Gang Bank

On Oct. 4 at 10:45 p.m., Huntington Beach economic-development director David Biggs sat in front of a packed City Council chamber, extolling the virtues of developer George Argyros' plan to build a towering Wal-Mart store in the city's low-slung Crest View neighborhood. Armed with statistics, a crude Powerpoint presentation and his own enthusiasm, Biggs told the city's council members that Argyros' Wal-Mart would produce new jobs, millions in tax revenue, and hundreds of thousands of dollars for the city's schools.

At stake was a citizens initiative to stop Argyros in his tracks. If approved by voters in March, the measure would rezone the Crest View lot to residential, temporarily block Wal-Mart's efforts to build in the city, and frustrate one of Orange County's most powerful and political developers.

Biggs' presentation was one part in the city's fight to put down the anti-Argyros revolt. Following Biggs' talk, the council voted 4-2 (with one member absent) to place on the same March ballot a competing measure, one that would allow Argyros to build his Wal-Mart.

Neither Biggs nor any other city official revealed to the audience that three of those four council members—as well as Biggs himself—have an undisclosed financial relationship with Argyros in a separate business venture: all are investors in the newly established Pacific Liberty Bank.

Argyros' $100,000 investment in Pacific Liberty came to light last week, along with evidence that some of the bank's other investors and directors are city officials and staff who months before the Oct. 4 vote okayed the Wal-Mart project.

City officials say they have done nothing wrong by failing to disclose their investments in the Argyros-backed bank. In a written opinion, the city attorney's office told one of those officials, City Councilwomen Pam Julien, her investments and subsequent votes on Wal-Mart did not represent a conflict of interest. Shirley Dettloff, Julien's colleague on the council, said she approached city attorney Gail Hutton and was also told the investment was not a problem. But Hutton told the Weekly “no council member has contacted me about the Pacific Liberty Bank issue.”

Ironically, Hutton said she declined repeated invitations to invest in Pacific Liberty because of her concern that it might appear to compromise her own independence. “I was approached by Pacific Liberty Bank, and I declined to [invest],” Hutton said. The reason, she explained, had to do with her experience more than a decade ago in the now-defunct Huntington National Bank. “Among other things, I had previously invested in a bank that was promoted in Huntington Beach, and I felt that this created a lot of difficulties for me to function as city attorney because once in a while, they have a matter coming before the council, and if I have any investment over $1,000, it is necessary for me to abstain and recuse myself. That costs the city money.”

That sort of circumspection seems to have eluded other officials who invested thousands of dollars in the bank, failed to disclose the investments, and remained involved in planning and permitting Argyros' Wal-Mart project. In addition to Biggs, Dettloff and Julien, the list of city officials with shares in Pacific Liberty includes mayor pro-tem David Garofalo and planning commissioners Haydee Tillotson and Ed Laird. Garofalo and Laird also sit on Pacific Liberty's board of directors.

So far, only Biggs seems to be wavering. He says his boss, Huntington Beach city administrator Ray Silver, has asked him about his $2,000 bank investment. “He was concerned about the appearance of a conflict of interest,” said Biggs, who added that he hasn't decided if he will sell his stock.

Alone among the council members, only Julien noted her Pacific Liberty investments in state-mandated personal-disclosure forms for 1998. When contacted by the Weekly, Garofalo, Dettloff, Julien and Biggs all characterized their investments in Pacific Liberty as gestures of support for a “community-based bank.”

“I've done nothing wrong,” said Dettloff. “When I heard rumors [that questions about the bank were being raised], I asked the city attorney if I had done anything inadvertently. I was assured that I didn't.”

Dettloff described her $3,000 investment as “paltry” and said it was “too small” to include in her already voluminous personal-disclosure form. State law requires that elected officials disclose investments greater than $1,000—a threshold exceeded by all the Huntington Beach officials involved.

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