LOS ANGELES, Calif.–The city Ethics Commission today found one of Mayor Antonio Villaraigosa’s re-election campaign donors guilty of money laundering and fined him $183,750 for violating campaign finance laws.
The fine for real estate executive Alexander Hugh, the head of CIC Group, was the maximum under city law.
The commission voted 4-0 to support the case presented by investigators, who found Hugh illegally made $18,000 in contributions in June 2008 under “assumed names” and exceeding the limit of $1,000.
Hugh, a Koreatown developer, pleaded not guilty in April to five felony counts filed by Los Angeles County District Attorney Steve Cooley, including conspiracy to commit campaign money laundering, two counts of filing false documents, forgery and false personation.
Hugh’s next criminal hearing is scheduled for late November.
The Ethics Commission said Hugh worked with longtime friend Annette Lee to have employees of her escrow firm give $1,000 to Villaraigosa’s campaign.
Hugh then reimbursed the employees, which is illegal, and contributed $1,000 to the campaign in his own name.
Earlier, Hugh agreed not to dispute the facts of the case and waived his right to an investigation by the commission, but he declined to admit guilt.
The year before the money laundering occurred, Hugh won approval from the City Council and Villaraigosa for a hotel project, despite a lack of support from Villaraigosa’s own Planning Commission appointees. The Planning Commission was worried the hotel, which was never built, would overwhelm the neighborhood.
The commission found Villaraigosa did not know about the money laundering. Villaraigosa told City News Service he does not plan to return the money.
“I had no knowledge of what occurred,” the mayor said.
The city Ethics Commission charged Hugh with 18 counts of making contributions under assumed names and two counts of illegally exceeding campaign contribution limits.
Hugh’s attorney, Kenneth White, asked the commission to consider reducing the fine, based on factors such as financial hardship and Hugh agreeing not to contest the facts of the ethics investigation.
Nathan Hochman, the commission’s newest member, asked about financial situation.
“What is his current monthly cash flow? What is his net worth?” he asked.
White declined to answer. He said that disclosing specifics about Hugh’s finances would jeopardize a recent civil case that was extremely costly to his client.
In a brief filed with the commission, White made other arguments for reducing Hugh’s penalty.
He said Hugh had no record of violating election laws and that he worked quickly to cooperate with the commission, saving the panel “substantial effort and resources” to prove its case.
White painted Hugh as a man in his mid 60s whose retirement would include volunteer work through his church, including trips to help rebuild earthquake-ravaged Japan and parts of Vietnam. Hugh’s retirement plans would be crippled by a large fine, his attorney argued.
White said Hugh contributed greatly to the Koreatown neighborhood through real estate developments that generated jobs and tax revenue.
He said Hugh was likely to be adequately punished in the criminal case pending in Los Angeles County Superior Court and would not be able to afford the fine. White cited an adverse legal settlement against Hugh in an employment case, legal fees in the pending election law cases and Hugh’s flagging income because of the state of the real estate industry.
City Ethics Commission staffers were not swayed.
“We note that he did waive the administrative hearing and he has no enforcement history, but we also note that he’s a sophisticated and education businessman and he should have understood that these types of actions do have profound consequences,” Ethics Commission Director of Enforcement Deena Ghaly said. “These types of transgressions create effects in the elections that cannot be undone. For those reasons … we are requesting a fine close to or at the maximum.
White said he was disappointed the commission did not show any leniency for his client. He said the decision is likely to prevent future guilty parties from coming forward.
“If the commission doesn’t show any consideration I think that future people before the commission and certainly people in the attorney community in Los Angeles will take that into consideration every time they are faced with a matter in front of the commission,” White said.
Commissioner Valerie Vanaman bristled at the suggestion. She said Hugh’s pending criminal prosecution was the only reason he did not argue the facts of the case.
By Richie Duchon | City News Service
