December 23, 2004

City Council censures one of its own

District 7 questions Terry Gregory’s ability to lead

By Kymberli W. Brady
Staff Writer

In an unparalleled move, the San Jose City Council voted on Friday to censure Councilmember Terry Gregory for allegedly accepting gifts and improper campaign contributions that violated the city’s municipal code.

John DiNapoli (seated above left), a local businessman with property in District 7, was pressured to acquire baseball tickets for Gregory.

Gregory has been suspected of corruption ever since reports of wrongdoing began to surface in March, just 12 days after he failed a field sobriety test and was booked in the Santa Clara County Jail on a misdemeanor DUI charge.

As the story started to unfold, additional witness came forward, including Wal-Mart and Costco executives—who accused Gregory of strong-arming them into making sizeable contributions or face a long road ahead running interference with their business plans.

Not since 1994 has a city council member been censured and Gregory, if recalled, will be the second elected official in San Jose history to be ousted from office, after District 8 Councilmember Kathy Cole was removed for racial mimicking following a videotaped speech.

Still, the city council has seen its share of ups and downs over the years, including a failed recall attempt in the early 60s that threatened to concurrently remove four council members from office.

The unanimous decision came on the heels of testimony from Gregory’s former Chief of Staff Craig Mann, Tropicana Shopping Center owner Dennis Fong, local businessman John DiNapoli, After School All-Stars Executive Director John Poach, attorney Christopher Shem, and legal counsel for Costco.

The move serves as a formal resolution that publicly condemns Gregory’s actions and strips him of most of his power on the council, but it does not remove him from office—only the voters can do that through a recall effort that would require at least 3,500 signatures or 12 percent of the voters. Gregory could also be ousted if found guilty of felony charges that are currently being investigated by the district attorney’s office.

Mayor Ron Gonzales took it a step further by issuing a memo recommending that Gregory be barred from serving on standing council committees and prohibited from traveling on the city account. The council unanimously supported the proposal, and a separate memo followed, where Vice Mayor Pat Dando, along with councilmembers Dave Cortese, Chuck Reed, and Linda LeZotte asked for Gregory’s resignation.

Municipal code violations = hefty fines
In a separate action, the Elections Commission discovered 24 individual code violations by receiving gifts that exceeded established limits, accepting 18 campaign contribution checks after the close of the contribution period, and failing to report nearly $3,430 in late contributions as required by the municipal code. Rather than return the checks to the donors, Gregory instructed Mann to destroy them. Instead, he kept them and made copies.

The evidence also discovered that Gregory accepted complimentary passes to golf tournaments and other entertainment events, although they remain unclear as to whether those violated the code. Further allegations implicate Gregory in soliciting and accepting contributions from companies doing business within his district, another violation, even though there wasn’t enough evidence to determine the violation within the commission’s jurisdiction.

They did however, impose the maximum penalty of $5,000, but it could have been worse as the council recently voted to amend the ordinance and allow the maximum penalty to be levied on each violation rather than each complaint. With six specific charges leveled at him, Gregory narrowly escaped a $30,000 fine. The new ordinance will go into effect this week.

A stellar beginning—with a tragic end
It looks to be a swift and tragic end to a promising political future for Gregory, a 20-year resident of District 7 who used his background in senior management and consulting to champion the effort to improve education, one that led him to serve as a governing board member—and then president of the Franklin-McKinley School District for six years.

Gregory’s former Chief of Staff Craig Mann (below) spoke to allegations of his boss’s behavior and clashes in character that led to Mann’s termination.

Highly educated, Gregory holds an AAS in computer science, a BS in information systems management, and an MA in organization transformation and leadership. Additionally, he was an accessory member of the JFK University faculty and taught briefly at the University of San Francisco.

His passion for improving youth and senior issues kept him closely involved with several organizations, where he held positions on the board of the directors for the San Jose Conservation Corps, Breakthrough Youth Foundation, Alum Rock Counseling Center, and Resource for Families & Communities. He also served as the youth minister for Antioch Baptist Church and instructed parent and student success forums.

In Feb. 2003, members from more than 40 neighborhood, community, and faith-based organizations participated District 7’s first ever Community Leadership Forum—an event geared toward empowering residents and businesses to work together as a community.

Gregory will soon be stripped of his roles on 11 committees, including the Association of Bay Area Government (ABAG) Executive Board [alternate], All Children Achieve Committee [member], City/School Collaborative [co-chair], Civil Service Commission [liaison], Deferred Compensation Advisory Committee [liaison], Driving a Strong Economy Committee [vice-chair], Mobile Home Advisory Commission [liaison], Police Athletic League Board [liaison], Santa Clara Valley Transportation Authority (VTA) Policy Advisory Board: Capitol Corridor [member], SJ/SC Treatment Plant Advisory Committee [member], and the Youth Commission [liaison].

So, with an impressive resume and a reputation for making things happen in his district, how did everything go terribly wrong?

Power and greed sets in
In his welcome letter posted on the District 7 Web site, Gregory champions himself as an advocate for the business community, helping them to “cut through the red tape at City Hall.” However, much of the red tape, according to last week’s testimony was allegedly at Gregory’s own hand.

According to Tropicana Shopping Center owner Dennis Fong, who met Gregory in 1999 while at a barbeque with Congressman Mike Honda at the home of Congresswoman Zoe Lofgren, there was “very little interaction” until Gregory called a month later and they met for lunch in Japan town.

“He stated his views on eminent domain and how he thought it was immoral and unconstitutional,” Fong began. “Then he said he was interested in running for City Council and asked for my support—which I did.”

Fong was later invited to Gregory’s victory party and asked to provide wine for 150-200 people, valued at approximately $360.When questioned as to whether he had been reimbursed for the cost, Fong said he had not been paid, nor did he ask.

“I thought it was a celebratory thing,” he said. “We finally had an ally on the City Council with eminent domain.”

However, Fong said the landscape changed after the election, but he continued to meet with Gregory to discuss the Tropicana project, which was turning sour by the moment, as Gregory wasn’t living up to his word—he even went so far as to tell Fong that there wasn’t much he could do, as “the train had already left the station.”

Although rarely available to meet during business hours, Gregory found time in the evenings to discuss the Tropicana dilemma over pricey dinners at Blow Fish, P.F. Changs, and Dynasty Cafe. While Gregory never offered to pay for the elaborate fares, Fong considered it a cost of doing business, but quickly tired of the $200-$300 meals that ultimately totaled $2,000 by 2004.

“He kept telling me there was no limit on meals,” Fong said.

In February, Gregory stopped by Fong’s gallery to pick up campaign contributions on his way to an Asian Democratic Fundraising dinner at the Dynasty Café for District 10 candidate Nancy Pyle. Fong said Gregory had been pressuring the merchants to cough up nearly $3,000 in campaign contributions, even though they had publicly endorsed fellow Tropicana merchant Rich DeLaRosa—whom Fong said was “family.”

He ultimately succumbed to increasing pressure and Gregory’s assurance that it was “insurance in case Nancy wins.” However, he refused to collect more than $1,000, carefully drawn on checks from tenants, vendors, and family members whose names he’d hoped would slip under the radar screen on campaign contribution documentation.

“None of us wanted to use our names because we felt it hypocritical,” Fong said. “He asked for a lot more and I turned him down twice. We thought he was joking—even Nancy wouldn’t do that. It was insulting.”

Gregory then noticed two cases of 1997 Opus One wine, valued at $1,440 each stacked near Fong’s desk. Fong admitted that prior discussions between them led to the purchase of the pricey vintage and Gregory left with one of them.

The arrangement took place in late May 2003 when DiNapoli was contacted three different times regarding the tickets, which he was able to obtain through an associate.

Tropicana Shopping Center owner Dennis Fong set the wheels in motion, when he came forward in March and accused Gregory of unethical abuse of power.

DiNapoli said his relationship with Gregory was business-related and that he was unsure why he specifically was contacted for the tickets.

“I don’t really have connections to baseball so it was a little bit surprising,” DiNapoli said. “I was asked to provide tickets. I could have said no.”

In late May, Gregory’s contacted John DiNapoli, a local businessman who owns property in District 7 to see if he could get tickets to the Oakland A’s/New York Yankees game. After three subsequent phone calls inquiring about the tickets, DiNapoli called upon John Poach, who successfully acquired four lower box tickets.

“I don’t really have any connections to baseball tickets,” DiNapoli said. “So it was a little surprising that I was asked.”

Poach stressed that he had no idea the tickets were for Gregory and only found out during a conversation with DiNapoli months later.

Inside accounts
In his testimony, former Chief of Staff Craig Mann, who has since filed a wrongful termination claim against Gregory recalled heated exchanges during meetings with Costco and Wal-Mart executives who were none to pleased with Gregory’s strong-arm tactics and demands for larger contributions to the District’s community events account. Although he never issued threats, Mann said the “message” was unmistakably embedded into the conversations. Meanwhile, a land-use amendment failed to get past the Planning Commission—as expected because General Electric [GE] wanted to change the industrial property into commercial use, but refused to allow housing on a site that could recreate another “Erin Brocovich” scenario—much to the chagrin of Gregory who had housing aspirations for the site.

“They wouldn’t budge,” Mann said. “They would rather let the property sit there in perpetuity than take that chance, and they have enough money to do just that.”

Mann also testified that he wasn’t comfortable with Gregory’s hard-lined style of coercion, often asking large corporations for more money than was needed. Adding to his discomfort was a sense of uneasiness when Gregory would comment about how easy it would be to pay a crack addict $50 to “get rid of someone.”

The future of District 7
In conjunction with an increased push for ethics, the city has a strict gift policy that prohibits gifts valued over $15.

Yet, between the dinners, baseball tickets, premium wine, and campaign contributions edging toward the $5,000 mark, Gregory well overstepped his limits, and then went one step further by asking Fong to lie if questioned by the media or the District Attorney’s office—suggesting that he left his portion of the dinners in the way of tips left on the table.

Gregory has been noticeably absent for the last two City Council meetings, much to the chagrin of his colleagues, who were hoping to hear his side of the story. Because a criminal investigation is also underway, Gregory has been advised by his attorney Steve Manchester not to address the allegations for fear that it would be in violation of his constitutional rights.

Many of the estimated 70 Capitol Improvement projects in District 7 may now be on shaky ground, especially as Gregory’s power and representation will be severely limited—in some cases silenced altogether, including at least three development projects that the City Attorney says he will not be allowed to vote on due to conflict of interest concerns raised during the ethics investigation.

Acting under the advice of his attorney, Gregory did not address the allegations and instead offered the following statement:

“To my family, my community, my friends, my constituents, I offer my sincere apologies that we’re having to take valuable time away from serving you. And to you my colleagues, I offer you my sincere apologies that we have to undergo this grueling process. My hope is that after today, this matter can be placed behind us.”

With little in the way of power and limited voting privileges, the beleaguered council member’s problems may be just beginning. Affordable housing projects are badly needed in a community dominated by Vietnamese immigrants, coupled with ongoing work at the Fairgrounds and projects such as the Vietnamese Community Gardens and the old GE Plant on Monterey still in the planning stages, residents are troubled and rightfully so—as Gregory may no longer have the power to properly represent his district and see the projects through, which ups the ante and has community members, as well as neighborhood associations toying with the need for a recall effort—unless the district attorney’s office finds felony criminal charges to levy on him that would result in a conviction.

According to City Council spokesperson David Vossbrink, Gregory intends to retain his position in office for the remainder of his term, which will expire in Dec. 2006.

If Gregory were to step down, former Councilmember George Shirakawa and Franklin McKinley School Board President Madison Nguyen have been named as possible contenders for his seat.

In either event, council members will ultimately decide whether to hold an election or appoint someone to the seat.