‘Nothing criminal’ in Dreyfus estate report

Friday, July 9, 1999 | 8:59 a.m.

That's the gist of a controversial report summarizing an investigation into the most expensive land swap in Forest Service history.

The probe involving Zephyr Cove's Dreyfus estate was made public Thursday after being stonewalled by the Forest Service.

The document, for the most part, supports what officials had already indicated but refused to elaborate.

"From my reading, I don't see any indication of misconduct or impropriety, which was what we were told. Apparently a few rules were not adhered to in the sense of procedure, but there was nothing criminal," said U.S. Sen. Richard Bryan, D-Nev., who has long followed the issue.

"But we were hearing all this stuff about criminal misconduct. And I think what caused the issue to grow was a refusal to release it. It gave rise to suspicion that there was really something juicy there. But it was consistent with what they were telling us."

The Tahoe Daily Tribune and The (Gardnerville, Nev.) Record-Courier filed a Freedom of Information request to obtain the report and were denied. Bryan and U.S. Rep. Jim Gibbons, R-Nev., urged the federal office to release the report.

It says the regional offices of the Forest Service and Bureau of Land Management were inexperienced in dealing with land swaps, such as the one involving the Dreyfus estate, which was the underlying reason for the problems hampering the exchange.

The U.S. Forest Service, whose officials were ordered not to talk about the issue during the investigation, are still silent, the Tribune reported today.

In a land exchange valued at $38 million, the federal government two years ago gave an Arizona-based land-brokerage company, the Olympic Group, public land around Las Vegas in exchange for the Zephyr Cove property, which contains 3,000 feet of sandy beach, a meadow, creek as well as a caretaker's cottage and a 10,000-square-foot mansion.

The Forest Service had no interest in the mansion or other improvements on the property and initially was planning to raze them. Instead, the agency allowed the Olympic Group to sell them.

Several parties were interested in purchasing the improvements, including Douglas County, but Park Cattle Co. ultimately made the purchase with the understanding that a special land-use permit would be issued to operate the buildings as a business, allowing residents and visitors to visit the lakefront estate.

Last year, before Park Cattle Co. could get a special use permit, the USDA Office of the Inspector General began a criminal investigation into how the transaction was made, based on an audit by the Forest Service's Pacific Southwest Region.

The auditors claimed that the property without the improvements should have been appraised at $10 million less, which meant that the public paid more than fair market value for the property.

David Dickson, special agent in charge of the investigation, said then that the USDA was examining whether accurate information was presented to the federal agencies involved.

Last month, he said the investigation was completed and no criminal wrongdoing was found. But he would not provide details or a copy of the report.