Scotts Valley City Councilman Dene Bustichi’s contractor licenses were revoked last year by the state for failing to pay a subcontractor.
Copies of the May 2015 disciplinary action by the state Registrar of Contractors and an accompanying finding by an administrative law judge were sent and delivered to the Press Banner by several individuals this week. The decision adopted a 22-page ruling that Bustichi’s construction company collected money in 2013 for a completed construction project in Palo Alto, but didn’t pay one of its subcontractors.
“Diversion of funds,” and “failure to pay for materials and services” were the specific claims cited by the judge. In addition to having his license revoked, Bustichi was ordered to pay $4,584 in court costs and repay the subcontractor $112,333, plus at least 11 months’ interest, at 2 percent a month.
Bustichi is seeking re-election on Nov. 8 to a fourth four-year term on the City Council. He has been mayor four times, elected by his fellow council members.
Copies of the court documents circulated quickly this week, reaching both his political opponents and City Hall.
Bustichi, Mayor Donna Lind and Vice Mayor Randy Johnson are facing off against Bruno’s BBQ owner Rosanna Herrera and former city finance director Jack Dilles in the Nov. 8 election for three open seats on the council.
In an interview this week, Bustichi said he had not yet attempted to reapply for a contractor’s license. He said he will seek a new license “eventually.”
As for the ruling and civil penalties, Bustichi acknowledged that he made “mistakes.”
Bustichi acknowledges ‘mistakes’
“We could have made better decisions along the process,” he said. “It’s been a heart-wrenching and humbling experience to be in business 25 years and have the rug pulled out from you.”
At least one of his opponents – and even the president of the Scotts Valley school board – were not sympathetic.
Dilles on Tuesday said he is concerned with the implications of the judgment.
“When I see the Administrative Law Judge’s words in his decision proposing revocation of Dene Bustichi’s contractor’s licenses, I see words that describe behavior that could undermine the council’s actions,” he said. “I do not see how Mr. Bustichi can effectively serve on the City Council.”
Michael Schulman, president of the Scotts Valley Unified School District Board of Trustees who is up for re-election himself, sent an email to City Manager Jenny Haruyama saying Bustichi should resign.
“With the pattern of ethical shortfalls demonstrated here, one might expect a good citizen to step aside so as to not create an atmosphere of corruption within the agency,” he wrote.
Shulman: ‘Step aside’
Shulman said he worries that the revocation of Bustichi’s license could taint all council members because Bustichi is involved with building matters, and his family is in the building trades. Schulman said in an interview he was speaking as a private citizen and not as school board president.
“His council role generates many opportunities for conflict between private gain and public good,” he wrote Haruyama. “The people who are serving in public office have a different standard of ethics.
In an email response to Press Banner questions about the Shulman email, Haruyama wrote, “The judgment is not a city matter. It does not impact Council Member Bustichi’s status as a Council Member.”
“Council Member Bustichi does not negotiate financial matters and contracts; that is the responsibility of the City Manager and staff,” she added. “If there is a legal conflict with an agenda item, Council Member Bustichi, as with any other Council Member would be advised to abstain from voting on the matter.”
Bustichi said a depressed economy had left him short of money, and that this should have nothing to do with politics.
He blamed the timing of the revelation on his political opponents: “The group supporting Rosanna (Herrera) and Jack (Dilles) are attacking me and other candidates. That is something they are willing to do,” he said. “(But) you don’t run away, you have to confront.”
‘I thought it was newsworthy’
“I thought it was newsworthy,” said John Muth, one of the people who emailed the Press Banner a copy of the judgment.
Muth is the husband of Deborah Muth, vice chair of the city’s planning commission. Muth was defeated by Bustichi in the 2004 council election and unsuccessfully sought appointment to a vacant council spot in 2007 when Bustichi was mayor.
“If I was going to plant this story, we would have heard about it a long time ago and Dene would have been the first to know,” said Herrera. “I would have delivered it to him personally.”
“I feel for what Dene is having to face right now and wish him the best,” she said in response to a Press Banner question.
“It is up to the voters to decide for themselves what to make of this, not me.”
The May 6, 2015 decision by Administrative Law Judge Perry O. Johnson was adopted on May 21, 2015 by Cindi A. Christenson, state Registrar of Contractors, who revoked the contractor license of two companies of which Bustichi was president and CEO – BCI Builders Inc., and Scotts Valley Green Builders Inc., both offices at 4652 Scotts Valley Dr., Scotts Valley. The revocation was effective June 23, 2015.
Christenson said Bustichi could apply for reissuance of his licenses after one year, or anytime after June 23, 2016.
In his decision, Johnson found that Bustichi had hired subcontractor Anthony Campo of Monterey, doing business as Tom Richards Installations, to provide countertop material for 67 bathrooms, bar tops and kitchens for a $1.225 million remodel at Dinah’s Garden Hotel in Palo Alto in 2013. Bustichi’s contract with Campo was for more than $122,000.
Johnson found that Bustichi was paid in full for the project,but did not pay Campo the whole amount, owing him $112,333 at the time of the hearing, in April 2015 in Oakland. Bustichi was represented by Scotts Valley lawyer Phillip Passafuime.
When called to testify in court, hotel owner Julie Handley said Bustichi told her on June 16, 2013 that all the project’s subcontractors had been paid.
“Bustichi was not truthful in much of his testimony at the hearing of this matter,” said Johnson in his ruling.
“Bustichi demonstrated that he was neither a credible nor reliable witness at the hearing of this matter.”
Bustichi testified that the project’s costs had run over budget because of unexpected labor expenses, and for that reason he did not have sufficient cash to pay Campo. Bustichi added that he attempted to reach a repayment agreement before the trial with Campo but was unsuccessful.
“Bustichi’s excuses and arguments do not counter the weight of evidence,” Johnson said in his order. “Bustichi showed a disregard, or gross misunderstanding, for the obligations required by the law for licensed contractors.”
Bustichi was also prohibited from serving as an officer, director, associate, or qualifying individual of any licensee while his license was revoked. Bustichi said he is still making payments to Campo.
At the time of the hearing, Bustichi was doing business as BCI Builders, Inc. and Scotts Valley Green Builders, Inc. He said he currently serves as controller and general manager of Bustichi and Co., his son Giovanni’s construction business. Bustichi said he would never allow his private concerns to interfere with his public duties.
“If the citizens want a perfect candidate for council I’m not your guy,” he said. “But I would hope people will judge me on the body of work I’ve done, not on mistakes I made two years ago.”
The complete judgment is here.
