MOVIN' ON UP
photo by Debra DiPaoloA FEW MONTHS AFTER LEE BACA TOOK OFFICE AS SHERIFF OF LOS ANGELES COUNTY, HE moved up to a tony San Marino address. He left behind the Pasadena bachelor's condo he'd been living in since his 1994 divorce and bought a rambling Mediterranean-style home for himself and his soon-to-be bride, Carol Chiang.
Baca's real estate upgrade has raised questions, however, particularly in regard to the sheriff's relationship with a wealthy Beverly Hills mortgage broker named Robert "Bob" Weiss. Weiss, through his company, the Richland Group, helped arrange for Baca to buy the $750,000 house for no money down, which several experts interviewed for this article called an unusually generous financing package.
At the same time, Baca took it upon himself to help Weiss promote a new program marketing home loans directly to cops, called the PRIDE Program. Baca joined the PRIDE Program's so-called "Advisory Board," and lobbied county officials to let Weiss' marketing teams set up sales booths and make presentations in department facilities across the county. Baca also talked up Weiss and the PRIDE Program to other top law-enforcement officials across the state.
"Something stinks here," says Bud Treece, head of the department's largest employee union. "Why would a professional cop want to endorse a commercial enterprise?"
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Even one of the sheriff's inner circle seems taken aback by the arrangement. "I don't think Lee should get involved in something like that," says Dan Bryant, a Pasadena real estate broker who calls himself Baca's "personal, political and spiritual" adviser. "I don't know what the hell he is doing that for."
Baca, for his part, isn't saying. His spokesman, Captain Doyle Campbell, says the sheriff has "no comment" regarding his relationship with Weiss, his endorsement of the Richland Group's products or his lobbying on the company's behalf.
Likewise, after the Weekly made repeated attempts to contact Weiss and other Richland executives by telephone, a spokesperson for the Richland Group said that the company had "no comment" on his relationship with the sheriff, and declined to provide any information about his company.
But a review of real estate records, court documents, financial-disclosure filings and other public records, supported by interviews with key participants, confirms Weiss' role in financing Baca's house, and Baca's activities on behalf of Weiss' PRIDE Program.
Moreover, in the glad-handing and back-scratching circles of police boosterism, it's not hard to turn up anecdotes about Weiss' relationship with the sheriff. Weiss has worked hard to ingratiate himself -- and his company -- into that world. And Baca has worked those same networks, using his office and its prerogatives to help those who help him, while cultivating political and financial supporters across the Southland.
"THE KEY TO SUCCESSFUL COMMUNITY LAW ENFORCEMENT," BACA LIKES TO SAY, "IS GETting everyone involved." It is one of his mottoes, featured on department letterhead. Since taking office as sheriff 11 months ago, Baca has pursued that ethos with the boundless enthusiasm he is known for, organizing "community involvement" groups, networking with businessmen, leading charitable fund-raising campaigns. "The guy has never stopped campaigning. He's everywhere," marvels political consultant Joe Cerrell. "He would attend the opening of a door. He loves it. He gets to wear the uniform and play the big shot. He doesn't miss an opportunity."
Indeed, Baca has demonstrated a gusto and flair for patronage unseen since Eugene Biscailuz was sheriff in the 1940s and '50s. He has even taken up Biscailuz's old practice of issuing "juice badges" -- bona fide department shields doled out to celebrities, wealthy supporters and department boosters -- to people like Bob Weiss.
The venue for these favors was Baca's Executive Reserve Co., known derisively among department insiders as the "Badge and Gun Club." Weiss was among the first class of "recruits"; 20 in all, most of them campaign contributors, businessmen, socialites and community figures, were issued not only badges, but uniforms and a Berretta 9mm semiautomatic pistol, after only a few weekends of training and cursory background checks.
The program was suspended in October after two of its badge-carrying members were arrested in as many months. In September, chicken-heir Scott Zacky made headlines when he brandished his gun and yelled "Stop! Police!" at a terrified couple he mistakenly thought were stealing a car from in front of his Bel Air home. And just last month, another member of the program, Elie Abdalnour, a Cypress jewelry dealer and prominent member of the local Lebanese community, was charged in connection with a six-month federal money-laundering probe.
Bob Weiss is another Baca backer in the badge-and-gun club. Weiss co-hosted a big, $250-a-plate fund-raiser for Baca last March; at the same time, Baca was promoting Weiss' PRIDE loan program with all the subtlety of a used-car salesman.
The skein of connections between Baca and Weiss troubles Dan Bryant, the sheriff's friend and confidant, who sees it as a question of priorities. "Lee may think this loan deal is a great program for cops, but it would be just as well that he didn't get involved with things like that," Bryant says. "He's got a full plate with the things he wants to do in the department, and I don't want to see him sidetracked."
WHEN BACA BEGAN LOOKING FOR FINANCING TO BUY A NEW HOME, BRYANT CONSULTED with a local law firm, Reed and Davidson, and advised the sheriff on the ethical considerations in play. "It was simple. I told him that he couldn't get a loan that Joe Blow on the street couldn't go in and get," Bryant says.
More complicated is whether Baca followed this advice.
What's clear is that Richland played a key role in the deal, shepherding Baca from initial negotiations to close of escrow in a matter of weeks. On April 2, Baca recorded a Deed of Trust securing a $600,000 loan, brokered by the Richland Group and financed by Merrill Lynch Credit Corp. The same day, he filed a second Deed of Trust, securing a $150,000 down-payment loan from the sellers of the property, the estate of Merle L. Collings. Contacted at his Newport Beach office, the administrator of the Collings trust, Donald R. Sheetz, declined to discuss the details of the loan, but implied that Baca's name on the mortgage was security enough for him. "I think personally," Sheetz said of Baca, "the county is awfully fortunate to have such a strong, innovative leader in law enforcement."
What's less clear is that Baca got a loan that any Joe Blow could have landed. For an assessment, the Weekly scoured the public record and then spoke with people in the lending business.
In January 1999, a month after taking office, Baca filed the required Statement of Economic Interest with the state's Fair Political Practices Commission, and claimed, under penalty of perjury, to have "no reportable interests": no investments, no business interests, no loans, no gifts and no real property.ã
Some assets and debts -- such as a primary savings account, or credit-card debt -- are exempt from disclosure, according to Dixie Howard of the state Fair Political Practices Commission. Also exempt was Baca's primary residence, a condo on East Del Mar Boulevard near downtown Pasadena. In Baca's divorce filing, the condo was valued at $175,000, with a $135,000 mortgage outstanding.
In an amendment to his economic statement, Baca disclosed that in 1998 he had taken a "personal loan" of "over $10,000" from Michael Yamaki, a topflight L.A. criminal-defense attorney and one of Baca's leading campaign fund-raisers. Yamaki floated the loan in June 1998, the same month Baca decided to resign from a $160,000-a-year position as commander and campaign full time -- a decision that strained Baca's resources. "Lee wasn't destitute," says one high-ranking campaign source. "But it was a little tight for him."
Baca's financial condition improved considerably after he took office as sheriff in December 1998. The job's $207,000-a-year salary tops that of every other elected official in the country, including the president of the U.S. But Baca still had to pay a hefty percentage of his salary in alimony to his ex-wife, Judith -- $4,500 a month, according to the judgment entered in their divorce settlement, plus an additional $4,200 lump-sum payment, for a total of $58,200 a year. From the documents, then, it would appear Baca is left with a gross adjusted pretax income of $148,800.
The Weekly contacted two mortgage brokers, selected from the Yellow Pages, to see if a potential borrower fitting Baca's financial profile would qualify for the loan Baca received.
Tony Valdez, the manager of GMAC Mortgage, on Ventura Boulevard in Encino, says the key issue is the borrower's ratio of debt to income, which his company likes to find between 40 percent and 50 percent. Given Baca's monthly income of $12,333, "he could look at purchasing a house in the $700,000 to $800,000 range," Valdez says -- exactly in the range of Baca's new home.
Baca's good income notwithstanding, Valdez says that he would not make the loan to Baca, because the sheriff borrowed 100 percent of the down payment from the seller of the house. "Most lenders wouldn't touch that loan," Valdez says. "He more than qualifies in terms of income . . . But I have been doing mortgages for 20 years, and I don't know anybody who would do that loan, because of the down-payment issue. They want to see the guy come in with something in hand."
Bayard figures Baca's income at $17,250 per month, and his debts as $9,800 a month: $4,875 a month for alimony, plus $4,925 a month total payment on a $600,000 loan.
"Presuming he has no other debt, that is a debt-to-income ratio of 57 percent, and that is too high for us," Bayard says, noting that as a bank, his institution follows more conservative guidelines.
Told that Baca also borrowed 100 percent of the down payment from the seller, Bayard adds: "We would have some very serious issues with that. There would have to be very considerable compensating factors, like he had a big investment portfolio, or a huge 401(k). He's got to have serious assets to compensate for no down payment."
In sum, Bayard concludes, "He is a very fortunate man, from my standpoint as a loan consultant, to have gotten that loan. I suppose there are lenders out there that would do it, if they had a reason to."
WHILE BACA HAS DECLINED ANY PUBLIC comment on his loan, he's been vigorous in promoting the services of his lender from the time the loan was first discussed. The first public record of that effort dates from July 1, 1999, when he made an unusual request to the Board of Supervisors on behalf of Weiss and the Richland Group.
He wrote the board on Sheriff's Department letterhead, asking them to "authorize access to the Sheriff's Department facilities for the Richland Group, a Los Angelesbased mortgage banking firm, enabling them to make presentations to Sheriff's Department employees regarding low-cost residential loans" -- to let Richland, in other words, set up shop on the premises.
Under the heading "Justification," Baca played up the supposed benefits of the PRIDE Program: "competitively priced loans" with "no origination fees" and a free seven-year life-insurance policy for active-duty and retired cops.
Even earlier -- within weeks of taking office -- Baca made less formal gestures on behalf of Richland. Bud Treece, executive director of the Association of Los Angeles Deputy Sheriffs (ALADS), says that at his first meeting with the new administration, in early January 1999, Baca's assistant sheriff for patrol, Bill Stonich, "gave us some literature from the Richland Group and told us the sheriff was very interested in us meeting with this man."
Around the same time, Baca asked another union official to come to his fourth-floor suite at department headquarters. The official, Dennis Slocumb, president of the Professional Police Officers Association, which represents the department's sergeants and lieutenants, among others, was surprised and mildly appalled to find Bob Weiss waiting there with the sheriff, ready to peddle his wares. "It seems to me like an elected police leader should be above commercial endorsement of moneymaking ventures," he says. It was the only time Baca ever invited Slocumb to meet in his office.
Neither union, it turns out, had anywhere near Baca's enthusiasm for endorsing the program. "What we explained to Mr. Weiss, very politely," says Treece, "is that we do not as an institution endorse commercial products."
Baca got a similarly cool reaction from the Board of Supervisors. After weeks of ã inaction on his July 1 request, Baca approached David Jansen, the county's influential chief administrative officer, and asked him to meet with Weiss. Jansen says he agreed to the meeting "out of courtesy," but was unmoved by Weiss' pitch. "We don't generally do this for businesses," he told Baca, noting that he couldn't remember another instance where the board had approved such a plan. "Once you start opening the county to private business, you'll never be able to draw the line."
SUCH CONCERNS OVER THE PROPRIETY OF involving Weiss in official government business are only deepened by a review of Weiss' career. The public record contains no bombshell revelations regarding Weiss, but plenty of reasons why the state's top law-enforcement officials might be wary of aggressively promoting such a commercial enterprise.
Weiss made his name and his fortune in the rough-edged world of "hard money" lending -- making high-cost, high-risk loans to less-than-creditworthy borrowers. Before that, he was a top executive for controversial Beverly Hills businessman and socialite Uri Sheinbaum, who would later be convicted in a federal fraud case unrelated to his business with Weiss.
Sheinbaum hired Weiss in 1987 to help him run his Calmark Holdings corporation, where Weiss' first assignment was assisting in a controversial takeover-cum-bailout of the Northview Corp., a piece of leveraged-buyout king Ivan Boesky's troubled financial empire. That deal became mired in years of litigation.
Calmark made headlines again two years later, when the L.A. Business Journal got hold of a story about campaign contributions to thenMayor Tom Bradley, whose top aides were pressing the Community Redevelopment Agency to grant Calmark exclusive negotiating rights to build a 1,741-room, $400 million hotel across the street from the L.A. Convention Center. That deal stalled over Calmark's demand for a $50-million-plus public subsidy, and collapsed in 1990 after Northview defaulted on $100 million in Drexel-Burnham junk bonds.
Judging by court files, Weiss developed a hard-nosed approach to business working alongside Sheinbaum. Weiss and other executives were once accused of improperly diverting corporate funds, according to a wrongful-discharge suit brought by a former employee. Weiss wrote a letter to the accuser warning her to keep quiet about company business. "There will be zero tolerance by the owners of this organization," Weiss wrote. "If you continue to try to address issues that are no longer of your concern, the results will be very unpleasant." The suit was ultimately dropped.
In the 10 years since he founded the Richland Group, Weiss has been accused in court papers of fraud, usury and running "loan to own" schemes to bilk borrowers out of their property. Most of the dozen-plus lawsuits brought against Weiss and the Richland Group have been quietly settled, with the parties bound to strict confidentiality agreements. "I'd love to tell you about the bastard, but I can't," says one source who wound up in court with Weiss. In one foreclosure case that went to trial, a court-appointed referee called Weiss' heavy-handed dealings "totally unconscionable."
Despite the rash of litigation, Weiss' name has surfaced only once in the press -- in 1994, after he arranged a $3 million loan for O.J. Simpson, then in custody for double murder. "Our customers are people who are busy, wealthy and don't want the hassle" of extended loan negotiations, Weiss told the Los Angeles Times. The paper reported that Richland's average loan was "about $1 million," and that its customers include "a former U.S. ambassador" and "a confidant of former President Reagan."
WEISS' BACKGROUND AND BUSINESS practices apparently caused little concern among Baca and his peers in the upper echelons of law enforcement, where Weiss and his loan program won a warm reception. The PRIDE Program's advisory board was stacked with heavy hitters: Baca; Dwight "Spike" Helmick, commissioner of the California Highway Patrol; Orange County Sheriff Michael Carona; Dr. Ted Hunt, president of the LAPD Police Protective League (PPL); Sam Cabral, president of the Washington, D.C.based International Union of Police Associations.
Weiss gained some degree of credibility in these circles through his ties to police booster organizations, pro-cop charitable groups and department hangers-on.
His biggest boost in this regard came through his relationship with Arthur Kassel, a wealthy, well-connected politico, onetime owner of the Beverly Hills Gun Club and, more recently, a paid consultant for the Richland Group. "My whole life has been helping policemen and their families," as Kassel described himself in an interview with the Weekly.
Kassel is a board member of the LAPD Historical Society, which hosts the annual Jack Webb Awards dinner, a black-tie soiree and one of the top engagements on the law-enforcement social calendar. In October 1998, Robert Weiss was named one of five people honored with the Jack Webb Award -- which is given for being "active in community service" and "supporters of law enforcement." At the time, Weiss was virtually unknown in law-enforcement circles. One longtime department insider comments that he never heard of Weiss before watching him stride up to the dais to accept the award. According to the source, Weiss used his acceptance speech to pitch the PRIDE Program.
LAPD Captain Greg Meyers, who produced this year's Jack Webb Awards, says it was Arthur Kassel who introduced Weiss to the board and arranged for the mortgage lender to receive the award. In the months prior to the awards dinner, Meyers says, Weiss persuaded the Historical Society to endorse the PRIDE Program and pledged to donate $15 to the society's coffers every time the Richland Group closed a loan. "It's a new program," Meyers says. "If it takes off, this could be very lucrative for us." Meyers acknowledges that last June he himself took advantage of the PRIDE Program's benefits and refinanced the loan on his home.
As a paid consultant for Richland, Kassel claims, he came up with the PRIDE Program's main sales hook: a free life-insurance policy for cops, so their mortgages would be paid off should something happen to them.
Kassel says he also made key introductions for the entrepreneur. His Rolodex led Weiss to the PPL's Ted Hunt, who in turn introduced Weiss to Cabral. And on the night of the 1998 Jack Webb Awards, he introduced Weiss to Lee Baca, who in turn vouched for Weiss to both Spike Helmick and Mike Carona.
"It's a small fraternity," Kassel says.
When contacted by the Weekly, one member of the fraternity credited Lee Baca's recommendation -- his "innovative leadership" on the issue, one might say -- as an important factor in deciding to endorse the product.
"I don't know anything about [the Richland Group's] business practices, personally," Helmick said. But after checking with Baca and others, "I felt very comfortable it was a good organization." As to his decision to join the PRIDE board, Helmick said simply, "Lee Baca suggested it to me."
Helmick subsequently got a PRIDE loan to refinance his own home. "That's how I know it works very well," Helmick said.
Baca's good friend Mike Carona also got himself a loan from Weiss, and endorsed the company on the Richland Group's Web site. "My wife and I are delighted with our PRIDE loan and the exceptional service we received from the Richland Group," Carona gushed. (Carona did not return repeated calls from the Weekly.) For his part, Ted Hunt allows the Richland Group to prominently display on the site a picture of himself standing in front of a squad car, smiling.
It was all very cozy. Around the time Baca and Carona both got loans from Weiss, Weiss signed on as a sponsor of a $250-a-plate fund-raiser for Baca, hosted by Carona. On the weekend of the fund-raiser, according to a reliable observer, the three men spent the day tooling around on a yacht owned by another controversial police booster and campaign fund-raiser, Donald G. Haidl, whom Carona had recently appointed assistant sheriff in charge of his volunteer reserve program. A few weeks after the boat trip, Haidl was the subject of a lengthy Orange County Register exposé that detailed how, while chairman of Nationwide Auction Systems, he was the subject of three separate state investigations for allegedly skimming as much as $1 million in public money. The story also detailed allegations of "gunrunning to Mexico" and his involvement with an L.A. County Sheriff's deputy who was convicted of hiring a bounty hunter to shoot up his ex-girlfriend's house. Haidl dismissed the allegations as a "bunch of trash."
SINCE LAUNCHING THE PRIDE PROGRAM, Robert Weiss has tried to project a plain-vanilla corporate image. He now bills the Richland Group as a "national mortgage banker," one of the country's biggest independent brokers for blue-chip firms like Merrill Lynch Credit Corp. and Nationwide Lending. "Ninety percent of our business is making garden-variety loans," he said in one recent deposition. He now even denies making a loan to O.J. Simpson, saying to one deputy who recently pressed him on the matter that heã merely "referred" Simpson to another lender.
The make-over has failed to smooth all of Weiss' rough edges, however, and in his move to capture the state's huge and lucrative market of law-enforcement home loans, he has managed to alienate several top law-enforcement officials with his heavy-handed, sales tactics.
Take his dealings with the Police Memorial Fund, a Sacramento-based organization that honors California police officers slain in the line of duty. Last spring, Ted Hunt introduced Weiss to Al LeBas, executive director of the fund. Weiss, it seems, wanted to make a $5,000 contribution to sponsor a luncheon during the group's annual memorial ceremony in the state capital May 7 and 8. During the event, LeBas says, Weiss distributed promotional brochures for the PRIDE Program -- a major faux pas. "For many of us, the memorial is something solemn, something sacrosanct," LeBas says. "Mr. Weiss was told at the beginning that he was not to commercialize the memorial."
LeBas was willing to dismiss Weiss' crass behavior as a rookie mistake -- that is, until last month, when LeBas received a letter from one Lieutenant John McGuiness, from the Sacramento County Sheriff's Office. McGuiness was writing to express his concern that, in a meeting to pitch the PRIDE Program to Sacramento County officials, Weiss not only invoked his support of the Police Memorial Fund but showed a video presentation that included footage of the group's memorial service.
LeBas was incensed, and he dashed off a cease-and-desist letter to Weiss promising that if Weiss persisted in abusing the fund's name, LeBas would denounce him to law-enforcement officials across the state. "We are upset," LeBas says. "Weiss was attempting to commercialize the fund again. None of the other sponsors had ever tried to do that before."
WEISS HAS SHOWN EQUALLY LITTLE CONcern for such niceties, and even less political sensitivity, in his wooing of Los Angeles Sheriff's Department rank-and-file officers. The difference, however, is that even as Weiss' aggressive sales tactics have landed himself and the sheriff in political hot water, Baca has stood gamely by his mortgage broker.
In April, Weiss placed an advertisement for the PRIDE Program in the Association of Los Angeles Deputy Sheriffs newsletter. When ALADS's management discovered Weiss' ad, they instructed staff to have it pulled. The reason Richland's loan offer was not allowed to be advertised in the publication, according to executive director Treece, was that it competed with a similar program sponsored by the AFL-CIO. Besides, Treece says, the program "did not offer anything unique."
If Weiss thought his relationship with Baca would provide leverage with ALADS, he was badly mistaken. In fact, the union and Baca had been at odds since the association endorsed incumbent Sheriff Sherman Block in last year's election. ALADS had, in turn, accused Baca of exacting retribution by sponsoring a rival, upstart union, led by two deputies who worked on Baca's campaign, just as the union was beginning contract talks with the county.
"Sheriff Baca, his command staff, subordinates and agents," the union wrote in a July 6 complaint to the county's Employees Relations Commission, "have engaged in an orchestrated campaign with [the Los Angeles Sheriff's Professional Association, or LASPA] to interfere with, dominate, control and destabilize ALADS as an employee organization."
Despite the apparent delicacy of the situation, Weiss wasted no time approaching ALADS's rival union. Weiss took the LASPA board members out to dinner to sell them on the PRIDE Program, according to Scott McKenzie, LASPA's vice president, and made a point of recounting how rudely ALADS had treated him. Weiss said he could not financially compensate LASPA, but promised to donate $20 to the union's favorite charity for every loan issued in the department. Soon after, LASPA's home page featured a link to the PRIDE Program's Web page, and McKenzie became a PRIDE customer himself, getting a refinancing on his home.
It wasn't long before ALADS officials noticed the Weiss-LASPA relationship and seized upon it as another attempt by Baca to undermine their authority. In a letter to the Richland Group, and with calls to friends in the LAPD union, ALADS insisted that Weiss stop abetting LASPA. The pressure worked: Not only was the link removed from LASPA's Web page, Weiss became the bogeyman for a vocal segment of the department that opposes Baca.
"Bob is not very sophisticated in this arena," Kassel says. "He didn't know the sheriff was having some problems with the union, and he got caught up in it."
ON FRIDAY, OCTOBER 22, L.A.'S CIVIC ESTABlishment paid up to $25,000 for a table at the sixth annual Jack Webb Awards at the Beverly Hilton Hotel. Mayor Richard Riordan, LAPD Chief Bernard Parks, Senator Dianne Feinstein and Governor Gray Davis were all there in black tie and gowns. Tommy Lasorda, stuffed into a penguin suit, was the dinner chair; Jay Leno and Dennis Franz, among the evening's honorees, lent star caliber.
Among the evening's other honorees were Arthur Kassel and his wife, Tichi Wilkerson Kassel. Also on hand to celebrate was "special guest" Lee Baca. As were the PPL's Ted Hunt and Don Haidl, the latter an event co-chair. And Robert Weiss, who by this time had found himself a position on the awards ceremony's yearly planning committee.
It is, as Kassel says, a small fraternity.
Earlier this year, the sheriff moved to this rambling San Marino house . . .
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