L.A. County district attorney looks into possible money laundering

Los Angeles County prosecutors say they are probing possible campaign money laundering that may be connected to a local water board member who is part of a powerful political family in the City of Commerce.

The inquiry into the financial dealings of Art Chacon, a board member at the Central Basin Municipal Water District, comes in response to a Times story that reported on his fundraising for a political action committee in 2008. The committee was advised by Chacon’s brother, Hector, who is a school board member in Montebello and veteran campaign consultant in southeast L.A. County.

David Demerjian, head of the L.A. County district attorney’s Public Integrity Division, said investigators were trying to determine whether Art Chacon had concealed the true source of campaign contributions.

“Campaign contributions cannot be made by anyone other than the actual source of the funds,” he said.

Gustavo Villa, the general manager of Maywood Mutual Water Co. No. 2, told The Times that Art Chacon visited his office one day in late 2008 with $2,000 in cash. Chacon asked Villa to write a check in exchange for the money, Villa said.

Because he didn’t have his checkbook, Villa said he asked his secretary, Beatriz Ortega, to write the check, which went to a committee called California Citizens for Good Government.

Ortega confirmed the account, saying she didn’t know at that time that it was illegal for her to accept the reimbursement.

“I was naive of course....I’ve never been in politics,” she said. “I was a new employee and trying to listen to my boss.”

On Thursday, Ortega said she had been contacted by a district attorney’s investigator who showed her photographs of Art Chacon and asked if he had visited Villa often. The investigator also spoke with other employees at the water company, she said.

Demerjian said in the past the office has not prosecuted “conduits” in campaign finance cases like this one. “We try to go after the true source of the funds,” he said.

Art Chacon has declined to discuss the allegations with The Times and could not be reached for comment this week.

Earlier this year, however, Hector Chacon denied the claims, saying his brother “never exchanged any cash with [Villa] or his employee.”

Hector Chacon added that Villa “is upset with anyone associated with the Central Basin,” because he failed to secure a loan from the water district for his water company.

California Citizens for Good Government was involved in a variety of bruising campaigns in 2008, including a recall in Commerce and council election in Cathedral City.

Hector Chacon described himself as the “primary consultant” for the committee. Out of about $100,000 it raised between 2008 and mid-2009, nearly $75,000 went to his company, Quantum Management Services.

Art Chacon has served on the Central Basin water board since 2006.

sam.allen@latimes.com