Posted on 06/25/2006 4:43:54 PM PDT by calcowgirl
The City Ethics Commission has violated the law for a decade by failing to notify city agencies of sanctions against dozens of people who money-laundered tens of thousands of dollars to political candidates, the Daily News has learned.
The notification failure means leaders of city agencies - who award millions of dollars in contracts - may have been unaware that some bidders who laundered campaign funds should be ineligible for city business under the four-year-ban rule.
As investigations of possible City Hall corruption continue, the breach in ethics enforcement rules raises new questions about whether effective measures are in place. While it's not clear whether campaign law violators slipped through the breakdown of rules, critics suggested that the commission's failure is symptomatic of lax ethical attitudes at City Hall.
"That's wrong, stupid and going against all the work I've put in on trying to make the city's process of both awarding contracts and having those contracts be impeccable," said City Controller Laura Chick, who has crusaded for years for measures to clean up the contracting process.
LeeAnn Pelham, executive director of the Ethics Commission, said the notification rule "fell off the radar" but will be corrected soon.
"Sure we knew it was in the law. But you look at all the priority projects and some things fall to the bottom. We should be doing it."
Ethics Commission President Gil Garcetti and Commissioner Bill Boyarsky said they were not aware of the legal notification requirement in money-laundering cases.
"If it's the law, they should be notified ... We should follow the law," Boyarsky said.
But Pelham and others said the breach points out a system failure and indicates a broader evaluation of city ethics enforcement might be needed.
While city law requires notification in money-laundering cases, there are no such requirements for other ethical violations - including when a person is convicted of violating city lobbying laws and banned for a year, or found guilty of violating campaign finance or ethics laws and banned from city contracts and lobbying for four years.
City departments aren't even notified about people who are convicted or admit to defrauding the city, such as when former Fleishman-Hillard public-relations executives were found guilty of bilking the Department of Water and Power out of hundreds of thousands of dollars.
There also is no automatic provision barring a person convicted of defrauding the city from getting a new city contract.
City attorneys evaluating prospective contractors instead rely on a questionnaire that asks companies to disclose any such violations by top officials, which could be used in a hearing to determine whether to disqualify them from bidding.
City Administrative Officer Bill Fujioka acknowledged that the system doesn't necessarily flag all people who may have defrauded or violated city ethics laws, because they could be at a lower level in the company.
And he said that while a city database rates companies' performances, it doesn't track individuals who might move from business to business.
In the recent Fleishman-Hillard case, former executives Doug Dowie and John Stodder were convicted of conspiracy and wire fraud for bilking the DWP and other clients. Neither has any current city contracts.
But former executive Steve Sugerman, who pleaded guilty to defrauding the DWP and is scheduled to be sentenced next month, continues to do communications work for the massive Playa Vista development, which gets numerous city entitlements.
Sugerman's attorney Ellyn Garofalo said she would advise him not to discuss anything prior to his sentencing.
Playa Vista President Steve Soboroff, formerly a top adviser to Mayor Richard Riordan and a mayoral candidate, said he is convinced Sugerman can be trusted.
"With or without rules, people in the city have to make a determination who they do business or don't do business with," he said. "It's about good discretion."
Fleishman-Hillard's team under Dowie and Stodder has dispersed, many leaving several years ago.
Fred Muir, who said he quit Fleishman-Hillard in October 2003 over the padded DWP billings after he realized some of the "write-ups" were wrong, now is at Burson-Marsteller's Los Angeles office. He declined comment.
Former executives Josh Gertler, who Sugerman testified helped him inflate bills, and Eric Moses, who said his port bills were written up without his consent, are at Consensus Planning Group, which does subcontracting for companies with city contracts.
Gertler was on a witness list but never called. He declined comment.
Julie Gertler, the company's CEO, said the community outreach and education firm conforms with all city disclosure requirements.
She said the men's tenure at Fleishman-Hillard isn't a factor.
"(Clients) are thrilled to work with them."
Others who left the firm include Matt Middlebrook, a former Hahn deputy mayor who now works for developer Rick Caruso, and Shannon Murphy, another former Hahn deputy who now is a spokeswoman for Los Angeles Unified Superintendent Roy Romer.
Prosecutors, ethics experts and others said that in the case of those convicted of fraud or other crimes against the city, some disclosure mechanism should be in place to guide decision-makers.
"I can make a case for an individual who has paid their dues to society, and I can make a case for the whole community to be protected from people who by reputation potentially appear to be a risk," said Rushworth Kidder, president of The Institute for Global Ethics, a nonprofit, nonsectarian, nonpartisan organization in Camden, Maine.
"There are arguments on both sides, which is what makes this tough, nuanced and difficult. It's not a slam dunk."
But without some system, it becomes easier for people who have abused the city's trust to avoid detection by moving to new firms who do business with the city.
"They can find immunity within the envelope of the (new) organization that is doing business with City Hall, and that's inappropriate," said Michael Josephson, president of the Josephson Institute of Ethics, a Los Angeles nonpartisan, nonsectarian, public benefit organization.
Josephson said the city could, for example, take such steps as refusing building permits or other entitlements to Playa Vista if it employs Sugerman.
"You say to Playa Vista, `You hired someone who abused and misused, who defrauded the city. We won't deal with you.' The city does this all the time, `You want a permit, you do it our way.' Of course, Playa Vista would have to give in."
Josephson said the city would have to be sensitive to gradations of violations, noting the unfairness of a "blackballing system" in which everyone remotely connected to a scandal is forever professionally disabled.
But he said it might be appropriate to set up sanctions under which a company like Fleishman-Hillard might be barred for a period of time, and then be reinstated only after solid evidence of reforms.
Fleishman-Hillard paid nearly $6 million to settle city allegations of overbilling, cooperated with prosecutors and apologized to residents.
Others say such city efforts could impinge on individuals' constitutional rights.
"This is something for the criminal courts to deal with," said George Kieffer, former chairman of the appointed Charter Reform Commission who also has done some work with Sugerman.
"You would be chasing your tail as a city on this to decide the gradations of responsibility and involvement and somehow penalize all future developers, contractors and charities, and the like. ... The city, as well as the developer, contractor or charity, know who these people are and whether they can be trusted in what they are doing."
Members of the city's Ethics Commission also had varying views.
Ethics Commission President Garcetti, formerly Los Angeles County district attorney, said there probably should be better tracking of those convicted of crimes against the city.
"The concern is that the person was with one company when the act was committed and then goes to another company and is essentially freed from any penalty or restriction - and that's bothersome," he said.
Even arm's-length relationships with the city by someone with a criminal record should be scrutinized, he said.
But Boyarsky said people convicted of crimes against the city should have the same rights to employment as any other "ex-con."
He said there are sufficient safeguards in the system for ensuring that contracts are awarded to honest companies, and that the protection for taxpayers is the "integrity and honesty" of top city bureaucrats and commissioners.
"I think if you commit a crime and are punished under our system, you're permitted to move on."
In other words, taxpayers have no protection from bureaucrats and commissioners.
But we do this in mexico all the time.
Take a look around. This is Mexico.
Me too, but in the county, not the city.
I remember the battles over secession a couple years ago. Hopefully there will continue to be strong efforts to break up the monster, and the LAUSD along with it!
A lot of people in the areas I mentioned do not consider themselves a "Los Angeles" resident. The reason being is that the city collects the taxes from these areas and spend them in places like South Central Los Angeles or other parts of the city instead of re-investing places like Hollywood or in the Valley.
Ping
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