Wednesday, June 15, 2005 | 10:49 a.m.
SAN DIEGO -- Former strip club owner Michael Galardi provided bombshell testimony in the federal public corruption case here Tuesday, telling the jury that he paid thousands of dollars in cash bribes to San Diego city councilmen in an attempt to change a city ordinance.
Galardi, who once controlled a string of strip clubs in Las Vegas and San Diego, testified Tuesday that he gave $18,000 in cash in three separate payments to San Diego city councilmen in return for their support in overturning a rule banning contact between club dancers and customers.
Galardi, who has pleaded guilty and is cooperating with the government in prosecutions in California and Nevada, said he gave former Clark County Commissioner Lance Malone the cash to deliver to San Diego councilmen.
The testimony surprised the lawyers in the courtroom and sparked a lengthy huddle between them and U.S. District Court Judge Jeffrey Miller. Federal prosecutors wouldn't comment, and the defense attorneys attacked the testimony.
While Galardi and an uncover government agent have detailed thousands that were sent to city councilmen as campaign contributions, the allegation that out-and-out cash bribes were paid had not come out before. The claim does not appear to be supported by the voluminous recitation of telephone wire taps and other recordings produced by federal prosecutors so far.
Malone, San Diego Councilmen Ralph Inzunza and Michael Zucchet and council aide David Cowan are charged with multiple counts stemming from the allegations of bribery. The San Diego investigation and trial is paralleled by a similar case against three former Clark County commissioners in Las Vegas, again including Malone. In the Nevada case, former county commissioner Erin Kenny has pleaded guilty.
Galardi's testimony Tuesday mirrored earlier testimony in which the government presented wiretaps and asked for the strip club owner's perspective on the conversations, most of them with his lobbyist Malone concerning the efforts to overturn the hated "no touch" rule. But when the government turned to efforts in April 2003, the testimony included the surprise.
Galardi told the Assistant U.S. Attorney Robert Ciaffa that he paid the $8,421 bill for his family and Malone's family to stay at a San Diego seaside resort while Malone continued lobbying on the issue.
During the stay, Galardi gave $10,000 in cash to Malone to hand out to councilmen, Galardi testified. He said Malone took the cash to unnamed councilmen and that it was accepted.
The $10,000 payment would have been the largest payment, but not the only one. Galardi said he also gave Malone $6,000 -- or $2,000 for each council member who appeared supportive -- in the same month. Malone, Galardi said, did not report any problems delivering the cash.
"He said they took the cash and everything was looking good," Galardi said, referring to the April 2003 deliveries.
Less than a month later, the FBI raided San Diego city offices, Galardi's clubs, homes and other sites. Galardi said that even before he knew that the government had wiretaps and several inside sources, including a government agent that posed as the strip club owner's head of security, he knew that he had to work out a deal with the government.
"I knew that I was guilty," Galardi said in response to a question from Ciaffa. "I thought I should just be a man and take responsibility for my actions."
In his deal with the government, the most Galardi could face is five years in federal prison for charges of conspiracy to commit wire fraud and racketeering. Galardi, who continues to operate the Cheetahs strip club in San Diego, also pledged to pay $400,000 in restitution and agreed to forfeit $4 million as part of the plea bargain.
Galardi, in wiretaps presented Tuesday, revealed an increasing level of frustration with the lack of movement in overturning the "no touch" rule. Galardi told Malone in one recorded conversation that they would have to publicly reveal their contributions to campaigns in San Diego if the council did not move to amend the law.
Galardi told the court that he did not reveal the $10,000 payment to the government in conversations in July 2003 as he sought to win a plea agreement that would keep him out of jail, or at least reduce his jail time.
"I forgot about it," Galardi said. "I might not have been asked about it, either."
Dominic Gentile, Malone's attorney, noted that Galardi had a written agreement from the government that in talks on the plea agreement offer, the strip club owner could not be prosecuted for information he provided. Gentile also elicited a "yes" from Galardi when he asked if Galardi's goal was to avoid prison altogether.
He knocked Galardi for several statements to the government. Gentile noted that Galardi told the government that Malone met Charles Lewis, a city councilman indicted in the federal probe who died before the trial began, for the first time at a public fundraiser for another candidate in October 2000. At the same event, Malone handed Lewis $2,000, Gentile quoted Galardi as telling the government.
"You told the government on that very first night, (you) just met the man, Lance Malone gave Charles Lewis $2,000?" Gentile asked Galardi.
Galardi did not deny telling the government that, but said he must have been mistaken. He said the first time he gave Lewis money was during a later visit by the councilman to Las Vegas, when Galardi gave Malone $500 for the councilman.
Gentile broke off his cross-examination early, at shortly after 1 p.m. and the jury left. Miller and the attorneys spent a half hour huddled discussing Galardi's testimony. When the sidebar ended, defense attorneys left the courtroom with sharp criticism of Galardi's claims.
Gentile said Galardi was "changing the numbers" of cash payments "all over the place."
"The truth isn't hard to remember," Gentile said, noting that the government has not offered any proof of the accusations leveled Tuesday in its wiretaps.
"If you looked at the things they would talk about on the phone it's hard to believe that there were things that they wouldn't talk about," he said.
"This guy's just throwing names and numbers out."
Jerry Coughlin, attorney for San Diego councilman Michael Zucchet, said outside the federal courthouse that his client never took cash from Galardi.
Zucchet "explicitly denies ever receiving cash from Mr. Malone," Coughlin said.
He noted that the government never included the accusations of the cash payoffs in its opening statement or since then. The claim, Coughlin said, "came as a complete and sudden shock" not just to the defense, but to prosecutors as well.
Michael Pancer, attorney for councilman Ralph Inzunza, agreed.
Inzunza "absolutely never received any cash from Mr. Malone or Mr. Galardi" he said. "It is important to remember the source of the accusation."
Prosecutors would not comment.
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