By Christian Berthelsen, Jim Herron Zamora, Todd Wallack, Chronicle Staff Writers
Originally published in the San Francisco Chronicle
January 23, 2005

Part One

Sacramento -- Three years ago, when Bay Area card clubs were desperate to stop Indian tribes from opening urban casinos that would compete with them, state Sen. Don Perata summoned the clubs' lobbyists to his Capitol office.

The Oakland Democrat introduced them to his college friend Timothy G. Staples and recommended they retain him to help their cause, according to two people who attended the meeting and spoke on the condition they not be identified.

Staples got the job. And Perata went to bat for the clubs -- at the same time Perata was being paid by Staples for work the two friends described as consulting.

Standing at the intersection of Perata's work as an elected official and his personal business dealings, Staples is one of several close Perata associates who have done political work for the senator or for campaigns he supported, worked for individuals or companies that Perata supported in his official capacity, and sometimes paid Perata.

Now, that money flow is the focus of an FBI investigation into whether Perata has been paid for wielding his influence on public issues -- influence that extends throughout the East Bay, where Perata's fund raising has helped elect or appoint at least a dozen loyalists to the Oakland City Council, BART, the Port of Oakland and other boards that make multimillion- dollar decisions. Last month, Perata was elected president pro tem of the California Senate, one of the most powerful positions in the state.

"He's clearly the most influential political figure in Oakland and Alameda County," said Dan Siegel, a member of the Oakland School Board who enjoyed Perata's support until a falling out in 2000. "If you want to run for office and he decides to support you, he will introduce you to people, help you raise money and work on a strategy to identify potential supporters."

From 2000 to 2004, Perata and Staples had a business relationship through which Staples paid the senator for what they described as consulting services, Perata reported on economic disclosure statements. Perata has said he was paid about $100,000 a year, but the statements require only a range of income. On those documents he reported receiving between $10,000 and $100,000 from Staples in 2000 and 2001, and more than $100,000 in 2002 and 2003.

Earlier statements

When questions about Perata's outside income were first raised in a Chronicle report in February 2004, the senator said his business with Staples was "not political" and he knew nothing about how Staples found clients.

Perata's introduction of Staples to the card clubs in his Senate office is an example of the senator taking an active role in getting his friend and business partner work, and raises questions about the extent to which he used his government position to do so. Some Perata associates -- who include his son, Nick Perata, and his daughter, Rebecca Perata-Rosati -- have identified themselves to prospective clients as being "part of the Perata family," a description that the senator himself promotes. On the fund-raising invitation for an Oct. 8, 2001, event, "The Peratas" was printed in the same script used by "The Sopranos," with a handgun as the "r." Seeking donations of as much as $10,000 for his Senate campaign fund, it said, "Please plan to join the Perata 'family'."

For four political consultants in the group, it has been a lucrative relationship: they have collectively grossed $1.4 million from campaigns and political funds associated with Perata over the last 10 years, according to campaign finance records examined by The Chronicle.

Perata, meanwhile, was paid by Staples for what Staples said was consulting on development deals. And Nick Perata, who runs a political mail production company called Exit Strategies, has paid his father at least $138, 000 since 1999, according to economic disclosure forms, for what he says was business and personal rent. The senator has said he and Staples ended their business arrangement last year.

Don Perata's lawyer, George O'Connell, said his client has never tied his business dealings to his work as a state lawmaker.

Perata's spokesman, Jason Kinney, said, "It was Sen. Perata's policy to assiduously keep a bright line between his work as a private consultant, which he no longer does, and his work as a public official."

Outside income

It is legal in California for legislators to earn outside income in addition to their state work. But it is illegal for them to receive personal income from outside sources related to the discharge of their official duties.

Many prominent legislators, including former state Sen. John Burton and Willie Brown, former Assembly speaker and San Francisco mayor, maintained legal practices while in office. While the practices were controversial, the lawmakers fully disclosed who their clients were. Perata is not a lawyer and has disclosed far less about his outside work.

Perata, a former high school civics teacher, established a consulting firm called Perata Engineering in 1994. He is not an engineer and the firm does not do engineering work.

Perata identified the clients of Perata Engineering on state filings each year. But in 1999, he was fined by state ethics regulators for failing to disclose $15,000 in income from a political supporter and financier whom he had helped get business in the East Bay. Starting in 2001, Perata changed the way he did business. Instead of having several clients, all disclosed, he had a single client -- Timothy Staples. And state law does not require him to be specific about his work for Staples.

Staples operates two firms, Ascendent Solutions and Staples Associates, that have been hired by political committees close to Perata, according to those committees' campaign finance reports. But because Staples is not a lobbyist or public official, he is not required to disclose his other clients.

Staples has not responded to repeated requests -- including a letter sent via registered mail -- for comment.

Perata's silence

Perata, for his part, has consistently refused to say what he did for Staples. Since questions about his business dealings were first raised by a Chronicle report last year, he has maintained Staples paid him for legitimate consulting work unrelated to his Senate duties. He later ended the relationship with Staples and told Senate colleagues, while campaigning for the Senate's top job, that he would stop all outside business dealings.

Staples does not have to disclose who his clients are, and it isn't always clear what he does for them. Take his work for M.R. Beal & Co.

According to public filings with the Municipal Securities Rulemaking Board, an industry group that oversees the trade practices of banks that deal in local government debt issues, Staples was paid a $5,000 per month retainer from early 2002 to early 2004 by Beal, a New York investment bank, and ultimately received more than $136,000.

The firm described his duties as providing "consulting/advisory services with respect" to "various state and municipal entities in California." Just months after it hired Staples, Beal was selected to help underwrite two bond offerings totaling $741 million for the Port of Oakland and one worth $56.7 million for BART. Yet neither the Port nor BART has any record of Staples representing Beal, according to responses to public records requests by The Chronicle.

In an interview, BART's controller, Scott Schroeder, who is part of a panel that decides which banks get the business, said of Staples: "I've never met the man, never talked to him."

Beal would not discuss its business relationship with Staples. Beal terminated its contract with Staples after The Chronicle reported on his business relationship with Perata in February.

 

To Part Two

Return to top