City atty. works legal loophole

When politicians run into legal trouble, it’s not unusual to see them open a defense fund, a move that allows them to pay their lawyers using money raised from private contributors.

But Los Angeles City Atty. Rocky Delgadillo is the only official at City Hall who spent the last year raising money for three legal defense funds, each designed to address a separate court challenge or city Ethics Commission probe.

Because each fund is a separate account, Delgadillo has been able to collect up to four times as much from each contributor as is typically allowed a citywide elected official.

Real estate developers, labor unions and law firms hired by Delgadillo to do legal work for the city have been giving $1,000 to each defense fund, plus $1,000 to his officeholder account, which pays for political activities such as meals and travel.

The arrangement dismays campaign finance watchdogs, who call it a loophole in a system in which city politicians are supposed to raise no more than $1,000 from each donor per year.

“The concern isn’t so much that Delgadillo shouldn’t be allowed to raise money to defend himself in an investigation,” said Kathay Feng, executive director of the nonprofit California Common Cause. “The concern is, with increasing dollars coming from a single contributor, those contributors may have the expectation of special access to the officeholder.”

Delgadillo created his latest legal defense fund July 13, three weeks after he acknowledged that his wife, Michelle, drove a city-owned vehicle without a license and enlisted staff members to baby-sit their children.

Taxpayers paid $1,222 in repair costs when Michelle Delgadillo backed the city-owned GMC Yukon into a pole, but Delgadillo reimbursed the expense when the accident became public.

Delgadillo offered few details about the fund, saying through an attorney that it was created in response to newspaper reports that the Ethics Commission was looking into his wife’s activities. Stephen Kaufman, a lawyer who serves as the accountant for Delgadillo’s various funds, said the city required his client to keep a separate legal account for each of his legal woes.

“He is doing it this way because he is required to do so, not because he wants to do so,” Kaufman said.

With roughly 18 months before he is termed out of office, Delgadillo has been on a fundraising treadmill, securing donations to pay off old legal bills, only to see that fundraising activity generate new bills for accounting and other services. Over three months last summer, Delgadillo collected more than $198,000 for his various funds but still owed $141,560, according to the most recent fundraising report, which covers the period ending Sept. 30.

One Delgadillo legal defense fund still owes $88,500 in lawyers’ fees stemming from a lawsuit incurred as a result of his 2001 city attorney campaign. Delgadillo raised money between July 1 and Sept. 30 on behalf of that fund, racking up another $8,337 in invoices from the Alice Borden Co., his private fundraiser.

The same company billed Delgadillo an additional $16,090 during the same period for his other two legal defense funds. Meanwhile, his treasurer is owed $28,065.

“It costs money to raise money, so each of these [funds] has had additional bills on top of the underlying legal fees,” Kaufman said.

Delgadillo’s oldest legal defense fund was created in response to a lawsuit that alleged that he could not serve in office as city attorney because he was an inactive member of the State Bar of California at the time of his 2001 election. Although he prevailed in that case in 2004, the fund must stay open until he pays all his legal fees.

The city attorney opened another legal defense fund in June, in response to a case in which the Ethics Commission accused him of failing to disclose a series of meals and gifts paid from his officeholder account.

Although he paid an $11,450 fine, the case generated another $18,323 in accounting and fundraising bills.

Delgadillo collected more than $210,000 for his various accounts between Jan. 1 and Sept. 30, raising money from contributors such as attorney Clifton Albright, whose firm received four contracts from Delgadillo over the last year, according to city records.

Albright contributed $4,000 on Aug. 1 -- $1,000 to Delgadillo’s officeholder account and $1,000 to each of the city attorney’s legal defense funds.

Stella Albright, another lawyer at the firm, also donated $4,000 to the various funds. So did J.H. Snyder Co., a real estate developer that built NoHo Commons, a condominium project in North Hollywood, with financial help from the city.

An attorney with the law firm retained by the city to give advice on NoHo Commons also gave $3,000.

Delgadillo took in $3,000 each from attorney Lisa Quateman and the law firms of Nixon Peabody and Lewis Brisbois Bisgaard & Smith, all of whom were retained by Delgadillo in 2006 to advise the city on its borrowing. And Delgadillo raised $3,000 from Tutor-Saliba, the construction company that is building a new Los Angeles Police Department headquarters, whose projected cost has grown from $303 million to $437 million over the last two years.

The last elected official to have three legal defense funds simultaneously while in office was former Councilman Richard Alatorre, who created the accounts in 1998 and stepped down the next year.

In 2001, Alatorre pleaded guilty to tax evasion for failing to report more than $40,000 in payments that he received from entities trying to influence him.

Former Mayor James K. Hahn, whose administration was investigated for three years by state and federal prosecutors, had two defense funds while in office and opened a third a few weeks ago to deal with a $5,450 fine levied by the Ethics Commission stemming from his 2005 election campaign.

Council members Jack Weiss, Tony Cardenas and Jan Perry have also had legal defense funds at some point in the last six years, all in response to Ethics Commission investigations.

Although Delgadillo has used the defense funds to cover his legal bills, money given to his officeholder account has paid for meetings at tony restaurants such as Zucca, Traxx and Cafe Pinot, according to the spending reports.

Delgadillo used the meetings to dine with Los Angeles Daily News Editor Ron Kaye, Councilman Bill Rosendahl and airport Commissioner Walter Zifkin.

One $256 meeting was described in Delgadillo’s report as a discussion of anti-gang programs attended by Senior Assistant City Atty. Bruce Riordan, Michelle Delgadillo and Riordan’s wife, Victoria.

The session was held at the restaurant Jar, whose dinner menu offers a wild Alaskan salmon for $28 and a prime porterhouse steak for $48.

“It’s unclear why you would bring family members to a meeting that’s supposed to be business-related,” said Feng, the head of California Common Cause.

Kaufman said nothing in the law bars Delgadillo from using officeholder funds to take a spouse to a meeting.

“It’s a perfectly permissible expenditure,” he said.

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david.zahniser@latimes.com