Councilman Kelly Fined for Violating Political Act

Huntington Beach City Councilman Jack Kelly has agreed to pay a $4,000 fine for twice failing to disclose his ownership of a controversial apartment building, constituting two violations of the California Political Reform Act.

The fine is part of a proposed settlement between Kelly, a co-star of the vintage “Maverick” television series, and the Fair Political Practices Commission, which has conducted a yearlong investigation into the matter, FPPC spokeswoman Sandra Michioku said Thursday.

FPPC attorneys, in a report to the commission explaining the pending agreement, wrote that Kelly’s omissions “frustrate and undermine the statutory policies by preventing discovery of potential conflicts.”

They conclude that “a review by the staff of actions taken by the Huntington Beach City Council, however, revealed no evidence that Mr. Kelly violated the conflicts of interest provisions of the Act.”

Before the agreement is completed, the five-member commission must ratify the deal Tuesday at its regular meeting, Michioku said. She would not elaborate on either the settlement or the investigation.

Sally Graham, who lives near the fourplex, stood up in a City Council meeting on Aug. 17, 1987, and accused Kelly of having a conflict of interest, and the next day Kelly admitted having owned the property at 16802 Moody Circle.

Graham and other residents of single-family homes surrounding the 11 bright-yellow fourplexes have complained for more than a year to city hall that attics in the units have been turned into bootleg apartments, and variances for setbacks and parking requirements were allowed on the project. The result, they said, has been overcrowding and a lack of street parking in their own neighborhood, located near the intersection of Bolsa Chica Street and Warner Avenue.

The City Council in 1986 placed a building moratorium on an undeveloped Moody Circle lot hoping that residents and the developer could work out any problems concerning what the residents called “the yellow elephants.” Kelly did not vote then, nor a year later, when the moratorium was lifted.

He has blamed the failure to disclose ownership on a bookkeeping “glitch.”

In an interview Thursday afternoon, Kelly, 62, confirmed the settlement and said he had mailed a cashier’s check for $4,000, payable to the General Fund of the State of California, to the FPPC.

“It’s a good example of the oversight, and (the fact that) it works,” Kelly said. “And I’m just sorry I got caught in it because I just felt that, because it was not a voluntary thing to blow smoke and cover it up . . . it cost me 4-K.

“I’m not too happy with the severity of it. . . . I was looking for more of a cautionary thing,” he added. “I’m not saying it to excuse myself of anything, but I think this was the max (penalty), and I was surprised at that.”

Michioku said violations of the Political Reform Act are subject to a maximum penalty of $2,000 each.

“And you can’t pay that damn thing off,” Kelly said with a chuckle, “with campaign funds.”

According to the FPPC, Kelly and his wife, Jo, bought the fourplex in 1986 from Janet Moody, who carried a second deed of trust for $19,000. The FPPC did not state the date Kelly bought the property; however, records show the title was recorded to the Kellys on June 20, 1986.

On Dec. 30, 1986, Kelly sold the property, and the debt to Moody was paid, the FPPC report said. But Kelly did not disclose the ownership and the debt to Moody on 1986 or 1987 statements of economic interest, which must be filed annually with the FPPC.

“One of the purposes of the Political Reform Act is that assets and income of public officials which may be materially affected by their official actions be disclosed,” FPPC attorneys wrote in the stipulated agreement. “ . . . The income required to be disclosed . . . is broadly defined to include loans. When a loan is disclosed the filer must also disclose the annual interest rate and security given for the loan.”