One of the lead prosecutors in the ongoing federal investigation of state Senate boss Don Perata recently contacted former San Francisco Chronicle reporters Robert Salladay and Christian Berthelsen and asked for their notes. The veteran reporters wrote extensively in early 2004 about Perata and his questionable financial dealings with his friend and business partner Timothy Staples.
The revelation that Assistant US Attorney Michael Wang, chief of the white-collar-crime division for Northern California, contacted Salladay and Berthelsen begs the question whether a federal grand jury is close to indicting Perata. Federal prosecutors in two other high-profile cases also waited until their investigations were nearly completed before contacting reporters and asking for their notes. In both cases, the targets of those probes — Barry Bonds and Scooter Libby — were then indicted.
Perata has been the official target of a public corruption probe since early November 2004. The FBI, the US Attorney's Office, and a federal grand jury have been investigating whether the state senate president pro tem took bribes or kickbacks from friends and campaign donors in exchange for his help, according to sources and public records. Perata has strongly denied any wrongdoing.
Salladay, who went to the Los Angeles Times before getting out of journalism, told Full Disclosure that Wang called him last month and asked him about articles he wrote with Berthelsen about Perata and Staples. Salladay was the only reporter to ever talk in detail to both Perata and Staples about their complicated financial dealings.
In a separate interview last week, Berthelsen, who also went to the Times and still works there, confirmed that he also had been contacted by a prosecutor in the case, but he would not reveal the prosecutor's name nor divulge the subject of their conversation or whether he provided information to the feds. According to two knowledgeable sources not connected to the investigation, Wang asked for Berthelsen's notes from his stories about Perata and Staples, but Berthelsen refused.
In a series of stories in January and February 2004, Salladay and Berthelsen uncovered evidence that Staples may have funneled illegal payments from donors to Perata. One of the stories disclosed that Perata had carried a bill on behalf of Mercury Insurance that would have allowed the company to circumvent Prop. 103 and charge higher rates to people who lacked previous auto insurance or allowed their coverage to lapse. Mercury, in turn, donated $50,000 to a political committee run by Oakland developer Phil Tagami, who then hired Staples — who then paid Perata as a consultant.
Salladay quoted Perata as saying that Staples paid his consulting company, Perata Engineering, which employs no one other than the senator, about $100,000 annually in the early part of this decade. Perata and Staples denied that Mercury's donations to Tagami's committee ended up in the senator's pocket. However, it was never clear exactly what Perata did for Staples to earn such high fees.
In a February 17, 2004 story, Salladay quoted Staples as saying that Perata helped him with development deals. "He has general knowledge of the Bay Area and of business in general that is very helpful," Staples said, according to the story. "I am the business guy, but I don't understand trends and things that occur in the Bay Area. He has that general expertise about the way things are going."
After Salladay and Berthelsen's stories triggered a Senate Ethics Committee probe of Perata, the Oakland Democrat told the paper that he was severing all financial ties with Staples, an old friend whom he met in the 1960s at St. Mary's College in Moraga.
Salladay said the federal prosecutor also asked for his notes, but he said he told Wang that he no longer had them. "When I left the Chronicle, I destroyed my notes," he said. Salladay said he also told the federal prosecutor that all of the relevant quotes he obtained from Staples and Perata were included in the stories. He said he then referred the prosecutor to an attorney for the Chronicle's parent company, Hearst Corporation.
US Attorney's Office spokesman Joshua Eaton declined to answer questions for this story.
Along with the stories by Salladay and Berthelsen, the federal probe of Perata was spurred by investigative reports about the senator published in the Oakland Tribune and the Los Angeles Times, according to public records and interviews with sources familiar with the investigation. The Express, meanwhile, broke the story of the Perata investigation. In addition, the feds have investigated the senator's son Nick Perata, his daughter Rebecca Perata-Rosati, his former aide Lily Hu, and his main political consultant Sandi Polka. All have denied wrongdoing.
Before leaving the Chronicle, Berthelsen also was one of the lead reporters in a series of investigative stories that led to the federal probe and ultimate resignation of Secretary of State Kevin Shelley. The Chronicle has not published an investigative story about Perata since Salladay and Berthelsen left. Salladay is now a freelance writer, while Berthelsen covers Orange County politics for the Times. The paper also recently sent him twice to Iraq to cover the war.
What Goes Around ...
When the campaign to put Oakland's controversial Oak to Ninth project on the ballot ran out of money last month, it was mired in accusations that it illegally employed out-of-town petition circulators. Lawyers for Oak to Ninth developer Signature Properties said in court papers that they had evidence that some of the signature gatherers actually lived in other cities and only came to Oakland for the petition drive in violation of state law.
But now one of the main benefactors of that project is facing the very same allegations.
It was no secret that Oak to Ninth enjoyed the blessing of Senator Perata. After all, Signature Properties and its minority partner Reynolds and Brown donated $175,800 to Perata and campaigns associated with him from 2000 through 2006, making them his third biggest East Bay donor. Signature also hosts the senator's largest fund-raiser each year at its exclusive Pleasanton country club (see "Living Large," cover story 5/23/07), and Perata personally carried legislation that would allow Signature to turn sixty-plus acres of waterfront land reserved for public use into 3,100 condos.
During the past few months, however, Perata and his closest confidante, Sacramento political consultant Sandi Polka (see "My Fair Lady," cover story 5/30/07), have been running their own petition drive — a recall campaign against state Senator Jeff Denham, a Central California Republican. Denham is a moderate like Perata and reportedly had been friends with the senator. But during the budget stalemate this past summer, Denham sided with his more conservative GOP colleagues and refused to compromise with Perata and the Democrats. Perata, who has a reputation for exacting revenge on those he views as disloyal, became enraged and launched a recall drive.
Then, earlier this month, Denham's campaign leveled its own accusations, saying Perata and Polka employed signature gatherers who do not live in Denham's district — the same charge Signature used to bankrupt the Oak to Ninth Referendum Committee. Denham's campaign filed an official complaint with state Attorney General Jerry Brown. "California election law is clear, signature gatherers must live in the district," said Chuck Bell, attorney for Friends of Jeff Denham committee, in a statement, as first reported by the Sacramento Bee. "It appears that recall proponents are purposely ignoring the law, and we're asking law enforcement to step in and prosecute this matter."
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