The other shoe has finally dropped for Cody Cluff, former prexy of the Entertainment Industry Development Corp.
Cluff faces up to 14 years and eight months in state prison for allegedly embezzling more than $150,000 in public funds during a six-year period and spending it on vacations, strip clubs and donations to a high school boosters club.
Cluff, who headed the film-permitting agency from its founding until he resigned last December, was arraigned Wednesday in Los Angeles Superior Court after an 11-count grand jury indictment was unsealed.
Cluff’s attorney proclaimed his client’s innocence, dubbing the spending “trivial” compared to Cluff’s efforts to put the brakes on runaway production.
Cluff, 44, was released on $240,000 bail after being charged with eight counts of embezzlement, one count of crime by a public official, one of forgery and one of possession of a counterfeit seal.
The grand jury also indicted 37-year-old Darryl Seif, EIDC veep and general manager, on the latter two counts. An attorney for Seif, who was released on $40,000 bail, said the charges were unwarranted.
“The charges revealed today against Cody Cluff and Darryl Seif go a long way to ensure that the taxpayers in Los Angeles County are better served by their public agencies,” said Los Angeles District Attorney Steve Cooley.
The indictment was returned Tuesday by the grand jury, which interviewed 54 witnesses during a two-week hearing. Panel summoned mostly elected officials, including former L.A. mayor Richard Riordan.
The indictment comes nearly a year after D.A. investigators stunned showbiz by raiding EIDC’s Hollywood office and Cluff’s two homes. Subsequent probe into alleged misuse of $700,000 in EIDC funds led to revelations of $200,000 in political contributions and a litany of lavish spending including cigar clubs, $350 bottles of wine, premium tickets to Laker games and concerts, a $5,000 donation to the booster club where his children attended high school and trips with Dawn Keezer, head of the Pittsburgh film office.
The indictment focused on the spending that appears to be at odds with the EIDC’s mission of promoting Hollywood as a production location — strip club visits, payments to Covina High School and the Covina High Football Boosters, payments for club memberships, payments to the Pittsburgh Film Office and the Film U.S. org headed by Keezer, reimbursement for a trip to the Dominican Republic and travel expenses with Keezer.
Case will likely center on whether the funds were public and whether the EIDC, created as a successor to the L.A. city and county film offices, is a public or private entity. The EIDC collects permit fees for a variety of government agencies and acts as a go-between in helping producers arrange for street closures and access to public properties; it charges $450 per permit, which can be used for 10 locations over a two-week period, and has an annual budget of about $3 million.
“We have always maintained that EIDC is a public, not a private, agency,” Cooley said. “That being said, its mission and purpose are vital to the important film industry here in Los Angeles County.”
Cluff has defended the lavish spending as legal, contending the EIDC is private, and has insisted the expenditures were appropriate as part of a strategy to entertain producers and fulfill the EIDC’s mission of slowing down runaway production.
“You can’t entertain film and record producers with brown-bag lunches,” Cluff’s attorney Mark Werksman told Daily Variety after Cluff’s court appearance. “You have to wine and dine, go to film festivals, Lakers games and cigar clubs. He had a broad responsibility for maintaining this essential industry that is the lifeblood of our community.”
“During the seven years that Cody headed the EIDC, film production revenues for the region grew from $15 billion to $30 billion a year, and while we’re not taking credit for all that, he was tireless in his efforts to streamline the process, cut red tape and stave off competition. Now the D.A. is playing ‘gotcha’ with a handful of trivial expenses.”
Werksman said he will move to dismiss the charges at Cluff’s pretrial hearing on Sept. 24 before Superior Court Judge William R. Pounders.
Keezer denied any wrongdoing and announced earlier this summer that Allegheny County prosecutors had ended their criminal investigation without filing charges.
After the raids last September, Cluff ignored calls for his resignation until reaching a deal with the city and county of Los Angeles under which the parties agreed not to sue each other for civil damages.
The EIDC, the brainchild of then-mayor Riordan, was heralded as an effective response to the growing problem of runaway production during the mid- and late 1990s. The D.A.’s probe proved embarrassing to elected officials serving on the EIDC exec committee and its 49-member board, since Cluff’s spending took place with virtually no oversight and several of those officials returned contributions from Cluff.
Since then, the exec committee barred any further political contributions, hired former city administrator Keith Comrie to oversee an audit, agreed to pay KMPG nearly $300,000 to perform a comprehensive review and hired veteran showbiz exec Lindsley Parsons Jr. to run the agency.
EIDC attorney Mark Holscher said, “We’re cooperating fully with the D.A.’s investigation and we’ve instituted significant financial controls that have made the EIDC operate far better.”