FREMONT -- The California Fair Political Practices Commission is investigating whether a Fremont business community stalwart has broken conflict-of-interest laws in his position as president of the Washington Township Heath Care District board of directors, a state official said.

The commission's investigation is focused on whether Fremont Bank board chairman Mike Wallace violated state regulations because of financial dealings between the bank and the health care district, said Greg Winuk, the commission's chief of enforcement.

The state agency opened the probe in August, Winuk said. He declined to comment further, citing the open investigation.

Wallace also is the president of the Washington Township Health Care District board of directors, on which he has served since 1990. Wallace did not respond to calls for comment.

The district has paid Fremont Bank around $1.2 million in fees since 2001, according to The Bay Citizen, which first reported the investigation.

Last year, Wallace earned more than $100,000 at Fremont Bank and held more than $1 million of stock in the bank's parent company, The Bay Citizen reported.

Other board members of state taxpayer-funded health care districts -- including two men in Redwood City and a former board member in Riverside County -- also are being investigated by the FPPC for possible conflict-of-interest violations, according to The Bay Citizen report.

The five-member Washington Township Health Care District board, which first formed in 1948 and is elected by voters, manages Washington Hospital in Fremont and other medical centers in the Tri-City area.

Gisela Hernandez, a Washington Hospital Healthcare System spokeswoman, denied that Wallace or the district committed any wrongdoing. Hernandez said in a written statement that, according to California law, the district is allowed to have a financial relationship with a bank "even though Wallace also services as an officer of the bank."

The district contracted with Fremont Bank in January 2001 after BCS & Associates -- an independent consultant firm that managed the request-for-proposals process -- had given the bank the highest rating for banking services, Hernandez wrote.

Wallace did not participate in the request-for-proposals process and abstained from voting on the bank's selection, according to the district's statement.

"Michael Wallace has not violated the state's conflict-of-interest laws," Hernandez wrote. "And the district's process for selection of a depository bank followed the requirements of the law."

Contact Chris De Benedetti at 510-353-7011. Follow him at Twitter.com/cdebenedetti.