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In San Francisco, the memo says, Malcolm used his influence with Mayor Willie Brown and staff in an attempt to set up a deal to allow Duke to operate that city's Hunter's Point power plant. By April 1999, the San Diego Unified Port District had closed escrow on the South Bay plant and leased it to Duke. During another series of votes regarding Duke and the South Bay plant in May 1999, Malcolm was absent from the commission but continued to work on behalf of Duke offstage. He prospected on behalf of Duke for other power plants in Alexandria, Virginia, and Washington, D.C.

In May 2000, Duke and Malcolm's Public Benefit Power cut a deal. Malcolm's company received $20,000 a month for consulting services. He collected a total of $210,000 before the contract was terminated a year later. Under the contract, the port commissioner from Chula Vista advised Duke on the South Bay plant, lobbied for an enterprise zone to provide the company favorable tax treatment, and secretly agreed not to "assist any competitor or potential competitor of [Duke Energy], including, but not limited to San Diego Gas & Electric Company and the San Diego Unified Port District."

In the wake of Malcolm's guilty plea, prosecutors argued for a tough sentence. "Malcolm pursued an ongoing and flagrant course of conduct with the purpose of placing his personal interests over the public's interest," prosecutors wrote. "His behavior was deceptive and sophisticated. All attempts to reform or rehabilitate Malcolm should be of secondary consideration to the primary objective of imposing punishment on him."

Spurning that advice, superior court judge John Einhorn gave Malcolm (now 49 and balding) just 120 days in a work-furlough facility at 35th and Ocean View, which Malcolm entered last week. Malcolm will have to fork over $260,000 in fines and restitution. As a felon, he will no longer be able to vote or hold public office. The investigation yielded a mountain of e-mails, memos, and letters documenting how the former port commissioner masterminded his scheme with help from Peace, Willie Brown, and others, a selection of which follows.

September 11, 1998

To: Bob Weisenmiller

From: Paula Rosput [Duke Energy]

cc: Richard Duzsynski

Subject: Congratulations

I absolutely would like for you to set up the David Malcolm meeting -- just do it with Rick Duszynski. Frankly, we sat down with Sempra last week and they'd be eager to see us involved. Rick and I both agreed that this one could be worth the effort.

September 14, 1998

To: David Malcolm

From: Bob Weisenmiller [port energy consultant]

Subject: Congratulations

David -- think about your availability for dinner. (I am on vacation from Sept. 23 through October 6, so while it would be best if I am there if it screws up the timing I'll have one of my colleagues there.) I had told Paula that I thought it was too late for the San Diego plays but that she should find a relationship with you to be very useful for their Northern California power plants.

September 16, 1998

To: David Malcolm

From: Bob Weisenmiller

Subject: Duke

David -- I had a long talk with Rick Duszynski of Duke yesterday about meeting you. Rick indicated that he needs to pick Paula's brain between now and close of business Friday, when she leaves for her new job, and also Duke is going through its internal personnel process, so he could not leave Houston this week. Given your schedule, that pushes things back until late next week or the following week. I indicated that I was out after the middle of next week for two weeks, so I suggested that he contact you directly and work out a mutually convenient time rather than put everything on hold for a couple of weeks. I also indicated that my colleague Steve McClary would be happy to step in to facilitate things, since Duke is familiar with him. (While I am out, I have told Chris and Tom that they should deal with either Steve or Bill Monsen on Port issues. Steve is Mr. ISO/RMR issues and Bill is Mr. Cash Flow modeling and South Bay assumptions issues. They are both principals of the firm and I have relied upon them on the detail of these issues, so you are in good hands.) However, we at MRW are trying to facilitate the meeting rather than having my availability become an obstacle.

I was relatively clear to Rick that I thought you could help them on their PG&E assets and that there may or may not be an opportunity for them to help the Port on South Bay. Rick was pretty clear they would not hesitate for a second on ISO/RMR contract issues (and given Kent's noises lately you may need this card), Duke has world class engineering capability, and very deep pockets. He thought Don Felsinger was going to call you and say some good words about Duke...

October 15, 1998

To: David L. Malcolm

From: Richard J. Duszynski

Re: South Bay Power Plant

Dear David:

I can imagine that everyone is in quite a festive mood out there in San Diego after last night's victory. Since Houston ended up having to lose, it is at least a small consolation that they did so to the eventual NL Champion. It would be even nicer if we could say "World Series Champion," so rest assured I will be lining up behind the Padres in their upcoming series.

Anyway, as you are aware, I have been trying to get in contact with you to follow-up on the South Bay situation in order to get started on several things here on my end that will be necessary to meet the tight timetable we will be working under. Included in these efforts will be an informational presentation to the Duke Energy Corporation management and Board. Summaries of this presentation will need to be sent out today, and so before I distribute this information I would like to confirm that the Port had no substantive outstanding issues associated with selecting Duke Energy Power Services as its operating partner in the South Bay transaction.

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