Wilson to Pay Taxes, Penalties for Ex-Workers

Gov. Pete Wilson said Friday that he will pay at least $15,000 in delinquent federal taxes and penalties for two of three household employees who worked for him during a 19-year period while he was mayor of San Diego and, later, a U.S. senator.

“I have never intentionally failed to make necessary Social Security payments, but I take full responsibility for these oversights and have satisfied my obligations to Social Security,” Wilson said in a statement.

The announcement is the result of a self-examination he ordered in May when reports surfaced that one of his household employees in San Diego during the late 1970s may have been an illegal immigrant.

At the time, just after Wilson announced his presidential campaign plans in the spring, the governor promised that the investigation would determine his tax liability and the legal status regarding all the household workers he has employed as an adult.

But many of those details remained unanswered in the report Wilson issued Friday that was conducted by a political research firm hired by the governor’s abandoned presidential campaign.

Wilson said in the report that all three of the household workers he employed at various times from 1971 to 1990 were hired in Washington by his current wife, Gayle, or in San Diego by his former wife, Betty Hosie.

Wilson officials said Social Security taxes were not paid for any of the employees, but the governor was unaware at the time that they were required or he assumed that his spouses had addressed the issue without his knowledge.

“He was not aware that there was someone working often enough to be required to pay taxes, and he was not aware there was someone who was not being paid taxes,” said John Davies, a close friend of the governor who directed the investigation.

The controversy surrounding Wilson’s household workers has been a political thorn since May when he confirmed a report that he may have employed an illegal immigrant maid in the late 1970s while he was mayor of San Diego.

The story was an early setback for the presidential campaign Wilson had unofficially announced two weeks earlier. Wilson critics blasted the governor as a hypocrite because he was an outspoken supporter of last year’s controversial Proposition 187, the ballot measure that sought to stop public benefits for illegal immigrants.

On Friday, Wilson’s critics charged that he timed the release of his report to minimize political damage because it came barely a month after Wilson dropped out of the presidential race.

“What the governor said today is that I am a crook and I am a tax cheat,” said state Democratic Party Chairman Bill Press. “That’s a hell of a statement for the chief executive to make. . . . This ain’t over. That is my advice to Pete Wilson.”

Press said he has information that he will release publicly identifying other illegal immigrants who were employed by Wilson.

Wilson officials acknowledged Friday that their report leaves some key questions unanswered regarding the legal status of the governor’s former household workers.

They said it is possible that the maid who prompted the investigation--Josefina Delgado Klag of Tijuana--was an illegal immigrant for about nine months out of the five years she worked in Wilson’s San Diego home.

Davies said it is also possible that some of Klag’s relatives--who might have been ineligible for U.S. employment--worked temporarily as substitutes in Wilson’s home. He said he was confident that their employment did not exceed the threshold that required withholding Social Security taxes.

Davies also said he believes that the two other maids Wilson employed--one in San Diego and one in Washington while he was a senator--were legal U.S. residents. In one case, he said, investigators could not find identification records and in the other, they did not check because they assumed it was not an issue.

In any case, Davies said it was not against the law to employ an illegal immigrant until 1986 when Congress passed the Immigration Reform and Control Act--which Wilson supported as a senator.

It is, however, a political liability for a presidential candidate, which is the reason Wilson’s former wife said she alerted the governor’s office last spring about her recollections of their employee.

Wilson officials subsequently interviewed Klag, who told them she was hired by Hosie in April, 1978, about nine months before she became eligible to work in the United States after her marriage to a U.S. citizen.

But Wilson’s report said it is still unclear whether Wilson employed Klag when she was an illegal worker because Hosie and other friends of the former couple in San Diego believe that the maid was not hired until 1979--after she was legally eligible to work.

As evidence, they said Hosie only knew Klag by her married name. According to records, Klag was married in December, 1978, and separated from her American husband in January, 1979.

The Immigration and Naturalization Service confirmed Friday that after a complaint from the Democratic Party last spring it is investigating whether Klag properly obtained her U.S. working papers. “It is not an investigation to determine whether the governor hired an illegal immigrant,” said Randy Murillo, an INS spokesman in San Diego. “The focus of this investigation is very narrow: the immigration status of Josefina Klag.”

Wilson’s report also said Josefina Klag was hired to work once a week and was paid about $25 or $30 each time.

Wilson’s report said Klag was referred to his wife by a friend in San Diego, travel writer and author Judith Morgan. Morgan could not be reached for comment Friday, but her husband, Neil Morgan, an associate editor and senior columnist with the San Diego Union-Tribune, confirmed that his wife was the person mentioned in Wilson’s report.

Rebecca Irwin, another Wilson friend and a La Jolla resident, also said Friday that Judith Morgan recommended Klag to both her and the Wilsons.

Irwin said she had been in frequent contact with Klag, 52, who has been her housekeeper almost continuously since 1979, about the time she also went to work for the Wilsons. She said Klag recently underwent rotator cuff surgery and was unable to work.

However, Irwin said that Klag had worked for her as recently as late July and had never “permanently fled” to her home in Mexico, where neighbors claimed to have not seen her for months.

Irwin said the scandal had been the most emotionally wrenching episode of Klag’s life, which left her feeling like a fugitive “when she never did anything wrong. . . . It’s awful what all of this has done to the poor girl.”

In 1983, after Wilson was sworn in as a senator and was remarried, his investigators say he employed another maid at his home in Washington. The report says the woman, Shirley Williams, worked irregularly.

At her request, Williams was paid in cash--$37 per working day. In later years, the report said, the amount was increased to $50 per day.

Davies said he calculated that Wilson owes about $3,519 in back taxes, penalties and interest for Williams. His report said the governor owes an additional $11,544 for Klag.

But Davies said it is likely that IRS officials will ask the governor to pay as much as “a few thousand” dollars more for the two employees after a closer look at the interest.

He also said that the governor has no plans to pay the delinquent funds owed on his first household worker because the information about her employment is so sketchy it is impossible to calculate.

Davies said neither Hosie nor Wilson could recall the woman’s last name, only her first--”Inez.” They said she worked once a week in Wilson’s home from 1971 to 1978.

Davies said investigators tried unsuccessfully to locate the woman or her husband in California and Arizona based on Hosie’s recollections.

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Times staff writers Michael Granberry, Sebastian Rotella and Chris Kraul in San Diego and James Bornemeier in Washington contributed to this story.