Justice Dept. Won’t Seek to Indict Bradley

After a wide-ranging 2 1/2-year investigation of Mayor Tom Bradley, the Justice Department has decided not to seek an indictment of the mayor on any charges, The Times has learned.

The government has officially ended its probe of alleged insider trading and political corruption involving Bradley, federal sources said this week.

Bradley’s lawyer, Stephen D. Miller, said he had been notified by U.S. Atty. Lourdes G. Baird late Friday afternoon that his client will not face criminal prosecution, lifting a cloud that has swirled over Bradley since the spring of 1989.

“We are extremely pleased that after a thorough investigation, the United States Attorney’s Office and the grand jury have ended their investigation concerning Mayor Bradley and that no charges should or will be brought against the mayor,” Miller said.

In a telephone interview from City Hall, Bradley reacted with exuberance, saying, “The news from the Justice Department this afternoon is the greatest Christmas present I’m going to receive this year or any other year. . . .”

“My honor and integrity have been upheld by this decision,” he said. “I’ve had to suffer through the speculation and media frenzy all this time.

“Even some of my friends began to believe what they were hearing. My image . . . has been tarnished somewhat by this two-year period of that kind of bashing.”

Noting that federal investigators had gone through his taxes for the past five years and boxes of other personal financial records, Bradley said he felt that nothing about his political or business dealings had been left unscrutinized.

“It was obvious they were digging very deeply to see if they could find anything,” he said.

However, Bradley, 74, said he had not been called before the federal grand jury that heard testimony from numerous witnesses. He also said he had not been questioned by federal investigators.

Federal officials declined to state why Bradley was not interrogated or called to testify.

Baird declined comment on the Justice Department’s decision not to prosecute. Federal investigators also would not divulge whether they got close to seeking an indictment.

There have been rumors for several months that the case was effectively over, but it was not formally closed until this week, knowledgeable sources said.

“No one should have a cloud hanging over his head this long,” said a Justice Department official. “But you have to make sure that all the doors that were potential (charges) were closed,” before ending the investigation.

The federal government has been investigating the mayor’s financial dealings--including his serving as an adviser to a bank doing business with the city and his relationship with Drexel Burnham Lambert Inc., the brokerage firm that sold him junk bonds.

At one point, federal authorities said, they were looking into whether Bradley broke insider trading laws and exploring whether he had violated federal laws aimed at political corruption.

The federal investigation--and a number of state and local probes of alleged misdeeds in City Hall--have tarnished the mayor’s reputation and had a significant impact on local government.

In the wake of conflict-of-interest allegations involving the mayor, a new city ethics law was passed by voters, creating an Ethics Commission to serve as a political watchdog.

The investigations absorbed time and energy of Bradley and his staff. The mayor launched a special fund-raising effort to pay his legal bills that, according to city records, exceeded $900,000.

Bradley paid a $20,000 penalty in 1989 for failing to properly disclose his personal investments, and recently he forfeited $55,000 in legally questionable campaign contributions raised through a series of inner-city carnivals.

The conclusion of the federal probe may not mean an end to Bradley’s problems, however.

The Los Angeles County district attorney’s office and Los Angeles Police Department officials said this week they are still investigating questionable fund raising by Bradley’s aides and appointees, alleged irregularities in poverty funds and low-income housing funds received by Bradley associates, and a series of political fund-raising carnivals for the mayor.

One high-ranking police official said the department has expanded the number of detectives assigned to its investigation from two to seven.

The LAPD official, who spoke on condition of anonymity, said there was “no crossover” between the local and federal investigations, meaning the Police Department has been probing different matters than the FBI.

In a recent meeting with Police Chief Daryl F. Gates, detectives told him that the investigations involving Bradley and his associates are worth pursuing but that nothing is “provable” at this point.

District attorney’s spokeswoman Sandi Gibbons said that the district attorney’s office hoped to complete the investigations soon.

Gibbons gave no indication as to the likelihood of charges being filed. She said there is no grand jury convened on any of the matters.

When Bradley was asked if he had any concern about the district attorney’s investigation, he laughed and said, “Absolutely not.”

The FBI completed the bulk of its work some months ago and bureau officials were given the impression by prosecutors that no charges would be filed, according to FBI sources.

But then, in July, new allegations involving a city department were brought to the U.S. Attorney’s Office by the Los Angeles Police Department. The FBI checked those out, too, but found nothing prosecutable, government sources said.

“It finally got to the point where you have to say enough is enough,” said a ranking Justice Department official.

The government never officially acknowledged its probe of Bradley, even though it was widely reported that a federal grand jury subpoenaed City Hall records and records of Bradley’s business ties to eight financial institutions, including banks, saving and loan associations and brokerage firms, and questioned numerous witnesses.

At one stage, federal investigators were hoping that they would get useful information about Bradley from convicted junk bond kingpin Michael Milken, formerly head of Drexel Burnham’s Beverly Hills office, but that did not materialize, sources said.

The Bradley investigation has been particularly sensitive because of charges by Benjamin L. Hooks, executive director of the National Assn. for the Advancement of Colored People, and some other black leaders, that the Justice Department was selectively prosecuting black officeholders while ignoring more serious crimes by wealthy, well-connected whites.

The allegations were made in 1990 after an FBI sting operation led to the drug conviction of then-Washington Mayor Marion Barry and after disclosure of federal investigations involving Bradley and the office of then-House Democratic Whip William H. Gray III of Pennsylvania.

“At no time since Reconstruction has there been a comparable period of incessant harassment of black elected officials,” Hooks said at the July, 1990, NAACP convention.

Then-Atty. Gen. Richard Thornburgh repeatedly denied that there was any “targeting” of black officials.

Federal interest in Bradley was aroused by a series of events in the spring of 1989.

The mayor’s troubles began in March, 1989, after the now-defunct Los Angeles Herald Examiner disclosed that City Treasurer Leonard Rittenberg ordered that $2 million in city tax funds be deposited in Far East National Bank after calls from Bradley on behalf of the bank, which had employed the mayor as a paid adviser. Bradley and Rittenberg have denied that Bradley influenced the treasurer’s actions.

On March 24, 1989, after the story appeared, Bradley returned $18,000 he had earned as a Far East adviser. A week later, City Atty. James K. Hahn launched an investigation of Bradley’s ties to Far East and to Valley Federal Savings & Loan Assn., which also had hired him.

On April 4, 1989, Bradley was narrowly reelected to a record fifth term. He resigned from the Valley Federal board of directors and established an ethics panel.

On May 10, reversing an earlier position, Bradley told the City Council that he had made “an error in judgment” in accepting money from Far East.

Later that month, Ira Distenfeld, a key Bradley fund-raiser, resigned from the Harbor Commission after The Times discovered that he had secretly testified of using his influence with Bradley to steer city business to his brokerage firm. Bradley denied that Distenfeld had improperly influenced him.

On May 25, the Justice Department opened a criminal investigation of Bradley and House Majority Whip Tony Coelho (D-Merced) in connection with their financial dealings with Drexel Burnham.

On Sept. 13, City Atty. Hahn filed a six-count civil lawsuit against Bradley for failure to report at least $222,000 in personal investments.

Hahn alleged the mayor had become insensitive to ethical concerns. Bradley, he said, had “clearly stepped into the gray area” between innocence and a chargeable offense.

Two weeks later, a federal grand jury opened an investigation into Bradley’s conduct in office and personal finances.

In mid-October, 1989, the mayor declared in an interview, “I haven’t done anything wrong” and predicted that he would not be indicted.

As the investigation continued, a host of documents were subpoenaed and numerous individuals, including Bradley supporter Mary Anne Singer and Far East Bank Chairman Henry Hwang, were called before the grand jury.

The investigation ebbed and flowed for months afterward. But sources close to the mayor took some comfort from the fact that one of the key prosecutors involved in the Bradley case, Assistant U.S. Atty. Jeffrey Eglash, was immersed during 1990 in the investigation and prosecution of eight sheriff’s deputies on drug-skimming charges.

This led some of Bradley’s lawyers and political aides to conclude that the probe of corruption in the sheriff’s office had assumed a higher priority than the investigation of the mayor. It appeared increasingly unlikely to them that he would be indicted.

Bradley’s lawyer Miller, a veteran white-collar criminal defense lawyer, meanwhile embarked on a strategy of blunting the allegations against Bradley. Through a series of meetings with prosecutors, Miller sought to rebut charges that the mayor had broken the law.

Eglash and other prosecutors have declined to comment on the case.

Bradley said he never doubted he would be vindicated. “The one question I ask is what happened to my reputation, my integrity, my honesty? How do I get that back? There’s no way you can fully recover that.”

Federal Investigation of the Mayor

In the last three years, Mayor Tom Bradley and his associates have been involved in more than a dozen investigations and ethics controversies. Here’s a look at the federal government investigation that cast the largest cloud over the mayor’s office: 1989:

April 27: The U. S. Comptroller of the Currency announces it is investigating possible misapplication of bank funds in Far East National Bank’s relationship with Bradley, who was a paid adviser to the bank. Bradley announces he is placing his investments in a blind trust to avoid any appearance of impropriety.

May 18: Federal authorities review Bradley’s ties to the controversial brokerage house of Drexel Burnham Lambert Inc. to determine whether the mayor received illegal insider trading tips from the firm.

May 24: The Justice Department begins preliminary criminal investigation of Bradley and House Majority Whip Tony Coelho and their financial dealings with Drexel Burnham.

July: The federal grand jury subpoenas Bradley’s personal tax records from 1982 to 1988, as well as records concerning various political fund-raising committees during the same years.

Sept. 1: The Los Angeles office of the FBI expands its role in the financial probe of Bradley after a jurisdictional problem with the U.S. Justice Department is resolved.

Sept. 11: Federal grand jury subpoenas Bradley’s financial records.

Sept. 30: A Los Angeles federal grand jury broadens its probe to include an examination of Bradley’s campaign fund-raising activities, subpoenaing financial records of Ira Distenfeld, former top political aide who raised substantial sums of money for the mayor.

Oct. 2: U.S. attorney’s office forces Bradley to turn over his income tax returns.

Oct. 22: Sources say federal authorities expect the investigation to continue six months or longer.

1990

May 4: The federal grand jury investigation of Bradley finances is expected to be delayed by developments in Michael Milken’s plea bargain arrangement and the pending appointment of a U.S. attorney in Los Angeles.

1991

Dec. 20: The Justice Department concludes its probe of Bradley and decides not to bring charges against him.

Weinstein reported from Los Angeles. Ostrow reported from Washington. Times staff writer Rich Connell contributed to this story.