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Fraudulent City Letters Investigated

Taxes: Some mailings claim a surplus has reduced fees. Others describe deteriorating services but demand business license payments.


Memo to local business owners from the Los Angeles city clerk's office: Don't believe everything you read.

In recent weeks, two fraudulent letters have been circulating on official-looking city stationery, one telling taxpayers that a revenue surplus has allowed for reduced fees, the other an obnoxious reminder that despite high crime and a faltering economy, business licenses must be renewed on time.

"I've seen people that have tried to mislead people for a lot of different reasons, but I've never seen anything like this," said Don DeBord, chief of the city clerk's tax and permit division and a 30-year veteran of the tax collection business. "I have a very short fuse when it comes to this sort of thing. I don't see any humor in it," DeBord said. "I'm not saying you can't joke a bit about any situation, but these are not jokes. It's a deception that's being run on the taxpayers."

So far, DeBord's office has been contacted by four dozen businesses throughout the San Fernando Valley that got the fake letters. But there is no way to know how many of the 240,000 companies holding Los Angeles business licenses may have received them. Printed on official letterhead that includes the city seal, Mayor Richard Riordan's name and the phone number of the clerk's office, both letters state at the bottom, "an equal employment opportunity-affirmative action employer," as do authentic city documents.

One letter celebrates supposed "surplus revenue collected by the city of Los Angeles for the tax year ending 1995" (in fact, the city is running a $50-million deficit) and invites taxpayers to apply for a discount. The second letter takes the opposite tack, with a cartoon of a man at a desk being held at gunpoint and a sarcastic message about the importance of paying taxes despite a crumbling society.

"Although this office is aware of how Los Angeles has deteriorated over the years, that crime is up and that the local economy has not recovered in this area, you are not relieved of the responsibility of paying business or payroll expense taxes," the letter with the cartoon says. "Though this may seem to be an unfair type of tax, that's the way the system works."

The Los Angeles Police Department is investigating the letters as a possible fraud. Many recipients said they came via fax, anonymously.

City business taxes range from $1.48 to $75 per $1,000 of gross revenue, depending on the type of company. DeBord said officials expect to collect $270 million through business licenses and payroll taxes this year; so far, the city has received about $54 million. Taxes were due Jan. 31 but are not delinquent until March 1. All the businesses that have contacted the city clerk's office are in the Valley, from Pacoima to Canoga Park to San Fernando. Many are print shops or stationery stores, but the list includes two Chinese restaurants, an optometrist, a travel agency, a florist, a sandblaster and a business called "POPE."

"I just filled it out and mailed it back, assuming that I'd get nothing more than $1. I mean, the city isn't going to give me back my taxes," said Marlene Miller of Marlene Miller's Calligraphy & Stationery shop in Woodland Hills. "I got a letter back on Saturday that says the first letter was fraudulent. Now I want to know about the letter I got on Saturday."

Jeff Sadinsky, owner of Kitchen & Bath Specialists in Van Nuys, was equally dubious about the prospect of a discount and even more befuddled by the perpetrator of the fake letter scam. "What could somebody possibly get out of this? How could they possibly benefit?" Sadinsky wondered. "They're wasting their time."

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