Lungren Aide Secretly Taped Target of Sting : Investigation: Disclosure of operation touches off anxiety in Capitol. Former state GOP Chairman Michael B. Montgomery denies making alleged bribery attempt.

In an unusual gambit, the attorney general’s office used one of its highest-ranking officials to gather evidence and secretly record a conversation with a former California Republican Party chairman who was under investigation for attempted bribery.

The involvement of Chief Deputy Atty. Gen. David Stirling in the criminal investigation of El Monte attorney Michael B. Montgomery was a major factor in the department’s decision to refer the matter to the Sacramento district attorney for possible prosecution, according to sources close to the investigation.

Montgomery has denied doing anything improper and has not been charged with any crime. Atty. Gen. Dan Lungren’s office has declined to comment other than to confirm that it has conducted an investigation.

The Times on Wednesday reported that for the last five months Lungren’s office, with the cooperation of Assemblyman William Hoge (R-Pasadena), has orchestrated a sting operation targeting Montgomery, whose conversations with the lawmaker were secretly recorded.

The disclosure touched off a wave of anxiety in the state Capitol, where lawmakers and others officials worried that Hoge, like former Sen. Alan Robbins, might have been wearing a wire while he conducted legislative business. Robbins wore a hidden recording device in 1991 as part of a federal corruption probe that resulted in the conviction of five elected state officials.

But sources close to the state investigation said Montgomery is the only one whose conversations were taped. They said the recording was done not only by Hoge but also by Stirling, a former judge and Whittier assemblyman who has been active in Republican politics for two decades.

The decision to record the conversation was made after Montgomery approached Stirling at a political event and said he wanted to discuss a card room application that had been pending with the attorney general’s gaming registration office, according to interviews.

Unknown to Montgomery at the time, the attorney general’s office had him under investigation as a result of a complaint from Hoge who, records show, told state agents that he had been offered an interest in the card club in return for his help with the application.

Montgomery, who served on the state Fair Political Practices Commission in the 1980s, has denied that he made such an offer.

The former Republican official represents two Colma businessmen who finished second in a competition to operate the town’s only card room and were seeking ways to block the winning applicant.

In the conversation with Stirling, according to sources, Montgomery sought to make a case for having the winning applicant disqualified and claimed that one of the principles had been charged with a gambling offense.

Montgomery, in an interview, confirmed that he contacted Stirling as part of a strategy to counteract what he considered the undue influence with the attorney general’s office of Michael Franchetti, a former chief deputy attorney general who represented the rival card room applicants.

“I thought that I was right on the law and that Stirling would say yeah,” Montgomery recalled. “But he never called me back.”

He said he did not know he was under investigation but, in retrospect, he said that must have been the reason that he never heard anything further from Stirling.

Franchetti, who acknowledged speaking to Stirling about the card room application at least once, denied that he had any special access to department decision-makers.

“The fact that I know people in state government has never resulted in my getting a favor,” Franchetti said. “Nor have I ever asked for a favor.”

Franchetti said he was surprised to learn there was an investigation but that it explained why the application process for his clients had dragged out much longer than he had expected.

“Now, we know what was going on. . . . A great many things have fallen into place in the last 24 hours,” Franchetti said.

Meantime in the Capitol, Hoge was publicly being praised while many officials were privately expressing concern about the two-term lawmaker’s clandestine taping.

Republican Leader James Brulte of Rancho Cucamonga said he was unaware of Hoge’s undercover activities, adding that his colleague “is an honorable man who did the right thing.”

State Sen. Tom Hayden (D-Santa Monica), who has been active in seeking gaming reform legislation, suggested that the disclosure of Hoge’s activities “might raise the paranoia level around here.”

When legislators do their customary backslapping, he said, “they may be feeling each other for wires.”

Hayden said the investigation shows just how intense the struggle over gambling legislation has become in the Capitol, where gaming interests, he said, will soon become the biggest source of contributions to legislators.

“We have to do something not just about regulating gambling but about campaign financing reform,” he said.