Photo by Joe Klein

Larry Remer, Tom Shepard. Remer: "I had no idea what was going on, how investors' money was being misused."

Back in the late 1970s, Larry Remer and Tom Shepard were idealistic liberal activists. Shepard worked for a young county supervisor named Roger Hedgecock, who advocated controlled growth, favored the coastal commission, and enjoyed the support of gay rights organizations. Remer, a veteran of the Door, a Vietnam-era radical newspaper, ran an anti-establishment weekly called Newsline, in which he frequently attacked then-mayor Pete Wilson and his then-wife Betty, a La Jolla real estate agent, for their conflicts of interest. Then along came J. David Dominelli.

Dominelli, Hedgecock, Hoover, Stallings, Madaffer, Atkins, Maienschein

A one-time dealer in penny stocks, Dominelli set up shop in La Jolla in 1979, advertising miraculous returns on investments in what he called the "overnight" market in international currency swaps. Beguiled by Dominelli's lavish personal spending and his extravagant gifts to charity, more than 1500 investors lined up to sink their money into what later was revealed to be an $80 million Ponzi scheme.

Before his fall, Dominelli -- along with Nancy Hoover, Dominelli's flashy blonde mistress and an ex-mayor of Del Mar -- set out to take over San Diego's political establishment. The vessel they chose was Roger Hedgecock, a county supervisor and former Del Mar city attorney who also happened to be a close friend of Hoover's.

Key to their plan was Tom Shepard, like Hoover a former member of the Del Mar City Council and longtime Hedgecock aide, who had set up a political-consulting firm in preparation for Hedgecock's 1983 race for mayor against former city councilwoman Maureen O'Connor.

O'Connor planned to put at least a million dollars of her wealthy husband's money into the race. As would later come to light, Dominelli and Hoover had made a secret plan to launder their own six-figure contributions to Hedgecock, circumventing the city's $250 limit on individual contributions.

After Hedgecock's victory in the spring of 1983, Shepard briefly became the crown prince of San Diego political consultants. He triumphed again that year in Hedgecock's well-funded campaign for voter approval of the downtown convention center next to the waterfront hotels of a key financial backer, millionaire Doug Manchester. By then, however, Dominelli's empire of fraud had already begun to come apart, and an army of investigators were digging through the records of J. David & Co., Dominelli's firm. A year later, Shepard faced indictment, along with Hedgecock, Dominelli, and Hoover, for conspiring to funnel thousands of dollars of illegal Dominelli money into Hedgecock's mayoral campaign.

At first, Shepard maintained that the $350,000 his political-consulting outfit received from Dominelli during the Hedgeock campaign was merely an "investment" in the firm by Dominelli's sidekick and lover, Nancy Hoover. But he eventually pleaded guilty to a misdemeanor money-laundering charge and was fined $1000 and ordered to do 200 hours of community service as part of three years' probation.

"I was aware that it was illegal for me, Nancy Hoover, or Jerry Dominelli to contribute the amount of money to Roger Hedgecock's campaign for mayor that was being supplied to Tom Shepard and Associates," Shepard said in a statement submitted to the court in April 1986.

Added Hoover, pleading to a felony: "I was aware at the time that I supplied funds to Tom Shepard & Associates that it was illegal for a company to make political contributions in the mayor's campaign.

"...Being aware [of contribution limits] Jerry Dominelli and I supplied a substantial amount of money to Tom Shepard & Associates understanding that the funds would be used to pay employees who were almost exclusively on Mr. Hedgecock's campaign."

Hedgecock, who would ultimately cut his own more favorable deal with prosecutors and become a talk-show host, dubbing himself San Diego's "radio mayor," complained about Shepard's testimony.

Remer also secretly took $350,000 from Hoover during 1982 and 1983, and critics said his weekly paper, Newsline, acted as an arm of the '83 Hedgecock campaign. "The money was too good to be true," Remer later told the Union-Tribune in a 1989 interview. "I had no idea what was going on, how investors' money was being misused."

During 1984's grand-jury investigation of Hedgecock, a memo from Remer to Hoover and Dominelli, dated May 12, 1983, came to light. In the memo, Remer asked Hoover and Dominelli to use their influence over the new mayor for Newsline's benefit. "I want to mine the political base of support that put Roger in office for Newsline," Remer wrote in the memo. "I want to leverage our relationship to the mayor's office into advertising from entities like the Transit company...and from city lessees." Hedgecock later denied he'd done any favors for Remer, and no charges were ever brought against the publisher.

In the same memo, recovered from Dominelli's files by bankruptcy investigators, Remer talked of forging an advertising-sales partnership with Shepard, to be underwritten by Hoover and Dominelli. "I've talked with Tom [Shepard] about this, and he's amenable to it if you guys want to pay for it."

After his guilty plea, Shepard's post-Hedgecock recovery was gradual but steady. Lying low for a year or two, he was hired by Richard Chase, husband-to-be of Nancy MacHutchin, Hedgecock's chief fundraiser. Richard Chase was in the business of developing trash dumps, and Shepard ran the September 1987 campaign for the so-called trash-to-energy plant in San Marcos. Though the measure was narrowly approved by San Marcos voters, the plant as conceived by Chase was never built. For years to come, Shepard and the Primacy Group, a consulting firm formed by Shepard and Remer, would continue to work for Chase and his series of ventures, including a failed 1988 plan to transport trash by train through the backcountry.

The next year, Shepard and Remer's Primacy Group ran the successful campaign for San Diego district city council elections. Other Primacy Group clients included city councilwoman Valerie Stallings, who a decade later would become enmeshed in a scandal regarding stock she purchased in a firm controlled by Padres owner John Moores.

In November 1989, it was revealed that Remer and Shepard had been retained by Southern California Edison, which was then attempting to take over San Diego Gas & Electric. "There's no question San Diego is witnessing a very insidious, concealed effort by Edison to buy influence here," Michael Shames, director of the Utility Consumers Action Network (UCAN), told the Union-Tribune. "Larry has clearly become part of that conspiracy."

"Forget the money. I wouldn't have taken Edison as a client if I didn't think it would be good for San Diego," the U-T quoted Remer as saying in response.

"If I'm wrong about Edison, I'll gladly eat my words. But I'm not wrong." Edison opponents, led by then-mayor Maureen O'Connor, eventually beat back the merger.

In 1992, Shepard left Remer and the Primacy Group and set up shop with Stoorza, Ziegaus, and Metzger, a well-connected downtown public relations and lobbying outfit with close ties to the California Republican establishment. Shepard's biggest client was Susan Golding, who was elected mayor that year. In an interview with the Los Angeles Times, Shepard denied that his work as a political consultant created a conflict of interest vis à vis Stoorza's lobbying activities.

"The public perception is that somehow your private clients have special access to an elected official, and the [official] might wonder whether the advice you're giving him is motivated by your commercial clients' interests," Shepard told the paper. "On both fronts, you're doing a disservice to your clients. It's better to stay on one side of the process."

Now ostensibly separate, the fortunes of Remer and Shepard continued to grow.

Shepard represented such Republican candidates as Bill Kolender in his successful 1994 race for sheriff against Jim Roache and then­San Diego City Council member Ron Roberts in his 1994 supervisorial bid against Peter Navarro. Other clients included Republican Brian Bilbray, who ousted Democratic congressional incumbent Lynn Schenk in 1994. In 1995, Shepard again worked for city councilwoman Valerie Stallings and managed Golding's easy mayoral reelection bid in 1996, as well as county supervisor Dianne Jacob's campaign the same year. In December 1997, he made waves when he left Golding's flagging campaign for U.S. Senate amid rumors he had advised her to drop out of the race. Two months later, she did.

During the late 1990s, both Shepard and Remer became used to running big-money special-interest campaigns against poorly funded opposition, which they crushed using a barrage of expensive television commercials and mailed brochures.

In June 1998, for instance, Shepard picked up a swift victory when the tourist industry chose him to run the convention-center-expansion campaign against opponents with no money. Close to a million dollars' worth of TV spots featuring the endorsement of Catholic monsignor "Father" Joe Carroll flooded the airwaves, and the measure passed handily.

That November, Shepard had another easy go of it when Padres owner John Moores selected him to run the Proposition C campaign to authorize a new, taxpayer-funded downtown baseball stadium. Moores and his partners dumped more than $2.5 million into a heavy TV and direct-mail campaign that downplayed the cost of the project to taxpayers. Again, the opposition couldn't afford to spend much and lost badly.

Shepard and his parent company, Stoorza, remained on the Padres payroll after the campaign, helping to fend off potential ballot challenges to the troubled downtown-stadium plan from forces led by ex-councilman Bruce Henderson. When the team cut some of its best players to save money in February, 1999, Shepard was ready with a quote for the Union-Tribune: "It's tough when players that you identify with leave, but the ownership's looking to the future."

For his part, Shepard's ex-partner Remer made a specialty of well-funded school-board races and school-bond issues. In November 1998, backed by $100,000 in individual contributions from donors such as U-T owner Helen Copley, Padres owner John Moores, Bonita-based Wal-Mart heir John Walton, and real estate mogul Malin Burnham, along with a raft of school contractors, Remer ran a $1.6 million campaign on behalf of Prop MM, a $1.51 billion bond issue for the San Diego Unified School District.

Like the convention-center expansion and the downtown baseball stadium, a pittance was raised by opponents to the measure, who argued that the enormous size of the $1.51 billion bond issue was far too large for the district to responsibly manage all at once. Though the critics later proved to be prophetic, the proponents' heavy spending on television and radio commercials easily carried the day.

Remer had cut his teeth in the school-bond business almost two years earlier in March 1997 when he ran an expensive campaign for a $250 million measure, until that time the largest such authorization in California, benefiting the San Ysidro School District. Though the tax base could only support $10 million of bonds at the time of the election, school officials and their developer allies argued that they needed to get pre-approval of the $250 million to accommodate "future expansion" on Otay Mesa. His success brought his Primacy Group's school-bond campaign business from around the state.

This year, however, the respective big-money juggernauts of Remer and Shepard encountered a few snags. Both consultants were hired by mayoral frontrunner and county supervisor Ron Roberts, a champion fundraiser who raked in more than a million dollars from a variety of developers, county vendors, contractors, and other special interests. Records show each consultant received thousands of dollars a month throughout the campaign, which also employed Decision Research, a polling firm run by Bob Meadow, another Hedgecock campaign veteran and Shepard co-worker.

Like Shepard, pollster Meadow has also worked regularly for Padres owner John Moores. "Since 1997, Decision Research, on behalf of the Padres, has surveyed the public repeatedly on ballpark issues," Meadow wrote in a letter to the Union-Tribune last December on Moores's behalf. "Despite the lawsuits, hearings, and controversy associated with redevelopment efforts, San Diegans still want a downtown ballpark and redevelopment project."

But when it was revealed during this year's campaign that Roberts had taken undisclosed trips on Moores's private plane and had frequently socialized with the baseball magnate, Roberts's connection with the Padres suddenly became a political liability, and the candidate quickly distanced himself from Moores. The baseball club even released a statement claiming to have severed its long-standing consulting agreement with Shepard and Stoorza. By then, however, Moores's stock-trading involvement with councilwoman Valerie Stallings, another longtime Shepard client, was under investigation by a federal grand jury. Despite Shepard's best efforts, the distinctive political scent of Moores stuck stubbornly to Roberts; his underdog opponent, Judge Dick Murphy, was elected mayor.

Moores and his political checkbook figured in yet another campaign that bore bad tidings for Remer and Shepard. San Diego Unified School District superintendent Alan Bersin, Bersin's father-in-law, border-area developer Stan Foster, and their allies in the local chamber of commerce had early on targeted incumbent school-board member Fran Zimmerman for defeat. Records show Shepard's Campaign Strategies was paid at least $11,000 to run the campaign of Zimmerman's opponent, Julie Dubick, a real estate lawyer with the firm of Seltzer, Caplan. Foster and his business associates, as well as school-district contractors, provided financial backing for the Dubick campaign.

In the meantime, an ostensibly independent group, calling itself the Partnership for Student Achievement, raised more than a half million dollars in $100,000 contributions from Moores, Qualcomm founder Irwin Jacobs, and Wal-Mart heir John Walton, among others. The money went into an unprecedented barrage of personal TV attack ads aimed at Zimmerman. Disclosure documents filed by the group show that Remer's Primacy Group was paid at least $400,000 by Partnership. In addition, Remer and Shepard's old friend and associate Nancy Chase, wife of solid-waste dump developer Richard Chase, were paid $15,000.

Including Dubick's expenditures, the campaign against Zimmerman raised and spent more than $750,000 but failed to beat the outspoken school-board member, marking the year's second biggest setback for both Remer and Shepard.

But the election was far from a total loss for the pair. Remer and his Primacy Group could boast of the victory of city councilmembers-elect Jim Madaffer and Toni Atkins. Shepard and his Stoorza-owned Campaign Strategies could claim success in the election of Brian Maienschein to the council. District elections, which Remer and Shepard had so long ago championed, were supposed to eliminate the need for expensive consultants. History has shown it didn't. Though their clients may face term limits and grand-jury investigations, the city's two preeminent political consultants, schooled in the cutthroat world of big-money politics, appear well positioned to remain on top for years into the future.