Once again Antonio had the chance to do the right thing and chose to do the absolutely wrong thing.
On Tuesday, the mayor passed up the chance to reach out to someone who would represent ratepayers on the DWP Board of Commissioners, to make a peace offering to the citizenry enraged about unjustified rate hikes and end the war with the City Council.
Instead, he nominated the ultimate insider, someone who will do his bidding on the DWP Board as he did on the LACERS pension board, someone whose political interests are closely tied with the mayor’s, someone whose financial interests are linked to key players in the mayor’s circle of solar energy profiteers, someone whose public relations consultant is an admitted and convicted felon for his role in the DWP overbilling scandal of several years ago.
That man is Eric Holoman, president of Magic Johnson Enterprises, who like so many others who serve as city commissioners is a pillar of the community who has allowed his private interests to become entangled with city business.
Back in September when the Early Retirement Incentive Program for 2,400 city workers was falling apart, Holoman as president of the LACERS board got a majority to support a 15-year payback for the costs of ERIP over the recommendation of General Manager Sally Choi and the fund’s actuarial consultant who believed five years was prudent if more costly to city workers.
In October, he was forced to resign over a blatant conflict of interest that was ignored until Gov. Arnold Schwarzenegger signed into law legislation that prohibits pension fund board members from directly or indirectly selling investments to any state pension plan.
“Holomon already was chair of the system’s board when, in September 2007, he was hired as president of Johnson Development Corp., an urban development company owned by former NBA player Earvin “Magic” Johnson Jr.,” Pensions & Investments reported at the time.
“Mr. Johnson is also a partner in Canyon Johnson Urban Funds, an institutional real estate joint venture with Canyon Capital Realty Advisors. LACERS is invested in Canyon Johnson funds, although the amount could not be immediately learned.”
According to the LACERS website, Villaraigosa, who got strong support for his election from Magic Johnson, appointed Holoman to the $9 billion pension fund board where he served as Chair of the Private Investment Committee that oversaw the funds
alternative investment Strategies.
LACERS not only lists Canyon-Johnson as manager of some of its funds but also Ron Burkle’s Yucaipa Companies, where key Villaraigosa fund-raiser and strategist Ari Swiller was a principal. The Magic Johnson Enterprises site boasts it operates a “small business private equity fund, Yucaipa-Johnson Corporate” for capital investments.
For its part, Canyon-Johnson relies on the PR services of Steve Sugerman, who testified he lied and cheated the DWP in a plea-bargain deal for probation in the DWP/Fleishman-Hillard billing scandal and provided testimony that helped convict Doug Dowie and John Stodder who are still out on appeal.
CIM Group also is listed as an investment manager. It’s the controversial Hollywood development firm that Swiller teamed up with to buy out from under the DWP the 68,000-acre Rudnick property in Kern County for a major wind farm where DWP has power lines.
“Over the last seven years, city agencies have agreed to provide CIM with $58 million worth of loans and subsidies. And two city pension boards have agreed to invest up to $115 million in CIM funds on behalf of city retirees,” the LA TImes reported in September..
“A few weeks before Swiller met with the Rudnicks in Century City, CIM Group had persuaded the California Public Employees Retirement System to invest up to $200 million in a new infrastructure fund managed by the firm.”
It’s also worthy of note that the company Swiller used for the deal was his Renewable Resources Group that was set up with Villaraigosa’s environmental wizard and his interim DWP General Manager David Freeman.
Freeman, you might remember, hired Fleishman-Hillard more than a decade ago to handle public relations at the DWP at the time of deregulation, a $3 million contract that included $2 million more that passed through to another firm, Donna Andrews.
Both contracts evolved into nebulous forms that came under scrutiny of City Controller Laura Chick whose audits cast doubt on their value and led to the pay-to-play investigations that helped bring down Mayor James Hahn and lead to Villaraigosa’s election in 2005.
Chick’s attacks on those contracts, particularly the pass-through to Andrews, so enraged then DWP Commission President Ken Lombard that he issued an immortal epithet:
“I’d rather swim across a river of snot than apologize to Laura Chick.”
At the time, Lombard was president of Magic Johnson Enterprises.