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January 14, 1996
Web posted at: 11:40 p.m. EST
WASHINGTON (CNN) -- Potentially controversial issues involving the financial past of Elizabeth Dole, the former Reagan and Bush cabinet member and wife of Republican presidential front-runner Bob Dole, highlight an article in the January 22 issue of The New Yorker magazine.
Author Jane Mayer suggests that the dealings have intertwined Sen. Dole's political influence with Elizabeth Dole's financial profit.
Elizabeth Dole, interviewed by Mayer, was quoted several times denying she knew much about her investments, which were in blind trusts for several years during three separate periods.
Sen. Dole, campaigning Sunday in Los Angeles, downplayed the significance of the article.
"I haven't read the story, but I'm certain there were no allegations of wrongdoing in it," Dole told CNN.
The article details Elizabeth Dole's involvement in several financial transactions directed by David Owen, a longtime political confidant to Sen. Dole who recently completed a one-year federal prison sentence for tax fraud.
Owen, once Kansas' lieutenant governor and state Republican party chairman, worked for Dole as his 1974 and 1980 Senate campaign chairman and chief fund-raiser. Owen ran Dole's Washington office when Dole was the GOP's 1976 vice presidential nominee.
In 1988, Owen was general finance chairman for Dole's presidential campaign, but the Doles severed ties with him when questions were raised about his role in Elizabeth Dole's finances in the weeks before the New Hampshire primary. Owen, upset that his old friends abandoned him, was interviewed for the first time recently by Mayer.
"I was made a scapegoat for Dole," Owen told Mayer. "He decided to wash his hands totally of me so that any problems that arose were mine, not his."
In 1975, Owen said, he began helping Elizabeth Dole with her investments.
In late 1979, when the Dole presidential campaign was short of cash, Owen arranged for Elizabeth Dole to borrow $50,000 below the prime interest rate from a bank where Owen was chairman and president, The New Yorker reported.
The article said that Elizabeth Dole, in turn, loaned the cash to her husband's campaign. The Federal Election Commission later investigated, finding "reason to believe that (Mrs. Dole) made a contribution to the (campaign) in excess of the contribution limit," according to the article.
The issue was dropped, the magazine said, after the FEC chairman concluded the law on spouses making such contributions was "sufficiently ambiguous" to make successful prosecution unlikely.
In 1984, Elizabeth Dole made a $250,000 loan to Golfun, a business venture created by Owen to produce a syndicated television show offering golf tips. When Golfun failed, other investors lost money but Elizabeth Dole made a profit of $71,000 over a period of several years, according to The New Yorker.
Elizabeth Dole told Mayer she had no recollection of the Golfun deal.
"I frankly didn't have much time to oversee investments, either then or now," she told The New Yorker. "My life is very, very hectic."
When Elizabeth Dole placed her holdings in a blind trust in 1985, Owen was named by the Doles to be its investment adviser despite his close involvement with Sen. Dole's political campaigns, according to the article.
In July 1986, Owen invested Elizabeth Dole's money in several thousand shares of stock in AmVestors Financial Corporation. The New Yorker reported that soon afterward, AmVestors reaped a half-billion dollar windfall with the aid of a loophole in Tax Reform Act of 1986 -- legislation Sen. Dole helped shepherd through Congress.
Owen told The New Yorker that he lobbied Sen. Dole to preserve the tax break for AmVestors and Dole visited the company's Topeka office to talk about the issue.
Elizabeth Dole's stock was sold a year later at "a decent profit," Mayer wrote, although Owen said he doubted that either Dole knew about the blind trust transaction.
In 1986, while Elizabeth Dole's holdings were in the blind trust, Owen invested more than $1 million of her money in an office building in the Kansas City suburb of Overland Park, Kansas. Owen then sold half of the building to a company owned by John Palmer, a former field officer to the Dole campaign, the article reported.
Questions about Palmer's relationship to the Doles were raised in 1988 by the presidential campaign of eventual winner George Bush. In 1982, Sen. Dole's office lobbied to get a $26 million no-bid Small Business Administration contract for Palmer, an African-American, according to The New Yorker. Palmer's company got the job of preparing and serving food for mess halls at the Army's Fort Leonard Wood, Missouri, although Palmer had little experience in that field, the article said.
In 1988, after the House Small Business Committee conducted a preliminary investigation of Palmer's deal, its chairman, Rep. John LaFalce, D-New York, concluded that awarding the contract to Palmer was "replete with appearances of improper activities." LaFalce sent the file to the Justice Department but nothing was heard of the case thereafter, the article said.
The New Yorker also dealt with Elizabeth Dole's evolution from a "knee-jerk liberal" working in the Johnson White House to a Reagan cabinet member married to the Republican's senate leader.
It quoted Jean Eberhart Dubosky, a friend from her days at Harvard Law School, who said Dole aspired even then to be first lady.
"What I really remember is that back then she wanted to be married to the President of the United States," Dubosky said.
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