Dirty Money
Mayoral election degenerates into 'guilt by fundraiser'
Money talks in politics, and in the Los Angeles mayor's race, dirty money talks, well, dirty.
And inside L.A. politics, nobody's talking more these days than sheriff's deputy-turned- lobbyist Clark Davis, who was at the heart of "pay-to-play" allegations that tainted Mayor James Hahn nearly two years ago and who recently blew the whistle on challenger Antonio Villaraigosa's fundraising that led him to return $47,000 to a Florida company.
"There's been a negative fallout on everybody," Davis, now retired, said in a recent interview. "I think there's been a negative fallout on the city, on me, on the mayor."
As a friend of Hahn, it's to Davis' satisfaction to have helped make Villaraigosa's ethics the target of days of recent news coverage, which has helped neutralize Hahn's problem over ongoing local and federal investigations of corruption in his administration.
With special-interest spending in the mayor's race at a record -- $15 million overall in the primary and runoff -- the campaign has devolved into something of a shouting match over whose campaign money is dirtier.
According to government watchdogs, the intimations, accusations, innuendos and negative ads all combine to undermine public confidence in government even as both candidates try to cast the critical issue as this: "Who do you trust?"
"The big problem is it will turn off the voters to the political process," said Bob Stern, president of the Center for Governmental Studies, a Los Angeles-based, nonpartisan, nonprofit organization that examines campaign financing and ethics issues.
"It's like United going after American as being dangerous to fly, and (American) saying 'No, United is more dangerous.' The result would be we wouldn't fly, and so we don't vote. There is an adverse effect as to how people feel -- much more cynical about government and politicians."
As the television, mailer and media battle over "my money is cleaner than your money" escalates, the reality is that most of the millions of dollars being raised on both sides is being "contributed by people who want something from government," he said.
"When that happens, (the media) and the candidates are both going to be able to draw connections between the money and decisions, and that's where the candidates and the media start drawing conclusions."
Among the connections that have been drawn so far are these:
* Villaraigosa took and then returned $47,000 from Travel Traders, a Florida company that's believed to have an interest in Los Angeles, though some of its employees seemed to know nothing about the race. Recently Villaraigosa and several other council members asked to review Los Angeles International Airport concession extensions to potential competitors of the firm, though Villaraigosa said he only wanted to ensure the airport commission's decision was proper.
* Hahn faced pressure to return $336,000 for his political campaigns from developer Mark Abrams, who has been fined $270,000 by the Ethics Commission; $25,500 for his 2001 race from lawyer Pierce O'Donnell, who is charged with money laundering, and what's left in a fundraiser's account from real estate developer Charles Fitzgerald, who contributed $70,000 to send anti-Villaraigosa mailings in the candidate's 2001 runoff. Fitzgerald is now a fugitive on unrelated fraud charges. Hahn has said the money has all been spent.
* An independent expenditure of more than $82,000 to Villaraigosa from developer Richard Meruelo, who lives part time in Whittier and part time in Miami. He made a controversial purchase of land the Los Angeles Unified School District had designated for a new school. Meruelo said he has no connection to the Florida money donated by Travel Traders, and made the offer 14 months before the race.
"It's the same players, the same lobbyist (Davis) ... it's very frustrating," said Bill Boyarsky, a city ethics commissioner and former journalist.
Pivotal figure The central figure in much of it is Davis, who says he can no longer get business, has retired and has health problems.
Davis' role in Hahn's troubles began in October 2003 when he went public with allegations that former Hahn-appointed Airport Commissioner Leland Wong pressured him to share a lobbying contract he had with the London-based firm W.H. Smith, which had gift shop concessions at Los Angeles International Airport, with Art M. Gastelum, a longtime political activist and campaign fundraiser.
Gastelum could not be reached for comment, but previously has said Davis asked him to join up.
When one of the concessions under the W.H. Smith contract opened up, Davis said he was pressured to give it to Gastelum's daughter and son-in-law.
W.H. Smith had backed Hahn, with its officials giving tens of thousands of dollars to his campaign, and the firm donating $50,000 to Hahn's L.A. United effort to defeat secession in the San Fernando Valley.
Wong, who was moved to the Department of Water and Power board, resigned as its vice president under pressure Jan. 13, 2004, amid allegations he improperly used his employer's money to sponsor campaign fundraisers and to give politicians gifts.
City Controller Laura Chick raised the issue of possible "pay to play" at the airport with District Attorney Steve Cooley, emanating from URS Corp., a San Francisco-based facilities, design, planning and construction management consultant at Los Angeles International Airport.
There also were allegations that Airport Commission President Ted Stein had linked their contract to campaign contributions. Stein -- who Davis said also is a friend -- resigned, denying any wrongdoing.
Davis appeared before a Los Angeles grand jury as part of its ongoing investigation. A federal investigation also is under way, but so far has resulted in a single indictment of John Stodder, a former Fleishman-Hillard executive, in an overbilling fraud case involving the city's Department of Water and Power. Stodder has pleaded not guilty.
Davis said he was "infuriated" at how the allegations had boomeranged against Hahn and Stein. He said the stage has shifted on the LAX concession front with W.H. Smith selling its U.S. hotel gift shop business to the New Jersey-based Hudson Group.
Davis said he kept in contact with Sean Anderson, a former W.H. Smith executive who became CEO of Miami-based Travel Traders, and had known for months about the campaign contributions from Travel Traders to Villaraigosa.
Suspicious dinner He said the red flag in his mind was a scheduled hour and a half dinner between Villaraigosa, Anderson and Gastelum last Sept. 27, followed the next day by $8,000 in contributions from a firm with ties to Travel Traders. He suspected LAX concessions were the target of the firm's overtures.
A spokesman for Villaraigosa said the councilman talked about his goals as mayor and didn't discuss the airport at all with Anderson and Gastelum. Davis went public after Villaraigosa and other council members last month tried to review extensions of airport concessions that were made by the Hahn-appointed Airport Commission without competitive bidding. The review effort failed.
Anderson could not be reached for comment.
Villaraigosa returned the money amid the controversy and went on the attack against Hahn over his failure to return hundreds of thousands of dollars from his past backers now facing prosecution for money laundering, ethics fines, and in the one case as a fugitive.
"I ended up having some good stuff -- it was juicy or something," Davis said.
Stern, the president of the Center for Governmental Studies, said there remains "a lot more smoke," around Hahn but that he was helped by the recent controversy.
"Hahn is just so grateful that the Florida contributions came in; he can call the kettle black. It was the worst $47,000 that Villaraigosa has ever received."
Darry Sragow, a lawyer and longtime Democratic political strategist who's neutral in the mayor's race, said when Hahn fell behind in the polls it was inevitable he would look for a negative theme.
"When you are an incumbent running for re-election and in political trouble, you have really only one option ... basically taking a baseball bat to the head of (your) opponent," Sragow said. "The Villaraigosa people know that is coming, and they took a baseball bat to Jimmy Hahn's head on pay to play.
"It becomes, 'Oh, yeah, so did he,' and the loser is the voters. It does nothing to assure the voters that the fundamental issues of the city will be addressed, and that likely means a depressed turnout."
Charges could backfire That the Florida money allegations against Villaraigosa came so late in the election could backfire as a last-ditch attempt by Hahn.
Voters have grown used to believing there is some corruption at City Hall, and may therefore cancel out the allegations and make their decision on other factors, Sragow said.
Meruelo, who in addition to his large independent expenditure on behalf of Villaraigosa is a major downtown landholder, said the candidates are doing whatever they can to get elected, because they aren't substantively different on the issues.
"They're talking about things that will resonate for 15 minutes on a voter's mind just to get elected," Meruelo said. "I think it's unfortunate that there's no better campaign themes than this. I'd love to hear about transportation, public safety issues and how to accommodate growth in this great city from these candidates, instead of who got what donation from whom and why. It's a sorry state of politics."
Sherry Bebitch Jeffe, senior scholar at USC's School of Policy, Planning and Development, said this mayor's race isn't the first, and won't be the last, defined by "who's more crooked."
Hahn was forced to find a way to blunt Villaraigosa's "pay to play" attack after it came to define the campaign, rather than any major differences on substantive issues, she said.
In the absence of concrete proof that either candidate "was swayed by those contributions," voters likely will make up their minds on "perception," including how each candidate handles the pressure of the negative attacks.
Others may simply be turned off and not go to the polls, an outcome that could favor Hahn, because his base is more conservative and Republican, which tends to vote in higher numbers.
"It's a chess game," she said.
Beth Barrett, (818) 713-3731 beth.barrett@dailynews.com
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