Doughnut shop owners, developer face campaign-money laundering fines

Doughnut shop owners, developer face combined $90,000 in fines for laundering L.A. campaign contributions

A Southern California developer and the owners of a Boyle Heights doughnut shop face a combined $90,000 in fines from the Los Angeles City Ethics Commission after acknowledging they improperly funneled contributions to Los Angeles City Councilman Jose Huizar's reelection campaign several years ago.

Under city rules, any contributions to a political candidate must be made in the name of the person who is the actual source of the money. Investigators found no evidence that Huizar or his staff were aware of the money laundering, which took place in 2010 and 2011.

City investigators concluded Somaly Lor Sosa and Jose Jesus Sosa, the owners of a Boyle Heights doughnut shop, asked their employees, family members and others to donate to the Huizar campaign and reimbursed them. That masked the source of more than two dozen campaign contributions totaling $12,300 between September 2010 and February 2011, according to an agreement reached between the ethics agency and the Sosas.

The pair wanted to curry favor with Huizar, according to a summary of the facts included in the proposed agreement. Their son-in-law, Craig Jones, hoped to develop a Boyle Heights property owned by the Los Angeles Metropolitan Transportation Authority and Huizar sat on the Metro board at the time, according to commission records.

Investigators also found that developer Donald Chae, known for the Plaza Mexico development in Lynwood, laundered donations to the same campaign.

Chae asked one of his employees to help raise money for the Huizar campaign in October 2010, according to a fact summary included in the proposed agreement signed by the developer. The understanding was that the donors would be reimbursed with money from a company that he co-owns, M + D Properties, the summary stated.

Chae met that same month with council aides to discuss a possible development on Olympic Boulevard in Huizar’s district. Chae and his company "hoped to further their business interests by establishing good relationships with politicians and the community," the ethics commission summary of the case stated.

The laundered money totaled $5,200 that the property company reimbursed to 11 people who made contributions to the Huizar campaign in their own names. The donations were made between October and December 2010.

Chae's attorney, Ken White, said the developer is in Korea on family and business matters. He declined to provide additional details about the development that Chae had discussed with council aides, saying that Chae "did not end up participating in" that development.

White also declined to discuss how Chae came up with the idea of laundering the campaign donations and how he expected to further his interests. "Often businesspeople make donations thinking that, generally, making donations will assist their business in the community, not in a quid pro quo way," the attorney said.

"When the ethics commission approached him, Mr. Chae immediately cooperated and we swiftly resolved this to the mutual satisfaction of us and the ethics commission," White said. "We’re happy to put it behind him."

Chae and his company face a possible fine of $27,500 and the Sosas could pay $62,500 – half of the maximum possible penalties in both cases. City investigators wrote that those fines reflected “the egregious nature of the violations,” and will serve to encourage others to cooperate with the commission.

The commission will meet Tuesday to consider the proposed settlements and fines. The agreements do not become final until the ethics commission agrees to them.

Somaly Sosa, reached Wednesday morning by phone at USA Donuts & Croissants, said she did not understand English and would ask her husband to call back.

A Huizar spokesman did not respond to messages seeking comment Wednesday morning. Neither did political consultant Parke Skelton, who worked on Huizar's 2011 campaign.

The ethics commission also is scheduled to vote on several other, smaller fines Tuesday. They include:

- a roughly $17,000 proposed penalty on an independent committee that supported former controller candidate Dennis Zine. The committee acknowledged violating campaign contribution limits by failing to properly report a mailer as a non-monetary contribution in the 2013 campaign.

- a $15,000 proposed penalty for former City Council candidate Rudy Svorinich Jr. and his 2011 campaign committee for failing to provide the commission copies of campaign communications.

- a $5,000 penalty for former planning department employee Daniel Ahadian, who left city employment last year. He began working as a paid consultant to a developer on a project he'd previously been involved in as a city employee.

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