Friday, Aug. 15, 2008 | When Nancy Graham arrived at the Centre City Development Corp. in December 2005, Lennar Corp. was working downtown to build Breeza, a 158-unit condominium project at Pacific Highway and Ash Street. CCDC had already approved the project; construction began soon after in early 2006.
When she filled out her annual conflict-of-interest forms, Graham never disclosed receiving any income from Lennar, a company that had been a former business partner.
CCDC executives are required to report their income, investments and positions in any business doing land development or construction downtown. Such disclosures are made annually to alert the public about potential conflicts of interest.
But before moving to San Diego, Graham directly partnered with Lennar on a condominium project in Lantana, Fla., and had an agreement to receive ongoing profits from the deal. Court records say a $250,000 payment was made to her Florida development business, N-K Ventures, in April 2006, the same year that Lennar started construction on Breeza.
It is not known whether Graham received any of that April payment, which came to her business as part of an ongoing profit agreement that reaped $7.5 million for the company. Her former husband jointly owned the company with her, though the two separated in 2006.
When the $250,000 payment arrived, the two were still married and had not yet separated. State and local conflict-of-interest laws count a spouse’s income as an official’s in most circumstances. Graham and her husband divided their finances sometime in “early 2006,” she has said. They were separated in July 2006, filed for divorce in December 2006 and were formally divorced Sept. 4, 2007.
When Graham filled out her conflict-of-interest form for 2006, she did not disclose any payment. Her form that year is two pages long and discloses only that she received three gifts totaling $62.
Stacey Fulhorst, executive director of the San Diego Ethics Commission, declined comment on Graham’s situation, but said conflict-of-interest codes such as CCDC’s apply to both public officials and their spouses. “Everything in that code applies to the official filing it out as well as the members of their immediate family,” Fulhorst said.
Helen Peak, CCDC’s attorney, wouldn’t comment about the specifics of Graham’s conflict forms, but said disclosure exceptions can occur if an official and spouse have a pre- or post-nuptial agreement precluding the official from having rights to the spouse’s income. She said she did not know whether such an exception applied in Graham’s case.
Graham and her husband had a post-nuptial, court records show, though they did not disclose its contents during their Florida divorce case. They worked to find a judge there who would allow them to keep their finances secret.
During his 2007 deposition, Graham’s husband corrected himself when describing who was receiving money from the joint condominium venture. According to a transcript, when asked about a different payment made in 2007, Lawler replied, “I received — we received the 250,000 in late April or early part of May.”
Graham and her husband jointly signed a 2002 contract with Lennar and another developer, The Related Group, that promised the couple ongoing profits from the Florida condominium project. During their Florida and California divorce proceedings, they said they’d divided their interests in N-K Ventures. They didn’t say how.
Graham has said she sold her interest in N-K Ventures, which received the $250,000 payment, to her husband sometime in “early 2006.” She has not been more specific about the date and has not returned calls for comment.
Until now, attention has focused on Graham’s ties to The Related Group, another partner in the Florida condominium project, the Moorings at Lantana. CCDC and the City Attorney’s Office have begun investigations into the circumstances surrounding the selection of a Related affiliate as the developer of a downtown skyscraper. Graham’s past business with Lennar widens the scope of potential problems arising from her Florida development dealings.
Violating conflict-of-interest disclosure laws can result in fines as high as $5,000 per violation and can also be punished as crimes under state and local law.
Fred Maas, CCDC’s chairman, said the relationship between Graham and Lennar deserved examination, though he said he did not know whether CCDC would include the disclosure issue in its ongoing internal investigation. He said the matter fell under the jurisdiction of the Ethics Commission and state Fair Political Practices Commission.
“On its face, it would appear someone should’ve known it was happening,” Maas said. “It’s a potential disclosure issue that certainly ought to be explored, whether by us or someone else.”
Maas said he had known that Graham had a previous relationship with Lennar. The issue was raised during her interview process, he said, because the company at the time was a partner on the planned Ballpark Village project.
Graham resigned July 24, citing her mother’s declining health. She left office, though, after changing her story about her involvement in negotiations of the downtown skyscraper proposed by Related of California, an affiliate of The Related Group. She initially denied having any involvement in negotiations. Her personal calendars subsequently showed she had met with the developers.
Related of California has been negotiating with CCDC about the specifics of a proposed 41-story, $409-million downtown skyscraper at 7th Avenue and Market Street. The project would benefit from an $8.7 million city subsidy in exchange for including affordable housing units.
The project is on hold pending an internal investigation at CCDC that is expected to conclude by early September.