City attorney to investigate Huntington Beach mayor

Theresa Moreau

HUNTINGTON BEACH -- City Atty. Gail Hutton warned Mayor Dave Garofalo in

two memos this week that his tangled business dealings had “at least the

appearance of impropriety,” that he should refrain from voting on certain

matters until state officials investigate and that her office will probe

the financial relationship between the mayor’s company and the

city-funded visitors bureau.

Garofalo has denied any wrongdoing and maintained that he has acted on

the advise of the city attorney.

In a written statement to the Independent, Garofalo on Wednesday said

he will be stepping aside from the publishing business “until the proper

authorities tell me it’s okay.”

However, at Monday’s City Council meeting, Garofalo -- who oversees

the operations of the Local News newspaper and the city’s annual visitors

guide -- announced he was getting out of the publishing business.

“It is with mixed emotions that I report to you, as of today, that I

have completely divested myself of any responsibilities for any of the

publishing businesses that I have built up over the past decade,”

Garofalo said. “That includes any administrative issues, including but

not limited to publishing, editing, designing, graphics, etc.”

The bombshell follows revelations in the Independent that:

* Developer Commercial Investment Management Group wrote a $2,995 check

for advertising to Garofalo’s company in January, and four months later

the mayor voted to push forward the group’s controversial $46-million

Downtown project. Garofalo said the check was deposited into the account

of the Local News, a business he said he doesn’t own.

According to state law, public officials may have a conflict of interest

if they receive as little as $250 from companies involved in issues that

come before them.

* Garofalo’s company -- David P. Garofalo & Associates -- has held the

potentially lucrative contract to publish the city’s visitors guide, a

publication of the city-funded Conference & Visitor’s Bureau, since he

joined the council in 1994. Garofalo’s son is the guide’s advertising

manager. Garofalo is not paid to publish the guide, but rather would

profit through advertising sold into the guide.

State law prohibits any city employee or family members from benefiting

financially from city business.

* Contrary to Garofalo’s previous assertion to state officials that his

role in the visitors guide involved only “nonsales issues,” such as

“mechanical and technical aspects of publishing,” he personally sold ads

in the 2000 visitors guide. Officials from both CIM and the Market

Broiler said Garofalo solicited ads from them, and both made checks out

to David P. Garofalo & Associates, though Market Broiler’s Murray Greer

said he also gave Garofalo $300 in cash and $300 in trade.

* The ownership of the Local News -- a key to any potential conflict of

interest charges -- is still murky. Garofalo, according to papers he

filed with the county in April, owns the Local News, a subsidiary of

David P. Garofalo & Associates. This contradicts a statement Garofalo

issued this week while answering questions raised by his council

colleagues.

“The Local News was sold, as all records properly show, to Coatings

Resource in December 1997,” Garofalo wrote. “The transaction was

concluded on Jan. 14, 1998.”

It also contradicts a statement made to the Independent by Ed Laird,

owner of Coatings Resource Co., who said he doesn’t own the Local News.

Other public records filed in December show that Air Quality Consultants,

whose president is Ed Laird’s son, took ownership of the Local News in

January 1999.

Hutton’s memo addressed the confusion.

“You have informed our office that while you have sold the Local News

that produces the Visitor’s Guide, you have not sold the corporate entity

that owns the Local News,” Hutton wrote. “Consequently, advertising

revenues are paid to the David Garofalo Corporation [David P. Garofalo &

Associates], a company you wholly own.”

“What’s the conclusion?” Councilman Dave Sullivan asked. “He still owns

the Local News.”

Also in Hutton’s memo, the city attorney advised Garofalo to refrain from

voting on matters involving advertisers in the visitors guide.

Advertisers in the 2000 guide include such Huntington Beach heavyweights

as the Waterfront Hilton Beach Resort hotel, The Crossings at Huntington,

Hearthside Homes, Huntington Seacliff and Seacliff Village.

Advertisers that have appeared in each year’s edition of Garofalo’s guide

include the Waterfront Hilton; Seacliff Shopping Center; Huntington Beach

Mall, which is now The Crossings; and Koll Real Estate, which is now

Hearthside. All have had significant projects before the council in

recent years.

Garofalo has denied any conflicts of interest and said he has always

followed state law.

Hutton’s memo said she’ll also ask the Fair Political Practices

Commission to decide whether Garofalo can vote on projects that are

within 2,500 feet of his Downtown home and whether Garofalo’s purchase

and sale of his St. Augustine home [see related story] affects his

ability to vote on projects by its developer, PLC.

Debbie Cook, who has requested that the city attorney investigate

Garofalo, predicted that Hutton’s opinion on Garofalo and the visitors

guide will gloss over the matter.

“I’m sure it will be supportive of Garofalo and that it’s not a

violation,” said Cook, a longtime critic of both Garofalo and Hutton.

Sullivan said he’s frustrated with Garofalo’s responses so far to the

conflict of interest charges.

“It’s kind of frustrating because of whatever cloud there is could be

lifted by documentation given to the public,” Sullivan said.

Councilwoman Pam Julien stands in support of Garofalo.

“Everyone is innocent until proven guilty,” Julien said. “Dave is a very

smart man, and I don’t think he would be doing something that is not

correct or legal. I still have faith in him.”