A state agency tasked with regulating government ethics has launched a formal investigation into conflict-of-interest allegations against Long Beach Councilwoman Jeannie Pearce, the Post has learned.
In a Sept. 23 letter to Long Beach resident Ian Patton, who filed a complaint with the agency against Pearce, the Fair Political Practices Commission said it will investigate but has not made any determination about the validity of the allegations at this time.
The investigation comes as a city-commissioned report released Friday found that Pearce failed to disclose income from businesses linked to the cannabis industry and the Queen Mary, which are two major issues in her 2nd District.
It is not clear how long the investigation will take. FPPC investigations can often take months to be completed. The Public Integrity Division of the Los Angeles County District Attorney’s Office on Wednesday confirmed that it has also received a complaint against Pearce and is reviewing the matter.
The city report conducted by an outside law firm determined that Pearce has conflicts of interest through her consulting work for Dan Zaharoni, the development manager for Urban Commons, which operates the Queen Mary. Zaharoni, a lawyer, owns several limited liability corporations in addition to his work for Urban Commons.
According to the report, Zaharoni paid Pearce, a union and nonprofit consultant, for two consulting contracts—one for assisting in opening a cannabis dispensary in Culver City, and another for helping to establish a nonprofit foundation to reduce criminal recidivism rates.
The report questioned Zaharoni’s complicated payment structure in which he paid Pearce through two of his businesses related to real estate development and property management, though Pearce was mainly doing work for his cannabis industry-related business called From the Earth, LLC.
“It raises the question of whether there has been an effort to conceal the true purpose of the work and source of payments to Ms. Pearce as being for and with other than a full service cannabis management company with potential interests in the City,” the report said.
Reached by phone on Tuesday, Zaharoni said he hired Pearce to help set up a nonprofit foundation, called From the Earth Foundation, but paid her through his development business in the meantime because establishing the foundation took longer than anticipated.
Pearce, a single mom, has said she needs to work because she can’t make it alone on her part-time City Council salary of about $35,000 a year.
Pearce’s attorney, Lacey Keys, sent a letter late Tuesday to City Attorney Charles Parkin questioning whether there was a conflict at all, since Zaharoni wasn’t an owner of the company that runs the Queen Mary and Pearce never did work for Urban Commons. Further, the letter states, no one gained anything from Pearce’s actions as a councilwoman.
The investigation into Pearce by an outside consultant—prompted by a Long Beach Post report in late May—”did not include any fact-finding related to the impacts of the governmental decision in question on Councilmember Pearce’s financial interest,” the letter says.
Zaharoni said in an interview that Pearce approached him looking for work last year and he agreed to “help her” as a friend.
He said he was direct with her about possible conflict-of-interest concerns.
“The first thing I asked her was to go to the city attorney or consult with whoever you need to consult with before we even discuss this,” he said. “And she came back to me a few days later and said everything was OK and that there was no conflict.”
Zaharoni said it was his understanding that Pearce, who worked for him from September 2018 to August of this year, did not have any conflicts and that she would recuse herself if any Queen Mary or cannabis-related business came before the City Council.
He said he was later shocked to learn that she had participated in a March 12 council vote to study the feasibility of a gondola system between Downtown Long Beach and the Queen Mary. The city report found that Pearce’s vote was in possible violation of the Political Reform Act.
Zaharoni said he only learned of the gondola system vote from reading a Long Beach Post article and was not aware that the issue had gone before the City Council.
As for the Queen Mary, Zaharoni said he never discussed any issues regarding Urban Commons or the historic ship with Pearce while she was working for him. Urban Commons signed a lease to run the city-owned ship in 2016 and is planning to develop the 64-acre waterfront as a major entertainment destination.
Zaharoni said the conceptual plans are pending city approval and that he was under the impression that no other Queen Mary issues would go before the City Council this year.
“To know that my integrity or the integrity of Urban Commons is being questioned is unimaginable for me,” he said.
He said Pearce no longer works for him.
For now, it’s unclear whether the City Council will take any action. The council could vote to censure Pearce, as they did in May 2018 after the fallout from a relationship she had with her former chief of staff.
City officials have remained quiet on the issue publicly.
Pearce is running for reelection in March, but so far, she’s the only the incumbent not to be endorsed by Mayor Robert Garcia in the upcoming elections. Garcia has not yet given his endorsement for the 2nd District. The mayor could not be reached for comment Tuesday.
Pearce’s fellow council members have declined to comment on the record, but when speaking on the condition they not be named, several colleagues expressed their anger and frustration.
“What matters is that she brought forward an initiative, wrote the motion, then voted on things where she had a financial interest, which she didn’t disclose,” said one councilmember.
“She should give serious consideration to resigning,” added another colleague. “I’m disappointed that City Council is distracted by ethical lapses by one of our colleagues. She’s smart, she means well, but there’s a pattern of serious challenges. Her poor decisions reflect badly on the council and on the city.”
Pearce in her statement Friday said she is not the only council member who may have conflicts of interest.
“As recently as this past Tuesday’s council meeting, a colleague of mine needed to recuse himself from a particular vote due to his employment,” she said. “I do applaud this new level of close scrutiny of council conflicts as a critical step forward for the city. The relaxed atmosphere of the past has led to many questionable decisions and practices, doing a disservice to all Long Beach.”