Saturday, Aug. 16, 2008 | Former Centre City Development Corp. President Nancy Graham acknowledged receiving income as recently as last summer from a Florida business deal with Lennar Corp. and The Related Group, according to a deposition.

The revelation, contained in Florida court records, contradicts Graham’s previous statements and raises questions about whether she violated conflict-of-interest laws when meeting with Related’s California affiliate about a CCDC-sponsored project. Graham never disclosed the income, as required by state and local laws.

The court records are the most revealing to date of Graham’s financial involvement with two developers doing work in downtown San Diego. could not obtain her full deposition, which runs more than 160 pages, but viewed nearly all of it late Friday. The depositions were taken in 2007 after Graham and her ex-husband were sued by a separate business partner.

While testifying, Graham said she was due 50 percent of payments and described one $125,000 payment being made in mid-2007 as “just mine.” Graham said she could only “guesstimate” the total profits from the 2002 condo deal in Florida.

“We have been paid something over 7 million,” Graham said in the deposition.

During a separate deposition, Kevin Lawler, now Graham’s ex-husband, testified that their business received a $250,000 payment in May 2007. Asked about it, Graham acknowledged a payment around the same time, saying a distribution of $125,000 had been made.

Graham resigned July 24, citing her mother’s declining health. She left, though, after changing her story about her involvement in a project proposed by a Related affiliate, Related of California, which proposes to build a skyscraper at 7th Avenue and Market Street downtown. The California company’s parent is a minority owner of the Florida group.

Graham’s admission in court raises two issues. By law, she was required to disclose financial interests and income received from any developer doing business or construction downtown. In 2006, when her former business received $250,000 from the partnership, Lennar was building a condominium project downtown called Breeza. She did not disclose receiving income from the company, which received CCDC approval before Graham arrived.

After Related of California began working in San Diego to build a 41-story, $409-million condominium and hotel project, which is slated to benefit from an $8.7 million city subsidy in exchange for including affordable housing, Graham claimed in May 2008 that she had recused herself from the project.

Her personal calendars subsequently revealed that she had attended meetings about the project, including negotiations, with the developer and CCDC staff.

Graham told a reporter she sold her interest in N-K Ventures, the business owned with her former husband and partner to Related and Lennar, sometime in “early 2006.”

Her testimony contradicts that. She testified in August 2007 that she had no involvement in N-K Ventures, but still had a “minor financial interest in a couple of projects that are out there.”

Under oath, Graham also said she was “pretty sure” she’d resigned from N-K Ventures before June 2007. “I was out by either the end of last year (2006) or a little bit after that or something,” she testified. “I don’t know exactly.”

State and local laws prohibit public officials from influencing decisions that can benefit themselves, their spouses or their business associates. The laws extend the prohibition for a year after receiving money from a source. The state Fair Political Practices Commission has advised that a prohibition to a spouse extends until a divorce is finalized.

Violating conflict-of-interest laws can result in a fine from the FPPC or San Diego Ethics Commission as high as $5,000 per violation. Conflicts can also be punished as crimes under state and local law.

Fred Maas, chairman of CCDC’s appointed board, said the outside attorneys investigating Graham’s involvement in the 7th and Market project hoped to obtain her deposition next week. After being told of the deposition’s contents, Maas described the situation as “clearly problematic.”

“Nancy Graham is gone, many of these circumstances that are being discovered are obviously difficult and unfortunate,” Maas said. “Our job is to move on, continue the investigation and try to rebuild confidence in the organization.”

He added that CCDC should “attempt to salvage or resurrect the project and the developer, who I have a lot of respect for.”

Graham and her former husband were paid as part of a 2002 agreement with The Related Group and Lennar. The husband-and-wife team formed a partnership with the developers to build a luxury condominium project in Lantana, Fla., south of West Palm Beach, where Graham served as mayor in the 1990s. For their role, Graham and her ex-husband were due 25 percent of any profits netted by Lennar and The Related Group.

Graham testified that income from the project had been handled by her husband. Checks did not arrive until the two were “physically split up” — from her late 2005 move to San Diego — “and close to legally split up before any of that money came in.”

Lawler testified that one payment of $250,000 was received in April 2006; the duo didn’t separate until July 2006, according to their divorce filings. In all, the business owned by Graham and Lawler was paid $7.5 million, Lawler testified. The lawsuit against them — which led to the revelatory depositions — was settled for $1 million.

Court records show Graham and her husband were separated in July 2006, filed for divorce in December 2006 and were formally divorced Sept. 4, 2007.

CCDC, which operated with a $217 million budget last year, oversees redevelopment and construction in a 1,500-acre radius downtown. The agency has put Related of California’s 7th and Market project on hold, pending its internal investigation. City Attorney Mike Aguirre has called for the agency to completely set aside the development.

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