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2 on Water Board Accused of Extortion

A congresswoman's son is arrested in a case linked to Carson political scandal.

August 01, 2003|Ted Rohrlich | Times Staff Writer

Building on a Carson corruption probe that has drawn guilty pleas from four public officials, federal agents arrested the son of U.S. Rep. Juanita Millender-McDonald (D-Carson) Thursday on charges of extorting kickbacks from contractors doing business with the government water agency he heads.

R. Keith McDonald, president of the obscure but powerful West Basin Municipal Water District, was also charged in a separate alleged scheme with extorting tens of thousands of dollars from a bus company seeking a contract extension from Carson.

In that case, McDonald is accused by a federal grand jury of ferrying bribe payments to three Carson City Council members who have since acknowledged receiving them.

A second West Basin board member, Tyrone Smith, was also indicted by the grand jury for allegedly extorting $25,000 two years ago from an investment banker who stood to earn 10 times that much if a firm he was representing handled the refinancing of $140 million in West Basin debt.

Both men face a nine- or 10-year prison term if convicted, said Assistant U.S. Atty. John Hueston, the government's lead prosecutor.

McDonald, 39, was arrested at his Long Beach home and taken to U.S. District Court in Santa Ana, where he was freed on $200,000 bail.

The sum was guaranteed by his mother, who agreed to put a $100,000 lien on her house.

Millender-McDonald declined to comment on the charges facing her son, as did his lawyer, John Potter.

Smith, 46, of Ladera Heights, remains at large, authorities said Thursday.

West Basin is one of the largest water districts in California, serving close to 1 million residents in Malibu, Culver City, Inglewood, the South Bay beach cities, Carson and Gardena and on the Palos Verdes Peninsula. Its five elected board members work part time, representing 17 cities and some unincorporated areas, principally in southwest Los Angeles County.

West Basin buys water from the giant Metropolitan Water District -- which imports supplies from the Colorado River and Northern California -- and sells it to local water companies. It also recycles sewage for industrial uses and landscape watering.

Although boards such as West Basin's attract little attention from voters or the media, they are considered plum positions by many budding politicians.

McDonald, who has served the water district since 1994, has lost two bids to succeed his mother in the state Assembly since she was elected to Congress in 1996.

West Basin board members control a $100-million annual budget and hand out multimillion-dollar construction contracts to build pipelines, as well as water recycling and desalination plants. One of the largest, the Juanita Millender-McDonald Regional Recycling Plant, was named two years ago for the congresswoman.

Keith McDonald was first elected to a four-year term on the board as part of a slate of water board candidates affiliated with former U.S. Rep. and current Assemblyman Mervyn Dymally (D-Compton). Dymally said he wanted to see more minority representation on boards traditionally dominated by whites. Dymally and McDonald are African American.

West Basin board members enjoy such benefits as meeting attendance fees that averaged $15,000 last year, plus travel expenses that ranged from $5,000 to $38,000 per member last year, a board spokesman said. McDonald received a total of $20,000 last year, the lowest among board members. In addition, the members get monthly car allowances and medical and dental insurance that extends to family members. In the past, the West Basin district also provided reimbursement for tuition and the costs of foreign travel.

McDonald lists his occupation as a venture capitalist with his own firm. Prosecutor Hueston described him as "a veteran and skilled extortionist who very carefully tried to cover the trail of his extortionate acts by putting intermediaries between himself and his victims."

McDonald would pressure firms into writing checks to intermediaries who would then write checks to him, Hueston said. McDonald would then allegedly claim that the payments were for consulting work he had done for the intermediaries.

McDonald came to Hueston's attention in late 2000 when Carson Councilman Manuel Ontal walked unbidden into the U.S. attorney's office in Santa Ana and confessed to having taken a bribe from McDonald. Ontal later agreed to work undercover for the government, providing the crucial break in what has become a widening probe of public corruption centered in Carson, a South Bay city of 90,000.

Ontal told prosecutors that McDonald paid him $5,000 in cash after the councilman voted to turn aside a staff recommendation and award a $6.5-million, five-year extension of a public bus service contract to Transportation Concepts Inc., whose work had been criticized in an audit.

The Irvine-based firm, the indictment says, had agreed to pay McDonald $120,000 if its contract was approved.

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