Santa Ana Mayor Miguel Pulido has agreed to pay $13,000 in fines to the state’s political watchdog for several violations of state law related to a real estate deal he conducted with a city contractor.
The Fair Political Practices Commission (FPPC) found that Pulido failed to disclose his financial ties to the owner of NAPA Orange County Auto Parts and also illegally voted for a contract with the vendor to provide equipment for the city’s vehicle fleet, according to a settlement agreement between Pulido and the agency made public Monday.
Pulido’s illegal vote and failure to disclose his ties to the contractor were “more than an inadvertent oversight,” and “served to conceal a conflict of interest,” the agreement states.
However, noticeably absent from the settlement agreement was an analysis of whether his transaction with the contractor constituted an illegal gift, which was the focus of the FPPC investigation. This created a possible loophole for public officials to receive gifts worth hundreds of thousands of dollars, according to a good government expert.
“Without an explanation (as to) why this isn’t a gift, the FPPC has left open a potential loophole that others might try to exploit,” said Tracy Westen, the ethics expert who first questioned whether the property swap was a bribe in disguise.
FPPC spokesman Jay Wierenga said the agency can’t comment on actions not yet approved by the commission, which is slated to sign off on the settlement at its May 21 meeting. Pulido couldn’t be immediately reached for comment.
In 2010, Pulido and his family traded a parking lot they owned for a house in Westminster owned by Rupen James Akoubian, president of NAPA Orange County Auto Parts. Akoubian and Pulido’s family recorded on sales deeds at the time that both properties sold for $200,000.
Later, the Orange County Assessor’s office appraised both properties and found that the fair market value of the house Pulido and his family received was worth $430,000 — more than twice the market value of the parking lot.
In 2012, the mayor’s family transferred the house solely to Pulido, who then sold the property for $397,000. By the time Pulido had sold the house, he voted for two separate contracts with the vendor, including a $1.35 million no-bid contract making NAPA Orange County Auto Parts the sole supplier of car parts to the city.
Good government experts had questioned whether the property swap amounted to an illegal gift, or even a bribe, because the house was worth so much more than the parking lot, and because Pulido hid his financial ties to the vendor, who then received a lucrative contract.
But the Orange County District Attorney’s office — which launched an investigation after Voice of OC exposed the property swap in 2013 – never interviewed potentially key witnesses at City Hall. And a source with knowledge of the situation said the DA never actually embarked on an investigation.
The settlement agreement, which the FPPC states is the result of a joint investigation between it and the DA’s office, states that Pulido maintains he didn’t influence city staff regarding the contract.
At first, the FPPC had found that the property swap did indeed constitute an illegal gift, according to the source. The penalty initially proposed for Pulido was to have him return the amount of the gift – possibly up to $230,000 – to Akoubian, the source said.
However, Pulido apparently negotiated a better deal for himself whereby there is no determination about the gift.
While the settlement doesn’t offer an analysis of why it wasn’t a gift, it does state that Pulido provided an appraisal showing the parking lot to be worth $720,000.
Under the Political Reform Act, public officials receive a gift if they do not provide something of equal or greater value in exchange. Generally, the law uses fair market value of the item being given to the official at the time of the transaction to determine whether it should officially be considered a gift.
Pulido’s appraisal, which was provided to the Orange County Register, didn’t valuate the parking lot based on fair market value, and not at the time of sale, the newspaper reported. Instead, it used a valuation method called “investment value,” which determines what the property is worth specifically to NAPA Orange County Auto Parts due to business needs.
Appraiser Craig Gilbert told the Register that market value most likely “is something lower than investment value.”
While the FPPC didn’t opine on whether Pulido received a gift, the agency did scold the mayor for not disclosing his dealings with the contractor as required under state law. Pulido, a college graduate who has served on council or as mayor for nearly 30 years, “knew or should have known” better, the agreement says.
The agreement cites several key omissions from the mayor’s statements of economic interests, which are intended to disclose possible conflicts of interest.
Specifically, Pulido failed to properly disclose over a period of four years and on at least 10 filings at three different agencies his financial interests in the house, the lot, his sale of the lot, Akoubian as a source of income, his sale of the house and the buyers of the house as a source of income.
Pulido in 2010 and 2011 also inaccurately disclosed that the parking lot was held in a family trust, according to the agreement. By reporting the lot as held in a trust, it concealed rental income received from the lot, the agreement stated.
In fact, for more than a decade Pulido has misreported on his statements of economic interest that the parking lot was held in a family trust, according to a Voice of OC analysis of his filings dating to the late 1990s. The FPPC only cited Pulido for violations between 2009 and 2012.
In the end, the FPPC fined Pulido $3,000 for one count of illegally voting to approve a contract with the vendor, and $2,000 each for five counts of failing to disclose various financial interests related to the property swap.
The DA’s office hasn’t yet announced whether it will charge Pulido with criminal violations of the law. However, sources close to the investigation say Pulido will soon be cleared of any criminal wrongdoing.
Meanwhile, late last year, the FPPC opened an investigation into whether Pulido illegally omitted campaign debts from his disclosure forms. The status of that investigation is unclear.