The Los Angeles City Ethics Commission on Tuesday reluctantly agreed to settle money laundering allegations against the firm that runs the Los Angeles Marathon, with a majority of the panel members saying they were disappointed that marathon President William Burke was not forced to accept culpability in the case.
The action requires Los Angeles Marathon Inc. to pay a $200,000 fine for hiding the fact it was the true source of nearly 100 political contributions totaling $51,000 to candidates in the city.
Burke, who has directed the commercial marathon for nine years, last month signed a settlement with the Ethics Commission and the state Fair Political Practices Commission stating that his organization had laundered campaign donations. But he was not personally cited for money laundering. A former top aide, George Beasley, admitted to illegally funneling marathon funds to candidates.
During Tuesday's public hearing, three of five ethics commissioners said they strongly suspected that Burke--husband of Los Angeles County Supervisor Yvonne Brathwaite Burke--knew of the money laundering scheme. But they said their agency could not produce conclusive evidence of Burke's involvement because Beasley accepted full blame.
"We have somebody in this scheme who was willing to take all of the responsibility," Ethics Commission Chairman Dennis Curtis said. "But I think we all understand . . . that there are other footprints and fingerprints all over this."
Burke did not attend the Ethics Commission hearing, but his attorney released a statement that said Burke and marathon Vice President Marie Patrick knew nothing of the money laundering scheme.
The statement, in part, read: "An employee of the corporation used corporate funds to make the contributions without authorization by the principals. Nevertheless, the corporation is accepting responsibility for not monitoring the situation more closely."
The statement also said that an outside accounting firm has been hired to prevent a repeat of the problems. Attorney Lance Olson declined to respond to the comments made by commissioners during the hearing.
The commission's unanimous vote to accept the settlement ends a three-year investigation by the Ethics Commission and the FPPC.
The state agency is scheduled Thursday to consider a similar settlement in the case, which includes another $22,000 in illicit contributions to candidates outside of Los Angeles. The state agency is due to receive a $236,000 fine, paid over five years.
In the stipulations, Burke acknowledged that he had personally signed or authorized others to sign his name to more than $37,000 in checks that went to Beasley or Beasley's company. That money, and other marathon funds, were in turn used by Beasley to pay back contributors to eight Los Angeles City Council members, former Mayor Tom Bradley, three unsuccessful council candidates, Oakland Mayor Elihu Harris and state Controller Gray Davis, according to the twin settlements with the city and state agencies.
By funneling the contributions through others, the marathon was able to exceed city and state limits on campaign contributions.
"The public established limits on campaign contributions to diffuse the distortion of the political process that money can have," said Ethics Commissioner Edwin Guthman, a USC journalism professor. "This was a blatant attempt to circumvent those limits."
The contributions to local politicians were made about the time in 1991 when the marathon firm was seeking an extension of its contract to put on the race. The City Council unanimously approved the new contract through 2000.
Guthman, Curtis and Commissioner Treesa W. Drury expressed incredulity that Burke, the majority shareholder in the marathon, would not have known about the money laundering operation.
In intensive questioning of the Ethics Commission staff, Guthman and Curtis noted that Burke admitted to personally authorizing the transfer of marathon funds to Beasley.
An Ethics Commission staff report also noted that those who were reimbursed for their contributions included Burke's parents as well as other relatives and marathon employees. Three contributions were even made in the name of Burke's yacht, Star in Motion, according to the report. Those three checks were signed by a onetime marathon employee who also was skipper of Burke's boat.
Guthman asked why Burke wasn't personally forced to accept responsibility, or at least to testify under oath. "So many times in public life now people don't take responsibility for what they do," Guthman said. "And here we are aiding and abetting . . . someone avoiding responsibility, and that troubles me."
But Rebecca Avila, deputy director of the Ethics Commission, said the investigators could not prove Burke knew of the laundering operation once his longtime confidant, Beasley, accepted responsibility.
"In other words you had someone who was . . . willing to say he was fully responsible," Curtis said.