City Ethics Panel Conducts Probe of Sanders Campaign : Politics: Commission is investigating allegations that council candidate used more than $50,000 to subsidize his law firm. He denies any wrongdoing.

The Los Angeles City Ethics Commission has jumped into an investigation of allegations that attorney J. Stanley Sanders, now trying to unseat City Councilman Nate Holden, may have improperly used more than $50,000 from the treasury of his 1993 race for mayor to subsidize his law practice, The Times has learned.

The Ethics Commission investigation comes as the hard-fought race enters its final push before the June 6 election.

Key to the investigation is a $53,490.01 check drawn against the Sanders for Mayor finance committee to pay nine months of back-due rent and settle a protracted dispute between Sanders and the landlord of the building where his law office was located. The state Fair Political Practices Commission earlier launched an investigation of the matter; the progress of that investigation could not be determined Friday.

Although several sources--including people who have been interviewed by city investigators--confirmed the existence of the local investigation, Sanders said Friday that he had not been informed of any such development.

“I don’t think any investigation exists, except as a figment of Harvey Englander and Richie Ross’ imagination,” Sanders said, referring to Holden’s former and current campaign consultants. “I haven’t been told there’s an investigation. I haven’t gotten any communication of any kind.”

Benjamin Bycel, executive director of the Ethics Commission, refused comment.

The commission’s interest in the matter apparently grows from concerns that some of Sanders’ rent payment may have included tax money from a city program that helps finance the campaigns of qualifying candidates. All told, Sanders got $158,279 from the public financing program--nearly $1 in every $3 spent on his mayoral campaign.

Sanders denied any impropriety, saying that he appropriately paid for his law office rent with funds from his 1993 campaign because the office was used for campaign purposes during the period in question.

“I’d say it was exclusively used [for campaign purposes],” Sanders said. “I was the only lawyer working there and I was devoting almost all of my time to the campaign. The amount spent on legal matters can hardly be counted--we did take calls and refer business out.”

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Meanwhile, Sanders’ former law office landlord, Mid-Wilshire Associates, this week filed a real estate lien to collect a $212,000 legal judgment for unpaid rent from Sanders and his former law partner, Charles Dickerson. (Dickerson has not been an active partner in the firm since 1992, when he became chief deputy to Councilwoman Rita Walters; he now is a special adviser to City Atty. James K. Hahn.)

The lien will prevent Sanders and Dickerson from selling any of their real estate in Los Angeles County until the judgment is satisfied, according to Patrick Garofalo, attorney for Mid-Wilshire.

Sanders has been in two rent disputes with Mid-Wilshire, the first ending in a stipulated agreement in which Sanders agreed to pay $73,252.42 in back rent from Nov. 1, 1992, to July 31, 1993, a nine-month period that included the time Sanders was actively running for mayor.

Of this judgment, $53,490.01 was paid with the check drawn against Sanders’ campaign committee, Sanders for Mayor. A copy of the check appears in court files, and its payment was reported on a campaign disclosure statement filed by Sanders for Mayor.

The second dispute involves non-payment of rent from August 1, 1993, to December, 1993, the dispute that ended in the court judgment against Sanders and Dickerson.

Sanders, who said he has not been notified of any lien placed on his properties, said Friday that he was confident the debt can be satisfied. The Sanders and Dickerson law firm, a partnership, has “more than $1 million” in unpaid legal fees due it, he said. Sanders said he is trying to collect some of those debts, but acknowledged that he has not paid off any of the judgment owed to Mid-Wilshire.

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Mid-Wilshire attorney Garofalo said he has been interviewed by a city investigator, as has the company’s building manager. Garofalo would not disclose what he told the investigator.

Dick Klein, manager of the Ampco-owned Wilshire Boulevard parking lot that served Sanders’ office, said he too was interviewed. Klein said a city investigator on May asked him about the use of the lot by people visiting or working in Sanders’ office, apparently for the purpose of determining whether the traffic was law office or campaign-related.

Klein said he was able to produce a log only for the month of January, 1993, that showed Sanders paid for parking for 19 visitors that month. But he said his company did not keep records of the names of the visitors.

Sanders, who has the backing of former Mayor Tom Bradley, said he did not believe that the new charges or the lien would detract from his candidacy or distract him from conducting it aggressively in the final days of the campaign.

Sanders won a place in the June 6 runoff when he got 42% of the vote in the April 11 primary election to Holden’s 46%. A third candidate, Kevin Ross, who has endorsed Holden, got the remainder of the vote. When no candidate gets more than 50% of the vote in a primary, the two top vote-getters must face each other in a runoff.

Holden recently avoided a legal and political problem of his own when a judge rescheduled for at least 90 days a hearing on a lawsuit filed by a former City Hall aide who said the councilman had sexually harassed her.