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One Word, 'Guilty,' Erases Years of Dogged Denial

For more than three years since an investigation revealed she
had orchestrated a secret system of bonuses, former SEDC President
Carolyn Y. Smith doggedly defended her actions. On Tuesday, she
admitted to doing something wrong.

 

It took more than three years, but former Southeastern Economic Development Corp. President Carolyn Y. Smith did something extraordinary on Tuesday afternoon: She admitted to doing something wrong.

Since summer 2008, when it was first revealed that she and her former top lieutenant Dante Dayacap had orchestrated a lucrative secret bonus scheme, Smith had maintained an air of indefatigable dignity and aloofness.

Through accusation, resignation and arrest, she seemed to believe she could make the serious allegations against her wither and die with little more than an eloquent rebuttal letter on SEDC’s once-ornate stationery, or with the disdainfully cold smile she saved for her critics.

When first confronted her with evidence that she had paid herself and her staff hundreds of thousands of dollars that had never been approved or permitted, Smith was unblinking. The payments were legitimate, she said. They were deserved and fair and had all been approved by the appointed board supposedly overseeing SEDC’s affairs.

Flanked by her attorney and spokesman, Smith was unflappable in that first, tense interview. How could she say that hundreds of thousands of dollars in “holiday allowances” and “cost of living increases” were not bonuses?

“We don’t call them bonuses,” she said.

And, for a while, Smith’s denial seemed to work.

With no shortage of bravery, as the bonus scandal escalated over the hot summer months of 2008, Smith stood up to her critics on the San Diego City Council as they began a refrain for her ouster.

When then-City Attorney Mike Aguirre placed her firmly in his sights, Smith stared straight back, arguing with the help of her publicly funded lawyers, that those bonuses weren’t bonuses. That all smelled fine at SEDC.

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Eventually, however, SEDC’s board of directors melted under the glare of Mayor Jerry Sanders, whose spokesman declared publicly that Smith had to go, and that SEDC needed to be cleaned up after voiceofsandiego.org revealed the bonus scheme.

Smith was finally ousted. Before an angry crowd of supporters, she held her head high and smiled that smile throughout a final board meeting on a sweltering evening in July 2008. After one last emotional speech to the crowd, her façade suddenly cracked and she ran from the room, crying, but proud. Supported and applauded by her friends to the last.

Smith maintained her innocence over the three years that followed.

When a local activist announced a challenge to the $100,000 golden parachute Smith had arranged in a secret session of her last board meeting, Smith again held fast. The money was hers, she argued in court. She had earned it, deserved it for years of stolid service to her community. Finally, after several futile hearings in court before an unsympathetic judge, she dropped her claim.

For more than two years after her ouster, it seemed that Smith’s pious defiance had won her the ultimate battle for legitimacy.

A sporadic criminal investigation, involving a raid of SEDC’s offices, confiscated computers and FBI men interviewing board members, seemed to be languishing by late 2010, forgotten or abandoned. And District Attorney Bonnie Dumanis, the most obvious candidate to prosecute Smith given her self-declaration as the scourge of corrupt officials, made no moves.

Then, out of nowhere and as the deadline imposed by a statute of limitations loomed, the state Attorney General’s Office resurrected the case against Smith and Dayacap in May 2011.

The two defendants were arrested, Dayacap at his home and Smith in a courtroom appearance. Both had short, no doubt bitter, tastes of jail time before being released on bail.

Perhaps, then, the seriousness of those $30,000, bonus-inflated monthly paychecks Smith had approved years before kicked in for the former SEDC president. Dayacap had spent two years hounded by the FBI, according to his lawyer, but Smith’s attorney offered nothing more beyond the standard lines of his client’s innocence.

With their defense lawyers working the case, Smith and Dayacap retreated largely from the public eye and the public consciousness. San Diegans moved on to new scandals: near-bankrupt schools and a Police Department beset by misconduct.

Then, in a 10-minute court appearance on a gray Tuesday afternoon, Smith erased, with one quiet word, that formidable career of omnipotence.

“Guilty.”

This time, the room was all but empty. No supporters had come to cheer Smith or lambaste her accusers. Instead, a couple of nicely dressed attorneys, a trio of public prosecutors, court staff and four journalists bore witness to the final crumbling of an impressive act of defiance.

Even Dayacap, whose personal and criminal problems have left him bankrupt and facing the prospect of jail time, brought with him three supporters.

Smith entered the room with her attorney, Jerry Coughlan. As she left, he shielded her from questions.

“Ms. Smith won’t be commenting,” Coughlan said.

Will Carless is an investigative reporter at voiceofsandiego.org. You can reach him at will.carless@voiceofsandiego.org or 619.550.5670.

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