Grand Jury Finds No Basis for Charges of LAFCO Conflicts

The Orange County Grand Jury, which has been investigating conflict-of-interest complaints against Phillip Schwartze and other members of the Local Agency Formation Commission, has found no basis to press charges against them, a grand juror said Friday.

The Grand Jury had received about 150 letters from Laguna Niguel residents calling for an investigation of the commission, which voted in January to give a coastal portion of Laguna Niguel to the proposed city of Dana Point. The commission is the county agency that reviews incorporation and annexation proposals.

The jurors’ decision came after the district attorney and county counsel concluded that there was no basis to bring criminal or civil charges against any LAFCO commissioners for alleged conflict of interest, said grand juror Judy Davison , chairwoman of the administration committee investigating the LAFCO case.

Instead, she said, the Grand Jury will probably send the case to the California Fair Political Practices Commission, which reviews complaints of conflict of interest among politicians.

Davison said most of the conflict-of-interest complaints were about Schwartze, a San Juan Capistrano councilman. Schwartze is vice president of Phillips Brandt Reddick, an environmental planning firm in Irvine. Some Laguna Niguel residents have charged that he has a conflict of interest because his firm has a contract with the M. H. Sherman Co., owners of Dana Strand beach, which is in the disputed coastal area.

Schwartze said Friday that many of those who brought complaints thought Phillips Brandt Reddick was a development firm.

“I do EIRs (environmental impact reports) for a living,” he said. “If it was a development company, that might have been true,” Schwartze said of the conflict-of-interest allegations. “I would encourage the FPPC to look into this very quickly. I feel very comfortable with what I’ve done. . . . I don’t think there’s a question about it.”

Schwartze maintains that, by state law, he has no conflict of interest because he owns less than 10% of his company’s stock.

According to conflict-of-interest statements on file with the county registrar of voters, Schwartze’s stock in the company is worth between $10,000 and $100,000.

Schwartze said he has abstained from votes that involved Laguna Niguel, which is within San Juan Capistrano’s sphere of influence.

For example, he said, when LAFCO voted in January to give the coastal strip to Dana Point and not to Laguna Niguel, Schwartze abstained, asking his alternate to vote instead.

In regard to the future of the case, Davison said the FPPC would be better suited for an investigation of conflict-of-interest complaints such as these because the commissioners, although they are appointed to LAFCO, are generally elected officials from other government entities.

The commission is composed of two county supervisors, two members of city councils within the county and one representative of the public.

Several Laguna Niguel residents have asked the Grand Jury to investigate the legality of the commission’s decision to hold an advisory election last November. In that election, 61% of the coastal strip residents voted to incorporate with Dana Point rather than with Laguna Niguel. The commission voted to give the coastal strip to Dana Point based on the election results.

Davison said the Grand Jury is not investigating that LAFCO decision because of pending litigation.

Laguna Niguel incorporation petitioners filed a lawsuit against LAFCO in December, charging that it violated the California Government Code, which requires such bodies to consider how an incorporation would affect areas adjacent to the proposed city. The coastal strip represents $2.5 million in annual tax revenue, and without it, a city of Laguna Niguel would not be financially viable, petitioners say.

“When litigation comes in, the Grand Jury steps aside because what we say could prejudice a case,” Davison said.

The Orange County Grand Jury investigates public complaints of alleged criminal or civil violations. Jurors review records and turn them over to either the district attorney, who takes over if there is substantial evidence to press criminal charges, or to the county counsel, who takes over civil cases.

“We are a lay body of people who have others we can ask for help,” Davison said. “It’s a way to let the citizenry register its complaints.”