By Mark Gutglueck
Evidence that San Bernardino Mayor John Valdivia is on the take has mounted in recent weeks to the point that there appears to be little prospect for the continuation of his once-seemingly bright political career.
The only question at present is the degree to which revelations with regard to his bribetaking and the quid pro quo arrangements he involved himself in will envelope other powerful political personages and public officials, including exposing efforts by his associates, members of his political machine, campaign backers, members of the city council as well as the city attorney and the police department hierarchy to protect him from prosecution.
Into the mix are indicators that Valdivia’s erratic behavior by which his questionable or illegal dealings will suddenly loom into stark relief is an outgrowth of his struggle with narcotic use.
One of the worst kept secrets at what now suffices for San Bernardino City Hall is that Valdivia’s advocacy on an individual’s or company’s behalf can be had for a price. Accounts abound relating to Valdivia taking money to influence votes or actions on city contracts, city franchises, or project approvals which are effectuated in the city’s backrooms or as result of a vote of the city council. Those accounts vary as to whether the money is ultimately reported as a donation to his electioneering fund, as income to his consulting business or whether it goes unreported altogether.
Somewhat ironically, as mayor, Valdivia under normal circumstances is not empowered to vote with the council on routine matters that come before that panel over which he serves as the presiding officer. Nevertheless, in the first nine months after he was elevated as mayor he had de facto control of the council’s ruling coalition and until the beginning of this year it was yet widely assumed that the majority of the council would automatically bend to his will. To those now paying attention to the council’s dynamics, it is clear that his reliable allies among the seven-member decision-making body has dwindled to two, virtually ensuring that with regard to most issues that play out before the council, his influence has been strikingly attenuated.
Still the same, following his November 2018 election as mayor and in the immediate aftermath of his swearing in to that office on December 19, 2018, his political stock had risen astronomically over what it had been during the six previous years of his political career, while he was serving as city councilman in San Bernardino’s Third Ward. As the newly installed mayor he appeared to have the support of four of the council’s six members at that point – First District Councilman Ted Sanchez, who had been elected in his maiden run for political office in November 2018, with Valdivia’s backing; Second District Councilwoman Sandra Ibarra, who like Sanchez had struck gold in her first effort at capturing political office in November 2018, likewise with Valdivia’s support; Fifth District Councilman Henry Nickel, with whom Valdivia had developed a political affinity over the five years they had been council colleagues; and Sixth Ward Councilwoman Bessine Richard, who had been elected in a hard-fought runoff election that carried over into 2016 following a tough four-way race in 2015 in which none of the candidates had managed to poll a majority of the vote. Richard was able to score a substantive victory to obtain her current berth on the council in no small measure on the strength of Valdivia’s advice and direction as well as the monetary support from his own coterie of supporters he had vectored her way.
To step up to the mayor’s post after his victory over incumbent Mayor Carey Davis in 2018, Valdivia was obliged to resign from his previous position on the council, that being councilman in the Third District, a position to which he had last been elected in 2015 prior to the 2016 charter change which moved San Bernardino elections from odd to even years. To fill the gap his resignation created, the city held a special election in May 2019. In that contest, Valdivia threw his backing to Juan Figueroa, who, assisted by Valdivia’s political consultant Chris Jones and the substantial amount of money Valdivia managed to scare up from his own political backers, cruised to an easy victory in that race. Thereupon, Valdivia had what was widely assumed to be an absolute lock on the city council, with only Fourth District Councilman Fred Shorett and Seventh District Councilman Jim Mulvihill crosswise of his agenda.
With his political machine firmly entrenched within the city’s governing structure, Valdivia was empowered to make policy and municipal authority at virtually every level in San Bernardino bend to his will.
Traditionally in Southern California, politicians on the make have achieved advancement by trading their authority for cash. These elected officials will lend the power of their office to whoever can make use of it, be they a service provider seeking a franchise conferred by the government, a vendor looking to sell a governmental entity a service or goods, or deep-pocketed developers or land interests hoping to prosper through the suspension of a land use use regulation or zoning restrictions or infrastructure building requirements or some other standard. In return, the beneficiary makes an investment in the politician or his political career in the crude form of outright bribes or kickbacks or the more refined form of legal but unseemly political donations.
Valdivia’s ability to enrich himself through the sale of his office was attenuated by San Bernardino’s more than two-decade-running economic death spiral that began with the shuttering of Norton Air Force Base in 1994. The declension in property values that accompanied the mass exodus of military personnel from the city, the loss of a whole class of jobs held by a strata of San Bernardino’s civilian residents, the decrement of federal money from the community, the wholesale emptying of existing buildings once filled with thriving commercial establishments and businesses, and the accompanying blight has virtually eliminated the need for further development or any prospect of any semblance of economic growth in the area. The resultant steep downturn in tax revenue to the city has led, in turn, to the decay of basic infrastructure. For Valdivia, there were so few entities in the city willing to pursue development projects that there was no opportunity to shake them down for bribes or payoffs.
In only a limited number of areas was the economy in San Bernardino not stagnating. The most promising province for growth was that of the nascent cannabis industry. In 2016, the statewide passage of Proposition 64, the Adult Use of Marijuana Act, had legalized marijuana use for its intoxicative effect. The same year Measure O had been placed on the ballot in San Bernardino, calling for allowing the retail sale of marijuana and its derivatives and byproducts, both for medical and recreational purposes. Between 2016 and 2018, there was, despite the voter mandates statewide and within the city to liberalize marijuana policy, substantial resistance to doing so as then-Mayor Davis, as well as councilmen Shorett, Mulvihill and Henry Nickel were philosophically opposed to the marijuanification of the city, and Davis, Shorett and Mulvihill were so culturally tone deaf that they were virtually incapable of distinguishing marijuana from other types of what had been for generations considered street drugs such as heroin, cocaine, amphetamines, and barbiturates. Meanwhile, Randy Welty, who had bankrolled getting Measure O on the ballot and passed so he could open a marijuana dispensary himself, sued the city so he could proceed at once with that operation. Perhaps for valid reasons or perhaps as part of a calculated strategy of dragging the city’s feet for as long as it could to delay the inevitable licensing and permitting of legalized marijuana, the lawsuit Welty brought against the city languished in the courts, providing the city with a legal rational for delaying the creation of a permitting and licensing process for such operations while the issues under litigation were being hashed out. Meanwhile, illicit dispensaries flourished throughout the 215,000 population 61.95-square mile city, as the police department made desultory efforts to raid those establishments, shutting them down, whereupon most of those bootleg operators would simply relocate to a hole-in-the-wall elsewhere in the city to persist in their black-market entrepreneurship. In August 2017, the city came to terms with Welty, granting him a license. It then moved on to the next round of delay, undertaking to formulate an ordinance that was based upon Measure O and the refinements of city marijuana policy that the city claimed were the byproduct of the litigation with Welty. In February 2018, the San Bernardino City Council passed an ordinance of its own creation allowing a limited number of marijuana-related commercial businesses in the city to function on limited duration permits that were to be renewed or discontinued annually, dependent upon whether their owners and operators complied with state and local law.
The ordinance allowed up to 17 cannabis-based businesses within the city limits, and was intended to supersede Measure O. The ordinance set a ratio of one cannabis-oriented business per 12,500 residents, which translates into a maximum of 17 marijuana concerns. The city thereafter began to accept applications for the licenses.
As the Davis administration was drawing to a close, a flawed and imperfect permitting/licensing process had begun, but had yet to reach its denouement, with the only permit that was issued being that for Welty’s operation.
Even before Valdivia took up the mayoral gavel, an event transpired which betrayed the anti-marijuana platitudes Valdivia had mouthed earlier in his political career were mere posturing, and that behind the scenes he was cutting deals with those trafficking in the once-absolutely illegal substance in return for money, either of the sort that would fill his campaign coffer or his own pockets.
Just eight days after his victory over incumbent Mayor Carey Davis and more than a month before he was installed as mayor, Valdivia on November 14, 2018 met with David Li, the owner of a property at 1435 North Waterman Avenue where an illicit but highly visible marijuana dispensary was located.
Li had been arrested and charged with two felonies after the dispensary, run by one of his renters, was raided thrice by the San Bernardino Police Department over the previous nine months. As a commercial real estate developer, Li had asked Valdivia to meet with him, other real estate developers interested in bringing affordable housing to the city and two groups exploring opening legal dispensaries in San Bernardino. Li believed Valdivia had enough pull to facilitate the efforts of those gathered, but it turned out Valdivia said he would be unable to act on their collective behalf, slyly leaving open the possibility he might be motivated to do something if enough silver crossed his palm. Following that “meet-and-greet,” as Valdivia referred to it, and the discussion of investment opportunities ended, less than an hour after the mayor-elect departed, a masked gunman came into the commercial space at the 1435 North Waterman Avenue location that was being renovated, and demanded money. A man there who was interested in transforming the property into a farmers market attempted to flee, at which point he was shot in the leg. The robber then made off with $25,000 in cash he took from Li.
Concerned about what might ensue after the police department initiated an investigation in which it might learn of his presence there and from which point things might careen out of control, Valdivia himself called the police department, arranging to make his statement to the department’s acting assistant police chief, David Green, who Valdivia believed would prove to be far more discreet and sensitive to political nuance in handling an investigation in which the soon-to-be-mayor’s name would surface than might a detective assigned to the matter. Valdivia insisted that he was in no way involved in the robbery that took place after his departure from the scene.
Magically, Valdivia dodged that bullet, as Green kept under wraps that the mayor-elect was present at the scene of what had once been an illegal operation while meeting with two groups of would-be cannabis entrepreneurs, as well as a man accused by the city’s police department of felonious activity.
Ultimately, Li would be acquitted of the charges against him.
Having sidestepped that scandal, Valdivia came into office, ready to take advantage of the wide-open opportunity for him to profiteer, exploiting his authority and the not-fully gestated licensing regime the city was struggling to put together. The Valdivia administration had inherited from Davis’s a host of marijuana/cannabis-related business licensing and permitting criteria, ones that were by no means perfect, formulated as they were under the authority of a political leader – Davis – to whom the drug culture was as foreign as the most obscure dialect of the Koro language, and which was at least in part designed to make obtaining such a license both difficult and expensive. Valdivia did not squander what was presented to him. Just two days more than two months after he became mayor, on February 21, 2019, the city council signed off on providing 16 permits to run marijuana/cannabis-related operations to 15 companies from among the 39 applications from 38 applicants for licenses. When the city council was pressed on what, precisely, had informed its decision to provide the permits to the 15 entities that were selected, the question was deflected with the assertion that the decision followed from the a staff recommendation. When staff was questioned, it was asserted that the selection process had been handled in accordance with an analysis of the applications carried out by the city’s consultant, HdL. HdL proved virtually unapproachable when inquiries were made with regard to its recommendations.
Empire Connect, Pure Dispensaries, Have a Heart, JIVA, and PTRE Management were given retail licenses. All five, curiously, were located in San Bernardino’s Third Ward at the extreme south end of the city, the political subdivision where Valdivia had been councilman. Equally notable was that four of the five microbusiness licenses went to businesses located within the Third Ward. A microbusiness under California law pertains to a license which allows a licensee to engage in the cultivation of cannabis on an area less than 10,000 square feet and to act as a licensed distributor, manufacturer of cannabis products and a retailer. In order to hold a microbusiness license, a licensee must engage in at least three of the four listed commercial cannabis activities. San Bernardino’s microbusinesses were Orange Show Cultivators, which was to engage in cultivation, manufacturing and distribution; SOCA Farms, involving retailing, cultivation and distribution; Central Avenue Nursery, a cultivator, retailer and distributor; and Nibble This, which was to entail retailing, manufacturing and distribution. Nibble This was also provided with a second permit to open a retailing, manufacturing and distribution operation at a location in the Sixth Ward, in the northwestern corner of the city.
The simple cultivation permits that were granted were more evenly distributed geographically, with Accessible Options set to grow in the southeastern First Ward; 14 Four and GWC Real Estate Services given agricultural clearance in the Third Ward; and Organtix Orchards to raise the herb in the Sixth Ward.
AM-PM Management, located in the centrally-positioned Second Ward, was the recipient of a manufacturing permit and Blunt Brothers, a distributor, was given a permit to operate its warehouse and dispatch office in the Third Ward.
Those 16 operations run by 15 entities joined Welty as those with an entitlement to set up marijuana/cannabis-related businesses in the city. The permits were a prerequisite to, but distinct from, licensing. Each operation would need to get a state license and continue to comply with the standards the city had set. In granting the permits, the city council had essentially certified that the businesses as proposed were in compliance with the municipal code, the city’s general plan and all other applicable city regulations.
While the city council’s action, no doubt, pleased the 15 companies that were winners in the permit sweepstakes, there were 23 applicants who were left on the outside looking in. That led to a hard examination of the entities that had gotten the permits.
Subsequent events would demonstrate that Organtix Orchards, AM-PM Mgmt. Inc., Orange Show Cultivators, Blunt Brothers, Accessible Options and Nibble This LLC were in violation of the municipal code or general plan in at least one respect and in some cases on multiple grounds. Moreover, it was determined, in at least a handful of the 23 cases where licensing was denied, those applicants met the city’s criteria.
After the permits were granted, Valdivia, without any explanation as to why, began to absent himself from the council dais when issues relating to cannabis/marijuana commercial licensing came before the council. Until December 2019, the meetings at such times were previously and currently officiated over by Councilwoman Richard, who was then the city’s designated mayor pro tem. After Councilman Sanchez was designated mayor pro tem in December 2019, he thereafter would chair meetings in Valdivia’s absence.
Without any clarification being forthcoming as to why it was that Valdivia was distancing himself from any action by the council relating to marijuana/cannabis-related businesses, there followed reports that, first, Mayor Valdivia was serving as a consultant to the owners of marijuana/cannabis-related business applicants in their efforts to obtain permits and licensing for their operations and, second, that Valdivia himself has a financial interest in a cannabis-related enterprise or cannabis-related enterprises.
At the same time, there were whispers about town that HdL, upon whose advice the council had separated the 38 applicants for cannabis-related business licenses into 15 haves and 23 have-nots, was in some fashion accepting retainers on the side from applicants, and that the city’s licensing process had in this way been compromised.
Ultimately, eight of those 23 applicants, SB Pharma Holdings, Inc. doing business as The Row House; Ashe Society SB, LLC; EEL Holdings, Inc., LLC; Washington, LLC; KP Investment Group, LLC; ECS Labs, Inc.; Luke LLC; and RZNHEAD, sued the city over their failure to obtain licensing.
Independent of those lawsuits, discontent among a large number of the entrepreneurs who were competing for those marijuana/cannabis-related business permits came to light. Information now coming available as a consequence of the lawsuits in many respects confirms or reinforces what was previously revealed by those who were aced out in the permit/licensing evaluation process. A picture emerges of Valdivia representing to those seeking permits that in exchange for money – be it donations to his electioneering fund or to his consulting company, AAdvantage Comm or directly into his pocket, that he would intercede on their behalf to ensure they obtained a permit.
Valdivia’s was an elaborate scheme, one into which was built three layers of protection, which insulated him from potential prosecution or political mishap. The first line of separation or insulation was that Valdivia would not be in the position of actually voting on the granting of those licenses. As mayor in San Bernardino, Valdivia was not empowered to vote under normal conditions. Only in the event of a tie could he cast a vote. His other direct influence on a matter before the council was that he had veto power, but only in cases of a 4-to-3 or 3-to-2 vote on an item. Thus, Valdivia was angling to accomplish his goals by proxy, through having the council, over whom he held sway, approve the list of applicants he favored.
There is evidence to indicate that Valdivia was able to execute, at least partially, on his game plan. There are also indications that in at least a handful of cases he failed to delivery on what he promised. This was in some measure attributable to Valdivia having overbooked the guarantees of permits. On February 21, 2019, there had been an upward limitation on the number of permits to be handed around – 16. What is evident is that Valdivia had made commitments to more than half of the 38 applicants who were in the hunt for for those permits.
Failed applicants have told the Sentinel that in the months and weeks before the council vote on February 21, 2019, Valdivia, either as the mayor-elect or mayor, had offered those seeking permits assurances that marijuana/cannabis-related business permits and licenses would be forthcoming for those who would endow him, his company or his campaign coffers with money. It was clear from the context of these reports the Sentinel has received that these were outright quid pro quos.
Those accounts are corroborated by others not involved in the application process who said that at social, governmental and political functions, when Valdivia encountered anyone who expressed an interest in opening a marijuana-based or cannabis-based business or even inquired about the city’s policy with regard to such operations, which for generations had been illegal in San Bernardino as well as elsewhere in San Bernardino County and California, that as mayor he was the person to work with if the party was interested in exploring the commercial potential of growing or selling marijuana in San Bernardino.
Don Smith, who had worked on Valdivia’s mayoral campaign in 2018 and then in 2019 went to work in Valdivia’s office as one of his legislative field assistants, has since filed a claim, supported by sworn affidavits, against the city and Valdivia, alleging he was mistreated by Valdivia while employed with the city. Smith’s claim states, “Valdivia was soliciting marijuana dispensary owners for contributions and told several of them “If you want to do business in San Bernardino, I am the guy to talk to.”
A more explicit account of Valdivia shaking down permit applicants was provided by Victor Munoz, who last month made a sworn declaration relating to his experience in dealing with Valdivia in his efforts to obtain permitting/licensing for a marijuana based business while Valdivia was yet a councilman and after he became mayor. “I was introduced to Mayor John Valdivia by a mutual friend around 2017 for the purpose of obtaining a marijuana retail license within the City of San Bernardino,” Munoz’s declaration states. “It was explained to me by Valdivia that in order to get my license, the system was set up like a lottery point system and I had to pay for extra points to better my chances. Valdivia guaranteed me a license as long as I did what he told me to do and I donated to his campaign and to his personal needs. Based on Valdivia’s representation, I leased a large 16-acre commercial lot for the purpose of the retail marijuana license. Thereafter, I met up with Valdivia a few times for coffee or lunch to discuss the license and business plans. Valdivia always had ways of indirectly collecting funds so he would not incriminate himself.” According to Munoz, on the day of the deadline for permit applications to be filed with the city, “Valdivia called me on my mobile phone and told me he needed by help and support and needed me to deposit money into his campaign fund. Based on the request by Valdivia, I wired $2,500 to Valdivia’s campaign fund through his website. Nevertheless, I ultimately lost my bid for the city license and found out that most of the licenses went to Valdivia’s family and friends.”
Shortly thereafter, Munoz confronted Valdivia about what had occurred, only to be rebuked with a vulgar insult belittling his masculinity.
Valdivia’s second layer of insulation consisted of his having neutralized the police department, and removing it as a factor that might interfere in his relationships with any of the would-be marijuana/cannabis entrepreneurs who were willing to pay to play in the “lottery” for licensing, as Valdivia put it. Under California law, an elected official is not precluded from voting on or participating in a decision relating to a political donor if the donation came with no strings attached. If either side – the politician or the donor – makes the donation conditional upon a past, current or future act of the official, a legal line is crossed, making that a quid pro quo arrangement, such that the donation is considered a de facto quid pro quo, an illegal inducement, a bribe or kickback. In multiple instances, the Sentinel is informed by those who were seeking permits and licensing, Valdivia made explicit representations that the city would provide permits and/or licenses to those who provided him with money. The police department, while in receipt of such reports, never conducted an effective inquiry into those reports nor examined evidence to support them. While in the course of the police department carrying out its normal and valid duties, illicit and unlicensed marijuana parlors and dispensaries were routinely shut down in the city, action which redounded to at least the potential benefit of the companies vying for licensing from the city. At the same time, the police department showed a pattern of steering clear of those who were engaging with Valdivia illicitly in the securing of city licenses. The Sentinel received an unverified report of one instance in which one of the companies that had succeeded in getting a permit but had yet to secure licensing was operating outside of the permitting process at a different location in the city than was specified in the permit. That company was not subjected to police department enforcement action, by virtue of protection extended to the company through Valdivia, the Sentinel was told.
In 2019, after the city council had settled on which companies would get the 16 marijuana/cannabis-related business operating permits, there was a push on at City Hall to up the pay of the police department’s top administrators. Even after acting Police Chief Eric McBride was given an automatic annual 3.5 percent raise in August 2019 that took his annual salary to $255,963.80, city administrators persisted with a proposal to confer on McBride and acting Assistant Police Chief David Green further raises. On November 6, that initiative had been solidified to add another $23,160 to McBride’s $255,960 pay before benefits, zooming his salary to $279,120 per year, and to increase Green’s $234,264 annual salary before benefits by $20,640 to $254,904, and was brought before the city council for a vote. With the council majority reasoning that the city’s financial circumstance did not permit the city to be making such payroll increase commitments, the motion to give McBride and Green those raises failed, 2-to-4, with council members Fred Shorett, Jim Mulvihill, Sandra Ibarra and Juan Figueroa in opposition and councilmen Ted Sanchez and Henry Nickel in support. In January, in one of the last acts of the city council before Valdivia found himself enveloped in a sexual harassment scandal that appears to have permanently fractured the ruling coalition on the council he once led, increases identical to what had previously been proposed, entailing adding $23,160 to McBride’s $255,960 salary to bring it to $279,120 per year before benefits and to increase Green’s $234,264 annual salary before benefits by $20,640 to $254,904, were set before the council again. Green was the member of the department to whom then-Mayor-elect John Valdivia had turned to for help on November 14, 2018 after he had become entangled in circumstances surrounding the hold-up and shooting at what had formerly been an illicit marijuana dispensary located at 1435 North Waterman Avenue. The vote taken that day to undo the November 6, 2019 vote and approve the raises for McBride and Green, done on 5-to-2 margin with councilmen Mulvihill and Fred Shorett opposed, was the last known instance of the Valdivia-led ruling coalition on the council, consisting of council members Sanchez, Ibarra, Figueroa, Nickel and Richard, holding together.
A third layer of insulation that Valdivia has been able to rely upon was that provided by the law firm Best Best & Krieger, which acts in the capacity of San Bernardino City Attorney. Two of the firm’s members are closely affiliated with the City of San Bernardino. Thomas Rice is the titular city attorney, though he rarely is publicly seen in that role. Rather, Sonia Carvalho, who is designated deputy city attorney, attends virtually all of the city council meetings and serves as the city’s primary legal adviser. Another lawyer formerly with Best Best & Krieger, Daniel Shimell, served as special counsel to the city in defending it against the eight lawsuits brought against it by the companies that applied for marijuana/cannabis-related business permits and were denied them in what they now maintain was a highly flawed selection process tainted by favoritism and graft. In making blanket denials of the allegations in those lawsuits, Shimell was obliged to ignore anything that might suggest the city had acted inappropriately. Thus he could admit no discourse relating to the mayor’s dishonesty. Shimell has since been replaced as San Bernardino’s special counsel with regard to the suits challenging the city’s marijuana/cannabis-related business permitting and licensing process by another Best Best & Krieger lawyer, Christopher Moffitt.
In their capacities, Carvalho and Shimell were exposed to multiple indications that graft has permeated the city’s permitting process, and that Valdivia was a key actor in such activity. In this regard, the performance of HdL, the firm that the city had contracted with to assist in the evaluation of the marijuana/cannabis-related business permits, fell under withering scrutiny. During the first wave, then the second wave and into the third wave of criticism leveled at the city council over its approval of the 16 permits on February 21, 2019, the council members sought to deflect the burgeoning discomfiture of the applicants toward them and allay the wider public perception of something amiss or crooked in the selection process by claiming they were merely deferring to the recommendations made by HdL. HdL and its representatives, however, were less than straightforward in spelling out what criteria had been used in making the evaluations or the scorecards that were kept in the evaluation process. As time progressed, notes were traded between those applicants who had been denied licenses, lawsuits over the matter were filed and more and more information about what had occurred became public. Inconsistencies and a lack of uniformity in the evaluation process were evident and the degree to which the suspension of the city’s standards had occurred grew evident. While some applicants were called in for or afforded personal contact with the evaluators, some were not. A principle the city had layered into the selection criteria was that those companies proposing to utilize their permitting and licensing to engage in cannabis-related research or product derivation that carried with it the potential, prospect or proven capability of the therapeutic value of cannabis were to be given priority over proposals that involved cultivation, warehousing, packaging wholesale or retail sales of the product intended to be used for its intoxicative effect. What occurred, however, was the precise opposite, in which operations that were designed to be the most profitable were favored over others that did not possess as strong of a wholesale or retail component. An analysis of those companies selected indicated that a major factor in the success of the applicants vis-à-vis those that were not successful had been their willingness to coordinate with Valdivia beforehand or during an early stage of the application and evaluation process. HdL fell under suspicion, with word spreading that some of the applicants had secured the company’s services as a consultant. Best Best & Krieger failed to react with alacrity to or act at all upon reports that HdL and Valdivia had been compromised in the city permitting process by money conveyed to them by some of the applicants. Soon, it was being bruited about the community that some of those applicants had likewise retained Best Best & Krieger to represent them, the suggestion being that this explained the disparities in the standards that the city was applying in the cannabis business permitting process. That rumor perpetuated itself, prompting Carvalho to state last week, “Best Best & Krieger, Daniel Shimell, Thomas Rice and Sonia Carvalho categorically deny any allegations that we have facilitated bribes, that we have ever represented any single individual or company applying for a cannabis permit in the City [of San Bernardino] or that we have in any way facilitated any type of conflict of interest.”
HdL and its representatives have consistently made themselves unavailable for discussion of the factors that went into the company’s recommendations to the city on which permit applicants should be accepted. Nor would the company discuss whether Valdivia had any input on the selection process, whether he had interfered in the evaluation process by arranging for certain applicants to be provided with interviews relating to their applications or whether the input Valdivia had provided was a factor in the company’s evaluation of the applicants.
As 2019 progressed, the shortcomings in HdL’s analysis were becoming more and more obvious to a wider and wider circle of city residents, such that standing by that company became untenable for the city council. Relatively quietly, in a move timed to coincide with the Christmas season during which the public’s focus on municipal issues is traditionally attenuated, the council in December ended its contractual relationship HdL for its evaluation of cannabis-related business license applications and other related services and recommendations, electing to give that assignment to SCI. In his motion to switch the city contract over to SCI, Councilman Ted Sanchez suggested the city move beyond “HdL’s colorful history.” Instead of that transition being effectuated on a timely basis, however, over the next six months while a number of loose ends relating to the permitting process were being dealt with and some of those companies were yet endeavoring to perfect their licensing, HdL remained as the city’s consultant. This fueled yet further suspicion that some order of collusion to favor the companies that had shown generosity to Valdivia was yet in play. Last week, the city council at last finalized the transition from HdL to SCI through a special act known as a “clean-up item,” with city officials explaining that what was referred to as an “execution error” was the reason that the contract with HdL was extended another half year.
Of relevance is that Valdivia, either on his own or with the guidance of someone else or others, for the most part has exhibited a degree of discipline in carrying off his depredations so that he does not give himself away as engaging in a running series of violations of the public trust. Nevertheless, on occasion he has slipped up. It is as a consequence and in the aftermath of those mistakes that the apparent bribetaking he is involved in leaps into stark focus. What some of those situations and some of those close to or otherwise involved with him suggest is that he is an intermittent drug user whose periodic episodes of intoxication explain his erratic behavior.
In the vast majority of his official public appearances, such as at city council meetings, hearings and workshops, Valdivia has for the most part come across as the model of even-temperedness and probity, as articulate and disciplined, and capable of maintaining his equanimity in the face of provocations. There have been a few occasions, however, where he evinces what can perhaps best be described as an atypical extreme impatience and petulance, sometimes involving relatively minor things. Moreover, outside of his high profile public appearances, those close to him have described him as slipping into a state of obvious intoxication. Mirna Cisneros, who worked in his office as a citizen relations specialist; Karen Cervantes, who worked as his personal assistant; and Don Smith, Valdivia’s legislative field representative, all recounted occasions during which the mayor became severely intoxicated.
Cisneros said she had received phone calls during which Valdivia’s state of intoxication was apparent, and that in any event he admitted while talking to her that he was drunk.
According to Cervantes, Valdivia in less formal settings was consuming alcohol himself and pressing upon others alcoholic beverages, against their wishes. Cervantes described other occasions when Valdivia evinced unreasonable impatience, anger out of proportion to the circumstance and going into an unaccountable rage on others.
Smith recollected numerous times when Valdivia was drinking heavily and became “extremely intoxicated.” In such circumstances, Smith said, Valdivia exhibited poor judgment and a lack of caution. On one occasion, Smith said, “Even though he was visibly intoxicated, Valdivia got in his car and drove himself home.”
The Sentinel has been provided with numerous accounts of Valdivia’s presence at fundraisers for himself and others, during which he reached a state of inebriation. At one of his fundraisers, the Sentinel was informed, while in the presence of a number of actual or potential political donors, Valdivia openly referenced while talking to a donor about having voted in favor of a lucrative deal involving that particular donor’s company. Unknown was whether the indiscreet remark was a result of Valdivia’s state of intoxication or whether he was trying to signal to the others present that he was willing to return favors to anyone who would back him in his political ambition.
A member of the city council, agreeing to speak to the Sentinel only upon an assurance of anonymity, said there were “convincing” signs that Valdivia’s use of intoxicants went beyond alcohol, including classic symptomology indicating Valdivia was using some sort of stimulant, most likely cocaine or methamphetamine.
A former city official whose tenure at City Hall included more than five years while both were in constant contact with one another, related that Valdivia made no secret of his having access to prescription pain medication.
In his sworn declaration, Munoz spoke of rendezvousing with Valdivia at a “dive bar” in Irvine, some 50 miles distant from San Bernardino and Valdivia’s usual haunts, and that prior to the meet-up there, which Valdivia had called for and during which he attempted to shake him down for more money, Valdivia insisted that he come “alone and with no one else.” When Valdivia arrived, Munoz said, the mayor “appeared to be under the influence of cocaine” and gripped by an accompanying paranoia to the point that Valdivia “accused an unknown customer at the bar that was sitting on the corner of spying on him.”
In 2018, while Valdivia, who is a Republican, was seeking the mayoralty in San Bernardino, he had constant interaction with Bill Essayli, another Republican who in 2018 was vying for the California Assembly in the 60th District, which lies entirely within Riverside County, but contiguous with San Bernardino County. Ultimately, Essayli would narrowly lose that election to Sabrina Cervantes, a Democrat. But prior to that, Valdivia and Essayli, two suede-shoed Republicans out in the political trenches in places where Democrats seriously outnumber members of their own party, hit it off. Valdivia, who was doing extremely well in raising money for his mayoral campaign, transferred some of his funds to Essayli’s campaign to assist him.
After he was situated in office, Valdivia hired Essayli, a lawyer, as his chief of staff. Essayli put on a valiant effort in helping Valdivia take charge of the city, even though a charter reform measure that had been passed by San Bernardino’s voters in 2016 had limited the administrative authority that had resided with mayor pursuant to the city charter that had been in place for 111 years beginning in 1905. Essayli remained as chief of staff through the first six months of 2019, and was in place when Valdivia tightened his grip on the city council with the May 2019 special election to choose his successor as Third District councilman, when Valdivia’s handpicked candidate for the post, Juan Figueroa, emerged victorious.
There were reports, however, of clashes between the headstrong Valdivia and the equally-driven and aggressive Essayli, including what city employees said were shouting matches between the two that could be heard through the closed door of Valdivia’s office.
Essayli departed in July 2019 to return to his law practice.
A political insider told the Sentinel that despite a friendly familiarity between the two men as a result of the 2018 election and their involvement with the Republican Party, they did not actually know each other well when Valdivia hired Essayli. As they began working together in earnest in early 2019 and grew into a cohesive and intimate working team, Essayli was both impressed by Valdivia’s glib political talent but simultaneously taken aback by some of the things he witnessed, the Sentinel was informed. Formerly an assistant U.S. Attorney and deputy district attorney in Riverside County, the straight-laced Essayli, was troubled by the nonchalance with which Valdivia would put the arm on individuals with business before the city, touching them for political donations. And Essayli was not insensitive, based on his experience as a prosecutor, to the signs of drug use. The April 2019 death of Mike Spence, a major figure in Inland Empire Republican Party politics who had descended into the abyss of methamphetamine addiction, had chastened many in the GOP. With Valdivia on what appeared to be a similar trajectory, Essayli decided it was best that he cut ties with him.
When the Sentinel reached Essayli this morning to ask him about Valdivia and the issues that had led to his departure, he said, “I’m not interested in commenting on anything in San Bernardino.”
Valdivia presided over the February 21, 2019 special hearing of the city council to award the permits, but relatively shortly thereafter initiated a practice of absenting himself from the council dais when an issue relating to the marijuana/cannabis-based business licensing came before the council, leaving the proceedings at that point to be officiated over by the then-mayor pro tem, Councilwoman Bessine Richard. In the aftermath of Richard being succeeded by Councilman Sanchez as mayor pro tem, the meetings were and have been conducted by Sanchez in Valdivia’s absence. At such times, Valdivia would precipitously leave without any public explanation as to why. Generally, after the issue relating to cannabis was concluded, Valdivia would return to his position and resume his role as the council’s leader. This was widely interpreted as a sign that Valdivia had some order of a conflict of interest with regard to the city’s marijuana and cannabis issues.
Among those applicants the council had favored with its set of decisions on February 21, 2019 was Nibble This, LLC, which is owned by Kater Bilow and Raquel Origel. Indeed, the council’s accommodation of Nibble This was conspicuous in that the company was given two permits for two separate locations, twice what any of the other successful applicants had achieved. This alone had raised red flags early, as 23 other applicants had been bypassed entirely. A strict requirement of both permitting and licensing in San Bernardino was that the applicant had to have an established physical location to operate out of, meaning it had outright ownership or a lease of the property shown as the location on the permit application. One of the so-called microbusiness permits Nibble was given was for an operation at 4130 West Hallmark Parkway. On November 7, 2019, Nibble This submitted a request for a zoning verification letter for an alternate location at 390 North H Street. On November 18, 2019, Nibble This was issued an approved zoning verification letter for 390 North H Street. On November 19, 2019, Nibble This submitted a commercial cannabis business application, 19-0002, seeking a change in location from 4130 West Hallmark Parkway to 390 North H Street. In the process it was revealed that Nibble This had never secured or otherwise had possession of or the right to occupy the property at 4130 West Hallmark Parkway. This brought into question how it was that Nibble This had obtained the cannabis microbusiness permit it has in the first place. This touched off an effort at the staff level well below that of city manager to rescind the permit that Nibble This had. When word that midlevel staff was seeking to enforce the city’s regulations in such a way that would reverse the provision of one of the permits and pending licenses granted to Nibble This reached the city council and Valdivia, there were convulsions in the backrooms of the city. After the issue with regard to Nibble This was put on the council’s agenda on two occasions and then postponed, it came up for a hearing on February 19. Valdivia was aware that Councilman Sanchez was opposed to granting Nibble This a change in location from 4130 West Hallmark to 390 North H Street, and he recognized that were he to recuse himself and not officiate when the matter was presented to the council that Sanchez might use his authority as the mayor pro tem to conduct that portion of the meeting to sway the outcome against granting the location change. Without explanation, Valdivia broke from his pattern of leaving the dais during matters relating to the city’s marijuana/cannabis policy that night. In a narrow 4-to3 vote, the council granted Nibble This the location change.
The Sentinel inquired with Best Best & Krieger with regard to the issue of the mayor recusing himself and surrendering the meeting gavel to the mayor pro tem on most of the occasions when issues relating to the city’s commercial marijuana/cannabis activity come before the council, whether there was a requirement or tradition of those recusing themselves from participating in the governmental decision-making process giving an explanation of the grounds for their declining to take part, as is commonly done in other jurisdictions; and whether a conflict on Valdivia’s part could be imputed from his practice of leaving the dais when such issues arise. Best Best & Krieger did not respond, nor did it explain the inconsistency in Valdivia recusing himself on most marijuana/cannabis-related business permitting decisions and his participation in the Nibble This relocation matter.
Indeed, Best Best & Krieger appears to be paralyzed by the entire circumstance relating to Valdivia and the legal conundrums he represents to the city and the law firm. The city is now in the position of fighting off four active claims against the city by current or former city employees who maintain that they were maltreated while working directly for Valdivia out of the mayor’s office, which included him making unwanted sexual advances toward the three of those who are women.
Previously, the city found itself besieged by SB Pharma Holdings, Inc. doing business as The Row House; Ashe Society SB, LLC; EEL Holdings, Inc., LLC; Washington, LLC; KP Investment Group, LLC; ECS Labs, Inc.; Luke LLC; and RZNHEAD, all of whom sued the city over its marijuana/cannabis-related business permitting and licensing processes. Daniel Shimell, then of Best Best & Krieger, was serving as special counsel for the city in response to any challenges of its permitting process. Initially, Shimell issued and filed standard boilerplate denials of what the first plaintiff, Washington, LLC, was alleging. But as the number of suits against the city mounted and the facts being alleged registered with him and the court, it grew clear to Shimell that this was not some garden variety contract dispute or land use case with which he had some previous experience handling. Rather, Valdivia and his activity, including the promises he had made to many, kept to some and abrogated with others, all in exchange for campaign cash or money, loomed large. That the city did not abide by its own standards and codes in handing out the permits, that some of those granted permits did not meet the criteria and that virtually all of those who were suing the city had met the city’s criteria but had been denied licenses under the city’s overriding pay-for-play ethos was unhinging him. Increasingly, he begged off from having to immerse himself in the issues the case entailed and bearing the burden of having to, essentially, construct a defense of a permitting and licensing process in which the central criteria was an applicant’s willingness to bribe the mayor. In response, Best, Best & Krieger detailed another member of the firm, Christopher Moffitt, who had slightly more experience in the ethically slippery world or government decision-making, to spot him. It was while Shimell and Moffitt were working on constructing a plan to divert the court’s attention from Valdivia’s shady dealings late this winter and early this spring that the claims from the four former San Bernardino city employees underscoring Valdivia’s character traits began playing out in headlines across San Bernardino County. At that point, Shimell pulled the plug and left Best Best & Krieger for another firm, Buchalter Nemer.
Moffitt is now looking to shoulder the burden that Shimell has abandoned. Having had something of a respite during the COVID-19 crisis during which most litigation has been suspended, Moffitt and the rest of the Best Best & Krieger legal team representing San Bernardino are putting their bets on a strategy of forging a global settlement with all eight plaintiffs, whose cases are being being heard by San Bernardino County Superior Court Judge David Cohn. The plan, the Sentinel is given to understand, is that the city council will revisit the ordinance it previously passed and the standards that were set limiting the number of marijuana/cannabis-related establishments in the city to 17. As it now stands, in addition to Welty’s Captain Jacks’s marijuana emporium which has been legally in place since 2017, two of the 16 businesses given permits on February 21, 2019 are now fully licensed and operating, one is at the end stage of construction and two are yet being constructed, and seven are at various stages along in the plan check process. Thus four of the 16 applicants granted licenses have made little or no progress toward actuating their proposals, are seeking capital to proceed but have not so far succeeded, or are currently looking to sell their permit to another entity. A key step in arriving at a settlement of the eight lawsuits will be to give the four businesses that have not progressed toward licensing or an opening a firm deadline to do so, declaring them dead in the water as of that date and rescinding their permits. Thereupon the council will consider and adopt a staff recommendation that it rewrite the city’s existing ordinance pertaining to commercial cannabis operations that provides for a ratio of one marijuana/cannabis-oriented business per 12,500 residents, which translates into a maximum of 17 marijuana concerns, and instead put into its place one that will allow for one such business for every 10,000 population. At that point there will be room in the city for the three current operating businesses, the three nearly constructed businesses, the seven businesses now being subjected to plan check review and the eight businesses suing the city. One potential wrinkle in that approach would be the not-very-likely prospect that Judge Cohn would refuse to condone the settlement. A slightly-more-realistic sticking point is the chance that one or more of the plaintiffs, sensing it or they could get more because of the strength of the evidence it or they possess showing San Bernardino’s highest official is up to his shoulders in graft, might insist on taking the matter to trial.
Perhaps because any public documentation of Valdivia’s bribetaking would obliterate the chance of the city pursuing a settlement with the eight plaintiffs, Best Best & Krieger, serving in its capacity as the city’s legal authority that should be dedicated to keeping city officials on the up and up, has been put in the somewhat awkward position of avoiding the near occasion of coming into contact with any information or indication relating to Valdivia’s bribetaking.
Last week, after providing the Sentinel with the statement asserting that Best Best & Krieger and its attorneys were not representing any of the entities who have sought or are seeking permits for a marijuana/cannabis-related business operation in San Bernardino and the firm was not engaged in facilitating any conflicts of interest, Deputy City Attorney Sonia Carvalho said she would field any further questions relating to the controversy revolving around Mayor Valdivia and the reports of his bribetaking in a follow-up phone call after she tended to a pressing matter. Thereafter, however, Carvalho steadfastly refused to engage with the Sentinel and did not respond to 14 separate emails, text messages and phone calls in which those questions were posed or alluded to.
Munoz said he too had been spurned by Carvalho when he offered to provide her with evidence he possessed demonstrating that Valdivia was soliciting bribes. In his sworn declaration, Munoz said he attended the April 3, 2019 San Bernardino City Council meeting, at which a sizable representation of those applicants for marijuana/cannabis-related business licenses who had been turned down had weighed in with objections to the city’s February 21 action. According to Munoz’s affidavit, when Councilman Fred
Shorett asserted the licensing procedure was proper, he stood up and verbally disputed that, making reference to Valdivia having asked him for money. As he was walking out from the meeting, which was still in progress, Munoz said, he was followed into the hallway by Carvalho and acting Police Chief Eric McBride. “Carvalho told me I could not be making such statements unless I had proof,” Munoz’s declaration states. “I offered to show her the text messages [of his exchange with Valdivia], but she refused to see them.” Near the three hour and 52 minute and 4 second time stamp of the video of the April 3, 2019 council meeting, Munoz’s remarks can be heard. Shortly thereafter at the three hour 52 minute and 45 second mark, while Shorett was still speaking, he noted that Carvalho had left the room. The city clerk then explained that Carvalho had gone into the hallway to talk to “the guy in audience,” a reference to Munoz.
Munoz’s sworn declaration represents a thorny issue for the city; for Valdivia; for Councilman Juan Figueroa, who is now one of Valdivia’s only two remaining allies on the council, as Ibarra, Sanchez and Nickel have abandoned him at this point; for a long list of Valdivia supporters, among whom there are many who have invested heavily in his political career; for the police chief and assistant police chief whose ascendancies were and are tied to Valdivia’s; and for Best Best and Krieger.
The declaration relates a second incident of Valdivia soliciting a bribe from him than the first one related earlier in the affidavit. On March 4, 2019, according to the affidavit, the same day Munoz said Valdivia had arranged to meet him in a bar in Irvine and showed up under the influence of cocaine, “Valdivia then proceeded to tell me we were all a bunch of ‘whining bitches’ because we did not want to wait our turn for licenses. I told Valdivia that he ‘fucked up’ because I did everything Valdivia asked me to, but he never kept his promise. Instead, Valdivia gave licenses to people that were not even zoned for retail sales of marijuana. Valdivia then asked me for more money to get my license and at that point he brought in and introduced to me [soon-to-become] Council Member Juan Figueroa. Valdivia said everything will go through Figueroa, and that it was the only way I was going to get my license.”
Munoz’s declaration continues, “Valdivia then asked me for more money and funding in the presence of Juan Figueroa if I wanted to get my license. I got angry and told Valdivia and Figueroa I was not giving them any more money.”
That provoked Valdivia, according to Munoz’s declaration. “Valdivia told me I was ‘cut off’ and ‘done,’ and that he was not helping me with anything anymore. Valdivia got up and said, ‘Fuck you. I don’t need this shit.’ After that meeting with Valdivia and Figueroa, I was blacklisted from several of the other council members and could not contact them.”
Last week, at the June 3 San Bernardino City Council meeting which was conducted remotely on a video and audio hook up among the council members in a forum from which the public was excluded because of the coronavirus precautions that were being taken, Councilman Fred Shorett read a written statement from Treasure Ortiz. Ortiz referenced Munoz’s declaration without mentioning him by name, saying that the accusations in the affidavit delineated “a pay-to-play scheme” and that Valdivia and Figueroa were “requesting illegal payments.” She said that Valdivia’s consulting business in which he represented interests in the cannabis industry represented a conflict of interest. She said neither Valdivia nor Figueroa should participate in any discussions or decision-making with regard to cannabis-involved businesses in San Bernardino.
After Shorett concluded his reading of Ortiz’s comments, Valdivia said, “A lot of those allegations are untrue, but I respect Dr. Ortiz and her infinite wisdom and observations.”
Referencing the California Department of Cannabis Control Code of Regulations, the Sentinel attempted to explore with Carvalho whether Valdivia’s business interests in cannabis-based operations might necessitate his resignation or removal from office. One section of that code appears to outright prohibit an elected official in California from getting involved in the cannabis business or marijuana trade.
Under those regulations, § 5005 bears the subheading “Personnel Prohibited from Holding Licenses.” Thereafter § 5005 states, “(a) A license authorized by the Act and issued by the Bureau may not be held by, or issued to, any person holding office in, or employed by, any agency of the State of California or any of its political subdivisions when the duties of such person have to do with the enforcement of the Act or any other penal provisions of law of this State prohibiting or regulating the sale, use, possession, transportation, distribution, testing, manufacturing, or cultivation of cannabis goods.”
In questions posed to San Bernardino City Attorney Thomas Rice, Ms. Carvalho & Shimell, the Sentinel asked if Best Best & Krieger had indeed determined whether Mayor Valdivia is the proprietor of a cannabis consulting firm and whether § 5005 of the California Department of Cannabis Control’s regulations prohibits Valdivia from involving himself as a consultant to an individual seeking a commercial marijuana/cannabis license generally, whether or not that license being sought was issued by the City of San Bernardino.
Neither Rice, Carvalho nor Shimell responded to the question.
The Sentinel further asked if California Government Code § 1090 prohibits Valdivia from involving himself as a consultant to an individual seeking a commercial marijuana/cannabis license from the City of San Bernardino. That inquiry garnered no response.
No one with Best Best & Krieger was prepared to address the substantial gaps in the financial interest disclosure documents that Valdivia, like all elected officials in California, is required to file. Known as the California Form 700, the document is supposed to list the sources of income directly to a public official. In a clever use of sleight of hand, Valdivia lists his business, AAdvantage Comm LLC, for which he gives “consulting” as the general description of the business, without specifying whence AAdvantage Comm draws its income. On the document he indicates an annual income of between $10,001 and $100,000 into AAdvntage Comm LLC, but does not disclose from whom the money originated.
It is of note that in 2015, while Valdivia was yet a councilman and during the bidding process for the city’s trash franchise, corporate officials with one of the competitors, Athens Services, reported Valdivia solicited a $10,000 donation to his campaign fund. When Athens declined, Valdivia opposed awarding the contract to Athens. Valdivia’s former legislative field representative, Don Smith, has stated in a sworn affidavit that he was present in 2018 when Valdivia was handed an envelope full of cash by Danny Alcarez, who holds one of the franchises for tow service with the City of San Bernardino. Smith characterized the money provided to Valdivia as a bribe made in exchange for Valdivia maintaining the status quo with regard to the city’s towing franchises.
Questions emailed to Councilman Figueroa elicited no response.
In response to the Sentinel’s questions to him, Mayor Valdivia stated, “I have noticed that you target minority elected officials in the City of San Bernardino while conspicuously avoiding the Anglo elected officials in our city from similar attacks. To my mind, you are clearly demonstrating a racist approach that has no place in legitimate journalism.”
Accordingly, Valdivia said, “I will not dignify your racist attacks with any further response.”
