Loan looms as ethics nightmare for Mack

Diana Sahagun

Tuesday, July 3, 2001 | 10:46 a.m.

A dispute about car dealerships in the far northwest of the city of Las Vegas would be just that -- a dispute -- if it weren't for a $60,000 loan.

The loan was taken from a landowner by a city councilman, and it has now spawned a lawsuit and ethics charges.

The dispute itself may be resolved Thursday, when the City Council reconsiders an application by a car dealer who wants to open a dealership near the Santa Fe Station hotel-casino.

But the lawsuit promises to yet again thrust the City Council into the center of an ethics controversy that may take months to resolve.

The man at the center of the controversy, Joseph Scala, was unknown to the general public in May 1999, when he bought about 100 acres of open land near Centennial Parkway and U.S. 95 -- an area within the city's Town Center master planned community.

Where the 100 acres is located was designated by the 1998 Town Center master plan as commercial. This year an ordinance was introduced by Councilman Michael Mack to restrict all new car dealerships in Town Center to the land owned by Scala and other owners of smaller parcels.

When Mack on June 6 led the council in denying an East Coast car dealer the right to purchase land other than Scala's for a dealership, he failed to disclose that he had taken a $60,000 loan from Scala in fall 2000 to cover mounting bills at his pawnshop business.

That failure to disclose has led to complaints against Mack filed with the Las Vegas Ethics Board and the state Ethics Commission.

It has also led to a lawsuit against Mack and Councilman Larry Brown, filed by the dealer, John Staluppi, whose application was denied. Staluppi is asking in his suit for the two councilmen to be removed from office for abusing their discretion. He seeks unspecified monetary damages.

At the time Scala bought the northwest property, Brown represented the area. That ward, however, was expanded in December 1999 and the far northwest became part of a new ward represented by Mack.

It was after the City Council approved the land-use plan for Town Center that Scala purchased several parcels near Centennial Parkway and U.S. 95.

Just before buying the land, Scala formed a limited liability company -- Peoples Real Estate Investment. It was through this company that Scala loaned Mack the $60,000.

In August 1998, Mack, owner of several downtown boutiques and a pawn shop, was appointed as a city planning commissioner. According to the city's Planning and Development Department, there were no applications before the commission by Scala during that time.

The paths of Scala and Mack crossed after Mack was appointed to represent the newly created Ward 6.

One year into his Planning Commission role, Mack moved his home from Ward 2 to the northwest, so he could vie for the new Ward 6 appointment. Mack was ultimately appointed and sworn in to office Dec. 15, 1999.

His first year was quiet. He held neighborhood meetings, sponsored a gun lock ordinance and was the leader in renaming the northwest as Centennial Hills.

In fall 2000, Mack accepted a $60,000 loan from Scala to help with his pawn shop.

Mack had been appointed to the City Council only until the 2000 municipal election, when a candidate would win the four-year term. Mack said he left his business duties to a bookkeeper while he campaigned for the April 3 primary.

Even before Staluppi appeared before the City Council, he seemed poised to make himself known to Mack. In December, Staluppi's local consultant on the dealership project, Michael Bellon, sent Mack a Christmas present -- a cookie basket worth $100. Mack disclosed this gift on his financial disclosure form.

The law firm of Patti & Sgro -- the firm now retained by Staluppi in the lawsuit -- also sent Mack a Christmas present -- a basket of snow crabs worth $200, according to his financial disclosure form.

In the early part of January, Staluppi met with Scala to discuss opening a Nissan dealership on Scala's property. About the same time, Scala and Staluppi donated to Mack's City Council campaign. Scala gave $10,000, and Staluppi gave $1,000, according to Mack's campaign contribution report.

Negotiations between Scala and Staluppi broke down, so Staluppi began looking for another commercial location. This time he chose a commercial site on Rancho Drive near the Santa Fe Station, still in Mack's ward but outside the Town Center master planned community.

On Feb. 21, a proposal for a site plan for the dealership on Rancho was set to be heard by the City Council. But Mack asked Staluppi to hold the item for 90 days. According to a letter Mack sent to Staluppi, Mack said he needed more time to meet with nearby residents who would be affected by the project. But he said in the letter he anticipated no problems with the site being approved.

When the item finally came before the council June 6, there were no objections to the project from residents who lived near the proposed dealership.

Several residents of other northwest neighborhoods, however, did speak. They said they wanted to see car dealerships in the Town Center area only.

Stephen Reilly, a member of the Northwest Network of Neighborhoods, said, "We are going to be in a world of hurt if the Town Center concept goes down the tubes."

At the meeting, Mack said that some time after he sent the letter he changed his mind about the Rancho site, saying it would hurt the integrity of Town Center.

But according to the lawsuit filed against Mack and Brown, attorney Anthony Sgro alleges both councilmen were working behind the scenes to broker a deal between Staluppi and Scala. The suit alleges that both councilmen were actively encouraging Staluppi to continue negotiations, even after he began looking for another site.

At the June 6 meeting, Mack voted to deny the project. City Council members Lynette Boggs McDonald, Larry Brown, Lawrence Weekly and Gary Reese joined with Mack in voting down the application. Mayor Oscar Goodman and Councilman Michael McDonald abstained.

The suit alleges Mack and Brown in fact voted against the project because they had made a guarantee to Scala that all new dealerships would locate on his property.

Brown said Monday that regardless of the suit, he feels comfortable with the original decision he made last month.

"The reasoning I was against it was the same reason that I put on the record a few years earlier," he said. "I am opposed to the proliferation of new-car dealerships. That is regardless of who owns what land inside or outside of Town Center."

The lawsuit follows closely on the heels of similar ethics complaints lodged against McDonald, for attempting to broker a deal between the city and an ailing sports park.

After months of controversy, McDonald was stripped of his mayor pro tem title. The state Ethics Commission ruled McDonald violated portions of the ethics law but split on whether his conduct was willful so therefore imposed no penalty.