While clearing Santa Ana Mayor Miguel Pulido of any criminal conflict of interest related to his property swap with a city contractor, county prosecutors did refer evidence of possible "tax fraud" to the state Franchise Tax Board.
The DA’s suspicion of a potentially illegal scheme to avoid taxes focuses on the reported value of a parking lot in downtown Santa Ana that Pulido's family traded to Rupen James Akoubian, the owner of NAPA Orange County Auto Parts, in exchange for a house in Westminster.
When the deal was consummated in 2010, sales deeds showed the value of both properties to be $200,000. Later, however, the county assessor appraised the house Pulido and his family received at $430,000, but agreed with the reported value of the parking lot.
By 2012, Pulido's family had transferred the Westminster house soley into the mayor's name and he had sold it for $397,000, which based on the sales deeds netted him a $197,000 profit. Meanwhile, Pulido voted in favor of two city contracts for NAPA Orange County Auto Parts.
The mayor admitted to six violations of state law stemming from his failure to publicly disclose financial interests related to the property swap and a conflict of interest vote for one of the contracts. The state’s Fair Political Practices Commission fined him $13,000 for the violations.
The Orange County District Attorney’s office said in a report released late last Friday that it couldn’t find sufficient evidence for criminal violations of the state’s conflict of interest laws. However, it did raise questions about why the value of the house was set at only $200,000.
According to the report, Akoubian told the DA’s office that the valuations were his idea and that he didn’t put much thought to it. He said he came up with the figure by rounding up the cost basis of the house. Under tax law, the cost basis is generally what the owner originally paid to acquire a property, minus other factors like depreciation.
“That issue has been referred to the [state] Franchise Tax Board to evaluate whether or not there are any possible tax fraud issues associated with the low property value submitted for the Westminster house,” the report states.
This isn’t the first time that the DA’s office reportedly asked an outside agency to probe the property swap for possible tax fraud.
According to a source familiar with the DA’s investigation, prosecutors stalled their inquiry for months and asked the FPPC to wait on issuing its fine until the IRS launched its own investigation. Then, just after Pulido’s reelection last November, DA officials told FPPC officials that the IRS wasn’t interested in the case and they wouldn't be taking any further action, the source said.
Pulido has long had trouble paying his taxes. He and his family have faced numerous tax liens, and his consulting business, The LaFarga Group, has continued to receive income despite having its articles of incorporation suspended for several years due to nonpayment of taxes.