Beleaguered Film Chief Refuses to Leave Stage

The president of the embattled Entertainment Industry Development Corp. was placed on paid leave Friday by the film permitting agency’s executive committee, but he told his staff hours later he will defy the vote and refuse to step down.

Lawyers for the agency said that Cody Cluff, who is under investigation by county prosecutors for alleged misuse of funds, was acting on their advice.

Negotiations were continuing late Friday between the EIDC’s lawyers and Keith Comrie, a consultant to the agency recently hired at the directive of the executive committee.

The lawyers for the agency have contended that the executive committee, made up largely of city and county officials, did not have the power to take action against Cluff.

The reaction of Cluff and the EIDC’s attorneys to the 8-2 vote infuriated several committee members, including Los Angeles County Supervisor Zev Yaroslavsky, who vowed to launch an effort to terminate the EIDC’s authority to handle city and county government film permitting applications if Cluff defies the vote. Yaroslavsky said he will ask the county board to reconstitute the agency with new bylaws and leadership.

“This is the most preposterous thing I’ve ever seen in my 27 years in government,” said Yaroslavsky, who serves automatically on the EIDC’s board of directors along with the four other county supervisors and the Los Angeles City Council. “We find ourselves at war with our own lawyers, who have made a choice to side with Mr. Cluff despite the fact that the executive board of this agency has made a decision that we are legally empowered to make.”

If Cluff defies the committee, Yaroslavsky said, “my next step would be to seek ... to cancel the contract and reconstitute the organization under different bylaws, rules and different professional leadership.”

The supervisor said he would also ask the EIDC executive committee to consider whether the agency’s lawyers are providing adequate representation.

The agency was created in 1995 to streamline the city and county’s process for issuing permits for television and film productions and to promote Los Angeles County to the entertainment industry.

The Los Angeles district attorney’s office is investigating alleged misuse of public funds by Cluff and the agency. The criminal probe is focused in part on whether the EIDC improperly made political contributions to elected officials, including nearly 20 members of the EIDC’s board of directors and executive committee. Investigators are also looking at whether EIDC funds directed by Cluff to the Pittsburgh Film Office were misappropriated.

Hours after the vote Friday morning, the EIDC’s lawyers offered the executive committee a compromise to end the wrangling, said Supervisor Gloria Molina and City Council member Wendy Greuel, both committee members. They said they were told that Cluff would take a paid leave if the lawyers could continue to represent Cluff and the agency.

“They’re interested in compromise,” Molina said, “but they want to shake us down first.”

Asked about the comments, EIDC lawyer George Newhouse said, “Certainly, no one is trying to shake anyone down. We would like to work out something that gives Cody protection and also expresses the will of what the executive committee said today.”

In addition to putting Cluff on administrative leave, the executive committee unanimously approved a contract Friday with the accounting firm KPMG for $297,795 to conduct a financial and managerial audit of the agency. The audit is expected to take four months.

The rapidly developing events Friday began when the 11-member executive committee addressed a motion in closed session to order Cluff to take a paid leave of absence pending the outcome of the criminal probe. Sources said the motion called for Cluff to continue receiving his $200,000 annual salary package, minus his expense account.

The motion also allowed EIDC consultant Comrie the power to name an interim president of the EIDC, according to sources. Comrie, a former city administrative officer of Los Angeles, was recently hired to organize a management audit and review of the troubled agency.

Executive committee Chairman Frank Scherma, who heads a commercial production company, sought to prevent the vote on Cluff by ruling the motion out of order. The committee, on a 7-2 vote, then overruled Scherma, who once was granted a $340,000 contract to develop an online permitting system for the agency. The contract was cited in a search warrant affidavit executed by the district attorney’s office during the investigation. County Supervisors Yvonne Brathwaite Burke, Molina and Yaroslavsky and City Council members Jan Perry and Greuel voted in the majority, along with representatives of Mayor James K. Hahn and Councilman Alex Padilla.

County Supervisor Mike Antonovich cast the only other “no” vote.

Immediately after the meeting, Newhouse told reporters the committee’s actions were a violation of parliamentary rules and thus were “ineffective” because the chairman ruled the motion out of order.

Yaroslavsky disagreed, saying that under Robert’s Rules of Order, a ruling of the chairman is challengeable by any member of the board and that a majority can overrule him.

Friday morning, another EIDC attorney, Tom Brown, said Cluff would defy the committee’s decision and report to work Monday. Late Friday, however, Newhouse said, “Cody has decided not to come in on Monday but he’s only taking a vacation, not a leave of absence.”

A third lawyer representing the EIDC, Randy Hollman, said Scherma’s effort to stop the vote was appropriate because the “the executive committee does not have the authority” to remove Cluff.

The lawyers contend that the agency’s bylaws allow Cluff to be removed only by a vote of the full 49-member board, which usually meets once a year, in January.

Their statements drew angry responses from committee members, including Greuel, who said, “I think some of the behavior of our lawyers today was outrageous and it will be dealt with appropriately.

“The executive committee, under the bylaws, is the responsible body for this organization,” Greuel said. “It is very clear that the executive board has the authority to hire and fire attorneys and consultants.”

Late in the afternoon, EIDC lawyer Brown, who has represented Cluff since the criminal probe began in September, said he received an e-mail from Comrie instructing him not to perform any additional legal work for the EIDC until its next meeting, which is in two weeks. In all, five attorneys representing the EIDC showed up at Friday’s meeting.

Despite the flurry of activity, Cluff gathered his staff together in a 3 p.m. meeting at the EIDC’s Hollywood office and assured them he would be at work Monday. Later in the day, Newhouse issued his statement saying Cluff will actually go on vacation for a week beginning Monday.