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SLO County District Attorney reaches settlement in self-dealing lawsuit with San Simeon official

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Posted at 5:12 PM, Jun 12, 2023

The San Luis Obispo County District Attorney’s office has reached a settlement in a civil lawsuit against a San Simeon official that alleged violations of California self-dealing laws, the district attorney’s office announced in a press release.

The lawsuit, filed in September of 2021, alleged that a contract between the San Simeon Community Services District and a private environmental services and consulting company violated California financial conflict-of-interest laws.

Charles Grace, who serves as the general manager of the San Simeon Community Services District, is also the owner of Grace Environmental Services (GES).

As general manager of the district, Grace “provided management services” and “administered financial matters,” the release said. Grace’s company GES simultaneously provided the “bulk of operations services” for the water and waste-water facilities belonging to the district, placing Grace and his company “in a position to self-deal,” the release said.

The District Attorney’s lawsuit alleged nine violations of the Unfair Competition Law (UCL) and False Advertising Law (FAL) based on the contract between GES and the San Simeon Community Services District.

California law prohibits public officials from self-dealing and holding a position that would create a perception of self-dealing, the DA’s office said.

“Public officials such as city council members, county supervisors, appointed officials including general managers must exercise their authority in a way that upholds the public’s trust," District Attorney Dan Dow said in the press release. "For this reason, California law forbids even the perception of self-dealing in contracts between these officials and government agencies they serve. … In this case, both parties agreed that this contract created a financial conflict of interest that violates the laws of California.”

As part of the settlement, GES will stop working with the district once a contract is reached with a new services provider.

GES cannot seek reimbursement for legal expenses associated with the lawsuit, the DA’s office said. The district had already reimbursed GES for over $125,000 in legal expenses related to the lawsuit.

Grace and GES paid $75,000 in civil penalties as part of the settlement with the SLO County District Attorney's office.

This lawsuit was the result of a joint investigation between the District Attorney’s office and the Fair Political Practices Commission (FPPC), a five-member independent, non-partisan commission that administers the Political Reform Act, according to its website.

Grace paid $4,500 in civil penalties in a separate settlement with the FPPC.

The Political Reform Act is a 1974 initiative passed by voters that purported to end corruption in politics.

Editor's Note: The original version of this article incorrectly stated the settlement amount with the SLO County DA's office as $4,500. That settlement was with the Fair Political Practices Commission. Grace and GES paid $75,000 in civil penalties as part of the settlement with the DA's office.