L.A. County D.A. examines the city’s $4.6-million purchase tied to a former politician.

By Hector Becerra and Paul Pringle, Los Angeles Times

July 31, 2010

The city of Bell has a pattern of doing business with current and former city officials, including an ex-mayor who served time in federal prison, according to interviews and records obtained by The Times.

In the most recent deal, Bell’s Community Redevelopment Agency last year paid $4.6 million to purchase property from a family trust of longtime politician Peter Werrlein, who was sentenced to three years in prison in the 1980s for holding hidden interests in a poker casino.

Despite his criminal record, Werrlein worked for the city as a consultant at least into the 1990s.

Werrlein also was executor for the estate of legendary Los Angeles mobster Mickey Cohen.

The Los Angeles County district attorney’s office is examining the sale of Werrlein’s Western Auto property, David Demerjian, head of the district attorney’s Public Integrity Division, said in response to a Times inquiry.

“We’re looking at whether the city overpaid for that property,” Demerjian said.

“That’s not necessarily illegal, but if they did, we’d want to look at whether any money was kicked back.”

The City Council approved the sale with one dissenting vote by a councilman who balked at the price.

The investigation of the purchase is one of several involving Bell politicians and administrators, focusing primarily on their unusually large salaries. Three top city administrators stepped down last week, including City Manager Robert Rizzo, who made nearly $800,000 a year.

The Werrlein transaction is among a number of financial entanglements involving City Hall and municipal leaders.

Six years ago, the city Housing Authority bought a house from Oscar Hernandez, who is now the mayor, and his wife, according to county records.

The city has not released records that show the amount paid for the house, the reason it was purchased, whether Hernandez took part in the decision or what the city did with the property.

Attempts to reach Hernandez were unsuccessful.

In another case, the Community Redevelopment Agency purchased property owned by the Steelworkers Oldtimers Foundation, a social services organization run by George Cole, a former councilman. Details about that 2004 transaction have not been released.

It is not illegal for cities to do business with elected officials. However, state conflict-of-interest laws require that the officials involved have no role in the decision-making and that the city not make deals that amount to a gift of public funds to the officials.

The Oldtimers Foundation also holds a $38,000-a-month city contract for Dial-A-Ride services to provide transportation to senior citizens, according to Cole.

He said in an interview that the foundation got the contract about 15 years ago and that it was approved when he was on the council. He said he recused himself from the vote.

Cole described the cost of the Dial-a-Ride contract as reasonable for a service that he said ferries about 25,000 passengers a year. That ridership would work out to an annual cost of about $18 per passenger.

Cole defended the city acquisition of the Western Auto property, which he voted for during his final term on the City Council.

Cole said the city already owned land around the property and wanted to assemble enough to rebuild a key business corridor along Atlantic Avenue.

“It was a pretty important commercial piece of property,” Cole said.

But former Councilman Victor Bello said he had voted against the deal because he thought the price was too high.

Werrlein said Friday that $4.6 million was a good price for the city and that he had been offered as much as $5 million by a drugstore chain. He also said his personal history was irrelevant. “I never committed any real — what I would call — crimes,” he said. “At least I didn’t steal from the people.”

It’s unclear what the city plans to do with the roughly 30,000-square-foot property, which is vacant. According to county records, the city purchased it from the Pete Werrlein Children’s Private Annuity Trust.

The district attorney’s office is just beginning to examine the deal. Demerjian said that in the patchwork of small cities in southeast L.A. County, such deals among a small cast of characters are far from uncommon, raising concerns about conflicts of interest.

“We do see cities hiring the same city attorneys and the same developers coming in,” he said.

“It’s OK for a city to do business with a council member if it’s truly done at arm’s length. But it’s hard to fathom a scenario where there doesn’t tend to be a conflict of interest,” he said.

Werrlein has been a prominent and controversial figure in Bell over the last 4 1/2 decades, serving on the City Council from 1964 to 1980.

He was voted out of office after a grand jury finding that he, along with other political figures, had attended sex parties with teenage prostitutes and convicted Hillside Strangler serial murderers Angelo Buono Jr. and Kenneth Bianchi, The Times reported at the time.

Werrlein had testified that he tried to set up a liaison with one of the prostitutes but that it never happened. In an interview with The Times back then, Werrlein denied engaging in any sexual activity but said that he saw Buono sitting next to a “blond, attractive, well-built woman who looked like she was in her early 20s. She might have been a prostitute. I don’t know.”

Five years later, Werrlein was sentenced to prison for holding hidden interests in a Bell poker casino, along with the city’s then-administrator, John Pitts.

Prosecutors said the two had conspired to form a secret partnership with investors to create the gambling enterprise through city ordinances; in return, Werrlein and Pitts would receive controlling interest in the casino.

Prosecutors submitted an FBI tape recording of a conversation between Werrlein and a government informant: “It wasn’t to glorify the city and, uh, bring the city $3 million per year,” Werrlein said of his involvement. “It was to fatten our pockets.”

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