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Copyright 2004 Los Angeles Times
All Rights Reserved
Los Angeles Times

December 19, 2004 Sunday
Home Edition

SECTION: MAIN NEWS; Metro Desk; Part A; Pg. 1

LENGTH: 4105 words

HEADLINE: CAPITALIZING ON CLOUT;
Capitalizing on a Politician's Clout;
The husband, daughter and son of Rep. Maxine Waters have business links to people the influential lawmaker has aided.

BYLINE: Chuck Neubauer and Ted Rohrlich, Times Staff Writers

BODY:


U.S. Rep. Maxine Waters' family members have made more than $1 million in the last eight years by doing business with companies, candidates and causes that the influential congresswoman has helped.

In varied ways, they have capitalized on clout she accumulated in a 28-year career as an elected official who built her power base among African Americans in South Los Angeles into a national platform.

Daughter Karen Waters has charged candidates for spots on her mother's "slate mailer," a sample ballot that many voters in South Los Angeles use to guide their choices.

She also has been paid by a nonprofit organization she and her mother set up, funded in part by special interests her mother helps in Washington, that throws parties her mother hosts at Democratic conventions.

Waters' husband has collected fees for opening doors with his wife's political allies on behalf of a bond firm seeking government business.

Son Edward Waters has shared in the slate mailer proceeds and has occasionally worked as a consultant to campaigns his mother supported.

The Waterses are a twist on a growing and unregulated trend in which relatives of members of Congress are paid by people receiving the members' help at home, in Washington or, in some cases, abroad. Over the last year and a half, The Times has identified five House members and seven senators whose family members have worked for clients that benefited from the lawmakers' official actions.

They included two sons and a son-in-law of Sen. Harry Reid (D-Nev.), the newly named minority leader, who in 2002 introduced legislation to free up public land in Nevada that benefited their lobbying clients.

In another case, the daughter of U.S. Rep. Curt Weldon (R-Pa.) wound up with $1 million worth of contracts as a rookie lobbyist, while her father tried to use his office to help her clients, including a struggling Russian aerospace company seeking U.S. contracts to build a flying saucer.

The practice has accelerated as tougher ethics laws make it harder to offer favors directly to members of Congress.

The Waters family is a variation on this theme, making money not only because of Waters' power in Washington but because of the way she uses her local political clout.

Rep. Waters said her family's business interests are separate from her congressional activities and declined to do a detailed interview for this article.

"They do their business, and I do mine," she said in a brief exchange, referring reporters to her relatives for information about their business activities.

The congresswoman's husband, Sidney Williams, 62, said his wife discloses the names of his clients in public reports as the law requires. Beyond that, he said, "You can't ask me anything about my business."

Karen Waters, 46, spoke only briefly, saying that she does public relations work for politicians and causes, that "Maxine Waters is one of my clients" and that they keep their business dealings at arm's length. Edward Waters, 49, declined to be interviewed.

Each was provided with detailed written questions, which went unanswered. "We don't have to answer your questions," Rep. Waters said, adding: "We are not bad people."

Close ties between elected officials' activities and their family members' financial interests are not uncommon, nor are they specifically prohibited by congressional ethics rules or state campaign laws. Still, for some, such conduct raises concerns.

"It looks like congresswoman Waters is using her position to financially benefit her family members, and that is at the very least unethical," said Melanie Sloan of Citizens for Responsibility and Ethics in Washington, a watchdog group. "You shouldn't be making money off your mother's endorsements."

Not everyone disapproves. "She takes care of her kids, and what's wrong with that?" asked Larry Levine, a political consultant in California who charges candidates to appear in his own slate mailer and whose son, Lloyd, is a state assemblyman.

*

A Political Force

Waters has built a strong political base from the under-represented and disenfranchised with a trademark in-your-face style and attention to issues that affect minorities, the poor, women, children, AIDS patients and prisoners.

"She's got a special place in the hearts and minds of a lot of African Americans," said civil rights lawyer Connie Rice, former co-director of the NAACP Legal Defense Fund's Los Angeles office. "She channels the fears and desires of the working-class and lower-class African American community. The only person who does it better is Jesse Jackson."

She has been a steady voice in Washington for poor nations, and Ms. magazine named her one of its 2004 Women of the Year for helping ousted Haitian President Jean-Bertrand Aristide find asylum in Jamaica.

Waters, 66, was one of 13 children born to a single mother in St. Louis. She moved to Los Angeles as a young woman, taking jobs in a garment factory, as a telephone operator, as a Head Start teacher and then as a staff member for former City Councilman David Cunningham.

In 1976, she was elected to her first political office, the Assembly, and rose to become part of Speaker Willie Brown's Democratic leadership. Among her crowning accomplishments was legislation requiring state pension funds to divest in South Africa, then under apartheid.

She also became a skilled street organizer, feared and admired for her ability to rally crowds around causes. She has led demonstrations protesting U.S. policy in Haiti, police brutality, alleged CIA complicity in the spread of crack cocaine, and attempts to restrict abortion rights, among others.

In 1990, she won a seat in Congress, and she has repeatedly been reelected with about 80% of the vote. Her district includes Inglewood, Hawthorne, Gardena, Lawndale and portions of the city of Los Angeles.

After riots devastated Waters' district in 1992 -- her local office was burned down -- she showed up uninvited to a White House summit between then-President Bush and congressional leaders. Later that year, she won $10 billion in additional funds for cities from the Democratic-controlled Congress.

Back home, Richard Riordan was running for mayor. Although she could not bring herself to endorse the rich Republican, she agreed not to endorse his opponent, Mike Woo, a liberal Democrat. The Riordan camp viewed her neutrality as a big help, sources said, and his administration paid her back by appointing her friends to powerful posts.

With her power now reduced in a Republican-controlled Congress, she has worked closely with the Republican chairman of the housing subcommittee, where she is the ranking member. U.S. Rep. Robert Ney of Ohio said their cooperation "has shocked a lot of people" and resulted in 11 bills being passed out of the subcommittee. He described Waters as knowledgeable, reasonable and direct.

Yet she still moves easily from the House floor to the streets of Los Angeles. Last month, she led 1,000 people at a protest in Willowbrook over county plans to close the trauma center at Martin Luther King Jr./Drew Medical Center.

It is Waters' ability to rally voters in South Los Angeles that has become her stock in trade. Political novices and heavyweights alike vie for her endorsement. Those who win it sometimes get a call or a visit from more than one of her family members.

A few years after Waters endorsed a bond issue for schools in her congressional district, she endorsed the Inglewood school board members who would administer it. While running for election, they paid the slate mailer run by Waters' daughter to publicize her support.

Then her husband went to work. He collected $54,000 from a bond underwriting firm for helping win the school board business.

*

L.A. Vote

There has been no more direct tie between Waters' political influence and her family's fortunes than L.A. Vote.

The political organization for years has published the slate mailer, a ballot look-alike featuring a photo of Waters mailed to homes in South Los Angeles with a check mark next to candidates she has endorsed.

A check mark has meant thousands of votes from Waters' loyalists, political consultants say.

Slate mailers like Waters' are a California tradition. They flourish in population centers like greater Los Angeles, where they allow local candidates to share the cost of mass mailings that target blocs of voters for a fraction of the amount charged by broadcast outlets and daily newspapers.

To guarantee themselves a spot on Waters' sample ballot, candidates have had to jump through two hoops. First, they had to get her endorsement, candidates say. Then, they say, they received a call from Karen Waters telling them the cost of advertising it. Karen said she decides on the fee without consulting her mother.

Campaign disclosure reports show that L.A. Vote has collected more than $1.7 million over the last eight years, mostly from candidates and ballot measure sponsors who paid to have their names and causes listed. About $450,000 went to Karen Waters and her consulting firm, Progressive Connections, and $115,000 to her brother, Edward, a high school basketball coach and sometime political consultant.

Payments from campaigns have varied widely. The state law that governs slate mailers sets no limits on how much candidates can be charged or how much people like the Waters children can be paid. It requires only a public accounting.

Well-known politicians such as former Gov. Gray Davis, state Treasurer Philip Angelides and Los Angeles Mayor James K. Hahn have been charged tens of thousands of dollars. Others have paid nothing. A school board candidate paid $250. Al Checchi, a wealthy businessman and political novice who ran for governor in 1998, paid L.A. Vote the most: $171,000.

This election, Rep. Waters sent out a slate mailer through her congressional committee, because of changes in federal election law. It's not clear what that means for the future of the L.A. Vote mailer.

Karen Waters or her brother, Edward, have also been paid as consultants by several of the same causes or politicians who have paid to appear on the sample ballot. Checchi's campaign, for example, paid Edward, while Karen was hired as a subcontractor by one of Checchi's other consultants.

Consultants who have hired Karen say she works only for candidates or causes her mother supports.

Indian tribes have been particularly good customers for both the slate mailer and Karen's consulting firm. Since 1998, they have paid $170,000 to the slate mailer operation and $126,000 to her firm for community outreach on gambling initiatives, their campaign reports show.

Meanwhile, Rep. Waters has backed the tribes' ballot measures and defended tribal gambling interests in Washington. Campaign consultants for the tribes said Karen Waters was hired because she does good work. "We didn't hire her because of her mom," said consultant Chuck Winner.

*

The Bond Business

While Karen Waters has been building a career in campaign consulting, the congresswoman's husband has found a lucrative niche in the municipal bond business.

In the last three years, Sidney Williams has made close to $500,000 by working part time as a consultant to a municipal bond underwriting firm and courting some of the same politicians his wife has endorsed, public records show.

"Sidney makes key introductions for me in the state of California," said Napoleon Brandford III, chairman and one of the owners of Siebert, Brandford & Shank, the largest minority- and women-owned bond underwriter in America.

The personal touch is important in the bond business, because most local and state governments award bond deals on a negotiated basis and not to the lowest bidder.

To stand out in years past, many bond underwriters wooed elected officials with campaign contributions. But after federal regulators stepped in a few years ago to limit that "pay to play" practice, some underwriting firms began paying politically connected consultants like Williams instead.

Williams had little or no background in the bond business when he began collecting consulting fees from Siebert in 2001, according to public records.

Married to Waters for 27 years, Williams was a former professional football linebacker turned Mercedes-Benz salesman, who in 1993 was named U.S. ambassador to the Bahamas by President Clinton after Waters earned Clinton's gratitude through her early support for his candidacy.

Brandford said he hired Williams based on Williams' own connections, not his wife's. Sometimes they are hard to distinguish.

One set of introductions, Brandford said, came in Inglewood, a mostly minority city of 112,000 in Waters' congressional district. Mayor Roosevelt Dorn credits Waters for helping get $10 million in loan guarantees from the Department of Housing and Urban Development last April and most every other federal dollar the city has received. "If she does not bless what we are seeking, our chances are slim to none," he said.

That's the way many local candidates feel about her support. Members of the Inglewood school board sought her endorsement, and all five paid her slate mailer operation to have it advertised.

When it came time for the school board members to decide on a new bond underwriter last year, Siebert, Brandford & Shank got the job. Sidney Williams earned his $54,000 fee for helping arrange the firm's contract to handle a $40-million school bond sale, according to the firm's chairman and public records.

What Williams did for Siebert is unclear. Brandford said Williams "introduced us to several of the school board members," although he said he could not remember which ones.

Willie Crittendon, then newly elected with Waters' help, said Williams called him and told him to "make sure you do your homework" on the bond deal but did not mention Siebert. Three board members said they did not speak to Williams about the deal, and board member Alice Grigsby would not answer questions about the matter.

Siebert pays Williams a 10% share of its net profit for each deal he helps the firm procure plus a $5,000-per-month retainer, according to documents the firm files with the Municipal Securities Rulemaking Board.

His biggest commission came from helping the firm win a bond contract from the office of another official his wife has endorsed: state Treasurer Angelides, a regular customer of the Waters slate mailer operation.

The last time Angelides ran for treasurer, in 2002, he paid $40,000 to advertise her endorsement in her sample ballot. Williams accompanied Brandford to meetings with Angelides and his staff, Brandford said. "Sidney knows the treasurer," said Brandford. "He knows him better than I do."

Brandford said he and Williams successfully pitched Angelides to let the firm lead the largest bond deal ever awarded by the state of California to a minority firm: $424 million to build a prison in Delano.

They argued that giving the firm the deal would be "socially responsible," because it was minority-owned and California-based, in Oakland, Brandford said. Williams collected $84,393 as his share of Siebert's net profit.

Angelides did not respond to questions except with a brief written statement that said his decisions are based solely "on the advice of the professional staff."

A spokesman for Angelides added that bond firms have been told they do not need to hire consultants to obtain access to the treasurer's office.

*

The Golf Course

Williams got into the golf business with the help of another of his wife's political allies.

He got his entry in 1993, when the Los Angeles County Board of Supervisors entertained bids on a contract to run county-owned Chester Washington Golf Course in South Los Angeles.

One of the bidders, Alton Duhon, a black golf professional, said he knew in his gut he was wasting his time as soon as he saw Williams sitting with another group on the day they were to be interviewed by a ratings panel. Duhon said he was with his partners, two other African American golf course professionals, while Williams was with a white-owned major company, American Golf.

"I knew that meant they weren't going to go with us," Duhon said. "I knew he was bigger than I was. He's Mrs. Waters' husband. He's a football player. And his wife's got all the action."

Indeed, with Williams and Waters' son, Edward, as minority partners, American Golf got the panel's nod and the board's approval for the 20-year lease to run Chester Washington, which has a rich history as a training ground for top-flight African American golfers.

County Supervisor Yvonne Brathwaite Burke threw her support behind the deal in 1993, just months after Rep. Waters had tossed Burke's campaign a lifeline -- endorsing her in the waning days of a tight race. Because the golf course was in her district, Burke became the key decision-maker and the focal point for a lobbying effort on behalf of Duhon's group, which had come in second with the ratings panel.

Burke declined to be interviewed. Her chief of staff, John Hill, said, "She doesn't believe there was any linkage" between her endorsement by Rep. Waters and her backing of a group that included Waters' husband and son.

Hill said Burke's usual practice is to go along with the review panels unless there is good reason not to. He added that, a decade ago, affirmative action would have been a consideration and "this group came in with minority contractors as subcontractors."

Williams, who played his pro football for the Cleveland Browns and other teams, bought his 15% of the Chester Washington venture for $15,000, records show. Edward Waters purchased 5% for $5,000, according to public records and interviews. A third minority partner, former L.A. Raider and USC quarterback Vince Evans, also put up $5,000. American Golf was to put in more than $700,000, according to a draft partnership agreement.

Rep. Waters has reported on her financial disclosure statements that her husband has earned between $140,000 and $400,000 since his group won the lease. The job of the minority partners was to help maintain good relations with the surrounding community, according to the draft. It said they were to have no active role in running the course.

Evans, who lends his name to a charity golf tournament, said he got his investment opportunity by approaching the then-president of American Golf. He said he has had little or no contact with his fellow minority partners. He said he has seen Williams around, but never met Edward, and has no idea how they became his partners.

*
Party Times

When Maxine Waters takes to the national stage in politics, her daughter is right beside her.

The congresswoman played host at star-studded parties at the 2000 and 2004 Democratic national conventions.

Most convention parties are sponsored by firms hoping to curry favor with politicians or by organizations that receive corporate funding. Companies that wanted to show their support for the Waters gatherings sent their contributions to African American Committee 2000 & Beyond, a tiny not-for-profit organization that she and her daughter co-founded four years ago.

The group has collected hundreds of thousands of dollars. Most of the money has gone toward party expenses. It raised $207,000 and staged a gala at the 2000 Democratic National Convention in Los Angeles, tax filings show. Karen Waters was paid $20,000, according to the records.

For many, the contributions are a way to build goodwill with black leaders and their supporters. For some, it can also be a good way to say thanks.

This year's party sponsors included mortgage giants Fannie Mae and Freddie Mac, two of the world's largest financial institutions. Created by federal legislation to help families buy homes, the companies are subject to broad oversight by the House Financial Services Committee. Waters is a senior member and a longtime ally.

Government regulators have recently accused Fannie Mae and Freddie Mac of accounting abuses that misled investors.

Before the scandals broke, Waters fought legislation that would have required increased financial disclosure by the companies to the Securities and Exchange Commission. In the wake of the scandals, she defended Fannie Mae in an October hearing on alleged accounting irregularities.

Freddie Mac spokeswoman Shawn Flaherty said Rep. Waters called a senior executive about a donation, and the company decided to give, because the party would draw "members of the black caucus and other people who we work with on housing initiatives."

Another party sponsor, OneUnited Bank, had Waters to thank for a recent merger that made it the nation's largest black-owned bank. Waters and other California leaders had pressured a smaller black-owned institution to back out of a deal to sell to a white-owned bank and go with OneUnited instead.

The financial institutions would not say what they gave. A spokesman for the UPS Foundation, another sponsor, said $20,000 was requested and paid.

Rep. Waters, her daughter and the attorney for African American Committee 2000 & Beyond declined to say how much was raised or what Karen Waters was paid in 2004. The nonprofit has until next year to report its 2004 expenses to the IRS.

*

The People Meter

As Nielsen Media Research began rolling out a new television ratings system, the company found itself at odds with some black leaders earlier this year.

Critics charged that minorities were being undercounted by the company's new "people meter" television rating system, which is intended to mechanically record viewer habits rather than rely on handwritten diaries.

The Rev. Al Sharpton and other civil rights leaders lined up against the people meter rollout, as did News Corp., the parent of the Fox network, and Tribune Co., which owns television stations and newspapers, including the Los Angeles Times.

So Nielsen went on the offensive. The company lined up Rep. Waters. Their Los Angeles-based lobbyist, Joe Cerrell, said he hired her daughter and paid her "a couple thousand" dollars to do community outreach for Nielsen.

Both Cerrell and a Nielsen spokesman said the events were unrelated. Rep. Waters was "just anti-Fox" because of Fox's politically conservative reputation and was more than willing to help, Cerrell said.

The congresswoman soon came through for Nielsen. On the night of July 14, a company representative approached Waters with an emergency request: Could she testify at a congressional hearing the next day on whether to delay the ratings system's launch?

At the hearing, several critics testified against Nielsen. Waters appeared as the only pro-Nielsen witness other than the company's president. She told the committee that she was "delighted" overall with the new people meters and that Congress should not try to stop their rollout. She did not mention that her daughter was being paid to help Nielsen, according to the hearing transcript.

The two senators holding the hearing, Conrad Burns (R-Mont.) and Barbara Boxer (D-Calif.), expressed concerns about the new method but, in the end, decided federal regulation was unnecessary.

As Nielsen revved up its lobbying campaign, Cerrell clearly remembered the Rev. Jesse Jackson giving the firm a piece of advice on how best to proceed: "You've got to get Maxine."

*

A very special interest

In the last year and a half, the Los Angeles Times has written about 12 U.S. senators and congressmen whose relatives were hired by special interests that the lawmakers have helped. The list:

Senate

Ted B. Stevens

(R-Alaska)

President pro tempore; Chairman, Appropriations Committee

Relatives: Son and brother-in-law

Harry Reid

(D-Nev.)

Minority leader designee

Relatives: Sons and son-in-law

John B. Breaux

(D-La.)

Deputy minority whip

Relative: Son

Trent G. Lott

(R-Miss.)

Chairman, Rules and Administration Committee; former majority leader

Relative: Son

Orrin G. Hatch

(R-Utah)

Chairman, Judiciary Committee

Relative: Son

Tom Daschle

(D-S.D.)

Minority leader

Relative: Wife

Barbara Boxer

(D-Calif.)

Relative: Son

House of Representatives

Curt Weldon (R-Pa.)

Vice chairman, Armed Services Committee

Relative: Daughter

**

House of Representatives

Curt Weldon (R-Pa.)

Vice chairman, Armed Services Committee

Relative: Daughter

Nick J. Rahall II

(D-W.Va.)

Ranking member, Resources Committee

Relative: Sister

W.J. "Billy" Tauzin Jr. (R-La.)

Former chairman, Energy and Commerce Committee

Relative: Son

J. Dennis Hastert (R.-Ill.)

House speaker

Relative: Son

Maxine Waters

(D-Los Angeles)

Ranking member, Housing and Community Opportunity subcommittee of House Financial Services Committee

Relative: Daughter*

*Waters' husband and son earned fees from doing business with state and local office holders or campaigns she has endorsed.

Sources: Times reports

*

Times researcher Mark Madden contributed to this report. Neubauer reported from Washington.


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