Feds won’t prosecute Dreyfus deal
The Department of Justice found no grounds for criminal prosecution in the most expensive land exchange in the U.S. Forest Service history – the $38 million transfer of the Dreyfus estate at Zephyr Cove.
David Dickson, special agent in charge of the Dreyfus exchange investigation, said Friday that the Office of Inspector General of the U.S. Department of Agriculture had completed its investigation and the Department of Justice had declined to prosecute.
Dickson declined to release details of the report, saying it could be obtained through the Freedom of Information Act.
“It’s quite lengthy. I really prefer to let the report speak for itself,” Dickson said from his office in San Francisco.
Juan Palma, forest supervisor for the Lake Tahoe Basin Management Unit, told Douglas County Commissioners on Thursday a meeting is scheduled June 29 at the U.S. Forest Service regional office in San Francisco to discuss the findings of the investigation.
Palma told commissioners on Thursday he wanted to get the investigation behind him.
“While the investigation was in the hands of the Inspector General, we couldn’t discuss the transaction or take action,” Palma said.
County Commissioner Don Miner encouraged Palma to begin the planning process for the future of the Dreyfus estate, particularly the 40 acres which Palma said were excluded from the investigation.
In a land exchange valued at $38 million, the federal government in 1997 gave an Arizona-based land brokerage company, the Olympic Group, private land around Las Vegas in exchange for the Dreyfus estate. The Forest Service reportedly had no interest in the mansion or other improvements on the property and the agency allowed the Olympic Group to sell them. The Park Cattle Co. ultimately made the purchase with the understanding that a special land-use permit would be issued for the company to operate the buildings as a business, possibly including a bed and breakfast and conference center. Douglas County officials viewed the transaction as meaning more tax dollars and additional public access on highly valued Lake Tahoe shorefront property.
n At a standstill. Negotiations reached a standstill last summer when questions arose over an audit by the Forest Service’s Pacific Southwest Region’s land adjustment program.
Auditors claimed the property without improvements – buildings, driveways, and fences – should have had an appraised value of up to $10 million less, which meant the public would have paid more than fair market value.
Miner strongly disagreed.
“I knew there wasn’t going to be any criminal problem,” Miner said Friday.
“I think the problem was that some of the higher ups within the Forest Service felt they paid too much for the appraisal and tried to reverse the land deal. That still might be in the cards. They might say the transaction would be inappropriate when they made the initial error. In registering the new name, they included the improved parcel. In correcting the title to put it in the name of the Park Cattle Co., that may have been done improperly. That’s been our belief all along.”
Gary Midkiff, who represents the Park family, said Friday he wasn’t surprised by the Justice Department’s findings.
“It doesn’t surprise me that there wasn’t going to be any criminal prosecution,” Midkiff said, “Anything I saw was way above board. In fact, I didn’t see anything that justified the investigation. Our only disappointment has been that it has taken so long.”
The Park family has been negotiating the transaction for two years, Midkiff said. The family has committed $5 million to the project.
“An awful lot of public money has been paid for that property,” said Palma. “It’s imperative to me that the public have a say-so in its development. Nothing has frustrated me more than this issue. I am anxious to see what they have to say about me or other people. I want them to release me from this topic or hold me accountable.”
Palma assured commissioners the Forest Service did not want to tear down the buildings on the estate.
“If there is no money in the Forest Service budget for this type of thing, Douglas County would like to help participate to create a venue for planning,” said Commissioner Jacques Etchegoyhen.
He referred to the project as a “tuna boat stuck in the mud,” and a “train from hell.”
“We talk some language, but we never get there,” he said.
Palma said he would report back to commissioners following the June 29 meeting in San Francisco.
“The August Office of the Inspector General report read like a federal fairy tale,” Miner said Friday. “I hope this current production is more honest and objective. The first report they published regarding the land exchange transaction was poorly investigated, inadequately researched and badly written.”