Laguna Mayor’s Deal Is Probed

Laguna Beach’s top city leaders testified Wednesday before a grand jury convened by the Orange County district attorney’s office to investigate Mayor Wayne Baglin’s role as a real estate agent in the $1.8-million sale of two properties to the city for a senior center.

City Manager Kenneth C. Frank, City Atty. Philip Kohn and three council members were among the witnesses led one by one to a closed grand jury room at the county’s main courthouse in Santa Ana.

Afterward, some acknowledged they had been subpoenaed to testify but declined to comment, saying they were sworn to secrecy.

Baglin said Wednesday that he was not called to testify and strongly denied that he did anything improper in the real estate transaction last year.

“I had freely talked about this during the last year and voluntarily met with the district attorney’s office to go over the details,” Baglin said. “At this point my attorney advised me it would be unwise to discuss the issue any further.”

His Newport Beach attorney, Michael Molfetta, said his client is innocent and “looks forward to this whole thing being put to rest.”

The case dates from January 2001, when the City Council voted to buy a pair of adjacent parcels on 3rd Street through eminent domain. The city wanted to use the downtown land for a long-awaited senior center.

The property was owned by Baglin’s clients and longtime friends, Edgar and Dorothy Hatfield. Baglin represented the couple during negotiations with the city. And within days, and without the need for eminent domain, the two parties agreed on the price. Baglin earned a $54,000 commission.

Baglin, then a councilman, recused himself from the city’s vote to buy the land and disclosed his relationship with the sellers. Still, the sale remains an issue in Laguna Beach.

Critics have argued that a conflict of interest existed because Baglin relinquished his role as a councilman in favor of his clients. The higher the price he was able to broker, the higher the cost for taxpayers and the higher his commission, they argue.

Molfetta said that Baglin has always been open about being a real estate agent and that he is allowed to earn a living. He also pointed out that the commission Baglin earned was below the going rate in Orange County.

“First and foremost, this isn’t one of those things that came to light after the fact,” he said.

“There is no impropriety,” he added. “When we have our day in court, it will be proven that Mr. Baglin has not run afoul of any law. In fact, he is innocent of any wrongdoing.”

But Fred Smoller, political science chairman at Chapman University in Orange, said the deal raises concerns.

He said council members should never represent anyone with business before the council if they have a financial interest in the outcome.

“Obviously, the better job he does for the client, the better off he does at the public’s expense,” Smoller said.

Molfetta said the grand jury is trying to determine whether Baglin violated government code section 1090, which prohibits elected officials from being financially interested in any contract made by them in their official capacity, or by any body or board of which they are members. The violation is a felony, punishable by a fine of up to $1,000 or by imprisonment. Those found guilty can also be banned forever from holding office in California.

Prosecutors declined to comment on the case or say when the grand jury will complete its work.

Baglin was first elected to the council in 1978 and lost his seat in 1998. He was elected in 2000 and is in the middle of a four-year term.