By Erin Sherbert
By Howard Cole
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By Leif Haven
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By Chris Roberts
By Kate Conger
Back in August 2005, FBI agents and district attorney's investigators swarmed the city's Department of Building Inspection during business hours and arrested midlevel manager Gus Fallay on bribery charges. Fallay was led away in handcuffs, even though his attorney had previously offered to surrender his client to avoid a public scene. Later that day, District Attorney Kamala Harris prematurely crowed to the Chronicle, "This is bribery, the worst form of corruption that exists." Meanwhile, Mayor Gavin Newsom, who had vowed to clean up the notoriously corrupt department, scored Fallay's arrest as a feather in his cap. Not long thereafter, Fallay was fired.
Then a funny thing happened: After a criminal trial, Fallay beat the rap. Last year a jury acquitted him of some charges, and deadlocked on the rest. The outcome was an embarrassment for the mayor, but an even bigger one for the DA, who decided not to seek a new trial.
Guess who's trying to get his old job back? That's right: Gus Fallay, the man once held up as the poster boy for all that was wrong with the building department.
The city fired Fallay in December 2005. His alleged transgressions include taking gifts and bribes over several years from contractor Tony Fu, including a $50,000 loan arranged by Fu that Fallay never repaid. (Fallay, however, insisted that he had tried to.) Fu was a lousy star witness for the prosecution; news reports after the criminal trial suggested jurors didn't find him credible.
Since the corruption charges have been shown to have no merit — that is, a jury didn't convict Fallay on any of them — the city should rehire the former manager of the one-stop permit counter, says Duane Reno, an attorney for the International Federation of Professional and Technical Engineers Local 21, the union representing Fallay. Fallay could also be entitled to back pay and, yes, a little payback. Another victory for Fallay would mean more embarrassment for Harris and Newsom.
But there's a major obstacle to Fallay's triumphant return: He may have lost his right to a labor arbitration hearing because he and his union chose not to set a date for one at the time of his termination. Reno says that back then the union hoped to delay the hearing — which would have required Fallay to testify under oath — until after his pending criminal trial. On Jan. 30, a hearing will determine whether Fallay can take his case to arbitration now — more than two years after he was canned.
Adding further intrigue to the whole mess, Fallay filed a legal claim against the city in October — the first step in initiating a formal lawsuit — alleging a slew of wrongdoings including racial and ethnic discrimination, harassment, false arrest, defamation, malicious prosecution, and intentional infliction of emotional distress.
Fallay's claim alleges that authorities were retaliating against him because he had refused to help their City Hall investigations — twice. In 1999 and 2005, Fallay declined to wear a wire to help nab higher-ups in the bureaucratic food chain.
The most shocking allegations Fallay makes are against FBI agent David Carr, the lead investigator in the corruption case involving Fu. In the claim Fallay, an immigrant from Africa, says when the FBI and district attorney's investigators stormed his home, Carr blew up when Fallay refused to cooperate in the probe and barked, "As far as I'm concerned, you are some fucking dispensable African. We don't need your type in this country." In an apparent appeal for mercy, Fallay told the FBI agent to consider that he had a family, which, according to the claim, only elicited a contemptuous response: "You guys breed like rats anyway. You have to think about them when you make your decision not to help us." When Fallay protested that his civil rights were being violated, Carr allegedly retorted that no one would believe the FBI agent was a racist because his wife is African-American.
Through an FBI spokesman, Carr denied making racist comments. "This is not the first time Mr. Fallay has made ridiculous and wholly unsubstantiated allegations against Special Agent Carr," Joseph Schadler said via e-mail. "We find it reprehensible that Mr. Fallay would slander a dedicated and hard-working public servant to advance his own personal agenda."
Carr has an unlikely person vouching for him: Randy Knox, Fallay's criminal attorney, who cross-examined the FBI agent at last year's trial. When asked if he thought Carr was a racist, Knox said no, at least not more than anyone else. "In terms of racism, I'm not [going to] say it isn't a factor, but it isn't a primary factor," he said.
Fallay did not return several phone calls from SF Weekly. The city attorney's office, meanwhile, has denied Fallay's legal claim, meaning he has until May to file a lawsuit in superior court. Who knows — maybe he'll have his old job back by then.