CA: Living Large - How state Senator Don Perata uses campaign cash to finance his lavish lifestyle

State Senate boss Don Perata throws impressive parties, and this one was a doozy. The guests, some of Perata's best donors among them, feasted on buttery Dungeness crab and sipped California Chardonnay. Then they settled into their plush luxury box seats to watch the Oakland Raiders play the New York Jets in a game with playoff implications.

It was mid-December 2000, and the state senator had just dropped $43,600 on an oversize luxury suite at the Oakland Coliseum for a single afternoon of festivities. At the time he said he was trying to convince East Bay business leaders to buy suites of their own. But like his other ideas involving the Raiders, this one misfired. Team officials later said the bash produced zero luxury box sales.

Perata paid for the box, and the bash, from the treasury of one of his political campaigns. Since the state senator often transfers cash from one campaign to another, it is difficult to determine its exact origin, but public records suggest that most of it came from the Three Rs, a fund-raising committee Perata formed with then-Mayor Jerry Brown a year earlier to improve Oakland schools. The same month as the Raiders party, Perata transferred the remaining $32,668 from the Three Rs into his main Senate account and paid for the luxury box. In other words, money raised to help Oakland schoolchildren likely was spent on crab, wine, and football for a bunch of rich people.

An intensive analysis of campaign finance records by this paper shows that California's most powerful Democratic politician has a long history of living large on money raised for his various campaigns. Over the past ten years, Perata has spent more than $1 million of campaign cash on parties and high-end lifestyle expenditures. That amounts to more than one-quarter of the total he raised for his reelection campaigns in that time. (For the complete run-down of Perata's expenses, see our news blog 92510 at EastBayExpress.com.)

Although politicians commonly use campaign cash to enhance their lifestyles, Perata, who sets the tone for the state legislature, appears to be among the most prodigious spenders in California politics. His prolific expenditures also undermine his well-crafted persona as a populist politician, a man of the people. The top expenses include:

Dining: The state senator frequents some of California's best restaurants, including Oliveto and BayWolf in Oakland. His campaign restaurant tab totals at least $119,517 over the past ten years, and includes at least 62 meals with bills in excess of $500.

Golf: He hosts an annual tournament he calls the Perata Cup at a private Pleasanton country club owned by one of his top donors. He has spent a total of at least $121,746 on the past four events, including gifts. He describes these tournaments as fund-raising events, but on at least one occasion there is no evidence of any fund-raising having occurred.

Hotels: He stays at some of the state's priciest luxury hotels, including several in both the Bay Area and Sacramento, where he owns homes. Perata has spent a total of $7,883 on posh lodging near his homes; his total hotel tab for the past ten years is at least $68,503.

Perata also uses money from his campaigns to shower gifts on his donor friends, colleagues, lobbyists, and staffers. He shops at Macy's and Nordstrom or buys expensive luggage, monogrammed pens, and upscale office supplies. Public records show he also creates dubious campaign committees and milks them for cash. "Clearly, the campaign money is not being used for re-election purposes," said Bob Stern, president of the Center for Governmental Studies in Los Angeles and former general counsel of the California Fair Political Practices Commission. "It's being used to maintain a lifestyle and create an image."

It's nonetheless legal, on paper at least. Although state and federal law bar politicians from enriching themselves with campaign funds, lax reporting rules make it virtually impossible to tell whether expenditures are for legitimate campaign needs or for personal use. Perata and other politicians easily exploit this loophole by calling an expensive dinner a "meeting" or "travel." Perata even uses these types of labels when he charges everyday items such as groceries, wine, and coffee to his campaign accounts.

Perata's spokesman Jason Kinney defended the state senate boss' many expenditures as "entirely legal," "legitimate," and "run-of-the-mill and commonplace." "Every officeholder, up and down the state, does this," he said.

However, this newspaper sampled campaign expense reports from other top state senators and found no others who appeared to have such extensive expenditures. There's also no denying that Perata benefits from the spending: It allows him to live the high life and bestow gifts on friends and colleagues, thereby cementing his leadership status. Plus it's all tax-free. In practice, the campaign money has allowed him to nearly double his $130,000 annual legislator's salary with more than $103,000 a year in tax-free income.

Perata's campaign spending habits bear more than a passing resemblance to the behavior that got him in hot water with federal law enforcement officials. The FBI and the US Attorney's Office are investigating whether Perata has enriched himself by taking kickbacks from family members, trusted friends, and donors.

It's unclear whether the FBI and the federal grand jury investigating the state senator during the past two-plus years also have delved deeply into his campaign expenditures. But this much is certain: Perata's high-end socializing and reputation for generosity would be impossible to sustain without his donors' money. And that makes him beholden to them.

a couple snips from page 4 and 5 of the article.

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For his donors, though, the senator usually spares no expense. In particular, he likes to buy fund-raising gifts from T. Shipley ($2,677), a retailer of fine leather goods. According to one Sacramento source, Perata is fond of handing out $150 pens engraved with his name. In late 2005, he purchased $1,549 worth of Italian ceramics for his contributors at Bella Ceramica on Piedmont Avenue. He charged another $544 for his donors from the upscale Herrington catalogue.

But Perata’s real gift-giving extravaganza is the Perata Cup, his annual golf tournament. Like Santa Claus on Christmas Eve, he typically arrives with bags full of presents. “The more money they give,” explained one source, “the better presents they get.”

Based on campaign finance reports, it’s not difficult to determine who should get the best presents. Although Perata’s list of donors is long and varied, there are a few loyal East Bay contributors whom he can count on to cut checks for at least $5,000, and sometimes as much as $50,000, nearly every time he launches a new campaign committee. They are the true creators of the Grand Pooh-Bah. The top five among them are Ed DeSilva, roadbuilder and developer ($512,500); Ron Cowan, Alameda developer ($210,300); Jim and Michael Ghielmetti, owners of Signature Properties, and Jon Reynolds, owner of Reynolds and Brown, developers of Oak to Ninth, a giant condo project on Oakland’s waterfront ($175,800); T. Gary Rogers, chairman and CEO of Dreyer’s Ice Cream ($143,500); and billboard owner John Foster ($81,300).

In return, the senator has done right by them. DeSilva, for example, stands to be the biggest Bay Area beneficiary of the $20 billion statewide transportation bond Perata sponsored last year (see Full Disclosure, page 4). As for Cowan, Perata was instrumental in getting a $40 million road — which DeSilva built — constructed between Oakland International Airport and Cowan’s flagging business park (”Road to Nowhere,” feature, 3/1/06). Foster, meanwhile, made millions after Perata twice carried state legislation that let him erect a series of billboards next to the Oakland Coliseum (”Fishing for Revenues,” Full Disclosure, 2/21). Finally, Signature Properties and Reynolds and Brown could gross nearly $2 billion after Perata pushed legislation that let them buy sixty-plus acres of public waterfront property for less than half its likely value.

The Investigation

How we conducted our campaign spending analysis.

Over the past three months, the Express scrutinized hard copies of Senator Perata’s personal campaign expense reports totaling more than two thousand pages. We then created an Excel spreadsheet logging every expense that didn’t appear to be directly related to actual campaigning. The result is available for download on our news blog 92510 at EastBayExpress.com. It includes items Perata labeled as “fund-raising” because it was impossible to distinguish where the fund-raising stopped and the partying began. To determine whether the spending patterns were unusual, we sampled campaign expense reports from other top senators, but found no others who appeared to have such extensive expenditures. Two political watchdogs, Bob Stern and Doug Heller, also expressed surprise that any legislator would spend more than $1 million on dining out, hotels, gift giving, etc., over the period in question.

That’s Just Part of It

Add $164,000 in unexplained credit-card expenses.

You might have noticed that the senator’s expenses in this story are preceded by the words “at least.” That’s because Perata incurred at least $163,976 in credit card charges over the past ten years for which he provided no specific explanation. It’s not clear whether this violates campaign-reporting rules, since state law doesn’t compel politicians to disclose individual expenses of less than $100. Because of this loophole, his total “living large” spending may be significantly higher than the $1,027,568.38 our analysis of campaign finance records has uncovered.

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