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Only Dick Murphy and his intimates know what's going on at San Diego city hall

Mayor defends Cheetah's money recipients Ralph Inzunza, Michael Zucchet, Charles Lewis

Of all the bad things said about Dick Murphy before 2004, he was never thought to have been a crook. If the word "corruption" was ever associated with his name, it was a small-c kind of corruption: a small favor done for a friend, a redevelopment subsidy approved because it would help the old neighborhood, the benefit of the doubt given to city council colleagues who might have gotten just a bit too chummy with a Mafia-linked strip club owner from Las Vegas. But as the year went on, as the financial clouds darkened around City Hall and city investigators analyzed computer disks using sophisticated software in an effort to retrieve the data that had been erased by persons unknown, there were second thoughts. How could Murphy have made such a mess of it? How long could his defense based on ignorance hold up?

As 2005 dawned, nobody, let alone Murphy himself, yet knew the answer.

Two thousand four was supposed to be the year the lid came off San Diego's City Hall, and in some ways expectations were met. Donna Frye was elected mayor, perhaps. Mike Aguirre, the chronic electoral loser whose legal battles against taxpayer subsidies for Chargers owner Alex Spanos were once regarded as ludicrously quixotic, took over as city attorney. But for Dick Murphy, no matter what the ultimate outcome of his fight to keep his tenuous hold on city government, his political future seemed to have gone into irreversible meltdown.

The year began with three city councilmembers under federal indictment. All three faced trial for wire fraud and conspiracy to commit wire fraud; two were also charged with extortion. The indictments arose out of the Cheetahs strip club scandal that had broken seven months before in the spring of 2003. The charges, which involved campaign contributions by representatives of Cheetahs owner Mike Galardi of Las Vegas to Ralph Inzunza, Michael Zucchet, and Charles Lewis, allegedly in exchange for their efforts to water down the city's ban on strippers touching their patrons, had not implicated Murphy. Lewis, 37, would not live to see a trial; he died in August of an esophageal hemorrhage that the county medical examiner concluded was caused by cirrhosis.

But in his January State of the City speech, the mayor leapt to the defense of the trio, singling them out for praise for backing his agenda and allowing them to remain in honorific positions such as deputy mayor, a move that many saw as unnecessary and even unseemly for a man who had been on the state bench.

"As a former Superior Court judge, let me remind everybody that in America people are presumed innocent until proven guilty," Murphy said shortly after FBI agents swooped down on city council offices in the May 2003 raid that resulted in the indictments. "This is just an investigation. We must await the outcome of the U.S. attorney's investigation before conclusions can be drawn."

The first sign of the big trouble to come in the new year of 2004 arrived the second week of January when an investigation by a television reporter led to the resignation of Roger Talamantez, head of the city-owned San Diego Data Processing Corp. Talamantez, who made $235,975, had been caught spending thousands of the corporation's dollars on bottles of wine and tequila shooters at employee parties.

Then, a week after Talamantez's departure, city auditor Ed Ryan, a small, nondescript man who drove a racy sports car, quit without explanation. Murphy, ever solicitous of the status quo, issued a curious statement in which he vouched for Ryan's integrity. "This was at his initiation," said Murphy about Ryan's sudden departure. "There is absolutely no suggestion, hint, or innuendo that this resignation is anything other than his choice.

"In fact, his retirement is being reluctantly accepted by me and everyone familiar with his outstanding performance. Reports indicating that Mr. Ryan has anything other than a stellar record are false. It would be a great injustice to report anything to the contrary."

Murphy's brave if unconvincing façade was shattered less than two weeks later when Phil LaVelle of the Union-Tribune reported that the FBI, the Securities and Exchange Commission, and the U.S. Attorney's Office had launched an investigation of the city's finances.

A day after that story broke, Murphy called a news conference in his 11th-floor City Hall offices to say he "welcomed" news of the investigation that an FBI spokeswoman had just confirmed was under way. "I want to assure the public that we will take the same calm, deliberate, effective action to resolve this matter as we have with other problems," he told the gathered reporters.

It was just the beginning of Murphy's long, slow political nightmare.

The mayor had once been expected to easily defeat his two main challengers in his March reelection bid, county supervisor Ron Roberts and port commissioner Peter Q. Davis. Roberts was widely viewed as a has-been member of downtown's old-boy network and crony of Padres owner John Moores. Widely unpopular, Roberts retained a deathlike grip on his supervisorial seat by virtue of his incumbency and the county's lack of term limits. Davis, a retired banker and onetime Murphy campaign contributor, was seen as a political lightweight who was wasting part of his substantial fortune in a futile effort to promote his candidacy.

But the very fact that Davis had the audacity to enter the race seemed to spook the mayor, who called his erstwhile friend "Brutus" and privately vowed that he would eventually wreak political revenge against Davis, whom he had appointed to the port commission. Murphy grew even more nervous as both Davis and Roberts began gaining momentum against him in the polls.

Murphy won the March primary by a comfortable margin over Roberts, with Davis trailing far behind, but he still faced a November runoff. Conventional wisdom said that, based on the March returns, Murphy would easily trounce Roberts and return to office. Donna Frye was nowhere on the horizon.

The next shoe dropped when, barely two weeks after the election, city manager Mike Uberuaga announced he was resigning. Whether he quit of his own accord or was pushed, nobody in the mayor's office would say for the record, but this time, unlike his warm words for Ed Ryan, Murphy did not come to Uberuaga's defense.

"The city faces some major challenges including looming budget shortfalls, problems with the pnsion system and the city's credit rating," the mayor said in a written statement. "We need a strong, decisive manager to work through these extremely important financial issues." Roberts, who had previously called for Uberuaga's ouster, used the occasion to step up his attacks on Murphy. "There are elected officials that need to be held accountable, also," he said.

The federal investigation turned into a dragnet. The Securities and Exchange Commission was looking into whether the city had failed to properly disclose negative financial information to the public, and the FBI was said to be probing alleged corruption of the city council and other city officials. Transcripts of thousands of hours of wiretaps of city phone lines, originally initiated during the Cheetahs investigation, were being reviewed.

The investigation dragged on through spring and summer and into the fall, producing only nebulous, if tantalizing, rumors linking Murphy and various high-ranking city bureaucrats including former auditor Ryan, deputy city manager Bruce Herring, and Uberuaga to a litany of financial crimes, ranging from bad bookkeeping to embezzlement. No indictments were forthcoming, but the lack of specifics seemed only to feed the frenzy of speculation about the mayor's fate.

Meanwhile, the city's outside auditor, KPMG, refused to deliver its final audit of the city's finances for 2003. The firm's bombshell disclosure in November 2003 that it would not proceed with the legally required audit until the city had investigated "likely illegal acts" had triggered the crises in the first place; each month that went by without delivery of the document further destroyed the mayor's credibility.

Murphy struggled to stanch the bleeding by hiring a series of consultants and lawyers who, he promised, would get to the bottom of the mess. The Texas law firm of Vinson & Elkins was retained at a cost of over $2.6 million to represent the city as the Securities and Exchange Commission sent a team from Washington to scour its books for wrongdoing. The lawyers came up with a 268-page report that, while carefully placing no individual blame or naming names, made it clear that the city had gone out of its way to hide bad financial news. That the firm's previous clients included Enron did not go unnoticed by the media.

Murphy and the city council had in 2003 created a nine-member "pension reform committee" that was supposed to review stock market losses at the city's retirement system and come up with painless ways to bail out the troubled plan. Murphy named his campaign treasurer, accountant April Boling, to its chairmanship.

Boling, who was president of the San Diego Taxpayers Association, a pro-business lobby, was also campaign treasurer for dozens of other local politicos, as well as the county Republican Central Committee and the GOP's Lincoln Club. "The Pension Reform Committee is not about reform. It's about covering your backside," claimed one city retiree. Like her client the mayor, Boling would face more controversy as the year wore on.

In the first week of September a New York Times headline announced that "sunny San Diego" had become "a kind of Enron-by-the-Sea." The accompanying story outlined the city's longtime practice of hiding the details of its mounting pension fund liabilities from the public. It highlighted the role of Diann Shipione, the La Jolla investment advisor and city pension fund trustee who the year before had first blown the whistle on the city's growing disclosure mess and then been attacked by the mayor and his supporters on the city council for her trouble.

Murphy refused to be interviewed by the Times; his second-in-command, onetime Evening Tribune reporter John Kern, told the paper that the fall in the stock market, cutbacks in state aid, and even the wildfires of 2003 had been largely responsible for the difficulties.

It was the same mantra the mayor had been using since the pension fund troubles broke into the open back in 2003. "The fundamental fact of the city and its finances is that it can meet its obligations, and we are working through the issues as carefully and methodically and expeditiously as we possibly can." The story added that Kern had "acknowledged inadvertent 'errors' in the city's recent financial statements" but said there were no illegalities.

On the last day of September, the broadening scandal finally brought city councilwoman Donna Frye into the race for mayor as a write-in candidate. "It's hard to explain sometimes when the public becomes very, very frustrated. Sort of like a big wave riding over the ocean, and it just keeps building and building and building momentum," she told reporters.

Frye, a 52-year-old Democrat with a knack for ingratiating herself with reporters, was not as unlikely a mayoral candidate as she was described in the glowing national media accounts that followed her entry into the race. An environmentalist who started Surfers Tired of Pollution (STOP), Frye was a savvy campaigner and a public relations expert who turned to powerful advantage the way opponents regularly underestimated her.

In some ways, her early political career mirrored that of Roger Hedgecock, who as a surfing young lawyer and coastal development opponent in the 1970s built a solid following among liberal-leaning middle- and upper-class voters angered by urban sprawl and the Union-Tribune's pro-growth editorial slant.

Unlike Republican Hedgecock, who was elected county supervisor and then mayor before being brought down in 1985 by charges of money laundering, Frye kept her ego in check and did not seem tempted by the greed that ultimately doomed the fallen mayor.

In the summer of 1996, she turned up at the front doors of the Republican National Convention, being held at the downtown convention center, to denounce the city's chronic sewage problem. "Rarely a day goes by that I don't hear at least two instances of surfers getting sick from ocean pollution," Frye, as always identified as a "surfer," told the Washington Times.

When Imperial Beach Republican congressman Brian Bilbray -- himself a surfer who had ridden the bad-water issue into office -- voted to revise the Clean Water Act against the wishes of environmentalists, Frye called a news conference at Harry's Surf Shop, which she owned with her husband, champion surfer Harry "Skip" Frye. She was standing beside a toilet featuring Bilbray's effigy stuck inside.

When she ran for city council in the spring of 2001, Frye showcased her image as an outsider and played up her eagerness to seek support from other than the usual circle of downtown power brokers and the Union-Tribune. She also spoke freely of her recovery from alcoholism and described gritty personal traumas such as the savage beatings she said she had endured at the hands of her first husband.

Afraid that Frye might oppose its favored development plans, such as the downtown ballpark and a new taxpayer-financed Chargers stadium in Mission Valley, the Union-Tribune, as expected, endorsed Steve Danon, a GOP operative working for county supervisor Ron Roberts. "Her penchant for opposing vital projects because of flaws she so often finds in them is cause for concern," the U-T opined. "Our worry is that she might become an impediment to progress, rather than a problem-solver committed to getting things accomplished."

Once elected, Frye continued to benefit from a popular perception that she was a naïve surfer who lucked into office, a maverick who, unlike her city council colleagues, was unafraid to tangle with the Copley-owned Union-Tribune and its monied friends in the downtown business establishment.

In the years since the fall of Hedgecock, who laundered thousands of dollars into his 1983 election bid from Del Mar investment swindler J. David Dominelli, San Diego campaigns had become even more expensive, and thus, in the eyes of many, far more corrupt. In Hedgecock's era, candidates had been limited to accepting $250 maximum from individual contributors, with both corporations and unions banned from giving.

As later revealed in a guilty plea entered by Hedgecock's political consultant, Tom Shepard, Dominelli circumvented the limit by paying Shepard directly with a $360,000 cash "investment" in his consulting business.

The intervening years had done nothing to make San Diego politics any cleaner. As the city grew, the costs of campaigning grew dramatically. With so much money sloshing around, a new tier of lawyers and accountants emerged to discover loopholes in the law for funneling even more cash to the candidates. To critics, the loopholes were nothing more than blatant violations of the law. They argued that sharp lawyering had kept enforcers like the city's Ethics Commission at bay.

There are two principal loopholes: spending by so-called independent political action committees and use of the Democratic and Republican county central committees to conduct "member communications" in the form of mailers and polls.

The latter was approved in 1998 by the state's electorate as part of a campaign "reform" measure. That exemption has since been used to funnel hundreds of thousands of dollars into San Diego city campaigns, flouting the local ban on contributions over $250 and on corporate donations. Murphy was a major beneficiary.

"Why is Dick Murphy such a doofus?" That was the question asked by a caller to a radio talk show shortly after Frye declared for the mayor's job. Murphy, whose handlers had counted on the unpopularity of Roberts to get their man through to reelection, was a perplexing figure. When he beat Roberts to gain office in 2000, Murphy presented himself as a reformer who would skeptically review the pension underfunding mess he had inherited from his predecessor Susan Golding.

"No downtown ballpark deal -- that drains the city treasury like the Charger ticket guarantee," Murphy promised the voters in his 2000 ballot statement. But ex-judge Murphy pushed through the Padres ballpark deal that Golding had made with team owner John Moores, despite clear evidence that it gave away hundreds of millions of tax dollars and development rights at a time when the city's pension fund was coming unglued and basic needs like street repair were going unmet. He compounded the public skepticism when his aide John Kern was caught in May 2002 meeting behind closed doors with Chargers president Dean Spanos to plot the construction of a new football stadium.

Perhaps most critically, the new mayor failed to clean the bureaucratic house left to him by Golding. Instead of ousting city manager Michael Uberuaga and lieutenants such as deputy manager Bruce Herring and city auditor Ed Ryan -- whom many blamed for allowing the city's growing financial mess to develop -- Murphy gave them all a pat on the back and praised their performance. Was he in denial? Maybe he was just too nice a guy.

But in contrast with his public reputation, the private Murphy, like many of his city council colleagues, often seemed prickly, defensive, and insecure. He was a miserable public speaker and told stale anecdotes. At cocktail parties, he whined about unfair newspaper coverage. During the city council inaugural ceremonies in December 2004, Murphy's council colleague Scott Peters, whom the mayor had endorsed for reelection, told the astonished audience: "Sometimes he is too conservative, and he can be boring."

Some also thought he was not very smart and relied too much on his mercurial aide John Kern, a former reporter and Republican political consultant who had close ties to the city's firefighters union, one of several labor-related special interests for which Kern had worked before joining the mayor's staff.

Kern remained the close friend of Ron Saathoff, head of the International Association of Firefighters Local 145. A member of the pension fund's board of trustees, Saathoff was a lightning rod for controversy. Unlike the AFL-CIO's San Diego-Imperial County Labor Council, which switched its endorsement from Murphy to Democrat Frye after she entered the race, the firefighters stuck with Murphy and spent at least $50,000 on his behalf.

Kern's other clients had included actor Clint Eastwood, who was elected mayor of Carmel, and the Bicycle Club, a giant card room in Bellflower that had been seized by federal marshals in a drug money laundering case. "John knows intuitively, 90 percent of the time, exactly what I would do," Murphy was quoted as saying shortly after taking office in 2001, "and therefore, he can speak for me because he usually knows where I would be."

Kern had a reputation for a flash-point temper, and his abrupt and unexplained firing of Murphy's first press secretary, Elena Cristiano, a former Padres cheerleader and close friend of team executive Charles Steinberg, had become legendary throughout the corridors of City Hall.

In a series of e-mails sent to colleagues in February 2002, shortly before she was fired, Cristiano, an attractive brunette, blasted Kern, with whom she was said to be having a tempestuous personal relationship in the months leading to her departure. "I am under a great deal of stress and I've allowed John's hostility to erode at [my] self confidence. Having suffered for so many years from Battered Women's Syndrome, the first thing to surface is a fear to confront and defend myself.

"I have been ordered by my doctor to stop all interaction with John. I very much want to resolve this and I can try to work together to reach a solution that everyone can live with, for the sake of the Mayor. Please let me know if you'd like to try, or if you prefer that I wait until the Mayor returns."

"I am still unclear about how much of this is at the Mayor's directive. I need clarity on my role before any further changes take place."

When he was on the city council in the 1980s, Murphy was said to have disliked sitting through council meetings so much that he finally sought a judicial appointment in 1985 from then-governor George Deukmejian just to get away from the dreaded weekly sessions. On the bench, Murphy liked the prestige, a member of his old campaign staff said, but missed the party circuit and the limelight of municipal office.

Once ensconced in the mayor's suite of 11th-floor offices, however, Murphy again became frustrated. The pension-fund scandal bubbling just beneath the surface of a troubled City Hall only increased his malaise. He had longed to rule as his mentor, Pete Wilson, once did: unchallenged and all-powerful. But those days were long gone. Those around him sensed that a kind of mental paralysis had set in. A measure of Murphy's discontent was revealed in March 2003, when he called a surprise news conference to say he would not run for reelection.

"I asked myself, was I going to be a part-time mayor, part-time campaigner, or was I going to be a full-time mayor. And for the good of the city, I have chosen to devote all of my energies to being mayor," he said as he pulled out of the race. "If I didn't have to run for reelection, I'd stay for four more years. I don't like campaigns. I don't feel I do them particularly well."

"I don't know if frustration is exactly the right term," he was reported as adding, "but I think I feel that the job of mayor is quite demanding." Less than a month later, Murphy put himself back in the race. "At a time when San Diego faces many serious challenges, the city needs stability and continuity in the office of mayor." It was confusing. Who was the real Dick Murphy, and what was the waffling about? Was there something seriously amiss at the city that had caused the mayor to turn tail? Had the imperious John Kern badgered him into running again? Only Murphy and his intimates knew the real story, and they weren't letting on.

Murphy was full of contradictions. His first mayoral campaign in 2000 pitched openness, but once elected he quickly began to circle the wagons. After promising in his first State of the City speech in January 2001 to create a "blue ribbon" committee to review the city's troubled finances, he waited four months to name its nine members.

When he finally got around to making the appointments, the mayor filled the committee's ranks with political cronies and campaign backers, like defense contracting consultant Joe Craver and NASSCO shipyard honcho Richard Vortmann. Another member was Murphy's old friend and campaign treasurer, accountant April Boling, whose business was growing mightily in the Murphy era as she attracted more and more Republican candidates to her stable of political clients.

Though it was clear to many that the city was heading for treacherous financial shoals, Murphy's committee issued a different opinion when it finally delivered its long-delayed report in April 2002. It proclaimed the city to be "fiscally sound."

Vortmann took the lead among committee members in calling attention to festering problems with the pension fund. "[P]art of today's costs will be paid by future years' taxpayers, and that's a concern," he was quoted as saying. Most of the report's other findings were those of staffers for city manager Mike Uberuaga, many of whom were entitled to millions of dollars in pension benefits upon retirement. A glaring example was deputy city manager Bruce Herring, who, according to a December 2003 report in the Union-Tribune, would upon retirement at age 60 be entitled to collect a lump sum of $1.2 million, in addition to annual payments of $144,000 for life and generous health insurance. The paper asserted that if Herring lived to be 85, he would receive a total of $6.4 million in retirement benefits.

Some speculated that Murphy and his top aide John Kern were too close to the firefighters union, which had supported the mayor's candidacy with generous financial backing. Widely viewed as a whitewash, the blue-ribbon committee's work, along with Vortmann's warning, was quickly forgotten and Murphy lost yet another opportunity to avert the coming disaster. Kern's application last month to the retirement board to be allowed to participate in a lucrative deferred retirement option only fed suspicions that Murphy had been in Kern's pocket all along.

The mayor's approach to campaign ethics also had two faces. During the 2000 campaign he dueled with his opponent Ron Roberts over their respective approaches to setting up an ethics commission. The ethics issue had come to dominate the campaign due to the case of Valerie Stallings, a city councilwoman who had been forced to resign after she was caught receiving financial favors from Padres owner John Moores at the same time she was voting to approve taxpayer subsidies for his baseball stadium and surrounding real estate development.

Once in office, Murphy set up the Ethics Commission as promised but diluted its effect by appointing to its board Charles La Bella, a former U.S. prosecutor who had been retained by Moores to help him avoid federal charges arising from the Stallings matter. The county grand jury, in March 2003, criticized his appointment, saying, "The grand jury finds that the commission in its present form might find it difficult to handle existing and potential conflicts of interest of both commission members as well as its staff."

The League of Women Voters and others -- including civic watchdog Mel Shapiro, who accused the commission of going easy on campaign money launderers -- made similar allegations. Murphy defended his appointees. "In my opinion, the Ethics Commission has had an exemplary record of accomplishment during its first year," he told the Union-Tribune. "While the grand jury recommendations are well-meaning, I would be reluctant to tinker with something that has worked so well."

But it was Murphy's own campaign ethics, along with those of April Boling, his ever-loyal campaign treasurer, that had begun to invite the most skepticism, no more so than in October 2004 as the three-way campaign between the mayor, Roberts, and Frye drew to a close. Polls showed that Frye had closed the gap between herself and her two opponents and that her once seemingly hopeless write-in drive might be poised for a historic victory.

On the final weekend of the campaign, a hit piece against Frye from a group calling itself the Coalition to Keep San Diego Working arrived in the mailboxes of voters from La Jolla to Otay Mesa. It featured an unflattering photo of Frye along with the charge that she had voted against city funding for children's programs. "Call Councilwoman Frye and tell her she should support San Diego's children," urged the mailer, which provided Frye's office phone number.

The strategy resembled that of a campaign mounted by supporters of San Diego Unified School District superintendent Alan Bersin against then-school board incumbent Frances Zimmerman in 2000. Even the catch phrase was similar: "Tell Fran Zimmerman to stop voting against back-to-basics school reform." Much of the money behind that effort came from Padres owner Moores and his partner Malin Burnham, who were also six-figure contributors to the county's GOP central committee.

As in the Zimmerman case, the anti-Frye mailers did not actually urge a vote against her. The coalition's lawyer insisted that it didn't have to reveal who paid for the hit piece, at least not until sometime after the election. The committee's treasurer? Murphy stalwart April Boling.

Murphy did not disavow the mailer. Instead, he simply remained silent. But Boling said he was not responsible for it. The coalition donors have thus far remained a mystery, and a complaint filed by La Jollan Ian Trowbridge, who first blew the whistle on the city's data processing scandal, remains pending before the city's Ethics Commission.

It wasn't the first time Boling was involved shepherding a so-called independent expenditure on Murphy's behalf while insisting that the mayor was not privy to the activity.

In the weeks leading up to the March primary, hundreds of thousands of dollars began flooding into the coffers of the San Diego County Republican Central Committee. Though none of the money was reported as being earmarked for Murphy's campaign, that's where much of it ended up. The treasurer of the central committee: April Boling,

On February 10 and 14, an outfit called 5th and J LLC gave the Republican Central Committee a total of $10,000 in two $5000 increments. After the primary, on June 10, the company contributed another $5000. Records revealed that the firm belonged to Ramin Samimi, a resident of Rancho Santa Fe who wanted to build a 344-room luxury hotel in the Gaslamp Quarter on land owned by Ahmad Mesdaq, owner of the popular Gran Havana Cigar and Coffee Lounge at the corner of Fifth Avenue and J Street. Mesdaq had been fighting Samimi's efforts to get Murphy and the city council to use their power of condemnation to take the land and business away from him.

Was it just a coincidence that, according to state disclosure records, the central committee spent more than $27,000 on Murphy's behalf in the two weeks between February 14 and February 27? Boling said it was. Others, including Mesdaq, an Afghani immigrant with a deep suspicion of City Hall, weren't convinced and demanded that the mayor abstain from voting on the condemnation question. Instead, Murphy cast repeated city council votes to take the property away from Mesdaq and give it to Samimi. Mesdaq later sued the city, alleging that the city's taking of his land was illegal. At the end of the year, the case was still pending.

Another case of the central committee's remarkable timing came on October 15, when it wrote a $44,161 check to Western Graphics for a direct mail piece on Murphy's behalf. The same day, the committee received $75,000 from Sempra Energy, the public utility giant that owns San Diego Gas & Electric. The mail piece was billed as "member communications" and thus arguably exempt from the city's ban against corporate money.

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Of all the bad things said about Dick Murphy before 2004, he was never thought to have been a crook. If the word "corruption" was ever associated with his name, it was a small-c kind of corruption: a small favor done for a friend, a redevelopment subsidy approved because it would help the old neighborhood, the benefit of the doubt given to city council colleagues who might have gotten just a bit too chummy with a Mafia-linked strip club owner from Las Vegas. But as the year went on, as the financial clouds darkened around City Hall and city investigators analyzed computer disks using sophisticated software in an effort to retrieve the data that had been erased by persons unknown, there were second thoughts. How could Murphy have made such a mess of it? How long could his defense based on ignorance hold up?

As 2005 dawned, nobody, let alone Murphy himself, yet knew the answer.

Two thousand four was supposed to be the year the lid came off San Diego's City Hall, and in some ways expectations were met. Donna Frye was elected mayor, perhaps. Mike Aguirre, the chronic electoral loser whose legal battles against taxpayer subsidies for Chargers owner Alex Spanos were once regarded as ludicrously quixotic, took over as city attorney. But for Dick Murphy, no matter what the ultimate outcome of his fight to keep his tenuous hold on city government, his political future seemed to have gone into irreversible meltdown.

The year began with three city councilmembers under federal indictment. All three faced trial for wire fraud and conspiracy to commit wire fraud; two were also charged with extortion. The indictments arose out of the Cheetahs strip club scandal that had broken seven months before in the spring of 2003. The charges, which involved campaign contributions by representatives of Cheetahs owner Mike Galardi of Las Vegas to Ralph Inzunza, Michael Zucchet, and Charles Lewis, allegedly in exchange for their efforts to water down the city's ban on strippers touching their patrons, had not implicated Murphy. Lewis, 37, would not live to see a trial; he died in August of an esophageal hemorrhage that the county medical examiner concluded was caused by cirrhosis.

But in his January State of the City speech, the mayor leapt to the defense of the trio, singling them out for praise for backing his agenda and allowing them to remain in honorific positions such as deputy mayor, a move that many saw as unnecessary and even unseemly for a man who had been on the state bench.

"As a former Superior Court judge, let me remind everybody that in America people are presumed innocent until proven guilty," Murphy said shortly after FBI agents swooped down on city council offices in the May 2003 raid that resulted in the indictments. "This is just an investigation. We must await the outcome of the U.S. attorney's investigation before conclusions can be drawn."

The first sign of the big trouble to come in the new year of 2004 arrived the second week of January when an investigation by a television reporter led to the resignation of Roger Talamantez, head of the city-owned San Diego Data Processing Corp. Talamantez, who made $235,975, had been caught spending thousands of the corporation's dollars on bottles of wine and tequila shooters at employee parties.

Then, a week after Talamantez's departure, city auditor Ed Ryan, a small, nondescript man who drove a racy sports car, quit without explanation. Murphy, ever solicitous of the status quo, issued a curious statement in which he vouched for Ryan's integrity. "This was at his initiation," said Murphy about Ryan's sudden departure. "There is absolutely no suggestion, hint, or innuendo that this resignation is anything other than his choice.

"In fact, his retirement is being reluctantly accepted by me and everyone familiar with his outstanding performance. Reports indicating that Mr. Ryan has anything other than a stellar record are false. It would be a great injustice to report anything to the contrary."

Murphy's brave if unconvincing façade was shattered less than two weeks later when Phil LaVelle of the Union-Tribune reported that the FBI, the Securities and Exchange Commission, and the U.S. Attorney's Office had launched an investigation of the city's finances.

A day after that story broke, Murphy called a news conference in his 11th-floor City Hall offices to say he "welcomed" news of the investigation that an FBI spokeswoman had just confirmed was under way. "I want to assure the public that we will take the same calm, deliberate, effective action to resolve this matter as we have with other problems," he told the gathered reporters.

It was just the beginning of Murphy's long, slow political nightmare.

The mayor had once been expected to easily defeat his two main challengers in his March reelection bid, county supervisor Ron Roberts and port commissioner Peter Q. Davis. Roberts was widely viewed as a has-been member of downtown's old-boy network and crony of Padres owner John Moores. Widely unpopular, Roberts retained a deathlike grip on his supervisorial seat by virtue of his incumbency and the county's lack of term limits. Davis, a retired banker and onetime Murphy campaign contributor, was seen as a political lightweight who was wasting part of his substantial fortune in a futile effort to promote his candidacy.

But the very fact that Davis had the audacity to enter the race seemed to spook the mayor, who called his erstwhile friend "Brutus" and privately vowed that he would eventually wreak political revenge against Davis, whom he had appointed to the port commission. Murphy grew even more nervous as both Davis and Roberts began gaining momentum against him in the polls.

Murphy won the March primary by a comfortable margin over Roberts, with Davis trailing far behind, but he still faced a November runoff. Conventional wisdom said that, based on the March returns, Murphy would easily trounce Roberts and return to office. Donna Frye was nowhere on the horizon.

The next shoe dropped when, barely two weeks after the election, city manager Mike Uberuaga announced he was resigning. Whether he quit of his own accord or was pushed, nobody in the mayor's office would say for the record, but this time, unlike his warm words for Ed Ryan, Murphy did not come to Uberuaga's defense.

"The city faces some major challenges including looming budget shortfalls, problems with the pnsion system and the city's credit rating," the mayor said in a written statement. "We need a strong, decisive manager to work through these extremely important financial issues." Roberts, who had previously called for Uberuaga's ouster, used the occasion to step up his attacks on Murphy. "There are elected officials that need to be held accountable, also," he said.

The federal investigation turned into a dragnet. The Securities and Exchange Commission was looking into whether the city had failed to properly disclose negative financial information to the public, and the FBI was said to be probing alleged corruption of the city council and other city officials. Transcripts of thousands of hours of wiretaps of city phone lines, originally initiated during the Cheetahs investigation, were being reviewed.

The investigation dragged on through spring and summer and into the fall, producing only nebulous, if tantalizing, rumors linking Murphy and various high-ranking city bureaucrats including former auditor Ryan, deputy city manager Bruce Herring, and Uberuaga to a litany of financial crimes, ranging from bad bookkeeping to embezzlement. No indictments were forthcoming, but the lack of specifics seemed only to feed the frenzy of speculation about the mayor's fate.

Meanwhile, the city's outside auditor, KPMG, refused to deliver its final audit of the city's finances for 2003. The firm's bombshell disclosure in November 2003 that it would not proceed with the legally required audit until the city had investigated "likely illegal acts" had triggered the crises in the first place; each month that went by without delivery of the document further destroyed the mayor's credibility.

Murphy struggled to stanch the bleeding by hiring a series of consultants and lawyers who, he promised, would get to the bottom of the mess. The Texas law firm of Vinson & Elkins was retained at a cost of over $2.6 million to represent the city as the Securities and Exchange Commission sent a team from Washington to scour its books for wrongdoing. The lawyers came up with a 268-page report that, while carefully placing no individual blame or naming names, made it clear that the city had gone out of its way to hide bad financial news. That the firm's previous clients included Enron did not go unnoticed by the media.

Murphy and the city council had in 2003 created a nine-member "pension reform committee" that was supposed to review stock market losses at the city's retirement system and come up with painless ways to bail out the troubled plan. Murphy named his campaign treasurer, accountant April Boling, to its chairmanship.

Boling, who was president of the San Diego Taxpayers Association, a pro-business lobby, was also campaign treasurer for dozens of other local politicos, as well as the county Republican Central Committee and the GOP's Lincoln Club. "The Pension Reform Committee is not about reform. It's about covering your backside," claimed one city retiree. Like her client the mayor, Boling would face more controversy as the year wore on.

In the first week of September a New York Times headline announced that "sunny San Diego" had become "a kind of Enron-by-the-Sea." The accompanying story outlined the city's longtime practice of hiding the details of its mounting pension fund liabilities from the public. It highlighted the role of Diann Shipione, the La Jolla investment advisor and city pension fund trustee who the year before had first blown the whistle on the city's growing disclosure mess and then been attacked by the mayor and his supporters on the city council for her trouble.

Murphy refused to be interviewed by the Times; his second-in-command, onetime Evening Tribune reporter John Kern, told the paper that the fall in the stock market, cutbacks in state aid, and even the wildfires of 2003 had been largely responsible for the difficulties.

It was the same mantra the mayor had been using since the pension fund troubles broke into the open back in 2003. "The fundamental fact of the city and its finances is that it can meet its obligations, and we are working through the issues as carefully and methodically and expeditiously as we possibly can." The story added that Kern had "acknowledged inadvertent 'errors' in the city's recent financial statements" but said there were no illegalities.

On the last day of September, the broadening scandal finally brought city councilwoman Donna Frye into the race for mayor as a write-in candidate. "It's hard to explain sometimes when the public becomes very, very frustrated. Sort of like a big wave riding over the ocean, and it just keeps building and building and building momentum," she told reporters.

Frye, a 52-year-old Democrat with a knack for ingratiating herself with reporters, was not as unlikely a mayoral candidate as she was described in the glowing national media accounts that followed her entry into the race. An environmentalist who started Surfers Tired of Pollution (STOP), Frye was a savvy campaigner and a public relations expert who turned to powerful advantage the way opponents regularly underestimated her.

In some ways, her early political career mirrored that of Roger Hedgecock, who as a surfing young lawyer and coastal development opponent in the 1970s built a solid following among liberal-leaning middle- and upper-class voters angered by urban sprawl and the Union-Tribune's pro-growth editorial slant.

Unlike Republican Hedgecock, who was elected county supervisor and then mayor before being brought down in 1985 by charges of money laundering, Frye kept her ego in check and did not seem tempted by the greed that ultimately doomed the fallen mayor.

In the summer of 1996, she turned up at the front doors of the Republican National Convention, being held at the downtown convention center, to denounce the city's chronic sewage problem. "Rarely a day goes by that I don't hear at least two instances of surfers getting sick from ocean pollution," Frye, as always identified as a "surfer," told the Washington Times.

When Imperial Beach Republican congressman Brian Bilbray -- himself a surfer who had ridden the bad-water issue into office -- voted to revise the Clean Water Act against the wishes of environmentalists, Frye called a news conference at Harry's Surf Shop, which she owned with her husband, champion surfer Harry "Skip" Frye. She was standing beside a toilet featuring Bilbray's effigy stuck inside.

When she ran for city council in the spring of 2001, Frye showcased her image as an outsider and played up her eagerness to seek support from other than the usual circle of downtown power brokers and the Union-Tribune. She also spoke freely of her recovery from alcoholism and described gritty personal traumas such as the savage beatings she said she had endured at the hands of her first husband.

Afraid that Frye might oppose its favored development plans, such as the downtown ballpark and a new taxpayer-financed Chargers stadium in Mission Valley, the Union-Tribune, as expected, endorsed Steve Danon, a GOP operative working for county supervisor Ron Roberts. "Her penchant for opposing vital projects because of flaws she so often finds in them is cause for concern," the U-T opined. "Our worry is that she might become an impediment to progress, rather than a problem-solver committed to getting things accomplished."

Once elected, Frye continued to benefit from a popular perception that she was a naïve surfer who lucked into office, a maverick who, unlike her city council colleagues, was unafraid to tangle with the Copley-owned Union-Tribune and its monied friends in the downtown business establishment.

In the years since the fall of Hedgecock, who laundered thousands of dollars into his 1983 election bid from Del Mar investment swindler J. David Dominelli, San Diego campaigns had become even more expensive, and thus, in the eyes of many, far more corrupt. In Hedgecock's era, candidates had been limited to accepting $250 maximum from individual contributors, with both corporations and unions banned from giving.

As later revealed in a guilty plea entered by Hedgecock's political consultant, Tom Shepard, Dominelli circumvented the limit by paying Shepard directly with a $360,000 cash "investment" in his consulting business.

The intervening years had done nothing to make San Diego politics any cleaner. As the city grew, the costs of campaigning grew dramatically. With so much money sloshing around, a new tier of lawyers and accountants emerged to discover loopholes in the law for funneling even more cash to the candidates. To critics, the loopholes were nothing more than blatant violations of the law. They argued that sharp lawyering had kept enforcers like the city's Ethics Commission at bay.

There are two principal loopholes: spending by so-called independent political action committees and use of the Democratic and Republican county central committees to conduct "member communications" in the form of mailers and polls.

The latter was approved in 1998 by the state's electorate as part of a campaign "reform" measure. That exemption has since been used to funnel hundreds of thousands of dollars into San Diego city campaigns, flouting the local ban on contributions over $250 and on corporate donations. Murphy was a major beneficiary.

"Why is Dick Murphy such a doofus?" That was the question asked by a caller to a radio talk show shortly after Frye declared for the mayor's job. Murphy, whose handlers had counted on the unpopularity of Roberts to get their man through to reelection, was a perplexing figure. When he beat Roberts to gain office in 2000, Murphy presented himself as a reformer who would skeptically review the pension underfunding mess he had inherited from his predecessor Susan Golding.

"No downtown ballpark deal -- that drains the city treasury like the Charger ticket guarantee," Murphy promised the voters in his 2000 ballot statement. But ex-judge Murphy pushed through the Padres ballpark deal that Golding had made with team owner John Moores, despite clear evidence that it gave away hundreds of millions of tax dollars and development rights at a time when the city's pension fund was coming unglued and basic needs like street repair were going unmet. He compounded the public skepticism when his aide John Kern was caught in May 2002 meeting behind closed doors with Chargers president Dean Spanos to plot the construction of a new football stadium.

Perhaps most critically, the new mayor failed to clean the bureaucratic house left to him by Golding. Instead of ousting city manager Michael Uberuaga and lieutenants such as deputy manager Bruce Herring and city auditor Ed Ryan -- whom many blamed for allowing the city's growing financial mess to develop -- Murphy gave them all a pat on the back and praised their performance. Was he in denial? Maybe he was just too nice a guy.

But in contrast with his public reputation, the private Murphy, like many of his city council colleagues, often seemed prickly, defensive, and insecure. He was a miserable public speaker and told stale anecdotes. At cocktail parties, he whined about unfair newspaper coverage. During the city council inaugural ceremonies in December 2004, Murphy's council colleague Scott Peters, whom the mayor had endorsed for reelection, told the astonished audience: "Sometimes he is too conservative, and he can be boring."

Some also thought he was not very smart and relied too much on his mercurial aide John Kern, a former reporter and Republican political consultant who had close ties to the city's firefighters union, one of several labor-related special interests for which Kern had worked before joining the mayor's staff.

Kern remained the close friend of Ron Saathoff, head of the International Association of Firefighters Local 145. A member of the pension fund's board of trustees, Saathoff was a lightning rod for controversy. Unlike the AFL-CIO's San Diego-Imperial County Labor Council, which switched its endorsement from Murphy to Democrat Frye after she entered the race, the firefighters stuck with Murphy and spent at least $50,000 on his behalf.

Kern's other clients had included actor Clint Eastwood, who was elected mayor of Carmel, and the Bicycle Club, a giant card room in Bellflower that had been seized by federal marshals in a drug money laundering case. "John knows intuitively, 90 percent of the time, exactly what I would do," Murphy was quoted as saying shortly after taking office in 2001, "and therefore, he can speak for me because he usually knows where I would be."

Kern had a reputation for a flash-point temper, and his abrupt and unexplained firing of Murphy's first press secretary, Elena Cristiano, a former Padres cheerleader and close friend of team executive Charles Steinberg, had become legendary throughout the corridors of City Hall.

In a series of e-mails sent to colleagues in February 2002, shortly before she was fired, Cristiano, an attractive brunette, blasted Kern, with whom she was said to be having a tempestuous personal relationship in the months leading to her departure. "I am under a great deal of stress and I've allowed John's hostility to erode at [my] self confidence. Having suffered for so many years from Battered Women's Syndrome, the first thing to surface is a fear to confront and defend myself.

"I have been ordered by my doctor to stop all interaction with John. I very much want to resolve this and I can try to work together to reach a solution that everyone can live with, for the sake of the Mayor. Please let me know if you'd like to try, or if you prefer that I wait until the Mayor returns."

"I am still unclear about how much of this is at the Mayor's directive. I need clarity on my role before any further changes take place."

When he was on the city council in the 1980s, Murphy was said to have disliked sitting through council meetings so much that he finally sought a judicial appointment in 1985 from then-governor George Deukmejian just to get away from the dreaded weekly sessions. On the bench, Murphy liked the prestige, a member of his old campaign staff said, but missed the party circuit and the limelight of municipal office.

Once ensconced in the mayor's suite of 11th-floor offices, however, Murphy again became frustrated. The pension-fund scandal bubbling just beneath the surface of a troubled City Hall only increased his malaise. He had longed to rule as his mentor, Pete Wilson, once did: unchallenged and all-powerful. But those days were long gone. Those around him sensed that a kind of mental paralysis had set in. A measure of Murphy's discontent was revealed in March 2003, when he called a surprise news conference to say he would not run for reelection.

"I asked myself, was I going to be a part-time mayor, part-time campaigner, or was I going to be a full-time mayor. And for the good of the city, I have chosen to devote all of my energies to being mayor," he said as he pulled out of the race. "If I didn't have to run for reelection, I'd stay for four more years. I don't like campaigns. I don't feel I do them particularly well."

"I don't know if frustration is exactly the right term," he was reported as adding, "but I think I feel that the job of mayor is quite demanding." Less than a month later, Murphy put himself back in the race. "At a time when San Diego faces many serious challenges, the city needs stability and continuity in the office of mayor." It was confusing. Who was the real Dick Murphy, and what was the waffling about? Was there something seriously amiss at the city that had caused the mayor to turn tail? Had the imperious John Kern badgered him into running again? Only Murphy and his intimates knew the real story, and they weren't letting on.

Murphy was full of contradictions. His first mayoral campaign in 2000 pitched openness, but once elected he quickly began to circle the wagons. After promising in his first State of the City speech in January 2001 to create a "blue ribbon" committee to review the city's troubled finances, he waited four months to name its nine members.

When he finally got around to making the appointments, the mayor filled the committee's ranks with political cronies and campaign backers, like defense contracting consultant Joe Craver and NASSCO shipyard honcho Richard Vortmann. Another member was Murphy's old friend and campaign treasurer, accountant April Boling, whose business was growing mightily in the Murphy era as she attracted more and more Republican candidates to her stable of political clients.

Though it was clear to many that the city was heading for treacherous financial shoals, Murphy's committee issued a different opinion when it finally delivered its long-delayed report in April 2002. It proclaimed the city to be "fiscally sound."

Vortmann took the lead among committee members in calling attention to festering problems with the pension fund. "[P]art of today's costs will be paid by future years' taxpayers, and that's a concern," he was quoted as saying. Most of the report's other findings were those of staffers for city manager Mike Uberuaga, many of whom were entitled to millions of dollars in pension benefits upon retirement. A glaring example was deputy city manager Bruce Herring, who, according to a December 2003 report in the Union-Tribune, would upon retirement at age 60 be entitled to collect a lump sum of $1.2 million, in addition to annual payments of $144,000 for life and generous health insurance. The paper asserted that if Herring lived to be 85, he would receive a total of $6.4 million in retirement benefits.

Some speculated that Murphy and his top aide John Kern were too close to the firefighters union, which had supported the mayor's candidacy with generous financial backing. Widely viewed as a whitewash, the blue-ribbon committee's work, along with Vortmann's warning, was quickly forgotten and Murphy lost yet another opportunity to avert the coming disaster. Kern's application last month to the retirement board to be allowed to participate in a lucrative deferred retirement option only fed suspicions that Murphy had been in Kern's pocket all along.

The mayor's approach to campaign ethics also had two faces. During the 2000 campaign he dueled with his opponent Ron Roberts over their respective approaches to setting up an ethics commission. The ethics issue had come to dominate the campaign due to the case of Valerie Stallings, a city councilwoman who had been forced to resign after she was caught receiving financial favors from Padres owner John Moores at the same time she was voting to approve taxpayer subsidies for his baseball stadium and surrounding real estate development.

Once in office, Murphy set up the Ethics Commission as promised but diluted its effect by appointing to its board Charles La Bella, a former U.S. prosecutor who had been retained by Moores to help him avoid federal charges arising from the Stallings matter. The county grand jury, in March 2003, criticized his appointment, saying, "The grand jury finds that the commission in its present form might find it difficult to handle existing and potential conflicts of interest of both commission members as well as its staff."

The League of Women Voters and others -- including civic watchdog Mel Shapiro, who accused the commission of going easy on campaign money launderers -- made similar allegations. Murphy defended his appointees. "In my opinion, the Ethics Commission has had an exemplary record of accomplishment during its first year," he told the Union-Tribune. "While the grand jury recommendations are well-meaning, I would be reluctant to tinker with something that has worked so well."

But it was Murphy's own campaign ethics, along with those of April Boling, his ever-loyal campaign treasurer, that had begun to invite the most skepticism, no more so than in October 2004 as the three-way campaign between the mayor, Roberts, and Frye drew to a close. Polls showed that Frye had closed the gap between herself and her two opponents and that her once seemingly hopeless write-in drive might be poised for a historic victory.

On the final weekend of the campaign, a hit piece against Frye from a group calling itself the Coalition to Keep San Diego Working arrived in the mailboxes of voters from La Jolla to Otay Mesa. It featured an unflattering photo of Frye along with the charge that she had voted against city funding for children's programs. "Call Councilwoman Frye and tell her she should support San Diego's children," urged the mailer, which provided Frye's office phone number.

The strategy resembled that of a campaign mounted by supporters of San Diego Unified School District superintendent Alan Bersin against then-school board incumbent Frances Zimmerman in 2000. Even the catch phrase was similar: "Tell Fran Zimmerman to stop voting against back-to-basics school reform." Much of the money behind that effort came from Padres owner Moores and his partner Malin Burnham, who were also six-figure contributors to the county's GOP central committee.

As in the Zimmerman case, the anti-Frye mailers did not actually urge a vote against her. The coalition's lawyer insisted that it didn't have to reveal who paid for the hit piece, at least not until sometime after the election. The committee's treasurer? Murphy stalwart April Boling.

Murphy did not disavow the mailer. Instead, he simply remained silent. But Boling said he was not responsible for it. The coalition donors have thus far remained a mystery, and a complaint filed by La Jollan Ian Trowbridge, who first blew the whistle on the city's data processing scandal, remains pending before the city's Ethics Commission.

It wasn't the first time Boling was involved shepherding a so-called independent expenditure on Murphy's behalf while insisting that the mayor was not privy to the activity.

In the weeks leading up to the March primary, hundreds of thousands of dollars began flooding into the coffers of the San Diego County Republican Central Committee. Though none of the money was reported as being earmarked for Murphy's campaign, that's where much of it ended up. The treasurer of the central committee: April Boling,

On February 10 and 14, an outfit called 5th and J LLC gave the Republican Central Committee a total of $10,000 in two $5000 increments. After the primary, on June 10, the company contributed another $5000. Records revealed that the firm belonged to Ramin Samimi, a resident of Rancho Santa Fe who wanted to build a 344-room luxury hotel in the Gaslamp Quarter on land owned by Ahmad Mesdaq, owner of the popular Gran Havana Cigar and Coffee Lounge at the corner of Fifth Avenue and J Street. Mesdaq had been fighting Samimi's efforts to get Murphy and the city council to use their power of condemnation to take the land and business away from him.

Was it just a coincidence that, according to state disclosure records, the central committee spent more than $27,000 on Murphy's behalf in the two weeks between February 14 and February 27? Boling said it was. Others, including Mesdaq, an Afghani immigrant with a deep suspicion of City Hall, weren't convinced and demanded that the mayor abstain from voting on the condemnation question. Instead, Murphy cast repeated city council votes to take the property away from Mesdaq and give it to Samimi. Mesdaq later sued the city, alleging that the city's taking of his land was illegal. At the end of the year, the case was still pending.

Another case of the central committee's remarkable timing came on October 15, when it wrote a $44,161 check to Western Graphics for a direct mail piece on Murphy's behalf. The same day, the committee received $75,000 from Sempra Energy, the public utility giant that owns San Diego Gas & Electric. The mail piece was billed as "member communications" and thus arguably exempt from the city's ban against corporate money.

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