Hawaiian Gardens : Investigation of Loan Urged

The City Council agreed Tuesday to ask the district attorney to investigate allegations that former Councilman Donald Schultze violated conflict-of-interest laws by borrowing $40,000 from the sister of a developer.

Schultze, who served on the council from 1980 to 1984, said he would welcome an investigation. He said he has "nothing to hide" and feels that the allegations are part of an effort to discredit him as he seeks to be elected again on April 8.

The allegations were brought by former Councilwoman Margaret Vineyard, a longtime foe of Schultze and an ally of Mayor Lupe Cabrera and Councilman Jack Myers, who are seeking reelection.

In an interview following the meeting, Schultze acknowledged that he had borrowed the money in March, 1982, from Barbara Helm, the sister of developer Harold Clayton.

Vineyard said the loan represented "an apparent conflict of interest" because Schultze participated in a series of council meetings between February, 1982, and March, 1984, dealing with a 22-acre shopping center project in Hawaiian Gardens proposed by Clayton's development firm.

Although the council approved a development agreement for the project, which Schultze supported, the deal eventually fell through and the shopping center was never built.

Schultze said the loan was repaid at 18% interest and secured with a deed on his house. "If I got something for free, I can see that it would be a conflict of interest," he said, adding that he felt Vineyard was "doing a hatchet job on me on behalf of" Myers and Cabrera.

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