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Former Valley candidate and aide fined for violations tied to campaign funds

Former Valley candidate and aide fined for violations tied to campaign funds
The City Ethics Commission fined a former City Council candidate and his treasurer for using laundered donations and misspending the money. Above, Los Angeles City Hall. (Al Seib / Los Angeles Times)

A former candidate for Los Angeles City Council and his campaign treasurer have been fined more than $38,000 for using laundered donations to get taxpayer money and misspending such dollars on personal expenses.

The Los Angeles City Ethics Commission voted unanimously Tuesday to fine J. Roy Garcia, who ran unsuccessfully in 2013 for a council seat in the San Fernando Valley, and his campaign treasurer Hardy Henriquez. Councilwoman Nury Martinez ultimately won the seat that year.

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Garcia, who runs a flooring business, turned in paperwork to get “matching funds” from the city — taxpayer funds that are supposed to help level the playing field for grassroots candidates by matching small donations from local residents.

At the time, city staffers questioned “the authenticity” of some of the donations, but Garcia and his campaign staff assured them that the contributions were legitimate, according to a city report.

However, Garcia later admitted that he had spoken to donors who were eager to give him the maximum amount allowed, and encouraged three of them to divide up their donations and give them in the name of other people.

Doing so would help him get more matching funds, since the money would appear to be coming from more donors. But disguising the true source of a campaign contribution by making it in the name of another person is a form of money laundering and violates the City Charter.

Garcia received nearly $54,000 in taxpayer money while running for the seat, which was being vacated by former Councilman Tony Cardenas. Garcia, his campaign committee and his treasurer misspent more than $4,400 of that funding for purposes besides the campaign, according to city investigators. Among the improper spending was more than $1,000 for services tied to his flooring business and roughly $500 for tutoring for his son.

Ethics Commission staff recommended Garcia and Henriquez face the maximum possible fine — $38,371 — because the violations were “extremely serious” and “indicate an intent to conceal or deceive,” according to their report. Staffers also said they should be required to repay $2,000 in public funds that Garcia received as a result of the laundered donations.

Garcia and Henriquez agreed to the penalty but asked to pay the $40,000 over roughly a year, according to the staff report. Neither spoke at the meeting Tuesday. The two are jointly responsible for paying the total amount of the fine, according to commission officials.

Garcia, who did not immediately respond to phone calls seeking comment Tuesday, is not the only San Fernando Valley politician to face scrutiny over matching funds.

More than three years ago, federal investigators questioned donors to Martinez about small donations of $5 and $10 that helped her qualify for matching funds in the 2015 election. Some of them told The Times they had not made contributions, even though city records listed them as having done so.

The Times also reported in September that at least three of Martinez's matching fund donors were summoned to a county grand jury last summer. A spokesman for Dist. Atty. Jackie Lacey said at the time that Lacey's office was reviewing complaints about Martinez but declined to provide details.

A spokesman for the district attorney said Tuesday that the matter remained under review. Martinez had not heard from either the district attorney or the U.S. attorney’s office as of last week, according to an aide.

Times staff writer David Zahniser contributed to this report.

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