State Sues Montoya for Alleged Misuse of Funds

State authorities slapped former Sen. Joseph B. Montoya with a lawsuit Wednesday seeking $270,000 in penalties for his alleged misuse of campaign funds and failure to disclose certain financial dealings.

The civil action filed by Atty. Gen. John K. Van de Kamp and the Fair Political Practices Commission comes two weeks after a federal court jury convicted Montoya on criminal corruption charges.

The $270,000 penalty is by far the largest ever sought by the state for the misuse of campaign funds and one of the largest for a violation of state campaign laws.

Montoya is accused in the lawsuit of diverting $98,343 in campaign funds for his personal use by making phony loans to associates and by purchasing clothes, videos, investment newsletters, encyclopedias and a life insurance policy.

In a separate action Wednesday, the Senate Rules Committee fired Senate staff member John Shahabian, an undercover FBI informant who played a key role in Montoya’s conviction.

Republican members of the Senate pushed for Shahabian’s termination after he admitted during the Montoya trial that he was caught in an FBI sting when he solicited a payment from an undercover agent. Privately, some senators also acknowledged that they wanted Shahabian fired because he secretly tape-recorded conversations with legislators as part of the FBI investigation.

In a rare public statement, Shahabian said he may seek legal action to regain his job. “What is most important is the fact that some light was shed on the problem of corruption in the capital and a reform effort is under way,” Shahabian said. “I’m proud I was able to be a part of it and I wouldn’t change the way I did it.”

In large part because of evidence Shahabian helped collect, Montoya was found guilty on seven counts of extortion, racketeering and money laundering. He faces 20 years in prison on each count and potential fines totaling more than $1.75 million. Last week, he resigned his Senate seat rather than be expelled by his colleagues.

Gov. George Deukmejian has called a special election April 10 to replace Montoya, with a runoff scheduled June 5, if needed.

In addition to charges that he pocketed campaign funds, the 14-count action filed Wednesday charges that the Whittier Democrat failed to publicly report nearly $68,000 in gifts and income he had received since 1985.

During his trial, Montoya admitted that he diverted more than $45,000 in campaign donations for his personal use, but contended that he was legally entitled to the money.

Montoya defense attorney Michael S. Sands charged that Van de Kamp, who is seeking the Democratic gubernatorial nomination, is attempting to boost his campaign at the expense of the former senator, who has few resources left for another court battle.

“I think they’re beating a dead horse,” Sands said. “It’s basically political. The attorney general is running for governor and everybody’s got to have their piece of the cake.”

But Sands acknowledged, as he did earlier in court, that Montoya’s handling of campaign funds was not entirely proper. “I said very candidly I think there were errors made,” he said.

A spokesman for Van de Kamp said it is an unresolved legal issue whether Montoya can use leftover campaign funds to pay whatever fine is assessed against him.

Montoya will get some help from the legislative pension system, however. Beginning March 1, he will receive $1,681.78 a month, even if he goes to prison.