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Contreras' $50,000 Fraud: How Do You Prosecute a Dead Man?

The assertion by the U.S. Attorney's office -- uncovered Friday by L.A. Weekly -- that the late Los Angeles labor giant Miguel Contreras stole more than $50,000 from his own nonprofit and gave the money to his friends has been met with a mix of outrage and apathy in a city that is growing eerily accustomed to corruption.

While ordinary citizens and political observers are understandably angered ("How did they name a school after this guy?" lamented activist Jack Humphreville, referring to the Miguel Contreras Learning Complex high school downtown), there is little indication that the powers-that-be are irked by the revelations.

Which is particularly troubling in light of the ongoing takeover of City Hall by backroom-dealing labor unions who seem happy to serve their own agenda at the expense of the city budget. But more on that in a minute.

First, there's the problem of how to deal with a dead man who appears to have defrauded donors to his nonprofit. Arrest him? Impossible. Investigate his friends? Seems like a good idea. Dig into his financial records? Makes sense. But will L.A. District Attorney Steve Cooley step up to the plate?


"We don't pursue cases against deceased persons," says Jane Robison, Cooley's press secretary.

Fair enough, but while Contreras is gone and his scandalous nonprofit, Voter Improvement Program (VIP), has folded, his allies still loom large in city politics. And there's plenty to suggest that Contreras was using VIP to grease their palms.

Federal

prosecutors had been sniffing at City Councilmember Jose Huizar and former LAUSD school

board member David Tokofsky for possibly receiving $30,000 "rewards" disguised as consulting fees from VIP, but the feds have now backed off of that angle.

That's the same crime, however, that Contreras carried out with buddy Alejandro Stephens, according to Stephens' plea agreement with the U.S. Attorney's office. (It is that agreement which identifies Contreras -- referred to as "M.C." in the document -- as the leader of the scheme.)

And then there's Contreras' widow, Maria Elena Durazo, a powerful force who worked side-by-side with her husband and took over his position atop the County Federation of Labor. Did Durazo, who did not respond to requests for an interview, know about her husband's corruption at VIP?

Robison said Cooley's office is not investigating anyone linked to Contreras or VIP. Which observers say is a sign that the D.A. isn't as hungry to out crooked power figures as he has claimed. "Cooley had promised to vigorously go after public corruption," says Ron Kaye, the former Daily News editor who blogs about city politics. "I don't see a lot of that."

Also troubling is the fact that the city's major media outlets, including the L.A. Times, have ignored the feds' findings that Contreras masterminded a $52,000 fraud.

No mention of Contreras' key role in the case has appeared in the city's largest newspaper. "The Times has the ability to tear the legacy of Contreras and the County Federation of Labor apart," says Kaye. "But I don't think they have the will to do that."

Meanwhile, at least one labor leader linked by the U.S. Attorney's office to Contreras' scheme still works for the SEIU: Anelle Grajeda, a former L.A. union boss who was previously investigated for making illegal payments to Stephens, her ex-boyfriend.

Grajeda and her son are identified -- by their initials "A.G." and "C.G." -- in the U.S. Attorney's introductory allegations against Stephens for accepting $52,000 from Contreras' organization. According to that court document, Grajeda was involved in a plan in which her son received $10,000 from Contreras' nonprofit and then gave the money to Stephens.  

In Stephens' subsequent plea agreement, only Grajeda's son is identified as having participated in the fraud.

Did Stephens save his ex-girlfriend from prosecution? We may never know. Grajeda has likely avoided further investigation by resigning as the SEIU's highest ranking California officer. She now maintains a lower profile as an executive assistant in SEIU's Washington D.C. headquarters.

Here in L.A, organized labor continues to wheel and deal its way into the backrooms of City Hall. The latest evidence?

Right now a coalition of L.A. unions is close to inking a deal to preserve a supposedly money-saving early retirement package that city financial experts warn will barely reduce the $405 million budget deficit -- and will cripple the ability of Antonio Villaraigosa and the Los Angeles City Council to make more cuts.

Even veterans of L.A. politics who've seen their share of deal-making and backscratching are stunned at the degree to which unions representing city workers have been able to dominate decision-making made by the 15-member City Council and Villaraigosa.