Ethics Agency Sends Signal of New Era in City : Government: Panel is winning praise for its aggressive probe of city attorney’s office.

The Los Angeles Ethics Commission’s aggressive criminal probe of possible payroll irregularities and political activity in City Atty. James K. Hahn’s office has stirred a mixture of hopes and anxieties about what may be a new era of watchdog activity at City Hall.

No charges have been filed, but the ethics panel already is winning praise from some community activists for the assertive approach it has taken in the inquiry, the panel’s first major investigation.

“We are very pleased and enthusiastic that they are taking their charter to heart,” said Bill Christopher, coordinator of a coalition of homeowner associations from Sunland to San Pedro.

The ethics agency’s head-on tactics, including serving a search warrant on Hahn’s office last month and subpoenaing employees to appear before a county grand jury this week, show a determination to be thorough and independent, other activists said. “It’s the most refreshing thing we’ve seen in City Hall for quite a while,” said Gordon Murley, president of a large federation of Westside and Valley neighborhood groups.

But in a city where investigations of political misconduct have usually been polite and cooperative exercises, some were critical of the ethics agency, particularly its surprise raid on Hahn’s office the morning after Christmas.

Hahn was angered by the search, which included the office of one of his top aides, City Hall sources said. Hahn, who the district attorney’s office has indicated is not a target of the investigation, has declined to comment.

Councilman Nate Holden, a Hahn family friend who spoke with the city attorney after the raid, said: “They should have contacted him. . . . Jimmy (Hahn) is not the subject of the investigation. . . . I would be highly insulted. (You should) tell me about it before you start locking my doors and putting padlocks on my cabinets.”

The raids were an “enormously troubling” signal that search warrants may become a prime investigative tool for the new ethics agency, said one prominent Los Angeles attorney who represents clients at City Hall. “Are these tactics really necessary?” asked the attorney, who spoke on condition of anonymity.

Details of the investigation, which raises political risks for both Hahn and the year-old ethics agency, remain sketchy. City Hall and law enforcement sources say the probe centers on allegations that employees collected pay but failed to show up for work, or did political tasks on city time.

The searches and subpoenas have focused in part on Charles P. Fuentes, Hahn’s chief administrative aide and Southern California vice chairman of the state Democratic Party, The Times has reported. Investigators also are examining the activities of Anthony C. Roland, a computer specialist in Hahn’s office who runs a Democratic campaign consulting business on the side, according to records and law enforcement sources.

Fuentes and Roland have not responded to several requests for interviews.

The Ethics Commission has remained tight-lipped about the scope of the investigation, as well as the evidence it developed in the several months since a tip first was received on a whistle-blower telephone hot line.

“Everybody has to draw their own conclusion, but we are certainly being cautious and careful in everything we do,” said Commission President Dennis Curtis, a USC law professor.

Geoffrey Cowan, who headed a citizens panel that proposed the ethics agency, was among its defenders last week.

“I think (this is) the kind of approach that people were hoping this Ethics Commission would be capable of,” Cowan said. “To treat (reports of official misconduct) like . . . any serious allegation of a crime.”

Cowan, a part-time UCLA law professor, said search warrants and subpoenas have not been common in Los Angeles’ political investigations. But he said they are frequently used by federal investigators, and he cited the recent state capital corruption prosecutions by the U.S. attorney’s office.

Experts on political corruption prosecutions, Cowan said, told his citizens panel in 1989 that search warrants and subpoenas are investigative tools that the new ethics agency would need to be effective.

In this case, the Ethics Commission sought investigation assistance from the district attorney because potential conflicts could arise if the agency sought help from the city attorney’s office or the Los Angeles Police Department. Hahn’s office represents the Police Department.

Since its creation in June, 1990, the ethics agency has struggled to overcome bureaucratic, political and legal obstacles. Many political observers say this high-profile case will be pivotal to the agency’s credibility, partly because it targets employees in a major law enforcement agency.

How the investigation proceeds will also be crucial to Hahn, who hopes to run for higher office. In 10 years in office, he has carefully cultivated a quiet, businesslike image and avoided the taint of scandal. In fact, his office has been a primary watchdog of political misconduct in the city, and Hahn issued a damaging report two years ago that chastised Mayor Tom Bradley for showing an indifference to ethical concerns.

Should wrongdoing be proven, Hahn could be wounded politically even if he is not implicated, Democratic activists said.

“Nobody can escape that it happened on their watch,” said Jim Wood, a county labor leader and party activist.

Fuentes has served as a close adviser to Hahn since helping him win his first bid for public office in 1981. Hahn was elected city controller in 1981 and city attorney in 1985. Aides have said Hahn is considering a run for state attorney general.

In the city attorney’s office, Fuentes oversees most administrative matters for Hahn.

The probe is revolving partly around a small “Research/Public Liaison Unit” under Fuentes that handles such tasks as relations with community groups and responding to constituent inquiries, City Hall and law enforcement sources have said.

There has been resentment of Fuentes and his assistants--all non-attorneys--among the office’s career legal staff, who consider them a financial drain in a period of tight budgets, sources said.

Such community relations operations are common in the offices of elected officials, and often involve politically active aides. Typically, these aides argue that any campaign work is done on their own time, though some of their tasks--such as attending meetings on behalf of their bosses--fall into gray areas that serve both public goals and private political agendas.

For example, Bradley has hired aides to do liaison work with various ethnic and business communities. Some of those aides also have been active as campaign workers and political fund-raisers.

In the case involving the city attorney’s office, investigators are pursuing allegations that employees drew city pay while performing political tasks, or never showed up for work, sources have said. Such misuse of city resources could be prosecuted as a felony.

One grand jury subpoena obtained by The Times shows that investigators are seeking payroll records for Fuentes and Roland, a computer specialist who worked in Fuentes’ public liaison unit.

Roland has developed software for a new timekeeping system in Hahn’s office, helped select computer equipment and been a trouble-shooter for computers in branch offices, according to Hahn’s spokesman, Mike Qualls. Qualls said Roland, who joined the office in 1989, was assigned to the automation system section, but worked part time directly under Fuentes.

Privately, Roland has been a computer consultant, setting up systems to track contributors and supporters for such Democrats as former San Francisco Mayor Dianne Feinstein and Los Angeles City Councilman Michael Woo, who is considering a run for mayor. In the last year, Roland has also set up a computer system for one of Hahn’s political committees, though Qualls said that was not done on city time.

At least one client, former state Democratic Party Chairman Peter Kelly, was surprised to learn that Roland was a Hahn employee and had a City Hall office. “I was under the impression he was a consultant,” said Kelly, who periodically has used Roland to solve computer problems at his law firm.

City Hall sources familiar with Roland’s work schedule have said he sometimes failed to show up at his office for days or weeks at a time. Also, a supervisor in automation systems once refused to sign his time card because the supervisor could not verify that Roland had worked the hours and overtime claimed, sources said.

Payroll records obtained from the city attorney’s office showed that Roland, who received about $53,000 last year, worked an irregular schedule. Sometimes he took off blocks of unpaid hours, or worked for the city at home. He also took nearly 30 days of sick leave in the first 10 months of the year, before he switched to a half-time schedule.

Fuentes approved most of Roland’s time cards in 1990 and 1991.

Defenders of Hahn and Fuentes have suggested that the investigation began with complaints from unhappy co-workers. “If it’s a whistle-blower, you can bet your bottom dollar it’s a disgruntled employee,” Holden said.

Memos obtained from the city attorney’s office show that Roland at one time had been at odds with the supervisor who refused to sign his time card. The two disagreed on the type of computer equipment the office should purchase, with Roland arguing that his choice would reduce costs significantly.

The investigation has sounded an alert for city officials that their conduct is under scrutiny.