ON THE COVER North Coast Journal Weekly
Sept. 9, 2004


CNPA logo2004 CNPA Award
Freedom of Information - First Place
and ~
2005 James Madison Freedom of Information Award

Community Media category
Society of Professional Journalists, Northern California Chapter
Freedom of Information Committee

The Debi August File: Unsealed Grand Jury transcripts in the case of a Fortuna council member [photo of files]

Photo of the unsealed Grand Jury transcripts in the case
against Fortuna council member Debi August.



In the summer of 2002, real estate broker and newly elected Fortuna Councilmember Debi August became the official agent for the Smith/West subdivision, an upscale "estate" development of 39 hilltop parcels on South Loop Road in Fortuna.

[debi August in hallway]In that role, she represented sister-brother developers Carmen Smith and Ted West for over a year as the initial work of planning the 24-acre subdivision proceeded. She made contact with city employees charged with overseeing the project, arguing against their recommendations that the developer install sidewalks and a second road linking the project with city streets. Finally, at a Planning Commission meeting in September 2003, August rose from her chair as City Council liaison to the commission and switched hats. She said that she was now acting as a private citizen representing the developer and presented a case advocating the subdivision to the commissioners, who serve at the pleasure of the City Council.

August, 53 [photo at left] , initially told city staff that she planned, as a real estate broker, to sell the parcels should the development go through. Later, when questions of conflict of interest arose, she said she would not be involved in the sales. She also said that she did not bill Smith for acting as her go-between with the city, and that she was only helping the project along because she felt it would be a good thing for Fortuna.

But after a neighbor complained about August to the Humboldt County Grand Jury, it began investigating. On May 4, the Grand Jury filed a formal accusation against August on five counts, the most serious of which is malfeasance conflict of interest in representing a developer of a subdivision subject to City Council approval while a council member.

When the accusation against August was first announced, her supporters hinted that she was the victim of a political vendetta. August had supported the effort to recall District Attorney Paul Gallegos. Assistant District Attorney Tim Stoen was the legal advisor to the Grand Jury throughout the hearings that led to the accusation, and the transcripts show that near the end of those hearings Stoen made a persuasive case that charges against August were warranted. August's supporters -- including her attorney, Bill Bragg -- seemed to think that Stoen, a fervent Gallegos supporter allegedly eager for payback against his political opponents, manipulated the Grand Jury into going forward with the accusation.

With the release of the transcripts, it becomes apparent that this argument has two holes. First, the Grand Jury initiated the August investigation and eventually made the decision to go forward with the charges against her. It's hard to imagine that Stoen could persuade a collection of distinguished, mostly older citizens to do his political dirty work, especially given that the Grand Jury began looking into the matter before Stoen was brought on.

[Tim Stoen]Second, perhaps the most important witness against August was one of the highest-profile supporters of the recall -- her colleague, former mayor and now Councilmember Mel Berti. Berti appeared in television ads for the recall committee, advocating for Gallegos' removal on the grounds that the DA was soft on drug crimes. But two months after the recall failed, Berti sat down with Stoen and the Grand Jury and recounted how he tried to rein in August's behavior, with no success.

Last week Judge W. Bruce Watson, after considering arguments brought by the North Coast Journal (see sidebar below), agreed to unseal transcripts of the Grand Jury's interviews with witnesses in the August case, along with documentary evidence, which together led to the accusation against her. Among those interviewed are August's fellow Fortuna City Council members, the city's planning commissioners and city employees.

A note about editing: We've corrected typos in the transcripts, but left e-mails and letters intact, so all spellings and punctuations are as written by the authors.

As for the South Loop Road development, it was approved late last year by the Planning Commission and the City Council. But Smith, a South Fortuna Elementary School kindergarten teacher who inherited the property from her parents, told the Journal earlier this week that the requirements placed on the project by the city made it impossible for it to pencil out financially. She informed the City Council she had no intention of building. Furthermore, she said that she never paid August a dime for her help. She called the council member a "wonderful person" caught up in an unfortunate mess.

"I really don't know what all the fuss is about," Smith said.

August's guilt or innocence, along with what punishment, if any, she should face, will be determined in court. The punishment in this case would be limited to removal from the City Council. On Tuesday, Judge W. Bruce Watson overruled the defense's demurrer on all counts, meaning the case will proceed.

But residents of Fortuna -- and other areas of the county, where similar conflict-of-interest problems have arisen in the past -- may use the Grand Jury's evidence, excerpted here, to draw their own conclusions about where the line between the public duties and private interests of their elected officials ought to be drawn.

[plans map for the South Loop Road development]
South Loop Road development plans

The beginning

Debi August was the top vote-getter in the Fortuna City Council elections of April 2002, after serving for 15 years on the city's Planning Commission.

August first notified Fortuna city staff in the summer of 2002 about the proposed Loop Road development. The following is a July 25, 2002 e-mail from August to Charles Clark, the city's engineer at the time.

Charles, I am meeting Tim Theiss (SHN) [engineering firm] at the Loop Road property at 2 p.m. tomorrow (Friday). Would you also like to be there? We are looking at the property to understand the feasibility of developement. Your input would be very valuable. Thank you in advance!!! Debi

As plans for the development progressed, August participated in numerous meetings and phone calls with city staff, including City Planner Liz Shorey. It was still early in the process when Shorey forwarded a San Francisco Chronicle story to August about a city official who was being investigated for possible conflict of interest in his dealings with a developer. August wrote back the following e-mail on Aug. 2, 2002 (emphasis is August's):

Hi Liz, I am not sure of your understanding of the article you sent me. I have always believed that if I have a conflict I should not participate in the meeting (either planning or council) and in fact should leave the room. I do not believe that I can't be involved in the planning of the project. I am not being paid for the help I am giving to Carmen Smith. However, if the project is completed I will be selling the parcels, so I have a conflict. If this project goes forward I will not be participating in any of the hearings. Have a good day! Debi

Shorey responded this way in another e-mail Aug. 2:

Debi, regarding the article I sent you, I am not making a big issue out of it. I am certainly not saying that you even have a conflict. It just sounded similar to, not exactly the same as, your situation with Carmen. I assumed you weren't getting paid right now and that you wouldn't vote on it. But it still sounds to me like there could be an appearance of a conflict because, obviously, you have influence at City Hall, and you would end up getting paid, and therefore you would have a stake in whether you get it approved.

Shorey testified before the Grand Jury that she was concerned about the San Francisco case.

Shorey: I don't remember if charges were actually pressed, but there was an investigation. And I thought it sounded similar to what she was going through.

Tim Stoen: What was your motive for sending it to her?

Shorey: For her to think about what she was doing, and for her to determine if she was doing the right thing. I don't know what the law is. I wasn't exactly telling her, you have a conflict.

Shorey also described in her testimony that she was "more sensitive" to the developers' timeline because of August's involvement and the fact that she was a City Council member. She felt August had attempted to influence her recommendations on the project, she testified.

Shorey: we had a pre-application meeting [August] was saying certain things about the project that she wanted to see.

Stoen: Do you recall what she said she wanted to see?

Shorey: Yes. She specifically said she didn't want to see a second access [road], and she felt that they needed to improve the off-site portion of the street but not the on-site portion. And I recall that because I didn't agree with either of those things.

Stoen: Did you sense there might have been a conflicting role for Deborah August being a City Council member as well as bringing to your attention recommendations on this development?

Shorey: Yes, I did.

In the end, the Planning Commission approved the development, but deleted the on-site road improvements -- items that Shorey had recommended but that August and the developer did not want, Shorey testified.

Problems brewing

August continued to represent Smith for the next year. She also became increasingly frustrated with what she saw as a city bureaucracy plagued with sloth and incompetence. She shared her frustrations with fellow council member Tom Cooke in a Feb. 12, 2003 e-mail:

The City is falling apart. Two builders just left here and they are in a panic state. They gave the city building plans 6 weeks ago. Last Tuesday they turned in the additional info [the city] wanted Still no permit. I called and spoke to Duane [Rigge] who is well aware of what is going on. He has no guts. This City is in chaos! Planning department is about to blow up, building dept. may never see another contractor turn in plans because they make it so difficult and unfriendly. Our Manager has no forceful features and acts like a damn wimp. I CAN'T STAND WHAT IS HAPPENING HERE!!!! Debi

By the summer of 2003, other problems became apparent. A group of neighbors of the Loop Road project complained to City Manager Duane Rigge about the grading work being done on the development. Rigge described their concerns in a Aug. 21, 2003 e-mail to August, and also told August for the first time that the Grand Jury was investigating city involvement in the project. Rigge wrote:

[Neighbor] Jim Wingo had asked to meet with Liz [Shorey] and I about the project as a follow-up to the letter he had sent to the City. He brought with him, four other property owners to present their concerns with the "out-of-control" grading work that has been perform by Wendt. They were under the impression that City staff had approved all the earth work that Wendt Construction has already performed. I explained that the work done to date did not comply with minimum grading plan that Wendt had submitted and that we were in the process in issuing a stop work/fix notice for the work. They were also under the mistaken belief that staff had already "approved" the subdivision plan without public input. In addition, the Grand Jury has summoned Liz for questions next Monday about the City's role in this project.

August was irate. She wrote back to Rigge the same day:

The Grand Jury summoned Liz for what project? Carmen Smith's? What in the world for? What is going on Duane, who and what feels there needs to be a Grand Jury investigation into this project? It hasn't even made it to the planning commission. It seems ludicrest to me that anyone would feel the need to look for wrong doing into this project let alone the grand jury. I told Carmen that her son should sell the lots and then I wouldn't have a future conflict. I have not charged a dime of my time on this project. It is an exceptional subdivision, one that would make any city proud to have. I have absolutely never at anytime done anything wrong I don't know who instigated this but I will find out. You can rest assured of that.

Public apology

At the City Council meeting of Sept. 2, 2003, August addressed the conflict of interest concerns in more measured tones, and brought up some concerns of her own, saying:

It has come to my attention that a group of Fortuna citizens believe that I have a conflict of interest in a proposed planned unit development in their neighborhood. I have also been informed that there is a grand jury investigation into that possibility. While I welcome the grand jury's investigation, I feel very badly that my interest in this development may have been construed as personal rather than a public one.

I have not and will not accept compensation for any help or advice that I may have provided to the project.

Our City Attorney told me that as long as this event was at least 12 months in the future that I had no conflict of interest.

I made it very clear that I could eventually have a conflict of interest if the lots were listed with my office.

I want to publicly apologize to any citizen or citizens who may have felt that I was attempting to gain favor by my participation. I can assure you I was not.

I also want to state publicly that I will not list, nor act as an agent for the seller in the sale of this development, should it be completed.

I am removing any and all possible conflicts so that I can do the job I was elected to do. From this time forward my only involvement will be that of council liaison [to the Planning Commission], not only to this applicant, but also for any member of the public that may have a concern or a project that they feel is not being treated fairly and equitably.

Now I would like to take this opportunity to inform the public of my concerns and fears for this City. It is my opinion that this City is in trouble. The friendly City is no longer friendly. Policies and procedures that Fortuna has always followed are being disregarded and citizens are being told by city staff that Fortuna is changing its policies. This council has made no policy changes Unbelievable improvement requirements are being requested by city staff that have never been required before.

Our City Engineer and Public Works Director are ignored. Our Planning Commission is in trouble with members wanting to quit. City staff make recommendations that are not proven or even investigated for their merit both to the commission and to this council as well.

Since 1977, I have made comments and wrote letters to the editor about how this country is being infiltrated, in every phase of government, by people who hold a socialistic belief of government. We in Fortuna have been blessed to be governed by conservative leaders, who believed in the rights of private ownership and individual freedom. We have been able to use and enjoy our property under fair and friendly zoning codes and ordinances.

Sadly those days are gone.

there is no amount of money that could induce me to remain quiet while our citizens are being mentally tortured. Time keeps moving along and this city keeps sinking deeper into the mire.

If I need to resign my council seat so that I can speak out openly and freely against the tyranny that is being rampaged against our citizens, then so be it.

[Mel Berti]Plugging the project

Three weeks later, on Sept. 23 -- in what appeared to be an about-face from her comments to the City Council -- August stood before the Planning Commission and made a presentation on the project on behalf of Smith.

In the Grand Jury questioning, Stoen asked Mayor Mel Berti [photo at right] whether he thought this was a conflict of interest:

Berti: I about fell off my chair when she got up there and did that.

After her Sept. 2 speech to the council, "I thought she was finally getting the message to where she was stepping out of bounds," Berti told the Grand Jury.

Berti also testified that at least two residents had complained to him that they believed August had a conflict of interest in the Smith project.

Stoen: What was the particular official duty they felt might be violated by this?

Berti: Just representing -- number one, putting staff in a bad position by representing a client, and then leaving like the Planning Commission liaison and go over there and take the whole project through its entirety, and signing `agent' on there. And they were well aware it was a conflict of interest, and they were kind of dumbfounded that she did that.

Stoen: Do you think it had a tendency to have a chilling effect on the staff and their recommendation?

Berti: Most definitely. Because, see it intimidates staff because, number one, when a council person comes to you -- I mean, that is the boss. You understand? We are five bosses up there. If a boss takes over a situation as an agent, and goes to staff, well, staff is saying, geez, what do I do? Here is the boss. So that is intimidation too when you do that to the staff, when you step down as a council person and be an agent. It makes it pretty rough on the staff, because they are saying, geez, do I really go with the situation like they want or do I go by the rules? How should it be?

When you put your name down as an agent and you are a City Council person, I think that is kind of a major conflict. If she would have just helped them -- like a lot of people come to us and asking for help, sit down with a department head and go over it so they understand it, that is a different thing. But when you sign your name as an "agent," and you sit there and you carry this through a meeting for an hour I have a problem with that.

`I was wrong'

On the night of Sept. 23, a remorseful August sat down to write a letter to Planning Commissioners apologizing for making her presentation.

I would like to formally apologize to each Commissioner and each member of the public who were present at tonight's planning commission meeting. I now know that I should not have presented the Smith/West project at the podium. The reasons for doing so was that I felt that after I had eliminated the possibility of any future financial gain and had removed the possibility of any conflict of interest I could basically do anything I wanted. I was wrong. Please believe me when I tell you that it was not and has never been my intention to influence or sway the commission one way or the other. Yet that is exactly what I was doing. I am sorry, truely sorry.

August went on to say that, since former City Manager Dale Neiman resigned in 2002, she felt it was up to her to become the expert on planning issues.

In my person I felt like I had to stand up and fight for the citizens of Fortuna. I believed we were turning into Arcata. I wanted to speak at planning commission meetings to help the commissioners but was told I could not. I was frustrated, miss-directed and literally brain dead and that is why I did what I did. And again I am sorry, very sorry.


TIMELINE: Debi August case

[Fortuna City Hall]April 9, 2002: Debi August is elected to the Fortuna City Council after serving for 15 years on the city's Planning Commission.

July 25, 2002: In her first documented contact with city staff on the Loop Road project, August writes to City Engineer Charles Clark asking him to attend a meeting with her and an engineering firm "to understand the feasibility of development."

Aug. 2, 2002: August responds to an e-mail sent to her by City Planner Liz Shorey about a San Francisco Chronicle story involving a city official accused of conflict of interest. August wrote she would be selling parcels if the development is approved. August spends the next year helping shepherd the project through city channels.

Aug. 21, 2003: August learns from City Manager Duane Rigge that some neighbors of the Loop Road project were upset, and that a Grand Jury investigation was under way.

Sept. 2, 2003:
August reads a statement at a City Council meeting saying she is removing all possible conflicts for herself on the Loop Road project, and that she would only act before the Planning Commission as the City Council liaison, her designated role, from now on.

Sept. 23, 2003: Stepping outside the role of liaison, August makes a presentation to the Planning Commission on behalf of Smith and the development. Later that evening, she writes a letter to Planning Commission members apologizing for her presentation that night.

Sept. 30, 2003: Planning Commission approves Loop Road development.

Dec. 1, 2003: City Council approves development.

May 4, 2004: Grand Jury makes a five-count accusation against August, charging her with malfeasance conflict of interest for acting as agent for a developer of a subdivision subject to City Council approval while a City Council member; criminal violations of the state Political Reform Act for filing various economic interest forms required of office-holders without disclosing income; and malfeasance contempt of Grand Jury secrecy admonition for disclosing a question asked of her by the Grand Jury to another city official.

Sept. 7, 2004: Judge W. Bruce Watson denies defense attorney William Bragg's request to have all counts thrown out, allowing the case to proceed.

First Amendment challenge:
How the Journal got the Grand Jury evidence unsealed



Check out the law regarding the sealing of Grand Jury transcripts, the caller said.

So we started to do a little digging. What we found out was that state law (Penal Code 938.1) was pretty clear on the subject: When a grand jury makes an indictment or accusation against a defendant, a transcript of all testimony is to be given to the court as well as to the defendant and the district attorney. The transcript is to remain sealed for 10 days, after which it "shall be open to the public unless the court orders otherwise on its own motion or on motion of a party "

It sounded straightforward to us. But when we showed up at the civil court window at the courthouse to ask for the transcripts, we were turned away. "It's sealed," the clerk said.

We went back to the office and called to get an appointment with Deann McCall, manager of court operations. She told us Judge John Feeney had ordered the transcripts sealed "until further notice of the court."

On the advice of our lawyer, we asked to see the formal written "order" of the judge. There was none. But this was not unusual, McCall said. Her boss, Court Executive Officer Dwight Clark, concurred. A judge can simply give a verbal order, he said.

Not so, said our lawyer.

It seemed we were at an impasse.

We sent a letter to the judge asking for the file to be made available. Clark called back a week later, saying we were welcome to bring our request before the judge in open court. That meant filing a special notice, waiting at least three weeks and bringing our lawyer all the way here from Sacramento -- a pricey endeavor for a community newspaper like the Journal.

So we tried again, with two more letters, on Aug. 10 and Aug. 20, asking the court to consider our request without us having to go to court.

Why would we go to all the trouble of fighting to get the file unsealed? First and foremost, the press has a duty to advocate for the right of the public to get information about the workings of its government. The Grand Jury represents the citizens of Humboldt County, after all, and its proceedings -- according to law -- are to be public in cases like these. The exception is when a judge or an attorney in the case argues successfully that the file's disclosure would undermine the defendant's right to a fair trial. That didn't happen in the August case.

Last Friday, at the latest hearing in the case, Judge W. Bruce Watson announced he was unsealing the transcripts. "It does not appear the court on its own motion, or on motion of a party, has ordered the transcript remain sealed," he wrote in a minute order filed Aug. 30.

The result is the Journal piece you're reading today.





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