Mob Tie to Housing Project Alleged : Business: Councilman Bruce Henderson claims the city will be helping organized crime if it purchases two apartment complexes from a Florida businessman.

Saying that the city “shouldn’t help launder . . . mob money,” San Diego City Councilman Bruce Henderson charged Thursday that the city’s Housing Commission is preparing to buy two low-income housing complexes from a Florida businessman with a lengthy history of purported underworld connections.

Complaining that the proposed $38.5-million sale could be a “major embarrassment for the city and just plain wrong,” Henderson said that unless questions about Alvin I. Malnik’s background are resolved, the deal should be scrapped.

“We have a standard to maintain: San Diego will not do business with organized crime nor with its associates nor its friends,” Henderson told a City Hall news conference.

In a telephone interview, Malnik denied any involvement or links with organized crime, characterizing the charges as “the kind of total falsehoods and innuendo you can never get rid of.”

“How do you remove an allegation?” the 57-year-old Malnik asked rhetorically. “It’s tough to correct it by just saying, ‘I’m not a bad guy.’ But when all was said and done, none of this ever resulted in legal problems of any kind. There wasn’t any proof to warrant all these wild stories.”

Housing Commission officials, while conceding that Malnik’s history may not be “squeaky clean,” emphasized Thursday that, if the city does not consummate the sale, it could lose more than 800 scarce low-income apartments housing more than 3,000 people in Clairemont and Rancho Penasquitos.

“I don’t want to defend the guy,” said Evan Becker, executive director of the San Diego Housing Commission, “but even if we assume there is a problem with his background, this still is a very sound transaction that I stand by and that would help us deal with our affordable housing problem.”

Malnik himself offered a similar argument in a letter that he sent this week to Mayor Maureen O’Connor after he became aware of the growing local inquiries.

“Any suggestion that my personality or my personal background should be a factor in determining whether or not this sale should be consummated is absurd,” Malnik wrote the mayor. “Any innuendo that the proceeds of the sale will go toward nefarious purposes is likewise outrageous and irresponsible. The maintenance of low-income housing for the citizens of San Diego is the issue. It is not Al Malnik.”

At Henderson’s request, O’Connor has scheduled a special meeting of the Housing Authority--on which all City Council members serve--for Monday to review the city’s proposed purchase of the Mount Aguilar and Penasquitos Gardens apartments.

Although the Housing Commission in June tentatively approved the sale, which would be financed primarily with federal funds, the council still must approve the issuance of bonds later this year for the deal to proceed, Becker explained.

The allegations about Malnik’s alleged ties to organized crime--which he dismisses as “crazy, wild myths”--are detailed in numerous newspaper stories, books and reports of the Nevada and New Jersey gaming commissions.

Using blown-up copies of some of those stories as props, Henderson traced Malnik’s alleged involvement with longtime underworld financial leader Meyer Lansky, other organized crime figures and the Teamsters Union.

earlier during the sale negotiations.

Malnik, however, said that he “never even met” Lansky or the other purported Mafia figures he is reported to have had extensive dealings with over the past three decades.

“This whole thing started with some lunatic in jail and grew bigger and bigger each time it got repeated,” Malnik said. “If you try to refute it, you just spread it more. I was left with an empty legacy.”

Malnik has owned the two local projects at issue for 15 years. In 1975, Malnik and two Miami Beach men--the sons of a former Las Vegas hotel executive who earlier had served a prison sentence for concealing $36 million in casino income--bought the Clairemont and Rancho Penasquitos projects from the Teamsters Union for $12.5 million, according to Housing Commission officials. (Malnik himself was acquitted of income-tax evasion charges in the early 1960s.)

Last year, Malnik became sole owner of the 312-unit Mount Aguilar and 504-unit Penasquitos Gardens projects via an exchange with his partners, Malnik said.

Becker describes the proposal as a “really marvelous deal” for the city, noting that the two projects are well-maintained, located in desirable areas and that the price comes to about $47,000 per unit.

Angered that it took an investigation by his own staff and O’Connor’s office to discover the damaging allegations, Henderson described the Housing Commission leaders as “highly paid public watchdogs who failed to bark.” At best, the agency did a “miserably poor” job checking on Malnik’s background, or, at worst, deliberately concealed the information, he charged.

Disputing Henderson’s speculation, Becker said his agency’s scrutiny of Malnik was limited to his financial background and that he was unaware of the information disclosed by the councilman Thursday. The fact that the U.S. Department of Housing and Urban Development approved the 1975 sale to Malnik and his partners “also gave us a positive reading,” Becker added.

“It’s easy to say that I or someone here should go to the library to get a book on organized crime to look whether this guy’s name is in the index, but that’s not the first thing I do in a deal like this,” Becker said.