Sheriff, County Reach Accord Over Drug Funds : Compromise: Tentative agreement settles lawsuit arising from former Sheriff John Duffy’s secret $1-million account.

Resolving a thorny issue that produced a legal showdown between the San Diego County Sheriff’s Department and the Board of Supervisors, a tentative agreement has been reached in a lawsuit stemming from former Sheriff John Duffy’s secret $1-million checking account for drug forfeiture money.

In a decision expected to be formally approved within two weeks, both new Sheriff Jim Roache and the supervisors have tentatively accepted a proposal that would allow the sheriff to retain discretion over use of funds from seized drug proceeds while simultaneously enhancing the board’s oversight over those expenditures.

“It’s an excellent compromise that allows the sheriff . . . to assess what the most critical needs are for these funds while recognizing that the board has a legitimate oversight role to play,” Roache said. “Both sides can feel very satisfied.”

County supervisors tentatively accepted the settlement in a closed session this week, and lawyers on both sides said that final details are expected to be worked out in meetings next week.

The dispute came to a head in November when it was disclosed that Duffy, in violation of an ordinance requiring that the drug funds be deposited in the county treasury, had instead set up a secret account in order to bypass restrictions set by the board.

Those guidelines were adopted by the board last spring after the supervisors objected to Duffy’s proposal to spend more than $450,000 on computers, money that the supervisors preferred to allocate to improve security at the county’s escape-prone jails.

After the board sued Duffy, Superior Court Judge Harrison Hollywood ordered the sheriff to deposit the money from the secret account into a court-controlled trust account. The fund, which at the time totaled $1,044,429, has since grown to about $1.8 million, county officials said Thursday.

Urging the two sides to settle their differences without a trial, Hollywood assigned retired Superior Court Judge William Yale to mediate the dispute. It was Yale who crafted the compromise that led to this week’s tentative settlement, which calls for the drug funds to be deposited in the county treasury and for the sheriff’s proposed expenditures to appear on the supervisors’ normal docket for review.

“As long as the sheriff is diligent and reasonable, his decisions will not be challenged by the board,” said Supervisor John MacDonald, the board’s chairman. “I think just knowing that this information will be made public will be sufficient to make sure that he’s careful about how the money is spent.”

The question of who controlled the money and property that law enforcement agencies seized from drug dealers and other criminals was a longstanding subject of dispute between Duffy and the board, one that badly strained their relationship during the final months of Duffy’s often stormy 20-year tenure.

Until he lost control of the funds last July, Duffy had been dutifully depositing the federal drug money into the county treasury. Even so, there were occasional disputes over use of the funds--most notably when county auditors and attorneys investigated Duffy’s use of nearly $70,000 in drug funds to pay attorney’s fees in civil suits filed by six deputies whom he had disciplined for their involvement in the activities of the so-called “Rambo Squad” at the County Jail in El Cajon.

When the supervisors amended the ordinance governing use of the funds to require that Duffy secure board approval before spending them, the sheriff angrily claimed that the board had overstepped its authority.

Though Duffy later argued that he established the secret account to prevent the board from spending the funds improperly, the supervisors saw the sheriff’s action as an attempt to avoid board and public scrutiny over the money’s use.

“The problem was never about use of the funds--it had to do with (Duffy’s) concern for turf protection,” Supervisor Susan Golding said. “We always understood very clearly that these funds were to be used for law-enforcement purposes. It’s just that the board felt that jail security was more important than laptop computers.”

Concurring, Roache said that, during Duffy’s regime the issue “digressed into more of a personality conflict than a substantive debate.”

“I’m more comfortable with the board, and they’re more comfortable with me, and that’s why we were able to work this out,” Roache said.

Roache’s attorney, Everett Bobbitt, was blunter in his assessment.

“If Duffy were still sheriff, I don’t think we’d have an agreement,” Bobbitt said. “Once he was out . . . things moved rapidly to a resolution.”

During the negotiations, some money from the assets forfeiture fund was spent with court approval to meet a previous financial commitment to the Homicide Task Force investigating of more than 40 prostitute killings, Bobbitt explained.

In the interim, other law-enforcement needs have essentially been on hold, including a $258,000 pledge to match the city’s contribution toward creation of a laboratory where investigators will be able to use so-called DNA “genetic fingerprinting” techniques. That lab will be operated jointly by the Sheriff’s Department and San Diego Police Department.

“Believe me, once the freeze is lifted, there will be no trouble spending the money,” Roache said. “And I think this ensures that the Sheriff’s Department and the board will be in line on how it’s spent.”