No Letup in Capital Corruption Probe : Sacramento: The federal investigation, which led to the indictment of a coastal commissioner last week, will proceed to other targets, sources say.

The federal corruption probe that led last week to the indictment of Coastal Commissioner Mark L. Nathanson is proceeding to other political figures without letup, according to sources familiar with the investigation.

Prosecutors have no intention of easing efforts that already have cracked California’s image of corruption-free politics, these sources say, and after six years of work prosecutors have in effect set up a permanent political corruption unit in the federal courthouse four blocks from the Capitol.

Late last week, a federal grand jury charged Nathanson with eight felony counts, contending that the 52-year-old Beverly Hills real estate broker had used his appointed position to demand payments totaling $575,000 from Hollywood figures and others with an interest in Coastal Commission business.

Many turned him down, but Nathanson allegedly collected more than $200,000--much of it in cash--from those he pressured, including “Rocky” producer Irwin Winkler and agent-producer Sandy Gallin, whose clients include performers Michael Jackson and Dolly Parton.

Nathanson’s lawyers argue that the charges are “flawed both factually and legally” and that Nathanson “will be ultimately vindicated of these charges.” They point out that the defendant had no chance to present his side to grand jurors and that the real test will come when the case goes to trial, which is not likely to begin until fall.

Whatever the outcome, however, U.S. Atty. George L. O’Connell makes it clear that he is determined to continue investigating political corruption in state government.

“To the extent there are allegations, we will continue to pursue them,” O’Connell said. “We are committed to doing that.”

O’Connell, 42, is a seasoned prosecutor and he has been involved in the Sacramento-based corruption investigation since it was launched in 1986, when he was an assistant U.S. attorney in the office he now directs.

“He is very good, very smart and very tough,” said a defense attorney who has faced him in court.

The prosecutor refuses to identify targets of the investigation or when charges against additional figures will be made.

But there are a number of public signs of where O’Connell is heading.

Former state Sen. Alan Robbins is continuing to cooperate with investigators, even as he prepares to enter federal prison next month in the wake of his guilty plea to felony charges of racketeering and tax evasion.

The San Fernando Valley Democrat implicated several others when he resigned from the Senate and entered his plea in federal court in November. He specifically said he took $17,500 in campaign contributions from one of Sacramento’s most powerful lobbyists, Clayton R. Jackson, in exchange for helping Jackson’s clients with legislation.

In addition, Robbins said Jackson arranged to have his clients pay $27,500 to a Robbins campaign committee in 1988. He said the money was forwarded to former state Sen. Paul B. Carpenter, at the time a member of state Board of Equalization, and eventually was paid out for Robbins’ benefit.

Sources familiar with the probe say that Jackson is a top target of the federal investigation. In November, his office was searched by FBI and IRS agents, who removed boxes of bill files as well as extensive computer records.

Jackson’s attorney, Donald H. Heller, has repeatedly said that his client has done nothing improper.

Meanwhile, Jackson continues as a lobbyist in the Capitol, representing a long string of clients.

Carpenter was convicted in September, 1990, on four counts of extortion, racketeering and conspiracy--including demanding $20,000 from an undercover FBI agent for help with a bill that was part of a government sting operation.

He was sentenced to 12 years in prison. That would have ended the prosecutors’ interest in Carpenter, who was forced to step down from the Board of Equalization as a result of the felony convictions, but last month an appellate court threw out the convictions because the jury had not received proper instructions.

O’Connell has vowed to retry the Democratic politician.

The retrial could be many months or even years away, however, because of a further appeal filed by Carpenter’s attorneys, who are hoping to have the case dismissed.

Meanwhile, Robbins and others have been cooperating with a new grand jury inquiry into Carpenter’s conduct that could bring separate charges against him, sources say.

Even before Robbins stepped down from the Senate he had been cooperating with federal authorities--and even wore a hidden recording device for several months. That has prompted speculation that even as he goes to prison, he will become a key witness in political corruption trials of other lawmakers. But no figures have been identified.

Still unresolved are investigations into the conduct of two other lawmakers who were caught up in the sting--Assemblyman Pat Nolan (R-Glendale) and Sen. Frank Hill (R-Whittier). Both legislators have vigorously denied any wrongdoing.

Karin L. Watson, a former Nolan aide, still awaits sentencing after pleading guilty to extortion 2 1/2 years ago. Periodically, the federal district court in Sacramento schedules her for sentencing--the next date is May 18. But in each case, her sentencing has been delayed pending the completion of her cooperation in the corruption investigation.

Several sources say the investigation of Nolan and Hill is far from complete. Nolan took campaign contributions arranged by Watson from undercover agents posing as Southern businessmen in 1988. Hill accepted an honorarium from the agents that year as well.

Prosecutor O’Connell has refused to comment on the Nolan and Hill investigations. He bristles at the suggestion that as the appointee of a GOP President, he has shied away from prosecuting Republicans.

“We will follow allegations wherever they lead us,” he has said.

Sources say that with limited staffs, prosecutors in the U.S. attorney’s office, as well as investigators with the FBI and IRS, cannot bring all the investigations to an end as quickly as they would like. The statute of limitations on political extortion cases is five years, and O’Connell may be forced to delay resolving the investigation of some individuals until the end of that period. In the case of Hill and Nolan, that would mean 1993.

For the most part, prosecutors have been successful in the cases they have brought so far, winning convictions of Carpenter and former state Sen. Joseph B. Montoya (D-Whittier), who is serving a 6 1/2-year sentence at the federal prison camp near the Mojave Desert town of Boron. Last year, former legislative aide Tyrone Netters and lobbyist Darryl O. Freeman were also convicted on charges of extorting payments from undercover agents.

The Sacramento-based corruption investigation is no longer working in isolation. Federal grand juries in Los Angeles have been conducting their own investigations of Robbins and Nathanson. Robbins has been trying to work out a plea bargain agreement on a bank fraud charge in Southern California. And the Los Angeles U.S. attorney’s office is investigating other allegations about Nathanson’s abuse of his appointed offices.

Also, the Los Angeles County grand jury is continuing its own investigation of allegations that Nathanson violated state law by failing to disclose all of his income and business interests on state-required annual financial reports.

Meanwhile, Nathanson’s indictment has led to renewed demands that Assembly Speaker Willie Brown (D-San Francisco), who appointed him in 1986, remove him from the coastal panel.

Democratic Assembly members Tom Hayden of Santa Monica and Terry B. Friedman of Los Angeles have openly called on Brown to force Nathanson off the commission.

Friedman said that he talked to the Speaker and that he believed that Brown was taking the request “very seriously.” But a spokesman for Brown said the Speaker would have no comment on the matter.

Coastal Commission officials voiced concern that Nathanson’s indictment would tarnish the image of the agency, which was set up 20 years ago to protect the state’s shoreline from overdevelopment and provide public access to beaches.

Peter Douglas, the commission’s executive director, said the indictment is “not something that helps in terms of public confidence and image.” He maintained “it would be grossly unfair and wrong to somehow characterize or taint all the good work of the commission with this incident.”

At the same time, Douglas, who has had differences with Nathanson, described himself as “shocked by the breadth of the allegations.”