PL charged with fraud on Headwaters deal

[Rich McGuiness]

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D.A. hits timber firm with fraud charges
Humboldt County sues Pacific Lumber
Glen Martin, Chronicle Environment Writer
Wednesday, February 26, 2003
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URL: http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/02/26/MN133684.DTL



The Humboldt County district attorney is suing Pacific Lumber Co., charging
that the big timber firm lied to government agencies about its logging plans
after completion of the historic Headwaters Forest agreement in 1999.

The suit alleges that the company filed fraudulent data to support its
Environmental Impact Report, resulting in "major landslides causing
destruction to ancient redwoods, serious harm to Humboldt Bay, and serious
harm to streams, bridges, roads, homes and property rights of the people of
Humboldt County."

The office of District Attorney Paul Gallegos filed six counts of fraud and
deceptive concealment charges in the civil suit against Pacific Lumber,
claiming the company misrepresented data supporting its EIR, it was required
to file in 1999.

The suit, filed in Humboldt County Superior Court in Eureka on Monday,
claims Pacific Lumber used unfair business practices to deceive state and
federal agencies by submitting false landslide data so it could log about
100, 000 trees on unstable slopes.

The company also suppressed "corrective" data that would have required a
review of the final EIR, the suit claims.

The suit has far-reaching implications. If successful, it would vindicate
long-standing claims by environmentalists that the scope of the company's
harvest is devastating North Coast watersheds and streams. It would also
form the basis for a new series of lawsuits that could force the company to
change its logging plans.

Pacific Lumber President and CEO Robert E. Manne called the lawsuit
"disappointing and distressing."

"There is no factual or legal basis for these allegations," Manne said.
"There is no substance to the complaints."

The district attorney's office, Manne added, "has obviously been misled and
misinformed as to what actually transpired in the development of (the firm's
logging plans). The result is that the complaint contains many inaccuracies
and misrepresentations."

200,000 ACRES OF TREES

Pacific Lumber, headquartered in Scotia, owns approximately 200,000 acres of
forestland, mostly redwoods, in northwestern California. Three years ago,
the company completed a deal with federal and state governments over
preservation of the Headwaters Forest, a stand of old-growth redwoods in
Humboldt County.

For some, the lawsuit was a big surprise.

Ken Miller, a Humboldt County physician and a director of the Humboldt
Watershed Council, a local environmental group, said the DA's move was
totally unexpected.

"(Gallegos) came into office saying he wanted to ease up on prosecution of
medical marijuana and concentrate on methamphetamine, things like that,"
said Miller, whose group long has opposed Pacific Lumber's logging plans. "I
don't really recall a strong environmental platform, though."

Miller said the district attorney's suit "is about the biggest thing to hit
this issue. It's bigger than Redwood Summer (the mass protests against
redwood logging in the 1990s). It's big because it's a fraud action, not an
environmental suit. It puts integrity back into local government. People
have been really disheartened up here by the lack of courage on the part of
regulators and politicians. This D.A.'s office is a true inspiration."

But Tim Stoen, the assistant district attorney who is leading the
litigation, said it was not his intention to start a crusade when he filed
the suit.

"I faced an existential choice when the Jordan Creek matter (a watershed
that is part of Pacific Lumber's logging plans) came across my desk," Stoen
said. "I could (pursue) it or not -- and when I looked into it, it seemed
like it was a matter that should go before a judge."

Stoen said his office is seeking a $2,500 civil penalty for every tree cut
under Pacific Lumber's 10-year harvest plan for the disputed parcels, which
encompass about 100,000 trees. Up to 30,000 trees have been cut, Stoen said.
That means the firm could be liable for as much as $75 million in penalties.

As far as his suit serving as the basis for future litigation, Stoen said,
"That was not my intention. If that happens, it's collateral. I have a lot
of respect for Pacific Lumber and their attorneys."


'LIES AND DECEIT'
Nevertheless, said Cynthia Elkins, the program director for the
Environmental Protection Information Center in Garberville, Mendocino
County, the suit has implications beyond its immediate goal.

EPIC has also filed a lawsuit against Pacific Lumber's logging plans, though
its litigation is based on environmental, rather than fair-business,
statutes.

"If the county's suit is successful, it will show that the whole Headwaters
deal was approved on lies and deceit," Elkins said. "That would mean that
all the (environmental concessions) approved under the deal were illegal."

E-mail Glen Martin at glenmartin at sfchronicle.com

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Comment by poster: Many believed right from the start PL's plans would get a
nod and a wink on their other logging operations if they participated in the
Headwaters deal. It appears they took the cash AND the right to log unstable
slopes. They got over half of what they paid for the company in 1985 for
less than 8000 acres, mostly but not all old growth redwood. People who have
tried to slow the logging have been jailed or hit with SLAPP suits-civil
suits the company files for loss of income. Many others have been jailed for
tree-sits and blocking gates. This threatens to take their homes even as
they protest that their homes are endangered by the practices. Humboldt Bay
was dredged last year at some expense but I have never heard  a relation to
logging before in regard to that, although Elk River and Freshwatewr Creek
empty directly into the bay, both areas currently in contention.
 Richard McGuiness