Film Agency Donations Questioned

A seven-year-old letter from the state’s campaign finance agency raises questions about whether the organization that issues Hollywood film permits can contribute to political campaigns.

Prosecutors from the Los Angeles County district attorney’s office have cited the letter in their probe of possible misuse of public funds by the Entertainment Industry Development Corp. The corporation has contributed nearly $200,000 in four years to various political committees, including more than a dozen run by elected officials who sit on its board.

In a letter issued at the agency’s conception in 1995, an attorney for the Fair Political Practices Commission concluded that the film office is a “local government agency.” State law forbids officers of local agencies from contributing to political campaigns.

The agency was formed by the Los Angeles City Council and county Board of Supervisors to provide one-stop shopping for film permits and to keep movie production in Los Angeles. In subsequent years, a dispute has arisen on whether the film office is a public agency responsible to taxpayers or a private corporation designed to wine and dine Hollywood royalty and contribute to industry-friendly politicians.

County prosecutors cited the commission’s letter in their affidavit for search warrants that were served last week at the agency’s Hollywood headquarters, as well as the San Dimas home of its president, Cody Cluff. Court papers describe an investigation into the misuse of public funds by the agency through its lavish spending on parties and meals and its generous political contributions. No charges have been filed.

On Monday, attorneys for the film office repeated their contention that the agency is a private, nonprofit corporation working under contract with the city and county. They said the commission’s letter--written shortly before the agency was incorporated--is moot and that the film office is entitled to spend money as it sees fit.

“The FPPC is not the Legislature. It’s an administrative agency with no rule-making authority, and its opinion of its counsel is not binding,” said agency lawyer George Newhouse. “We’re not aware of any rule, law or regulation which would preclude EIDC from making political contributions or spending money to promote the film industry in Los Angeles.”

Newhouse and other attorneys argue that the entity operates as a private contractor to facilitate film production. The legal power to issue film permits that close streets for movie crews still resides with the city and county governments, the attorneys argue, even though almost all permits are issued through the agency. The organization’s $3-million annual budget comes from a portion of the permit fees, the rest of which is passed on to the city and county. “It’s just an advisory letter, [from] Joe Blow over there,” said Tom Brown, an attorney for Cluff. “If and when the time comes for us to litigate it, I believe there’s enough law to determine otherwise.”

The Los Angeles city attorney’s office, then headed by Mayor James K. Hahn, solicited the letter from the Fair Political Practices Commission in the spring of 1995 to determine whether the state’s conflict-of-interest laws applied to the film office. In response, a commission attorney wrote that the corporation was a public agency and its officials were subject to the political reform act. In affidavits supporting last week’s searches, county prosecutors used the letter to show that the film office is a public entity that must comply with state laws. And in an interview last week, Dist. Atty. Steve Cooley warned the corporation against using public funds to pay for private defense attorneys.

Former Los Angeles Mayor Richard Riordan, who spearheaded the creation of the film office, said in an interview Monday that he always believed the agency was public and that he was troubled by its campaign contributions.

Though as mayor of Los Angeles Riordan sat on the corporation’s board--along with the members of the City Council and Board of Supervisors--agency officials have said that politicians had a hands-off approach to the agency and that most of its decisions were made by its executives. Riordan said he did not find out about the agency’s political contributions until late in his City Hall tenure.

“Clearly, I never intended it to go there, and I thought when I first heard of it that it didn’t pass the smell test,” said Riordan, who has since had a falling-out with Cluff. Riordan said that, as a result of his misgivings, he directed his staff to remove him from the agency’s board. “I don’t want to be on a board if I don’t have any control,” he said.

As a result of Riordan’s complaints, the film office began restricting its contributions to ballot initiatives rather than individual candidates, although it still hosts fund-raisers for politicians and individual agency employees continue to donate money to their campaigns.

The controversy over the political contributions continued Monday as proponents of Hollywood and San Fernando Valley secession gathered in front of the corporation’s Hollywood Boulevard offices to demand additional state and federal investigations of the group’s $10,000 contribution to the anti-secession campaign led by Hahn, a film office board member.

“The EIDC was set up to facilitate the film permit process in the city, not to funnel campaign contributions to elected officials who sit on its board,” said Carlos Ferreyra of the Valley Independence Committee, which also called for a county takeover of the agency.

Hahn solicited the contribution but sees nothing wrong with it, according to Kam Kuwata, the political strategist for the mayor’s anti-secession effort. “Nothing wrong took place in terms of the contributions,” Kuwata said. “It’s never surprising when people come out against these [secession] proposals because they are bad ideas. That is what the EIDC determined.”

Still, some politicians Monday were reconsidering whether they should have accepted film office money in light of the commission’s letter.

City Controller Laura Chick, who received $1,000 from the corporation when she was a city councilwoman and on its board, said she might have refused the donation had she known about the letter.

“It is very clear to me that there are some questions about governance and management of spending, and obviously this needs a good hard look,” Chick said.

State Sen. Sheila Kuehl (D-Santa Monica), whose campaign committee received $10,000 from the agency, also said she was unaware of the letter. As the sponsor of a bill to keep movie filming in California, Kuehl said she had not been surprised to receive film office funds. “I assumed they were more of a private business,” she said.

Sen. Richard Alarcon (D-Sylmar), whose political committee received $8,500 from the organization, some of it while he sat on its board as a city councilman, said he believed there was nothing wrong with the contribution.

Alarcon, who solicited the money, said Cluff had assured him that the donation was legal. “I took the contributions as their effort to ensure elected officials were elected to promote the benefits of the entertainment industry,” he said, adding that he still believes the agency is private.

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Times staff writer Steve Berry contributed to this report.