Dodgers owner Frank McCourt repaid funds to a team charity

Dodgers owner Frank McCourt repaid more than $100,000 to a team charity after the state attorney general found the funds had been used primarily for the benefit of the club’s former chief executive, Jamie McCourt.

In a letter to the Dodgers Dream Foundation dated March 3, the attorney general’s office said the foundation in 2008 had authorized a consulting contract worth $122,352 in violation of state requirements governing charity funds. The money was ordered repaid to the charity, and foundation attorney William Choi said Frank McCourt complied.

The investigation cited the Dream Foundation for improper expenditures totaling $361,432 in 2007 and 2008, including a bonus payment of $239,080 to Dodgers executive Howard Sunkin that the team had already reimbursed to the charity. The foundation distributed $2,154,043 in charitable funds in those years, tax records show.

In 2008, the Dream Foundation retained Sanderson Strategies as a consultant, in a contract the attorney general found was “primarily for the benefit of a member of the board of directors.” The attorney general’s letter did not name the director in question or what services that person received. However, based on interviews and federal tax records for the foundation, the director could only be Jamie McCourt.

The 2009 Dream Foundation tax filing outlined the Sanderson contract and included the notation of a possible “excess benefit” for one of its directors. The director wasn’t identified, but the filing said that person resigned from the foundation board on April 10, 2010.

“Mrs. McCourt resigned as of that day,” Choi said. Frank McCourt is the charity’s sole remaining director, Choi said.

Jamie McCourt said neither she nor anyone on her behalf was interviewed by the attorney general’s office, according to her spokesman, Matthew Hiltzik. She declined to comment further.

Frank McCourt, through his spokesman, declined to comment. A spokesman for Atty. Gen. Kamala D. Harris said her office, as a policy, “does not confirm, deny or comment on investigations.”

Charles Steinberg, formerly the Dodgers’ executive vice president of marketing and public relations, executed the contract on behalf of the Dodgers, according to the attorney general.

Steinberg now works for the office of the commissioner of Major League Baseball, as senior advisor for public affairs. He declined to comment, citing a confidentiality clause in his employment agreement with the Dodgers that prevents him from discussing club affairs with the media.

Commissioner Bud Selig is aware of the charity matter but was not concerned about Steinberg’s role, according to Rob Manfred, MLB’s executive vice president.

“Whatever was going on with the Dodgers Dream Foundation was directed by either Frank or Jamie McCourt,” Manfred said.

Sanderson was retained to “provide strategic counsel and consulting to assist in the positioning and direction of the Dodgers Dream Foundation,” according to the attorney general. Len Sanderson, president of Sanderson Strategies, said he had done similar work for about a dozen other professional sports teams. He also said the attorney general never contacted him.

“If the AG would have asked me, I would have told them what we did,” Sanderson said. “I’m proud of it.”

Sanderson said his primary assignment was to shape the foundation’s mission by surveying how foundations related to other professional sports teams operated and by determining how the Dodgers’ could distinguish itself in the community. His plan included several “cornerstone programs,” and listed the goals and objectives for each.

Sanderson said his plan included efforts to raise Jamie McCourt’s profile as chairwoman of the foundation. Those efforts, according to the correspondence, included a successful push to get Selig to launch a fan affordability initiative, the pursuit of a book project focused on Jamie McCourt and even the exploration of whether she could work with the Obama administration on community projects.

“All of that helps the charitable foundation,” Sanderson said. “You’re trying to establish the fact that the foundation and ownership cares. The best way to do that is by branding the product, and putting a face behind the brand.”

Sanderson acknowledged talk of Jamie McCourt running for public office but dismissed it as “frivolous conversation.”

In an email dated Nov. 27, 2008, Sanderson wrote to Jamie McCourt: “Madame President — Hope you’re having a great Thanksgiving, complete with your very own Charles Steinberg. Enjoy the turkey. In eight years you can be pardoning one on the White House lawn. Let me know when you want to talk tomorrow.”

Jamie McCourt’s response: “And to you!!! How’s 11 AM my time? As for the turkeys, it would be hard to choose if sports writers count!!”

The attorney general launched an investigation into the Dream Foundation last year, after the New York Times reported the payment to Sunkin — the $239,080 bonus part of $401,395 in total compensation.

The amount paid to Sanderson was repaid to the Dream Foundation by Frank McCourt “from his personal account,” Choi said. He added that there was “nothing to indicate that Mr. McCourt received any personal benefit” from Sanderson’s work.

“This was the final issue that was outstanding with the investigation, so he made the decision to write the check,” Choi said of Frank McCourt. The attorney general’s letter did not say what would happen if the money was not repaid.

The Dodgers repaid the Sunkin bonus, according to three people with knowledge of the situation who declined to be identified because of the sensitive circumstances.

The Dream Foundation is the Dodgers’ second-largest but most active charity. Founded in 1998, it builds youth baseball fields and provides college scholarships for minority students. The charity had assets of $984,193 at the end of 2009, the most recent year for which tax records were available.

The team’s largest charity by current assets is ThinkCure, which raises money for cancer research.

ThinkCure, which had $1.7 million in assets at the end of 2009, paid its former president, Janet Clayton, $456,655 in combined compensation — including $432,466 in salary — in 2008 and 2009, according to its federal tax records.

Clayton’s compensation “definitely seems excessive for a charity of this size,” said Sandra Miniutti, vice president of Charity Navigation, which tracks executive compensation at more than 5,000 charities. Miniutti said most charities of similar size would pay their top officer in the $100,000 range.

Clayton said her compensation came not from donors but from $1 million that the McCourts provided as seed money to ThinkCure to cover salaries and other administrative costs.

“In my case, the McCourts as benefactors were paying my salary, which means that the cost of my compensation to the [charity’s] donors was not excessive, it was zero,” said Clayton, who was a senior editor at The Times before leaving to join ThinkCure.

ThinkCure took in contributions and grants totaling $2.97 million in 2008, its first full year of operation, according to its 2008 federal tax return. That sum included the initial $1-million endowment from the McCourts, said Clayton, whose total compensation that year was $203,375.

In 2009, the charity announced that it paid out its first research grants — totaling $600,000, a significant total for a foundation of its size — to City of Hope and Children’s Hospital Los Angeles.

That same year, Clayton’s compensation climbed to $253,280 while the contributions and grants brought in by ThinkCure dropped to $571,880, according to the tax records. Clayton left ThinkCure in March of this year.

ThinkCure paid out an additional $600,000 in grants to City of Hope and Children’s Hospital Los Angeles last year, Clayton said. The charity’s 2010 federal tax forms were not yet publicly available.

james.peltz@latimes.com

bill.shaikin@latimes.com