Steiner Wants D.A. Capizzi Barred From Prosecuting Him

In an apparent effort to head off expected grand jury charges stemming from the county’s bankruptcy, Supervisor William G. Steiner on Thursday asked that Dist. Atty. Michael R. Capizzi be disqualified from prosecuting him, contending Capizzi knew as much as any ranking county official about “questionable or unlawful” investments of former Treasurer-Tax Collector Robert L. Citron.

In an unusual motion filed in Superior Court, Steiner’s attorney said he was told by two assistant district attorneys that prosecutors would make their recommendations about charges to the grand jury next week.

“I prayed it wouldn’t come to this,” Steiner said in an interview. “I had hoped that my credibility with the grand jury and district attorney would have stopped this injustice.”

Steiner’s attorney, Allan C. Stokke, asked a judge to order the grand jury and the district attorney “to take no action” until a court hearing could be held and the grand jurors could be publicly questioned “to determine whether they can be fair,” or were personally affected and thus influenced by the county’s bankruptcy.

Stokke argued that “if the recusal motion is not . . . granted, the grand jury will be advised about the law and will be instructed . . . by [a district] attorney who has been personally affected, and whose budget has been slashed by . . . Steiner, [an] Orange County Supervisor.”

“The appearance of such an obvious conflict is as bad as the actual conflict,” Stokke asserted, and “public confidence in the justice system will further deteriorate unless the recusal motion is granted.”

Steiner, who has vowed to vigorously defend himself, attacked Capizzi’s office in a statement of facts that is required by law to accompany any motion to disqualify a prosecutor.

In the statement, Steiner argued that Capizzi was as well-informed as any top official that the interest “windfall” flowing into county coffers had come from Citron’s investments.

Steiner said Capizzi’s office “had direct involvement with the now recognized, unusually high interest revenue coming from the questionable or unlawful investments,” according to the statement.

In fact, Capizzi “knowingly received over $2 million” to support a gang suppression unit and “participated in the planning and funding of this unusual mid-year windfall of interest revenue.”

Steiner also noted that as early as Aug. 5, 1993, Capizzi “was sent a copy of a letter from Steven Lewis, County Auditor, stating that [Citron] was making unlawful investments. This letter is available to the Grand Jury and its contents have been made known to [Capizzi],” according to the statement.

That letter, and the 1991 audit that accompanied it, criticized Citron for running his office without adequate controls and for violating California laws while seeking to maximize returns for his investment portfolio.

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The letter and audit generated considerable controversy after the bankruptcy, when some officials said they couldn’t recall having received or having read the documents. Steiner and former supervisor Thomas F. Riley acknowledged receiving it.

“High ranking individuals within the [district attorney’s] office should necessarily be called to testify as to why they, having the same information as [Steiner], also took no action to eliminate Orange County’s unlawful and questionable investment practices,” according to the statement.

“Presently, the district attorney is advising the grand jury and criticizing . . . Steiner for not having recognized that this very same interest return was unusually high and signaled possible unlawful activity by the treasurer,” according to the statement.

Stokke said he met Tuesday with Assistant Dist. Attys. Jan Nolan and Wallace J. Wade and was told that the grand jury will likely finish hearing evidence this week. Stokke, who requested the meeting, said he was not told whether the Capizzi’s office would ask the grand jury to charge Steiner.

“Mr. Wade stated he would expect the Grand Jury decision thereafter,” Stokke wrote.

Stokke said he also asked the California attorney general to take over the case. A hearing is scheduled for 9 a.m. Tuesday.

But Gary Schons, a senior assistant attorney general, said Thursday it is unlikely that a hearing could be held on a recusal request before the passage of 10-day notice period required by state law.

Steiner has publicly and privately expressed disgust that he may be forced to defend himself against charges by the grand jury and the U.S. Securities and Exchange Commission for his part in the county’s bankruptcy.

The supervisor has said repeatedly he had no hand in the reckless investment strategy that cost the county nearly $1.7 billion and prompted the bankruptcy.

Because the grand jury and the district attorney were affected by the bankruptcy the same as he was, Steiner said a public hearing is necessary.

He also formally asked that further grand jury sessions be made public.

“Since the beginning of the bankruptcy . . . we have felt there’s no conflict of interest in our office conducting the investigation,” said Maurice Evans, assistant chief district attorney. “And we will continue in this investigation until it is completed.”

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Stokke said the action was “not a personal attack on the D.A. It’s just that we’re very concerned that everybody is looking for someone to blame and I think that parties . . . making the decision should not be the people who have lost money.”

For weeks, word has circulated among county officials and workers that the current and former supervisors would face, at least, “civil accusations” charging them with willful misconduct for failing to oversee the investment pool and prevent its eventual collapse.

“On Monday, Aug. 14, 1995, the [grand jury] commenced an investigation into a matter in which you may be involved,” Steiner said he learned from a letter Wade sent him on Sept. 13.

Wade’s letter continued: “The matter under investigation relates to the financial collapse of Orange County, ultimately resulting in the bankruptcy filing . . . as well as other acts which have been the subject of complaints received by this office and the grand jury. . . . This investigation could potentially lead to an accusation.”

If civil accusations are issued, the supervisors will be given the opportunity to mount a defense in court and have the charges heard by a jury.

To prove willful misconduct, Stokke said, “requires [demonstrating] some kind of purpose to do something wrong, a conscious abdication of responsibility. And there’s nothing like that in this case.”

All motions to disqualify a district attorney are made pursuant to the California Penal Code.

According to the law, “the motion shall not be granted unless it is shown by the evidence that a conflict-of-interest exists such as would render it unlikely that the defendant would receive a fair trial.”

If a disqualification is granted, the defendant or the district attorney can appeal and the criminal case stops until the appeal is heard. Stokke said it is unclear whether that would occur in the case of a grand jury investigation.

Former Assistant Treasurer Matthew Raabe--whose trial on six felony counts of securities fraud is pending--made a similar motion to have Capizzi recuse himself.

Raabe claimed that Capizzi, his prosecutors and the office itself were all “victims” of Raabe’s alleged criminal conduct and, as a result, he could not receive a fair trial.

In his motion, Raabe contended that prosecutors would be influenced by his alleged wrongdoing. As a result of the massive losses in the county’s investment pool, Raabe argued, their office’s pension payments, deferred compensation, wages and caseload would all be negatively affected.

But the California attorney general disagreed. In a 13-page response filed Nov. 15, Schons, the senior assistant attorney general, wrote that Raabe “has not alleged, nor can he show, that he cannot obtain a fair trial as a result of being prosecuted by the District Attorney’s Office.”

Among other things, Schons noted that some of the fraudulent acts Raabe was accused of actually benefited the county.

Reached Thursday, Schons said, “It’s rare when the courts grant” such recusal motions. He estimated that as few as 5% of such motions are granted.

Steiner, who was appointed by Gov. Pete Wilson to the board in March, 1993, was reelected in January. He said recently he will not seek reelection after his term expires.

“This is all about my personal credibility and my good name,” Steiner said. “I spent a lot of years trying to improve my community and to think I would willfully harm the county is unbelievable.”