Keating Prosecutors to Probe Hahn’s Office : Ethics inquiry: Reiner says his choice of top investigators underscores priority of case. D.A. says there is no evidence against city attorney but ‘no one is being ruled out’ as a target.

Underlining the seriousness of the case, Los Angeles District Atty. Ira Reiner on Friday said the prosecutors who won convictions of former Lincoln Savings & Loan chief Charles H. Keating Jr. have been assigned to the investigation of alleged payroll irregularities in the city attorney’s office.

Reiner, whose office had previously indicated that City Atty. James K. Hahn was not a target of the investigation, also said, “no one is being ruled out.”

“That is not to suggest there is evidence at the moment that would indicate there is any wrongdoing on his (Hahn’s) part,” Reiner said. But he added: “The investigation will go wherever the information leads it.”

Hahn’s spokesman, Mike Qualls, responded that the city attorney “has been cooperating fully with this investigation and he will continue to cooperate fully.”

Reiner’s announcement came at a meeting of the five-member Ethics Commission--three days after a Superior Court judge temporarily halted the commission’s investigation into possible wrongdoing by employees in the city attorney’s office.

On Jan. 24, Judge Robert H. O’Brien is scheduled to hear arguments on a request for a permanent injunction.

“We will be stepping in now,” Reiner told the commission. “I have assigned to the investigation, and if warranted to the prosecution . . . the same team that so thoroughly, carefully and professionally investigated Charles Keating,” Reiner said. “This sends a clear message that we take this investigation as seriously as the Ethics Commission does.”

Reiner said the commission “has done an outstanding job” and will continue to cooperate with his office, although the extent of the cooperation will be determined by the court hearing on the ethics agency’s powers.

Heading the team are Deputy Dist. Attys. William Hodgman and Paul Turley, who faced an uphill battle in Keating’s long, complex and controversial Los Angeles Superior Court jury trial.

Keating was convicted Dec. 4 on 17 of 18 counts of securities fraud stemming from the sale of his firm’s bonds at Lincoln Savings & Loan branches.

Ethics Commission Executive Director Ben Bycel said Reiner’s action “clearly punctuates the fact that all law enforcement agencies are taking this very seriously.”

“We are not emasculated in any way, shape or form--at this point there is a court order and we will continue to obey the court order,” Bycel said. “This is only round two and this is definitely going to be a 10-rounder.”

The commission’s inquiry became public in December when it served a search warrant on Hahn’s office and subpoenaed employees to appear before a county grand jury. The investigation, which began with a tip to the Ethic Commission’s new whistle-blower hot line, centers on allegations that “ghost employees” performed political tasks on city time, or failed to show up for work.

Records and interviews indicate the investigation is focusing partly on Charles P. Fuentes, one of Hahn’s top aides and vice chairman of the state Democratic Party, and Anthony C. Roland, a city computer specialist who runs a private consulting business serving top Democratic candidates.

Attorney Neil Papiano, who is representing Fuentes, has argued that the Ethics Commission was exceeding its authority and not following proper procedures in conducting what could be a felony investigation.

On Friday, Papiano said the assignment of Reiner’s top prosecutors to the case is “a welcome addition.”

“We have always said . . . there is no problem with any legally constituted investigation--but the Ethics Commission did not do that,” Papiano said. “Reiner should have the people who have the best legal knowledge on the case so that we don’t get into this problem again.”

Brian O’Neill, Roland’s attorney, predicted that “a fair investigation will disclose that Mr. Roland never was paid by the city for anything other than city work.” But he expressed concern that the inquiry, the Ethics Commission’s first major investigation, “originated as a political case” and a “press event” to bolstered the panel’s credibility.

He said he believed that the case was initiated by a former Roland colleague who had a disagreement over what type of computer system to install in Hahn’s office. Records show that Roland had such a dispute, and Qualls said that was the reason Roland was reassigned to a special unit that reported directly to Fuentes.

Bycel said it is “absurd” to suggest that the case is politically motivated.

“The caliber of ethics commissioners and their staff totally belies any accusation of political motivation,” he said.

“Unlike some of the individuals involved in this case, I can’t comment on the evidence,” Bycel said, referring to O’Neill’s statements.

“However, if they are so anxious to talk about the evidence, let’s do it in front of the grand jury as soon as possible.”