Cory Committee Heavily in Debt --Mostly to Cory

SACRAMENTO — With his decision to step down from public office, state Controller Kenneth Cory leaves his campaign committee heavily in debt--most of the money owed to Cory himself and unlikely ever to be repaid.

The most recent campaign disclosure report filed by Citizens for Cory shows the committee with an accumulated deficit of $542,500 at the close of last year. The same records show that Cory’s political committee has long been awash in red ink.

The veteran politician and the state’s official bookkeeper was able to raise enough cash for his campaign committee to pay him more than half the principal of a $524,600 loan he assumed in 1978. But he has made little headway in reducing the overall size of campaign deficits that date back to his successful run for the statewide office in 1974.

“He owes himself basically most of that money,” said Deputy Controller Peter Pelkofer. “I seriously doubt it will all be paid back.”

Cory has held some fund-raisers in recent months, Pelkofer noted. But that was before Cory announced that he would not seek a fourth term.

Cory was on a trip to New York and was unavailable for comment Thursday on the status of his campaign committee.

Loans Outstanding

His campaign treasurer, Warren B. Cole Jr., said that in addition to the money owed to Cory, the committee has $62,500 in loans outstanding--the largest, $47,500 from Agri-Empire of San Jacinto. The committee has $323,500 in unpaid bills, largely in unmet interest payments to Cory.

“Frankly, if we could pay off the principal, we’d be doing well,” Cole said. “Hopefully, we can pay off the interest too, but right now it looks like a difficult problem.”

Cory’s loan to his own committee has long been the source of controversy.

In 1974, Orange County entrepreneurs and political figures Louis J. Cella Jr. and Richard J. O’Neill loaned Cory’s campaign committee $524,600 in his successful campaign for statewide office. The lenders held onto the notes and presumably expected to be repaid one day.

In 1978, Cory took over the notes, under the terms of the sale of Kobe Enterprises, a cattle ranch and farming operation he owned with Cella and O’Neill. At the time of the deal, a spokesman for Cory said that Cory never expected to be repaid.

Listed as Investment

But for several years, Cory has been listing the loan to his own campaign committee as an investment--and, indeed, the committee has been slowly paying off the principal as well as making interest payments.

This year, a Republican candidate for controller, Dan Stanford, has charged that the loan arrangement provided a way for more than $300,000 in campaign contributions to go directly into Cory’s own pocket. Stanford argued at a Thursday press conference that the property held by Kobe Enterprises could not have been worth more than $500,000.

“It is our best estimate that Cory paid Cella and O’Neill less than $100,000 for over $500,000 in notes,” Stanford claimed.

But Pelkofer said that the land was only part of the value of the partnership, which also owned equipment and livestock--more than enough to cover the value of the notes.

Although Stanford has demanded a probe of the sale, none of the agencies approached--the state attorney general’s office, the Sacramento district attorney or the Fair Political Practices Commission--has agreed to conduct an investigation.

Has Holdings, Income

Cory’s recent financial disclosure report shows that he has substantial private holdings and significant outside income in addition to his $42,500-a-year salary as controller.

He listed three investments valued at more than $100,000 each--including a farm in Fresno--and income from the sale of cotton, grain and rice.

When he steps down as controller at the age of 48, after 12 years in that office and eight as a legislator, he will be immediately eligible for a $17,000-a-year pension--40% of his present salary.