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Slime Pays
San Diego — 'Anything Goes." Cole Porter wrote the music and lyrics. But it became San Diego's theme song. We don't yet know if any city councilmembers solicited bribes or improperly took money from strip-club operators wanting looser laws. But we do know that in recent years, San Diego's corporate/government power structure has been conducive to palm-greasing.
Government at various levels has sent out the message that it was not going to peer under the table to see what was passing from the fat-fingered to the sticky-fingered.
Pelf passer and pelf payee had few reasons to believe that they would be detected, and if detected, that they would be prosecuted. Apologists say the mentality grew out of the city's desire to be known as business-friendly. Others blame law-enforcement lethargy. But the wise describe it as a rancid environment breeding corruption.
Two women new to their offices, U.S. Attorney Carol C. Lam and District Attorney Bonnie M. Dumanis, have a chance to reform this dirty old boys' network. With luck, the next city attorney will straighten out that office, too.
Consider campaign-finance abuses. Earlier this year, the grand jury, citing a story by the Reader, said that between 1996 and 1999, a full 476 complaints on campaign finance were referred to the city attorney's office, which managed to prosecute just one of them.
Now, such complaints are forwarded to the so-called Ethics Commission. The executive director of the purported ethics watchdog has said he wants to look into "bundling" of campaign contributions -- that is, a bunch of employees of a favor-seeking company and its boss all giving the maximum amount to a political candidate. When the boss reimburses the employees, it becomes campaign money laundering.
Last year, civic activist Mel Shapiro gave the commission information on employees of a trash-hauling company all giving the same amount to two city councilmembers on the same day. The commission nonetheless described his complaint as "an expression of opinion," not factual information. In replying to the commission, Shapiro cited one part of a long-running campaign money-laundering case that had already been ruled upon by the state Fair Political Practices Commission (FPPC).
In this case, trash hauler James Mashburn and a company he co-owned, Refuse Services, in early 1999 agreed to pay the fourth-largest campaign-money-laundering fine in the commission's history, $249,500.
Mashburn admitted that he reimbursed employees who made political contributions in cash -- thus making discovery hard to trace. Through these maneuvers, he had given money to Mayor Susan Golding, five county supervisors, and politicians in North County such as Poway's Mickey Cafagna. The fair practices committee passed on the information to the district attorney's office, but then-DA Paul Pfingst decided not to prosecute.
Then there is the case of Gatlin Development, a real estate firm. According to the FPPC, between 1992 and 1994, the company made 107 campaign contributions to members of and candidates for city council and the board of supervisors, along with other politicians. At the time, the contribution limit was $250. Most of the contributions from Gatlin employees and their spouses, along with members, relatives, and business associates of Gatlin's law firm, were for $250. When the word of the generosity got around, chief executive Frank Gatlin received calls from other politicians asking assistance in fund-raising, according to the fair practices commission.
Frank Gatlin reimbursed his employees for the gifts. Since the practice persisted for a year and a half, the FPPC said it "indicates a pattern of laundering activity, rather than an isolated incident." Gatlin and the law firm were fined $420,000. The FPPC referred the matter to Pfingst, who kicked it to the city attorney's office. They wouldn't touch it.
Both cases "should have been prosecuted as criminal cases," says former DA Ed Miller. "A lot of prosecutors don't want to make waves with people who have a lot of clout." But making such cases criminal would be a "significant deterrent" to campaign money laundering, says Miller.
And that's the point. For many years, there have been very few deterrents to such activities. Deputy District Attorney Rupert Linley remembers being told, when he was transferred out of the DA's environmental unit in 1997, "The DA's office wanted to be more business-friendly." That's one reason he opposed Pfingst's reelection bid. Linley says that Dumanis "wants strict enforcement."
There are multiple examples of the symbiotic relationship of politicians and businesses wanting favors. In mid-2000, the locally based Corky McMillin Companies won the contract for development of the former Naval Training Center over a larger, much better-financed, out-of-town company that had been recommended by a special blue-ribbon selection committee. According to Save Our NTC Inc. McMillin got $1 billion of assets for a few dollars, as well as tax breaks and subsidies of more than $100 million. Records show that the McMillin firm donated heavily to local politicians.
In 1972, the city had voted a 30-foot height limit on coastal buildings. That cramped McMillin's style. So the city attorney's office came up with an -- er, uh -- novel interpretation: The limitation did not apply to NTC because the land was in federal hands when the citizenry voted in the limitation. Shockingly, both Superior Court and the Fourth Appellate District bought into this -- er, uh -- bizarre argument.
The most infamous signal-sending case was the Stallings-Moores scandal. Padres majority owner John Moores showered gifts on former councilmember Valerie Stallings. He stood to gain a city-subsidized ballpark as well as one-tenth of downtown at lowball prices.
He permitted her to get on the "friends and family" list of a hot stock Moores controlled, Neon Systems, as Matt Potter first revealed in the Reader. The initial reaction of City Attorney Casey Gwinn was that the gift was not a problem because Neon didn't do business with the city. "Instead of a watchdog or an attack dog, he was a lap dog," says attorney Michael Aguirre of Gwinn. Aguirre, an excellent attack dog, is running for the post.
Eventually, the Moores gifts were investigated by federal authorities. But Stallings got a wrist slap under state law, and Moores was not charged. Because the FBI did the investigation, the records were sealed. If it had been a state investigation, they could have been opened.
The authorities never did state the value of many of the gifts bestowed on Stallings by Moores. Former councilmember Bruce Henderson asked Superior Court to make it a condition of probation that she disclose the value of those gifts. The court nixed the idea.
In announcing the dubious deal, then-U.S. Attorney Gregory Vega said that there was nothing wrong with giving money to a politician -- ignoring the big monetary gains Moores would make, partly through Stallings's votes. After he left office, Vega was named to the purported Ethics Commission.
Shapiro won a lawsuit charging the city council with illegally holding 12 Padres-related closed sessions. After Shapiro also won at the appellate level, the city attorney's office decreed that it would from then on take notes at closed sessions, instead of the city clerk, who had done it for years.
Viewing the foul-smelling activities through the years, Henderson sums it up: "Slime pays."
If U.S. Attorney Lam succeeds in the investigation of possible strip-club bribes -- as well as in her office's probe of Peregrine Systems -- the malefactors may find life, as Cole Porter intoned, "Too Darn Hot."
Here's something you might be interested in.
Slime Pays
Slime Pays
San Diego — 'Anything Goes." Cole Porter wrote the music and lyrics. But it became San Diego's theme song. We don't yet know if any city councilmembers solicited bribes or improperly took money from strip-club operators wanting looser laws. But we do know that in recent years, San Diego's corporate/government power structure has been conducive to palm-greasing.
Government at various levels has sent out the message that it was not going to peer under the table to see what was passing from the fat-fingered to the sticky-fingered.
Pelf passer and pelf payee had few reasons to believe that they would be detected, and if detected, that they would be prosecuted. Apologists say the mentality grew out of the city's desire to be known as business-friendly. Others blame law-enforcement lethargy. But the wise describe it as a rancid environment breeding corruption.
Two women new to their offices, U.S. Attorney Carol C. Lam and District Attorney Bonnie M. Dumanis, have a chance to reform this dirty old boys' network. With luck, the next city attorney will straighten out that office, too.
Consider campaign-finance abuses. Earlier this year, the grand jury, citing a story by the Reader, said that between 1996 and 1999, a full 476 complaints on campaign finance were referred to the city attorney's office, which managed to prosecute just one of them.
Now, such complaints are forwarded to the so-called Ethics Commission. The executive director of the purported ethics watchdog has said he wants to look into "bundling" of campaign contributions -- that is, a bunch of employees of a favor-seeking company and its boss all giving the maximum amount to a political candidate. When the boss reimburses the employees, it becomes campaign money laundering.
Last year, civic activist Mel Shapiro gave the commission information on employees of a trash-hauling company all giving the same amount to two city councilmembers on the same day. The commission nonetheless described his complaint as "an expression of opinion," not factual information. In replying to the commission, Shapiro cited one part of a long-running campaign money-laundering case that had already been ruled upon by the state Fair Political Practices Commission (FPPC).
In this case, trash hauler James Mashburn and a company he co-owned, Refuse Services, in early 1999 agreed to pay the fourth-largest campaign-money-laundering fine in the commission's history, $249,500.
Mashburn admitted that he reimbursed employees who made political contributions in cash -- thus making discovery hard to trace. Through these maneuvers, he had given money to Mayor Susan Golding, five county supervisors, and politicians in North County such as Poway's Mickey Cafagna. The fair practices committee passed on the information to the district attorney's office, but then-DA Paul Pfingst decided not to prosecute.
Then there is the case of Gatlin Development, a real estate firm. According to the FPPC, between 1992 and 1994, the company made 107 campaign contributions to members of and candidates for city council and the board of supervisors, along with other politicians. At the time, the contribution limit was $250. Most of the contributions from Gatlin employees and their spouses, along with members, relatives, and business associates of Gatlin's law firm, were for $250. When the word of the generosity got around, chief executive Frank Gatlin received calls from other politicians asking assistance in fund-raising, according to the fair practices commission.
Frank Gatlin reimbursed his employees for the gifts. Since the practice persisted for a year and a half, the FPPC said it "indicates a pattern of laundering activity, rather than an isolated incident." Gatlin and the law firm were fined $420,000. The FPPC referred the matter to Pfingst, who kicked it to the city attorney's office. They wouldn't touch it.
Both cases "should have been prosecuted as criminal cases," says former DA Ed Miller. "A lot of prosecutors don't want to make waves with people who have a lot of clout." But making such cases criminal would be a "significant deterrent" to campaign money laundering, says Miller.
And that's the point. For many years, there have been very few deterrents to such activities. Deputy District Attorney Rupert Linley remembers being told, when he was transferred out of the DA's environmental unit in 1997, "The DA's office wanted to be more business-friendly." That's one reason he opposed Pfingst's reelection bid. Linley says that Dumanis "wants strict enforcement."
There are multiple examples of the symbiotic relationship of politicians and businesses wanting favors. In mid-2000, the locally based Corky McMillin Companies won the contract for development of the former Naval Training Center over a larger, much better-financed, out-of-town company that had been recommended by a special blue-ribbon selection committee. According to Save Our NTC Inc. McMillin got $1 billion of assets for a few dollars, as well as tax breaks and subsidies of more than $100 million. Records show that the McMillin firm donated heavily to local politicians.
In 1972, the city had voted a 30-foot height limit on coastal buildings. That cramped McMillin's style. So the city attorney's office came up with an -- er, uh -- novel interpretation: The limitation did not apply to NTC because the land was in federal hands when the citizenry voted in the limitation. Shockingly, both Superior Court and the Fourth Appellate District bought into this -- er, uh -- bizarre argument.
The most infamous signal-sending case was the Stallings-Moores scandal. Padres majority owner John Moores showered gifts on former councilmember Valerie Stallings. He stood to gain a city-subsidized ballpark as well as one-tenth of downtown at lowball prices.
He permitted her to get on the "friends and family" list of a hot stock Moores controlled, Neon Systems, as Matt Potter first revealed in the Reader. The initial reaction of City Attorney Casey Gwinn was that the gift was not a problem because Neon didn't do business with the city. "Instead of a watchdog or an attack dog, he was a lap dog," says attorney Michael Aguirre of Gwinn. Aguirre, an excellent attack dog, is running for the post.
Eventually, the Moores gifts were investigated by federal authorities. But Stallings got a wrist slap under state law, and Moores was not charged. Because the FBI did the investigation, the records were sealed. If it had been a state investigation, they could have been opened.
The authorities never did state the value of many of the gifts bestowed on Stallings by Moores. Former councilmember Bruce Henderson asked Superior Court to make it a condition of probation that she disclose the value of those gifts. The court nixed the idea.
In announcing the dubious deal, then-U.S. Attorney Gregory Vega said that there was nothing wrong with giving money to a politician -- ignoring the big monetary gains Moores would make, partly through Stallings's votes. After he left office, Vega was named to the purported Ethics Commission.
Shapiro won a lawsuit charging the city council with illegally holding 12 Padres-related closed sessions. After Shapiro also won at the appellate level, the city attorney's office decreed that it would from then on take notes at closed sessions, instead of the city clerk, who had done it for years.
Viewing the foul-smelling activities through the years, Henderson sums it up: "Slime pays."
If U.S. Attorney Lam succeeds in the investigation of possible strip-club bribes -- as well as in her office's probe of Peregrine Systems -- the malefactors may find life, as Cole Porter intoned, "Too Darn Hot."
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