Former Councilman John Drayman was indicted Tuesday on charges that he embezzled at least $304,000 from the weekly farmers market in Montrose.
In a 28-count grand jury indictment unsealed in Los Angeles County Superior Court, prosecutors also allege that Drayman committed perjury when he excluded earnings sources on Fair Political Practices forms, submitted a bogus credit application in 2010 to a mortgage lender and falsified tax returns to hide the embezzlement, which they say occurred between January 2004 and April 2011.
Drayman, who was arraigned on the felony charges at a downtown Los Angeles courtroom, pleaded not guilty. He is accused of: one count of embezzlement, 10 counts of filing false tax returns, five counts of money laundering, three counts of forgery, one count filing a false financial statement and eight counts of perjury by declaration.
Los Angeles County Deputy District Atty. Susan Schwartz said in court that the evidence shows Drayman deposited funds he collected from the Montrose Harvest Market into his own bank accounts, and the extent of embezzlement may have reached $880,000.
She also alleged that Drayman was uncooperative with authorities during the course of the investigation.
“He has consistently lied to them,” Schwartz said.
Drayman — who faces 10 years in prison if convicted — was silent and reserved during much of the hearing.
His attorney, Michael Kraut, rebuffed Schwartz’ characterization in court.
“Mr. Drayman has been cooperating with this investigation,” said Kraut, who specializes in representing executives accused of white-collar crimes.
The indictment caps a year-long Glendale police investigation into allegations of embezzlement brought by the Montrose Shopping Park Assn., which operates the Harvest Market every Sunday.
The event had been logging steady losses as early as 2011, when organizers estimated they would lose $52,000 on the venture.
In the years since he helped create the Harvest Market in 2002, Drayman maintained an active role in the market, even after his election to the City Council in 2007.
But amid steep revenue losses, the association’s board of directors created a “Harvest Market Oversight Committee” in April 2011 and instituted a new procedure for collecting and recording weekly cash payments from vendors. Around the same time, Drayman was removed from his role in helping with the event for which some vendors said he collected cash payments.
According to the indictment, four board members discovered Drayman was submitting far less to the shopping park than what was being collected from vendors at the market.
A month later, news of the embezzlement investigation broke.
A few months after that, the association started reporting a massive market revenue spike — a turnaround Executive Director Dale Dawson called a “wonderful mystery.”
By December of that year, the Montrose Shopping Park Assn. was forecasting an income on the market of roughly $130,000 for 2012 — or nearly half the group’s operating budget.
Schwartz said the shopping park saw a 300% jump in revenues after Drayman was removed from the board.
Drayman was taken into custody in court after Superior Court Judge Patricia Schnegg ruled that Glendale police would have to investigate the source of the money put up for his bail, which was set at $200,000.
She declined Kraut’s request to allow Drayman to remain free until the terms of his bail were settled.
“I believe all defendants should be treated equally,” Schnegg said. “I treat everybody the same.”
He is scheduled to appear in court today for the bail hearing. Longtime Drayman supporters Sharon and Robert Thompson and Sharon and Bill Weisman had offered to put up funds to post bail using lines of equity and property. Schwartz raised concerns over the funding, which she said came in the form of an Internet printout and an “old grant deed.”
Schnegg also said she would only grant bail so long as Drayman wasn’t involved in any flea and farmers markets that were run by his “life partner,” Jeff Decker.
Decker recently started a new market for antiques and collectibles in La Crescenta, but Drayman’s attorney assured the judge that the former councilman was not involved.