Former Aides Say Moriarty Laundered Political Gifts

By GEORGE FRANK and TRACY WOOD

Jan. 20, 1985 12 AM PT

Times Staff Writers

Fireworks manufacturer W. Patrick Moriarty secretly funneled more than $153,000 in campaign contributions to dozens of California political figures, according to former Moriarty associates who said that they were used as go- betweens in the illegal laundering scheme.

The former Moriarty operatives told The Times that 32 California officeholders and candidates received laundered contributions mostly during 1981 and 1982, a period when Moriarty was actively lobbying for legislation to abolish local bans on the sale of so-called safe-and-sane fireworks.

Those who told how they distributed Moriarty’s political money said the Anaheim fireworks magnate reimbursed them for contributions they made in their own names. In many cases, these former Moriarty aides said that the recipients were aware that the money actually was coming from Moriarty.

The list of those who got the allegedly laundered contributions includes Gov. George Deukmejian, Lt. Gov. Leo T. McCarthy, an array of state lawmakers and a smattering of local politicians including Los Angeles City Councilman David Cunningham.

The politicians all deny knowing that the money actually was Moriarty’s.

And Moriarty, through an attorney, denied any knowledge of the alleged laundering scheme that has become a central element in a widening probe of Moriarty’s political and financial activities by federal authorities and the Orange County district attorney’s office.

Investigators also are looking into allegations that Moriarty provided prostitutes to politicians and bankers. Moriarty already has been indicted on mail fraud and racketeering in connection with the licensing of a poker club in the City of Commerce.

Until now, public knowledge of Moriarty’s political money laundering activities was confined to $34,000, including $18,000 given by his business associates and family members to Orange County Supervisor Bruce Nestande.

But the disclosures made to The Times by former Moriarty associates support the belief of some officials that the laundering scheme was far more extensive and may, in fact, be the biggest case of its kind in California history.

Requirements of Law

State law makes it a crime to hide the source of political contributions and sets up detailed public reporting requirements designed to guard against the secret flow of funds.

The former Moriarty associates said that they violated these requirements as part of a scheme to prevent the public from learning how much fireworks money was flowing into political campaigns.

The idea, these sources explain, was to avoid scrutiny by election officials and news reporters while protecting politicians from being accused of backing Moriarty proposals because of campaign contributions.

Moriarty’s associates, companies and fireworks political action committees, contributed $290,000 to politicians between 1980 and 1983. More than half of that was laundered, according to former Moriarty associates, including:

= Richard Raymond Keith, formerly Moriarty’s closest business associate who now is facing trial for income tax evasion, bankruptcy fraud and making false statements to a bank. He said he has told the FBI that Moriarty reimbursed him for $49,000 in campaign contributions Keith made in 1981 and 1982.

Tells of Laundering Funds

= John E. (Pete) Murphy, who for 20 years handled insurance for Moriarty’s fireworks and development businesses. He said he testified twice before the federal grand jury in Los Angeles outlining, among other things, how he laundered $50,075 in Moriarty contributions.

= Albert Hole, a former state fire marshal who represented Moriarty in efforts to fight local bans on safe-and-sane fireworks. Hole said he has testified before the Orange County Grand Jury that he laundered $11,000 in Moriarty contributions. He was given immunity from prosecution.

Two other former close Moriarty associates, who asked that their names not be used, confirmed the laundering system.

Here is the picture drawn by these one-time Moriarty operatives:

Beginning in the late 1960s, Moriarty’s employees started making campaign contributions on their boss’ behalf.

Secretly Reimbursed

Murphy said Moriarty thought the contributions were a good way for area managers of his fireworks companies to personally contribute to local politicians. It did not cost the managers anything because they were secretly reimbursed by Moriarty, and it gave his operatives access to lawmakers who decided whether to allow local fireworks sales.

In those days, there was no prohibition against laundering, and there was definitely a demand for the money.

“I don’t think anyone started out to be a criminal,” Hole explained. “Lots of people wanted contributions and they didn’t necessarily want them from the fireworks industry.”

While Moriarty’s go-betweens used their own checks to make the contributions, they tried to make sure the recipients knew where the money really was coming from.

“In general, I would have a request from Mr. Moriarty to attend a function like a $150 cocktail party,” Murphy explained. “I would issue a check for $300 (for two tickets). . . . I would notify the people . . . ‘This is in my name but it is really coming from W. Patrick Moriarty.’

“Then I would go have cocktails and have a great time and enjoy myself.”

The reimbursements would come from Moriarty. Exactly how that was done depended on the amounts.

In the case of smaller contributions, Murphy said he would simply list the donation on his expense account and the reimbursement “came from the Pyrotronics Corp.” (parent company of Moriarty’s Red Devil fireworks firm).

“Other times, when it was a larger contribution, I would draw a check out of the Bank of Irvine and make a $2,500 contribution to an individual. . . . I would get a reimbursement from him (Moriarty). Sometimes it came in the form of a check; sometimes he would just deposit it to my bank account,” he said, explaining that Moriarty was a director and co-founder of the now-defunct Bank of Irvine and knew Murphy’s bank account number.

Keith said he too was reimbursed for contributions Moriarty asked him to give state and local lawmakers:

Explains Process

“I would say, ‘Pat, I need money.’ I would put down on a slip of paper . . . . ‘I need $3,000, $4,000 or $5,000 to cover whatever political contributions I made (for Moriarty).’ He (Moriarty) would issue a check for $5,000 or $25,000 or $50,000 to cover whatever we needed.”

A shadow fell over the scheme in 1974 when California voters passed the Political Reform Act, which made it illegal to give contributions under another person’s name.

“When the law came into effect, we didn’t change anything,” Murphy said. In fact, he said it was several years before he learned just how illegal the reimbursement practice was.

Even then, Murphy said, his attempts to ask Moriarty about the 1974 political reform law were unsuccessful.

“I asked him a few times and I got a ‘look’ but I never got an answer,” Murphy said. “I was well aware (from talking to them) that other people in the organization were doing what I was doing. I knew exactly what to do and I’d been doing it for a long time--before they passed the Act.”

Laundering Continued

So the laundering continued, Murphy said, even after he and other Moriarty associates knew about the reform law. Murphy said Moriarty would say who to contribute to or send lists of candidates.

“No one ever seemed to laugh when I joked that we would someday all go to jail,” the 62-year-old Murphy recalled. “I didn’t believe it myself. I always thought Patrick could take care of any problem. It was as if he thought he was above the law.”

Reporting requirements in the political reform law were ignored, according to Murphy and others who served as Moriarty go-betweens.

For instance, the law requires anyone who contributes $5,000 or more a year to register as “major donors” and to list, under penalty of perjury, how much they contributed and to whom.

Moriarty, Murphy, Keith, Hole and other key associates failed to file the required reports until the summer of 1983 when The Times began reporting their donations.

Aware of Perjury

Tardy reports were filed showing contributions by the Moriarty operatives but failing to identify Moriarty as the true source of the money, Murphy said, adding that he signed the report knowing he was perjuring himself.

Word spread quickly in political circles that there was money to be found in the Moriarty camp. Invitations to political dinners flowed into his Anaheim office, Moriarty’s associates said. And there were letters and phone calls and personal visits such as the one in late 1981 from Lt. Gov. McCarthy, then an assemblyman.

The former Assembly Speaker recalled that a colleague--he could not remember who--had suggested that Moriarty might contribute to McCarthy’s campaign for lieutenant governor. (Earlier that year, a Moriarty-backed bill to prohibit local bans on “safe-and-sane” fireworks sales had been introduced in the Legislature, and Moriarty and his associates had begun making large contributions to lawmakers and statewide political figures.)

McCarthy said he met Moriarty in the fireworks manufacturer’s Anaheim office and “asked him for help.”

A few weeks later, McCarthy received a $10,000 check from Murphy.

“The check from Pete Murphy had to be prompted by my visit to Moriarty,” McCarthy said. “I didn’t know it was laundered. I assumed the check was requested by Mr. Moriarty, but I also assumed it was Mr. Murphy’s money.”

Murphy said he wrote the check to McCarthy at Moriarty’s request and was reimbursed.

Around the time the fireworks bill was pending, lawmakers received more than $129,000 in contributions from the Moriarty forces.

Moriarty reported giving only $17,100 in his own name.

13 Voted for Bill

But the former Moriarty associates said that $69,500 in laundered Moriarty money was given to 13 legislators who ended up voting for the bill.

Another $42,770 in contributions to 23 lawmakers who voted for the bill rolled in from Moriarty associates, companies and political action committees. The source of some of those contributions is under investigation.

Former top Moriarty aide Keith said his boss chose not to give more money in his own name because “you can’t buy the state of California and still have them vote (for) your issues.”

With the fate of the fireworks bill still to be decided, lawmakers were gearing up for the 1982 elections.

Right to the Point

On May 20, only weeks before the June primary election, Moriarty got a brief letter on the stationery of then-Assemblyman Bruce Young (D-Norwalk), who guided the fireworks bill through the Assembly. The letter went right to the point:

“Following is the list from Willie (Assembly Speaker Willie Brown of San Francisco) regarding contributions he is requesting for the primary election.”

The letter asked that $18,500 be contributed to six Democratic candidates who were facing election or reelection to the state Assembly.

“I know this is a big hit,” the writer said. “I said I didn’t know if you could do it, but I would convey the request. The other problem is that we need them by May 27. See you tomorrow. Kindest regards, Bruce.”

Although the letter did not ask that the money be laundered, Murphy recalled that Moriarty’s secretary, Joyce Moulton, gave him a copy of the letter with instructions from Moriarty to write out the checks on his personal account.

Denies Signature His

Young’s attorney said his client would only say that the signature on the letter is not his and that he “emphatically denies any wrongdoing.”

Brown said he did not know that his name had been used in the letter to solicit campaign funds from Moriarty. But the Speaker said legislators often use party leaders’ names to raise money. Brown said he did not personally raise money for the 1982 primary election.

Five of the candidates who received the allegedly laundered contributions --Assembly members Maxine Waters of Los Angeles ($1,000), Charles M. Calderon of Alhambra ($2,500), Steve Peace of Chula Vista ($2,000), Rusty Areias of Los Banos ($3,000), and unsuccessful Assembly candidate Richard Polanco of Los Angeles ($1,000)--told The Times that they were not aware that the money might really have come from Moriarty.

The sixth recipient, Assemblyman Burt Margolin of Los Angeles, said he returned the $7,500 check to Murphy after learning from Young’s staff that Murphy was connected to the fireworks industry. Margolin said he opposed the sale of “safe-and-sane” fireworks because of the potential fire hazard and injuries they create.

When the $7,500 check arrived back at Moriarty’s office, Murphy said, he wrote another check for the same amount to Young’s campaign.

At about the same time, Young’s campaign contributed $6,500 to Margolin.

The fireworks bill had narrowly passed both houses by the fall of 1982 but was vetoed by then-Gov. Edmund G. Brown Jr.

Only two of the legislators who received allegedly laundered money voted against the Moriarty-backed bill. They were Senate President Pro Tem David A. Roberti and Sen. Diane Watson, both Los Angeles Democrats. Roberti and Watson received their contributions before the bill came to the Senate for a final vote.

Awareness Uncertain

Just how much the lawmakers knew about where the money came from still is uncertain. Hole would only say that he assumed that certain political figures knew what was going on. Murphy said he specifically told some politicians that Moriarty was their real benefactor. The politicians themselves deny any knowledge of the alleged laundering scheme.

Keith said he did not tell the politicians where the money came from because Moriarty usually went with him to the fund-raising events. Other times, Moriarty would give Keith’s checks to the politicians.

The biggest beneficiary of the alleged laundering in 1982 was Republican Atty. Gen. George Deukmejian, who was locked in a tight race for governor against Los Angeles Mayor Tom Bradley.

Hole and Murphy explained how they laundered $17,500 into Deukmejian’s winning campaign.

“(Moriarty) wanted to make a contribution to (Deukmejian) and he didn’t want to make it in his name. He wanted to make it in mine,” said Hole, who explained that Moriarty asked him to write a $10,000 check for which he later was reimbursed by Moriarty.

Hole had known Deukmejian since the 1960s when Hole was state fire marshal and Deukmejian was a state senator. Both are from Long Beach and, at the request of Long Beach officials, Deukmejian had recommended Hole for the fire marshal’s job during the Administration of former Gov. Ronald Reagan. Murphy said he laundered another $7,500 of Moriarty’s money into the Deukmejian campaign.

Twice, Murphy said, he received notices from the Deukmejian gubernatorial campaign pointing out that state law required him to file a report if he were acting as an intermediary for another donor. The Deukmejian campaign had a policy of sending such letters to major donors.

Murphy said he showed the letters to Moriarty, who told him to “forget it.” The attitude, Murphy said, was “ ‘This is just another thing to harass the working man.’ ”

Aide Issues Denial

The governor’s press secretary, Larry Thomas, said Deukmejian had no idea that the contributions from Hole and Murphy might really have been from Moriarty. Deukmejian campaign aides also expressed surprise at the laundering allegations.

Moriarty operatives also were active in local politics.

Murphy said that a former Moriarty employee, Anthony Martello, who has been granted immunity for his testimony before the Orange County Grand Jury, was used to launder a $5,000 contribution to Los Angeles City Councilman David Cunningham in 1982.

Cunningham, whose wife Sylvia worked for Moriarty as a $30,000-a-year real estate saleswoman, said through a spokesman that he had no knowledge that the money might have been laundered.

The Political Contributions

Here is a list of elected officials and political candidates who received campaign contributions from relatives, employees and former associates of Anaheim fireworks manufacturer W. Patrick Moriarty. Former Moriarty associates say contributors later were reimbursed by Moriarty. The list was compiled from reports filed by the candidates and the contributors. All of the candidates denied knowing anything about the alleged laundering. Orange County Supervisor Bruce Nestande returned $18,000 he received after Moriarty told him he was the true source of the donations.

-Legislators who voted for Moriarty-backed bill that would have prohibited local bans on sale of “safe-and-sane” fireworks. =-Legislators who opposed the bill.

Contributor John E. (Pete) Murphy An insurance broker and Moriarty associate who has testified twice before the federal grand jury.