MTA Probes Charities Promoted by Alatorre

Created with the noble goal of helping disadvantaged youngsters, two charities championed by Los Angeles City Councilman Richard Alatorre are being investigated by transit authorities for steering money to an event-planning firm founded by his wife.

Records show that Alatorre has personally helped solicit large sums for the charities from businesses, lobbyists and others seeking contracts with the city of Los Angeles and the Metropolitan Transportation Authority, where he is a powerful member of the governing board.

The charities, meanwhile, have exclusively hired Eventfully Yours, formed by Angie Alatorre, to stage events and coordinate fund-raising drives. As legal ownership of the small firm has shifted between close family members in recent years, Angie Alatorre has remained a key employee, drawing, by her account, a part-time annual salary of $36,000.

Richard Alatorre said in interviews that he and Angie have engaged in no wrongdoing. He would not comment specifically on the investigation.

The councilman acknowledged that “there could be an appearance” problem with a portion of his wife’s salary coming from donations by contractors and others seeking government business. But, he said, “I don’t think it’s a conflict of interest.” Added his wife: “I am an honest person. . . . I wasn’t brought up to be deceiving anyone.”

The charities the councilman helped create--El Sereno Youth Development Corp. and Feliz Navidad Project Inc.--have in recent years paid nearly a quarter-million dollars in commissions to the company that Angie Alatorre established in 1987. At the same time, at least two corporate players Alatorre has backed for public jobs--TELACU Industries and Cordoba Corp.--have directly paid Eventfully Yours monthly “retainer” fees totaling thousands of dollars.

A review of voluminous documents and dozens of interviews by The Times show that the two charities and Eventfully Yours repeatedly have failed to fully disclose their financial activities, as required by state and local law.

On one occasion, the councilman prevailed upon a top city regulator to bend licensing rules so Eventfully Yours could continue operating. El Sereno Youth Development, meanwhile, has inconsistently accounted for hundreds of thousands of dollars in charitable contributions, according to official records.

The investigation of the charities and their relationship to Eventfully Yours is being conducted by the MTA inspector general’s office. A large number of the charitable donations have come from transit contractors and others seeking business with the MTA, which Alatorre helped shape as its first chairman in the early 1990s.

Although the full scope remains unclear, the investigation represents a broadening of an earlier--and continuing--probe of how a last-ranked team backed by Alatorre came to be recommended last fall for a lucrative Eastside subway contract. The ensuing controversy forced the resignation of MTA Executive Director Joseph E. Drew, who selected the team after it made a $20,000 donation to a golf tournament benefiting El Sereno Youth Development, of which Alatorre is honorary chairman.

Of the two charities backed by the councilman, investigators currently are focusing most intently on El Sereno, partly because of its connection to the controversial golf tournament.

So far, with assistance from the U.S. attorney’s office, MTA investigators have obtained the charity’s records from one bank, according to sources familiar with the financial institution’s operations. In addition, current and former MTA employees and local charity regulators said in interviews that they have been contacted in connection with the inquiry.

MTA Inspector General Arthur Sinai’s office declined to comment on the months-long investigation, as did the U.S. attorney’s office in Los Angeles. Other sources, however, said investigators apparently are attempting to determine whether Eventfully Yours served as an improper channel for money raised from transit interests.

“I’m very confident that nothing is wrong, everything is right,” said El Sereno board chairwoman Marina Martinez.

Echoing that sentiment was Anthony Zamora, chairman of the board for Feliz Navidad Project and Eventfully Yours’ attorney.

“We’ve dealt with all involved openly and candidly,” he said. “Nothing improper has happened.” Investigators will conclude similarly, he said, “if there is a fair examination of the issues.”

Whatever the outcome, Eventfully Yours has decided to shut down, according to Zamora, who said of the firm’s employees: “They’re tired.”

The announced closure comes amid a separate investigation of Eventfully Yours’ charitable fund-raising by the state attorney general’s office.

Many Needs, Big Donors

The Alatorres and officials of the nonprofit groups say their sole mission has been to help needy Eastside children, providing recreational opportunities through the El Sereno charity and Christmas toys through the Feliz Navidad Project. There is no argument that many children have benefitted from the charities’ structured programs and holiday parties.

To that end, Alattore, who chairs the City Council’s influential Budget and Finance Committee, said he sees no legal or ethical problems requesting charitable donations from companies and individuals with business pending before him.

“I have nothing to apologize for that,” he said. “I sent letters to a lot of people. And you know what? They don’t have to give.”

But many do.

Although the amount of money that special interests can contribute to local politicians has been sharply curbed in recent years, there are no restraints on the tax-deductible gifts donated to an elected official’s pet charity.

Because federal law allows nonprofits to publicly withhold the names of donors and the amount they give, it is difficult to determine precisely how much of the roughly $2 million raised in recent years by El Sereno and Feliz Navidad has flowed from companies and individuals with government business. But tax filings, which identify only the largest donors, show that virtually every one of them knows the corridors of City Hall or the MTA.

A sampling:

The law firm of Latham & Watkins--home to several of Los Angeles’ top lobbyists--has contributed $55,000. One joint venture, called CRSS/STV, which won a multimillion-dollar Blue Line contract, gave $30,700. The Catellus Corp., shortly before being picked to help build the towering new MTA headquarters, donated $25,000. Contributing the same amount was the New York-based M.R. Beal & Co., which has been part of the MTA’s bond underwriting group.

The tight ties between such interests and the charities were illustrated by a 1993 letter an MTA contractor wrote to his industry colleagues, seeking donations for an El Sereno benefit. “Join me and ICF Kaiser in honoring Richard Alatorre,” the executive wrote on his firm’s letterhead.

These donors and fund-raisers say they have given money to the councilman’s favored charities for no reason other than to brighten the lives of children with few opportunities.

“We tend to get involved in a lot of . . . programs for kids who are disadvantaged,” said attorney-lobbyist George Mihlsten of Latham & Watkins. Alatorre’s connection to the charities, he said, “is not the basis upon which we are involved in those programs.”

But other contributors, speaking privately, said they felt pressured to pony up.

“There is a defensive mentality to it. If you’re not doing it, your competitor may be doing it,” said a representative of one MTA subway contractor that donated to one of Alatorre’s charities. “Does it get access? Sure it does.”

While investigators sort through legal issues surrounding the Alatorre-inspired charities and Eventfully Yours, some experts say one thing is clear--the arrangements pose troubling ethical issues.

“It sounds like a conflict [and] may not be easily defensible,” said professor Herb Alexander, head of USC’s Citizens’ Research Foundation, a government-ethics think tank. The concern, he said, is that the councilman is involved with generating donations from government contractors that financially benefit his wife and his household.

“The question,” Alexander said, “is whether it smells. . . . It’s not putrid, but it’s not pleasant either.”

Seeking a Favor at City Hall

Although Alatorre has been the driving force behind both charities--whose boards are dominated by his political allies--the councilman said he played no role in the hiring of Eventfully Yours. “I had nothing to do with that,” he said.

In fact, no one interviewed for this report could fully explain how Eventfully Yours landed the jobs, including Angie Alatorre and past and present board members of the charities, some of whom thought the firm was working for free.

Alatorre stressed that his wife is now only an employee of the firm. But he added that her Eventfully Yours salary and money she makes from consulting work are important to the couple’s economic well-being. “My [gripe] to her was always, ‘Why don’t you make some more money?’ ”

The councilman has listed his wife’s work with Eventfully Yours on state and city economic disclosure statements. In his most recent city filing, however, he under-reported her salary by thousands of dollars--a mistake he blamed on his bookkeeper.

Although Alatorre said he has made sure to keep his distance from his wife’s business affairs, that contention is open to debate.

Among supporters at fund-raisers, the councilman often has praised Eventfully Yours and mentioned his wife’s connection. He has attended events for corporate clients that his wife helped plan. His name is featured repeatedly in Eventfully Yours’ calendar of 1997 events. On letters requesting donations for the nonprofits, the councilman instructs potential donors to contact Eventfully Yours.

Most dramatically, Alatorre intervened with City Hall officials on behalf of Eventfully Yours, allowing the firm to continue reaping thousands of dollars in commissions.

The city’s top charity regulator, Shirley Flucus, said the “very unusual” incident came last year as Eventfully Yours was gearing up for an El Sereno charity event. To legally raise the money, El Sereno needed documentation that its professional fund-raiser--Eventfully Yours--was licensed, a requirement intended to weed out scam artists.

Regulators discovered that Eventfully Yours’ license had been canceled for failing to file financial information about its operations. They warned in a phone call that unless Eventfully Yours submitted the necessary material, the city would refuse to issue a permit for El Sereno’s big fund-raiser.

About 30 minutes later, then-Social Service Department General Manager Flucus said she was “shocked” to get a call from Richard Alatorre about Eventfully Yours’ problem.

“Do me a favor,” Flucus recalled the councilman saying. “Give ‘em a break. They’re going to get their act together. Everything is going to be all right.” During the conversation, Flucus said, Alatorre mentioned something about “a family connection” and promised that all necessary paperwork would be forthcoming.

Although uncomfortable with the request, Flucus said she relented. “I’ll make an exception,” she said she told Alatorre. “I usually don’t.”

Flucus’ office dispatched a letter to Eventfully Yours informing the firm that its license was being temporarily extended “per the conversation between Councilman Richard Alatorre and the General Manager of this Department.”

As it turned out--despite Alatorre’s reported assurances and the mandates laid down in the letter--the paperwork never arrived and Eventfully Yours continued staging charity fund-raisers outside city law. Just weeks ago, Eventfully Yours helped organize a fund-raiser for the bilingual child-care center Centro de Ninos. One of the headliners: Richard Alatorre.

Asked about the phone call to Flucus, the councilman said he can’t remember if he spoke to her. “I’m not saying I didn’t. I may have, because obviously the way you described it I may have made the phone call.”

Alatorre added that if he did, it was “nothing sinister.”

Nonetheless, city ethics laws generally prohibit elected officials from inducing preferential treatment not available to the public at large.

Eventfully Yours’ problems with watchdog agencies have extended beyond Los Angeles to Sacramento, where the state attorney general’s office is investigating the firm. For five years, Eventfully Yours failed to publicly account for hundreds of thousands of dollars of charitable funds it helped raise.

Such written disclosures are crucial, according to Deputy Atty. Gen. Belinda J. Johns, who is heading the state investigation. She said they help ensure that charitable contributions go to their intended destinations.

Only after inquiries from The Times and repeated warnings from the attorney general’s office did Eventfully Yours in May reconstruct several years of its charitable fund-raising activity. In a cover letter to state officials, Eventfully Yours attorney Zamora said the firm’s forte was staging “spectacular” events--not tending faithfully to administrative matters.

Deputy Atty. Gen. Johns said she remains concerned. The submitted reports, she said, fall short of state standards. “We still want a complete accounting of where the money went,” she said. Asked about the close connections between Alatorre’s charitable work and links to his wife’s employer, Johns said: “I’m not sure I’ve ever seen it like this.”

As in the enforcement effort against Eventfully Yours by Los Angeles officials, the attorney general’s office also received an inquiry from a powerful lawmaker--this time state Sen. Richard Polanco (D-Los Angeles), a longtime Alatorre ally.

Polanco, according to a state justice department official, said he was concerned about the pressure being placed on the firm. The official recounted Polanco saying that he knew the people associated with Eventfully Yours to be upstanding and asked why they were being targeted.

The lawmaker was informed that, because of the pending investigation, no information would be coming his way. Polanco did not return repeated calls for comment.

Shifting Ownership, Questions of Conflict

One potential complication for MTA agents, government ethics experts say, is the corporate evolution of Eventfully Yours--the difficulty of establishing whether there is a conflict of interest for Alatorre and how severe it might be.

The company was founded a decade ago by the former Angie Ramos Vasquez. On paper, she remained the sole owner until 1992--six months after her marriage to the councilman. By then, she had emerged as the premier event consultant in the Latino community, with much of her business paralleling Alatorre’s interests.

As she tells it, her marriage changed her views on work. “I was getting married, and I wanted to make that my priority . . . basically be a wife.”

At the same time, she said, her sister, Belinda Nykoluk, was financially adrift, a single mother with “nothing in her life that was her own, other than her daughter.”

So, Angie Alatorre said, she gave her something special: the business, for free. Documents on file with the secretary of state’s office show that in mid-1992, Nykoluk became president, chief executive officer and chief financial officer of the newly incorporated Eventfully Yours.

Although promotional literature continued to tout Angie Alatorre’s importance in the firm’s rise, her name vanished from state and local business filings. “I continued to work there,” she said, “but it was [my sister’s] company.”

Others recall a different scenario.

They say Richard and Angie Alatorre were concerned about conflicts of interest if she retained legal ownership of the firm. Had she done so, the increasingly influential councilman might have been forced to avoid voting on or participating in matters involving his wife’s clients, some of whom he had backed for government business.

“I had talked to Angie about the whole appearance of conflict of interest regarding Eventfully Yours. She was very concerned about that,” said Beatriz Olvera-Stotzer, a former board member of the El Sereno charity.

Added another longtime Alatorre associate: “They only changed the name over to Bel [the sister] because they did not want to create a conflict of interest. I guess they thought it would protect them.”

One company whose official influence could have been compromised was the Cordoba Corp., a consulting firm with recurring city and MTA business, headed by Alatorre’s longtime friend George Pla. During that time, Cordoba was paying Eventfully Yours monthly fees of up to $3,500, according to billing records.

Cordoba president Pla, who refused to say how much his company has paid, said the arrangement was based on his long association with Angie Alatorre and her reputation for quality work--not on currying favor with the councilman.

Despite the shift in Eventfully Yours’ ownership, Angie Alatorre did not disappear from the scene.

For example, more than a year after she says she relinquished the firm, Angie Alatorre--not her sister--was identified as “president” of Eventfully Yours in the program for a large benefit the firm planned. Her $36,000 salary was nearly four times that of her sister, her boss.

Also casting doubt on who was in control was Angie Alatorre’s efforts to help get her sister a second job--despite the high executive positions she already held at Eventfully Yours. Belinda Nykoluk became a $12.50-an-hour, part-time program assistant at the El Sereno charity, where Angie is on the board of directors.

Soon, though, the sister’s health took a devastating turn: She was diagnosed with colon cancer. Belinda Nykoluk died in January 1996. On her death certificate, Angie Alatorre told authorities that her sister’s usual employer was El Sereno. Eventfully Yours was not mentioned.

In her final days, Nykoluk entrusted her young daughter to the care of the Alatorres. She transferred ownership of Eventfully Yours to her father, according to the firm’s attorney.

But that too has raised questions about who’s controlling the business. Although said to hold all the company’s stock, father Frank Mendoza has never been in the management loop or named in state incorporation records.

“Basically, my dad was put down for the owner of the company, but it’s only on paper,” said Angie Alatorre. “He has had nothing to do with the business.”

Importance of Alatorre’s Backing

Alatorre’s two favored charities, meanwhile, have had their own series of problems, raising questions about how carefully the nonprofits have tracked hundreds of thousands of dollars in donations and complied with consumer-protection laws.

Money has poured into these groups largely because of the stature of Richard Alatorre, unquestionably one of the state’s most formidable Latino politicians. He has personally vouched for the integrity of the charities.

“If Richard supports something, you feel comfortable it’s a good cause,” said transit consultant Rodrigo T. Garcia, a longtime Alatorre friend and fund-raiser.

In 1989, Alatorre rallied friends and created the nonprofit Feliz Navidad Project Inc. to purchase and distribute tens of thousands of Christmas toys to children in housing projects. On the average, the charity annually raises about $100,000. To stage the events, Eventfully Yours has charged anywhere from $20,000 to $35,000--the largest fees it collects from its nonprofit clients.

Despite years of operating within Los Angeles, Alatorre’s Feliz Navidad project has never obtained a city permit to collect donations, the largest amounts of which have come from companies and individuals with an eye on public dollars.

“The city ordinance clearly states that we are supposed to control charitable solicitation within the city of Los Angeles,” said charity regulator Flucus, who now works under the auspices of the Police Commission. “And they should get police permits from us.”

The charity’s longtime treasurer, Sandra Serrano Sewell, said in an interview that she thought Eventfully Yours was getting the permits. “I’m real surprised,” she said. “[We] have to make sure that gets done.”

Three years after forming Feliz Navidad, Alatorre spearheaded the creation of El Sereno. Among other things, the group offers tutoring, sports and field trips and sponsors a Girl Scout troop. It has spent more than $230,000 toward the purchase of property to build a new state-of-the-art youth center.

In a recent letter to contributors, Alatorre said: “I set these organizations in motion years ago and they continue to be near and dear to my heart.”

They also are of interest to investigators, particularly El Sereno, whose banking records were subpoenaed several months ago.

A Times review of El Sereno’s finances found repeated omissions of key information and substantial discrepancies in the amount of money the group has told supporters and government agencies it raised on its first and largest fund-raiser.

The charity, for instance, disclosed on state reports that Angie Alatorre was a board member but did not reveal that she also had a financial interest in Eventfully Yours, one of the group’s primary contractors. Such disclosures of dual roles--even when it involves only employment--are considered crucial so charity watchdogs can spot potential conflicts of interest or improper “self-dealing,” according to the state attorney general’s office.

El Sereno Executive Director Raul Caiz, who signed the state reports, said he and the charity’s board assumed the disclosure was unnecessary because Angie Alatorre was not the owner of Eventfully Yours. “To tell you the truth,” he said, “I don’t think we thought that through.”

The state attorney general’s office says it is concerned not only about that reporting lapse but about a substantial disparity in the amount of money El Sereno has said it collected from its inaugural fund-raising dinner in 1993--a tribute to Alatorre’s 20 years in public office. The proceeds from the swanky Biltmore Hotel event were earmarked to help erect the proposed youth center, which has yet to be built.

Solicitations for dinner packages ranged from $10,000 to $100,000. As the event coordinator, Eventfully Yours was primarily responsible for collecting the money.

Six months after the dinner, El Sereno reported to city charity regulators that it had grossed more than $800,000 on the event. After expenses, the net was listed as $733,541--a sum trumpeted repeatedly by the group in newsletters and news releases.

More than a year later, however, when it came time to file federal tax returns, El Sereno reported grossing just $564,486 for 1993--nearly a quarter-million dollars less than the charity had told the city and its supporters.

The principal players offer a variety of explanations for the seeming shortfall, including clerical errors and pledges that never materialized. They declined to provide a detailed breakdown of donations and pledges.

Asked why El Sereno continues to tell supporters and potential contributors that the event netted more than $700,000, Councilman Alatorre offered this explanation:

“It’s a P.R. thing, man. . . . There’s nothing wrong with that. I don’t know a fund-raiser that doesn’t do it.”

State regulators are not so quick to sign off on that explanation. Deputy Atty. Gen. Johns says the public relies on accurate information from charities in deciding whether a specific group is worthy of receiving donations.

“It raises an issue of the accuracy of reporting,” she said, “[and] may raise an issue of false or misleading solicitation.”

Mystery of the $100,000 Club

A glaring issue of accuracy growing out of the 1993 Alatorre tribute--underscoring questions about how El Sereno has accounted for its money--revolves around three $100,000 contributions.

On its federal income tax forms, El Sereno listed the individual donors as International Escrow, Han Huskey and Dr. Gene Scott.

In fact, International Escrow, a small Montebello business, contributed nothing, acting instead as an intermediary for the donation attributed in the tax forms to Huskey.

Huskey says he did contribute, but only about $30,000. The rest, he says, was equally donated by two business partners in the sale of a skid row hotel that was financed with city tax dollars. Weeks before the donation, Alatorre helped shepherd the deal through the City Council, despite warnings by some city analysts that the price may have been too high. Alatorre said he relied on contrary staff recommendations.

One of the unnamed duo in the Huskey contribution was banker Ben Karmelich. He was being sued at the time of his donation by the city attorney’s office for racketeering and fraud involving lending on slum properties. The bank, of which he was president, later settled the case by agreeing to pay tenants $1.4 million, and restrictions were placed on Karmelich’s real estate dealings.

The third party to the donation was Angel Lopez, whose Highland Park apartment building in the late 1980s was the subject of numerous neighborhood complaints about gang activity and drug dealing. After city intervention, he corrected the problems.

Huskey, who said he has no idea why he was listed as the sole giver, explained that he and his partners contributed to El Sereno because they had made so much money on the city-financed sale of the downtown Hayward Hotel.

“We felt we were very fortunate to be able to negotiate a handsome price” through the city-backed deal, Huskey said in an interview. Added Karmelich: “We made quite a bit of money.”

Although Lopez did not respond to interview requests, Karmelich and Huskey said they could not recall how, of all the city’s charities, they came to donate to El Sereno. At the time, it had not yet gotten off the ground. They said Alatorre did not solicit the donation, and the councilman said he was unaware that the money flowed from the deal he helped seal at City Hall.

It seems the only $100,000 that El Sereno accurately reported to the IRS came from televangelist Gene Scott, who over the years has developed close relationships with many politicians, contributing thousands of dollars to their campaigns. Scott’s large downtown church has operated in Alatorre’s district.

For months, El Sereno officials refused to give a detailed explanation about these substantial discrepancies, citing confidentiality concerns for the donors. In late June, at the newspaper’s request, Alatorre interceded, prompting a written response from El Sereno in which it admitted making mistakes.

The charity acknowledged that it “erroneously” reported that International Escrow made a donation. In fact, the charity revealed, the true donor of one of the three $100,000 “commitments” was TELACU--the Eastside business conglomerate with longtime ties to the councilman. It is that same firm that in the late 1980s paid Alatorre a $1,000 speaking fee shortly before he allegedly tried to steer a city contract to TELACU, prompting state officials to fine the lawmaker.

Nowhere on El Sereno’s federal tax filings is TELACU--part of the controversial low-ranked Eastside subway team--mentioned as a donor.

In its explanation, El Sereno said the conglomerate had contributed an initial sum of $25,000 toward the larger commitment, which is still outstanding. TELACU president David Lizarraga and a company spokeswoman did not respond to requests for comment.

As for Huskey and his Hayward Hotel group, El Sereno acknowledged that others were involved in the donation, but would not name them.

“Needless to say,” El Sereno concluded in its written response, the charity “will amend its tax forms as provided by law.”

Dealing with investigators and still struggling to sort out the money that has moved between the charities and Eventfully Yours, the event firm’s lawyer, Anthony Zamora, acknowledged that errors have been made.

“One lesson out of this,” he said, frustration in his voice, “is that you just have to look at all the rules and make sure everything is being followed to the letter.”

Times librarian Janet Lundblad contributed to this story.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

All in the Family

MTA and state investigators are probing the financial relationship between two charities conceived by Councilman Richard Alatorre and a firm founded by his wife, called Eventfully Yours.

* The councilman often has solicited money from special interests and others for the charities, which have paid more than $225,000 in commissions to the small firm where his wife works.

* The charities have exclusively used the event-planning company to stage such fund raisers as a 1993 tribute to Alatorre’s 20 years in public office.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

‘Give ‘em a Break’

Councilman Richard Alatorre intervened last year to help Eventfully Yours, an event-planning firm founded by his wife, after it encountered City Hall regulatory problems. Charity watchdog Shirley Flucus, right, remembers the councilman saying, “Do me a favor. Give ‘em a break.” Reluctantly, she says, she did, effectively allowing the firm to collect thousands of dollars in fees. Although the conversation was referenced in a letter to the firm, Alatorre says he does not remember the call.