City of Commerce Links 3 Former Officials, Moriarty in Fraud Suit

The City of Commerce filed suit Friday in Los Angeles Superior Court charging that the city was defrauded out of more than $6 million through shady dealings involving three former city councilmen and W. Patrick Moriarty, who was convicted of political corruption.

Named as defendants in the suit were Robert Eula, Arthur Loya and Ricardo Vasquez, all of whom pleaded guilty last year to soliciting and accepting bribes from the Orange County businessman and former fireworks magnate.

According to the suit, the losses arose out of dealings the city and the Commerce Redevelopment Agency had with Moriarty over his proposed purchase of property commonly known as the Uniroyal site from the Daon Corp. The property, a famous Santa Ana Freeway landmark built in 1922 to resemble an Assyrian castle, lies within the city and its CRA project.

Loans Allegedly Obtained

To complete the purchase, Moriarty got loans from the redevelopment agency totaling $4,350,000, money intended to pay off several liens on the property and one year’s interest on the transaction, the suit states.

In June, 1983, the Uniroyal purchase was approved by the Commerce City Council on a motion by Loya that was seconded by Vasquez. But, the suit says, “the entire agreement was procured by fraud.” Moriarty had misrepresented the value of the collateral and his financial ability to pay and he immediately defaulted on the loan agreement, according to the suit.

Moriarty sold his interest in the Uniroyal site back to the redevelopment agency for $14 million. Under terms of the buy-back agreement, the agency cleared all liens on the property and released about $1 million in cash to Moriarty.

Agreement OKd by Council

This buy-back agreement was approved by the City Council on a motion by Eula, seconded by Loya. The suit alleges that both the purchase and buy-back agreements were procured by the payment of bribes by Moriarty to the defendants.

As a result, the city says it lost the sums advanced for the loans, the $1 million it gave Moriarty plus staff expenses, fees and tax allocations from development of the site estimated at another $1 million. The suit asks for damages of not less than $6,350,000, trebled.

Eula, Loya and Vasquez were sentenced last April 8 in U.S. District Court to federal prison terms of 10 months, 8 months and 3 months, respectively. Moriarty is scheduled to begin serving a seven-year sentence for mail fraud, laundering campaign money and other crimes in connection with attempts to influence state and local politicians.