Documentation shows cost of upgrades

Theresa Moreau

HUNTINGTON BEACH -- The gas station mogul who bought a coveted home in

the St. Augustine tract of Holly Seacliff from Mayor Dave Garofalo in

July 1998 has released documentation that shows $58,167 was spent on upgrades.

Twenty-four hours after buying the home, Garofalo sold it to fellow

churchgoer George Pearson for $60,000 more than the initial purchase

price of $564,900 recorded with the county.

Pearson said the builder had made a paperwork error and didn’t include

the developer upgrades when reporting the original purchase price to the

county.

Executives at Christopher Homes did not return calls.

Garofalo has said he made a ceremonial $1 from the $625,000 home sale,

and the $60,000 jump in price was due to upgrades and closing costs.

Homeowners in the tract have said Garofalo was given the VIP treatment

and allowed first crack at choosing a home in the St. Augustine

development, bypassing about 300 people to snatch the tract’s most

expensive house. Huntington Beach City School District Supt. Duane Dishno

said he landed on the VIP list after expressing an interest in buying a

home there and was told soon after that Garofalo was on the same

preferred list.

Garofalo has said he couldn’t afford the home but decided to do a

favor for Pearson and secure the property, then hand it over to his

friend. Pearson said he fronted Garofalo the cash to make the purchase.

The Independent had been requesting the documentation on the upgrades

from both Garofalo and Pearson for several weeks. On Monday, Pearson

provided a copy of the document from Investors Title Co.’s escrow

division dated July 24, 1998, delineating how the sale price of the home

jumped from $564,900 to $625,595 due to the upgrades.

Pearson then refiled the quitclaim deed on Aug. 13, 1998, because the

original “contained an error in the amount of the purchase price of the

property.” The second quitclaim records the price at $625,596 --

reflecting the upgrades, closing costs and an additional $1.

At one point during the transactions, Pearson said he offered Garofalo

some money for his trouble.

“I offered him $20,000, and he refused it,” Pearson said. “He said it

wouldn’t be right.”

The district attorney’s office and the Fair Political Practices

Commission are investigating the purchase and sale of the house and

reviewing how the transactions may have affected his council votes on the

developer’s projects.

Pearson’s real estate consultant, Jerry Bickov, said it’s not unusual

that the information on the upgrades was not filed with the county

because the home was a first subdivision sale.

“It is common that upgrades” are not included in the sale price in a

subdivision sale, he said. “Upgrades are not part of a sales price. This

is not considered part of the purchase price.”

But Bob Cronk, a local real estate broker, disagreed.

“It’s a violation of law to mistake the transfer value,” Cronk said.

The county assessor’s office said the home price listed on the deed --

a document signed under penalty of perjury -- should have included the

value of all upgrades.

Pearson’s documentation on the upgrades didn’t satisfy Debbie Cook,

one of Garofalo’s harshest critics. Cook, who has pulled candidate papers

for City Council, said something seems amiss.

“Why didn’t they come forward with this information earlier?” she

asked.

“I want to see Garofalo’s 1040 [tax] form,” she said. “I also want to

see any canceled checks. It doesn’t smell right. The bottom line is he

still got preferential treatment.”

Pearson said he asked Garofalo about being on a VIP list, a perk that

gave him the opportunity to buy the most coveted lot in the tract.

“I asked him about the VIP list, and he said, ‘What’s the big deal?”’

Pearson said.