Pocket of Trouble
NOTHING QUITE GRABS THE ATTENTION of a prosecutor like a politician carrying a package full of cash. And in the criminal investigation of former Los Angeles City Councilman Martin Ludlow — now the ex-head of the powerful Los Angeles County Federation of Labor — Ludlow’s delivery of $1,300 quickly became one of the most eye-popping details to emerge from the state and federal probe, which deals largely in arcane campaign-fund-raising rules.
In state and federal charges filed last week, prosecutors described Ludlow’s decision to hand an envelope containing $1,300 to an intermediary, who in turn paid the money to Kineta Shorts — one of six “phantom employees” who worked on Ludlow’s successful 2003 council campaign while secretly being paid by Service Employees International Union Local 99 — a violation of the city’s campaign laws.
By paying in cash, Ludlow had managed to keep Shorts out of the paperwork of his campaign until she could be added to the union payroll, said Assistant U.S. Attorney Craig Missakian. But in doing so, he also sent a message to federal investigators, who quickly concluded that Ludlow was attempting to run his campaign at least partly off the books.
“Whenever a politician deals in cash, that tends to be a red flag,” Missakian added.
Ludlow pleaded guilty Wednesday to one felony charge of conspiracy, confirming allegations that he engaged in a campaign in which SEIU Local 99 paid for six phantom employees, provided health-care coverage to a seventh and covered other unreported costs, including $3,397 in cell-phone calls. His plea agreement, ironically, grew out of a decision by the SEIU three years ago to contact the federal Department of Labor about financial irregularities in the union’s books.
The cash transaction between Ludlow and Shorts formed the basis for one of the state charges against Ludlow, who reached an agreement that could require him to spend as many as 13 years away from labor unions. While the money was a small fraction of the $36,000 illegally received by the Ludlow campaign, it put him in the worst possible light. At City Hall, you must understand, there are three tiers of trouble when it comes to receiving questionable campaign funds. The best-case scenario for a politician — and most forgivable in the eyes of the Ethics Commission — is to be oblivious, that is, to have no idea that tainted money was given. Quite a few of the city’s elected officials have fallen into this category, learning after their election victories that their contributors exceeded the $500 limit or even engaged in money laundering, schemes in which multiple players work in tandem to circumvent fund-raising limits.
The second and considerably worse kind of trouble is to know about tainted campaign contributions and do nothing to stop them. Until last week, that still seemed a possible scenario for Ludlow, who had a broad base of union support and is a close ally of Mayor Antonio Villaraigosa. With the filing of charges last week, Ludlow’s behavior fell into the third and most legally perilous category — orchestrating the scheme to obtain tainted money. While most campaign-finance violations are misdemeanors, coordinating them is a felony. And although Ludlow’s political demise had been predicted, even some Ludlow partisans voiced surprise at how explicit his actions were.
Last Friday, Assistant District Attorney Max Huntsman told the court that he planned to submit no fewer than 30 exhibits for his case, including a spreadsheet Ludlow gave to a union employee spelling out the campaign workers he wanted to be paid by SEIU Local 99, which represents blue-collar school employees like bus drivers, cafeteria workers and custodians.
THE SPREADSHEET, one of three uncovered during the probe, cemented Ludlow’s status as an architect of the fund-raising scheme. Meanwhile, Missakian alleged in a separate filing that Ludlow and the former president of the union, Janett Humphries, later tried to cover up the illegal use of union funds by falsifying documents and altering union records — actions that allowed for the embezzlement of union funds.
Standing outside the courthouse this week, Ludlow said his appearance was the first step in a long road toward accepting responsibility. The next step comes Tuesday, when he will be asked to pay a $105,271 fine to the city’s Ethics Commission, the first of three resulting from the corruption probe.
Humphries, on the other hand, entered a not-guilty plea and set the stage for a potentially protracted court battle over the case. One day before the indictments were handed down, Humphries filed a lawsuit and signaled plans to call multiple City Hall players as witnesses, including Villaraigosa. Attorney Nick Pacheco went on to argue that Humphries, his client, was simply a figurehead in the union, not a power player green-lighting illegal campaign fund-raising.
That Pacheco and another lawyer, Ricardo Torres II, have such prominent roles in the case is yet another unusual turn of events. Both men have been at odds with Villaraigosa over the past five years, most notably during election season. In the 2001 mayoral campaign, Pacheco’s deputy chief of staff, the late Lloyd Monserratt, helped to program a series of automated telephone calls to voters saying that Villaraigosa opposed increased penalties for rapists and child molesters. District Attorney Steve Cooley investigated the calls — which featured an impersonation of Supervisor Gloria Molina by a woman identifying herself as Gloria Marina — and concluded that, while no laws were broken, it amounted to “underhanded political dirty tricksterism.”
Pacheco denied knowledge of the calls. Villaraigosa went on to unseat Pacheco as a councilman two years later, after a campaign in which Torres — Humphries’ other attorney — sent widely derided mailers accusing Villaraigosa of relying on “white advisors” at the expense of Latino constituents. While Pacheco was waging that losing campaign against Villaraigosa, Ludlow — the man who the mayor likened to a son — was relying on SEIU funds to make the election in his own council bid.
In November, the mayor helped to deny Pacheco a political comeback at City Hall by backing school-board member Jose Huizar in his race for Villaraigosa’s old council seat. But if Humphries has any success with her lawsuit, Pacheco and Villaraigosa could spar yet again, this time in court.
Get the This Week's Top Stories Newsletter
Every week we collect the latest news, music and arts stories — along with film and food reviews and the best things to do this week — so that you'll never miss LA Weekly's biggest stories.