Some locals question Garofalo’s business decisions

Eron Ben-Yehuda

HUNTINGTON BEACH -- Some locals worry that newly appointed Mayor Dave

Garofalo’s history of business dealings may lead to questionable spending

of public funds.

“He’s always somewhere on the shady part of the gray area in terms of

financial investments,” said James Bridges, a perennial City Hall critic

who is frequently at odds with government spending. “It can’t help but

carry over into his public decision making.”

The latest example of Garofalo’s questionable dealings came to light in

recent weeks, after he invested $50,000 of borrowed money in a small

community bank in April. Councilwomen Shirley Dettloff and Pam Julien

also invested in the bank -- Pacific Liberty Bank, which opened in May.

The city, however, has not invested public funds in the bank.

Like any other start-up company, there’s a great danger the institution

may lose money, financial experts said.

“There’s always a huge risk with any start-up,” said Gerard Ledoux, an

analyst for Fidelity Asset Management Inc. in Huntington Beach.

And if a council member is willing to invest his own money -- or borrowed

money -- in a risky venture, Bridges wonders whether he might be willing

to treat the taxpayers’ money the same way.

While individuals may feel comfortable taking risks, government agencies

should be more careful about their investments, choosing an “asset mix”

that offers the least amount of volatility with the highest rate of

return, said Geoff Janquart, district manager for Fortis Investments Inc.

in Huntington Beach. While it might be fine for a private resident to

invest in a start-up venture, it wouldn’t be appropriate for the city,

Ledoux said.

“I would not recommend that to anyone who considers himself a

conservative investor,” he said.

As for other business decisions Garofalo has made, Bridges said he sees a

pattern.

“It tells you something,” said Bridges, a member of the Citizens Bureau

of Investigation, a watchdog group that formed a few years ago to monitor

City Hall spending.

Since he won a seat on the City Council in 1994, Garofalo has voted on

issues affecting companies from which he has received advertising revenue

as publisher of the Local News and the Huntington Beach Conference and

Visitors Guide.

And in June 1998, Garofalo gave the developer that built his Downtown

home a list of city employee home addresses. The company used it as an

invitation list for a preview of its residential development. The

addresses are supposed to be kept private.

But City Councilman Ralph Bauer warned that people should not read too

much into the fact that Garofalo is now mayor. It is largely a ceremonial

position with little added power, he said, and decisions involving public

money require a council majority vote.

QUESTION

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