Developer Pleads No Contest in Wage Case : Courts: Fund-raiser for Mayor Bradley admits paying workers less than required on CRA project. He receives no jail time.

In a surprise move, a developer and fund-raiser for Mayor Tom Bradley settled a longstanding labor violation case Thursday just as his trial was to begin on charges that he cheated workers out of hundreds of thousands of dollars on a city redevelopment project.

Harold R. Washington Jr. pleaded no contest to 33 misdemeanor violations of state laws requiring that workers on public works projects be paid prevailing wages. Smiling, he declared himself “very innocent of these charges” as he left the courtroom.

Municipal Judge Ronald Schoenberg sentenced Washington, 71, to 18 months of community service and three years on summary probation. The judge said he was reluctant to mandate jail time because of the prominent developer’s age and lack of a criminal record.

Deputy City Atty. Michael Guarino expressed dismay at the sentence and said Washington deserved to spend the 18 months in jail.

Washington knowingly violated prevailing-wage laws when building a city-assisted low-income housing project known as Sheridan Manor because he thought his political connections would enable him to evade prosecution and penalties by city redevelopment officials, Guarino told the judge.

“I think the wrong message is being sent out,” Guarino said in opposing the sentence. “I think it is important that someone like Mr. Washington, who thinks he can buy the system, is placed in jail for some period of time.”

A former partner in the Sheridan Manor project, Glenn Session, came to testify against Washington but did not get the chance. He said of the city redevelopment process: “It’s just a big rip-off. It’s all back-room deals. . . . You pay money to get things done, to get favors.”

Session, who made similar statements to police in a taped interview, said certain developers such as Washington get redevelopment projects--and at more favorable terms than “unconnected” developers--because of their ties to politicians. In a letter introduced in the court proceedings, Washington called those connections his “aces in the hole” as a developer.

Washington has variously served as a developer and consultant on Sheridan Manor. Sources in an ongoing police investigation into political corruption on the project said a primary focus of the inquiry is Washington and his ties to Bradley and officials of the Community Redevelopment Agency.

Washington and Session no longer have an interest in the Sheridan Manor project, which involved refurbishment of two apartment buildings in Koreatown and MacArthur Park with the help of a $900,000 low-interest loan from the CRA.

On Thursday, Washington denied ever making contributions or raising money for Bradley or any other politician in exchange for favors. He also said the workers in question were not covered by prevailing-wage laws.

Washington told the judge that Session was a disgruntled former business partner who has changed his story several times.

CRA Board Chairman Jim Wood and a spokesman for Bradley had no comment on the settlement of the case. However, the mayor issued a statement denying he had ever approved “any projects by Harold Washington following any monetary contributions.” In the past, CRA officials also have denied improperly going out of their way to help Washington.

A Bradley spokeswoman on Thursday divulged the existence of a federal investigation of the matter, but said the mayor had been vindicated in the case.

Guarino, who has investigated the case for more than two years, said he had hoped to show through testimony that the case involved much more than mere labor violations.

The prosecutor told the judge that Washington had informed Session and another business partner that he had planned from the outset to use his City Hall connections and campaign contributions to get the Sheridan Manor contract.

Then, according to Guarino, Washington told his business partners they could substantially profit from the deal by paying workers much less than the $22-an-hour prevailing wage and pocketing the difference. Washington also told the partners that he planned to inflate some costs of the project and keep the difference, said Guarino. In addition, the prosecutor alleged that Washington told the partners they could accept the $900,000 CRA loan but avoid repayment because of his political connections.

“And that’s not a good way to run a city,” Guarino said in an interview. He said testimony would have shown that Washington’s relationship with former CRA Administrator John Tuite--at times a consultant on Sheridan Manor--and other top CRA officials initially enabled him to escape scrutiny and allow the prevailing-wage violations to occur. Because the CRA waited months before bringing the alleged labor violations to city prosecutors, Guarino said, the one-year statute of limitations on many of them expired.

Tuite has denied any wrongdoing.

Session was one of two former Washington partners to turn police informant in the ongoing Los Angeles Police Department investigation of alleged political corruption in the awarding and oversight of the Sheridan Manor contract.

In that case, Washington and perhaps others are under investigation for possible felony crimes of grand theft embezzlement, bribery, dissuading a witness and influencing testimony and diversion of public funds, according to police affidavits.

“We’re following the money, the CRA funds, to see where it goes,” Detective Gary O. Ingemunson said Thursday. Authorities said they are also investigating allegations that Washington made political contributions or payments to city officials, including Bradley, to help secure approval and assistance for the Sheridan Manor project.

Last year, The Times reported that Bradley intervened repeatedly with city and federal agencies on Sheridan Manor and other projects involving Washington, who, besides fund-raising for the mayor, has personally contributed at least $5,000 to Bradley campaign efforts.

Washington has claimed that he has lost a considerable amount of money on Sheridan Manor, and that the investigation has reduced his $250,000-a-year earnings to nothing. His lawyer in the prevailing-wage case was court-appointed, and Washington said he has no money left.

The project itself, which was mired in delays and cost overruns, finally was completed last year. Within the past seven months, the CRA assisted two nonprofit agencies in buying out Jerome Steinbaum, the project’s former owner and major investor. The CRA provided the agencies with more than $1.8 million for the buyout, saying the purchase was needed to ensure that the two apartment buildings remained low-income housing.

The city attorney’s office originally filed a 114-count complaint against Washington, Steinbaum and another former partner who was dismissed from the case.

Steinbaum pleaded no contest to 15 counts of misdemeanor labor violations in February, 1991. He agreed to pay $100,000 in fines and $400,000 in restitution to workers who said they had been paid about $7 an hour instead of the prevailing wage. Steinbaum also agreed to cooperate with local, state and federal authorities in various investigations into Sheridan Manor.