Councilmen, Strip Club Lobbyist Found Guilty of Corruption
Monday, July 18, 2005

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A jury found City Councilmen Michael Zucchet and Ralph Inzunza, and strip club lobbyist Lance Malone, guilty of numerous federal criminal charges Monday for their roles in a scheme in which the councilmen accepted clandestine campaign contributions for efforts to relax a "no-touch" rule at adult entertainment clubs.

In a court room thick with tension, a clerk slowly read the verdicts on the 30-plus individual indictments as midday neared. The defendants were each found guilty on various charges of extortion and honest services wire fraud, drawing looks of anger, shock and extreme sadness from an assembled group of family members, supporters and council aides.

Zucchet was to assume the city of San Diego's mayoral duties at a council meeting this afternoon after former Mayor Dick Murphy's resignation became official Friday. A primary election is scheduled to select Murphy's replacement July 26. Zucchet was accompanied to court by the mayor's security detail.

City Attorney Mike Aguirre said in a statement that the councilmen must forfeit their offices when they are sentenced by a court or the court otherwise implements the jury's decision. Sentencing was set for Nov. 9.

Outside the federal courthouse downtown, Inzunza defended his actions.

"I believe I have done nothing wrong," he said.

Michael Pancer, Inzunza's attorney, promises to appeal and Zucchet is expected to do the same.

-- ANDREW DONOHUE, Voice Political Writer

July 19, 2005
2 San Diego Officials Are Found Guilty of Corruption
By ANDREW POLLACK, NY TIMES

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LOS ANGELES, July 18 - San Diego's new acting mayor and another city councilman were found guilty of corruption Monday, throwing the governance of the scandal-plagued city further into turmoil.

A federal jury in San Diego said that Michael Zucchet, the acting mayor, and Ralph Inzunza, the councilman, had taken thousands of dollars in payments from the owner of a strip club who wanted them to repeal an ordinance that prohibited customers from touching naked dancers.

Mr. Zucchet, 35, was to preside over his first City Council meeting Monday afternoon. Instead, he was suspended before the meeting began, as was Mr. Inzunza, also 35.

The verdict leaves the city leaderless at a time when it is reeling from a host of governance problems. The previous mayor, Dick Murphy, left office on Friday, only seven months into a trouble-ridden second term, which put Mr. Zucchet, who had been deputy mayor, in charge.

An election for mayor is scheduled for next Tuesday. But unless a candidate gets 50 percent of the vote - considered unlikely - there will be a runoff election in November.

Michael J. Aguirre, the San Diego city attorney, said the current scandal was "a subset of a much larger problem" of city corruption.

"Although it's very tragic news," Mr. Aguirre said in an interview about the verdict, "it's very good news because the forces of corruption were defeated today."

Federal, state and city authorities are investigating whether the city's leadership committed wrongdoing in overseeing the city's pension fund, which has a deficit estimated at $1.4 billion or more.

Credit agencies have slashed the city's credit ratings or suspended them altogether because audits of the city's finances have not been conducted. That has kept the city from issuing bonds to finance projects like sewage treatment improvements and firehouse construction.

In its meeting Monday, the City Council elected one of its members, Toni Atkins, to preside this week and will elect a mayor pro tem next week.

But the Council is now down to six members. "Having six people presents a real challenge because we need five votes to take any action," said Councilman Scott Peters.

The trial had been under way since early May, and the jury reached its verdict at the start of its fourth day of deliberations.

Prosecutors charged that Mr. Zucchet and Mr. Inzunza had accepted payments from Michael Galardi, owner of the Cheetahs strip club, for their help in repealing the no-touching ordinance. Some of those payments, which totaled more than $30,000, were campaign contributions, and others were cash, prosecutors said.

Mr. Galardi had pleaded guilty and testified for the government. Prosecutors had presented tapes of conversations in which payments were discussed. The plot, they said, involved people posing to be constituents or sending bogus e-mail messages asking for a crackdown on nude clubs, to get the issue onto the Council's agenda.

Lawyers for the two councilmen had argued that their clients were just accepting campaign contributions and meeting with lobbyists. They noted that the City Council never repealed the no-touching ordinance nor was there even a vote.

Both Mr. Zucchet and Mr. Inzunza were convicted of conspiracy to commit wire fraud, wire fraud and extortion, with Mr. Zucchet guilty on 9 counts and Mr. Inzunza on 13. They will remain free until sentencing, scheduled for Nov. 9.

The jury also convicted Lance Malone, a former commissioner of Clark County, Nev., who worked for the strip club owner as a lobbyist and who was called the "bagman" by prosecutors.

Another councilman, Charles Lewis, had also been indicted but he died last August. On Monday the jury acquitted David Cowan, who had been an aide to Mr. Lewis, of making a false statement to the Federal Bureau of Investigation.

Mr. Inzunza, speaking to reporters outside the courthouse after the verdict, maintained his innocence.

"I'm not going anywhere," he said, according to a video on the Web site of The San Diego Union-Tribune. "I'm going to stay as Ralph Inzunza, I'm going to stay in San Diego. My wife and I are going to raise our family here. And I will be back."

His lawyer, Michael Pancer, said in an interview that the verdict "sets a very dangerous precedent, where councilmen who took campaign contributions are then being accused of bribery and extortion because they did something that might have furthered the benefit of the person who made the contribution."

There is no bribery unless there is a specific quid pro quo. Mr. Pancer said.

R. J. Coughlan Jr., Mr. Zucchet's lawyer, made a similar argument.

"Every single thing that he was accused of doing is the kind of stuff that those experts, all knowing the system, said goes on every single day," Mr. Coughlan, apparently referring to experts in city governance, said in a videotaped statement outside the courthouse.

But Mike Nichols, a juror, told television reporters after the verdict: "As a politician, you are going to be accepting contributions. It's a matter of how you accept them that we were concerned with."

Neil Morgan, a former columnist for The San Diego Union-Tribune, said he thought the city's corruption problems stemmed from lack of civic involvement by the public.

"I think we're probably just too comfortable out here to do our civic duty," said Mr. Morgan, who is now senior editor of voiceofsandiego.org, a Web site. But he said the scandals might bring some change.

"There is enough alarm that it will be the beginning of a reform movement," he said in an interview, "but it took total corrupt collapse to really bring the city around."

Neal Matthews contributed reporting from San Diego for this article.