Gambles Haven’t Always Paid Off : Finance Profile Paints Bradley as Risk-Taker

Mayor Tom Bradley has lived rent-free for 12 years in a French Colonial mansion owned by the city. Similarly, taxpayers provide Bradley with a chauffeur and other domestic staff and pick up the tab for his utilities, which last year averaged more than $750 a month.

Friends and supporters supply the mayor with most of his lunches and dinners, and with his clothes. He receives free tickets to Dodger Stadium--the seats are right behind the home team dugout--and passes to other entertainment events.

In addition to such perquisites, Los Angeles’ mayor receives a $97,654 annual salary, a $63,000 expense account and, last year, nearly $50,000 in other income, including $42,000 in fees earned as an adviser to two banks.

Over the years, all of this has left the five-term mayor with thousands of dollars in disposable income--money to invest.

Bradley’s problem, according to experts who have reviewed a synopsis of documents charting his personal finances, is that he has not invested it very well.

Although the mayor may well be a millionaire, The Times found that his net worth has been stunted by numerous highly speculative and ultimately less-than-successful investments.

Federal officials have opened a preliminary inquiry into Bradley’s stock transactions, apparently exploring whether he was given access to insider information. Bradley has denied any wrongdoing and refused to publicly discuss his personal finances until the investigations into his investments and possible conflict of interest are complete.

Since 1963, when he was first elected to public office, Bradley has bought or sold at least five pieces of real estate while trading in nearly 30 different securities, including oil companies, savings and loans, an auto parts firm and toy manufacturers.

Any estimate of Bradley’s net worth would be rough, given the vague reporting requirements for California politicians. Based only on personal financial data that he is required to report, however, it would appear that he has accumulated at least $679,000 to $1.5 million, including two small houses that the mayor owns in Southwest Los Angeles.

Had he been more prudent in his investments, according to three professional financial specialists who were asked by The Times to independently assess Bradley’s portfolio, it is likely that he would be worth far more today.

With the exception of a handful of real estate deals--the majority involving property that Bradley acquired from financially distressed relatives--few of his investments have been the kind that analysts would deem successful or conservative.

From investments in talking teddy bears to avocado groves in Temecula, the operative word in the mayor’s portfolio has been risk. Not one blue-chip stock. Not one mutual fund. Not one municipal bond.

It is, according to experts, the investment profile of an aggressive speculator willing to risk principal in the hope of making a killing. It is also a profile that clashes with Bradley’s reputation as a man of patience and circumspection.

“Bradley has this image of being very cautious, the kind of person who would be happy with a 6% return on a certificate of deposit,” said Mitchell Keil, a financial planner with IDS Financial Services in Irvine. “But looking at where he’s put his money over the years, you’d swear that this is a man who likes to drive Corvettes at a hundred miles an hour.”

Indeed, it is the kind of adventuresome attitude that even the mayor’s wife might find difficult to believe.

In a recent interview, Ethel Bradley pointed out that her husband is such a model of thrift that he refuses to drop so much as a nickel in a slot machine when visiting Las Vegas.

Tom Bradley, his wife of 48 years said, “would never gamble.”

Records show that in 1980 the mayor sank about $15,000 into two companies marketing a highly speculative line of innovative slot machines and electronic poker games. The companies, Interscience Systems Inc. of Canoga Park and its subsidiary, Summit Systems, also were seeking a share of a gambling casino license with Playboy Enterprises in Atlantic City, N.J. Both companies failed about three years later and Bradley lost virtually all of his investment, according to records.

Friendships and Contacts

In many instances, Bradley’s investments have been built on friendships, social acquaintances and political contacts. Not all of those relationships have served him well financially.

“Bradley is what we would call a ‘story,’ ” said Joseph D. Vinso, a USC economics professor and former financial analyst for Dow Chemical Co. “Somebody has a story about a good investment and the investor buys it without checking it out. He figures, ‘What can I lose?’ Well, he can lose a lot.”

Consider Bradley’s purchase in March, 1986, of $100,000 in “junk” bonds in Gibraltar Savings & Loan Assn., underwritten by the stock brokerage of Drexel Burnham Lambert, with whom the mayor had a trading account. Bradley sold the bonds in January, apparently at a loss of between $70,000 and $80,000, just before the ailing Gibraltar was seized by the federal government.

‘Mediocre ... Results’

“He’s trying to make money aggressively,” observed Maurice Weiss, a former Drexel broker who now works as an independent financial adviser. “He’s a nice man who’s . . . had mediocre investment results.”

Consider Bradley’s participation in CZI and CZII, two limited partnerships formed in 1980 to buy raw land in Rancho California in Riverside County.

The partnerships were organized by Charles Z. Wilson, then a vice chancellor at UCLA and a longtime friend of Bradley. Nine partners each committed about $25,000 to buy the property. The participants ranged from the mayor to Mary Jane Hewitt, the former head of UCLA’s black studies department, to Xavier Gonzales-Goenaga, an insurance broker living in Puerto Rico.

In 1987, part of the property was sold, resulting in a loss to each investor of about $8,000. The remaining land, for which the partners have paid more than $250,000 in mortgages, taxes and other expenses, was appraised two years ago at $110,000, according to one partner, Juanita St. John. The partnerships have since been renamed Kathy St. John I and II, after St. John’s daughter.

Task Force Appointment

“If you get someone to buy it,” Juanita St. John joked, “I’ll give you a commission.”

It was St. John whom Bradley in 1985 appointed to the Task Force for Africa/Los Angeles Relations, a group created to promote trade with Africa. Two weeks ago, City Atty. James K. Hahn filed criminal charges against St. John, alleging that she failed to heed a subpoena and deliver records to show how more than $180,000 in city funds under her control was spent.

The land in Rancho California in which St. John and Bradley are involved is not far from an avocado grove in Temecula in which Bradley invested through another limited partnership, Green Gold XI, in November, 1975. At the time, agricultural investments offered considerable tax write-offs for individuals with high incomes.

Bradley put nearly $15,000 into Green Gold, according to Tom Levers, one of the firm’s general partners. But in subsequent years, the avocado market grew soft, Levers said, and Congress did away with most of the tax incentives for such investments.

Still, Bradley has held onto his shares, which Levers estimated to be worth $10,000.

Another Green Gold official conceded, “It was not a good investment.”

Not All Losers

That is not to say that all of Bradley’s investments have lost money. Some, in fact, have been extremely well-timed.

Worlds of Wonder, makers of the Teddy Ruxpin talking teddy bear, was one such investment. Bradley bought and sold less than $10,000 worth of stock in Worlds of Wonder in April, 1986, making a considerable profit.

When he was first elected to the City Council in 1963 after 20 years as a Los Angeles police officer, Bradley had little more than a $19,000 tract house in Southwest Los Angeles to show for his public service.

Over the next seven years, Bradley was named a founder in the Bank of Finance, California’s first black-owned bank, and acquired four other modest properties that he took over from relatives who were financially strapped. Bradley turned tidy profits on each real estate investment.

Fearing the appearance of a conflict of interest after being elected mayor in 1973, Bradley resigned from the board of the Bank of Finance. “I don’t want that relationship raising any questions,” he was quoted as saying at the time.

It was a statement that would come back to haunt him this year amid disclosures that the mayor had received thousands of dollars in fees from two financial institutions that had dealings with the city.

In 1977, Bradley moved into Getty House, the new mayor’s residence that had been donated to the city the year before. The move, according to one source close to the mayor, proved a financial windfall.

‘Hardly a Rich Man’

“You go to dinner with the mayor,” said the source, “and all these people are coming up to him, slapping him on the back, saying, ‘Hi, Mr. Mayor. Remember me? I have a company now. I want to give you a tip.’ He’s been hearing it all his life. So now he no longer has a house expense and he decides to start investing. He’s done well on some things and (poorly) in others. He’s hardly a rich man.”

Said one former Bradley aide: “This is a guy who still buys his socks in bulk.”

But there are critics who insist that the mayor has enriched himself through his elected position.

“People don’t give you things unless your hand is out,” said former Mayor Sam Yorty, who remains bitter over the defeat Bradley handed him in 1973. “If you look at his income tax (return), you’ll see he’s a millionaire.”

Available records, however, suggest that if Bradley is a millionaire, it is not by much.

Welland Avenue house

Bradley still owns the three-bedroom, 1,282-square-foot house on Welland Avenue that he and his wife bought in 1950. It has a current estimated market value of about $200,000.

In addition, the mayor holds title to another small, stucco-covered house on Somerset Drive, about a mile away, which he acquired in 1985 after agreeing to take over the mortgage payments and other expenses for in-laws living there. It is worth about $175,000.

Relatives live rent-free in his other house as well.

Until he sold it in March for $123,000, Bradley also owned a nearby bungalow on West 36th Place that he bought in 1969 and rented out. The rental property brought in less than $10,000 a year, according to Bradley’s disclosure statements.

As of January, when Bradley filed his last annual disclosure statement with the city clerk’s office, he was involved in five stocks and seven partnerships, including the Temecula avocado groves and federally subsidized low-income apartment buildings in Mariposa and Paso Robles.

Sketchy Disclosures

Still, disclosure requirements for public officials in California are sufficiently broad that, without other sources of information, it is all but impossible to determine how much money Bradley may have invested in a particular security.

The annual statements of economic interests simply require the name of the business entity, the date the shares were bought or sold, and whether the amount of the investment is between $1,000-$10,000, $10,001-$100,000 or more than $100,000.

Indeed, in 11 of the 12 corporations or partnerships listed on his 1989 statement of economic interests, Bradley simply reports holdings of between $10,001-$100,000 in each--a portfolio that could be worth anywhere from $110,011 to $1.1 million. As for the 12th investment, Bradley reported a December, 1987, purchase of $1,000-$10,000 in Greenwich Pharmaceuticals Inc. stock.

It is also conceivable that Bradley holds thousands of dollars in other assets that by law he does not have to report. Public officials in California need not disclose bank certificates of deposit, money earned from interest-bearing accounts, real estate outside their immediate jurisdiction, inheritances or proceeds from the sale of commodities futures, among other exemptions.

No Undisclosed Real Estate

The Times checked real estate records throughout California, Nevada, Arizona and several other selected states but could find no properties that Bradley had not disclosed.

However, there is at least one indication that the mayor has money in a non-reportable asset. On one of his recent statements of economic interest, Bradley indicated having a 9% loan of more than $10,000 with Far East National Bank. The loan, according to Bradley’s disclosure statement, is secured by a certificate of deposit, the size of which is not described.

The California Fair Political Practices Commission has ordered Bradley to provide greater detail on his 1984-88 financial disclosure statements. Bradley is expected this week to release the precise dates on which he bought or sold certain stocks but has indicated that he will not reveal how much stock was involved in each transaction.

One of Bradley’s $10,001-$100,000 investments is in Valley Federal Savings & Loan Assn. Since 1978, Bradley received as much as $24,000 a year as a paid adviser to the thrift while it did business with the city.

The mayor last year also received about $18,000 in fees as an adviser to Far East National Bank, which also had dealings with the city.

Investigations Under Way

Local authorities are investigating whether Bradley’s relationships with Valley Federal and Far East posed any illegalities. The mayor also faces an inquiry by the U.S. Securities and Exchange Commission over his Drexel investments. The California Fair Political Practices Commission, meanwhile, is looking into allegedly unlawful votes Bradley cast as chairman of the Los Angeles County Transportation Commission.

Bradley has subsequently resigned his positions with Far East and Valley Federal, announced that he will place his assets in a blind trust and grown silent over his personal finances, leaving many investments shrouded in mystery.

His involvement in Peiming Co. and Elree Co. may be among the murkiest.

The mayor on Oct. 6, 1987, invested between $20,000 and $200,000 in the two companies, which California secretary of state records indicate are interrelated partnerships, specializing in real estate. Real estate records show that neither company holds any property anywhere in California.

The chief financial officer in Peiming is Chi Hsing Pei, who is also a partner in a company that has a lucrative city contract to run gift stands at Los Angeles International Airport. Authorities are auditing the company, Duty Free Shoppers Group Ltd., to determine whether there were any improprieties in issuance of the contract.

Wilshire Offices

The offices of Peiming and Elree are on the 15th floor of an office building at 3200 Wilshire Blvd. There is no listing for either company in the lobby directory. There are no names on the locked door to the office, which a spokeswoman for the building’s management company said has been leased for four years.

Inside the nicely furnished, one-room office is an autographed photo of Bradley posing with a woman. The same woman was sitting in the office. On the desk at which she sat is a plaque engraved with the name Chi Hsing Pei.

The woman, however, would not identify herself and denied association with Peiming or Elree. She would not discuss the companies because, she said, “they are private.”

Asked what her relationship was with Bradley, she said: “No relationship. I’m in the community. He’s our mayor.”

According to records, Duty Free Shoppers, in which Pei is a partner, was granted contracts at the airport under programs intended to aid disadvantaged businesses owned and operated by women and minorities.

Dixon Disclosure

In June, it was disclosed that another partner in Duty Free Shoppers is Betty Dixon, wife of U.S. Rep. Julian Dixon (D-Los Angeles), chairman of the House Ethics Committee. Records show that Betty Dixon, who had invested less than $15,000 in Duty Free Shoppers, collected at least $150,000 in profits from the venture.

Bradley has said that he has no involvement in the company.

Seeking to better determine the sources of Bradley’s outside income, The Times in early July requested that the mayor provide a copy of his most recent income tax return. He rejected the request. Bradley also declined a later request that he reveal his adjusted gross income for 1988 as reported to the Internal Revenue Service.

Many other elected officials, President Bush and California Gov. George Deukmejian among them, routinely make public their tax returns to dispel concerns over potential conflicts of interest and other improprieties.

Private Matters

“Matters between the IRS and a taxpayer are private,” said Bradley’s spokesman, Bill Chandler. “The same is true with the mayor as with any other citizen.”

Bradley last disclosed his tax return seven years ago. He was running for governor against Deukmejian and was goaded into disclosure by his Republican rival. Bradley’s 1981 tax return showed that the mayor and his wife declared $93,645 in adjusted gross income.

Bradley later complained that the information had been “abused” by his opponents.

City records show that in salary alone, Bradley will earn $97,654 this year and another $12,413 in pension for his past service as a Los Angeles police officer. Among other fringe benefits, the city will put $17,510 into a second pension that Bradley will receive when he is no longer mayor.

Expense Account

Bradley also has at his disposal a $63,000 expense account that he uses primarily to pay for trips abroad intended to promote Los Angeles. In fiscal 1987-88, Bradley’s expenses totaled $45,355.

There are other benefits that add to the mayor’s disposable income:

* He lives rent-free in Getty House, the 6,338-square-foot, 14-room mayor’s mansion in Hancock Park donated to the city in 1976 by Getty Oil Co. Tax money pays for the full-time custodian, gardener and butler who work there.

* His gas, electricity and water bills are paid by the city. During the last fiscal year, utilities at Getty House came to $9,204, according to city records.

* Last year, Bradley reported receiving free passes to Dodgers, Lakers and Kings games, the Greek Theatre, Disneyland, the Academy Awards and every major movie theater chain, among others. Together the passes were worth $9,218.

* He is provided a Los Angeles police bodyguard/driver and a 1987 Oldsmobile Regency, which cost $19,170 new, with a $700 cellular phone. The city pays for the car’s maintenance as well as the $38 monthly fee for the telephone.

* Much of Bradley’s wardrobe has been donated to him by various tailors and benefactors.

Since 1977, records show, Bradley has received at least 11 custom-made suits worth $8,025. In the same period, he has been given an undetermined number of custom-made shirts valued at $2,790, and $180 in neckties.

The Mayor’s Shoes

He also has received at least nine pairs of shoes valued at $2,200. Six of those were given to Bradley by Pasquale DiFabrizio, an Italian immigrant and self-proclaimed “shoemaker to the stars.”

One wall of DiFabrizio’s shop near the Beverly Center is covered with hundreds of photographs of him posing with celebrities who wear his custom-made footwear. Bradley’s picture hangs just above Kirk Douglas’ and just below Liza Minnelli’s.

“I’m a Democrat,” the affable DiFabrizio explained when asked why the mayor gets his shoes free. “The past few years, he no show up, but he still sends me Christmas cards. Any time he wants new shoes, I’m happy to give him. He does a good job for the city.”

Times staff writers Glenn F. Bunting, Frank Clifford, Rich Connell, Dan Morain and Henry Weinstein contributed to this report.

BRADLEY’S INVESTMENTS Mayor Tom Bradley’s investment activity started slowly with small real estate purchases in the 1960s. After his election as mayor in 1971, his real estate investments expanded. After he moved into the mayor’s official residence in 1977, according to a source familiar with the mayor’s personal finances, he began building a stock portfolio. Financial experts consulted by The Times say the mayor’s net worth, today estimated at $679,000 to $1.5 million, could be much higher if he had invested more prudently. 1960-69: Bradley invests $18,000 to $34,000 in California’s first black-owned bank, Bank of Finance, which he helped form. Starts dabbling in real estate, purchasing a two-story house on South Catalina Street for $17,730 (sold three years later for $26,820) and a frame bungalow on West 36th Place (sold this year for $123,000).

1970-74: In return for paying off a $1,000 debt for relatives, Bradley receives two vacant lots near Watts in the path of proposed Century Freeway. Later sells the lots to California Department of Transportation for $13,000. Pays a relative $25,000 for eight acres located along a road that three years later became the main thoroughfare into the state-owned Lake Perris Recreation Area in Riverside County. Sells land for $110,000.

1975-79: By late 1970s, Bradley is involved with real estate partnerships. Invests $15,000 in a limited partnership that operates avocado groves in Riverside and Ventura counties and $25,000 in two low-income housing complexes. Puts $10,001-$100,000 in Drexel Burnham Lambert real estate partnership, which owns a resort hotel in South Carolina and an apartment complex in Florida. Invests $3,000 in Penril Corp. (data transmission equipment).

1980-84: In 1980s, Bradley steps up trading in stocks. Puts less than $10,000 in Summit Systems and $12,000 in Interscience Systems Inc. (futuristic slot machines)--investments later reported as worthless. Also invests $15,000-$105,000 in Beverly Hills-based Columbia Savings & Loan, less than $10,000 in Valley Federal Savings and $10,001-100,000 in Metromedia debentures, a communications conglomerate. Puts $10,001-100,000 in limited partnerships that own raw land in Riverside County.

1985-1989: New investments include less than $10,000 in Wickes Corp. (furniture) and in Discovery Oil Co., $10,001-$100,000 each in Coast Savings Common Stock and SCI Holdings Inc., a privately held company formed to take over Storer Communications and partly funded by Drexel Burnham Lambert junk bonds. Invests $100,000 in Gibraltar Savings, and loses about $80,000. Invests $10,001-$100,000 in Beatrice Foods one month before company is bought out by BCI Holding Inc. in a $6.2-billion leveraged buyout and later puts $10,001-100,000 into BCI. Other stock investments range from energy and pharmaceutical companies to toy companies--less than $10,000 in Worlds of Wonder (Teddy Ruxpin talking teddy bears) and $10,001-$100,000 in Mattel toy manufacturing company.

SOURCE: Based on public filings and documents

THE MAYOR’S CURRENT HOLDINGS Real Estate--Value: $375,000

A single-family frame house on Welland Avenue purchased in 1950 for $19,000. Worth $200,000 today.

A single-family frame house on Somerset Drive. acquired in 1985 after Bradley agreed to take over payments for financially troubled relatives. Worth estimated $175,000 today.

Limited Partnerships--Value: $120,005-$570,000

Green Gold XI agricultural development partnership (Riverside County avocado groves). Acquired in 1975. $10,000.

Drexel Burnham Lambert Real Estate Associates (holdings include a resort hotel in Myrtle Beach, S.C., and an apartment complex in Lakeland, Fla.) Acquired in 1979. $10,001-100,000.

Mariposa Oaks Apartments (apartment house in Sierra foothills community of Mariposa). Acquired in 1979. Approximately $60,000.

Kathy St. John I and II (undeveloped residential lots near La Cresta). Acquired in 1980. $10,001-100,000.

Paso Robles Investors (apartment house in Paso Robles). Acquired in 1981. $10,001-100,000.

El Rey Investments (activities unknown). Acquired in 1987. $10,001-100,000.

Peiming Co. (undetermined real estate activities). Acquired in 1987. $10,001-100,000.

Stocks--Value: $41,004-$410,000

Columbia Savings & Loan Assn. Acquired in 1979. $10,001-100,000.

Valley Federal Savings. Acquired in 1983. $10,001-100,000.

SCI Holdings. Acquired in 1986. $10,001-100,000.

Gibraltar Financial. Acquired in 1986. $10,001-100,000.

Greenwich Pharmaceutical. Acquired in 1987. $1,000-10,000.

Other known assets, including proceeds from March, 1989, property sale and January, 1989, sale of bonds. Estimated minimum of $143,000.

TOTAL ASSETS: $679,000-$1.5 million.

SOURCE: Based on public filings and documents