The Legal Reader^™

That's not news, judges run businesses out of the courthouse, too. See from 1999 - Washington Times.

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Is Justice for Sale in L.A.?
By Kelly Patricia O'Meara

Child-custody cases always are heart-wrenching, but a three-month probe by Insight has unearthed an added twist for parents with cases before the Superior Court in Los Angeles. Emotionally distraught litigants are questioning whether a cozy financial connection between judges, attorneys and some court-appointed professionals in the City of Angels is affecting the outcome of their cases. Friends of the court are concerned that, at the very least, there is a strong appearance of impropriety.

Private bank accounts that benefit judges are at the heart of this brewing scandal - one that state and local agencies resolutely have failed to investigate, adding further suspicion. Bank accounts funded in part by fees from local lawyers and others involved in the family-court system are troubling litigants. Many feel it is impossible to know whether they're facing a judge who has benefited financially from an attorney appearing before the court.

Former presiding judge Robert Parkin tells Insight that an account critics dub a slush fund is nothing more than "coffee-and-flowers" cash for the Los Angeles Superior Court Judges Association, or LASCJA. But documents obtained by Insight show the bank account served a great many purposes and that the judges' association, a private organization, did not pay taxes on funds run through the account for the benefit of its members - who also would be subject to taxes.

Law-enforcement sources are nervous and concerned about the LASCJA accounts. They and county officials tell Insight not the least of the concerns is that for years county employees, paid by the taxpayers, were at the same time working on the LASCJA's books. This is because before filing for federal tax-exempt status in late 1997, the LASCJA was using the federal employer-identification number, or EIN, of Los Angeles County, which in turn covered the fact that the judges were not paying taxes on the outside income they moved through their association.

"On the face of it, there appear to have been one or several laws that may have been broken, but without specific information it is impossible to know what statutes are applicable," says Beth Miller, a spokeswoman for California Secretary of State Bill Jones. At the federal level a spokesman for the IRS who declined to be named said that an act of this nature "may fall under Section 72.061 of the tax code - fraud and false statements."

How much money is involved? Plenty. Just one of the LASCJA Bank of America account statements shows this alleged "coffee-and-flowers" fund with a balance of $110,000, according to copies secured by Insight.

Parents with business before the Superior Court say they feel caught in a web of judicial deceit that borders on an organized racket. But for years their requests for an investigation fell on deaf ears, as elected officials and law-enforcement agencies did nothing. Enter Marvin Bryer, a retired computer analyst in La Crescenta, Calif.

Bryer became ensnared with the family-court system after his daughter, Karen, was faced with losing custody of her 2-year-old son. Having spent nearly $100,000 on attorneys and research fees, Bryer took matters into his own hands and has been campaigning for a probe of a system that he claims "purposefully profits off the conflict of the families in litigation." He says, "I felt violated, almost numb, when I learned that the judges were making money through the child-custody system. The judges have too much power, and nobody is monitoring these guys."

In July 1994, Bryer challenged the internal finance auditor of the family court, Gregory Pentoney, to turn over all records of donations to the court from members of the Los Angeles County bar. It was in those records that he found two "donation" checks totaling $6,750 to the judges' fund, requisitioned through the bar association by the mother of the man Bryer's daughter was resisting in her custody case. This was regarded as compromising family-court judges in Los Angeles County from hearing the case and it was moved to Orange County.

According to a statement by Robert M. Mallano, the presiding judge of the Superior Court in 1993 and 1994, the funds being deposited into the account were not payments from lawyers and other court personnel, but "contributions made by judges to the association." If so, were these earned funds on which taxes were not paid, and what did the judges do to earn these monies? Moreover, other funds also were deposited in the LASCJA account. In a deposition taken in response to a case in which Mallano was asked to disqualify himself due to his possible financial interest, Mallano provided a sketchy picture of how the funds were raised for the LASCJA.

"Judges often participated on their own time in writing articles for various bar groups and assisted in lawyer-orientation programs, seminars and the like with various bar associations. Often when judges declined payment for these services, the bar associations made donations to the judges' association," Mallano said. Former presiding judge Parkin confirms Mallano's explanation of the LASCJA account to Insight, adding, "I think one judge edited a book or something and contributed the $20,000 he made into the account." According to Parkin, taxes never were paid on any of the funds going into the account.

Parkin and Mallano's description ignores a great deal of money moved to the LASCJA accounts - from direct payments by attorneys and other court personnel for minimum continuing legal education, or MCLE, classes to assorted "seminars" conducted by Superior Court judges - according to copies of banking records obtained by Insight.

The process by which the checks were being collected and deposited into the judges' account raises still more questions about the LASCJA and highlights the perceived conflict that arises from the judges' financial relationship to other child-custody professionals who work for the court.

Dozens of checks, obtained by Insight, deposited in the LASCJA account were made out to several other institutions, including the Judges Miscellaneous Expense Fund, the Judges Trust Fund, the Family Court Services Special Fund and the Family Court Services. These organizations are not registered with the IRS or the California State Franchise Tax Board, and if the Bank of America has accounts for any of them, the checks were not deposited in those accounts.

Not only were attorneys who argue cases before the family court making payments to the judges' fund, but so were the court monitors - appointed by the judges and paid a professional fee of as much as $240 a day as observers during child visitations. These monitors qualify for their jobs by paying to take a training and certification course from the judges, with the check going to the fund, whereupon they are placed on the exclusive list the judges use when assigning monitors.

The Los Angeles County Bar Association's contributions to the fund were payments to the judges run through a joint partnership with the court on MCLE classes. They split the proceeds from legal and professional seminars.

So, in addition to the ethical issues involved in how the bank account has been maintained, its funding also raises numerous legal issues, according to attorney Richard I. Fine, a taxpayers' advocate. "If a private group [the LASCJA] is using a public building and everything associated with that private group is being paid for with taxpayers' dollars, then it is clearly fraudulent," Fine contends. He adds that "unless the public entity has passed an ordinance specifically allowing the private group to exist and specifically stating that the public will bear the costs - separate phones, leasing office space, furniture, computers, etc. - then it should be paid for by the private organization."

According to Fine, "If the judges have provided false information on official financial statements submitted to government agencies or financial institutions [the Bank of America account], then they have defrauded the Internal Revenue Service and the county and the people of Los Angeles by receiving tax-free status under fraudulent means. i This would be the same as if a person lied on their tax return. It is incredulous to me that something like this could have happened and the IRS, state attorney general, county district attorney and auditor have not acted over all these years."

Yet that is what appears to have happened. In 1996, when Bryer first brought the matter to the attention of Alan Sasaki, the auditor/controller of Los Angeles County. Sasaki's office conducted a "limited review" of the checks paid by the bar to the judges and determined that those two checks Bryer was questioning, totaling $6,750, should have been deposited into the county treasury.

However, rather than requesting that the judges return the money to the treasury, Sasaki's office merely suggested they "take corrective action to ensure future revenue from court-sponsored events is deposited into the proper accounts." Without full disclosure of the LASCJA books and bank records, it is impossible to know how much money belonging to the county has been siphoned into the judges' private account, critics note.

Alf Schonbach, manager of the finance, accounting and internal-audits section of the L.A. Superior Court, has overseen the LASCJA account since 1992. He now tells Insight he paid no attention to whom the checks were being written. Schonbach says, "Somebody on staff collected the checks from the attorneys at the door during the weekend seminars and kept them in a safe box over the weekend. Then they'd bring them into the office, and then we would deposit the checks into the LASCJA account."

Despite the fact that Schonbach and his staff managed all aspects of the judges' account and regularly received account statements from the Bank of America, which in turn printed the county EIN at the top of the statements seen by Insight, he says he had no knowledge the judges were using the county of Los Angeles EIN to avoid taxes.

Tyler McCauley, Los Angeles County's assistant auditor, also tells Insight he was not aware the judges had been using the county EIN, although the county "has an agreement with banks to notify them when someone is using the number." He explains that "the Bank of America never brought this to our attention."

Although the auditor's office knew since at least 1996 that the LASCJA was using the county EIN, no administrative or legal action was taken. And despite the serious repercussions of having unknown entities randomly using the county's tax-exempt number, Sasaki seems unconcerned. "The fact that they are using our EIN is an issue with the IRS, not an issue with us," he says.

Sasaki's response did not surprise Bryer. "Every time I'd go to a law-enforcement agency or county representative to file a complaint, they'd tell me to go to some other agency. All you get is a big runaround with no one willing to help." A dozen county, state and federal agencies have had the opportunity to do something. The list reads like a Who's Who of law enforcement, beginning with the judges themselves: the Los Angeles Police Department, or LAPD; the bunco and forgery unit of the LAPD; the county Sheriff's Department; the district attorney; the city attorney for Los Angeles; the county of Los Angeles auditor and assistant auditor; the county treasurer; and the state attorney general. All failed to act.

Bryer also has met with representatives of the U.S. Department of Justice, Republican Rep. James Rogan's staff, the FBI and the IRS. The IRS couldn't comment to Insight because it is prohibited from releasing information about complaints - including information as to whether a probe has been opened.

Nathan Barankin, a spokesman for California Attorney General Bill Lockyer, says of Bryer's complaint, "The request has been reviewed by the city of Los Angeles attorney and the county of Los Angeles district attorney, but no one has asked us to do our own investigation." He adds, "We have only been asked to review their decision, not to move forward on the request.

Such a response suggests the attorney-general's office is making it clear that the Los Angeles district attorney and the city of Los Angeles attorney have taken the position that there has been no criminal wrongdoing on the part of the LASCJA. Attorney General Lockyer, however, was unaware of a March 3, 1999, preliminary investigation by the bunco unit of the LAPD in which Luis Lopez, an investigator for the city attorney's office, admitted to Bryer that he was directed not to initiate the crime report and was ordered to shred documents related to his investigation of LASCJA. Lopez refused to comment for this article.

Perhaps the stonewalling and apathy Bryer has faced from these agencies may be attributed to the fact that many of them are carrying on similar practices, he and others believe. Running private corporations inside the public sector is quite the accepted practice among Los Angeles officials, Insight learned. And many of those corporations are linked to the very agencies that reviewed the LASCJA.

For example, the IRS has Certified Public Accountants Inc. at the address of the district office of the IRS. The IRS refused comment. The Association of Los Angeles City Attorneys Inc. operates at City Hall, where Chief of Criminal Division Maureen Siegel says she was not aware it is listed. The Association of Deputy District Attorneys Inc. is run out of the Criminal Court Building, where Bill Ryder, who handles its accounts, says he is unaware of any rules concerning operation of a private corporation inside public buildings. Gil Garcetti, the district attorney of the county of Los Angeles, has two associations incorporated out of his offices in the Criminal Court Building. These are the District Attorney Crime Prevention Foundation and the Special Assistance for Victims in Emergency Inc. Spokeswoman Jerri Patchett claims these corporations were authorized by the Board of Supervisors and information about them is sent to that board annually. In order to get control over the ever-increasing nonprofit corporations popping up inside public buildings, the Los Angeles County Board of Supervisors established guidelines for foundations, requesting that they report the amount of staff time spent working for the organization and the value of government office space, supplies, etc. Of the above corporations, only the District Attorney Crime Prevention Foundation has listed itself with the Board of Supervisors.

"The entire concept of family law," says Bryer, "is that it is to operate in the best interest of the children. But the fact is that court personnel are making a living by decimating the bank accounts of the litigants, which ultimately destroys the quality of the child's life." Bryer is referring to the excruciating process litigants are forced to endure in order to prove they are worthy of retaining custody. Here's an example of what may be requested of such litigants in Los Angeles:

If a divorcing couple is unable to come to an agreement on the custody of their child, the court has the power to require the couple to attend mediation sessions with a court-appointed marriage counselor who attempts to resolve custody differences.

During these court-ordered sessions, mediators have the authority to demand that one, or both, of the litigants submit to tests, including drug testing. If a judge believes additional tests are necessary, litigants may be subjected to psychiatric evaluations or face losing their child. Once custody has been decided, the litigant who loses custody becomes the noncustodial parent and the judge determines the financial payments that must be made to the custodial parent.

At each step of the process, both litigants are forced to pay thousands of dollars for the services demanded by the court, not including the fees each side already is paying attorneys. But the child-custody cash register doesn't stop ringing. The system continues to rake in money for its swarm of support personnel long after custody has been awarded.

In the case of the noncustodial parent missing payments, collection is turned over to the Bureau of Family Support, or BFS - in Los Angeles District Attorney Garcetti's office - which becomes the collector and distributor of the noncustodial parent's payments. For years, however, complaints have been raised about Garcetti's alleged mismanagement of the BFS, and currently 14,000 families are owed nearly $25 million that Garcetti has collected but refused to pay.

With information generated by Insight's investigation into the family-court system, a lawsuit was filed by taxpayers' advocate Fine on Feb. 19 on behalf of John R. Silva of Sylmar, Calif., an aggrieved parent. Although Silva has made child-support payments since 1984, Garcetti's office sent him a letter in late 1997 advising that his payments were in arrears to the tune of $64,000. Garcetti began garnishing Silva's paycheck, despite the fact that Silva had documentary evidence both that all payments were received by Garcetti's office and that they never were forwarded to the custodial parent. Garcetti's office is trying to make Silva pay a second time and, in one instance, has left him with only one dollar of his pay.

The Silva lawsuit seeks to require Garcetti immediately to distribute the millions in child-support payments he has been holding. Bryer is hopeful that the lawsuit will provide an opening for investigation of the whole child-custody system. "The mishandling of the child-support payments," says Bryer, "is just one more outgrowth of a broken system that begins with the family court. It's time for the unholy financial relationship between the judges and other court professionals to end, and the lawsuit filed against Garcetti is as good a place as any to start."

Posted by: Bonnie Russell at January 2, 2007 6:43 AM