SUPER-WEALTHY THREESOME FUND GROWING WAR ON THE WAR ON DRUGS

As the pendulum on drug policy swings away from harsher penalties and
toward expanded treatment programs, it is getting a big shove from an
unusual trio of rich men: billionaires George Soros and Peter Lewis and
centimillionaire John Sperling.

Opposed to locking up nonviolent drug users, the three have financed a
string of state-ballot-box victories on what until recently seemed an
unpromising electoral battlefield -- getting softer on the possession of
marijuana and other illegal drugs. Now, after a breakthrough win last
November in California, they are moving to expand their war on the war on
drugs by backing new initiatives elsewhere under the banner of "treatment
not jail."

Next month, the three men are expected to approve a multimillion-dollar
plan to mount ballot-initiative campaigns in 2002 in the politically
crucial states of Florida, Ohio and Michigan. The ballot measures are
modeled on California's Proposition 36, which last fall produced a voter
mandate to prevent state judges from sending people to prison after their
first or second conviction for drug use or possession. Instead, those
nonviolent offenders will be directed into treatment programs.

Since 1996, when the wealthy trio decided to make reining in the drug war a
joint cause, they have spent more than $20 million on a state-by-state
campaign to chip away at the hard-line policies of the past 15 years. The
money has built a formidable political machine that has already won ballot
fights in nine states, including Colorado, Nevada, Oregon and California.
Most of the initiatives so far have focused on two narrow issues: allowing
the medical use of marijuana and curbing police authority to seize money
and property from alleged drug criminals before conviction.

Last year's California victory, and one in 1996 in Arizona, made deeper
changes in the legal system. For the last two decades, California has led
the nation in the rate at which it locks up people convicted of drug
offenses. By 1999, the state was putting away 134 people for every 100,000
residents, a rate 60% higher than New York's and twice that of Texas.

But Proposition 36 -- approved 61% to 38%, and set to take effect July 1 --
is expected to keep as many as 36,000 new convicts and parole violators out
of California prisons each year. That could cause the state's prison
admissions for drug offenses to fall for the first time in more than two
decades.

The funders' political operatives say their private polling tells them
initiatives pushing treatment instead of jail can win in all three of the
states they are targeting next year. The well-heeled activists are trying
to prove that nationwide, "the public is ahead of the politicians" on drug
policy, as Mr. Soros's chief adviser on the issue, Ethan Nadelmann, puts it.

How far ahead even Mr. Nadelmann hesitates to guess. Still, after two
decades in which drug abuse was generally met with tougher law enforcement,
the debate seems to be swinging toward curbing extreme punishment and
identifying effective means of treatment.

When President Bush earlier this month nominated as his drug czar the
hawkish John P. Walters, he strikingly used the occasion to stress his plan
to expand treatment programs, even while reiterating his support for jail
time for drug offenders. "We've got to make sure that those who are hooked
on drugs are treated," Mr. Bush said after the announcement.

Positions long considered untouchable by politicians are suddenly part of
the mainstream debate. New York's Republican governor, George Pataki, in
January proposed moderating his state's severe drug-sentencing laws. That
prompted Democratic state legislators to push for more-aggressive
reductions, and compromise legislation is expected to win approval.

In New Mexico, GOP Gov. Gary Johnson is pressing a long-shot campaign for
the legalization of marijuana. And Hawaii last year became the first state
in which lawmakers, rather than voters, approved the medical use of marijuana.

The U.S. Supreme Court ruled earlier this month that the federal
prohibition on marijuana doesn't have an exception for medicinal use, but
the ruling won't necessarily block states from allowing such use. States
and localities, not federal authorities, do the vast majority of drug-law
enforcement.

The troika's political operatives have targeted their initiative campaigns
cautiously. So far, they are steering clear of legalization initiatives,
even of marijuana. They note that polls going back to the 1970s show the
public is about evenly divided over whether marijuana use should be
punished criminally, with support for such punishment rising slightly in
recent years.

Last year, the trio opted not to back a ballot measure pushed by local
pro-marijuana activists in Alaska that would have effectively legalized the
drug there. The initiative failed. Ten states, including California, have
decriminalized possession of small amounts of marijuana, treating the
offense as an infraction punishable by a small fine.

While there isn't a popular groundswell for broader legalization, there is
evidence of popular unease about the way the war on drugs has been fought.
A nationwide poll released last month by the Pew Research Center for People
and the Press, for example, found that a 52%-to-35% majority of adults
believe drug use should be treated as a "disease," not a crime.

"The public has a very different view of first-or second-time users versus
habitual users -- and especially versus dealers," asserts Bill Zimmerman,
the California political consultant who has run most of the group's
campaigns. "Voters see themselves and their family members and friends as
being potentially in this category."

Changing the Debate

Even foes of the trio's campaign concede it is adroitly capitalizing on
public uncertainty. Many of the initiatives "would never have made it to
the ballot without their funding," says Herbert Kleber, director of the
substance-abuse division of Columbia University's medical school, who
considers the threat of punishment a crucial ingredient of effective
treatment. "I can't think of another situation where a few individuals have
so dominated and changed the nature of a debate."

Mr. Soros, a 70-year-old financier whose fortune is estimated by Forbes
magazine at $5 billion, began in the early 1990s to support organizations
trying to change U.S. drug laws. In 1994, Mr. Nadelmann, a former assistant
professor of public policy at Princeton University, started advising Mr.
Soros on the topic and now heads the Lindesmith Center/Drug Policy
Foundation, a spinoff from Mr. Soros's main foundation in New York.

"The core vision" of the Soros campaign "is that people shouldn't be
punished for what they put in their bodies, absent harm to others," says
Mr. Nadelmann. All three of the donors say they have at least dabbled with
marijuana. Mr. Soros, whose office referred all questions about the drug
campaigns to Mr. Nadelmann, has said he has tried it and enjoyed it, but he
said in 1997 he hadn't used the drug in many years.

Mr. Lewis, 67, is chairman of Progressive Insurance Inc. in Cleveland, the
nation's fifth-largest auto insurer. He holds a nearly 13% stake in
Progressive, worth at least $1.15 billion. After funding a 1995 poll by the
American Civil Liberties Union on attitudes toward marijuana use, he met
Mr. Soros to discuss the issue. "I have seen it for quite a while as pure
patriotism to try to change a policy that is sillier than prohibition," Mr.
Lewis says.

Mr. Lewis, who spends much of his time in tropical climes aboard a
converted tugboat called the Lone Ranger, says his personal use of
marijuana has influenced his political activity. Last year, in New Zealand,
he was arrested for possession of hashish and marijuana. Authorities there
released him after he made a donation to a local drug-rehabilitation
center, he says. "My personal experience lets me understand and have a view
of the relative effects of some of these substances," he says.

The three anti-drug-war funders first warily came together for the 1996
election. Mr. Sperling, a humanities professor-turned-entrepreneur, had
just become a wealthy man as a result of the successful 1994 initial public
offering of Apollo Group Inc. Apollo Group is parent of the for-profit
University of Phoenix, which he had founded 21 years earlier. Today, his
18% stake in Apollo Group is worth more than $515 million.

Since the mid-1980s, Mr. Sperling says, he had collected newspaper
clippings about the increasingly punitive drug war, concluding that it was
a waste of money and lives. He used marijuana himself in the late 1970s,
when he underwent radiation treatment for prostate cancer. In an
autobiography published last year, he recounted his recuperation on a
Hawaiian beach: "I was able to lie in the shade, listen to the surf and
smoke enough marijuana to mask the burning completely." Now 80 years old,
he says his use of marijuana doesn't figure significantly in his political
activities.

Within weeks of the Apollo Group IPO, Mr. Sperling hired Sam Vagenas, an
Arizona campaign consultant, to look into ballot-box strategies. Mr.
Vagenas stealthily got the 1996 Arizona initiative on the ballot before it
attracted any press coverage or organized opposition. For political cover,
Messrs. Vagenas and Sperling obtained endorsements from Barry Goldwater,
the ex-U.S. senator and conservative libertarian from Arizona, who has
since died, and former Sen. Dennis DeConcini, an Arizona Democrat known for
his pro-enforcement views. Mr. DeConcini's brother, Dino, serves on the
board of Apollo Group.

Mr. Vagenas worded the initiative in a way that opponents say was
dishonest. He introduced the measure with a clause that would lengthen
prison sentences for certain violent drug offenders. At first glance, a
voter might easily have thought the whole initiative was another get-tough
move, when in fact, its main thrust was to curb incarceration. "That's just
good politics," says Mr. Vagenas. Subsequent initiatives in other states
have used more direct language.

Word of Mr. Sperling's activities wasn't warmly received in the Soros camp.
Mr. Nadelmann sympathized with Mr. Sperling's goals but worried the Arizona
initiative would be defeated and set back lower-key public-education
efforts the Soros-sponsored team was coordinating.

For the same reason, Mr. Nadelmann was fretting about a separate campaign
for a medical-marijuana initiative by local activists in California, which
also appeared headed for an embarrassing failure. In the end, Mr. Nadelmann
brokered a compromise: Messrs. Soros and Sperling, joined by Mr. Lewis,
would underwrite the Arizona initiative and simultaneously go to the rescue
of the one in California.

Both initiatives succeeded, emboldening the threesome. "It was the first
time the drug-reform movement had shown it could play ball and win in the
real world of politics," says Mr. Nadelmann.

'Very Clever'

Critics say the funders' entire campaign is a disingenuous effort to
promote drug use. "They've been very clever," says retired Gen. Barry
McCaffrey, who served as President Clinton's drug czar. "You cannot have
effective drug prevention or drug treatment unless there is high social
disapproval of drug use. And disapproval has to be backed up by it being
against the law to possess, use or sell drugs." Whether they admit it, or
not, he says, the wealthy trio "are trying to normalize drug use in America."

Undaunted by such criticism, the troika geared up for the 1998 election
cycle, agreeing to chip in as much as $3 million apiece for initiatives in
seven states and Washington, D.C.

The arrival of big money changed the dynamics of drug politics, to the
chagrin not just of enforcers like Gen. McCaffrey, but also of some local
activists. In several states and in Washington, D.C., the trio paid for
signature-gathering efforts for medical-marijuana initiatives that competed
with measures backed by local groups. The bad blood lingers in Washington,
where Mr. Zimmerman in 1998 unsuccessfully tried to mount an initiative
that competed with a measure backed by local members of the AIDS-activism
group ACT/UP.

The local activists, concerned about AIDS patients' privacy, objected to a
provision of the Soros-backed alternative that created a central registry
of medical-marijuana users. Wayne Turner, who ran the local campaign, says
of the outsiders: "Soros and his funders, they just wanted to win. From our
perspective, it was better to have local people and real patients fighting
for our lives." The local measure ultimately was blocked by Congress.

These days, Mr. Zimmerman, whose office is in Santa Monica, Calif., is
careful to praise the local activists for their political spadework, but he
says they should step aside when an election is on the line. "You don't
want someone with a Rastafarian hairdo and a tie-dyed T-shirt representing
your ideas," he says.

Following the victories in 1998, the three funders met at Mr. Soros'
country estate outside New York City. They agreed to increase their
contributions to more than $3 million each for 2000.

Last fall's victories in California and four other states were tempered in
Massachusetts, where the funders learned that the public's sympathy for
drug users doesn't extend to dealers. The trio backed an initiative in the
generally liberal New England state that included the diversion to
treatment of some small-scale dealers who could show they sold drugs to
feed their addiction. The measure was barely defeated, 52% to 48%.