Eye On Modesto

Thoughts and observations about Modesto and Stanislaus County

Archive for the day “October 26, 2011”

Attention Joe Muratore, No Conflict of Interest? That’s NOT Entirely True Is It

We understand how Bee reporter Ken Carlson has a difficult job getting reality past his editors and we truly sympathize. So we contacted the City Attorney Susan Acala Wood through City Clerk Stephanie Lopez to find out what really took place.

Here is the Ms. Wood’s response:

Dear Mr. Drake:
The City Clerk’s Office forwarded your request to me for response.
It’s unfortunate that the newspaper mis-reported the facts, because their botched article has obviously caused your concern.
The actual facts are that once the OIG auditors flagged the Tully Road transaction to City staff, a number of steps which included analyzing the transaction under three separate and applicable conflict of interest statutes: 1) HUD and NSP regulations; 2) The Political Reform Act; and 3) Government Code Section 1090.
In the first one, the City of Modesto found that Councilmember Muratore violated conflict of interest laws under the NSP program and HUD regulations when, as a principal of Benchmark, he participated in the sale and acquisition of the Tully Road property which was purchased by Trinity Ventures through the NSP program. Enforcement action was taken, which included the issuance of a violation notice and a demand for a return of the $62,000.00 commission that Benchmark received. As a result, Councilmember Muratore and Benchmark forfeited the commission (A number of enforcement actions were also taken against Trinity Ventures however Councilmember Muratore is not a principal of Trinity). This enforcement action was pursued in consultation with HUD officials in the regional office in San Francisco. Both HUD and the City await the final audit from OIG to determine if they will require us to take additional action.
In the second one, the FPPC found that Councilmember Muratore violated conflict of interest laws under the California Political Reform Act regarding his vote on two NSP related action items. They issued him a written warning, and set forth reasons why they were declining to assess a fine or penalty against him and considered their enforcement action closed.
Regarding the third, out of an abundance of caution, the Council asked my office to review the Tully Road transaction and determine whether the Councilmember’s involvement implicated Government Code Section 1090. We engaged the law firm of Meyers Nave, and Mr. Richard Rudnansky to assist in this analysis and review. The City paid approximately $2200.00 for this work. The analysis concluded there was no 1090 violation because the transaction was not one that was presented to the Council for action, nor did it require ratification by the Council, and also because the delegation to the CH&CDC, which was the body authorized to give final approve to the loans, occurred prior to Councilmember Muratore being elected to office (so he was not in a position to influence the delegation to the CH&CDC). Accordingly, no additional enforcement action was required under this statute.
That is the statement that the Mayor provided yesterday. If you would like a copy of the statement that was given, just let me or Ms. Lopez know.
I know this is more information than you actually requested. But since you always take care to research into the actual facts, I thought you might appreciate the information.
If I can answer additional questions, please feel free to contact me.
Susana Wood
City Attorney
Here is the official city news release:

Mayor Provides Update Regarding Councilmember Conflict of Interest Issue

Below is the formal statement from Modesto Mayor Jim Ridenour regarding the Councilmember Conflict of Interest issue related to the Neighborhood Stabilization Program (NSP):
I want to take this opportunity to provide an update to the public about the conclusion of the City’s review of the receipt of a real estate sales commission earned by Benchmark Realty, the company co-owned by Councilmember Muratore for the sale of a property that was purchased using NSP funds.
As soon as the City became aware of the Councilmember’s involvement, a number of actions were simultaneously initiated to address the matter:
• To begin with, staff conducted an immediate investigation to verify the facts and to determine the appropriate manner in which to proceed under NSP regulations. This included coordinating with HUD staff. As a result, the City took immediate corrective action to recover the commission
• I requested that the OIG conduct a full audit of the City’s NSP program. The OIG also determined that the involvement by the Councilmember would trigger a more comprehensive audit of the City’s NSP transactions. That review has been ongoing and is expected to conclude in the next 6-7 weeks.
• Benchmark principals were notified of the violation of NSP regulations and were ordered to return the commission to the city. Benchmark immediately responded and returned the funds.
• Councilmember Muratore self-initiated a report to FPPC for determination of whether he had violated conflict of interest laws under the California Political Reform Act. The FPPC responded that he had violated the Political Reform Act and he was given a written warning. They also determined that because Mr. Muratore promptly brought the matter to their attention they would close the case without fine or penalty.
• Finally, the City Council requested from its attorneys a formal review, analysis and opinion as to whether the transaction constituted an impermissible Conflict of interest violation under California Government Code section 1090. The analysis concluded there was no 1090 violation because the transaction was not one that was presented to the Council for action, and the delegation to the CH&CDC, which was the body delegated to approve the loans, occurred prior to Councilmember Muratore being elected to office.
I have personally overseen this process on behalf of the Council, and feel that the City has been diligent in its response to this incident. The City Manager has kept the OIG auditors fully informed of all responses to this matter, and has continued to request HUD’s assistance and review of every step of the enforcement action taken.
We will also continue to wait for the results of the OIG audit and respond to any additional actions they may require of the City.

We want to thank Ms. Woods and Ms. Lopez for their timely response to our queries.

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