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Trouble-plagued firms give generously to attorney general

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SACRAMENTO (AP) - In the last two months, Attorney General Bill Lockyer has taken $71,000 in campaign contributions from executives and two companies that are embroiled in lawsuits and the subject of scores of consumer complaints.

Executives from one firm, Oklahoma-based Pre-Paid Legal Services Inc., gave Lockyer a total of $20,000 between Nov. 8 and Nov. 12, according to state campaign finance records.

Former football Hall of Famer Fran Tarkenton, who used to be on the firm's board, chipped in another $5,000.

Pre-Paid, a multilevel marketing firm that sells insurance-like legal plans, has been the subject of an "inquiry" by the U.S. Securities and Exchange Commission, according to the company's annual report, and has been the subject of dozens of lawsuits in Oklahoma, Mississippi, Alabama, and West Virginia stemming from its business practices.

On Nov. 8, the same day contributions from Pre-Paid executives were received, Lockyer attended a Pre-Paid meeting at the Long Beach Convention Center, where he "delivered some remarks and left," said Nathan Barankin, a Lockyer spokesman. Lockyer is familiar with the company through former Oklahoma Attorney General Mike Turpin.

In 1999, Tarkenton, the football player turned businessman, paid $100,000 to settle federal accounting fraud charges with the SEC, without admitting or denying any wrongdoing.

The second company, Paycom Billing Services Inc. of Marina del Rey, is the subject of more than 150 complaints with the Better Business Bureau over its billing practices. The company and its top executives gave $46,000 to Lockyer this December.

Paycom is headed by J. Christopher Mallick, a Los Angeles businessman and longtime Lockyer donor who calls the state's top consumer watchdog a "personal friend." In 2001, Mallick, the company, other Paycom officials and lawyer representing the company gave Lockyer $36,195 for his re-election fund.

Consumers have complained that Paycom, an Internet billing company that gets a substantial portion of its money processing credit card payments for adult Web sites, charged them for services they didn't buy.

Mallick, Paycom's CEO, said the complaints are most likely cases of identify theft.

But Lona Luckett, a senior trade consultant for the Better Business Bureau in Los Angeles, said Paycom has "an unsatisfactory rating and a clear pattern of deceptive business practices."

Lockyer, a potential Democratic candidate for governor in 2006, has no plans to return the contributions, although he is aware of the lawsuits against Pre-Paid, Barankin said.

"They are not a company that has had legal problems in the state of California. That is something that is of primary concern to Lockyer, with respect to campaign donors," Barankin said. "If someone were to contribute in the hopes that it would benefit them in some way, they would be disappointed."

Barankin said the office wasn't aware of the consumer complaints against Paycom, or the company's lawsuit.

"We like his politics," Mallick said of Lockyer, "particularly in the area of issues of civil rights and the environment, as well as e-commerce, which is our business. We're not contributing because we have any investigation threatened or pending."

Campaign finance experts wondered if Lockyer would keep money from companies dogged by so many consumer complaints. In the case of Pre-Paid, they questioned why officials of an out-of-state company would give to Lockyer.

"Companies always give money with business in mind. They're giving it to someone they think could help them out," said Bob Stern of the nonpartisan Center for Government Studies in Los Angeles.

"Because he's (Lockyer) a potential future governor, he probably has the possibility of some say over what lawsuits are being filed," Stern said.

Pre-Paid advertises on its Web site that for a certain monthly fee - ranging from $9.95 to $49 in California - the company will provide a set package of legal services.

A class action lawsuit filed in an Oklahoma federal court in March 2002 alleges the company, whose stock is traded on the New York Stock Exchange, violated federal securities laws. Plaintiffs also allege the firm operates as a pyramid scheme and that they were "duped into expending money and other valuable consideration on a worthless enterprise," according to court documents.

The Oklahoma attorney general's office confirmed that people associated with Pre-Paid had contributed to the attorney general there in the last election.

Pre-Paid executives did not respond to telephone and e-mail requests for an interview.

Robert FitzPatrick, the founder of Pyramid Scheme Alert, a North Carolina-based consumer advocacy group that analyzes multilevel marketing firms, said such firms have a long track record for prosecution as pyramid schemes and contributing politically is a common practice among them.

Attorneys general "are people who would investigate or oversee prosecution at the state level," FitzPatrick said. "That's why it helps to have a relationship with the attorney general."

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