Duffy Ordered Not to Touch Secret Account : Sheriff: Judge orders $680,000 seized in drug raids to be placed in a trust fund, where neither Duffy nor the county can spend any of it until a Nov. 27 hearing to decide who controls the money.

Sheriff John Duffy, who opened a secret bank account for drug forfeiture money two months ago to bypass restrictions set by the San Diego County Board of Supervisors, cannot touch the nearly $700,000 in estimated deposits he has accrued, a Superior Court judge ruled Friday.

Judge Harrison Hollywood also ruled that the county cannot place the money in its treasury--as it had hoped--before a Nov. 27 court hearing to determine who legally controls the funds.

In the meantime, Duffy has been ordered to write a check covering the full amount of the secret bank account--estimated at $680,000--when he returns to work next Tuesday and must deposit the money with the Superior Court’s trust fund.

Duffy is at a law enforcement conference in Hawaii and is unable to make the transfer from the account before he returns. Only Duffy is authorized to transfer the money, his attorney said at Friday’s hearing.

The secret bank account has been a source of controversy since Duffy admitted three weeks ago that he deliberately kept the money out of the county treasury so he could control how it is spent.

He has not yet detailed how much he has spent or what he bought with the money. He declined to provide the information to The Times, which made a request under state and federal public records laws. Duffy argued that bank records are private, even though the Sheriff’s Department is a public agency.

On Friday, county attorneys asked Hollywood for a temporary restraining order that would keep Duffy from spending any more money. County counsel Andrew J. Freeman said he feared Duffy might try to spend some of the funds before he leaves office Jan. 7.

Hollywood said he would not permit the money to be transferred into the county treasury until the hearing because he didn’t want the county to spend it either.

After the hearing, Janet Houts, the sheriff’s attorney, said she will probably seek a restraining order next week to keep the county supervisors from spending any of the drug funds already deposited in the county treasury.

As of June 30, the department had collected $3.7 million, spent $1.8 million, plans to spend $270,092 and still has $1.6 million. Of the amount it already has spent, the department has paid for portable radios, video production equipment, computers, a portable copier, a laser printer and other items.

Houts argued Friday, as Duffy has argued in the past, that the federal money does not belong to the county and that supervisors have no authority to spend it.

Further, she said, the county’s decision last summer to spend $404,000 of drug funds for jail security measures instead of laptop computers--as Duffy wanted--violated federal drug fund spending guidelines.

Houts said Duffy checked with the U.S. attorney general’s office, the Department of Justice, Dist. Atty. Edwin Miller and his own private attorney and was told that there was nothing illegal about setting up the secret fund, which he established Sept. 5.

In a letter distributed by the Sheriff’s Department at Friday’s hearing, Duffy said the department could be held liable for the money he claims the county misspent. At worst, the U.S. attorney general’s office could cut the Sheriff’s Department out of the program entirely, Duffy said.

County attorneys said they are not yet prepared to argue over how the money has been spent. For now, they want the money returned to the treasury after the Nov. 27 hearing.

In his request for a temporary restraining order, county counsel Freeman said a state statute and county ordinance require that “each officer of a county . . . authorized to collect money shall pay into the county treasury all money collected . . . that is payable into the treasury.”

On Friday, Freeman and Chief Deputy Attorney Diane Bardsley asked Hollywood that Duffy not only deposit the proceeds of the secret bank account into the county treasury, but that he provide a full accounting of all the funds he received and spent after July 1, 1990.

“We don’t know how much he spent, but we want what is left,” Freeman said. “At some other time, we’ll deal with getting back what he spent. For now, we got enough to protect the money pending final resolution of the matter.”

After Friday’s hearing, Houts said Duffy plans to make the expenditures from the fund public next week. She said she does not know how much was in the secret account, what had been spent, or whether Duffy planned to spend the rest of the money before he leaves office.

The U.S. attorney general’s office in San Diego said it had distributed $318,865 to Duffy’s department between July 1 and Sept. 30. Last week, the office said it had distributed another $361,704, for a total of $680,569.

Duffy has spoken only in the most general terms about how he spent the money, saying he shared some of the seized drug proceeds with other law enforcement agencies, such as the district attorney’s office, which helped with related investigations and prosecutions.

Many believe that the discovery of the secret fund in the weeks leading up to Tuesday’s sheriff’s election helped defeat Assistant Sheriff Jack Drown, whom Duffy had endorsed. Sheriff’s Capt. Jim Roache, who ran a strong anti-Duffy platform and criticized the secret fund, won the office by nearly 60,000 votes.