Friday, December 06, 2002

2 men, Mattel fined for illicit donations

SCANDAL: Former executive and a consultant laundered 56 campaign contributions to several local politicians through third parties.

By Nick Green

DAILY BREEZE

El Segundo-based Mattel Inc., a former company executive and a Torrance-based political consultant have agreed to pay more than $900,000 in fines stemming from an ethics probe into the laundering of corporate political contributions. The 56 contributions, most of them amounting to a few hundred dollars apiece, were given from 1996 to 2000 to more than two dozen political candidates, party committees and political action committees.

Recipients were both Republicans and Democrats and included the campaigns of such local politicians as state Sen. Debra Bowen, D-Redondo Beach; Assemblyman George Nakano, D-Torrance; county supervisors Don Knabe and Yvonne Brathwaite Burke; former Republican Rep. Steve Kuykendall and Hawthorne Mayor Larry Guidi. Cash also went to Gov. Gray Davis and the Gore 2000 presidential campaign. (also Senator Diane Feinstein, Senator Barbara Boxer, Bob Filner-San Diego)

"The laundering of campaign contributions is one of the most serious violations of the (Political Reform) Act, as it denies the public of information about the true source of a candidate's financial support," the state Fair Political Practices Commission said in its filing.

Indeed, the politicians involved didn't know the true identity of the donors either. "I had no idea," Guidi said, adding he did not plan to return the $5,000 he received in 1999, the largest single contribution. "It's money spent. How do you return it?"

Fines also have been levied by the city of Los Angeles Ethics Commission and the Federal Election Commission, which announced Thursday that its $477,000 penalty was "one of the highest cumulative civil penalties in the history of the commission."  However, the state commission observed that the contributions were so "widely dispersed" that they "did not have a significant effect on any particular election."

The scheme, unbeknownst to Mattel, went like this: Fermin Cuza, senior vice president of governmental affairs at Mattel from 1997 until he resigned under company pressure in 2001, funneled more than $100,000 from the world's largest toymaker to political campaigns under other people's names. "It was done in the mistaken belief that this was necessary to get out there politically, without thinking of the consequences," said Mark E. Beck, an attorney for Cuza.  Cuza, who maintains a house in Manhattan Beach, has agreed to pay $188,000 in federal penalties, $110,000 in city fines and $88,000 to the state.

Alan Schwartz, a political consultant well known in Democratic circles and a member of a prominent Torrance family, was hired as a consultant by Mattel and via his company, Asset Management Systems, aided Cuza in laundering 30 of the contributions. He has agreed to pay $195,000 in federal fines, $66,000 to the city and $58,000 to the state.  Mattel uncovered the scheme last year and reported it to government officials, who began the three-pronged probe.

"The actions taken were in direct violation of Mattel policy and without the knowledge or approval of the company," Mattel spokeswoman Jules Andres said in a statement.  Nevertheless, the company conceded it failed to report 48 campaign contributions made to various local and state candidates. It will pay $94,000 in federal penalties, $72,000 in state penalties and $60,000 in city fines.

Observers on Thursday were mystified why Cuza and Schwartz broke campaign finance laws. The amounts involved were relatively small; Schwartz had contributed to campaigns before and in some - such as state races - there was no limit to the amount of corporate contributions Mattel could give anyway at the time. "We're talking about a contribution I got from somebody, having no idea the money he was donating to the campaign wasn't really coming from him and wasn't really his to give," Bowen said. "The whole thing is just so odd that I still don't know what to make of it or what they were trying to accomplish.

"I wouldn't have had a problem with a contribution from Mattel and I can't imagine George Nakano would have either," she added. "Mattel is a good employer in my district."  Schwartz wasn't talking Thursday to shed light on his actions. He referred inquiries to his attorney, who didn't return a phone call requesting comment.

Becky Ames, chief of staff for Nakano - who knows Schwartz well, but was traveling and unavailable for comment - said the real damage was to the public's perception of politics. "Garbage like this is just unfortunate because you accept the contributions in good faith and it undermines the public's faith in the (political) process," she said. "It's a very frustrating position to be in." Both Cuza and Schwartz had glowing civic careers.

Cuza is a former executive in residence at California State University, Los Angeles, and rose to director of border operations on the U.S.-Mexico border during a 15-year career with U.S. Customs. Los Angeles Mayor James Hahn appointed him in July to his International Trade Advisory Board, although Cuza resigned a month ago to start his own business, city officials said.

Schwartz, who flirted with running for Congress in 1998, is former chairman of the South Bay Economic Consortium, served as managing director of a Torrance investment firm and is a member of the Harbor-UCLA Community Alliance Steering Committee, which is working to save the trauma center. While the federal commission levied the fines Thursday, the state commission isn't scheduled to take action until next Friday while the city's Ethics Commission will finalize its settlement Dec. 17. Federal ethics officials said recipients of the contributions will be instructed to "disgorge" all illegal donations.

The Associated Press, staff writers Donna Littlejohn, Ian Gregor and Lee Peterson, Copley News Service correspondent David Zahniser and researcher Sam Gnerre contributed to this article.

Publish Date:December 6, 2002

Associated Press article:

Fines recommended for alleged laundering by former Mattel exec

ASSOCIATED PRESS
December 5, 2002

LOS ANGELES - More than $450,000 in fines have been recommended against Mattel Inc., one of its former executives and a former political consultant for allegedly laundering political contributions, state and city ethics investigators said.

On Wednesday, officials said former Mattel executive Fermin Cuza signed a stipulation admitting that he used $52,000 from the El Segundo-based toy maker for political purposes.

Cuza made 56 political contributions in the names of others to 25 campaign committees in state and local races. Officials said that political consultant Alan Schwartz admitted that he aided Cuza in laundering 30 of the contributions.

Mark E. Beck, an attorney for Cuza, said his client has agreed to pay approximately $105,000 for laundering contributions to federal candidates, including those running for Congress.

"It was done in the mistaken belief that this was necessary to get out there politically, without thinking of the consequences," Beck said.

Both men were fined for laundering and Mattel stipulated that it failed to properly disclose contributions that came from its coffers.

"The laundering of campaign contributions is one of the most serious violations of the (Political Reform) Act, as it denies the public of information about the true source of a candidate's financial support," the state Fair Political Practices Commission said in its filing.

Some of the political committees that received the money include those for Gov. Gray Davis, Attorney General Bill Lockyer, state Sen. Debra Bown, D-Marina del Rey and Los Angeles County Supervisor Don Knabe.NOTE:(Other names NOT printed in these article but printed in the San Diego Union Tribune on page A-8 are: Democrat Senators Diane Feinstein,Senator Barbara Boxer, Rep. Bob Filner, D-San Diego, Gore 2000 presidential committee.)

Representatives of the governor, attorney general and county supervisor said those officials had no knowledge that the contributions did not come from the source listed on the checks.

The city Ethics Commission said Cuza and Schwartz "sought to conceal the use of Mattel funds to make political contributions under assumed names by circumventing Mattel's internal policies and procedures regarding the making of political contributions."

The two also admitted that their laundered donations cumulatively exceeded the contribution limit of $500 in City Council races and $1,000 in mayoral contests.

The stipulations and fine amounts have been recommended by the staffs of the state and city agencies but still have to be approved by the FPPC and the city commission, which are scheduled to vote on them in the next week.

The government probe began last year when Mattel reported to the city, state and federal agencies that Cuza, a senior vice president, had Schwartz's help that "unilaterally caused Mattel to reimburse various individuals for their political contributions," according to the Ethics Commission stipulation.

"We are pleased to bring this issue to a close," Mattel spokeswoman Jules Andres said.

"These actions were taken in direct violation of Mattel policy. When we learned of the wrongdoing, we immediately investigated and self-disclosed the situation to the appropriate authorities and have since cooperated fully with them," Andres said.

Contributions financed with Mattel funds included a $1,000 contribution attributed to Schwartz and given to the Davis campaign for governor in 1997, almost a year before he was elected.

The largest single contribution was $5,000, given in 1999 to a committee for Larry Guidi, a candidate for mayor of Hawthorne.

Associated Press Clipping

  Originally published Tuesday, April 10, 2007

Hawthorne nears trash plan OK;  5% hike likely

By Doug Irving
STAFF WRITER

Hawthorne's City Council is scheduled to vote tonight to overhaul how the city collects trash -- a change that will likely cost residents more money.

Hawthorne's main trash hauler, H&C Disposal, has rung up nearly $1.5 million in debt to the city. City leaders have given up trying to collect that money, choosing instead to terminate the company's contract and bring in a new hauler.

That new hauler will take over not just the residential routes, but also those for commercial buildings, apartments and offices. It will replace a half-dozen trash companies that currently compete for customers in Hawthorne.

A staff report given to the City Council recommends that the new contract go to Allied Waste Services of North America. The company's proposal received "markedly higher" rankings than those submitted by three other trash haulers, according to the report.

Allied would raise the monthly rate for most residential customers by about 5 percent, to $17.35 for a 65-gallon cart, the staff report notes. It would raise the rates on commercial and multifamily customers by 4 percent.

As part of the deal, Allied must make an upfront payment of $1.5 million to the city -- roughly the same amount owed by H&C. In return, it would become the only trash hauler allowed to operate in Hawthorne for at least seven years.

The City Council meeting begins at 6 p.m. in City Hall, 4455 W. 126 ^th St. The council will hold a public hearing on the trash contract before it takes a vote.

USER COMMENTS (posted originally on DailyBreeze.com)

"I liked the 'old' H & C plan"

I never quite understood what was wrong with old H&C plan, the one before July 2003. They charged the cost of the trash on your property tax bill, the city then took out their 25% and sent the rest to H&C, seemed to work well from a collection point of view. But alas, the apartment owners won the day, with their influence on our city council. They wanted cheaper rates, so we all had to pay for it, and will continue to in the future. Hawthorne trash, what a mess!
- Robert Schubert posted: Wednesday, April 11st at 8:35 AM

"My thanks to the city"

Just wanted to say thanks to the City of Hawthorne. Thank you for going with H&C when the contract went out to bid instead of the preferred contractor (council was afraid they didn't have enough experience, as if that made a difference). Thanks to the council for forgiving H&C their debts (we, the public, do not care about being soaked through our tax dollars - what better use could our taxes be put to anyhow). Thanks to the council for charging the new hauler $1.5 million to make up for the H&C write-off (we certainly understand the requirement to still raise our rates even if the city itself ends up losing no money - after all, to what better use could our tax dollars be put). Thanks to the council for their care and attention to making the best use possible of all tax dollars collect by the city. That being said, please excuse me while I bend over - once again.
- Jerry Orlemann posted: Tuesday, April 10th at 12:48 PM

  Originally published Saturday April 14, 2007

Popular traffic controls placed near Hawthorne officials' homes

City rejected most requests to install speed humps, except on mayor and council members' streets, records show.

By Doug Irving
STAFF WRITER

The city of Hawthorne overstepped its own rules and spent thousands of taxpayer dollars to ease traffic in front of the mayor's house and the homes of two council members, city records show.

In recent years, the city has turned down pleas from worried neighborhoods and even a church to slow down traffic on their streets by installing speed humps. But the city moved quickly when the requests came from the politicians or their neighbors -- in some cases without checking to make sure they even had a speeding problem on their streets.

One of the council members, Ginny Lambert, said she persuaded the city to place speed humps on her street only after she found the money for them in an overlooked account. The other politicians -- Mayor Larry Guidi and Councilman Pablo Catano -- did not return phone calls seeking explanations; city officials also refused to answer questions about the speed humps.

"It drives me crazy," said Eduard Crawford, who petitioned unsuccessfully for speed humps on his tree-lined street of apartment buildings a few blocks from City Hall. "I just don't want to be the one to see some kid get hit."

As for the politicians, he added, "I just figure, sooner or later, it's going to catch up to them."

It's not easy to get a speed hump in the city of Hawthorne, unless you live next to a public school. Schools can get speed humps at the request of the school district; everyone else faces a series of traffic studies and other tests to win the city's approval.

The city has approved only four sets of speed humps in the past five years on streets not adjacent to schools, according to records obtained by the Daily Breeze under California's public-records law. Three of those streets have city politicians living on them; the fourth survived the city's battery of tests and won its speed humps under city policy.

Each hump -- a smooth rise of asphalt in the street, designed to force drivers to slow down -- costs a few thousand dollars to install. They're not quite as abrupt as the jarring speed bumps of shopping centers and apartment complexes.

The most recent speed humps in Hawthorne neatly bracket the mayor's house on 133rd Street. Work crews put them in last month at the direction of the City Council; Mayor Guidi abstained from the vote.

But the street appears to fall short of two key criteria that the city uses to decide whether speed humps are justified. For one thing, it doesn't see enough traffic to meet even the minimum standards for speed humps, a traffic study found. And not enough of the cars that do use it are going significantly faster than the speed limit.

The traffic study apparently measured only traffic going in one direction, even though city policy makes no provision for such a partial count.

The city indicated that 133rd Street met its criteria for speed humps -- despite the findings of its traffic study -- in a written summary that it produced in response to the Daily Breeze's request for documents. Neither Public Works Director Arnold Shadbehr nor City Manager Jag Pathirana would discuss the apparent discrepancies between that summary and the traffic study.

The petition for those speed humps came not from Guidi, but from Frank DiPasquale, a resident who said he had grown alarmed at the amount of speeding down his street. He said he was worried about the safety of neighborhood children.

Guidi's wife and daughter signed his petition. But DiPasquale said the mayor himself "really wasn't very helpful." He said when he mentioned the idea of speed bumps to Guidi, he was told: "Well, if you want speed humps, you're going to have to go through the process."

That's more than the two council members did, the records show.

Last fall, the city placed new speed humps on 132nd Street, near Councilman Catano's house, and on 130th Street, near Councilwoman Lambert's house. In both cases, the city failed to conduct any kind of traffic study and even waived its requirement that a solid majority of the residents on those streets sign a petition.

Lambert said she had been working for several years to slow traffic on her street, at the urging of her neighbors. She pointed out that Trinity Lutheran Church operates a school at the end of her block.

But the real breakthrough, she said, came when she discovered an untapped state account with several thousand dollars earmarked for Hawthorne. She said she couldn't remember the details of that account, except that she persuaded the rest of the City Council to spend some of it on the speed humps on her street.

"I tell you, I've had more thanks from my neighbors for doing that," she said. "I found the money. I brought it in. ... I feel I did it the right way."

The City Council approved speed humps for Catano's street at the same time, with no explanation. Catano did not return a phone call seeking comment.

Hawthorne neighborhoods that don't have City Council members as residents have not fared nearly as well when they approached City Hall for speed humps. The last to win its case was a stretch of 132nd Street, which had speed humps installed more than two years ago.

Last year, St. Joseph Catholic Church asked for speed humps on Acacia Avenue, which cuts between the church and its grammar school. A note in the city file says only that the pastor of the church later agreed "it would be best to hold off on speed humps and see if they will be installed."

So far, they have not been.

"There is a risk" on that street, said Angelica Hernandez, a parishioner and the mother of a student at the church's school. "There is definitely a risk of people getting hurt."

A neighborhood of small family homes near Kit Carson Elementary School also petitioned the city for speed humps. A traffic study confirmed that enough drivers were blowing past the speed limit there; but it concluded that traffic was too heavy to qualify for the speed humps.

And Crawford turned in his petition for speed humps on a stretch of Ramona Avenue that includes private Hawthorne Academy. The city told him he didn't have enough signatures, and the level of speeding there didn't justify speed humps.

"It was a poor excuse," he said. "I went through the whole rigmarole. They need to put a hump there."

USER COMMENTS (originally posted on DailyBreeze.com)

"The inconvenient truth"

"Giving money and power to government is like giving whiskey and car keys to teenage boys." – P.J. O'Rourke posted: Saturday, April 14th at 23:30 PM

"Tell me something I don't already know"

"....city administrations in Hawthorne have become a joke. Men, like the present officials, are elected to the city council without regard to intelligence and ability." - September 7, 1950 editorial - page 1 - Hawthorne Tribune as quoted in the book "Policing Hawthorne" (pg. 50)
- Stan Gidaszewski - Frmr Planning Commissioner posted: Saturday, April 14th at 22:38 PM

"Business as Usual"

Hawthorne won't change unless the voters get off their butts and vote these guys out. I pray that voters do a minimum of research by at least using Google to look up information on Larry Guidi before the next election. I challenge any Hawthorne resident to vote for the current mayor and councilmembers after attending or watching four complete council meetings. After years of pointing out the blatently obvious to oblivious residents, I gave up. Fortunately, I had the opportunity to get out of Hawthorne.
- Watchdog posted: Saturday, April 14th at 19:52 PM

"The "I's" have it"

It looks like there is definitely an "I" in Politician. There are actually three. One for each member that received a speed hump.
- Former Hawthorne Resident posted: Saturday, April 14th at 16:22 PM

"Another Sad Saga of Corruption in Hawthorne"

Well, no surprise there that City Officials get what they want when they want. I suppose the term "civil servant" should be translated to "civil fiefdom" with Council members being the evil feudal lords. Certainly, Mayor Guidi is becoming one effective puppet master with ALL department heads and city manager being his minions who who seem to be not dedicated to the citizens, but merely to servile obedience to the Mayor, a modern day Godfather.
- Jerry Browning posted: Saturday, April 14th at 14:48 PM

""This is news?""

Yes, the City of Hawthorne is Corrupt and the main offenders are the members of the City Council. This is hardly news worthy to those who live in Hawthorne. What will it take before people with leadership skills, innovation, and the true concern for the City take the seats of the City Council? More corruption?
- Once More posted: Saturday, April 14th at 12:24 PM

Hawthorne has to be one of the most corrupt cities in Los Angeles County. It will be nice when truly honorable people rise to positions of power and influence in Hawthorne.
- Enemy of the HPD posted: Saturday, April 14th at 9:23 AM

"Speedbumps for City Council Members"

Here again we find another example of Hawthorne's City Council members looking out for themselves. By allowing city policies to bend in their favor, the council members prove that they hold their seats for self gain over civic service. I pray for the day when we will have a new breed of City Council member. One who desires to serve the citizens of Hawthorne and not to seek political favors.
- Citizen C posted: Saturday, April 14th at 7:56 AM