HAHN: THE INSIDE STORY MAYOR'S PROBLEMS TRACED TO THE START.

Byline: Beth Barrett Staff Writer

Questions about corruption swirling around Mayor James Hahn have their origins in the decisions he made at the start of his administration to put key fund-raisers in critical roles that would aid his future efforts to raise campaign cash.

What analysts are calling the ``perfect political storm'' was virtually assured years ago by a cascade of decisions that put the demands of his campaigns and the interests of insiders at the top of the Hahn agenda.

Among the decisions that observers point to is naming his relatively inexperienced 2001 campaign fund-raiser, Troy Edwards, to oversee the three proprietary departments - Harbor, Airports and Water and Power - that employ thousands and award hundreds of millions of dollars in contracts every year.

At the same time, he put longtime City Hall players - Ted Stein, Leland Wong and James Acevedo, among others - into key roles on those same commissions while relying for political advice on power broker William Wardlaw and for public relations advice on Fleishman-Hillard, a firm with lucrative contracts with the DWP, the harbor and airport.

The ``$64,000 question,'' said Loyola Law School professor and former federal prosecutor Laurie Levenson is whether the fault for corruption lies in the political system that evolved at City Hall or in the isolated behavior of individuals.

``I think people suspect there were system problems that created an environment where that is possible ... Ordinarily it's rare to have the one rogue official or employee. It ordinarily takes a culture that provides an opportunity for them to commit that crime.

``What happens is the focus becomes so much on, 'Are we pleasing individuals?' that people lose track of what the job is about ... People become so used to working with their buddies, the inner circle, that people misunderstand what their role (should be).''

State and federal grand juries have been investigating ``pay-to-play'' allegations that contractors and consultants were pressured to make political contributions and threatened with losing out if they didn't. As an outgrowth of that investigation, John Stodder, a former public relations executive with Fleishman-Hillard involved with the firm's contracts with the city, was indicted by a federal grand jury on Jan. 13 on 11 felony counts alleging fraud. He's denied any wrongdoing.

Since the investigations began in late 2003, Edwards has resigned and so have Stein, Wong and others whose names have been swept up in the controversy. Many top executives in Fleishman-Hillard's Los Angeles office have been fired or resigned.

Several prominent attorneys and other civic leaders also have been swept up in accusations of fund-raising improprieties favoring Hahn, including lawyer Pierce O'Donnell who faces 26 misdemeanor charges of making contributions to the mayor's 2001 campaign in the names of other people. O'Donnell, through a representative, declined comment.

Westside developer Mark Alan Abrams has been accused of money laundering political contributions by the staff of the city Ethics Commission in connection with Hahn, and other candidates. The commission last week approved a record fine of $270,000, which his attorney, Nathan J. Hochman, called ``excessive.''

The violations have reached beyond Hahn, including a vice president of Alan Casden's development company, John Archibald, and 13 subcontractors who all pleaded no contest in connection with laundering campaign contributions.

Bill Carrick, Hahn's campaign media consultant and strategist, said Hahn has never engaged in corruption, and characterized the Stodder charges as ``corporate corruption.''

The mayoral campaign has gotten competitive, he added, because Hahn got rid of Police Chief Bernard Parks, now a councilman running for mayor, and opposed San Fernando Valley secession.

``Once he made those decisions he was going to have a competitive race, and I don't think anything else has anything to do with it,'' Carrick said.

Sherry Bebitch Jeffe, a senior scholar at the University of Southern California's School of Policy, Planning and Development said the City Hall corruption allegations will only register with large numbers of voters if people closer to the mayor are indicted.

``Hahn and Edwards had a responsibility to separate politics from City Hall. You have to tailor your behavior to not only the letter of the law, but to the norms and mores ... You don't bang people over the head in 'pay to play,' not inside the Mayor's Office.

``It begins as a perception problem, and in politics perception becomes reality.''

City Hall's culture

With Hahn's low-key style, and reliance on longtime confidant Tim McOsker as his chief of staff, it wasn't long before the larger personalities from his 2001 campaign and fund-raising operations were exerting increasing influence within the administration, insiders say.

The appointment of Edwards, then 34 with little experience in government, as deputy mayor overseeing the Airports, Harbor and Water and Power departments that approve more than $1 billion in contracts a year, immediately raised eyebrows. Edwards resigned March 25, 2004, after testifying before a county grand jury.

Edwards came out of a Hahn campaign machine that raised $7.5 million for the 2001 campaign. It was led by seasoned operatives like Stein, a controversial West Valley developer who was fired by Mayor Richard Riordan after serving in key commission posts.

Stein ran for city attorney against Hahn in 1997 but lost a bitter race in which he faced charges of abusing his power as Airport Commission president by hiring Whitewater figure Webster Hubbell, a former law partner of Sen. Hillary Rodham Clinton, D-N.Y., as a city lobbyist.

A close ally to Wardlaw, one of the state's most influential Democrats and chairman of Hahn's mayoral campaigns, Stein found himself back as head of the Airport Commission when Hahn took office. He resigned under pressure on April 6, 2004, amid allegations he punished a contractor who was reluctant to make campaign contributions. Stein has denied wrongdoing.

Other Hahn backers were appointed, including Wong at airports and James Acevedo, a Valley power broker who was paid to work on Hahn's 2001 campaign but didn't raise any money for him, at the port. Wong, who later was moved to the DWP board, resigned as its vice president Jan. 13, 2004, amid allegations he improperly used his employer's money to sponsor campaign fund-raisers and to give politicians gifts. Acevedo could not be reached for comment.

Critics say the composition and structure of Hahn's inner circle almost guaranteed it would implode.

Edwards was at the center - at times overwhelmed, according to e-mails, and frequently in contact, if not relying, on more seasoned people, including Doug Dowie, 56, the head of Fleishman-Hillard's Los Angeles office. The firm had provided hundreds of hours of pro bono work to the Mayor's Office while holding more than $3 million a year in city contracts.

``One of the biggest issues is how you can have a campaign fund-raiser be your deputy mayor,'' said a source familiar with the inner workings of the Hahn administration. ``It's a fundamental flaw in the system. You can't mix those functions and they did. That set them on a course where everything and everybody became about fund-raising.''

It also set a tone for the administration that favored campaign loyalists and fund-raisers, sources said.

With Controller Laura Chick already questioning the DWP contract with Fleishman-Hillard in the summer of 2002, the pressure on the Hahn administration to raise campaign money suddenly became intense again when Valley secession became a real possibility.

Reviving the fund-raising operation of the 2001 campaign, Hahn's team raised $6.2 million compared with $760,000 by the Valley's secessionists.

David Fleming, a secession leader who's now co-chairman of former Assembly Speaker Bob Hertzberg's mayoral campaign, said the way City Hall wielded power during secession was an exercise in ``hubris.''

``The irony is that Jim Hahn won the battle (over secession), but he could lose the war, remaining the mayor of the city of Los Angeles,'' said Fleming, a longtime activist in local civic and political affairs.

Beth Barrett, [phone]

beth.barrett(at)dailynews.com