D.A. Declines to Investigate Duffy’s Secret Bank Account

San Diego County Dist. Atty. Edwin Miller said Friday that he will not initiate a criminal investigation of Sheriff John Duffy, who deposited more than $300,000 in federal funds into a a secret bank account without the county’s knowledge or approval.

“I see nothing of a criminal nature here,” Miller said at a press conference Friday to endorse sheriff’s candidate Jack Drown. “I have no reason to believe there’s anything criminal. This is a matter of litigation, as to who has the authority to spend these monies. It’s not a local issue or a state issue. It’s a national issue.”

County auditors, angry at learning that Duffy had created a secret account this summer after they prohibited him from spending money seized in drug busts, asked Miller’s office on Wednesday to investigate.

Because the district attorney received a share of the money out of the secret account, auditors asked him to consider turning the matter over to the state attorney general’s office to prevent a conflict of interest. Miller said Friday he was still deciding whether to do so.

County Supervisor George Bailey said Friday that, although he does not know if Duffy was criminally negligent, he was certain that Duffy had improperly bypassed the supervisors.

“I’m not saying any of the money was misused,” he said. “But it’s wrong to hide it into a separate account, for God’s sake. I hope we can work something out with the next sheriff.”

Sheriff’s spokesman Glenn Revell said Duffy had not heard the news, but had always been confident that he did nothing wrong.

At issue is who controls federal drug money. A county ordinance requires that Duffy deposit the Sheriff’s Department’s share of the money into the county treasury. Duffy contends that the money belongs to the Sheriff’s Department, and that he should determine how it is spent.

Vague federal guidelines state in broad terms how the federal money may be used--”for law enforcement purposes only”--but there is no federal mechanism to audit the money once it is distributed.

“It’s not our money, it’s the money of the local law enforcement agency, and it would ill-behoove us to get involved in auditing their money,” said Michael Robinson, a spokesman for the Justice Department in Washington. “We don’t micromanage these things.”

Miller said his findings were based on a cursory review of the situation Friday, but that it was clear to him in discussions about federal guidelines over the years with former U.S. Atty. Gen. Ed Meese and current U.S. Atty. Gen. Dick Thornburgh that the debate over who controlled the money went far beyond Duffy and the Board of Supervisors.

“This has to do with whether there is a conflict between administrative rules and the county ordinance, and between state laws and federal guidelines,” Miller said. “This may well be resolved with a lawsuit.”

It is still unclear whether Duffy or the Board of Supervisors is willing to file a lawsuit.

The Board of Supervisors, in a struggle with Duffy this summer over whether to use the drug proceeds for jail security or laptop computers, voted to adopt an ordinance in June that prohibited Duffy from spending money without the board’s approval.

Furious with their decision, Duffy established his own bank account and deposited the drug money but told no county official. According to Revell, Duffy’s spokesman, the sheriff spent a “minimal amount” from the fund, mostly to pay other law enforcement agencies their share for participating in drug raids.

Duffy has refused to document how much of the money he spent or what it was spent on. The U.S. attorney’s office said it had distributed about $318,000 to the Sheriff’s Department between June 30 and Sept. 30. Harold Donahoo, who manages finances for the department, said he never saw the money but heard rumors of another account.

News of the account surfaced this week and shocked county officials.

“It is clear that, No. 1, all funds have to come through the county treasury and, No. 2, they must be appropriated by the Board of Supervisors,” said Norman Hickey, the county’s chief administrative officer. “I don’t know why anyone would want to make himself vulnerable this way. It’s incredulous.”

County attorneys and auditors already were investigating Duffy’s use of nearly $70,000 in drug funds to pay an attorney in a civil lawsuit. Auditors discovered the problem in June and asked Duffy to repay the funds. He has refused.

Assistant Sheriff Drown, who is running in next Tuesday’s election against Sheriff’s Capt. Jim Roache, said he recalled Duffy mentioning the account, but didn’t know whether or not it had been created. Drown said he warned Duffy against it.

Miller said Friday that he does not see a problem with considering an investigation of Duffy at the same time he is endorsing Drown, one of Duffy’s assistant sheriffs. Miller said Drown had nothing to do with Duffy’s action.

In fact, Miller said, he is not certain he would have endorsed anyone in the sheriff’s race if he had not read repeated media accounts that described Drown as a “Duffy clone.”

Drown, he said, is “impeccably honest, a seasoned veteran with experience in every area of law enforcement, and he’s a good person. He’s also independent. He’s a man of his own ideas.”

Miller said he has endorsed only one other local candidate: Maureen O’Connor for mayor in 1983. Roger Hedgecock beat O’Connor at the polls, and Miller successfully prosecuted Hedgecock for violations of laws governing campaign contributions.

Hedgecock said the investigation was politically motivated, a charge Miller denied at the time.

Asked if he would be subject to another round of criticism in endorsing Drown, Miller shrugged.

“I don’t know, and I don’t care,” he said.

Miller said he had never met Roache and had no opinion about him.