San Diego: A Tale of Two Cities Part 1 - the Strippergate scandal

Everything is going well in San Diego. Look at all the cranes, all the developments, all the new condos, parks, restaurants, the new ball park. Everything is going poorly in San Diego. The city's broke. The new library probably won't get built. Three former councilmen were convicted in the so-called "strippergate" scandal. San Diego can't get its audits for the last few years certified, and, therefore, can't borrow money in the bond market. There is a pension crisis. Members of the pension board are under inditement. There is a notorious DROP program whereby city employees can line their pockets at taxpayers' expense. The Chargers were given a ticket guarantee whereby the city (taxpayers) would pay for any unsold tickets. That was renegotiated finally, but now the city can't afford to keep the Chargers and is shopping them around to other cities within the county. The list goes on and on.

How can this be in "America's Finest City?" Simple. All the amazing development and redevelopment is overseen by the Center City Development Corporation (CCDC). They have plenty of money since they get a percentage of the increased taxes due to redevelopment. For instance, if an old rundown warehouse is replaced by a 30 story condo, the value of that property increases and hence the inflow of property taxes increases, a percentage of which goes to the CCDC. All the problems mentioned above are overseen by the traditional city government presided over by the mayor and city council made up of councilmen representing several city districts. City government oversees the police, the fire department, parks and recreation, transportation etc., a bureaucracy made up of municipal employees all of which have benefits such as a traditional pension plan.

In this first of a series, we'll explore the "strippergate" scandal which resulted in the Federal criminal inditements of 3 city councilmen. Two were convicted. One died before trial thus escaping conviction. One was eventually exonerated in a surprising event because a judge overturned the jury verdict. Michael Zucchet was elected to the city council in November of 2002. Zucchet represented the downtown district of the city of San Diego and was a hard worker and a policy wonk, a personable young man on the way up and helping to shape the new, transformed San Diego, making sure developers lived up to their promises such as the Park in the Park at the San Diego Padres baseball stadium. Elected to city council in February of 2001 representing District 8 was Ralph Inzunza from a prominent south bay political family. Councilman Charles Lewis from District 4 was also indited as part of the conspiracy

It all started when the city council passed the no-touch rule in 2000 which outlawed lap dancing and cut into club profits. Michael Galardi, owner of Cheetah's in both San Diego and Las Vegas, was determined to get it repealed. Enlisting the aid of lobbyist Lance Malone, they started contacting city councilmen Lewis, Inzunza and Zucchet. Meanwhile, the Feds had started investigating Galardi in Las Vegas and continued their investigation into San Diego. Tony Montagna, a paid FBI informant who worked as a bouncer at Cheetah's, wore a wire, and the Feds ended up with 100,000 wiretaps recording conversations among the principal players. Anther character in the saga was John D'Intino who had worked his way up to manager at Cheetah's.

At trial, the  prosecution argued that Inzunza and Zucchet accepted money from club owner Galardi (through his bagman, Malone) in a scheme to repeal the no-touch law at his Kearny Mesa club. Galardi wanted to return to the old standard, in which police vice officers had to decide what constituted "lewd and lascivious" behavior on the part of dancers. That standard was more difficult to define and enforce according to the police. At trial San Diego police Capt. Robert Kanaski, who was a lieutenant in the vice department during part of the corruption investigation, testified that the no-touch law was an effective tool for the vice squad.

Also working for the FBI was San Diego police officer Russ Bristol who was being paid off by Galardi for informing him about vice inspections so he could go into "no-touch" mode. Montagna had ingratiated himself to Galardi and D'Intino by telling them that he had a friend on the police force who was willing to inform them when a vice raid was being planned - in return for a pay-off, of course. So Galardi was paying both Montagna and Bristol who in reality were both working for the FBI, and, of course, Bristol was there to tell the councilmen that the police didn't like the no-touch rule. This seems a bit duplicitous on the Feds' part like they're setting up Inzunza and Zucchet who had to believe Bristol was for real. They didn't know him as the corrupt cop that Galardi and D'Intino knew him as.

On May 16, 2003 the FBI raided San Diego City Hall and three strip clubs owned by Michael Galardi in San Diego and Las Vegas, including Cheetahs in Kearny Mesa. On August 28 Inzunza, Lewis, Zucchet, Galardi, Malone and D'Intino are charged with wire fraud and conspiracy to commit wire fraud. Galardi, Malone and D'Intino are charged with interstate travel in aid of racketeering. Galardi pleads guilty to wire fraud conspiracy and admits he paid officials so they would vote in his favor. He agrees to testify against the other defendants and remains free on $250,000 bond, although he faces a five-year sentence. D'Intino also worked out a plea agreement and was incarcerated in the downtown jail.

Zucchet and Inzunza said that any monies received from Galardi were legitimate campaign contributions, and there seems to be no evidence to the contrary.  As for being lobbied by the adult entertainment industry, it's presumably a legal business with the right to lobby. Presumably politicians have a right to be lobbied even if it's by sleazy characters like Galardi and Malone. Oftentimes politicians who are lobbied receive campaign contributions from those who are lobbying them. Business as usual. But did any of them receive cash under the table or other favors such as free tickets in Vegas or, God forbid, free lap dances? There were taped statements to the effect that Lewis did. In fact Lewis solicited Malone on tape. Had he lived, he would have been found guilty as sin.

Zucchet was the only one who had a legitimate interest in the no-touch rule as a policy issue since he represented a district that was "blighted" by such establishments. In Zucchet's mind he might have considered working out some kind of deal to exchange repealing no-touch in return for moving certain clubs out of the Sports Arena area which Zucchet would have liked to see cleaned up. Zucchet comes across on the tapes as somewhat skeptical of the whole business and tells them he is going to interview the police to see if they really would like to have no-touch repealed as Malone and Galardi maintain. Of course, Galardi and Malone try to steer him to the (in their mind) corrupt cop who will support their story, but Zucchet goes to someone else who tells him this is nonsense. After that Zucchet seems to lose interest in the issue.

Meanwhile Inzunza is acting like a cheerleader for the project. His enthusiasm for repealing no-touch is curious since, according to the players and clubs involved, it didn't even have anything to do with his own district. He suggests sending the other councilmen some phony emails to try to drum up interest in putting the issue on the council agenda. At one point they even bring in a plant to the council meeting to bring up the issue in a sort of roundabout way by suggesting that the law actually be strengthened. Tom Waddell, a Galardi strip club employee in Las Vegas, posed as a "concerned citizen" from San Diego and asked members of a City Council committee to consider tightening restrictions on adult entertainment clubs. The proposed crackdown was a ruse meant to distract from the real goal: abolishing the no-touch law. So Waddell's whole purpose was just to bring the subject up. Later, supposedly, some sort of a compromise would be worked out in which the adult entertainment industry would have to give up something or appear to give up something in return for repealing no-touch. The whole scenario has hints of the Keystone cops. Zucchet's involvement at this point could just as well have been motivated by his desire to rid his district of some of the clubs he considered unsavory. If repealing no-touch was the price of it, so be it. His goal was urban redevelopment. However, at trial, it is in Galardi's interest to testify that Zucchet and Inzunza accepted cash under the table in order to save his own skin since that is District Attorney Carol Lam's case, and he has to demonstrate cooperation with the Federal authorities as part of his plea bargain.

Continued here.