Conflicts of Interest are Rife Between Downey City Council Candidate and Former Downey Mayor

FAVORS LATER? Newspaper editor and Downey City Council candidate Eric Pierce (left) and former Downey Mayor Mario Guerra. Guerra sold a condo he owned to Pierce for 12% less than a nearby comparable so Pierce could move into Downtown Downey.

BY BRIAN HEWS • October 17, 2020

Hews Media Group-Cerritos News has learned that former Downey Mayor Mario Guerra sold a condominium he owned in the city, at a reduced price according to nearby comparable properties, to Eric Pierce, current Downey City Council candidate and editor of Downey’s local newspaper.

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OC Title document showing Guerra selling the condominium to Eric Pierce in Aug. 2019.

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The condominium is located at 8134 3rd St., just one block away from Downtown Downey at Firestone and Downey Ave., one of the busiest areas in the city.

The area is so desirable that Guerra has occupied a large business office in the building on the corner of Firestone and Downey for many years as does Assemblywoman Cristina Garcia.

According to online documents, Guerra paid $559,000 in cash for the condominium in 2018, then sold to Pierce in August 2019 for $31,000 more at $590,000.

Since Guerra owned the condominium for less than two years, the transaction was subject higher than normal short term capital gains tax. Adding the selling commission of 5%-9%, 3.5% of the purchase price held by California’s Franchise Tax Board because it was not Guerra’s primary residence, along with other fees, Guerra’s likely lost money on the deal.

5% of $590,000 equates to $29,500; 3.5% of $590,000 equates to $20,650, total fees over $50,150 meaning Guerra lost $20,150 on the deal.

The $590,000 selling price offered by Guerra, for the two bedroom, three bath 1,600 square foot property located at 3rd and La Riena – within walking distance of the iconic Portos’ Bakery – equated to $368 per square foot.

A check of comparable sales on OCTitle.com in the area reveals that Guerra extended a very low purchase price to Pierce.

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Map showing comparable sales in the area, with Pierce’s condo in the middle. The average sale is 9% more than Guerra’s selling price to Pierce, and a condo in the same complex sold for $390 per square foot in 2018.

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At 9104 Florence, east of Lakewood Blvd. and nearly two miles from Downtown Downey, a 1,480 three bed, three bath sold for nearly 5% more at $385 per square foot.

Just one block away on the corner of Downey and 7th street, a one bedroom, one bath property sold for nearly 10% more at $404 per square foot.

At 7640 Stewart and Gray Rd. is a property that sits in the middle of a residential neighborhood, nowhere near any retail shops, a two bed, two bath property sold for 12% more at $412 per square foot.

And  a condominium in the same complex sold for $390 per square foot, 6% more in 2018.

The home loan Pierce secured is another indication that Pierce and Guerra cut a deal.

Pierce applied for a FHA loan, which requires a very minimal 580 credit score, and is generally extended to buyers with extremely bad credit or low income, mandating a minimal 3.5% down payment, but also requiring homeowners to pay for very expensive mortgage insurance due to high credit risk.

If the low 5% comparable was added to the purchase price, Guerra could have sold the property for just over $618,000, earning $29,500 more and raising Pierce’s down payment by $1,032 and the purchase price by $29,500.

If the 10% was added to the purchase price, Guerra could have sold the property for $647,000, earning $57,000 more and raising Pierce’s down payment by nearly $2,100 and the purchase price by $57,000.

If the 12% was added to the purchase price, Guerra could have sold the property for $659,000 earning $69,000 more and raising Pierce’s down payment by nearly $2,500 the purchase price by $70,800.

Additional Conflicts

In addition to the low selling price, campaign documents show that Guerra donated $1,000 to Pierce’s campaign and an ex-employee of Guerra’s, Hans Fritz, was paid $2,500 by Pierce as a campaign consultant.

Fritz’ office is next to Guerra’s office on the corner of Downey and Firestone, with Guerra’s at #309 and Fritz’ at #308.

Ethics Conflict

Many Downey residents and journalists have criticized Pierce and his publisher, Jennifer DeKay-Givens for

DeKay-Givens

allowing Pierce to remain as editor of her newspaper during Pierce’s city council campaign saying, “he will not be involved in elections coverage.”

One local journalist, who did not want to be identified, told HMG-CN, “the optics are terrible for both Pierce and his publisher. So what happens if Pierce is handed a corruption story about Guerra, or Councilmen [Alex] Saab or [Rick] Rodriguez, do you think he will publish the story or bury it? My choice is the latter.”

“He has already shown his lack of ethics, ignoring Downey Assistant City Manager John Oskoui’s exploits while at Central Basin, he has a track record of ignoring corruption when it serves him and his publisher DeKay-Givens.”

HMG-CN has broke several stories about Oskoui that Pierce has ignored.

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Several emails into Pierce, Guerra, and Jennifer DeKay-Givens went unreturned.