State Investment Banker Indicted in Bribery Case
Calvin B. Grigsby, a leading California investment banker and a major underwriter of public bonds, was indicted Thursday on bribery, money laundering and conspiracy charges after he was videotaped allegedly offering a Miami-Dade County commissioner a $300,000 kickback for obtaining a piece of the county’s bond business.
The 25-page federal grand jury indictment handed up in Miami against Grigsby, Miami-Dade County Commissioner James C. Burke and his former chief of staff, Billy Hardemon, describes an August 1996 meeting in a posh San Francisco hotel suite at which Grigsby allegedly discussed the kickback.
The indictment also states that Grigsby, whose politically well-connected firm has underwritten major bond issues for the state of California and the city and county of Los Angeles, wired $50,000 in payments from a Swiss bank to an account in Bermuda. The next day, Burke allegedly flew to Bermuda and picked up most of the money.
Arraigned on the charges, Grigsby pleaded not guilty and was released on $1 million bond. He had no comment when leaving the federal courthouse in Miami.
Before its breakup in 1996, the San Francisco-based investment banker’s firm, Grigsby Brandford & Co., was the nation’s largest minority-owned investment bank and a major underwriter of government bonds throughout California.
The firm, all of whose principals were African Americans, grew rapidly during the 1980s, initially capturing a small piece of the vast bond underwriting business as state and local government agencies sought to include minority firms in their financing business.
As an executive of one of the handful of minority-run investment banking firms, Grigsby was able to win considerable business from the state of California--obtaining fees as co-manager on a number of large bond issues, including state general obligations and construction bonds for the University of California and the state’s pollution control, housing, and health facility financing authorities.
He enjoyed a close relationship with then-Assembly Speaker Willie Brown, who introduced Grigsby at political gatherings as his “personal investment banker.â€
Grigsby Brandford & Co. regularly contributed to the speaker’s campaign war chest, and hired Brown to write a legal opinion on a bond issue for a small Central California school district.
The banker established equally close relationships with other key political figures around the state, including then-Alameda County Supervisor Don Perata, who now heads the Assembly Rules Committee as a Democratic legislator from Oakland.
Perata was embarrassed last year when it was revealed that he had failed to report a $15,000 consulting fee he received from the Grigsby firm. In 1994, while a county supervisor, Perata voted to name Grigsby’s firm as underwriter on a $500-million Alameda County bond issue.
Grigsby and his firm also were reliable campaign contributors to local officials in Southern California, including members of the Los Angeles City Council.
The firm sparked intense controversy in Los Angeles in 1993, when--against the advice of city officials and an outside financial consultant--it was chosen to manage the largest bond sale in civic history, a $500-million refinancing of the expansion of the Convention Center.
With capital of only about $10 million, critics charged at the time that the firm was far too small and undercapitalized to manage a bond sale of up to $500 million.
At the Metropolitan Transportation Authority and its predecessor, the Los Angeles County Transportation Commission, Grigsby Brandford & Co. was a member of a syndicate of underwriters that handled bond issues from 1986 through 1996. The firm became the senior manager of two financing packages in 1991 and 1992 and was involved in the financing and refinancing of the MTA’s 25-story headquarters in 1995 and 1996.
Sources said that MTA investigators were watching the developments in Miami “because of their interest in Grigsby’s prominent role in MTA bond issues.â€
Grigsby resigned from Grigsby Brandford & Co. in 1996 and in September of that year the firm broke up after the Securities and Exchange Commission began a probe of his Miami activities.
The same year, Grigsby was fined $5,000 by the California Fair Political Practices Commission for violating campaign financing law by laundering money to an Oakland mayoral candidate and failing to report $53,500 in campaign contributions made in 1993 to several politicians, including Los Angeles County Supervisor Yvonne Brathwaite Burke and Los Angeles City Council members Rita Walters and Nate Holden. None of the elected officials were implicated in the violations.
Los Angeles’ Deputy City Controller Tim Lynch said he could not determine how much Grigsby Brandford & Co. got as the lead underwriter in the Convention Center bond issue, but said the firm shared more than $3.4 million with other bond firms such as Goldman, Sachs & Co.
Grigsby’s lobbying efforts preceding the vote on the convention deal were an issue at the time; the firm contributed nearly $31,000 to City Council members and former Mayor Tom Bradley from 1984 through 1992. It also gave $5,000 to the transition effort of Mayor Richard Riordan.
Even though the city’s outside financial expert urged putting the Convention Center refinancing project out to competitive bid rather than give it to Grigsby Brandford & Co., the consultant had praise for Grigsby himself, saying he had worked with him on a number of projects in Los Angeles and San Diego.
“I found him to be a very intelligent and very honorable man,†said David Rush, who in 1993 worked for the Public Resources Advisory Group, which was a consultant to city officials on finance issues.
Grigsby’s indictment is the latest in a wide-ranging federal probe of corruption in Miami.
Operation Greenpalm began in 1995 when a Unisys salesman complained that the city of Miami’s finance director was trying to shake down the company for a payoff in exchange for help in approving a computer sale.
An investigation launched by the FBI led to the convictions on corruption charges of Miami city manager Cesar Odio, City Commissioner Miller Dawkins, and a county lobbyist.
The one key player in Operation Greenpalm who has not yet been charged with wrongdoing is former Miami City Manager and bond trader Howard Gary, a financial advisor to the city who after being implicated in the kickback scheme began to cooperate with the FBI.
During the pivotal August 1996 meeting with Grigsby and Burke in San Francisco, Gary wore a tape recorder as the trio discussed the payoffs they would reap from the recycling facility refinancing deal. The conversation was also videotaped by a hidden camera.
Asked to comment when he emerged from the courthouse, Grigsby smiled softly and replied, “I have no comment.â€
But his attorney, Albert Krieger, said, “We believe that the evidence to come out of this case is about an extortion attempt by Howard Gary. There is more here than meets the eye.â€
In Miami, the probe has taken on a racial dimension because Grigsby, Dawkins, Hardemon and Gary are all African Americans. Hardemon alluded to that Thursday, as he walked out of the courthouse on $500,000 bond.
“This case is not Operation Greenpalm,†he told reporters. “This case has been changed to Operation High-Tech Lynching.â€
Clary reported from Miami; Rabin and Meyer reported from Los Angeles. Times staff writer Paul Jacobs contributed to this story from Sacramento.
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