Councilman Jack Morton said Wednesday he does not have a conflict of interest regarding the proposed Children's Theatre audit.
City Attorney Gary Baum said he could not disclose his advice to council members due to attorney-client privilege.
"I certainly went over the issues with (Morton)," Baum said Wednesday.
Morton has been the accountant for the non-profit Friends of the Palo Alto Children's Theatre since the 1980s. In the last year, he has volunteered his services, charging the non-profit nothing, although in the past he has sometimes charged a discounted rate, Morton said Thursday.
A sub-section of Sgt. Michael Yore's May 15 criminal investigation report focuses on Morton, listing five questions Yore would like to ask Morton. Morton has also been one of the most outspoken critics of the police investigation, calling it a "sorry mess" this week.
The council decided Monday to work with police auditor Michael Gennaco, of the Los Angeles County Office of Independent Review, to determine the scope of an audit examining the 11-month investigation into potential embezzlement at the city-run theater, which ended May 15. No one will be charged with a crime.
Morton said he has no direct relationship with the theater.
"The Police Department isn't investigating the Friends," Morton said.
In addition, the council doesn't intend to investigate the Friends, he said.
Morton said he didn't know what he would tell someone who believes he has a conflict.
"I guess everybody's entitled to their opinion. There's no legal reason for there to be a conflict," Morton said.
Morton said he was surprised to see his name in the report and believes that makes him a possible witness, but doesn't create a conflict.
"(Yore's) questions seem to be almost insane. They were really off-the-wall," Morton said.
State and local ordinances on political conflicts of interest focus on financial relationships.
It must be "reasonably foreseeable that the governmental decision will have a material financial effect on each economic interest," according to Fair Political Practices Commission regulations.
The city's Council Protocols are broader. It is a code of conduct, enforced informally.
"In order to assure their independence and impartiality on behalf of the common good, members shall not use their official positions to influence decisions in which they have a material financial interest or where they have an organizational responsibility or personal relationship, which may give the appearance of a conflict of interest."
Mayor Larry Klein also says he doesn't have a conflict regarding the Children's Theatre audit. He is being paid as the attorney for Assistant Director Michael Litfin's estate. Klein is also mentioned in the 120-page Yore report because he released traveler's checks found in Litfin's condo to the police. The proceeds from Litfin's estate will be donated to the Friends.
"The reason (I don't have a conflict) is very simple. Has Michael been accused of any crime? Answer: no. Does the estate have any financial stake in any of this? The answer is no," Klein said.
Several other council members said Morton could have a conflict and that Klein probably doesn't.
"I think it's a valid question for Jack given his official capacity with the Friends group," Councilman Pat Burt said.
If their roles were switched, Burt said he "would have to consider really hard whether it would be appropriate to participate."
Burt said he understands how passionately Morton feels about the investigations, feelings that would make it even harder to step away.
"I think it's important that the council be able to have credibility as trying to be as impartial and objective as possible," Burt said.
Vice Mayor Peter Drekmeier said each council member must determine whether he or she has a conflict.
"Legally (Morton and Klein) don't have a conflict. But they might on their own determine they had a conflict," Drekmeier said.
Councilman Sid Espinosa said he's been receiving inquiries from community members.
"I trust each of my colleagues will work with the city attorney whenever they are concerned that they might have a conflict of interest and the city attorney would speak up if he was ever concerned if one of the council members did have a conflict of interest," Espinosa said.
Espinosa said he had assumed that discussion had already occurred because the Children's Theatre case has been so prominent.
Councilman John Barton said he isn't ready to discuss his opinion.
"I have my own thoughts on this, but I need to talk to my colleagues."
Councilman Yiaway Yeh said he has no comment on the issue.
On page 117 of the police report, Yore lists five follow-up questions he has for Morton, related to the itemization of costume sales on the Friends' tax reports and the source of money in the "Director's Discretionary Fund."
Yore also wanted to know "why (Morton) did not report to the city that tens of thousands of dollars of city funds were being siphoned out of the city's general fund (from the costume sales and extra performances) and were being given to the Friends."
Also, "why (Morton) did not report to the city that fraudulent contracts (according to Assistant City attorney Don Larkin) arranged by Briggs and Litfin with the Friends were being used to embezzle money from the city."
Larkin said he called the contracts "illegal" not fradulent.
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