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Disclose Financial Ties or Face Legal Action, SCUSD Board Tells Trustee Stampolis

In closed session last week, the SCUSD Board voted 6-0 to authorize its attorney to initiate legal, judicial or administrative proceedings against Trustee Christopher Stampolis, to compel him to comply with California conflict of interest disclosure requirements (California Code Section 1090) and/or recuse himself from board actions and discussions concerning district policy on project labor agreements (PLAs).

“The Board requested that Counsel offer Trustee Stampolis an opportunity to disclose, and if needed recuse himself, by the next regular board meeting [September 24],” said Board President Albert Gonzalez. “If this action is fully complied with the board will have Counsel stop the legal action authorized.”

In August, with the discussion of a PLA on the board agenda, SCUSD district officials asked public law specialist Sherman Wong for a legal opinion on Stampolis’ possible conflict of interest as a result of his $5,000/month consulting income from the Laborers Pacific Southwest Regional Organizing Coalition, an organizing group that’s part of the Laborers International Union of North America (LIUNA).

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The Organizing Coalition’s purpose, according to its website, “is to increase our market share by organizing more contractors to become signatory [union shops],” and  “to raise our market share and footprint in the industries in which we represent.” Those unions include all AFL-CIO laborers and those in the AFL-CIO Building and Construction Trades Department – which includes the IEBW, Teamsters and International Union of Bricklayers and Allied Craftworkers. Promoting PLAs is one LIUNA’s trademark issues.

Attorney Wong’s analysis was that Stampolis’ consulting work constituted a conflict of interest that required Stampolis to disclose at a public meeting “the nature, scope, and details of his financial relationship and/or recuse himself from participating in a any discussion or attempting to influence board member” on any subject related to LIUNA and its affiliated organizations.

Because Stampolis refused to make the legally required disclosure or recuse himself, and the SCUSD board voted at the August 13 meeting to get a judicial ruling on Stampolis’ possible conflict of interest before any further discussion of PLAs. Until Stampolis recuses himself, or proves that his consulting work has no bearing on labor agreements, any discussion of a PLA puts the district in legal jeopardy and contractors at risk of not getting paid.

If a court finds that Stampolis has a conflict of interest that he didn’t disclose, any contract affected by it can be found “void and unenforceable;” regardless of whether the contract award complies with state and local law in every other respect, according to the California Attorney General’s 2010 Conflicts of Interest Guide. The law covers all officials that participate in the contract discussions in any way – not just those negotiating terms or signing the final contract.

Further, advises the AG’s office, courts have ruled that contracts made in violation of conflict of interest law “to be void, not merely voidable.” Contracts can even be found void in some cases just because the official with the conflicting interest is part of the contracting agency, even if the official didn’t participate in developing the contract.

If a conflict of interest is uncovered, contractors don’t have to be paid for work completed and can be forced to return any payments received, according to the law. The agency is also open to lawsuits challenging contract awards on the grounds that decisions were tainted by a conflict of interest.

A public official who intentionally fails to disclose a conflicting interest is subject to fines, prison time and barred from holding public office.

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