San Bernardino County officials acknowledged this week that one of the law firms representing them has a legal conflict by virtue of the other governmental entities it represents, but said it was okay for the situation to continue.
In San Bernardino County over the past half century, public officials have involved themselves in a myriad of political, jurisdictional, financial and legal conflicts of interest. In an uncommon number of those, the perpetrators have crossed over the line from a simple conflict into outright criminal acts.
The lion’s share of those conflicts were permitted to proceed unabated, as those involved in the conflicts were among those few who possessed the power to hold the conflicts in check or apply accountability to the situation. Though most of San Bernardino County’s officials caught up in such perfidies would get away with their depredations, occasionally a gesture toward bringing these miscreants to justice was made.
Indeed, in the last 30 years, 45 elected county, city or school district and senior county and city staff officials have been arrested, charged, indicted or convicted of criminal acts or violations of the public trust, with only three of those, former Fontana treasurer Ron Hibble, San Bernardino Police Department Technical Information Systems Manager Joe Kranyac and San Bernardino County District Attorney’s Investigator Tom Dawson able to show that the charges against them were unjustified, and they vindicated themselves in trials. Of the remaining 42, 39 were convicted and three yet maintain their innocence and are yet to stand trial.
Central to an overwhelming number of those cases were out-and-out conflicts of interest. So entangled is the county in these conflicts that any real prospect of sorting out the overlapping of interests of all of the county’s major power players is non-existent, and the vast majority of the conflicts are noted only in the course of being ignored. Occasionally, particularly in those instances where one of those involved in such a conflict finds him or herself at odds with the district attorney either personally or politically, criminal charges may be, and have been, filed against the offending party. Such filings are relatively rare.
This has had a deleterious impact on San Bernardino County’s reputation, such that it is widely perceived that corruption within its governmental structure is pervasive, with gross favoritism being provided to the county’s powerful elite and the higher ranking of its public officials.
Simultaneously, institutional conflicts persist. The government itself, departments or divisions of the government, agencies of the government, private business entities, companies, firms, and law firms find themselves enmeshed in conflicts of multiple sorts, involving circumstances where loyalty to themselves, to their ownership and management or their customers and/or clients is subject to conflict.
This week, the county and its board of supervisors, before man, God and everyone else, succeeded in blowing past everyone an acknowledgment of the intractable state of conflict local government finds itself in.
In response to a report by the county’s top in-house attorney, Jean-Rene Basle, who carries the title of county counsel, made a gesture toward disclosure of the conflict with regard to one such company involved in these conflicts. It is worth noting that Basle, in making the disclosure did not disclose the full range of conflict involving the company, the Santa Monica-based law firm of Stradling Yocca Carlson & Rauth.
In his report, which was also categorized as a “recommendation to the board of supervisors,” and was entitled “Conflicts to Representation and Waivers of Conflicts of Interest,” Basle called upon the board to make “approval of the consents to representation and waiver of potential conflict of interest arising out of ongoing representation of the County of San Bernardino by Stradling Yocca Carlson & Rauth.”
According to Basle, “The county has utilized Stradling Yocca Carlson & Rauth’s services in the structuring, negotiation and drafting of financial assistance and other documents in county financings. Stradling has been asked to represent the City of San Bernardino and the Successor Agency to the Redevelopment Agency of the City of San Bernardino, and the City of Rialto and the Successor Agency to the Redevelopment Agency of the City of Rialto in connection with the negotiation of compensation agreements with various taxing agencies, including the county. If Stradling Yocca Carlson & Rauth represents the City of San Bernardino and the San Bernardino Successor Agency and/or the City of Rialto and the Rialto Successor Agency in the negotiation of the compensation agreements relating to the disposition of real property pursuant to the respective long range property management plans of each of the city successor agencies, actual conflicts of interest will exist with the county. In addition, Stradling Yocca Carlson & Rauth’s representation of all the parties could lead to future potential conflicts of interest. The existence of an actual conflict as well as potential future conflicts requires the informed written consent of all the parties. Approval of this item would authorize consents to representation and waiver of the conflicts of interest arising out of ongoing representation of both the county and City of San Bernardino, San Bernardino Successor Agency, City of Rialto and Rialto Successor Agency by Stradling Yocca Carlson & Rauth.”
The successor agencies referenced in the report are those entities that were created to manage the assets left over after the dissolution of the more than 400 redevelopment agencies that were associated with all of California’s cities following legislation in 2011 that ended municipal redevelopment authority throughout the state. Those successor agencies are supposed to distribute the monetary assets once controlled by those redevelopment agencies to other governmental entities, such as school, water and fire districts, as well as entities within the municipalities such as police departments. Those successor agencies also have governance over non-monetary assets from the redevelopment agencies, such as real estate.
According to Basle, “Under the Rules of Professional Conduct of the State Bar of California (Rule 3-310 (C)), which governs conflict of interest for attorneys, Stradling Yocca Carlson & Rauth must disclose the fact and scope of its representation of the City of San Bernardino, San Bernardino Successor Agency, City of Rialto and Rialto Successor Agency, inform the county of the actual and potential conflicts of interest arising out of its representation of all the entities and must obtain the written consent (regarding the waiver of the potential conflict of interest) of the county to represent the other entities. If the board consents to the waivers of the potential conflicts of interest, it would be allowing Stradling Yocca Carlson & Rauth to represent the other entities and would be waiving its right to seek to disqualify Stradling Yocca Carlson & Rauth from its representation of those other entities, even if the county and the other entities end up in an adverse relationship arising out of Stradling Yocca Carlson & Rauth’s representation of those other entities. The County of San Bernardino Successor Agency to the former Redevelopment Agency of the County of San Bernardino is also being asked for waivers of potential conflicts of interest arising out of Stradling’s representation of the successor agency in financing transactions and the City of San Bernardino, San Bernardino Successor Agency, City of Rialto and Rialto Successor Agency.”
In his report, Basle informed the board, “County counsel has reviewed the consents to representation and waivers of actual and potential conflicts of interest. In addition to county counsel, the county and the county successor agency have independent representation provided by the Goldfarb & Lipman law firm with respect to matters involving dissolution of redevelopment agencies and compensation agreement issues.”
Basle noted, “With the exception of financing matters, by Stradling Yocca Carlson & Rauth has not represented the county or county successor agency on dissolution or compensation issues. The county’s interests would be adequately protected by the independent representation with respect to the compensation agreements. It would be appropriate for the board to approve the consents to representation and waivers of conflicts of interest.”
Curiously, Basle did not give exhaustive disclosure of Stradling Yocca Carlson & Rauth’s involvement in representing governments in San Bernardino County.
Stradling, Yocca, Carlson & Rauth is involved in many other circumstances relating to the county, the county’s cities, their collective former redevelopment agencies or adjuncts, most often, but not exclusively, with regard to the lucrative practice of providing legal services relating to the issuance of bonds.
For example, the county in 2013 signed off on allowing Stradling Yocca Carlson & Rauth to serve as disclosure counsel with regard to the issuance of $9.25 million worth of bonds to provide financing for infrastructure to facilitate the Lytle Creek North residential development project in the Lytle Creek area being undertaken by Lennar Homes. That bonded indebtedness is to be retired by Mello-Roos fees to be borne by the eventual occupants of the homes to be built.
Paul Glassman, is an attorney with Stradling Yocca Carlson & Rauth. He has represented San Bernardino in bankruptcy court throughout its 2012 bankruptcy filing.
In 2013, a citizens group, San Bernardino Residents For Responsible Government, sought to recall all seven of San Bernardino’s city council members, its mayor and city attorney. That effort eventually reduced down to an attempt to dislodge city attorney Jim Penman, councilwoman Wendy McCammack, Councilman John Valdivia and Councilman Chas Kelley. Straddling Yocca Carlson & Rauth at a cost of nearly $30,000, filed court papers on behalf of the city that maintained that the city could not comply with a writ of mandate filed with the Superior Court to force the city clerk to process the recall petitions and qualify the recall vote for the ballot because of the late filing of certain recall-related documents and delays in the submission of the petitions.
Basle’s report makes no indication of what many consider to be a serious conflict of interest involving Stradling Yocca Carlson & Rauth in the City of Upland that came to light earlier this year. In June, the Upland City Council allowed Stradling Yocca Carlson & Rauth to serve in the dual capacities of bond counsel and disclosure counsel with regard to a bond issuing arrangement that will transfer the responsibility for financing infrastructure at the Harvest At Upland project from the developer and current landowners to the future residents of that subdivision.
Stradling Yocca Carlson & Rauth was the special counsel for the City of Upland which recommended the bond issuance to facilitate the Harvest At Upland project, such that by its own legal advice to the city, it churned for itself further legal fees, so-called triple dipping.
In the public documents considered by the Upland City Council prior to its June 27, 2016 vote relating to the issuance of $22 million in bonds to defray the cost of building infrastructure at the Harvest project, the law firm of Stradling Yocca Carlson & Rauth is not mentioned. The Harvest project is being undertaken by the Lewis Operating Company. It was only after the June 27 meeting had concluded and the vote was already taken that it was revealed Stradling Yocca Carlson & Rauth had a multiple capacity role in the matter. That revelation was not provided until media inquiries were made into whether the law firm would serve in the bond counsel and disclosure counsel roles.
Stradling Yocca Carlson & Rauth had been retained by city staff to serve as special counsel on the matter at the recommendation of Marshall Linn of the firm Urban Futures. Linn is Upland’s financial adviser.
It is unknown how many other instances of Stradling Yocca Carlson & Rauth’s involvement in local government there are and how many of those have gone undisclosed.