Two Political Money-Laundering Schemes Bring $96,000 in Fines

Los Angeles ethics officials announced $96,000 in fines Thursday against 17 participants in two political money-laundering schemes, including some who contributed to James K. Hahn’s last mayoral campaign.

In one case, 15 contributors to Hahn and other candidates agreed to pay $54,000 in fines for donations they admitted were reimbursed, including four who said they were repaid by Mark Alan Abrams, a developer who is under investigation for fraud.

In the second case, builder Alan Casden’s firm and one of its vice presidents agreed to pay $42,000 in fines for helping launder political contributions made by others to the 2001 mayoral campaign of former state Controller Kathleen Connell.

In total, $25,000 in laundered contributions went to city politicians.

“These are major cases, considering the amount of money involved,” said Tracy Westen, executive officer for the nonpartisan Center for Governmental Studies in Los Angeles.

Westen said political money laundering deprives the public of the true identity behind the contributions, and allows the launderer to circumvent the $1,000 limit on individual contributions. “If money talks, we need to hear who is talking, and money laundering hides that,” he said.

The penalties, negotiated by the staff of the Los Angeles Ethics Commission, still must be ratified by the panel, which will consider them Tuesday.

Neither Abrams nor Casden, the developer of the Palazzo at Park La Brea and other luxury apartment buildings, admit in documents released Thursday that they personally laundered contributions. Some Abrams associates, however, say he wrote them checks for the full amount of the contributions they made to Hahn’s campaign.

Additional fines could come in future months. Many more associates of Casden and Abrams have been named in public records, including court files, as having allegedly been reimbursed.

Ethics officials said there is no evidence that Hahn or the other candidates knew the contributions were laundered.

Abrams and business partner Charles Elliott Fitzgerald funneled more than $300,000 in contributions to Hahn’s political causes before their real estate group collapsed in financial scandal two years ago. Both are now central figures in a federal investigation of alleged mortgage fraud. And the district attorney is reviewing contributions arranged by Abrams for possible criminal violations.

The developers were major supporters of Hahn’s 2001 mayoral campaign, spending $70,000 on mailers attacking Hahn’s opponent, Antonio Villaraigosa.

In documents released Thursday, Scott Williams, an associate of a real estate broker who worked with Abrams, said that he, his wife and others were reimbursed by Abrams for political contributions made to Hahn and Councilmen Tony Cardenas and Nick Pacheco.

Also agreeing to pay a fine was David Eisenberg, who worked with Abrams and Fitzgerald as an investment manager and said he contributed $500 to Cardenas “with the understanding that Abrams would reimburse him,” the settlement said. “On or about the same date the contribution was made, Mark Abrams gave David Eisenberg the reimbursement funds in cash.”

In addition, real estate investors in two firms -- Angelo Development Co. and 2545 BWMT LLC -- agreed to have the firms pay $10,000 and $11,000 in fines, respectively, after admitting that the firms reimbursed contributors to the Hahn campaign.

Both firms were formed to help bankroll development projects being built by Abrams, the stipulations say.

“During a meeting around December 2000, several investors, at the solicitation of Abrams, agreed to make per-person contributions of $1,000 each to mayoral candidate James Hahn with the understanding that they would be reimbursed by ... Angelo Development Corp.,” said a stipulation signed by Cleo A. Bluth, president of the firm.

One of those fined, Garrett Kreditor, is manager of 2545 BWMT LLC. Kreditor’s attorney, Craig Steele, called the action against his client and other partnership members a “ticky-tacky kind of case” because the donors were paid back with money from their own entity.

Abrams’ attorney, Nathan Hochman, declined to comment.

A Hahn spokesman said the mayor did not know any of the money was laundered. But Villaraigosa campaign consultant Ace Smith said the allegations are troubling.

“This is just the tip of the iceberg of all the sleazy activity going on with Abrams and the Hahn campaign,” Smith said.

In the other scheme, Casden Properties and John Archibald, a vice president for the firm, agreed to pay $42,000 in fines for helping in the laundering of political contributions to Connell’s campaign by Larry Higgins, his firm Higgins Termite and nine employees or friends of the exterminator.

“Archibald’s suggestions to Higgins in methods of reimbursing political contributions resulted in substantial excess contributions,” said the settlement agreement, signed by Archibald and Robert H. Platt, an attorney who signed for Casden Properties.

Platt did not return calls to his law office. Michael Fitzgerald, an attorney for Archibald, said he had no comment.