Huntington Beach City Councilman Dave Garofalo repeatedly violated state conflict-of-interest laws by voting on matters affecting advertisers in his publishing business and failing to report the source of business income for two years, according to allegations made in court documents filed Wednesday.
Investigators with the district attorney's office and the state Fair Political Practices Commission said Garofalo voted as many as 200 times between 1997 and 2000 on city matters that affected advertisers in his publications--the Local News, the annual Huntington Beach Visitors Guide and the Huntington Beach Chamber of Commerce business directory.
Garofalo could not be reached Wednesday for comment on the court documents. His attorney, Steven G. Churchwell of Sacramento, declined to comment.
The documents filed Wednesday were the basis for search warrants issued in April in a continuing probe against the councilman.
The paperwork--bank and business records, including canceled checks--is the broadest look yet at the scope of the allegations by the district attorney's office against Garofalo and his business dealings while in office.
Garofalo, elected in 1994, has denied wrongdoing and has not been charged with any crime. He has said that he followed advice from City Atty. Gail Hutton on his votes and that he sold his publishing interests in January 1998 to Huntington Beach businessman and friend Ed Laird.
Investigators began their probe of Garofalo's business and city dealings a year ago after the Los Angeles Times detailed potential conflicts of interest with his business income and voting record.
The Times reported in June 2000 that Garofalo voted at least 87 times since 1994 on matters involving nine major advertisers in the Visitors Guide, which he published until last year through an exclusive contract with the city's Conference and Visitors Bureau. There were more than 100 advertisers in the guide from 1995 to 2000.
State law requires elected officials who receive $250 or more to abstain for a year from voting on matters involving the giver.
Last April, district attorney investigators searched Garofalo's home, cars, bank records, business office and the offices of his business' new owners to determine, among other things, if and when the business was sold.
Investigators said they discovered from the search and in subsequent interviews that Garofalo continued to control all aspects of his publications--including sole check-signing authority--until June 2000.
The court documents detail $61,046 in payments to Garofalo from seven advertising contracts between October 1997 and May 2000. The money, received in installments over several months, was deposited by Garofalo into his bank account until June 2000, the court documents said.
In November 2000, Garofalo called the marketing director for the Huntington Beach Mall to inform her that the mall still owed $500 for its ad, the documents said. Investigators obtained a copy of the phone message Garofalo left.
"The bottom line is, as soon as you pay the bill, the sooner a year would go by from the date of that payment to no conflict," investigators said Garofalo said in the message.
Among other records requested during the April search were state and federal tax returns since 1996 for Garofalo and four family members and two companies owned by businessman Laird and listed by Garofalo as having assumed control of his publishing interests. District attorney officials declined to comment on the search warrant affidavit.
Investigators allege that during 1998 and 1999, Garofalo used advertising income from his publications to pay salaries to family members--including his 80-year-old mother. He also failed to report the source of income on conflict-of-interest forms that must be filed by elected officials, they said. Failure to properly report income on the forms is a felony.
Garofalo also failed to report the repayment of a $20,000 loan to Laird, the documents said. Laird told investigators in an interview that the $20,000 loan was to help him during a cash crunch; Garofalo told investigators Laird was going to use the money, from Garofalo's campaign account, to help buy campaign signs and other materials that ultimately weren't purchased.
Garofalo has insisted for a year that he didn't knowingly violate any laws when he voted on items involving advertisers in his publications. The votes--most of them unanimous among Huntington Beach's seven-member council--ranged from development approvals to routine permits.
He has said that he was paid $100,000 a year as a consultant to Laird's business, Coatings Resource, after selling the business to Laird. The court documents include statements from Laird, Laird's son and a company controller telling investigators they didn't know how Garofalo was paid and had no control over the business' bank accounts until 2 1/2 years after Laird took over.
Advertisers in the publications included some of the city's major businesses, including Hearthside Homes, formerly Koll Real Estate; the Waterfront Hilton; Huntington Beach Mall; and Seacliff Village Shopping Center.
Also advertising were two developers who built homes purchased by Garofalo. He bought one home for $565,000 after being placed ahead of 300 potential home buyers by the developer, then sold the house a day later for $625,000. He said he made only $1 profit after paying for $60,000 worth of upgrades requested by the new owner, his longtime friend George Pearson.
In an interview last year, Garofalo said the investigation was sparked by his political enemies. He blamed the animus on his pro-development stance.
"I'm prepared to stand the test of whatever scrutiny anyone wants to throw at me," he said in June 2000. "I didn't profit from anything."
If charges ultimately are filed over the votes, they could range from administrative to criminal.
If handled administratively, each violation of the state's Political Reform Act carries a maximum $2,000 fine. Civil penalties can be higher. Misdemeanor violations carry fines of $1,000 each and a year in jail.
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December 1993 -- Newspaper publisher Dave Garofalo awarded contract to publish Huntington Beach Visitors Guide.
November 1994 -- Garofalo elected to Huntington Beach City Council.
January 1998 -- Garofalo sells Visitor Guide publishing rights to a longtime friend.
July 1998 -- Garofalo purchases home for $565,000 and sells it a day later to a friend for $625,000.
October 1998 -- Fair Political Practices Commission advises Garofalo to abstain from voting on matters involving advertisers for a year after receiving payment.
May 2000 -- Complaint filed with FPPC claiming Garofalo violated state voting and conflict-of-interest laws.
June 2000 -- Huntington Beach city attorney launches an investigation into the relationship between the Visitors Guide, Garofalo and the Huntington Beach Conference and Visitors Bureau.
July 2000 -- Orange County district attorney's office requests minutes from council meetings since December 1994 and statements of economic interest as part of a Garofalo conflict-of-interest investigation.
July 2000 -- City attorney turns over investigation to D.A.'s office and FPPC.
July 2000 -- Garofalo admits to casting hundreds of votes aiding advertisers while unaware of potential conflict.
August 2000 -- City attorney orders Huntington Beach Conference and Visitors Bureau to terminate Visitors Guide contract with Garofalo.
April 2001 -- D.A.'s office serves search warrants on Garofalo's home, cars, business and bank accounts and on the offices of his business' new owners.
June 2001 -- Council rejects request to pay Garofalo's legal fees and any civil fines that stem from criminal probe.
July 2001 -- Court documents allege that Garofalo repeatedly violated state conflict-of-interest laws and failed to report business income for at least two years.
December 2001 -- Resigns his City Council seat, saying he wants to devote more attention to "personal issues."