Firm With City Business Paid for Alatorre’s Roof

A firm with substantial government business and a controversial history paid $12,000 for a tile roof for Los Angeles City Councilman Richard Alatorre, raising new questions of possible illegalities involving the lawmaker’s Eagle Rock home.

The roof was financed by the East Los Angeles Community Union, known as TELACU, just weeks after Alatorre helped one of the firm’s partnerships obtain a crucial $2-million city loan for a shopping center project, a Times investigation has found.

Around the same time, Alatorre--who also is a board member of the Metropolitan Transportation Authority--was strongly backing the firm and its partners for a hotly contested multimillion-dollar subway contract.

The FBI’s public corruption unit is investigating TELACU’s role in the roof purchase and the circumstances surrounding the acquisition of the house itself, according to sources familiar with the transactions.

The Times reported in December that Alatorre obtained a mortgage after associates of a real estate investor in need of City Hall help allegedly fabricated financial documents to enhance the cash-strapped councilman’s standing with his bank. Alatorre later became the investor’s strongest advocate.

Alatorre and his wife have denied any wrongdoing in connection with their personal finances, including the purchase of the home and roof.

“We don’t have time to deal with fairy tales in the paper,” Angie Alatorre said in a statement, speaking for her husband, who is recovering from surgery for a torn diaphragm. “Contractors are free to work with whomever they choose and can be referred by any number of people who have experience. The point is who pays the bill, and we are paying our bill.”

The couple have refused, however, to say when they began paying that bill, who they are paying and how a prominent government contractor such as TELACU or one of its subsidiaries became involved.

Alatorre did not disclose any loan or other financial dealings with TELACU in his public economic interest reports. State and local laws generally require disclosure of loans not made through commercial lenders and on terms not available to the general public.

Although TELACU did not respond to numerous calls for comment, the company that installed the high-grade roof has said it was fully paid after the job’s completion in 1996 and that the money did not come from the Alatorres. Executives of Circle City Roofing declined to name the source of the payment. But The Times has learned it came from TELACU through one of its chief contractors, Ellias Construction Co.

FBI agents have subpoenaed records from the roofer and Ellias and have interviewed employees, obtaining evidence of TELACU’s financial involvement, according to the sources familiar with the transactions.

The new disclosures involving Alatorre’s roof are certain to heighten speculation over the future of the councilman’s quarter-century career in elected office--a storied rise from East Los Angeles campus activist to one of the region’s most formidable political power brokers.

As part of its wide-ranging corruption probe, the FBI also is investigating allegations by Alatorre’s former executive secretary that he would show up at City Hall with wads of $100 bills after meeting with people who had city business interests.

Besides the FBI investigation, the councilman is under scrutiny by the Internal Revenue Service for possibly hiding income and by the MTA inspector general’s office, which recently escalated its probe into whether Alatorre, an event-planning firm founded by his wife and two charities he has championed have had improper dealings with transit contractors.

Alatorre personally solicited contractor donations for the charities, which exclusively hired the firm, Eventfully Yours, paying it more than $200,000 in recent years.

During the past few weeks, the U.S. attorney’s office in Los Angeles, on behalf of MTA agents, has issued numerous federal grand jury subpoenas to companies large and small throughout the nation. According to those who have received them, the government is seeking records involving Alatorre and the contributions to his two favored charities.

Said one MTA contractor of the subpoenas: “The buzz is: Everybody is getting them.”

Ties to TELACU

TELACU was created to promote economic development in the aftermath of the 1965 Watts riots.

In the 1980s, federal authorities accused the group of mismanaging public money intended to help the poor. A federal judge ordered the firm to repay about $1 million, and it later agreed to surrender more than $3 million in assets.

Since then, TELACU has evolved into a $100-million-a-year network of for-profit and nonprofit enterprises, ranging from real estate development to banking to transit consulting. The sprawling business empire, which operates under the umbrella of a nonprofit corporation, has recurring financial interests at City Hall and the MTA.

TELACU’s main profit-generating corporation and its executives have donated hundreds of thousands of dollars in recent years to both Republicans and Democrats in local, state and federal campaigns. In the process, the corporation has cultivated strong ties with decision-makers from Los Angeles to Sacramento to Washington.

At a gala TELACU fund-raiser last year, Alatorre and Los Angeles Mayor Richard Riordan were honorary co-chairs, and U.S. Secretary of Education Richard W. Riley and state Sen. Richard G. Polanco (D-Los Angeles) were presented awards.

But it is with the veteran Eastside councilman that the firm’s connections seem to run deepest.

A number of present or former TELACU executives are close friends of Alatorre and have advanced his political ambitions by serving as fund-raisers or campaign strategists.

After moving to the City Council from the Assembly in the mid-1980s, Alatorre was fined for trying to secure a $722,000 city transit contract for TELACU. Alatorre urged his colleagues to award the firm the business, even though it had been ranked behind another bidder. State investigators found that the firm had paid Alatorre a $1,000 speaking fee a few weeks earlier.

More recently, a suite in TELACU’s city of Commerce headquarters was the common address for an Alatorre political committee, one of his favored charities and Eventfully Yours, the firm founded by his wife.

Earlier last year, The Times reported that Eventfully Yours was receiving a monthly retainer from TELACU at a time when the conglomerate was pursuing a wide range of city and MTA business.

In 1993, TELACU donated $25,000 of a $100,000 “commitment” to one of Alatorre’s favored charities, the El Serreno Youth Development Corp.--a fact the charity failed to disclose on its federal tax forms.

Charity officials have dismissed their failure to disclose the money as an error.

State regulators, in yet another broadening investigation, are examining numerous issues surrounding the charity’s financial operations, including payments to the event-planning firm of Alatorre’s wife.

Timing of the Work

Although far from palatial, Alatorre’s new Eagle Rock home seems comfortable enough, with its swimming pool and secluded location at the end of a street nestled against the hills below the Ventura Freeway.

Shortly after purchasing the house for $285,000, the Alatorres began a major renovation that included knocking down walls, adding a wash room and replacing the structure’s old roof with top-of-the-line Spanish tile.

Workers on the site knew they were dealing with no ordinary customer. They had been told upfront to do a good job because the owner of the home was “an important person,” one insider recalled.

In the past, the owner of Circle City Roofing has said only that he was hired by a commercial builder, refusing to disclose the name. But an Ellias Construction Co. secretary confirmed that her company served as general contractor for the roof project.

Although officials there declined to comment further, sources familiar with the work said Ellias was hired by a TELACU enterprise to oversee the work, a seemingly unusual request of a contractor known for specializing in big developments.

In recent years, Ellias has been TELACU’s general contractor on several multimillion-dollar projects, a number of them subsidized by city or federal housing loans, records show. They include low-income residential projects for senior citizens and disabled people in areas ranging from Glassell Park in northeast Los Angeles to El Monte in the San Gabriel Valley.

The timing of Alatorre’s roof installation could prove particularly troublesome.

Just weeks before the firm arranged the job, Alatorre won City Hall approval of a $2-million loan to a TELACU partnership developing a commercial center in the Boyle Heights area of the councilman’s district. A major contractor on the center was Ellias Construction, records and interviews show.

The city loan, which was essential to complete the center, came after TELACU President and Chief Executive Officer David C. Lizarraga assured his staff he would ask his friend, Alatorre, for help at City Hall, according to a source familiar with the discussions.

Lizarraga did not return calls to his office and home.

Moreover, several months earlier, Alatorre tried to help TELACU and its partners land a highly coveted contract to oversee the extension of the Red Line subway into the heart of his district. The amount: $65 million.

Alatorre pushed hard, despite concerns among some officials that the decision was moving too swiftly.

MTA board member James Cragin said Alatorre asked him in spring 1996 to introduce a motion clearing the way for a quick vote to award the contract to the TELACU team. A member of the construction committee reviewing the proposal, Cragin said he went along with Alatorre as a courtesy.

“He was locked in with those people,” Cragin recalled. “He wanted to get the contract and get going.”

The decision was delayed several months and, by then, another firm had been ranked ahead of TELACU and its partners. In the end, Alatorre argued that the TELACU partnership was best qualified and cast the only vote against its rival.

Looking back, Cragin thinks Alatorre was so aggressive because he feared the deal could collapse amid an MTA probe of the contract.

“I think people were starting to pick up rocks and starting to look underneath them,” Cragin said.