Mattel to Pay Fine for Donations

State and city ethics investigators announced Wednesday that a joint probe into laundering of political contributions has resulted in more than $454,000 in fines proposed against Mattel Inc., a former executive at the firm and its former political consultant.

Former Mattel executive Fermin Cuza signed a stipulation admitting that he used $52,000 from the El Segundo-based toy maker for political purposes. Cuza made 56 political contributions in the names of others to 25 campaign committees in state and local races. Consultant Alan M. Schwartz admitted that he aided and abetted Cuza in laundering 30 of the contributions.

Cuza and Schwartz were fined for laundering political contributions. Mattel stipulated that it failed to properly disclose contributions that came from its coffers.

There was no indication in the ethics filings that any of the candidates who received the money knew the funds were laundered.

Committees that got the money include those for Gov. Gray Davis, Atty. Gen. Bill Lockyer, state Sen. Debra Bowen (D-Marina del Rey), Assemblywoman Hannah-Beth Jackson (D-Santa Barbara), County Supervisor Don Knabe, Los Angeles City Councilman Nick Pacheco, City Atty. Rocky Delgadillo, and former Los Angeles mayoral candidates Xavier Becerra and Antonio Villaraigosa.

“The laundering of campaign contributions is one of the most serious violations of the [Political Reform] Act, as it denies the public of information about the true source of a candidate’s financial support,” the state Fair Political Practices Commission said in its filing.

Representatives of the governor, attorney general, county supervisor and others said those officials had no knowledge that the contributions did not come from the source listed on the checks.

“This kind of stuff is horrible for politics,” said Phil Giarrizzo, a political consultant for Pacheco. “By the sins of others, [Schwartz)] taints a whole lot of decent, honorable people.”

Pacheco said he would return any city matching funds received based on the laundered contributions, and he would ask ethics officials if he could legally return the donations themselves to Mattel.

The city Ethics Commission said Cuza and Schwartz “sought to conceal the use of Mattel funds to make political contributions under assumed names by circumventing Mattel’s internal policies and procedures regarding the making of political contributions.”

The two also admitted that their laundered donations cumulatively exceeded the contribution limit of $500 in City Council races and $1,000 in mayoral contests.

The stipulations and fine amounts have been recommended by the staffs of the state and city agencies but still have to be approved by the FPPC and the city commission, which are scheduled to vote on them in the next week.

A probe by the Federal Election Commission has been completed and soon is expected to result in fines in the six figures.

Mark E. Beck, an attorney for Cuza, said his client has agreed to pay approximately $105,000 for laundering contributions to federal candidates, including those running for Congress.

“It was done in the mistaken belief that this was necessary to get out there politically, without thinking of the consequences,” Beck said.

He said that Cuza was not seeking any specific favors from the politicians he was giving to and that there was no quid pro quo involved.

The $236,000 in city fines from the three parties represents the second-largest amount in a case of its kind in the history of the Los Angeles Ethics Commission.

The government probe began in March 2001, when Mattel reported to the city, state and federal agencies that Cuza, a senior vice president, had with the assistance of Schwartz “unilaterally caused Mattel to reimburse various individuals for their political contributions,” according to the Ethics Commission stipulation.

“We are pleased to bring this issue to a close,” Mattel spokeswoman Jules Andres said.

“These actions were taken in direct violation of Mattel policy. When we learned of the wrongdoing, we immediately investigated and self-disclosed the situation to the appropriate authorities and have since cooperated fully with them,” Andres added

Contributions financed with Mattel funds included a $1,000 contribution attributed to Schwartz and given to the Davis campaign for governor in 1997, almost a year before he was elected.

The largest single contribution was $5,000, given in 1999 to a committee for Larry Guidi, a candidate for mayor of Hawthorne.

Nine contributions totaling $4,250 went to Pacheco in 1999 when he was running for City Council, and 11 totaling $10,000 went to the mayoral campaign of Becerra.

Schwartz agreed to pay $66,000 in fines to the city Ethics Commission after admitting to 66 counts of violating ethics rules.

Cuza agreed to pay $110,000 and Mattel will pay $60,000 to the city agency. The three parties agreed to pay $218,000 in fines to the state Fair Political Practices Commission.

Steve Russo, chief of enforcement for the FPPC, issued a statement crediting Mattel for bringing the violations to the attention of authorities.

He declined to comment on the merits of the case, as did Ethics Commission Executive Director LeeAnn Pelham.