Councilman Cleared of Election Law Violation : Politics: The city attorney determines that use of a newsletter by Walt Keller to tout three candidates did not breach ordinance.

MALIBU —  Malibu City Atty. Michael Jenkins has exonerated Councilman Walt Keller of allegations that his use of a newsletter to endorse three candidates in the April 14 election violated a city campaign law.

Jenkins said this week that Keller’s use of the newsletter to tout the campaigns of Councilwoman Carolyn Van Horn and contenders Joan House and Jeff Kramer did not violate an ordinance that sets a $500 limit on contributions in Malibu elections.

However, the city attorney said he believes that motion-picture advertising executive Brian Fox exceeded the limit by donating thousands of dollars worth of ad space in a Malibu newspaper to the Malibu Grassroots Movement. The group, which uses the acronym MGM, has also endorsed Van Horn, House and Kramer.

The ads, which aim to unseat incumbents Mike Caggiano and Missy Zeitsoff, have appeared for several weeks in the Malibu Surfside News under the group’s sponsorship.

MGM is a political action committee that has drawn much of its funding from a group of entertainment industry executives who live in Malibu. Fox is a member.

Its leaders have vigorously denied any impropriety.

Tom Hasse, MGM’s chief spokesman, said that if Jenkins refers the matter to authorities for possible prosecution, the group “will be all too happy” to challenge the law in court.

The City Council two weeks ago voted unanimously to direct Jenkins to investigate allegations involving Keller, Fox and MGM and, if violations were found, to refer them to the district attorney’s office.

The city attorney had already dismissed as unfounded two other allegations, one aimed at Fox and the other at the so-called grass-roots group.

The allegations were leveled two weeks ago by 14 of the 20 City Council candidates who signed a petition demanding an investigation.

Keller has said that the law setting the $500 limit on contributions to candidates or committees acting on behalf of candidates did not apply to his newsletter, and that even if it did, he did not spend enough on the newsletter to constitute a violation.

Upon learning of Jenkins’ finding, Keller said he was “not surprised, since I knew I had done nothing improper,” adding that the allegation against him was “politically motivated.”

In an interview with The Times last month, Fox said he had agreed to donate $6,000 worth of ad space in the Malibu Surfside News to MGM. He said he was owed the ad space as part payment for his work in redesigning the newspaper last year.

Opponents contend that Fox’s donation of ad space to MGM was tantamount to giving the money directly to the three candidates the group endorses.

Fox and MGM insist that Fox did not violate the law because, they say, he donated the ad space last November, long before the ordinance became effective Jan. 7.

The group contends that the contribution was tendered last Nov. 30, the date the group says Fox made an oral promise to donate the ad space on the group’s behalf to the newspaper.

But Jenkins, the city attorney, said that such a promise was not enforceable and that, in his view, the contribution took place only when the ad space began to be used last month.

Jenkins noted that MGM, in its campaign disclosure statements for the period that ended Dec. 31, 1991, did not report the ad space contribution.

Joan Lavine, an attorney and a member of MGM, said the group’s failure to report the gift was an oversight and disputed Jenkins’ contention that the promise was not enforceable.

“I think (the city attorney) has a pathetic lack of understanding on what an enforceable promise is,” she said.

Besides the three candidates endorsed by MGM, only three others declined to sign the petition, which was presented to the City Council on March 17.

Opponents have accused MGM of trying to buy the election. MGM’s leaders dismiss the criticism as sour grapes from candidates who do not have substantial support of their own.

MGM’s leaders have been especially critical of Caggiano for his role in criticizing Fox and the group concerning the ad space.

Fox and MGM spokesman Hasse contend that before Fox decided last November to devote the space to the group, Caggiano courted Fox in an effort to obtain the ad space for his own election campaign.

In an interview, Caggiano acknowledged that the subject of ad space came up during a reception for Caggiano hosted by Fox and his wife, Kara, at the couple’s home last October.

Caggiano said that it was Fox who mentioned the possibility of donating the ad space and that he never solicited it.

“Quite frankly, I have always been concerned about Mr. Fox’s tactics and I would never permit attack ads and the half-truths he puts in them to be a part of my campaign,” Caggiano said.

Kara Fox disputed Caggiano’s account.

She said the councilman sought the ad space after the reception but, because she and her husband had misgivings about his candidacy, they did not return his phone calls for several weeks.

“He finally called one day and I explained that we did not intend to support him for reelection and that we had decided to give the ad space to MGM,” Kara Fox said.

Brian Fox is widely regarded as having helped shape the outcome of the 1990 City Council election by placing ads in Malibu’s two weekly newspapers attacking several candidates--including some who were considered to be among the front-runners--as pro-development. Each of the candidates targeted by the ads lost.