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Scott Kessler works with FBI investigating Marco Li Mandri

A $250,000 parking contract for the Little Italy Association

On or about October 17, 2008, Police Chief William Lansdowne was summoned to the office of an irate Mayor Jerry Sanders. The mayor wanted to know how a criminal investigative report coauthored by one of Lansdowne’s detectives, Dan Vile, had gotten into the hands of Scott Kessler, deputy director of the City’s Economic Development Division, and to the City’s Ethics Commission.

Earlier, Kessler had informed his superiors that he was cooperating with Vile and FBI agent Gerald Cook. Beginning in 2005, Vile and Cook had been investigating activities of Marco Li Mandri, a Little Italy powerhouse who had clout with the mayor, and Paul (Joe) Mannino, a fellow with a dubious past who had been conducting questionable business with Li Mandri in a San Diego business improvement district. Kessler was cooperating with the investigators because one of his jobs at the City was to monitor business improvement districts for fraud and irregularities. The exhaustive investigative report had concluded that, among many things, Li Mandri and Mannino, using fraudulent procurement processes, had engaged in a conspiracy to misappropriate money.

The FBI/police criminal investigation had been submitted to District Attorney Bonnie Dumanis in early 2007, but she had refused to prosecute. The mayor’s office was continuing to do business with Li Mandri and his colleagues and criticizing Kessler when he would point out Li Mandri’s ongoing contractual violations. Therefore, Vile and Cook began to look into whether the mayor’s office had had any influence over Dumanis’s refusal to prosecute Li Mandri and Mannino.

Not long after Lansdowne met with the mayor, Cook told Kessler that he could no longer talk with detective Vile, who had been disciplined.

Before 2008 was over, Kessler had been fired from his City post. After the axe fell, he recalled three conversations he had had with Julie Dubick, the mayor’s legislative director, between late 2007 and the spring of 2008. She had asked him several times how the investigation was going. Invariably she would end the conversations with her observations that so much time had elapsed she doubted there would be a prosecution. All along, Kessler had reported these conversations with Dubick to Vile and Cook.

Kessler is suing for wrongful termination and retaliation. In the issue of March 4, the Reader reported on the FBI/police report and Kessler’s lawsuit. Both the investigative report and lawsuit were posted on the Reader website. Now, new allegations have arisen, including the story of the mayor allegedly dressing down the police chief; the apparent sanctioning of the detective; the account of the two investigators wondering if there had been communications between the mayor’s and district attorney’s offices on the decision not to prosecute Li Mandri and Mannino; and an assertion that it was the mayor’s office that fired Kessler.

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The Reader has obtained a copy of Kessler’s answers to 57 interrogatories posed by the city attorney’s office, as well as copies of Li Mandri’s communications with the mayor’s office seeking relief from Kessler’s restrictions on the Little Italy leader’s allegedly self-serving activities.

Through Kessler’s answers and those emails, more detail can be added to the story — a story that San Diegans might ponder soberly when considering the concept of a strong mayor and the outsourcing of government jobs to private-sector companies.

It was Bill Anderson, Kessler’s boss, and Beth Murray, his eventual replacement, who specifically told Kessler not to cooperate with the criminal investigators. But according to the interrogatory responses, Murray told Kessler “that the directives she was relaying to [Kessler] were not her own but came directly from individuals in the mayor’s office.” Murray had previously told Kessler that Dubick and Kris Michell, the mayor’s aide, had unreasonably criticized his attempts to curtail Li Mandri’s questionable contracts. Anderson and Murray joked that they had to watch Kessler’s back because of Dubick’s and Michell’s biting criticisms, according to the interrogatory responses.

Murray told Kessler that Michell and Dubick accepted at least some of Li Mandri’s complaints about him, such as that Kessler was unduly harsh on Li Mandri and trying to ruin his reputation; that the FBI/police investigation was “an anti-Italian witch hunt”; and that Li Mandri “was unfairly caught up in the investigation because of his association with Mannino,” according to the interrogatory responses.

At one point, FBI agent Cook told Kessler of a rumor that he might be fired. Murray wondered if something uttered at a secret meeting she had attended had been leaked. She asked Kessler, “Do you think our offices are bugged?” Kessler asked her if she were serious. She replied, “Really, do you think the 11th floor [of City Hall] is bugged?” The offices of those indicted in the Strippergate scandals had been bugged, she pointed out.

At that point, Kessler asked Murray if there was talk around the office that he would be fired. She replied in the affirmative. According to the interrogatory responses, Murray said she didn’t want to get into any trouble. She told Kessler that Phil Rath, the mayor’s policy advisor, had said, “He hopes he never gets put under oath about what he’s witnessed in the mayor’s office regarding Li Mandri.”

In a phone call, Anderson told Kessler that he was a public employee and had to take directions from his superiors. Kessler “wasn’t a private citizen anymore and couldn’t do what [he] wanted,” said Anderson, according to the interrogatory responses. What’s more, Kessler “didn’t have to respond to questions [the investigators] posed right away.”

As Kessler took more and more flak for providing the investigative report to the Ethics Commission, he went to Jay Goldstone, the City’s chief operating officer. Goldstone told Kessler that “people were concerned that the mayor’s office might get dragged into this now that the Ethics Commission has the report.” Goldstone claimed he had not read the investigative report but said others had, including people in the mayor’s office. Goldstone asserted that he supported Kessler and that the City should not “shoot the messenger,” according to the interrogatory responses.

In one meeting, Michell, the mayor’s Machiavelli, told Kessler he had a “bad attitude” toward Li Mandri, according to the interrogatory responses. She also expressed her unhappiness that Kessler had disclosed that he was cooperating with the two investigators.

Dubick, Michell, and the mayor’s former flack, Fred Sainz, told Kessler on several occasions not to share information with the city attorney’s office. The city attorney at the time was Mike Aguirre, who sided with Kessler in his attempts to restrain Li Mandri. And the mayor’s office hated Aguirre. But there was a political reason. Anderson told Kessler, “City Attorney Mike Aguirre might latch onto the [FBI/police] investigative report regarding Li Mandri as a campaign issue, which the mayor did not want to happen, since the election was two weeks away and City Attorney Aguirre’s office had authored opinions critical of Mr. Li Mandri’s contracting practices which often validated [Kessler’s] actions and ran counter to what became the mayor’s office’s position,” says Kessler in a response to an interrogatory.

Li Mandri was a political force in Little Italy and Sanders knew it, says Joshua Gruenberg, Kessler’s lawyer. That’s how Li Mandri kept getting contracts.

The new material shows that another person in this drama was none other than Nancy Graham, who resigned as head of Centre City Development Corporation in mid-2008. Her official explanation was that she had to care for an ailing mother. But that wasn’t the nub, or the rub. The Centre City board had chosen a company to do a big project at Seventh and Market. Graham had worked with the company while she was mayor of West Palm Beach and also as a private developer there. She claimed she was not involving herself in the Seventh and Market project, but it became clear that she was. Both Centre City and Aguirre investigated. She also faces charges that she did not reveal her relationship with another contractor.

Li Mandri in 2008 had attempted to wangle a $250,000 parking contract for the nonprofit Little Italy Association. The mayor’s office had concealed the deal from Kessler, who administered the community parking district program. (Community parking districts are managed by local nonprofits on behalf of the City to provide parking and transportation solutions. The funds are derived from 45 percent of parking meter revenue within the district.) Centre City managed the entire downtown community parking district for the City free of charge. Li Mandri proposed breaking off the portion in Little Italy and charging the City $20,000 a year that would go to his for-profit company, New City America. Michell had told Graham to back Li Mandri in the deal, according to Kessler’s interrogatories.

Li Mandri was steadily working on Graham. On March 27, 2008, he wrote the mayor’s policy advisor Phil Rath and Michell and boasted, “Nancy and I have a very good working relationship.” He also noted that he was getting support from Kevin Faulconer, councilperson for the district.

The same month, Li Mandri peppered Rath with emails, trying to get the mayor’s support for the parking district contract and wanting to be sure Kessler didn’t put the kibosh on the proposal. In mid-2008, Li Mandri sent a letter to Sanders thanking him for his and Faulconer’s support for the new Little Italy parking district. However, he was ordered to withdraw the proposal the week after Kessler gave the investigative report to the Ethics Commission, according to Gruenberg. (Li Mandri then managed to get a different juicy contract.) As a result of the entire Li Mandri flap, Anderson told Kessler that he had “really pissed off the 11th floor.”

Of course, throughout 2007 and 2008, Li Mandri was writing various members of the mayor’s staff, blasting Kessler. In 2007, he was successfully trying to get meetings with the mayor’s then–wizard of ooze Fred Sainz. According to Gruenberg, Sainz told Kessler that he was wrong about Li Mandri and that Kessler should focus on more problematic contractors.

Meanwhile, the FBI/police criminal report on Li Mandri and Mannino has gone nowhere with authorities. The city attorney’s office is trying to get Kessler’s suit dismissed. According to Gruenberg, the office is seeking the dismissal even though it has not deposed Kessler.

Dumanis’s office refuses comment on the question of whether it communicated with the mayor’s office in the decision not to prosecute Li Mandri and Mannino. The mayor’s public relations representative, given a list of eight City Hall officials about whom the Reader wanted information, did not return calls, as usual. The city attorney’s office, also told by voice mail specifically what the Reader requested, did not return calls. Police Chief Lansdowne declined to comment.

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On or about October 17, 2008, Police Chief William Lansdowne was summoned to the office of an irate Mayor Jerry Sanders. The mayor wanted to know how a criminal investigative report coauthored by one of Lansdowne’s detectives, Dan Vile, had gotten into the hands of Scott Kessler, deputy director of the City’s Economic Development Division, and to the City’s Ethics Commission.

Earlier, Kessler had informed his superiors that he was cooperating with Vile and FBI agent Gerald Cook. Beginning in 2005, Vile and Cook had been investigating activities of Marco Li Mandri, a Little Italy powerhouse who had clout with the mayor, and Paul (Joe) Mannino, a fellow with a dubious past who had been conducting questionable business with Li Mandri in a San Diego business improvement district. Kessler was cooperating with the investigators because one of his jobs at the City was to monitor business improvement districts for fraud and irregularities. The exhaustive investigative report had concluded that, among many things, Li Mandri and Mannino, using fraudulent procurement processes, had engaged in a conspiracy to misappropriate money.

The FBI/police criminal investigation had been submitted to District Attorney Bonnie Dumanis in early 2007, but she had refused to prosecute. The mayor’s office was continuing to do business with Li Mandri and his colleagues and criticizing Kessler when he would point out Li Mandri’s ongoing contractual violations. Therefore, Vile and Cook began to look into whether the mayor’s office had had any influence over Dumanis’s refusal to prosecute Li Mandri and Mannino.

Not long after Lansdowne met with the mayor, Cook told Kessler that he could no longer talk with detective Vile, who had been disciplined.

Before 2008 was over, Kessler had been fired from his City post. After the axe fell, he recalled three conversations he had had with Julie Dubick, the mayor’s legislative director, between late 2007 and the spring of 2008. She had asked him several times how the investigation was going. Invariably she would end the conversations with her observations that so much time had elapsed she doubted there would be a prosecution. All along, Kessler had reported these conversations with Dubick to Vile and Cook.

Kessler is suing for wrongful termination and retaliation. In the issue of March 4, the Reader reported on the FBI/police report and Kessler’s lawsuit. Both the investigative report and lawsuit were posted on the Reader website. Now, new allegations have arisen, including the story of the mayor allegedly dressing down the police chief; the apparent sanctioning of the detective; the account of the two investigators wondering if there had been communications between the mayor’s and district attorney’s offices on the decision not to prosecute Li Mandri and Mannino; and an assertion that it was the mayor’s office that fired Kessler.

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The Reader has obtained a copy of Kessler’s answers to 57 interrogatories posed by the city attorney’s office, as well as copies of Li Mandri’s communications with the mayor’s office seeking relief from Kessler’s restrictions on the Little Italy leader’s allegedly self-serving activities.

Through Kessler’s answers and those emails, more detail can be added to the story — a story that San Diegans might ponder soberly when considering the concept of a strong mayor and the outsourcing of government jobs to private-sector companies.

It was Bill Anderson, Kessler’s boss, and Beth Murray, his eventual replacement, who specifically told Kessler not to cooperate with the criminal investigators. But according to the interrogatory responses, Murray told Kessler “that the directives she was relaying to [Kessler] were not her own but came directly from individuals in the mayor’s office.” Murray had previously told Kessler that Dubick and Kris Michell, the mayor’s aide, had unreasonably criticized his attempts to curtail Li Mandri’s questionable contracts. Anderson and Murray joked that they had to watch Kessler’s back because of Dubick’s and Michell’s biting criticisms, according to the interrogatory responses.

Murray told Kessler that Michell and Dubick accepted at least some of Li Mandri’s complaints about him, such as that Kessler was unduly harsh on Li Mandri and trying to ruin his reputation; that the FBI/police investigation was “an anti-Italian witch hunt”; and that Li Mandri “was unfairly caught up in the investigation because of his association with Mannino,” according to the interrogatory responses.

At one point, FBI agent Cook told Kessler of a rumor that he might be fired. Murray wondered if something uttered at a secret meeting she had attended had been leaked. She asked Kessler, “Do you think our offices are bugged?” Kessler asked her if she were serious. She replied, “Really, do you think the 11th floor [of City Hall] is bugged?” The offices of those indicted in the Strippergate scandals had been bugged, she pointed out.

At that point, Kessler asked Murray if there was talk around the office that he would be fired. She replied in the affirmative. According to the interrogatory responses, Murray said she didn’t want to get into any trouble. She told Kessler that Phil Rath, the mayor’s policy advisor, had said, “He hopes he never gets put under oath about what he’s witnessed in the mayor’s office regarding Li Mandri.”

In a phone call, Anderson told Kessler that he was a public employee and had to take directions from his superiors. Kessler “wasn’t a private citizen anymore and couldn’t do what [he] wanted,” said Anderson, according to the interrogatory responses. What’s more, Kessler “didn’t have to respond to questions [the investigators] posed right away.”

As Kessler took more and more flak for providing the investigative report to the Ethics Commission, he went to Jay Goldstone, the City’s chief operating officer. Goldstone told Kessler that “people were concerned that the mayor’s office might get dragged into this now that the Ethics Commission has the report.” Goldstone claimed he had not read the investigative report but said others had, including people in the mayor’s office. Goldstone asserted that he supported Kessler and that the City should not “shoot the messenger,” according to the interrogatory responses.

In one meeting, Michell, the mayor’s Machiavelli, told Kessler he had a “bad attitude” toward Li Mandri, according to the interrogatory responses. She also expressed her unhappiness that Kessler had disclosed that he was cooperating with the two investigators.

Dubick, Michell, and the mayor’s former flack, Fred Sainz, told Kessler on several occasions not to share information with the city attorney’s office. The city attorney at the time was Mike Aguirre, who sided with Kessler in his attempts to restrain Li Mandri. And the mayor’s office hated Aguirre. But there was a political reason. Anderson told Kessler, “City Attorney Mike Aguirre might latch onto the [FBI/police] investigative report regarding Li Mandri as a campaign issue, which the mayor did not want to happen, since the election was two weeks away and City Attorney Aguirre’s office had authored opinions critical of Mr. Li Mandri’s contracting practices which often validated [Kessler’s] actions and ran counter to what became the mayor’s office’s position,” says Kessler in a response to an interrogatory.

Li Mandri was a political force in Little Italy and Sanders knew it, says Joshua Gruenberg, Kessler’s lawyer. That’s how Li Mandri kept getting contracts.

The new material shows that another person in this drama was none other than Nancy Graham, who resigned as head of Centre City Development Corporation in mid-2008. Her official explanation was that she had to care for an ailing mother. But that wasn’t the nub, or the rub. The Centre City board had chosen a company to do a big project at Seventh and Market. Graham had worked with the company while she was mayor of West Palm Beach and also as a private developer there. She claimed she was not involving herself in the Seventh and Market project, but it became clear that she was. Both Centre City and Aguirre investigated. She also faces charges that she did not reveal her relationship with another contractor.

Li Mandri in 2008 had attempted to wangle a $250,000 parking contract for the nonprofit Little Italy Association. The mayor’s office had concealed the deal from Kessler, who administered the community parking district program. (Community parking districts are managed by local nonprofits on behalf of the City to provide parking and transportation solutions. The funds are derived from 45 percent of parking meter revenue within the district.) Centre City managed the entire downtown community parking district for the City free of charge. Li Mandri proposed breaking off the portion in Little Italy and charging the City $20,000 a year that would go to his for-profit company, New City America. Michell had told Graham to back Li Mandri in the deal, according to Kessler’s interrogatories.

Li Mandri was steadily working on Graham. On March 27, 2008, he wrote the mayor’s policy advisor Phil Rath and Michell and boasted, “Nancy and I have a very good working relationship.” He also noted that he was getting support from Kevin Faulconer, councilperson for the district.

The same month, Li Mandri peppered Rath with emails, trying to get the mayor’s support for the parking district contract and wanting to be sure Kessler didn’t put the kibosh on the proposal. In mid-2008, Li Mandri sent a letter to Sanders thanking him for his and Faulconer’s support for the new Little Italy parking district. However, he was ordered to withdraw the proposal the week after Kessler gave the investigative report to the Ethics Commission, according to Gruenberg. (Li Mandri then managed to get a different juicy contract.) As a result of the entire Li Mandri flap, Anderson told Kessler that he had “really pissed off the 11th floor.”

Of course, throughout 2007 and 2008, Li Mandri was writing various members of the mayor’s staff, blasting Kessler. In 2007, he was successfully trying to get meetings with the mayor’s then–wizard of ooze Fred Sainz. According to Gruenberg, Sainz told Kessler that he was wrong about Li Mandri and that Kessler should focus on more problematic contractors.

Meanwhile, the FBI/police criminal report on Li Mandri and Mannino has gone nowhere with authorities. The city attorney’s office is trying to get Kessler’s suit dismissed. According to Gruenberg, the office is seeking the dismissal even though it has not deposed Kessler.

Dumanis’s office refuses comment on the question of whether it communicated with the mayor’s office in the decision not to prosecute Li Mandri and Mannino. The mayor’s public relations representative, given a list of eight City Hall officials about whom the Reader wanted information, did not return calls, as usual. The city attorney’s office, also told by voice mail specifically what the Reader requested, did not return calls. Police Chief Lansdowne declined to comment.

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