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Donor to three mayoral candidates hit with $170,000 ethics fine

February 14, 2013 |  2:49 pm

The Los Angeles City Ethics Commission on Thursday fined a business executive $170,000 for laundering dozens of campaign contributions, including 11 that went into the campaigns of three top L.A. mayoral candidates –- City Controller Wendy Greuel and council members Eric Garcetti and Jan Perry.

The panel issued the fine to Peter Barker, president of Barker Management, Inc., an Orange County-based property management company. Barker Management handled building maintenance for Advanced Development & Investment, a company that received $29 million in city funding to develop apartment buildings for low-income residents over the past decade. City officials said they found no evidence of wrongdoing by the recipients of the contributions.

The U.S. attorney's office began investigating ADI executive in 2010, including allegations that it illegally inflated invoices for work on its projects. The Ethics Commission started its own inquiry a year later, after The Times reported that subcontractors of ADI said they had been pressured by the company to make contributions or risk losing additional work on taxpayer-subsidized projects.

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Ethics investigators concluded that over a dozen years, Barker reimbursed his employees or their spouses for 68 contributions given to an array of city campaigns, including the mayoral bids of Greuel, Garcetti and Perry.

That practice, known as campaign money laundering, allowed Barker to bypass city laws restricting the size of campaign donations. The laundered money totaled nearly $42,000 over 12 years. Greuel received nine laundered contributions over six years, while four went to Perry and two to Garcetti.

Kevin James, another candidate for mayor, said the fact that Barker violated the law while helping three of his opponents in the same race shows there is a “culture of corruption” at City Hall.

The contributors "can’t vote for all three" candidates, James said. "They donate to them because they feel like they have to, the way the city system is set up.”

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Barker told ethics investigators that an ADI representative threatened to terminate his company if he failed to assist its campaign fundraising activities at City Hall. However, he continued to reimburse employees on his own even after ADI ran into legal problems, a report to the commission said.

Representatives of Greuel, Garcetti and Perry said they had already gathered the money Barker provided their mayoral campaigns and turned it over to the city's general fund.

Asked if Garcetti should have done more to vet the contributions, campaign spokesman Jeff Millman said: “We were very careful to comply with all the rules and requirements.”

Greuel spokeswoman Shannon Murphy said her boss gave back any money affiliated with Barker that went to her mayoral campaign, regardless of whether investigators considered it to be laundered.

In a second vote, the Ethics Commission approved a $15,000 fine for another ADI subcontractor, American General Contractors, a construction company that served as a contractor to an ADI affiliate, Pacific Housing Diversified, on one of its development projects.

Investigators concluded that American General reimbursed employees and relatives for six $500 contributions made to Perry between November 2008 and January 2009, before she launched her mayoral bid. American General told investigators that they too had been "pressured by an ADI representative to satisfy specific political fundraising requests," according to the commission's report.

The report did not name the ADI representative.

A spokeswoman for Perry said she has given back all the money provided by Barker and American General to her various campaigns. “The campaign follows the letter of the law. It’s hard if someone else on the other end isn’t,” said Perry spokeswoman Helen Sanchez.

Other beneficiaries of Barker's laundered contributions were Council President Herb Wesson, Council members Bernard Parks and Ed Reyes and council candidate Jose Gardea, who is currently running to replace Reyes, according to the report.

Barker’s attorney, Stephen Kaufman, said his client had “cooperated fully” with investigators. “He’s very relieved to have this matter behind him,” said Kaufman, who represented Perry, Greuel and Garcetti in their prior campaigns.

The cities of Los Angeles and Glendale have filed fraud lawsuits against ADI. The company, which is now in receivership, has already agreed to pay the city a $165,000 ethics fine.


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-- David Zahniser and Laura J. Nelson at Los Angeles City Hall