Jury Quizzes City Aides in Bradley Probe : Investigation: Treasurer Rittenberg and a top assistant testify. The panel’s examination is expected to be a long one.

A federal grand jury investigating Mayor Tom Bradley’s financial dealings has begun taking testimony, questioning City Treasurer Leonard Rittenberg and a top aide about the mayor’s involvement with $3 million in city deposits with a bank that employed the mayor as an adviser.

Rittenberg and city investment officer George Sehlmeyer each testified for several hours on Nov. 8, and at least two other officials in the treasurer’s office, chief investment officer Henry Davis and former cash management officer William T. Hoss, have been called and are scheduled to testify in the coming weeks, according to several sources.

The federal grand jury’s probe is expected to be a lengthy examination of Bradley’s business ties with eight banks, savings and loan associations and brokerage firms.

Federal subpoenas indicate that the investigation goes well beyond the scope of the recently completed investigation by the city attorney. The city attorney found insufficient evidence to prosecute Bradley on conflict-of-interest charges, although he did file a civil suit against Bradley over errors and omissions in his financial disclosure reporting.

Among the areas being explored in the wide-ranging federal probe is possible insider stock trading violations, as well as violations of federal law specifically aimed at political corruption. Under scrutiny are Bradley’s employment as an $18,000-a-year adviser to Far East National Bank, his appointment to the board of directors of Valley Federal Savings & Loan and his relationships with Columbia Savings & Loan Chairman Abraham Spiegel and investment broker Ira Distenfield.

In what is believed to be the opening round of questioning before the grand jury, investigators are apparently digging through some well-plowed turf.

“It was the same old stuff, a rehash,” Hoss said he was told by Rittenberg when the treasurer emerged from the jury room after four hours. While Hoss was called to appear before the grand jury last week and was sworn in, he did not actually testify.

“I sat there for eight hours, but they never got to me,” he said.

Hoss said Rittenberg told him that the questioning was similar to earlier sessions with the city attorney and other investigators. Only Rittenberg and Sehlmeyer actually appeared before the grand jury, while Hoss and Davis waited.

Another source with knowledge of the grand jury proceedings agreed that no new ground was broken in questioning by federal investigators.

“It ran the entire range of stuff that has been in the media before,” said one source who asked not to be named.

The focus of earlier investigations--and the questioning before the grand jury last week--has been the circumstances surrounding Rittenberg’s decision to reinstate a $1-million deposit and to deposit another $1 million in Far East after the treasurer received a phone call from Bradley.

Bradley, in sworn testimony before investigators with the city controller’s office, said he received a call on March 21 from Far East National Bank Chairman Henry Hwang, who asked if it was true that the city was withdrawing funds from all banks. Bradley said he was concerned that the city might be suffering some financial problems and called Rittenberg to inquire about the status of the city’s bank deposits.

Rittenberg has testified under oath before the city controller and the City Council that the mayor asked him in that phone call if the city was doing business with Far East National Bank.

Rittenberg said he later learned that a $1-million deposit at the bank had been withdrawn several days earlier. He said he then placed a $1-million deposit with Far East and, hours later after a phone conversation with Hwang, made an additional $1-million deposit.

Sehlmeyer testified under oath to city investigators that he wrote “per the mayor, per Leonard Rittenberg” on the Far East “bid sheet,” a document that accompanies all deposits.

Sometime that day, someone in the treasurer’s office took white correction fluid and attempted to obliterate the reference to Bradley.

Bradley and Rittenberg have insisted that the mayor did not pressure the treasurer into depositing funds with Far East.

In summarizing his investigation, City Atty. James K. Hahn accused Rittenberg and his top aides of repeatedly lying and concealing crucial documents that linked the mayor to efforts by Far East to obtain city deposits.

In 1988, when Bradley served as a paid adviser to the bank, the mayor forwarded letters from Hwang to Rittenberg seeking city deposits. As a result, Far East received a $1-million deposit.

Rittenberg, through an assistant, and Davis said they would not comment on the grand jury.

Sehlmeyer’s attorney said he would not confirm or deny that Sehlmeyer appeared before the grand jury.

The mayor’s office had no comment on the grand jury proceedings. Earlier, Bradley predicted that the jury will exonerate him.

The federal investigation began last spring but showed little movement until Hahn completed his probe in September. Since then, the grand jury has been impaneled and federal investigators have subpoenaed Bradley’s tax returns and his personal financial records from the investment firm of Bateman Eichler, Hill Richards Inc.