Ethics Panel to Appeal Court Ruling Curbing Its Investigative Power : City Hall: Commission official says charter requires the agency to pursue any possible criminal violations.

With the city Ethics Commission defanged by a court decision revoking its power to investigate alleged felonies, a commission official Thursday said it intends to appeal the ruling on grounds that the City Charter clearly requires it to pursue any possible criminal violations.

Meanwhile, the ruling has placed in question at least five investigations involving potentially serious violations of state and city law relating to government ethics violations, said Ben Bycel, executive director of the year-old, five-member commission.

At issue is Superior Court Judge Robert H. O’Brien’s recent decision to bar the panel from participating in a felony investigation into alleged payroll irregularities in the office of City Atty. James K. Hahn.

O’Brien’s decision also said the Ethics Commission’s investigatory powers were limited to misdemeanors, not felonies.

“For some reason the judge went overboard and created a cloud over some of our authority,” Bycel said. “Next week we are going to ask for an immediate state appellate court review of any suggestion or hint by the judge that somehow the authority of the commission in general should be limited.”

If the appeal fails to overturn the ruling, Los Angeles City Council members, including Council President John Ferraro, said Thursday they will ask for a ballot initiative seeking to restore the panel’s full investigative powers.

“If there is something about the language of the charter that does not give them certain powers, as implied by the judge,” Ferraro said, “I’m willing to bring a motion for a ballot initiative that would give them that authority.”

Councilman Michael Woo agreed, saying: “If the appeal fails, we should go back to the voters to close possible loopholes and reassert the power of the commission to vigorously investigate all ethics violations.”

But Councilman Zev Yaroslavsky said it is not clear whether a charter amendment would be “enough to clarify the issue.”

“It may take state legislation to give a city agency the right to investigate felonies,” Yaroslavsky said.

Bycel said he does not believe a ballot measure will be necessary.

“The charter clearly says we have investigative powers in alleged violations of state law,” Bycel said, citing a section of the law that says the panel’s duties include auditing “campaign statements and other relevant documents and investigate alleged violations of state law.”

But that provision was not cited in O’Brien’s decision that the commission exceeded its authority when its legal adviser assisted Los Angeles County Dist. Atty. Ira Reiner’s office in a criminal investigation into alleged payroll irregularities in the city attorney’s office.

In his 10-page ruling, O’Brien said the district attorney’s office could proceed on its own. But he also expressed concern that an investigation by both agencies had resulted in “a disjointed, mixed-up investigation that leaves all concerned . . . confused as to who is investigating what and for what purpose.”

The commission’s aggressive investigation started in December when it served a search warrant on Hahn’s office and subpoenaed employees to appear before a county grand jury.

Hahn was angered by the search, which included the offices of Charles P. Fuentes, one of Hahn’s top aides and vice chairman of the state Democratic Party, and Anthony C. Roland, a computer specialist who operates a private consulting business serving top Democratic candidates.

The investigation, which started with a tip to the 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.

Attorney Neil Papiano, who is representing Fuentes in the case, argued that the commission had exceeded its authority and was not following proper procedures in conducting what could be a felony investigation.

Papiano was out of town Thursday and could be reached for comment.

“Right now,” Bycel said, “if we get a call on our whistle-blower hot line from someone saying they know of false campaign statements for a candidate involving hundreds of thousands of dollars, we have to say: ‘Sorry. We can’t investigate because it is a felony. Please go elsewhere.’

“This is an absurd result and can’t possibly be what the people of Los Angeles wanted from ethics reform,” he said.

Lisa Foster, spokeswoman for the political watchdog group California Common Cause, agreed. “The judge is wrong.”

“The decision takes away a potent tool in fighting and investigating political corruption,” Foster said. “Under the judge’s interpretation, the commission can’t investigate anything that may lead to a felony--but that’s exactly what we created (it) to do.”

In a related development, the city attorney’s office has informed the commission that it will withhold a draft of enforcement and investigation regulations for civil cases not involving criminal activity pending a two-week review “of how they hold up in light of O’Brien’s ruling,” Bycel said.

Bycel has asked the city attorney’s office to explain the delay at a commission meeting today.