When liquefied natural gas developer Peter Hansen met Port of Astoria Director Peter Gearin and marketing consultant Susan Trabucco in San Jose, Calif., in October 2004, there was a moment when Hansen thought the two might be more than co-workers.

"I picked them up at the airport, and there was a funny little thing there ... there was a look between them," Hansen said in an interview with state investigators in August of this year. "It was just for a split second, and then I didn't think any more of it."

The meeting took place within weeks of the Port of Astoria Commission's vote approving the controversial land leases for Hansen's company, Calpine Corp., which was quietly planning to build a $500 million LNG terminal on the Skipanon Peninsula in Warrenton.

Trabucco, who was doing contract marketing work for the Port of Astoria at the time, had recently been hired by Calpine, to help promote the LNG project. She and Gearin traveled to San Jose together to meet with company executives.

At the time of the trip - and for several months afterwards - neither Hansen nor the Port Commission knew that Gearin and Trabucco were dating. And Gearin didn't tell his Commission that Trabucco was working a second job with Calpine.

According to investigation documents released by Oregon Department of Justice this week, including transcripts of interviews with Gearin and Hansen, Gearin had recommended Trabucco for the Calpine job while talking with Hansen about the company's plans to lease land from the Port for the LNG terminal.

Hansen told investigators his company was looking for someone local who "sort of knew the flavor of the ... Kool-Aid in that area." Gearin recommended Trabucco based on her work at the Port, documents show, but he neglected to tell Hansen that he was secretly dating her at a time when he was married to Carol Gearin, his second wife. Trabucco and Gearin went public with their relationship several months after the LNG lease was signed and are now married.

On Tuesday, DOJ investigators announced they believed they could prove Gearin misused his position as Port director to secure employment for Trabucco, and that in doing so he committed official misconduct in the first degree. The class A misdemeanor would be punishable by up to a year in jail. But the two-year statute of limitations has run out, so the state is barred from prosecuting.

According to the investigation findings, Trabucco worked for Calpine from October 2004 through February 2005, earning a total of $41,030. Gearin was dismissed from the Port in February 2007 amid accusations of mismanagement. He was convicted of a felony violation of the Clean Water Act earlier this year for intentionally violating a dredge permit while acting as director of the Port.

Some Port leaders and many LNG opponents are looking to use the state's findings not against Gearin, but to get the Port out of its unprofitable lease with Hansen and his new company, Oregon LNG. The company is pursuing the LNG development with a sublease of 92 acres of land in Warrenton, but the future of the lease depends on the outcome of two lawsuits.

If the lease were found to be fraudulent - possibly because Gearin withheld information from Port commissioners - the Port could have legal grounds to break the contract.

Upon hearing the news of the state investigation's conclusion, Astoria resident and LNG opponent Lori Durheim said it didn't seem like the findings gave the Port an easy way out of the lease agreement.

"It's still muddy," she said. "It's not positive one way or the other. Can they get out of this lease or are they married to it? I?want to hear what the Port's attorneys say about it."

Port Executive Director Jack Crider said he doesn't know what, if any, implications the investigation will have for the Port's master lease with Oregon Department of State Lands or the pass-through sublease to Oregon LNG.

Louise Solliday, director of Oregon Department of State Lands, said as far as she knows the investigation does not change the status of the Port's master lease with the state nor does it offer any legal justification for invalidating the lease.

Trabucco told The Daily Astorian via e-mail that she is reserving comment on the investigation's findings until she has a chance to assess her legal options.

Gearin's attorney Robert Calo said he and Gearin are "pleased that the investigation has been closed, but we are disappointed that there is so much press involving a man who has not been found guilty of any wrongdoing."

Hansen did not return phone calls from The Daily Astorian on Tuesday and Wednesday.

Port Commission President Bill Hunsinger said he doesn't think the 2004 commission would have approved the lease if they had known all the facts.

"In my opinion, the commission was defrauded into something and they weren't told the truth," he said.

In a three-hour interview with investigators in September, Gearin said he did not see a conflict in having Trabucco simultaneously working for the Port and Calpine nor he did feel obligated to tell the Port Commission prior to the vote approving the Calpine lease that his girlfriend was collecting a paycheck from the company.

According to a transcript of Gearin's Sept. 4 interview with investigators, DOJ Chief Counsel Sean Riddell said: "My question was ... you don't think the commissioners would have liked to have known that the man they hired to act in the public interest and to give his professional unbiased opinion is dating a woman who is getting upwards the sum of $30,000 from the very company he was advocating for?"

"And I said no," Gearin replied.

Gearin said he would have considered telling the board about Trabucco's employment with Calpine if she were making "significantly above the market rate for the hours she was working."

But he also said he didn't know how much Trabucco was making from Calpine.

"You never asked her, you never said, 'We're all in this together. It looks real yucky. How much are you making? What's your relationship with Calpine?' You never had that conversation?" Riddell asked.

According to the transcript, Gearin said "no," and later added, "I?see no conflict with Susan having worked for Calpine for whatever she got paid."

Gearin said after he and Trabucco went public with their relationship, he formally put deputy director Bill Cook in charge of supervising Trabucco to alleviate possible "concerns," and Trabucco quit her job with Calpine.

Investigation documents also reveal new details about the LNG project's development and history.

Hansen said his company would have paid more to lease the Port's land, and that Gearin never tried to negotiate for a higher price. The Port has a policy of leasing land at an annual rate of 10 percent of the appraised value. The Skipanon property was valued at $384,000, so Calpine was charged $38,400 per year.

Gearin told investigators it was the Port's job to encourage economic development and often offered breaks to developers, but the plan was to raise revenues from property taxes as the site increased in value.

"The issue of trying to make money on it was not in our culture," he said. "Our culture was to encourage investment and employment in the community."

Investigators asked why the Port Commission meeting convened to approve the lease was held with only 24 hours notice on a Friday.

Gearin did not have a solid answer in his September interview.

"There was an issue, I think it was something at Calpine's request, and I?don't remember the reason why," he said.

But Hansen said he was facing intensifying competition from other LNG projects, including the developers who are now backing the Bradwood Landing LNG facility, and was "obviously eager to get going."

Hansen also said the low price on the lease helped him keep the project afloat when Calpine declared bankruptcy and made it more affordable for a new company - New York holding company Leucadia National Corp. - to take it over in 2006. Hansen moved with the project and became CEO of Oregon LNG, a Delaware-based limited liability corporation owned by Leucadia.

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