2 San Diego Officials Guilty in Strip-Club Graft Scandal

Acting Mayor Michael Zucchet and Councilman Ralph Inzunza were convicted Monday of trading political favors for campaign contributions from a strip-club owner -- adding to the political turmoil gripping the city where the mayor has resigned and the pension system is under federal investigation.

Prosecutors charged that the two men, both 35-year-old Democrats, took $23,000 from the owner of Cheetahs Totally Nude club and his associates and, in exchange, agreed to work to ease a city law that prohibits nude dancers from touching their customers.

The conviction in federal court came as Deputy Mayor Zucchet had just assumed the duties of Mayor Dick Murphy, who resigned Friday amid controversy over his handling of the city’s $2-billion pension deficit.

The city is also beset by investigations by the U.S. attorney’s office and the Securities and Exchange Commission over the pension matter, and six former pension board members face criminal charges of conflict of interest filed by the district attorney.

“This is a sad chapter in our city’s history,” Councilman Jim Madaffer said.

Under state law, Zucchet and Inzunza were immediately suspended from office without pay, although they will not be removed until the judge accepts the jury’s verdict, set for Nov. 9, or their fellow City Council members oust them.

As the verdicts were read, Inzunza shook his head slowly and turned his gaze toward his wife. Zucchet, who had been sitting ramrod straight, pursed his lips and bowed his head.

“I believe I have done nothing wrong so I’m going to continue to fight this,” Inzunza later told reporters. “I will be back.”

Within two hours of the verdicts, the City Council named Councilwoman Toni Atkins as mayor pro tem through next week. Atkins promised residents in Zucchet’s and Inzunza’s districts that other council members would respond to their calls for service.

“The business of the city will continue,” Atkins said.

Zucchet and Inzunza, each free on $25,000 bail, were convicted of conspiracy, wire fraud and extortion. Each faces a possible three to four years in federal prison.

Jerry Coughlan, Zucchet’s attorney, said the contacts between the council members and the strip-club owner’s lobbyist were identical to those carried on daily between officeholders and contributors seeking favors.

“There isn’t a single public official in the country that hasn’t done the same thing,” he told reporters outside the federal courthouse.

The only difference, Coughlan said, is that the conversations of Zucchet and Inzunza were secretly recorded by the FBI and played for a jury. “Maybe this is a call for public financing [of campaigns] and getting rid of the current system,” he said.

Also convicted was Lance Malone, a former member of Nevada’s Clark County governing board, who was the middleman between strip-club owner Michael Galardi and the council members.

After a six-week trial, U.S. District Judge Jeffrey T. Miller had instructed jurors that if they could infer an agreement had been made, then they could vote for conviction.

The jury took three days of deliberations to convict Zucchet, Inzunza and Malone of plotting to swap campaign contributions for the council members’ help in easing the “no-touch” rule adopted in 2000.

Jurors said that while there was no smoking gun, the slow accumulation of evidence from the wiretaps showed that the relationship between the council members and Malone was not business as usual.

In one taped call between Inzunza and Malone, the councilman refers to himself as “your humble servant Ralph Inzunza.” In another, Zucchet promises Malone that he’ll “do the lifting” to get the no-touch issue considered. And in a third call, Malone tells Inzunza: “You guys both took money from us.”

The council members also discussed using phony e-mails to create a sense that the public wanted the city’s nude-entertainment law reviewed.

Juror Mike Nichols said that after hearing a tape involving a strategy session between the council members and Galardi, “we saw the quid pro quo.”

Juror Mike Miller said a key piece of evidence against Zucchet was his decision to proceed with the conspiracy even after police told him they supported keeping the no-touch rule.

“From that point on, he was as tarred as the rest of them,” he said. “The money was the thing they were after.”

City Atty. Michael Aguirre, at a news conference, urged the City Council to declare the offices of the convicted council members vacant and to order an election in November to find successors.

The council could do that next week.

Aguirre suggested the convictions, coupled with Murphy’s resignation, would help San Diego by decreasing “the forces” that caused the pension problem and have resisted his proposals for financial and political reform.

Voters next week will be asked to pick Murphy’s replacement -- though that election is expected to require a November runoff of the top two finishers.

Zucchet, Inzunza and Councilman Charles Lewis were indicted in August 2003 after a two-year investigation by the FBI and U.S. attorney’s offices in San Diego and Las Vegas, where Galardi’s family also owned a strip club. Lewis died of cirrhosis a year after the indictment.

Galardi, owner of Cheetahs Totally Nude club, had pleaded guilty and testified for the prosecution that he tried to bribe the council members.

While $23,000 in contributions from Galardi and his associates were reported on state-mandated campaign disclosure forms, federal prosecutors alleged that hundreds of hours of secretly recorded conversations showed that an illegal quid pro quo existed between the council members and Malone.

The investigation had begun as a probe of the strip-club and pornography industries in Las Vegas. It spread to San Diego officials when FBI agents, listening to wiretapped conversations involving Galardi, heard references to buying influence in San Diego.

None of the taped conversations contained an explicit agreement by the council members to try to change the law in exchange for the contributions. Nor was the no-touch issue ever brought before the council.

Jurors said Monday that Galardi’s testimony about cash was not considered credible and played no role in the conviction.

Late in the trial, Galardi testified that he had given Malone $11,000 in cash to give to the council members.

None of the charges involved allegations of cash payments, and defense attorneys suggested Galardi was lying in hopes of getting a recommendation from prosecutors for leniency when he is sentenced.

A fourth defendant, David Cowan, an aide to the late Councilman Lewis, was acquitted of lying to the FBI about having discussed the no-touch rule with Malone. The tape of a conversation between Cowan and Malone had only Malone talking and no response from Cowan.

None of the defendants testified, a fact alluded to by Asst. U.S. Atty. Michael Wheat during his closing argument.

Looking at Inzunza and Zucchet, the prosecutor recalled a famous quote from a young boy to his idol, baseball legend “Shoeless Joe” Jackson, one of the infamous Chicago White Sox players banned for taking bribes: “Say it ain’t so, Joe.”

Inzunza’s attorney, Michael Pancer, called Wheat’s comment “outrageous misconduct” and said it will be part of a planned appeal because it suggested that the council members were guilty because they didn’t testify.

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Special correspondent Neal Putnam contributed to this report.