TERRIGNO: Grand Jury Probe : Terrigno Concedes Loss of Post, Faces Grand Jury Probe

Times Staff Writer

West Hollywood Mayor Valerie Terrigno, resigned to losing her post despite a short-lived effort to keep it, faced new troubles this week as a federal grand jury began hearing testimony into allegations that she misused government funds while managing a Hollywood counseling agency.

After a controversial weekend retreat, during which City Council members tried to avert a political battle over her mayoral term, Terrigno said Wednesday she expects that at its session tonight the council will uphold an agreement made last year that will allow City Councilman John Heilman to assume the largely ceremonial mayor's job. Terrigno has three more years on the council.

"I expect we will be changing mayors," she said, but added that she was uncertain whether she will support the agreement.

The struggle between Terrigno and Heilman was overshadowed by reports that during the past week, at least seven of Terrigno's associates and former co-workers--and as many as 12 people, according to sources in the gay community--were subpoenaed to appear Wednesday before a federal grand jury.

Terrigno, who had previously denied any knowledge of the investigation, said Wednesday that she had learned of the subpoenas and verified for the first time that she has known about the probe. "My understanding is there was a complaint made by a citizen and that a grand jury is looking into it," she said.

Retained an Attorney

Terrigno said she has retained defense attorney Howard Weitzman to "keep an eye" on the investigation and to handle her defense if she is indicted. "If I do need representation, Howard would be the person," she said.

Weitzman could not be reached for comment.

The grand jury developments come after a seven-month FBI and Los Angeles Community Development Department probe of Terrigno's activities while she was running the now-defunct Crossroads Counseling Service in 1983 and 1984. The agency closed last December after its federal funding contract expired.

The investigation has centered on checks written on Crossroads' bank account and on federally subsidized rent and food vouchers that Crossroads was allocated to provide emergency food supplements and housing vouchers to unemployed and homeless clients.

Officials of the Federal Emergency Management Agency have said that Crossroads did not account for $24,000 in FEMA grant funds allocated to the agency in the winter of 1983-84 and failed to properly document its use of another $6,000. The FEMA grant came under a program designed to provide aid to destitute victims of the recent economic recession.

Richard Callahan, an assistant U.S. attorney in the office's Major Frauds Unit, has been assigned to the case. Callahan declined, however, to comment on the reports of grand jury activity.

But several of those subpoenaed and others with knowledge of the investigation confirmed that former staff counselors, members of Crossroads' board of directors and a number of Terrigno's close friends and political allies had been called to testify.

One friend, Richard LaVoie, an aide to state Sen. David A. Roberti (D-Los Angeles), confirmed last week that he had received a subpoena. "They want me to appear," he said. "That's all I know."

Not Allowed to Speak

A number of Terrigno's supporters questioned the timing of subpoenas, concerned that they arrived the same day last week that the City Council was scheduled to decide whether to extend her term as mayor (the decision was postponed until tonight).

"The fact that they were issued while the council was in the middle of trying to work out the differences between Valerie and John (Heilman) seemed somewhat suspect to me," said Councilman Alan Viterbi.

Several of Terrigno's allies, who went to last week's council meeting armed with petitions that they claimed bore the names of 3,000 West Hollywood residents who wanted Terrigno to remain in office, were also perturbed because the council refused to allow them to speak.

Restaurant owner Melinda Tremaglio said she and several other Terrigno allies approached the city clerk last week in an effort to get on the council agenda, but were told they would not be allowed to speak.

"I'm upset that the council can ignore public testimony like this," said Peter McAlear, another Terrigno supporter. "People have a right to be heard."

Terrigno, too, criticized the lack of public testimony on the issue. "If people had tried to bring it up at the meeting, I would have forced the council to take a vote on it," she said.

But other council members, who regard the issue as a procedural matter, insisted that it was not an issue for public discussion. "It is an internal matter," Viterbi said.

When the five council members, accompanied by City Manager Paul Brotzman, met last weekend in the Santa Barbara Sheraton to discuss inter-council relations with a paid "facilitator," the Terrigno-Heilman conflict was high on the agenda.

The $4,000 retreat, which evoked criticism from some West Hollywood residents, was defended by the participants as necessary in light of the deteriorating relations between Heilman and Terrigno.

"When two people on a City Council start reacting to each other and aren't judging situations on their merits, you're in trouble," said Councilman Steve Schulte.

Heilman said he came away from the meeting realizing "that we needed to work on our communications skills and function better as a team." Heilman said he also had come to recognize that "we have different approaches to our jobs. . . . Some of us need more details. Others are more satisfied with the broader picture."

Terrigno agreed that the meeting "set a groundwork for better communications." But she said she was unsure of its ultimate success. "It's hard to tell right now whether it will work out or not," she said.

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