The state attorney general’s office and the IRS have launched separate inquiries into how state Sen. Joseph Montoya (D-Whittier) has financed and managed nearly $2 million in California rental properties, according to officials and sources contacted by investigators.
The Times reported last month that Montoya has used his Capitol office and legislative staff to collect monthly rent checks, show properties and arrange maintenance repairs, according to Montoya’s current tenants. This week, several of Montoya’s former tenants said in interviews that this practice dates back to 1980.
“I just couldn’t understand why he was having his office secretary take care of his private business on our public tax dollars,” said Tosh Tamaribuchi, a Sacramento hairdresser who rented office space from Montoya between 1980 and 1982.
Montoya, one of four legislators who are targets in the ongoing FBI investigation into political corruption, declined to comment Friday.
“Sen. Montoya will neither verify, confirm or deny any facts you have to print,” said his attorney, Michael S. Sands.
Previously, Montoya denied using his office or staff to manage his properties.
A public official who is found to have used state employees or equipment for his own personal benefit can be charged with theft of government funds, said Alan B. Ashby, a spokesman for the attorney general’s office.
State prosecutors are seeking to determine whether Montoya violated any laws when he reportedly used his office and staff to manage his extensive real estate holdings, said Duane L. Peterson, a spokesman for Atty. Gen. John K. Van de Kamp.
“We are looking into the allegations,” Peterson said Friday.
At the same time, IRS agents told Montoya’s tenants this week that they are investigating the senator, the tenants said. IRS officials declined to confirm the investigation.
Graphic designer Steve Tackett-Barbaria said an IRS agent told him the department was “conducting an investigation” and “asked for copies of rent checks” from 1985 and 1986, when he rented office space from Montoya.
Another tenant said the IRS was looking into whether Montoya claimed the rental income on his federal tax returns. The tenant, who asked not to be identified, complained that the IRS “wanted me to drag out old rent checks from three or four years ago.” The IRS also requested copies of rental agreements, the tenant said.
The Times reported last month that Montoya, who earned less than $14,000 a year as a social worker before he was elected to the Legislature in 1972, has built an impressive financial portfolio on a government salary that currently pays $37,105 annually.
The 49-year-old legislator said last month that it was “very easy” to acquire the properties.
“The ‘Joe Montoya Success Formula’ has been that I haven’t bought any properties paying more than 10% (down), with a couple of exceptions,” he said.
Records show that Montoya and his wife, Pilar, have purchased 18 properties in Sacramento, Madera, Palm Springs and Los Angeles County since 1974 and currently own 14 of the properties.
Several of the rental units were purchased in partnership with a top aide, Amiel A. Jaramillo, shortly after he received about $30,000 in campaign loans from Montoya. In addition, Jaramillo and one of Montoya’s daughters jointly purchased a Sacramento rental unit in October, 1986--four days after the senator gave him a $7,500 loan.
It is unlawful for a public official to use political campaign funds to buy or lease personal real estate. While Montoya has denied that the loans were made to his aide for the purpose of purchasing the properties, Jaramillo’s attorney has acknowledged that the money may have made it economically feasible for Jaramillo to invest in the rental units.
Montoya has been notified that he also may be in violation of city land-use laws in Sacramento by leasing to businesses a large Victorian house that is zoned for residential use, a city planning official said. Montoya said he was told the house was zoned for commercial use when he purchased it in 1978.
The Whittier Democrat has also called statements by current tenants that he used his staff to manage his properties “outrageous lies.” But several former tenants reached this week said the senator has used his staff and office to manage property since 1980.
Maureen Ramos and Ken Mandler said they were looking for downtown office space in 1980 when they spotted a classified newspaper advertisement for a Victorian house that included a phone number to Montoya’s Capitol office. Ramos said she believed that a Montoya staff member showed her the property, located on Capitol Avenue. Mandler said that a Montoya staff member called him back several times to ask if he was still interested in the house.
“I just remember being surprised,” Mandler said. “I was kind of new to Sacramento at the time. I wondered if that was how things worked. . . . We didn’t want anything to do with it.”
Tamaribuchi, the Sacramento hairdresser, said he personally delivered his monthly rent checks to Montoya’s secretary, Rachel Fontes, in the senator’s office between 1980 and 1982. He said that Fontes showed him the building and oversaw the property.
“If anything needed to be done, the plumbing or whatever, she would have to make all of the arrangements,” Tamaribuchi said.
Times staff writer Tracy Wood contributed to this story.