It's Good to Be King George

Illustration by Bob AulIt's a public-relations axiom: if you want to bury bad news, release it on a Friday evening for the almost universally unread Saturday edition. And so the state attorney general on Friday, Sept. 28, announced a $1.5 million settlement in the consumer-fraud lawsuit against bazillionaire apartment mogul George Argyros.

You wouldn't have read that story in either the Times or the Register, however. Both papers reported Sept. 29 that the settlement was reached with Arnel Management Co. and asserted that the settlement does not name Argyros, the Costa Mesa firm's owner.

While it's true that the attorney general's press release doesn't name Argyros specifically, the actual complaint does say that when Attorney General Bill Lockyer refers to "Arnel," he's talking about "the directors and officers of Arnel Management Co. at the time of the entry of this judgment."

That would clearly include Argyros. But the reference may be elliptical enough to allow Argyros to be confirmed as the Bush administration's U.S. ambassador to Spain.

Thousands of poor and middle-class former residents in some of Arnel's 5,000 apartments in Orange and LA counties allege Argyros' company swindled them out of millions of dollars in security deposits and cleaning charges over the past several years.

The case against Argyros had once seemed a slam-dunk for prosecutors. In addition to the alleged victims, several ex-Arnel employees were prepared to testify they were ordered—in some cases by Argyros himself—to pad tenants' bills and unjustly withhold deposits. The Orange County district attorney's office had been set to seek a $5.3 million judgment, a figure one DA's investigator called "conservative because the potential violations would be many times that amount."

An Arnel statement claims the company didn't cheat anyone and that settling the case was less costly than going to court. But if that's true, Arnel surely could have won the fight in court and then easily won a judgment ordering the plaintiffs to reimburse its legal fees. Arnel still faces a $96 million civil suit filed by former tenants.

Some of those former tenants told the Weeklythat the settlement will provide little relief because the Arnel experience permanently destroyed their credit histories. One said, "Big surprise: You can't fight city hall." Others reportedly told the Times they were pleased to get anything, no matter how little.

OC District Attorney Tony Rackauckas has to be cheered by the decision. It was his own investigators who alleged that Argyros directed a massive "rip-off" scheme through Arnel. But Argyros is a major Republican donor, and Rackauckas, also a Republican, sought to derail the case, saying that Argyros had nothing to do with his company's alleged unlawful tactics. When a civil war broke out in his office, Rackauckas kicked the case to the state attorney.

Rackauckas and most of Orange County's delegation to Congress, the state Assembly and the state Senate owe their seats to the millions upon millions of dollars Argyros has lavished on them. Ironically—no, sadistically—the fat (and we mean fat) cat might have drawn some of those millions from the pool of cash allegedly siphoned from working stiffs.

Lockyer—who while a state senator had a reputation as Sacramento's slimiest legislator—tried to make hay out of the $1.5 million deal, calling it one of the largest of its kind in state history. But his staff was careful not to name Argyros in their chest-thumper of a press release. Since only media types who know what Arnel Management Co. is would rush to get the story out, Lockyer's timing and omission of Argyros' name guaranteed little press play outside Orange County, particularly in Washington, D.C., where topics and pundits were being firmed up for weekend political-chat shows.

Such kid-glove treatment makes one wonder about possible paybacks for Democrats Lockyer and Barbara Boxer, the U.S. senator from California who will green-light King George's bid for Madrid now that the fraud case has been resolved. Don't be surprised if their coffers are beefed up the same way Argyros secretly rewards his GOP lapdogs. As Danny DeVito put it in L.A. Confidential, dear readers, it'll be off the record, on the Q.T., and very hush-hush.


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