Political Watchdog Agency Closes File on Chula Vista Councilman

Saying it could not prove wrongdoing, the state’s Fair Political Practices Commission on Wednesday closed its file on allegations that Chula Vista Councilman David Malcolm used his position to financially benefit himself and business partners.

The decision ends a wide-ranging investigation by the political watchdog agency that began in 1988 with two informal complaints charging Malcolm, also a member of the California Coastal Commission, with conflict of interest.

But the agency’s eight-page memo detailing the charges raised questions about some of Malcolm’s actions.

State law prohibits public officials from participating in official decisions if those decision would have a material effect on personal investments of $1,000 or more, or sources of income worth more than $250 a year.

A number of the allegations centered around Malcolm’s financial involvement with San Diego developer William Patrick Kruer in a partnership called MKEG Associates. They included:

* Instances in which Malcolm, a limited partner in MKEG, made decisions as a city councilman during 1987 and 1988 affecting another Kruer partnership called Rancho del Sur, which sought to develop 700 acres in Chula Vista. The FPPC found that the agency itself was partly to blame for Malcolm’s actions because it gave him “erroneous” advice and furnished him with an unclear ruling as guidance.

* Malcolm’s contacting of a city staff member about city plans to reconsider the density for Rancho del Sur and other undeveloped properties. Malcolm publicly abstained from voting, but the FPPC found that he made the contact after acquiring an interest in Great American First Savings Bank, a subsidiary that owned 25% in the project. Although the agency believed the contact violated state prohibitions, it decided not to pursue the matter because of difficulties in getting “relevant witnesses” to discuss it.

* Malcolm’s extensive role in having the city of Chula Vista oppose a 1986 Sierra Club lawsuit trying to stop a federal flood control project and construction of California 54. At the time, Malcolm was part owner of a parcel of land that would greatly benefit from the projects, which removed the property from the 100-year flood plain and provided access. Malcolm and his partner had sold an option to the land to a group that included Kruer, who intended to build a car dealership and other businesses on the site.

The FPPC said Malcolm’s role in the lawsuit, which was subsequently settled, appeared to be a violation of law. But the agency decided not to pursue it because it would be “impossible” to prove what he said during the council’s closed-session discussions.

* Reports that Malcolm improperly solicited campaign donations for Assemblyman Steve Peace (D-Rancho San Diego) from a company hoping to win a plan amendment from the Coastal Commission, on which Malcolm sits. The company denied the allegation, and the FPPC determined that it was “highly unlikely that the party would in any way cooperate” with the inquiry.

Reached in San Francisco, where he was attending a Coastal Commission meeting, Malcolm said he was relieved at the news of the FPPC decision to close its file.

“I’m glad it’s over,” he said. “It’s been over three years. They spent more than $100,000 investigating this. I’m glad it’s over.”

Malcolm said he spent “substantially” more than $10,000 in attorneys fees fighting the allegations, which he blamed on political enemies.