Monday, Nov. 27, 1995

WHERE'S THE MONEY?

By Richard Lacayo

BY THE TIME ENID WALDHOLTZ WAS elected to Congress last year, two things about her campaign had people amazed. Where did she get so much money? And, some wondered, how come she still couldn't pay her bills? To beat the Democratic incumbent in her Salt Lake City district, Waldholtz spent $1.8 million in personal funds, more than any other House freshman, $1 million of it in a last-minute media blitz. Though she never gave a detailed account of where it came from, Waldholtz insisted the money belonged to her and her husband Joe, a political consultant from Pittsburgh who was also her campaign treasurer. "We've worked hard,'' she would say. "And we're very blessed.''

Yet all the while her campaign left behind a trail of bounced checks and unpaid vendors. Most people blamed the confusion on Joe. For a man reputed to have a fortune tucked away back East, he was weirdly inept with money. During the campaign it emerged that he had written $60,000 in bad checks to a Salt Lake City luxury-gift store. A mix-up, said Joe. His account in Pennsylvania hadn't been transferred to Utah in time. "There were always explanations,'' says Peter Valcarce, manager of Enid's unsuccessful 1992 campaign and a consultant in 1994, who was paid with bad checks three times. "He said he wanted to keep his funds in Pittsburgh because he didn't want anybody in Utah to know how much he had."

On that score Joe Waldholtz did a pretty good job. Even now, no one is sure how much he has, or ever had, or how much he may have got by manipulating family, friends and creditors. But everybody wants some answers. Joe, 32, is under federal investigation in an alleged check-kiting scheme that may involve as much as $1.7 million. And Enid, 37, who last week filed for divorce and custody of their infant daughter, now faces questions about what she knew or should have known about her tangled finances.

Those began to unravel in earnest on Saturday, Nov. 11, when Joe disappeared from National Airport in Washington. He had gone there with his wife's brother-in-law, ostensibly to meet the trustees of a $5 million family trust fund he claimed to have. Once there, the over-6-ft., almost-300-lb. Waldholtz slipped away, beginning six days on the run with the FBI in pursuit. After he surrendered on Friday in Washington, Waldholtz was released into the custody of a lawyer friend until he is called before a federal grand jury.

During Waldholtz's disappearance, several other possible scams came to light. His wife said he may have had access to $2 million from their joint accounts. His family has gone to court in an attempt to find out what became of $600,000 that belonged to Joe's step-grandmother, 87, whose money Joe was supposed to be investing. As for the existence of a family trust, the elder Waldholtz, a Pittsburgh dentist, says it's news to him. That's bad news for Enid's father, who, according to Enid's statements to investigators, allegedly turned over $4 million in liquid assets to the couple in a swap that was supposed to bring him real estate from the presumed trust.

Though no one called their marriage a political one, it was politics that brought the Waldholtzes together. In 1991 when she campaigned successfully to head the national Young Republican Federation, Joe was her fund raiser. For her first run for Congress a year later, he scrapped his duties as Bush campaign director in Pennsylvania to become her chief fund raiser and treasurer. After her defeat, she resumed work as an attorney. He briefly returned to Pittsburgh and courted her long distance.

"Joe pursued her romantically as hard as anybody I've ever seen,'' recalls Dave Hansen, Utah regional field representative for the Republican National Committee. "You should have seen some of the flowers he'd send from Pittsburgh." Enid was enchanted by his insider stories about politics and his sense of humor, though acquaintances said it could take on a menacing edge when he was crossed. When they married in August 1993, the wedding was attended by the cream of Utah's Republican hierarchy. Governor Michael Leavitt performed the ceremony.

When she arrived in Washington this year among the shock troops of the G.O.P. freshman class, Waldholtz stood apart as one of the few freshman ever to join the powerful House Rules Committee, which sets the timing and scope of debate on all legislation. The strongly pro-life, fiscally conservative Waldholtz--she has been called "a Mormon Maggie Thatcher''--also made a name for herself by tearing into congressional salaries and perks. She denounced the 1989 pay raise that boosted congressional salaries from $89,000 to $133,600 and insisted she would refund her own raise.

As it happens, she hasn't got around yet to doing that. Her constituents are also still waiting for the amended disclosure statement to the Federal Election Commission that she has promised will explain what she calls "bookkeeping errors'' in her campaign funding. An investigation conducted after the election by the Salt Lake City Tribune couldn't account for the source of $1.5 million of the funds. Waldholtz initially told the paper that the cash was from a money-management account belonging to her. If it came instead from the $4 million asset swap with her father, it could violate fec regulations. Even if it had come from her husband it would be a problem, since federal election laws permit candidates to spend an unlimited amount of their own cash in a run for office, but only half of any assets held jointly with a spouse.

"My first reaction in all of this was to stand beside my husband and defend him," Waldholtz said last week. "I trusted him. I was wrong.'' If that's true, there is still the question of when blind trust becomes fractured judgment. According to the Deseret News, a Utah daily, Waldholtz campaign manager Kaylin Loveland and another worker, Steve Taggart, say they confronted the couple with irregularities they discovered in reports prepared by Joe for filing with the FEC. When nothing was done, they brought their concerns to Hansen, who in turn sought advice from G.O.P. state chairman Bruce Hough, Governor Leavitt and former U.S. Attorney David Jordan, all of whom urged the Waldholtzes to tighten up. When that failed, say Taggart and Loveland, they resigned.

Once settled in Washington, Joe Waldholtz appears to have sustained himself and his wife through a number of dubious means. Aaron Edens, a $34,000-a-year assistant in Enid's Capitol Hill office, says that under pressure he allowed Joe to be added as a cardholder on his American Express account and that Joe ran up $45,000 in expenses for both Waldholtzes. Richard Simon, who owns the three-story brick townhouse in Georgetown where the Waldholtzes live, says they were routinely behind on the $3,800 monthly rent. On one occasion, Joe told Simon that he couldn't pay because their checking account had been drained when a thief made off with a suitcase containing signed blank checks.

In Utah, Republicans and Democrats are poised to see if Representative Waldholtz can salvage her career. Potential contenders are already lining up in case she resigns. After staying away from the debate, she voted on Thursday as the House overwhelmingly adopted a bill barring its members from accepting nearly all free meals and gifts. She had sponsored the original version. Representative Gerald Solomon, the New York Republican who chairs the Rules Committee, says he has no intention of asking her to relinquish her place on his committee. "She's such a principled person,'' he says. "She's principled to the point of being naive.''

--Reported by Anne Palmer Donohoe/Salt Lake City, Tamala M. Edwards and Viveca Novak/Washington

With reporting by ANNE PALMER DONOHOE/SALT LAKE CITY, TAMALA M. EDWARDS AND VIVECA NOVAK/WASHINGTON