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Federal ‘Capscam’ Sting Spread Money Through State Capitol

September 1, 1988

SACRAMENTO, Calif. (AP) _ FBI sting companies and people linked to their political corruption probe spread at least $56,000 in political contributions around the California Capitol in the past two years, finance reports show.

Assembly Speaker Willie Brown, national chairman of Jesse Jackson’s presidential campaign, received $5,000 directly from two firms identified as FBI fronts and $6,500 from another company with ties to the sting.

A $5,000 contribution from one of the FBI fronts was listed in reports filed by Assembly Republican leader Pat Nolan of Glendale before the corruption probe came to light.

Nolan’s attorney, Ephraim Margolin, said Nolan’s campaign reports would be amended to list another $5,000 contribution from the FBI front.

During the sweeping, two-year probe of legislative corruption, the FBI sting companies reportedly offered payments in return for votes on two bills drafted to give special bank loan benefits to the bogus FBI firms.

Terry Knowles, chief of the FBI’s Sacramento office, said Wednesday that he didn’t expect the investigation to be concluded until October at the earliest.

″We are working, I don’t like to say around the clock, but full days with a full squad,″ he said.

In a related development, the Daily News of Los Angeles reported Wednesday that Nolan’s personal calendar for the night prior to the date of those contributions listed a private dinner meeting in a hotel room with a man now believed to be an FBI agent posing as an out-of-state businessman seeking legislative favors.

Reports filed with the secretary of state’s office show that Northern California Research Associates, a firm reportedly retained by one of the dummy FBI companies, Gulf Shrimp Fisheries, gave campaign contributions of $6,500 to Brown, the powerful Democratic leader of the Legislature’s lower house, and $3,500 to Democratic Assemblywoman Gwen Moore of Los Angeles.

Two bills written by Moore to give special benefits to the phony FBI companies are the focus of the ″Capscam″ scandal.

Records at the secretary of state’s office showed that Brown also received a $4,000 contribution on May 26 from Peachstate Capital and $1,000 from Gulf Shrimp in 1986.

Peachstate and Gulf Shrimp have been identified as FBI front companies by Donald Heller, an attorney for a legislative staffer cooperating with federal agents. Federal and Capitol sources confirmed Heller’s statement.

Brown spokeswoman Susan Jetton said the Peachstate contribution, in the form of a cashier’s check, was for four tickets to a large fund-raising dinner, and that it was ″no big deal - we didn’t have anything to do with them. ... It’s not unusual that people who do not have any connection (to the speaker) to come to these things.″

Jetton also said the $6,500 contribution from NCRA in no way linked the speaker to the investigation, adding, ″We’re not going to comment on anything that silly.″

Regarding Moore’s receipt of $3,500 from NCRA, Moore’s spokeswoman, Amy King, declined comment, and Nolan referred all questions to his attorney, who said only that the facts would vindicate the Republican leader.

Gulf Shrimp and Peachstate were among bogus firms federal agents set up in the probe of legislative corruption that came to light with a late night search of Capitol offices by FBI agents last week.

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