By John Earl
Surf City Voice
Huntington Beach Planning Commissioner Fred Speaker is no doubt one of the leading candidates from the pack of 20 locals running for one of four open City Council seats on the November 2 ballot.
Speaker—in his own words—is a “fiscally responsible” and “pay as you go” candidate who as an experienced small businessman knows “how to balance a budget” and who promises that he “won’t treat taxpayer dollars any less carefully.”
Red County is the voice of Orange County’s Republican partisans who hope to get “real” Republicans in office and do their part to take back control of America—by following the tenets of “revolution” proclaimed by Party leader Scott Baugh.
The union and OCGOP endorsements combined with the PAC money and campaign donations that they will generate will make Speaker a “virtual shoe-in” on election day, says Hanlon.
But Hanlon and other Red County revolutionaries are wondering what Speaker has done to deserve an endorsement and why more credible Republicans like council candidates Billy O’Connell and Barbara Delgleize have been rejected by the OCGOP.
Hanlon explains that those two leading candidates were denied their endorsements because Delgleize supports gay marriage and abortion rights for women and O’Connell gave campaign money to a few Democrats in the past.
One of the underlying problems with the Speaker endorsement, however, is that it would violate one of Baugh’s most important revolutionary decrees: the Party shall oppose union backed candidates.
Hanlon, a Surf City resident and financial investor who appears regularly as a commentator on CNBC, has used Red County as a staging ground for his cyber crusade to reform Surf City’s budget process.
Hanlon hopes to pave the way for O’Connell and Delgleize to join councilmembers Don Hansen and Devin Dwyer to form a majority that will weaken the City’s unions and cut their “bloated” public employee pensions.
That union busting plan is based on creating unavoidable budget cuts through the mandatory allocation of funds for city infrastructure.
Delgleize and O’Connell, who were not endorsed by the Police and Fire unions, are strong supporters of Measure O, the city ballot proposition that starting in 2017 will amend the City Charter to prohibit inclusion of bond interest costs—even for infrastructure—in a 15 percent set-aside fund from the city budget that is dedicated to infrastructure projects.
Critics say that the amendment would hamstring the City’s ability to responsibly plan future budgets for basic needs like public safety and will actually leave less money available for infrastructure.
It all boils down to a classic Republican “pay as you go” ploy for dismantling and outsourcing government to the private sector, an approach that O’Connell openly advocates but that Speaker only vaguely implies on his web site.
But it’s not only Republican candidates who are using infrastructure as a wedge issue in what is supposed to be a non partisan city election.
Even Democrat Connie Boardman (who was also endorsed by the Police and Fire unions) and Democrat Joe Shaw, two of the three members of “Team A”, a coalition of progressive and leading candidates also running for city council, support Measure O; the third Team A member, Blair Farley, opposes it, but most of the 20 candidates running for city council support it.
Of course, the same unions that endorsed Speaker oppose Measure O. But unlike the other major candidates, who have taken a stand one way or the other, Speaker has been sitting on the infrastructure fence lately, complains Hanlon, who also implies that Speaker made a secret deal with his newly acquired campaign sugar daddies.
A Crotchety Speaker
Those assertions were made in another Red County commentary that Hanlon recently wrote and provocatively headlined “Fred Speaker is Preparing to Screw You.”
The story is based in part on a phone conversation that he allegedly had with Speaker last Monday. In that conversation, Hanlon says, Speaker told him that as far as Measure O is concerned, “Right now I’m in between. I’m just concentrating on winning this election.”
On the suspected deal with the unions, Hanlon says that Speaker told him “That conversation is between me and them.”
Then the phone connection broke up and the call died. Hanlon say he tried to call Speaker back but Speaker didn’t want to speak anymore.
Hanlon describes Speaker, who is 67-years-old, as “supposedly a Republican” and “a crotchety old guy.”
A crotchety city council candidate is exactly what I found when I went to the office of S & S Auto Brokers, the company Speaker owns, to ask him about another budget issue the he doesn’t want to talk about: a joint Chapter 7 bankruptcy he filed with his wife in late 1997 on the same day that he, as sole proprietor of Economy Auto Leasing, lost a lawsuit to the Bank of America for breech of contract resulting from car lease fraud.
I had already tried without success to contact Speaker several times by e-mail, Facebook and by leaving a phone message. Speaker knew only that I was writing a general story about his campaign. But he was clearly already agitated when we met. He just got back in town and had 27 messages to answer, he complained.
“I just really don’t have any time, sir. I got your message. I will give you a call when I’ve got some time please,” he explained further, his voice rising in anger.
I told him that I wanted to ask specifically about the bankruptcy. “The bankruptcy was 12 years ago,” he replied.
Protecting the Taxpayers
He had a point, but what makes the bankruptcy and lawsuit relevant today is that on his campaign web sites and in other public comments, which are rife with platitudes but short on specifics, he uses his 30-year-record as a Huntington Beach small businessman/auto executive to promote himself as the right person to protect the financial interests of the taxpayers.
But before I could say that, Speaker became red-faced angry and demanded that I leave his office at once. “I don’t have time for you sir,” he said, almost shouting but still promising to call me later. Repeated attempts to contact him failed and that call never came.
The following excerpts from Speaker’s campaign literature show how he is using the skills he supposedly acquired from his 30 years of doing business to promote himself as the taxpayer’s advocate:
- “During my tenure on the Water Task Force, I helped to save the tax payers over $20 million by proposing a “pay as you go program” instead of a bond issue. I am also a small business owner for the past 30 yeas and I pay as I go in keeping my business alive.” – Web site
- “We need to stop raising taxes and fees and start living within our means. That is my sound pledge.” – Web site
- “Getting lots of great feedback from the community. Seems like we really are looking for common sense candidates who know how to balance a budget and won’t treat taxpayer dollars any less carefully. Thanks for the support!” – Facebook
- “What makes Fred a bit different is that he is prepared to ask the tough questions: How are we going to pay for it? Is it the highest priority? Do the residents want us to do this? Are we doing this the most cost-effective way? Are there any business sector partners to help?” – Web site
- FRED, used as an acronym, for: Fiscally responsible; Responsible small business owner; Experienced public service volunteer; Dedicated to HB historic, ecological & business climate. – Web site
- “… an auto industry executive, has run both Domestic and Import dealerships and owns and operates his own Auto Brokerage Firm: S & S Auto. He has been an entrepreneur most of his adult life.” – Web site
In a recent Huntington Beach Independent story on his campaign, Speaker presented himself as a candidate who could use his business skills to help save the city during its financial crisis.
The time turned ripe for Speaker to run for City Council when he saw the country — and, consequently, the city — getting into financial trouble, he said in his office Tuesday afternoon. He said he wanted to bring forward his experience working with cuts and balancing the budget.
But if Speaker’s 30 year history as a businessman and his desire to apply that experience toward solving the City’s current budget problems are reasons to vote for him for city council, then surely the history of financial problems he had during that time is also relevant.
The joint bankruptcy contained over $718,000 in liabilities to 14 creditors, mostly for credit card and personal loan debts, as well as $10,000 owed to Dave Garofalo, the former Huntington Beach mayor who was convicted of a felony and banned from pubic office. The bankruptcy statement also mentioned a $5,000 gambling loss at the Tropicana hotel in Las Vegas.
Duped by Identity Thieves
The Bank of America’s lawsuit alleged that Speaker was duped by others in his employ or working as his agents who used fraudulent identification to sell the bank four auto leases and that after the bank failed to receive payments and discovered the fraud Speaker committed breach of contract by refusing to buy back those leases.
The Bank asked for $94,390.05 to recover its losses and $25,609.05 for attorney’s fees, but two other identity fraud cases with different banks made up another $125,000 for a total $245,000 total in car lease fraud.
The four leases were sold within days apart in late September, 1995. In deposition testimony, Speaker claimed that he was in Hawaii with his wife at the time, although he could not remember the exact dates or whether it was at the beginning or end of the month, and that the leases had been signed by an independent contractor who he claimed was not authorized to sign leases for Economy.
Speaker also made an incredible claim: he was unaware of his contractual or moral obligation to repay the bank for bad leases; in fact, he hadn’t given it much thought.
Testifying about a another fraudulent lease that he was not being sued for but for which he did actually repay the bank—claiming that he did it only to get the title to the car so he could resell it—Speaker said the following:
Q: Did you feel that you had a legal obligation to repay?
Q: Did you feel that you had a moral obligation?
And again in another exchange about the same event:
Q: When you were discussing with the bank repayment of the (name withheld) lease, did you understand that the bank had a right to demand repayment under the contract?
A: No, I did not.
Q: By repaying the bank did you believe you had fulfilled your obligation under the contract?
A: I didn’t realize I had an obligation under the contract.
In another incredulity inducing exchange, Speaker says that he never read the Dealer Lease Agreement that he signed with the Bank:
Q: So you’re saying this represents the sole agreement between you and Bank of America with regard to the leases?
A: As far as I know.
Q: Now, you testified earlier that you had not read the terms of this lease before you signed it, correct?
A: That is correct.
Q: Did any representatives at Bank of America instruct you not to read the agreement?
Q: Were you ever prohibited by any representative at the Bank of America for reading the agreement?
The Dealer agreement that Speaker signed and should have read was direct (emphasis added):
“Bank may provide Dealer written notice with respect to any lease if: (1) Bank reasonably determines that there is a breach of any of Dealer’s representations and warranties with respect to the Lease… (3) the lessee refuses to make one or more whole or partial payments on the Lease based in whole or in part upon an assertion … against the Dealer…Dealer shall repurchase the lease and related vehicle upon demand of the Bank.”
The leases sold by Economy were determined to be clearly fraudulent, but in his defense Speaker denied the Bank’s allegations and accused it of self-inflicting the damages through its own negligence, alleging that it did not run proper credit checks and had accepted the leases signed by one of his independent contractors even though he had told the Bank, albeit not in writing but verbally, that only he had authorization to sign the leases.
Even if it seems unlikely that an independent contractor would waste time doing an unauthorized lease transaction when he probably could have signed the customer up with another auto broker, wouldn’t common business sense have motivated Speaker to inform the Bank about the unauthorized leases when he found out about them?
His reason for not doing that? He didn’t want to “rock the boat.”
Q: When you returned from Hawaii and saw that other leases had been executed in your absence, did you call Bank of America and tell them that they did not contain authorized signatures?
A: No, I did not.
Q: Why didn’t you do this?
A: Why rock the boat at that period of time. The leases were executed and paid, the cars were down the road. I felt everything was fine.
Q: And that is with regard to the four leases that are the subject of this litigation?
Speaker’s apparent lack of common business sense is evident in other parts of his testimony as well:
Q: After theses losses occurred, did you go back and review the terms of your various contracts with your lenders to find out what your responsibility would be?
A: No, I did not.
Q: Wasn’t it your understanding that your responsibility would be governed by your contracts?
A: I gave it no thought.
Q: What did you think your responsibility, or lack thereof, was based on?
A: I did not approve the credit.
Q: Was it based on any understanding with the lenders that you had?
A: In my mind, yes.
Q: So the sole reason you felt you weren’t responsibly is because you did not approve the credit, or are there other reasons?
A: That reason.
It wasn’t until probably 6 months after learning of one of the fraud cases, Speaker testified, that he contacted an attorney to advise him on his contractual responsibilities.
If Speaker’s problems with the Bank arose from the work of the independent contractor who allegedly signed the fraudulent leases without his authorization—and who Speaker called a “thief” in his testimony—the same contractor, his testimony indicates, who he continued to work with for months after he knew the leases were frauds—then perhaps he could have done a better job screening his applicants.
During his deposition Speaker was asked about how he hires his independent contractors.
Q: Now, why are there so many blanks on this application?
A: You don’t take an application from someone who is not your employee. These are not employees, these are independent contractors. There’s a big difference.
Q: I understand the difference. I’m a lawyer. What I’m asking you, are you saying, then, that you do not require any information from independent contractors?
A: That is correct.
Speaker’s questionable past business practices and the rationalizations he offered for them at the time are potential areas of concern for voters if, as he wishes, his 30 years of business experience should count on election day.
On Nov. 5, 1997, the court granted a summary judgment to the Bank of America, which means that the judge thought the evidence was so strong in favor of the plaintiff that a trial wasn’t necessary.
The judge disagreed with Speaker that the bank had been negligent and concluded that it was “not material” whether he had been the sole authorized signatory or had been on vacation when the lease fraud took place because the trial outcome would have been the same anyway.
The Bank of America was awarded $120,000, but on that same day Speaker filed for Chapter 7 bankruptcy and never paid a penny of that sum. Today, Speaker is back in business as president of S & S Auto Brokers and there haven’t been any more bankruptcies or lawsuits (against him) since that day.
Voters may wonder how Councilmember Fred Speaker would negotiate contracts with the public employees unions and developers that will come before the council, or how he would vote to settle lawsuits against the City. Would he manage the taxpayer’s money not “any less carefully” than he has managed his own financial affairs?
Speaker’s next judgment day will be on Nov. 2 when Huntington Beach voters go to the polls.
Editor’s update: On Monday, Sept. 20, the Orange County Grand Old Party (Republican Party) endorsed Fred Speaker and Billy O’Connell for Huntington Beach City Council. Speaker still refuses to answer the Voice’s questions.