Treasurer Aide Denies Doctoring Document : L.A. Cash Manager Says He’s Not the One Who Painted Out ‘Per the Mayor’ on Deposit Sheet

An official in the Los Angeles city treasurer’s office denied Wednesday that he tried to conceal Mayor Tom Bradley’s role in a controversial bank deposit, further confusing a tangled investigation into the alleged cover-up of the mayor’s involvement.

Cash management officer William T. Hoss, a career employee of the treasurer’s office, had been named in earlier testimony before a City Council committee as a central figure in the bungled attempt to white-out a phrase suggesting that Bradley had ordered the deposit of taxpayer money in Far East National Bank, which had employed the mayor as an adviser.

Auditor Points Finger

It was Hoss, a city auditor testified, who had suggested that the phrase “per the mayor” be obscured from a treasurer’s office document reporting the March 22 transaction.

Auditor Ed Corser, quoting another treasurer’s office official, also credited Hoss with concocting a scheme to cover up the fact that the $2-million deposit had been awarded without competitive bids in violation of policy.

“I had nothing to do with it,” Hoss declared of the alleged document tampering. He said that he was “almost certain” that the phrase “per the mayor” had been expunged before he first saw the document.

Hoss, at times appearing flustered and red-faced, provided his account of the Far East deposit during testimony before the council’s Finance Committee, which is among several government entities now investigating the bank deposit and other allegations of Bradley malfeasance.

Offering often imprecise and contradictory recollections, Hoss did little to clarify the deepening mystery of who engineered the alleged cover-up and why. It seemed that the one consistent theme throughout his remarks was that he was not involved and that he has done nothing improper in his more than 38 years as a city employee.

“Somebody isn’t telling the truth and we may or may not know more in the days ahead,” said Councilman Zev Yaroslavsky, committee chairman, after the hearing. “I just don’t know what conclusion to draw from what I’ve heard so far, only that one or more people have not told our committee and the auditors the truth.”

The committee hearings, moving into the fourth day today, represent the first public exploration of details surrounding the Far East affair, which has cast a shadow over Bradley since March.

To date, the hearings have had two immediate effects: they have heightened suspicions in City Hall about whether Bradley acted improperly and have made the City Council leadership more determined to get to the bottom of the matter.

The hearings were spawned by an audit of the treasurer’s office, which was requested by the committee and conducted by the city administrative office. Released last week, the audit produced the revelation that Treasurer Leonard Rittenberg and his staff had created a document to allegedly conceal the fact that competitive bids had not been sought before depositing $2 million in Far East National Bank. Other banks were later added to the so-called bid sheet to make it appear that they, too, had competed for the deposit.

During subsequent testimony before the Finance Committee, the audit’s supervisor, Corser, revealed that a reference to the mayor had been whited out on the same document.

The $2-million deposit--and the alterations of the bid sheet--were made the same day that Bradley discussed Far East’s account with Rittenberg and a Los Angeles Herald Examiner reporter began questioning the mayor’s ties to the bank. This occurred in the final days of Bradley’s campaign for a fifth term as mayor.

Bradley has consistently denied exerting any pressure on the bank’s behalf.

Rittenberg, for his part, has said he decided on his own to award the deposit to Far East.

The issue is coming down to a case of whom to believe--pitting on one side Hoss and Rittenberg and, on the other, city investment officer George Sehlmeyer, a treasurer’s office employee who has said that he wrote “per the mayor” on the document.

Sehlmeyer told The Times that, when called to testify today, he will tell the council committee that Hoss whited-out the mayoral reference and concocted the idea of listing other banks on the bid sheet, an idea with which the treasurer concurred.

One significant disagreement in the testimony so far centers on exactly when the mayoral reference was obscured and when the other banks were listed on the bid sheet. The discrepancy boils down to a matter of motivation.

In testimony earlier this week, Rittenberg said that he asked Hoss, “as a favor,” to call other banks to see what interest rates they were offering--even though the deposit had already been made at Far East in violation of competitive bidding requirements.

He said he did this to see whether the 10% interest offered by Far East was “in the ballpark.”

The treasurer said the results of Hoss’s survey were then put on the bid sheet, a document that Rittenberg described as nothing more than a “work sheet.” He said this occurred in the morning, before any inquiries from the news media.

Hoss confirmed that account in his testimony Wednesday.

But Sehlmeyer has provided a dramatically different scenario to city auditors and investigators. He said the doctoring of the document came after Rittenberg was interviewed by a reporter. Sehlmeyer has said Hoss and he were summoned to Rittenberg’s office in the afternoon and told by the treasurer that newspapers “would be looking very closely at the documents involved” in the Far East transaction.

It was then, according to Sehlmeyer, that the other banks were called and that Hoss used white correction ink to conceal any trace of the mayor’s involvement in the deposit.

Sehlmeyer said that he personally had written “per the mayor” as a “reflexive” action after the treasurer had informed him of his conversation with Bradley.

Rittenberg has acknowledged informing his subordinates of Bradley’s inquiry about Far East but has denied telling him that the mayor had ordered the deposit.

There is a history of conflict between Sehlmeyer and Hoss that dates to early 1986. Hoss, as Sehlmeyer’s boss in the five-member cash management section of the treasurer’s office, was instrumental in getting Sehlmeyer suspended from his job for four days for being overly emotional, a poor worker who frequently made mistakes, whonearly always was late, and was foul-mouthed around co-workers, according to documents filed with the Civil Service Commission.

After the suspension, Sehlmeyer was put on probation, but was accused of falling down on the job again. To chart his progress Hoss and the other three workers under him kept a daily log of when Sehlmeyer arrived for work, took breaks, ate lunch, made or received personal calls and committed errors.

When officials decided Sehlmeyer had failed his probation, they sought a 20-day suspension, which Sehlmeyer appealed to the Civil Service Commission. That suspension was reduced to a single day under a settlement reached between the city and Sehlmeyer’s lawyer.

During Wednesday’s hearing before the council committee, Hoss also was questioned about the use of white ink on documents involving deposits awarded to Gibraltar Savings & Loan Assn. According to the city administrative office audit, Hoss on a number of occasions whited-out interest-rate bids offered by Gibraltar. In some cases, the bid that had been obscured was higher than the one later entered on the document.

Committee members pressed Hoss for much of the afternoon on the white-outs.

“I could hardly believe my eyes,” Hoss recalled thinking upon being shown the sheets by auditors.

“I’m highly suspicious of what is there,” he said, adding that someone else must have altered the documents.

But committee members apparently had difficulty accepting all that Hoss said. He first denied ever using white-out on any documents, then said he used it sometimes, then said that he could have made some of the corrections in question.

“To put it charitably,” Yaroslavsky said of Hoss’s testimony, “he said all sorts of things, many of them contradictory.”

Hoss, for his part, accused the city administrative office of conspiring against him, the mayor and Gibraltar.

Times staff writer Tracy Wood contributed to this article.