Ex-Treasurer Had His Own Money Woes

By JEFFREY L. RABIN

June 21, 1998 12 AM PT

TIMES STAFF WRITER

Leslie V. Porter, an obscure public employee, played the leading role in issuing more than $2 billion in long-term debt as treasurer of the Metropolitan Transportation Authority and deputy executive director of the former Los Angeles County Transportation Commission.

He worked with investment bankers, bond underwriters, financial advisors and lawyers structuring the complex deals that is financing construction of the county’s subway and rail system. He also made decisions on how to invest some of the proceeds from the MTA’s borrowing.

After six years as the man in charge of the multibillion-dollar agency’s money, Porter was fired by the MTA because he was unable to manage his own financial affairs.

By that point, in December 1996, public records show that the MTA treasurer had defaulted on a mortgage on his Beverly Hills condominium, had not paid his property taxes in years, and owed the IRS and the state substantial amounts of income taxes, penalties and interest as far back as 1990.

But the MTA’s concern was much more parochial.

The Transportation Commission had invested $250,000 worth of public money in Porter’s condominium, and that so-called shared equity investment was in jeopardy.

“We believed that he had put the MTA’s amount at risk,” said Terry Matsumoto, the MTA’s top finance official. “We didn’t feel that was the kind of behavior that would be acceptable for a person in his position.”

So Matsumoto fired Porter and told him to vacate the corner office with the panoramic view on the 21st floor of MTA’s Gateway Center headquarters.

“From our perspective,” Matsumoto said, “he had agreed to the contract, the shared equity agreement, and he was not holding up his end of the deal, when it appeared he should have had every ability to do so.”

Out of work, Porter and his wife declared bankruptcy little more than two months later. When the Porters lost their condominium in the bankruptcy proceedings, the MTA lost the $250,000 that it had invested in the property. That sum came from the county’s transit sales tax, a disproportionate share of which is paid by the poor.

The Porters’ bankruptcy filing listed many unpaid debts, including: $95,200 owed to the IRS and Franchise Tax Board, $21,500 to the Los Angeles County tax collector, $13,100 on two credit cards, and $3,000 on accounts at Saks Fifth Avenue and Nieman Marcus.

Porter, who had made more than $125,000 a year, unsuccessfully challenged his firing. He later sued the MTA for wrongful termination, but never served the agency with the case. Instead, he filed a damage claim in March that was quickly rejected by MTA attorneys.

A veteran transit finance official who received an MBA from Harvard, Porter now lives in Marietta, Ga. He is no longer involved with a transit agency.

In an interview, Porter said he does not believe that his personal financial situation should have had any effect on his professional role as treasurer of the nation’s second-largest transit operator.

“Clearly, I and the MTA disagree on that matter,” Porter said. “I’m not prepared to discuss the details of the firing at this point.”

Porter did acknowledge that he had financial problems and was in default on the condominium’s mortgage when he was fired. “I found myself sitting on a piece of property which had depreciated really drastically.”

When the condominium was financed in 1990, Porter said, the second mortgage included a so-called bullet payment due in five years. Many of the bond deals Porter helped structure for the MTA contain bullet payments. Because of the decline in real estate prices, Porter said, he could not make that payment or refinance the property.

But a search of public records by The Times found that Porter’s financial troubles began years earlier, while he was deputy executive director for finance and administration at the transportation commission.

Porter had been recruited by the commission’s executive director, Neil Peterson, who offered low-cost mortgages and “shared equity” investments to assist top officials in dealing with high housing costs in Los Angeles.

MTA records show that Porter bought the $490,000 condominium in October 1990 without making any contribution to the shared investment in the property.

The commission invested $250,000 and Porter took out $240,000 in a first and a second mortgage, according to documents in the county registrar-recorder’s office.

Porter said he did “put cash into the financing,” but would not discuss any specifics. “I’m not going to comment on it,” he said.

Although the commission had a 50.5% ownership interest in the property, no deed showing that majority stake was recorded until March 1993, less than a month before the commission merged into the newly established MTA.

By that point, public records show that the county had found Porter delinquent on his property taxes. In July 1993, the state Franchise Tax Board filed a $27,852 lien for state taxes, penalties and interest dating back to 1990.

The IRS would follow in July 1995, recording $44,634 in liens against Porter for unpaid taxes during the period from 1990 through 1992. Another $54,514 IRS lien was recorded in June 1996 for unpaid taxes in 1993 and 1994.

Porter refused to discuss any aspect of his long-standing tax problems.

But even as federal and state authorities pursued him for his unpaid taxes and as his employers’ concern mounted about their investment being placed at risk, Porter was allowed by his superiors to go on making the bond deals that have left the MTA struggling with an enormous burden of debt.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Leslie V. Porter: A Career at the MTA

While playing a key role in issuing $2 billion in long-term debt, including refinancing, as a top official of the MTA and one of its predecessors, Porter had increasing difficulty managing his own financial affairs. He failed to pay property taxes, owed substantial amounts of state and federal income taxes, and ultimately defaulted on his mortgage. After being fired as treasurer of the MTA, he declared bankruptcy.

Positions Held

Deputy Director, Los Angeles County Transportation Commission: 1990-1993

Treasurer, MTA: 1993-1996

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1990: Buys Beverly Hills condominium; MTA invests $250,000

Beginning 1991: Fails to pay property taxes

July 1993: State files income tax lien

July 1995: IRS files income tax liens

November 1996: Defaults on mortgage

December 1996: Fired by MTA

March 1997: Declares bankruptcy

June 1997: MTA loses $250,000 investment