Hahn Files Suit, Cites Bradley Ethics Apathy : City Atty. Sees No Basis for Criminal Case

Declaring that Mayor Tom Bradley has become indifferent to ethical concerns, Los Angeles City Atty. James K. Hahn filed suit Wednesday against the five-term mayor for failing to disclose major personal stock holdings, but said he did not find sufficient evidence to bring criminal charges.

Although his unprecedented investigation of Bradley’s financial affairs produced “no reasonable possibility of a (criminal) conviction,” Hahn said that “no vindication of the mayor’s conduct is intended, implied or should in any way be inferred.”

At a morning news conference crowded with reporters and camera crews, Hahn announced the filing of the lawsuit demanding unspecified fines from the mayor and he released a 1,165-page report on his six-month investigation of Bradley.

Denial of Conflicts

Bradley responded at 5 p.m. with a 40-minute statement, followed by a news conference that was covered live by local television. “When all is said and done,” the mayor declared, “the inquiry confirms what I have said all along: I did not engage in conflicts of interest; I did not violate the public’s trust.”

While the release of the report marked the end of one major phase of inquiry into the mayor private business, Bradley’s troubles were not over.

Hahn turned over to Dist. Atty. Ira Reiner, the state Fair Political Practices Commission, Atty. Gen. John K. Van de Kamp and the U.S. comptroller of the currency information dealing with possible law violations outside the scope of the city attorney’s investigation.

In addition, the U.S. Justice Department is investigating Bradley’s stock investments, including some with the investment firm of Drexel Burham Lambert and its former top junk bond executive, Michael Milken, who is under indictment in an unrelated matter.

Began With April Reports

The city attorney’s investigation began in April with news reports of Bradley’s employment by Far East National Bank, which paid him $18,000 as a consultant, and by Valley Federal Savings, which paid him $25,000 a year for serving on its board of directors.

As the furor mounted, Bradley’s lead in the mayoral election shrank to the point where he just managed to win a majority and avoid a runoff. The day after the election, he announced he was resigning from the Valley Federal board and placing his personal financial holdings in a blind trust. He had previously returned the $18,000 to Far East National Bank.

The probe expanded to other aspects of the mayor’s finances, particularly focusing on a city-funded task force to promote Los Angeles-Africa trade. The task force, headed by Bradley business partner and friend Juanita St. John, has failed to account for nearly $180,000 in city funds.

The district attorney’s office said it had opened a criminal investigation of St. John and financial irregularities at the task force. Last week, City Controller Rick Tuttle referred an audit to Reiner indicating that St. John owed the city more than $260,000. Hahn also said the Los Angles Police Department is continuing its investigation of the task force.

Criticism of Bradley’s conduct--and skepticism about his explanations--was a dominant theme of the city attorney’s report and of Hahn’s spoken words, both at a press conference in the morning and at an interview with Times editors and reporters later in the day.

Conduct Then and Now

In the report, Hahn--whose father, County Supervisor Kenneth Hahn, is an old Bradley friend and ally--compared the mayor’s conduct when he was elected to office in 1973 as a reformer to his behavior today.

In earlier days, said Hahn, who was a boy when he first met Bradley, the mayor “took apparent great care in assuring that his outside interest would not in any way conflict or even give the appearance of being inconsistent with his official duties.

“In contrast, in recent years, an indifference to such ethical concerns has become apparent,” Hahn said.

Hahn also said that, “While the mayor’s employment by Far East National Bank may in and of itself been legal, it nevertheless served to diminish the prestige of his office. The mayor should be answerable only to the citizens of the city and to no other employer.”

Great Skepticism

After reviewing the evidence and the law, Hahn said he found “there is no reasonable possibility of a conviction.” But he added, “The mayor clearly stepped into that gray area of the law between factual innocence and a chargeable offense.”

Hahn showed great skepticism during the interview when he discussed a main issue in the report--whether Bradley influenced City Treasurer Leonard Rittenberg to deposit $2 million in city funds in Far East National Bank.

“I have questions about the explanation that the mayor has given us,” Hahn said. “I have questions because there appear to be inconsistencies.”

The mayor’s supporters, especially those on the City Council, said they hoped the report would put Bradley’s political troubles behind him. But Councilman Zev Yaroslavsky, whose Finance and Revenue Committee conducted hearings on the Far East Bank matter, said the report, “weaves a story of influence-peddling that says it is not what you know that gets you business with the city, but who you know. I think that stinks, and I think the public thinks that stinks.

“This (report) is not a vindication,” Yaroslavsky said.

‘I’m Not Surprised’

Councilman Joel Wachs, a Bradley supporter, said “I’m not surprised” that Hahn decided against criminal prosecution.

“I never thought of Tom Bradley as a criminal,” he said. But he added, “Some people will continue going (after) for him for their own reasons.”

Councilman Richard Alatorre, another Bradley supporter, said: “It’s time for us to start looking ahead. We need to put this behind us and move ahead on issues that are important to the people of Los Angeles. . . . There are certainly more important things that affect Los Angeles. Enough is enough.”

But another council member disagreed.

Councilman Nate Holden, who ran against Bradley for mayor earlier this year, said he questioned the validity of Hahn’s investigation because the city attorney lacked subpoena power and the ability to force people to testify under oath.

‘The Whole Truth?’

“Without putting people under oath, how can you expect to get the truth, the whole truth and nothing but the truth?” Holden said.

Bradley voluntarily testified under oath during 10 hours of questioning by Hahn.

The mayor’s first task will be to defend himself against the lawsuit which alleges violations of laws requiring public officials to disclose their financial holdings. Civil penalties in the case could theoretically reach $2.2 million, but legal observers doubt that a final figure reached through litigation or settlement would reach that.

The lawsuit accused Bradley of failing to report six stock and bond investments.

The fact that some of these investments were with the Drexel firm, and were in high-flying junk bond transactions, attracted the interest of federal authorities, who then launched a criminal investigation.

The state Fair Political Practices Commission, after inquiries from reporters, examined Bradley’s financial disclosure filings and ordered the mayor to submit revised reports. When the revised reports showed that Bradley had made more than 100 errors and omissions, Hahn launched the investigation leading up to Wednesday’s lawsuit.

The suit alleges failure to disclose these investments:

* Metromedia Inc. bonds, between $10,001 and $100,000.

* L.A. Gear common stock, between $1,000 and $10,000.

* CVN Companies Inc. common stock, more than $100,000.

* Gibraltar Financial Corp. bond, between $1,000 and $10,000.

* Trans World Airline bond, between $10,001 and $100,000.

The bulk of the report dealt with what Hahn called “the most serious question”--Bradley’s employment by Far East National Bank.

“The incident that caused the most concern,” he said, was a telephone call Bradley made to City Treasurer Rittenberg last March. After the call, Rittenberg reinstated a $1-million deposit with Far East and added another $1 million in city funds.

Although those two deposits have attracted most of the attention surrounding Bradley’s dealings with Far East, Hahn’s report also examined another $1-million placement of city funds with the bank that occurred three months after Bradley was hired as an adviser in January, 1988.

Hahn said that deposit got “special and rush treatment” after a letter that Bradley’s office forwarded in February to Rittenberg from Far East Bank President Henry Hwang, asking for the mayor’s help in obtaining city business.

Influence Denied

Rittenberg told the city attorney’s office that the letter--which carried the notation “RUSH”--”made me stand up a little straighter and react a little quicker.” But Rittenberg denied under questioning that this constituted “influence” by the mayor, and Hahn said he could find no criminal violation.

Around this same time, Bradley also personally telephoned the head of the Community Redevelopment Agency, John Tuite, to inform him that Hwang was “looking for depositors.” But the report noted that Bradley made no “demands or suggestions.”

Hahn said there was insufficient evidence to conclude that Bradley was seeking to influence the CRA on Far East’s behalf.

The report shed new light on Bradley’s relationship with the bank and Hwang, and showed sharply conflicting testimony by the mayor and the bank president.

Hwang said he hired Bradley to bring in business, especially from Asian concerns, and spelled out his desires in a letter to the mayor. Bradley said he never received such a letter.

Different Versions

Hwang said he decided to end the relationship because the mayor was not bringing in business. Bradley said he quit.

Bradley and his chief of staff, Mike Gage, have consistently said that the mayor asked Hwang before he accepted the Far East job whether the bank had business dealings with the city. The mayor said he was told the bank had no business with the city.

However, the city attorney concluded that “there was never any discussion with Mr. Hwang prior to or at that time of employment as to whether Far East National Bank had any city deposits.”

Hahn also noted, “The treasurer has consistently denied that he felt any pressure from the mayor to give special treatment to Far East, and the mayor has denied exerting any pressure or even having that intention.

“In the absence of compelling evidence to the contrary, we cannot file a legal action on the basis of that telephone call or the fact that the telephone call resulted in the deposit of $2 million of city funds in Far East.

Crucial Question

“The crucial question was: Did the mayor have the specific intent to influence or attempt to influence a governmental decision in which he had a financial interest? We have not found sufficient evidence to prove that he had such an intent.”

As a result, Hahn said, he decided against pressing for criminal conflict-of-interest charges against Bradley.

“But just because we found no violation of the law does not mean what the mayor did was right,” he added.

Hahn said he found no evidence that the mayor intentionally tried to help the other financial institution which paid him, Valley Federal.

Bradley signed two zoning changes that benefitted property developments in which the savings and loan had interests.

But Hahn said, “We did not find any evidence that the mayor knew about these projects as a result of his membership on the Valley Federal board or that he knew the ordinances he signed affected Valley Federal.”

Task Force Issue

The mayor, however, should have looked into the matters more closely before signing the ordinances, Hahn said. “When the mayor becomes a paid director of an institution which has real estate projects in the city, he must pay greater attention to what he signs. In fact, the mayor chose not to take such special precautions.”

On the Africa task force issue, Hahn said, there was no violation of the law when Bradley backed funding for the group run by friend and business partner Juanita St. John, because the mayor did not financially profit from it.

“Under the law, there is generally no violation unless a public official . . . knowingly became the direct or indirect beneficiary of his official actions or influence,” Hahn said at the press conference.

Times staff writers Glenn F. Bunting, Frederick M. Muir, Rich Connell and Joel Sappell contributed to this story.