Results Differ in Political Probes : Investigations: Attorney general’s prosecution of Honig ended in a conviction. A similar case involving an ex-senator resulted in civil settlement.

Within weeks of taking office in 1991, Atty. Gen. Dan Lungren discovered that he had inherited investigations of two political figures. Both involved nonprofit foundations and both involved possible benefit to the wives of the elected officials.

One inquiry was aimed at state Supt. of Public Instruction Bill Honig, a longtime foe of the religious right who had earned the enmity of a Republican governor by lashing out at anyone who opposed more money for public education.

The second case involved former Sen. William Campbell, an Orange County Republican.

The Honig investigation led to an indictment on felony conflict-of-interest charges for using his post to award contracts that benefited a nonprofit educational foundation run by his wife. Honig said the prosecution resulted from “a right-wing cabal,” but he was convicted by a jury on all counts.

Privately, several attorneys associated with former Atty. Gen. John K. Van de Kamp said they agreed with the decision to prosecute Honig.

But these attorneys are critical of Lungren and his top aides for dropping the criminal investigation of Campbell.

Records obtained under the state Public Records Act show that the attorney general’s office under Van de Kamp had begun investigating the annual, nonprofit women’s conference sponsored by Campbell in his home district.

In 1990, the attorney general’s office examined whether the foundation that funded the conference had acted properly in paying out a total of $427,000 in 1987 and 1988 to a partnership owned by Campbell’s wife, Margene, and his Senate district coordinator, Karen L. Smith. At issue was a civil offense: whether the conference had been abusing its nonprofit, tax-exempt status for private gain.

The president of the nonprofit conference’s board was John J. Costello, an accountant, who happened to be Lungren’s longtime campaign treasurer. Because of his ties to Costello, Lungren said he recused himself when he took office in 1991, turning the case over to chief deputy M. David Stirling.

In March, 1991, the head of the department’s criminal division, George Williamson, opened a criminal investigation into allegations that Campbell had violated the state embezzlement statute by using his Senate staff and offices to work on the conference. Stirling said the state’s criminal conflict-of-interest statute did not apply because Campbell awarded no state contract to either the nonprofit foundation or his wife.

Four months later, after only two of 12 possible witnesses had been interviewed, the criminal case was ordered closed.

The deputy attorney general on the case, W. Scott Thorpe, wrote in a July, 1991, memo that his supervisor had informed him “that the attorney general had personally reviewed the allegations and had concluded that the investigation should be terminated.”

But Stirling said that Thorpe’s memo was in error and that Lungren, having disqualified himself, had nothing to do with the decision. Stirling said that he and Williamson concluded that even if all the allegations were true and that Campbell’s staff had worked on the conference on state time, “it was not a violation of law to do that.”

Thorpe told The Times that the memo reflected what he was told.

In July, the attorney general’s office announced that Margene Campbell and Costello had agreed to pay $30,000 to settle a civil lawsuit. The amount was less than the $53,000 sought by the deputies assigned to the case, according to records. But it represented a reasonable settlement of what could have been a difficult case, aides to Lungren said.