SACRAMENTO: California's GOP gubernatorial candidate Bill Simon, Jr. is battling to rebuild his image after a civil jury found his family's investment company guilty of fraud, and levied a $78 million dollar judgment against it earlier this month.
Simon is co-owner of investment firm William E. Simon & Sons (WES&S).
A lawsuit filed by former business partner Paul Hindelang charged that WES&S and others invested millions in his pay-phone company, Pacific Coin (PC). Hindelang claimed that those investors secretly planned to inflate PC through quick acquisitions, take it public, and cash out. That plan caused PC to accumulate too much debt and forced a default to creditors, claims the suit.
While the suit didn't name Simon personally, it dealt a huge blow to a candidate who's been portrayed in the press as secretive about his financial dealings. Previously, he angered media by restricting access to tax returns.
He also faced an IRS inquiry over a questionable tax shelter.
Crisis experts say that the scandal has placed Simon's campaign in critical condition.
"In a time when the only thing worse than being a corrupt or inept businessman is being a kidnapper, it's really a devastating blow, said Fleishman-Hillard's LA GM Doug Dowie.
Others predict Simon may not rebound. "I don't see a way for him to turn this around now, said Jerry Swerling, director of the USC Annenberg School of Journalism's PR program.
Simon's campaign, however, is seeking to refocus on political issues and distance him from the judgment, which Simon called "fundamentally flawed."
"The strategy is to address (the verdict) head on and move to the issues that really matter, said deputy campaign manager Mark Miner, who added that the verdict will be appealed.
"There is still more to be done in this case and more facts to come out, said Miner.
However, Simon was stung again last week as the US Justice Department announced he'd be called as a witness in a failed savings and loan trial scheduled for three weeks before the election.