By Matt Coker
By R. Scott Moxley
By Charles Lam
By Nick Schou
By Gustavo Arellano
By Gustavo Arellano
By Steve Lowery
By R. Scott Moxley
Two grand-jury members have told the Weekly that the county's grand-jury foreman failed to inform fellow jurors that he had refused a request to investigate ties among a bank he helped found, Huntington Beach Mayor Dave Garofalo and developer George Argyros.
Speaking to the Weekly on condition of anonymity, the two grand-jury members said foreman Phil S. Inglee also failed to notify jurors that he signed a letter in October declining on the jury's behalf to look into conflict-of-interest charges involving Garofalo and Argyros. Garofalo, Argyros and Inglee are investors in Pacific Liberty Bank; Garofalo is also a bank director.
The state's Fair Political Practices Commission is looking into Garofalo's failure to disclose his financial relationship with Argyros before voting last April to approve the developer's controversial Huntington Beach Wal-Mart project. The Huntington Beach city attorney's office has said there was no conflict of interest.
The new allegation stems from a complaint letter by Huntington Beach resident Susan Newman. A frequent critic of the City Council, Newman sent a complaint on Oct. 1 to the district attorney and the county grand jury outlining the controversial relationships among the Huntington Beach City Council, Wal-Mart developer George Argyros and recent start-up Pacific Liberty Bank. The conflicts Newman alleged center on a single question: whether it was legal and proper for three members of the City Council to vote on Argyros' plan without disclosing that all three are investors with Argyros in Pacific Liberty Bank.
On Oct. 4, Newman received a brief reply from Inglee acknowledging receipt of her complaint.
According to a grand-jury administrative staffer, complaint letters should go for review to a committee specializing in that particular subject matter. After review, the committee sends the letter and any additional information it has gathered to all 19 members of the grand jury. The staffer added that the system is designed to be "very organized and very safe" so that no single person can subvert the process.
But no such review appears to have taken place in the Pacific Liberty case. "No one on the grand jury has any memory of this [letter] coming by," said one grand-jury member. Another grand-jury member confirmed this.
On Oct. 19, Inglee and grand-jury criminal-justice-committee chairman Richard D. Cottingham wrote Newman saying her allegation "has been reviewed." The letter referred Newman to a response the district attorney's office had already sent her, advising Newman to contact the Huntington Beach Police Department. The letter concluded by saying the grand jury "will take no further action on this matter."
Citing confidentiality rules, Cottingham refused to comment, saying the letter "stands on its face." Inglee said simply, "Everything was done correctly."
But others have questioned Inglee's actions.
San Diego grand-jury foreman pro tem Barry Newman (no relation to Susan Newman) said he could understand why the grand jury might decide "as a body" to abstain from investigating a complaint already being investigated by another agency—"like the DA, the FBI, the police, or whatever. But in this hypothetical case," Newman said, "clearly and emphatically" the foreman should recuse himself from participating in such a decision.
"It is completely impermissible for somebody who is an investor in a business to take part in considering whether to proceed with a criminal investigation into that business," said Erwin Chemerinsky, a USC professor of law. "That would be compounded if that person violated procedures by making the decision on his own without consulting the rest of the jury. In any case, he should take no part in the decision."
Although Inglee now downplays his role in Pacific Liberty (he insists he's "just an investor"), he played a key role in the community bank's formation. In February 1998, Inglee was even identified in an Orange County Business Journalarticle as the bank's likely chairman. This wasn't surprising, since Inglee and current bank president Richard Ganulin were longtime associates, having formed Huntington Beach-based Liberty National Bank in 1992. Inglee served as chairman of the board of that bank until July 1997, when Liberty National merged with the much larger El Dorado Bank. Less than a year later, Inglee and Ganulin were hard at work opening Pacific Liberty. But after a falling out with bank director Ed Laird (who ended up replacing Inglee on the Huntington Beach planning commission as well), Inglee left Pacific Liberty's inner circle before the bank opened in May 1999.