G.W. Schulz

Housing poor people one press release at a time

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By G.W. Schulz

The mayor has threatened a few times now to do something about the city’s aging public housing stock, mostly via press release. He’s at it again, via press release, of course.

We wrote two weeks ago that due to federal funding cuts, public housing residents are already experiencing increased security risks like robbery and assault at some of the developments around town. At this point, much has been said about the otherwise deplorable living conditions public housing residents already face here, from mildew to perpetually broken appliances, without having to worry about robbers armed with hammers and knives.

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Plaza East development before 2001 reconstruction

Candlelight vigil for murdered Nicaraguan immigrant

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By G.W. Schulz

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Friday vigil for Ruby Ordenana, aka Ruby Rodriguez

Supporters of the strangulated Nicaraguan immigrant and transgendered sex worker Ruby Ordenana held a candlelight vigil for her on Friday at Indiana and Cesar Chavez streets in Potrero Hill where her body was found stripped of clothing March 16.

Police were finally able to identify her last Thursday and are still trying to figure out what happened. Another transgendered sex worker was found beaten and raped in the same area last summer, so people are reasonably enough a little freaked out. Just 27 years old, Ordenana faced all manner of obstacles already, even in San Francisco, without having to face the threat of a violent assault.

We haven’t found any updates on the investigation so far, but good sam bloggers should keep posting the SFPD’s homicide division phone number for witnesses to call with information: 415-553-1145.

Some clown called into the Chronicle complaining about the paper’s respect for Ordenana’s MTF gender identity. What’s it to you, pal? Your crime blotter has to be politically sterilized, too? He even suggested such reporting was to blame for the Chron’s declining circulation. Uh, yeah. And by extension, perhaps, the city’s homicide rate could somehow be directly linked to the Chron‘s declining circulation. That probably has more to do with industry factors and the Chron‘s dorky lifestyle coverage, e.g. the lackluster sex column. Just my guess, goober.

WHERE ARE THE DPT CARTS WHEN IT MATTERS?

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By G.W. Schulz

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Thanks to Guardian friend Lauren De Vine for catching this utterly hilarious photo of a cop van parked illegally in front of a hydrant near Atlas coffehouse in the Mission on Friday afternoon. No emergency, she told us. They were just gettin’ some coffee, and perhaps a pastry or two. We considered calling John Hanley, president of the San Francisco Firefighters Union, to see if we could stoke the still-flaming embers from last November’s District 6 board race when the union enraged the San Francisco Police Officers Association by endorsing Chris Daly. Maybe next time.

TURKEY LEGS AND MATCHING SWEATSHIRTS: Hearst and MediaNews plan future after sordid tryst

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By G.W. Schulz

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So what’s going on with the Bay Area’s favorite media love affair these days? You know the one. Hearst and MediaNews met first in Houston two decades ago and engaged in a nefarious entanglement that made one of the nation’s largest cities a single-daily town.

Since then, Hearst and MediaNews just can’t keep their hands off each other. They’re like that nerdy couple at the mall, both looking hopelessly vanilla in matching Banana Republic sweatshirts as they tear into one of those wax paper-wrapped turkey legs, grease dripping from their third chins.

Douchebags in Fall Out Boy might get sued again for ripping off yet another band

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By G.W. Schulz

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It’s tough to come up with your own musical concepts and ideas when your schedule is loaded with photo sessions and magazine interviews inquiring about your sex life on behalf of thousands of barely legal teenage girls.

How does Fall Out Boy have time to write music these days? They’re everywhere ‘cept behind their instruments. They’re on the cover of Rolling Stone. They’re on the cover of Spin. Shit, the New Yorker even ran a piece on them, dutifully highlighting in the photo that one guy who insists on liberally applying mascara and not wearing a shirt. You’re no Iggy Pop, douchebag. Who is their publicist fellating to get all this good press, by the way? Do people still buy this trash? Most of all, why is Microsoft Word telling me not to use “fellatio” as a verb, or even “douchbag” as a noun? Perhaps the new Word version in Microsoft Vista will list “Fall Out Boy” among the alternatives for “douchebags.”

Anyway, it looks like Nicholas Hans of the now-defunct Knives Out is considering legal action against Fall Out Douche for ripping off the image that appeared on a shirt Knives Out was selling a few years ago in 2001 while on tour.

A half-century of lies

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View pictures of Leola King’s legendary Blue Mirror club here.

Leola King has lived your life, the lives of three friends and then some.

She’s traveled to Africa with the legendary entertainer, Josephine Baker. She’s featured jazz great Louis Armstrong at a popular Fillmore nightclub she helmed in the 1950s called the Blue Mirror, where she also once convinced a roomful of patrons to drink sweet champagne from the heel of her shoe.

She’s played host to the crusading television journalist Edward R. Murrow.

She’s even had a fling with championship boxer Joe Louis. From the ring at Madison Square Garden, he glanced toward her front-row seat, which she’d secured by chance during her first trip to New York, and had his lackeys retrieve her for a date afterward. Their rendezvous appeared as a gossip item in an Ohio paper and remains in its archives today.

Most of all, Leola King has come as close as anyone possibly can to experiencing bureaucratic hell on earth. For half a century, she’s been fighting with the San Francisco Redevelopment Agency, which has taken four pieces of her property, wiped out a restaurant and two nightclubs she owned, and left her with a string of broken promises.

Her story is evidence that the ugly local chapter of Western Addition redevelopment history still isn’t over – and it’s a demonstration of why so many African Americans in this town will never trust the Redevelopment Agency.

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Beginning in the 1940s, King successfully operated a series of restaurants and nightclubs in the city, remarkable enough in an era that imposed a double-paned glass ceiling on black, female entrepreneurs.

“Back when I first moved onto Fillmore, it was very popular,” King told the Guardian. “Market Street didn’t have shit. They didn’t have traffic. They didn’t have nothing on Market Street.”

During the height of King’s accomplishments, the Redevelopment Agency infamously launched an ambitious project to clear out “blight” in the neighborhood. It was part of a nationwide urban-renewal trend, and while the project here still won’t be finished until 2009, it’s widely regarded as one of America’s worst urban-planning disasters.

In theory, Western Addition residents who were forced to give up their homes or businesses were given a “certificate of preference,” a promise that when the sometimes decaying buildings were turned to kindling and new ones built, the former occupants could return.

In practice, it didn’t work out that way. An estimated 5,500 certificates were issued to families and business owners shortly before the second phase of Western Addition redevelopment began in 1964. Some 5,000 families were dislodged and many of them fled to other sectors of the city (including Bayview-Hunter’s Point, which is today slated for its own redevelopment), or outside of the Bay Area completely.

Only a fraction of the certificates have benefited anyone. The agency has lost contact information for more than half of the holders, and redevelopment commissioners now openly admit the program is a joke.

“If we’re going to boast about being this diverse community in San Francisco, and we’re going to allow our African American population to become extinct, then how can we show our faces in government if we’re not really doing anything about it?” asked London Breed, a redevelopment commissioner appointed by Gavin Newsom in 2005. “And not just putting black people in low-income housing. There [are] a lot of middle-class African Americans all across America, specifically in the East Bay and in other places. Why do they choose to live in the East Bay over San Francisco?”

A renewed interest in the certificates by City Hall led to hearings this month, and District 5 Sup. Ross Mirkarimi has planned another for April.

King obtained two certificates, and attempts to later redeem them both devolved into costly legal wrangling with the agency that lasted more than two decades. She has never regained what she lost.

Leola King’s story is about more than certificates of preference. It’s a story about the troubling legacy of urban renewal.

King welcomes guests into her home on Eddy Street near Fillmore with ease. The living room in what is little more than a two-bedroom converted garage apartment swells unimaginably with antiques – three stuffed chairs with vinyl slips, crystal chandeliers, an ornate dining-room table, lamps, a fur throw.

She insists that she’s just 39 years old, but public records put her closer to 84.

When the Guardian first visited with her in person, she was dressed in black cotton leisure attire. Two chestnut braids cascaded from a gray Kangol-style cap, which she smoothed with her hands as they hugged a pair of light-skinned cherub cheeks.

King made her way west after spending her earliest years behind the barbed wire of a Cherokee reservation in Haskell, Ok. Her mother died when King was young, and her restless father had meandered off to Los Angeles. Her grandparents oversaw her adolescence before she trailed after her father to California, where he was establishing a chain of barbecue restaurants. She married a man at just 14, and a year later, she was a mother. Tony Tyler, her son, is a San Francisco tour guide today and remains a close confidant and business partner.

It was 1946 when she first landed in San Francisco and eventually started her own barbecue pit at 1601 Geary St., near Buchanan, historic building inspection records show. She called it Oklahoma King’s, and hungry San Franciscans were lured to the smell of exotic buffalo, deer and quail meats.

“That end of Fillmore was very popular all the way down until you got almost to Pacific [Avenue],” she said. “Heavily populated. There was at one time in that area of Fillmore over 100 bars alone. Lots of hamburger places. That’s where I had the barbecue pit.”

By 1949, however, Congress had made urban renewal federal law with the goal of leveling slums and deleting general “blight,” still the most popular and awkwardly defined threshold for determining where the government can clear homes and businesses using eminent domain.

The first redevelopment zone in the Western Addition, known as A-1, included Oklahoma King’s. She was paid approximately $25,000 for the property, but offered no relocation assistance or other compensation for the revenue she lost as a result of ceasing her day-to-day business.

Forging ahead, she opened in 1953 what became a hub of jazz and blues entertainment in the Fillmore, the Blue Mirror, at 935 Fillmore Street. The place was decorated with brass Greek figurines on the walls, a circular bar and velvet festoons. King spent a year hopping onto buses full of tourists and begging the driver to drop them by her nightclub for a drink. Before long, her brassy personality had attracted world-class performers, each of them adding electricity to the club’s reputation.

“She was the type of woman who knew how to handle people,” a Blue Mirror regular later said in the 2006 collection of Fillmore jazz-era photography, Harlem of the West. “She could talk to the pimps and hustlers. She didn’t play around, and they knew how to conduct themselves in her club.”

A musician who formerly worked there told the Guardian the Blue Mirror was one of the few places on Fillmore that actually provided live entertainment at that time. Bobbie Webb backed up B.B. King, Little Willie John, T-Bone Walker and others as a young saxophonist at the Blue Mirror with his band the Rhythm Rockers. He said the other establishments nearby on Fillmore were mostly bars except for headlining auditoriums where mainstream acts like James Brown and the Temptations performed. Smaller venues abounded up the street on Divisadero, he said, save mostly for King’s Blue Mirror and the Booker T. Washington Hotel.

“[King] didn’t only have a personality” said Webb, who now airs a show Tuesdays on 89.5 KPOO, “she was a beautiful lady. Personality just spoke for itself. All she had to do was stand there.”

But like virtually everyone in the neighborhood at that time, King rented the place where the Blue Mirror operated. Redevelopment again reached her business in the early 1960s. State booze enforcers, she says, claimed to have witnessed a bartender serving alcohol to a minor and her liquor license was taken away. When the Redevelopment Agency showed up shortly thereafter to sweep the block away, she was ejected without compensation because she wasn’t at that time technically in business.

Two more commercial and residential properties she owned on Post and Webster streets respectively were also eventually taken under redevelopment.

She pressed on, encouraged by Jewish business owners in the area she’d befriended, including liquor wholesaler Max Sobel and Fairmont Hotel operator Benjamin Swig.

“Whenever I’d lose something, they’d say, ‘Keep on moving. Don’t stop, because you’ll lose your customers. When you open back up, they won’t know who you are.’ They’re the ones who told me, ‘Go get another spot.'”

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By the time King began work on her third business in the Fillmore, urban renewal projects had wreaked havoc on minority communities across the nation, including neighborhoods in west-side Boston, downtown Atlanta, the celebrated 18th & Vine District of Kansas City and elsewhere.

King opened the Bird Cage Tavern at 1505 Fillmore St. in 1964 near O’Farrell complete with a jukebox, 30-foot mahogany bar, a piano and a gilded birdcage. Then-police chief Thomas J. Cahill tried to block her liquor-license renewal by complaining to the state about “winos” and “prostitutes” in the neighborhood, records show, but regulators dismissed the claims.

“We had viable businesses all around us,” King said. “I had one fellow I worked with a lot named Willie Jones. He was a blues singer. The interesting thing was, I had music in the daytime at the Bird Cage. I specialized in afternoon jazz.”

Despite a triumphant resettlement, nonetheless, the redevelopment agency arrived yet again and bought her building during the expansion of it’s A-2 redevelopment phase and served as landlord for the Bird Cage, a barber shop and a liquor store as it waited for another two years deciding what to do with the building.

On the agency’s watch, a fire broke out next door to the Bird Cage that led to water damage in her space. Federal Housing and Urban Development records show that no insurance claim was ever filed by the Redevelopment Agency. King says the agency removed some of the bar’s contents, mostly kitchen supplies, and made only stopgap repairs to the building anticipating that she would later be ousted anyway. The items they took, she says, were never returned.

The agency then evicted all of the building’s tenants in 1974. This time, King stood fast and had to be forced out by the sheriff. The agency promised relocation assistance, but those empty assurances became her biggest headache yet. In fact, she would spend the next 25 years quarreling with the agency over relocation terms.

King and the agency searched fruitlessly until 1977 for a suitable replacement building before King purchased her own out of desperation at 1081 Post St. She was then forced to begin another endurance test of working to actually extract money from the agency owed to her for properly outfitting the new building.

Meanwhile, the Bird Cage’s leftover furnishings – from oil paintings, rugs and curtains to an ice maker, wood shelving and an antique porcelain lamp – were destroyed when the agency amazingly chose to store them on an outdoor lot off Third Street during her move, a fact later confirmed by an agency employee in an affidavit.

“They moved it all out,” King said, “all these antiques and stuff, into this field where the weather ate it up.”

The agency’s initial response was to determine how it could best avoid legal liability. Redevelopment officials finally offered her about $100,000, which she needed desperately to keep things moving with the Bird Cage’s new location, but King insists today the materials were worth closer to $1 million.

As she was fighting to reopen her bar business, she attempted to redeem an earlier certificate of preference given to her when she’d lost a residential property on Webster Street to redevelopment. In 1983, she bought a condemned, 12-unit apartment building on Eddy Street hoping to rehabilitate it using a federally backed loan.

The deal only led to more trouble. The agency paid for its own roving security to patrol Western Addition properties it had purchased, and before 1431 Eddy St. was ever officially conveyed to King (as well as two other neighboring developers), thieves gutted the building of windows, doors, plumbing, light fixtures and other hardware. (Two buildings belonging to neighboring developers were also hit, and the agency addressed their losses the same way.)

Almost immediately, the agency told her she’d purchased the building “as is” and that they weren’t responsible for the break-in. But according to an internal 1983 memo marked “confidential,” later unearthed when friends of King submitted a records request to the agency, staffers clearly were concerned about the legal implications of offering one building for sale “as is” and actually providing another one on the date of delivery that had been thoroughly burglarized.

The memo shows that the possibility of a lawsuit was of greater concern to the agency than any obligation to compensate King for the lost hardware, regardless of whether proper security was the agency’s responsibility. Records show they did discuss a settlement of little more than $2,000, but King considered the stolen goods to be worth thousands of dollars more.

She managed to eventually finish the rehabilitation of her Eddy Street property after several years of work, and while she lives there today, time and angst took their toll. Each step of the transition to what she hoped would someday become her new bar, Goldie’s on Post Street, involved a seemingly endless round of yet more negotiations, letters, legal threats and bureaucratic backbiting before the agency would lift a finger and allocate money for contractors, necessary seismic upgrades, architects and equipment.

In 1997, then-Rep. Ron Dellums (now Oakland mayor) wrote a letter to top local HUD official Art Agnos (later a San Francisco mayor) on King’s behalf.

“On August 26, Ms. King met with a member of my staff and detailed issues surrounding a 25-year dispute she has attempted to resolve with HUD and the San Francisco Redevelopment Agency,” Dellums wrote. “Your expeditious attention to this matter is [a] request, as Ms. King is elderly and experiencing health problems. The resolution to this issue would allow her to live the remainder of her life with some piece of mind.”

It was too late. The federally backed loans she’d received from HUD to rehab her Eddy Street property, from which the Redevelopment Agency strictly enforced repayment, fell into default. Loans leveraged against her other remaining properties began to slip, too, all while she fought with the forces of redevelopment to recreate what she had once proudly possessed.

King’s story may seem like an unfathomable streak of bad luck, but there’s a paper trail for all of it. And her battle, laid out in hundreds of pages of documents saved by King over several decades and reviewed by the Guardian, was ultimately unsuccessful..

By 1997, King was submerged in bankruptcy proceedings and would lose pretty much everything that she owned, including an Edwardian landmark home on Scott Street near Alamo Square where she’d lived for years (partially burned in a 1986 fire, believe it or not) and a residential building on Sutter Street.

Goldie’s was to be her final resting place, a roost from which she hoped to feature cabaret dancing, fresh crab at happy hour, a refined art deco aesthetic and live music performances. She lost that, too. Today, it’s Diva’s just off Polk Street.

Urban renewal won.

———————-

Hopeful press accounts lately foretell a jazz revival in the Fillmore District fueled by enterprising developers deft at financing lucrative redevelopment projects through tax incentives and low-interest loans half a century after the promise of “renewal,” now described euphemistically as “historic preservation.”

But with such a sordid history behind them, it’s no wonder residents of Bayview-Hunter’s Point, many of whom escaped Western Addition “renewal” in the first place, are leery of a pending years-long plan to redevelop nearly 1,500 acres in the southeast neighborhoods.

Bayview newspaper publisher Willie Ratcliff led a petition drive last year in an effort to put the plan before voters. Over 20,000 petition signatures were certified by elections officials, but City Attorney Dennis Herrera ruled the petitions were technically invalid because circulators hadn’t presented the full text of the redevelopment plan to signers. Redevelopment foes have since sued to have Herrera’s decision tossed.

“The misuse by these people is just unbelievable,” King said. “They were fighting me every inch.”

Thanks to Susan Bryan for joining the Guardian in reviewing hundreds of pages of public and personal records preserved in Leola King’s estate. Bryan is currently working with Monkey Paw Productions on a documentary about King’s life

Home invasion

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› gwschulz@sfbg.com

Don Barsuglia worried security was deteriorating at the SoMa public housing complex where he’s lived for about eight years after he watched a body drop past his ninth-floor balcony window late one evening.

A would-be thief had climbed over the 10th-floor balcony during an escape attempt after stealing a few thousand dollars from another resident in Clementina Towers, located close to Sixth Street between Howard and Folsom. The man misjudged his footing and dropped to his death below before police could arrive.

"He probably thought my balcony was open," Barsuglia told the Guardian. "However, I have a bird net on my balcony. So when he went to go down, he hit my net, and good-bye, Mr. Spider-Man. Splat. That’s it, man."

That was enough for Barsuglia, who joined dozens of angry public housing residents last week at City Hall for a special hearing on safety and living conditions, which was organized by Sup. Chris Daly, whose District 6 includes Clementina’s neighborhood.

The 74-year-old Barsuglia recounts with verve the building’s recent run-ins with dope dealers, prostitutes, and knife-wielding teenage stickup artists. Several years ago his building and a neighboring tower had two 24-hour security guards, he said, but they’re now down to one. And just a few weeks ago, when daytime watches were trimmed back to save money, Barsuglia and other residents say they noticed a marked difference.

"It’s neglect by management and administration," he said of the San Francisco Housing Authority. "They pay no attention to us … totally ignored. They don’t even return calls."

Daly’s office has been inundated with grievances from people frightened by an uptick in crime at public housing, including the Ping Yuen complex on Pacific Avenue in Chinatown and Sala Burton on Turk Street in the Tenderloin.

Clementina, built in the early ’70s, houses low-income elderly and disabled residents in 275 studios and one-bedroom apartments. The building is supervised by the trouble-plagued Housing Authority, which faced a litany of questions at the meeting about a diminished security presence at several of its 52 developments across the city.

In November 2006 housing officials sent an abrupt memo to residents notifying them that the authority would have to "explore other methods" for policing its senior and disabled housing sites due to cash shortages.

Progressives on the Board of Supervisors have set their sights on the authority’s seven-member commission, composed of mayoral appointees, demanding at the hearing that Mayor Gavin Newsom consider a shake-up of its membership. No one from the Housing Authority Commission attended the meeting.

"Where are they?" Sup. Tom Ammiano asked after hearing a steady stream of emotional public comments. "I find it criminal, and I challenge the mayor to look at his appointments. Are they the right people for the commission?"

A 51-year-old heart patient who’s lived at Clementina for nine years told the Guardian she positions her motorized wheelchair against the door each night for additional safety. The headboard of her bed seals off one of the windows. Full-time security returned to the building recently, but the woman, who asked not to be named, fearing an assault, said that when the single guard checks each of the 26 floors, nonresidents manage to sneak in. She said that just last week a duo armed with a hammer and a knife robbed an older man living in the building.

"It used to be nice and quiet," she said. "Our front doors we could leave open with just the chain on…. [Now] I’m not sleeping in my bedroom. I’m sleeping on my couch facing the door."

The authority’s embattled executive director, Gregg Fortner, blames it on the White House and congressional cuts to the federal Department of Housing and Urban Development (HUD), the bureaucracy that controls his bank account. The money available for armed and unarmed patrols at public housing in San Francisco has dropped by half in the last six years, according to figures Fortner furnished at our request.

A contingent of San Francisco Police Department officers is hired for $83,000 a month to patrol the "Big Four" public housing projects — Sunnydale, Alice Griffith, Hunters View, and Potrero — where many of the city’s headline-grabbing violent crimes occur. That approach was recently expanded to the Western Addition.

Fortner was already struggling to stay out of the papers without the most recent security headaches. In a series of stories published in 2005, the Guardian exposed dangerous and unhealthy conditions at the city’s public housing projects, sparking promises by city officials to fix the problems. And Fortner has also been threatened with jail time by a judge for refusing to pay out millions of dollars the agency owes on verdicts in civil lawsuits.

In addition, last week the Guardian obtained more than 100 forms filled out by public housing residents detailing chronically deplorable living conditions that apparently continue unabated citywide. Compiled by local organizers of the Association of Community Organizations for Reform Now (known nationally as ACORN), the reports of maintenance failure betray stubborn structural decay that persists despite frequent promises of reform from City Hall.

"Bathroom tub leaks through ceiling," one of them reads, closely echoing many of the other complaints. "Stove is broken. Roaches. Holes in my walls; some as big as a square foot."

"My kitchen window has been broken for eight months (due to burglary) and it keeps my house cold," another reads. Most of the maintenance failures have persisted for months, even years. Other complaints depict half-assed repairs that did little or nothing to fix the problem.

In response, Fortner told us tenants are charged for repairs if the authority determines they’re at fault, which leads some to avoid lodging complaints. He maintains that emergency work orders are handled within 24 hours and all others before 30 to 45 days are up.

"We did 63,000 work orders from Oct. 1, 2005, to Sept. 30, 2006," Fortner said. "That’s like 10 work orders per unit, per year. I don’t know where you live, but do you have a repairman in your unit once a month to fix something? We have an old stock that’s falling apart."

But beyond the indignant outcry and public hearings, no one at City Hall except the mayor is in a position to do anything about public housing unless San Francisco decides to take over the authority completely, which some supervisors have discussed informally. The authority answers mostly to the feds.

Fortner warned that when local governments attempt to babysit their housing authorities, they inevitably get into trouble with HUD. In fact, the Berkeley City Council fired itself last week as the charge of its housing authority because of pressure from HUD.

And the burglar who fell to his death at Clementina Towers? SFPD spokesperson Sgt. Neville Gittens told us he was 19 years old and had been working as a caretaker for his victim. The two quarreled over the money, and a neighbor eventually made a noise complaint to the guard downstairs. When the guard arrived, he managed to block the alleged perp from leaving through the front door but couldn’t keep him from making a gruesome exit out the back.

Other residents told the committee shady figures scaled the exteriors of the towers all the time and were doing so with more frequency. Fortner told the committee it was the first he’d heard of the problem. Maybe his promise of a new tip line for residents will prevent ignorance as an excuse in the future. Or maybe not. *

100 years of secrets

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› gwschulz@sfbg.com

They’re back.

First Amendment foes are again attempting to criminalize news reporting that exposes questionable if not illegal conduct by the White House, Pentagon, and intelligence agencies, from dispatching terrorism suspects to secret torture chambers abroad to listening in on private phone conversations.

An attempt by Sen. Kit Bond (R-Mo.) in 2005 to pass legislation similar to Britain’s Official Secrets Act failed, but Sen. Jon Kyl (R-Ariz.) quietly tried to attach an amendment to an unrelated bill scheduled for committee review last month that would have expanded the Espionage Act of 1917.

The amendment’s broad scope was narrowed March 2 before being shifted to another Senate bill amid an outcry by First Amendment advocates. The proposal’s almost laughably vague original legislative language aimed to punish anyone who published or communicated classified information "concerning efforts by the United States to identify, investigate or prevent terrorist activity."

The amendment would have extended jail time for whistleblowers to 20 years. Senate Bill 2, where the amendment now rests, was originally intended to enact the remaining recommendations of the 9/11 Commission. The new amendment would still punish employees working on Capitol Hill or other unauthorized personnel who knowingly disclose classified information contained in congressional reports.

Coalition of Journalists for Open Government coordinator Pete Weitzel told the Guardian that the earlier language seemed to include newspaper publishers as well as government employees in its scope.

Conservative members of Congress called for reporters to be punished under the Espionage Act after the New York Times, the Washington Post, and other media reported details of the George W. Bush White House’s domestic wiretapping and extraordinary rendition programs. In particular, Post reporter Dana Priest and Times reporter James Risen were condemned and accused of treason by Fox News pundits and jingoistic bloggers for harming national security, today’s ever-present excuse for government secrecy.

"Current laws are sufficient to prosecute anyone who leaks classified information and has an intent to harm the United States," Weitzel told us from Washington. "There’s no impediment to going ahead and prosecuting under existing law. So I don’t see a need for this additional legislation."

Sunshine activists worried the original amendment could plausibly include journalists covering emergency response planning, security failures, public health threats, and federal homeland security spending. In addition, its broadness is simply unconstitutional, according to the Virginia-based Sunshine in Government Initiative.

"The amendment would work to constrain critical reporting on homeland security — even information as basic as homeland security grants — as well as national security and foreign policy matters," the group, which includes the Association of Alternative Newsweeklies (of which the Guardian is a member), wrote in a public statement Feb. 27.

The Espionage Act was passed under President Woodrow Wilson and led to a 10-year prison term for one-time Socialist Party leader and presidential candidate Eugene V. Debs, who was eventually pardoned by President Warren G. Harding after serving three years. Debs had criticized World War I and conscription during a speech in Ohio.

"Do not worry over the charge of treason to your masters," he said during the speech, "but be concerned about the treason that involves yourselves. Be true to yourself, and you cannot be a traitor to any good cause on earth." *

Sorta, maybe an alcoholic

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› gwschulz@sfbg.com

To read about Delancey’s finances, click here.

What exactly is Gavin Newsom doing at Delancey Street?

It’s not counseling, we’re told. It’s not rehab. It’s not detox. It’s not a typical course of treatment at the storied $20 million nonprofit. So what is it beyond a reprieve from the otherwise ugly headlines?

Newsom isn’t talking much about his program. But some mental-health professionals are raising serious questions about his regimen.

San Francisco’s chief executive declared several weeks ago in a public announcement to all the city’s department heads that he was seeking a diluted version of rehab at Delancey Street.

That struck more than a few people as odd. Delancey Street doesn’t do part-time or outpatient treatment. It only takes clients who agree to a long-term, full-time residential program geared entirely toward hardcore alcoholics, drug addicts, and criminals.

It’s not, in other words, a place where someone in Newsom’s condition would typically seek help. And it’s not a place designed to alleviate a comparatively minor thirst for white wine.

The news certainly appalled Dee-Dee Stout.

Stout is a City College of San Francisco professor and an adjunct faculty member at San Francisco State University. It’s her job to train city employees working in any major capacity that involves medically treating alcohol and drug abuse, from San Francisco General Hospital to Community Behavioral Health Services to the Adult Probation Department.

Stout, a certified drug and alcohol counselor, told us friends who’d seen the headlines said, " ‘Oh god, Dee-Dee’s going to hit the roof on this one.’ And they were right."

She struggled to figure out how she could broach the subject to one of her classes at City College — but a student beat her to it, quickly pointing out that it was unethical for credentialed treatment specialists to counsel their close friends. The two-year recertification required of caseworkers in the city includes an ethics update, Stout said.

Delancey Street’s executive director, Mimi Silbert, has been Newsom’s friend since he was a child and knows his father well. Silbert, in fact, has openly discussed Newsom’s progress with the press, including the Guardian, while the mayor’s own ear-piercing silence on the matter enables him to appear repentant.

Stout decided to offer the student extra credit if he drafted a letter outlining the concerns of the class, which she had colleagues review before sending it along to the entire Board of Supervisors, the Mayor’s Office, and pretty much every major newspaper in town.

"This relationship is not acceptable under any applicable code of professional ethics," the letter states. Hardly anyone bothered to write back, save for the auto-response letters Stout received from Sophie Maxwell and the Mayor’s Office, plus a letter from Bevan Dufty urging Stout and her students to empathize with Gavin during this difficult time.

Silbert, for her part, told the Guardian that ethics weren’t a concern for her because Newsom wasn’t a full-tilt drunk and hadn’t submitted completely to a detailed treatment plan when he approached her for help.

"The mayor is not a drug addict," Silbert said. "That’s not what he was looking for…. Having stopped drinking, he wanted to take a look at himself. He drank what people would call ‘socially.’ I’ve seen other people when they stopped drinking — even people who didn’t need detox — and there were physical signs of problems. That’s not the shape the mayor was in."

The mayor is attending both group and solo counseling sessions after work each day, a schedule that Silbert told us is still ongoing.

Dannie Lee, a former Delancey Street resident we interviewed, said that during his own stay he attended group therapy three days a week and they were generally no-holds-barred sessions. Lee lived at Delancey Street for three and a half years after spending much of his adult life in California’s prison system. While the program ultimately worked for him, he insists, he’s skeptical that it could benefit anyone who’s trying to attend as an outpatient.

"Maybe it would be great if [Newsom] was actually there as a client or whatever to really sit in a circle and really share his stuff and listen to the group and let the group really attack," said the 49-year-old Lee, who today is one of Stout’s students. "That probably would be fine. But I don’t see that happening…. I think he would really have to tell things I don’t think he wants to tell."

Press accounts have depicted Delancey Street as an abrasive scrub brush for Newsom’s sinful indulgences. "No Nonsense: Toughness Key to Delancey Street, Silbert’s Success," a Chronicle headline announced Feb. 7. Silbert herself told the Guardian, "No one would come near us if they weren’t serious. I’m old, crotchety, and very direct. I have no time to waste."

That may be true — and it’s clear Delancey Street has had some remarkable success in treating people with severe self-destructive impulses.

San Francisco, on the other hand, years ago eschewed the sort of harsh treatment techniques that have made Delancey Street famous.

H. Westley Clark, director of the federal Center for Substance Abuse Treatment and a one-time clinical professor at the University of California at San Francisco, told us that federal mental-health bureaucrats are less inclined today to fund groups that use confrontational methods for treating clients.

Any local nonprofit agency that wants to provide help to substance abusers using city money must comply with San Francisco’s harm reduction policy, which discourages hostile interview techniques and was set in stone by the San Francisco Health Commission seven years ago.

The letter from Stout’s class points out that treatment professionals are moving away from tough-love verbal upbraids such as those employed by the Delancey Street model.

" ‘Attack therapy’ often involves yelling at patients who have, in our view, a medical condition…. While we realize that some patients are helped by strong, confrontational methods, we believe that an evidence-based approach offers more consistent successful results."

Silbert’s techniques may be controversial, but she does move easily among Democratic Party rainmakers and philanthropists. Delancey Street enjoys wide popularity with the likes of Robert Redford, Sen. Dianne Feinstein, the Washington-based Eisenhower Foundation, and executives at the Gap, Pottery Barn, and Bank of America.

Silbert said the mayor deserves credit for whatever help he chooses to pursue. Other prominent friends of Delancey Street have called her before when they needed to "tune themselves up."

"I would never choose to criticize other people’s approaches, so I’m sorry if people are criticizing ours," she said. "We work hard. We do our best…. I’m glad these people feel they have a definitive answer. I don’t, and I’ve been doing it for 35 years."

If Newsom, as Silbert says, isn’t a serious alcoholic, Delancey Street is a peculiar place for him to seek help.

Most people entering the program have hit rock bottom, a step away from death or lifelong incarceration. They’re one-time prostitutes, drug pushers, robbers, and ruthless bangers. Since the organization was formed in the 1970s, it claims to have transformed the lives of 14,000 people through vocational and education assistance in addition to group counseling.

Very few of those people come in for the sort of casual treatment Newsom is seeking. In fact, Delancey Street typically doesn’t accept anyone who isn’t planning on spending a couple years in residence.

Residents living at the Embarcadero Triangle provide labor for several businesses that buoy the nonprofit financially, from its famous Delancey Street Restaurant to a national moving and trucking service.

Newsom for the most part is refusing to answer questions about his now-public battle with booze.

But Stout suggests that Newsom, by allowing the entirety of his treatment to appear on a marquee, has brought the publicity on himself. "Frankly, I don’t think it’s any of our business if he goes to treatment," Stout said. "I wish he would have just quietly gone and did what he needed to do and said he just had some medical things he needed to take care of, period." *

A little help from their friends

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The San Francisco Chronicle’s intrepid reporters have insisted repeatedly in recent weeks that the Delancey Street Foundation accepts absolutely no government funds. “Instead, it relies on donations and the profits from its commercial enterprises,” San Francisco’s paper of record wrote on Feb. 6.

A simple search of the city’s vendor database, however, confirms that several local agencies in San Francisco paid Delancey Street amounts totaling well over $1 million for the last two fiscal years alone. The Department of Children, Youth & Their Families gave Delancey Street $98,000 in program grants for each of the last two fiscal years and by the end of 2007 will have given the nonprofit more than $300,000.

And the mayor’s office gave Delancey Street $435,000 in fiscal year 2006 and $483,000 in 2005, the records show.

The city has paid the foundation more than $200,000 so far this year, and there’s another $64,000 in outstanding payments. The Guardian obtained copies of the grant agreements through sunshine requests made last week.

Mayor Newsom is receiving “counseling” for a self-diagnosed excessive love of white wine from Delancey Street’s politically well-connected executive director, Mimi Silbert, who has known Newsom and his family for years.

The foundation’s easily accessible federal tax forms reflect the hundreds of thousands in annual government dollars paid to Delancey Street.

After local blogger Michael Petrelis began contesting the claims, a Chronicle reporter clarified for Petrelis following a call to Silbert that grant money from the city supports a charter school on Treasure Island called the Life Learning Academy. The academy is managed by Delancey Street and targets troublesome teens – half of them on probation – who have had problems elsewhere in the school district. Silbert told us that the school was designed in part to emulate Delancey Street by operating businesses like its organic produce subscription service and bike maintenance shop.

She said, as Delancey Street has for years, that program residents living at the nonprofit’s Embarcadero Street headquarters depend on one another to keep the place operating through its variety of undertakings.

“We structured it without a staff and without day-to-day funding so that people could help each other,” Silbert said. “And it’s in the helping of each other that you begin to find your strength. And since they run the organization and go from department to department to department, they eventually find what they are good at.”

But there’s more. According to Delancey Street’s tax forms and deed records maintained by the county recorder, the Mayor’s Office of Housing facilitated a $4 million loan for Delancey Street in 1989 using city money to help with the construction of its sprawling residential and commercial center on the Embarcadero, which cost $20 million to build, not including donated labor. As long as Delancey Street complied with a series of terms, the loan, plus interest, would be forgiven after 20 years. Free government money, in other words.

The city’s mayor at that time was Art Agnos. Delancey Street leveraged $18 million more through the private sector to cover the rest of its construction costs for the Embarcadero Triangle Project, according to its tax forms.

They did so using a cash-generating scheme known as a “leaseback” agreement. A third party purchased the property for $18.7 million paid to Delancey Street and also covered the expense of the $4 million loan made by the city. The whole transaction took place only on paper, and in exchange, the third party got to take advantage of the property’s low-income housing tax credits by technically owning 600 Embarcadero St. while the nonprofit continued to operate Delancey Street at the location.

Silbert wields far-reaching connections inside the Democratic Party and among moneyed philanthropists including Rep. Nancy Pelosi, Sen Dianne Feinstein and even Britain’s prime minister, Tony Blair. When Silbert announced plans to expand nationally, Delancey Street’s longtime supporter, Feinstein, vowed to secure a $1 million grant from the U.S. Justice Department to help in the effort, according to a 2002 LA Times profile of the organization.

The foundation is headquartered in a burnt umber stucco building on Embarcadero Street fringed with decorative iron gates and planters beneath French-style windows. Overlaying the property is a grid of sun-baked courtyards. Its design complies neatly with the principles of New Urbanism encouraged in the northeastern neighborhood with a walkable row of ground-floor businesses and densely packed dwellings. According to lore, it was built entirely by residents of Delancey Street.

If you didn’t know it was a treatment center, frankly, you’d mistake it for another of the innumerable yuppie enclaves that have sprouted in the neighborhood over the last two decades.

Five hundred residents live on site and conduct all of the program’s day-to-day operations as part of their commitment to an intensive two-year program. They provide labor for several Delancey Street businesses that buoy the nonprofit, from its famous Delancey Street Restaurant to a national moving and trucking service.

Leaseback agreements, such as the one entered into by Delancey Street to build its hub on the Embarcadero, are a common financing mechanism for low-income housing construction. But the forgivable loan from the city shows that a little sleuthing on the part of reporters would have gone a long way in confirming the extent of the nonprofit’s professed independence

What we know now

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› gwschulz@sfbg.com

Records unsealed in a federal civil suit last week show that the Hearst Corp. and MediaNews Group have grown intensely fond of each other during the past several years. Hearst even considered selling its San Francisco Chronicle to MediaNews in 2005, but CEO Dean Singleton wasn’t offering nearly enough money.

What the records don’t show is any effort by the two chains to compete in the market by improving their products.

The Guardian first posted a story online Jan. 31 detailing court documents unsealed by Federal Judge Susan Illston in real estate investor Clint Reilly’s antitrust suit against Hearst, MediaNews, and a group of other newspaper companies who joined Singleton in a Northern California partnership that has given him control of almost every big daily in the Bay Area except the Chronicle.

The evidence of anticompetitive behavior is so clear now that the obvious question is whether the US Justice Department or the California Attorney General’s Office, with new boss Jerry Brown, will do anything about it.

Gina Talamona, a Justice Department spokesperson in Washington, DC, confirmed that the feds were still looking into Hearst’s alliance with MediaNews, but she wouldn’t, of course, divulge details.

"I’m just confirming generally we’re looking at it, and we look at the anticompetitive effects of a proposed transaction, and that’s ongoing," Talamona said. "Obviously, our folks are aware of what’s going on in that private suit, but I wouldn’t have anything further for you on that."

Illston, meanwhile, has made it clear in the past that she could force MediaNews to give up some of its newly purchased properties if Reilly convinces her that the deal violates antitrust laws.

Among the documents we obtained is a deposition of Hearst senior vice president James Asher, taken by Justice Department lawyers last September, in which he candidly explains how Hearst for years has wanted to invest in MediaNews — which likes to buy up all the papers in a region and cut costs by sharing facilities and stories.

Hearst executives "formed a favorable impression of Dean Singleton and his company" all the way back in 1995, when a shady deal in Houston gave Hearst’s Houston Chronicle a dominant position in that market after MediaNews shuttered the Houston Post and sold its assets to Hearst. Since then, Asher stated, Hearst has quietly waited for an opportunity to invest in MediaNews or at least cut costs by joining ad, distribution, and printing operations with the ostensible competitors across the bay.

That opportunity arose when Hearst claims it was most needed.

Hearst spent three-quarters of a billion dollars buying the San Francisco Chronicle in 2000, a messy deal that nearly left its old property, the San Francisco Examiner, in shambles. But the purchase quickly became a drag on the company’s portfolio.

Hearst has since lost $330 million trying to figure out how to make the Chronicle profitable. Of all the documents reviewed by Guardian so far, which include memos between Hearst and MediaNews executives outlining potential collaborations, little time appears to have been spent determining how the product itself could actually be made more valuable to readers and, hence, more lucrative for both companies. Instead, Hearst seemed hungry to emulate Singleton or at least buy a bunch of his stock and let him handle the dirty work.

The infamous Singleton strategy includes clustering properties (its Bay Area cluster is now the company’s largest), slashing staff, outsourcing jobs, and consolidating business offices. Layoffs have already occurred at the San Jose Mercury News and the Contra Costa Times, and reporters are covering stories for several papers under a single "MediaNews Staff" byline.

While Hearst lawyers told Illston early in Reilly’s suit that its $300 million investment in MediaNews, consummated last summer, would involve only non–Bay Area properties to avoid conflicting interests, executives were telling another story behind the scenes.

"The proposed transaction is an opportunity to invest at a reasonable price in a company we have admired," Hearst president and CEO Victor Ganzi wrote to Hearst’s board of directors last July. "If we are able to convert the investment to common stock in all of MediaNews, we will be able to participate in the efficiencies MediaNews will achieve through the consolidation of the Bay Area newspapers other than the San Francisco Chronicle. Whether or not we are able to convert our investment, the proposed transaction provides additional impetus for lawful cooperation between the San Francisco Chronicle and the Bay Area newspapers, which will be owned or controlled by MediaNews, in areas such as distribution, national advertising and the Internet."

Several hundred pages of records were originally filed under seal in Reilly’s suit, but the Guardian, along with the East Bay nonprofit Media Alliance, intervened to have the filings opened to public access. Attorneys Jim Wheaton, David Green, and Pondra Perkins of the First Amendment Project did the legal work.

Illston agreed with our request and made most of the records available in an order last month. Reilly’s suit is expected to go to trial in the spring. He’s alleging that Hearst, MediaNews, and its other business partners, including the Stephens Group and Gannett Co., conspired to divide and monopolize the Bay Area newspaper market.

At the very least, Asher admitted in his deposition that Hearst saw media consolidation as one of the few reasons to bother staying in the newspaper biz. Originally, Hearst executives were considering a $500 million investment in MediaNews, but that amount was eventually lowered.

"We’re among the larger owners and operators of newspapers," Asher stated. "We still believe in them, notwithstanding their challenges, and we would like to participate in that consolidation. And, in fact, if we don’t choose to, we should probably think about exiting the business." *

What’s the cop union pissed about now?

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By G.W. Schulz

Welcome to another edition of “What’s the cop union pissed about now?” where we summarize the open contempt and paranoia filling the POA Journal, the official publication of the San Francisco Police Officers Association, which leads each month with a generally aimless yet sometimes hilarious diatribe on somebody or something in the city from the union’s outspoken president Gary Delagnes.

The numbers game

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By G.W. Schulz

The police department sent out a press release earlier today complaining about an Examiner article from last Friday highlighting the city’s dismal homicide arrest rate. The department’s press office wants you to know that the article appears to have relied exclusively on statistics from a state criminal justice Web site.

First of all, here’s what they had to say:

“The statistics as presented in the article did not include many homicide arrests. For example, they do not reflect the recently much publicized federal gang indictments for murder … The department does not believe the statistics as presented in the article were intentionally misleading, but we believe that it is important to provide accurate data to set the record straight. The department has asked the Examiner to correct these errors to ensure that the public’s perception of our efforts in violence reduction [are] not undermined.”

Well isn’t that sweet. The department just wants clean numbers. That’s all. The problem is, their numbers don’t inspire much faith.

Skateparks revisited; someone tell the mayor it’s not a ‘backslide’ 180

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By G.W. Schulz

Got a call this morning from Rich Hillis, a deputy in the Mayor’s Office of Economic and Workforce Development. He was responding to a blog entry we posted last night pointing out that the city has made lots of promises in recent years about constructing new skateparks within the city, an inexpensive gesture any city can make for providing kids with something to do. (Our original post contains plenty of links explaining where skatepark construction is in San Francisco right now.)

Between the sheets

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› gwschulz@sfbg.com

The changes are already well on their way. Dozens of layoffs have occurred. Offices are being consolidated. Fewer reporters are writing stories, which appear in several local newspapers under the single corporate byline "MediaNews Staff."

A few more details have since leaked out: the Hearst Corp., which owns the San Francisco Chronicle, has talked about joint advertising sales with its supposed competitor, Dean Singleton’s MediaNews Group, which owns almost all the other big dailies in the Bay Area.

Some sources predict Hearst may share printing facilities with Singleton. The two might ultimately divide the entire Bay Area into isolated markets and avoid one another’s turf. The Singleton papers could even scrap their Sunday editions, leaving that market entirely to Hearst.

Nobody outside the corporate suites of the nation’s top newspaper barons knows exactly what’s true and what’s speculation right now. But it’s clear there’s a move afoot to end all daily newspaper competition in the region — and the public hasn’t been privy to any of it.

That may be about to change.

An order by Federal Judge Susan Illston handed down Jan. 24 has opened up key company records that will likely further confirm how Hearst, Singleton, and some of the nation’s biggest media players are conspiring to turn the Bay Area into a homogenized news market.

The records — which will likely be released shortly after the Guardian‘s press deadline — are part of a lawsuit filed by local real estate investor Clint Reilly, who wants to block the deal that allowed Singleton to control the Contra Costa Times, the San Jose Mercury News, the Oakland Tribune, the Marin Independent Journal, and the San Mateo County Times, along with a bunch of other smaller papers.

There have been hints that some of the documents filed as part of that suit portray a plan by Hearst and Singleton to form some sort of alliance. But since almost everything in the case has been filed under court seal, it’s hard to tell exactly what the truth is.

The Guardian, along with the East Bay nonprofit Media Alliance, intervened in the case in December, asking Illston to open documents in the suit. The publishers, who had initially insisted nearly every scrap of paper was some sort of protected trade secret, quickly backed down, agreeing to release much of the information. And last week Illston ordered them to release some of the rest.

In the end, Jim Wheaton of the First Amendment Project, who represents the Guardian and Media Alliance, says 90 percent of the key material in the suit will be made public.

The documents that are set for public release still need to be refiled, a process that’s under way. They’ll be posted at www.sfbg.com the moment they’re available.

Already, the news coverage of this case has demonstrated how bad journalism would be if the Bay Area had no daily competition.

When Illston released her decision, two headlines appeared on the Chronicle‘s Web site, www.sfgate.com. One, from the Associated Press, announced, "MediaNews, Hearst Lawsuit Documents Remain Sealed." The Chronicle‘s own staff reported, "Some MediaNews Data Released — Judge Says Other Documents in Reilly Suit to Stay Sealed."

The conclusion of both stories was the same: the Guardian and Media Alliance had essentially lost. Very little material would be unsealed.

And despite the different perspectives in the headlines, neither story got it right.

"MediaNews Group and Hearst were asked by Media Alliance and the Guardian before they intervened to unseal everything. They declined to unseal anything," Wheaton said. "But as soon as Media Alliance and the Guardian moved to intervene and unseal, MediaNews and Hearst surrendered on almost all the sealed documents. They fought only to keep some parts of five exhibits and one brief sealed, which comprised 19 separate excerpts [of which six were duplicates, leaving only 13 distinct items]."

And all but a few pages of those documents will now be released to the public. They will almost certainly offer a broader picture of the relationship between the Bay Area’s top media bedfellows.

Wheaton has asked both the Chron and the AP for a correction. Mark Rochester, assistant bureau chief for the AP in San Francisco, told Wheaton by e-mail that a clarification would not be "useful to member news organizations." We’re waiting to hear from the Chron. Perhaps not entirely coincidentally, Dean Singleton is slated to take over as chair of the AP this spring.

Illston also agreed to allow the Guardian and Media Alliance to remain as interveners, or parties to the suit, giving the two organizations the right to challenge any future secrecy.

For example, the interveners might seek to unseal the depositions Reilly attorney Joe Alioto took of top executives at the companies last week.

Hearst and MediaNews have claimed they need to protect some records to avoid giving competitors access to proprietary financial information. But the chains are hardly normal competitors.

Singleton reached a secret agreement with Hearst in 1995 to shutter the Houston Post and sell its assets to Hearst for $120 million, for instance. The deal gave Hearst’s Houston Chronicle significant control over the southern Texas metropolis and its sizable suburbs before the two companies continued their westward expansion hand in hand.

In a downright hilarious side note, attorneys for the Chronicle managed to convince a Santa Clara County superior court judge in January to open confidential court documents in a shareholder suit filed against Silicon Valley–based Mercury Interactive, one of the first companies rocked by allegations that it had improperly backdated stock options for some of its top executives.

Chronicle attorney Karl Olson at the time righteously denounced attempts by attorneys for Mercury and its former executives, three of whom were fired during the height of the backdating firestorm, to seal court records detailing one of the more lurid executive-enrichment scandals to hit Wall Street in recent years (see "Off the Record," 1/10/2007).

Calls to seven people up and down MediaNews and Hearst, from attorneys to executives, weren’t returned. We’ve even tried to reach CoCo Times executive editor Kevin Keane on his cell phone, but he wouldn’t comment for us despite complaints he’d made about the East Bay Express not giving him a chance to respond to similar stories. *

Who’s the poseur at City Hall?

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By G.W. Schulz

San Francisco has always been notoriously behind statewide on skatepark construction, despite the relatively small monetary investment they require and the high civic value they produce. One spot already exists at Crocker Amazon Park, but it’s largely regarded as mediocre. Conservative states years ago were funding the construction of skateparks through their public works departments and allowing young skaters to participate in the designs. Shit, rural Kansas was doing it a long time ago.

Wired magazine wins

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By G.W. Schulz

As we’ve reported online, federal Judge Susan Illston has largely ruled in favor of the Guardian and Media Alliance and has opened several documents originally filed under seal in Clint Reilly’s civil suit alleging that the Hearst Corp. and MediaNews Group are conspiring to monopolize the Bay Area’s newspaper market. A Santa Clara County judge ruled against one of Silicone Valley’s biggest public companies last week and opened up court records to the press and public in a shareholder suit alleging problems with backdated stock options to top executives.

But coincidentally, Illston ruled in yet another open-records case recently that the feds have to pay Stanford’s Cyberlaw Clinic $67,000 to cover legal fees regarding its court-based effort to obtain records of the Department of Homeland Security’s US-VISIT system.

CoCo Times editor moves on

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By G.W. Schulz

Looks like former Contra Costa Times editor Chris Lopez has at least found some part-time work blogging for NewAssignment.net. His most recent entries highlight technological innovations at some of the nation’s big dailies, including a video obituary of Art Buchwald that appeared on the New York Times Web site.

An early January post notes that the McClatchy chain of newspapers, which owns the Sacramento Bee, has purchased the “Famous” blogs, including FresnoFamous.com and ModestoFamous.com.

The tough CoCo Times editor was unexpectedly let go from the paper in October after Denver-based MediaNews and William Dean Singleton bought the scrappy daily along with a group of other Bay Area papers. Lopez helped Singleton win a Pulitzer while working at Singleton’s flagship Denver Post.

Fun with whistleblowers!

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By G.W. Schulz

Every six months or so, the San Francisco Controller’s Office releases a summary of the numerous whistleblower complaints it receives from citizens and municipal employees alike.

No names are attached, unfortunately. And attempts by the Guardian in the past to obtain details of the complaints and resulting investigations through sunshine requests were rebuffed by the controller. Ed Harrington’s office argued that publicity might inhibit potential whistleblowers from stepping forward.

But for now, at least, we’ve got a good idea of which city and county offices are housing ill-behaved employees and what’s been done to stop them.

Off the record

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› gwschulz@sfbg.com

Among the mansions and box stores popuutf8g Silicon Valley are several major tech firms at the heart of a stock option backdating scandal that has metastasized through corporate America over the last two years.

The hall of shame includes Juniper Networks, McAfee, Nvidia, Brocade Communications Systems, and most notably for this story, a Mountain View–based firm called Mercury Interactive, which came under scrutiny in late 2004, making it one of the earliest companies identified for allegedly tampering with the lucrative stock options given to employees.

While some of the half-billion-dollar backdating mess at Mercury has appeared in the business press already, additional details contained in a civil lawsuit filed by investors are under seal in Santa Clara County Superior Court, and three news outlets want them opened up by a judge.

"These companies fleeced investors, and the public has a right to know," Karl Olson, an attorney for the outlets, told Judge James Kleinberg during a hearing Jan 5. Olson is representing the San Francisco Chronicle, Bloomberg News, and the Recorder legal newspaper. He added the defendants have "not shown an overriding interest that supports sealing any of these records."

Attorneys for the company and its fallen former executives have not cited trade secrets or proprietary information — commonly used excuses in corporate litigation — as reasons for keeping the filings sealed. Instead, they seem to be worried the documents will paint an even more sordid picture of executive misdeeds than what’s already come out, and they want to block the press from telling the full story.

But there is an interesting irony to the Chronicle insisting it is entitled to access this information. The newspaper’s parent company, the Hearst Corp., asked a federal judge to withhold from the public some of its own company records unearthed amid a federal civil suit leveled against it and other media giants over the summer.

San Francisco real estate mogul Clint Reilly filed an antitrust claim against Hearst and its rival–cum–business partner, Denver-based MediaNews Group, owner of several Bay Area newspapers, arguing that a bid between the companies to share business expenses was illegal. The Guardian has joined an effort with the nonprofit Media Alliance to unseal records related to Reilly’s suit.

But in the Mercury case, attorneys for the company and its former executives complain individuals not listed as defendants "would have their identities revealed and be implicated in alleged misconduct."

Mercury certainly would like to forget its troublesome past. Computer giant Hewlett-Packard is closing out its purchase of the company for $4.5 billion, taking on Mercury’s liabilities and obviously hoping to put the backdating matter to bed.

Nationwide, somewhere between 150 and 200 companies (reports vary) are internally investigating options problems or have received inquiries from the Securities and Exchange Commission (SEC), the federal agency charged with ensuring publicly traded firms reveal essentially every major move they make.

Mercury was founded in 1989 and produces business software for companies worldwide. In another bit of irony, Mercury specializes in making a group of applications designed to help corporate clients fully comply with the new federal financial disclosure rules passed by Congress as part of the Sarbanes-Oxley Act following Enron’s implosion.

Amnon Landan, the former Mercury CEO who resigned in November 2005 under pressure following an internal probe, is said to have exercised $5.5 million worth of options and sold 1.04 million company shares for a total of $73.6 million "during the period of wrongdoing," according to another suit filed by investors in federal court last spring.

Two additional executives resigned at the same time as Landan. The list of plaintiffs in the federal suit, which charges that Mercury’s backdating imbroglio greatly damaged the company’s market value, includes the retirement system for New Orleans municipal employees.

The value of a stock option is determined by its closing price per share on the day the option is granted. Instead of listing that particular date when the options are later exercised, backdating an option generally involves picking a spot earlier on the calendar. That way, employees of companies that make it big can reap huge windfall profits far bigger than they were entitled to receive. As Duke law professor James Cox somewhat famously described backdating, it’s like betting on a race and knowing who the winner will be.

Silicon Valley’s start-ups during the tech boom relied on hopes and dreams more than directly available cash assets to flashpoint their growth. To attract the best executive talent around, they offered stock options in exchange for hefty salaries. If the top suits performed well from the beginning, when the stock price was low, they could sell the shares much later when their value had climbed sky-high.

But some of the still relatively young companies that dot the fringes of Highway 101 where it weaves toward downtown San Jose are today being charged with failing to inform investors and government regulators just how many zeros were involved in those enriching IOUs.

Defense attorney James Kramer made an important point about backdating, however, to Judge Kleinberg during last week’s hearing. "There is nothing about backdating that is illegal," he said. "The issue is whether you properly account for it."

Yet Mercury didn’t properly account for more than $567 million in compensation expenses over a 12-year period in its SEC filings. And that’s what is illegal. The IRS heavily taxes earnings from backdated stock options, which are akin to tax-free bonuses that aren’t reported to the SEC. Investors say the failure to disclose the backdating exposed the company to heavy tax penalties, money that came from shareholders.

"Throughout the development of the options scandal, Mercury Interactive has been one of the most significant companies for the public to watch, due to both the primacy and seriousness of its options problems," Recorder reporter Justin Scheck wrote in a declaration to the judge last week. The Recorder, which serves about 20,000 readers in the state’s legal community, asked Jan. 5 for Kleinberg to open the records.

Recorder attorney Olson, who regularly represents the Chronicle in such open-records cases, argued in a memo to the court that the desire to shield top Mercury execs from "adverse publicity" and "potentially embarrassing corporate documents" doesn’t justify withholding up to 17 exhibits that Mercury wants to keep away from the press and the public. Petitions submitted to the court regarding the sealed portions of the case are public and were obtained by the Guardian last week.

The defendants’ attorneys said the investors signed a confidentiality agreement early in the suit so that evidence could be more freely exchanged with Mercury during discovery, and they want that promise kept.

"The plaintiffs in the [Santa Clara] suit are not roving attorneys general who are tasked with pursing every defendant who they believe has done something wrong or caused harm to someone else," Brandon Wisoff, a defense attorney in the case, said in a phone interview. "The purpose of a derivative suit is for a shareholder to recover on behalf of a corporation in which he or she owns stock, because he or she is indirectly impacted by any harm that allegedly occurred to the corporation."

The Santa Clara suit’s status as a derivative claim could lead Judge Kleinberg to toss it out, since HP has purchased Mercury. For that reason, Wisoff says, documents produced before the sale aren’t going to be used in court and so shouldn’t be accessible to the public.

"Non-defendant third parties also would have their identities revealed and be implicated in the alleged misconduct" if the records were opened, attorney Thomas Martin wrote in a declaration to the court. In other words, the documents could suggest how much was known about the problems with backdating at Mercury. And that might be of concern to more than just the company’s investors.

Martin, who declined to comment over the phone for us, is representing Kenneth Klein, a former Mercury chief operating officer who left the company in 2003 and has not officially been linked by Mercury to backdating problems but is nonetheless listed as a defendant in the Santa Clara suit.

Thomas and the other defense attorneys argue the investors’ court filings openly cite sealed discovery material, which presumably includes references to Klein’s alleged involvement in or knowledge of backdating, given his status as a defendant, as well as the names of others possibly listed in the documents. They’re arguing Mercury and its executive defendants could not publicly rebut suggestions made by the media about their involvement.

While Kleinberg seemed sympathetic to the notion that the press doesn’t always do the best job reporting on civil allegations, he said it’s a fact of life that most civil complaints — even ones that say "very outrageous things about people and institutions" — fall into the public domain.

But Amber Eck, an attorney for the investors who are now advocating for the filings to be opened, says the complaints made in the suit are far from frivolous and the company’s own board investigation identified who had participated in the misconduct and who knew about it. She said the whole story hasn’t been told.

"There’s a lot saying there was backdating and the amount of the [SEC financial] restatements," Eck said in a phone interview. "But what I was explaining to the judge was that as far as the details on the manner and the process in which it happened … that isn’t really out there yet, and that’s contained in our complaint and the exhibits."

Janet Guyon, an editor at Bloomberg News in New York who has watched the options backdating scandal unfold, told the judge in a declaration that the public deserves a "window into this litigation" to ensure fairness for investors who are expected to trust promises of transparency made by public companies.

"More than 80 companies have announced earnings restatements totaling over $8.8 billion, including $84 million most recently by Apple Computer, which admitted it forged documents recording a directors’ meeting to award its CEO backdated options," Guyon stated. "At least 65 executives or directors have resigned and 300 lawsuits have been filed against 100 companies. Yet little light has been shed on how this practice got started and why it continued." *

Declaration by Bloomberg News editor Janet Guyon to judge Kleinberg on why the Mercury records should be unsealed.


Declaration by local reporter Justin Scheck on why the Mercury records should be unsealed.

Application by attorney Jared Kopel for defendant Kenneth Klein on why the records should continue to be sealed.


Declaration by attorney Thomas Martin for defendant Kenneth Klein on why the records should continue to be sealed.

OCC DIRECTOR KEVIN ALLEN RESIGNS

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By G.W. Schulz

The head of the city’s police watchdog agency announced at a San Francisco Police Commission meeting last night that he would be resigning his post in early February. The Office of Citizen Complaints is one of the few city entities in the nation that independently investigates charges of police misconduct from civilians and maintains the power to subpoena officers. While director Kevin Allen told the commission he’s stepping down for health reasons, the pace of said investigations has at times been slow during his tenure, and commissioner Joe Veronese told us just moments ago that the OCC’s full responsibilities weren’t effectively being carried out.

Cute and cuddly crime statistics

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By G.W. Schulz

Sorry to piss on everybody’s parade, but a slight drop in the homicide rate isn’t exactly an excuse to break out the coke and booze. Then again, it doesn’t take much to get the frat brothers in the mayor’s office amped up for a party. Bro.

With murders down slightly in 2006 compared to the previous year, Gavin Newsom is preparing for a walk down Divisadero with Police Chief Heather Fong, an area where cops say crime has dropped. The event surely will include a healthy dose of media coverage, and going into an election year, Newsom needs all the flashbulbs he can get. In 2004, he melodramatically proclaimed that voters should recall him if the homicide rate isn’t brought down, so technically, he’s safe for now.

But a buried paragraph in the Chronicle’s front-page story from today reveals a key facet of crime statistics that should be taken into account when considering street-level violence and its effect on a city.

“Richmond Police Lt. Mark Gagan said homicide numbers tell only part of the story in Richmond, where a total of 280 people were shot last year. ‘I don’t think just the homicide rate alone is the way to determine whether violence is up or down,’ Gagan said.”

Apple knowingly falsified documents. And that is a crime.

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By G.W. Schulz

So let’s get this straight. In 2001, Bay Area-based Apple Computer Inc. gave 7.5 million stock options to its CEO, Steve Jobs. The options were approved by the company’s board of directors at a meeting that never actually happened. The company also now admits that documents related to this imaginary meeting were fudged to make it appear that the necessary board approval had taken place.

The special committee formed by Apple to investigate the matter (which includes Al Gore) says no current member of management was aware of the falsified records. Jobs, the committee insists, was innocent, and as the public is often told during such controversies, the top exec was ignorant of the manipulation.

Steve Jobs sure gets paid a lot of money for a man who’s clueless.

From the Chronicle:

“Apple said Jobs was aware of some instances of backdating and even recommended favorable dates to grant options. But, the company said, Jobs did not financially benefit from these grants and did not understand the accounting implications.”

That’s sort of like arguing that a casino patron who got caught counting cards didn’t make a dime off it and had no idea how badly the hired muscle would kick his ass once they got him outside. He was still counting cards.

No reprieve

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By G.W. Schulz

The most recent newsletter from the Tenderloin police station shows yet again what has been one of California’s worst criminal-justice problems – recidivism.

California has one of the highest recidivism rates in the country, an ongoing crisis that has remained a vexing political issue for the governator. We love putting people behind bars over and over again, and nowhere in San Francisco is that more startlingly clear than in the Tenderloin, which alone boasted 4,200 arrests last year, the highest in the city. Of the over 20 arrests that took place in the district between Dec. 15 and Dec. 21, almost every single one of them involved both drugs and repeat offenders.