Hawthorne Law on Dealings With City Contractors Urged

Prompted by inquiries into the mayor’s dealings with a city contractor, Hawthorne’s city manager said the municipality should have an ordinance restricting employees from engaging in personal transactions with firms doing business with the city.

The city does not have a law or policy prohibiting such relationships, Hawthorne City Manager Rick Prentice said.

“But I think we soon will have one ... a resolution to advise city employees not to deal with city contractors in that way,” Prentice said. One businessman, a city tow operator, said he has sold at least 100 vehicles to city workers in recent years.

Prentice spoke this week as investigators looked at how Mayor Larry Guidi’s family members obtained vehicles from the tow company and whether the transfers were below market prices. The contractor, S&W; Towing, faces 53 felony charges -- ranging from grand theft to extortion -- in a separate case related to vehicle sales that do not involve Guidi or other public officials, according to the Los Angeles County district attorney’s office.

“We’re reviewing whether there’s any criminal activity by any public officials down there,” said Dave Demerjian, the head deputy in charge of the district attorney’s public integrity division. To date, none has been found, Demerjian said.

John Germain, general manager of his family-owned tow company and a co-defendant in the criminal case, has pleaded not guilty. Both he and Guidi declined to comment on their dealings with each other.

Public records show that at least two cars owned by Guidi’s relatives came from Germain’s lot. A former S&W; employee also has told police that the mayor obtained at least two other vehicles under unusual circumstances.

In 1997, Guidi voted to award a five-year contract to Germain’s company to provide service to the Hawthorne Police Department, records show. In June 2000, the mayor voted to increase the company’s fees and extend the contract to 2010.

Germain said he is a longtime businessman who routinely does business with the Hawthorne community.

Germain estimated that in the last few years, his lot has sold at least 100 vehicles to city employees, including members of the Hawthorne Police Department.

Under state law, elected officials are prohibited from having a financial interest in any contract made by them in their official capacity.

They are also required to disclose gifts worth $50 or more and are prohibited from accepting gifts of more than $340 in a calendar year.

But experts say it is unclear whether there were any violations in Hawthorne. The fair market value of a tow yard vehicle can be difficult to gauge. The law also does not require disclosure of gifts to family members if the official obtains no direct benefit.

“The question is, did [the mayor] receive the gift? If I give his wife clothes, he wouldn’t have a report it. But if I give her a TV set ... it gets tricky,” said Bob Stern, president of the Center for Government Studies and co-author of California’s Political Reform Act.

“The more important question is what is he doing in exchange for the opportunity to buy those cars, or is he not doing anything? Is he being given something that an ordinary citizen is not given?”

Public records show that the mayor’s daughter, Michelle, is the registered owner of a 1991 Honda Accord acquired from S&W; Towing in December 1999 for about $5,100, according to Department of Motor Vehicles records. The car had 139,467 miles on the odometer.

According to the December 1999 Kelley Blue Book, a car of that make, model and mileage, in fairly good condition, has a retail value of $7,450 and a wholesale value of $5,000.

Guidi’s wife Marilyn and daughter Gabriella are the registered co-owners of a 1993 Honda Accord SE that had an odometer reading of 100,536 miles when they bought it in November 2000 from the mayor’s nephew, John Dragone, for about $1,800, according to the DMV.

Dragone, who did not return calls, had previously obtained the vehicle from Germain. A preliminary check of DMV records did not indicate the cost or date of that transfer.

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Times staff writer Anna Gorman contributed to this report.