San Diego Mollycoddle the malefactors and revile the reformers. It's the San Diego mentality of long standing. And it's painfully evident these days.
David Malcolm, the Artful Dodger in the Padres' pocket, got off with barely a scratch on very serious conflict-of-interest charges. But former district attorney Ed Miller, one of the few true San Diego reformers, will almost certainly not be named to the Ethics Commission because of an honest dispute over a nine-year-old bill.
A year after helping Duke Energy get a juicy lease on the South Bay power plant, port commissioner Malcolm went to work for Duke at $20,000 per month -- a startling conflict of interest, and not Malcolm's first. But a judge gave Malcolm just 120 days of a work-furlough program, and he will only have to serve 80 days. He will pay $261,000 in fees and costs.
It's chump change, particularly since Malcolm's ooze has victimized San Diego saps for years. He was investigated by the D.A.'s office for plotting arson to get an insurance payoff. He was investigated by the Fair Political Practices Commission for conflict-of-interest violations that had allegedly lined his pockets. As a member of the port commission, he helped a company get a port-district contract and a year later showed up as a vice president of the firm. He wiggled out of the noose in these cases and others, but savvy San Diegans knew enough to watch their wallets around Malcolm.
Malcolm headed the port commission when it mysteriously announced it had come up with $21 million for ballpark infrastructure, thus filling a financing gap in the scheme. Former port commissioner Harvey Furgatch noted that the port had never docketed a meeting for making such a decision. Furgatch sued, claiming a violation of the Brown Act, which requires that public decision-making be conducted in public with advance notice of the time and place of meetings. Furgatch's lawyer, Stanley Zubel, entered into evidence 30 documents showing that the commissioners must have met secretly in October of 1998 to authorize the phantom $21 million. But Malcolm and one other commissioner testified that there had been no such meeting. Superior court judge William C. Pate, weighing the overwhelming evidence versus the word of Malcolm and a colleague, sided with the testimony.
"I have watched a lot of people testify over the years, and so I think I have a little bit of a feel for some of the clues, and nothing came to me that indicated that these people were not being perfectly truthful," said Pate -- one more reason why, when taxpayers realize how they are being drained by the ballpark project, superior court must come under scrutiny.
Zubel laughingly notes that it would have been illegal for the port to authorize the $21 million without a meeting. "But they reached the consensus without a meeting," says Zubel. "We call it the Immaculate Consensus." He notes that if the trial were held today, Judge Pate "would have a difficult time under Evidence Code 788 concluding that Malcolm -- now a felon -- was speaking the truth."
But San Diego has long given succor to its rascals. Consider the 1960s and '70s. Key members of the business establishment were "Mr. San Diego" award winners C. Arnholt Smith and John Alessio, both of whom would later spend unjustifiably abbreviated times in incarceration. Irvin Kahn was spreading tainted Teamsters money in real estate ventures. Clifford Graham, founder of Fotomat, was lavishly entertaining the rich and chic at his Rancho Santa Fe estate, formerly owned by Bing Crosby. The diminutive Graham had a statuesque trophy wife and lifts in his shoes, servants, a fleet of cars, a yacht, and, says the FBI, "a strong and winning personality." After fleecing investors of $13 million in a gold-mining scheme, lubricated through Bahamian and Panamanian trusts, Graham disappeared. He is still wanted on multiple counts of mail fraud, wire fraud, and tax evasion.
Smith ran a conglomerate with such diverse assets as a luxury hotel, tuna cannery, airline, taxicab firm, shipbuilding operation, and land. He also owned a bank. In 1973, accounting critic Abe Briloff chuckled that Smith had a gnome running assets between the bank and conglomerate. Both institutions failed ignominiously. The Securities and Exchange Commission filed charges that the conglomerate misappropriated assets. The comptroller of the currency described the bank as "self-dealing lending run riot."
Smith got only probation on federal criminal charges. "Ed Miller called me into his office and said, 'This isn't right; the state needs to conduct an inquiry,' " remembers deputy D.A. Steve Davis, lauding Miller's courage. In 1979, Smith was convicted of tax evasion. After lengthy appeals, Smith, the establishment darling, finally got eight months clipping flowers in so-called incarceration. It was woefully inadequate, but at least it was something, says Davis.
John Alessio, operator of a Mexican racetrack and bookmaking facility, and his brother Angelo were sentenced to Lompoc for tax evasion in 1971. But the Lompoc country club atmosphere still didn't suit them. They were allowed to make unauthorized trips. John enjoyed motel love trysts, and Angelo went deer-hunting with a guard. A Lompoc administrator was entertained by an Alessio family member on Smith's yacht. Nationally respected investigative reporters such as Denny Walsh, Lowell Bergman, and others focused on the Smith-Alessio corruption and the pair's ties to President Richard Nixon and, in some cases, the mob.
But, like Smith, John Alessio was a lion of the establishment. When he died in 1998, the Union-Tribune's obit was a veritable panegyric, barely mentioning the imprisonment. Beautiful People by the bushel, including law-enforcement officials, turned out for the ceremonies.
The diddle days of the '60s and '70s put San Diego in the spotlight. U.S. Financial, an accounting swindle, collapsed, and some manipulators went to the pokey. Royal Inns, R.L. Burns Corp., and Nucorp also went down in scandal, and conglomerateur Walter Wencke disappeared before he could serve his prison sentence.
Amid the flimflam, Ed Miller, as U.S. attorney and then district attorney, was doing his job. He nailed Russell Alessio, another family member, for interstate gambling in support of racketeering. Miller's investigation revealed that bookies were paying cops for protection. Firings and resignations followed. Miller's team got several large national corporations for unfair business practices. Doctors were prosecuted for profiteering on laboratory bills. "In pursuing white-collar crime, Ed was protecting the people and not worrying how it would affect his political career," says deputy D.A. Cliff Dobrin.
But Miller ruffled the establishment's feathers. After serving six terms as D.A., he was defeated in the 1994 primary. In February of this year, he was nominated to the Ethics Commission. If confirmed, there would be an Ethics Commission member respected for ethics. But Miller's former political consultant, Bob G. Glaser of the La Jolla Group, was contacted by the press and said Miller owed him $19,573.67, plus interest, for the 1994 campaign.
Records show that Glaser submitted the bill October 1, 1994; the election had been in June. On September 3, 1996, he turned the matter over to a collection agency. On November 7, 1996, M. James Lorenz, Miller's campaign manager and now a federal judge, wrote to the agency, "The amount alleged to be due is an amount that exceeds the budget as projected by the La Jolla Group and was not approved in advance as required." The letter also pointed out that Miller had been sued because of an act by a former employee of the La Jolla Group. Miller had not been reimbursed by the La Jolla Group, which had indemnified him.
Glaser says that the campaign expenses had been approved 30 days in advance. Miller should have reported the billing dispute, says Glaser. Miller disputes that. The lawsuit was generated by an intern, not an employee, and Lorenz's legal interpretation of indemnification was a stretch, claims Glaser. Miller should not sit on a commission ruling on campaign violations, avers Glaser. The Union-Tribune took that view editorially.
Miller is being muddied by minutiae -- an old San Diego ploy. The so-called Ethics Commission's mandate is to fry bigger fish -- lobbyists, consultants, city employees -- and not simply political campaign violators. No one is more qualified to do that than Miller. And that's why he won't be named.