Prosecutors believe a 1990 memo that former Los Angeles Councilman Arthur K. Snyder wrote to a major lobbying client shows that the ex-lawmaker was centrally involved in a vast criminal scheme that generated about $200,000 in illegal campaign contributions, according to court records unsealed Friday.
The memo outlined a plan for increased political donations to elected officials who would consider a large Downtown development project, and many of the donations later were found to be secretly laundered, the records show. Dozens of people and hundreds of illegal contributions were involved, prosecutors said.
Along with other documents, allegedly illegal contributions by Snyder's employees and relatives, and $67,000 in cash that investigators found at Snyder's Eagle Rock home, prosecutors say they have assembled a "circumstantial puzzle" that places Snyder at the head of a large conspiracy to enhance his political access and influence with elected officials.
Snyder, who left office in 1985 after representing the Eastside for 18 years, "is the primary beneficiary, (along with) his clients," said Deputy Dist. Atty. Gail Ehrlich. "He gained influence, and influence is power that helps his business."
Snyder, his wife, his law partner and four others were indicted last month after nearly three years of investigation by the state Fair Political Practices Commission and the Los Angeles Ethics Commission.
Friday's release of grand jury and other records in the case was ordered by Superior Court Judge John Ouderkirk, over objections by Snyder's attorney, in response to a motion by The Times.
They shed the first light on details of the prosecutors' case, culled from voluminous information gathered through search warrants, subpoenas and secret grand jury testimony.
But Snyder denied that the evidence shows he engaged in illegal conduct. He noted that the 1990 memo does not urge any illegal act.
"They've created from whole cloth a crime that doesn't exist," he told reporters at a hearing Friday on motions to dismiss the case against him and other defendants charged in a grand jury indictment. "They are pursuing an innocent man and . . . have been unable to find any facts that will uphold their preconception that he has done evil."
Specifically, Snyder and the others are accused of joining in a felony by conspiring to funnel tens of thousands of dollars in illegal contributions through a large web of friends, relatives and business associates who were secretly reimbursed, often with $100 bills.
Such activity is commonly called campaign money-laundering, and is viewed as serious corruption of the political process because it circumvents contribution limits and conceals a candidate's true financial backing.
While there has been no allegation that candidates knew the donations were improper, officials say money-laundering still boosts the influence of special interests and lobbyists because it helps them bring in large numbers of checks at election time.
But until Friday, it had not been clear how investigators planned to implicate Snyder in a scheme that prosecutors allege laundered more than $60,000 in cash to Los Angeles City Council members and other candidates.
Summarizing the prosecution's case, records show Ehrlich noted that Snyder was the chief executive, financial officer and sole owner of his Downtown law and lobbying firm. Other evidence and testimony shows that several employees of the firm, most of whom are relatives of Snyder's wife, Delia Wu Snyder, either admitted or were alleged to have participated in money-laundering.
"Every major employee from his firm is laundering money," Ehrlich told the grand jury. "And no one at the law firm other than Arthur Snyder gained any benefit by laundering the money."
Moreover, Ehrlich told the panel that the 1990 memo showed how the money-laundering operation was set in motion. It was written by Snyder to his brother-in-law, William Wang, an executive with Evergreen America Corp., a shipping conglomerate that had links to a major proposed Downtown development known as Mangrove Estates.
Noting that the project was moving toward approval, Snyder said in the memo it was important that Evergreen increase its political participation so "the Mangrove Project will come to be known as a close friend of the officials who will be determining whether or not it will be approved."
In the memo, he then laid out a detailed plan for contributions to such politicians as Mayor Tom Bradley, Councilwoman Ruth Galanter and then-council members Joan Milke Flores and Michael Woo.
Grand jury testimony and a record-setting settlement with Evergreen, which admitted making more than $170,000 in illegal donations, show that many of the suggested contributions were arranged by Wang after he received the memo.
"This is a circumstantial puzzle, and the memo is a key piece of the puzzle," Deputy Dist. Atty. Katherine Mader said Friday.
Records show that about the time of some of the illegal cash reimbursements, a series of retainer checks to Snyder's firm totaling more than $27,000 were redeemed at banks for $100 bills.
Many of the checks were cashed by Snyder's wife or her sister, but one for $5,000 bore only Snyder's endorsement.
In addition, Ehrlich described other records allegedly linking the Snyders to Evergreen donations that were found in a closet at the Snyder home, and $67,000 in cash found in the household safe.
A separate memo hand-delivered by Snyder's law partner, Gilbert Archuletta, to another client also laid out a series of proposed donations totaling $20,000 to members of the County Board of Supervisors and to candidates the supervisors supported. Though never acted on by the client, Price Waterhouse, the memo appeared to be part of the conspiracy because it used "suspiciously veiled language," was unsigned and was drafted on blank paper, prosecutors said in court records. The memo directed checks to be returned to Snyder's firm so they could be "passed forward in the manner most advantageous to (the client)," prosecutors added.
Snyder said Friday he admonished Wang and other clients to follow the law on political contributions. He also said he had no recollection of cashing the $5,000 retainer check, but that it would have been legal to do so.
He also said he has little knowledge of his personal or business financial affairs, which were handled by his wife, who remains out of the country although a warrant has been issued for her arrest.
Archuletta's attorney, Edward Klein, said the prosecution's emphasis on the Price Waterhouse memo is a smoke screen intended to divert attention from the fact that his client has been wrongly charged. Archuletta has already paid a $16,000 civil penalty in connection with illegal donations, Klein noted.
On Friday, Ouderkirk delayed arraignments in the case for at least a month, citing a series of complex defense motions to dismiss the case. The defendants argue that the state Political Reform Act precludes criminal action against them.
Also charged with the ex-councilman, his wife, Wang and Archuletta are Aide Posadas, an employee in Snyder's law firm; Grace Wang, Wang's wife and Delia Wu Snyder's sister; and Blanche Wu Poon, another sister of Delia Snyder's. All have denied wrongdoing, or said they have been wrongly charged.