Bill Simon, Jr.’s campaign to unseat Gray Davis, the unpopular governor of California, may live to play another day, but don’t count on it.

When, week before last, a jury levied $78 million in damages against the Simon family’s investment banking firm it was the latest case of Murphy’s Law (Anything That Can Go Wrong Will) at work. Other examples: Weeks passed before he made a limited release of his tax returns, fueling suspicions he had something to hide (he didn’t). Despite having clever television spots which satirize Davis’s $23 billion state budget deficit and his well-known shakedown of constituent groups for contributions, Simon hasn’t raised enough money to run them with sufficient frequency to counter Davis’s negative spots on him. Result: Simon’s “unfavorable” ratings have gone from 24 to 39 percent.

No matter how flawed the jury’s verdict or whether a quick appeal reverses the award, the story has had the legs of a centipede in the California press and the perception is set that this whiz-bang business man was somehow involved in fraudulent activities. Simon insists his involvement was peripheral; however, an internal William Simon & Sons memo of September 15, 1998 about investment in Pacific Coin, the plaintiff’s company, has a number of margin notes in his handwriting, indicating keen interest in details of the deal.

His non-involvement argument doesn’t hold water and, worse, well after his firm arranged the investment in Pacific Coin (an operator of pay phones), it was learned that its chief executive, Paul E. Hindelang, was a convicted felon, having pled guilty in 1981 to charges that he was part of a big-time marijuana smuggling ring. He was convicted of bringing in half-a-million tons from Colombia and conspiring to bring in another 150,000 tons. At the time of his plea he forfeited $640,000 in drug proceeds. Federal agents suspected he had secreted away much more money. By 1997 they had found it in Swiss bank accounts. By coincidence, at the time Simon’s company was negotiating to invest in Pacific Coin, Hindelang was on his way to Miami to meet with federal prosecutors to turn over $50 million of his ill-gotten gains.

Simon, himself a one-time prosecutor, now looks foolish for (a) appearing to be either uninvolved in business decisions or prevaricating about his involvement, and (b) failing to conduct “due diligence” on Hindelang. Either way, Murphy’s Law undercuts his central campaign message that his business savvy will bring fiscal discipline to California.

Meanwhile, back at the White House, President Bush and his advisers await the results of a poll of Californians conducted by the Republican National Committee over the course of the last few days to determine if the Simon candidacy is still viable.

If they decide it is not, they will not say so. Bush will honor his commitment to do three fund-raising events in California on August 23 and 24. Two are to be at private homes and one at a hotel. The press will not be invited and there will be no arm-in-arm photos with Simon. Then, Bush and the White House will silently turn away from the campaign, stating, when asked, that yes the president still wishes Simon well — but that will be all.

If Bush were to cancel his California appearances it would be an instant death knell for the Simon campaign. Worse for Bush, it would revive charges (levied against him in 2000, Bob Dole in 1996 and Bush père in 1992) that the national leadership is once again writing off California.

On the other hand, if the conclusion from the poll is that Simon can still win, he will have a very steep hill to climb, and there is still danger in it for Bush. Bush has been deft in putting distance between himself and the cluster of corporate scandals that have been splashed across the nation’s front pages for weeks. By quickly getting behind the Senate bill tightening corporate governance and accounting and signing it, Bush once again robbed the Democrats of an issue. Yet, getting too close to Simon, whatever the merits of his side of the Pacific Coin case, risks undercutting Bush’s war on corporate wrongdoing.

Peter Hannaford is the publisher of The American Spectator.