Lawmaker Targeted by FBI : Assemblyman Frank Hill: ‘Cruising for a Bruising’

SACRAMENTO —  Assemblyman Frank Hill was a man in a hurry, his critics say, like a driver careening down the highway heading for calamity.

Even his political allies concede that the 35-year-old Whittier Republican courted trouble by boasting of his ability to use choice committee assignments and his influence with the governor’s office to raise money for legislative races.

“He was cruising for a bruising,” said a former Republican legislative aide.

The crash came last Aug. 24 when the FBI began a late-night search of Hill’s office and the offices of three other legislators, the culmination of a three-year federal sting operation that targeted political corruption in the Capitol.

Neither Hill nor any other legislator whose office was searched has been charged with a crime.

But for the last seven months, since the FBI raid, the usually affable Hill has kept a low public profile. A spokesman for Hill said he has been advised not to make statements to the press.

However, a detailed review of public records and dozens of interviews with legislators, aides, and lobbyists reveal that Hill has had a dangerous attraction to what his colleagues call “juice bills”--special-interest legislation that can be counted on to win sizable campaign contributions and speaking fees. In the course of that review, The Times has learned that:

- In at least two instances Hill may have violated the state’s conflict-of-interest law by taking part in decisions that affect companies that paid him substantial speaking fees.

- In numerous other cases, he carried or supported special-interest bills affecting groups that courted or rewarded him with gifts, campaign contributions and honorariums.

- The FBI is continuing to review Hill’s conduct in an inquiry ranging far beyond the sting itself and examining two bills that Hill authored for special interests.

At an unusually young age, Hill became what Capitol insiders described as a “player”--someone who would stake out positions on controversial issues and had to be reckoned with in any settlement. Before the sting controversy hit, Hill would talk openly about using his position as a GOP leader and vice chairman of the Assembly Governmental Organization Committee to raise money for campaigns.

‘Good Fund-Raiser’

“Sure, I’m a good fund-raiser. I’m one of the best in our caucus,” Hill said in an interview two years ago.

A former Republican legislative staff member described Hill’s role more bluntly: “That was Frank’s job, to make sure all our traditional friends who took us for granted knew that there was now going to be a price tag. . . . He used to brag how much money he raised, that he was the bagman for the caucus.”

Federal investigators have been focusing on Hill’s dealings with special interests.

This month, for example, FBI agents questioned officials of the Society of California Accountants about a $2,000 payment made to Hill in October, 1987, by the group’s political action committee, the Independent CPA Practitioners Foundation.

Although Hill reported the payment as an honorarium for a “speech,” he never delivered a speech to the society, said the foundation’s executive vice president, Charles A. Deen, one of those interviewed by the FBI.

Advance Payment

Deen said he sent the check a week after Hill met with a small group of society members at a get-acquainted lunch to discuss a bill that Hill had agreed to carry for the accountants. The measure later died in the Legislature. The money, according to Deen, was intended as an advance payment for a speech at one of the group’s annual meetings in the spring. The meetings were held as scheduled, but Deen said he was unable to make arrangements with Hill for a speaking date.

A few weeks ago, the FBI also obtained records of a bill Hill authored last year for Nickels & Dimes Inc., a Texas-based chain of amusement arcades.

The measure would have cleared up questions about the legality of “crane games,” devices found in arcades, bars and liquor stores that require customers to manipulate a claw mechanism for a chance to pick up prizes. Los Angeles Police Department officials, who conducted an undercover investigation of the games, contend that the claw devices--like slot machines--can easily be tampered with and amount to games of chance, which are banned under state law.

Case Became Test

Nickels & Dimes Inc., owner of the Goldmine Arcade in Los Angeles, was among those prosecuted for operating crane games. The case, which quickly became a test of whether the machines were permitted by California law, resulted in a hung jury last year. All charges against the firm have since been dropped.

But in the midst of its legal battle, Nickels & Dimes decided to settle the matter by asking the Legislature to change the law. “Why fight it out for 10 years (in court)?” asked Nickels & Dimes lobbyist Scott R. Keene. The lobbyist reported that FBI agents have interviewed him about the measure, which ultimately was killed in committee.

Investigators have obtained copies of lobbying reports filed with the secretary of state by Nickels & Dimes as well as Keene’s lobbying firm. Those reports do not show any payments made to Hill or his campaign committee.

However, the center of the FBI’s probe continues to be the meeting Hill had last June 27 with three undercover agents posing as businessmen in a room at Sacramento’s Hyatt Regency Hotel across the street from the Capitol, according to information pieced together from sources familiar with the investigation and Hill’s annual financial disclosure statement.

Special-Interest Bill

At the meeting, the “businessmen” handed Hill a check for $2,500 drawn on the account of Peachstate Capital West Ltd., a bogus company set up by the FBI as part of the sting. The agents were seeking support for a special-interest bill that supposedly would have helped Peachstate build a shrimp-processing plant in West Sacramento.

FBI agents repeatedly asked Hill, who was accompanied by Republican legislative consultant Karin Watson, whether they could help him out with “green stuff”--a cash payment of some kind--and even offered to take him on a helicopter duck-hunting trip. By one account, Hill accepted the check but turned down the offer of cash. Sources indicate that the meeting was taped.

Hill frequently received substantial honorariums, gifts and travel expenses as well as campaign contributions from companies and trade groups whose bills he carried or supported.

Conflict-of-Interest Laws

In at least two cases, he may have violated the state’s conflict-of-interest law, which prohibits elected officials from playing a role in decisions affecting businesses that have provided them with gifts or income of $250 or more in the previous 12 months. However, the law has a major loophole that exempts legislators and other state elected officials from its penalty provisions.

In one instance, Hill voted for a measure to add the popular anti-ulcer medication Zantac to the list of drugs approved for Medi-Cal patients, just weeks after receiving a $2,000 honorarium from the manufacturer, Glaxo Inc. of North Carolina. The payment was for speaking to a meeting of company personnel in California, Glaxo spokesman Jim Shamp said.

In the other case, Hill reported receiving a $2,500 speaking fee and $541 in meals and accommodations from Sunrise/Desert Partners, a firm planning a resort development in the city of Indian Wells. Those payments came during the six months before Hill voted for a bill lobbied by Sunrise that would have benefited that development. The measure ultimately was vetoed by the governor last year.

Openly Critical

Consumers Union lobbyist Harry Snyder is openly critical of Hill.

“If you would say to people in the Capitol that this is a Frank Hill bill, their eyes would roll up in their heads,” Snyder said. “They’d view it with suspicion.”

However, Hill has his defenders.

“He never did anything wrong,” said ex-Sen. H. L. Richardson (R-Glendora), who helped fund Hill’s initial Assembly campaign in 1982. “He’s not the type who goes out and does dumb things. Frank will lead out with a strong statement once in a while. It’s more baloney than fact.

“I personally have never known him to do anything illegal. . . . He’s more boastful. He’s not the kind who would go in to leverage (a bill) to feather his own pocketbook.”

In his legislative work, Hill has been a champion of making English the official state language and has worked to give local school districts more control over bilingual education.

A hunter and outdoorsman, he has impressed colleagues--Democrats as well as Republicans--by fighting for measures intended to clean up the environment. And for his district, he carried one of the bills granting relief to victims of the 1987 Whittier earthquake.

In late 1987, Hill became the Assembly GOP’s “liaison to the governor”--one of four Republican legislative leaders who meet regularly with Gov. George Deukmejian.

His rise was rapid and rewarding financially.

During the 1987-88 legislative session, only four legislators reported receiving more money in speaking fees and honorariums than Hill, who collected $48,892.

He has also become one of the Assembly’s top campaign fund-raisers, using the money he collects to support other Republican candidates and to maintain a political apparatus that he scarcely needs to keep his own Assembly seat. Over an 18-month period, ending June 30, 1988, only eight legislators doled out more money to other candidates, according to a report prepared by the Fair Political Practices Commission.

Controversial Legislation

Since he won election to the Legislature in 1982, Hill has often been involved in controversial legislation. But he has managed to do so without alienating colleagues.

“He has more friends than any other legislator,” said Assemblyman Gil Ferguson (R-Newport Beach). “He never did anything to make anybody mad at him.”

“Charming” is the way a number of legislators describe him. Maybe a little too “brash” at times, but definitely “likable” is the consensus.

“Frank can be the life of a party,” said a lobbyist who knows him well. “He can be the first person to put a lamp shade on his head.”

Born in El Paso, the oldest of six children, Hill got his start in politics while in high school, when he worked on the reelection campaign of then-Assemblyman Bill Campbell, now a Republican state senator from Hacienda Heights.

Moved to Washington

While a senior at UCLA, he volunteered for S. I. Hayakawa’s 1976 U.S. Senate campaign. When Hayakawa won the primary, Hill, fresh out of college, became a full-time member of the campaign staff. After Hayakawa upset incumbent Democratic Sen. John V. Tunney that fall, Hill moved to Washington to work in the new senator’s office.

He has been in government ever since. His official legislative biography’s description of him as a “legislator-businessman” notwithstanding, Hill’s only business experience during his pre-legislative days was occasional political consulting work.

In 1979, Hill moved back to California to run then-Rep. Wayne Grisham’s Whittier office. He was looking for an opportunity to break into politics himself, Republican Grisham said.

He soon found it. In 1982, at age 28, Hill ran for a vacant Assembly seat in a district where the winner of the Republican primary could be expected to be victorious in the general election as well.

‘Not Very Correct’

His chief Republican opponent, Barbara Shell Stone, said she was annoyed that Hill ran while remaining on Grisham’s payroll and collecting a federal salary of $3,320 a month. “Ethically, he should have resigned and not campaigned on taxpayers’ money,” Stone said. “It’s not illegal, but it’s not very correct.”

Hill beat Stone by 1,593 votes. Then, in the November general election, Hill won 66% of the vote.

Even after the FBI investigation became public, Hill’s popularity with voters in his district seemed to be hardly dented. In November, he was reelected with 63% of the vote.

Some Republican legislators report that Hill has been quieter since the FBI’s Capitol raid, but they express confidence that he can survive politically.

Ex-Assemblyman Grisham is certain that Hill did nothing wrong in accepting a $2,500 payment from the bogus FBI company, declaring: “I really think the FBI people are not used to the way Californians work. What they thought was illegal was perfectly legal.”

Proper Role

But one veteran Capitol lobbyist, who has worked with Hill on several bills and clashed with him on others, believes that the assemblyman lost sight of his proper role as a legislator.

“Frank Hill came up here as a young man, very naive,” the lobbyist said. “What’s happened is one of those things, where you dip your hands into water three or four times and don’t get hurt and you figure you’ll never get hurt. . . . He got sucked into it all and ended up going too far and got caught.”

GIFTS AND HONORARIUMS TO ASSEMBLYMAN HILL

Public records show Assemblyman Frank Hill frequently received substantial honorariums, gifts and travel expenses as well as campaign contributions from companies and trade groups whose bills he carried or supported. Here’s a summary:

COMPANY/INTEREST GROUP Glaxo Inc. of North Carolina BENEFIT RECEIVED $2,000 honorarium for speech LEGISLATIVE CONNECTION Voted for bill to put a medication made by Glaxo on list of drugs approved for Medi-Cal patients COMPANY/INTEREST GROUP Sunrise/Desert Partners, a firm planning a resort development in the city of Indian Wells BENEFIT RECEIVED $2,500 speaking fee and $541 in meals and accommodations. LEGISLATIVE CONNECTION Later voted for a bill, ultimately vetoed by the governor, that would have benefited the Sunrise development. Part of $9,670 in honorariums and gifts received from Sunrise and related companies COMPANY/INTEREST GROUP California Retailers Assn. BENEFIT RECEIVED $2,000 for a speech LEGISLATIVE CONNECTION Two weeks before getting the honorarium led Assembly floor fight for a bill to lift interest rate limits on retail charge card accounts COMPANY/INTEREST GROUP California Cable Television Assn. BENEFIT RECEIVED $10,316 in speaking fees and gifts over the last five years LEGISLATIVE CONNECTION Carried a bill--signed into law by the governor--that could save cable firms up to $85 million a year in taxes COMPANY/INTEREST GROUP GTECH Corp., which holds a $200-million contract with the California Lottery BENEFIT RECEIVED $9,670 in speaking fees and gifts since 1986; $20,000 in campaign contributions LEGISLATIVE CONNECTION As vice chairman of the Governmental Organization Committee, can influence lottery legislation affecting GTECH. Also has carried several lottery bills himself COMPANY/INTEREST GROUP National Waterbed Retailers Assn. BENEFIT RECEIVED $2,200 fee and $394 in expenses to talk with the group’s board members at a meeting in Tucson in November, 1987 LEGISLATIVE CONNECTION Backed a bill prohibiting landlords from refusing to rent to tenants with waterbeds, which gained Assembly approval two months before the Tucson meeting COMPANY/INTEREST GROUP Louisiana-Pacific Corp. BENEFIT RECEIVED Firm took Hill on trips worth $2,426 LEGISLATIVE CONNECTION Joined other Assembly Republicans in opposing a bill to let environmental agencies appeal timber harvest plans approved by state forestry director. The timber industry, including Louisiana-Pacific, successfully fought to kill the measure COMPANY/INTEREST GROUP California Medical Assn. BENEFIT RECEIVED $25,000 in campaign contributions. A $2,000 honorarium for attending a dinner meeting with eight physicians from the affiliated Los Angeles County Medical Assn. LEGISLATIVE CONNECTION CMA spokesman says Hill, an Assembly Health Committee member, is considered “a very good vote for medicine” COMPANY/INTEREST GROUP Huntington Park Casino, a card club BENEFIT RECEIVED $3,200 for what Hill reported as “speeches” in 1986 and 1987, in addition to $2,100 in campaign contributions LEGISLATIVE CONNECTION A vice chairman of a committee that must approve most gambling legislation, Hill carried a card club-backed measure that would have ended an ongoing battle with the Los Angeles County Sheriff’s Department over legality of stud poker games