‘Nothing criminal’ in Dreyfus estate report | TahoeDailyTribune.com
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‘Nothing criminal’ in Dreyfus estate report

A controversial report summarizing an investigation into the most expensive land swap in Forest Service history -involving Zephyr Cove’s Dreyfus estate – was made public Thursday.

The document, for the most part, supported what officials had already indicated but refused to elaborate.

“From my reading, I don’t see any indication of misconduct or impropriety, which was what we were told. Apparently a few rules were not adhered to in the sense of procedure, but there was nothing criminal,” said U.S. Sen. Richard Bryan, D-Nev., who has long followed the issue. ” But (at the beginning of the investigation) we were hearing all this stuff about criminal misconduct. And I think what caused the issue to grow was a refusal to release (the report). It gave rise to suspicion that there was really something juicy there. But it was consistent with what they were telling us.”



The report says the regional offices of the U.S. Forest Service and Bureau of Land Management were inexperienced in dealing with land swaps, such as the one involving the Dreyfus estate, which was the underlying reason for the problems hampering the exchange.

The document verified earlier reports that no information was misrepresented to the federal agencies and there was no criminal wrongdoing. Beyond that, the report – obtained Thursday, a month after completion, by the Tahoe Daily Tribune – seems to have changed little.




The U.S. Forest Service, whose officials were ordered not to talk about the issue during the investigation, are still silent.

Matt Mathes, spokesman for the Forest Service’s regional office, said that prior to Thursday, only two people in the agency had seen the report. After quickly reading the six-page report, which reportedly has more than 100 pages of supporting documents that have not yet been release, Mathes said the Forest Service could not elaborate at this point.

“We respect the work of the (Office of the Inspector General, the investigative branch of the U.S. Department of Agriculture). We are absolutely going to talk to the OIG about their concerns, but I’m afraid it’s not appropriate to discuss it in further detail before we talk to OIG,” he said.

After a copy of the report was given to the Lake Tahoe Basin Management Unit on Thursday, neither Juan Palma, forest supervisor, nor Linda Massey, public affairs officer, returned phone calls.

Park Cattle Co, which has extensive holdings in Douglas County, owns the property’s improvements – buildings, driveways, fences and other man-made structures. Officials from Park Cattle Co. hope the completion of the investigation will jump start stalled proceedings to obtain a special permit for the estate.

“Our best guess is, at least the way I read the document, the report says there were some areas that weren’t handled as precisely as they should have been,” said Gary Midkiff, a consultant representing Park Cattle Co. “But everyone agrees to what the intent was, and that is the improvements were to remain private and could receive a special use permit. I think we’re going to proceed with our efforts to obtain a special use permit.”

In a land exchange valued at $38 million, the federal government two years ago gave an Arizona-based land-brokerage company, the Olympic Group, public land around Las Vegas in exchange for the Zephyr Cove property, which contains 3,000 feet of sandy beach, a meadow, creek as well as a caretaker’s cottage and a 10,000-square-foot mansion.

The Forest Service had no interest in the mansion or other improvements on the property and initially was planning to raze them. Instead, the agency allowed the Olympic Group to sell them. Several parties were interested in purchasing the improvements, including Douglas County, but Park Cattle Co. ultimately made the purchase. It did so with the understanding that a special land-use permit would be issued to operate the buildings as a business, allowing residents and visitors to visit the lakefront estate.

Douglas County officials were pleased not only that Park Cattle Co.’s ownership would lead to more public access to Lake Tahoe, but it would result in more tax dollars for the county.

Last year, before Park Cattle Co. could get a special use permit, the USDA Office of the Inspector General began a criminal investigation into how the transaction was made, based on an audit by the Forest Service’s Pacific Southwest Region.

The auditors claimed that the property without the improvements should have been appraised at $10 million less, which meant that the public paid more than fair market value for the property.

David Dickson, special agent in charge of the investigation, said then that the USDA was examining whether accurate information was presented to the federal agencies involved.

Last month, he said the investigation was completed and no criminal wrongdoing was found. But he would not provide details or a copy of the report.

The Tahoe Daily Tribune and The Record-Courier filed a Freedom of Information request to obtain the report and were denied. Bryan and U.S. Rep. Jim Gibbons urged the federal office to release the report.

This was the first Forest Service land exchange in the region involving a private party retaining structures on the property, the report stated. In addition to officials inexperience in such exchanges, the report says, there were breakdowns in communication between Forest Service and BLM employees.

“Unfortunately, after all of this, what we’re seeing is the people who have really been short-changed is Park Cattle Co.,” said Guy Inzalaco of the Olympic Group. “They went into this decision in good faith with the Forest Service. The Forest Service, for whatever reason, has decided they want these buildings torn down. They’re basing this on a belief that there’s no public need for this type of thing at Lake Tahoe, when other folks up there believe there’s a great need.”

Olympic Group no longer is involved in the exchange.

“I just saw (the report), and I hope the Forest Service will try to resolve this thing in a positive way – where everyone’s happy. And it can be done,” Inzalaco said.

Midkiff said, while he is hopeful progress soon can be made, he is not convinced.

“The difficulty (the media) had in getting the report suggests maybe we’re not (making progress),” he said.

Said Bernie Curtis, a Douglas County commissioner: “I don’t know what to say. This Dreyfus thing has been kicked around for years, and it’s not going anywhere. There’s no progress.”

In the meantime, however, the 46 acres is open to the public, Mathes said.

“All of the land is available right now for any member of the public to use,” he said. “The land is public land. The only thing off limits is the buildings themselves.”


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