Montoya’s Secretary Tells of Financial Shenanigans

State Sen. Joseph B. Montoya used his campaign funds to buy a variety of personal items and pocketed reimbursements from the state for his airline travel, a longtime secretary to the Whittier Democrat testified Wednesday.

Terry Kaut, who has worked for Montoya since 1975, also said she regularly marked Montoya’s calendar “code green” on days he was scheduled to collect honorariums or campaign contributions.

“Code green,” she told the federal court jury, was more discreet than the “little dollar signs” she had used previously to denote meetings where the senator would be receiving money.

Later in the day Wednesday, two Sacramento businessmen testified that Montoya’s former top aide, Amiel Jaramillo, once told them that they should consider giving the senator a donation if they wanted to win his backing.

“He said if we wanted to get his (Montoya’s) attention we might consider an honorarium,” testified Larry McCracken, one of the businessmen who was seeking the senator’s vote against a bill. “I was incredulous. . . . I felt that I had just been solicited for a bribe.”

Montoya, the first legislator indicted as a result of a four-year federal investigation into political corruption in the state Capitol, is on trial in federal court on 12 counts of extortion, racketeering, bribery and money laundering.

The testimony about Jaramillo’s fund-raising efforts and Montoya’s handling of his campaign funds does not directly support any of the 12 counts against the senator, but it does serve to strengthen the prosecution’s portrayal of Montoya as a greedy legislator who was seeking to profit personally from his position.

Kaut, a reluctant witness for the prosecution, testified that she kept track of all expenditures and receipts for Montoya’s campaign account, including paying bills for credit cards the senator used.

At Montoya’s direction, Kaut said, she routinely used campaign funds to pay for the senator’s personal purchases, including clothes, videos, a life insurance policy and, on one occasion, a $2,200 set of encyclopedias.

Under state law, it is illegal to use campaign funds for personal purposes, although Montoya has not been charged with such a violation in this case.

Montoya also paid for airline tickets out of his campaign account and received reimbursement from the state, Kaut said, but did not pay the money back to his campaign account. “I don’t know where he put it,” she told the jury.

In December, the jury heard testimony that Montoya received a $350 reimbursement for air fare from the Allan Co., a Los Angeles recycling firm, and later deposited the money in a business bank account he controlled.

Kaut testified that she and other members of the staff regularly carried out campaign fund-raising activities on state time with state equipment. Staff members also handled the management duties for rental property owned by Montoya, she said.

The use of state resources for personal or campaign purposes is a violation of state law, but no charges have been filed in connection with these alleged activities.

Members of Montoya’s staff benefited by borrowing thousands of dollars from the senator’s campaign funds, sometimes not paying back the money for years, she acknowledged.

Among those who borrowed campaign money, she said, were former aide Jaramillo; secretary Rachel Fontes, who handled most of Montoya’s rental matters; committee consultant Steven English, and Leonard Talbert, husband of one of Montoya’s campaign treasurers.

In fact, Kaut herself testified that she had borrowed money three times from Montoya, including a $1,500 loan in 1980 or 1981 that she never repaid.

At first, Kaut told the jury that she had borrowed campaign money on only two occasions and had paid all of it back. But under questioning by Assistant U.S. Atty. John Panneton, Kaut admitted the existence of the third, unpaid loan.

McCracken, a partner in an employment agency, and Ray Castile, a former partner in a different agency, were among a group of people who had gone to the Capitol in 1986 seeking Montoya’s opposition to a bill deregulating a portion of the employment agency industry.

They testified that Jaramillo informed them the senator had already decided to support the bill but if they wanted to meet with him, they should consider making an honorarium and taking the senator to dinner.

“I couldn’t believe this was how the government worked--that you had to pay someone to get their attention,” McCracken testified.

However, there were several discrepancies in the testimony of the two men. McCracken said Jaramillo suggested the group pay a $5,000 honorarium and invite the entire Senate committee to dinner at a posh restaurant. Castile, a former deputy chief of personnel services for the state Department of Consumer Affairs, testified that Jaramillo suggested a minimum $500 payment and a meal just with Montoya.

McCracken, a reserve police officer in the nearby city of Folsom, testified that he was particularly outraged by the request for money. But under cross-examination by defense attorney Michael Sands, McCracken acknowledged that he had never taken his complaint to any law enforcement agency.

Jaramillo faces trial in March on five counts of extortion, racketeering and conspiracy growing out of the same investigation.