By KEVIN GALVIN Associated Press Writer 
Monday, June 9, 1997 9:21 pm EDT 

WASHINGTON (AP) -- A liberal consumer group allegedly funneled illegal contributions to Teamster President Ron Carey's re-election campaign, sources familiar with a federal probe of Carey's fund-raising said Monday. 

Citizen Action, a national organization which claims 2 million members, allegedly gave $75,000 for Carey to a Massachusetts telemarketing consultant who has admitted to the FBI that he laundered money sent to Carey's coffers. 

``We are cooperating with the U.S. attorney's office with respect to the probe,'' said Ed Rothschild, spokesman for Citizen Action. He declined to comment further on the allegations. 

A federal grand jury in New York is investigating whether the election was tainted. Under the rules of the contest -- which was funded with $22 million in public money -- candidates were barred from using union funds or accepting donations from anyone who was an employer. 

Nancy Stella, spokeswoman for the Teamsters, acknowledged that the union paid Citizen Action $475,000 last year to support voter education. She said the union is cooperating with investigators. 

``Carey's position is that he has done absolutely nothing illegal and that he had no knowledge of the actions that are alleged,'' she said. 

But James P. Hoffa, who was Carey's opponent, called for federal election officers to disqualify Carey and install the Hoffa slate. ``I don't believe he didn't know what was going on,'' he said. 

Alleging a scheme to funnel union funds to Carey's campaign, the FBI arrested a Washington political consultant Friday. 

Martin Davis, 35, a co-owner of the November Group, was charged with one count of mail fraud and released on $100,000 bond. His attorney said he would plead innocent. 

The complaint against Davis was based on information provided by Michael Ansara, the owner of a telemarketing firm contracted by the Teamsters. Ansara agreed to plead guilty to conspiracy and is cooperating with the FBI. 

In addition to the allegations against Davis, the complaint said an unnamed organization paid Ansara $75,000 for work he didn't perform, knowing that the funds would be passed along to Carey's campaign. 

As he did with the Teamster money allegedly directed to him by Davis, Ansara instructed his wife, Barbara Arnold, to write a check to Carey's campaign and reimbursed her with money he allegedly collected from the organization. 

Investigators corroborated Ansara's information with billing records and an interview with an official from the organization, which was identified Monday as Citizen Action by two sources with knowledge of the investigation. They spoke on condition of anonymity. 

Citizen action is closely allied with labor, but recently angered some of its liberal supporters by accepting donations from interests with ties to the utility and tobacco industries, the Chicago Tribune reported. 

Hoffa's slate was previously found by the election officer to have used local union funds during the campaign, but the violations were set aside after the money was returned. 

Carey has returned $210,000 in questionable contributions, including $95,000 from Barbara Arnold, which were used to pay for a mass mailing by the November Group in the last days of the campaign. 

Carey campaign spokesman John Bell argued that Arnold's contribution represented less than 4 percent of the money the campaign spent and therefore didn't significantly impact the outcome of the hard fought election. 

``One million pieces of literature mailed on the day the ballots went out? That obviously affected the outcome,'' Hoffa said. 

The elections were held as part of an agreement the union struck to avoid federal racketeering charges. 

Meanwhile, the federal official who oversaw the contest said the fact that she and her husband have worked with Citizen Action shouldn't prevent her from ruling on a protest lodged by Hoffa. 

The election officer, Barbara Zack Quindel, sent a letter to the federal judge overseeing the union's cleanup acknowledging that her husband, Roger Quindel, sat on the board of the Wisconsin chapter of Citizen Action and that she had worked on political campaigns involving the group. 

Hoffa has also complained that the Teamsters gave $5,000 this year to the New Party, of which Mr. Quindel is a member. 

``I do not believe that my previous contacts with either the New Party of Citizen Action would in any way impair my ability to properly investigate and impartially render a decision in this matter,'' Quindel wrote.