Malone guilty; LV trial next

Tuesday, July 19, 2005 | 11:11 a.m.

The attorney for Lance Malone, the former Clark County commissioner and Metro Police officer convicted in a federal political corruption case in San Diego, said Monday that Malone will seek to overturn the verdict.

Dominic Gentile also said Malone would not strike a deal with federal prosecutors despite the second, parallel political corruption trial in Las Vegas expected to begin early next year.

"No deal," Gentile said Monday evening, six hours after the San Diego jury of eight men and four women read its decision. "It won't be Lance Malone."

If the convictions stand, Malone faces sentencing Nov. 9. He could face years in federal prison. The old federal sentencing guidelines would have set his prison sentence at 51 months, but a recent U.S. Supreme Court decision has thrown the federal guidelines out.

Malone was convicted of 37 of 39 potential charges: 33 wire fraud counts, a single count of conspiracy and three counts of extortion. The jury rejected two counts of racketeering.

The jury also convicted two San Diego city councilmen -- one of whom was in his first business day as the mayor of the oceanfront city -- on charges of illegally accepting campaign contributions in exchange for political favors.

Councilmen Michael Zucchet and Ralph Inzunza were immediately suspended from the City Council after the convictions for conspiracy, fraud and extortion.

Zucchet and Inzunza, both 35, were accused of taking $34,500 in cash bribes and campaign contributions from Galardi. Malone allegedly delivered the wads of cash from Galardi to Inzunza and Zucchet.

Zucchet's conviction left the nation's seventh-biggest city without a mayor at one of the most troubled points in its history. Mayor Dick Murphy resigned and left office Friday, seven months into a second term he cut short to give the city a fresh start amid a widening federal probe of San Diego's deficit-ridden pension fund.

The jury returned a not-guilty verdict for City Council aide David Cowan, who had been charged with a single count of lying to the FBI in the final days of the investigation in 2003.

All of the charges stem from an unsuccessful effort by strip club owner Michael Galardi to overturn a law in San Diego that banned physical contact between dancers and patrons, including the intimate and lucrative four-minute "lap dances" that kept customers and their dollars coming to his clubs. Prosecutors said the councilmen accepted more than $34,000 each in bribes from Galardi.

Outside court, Inzunza insisted that he had done nothing wrong, explaining that his actions were part of the normal political process, and promised to fight the charges. "I will be back," he said.

Zucchet left without talking to reporters. His attorney, Jerry Coughlan, said his client had no immediate plans to resign, pending an appeal, and maintained that Zucchet, too, was only doing his job.

"There isn't a single public official in this country that hasn't done the same thing," Coughlan said.

U.S. Attorney Carol Lam said prosecutors have yet to decide whether to seek jail time at sentencing, set for Nov. 9.

"This is both a sad day for San Diego and a hopeful one," Lam told reporters. "This verdict should signal a new day for San Diego politics going forward, a day in which our politicians do not trade their obligations to the public for personal gain."

Prosecutors said the evidence of the plot could be found on secretly recorded conversations dating to 2001. In one 2003 conversation, Malone told a Las Vegas strip club employee before he posed as a concerned San Diego citizen at a council committee meeting that the less he knew about the plot the better.

"It's called plausible deniability, baby," Malone said.

Juror Niki Coates, 59, of Carlsbad found Inzunza and Zucchet to be motivated by greed.

"I really believe the councilmen knew the plan would never work, that they thought it was a really stupid plan, but they wanted the money," she said.

Galardi, who has pleaded guilty in both the San Diego and Las Vegas investigations, continues to operate one nude bar in San Diego that was the epicenter of the scandal in the Golden State.

Galardi also operated three clubs in Las Vegas, all of which he has been forced to sell since his guilty plea to federal prosecutors. Galardi and his one-time "chief of security," an FBI informant and admitted drug and weapons dealer who went by the name Tony Montagna, were the star prosecution witnesses in the San Diego trial.

However, the prosecution also had hundreds of hours of audio tapes culled from 100,000 wiretaps on phones, bodywires and on bugged furniture. Both sides said early in the trial, which began in May, that the centerpiece of their cases would be the audio tapes.

Gentile said despite the jury's decision, the process is not over for Malone.

"We have some issues that we have raised all through this thing," Gentile said. "The one that comes to mind first is allowing Montagna to run rampant, provide false information without FBI supervision."

Gentile has already filed a motion to dismiss the case for "outrageous government conduct."

"Another one will be that the prosecution was using this theory on campaign contributions," he said. "That was never what the statute was intended for."

Gentile has long admitted that Malone improperly helped funnel campaign contributions to both Zucchet and Inzunza but has argued that the misdeed was a misdemeanor violation of state and local law.

The attorney, who is now slated to defend Malone in the Las Vegas trial as well, said part of the jury's decision could be chalked up to a prevalent distrust of government and government officials.

"The case came down exactly how I thought the case might," he said. "The average person who serves as a juror has a powerful distrust of elected officials. Jurors bring to the table almost a presumption of guilt ... They try not to act on that presumption, I think they mean it consciously when they tell the judge they don't have it, but subconsciously, it's so deeply imbedded.

"I'm not suggesting that it's unwarranted," he said, adding that media reports of official misconduct exacerbate the perception.

A court of appeals might look at it differently, Gentile said.

"I think they would have the opposite approach," he said.

Gentile said the possibility of a fair trial in Las Vegas could be affected by the decision and media attention of the San Diego trial, but in Las Vegas Malone has some benefits as well.

In San Diego, Malone was identified as a lobbyist for the strip club industry, as a politician and as a man "with Las Vegas painted on his forehead," Gentile said. "Those of us from Las Vegas know that we are often looked at in way different from anywhere else in the United States."

A Southern Nevada jury will take the negative cache of those negative labels away, he said.

"I don't believe you can take the results here (in San Diego) and use it as a great predictor of what will come to pass in Las Vegas."

Richard Salas, a Las Vegas attorney and former assistant U.S. attorney in Illinois, said the San Diego outcome, however, makes things more difficult for Malone and his co-defendants here.

Malone faces trial on similar corruption charges along with former Clark County Commissioners Dario Herrera and Mary Kincaid-Chauncey. Former Commissioner Erin Kenny has, like Galardi and Galardi's company lieutenants, agreed to cooperate with the federal investigation and has pleaded guilty.

Salas said the guilty verdict in San Diego could push one or more of the indicted Las Vegas trio to seek an accommodation with the federal prosecutors.

"It becomes decision time," Salas said. "There is a natural phenomena that arises whenever the government has multiple individuals, and that phenomena is called a race to the prosecutor's office."

Salas said that as in the San Diego trial, the government's witnesses often are of dubious credibility -- the central issue for the four defense attorneys in San Diego. But in San Diego, as in Las Vegas, hours of audio tape apparently played a key role in swinging the jury.

One of those who does not have a high opinion of Galardi's credibility is Gary Guymon, whom Galardi, in pre-trial testimony to the FBI, accused of taking favors. At the time of the federal investigation from 2001 to mid-2003, Guymon was a Clark County deputy district attorney.

Guymon said allegations from Galardi led to the loss of his job in the district attorney's office and his transfer to the Clark County public defender's office. Guymon said it was likely the audio recordings, not Galardi's testimony, that made the difference in the case.

"I can't imagine that Galardi's statements would have been that important because I don't think he was that credible," Guymon said.

Galardi's credibility, already challenged in the San Diego case, will be even more on trial in Las Vegas, Guymon said.

U.S. District Judge Jeffrey Miller ruled early in the San Diego trial that the prosecution would not be allowed to allege that Galardi's behavior in San Diego matched what he had been doing for years in bribing public officials in Las Vegas.

The goal was to avoid a parade of Las Vegas officials -- among them elected officials from county law enforcement and the courts -- who would deny allegations leveled by Galardi that he had bribed them with campaign contributions. It remains a possibility in the coming Las Vegas trial, however.

"That could be a much larger can of worms," Guymon said. "Vegas has yet to deal with the stories of Mike Galardi and the tales about the people who live here. My guess is his credibility will be scrutinized, even more so."

Charles E. Kelly, a Las Vegas criminal defense attorney and former federal prosecutor in Las Vegas, said Galardi's testimony in San Diego, "although obviously impeached to some degree, presumably the jury accepted some of what he was selling."

Kelly said the San Diego testimony wouldn't likely have won the case without the virtual mountain of wiretaps behind it.

"In this case we can assume the jury used the tapes to corroborate the testimony," Kelly said. "I used to say to the jury: Don't take his word on it. Use the other evidence to judge his credibility. I think that has ramifications on the case up here.

"The question is what those tapes say and do those tapes corroborate what Galardi has to say about these particular county commissioners here."

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