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PERSPECTIVE: If Footnote 15 is Real, City Officials & Lawyers May Have Committed Crimes

PERSPECTIVE: If Footnote 15 is Real, City Officials & Lawyers May Have Committed Crimes

Arturo Castañares
Publisher

Somebody help! San Diego is in distress!

For over a year, La Prensa San Diego has been pursuing and investigating the truth behind a series of legal memos hidden from the City Council and the public that may now lead to criminal charges in a growing scandal that went from a potential political embarrassment to possible criminal charges for City officials and lawyers involved in an ongoing cover-up.

The legal memos in question were written by outside lawyers for the City of San Diego who were asked early last year to investigate the origins of the City’s disastrous acquisition of the 101 Ash Street office tower in downtown.

The lawyers from the law firm of Burke, Williams & Sorensen, LLP, were engaged after the City evacuated the building in January 2020 because of loose asbestos material that led the County Air Pollution Control District to deem the building a public nuisance. Over 1,000 City employees had been moved into the building in late December 2019 but were kicked out just three weeks later. The building remains empty today.

The Burke lawyers began looking into the deal in February 2020, but none of their memos or reports were made public until a September 3, 2020, article by NBC7/39 reporter Dorian Hargrove exposed a leaked copy of a Burke memo.

That June 15th version of a Burke memo concluded that City Attorney Mara Elliott failed to conduct proper due diligence on the building and relied exclusively on representations and documents provided by the sellers and made matters even worse by agreeing to an “as-is” clause that released the sellers and the landlord from all liability for any known and unknown issues with the 55-year-old building.

The memo used in the NBC article included a footnote, known as Footnote 15, which claimed the lawyers wanted to ask former City Councilman Todd Gloria about his support for the lease deal when he was on the City Council in 2016, but that they were “unable to obtain the City Attorney’s approval to interview Mr. Gloria or his staff.”

Elliott and Gloria, then a candidate for Mayor, both publicly denounced the article for using what they called a “fabricated” footnote because, they claimed, the lawyers never attempted or even wanted to interview Gloria.

Gloria demanded an investigation to find out who leaked the memo which, he claimed, was being used to impact the election for mayor in which he and Councilwoman Barbara Bry were running neck-and-neck at the time.

The two lawyers who signed the Burke memos even released identical letters signed “under penalty of perjury” stating that the footnote was “completely and totally fabricated, and was not included in any Memorandum from the Burke firm to the City.”

John Hemmerling, Elliott’s criminal division chief, even went so far as to send Hargrove a letter threatening criminal prosecution for having the memo in his possession, a clear abuse of their police powers under color of law in an effort to chill the reporter’s coverage. The tactic not only sidelined Hargrove, but also chilled other media outlets from chasing the story, and stopped Bry from running online ads she had already launched exposing Gloria’s connection to the controversial building deal.

NBC crumbled under pressure and retracted the part of the story pertaining to the disputed footnote, and sidelined Hargrove from writing about the City for the rest of the election cycle, even though no one proved the footnote was fabricated.

We have to remember that the NBC article on September 3rd of last year was only two months before the election where Gloria was locked in a head-to-head race with Bry, and Elliott herself was being challenged for re-election by local attorney Cory Briggs. Elliott surely thought Briggs would use the conclusions in the memo and, even worse, Footnote 15’s comment that her office denied Burke lawyers “approval” to interview Gloria, to discredit her in the campaign, and Gloria feared the controversial deal would sink his chances of becoming Mayor.

Elliott and Gloria went on to win their respective elections in November and now control the two most powerful Citywide elected positions in San Diego.

And what did they do to get to the bottom of the footnote controversy when they got into power? Nothing. Not. A. Thing.

No investigation to find the “leaker” of the memo. No investigation to answer the questions the Burke lawyers were asking in the memos: Who knew what, when?

Why? Because Elliott and Gloria may already know or don’t want the public to find out.

But, during the past year, more and more evidence has come out that suggests Footnote 15 may have been real given the language of the rest of the memo and a recently obtained April 7th legal memo from the same lawyers asking the same questions as the disputed footnote.

The basis of the disputed footnote concerned lingering questions that the Burke lawyers had last year about why the City chose the more expensive option of a 20-year lease instead of purchasing the building directly from the sellers without using a middleman landlord, Cisterra Development.

City officials admitted back in 2016 that the lease would cost at least $17 million more than a conventional purchase, but argued that the agreement between the sellers and Cisterra and the agreement between Cisterra and the City were not clear that the City could step in and buy the building directly.

But the Burke lawyers found that the arguments did not match the language in the agreements, and that “there are at least some questions raised by these explanations that are not answered by the known facts.

This is where the June 15th memo used by NBC had Footnote 15 which said the lawyers thought interviewing Gloria “could be informative about why the City went forward with the transaction despite the unfavorable language in the lease Agreement, the due diligence materials available to the City, and the substantially higher cost of the lease-to-own structure. However, we were unable to obtain the City Attorney’s approval to interview Mr. Gloria or his staff (all of whom are no longer in the employ of the City).

The language of Footnote 15, even if real, was not accusing Gloria or Elliott of any illegal acts or even criticizing them for supporting and approving the deal, but, if authentic, would have raised questions as to their true motives in spending $17 million more on a building than they otherwise could have, or should have.

La Prensa San Diego published both the April 7th and June 15th memos over the past three weeks with articles explaining the connections between the two memos and the likelihood that Footnote 15 may have been authentic, yet neither the City Attorney’s office nor Mayor Todd Gloria’s office have refuted the claims, denounced the memos as fabricated, nor demanded any corrections or retractions.

When NBC7/39 published one article about the memo last year, both Elliott and Gloria immediately denounced it. But, LPSD has now published two articles about the memos, and the San Diego Union-Tribune followed each of those stories with articles of their own citing LPSD’s coverage, yet not a word from Elliott and Gloria.

Why not?

Well, maybe because Footnote 15 actually DID exist in some version of an authentic memo from Burke lawyers who were honestly trying to figure out why City officials would have misspent over $128 million on a building that was in need of upgrades and why they wasted $17 million more on an expensive lease to acquire it instead of buying it directly for less money.

The memos clearly show the lawyers did not believe the narratives put forward by City officials and staff at the time the lease was approved, and that the “known facts” didn’t justify the purchase, much less the lease.

If the lawyers didn’t ask to speak with Gloria, who was the most vocal champion for the lease in 2016, why wouldn’t they have done so if it could have helped explain the reasoning behind the deal? The point of Footnote 15 makes perfect sense given the full context of the two memos.

It now appears that the Burke lawyers may have gotten too close to stumbling onto the truth and Elliott hid the memos from the City Council to cover her malpractice in approving the risky lease deal, but when the memo was exposed by NBC, she just called the embarrassing footnote “fabricated”.

Unfortunately, though, lying to the public is not a crime.

But, what may be criminal is a coverup to hide the truth behind why City officials used an expensive lease to acquire the building in the first place. They didn’t conduct their own inspections. They took the sellers’ word for it that the building was Class-A and needed only a “$10,000 power wash”, which we now know were both untrue, to put it mildly. And they didn’t even ask who was going to make money from the deal!

Why?

We now know big political contributors, developers, and the City’s well-connected real estate broker each made millions by fleecing the City and the coverup continues to hide who in the City helped them in their brazen acts and who allowed it to happen by their incompetence.

The fact that Elliott hid the legal memos from her client, the City Council, doesn’t seemed to bother any of the Councilmembers themselves, even after they became aware the memos exist. Not one has complained publicly. Not one has asked why their lawyer withheld information from them, which is a violation of a lawyer’s duty to her client. And, amazingly, not one has asked for Elliott to recuse herself from an investigation of which she, herself, is a target.

Elliott already violated both her ethical duty to her clients and her duty to the public, much like former prosecutor Jackie Johnson in Georgia who was recently indicted by a grand jury and now faces felony charges for violating her oath of office and misdemeanor charges for obstructing justice in the case of Ahmaud Arbery’s murder.

And using her police powers to impact an election – not only her own campaign, but also a federal election- by threatening a reporter and discrediting political opponents, could also open Elliott up to federal elections law violations.

And the two Burke lawyers who signed letters under “penalty of perjury” swearing that Footnote 15 was “fabricated” but admitted the rest of the 26-page memo was authentic by saying it was “absolutely clear that our Memorandum has been doctored to add the Fabricated Footnote 15” could also face ethical -if not criminal- charges, if Footnote 15 was, in fact, real and they lied about it under oath.

We now know that several high-ranking City officials (past and present) knew or now know about the memos but are going along with the coverup: Some to protect themselves, some to protect others. Whether they knew last year or just found out recently doesn’t matter because every day they allow the deception to continue makes them increasingly culpable for the ongoing coverup.

Every Councilmember, high-ranking official, and staffer (past or present) has a duty to blow the whistle if they know that someone has misrepresented, deceived, or lied in this consequential public issue. Remaining silent or looking the other way does not absolve them from the same guilt -and legal jeopardy- as the active participants in the coverup.

Public officials should be worried about federal honest services fraud statutes which have been used to prosecute corrupt politicians who took bribes, or even campaign contributions, in schemes that worked against the public good. Congressman Randy “Duke” Cunningham was charged for taking over $2.4 million in bribes from defense companies seeking contracts, but Councilman Ralph Inzunza only took campaign contributions and didn’t even deliver on his promises to a strip club owner; both, however, served time in prison.

What did Mayor Kevin Faulconer and his staff know?
Who received money from the deal?
Why didn’t the City Attorney review her required due diligence before she signed the lease?
Which City officials have known the truth and concealed it?
Who took money or campaign contributions from the participants of the scheme?
Who voted to give them the deal?
Who plans to vote for a new deal?

There are hundreds of millions of dollars at stake for local taxpayers, lives have been put at risk by exposure to asbestos and dangerous conditions in the building, and at least one reporter’s career has been damaged by what now appears to have been a political operation gone awry.

Criminal investigators should be, if they aren’t already, combing through the complex details of who knew what when, and considering charges against those responsible for theft of public funds and the subsequent coverup, as well as for those who enabled them to orchestrate it and continue to let them get away with it.

San Diego’s political history is littered with the names public officials who transgressed against the public good, violated the public trust, and committed crimes many thought were just par for the course in politics. Curran. Hedgecock. Cunningham. Martinez. Inzunza. Hunter.

That’s exactly the problem in this town: Too many people believe this is just the way the system works.

No, it’s not.

In this article

Arturo Castañares

Art Castanares purchased La Prensa five years ago and brings decades of experience in government and politics in his quest to find out what government officials and others are hiding from the public. Host of Behind the Curtain.