D.A. DEMANDS OVERHAUL OF ENTERTAINMENT GROUP.

Byline: Beth Barrett Staff Writer

Saying there is ``ample probable cause crimes were committed,'' District Attorney Steve Cooley on Monday called for local elected public officials who sit on the board of the Entertainment Industry Development Corp. to immediately carry out major reforms.

Cooley has launched an investigation and seized evidence under search warrants that EIDC officials ran up huge expense accounts and gave generously to political candidates and the anti-secession campaign.

The EIDC, created in 1995 to fight runaway television and film production, is funded by fees for shooting that previously went to local government. Mayor James Hahn, county supervisors and City Council members sit on its board, and many have received campaign contributions from the EIDC. The nonprofit agency also recently gave $10,000 to Hahn's campaign against San Fernando Valley and Hollywood secession.

Cooley, in an interview with the Daily News, criticized those who are defending EIDC President Cody Cluff and ``suggesting it's all OK'' when the evidence is strong. The search warrant spells out that the EIDC paid expenses of more than $500,000 to Cluff, including membership in a private Beverly Hills cigar club, tips equal to 100 percent of restaurant bills and travel to France and the Caribbean.

``We didn't just drop from the sky,'' Cooley said. ``There is ample probable cause crimes were committed, and certain people committed them ... to suggest the investigation is at least warranted.''

Cooley said prosecutors are exploring ``a wide variety of theories of criminal liability.''

Cluff has not returned phone calls, but EIDC officials and their lawyers have denied any wrongdoing.

Cooley said board members, and the city's Ethics Commission should immediately take steps to make sure the corporation is fulfilling its mission to keep movie-filming centered in Los Angeles, and not abusing its role.

``As a matter of how to run a railroad, the Board of Supervisors and City Council members, in the wake of what is public out there, ought to revisit how this government function should be discharged, so there are no abuses or other untoward appearances,'' Cooley said.

``The city Ethics Commission ought to evaluate the facts known in terms of (setting) guidelines of ethical behavior,'' he said.

Hahn spokeswoman Julie Wong said the mayor has no intention of resigning from the EIDC's board, but expects there to be complete cooperation with the district attorney's investigation.

Ethics Commission Executive Director LeeAnn Pelham declined comment.

``Our policy is not to confirm or deny whether we're investigating things,'' Pelham said.

Former Mayor Richard Riordan, who was instrumental in moving the film-permit business out of government offices, said reforms are needed.

``(They) need to restructure it so there is the power to hold it accountable,'' Riordan said.

Dozens of boxes of financial records were seized under search warrants Thursday at EIDC's Hollywood office and two of Cluff's residences.

Cooley said EIDC board members have a ``fiduciary responsibility'' under the law to make sure the agency is achieving its mission lawfully.

``By law, there have to be annual meetings, they have to adopt minutes, approve budgets, elect officers,'' Cooley said. ``Someone should look into whether these are titular board members, or really board members.''

The district attorney declined to comment on whether any public officials are part of the criminal investigation.

``I'm not going to speculate,'' Cooley said. ``I couldn't say at this stage.''

Cooley also warned the EIDC and its board against using any EIDC funds on criminal-defense attorneys.

``I want to know who's paying,'' Cooley said. ``It better not be EIDC, because as far as I'm concerned it's taxpayer money.''

Attorney Tom Brown with Sheppart, Mullin, Richter & Hampton said the source of funds for legal representation is ``confidential.'' He denied that EIDC funds are taxpayer dollars.

Brown said ``many very influential politicians'' have called Cluff to express their support.

``There's been a ton of support from politicians and industry people,'' Brown said.

Brown said all of the expenses identified in the search warrant are ``fully justified.'' The trips were exclusively for film events, and that contributions to schools - including those attended by Cluff's children - were only made to those found to be worthy in terms of the fine arts or entertainment.

``If you're trying to get the best table at a restaurant so a producer is impressed, then you give a $100 tip,'' Brown added.

EIDC officials contend that they represent a private, nonprofit corporation and that the $450 they keep per movie shoot to coordinate locations aren't public funds. Funds above the $450 paid by the companies are remitted to the city or county.

The nonprofit corporation was created in 1995 to replace city and county film offices.

In another development Monday, leaders of secession movements in the San Fernando Valley and Hollywood called for a broader investigation of Hahn's and City Council members' roles with the EIDC, dubbing it ``filmgate.''

Leaders, and candidates for council in the potential breakaway cities said political donations from the EIDC - including the $10,000 to Hahn's anti-secession campaign - should be returned and that all elected officials should be suspended from the board.

They also urged a racketeering investigation of the EIDC and its board.

Carlos Ferreyra, co-chairman of the San Fernando Valley Independence Committee, said during a news conference in Hollywood, ``We are here to demand an investigation into the `filmgate scandal' and an investigation into this abuse of power by the Mayor's Office.

``This is just another example of politicians being unable to tell the difference between public moneys and their own private political slush funds,'' Ferreyra said.

Morrie Goldman, EIDC vice president, dismissed the groups, saying, ``It's campaign season and the secession campaigns are desperate for an issue.''

Cooley promised that the criminal investigation would be thorough, saying there are ``a lot of pieces and parts.''

``We don't avert our eyes in the face of apparent criminal corruption by anyone or any institution. Our job is to protect the public interest.''