FBI, DA seize files from Palm Springs City Hall

A dozen agents with the FBI and Riverside County District Attorney executed search warrants at Palm Springs City Hall on Tuesday morning, shutting the building down, sending employees home and removing evidence.

Investigators also knocked at an apartment that Mayor Steve Pougnet listed as his home address in county voter registration records. Later, the investigators met with Pougnet and seized items in his possession that had been included in a City Hall warrant, according to FBI spokeswoman Laura Eimiller.

Eimiller said the warrants are sealed so she can't comment on what those items are. But she did confirm that the investigation is part of an Inland Empire public corruption task force that also involves the San Bernardino District Attorney's Office and the Internal Revenue Service.

Around 6 p.m. — after nearly 9 hours of digging — investigators were seen rolling boxes and computer electronics out of City Hall.

The raid comes roughly three months after the Fair Political Practices Commission announced it would investigate a vote by Pougnet that awarded the sale of city property at a questionable price to developer Richard Meaney and his partner. The FPPC began investigating after The Desert Sun published a series of stories linking the mayor to more than $200,000 in consulting work to Union Abbey, a company owned by Meaney. At the time the company's business license had been suspended by the State of California for five years.

California was seeking more than $47,000 in unpaid taxes from Union Abbey when Pougnet began working for the company. When first asked about the consulting contract, Pougnet said it was only for development work outside of Palm Springs. He later changed his story, saying Union Abbey paid him to explain the city's economic development plans.

A paper sign with the word "closed" had been posted on the main public entrance to City Hall. A handful of people milled around outside as City Manager David Ready entered shortly after 9:30 a.m. He'd spent the morning at the Hyatt Palm Springs to take questions and offer his praise for the large-scale construction connected to a massive redevelopment of 14 acres of downtown.

"I don't know anything," Ready said. "I'm going to go find out."

Through a side door, investigators could be seen rifling through three-ring binders. City Clerk Jay Thompson said the agents were also examining electronic records on city servers and individual computers; employees were asked to leave their work phones before exiting the building.

In December, Pougnet participated in a City Council vote selling a plot of land on North Palm Canyon Drive to Meaney and an investor named Yokang Zhou. Six months later, after a reporter questioned Pougnet about the vote, the mayor said he'd made a mistake. The City Council later voted to rescind the land sale to Meaney and Zhou.

The FPPC's investigation was open and ongoing as of Tuesday.

A Desert Sun analysis found that the city set a price for the land it sold to Meaney without an appraisal and by comparing it land sales outside Palm Springs. Meaney and Zhou purchased the property for $195,561 not long after purchasing a similar adjacent lot from a private owner for $1 million.

City officials defended the sale by saying it was a part of the state-sanctioned and ongoing dissolution of its former redevelopment agency.

Pougnet has said he no longer works for Meaney. In May, he announced he would not seek re-election for a third term as mayor. The paper reached Meaney Monday night after learning that a federal investigation was in the works, and he declined to comment.

Pougnet did not return messages Tuesday, but released a statement through Ready in which he said he would be happy to cooperate with the inquiry and was confident that everyone at City Hall would be cooperative too.

"Palm Springs has made tremendous progress over the past eight years," he wrote. "We simply can't permit this matter to sidetrack our efforts to make the future even brighter."

Via email, City Councilman Paul Lewin called Tuesday "a very unfortunate and sad day for Palm Springs — both for the city and the people it serves." He promised that he and his colleagues would "take the appropriate steps" when all the facts are known. Until then, he was reserving judgment.

The raid attracted reporters, bystanders and even a couple candidates for this fall's City Council election, including former Mayor Ron Oden, who remarked that he'd never seen anything like it.

"I'm so disappointed," he added. "This just breaks my heart."

Mayoral candidate Bob Weinstein called for a clean slate, suggesting the entire City Council step down.

"Why?" Councilwoman Ginny Foat responded at a late afternoon press conference. "What have we done to step down? I mean, you step down when you've done something. We've done nothing wrong."

Foat, who is also running for mayor in the November election, was joined on the steps of City Hall by fellow council member Chris Mills, both of whom told reporters they hadn't spoken to investigators or to Pougnet, and that authorities hadn't confiscated any documents or other items in their possession. Both were also adamant they knew nothing about the investigation's scope outside of media reports.

There's been talk of a corruption probe hanging over City Hall for months, and Dave Baron, an attorney and vice chair of the Palm Springs International Film Festival, said he welcomes whatever comes of it.

"Trust in our representatives is absolutely paramount to our system of government," he added, "and any inference or allegation that the system has been corrupted pulls at the very fabric of our democratic process."

The FBI has confirmed that Pougnet was in town Tuesday. A council meeting is still scheduled for Wednesday night, but it's unclear at what time the building will reopen.

"They need to do what they need to do," Foat said of the investigators. "And I would rather see them stay here as long as they need to because I'm fully confident that once they see what they're looking for, there's nothing to be seen. We've run a very good city. And I'm proud of my staff. I'm proud of what we've done as a city council."

Barrett Newkirk and Colin Atagi contributed to this report. Jesse Marx is The Desert Sun political reporter. Kia Farhang covers Palm Springs, Cathedral City and Desert Hot Springs.