Bradley Probers Study Links to Powerful Ally : Inquiries Centering on Builder Abraham Spiegel Fail to Show That Connections Were Unethical

When Abraham Spiegel needed help with a city bureaucracy that was seeking to halt construction of a Westside office building, he arranged to have breakfast with a powerful friend--Mayor Tom Bradley. And, according to a source familiar with the meeting, Spiegel brought along his blueprints.

When Bradley needed advice on his personal finances, he routinely spoke with Spiegel, a wealthy bank owner and builder. Spiegel placed securities orders on the mayor’s behalf with a stockbroker at Shearson Lehman Hutton, said sources familiar with Bradley’s financial arrangements. The two men also shared a broker at Drexel Burnham Lambert’s exclusive junk-bond unit in Beverly Hills.

The intertwined business, political and personal affairs of Bradley and Spiegel have come under scrutiny from federal and city investigators.

On Friday, The Times reported that a federal grand jury in Los Angeles has opened a criminal investigation into Bradley’s personal finances and business ties with eight financial institutions, including Spiegel’s Columbia Savings & Loan Assn. of Beverly Hills.

A subpoena issued by the U.S. Justice Department earlier this month ordered the city treasurer’s office to surrender “all documents relating to . . . Columbia Savings & Loan Assn., its directors, officers and employees.”

The mayor in a statement released Friday said he was confident that “there has been no impropriety on my part.” And through a spokesman the mayor has said he will cooperate in providing “all relevant and appropriate information to aid in this (federal) investigation.”

Another subpoena served on former Bradley fund-raiser Ira Distenfield also focused on records pertaining to Columbia and Drexel, according to Distenfield’s lawyer, Jules Radcliff. Sources said Columbia also has received a subpoena. Spiegel is the majority shareholder and former chairman of Columbia.

Spiegel Family Friend

As part of their investigation, federal authorities continue to examine Bradley’s trades to determine whether the mayor had access to insider information. The investments include securities offered by the Drexel junk-bond operation not readily available to the public. The Drexel unit was then headed by Spiegel family friend Michael Milken, who has been indicted on fraud and insider-trading charges. The U.S. attorney’s investigation of Milken includes a probe of Columbia, a leading customer of Drexel junk bonds.

Ties between Bradley and Spiegel also were examined during the city attorney’s six-month conflict-of-interest investigation of the mayor. City Atty. James K. Hahn declared Sept. 13 that he had found no illegality in connection with a $50,000 loan from Columbia to Bradley and some business partners, or the way a top mayoral aide cut through city red tape for three Spiegel developments--including the one that figured in the February, 1987, breakfast meeting of Spiegel and Bradley in a deserted dining room of Hillcrest Country Club in Beverly Hills.

In his report, though, Hahn chided the mayor for his “indifference to . . . ethical concerns” and his failure to avoid the appearance of conflicts of interest in some of his recent investments.

There is no evidence that Bradley and Spiegel, the founder of Columbia Savings & Loan Assn., ever crossed the line between favors among friends and unethical behavior. For example, although the mayor had breakfast with Spiegel and looked at his blueprints for his Third and Fairfax Plaza project, The Times found nothing to show that the mayor took action to help Spiegel, who finally got the city approval he wanted.

Nonetheless, at a time of heightened concerns about ethics in government, the relationship raises questions about the degree of access to the mayor enjoyed by political contributors and supporters who have dealings with the city. Spiegel, his family and businesses have contributed $53,150 to Bradley campaigns since 1983.

The rapport between Bradley and Spiegel goes beyond that of a politician and a loyal contributor. The sheer number and personal nature of Spiegel favors for the mayor ensure that he shares an intimacy with Bradley that few others enjoy.

Few Friends Are Close

“Tom Bradley doesn’t have many real friends,” said one source who knows them both. “It’s not easy to get close to the mayor.”

The only two who know all the details of the Bradley-Spiegel relationship are not talking. Both men have declined requests to be interviewed by The Times.

“Mr. Spiegel has always been a very private individual,” said Lenore Hatch, a Columbia spokeswoman. “He has rarely been interviewed and continues his position of maintaining his privacy.”

The mayor’s spokesman, Bill Chandler, said Bradley has nothing to say about his relationship with Spiegel beyond his statement to the city attorney’s office as part of its investigation.

Those close to the two men are likewise reluctant to discuss the links that bond them. Most who agreed to talk with reporters did so only on the condition that their names be withheld.

On one count, they all agree: Abe Spiegel and Tom Bradley truly like and admire each other.

Symbols of Power

When Bradley gave a five-minute welcoming address in 1987 at Drexel’s annual junk-bond conference--known informally as the “Predators’ Ball”--the mayor heaped praise on host Michael Milken by comparing him to Spiegel.

“We haven’t had this kind of power and this kind of influence in this city since Abe Spiegel sat down with his friends from Israel,” Bradley said.

The mayor has traveled twice to Israel to participate in ground-breakings and dedications of museum and university buildings donated by Spiegel. And Spiegel in turn raised funds at a Los Angeles dinner to establish a Tom Bradley Chair in Social Integration at a college near Tel Aviv. Spiegel, a survivor of Nazi concentration camps, also endowed an Abraham Spiegel Chair in Holocaust Studies. The school, Bar-Ilan University, granted Bradley an honorary doctorate. Spiegel has one, too.

At the mayor’s recommendation, Spiegel appointed a longtime Bradley aide, William Elkins, to Columbia’s board of directors. And Spiegel paved the way for a $50,000 loan when Bradley and some partners needed to make a balloon payment on two five-acre parcels of vacant Riverside County land.

Certainly Abe Spiegel has ties to other politicians besides the mayor, most notably County Supervisor Michael Antonovich, who admitted earlier this year that he had violated federal campaign laws by improperly reporting a $100,000 loan from a Spiegel business during Antonovich’s 1986 U.S. Senate bid.

Spiegel--an appointee to the Little Hoover Commission--has, along with his thrift and his family, contributed to many other election campaigns and often has invited local officials to galas for visiting Israeli dignitaries.

Known by Everyone

“Anybody who’s active in L.A. politics knows Abe Spiegel,” said Councilman Michael Woo.

But those who know Spiegel say his relationship with the mayor is special.

“Antonovich (who takes a strong pro-development stance) is good for business,” said one source. “But with Bradley, it’s more like love.”

One benefit of the friendship between Bradley and Spiegel has been extraordinary access to the mayor and his staff.

In the three development cases examined by the city attorney’s report, Spiegel corresponded frequently with another of Bradley’s top assistants, Frances Savitch, who is also a personal friend.

Projects Exempted

Two of the developments--Third and Fairfax Plaza and a nearby apartment building with ground-floor shops--were eventually exempted by Bradley-appointed commissioners from potentially costly restrictions imposed under Proposition U, the city’s 1986 growth-control initiative. Faced with community opposition, Spiegel last year gave up on the third project, the 137-acre Carey Ranch in Sylmar, opting to sell the property.

For all three, Savitch took steps to cut through red tape for Spiegel and his partners, according to city documents.

Savitch, now a private lobbyist, said in an interview that her efforts for Spiegel did not amount to special treatment. She said her job was to help solve problems for all constituents, even though planning and development issues were not part of her formal job description.

The city attorney’s report investigated all three Spiegel projects and concluded “there is no available evidence that the mayor took any action or attempted to influence any governmental decision.”

Sources familiar with the city attorney’s report said it contained virtually everything investigators knew about Bradley’s relationship with Spiegel and that, unless new evidence is turned up, the report’s conclusions would stand.

In the case of Third and Fairfax Plaza, Spiegel’s partners had failed to persuade the Department of Building and Safety to exempt the four-story office project from Proposition U, a slow-growth initiative that restricted the size of buildings. This meant that the project would need to be reduced by half, or abandoned.

Urgent Letter

On Feb. 2, 1987, Spiegel received an urgent letter from his partner, Joseph Kornwasser. “I would appreciate any help you can render in resolving a now critical situation. As of the current time over $1.7 million have been incurred in the actual construction of the project, which would be unsalvageable if the building were halted.”

Spiegel went to work immediately, contacting Savitch and complaining about the interpretation by building and safety officials. After Savitch’s assistant informed Spiegel that building officials remained adamant, Spiegel had breakfast with Bradley on Feb. 27, 1987 at the Hillcrest, a private club where Spiegel is a member.

One source said that the two men met at 7 a.m. and pored over the Third and Fairfax blueprints, then put them aside before being joined by former Israeli Foreign Minister Abba Eban and the local Israeli consul general. The mayor’s appointment calendar shows a 7:30 a.m. scheduled breakfast at the Hillcrest with Spiegel and Eban.

Eban recalled in an interview that the discussion at their table centered on two topics--Bradley’s friendship for Israel and Spiegel’s construction projects in Los Angeles. “He’s a builder,” said Eban. “He likes to see things grow and flourish.”

When the city attorney’s investigators asked Bradley if Spiegel had ever contacted him regarding the impact of Proposition U on development projects, the mayor responded, “No. Not that I recall,” transcripts show.

City attorney’s investigators told The Times that they did not ask Bradley specifically about his discussion with Spiegel at the Hillcrest, because they did not know about it.

Rare Kind of Meeting

A Bradley spokesman declined to discuss how often the mayor sits down with developers away from City Hall to review blueprints, but lobbyists say it is a rare occurrence.

In March, 1987, the Building and Safety Commission, a five-member panel appointed by Bradley, voted unanimously to reverse the department at 3rd and Fairfax and three developments involving other builders. Spiegel’s partners provided evidence that halting work on Third and Fairfax Plaza would be a financial hardship.

W.E. Stanley, a former construction company vice president who documented the amount of work completed for the building’s owners, said that part of the evidence submitted to the city by the developers of Third and Fairfax was “slightly inflated.” “We were fudging the numbers, no question,” Stanley said.

At the same time Spiegel was seeking assistance from the mayor’s office on Third and Fairfax, he also was helping to shape Bradley’s financial portfolio.

Recently, Spiegel told the magazine Institutional Investor that he had served as the mayor’s informal investment adviser for years. “If and when (Bradley) asks me, I give him advice,” Spiegel said.

But the arrangement goes much further.

Sources close to both men said Spiegel spoke periodically with Bradley over the telephone regarding potential investments. Spiegel then directed a secretary to process trades on behalf of the mayor by calling Spiegel’s broker at Shearson, one of the sources said.

As recently as January, 1987--the month before the Hillcrest breakfast--Spiegel’s office responded to requests from the mayor to provide information for tax purposes on his investment trades during the previous year. One source said these documents show that Spiegel ordered a Shearson broker to place trades for the mayor in Columbia securities, and Beatrice Foods preferred stock, which later was converted to BCI Holdings Inc. junk bonds. The BCI bonds and some Columbia securities were issued by Michael Milken’s unit at Drexel.

A Milken Associate

Another source familiar with the federal investigation of Bradley said the mayor and Spiegel also were both clients of of Jim Dahl, a Drexel trader often described as Milken’s “super salesman.” Two other clients of Dahl were Spiegel’s son, Tom, and then Rep. Tony Coelho, who resigned from Congress after it was revealed that he had purchased a Drexel junk bond with financial assistance from Tom Spiegel and Columbia.

A source close to Abraham Spiegel said Bradley placed a lot of “trust and confidence” in Spiegel’s advice. Spiegel “can take nickels and dimes and turn them into dollar bills overnight,” said the source.

Bradley and Spiegel first met in 1969. At the time, Bradley was a city councilman running what would be an unsuccessful race for mayor against incumbent Sam Yorty. Spiegel was already a familiar sight around City Hall and active in Jewish affairs. And Bradley’s 10th Council District included a significant Jewish population.

Spiegel was moved to offer his support to Bradley in reaction to Yorty’s appeals to racial prejudice during the campaign, said a source close to Spiegel. Spiegel saw in Bradley a strong leader who could foster harmonious relations between the city’s Jews and blacks.

After Bradley won his rematch against Yorty in 1973, he and Spiegel grew even closer. Spiegel became Bradley’s “point man” in Los Angeles’ Jewish community, raising the mayor’s profile among Israeli officials and thus among affluent local supporters of Israel.

“Abe Spiegel has taken Tom Bradley by the hand to all sorts of Jewish events I have been at,” said one Democrat, who is influential in Westside Jewish politics.

Olympic Tribute

During planning for the Los Angeles Olympics in 1984, some of Bradley’s backers took up a proposal from local rabbis to honor the 11 Israeli athletes slain by terrorists during the 1972 Munich games. But the plan presented a thicket of problems because Olympic officials, worried that a memorial would attract more terrorism, were not about to allow such a ceremony at the Coliseum, said Maureen Kindel, a Bradley supporter who was involved in the discussions.

The mayor’s office agreed to hold the event at City Hall, but Israeli officials did not want to participate unless it was held in the Coliseum. Bradley, said another source, suggested asking Spiegel for help. Spiegel made a few well-placed calls overseas and within minutes the Israeli consulate embraced the proposal for a City Hall ceremony, the source said. Spiegel paid for the commemorative plaque, and hosted a reception for the Israeli Olympic team.

And there was one last touch. According to a third source, Spiegel had prominent politicians in Israel, including the mayor of Tel Aviv, send thank-you telegrams to Bradley.

The mayor turned to Spiegel in 1985 when he needed help making a $50,000 balloon payment on a Riverside County real estate partnership.

Bradley explained to investigators for the city attorney’s office how the loan came about. “I talked with Abe Spiegel who was chairman of the board of the bank and told him that we were looking for a loan in order to pay off this balloon payment. And he said, well, ‘Send something over and have them meet with my real estate people and we’ll see what we can do.’ ”

Bradley said he sent his partner, Juanita St. John, the head of the troubled Task Force For Africa/Los Angeles Relations, to meet with Spiegel and the loan was arranged. The mayor could not recall the interest rate or whether the partnership had to pay any points to obtain the loan.

Travels in Israel

In 1985 and in 1987, Bradley and Spiegel traveled to Israel together. The mayor’s expenses for the first trip were paid by Bar-Ilan University through a donation provided by Spiegel, said one source. The two attended a ground-breaking for a mathematics and computer science building that Spiegel had donated to the university.

According to the mayor’s disclosure forms, his second Israel trip was financed by the International Society for Yad Vashem, which operates a memorial in Jerusalem to the 6 million Jews who perished in the Holocaust. The occasion was the dedication of a Moshe Safdie-designed monument to the 1.5 million Jewish children slain by the Nazis. Spiegel paid for it.

The Yad Vashem event was particularly moving, recalled Kindel, who was along on the trip. At the entrance to the underground chamber were photographs of nine of the young victims, including Uziel Spiegel, Spiegel’s 2-year-old son who perished at Auschwitz.

On the 1987 journey, Spiegel and Bradley took a side trip to Egypt to meet with that country’s president, Hosni Mubarak. The two men carried peace messages from Israel and Spiegel discussed donating a “peace park” in Cairo.

All this activity played well at home on the city’s Westside. “It’s good for Tom, politically, to be popular, to have the Israeli government know who you are,” said another member of the traveling party.

At the same time, another source noted, the mayor’s presence underscored to Israeli leaders that Abe Spiegel was an important man back in the United States.

While Bradley and Spiegel may go weeks or months without seeing each other, they keep in touch by telephone and the affection between them is documented by their frequent correspondence.

In April, Spiegel wrote Bradley after he narrowly avoided a runoff in the mayoral primary, “I really did not have any doubts about the outcome. It shows that even before people enter the booth, they know what is good for them.”

At a time when the mayor was under fire--his lapses in ethics causing him serious political problems--such words were welcome. Bradley responded in a letter to Spiegel: “Your warm wishes are deeply appreciated. It is dear friends such as you and Eda (Spiegel’s wife, Edita) who keep the spring in my step, the warm glow in my heart, and increase my joy in the job.”

At a Distance

These days, though, Bradley and Spiegel appear to have distanced themselves from one another--publicly, at least.

Bradley backed out of a third trip to Israel with Spiegel in April after reports that the mayor had engaged in possible conflicts of interest surfaced. He did not attend Bar-Ilan’s Sept. 7 fund-raising dinner at the Century Plaza, though other politicians did appear. On Sept. 18, Spiegel declined an invitation from the Israeli consulate to attend Bradley’s City Hall reception for Israeli Labor Party leader Shimon Peres.

But mutual friends say that, privately, Bradley and Spiegel remain close. The two continue to exchange their gentlemanly notes. As recently as Sept. 6, Spiegel sent the mayor a letter with photographs enclosed. The mayor’s office refused to reveal the contents.

Times staff writers Dean Murphy and Tracy Wood in Los Angeles, Scot J. Paltrow in New York and Dan Williams in Israel contributed to this report.

THE SPIEGEL CONNECTION Beginning in 1969, Mayor Tom Bradley and Abraham Spiegel, the owner of Columbia Savings & Loan Assn., established a close friendship. Here are some examples of how the two men have mixed their personal, political and business interests over the last decade:

1978: Spiegel, acting on Bradley’s recommendation, selects William Elkins, a longtime aide to the mayor, to serve on Columbia’s board of directors.

1979: Bradley reports making his first purchase of common stock in Spiegel’s thrift.

1980: Spiegel notifies Bradley that he is raising funds to establish a chair at Bar-Ilan University in Israel in the mayor’s name.

1981: Spiegel gives Bradley a television set worth $300 at Christmas.

1982: Bradley writes Spiegel a letter of thanks for arranging a gift subscription to the Jerusalem Post.

1983: Spiegel sends correspondence to Bradley in May marked

“personal and confidential,” the 10th such letter in four years.

1984: Bradley, at Spiegel’s suggestion, appoints Milton I. Swimmer, a Spiegel business acquaintance, to the city Convention and Exhibition Center Authority.

1985: Spiegel paves the way for a $50,000 Columbia loan to Bradley and his business partners to finance a balloon payment on a real estate investment. In November, Bradley and Spiegel travel to Israel together.

1986: Spiegel arranges investments for the mayor in Columbia securities and Beatrice Foods preferred stock, which was converted to BCI junk bonds.

1987: Spiegel’s office in January furnishes Bradley with information for tax purposes on the mayor’s investment activity during the previous year. In late February, Bradley and Spiegel meet over breakfast at the Hillcrest Country Club, and review construction blueprints for Third and Fairfax Plaza, a Spiegel office building. The project is approved a month later by the city Building and Safety Commission. In June, Bradley accompanies Spiegel on a second trip to Israel. Bradley appoints Spiegel in August as co-chair of the mayor’s committee for the celebration of Israel’s 40th anniversary.

1988: Spiegel’s thrift, Columbia Savings, gives $4,000 to Bradley’s reelection campaign, bringing to $53,130 the total of political contributions the mayor has received from the Spiegel family, Columbia and its employees since 1983.

1989: Bradley backs out of another trip to Israel with Spiegel in April as the mayor’s ethical and political problems mount. It is learned in May that Bradley, along with then-Congressman Tony Coelho, are the subjects of a preliminary criminal investigation by the Justice Department in Washington in connection with their financial dealings with Drexel and Columbia. In August, Bradley amends his statements of economic interests to disclose new investments in Columbia warrants and bonds. The mayor’s revised forms reveal that he owns more than $100,000 in Columbia securities.