Witt Cautions Against Cutting Fraud Unit

Times Staff Writer

The case of the foot doctor who wasn't and offered bogus cures is just one investigation Bill Newsome recalls. The phony podiatrist ended up in jail.

Newsome, in his more than five years as head of the city attorney's Consumer Fraud Unit, has seen everything from street scams to fraudulent packaging plans by Fortune 500 companies.

The unit, formed in 1973 to address citizens' complaints and those from regulatory agencies, receives 2,000 to 2,400 calls a month. It also faces the prospect of elimination.

New Officers Sought

The spending plan for fiscal year 1990, proposed last week by City Manager John Lockwood, does not include the $535,000 annual budget for the fraud unit.

The cuts, which are intended to allow the city to hire an additional 140 police officers, would cut $21.8 million from an array of programs over the next two fiscal years, including $7.5 million in fiscal 1990. Lockwood, who has proposed a spending plan of $930 million for the fiscal year, could not be reached for comment.

If the City Council approves eliminating the fraud unit, the city attorney's office would still handle consumer complaints, City Atty. John Witt said. But it "would not be in a position to commit the resources" to consumer affairs the way the unit does, he said.

"If choosing between a drunk-driving case and a consumer complaint, the drunk-driving case would receive priority," he said.

Opposes Across-the-Board Cuts

Witt said he is opposed to across-the-board cuts in his department because it might affect resources for prosecuting violent crimes. If cutbacks in the city attorney's office are necessary, Witt said, he would prefer that individual programs be cut.

"I've always felt (the Consumer Fraud Unit) was a valuable program--it keeps the marketplace free. But, while consumer protection is an important aspect, when you get down to making a judgment call, you have to go with crimes of violence," Witt said.

The consumer protection unit also investigates unlicensed contractors and medical services, and violations of the sanitary code. The three attorneys and three investigators assigned to the unit would likely be absorbed elsewhere in the department, Witt said.

The unit currently handles civil and criminal consumer fraud cases. If it is eliminated, the city attorney's office would probably pursue only criminal cases.

In civil matters, the consumer would be "left to his own devices," Witt said, even though a civil matter is "usually not feasible for most people."

The loss of the unit, combined with the low priority that would likely be assigned to consumer complaints, leaves one message if the cuts are approved, Witt said: "Buyer beware."

In some cases, that might not be enough, said Newsome. Statements on packages that list weight, volume or unit count are sometimes false, intentionally or otherwise.

"Some of these packages are shipped all over the United States, and the consumer is not getting what he pays for," Newsome said. "The only way to find out is to bring a scale in there. You don't carry a scale with you when you go to the grocery store. The courts have ruled that consumers should not be required to bring in scales."

The stiff penalties that the unit can impose on violators are also a source of revenue for city coffers, Newsome said. About 50 to 100 cases annually result in settlements. In 1988, about $420,000 in fines and penalties were assessed, not including restitution paid to consumers.

Come a Long Way

"We literally put the money back in their pocket," Newsome said. "We also monitor people to make sure the money is paid back. I've got cases 10 years old that are still getting money back" to the consumer.

The unit has come a long way since its inception in 1973. In those days, it consisted of one attorney equipped with a telephone. Today the unit's investigators do their own police work and go undercover to corroborate consumer complaints.

As the number of commercial enterprises and the area's population have increased, so has the caseload, Newsome said, who also stressed the deterrent value of the program.

"Word will get out in the industries that a case has been prosecuted. The deterrent value is immeasurable. Within certain industries, there is an impact."

In one recent suit, three grocery chains settled false-advertising cases brought jointly by the San Diego Consumer Fraud Unit and the Los Angeles County district attorney's office for ads offering "unlimited double coupons." The settlement June 9 stipulated that the stores--Ralphs Grocery Company, Alpha Beta Company and Safeway Stores--without admitting wrongdoing, are permanently barred from using the word unlimited in advertisements when the service is actually limited. The stores paid fines of about $32,000 apiece.

Newsome said the program is also a benefit to legitimate businesses because it prevents unfair competition.

City Councilman Ed Struiksma said he hopes the council will recognize the value of the program to the public and not make an issue of whether or not it generates revenue.

"I feel that it provides people the last line of support against unscrupulous business practices," Struiksma said. "I'm hopeful that the council doesn't cut it, period."

The council will hear budget arguments Thursday.

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