No Misconduct Found in Apartment Sale : Inquiry: D.A. investigators say they uncovered no evidence that Alvin Malnik or housing officials acted improperly.

No wrongdoing by Florida attorney Alvin Malnik, owner of two low-income apartment projects that are being purchased by the city of San Diego, has been found in an investigation by the district attorney’s office.

A 10-page report released by Dist. Atty. Edwin Miller on Thursday absolved Malnik and several local housing officials who were accused of improper conduct by Mayor Maureen O’Connor and Councilman Bruce Henderson.

Both O’Connor and Henderson oppose a plan by the San Diego Housing Authority to purchase 816 units at the Mt. Aguilar Apartments in Clairemont and Penasquitos Gardens in Rancho Penasquitos from Malnik. The San Diego City Council approved the purchase of the two projects in January by a 6-2 vote.

O’Connor has accused the San Diego Housing Commission’s staff of deliberately hiding details of the $47.5-million deal from the City Council, and Henderson has hammered away at reports about Malnik’s purported ties to organized crime.

The district attorney’s report says that the district attorney’s investigators reviewed “thousands of pages of documents” and interviewed Malnik and commission staff members.

“Our investigation has not disclosed any improper conduct by city employees or any criminal wrongdoing,” the report said. “ . . . There have been several allegations that Mr. Malnik has ties to organized crime. . . . Most of this information is based on confidential sources, rumor and hearsay, the underlying facts of which are difficult, if not impossible, to verify.”

The report goes on to say that Malnik has never been arrested or convicted of any crime and was acquitted of income- tax fraud in a previous indictment brought by federal prosecutors.

San Diego Housing Commission Executive Director Evan Becker said he was not surprised by the district attorney’s findings. Becker has been a frequent target of O’Connor’s criticism over the deal with Malnik.

“The investigation was not something that concerned us very much from the standpoint of the staff’s involvement in this project. . . . We’ve chosen instead to focus consistently on the affordable housing aspect of this issue. I don’t think we’d be doing our job for this city if we did otherwise,” Becker said.

As for O’Connor’s allegations that the commission staff acted improperly by deliberately withholding information about the deal with Malnik from the council, Becker said:

“With all due respect. We have not done anything that’s been improper. I think we have done an exceptional job to work with a very difficult housing problem.”

O’Connor, who has been adamant in her opposition to the purchase, was not available for comment Thursday. However, her office released a copy of a letter that she and Henderson sent to a state agency, urging officials to disapprove additional state funding for the purchase of the apartments.

The California Debt Limit Allocation Committee is studying a request by the housing commission for the issuance of $31 million in tax-exempt bonds, which will be the bulk of the financing. The commission has already received $9.2 million in state housing rehabilitation funds.

The letter to the state committee listed several objections to the deal with Malnik, including an allegation that the two apartment projects are only worth $23 million, more than 50% less than the $47.5 million that the commission has offered Malnik for the units.

Henderson, who was the point man in the battle to kill the deal with Malnik, did not return phone calls to his office Thursday.