Anonymous Note Alerted Sheriff to Deputies' Thefts : Crime: Officers were stealing drug money, the letter said. Soon after, a crack investigative team was on the trail.

TIMES STAFF WRITER

The typewritten letter was postmarked Oct. 28, 1988, and copies arrived simultaneously in the mailboxes of Los Angeles County Sheriff Sherman Block and three of his top executives. What it had to say was a bombshell.

"I have come to the point where I have to tell someone what I know," began the letter. "I am worried about my husband and my children and I am tired of living like a Mafia wife. The money doesn't make up for this living hell."

The anonymous author said she was tormented by the fact that her husband and other narcotics deputies were stealing hundreds of thousands of dollars in drug money and "making a mockery of everything they used to stand for."

"Please do something to stop this," urged the writer. "They all know they can go to jail and they live in fear too. (B)ut the greed has taken over everything else."

Only years later would investigators discover that the author of the explosive letter was no spouse. The writer was actually a Sheriff's Department employee who was a close friend of a narcotics deputy and was aware of the thefts. But no matter.

The letter would trigger the largest corruption investigation in local law enforcement history, a probe that has lasted five years and has resulted, so far, in the convictions of 19 present or former sheriff's deputies. In addition, four friends and family members of deputies have been convicted and a dozen other ex-officers are awaiting trial or retrial.

But the massive investigation, known as Operation Big Spender, did not get under way for more than five months after the letter arrived.

In the fall of 1988, sheriff's officials were skeptical of the allegations, which targeted some of the most experienced and decorated deputies in the department, including narcotics officers assigned to major drug-trafficking and money-laundering cases.

After all, sheriff's officials wondered, how could such thefts go unnoticed in a department of 8,000 officers? How could so many deputies be involved without anyone reporting the thefts? Why would veteran deputies risk their careers and a jail term to steal drug money?

When a preliminary inquiry failed to substantiate the allegations, they lay largely dormant until several incidents revived interest in the letter:

A deputy was heard complaining that his brother-in-law, a narcotics cop, was engaged in thefts and other misconduct. A supervisor in the Vice Bureau noted that one of his employees--the wife of a narcotics officer--was wearing flashy jewelry, driving a new Cadillac and taking time off for expensive vacations. And despite the lack of any hard evidence, rumors persisted that some narcotics officers were "dirty."

Chief of Detectives Ollie Taylor, who oversaw the narcotics bureau, spoke to Block, and both men realized that it was time for a full-scale investigation. Taylor called in Cmdr. Roy Brown, a top aide. He showed Brown the letter and gave him a mandate: Investigate the allegations and do it as quietly as possible.

Brown, a 30-year veteran of the department, was no stranger to police corruption, albeit on a much smaller scale. As a child growing up in Brooklyn, he would stand in his family's candy store and watch as his father paid off local beat cops with cartons of cigarettes. But that was penny-ante stuff.

The allegations that Brown was asked to investigate were serious. They involved possible felonies and hinted at an explosive scandal. And he was supposed to investigate law enforcement officers who were themselves experienced at surveillance and other techniques.

Brown, in effect, was a cop chasing cops--and he needed a crack investigative team. Meeting with Taylor and Lt. Kenneth Chausee at the Hall of Justice, the three began trading suggestions. They concentrated on using experienced detectives from the homicide and intelligence divisions. They avoided former narcotics deputies and eliminated any deputies who had worked with members of the Major Violators teams, which handled the largest drug cases.

What they wanted were detectives with special skills, men and women known for their dogged investigative styles. Their abilities to handle confidential sources. Their adeptness at scouring records. Above all, everyone on their list had to be discreet enough not to disclose anything to friends or colleagues.

For security reasons, the inaugural meeting of the team was held in a private room at a South Pasadena golf course. As the deputies learned the specific allegations against narcotics officers, one deputy realized that only a week before she had attended a training seminar given by Sgt. Robert Sobel, leader of the initial narcotics team under suspicion. A couple of investigators had once met another targeted narcotics officer and were aware of his reputation as a tough, effective cop.

After the meeting, one deputy did have second thoughts, saying he was uncomfortable about investigating fellow officers. Sworn to secrecy, he was allowed to return to his regular job. Then work began in earnest for the five men and two women who remained as the first members of Operation Big Spender.

For a time, the officers continued their routine duties while surreptitiously working on the money-skimming case. They met once a week at the home of one investigator, often staying until the early morning hours, comparing notes and filing reports.

Gradually, they were pulled away from their old tasks and placed on special assignment. Their cover story was that they were researching the background of a former deputy who was arrested by the Los Angeles Police Department in the murders of several prostitutes. The ruse was used at least once when a deputy started asking questions about the secret operation.

The probe soon mushroomed, targeting more than 20 deputies. And the paper chase expanded quickly beyond Southern California, as investigators delved into property, bankruptcy and divorce documents, motor vehicle information and business records. When they discovered property located in neighboring states, they widened their hunt--and turned to computers. They drew up a proposal to computerize their findings and develop software that would search for spending patterns and incriminating links among the narcotics officers. The price tag was more than $75,000--but Block approved it within hours.

"If I didn't know it before, I knew then that this was a top priority investigation," Brown said.

Soon, the investigators found that Eufrasio G. (Al) Cortez and Ronald Daub, who worked with Sobel on the Major Violators Two team, were conspicuous in the number of cars and properties they owned. Cortez, for example, had filed for bankruptcy only a few years earlier and had slept occasionally at the office after his divorce. Fellow officers had even pitched in to purchase a used car for him.

But property records showed that Cortez now had a new home in Chino Hills. He and Daub also had vacation property in Arizona and had recently purchased similar speedboats.

When a deputy stopped by Bullhead City to photograph Daub's vacation home, she spoke to the real estate salesman for the property. In tracking down the boat purchases, other investigators learned the deputies had accelerated loan payments. In addition, they found that when Daub bought his mother a used car, he had offered to pay with a briefcase stuffed with cash.

Even as their findings mounted, some investigators held out hope that legitimate sources of income, such as gambling, could explain the deputies' conspicuous consumption and newfound cash. Other investigators felt that only a few deputies could be dirty.

"There was smoke everywhere," said one investigator, "but no one could find the fire. We kept hitting our head against the wall, asking ourselves if we were missing something."

Top sheriff's investigators reassessed their strategy and pondered whether to seek federal assistance. Federal subpoena power could help open the trove of bank records and other financial data regarding the narcotics deputies. The administrative subpoenas, written by the U.S. attorney's office, would enable investigators to scour financial statements for signs that deputies were spending beyond their means. Bank records would show whether large sums of money were being deposited after drug raids. Canceled checks would indicate whether officers had altered their spending patterns. And income tax records might reveal extra income.

The local investigators also thought the feds could help penetrate the majors team and document criminal acts. They decided that trying to place an undercover agent in the closely knit narcotics crew would be too difficult--and that trying to turn one of the deputies into an informant was too risky.

In the end, a sting was the tactic of choice--and the FBI was deemed the best agency to run it. Although the Sheriff's Department had some surveillance equipment of its own, the FBI had pinhole cameras and other high-tech devices. The FBI also could draw on undercover officers from other cities to pose as the drug dealers and money-launderers and lure any corrupt narcotics officers into the open.

Seeking help from federal authorities had drawbacks, of course. By inviting outsiders into the investigation, the Sheriff's Department would share an embarrassing internal problem with outside agencies. Also, when the investigation became public, some would assume that it took federal officials to clean up the Sheriff's Department.

Sheriff's officials, nonetheless, met with a top FBI official at a West Los Angeles hamburger eatery. The overture led to a formal meeting in the U.S. attorney's office downtown.

William Fahey, who headed the U.S. attorney's public corruption and government fraud unit, was among those seated around the conference table. As he listened to the sheriff's presentation, Fahey scribbled on a yellow legal pad: "elite narcotics unit" and "officers take $$ from room." He noted that investigators were focusing on seven deputies and a sergeant. Then he listed the possible criminal charges: civil rights violations, theft and money laundering--and put a question mark next to the name of his chosen prosecutor: Tom Hagemann.

As a 33-year-old assistant U.S. attorney, Hagemann had prosecuted drug dealers and skyjackers and had represented the government in a corruption case against a fellow prosecutor. But like other ambitious attorneys, the Texas-born lawyer was hankering for a monster case when Fahey walked into his 13th-floor office to brief him.

"We've got a big corruption case," Fahey told him. "Are you interested?"

"Absolutely," Hagemann replied.

When he finally met with sheriff's officials, Hagemann was struck by the mix of sadness and professionalism as they detailed what they feared was corruption within their ranks. These are "elite, savvy, great cops who had done great work for the department," Hagemann was told. "But something really smells."

When the briefing was over, Hagemann called Robert Hightower, an FBI agent who had arrived in Los Angeles a few months earlier from Kansas City, to act as the agency's liaison with Operation Big Spender.

Later, federal prosecutors and sheriff's officials decided it was time to bring in the Internal Revenue Service. It already was clear that some deputies were living well beyond their county salaries. Some deputies used lump sums of cash to speed up loan payments for boats and cars. Following the alleged theft of cash, it appeared that some deputies and their spouses did not draw on their bank accounts to pay bills--for months at a time. Rumors were rampant of narcotics crews stealing money and spending it on boats, luxury cars and vacation homes. And, according to an anonymous tip, an investment adviser had walked into the narcotics bureau and talked to deputies about investing money that they had apparently skimmed.

Despite such intriguing information, investigators still lacked hard evidence. "It was getting abundantly clear that what we needed now was the sting," Hagemann said. "Without the sting, we didn't have much of a case."

The logical target was the Majors Two team. It contained Cortez and Daub, as well as Sobel, who had purchased a sailboat, a BMW car for his wife and other luxury items. The team had been making major money seizures for years, and it recently had been learned that a drug suspect had accused team members of pilfering $100,000 during a raid.

Armed with a court order, FBI agents set the trap Aug. 16 at the Warner Center Marriott in Woodland Hills. Three rooms were reserved, all in a row. An undercover agent, posing as a narcotics trafficker, would be in the middle room with the cash that would serve as bait. In another room, agents were waiting to record the activities on video and audio, while in a third room, SWAT team members stood ready in case things got out of hand.

Everything was in place--but the sting fizzled.

From the start, there were problems. As planned, the suspected deputies were tipped that a drug trafficker was carrying large sums of money. But their reactions were so swift that they managed to stake him out at the hotel before federal investigators could get in place. Hagemann, who was supposed to oversee the operation, was still in his Downtown office when Sobel and his crew arrived at the Marriott.

Then, the suspects grew suspicious after learning that the drug trafficker had apparently reserved three rooms in a row. Investigators who were monitoring radio transmissions by the deputies suddenly feared that the sting would be exposed. Worried that the deputies might walk into the other rooms and see the monitoring devices or SWAT team, the sting was quickly aborted. An FBI agent approached Sobel's crew, saying the deputies had stumbled upon a federal undercover operation. You can go home, they told Sobel.

The glitch left sheriff's officials upset that the investigation might have been compromised. They felt that the FBI had blundered by reserving all three rooms at the same time and had underestimated their quarry. They were so angry that they refused to even meet federal officials in the U.S. attorney's office several days later. Instead, both sides parleyed at a neutral site--the state Department of Justice--and discussed salvaging Operation Big Spender.

Another sting was needed, they agreed. With the expiration date approaching for their court order, they would set up a new undercover operation for Aug. 30, this time at what was then the Valley Hilton Hotel in Sherman Oaks. It was their last chance to gain enough leverage to lead one or more deputies to cooperate with the investigation.

"If we don't get them this time and nobody flips," Hagemann said, "everybody's home free."

NEXT: The Sting and Aftermath

Chronology of Corruption

Key events in the investigation of drug money-skimming by members of an elite Los Angeles County Sheriff's Department narcotics team, known as Major Violators Two, who handled major drug-trafficking cases:

* Oct. 28, 1988: Anonymous letter, postmarked on this date, arrives at the Sheriff's Department alleging that deputies are stealing cash confiscated from money launderers and drug dealers.

* March, 1989: Sheriff Sherman Block expands Operation Big Spender probe as investigators target the Major Violators Two team. Sheriff's officials seek help from the FBI, the IRS and the U.S. attorney's office.

* Aug. 16, 1989: Investigators set up an undercover operation at a Woodland Hills hotel to catch members of the Majors Two team stealing money. But problems develop and the sting is aborted.

* Aug. 30, 1989: Another sting at a Sherman Oaks hotel targets the nine members of Majors Two. This time, FBI agents videotape a squad member hurriedly taking three $10,000 bundles of cash from a suspected drug dealer's satchel and stuffing them into a fellow deputy's bag.

* Sept. 1, 1989: More than 100 FBI agents and sheriff's deputies raid the homes and offices of Majors Two squad members, finding sting money in several homes and in one deputy's car. The eight veteran officers and their sergeant are suspended.

* Sept. 4, 1989: Robert Sobel, the crew sergeant, approaches federal prosecutors about cooperating. He later meets investigators and details thefts and other misconduct he says he and others have engaged in. Sobel says corruption goes beyond his own squad.

* Sept. 20, 1989: The Sheriff's Department disbands its four elite narcotics squads, including Majors Two, transferring at least 30 officers from the narcotics bureau headquarters in Whittier to stations throughout the county.

* Sept. 26, 1989: As the scandal grows, a state court case against three defendants caught with 10 kilograms of cocaine is dismissed because suspended deputies on Majors Two are involved in the case.

* Oct. 3, 1989: Nine more narcotics officers are suspended from other majors teams, bringing to 18 the number of deputies relieved of duty.

* Oct. 5, 1989: Three more court cases are dismissed because they involve suspended deputies. In one case, a Los Angeles Superior Court judge frees a 48-year-old man who had been caught with nearly 800 pounds of cocaine in his Sylmar home.

* Feb. 22, 1990: A federal grand jury indicts 10 Los Angeles County Sheriff's Department narcotics officers, including Sobel and the eight other members of Majors Two. They are accused of stealing more than $1.4 million in seized drug cash and using much of the money to buy things such as boats, vacation homes and stocks. The veteran officers are also accused of conspiracy and various money-laundering and tax-evasion charges.

* April 18, 1990: The investigation continues as sheriff's officials announce that eight more narcotics officers have been relieved of duty. This brings to 26 the number of deputies suspended as a result of the probe.

* Oct. 9, 1990: The trial of seven sheriff's deputies begins. Sobel later appears as the key prosecution witness against his former colleagues. The cases of two deputies are severed from the others in a legal dispute over searches of their homes and property.

* Dec. 10, 1990: Six deputies are convicted of conspiring to steal drug money and other charges. A seventh is found guilty of tax violations.

* Nov. 23, 1992: The remaining Majors Two deputies, whose cases were severed from the others, are convicted of conspiracy and theft. Sobel and other convicted deputies testify at their trial as key prosecution witnesses.

About This Series

Millions of dollars were stolen. Nineteen narcotics deputies were convicted. And the image of the nation's largest sheriff's department was shattered during a drug money-skimming scandal. "Breach of Trust," a three-part series, reveals the stories of the deputies who turned to crime and the investigators who caught them. During a six-month investigation, Times staff writer Victor Merina examined thousands of pages of court transcripts, government records and Los Angeles County Sheriff's Department documents. He interviewed scores of deputies, investigators and other participants in the money-skimming case. What emerged is a profile of corruption and greed that flourished in elite units of a law enforcement agency that had long prided itself on integrity.

* Today: Inside the investigation

* Friday: The cost of corruption

How It Unraveled

One of the worst corruption scandals in local law enforcement history began to unravel when an anonymous letter arrived at the Los Angeles County Sheriff's Department. Here is how the probe began:

THE LETTER

The letter, postmarked Oct. 28, 1988, is sent to Sheriff Sherman Block and three of his top aides. Purporting to be from the wife of a narcotics cop, the letter alleges deputies are stealing hundreds of thousands of dollars during drug raids.

THE INVESTIGATORS

SHERIFF SHERMAN BLOCK: As head of the nation's largest Sheriff's Department, Block quietly orders an investigation into the money-skimming allegations. Several months later, he expands the probe and establishes a special task force dubbed "Operation Big Spender."

CMDR. ROY BROWN: A top executive in the department's detectives division, Brown is named to run the task force amid tight security. He and a handful of deputies work on the case before being joined by agents from the FBI and IRS.

THOMAS HAGEMANN: An assistant U.S. attorney, Hagemann is assigned the case and becomes the leading federal official on the Big Spender task force. He helps set up an FBI sting, and co-prosecutes the first money-skimming case to go to trial.

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