D.A. Declines to Investigate Loans Given City Manager : Legal review: Officials say they have no evidence suggesting criminal violation by San Juan Capistrano’s Stephen B. Julian.
Officials with the Orange County district attorney’s office declined on Friday to investigate municipal loans made to San Juan Capistrano City Manager Stephen B. Julian, saying that they have no evidence suggesting any crime was committed.
The district attorney’s decision was announced in a one-page letter to San Juan Capistrano Mayor Kenneth E. Friess. Two weeks earlier, Friess had written to Dist. Atty. Michael R. Capizzi requesting the review on behalf of the City Council.
For the record:
12:00 a.m. March 1, 1992 For the Record
Los Angeles Times Sunday March 1, 1992 Home Edition Part A Page 3 Column 4 Metro Desk 5 inches; 162 words Type of Material: Correction
Stephen B. Julian, city manager of San Juan Capistrano, filed a lawsuit last month against The Times and several of its employees for libel. The lawsuit claims, in part, that the articles and editorials published during January and February, 1991, accused Julian of illegal and corrupt conduct in his financial dealings with the city of San Juan Capistrano.
The Times wishes to make clear that the articles did not state and were not intended to imply that Julian is a corrupt public official. Additionally, the articles did not state, nor were they intended to imply, that Julian participated in any illegal activity or that any of the terms and conditions of his employment were illegal.
As The Times reported on March 9, 1991, the Orange County district attorney’s office declined to investigate Julian’s dealings with San Juan Capistrano, stating that it had no evidence suggesting that any crime had been committed.
Julian contends that the articles harmed him and caused him and members of his family to be the subject of harassment. The Times does not condone or encourage any harassment of Julian or his family and regrets any harm that may have occurred.
“Based on the limited materials you have presented us, there has been inadequate evidence presented to justify the belief that further investigation would produce sufficient evidence of a criminal violation,” wrote Chief Assistant Dist. Atty. Maurice L. Evans.
Julian and members of the council who served when the loan transactions occurred have repeatedly described the events as entirely proper. Friess said the district attorney’s decision validates “what I’ve been saying from the beginning: There never was an issue there. There isn’t one now.” Julian could not be reached Friday for comment.
The council’s request that the district attorney review the loan transactions followed an article in January by The Times reporting that Julian had obtained five city loans since 1981, incurring debts totaling $398,235.
Julian did not repay three of the loans within the time that he had originally promised to and, as of February, still owed the city about $80,000, at no interest. Julian’s most recent employment contract could free him from repaying “any” financial obligations to San Juan Capistrano if the city terminates him for reasons unrelated to misconduct or “willful or habitual breach of duty.”
Evans explained Friday that his office’s decision was made after reviewing materials submitted by Friess, including news articles, a prepared statement issued in January by Julian and Julian’s most recent employment contract. Evans said that his staff also had obtained Julian’s most recent yearly income disclosure statements.
Evans added, in his letter:
“The jurisdiction of the district attorney’s office is limited to criminal matters. We, therefore, express no opinion on whether your (Friess’) materials show violations of any California laws which have no criminal penalties, or on management practices and judgment as shown by the materials.”
Evans also said his office “would appreciate being furnished with” the reports of outside law and accounting firms that the City Council voted last month to hire in the event the district attorney declined to investigate.
“Our opinion above is an initial one,” Evans concluded, “and could be re-examined based on new information.”
Friess, however, said that he does not see the need for the outside law review or audit, noting that the studies would cost the financially strapped city about $15,000.
“Quite frankly, at this point in time, I’m somewhat hesitant to spend any more money on any more investigations,” Friess said, adding that he would nevertheless follow the will of his colleagues.
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