POSTED: 12:10 pm PDT June 22, 2006
Mayor Ron Gonzales rejected calls to step down after he was booked on fraud, bribery and conspiracy charges from a grand jury probe into a secretly negotiated garbage contract.
Gonzales, 55, was released on a $50,000 bond after being indicted on six counts Thursday for allegedly brokering a backroom deal that cost taxpayers more than $11 million. He refused to resign his post and continued to deny any wrongdoing in the scandal that has dogged him for nearly two years.
"The people of San Jose elected me to be the mayor of this town, and I am going to be the mayor of this town," Gonzales told reporters at a benefit dinner for a local education foundation Thursday night. He declined further comment.
His budget aide, Joe Guerra, and Norcal Waste Systems also were charged in the indictment. All three face arraignment Monday in Santa Clara County Superior Court.
Guerra faces charges of fraud, conspiracy and misappropriating public money, according to the indictment. His lawyer, Alan Lagod, confirmed his client was booked and released on bail.
The indictment named Norcal in four counts, including conspiracy, bribery and misappropriating public money. Its lawyer, Bill Goodman, said the company denied wrongdoing.
Gonzales also faces felony charges of misappropriating funds and falsifying public documents. He could be sentenced to more than a dozen years in prison if convicted, criminal experts said.
Prosecutors would not comment on the indictment. They scheduled a news conference Friday to discuss the results of the grand jury probe that had already led city councilors to censure the mayor last year.
The indictment alleges Gonzales pressured Norcal to recognize the Teamsters union at a recycling plant run by one of Norcal's subcontractors -- a move the company said would keep labor peace but would cost millions more a year than planned. The indictment said Gonzales suggested to company officials that he could make the city reimburse Norcal.
The meeting constituted conspiracy to "cheat and defraud because from this meeting Norcal understood that Gonzales was offering to use his official position to persuade the City of San Jose to pay Norcal an additional estimated two million dollars per year."
The indictment alleges Gonzales then took an unspecified bribe from Norcal and conspired over the next four years with Guerra to make good on his plan.
Through an elaborate series of misleading statements and falsified public documents, the two convinced the council to approve the extra payments without knowing where the money was going, according to the indictment.
District Attorney George Kennedy said in December that he was investigating the deal Gonzales struck with Norcal.
At the time, Kennedy said that civil grand jury findings and those of independent investigator Chris Scott Graham raised "serious questions" about the dealmaking process.
Gonzales and Guerra treated City Council procedure as a "mere formality" and failed to adhere to the concepts of open government by forging the agreement, Graham said in the report.
A civil grand jury accused the two last year of "duping" the council into approving a 2003 rate increase and a 2004 contract amendment to cover $11.25 million in increased labor costs. Gonzales did not disclose to city councilors that $1 of a $1.40 per month garbage rate increase was intended to cover labor costs.
Gonzales has acknowledged that he agreed to the pay hikes without informing the council, but said members knew it was happening.
As word of the indictment spread, Vice Mayor Cindy Chavez and three city councilors called on Gonzales to step down immediately.
The indictment now promises to dominate the city's November mayoral race. Gonzales, whose term is up at the end of the year, is barred by city law from making a third run for the office.
Councilor Chuck Reed, who is in a runoff with Chavez to replace Gonzales, has based his campaign on cleaning up City Hall. He's painted Chavez, the mayor's appointee, as tied to a tainted administration.
"I plan to continue pointing out that the council terminated the Norcal investigation without clearing up the facts," said Reed, one of two councilors who dissented on the vote last year.
Chavez, who first supported the mayor when the allegations arose, on Thursday asked the City Council to convene a special session seeking Gonzales' resignation.
If Gonzales won't resign, Chavez wrote in a memo to her colleagues, the council should seek to restrict his ability to act on the city's behalf. She also noted that she would not seek to be named interim mayor while running a campaign for the post.
Gonzales' indictment may mark the end of a meteoric political fall. In 1998, he was one of the first Hispanic mayors of a major U.S. city.
In 2000, he addressed the Democratic National Convention in Los Angeles after being named one of 100 rising stars by the Democratic Leadership Council, a centrist group led by Sen. Joe Lieberman, D-Conn., then presidential candidate Al Gore's running mate.
Two months later, however, Gonzales' reputation sustained a major blow when he was forced to admit an extramarital affair with a 25-year-old subordinate.
Gonzales eked out a re-election victory in 2002, but the city soon struggled under the weight of record deficits following the dot-com bust. The mayor suffered a stroke during his State of the City address in 2004.
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Since then, the city has been racked by a series of contract scandals, including a sweetheart deal requiring contractors to use equipment from local technology giant Cisco Systems for a new City Hall that has cost more than $500 million.
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Ron Gonzales, the mayor of San Jose, California, and his financial aide, Joe Guerra, were indicted by a criminal grand jury on June 22 on six undisclosed charges. Gonzales and Guerra surrendered to the Santa Clara County Sheriff's Department Thursday morning, where they were processed and released on bail. While the indictment has been sealed, the grand jury was investigating Gonzales's role in an $11 million contract amendment with Norcal Waste Systems. The County District Attorney has scheduled a press conference for 1:30 p.m. Friday PDT on the indictment. Gonzales and Guerra will appear before the county's superior court for a hearing on Monday, June 26.