San Diego — Okay, so California Government Code section 1090 bans government officials from developing, negotiating, or executing a contract in which they have a financial interest. It's an obvious conflict; someone violating 1090 deserves to be punished. But what about the private-sector entrepreneur who goes into a partnership with a government official who then uses his government influence to benefit their business? The public employee may be charged with a 1090 violation, but what happens to the entrepreneur, who is not with the government? Probably nothing.

Take the case of attorney James Waring, the City of San Diego's czar over real estate, land use, and development policies. Two decades ago in Riverside County, he and several other speculators formed Murrieta 40, a partnership holding 40 acres of land within the Murrieta County Water District. Waring had 50 percent of the deal. The district couldn't provide water and sewer hookups to the land. Well, no problem. One person holding a 25 percent interest was Stanley Thomas Mills, an attorney who was also general manager of the Rancho California Water District.

Mills successfully pushed to have the Murrieta 40 acreage transferred to the Rancho California Water District, over the strong opposition of the Murrieta district. The hookups were made. Mills "used his position as the general manager of the Water District to influence the [Rancho California] Board's decision," said the State Bar of California.

From January 1, 1988, through October 1, 1988, Mills "concealed the fact that he had a contingent interest" in the partnership, said the bar. On January 1, 1988, Mills said he was selling his interest. But he continued to make secret installment payments. In late 1988, the 40 acres were sold for $2.4 million. Mills made $388,000 of that. He had paid $113,000 for his portion of the partnership.

In March 1990, Mills was indicted on one felony count of perjury for stating that he had disposed of his share of the property, which he clearly had not. He was indicted on ten felony counts of 1090 violations and three misdemeanor counts of violating section 87100 of the government code, for using "his official position to influence a governmental decision, in which he knew or had reason to know that he had a financial interest," according to the indictment by the Riverside County district attorney.

Eventually, Mills pleaded guilty to three violations of 87100 and, in a plea bargain, got three years of probation plus a $30,000 fine and $10,000 payment to the district attorney's office. In addition, he was required to participate in a substance abuse program. (He was a heavy drinker.)

The bar decided that Mills's behavior did not involve moral turpitude but was "inconsistent with the truth and likely to mislead those to whom he owed a duty of full disclosure." The bar placed him on probation for three years and suspended him from practice for one year. He was required to pass legal courses and file probationary reports.

He then resigned from the bar and went to Alaska, where he died.

As I studied this deal, I knew the district attorney couldn't nail Waring, who was not a government employee, on a 1090 charge. But did the prosecutors have other questions about the participants? Alas, neither the former deputy D.A. nor the former D.A. would respond to my questions. Two others did, but they couldn't remember anything about Waring. "I was an elected director of the Rancho California Water District at the time of the incident," says Jeffrey Minkler. "I can remember being terribly embarrassed that this and other unethical behavior by Stan Mills could have occurred without being discovered by the board of directors."

Arthur G. Kidman, who at the time was attorney for the Rancho California Water District, points out that one of the Murrieta 40 partners did consulting work for the district. "To the extent that the two of them had private business that was at all shady, I was the last one they wanted to catch wind of it," says Kidman.

Waring made a bundle of money on the deal. One of his partners was destroyed, and another, although not a government employee, was cast in an ugly light. Waring came out fine. He has a spotless record with the bar. He went on to head a trust of longtime Las Vegas gangster Morris (Moe) Dalitz and helped Dalitz's daughter sort out financial matters after her father's death. Now Waring is one of the most powerful officials in San Diego government. He did not respond to requests for comment.