By Gustavo Arellano
By R. Scott Moxley
By Alfonso Delgado
By Courtney Hamilton
By Joel Beers
By Peter Maguire
By Charles Lam
By Charles Lam
Photo by Jack GouldAfter 18 months of scrutiny, the Orange County district attorney is preparing to present the grand jury with a criminal case against Huntington Beach City Councilman Dave Garofalo by the end of the month. Sources familiar with the probe—including witnesses questioned by DA investigators—told the Weekly that charges are likely to include multiple felonies and misdemeanors, ranging from political conflict of interest to fraud. Those offenses carry possible punishments such as imprisonment, fines and lifetime exclusion from public office.
DA investigators "have nailed down pretty much what the search warrant sets forth," said one source, speaking on condition of anonymity. "They're in the final stages of getting it prepared for the grand jury."
The DA's search warrant was used on April 12 during a crack-of-dawn sweep through records stored at the homes, offices and banks of Garofalo, his family members and his business partner Ed Laird, a former Huntington Beach planning commissioner and prolific political donor. Prompted by a yearlong investigation by the Weekly, the DA sought evidence to determine whether Garofalo abused his position as a city official to assist advertisers in his several publications.
Advertisers in Garofalo's publications—including The Local News, the city visitors' guide and the chamber of commerce directory—frequently had business before the City Council. In the search warrant, investigators said they had identified 42 occasions in which a debtor-creditor relationship existed between Garofalo and someone with a business interest before the council. Only twice did Garofalo vote against projects brought forward by his advertisers.
"The investigation began as a question of conflict of interest," said another source, who also demanded anonymity, "but it has also turned into a prosecution for fraud."
Garofalo insists he sold his publishing interests in January 1998 to Laird's company, Coatings Resources, for $220,000, thereby avoiding some of the most serious charges. But investigators found evidence suggesting the sale was a sham. "The few records received from the business for the year 1999 show David Garofalo paying his house payments, car payments, credit cards, his former political campaign chairman, and family members with business funds that were allegedly sold to Coatings Resources/Air Quality Consultants," the search warrant declared.
The question of who owned the publishing business raises the matter of who owes the taxes on that business. The difficulty of tracking down and untangling the tax issues apparently slowed the investigation considerably, according to the second anonymous source, who indicated that the DA's office would go forward without the tax information for now, possibly amending its charges later as that information becomes available. "They realize they are running out of time—Garofalo's council term ends in a year," said a source. "They want this to reach a conclusion before he leaves office."
The DA previously declined to investigate Garofalo in November 1999. District Attorney Tony Rackauckas has been one of Garofalo's political allies, celebrating with Garofalo in Huntington Beach City Hall when the councilman rotated into the mayor's seat in December 1999.
As a result, the slow pace of this probe has attracted some suspicion and criticism. However, several people close to the inquiry insist that investigators have not been fettered by politics, backing up the assertions of DA spokeswoman Tori Richards. "No one can compare this case to any other in the office," Richards said in June, "because I don't think we've ever undertaken a case where we had to go back through hundreds of votes over a several-year time period. Not to mention dealing with financial and business records. We're talking about hundreds of thousands of pages."
Presenting the evidence for criminal indictments against Garofalo behind the closed doors of the grand jury—in a series of hearings that may take about three weeks—is seen as another way of expediting the process. "If [the DA] filed the charges, it would drag out too long," said a source. "Garofalo and his attorney could file continuance after continuance."
Of course, the grand jury has already rejected one investigation of Garofalo. In 1999, when Huntington Beach housewife Susie Newman alerted the grand jury of her suspicions of Garofalo, the jury's then-foreman, Phil Inglee, sent her a letter saying the jury had decided not to investigate. However, Inglee was also an investor in Pacific Liberty Bank, where Garofalo sits on the board of directors. A jury member later told the Weekly that Newman's letter had never been presented to the rest of the grand jury. Inglee had simply rejected it himself.
A new grand jury with a new foreman has been seated since then. Additionally, this time, the grand jury would not be investigating Garofalo itself, only considering evidence and witnesses called by the DA. Then it would decide whether there is probable cause for prosecution. If so, the case would be assigned to a court, and the trial would soon be on.
One other scenario could wrap up the matter even faster. The DA is expected to provide Garofalo and his attorney, Al Stokke, with a preview of its case before presenting it to the grand jury. Garofalo would then have an opportunity to reach a settlement rather than endure possible prosecution in open court.