Exclusive: Feds Scrutinize Oakland Developer

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In the latest development in the FBI's ongoing probe of Oakland political corruption, a federal grand jury is investigating developer Alan Dones and his dealings with the four-college Peralta Community College District. A subpoena obtained by the Express suggests the feds are focusing on an exclusive deal the district's board of trustees made with Dones two years ago under suspicious circumstances. At that time, faculty and union reps accused trustees of cutting a backroom deal with the Oakland builder, who wanted to redevelop the Laney College parking lot and nearby land that houses the Peralta district's administrative offices.

The October 26 subpoena sent to the district's general counsel demanded records related to the trustees' vote as well as any others going back to 1998 that involved Dones, his two companies, his relatives, and his business partners John Guillory and Calvin Grigsby. The subpoena also asks for records on Virtual Murrell, the brother of Peralta trustee William Riley. Murrell was convicted in 1995 for extorting $750 from a developer doing business with the city of Oakland.

The underlying question is whether Dones is the feds' real target. The developer says he's done nothing wrong or improper, and has cooperated fully with the investigators who are conducting a sweeping probe into his life and business. In a sit-down interview this week with Dones and his associates, the developer said FBI agents have told him they are looking at him as part of a broader Oakland corruption investigation. "They asked me about every single elected official, and basically they told me they want me to help them with their investigation," he says. "That's the whole point. And my problem is, I don't know if I have anything of value to them, except for to tell them that there has not been any criminal interactions with anyone."

A senior Peralta official speculates that the feds want Dones in order to get to Lily Hu, one of his lobbyists, who is tight with state Senate president Don Perata. The Peralta official suggested that if Dones implicates Hu in wrongdoing, the feds can pressure her to snitch on Perata.

Dones, like many local businessmen, was first contacted by the feds in the fall of 2004 as part of their investigation of Perata. Although Dones has donated $5,000 to the senator's campaign committees over the past two and a half years, he says he isn't particularly close to Perata and hasn't spoken to him in three years.

The deal under scrutiny was tremendously controversial when first struck. At a Peralta board meeting on November 23, 2004, Dones outlined his vision to put one thousand apartments, a medical center, and a multi-agency office building on the Laney land. It was supposed to be just an informational presentation, but a majority of trustees surprised practically everyone by voting to enter formal negotiations with Dones and his team. Then-trustee Darryl Moore, now a Berkeley City Council member, was the only dissenter. "I was somewhat surprised it was on the agenda," he says. "It just seemed like it came from nowhere � this major development proposal."

Among the aye votes was Alona Clifton, a Dones business associate. Clifton is president of a nonprofit created to partner with one of his two firms for the construction of a county social services facility in Oakland's uptown. That project inspired a lawsuit against Dones' firm that later was thrown out by a judge.

Clifton, who lost her re-election bid last month and will step down as a trustee this week, didn't return phone calls seeking comment. But in the wake of the vote, she denied any conflict of interest, and told reporters she didn't make any money from the nonprofit. Dones said Clifton does currently earn nominal compensation for the job, as do other nonprofit board members � between $3,000 and $5,000 a year. The money, Dones said, was never meant to influence any vote by Clifton.

Dones and Guillory say even they were surprised when the lame-duck Peralta board voted to enter exclusive talks. The trustees, Dones said, got swept up in the excitement his presentation generated. That excitement was soon replaced by the whiff of scandal, and six months later Dones withdrew his development plans.

In a carefully worded statement, Peralta spokesman Jeffrey Heyman said the school district was cooperating with the investigation. He stressed that "no district employees are targets." But Peralta's grand jury subpoena also seeks information on the district's conflict-of-interest rules and "relevant education" provided to trustees on those rules since 2000. Heyman would not elaborate on his statement, and Feeder is still awaiting word from the district's lawyers as to whether elected trustees are considered "employees."

In the meantime, FBI spokesman Joseph Schadler confirmed that the agency is investigating Dones, but he would not comment on the details, nor say whether the investigation extends to Senator Perata.

As for Dones, you gotta give the man credit � he's definitely not acting like he has anything to hide. After all, he agreed to be interviewed by a nosy columnist who calls himself Bottom Feeder. Dones believes there's a racial aspect as to why he has come under suspicion. He didn't go so far as to accuse the feds of targeting him because he's African American, but he suspects people who are talking to investigators have singled him out because he's a black man in a field with few black men.

"It's something analogous to profiling," Dones says. "If you are a black man in a neighborhood where black men are not used to being seen, you draw attention to yourself on one level. People look out their windows, they see a black man walking down the street, and they call the police. And the police have an obligation to show up because they've been called. I am, and our company, and my partner and I, we are in a city that has maybe thirty major projects in downtown. We are the only black developer in that area."

Guess we'll all have to wait and watch what the feds do in the coming weeks to see if their Dones investigation is the real deal or a wild goose chase. After all, the feds have been tracking the state Senate boss and his allies for two years now, and what have they got to show for it? Bupkus.

Staff writer Robert Gammon contributed to this report.

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