Valerie Stallings's guilty plea in late January to two state misdemeanors for not reporting gifts from Padres owner John Moores resulted in her resignation from the city council and a $10,000 fine. And yet the revelations of Moores’s four-year gift-bounty to Stallings have some San Diegans in disbelief — fuming, really — as to why Stallings took the fall and Moores was exonerated and why neither was charged with a federal offense after being investigated by the FBI.
From 1996 to 2000, Moores gave — airline tickets, baseball memorabilia, cash, use of car and vacation home, access to a Neon Systems stock IPO, miscellaneous items (the total value of things that remain in her possession has not been reported, though it is estimated at $10,000) — and Stallings received.
The U.S. Attorney’s Office concluded, after more than seven months of grand-jury testimony, that Moores’s gifts were not improper: Neither the dollar amount, nor the quantity, nor the time period during which he gave the gifts, nor their timing was improper. The crime occurred because Stallings did not declare the gifts on her yearly Statement of Economic Interest and did not, as the plea states, “disqualify herself from voting on matters materially affecting Moores or the Padres.”
As far as what Moores intended these gifts for — this we may never know, since the grand-jury investigation into the relationship between the near two-term councilmember and the real estate developer has been “sealed forever.” Was Moores trying to influence Stallings’s votes in the city council? Were his gifts, such as the airline tickets given in 1996 to fly Stallings’s family members to San Diego for her mastectomy, based only on friendship?
But beyond intent, this case is much larger than their guilt or innocence. In California, safeguards against undue influence or unethical gift-giving are either nonexistent, poorly designed, inadequately written, or, what may be worse, carefully crafted with loopholes dangling like slipknots. For one, which local, state, or federal agency should have been investigating Moores and Stallings’s relationship?
It is still not clear who — if anyone — was making inquiries before the FBI took the reins. For another, on what grounds was Moores being investigated? Was it bribery? Should Moores, who frequently lobbied other city officials besides Stallings, have registered as a lobbyist and thus reported all his gifts? Was it the ambiguous “exemption clause” in San Diego’s Municipal Lobbying Ordinance that got Moores and Padres CEO Larry Lucchino off the hook?
One reliable source said that the FBI began looking into Moores and Stallings’s friendship for possible wrongdoing because no one in the city attorney’s or district attorney’s offices was minding the store. Deputy District Attorney Sally Williams would not confirm this claim but did say that I could infer the following: When her office began investigating complaints in early 2000, she was joined by the FBI, who then took over the inquiry entirely in April 2000 — which meant that, yes, Moores had been under investigation by the D.A. She also said the D.A. was not, prior to April 2000, looking at lobbying violations with regard to John Moores because a lobbying violation would have been handled by the city attorney, not the D.A.
According to the city attorney’s office, Moores and Stallings were not under scrutiny before April 2000. On April 6, Matt Potter broke the story of Valerie Stallings’s sweetheart IPO with Neon Systems in the “City Lights” section of the Reader. That was the first City Attorney Casey Gwinn had heard of it. He stated that though he can legally investigate a sitting councilmember, he thought at the time, “to avoid any appearance of impropriety,” he would refer the matter to the state attorney general and the D.A. “Which is what I did.”
With Stallings, Gwinn was hamstrung by the lack of investigative tools in his own office. “I don’t have search-warrant authority; and I don’t have subpoena power as the misdemeanor prosecutor for the city. I can’t convene a grand jury to take testimony. So I don’t have the authority of a U.S. Attorney, a district attorney, or an ethics commission.
“If I had intervened,” in the Stallings matter, he continued, “and said, ‘We’re going to conduct this investigation,’ people would have said, ‘Wait a minute. He [Gwinn] is trying to cover up insider trading.’ But I don’t have jurisdiction over insider trading. So I had to say, ‘If the accusation is true that there was insider trading, the U.S. Attorney is going to handle that on behalf of the Securities and Exchange Commission.’ If I had said, ‘We’re going to investigate whether there was a criminal conflict of interest,’ people would have said, ‘He shouldn’t be doing that either because that’s a felony’ — and I don’t have jurisdiction over felonies. There was no way I could have conducted an investigation of Valerie Stallings in a thorough way.”
More to the point is Assistant City Attorney Les Girard’s comment: “We had absolutely no information, knowledge, or indication that there was anything other [than what was] there [between Moores and Stallings]. Absolutely not. I think it would be fair to say that nobody in the city had any idea about the stock offering or anything else” until it was reported on April 6. This was shortly after Stallings first revealed in her Statement of Economic Interest for 1999 that she had profited from the Neon Systems trade. Stallings, Girard said, “never asked anybody in our office about the propriety of that stock offering with regard to John Moores. Normally councilmembers will ask our office about issues like that, and we’re happy to give them advice. She never asked.”
What sounds like a lot of agency buck-passing has legal feet. By charter, the city attorney prosecutes San Diego Municipal Code violations, which are misdemeanors. The district attorney does the same for the county and also prosecutes violations of California law, which includes felonies. Thus, certain crimes against the city, as Girard said, must be “shipped over to the D.A.”