Former Los Angeles City Councilman Martin Ludlow is considering stepping down as head of an influential and politically active labor group and is weighing a plea bargain with prosecutors investigating the alleged misuse of union money in his 2003 campaign for the council, associates and sources said Thursday.
Union officials seemed stunned as word circulated that Ludlow might face criminal charges. Only last summer, he resigned his council post to became executive secretary-treasurer -- the top staff position -- of the powerful Los Angeles County Federation of Labor upon the sudden death of his union mentor, Miguel Contreras.
"I'm just devastated," said Rick Icaza, federation president. "We're going to have to have an emergency meeting to appoint a successor."
For weeks federal and state authorities have been questioning union officials about whether Ludlow's campaign received illegal union assistance.
If Ludlow accepts the plea offer, sources said, he might avoid jail but face a heavy fine and be banned from public office or union posts for at least 10 years.
A plea bargain would also mark a substantial downfall for the energetic, articulate, 41-year-old, who local labor leaders hoped would fill a void left by the death of Contreras, long a prominent player in Los Angeles politics. The federation represents 354 unions with a membership totaling 825,000.
Icaza said other union board members told him Thursday that Ludlow planned to take a leave as he deals with a joint investigation by the U.S. attorney, the district attorney and the city Ethics Commission.
Ludlow avoided reporters seeking comment when he appeared at an afternoon rally for downtown hotel workers.
However, earlier in the day union leaders throughout Southern California received a terse letter from him.
"It's been brought to my attention there are rumors circulating regarding the investigation into my 2003 City Council campaign," Ludlow wrote. "As a policy, the Los Angeles County Federation of Labor will not comment on pending investigations of an affiliate. Any investigation into any campaign, including my own, will receive my full cooperation."
Mary Gutierrez, a spokeswoman for Ludlow, said Thursday that Ludlow has not quit his post or said he would.
Another official close to Ludlow is Los Angeles Mayor Antonio Villaraigosa, who was a labor activist before seeking public office. Villaraigosa said he knew nothing about Ludlow's plans or the union investigation.
"I frankly don't have at my disposal any information in that regard, and I don't want to comment until I do," said the mayor after a news conference in Boyle Heights. "Let me be clear about this. He's like a son to me. I love him."
Sources said authorities have found evidence that Ludlow's council campaign benefited from a secret effort by leaders of Service Employees International Union, Local 99, which represents school employees. The two sources spoke on the condition they not be identified because, although they have direct knowledge of the plea proposal, they are not authorized to speak publicly.
Investigators suspect that Local 99 leaders illegally spent at least $53,000 in union funds to hire political operatives as phantom employees and to pay for cellphones, computers and phone banks benefiting Ludlow's campaign, according to the sources.
Those contributions, the sources said, may have violated federal laws that regulate the expenditure of political money by unions and give the government broad latitude to prosecute violators and demand repayment to union members whose dues are misspent.
Prosecutors are seeking $181,000 in fines and $81,000 in restitution from Ludlow and his campaign committee, the sources said.
The deal being discussed could involve one felony count of conspiracy to violate city campaign limits, sources said.
The U.S. attorney may also seek one count involving the misuse of Local 99 resources, sources said. Investigators for the U.S. Department of Labor participated in the inquiry.
Ludlow has been given until Tuesday to accept a plea bargain, sources said, in part because the statute of limitations for some potential charges expires at the end of this month.
Federal authorities are also said to be looking at Ludlow's involvement in a contract provided to a friend while Ludlow was on the Metropolitan Transportation Authority board in 2003.
At issue is whether Ludlow pushed the MTA to provide a woman he knew from the janitors union with a $282,000 public relations contract for a bus yard project on the Westside -- a project that Ludlow had earlier been disqualified from voting on because of his ties to a developer.
The status of that inquiry was unclear Thursday.
When asked about the MTA investigation last June, Ludlow described it as "the most ridiculous thing I've ever heard."
The labor leader moved to Los Angeles in 1986 and quickly built deep political connections, earning a reputation as a strong public speaker with nerve who could organize in the field.
