Legal costs hit Street hard

Orange County Treasurer Chriss Street was forced to sell his home to cover more than $1 million in legal bills from litigation alleging that he misused funds from a bankrupt trailer company he oversaw and can no longer afford to defend the case, according to a court motion filed this week.

Rumors circulated last year that Street had sold his home to cover his legal bills but he declined to comment when asked about it then.

The financial difficulties are the latest in a long line of setbacks for Street, who came into office last year as a popular first-time politician. But he quickly encountered trouble stemming from his previous private work as a specialist in restructuring distressed companies, as well as drawing criticism for a pricey office renovation and raising questions about investment choices that have roiled the county investment pool.

The legal claims against Street arose from his oversight of Fruehauf Trailer Corp., a company he agreed to manage in bankruptcy as a trustee in 1998.

Street was replaced as trustee in 2005, and his successor filed suit against him last year, seeking damages of $33 million for fraud, breach of contract and other claims.

The new trustee said Street paid himself $2 million and used the trust to pay for travel to resorts in exotic South American locales, pay his wife, install new wheels and a stereo on a company car, visit a plastic surgeon, pay a speeding ticket and buy ice cream, among other things.

Street denied wrongdoing and has filed a countersuit in the case.

“Chriss ain’t broke,” his lawyer, Phillip Greer, said in an interview Friday. “He’s fighting a very complicated piece of litigation and it costs a lot of money. I’m just frustrated with the implication that he is selling oranges or peanuts on the freeway.”

Greer said the case had not distracted Street from his duties as treasurer.

The filing said Street took out a second mortgage on his Newport Beach home and ultimately sold it to cover his legal fees. Although the proceeds from the sale have covered most of his legal expenses, “those funds are now exhausted,” the motion said.

Street is asserting that he is entitled to have his legal expenses paid for by Fruehauf under the labor agreement he entered into when he agreed to oversee the firm.

He is asking a judge to halt the legal proceedings until there is a ruling on that claim.

“Mr. Street is in a position where he can no longer fund his defense,” the motion stated.

--

christian.berthelsen@latimes.com