Moreno, Three Others Indicted by Grand Jury

A federal grand jury Tuesday indicted Santa Ana Councilman Ted R. Moreno on charges that he masterminded an elaborate political extortion and money-laundering scheme to shake down two businessmen for thousands of dollars in campaign donations.

The 24-count indictment also names as defendants fellow Councilman Tony Espinoza and two 1996 Moreno-backed council candidates, Hector Olivares and Roman Palacios.

Moreno and Olivares denied the allegations. A lawyer for Espinoza declined to comment. Palacios couldn’t be reached.

At a Santa Ana news conference announcing the indictments, U.S. Atty. Nora Manella called the alleged vote-selling scheme a “time-honored tradition of corrupt politicians.”

“The message to businessmen was clear,” Manella said about the alleged plot. “Don’t worry about us voting our consciences. . . . We’re willing to support any businessmen who will pay us.”

Moreno, 31, a real estate agent, defended himself Tuesday.

“I never extorted anybody. I never threatened anybody. I never harassed anybody. I never made any promises in return for campaign contributions,” he said. “All I ever wanted to do was help the people of this city.

“This is not the first time I’ve gone through this,” he said, referring to two previous investigations of alleged wrongdoing involving

campaign contributions. Those probes by the Orange County district attorney’s office ended without action being taken.

He said he plans to continue his campaign for mayor this fall.

All four men are charged with conspiracy to extort about $31,000 from a service station owner who wanted a beer-and-wine permit for his mini-mart.

Olivares also is accused of one count of conspiracy to launder money and 12 counts of laundering money, mainly from a landowner who turned over $10,000 in cash and gold South African Krugerrand coins.

Moreno is named in all 24 counts, which also include an extortion charge and nine counts of defrauding the public by mailing or filing false and misleading campaign expense reports and documents, including mailers.

None of the defendants was arrested. They are scheduled to be arraigned Monday in federal court in Santa Ana.

A Community Divided

The grand jury accusations rocked the city, where a Latino majority has been split over the politics of mainstream Mayor Miguel Pulido and the ambitious, rough-edged Moreno.

Santa Ana accountant Bob Lopez said the indictment paints Latinos as a negative rather than positive influence in the community.

“The names really don’t matter,” he said. “We struggle so hard to prove ourselves and then we get some negative thing hitting the newspaper and some people say, ‘Ah. See what [Latinos] do when they get elected.’ ”

Santa Ana Police Chief Paul M. Walters, who attended the news conference, said that “any time you have local politicians charged with these types of crimes” the city gets a black eye. He cautioned, though, that the city should not be judged by allegations against its elected officials.

“These individuals, in my opinion, they don’t represent what the city is all about,” Walters said.

Pulido, Moreno’s opponent in many council battles as well as in the upcoming mayoral race, said the outcome of the criminal proceedings shouldn’t undermine the democratic process in the city.

“Obviously I haven’t seen the [indictment], but I hope the allegations are not true,” he said.

Moreno and his supporters said they believe the investigation and the indictment are a clear attempt to maintain the status quo in Santa Ana and eliminate the political opposition.

“This is a political animal fight,” said Margarita Rodriguez, a longtime supporter.

Manella denied that the investigation was politically motivated. “I have not the slightest knowledge--or interest--in the local politics of Santa Ana,” she said.

Moreno’s attorney, Edward R. Munoz, decried government leaks that resulted in news stories Tuesday about the two-year investigation, and he berated prosecutors for refusing to talk with him in advance about possible charges.

Olivares, 31, district manager for the Orange County operations of parking lot operator Century Parking Inc., denied the charges through his attorney, Mark Rosen.

“I don’t think Hector extorted any money from anybody or laundered any money,” Rosen said. “He ran a straight-forward campaign and he didn’t promise his vote to anybody. I mean the guy didn’t even get into office and they’re ganging up on him.”

Ed Asberger, the attorney for Espinoza, said he had not seen the indictment and declined to comment. His client, 30, works with juvenile offenders in the Orange County Probation Department.

Neither Palacios, 37, manager of the Santa Ana office of Templo Calvario, a church-affiliated immigrant education organization, nor his lawyer could be reached for comment.

According to the indictment, an unnamed businessman sought a conditional use permit from April 1996 to April 1997 to sell beer and wine at the mini-mart in his Santa Ana service station.

The indictment charges that Moreno initiated a meeting with the station owner and that the four politicians met with the businessman at a Santa Ana restaurant and promised to support his application for a permit.

The businessman, whom authorities identified as Vaskin “Victor” Koshkerian, refused to talk last week and couldn’t be reached for comment Tuesday.

In a separate deal, the indictment accuses Moreno of seeking $15,000 from a landowner who wanted to sell a 15-acre North Bristol Street lot.

Cash and Krugerrands

Though unnamed in the indictment, the landowner was identified by authorities as Jack Blackburn, the head of a nonprofit Fountain Valley corporation called the Cooper Fellowship Inc.

In May 1996, the indictment says the landowner wanted to sell the North Bristol Street parcel to the Santa Ana Unified School District or, failing that, to have the property’s zoning changed from agricultural to residential use to make it more valuable.

Moreno allegedly collected $10,000 from the landowner--half in the form of 14 gold Krugerrands valued at $5,320 and the rest in cash, according to the indictment.

After receiving the cash from the two businessmen, the indictment says Moreno and Olivares schemed to launder the money in several ways:

* They allegedly used third parties to accept the landowner’s cash in return for checks written to his campaign and to those of Olivares and Palacios.

* They allegedly had the service station owner write multiple checks in such a way that they would appear to come from separate sources, thereby avoiding limits on contributions from one source.

The indictment also charges that Moreno defrauded the public in his money-laundering scheme by voting to support the liquor permit and by filing allegedly false campaign statements to hide thousands of dollars flowing to his campaign.

The indictment states that Moreno declared only $249 from the service station owner, when he had received $16,000 in cash and an additional $747 by check.

‘Demands for Help’

Moreno, who describes himself as politically naive, acknowledged that 1996 running mates Palacios and Olivares received large campaign contributions from Koshkerian, but he insisted, “Mr. Koshkerian came to us. We did not go to him.”

Moreno said Koshkerian called or met with him or campaign workers many times, growing increasingly belligerent in what he called “demands for help.”

The councilman said he told Koshkerian that he could not promise votes or support in exchange for donations. He said he learned that Koshkerian was wearing a wire and was taping their conversations.

A videotape of the council’s April 1997 meeting, he said, shows Koshkerian shouting to Councilman Tom Lutz, “You told me I didn’t get this project because I supported the wrong side [Moreno]. Put that on the record.”

Moreno said he supported the request for the beer-and-wine permit in spite of his devout religious and anti-alcohol philosophy because he believed Koshkerian “was lied to by city staff who told him . . . he would get his approval.”

Blackburn was “a nice guy,” Moreno said, but the councilman denied accepting anything more than one check for $249 from Blackburn’s girlfriend.

“I’ve never received Krugerrands,” Moreno said.

*

Times staff writer David Reyes contributed to this report.

* CONSTANT OUTSIDER: Over time, Ted Moreno’s combativeness pushed him to the margin of city politics. A10

* LATINO REACTION: Among the community, people fear recent political gains may be lost if charges are true. A10

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A Case Unfolds

What the Indicment Says Moreno Did

A 24-count indictment filed Tuesday in U.S. District Court lays out the allegations against Santa Ana Councilman Ted R. Moreno, fellow Councilman Tony Espinoza and two former council candidates, Hector Olivares and Roman Palacios. How the an alleged vote peddling and money laundering scheme unfolded, according to the indictment:

Businessmen

1) In separate cases, Moreno allegedly extorts more than $40,000 from two businessmen with issues before the council in exchange for favorable votes.

Moreno

2) Moreno allegedly recruits conduits willing to launder cash.

Conduits

3) Conduits write checks under multiple names to campaigns as contributions, loans.

4) Moreno allegedly forwards checks to his campaign and to Olivares’ and Palacios’ campaigns.

Olivares, Palacios / Campaigns

5) Campaigns repay loans to conduits, cash allegedly forwarded to Moreno.

Campaign for Change

In the November 1996 election, Moreno headed a slate of candidates he hoped would shift the majority on the council. According to the indictment, Moreno allegedly promised to swing votes--if the slate was elected--in exchange for contributions. How the election turned out:

Council majority: Pulido, Richardson, McGuigan, Franklin, Lutz

Moreno slate: Olivares, Palacios, Moreno, Espinoza

Losses by Olivares, Palacios keep Moreno, Espinoza in minority

Timeline

Nov. 1992 - Moreno elected to Santa Ana City Council

Nov. 1994 - Espinoza elected to council

April 1996 - Vote peddling, money laundering allegedly begins

Nov. 1996 - Olivares and Palacios lose bid for council seats, Moreno reelected

Tuesday - Indictments handed down

Sources: Grand Jury indictment, campaign contribution records, election results

Graphics reporting by BRADY MacDONALD/Los Angeles Times