Probe Clears City Attorney Aides of Fraud : Investigation: Reiner’s office finds no evidence that two top assistants to James Hahn did political work while on public payroll. The city Ethics Commission’s role in pursuing the case remains controversial.

Los Angeles County Dist. Atty. Ira Reiner on Monday dropped a seven-month investigation into allegations of payroll fraud in City Atty. James K. Hahn’s office, saying there was no evidence of criminality.

The investigation had focused on the activities 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 also works as a private consultant to Democratic candidates.

The two men had been accused by a tipster of performing political work in Hahn’s office while collecting a city paycheck, a possible felony violation. The allegation was leveled in a call to the whistle-blower’s hot line of the city Ethics Commission, which referred the matter to Reiner’s office.

In a report released Monday, the district attorney concluded that Fuentes and Roland had kept their political and city duties separate. Although their Democratic Party jobs had “created the appearance of impropriety,” the report said, “the evidence obtained in this investigation revealed no actual impropriety . . . and no foundation for filing criminal charges.”

In a prepared statement, Hahn said he was relieved that the district attorney’s inquiry was over after investigators had interviewed 35 people and reviewed 16,000 documents and 500 megabytes of computer data.

But Hahn blasted Los Angeles Ethics Commission Executive Director Ben Bycel for his handling of the case before it was assumed by the district attorney’s office.

“The embarrassment and damage suffered by these employees would have been greatly lessened if . . . Bycel had gone about directing the investigation in a responsible and professional manner,” Hahn said, “rather than through the use of widely publicized search warrants, grand jury subpoenas and news interviews.”

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

Without sufficient staff to handle the potential felony case, Bycel in January notified the district attorney and requested that he conduct an investigation for potential criminal violations of campaign financing, conflicts of interest and governmental ethics.

That same month, in response to a challenge by Fuentes, a Superior Court judge ruled that the commission had overstepped its bounds by allowing its legal adviser to assist in the criminal investigation by the district attorney’s office. The panel’s investigative powers were limited to misdemeanors, the judge said.

In August, however, a state appellate court overturned the ruling, saying the commission had “proceeded in every way in accordance with state law and its express purpose under the City Charter.”

On Monday, Hahn expressed hope that “this sorry chapter is over and will not be repeated.”

“Clearly, the unfounded allegations have been laid to rest once and for all, and the matter warrants no further action by the Ethics Commission,” Hahn said.

But Bycel said in a prepared statement Monday that the district attorney’s decision not to file charges “does not preclude appropriate action by the Ethics Commission.”

“We will closely review the evidence accumulated by the district attorney’s office and determine whether any violation of law occurred,” Bycel said, “which can be dealt with within the scope of the Ethics Commission’s . . . ability to prosecute misdemeanor charges or take other enforcement actions.”

Attorney Neil Papiano, who represented Fuentes in the case, said he was disappointed by Bycel’s threat to renew the commission’s investigation. “There has already been an appropriate investigation,” he said, “and there is no reason for reopening it by a private vigilante group without investigative or law enforcement experience.”

Neither Fuentes nor Roland could be reached for comment Monday.