State fines ex-Maywood water company head in money-laundering case

The former head of a small water company in Maywood was fined $4,500 by the state's Fair Political Practices Commission on Monday for campaign money laundering involving a cash-for-check exchange that benefited a southeast Los Angeles County political action committee.

The case against Gustavo Villa stemmed from a transaction uncovered by The Times, which in 2012 reported that Arturo Chacon, an elected board member with the Central Basin Municipal Water District, gave Villa $2,000 in cash and asked him to write a check.


Villa, who ran the Maywood Mutual Water Co. No. 2 at the time, said he asked a secretary, Beatriz Ortega Torres, to write the check for Chacon.

The check ended up going to California Citizens for Good Government, a political action committee that Chacon's brother, Hector, had helped manage, raising thousands of dollars from attorneys, trash haulers and construction management firms who relied on contracts from government agencies.

Money to the committee was used to fund some notably heated political campaigns, including a City Council election in Bell and a recall in the City of Commerce. Villa could not be reached for comment. The FPPC said he agreed to pay the fine.

The FPPC did not take action against Chacon, who declined to comment. But in its complaint, the FPPC said the Central Basin official denied any involvement with the $2,000 contribution. And Villa's former secretary told the panel she had no recollection of Chacon being present when her then-employer asked her to write the check.

Gary Winuk, chief of the FPPC's enforcement division, said campaign money laundering is a serious problem because it obscures the true source of political money.

"Campaign money laundering is a serious violation because the public has a right to know who's contributing to campaigns, who is behind campaign advertisements and mailers," he said. "They also have a right to know what a public official's sources of income are to see if there are conflicts of duty."

Winuk said the FPPC launched its investigation after reading about the money-for-check transaction in The Times. In addition to the $2,000 in cash that was exchanged, the FPPC said Villa had an $800 check made in the name of Torres in October 2008. Those funds went to a council recall campaign in Maywood.

According to the complaint, Torres said she wrote a check for the cash because she did not want to displease her boss, Villa. Villa told investigators he handed the $2,000 check to Chacon, and the money then went to California Citizens for Good Government.

In 2012, Villa said that when he was first asked by Chacon, he told him he didn't have his checkbook, and then agreed to ask his secretary to write the check. He said he felt pressure not to turn Chacon down because of the regional influence of the public agency he served.

Chacon declined to be interviewed at the time; but his brother, Hector, a board member in Montebello, denied that his brother acted inappropriately.