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By Max Whittaker
BY LANCE WILLIAMS The Center for Investigative Reporting firstname.lastname@example.org
For more than a year, John A. Perez, speaker of the California Assembly, dated a Hollywood funeral director who faces fraud allegations in one of the biggest financial scandals to rock the U.S. funeral industry.
During their relationship, Perez, a Los Angeles Democrat, mixed political business with his personal life in ways that showed poor judgment, ethics experts say. A Perez spokesman said the lawmaker conducted himself appropriately during a casual dating relationship.
Perez will run for state controller
SACRAMENTO -- Assembly Speaker John A. Perez (D-Los Angeles) announced Wednesday he will run for state controller next year.
Perez opened a campaign account and funded it with $1.5 million bankrolled while in the Assembly, his political strategist, Doug Herman, said.
Board of Equalization member Betty Yee, a former California Department of Finance chief deputy director, has also announced her candidacy for the office. She had about $473,000 on hand at the end of June.
The race for controller opened wide after state Treasurer Bill Lockyer, who was expected to seek the seat, announced this summer he would retire from politics when his term expires in early 2015. State Controller John Chiang, who is termed out next year, is raising money for a campaign for treasurer.
Tyler Cassity, proprietor of a boutique cemetery called Hollywood Forever and defendant in a $600 million fraud lawsuit in his native Missouri, accompanied Perez to a series of high-profile public events.
In July 2011, the powerful state official brought Cassity to an exclusive Los Angeles party to honor Britain's Prince William and his wife, Catherine, documents show. In December 2011, Perez took Cassity on a weeklong lawmakers' junket to Israel, where they met President Shimon Peres and other Israeli officials.
In 2012, Perez persuaded Sacramento political donors to contribute thousands of dollars to AIDS/LifeCycle, a charity Cassity favors, according to state records. Also last year, Perez accepted a $1,000 political donation from the funeral director.
Meanwhile, in St. Louis, Cassity, his parents and his older brother are defendants in a 2009 lawsuit that contends they looted millions of dollars from trust accounts and insurance policies that were supposed to be set aside to pay for customers' funerals.
The suit was filed by a receiver appointed to oversee the Cassity family's National Prearranged Services Inc. and related businesses after they became insolvent.
In terms of financial losses, the collapse of the Cassity companies may represent "the biggest scam" ever in the U.S. funeral industry, said Joshua Slocum, executive director of the Funeral Consumers Alliance reform group.
In 2010, Cassity's father and brother were indicted on fraud charges in the scandal. In July, they pleaded guilty to felony charges.
Cassity himself was not charged with any crimes. However, the receiver's lawsuit contends that he committed racketeering and fraud, saying he helped direct improper fund transfers and intercompany loans at the heart of the looting scheme. Cassity and companies he headed got millions of dollars that should have been set aside for customers' funerals, the suit says.
In the indictment of Cassity's father and brother, federal prosecutors claimed that both Hollywood Forever and Cassity's Fernwood cemetery in Mill Valley, were operated with illegally obtained funds.
Cassity is fighting the lawsuit, denying in legal filings that he did anything wrong. His lawyer declined to comment for this story. Cassity didn't respond to interview requests.
Perez became aware "that there was this investigation" of Cassity at some point after they began dating, said John Vigna, the speaker's spokesman. He said the lawmaker didn't seek details about what he regarded as allegations "in another state concerning Mr. Cassity and his family and their business" that eventually would be sorted out in the courts. Perez has seen little of Cassity in the past 18 months, the spokesman said.
Kirk Hanson, executive director of the Markkula Center for Applied Ethics at Santa Clara University, said Perez displayed "colossal bad judgment" in the relationship.
Hanson cited the $1,000 political donation as evidence of questionable judgment. It's unwise, he said, for a politician to take donations from someone being sued for financial fraud because of questions about the source of the funds. It's also a mistake to introduce a person facing fraud allegations to foreign dignitaries, Hanson added, saying that can expose the officials to embarrassment.
Vigna, Perez's spokesman, said the foreign governments didn't ask for background information about Cassity and Perez didn't provide it. Both the Israel trip and the party for the British prince were "meet-and-greets" rather than "events of state" where a participant's background might be relevant, he said. The spokesman also noted that Cassity has donated to other politicians besides the speaker.
Perez, 44, is a former labor union official who was elected to the state Assembly from a downtown Los Angeles district in 2008. The following year, he was named speaker -- the first openly gay lawmaker to hold the post.
Cassity, 43, went to college in New York, where he was active in the gay rights movement. He has worked as an executive in the family funeral business his entire adult life, records show.
In 1998, with his brother, Cassity bought the old Hollywood Memorial Park cemetery near Paramount Studios, burial place of Rudolph Valentino, Douglas Fairbanks and other film stars. He renamed it Hollywood Forever and spent millions on renovations to make it a "proud, revitalized cultural landmark," as he told the judge in the lawsuit filed by the receiver.
Under his direction, Hollywood Forever became a popular venue for dance parties, concerts and fundraisers well as funerals, and Cassity became a local celebrity. Last month, an outdoor screening of the final episode of the television series "Breaking Bad" drew thousands of fans.
In 2004, Cassity bought the Fernwood cemetery in Marin County and promoted it as a venue for "eco burials."
In an HBO documentary, a New Yorker magazine profile and other news accounts, he has been portrayed as a funeral industry entrepreneur whose innovations have made him millions. But the receiver's lawsuit claims that both California cemeteries were subsidized with illegally obtained funds. More than $1 million in customers' funds was spent to pay off Cassity's personal credit card, the suit also says.
The independent, nonprofit Center for Investigative Reporting is a Bay Area-based investigative reporting team. For more, visit www.cironline.org. Perez