O.C. Fair Official’s Role Investigated

A decision on who will run the Orange County Fairgrounds’ lucrative weekend swap meet is stalled while the state attorney general’s office investigates an alleged conflict of interest by a member of the fair board.

Atty. Gen. Bill Lockyer will decide whether board member Frank Barbaro can participate in decisions involving the Orange County Market Place, the largest swap meet in the country.

Barbaro, appointed by former Gov. Gray Davis in July 2002, is majority owner of Aamerican Online Tickets, which sells tickets to concerts and other entertainment events from a booth at the Market Place and on the Internet. The business earns $100,000 to $1 million a year, according to a financial statement signed by Barbaro in March.

Lockyer and Barbaro have their own political and financial connection. Barbaro is a well-connected Santa Ana trial attorney and chairman of the Orange County Democratic Party.

Barbaro has given more than $100,000 to Democratic candidates since 2000, according to campaign reports filed with the secretary of state, including about $25,000 to Lockyer’s reelection campaign last year.

Objections to Barbaro’s alleged conflict surfaced in July, from representatives of Delaware North, a multinational conglomerate bidding to take over swap meet operations at the fairgrounds for the next 10 years from the current operator, Tel Phil Enterprises of Newport Beach.

Tel Phil’s founder, Robert Teller, started the popular outdoor event as Teller’s Treasures and Trash in 1969.

The attorney general’s office is probing the allegation because the office provides legal counsel to the fair board.

Barbaro recused himself in July when fellow members of the nine-person board voted to throw out the current bid process that was pitting Tel Phil against Delaware North’s American Park ‘N’ Swap. After a 90-minute private meeting, board members decided to restart the bidding process from scratch, citing unspecified legal considerations.

While he said he was “erring on the side of caution” by sidestepping the vote, Barbaro said his business hadn’t stopped him from voting last year on an amendment to Tel Phil’s contract. Earlier this year, Barbaro filed the required forms addressing potential conflicts of interest.

Barbaro didn’t return calls this week for comment. He has told fair board members that he should be able to vote on a new agreement, which was to have been ready for approval this month. But work on it stopped because of the attorney general’s investigation, said Becky Bailey-Findley, the fair’s chief executive officer.

“Because of the nature of the allegation, the board can’t move forward in making any new decision [on the swap meet] until that’s cleared up,” she said.

Lockyer’s spokesman declined to comment on the matter. The fair board’s next meeting is Dec. 18.

Lockyer should step lightly because of Barbaro’s relationship with him as friend and campaign contributor, said Jim Knox, executive director of the good-government group Common Cause of California, based in Sacramento. But there is no reason for someone other than Lockyer to investigate the potential conflict, he said. “For better or worse,” he said, “it comes with the territory of attorney general that at some point you’re going to have to investigate your friends.”

Knox added that the probe of Barbaro is appropriate because a conflict could exist.

State law forbids members of governmental bodies such as the fair board, officially known as the 32nd District Agricultural Assn., from voting on contracts in which they have a financial interest. Government Code Section 1090 has been applied by the courts to include a broad range of financial interests, including those with direct or indirect gain. Willful violation of the law is a felony punishable by fines, imprisonment and being disqualified from office.

A separate law forbids public officials from making, participating in or using an official position to influence a decision that would have a “material financial effect” on the official’s business.

Lawyers for Delaware North argue that, as a booth vendor, Barbaro has a financial interest in who operates the swap meet because his company is subject to space rents and selling locations, which can affect profits. His company has sold tickets at the Market Place since 1999.

“Mr. Barbaro’s financial interest may be heightened by the fact that his company has received a prime location from Tel Phil,” said attorney Randall W. Keen of Manatt Phelps Phillips of Los Angeles, representing Delaware North.

In May, Barbaro signed an “incompatible activities” form with the state, describing his ownership of 51% of stock in Aamerican Online Tickets. Barbaro said his income from the business last year was in the range of $10,000 to $100,000.

Barbaro noted that his company didn’t sell tickets to shows at the Pacific Amphitheater, which also is owned by the state and located on the fairgrounds. “I do not believe, therefore, that this is incompatible,” he wrote.

Barbaro is also co-chairman of the board’s Pacific Amphitheater operations committee, which oversaw the reopening of the concert venue during last summer’s fair. An ambitious schedule of concerts during the fair’s 21-day run had a $5-million talent budget. The series lost about $1.5 million, Bailey-Findley said.

The Orange County Market Place is considered the Rolls Royce of swap meets. It has grown over the years into an extensive open-air mall, with 31 acres of walking room for 1,200 vendors in 1,500 spaces. It operates 48 weekends a year and is a big moneymaker for the fair board. Tel Phil’s payment of $4.5 million accounted for about 26% of the district’s total revenue last year.

Tel Phil has operated the Orange County Market Place on a month-to-month basis since May 1, when the current contract expired.

Though neither company’s bid was opened in July, Delaware North attorneys alleged in court papers that its proposal would have brought in $12.4 million more to the fair board over five years, based on Teller’s current contract. Tel Phil pays the Orange County Fair 35% of its gross receipts; Delaware North offered 50%.

In August 2002, at Barbaro’s first board meeting, he joined in the vote to cut the amount Teller had been providing to the fair, from a sliding scale to a flat 35% of all gross revenue.

A year later, and a month after the bid process was scrapped, a routine state audit faulted the fair board for failing to verify Tel Phil revenue and for approving contract amendments “initiated primarily to improve the return to the operator.”

The audit noted that there was no monthly reconciliation of revenue to the fair, leading to the failure to record $51,373 in swap meet miscellaneous income in December 2002.