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Ronka Sues Lawyer for $2.4 Million : Ex-Councilman Claims Fraud Over Blind Trust

June 03, 1988|RICHARD SIMON | Times Staff Writer

Former San Fernando Valley councilman Bob Ronka has filed a $2.4-million lawsuit against his former attorney, accusing him of mishandling his personal finances and damaging his chances for a political comeback.

In court documents filed Wednesday, Ronka accused Stephen Chrystie of "breach of trust and fraud" in managing a blind trust that the former councilman set up while he was on the Los Angeles City Council.

Ronka contends that Chrystie not only lost him $1.4 million but invested his money in slum property--a move that the former councilman said was a "potential political embarrassment" that contributed to his decision not to run for the council last year.

Chrystie on Thursday called the charges ridiculous.

"Mr. Ronka has retired on the millions I made for him," he said.

Ronka said Thursday: "This lawsuit isn't just about bad investments. It's about breach of trust and fraud."

Chrystie, 51, managed a blind trust that Ronka set up after he was elected to the council in 1977. In a blind trust, a person places his personal assets under the control of a trustee. The individual has no knowledge of how those funds are invested. Blind trusts are typically set up by public officials to avoid conflicts of interest.

Ronka contends that Chrystie in December, 1981 used $440,000 of the trust's assets to buy three slum properties at a "grossly inflated" price from Chrystie's cousin, Jack Margolis. Ronka claims the purchase of the "ramshackle" buildings was a poor use of the trust funds.

"Moreover, defendant Chrystie was well aware at the time of purchase that such investments, if ever disclosed to the public, could severely jeopardize plaintiff's political career," the suit charges.

Ronka contends that the investment contributed to his decision not to run for the council in April, 1987.

"A major reason for his decision not to be a candidate in said election was the potential political embarrassment caused by the wrongful actions of defendants," the lawsuit says. Besides Chrystie, Margolis and Chrystie's former law firm are named as defendants.

Chrystie contended that the three properties--all in Hollywood--are low-income housing, not slums. He added that they sold for a profit "except for one that had a small loss."

Ronka, 45, represented the northeast Valley's old 1st District for four years until he ran unsuccessfully for city attorney in 1981.

In an interview, he said that he spends most of his time today managing his investments. The bulk of his money came from real estate investments in booming Warner Center. He said he also has been active in a homeowners association in Calabasas, where he lives.

Chrystie, an old friend and political confidante of Ronka's, said he never charged the former councilman for managing his funds. He said of the lawsuit: "It's probably the most ungrateful action I've known a human being to take."

The suit seeks $1.4 million in damages for "lost profits, lost investment opportunities and lost political opportunities." It asks for $1 million in punitive damages. No date has been set for a hearing.

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