U.S. Probes Alatorre Source of Down Payment for House

Federal authorities are investigating how Los Angeles City Councilman Richard Alatorre came up with thousands of dollars that he used for a 1996 down payment on an Eagle Rock home.

One area that investigators appear to be focusing on is payments totaling more than $12,000--much of it in cash--provided by the councilman’s two sons, according to documents and interviews. Both sons have been summoned to testify before a federal grand jury investigating Alatorre.

Alatorre’s lender, Coast Federal Savings, questioned how the sons could afford such sums, records show. As the questions arose, one of Los Angeles’ influential behind-the-scenes political powers came to the councilman’s aid.

Lawyer Andy M. Camacho wrote the bank offering assurances that he had hired the sons and paid them thousands of dollars in consulting fees for work on several of his projects, records show. But officials closely involved with the projects said they recalled no involvement by the councilman’s sons.

In any event, the letter helped satisfy the bank’s concerns, and three days later Alatorre received his $253,000 loan.

A trusted longtime friend of the councilman, Camacho has built a multimillion-dollar network of high-profile restaurants, including city concessions at Los Angeles and Ontario international airports. During the period of Alatorre’s house deal, Camacho also had a stake in the development of the city’s historic Pueblo de Los Angeles near downtown, partly because of action taken by the councilman.

The federal scrutiny of the down payment is further evidence that the Alatorre probe has extended beyond the councilman to his dealings involving political allies who have had substantial business at City Hall and with the Metropolitan Transportation Authority, where the lawmaker wields considerable influence.

Federal authorities are also examining work on Alatorre’s home, financed by the East Los Angeles Community Union (TELACU), a prominent developer and contractor seeking millions of dollars in MTA and city deals backed by the councilman.

The federal grand jury, as part of a larger corruption probe directed by the U.S. attorney in Los Angeles, has also summoned another Alatorre relative who helped finance the down payment, according to court records.

The panel has issued dozens of subpoenas to government contractors across the country. Among the items sought by federal authorities are records of any payments to Alatorre’s sons, Derrick and Darrell, according to those who have received the court orders.

Camacho and Darrell Alatorre declined to discuss the situation. Derrick Alatorre did not respond to requests for comments.

The councilman also had no comment for this story. Previously, he has said he acted properly in the matters under scrutiny by the FBI, the Internal Revenue Service and the MTA inspector general’s office, which is also participating in the probe.

Trouble From the Beginning

From the outset of his house purchase, Alatorre was stretched for cash and assets as he sought his mortgage loan from Coast Federal Savings, records show. He needed about $30,000 for a down payment and closing costs.

To begin with, he was saddled with a condominium he was trying to sell that was worth far less than what he owed on it.

Pumping up his financial profile, Alatorre claimed a Jeep Cherokee as a $25,000 personal asset on his loan application, accounting for nearly a quarter of his listed net worth. Records show that a Cherokee driven by the councilman at the time was owned by the city.

At first, the councilman told Coast Federal that the bulk of the down payment would come from a “partial liquidation of retirement account” and a “gift from mother,” records show.

But as the deal was nearly ready to close, Alatorre and his wife, Angie, suddenly changed course, pulling together funds from several directions, records show.

Alatorre gave the escrow company handling the deal a cashier’s check for nearly $9,000.

The check was purchased at a San Francisco bank Aug. 15, 1996. It bears no indication of who bought it.

The councilman delivered it that same day to the escrow company in Glendale, records show.

An additional $8,000--in cash--came from Frank E. Mendoza, a relative.

This money “did not come from any account but was simply cash [Mendoza] kept in his house,” Angie Alatorre wrote Coast Federal. “As an older generation Mexican American, he does not believe in bank accounts.

“There is no attempt here at deception, but rather a genuine cultural difference on where one should keep their money.”

Coast Federal, as is customary, inquired into the sources of the money used by the Alatorres. The bank concluded that the origins of Mendoza’s gift were “not verifiable,” records show.

Mendoza, 62, declined to comment for this story. But in a recent guardianship case involving Angie Alatorre’s 10-year-old niece, he testified that the money came from rental income on a family property and other cash he kept at home.

He also acknowledged being subpoenaed and appearing before the grand jury, although he said he could not recall specifics of his testimony.

Alatorre testified in the same guardianship case that, as far as he knew, the gift came from Mendoza’s retirement money.

An additional $12,200 chunk of Alatorre’s down payment, nearly half of it cash, came from the lawmaker’s two sons.

Derrick Alatorre provided $5,000 of it in cash. He wrote the bank to say that he was repaying money borrowed over the years with cash he had saved.

“I do not possess a checking account nor a savings account with any financial institution. I have made a personal choice of no longer using the banking system.”

The other son, Darrell Alatorre, gave his father a $7,200 cashier’s check as a “loan repayment.”

A Coast Federal loan officer alerted his supervisor that “there was no formal note” for the loan Darrell was repaying, records show. “Please advise if this acceptable.”

Just days after providing his father with the funds, Darrell Alatorre fell in arrears on a $40,000 business loan and was later sued by the lender for failing to make payments, court records show. His lender later agreed on a new repayment plan.

With the councilman’s home loan ready to fund, Coast Federal bank officials continued to ask questions about how the sons came up with the money.

“If somebody gives a gift, they have to demonstrate the ability to give the gift,” said Glenda Sundstrom, the former Coast Federal loan officer who handled Alatorre’s mortgage.

At that point, Camacho entered the picture with his letter to the bank.

“The purpose of this letter,” he wrote, “is [to] verify that I did retain the services of Mr. Darrell Alatorre and Mr. Derrick Alatorre for consultation for my restaurant operation.”

Specifically, Camacho said he had paid Darrell Alatorre a $10,000 fee for helping develop his El Paseo Cafe at LAX. He had paid Derrick Alatorre $8,000 for help with his Universal Studios CityWalk and Santa Monica Pier restaurants, he wrote.

Camacho did not indicate when he hired or paid the sons. And city files make no mention of Darrell Alatorre’s participation in Camacho’s LAX restaurant. Nor did a city official recall Darrell Alatorre’s involvement.

“I don’t think he was a consultant to Andy [Camacho],” said Ramon Olivares, an LAX contract administrator who handled the restaurant contract.

At the same time Camacho was seeking his LAX cafe concession, Darrell Alatorre was part of a competing team that submitted its own bid to operate an airport restaurant, records show.

Similarly, sources in organized labor who have closely monitored Camacho’s Santa Monica Pier restaurant because of a bitter dispute said they were unaware of any role played there by Derrick Alatorre.

Nonetheless, loan officer Sundstrom said Camacho’s letter helped resolve the bank’s questions about the down payment provided by the councilman’s sons. Three days after the letter, the bank released the loan funds.

Public Role, Private Interests

Alatorre’s public responsibilities and Camacho’s business interests have been repeatedly interwoven, including during the period the lawmaker was trying to close the deal on his new home.

For example, Camacho has multiple public contracts and maintains his corporate offices at the city-operated Olvera Street complex, a cultural centerpiece of Alatorre’s district.

About the time Alatorre began looking for a new house, he also pushed ahead a city agreement involving one of Camacho’s Olvera Street interests--a deal that critics complained put the city and other companies at a disadvantage.

Camacho was a partner in Old Los Angeles, a business venture that held a lease to restore and develop long-neglected historic buildings at the southern end of Pueblo de Los Angeles and Olvera Street. But the project languished because of financial problems and its backers got into a dispute with the city.

Old Los Angeles said it had invested substantially in the project but that the city had not fulfilled its obligations. The city contended that Old Los Angeles was financially responsible for major improvements that remained uncompleted.

After nearly a decade of wrangling, city officials and Old Los Angeles reached a tentative agreement to end the lease and make way for new development proposals.

But there were controversial catches in the agreement: Old Los Angeles retained the right to match any better, competing offer. And if another company was selected, it had to negotiate with the Camacho partnership. This arrangement would have potentially benefited the partnership.

City lawyers said the agreement was the best way to avoid drawn-out litigation with the Camacho group. Still, some lawmakers were uncomfortable with the deal.

“It was awful,” Councilwoman Rita Walters, head of the committee that reviewed the matter, recalled.

In early 1996, her committee passed the matter to the full City Council with no recommendation, meaning that the agreement would need a sponsor on the council floor.

Alatorre introduced the needed motion at a March 5 session, and further asked that the agreement be expedited to Mayor Richard Riordan, who later approved the deal.

A spokesman for the mayor said “we were following the lead of Mr. Alatorre” on Old Los Angeles matters.

Alatorre was absent when the council revisited the matter last year, fine-tuning guidelines for new proposals to refurbish the historic buildings.

During this discussion, concerns remained.

Councilman Mike Hernandez said the city might be forced to again select Old Los Angeles, which “basically was not able to comply” with its previous obligations to develop the historic structures.

Walters told her colleagues “this is not something, at all, that I feel comfortable with.”

And Councilman Joel Wachs complained that Old Los Angeles had boxed the city into a position of not having “a lot of choice.”

“I think it’s blackmail on their part, quite frankly,” Wachs said.

But even the council critics, complaining that options were limited, grudgingly went along with a process laid out a year earlier in the motion advanced by Alatorre.

With new proposals being sought, Old Los Angeles was positioned to reap benefits--any new developer would have to negotiate with the Camacho group.

The sole new bidder, Catellus Development, did just that, agreeing last year to a pact that could pay Old Los Angeles hundreds of thousands of dollars.

Times researcher Janet Lundblad contributed to this story.