Edelman to Call for Rail Fund Inquiry : Transportation: The supervisor says he will ask county lawyers to look into charge that money was diverted from account for a Valley transit station.

Los Angeles County Supervisor Edmund D. Edelman said Monday he will ask county lawyers to investigate charges that transportation officials have illegally diverted $65 million from an account set aside to build a North Hollywood Metro Rail station.

The charges were raised in the past week by North Hollywood businessman Guy McCreary and his attorney, Michael Murphy, who allege that the money was taken from a $120-million account and used to complete other segments of the 13.3-mile Red Line subway, in violation of state law.

But Metropolitan Transportation Authority officials deny any wrongdoing, saying the money in the account has only been spent toward construction of the North Hollywood subway line and station, as is required by law.

In letters to the MTA board members, Murphy said an “extensive investigation” unveiled the illegal diversion of funds. He demanded that the money be replaced within 30 days or he would file a lawsuit against the authority.

In an interview, McCreary--who said he expects to profit from the increased value of North Hollywood property he owns if the station is built as planned--said the information about the money being diverted from the account was confirmed to him by a state assemblyman’s aide who asked not to be identified.

The trust account was established under a 1984 state law that requires the MTA put aside 15% of state funding for the 13.3-mile Red Line in an account to be used only to build the San Fernando Valley segment of the line.

The law was designed to ensure that the Valley segment of the subway was built, regardless of any financial problems that may arise in the construction of other segments of the line.

Edelman, who co-chairs the MTA, said he saw the letter from Murphy on Monday and planned to refer it to the county counsel’s office to determine if the charges “have any merit.”

Edelman said he would strongly oppose any delays in the construction of the Red Line’s North Hollywood segment.

The North Hollywood station is part of the third and last segment of the Red Line subway, which is scheduled to be completed by the year 2000.

The MTA is scheduled to approve a contract in November for construction of the subway tunnel from the Universal City station to North Hollywood.

David Mieger, a rail project manager for MTA, said he could not determine exactly how much money was in the North Hollywood account, but said the money has been spent only as allowed by law.

He added that the MTA plans to complete the North Hollywood segment on time and with the funds set aside in the account.

He said capital planning officials who oversee the North Hollywood account rejected the charges that money was used elsewhere.

McCreary, who owns several plots of land in North Hollywood and has been active in redevelopment efforts in that community, said he fears the diverted money may never be repaid to the North Hollywood account.

Construction of the North Hollywood station can only be assured if the money is replaced and construction begins as soon as possible, McCreary said.

“I’m saying: You put that money back and don’t spend it elsewhere,” McCreary said.