January 20, 2005

San Jose Councilman Terry Gregory resigns from office

Santa Clara County District Attorney’s Office files criminal charges against beleaguered public official

By Sheila Sanchez
Staff Writer

Embattled San Jose Councilman Terry Gregory resigned from office Tuesday as the Santa Clara County District Attorney filed 11 misdemeanor counts against him for failing to report eight gifts valued at $1,296, one loan in the amount of $4,000 and using his position to help a former girlfriend get a rental discount on an apartment.

Terry Gregory is the first councilman to resign since 1978, when David Runyon resigned after two run-ins with police. In 1994, Councilwoman Kathy Cole was recalled from office after making racially insensitive remarks in public. Photo by Sheila Sanchez

“After careful thought and consultation with my family, very close friends and many supporters, I am standing here today to tell you sadly that effective today, I resign from my seat on the San Jose City Council and that in agreement with the district attorney I will plead no contest to several misdemeanor charges,” Gregory said during a morning press conference at City Hall Jan. 18.

The agreement with the D.A.’s office spared Gregory jail time for the misdemeanors in exchange for the no-contest pleas to the charges. Gregory, however, may be placed on probation, ordered to perform community service and to pay various fines and fees as well as restitution as determined by the court. The maximum penalty for each of the misdemeanor offenses is six months in the county jail and a fine of up to $10,000, said Santa Clara Supervising Deputy District Attorney Julius Finkelstein in a press release.

“This action deeply saddens me, knowing that I have let down the families of District 7, my friends, my family, my staff and the hundreds of working people who invested their energy, countless hours away from their families and contributed their hard earned dollars to get me elected. To all of them I owe profound gratitude and even greater apologies,” he added.

According to the D.A.’s office, Gregory was supposed to have disclosed the $4,000 loan received in 2003 from his friend Susan Sandy, a Franklin-McKinley school board trustee. Gregory should have reported the loan in the Economic Interest Statement he filed on April 1, 2004.

He was also charged with two misdemeanor counts for attempting to influence governmental decisions that either had, or would have had, material effects on two individuals who each gave Gregory gifts valued in excess of $340, said Santa Clara County Supervising Deputy District Attorney Julius Finkelstein.

Gregory’s resignation came after he began losing support from his strongest supporters on the council, including Vice Mayor Cindy Chavez and Phaedra Ellis-Lamkins, chief of the powerful South Bay Labor Council, who helped Gregory win his seat on the council in November of 2002. He began his four-year term Jan. 1, 2003 but could not finish his political assignment expected to end Dec. 31, 2006. He’s the first councilman to resign since 1978, when David Runyon resigned after two run-ins with police. In 1994, Councilwoman Kathy Cole was recalled from office after making racially insensitive remarks in public.

According to the D.A.’s Office, the following are the gifts, which Gregory allegedly didn’t report.
- A round of golf at Cinnabar Gold Course on June 13, 2003 from Eric Brandenburg valued at $100.
- Participation in a golf tournament at Santa Clara Golf & Tennis Club on June 16, 2003 from Wylie, McBride valued at $200.
- Four tickets to Oakland A’s versus N.Y. Yankees game from John DiNapoli valued at $120.
- Two suite tickets to the Aug. 10, 2003 CiberRays game from Dean Munro valued at $106.
- Two tickets to Building and Earth Awards event on Aug. 21, 2003 from the Building Owners and Managers Association valued at $110.
- A round of golf at Cinnabar Golf Course on Sept. 19, 2003 from Eric Brandenburg valued at $100.
- Two tickets to PRC on Sept. 26, 2003 celebration at Dynasty Restaurant from Steven Dang valued at $60.
- Two tickets to the Legends and Leaders event on Nov. 11, 2003 at the Fairmont from IBM valued at $500.

The conflict of interest charges are based on Gregory’s attempts to broker a settlement of claims made by Dennis Fong against the city in connection with the city’s efforts to acquire the Tropicana Shopping Center through the eminent domain process and Gregory’s vote on a grant and loan to Core Development after Core Development’s owner, David Neale, gave Gregory’s former girlfriend a $495 per month discount on the rent at one of Core Development’s apartment buildings.

Gregory’s political misfortunes began when the Mercury News started writing editorials and news stories in May of last year reporting that Gregory had received and sought free meals, gifts, baseball tickets and a $1,400 case of wine from Tropicana Shopping Center owner Dennis Fong.

Gregory’s former chief of staff, Craig Mann, also filed a wrongful termination claim with the city in November of last year alleging Gregory pressured Wal-Mart and Costco representatives to make contributions to a special events fund for his district. He also alleged that Gregory instructed him to destroy late campaign donation checks instead of reporting them or returning them, as required by campaign laws.

The San Jose City Council censured Gregory in December, the most serious punishment of a sitting council member, but could not oust him. Many only asked him to resign.

A somber Gregory, reading a prepared resignation statement in front of a room packed with reporters and television cameras, said throughout the course of the past months he had followed his attorney’s advice to remain silent with regard to the investigations pursued by the D.A.’s office and the council. He said the action resulted in only one side of the story to be told. “As a private citizen, I will be sharing more details in the near future,” he said.

“Let me be clear. I accept total and full responsibility for my actions and I’m prepared to do what’s right in facing the consequences of any mistakes that I have made,” he read. “Although I am leaving this office, I am at peace with myself knowing that I have always only worked for the betterment of our community.”

Immediately after reading the statement, Gregory left the room leaving the media with unanswered questions. Fellow council members were at the press conference and spoke to reporters about Gregory’s resignation.

Newly elected District 10 Councilwoman Nancy Pyle, who took office at the beginning of the month, said Gregory’s resignation would teach valuable lessons to council members. “It’s a sad day, not only for Terry Gregory but for the City Council,” she said. “The city needs to address the issues of ethics more thoroughly with new council members such as myself. I came in on the third act and I feel it’s important to be brought up to speed. I’m trying to be as squeaky clean as I can be. I will make it a point to become much more educated in reference to all the fine lines that need to be drawn.”

District 8 San Jose City Councilman David Cortese said Gregory had no option but to resign from office to “begin the process of restoring trust in local government and City Hall.”

He said the council would have to decide whether to appoint someone to serve the remainder of Gregory’s term or have a special election. “District 7 should not be a stepchild here in the city of San Jose,” Cortese said. “The voters in District 7 deserve to select their own representative and I’m going to stand by my own commitment to make sure that this happens.”

Cortese said he favored a special election. “The worst thing that can possibly happen would be anything that resembles a decision made in a smoke-filled room, a back channel protocol appointment at a time when we’re trying to restore faith and confidence in City Hall,” he added.

Cortese regretted that few council members pushed for an investigation into Gregory’s conduct last year.
Asked about how much money an election would cost, Cortese said, “There’s no price for democracy. We can’t put a price on what it takes to restore hope and faith in District 7 in the city of San Jose.”

Several council members said the accusations against Gregory were a huge distraction for council members but also for District 7 residents who live in the south part of the city and who have waited to get projects completed and are ready to open the newly built Tully Branch Library.

“Anytime you go through a scandal like this it taints the entire city council,” Cortese lamented. “That saddens me because I’m a third generation San Josean and this city has been built on the shoulders and backs of generations of people who sacrificed much for the city.”

Like Cortese, Pyle said the council needed to get busy to serve the constituents of District 7. “They have been underserved,” Pyle said.

District 5 San Jose Councilwoman Nora Campos agreed with Pyle that the residents of District 7 have been underserved. “They have a lot of needs and it’s important to meet those needs,” Campos said. “We need to make sure that we’re making the commitments of the community and that its projects are being brought forward and that its issues are being addressed. With time wounds need to be healed and as we demonstrate our commitment to their needs, their trust will be restored in the city of San Jose,” Campos said.

Campos called on community activists in District 7 to step forward and make their voices heard. She said because of the city’s financial situation she didn’t favor an election. “This has been painful. You never want your colleagues to be faced with a bad situation.”

Campos said it was appropriate for Gregory to step down as many residents in district 7 complained that their needs were being met as all the focus was on Gregory’s charges and accusations.