Grand jury dismisses conflict complaint

HUNTINGTON BEACH -- A grand jury has dismissed a complaint accusing three

council members of a conflict of interest for investing in a bank along

with the developer of Wal-Mart -- and Wal-Mart foe Susie Newman said

she’s not surprised, considering the jury foreman is also an investor.

“They’re all in bed with each other,” said Newman, who filed complaints

with the Orange County Grand Jury and the Fair Political Practices

Commission.

Jury foreman Phil Inglee would not discuss the deliberation, which must

be kept confidential. But, he said, “I can assure you it was done

correctly.”

The Fair Political Practices Commission’s review is still being

conducted, according to a letter from the group. However, the district

attorney’s office, which also conducted a review, said it found no

conflict. And watchdog group Common Cause said the investments aren’t

inappropriate as long as the council members don’t stand to make any

financial gain.

Still, Inglee’s involvement highlights the web of relationships that

create at least the appearance of an “overwhelming” conflict of interest,

Newman said.

In the middle of that web are Huntington Beach councilwomen Pam Julien

and Shirley Dettloff, and Dave Garofalo, who took over as mayor this

week.

Between October 1998 and April, they purchased subscriptions to invest in

Pacific Liberty Bank at Adams Avenue and Beach Boulevard, contributing

start-up money to the bank, which would be converted to stock once the

bank opened in May.

George Argyros, CEO and chairman of Arnel Retail Group, also purchased a

subscription to invest in the bank.

Arnel proposes building a Wal-Mart on Talbert Avenue near Beach

Boulevard, despite strong opposition from some residents.

Argyros reportedly invested $100,000, although bank officials would not

disclose when the money was deposited.

Julien said she invested $10,000 in October of last year. Dettloff said

she invested $3,000 in December 1998, the same month the council paved

the way for Wal-Mart construction by voting 4-3 to change the zoning at

the proposed development site from residential to commercial.

The largest of the three contributions came from Garofalo, who invested

$50,000 in April, the same month the council voted 6-1 to approve

Wal-Mart’s plans for a 150,000 square-foot retail complex.

On both occasions, these council members voted in favor of the project,

but they deny having any knowledge about Argyros’ involvement in the bank

until after its opening in May.

Wal-Mart opponents said it’s more than just a coincidence.

“It has answered the question of why the council was so headstrong in

moving forward on this Wal-Mart [project] when residents for years have

said no to this thing,” said Marvin Josephson, chairman of Crest View

United, a group that vehemently opposes the development.

In March, a ballot initiative will let voters decide whether to overturn

the council’s decision about Wal-Mart.

But Josephson said the council doesn’t have to wait for the voters. The

council should “do the right thing” and reconsider the project,

disqualifying those council members whose conduct he considers

“absolutely outrageous.”

Meanwhile, concerned residents will “get the word out” about the

questionable dealings by speaking out at City Council meetings, sending

out mailers and posting information on the Web, said resident Barbara

Boscovich, another Wal-Mart critic.

The bank’s president, Rick Ganulin, downplays the significance of

Argyros’ investment. About 15 others had contributed $100,000 or more, and the bank would have easily raised the $5 million necessary for

regulatory approval without Argyros’ help, he said.

As for Inglee, he was just one of about 360 investors, many of whom are

local because Pacific Liberty is a community bank, Ganulin said.

He also dismissed any notion that his “fledgling” institution has any

direct financial dealings with Arnel or Wal-Mart.

“We’re just too small,” Ganulin said.

Because the bank has no direct link to the project, City Atty. Gail

Hutton said her office concluded there was no conflict. The district

attorney’s office also found no wrongdoing, said Deputy Dist. Atty. Susan

J. Laird.

As long as the council members do not benefit financially from the

Wal-Mart project, they are in the clear, said Ben Wilcox, a spokesman for

Common Cause, a nationwide public interest group that tracks abuses of

power by government officials.

And council members vigorously denied the implication that they were

influenced in any way by Argyros’ investment.

“It’s a ridiculous concept of [conflict of] interest,” said Garofalo, who

sits on the bank’s board of directors.

Dettloff said her sole motivation for investing was to support a local

business. But she said she suspects Wal-Mart opponents have spoiled her

good intentions by creating this “scuttlebutt.”

“We’re stuck with knowing that we’re probably right, but nobody cares

about that,” she said. “It’s very hurtful. It’s an ugly side of

Huntington Beach that’s frightening me.”

QUESTION

Banking on it?

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