PR Chief Pleads in DWP Case
A former executive at Fleishman-Hillard pleaded guilty Monday to three fraud counts stemming from a scheme to bilk the city of L.A. through phony billings to the Department of Water and Power, the Daily Breeze reported. The pleas by Steven Sugerman were expected but mark the first formal admissions of guilt stemming from a state and federal corruption probe into contracting at the city’s airport, harbor and DWP. Sugerman, the former head of the firm’s public affairs division in Los Angeles, signed a plea deal earlier this year in which he acknowledged taking part in the scheme and agreed to testify against his former boss, Doug Dowie, who faces trial in November.
KB Home Facing Fines Over Arbitration Clauses
The U.S. Federal Trade Commission plans to accuse KB Home of limiting buyers’ ability to sue the company over alleged defects, The Wall Street Journal reported. The FTC’s citation, which is likely to carry a multi-million-dollar fine, alleges that the L.A.-based homebuilder violated a consent decree preventing the company from putting mandatory arbitration clauses into the warranties of home-purchase agreements. The consent decree was imposed in 1979 as part of a settlement after KB Home was accused of selling homes with serious faults.
L.A. Mayor Targeting Name-Droppers
Los Angeles Mayor Antonio Villaraigosa said Monday that he wants city department heads to inform him when someone outside City Hall mentions his name in an attempt to secure a city contract, project, policy or municipal decision, Copley News Service reported. Villaraigosa returned to his theme of restoring trust at City Hall, instructing a group of general managers to fill out an “ethics pledge” and letting them know that they should share his work ethic. The mayor said he needs to know if potential contractors, consultants, developers or other entities are using his name “for their own personal gain.”
L.A. Unified May Seek More Money
The Los Angeles Board of Education is considering asking voters to approve a multibillion-dollar bond, as well as a property tax, on the November special election ballot. Some board members, however, are questioning the idea of again turning to taxpayers soon after they approved a school bond in March 2004, the Los Angeles Times reported. If the board moves to place the $3.8-billion bond measure on the ballot, it would be the fourth time since 1997 that the school system has asked taxpayers to help fund its building and repair project aimed at ending classroom overcrowding. Voters have approved more than $9.5 billion in three previous school bond measures.
Feinstein to Protect Security Dollars
California Sen. Dianne Feinstein is headed for a showdown today with Connecticut and Maine lawmakers who want to divert anti-terrorism money from Los Angeles and other high-threat areas to small states like the ones they represent, the Daily News of Los Angeles reported. Sens. Joseph Lieberman, D-Conn., and Susan Collins, R-Maine, have introduced an amendment to a $31.9 billion homeland security spending bill that seeks to distribute 40 percent of grants to every state. California lawmakers said this formula, set for a vote today, could translate into a $20 million loss for the L.A. area, undermining the region’s anti-terrorism efforts. Feinstein’s plan doles out only 13 percent of the estimated $2.9 billion in homeland security grants to each state.
Gardena Considers Fee Hikes as Debt Repayment Looms
A deadline is looming for Gardena: Pay $26 million in loans by the end of August , or face possible bankruptcy. The city, however, is hoping for its third loan extension. In a bid to show its creditors that it is serious about fiscal prudence, the City Council today will consider about 100 fee increases for city services, the Los Angeles Times reported. The proposed increases would hit new card club employees, fortunetellers, junk collectors and junk dealers hardest. City officials say the fee hikes could provide an additional $480,000 a year in revenue. But critics say the city is trying to solve its fiscal woes by dipping into the pockets of those who can least afford it.
Exec Life Jurors to Focus on Damages
Jurors will return to federal court in Los Angeles today to weigh damages in a California regulator’s fraud lawsuit against French investors who bought billions of dollars of bonds from the portfolio of failed Executive Life Insurance Co., the Los Angeles Times reported. Testimony will focus on whether state Insurance Commissioner John Garamendi can collect compensatory and punitive damages. In May, the jury found that Artemis, a Paris-based holding company, conspired with banking giant Credit Lyonnais and other French investors to defraud California regulators.
