Fund-Raiser for Bradley Quits Harbor Post

Ira Distenfield, one of Mayor Tom Bradley’s biggest fund-raisers, resigned Tuesday as president of the Harbor Commission, saying that news media inquiries about him had “imposed a burden upon my family that I have no right to ask them to bear.”

Distenfield resigned as The Times was preparing a report for today’s editions on sworn testimony that he gave during a confidential New York Stock Exchange arbitration hearing in 1987. At that time, he said he had used his influence with Bradley to obtain a prized city contract for a firm that employed him as an executive.

Finder’s Fee

According to three members of the arbitration panel, Distenfield argued that he deserved a $150,000 “finder’s fee” from Smith Barney, Harris Upham & Co. for helping the brokerage house land a potentially lucrative contract to underwrite bonds for the city’s trash-to-energy project known as LANCER, which was never built.

When the hotly contested contract was up for grabs, Distenfield managed Smith Barney’s office in Beverly Hills and was a Bradley appointee on the city’s Telecommunications Commission.

During the closed-door stock exchange hearing, Distenfield called as a witness a friend, then-Deputy Mayor Tom Houston. Arbitrators interviewed by The Times said Houston acknowledged that Distenfield’s relationship with the mayor had helped Smith Barney catapult over three higher-ranked competitors to win the contract.

Asked Tuesday about his testimony, Houston stopped short of saying that it was Distenfield’s relationship with the mayor that cinched the deal. Instead, he said Distenfield’s volunteer community work--including his chairmanship of a Bradley program to help disadvantaged youth--had “certainly enhanced the efforts of Smith Barney.”

The arbitration panel ruled partially in Distenfield’s favor. As one arbitrator put it, “We didn’t think Smith Barney would have had a chance to get its big guns in the door without Mr. Distenfield and his connections with the mayor.”

Distenfield announced his resignation at a time when the Bradley Administration is attempting to struggle through a period of extraordinary scrutiny. Separate inquiries are under way by city and federal investigators into the mayor’s personal finances, including his stock transactions and his work as a paid consultant for a bank that did business with the city.

It remains unclear exactly how Distenfield exerted influence in one of the most hotly contested underwriting deals in the city’s history. Smith Barney, like other firms, had launched a multifaceted effort to win the $235-million contract. Those involved say that while Distenfield may have been influential, it is unlikely that he alone could have swung a divided City Council to choose Smith Barney as the lead firm.

Not Available

The Times on Tuesday attempted repeatedly to reach Distenfield. Through his secretary, he promised to return the newspaper’s phone calls but did not. At 4:16 p.m., he transmitted a copy of his resignation to The Times by facsimile machine.

A Bradley spokesman said the mayor accepted Distenfield’s resignation “with regret,” praising him for his “energy and creative ideas” and his “vision and leadership” as head of the Harbor Commission, which oversees the sprawling Port of Los Angeles.

Geoffrey Cowan, head of a newly created ethics panel that was formed after the mayor was barraged by conflict-of-interest questions, said he was unfamiliar with the specifics of the Distenfield case but noted that it reflects the need for more stringent controls.

“It’s another illustration of the need to find clear and tight ethical laws so that people would know what side of the lines this kind of conduct falls on,” he said.

Distenfield emerged as a Bradley ally in early 1985 when the registered Republican began to contribute heavily to the mayor’s reelection campaign. In all, Distenfield has funneled more than $86,000 in cash contributions to Bradley and has bankrolled expensive fund-raisers for him.

During Bradley’s unsuccessful gubernatorial bid in 1986, Distenfield served as a key fund-raiser, bringing in millions of dollars, often soliciting contributions from people and companies doing business with the city, according to a former campaign official who requested anonymity.

In April, 1987, Distenfield moved from the Telecommunications Commission to the far more powerful Harbor Commission and was elected its president last August.

Around City Hall, Distenfield has earned a reputation as a man who openly brags about his influence with the mayor--as he did during the New York Stock Exchange arbitration. At the same time, he has amassed staggering personal debts while becoming one of Bradley’s biggest individual contributors.

Distenfield currently owes, for example, more than $300,000 in back taxes, according to documents filed by the federal government in the Los Angeles County recorder’s office.

The arbitration hearing during which Distenfield claimed credit for helping Smith Barney obtain the LANCER contract grew out of an effort by the brokerage house to recover $550,000 that it had loaned to Distenfield in 1985.

Distenfield had told executives of the firm that he was in serious financial trouble from bad investments and a messy divorce settlement. Smith Barney gave him two unsecured loans, one for $300,000 and another for $250,000. In court papers, Smith Barney said it agreed to do so after Distenfield promised to stay with the firm for another four years.

But two months after Distenfield obtained the final installment, he quit to run the Century City brokerage office of Bateman Eichler, Hill Richards Inc. He has said in the arbitration hearing that he never promised to stay with Smith Barney, only that “I have no intention of leaving Smith Barney for the next four years.”

Distenfield now runs a firm called Financial Services Group, an affiliate of Integrated Resources.

During the New York Stock Exchange hearing, Distenfield “represented that he was close to the mayor and was responsible for lining up the contract through his influence,” arbitrator DeOtis Marlett told The Times. Added arbitrator John Kirk Sr.: “It was certainly my impression that Smith Barney got the contract because of Mr. Distenfield’s connections with the mayor.”

Distenfield, who sought $150,000, was awarded an $80,000 reduction in his debt, partially for his work on the LANCER deal.

Lindsay Skeptical

Others contend that Distenfield exaggerated his role as a way to fare better in his arbitration case. Councilman Gilbert Lindsay, who represents the 9th District, where the LANCER project was to be built, said the mayor’s office did not influence the selection process.

“Let him have the credit if he wants to, but it’s a bunch of malarkey,” Lindsay said. “I would say that not anyone can do anything in my district until I say so. I don’t give a hoot who they are.”

Lindsay’s chief deputy, Robert Gay, said the only time Distenfield was visible during the protracted selection process was during interviews by members of a LANCER steering committee with competitors for the contract.

Gay said Distenfield continually emphasized his ties to Bradley and his volunteer work for the mayor in the community.

“I was really chagrined at the whole presentation,” Gay said. “No other firm did that. They all came in and talked about skills, talent, the firm’s record and the firm’s standing in the financial community.”

Although the LANCER incinerator was never built--the victim of community protests over its environmental impact--Smith Barney received about $750,000 in fees for selling $156 million in bonds, according to city records. The firm did not collect on another $300,000 in management fees that would have been paid if the project had been built.