Second Refund Is Tougher for Spitzer Donors

Employees of a California law firm whose donations were spurned on ethical grounds and then re-solicited by the campaign of Eliot Spitzer are fuming over what they say is the former governor's hypocrisy and his campaign's vague answers about whether and when they might get their money back, according to correspondence obtained by The New York Sun.

A host of donors to Mr. Spitzer's defunct re-election bid are said to be seeking refunds after the former prosecutor was linked to a prostitution ring last month and quickly resigned as governor.

Lawyers at Coughlin Stoia Geller Rudman & Robbins LLP, which is based in San Diego and has an office in Manhattan, feel they have a particularly compelling claim.

In 2006, Mr. Spitzer's team returned more than $17,000 in donations from the firm and its employees after it became clear prosecutors were homing in on William Lerach, who was a founder of Lerach Coughlin, as it was known at the time. The refund checks were dated a day after a Los Angeles grand jury indicted two of Lerach's partners at his former firm, Milberg Weiss, as part of a conspiracy involving secret payments to plaintiffs in securities cases.

Although Lerach's new firm was never implicated in the scheme, Mr. Spitzer's committee sent back all money connected with both firms, including $35,000 from Milberg Weiss and $7,500 from Lerach Coughlin. Spitzer 2006 also returned about $10,000 to Lerach Coughlin employees and was so meticulous that it even refunded a $25 gift from an administrative assistant at the firm.

"In light of recent events, the Spitzer campaign has decided that we must return any and all contributions made by employees of and/or the firms of Milberg Weiss and Lerach Coughlin," an assistant treasurer for Spitzer 2006, Sasha Soreff, wrote in letters accompanying the refunds.

Yet within days after Lerach quit the new firm and entered a guilty plea in the criminal case last year, Mr. Spitzer's finance officials were back in contact with Coughlin Stoia, seeking not only new contributions, but also makeup gifts for the money refunded a year earlier, according to two sources close to the firm.

"The campaign people came back the second Lerach retired," one firm source, who asked not to be named, said. "It was, 'Let's try to make up everything we gave back to you.'"

One partner who decided to give again, Patrick Daniels, recently asked for his $10,000 gift back and was rebuffed by the campaign.

"We would like to assure you that Spitzer 2010 has an extremely thorough and detailed review process to vet and approve expenses," the committee's compliance director, Leslie Higgins, wrote on April 3. "Additionally, no funds from Spitzer 2010 will be used to pay Governor Spitzer's personal legal fees."

Ms. Higgins said the campaign was "disbanding" and paying "outstanding bills," but she did not commit even to a partial refund. "Any remaining funds will be distributed in accordance with all applicable laws," she wrote.

"This donation was solicited under misleading circumstances — that Mr. Spitzer would continue his policies and practices of vigorous and principled law enforcement," Mr. Daniels wrote in reply last week. "That he was vigorous is not in doubt," the San Diego attorney said, in a dig at the ex-governor's alleged repeated romps with high-priced call girls.

"Mr. Spitzer should be held accountable for the costs of shutting down his own campaign, which he was responsible for destroying," Mr. Daniels wrote. He demanded a full accounting of the expenses the campaign claimed to have incurred.

Under New York law, Mr. Spitzer's campaign can send its remaining funds, which totaled $2.9 million at the end of last year, to other political committees, to charity, or back to donors.

An aide to Ms. Higgins referred a reporter's inquiry yesterday to a spokesman for Spitzer 2010, Jonathan Rosen. He repeated a portion of the letter to Mr. Daniels and declined to comment further.