Money laundering trial begins for Modesto-area Berryhill brothers

11/12/2013 1:07 PM

11/12/2013 11:00 PM

Modesto-area brothers Tom and Bill Berryhill broke state laws in 2008 by laundering $40,000 in campaign money through Republican central committees in Stanislaus and San Joaquin counties, a prosecutor said Tuesday morning at a trial with big political implications.

Tom Berryhill, now a state senator, sat at the defense counsel table and is expected to testify in coming days. As a state assemblyman at the time, he had no trouble raising big money while his brother was running for the first time in a tight Assembly race and needed a cash infusion for a last-minute television hit piece on his opponent, a prosecutor said.

“Tom Berryhill needed to get money to his brother very badly,” said Neal Bucknell, attorney with the California Fair Political Practices Commission. “They decided to send it through the central committees. It’s a straight-up money-laundering case.”

The trial, before an administrative law judge, is expected to last as long as nine days and is considered unusual for its heavy focus on an aggressive defense by the Berryhills and the central committees. Attorneys on both sides said almost all witnesses will be called to support defense claims that the money exchange was not a conspiracy.

Bill Berryhill’s campaign manager “was ringing the bell everywhere he could to raise money,” defense attorney Charles Bell said, but “there was no agreement between them and the central committees to commit laundering.”

At stake are penalties of as much as $80,000, as well as the reputations of several Republican power brokers. The central committees are defendants as well.

The Stanislaus GOP group is being investigated in a separate case on its suspected role in funneling $1.7 million in later years to candidates throughout California at the behest of state party leaders.

“This is a death penalty-type case for the central committees,” Bell said in his opening statement. The idea that they owed a duty to state leaders that involved breaking the law “seems to be illogical and absurd,” he added.

The last-minute TV ad in 2008 attacking Bill Berryhill’s Democratic opponent, John Eisenhut, may have helped Berryhill prevail with 51percent of the vote, and the Berryhills became the first brothers to serve in the Assembly at the same time in nearly six decades. They are sons of the late Clare Berryhill, a longtime Republican legislator who also served as state director of food and agriculture.

Tom Berryhill subsequently moved to Twain Harte and was elected to the state Senate. Bill Berryhill won re-election in 2010, about the time state ethics investigators launched the probe leading to this trial. He narrowly lost a Senate bid two years later to Cathleen Galgiani despite a $320,000 contribution from the Stanislaus central committee; that donation is part of the current investigation and is not related to the trial.

Knowing his brother needed quick campaign cash, Tom Berryhill on Oct. 28, 2008, held an event that raised $50,000. He sent $20,000 to the Stanislaus committee on Oct.30 and another $20,000 on Oct.31 to the San Joaquin group. The committees donated $20,000 and $21,000, respectively, to Bill Berryhill on the same days they received his brother’s contributions.

The Berryhill-Einsenhut campaign was “targeted,” or expected to draw unusual party attention because both sides hoped to win the seat with sufficient support, as opposed to others considered safe for either party. Safe contests typically draw little party support.

But neither committee gave more than $250 to Bill Berryhill before the last-minute infusion, according to testimony.

Tom Berryhill had given his brother the maximum allowed under law – $3,600 at the time, Bucknell said – while parties had no such ceiling.

Tom Berryhill used two committees as straw donors to conceal that he gave the $40,000, authorities suggest, because the law prohibited a candidate from receiving more than $30,200 from a single committee.

Dale Fritchen, chairman of the San Joaquin committee, testified that he alone decided how to spend Tom Berryhill’s donation.

“No one told me, ‘Here is a check; we want you to give it to somebody else,’” Fritchen said. “That didn’t happen. I would have been very offended by that.”

The Stanislaus committee in 2009 got into trouble for helping San Diego politician Joel Anderson launder money to his own campaign. Anderson was fined $20,000, and Fresno’s central committee $29,000, but the Stanislaus group got off with a warning letter.

“It just shows that’s how they do business,” Bucknell said, citing the Anderson case, “and that deprives the public of (knowing) the true source of the funds.”

Emails between involved parties suggest collusion, the prosecution team says.

Bell said it’s not enough for the FPPC to draw inferences of conspiracy. A penalty demands hard proof, he said.

In a recorded deposition viewed Tuesday, Bill Berryhill’s campaign manager, Carl Fogliani, said he did not recall whether he pressured Tom Berryhill for money.

But Fogliani did not dispute having described, in a conversation with Tom Berryhill, his brother’s depleted campaign bank account as “damn scary” and saying his “ass was hanging in the wind.” That was just before Tom Berryhill’s fundraiser and the subsequent money transfers.

Fogliani, appearing defiant and annoyed during questioning, said he pushed for an aggressive TV ad to counter Eisenhut’s “nasty” claims about Bill Berryhill. Fogliani’s commercial accused Eisenhut of getting a golden parachute from a bank CEO job and of being involved in the type of predatory lending that had caused foreclosures. Both were hot topics in late 2008.

“We were trying to run a positive campaign, until the other side decided to take liberties and attack Bill,” Fogliani said. “It’s not bean bags. He was in a glass house. We punched back.”

Gov. Jerry Brown in August appointed Eisenhut to the California Air Resources Board.

In addition to money laundering charges, Tom Berryhill is accused of failing to disclose, as required by law, gifts of Disney tickets worth $244 and tickets to a Keith Urban concert, valued at $59.50, from the Pechanga Band of Luiseno Mission Indians.

Two weeks ago, the FPPC made headlines by extracting a record $1 million penalty from two Arizona entities that conspired to launder $15 million in California campaign money last year.

Testimony is scheduled to continue at 9 a.m. today at the Office of Administrative Hearings, 2349 Gateway Oaks Drive, Sacramento.

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