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5/21/16 – The recently released Grand Jury report (view) about the City of Banning and the Banning Chamber does not name those responsible. In the following article we will identify the key players at the heart of the scandal – by name.

As stated in the report, the City is faulted for not charging the Chamber for utilities, for not enforcing the chamber’s lease agreement and for doing business with the Chamber, despite the fact that it’s executive director personally owes the City over $ 75,000, resulting in a conflict of interest.

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GRAND JURY EXPOSES BANNING’S LONG STANDING GOOD-OLD-BOY CULTURE

For a City to be subject to a Grand Jury report is extremely rare. Not even the City of Beaumont, who’s former officials were just charged with horrendous corruption crimes, has ever been scrutinized by a Grand Jury.

Banning, on the other hand, had not one, but two such reports issued over the past 6 years. We don’t know of any City in California that – within less than a decade – had two Grand Jury reports issued against it, both of them exposing the unlawful giving away of public funds, this time via a (highly illegal) “handshake agreement”. What does this say about Banning?

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KEY PLAYER : MAYOR ART WELCH

Mayor Art Welch will not openly divulge what you are about to read. His involvement in the scandal is so deep, he was one of two councilmembers who were interviewed by the Grand Jury.

Welch was Mayor of Banning in 2006. After losing his re-election bid for the city council in the November 2006 elections, Welch became active in the Banning Chamber, which historically has always served as a catch basin/ recycling center for failed Banning politicians.

Welch immediately advanced to the position of “Director”, according to public documents filed by the Chamber.

In 2007, when the infamous and illegal handshake agreement was reached, Welch was the Chamber’s Vice President. He remained in this position until 2009, when he became President of the Chamber. Welch remain as President until 2012, at which time he again acted as its “Director”.

Even after his election to the Banning City Council in November of 2012, Welch remained intimately involved with the Chamber. According to sworn filings with the Secretary of State, Welch was the official “Agent for Service of Process” for the organization –  until 2015, when it became clear that the Grand Jury was beginning an investigation into the Chamber utility scandal.

Today Welch is trying to downplay his documented continued involvement in the Chamber as an erroneous publication by “a website”. The “website”, however, is none other than that of the California Secretary of State, which publishes the record based on filings that were submitted to them under penalty of perjury.

So who should we believe ? Good-old-boy Art Welch – or the Secretary of State? The answer is obvious.

No doubt, Art Welch was an official agent for the Chamber for 3 out of 4 years he has been on the City council (2012-2015). This means that Welch had a textbook conflict of interest when it came to holding his fellow Chamber cronies accountable for their utility debt.

Not surprisingly, Welch was one of three councilmembers (Franklin, Moyer, Welch) who tried to bury the issue by delaying any collection for over 2 years, before the Grand Jury finally put a stop to it. That Welch maintains a close personal friendship with the Chamber’s Executive Director and judgment deadbeat Jim Smith, is yet another telling circumstance implicating Banning’s Mayor, Art Welch as being at the core of the problem.

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KEY PLAYER : COUNCILMEMBER DEBBIE FRANKLIN

Councilmember Debbie Franklin has a long standing intimate involvement with the Chamber. According to her own account, she ran a charitable program called “Holiday Wish” with the help of the Chamber.

It is also a matter of record that Franklin regularly attends numerous – if not all –  Chamber functions, including installation dinners. Due to her close involvement, Franklin was featured on the Chamber’s website, up to the time the Grand Jury started their investigation, at which time her picture and that of Art Welch was removed.

During her 2014 election campaign, Franklin characterized herself as an “Associate” of the Banning Chamber of Commerce. This statement alone shows that she had a conflict of interest dealing with any City matters related to the Chamber.

But instead of recusing herself from the discussion, Franklin continued to involve herself in the matter. Along with Art Welch, she is responsible for purposely delaying the collection of the Chamber bill for over two years after the issue had become public.

But it gets much worse: Franklin has been on the City council since 2006. For years she knew, or at least should have known, that an illegal handshake agreement for free utilities was in  place. As a councilmember, Franklin was entrusted to guard public funds. But due to her having a conflict of interest for the entire time, she had no incentive to take corrective action. Like Welch , she couldn’t care less about looking out for the average rate payer that gets shut off the moment he/she misses a payment.

Debbie Franklin is a member of the “Club” –  and the “Club” is always eager to protect a dirty system.

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KEY PLAYER : CHAMBER DIRECTOR JAMES C. “JIM” SMITH

The Grand Jury Report expressly recommends that James C. “Jim” Smith be removed from his position as Executive Director at the Banning Chamber of Commerce for conflict of interest, due to the fact that the City holds an unsatisfied judgment against Smith since 2011.

But the judgment which the Grand Jury refers to is only the tip of a humongous iceberg. Smith has been inundated with lawsuits, judgments and Federal and State tax liens:

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• Judgment by Delton Dysart in the amount of $ 122,267.04  –  This judgment (view here) was entered into based on a used car financing scheme run by Smith, in which Dysart financed the purchase of used cars that Smith was going to sell. The court found that once the cars sold, Smith kept the proceeds from the sales for himself, instead of repaying Dysart. Smith did not contest the case, therefore the above circumstances are deemed admitted by Smith. Nevertheless, Smith regularly attempts to explain away this and other judgments, claiming he was caught by a “bad economy”. This judgment has been accruing 10% per year in interest since July of 2012, bringing the amount owed to over $ 170,000 to date.

 

• Judgment by Automotive Finance Corp. in the amount $ 74,434.37  – According to public record, “Jim Smith Automotive  Enterprises, Inc.” has an outstanding judgment entered against it in the amount of $ 74,434.37. This judgment also extends to Jim Smith personally (see Abstract of Judgment). Since this judgment was entered into in May of 2010, it has accumulated to an amount of well over $ 125,000 by now.

 

• Federal Tax liens totaling  $ 18,746.91  –  Two Federal tax liens are currently filed against Smith, one from 2011, the other from 2015 (view here and here).

 

• State of California Tax liens totaling $ 66,553.36  –  Two State tax liens are currently filed against Smith , one from 2009, the other from 2014 (view here and here).

 

• Allegations of embezzlement by Carol’s Kitchen in the amount of $ 12,150   –   Carol’s Kitchen accused Smith – a used car dealer – of promising to purchase a van for the organization and receiving $ 15,000 for this purpose. The organization says Smith took the money, but they never received their van.  Carol’s Kitchen’s Statement can be viewed by clicking here. It is supported by their 2011 tax return, which shows a loan to Jim Smith for a vehicle purchase, with an outstanding balance of then $ 12,150 (view pg.8). Once again, Smith has attempted to explain away the issue by blaming a “bad economy”, that supposedly made it impossible for him to deliver the van. (view Smith’s previous statement)

 

• Judgment by City of Banning in the amount of $ 74,434.37   –   As indicated in the Grand Jury report, the City of Banning holds a judgment against Smith in the above amount. The judgment was entered against Smith and David Dysart in 2011 for attorney’s fees incurred, due to an unsuccessful lawsuit they brought against the City. It has since accrued interest, resulting in a total judgment amount against Smith now exceeding $ 100,000.

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RECORD GAZETTE PROTECTING THE STATUS QUO

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Record Gazette writer David Heiss, a personal friend of Smith, gave Smith a seemingly unlimited  platform to ramble about the City’s judgment against him. Smith is quoted as saying that since there were two judgment debtors (Smith and David Dysart), he, Smith, only owed half of the judgment. That, of course, is utter nonsense: whenever a judgment is entered against multiple defendants, all of them owe the full amount until such time as the judgment is satisfied.

But despite this rather well known, undeniable fact, David Heiss printed Smith’s absurd statement without any challenge whatsoever. Does this come as surprise ? Not at all.

Record Gazette Publisher Toebe Bush, who is Heiss’ boss, himself has close personal ties to the Banning Chamber: according to public filings (view pg.8 of this document), he is a former Director of the Banning Chamber of Commerce. This explains the paper’s long standing bias towards  protecting the status quo.

We now also understand why Record Gazette columnist Gail Paparian is consistently crafting twisted hit pieces attacking councilmember Don Peterson. Looking out for the little guy, it was Peterson who publicly exposed the Chamber’s utility shananigans by filing a complaint with the Grand Jury.

And, last but not least, we now understand why during the 2014 election the Record Gazette refused to run two full page Anti-Franklin ads, willingly walking away from close to $ 10,000 in advertising revenue!

With the Chamber, City officials and the Record Gazette having such a long standing, incestuous relationship, how can we trust anything they print?  There seem to be good reasons why the paper is regularly referred to as the local “fish wrapper”.

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PUTTING THE CHAMBER FIRST AND THE PUBLIC SECOND: CITY MANAGER MICHAEL ROCK

The list of players in the Chamber scandal would not be complete without mentioning City manager Michael Rock. Rock has only been with the City for a few months. Right from the start, he was briefed on the utility scandal as well as the 6-figure judgment now owed by Chamber Executive Director Jim Smith.

But this did not keep Rock from appearing as a featured speaker at the Banning Chamber two months ago. Knowing full well that the Chamber owed the City money, Rock allowed the Chamber to retain the $ 15.00 per person admission they charged attendees, rather than demand that the proceeds be surrendered to the City. Additionally, we must remind ourselves that Rock appeared at the event during time that was paid for by the taxpayer.

So how exactly did Mr. Rock’s taxpayer funded appearance at the Banning Chamber help the citizens of Banning? The answer is, it didn’t – but it helped to give the Chamber of Commerce the appearance of credibility, when in fact it has none.

This episode makes it abundantly clear where City manager Michael Rock’s loyalties lie : for Michael Rock the Chamber’s interest comes first, while the public’s interest is a distant second.

“Chamber-boy” Michael Rock – a willing tool servicing a rotten, corrupt system.

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CONCLUSION

The Grand Jury Report is about much more than just an unpaid utility bill. And it is about much more than just a deadbeat con-man running the Chamber of Commerce.

Rather, the Grand Jury Report is about a diseased City that is governed by leaders who are dirty and corrupt to the core. It is about a City in desperate need of a major overhaul. And if this overhaul does not take place soon, Banning may be bound to become yet another Moreno Valley.

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