Cover Story - June 24, 2005
Greed takes centerstage
Saga of children's theater deal ends in County Jail
by Kathy Cordova
"For the kids" was a favorite phrase of William McCann as he spearheaded a complex deal to build a grand children's theater in Danville. The former attorney and community leader spoke those words as he persuaded a local developer to donate a nearly $2 million parcel of land for the project. He said them often as he induced generous individuals to give a total of more than $3 million for the construction of the theater.
But as the deal unfolded, and eventually fell apart, those words would become an indictment of McCann.
Edward Belasco described McCann's duplicity in the scheme that tricked him into giving up the land that was donated to his children's theater. "He was for the kids, I thought," Belasco said.
In May, a Contra Costa Superior Court judge ruled that McCann's conduct in regard to the theater "was a serious fraud on a number of parties" and his actions "constituted on many levels a severe and blatant conflict of interest and self-dealing." He found McCann, 58, guilty of felony tax evasion and sentenced him to 180 days in jail and a $10,000 fine.
Thus ends a saga that has all the elements of a Greek tragedy - greed, betrayal, revenge, even death - that has played out in Danville over eight years, multiple lawyers, tens of thousands of pages of court documents, and hundreds of thousands of dollars in settlement deals.
None of the principles or the attorneys contacted would agree to talk on the record. McCann declined to be interviewed for this article. Versions of the story that attribute dishonorable motivations to the parties involved vary widely. Court documents are the only reliable source of verifiable information, and they, primarily, have been used to reconstruct the story that follows.
Involvement with children's theater
In late 1996, McCann approached real estate developer Sid Corrie and asked him to donate a portion of his property at 500 La Gonda Way to build a children's theater. At the time McCann was president and chairman of the Belasco Theatre Company (BTC), a nonprofit, highly respected children's theater company in which his daughter had performed. McCann had been involved with the company for years, also served as its attorney, and represented to Corrie that he had full authority to act on behalf of BTC.
McCann proposed a complicated deal in which Corrie would donate 58.33 percent of the 2.69-acre parcel of land to BTC. McCann and his partner, J. Gordon Bingham, would purchase the remaining 41.67 percent, on which they planned to construct an office building, for a fair market value $1.4 million based upon an appraisal of $3,360,000 for the total property.
Corrie, who had been involved in children's theater growing up, agreed in late December 1997 to the deal, contingent upon his ability to take a 1997 tax deduction for the charitable contribution.
However, according to Belasco's testimony, McCann never informed him about the donation. "I was never told anything about the property," said Belasco. "I knew nothing of the property, period."
Signing documents at midnight
On New Year's Eve 1997, McCann dropped by Belasco's home a little before midnight with a bottle of wine and holiday wishes. Then he produced a document he asked Belasco, as founder and artistic director of BTC, to sign to "get the theater going."
Belasco, who was close to 70 and nearly blind as a result of diabetes, explained in his deposition, "He did not explain what was in it, did not tell me what it was about, and he wanted me to sign it. And like I told you, he was my lawyer. He was my friend. And he knew I couldn't see. The lights were dim. It was nighttime. And I signed it."
The document, Belasco discovered almost two years later, effectively signed away his portion of the property to Bingham/McCann, making the partnership the sole owner of the entire property. In exchange for the valuable piece of property, Bingham/McCann committed to building a theater through a private nonprofit foundation and giving BTC "first right of use for up to 36 performances per year and a discounted rental, which needs to be worked out."
$3 million raised
McCann and Bingham then set up the Mount Diablo Center for the Arts Foundation to raise money to build the theater. The foundation's chief officers were a close-knit group of McCann, Bingham, and Linda High, an employee of McCann's, although a host of community leaders, including U.S. Rep. Ellen Tauscher, D-Alamo, and Danville Councilmen Mike Doyle and Mike Shimansky, lent their names to the foundation's committee.
The gregarious McCann succeeded in raising more than $3 million for the foundation and was generally lauded by the community. "When it's done, it's going to be bloody gorgeous," McCann was quoted as saying in a 2001 newspaper article.
Right about that time, the carefully woven plan began to unravel. The IRS disallowed Corrie's tax deduction because the property was quickly transferred from the nonprofit BTC to the private financial partnership of Bingham/McCann. When Bingham/McCann put the property up for sale in 2001 for $15.5 million, Corrie filed a civil lawsuit against the partners charging them with a number of offenses, including fraud.
The court action and associated publicity thwarted fundraising efforts; all work on the theater ceased; and the Attorney General's Office ordered the foundation board disbanded.
The details of the deal that Corrie and his attorneys uncovered led to a criminal investigation of Bingham and McCann in addition to the civil litigation.
A fascinating web of circumstances and facts add to the intrigue of the case. Beyond the allegations of fraud regarding the land transactions, other accusations Corrie made in his civil suit include:
1. McCann and Bingham used the deed to all of the property (including the land meant for the theater) to borrow the entire amount of the $1.4 million they owed Corrie, thus owning a property, appraised at $3.36 million for the bargain price of $1.4 million - none of which came out of their pockets. Bingham and McCann were directors of Mt. Diablo Bank, the institution that loaned them the money. Corrie asserted that any other financial institution in which Bingham/McCann did not have a position of trust and confidence would have questioned the legitimacy of the title history of the property.
2. Because of Danville's strict requirements for on-site parking, Bingham and McCann knew that the only way to get a large office building approved would be to construct a large parking lot. Corrie alleged that one of McCann's primary reasons for building the theater was to create enough parking spaces for the office building to be entitled. The office building required 173 spaces and the theater required 140. To satisfy the city's requirements for both structures by constructing only 173 spaces, McCann, as chairman of the foundation, agreed to shared usage of the parking spaces between the office building and the theater, at a disadvantage to the theater.
3. Despite his claims, McCann never intended BTC to benefit from the theater. The document that McCann convinced Belasco to sign on New Year's Eve states that the undetermined discounted rental rate is only good "so long as Edward Belasco is artistic director of the Theatre." Belasco testified that he believed McCann added this clause because, due to his poor health and advanced age, McCann did not expect him to continue for much longer as BTC's artistic director.
Court records continue:
"Thereafter, BTC would have no further rights, privileges or direct or indirect economic interest in or control over the theatre of any kind. The Defendants (or future owner of the project) consequently would retain complete control over the theatre, exercised either directly or through the captive foundation which McCann and Bingham planned to create."
Criminal case proceeds
The veracity of these charges was never conclusively determined because the civil case was settled. The criminal case proceeded and Bingham, in ill health, pleaded guilty to a reduced charge of misdemeanor tax evasion in exchange for his cooperation. Bingham died of leukemia in 2003 before he could testify.
Due to a conflict of interest with the Contra Costa Attorney General's Office, Bill Denny, the Special Deputy Attorney General for Alameda County was assigned to the case. Denny initially charged McCann with five counts of offenses pertaining to the deal. But the two sides made an agreement to waive a trial by jury and Denny would prosecute only on one count of felony tax evasion. Denny also agreed that, if convicted, McCann would not go to state prison but would serve a maximum of one year in county jail. The agreement stipulated that evidence from the civil case would be allowed to be heard in the criminal case. On April 7, 2005, Judge John W. Kennedy took all the evidence into account and found McCann guilty on felony tax evasion. McCann was sentenced May 13 and turned himself in to the sheriff's office June 2.
Nobody but McCann knows his true motivation in this complex ordeal. Was he a charitable, community-minded altruist inspired to build a community theater for the children? Was he the Machiavellian manipulator painted by the civil lawsuit? Or was he just a well-intentioned guy trying to make a little profit on the side who made some stupid decisions in the interest of moving a deal along as quickly as possible?
According to the probation officer's report, "The defendant's conviction is part of a complex series of real estate and business transactions that span an approximate four-year period. While he states that his goal was to help build a children's theater we believe that 'greed' and the prospect of making 'unanticipated profits' from building an office complex became his primary concern."
McCann was his own victim
In McCann's defense, he has no history of criminal offense. He suffers from Bipolar Disorder II, which he claims played a part in his behavior. In a letter to the court, McCann's attorney, William Du Bois, wrote, "Foremost amongst the outward manifestations of the disorder were McCann's careless conduct, delusions of grandiosity, and occasional bad judgment." McCann has paid restitution to all parties, including back taxes and penalties.
There is no doubt that McCann was one of the biggest victims of his own misdeeds. His wife divorced him in 2004; he will lose his license to practice law as a result of the felony conviction; and his attorney says he is financially ruined.
In January 2003 McCann moved to Genoa, Nev., where he plans to return after he serves his sentence. In court documents McCann says he will pursue a graduate degree in English literature at the University of Nevada in Reno and hopes to teach.
The 39,000-square-foot office building and the 299-seat theater shell were sold by Bingham/McCann to the Tan Group in 2001, which is obligated to lease the theater to a nonprofit group for $1 a year.
The Mt. Diablo Region YMCA has taken over that lease and the operation of the theater, which is now called the Danville Center for the Performing Arts. It has agreed to pay $100,000 to BTC and give it the first right of use after the YMCA. The hope is to raise the additional $3 million to $5 million needed to finish the interior of the theater and then use it for youth and theater programs.
Maybe this tragedy will have a happy ending and the theater will eventually serve the purpose for which it was originally intended - for the kids.