CALIFORNIA : San Jacinto councilman was shut out : The only one to avoid indictment says his colleagues stonewalled him because he would not ‘play the game.’

After winning a City Council seat last year on a campaign of transparency and accountability, Steve Di Memmo said he quickly found himself the outsider in a clique of clubby officials who shared long-standing ties and mutual interests.

But he didn’t realize just how far outside he was until Thursday, when he learned he was the sole San Jacinto city councilman not facing felony indictments.

The news left him torn.

“These people have not been found guilty of anything yet,” he said repeatedly over coffee in San Jacinto on Friday. “I believe they all started out with a good heart and got caught up in something else. They let greed get the better of them.”

Di Memmo fears just sitting next to them taints him.

“If they don’t resign,” he said, “I might.”

According to Riverside County Dist. Atty. Rod Pacheco, the four indicted council members -- including the mayor -- and five local business leaders engaged in a massive campaign of money laundering, perjury, bribery, falsifying federal documents and conspiracy to hide campaign contributions.

Those indicted are council members Jim Ayres, James Potts and John Mansperger; Mayor Dale Stubblefield; San Jacinto school board trustee and San Jacinto Chamber of Commerce Executive Director Nancy Jo Ayres; and businessmen Stephen Holgate, Robert Osborne, Scott Shaull and Byron Ellison Sr.

Many of the allegations surround Jim Ayres’ unsuccessful bid for the 65th District Assembly seat in 2006. Prosecutors said Holgate, a developer, funneled money into that campaign through numerous phony contributors in order to circumvent a state law that limits donations to $6,600 per person. There are also allegations of bribery that Pacheco would not detail but said involved “hundreds of thousands of dollars.”

Those involved face 155 charges, including 56 felonies, which could carry prison terms of up to 26 years for each defendant. All are out on bail.

Di Memmo, a former federal customs agent who cooperated with authorities during the 18-month investigation, said he had a “gut feeling” that something wasn’t right at City Hall but couldn’t prove it. He said development projects promoted by Holgate “that didn’t make sense” would come before the board and win approval by every council member but him.

“I was stonewalled and never kept in the loop,” he said. “I was told they would never support what I support because I wouldn’t play the game.”

Then there was the founding last year of the San Jacinto Chamber of Commerce. Given that the town was already part of the much larger Hemet-San Jacinto Valley chamber, which represents more than 1,000 businesses, a new one seemed superfluous to some. Nancy Jo Ayres, Jim Ayres’ wife, was made executive director and paid about $3,000 a month even though the organization seemed to generate little money, Di Memmo said.

Patti Drusky heads the Hemet-San Jacinto Valley chamber and said she never saw the point of the 130-member San Jacinto chamber.

“It was the brainchild of Jim Ayres and Steve Holgate, who funded it. It was surprising since we service the entire region and we are much older and more established,” she said. “The city gave them the building to work out of for $1 a year. That’s not how a chamber of commerce functions. You need to be separate from government encumbrances.”

Drusky said the scandal has fractured the community.

“These were officials elected by people who trusted them,” she said. “This saddens me beyond my ability to express. But I am optimistic that this might be an opportunity to make a clean sweep. This is still a desirable place to live and do business.”

Nobody knows that better than Larry Minor, who was born in San Jacinto 70 years ago and runs Agri-Empire, which grows and ships potatoes throughout the United States, Mexico and Canada.

He has served on countless local boards and commissions and knows all the City Council members.

“Whether they are guilty or not has to be proven, but what they have done is unethical,” he said, sitting behind his desk in an office covered with photos of racing cars and portraits of the bison he keeps on his ranch. “I think they should resign and the county should appoint replacements.

“I knew things had gone wrong, but this was bigger than I ever thought.”

Exactly how San Jacinto -- a tidy, diverse and growing city of about 35,000 near Hemet -- will govern itself as the investigations continue is unknown.

“It’s really stunning. They will be under constant scrutiny, there will be a cloud of suspicion over the City Council and it will be hard for them to get anything done,” said Jessica Levinson, director of political reform at the Center for Governmental Studies in Los Angeles. “They have left the city with no government body they can trust. I think some of these members, even if they are innocent, would be serving the public good if they stepped down.”

None of the officials are talking, citing advice from their lawyers, but Councilman Potts said on Friday that he didn’t plan to resign.

As for Di Memmo, 53, he is urging citizens to recognize that San Jacinto is essentially run by the city manager and will continue to operate “effectively and efficiently.”

Still, he’s bracing himself for more indictments and possible arrests.

“I don’t think its over,” he said. “I think we have a long way to go. I would expect other charges.”

--

david.kelly@latimes.com