Metropolitan News-Enterprise


Thursday, September 12, 2002


Page 4


Court Throws Out Conflict Indictment Against City Attorney


By a MetNews Staff Writer


An indictment charging the city attorney for a small municipality near Modesto with 10 counts of criminal conflict of interest was thrown out yesterday by the Fifth District Court of Appeal.

Stanislaus County prosecutors may have misled the grand jury by failing to explain that a public official’s acquisition of a prohibited interest in a public contract is a crime only if it was “knowing” and “willful,” Justice Timothy Buckley wrote for the panel.

The court ruled in favor of William Gnass, a Merced attorney who has represented the City of Waterford on a contract basis since 1989. The district attorney claims Gnass had a conflict of interest when he received payment as “disclosure counsel” in connection with certain bond sales between 1995 and 1997.

Gnass contends there was no conflict because neither he nor the city was a party to the bond sales contracts. The bonds were issued by a joint powers agency, of which the Waterford Public Financing Authority was a member.

Nothing in the JPA requires that any Waterford official serve on the JPA’s board.

The authority was a legal entity separate from the city, although the city council served as its governing board and Gnass as its attorney. The bond issues were controversial, as they were used to confer the benefits of tax-exempt financing on projects such as golf courses, housing developments, and casinos built by private developers.

The local governments belonging to the JPA, Buckley explained, “had little to do with the development projects they helped to finance” beyond lending their power to issue bonds in exchange for “an administrative fee.”

Buckley rejected Gnass’ argument that there was insufficient evidence of a conflict to justify the indictment. While the evidence was deficient in a number of respects, the justice said, it supported a reasonable inference that Gnass helped steer the city into creating the authority, and the authority into joining the JPA, in order to get the bond business for himself.

But the justice went on to say that it was “possible, if not likely, the grand jury indicted Gnass on something less than reasonable or probable cause.” The district attorney, the justice said, was obligated to give a scienter instruction because there was evidence suggesting that Gnass did not know he was involved in a conflict situation at the time.

Failure to give an instruction as to exculpatory evidence, the justice said, didn’t merely render the instructions incomplete, it made them misleading.

The case is People v. Gnass,  02 S.O.S. 4817.


Copyright 2002, Metropolitan News Company