NEWS ANALYSIS : Public-Fund Scandals Strain Public’s Trust : Government: Recent O.C. incidents could darken the taxpayer’s already dim view of politicians, officials feel.

Still reeling from a quick succession of scandals over the use of public funds in Orange County, political leaders and activists agree that the incidents could jeopardize the public’s already shaken trust in government.

Politicians “always say they have no money to do anything--then we find the money is going into the pockets of corrupt officials,” said Jan Vandersloot, who has been active in local environmental affairs for years.

“The taxpayers are getting ripped off basically, and the problem is that these people are really not being held accountable,” he said. “The fox is guarding the chicken coop.”

Vandersloot’s concerns aren’t new, but they are buttressed by recent events in Orange County. Consider that in the last three weeks alone:

* Newport Beach investment adviser Steven D. Wymer was indicted on security fraud charges for allegedly pilfering $7.1 million from an account he managed for the city of Orange. He has pleaded innocent to charges of absconding with more than $100 million from cities across the country.

* Newport Beach Utilities Director Robert J. Dixon was arrested on charges of embezzling $1.2 million in city funds by forging documents and checks. His arraignment is scheduled for Jan. 31.

* More than a dozen former officials in Huntington Beach and Anaheim were chastised by state auditors for pension “spiking”--inflating their last year’s salaries artificially and thus raising their lifetime pension benefits. One former Anaheim city manager increased his salary by nearly $63,000.

No criminal charges were filed in the pension cases, but state Controller Gray Davis is calling for jail terms and penalties in the future to punish those who “pig out” on the public pension system.

“I think everyone in Orange County is upset about this,” Irvine Mayor Sally Anne Sheridan, county president of the League of California Cities, said of recent events. “There are many mayors who are saying: ‘Could this happen in our city?’ I know that was my first reaction.”

Huntington Beach Mayor Peter M. Green points out that the “pension spiking” cases in his city and others are different than the Dixon and Wymer cases because they involve “ethical and moral,” rather than legal, questions.

But the distinction may be blurred in the public eye.

“I think there’s a level of indignation there. . . . And each one of these (cases) contributes to some extent to an erosion of public trust--rightly or wrongly,” Green said.

To some political observers, the series of scandals hearken back to the late 1970s in Orange County, when three county supervisors were toppled by charges of campaign finance abuses, and several dozen other public officials were indicted on public corruption charges.

Charges of misusing public funds have arisen periodically in Orange County since then.

Three Orange Unified School District board members were convicted in the early 1980s of taking kickbacks.

Last year, several members of the Orange County Employee Retirement System were criticized by county officials for taking an expensive junket to Europe to consult with economic advisers.

But rarely have the accusations come in such rapid succession as in the past several weeks.

“I do think it’s unusual that you have this many allegations coming out all at once,” said Deputy Dist. Atty. Wallace J. Wade, who until last year headed the prosecutors’ section that handles public corruption cases.

“But with the size of government and the large amount of money available, there’s always the temptation for some folks to take money,” Wade said. “The more agencies you have, the more cities created, it requires more vigilance to keep a check on these kinds of activities.”

Some officials are worried about the cumulative effect that the recent cases may have on the public’s attitude toward government.

“These things always have a sort of smudging effect on the whole face of government,” said Board of Supervisors Chairman Roger R. Stanton.

A series of public polls in Orange County in recent years have shown a high level of mistrust of government officials, and experts say the recent series of events can’t help that trend.

“For a public that is already skeptical about politicians and the use of their public funds, this can only further damage the public’s attitudes toward elected leaders,” said Mark Baldassare, a UC Irvine social ecology professor.

Added Prof. Henry Pontell, a criminologist at UC Irvine who has studied white-collar crime: “The bottom line in all of these (local) cases is an abuse of public trust.

“People are shaking their heads, saying: ‘God, what’s going on?’ It undermines a lot of what we believe,” Pontell said. But “this type of thing is really inevitable if we refuse to squarely deal with it . . . and just wait for the lid to blow off.”

For some, the lid blew off last week in Orange County.

For Newport Beach resident Vandersloot, an environmentalist who attends council meetings regularly, the Dixon scandal and other recent events have confirmed an already cynical view of government.

In the view of Orange city activist Carole Walters, the alleged loss of more than $7 million in municipal funds entrusted to money manager Wymer could jeopardize crucial city services. “I blame the person in charge--the city manager or whatever,” she said.

And for Curtis Stricker, an activist in Anaheim, the city’s approval of what state auditors describe as a questionable pension plan for former City Manager William O. Talley confirms what Stricker always thought about local politicians: Don’t trust them.

“The way they do things is corrupt,” said Stricker, who is president of a homeowners’ association in Anaheim. “It’s legal, but they play it just within the lines every time. They should all play tennis--they’d be good at that.”

Such broad-brushed attitudes may be unfair, some politicians suggest.

“So many people are turned off by government when they pick up the paper and see the stories about Wymer and this Newport Beach guy,” said Anaheim Mayor Fred Hunter, whose city was hit with the “pension spiking” accusations from the state.

“The people are blaming all of us,” he said. “There is a real frustration out there.”

But Bill Mitchell, a Tustin attorney who is chairman of the Orange County chapter of Common Cause, a government watchdog group, said politicians have to shoulder the blame for public discontent.

Unlike many of those involved in past scandals, Mitchell noted, Dixon, Wymer and most of the alleged pension abusers were not elected officials but rather professionals hired by the cities to perform various services.

“The problem here is not the politicians--it’s the people the politicians have hired to conduct government,” Mitchell said.

“The problem is that the elected officials are not supervising government the way they’re supposed to,” he asserted. “They’re spending too much time raising campaign funds and getting reelected.”

Some officials predict that the current series of incidents--particularly the Dixon affair--could prompt positive change through tougher oversight of public funds.

“Revelations of this sort are the best medicine,” Supervisor Stanton said.

But in the maze of bureaucracy that constitutes municipal governments today, even the most diligent oversight can’t stop a clever criminal, some of the county’s top auditors said.

“If somebody really wants to make off with some money and they’re smart enough, they can get away with it,” said Chuck Hulse, chief deputy auditor-controller for Orange County. “It can happen in any organization.”

Is public graft in fact becoming more common?

No hard statistics are available to help answer the question.

Deputy Dist. Atty. Guy Ormes, who heads the section specializing in public corruption, says his investigators are conducting no other inquiries involving issues such as those that have surfaced locally in recent weeks.

He hopes that is a good sign. “It’s the kind of thing that doesn’t come up that often and I hope--maybe I’m being naive--that that’s because it doesn’t happen that often.”

Newport Beach City Manager Robert L. Wynn, who hired Dixon as a supply clerk 17 years ago and helped handle the fallout last week over the allegations against Dixon, shares Ormes’ assessment.

“We’ve still got a bushel full of apples with 99 good ones and one bad. . . . I agree the public perception of public officials is worse today than it was 35 years ago when I started out, but that didn’t just come Monday afternoon with Bob Dixon,” Wynn said.

“Whenever you have people and money and ambition and ego,” he said, “you’re going to have problems like this.”

Times staff writer Kevin Johnson contributed to this report.

Problems with Public Money

During the past six months, a variety of alleged swindles, scandals and questionable practices have pecked away at the trust taxpayers place in those who operate Orange County governments.

* Investment Scandal: $7.1 million

The issue: The city of Orange is out as much as $7.1 million in an alleged investment swindle orchestrated by Steven D. Wymer, a Newport Beach consultant.

What’s happened: Wymer has pleaded innocent to federal charges.

* Embezzlement Charges: $1.2 million

The issue: As much as $1.2 million has allegedly been siphoned from Newport Beach city accounts by Utilities Director Robert J. Dixon.

What’s happened: He faces criminal charges and is being held in Orange County Jail. Arraignment is set for Jan. 31.

* Pension ‘Spiking’: $100,000

The issue: Anaheim and Huntington Beach officials have been blasted for jacking up the salaries of some employees to boost their pensions. More than $100,000 in disputed compensation is involved.

What’s happened: The state controller wants to ban the practice.

* Travel Expenses: $5,000

The issue: Managers of the Orange County Employees Retirement System have been criticized for $5,000 in personal expenses--from fancy dinners to opera tickets--incurred during a European trip.

What’s happened: Auditors refused to pay the tab, and travel policies were tightened.

Voice of Concern:

One Mayor’s Reaction

“There are many mayors who are saying: ‘Could this happen in our city?’ I know that was my first reaction.” --Irvine Mayor Sally Anne Sheridan