Newly-filed documents obtained by San Jose Inside show that the city of San Jose’s top casino watchdog repeatedly filed false statements over the course of a decade while under penalty of perjury.
The revised documents bolster accusations by Casino M8trix co-owner Eric Swallow, who claimed in a lawsuit against the city that San Jose Police Department gambling czar Richard Teng had “sustained and substantial conflicts of interest through his lucrative private consulting business, the details of which he has hidden from public scrutiny, in violation of the city of San Jose’s Code of Ethics and the public trust.”
The lawsuit over the city’s delays in approving M8trix’s opening accuses Teng of “a long history of unlawful, harassing, and malicious conduct” that unfairly targeted Garden City and Casino M8trix.Teng, who joined the San Jose Police Department in 2002, rejected any conflict-of-interest claims in sworn testimony last December.
The documents show that not only did Teng fail to list his numerous stock investments, which could now be worth millions, but he also understated the income he received from his private consulting business. The consultancy caters to racetracks as well as private and tribal casinos, the latter of which could be in direct competition with San Jose’s gaming establishments.
On March 20 and 21, Teng filed nine amended Form 700s, which list any outside financial interest city officials have. What prompted this sudden call to action is unclear, as Teng has declined all interview requests.
But the change in disclosure is dramatic. Previously, Teng had only submitted forms that acknowledged he was self-employed by “Richard Teng, CPA,” and that his outside income hovered around $100,000 depending on the year. Teng omitted mention of his actual clients.
“As an elected official, I know that the intent of any Form 700 filing is to inform the public who your sources of income are,” says San Jose Councilman Pete Constant, whose district was home to Garden City. “Somebody who lists himself as a source of income to hide their clients is definitely violating the spirit and intent of FPPC regulations. The public has a right to know.”
A comparison of Form 700s that Teng originally filed with the City Clerk’s office in previous years and those he recently amended show glaring inconsistencies.
According to his newly amended Form 700 for 2011, Teng previously omitted 14 different companies in which he owns stock. It’s difficult to know for sure how much the stock is worth, but based on the boxes Teng checked, the stock—which included shares in Southwest Airlines, Intel, Freddie Mac, Pandora, Microsoft, several real estate holding trusts and others—was valued between $92,000 and $860,000.
That same year, Teng also made somewhere between $20,000 and $200,000 in outside income as a contractor to Spectrum Gaming Group—a company that has its own contract with the city, which has netted more than $666,000 since 1998—and Advanced Surgical Care. For someone who listed himself as an accountant for the latter and is an official in charge of compliance and financial review for the former, there seems to be a disconnect on how he could have failed to note any of these stock holdings and additional income sources.
“These amendments, we’re not talking about minor amendments; we’re talking about major amendments,” says former Fair Political Practices Commission general counsel Bob Stern. “I would think somebody [at the FPPC] is going to take a look at that and find out if he should be fined for not disclosing. Perjury is always very hard to prove, but fining him for not disclosing is not very hard to prove.”
Teng also amended his Form 700 for 2010 with newly disclosed stocks and a revised compensation figure for earnings from his company. While he previously disclosed outside income of $10,000 to $100,000 in 2010 for “Accounting and Consulting Services,” Teng’s amended form from last month now notes he made more than $100,000.
In 2008, Teng was especially busy performing services unrelated to his work with the SJPD. In addition to making between $10,000 and $100,000 that year from Spectrum Gaming Group, which may have possible conflicts of interest because of its separate contracts with the city and the gaming administrator, Teng’s amended filing shows that he made more than $100,000 for “compliance review” of Barcelona Hotel and Casino in Las Vegas.
Former Santa Clara Mayor Judy Nadler, who now oversees Santa Clara University’s Markkula Center for Applied Ethics, wouldn’t address Teng’s specific situation but did say that public servants shouldn’t let secondary employment interfere with their public work: “Any work you do outside of that should: No. 1, Not be in conflict with the work you’re doing; and No. 2, Should not take away from the time and energy that you would be using to do your public job.” In 2012, WhiteSand Gaming delivered a less-than-stellar audit of the Teng’s SJPD division, finding that staff was “largely unable to draw on the appropriate skill sets to conduct meaningful operational oversight from other than its two senior staffers who are already overcommitted on the licensing side.” Or were they just working elsewhere?
Last year, Teng made more than $156,000 in his role as gaming administrator for the city. Police Chief Larry Esquivel, who came into the job around the same time Casino M8trix filed its lawsuits, would not comment for this story because of the pending litigation, and former chief Chris Moore could not be reached for comment.
But Sgt. Jason Dwyer, a police information officer for SJPD, says that Teng’s outside employment was reviewed. “I think it was made clear to him when he got his work permits, like any other officer, that there cant be a conflict with the city or the department,” Dwyer says.
No one within the city was willing to comment on why Teng amended years of financial-disclosure documents in the last few weeks, but it could be attributed to statements he made in sworn testimony during a December hearing with Casino M8trix attorneys.
The following back and forth comes from Casino M8trix’s lawyer Allen Ruby—whose past clients include Barry Bonds, Microsoft and the National Football League—and Teng, in reference to his disclosure of outside income.
Richard Teng: Okay. I believe that has something to do with your earlier question with respect to conflict of interest, with respect to myself, whether or not I’m consulting a business that could be in competition of Garden City.
Allen Ruby: Worried about that, are you?
Richard Teng: Absolutely not, sir, been open book for 10 years.
Allen Ruby: Does the Chief know who all your customers are?
Richard Teng: Absolutely. So does the Mayor and as well as City Attorney’s Office.
When San Jose Inside placed calls in to the offices of Mayor Chuck Reed, City Attorney Rich Doyle and Chief Esquivel, none of the above-mentioned offices said they had any information regarding Teng’s secondary employment outside of Form 700s he previouly filed with the City Clerk’s office.
The city and Casino M8trix’s attorneys are expected back in court in June.