There is the curbside view of the Mexican border: severed heads on nightclub floors, migrant corpses in the mountains, fingers lopped off, armies in pursuit of drug lords, fleeing fugitives, gangs of money-washers, set to the plaintive ballads of narcocorridistas.
And then there is another world, unseen by most. In this opposite realm, the right real-estate deal is enough to endow a family dynasty for decades. The players are ensconced in air-conditioned suites far removed from the turmoil in the streets, filled with the prerogatives of privilege and gentle promises of progress.
This world was created by the desire by millions to cross the border, in one direction or another — to get a job, score a line of coke, sell a stash of guns, open a factory, flee a crime, smuggle illegal labor, build a power plant, launder drug money.
Finding a way to profit from this traffic is the business of the border barons. They do not judge its morality or concern themselves with its values. Oblivious to the mayhem outside the door, business proceeds smoothly, on both sides of the frontier, cloaked in a velvet curtain of discretion and diplomacy.
The controlling families, both Americans and Mexicans, are rich. They were born in American hospitals, went to Ivy League schools, wear tailored European suits, are protected from kidnappers by bodyguards, and shuttle through border crossings with no delay.
They have homes in Coronado, La Jolla, Mazatlán, and Luzerne. They know the cops and politicians worth knowing and can spot the next big money-making opportunity because they have been doing it, as have their fathers and grandfathers before them, for as long as they can remember.
Whether their native language is English or Spanish, they use a coded vocabulary, so as not to offend public sensibilities by saying the obvious: the border is a broken but lucrative place for business, and no authority in Mexico or the United States of America will do anything to fix it.
“Treating the border as a shared economic space rather than a clear boundary might permit flexibility in how national regulations are applied to adjacent communities on different sides of the frontier,” says a February 2009 “concept paper” by the Pacific Council on International Policy and the Mexican Council on Foreign Relations, two nonprofit think tanks closely linked to the border moguls.
Translation: we want more border crossings. Pedestrian bridges, freeway crossings, freight crossings, truck depots. Billions of dollars are made every time a new border crossing is opened and the flow of trade and humanity gushes across the frontier, bathing the owners of adjacent real estate in commerce and cash.
This is a story about a new border crossing, not yet open and still pending United States approval, along the frontier between Mexicali and Calexico, in the desert about 100 miles east of San Diego. It is also about a longtime denizen of the border and its politics, who married into a wealthy San Diego family with deep ties to the border region. He has become a major border player, with a personal financial stake in its development.
On September 22, President Barack Obama nominated Alan Bersin to be commissioner of Customs and Border Protection, known as CBP, one of the most sensitive positions in the government of the United States. As noted on its website, the agency “is one of the Department of Homeland Security’s largest and most complex components, with a priority mission of keeping terrorists and their weapons out of the U.S.
“It also has a responsibility for securing and facilitating trade and travel while enforcing hundreds of U.S. regulations, including immigration and drug laws.”
Bersin has been a United States Attorney, superintendent of the San Diego Unified School District, and California secretary of education. He is a personal friend of Bill and Hillary Clinton and Arnold and Maria Schwarzenegger and is revered by many other friends of trade along the border.
“He is somebody that knows the border, knows the process,” J.B. Manson, chairman of the Greater Nogales and Santa Cruz County Port Authority, said after Bersin’s appointment was announced in September. “I believe if he is confirmed it would mean a smooth relationship between trade and CBP.”
“He is a man that is very passionate and understands the balance between trade and security,” former Nogales mayor Marco Antonio Lopez Jr., now chief of staff for CBP, told Nogales International.
Alan Bersin has taken an interesting road to the border. But the saga begins long before he was born, with the great grandfather of his wife, Lisa Foster.
Isaac Ratner, a cap maker from New York, came to San Diego for his health in 1921, accompanied by his wife and six children, and established United Cap Works. San Diego was close to the border and filled with sunshine, cheap labor, and Navy contracts.
Ratner began making uniforms and, in the 1930s, civilian menswear. Sons Abe and Nate joined him in the business. After World War II, their downtown factory began turning out a stylish variety of suits, sports coats, and slacks. Business in the postwar era was good, but it would become much better under the direction of Abe’s ambitious young son-in-law.
Abe’s daughter Pauline met Stanley Foster on a blind date while she was a student at Reed College in Portland, Oregon. The son of a Ukrainian scrap dealer, he ran a downtown furniture store. They married in 1954 and moved to San Diego, where Stan worked his way up the ladder at Ratner Clothing, first in the shipping department, then in sales.
In 1970, at the age of 42, Stan Foster succeeded 64-year-old Abe Ratner as president of the business and quickly moved to put his stamp on the firm. In 1972, he took the company public. A year earlier he had purchased the Hang Ten trademark for $2 million, the beginning of a multimillion-dollar licensing bonanza for the firm.
The Ratner company was a creature of the border. It built a 310,000-square-foot factory in Chula Vista, an easy commute from Tijuana for many of its workers. It also owned the Arizona Slack Co., which operated a plant just across the state border in Yuma, employing hundreds of Hispanic workers, and owned a warehouse in El Paso, Texas, opposite the Mexican city of Ciudad Juárez.
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. But the domestic garment industry was rapidly changing.
In April 1977, Foster told a crowd gathered at Ratner’s annual shareholder meeting that “the crash in the men’s leisure suit market” had been responsible for the first loss in the firm’s history, the Union-Tribune reported. The next year, the company returned to profitability, but new trade laws and the lifting of tariffs allowed foreign manufacturers to undercut the cost of goods produced in America.
With Ratner’s work force having shrunk to 500, Isaac Ratner’s heirs were worried. Along with other members of the family, Foster had taken the company private again in 1977. In 1989 he bought out his in-laws, merging Ratner Manufacturing into his Foster Investment Corp.
In 1999, one of Isaac’s grandsons, Harry Ratner, sued Foster for fraud, claiming Stan had cheated Harry out of $16 million by failing to disclose the true value of Hang Ten and Ratner Manufacturing’s lucrative real estate before he sold his interest to Foster.
In October 2000, the jury sided with Foster. “There was never anything brought before us to say he did anything illegal,” foreman Barry Hudson told the Union-Tribune. Foster called the verdict “a vindication.” His lawyer, the paper said, “attributed the company’s turnaround to Foster’s business savvy.”
By then, Foster’s personal fortune had expanded dramatically, due in major part to his interests in real estate tied to the border. In a 1991 interview with San Diego Executive Magazine, Foster said he acquired his first parcel in Chula Vista, a tomato field, in 1962, and never stopped buying.
“Through a variety of partnerships Foster has a hand in 17 industrial properties, most of them in the South Bay,” the magazine said, adding that the holdings totaled between 1 and 2 million square feet, though Foster “won’t give an exact number.” His office hallways, the story noted, were “lined with photos of his buildings.”
“Companies that take space in buildings such as Foster’s are drawn to the area for obvious reasons,” the magazine said, including “border access for businesses with Mexican ties” and “low-cost labor in the South Bay and nearby Mexico.”
“Our primary goal was to move our manufacturing facility into Mexico,” William Cleveland, vice president of Troxel Cycling, an exercise-equipment maker, told the magazine. “Then it was a question of where to locate our distribution center and offices in relation to Mexico.” Troxel leased 10,000 square feet in a Foster-owned business park, the magazine reported.
Like Foster, his future son-in-law Alan Bersin would be given great opportunity through marriage. Like Foster, he would also prosper in the realm of the border.
Born in Brooklyn, New York, on October 15, 1946, Bersin went to public schools and received a scholarship to Harvard. Though notably short of stature, he was scrappy enough to become an All–Ivy League linebacker. One of his teammates was actor Tommy Lee Jones. Upon graduating in 1968, Bersin went to Oxford University on a Rhodes Scholarship.
That put him in the company of 22-year-old Bill Clinton, the future president of the United States. After Oxford, Bersin entered Yale Law, where he was Hillary Clinton’s classmate and married one of her best friends. They were later divorced, but Bersin’s personal and professional bond to Hillary grew deeper as the years progressed. Upon getting his law degree in 1974, Bersin moved west, joining the big downtown Los Angeles law firm of Munger, Tolles & Olson.
In 1991, while still in L.A., Bersin met and married second wife Lisa Foster, a daughter of Stan and Pauline Foster, owners of a large local garment factory and acres of South Bay real estate, with longstanding ties to the Democratic Party and connections along the Mexican border.
In 1992, as Bill Clinton ramped up his campaign for the presidency, Alan Bersin and Lisa Foster left their home in Los Angeles and moved to San Diego. Bersin took a sabbatical from Munger Tolles, ostensibly to manage the local Clinton campaign and teach law part-time at the University of San Diego, a Catholic school financially supported by many of the city’s wealthy Democrats, including the Foster family. To many, it appeared Bersin was being groomed for power.
Four months after his inauguration as president, Clinton announced he would make Bersin U.S. Attorney for the Southern District of California, the country’s busiest port of entry with Mexico. Those familiar with the often-murky world of the border economy took note. “Bersin carries the carpetbagger tag,” wrote Tom Blair, a columnist for the San Diego Union. “Still a partner in an L.A. firm, he’s been here only eight months while teaching one class at USD.”
As his father-in-law had done at Ratner, Bersin shook up the U.S. Attorney’s office, firing five top prosecutors. The head of the financial institution fraud task force, Gay Hugo, who had handled the high-profile J. David Dominelli fraud case, quit her job. The Union-Tribune later reported that Hugo “was critical of Bersin as she left” but declined to elaborate.
Unlike San Diego U.S. Attorneys of the past, Bersin became a magnet for national publicity, chiefly because of his carefully cultivated association with the economically burgeoning, increasingly troubled border region. In October 1995, Attorney General Janet Reno named him “border czar,” ostensibly to run herd on Operation Gatekeeper, the Clinton Administration’s program to stem the growing torrent of illegal immigration.
The job was a public relations bonanza for both Clinton and Bersin; during Bersin’s tenure, Washington flooded the San Diego sector with Border Patrol agents, and a host of fences and expensive electronic devices were installed. Bersin boasted that illegal crossings dropped in San Diego. Reality was different. Human traffic was forced east, into the San Diego County backcountry and Imperial County, where many of the illegal crossers died of thirst and exposure. Smugglers, known as coyotes, collected ever higher fees to shepherd their desperate clients.
Critics said Bersin was spending too much time schmoozing with members of the tightly knit Tijuana business establishment and friends of his father-in-law and not enough looking into money-laundering schemes used by the drug cartels. He called for easier border crossings for business people and trade and was a regular draw at banquets and business tributes on both sides of the border.
In 1997, he endorsed a controversial private real-estate venture called the International Gateway of the Americas, a $192 million shopping mall, duty-free zone, and hotel to be built on the U.S. side of the border just west of the existing Tijuana border crossing. The new development was to feature a new opening to Mexico in the form of a pedestrian bridge. The bridge had the support of the city’s big financial interests but was criticized by federal law enforcement officials, who believed it would become a nightmare to police.
Bersin’s role in pushing the project forward was hailed by a Union-Tribune editorial in March 1998. “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.”
Bersin continued to lobby for the project even after he had stepped down as U.S. Attorney in early 1998. In December 1998, a reporter for the Los Angeles Times noted, “The campaign crested in September when a parade of boosters, including the head of Tijuana’s economic development council and former U.S. Attorney and border czar Alan Bersin, took turns praising likely benefits to the region’s economy and image during a meeting of a U.S.–Mexico panel that reviews new border crossings.”
The project drew fierce opposition from the U.S. Immigration and Naturalization Service, which stated in a letter that “a requirement to conduct pedestrian inspections at another location at any distance from the existing inspection facility would result in significant disruption of customer service and law enforcement operations.” Ultimately, the pedestrian bridge was dropped from the project, though the mall was allowed to proceed.
Though not widely known to the public, Bersin had a personal financial stake in border real estate held with his father-in-law and other family members. According to an agreement recorded October 2, 1996, Bersin, his wife Lisa, along with Stan and Pauline Foster and Marliskar, a family-related partnership, had formed Otay Terminal, a general partnership.
A disclosure Bersin filed with the Justice Department in Washington, D.C., showed that Otay Terminal owned four properties, including a trucking facility at 6930 Cactus Court on San Diego’s Otay Mesa, less than 2000 feet from the border with Mexico.
A trust controlled by Foster and his wife Pauline purchased the land on January 14, 1992, for $880,500, according to county records. Foster built a truck terminal and offices on the parcel, finishing the project on July 20, 1992, a notice of completion says. On January 14, 2003, the partnership sold the property for $3.5 million.
In a September 1998 interview with the Reader, Bersin said, “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, he said, was the first piece of real estate acquired by the partnership.
“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 said that the Otay Mesa purchase was made in 1992, “before I was U.S. Attorney,” and later put into the Otay Terminal partnership.
In the same interview, Bersin repeated 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.”
His role in the project, Bersin said, 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 [that] 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 is that Tijuana and San Diego have agreed on a common development plan.”
Bersin said no conflict of interest arose from his ownership in the Otay Terminal partnership and his role as United States Attorney and border czar. “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.”
But what of Bersin’s advocacy of development-enhancing initiatives for Otay Mesa? Would that represent a conflict? “You can draw that inference, but I didn’t. There [were] much larger purposes involved than promoting a 10 percent interest I have in a piece of property there.”
Was his role as border czar compromised? “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.”
Though the Foster family partnership sold the truck terminal in 2003, Bersin and his wife have since acquired major financial stakes in other border-related ventures. A financial disclosure statement Bersin filed with the State of California in March 2006 revealed that he held between $10,000 and $100,000 of stock in “SafeMex/International Gateway.” He reported the same interest in a similar disclosure made May 9, 2009, with the San Diego County Regional Airport Authority.
According to its website, SafeMex sells insurance and emergency travel-assistance plans to foreigners going to Mexico. The company, it says, “was established to better serve travelers to Mexico. These same services are now provided on a worldwide basis.” Records show the firm has an office across the street from the now-complete International Gateway border development.
The founder, chairman, and CEO of SafeMex is Enrique Mier y Terán, a border baron who with his father Juan Mier y Terán is credited with founding the first maquiladora — or “twin plant” — Kaynar de Mexico, in 1960, which imported duty-free materials from the United States and exported the finished products back to this country.
A June 1998 profile in the Economist traced Mier y Terán’s career:
“One night in 1959, a Mexican teenager was at a party in San Diego in Southern California. Among the cool new American friends 19-year-old Enrique Mier y Terán made that night was a 20-something American who said he was in business.
“What business? ‘I have a factory making pin curl clips,’ said the American. This was still the 1950s, and the wannabe Rita Hayworths of those days needed something to control their huge hair bangs. Enrique laughed out loud. Offended, his new friend invited him to visit his factory the next day.
“As he went round the plant, he asked the American how much he paid the 500 girls who operated the simple machinery and assembled the plastic clips. The answer was $65 a week. ‘I could get people to do that for 16 Mexican dollars a week,’ said Enrique — a 50th of what the American was paying.
“So the American lent Enrique two machines, and he started making pin curl clips in an old shed just over the border in Tijuana, to sell in America. He paid no Mexican duties on the imported parts because he was in a free-trade zone by the border; and the American customs were persuaded that the plastic parts were going south for ‘repair,’ which got around American duties on re-entry.
“As the business grew, he got his businessman father to help him. Thus was born one of the first maquiladora factories along Mexico’s border with the United States. Now Mr. Mier y Terán owns an industrial park and a consultancy which advises multinationals around the world how to do today what he started doing 39 years ago.”
Mier y Terán, acting on behalf of himself and as the “representative of an investor group,” bought 100 percent of the stock of the International Gateway brokerage for $1.5 million in January 2005 and began operating it as a subsidiary of SafeMex, according to a stock purchase agreement filed in connection with a lawsuit Mier y Terán brought against the sellers of the business in 2008. International Gateway, according to the court records, owns Amerimex Insurance, a Texas brokerage; Club Mex Insurance Services; and Tour Aide Inc.
In July 1983, ground was broken on the second border crossing to link Tijuana and San Diego. “The facility itself points to an ever-increasing volume of traffic between our two countries, commercial, and social interchange,” said Ed Meese, a San Diegan and intimate of then-president Ronald Reagan, who named him attorney general in 1985. “It will give further impetus to development of the area itself on both sides of the border.”
In May 1984, as opening day approached, San Diego Tribune reporters Joe Hughes and Fernando Romero recounted the rampant real-estate speculation boom that had occurred on the mesa as a result of the new crossing.
“There are probably as many rumors of intrigue, hidden ownerships, the mob, get-rich-quick schemes, and public officials gobbling up the good land as there are acres on sprawling Otay Mesa,” they wrote.
“Speculation was hottest when the border gate was being mapped,” they added. “In some instances, land values in eight years shot to $60,000 an acre from $6,000 an acre.”
On the Mexican side, the heat was even more intense. “Land records are not public in Tijuana, and government officials are reluctant to talk about ownership,” the reporters wrote. “But investors and speculators are said to include politicians, some of whom may have benefited by their positions. Former Baja California Gov. Roberto de la Madrid, who helped pick the site of the border gate, is often mentioned as a landowner.
“One source said de la Madrid helped Leandro Lozano Franco obtain 120 acres near the gate through a federal land swap and retained an ownership interest in the land. A spokesman for Lozano Franco, who plans a commercial complex on his property, denied that de la Madrid is an owner.
“The former governor, when asked if he has holdings on the mesa, smiled and said political obligations prevent him from commenting. ‘Why don’t you ask me about my health instead?’ de la Madrid asked. His brother Francisco, once Tijuana’s customs chief, also is said to own land.”
Alan Bersin had been U.S. Attorney for nearly five years in February 1998 when word leaked that he was the front-runner in a secretive race to become the next head of the San Diego Unified School District. It was a surprising development, not the least because there had been speculation that President Clinton would soon elevate Bersin to a Justice Department post in Washington.
Wrote the Union-Tribune’s Valerie Alvord in March 1998: “It was confirmed that [Bersin] was a candidate for the Number 2 and 3 positions in the Justice Department under Attorney General Janet Reno. There was also talk that he might have been considered for the top spot at the U.S. Customs Service after its commissioner resigned last summer.
“Why he didn’t get any of these jobs was the subject of heated speculation in some circles. Those who admire Bersin say he lost out because he was too close to the president and would have been perceived as having a conflict of interest, given the ongoing investigations of Clinton and his top advisers.
“Critics said it was because Bersin was light in management background, and because he had angered the Latino community in San Diego, partially over Operation Gatekeeper, the government’s crackdown at the border.”
(In November 2007, the Reader filed a Freedom of Information Act request with the Clinton presidential library in Little Rock, Arkansas, for records documenting Bersin’s performance as U.S. Attorney. Two years later, the library, citing limited staff and a deluge of FOIA requests, says it can’t predict when it will turn over the records. An administrative appeal made to the library in September of this year to expedite delivery of the documents on the grounds that Bersin’s nomination as CPB chief made them of immediate and significant public interest was rejected earlier this month.)
Whatever the reason, Bersin was headed not to Pennsylvania Avenue in Washington but to Normal Street, the appellation given San Diego Unified School District headquarters in North Park. But how had he arrived there?
Many saw the hand of his father-in-law Stan Foster and Foster’s business allies on the board of the San Diego Chamber of Commerce, chief among them downtown real-estate and banking mogul Malin Burnham, an internationally known yachtsman and longtime friend and business associate of Foster.
In March 1989, the San Diego Tribune had revealed that Burnham and Foster were co-investors, along with other San Diego establishment figures, including newspaper publisher Helen Copley, another Bersin backer, in a series of venture capital funds known as Sorrento Ventures. The two men were also partners in the San Diego Sockers, a professional soccer franchise. Burnham was a member of the selection committee that had pitched Bersin to the board of education.
Burnham and his fellow chamber of commerce members were looking for a tough ex-prosecutor like Bersin to take on the teachers’ union, whose members, they argued, were an obstruction to market-oriented education reform. Many also wanted to spin off many district support functions to the private sector.
As early as November 1993, the chamber’s Business Roundtable for Education had lobbied for turning over as many as a dozen of the district’s worst-performing schools to Education Alternatives Inc., a private company based in Minnesota. Though the plan was not carried out, the chamber lobby continued to push similar ideas, as well as privately run nonprofit charter schools.
Business interests also wanted to develop chunks of the district’s portfolio of underutilized real estate into shops and condominiums. Having a trusted ally at the helm of the school district couldn’t hurt that agenda.
In early 1999, a year after taking over the school district, Bersin created an ad hoc Real Estate Assets Committee and appointed his father-in-law, Stan Foster, to run it. The group was charged with combing through the district’s massive real-estate catalog and choosing which properties should be sold as surplus.
Members of the panel included developer Morgan Dene Oliver of the firm OliverMcMillan, another Foster business friend, and Lewis Silverberg, a retired lawyer and Foster associate. Silverberg was a board member of the San Diego Zoo, which coveted the property beneath Roosevelt Junior High School, just north of the zoo’s main entrance, for future zoo-related expansion.
The committee did not publicize its meetings. When its existence came to light in late 1999, critics said the arrangement reeked of cronyism. Bersin defended the panel, telling the Union-Tribune in December 1999, “The notion that there is any conflict…This is part and parcel of the kind of poison that infects public life and makes someone throw up their arms and say, ‘Why should I step up and get involved?’ ”
Many were skeptical. “I think Silverberg’s appointment to the committee is highly suspicious,” Peter Dennehy, an attorney employed by a local real-estate management firm, said in a letter to the district quoted by the U-T. “I’m sure [Silverberg] is qualified, but it seems unethical to have him on the committee.”
Though the committee wasn’t officially shuttered until 2000, Bersin mothballed the effort and moved on with the rest of his agenda. Most pressing was the effort to defeat the re-election bid of Frances O’Neill Zimmerman, a board of education member backed by the teachers’ union who had become Bersin’s chief nemesis and the source of embarrassing leaks highlighting Stan Foster and his role on the real-estate committee.
In the late summer of 2000, a series of 30-second spots blasting Zimmerman began running on San Diego television stations, paid for by a group calling itself the Partnership for Student Achievement. “Tell Fran Zimmerman to stop voting against back-to-basics school reform,” the spots urged viewers, but no one came forward to identify the partners or who had paid for the unprecedented media buy, costing an initial $545,000.
Thanks to the spadework of a San Diego television reporter, the truth emerged: Malin Burnham, Stan Foster’s longstanding business partner, had put up $50,000, and $100,000 each had come from three billionaires: Burnham’s business partner and Padres owner John Moores; Walmart heir John Walton, who maintained a home in National City; and Qualcomm founder Irwin Jacobs of La Jolla.
Two small nonprofit foundations based on the East Coast that supplied $160,000 later turned out to be acting as fronts for yet another billionaire, Democrat and school reformer Eli Broad, a Los Angeles real-estate developer and Bersin’s friend and supporter.
“This TV campaign to assassinate Zimmerman’s character is a raw exercise in power, impure and simple,” wrote Union-Tribune columnist Logan Jenkins. “Bersin may be far enough away to deny direct involvement, but why would the cleanup hitters be in the partnership’s lineup if they weren’t acting on his behalf?”
Added Jenkins, “This downtown jihad to oust Zimmerman and replace her with Chamber of Commerce favorite Julie Dubick has nothing to do with education.” In part due to the commotion generated by the unmasking of the partnership’s political fat cats, Zimmerman narrowly won reelection in November 2000.
For Bersin, it was a jarring setback. Backed by the downtown business establishment and the editorial board of the Union-Tribune, Bersin would last another four years as superintendent before a newly elected board majority forced him out, but privatization of education was stymied, and Foster’s efforts to sell off the district’s surplus real estate died.
On November 14, 2001, after a six-week battle with cancer, Stan Foster died at San Diego Hospice. He was 74. The many politicians to whom he had been so generous eulogized him. “He was a dear friend and one of the most decent human beings I ever met,” Democratic governor Gray Davis was quoted as saying. Republican ex-governor, U.S. senator, and San Diego mayor Pete Wilson called him “a role model for citizen leadership.”
From 1990 until his death, Foster contributed a total of $55,500 to federal campaigns, almost all to Democrats, with the exception of $300 to Republican congressman Bill Lowery and $2000 to the pro-Israel San Diego Community PAC. Through this year, Foster’s widow Pauline has given $62,400 to campaigns for federal office.
The Foster family contributed thousands more to state candidates, including then-incumbent Governor Gray Davis. In August 2002, Pauline Foster gave $2500 to the Davis campaign; the week before, Bersin gave $2500. That December, Davis named Bersin’s wife Lisa Foster a superior court judge.
In January 2005, the San Diego school board voted to buy out the final year of Bersin’s contract for $240,000. He soon found another job. That April, Governor Arnold Schwarzenegger, who had ousted Gray Davis in a recall election two years earlier, named Bersin to be his education secretary, succeeding ex–Los Angeles mayor Richard Riordan, who was pushed out after seeming confused during several public appearances.
That September, Bersin and Schwarzenegger boarded a private plane for Mexico. The pair were headed to Mexicali for a meeting with Eugenio Elorduy Walther, governor of Baja California, who was promoting Silicon Border, a 10,000-acre industrial park to be developed by two Americans from San Diego. It was just south of the international boundary, about ten miles west of downtown Mexicali.
Born in a Calexico hospital in November 1940, Elorduy had attended the Army and Navy Academy in Carlsbad, graduating from Jesuit-run Loyola High School in Los Angeles in 1958. He received a business degree from the Technical Institute of Monterrey and was an early member of Mexico’s pro–private enterprise Partido Acción Nacional political party, known as PAN.
A millionaire Ford dealer from a wealthy old-line family, the six-foot-four Elorduy had longstanding ties to San Diego and its business establishment. He owned a condo in La Jolla and was chairman of San Diego Dialogue’s Forum Fronterizo, a secretive group of influential business types from both sides of the border, run out of offices at UCSD Extension. Next to the industrialization of Mexicali, one of Elorduy’s top priorities was opening new border crossings to serve future manufacturing hubs in Baja California.
A little over a month after Elorduy was sworn in as governor on the first of November 2001, Silicon Border Holding Company, LLC was incorporated as a Minnesota limited-liability company on December 10, 2001, according to state records. The incorporation of Silicon Border Land, LLC would follow on May 10, 2004.
The project was officially unveiled on July 14, 2004, at SEMICON West, a semiconductor trade show in San Francisco. “We’re acquiring the property right now, and we will finish the design work of the park over the balance of this year,” Silicon Border cofounder Daniel J. Hill said in a news release. “In early 2005, we will start construction of the industrial park itself.”
Elorduy issued a statement of support: “This joint commitment among federal government, state government, and private enterprise is indicative of a growing confidence in Mexico’s national economy and its emerging role in a technology-driven global economy.”
In December 2004, a company news release said it had obtained “a development grant and an expanded exclusivity agreement” from the Mexican federal and state governments. “The amount of the grant was not disclosed,” the firm said, “but a portion comes from Mexico’s federal Prosoft program, formed to support technology development throughout the country.”
“Every day we are creating more goodwill and good fortune between us,” Schwarzenegger said in his statewide radio address after he and Bersin met with Elorduy in September 2005. “And then there is the Silicon Border, a high-tech industrial park in Baja, to attract manufacturing operations that will expand both our economies.”
On December 10, 2005, Schwarzenegger again hyped Silicon Border during his radio broadcast, saying, “…It’s important to speed up the movement of goods across our border and build new economic partnerships like the one we’re creating in high tech, between our Silicon Valley and the Silicon Border.”
At the beginning of 2006, the California governor created the “California/Baja Silicon Border Work Group,” run by deputy secretary of the California Business, Transportation, and Housing Agency, Yolanda Benson. State officials promised to hasten the roadways needed to link up with those being built for Silicon Border in Mexico.
That January, Elorduy met with the Union-Tribune’s editorial board. “We need more border crossings,” he said. “To get a border crossing you have to wait 10 to 12 years. It’s ridiculous. There are five times more border crossings between Canada and the U.S. than between Mexico and the U.S. So these long lines are due to that, because we need more border crossings.”
In May 2006, Elorduy and San Diego’s Republican mayor Jerry Sanders went to Washington, D.C., to lobby Congress, the Bush White House, and the Inter-American Development Bank on behalf of Mexican industrial projects along the border.
Malin Burnham joined the delegation in Washington. According to a document posted on the Silicon Border website, the group urged creation of a new port of entry between Mexico and the United States sought by Silicon Border.
Burnham had long shared Elorduy’s desire for creating new border crossings.
“I’ve been involved with Mexico for more than 50 years,” Burnham said in an interview this October with Barbara Bry of San Diego News Network, a local website. “I started sailing to Acapulco when I was young, and I have a lot of friends in Mexico, I have active real estate investments and a home in Los Cabos. I like Mexico. Yet many Americans think Mexico is the enemy instead of a neighbor. It’s ridiculous. In the long term, we need to get bulldozers and tear down the fence.”
In 2004, he launched a seemingly quixotic quest to lure the 2016 summer Olympic games to the border region. But Burnham said he had a larger goal.
“Winning the bid is perhaps secondary to the catalytic effect it generates for infrastructure, cultural and civic closeness, housing, cross-border relations and the environment,” Burnham wrote in an August 8, 2004 op-ed piece in the San Diego Daily Transcript. “Our bi-national region should be a seamless network of citizens and businesses that connect our economies, infrastructure and environment.”
A few months later in 2005, the real-estate magnate became the leader of a group of “San Diego and Tijuana business executives” pushing for a so-called cross-border terminal linking Tijuana’s Rodríguez International Airport with Otay Mesa.
“I believe we got traction,” Burnham told the Union-Tribune in January 2006 after meeting Mexican Undersecretary of Transportation and Communications Aaron Dychter during a trade mission to Mexico City sponsored by the chamber of commerce’s Mexico Business Center. “I looked the undersecretary in the eye and asked, ‘Will you help us?’ and he said, ‘Yes. I will be the champion.’ ”
The idea bore similarities to the International Gateway proposal to build a pedestrian crossing at the downtown Tijuana port of entry backed by Bersin less than a decade earlier. “We’re only talking about a terminal, not an airport, on our side of the border,” Burnham told the paper. “People could park on this side and process their tickets and luggage and walk to the Tijuana airport. We think it can make economic sense to an investor.”
But the proposal made slow progress. Then, in November 2006, Bersin quit his state education job and was appointed chairman of the San Diego County Airport Authority by Jerry Sanders. To those unfamiliar with Bersin’s relationship with Burnham and the border economy, it was yet another surprising career jump.
Sanders spokesman Fred Sainz said of Bersin, “The mayor has a high degree of confidence in his leadership skills and thinks that he’s an extraordinary candidate that can add immeasurably to this important board.”
The press aide did not mention that in May and October of that year, San Diegans for City Hall Reform, a campaign committee controlled by Sanders, received a total of $22,500 from OM Foster, LLC, a real-estate development partnership between Oliver McMillan and the Foster family. Alan Bersin’s mother-in-law Pauline Foster personally gave $500.
In his new role as airport chairman, Bersin spoke favorably of the prospects for the Tijuana–Otay Mesa airport connection. During a March 29, 2007, meeting of the chamber of commerce’s Mexico Business Center and Dialogue’s Forum Fronterizo, Bersin and Tijuana airport director Enrique Valle spoke about the merits of “Airports for the Californias.”
Then, on June 5, 2008, Bersin joined a unanimous airport board vote endorsing the positive conclusions of a $385,000 “Cross Border Terminal Market Demand Study” commissioned by the airport authority in March 2007. “Chairperson Bersin requested that staff explore ways in which the Authority could participate in a working group that would move this project forward by supporting the Chamber and the [Economic Development Corporation] in its efforts,” according to minutes of the meeting. “He also requested that staff explore, while not committing fiscally to the project, how the Authority could support public and private partnerships in its efforts to build the border crossing.”
The proposed cross-border terminal has since progressed steadily. This September, promoters of the venture, whose United States backers include Chicago-based billionaire Sam Zell, applied to U.S. Secretary of State Hillary Clinton for a so-called Presidential Permit, the final federal approval needed to clear the way for construction of the gateway. The public comment period for the application ends this December, according to a State Department spokesman.
In late 2007, Bersin joined Malin Burnham on the steering committee of Project Smart Border 2010, an initiative sponsored by the Mexico Business Center. The group said it had hired the Washington lobbying firm of Roberts, Raheb & Gradler, LLC, whose principal, Geoffrey Gradler, was a former aide to indicted Texas Congressman and GOP Majority Leader Tom Delay. Congressional reports show that RR&G was paid $10,000 to lobby Congress and the Customs and Border Protection agency “to reduce wait times at ports of entry in San Diego County.”
Smart Border’s mission, according to a post on its website: to promote “faster border crossings and new border crossings at Tijuana International Airport (Cross Border Passenger Terminal), Otay II, Imperial County and elsewhere.” On the steering committee with Bersin and Burnham was Silicon Border’s Daniel J. Hill.
Though it wasn't widely advertised, all three men owned a piece of Silicon Border.
In mid-2007, Bersin and his wife acquired stock in Silicon Border they valued between $100,000 and $1 million, according to a state financial statement she filed in 2008.
Bersin still owned the Silicon Border stock in April 2009, according to a “leaving office” financial disclosure he filed with the San Diego County Regional Airport Authority on May 9, 2009. He also reported a stock holding in “Safeway/International Gateway” valued between $10,000 and $100,000.
In addition, according to a federally required disclosure report Bersin filed May 15, 2009, with the United States Department of Justice, he served as chairman of the Silicon Border “advisory board” for more than a year, from February 2008 until April 2009, the same month his appointment as the Obama Administration’s “border czar” was announced by Homeland Security secretary Janet Napolitano.
But Bersin’s May 2009 federal disclosure omitted any reference to either the Silicon Border or the SafeMex interests he had previously reported on his state filings.
Then, in a second federal filing dated September 30 of this year, made as a requirement for his nomination to become head of Customs and Border Protection, Bersin disclosed that he still held a direct financial interest in both Silicon Border and SafeMex/International Gateway.
According to the September disclosure, Bersin held a promissory note from “Silicon Border Holding Company LLC” valued between $500,000 and $1 million. Bersin also held a promissory note from “Enrique Mier y Terán for SafeMex/International Gateway,” valued between $100,000 and $250,000, the report says. Neither of the notes has paid him greater than $250, the disclosure says.
While not providing details, Silicon Border CEO David J. Hill confirmed in an interview that both Bersin and Malin Burnham had taken direct financial stakes in the project. Bersin’s background in the U.S. Department of Justice as the Clinton Administration’s border czar in the 1990s came in handy in attracting support for the venture, according to Hill. “He was very helpful in making introductions to the community. He knows border law. He’s very smart.”
This summer, without mentioning Bersin’s previous role, Silicon Border announced that Malin Burnham was chairman of a new advisory board “comprised of seasoned political and industry leaders with experience in dealing with issues impacting the Mexico/California border.” Also on the board was Eugenio Elorduy, the ex-governor of Baja California who had spearheaded government funding for the project.
Though Bersin’s investment in Silicon Border did not make the papers in the United States, Mexico City’s Reforma newspaper reported in October 2007 that Bersin and Malin Burnham, identified by the paper as “U.S. investors” in Silicon Border, had discussed the project with Mexican economic secretary Eduardo Sojo and representatives of Fernando Maiz, the wealthy head of Maiz Edifications, a large Mexican construction conglomerate based in Monterrey.
In November 2007, Silicon Border announced that Maiz’s company would become the development’s “preferred contractor to design and manage the physical attributes of the Silicon Border Science Park,” said to be worth over $150 million. He was subsequently listed as a member of the project’s advisory board, alongside Elorduy and Burnham.
More good news for the project’s investors came in May 2008 with the announcement that Q-Cells, a large German maker of solar cells, would build its first American factory at Silicon Border. ING Clarion, a division of ING, a big Dutch multinational bank, agreed to provide millions in financing.
But there was still the matter of the new border crossing. The crash of the American economy in the fall of 2008 slowed financial activity on both sides of the border, and local, state, and national officials say little progress has been made in Silicon Border’s bid to open a new port of entry in the desert west of Mexicali. According to Robert Allison of the U.S. State Department’s Office of Mexican Affairs, no paperwork has been filed for approval of the coveted Presidential Permit needed to allow the project to go forward.
Reached by phone earlier this month, Silicon Border CEO David J. Hill acknowledged that the sour economy had delayed the planned border crossing but vowed that it would be eventually built and opened. “This is a long-term process, but with an enlightened government, t could be done within five years,” he said, adding that the development’s first major tenant, Germany’s Q-Cells, had encountered economic setbacks, delaying its move into the industrial park. “We hope to have other companies announced by early next year.”
In February 2009, Bersin was named co-chairman of a new binational task force, sponsored by the Mexico City–based Mexican Council on Foreign Relations and the Pacific Council on International Policy, based in Los Angeles.
“Both are invitation-only organizations made up of civic and government leaders,” noted a story in the Union-Tribune.
“Much of the congestion at the border reflects the fact that the U.S.–Mexico frontier is treated as a ‘line’ rather than a ‘buffer zone’ or economic region,” according to an outline of the task force’s mission published on the Pacific Council’s website.
“The Task Force will assess whether there are ways to expedite border crossings to meet local needs that do not materially increase the risk of criminals or terrorists gaining entry.
“It will also consider the degree to which such efforts at facilitation should remain entirely unilateral rather than developed jointly by Mexican and U.S. authorities.
“By and large, we have a fairly chaotic, badly governed, badly managed situation,” Andres Rozental, Bersin’s cochairman, told the Union-Tribune. A former deputy foreign minister of Mexico, Rozental is currently a highly paid consultant to multinational corporations with Mexican investments.
“We want to look at the border in a more cooperative way, so that rather than being a point of conflict and tension, it becomes more of a point of cooperation and maybe even joint management,” said Rozental.
“Any change in administration in either country provides an opportunity for interested observers and experts to review the bidding,” Bersin said.
In addition to Bersin, who resigned from the task force in April 2009 upon joining the Obama Administration, members of the task force included his longtime business associates Malin Burnham, Eugenio Elorduy, and Enrique Mier y Terán. And, according to its final report, released in late October 2009, task force sponsors who provided “financial or organizational support” for the study included Silicon Border and Mier y Terán.
Thus, it was perhaps not surprising that the group’s report, entitled “Managing the United States-Mexico Border: Cooperative Solutions to Common Problems,” called for increased spending by United States taxpayers on border crossings of the type sought by Silicon Border.
“One crucial barrier to trade facilitation is the deficit in border infrastructure, which simply has not kept pace with massive increases in trade and transit since ratification of the North American Free Trade Agreement,” the report said.
“Federal spending on ports of entry would have a very high rate of return; for this reason, both countries should make a long-term commitment to fund border infrastructure and (in the short run) disproportionately direct stimulus money toward the ports of entry,” the report added.
Alan Bersin, no stranger to the world of border politics, now awaits the Washington version, in the form of confirmation proceedings by the United States Senate. In July of last year, Bersin contributed $28,500 to the Democratic National Committee, according to the website OpenSecrets.org. Having given $2300 to the presidential campaign of Hillary Clinton in 2007, he gave $2300 to the campaign of Barack Obama on July 31, 2008. A spokesman for the Senate’s Commerce Committee says it is conducting the requisite background checks on the nominee and has not yet scheduled a public hearing at which Bersin is expected to testify. In the meantime, a spokesman for the Department of Homeland Security says the nominee will not answer any questions posed by the media until he is confirmed.
The author spoke to the staff of the Senate Finance Committee, which was erroneously referred to as the "Commerce" Committee. We regret the error.