D. A. Says Kraus Spoke Falsely in Investigation : No Prosecution Planned of Ex-Official for Statements During 1983 Deposition

The Los Angeles County district attorney has concluded that former City Administrator William H. Kraus made false statements during a city invesigation but that he cannot be prosecuted for perjury.

The district attorney said the office will not prosecute Kraus because there were defects in the 1983 city investigation which led to his resignation.

The district attorney said that Kraus--now a candidate for City Council--never signed the depositions he gave during the city’s investigation. Also, the district attorney said in the opinion that the City Council did not follow state law that required the council to pass an ordinance or regulation authorizing the original investigation of Kraus’ personal financial dealings.

The district attorney’s conclusions were outlined in a Dec. 31 letter from Deputy Dist. Atty. Candace J. Beason to City Atty. Kenneth J. Brown, a copy of which was obtained last week by The Times.

In an interview Tuesday, Kraus denied he had ever made false statements in his testimony.

Conclusions Criticized

Meanwhile, the district attorney’s conclusions were criticized by city officials and a lawyer who had been hired by the city to investigate Kraus.

“If they (the district attorney) want to lay it off on me, that’s fine; I’m a big boy,” said Los Angeles lawyer George J. Franscell, who was hired by the city in 1983 to investigate Kraus.

Franscell, however, said that Kraus’ testimony in 1983 was made under an oath administered by a court reporter and was legally the same as testimony before a judge or jury.

“The fact that he didn’t sign it doesn’t change anything. If he lied under oath, he lied under oath,” Franscell said. He added that he believed the district attorney decided against prosecuting Kraus because the case would have been difficult for a jury to understand.

Brown also disagreed with the district attorney, saying that no ordinance or regulation was needed to investigate Kraus. He added, however, that he does not intend to pursue the matter.

Resigned in 1983

Kraus, city administrator for 10 years, resigned in 1983 after a highly critical report written by Franscell’s law firm raised numerous questions about his personal business dealings. The City Council hired Franscell to investigate allegations made against Kraus by city activist Ed White.

The investigation centered on Kraus’ business dealings with convicted criminals and a number of loans defaulted on by Kraus. The Francell report following that investigation said Kraus might have committed a crime when he assertedly used a deed to a Riverside property that he had no financial interest in as collateral to borrow $27,000 from a San Diego bank in 1978. But no charges were ever brought against Kraus.

The Franscell report also charged Kraus with “intentionally misleading” City Council members about his personal business dealings.

In the district attorney’s letter, Beason said that members of Franscell’s law firm have speculated to the district attorney’s office that the law firm, which took the depositions from him, mailed the depositions to Kraus but that he never returned them.

In an interview, however, Kraus said he never received copies of his depositions and that he only briefly reviewed copies of the depositions. Kraus also said that the city investigation was unprofessional and politically motivated.

Property Deed

In her letter, Beason wrote that Kraus said during the 1983 city investigation that he did not use the Riverside County property deed as collateral for a loan obtained from a San Diego bank.

“In truth and in fact it appears that Mr. Kraus used the worthless deed to the Riverside property as collateral for a loan in San Diego County,” Beason wrote. She could not be reached for further comment. In a Wednesday interview, Beason’s boss, Steve Sowders, head deputy of the district attorney’s special investigations division, said that the district attorney’s investigation concluded that Kraus had made false statements under oath.

In an interview Tuesday, Kraus, however, denied he had ever used the deed as collateral.

In 1983, city officials forwarded the Franscell report to the district attorney’s office for investigation, but no charges were ever filed against Kraus. In the meantime, White asked the district attorney’s special investigations division to review the Franscell report to see whether Kraus had committed perjury.

In a separate matter, Kraus also is under a federal indictment in San Diego for mail fraud in a case that is not expected to be tried until August. The city election is April 8. Kraus has said he is innocent of the mail fraud charges.