July 3, 2006

Mayor Gonzales indicted, refuses to resign

By Carol Rosen
Staff Writer

Within hours of Mayor Ron Gon-zales’ arrest on charges of bribery, conspiracy and misappropriation of funds pertaining to the Norcal Garbage agreement, members of the City Council were calling for him to step down.

Supervising Deputy District Attorney Julius Finkelstein discusses the indictments levied against Mayor Ron Gonzales, his budget aide Joe Guerra and NorCal Waste Systems at a June 23 press conference. Photo by Diego Abeloos.

While statements flew fast and furious from Councilmembers Chuck Reed, Dave Cortese, Ken Yeager and Vice Mayor Cindy Chavez, the members themselves decided to hold a special meeting on June 28 to decide how to ask the mayor to step down.

Most of the meeting, which Gonzales chaired, was taken up with City Attorney Rick Doyle’s interpretation of state and city law. San Jose’s City Charter, section 405, states “that the council ‘shall be the judge’ of the ‘grounds for forfeiture or loss’ of office of elective city officers, including the mayor.” In addition, Doyle noted that the charter gives no grounds for removal from office, but does grant authority for the council to establish them. Finally, while the council can adopt grounds and clarify the process, Doyle said it’s unlikely that grounds for removal, adopted now, could be applied to conduct occurring prior to such passage.

Doyle also concluded that the council could not remove Gonzales’ budget and policy aide Joe Guerra without violating his rights.

Prior to voting on the motion, about 20 members of the public stood up to comment. Fourteen of the speakers asked the mayor not to step down, while four said he should resign.

Three motions were passed at the meeting. And, while none did so much as “clip the mayor’s wings”, as Reed said, they did show a mostly united council and their desire to work without a “media circus.” Council members looked grim, and there was none of the usual bantering that goes on during a typical session.

The first motion by Vice Mayor Chavez asked Gonzales to step down. Only three voted against it, Gonzales and Council members Madison Nguyen and Forrest Williams. Before the vote was taken, Gonzales reiterated that he would not resign.

The second motion, by District 4 Council member Chuck Reed, directed the city attorney to draft a set of procedures for a hearing to remove the mayor. It also asked Doyle to get copies of the Grand Jury transcript for review to determine if action can be taken to amend the contract to get back the $11.25 million from Norcal Waste Systems.

“We need to establish grounds to taken action under section 405 for the future,” Reed said.

Doyle indicated staff in July—normally a vacation month—will be sufficient to come up with criteria by the August 8 city council meeting.

After significant discussion, the motion passed with Gonzales, Nguyen and Campos voting no.

Doyle noted that in the event of a vacancy, the city council can appoint someone to step in. That person, however, could not be the vice mayor, because that job serves only when the mayor is absent. Council members also discussed the ability to restrict Gonzales’ travel.

Chavez then asked if it would be possible to restrict the mayor’s budget until January 2007. The budget director and city manager said this couldn’t happen. However, the council could come back and amend the current budget in early August.

Chavez’ motion to make the mayor’s calendar and phones and meeting logs accessible to the public was passed again with three—Gonzales, Williams and Councilwoman Judy Chirco—voting no.

Prior to each vote, Gonzales said he would vote no, and that “I consider this a violation of my responsibilities as mayor… and that it sets a dangerous precedent.”

Talking resignation
One of the first to bring up the matter of Gonzales stepping down was Chavez. She and other City Council members were reluctant to discuss the grounds or methods of removing the mayor from office. Early on, council members suggested that if the mayor would not step down, they would take away his budget and reassign his staff, with the exception of Guerra, to other areas of City Hall.

Immediately following announcement of the charges, both Reed and Cortese suggested the mayor step down. Later that afternoon, Chavez and Yeager echoed the call.

“The mayor should resign immediately because he can’t both run the city and mount a defense to the criminal charges against him. It is not up to the council to judge the evidence or the charges against him, but as elected officials we are to be held to a higher standard. The council is responsible for making sure the city is run effectively and we will do that,” Chavez told the Times.

“The mayor of the 10th largest city being indicted, being fingerprinted, being booked and this is a disturbing image. These are very serious charges, and it’s just disconcerting that this has happened to our city,” said Yeager. “Whether or not he’s committed a crime will be determined by a jury, but these are not the standards through which we should judge elected officials.”

“I asked the City Council to remove him last December. I think there are grounds. I think he engaged in a course of deception and concealment and misrepresented [the case] for four years. I think that’s grounds for removal,” said Reed.

Cortese also called for the mayor to resign last December. “I felt strongly, based on reports, investigations and facts, that this was a long-standing pattern of behavior…and I didn’t want the city to have to attempt to conduct business in such an atmosphere.”

“I think the citizens of San Jose need to ask themselves if this is the leadership they want for the next six months. There are big decisions ahead—the Redevelopment Agency’s multimillion dollar budget, the airport expansion, Coyote Valley development, local land use, parkland, etc. Do we trust this mayor and his top aide to play a role in these processes? The lack of ethical standards in the mayor’s office are so contrary to what San Jose is really all about,” Cortese said.

Names
A number of names have been bandied about to take his place. Some have suggested previous mayors such as Susan Hammer and Norm Mineta and while others suggest Yeager should take over, since he’s leaving the council for a Santa Clara County Board Supervisor position at the end of the year.

Reed suggested that District 1 Councilwoman Linda LeZotte step in. “She’s a capable and experienced woman who could do a good job,” he said. Termed off the council at the end of the year, LeZotte’s seat already has been won by Pete Constant who could step in early, Reed said.

On June 26, Cortese asked City Attorney Rick Doyle if the council could “vote to terminate and/or de-fund the position of the Mayor’s Budget and Policy Director, as currently held by Joe Guerra. It is my understanding that this position, although supervised by the Mayor, is funded through Council General and therefore, arguably the legal employer would be the entire Council as would the budget authority.”

On June 23, Reed sent a memo to the mayor and council asking “the city attorney to take legal action to require Norcal to pay back $11.25 million, which Norcal received under an Amendment to the Recycle Plus Contract, which was approved by the council majority on Sept. 21, 2004.”

Meanwhile, Gonzales was alerted to the indictment on Wednesday. He asked to surrender himself and on Thursday morning, he and budget and policy aide Joe Guerra were arrested and released after each posted $50,000 bail at the Santa Clara County Jail.

DA press conference
Supervising Deputy District Attorney Julius Finkelstein delineated the charges at a June 23 press conference. He would not discuss or elaborate on the information the grand jury used to indict Gonzales, Guerra and Norcal Waste Systems, except to note that the six-month investigation included 31 witnesses and 100,000 pages of documents.

During the questioning period, he indicated that no one else would be indicted.

At that time, transcripts from the secret grand jury hearings were still being typed, Finkelstein said. He estimated they would not be available for 10-20 days at which time they would be given to the defendants. They will be available to the public 10 days later, when the defense has had time to go over the material.

During the questioning period, Finkelstein reiterated several times that these were the only indictments that would be made. When questioned whether the case would stand up in court, he said the grand jury felt the evidence is strong enough to convict. “We believe this is a case that should be brought to trial,” he told reporters.

Neither Finkelstein nor Gonzales’ attorney, Allen Ruby, would elaborate on grand jury testimony at any of the press conferences. Questions seeking information about the testimony, including whether any participants invoked the Fifth Amendment, went unanswered.

As for the bribery charge against Gonzales, Finkelstein reiterated throughout the press conference that under California law, the mayor does not have to personally gain anything—it can be an asset, payment or award to a third party—but if the transaction constitutes bribery then it is against the law (see sidebar below for exact charges).

“I think the message indicates that public officials can’t use their office for the benefit of themselves or others,” Finkelstein said at the end of the press conference.

Arraignment
The initial arraignment was set for June 26. The mayor, Guerra and Norcal representatives all appeared at the courthouse. Ruby and the other defense attorneys asked to demur, a process indicating that the defendant believes the charges were either untrue or insufficient for a trial. Because of the demur, all three defendants waived a plea until July 26.

Later that day, Ruby and Gonzales held a press conference at City Hall. Ruby revealed several memos dealing with the Norcal agreement; some dated in 2000, others in 2004.

Ruby took the floor first telling reporters that “ … Cases are decided by evidence. At the end of the day what matters are the facts.” And, he claims, the facts all indicate Gonzales is innocent.

Three items are of prime importance with the garbage contract, Ruby said. Those three requirements are prevailing wages, worker retention and labor peace.

In an early September memo that Ruby showed reporters, a paragraph explained that “Norcal has already initiated discussions with the union representing current [waste] drivers, Teamsters Union Local 350, and has included in their proposal a Memorandum of Understanding between Norcal and Local 350.”

In addition, Ruby notes the indictment also doesn’t say anything about an Oct. 5 complaint filed with the National Labor Relations Board. This states that it’s illegal for the International Longshoreman’s Union Local 6 to represent California Waste System employees, who handle the city’s recycling.

“’By entering into the foregoing agreement with the ILWU Local 6, the Employer is in violation of Section 8(a) of the Act, as well as Section 8 (s) (1). This agreement has been openly publicized and has the immediate effect of restraining and coercing the employees presently performing the work with respect to their representatives,” the complaint stated.

In a letter dated Dec. 8, 2000, attorney Duane Beeson told Teamsters’ Local 350 secretary treasure, Robert Morales, that CWS had a “collective bargaining agreement with a different union (ILSU Local 6), covering the same kind of work in Oakland, Calif. And that it intended to extend that contract to San Jose with respect to the City’s work under the Norcal franchise. “

The letter stated that such a program was “completely illegal; that is, federal labor law prohibits the imposition of a collective bargaining agreement on employees who have not designated the signatory union as their bargaining representative….

“CWS has now agreed,” the letter continued, “to comply with the City’s retention policy, which requires new franchisees to offer employment to the same employees who had been performing the same work for the predecessor franchisee. Local 350 has never been assured, however, that CWS will allow those employees, who are members of Local 350, to select their own union. Thus even if CWS hires Local 350 members, as the City’s job retention policy requires, it would be completely unlawful for CWS to cover those employees with the Local 6 agreement.”

The letter also discusses the city’s labor peace policy in transition arrangements. And, according to Beeson, Local 350 “will not stand by quietly if CWS either declines to employ the employees presently doing the work who are Local 350 members or alternatively hires those employees but attempts to subject them to a collective bargaining agreement with a union they have not elected to represent them.”

More memos
Ruby also presented a Norcal letter dated July 22, 2004 to former City Manager Del Borgsdorf dealing with a request to amend its contract with the city to account for increased labor costs. In addition, Ruby showed a memo from Gonzales, then Vice Mayor Pat Dando and Councilwoman Chavez that noted the background of the amendment with Norcal.

The memo discusses the significant costs savings, but adds that “Council also gave specific direction that RFP respondents were required to provide ‘worker retention’ guarantees to the employees of our pre-existing vendors and to certify that there would be ‘labor peace’ once new vendors took over operations.”

The memo notes although the price rises, the cost per household is $1.39 instead of the $5.27 charge per home from GreenTeam. In addition, the memo notes this establishes a better wage for workers, prevents work stoppage and remains under the costs of competing contractors.

Mayor Ron Gonzales with his wife Guiselle Nunez at a city hall press conference on June 26 following an arraignment hearing at the hall of justice. Photo by Diego Abeloos

This Ruby said, confirms that everyone on the City Council “knew all the way through exactly what was happening. These documents show there is no case.”

Fight to the finish
“I don’t intend to resign, I will complete my term,” Gonzales told reporters at the packed press conference.

“I am innocent and I will do everything possible to beat the charges,” he said.

He claims the circumstances surrounding the case are not a distraction. “I have the ability to be a big city mayor. I can deal with the challenges, and I will continue to work with the council.”

In terms of his budget and policy aide, Guerra, he added, “I think it’s important for the council to recognize the importance of my staff. I have a great staff. We need to complete our work as a team. We’ve always had a team relationship.”

Gonzales claims he discussed the general contract with others. “I solicited meetings with every council member,” he said, but later added that he would have done the process differently with hindsight, and that “I would be more informative about the process, but that doesn’t make me subject to these charges.”

He reiterated that the Norcal contract has saved San Jose citizens $60 million when compared with previous garbage contracts.

Somber mood
The mood in City Hall this week has been somber, subdued, sad and grim, depending on whom you speak with.

“This has been a disappointment for many of us who have dedicated our lives to public service,” said Chavez.

According to Yeager, the situation “is very awkward. You don’t want to pretend the issue doesn’t exist. But we certainly respect the office of the mayor, and it’s not our intent to publicly embarrass him and say anything inappropriate.”

District attorney publicizes charges

On Wednesday June 21, the district attorney swore out a seven-count indictment against Mayor Ron Gonzales, Joseph A. Guerra III (Gonzales’ budget and policy aide) and Norcal Waste Systems. The indictment charges that the three participated in “a secret bribery/fraud scheme whereby Norcal would receive $11.25 million more than it was entitled to under its agreement with the city of San Jose.”

If convicted, Gonzales could spend up to eight years in prison, forfeit his office and be barred from holding public office again. Guerra could receive a five-year, eight-month sentence. The two, along with Norcal, may also be obligated to pay $27,000 per count and be required to make restitution of the $11.25 million plus interest.

Following are the charges:

The first count charges the three defendants with conspiring to cheat and defraud San Jose by false pretences and promises with fraudulent intent not to perform those promises in connection with a Norcal/San Jose pact made in 2000 and the resulting agreement and later amendments to that agreement. The indictment charges 12 overt acts to further the conspiracy.

The second and third counts charge Gonzales with asking for and receiving a bribe. (California law defines a bribe as something of present or future value or advantage, or a promise to give such a thing that is requested or taken with the corrupt intent that the official’s actions will be unlawfully influenced.)

Two other counts, numbers four and seven, charge Gonzales with falsifying memos he submitted to the City Council in connection with the award of the contract to Norcal.

Counts five and six charge the three defendants with conspiring to commit, and committing, the crime of misappropriating public funds through the disbursement of $11.25 million to Norcal.