Junk Bonds, Stocks, Real Estate : Bradley Amasses Diverse Portfolio of Investments

In trading that has increased in intensity over the last several years, Los Angeles Mayor Tom Bradley has built up his personal investment portfolio with stocks, valuable real estate and, in one notable gamble, junk bonds.

A Times study showed the diverse portfolio has been accumulated, in part, by trading in stocks and bonds involved in some big corporate financial deals, including three handled by Drexel Burnham Lambert and its junk bond operation headed by Michael Milken.

Bradley has received some of his largest political contributions from Drexel and Milken’s brother, Lowell Milken, and was instrumental in launching a congressional lobbying effort to persuade the Securities and Exchange Commission into allowing the firm to keep its junk bonds operation in Beverly Hills.

Milken has since been indicted on charges of racketeering, insider trading and securities fraud. While there is no indication that Bradley had any connection with Milken’s troubles, an intensifying investigation into the mayor’s personal finances prompted him to announce Thursday that he has placed his portfolio into a blind trust.

“Today, I voluntarily take another step to reinforce my bond of trust with the people,” Bradley said in a statement.

The action is the latest in the series of moves the mayor has taken since disclosure that he has accepted more than $100,000 in fees from two local financial institutions that have had dealings with the city. Those disclosures set off a furor, and prompted an investigation by City Atty. James K. Hahn, who has asked for Police Department assistance.

Under heavy criticism, the mayor in recent weeks has returned $18,000 in adviser fees to Far East National Bank. Then, a day after his surprisingly narrow reelection victory, Bradley resigned from the board of Valley Federal Savings & Loan Assn. He also established a committee to write a tougher ethics code for city officials.

Over the last two weeks, The Times has researched the financial holdings that Bradley disclosed in the statements of economic interests that public officials are required to file. The information was supplemented by data from financial reporting services and interviews.

Broad Ranges

Because elected officials are required to disclose the value of their investments only in broad ranges, it was impossible to accurately determine the current worth of the holdings Bradley will put into the trust.

Asked in an interview Thursday how much he is worth, Bradley replied, “I have no idea, I couldn’t tell you that.”

While the mayor agreed to an interview only on grounds that questions would be restricted to his blind trust, he did comment on his investing.

“There’s no magic in it,” he said. “I don’t know any expert. My losses will justify that. . . . The market is a risk and you buy from the judgment of people. Sometimes they are right. Sometimes they are wrong.”

Bradley declined to say who his broker was in any of his transactions.

Asked if he likes to “play” in the securities market, Bradley demurred. “Next you’ll want to know if I play the horses,” he said.

Among Bradley’s investments was Beatrice Foods Inc. preferred stock he bought in March, 1986--one month before the company was acquired by BCI Holding Inc. in a controversial takeover financed by Drexel Burnham’s high-yield junk bonds.

The $6.2-billion leveraged buyout was one of the largest acquisitions of its kind.

Bradley’s statement of economic interest shows that he purchased between $10,000 and $100,000 of Beatrice Foods stock. After he purchased the stock, its value rose sharply. That was because of a BCI stock conversion and other aspects of the deal.

After the takeover, investigators for a congressional subcommittee looked at the deal, and last year reported that they found evidence that Drexel Burnham and its employees acquired significant equity in the Beatrice takeover transaction and profited from junk bonds that were later made available at an escalated price to customers.

Questions also have been raised about the investment of Rep. Tony Coelho (D-Merced) in the Beatrice transaction. Coelho’s involvement was particularly controversial because he obtained debentures (a form of corporate bonds) not normally available to individual investors. The investment netted Coelho a profit of $6,882 over six months.

Wickes Corp. was another Bradley investment. He reported purchasing between $1,000 and $10,000 worth of Wickes Corp. common stock in June, 1985, shortly after the firm made a preferred stock offering to raise cash. After the offering, the price of the stock rose and Bradley sold his shares in March, 1986.

The indictment of Milken alleges that he manipulated the market to keep up the price of Wickes stock in April. But by that time, Bradley had reported that he had sold it.

The mayor also purchased debentures in a successful leveraged buyout of Metromedia in 1984, when a group of executives took over the company in a deal involving Drexel Burnham.

It was one of the largest junk bond deals at the time and the debentures were considered risky. But by the following year--when Bradley sold them--the bonds ultimately paid off at a premium, several brokers said, when financier Rupert Murdoch led another takeover of the firm.

sh Political Supporter

As one of the mayor’s biggest political supporters, Drexel Burnham and its employees have given Bradley $72,700 in campaign contributions since 1983, including $8,600 from Lowell Milken. Bradley also has received $51,880 from employees of Columbia Savings & Loan Assn., a Beverly Hills thrift that has invested heavily in junk bonds through Drexel. Michael Milken is a close acquaintance of Tom Spiegel, the president of Columbia who has had Bradley over for dinner at his home, according to the mayor’s calendar.

Bradley and Milken, who could not be reached for comment, have worked together on behalf of several community charity foundations, a source close to Milken said. Several months ago, Milken’s personal public relations spokesman suggested that a Times reporter interview Bradley and a number of other Milken supporters for a profile story on the junk bond king.

But on Thursday, the spokesman, Ken Lerer, said that he furnished the reporter with the name of William Elkins, the mayor’s longtime aide, not Bradley’s. Elkins sits on the board of directors of Columbia Savings.

Bradley played a key role in helping to successfully bring pressure on the Securities and Exchange Commission in January to drop its demand as part of a securities fraud lawsuit that Drexel close Milken’s junk-bond operation in Beverly Hills.

Drexel spokesman Steve Anreder told The Times that the firm solicited Bradley’s help by asking him to call Rep. Coelho to arrange what one Coelho aide described as “some kind of coordinated effort” to persuade the SEC to drop its demand.

Acknowledges Contact

A spokeswoman for the mayor acknowledged that Bradley contacted Coelho, but said that the phone call was spontaneous and was not made at the request of Drexel Burnham.

In other investments, Bradley has traded in Gibraltar Savings & Loan stocks, Mattel, Discovery Oil, Coast Savings & Loan, Columbia Savings & Loan, and Valley Federal, on whose board he had served.

Bradley also is an investor in a Riverside County land deal put together by an old friend, Juanita St. John, who is also head of the Task Force for Africa-Los Angeles Relations. That organization’s finances are being investigated by the city attorney and city controller.

Records show that the mayor had been a relatively passive investor until the early 1980s, tending to buy and hold stocks for longer-term appreciation. But beginning in about 1983, the mayor became much more active in the market, in some cases buying and selling stocks in a matter of weeks or months. For example, in early 1986 the mayor bought and sold between $10,000 and $100,000 of stock in Coast Savings & Loan in a month.

Bradley said he began to think about setting up the blind trust immediately after the election.

“I began tossing the idea around with various people, they all seemed to concur it would be a good step to take,” he said.

“I just think in light of the time, a question of ethics has been raised . . . and we in this city need to at least take actions that will reinforce confidence of people in their elected leadership.”

Bradley said he has not named the person in charge of the trust.

This article was reported by Times staff writers Bill Boyarsky, Glenn F. Bunting and Rich Connell.