Audit Questions Bernson’s Use of Campaign Funds

Los Angeles City Councilman Hal Bernson used campaign funds to make more than $158,000 in questionable expenditures, including tens of thousands of dollars spent for foreign travel and expensive dinners, according to a highly critical audit released Monday.

The audit, by the staff of the city Ethics Commission, also could not find checks, receipts or other supporting documents to verify how at least another $700,000 in campaign funds was spent by two of seven campaign committees controlled by Bernson.

“You and the treasurer failed in your duty to exercise reasonable diligence” in preparing accurate and complete campaign finance disclosure reports, the auditors concluded in a rebuke aimed at Bernson, who has represented the northwest San Fernando Valley since 1979.

The findings are being reported to the Ethics Commission enforcement staff, to the city attorney’s office and to the state Fair Political Practices Commission, all of which have responsibilities for enforcing the city or state campaign finance reform laws.

Rebecca Avila, deputy director of the Ethics Commission, refused to speculate on what those agencies might do with the information.

“We’re making no recommendation about what they should do, only providing them with our findings of facts,” Avila said. “It’s up to those agencies to determine if there’s been violations of law.”

State and local campaign finance reform laws require accurate disclosure of contributions and expenditures and adherence to certain record-keeping standards. Those laws also prohibit funds from being spent for the personal, and in some instances political, benefit of the candidate.

City law requires routine audits of candidates’ finance committees.

Meanwhile, Bernson and his staff complained that the audit findings largely ignored their explanations for many of the expenditures called questionable.

They blamed many of the financial gaps and fiscal confusion on the fact that a Bernson political bookkeeper embezzled $126,000 from at least two of his committees and then destroyed records to cover up the theft. They also criticized the Ethics Commission for not giving Bernson more time to respond to the audit.

“They have been biased, hostile and antagonistic because I won’t knuckle under to (Benjamin) Bycel (executive director of the Ethics Commission) and his dictatorial tactics,” Bernson said.

“We had 45 days to respond to an audit that took them two years to do,” added Grieg Smith, Bernson’s chief deputy.

The findings of this latest round of audits covered some ground previously explored by a state attorney general investigation that eventually cleared Bernson of misusing campaign funds for personal benefit.

However, Bernson himself acknowledged that the attorney general’s investigation did not cover three of the committees audited by the Ethics Commission that were found to have problems. “I don’t think the attorney general covered the 1991 committees or the officeholder committee (in 1991),” Bernson said.

Smith acknowledged that he and Bernson were unable to completely reply to the auditors’ findings regarding the two committees Bernson used to finance his 1991 reelection campaign because of lack of time.

“The 1991 reports were the big ones we couldn’t get to,” Smith said. “We just didn’t have time.” Candidates normally get 30 days to reply to an audit. Smith said he had sought a 90-day extension but only got a 15-day extension.

Meanwhile, despite Bernson’s claims that many of the problems can be traced to the embezzlement, the auditors noted that two of the committees were formed after that case had ended. “Furthermore, for the committees which were embezzled, auditors found no discernible improvement in the committee’s record-keeping after the embezzlement activity ceased,” they added.

In 1991, Toni Lee Corpuel, a former bookkeeper for the accounting firm Bernson used, was sentenced to a year in jail after being convicted of embezzling more than $126,000 from Bernson’s committees.

The audit report concluded that five of the seven committees they examined “did not substantially comply” with city and state campaign finance and reporting laws.

Some of the key findings:

* The audit of the Bernson Political Action Committee found that of the $521,475.92 spent by this committee, only $11,225 was spent to support other candidates or ballot measures. Political action committees, while not bound by any special obligation to do so, are generally established by candidates to finance other candidates or causes.

* The audit found $126,537.29 in expenditures by the Bernson PAC that were not readily explained in its campaign disclosure reports as meeting a governmental, legislative or political purpose, as required by law. The audit, however, cited the brief explanations subsequently offered by Bernson for each of the 82 questioned expenditures involved.

Many of these expenditures were for meals or trips, including travel to Rome, China and Hawaii, to meet with emergency operations personnel in those areas, and to Israel, according to Bernson. Some of the trips were made with Bernson’s wife and children.

In addition to the $8,079 in air fare costs to China, including the cost of one staff member, Bernson also charged this committee $106.45 for a “tux for China trip” and $105.97 to buy a “luggage carrying case for governmental related travel.”

Bernson also tapped this account to pay $141.67 to “repair VCR used in recording TV programs about Councilman or legislative activities.”

* Another audit noted that it could not determine if $30,905.74 spent by Bernson’s officeholder committee was related to a legislative or governmental purpose, as required by law. Many of the questioned expenditures reported by this committee were for gifts and tickets to sporting events given to Bernson’s staff, City Hall personnel or constituents.

In his official response to the audit, Bernson identified 30 of the 69 questioned expenditures as politically related, although the Ethics Commission said money from such committees can not be legally spent on such activities. In eight instances, Bernson offered no explanation for the expenditures, including payments of $2,680 at the Hollywood Bowl and $2,917.93 at Northridge Hill Liquor.

* The audit of Bernson’s two 1991 reelection committees concluded that the committee received $15,912 from 30 people or companies who gave more than the $500-per-person limit allowed under the city law.