Charges Dropped in Laguna Arson When ‘Confession’ Is Proved Bogus : Courts: O.C. prosecutors admit they were duped, verify suspect was in Mexican jail during last year’s firestorm.

Admitting they were duped by a bogus confession, Orange County prosecutors on Wednesday dropped an arson charge against the man accused of sparking last year’s Laguna Beach firestorm.

The stunning dismissal of the most serious of four arson charges against Jose Soto Martinez, 26, came after investigators belatedly discovered that he was locked up in a Mexican prison when the fire was set last Oct. 27.

“I had a lot of faith that (a conviction) couldn’t happen because of all the proof we had,” said Teresa Campos, Martinez’s mother, who told investigators her son had an ironclad alibi. “I knew he was innocent. And now I feel very contented, happy.”

Sometime after he was arrested Sept. 16 in connection with starting three small fires in Fullerton, Martinez told investigators that he also had set the Laguna blaze. In what prosecutors said was surprisingly accurate detail, he described where and how the fire was lit, and explained that he started the blaze to conjure up a demon god named Gotam.

Based on his confession, Orange County Dist. Atty. Michael R. Capizzi announced at a press conference last Friday that he had filed charges against the man “responsible” for “willfully and maliciously” starting the devastating fire, which damaged or destroyed 441 homes and caused $528 million in damage.

But the district attorney’s case started to unravel less than a day later when Martinez’s mother, who had reported her son missing and was unaware that he had been arrested, was quoted in a newspaper saying her son was serving time in a Mexican prison 1,200 miles away when the firestorm occurred. She said her son confessed only because he is delusional and believes mobsters want to kill him. She said he thought he would be safe in jail.

That was the first time prosecutors had heard of a possible alibi. Martinez, whose true name is Jaime Saille Higuera, never even told investigators that he had family in Orange County.

Following that published report, investigators interviewed the mother and flew to Mexico to verify Martinez’s record at the prison in Mazatlan. After reviewing the information, which included fingerprints, medical records and interviews with the prison warden and inmates, the investigators determined that Martinez had been incarcerated from May 15, 1993--five months before the Laguna fire--until July 8, 1994--eight months after the fire.

Campos, 50, said she did not feel any anger at the Orange County district attorney’s office for filing the arson charges against her son.

“No. No, I don’t feel anger,” said Campos, who attended the court hearing with other family members. “I knew that he had a problem. He has this (mental) problem. But I knew that the system here, given proof that he was somewhere else, that said he was in jail at the time, that he would be found not guilty.”

Martinez is still being held without bail in Orange County Jail for the three other arson charges stemming from the Fullerton fires, and Riverside County authorities have not ruled him out as a suspect in an Aug. 5 brush fire at Green River.

Victims of last year’s horrifying Laguna fire, who were elated last week when they heard that the arsonist responsible for the blaze had been arrested and charged, said Wednesday that their hopes have been dashed. The residents of the upscale beach community, however, said they would rather have the charge dropped than convict an innocent man.

“Obviously, we’re disappointed,” said Kathleen Blackburn, a Laguna Beach councilwoman. “Thank heaven they recognized he was wasn’t the one. I hope they do find the person responsible. It would give our residents a sense of closure to a rather unattractive incident. . . . (But) it would have been nice if he was the one.”

Orange County fire officials, who had stopped actively investigating the case about three months ago and reopened it only when Martinez confessed to starting the blaze, said Wednesday they were also disappointed.

“It’s frustrating that the person who did this is still out there, although nobody wants to see someone in jail who is wrongly accused,” said Orange County Fire Capt. Dan Young. “We had more than a thousand leads and nothing. This came along and we reopened the case. But now we have no other leads.”

County Fire Chief Larry J. Holms said the investigation “is still open” and he did not fault the district attorney’s decision to charge Martinez with setting the Laguna blaze.

“Naturally, we are disappointed that at this point in time we don’t have the specific answer as to who started the fire,” he said. “Based on information available to the D.A. and investigators, they proceeded in the appropriate manner on what appeared to be a solid case. I would have done the same thing.”

Even after the charge was dismissed, law enforcement officials said they were perplexed as to how Martinez might have had such intimate knowledge about the Laguna fire, especially since he was in prison at the time.

Martinez’s attorneys from the public defender’s office have openly criticized the way the district attorney has handled the case.

Public Defender Ronald Y. Butler has said he thinks the district attorney didn’t thoroughly investigate the case or exercise enough caution in filing the charge.

Additionally, Butler said he was surprised that investigators never contacted Martinez’s mother, who lives in Fullerton and had even filed a missing persons report on her son days before Capizzi’s press conference.

That report referred to Martinez as Jaime Saille Higuera, but Fullerton police acknowledge that they were aware of both names at the time of Martinez’s arrest. Officials said Wednesday that they are looking into why a connection was never made between the missing person report and the man they had in custody.

Butler also contended that prosecutors violated Martinez’s constitutional rights by interviewing him even after Martinez had obtained a court-appointed lawyer to represent him on the Fullerton arson charges.

Some law enforcement officials have also suggested that Capizzi may have hastily filed the case when news leaked that a suspect, who had made a confession, was in custody.

The district attorney’s office, however, stood by its investigation and its decision to file charges.

“We acted in good faith on an individual, who, as best as we could verify, was telling the truth,” said Capizzi, noting Martinez had been arrested while allegedly starting a fire in Fullerton and had made a confession that contained accurate information about the Laguna blaze.

Given the information that was available to investigators, Capizzi said, “we would have been remiss if we delayed filing.”

A six-page document presented in court Wednesday further explained the prosecution’s move, and defended the decision to charge Martinez with the Laguna fire. The document states that “although Martinez admitted setting this (Laguna Beach) blaze several times, he did so with some hesitancy, leading investigators to believe he was telling the truth.”

Deputy Dist. Atty. Michael L. Fell, who handled the case and made the motion in court Wednesday to drop the Laguna arson charge, said, “The information given to investigators was very concise. The information, drawings, statements, tenor and repeated consistency of his stories led us to believe that we actually had the suspect who started the Laguna Beach fires.”

Fell said that on Sept. 19, Martinez guided Fullerton investigators--”who did not know where the (Laguna) fire started”--to within 10 feet of its point of origin.

According to the document filed in court, Martinez then proceeded to re-enact how he had set the fire, and in addition, “correctly indicated the device (used to start the fire), weather conditions and direction of the fire, once set.”

Peering into the television cameras that lined the courtroom’s jury box, Fell stressed that “at no time from Sept. 16 until (his Monday arraignment) did the defendant ever deny that . . . he started that fire.

“At no time did the defendant ever say he had an alibi or that he was in a Mexican prison. The defendant never said that he had family in the states; his contention was that his family was all in Mexico.”

Before the Laguna charge was dismissed, Martinez faced a maximum of 30 years in prison because he faced four felony charges and had a previous conviction for a residential burglary in San Diego, which counts as a strike under the state’s new three-strikes law.

Prosecutors say Martinez now faces a prison term of 19 years and eight months, although the overwhelming majority of defendants convicted over the past five years on the charges Martinez now faces have been punished with less than a year in jail and three years or less on probation.

After Wednesday’s court hearing, Fell defended the district attorney’s office’s handling of the case, saying it was “not at all” embarrassed by the turn of events.

“To tell you frankly,” Fell said, “that’s what we’re here for. It is just as much our responsibility to dismiss charges against an innocent person as it is to prosecute a guilty person. That’s exactly what we did here.”

Fell declined to answer questions about the other, unexplained evidence prosecutors cited in defending their decision to charge Martinez. “We don’t want to get into specifics at this time. Our policy is that there still is someone out there who did this.”

South Court Municipal Judge Arthur G. Koelle granted Fell’s motions, and also teased him for launching into an explanation why the motion should be granted after the action had been taken.

Times staff writers David Reyes and Mark Platte contributed to this report.