Jury Verdict Endangers Simon's Campaign for Governor

By Christine Hall | July 7, 2008 | 8:29 PM EDT

(Clarification: Jury verdict applied to company Simon helped start, not to him personally)

(CNSNews.com) - News of an adverse jury verdict against the company that California GOP gubernatorial candidate Bill Simon helped start, has reportedly caused the Bush administration to rethink upcoming presidential fundraising visits to the state.

Republicans fear that Democrats might portray President Bush as a hypocrite for supporting Simon, whose company was sued for fraud, at the same time the president is taking a tough stance toward corporate corruption.

California Democratic Gov. Gray Davis saw his lead over Simon cut in half to just seven percentage points in July, with another poll showing the Republican actually ahead by two points. But the good news for Simon may be short-lived as the business scandal threatens to dominate the rest of the campaign.

A Los Angeles Superior Court jury on July 31 awarded $78 million in damages in a case against William E. Simon and Sons, an investment company founded by Simon and his family. The lawsuit brought by Pacific Coin Management alleged that Simon and Sons was guilty of fraud and other misconduct resulting from a failed plan to take the payphone company public.

"This is a bump in the road of a politically charged lawsuit," Shawn Steel, chairman of the California Republican Party, said about the jury decision. "It's a classic tort shakedown." And "it's unfortunately another runaway L.A. jury.

"There's obviously been coordination between Davis and this law firm, because we got press releases from the law firm right after the verdict was given," Steel alleged. "We can't show it or prove it, but it's obvious that the lawyers are in cahoots with Davis."

Simon called the jury decision "fundamentally flawed" and predicted the case would be appealed and the decision overturned by the trial judge or an appeals court.

But the Davis campaign was quick to fold the jury verdict into its ongoing attack aimed at undermining Simon's claim of business skill.

"We're starting to see a disturbing picture emerge. It seems Bill Simon is the Gordon Gekko of this generation," Davis press secretary Roger Salazar told the Associated Press in a reference to the greedy corporate mogul depicted in the 1980s movie 'Wall Street.'"

Davis allies promptly launched a television ad campaign criticizing Simon on his handling of business ethics and personal income taxes. "If we can't trust him in business, how can we trust him in the governor's office?" the ad asked. Davis had earlier attacked Simon on his management of the failed Western Federal Savings & Loan.

But Davis himself has been on the defensive over fund-raising ethics.

The Davis campaign accepted a $25,000 contribution from an Oracle Corp. lobbyist shortly after his administration awarded the company a $95 million software contract. Davis has denied prior knowledge of the contract and responded by firing his director of e-government, Arun Baheti.

Steel said Davis' campaign fundraising scandals won't end there.

"The latest scandal ... is that [oil refining company] Tosco has been giving lots of money to Gray Davis, and they got a waiver for putting ... more dioxin in the San Francisco Bay," Steel said. "Because this one company paid extra money to Gray Davis's campaign, they got a personal waiver from Gray Davis so they actually could dump more toxins (dioxin)."

In the fundraising department, Davis is reportedly besting Simon by a margin of six to one. A Davis spokesman recently boasted to news sources that the governor's campaign has raised $50 million dollars and holds another $32 million in the bank.

However, the bottom line is that California remains a Democratic stronghold, according to Lawrence L. Giventer, a University of California political scientist and registered Democrat.

"The candidate of course with the better chance of winning, because of voter registration and the political trends in California, is Gov. Gray Davis," said Giventer.

"California is a Democratic state, and the registration is going that way. We have a Democratic delegation in Congress; both senators are Democrats; Democrats control both houses of the state Legislature; and redistricting cemented the incumbents in the Legislature in office," he said.

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See Earlier Stories:

Bush to Campaign for Bill Simon in California

Bush Pushes Policies, Raises Funds in California

Californians Rate Bush Over Davis on Environment