Sen. Montoya Admits Diverting $45,000 From Campaign Fund

SACRAMENTO —  State Sen. Joseph B. Montoya, submitting to a bruising cross-examination, admitted Wednesday that he diverted more than $45,000 in campaign funds to his personal use, including pocketing $22,000 in travel reimbursements.

In his second day of testimony, the Whittier Democrat also admitted that he did not properly report the acquisition of two pieces of property or the receipt of $37,000 in income and loans. Montoya acknowledged that the transactions should have been disclosed when he filed annual reports with the state under penalty of perjury.

But in a victory for the embattled senator, U.S. District Judge Milton L. Schwartz threw out two federal bribery charges against Montoya that duplicated extortion and racketeering counts also included in the indictment.

Schwartz ruled that the relatively new bribery statute was not intended to apply to a state legislator. However, the judge’s decision does not substantially affect the case against Montoya, since the allegations involved in the two bribery counts are already covered by separate charges.

As a result of the judge’s action, Montoya now stands accused of 10 counts of extortion, racketeering and money laundering.

Assistant U.S. Atty. John Panneton spent much of the day attempting to show that Montoya sought to enrich himself through a variety of transactions, including using campaign funds for his personal benefit.

While not directly covered in the indictment, prosecutors contend that Montoya’s diversion of funds demonstrates his motive in allegedly extorting campaign donations and honorariums from individuals with business before the Legislature.

The senator told the jury he was aware that the office of Atty. Gen. John K. Van de Kamp is investigating possible violations of state law governing his use of campaign funds. It is against the law for a legislator to use campaign contributions for personal purposes.

Montoya acknowledged that he received $18,000 in reimbursements from the state for travel expenditures from his campaign account. But instead of paying his campaign fund, Montoya admitted, he kept the money.

“I feel I was legally entitled to the money,” Montoya said, without offering a further explanation.

Similarly, Montoya admitted pocketing another $4,000 in reimbursements from private groups, including $350 he received from the Allan Co. Prosecutors contend that Montoya received the payment from the Baldwin Park recycling firm as part of an extortion plot.

In a more complicated transaction, the senator testified, he loaned $10,000 from his campaign account to Leonard Talbert, the husband of his campaign treasurer. Talbert then loaned Montoya $6,000 of the money and paid another $2,375 to Montoya family members and the senator’s stockbrokers, the senator acknowledged.

Montoya also conceded that he spent campaign funds on a variety of personal purposes, including $4,500 on season tickets for Los Angeles Raiders games and $10,500 to take his family on trips to Hawaii and the East Coast.

When it came to reporting his personal finances as required by law, Montoya said, he did not disclose the $6,000 loan from Talbert or $31,000 in profit from a business venture with another friend who had borrowed $66,000 from the senator’s campaign fund.

Montoya, who over the years acquired 19 pieces of property throughout the state, also admitted that he did not report the acquisition of a Sacramento house he purchased with a former aide, Amiel Jaramillo. The house was purchased with a $7,700 down payment from Jaramillo shortly after the aide borrowed $7,500 from Montoya’s campaign treasury, but the senator testified that there was no connection between the loan and the house.

And the senator testified that he did not report the acquisition of a Sacramento house given to him by his secretary, Rachel Fontes. Montoya said he did not disclose the transaction because the house had no value. He offered no further explanation.

At the end of the day, defense attorney Michael Sands described the grueling cross-examination of Montoya as “somewhat akin to the Chinese water torture.” But Sands also told reporters he was “very, very pleased” that Judge Schwartz had dismissed the two bribery counts.

One of the charges involved the federal sting operation in which Montoya received a $3,000 honorarium from an undercover FBI agent. The second bribery count accused Montoya of seeking a $500 campaign contribution from an organization of oil producers who wanted the senator’s vote on a bill.

However, U.S. Atty. David F. Levi said the judge’s ruling will have “virtually no effect on our case” since the sting and the episode involving the oil producers are covered in other counts in the indictment.