In a heroic move, Humboldt County District Attorney Paul Gallegos surprised residents last February by filing a lawsuit against Pacific Lumber Company for fraud, under the Business and Professions Code 172000, which allows a DA to seek an injunction and penalties where a business fraudulently secures advantage. The D.A.'s complaint alleges that Pacific Lumber submitted fraudulent data and deceptively concealed real data in order to secure government approval for its Sustained Yield Plan (SYP), thereby obtaining a scientifically unsupportable timber harvest level sufficient to meet Maxxam's debt obligations, at the expense of resource protection.
Maxxam refinanced its $550 million debt in August of 1998, during the preparation of the HCP/SYP for the Headwaters Deal, increasing the debt to $850 million by mortgaging all of PL's timberlands. Charles Hurwitz made off with $250 million, effectively selling off all of PL's trees 6 months before the allowable harvest volumes under the SYP were established.
PL's deception enabled the company to log illegally on steep, unstable slopes, resulting in "major landslides, causing destruction to ancient redwoods, serious harm to Humboldt Bay, and serious harm to streams, bridges, roads, homes and property rights of the people of Humboldt Bay," the suit alleges.
The lawsuit seeks damages in the amount of $2500 per tree cut, and restitution of $300 million for accepting government payment for the illegal SYP.
Gallegos maintains that his job compels him to apply the law so that there is "equal treatment before the law". In a letter to the Times Standard newspaper on April 27, 2003, Gallegos wrote "It has been suggested that we should not have filed this case against the biggest business in Humboldt County. This suggestion is troubling and perplexing, as it implies that we either do or should have different rules for people based on their wealth or political power. Clearly this cannot be." The recently elected D.A. said that when he discovered solid evidence of fraud, he had to file the lawsuit to avoid the running of the statue of limitations.
Gallegos Gets It from All Sides
Within a month after filing the lawsuit, Gallegos found himself facing a recall campaign. The anti-Gallegos petitioners claim that he has not sought sufficiently harsh sentences in criminal cases. Gallegos supporters have demonstrated that in his brief 6-month tenure, his record compares favorably with, or better than, his predecessor who held the office for 20 years. Ironically, Gallegos has also been criticized for pursuing criminal charges against forest defenders who trespass on Pacific Lumber land, as well as for not prosecuting them vigorously enough!
The recall drive differs from the Governor Davis recall in that Gallegos has not abused the power of his position.
Richard Salzman of the Alliance for Ethical Business in Eureka told BACH that the same people hired to gather signatures for the Davis recall were also hired for the Gallegos recall campaign, and that 8500 of the anti-Gallegos signatures were gathered when people were asked to sign the Davis recall. The petition solicitors are paid by the signature. The recall petitioners did not garner enough signatures in time to qualify for the November ballot, but claim to have sufficient signatures to meet the October 22 deadline in order to qualify for a March special election, which would cost the economically strapped county $100,000.
Gallegos' suit poses a serious threat to politics and business as usual in and beyond Humboldt County. Perhaps this threat to the good ole boy network explains why, to date, few members of the Democratic Party have spoken up against the Gallegos recall, including Attorney General Lockyer, who has publicly opposed the Davis recall attempt.
Lockyer has also declined to support Mr. Gallegos's suit, arguing that to do so would be a conflict with his office's defense of the SYP in the EPIC suit. However, his office is currently appealing a Humboldt Judge's decision in favor of PL vs. the State Water Board.
Ironically, Lockyer campaigned in favor of environmental values, strongly criticizing corporate crime, and pledging to clamp down on polluters and other violators of California's environmental laws.
Despite these obstacles, the fraud case moves forward. On July 28, Judge Christopher Wilson of Humboldt County Superior Court heard arguments on the demurrer filed by Pacific Lumber, the first test of the legal strength of the case. Judge Wilson will rule before the end of Sept. as to whether the DA has set out the proper allegations of a fraud suit and whether the DA should be sanctioned for filing the suit.
The recent victory of EPIC, the Sierra Club, and the Steelworkers union in the SYP case certainly bolsters the credibility of the allegations the District Attorney makes against Pacific Lumber. (see story, this issue) At this stage, the greatest barrier to the success of this lawsuit is the survival of Paul Gallegos in the office of District attorney.
What You Can Do
* Follow the litigation and recall effort on the Alliance for Ethical Business website at www.goodtimberjobs.org and via BACH's email alerts
* Contact the BACH office to sign a petition to Lockyer asking for his support of D.A. Gallegos
* Write your own letter asking Bill Lockyer to demonstrate his commitment to environmental protection and prosecution of corporate fraud by supporting Gallegos' lawsuit against Pacific Lumber. Make the following points:
-Pacific Lumber for years has flagrantly violated the California Forest Practices Act and Rules by illegally logging old-growth groves, in restricted habitat, and causing landslides by cutting on steep slopes.
-Pacific Lumber willfully deceived state and federal agencies in the Headwaters Forest deal negotiations, knowingly violating private property rights and the Public Trust, and externalizing the environmental costs of illegally harvest volumes onto downstream property owners and taxpayers.
-Pacific Lumber has reaped huge profits from its illegal logging
operations, permanently damaging fragile natural resources.
Contact Info: Attorney General Bill Lockyer, Department of Justice,
P.O. Box 944255,
Sacramento, CA 94244-2550
(916) 324-5437;
fax (916)445-6749
