Wednesday, Nov 22, 2006

MERCURY NEWS SPECIAL REPORT | PART 1 OF 2

Fury on the range

IN FAST-GROWING SAN BENITO COUNTY, A BATTLE OVER LAND, POWER AND THE PACE OF DEVELOPMENT BREAKS OUT WITH ACCUSATIONS OF BLACKMAIL, BRIBERY AND REVENGE

A few miles beyond the outlet mall in Gilroy, along Highway 101 just past Garlic World, the dominoes of development that start in Silicon Valley come to a stop, and the vast open land of row crops and pastures begins. A Highway 25 exit sign points east: Hollister, 12 miles.

The turnoff is onto a two-lane road that runs past cherry stands and strawberry fields, lulling you with its rural charm, making you want to pause and take a long, deep breath.

Until the mighty stench from a towering compost heap hits just as you cross the county line.

This is the gateway to San Benito County, where a dirty political battle is raging over the land and what becomes of it, the money and who makes it, the power and who wields it. The weapons are accusations of blackmail and bribery, adultery and revenge. Dogs have been poisoned, a marriage has broken, and, as a warning, a coyote eyeball was left on the hood of a car.

The worst of it has played out in Hollister, the county seat, where the old-fashioned downtown seems as slow as the old clock atop the Masonic Temple in the center of town. But on these unassuming streets, gossip spreads fast when a man has lunch with a woman not his wife, political threats are overheard at the Cozy Cup Cafe, or a county supervisor walks into the newspaper office with a bulging paper sack.

A secret society calling itself Los Valientes -- ``the brave ones'' -- has emerged at the vortex. Its members say they are fighting corruption, on the side of clean government and fair play. But they have gone after advocates of slow growth, and they won't reveal themselves. Their targets call them cowards.

The district attorney with San Jose roots has been fighting a lonely battle against them, a battle some say has become misguided and personal, a battle that has nearly ruined him.

And one of their targets, a former newspaper publisher once accused of taking a bribe, tried to regain her slow-growth voice by seeking a county supervisor's seat in this month's election.

Tensions were born out of the last building boom here in the late 1990s, when San Benito was the fastest-growing county in the state and subdivisions were popping up like wild mushrooms. From 1990 to 2000, the population nearly doubled to 53,000. On the little two-lane road that no one bothered to widen, it took just 18 months for 22 commuters to be killed in head-on collisions in 2001-02. From a sewage treatment pond that no one bothered to expand, it took little more than a gopher digging a hole to spill 15 million gallons of sewage into the San Benito River.

The state stepped in, and in 2002, imposed a moratorium on new sewer hookups in Hollister, effectively halting new construction. It was supposed to give the community time to reflect, plan and prepare for more growth. But county land could still be developed, and resentments deepened as people clashed over the future of this place and jockeyed for their fair share.

It's a classic California tale of preservation vs. development, says University of California-Berkeley Professor Timothy Duane, who wrote a book dedicated to similar conflicts raging in small towns across the Sierra.

``But mine was a PG movie,'' Duane told the Mercury News, ``compared to the R-rated San Benito version.''

Old ways, new blood
• Seeking refuge from cities, newcomers make mark

It was only a decade ago that San Benito County seemed such a promising place, where young families and business people could pursue their destinies in one of the last rural expanses on the edge of the Bay Area. There was a nostalgic Western appeal here, where the local Saddle Club still held a rodeo each summer and hay trucks still rumbled down the main street of Hollister.

At the height of Silicon Valley's dot-com boom, homes nearly twice as large in Hollister cost half as much as in San Jose. Tech jobs were a 45-minute drive away.

The county drew people like John Sarsfield, who grew up in San Jose and graduated in 1980 from prestigious Bellarmine College Prep, and his wife, Wendy Abbott Sarsfield, who came from a San Jose family deeply involved in local Republican politics.

The Sarsfields could afford a new two-story house on a corner lot in a Kaufman and Broad subdivision, to raise their son and daughter in a town that seemed safe. John Sarsfield, now 44, a Santa Clara University Law School graduate with straight dark hair parted neatly on the side, became a director for United Way and a board member of the local YMCA. He chaired the county's Republican central committee, ran for district attorney in 2002 and won with 68 percent of the vote.

``He has all the makings for a district attorney to carry the office well into the future,'' the daily Hollister Free Lance wrote at the time.

But it didn't take long for Sarsfield to show himself as an outsider with little patience for the eccentricities of small-town politics. At a community forum three years later, packed with men in cowboy hats and work boots, Sarsfield, in suit and tie, told voters, ``I'm not a creature of this place.''

Tracie Cone also was drawn to San Benito County. She and her partner, Anna Marie dos Remedios, fell in love with the county when they worked at the Mercury News -- Cone as a reporter and dos Remedios as a photographer. In 1996, they moved to a five-acre spread with room for their horse and their Harley-Davidson motorcycles. Cone, 6 feet tall with a ruddy complexion, would write about the high desert edge of the county that stretches to the Fresno County limit, where little is seen but horses, cattle and ``vast expanses unaltered by humans.'' She imagined wagon trains rolling across the high golden grasses a century before.

When Hollister's free weekly paper -- the Pinnacle, owned by a local grocery -- came up for sale in late 1999, Cone and dos Remedios left their Mercury News jobs and bought it.

Cone had served on the county grand jury, which faced numerous homeowner complaints about rapid construction so shoddy that walls bowed, mold grew and new stucco cracked. At the Pinnacle, they wasted no time exposing the disasters that accompanied unbridled growth -- the paltry developers' fees that left the influx of new Little Leaguers without enough ball fields, the schools without enough classrooms.

The Pinnacle even predicted that the sewer system, over capacity without upgrades, would fail -- which it did within two years.

``God, I hate to be so right about these things,'' Cone said later. ``Slow down, and have a plan, and grow. People don't think two generations from now, they think now. Why do we have to become Gilroy when we could become Sonoma?''

Within three years, the Pinnacle had won dozens of awards for its watchdog journalism and Cone and dos Remedios had been named News Executives of the Year by the California Press Association. The couple felt embraced by the folks in this farming town. Locals affectionately referred to them as ``the girls.''

But it didn't take long for Cone to realize that some of the established community resented her newcomer's influence and the way she used her paper as a platform for her slow-growth position.

When the paper opposed a new 677-house development in 2000, an anonymous e-mail was sent to prominent Hollister residents advertising a new Web site, which called Cone and dos Remedios ``the filth from up north.'' Clicking on Cone's name would send viewers to hard-core lesbian porn sites. The culprit turned out to be Hollister Councilman Joe Felice, who had retired by the time he apologized in 2001.

And when a Pinnacle editorial decried a coyote-hunting program as excessive, someone left a coyote eyeball on the hood of Cone's car.

By 2003, Cone thought she had experienced the worst of Hollister. She was wrong.

That was the year Los Valientes was born and, behind the mask of anonymity, launched its campaign to bring down political enemies and install allies. It was also the year of divisive Measure G -- a growth-control initiative crafted to prevent problems like those exposed by the previous building boom. It set growth limits, drew boundaries for development and limited the ability of ranchers and other land owners to subdivide their land.

Rather than wait for a vote of the people, the board of supervisors adopted it outright in April 2003, voting 4-1.

It quickly became clear that although everyone agreed that something had to be done to control rampant growth, no one wanted it done to them. Not the farmers or ranchers who considered the land their nest egg and wanted to profit well from their lifelong investment, not the business people -- from building contractors to shopkeepers -- who worried that the restrictions on growth would hurt their businesses and stifle the broader economy.

Civic groups, including the county Farm Bureau and chamber of commerce, joined a campaign to take the issue to the March 2004 ballot.

Los Valientes also opposed Measure G, and as members met secretly around town, they saw the problem in a sinister light: They believed a county official who was a key backer of Measure G was corrupt, a hypocrite who helped craft the measure for his own benefit.

Deep suspicions
• Private eye digs for dirt on slow-growth supervisor

They believed that the four-term board chairman, Richard Scagliotti, who was also a small-time developer and land owner, was drawing the new zoning lines to keep his own properties exempt from the restrictions. Word around town was that a revolt was brewing. A friend of Scagliotti's, who was having lunch at the Cozy Cup Cafe on Fourth Street in early October 2003, told him he overheard two men at the next table. One of them said, ``Scagliotti is dead meat.''

Los Valientes members also thought the county planning director, Rob Mendiola, must go. He was just as bad because, they believed, he played favorites and punished enemies when doling out valuable building permits. The two were in cahoots, they believed.

It wasn't a long stretch, either, they figured, to believe that the brown paper bag someone saw Scagliotti carry into the Pinnacle contained $25,000 -- in cash -- a bribe for Cone to advocate slow growth.

The group hired a private investigator, Dave Henderson, to document what members suspected.

``This memo is intended to be confidential,'' the note to Henderson from the Los Valientes lawyer read. ``If it were known that I am the person who requested this investigation, the persons you are investigating would retaliate.''

In a deposition that District Attorney John Sarsfield later requested, that same investigator, under oath, said this about the job he decided to undertake:

``I felt it was a politically motivated witch hunt.''

Where's the beef?
• DA won't prosecute; allegations hit press

In summer 2003, Henderson's two-volume report landed on Sarsfield's desk. It accused Scagliotti of several misdeeds, from claiming reimbursements on an extra-large, high-priced drainage pipe, to voting to give a business associate a county contract, to using his political clout to rezone an old nut-shelling plant so he could sell it at a profit. Los Valientes also said Scagliotti drew the new Measure G zoning lines to exclude his property, making his land more valuable than his neighbor's.

Allegation by allegation, Sarsfield found what he considered errors, false assumptions, half-truths, exaggerations. Sarsfield knew, for example, that Scagliotti had approval from the state attorney general to be reimbursed for the drainage pipe. And he saw no evidence in Henderson's report that Scagliotti had used his influence to rezone the nut plant property. The rest of the allegations, Sarsfield concluded, didn't amount to crimes either.

He refused to prosecute.

Within weeks, the allegations spread like a brush fire across the county -- from the front page of the Hollister Free Lance to the county courthouse, where they became an intervention in a Measure G lawsuit. In both places, Los Valientes was used as a moniker for the group, whose members remained anonymous.

``What difference does it make who's behind the allegations? All that doesn't matter,'' Salinas lawyer Michael Pekin, who represents Los Valientes, told the Free Lance. ``It's not just cheap talk. They're putting their money where their mouth is.''

Pekin would later tell a judge that the group paid Henderson ``tens of thousands of dollars,'' but he would never say exactly who did the paying.

Scagliotti and planning director Mendiola denied the allegations, saying their accusers were obviously politically motivated.

``It's just sick what's going on,'' Scagliotti told the Free Lance. ``It's unfortunate that, again, this is all related to slow and managed growth.''

Cone's paper, the Pinnacle, got on the story, too. Its reporter, Kate Woods -- a 49-year-old local who drives an old open-air Jeep with a ``Vote Libertarian'' sticker on the side -- investigated and agreed with Sarsfield: The allegations were unfounded.

``I followed this thing for three years. It was a big hot dog bun with nothing in it,'' Woods said. ``There was nothing there, but they would dribble out the corner of their mouths, `Corruption, corruption, corruption.' ''

What's in the bag?
• Watching newspaper office and suspecting bribery

One Los Valientes rumor hit Cone -- hard.

She received a call from Henderson, who had been asked by the Los Valientes lawyer to look into the bribe rumor: Did the bag someone saw Scagliotti carry into the Pinnacle contain $25,000 in cash? The accusation was ludicrous, she told him. If anything, Scagliotti might have brought in a bag of Mexican pastries from the panaderia down the block.

Henderson concluded the rumor was unfounded, but a reference to it turned up in the rival Free Lance nonetheless, in two opinion columns by local businessman Ignacio Velázquez, who owned an electrical contracting business and the Vault restaurant downtown. From his office window over the restaurant, he watched the comings and goings at the Pinnacle. He also had friends in offices nearby, he would later say, who kept him informed. His columns routinely maligned Measure G and ridiculed Scagliotti.

``Could it be true, as alleged by many, that one of the supervisors is financially supporting the Pinnacle?'' he wrote in January 2004.

Cone was confident her supporters would see through the attacks, as they had before. But when one of her loyal readers, 81-year-old Martha Moses, stopped her on the street and asked, ``I just have to know: Did you take the bribe?'' Cone was demoralized.

``There's just so many kicks to the gut you can take,'' Cone recalled.

She had enough on her mind. Her father was dying of prostate cancer. She and dos Remedios had recently moved to a 160-acre spread in the Panoche Valley southeast of town. There were corrals to build for their horses and a barn for the miniature cows, and five acres of grapes to plant. She needed a break.

In 2004, after owning the paper for five years, Cone and dos Remedios put the Pinnacle up for sale.

An offer came in from Main Street Media, the same company that owned the rival Hollister Free Lance. At first, Cone and dos Remedios balked. But the offer was highly profitable, and the buyers ultimately convinced them the paper would maintain its journalistic standards, including keeping Cone on indefinitely as publisher.

Election allegations
• Fraud charges urged against Measure G foes

As the March 2004 election neared, with Measure G and three county supervisor seats on the ballot, the debate over Measure G and the corruption allegations against its supporters shared the headlines.

Scagliotti decided not to run, having served in office for 16 years. And Supervisors Ruth Kessler and Bob Cruz, two Scagliotti allies and slow-growth advocates who were accused by Los Valientes of holding secret meetings before adopting Measure G, were up for re-election.

Measure G failed resoundingly. Kessler lost to Anthony Botelho, a San Juan Bautista farmer.

And Cruz lost by 10 votes to Jaime De La Cruz, an accountant on disability with kidney problems, whose campaign adviser was restaurant owner, electrical contractor and occasional columnist Ignacio Velázquez.

With such a slim margin of victory, it didn't take long for allegations of election fraud to surface. The San Benito County counsel called Sarsfield, telling him she had received calls from De La Cruz's opponents, accusing De La Cruz and Velázquez of illegally hand-delivering absentee ballots to the elections office.

Sarsfield hired an investigator from outside the county to look into allegations that De La Cruz had illegally collected a number of absentee ballots from acquaintances and given them to Velázquez to submit. The law allows only a close family member to deliver ballots for a voter who is ill or disabled. And just as disturbing, the investigator told Sarsfield, was that when he approached De La Cruz, the new supervisor had said menacingly, ``I know where you live.''

The investigator recommended that Sarsfield bring charges.

As Sarsfield prepared to take the election fraud case to the grand jury in May 2004, he got word that Michael Pekin -- the Los Valientes lawyer -- was representing De La Cruz and Velázquez. Pekin had called another county lawyer and had this to say: If Sarsfield didn't drop the election fraud case, he would expose a rumor that Sarsfield was having an affair.

The woman was on Sarsfield's office staff and was the niece of a ``longtime foe'' of Velázquez, which, in Pekin's estimation, compromised Sarsfield's judgment.

``Everyone knows downtown,'' Velázquez said. ``They walk down the street like teenagers in love.''

Sarsfield refused to discuss the allegation, then or since, but made it clear he would proceed with the case. Within days, the rumor of the alleged affair was splashed across the pages of the Hollister Free Lance.

Weeks later, two other women in Sarsfield's office filed a claim against the county, contending that the alleged affair contributed to a hostile workplace. And after that, voters started a recall campaign against him.

To Pekin, Sarsfield deserved what he got. Sarsfield's prosecution of De La Cruz was politically motivated, Pekin believed. And Sarsfield's refusal to prosecute Scagliotti was an obvious sign he was shielding a corrupt county official. Los Valientes was fighting for the rights of the common businessman, Pekin said, and its members stayed anonymous out of fear of retaliation. Sarsfield, Pekin believed, must go.

To Sarsfield, it was becoming clear that De La Cruz and Velázquez were connected to Los Valientes. As he came to see it, the secret group would stop at nothing to seize political power -- from making false allegations of corruption against county leaders, to illegally usurping an election, to trying to blackmail him personally for being an obstacle in its path. Los Valientes, he believed, must be unmasked.

On July 26, 2004, as Sarsfield was heading to a Rotary Club meeting, his cell phone rang with a call from his 12-year-old son.

He was in the back yard playing with their two dogs, Sundance, his Brittany spaniel, and Whisper, the puppy border collie that was a gift to his 7-year-old sister.

``Dad,'' Sarsfield's son said, ``I think the dogs are sick.''

Contact Julia Prodis Sulek at jsulek@mercurynews.com or (408) 278-3409