Financial Portfolio Blooms : Sen. Montoya--the Good Life on a $37,105 Salary
As a county social worker and a La Puente city councilman, Joseph B. Montoya struggled in the early 1970s to raise a young family of four on an annual income of less than $14,000.
But his financial portfolio--and life style--improved dramatically after the Whittier Democrat was elected to the California Legislature in 1972.
Since then, Montoya has purchased 19 properties in California worth nearly $2 million, property records show. Today, Montoya resides in a large $300,000 home in Whittier, drives a $30,000 Cadillac Fleetwood--paid for in part by state funds--and has traveled extensively on paid trips to the Caribbean, London, Hawaii, Mexico, the Far East and other exotic places.
How has Montoya done it on a government salary that currently pays $37,105 a year?
“It’s very easy,” he told a reporter last week. “You can read the books yourself. . . . The ‘Joe Montoya Success Formula’ has been that I haven’t bought any properties paying more than 10% (down), with a couple of exceptions.”
A Times investigation found that Montoya, whose influential office has brought him more than $150,000 in speaking fees, has acquired extensive real estate holdings and has relied on government personnel and equipment in managing his Sacramento rental units.
“In some ways, the office (in the Capitol) became the rental office,” said one former Montoya aide, who asked not to be identified.
The ex-staffer said that Montoya listed his Capitol office number in newspaper rental ads and that his secretary showed properties to prospective tenants. In addition, several tenants said they send their monthly rent checks to Montoya’s Capitol office and call Montoya’s secretary or a legislative aide during normal working hours to arrange repair work. One tenant reported receiving a telephone call from Montoya’s secretary whenever the rent check was late.
Called Outrageous Lies
These statements are “outrageous lies,” said Montoya, 49, who is among four state legislators targeted by an ongoing FBI investigation into political corruption.
“Does the fact that those checks come to the office mean that there is something wrong?” Montoya asked a reporter. “Where do you expect me to receive them? I don’t want them calling me at home. . . . If I go out (or) somebody else goes out and does something at noon, I don’t think that is anybody’s business. I am not using state employees to do my personal business. I guarantee you that.”
The Times investigation also found that:
- “Friends of Joe Montoya,” a political campaign committee, has loaned about $30,000 to Amiel A. Jaramillo, a Montoya aide who also is under scrutiny in the FBI’s Capitol probe. Shortly after the loans were made, Jaramillo and Montoya purchased several properties in Sacramento and Madera. It is unlawful to use political campaign funds for personal benefit. Montoya denied that the loans were used to buy the properties.
- Montoya has been notified that he may be in violation of city land-use laws in Sacramento by renting to private and commercial businesses a large Victorian house that is zoned for residential use, a city planning official said.
- The Senate Business and Professions Committee has held 14 days of hearings in Palm Springs since 1983 when Montoya became committee chairman and purchased condominiums in the desert city. “I don’t go there just because I happen to have the properties,” Montoya said. “I happen to like Palm Springs.”
- Two staff members each turned over property at no apparent cost to Montoya, who did not report them as gifts on his annual economic interest statements. Public officials are required to disclose all sources of gifts valued at $50 or more.
Denies Impropriety
During a half-hour interview conducted in the street in front of his Whittier residence, Montoya insisted that he has done nothing inappropriate in acquiring and managing rental units in Sacramento, Palm Springs, Madera, Big Bear and Los Angeles.
“I have been very successful,” Montoya said. “I’ve made it a point to be successful, but it isn’t because I’ve done anything wrong.”
When pressed for more details about his real estate purchases, Montoya later said, “I’m not going to give away the secrets of my success.”
Property records show that Montoya currently owns an interest in seven properties in Sacramento--so many that confused federal agents had trouble finding the senator’s own residence on Aug. 24 during their after-hours surprise raid of Capitol offices. One Montoya tenant said that excited FBI agents banged on his door late at night looking for the senator.
Montoya is one of four Los Angeles-area lawmakers currently under investigation as part of a three-year FBI undercover sting operation. The others are Assembly Republican Leader Pat Nolan of Glendale, Assemblyman Frank Hill (R-Whittier) and Assemblywoman Gwen Moore (D-Los Angeles). Paul Carpenter, now a member of the State Board of Equalization and a former state senator, also is a target of the probe.
As part of its operation, the FBI sponsored phony special-interest bills to benefit two bogus companies and then offered money to legislators to see if they could be bribed in exchange for their votes. Prosecutors reportedly have videotapes of Montoya boasting to undercover federal agents in a popular Sacramento cafe that he worked hard to push the FBI’s special-interest legislation.
Montoya has acknowledged accepting a $3,000 honorarium from one of the “firms” pushing a bill to help finance expansion of a fictitious shrimp business.
Solicitation of Money
The FBI also is investigating an allegation that Jaramillo solicited a minimum $500 honorarium for Montoya from individuals seeking the senator’s help in killing an employment agency bill, sources close to the investigation said.
Montoya has collected more money in honorariums--$80,879 during the last two years--than any legislator named in the FBI probe. Since 1980, Montoya has received $218,503 in honorariums and gifts, records show. Public-interest groups have criticized Montoya for his use of political funds. Taxpayers to Limit Public Spending reported that he spent $706,000 on his 1986 reelection campaign, much of it on travel and entertainment, although he was unopposed. In recent years, Montoya has taken at least 17 trips to Hawaii, Lake Tahoe, New Orleans and other vacation spots that were financed in part by campaign funds, according to the group.
Montoya has used the lucrative speaking fees to help finance his real estate purchases, according to former aides.
When asked in an interview how a legislator could afford to invest thousands of dollars in real estate, Montoya said, “I’m also one of the top honorarium getters, right?”
Montoya also has relied on three government employees to help acquire and manage his properties--Jaramillo, Rachel Fontes and Rita D. Stephenson.
Jaramillo, who earns $61,680 as Montoya’s principal consultant on the Business and Professions Committee, jointly owns seven properties with the senator in Sacramento, Oakdale and Madera.
Since he joined Montoya’s staff in 1984, Jaramillo has received at least $30,000 in loans from the senator’s political campaign committee. In October, 1986, Jaramillo was given a $7,500 loan at 8% interest. Four days later, Jaramillo and Montoya purchased a $61,000 rental unit at 2775 Freeport Blvd. in Sacramento. Five months after Jaramillo was issued an $8,500 loan at 8% interest in 1985, the aide and Montoya purchased two houses together in Madera County.
It is unlawful for a public official to use political campaign funds to buy or lease personal real estate. Both Montoya and Christopher Wing, Jaramillo’s attorney, said the loans were not used to purchase any of the properties. But Wing acknowledged that without the loans Jaramillo may not have been able to afford his share of the houses.
“The loans weren’t sought by Amiel,” Wing said. “They were made available. . . . It’s a situation that, I think, freed him up. Then, when the opportunity (to buy the properties) came up, (Jaramillo) said, ‘I’ve got $10,000 in the bank.’ He had the ability to go in on that.”
Montoya said he loaned the money to Jaramillo because he is “a longtime friend and able assistant” who needed the money. “He has been paying it back faithfully every month for the past two years,” Montoya added.
But Montoya’s campaign records show that Jaramillo has missed several monthly payments since initially accepting a $12,500 loan in 1984.
A lawyer, Jaramillo has represented Montoya on various real estate matters, including several discussions with city planning officials during working hours, the officials said.
Jaramillo “does not use state time to do that kind of work for Montoya,” Wing said. He described Jaramillo as a “diligent, hard worker.”
“When Montoya wants advice on how to deal with property or legal problems, Amiel is the guy he trusts,” Wing said. “If Sen. Montoya has a question (about his personal business), then Amiel takes it at home, takes a look at it, resolves it and gives him his advice.”
Montoya’s executive secretary, Rachel Fontes, also has been involved in real estate matters with the senator. In November, 1983, Fontes and her husband, Steven, gave Montoya a duplex located at 2720 F St. in Sacramento. According to property records, the duplex was a gift to Montoya and no taxes were paid on the transaction. Montoya did not report it as a gift on his economic interest statement. A state Fair Political Practices Commission official said such transactions should be reported as gifts.
Tenants’ Statements
Several of Montoya’s tenants said they call Fontes, who earns $36,120 a year, during normal office hours whenever they have problems with their properties.
“I deal with Rachel at the Capitol,” said one tenant, who asked not to be identified. “The senator doesn’t listen. If someone calls, it’s usually Rachel.”
Another tenant said that Montoya’s office phone is “the only number we have. We don’t have a number for him on weekends. We don’t have an emergency number.”
Earlier this month, Montoya mailed a check to cover repairs on one of his properties along with a note that was typed by Fontes, according to the initials on the letter.
Asked if she does any of Montoya’s personal work, Fontes said: “I don’t do any of that. I just take messages for him and pass them along.”
Recently, several tenants said, Fontes has referred their calls to the Capitol office of Rita D. Stephenson, a friend of Montoya’s who works as a secretary for the Assembly Health Committee. The day after the FBI raided Montoya’s office, one tenant reported calling the Capitol to complain to Fontes that the electricity had gone out. The tenant was asked to contact Stephenson at her Assembly office. The next day, Stephenson accompanied an electrician to the rental unit during a weekday morning, the tenant said.
Two others who reside in one of Montoya’s properties said they negotiated a price for appliance repairs with Stephenson during normal working hours. One tenant, David Michael Flanagan, said he contacted Stephenson at her Capitol office and negotiated the lease with her.
Property Management
Stephenson, who earns $33,384 as the health committee secretary, said that for the last few months she has helped manage Montoya’s Sacramento holdings.
“I do it as a favor,” Stephenson said. “I go on my lunch hour. It’s not always from 12 to 1.”
In 1985, records show, Montoya sold Stephenson one of his downtown Sacramento houses.
Montoya said that he manages all of his Sacramento properties and keeps all of the records and books. He did not say who assumes those duties when the Legislature is in recess or when he spends time with his family in Whittier.
“Joe Montoya has got to be about a 20 hour-a-day man,” Montoya said. “All them . . . damn entries and checks that come in and all that stuff--you know who it’s done by on the ledger in my checkbook? I do all of that myself.”
When Montoya first came to the Capitol as an assemblyman, legislators earned $19,200 a year. His third of four children was born when Montoya assumed office in January, 1973. At the time, Montoya owned one piece of property--his family residence, a small, wood-frame house in La Puente that he purchased in 1964 for $13,000. He sold it 13 years later for $57,000.
Montoya purchased his current residence in Whittier for $42,000 in 1975. The 2,400-square-foot beige stucco house is located in the middle of a clean, neat neighborhood and worth about $300,000, the senator said.
By the middle 1970s, Montoya had become interested in accumulating property, former staff members recalled. He often was seen carrying books that furnished tips on how to get rich in real estate.
“This is a working boy making good, “ said one former Montoya aide. “The longer he stayed in Sacramento (the more) he was driven to make money.”
First Rental Purchase
In 1974, Montoya acquired his first rental property, a Sacramento condominium, from one of his legislative aides, Jerold S. Asher. Montoya received the condominium at no cost in exchange for assuming the monthly payments, Asher said. Montoya did not report the house as a gift.
Montoya began purchasing rental units in the Sacramento area because housing prices were inexpensive by California standards. Properties could be obtained with little cash and he could manage the properties himself, aides said.
Montoya’s first major purchase was in 1977 when he bought a large Victorian house at 2405 Capitol Ave. for $95,000. As the artists who occupied the building gradually left, Montoya replaced them with a hair salon, an energy development company, a consulting firm and other commercial tenants, neighbors said. Montoya currently is renting space to four businesses and is looking for a fifth tenant.
The increased street traffic generated by the businesses led neighbors to complain to city officials, said Rich Grix, who lives in a restored Victorian house behind Montoya’s property. In an interview Grix complained about the deteriorating condition of Montoya’s house and about garbage strewn over the property.
Sacramento planning officials said they sent Montoya an illegal occupancy notice in August because the property is zoned for residential use only. Montoya likely will have to evict his tenants or apply for a zone change, said Dennis Kubo, the city’s nuisance abatement officer. If Montoya is granted a zone change, he would be required to provide a parking lot, handicapped entrances, new electrical wiring and make other changes, Kubo said.
Montoya angrily denounced neighborhood residents for singling his property out and ignoring other houses that he contended were operating illegally.
“Joe Montoya is a right-wing conservative, according to these bastards,” Montoya said. “Let’s find out what this agenda is. Did they not like my parental consent bill? I mean, this is a political bull . . . trip is what it is!”
Acquired More Units
Montoya continued to buy property in Sacramento and by 1981 owned five rental units. In 1983, when California real estate was stagnant, Montoya learned of an enticing deal in Palm Springs. Guaranty Construction Financing Corp. was offering 61 new, furnished, two-bedroom condominiums for about $90,000 apiece. With $10,000 down, Guaranty was offering 7 3/4% financing. Montoya began spreading the word among friends and colleagues in the Legislature.
Sen. Ruben Ayala (D-Chino) and Sen. Robert Presley (D-Riverside) bought single units along with Montoya, who purchased a half-interest in two units, one with his daughter and the other with a West Covina couple who later turned their interest over to Montoya. In 1985, Montoya bought a share of a third unit at the complex, located on Indian Avenue across from Desert Hospital.
Few of the condominiums are rented out often enough to pay for themselves, much less bring a profit, said once source familiar with the complex. He said that one of Montoya’s units is occupied by his daughter on many weekends and another is vacant much of the year.
When Montoya holds his committee hearings in Palm Springs, he sometimes suggests to lobbyists that they rent one of his condominiums, said two lobbyists who asked not to be identified. One of them said he had been pressed by Montoya to rent one of the units, but he declined. The other said he had also heard about Montoya making similar requests but had not received an invitation himself.
Montoya said he could not recall renting one of his units to anyone who was scheduled to attend his hearings.
Attendance records kept by the Senate show that Montoya is the only committee member who did not miss any of the 14 hearings in Palm Springs since 1983. Montoya is usually accompanied by one or two other members and occasionally is the only member present. Last December, Montoya held hearings over a four-day period in Palm Springs, including one session on “cable TV dealing with the city of Cerritos.” The hearings cost the state $2,499 in travel and per-diem expenses.
Montoya said he is tired of being chastised for holding committee hearings in Palm Springs, Carmel and San Diego by reporters who, he said, fail to cover the issues raised at the sessions. Beginning this month, Montoya’s constituents will be seeing more of the senator. He said he will hold all of his hearings during the legislative recess in his district.
Times staff writers Tracy Wood and Richard C. Paddock and researchers Patti Cole and Cecilia Rasmussen contributed to this article.
THE JOE MONTOYA SUCCESS FORMULA These are California properties acquired by State Sen. Joseph B. Montoya, left, since he became a legislator in 1972. The current real estate values are estimates furnished by licensed California realtors and appraisers. “It’s very easy,” he told a reporter last week. “You can read the books yourself. . . . The ‘Joe Montoya Success Formula’ has been that I haven’t bought any properties paying more than 10% (down), with a couple of exceptions.”
IN SACRAMENTO
2405 Capitol Ave., Sacramento
Acquired June, 1977
Value $160,000
2720 F St.,
Sacramento
Acquired November, 1983
Value $115,000
2501 Gilgunn Way, Sacramento
Acquired February, 1984
Value $95,000
2775 Freeport Blvd., Sacramento
Acquired October, 1986
Value $70,000
2637 Freeport Blvd., Sacramento
Acquired December, 1986
Value $65,000
3001/3003 6th Ave., Sacramento
Acquired December, 1986
Value $85,000
2405 E St., Sacramento
Acquired September, 1986
Value $79,000
IN THE SAN JOAQUIN VALLEY
27437 San Carlos, Madera
Acquired December, 1985
Value $60,000
27224 Standford, Madera
Acquired December, 1985
Value $50,000
530/532 East H St., Oakdale
Acquired May, 1986
Value $75,000
IN SOUTHERN CALIFORNIA
291 Mel Ave., No. 272, Palm Springs
Acquired July, 1983
Value $88,500
291 Mel Ave., No. 222, Palm Springs
Acquired August, 1983
Value $93,500
291 Mel Ave., No. 262, Palm Springs
Acquired February, 1985
Value $87,000
861 Thrush Ave.,
Big Bear Lake
Acquired September, 1983
Value $87,500
810 Dovey St.,
Whittier
Acquired April, 1975
Value $300,000
2852 Sawtelle Blvd.,
No. 38, Los Angeles
Acquired August, 1987
Value $112,000
PROPERTIES ACQUIRED AND SOLD
3524 Larchmont Sq. Ln., Sacramento
Acquired January, 1974
Value $75,000
(Sold June, 1982)
2512 G St.,
Sacramento
Acquired September, 1978
Value $100,000
(Sold January, 1985)
711 18th St., Sacramento
Acquired September, 1978
Value $95,000
(Sold September, 1988)
Source: California Secretary of State Compiled by Researcher Cecilia Rasmussen
