Irwindale Official to Pay $400,000, Avoid Criminal Charges

Charles Martin, the city manager and city attorney of Irwindale, will pay $400,000 in civil fines to avoid criminal prosecution on charges that he was involved in conflicts of interest when he took commissions on sales of six bond issues he had recommended to the Irwindale City Council, Los Angeles County Dist. Atty. Ira Reiner announced Wednesday.

Under an injunction, Martin has agreed to refrain from ever again taking commissions or bonuses in connection with bond sales he may recommend or coordinate for the city, Reiner said.

Martin was one of the key officials in negotiating the deal to move the Los Angeles Raiders professional football franchise to Irwindale. The $90-million bond sale needed to build a stadium for the Raiders has not been consummated and thus was not part of the district attorney’s investigation into Irwindale city dealings.

What was involved were six earlier bond issues on which Martin had worked since 1984 and for which he received more than $500,000 in fees. These included a $395-million issue directed at building a huge trash-to-energy plant in Irwindale. That project was abandoned and the bonds ultimately redeemed, but not before Martin had taken at least $123,437 of a planned $500,000 in commissions.

Other Investigations

In announcing the settlement, the district attorney’s office said that it had completed an investigation into Martin and two other Irwindale officials named in a Sept. 24 Times article. The article revealed a wide-ranging practice in which the officials steered lucrative city contracts to businesses that they either owned or had a substantial interest in.

The district attorney’s office said it would issue a written opinion stating why it was not seeking criminal charges or civil penalties against the two officials, City Engineer Carlos Alvarado and City Treasurer Abraham DeDios. The opinions, to be issued within the next two weeks, are expected to raise concern over their dealings.

Reiner also said his office is pursuing investigations in other unnamed communities that may result in additional civil settlements in the next month or two.

Reiner said “classic conflicts of interest” of the type that he said Martin had engaged in exist in some other small cities in the county.

Sources close to the investigation say the City of Industry is one of those under scrutiny.

In the settlement Martin signed, he specifically said he was admitting nothing while agreeing to pay the fines.

“I am confident that a jury of my peers would reject the district attorney’s allegations against me,” he said in a written statement. “However, I am not willing to jeopardize the exciting project which is under way to bring the Raiders to Irwindale . . . by spending the next several years of my life . . . entangled in protracted legal squabbles.

Order to ‘Buy Peace’

“Therefore I have instructed my attorneys to ‘buy peace’ for me and the city by negotiating a money settlement.”

But the district attorney said Martin had “obviously” been involved in a conflict of interest and he said Martin’s attorneys had suggested paying the fine so that he could escape criminal prosecution.

“This involves the peculiar way that the City of Irwindale and some of its officials, in this particular case Charles Martin, (do business),” Reiner said.

He said Martin “wears many hats. He’s the city manager. He’s the city attorney. He’s the executive director and counsel of the redevelopment agency. And then he gets the City Council to appoint him as the project coordinator and bond issuers’ counsel on various bond issues.

Reiner said the conflict of interest inherent in such an arrangement is that Martin is in the unique position of recommending to the City Council a bond issue in which he stands to make thousands of dollars.

‘Substantial Fee’

“If he advises the (council members) that it’s not in their interest to go ahead with it,” Reiner said, “he’s talked the city out of paying him a very substantial fee. And human nature being what it is, that isn’t likely to occur.”

Under the injunction Martin agreed to, Reiner said, the Irwindale official can still handle bond sales, if the council desires. But they can pay him only his normal salary or a flat fee for the work, not contingency fees based on a percentage of the bond issue.

But R. Zaiden Corrado, Martin’s attorney, said he did not anticipate his client ever being involved in Irwindale bond sales again.

City spokesman Xavier Hermosillo said the agreement lifted a cloud over the small east San Gabriel Valley city that threatened the Raider stadium deal. The agreement to build a $115-million, 65,000-seat stadium has been temporarily stalled by a court injunction requiring Irwindale to complete an environmental impact report.

“The deal with the Raiders is alive. We will finish the Environmental Impact Report and bring the Raiders to Irwindale,” he said.

The district attorney said that in Irwindale and other small cities his deputies had found “real tight-knit operations” where city officials were profiting directly from projects they were recommending.

“This case (Irwindale) is the first of another one or two that we’ll perhaps be following,” Reiner said. “I hope the impact goes beyond the $400,000 that will be coming out of Mr. Martin’s pocket, and there will be the beginning of reform in how some of these smaller communities work with their city attorneys, their managers, their consultants and the like.”

Under the terms of Wednesday’s settlement, Martin will pay the $400,000 in installments beginning Jan. 15, 1988, and ending Dec. 15, 1991.

Of the total, $150,000 will go to the district attorney’s office for its legal and investigative costs, $100,000 will be paid to the district attorney’s office as civil penalties pursuant to the Business and Professions Code, and $150,000 will go ultimately to a “civic project for the benefit of the citizens of Irwindale and/or the surrounding community.”

Reiner said the $150,000 civic improvement project will be decided by the district attorney’s office in consultation with Martin, who in the past has donated about $200,000 to a city scholarship fund.

Equivalent to Commissions

The district attorney said the $400,000 in total fines Martin has agreed to pay are approximately the equivalent of the commissions he received for coordinating bond issues that he had urged the Irwindale City Council to undertake.

But, he noted, Martin has told the district attorney’s office that since he paid income taxes on his fees, he will be out more money than he has taken in.

Reiner conceded that had Martin’s attorneys not suggested the civil settlement procedure as a way to resolve the investigation, he might have found it difficult to prosecute Martin criminally.

“This was arguably prosecutable criminally,” he said. “It was our intention to go ahead and prosecute this criminally even though it was . . . borderline because we felt the conflict situation needed to be resolved. . . .

“They asked if we would at least consider the possibility of a civil filing rather than a criminal filing, and then they made this proposal. We considered that and decided (to go along).”

Asked what he would do if the Irwindale City Council attempted to compensate Martin or other officials indirectly in the future for coordinating bonds, for example by jacking up their regular salaries, Reiner responded:

“We’d be right back in there. . . . If there is an effort to do indirectly that which this order prevents them from doing directly, we’ll be back there. They understand that very well.”