U.S. Investigates Nathanson Role in Aiding Kerkorian’s Luxury Airline

Federal authorities conducting a criminal investigation of Mark L. Nathanson’s activities as coastal commissioner also are delving into his role in launching billionaire Kirk Kerkorian’s luxury-class airline, MGM Grand Air, The Times has learned.

Nathanson’s work for Kerkorian also underscored the benefits stemming from his relationship with his political patron, Assembly Speaker Willie Brown.

Kerkorian, who once controlled MGM-United Artists, hired Nathanson in 1987 as a consultant-lobbyist to help with the start-up of MGM Grand Air, an all-first-class airline.

The air carrier paid Nathanson almost $150,000 when he helped negotiate leases for gates at Los Angeles International Airport and New York’s John F. Kennedy International Airport, said attorney Terry Christensen, a director of MGM Grand Inc., the airline’s parent company.

By failing to report this income on his state-required financial statements, Nathanson may have violated the California Political Reform Act.

Robert L. Shapiro, Nathanson’s attorney, said his client has “made full and accurate disclosure of all income and if there were any omissions they were by inadvertence.”

Nathanson was hired by MGM Grand Air to help market the new airline’s coast-to-coast service and negotiate airport gate leases in Los Angeles and in New York, Christensen said. In addition to nearly $150,000 for consulting, the airline paid Nathanson about $2,000 a year for serving on its board of directors, Christensen said.

Assembly Speaker Brown (D-San Francisco), who appointed Nathanson to the Coastal Commission, helped open doors at Kennedy International for Nathanson and other airline negotiators by contacting officials in New York on their behalf.

Christensen confirmed that Brown “called someone in New York and asked if they would meet with us.” Christensen said that he and Nathanson were able to negotiate directly with top officials of the Port Authority of New York and New Jersey, which operates Kennedy Airport.

Christensen said that he did not know whom Brown contacted.

The former director of the Port Authority, Stephen Berger, recalled that he was contacted by someone in Democratic Gov. Mario Cuomo’s Administration, who relayed Brown’s interest in the gate issue.

Berger said he could not remember who in the Cuomo Administration contacted him about Brown’s interest.

Brown refused to discuss calls he might have made to help the California-based airline.

There is no indication that Brown is under investigation for his role on behalf of the airline, but the FBI has been examining Nathanson’s work, specifically focusing attention on his efforts at Los Angeles International Airport.

The grand jury has subpoenaed files on the leasing of terminal space and gates to MGM Grand Air, asking for records of contacts with Nathanson, said Clifton Moore, executive director of the Los Angeles Department of Airports.

At the same time that Nathanson was helping the airline secure gates, Brown appointed the coastal commissioner to a newly created legislative Commission on Aviation and Airports. Because the commission could propose legislation, it may have given Nathanson added clout in dealing with airport officials in Los Angeles.

In its investigation, the grand jury interviewed Mary O’Connor, Nathanson’s former assistant at MGM Grand Air, according to sources familiar with the probe.

O’Connor was the intermediary in a $100,000 loan Jerry Simms, a former Pasadena car dealer, made to Nathanson in 1987, the sources said.

The payment came about the time that Simms was seeking a Coastal Commission permit to build a swimming pool at his La Jolla home. Records show that the commission staff recommended that the permit be denied as “inconsistent with previous commission action.”

However, in June, 1987, commission records show, Nathanson voted with a majority to overrule the staff and allow Simms to build his pool.

Attorneys for O’Connor, Simms and Nathanson all refused to comment on the loan transaction.

The Political Reform Act generally requires coastal commissioners to report income and loans of $250 or more on annual economic disclosure statements.

Nathanson reported neither the Simms-O’Connor loan nor his income from MGM Grand Air on his economic disclosure statement.