DA’s Investigation of Santa Ana Mayor Faces Scrutiny

District Attorney and Mayor Pulido
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Orange County District Attorney’s Office investigators haven’t once tried to contact key Santa Ana City Hall officials during their months-long investigation into Mayor Miguel Pulido’s property swap with a city contractor, multiple sources confirmed during interviews with Voice of OC.

This despite a city report handed over to the DA over six months ago that found Pulido likely committed crimes under Gov. code section 1090, which prohibits public officials from having financial interests in their agency’s contracts.

In fact, the report, based on an inquiry by former Riverside County District Attorney Grover Trask, said whether Pulido had influence on city staff’s recommendation of the contract with NAPA Orange County Auto Parts is the top question investigators should be trying to answer.

“What, if anything, did Mayor Pulido say to City employees about the Auto Parts Co. contracts?” Asks the report, which was obtained by Voice of OC last week.

DA investigators don’t know the answer to this question because they haven’t interviewed any of the city officials who could have had a hand in the contract, according to sources inside City Hall.

Former FBI agent Jim Wedick, who specialized in public corruption cases, said such interviews must be a top priority for investigators. And he is dumbfounded by the DA’s lack of action.

“It doesn’t make sense,” said Wedick, whose storied career included work on the Abscam public corruption sting popularized in the movie American Hustle. “The worst thing that can happen in a case is you wait until memories fade… there’s no more important job that you can do than to get that story down on paper.”

Wedick added, “why have [the investigation] if you’re not going to do it right?”

Rackauckas’ chief spokeswoman Susan Kang Schroeder refused to address the issue, citing past disagreements with Voice of OC.

The Property Swap

In 2010, Pulido traded a parking lot his family owned worth $200,000 for a house in Westminster worth $430,000, according to county assessor records. The house was owned by Rupen James Akoubian, who is also the owner of NAPA Orange County Auto Parts, which for years has been among the city’s auto parts vendors.

After Voice of OC uncovered the deal last November, good government experts said it very likely was a conflict of interest and/or a violation of the state Political Reform Act, and could possibly even be construed as a bribe.

The penalties for violations of the Political Reform Act could include fines and misdemeanor charges, while an official who commits felony conflict of interest could be facing prison time and a lifetime ban from holding public office in California.

The city report found that Pulido structured a cover-up of his deal with the contractor. He didn’t disclose the transaction on his statement of economic interests – as required under state law – and sold the house at a $197,000 profit.

Also, the $200,000 figure tagged on sales deeds as the value of both the parking lot and the house appeared to be an effort to conceal Pulido’s windfall in the trade, according to the report.

Meanwhile, Pulido joined his council colleagues in voting for two contracts with the auto parts vendor, including a Dec. 19, 2011 agreement for $1.35 million that made the store the city’s exclusive car parts provider.

The fact that Akoubian needed Pulido’s parking lot to better operate his business indirectly ties the vendor’s contracts to the property swap, according to the report.

“The property swap was an ongoing scheme and it was directly linked to enhancing the Auto Parts Co. business which in turn was directly linked [to] providing the necessary auto parts service and supplies to the City’s fleet of vehicles,” the report states.

Following Voice of OC’s disclosure of the city’s report, Pulido provided a counter appraisal to the Orange County Register claiming the parking lot was actually worth $700,000 – three-and-a-half times the value Pulido and Akoubian originally claimed it was worth on officially recorded real estate deeds.

The counter appraisal was done based on investment value and four years after the transaction, according to the Register. In other words, the figure reflects the lot’s value specifically to Akoubian’s business.

Pulido used the appraisal to argue that there was no bribe and he actually lost money in the deal. But the appraisal does confirm the fact that the parking lot was crucial to Akoubian’s business, which is the foundational principle in the argument for code section 1090 violations.

But making a case would be hard, if not impossible, without witnesses, Wedick said.

“[Pulido’s appraisal] will help, but the argument is a tough argument to make” just on paper, Wedick said. “That’s why it’s important to conduct the investigation quickly so they can get witnesses on record early.”

A Potential City Hall Witness List

Staffers at all levels of city government who would have been involved in recommending the contracts to the City Council – the auto fleet division, the finance department that oversees the division and the city manager’s office – have all confirmed that the DA’s office hasn’t contacted them.

Some spoke on the record, others only on background.

Fleet manager Rick Longobart began pushing for the exclusive auto parts contract almost immediately after he was hired May 1, 2010, he and other sources confirmed.

The property swap occurred four months after Longobart was hired.

Yet as of last August – nine months after Voice of OC broke the story and at least five months after the city referred its investigative report to the DA’s office for investigation – Longobart said the DA’s office had not tried to interview him.

He also insisted that the mayor’s office had no communication with him regarding the contract.

Finance Director Francisco Gutierrez oversaw the fleet division and was at the helm when Longobart was hired. Gutierrez said in an interview last week that the DA’s office had not reached out to him.

Former City Manager Dave Ream retired in 2011. But he had worked with Pulido since first being elected mayor in 1994, and the two were known to be very close. Ream was also city manager when Longobart was hired.

Ream confirmed in an interview last month that the DA’s office had not contacted him about their Pulido investigation. He also said he didn’t recall Pulido being involved in discussions about the auto parts contracts.

Others who could have been involved in making sure the exclusive contract went through include former City Manager Paul Walters, who was also a close Pulido ally until he was ousted by a council majority that turned against the mayor. Walters was city manager when the council approved the contract.

Another potentially key witness would be Jill Wallace, a former eighth floor staffer who acted as Pulido’s eyes and ears at City Hall.

Wallace was forced out of city employment following allegations of inappropriate conduct related to a car accident, but is still helping the mayor as a volunteer assistant. She changed her last name, which was Arthur, soon after leaving City Hall.

Wallace and Walters couldn’t be reached for this article.

This is not the first time the DA’s office has avoided interviewing potential witnesses in a public corruption case.

In 2010, the office investigated allegations that lobbyist and former GOP state Sen. Dick Ackerman engaged in illegal lobbying during the failed effort to privatize the county fairgrounds.

Yet county prosecutors didn’t contact legislators Ackerman talked to during the privatization effort in order to find out if he actually did any illegal lobbying, a Voice of OC investigation found. 

The Pulido-Rackauckas Connection

District Attorney Tony Rackauckas’ relationship with Pulido is the first thing Wedick questioned when told about his office’s disinterest in who knows what at City Hall.

“Are they friends?” Wedick said. “Politics makes strange bed fellows, and you’ve got that issue to deal with also.”

Questions have dogged Rackauckas’ Pulido investigation ever since he was seen at the mayor’s state of the city address, sitting as a VIP guest at the mayor’s table, earlier this year.

Politicos around the county asked whether Rackauckas was conducting an impartial investigation.

Later, Voice of OC published an article detailing the overlap between Pulido’s circle of political allies and Rackauckas’ campaign contributors.

Pulido’s campaign manager, Dennis DeSnoo, had never before contributed to a candidate for DA. After the story broke and there were whispers of a DA investigation, DeSnoo contributed $1,900, which is the maximum allowed, to Rackauckas’ campaign.

Pulido also hired Al Stokke as his criminal defense attorney. The county grand jury in 2002 specifically mentioned Stokke and other campaign contributors as possibly having inappropriate influence over Rackauckas’ decisions to drop charges against them or their clients.

Possible Federal Charges

The DA’s office is part of a federal corruption task force that is looking at corruption in the county. And multiple agencies could be looking at a range of crimes to pursue related to the property swap, according to Wedick.

Sources have said the FBI and the IRS are also investigating the property swap. Federal crimes could include mail fraud; honest services fraud and capitol gain income tax evasion on the house sale.

The particularly damning evidence, Wedick says, is the fact that Pulido omitted his financial relationship with Akoubian from his statements of economic interest, which are filed under penalty of perjury, known as form 700s.

With the incorrect form 700s, ”you’re little fast dance about conflict of interest and bribery becomes a little more difficult. The lawyers know we’ve got a different problem here, and this becomes a little more difficult to explain,” Wedick said. “You’ve asserted it. And now you’re telling me it’s not true? Well if it’s not true why did you sign it?”

Yet even with the universe of laws that prosecutors could use in pursuing a case against Pulido, Wedick says, wielding justice in the face of public corruption requires vigorous and energetic investigators, and prosecutors willing to be hated by powerful people.

“Only if you’re willing to extract blood will a case get prosecuted,” Wedick said. “That’s what it will take if you believe that something happened.”

Please contact Adam Elmahrek directly at aelmahrek@voiceofoc.org and follow him on Twitter: twitter.com/adamelmahrek

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