L.A. Film Permit Agency Is Target of Investigation
Prosecutors are investigating whether the quasi-public agency that issues film permits in Los Angeles County misused public funds by lavishing exorbitant tips at restaurants, sending its executives on Caribbean jaunts and donating money to politicians who sit on its board, according to court records and interviews.
The Entertainment Industry Development Corp., whose board includes the entire Los Angeles City Council and county Board of Supervisors, gets its $3-million budget from permit fees that would otherwise go to public coffers. Its mission includes keeping movie production in the county.
For the record:
12:00 a.m. Sept. 12, 2002 For The Record
Los Angeles Times Thursday September 12, 2002 Home Edition Main News Part A Page 2 National Desk 4 inches; 168 words Type of Material: Correction
Film agency--An article in Saturday’s Section A misstated the former job title of Cody Cluff, the president of the Entertainment Industry Development Corp. Cluff was a former assistant deputy mayor in the administration of Richard Riordan and also worked under Mayor Tom Bradley.
An investigation by the district attorney’s office, with the assistance of county auditors, led to a Wednesday night search of the agency’s offices and the home of its president, Cody Cluff. Financial documents and computer disks were seized.
In court papers filed to support the search, prosecutors said Cluff, 43, charged $500,000 worth of personal expenses, steered funds to his children’s school, and perjured himself on state documents he signed denying that any of EIDC’s directors profited from the agency.
Cluff’s attorney, Tom Brown, said his client and the EIDC have cooperated with investigators. Cluff has done nothing wrong, he said.
“EIDC entertains and markets the film industry,” Brown said. “We believe that when we’ve had an opportunity to explain its business and what we’ve done, both EIDC and Cody Cluff will be fully vindicated.”
Records show that the agency contributed nearly $200,000 to politicians, including more than a dozen who sat on its board.
An hour before prosecutors raided EIDC headquarters in Hollywood, the agency was sending invitations signed by Cluff to $500-a-plate fund-raisers for Los Angeles City Councilman Nick Pacheco--an EIDC board member--and Assemblyman Tony Cardenas (D-Panorama City), who is running for a Los Angeles City Council seat.
No charges have been filed. County auditors said the search warrant was sought after the agency refused to turn over financial records this summer.
“They’ve been fighting giving us information,” said Pat McMahon, the county’s assistant auditor-controller.
The EIDC was formed in 1995, when the City Council and Board of Supervisors agreed to consolidate their film-permitting functions into a single agency. The merger was a pet project of former Mayor Richard Riordan, and came amid complaints that production companies faced too much red tape.
Both government agencies entered into contracts with the EIDC, which was charged with stemming the loss of movie work to lower-cost states, as well as Canada, Australia and Mexico.
The office charges $450 per permit, and arranges for the closure of public streets, for example, negotiating with police and fire agencies. It acts as a trouble-shooter when movie producers have difficulty gaining access to public property or clash with neighbors. The office also touts the advantages of filming in Los Angeles to industry executives, often over expensive meals and at sporting events.
But there has been disagreement over the agency’s role: Is it a public institution beholden to taxpayers? Or a private enterprise that operates in the same freewheeling fashion as the Hollywood companies, which spend lavishly on banquets, parties and junkets?
McMahon, of the auditor-controller’s office, described the EIDC as a quasi-government agency, subject to “a higher standard than a private corporation.” It operates under the state’s open meetings law, required of all public agencies, according to court records.
But advocates of the EIDC argue that the film office needs to spend generously to woo the high-rolling movie industry, as well as to contribute to the politicians who nurture show business.
“Los Angeles is the entertainment capital,” said Morrie Goldman, vice president of public affairs for the agency. “The people who make decisions on where to shoot live and work here. They operate in a world where they’ve got a lot of demands on their time, and have a lot available to them in forms of entertainment. We need to be able to interact in their world.”
Auditors found that Cluff, a former deputy mayor under Riordan, received more than $50,000 in direct payments from EIDC to his personal American Express card. Prosecutors found more than $40,000 in charges for Laker basketball games and other sporting and concert events, and $20,000 in cashier’s checks from the EIDC to Cluff.
Cluff charged the EIDC for his membership in the Grand Havana Room, a Beverly Hills cigar club that lists a $3,000 initiation fee and a $200 monthly charge. Auditors also noted “numerous payments for meals and bar [alcohol] tabs at exclusive restaurants and clubs, often incurred late at night or early in the morning,” where Cluff sometimes signed for tips equal to 100% of the bill.
Court papers also state that Cluff, who had once worked as an auditor, used $40,000 in EIDC money to pay for trips to Georgia, as well as Utah and France--where two of the world’s biggest film festivals, Sundance and Cannes, are held.
Prosecutors said Cluff and another EIDC executive traveled to the Caribbean at agency expense. Court papers said the EIDC gave money to the school that Cluff’s children attend, and list a $5,000 contribution to Covina High School. The office also paid $341,000 to an Internet company run by one of its 45 board members.
Brown, Cluff’s attorney, would not address any specific allegations, but he said the investigation stems from a misunderstanding about the movie business.
“Part of the problem is that you’ve got county auditors who are used to going into county agencies, and this is not your typical county agency,” he said. “When they see expense accounts where four Lakers tickets are provided to the movie industry, they don’t know what to do with it.... They’re just not sophisticated enough to deal with private industry.”
Prosecutors contend that the EIDC is a publicly funded agency, and they are trying to determine whether its campaign contributions are an illegal gift of government funds.
David Demerjian, head of the Public Integrity Division of the district attorney’s office, said no conclusion has been reached. The EIDC’s board includes not only elected officials, but also the county’s top budget officer and the city’s legislative analyst, plus entertainment executives.
State records show that the EIDC has contributed $194,000 to political committees since 1998. The recipients include more than a dozen politicians who at the time were sitting on the group’s board. Jackie Goldberg, who represented Hollywood on the Los Angeles City Council and now represents the region in the state Assembly, received at least $15,500, the largest amount.
The EIDC also contributed $10,000 to the anti-secession campaign run by Mayor James K. Hahn, an EIDC board member. On Friday, secessionists called for an investigation by the city ethics commission into a possible conflict of interest by Hahn.
“It’s absolutely appalling,” said Gene La Pietra, head of the Hollywood secession effort.
Kam Kuwata, Hahn’s consultant on the anti-secession campaign, said Friday the mayor solicited the contribution but that there is no conflict.
City Councilman Hal Bernson said the board, of which he is a member, is a “figurehead” organization with no control over campaign contributions. “The only question I would have is whether the organization should be making political contributions at all,” he said.
Cluff determined who got the campaign money, said Goldman, the EIDC vice president.
David Gershwin, a spokesman for City Council President Alex Padilla, who received two $500 contributions from EIDC in 2000, said there is nothing wrong with the donations.
“EIDC is a private corporation,” Gershwin said.
Supervisor Mike Antonovich agreed, noting that campaign donations by the EIDC were not large. He received $1,000 in 1999. “Having them support those who support eliminating the red tape is proper,” he said.
Dist. Atty. Steve Cooley said Friday that whatever the outcome of the investigation, county and city officials ought to better define how the EIDC should operate.
“They are giving license, in a sense, for people to work outside the normal constraints of government,” he said.
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Times staff writers Steve Berry, Anita M. Busch, Jose Cardenas and Patrick McGreevy contributed to this report.
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Politicians Who Got Contributions
Politicians who sat on the board of directors of the Entertainment Industry Development Corp. and received campaign contributions from the agency since 1998:
* Los Angeles City Councilman Richard Alarcon (now a state senator)
* Los Angeles City Councilman Richard Alatorre (retired)
* Los Angeles County Supervisor Mike Antonovich
* Los Angeles County Supervisor Yvonne Brathwaite Burke
* Los Angeles City Councilwoman Laura Chick (now city controller)
* Los Angeles City Councilman John Ferraro (deceased)
* Los Angeles City Councilman Mike Hernandez (retired)
* Los Angeles City Councilwoman Jackie Goldberg (now a state assemblywoman)
* Los Angeles City Councilwoman Cindi Miscikowski
* Los Angeles City Councilman Nick Pacheco
* Los Angeles City Councilman Alex Padilla
* Los Angeles City Councilman Mark Ridley-Thomas
* Los Angeles City Councilman Rudy Svorinich Jr. (retired)
* Los Angeles City Councilman Joel Wachs (retired)
Source: State records
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