State probe casts a shadow on new San Luis Obispo mayor

January 6, 2011

By  LISA RIZZO and KAREN VELIE

A three-year state investigation into the funneling of cash and gifts to the campaigns to stop Ernie Dalidio’s proposal to develop his San Luis Obispo farmland has revealed that the city’s newly-elected mayor, Jan Marx, was part of the alleged illicit effort.

Last October, the California Fair Political Practices Commission (FPPC) levied $80,000 in fines against Tom and Jim Copeland, and banker David Booker for committing 16 campaign violations in their secretive battle against Dalidio’s project, proposed for south of the Madonna Plaza shopping center.

The state’s probe includes 1,414 pages of reports and documents and was recently made public through a Freedom of Information request. The documents identify Mayor Marx, an attorney, as a leader in the campaign to stop Dalidio’s development, which was slated to directly compete with commercial properties owned by the two Copeland brothers.

In 2000, while on the San Luis Obispo City Council, Marx and former councilman John Ewan served as representatives in negotiations to annex Dalidio’s proposed project into the city. Marx and Ewan bargained with former San Luis Obispo County Supervisors Katcho Achadjian and Peg Pinard until they came up with a proposal that included 46 percent open space in the project, and a contract with Dalidio to purchase additional lands to be designated as open space.

All four negotiators signed the agreement.

Much to the surprise of other council members, Marx voted against the project when it went in front of the City Council. After she was on the losing end of the vote, she helped launch a political campaign to stop the project.

“She (Marx) then did an about face and said ‘No,’ ” Ewan said. “She has said that the end justifies the means. It makes me think that she was not negotiating in good faith.”

A thorough review of the voluminous FPPC documents confirms that Marx was involved in the campaigns and that she made a $3,000 loan to help launch the effort in 2004.

The FPPC, in its decision and order  in which the Copeland’s did not contest, said the Copelands’ LLC, Responsible County Development, was the “sponsor” of the campaign against Dalidio’s project.

In an interview with CalCoastNews, Marx said, “I wasn’t against the project, I wanted them to follow the rules and have 50 percent open space.”

When asked for a reaction to the state’s repeated documentation of her involvement in the campaign against Dalidio, Marx said that even though she along with several other people founded the campaign against the project, she was not involved in the inner working of the campaign as it progressed.

But the FPPC documents reveal a different story.

A trail of receipts, credit card statements and reimbursement checks shows that Marx handled everyday campaign duties from the start of the fight in 2004 through the second election in November, 2006.

She also printed campaign flyers, purchased campaign supplies and handled some advertising with local media. As late as August, 2006, just months before the election, the campaign phone service was paid with Marx’s credit card and not yet listed in the campaign’s name, according to FPPC documentation.

The anti-Dalidio development campaign has gone by many names, including Citizens for Planning Responsibly. It was first known as “Save San Luis Obispo, A Committee against Measures A, B & C” during the April, 2005 election and was renamed “County Coalition for Local Control (CCLC), No on J-06” for the November 2006 election.

Front and center in the investigation is a series of substantial loans that were made to the Save San Luis Obispo campaign that were later forgiven. Booker contributed $750 and together with his wife, another $98,000 in loans, according to contribution forms and promissory notes obtained by CalCoastNews.

The Bookers forgave more than $89,000 of the loans.

The Copelands, along with their limited liability companies, San Luis Obispo Court Street and San Luis Obispo Downtown Centre, contributed $87,500 with $58,000 of that in loans. Only $20,000 was paid back while $38,000 was forgiven.

Developers and commercial property owners, many with financial motives to stop Dalidio, provided the bulk — more than 80 percent — of the funding for the committees opposing Dalidio. And while some developers donated funds using their name and legal addresses, others, such as the Copeland brothers and former North County developer Kelly Gearhart, who contributed $20,000, hid their identities behind company names and post offices boxes.

The Political Reform Act requires that contributors provide a street address and their full legal name.

Local clerk recorder employees are responsible for inspecting campaign filings to make sure laws are being followed. These employees said they repeatedly told Dalidio’s opponents that they were breaking campaign laws and that they needed to correct the filings and provide addresses and not post offices boxes.

“Please be aware that the State Franchise Tax Board periodically audits these files and will often fine a committee that has inaccurate or incomplete filings,” said Tami Bisantz, county clerk recorder assistant, in a letter to the CCLC, on Oct. 4, 2006. “When you amend, you will need the complete cover page along with the amended pages attached.”

The group appears to have elected to keep their donors identities hidden and never provided an amendment with the solicited corrections.

In an odd twist last week, the County Clerk-Recorder’s office told CalCoastNews that it lost part of the file for the CCLC about a year ago. Last week, Bisantz asked the committee if they could re-file the missing documents following a CalCoastNews request for the complete file.

During their fight against Dalidio’s development, the committees were regularly under fire by the media for transgressions such as not paying rent, claiming the use of a Copeland owned building as a donation and sending misleading mailers.

The FPPC investigation confirmed the allegations.

Just days before the Nov. 7 election, it was Marx who was tasked with publishing an apology on behalf of the CCLC following a deceptive mailer that resulted in criticism from the media and the San Luis Obispo County Clerk Recorder. The campaign mailed out absentee ballot applications to potential voters, which appeared to show that the County Clerk Recorder was in favor of “No on J.”

The campaign apologized for their “inadvertent error” through a correction that Marx personally published in The Tribune, records show.

The FPPC investigation report says that for four months in 2005 the Copelands donated office space to the committee without disclosures by the campaign as required by law.

When asked about the failure to report the donation of office space from the Copelands, Marx said, “I don’t think we had an office. We met in each others’ homes.

“We were a grassroots group.”

In 2006, while a Copeland-owned building on Monterey Street served as the CCLC campaign headquarters, the local media began writing about the group’s failure to properly report the office space donation.

Shortly before the election, Suzanne Fryer, the Copeland’s corporate attorney and one of the principals in the anti-Dalidio campaigns, drew up a contract between CCLC and the Copelands to pay $7,500 for four months rent. The agreement says it “was entered into and effective as of July 10, 2006.”

However, according to dates on the bottom of each page, the contract was not penned until Oct. 29, 2006, months after the campaign took occupancy of the space.

The FPPC investigation also noted that Fryer failed to claim $2,337 in copies and paper she donated to the committees battling against Dalidio.

Fryer did not return requests from CalCoastNews for comment.

Marx, asserting her limited involvement, said she was unaware who was making donations to the anti-Marketplace committees, even those donating more than $10,000.

However, others involved in the campaign claim Fryer and Marx headed up the various committees that battled Dalidio and that they must have known the names of the big donors.

“Jan (Marx) and Suzanne (Fryer) sort of ran it,” said Rosemary Wilvert, president and spokesperson for Citizens for Planning Responsibly. “We would get legal advice from Jan and Suzanne. They would tell me how to say things to the media.

“I imagine they (Marx and Fryer) knew but they did not tell us,” Wilvert responded when asked if Marx and Fryer knew the donations came from the Copelands.

Under persistent questioning about her anonymous role in the fight against Dalidio, the mayor was evasive and then chose not respond to further requests for comment.

The FPPC investigation found that the Copelands and Booker made contributions to the committee through an LLC rather than their legal names, failed to disclose the true source of contributions made to the campaign and did not file a semi-annual and late contribution report as required by campaign laws.

The Copelands and Booker, among other contributors, had worked to conceal their identities from voters for four years despite public outcry for disclosure, even though California campaign rules require the transparency of donors.

In addition, the report notes that Booker, the agent for service on the Copeland’s LLC, Responsible County Development, was also the president of First Bank of San Luis Obispo, the bank the illegal donations were funneled through.

Even though the FPPC investigation does not name others suspected of contributing to the campaign through the Copelands’ LLC, Dalidio’s attorney, James McKiernan of San Luis Obispo, said that a review of the FPPC records makes it appear other rival developers used the LLC to funnel funds to fight Dalidio’s development.

These developers are likely to be exposed if Dalidio elects to re-file a lawsuit against those who illegally donated money though the LLC, McKiernan said, adding that Dalidio is exploring the revival of a lawsuit, which would likely include a subpoena of the LLC’s bank account records.

As part of their investigation, the FPPC also looked into Booker’s 2004 unsuccessful run for mayor of San Luis Obispo, a campaign that included $30,000 in loans the banker made to his campaign and then forgave. The report notes that Dalidio’s Marketplace Association spent $2,732 opposing Booker while Copeland, through several LLCs and family members, supported Booker’s campaign.

Booker did not return requests for comment.

In July, 2004, the development plan for Dalidio’s marketplace project was approved by the San Luis Obispo City Council. However, a citizen’s referendum placed the issue of development on a 2005 special election ballot as Measures A, B, and C, which was defeated by city voters.

After this loss, the previous “Marketplace Project” proposal was revised and submitted to San Luis Obispo County as the “Dalidio Ranch” initiative and the Board of Supervisors placed it on the November, 2006 ballot as Measure J, which was approved by voters countywide.

The Dalidio Ranch project is slated to include a 13-acre organic farm, a seven-day-a-week farmers’ market, a soccer field, a Monarch butterfly preserve, a 24-hour drive-through pharmacy, retail development, 60 units of workforce housing and the construction of an overpass connecting U.S. Highway 101 and Prado Road.

The 131 acres of Dalidio land currently is in unincorporated county territory just south of the San Luis Obispo city limit. Officials from the city have repeatedly said they want the Dalidio project to be annexed into the city and wonder if the bad blood between Dalidio and Mayor Marx could thwart their plans.

“I am not going to work with the city with Marx on the council, after what she has done,” Dalidio said. “She has been in the pocket of the Copelands.”