County to Forgive $40,000 in Rent

The Los Angeles County Board of Supervisors passed an emergency ordinance Tuesday requiring the county Housing Authority to forgive $40,000 in rent that hundreds of tenants paid with worthless money orders.

Supervisor Gloria Molina said she proposed the ordinance after reading a story in The Times on Sunday about the failure of General Money Order Co., which left an estimated 100,000 poor people in debt after paying bills with the money orders.

“The people who bought these money orders thought that they were government-backed,” Molina said. “Well, we’re government and we should not turn away from it.”

Supervisor Deane Dana said the policy should apply to the entire county government and asked officials to determine which other departments received the money orders.

The state Department of Corporations seized the money order company in December after its owner said he could not redeem $3.2 million in money orders. The department is investigating how the shortage occurred, and reimbursement of customers is not expected until late this year.

Housing officials had previously required 219 families who paid rent with the money orders to reimburse the county within three months. Officials could not be reached. Earlier, they said they could not afford to wait for reimbursement from the state.

Molina said the county can carry the debt more easily than the tenants can. She said tenants who have already repaid the rent money should receive refunds from the county.

Molina criticized the state for not preventing the failure.

Department of Corporations Commissioner Thomas Sayles could not be reached for comment late Tuesday. But he said earlier that the state did its best with limited resources.

Sayles said that after the failure of General Money Order his agency asked public and private agencies to wait for repayment rather than demand it from victims of the collapse. The commissioner has joined with Assemblywoman Marguerite Archie-Hudson (D-Los Angeles) to propose state legislation that would require money order companies to pay for a state bailout fund to protect their customers in event of a failure.