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A San Diego Superior Court judge ruled Thursday on a lawsuit against Mark Arabo and the trade group of independent corner stores he ran, the Neighborhood Market Association.
The ruling is a doozy.
The lawsuit from A&B Market Plus and other members of the association alleged that Arabo – who is also an activist for Christian refugees fleeing the Middle East – received improper payments related to the sale of an NMA building and for personal expenses.
Arabo and the NMA have fought for political power for years. They’ve thrown money around to political candidates, earning fines and reprimands from state and local watchdogs for campaign finance violations. Arabo considered running for office, and his brother – who ran the NMA before him – lost a state Assembly bid in 2008. The NMA wields influence on issues affecting its members, from alcohol licensing to plastic bag restrictions. But it came up short in pushes against minimum wage hikes and banning booze on the beach.
Now, in a scathing ruling that questions the credibility of Arabo and multiple witnesses his lawyers called to the stand, Judge Richard E.L. Strauss said the NMA needs new leadership.
“I do know this,” Strauss said. “This organization should not be run by the people who are running it now in terms of administering it.”
He said the group should be run by a receiver until its members can vote on new board leadership, overseen by an impartial election official. An NMA spokesman said the organization plans to appeal the ruling. In statements, board members disputed the idea that they were misled by Arabo.
Arabo stepped down as NMA president in 2015, but his management company has a contract to run the organization’s day-to-day business. It’s unclear how that contract will be sorted out, but the judge said Arabo’s company can’t be trusted to run the organization.
The ruling was a blistering takedown that mars the legacy of the Arabo family and others close to him and will reverberate through the San Diego’s Chaldean community.
Strauss also ordered Arabo to repay the association for $248,000 he received in compensation the judge deemed improper.
“This is one of the most unusual cases I’ve had in my 22 years on the bench,” Strauss said, according to a transcript of his remarks. “I’ve never heard so much fiction under oath. It’s really unbelievable. I don’t even know where to start.”
Stauss slammed various witnesses and participants in the trial.
The judge said, for example, that he did not allow the plaintiffs in the suit to name Amad Attisha, the executive chairman of the NMA, as a defendant only because it would have delayed the case, which was going too long anyway.
Nonetheless, he said, “I don’t know where that would have gone with him, but I have my doubts as to his credibility.”
Of Mike Habib, a commercial real estate broker whose testimony was crucial to a claim related to a payment Arabo received for the sale of an NMA-owned building, the judge said, “I don’t believe anything he said. He came in here under oath and … I don’t believe him.”
Habib was involved in the sale of the NMA building. He wrote a letter to the NMA board describing how valuable Arabo had been to the deal. The judge determined the letter misrepresented the sale of the building to the board specifically so that Arabo could get a $210,000 payment.
“And I think – Mr. Arabo, I think you knew that at the time,” he said. “I think you participated in that and I think you took that money knowing – maybe you weren’t in the room when the board decided to give you $210,000, but you knew what was happening and you know the basis that they were being sold that.”
The representations made to the board over that transaction were simply untrue, the judge determined.
“There’s no question in my mind that they were told of all the fabulous things that you did in the sale of the property supposedly, which were not true,” Strauss said.
Strauss took specific aim at Arabo’s credibility.
Arabo at one point said he couldn’t confirm whether handwriting on a document was his. After the plaintiffs’ attorneys threatened to send the samples to an expert, Arabo conceded the writing was his.
“Your testimony, Mr. Arabo, is also incredible,” Strauss said. “To sit here on this stand and tell me you can’t tell if that’s your own handwriting when even I could tell by looking at the … they’re identical. And then when faced with a concept that they’re taking your handwriting exemplars and they’re going to give them to an expert, then all of a sudden you go home and you look at it further and come to a realization that probably is your handwriting. You could tell right here. And to try to say that you can’t recognize your own handwriting is very difficult for me to believe. And I don’t believe.”
The judge also said Arabo’s compensation structure – which included a personal expense account in addition to his salary that he could spend on whatever he wanted, without any connection to NMA business – was an illegal tax maneuver.
“It was clearly a tax-dodge arrangement admittedly to save the association having to pay employment taxes on W-2-type compensation, theoretically,” he said. “Well, you can’t do that.”
In a statement Saturday morning, NMA communications director Lundon Attisha said the board knew what it was voting on when it authorized payments to Arabo. The board stands by its choice.
“The judge’s decision to undermine a unanimous vote and a 14-2 decision by the NMA board came as a disappointment to all of us,” Lundon Attisha said. “While the NMA board respects the ruling of the judge, we obviously feel as though an appeal is more than necessary.”
Though the judge said the organization couldn’t continue to be run by current leadership, Arabo’s contract with the association is still active. It’s unclear what will happen to that contract with the organization under receivership. In a statement, Arabo said he looks forward to continuing to run the NMA.
“I respect the decision of Judge Strauss and I look forward to my continued standing with the NMA as an operator of the organization,” he said.
Amad Attisha said the board stood by its decision, despite the ruling. NMA board member Ramzi Murad echoed those sentiments.
And Bashar Ballo, executive chairman of the NMA, said the judge determined the board was misled without allowing board members to testify whether they felt that was the case.
“The judge chose to disregard hard evidence, and instead based his assessment on what was a series of judicial character judgments,” Ballo said.