Official Sought Retirement as Probe of Bank Ties Unfolded

William T. Hoss, a veteran city treasurer’s official at the center of a controversy involving city deposits to a bank that paid Mayor Tom Bradley advisory fees, filed for retirement on July 20--the day the City Administrative Office released its report on a cover-up, it was learned Monday.

Hoss, 68, who has worked for the treasurer’s office for 38 years, stunned the council’s Finance and Revenue Committee last week by leaving on a three-week vacation after the council asked him to return for more questioning. The committee held hearings last week on a City Administrative Office report that showed someone--possibly Hoss--had changed investment records that might have shown whether Bradley influenced the treasurer’s decision to deposit $2 million with Far East National Bank last spring.

September Date

Hoss, accused by another treasurer’s official, George Sehlmeyer, of engineering a plan to remove a reference to Bradley and to add other banks’ names to a “bid sheet” on Far East’s deposits, applied to retire effective Sept. 12. Depending on how much vacation time the investment officer has accumulated, it is possible he could retire without ever returning to work, said Raymond A. Young, assistant manager of the City Employees’ Retirement System.

Hoss was said to be out of town and unavailable for comment. However, last week he denied engineering the cover-up and said he does not know who “whited out” Sehlmeyer’s handwritten notation “per the mayor” after Far East’s name. He said he added “bids” from other banks to the form only after being asked to do so by City Treasurer Leonard Rittenberg. Rittenberg said he asked for the bids, even though the money already had been deposited with Far East, because he wanted to see if the bank’s interest rate was “in the ballpark.”

Several city bodies are investigating whether Bradley used his influence to get Far East city business. Bradley has denied any wrongdoing but has refused to discuss the matter in detail publicly until the investigations are completed.

Hoss did not tell anyone during the hearings that he was preparing to retire. The mayor’s office and Councilman Richard Alatorre, who on Monday announced some reforms in the treasurer’s office, also said they did not know of Hoss’ intention to retire until asked about it by a Times reporter late Monday afternoon.

In another development Monday, City Controller Rick Tuttle said Los Angeles police officers working on the city attorney’s probe have asked Tuttle’s department to proceed slowly on its own investigation of the treasurer’s office. Tuttle said the Police Department investigators asked him to delay interviews with certain treasurer’s officials until police have an opportunity to question them as part of an ongoing criminal investigation.

Some Have Testified

Tuttle would not identify the treasurer’s officials, but it is known that some, including investment officer Sehlmeyer, have already testified under oath as part of the controller’s investigation.

Meanwhile, in the wake of last week’s explosive hearings that revealed widespread personnel problems and possible criminal activity in the treasurer’s office, Alatorre announced a package of proposals to solve the “chaos and turmoil” in the city department responsible for investing $2 billion of taxpayer money.

In a City Hall press conference,, Alatorre said he has negotiated the immediate hiring of two additional staff members to buttress the department’s small, three-man investment team that is now preoccupied with investigations and internal squabbling.

Alatorre also proposed considering a City Charter change to make the treasurer an elected office, to “bring the accountability” to the position. The treasurer is appointed by the mayor and can be fired by the mayor and council together. “This is an extremely important position, as we learned in recent weeks,” said Alatorre. He plans to ask the chief legislative analyst, chief administrative officer and city attorney to prepare a report on the “feasibility and advisability” of an elected treasurer.

It was at Alatorre’s urging that Rittenberg agreed late Friday to add one investment officer to the current staff of two and to hire a clerk to review paper work and ensure that procedures are followed. The two new positions become effective next Monday and could be staffed with in a week.

Outside Accountant

In addition, Alatorre will ask the City Council today to approve the hiring of an outside accounting firm to keep an eye on the treasurer’s investment staff and report weekly to the council. He said the accounting firm’s review is necessary to have the “accountability that the City Council and the residents of Los Angeles need.”

At the recommendation of the City Administrative Office, Alatorre said he will ask the council to approve a $25,000, three-month contract with the accounting firm of Quesada, Navarro & Co.--a firm that already has extensive auditing contracts with the city. The accounting firm’s daily review will be necessary for two to three months, or “until this thing shakes out,” Alatorre said.

Alatorre said he wants to know why the city’s own chief auditor--City Controller Tuttle--has not completed audits of the treasurer that are required by the City Council. “I’ve got a lot of questions for them,” said Alatorre of the controller’s staff, which has been asked to appear at the council today. “I want to know why some of these things have not come to light earlier,” said Alatorre.

Tuttle on Monday said that the first of those audits will be released in a month.

Homeowners’ Move

Also on Monday, leaders of three large, politically active San Fernando Valley homeowners associations demanded that a special investigator be named to probe Bradley’s business and personal financial dealings, as well as alleged management problems in the city treasurer’s office.

In an open letter to City Council members, the neighborhood leaders, representing about 2,000 homeowners in Sherman Oaks, North Hollywood and Studio City, said the “burgeoning crisis of confidence must be recognized . . . and dealt with promptly.”

Tom Paterson, president of one of the groups, said that in addition to the special investigator, the City Council should use subpoena powers and require testimony under oath from city officials, including Bradley, to clear up allegations of conflicts of interest.

Times staff writers Tracy Wood and Rich Connell contributed to this story.