Mayor, Associates Lead Charter Issue Funding

By HUGO MARTIN and JEFFREY L. RABIN

March 29, 1997 12 AM PT

TIMES STAFF WRITERS

In an adroit series of maneuvers worthy of one of his fabled business deals, Los Angeles Mayor Richard J. Riordan and his associates have used a sophisticated group of interlocking campaign committees to raise more than $1.9 million to promote his effort to rewrite the City Charter.

From a financial perspective, the mayor’s effort has been so successful that it has overwhelmed competing campaigns by city employee unions, the City Council, and the public interest group Common Cause.

The intricacy, success and implications of the Riordan effort, City Hall sources say, have led Los Angeles City Ethics Commission members to wonder whether current regulations ought to be amended to close loopholes allowing candidates for office to make such free use of so-called “independent expenditure committees.”

Until Thursday, the sources say, the Ethics Commission had been investigating whether the fund-raising tactics of the committees formed by Riordan and his rivals comply with campaign laws. Then, in a surprise move, the state Fair Political Practices Commission ruled that strict new limits on campaign contributions that took effect Jan. 1 do not apply to candidates for the proposed charter commission.

Virtually all of the money raised to win passage of Riordan’s charter reform measure on the April 8 ballot has come from Riordan personally and about 30 individuals and businesses with whom he has close ties.

More than two dozen of the donors have given between $25,000 and $50,000 each. In fact, 94% of the $1.92 million has come from contributors of $10,000 or more.

But Riordan is by far the largest contributor. The multimillionaire mayor provided $575,000 in seed money to launch a signature-gathering effort that succeeded in putting the charter reform initiative before the voters.

“I was a catalyst to get people together who had the wherewithal to make contributions,” Riordan said in an interview. “ . . . If you look at the vast, vast majority of them, [they] basically are people who are doing this because they love the city and they trust me.”

Many of the largest checks were written in late December, just days before tough campaign contribution limits approved last fall by California voters went into effect.

Until the FPPC ruling, it was widely believed the limits contained in Proposition 208 prohibited candidates for the proposed charter commission from raising more than $250 from any single contributor after Jan. 1, 1997. So-called independent expenditure committees not directly controlled by a candidate also were thought to be covered by those limits.

So, just before New Year’s Day, the campaign committee supporting the mayor’s slate of charter reform candidates, Citizens for a Better Los Angeles, collected a total of $556,500 in about three weeks.

One donor, Los Angeles businessman A. Jerrold Perenchio, gave $100,000 two days after Christmas--400 times the new limit. That check was in addition to an earlier $50,000 contribution, making him the largest donor to the charter reform effort apart from Riordan.

An aide to Perenchio at Chartwell Partners declined to comment, saying he has a policy of not talking with the press.

“It’s clear,” Riordan said. “We did the job before 208 took effect. It’s that simple.”

To do the job, the mayor has employed three separate committees: Citizens for a Better Los Angeles, Citizens to Turn L.A. Around, and Yes on Prop. 8.

The treasurer of all three committees is Riordan’s longtime campaign treasurer, David Gould. Riordan is the controlling officer of Citizens to Turn L.A. Around, while two of his close allies--Bill Wardlaw and Mike Keeley--operate the other committees. All share the same address, campaign consultants and legal advisors.

The campaign’s chief legal consultant is Keeley, an attorney who acted as Riordan’s chief operating officer until he resigned in May after admitting he had leaked confidential information to lawyers on the opposing side of a contract dispute with the city. Riordan’s former law firm, Riordan & McKinzie, has been paid $58,000 to represent the reform effort and is owed $70,810 more.

The mayor’s links to many of the contributors are similarly close. Stanley Zax, a Riordan friend and president of Zenith Insurance Co., gave $34,000 to Citizens for a Better Los Angeles on Dec. 16 and $33,000 to the Yes on Prop. 8 campaign on Jan. 29.

Zax said he knows very little about charter reform but said, “If Dick Riordan believes in it and is willing to put up his own money, the least I can do is put up some of my money.”

“As far as I’m concerned, this man is a saint,” he added.

Herbert Boeckmann, a Riordan appointee to the city’s Police Commission and the owner of Galpin Motors, the nation’s largest Ford dealership, wrote a $25,000 check in late December to one committee and another $25,000 check in early February to the other committee.

Riordan and Boeckmann have long been friends and the mayor bought his red Ford Explorer at Galpin Motors.

Many other contributors followed the same pattern.

Stewart A. Resnick, chairman of Franklin Mint, gave $25,000 to one committee in December and $25,000 to the other in January.

Back-to-back checks in the same amount were sent to separate committees by Walt Disney Co., Saban Entertainment, Wells Fargo Bank, High Desert Medical Group of Lancaster, Petersen Properties, and Peter W. Mullin, a Los Angeles management consultant.

Ticketmaster Southern California Inc. gave a total of $50,000 in checks to all three committees supporting Riordan’s charter reform effort. Fred Rosen, president and chief operating officer of Ticketmaster Corp., was named by Riordan in 1995 to head a task force to try to return a professional football team to Los Angeles.

Media baron Rupert Murdoch and his News America Publishing gave a total of $49,000 in separate checks. Financier and producer Marvin Davis also contributed $49,000.

Riordan said the contributors were “individuals . . . who have no ax to grind with the city.” But some of the major donors currently do business with the city of Los Angeles.

David Price, chairman of American Golf Corp., gave a total of $50,000 to two of Riordan’s committees in the December and January. His firm has operated a city golf course in Westchester for 30 years and has submitted bids to operate two other city courses.

“One has nothing to do with the other,” Price said in an interview. “If the charter is reformed in a positive way that makes the city better, that is not connected to us running a city golf course.”

Riordan said he did not know Price has a contract with the city until several weeks ago.

Two banks that do business with the city also are among the donors. Wells Fargo contributed $50,000 and Bank of America gave $25,000 to the charter reform campaign. Both companies provide direct-deposit banking services for the city’s payroll system.

Critics argue that all this adds up to a reform movement beholden to Riordan and his business allies.

Councilwoman Ruth Galanter said the contributions from big businesses raise many questions. “The mayor has gone to the biggest corporate interests in town and they have given it,” she said. “My question is why have they given it.”

Julie Butcher, a spokeswoman for the city’s Service Employees International Union, said she doesn’t believe that big business contributes tens of thousands of dollars to campaigns for simply altruistic reasons. “I think they are trying to buy themselves a new set of rules that benefit corporate leaders, not the working-class people,” she said.

Butcher said she believes Riordan and the contributors want to fund a charter overhaul that will give the mayor the authority he has long demanded to privatize city services and make City Hall more friendly to business.

To fight back, Butcher had vowed that labor would match Riordan’s fund-raising with up to $500,000 for 15 union-backed candidates. But according to campaign statements filed Friday, the unions have apparently given up to $15,000 per candidate, about half of what they promised to spend.

The union money is being spent on political consultants who are sending campaign mailers and other literature on behalf of the candidates, according to the statements.

Harvey Englander, a campaign consultant on charter reform to a majority of the City Council, declined to discuss the amount collected at a February fund-raiser attended by seven council members, City Hall lobbyists and union representatives.

David Fleming, a Studio City attorney and Riordan appointee to the city’s Fire Commission, defended the mayor’s reform campaign. He argued that the interest of the business community is to create an efficient, responsive government--an interest that he said coincides with that of most residents.

“Big business is going to get something out of this,” said Fleming, who gave $32,500. “It’s going to get a city government that functions properly.”

Others among the mayor’s contributors argee.

“We deal with a lot of municipalities and there are many municipalities that are easier to work with than Los Angeles,” said Darius Anderson, a spokesman for the Ralphs and Food 4 Less supermarkets, which contributed $50,000 to the campaign. “It’s simply a good-government position.”

Ralphs recent merger with Food 4 Less was arranged by Apollo Advisors, an investment firm that includes former junk bond traders from the failed Drexel Burnham Lambert trading operation in Beverly Hills. Apollo Advisors and two of its principals, Antony Ressler and John Kissick, gave a total of $25,000 to the Riordan effort on the same day in December.

Their contributions are the subject of a negative radio ad by Riordan’s mayoral opponent, state Sen. Tom Hayden (D-Los Angeles), who charges that the mayor’s “junk bond friends” are “buying the city of Los Angeles to seek a greater advantage over homeowner groups, city employees and environmentalists.”

But longtime Riordan friend Eli Broad, chairman of SunAmerica investment firm and co-founder of Kaufman & Broad development company, said he gave the mayor’s reform effort $50,000 because, like many other business leaders, he believes the current charter gives the council too much power and the mayor too little.

“This whole business of every council member feeling as important as the mayor doesn’t make sense,” Broad said. “It does not make sense to have a weak mayor.”

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Financing the Campaign

Here are the top contributors to the mayor’s charter reform campaign and candidates:

Total raised by three committees: $1.89 million

Richard Riordan, mayor: $575,000

A. Jerrold Perenchio, film producer/investor, Chartwell Partners: $150,000

Zenith Insurance Co: $67,000

Herbert Boeckmann, owner of Galpin Motors and Riordan appointee to Police Commission: $50,000

Eli Broad, head of SunAmerica investment firm, and co-founder of Kaufman & Broad home builders: $50,000

High Desert Medical Group, Lancaster: $50,000

Peter W. Mullin, owner, Management Compensation Group: $50,000

David G. Price, Chairman, American Golf Corp.: $50,000