Reaction Mild to Marathon's Money Laundering : Ethics: Several officials praise firm's management of the race, but two call for a review of company's contract with the city.


The revelation that the Los Angeles Marathon laundered political contributions evoked muted concern Tuesday among Los Angeles officials, with many saying they consider the annual race a major success and do not want to tamper with its operation.

Several key City Council members said Los Angeles Marathon Inc. has run the event successfully and smoothly for the last nine years, regardless of the admission Monday that the firm had illegally concealed that it was the source of $73,000 in campaign contributions from 1989 to 1992.

"What they did with illegal contributions is beyond me," said Councilman Zev Yaroslavsky. "As a councilman and as a marathoner myself, I can say that (marathon President William Burke) runs a first-class operation. He brings 20,000 people into the city, doesn't cause any problems, cleans up promptly and does everything he is asked to do."

Council President John Ferraro and Councilman Hal Bernson also praised Burke for building the marathon from modest roots into an internationally recognized event. Yaroslavsky said a review of the operation is warranted only if the public demands it "to restore confidence."


Councilman Joel Wachs, in contrast, said Burke has "a major character flaw" for allowing the money laundering operation to go on and said he plans to review the marathon's contract "with a fine-tooth comb."

City Controller Rick Tuttle also said he will review the contract.

The concerns were voiced a day after the city Ethics Commission and state Fair Political Practices Commission announced twin settlements in which the marathon and one of its former top employees admitted to concealing that the firm was the source of 137 campaign contributions.

Burke was not cited personally for money laundering, but he signed the settlements on behalf of the organization he heads, which agreed to pay a $436,000 fine.

The secret contributions allowed the marathon to give thousands of dollars more to candidates than permitted under the city's campaign finance law. Most of the money was funneled to City Council candidates and others around the time that the council was extending the marathon's contract.

While political leaders were mostly sanguine about the city's relationship with the marathon, interviews with city bureaucrats indicated that the event's organizers may not be meeting all the terms of their contract.

The city official charged with monitoring the contract with Los Angeles Marathon Inc. said in an interview that the firm has not filed quarterly reports on its payment of a licensing fee to the city.

In a 1991 contract amendment, the marathon agreed to pay a $300,000 annual licensing fee, not in cash but in free billboard and bus board advertising space. City operations such as the Los Angeles Zoo can use the advertising space to promote exhibits or new programs.

But John Duggan, an analyst in the city administrative office, said Tuesday that the marathon firm filed only one of the required quarterly reports, in 1991, and has not filed any since. Duggan said the initial report from the marathon "had problems," although he said he could not recall Tuesday what they were. As a result, he decided to have city departments report on the free advertising they received from the marathon, he said.

Those reports showed that the city got $297,000 worth of billboard space in 1991. But Duggan said Tuesday he could not confirm whether the city received the billboard space promised in the last three years. However, he said he was confident that further review of his files would reveal that the marathon has met its advertising obligation to the city.

Marathon officials arranged to meet the billboard requirement through a deal with Patrick Media, the giant of that industry, Duggan said.

The marathon officials promise in their contract to supply the ad space free and "not conditioned on any advertising purchases by the city."

Yet on Tuesday, the Los Angeles Zoo official in charge of advertising said the zoo had paid $150,000 to Patrick Media in fiscal year 1993-94 as part of the "free" advertising deal. After buying that ad space, the zoo did get "at least" another $150,000 in free space through the billboard firm, said Lora LaMarca, the zoo's public information director.

She said she expects to pay about $100,000 this year in order to obtain a like amount of "free" ad space promised by the marathon.

Duggan said such an arrangement would violate the marathon's promise to provide the city with free advertising. Members of the City Council objected three years ago when they learned that the "free" ads came with strings attached.

Burke, through his attorney, declined comment. Other marathon officials did not return repeated phone calls. Patrick Media also could not be reached for comment.

The settlements with the FPPC and the city Ethics Commission described a pattern for most of the illicit donations.

Marathon representatives Burke, George Beasley and Marie Patrick, described as an officer in the company, would authorize payments from the marathon to Beasley, once a top employee at the firm. Marathon employees, their relatives and others would then give donations to political officials and be reimbursed by Beasley. Among those who made the payments to candidates were Burke's parents, Edna and Leonard.

FPPC Chief of Enforcement Daryl East said Tuesday that at an early stage of the investigation he believed Burke probably knew marathon money was being laundered. But East said the investigation never developed direct evidence that Burke guided the illegal contributions.

Also Tuesday, some details emerged of the relationship between Burke and Oakland Mayor Elihu Harris, who received more than $20,000 in laundered marathon contributions, according to the settlements. In the 1970s, Harris worked as a congressional staff member for Burke's wife, Yvonne Brathwaite Burke, who is now a Los Angeles County supervisor, said a Harris political associate.

The Oakland mayor has "been family friends with both Yvonne and Bill Burke for a couple of decades," said Alameda County Supervisor Don Perata. "When (Harris) ran for mayor he asked his friends to give a hand in fund raising," Perata said, and managed to collect more than $1 million. Through a spokesman, Harris declined to comment Tuesday, instead issuing a statement stressing that there has been no evidence he knew the contributions were improper.

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