Montoya, Ex-Aide Indicted on Multiple Felony Counts

State Sen. Joseph B. Montoya (D-Whittier) and a former top aide were indicted by a federal grand jury Wednesday on 12 counts of racketeering, extortion and money laundering, making them the first legislative targets to be charged in a 3 1/2-year federal investigation of corruption in the capital.

The indictment charges that Montoya and aide Amiel A. Jaramillo used their offices to extort campaign contributions and speaking fees from those seeking help with legislation.

“It is our responsibility as federal law enforcement officers to guarantee the people that its public servants do not turn the privilege and honor of public office into opportunities for private gain,” said U.S. Attorney David F. Levi in announcing the indictment.

The feisty 50-year-old Montoya, elected to the Legislature in 1972, was charged with 10 felony counts, each of which carries a possible penalty of 20 years in prison and a fine as high as $500,000 if he is convicted.

Montoya, chairman of the Senate Business and Professions Committee, is charged with extorting money from groups as diverse as the National Football League Players Assn., representatives of the recycling industry, and undercover FBI agents.

Montoya proclaimed his innocence in a statement released by his El Monte office: “I have from the onset of this investigation claimed my innocence and I will plead ‘not guilty’ to all charges. I have complied with all laws and will vigorously defend my position in court.”

Jaramillo, who was indicted on the same racketeering count as Montoya, plus two separate counts of extortion, was not available for comment.

Levi made it clear that neither man would be arrested, but would be summoned to court some time in the next two weeks to answer the charges against them.

The 21-page indictment is heavy with allegations of wrongdoing but vague on detail. At a press conference, Levi refused to elaborate on any of the charges, telling reporters that the details will unfold as the cases moved toward trial.

Levi would not indicate whether anyone else will be indicted, but said that the investigation of other legislators and aides will continue “for some considerable period of time.”

Specifically, Montoya was charged with asking for a $3,000 payment in 1988 from FBI agents posing as businessmen in an elaborate sting operation called Brispec, for Bribery--Special Interest. The “businessmen” were seeking legislative support for a special-interest bill that would supposedly help them build a shrimp processing plant in West Sacramento.

Montoya deposited the $3,000 money he got from the agents into a bank account, and according to the prosecutor, that in itself is a violation of federal money laundering laws.

However, the grand jury indictment includes charges that go far beyond the sting itself.

Pattern of Behavior Found

In fact, the indictment states that Montoya and Jaramillo engaged in a pattern of behavior going back to at least 1985 that violated the Racketeer Influenced and Corrupt Organizations Act, a federal statute that was originally enacted to prosecute organized crime.

Many of the charges were the result of citizens coming forward to complain to federal officials after the sting came to light, said Terry L. Knowles, special agent in charge of the Sacramento FBI office. Knowles said he hopes members of the public will continue to report knowledge of political corruption.

In one case, the indictment charged that in 1986 Montoya asked for a payment from a National Football League Players’ Assn. representative concerned about a bill affecting athletic agents. The lawmaker was also charged with soliciting a $5,000 payment from another athletic agent interested in the same bill.

In another count, the indictment charges that Montoya asked for a campaign contribution from unidentified parties affected by a bill before the Senate that would have extended the life of recording industry contracts.

The grand jury accused Montoya of asking in 1985 for a payment of “speaking fees” in exchange for his vote on legislation affecting catastrophic insurance for public schools.

Recycling Contacts

In addition, the senator was charged with using his position to seek a $2,000 payment from representatives of the recycling industry.

The other counts involved alleged attempts to extort money in connection with legislation affecting foreign medical school graduates and the oil and gas industry.

In his statement, Montoya did not discuss any of the specific charges and indicated he will not address them until he appears in court. “Due to the nature of the proceedings, and upon the advice of my attorney, I will issue no further comments nor answer any questions relating to this case,” he said.

Jaramillo, while a consultant to the Senate committee chaired by Montoya, solicited payments from a group of employment agency owners and the Assn. of Osteopathic Physicians and Surgeons, the indictment charges.

Prosecutor Levi said that the grand jury “believes that there is public corruption here and that is very serious, but . . . the system has the ability to cleanse itself.”

Legislative reaction to the Montoya indictment was cautious, but Senate President Pro Tem David A. Roberti (D-Los Angeles) said that he is considering whether to remove Montoya from his post as chairman of the Business and Professions Committee.

“In our system, we live by the presumption of innocence,” Roberti said, but added: “I don’t want that to be necessarily a foolproof guide of what actions I am going to take.”

Ironically, Montoya moved up to the Senate from an Assembly seat in 1978 by challenging a fellow Democrat who was then the subject of a federal political corruption investigation. The incumbent, Sen. Alfred H. Song of Monterey Park, was never indicted, however, and charges against two of his aides ended in hung juries.

During that combative campaign Montoya made corruption allegations the central issue. “My name is Joe Montoya, and I strongly believe integrity is an issue in this campaign,” he wrote in a letter to district voters. . . . At a time when public respect for government is at an all time low, elected officials should be setting an example of upholding the spirit as well as the letter of the law.”

Now, Montoya is facing corruption charges himself at a time when he would normally be preparing to run for reelection in 1990.

Jaramillo, 35, was hired by Montoya in 1985 and quickly became one of the senator’s top staff members. In January he left his $67,224-a-year Senate post to go into private law practice in Sacramento.

The two were partners in several real estate deals that are the subject of a separate investigation by the state attorney general’s office. The state probe was started last year following a Times’ article that described Montoya’s use of his legislative office and staff to manage nearly $2 million in rental properties during his years as a legislator.

Several of the rentals were purchased shortly after Jaramillo received about $30,000 in loans from one of Montoya’s campaign committees.

While on the Senate payroll, Jaramillo maintained a small law practice on the side and enjoyed many of the perks of office usually reserved for legislators. For example, in a two-year period, Jaramillo received $9,400 in travel, lodging, meals and gifts from groups with an interest in legislation.

The federal probe of corruption in the Legislature first came to light on Aug. 24 when 30 FBI agents armed with search warrants raided the offices of Montoya, three other legislators and two aides.

The next day, typically combative and outspoken, Montoya was the only one of the legislators to respond publicly to the search of his office that had ended in the early morning hours. He even read aloud from the federal search warrant with its allegations of violations of federal extortion statutes to a Times reporter and television crew confronting him in his office.

It soon became clear that the FBI raid was part of an elaborate federal sting operation in which federal agents posing as businessmen were doling out speaking fees and honorariums as their special-interest bills moved through the Legislature.

Montoya was one of 13 or more public officials to be taped by federal agents and their informants during the course of the sting, according to sources familiar with the investigation.

Others still under investigation include Assemblyman Pat Nolan (R-Glendale), Assemblyman Frank Hill (R-Whittier), Assemblywoman Gwen Moore (D-Los Angeles), and State Board of Equalization member Paul Carpenter, a former Democratic state senator from Cypress.

Montoya is not the only lawmaker currently facing felony charges of political conduct. In February, Republican Assemblyman John R. Lewis of the city of Orange, was charged in state court with forgery for his role in mailing thousands of campaign letters bearing the phony signature of then-President Ronald Reagan. Lewis has pleaded innocent to the charge.

However, Lewis and Montoya have become the first sitting legislators to be indicted in 24 years for charges of political misconduct.

The present federal investigation into political corruption began in October, 1985.

Using a series of dummy companies, the agents sought support for special interest bills that supposedly would help them finance a shrimp processing plant in West Sacramento. With present and former legislative aides acting as intermediaries, the federal agents--doing business as Gulf Shrimp Fisheries Inc. and later as Peachstate Capital West--had little trouble winning support for their legislation. Twice the Legislature approved bills by Assemblywoman Moore--in 1986 and again in 1988. And twice Gov. George Deukmejian, tipped off by the FBI about the sting operation, vetoed the measures.

The agents played the part of chummy glad-handers, bumpkins with heavy Southern drawls, who would ask legislators and aides straight out how much it would cost them to get their bills through, according to several accounts.

To smooth the way for the legislation the “businessmen” paid out at least $86,500 in campaign contributions, honorariums and consulting fees to lawmakers, legislative staff members and an ex-employee who acted as their lobbyist.

The first to be indicted were Yolo County Sheriff Rod Graham and his former top deputy, Wendell Luttrull, who were unexpectedly snared in the FBI sting. Graham pleaded not guilty to charges that he had extorted $3,650 in campaign contributions from Marvin Levin, a local developer. Levin, a former lobbyist, was helping the FBI with the undercover sting operation at the Capitol and wore a hidden microphone in several meetings with the two Yolo County peace officers. Luttrull has pleaded guilty to charges, agreeing to cooperate in the prosecution of Graham in exchange for a lighter sentence.