Dones' Deal 

A federal grand jury scrutinizes a well-connected Oakland developer. Outgoing Oakland auditor gives his successor a cold welcome present.

In the latest development in the FBI's ongoing probe of Oakland political corruption, a federal grand jury is investigating developer Alan Dones and his dealings with the four-college Peralta Community College District.

A subpoena obtained by the Express suggests the feds are focusing on an exclusive deal the district's board of trustees made with Dones two years ago under suspicious circumstances. At that time, faculty and union reps accused trustees of cutting a backroom deal with the Oakland builder, who wanted to redevelop the Laney College parking lot and nearby land that houses the Peralta district's administrative offices.

An October 26 subpoena sent to the district's general counsel demanded records related to the trustees' vote as well as any others going back to 1998 that involved Dones, his two companies, his relatives, and his business partners John Guillory and Calvin Grigsby. The subpoena also asks for records on Virtual Murrell, the brother of Peralta trustee William Riley. Murrell was convicted in 1995 for extorting $750 from a developer doing business with the city of Oakland.

The underlying question is whether Dones is the feds' real target. The developer says he's done nothing wrong or improper, and has cooperated fully with the investigators who are conducting a sweeping probe into his life and business. In a sit-down interview this week with Dones and his associates, the developer said FBI agents have told him they are looking at him as part of a broader Oakland corruption investigation. "They asked me about every single elected official, and basically they told me they want me to help them with their investigation," he says. "That's the whole point. And my problem is, I don't know if I have anything of value to them, except for to tell them that there has not been any criminal interactions with anyone."

A senior Peralta official speculates that the feds want Dones in order to get to Lily Hu, one of his lobbyists, who is tight with state Senate president Don Perata. The Peralta official suggested that if Dones implicates Hu in wrongdoing, the feds can pressure her to snitch on Perata.

Dones, like many local businessmen, was first contacted by the feds in the fall of 2004 as part of their investigation of Perata. Although Dones has donated $5,000 to the senator's campaign committees over the past two and a half years, he says he isn't particularly close to Perata and hasn't spoken to him in three years.

The deal under scrutiny was tremendously controversial when first struck. At a Peralta board meeting on November 23, 2004, Dones outlined his vision to put one thousand apartments, a medical center, and a multi-agency office building on the Laney land. It was supposed to be just an informational presentation, but a majority of trustees surprised practically everyone by voting to enter formal negotiations with Dones and his team. Then-trustee Darryl Moore, now a Berkeley City Council member, was the only dissenter. "I was somewhat surprised it was on the agenda," he says. "It just seemed like it came from nowhere — this major development proposal."

Among the aye votes was Alona Clifton, a Dones business associate. Clifton is president of a nonprofit created to partner with one of his two firms for the construction of a county social services facility in Oakland's uptown. That project inspired a lawsuit against Dones' firm that later was thrown out by a judge.

Clifton, who lost her re-election bid last month and will step down as a trustee this week, didn't return phone calls seeking comment. But in the wake of the vote, she denied any conflict of interest, and told reporters she didn't make any money from the nonprofit. Dones said Clifton does currently earn nominal compensation for the job, as do other nonprofit board members — between $3,000 and $5,000 a year. The money, Dones said, was never meant to influence any vote by Clifton.

Dones and Guillory say even they were surprised when the lame-duck Peralta board voted to enter exclusive talks. The trustees, Dones said, got swept up in the excitement his presentation generated. That excitement was soon replaced by the whiff of scandal, and six months later Dones withdrew his development plans.

In a carefully worded statement, Peralta spokesman Jeffrey Heyman said the school district was cooperating with the investigation. He stressed that "no district employees are targets." FBI spokesman Joseph Schadler confirmed that the agency is investigating Dones, but would not comment on the details, nor say whether the investigation extends to Perata.

As for Dones, you gotta give the man credit — he's definitely not acting like he has anything to hide. After all, he agreed to be interviewed by a nosy columnist who calls himself Bottom Feeder. Dones believes there's a racial aspect as to why he has come under suspicion. He didn't go so far as to accuse the feds of targeting him because he's African American, but he suspects people who are talking to investigators have singled him out because he's a black man in a field with few black men. "It's something analogous to profiling," he says. "If you are a black man in a neighborhood where black men are not used to being seen, you draw attention to yourself on one level. People look out their windows, they see a black man walking down the street, and they call the police. And the police have an obligation to show up because they've been called. I am, and our company, and my partner and I, we are in a city that has maybe thirty major projects in downtown. We are the only black developer in that area."

Guess we'll all have to wait and watch what the feds do in the coming weeks to see if their Dones investigation is the real deal or a wild goose chase. After all, the feds have been tracking the state Senate boss and his allies for two years now, and what have they got to show for it? Bupkus.

Update 1: Federal investigators are also probing Dones' business with Alameda County.

Update 2: Peralta district trustees may also be among the feds' targets.

For further developments on this story, stay tuned to 92510: The East Bay Blog.

Staff writer Robert Gammon contributed to this report.

An Auditor's Welcome

Courtney Ruby defeated incumbent Oakland city auditor Roland Smith in a landslide, so how is Smith getting a little payback? By recommending that the new auditor's pay be cut in half. In a goodbye kiss-off to Ruby, Smith is recommending that the City Council cut the auditor's current $170,600 salary to anywhere from $85,000 to $109,400 per year.

Is it just sour grapes on Smith's part? It's no secret that he has been less than a gracious loser. Nearly a month after the election, he still hasn't called Ruby to congratulate her and concede defeat. But the auditor insists his salary report was done "in conformity" with the formula laid out in the city charter.

A couple of years ago, voters changed the way the auditor's salary is calculated as part of a larger ballot measure extending the strong-mayor form of government. Under the terms of the measure, 2007 is the first year the new formula will be used. The charter formula requires that Oakland's auditor be paid in a range of 70 to 90 percent of the average salaries of auditors in six cities of similar size. Well, if there's a formula, Smith can't be trying to screw over his successor, can he?

But consider this: Another survey done by the council's legislative analyst, Lupe Schoenberger, recommends a much more modest pay cut. By her calculation, the new auditor should make between $118,150 and $151,200. The discrepancy comes from how Smith and Schoenberger chose their comparison cities. Smith, unlike Schoenberger, included Fresno. That skewed the average because Fresno's city auditor, according to Smith, makes only $67,000.

Schoenberger says she didn't include Fresno because that city doesn't have a comparable position to Oakland's auditor. Smith acknowledges there isn't anyone with the title "city auditor" in Fresno, but they do have someone who performs all the same functions, he says. Smith opines that he's far more qualified than Schoenberger to determine who is an auditor and who isn't. Still, he concedes that it's not his call to make. "The people on the council are going to have to decide who they're going to believe," Smith sniffs.


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