Sacramento Builder Played Unlikely but Key Role in FBI’s Capitol Sting

Wearing a recording device crammed into a cowboy boot, a Sacramento developer secretly taped dozens of meetings with legislative aides as well as the Yolo County sheriff as he gathered important evidence for the FBI’s Capitol sting operation, the businessman told The Times.

For three years, Marvin Levin, manager of a proposed $600-million marina/condominum project along the Sacramento River, has been an invaluable informant in the sting, which ended Aug. 24 when 30 investigators raided the Capitol offices of four legislators and two legislative aides.

Without Levin, federal authorities said, there might have been no sting at all.

“He was crucial,” said U.S. Atty. David F. Levi, the prosecutor who will handle any sting-related cases. By offering to become an informant Levin “provided us with an opportunity, with a set of experiences that were fairly compelling.”

The 54-year-old Levin, who has a history of being involved in controversy, said that he was motivated by growing disgust with Capitol politics.

That feeling peaked, he said, when state Senate aide John Shahabian advised him to hire a particular lobbyist for a fee of $10,000 to $15,000 in order to get a one line change in a statute that might have provided low-interest financing for his business project called Lighthouse Marina.

Levin dropped the legislative proposal but his ill-will toward Shahabian remained. In 1986, with Levin’s help, Shahabian was caught in the FBI sting and turned informant a year later when confronted with the evidence against him.

In directing the FBI to Shahabian, Levin said, the aide “was not picked out of thin air.”

Levin describes himself as a concerned citizen who cooperated with federal investigators because someone, he felt, had to help put an end to Capitol corruption. “Somebody had to try,” he said.

However, those who have wrangled with Levin in the past paint a different portrait. They describe him as a manipulative and vindictive man, who in 1979 lost his job as a Sacramento lobbyist-consultant for a small business development agency in Fresno. The situation not only cost him his job but the confidence of many in the Capitol.

Shut out of Capitol circles, Levin, according to his own account, purchased a gasoline station in order to make a living.

“If he’s a witness for them (federal prosecutors), they’re in trouble,” said Jack Weisberg, a Fresno attorney, who tangled with Levin in the late 1970s. “I just don’t think he’s a credible guy. . . . He’s a pretty slick operator.”

Weisberg said he won a lawsuit blocking Levin’s attempt to take over the California Rural Small Business Development Corp. in Fresno. The attorney said in an interview that Levin said he had secured pledges of financial backing for the corporation but the pledges turned out to be phony.

Mike Foley, who now operates Cal Rural’s successor agency, said that he cooperated with state investigators in an audit that found Levin had billed the agency for expenses he did not incur. Foley said that the agency was shut down by the state as a result of the audit and Weisberg’s court action.

Levin denies any wrongdoing and said the entire controversy was the result of internal politics within the development corporation.

Whatever his past adversaries say about him, it is clear that Levin played a central role in getting the FBI sting off the ground three years ago.

Unlikely Choice

At first blush, Levin appears to be the unlikeliest of undercover agents.

He is a gray-haired man with puffy eyes and a paunch, whose idea of reckless abandon is to blow bubble gum while cruising down the freeway in his full-sized car.

By his own description, he was a bumbling amateur at undercover operations.

“I was clumsy at first,” he said.

Sometimes he recorded over taped evidence, he said. He repeatedly forgot to change the batteries in the pager that the FBI had supplied. He often got confused about the phony names being used by one of the agents posing as a high-rolling Southern businessman, forgetting whether to call him “Jim” or “Jack” or “John.”

But by all accounts, his quiet demeanor and fumbling manner made him a particularly effective undercover operative.

It was Levin who in 1986 secretly taped numerous sessions with Shahabian and who a year later led an unsuspecting Senate aide to what was supposed to be a meeting with U.S. Fish and Wildlife officials. Instead, while Levin enjoyed doughnuts and coffee, Shahabian found himself in a room at the FBI’s Sacramento headquarters, being confronted with evidence against him and being persuaded to become an informant.

Gave Check to Sheriff

It was Levin who in 1986 handed Yolo County Sheriff Rod Graham a check for $1,500 from the account of Gulf Shrimp Fisheries, a bogus company set up by the FBI as part of the sting, according to Levin and another source familiar with the probe. Levin taped that encounter, which took place at a West Sacramento restaurant, where two women FBI agents recorded the meeting with a camera hidden in a large purse.

According to Levin and others familiar with the incident, Graham and his assistant, Wendell Luttrull, cashed the check and kept the money without reporting it as a campaign contribution. The payment, along with a $2,000 cash contribution from Levin to the sheriff that was never properly reported, is the subject of a continuing FBI investigation.

It was also Levin who in 1986 directed FBI agents posing as businessmen to Darryl O. Freeman, a former legislative aide who headed a nonprofit group that guaranteed a $100,000 loan to Gulf Shrimp. Freeman, after being forced out of his job, became a lobbyist for Gulf Shrimp, helping to push a special-interest bill through the Legislature.

Levin said he was uncomfortable with his role as an informant. “I thought of myself as a betrayer,” he asserted.

Those caught up in the sting operation insist privately that the FBI must have had a secret hold over Levin, in order to force his cooperation.

‘Came Voluntarily’

But federal prosecutor Levi flatly denied that account as “a sorry commentary on this society. The fact of the matter is he came to us voluntarily. We are deeply in his debt.”

“I think he showed great courage throughout and certainly made numerous sacrifices,” Levi said. “Certainly in the context of what he was doing, he was unique. There are just not that many people who have active careers who are prepared to take those kinds of risks.”

Levin said that the only personal benefit he received for helping the federal investigators was a $1,800 payment intended to cover unreimbursed expenses. Among those out-of-pocket costs were a paint job for his 1978 Buick to make it look more respectable and the cost of new clothes when the FBI agents “didn’t think I was flashy enough,” he said.

And besides, threading a microphone wire through the pockets of his suits took its toll on his clothes, he said.

His one indulgence was spending $200 from the FBI for a pair of black boots he needed to hide the tape recorder supplied him by agents. He said that he grew to hate the boots because the recording device “cut into the bone.” The microphone had to be taped to his body, he said, which proved to be painful. “They always managed to hit a patch of hair,” he said.

He wore the device repeatedly as he taped sessions with Freeman and Shahabian and Tyrone Netters, an aide to Assemblywoman Gwen Moore (D-Los Angeles).

Special-Interest Measures

Moore was the lawmaker who carried special-interest legislation that would have benefited the FBI’s bogus companies--Gulf Shrimp and its successor, Peach state Capital Investment, Ltd.

Last month, FBI agents with search warrants removed files from the offices of Moore, Assembly Republican Leader Pat Nolan (R-Glendale), Assemblyman Frank Hill (R-Whittier) and Sen. Joseph B. Montoya (D-Whittier). The federal authorities also questioned Board of Equalization member Paul Carpenter, a former senate Democrat who had been Shahabian’s boss.

Levin said that he was an intermediary during the first phases of the sting operation and helped in the planning, but did not have direct contact with elected officials.

For months now, he has been aware that his role would become public. And this has worried him, perhaps leading to the heart attack he suffered in May. A major fear has been that public knowledge of his role in the sting would affect the marina project, which has not yet finalized its financing.

Levin said he recently told his partners about his role, offering to resign if necessary to salvage the development. His partners, he said, refused the offer.

Times Staff Writer Richard C. Paddock contributed to this story.