Locke's Cash Donations Eluded Public Disclosure

RECALL, for a moment, the final weeks before last November's general election. Democratic gubernatorial candidate Gary Locke was hopping across the country in search of a last-minute infusion of ethnic money. Newspapers described the jaunts in passing as "unusual," but reported few details of the fund-raisers for voters back home.

Two weeks ago, Gov. Gary Locke told me in an interview that he was unaware of any cash contributions (i.e., currency as opposed to checks) collected during those out-of-state swings. Last week, however, Locke's campaign-finance committee chairman, Bill Marler, admitted that the campaign accepted more than $8,000 in improper cash contributions.

On Friday, Marler acknowledged for the first time to the Public Disclosure Commission that $4,465 in cash had been improperly collected at a Locke fund-raiser in New York last October. The New York cash donors were never disclosed, as required by law, until last week - after I queried PDC executive director Melissa Warheit. In addition, Marler has returned $3,770 to 37 individual donors who had exceeded the state's inflation-adjusted cash contribution limit of $55 per individual.

How did we get from there to here? "It was really more of a screw-up by unpaid volunteers, a `Keystone Cops' kind of thing, as opposed to something insidious," Marler says. No, it's not Watergate. But this much is clear: The spirit, if not the letter, of the state's full-disclosure laws was violated by sloppy campaign workers who operated outside of public scrutiny.

On Locke's trips to Los Angeles, New York and Washington, D.C., he was accompanied by Grace Yuan (an attorney at Preston, Gates and Ellis) and Judy Yu (co-President of AsiaNet, a public-relations company). Yuan spearheaded Locke's out-of-state ethnic fund-raising efforts; Yu handled Asian-related press issues.

Yuan organized an Oct. 22 fund-raising dinner at the Harmony Restaurant in New York City's Chinatown. Locke and his wife attended. It was a smash: Yu collected $25,740 in contributions, including $4,465 in currency. Yu then reportedly spent all the cash on campaign-related expenses such as the fund-raising dinner and banners.

What's wrong with this picture?

-- The Locke campaign was legally required to file with the PDC the names and addresses of all contributors, and the amount and date each donor gave (RCW 42.17.090). But until last week, the campaign never reported the cash contributions collected in New York.

-- Campaign expenditures of more than $55 may not be made in currency unless a receipt, signed by the campaign treasurer, is prepared and made a part of the campaign's financial records (RCW 42.17.070). "There are receipts for this stuff," Marler said. "(But) I haven't seen them physically." Neither has the PDC.

-- Contributions received by a campaign must be deposited within five days in an account established for that purpose (RCW 42.17.060). Yu never deposited the cash contributions she collected. "Judy took the cash, and incorrectly used it," Marler said. "She didn't know what she was doing."

When Locke campaign consultant Dia Hujar discovered what had happened in New York, she "went ballistic," Marler says. Hujar notified the PDC sometime in late October. PDC auditor Kurt Young advised Yuan and Yu to write a memo explaining what had happened. But the memo wasn't sent, and until last week, the PDC didn't follow up.

In the meantime, reportedly on the advice of PDC staffer Young, the campaign engaged in a Rube Goldberg exchange of funds in an attempt to undo the damage. Here's how it worked: The campaign cut a check to Yu purportedly to reimburse her for campaign-related expenses she incurred in New York (even though she didn't use her own money to pay for $4,465 of those expenses). Yu then purchased a cashier's check for $4,465 made out to the campaign.

The cashier's check from Yu was supposed to be divvied up into smaller cashier's checks to reimburse the original New York donors. But it sat in Hujar's desk drawer for the duration of the campaign. Not until Jan. 9, Marler says, did Yuan and Yu convert the check into smaller reimbursement checks and send them to the New York contributors. The campaign bookkeeper has no records of those reimbursements.

Last Wednesday, in response to my inquiry, the PDC requested a written account of what happened in New York from the Locke campaign. An attachment to the campaign's report to the PDC showed who had given cash at the Oct. 22 dinner, and how much each donor gave. Sixteen contributors were listed. All but one gave more than $55, which is the inflation-adjusted legal limit in Washington for currency contributions (RCW 42.17.740). Four donors - Eric Ng, Wai Chee Chan, Check Ng and Tsui Chun - gave $750 each in cash.

State law is ambiguous about who should be held accountable for these violations. Under a poorly worded provision in Initiative 134, only donors may be held responsible (RCW 42.17.740). But an earlier law, Initiative 276, states that campaigns cannot accept donations that exceed the currency limit without a signed receipt. (RCW 42.17.060). "Our intent with I-276 was to minimize huge amounts of cash coming into campaigns precisely because it's so hard to track," says Chuck Sauvage of Common Cause.

To his credit, Marler isn't waiting for the PDC to reconcile the laws. He ordered a complete review of all cash contributions accepted by Locke and last week returned all donations in excess of the legal limit. If other campaigns accepted large cash contributions, they should follow his example. Gov. Locke should lobby to clarify the law.

The public has a right to know of the financing of political campaigns. That right is enshrined in state law. "We did everything humanly possible," Marler says, "to follow it." Yuan and Yu, however, refuse to answer my questions directly about their out-of-state fund-raising activities.

Maybe the PDC will have better luck. ----------------------------------------------------------------- Michelle Malkin's column appears Tuesday on editorial pages of The Times. Her e-mail address is: malkin1@ix.netcom.com.