Experts Assess Case Against Mayor : Bradley Unlikely to Face Criminal Conflict Charge

Legal experts say they do not expect prosecutors to charge Los Angeles Mayor Tom Bradley with any crimes based on allegations that he took official actions to benefit a bank and a savings and loan in which he had financial interests.

They say that if the mayor faces legal difficulty stemming from his role as a paid official of the two financial institutions--and it is not clear that he does--it will most likely take the form of a civil suit alleging that he violated the less punitive of the state’s two conflict-of-interest laws. Such a suit would carry a maximum $2,000 fine.

The allegations were prompted by disclosures that Bradley was paid $18,000 as an adviser to Far East National Bank and up to $24,000 a year as a member of the board of directors of Valley Federal Savings and Loan Assn., both of which had business dealings with the city. The ties between these institutions and Bradley have become the central focus of an investigation by City Atty. James K. Hahn.

This is only one of several inquiries into the mayor’s financial affairs. The Securities and Exchange Commission and the U.S. attorney’s office in Manhattan have begun separate inquiries into the mayor’s financial affairs.

But the exact nature and likely outcome of these probes are largely unknown.

The assessment that Bradley will not be charged with a crime for violating conflict-of-interest laws is based in part on the observation that very few politicians have ever been prosecuted on such charges. Charlotte Rhea, a research analyst for the state attorney general’s Bureau of Criminal Statistics, said she could not find any record of conflict-of-interest prosecutions in California in the last 10 years.

The assessment is also based on the mayor’s not having acted in a typically criminal manner: Rather than hide his financial relationship with the financial institutions, he reported them, as the law requires, on economic disclosure statements that are open to the public.

“The fact that he did not try to fool the voters--that he reported it--pretty much takes it out of the criminal arena,” said one prosecutor who has evaluated numerous conflict-of-interest allegations involving other officials.

Perhaps the most serious of the allegations is that Bradley used his official position to try to influence the city treasurer to deposit city funds with Far East National Bank, where Bradley was acting as a paid adviser.

This is what has been reported:

The mayor called city Treasurer Leonard Rittenberg just after he had received a phone call from the bank’s president, Henry Hwang, asking about reports that the city was about to end its policy of depositing money in small minority-owned banks. The next day, the treasurer deposited $1 million in Hwang’s bank and another $1 million a few days later.

Civil Suit More Likely

One expert, a lawyer who has wide experience in such cases, said a civil suit is more likely than a criminal prosecution. Like most of seven experts interviewed for this story, this one spoke on condition that he not to be named.

“Bradley has received more than $250 (the legal standard),” the lawyer said. “It appears he’s participated in a decision affecting his source of income in that he called the city treasurer and said--if it can be shown that he indeed said this--’why don’t you deposit money with Far East?’ ”

The difficulty is proving Bradley made such a statement.

The treasurer has said that he did not think the mayor or anyone else was trying to influence him.

What did the mayor then want? The treasurer and the mayor have said Bradley simply wanted to know if the bank was receiving city deposits. Rebutting this appears to depend on city documents that reportedly indicate the mayor long knew the city had funds on deposit with the bank.

A criminal prosecution, which entails proving guilt beyond a reasonable doubt, probably would be extremely difficult under these circumstances, experts said. A civil suit, which requires only that one side’s case be a little stronger than the other’s, would be much easier.

Bradley appears clearly off the hook as far as the tougher of California’s two conflict-of-interest laws is concerned. That law, which can be prosecuted as a felony, prohibits public officials from being “financially interested in any contract made by them in their official capacity or by any body or board of which they are members.” But bank deposits, although contracts, are specifically exempted.

Role Poses Questions

Bradley’s position as Far East’s only paid “special adviser” raises other questions for prosecutors:

Did the mayor, who was a police officer for many years before he became a politician, have special expertise in banking?

If not, was he really offering advice, or was he offering his influence as mayor in the guise of advice? If so, was he guilty of accepting an illegal gratuity--which is akin to a tip--or a bribe?

Prosecutors with the Los Angeles city attorney’s office, which is reviewing the allegations, have already ruled out such prosecutions, according to a source familiar with their probe, because they have come up with no evidence of a quid pro quo.

But Daniel Lowenstein, a UCLA law professor and principal author of the state’s Political Reform Act, said bribery should not necessarily be ruled out.

Lowenstein said a bribe does not require an explicit exchange of money for an official action. It merely requires that the public official intends to be influenced when he accepts the money. Lowenstein said bribes are commonplace in politics, and distinctions between them and some campaign contributions, gifts, honorariums and illegal gratuities are blurred. Much “bribery goes unprosecuted primarily because the crime is so pervasive,” he said.

Four prosecutors said that while Lowenstein may be technically correct, it is unrealistic to expect a jury to convict a public official of bribery without evidence of a quid pro quo-- preferably on tape.

In part because they believe it is so difficult to obtain convictions against popular public figures, some prosecutors, who have almost unlimited discretion in these matters, said they are sometimes content to let politicians take a beating in the media--rather than spend money on taking them to court.

Frequent Violations

A decision to prosecute, they said, usually requires that a lot of money, concealment or repeated violations be involved. They also said they have to be convinced that there was an intent to commit a crime rather than a foul-up.

The only conflict-of-interest prosecution in Los Angeles County in recent years--one that apparently escaped the attention of the Bureau of Criminal Statistics--involved a Downey city councilman. The councilman, James Santangelo, cast the deciding vote in favor of redeveloping an area in which he operated a large real estate office and owned substantial property, said Deputy Dist. Atty. Herbert Lapin, who prosecuted the case.

Santangelo had not hidden his assets. The case against him was dropped after a jury was declared hopelessly deadlocked, 11 to 1, for conviction.

Santangelo was charged with a misdemeanor under the Political Reform Act’s conflict-of-interest provision. It prohibits a public official from participating in or using his position to try to influence any governmental decision in which he “knows or has reason to know he has a financial interest.”

There is nothing wrong with public officials having conflicting interests. It is only illegal if they fail to disqualify themselves from public actions that affect their private interests.

Conflict-of-interest law evolved from the Biblical admonition that “no man shall serve two masters.”

The point of the law, as the attorney general’s office has expressed it in a formal opinion, is to forbid a public official from placing himself “in a position in which he might be tempted by his own private interest to disregard the interest of the public.”

“We know some people may be capable of acting objectively” even though they have a competing private interest, Lowenstein said, “but we’re not interested in that. We’re saying, ‘This is the line, don’t cross it.’ ”

In the case of Valley Federal Savings and Loan, Bradley faces allegations that he crossed the line because he conducted city business that affected the financial institution, while a he was one of its stockholders and directors.

Approved Rezoning

The city business was approval of zoning changes sought by Valley Federal’s development subsidiary.

One question facing prosecutors is whether Bradley knew or had reason to know that the documents he signed involved this subsidiary. Bradley has said he did not know. Rebutting his position would probably be difficult because the documents did not contain the name of the Valley Federal subsidiary.

Bradley could also be off the hook if it could be shown that the zoning changes did not have what the law refers to as a “material financial effect” on the savings and loan. This effect has been variously defined.

To have a material effect on a company the size of IBM, for example, in which a public official owned stock, a decision by the public official would have to result in at least a million-dollar change in IBM’s gross revenues, according to regulations imposed by the state Fair Political Practices Commission, a policing agency created by the Political Reform Act. To materially affect a small business, the decision would have to result in at least a $10,000 change. In a zoning case, there would have to be a $10,000 increase or decrease in the fair market value of the rezoned property.

Whether such a change could be proved as a result of the Valley Federal rezoning decisions is unclear.

Another difficulty in prosecuting Bradley in connection with the zoning changes involves an exception to conflict-of-interest law called the rule of necessity. This exception, according to the attorney general’s office, “permits governmental officers or agencies to carry out essential duties despite conflicts where only they may act.”

In the case of Bradley, he can sign, veto or refuse to sign zoning change ordinances approved by the City Council. If he refuses to sign, the ordinance becomes law anyway.

The only way Bradley could have avoided a conflict of interest in the zoning matters would have been to leave the city.

Leave the City?

The question then becomes: Is the mayor required to leave the city whenever a conflict arises? The answer is doubtful.

A similar question arose in San Francisco a few years ago when then-Mayor Dianne Feinstein vetoed an ordinance that could have cost her money. Feinstein was a landlord with five apartments. The ordinance would have limited the rent that landlords could have charged new tenants.

Feinstein was sued by a nonprofit group, which alleged her veto violated conflict-of-interest law. A trial court agreed, but a panel of the state Court of Appeal ruled there was no violation.

If the city attorney’s office declines to prosecute Bradley or file suit against him, the FPPC still could could begin an administrative action against the mayor.

The commission did that last year with Los Angeles City Councilman Richard Alatorre, after the city attorney’s office declined to press a conflict-of-interest case. Alatorre was fined $2,000 after admitting that he attempted to steer a $722,500 city contract to an Eastside community organization that had paid him $1,000.

The commission has fined 14 public officials for conflict-of-interest violations in the last four years.

For public officials concerned about avoiding conflicts, the commission hands out free advice. Every month, about 10 officials make use of the service.