Funds Misused in Paying Torres, U.S. Report Says

California Democratic Party Chairman Art Torres, who until recently held a $150,000-a-year job with a prominent Latino government contracting firm in Los Angeles, was improperly paid with federal funds, according to internal Commerce Department reports obtained by The Times.

Two previously undisclosed Commerce Department reports written early last year stated that Torres, as an employee of Cordoba Corp., was paid in part with funds the company received to run a government program of assistance for minority businesses. The reports stated there was no evidence that Torres did the work for which he was paid.

As a Cordoba employee, Torres, a former state senator, received a $6,500 paycheck every two weeks with a fluctuating portion of it coming from government funds. During the first three months of 1995, as much as 70% and as little as 24% of his paycheck was drawn from government funds.

Government officials said Torres failed to justify the payments and they concluded that his salary was excessive under any circumstances. They noted that Torres earned more than either the president of Cordoba or the Cordoba employee who ran the federally funded program.

“The percentage of salary paid to Mr. Torres . . . from program funds is not justified,” one report concluded.

Asked about these findings, Torres said he had no knowledge of the report and declined to comment. He resigned from the Cordoba job earlier this year after being elected state party chairman.

Cordoba President George Pla said in a telephone interview that the dispute over Torres’ pay was resolved when Pla agreed to reduce the amount of federal funds paid to the former senator. But Pla said he could not recall how much money was involved in the dispute. He acknowledged that the government had accused him of improperly paying Torres for 236 hours of work.

Cordoba is a politically well-connected firm that has been hired to carry out many high-profile municipal projects in Southern California over the last decade. The company was awarded a $3.2-million Commerce Department contract in 1994 to operate a so-called MEGA Center in Los Angeles. The center was intended to provide advice and assistance to minority-owned businesses in the West.

Many prominent California politicians--including Democratic Sen. Dianne Feinstein, Rep. Matthew G. Martinez (D-Monterey Park) and Al Villalobos, then a deputy to Republican Los Angeles Mayor Richard Riordan--used their influence to help Cordoba win the contract from the government.

The project later became a source of income for the families of some of the politicians who helped win the contract for Cordoba.

Records show that Villalobos, his son, Eric, and Martinez’s son, Matt, were hired to work on the project, as was Torres.

But after a year, the Commerce Department decided to shut down the MEGA Center as a result of a federal audit that found numerous management failures.

Torres went on the Cordoba payroll in December 1994 and was given the title of president of Cordoba International, a subsidiary.

According to two reports written in early 1995 by Commerce Department officials, Torres was expected to assist MEGA Center clients on international trade issues on an “as needed” basis.

Government officials initially objected to Torres’ work for the MEGA center on the grounds that his position had not been part of the original program authorized by the Commerce Department and because, as far as they knew, Torres had no experience in the field of international trade.

But Cordoba defended Torres’ qualifications for the job in a letter sent to Commerce officials on Jan. 30, 1995. The letter, which Pla supplied to The Times, noted that Torres had been chairman of a California Senate subcommittee on international trade and a member of the New York Foreign Affairs Council.

In a subsequent government report prepared three months later, Commerce Department officials once again questioned the role Torres was serving at the MEGA Center, saying they found “no records of assistance to center clients” by Torres.