Free Meal

Statewide investigation started in Poway, nabbed 260 officials
By Ricky Young and Jeff McDonald
Oct. 6, 2014 – 02:52 p.m.

California regulators have cracked down on hundreds of public officials up and down the state who accepted meals, baseball tickets, brownies and other gifts from a bond-finance company and failed to disclose them.

The dinners and other considerations came from Stone & Youngberg, a Bay Area firm that was paid $62.7 million in the past four years for issuing $10.4 billion of public bonds in California.

Many of the agencies issuing the bonds were the ones whose leaders received the meals and failed to disclose them as required by law.

The eight-month investigation by the California Fair Political Practices Commission resulted in more than $18,000 in fines, appearing on a meeting agenda posted today for formal approval next week. The probe began earlier this year in response to a U-T Watchdog report about Poway school officials who repeatedly accepted gifts from the firm and failed to disclose them for years.

Agencies whose leaders also failed to report the firm’s gifts include a water district in Temecula, a housing authority in Fresno and the cities of Ventura and Vista.

Most prevalent were school districts. More than 20 board members and 30 superintendents agreed to fines from the political regulator, from Fallbrook in San Diego County to Norris School District in Bakersfield and the Dixie School District in Marin County.

Stone & Youngberg did not respond to questions about its gift-giving practices.

Bennett Drake, a member of the Rancho California Water District board in Temecula, failed to report two meals in 2012 totaling $155. He said he went to dinner at the Chart House in Monterey and didn’t know the underwriter picked up the tab.

Usually, he said, he doesn’t accept gifts.

“It’s a pain to try to keep track of them all,” he said. “And I don’t want to be beholden to anyone.”

San Marcos Unified School District Superintendent Kevin Holt failed to report a $105 dinner at the Lodge at Pebble Beach in 2011, calling it a clerical error. He said he goes to an administrator’s conference in Monterey every year, and Stone & Youngberg sponsors dinner.

Since 2010, Stone & Youngberg has underwritten $258.5 million for the San Marcos Unified School District and its related financing authority, earning $2.4 million in underwriting fees.

“I can assure you a single meal per year does not influence my decision making,” Holt said.

Indeed, about half of the officials who accepted meals from the bond firm have not done business with the company, according to a Watchdog review of state records. For instance, Fallbrook schools Superintendent Candace Singh is being penalized for failing to report a Stone & Youngberg meal in 2013, and her district does no business with the firm.

But Glenn Byers, assistant treasurer of Los Angeles County, said he sees an overall pattern in the bonds his office processes, in which the firms that buy meals and other considerations for officials are rewarded with business.

“It creates an atmosphere, where the guy says, ‘Hey, you want some Dodgers tickets,’ and guess what? The next time you have to award a contract, you’re picking between the firm that gave you the tickets and the one that didn’t. It’s undue influence by the one that gave the tickets.”

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