The politics and pitfalls of paid speeches
Former L.A. mayor was paid $50,000 to promote company later sued by the SEC
In the years before running for governor, former Los Angeles Mayor Antonio Villaraigosa traveled the world addressing audiences from Beijing to Baku to Bakersfield, leveraging his political celebrity to rake in hundreds of thousands of dollars in speaking fees.
Villaraigosa earned just over $318,000 for 24 speeches he gave since leaving the mayor’s office in July 2013, according to a list released by his campaign.
But an examination of his speeches underscores the potential pitfalls when high- profile politicians leap from the speaking circuit back to the campaign
trail. In China, Villaraigosa was paid more than $50,000 by a company that was later sued by the Securities and Exchange Commission for defrauding immigrant investors. Comments he made while traveling to Azerbaijan could anger California’s large Armenian community. And he gave one $10,000 speech to a financial firm after launching his bid for governor — questionable timing in the Golden State, which bans most paid speeches by declared candidates.
Speaking for cash is a popular move for prominent pols between jobs, even as it’s led to scrutiny about who’s paying them — and why. Former Secretary of State HillaryClinton faced controversy when she declined to release transcripts of her speeches to GoldmanSachs and other big banks during the 2016 presidential campaign. New Jersey Sen. Cory Booker made more than $1.3 million for paid speeches before being elected to the U.S. Senate in 2013.
“These engagements are often ways to sweeten the pot” for past and future elected officials, said Richard Painter, the vice-chairman of Citizens for Responsibility and Ethics in Washington. “It’s another way to gain influence.”
Villaraigosa said he gave speeches to share the lessons he learned from leading Los Angeles.
“I have been focused on how we can unite around bold solutions,” he said in a statement. “Speaking on those topics, and hearing from fellow speakers and audience members, was both a chance to teachandachance to learn.”
None of the other top candidates for governor have earned big bucks for public speaking. Former state schools chief Delaine Eastin, who has trailed in the polls, was paid for occasional education-related speeches after leaving office, a spokeswoman said.
Villaraigosa received his largest speaking fee — $50,025 — for a December 2014 event in Beijing organized by a company called Los Angeles County Proton Therapy, which planned to build a cancer treatment center in Southern California. The firm raised money through EB-5, a federal program that allows foreigners to invest $500,000 in a jobcreating business enterprise in exchange for a U.S. visa and, eventually, permanent residency.
But the project collapsed when the company, later renamed Beverly Proton Center, was sued by the SEC for securities fraud in May 2016. The SEC alleged that the company collected $27 million from 50 Chinese investors for the center and then diverted $20 million to its husband-and-wife executives, Charles Liu and Xin Wang, and to firms associated with them. In April 2017, a judge ordered Liu and Wang to pay back the funds they raised and levied more than $8 million in civil penalties against them.
The SEC never suggested any wrongdoing on Villaraigosa’s part, and his campaign said he was unaware of the alleged fraud and the investigation into the company until contacted by the Bay Area News Group last week. He accepted the payment a year andahalfbefore theSEClawsuit was filed.
Still, Villaraigosa’s decision to travel to China and givethespeechlentasheenof legitimacy to the project. The event, at the opulent ParkHyatt Hotel in Beijng, was part of an effort to recruit investors, according to court documents. InaMarch 2016 deposition, Liu lauded Villaraigosa as a “natural speaker.” A website promoting the project also featured a 2013 letterhewroteinsupport of the project while in office — his campaign said he wrote the letter because of the center’s expected job creation and economic impact.
Bill Novodor, a former business partner on the treatment center who invited Villaraigosa to Beijing, said the formermayor “did this with only one thing in mind: how he could better the lives of Californians.” Liu andWang, who now live in China, are appealing the court’s ruling against them and didn’t respond to a request for comment. The treatment center was never built.
In one other speech that raises questions, Villaraigosa spoke about the results of the presidential election at an event held by The Capital Group, a Los Angeles investmentmanagement company, on Nov. 17, 2016, according to his campaign. That was a week after he launched his bid for governor, onNov. 10.
The state Political Reform Act bars candidates fromaccepting speaking fees after they file campaign paperwork. ButVillaraigosa’s campaign said he did not violate the law because the speech qualified under an exception for income earned as part of his business as a policy consultant, and because he was paid the $10,000 in advance, before he filed to run. The campaign did not specify when the paymentwasmade or release a canceled check or other documentation.
The paid speaking prohibition exists to eliminate the appearance of corruption when state officials and candidates “receive payments for activities requiring little orno work in exchange,” according to opinions published by the Fair Political Practices Commission, which evaluates ethics issues.
But experts say Villaraigosa’s paid-in-advance explanation has precedent, and an opinion by the commission in a 1993 case concluded the speaking ban “is not served by prohibiting contractual arrangements made by a public official” prior to their candidacy.
Villaraigosa’s case “doesn’t seem to be a violation,” said Michael Salerno, a UC Hast- ings law professor and the commission’s former executive director. A commission spokesman declined to comment on specific cases.
Villaraigosa’s other speeches were less remarkable. He was paid by universities, nonprofits, and trade groups, for events around the U.S. and in Mexico and South Korea. He discussed topics such as environmental policy, the Latino vote and his experiences running Los Angeles.
When Villaraigosa left office in July 2013, he had “no job, no house, no car,” he told theL.A. Times. Paidspeeches and lucrative consulting gigs changed that, while alsohelping him stay in the public eye before running for the state’s top job.
“I guess you’re keepingme employed,” he joked in a November2013speechongreen cities at UC Berkeley, which paid him $13,505.
Villaraigosa’s campaign said he did not receive a fee for more than 40 additional speeches identified by the Bay Area News Group that he gave between 2013 and 2016, including conferences in Baku, Azerbaijan; Bilbao, Spain; and Herzliya, Israel. His travel expenseswere paid for some of those trips.
The Azerbaijan trip could raise eyebrows in California. While attending the Baku International Humanitarian Forum in October 2014, Villaraigosa said in a TV interview that the country was a “model nation” and a “force for peace.”
A report from Human Rights Watch released that year found that the government arrested political activists and journalists. Azerbaijani president Ilham Aliyev, whospokeat the same forum as Villaraigosa, previously declared that “our main enemies are Armenians of the world and the hypocritical and corrupt politicians that they control.”
Villaraigosa spokesman LuisVizcaino said thisweek that his candidate misspoke and does not believe Azerbaijan is a model nation. As mayor, Villaraigosa hosted visits by the presidents of Armenia and Nagorno-Karabakh, a breakaway region of Azerbaijan controlled by ethnic Armenian separatists, and advocated for recognition of the Armenian genocide. “His record is loud and clear — he is, and has been, a strong public supporter and advocate for the Armenian community,” Vizcaino said.
Villaraigosa’s campaign said he was not paid a fee for his appearance in Baku, but did not answer a question about who paid his travel expenses.
Nora Hovsepian, the regional chair of the Armenian National Committee of America, said she was disappointed by Villaraigosa’s warm words. “We’re still waiting for him tomake any sort of public renunciation,” she said.