Duffy Didn’t Report Loans to Settle Suit

Three San Diego County businessmen each loaned Sheriff John Duffy $12,000 last year to help Duffy pay for attorney’s fees in a lawsuit he lost over his involvement in the ouster of Rose Elizabeth Bird as chief justice of California.

The $36,000, one-year note, due in July, wasn’t disclosed on Duffy’s 1988 Statement of Economic Interests report filed March 24. Duffy is required by state law to complete the report and may have violated the law by failing to disclose the loan, a state official said Thursday.

“Generally speaking, a public official who receives a loan must disclose it either on a financial disclosure statement, or on a campaign statement,” said Sandra Michioku, a spokeswoman for the state Fair Political Practices Commission in Sacramento.

Michioku said that, if the commission receives a formal complaint on the matter, and then determines that he willfully tried to hide the loan, the sheriff could be assessed a maximum administrative fine of $2,000.

She said the San Diego County district attorney’s office also could independently investigate the situation to see if any criminal misdemeanor laws had been violated.

Steve Casey, a spokesman for the district attorney, said his office will review the case to determine whether an inquiry should be opened.

Duffy failed to respond to a telephone call from The Times asking about the loan and his failure to report the transaction.

Lt. Liz Foster, a Sheriff’s Department spokeswoman, said she “believed” Duffy may have filed an amendment to his disclosure form. But she said she did not know what items were included in the amendment, or when it may have been filed.

Result of Judgment

Duffy incurred the legal debt as a result of an ACLU lawsuit. In 1985 Duffy had his on-duty deputies distribute anti-Bird postcards as part of the campaign to remove the chief justice from the state Supreme Court. The ACLU successfully sued Duffy for misusing his office.

As part of the court judgment, Duffy and Sheriff’s Lt. John Tenwolde, who also was sued by the ACLU, were ordered to pay $33,796 in attorney’s fee and court costs. Duffy asked the county to pay the money, but the county refused.

Lewis A. Wenzell, who represented the American Civil Liberties Union against Duffy in the case, said the ACLU received a check for the full amount dated July 25 and written on the Scripps Bank of La Jolla.

Betty Wheeler, legal director for the ACLU, said the remitters on the cashier’s check were Duffy and Tenwolde.

“When we were paid the attorney’s fees, that satisfied our concern,” she said. “My job was to collect the award of attorney’s fees and once that was done, that for us closed the case.”

In fact, the money to pay the ACLU came from three of Duffy’s closest supporters, who also were members of the San Diego County Honorary Deputy Sheriff’s Assn.

William Cowling II and Charles Cono, in separate interviews Thursday, said they were approached by the late Arthur Bloom and asked to pitch in for the the loan. (Bloom, who owned a clothing store and was a captain in the honorary deputies association, died after the loan was made.)

Cowling, president of Dixieline Lumber Co., is a captain in the honorary deputies association and a lieutenant in the San Diego County reserve deputy program.

Cono, a Realtor, is a captain in the honorary deputies group, as was Bloom.

“It’s no big deal,” Cowling said. “Art Bloom started the ball rolling, and Cono and I said, ‘Let’s loan him the money.’ ”

Cowling and Cono said the arrangement was a simple financial transaction and not a political contribution. They said the money was loaned to Duffy on the strict premise that it be repaid in one lump sum this July, with 10% interest.

‘Arms-Length Transaction’

Cowling said the sheriff must repay the loan. “That was our deal,” he said. “It was an arms-length transaction.”

Cowling said he believes Duffy was justified in his decision to use sworn deputies to work against Bird. And because of that, he said, it was unfair for the sheriff “to have to go to work each morning with a financial problem hanging over his head.”

Cono said Duffy did not ask for the loan, but that it was Bloom’s idea to loan the sheriff the money. Cono said his attorney drew up the loan agreement.

“Bill Cowling called me and said the sheriff needed some money to defend himself,” Cono said. “Art Bloom called me too, and I said fine. It’s as simple as that.”

Claim Filed

In November, three months after the loan was made, Tenwolde filed a legal claim against the county, asking it to indemnify him for the costs of the attorney’s fees.

But Thomas L. Brown, the county claims supervisor, said the request was rejected because it was not filed in a timely fashion.

Tenwolde could not be reached for comment Thursday.

Duffy, in his 1988 Statement of Economic Interests, declared that the form’s category for reporting loans was “not applicable . . . to my disclosure category.” Duffy has taken that position on the disclosure forms since 1983. In the years before 1983, he simply disclosed that he had received no reportable loans.

However, the Sheriff’s Department’s “Conflict of Interest Code,” which was signed by Duffy and filed with the county in 1977, requires that the sheriff disclose “all income . . . from any county-related source aggregating $250 or more.”

Also in his 1988 disclosure, Duffy reported receiving three gifts: Season tickets to the San Diego Chargers, worth $900; a gun belt worth $120 from John Rose and $144 in what he described as “Guns--Italian replicas of antique Colt Percussion Muzzle Loading Pistols” from Don van Hooser.

Rose, a Mission Valley car dealer and member of the honorary sheriff’s association, said he gave the sheriff the monogrammed gun belt because “John has been so good with everybody we know of.”

Van Hooser could not be reached for comment.