Night Drop

Photo by Jack GouldThese days, the political waters Dave Garofalo treads register approximately the same fecal count as the waves lapping at the shores of Surf City.

A nine-month investigation into the Huntington Beach city councilman by the Orange County district attorney's office has included a dramatic April 12 raid on his home, two offices and several banks.

But last Friday's decision by District Attorney Tony Rackauckas to pack in his office's investigation of another Republican, wealthy kingmaker George Argyros, was a reminder that it wasn't so long ago that Garofalo used to, kind of, almost, be a player.

Well, sorta. An unseemly relationship among Garofalo; little Pacific Liberty Bank; Argyros; and Argyros' huge development company, Arnel, was uncovered two years ago during a Weekly investigation into the controversial construction of a Wal-Mart store in the middle of a residential neighborhood. That was long before DA prosecutors announced early this year they had found thousands of incidents in which Arnel property-management company used a "systematic ripoff" scheme to overcharge apartment tenants for repairs, shortchange them on deposit refunds and bill them for fictitious expenses.

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The DA filed suit against Arnel in February, only to withdraw it when Rackauckas—Argyros' friend and political ally—found out about it. On April 27, after unsuccessfully attempting to negotiate a settlement with one of his most important political supporters, Rackauckas referred the Argyros/ Arnel case to the state attorney general —"to ensure the perception of fairness."

But Garofalo, perhaps clinging to the fiction that his fate still matters to those in the Republican power circle, didn't add to the perception of the DA's fairness when he assessed the purpose of the DA's raids in an interview with the Huntington Beach Wave. "The entire event had to happen in order for the DA to prove to his constituency that this investigation was thorough," Garofalo said. "This event is going to help bring closure and vindication soon."

The district attorney continues to scrutinize Garofalo's numerous conflict-of-interest charges, but allegations concerning his relationship with Argyros remain unaddressed.

And they are considerable. In the spring of 1999, Argyros invested $100,000 in start-up capital in Pacific Liberty Bank, where Garofalo is a bank director. That investment came as the Huntington Beach City Council was considering a controversial proposal for Arnel to build a Wal-Mart on a residential school site. On April 5, 1999, Garofalo voted with the council majority to approve the Wal-Mart deal. The next day—six days late—he submitted his state-mandated disclosure of his personal finances but did not mention his own $50,000 investment ($35,000 of it in borrowed money) in Pacific Liberty. Almost two months later, on May 31, Garofalo amended the form along with a curious, hand-written note, explaining that he had failed to disclose the Pacific Liberty investment because he was confused.

In December 1999, when a citizens' petition forced a voter referendum on the Wal-Mart plan, Garofalo led the fight for the development—at the same time that Rackauckas showed up at City Hall to cheer Garofalo's garish induction as mayor of Huntington Beach and Argyros helped throw a gala fund-raiser in honor of Garofalo at the Waterfront Hilton, raising about $10,000.

Suspicious of the Argyros-Garofalo relationship, Huntington Beach resident Susie Newman had filed complaints months before with the Huntington Beach police, the Orange County district attorney's office and the Orange County grand jury, along with the state Fair Political Practices Commission (FPPC).

That's when the Garofalo scandal got spectacularly weird. Grand jury foreman Phil Inglee—an investor in Pacific Liberty—rejected Newman's complaint. So did the district attorney's office. The FPPC bungled its investigation by looking at the wrong economic-interest statements.

Newman resubmitted a complaint to the grand jury in July 2000, and new foreman Joseph Gatlin promised an investigation. Newman has heard nothing further.

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