2 Hahn Events Test Ethics Law

Los Angeles Mayor James K. Hahn was just getting his reelection campaign started last summer when he went to suburban Rolling Hills to raise money.

At an estate overlooking the Pacific, executives with companies that did business at the nearby Port of Los Angeles -- including a few that were in the middle of negotiating new leases there -- paid $1,000 to eat a catered poolside dinner and chat with the mayor.

And there to welcome them was Nick Tonsich, the fundraiser’s co-host and president of the harbor commission, which oversees millions of dollars’ worth of contracts and leases at the sprawling port.

It was not the only time one of Hahn’s commissioners helped raise money from companies that depended on the commissioner to get city contracts.

Nine months earlier, Ted Stein, then president of the airport commission, had opened his Encino mansion to support Hahn’s campaign against San Fernando Valley secession and played host to firms that had recently won contracts from his commission.

Tonsich and Stein -- two of Hahn’s most powerful appointed commissioners until Stein resigned in April amid controversy over his fundraising -- together helped raise at least $80,000 from companies that had recently come before their commissions.

Hahn’s fundraising has come under increasing scrutiny in recent months as federal and local prosecutors investigate potential links between campaign contributions and city contracts, particularly at the harbor and airport. It is not known what specific acts prosecutors are investigating.

Civic leaders tried to separate fundraising from city business when they wrote Los Angeles’ trailblazing ethics law 14 years ago. The law states that officials shall not “solicit” from companies with recent or pending business before them.

Hahn maintains the two commissioners did not break the city ethics law because they did not specifically “solicit” donations.

“If someone has a fundraising event at their house, it doesn’t mean they are soliciting the contributions,” the mayor said. In a later interview, Hahn added, “Fundraising means asking somebody for money.”

But a review of contracts, campaign reports and commission minutes, as well as interviews with more than 45 donors and lobbyists, indicates that Tonsich and Stein played key roles in the mayor’s efforts to raise money from people with business at their commissions -- the very scenario that the law was written to prevent.

Tonsich paid for the invitations to his fundraiser, put his name on them as a co-host and directed donors to send checks to his San Pedro law office. Stein opened up his home, paid for cocktails for guests and introduced the mayor when Hahn spoke to donors assembled in the backyard.

Tonsich played host to at least five Hahn donors who had either recently won harbor contracts or were still in negotiations to lease property at the port. Stein played host to at least four donors who had recently won contracts or leases from the airport commission.

And both men took advantage of a fundraising environment in which at least some companies that depended on the commissioners for contracts and leases believed that making a donation was part of doing business with the city of Los Angeles.

Robert Curry, president of California Cartage Co., who paid $1,000 to attend Tonsich’s fundraiser, was among several businessmen who said they felt they should not turn down an invitation to a mayoral fundraiser.

“I don’t think the mayor has done anything for or against me,” said Curry, who said he doesn’t pay attention to local politics. “I heard everybody in the industry is going to be there, so I thought I would be conspicuous by my absence. It seemed like the smart thing to do.”

It was scandal over mixing personal business with official duties in the late years of Mayor Tom Bradley’s administration that prompted Los Angeles voters to adopt tougher campaign finance laws in 1990.

The law’s authors wanted to prevent companies from winning city contracts by making political contributions.

But they also meant to eliminate the possibility that contractors would feel they could not compete for city business unless they contributed, said Geoffrey Cowan, now dean of the USC Annenberg School for Communication, who chaired the special commission that wrote the laws.

Their solution was to restrict the fundraising activities of city commissioners, the citizen volunteers appointed by the mayor to oversee city departments.

The ethics law states that a commissioner shall not “solicit, direct or receive any contribution” for city campaigns from anyone with an “administrative action” pending before him or her or anyone who has had an “administrative action” before him or her in the preceding 12 months.

Violations can be prosecuted by the city attorney as misdemeanors.

The law does not explicitly define what it means to “solicit, direct or receive” a contribution, however. In defending the fundraisers, Hahn and Tonsich, both lawyers, offered their own, narrow definitions of what does and does not constitute a solicitation.

“The key is whether or not I invited them,” Tonsich said. “I didn’t solicit any tenants to attend that function.” He declined to say who did invite the companies to the fundraiser he co-hosted with a longtime friend.

The invitation asked donors to “join Nick Tonsich & John Blazevich for an evening of dining and entertainment in support of Mayor Jim Hahn.” Donors were also instructed on the invitation to RSVP to Tonsich’s law firm and to send their $1,000 checks there.

Tonsich declined to answer questions about whether he received any of the checks from port tenants.

Stein did not respond to repeated requests to discuss the fundraiser at his home.

Hahn, who was city attorney when the ethics laws were enacted, argued that Stein was not fundraising, even though he hosted a fundraising event.

“You know, I let people have fundraisers at the Getty House,” the mayor said, referring to the city-owned ceremonial residence where he does not live. “It’s my house, as the mayor. I’m the host. Am I fundraising for those organizations? No. I’m letting someone use my house for a fundraiser.”

Three people who helped write the ethics law said, however, that they never envisioned that the law would allow commissioners to host fundraisers where businesses that depended on them for contracts would be asked to contribute.

“The point of the law is not to split hairs about what you can get around,” said Xandra Kayden, a UCLA political scientist who worked on the law. “The point is to assure residents that there is honesty and integrity in government.”

In March, the City Council banned commissioners from raising funds for local candidates or ballot measures and specifically defined the use of a commissioner’s home as “prohibited fundraising.”

LeeAnn Pelham, executive director of the City Ethics Commission, which regulates local campaign finance, said she could not comment on specific cases. But she said that, even under the old law, if a commissioner had asked if he could host a fundraiser attended by potential donors with pending or recent business before his commission, the Ethics Commission would almost certainly have advised against it.

Neither Tonsich nor Stein asked, according to the commission.

In the summer of 2003, Tonsich simply went ahead and co-hosted a fundraiser for dozens of donors at a friend’s Rolling Hills home.

Tonsich paid $1,000 for the invitations, while family members paid $2,709 for staff, entertainment and food at the event, campaign finance records show.

An attorney and former Long Beach prosecutor from a family that goes back generations in San Pedro, Tonsich has long supported both Hahn and Hahn’s sister Janice, who represents San Pedro on the Los Angeles City Council. Both Hahns live in San Pedro.

Shortly after Hahn won the 2001 election, the new mayor appointed Tonsich to the harbor commission.

Two years later, Tonsich was among the first supporters to host a fundraiser for Hahn’s 2005 reelection campaign.

Campaign finance reports, harbor commission minutes and interviews with guests indicate that companies and executives represented at the fundraiser on June 27, 2003, contributed at least $10,000 while they were either in negotiations with the port or had recently won business from Tonsich’s commission. Contributions to mayoral campaigns are limited to $1,000 per donor.

* Four executives with P&O; Nedlloyd, a London-based shipping giant that was negotiating with Tonsich to lease land at the harbor to load and unload ships, gave $4,000.

* Yusen Terminals, which was negotiating for the same land, gave $1,000.

* Two executives of Trans Pacific Container Service Corp., which was negotiating to extend its lease for land to handle cargo at the port, gave $2,000.

* The president of California Cartage Co., a Long Beach trucking firm that a month before the fundraiser had won an extension from Tonsich’s harbor commission to use a port warehouse, gave $1,000.

* SSA Pacific Terminals, whose agreement to handle cargo at the port was extended by the harbor commission five months earlier, gave $1,000. Four executives with SSA’s parent company gave $1,250.

P&O; Nedlloyd, Yusen and Trans Pacific are still seeking leases at the port.

Nine months before Tonsich’s event, Stein hosted his fundraiser, on Sept. 9, 2002, to help the mayor fight the proposed secession of the San Fernando Valley.

Like Tonsich, Stein had been a leading Hahn supporter during the 2001 mayoral campaign.

After the election, Hahn appointed the influential lawyer and developer to the airport commission. The mayor also named Stein’s wife to a paid position on the Public Works Board and hired Stein’s daughter to work in the mayor’s office.

Stein, a year after his appointment, helped bring airport contractors together with city power brokers at his Tudor-style mansion in the Encino hills.

“You might as well have been at the airport that night,” said an executive with one contractor who attended Stein’s fundraiser for the mayor’s L.A. United campaign.

After valets parked cars, several dozen guests gathered on the back terrace and lawn overlooking the Valley and sipped cocktails from a bar that Stein paid $716.88 to help stock, according to campaign finance records.

Some guests chatted with Hahn’s deputy mayors, including one who oversaw the airport for the mayor, guests said.

Stein introduced the mayor, who spoke briefly to the assembled guests.

At least four guests represented companies that had been awarded contracts or leases by Stein and his airport commission between four and nine months before the fundraiser, commission and campaign finance records show.

* Mercury Air Group, a major airport tenant that won a new lease to use airport land for its cargo and airfield refueling operations, gave $2,500. Joe Czyzyk, the company’s president, said Stein personally asked him to contribute.

* DMJM, a leading engineering firm that was awarded a $1.5-million contract extension for work on a Van Nuys Airport bus terminal, gave $40,000. Its parent company gave an additional $10,000.

* Soto & Sanchez, a family-owned company that was given space for two “I Love L.A.” gift shops at LAX as part of a lease awarded to concessionaire W.H. Smith, gave $12,500.

* Bechtel, another construction and engineering giant that was awarded a $1.7-million contract to study security upgrades at LAX, gave $5,000.

Unlike the mayoral campaign, there were no limits on the size of contributions during the secession campaign.

Campaign finance reports show that 15 other companies with recent or pending business before Tonsich and Stein or the companies’ representatives contributed around the time of the two fundraisers:

Five airport contractors sent checks to the anti-secession campaign within a week of the Stein fundraiser. Representatives of 10 harbor tenants and contractors made donations that the Hahn campaign recorded on June 30, 2003, the same day the campaign recorded donations from guests at Tonsich’s fundraiser.

Whether those companies were invited to the events is unknown. Hahn, who has called for comprehensive new campaign finance reforms, declined to provide the invitation list or the invitation to Stein’s fundraiser, pointing out that there is no legal requirement that he make them public.

Tonsich did not respond to a request for a list of those who were invited to his fundraiser.

The firms that made contributions either did not return calls, declined to discuss their donations or said their records were unclear.

Officials with the airport and harbor contractors who attended Tonsich’s and Stein’s fundraisers said their donations were not connected to their recent business before the commissions.

Bob Waters, a spokesman for SSA Pacific Terminals, said his company wanted to support Hahn because his administration had “done such a good job with economic development.”

And DMJM spokeswoman Alexandra Spencer said her company supported the anti-secession campaign because it did not want Los Angeles to fragment. “We are very proactive in supporting issues we feel are in the best interest of our community and our employees,” she said.

But some of the guests at the fundraisers said they felt there was a business reason to attend.

Manuel Soto, president of airport concessionaire Soto & Sanchez, said he had already decided to contribute to the anti-secession campaign when he got the invitation to Stein’s house.

“Part of doing business is being involved in the city,” said Soto, adding that his firm had supported political campaigns for years.

But Soto said he also saw the Stein fundraiser as an opportunity to “be seen” and to get to know the airport commission president better.

“When politicians are voting on something, you want them to know what your issues are. If you’re not involved, you don’t get called,” he said. “You know if you’re not there, your competition will be.”

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Contractors and donors

Companies that had pending or recent business at the airport or harbor when they attended fundraisers hosted by Ted Stein, then president of the airport commission, or Nick Tonsich, president of the harbor commission:

Fundraiser hosted by Stein for L.A. United (9/9/02)

Date of Dates of Amounts Donors contract donations lease award Bechtel 4/16/02 9/11/02 $5,000 DMJM and parent 9/4/02 $2,500 company AECOM 3/5/02 9/18/02 $47,500 Mercury Air Group 1/8/02 9/4/02 $2,500 Soto & Sanchez 5/7/02 9/18/02 $10,000 10/1/02 $2,500

**

Fundraiser hosted by Tonsich for Hahn for Mayor 2005 (6/27/03)

Donors Date of Dates of Amounts contract donations lease award California Cartage Co. executive* 5/14/03 6/30/03 $1,000 Four P&O; Nedlloyd executives** Pending at 6/30/03 $4,000 time of event SSA Pacific Terms and four execs of parent co SSA Marine+ 2/11/03 6/30/03 $2,250 Two Trans Pacific Container Service Pending 6/30/03 $2,000 Corp. execs++ at time of event Yusen Terminals Inc. Pending 6/30/03 $1,000 at time of event

* Donation made by Robert Curry, president. ** Donations made by Michael White, president; Robert Agresti, CFO; Alan Hicks, vice president; William Knight, senior vice president. + Donations made by Joanne I. Fitz, assistant vice president; Donald Kee, regional vice president; Christopher Minus, assistant vice president; Robert Wilder, assistant vice president. ++ Donations made by Scott Axelson, terminal manager, and Frank Pisano, regional vice president.

Sources: City Ethics Commission; Los Angeles World Airports; Port of Los Angeles