By Hillel Aron
By Joseph Tsidulko
By Patrick Range McDonald
By David Futch
By Hillel Aron
By Dennis Romero
By Jill Stewart
By Dennis Romero
In many ways, City of Industry founder James Stafford's problems began and ended with the Bank of Industry. The wealthy rancher organized the bank's formation in the early 1980s, enlisting Ed Roski Jr. and other Industry insiders to serve on the bank's board of directors. Stafford had already established his practice of laundering checks kicked back from Industry redevelopment projects; soon after the new bank opened for business, Stafford moved his check-laundering operation there from Industry's Bank of America branch.
Lucilla Rowlett was a common denominator in his laundering scheme. She handled many of Stafford's kickback checks while employed as a Bank of America teller. She did the same after she went to work at the Bank of Industry, cashing checks Stafford had drawn on bogus accounts brimming with money skimmed from Industry construction contracts: more than $1.3 million that should have gone toward the construction of a $65 million exhibit and conference center.
Then, in the midst of a deepening FBI corruption probe, Rowlett skipped town. Stafford finally tracked down his favorite teller in her home state. He persuaded her to meet him for dinner at the Holiday Inn in Leesville, Louisiana. Stafford wanted to pay for more than dinner. He wanted to buy Rowlett's silence. Before the meal of steaks and Heinekens had ended, records show Stafford had uttered Roski's name three separate times to reassure Rowlett that he could protect her from prosecution.
The FBI, betting that Stafford would try to cover his tracks, had already persuaded Rowlett to wear a wire that night. Transcripts from this and other tape-recorded conversations not only helped convict Stafford, but federal prosecutors would also cite them as evidence of Stafford's inordinate influence over the city and his closest associates, including Ed Roski Sr. and Jr.
In 1984, after obtaining Stafford's conviction, Assistant U.S. Attorney Gary Feess submitted a sentencing memorandum in which he asked the court to mete out the stiffest sentence possible. Feess argued that the wealthy rancher had "betrayed the trust and confidence" of the city and its agencies, and "abused his position as a preferred customer of the local banks," including the Bank of Industry.
Feess' memorandum, court and bank records, and interviews with former bank officers show that Stafford, without owning a share in the bank or serving as a director, virtually handpicked its first board of directors, breached bank confidentiality by pumping its members for information, and used the bank to launder $123,000 in kickback checks. When the bank's president called a halt to Stafford's check cashing and meddling in bank business, Stafford sought the help of Roski Jr. and other board members to have the bank president fired, these sources show. Feess' allegations weren't entirely new. Reporter Scot Paltrow explored Stafford's ties to the Roskis in a 1980 investigative series in the now-defunct Los Angeles Herald Examiner.
Despite repeated attempts to interview them, Paltrow reported that Roski Sr. and Jr. had declined to return his calls or answer his questions about their relationship to Stafford. Recently, however, Roski Jr. maintained that the allegations made against him in Paltrow's articles were untrue.
Separately, Roski has claimed in court papers that in Industry, he was an innocent victim caught up in other people's wrongdoing. But five years after the publication of Paltrow's series, and a year after sending Stafford to prison, Assistant U.S. Attorney Feess concluded in a sentencing memorandum, that the "fundamental allegations contained" in Paltrow's series had "been borne out." Stafford's crimes "were not isolated; they were part of a pattern of conduct extending back to the formation of the City of Industry."
Feess never filed charges against Roski Sr. or Roski Jr. But he made a point of describing the Roskis, and other Industry insiders, as "close friends of Stafford," before concluding in his memorandum that "Through these relationships . . . Stafford has been able to exert his influence at all levels of government in the City of Industry. There is no door in the city that is closed to James Stafford, and few decisions on which his counsel is not sought." Stafford's ties to the Bank of Industry, Feess wrote, illustrated that influence.
Stafford hatched his idea for a bank over lunch at the California Country Club, then the town's unofficial City Hall and the favored watering hole for Stafford and his confidants.
In the mid-1970s, about a dozen of Stafford's closest associates were summoned to a series of meetings at the country club to discuss the bank's formation. Ten of the original 12 bank directors, including Roski Jr., attended these meetings at Stafford's invitation, said former bank officers and Stafford's son in interviews given in the mid-1980s.
Roski Jr. recruited a respected Bay Area banker, Dale E. Walter, to serve as the bank's first president, former bank officers said. With Walter at the helm, the bank's associates and board of directors, including Roski Jr., invested nearly all of the $5.5 million needed to open the bank, bank records show. Stafford bought about $275,000 worth of stock (about 3.2 percent of the bank's total shares) for his grandson, stocks that were held in trust by his former daughter-in-law, according to former bank officers.