Hausdorfer to Pay Fines for Violating Interest Law : Government: San Juan Capistrano councilman accepts $2,500 in civil penalties for failing to disclose wife’s earnings with firm working for city.

City Councilman Gary L. Hausdorfer has agreed to pay $2,500 in civil penalties for violating California’s conflict-of-interest law by failing to disclose that his wife earned more than $10,000 from a company that did business with the city.

The district attorney’s office, which investigated Hausdorfer for a year, filed a complaint against him Thursday in Orange County Superior Court, alleging that he had violated the conflict-of-interest provision.

But simultaneously, the office filed a settlement in which Hausdorfer, also a regional transportation commissioner, agreed to pay the $2,500 penalty.

Hausdorfer was vacationing in Europe for the holidays and could not be reached for comment.

But Deputy Dist. Atty. Rosanne Froeberg said Hausdorfer had been extremely cooperative in the investigation.

“He has been very up-front, very forthright,” she said. “He claims he just did not realize he had to declare that income.”

Froeberg said that while Hausdorfer violated the state Political Reform Act by failing to disclose his wife’s income on statements of economic interest for 1988 and 1989, the votes he cast while on the City Council did not represent wrongdoing.

“We conducted a thorough investigation, and we did not find anything that amounted to a conflict of interest,” she said.

But the state Fair Political Practices Commission is examining similar conflict-of-interest allegations against Hausdorfer for failing to report the income.

Under state law, public officials must refrain from decision-making on matters that affect the sources of their own income or the income of their spouses. They must file documents each year, detailing how they and their spouses earn their income.

In December, 1990, The Times reported that Hausdorfer failed to report on his economic disclosure forms the income his wife, Debora, had earned in 1988 and 1989 working for the Keith Cos., a Costa Mesa-based planning and engineering firm that did business with San Juan Capistrano. She is now the company’s director of public affairs.

In a possible conflict of interest, Hausdorfer voted on several items of business pertaining to the Keith firm, including a $304,197 city contract in September, 1990--when Hausdorfer was mayor--in which Keith received $8,000 as a subcontractor.

Admitting that failure to report the income had been “an oversight” and that he might have misunderstood the law, Hausdorfer filed revised documents, reporting that his wife’s income from Keith was $1,000 to $10,000 in 1988 and “over $10,000” in 1989.

Hausdorfer also said he had been unaware that the Keith firm was a subcontractor when he voted to award that project. Froeberg said the district attorney’s investigation bore out that claim.

She said the list of subcontractors on the project was not revealed to City Council members until “very late in the process.”

In other matters pertaining to the Keith Cos., she said, Hausdorfer--along with the other city council members--signed documents authorizing payment to the company for business it did with the city, but they did so in a strictly “ministerial” capacity, as a final rubber-stamp act, after the checks had already been written.