Berkeley City Councilman Laurie Capitelli said Monday that he never served as the real estate agent for Police Chief Michael Meehan’s home purchase and never split a nearly $30,000 commission for the deal, contrary to what was reported Friday by the Bay Area News Group.
When Meehan went looking to buy a home in Berkeley in 2010 — aided by a $500,000, 3% loan provided him by the city of Berkeley — he hired an agent from Red Oak Realty, a company in which Capitelli was once a partner with a 15% stake, but from which he had largely divested by 2009. That agent asked Capitelli some questions about whether Berkeley or a homeowner was liable for the upkeep of sewer lines and creek beds. After Meehan purchased a home in the Thousand Oaks neighborhood, she paid Capitelli $5,925 for his advice, he said in a statement.
“I reiterate that I received no compensation whatsoever from Red Oak from the sale itself,” Capitelli said in the statement. “I have had no financial interest in the company for several years. I did not, as reported, split any commission on the sale. I did receive a $5,925 unsolicited payment for dealing with a variety of questions and issues forwarded to me by the agent, which arose during their search for a new home. To avoid any suggestion of impropriety I will nonetheless donate that fee to a local charity.”
The Bay Area News Group reported last week that just months after the Berkeley City Council had approved the $500,000 low-interest housing loan for Meehan, Capitelli worked as his real estate agent and split the nearly $30,000 commission. Several ethicists, as well as City Councilman Kriss Worthington, raised questions about the ethical nature of Capitelli voting to give Meehan a loan, and then profiting from that loan.
Capitelli told the newspaper he had consulted with City Attorney Zach Cowan who said there was no conflict because there was such a long gap between the 2009 council vote and the house purchase in 2010.
The Bay Area News Group stands by its story.
Peele wrote that Capitelli told him he had “split” the commission and added: “I had no clue I’d be representing him,” when the loan was approved. “He came to me months later.”
On Monday, Capitelli said the reporter for the Bay Area News Group may have misunderstood his role. Capitelli sold most of his stake in Red Oak Realty six or seven years ago. For a time he sat on the company board, but he no longer does so. He has now reduced his stake to 2%. However, Capitelli still acts as the agency’s broker since there are no other brokers in the office. The state of California requires a broker to oversee and sign off on all transactions done by real estate agents in an office. The broker’s name is then affixed to all the real estate documents.
So when the reporter looked at documents about the Meehan sale, he saw Capitelli’s name listed, even though he was not the co-agent, said Capitelli.
“I didn’t say I was a co-agent,” said Capitelli. “I don’t know how he heard that.”
The biggest misunderstanding came “over the interpretation of the word ‘split,’” said Capitelli. “He assumed I meant cutting the baby in half. That was not the case. The agent offered a payment at the close of the transaction.”
Capitelli now regrets taking the $5,925 fee because it has called his integrity into question.
“I regret it because of the pain it has caused me and my family. It could have been $60,000 and I would not have taken it because I value my integrity.”
Capitelli’s complete statement about the controversy appears below.
Statement to Berkeleyside from Laurie Capitelli, Oct. 5, 2015
Let’s Get the Facts Right
Recent news articles have called my ethical behavior into question, implying that I improperly assisted Police Chief Meehan in purchasing a house in Berkeley for my own financial gain. This is patently false.
I am devastated by this accusation, as is my family. I never had any intention of gaming the system or of self-gain with regard to the Police Chief’s effort to buy a house in Berkeley. I was only trying to help, and never expected any compensation.
I do my best to live my life and do my work within high ethical standards, standards that I inherited from my parents. Whatever mistake I may have made in this matter, I did nothing to violate those standards.
The facts are the following:
- The file prepared by Red Oak Realty contained a serious error: it listed me as the agent for the sale of the house to the Meehans. I was most certainly not the agent in the sale to the Meehans. Red Oak agents work under my broker’s license, but I receive no compensation from Red Oak under this arrangement. I can certainly see how a reading of the mistaken entry could invite a misinterpretation of my involvement. Red Oak will be correcting that error in their file.
- The Council’s decision to offer a housing loan to Berkeley’s incoming Chief of Police was made by a unanimous Council vote long before Chief Meehan accepted the job, and well before he and I became acquainted. I supported that item because I felt it important that our police chief live in the community he serves.
- Several weeks after accepting the job, Chief Meehan, being new to Berkeley and coming from out of state, solicited my advice regarding his search for a new home. I suggested I would introduce him to an excellent agent at Red Oak after consulting with the City Attorney.
- I consulted with the City Attorney on the potential for conflict in referring him to a firm to which I was connected. I explained that although Red Oak agents work under my broker’s license I receive no compensation from Red Oak under this arrangement. And I had no financial interest in the transaction itself. The City Attorney assured me there was no conflict.
I reiterate that I received no compensation whatsoever from Red Oak from the sale itself. I have had no financial interest in the company for several years. I did not, as reported, split any commission on the sale. I did receive a $5925 unsolicited payment for dealing with a variety of questions and issues forwarded to me by the agent which arose during their search for a new home. To avoid any suggestion of impropriety I will nonetheless donate that fee to a local charity.
This situation is mine to repair, and I intend to do just that in order to lay to rest any suggestion that I was party to any impropriety.
It is an honor and a privilege to serve on the Berkeley City Council. I will continue working on the issues that brought me to serve: ending homelessness, improving quality education for our children, responding to our housing crisis and building an ever healthier community.
Capitelli profited from $500,000 housing loan given to police chief, paper says (10.03.15)
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