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FBI’s ‘Capscam’ Probe Focuses on California Capitol

June 19, 1989

SACRAMENTO, Calif. (AP) _ The Capitol is a place of ″high curiosity and low anxiety″ nearly a year after a group of Alabamans who doled out $100,000 for legislative favors turned out to be FBI agents hunting corruption.

Since 30 federal agents raided the offices of four legislators and their aides the night of Aug. 24, 1988, one lawmaker has been indicted for bribery, extortion and money laundering and several others are under investigation.

″We’ve lived with this for a year now, so that the initial shock has worn off,″ said Bob Forsyth, a top Senate aide. ″The curiosity now is about who’s next and if they’ll be somebody next. There must be a few people here privately who are worried, but generally there is high curiosity and low anxiety.″

The raid revealed a complex 3 1/2 -year sting in which the FBI set up phony companies to dispense cash for special-interest legislation. Agents videotaped lawmakers taking cash, according to the lawyer for a key FBI informant.

The FBI descended on the Capitol after a legislative aide reportedly refused to work as an informant and agents feared she would tip other people. As the agents moved through the building, several staffers reportedly shredded documents and erased sensitive files from computers.

Sen. Joseph Montoya, one of the four lawmakers whose offices were searched, pleaded innocent June 12 to 10 counts of violating the Hobbs Act, which is used in bribery cases involving public officials, and the Racketeer Influenced and Corrupt Organizations Act. The El Monte Democrat, who has served 17 years in the Legislature, faces $2.5 million in fines and 200 years in prison if convicted. An aide, Amiel Jaramillo, pleaded innocent to three counts. The other three whose offices were searched, all members of the Assembly, are Gwen Moore, D-Los Angeles, and Republicans Pat Nolan of Glendale and Frank Hill of Whittier. Nolan served as Republican leader of the Democrat-dominated Assembly until he stepped down, partly because of the FBI investigation.

The San Francisco Examiner reported Tuesday that IRS agents assisting the FBI had subpoenaed the files on 16 bills carried by Sen. Alan Robbins, chairman of the Senate Insurance Committee. Robbins declined to comment.

Except for Montoya, no lawmaker has been indicted or arrested. All have denied any wrongdoing.

The undercover agents gave more than $90,000 in campaign contributions, honoraria and other payments to state and local officials, aides, campaign consultants and others, according to government and private financial records obtained by The Associated Press. A federal source knowledgeable with the investigation said ″about $100,000, maybe a little more″ was budgeted.

About a fifth of the money went to Paul Carpenter, a former state senator and now a member of the powerful-but-obscure Board of Equalization, which sets property tax assessments for utilities and is California’s tax appeals agency.

Carpenter received three payments in 1986 totaling $20,000. Carpenter said he was interviewed by the FBI, but has declined to discuss the case further.

Moore, Hill and Nolan got several thousand dollars each, and other minor contributions were scattered throughout the Legislature.

The sting has been dubbed ″Capscam″ or ″Shrimpscam″ by the media, but its official FBI file name is ″Brispec,″ for ″Bribery - Special Interest.″ According to documents, sources and published reports, here is how it worked:

FBI agents posed as representatives of a Mobile, Ala.-based company planning to launch a shrimp-processing plant in West Sacramento. They went to lawmakers, seeking legislation that would lure investment to the phony company as they spread donations around the Capitol.

Ultimately, two bills pushed by the undercover agents were approved by the Legislature. Both - written by Moore - were vetoed by Gov. George Deukmejian, who had been tipped off by the FBI.

One agent, who identified himself as ″Jack Gordon of Alabama,″ was an engaging, country-bumpkin type who became a familiar figure in the Capitol. He was often accompanied on his Capitol rounds by John Shahabian, a Senate staffer who was serving the FBI as an undercover informant.

Shahabian’s lawyer, Sacramento attorney Donald Heller, said his client was involved in audio and video recordings of lawmakers taking money.

The FBI probe was secret until Aug. 24. As about 30 agents gathered in the Hyatt Regency Hotel across the street from the Capitol, others were inside the statehouse interviewing Karen Watson, an aide to Nolan. During the interview, the agents reportedly asked Watson to work as an informant. She refused.

Within minutes, agents left the hotel and headed for the Capitol.

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