San Diego is a wired city, not by telephone lines or fiber-optic cables, but by a small group of insiders: men and a few women who, by virtue of birth, marriage, enterprise, cunning, guile, or simple longevity, control the direction of the region's economic and political life. This loose network, made up primarily of Republicans but including some old-time Democrats as well, exerts a subtle but strong influence over such matters as who runs for public office, what news and opinion appears in the city's only daily newspaper, what land should be re-zoned for higher use, and whether public money is spent on stadiums or libraries. Because of their connections, members of this circle are rewarded with wealth and power far greater than their numbers, or public profile, would suggest.
Many cities have such an old-boys' network or so-called establishment, but few are as small and inbred as San Diego's. Some attribute the exclusivity of the group to a sort of natural selection in reverse, a perverse "survival of the unfittest" that has come about after a series of untoward economic and political events and coincidences, leaving the community leaderless and without intellectual or moral compass.
Much of San Diego's currently robust prosperity is tied to the fate of low-wage manufacturing plants across the border in Tijuana and small, highly speculative computer and biotech start-up companies in the Sorrento Valley that could crash and burn at any time. With the failure of two major hometown savings and loans in the 1980s and the departure of aerospace giants like General Dynamics in the early 1990s, the city's old-line industrial and financial base has ceased to exist.
Indeed, as the city's population has grown over the past four decades, from about half a million to more than 1.2 million, its ruling class has shrunk. In the 1960s, the godfather of San Diego's political and economic scene was C. Arnholt Smith, a friend of Richard Nixon and a titan of the Republican party who was brought down in the early 1970s by his looting of the city's biggest bank, which he owned. In the late 1980s came the fall of Republicans Gordon Luce and Kim Fletcher, icons of San Diego business who each controlled a savings and loan that collapsed during the financial scandals of the Reagan era.
San Diego Democrats met their own disgrace in Richard T. Silberman, the multimillionaire aide to Governor Jerry Brown and spouse of Republican county supervisor Susan Golding. Silberman went to jail after being caught in an FBI money-laundering sting and is reported to be living with a girlfriend near San Francisco. Finally, there was Democrat M. Larry Lawrence, who until his death from cancer two years ago was a bulwark of the region's power structure. Wealthy owner of the Hotel del Coronado, Lawrence helped bankroll Bill Clinton's presidential campaigns and was appointed United States Ambassador to Switzerland, where he died. After Lawrence's young wife pulled strings with the White House to have him buried at Arlington National Cemetery, it was revealed that his war record was phony and his body was unceremoniously exhumed and returned to San Diego.
Thus was the barren political landscape encountered by another of Bill Clinton's connections to San Diego, Alan D. Bersin, when he arrived here in early 1992 to take over the Arkansas governor's San Diego County presidential campaign operation. But in the apparent wilderness of San Diego politics, Bersin seemed to have discovered instant opportunity. In what other major city in America could a Los Angeles lawyer, who had lived for years in the fancy Los Angeles enclave of Marina del Rey, quickly relocate, set up shop as a visiting professor at a prominent law school, and soon insinuate himself so completely into the heart of the local establishment?
Then, within months of Clinton's election to the presidency in November 1992, Bersin went from that visiting professorship at the University of San Diego to United States Attorney, and in 1995, thanks to an appointment by Clinton's Attorney General Janet Reno, to the newly created post of Southwest "border czar," a sort of ambassador without portfolio to both sides of the border region. Seemingly overnight he became the darling of the nominally Republican San Diego Union-Tribune, which barely mentioned the fact that the civil litigator had arrived in the city just a year before and whose government experience consisted of a brief tenure as junior counsel to the Los Angeles police commission. He had never been a prosecutor.
Bersin came to San Diego with two major entrées. Clinton was the one most known to the public. After graduating from Harvard in 1968, Bersin attended Oxford's Balliol College on a prestigious Rhodes Scholarship from 1969 to 1971 and graduated Yale Law in 1974. That put him one class behind Bill Clinton, who Bersin says he met while they were at Oxford. Although Bersin isn't mentioned by noted Clinton biographer David Maraniss in his book about Clinton's formative years, First in His Class, the new United States Attorney from San Diego talked frequently of his personal relationship with the first president of the Baby Boom generation. There was no doubt Bersin had been a Clinton supporter for a long time. In 1986, more than six years before Clinton's run for the presidency, the Arkansas Democrat-Gazette reported that Bersin had given $500 to the campaign of the then-governor of Arkansas. In the account, Bersin was listed as a "businessman" from Marina del Rey.
Much of Bersin's later legendary ability to cut deals regarding trade and development along the border purportedly stemmed from these direct personal ties to the White House. "A look at his appointment schedule for 1995 shows that Bersin spent about 60 days out of town, most of it in Washington," the Union-Tribune reported in August 1996. It added that Bersin said First Lady Hillary Clinton had "introduced him to his first wife."
But Bersin's links to the president and the first lady were only part of the story. Bersin had another, far more local relationship that seemed to guarantee quick entry to San Diego's cozy good-old-boy network and favorable treatment by the Union-Tribune. His father-in-law was Stanley E. Foster, son-in-law of one of San Diego's most respected and richest businessmen, the late Abraham Ratner. Bersin's second wife is San Diego attorney Lisa Foster, daughter of Stanley and his wife Pauline. Bersin and Lisa Foster, who Bersin says he met while they were doing pro bono legal work together for the homeless in Los Angeles, were married in the summer of 1991.
San Diego's Ratner dynasty began in 1921, when Isaac Ratner came here from New York and set up a small cap factory called United Cap Works in a rowdy neighborhood south of Broadway at Sixth and G. As the story goes, in the 1930s, when caps fell out of favor because of their association with mobsters, Isaac and his two sons, Abraham and Nathaniel, switched to making Navy uniforms and received a succession of government contracts that saw them through the Depression and World War II.
After the war, Abe and Nathaniel, along with Abe's new son-in-law Stan Foster, switched to civilians' menswear, turning out slacks and suit coats in what was described as "a broad-shouldered California casual style." In 1971, a year after Foster became president of the company, it purchased an obscure brand name called "Hang Ten" for $3 million and built it into one of the most lucrative casual-clothing franchises in history. At its peak in the mid-1970s, Ratner Manufacturing, as the company came to be known, was said by San Diego Magazine to be the fifth-largest menswear maker in the country, employing 2500 people, with sales of $57 million. The company produced most of its clothes in a 310,000- square-foot plant in Chula Vista.
But major sectors of the United States garment business soon saw a decline, due largely to the lifting of tariffs and the free trade movement, which allowed foreign manufacturers to undercut the cost of goods produced in America. Unionized plants like Ratner's were hard hit. The future lay in tiny sweatshops run by independent contractors, which by the late 1980s had proliferated throughout the county. "The contracting business is terrifyingly difficult to keep control on," Foster told the San Diego Union in a May 1990 interview.
"There are a lot of little shops at the border and in the Oceanside area," he added. "There are Vietnamese shops, Chicano shops. Almost every industrial park has shops with 20 to 100 people sewing. There are garages with 20 or 30 people. The business is labor intensive, not capital intensive. They deal in pennies, contracting and subcontracting down close to the cottage level. I would guess it's a several hundred million dollar business, but most of the people are hidden."
The days of 2500 unionized garment workers in Ratner's big Chula Vista plant were gone. In 1988, Foster and his in-laws, including Abe and Nate, sold Ratner Manufacturing to a clothing manufacturer from Los Angeles. Though the sale price was not disclosed, the family was said to have made millions on the deal. Well before the final sale, Foster had already turned his attention to an array of other businesses and real estate interests focused on the South Bay and the border with Mexico.
Foster was something of a connoisseur of South Bay industrial property. In a 1991 interview with Dirk Sutro of San Diego Executive Magazine, Foster, then 64, was quoted as saying he bought his first Chula Vista real estate, a 17-acre tomato field, in 1962, when he was 35 years old, and turned it into an industrial park, earning a tidy return.
In that pre-NAFTA interview Foster predicted the border area would explode with development. Already, he said, he owned 17 industrial properties, with a total of one or two million square feet, "mostly in South Bay," many of which were leased to an assortment of border-related businesses such as freight forwarders and maquiladora support operations.
Thus it was that by June of 1992 -- when his son-in-law Alan Bersin, on a leave of absence from the Los Angeles law firm of Munger, Tolles and Olson, arrived in San Diego to coordinate the local Clinton-for-President general election campaign and work as a visiting professor of law at USD -- Foster and family members were wheeling and dealing in millions of dollars of raw land, office parks, and industrial buildings.
Soon it was Bersin's turn. On January 24, 1992, according to records on file in the San Diego County recorder's office, Stan Foster, his wife Pauline, and Bersin and his wife, Lisa Foster, along with a family-owned general partnership known as Marliskar, were listed on a fictitious business name statement for an entity called Otay Terminal.
Four years later, in a document recorded on October 2, 1996, the Fosters and Bersin and his wife were listed, along with Marliskar, as general partners in a statement of partnership for Otay Terminal. County real estate records show that the market value of the four industrial parcels owned by the partnership, and purchased between 1992 and 1998, including one directly across from the border, easily exceed $12 million. Alan Bersin had arrived.
According to county records, and a financial disclosure statement filed by Bersin dated August 14, 1998, after he became superintendent of the San Diego Unified School District, the real estate currently owned by Otay Terminal includes:
‰ 3860 Calle Fortunado, an office building in Kearny Mesa, purchased in December, 1994, which according to county tax rolls has an assessed value of $3.17 million.
‰ 9445-9465 Farnham, another Kearny Mesa property, purchased in December 1995 and valued at $2.86 million.
‰ La Mirada Drive, a 4.27-acre Vista office complex purchased by the partnership in August 1997 and currently being used as a warehouse, valued at $3.75 million.
‰ 6930 Cactus Court, an industrial parcel on Otay Mesa, less than a quarter mile from the U.S.-Mexican border, purchased by Foster in January 1992, valued at $1.7 million.
According to Bersin's disclosure statement, the partnership nets "more than $10,000 a year," the maximum disclosure category. The Cactus Court property is occupied by Consolidated Freightways, a giant freight-forwarding and trans-shipping company said to handle hundreds of thousands of tons of truck traffic through the San Ysidro border each month.
The La Mirada Drive property in Vista is being leased by Otay Terminal to Callaway Golf, whose founder, Ely Callaway, is a long-time friend of President Bill Clinton. Vernon Jordan, the influential Washington lawyer and Clinton backer who acted as an intermediary in the Monica Lewinsky job search, is a member of Callaway's board. And in 1994 Callaway gave Clinton aide David Watkins a job at its North County headquarters after Watkins was forced out of his White House post for misusing government helicopters on a golf junket. In March of this year, the Washington Times reported that the president himself had called Callaway, a major Clinton contributor, to clinch the job for Watkins.
In another city, perhaps, a man who had become a U.S. Attorney and a border booster, who owned land under a large freight-forwarding firm along the border, might have engendered a few questions. But in San Diego, if anyone ever knew about the Bersin situation, no one spoke out or questioned the deal, at least not in public.
The record is clear that Bersin worked diligently as border czar, to the advantage of those who wanted to see the border developed with factories and large projects sure to increase property values.
Wasn't there an appearance of conflict of interest between Bersin's public position as border advocate and his unseen role as a major property owner? Bersin, as is the case with all U.S. Attorneys, was required by law to disclose his financial interests in a document filed at the Attorney General's office in Washington. It is not available over the counter anywhere in San Diego; obtaining it requires writing a letter of request to Washington, a relatively simple matter if one knows the procedure. In any case, nowhere in the reams of print devoted by the Union-Tribune to its new border czar was there even a hint about the Bersin family partnership or its holdings.
In an interview this week, Bersin commented for the first time on his business activities along the border and Otay Terminal.
"It's a partnership in which my wife and I have an interest. I don't know when we made it, but it's something my father-in-law organized. It's a truck -- Consolidated Freight -- transfer point." The Otay property was the first property purchased by the partnership, Bersin said, "that's why it's called the Otay partnership.... And then there were other investments made in other properties. Kearny Mesa is one -- actually two in Kearny Mesa. I guess there's one in Vista. My wife and I invested in the partnership in cash, that's what the investment was." Bersin pointed out that the Otay Mesa purchase was made by Stanley Foster in 1992, "before I was U.S. Attorney."
Bersin's financial disclosure statements filed with the school district and the U.S. Attorney General's office report that his interest in Otay Terminal is in the form of a limited partnership. Told this week that the partnership document recorded in 1996 lists him as a general partner, Bersin said he wasn't sure of his status in the partnership. Recorded mortgage loans to the partnership were also not disclosed, as required by state law.
The Otay Terminal investments have raised questions about Bersin's handling of complaints by whistle-blowers among customs agents, who in 1996 claimed that corruption among officials of the U.S. government was allowing tons of cocaine and other contraband to pour through the border unchecked.
The controversy, covered by the Washington Times, 60 Minutes, and other national media, was allegedly swept under the rug by Bersin, which led the customs agents to claim that the San Diego old boys' network was hard at work. In a story of August 8, 1996, headlined "Customs here cleared of accusations," the Union-Tribune reported that "High-ranking San Diego officials of the U.S. Customs Service were officially cleared yesterday of persistent contentions that they collaborated with drug traffickers at the Mexican border." The story went on to say, "During the probe, more than 80 people were interviewed and hundreds of pages of documents and records were reviewed, Bersin said. In the end, he said, 'There was no sufficient credible basis for pursuing...criminal prosecution of any of the allegations.'
"At a news conference yesterday, Bersin said he was making the unusual move of publicly announcing the end of a secret grand jury probe because former customs inspector Michael Horner had so effectively persuaded the news media to repeatedly report his assertions of widespread agency corruption. 'The investigation, with regard to the allegations made by Mr. Horner and others, that has been reported...is now closed,' Bersin said."
Horner and his fellow whistle-blowers were not convinced. To this day they allege that Bersin conducted a sham investigation, failing to call witnesses before the grand jury, a secret proceeding of which there is no public record.
"He's the border czar," the Union-Tribune quoted Horner as saying. "They want to implement trade with influential people in Mexico, and a lot of those influential people are involved in the narcotics trade."
As border czar, Bersin "enjoyed a broad, if largely symbolic, mandate and a bully pulpit," the Los Angeles Times reported June 28, 1998, shortly after Bersin departed as U.S. Attorney. "Bersin was an aggressive border advocate, officials say, prodding Washington and coaxing a sometimes-fractious array of U.S. agencies into shared action on matters such as reducing waits at the border crossing. Savvy about the media, Bersin often took to the airwaves, appearing regularly on Tijuana radio and television. A favored theme was the shared binational region he called 'San Tijuana.'
"Officials on both sides of the border boast of unprecedented cooperation in regional law enforcement and other matters, in part because of wider latitude granted by the governments of both countries. Also of help was Bersin's budding friendship with the Mexican consul general in San Diego, Luís Herrera-Lasso. The new approach prompted formation of cross-border committees on issues including management of the ports of entry, water supply, and migrant safety."
Six months earlier, in November 1997, the Associated Press reported that Bersin's dual role as U.S. Attorney and border czar was becoming controversial. "Critics say his job as the region's top law enforcement officer on immigration and narcotics conflicts with his role as 'border czar,' in which he encourages greater cooperation between the United States and Mexico in these two areas."
Bersin says his ownership in the Otay Terminal partnership and his role as United States Attorney and border czar posed no conflict of interest. "No, because, first of all, it's fully disclosed, and it had no bearing on -- you know, the requirement is to disclose it. Frankly, none of the decisions I made as a prosecutor were affected by that."
Did the interest compromise his activity as border czar? "The obligation is to disclose [the partnership interest]. I don't think any decision that was made would have anything to do with that piece of property."
What about Bersin's advocacy for more infrastructure along the border and other development-enhancing initiatives for Otay Mesa. Would that be a conflict? "You can draw that inference, but I didn't. There was much larger purposes involved than promoting a 10 percent interest I have in a piece of property there."
In light of the allegations by customs agents such as Michael Horner and others that U.S. border checkpoints had become a sieve for drugs and other contraband because officials had decided to favor trucking interests, wasn't there at least a potential for the appearance of a conflict?
"No. It would be if there was no disclosure of [the partnership interest], but the promotion of commerce is a much larger purpose than something to benefit a real estate investment. If it were not disclosed and if it would materially affect my life, I think you could draw an inference, but the notion that my role was driven by a desire to feather my own nest, I think, is a little bit far-fetched."
In any case, Bersin was devoted to promoting the border, and the Union-Tribune became a key ally in the cause. Neil Morgan, the aging and voluble columnist and elder statesman of the newspaper -- and said to be an old friend of Stan Foster, Bersin's father-in-law -- has become a champion of border development and a frequent Bersin booster. Oftentimes, Morgan's columns of support have revealed details about Bersin's ties to the San Diego business world and the Mexican government.
This April, Morgan reported that the "Morgan Award" (named after himself) for "civic leadership above and beyond the course of duty went to U.S. Attorney Alan Bersin and Mexican consul general Luís Herrera-Lasso for overseeing breakthroughs in binational cooperation, from law enforcement to humanitarian concerns." The award was made by a nonprofit group called LEAD, which serves as a training ground for those wishing to obtain entrée to the local business establishment. Morgan was a founding board member. Various alumni of the program, Morgan noted, "sit on 2475 San Diego region boards, with 97 serving as president and 40 as executive director or equivalent. Thirty others head for-profit corporations, and eight are elected officials."
Bersin's close relationship with Herrera-Lasso has figured large in his legend. "Bersin and Herrera-Lasso, the Mexican consul general, got together weekly at a coffeehouse in San Diego's Little Italy," according to one version of the relationship reported in the Los Angeles Times. In a column this June, Morgan reported that, thanks to the "midwifery of Alan Bersin as U.S. Attorney and Luís Herrera-Lasso, the visionary Mexican consul-general," a new group dealing with "the super-issue of binational regionalism" had been created. "It incorporates a port-of-entry council of officials on both sides of the border," according to the columnist.
"There are many things at the border where the federal governments need to work together, and they used Alan Bersin as their person to do it," says a longtime Bersin watcher with no inkling of Bersin's personal real estate venture. "A hundred percent of what I'm talking about I'm sure is totally legitimate. He helped them. I think he liked the glory of working with Lasso; he liked the internationality of it. Lasso's kind of everyone's favorite person to get a hug and a kiss from. He's a real nice guy."
Bersin's favors on behalf of Lasso, according to the source, included activities such as "calling a meeting and getting the border port-of-entry directors together, mixing and matching like U.S. Attorneys, GSA [General Services Administration], Customs, Treasury, INS -- kind of bringing people together the way a real leader does do, crosses over protocol lines and levels of authority, and I think he did that for Lasso."
But Herrera-Lasso is not always so warm and cuddly. While professing support for North-South cooperation when it fits Mexico's agenda, he has drawn the line against what Mexican officials say is United States "interference" in Mexican labor disputes. Last April, after the U.S. Labor Department issued a report highly critical of the Mexican government for blocking union-organizing activities at a Tijuana maquiladora owned by Han Young, a Korean firm, Herrera-Lasso fired off a letter to San Diego "business leaders" saying the U.S. should not question Mexico's "internal legislation with regard to labor matters."
The San Diego business establishment shares the Mexican government's interest in protecting the growth and development of maquiladoras from labor unions. Cheap Mexican labor has fueled a manufacturing boom that has enriched moguls on both sides of the border and jacked up real estate prices on Otay Mesa many times over since the adoption of NAFTA during the first term of the Clinton administration.
On March 4 of this year, a Union-Tribune editorial praised Bersin, then still U.S. Attorney, for his role on behalf of a commercial real estate development at the San Ysidro border, proposed by Landgrant Development, a company owned in part by Ronald Hahn, the son of the late shopping-center developer Ernest Hahn. Both Hahns have enjoyed close ties to Neil Morgan and other top editors at the newspaper.
"When the proposed International Gateway of the Americas Project was going nowhere, it was Bersin who stepped in and cut through the red tape to get the border development project on track," the editorial said. "This innovative enterprise would transform a blighted area west of the San Ysidro border crossing into a development of duty-free stores, restaurants, a World Trade Center complex, a hotel and meeting facilities."
The editorial failed to mention, and the paper has only briefly reported, that the International Gateway project has a legion of critics among San Ysidro residents and business owners who claim it would divert both pedestrian and auto traffic away from the traditional border crossing. The project also calls for a hefty public subsidy from San Diego taxpayers, and would charge users a toll to cross the bridge. Approved in concept by the San Diego City Council in May, the development is currently making its way through the same federal agencies, such as Customs and the Immigration and Naturalization Service, which Bersin regularly dealt with as U.S. Attorney.
In an interview this week, Bersin reiterated his support for the Gateway project. "Tijuana and San Diego and Customs and INS and GSA are all trying to get -- and it's something that I was, that I am supportive of, is to be able to develop the San Ysidro gateway between Tijuana and San Diego so that it reflects the kind of region that we're developing, and lets the region, San Diego and Tijuana, take charge of their destiny because if we wait for federal governments to do it, we will never get the kind of port of entry that we need to build this U.S.-Mexico border region."
Bersin says his role in the Gateway project was "to be part of a border port council that considered it and is recommending it to the U.S. and Mexican authorities. There are federal, state, and local jurisdictions on both sides of the border that are building a regional consensus to get a recommendation. You need a permit to build this cross-border development.
"What this would do would increase the lanes. As we've improved the travel time between Tijuana and San Diego, it's become clear like everything, when you make it easier to get back and forth between the two cities, more cars come, and what's pretty clear now is that the port of entry that was built in the mid-'70s is not capable of handling the traffic between the two cities. We need more lanes and a reconfigured pedestrian area. That's what customs, INS on this side, working with GSA, is doing. And really what the breakthrough is that Tijuana and San Diego have agreed on a common development plan."
Throughout his term as U.S. Attorney, Bersin was also a member of the steering committee of San Diego Dialogue, which the Union-Tribune has variously described as "a group that promotes cross-border economic links," "a cross-border economic association," "a think tank specializing in international trade," and "a binational group that promotes economic ties between Tijuana and San Diego." Its steering committee packed with members of San Diego's business establishment, the Dialogue is run under the auspices of the University of California San Diego by a sociologist named Charles Nathanson. The group strongly favors NAFTA and a border permeable to as much trade traffic as the political situation will bear. It is a proponent of the International Gateway project and other border-redevelopment projects.
In June, Bersin became superintendent of the San Diego Unified School District and launched into an aggressive campaign for voter approval of a billion-dollar-plus school-bond issue on the November ballot. Some say he had wanted to become Attorney General but didn't have the juice in the Clinton administration to get the appointment from a Ken Starr-distracted president. Others claimed that the festering Customs scandal in San Diego -- aspects of which are said to be still under investigation in Washington -- might have been a consideration.
In any case, Bersin, the old Friend of Bill, is now calling on his new friends in San Diego. "As shelter for battles ahead, starting with the massive school-bond issue, Bersin is building an uncommonly wide tent," Morgan wrote in a column published on July 16. "Malin Burnham and Robert Price, for instance, will team together as bond campaign chairmen." Both Burnham, Republican heir to a 100-year-old San Diego real estate fortune, and Price, the son of liberal Democrat Sol Price, an 80-year-old lawyer who had already minted a fortune when he founded the lucrative Price Club retail chain in the 1970s, are gold-plated members of the old boys' network. Burnham's company, John Burnham and Company, is also the leasing agent for Bersin's Otay Terminal general partnership.