Grand jury testimony in the embezzlement case against John Drayman — unsealed Friday — painted a picture of lax oversight of the former city councilman’s collection and accounting of proceeds from the Montrose Harvest Market, an operation that consistently lost money until more stringent controls were implemented.
During his years of running the Sunday market, from which Drayman allegedly embezzled at least $304,000, the Montrose Shopping Park Assn. largely took a hands-off approach to monitoring income, taking at face value his explanations for lower-than-expected income.
Even as he delayed turning in thousands of dollars collected from vendors — at one point by up to 11 months — the board of directors declined to push Drayman for answers beyond a few tepid requests, according to the testimony.
That all changed when a new Montrose Shopping Park Assn. treasurer — Dale Dawson, who now serves as the association’s executive director— started taking a hard look at the market’s revenue statements, and demanded Drayman hand over the vendor payments, witnesses testified.
The hard line approach allegedly triggered a series of fraudulent moves and other desperate attempts by Drayman to get nearly a year’s worth of revenue owed to the association, the testimony stated.
Drayman was indicted earlier this month on 28 counts, including embezzlement, perjury, fraud, money laundering and other charges.
For years, Drayman was the only one who consistently counted all the money made at the weekly Montrose Harvest Market, according to witness testimony.
He would then compare the money to merchant sales receipts at his home. He then handed the proceeds over to the treasurer of the Montrose Shopping Park Assn.
But according to the hundreds of pages of grand jury testimony, not all the money he collected was turned over to the association. He also took several weeks to turn the money over and lied about market revenues, according to the grand jury testimony leading up to his May 8 indictment.
Weeks turned into months and by March 2011, he was allegedly nearly one year behind. It wasn’t until then that shopping park board members started inquiring more often about the money. They had asked Drayman to pick up the pace in 2008 and 2009, but they told the grand jury that he said it took several weeks to reconcile the proceeds.
They also knew he was busy, particularly during his reelection bid in April.
“We trusted him. We weren’t suspecting criminal activity, just simply a work overload perhaps, or a certain arrogance about what he was expected to do, but no one was thinking it was criminal activity,” Dawson told the grand jury last month.
But that perception started to change as the board instituted new reporting oversight.
On April 17, the association’s former treasurer, Maureen Palacios, collected the market fees — 10% from the food vendors and a flat fee of $35 from collectibles and antique dealers. She recorded collecting more than $3,000 — far more than the less than $1,000 per market typically reported by Drayman.
“I was flabbergasted,” Palacios told the jurors.
She called her husband to tell him the news. He told her to count the money again.
The market had been running a roughly $30,000 annual deficit, forcing the association to cover the debt with mandatory assessments paid by local merchants, about $15,000 in annual city redevelopment funds and other money, according to the testimony.
Four days before Palacios collected the money, the board had asked Drayman to turn in all the money he had left over.
Board members testified Drayman become emotional during the meeting and started to cry, asking for a few more weeks to finish the accounting. He allegedly told them the money was in a safe in his house.
The board kept the meeting private because they didn’t want news of their inquiry to spread due to Drayman’s standing in the community, former Board President Alyce Russell said during her testimony.
Later, after a police investigation began in May 2011, Drayman told police the safe didn’t exist.
“He felt it would look bad if he told them that it was just laying around his house,” Glendale Police Det. Esperanza Fernandez told the the jury.
A few weeks passed and Drayman allegedly didn’t turn in all the money as requested, prompting the board to send him a demand letter for the funds. In May, he gave Russell an envelope with two cashier’s checks from his personal bank account for about $29,000 while she was at her restaurant, Oceanview Bar & Grill, according to her testimony.
He had dropped off $4,910 at Dawson’s store on April 19, according to testimony.
Fernandez testified that Drayman got the $30,000 via a loan from the parents of his domestic partner, Jeff Decker, who also helped collect money at the market.
After receiving the money, the board contacted police.
Michael Kraut, Drayman’s attorney, said in a phone interview Monday that Drayman got the loan because the market money had been stolen in a house burglary.
In January 2010, Glendale Police Officer Tracy Lowrey visited Drayman’s rented house on Cedar Street to assess whether a break-in occurred, Lowrey told the jury. Drayman reported nothing was missing but his dog. Decker said during testimony he had not heard of the missing $30,000 until Drayman said he needed the loan.
“So many different aspects of John Drayman’s lies involved lies and efforts to conceal the truth and efforts to steal money from other people,” Los Angeles County Deputy District Atty. Susan Schwartz told the grand jury.
Kraut said Drayman didn’t notice the money went missing until after Lowrey had left.
“Public officials were made aware that the money had been in fact stolen in the original burglary,” Kraut said.
“I believe in the end John will be exonerated for this,” Kraut said. "John Drayman will still have a character assassination against him no matter how innocent the jury finds him."
Note: This is the first in a series of articles examining the grand jury testimony.