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Johnny on the spot

John Lindauer talked of a legacy. Instead, his run for governor is remembered as the most self-destructive campaign in Alaska's history.

By MARK SABBATINI
THE JUNEAU EMPIRE

John Lindauer was in low spirits as he sat down at his brother's table for Thanksgiving dinner in 1993. His wife had died from cancer the year before, debts and lawsuits from a failed business were piling up and his most recent political venture as a fringe gubernatorial candidate collected less than 3 percent of the vote.

Those at the table asked about his future plans.

"Someday I'll meet the right woman and I'll run again," he said.

Guests from Illinois said they knew just the woman: Dorothy Oremus, a Chicago attorney who with other family members owned the largest cement concern in the Midwest. She was, as Lindauer put it years later, "a caring, loyal, intelligent woman of means" from a political family.

That fateful dinner, described by Lindauer to an Anchorage newspaper reporter, set the framework for what many consider the most self-destructive political campaign in Alaska's history.

With his new wife helping fund a high-priced reentry into politics, he captured the Republican nomination for governor in a state dominated by conservative voters. But his oft-spoken dream of leaving a legacy dissolved into disgrace amid a bizarre collection of lies, financial scandals, lawsuits and associations with questionable characters, some with reputed mob ties.

Lindauer, 60, claimed he was the victim of a conspiracy by GOP party officials, political opponents, the media, pollsters and business leaders. Nearly everyone else, including top campaign officials who abandoned him, portrayed him as a compulsive liar whose primary goal was to benefit himself.

"He was really running because he was another wannabe,'' said Jerry McBeath, chairman of the political science department at the University of Alaska Fairbanks. ``He wanted to be governor in the worst possible way."

Cloudy past

Lindauer's checkered past was hazy or unknown to much of the state's constantly changing population. He resigned after 18 controversial months as chancellor of the University of Alaska Anchorage in the 1970s, served one state House term from 1983 to 1984, and founded a chain of rural newspapers and radio stations that went broke shortly after he sold them in 1992.

He ran for governor in 1990, first as a Republican and then switching to the less-crowded Alaskan Independence Party, where his meager showing was enough to win the party's nomination in the August primary. Lindauer stepped down after some closed-door meetings a few weeks later, allowing conservative Republicans unhappy with their nominee to place Walter J. Hickel on the AIP ticket. Hickel, who had plenty of his own money to spend, won the election.

Lindauer's first wife, Jacqueline, died in 1992 and he later said her cancer caused his withdrawal and subsequent financial problems. Some people sympathized, but other residents who compared his past and present statements accused him of exploiting her death for political gain by seeking sympathy and misstating past events.

Money troubles

By the time he traveled to Chicago and began courting Oremus in 1994, he had nearly $2 million in accumulated debt to former business associates and the Internal Revenue Service. His 1994 tax form listed him as ``retired'' and debts continued piling up during the next couple of years.

In 1995, he married Oremus, although exactly what else he did during the next couple of years is unclear. The only federal income tax he paid was in 1997 when he received a $100,000 consulting fee from a friend of the Oremus family. A top official in Lindauer's campaign the following year would say the payment was to arrange a meeting with a U.S. senator concerning a radioactive waste dump.

Lindauer was virtually non-existent on the public scene in Alaska. The most prominent in-state politician was Gov. Tony Knowles, a Democrat who many considered a shoo-in for reelection after winning the support of a variety of groups, including oil and business interests, during his first term. But some Republicans felt their party had a shot, given Knowles' mere 536-vote margin of victory in 1994 - if they could find someone with the ability to match the pricey reelection campaign Knowles was certain to mount.

Not-so-humble beginnings

By spring of 1997, Lindauer was ready to jump back into politics. He visited Juneau during the legislative session and had dinner with Tuckerman Babcock, a veteran GOP strategist credited with helping redraw election districts in 1991 to ensure a heavy Republican majority. Lindauer was seeking a campaign manager, Babcock said, but Babcock wasn't interested.

Undeterred, Lindauer invited himself to the Lake Clark home of Jay Hammond, a popular ex-GOP governor, seeking an endorsement. Hammond said no. Lindauer then asked Hammond to co-chair a new watchdog group dedicated to preventing changes to the state's Permanent Fund Dividend program. Hammond turned that down as well, sensing it was a political gimmick.

The group, was, in fact, a front for Lindauer's gubernatorial campaign, said Rex Shattuck, a political consultant hired to run the organization, called Friends of the Dividend. Shattuck, later deposed in a lawsuit, said Lindauer hoped the group would boost his name recognition, provide an alternate way for to people to donate and place an initiative on the ballot that mirrored his chief campaign issue.

Cutthroat strategy

A "top secret" campaign plan, given to Shattuck just before July 4, 1997, and revised during the summer, talked about integrating the dividend and Lindauer campaigns. It also revealed a cutthroat strategy for the election, including Lindauer's intent to destroy any other GOP candidate and run again in 2002 if he lost the primary.

"Pass the word as to what will happen if certain Republicans run in 1998," stated the plan, a portion of which became part of a lawsuit. "JL will make sure they are defeated so JL can run and win in four years instead of waiting eight. Make sure everyone knows that JL will not back off for anyone and will be able to insure Knowles wins if JL loses the primary."

If Lindauer won the 1998 primary, money would be sent to the Green Party of Alaska, with the hopes a strong showing by a Green candidate would cut into Knowles' support, according to the plan. If Lindauer lost, the plan indicated the candidate for the newly formed Republican Moderate Party would be well financed.

Meanwhile, Lindauer kept in touch with Babcock, hoping to change his mind about managing the campaign. In September of 1997, over lunch with campaign chairman Jim Crawford, Babcock finally said he was interested and signed on in January when another job prospect fell through.

Crawford had signed up after confirming Lindauer had more than $1 million at his disposal, with more from his family if needed. Crawford, in a letter to a state Sen. Robin Taylor, who was also interested in hiring him, said a new law restricting campaign donations meant an independently wealthy candidate was the only one with a chance to unseat Knowles.

Unknown to virtually everyone was that the $1.1 million Lindauer had in a Chicago bank by the end of 1997 was mostly a loan guaranteed by his wife. The new campaign finance law restricted individual donations to $500 and state officials considered a loan or guaranteeing one a contribution. The question of whether the loan and subsequent money she gave him violated the law would remain unresolved until after the election.

Making it official

On Oct. 29, 1997, Lindauer filed his declaration of intent to run and in a Nov. 10 press conference he made official a candidacy many had speculated publicly about for weeks. The assertions he was wealthy and could spend "whatever it takes" to win the election were taken at face value.

Observers said it was impossible to take someone with lots of money lightly, but Lindauer's odd and relatively obscure past had to be overcome.

"I think it boils down to two things: How much money he is willing to spend and how he is packaged," Ivan Moore, an Anchorage pollster, said at the time. "He comes across as a somewhat eccentric character and I think that's got to be disguised somewhat."

Lindauer didn't help himself in a Nov. 14 speech to Republicans in Fairbanks, earning derisive reviews for a plan to attract thousands of new students to the University of Alaska by focusing on "customers' " needs, which he described as "hot pizza, cold beer, and where are the girls - or the boys." In the first of many skirmishes with the press, he said the quote was taken out of context.

During a media tour in Juneau he said the governor has the state's only true political power and Knowles could thwart opposition from the GOP-dominated Legislature on his proposals if he really wanted to. Lindauer was also often short on specifics when it came to complex issues, saying he didn't want others stealing his ideas for the campaign.

In the months to follow he would emerge as the favorite to win the nomination, especially when potential contenders considered most likely to beat Knowles - including U.S. Sen. Frank Murkowski and Anchorage Mayor Rick Mystrom - announced they wouldn't run. His strongest challenge came from Taylor, a Wrangell state senator who would struggle for support beyond his home base of Southeast Alaska. Also in the race was Anchorage attorney Wayne Anthony Ross, who had relatively little funding and lagged far behind in polls.

Campaign troubles

Things did not always go smoothly. Oremus fumed when an early biographical ad mentioned Jacqueline, Lindauer's first wife, but not her, Babcock said. He explained the ad was to catch voters up on Lindauer's past, but Oremus was not mollified. In an angry July memo made public in a lawsuit, she stated she was supposed to have prior approval of commercials and was not receiving updated copies.

"Doesn't your 'manager' understand how serious I was about correcting those commercials months ago, and that such rude negligence there will not elicit any further cooperation here?" she wrote to Lindauer.

Babcock, who at the time didn't know she was helping fund the campaign, said in retrospect it sounded like she was threatening to cut off Lindauer's money supply.

The campaign manager also had his struggles with Lindauer. Babcock wrote a memo sometime in late May or early June telling Lindauer, among other things, to cut down on his public gaffes.

"Consider consistency in message and please consider fall-out from statements," Babcock wrote, adding "we must always get our facts right and stick to facts. To do so otherwise invites attack and derision by the media."

Storm clouds brewing

Lindauer's claim of independent wealth went largely unchallenged during the early months of the campaign. But when Anchorage Daily News attorney John McKay met with the candidate in early June to collect a 1992 printing debt, a much different story resulted.

"He told me that he was broke," McKay later wrote in a sworn statement. "He had nothing. His said his campaign was being financed by his wife."

Moreover, his wife was adamant about not paying off Lindauer's old debts, McKay said.

Lindauer asked McKay to hold off until after the general election, confident he could raise the money once in office, according to McKay's account. McKay refused, uncomfortable with pursuing a sitting governor for a debt and allowing such fund-raising tactics.

The candidate suggested other possibilities in later discussions, including selling his Anchorage home, according to McKay.

"My understanding from our conversation is that Mr. Lindauer intends to move from Anchorage after the November election, either to Juneau, in the event he is elected governor, or out of state, if he is not elected," the attorney stated. His comments wouldn't be known until they became public in a lawsuit during the fall.

Within the campaign, Babcock's problems with Lindauer were worsening. In mid-June he warned Lindauer he had to disclose his debts to state elections officials or face possible removal from the ballot. He also confronted Lindauer about suspicions he had pocketed contributions at a Fairbanks fund-raiser without reporting them.

Twice within a 16-day span, on June 17 and July 3, Babcock drafted resignation letters, but failed to act on them.

"He assured me that he just did not understand the rules and that I was hired to keep him straight on that and that (it) wouldn't happen again," Babcock said.

Publicly, the campaign was still in high gear. Lindauer's signs and ads were everywhere. Polls a month before the August primary showed him with a solid, if not dominant, lead over Taylor and Ross. Taylor was having the money problems predicted, and his cries about how Lindauer got his money and whether he'd lived in Chicago too long to be an eligible candidate were slow in finding a receptive audience.

Lindauer's platform as a champion of the Permanent Fund dividend program was tarnished a few weeks before the primary when a Daily News story revealed he'd called it "poorly conceived, badly executed, and terribly named" when it was formed in 1982 and had said he would have voted against it. The candidate fired off a letter saying he'd supported the program ever since.

Money questions multiply

The question of how Lindauer got his money finally became a dominant issue in the days just before the primary, largely because of the elusive explanations he provided. Some of it, he said, came from investing with a ``crazy inventor'' he would not name. He implied during a debate it came from selling his radio stations, which Babcock said shortly afterward was not true. The one place it did not come from, Lindauer insisted, was his wife.

A rush of last-minute editorials demanded a fuller explanation. The Daily News, the day before the primary, took the extraordinary step of saying it would provide space the next day for Lindauer to answer its challenge. Lindauer responded by stating his money came from "consulting income, rental income, clients, tenants, etc., etc." He attacked editorial writers who questioned his explanations.

"Their actions make one thing very clear, that are worried that John Lindauer can beat Tony Knowles," he wrote.

The cries from the press would be overshadowed by the roar of Lindauer's supporters the night of the primary, as Knowles won the Democratic nomination with 36 percent of the statewide vote and Lindauer the Republican spot with 23 percent. Taylor finished just ahead of Ross, both at about 16 percent. Polls showed Knowles leading Lindauer in a head-to-head matchup, but the GOP nominee saw plenty of opportunity in the 55 percent of the primary vote received by his party's candidates. His loneliness from that long-ago Thanksgiving dinner had been replaced by visions of being in the Governor's Mansion by Christmas.

"It certainly is a glorious evening," he said. "My wife and I are ecstatic about it."

Part II - The collapse

The night before, John Lindauer was basking in the cheers of supporters after winning the Republican nomination for governor. Now he was back at his Anchorage campaign headquarters listening to the hard facts about what lay ahead.

He and his wife, Dorothy Oremus, spent three or four hours in an Aug. 26 meeting with two top campaign officials who explained a decisive strategy was crucial in explaining how he got his vast personal funds for the campaign. During the primary he had spent more than the 10 other candidates combined and the press was demanding details, especially with Lindauer giving out odd and differing stories such as investing with an unnamed "crazy inventor."

Lindauer could tell all in detail, they said. Or he could rely on the letter of the law, which largely shielded him from disclosure. But there was one thing both Campaign Manager Tuckerman Babcock and political strategist Tim Phillips agreed the candidate should not do.

"He should not go forth and talk about a little bit of money earned here or some were earned over at this place," Babcock said, describing the meeting later during a deposition in a citizen's lawsuit against Lindauer.

In the weeks to come Lindauer not only ignored their advice, he continued telling false stories about where the funds did come from. The money issue dominated the fall campaign as his tales unraveled, causing his party to abandon him for a write-in candidate who finished ahead of him on Election Day.

One question not asked at the post-primary meeting was whether Oremus, a wealthy Chicago attorney, was the source of her husband's money, Babcock said. Lindauer had struggled with debts before and after marrying her in 1995, causing many to suspect she had helped him - a possible violation of campaign finance laws. Oremus, either at the meeting or shortly afterward, simply said the money was Lindauer's.

Attention from the money issue was diverted briefly by an Aug. 27 call Lindauer made to Clyde Baxley, a candidate for lieutenant governor for the newly formed Republican Moderate Party. Baxley claimed Lindauer offered him a political appointment if he dropped out of the race. Lindauer acknowledged making the call and suggesting Baxley quit, but denied the job offer.

Lindauer's campaign staff also acknowledged publicly for the first time it intended to raise funds, despite Lindauer's earlier claims he would pay for his own campaign to avoid being indebted to special interests. Campaign Chairman Jim Crawford said staff planned to raise several hundred thousand dollars, but the plan fizzled badly as revelations about the candidate came to light.

Into the buzzsaw

Democratic Gov. Tony Knowles essentially ignored his opponent during the campaign, leaving attacks to aides when the occasion arose. But in early September the governor baited a trap that lured Lindauer into one of his biggest mistakes.

Knowles released an unremarkable set of tax returns from the past five years, citing media requests that both candidates do so. Lindauer ignored cries to do the same. Instead, he and Babcock drafted a letter providing limited details and attacking "Tony's toothless tigers in the press."

"My campaign has not been 'bankrolled' by my wife, Dorothy, as insinuated by the media and I believe an apology is in order," the letter stated.

Lindauer claimed he earned $1.9 million in recent years from real estate investments, oil royalties, selling assets and performing $600,000 of consulting work for a Florida man named Edward Heil.

Later news reports indicated Heil, nicknamed "Terrible Eddie" by a Chicago newspaper, was a developer and friend of Oremus active in Republican politics in Illinois.

Babcock, before the letter was sent to supporters and the press, said he told Lindauer his credibility was at stake and the details had to be accurate. Lindauer assured him they were.

The letter didn't satisfy critics, who said it contained too many unverifiable details. Who, for example, was Heil and what advice had Lindauer provided that was worth $600,000?

About a week later state Republican leaders, concerned about documents two party members sent them, asked Anchorage attorney Wev Shea to do an in-depth probe of Lindauer's finances. But a more official series of investigations caused the GOP to halt its probe almost immediately and Shea to become a defender, rather than an investigator, of Lindauer.

A complaint seeking to throw Lindauer off the ballot was filed Sept. 15 by Chuck Achberger, who managed state Sen. Robin Taylor's unsuccessful bid for the GOP nomination. The complaint accused Lindauer of failing to meet a state law requiring him to disclose all sources of income for 1997 - but not amounts - as well as business connections he and his wife had.

Babcock, who was handling most of Lindauer's press calls, stood by his boss.

"It doesn't have anything to do with anything other than Chuck Achberger being a sore loser," he said.

A day later a Superior Court lawsuit with similar allegations was filed by Frances Grady, a Chugiak woman also hoping to toss Lindauer off the ballot. The lawsuit would not be resolved by Election Day, but did make public hundreds of pages of embarrassing material that would badly damage a campaign some thought was already beyond repair.

The $100,000 question

Babcock found out just how bad things were going to get when he walked through the front door of Lindauer's home Sept. 18. The candidate was talking on the phone as political strategist Phillips approached the campaign manager.

"What is he talking about, saying he only collected $100,000 from Ed Heil?" Babcock recalled Phillips saying. "I thought it was $600,000."

"I don't know what he's talking about," Babcock replied.

When Lindauer hung up, Babcock confronted him.

Yes, the candidate said, it was true Heil had only given him $100,000. The other $500,000 was supposed to come after winning the primary.

"I actually don't remember any more of that conversation," Babcock said. "I was in shock."

At some point Lindauer also mentioned the fee wasn't for consulting; it was to set up a meeting with U.S. Sen. Frank Murkowski, Babcock said. Heil, according to later reports, was interested in opening a radioactive waste dump in California and Murkowski, chairman of the Senate Energy and Natural Resources Committee, could have a say in such a proposal. The two chatted briefly at an Aug. 22 picnic in Kenai, but Murkowski later said "I sure as the devil didn't know that I was in a meeting."

It was the last straw for Babcock. Two days after Lindauer's admission, the campaign manager resigned as soon as the candidate, who was campaigning in Juneau, called into the office. Lindauer reportedly pleaded his case, stating his wife had consulted with attorneys and concluded she could "gift" him the money so the letter story wouldn't have to be changed.

"I will not lie on your behalf nor will I be lied to," Babcock wrote in a stinging memo faxed to Lindauer the next day.

Lindauer kept up his campaign trip as if nothing happened. He cheerfully greeted supporters and local party officials who were shocked to learn about Babcock's resignation a day or two later. The biggest public development that day was a Ketchikan Daily News editorial demanding Lindauer bow out of the race, the first of at least three newspapers to do so.

The Republican revolution

It was an unprecedented request as far as party leaders knew, but they felt there was no option. On Sept. 29, the executive committee of the Republican Party of Alaska voted to withdraw its endorsement of Lindauer and ask that he step down from the ballot.

Most of the party's 19-member committee had met with Lindauer, his wife and members of the campaign behind closed doors the night before, said Tom McKay, the party's chairman. Whatever the committee heard wasn't enough to offset the concerns being voiced by Republicans around the state.

"I've got them coming from all factions of the party," McKay said.

Among the concerns: Lindauer's candidacy was endangering the party's legislative candidates. He was constantly accusing Veco Corp., an oil field services provider, of giving Knowles money in exchange for special oil deals and the company, whose executives were heavy GOP party contributors, had filed a defamation suit in response. Also, state officials had not only decided to investigate most of Achberger's accusations, but also added more of their own.

An emergency meeting of the GOP's 96-member central committee was convened Oct. 3 in Anchorage. McKay expected approval of the executive committee's recommendations to be a formality, but Lindauer won a temporary victory by pleading his case.

Lindauer told the committee a person of the highest integrity would review his finances and present findings satisfactory to the committee, said former Anchorage Mayor Tom Fink, a Lindauer supporter who was deposed in the Frances Grady lawsuit. Fink said he was probably supposed to be that person, but Lindauer never asked him for a review.

A majority of the Republican central committee voted to stay with Lindauer, but some members afterward were far from solid supporters.

"He's a disaster and a pathological liar, but hey, he's our guy," said Fritz Pettyjohn, a former Anchorage legislator who supported Taylor during the primary.

The party's vote of support didn't stop fallout within the campaign. A day later political assistant Jo Ann Draper and statewide volunteer coordinator Rina Salazar resigned. Salazar, in a memo, said she couldn't stay if "I can no longer be trusted."

Two days later Rex Shattuck, a political consultant who'd been with the campaign from the start, and his wife, Linda, the campaign's treasurer, resigned saying they were uncomfortable with the direction of the campaign and the "overall tracking and reporting of financial information."

The dam breaks

On Oct. 6, the same day the Shattucks resigned, Superior Court Judge Michael Wolverton ruled Lindauer had to turn over his tax returns from 1995 to 1997 in the Grady lawsuit. Knowing they would show he had not earned any significant amount of money aside from Heil's fee, the candidate the next day admitted what he had denied for months.

"I received a spousal gift," he said.

Even that admission was muddled, as Lindauer told a television station the gift came after the primary - an almost certain violation of campaign finance laws - and later said it came before he declared his candidacy. His defense for the rest of the campaign was his wife gave him the money - and guaranteed a loan, he subsequently admitted - for any purpose he chose. Therefore, he said, it was not a political contribution.

Fink said he called the campaign office after the revelation and asked it to stop running radio ads featuring his support. Fink was invited to an Oct. 10 meeting at campaign chairman Crawford's house, where Lindauer said attorneys concluded his explanation was legal. Fink left satisfied the explanation was technically accurate.

The state's Republican party was not appeased. On Oct. 20, the central committee voted overwhelmingly to drop its endorsement of Lindauer and shortly afterward backed Taylor as a write-in candidate.

"I think the primary reason is because it's very obvious Mr. Lindauer had lied to us at the state central committee meeting about the sources of his campaign finances," McKay said. He noted other allegations against Lindauer, some highly personal, had also been raised.

Questionable connections

By then Lindauer's legal problems were overshadowing anything on the campaign trail. To his legal team he added Michael J. Rovell, a Chicago criminal defense attorney who gained notoriety in the 1980s by defending Allen Dorfman, a mob figure accused of skimming millions from a Teamsters health and pension fund. When questioned by Grady's attorney, Lindauer repeatedly said "I can't recall" to questions such as how much in gifts his wife had given him.

The candidate struck back with his own court filing Oct. 22: A $100 million conspiracy lawsuit against Republican party leaders and business officials, claiming they intentionally destroyed his campaign.

The Republican party had its own beef, unsuccessfully seeking to delay the Nov. 3 election until it was determined if Lindauer was an eligible candidate. Republicans hoped if he was removed, Taylor would have time to wage a realistic campaign.

The Saturday before the election the Anchorage Daily News reported that when Lindauer tried to get organized labor's support in July, he got lobbying help from Ernest Kumerow, son-in-law of Chicago mob boss Anthony "Big Tuna" Accardo. The Laborers International Union classified Kumerow, a former head of the Chicago District Council and a friend of the Oremus family, as "an associate of the Chicago Outfit."

A poll taken shortly before Election Day showed Lindauer favored by less than 10 percent of those surveyed. The campaign responded with a final Hail Mary throw: a press release four days before the election claiming a poll Lindauer paid for showed him favored by 38 percent of respondents, with Knowles at 40 percent and Taylor 8 percent. Few took it seriously and requests to see the actual survey were turned down.

The end of the road

Election Day was anticlimactic. There were no headlines with new revelations or accusations. Knowles grabbed the lion's share of the first ballots counted and never looked back. While candidates in a other races worked the crowds at an Anchorage convention hall where results were posted, Lindauer left early without talking to the media and took his wife to the airport, reportedly so she could fly home to be with her sick father.

Knowles finished with 51 percent of the vote - the first governor since 1970 to win by majority instead of plurality - with Taylor getting an estimated 20 percent. Lindauer finished at 17 percent with about 32,000 votes - a cost of $53 a vote after his $1.7 million campaign.

The next day he was back at campaign headquarters, ignoring press calls as he helped close down the office. His vision of a legacy was over. But others said that doesn't necessarily mean he'll be just another forgotten losing candidate.

"He'll be much more memorable because it was such a farce," said Jerry McBeath, chairman of the political science department at the University of Alaska Fairbanks. "People remember farces."