On April 23, 2007, two San Diego investigators, Gerald Cook of the Federal Bureau of Investigation and Dan Vile of the San Diego Police Department, turned in a criminal investigation of wrongdoing in a local business improvement district. The report was submitted to the district attorney’s office, which ultimately did nothing about it.
Business improvement districts provide landscaping, marketing plans, and parking improvements, among other services, to older areas of town. Businesses pick up the bulk of the tab through assessments, but local governments authorize expenditures and can also award contracts and federal community development block grants to the districts.
The focus of the investigators’ report was the North Bay Association, a business improvement district in the Sports Arena area, and two entrepreneurs, Paul Mannino and the politically powerful Marco Li Mandri, executive director of the nonprofit Little Italy Association and also head of his own company, the for-profit New City America, which specializes in contracts with business improvement districts. (The Reader offices are within the Little Italy business improvement district.) Scott Kessler, who has spent much of his life working with such districts, has for several years had questions about Li Mandri’s possible conflicts of interest — for just one thing, Li Mandri’s for-profit operation getting fat contracts from the nonprofit he runs. Li Mandri has been involved in several business improvement districts in San Diego and is active in such districts around the country.
In 2006, Kessler got a job with the City riding herd on the districts. And according to a lawsuit in superior court, he lost that job because he refused a direct order from his superior to discontinue further contact with the investigators, supplied their criminal report to the Ethics Commission, and would not go along with Li Mandri’s attempts to shortcut municipal regulations.
View Kessler’s suit
The joint FBI/police investigation got under way in April of 2005, when Kessler, then head of the nongovernmental San Diego Business Improvement District Council, told the police about alleged conflict-of-interest violations in the North Bay Association. The first conflict of interest occurred, the report says, when Li Mandri, who was hired as a consultant to set up the district, became the district’s executive director, with a $50,000 salary. On a similar note, the investigators say, “Although not a focus of this investigation, Li Mandri had been hired by the City to form the Little Italy [business improvement district] and subsequently, after the [district] was formed, was hired by the organization that received the [district] administration contract.”
In 2001 Paul Mannino held the unpaid position of president of the North Bay Association and Li Mandri was its paid executive director. According to the joint FBI/police report, Mannino wanted to award a $50,000-a-year subcontract for security work to a company that Mannino would set up. Kessler told Mannino that it was an obvious conflict of interest. So, according to the report, Mannino then took over Li Mandri’s position as executive director of the North Bay Association under a subcontract from Li Mandri. Lo and behold, Li Mandri’s New City America then got two community development block grant subcontracts from North Bay. Kessler cocked an eyebrow at that nifty exchange too. So did the two investigators, who then began their exhaustive report, which is 65 pages in length, single-spaced. Li Mandri and Mannino were never interviewed because they would not talk without certain assurances and conditions, according to the report.
The investigators gathered copious documents from such places as New City America and the homes of Li Mandri and Mannino. The documents indicate that there’d been a quid pro quo arrangement between the two men. Conclusion: Li Mandri and Mannino were guilty of violating many laws.
The investigative report found that “fraudulent procurement processes” had been used when the grants were awarded to Li Mandri. Additionally, when the City asked North Bay for documentation, Mannino submitted false information.
In 2002, the North Bay Association got a block grant from the city worth $20,000 to conduct a study of vagrant-related activity. The association was to gather crime statistics and to survey businesses. In July 2004, North Bay requested payment from the City for the work. However, the investigators concluded that work had never been done, according to the report.
A year later, the City asked North Bay for the study, and after three weeks Mannino supplied a purported study. Evidence obtained through the search warrant indicates that it was written just days before it was sent in. Among that evidence were the surveys. The investigators got in touch with the people who supposedly had filled them out. One after another said they had never been contacted for the association’s so-called survey and the handwriting supposedly displaying their answers was not theirs. For just one example, Joey DeSanti, a friend of Mannino’s, “advised that he had never filled out such a survey, did not recall ever being contacted and asked the questions found in the survey, and did not recall ever giving permission to use his name in association with such a survey,” according to the investigative report.
Lynn Ammons “advised that the handwriting on the survey was not hers,” says the report. “She further advised that she never completed such a survey in person, nor was she ever called by anyone and asked the survey questions over the phone.”
Using handwriting analysis, the investigators concluded that the names and answers were written by Mannino, according to the report. The vagrant study was fabricated and fraudulent, say the investigators.
The FBI/police report’s final allegation involves “a bribery and attempt[ed] extortion scheme.” On September 17, 2004, Mannino, two other North Bay Association boardmembers, and a local developer, Bill Kenton, held a meeting. At this time, Mannino chaired the North Bay Redevelopment Project Area Committee. The investigators learned that Mannino and his associates suggested that Kenton pay $100,000 in exchange for North Bay’s support for a Midway development project. The North Bay Association would supposedly provide vision, subsidy and land acquisition assistance, strategy development, and community support. Kenton said the suggestion was “outrageous.” He told the FBI/police investigators “the lever was put” to him and that the North Bay offer constituted “extortion.” The investigators concluded that Mannino and his associates violated state law in making the request. (Kenton remembered the sum as $10,000, not $100,000, but still considered the proposal an outrage.)