State Democratic Party Chair Paul Berendt acknowledged to me this week that during the 2004 statewide anti-Bush effort, a top Democratic staffer "inappropriately" cut $50,000 in checks to a private company that the staffer helped form with some pals. Berendt is not accusing the staffer of stealing—“I don’t think he was setting out to steal money,” Berendt says—but the Seattle law offices of Perkins Coie eventually did an investigation. The Dems tried to keep the story hush-hush in the hope that it would go away (the staffer is “long gone” now, says Berendt), but the embarrassing screw-up was all the talk at this month’s annual Democratic Christmas party. Thus it came to my attention just a few days after Berendt had been trashing the Republicans for their monopoly on questionable conduct.

Just last weekend, Berendt was in a great mood. He was attending the DNC’s year-end meeting in Phoenix to come up with a message for the 2006 elections. With Republicans skidding from high-profile wreck to high-profile wreck, it was evidently a delightful, if not effortless, task for the Democrats. As of Friday afternoon, Berendt was already fluent in the Democrats’ “Culture of Corruption” sound bite, describing the Republicans as the disgraced party of Halliburton, Sen. Bill Frist, Rep. Tom DeLay, Scooter Libby, and Rep. Randy Cunningham.

Just two days after the DNC meeting (after I listened to Berendt explain how “the Republicans have given us a real opportunity to take the high ground”), Berendt was back in Seattle, and he wasn’t in such a good mood anymore. I was questioning him about the state party’s former field operations coordinator, Ryan Pennington.

It turns out that during the 2004 campaign, a company called Stack of Dimes (a tiny company that Pennington cofounded) had “over-billed” the state party, as Berendt put it, by charging $60,000 for $10,000 worth of computer networking services. “I had not known at the time that he was affiliated with this company,” Berendt says. Stack of Dimes got paid with a series of checks, some signed by Pennington himself, according to a witness involved the investigation. Pennington was one of the privileged staffers that had the authority to sign checks. (Pennington would not go on the record for this story. Stack of Dimes no longer exists.)

Berendt discovered the whopping “overcharge” during the party’s annual audit the following winter, and hushed up the potential scandal—namely, that during 2004’s urgent anti-Bush drive, when money was pouring into Democratic coffers from small donors anxious to unseat Bush, Pennington, the party’s lead field coordinator, had directed D Party funds to Stack of Dimes. Rather than bringing the “overcharge” to light, the party quietly forced Pennington to pay them back (which he finished doing in June) hoping the whole affair would go away.

No such luck. Obviously, Republican staff don’t have a lock on questionable conduct. One apparent ethical lapse and all the poll-tested speaking points may start to work against you. Both parties, especially one that’s talking about a “Culture of Corruption,” owe their supporters a tighter ship.

josh@thestranger.com