Associate of Snyder to Pay Ethics Fine : Politics: Controller in former councilman’s law office tentatively agrees to admit funneling illegal contributions. Other money-laundering investigations continue.

In a last-minute settlement of campaign money-laundering allegations, the controller in former Los Angeles City Councilman Art Snyder’s law office tentatively agreed Monday to pay a $38,000 fine for repeatedly funneling illegal contributions to politicians.

The proposed settlement between the staff of the state Fair Political Practices Commission and Chi May (Marian) Chen would be the second-largest state fine ever levied on an “intermediary” of improper political contributions.

It stems from an ambitious series of state and local probes of alleged political money laundering in Southern California, several of them revolving around both Snyder, an influential and often controversial City Hall lobbyist and fund-raiser, and his Downtown law office, records show.

Three months ago, one investigation conducted jointly by the FPPC and the city Ethics Commission yielded a landmark $895,000 political money-laundering penalty against Taiwan-based shipping giant Evergreen America Corp. The firm, which employed Snyder’s brother-in-law to manage its Los Angeles operations, admitted to having arranged $172,000 in improper donations to state and local candidates since 1989.

Snyder has not been charged with any wrongdoing, and has strongly denied any involvement in illegal contributions.

In the Chen case, state officials alleged that the law firm employee was a “conduit” for illegal donations in a scheme to conceal the source of political funds and circumvent contribution limits. Chen was accused of recruiting donors to write checks for favored candidates, and then secretly reimbursing them, often with $100 bills.

The proposed settlement appeared to be a mixed result for investigators. The FPPC obtained a sizable penalty and, for the first time, had a Snyder employee admitting to money-laundering activity.

But the agreement, completed in a flurry of eleventh-hour negotiations Monday morning, had the effect of foreclosing a much-anticipated administrative hearing in which Snyder, his wife, his law partner and other associates had been subpoenaed to testify publicly. An FPPC brief submitted to Administrative Law Judge David Rosenman in preparation for the case claimed that evidence would show that the laundering scheme was conducted for Snyder Law Corp., and that Chen told the state’s witnesses she was collecting contributions at the request of her “boss.”

But the proposed settlement, still subject to final approval by both sides, does not deal with any additional participants in the alleged scheme or require Chen to cooperate with investigators in other probes, according to Chen’s attorney, Susan Strick.

Chen declined comment, but Strick characterized her client’s actions as “unintentional, uninformed and unsophisticated.” Strick told reporters that, despite Chen’s acknowledgment that she had acted as an intermediary, her client was not acting on behalf of anyone. She said Chen chose to settle the case to avoid a costly legal defense and embarrassment to relatives who had been subpoenaed to testify against her.

Snyder’s attorney, Mark Geragos, quickly asserted that the proposed settlement shows that the FPPC could not prove alleged links to Snyder. “This is a weakening of their case,” he said. “There is absolutely nothing contained in this that in any way, shape or form implicates the (Snyder) law office.”

Geragos said it appears more likely that any improper contributions were related to Evergreen, the shipping company, and possibly through that firm to relatives of Snyder by marriage. Chen is a distant relation by marriage to Snyder’s wife, Delia Wu Snyder, who, records show, is also suspected by investigators of involvement in money-laundering activity. Delia Snyder has declined to comment, and her attorney was not available for comment Monday.

Geragos acknowledged that the investigations do not appear to be over. He said he has indications that more charges could be filed soon against Snyder relatives by the city Ethics Commission. Mimi Strauss, chief of the ethics agency’s enforcement division, declined to comment.

FPPC attorney Mark T. Morodomi would say only that the Chen agreement was “in the best interests of the state.” He declined to discuss possible ongoing investigations, or how the Chen agreement might affect them.

Chen and two relatives initially were accused of making 92 improper contributions to state and local politicians in 1990 and 1991, and faced up to $78,000 in fines. It was not clear Monday which counts Chen was admitting, although the settlement, as outlined to Rosenman, covers 19 instances in which Chen acknowledged making improper campaign donations.

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Also as part of the agreement, the state agreed to drop accusations against Chen’s sister, Chi Chun (Jean) Lee, and her brother-in-law, Chung Mei (Jammy) Lee.

Chen agreed Monday to pay the $38,000 penalty by Friday or risk facing a resumption of the FPPC’s enforcement hearings. Strick declined to say how Chen would pay the fine. There appears to be no restriction on any third party, including Snyder or his law firm, contributing to the payment.

Geragos, Snyder’s attorney, said he did not think Snyder or the law firm would help pay the fine.