EIDC May Pay Some of Cluff’s Legal Fees

Negotiators for the Entertainment Industry Development Corp. have proposed paying up to $200,000 in future legal fees for its embattled president, Cody Cluff, who is under investigation for alleged misuse of funds and perjury, according to a draft agreement obtained by The Times.

The package would total $300,000, including six months’ salary at about $100,000, according to the document.

Under the proposal, Cluff would be required to fully cooperate with EIDC officials, including consultants who were recently hired to conduct a management audit of the film-permit agency. The proposal includes mutual agreements that Cluff and the EIDC would not sue each other.

The package has been under discussion between EIDC consultant Keith Comrie and Cluff or his representatives since Nov. 22, when the agency’s executive committee put Cluff on an administrative leave with pay, at least until the conclusion of an audit, which is expected to take about four months.

Sources close to the negotiations between EIDC and Cluff over the severance package said details contained in the draft were considered by members of the executive committee Monday during a closed session. In attendance were Los Angeles County Supervisor Zev Yaroslavsky, Los Angeles City Councilwoman Wendy Greuel and a representative of Mayor James K. Hahn, among others.

Action was postponed because some members wanted to ensure that the proposal firmly requires Cluff to reimburse EIDC if he is convicted of any crimes, according to sources close to the negotiations.

Several sources said members feel they are abiding by state law and the requirements of EIDC’s bylaws to provide funds to Cluff to defend himself if he is accused of criminal or civil violations for carrying out his responsibilities as president of the corporation.

The EIDC’s bylaws require that any employee “shall be indemnified against expenses actually and reasonably incurred” for legal costs if they are successful in any “civil, criminal, administrative or investigative proceeding” brought against them because of their work for the agency.

The draft agreement also cites a specific section in California’s corporations code that gives corporations “the power to indemnify” any of its employees for legal actions against them that arise out their work.

In September, Los Angeles County Dist. Atty. Steve Cooley sent letters to EIDC board members that some of them interpreted as warnings that providing money for Cluff’s defense could be illegal.

Whatever the legal requirements, sources say, executive committee members recognize that any severance package with Cluff is likely to ignite public criticism.

Committee members refused to reveal any details about the discussions Monday, and Cluff declined to comment.

When the severance package, which is titled the “Resignation, Severance and Release Agreement,” is concluded, it will end the seven-year tenure of the man who founded the agency at the behest of Los Angeles city and county governments. The City Council and the county Board of Supervisors signed contracts putting the EIDC in charge of streamlining and combining their cumbersome processes for issuing permits to production companies and to promote the county to the entertainment industry.

During his tenure, the EIDC’s board and executive committee gave Cluff virtual carte blanche to run the agency and spend its money as he saw fit.

Over the years, Cluff has greatly expanded the EIDC’s duties, taking over film-coordination activities from other government entities such as the Los Angeles Unified School District, and increasing the agency’s staff from eight to 45, plus 30 part-timers.

Cluff’s expenditures are what caught the eye of criminal investigators for the Los Angeles County district attorney’s office.

In a search warrant affidavit earlier this year, they alleged Cluff had misused hundreds of thousands of dollars in EIDC funds for trips to resort areas, expensive wine and exorbitant tips, and for campaign contributions to elected officials, many of whom serve on the EIDC Board of Directors.

For months after the investigation became public in September, Cluff continued working for EIDC and getting advice from its lawyers. But when news stories emerged revealing that Cluff had directed nearly $47,000 to the Pittsburgh Film Office and a national film organization run by a close friend of his, Hahn, Yaroslavsky and Greuel called on him to take a paid leave.

When the committee voted 8 to 2 to force him to leave, Cluff resisted, prompting the three weeks of negotiations that continued Monday.