Seymour Real Estate Ties Illustrate Ethical Dilemma : Government: The senator has close links with housing industry. Reports on his wealth have been exaggerated.

When Gov. Pete Wilson named John Seymour to succeed him in the U. S. Senate in January, the governor portrayed his choice as a prodigy from the business world who did what many Republicans only dream about: He became a millionaire before age 30.

Wilson that day perpetuated part of a political myth that has evolved about Seymour, a former real estate broker, Anaheim mayor and state senator.

Interviews and public records show Seymour’s reputation grew out of repeated exaggerations--some by Seymour, some by his fellow politicians and some by journalists. Seymour was not a millionaire at 30 and, after enduring his share of financial tumbles, there is some question about whether he is one today.

What have not been exaggerated are Seymour’s extensive ties to the real estate and building industry as investor and property trader, and that he championed these interests while he held public office.

During his years in the state Senate, Seymour collected nearly $145,000 in consulting fees from two title companies and a savings and loan plus $30,000 in gifts, speaking fees and trips from real estate interests. He owned rental properties, tried to develop land, and invested in real estate partnerships even as he carried legislation affecting these interests.

Seymour also has tapped his business contacts to finance his campaigns, raising about half the contributions to his unsuccessful lieutenant governor’s race last year from the real estate and development industries, a Times analysis shows. Over the years, he has expanded that fund-raising base to include a wide range of special interests, including many for which he has carried legislation.

Seymour’s efficient fund-raising operation--honed while he was serving as the chief money-raiser for the state Senate’s Republican Caucus--was one reason Wilson said he appointed the 53-year-old lawmaker to the Senate seat. Those money-raising skills will take on even greater importance as Seymour tries to hold his seat with a 1992 campaign projected to cost as much as $20 million. If he wins in 1992, Seymour would face another costly election two years later.

In a recent interview, Seymour said he should not be blamed for the exaggerated stories of his financial prowess, adding that he did not feel it was his place to correct a mistaken public impression perpetuated by colleagues, newspaper articles or--most recent--the governor.

“I didn’t think it was material one way or another so I let it go,” Seymour said about Wilson’s comments at the January press conference. “What is the difference if you become a millionaire by the age 30, 34, or 40 or 42? What’s the big deal?”

Seymour also said his support of the real estate and development industries was based on deeply ingrained philosophical beliefs, not personal gain or the prospect of campaign support. He said there is no connection between his official duties and his outside income as a consultant or his personal stake in the real estate market.

Seymour’s record in the state Senate shows no evidence of illegal conflicts of interest. State law does not prohibit legislators from advancing the financial interests of their contributors as long as money is not traded directly for their actions. Lawmakers may benefit from their own bills as long as the legislation applies broadly to an entire profession or industry.

Yet, the Orange County Republican’s ties with the real estate industry illustrate the ethical dilemma facing full-time legislators who have outside jobs or close affiliations with special interests groups. To avoid conflicts, they often are forced to leave their higher-paying careers behind, sell their businesses or cut ties to groups with which they have had long associations.

Keeping these outside interests is not “inherently bad” for legislators, especially if the relationships are publicly disclosed, said Michael Josephson, a Marina del Rey-based consultant who conducted ethics classes earlier this year for state senators and their staffs.

“You just have to be extremely careful,” he said. “The source of income has to be such that it doesn’t impede your ability to make independent judgments. You also have to be sure that people aren’t hiring you . . . simply because you are a legislator.”

Keene’s Example

Senate Majority Leader Barry Keene (D-Benicia) said he gave up his outside job as an attorney for that very reason. The risk of doing otherwise, he said, became clear when some of his clients asked if they could use his name with state administrators or regulators.

Recently, Seymour, in a speech to the California Assn. of Realtors, boasted of being the “realtors’ senator” in Sacramento and vowed to continue advocating for them in Washington. Keene was particularly critical of that remark.

“I don’t believe any elected official ought to portray himself or herself as a principal advocate for a particular special interest,” Keene said.

In the state Senate, Seymour was known as one of the strongest advocates for the housing industry. Early in his first term, he created Californians for Housing, a coalition of industry representatives, lenders, real estate brokers and labor leaders aimed at increasing the amount of developable land and limiting regulation of the home-building industry.

Later, he carried a broad variety of legislation of interest to his backers--from bills to remove regulations and controls on development to measures intended to make minor changes in laws governing the discipline of wayward real estate brokers.

“He understood the issues. He had been in the trenches,” said Alexander E. Creel, a lobbyist for the association. “He was outspoken and persuasive.”

Much of Seymour’s adult life has been dedicated to the real estate business.

A native of Chicago who grew up near Pittsburgh, Seymour graduated from UCLA in 1962 with a degree in real estate and economics. He moved to Orange County to start his own business, which he founded in 1964 with a $10,000 bank loan co-signed by his father. He brokered hundreds of small deals in the booming Southern California real estate market, while buying and selling land in his own name, sometimes acquiring and unloading a property in less than two weeks.

One measure of his hectic pace is the Orange County Recorder’s Office index of transactions under Seymour’s name: 1,542 since 1966. In addition to his real estate brokerage and an escrow company he bought in 1968, Seymour was part of 23 limited partnerships that owned rental property.

Seymour said he worked 12 to 18 hours a day--17 years of “blood, sweat and tears”--seeking to fulfill a plan for success he committed to paper while in his youth.

“It had always been a goal, almost a lifetime goal, from the time I was a teen-ager, to become a millionaire,” Seymour said.

Interested in Politics

At the same time, he found himself drawn to politics. He was appointed to the Anaheim Planning Commission in 1970 and ran unsuccessfully for the City Council two years later. Depending heavily on contributions from builders and real estate interests, Seymour was elected to the council in 1974 and became mayor in 1978--both part-time posts.

“I was expanding my business, running for reelection as mayor of the city of Anaheim, and serving as president of the California Assn. of Realtors,” Seymour said. “Through this evolvement, almost unintentionally, I had become almost half-businessman and half-public servant.”

Seymour sold controlling interest in the business in 1981 and was elected to the state Senate the next year. Ever since, he has been viewed in political circles as the former “kid broker” who struck it rich quick and then left the business world to devote himself to public service.

This is the Seymour image. But an examination of his record, from his first houses bought and sold in Orange County to his appointment Jan. 7 to the U. S. Senate, has found several cases in which the facts contradict the image:

* Gov. Wilson’s anecdote about Seymour being a millionaire before 30 was far off the mark. When Seymour turned 30 in 1967, his brokerage business was barely getting off the ground, he says now. Wilson aides say they got the story from Seymour’s office or his family.

* The later growth of Seymour’s business has been wrongly portrayed as a financial phenomenon that made the workaholic broker independently wealthy before he ever ran for public office.

“I had a 10-year plan and I made it in eight years,” Seymour was quoted in the Orange County Register as saying. And, in an article that has been distributed by Seymour’s office, the California Journal reported that Seymour was independently wealthy by the “tender age of 34.”

Public records show that eight years after he started his business, Seymour still was a man of modest means. When he divorced his first wife at 34, his net worth from all sources was less than $50,000, court records show.

* In recent interviews, Seymour said he realized his business goals and became a millionaire in 1977 or 1978, when he was 40 or 41 and had been serving in Anaheim city government for seven or eight years. Seymour declined a Times request to make public his income tax returns to corroborate this contention.

* When Seymour sold his business in 1981, the deal was portrayed as a financial coup. The Times has since reported that he made a “fortune” on the sale and the San Diego Union has said it netted the lawmaker “several million dollars.” Neither article--both published after he was appointed to the U. S. Senate--cited a source and both were wrong.

Court records, including documents from two lawsuits filed by the senator, show Seymour received far less from the deal than had been believed. William E. Cooper paid Seymour $50,000 down and agreed to pay another $670,000, plus interest, over time for 80% of the company, according to these court records.

But the company faltered, and Cooper was able to make only a few payments to Seymour. Court records show Seymour agreed to settle for $100,000 in 1988, although the records are not clear about whether payment was made. Seymour says he received the money, although records show he did not report it as required on his statement of economic interest.

Twice while Seymour and Cooper were struggling over the business debt, Seymour’s top aide intervened with state regulators in matters involving Cooper. Once, the aide tried to help Cooper win reinstatement of his real estate license, which had been revoked by the state. The second time, after Seymour sued Cooper over the unpaid portion of his debt, his aide called the state real estate commissioner and urged him to investigate the business practices of Cooper’s company.

The aide, William Cranham, denies he knew about Cooper’s default or Seymour’s lawsuit before he urged the commissioner to investigate Cooper. Seymour has denied any knowledge of the regulatory matters.

* Seymour contends he is a millionaire today. But records indicate that his analysis appears to be based on some generous assumptions about the value of his properties.

Seymour and his wife, Judy, own eight mortgaged homes and an interest in their son’s house that together account for the couple’s net worth of $978,000, Seymour said.

Real estate records show Seymour’s appraisals of his own property may be high. Seymour told The Times that a San Clemente condominium he owns is worth $400,000.

Several identical units nearby have sold recently for about $250,000, according to a private service that tracks real estate sales. In a disclosure form he filed March 5 with the U. S. Senate, Seymour listed the condo’s value at not more than $250,000.

“I guess the bottom line, and the question I don’t even have an answer for, is what is the equity worth in those properties in today’s real estate market,” Seymour said. “Values go up, values go down. But if you’re asking where’s the million bucks, or approximately million dollars, it’s in that real estate.”

Whatever Seymour’s net worth has been, or is today, public records and interviews with the lawmaker show he began running short of cash when he entered the state Senate in 1982. Soon after, he began accepting speechmaking and consulting fees and other payments from firms allied with the real estate industry.

Seymour now says that when he went to the state Senate in 1982 he took a cut in pay that left him unable to make ends meet and was forced to unload some of his real estate.

He made regular annual speeches to the California Assn. of Realtors for $2,000 each and had similar paid appearances before a number of builders and housing industry groups.

Two title insurance companies with which Seymour had been associated began paying him monthly fees to act as an adviser on real estate and political matters. Orange Coast Title paid Seymour $600 a month beginning in 1983 while Founders Title of San Francisco signed him up a year later and paid him $200 a month, according to a Seymour aide.

John Marconi, president of Orange Coast Title, said he put Seymour, his longtime friend and business associate, on his payroll to get his advice on a variety of issues, including “what was happening at the state.”

“We would have John two or three times (a year) at meetings,” Marconi said. “John was consulting as a friend and also professionally--what he knew about real estate as it worked into politics.”

Seymour also served in private roles for two savings institutions. He joined the board of directors of the troubled Los Angeles Federal Savings and Loan in 1984. When the San Diego-based Great American Savings Bank bought Los Angeles Federal a year later, Seymour was placed on an advisory committee and paid $13,800 a year.

Seymour resigned his bank and title company positions when he was named to the U. S. Senate. “I wanted to make sure that there wasn’t any perception whatsoever . . . of any potential conflict,” he said.

Seymour said he never considered the jobs to be a conflict while he was in state government, insisting that he never used his government position to help any of his business associates or the companies that paid him as a consultant.

Seymour did cast votes on dozens of bills lobbied by the trade associations representing the savings and loan and land title industries, including measures involving earthquake safety, rental security deposits and automobile loans.

Seymour said there was no conflict of interest because the measures applied to a large number of firms, not just the companies that hired him. “If it were a piece of legislation that did affect one company, then I think it would be absolutely wrong, immoral and illegal,” he said.

In 1985, Seymour sponsored a measure with a narrow goal: to help save an Orange County company accused in two civil lawsuits of participating in a kickback scheme.

T. D. Service Co., founded and partly owned by a Seymour campaign supporter, had a stake in the bill because it would ease the legal controversy over the practice of “fee-splitting” in the foreclosure industry, legislative files show. Under the practice, homeowners trying to save their property were required to pay processing fees to a foreclosure agent, who then split the money with the escrow or title company that hired the agent to act as a go-between and perform paperwork.

T. D. Service, which pioneered the fee practice and dominated the foreclosure field, was a main target in two lawsuits that challenged the fees as “illegal kickbacks.” Seymour’s legislation declared the fee-splitting to be legal, and it followed an earlier bill setting limits on how much foreclosure agents could charge.

The two bills were necessary to help T. D. Service survive and avoid further legal challenge, according to the firm’s president, Dale Dykema. “If the legislation hadn’t been there, we would have faced continuing lawsuits, saying what we were doing was improper,” Dykema said.

Dykema’s firm, which contributed at least $1,650 to Seymour’s campaigns between 1982 and 1986, paid the disputed fees to a company once owned by Seymour, and did business with the two title firms that hired Seymour as a consultant after he was elected to state office. None of those fees went directly to Seymour, who said his bill was justified because it applied to other foreclosure agents besides T. D. Service.

“Was there a conflict of interest?” Seymour asked. “I certainly don’t think so.”

Similarly, Seymour said he sees nothing wrong in legislative actions he took that had the potential to benefit himself and other real estate investors.

Nearly every session he was in the Legislature, Seymour unsuccessfully carried legislation to eliminate or limit rent control. One of his bills would have denied state housing funds to cities and counties that enacted ordinances controlling rents or growth. In 1988, he authored legislation to eliminate the $600 minimum tax on limited partnerships. Seymour had invested off and on in two dozen such partnerships over the years and had one active partnership at the time he introduced the legislation. The bill failed in the Senate.

Twice Seymour introduced measures to exempt landlords--including himself--from liability for injuries or damage caused by certain defects in their property. At the time, he owned five rental properties in Orange County.

Seymour said all of these proposals were based on his belief in the need to protect the rights of private property owners.

“The bills you cite have nothing whatsoever to do with my financial well-being, loss, or . . . benefit,” Seymour said in an interview. “They have to do with a very deeply ingrained philosophy.”

Seymour added: “If what you’re trying to show is, here’s a guy, has roots in real estate, made all kinds of deals to his benefit, using his Senate office and his ability to legislate in order to increase his net worth, nothing could be further from the truth. It’s the opposite story that’s true.”

Campaign Donations

A Times analysis of contributions to John Seymour’s failed 1990 campaign for lieutenant governor shows that at least 46% of his $1.2-million campaign budget came from individuals and companies involved in the land business: Real estate agents: $312,569 Developers: $144,683 Construction: $70,660 Mortgage/banking: $32,528 Title/escrow firms: $29,025 Total: $589,465