Former Labor Chief Takes Plea Deal in Funds Case

Former Los Angeles City Councilman and labor leader Martin Ludlow has agreed to plead guilty to a criminal conspiracy that secretly diverted union money to his 2003 council campaign, officials said Friday.

Faced with embezzlement and coverup allegations that include backdating records and passing an envelope of unreported cash to a campaign worker, Ludlow will pay fines and restitution of $186,000 and accept a four-year ban from public office and a 13-year prohibition on leading a union. The union ban could be reconsidered after five years.

As part of the deal with federal and state prosecutors and the city Ethics Commission, Ludlow will avoid jail time -- if a federal judge agrees -- in exchange for cooperating with investigators, who also filed charges Friday against Janett Humphries, the former president of Service Employees International Union Local 99.

Humphries immediately pleaded not guilty to two state counts, including conspiring to provide illegal funding from Local 99 to Ludlow’s campaign.

She was also indicted by a federal grand jury on one count of conspiracy and 17 counts of embezzling union funds to help Ludlow’s campaign and finance lavish travel for herself, her family and friends. She has not yet entered a plea to those charges.

Deputy Dist. Atty. Max Huntsman said the city’s election process seeks to give candidates a level playing field by limiting individual contributions to $500 and requiring the reporting of all money spent to support a contender.

“The allegations involve a conspiracy to overcome those laws, to allow Mr. Ludlow to have access to a large pool of money that his competition didn’t have,” Huntsman said. “When you have a level playing field set out for an election and somebody violates those rules ... that endangers the democratic process.”

Ludlow, 41, is scheduled to appear Monday in Superior Court to plead guilty to one felony charge of conspiring to violate city campaign finance laws and to two misdemeanor charges.

He has already signed a federal plea agreement, admitting that he participated in an embezzlement conspiracy to have Local 99 spend $36,492 on six workers who were put on the union payroll but actually worked on his campaign, and to cover cellphone, photocopying and office supply charges.

Gordon S. Heddell, inspector general for the U.S. Department of Labor, which oversees spending by unions, added that using union money to illegally aid a political campaign betrays “members’ trust and weakens the public trust.”

The federal agreement also requires that Ludlow cooperate with the inspector general of the Metropolitan Transportation Authority, which has been investigating contracting decisions by that agency dating back to when Ludlow served on the board.

However, federal prosecutors agreed not to prosecute him for his role, while a board member, in helping an associate get a $282,000 public relations contract even though conflict-of-interest rules prohibited him from officially acting on the project.

Ludlow did not appear in court Friday, but his three attorneys issued a statement.

“Mr. Ludlow has admitted that he made mistakes,” the lawyers wrote. “He has accepted responsibility for those mistakes by reaching agreements to settle this matter with federal and local authorities. He will do so by formally admitting what he did and by continuing his personal cooperation.”

Ludlow left the City Council last summer to become executive secretary-treasurer -- the top staff position -- of the Los Angeles County Federation of Labor upon the unexpected death of his longtime labor mentor, Miguel Contreras.

Ludlow announced last week that he would also leave that post in the face of the campaign investigation.

The complaints filed by federal and state prosecutors allege that Ludlow approached several people to work on his 2003 campaign who were later put on the union payroll.

Humphries, the state’s complaint alleges, told the union’s bookkeeper that “several people were to be paid by Local 99 for work done on Martin Ludlow’s campaign” because the union had already contributed the legal maximum of $500.

The complaint also alleges that in December 2002, Ludlow provided an envelope containing $1,300 in cash to campaign worker Gregory Akili and directed him to give it to staff member Kineta Shorts to pay for work on his campaign.

However, Ludlow later filed campaign finance reports that failed to disclose the cash payment to Shorts and other expenditures.

He also tried to cover up the illegal activity by directing Akili “to create antedated work product” for the union and sign a false contract, according to the state complaint.

Akili and other “phantom workers” for the union are cooperating with prosecutors, officials said.

Humphries is also charged with directing the union bookkeeper to create backdated documents and change employment records to “make them appear as independent contractors rather than employees,” the complaint says.

The largest fine against Ludlow from the three prosectorial agencies, $105,000 by the city Ethics Commission, may not come from his pocket.

Under city law, former elected officials can reopen old campaign committees as legal defense funds and accept contributions from supporters to cover legal expenses and fines.

Meanwhile, officials said the investigation into Local 99 funds is continuing.

“There is an ongoing investigation on the part of the district attorney’s office into the conduct at issue here,” Huntsman said. “Whether that is going to branch out into something further or simply enable us to effect our prosecution would just be speculation on my part. But we’re not done.”

Local 99 has spent hundreds of thousands of dollars to legally support more than a dozen local candidates.