A Palo Alto police officer who secretly recorded a phone conversation between an East Palo Alto tenant activist and an official from Page Mill Properties in December 2008 and then released the transcript to Page Mill violated a department policy, a recently completed internal investigation found. (View the transcript)

The investigation was prompted by a March 2009 complaint from tenant activist Chris Lund, who has been one of Page Mill's most vocal critics. The Palo Alto-based property manager bought more than 1,800 units in East Palo Alto in 2006 and 2007, but lost these units in August 2009 after defaulting on a $50 million loan.

The investigation, which was conducted by retired police Capt. Brad Zook, found that a Palo Alto officer released the transcript of Lund's conversation with Russell Schaadt, Page Mill's director of asset management, in violation of a department policy on confidential information.

The summary of findings, which the Weekly obtained this week, states that the officer "should not have released the telephone recordings." The officer, who is not named in the summary, violated a policy regarding "unauthorized, intentional release of designated confidential information, materials, data, forms or reports."

The summary states that the "involved employees have received counseling and training regarding our policy for retaining and releasing evidence." Police Chief Dennis Burns wouldn't say which officer violated the policy, but the transcript of the phone call has Agent April Wagner's name written on top of it. Burns would not confirm or deny Wagner's involvement in the pretext call, citing personnel laws.

Wagner has since been promoted to sergeant.

Palo Alto police recorded the phone call between Lund and Schaadt upon request from Page Mill officials. Page Mill had filed a claim against Lund, accusing him of trying to extort the company. Police recorded the conversation as part of their investigation into the extortion claim.

During the phone call, Schaadt repeatedly offered Lund $20,000 to halt his campaign against the company. He told Lund he would "just as soon get you out of the picture" and offered him money.

"I mean, you are continuing to disgrace me, you know, and our company, you know, with going around and posting these things," Schaadt said, referring to fliers Lund had posted criticizing Page Mill. "But that seems to be what it is about at this point and I would just as soon accommodate you in your request, get you out of the picture, and I want, you know, to move on."

"I (would) just as soon give you the twenty grand," Schaadt later added.

Lund declined the offer, saying his opposition to Page Mill "is not about the money" and "has never been about a personal settlement." He was cleared of all charges shortly after the phone call.

Burns said that while it's typically illegal to record phone conversations without the consent of the parties, it is acceptable to do so during the course of a criminal investigation. The "pretext call" was arranged because of Page Mill's allegations against Lund.

Burns said an officer released the recording to Page Mill with the understanding that the company would transcribe the phone conversation and facilitate the department's investigation against Lund. Police turned the recording over to Jim Shore, a former Santa Clara County deputy district attorney who served as Page Mill's general counsel.

Shore then released the transcript to the Daily News, much to the surprise of Palo Alto police.

"They offered to transcribe the tape to facilitate the investigation and then went ahead and released it without our knowledge," Burns said. "We were not releasing it to Page Mill with the intent to have it released to the press.

"It was not the intent to release it to the press or to damage in any way the reputation of Mr. Lund," he added.

The transcript of the phone call was released last month by CalPERS, which lost $100 million by investing in Page Mill. The pension fund was ordered by a San Francisco Superior Court judge to release thousands of documents pertaining to its failed investment in Page Mill. The group First Amendment Coalition sued CalPERS after the pension fund refused to release the documents.

In his complaint, Lund asked for the name of the Palo Alto officer who released the transcript to Page Mill. He also wrote that it is his understanding "that such evidence, or in this case, lack thereof, generally remains under seal."

The pretext call wasn't the only case in which a member of the Palo Alto Police Department intervened on behalf of Page Mill. Lund also complained to the police about an incident on Jan. 29, 2009, when a man allegedly walked up to Lund's house with a camera and began taking pictures. The man refused to identify himself and fled the scene after Lund called East Palo Alto police.

The man was later identified as Palo Alto police Lt. Tim Morgan, who moonlighted as Page Mill's head of security. The recent internal investigation confirmed the department's earlier finding that Morgan violated the department's policy prohibiting active officers from working in private security or holding outside jobs that may constitute a conflict of interest or an appearance of a conflict of interest. Morgan retired from the Palo Alto department days after Lund's allegation became public.

Though the internal investigation sustained Lund's allegation that Morgan violated the department's policy pertaining to outside employment, it did not charge Morgan with using his position in the department to gain influence in his work for Page Mill.

"It could not be proven that the employee was attempting to use his position to gain influence or authority in his non-departmental activity," the summary of findings stated.

Lund told the Weekly he was satisfied with the police department's response to his complaint and pleased to see the investigation conclude after almost two years.

"It took a little longer than I would've liked, but they took it seriously and looked into it thoroughly," Lund said.

He said he has forwarded the report's findings to an attorney for a review.

Burns wrote in the summary letter that the department "will make some improvements in our operations to ensure that something like this does not occur again." He said one of the outcomes of the investigation is that department will work with the city's independent police auditor to "clarify our outside employment policy."

"It'll be more specific as to off-duty employment and what is acceptable and what's not acceptable employment," Burns told the Weekly.