W. Hollywood Mayor’s Fund Use Probed

Federal law enforcement authorities and Los Angeles housing department agents are investigating allegations that West Hollywood Mayor Valerie Terrigno misappropriated government block grant funds while she ran a now-defunct Hollywood job counseling agency, according to officials and others familiar with the case.

Those questioned during the past month say FBI agents and city Community Development Department investigators have been examining Terrigno’s actions as director of Crossroads Counseling Service, which closed last December after its federal funding contract expired.

The list of persons who have told The Times about being contacted by investigators includes federal officials, social service and charity agency workers, gay activists and associates of Terrigno.

Neither the FBI nor U.S. Attorney’s office spokesmen would comment publicly on the investigation. U.S. Atty. Robert C. Bonner said he would not “confirm or deny” the reports but other federal officials did confirm that Terrigno has been the subject of an FBI probe into alleged misappropriation of funds.

Federal officials said Assistant U.S. Atty. Gary A. Feess has been assigned to the case. Authorities also said that the case is still in a preliminary stage and it may be weeks before any action is taken.

Terrigno, 31, worked at Crossroads for three years before running as an openly lesbian candidate for the West Hollywood City Council during the area’s incorporation campaign in November.

Responding to inquiries about the investigation, Terrigno said Thursday she has not been contacted by either federal or city investigators and was still uncertain whether there was a probe. “I don’t believe I’ve done anything to warrant an investigation,” she said.

She said she had consulted with criminal defense attorney Howard Weitzman and asked him to contact federal officials about the rumors. “He has not been able to confirm an FBI investigation nor does he have any reason to believe that I need legal representation at this time,” she said.

Weitzman was unavailable for comment Thursday. But earlier he told the Times that “she has talked to me and I’ve been trying to find out what the government’s doing. So far they haven’t told me anything.”

Federal officials and sources questioned by investigators said the probe has centered on checks written on Crossroads’ bank account and on federally subsidized rent and food vouchers intended for use by Crossroads to provide temporary shelter and emergency food supplies to homeless, unemployed and low-income clients.

Carolyn Perroni, a spokesman for the Federal Emergency Management Agency, said $24,000 of a $30,000 FEMA grant allocated to Crossroads in the winter of 1983-1984 has “not been accounted for.” She said the grant came under a FEMA program to supplement existing federal “food and shelter to the needy and homeless . . . people who had been hurt by the recession.”

Perroni said FEMA was conducting an audit of Crossroads’ financial records and added that its investigation had to be temporarily suspended last week when FEMA auditors learned of the FBI probe. “Our local board in Los Angeles was notified that some of the records we needed had been impounded because of the FBI investigation,” Perroni said.

The city’s director of the Community Development Department, Douglas S. Ford, confirmed that his agency is also investigating Crossroads but would not discuss the matter further. “I can’t comment on the scope of the investigation other than to say that we’re investigating our past contract relationship with Crossroads,” he said.

Ford did say that Crossroads had received $108,000 in federal Housing and Urban Development block grant funds in 1983 and 1984. Ford said funding was discontinued to the agency last year “simply because it didn’t survive our competitive scoring evaluation and the contract expired.”

Crossroads opened in 1981 primarily to work with Hollywood’s poor--particularly homosexuals looking for jobs or shelter, according to gay activist Morris Kight, who helped found the agency. Kight, who resigned from his position on the agency’s board in 1983 when Terrigno became Crossroads’ director, said that in recent weeks he also has been questioned by FBI agents and city investigators.

John Brown, director of the Gay and Lesbian Community Services Center, said FBI agents recently examined the center’s financial transactions with Crossroads. “They wanted to look at emergency housing vouchers we provided to Crossroads,” he said.

At Macho, a clothing shop on Santa Monica Boulevard in West Hollywood, store manager Norman Harris said FBI agents questioned him more than three weeks ago about a check Terrigno used to pay for clothing. “They wanted to know if I remembered her visit,” Harris said.