New Details Emerge in Perata Inquiry

By Dan Morain, Times Staff Writer

SACRAMENTO â€" A document disclosed Friday offered new details about the federal law enforcement inquiry into the activities of incoming state Senate leader Don Perata and an array of his relatives, associates and their businesses.

A subpoena issued by a federal grand jury meeting in Perata's hometown of Oakland is one of several delivered in recent weeks as part of an FBI probe apparently focused on activities there. The scope and target of the investigation are not clear.

The subpoena was obtained by the Oakland-based East Bay Express newspaper and posted Friday on its website.

Perata's attorney, Sacramento criminal law specialist George L. O'Connell, said Friday that Perata had done nothing improper. Perata on Thursday denied wrongdoing and said he had not been contacted by federal authorities.

The name of the entity that received the subpoena is blotted out on the website. But images of most of the three-page document offer a list of individuals of interest to law enforcement. It requests that the recipient provide records of payments, correspondence and other documents involving the individuals and their businesses.

Among those:

• Lily Hu and her Oakland-based lobbying business. The investigation apparently dates to 2003, when Hu's estranged and embittered companion contacted the FBI with an array of allegations related to Hu and politicians.

Hu, who worked briefly as an aide to Perata and ran for the Oakland City Council in the 1990s, represents several clients before Oakland officials, including some who are among Perata's major backers.

All together, Hu's clients have donated at least $400,000 to Perata's campaigns over the years, campaign finance reports show.

This year, Perata carried legislation, which was signed into law, to help open the way for a developer, Signature Properties, to purchase a prime piece of waterfront land in downtown Oakland. Signature wants to build 3,000 homes and various retail outlets on the 60-acre parcel. Hu has represented Signature in Oakland. Signature has donated $63,000 to Perata over the years.

The legislation, SB 1622, passed unanimously and had no opposition.

Mark Stice, Signature's general counsel, said law enforcement personnel had not contacted the company. Stice said the proposed development still required approval from various local agencies.

Hu's attorney, Doron Weinberg, said his client had done nothing improper.

• Timothy G. Staples and three of his corporate entities â€" Socratic Solutions, Staples Associates and Ascendent Solutions.

Staples, Perata's roommate at Saint Mary's College of California in the 1960s, has earned more than $370,000 since 1998 as a consultant on Perata-related campaigns.

Staples could not be reached and has declined to be interviewed in the past.

On his statements of economic interests, on which he discloses his outside income, Perata reports that Staples' entities paid Perata's political consulting firm, Perata Engineering, more than $100,000 last year and $10,000 to $100,000 in each of the three preceding years.

The senator has said he severed the business relationship this year after it became the subject of news reports.

• Sandra Polka. She is a long-time political consultant in Sacramento and one of Perata's chief political advisors. Campaign finance reports show she has grossed at least $254,000 this year.

She has declined to comment.

• Perata's son, Nick, and his businesses, NPR Productions and Exit Strategies. Nick Perata lives in Oakland in a home once owned by his father. Specializing in mass mailings, Nick Perata works on his father's campaigns and those endorsed by the elder Perata. Campaign finance reports show the younger Perata has grossed more than $1.6 million since the 1990s.

• Perata's daughter, Rebecca, her husband, Michael Rosati, and their business, Vox Populi. She has worked on Perata campaigns.

In a telephone news conference Friday, O'Connell said the appearance of names on a subpoena did not suggest that the individuals had done anything wrong. He added that prosecutors often used grand juries to facilitate wide-ranging investigations that culminated with no charges being filed.

O'Connell denounced the investigation and called on the U.S. Justice Department to investigate whether federal law enforcement officials had disclosed details of what was supposed to be a secret grand jury investigation, thereby violating federal law.

He charged that the timing of "leaks" suggested that there was a "political agenda" aimed at derailing Perata from formally being elected Senate president pro tem when the Legislature reconvened in early December.

"This kind of sneak attack on a public servant who has acted appropriately at all times amounts to a gross misuse of the grand jury process," O'Connell wrote in a letter to U.S. Atty. Kevin Ryan of San Francisco.

Ryan's spokesman declined to comment Friday.

Perata, 59, was narrowly elected Senate leader in a secret vote by Democrats in August, and must be confirmed when the lawmakers return. As president pro tem, Perata would be among the most powerful people in state government, serving, for example, as one of five primary negotiators who shape the state budget.

Sen. Martha Escutia (D-Whittier), who was Perata's main rival for the leadership position, said in an interview Friday that she expected senators would confirm Perata and that she intended to vote for him.

"I'm not running for pro tem," Escutia said. "Everything about the grand jury as far as I'm concerned is merely speculation right now. I haven't seen anything. If a grand jury has been impaneled, I'm sure that due process will take place…. There is this notion of innocent until proven guilty. I highly respect that."

O'Connell, who served as U.S. attorney in Sacramento in the early 1990s and presided over high-profile public corruption cases, cited various news reports that quoted "law enforcement officials" as sources, and charged that the leaks violated "fundamental rules of fairness."

O'Connell was particularly harsh in his attack on law enforcement authorities for appearing to implicate Perata's children, labeling the suggestion "just plain indecent," "grossly irresponsible" and "shameful."

O'Connell added that Perata "would be more than happy to cooperate with any legitimate inquiry," but that federal investigators had not tried to contact the senator.

He called on Ryan to allow him to depose law enforcement officials who might be involved in the investigation "to determine whether there was a political agenda."

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