Friday, Sept. 12, 2003 | 5:33 a.m.
WEEKEND EDITION: Sept. 14, 2003
SAN DIEGO -- On a muggy afternoon at San Diego City College, janitor Veneice Taylor took a break from raking leaves, wiped the sweat from her brow and offered her thoughts about Charles Lewis, an indicted city councilman.
"Lewis has been fighting the gangs, so it's terrible he's in trouble himself," Taylor said. "That sets a poor example. They should all be put out because they're untrustworthy."
"They" refers to Lewis and two other San Diego councilmen, Ralph Inzunza and Michael Zucchet, who have been indicted on political corruption charges involving an owner of strip clubs in Las Vegas and San Diego.
Elsewhere on the terraced college campus, which affords sweeping views of downtown skyscrapers and sailboats in the waters beyond, Wells Fargo bank sales representative Felicity Pedrena was finishing a day of signing up students for checking accounts. Pedrena, a neighbor of Lewis, came to his defense.
"I'm more appalled and shocked than anything else," Pedrena said. "But I don't think he should resign. I don't see any hard evidence that he was involved. I haven't really seen him do anything wrong yet. Sometimes people do things in politics that they're not supposed to do. In the end, justice will be served."
Taylor and Pedrena represent the division of opinion in the nation's seventh largest city since Lewis, Inzunza and Zucchet were indicted on Aug. 28.
The councilmen have been charged with accepting bribes from Las Vegas businessman Michael Galardi and his lobbyist, former Clark County Commissioner Lance Malone, so that Galardi's strip club, Cheetahs, would not be subject to enforcement of a city "no touch" ordinance that prohibits physical contact between strippers and customers in nude establishments.
Galardi has already pleaded guilty to one felony count of conspiracy to commit wire fraud and is cooperating with federal prosecutors. John D'Intino, the manager of Galardi's north San Diego gentlemen's club, has also pleaded guilty and agreed to cooperate. Malone has pleaded not guilty to the wire fraud charges, as well as to extortion and racketeering.
The three councilmen also have maintained their innocence and vow to remain in office, with their next court hearing scheduled for Oct. 23. But they have ducked the media for the most part since proclaiming their innocence the day of the indictment.
The implications of the indictment extend far beyond the political futures of Inzunza, Zucchet and Lewis, according to City Hall insiders and prominent businessmen who are familiar with the inner workings of San Diego politics.
They say that because the indictment alleges in part that campaign donations were made illegally through Cheetahs' employees, it is probable that the city will have to review its campaign finance laws, which are the most stringent of any major city in California. Contributions are limited to $250 each from individuals for city primaries and general elections. No contributions may be made from businesses or political action committees
In contrast, the contribution limits in Las Vegas and Clark County are $5,000 per individual per election, a limit that also may be given by companies and PACs.
Although the full-time positions on the nine-member San Diego City Council are nonpartisan, political observers say that registered Democrats took control for the first time in city history in 2000. Democrats now enjoy a 6-3 advantage on the council, and they have been somewhat tougher on developers and more pro-labor.
Inzunza, Zucchet and Lewis are all Democrats, so if they are forced from office -- something that would occur with a felony conviction -- the political and philosophical makeup of the council could be thrown into disarray, insiders say.
There is also concern that the indictment could distract the City Council from concentrating on important issues that face the city, though most insiders say they expect City Hall to continue to function as normally as possible.
Among the hot-button issues they say could be impacted by the indictment are ongoing negotiations with the National Football League's San Diego Chargers for a new stadium, persistent budget problems attributed to a sluggish economy, and potentially divisive issues such as a proposed "livable" minimum wage for workers employed under city contracts.
Although Galardi and Malone are at the center of the probe, no one in San Diego is blaming any of this on Las Vegas-style sin or corruption or anything else that has to do with Las Vegas.
"I don't think so," San Diego City Councilwoman Donna Frye said. "Blame Las Vegas? I haven't thought about that. But some of this stuff is very disturbing. As you go through life you understand the imperfection of humans. This is not because of anything to do with Las Vegas. It's because people are human."
Ben Haddad, chief of staff for former San Diego Mayor Susan Golding, predecessor of current Mayor Dick Murphy, agreed that the scandal had nothing to do with Las Vegas.
"I've always looked at Las Vegas as tough competition, the standard to beat in the tourism industry," Haddad said. "I'm not going to cast a stone at Las Vegas. I don't think your city brought any shame on us. It was brought on ourselves."
Frye, a Democrat, is withholding judgment on her tainted colleagues. So, too, is fellow Democrat and Councilman Scott Peters.
"Obviously it's sad for the city of San Diego for someone to go through this," Peters said. "I can't tell you what's on the minds of my colleagues who are involved in this. I just hope the issues can be resolved quickly because we have a lot to work on.
"I'm just coming here to do my job. I'm just going to come to work everyday to work on the problems of my city."
Even Republican Mayor Murphy, who has spoken only briefly to the San Diego media regarding the probe, has taken the position that the indicted councilmen are innocent until proven guilty. While declining an interview request, Murphy issued a statement following the Aug. 28 indictment.
"These are not the first indictments to take place in San Diego," Murphy said. "Indictments have been handed down to council members in the past and then some were subsequently dismissed and other council members were found to be innocent. So again, I would remind everyone not to rush to judgment.
"This city has survived problems in the past and will in the future."
Councilman Jim Madaffer, another Republican, also released a statement in which he called the scandal "a black eye for all of us in San Diego." But he, too, maintained that his colleagues were innocent until proven guilty.
"The city of San Diego is larger than any one council member, or even three council members," Madaffer said. "I can assure you that the important work of the city is being carried out."
Murphy is right when he says that California's second largest city -- with 1.27 million people, 70 miles of pristine coastline and the nation's mildest climate -- has had its share of stormy City Hall scandals.
This is the sixth City Hall scandal since 1970, when then-Mayor Frank Curran and seven current or former council members were charged with taking bribes from a taxicab company. All were acquitted or had their cases dropped, with the exception of one councilman who pleaded no contest to a misdemeanor conspiracy charge.
In 1985, then-Mayor Roger Hedgecock resigned following a criminal conviction involving illegal campaign financing. But he cut a deal with prosecutors and served no prison time. His former chief of staff, San Diego attorney J. Michael McDade, said he knows what it's like to be around City Hall when a politician has been indicted.
"The first thing you think of when you wake up in the morning is the impact of the charges," McDade said. "It challenges your integrity and your livelihood. It causes people to be cautious around you. You learn who your friends are. It's certainly life-changing."
Prior to the ongoing probe, the latest scandal to hit City Hall occurred in 2001, when then-Councilwoman Valerie Stallings resigned after illegally accepting gifts from Major League Baseball's San Diego Padres while the council was considering the team's request for a new ballpark.
"The city does have an ability to recover from these things and has shown itself to be resilient," Salvatore Giametta, spokesman for the San Diego Convention & Visitors Bureau, said. "Part of the reason is that many people here are newcomers."
In addition to being Democrats, Inzunza, Lewis and Zucchet are all in their 30s, served as council aides before taking office and have reputations for being smart and energetic. Cheetahs also happens to be outside their respective districts.
"There is a sense of uncertainty and even confusion about the veracity of the investigation," Giametta said. "Many people are saying that we need to wait and see and are giving them the benefit of the doubt. Couple that with the apathy and laid back character of San Diego and that's the reaction you get.
"Traditionally, to the majority of people who live in San Diego, what happens at City Hall is irrelevant. People are busy taking their kids to day care and trying to make ends meet."
Of the three indicted councilmen, Inzunza, the city's deputy mayor, is widely believed to have had the brightest political future. In 2001, he was named by San Diego Magazine as one of "50 People to Watch" in the city. Some have viewed him as a possible state assemblyman and even as a potential future mayor of San Diego.
Inzunza is a lifelong resident of his south San Diego district and grew up in public housing. He belongs to the most prominent Hispanic political family in the San Diego area. One of his brothers is mayor of neighboring National City and his father and another brother have also been involved in local politics.
Since first winning office during a special election in February 2001, Inzunza has taken credit for helping to shape the city's ethics commission, blocking expansion of a cargo airport that was "backed by wealthy special interests," and securing new fire stations, parks and libraries in his district.
"Inzunza is no shrinking violet," McDade said. "If he is vindicated, he still has a chance to accomplish his goals. But he'll never get rid of this (indictment) entirely. It will always be brought up, convicted or not."
Lewis and Zucchet are relative neophytes as elected officials, having both served on the council only since November. It was Lewis who allegedly was wined and dined by Galardi in Las Vegas, according to Galardi's plea agreement.
Lewis, who represents a south San Diego district, has billed himself as a crime fighter and protector of his district's youth. As a longtime councilman's aide, he took credit for helping to create neighborhood councils and for ridding the city of graffiti.
Pedrena, the bank employee, views Lewis as a friendly neighbor, a guy who walks his dog daily and waves to his constituents. She portrayed Lewis as an "eloquent speaker who gets involved in the community."
"We'll just have to see what happens at the end, just like with Gov. Gray Davis," Pedrena said.
But Taylor, the janitor, said that as a black woman she was ashamed of Lewis, the only black member of the City Council. She said she felt Lewis' predicament may make it more difficult for racial minorities who want to run for city office in the future.
"He's messing it up for anyone who may want to do that," Taylor said. "The bad part of it is he represents my area. If he gets cleared, maybe he'll think twice before he does something stupid like that. This was his first chance. Maybe he thought he'd get away with it."
Zucchet, a third-generation resident of his coastal district, is an environmental protection advocate who has fought for waterfront beautification projects.
Prior to his election, he was a renewable energy economist for the U.S. Department of Energy, and a legislative aide for San Diego firefighters as well as a council aide.
In a statement he released following the indictment, Zucchet said he had met with FBI agents on May 14 for more than three hours, with the questions centering on his dealings with Malone.
"Since this all began, I have consistently denied any wrongdoing," Zucchet said. "I reiterate again today my complete and total denial of ever taking any bribe. Period. I have not betrayed the trust of my friends, my supporters, or my constituents.
"I am completely innocent of the charges alleged by the government. No bribes. No quid pro quo. No crime. I have attempted to cooperate fully with the government's investigation, as an innocent person would tend to do, and I have nothing to hide.
"I trust the judgment of the people I represent and I want them to know what this case is all about. But I am in the fight of my life, and as much as I would like to clear my name with the public right now, it is best for me to allow the judicial process to work its course."
Carl Luna, a political science professor at San Diego Mesa College who has followed the city's political scene for 30 years, said Inzunza's involvement in the scandal was the biggest surprise.
"Lewis and Zucchet rolled in as rookies and made rookie mistakes but Inzunza should have known better," Luna said. "A lot of this seems to have moved through him. He's the old man of the troika. He had the contact with the money and he has the most clout of the three. That's why he was approached."
If the San Diego Union-Tribune had its way, all three councilmen would resign. The city's only general circulation daily newspaper took that editorial position the day following the indictment.
"Regardless of their guilt or innocence, we urge all three councilmen to resign their posts now so that they can devote their full attention to the criminal charges against them," the newspaper wrote. "Stepping down is the only way to spare the City Council -- and the citizens of San Diego -- the protracted public turmoil that ensues from this scandal."
The city, which relies heavily on tourism and high-tech industries to drive its economy, has managed to survive each of its City Hall scandals. That explains, in part, why prominent civic leaders in the know -- most of whom share Murphy's attitude that the indicted councilmen are innocent until proven guilty -- expect City Hall business to proceed with minimal disruption.
Mark Fabiani, special counsel to Chargers President Dean Spanos, who is a member of one of San Diego's most powerful families, said the federal prosecution has the potential to disrupt negotiations over a proposed new football stadium and the existing lease agreement.
The team has proposed replacing existing Qualcomm Stadium with a new facility at the same location, which is on land owned by the city. The sports rumor mill has it that the Chargers would consider a move to Los Angeles, which does not have an NFL team, if San Diego is unwilling to deal.
But Fabiani said it was premature to state that the indictment would, indeed, affect stadium negotiations, which have been extended through next May 1.
"We really don't know," Fabiani said. "We're watching it like everyone else to see what the impact is. Obviously, there is the possibility of very negative consequences, not just for the Chargers but for the city. It's all too soon to make judgments.
"In our dealings with the three councilmen they've been very businesslike, nothing extraordinary one way or the other."
There are no anticipated hotel issues before the council that would be impeded by the indictment, Pam Richardson, president of the San Diego County Hotel Motel Association, said. Richardson, general manager of the Hilton San Diego Airport Harbor Island hotel, said "we just hope things get resolved soon."
"It's an unfortunate situation but we have not seen any changes at City Hall," Richardson said.
Barnhart Inc. construction company owner Douglas Barnhart, one of the nation's largest school builders and one of the general contractors for Petco Park, the new downtown stadium that will be home to the baseball Padres beginning next season, said he expects distractions at City Hall to be "fairly minimal."
He said that's because San Diego has a strong city manager form of government. That is, City Manager Michael Uberuaga has as much clout as the council, particularly on budget matters.
Despite the indictment, the city is making progress on such building improvements as construction of a new downtown library, Barnhart said.
"To that extent the business of the city is moving on," he said. "Right now, it's sort of business as usual. I'm not sure that we're going to see any changes in day-to-day operations.
"Right now you just have three councilmen that have been charged with something. That doesn't mean they're guilty. Everyone is going down the path as though we're going to have three new councilmen, but that may not be the case. Let's wait and see."
On the other hand, Barnhart said that if the councilmen are convicted and replaced, there is a possibility the philosophical direction of the council could be altered.
"It might change the dynamics of the city," he said.
But Kennan Kaeder, president of the Democratic Party of San Diego County, wasn't willing to concede that his party stands to lose if the three Democratic councilmen are convicted.
"It's premature to discuss that because there's a presumption of innocence and all three have denied the allegations," Kaeder said. "Even the mayor, who is a Republican, says there is a presumption of innocence. There is no talk of damage to our party. We are assuming the charges will be proven false and then we'll move on at that time."
Brad Barnum, director of government relations for the 800-member Associated General Contractors, said the City Council appears to be going about its business.
"As far as our contractors are concerned, we hope the council moves forward," Barnum said. "We hope the indictment doesn't slow the process down or affect any construction projects that might come forward."
That sentiment was shared by Eugene "Mitch" Mitchell, vice president of public policy for the San Diego Regional Chamber of Commerce and its lobbyist at City Hall.
"Obviously, there is concern that this will disrupt City Hall," Mitchell said. "The city's budget deficit is growing and there are the negotiations with the Chargers. But we honestly believe we will still be able to function as a city and address the issues that need to be addressed."
Ted Roth, managing partner of Roth Capital Partners, a San Diego investment banking firm, also said he does not foresee any major impact while the three councilmen remain under a cloud.
"I don't think it will negatively impact doing business with the city," Roth said. "Will it be a distraction? Yes, but I think it is workable. The councilmen involved, I think, will continue to pursue their roles.
"Obviously, if this gets to be an extended trial, I might react differently."
Donald Cohen, director of the Center On Policy Initiatives, a pro-labor think tank, and a friend of the three councilmen, called the indictment "terrible" for a number of reasons.
"They're not crooks," Cohen said. "Two of them (Zucchet and Inzunza) just had babies. They really want to do good for this community. There's no evidence they did anything crooked. At worst, they did something dumb.
"The significance of all this is that this is a new, ethnically diverse City Council. This is the first majority Democratic council in city history. So this situation could have an effect on affordable housing. It could affect whether developers get control. The developers used to run this town. They had the power and the juice. This council doesn't give the developers everything they want."
Haddad, the onetime aide to former Mayor Golding who is now an executive with a San Diego defense contractor, said he didn't view the indictment as a conspiracy to get rid of Democrats.
"Some may want to make this into a political witch-hunt but I don't think that that's the case at all," Haddad said. "I will tell you that the adult entertainment industry will be viewed as radioactive for quite awhile, just because of the perception it gives to voters."
San Diego City Attorney Casey Gwinn has already researched council votes dating back two years. He said he found no evidence that Inzunza, Lewis or Zucchet voted improperly or that any council decision must be reconsidered because of the indictment.
"We couldn't find a vote that we thought was legally compromised," Gwinn said.
But Gwinn said it was clear that the trio will be discouraged from voting on any strip club issue. Less certain, he said, is whether they will have to abstain on matters dealing with the San Diego Police Department, since an undercover vice detective was used as part of the federal investigation.
"We will look at potential conflict of interest issues as they may happen," Gwinn said. "What would disqualify them from voting is a financial interest. It would be hard to find the financial gain they would have by voting on the police budget."
As for the indictment itself, Gwinn had a two-word description: "It's ugly."
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