Luke Thomas Archives — San Francisco Bay Guardian Archive 1966

Olague explains her support for RCV repeal measure

Sasha Cuttler

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March 10, 2012

Olague explains her support for RCV repeal measure

Sup. Christina Olague has drawn ire from progressive circles over her pivotal co-sponsorship of a proposed charter amendment that aims to eliminate Ranked Choice Voting in all citywide races. It takes six members of the Board of Supervisors to place the repeal measure on the November ballot and she is the sixth co-sponsor.

Olague has long ties to the progressive community and was appointed by Mayor Ed Lee to the District 5 seat, one of the city’s most progressive, in January after Ross Mirkarimi was elected Sheriff. This week, she joined Sean Elsbernd, Carmen Chu, Scott Wiener, and Malia Cohen – all considered moderate/conservative supervisors – in supporting Sup. Mark Farrell’s proposal to replace RCV with runoff elections for the mayor’s race and other citywide offices.

“To me, this isn’t a progressive or moderate issue. This is a democratic one here in San Francisco,” Farrell said during Tuesday’s Board of Supervisors meeting, where he introduced the measure, which will have a hearing next month. “Ranked Choice Voting has continued to confuse and disenfranchise voters here for over a decade and, in my opinion, it’s time to restore our voting system to the one person, one vote rule.”

Farrell’s sentiments mirror a similar line trumpeted by the San Francisco Chamber of Commerce, a supporter of runoff elections and longtime opponent of RCV. A recent poll commissioned by the Chamber, which claims 58 percent of respondents prefer runoff elections, has been discounted as biased and based on misleading statements. Farrell, who was elected to the District 2 seat in November using RCV, said he would have prefers to eliminate RCV altogether in San Francisco but said, “This is a significant step in the right direction.” A proposed ballot measure by Farrell and Elsbernd to eliminate RCV was rejected by the Board of Supervisors last month.

Steven Hill, who helped crafted the city’s voter-approved RCV system, criticized the move to repeal it: “Critics of RCV have long maintained that voters are confused and even disenfranchised and yet they have offered no credible evidence to support these claims. In fact, the evidence shows just the opposite, that voters understand what they have to do with RCV, which is to rank their ballots, 1, 2, 3, and they are using their ranked ballots effectively.”

In an interview conducted as she was departing the Westbay Community Center on Thursday, Olague initially rebuffed our request to discuss her support for Farrell’s amendment (just as she had an earlier request by the Guardian), but she ultimately relented.

Here’s what she had to say:

Olague: “What it is is that it begins a conversation. There was talk of eliminating RCV altogether, which I certainly don’t support. There was talk from a lot of different corners, not just moderate circles, but progressive circles as well, that maybe we need to examine it and see how has it or has it not really been – has it really helped us reach our goals in the way that we had originally intended that it would.”

SFBG: What were those goals?

Olague: “I think it was to try to make sure that more progressives were elected… and make it easier for people who had lesser means to prevail… So I think maybe it is time to reflect on that a little bit.”

SFBG: What parts of RCV don’t you like or don’t support?

Olague: “Well, I think it’s just time to have a conversation about it. I’m not even sure that I’m against it, per se. When I signed on to it, I believed it was looking at keeping some of the citywide races, where there are fewer numbers of candidates engaged, to reverting back to a runoff, and keeping the races where we have a diversity of candidates and numerous candidates, which are the district races, as they are – which is ranked choice voting.”

“Now there’s some people who say what we need to do is, well, maybe revisit that and maybe just, rather than have it apply to all citywide races, maybe it should just apply to the mayor’s race.”

“So I think there needs to be a conversation and there needs to be a reflection on its effectiveness. I think that’s what [Sup. John] Avalos and even [Sup. David] Campos were thinking that there needs to be more education – and I do think there needs to be more education as it relates to RCV.”

SFBG: Voters don’t seem to be confused about filling out an RCV ballot, but maybe there’s confusion about how votes are tallied and candidates are eliminated. It would appear that there’s a myth being spread that voters are confused about filling in a RCV ballot, but that doesn’t appear to be the case…

Olague: “Do you know that? I think when you talk to people out there on either side of spectrum, politically, I think there’s still a lot of – I don’t think that people have necessarily concluded that this is the most effective way of achieving certain goals. But, you know, I think it starts a conversation and it may end up that the voters decide, you know, let’s just leave it the way it is, we’re happy with it.”

SFBG: And how would you feel if RCV is completely eliminated?

Olague: “Well it’s not going to be eliminated because there’s nothing in the charter amendment asking that RCV be eliminated. What I was concerned about was that there was a push to eliminate it altogether, which I don’t support. What this does, I figured I’ll meet them halfway because I can’t support a complete repeal of RCV and currently the way this charter amendment is drafted, what is does is it keeps RCV in the District elections. That stays the same, and the citywide elections would be reverting back to a runoff, so it goes to a more citywide for a runoff, ranked choice voting for District [elections]. There is an argument to be made for why that should be the case.”

SFBG: Wouldn’t this eliminate a diversity of candidates if there were a repeal of RCV in citywide races?

Olague: “So let’s have the debate and people may decide, you know, if it’s not a good idea. People may decide they want to push to amend the charter amendment as it is before us. Some people are thinking it should just apply to the mayor’s race and not other citywide races like public defender and others. So maybe there’ll be amendments to the charter amendment before it even hits the ballot.”

SFBG: Why do you think some people are up in arms over your support on this?

Olague: “I guess, you know, I mean – I just think that everyone is going to sit around and wait for something, right? They’re, sort of, laying in wait, right? So it’s just what it is, you know – it’s like people are going to agree with me sometimes, they’re not going to agree with me other times. There are some things that I am doing that is progressive, there are some things people will perceive as not being progressive.”

SFBG: Did you come to this decision by yourself, or was there any influence or pressure from others to vote the way you did on this?

Olague: “No. I just think it’s funny because it’s like I don’t really succumb to pressure. I’m willing to start the conversation at some kind of a compromise. To me, this is as close to a compromise as we’re going to get and then it can start the conversation. So I think the conversation will start and people can assume all kinds of things, and they will.”

SFBG: So you voted in good conscience? You didn’t have any doubts about your vote?

Olague: “I vote in good conscience, but sometimes you have to go with a compromise. It’s not completely what you want and it might not be completely what you don’t want, but the alternative might be something that is completely unacceptable, which could be the complete elimination of RCV.”

A version of this story also appears on Fog City Journal, which is run by Luke Thomas.

Lackluster finish to case that made serious political charges

Sasha Cuttler

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February 16, 2012

9

Lackluster finish to case that made serious political charges

A jury awarded the City and County of San Francisco $24,498 yesterday following its deliberations of a complicated civil case filed by the city in 2003 against a minority-owned computer services company accused of fraud and breach of contract, a company that countersued with a claim of being harmed by top city officials.

But that paltry sum and the jury’s verdict of shared responsibility in failing to root out corruption in city government belied the more politically significant accusations made through depositions in the case that Mayor Ed Lee and former Mayor Willie Brown overrode city staff to give contracts to a “fraudulent” yet politically connected company, which proved to be a tangential issue that was left largely unexplored at trial.

In CCSF vs. Cobra Solutions, the jury found that both the city and Cobra Solutions failed in their responsibilities to prevent a former Department of Building Inspection information technology manager, Marcus Armstrong, from fraudulently bilking the city out of at least $482,000 between 1999 and 2001. An alleged Armstrong accomplice, Government Computer Sales, Inc. – which witnesses said Brown and Lee improperly certified, and which they say they don’t remember – fled and was never brought to justice.

Cobra Solutions, which was awarded master contract status in 1998, was bound by a provision in its agreement with the city that required Cobra to “supervise” sub-contractors. The allegation of fraud against Cobra, however, was effectively dropped from the city’s complaint, but not until the end of the trial when consideration of fraud was omitted from the city’s closing arguments.

The award to the city was the difference between the monies paid by the city to Cobra Solutions ($269,739.93) and the monies paid by Cobra Solutions to Armstrong’s phony companies ($245,241.93), or the markup Cobra Solutions received from the city following the submission of several fraudulent invoices from two phony sub-contractor companies, Monarch Enterprises and Mindstorm technologies, set up by Armstrong.

Following the verdict announcement, a juror who did not want to be identified, said there wasn’t a single piece of evidence that was most compelling, but that, “the city proved its case. Cobra failed to prove its case.” The “vast majority” of jurors shared that opinion, the juror said. “It wasn’t even close.”

“The jury thought there was obviously a failure to supervise,” the juror continued. “[Cobra Solutions] took on work without even knowing who the party was that was working for them. Who was Monarch?”

Several invoices from Armstrong’s phony companies contained different addresses that the juror described as “a bit of a red flag.”

“If I’m in business, I’m not going to have someone working for me who I don’t know, and I’m not going to be paying them checks,” the juror said.

“The city also bore responsibility” in its failure to detect Armstrong’s kickback scheme, the juror said, mirroring the same sentiment echoed by then-City Controller Ed Harrington, who took the stand and conceded the city’s internal controls – as well as those of Cobra Solutions – failed to detect Armstrong’s kickback scheme.

Cobra had sought damages for breach of contract (the city’s failure to pay monies owed Cobra) and due process violations in connection with the city’s alleged debarment of Cobra from doing further business with the city.

“I’m disappointed,” said Cobra Solutions founder and president James Brady. “Life goes on. We’ll continue to move forward and repair our damaged reputation, raise our grandchildren, and focus on our families.”

Asked about the issue of sub-contractor supervision, Brady said, “I don’t think anybody could supervise a con man and the city was negligent in hiring this guy – they wouldn’t even bring him in the courtroom – so it’s just betrayal. And it’s a sad day that you hire con man and you won’t take any responsibility for his actions and you blame the small business. That’s not the American way.”

On the jurors finding that Cobra was not intentionally or defacto debarred from doing further business with the city, Brady said, “I think they got it wrong. I have no doubt about that.”

“The jury missed a lot of important facts,” said Mr. Brady’s wife, Deborah Brady, a co-founder of Telecon, the parent company of Cobra Solutions. The city had originally sued Telecon in its case-in-chief, but pursued no claims against Telecon at trial. “I don’t know how they missed them, but they missed them.”

Ms. Brady said the city gave another company, Desktop, the opportunity to defend itself against debarment, but “they never gave us that opportunity.”

“Judith Blackwell, she told the whole story in terms of Monique Zmuda saying they wanted us out, that we’re crooks,” Ms. Brady continued. “They accused us… and never gave us the opportunity to respond, ever.” Monique Zmuda is the deputy City Controller.

“I feel really betrayed by a city that I used to really love and [City Attorney] Dennis Herrera, who is our private attorney, betrayed us,” a tearful Ms. Brady said. “Ed Lee, who claims he barely knew us, betrayed us. Ed Harrington? I don’t know what that was all about, or Monique Zmuda… but Ed Lee and Dennis Herrera, they let down really good people who used to live in this city and loved this city and did all that we could to do good in the community and this city. “

“So I pretty much call it, ‘The City of Betrayal.’”

Cobra’s lead counsel in the case, Whitney Leigh, told us, “The jury made its decision. We’re concerned that the jury was allowed to find that Cobra could have breached the contract by refusing to submit to an audit by the City Attorney. So we believe there are some issues that need to be researched, so we’ll be looking at those issues.”

Asked if there would be post-trial motions, Leigh said, “Post trial motions and/or appeal.”

“Obviously we’re disappointed,” Leigh added, “but we’ll review the transcripts and see what options are available.”

Because of the possibility of an appeal, Herrera was unable to comment on the verdict or to discuss city’s costs in trying the case, said Herrera spokesperson Matt Dorsey.

How business was done

Andrew Lam

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February 14, 2012

8

news@sfbg.com

A complicated civil lawsuit alleging corruption and fraud and involving several prominent current and former city officials — including Mayor Ed Lee, who took the witness stand to discuss actions he took as city purchaser a decade ago — could end up costing city taxpayers as much as $10 million.

City and County of San Francisco vs. Cobra Solutions and Telecon was being deliberated by jurors in Superior Court at press time. It centers on a fraud and kickback scheme engineered by convicted felon Marcus Armstrong, a former Department of Building Inspection information technology manager who bilked the city out of at least $482,000 between 1999 and 2001 (see “Dirty Business,” 2/8/11). His scheme was exposed by an FBI investigation following a whistleblower’s complaints in September 2001 that sub-contractors were not being paid.

The City Attorney’s Office accused Cobra Solutions of participating in Armstrong’s fraud, but Cobra’s owners denied being part of the scheme and they say their business was wrongfully damaged when their contracts were frozen by city officials.

Armstrong created two phony companies, Monarch Enterprises and Mindstorm Technologies, and ordered master contractor Cobra Solutions to use the phony sub-contractor companies to provide technology services to the city’s Computer Store (a list of approved contractors) under an agreement awarded to Cobra by the Committee on Information Technology (COIT). It also partnered with another company alleged by the city to be fraudulent, Government Computer Sales, Inc. (GCSI), whose principals fled and whose whereabouts are unknown.

Cobra Solutions founder and president James Brady had raised questions about Armstrong as early as 2000, questions that triggered an unfruitful investigation by the city. Brady maintained in court testimony that Cobra, unaware of Armstrong’s fraud, relied on him to sign off on work services that Armstrong’s phony companies were supposed to have supplied to the city.

The Computer Store was set up by then-Purchaser Ed Lee under the administration of then-Mayor Willie Brown to centralize technology procurement across departments. Now-Mayor Lee was deposed in the case and called to the witness stand on Feb. 6, where he said he awarded Cobra Solutions the highest-rated ranking among several vendors being evaluated by COIT for master contract award status. Each of the other city evaluators, including Deputy Controller Monique Zmuda, also ranked Cobra the top service provider.

According to Armstrong’s guilty plea agreement, GCSI partnered with Armstrong to defraud the City out of $240,000. Deborah Vincent James — then-director of COIT and now deceased — testified in a pre-trial deposition that GCSI was “fraudulent,” that city staffers recommended against certifying the company, and that it was only awarded master contract status because of its political ties to Brown, who directed Lee to overrule the staff recommendation. In his deposition, Lee claimed he could not remember GCSI.

Vincent-James and former Purchasing Directory Judith Blackwell forwarded whistleblower complaints about GCSI to the City Attorney’s Office in early 2001, but neither that office nor the Controller’s Office acted on the complaints until GCSI had gone bankrupt and GCSI’s owners, two foreign nationals, had disappeared.

Of note, Lee was not questioned about his and Brown’s involvement in awarding GCSI its master contract status in 1998. Time restrictions placed on attorneys by Judge James McBride limited the scope of witness examinations, so the most politically explosive charges went largely unexplored in court.

The city completed a subsequent investigation in January 2003 that resulted in stopped payments to Cobra, contract termination, and the city’s civil lawsuit filed by City Attorney Dennis Herrera against Cobra in April 2003. Following Herrera’s filing against Cobra, Herrera demanded an audit of Cobra which Cobra refused, citing a conflict of interest. Herrera had previously represented Cobra in private practice before he was elected City Attorney in 2001.

A trial court ruled in that Herrera had a conflict of interest, disqualifying Herrera and his office from participating in the Cobra case, a ruling later upheld by the California Supreme Court. Yet the suit alleges Herrera and his office continued to supply work to various City agencies and to effectively prevent Cobra from doing further business with city. By withholding the $2 million Cobra was owed by the City, COIT was able to disbar Cobra from entering into master contract agreements with the city, claiming Cobra was fiscally “non-responsible,” according to court testimony.

Blackwell, in her testimony at trial, said the determination of Cobra’s non-responsibility was used as a “pretext” for Cobra’s disbarment, a procedure that should have triggered a hearing to allow Cobra to defend itself against debarment. That never happened.

An FBI investigation into Armstrong’s kickback scheme resulted in Armstrong pleading guilty to mail fraud, wire fraud, and obstruction of justice in July 2003. No criminal charges were ever brought against Cobra Solutions or Telecon and yet the city’s outside law firm, Cotchett, Pitre & McCarthy LLP, which tried the case on behalf of the city, held on to the city’s allegation of fraud committed by Cobra and Telecon throughout the case and trial until closing arguments on Feb. 9.

In his closing arguments, attorney Ara Jabagchourian made no mention of Telecon, effectively dropping the city’s claims against Telecon, and constricted the city’s damage claims against Cobra. He asked the jury to award the city up to $266,000, money paid to Cobra for work authorized and signed-off by the city, via Armstrong, for breaching a provision in the contract agreement between the city and Cobra that requires the master contractor to “supervise” sub-contractors.

But Cobra’s lawyers — the firm of Gonzalez & Leigh, which includes former Board of Supervisors President Matt Gonzalez, who took a leave from his current job as deputy public defender to consult on the case — says it is the city that should pay for fatally harming a business without just cause.

“The City and City Attorney’s office falsely accused Cobra and Telecon of stealing $2.4 million dollars from the City, destroying these companies and ruining the lives of good, decent people who were the victims of a city tech official who should not have been hired in the first place,” said attorney Whitney Leigh. “Then the City Attorney made it worse, flatly defying an order disqualifying the City Attorney’s Office and instead driving efforts to run Cobra and Telecon out of business just because Cobra raised the issue of the conflict of interest. I’ve been unable to find any case in which an attorney has so flagrantly ignored a disqualification order.”

Herrera can’t comment on the case, but his office previously told the Guardian, “Immediately upon discovery of Cobra’s role, the office screened Herrera off from further involvement in the investigation and all matters related to it in accordance with a stringent ethical screening policy Herrera established when he took office.”

The-City Controller Ed Harrington, who exerted significant influence over contract awards and debarment proceedings as chair of COIT, conceded in court testimony that internal controls failed to detect Armstrong’s scheme.

“In the case of Marcus Armstrong, the control within the city failed and the control within Cobra failed,” Harrington, now head of the San Francisco Public Utilities Commission, told the court. “We had both controls in place. If they had worked, the city would have been protected. Both failed.”

Cobra is seeking damages for breach of contract (the city’s failure to pay monies owed Cobra), and civil rights due process violations in connection with the city’s apparent conspiracy to bar Cobra from doing further business with the city.

A business valuation expert testified Cobra Solutions was valued between $5.2 million and $8.8 million based on future lost profits from the city’s debarment. With attorney fees and court costs, the city could be on the hook for as much as $10 million.

The city has subsequently established more stringent controls as it relates to the authorization of work assigned to master contractors and sub-contractors. The jury was expected to resume deliberations on Feb. 14 and deliver its verdict by week’s end. Check the SFBG.com Politics blog for the latest.