Document Describes Details of Capitol Sting : Court: Judge releases FBI affidavit in probe of lawmakers Nolan and Hill. They say it is misleading.

A federal court judge Monday unsealed a document that reveals details of how undercover agents built their case against two influential Republican lawmakers accused of taking payments in exchange for legislative favors.

The document, a 5-year-old affidavit, was used to justify the unprecedented 1988 FBI raid in the Capitol, which included searches of the offices of Assembly members Pat Nolan of Glendale and Frank Hill of Whittier. The two are awaiting trial on political corruption charges.

The 108-page document, which persuaded a federal magistrate to permit the search, is the FBI’s version of events leading up to the search.

Buttressed by fragments of secretly recorded conversations, it is a step-by-step account of the undercover sting, in which agents posing as businessmen tried to win support for bills that would help them set up a shrimp processing plant near Sacramento.

The probe led the undercover agents to face-to-face meetings with Nolan, then Republican Assembly leader, and Hill, then one of Nolan’s top Assembly lieutenants and now a state senator from Whittier.

At one of those meetings, on June 27, 1988, Hill agreed to help an undercover FBI agent get the governor’s signature on a special interest bill and persuade Sen. Ken Maddy (R-Fresno) to take up the measure the next day on the Senate floor.

After an hour’s discussion, the undercover agent thanked Hill, handed him a check for $2,500 as an honorarium and told him, “Make sure you count it all.”

According to the affidavit, “Hill took the envelope and assured (the agent) that he (Hill) and Nolan could handle the governor.”

The next day the undercover agent called Hill and asked whether the payment was enough: “I can certainly increase what I gave you last night with no problem at all.” But Hill turned him down, saying, “No, no, I think you’ve been very generous. . . . It’s a good bill and (I) hope we can help you with it.”

But the discussion was troubling to Hill, according to transcripts of conversations with Nolan aide Karin L. Watson. She told a government informant, “It was a mistake. Remember I told you how goosie my members are talking about money and bills.”

Watson, who is now cooperating with authorities, said Hill suspected that “the guy was wired (wearing a hidden recording device) and is . . . working with FBI.”

On another occasion, the undercover agent was escorted by Watson to meet Nolan on the Assembly floor. Nolan assured the agent he had spoken with then-Gov. George Deukmejian about the bill and “everything appeared all right,” the document says.

The next morning, Nolan and Watson stopped by the undercover agent’s hotel suite across from the Capitol. In Nolan’s presence, Watson accepted two undated $5,000 checks from the phony businessman--one payable to the Assemblyman’s campaign committee and the other left blank. Watson advised the agent “that leaving the check blank was all right,” according to the affidavit signed by FBI agent James J. Wedick, Jr.

Later Watson said that Nolan, too, was worried that the supposed businessman “was just the type of individual whom the FBI would set up to do an undercover operation.”

Both Hill and Nolan eventually reported receiving the money--although Nolan was late reporting one of the checks.

Nolan and Hill have pleaded not guilty and on Monday they complained about the release of the material before their trial.

“The government’s affidavits are often one-sided and frequently contain misleading and erroneous information,” said Mike MeCey, Nolan’s aide. “We hope people will judge Pat by his own actions and not by the actions of others.”

Hill issued a statement saying that the document “is scattered with innuendoes and sentences which are taken completely out of context. . . . By releasing this document, the public will receive a one-sided and unfair reading of this case before the trial begins and I can defend my name.”

The search warrant affidavit was released over the objections of attorneys representing Nolan, Hill and their fellow defendant, former legislative aide Terry E. Frost.

U.S. District Judge Edward J. Garcia agreed to unseal the sworn statement at the request of federal prosecutors, joined by attorneys for The Times and the Sacramento Bee.

Garcia also turned down a request by Nolan and Hill to move the trial to San Francisco. They claimed that Sacramento news coverage of the political corruption probe--coupled with the large number of state government workers here--would make it impossible to select an unbiased jury.

But Garcia dismissed the defense arguments brusquely, contending that the defense attorneys had underestimated the ability of the court to ensure an unbiased jury. He pointed out that so much has been revealed about the Capitol probe through news reports and court documents that “most if not all of the cat has been out of the bag for some time.”

The three are accused in connection with an elaborate sting operation, in which undercover FBI agents posed as Southern businessmen seeking passage of special-interest bills to help start up a shrimp processing plant near Sacramento. One of the phony companies, Peach State Capital West, paid $10,000 in 1988 to two Nolan-run campaign committees and a $2,500 honorarium to Hill.

In April, a federal grand jury indicted Nolan on six counts of racketeering, extortion, conspiracy and money laundering for allegedly using his public office to extort campaign contributions from Peach State and others needing help with a variety of legislation.

The same indictment charged Hill with three counts of extortion, conspiracy and money laundering in connection with the honorarium.

The trial of Nolan, Hill and Frost is expected to begin here in mid-March.

Earlier Monday, Garcia completed his instructions to the jury trying political corruption charges against former state Sen. Paul B. Carpenter and insurance industry lobbyist Clayton R. Jackson.

Attorneys for Carpenter and Jackson asked Garcia to delay release of the 1988 search warrant affidavit until the jury in their clients’ case reaches a verdict. But the judge rejected the argument that jurors in the Carpenter-Jackson trial would be influenced by news accounts of the affidavit.

Since the investigation began in early 1986, 14 people have been convicted or indicted or have pleaded guilty as a result of the federal political corruption probe.

Times staff writer Cynthia H. Craft contributed to this report.