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It was the biggest mystery of the most controversial and expensive schoolboard election in San Diego history. Why would two obscure East Coast liberal foundations unite with some of the most conservative and wealthiest of San Diego business interests in a secretive attempt to defeat incumbent board member Frances O'Neill Zimmerman? By the time the campaign was over in November 2000, the two foundations — along with the likes of Padres owner John Moores, Wal-Mart heir John Walton, downtown real estate mogul Malin Burnham, and Qualcomm founder Irwin Jacobs — poured $720,000 into a slashing campaign of television spots, attacking Zimmerman and her opposition to the policies of San Diego Unified School District superintendent Alan Bersin. Despite — and some believe because of — the heavy onslaught, Zimmerman narrowly held off her pro-Bersin foe, downtown real estate lawyer Julie Dubick, and remained on the board. But questions about the two foundations, which consistently refused to explain why each had helped fund the campaign, would not go away. The money from the individuals and the foundations was funneled into the race through a nonprofit corporation called the Partnership for Student Achievement (a front organization with no official board of directors), set up in the Encinitas offices of F. Laurence Scott, Jr. a certified public accountant known for managing the campaign bookkeeping of Republican stalwart Pete Wilson. Moores, Walton, and Jacobs each gave $100,000. Burnham gave $50,000, as did Harvey White, the chief executive officer of Leap Wireless, a Qualcomm spin-off whose stock, now worth only pennies a share, was flying high on Wall Street. Manpower of San Diego, a temporary-help firm owned by Phil Blair and Mel Katz, two mainstays of San Diego's chamber of commerce, gave $100,000.

The slickly produced commercials opened with a color shot of smiling students walking down a hallway, over which was superimposed an unflattering, black-and-white still photograph of a frowning Zimmerman. A menacing male baritone voice intoned "School board member Fran Zimmerman is leading the fight against San Diego's back-to-basics reform plan." After listing a series of anti-Bersin board votes that Zimmerman allegedly had made, the voice concluded, "Tell Fran Zimmerman to stop voting against back-to-basics school reform. Because it's working."

It made sense that the chamber of commerce had come out against Zimmerman. She was leading the charge against selling off the district's real estate for commercial development and was raising bothersome questions about the district's purchasing policies. Then, during the campaign, it had emerged that Dubick worked for a law firm that was lobbying hard for sweetheart district property deals, and local real estate interests were pouring money into the Dubick campaign. Moores and his associates clearly wanted a more "business-friendly" school district.

But the two Eastern foundations, which between them gave a total of $157,000, seemed an unlikely source of funds. Essential Information, Inc., of Washington, D.C., gave $100,000. Public Interest Projects of New York City gave $57,000. Founded in 1982, Essential Information was run by Russell Mokhiber, a then-46-year-old veteran of the left-wing turbulence of the 1960s and '70s who had made a career of bashing America's corporate culture. The foundation website announced that Mokhiber, who grew up in Niagara Falls, New York, the child of working-class parents, and who later went to work for Ralph Nader, was "one of the nation's leading authorities on corporate crime, is the editor of the Corporate Crime Reporter, a legal weekly, and the author of Corporate Crime and Violence: Big Business Power and the Abuse of the Public Trust."

"Corporations are the only criminal class that has so marinated the lawmaking process with their money that they both define the law and influence enforcement of the law," Mokhiber told Florida's St. Petersburg Times in 1997. In 1999 he told the New York Times that "Corporate crime is crime without shame. It's gotten to the point where when a corporation pleads guilty to some criminal act, the stock goes up." Essential Information publishes a monthly magazine called the Multinational Monitor, which features articles with headlines such as "Corporate Pigs and Other Tales of Agribusiness," "Big Business Looks to Sew Up the Chinese Market," and "The World Bank: Fifty Years Is Enough!"

So what was Mokhiber doing in the company of corporate titans such as John Moores, Harvey White, Irwin Jacobs, and John Walton? And why did the anti-corporate activist care about San Diego's school board? Contacted by telephone in October 2000, Mokhiber said he was not familiar with the donation his foundation had made to the San Diego race and promised a reporter he'd investigate and call back. He never did and failed to respond to numerous follow-up calls. Charitable tax returns filed in 1999 with the Internal Revenue Service showed that Essential Information had the previous year raised $672,000 from a variety of contributors and had net assets of $166,000.

The second foundation, Public Interest Projects, was even more elusive. Its president, Donald Ross, is a wealthy, well-connected Democratic lobbyist and longtime liberal activist in New York and Washington who had founded the Ralph Nader-sponsored New York Public Interest Research Group in 1973. He and his partner, attorney Arthur Malkin, lobbied for the New York state trial attorneys' organization, which often pitted them against the state's business community. Ross failed to return numerous phone calls from a reporter attempting to find out why the foundation he ran had given to the anti-Zimmerman cause.

Pam Maurath, who identified herself as an employee of Public Interest Projects, confirmed that the foundation had contributed the money to the Partnership for Student Achievement but said she was "not aware" of its negative television advertising campaign. "This was something we felt was of consumer interest," she said. Maurath added she didn't know how the foundation was approached for the money but said the foundation's grants were not advertised to the public. "There would have to be some personal connection, oh, sure," she said. "We don't have a regular process by which we award grants. There would have to be some personal connection. You would definitely have to know somebody."

Tax returns showed the foundation had collected about $4 million from a variety of donors. Like Essential Information, Inc., Public Interest Projects had no history of contributing to education issues. Its largest donation was $1.5 million to an environmental study in Klamath Falls, Oregon. Another $1.3 million went to an "immigration advocacy" project. Under the law, neither foundation was required to disclose the names of those who contributed the funds.

Thus, because neither Mokhiber nor Ross responded to multiple requests to identify the source of the funds used to pay for their respective foundations' contributions to the anti-Zimmerman commercials, the ultimate source of the money remained unknown. After Zimmerman's narrow November victory over Dubick, the controversy soon faded away, the funding questions unanswered.

Today, exactly two years later, in the midst of another closely fought school-board race, many of the same questions are being raised once more. This time attention has focused on public relations man Alan Ziegaus and his company, Southwest Strategies.

In August, sources inside the district revealed that he and his associate, Bernie Rhinerson, a longtime veteran of local political campaigns, had begun to meet frequently with Bersin and Bersin's in-house public relations staff.

The purpose, according to the sources, was to plot campaign public relations strategy with an eye to the election of two Bersin supporters running for the school board: ex-FBI man Clyde Fuller and Katherine Nakamura, a lawyer employed by the University of San Diego. Although neither Ziegaus nor Bersin has responded to questions regarding the arrangement, district sources say Bersin told associates that the services of Southwest Strategies are being paid for by private donations. But he would not reveal the source of the money.

As the summer drew to a close, however, speculation began to focus on one man, Eli Broad, a powerful Los Angeles Democrat who had amassed a $5 billion fortune, first as a home builder and later in the financial and insurance industry. Three years ago Broad, who had given millions to various modern-art museums, announced that he was shifting focus and establishing the Broad Foundation to improve public education in America; earlier this year, flanked by U.S. Secretary of Education Rod Paige and various congressional Democrats, he said that he and his family would quadruple the L.A.-based foundation's assets to $400 million.

Born in 1933, a child of Lithuanian Jewish immigrants, Broad graduated from Detroit's Central High School and Michigan State University in 1954. He reportedly stepped down from day-to-day leadership of his home-building business, now known as KB Homes, and financial services company, SunAmerica, Inc., to take personal charge of his charitable efforts on behalf of education. "We are going to seek out, identify, and fund action-oriented and promising initiatives," he told a Los Angeles townhall forum in April 2001.

A lifelong Democrat, Broad doesn't hesitate to use his wealth to gain political position. He contributed $150,000 to this year's reelection campaign for Democratic governor Gray Davis, and Davis subsequently appointed him to the governor's Commission on Building for the 21st Century. The commission, made up mostly of wealthy Davis contributors, has recommended a series of infrastructure tax hikes, bond issues, and other pro-business deregulatory measures intended to boost real estate and industrial development in the state.

On the education front, Broad and the foundation he controls have embraced a variety of experimental programs, including charter schools, and he has taken the lead in advocating the appointment of so-called "nontraditional" school superintendents, contending that hidebound administrators are resisting change and reform.

According to the Broad Foundation website, the organization's mission is to "redefine the traditional roles, practices, and policies of school board members, superintendents, principals, and labor union leaders to better address contemporary challenges in education."

Broad told the New York Times in July that the old-fashioned education model for superintendents was passé. "The skills necessary to run a huge urban school district have changed dramatically in recent years," he said. "They have to know or be trained in management, problem solving, finance, labor relations, systems operations, and so on."

Critics argue that Broad's charitable operation, like Davis's 21st Century committee, is really just the camel's nose under the tent for a number of various business interests, which seek to obtain lucrative contracts for educational "outsourcing" -- school-bond financing, office supplies, and construction. Teachers' union organizers also fear that the newly aggressive management will eventually toss them onto the street. But in the midst of the country's current desperation over the quality of public education, Broad's message has met very little skepticism or public questioning. He is frequently hailed by newspaper editorial writers.

At the top of Broad's list of "nontraditional" administrators, according to a page on the website of his foundation, is none other than San Diego's Alan Bersin, a lawyer who served as the San Diego region's United States Attorney during the Clinton administration and who is the son-in-law of the late Stanley Foster, a wealthy local financier and landowner with longtime ties to the state Democratic Party.

Headlined "Our Heroes," the page proclaims that Bersin and his deputy, ex-New York public schools administrator Anthony Alvarado, are "making difficult but needed changes, including replacing several principals due to lackluster performance. They relish challenging the status quo and are prepared to be judged by the results. The Broad Foundation is a long-term investor in developing a leadership academy for aspiring principals. We're betting on San Diego's leadership team to transform San Diego's schools.

"Alan's partner, Chancellor of Instruction Tony Alvarado, has a long record of success in raising student achievement levels and attracting high-quality professional educators during his ten years as superintendent of Manhattan Community School District 2 in New York City."

Since 2000, Broad's foundation has given $4.7 million to the University of San Diego to operate on behalf of the San Diego Unified School District a "principals' school," known as the Educational Leadership Development Academy. It is run by Elaine Fink, who was Alvarado's professional associate in New York. Records show she now shares a Coronado Shores condominium with him. A big supporter of the Fink operation -- a favorite Bersin project -- is school-board candidate Katherine Nakamura, who is USD's assistant secretary of the corporation's board of trustees, reporting to the president of the university.

According to press accounts, Broad frequently consults with Bersin, often taking him to meetings with other "nontraditional" school superintendents, such as L.A.'s Roy Roemer, a former Colorado governor and another Broad favorite; and Paul Vallas, a former budget advisor to Chicago mayor Richard Daley, who named Vallas to run the schools there. Vallas later transferred to a similar post in Philadelphia.

Late last week, in the face of persistent rumors about Broad's financial support for Alan Ziegaus and his election-season public relations campaign on behalf of Bersin's policies, Broad Foundation spokeswoman Melissa Bonney Ratcliff, a former press aide to ex-vice president Al Gore, confirmed that the foundation has so far contributed $20,000 to support the effort. The foundation, she added, has a contract with Ziegaus's firm. "It's my understanding that the district is going to seek money from other sources to supplement that, but that is up to the district. We are responsible for $20,000. I have no other information than that.

"It is no secret that Eli Broad is a big fan of Alan Bersin," Ratcliff continued. "We are working with Alan on a project down in San Diego, yes. We are very interested in getting the message out about how well the reforms launched by Alan Bersin are doing down there. This is not restricted to San Diego. We work with a number of school districts around the country in the same way."

San Diego Unified spokeswoman Peri Lynn Turnbull acknowledged in a telephone interview late last week that Broad was the source of $20,000 for the effort, which she characterized as a way to "improve communications" between the district and parents. The timing of Ziegaus's arrival, she said, was based on the departure of district public relations chief John Spelich, a veteran of Ziegaus's former firm, Ziegaus, Stoorza, and Metzger. Spelich was hired by Bersin last November but left to take a job at the Walt Disney Company in June.

"There was a need to replace John Spelich while we look for a permanent replacement." Turnbull quoted chief administrative officer Terry Smith -- Bersin's right-hand man -- as saying Smith was "not aware" of any other funds being channeled to Ziegaus. "None of the money is coming through the district," she said. "You have to ask Alan Ziegaus about that." Ziegaus did not respond to requests for comment left on his voice-mail system.

San Diego isn't the only place Broad has put up big money to run a public relations campaign on behalf of a school district -- and raised questions of conflict of interest in the process. Broad often partners with local business interests, especially chambers of commerce, composed in part of school-district vendors, who frequently have more than education at heart. According to the Broad website, the foundation is paying for "community leaders in target cities to organize slates of highly effective school board candidates and to mount local voter education campaigns. We are currently piloting this initiative in Fresno, in partnership with the educational foundation of the Fresno Chamber of Commerce."

In Atlanta, Georgia, according to Broad's website, "The Foundation supported the Metro Atlanta Chamber of Commerce's efforts to promote effective school-board governance through two local initiatives. First, the Foundation contributed to a nonpartisan public awareness campaign to educate the public about the characteristics of an effective school board and the importance of voting in the November 2001 election.

"Second, the Foundation sponsored training sessions for school-board candidates to familiarize them with the principles of policy governance and the roles and responsibilities of effective school board members. Board training was offered to 14 board candidates, including three challengers who were elected to the school board in November 2001."

Critics of Broad and his reform efforts complain that his frequent political interventions in school-board races are not as "nonpartisan" as he claims. This August, the Los Angeles Times reported that Broad's foundation provided a $100,000 grant to hire Rose & Kindel, an L.A. lobbying firm. The company was retained to "educate voters" about the merits of a $3.3 million school-construction bond issue on the November 5 ballot. But while Rose & Kindel was working on behalf of the school district, at the same time it was also representing a series of developers and consultants who were seeking contracts with the district. That, according to ethics experts interviewed by the paper, represented a serious conflict of interest, a problem compounded by the L.A. district's lack of a lobbyist-disclosure law.

"The bottom line is that it's a conflict of interest for Rose & Kindel to be working for the district and have clients trying to lobby the district," L.A. school-board member Genethia Hudley-Hayes was quoted as saying. The district's ethics officer, Peter Bowen, told the paper he was not aware of the details of the Broad arrangement but added, "People who are acting as a lobbyist for us are not supposed to be lobbying to us."

Whether Ziegaus represents others who have business before the San Diego Unified School District is not known. Like Los Angeles, San Diego has failed to adopt a lobbyist-disclosure ordinance, and Ziegaus did not respond to questions regarding his clientele.

A lobbyist-disclosure statement filed with San Diego County on June 27 of this year by Ziegaus associate Bernie Rhinerson shows that Rhinerson lobbied both the county board of supervisors and county assessor Greg Smith on behalf of KMPG Consulting of Costa Mesa. According to San Diego Unified School District records, KMPG LLP has a contract with the district to conduct the district's annual outside audit. Rhinerson did not return calls regarding the matter.

Also troubling to some, the Times reported, was "Coalition for Kids," a political committee formed by Broad and former L.A. mayor Richard Riordan to lobby the Los Angeles City Council regarding a school-board redistricting map favored by board president and Broad ally Caprice Young. The coalition paid Rose & Kindel $30,000 for its services. Young denied that the arrangement represented a conflict, but Bob Stern, president of the Center for Governmental Studies, voiced a warning. "Obviously, the public perception would be that they would tend to favor people or firms who are representing them privately," he noted of board members such as Young.

Meanwhile, back in San Diego, at least part of the mystery surrounding those anti-Zimmerman television spots may have been resolved. According to a tax return filed by the Broad Foundation in May 2001, both Essential Information and Public Interest Projects, the two groups listed as giving a total of $157,000 to the Partnership for Student Achievement, which paid for the commercials, received funding from the Broad Foundation.

The grants were memorialized in virtually identical letters from Broad to each foundation, both dated October 2, 2000, personally signed by Broad himself. Copies of the letters were supplied by Broad Foundation spokeswoman Ratcliff after a reporter's inquiry.

In his letter to Essential Information, Broad wrote that his foundation was making a $110,000 grant. "I am pleased to inform you that the Broad Foundation has approved your recent grant request to support Essential Information's efforts to encourage citizens to become active in public education issues in their communities.

"We are impressed with your prior work in disseminating education and other urban economic development information through conferences, journal articles, books, and reports. We are pleased to be able to support you as you continue this important work."

In his letter to Public Interest Projects, Broad wrote that the foundation had approved a $60,000 grant to support Public Interest Projects' "efforts to increase citizen awareness of the need for urban school reform.

"We are impressed with the mission of your organization and with your prior work in educating and informing the general public about community, health, and education issues. We are pleased to be able to support you as you continue this important work."

Records show that, soon after receiving the Broad Foundation money, both Essential Information and Public Interest Projects made their respective contributions to the Partnership for Student Achievement, which in turn spent the money to produce and air the anti-Zimmerman hit spots.

According to a disclosure made by the Partnership dated October 21, 2000, and covering the disclosure period between October 1 and October 17, the group received $50,000 from Essential Information and $57,000 from Public Interest Projects. The partnership received another $50,000 from Essential Information during the period between October 18 and November 27, according to a disclosure dated December 6, 2000.

Mark Dowie, author of a recently published book about charitable abuse entitled American Foundations: An Investigative History, says that there appears to be nothing outright illegal about the way the funds from the Broad Foundation traveled to Public Interest Projects and Essential Information, apparently winding up in the coffers of the Partnership for Student Achievement. But he adds that the process represents a growing trend of borderline illegality in the use of charities to support political causes.

"I would say it's pushing the envelope, no doubt about it," he said last week in a telephone interview from his office in Northern California. "It is legal, but it is a legal loophole. This is clearly a possible way to launder huge amounts of political money under the rubric of education."

Queried about how the grant proceeds were intended to be spent, the Broad Foundation's Ratcliff responded: "Both grants were unrestricted except for the purposes outlined in the grant letters. Both foundations are qualified charitable organizations, and we had no control over how the money was used."

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