Former Alhambra City Councilman Was Consulting Without a Business License

January 24, 2019
Alhambra, CA

Former Alhambra City Councilman and current San Gabriel Valley Municipal Water District Board Director, Mark R. Paulson, began consulting on large development projects and municipal contracts sometime after he left city office in 2006. However, he failed to notify the City of Alhambra that he was making money doing so out of the real estate offices of Anthony Venti Realtors, Inc. in Alhambra.

By Sean McMorris

When brought to the City’s attention, the response was swift: nothing to see here, everything is fine. In fact, everything was not fine. Paulson was indeed consulting without a business license from the City. A summary of a city commissioned investigation also shows city officials inappropriately—maybe illegally—tampered with Paulson’s business license application, which he submitted after a complaint was filed with Code Enforcement. Why that tampering occurred is still unclear.

When it was all said and done, City Hall did not fine Paulson or seek back fees on potentially hundreds of thousands of dollars in consulting income, nor did the City audit Paulson’s books of account or investigate how long he had been consulting illegally in the City despite evidence that he had been consulting since at least tax year 2010.

Staying under the radar

For years, former Alhambra City Councilman, Mark Paulson, was a constant presence in city council chambers during planning commission and city council meetings in which developers sought approval for projects in Alhambra. Paulson never publicly spoke at the meetings but always sat and conversed with the developer and his team of lawyers, architects, and engineers.

When numerous emails surfaced of Paulson communicating with city hall regarding development projects, some community members and press outlets questioned Paulson’s connection to the projects. Paulson would not publicly confirm if he was a paid consultant or lobbyist. Instead, press resorted to calling him a “liaison” or “advisor.” Paulson portrayed himself as someone who was just “trying to be helpful” for the good of the city.

Pulling the thread

I began investigating Mark Paulson’s relationship to developers and city contractors in Alhambra in 2017. His name kept popping up in emails to city officials I had obtained through California Public Records Act (CPRA) requests. Most of Paulson’s emails to city management centered around large development projects and ended with the email signature “Gateway Consultants.”

An Alhambra Source article from 2010 noted that Mark Paulson was a principal officer of “Gateway Consultants” with former and fellow three term Alhambra Councilmember, Paul Talbot. Paulson and Talbot apparently formed the business sometime after they both termed out of their city council seats in 2006. Talbot had to divest himself from the business in 2010 when he became Monterey Park City Manager. By then, Gateway Consultants had worked on large development projects in Alhambra, Monterey Park, and a proposed NFL stadium in the City of Industry.

In 2007, Mark Paulson was elected to the San Gabriel Valley Municipal Water District Board of Directors and remains there to this day. Law requires elected officials to publically file income statements each year, called Form 700s, to ensure they are not voting on anything that poses a conflict of interest. In 2010, for the first time, Paulson listed consulting on his Form 700, but then never again. Even so, public record searches for Gateway Consultants through the California Secretary of State, L.A. County Registrar, and the Alhambra Finance Dept. came up empty. Monrovia City Hall also had no record of Gateway Consultants having been registered as a business in the city, even though online data bases showed that Gateway Consultants operated at one time at the same address as Talbot’s insurance business in Monrovia.

I then received a tip that I should make a public records search through the L.A. County Registrar’s office for “Gateway Consultant” without the “s” on the end of “Consultant.” The result was the discovery of a Fictitious Business Name Statement, also known as a DBA (Doing Business As), that Paulson had filed for “Gateway Consultant” in 2016. However, Paulson reported on his DBA that Gateway Consultant had been transacting since 2010, the same year Paul Talbot divested himself from Gateway Consultant”s.”

A person must file a DBA if they are going to do business through another company that uses a different legal name. The address Paulson listed on his DBA paperwork was the same Alhambra address as the commercial real estate company he works for, Anthony Venti Realtors, Inc.

Once a person begins operating a sole proprietorship either out of their home or another business, they must notify the city and obtain a certificate of occupancy and business license. It is hard to believe that someone with as much city hall experience as Mark Paulson did not know this, yet when I had the Alhambra Finance Department pull records in 2017 for 1129 E. Main St., the only business registered at that address was Anthony Venti Realtors, Inc.

I took the records to Development Services to inquire further and was told that I would need to fill out a complaint form before Code Enforcement could investigate. I filled out the form around 4:00 PM on Sept. 28, 2017, and by the end of the same business day, Code Enforcement Supervisor, Rafael Perez, made a determination that Gateway Consultant was without business license but that no transactions had occurred. In less than 24 hours, The Finance Dept. issued Paulson a Certificate of Occupancy and new business license for Gateway Consultant. Perez called me eleven days later to inform me that the case was closed. That same day (10/09/2017), Mark Paulson amended his Form 700s to report consulting work in 2015 and 2016 worth at least tens of thousands of dollars but potentially hundreds of thousands of dollars.

Case closed…?

CPRA requests surrounding the closure of the case raised further questions. Had the City followed proper protocol? Did the City adhere to the municipal code? Was there favoritism involved?

For instance, how was code enforcement able to determine within a matter of hours that Gateway Consultant had made no transactions since 2010—the year Paulson stated on his DBA that Gateway Consultant had begun transactions? Correspondingly, how could city management concur with this finding knowing how heavily involved Paulson had been over the years in the development process at city hall (as emails reveal) for so many major projects in Alhambra? Moreover, if Code Enforcement had determined that no transactions had occurred since 2010 then why was Gateway Consultant’s setup date listed as Jan 1, 2016 on the Finance Department’s online business search tool and not Oct, 2017, when Gateway Consultant actually received its business license? Why was an inspection of the premises not conducted, as mandated in the municipal code, before issuing Paulson a certificate of occupancy? Why was the owner of Anthony Venti Realtors, Inc. not contacted to determine if Paulson had authorization to engage in consulting work on his property? Why was no case number assigned to my initial complaint and why was the date of the complaint listed as received a day earlier than it was?

Finally, why was Paulson’s application for a certificate of occupancy for a “Business Name Change” and not a “New Business”? The check box for a “New Business” had been scribbled out on the application and an X was placed in the “Business Name Change” box. In addition to not requiring a building and fire inspection, an application for Business Name Change also implies that the business had been licensed and operational under a different name for some time, thus precluding additional fees, fines, back taxes, or potential investigations.

Case not closed…

I questioned Code Enforcement and the Finance Dept. about these matters but felt that I was not getting anywhere with my inquires, and, in one instance, was told that the things I had concerns about were not of significant consequence in the broader scheme of things. So I filed a second complaint with Code Enforcement pointing out discrepancies and wrote a formal letter to the City Manager and City Attorney outlining my questions and concerns. In the letter, I asked that the matter be thoroughly investigated and that I be informed of the results.

I filed the second Code Enforcement complaint on Oct. 19, 2017. I filed my formal letter to city management on Oct. 23, 2017.

I received a letter from Development Services Director, Marc Castagnola, on Nov. 10, 2018, that the matter was being investigated but the City had yet to come to any conclusions. However, Castagnola confirmed that a prerequisite to issuance of a Business License is the issuance of a Certificate of Occupancy, which requires an onsite inspection—something that did not occur when Mark Paulson was issued a business license for Gateway Consultant. Castignola also stated that it is not city practice to “request past fees for businesses operating prior to obtaining a valid license.” This statement is counter to multiple sections in Title V of the Alhambra Municipal Code (AMC) as well as Revenue Supervisor Mable Yu’s statement that the City charges up to 3 years penalty on a business license. More generally, such a practice conveys to would-be business owners that there are no negative consequences if you are operating a business in Alhambra without a license.

A new CPRA request revealed that the City had re-opened the Gateway Consultant case, voided Paulson’s previous Certificate of Occupancy for Gateway Consultant, made changes to the application to reflect a “New Business” with “Shared Occupancy,” did a building and fire inspection, and obtained authorization from Daniel Venti for Paulson to operate his consulting business out of the Anthony Venti Relators, Inc. office building. The City then authorized a new Certificate of Occupancy for Gateway Consultant and re-closed the case. The receipt of record does not show that the City issued any fines or citations to Paulson or that they sought an audit to determine the amount of money he had made since he began consulting out of Alhambra.

City Hall also did not change the 2016 date of establishment for Gateway Consultant despite the additional evidence of Paulson’s Form 700s showing consulting work in tax years 2010 and 2016. Paulson reported on his Business License Application to the City, which he signed under penalty of perjury, that Gateway Consult was established on 01/01/2016. The Finance Dept. requested gross receipts for tax years 2017 and 2018 (when Paulson renewed his business license), but not tax year 2016 or later. It is unknown if Paulson reported the same amount of consulting income to the City that he reported to the FPPC on his Form 700s, which he also signed under penalty of perjury, since gross receipts reported to the City are confidential (Gateway Consultants redacted gross receipts).

Investigation concluded; public barred from viewing report

On January 17, 2018, Alhambra City Manager, Jessica Binnquist, informed me that the city had concluded its investigation into the matter, and that outside counsel, Allison V. Saunders of Ford & Harrison, LLP, determined no wrong-doing or bias occurred with the handling of the Gateway Consultant case. However, the City was not going to release the report to the public, citing Government Code Section 6254(c): an exclusionary clause in the California Public Records Act (CPRA) pertaining to “personnel, medical, or similar files, the disclosure of which would constitute an unwarranted invasion of personal privacy.”

Binnquist also noted that because the investigation concluded that no wrong-doing occurred, there was no need to release the report. Instead, the City released a page and a half summary of the findings, and, in so doing, outed me as the person who filed the complaint that triggered the investigation. (Note: We redacted the personal information in the above-linked summary even though the City did not)

The summary memo does not provide any information on how Saunders came to her conclusions, but she nonetheless resolves, amongst other things, that the “City treated Paulson and Gateway Consultant similar to other business owners and businesses.” The memo acknowledges that Project Manager, Janet Alvarez, at the direction of Development Services Director, Marc Castagnola, altered Paulson’s application to indicate that it was for a “Business Name Change” and not a “New Business.” Saunders was unable to determine why Castagnola requested the alteration, but nonetheless chalks it up to either ignorance or a “mistake.”

Saunders writes:

“It is not unusual, under certain circumstances (emphasis added), for a Certificate of Occupancy and a Business License to be issued to a business owner on the same day a business owner applies for each.

This is a curious statement given that it took nearly a month for Paulson to receive both once the City re-opened the Gateway Consultant case and more closely adhered to the AMC than they did the first time around.

The memo concedes that the “City does not typically go after a business for past due fees or require a business to provide documentation reflecting its rental arrangement with a property owner.” This statement is reflective of what Development Services Director Castagnola wrote to me earlier, but, again, is counter to multiple sections of Title V of the AMC, which state that the City “shall” assess penalties and interest for failure to pay a license tax when due. The AMC also has a clear commercial property rental clause for the purpose of collecting taxes.

Despite the report’s conclusions, Saunders statements are problematic in that they reveal an inconsistent policy process, which suggests bias. “Typically” is not always. Why are some businesses required to pay past due fees while others are not? Similarly, “other” is not “all.” That the City may have treated Paulson “similar to other business owners and businesses,” suggests that some businesses are treated different than others if they violate the AMC. “Under certain circumstances” extraordinary things can happen, like getting a new business license and certificate of occupancy in less than 2 business hours from the time a complaint is filed with Code Enforcement (my complaint was filed around 4:00 PM, the receipt of record shows that Paulson received his business license and certificate of occupancy at 9:12 AM the next day). What those “circumstances” are is unclear, as is whether or not Paulson’s application fell within those “circumstances.”

What is conclusive?

Mark Paulson was consulting on development projects and city contracts since at least 2009. He was doing so without a certificate of occupancy and business license in Alhambra. Mr. Paulson’s application for a new business license was altered resulting in deviations from AMC protocol. Mr. Paulson received a business license and certificate of occupancy without mandated AMC inspections. After Mr. Paulson registered his consulting business with the City of Alhambra, he amended his Form 700s to show that he had consulted on numerous projects from 2015-2016 worth at least tens of thousands of dollars in annual income.

The City did not issue a citation or fine to Mr. Paulson even though public records show that doing so is common practice for Code Enforcement. The City also appears to have not sought interest and late fees from Mr. Paulson, even though public records suggest that the City has collected such fees on numerous businesses over the last ten years that were operating without a business license—a revelation that is counter to Development Services Director, Marc Castagnola’s statement that “Past practice indicates that the Finance Department’s Business License Division does not request past fees for businesses operating prior to obtaining a valid license.”

Unanswered questions

Even though the investigative summary comes to multiple conclusions that absolve the City of impropriety, it does not relay how those conclusions were reached via corroborating evidence.

How was Paulson able to get his new business license and certificate of occupancy within 1 hour after he submitted his application (he filled out the application at 8:04 AM on 09/29/2017 and received his license and certificate at 9:12 AM the same day)?

Why does the original receipt of record show that the Development Services Dept. charged Paulson for a Fire Inspection that never occurred, and, according to Paulson’s original application, was not required? Regardless, it defies credulity that such an inspection could take place from the time Paulson filled out his application to when he received all corresponding documents an hour later. The City would also have had to verify that such an inspection took place, per the AMC, before issuing Paulson his documentation. Obviously, that did not happen. The question is, why? Consequently, Gateway Consultant did not pass its initial fire inspection after the case was re-opened.

In addition, the investigative summary does not address numerous relevant questions posed in the complaint to the city manager and city attorney.

Finally, a CPRA request for all Alhambra business license violations since 2015 lists 34 Code Enforcement cases with addresses. 1129 E. Main St., the address of Gateway Consultant, is absent from the list. Why? Another oversight?

The City is asking the public to overlook too much. Trust without verification is counter to CPRA philosophy and intent.

The public’s right to know

City Manager Binnquist alleges in her letter to me that no wrong doing occurred in the handling of Mr. Paulson’s application for a Certificate of Occupancy and New Business License—even though the City’s investigation concluded that Mr. Paulson’s application had been tampered with, resulting in significant deviations from AMC protocol. Public records also indicate that City Hall has treated other business owners and businesses different than they treated Mr. Paulson and Gateway Consultant.

Nonetheless, on the premise that the allegations in my complaint were not sustained, Ms. Binnquist and the City Attorney concluded that public disclosure of the full investigative report is not warranted. Again, trust without verification.

The City also invoked Government Code Section 6254(c) as further reason not to release the full report. I challenged the City’s use of Gov. Code Section 6254(c) in this instance but was informed by Ms. Binnquest that the City had made its decision and would not comment further on the matter (or release the full report).

The public’s right to know how its government conducts business, especially when an elected official or public employee of high rank and policing power are involved, take precedence over most else. There are some exceptions, but in those instances protected information (which is clearly outlined in the CPRA) can be redacted in order to prevent nondisclosure of otherwise public material. The section of the law Alhambra City Hall is relying upon for not disclosing the report pertains to “personnel, medical, and similar files,” things that were unlikely part of the report, but could nonetheless be redacted.

Improper disclosure

Despite City Manager Binnquist’s invocation of privacy rights as reason not to disclose the full investigative report into the handling of Mr. Paulson’s business license, the City of Alhambra appears to have violated my privacy rights when they released my personal information through CPRA requests and in its summary investigative report to the public.[1]

Alhambra Code Enforcement states on its website that “All reports are handled confidentially.” In addition, Alhambra City Clerk, Lauren Myles, has confirmed that it is standard practice for the City not to release the names, addresses, and contact information of complainants, stating that the practice “is consistent with the City of San Jose v. San Jose Mercury News (1999) 71 Cal. App.4th 1008, case as well as the League of California Cities Guide to the California Public Records Act.”

However, the California Attorney General’s Office wrote in a 2004 CPRA compendious that “Exempt material must not be disclosed to any member of the public if the material is to remain exempt from disclosure. Once material has been disclosed to a member of the public, it generally is available upon request to any and all members of the public.” Hence, my disclosure in this article that I filed the complaints that triggered the Gateway Consultant investigation, something I would have preferred not to have done in order to protect sources and methods as well as myself from potential retaliation.

Why it matters

Public trust is paramount to the efficacy of democracy. That trust is contingent upon transparency and accountability. If a democratic government grants exceptions to constitutional/chartered checks and balances then privilege snowballs and corruption becomes institutionalized.

If certain people of power are being afforded undue privileges at Alhambra City Hall then the public has a right to know why, to what extent, and to what end. City Hall simply telling the public, “trust us,” we found no wrong in how we operate or engage with current and former elected officials who are profiting from planning commission and city council votes when the record suggests otherwise is no more adequate than big banks telling the public after a financial crisis, “trust us,” we investigated ourselves and found no wrong doing.

Mark R. Paulson sat for 12 years on the Alhambra City Council, sat on the Alhambra Planning Commission before that, was the Chairman for the recently dissolved Successor Agency Oversight Board to the Alhambra Redevelopment Agency, and is an 11 year Board Director for the San Gabriel Valley Municipal Water District. His son, Chris Paulson, until recently, was the Alhambra Community Services Director, and the Director of Administrative Services before that.

In October, reported on e-mails between Mark Paulson and city management in which Paulson attempts to orchestrate city council meetings surrounding a development project he is consulting on. Another email, in reference to community members who opposed a development project that Paulson was working on, revealed him stating to Deputy Director of Community Development, Vanessa Reynoso, “We don’t want the malcontents to think they got another win.” And yet another email revealed that Paulson had ghost written a letter of praise for the mayor to send to the developer of a major project in Alhambra that Paulson was consulting on.

All of this suggests that Mark Paulson, even though he left the city council in 2006, maintains a great deal of access and influence at Alhambra City Hall, more so than most people. That he is profiting because of that access and influence—while he is an elected County official—raises the prospect of potential nepotism and malfeasance via the “revolving door:” those who now profit from the industries they once regulated as elected leaders or government officials.

Mark R. Paulson is now, and has been for years, a paid consultant for people and entities that seek approval and gains from Alhambra City hall. This is not illegal in and of itself, but hiding it from city hall (some might say in broad daylight) and from the FPPC is illegal. Being evasive about it to the public and the press when asked is devious. This, in addition to Paulson’s decades in elected office, make it hard to believe that all of this was a simple oversight on Paulson’s part. City management’s want to sweep the mater under the rug while being non-transparent and misrepresenting facts (i.e. “allegations were not sustained” when in fact they were: Paulson’s application was mishandled and AMC protocol was not followed) suggests duplicity and/or willful ignorance on the City’s part.

These are precisely the matters of public interest for which the CPRA was instituted. The City should release the full investigative report regarding Gateway Consultant, be wholly transparent in their interactions with Mr. Paulson, take responsibility for any impropriety, and take action to ensure that process is clear and consistent with city code and that people of power and privilege will not be granted undue influence, access, or favoritism at city hall.