A California superior court judge has fined former San Lorenzo Valley Water District board member Terry Vierra $9,300, the amount that he and his wife profited from a district board decision which Vierra influenced.
The problem was that while a district board member, Vierra influenced the boardâ€™s decision to buy the property, a decision in which Vierra had a financial interest, and profited from.
The judge chose not to order the maximum penalty, which would have been three times the amount. The prosecutor, in a Dec. 13 statement, wrote: â€œThe court does not believe that the defendant had evil intent in violating 91005 [the law] and finds that it is not necessary to set the maximum fine. Still, the legislature has set strict guidelines to prevent conflicts of interest with public officials and the court cannot ignore the law.â€
Vierra declined to comment, since the case is ongoing. Sometime in late 2017, the second part of the lawsuit against Vierra will be heard, on the districtâ€™s alleged violation of government code Section 1090, which the League of California Cities calls the â€œWhen in Doubt, Sit it Outâ€ code.
The court initially found that the Section 1090 charges against Vierra and the district were wrongfully issued, but itâ€™s on appeal.
If the court finds that the district entered into a contract in which Vierra had a financial interest, more penalties could be issued. One possibility is the 2010 home sale could be voided, and the sellers, or more likely Vierra, could be ordered to return $522,000 to the district. The district also could be liable for the prosecutorâ€™s legal fees.
NOT ON MY WATCH
The lawsuit was filed two years ago by Boulder Creek resident Bruce Holloway, a retired Silicon Valley computer engineer who heard about the house sale after he began attending water district meetings in 2011.
â€œI thought, â€˜Thatâ€™s really strange. Why would the water district buy a house?â€™â€ says Holloway.
He heard the reasons: The district was replacing nearby water tanks and wanted a staging area for construction and an extension of the property line, since the new tanks would need more space. But Holloway thought it didnâ€™t make sense. Why couldnâ€™t the district get an easement, like other utility companies do to install public equipment, or rent a dumpster and put it on the road for construction debris?
Holloway began digging through old meeting notes and asking board members in public sessions. Eventually, months later, a group with access to the real estate records tipped him off about Bischoffâ€™s involvement as an agent.
Thatâ€™s when Holloway made a records request for the house sale contracts and got proof of Vierraâ€™s profit from the sale. Holloway studied the law, and zeroed in on what was illegal about Vierraâ€™s actions.
Meanwhile, the district was embroiled in another controversy: in 2014, it fired its district manager, two days after a civil grand jury report was released, blasting the district for its lack of financial and operational oversight.
Holloway knew the district board was going to choose the next manager, and he didnâ€™t think Vierra had a right to take part in that important decision. Holloway approached Vierra at his office, a month before Vierraâ€™s term ended.
â€œI told him he should pay the money back and resign,â€ says Holloway, which Vierra didnâ€™t do.
Holloway filed the lawsuit against Vierra. And to Hollowayâ€™s dismay, Vierra took part in the decision to appoint Brian Lee, the districtâ€™s current manager.
One of Leeâ€™s first actions as manager, in 2015, was to pay $13,000 for Vierraâ€™s legal defense.Â
â€œTerry was acting as a director of the district at the time of the claim, so we would be hard-pressed not to defend him,â€ Lee says.â€œAnd at this point in time, the district still feels that the judge misunderstood the law. And we think that itâ€™s the right thing to do. We think that Terryâ€”and even the judge saidâ€”Terry did not intend to do anything wrong. Terry tried very hard to do it right. So you know it seems kind of obvious that we would pay for his legal defense.â€
Lee says the lawsuit has cost the district $59,000 in legal fees.
Several former board members testified on Vierraâ€™s behalf. Margaret Bruce, the newly elected board president, also testified, but was unwilling to comment for this article, since the lawsuit is ongoing.
Former board member Randall Brown wasnâ€™t on the board in 2010 when the sale happened, but read about it and discussed it in the closed session meetings from 2012 to 2016.
Brown says Vierra excused himself a few times from decisions because he was aware of a possible conflict of interest, but mistakenly approved a group of payments that included the house sale.
Brown says the board wanted to pay Vierraâ€™s legal fees because otherwise people may be discouraged to run for office.
â€œThere was consensus on the board that this was one of our own and we had to own it,â€ Brown says.
Brown says it seemed that the judge was â€œpractically almost embarrassedâ€ to pass his ruling against Vierra, due to â€œa technicality.â€
â€œThe appeal is still pending, and thatâ€™s really the joker, is if [Holloway] wins, then that could set a lot of precedence,â€ Brown says. â€œI think Terry tried his best not to be in the middle of that. I think he knew he would have been wrong if he was involved more than he was.â€
Mark Hynes, the districtâ€™s counsel, was present in the closed session meeting in 2010 in which the board decided to buy the house. Interestingly, Hynes is also Vierraâ€™s lawyer, paid by the district to defend Vierraâ€™s actions, which might have been avoided if Hynes had properly counseled the district back in 2010.
â€œReally, my target is the district counsel [Hynes],â€ says Holloway. â€œItâ€™s because heâ€™s giving the board really bad advice. And I need to demonstrate that youâ€™re listening to the wrong kind of advice, and I donâ€™t think thatâ€™s gotten through to them. I donâ€™t think theyâ€™ve gotten it at all.â€
Hynes was reached for comment, but did not reply before this article went to print.
According to law, as a plaintiff, Holloway received $4,600 of the $9,300 that Vierra was ordered to pay. The stateâ€™s general fund received the other roughly $4,600. Vierra also may be asked to pay for Hollowayâ€™s legal fees accrued thus far.
If Holloway wins his appeal, and the court orders the home sale void, the $522,000 would be returned entirely to the water district. Holloway says he really doesnâ€™t understand why the district is defending Vierraâ€™s actions.
â€œI feel like Iâ€™ve got the pieces to a puzzle, and I think it might be worth half a million dollars to the public, and I need to illustrate to this agency that theyâ€™re really going in the wrong direction. Theyâ€™re really taking the wrong advice and theyâ€™re spending money for the wrong purpose.â€