• 1. In 2018, Councilmember Pearce failed to disclose $11,222 of income received from DNS Verde, LLC, a business entity owned by Daniel Zaharoni. Mr. Zaharoni is the development manager of Urban Commons Queensway, operator/lessee of the Queen Mary, and owner/operator/manager of several cannabis and other businesses.

• 2. In 2019, Councilmember Pearce received $30,000 in income from Global Growth International ("GGI"), for consulting work performed for From the Earth, LLC. These two entities are both owned or controlled by Daniel Zaharoni.

• 3. Therefore, Councilmember Pearce has a disqualifying financial conflict of interest under the Political Reform Act in Daniel Zaharoni as a source of income. The threshold past which a conflict is triggered under the Political Reform Act is $500 within 12 months of a governmental decision. Councilmember Pearce had contracted to provide, and did provide, services to businesses controlled by Mr. Zaharoni, and was paid more than $500 for those services in a 12 month period.

• 4. Because the Political Reform Act prohibits a public official with a financial conflict of interest from influencing, attempting to influence or otherwise participating in the making of any governmental decision with respect to a source of income, Councilmember Pearce and her staff should not be contacted on issues affecting Urban Commons Queensway or the operations of the Queen Mary by Councilmembers and/or City staff, including routine briefings. Additionally, Councilmember Pearce may have to recuse herself from voting on or seeking to influence voting on any City Council items affecting Urban Commons Queensway or the operations of the Queen Mary.

• 5. Similarly, Councilmember Pearce and her staff should not be contacted by Councilmembers or City staff on issues affecting the cannabis industry, including permits, tax rates and/or general information, including routine briefings. Additionally, Councilmember Pearce may have to recuse herself from voting on or seeking to influence voting on any City Council items affecting the cannabis industry.

• 6. The prohibited and disqualifying financial conflict of interest and recusal requirement will persist until 12 months from the final payment received by Councilmember Pearce in connection with her consulting business for Mr. Zaharoni.

• 7. Councilmember Pearce's participation and voting on March 12, 2019 requesting the City to conduct a feasibility study into the development of a gondola system between downtown Long Beach and the Queen Mary may have been taken in violation of the Political Reform Act because Councilmember Pearce had a prohibited disqualifying conflictof interest. Her individual vote, therefore, may have been void. However, because a majority of the City Council voted to approve the recommendation, it was and remains a valid action of the City Council

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• 8. Councilmember Pearce's amended 2018 Statement of Economic Interests ("Form 700") does not currently reflect the levels of income actually received, according to information provided by Councilmember Pearce and her attorney. Her amended 2018 Form 700 shows DHS Verde provided income to her under $10,000. Our investigation indicates Councilmember Pearce received at least $11,222 in income from DHS Verde.

• 9. Councilmember Pearce's amended 2018 Form 700 also shows GGI provided income to her under $10,000. Our investigation indicates that GGI provided Councilmember Pearce at least $30,000 in income and this income was paid in 2019. Her 2019 Form 700, which must be filed by April 1, 2020, should reflect income received from GGI in 2019 of at least $30,000.

• 10. These actions are in violation of Long Beach Municipal Code Section 2.07.010, which requires Councilmembers to "make every effort to avoid a conflict of interest" and to submit a written ethics pledge to the City Clerk's office.

• 11. These actions are in violation of Long Beach Municipal Code Section 3.80.210, which requires consultants to obtain a Long Beach business license to perform consulting work In the City.

• 12. Daniel Zaharoni was not interviewed as part of this inquiry.

• 13. Councilmember Pearce, who was represented by an outside attorney throughout these proceedings, may choose to seek an opinion on this matter from the Fair Political Practices Commission, an independent state agency.

The memo to the Mayor/Council attached a copy of the investigation summary by Best, Best and Krieger.

At 6:34 p.m., Councilwoman Pearce emailed the following statement:

Upon the release of a memo from the Long Beach City Attorney regarding the potential conflicts Long Beach City Councilwoman Jeannine Pearce issued the following statement:

"I applaud the work by the City Attorney’s office, having worked collaboratively with him and his team to ensure they had all the materials they requested prior to the end of their review. I am glad that this process has come to an end. I have cooperated fully with the City Attorney and I plan to continue cooperating with them in any and all review of potential conflicts that might arise. As is always the case with every elected official, I will continue to weigh potential conflict of interest issues on a case-by-case basis and will recuse myself when appropriate.

"I filed and updated all required Form 700 amendments prior to the conclusion of the City Attorney's review. We have requested this be updated in the memo right away. Technical issues arose on the platform site that prevented making all updates at one time. I am not the first and I am sure that I will not be the last to make errors in filling out this form.

"Long Beach’s city council is a part-time city council and all of us have other full-time jobs. In that regard, every member of the council could potentially have a conflict of interest that would cause him or her to recuse themselves from certain votes. As recently as this past Tuesday’s council meeting, a colleague of mine needed to recuse himself from a particular vote due to his employment.

"I do applaud this new level of close scrutiny of council conflicts as a critical step forward for the city. The relaxed atmosphere of the past has led to many questionable decisions and practices, doing a disservice to all Long Beach.

"This is one reason why I agendized a full Audit of Human Resources in September 2018 and included a review of training for the legislative department to ensure the electeds and their staff have all the support they need to mitigate conflicts and abide by laws that might not be known to the elected or the staff.

"Now that this issue is behind us, we can get back to the business of governing our city and finding common-sense solutions to our city’s most complex problems."

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