Fresno Libel Suit : Explosive Story of Crime --Was It Also Accurate?

The headline on the story was: “Documents tie crime to Fresno officials, businessmen.”

The first paragraph said: “Organized crime, the umbrella for narcotics, gambling and prostitution in the Fresno area, has infiltrated a number of the city’s seemingly legitimate businesses, according to law enforcement intelligence reports, court records and statements made as part of a $26-million defamation suit moving toward trial.”

It was an explosive story, published in the Fresno Bee and Sacramento Bee in May, 1982. The story was based largely on a deposition given by Bee reporter Denny Walsh during pretrial proceedings in a libel suit filed by a Fresno attorney, a suit that was ultimately settled with no money changing hands.

Edward M. Kashian, a multimillionaire Fresno land developer, was one of the businessmen named in the story, and he was enraged by what he read--so enraged that he filed a $6-million libel suit of his own against Walsh, four other reporters and their employer, McClatchy Newspapers (publisher of the Sacramento Bee, Fresno Bee and Modesto Bee).

Kashian subsequently dropped two of the reporters and the president of McClatchy Newspapers, individually, from his suit, but he is still convinced that the other defendants libeled him in the story.

Is he correct? Was the story accurate, fair and responsible, as Walsh and McClatchy contend, or was it inaccurate, unfair and irresponsible, as Kashian contends?

Interviews with most of the principals in the case and an examination of more than 10,000 pages of documents raise questions on both sides.

Kashian, for example, has never been officially tied to (i.e., charged with or convicted of) any crime, organized or otherwise. Frank McCulloch, executive editor of McClatchy Newspapers when the story was published, conceded in an interview with The Times before leaving McClatchy in July that the narcotics/prostitution/gambling definition of organized crime in the lead paragraph of the Bee story was “unfortunate.”

McCulloch, now managing editor of the San Francisco Examiner, said that definition was not the definition Walsh had given in his deposition (when Walsh had said Kashian was a member of the “Fresno mob” and had defined the “Fresno mob” as “people who enter into conspiracies to subvert our laws”).

“Denny wasn’t saying this guy (Kashian) is a thug; he’s saying he’s a corrupter of the political and governmental processes,” McCulloch said.

Thus, McCulloch said, “I wouldn’t have approved that lead (paragraph). I can’t believe those (Fresno Bee) lawyers, who were on the floor of the (newspaper) city room that day (to review the story before publication), approved that lead.”

McCulloch left the state on a longstanding business trip before the story was actually written--something he now regrets having done--so he did not see the story before publication. But he told The Times he thinks that the lead paragraph of the story was “overwritten, overblown--no, it really isn’t overblown--it’s not precisely true to the deposition.”

Not precisely true to the deposition? That concession would seem to strike at the very heart of McClatchy’s defense--the contention that the story was legally privileged because it was “a fair and true report of . . . a judicial proceeding.” No, McCulloch says, the McClatchy position is altogether valid. But when he was asked if he thinks that the lead paragraph was “unsubstantiated,” he would say only, “I can’t say that . . . for legal reasons.”

Prior Phone Calls

Should the Bee have called Kashian and others mentioned in the story to get their side before publication?

Royal Calkins, the Fresno Bee reporter who wrote the story based on Walsh’s deposition (and on the exhibits Walsh submitted to support his deposition), said he did not call any of the people Walsh named in his deposition because he did not have time to call all of them and because he was treating the deposition as he would treat trial testimony. “If I’m covering a trial, I don’t go out and try to independently corroborate everything that’s said in a trial,” he said.

If someone said something critical of another person in an interview, however, a responsible reporter would call the second person to get his side before publication. What is the difference between a pejorative statement made in a deposition (or in a trial) and a pejorative statement made in an interview?

The biggest difference is that a statement made in an interview is not privileged and could lead to a libel suit, whereas a statement made in a judicial proceeding is deemed to be legally privileged; generally speaking, no one can successfully sue an individual for testimony he gives in a judicial proceeding, and if a newspaper reports that proceeding fairly and accurately, it generally need not fear that it will lose a libel suit over that report.

McCulloch conceded that the paper probably should have “called him (Kashian) for a quote” anyway, but he said this is “hindsight” and he insisted that although the journalistic process may have been “imperfect,” there were “no errors in that story.”

‘Prudent,’ Factual Reporter

McCulloch said he has never known a “more prudent” reporter than Walsh and added that in the 20 years they have known each other, personally and professionally, “I have yet to find Walsh in a factual error.”

Walsh did not write the story, though, and he told The Times that he would not have written a story based on the exhibits he submitted with his deposition. The exhibits were largely “raw data,” he said. “Much of it had not been checked out, at least by me.”

When he saw the story in the paper, Walsh said, his reaction was, “This is not the way I would have done this.”

Does Walsh think the story, as published, was irresponsible?

“I better not be quoted on that. . . . That would seriously hurt the company’s position in the Kashian suit,” he said.

Walsh, like McCulloch, denies that there was any conspiracy to slip the story into print under the guise of legal privilege, and both say, unequivocally, that the story and its characterization of Kashian were absolutely accurate.

Much of Walsh’s “raw data” came from confidential intelligence reports based on 1972 and 1973 interviews with various Fresno law enforcement officials by P. A. Crim, special agent for the Organized Crime and Criminal Intelligence Branch of the California Department of Justice.

‘Confidential’ Reports

Law enforcement officers routinely file such intelligence reports, but because so much of this kind of information is speculative and unsubstantiated, it is rarely made public. Crim’s reports were, in fact, stamped “confidential.”

Calkins decided, however, that because Crim’s sources included the police chief and district attorney at the time of Crim’s interviews, it was proper to use that information.

“A police chief saying, ‘This guy might have dirty ties’ when he’s talking to another law enforcement official, I think that’s significant, . . .” Calkins told The Times in an interview.

Calkins made this decision even though the Crim reports were 10 years old and even though Crim’s final report made no mention of Kashian. In his deposition in this case, Crim said he deliberately left Kashian’s name out of his final report because he did not think that Kashian was directly involved in any criminal activities in the Fresno area. (When pressed by McClatchy attorneys on cross-examination--”Do you recall as you sit here today that you specifically and consciously made the decision to leave Mr. Kashian’s name out of this report?” Crim replied, “I can’t recall. . . .”)

The only specific references in the first two Crim reports or in Calkins’ story to allegations that Kashian might have “dirty ties” involved a rubbish-collection company he founded and in which he was a partner for three years in the early 1970s. It was this company, Fresno Ecological, among several non-Kashian companies, that the Bee referred to as “possibly having organized crime connections.”

‘Well-Known . . . Associate’

Kashian said he started Fresno Ecological in December, 1971, because he wanted to get into the recycling business, and he insisted that he did not know that Sam Asadurian, the man he hired to run the company, was suspected by law enforcement authorities of being “a well-known and longtime associate of organized crime figures,” as Walsh subsequently charged in his deposition in this case. Nor, he said, did he know that Luigi Gelfuso, hired by Asadurian to work for the company, was a convicted felon, long thought by law enforcement officials to be involved in organized crime.

Kashian said that when he learned of Gelfuso’s criminal record, he asked that he be fired. Soon thereafter, Kashian said, he sold his interest in Fresno Ecological--at a loss--and had nothing more to do with the company. Kashian also said he had little to do with the operation of the company, even before he sold his interest.

A report by an investigator for the Fresno County district attorney’s office said, however, that Kashian told the investigator in 1975 that he had been “the primary policy decision maker” in the company. Pretrial depositions in the case have raised questions about whether Gelfuso also played a more important role in the company than Kashian says he did and about whether it was Kashian who actually fired him.

Moreover, shortly after Kashian left the company, Asadurian was accused of trying to hire Marc Stefano, a Fresno city councilman, to act as an attorney for Fresno Ecological--in effect, trying to bribe him to help the company win a city garbage collection contract. The charges against Asadurian were dropped, and he testified in Stefano’s bribery trial; Stefano was acquitted.

Skeptical of Claims

In its story on Walsh’s deposition, the Bee mentioned Stefano’s trial and acquittal and reported that Kashian “was a partner in Fresno Ecological,” but it did not report that he had left the company before the bribery charges were made.

Although Bee reporters are cautious in talking about Kashian now because of his pending lawsuit, interviews with them and a reading of their pretrial depositions in the case make clear that they are skeptical of Kashian’s protestations of innocence in the Stefano matter and in many of his other business dealings.

They point out, for example, that although Kashian says he had nothing to do with the hiring of Stefano, it was Kashian who proposed his hiring. Kashian says he does not know if he would have followed through on this idea had he remained with Fresno Ecological, but he does not deny initiating the idea--even though he has admitted that he did not think that Stefano was a good attorney. In fact, in a 1975 interview with investigators from the Fresno County district attorney’s office, Kashian was quoted as calling Stefano “a terrible lawyer,” thus raising the question of why Kashian would even think of hiring him, if not for Stefano’s city hall influence or contacts or both.

Walsh introduced this investigative report in his deposition in the Kashian case--part of more than 800 pages of exhibits he offered in support of the 1982 story; there are many similar revelations about Kashian in this and other depositions in the case.

There are implications in these documents, for example--echoed in interviews with the principals who gave the depositions--that Kashian had uncommonly close relations with several present and former Fresno city officials. More important, he made thousands of dollars of political campaign contributions over the years, and he often won favorable zoning decisions from local government agencies on his own developments and on those he served as a consultant.

Potential Conflicts

In his deposition in this case, Kashian was also questioned about the propriety of his behavior in at least half a dozen other cases that could have resulted in a potential conflict of interest for (or other improper behavior by) various public officials.

None of these cases resulted in any charges being filed against Kashian--or against anyone else--and in interviews (and in his own depositions), Kashian has denied any wrongful intent in any of them.

As for his own campaign contributions to various local officials, Kashian said all he expected in return was “good government.”

When asked during his deposition, “Did you consider that one of the functions that Mr. Stefano would play would be to lobby his fellow city councilmen in connection with granting a contract to Fresno Ecological?” Kashian replied, “That would not have been in my thought process, no. . . . Doing something devious or unlawful doesn’t occur to me.”

Nevertheless, there have long been questions about Kashian’s business associations, even among people who like and admire him.

“There have always been questions and suspicions about Ed and his supposed connections with unsavory characters,” said Daniel K. Whitehurst, mayor of Fresno from 1977 until early this year.

“But Ed had a lot of land use issues that came before city government, and in our dealings with him, there wasn’t a hint of impropriety; he was always above board and straightforward. If anything, of the developers in Fresno, he was the one who played by the book the most. He was a tough negotiator, but he didn’t cut any corners.”

Rumors Laid to Envy

Kashian said he was amazed to hear that anyone thought that he was less than honest or that he had any unsavory connections. He has amassed a fortune he estimates at $20 million, and he attributes the rumors about him to envy and misunderstanding of his enormous success, both financially and in winning favorable zoning decisions from local government.

Kashian’s insistence that he would not do anything illegal or unethical and cannot imagine anyone else doing so has been one of his two primary lines of response to questioning in his five days of deposition testimony.

His other standard response has been “I don’t recall.” Kashian has given that answer when questioned about telephone calls, messages, letters, conversations, meetings, trips and statements he has made--even when confronted with his own daily schedules, correspondence, telephone message slips and previous statements that show that he did say, see or do what he is being asked about.

In one instance, Kashian said he did not recall traveling to Lafayette, La., while he was with Fresno Ecological in an effort to persuade the city attorney there to “lobby the city council . . . to grant a garbage contract” to Fresno Ecological. According to a report by an investigator for the Fresno County district attorney’s office, however, Kashian told the investigator in 1975 that he had traveled to Lafayette, La., while with Fresno Ecological.

Potentially Harmful Denial

Perhaps the most potentially damaging inconsistency in Kashian’s testimony thus far is his flat denial that he had ever attempted to give a gift to a governmental employee or that a governmental employee had ever rejected a gift from him.

After that denial, McClatchy attorney Donald Glasrud introduced a letter that a California Department of Transportation official had sent to Kashian in 1981, telling him that she could not accept a case of wine he had sent her after visiting her office in Sacramento to discuss a freeway project that could have bisected one of his properties.

Kashian then denied “any kind of wrongdoing,” and when Glasrud asked him, “What did you intend to accomplish by sending her a case of wine?” Kashian replied:

“I liked her.”

Kashian will resume giving his deposition Nov. 11. The trial is scheduled to begin Jan. 21.