CODY WON'T LEAVE EIDC LEADER IGNORES EXECUTIVE BOARD VOTE.

Byline: Beth Barrett Staff Writer

Entertainment Industry Development Corp. President Cody Cluff defied Los Angeles' elected political leaders Friday by staying on the job after the executive committee voted 8-2 to put him on paid administrative leave.

City Councilwoman Wendy Greuel and county Supervisor Zev Yaroslavsky expressed shock and anger at Cluff's defiance, and vowed they would remove him from the helm. Contracts with the beleaguered quasi-public agency, under criminal investigation by county prosecutors, might be broken if necessary.

Greuel, an executive committee member, said she considered Cluff's action ``insubordination.''

``It's amazing to me,'' Greuel said. ``I don't like to be threatened, to have it suggested we don't have the right to do this. I've never been in a situation where a board of directors has taken action and the executive director has not followed it.''

Yaroslavsky said if Cluff shows up for work Monday he's prepared to ask the county to terminate its contract with the beleaguered EIDC, and ask the city to do the same.

``We're not going to have a long spectacle, a protracted debate,'' Yaroslavsky said. ``If he decides to violate the order ... my next step is to suggest to the Board of Supervisors it withdraw from EIDC. We could reconstitute it in some other fashion under other professional leadership, other rules and bylaws.''

Mayor James Hahn's deputy, Matt Middlebrook, said the city is looking to get Cluff on administrative leave soon, but is prepared to consider all options - up to severing the city's contract - if necessary to remove him from the helm so the corporation can move ahead.

``The purpose of the EIDC is to help facilitate the needs of the movie industry in Los Angeles, and with Cody Cluff remaining in that position it's not as effective as it should be in carrying out that mission,'' Middlebrook said.

Cluff declined comment. But in a Nov. 15 letter to committee chairman Frank Scherma, president of (at)radical.media in Santa Monica, Cluff wrote, ``I believe, as do many of you, that stepping down from EIDC at this time would be destabilizing, unfounded and rash.''

EIDC spokeswoman Kathleen Milnes said Cluff would remain on the job.

``He will retain his position and report to work,'' Milnes said. ``(The executive committee) did not have the authority to take this action.''

Attorneys retained by the EIDC said Friday's vote was invalid because Scherma, the chairman, ruled the motion out of order. Scherma declined comment after the meeting.

Committee members said they had authority to place Cluff on administrative leave, and Yaroslavsky said the parliamentary procedures followed in the closed session were correct.

A letter from County Counsel Lloyd W. Pellman to supervisors Thursday said no provision in EIDC's bylaws precluded the executive committee from placing Cluff on administrative leave, noting it would be a temporary action.

Milnes said the EIDC does ``amazing work.''

She said it would be a ``very regrettable action'' if the county or city were to terminate their contracts.

``It's not our fault they didn't have the legal authority (to remove Cluff),'' Milnes said.

EIDC corporate attorney George B. Newhouse Jr. of the law firm Thelen Reid & Priest said ``every effort'' would be made to work out a solution in the coming days or weeks.

``Clearly, everyone's long-range objective is to have a well-functioning EIDC to serve the interests of the city, county and ... industry,'' Newhouse said.

Los Angeles investigators searched Cluff's two homes and EIDC's Hollywood office in September after learning EIDC had given tens of thousands of dollars to elected officials on its board, as well as to causes, including $25,000 to fight secession movements.

County auditors also questioned up to $500,000 in expenses claimed by Cluff. EIDC officials later said Cluff used his personal credit cards as EIDC's line of credit.

Earlier this month, investigators seized computer files and other documents in raids of the Pittsburgh Film Office, the home of its director, Dawn Keezer, and an art gallery. Search warrant affidavits linked Cluff and Keezer romantically, and suggested they misappropriated public funds.

EIDC's corporate lawyers have denied it is a public entity - the crux of the district attorney's case.

Yaroslavsky contended EIDC's corporate lawyers improperly backed Cluff against the decision of the EIDC's executive committee.

``I'm at war with my own attorneys; they're out to do me in, to frustrate the will of the EIDC governing board,''Yaroslavsky said, adding such a legal twist was unprecedented in his years of experience.

``Today is the first smoking gun that validates my suspicions,'' Yaroslavsky said. ``These are lawyers who have run amok. It's a very serious breach. When a client can't trust his own lawyer, it's a pretty sad day.''

Supervisor Gloria Molina said, ``It is an outrage that the attorneys hired to protect the best interests of the EIDC are now choosing to exclusively protect the best interests of Mr. Cluff.''

EIDC corporate attorney Tom Brown, with Sheppard, Mullin, Richter & Hampton, said the attorneys didn't pick sides, but only provided legal advice. In this case, another attorney, Paul S. Bernstein with Hughes Hubbard & Reed, who specializes in corporate governance issues, was brought in, Brown said.

``We represent the corporation,'' Brown said. ``We're not defending the board or Cody.''

Voting to place Cluff on paid administrative leave were representatives for Mayor James Hahn and City Council President Alex Padilla; council members Jan Perry and Greuel; Supervisors Gloria Molina, Yvonne Brathwaite Burke, Yaroslavsky; and an industry representative.

Supervisor Michael D. Antonovich joined Scherma in voting not to place Cluff on administrative leave, according to a public report of the closed session.

Antonovich said he was concerned about ``due process,'' noting the committee agreed to pay the firm KPMG $297,795 for a comprehensive financial, management and performance review of the corporation. Keith Comrie, Los Angeles' former city administrative officer, has been retained as the corporation's special consultant.

``I want to have all the facts,'' Antonovich said. ``Due process requires that an individual have his day in court.''