New Jersey Democratic Attorney General Peter C. Harvey's Office, after two months of study, said last week that Douglas R. Forrester==the Republican candidate for governor==did nothing criminal by using proceeds from a captive insurance operation for his campaign.

Money from the Washington, D.C.-based Heartland Insurance Company surfaced as a campaign issue in August. Mr. Forrester is running against Democratic U.S. Sen. Jon Corzine in a contest for a post that was previously held by Democrat Jim McGreevy, who resigned after confessing he had an extramarital gay affair. Democratic Senate President Richard Codey has filled out the term in an acting capacity.

At issue for Mr. Forrester were a variety of state election statutes, part of the criminal law, which outlaw political contributions by insurance corporations and other businesses. The measure was enacted in 1911 when a slew of reform bills were passed to halt the influence of election spending by a variety of industries.

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