Board Cuts Off O.C. Auditor’s Defense Fee Aid

In an apparent move to force the county’s embattled auditor to resign, the Board of Supervisors Tuesday rejected the elected official’s request for money he sought to keep defending himself against bankruptcy-related charges.

The board’s 3-2 vote was a devastating setback for Auditor-Controller Steve E. Lewis, who faces civil misconduct charges for his alleged failure to detect problems in the county treasurer’s office that contributed to the largest municipal bankruptcy in U.S. history.

The board previously appropriated $300,000 for Lewis’ defense, but he has already incurred nearly $500,000 in legal bills, even though no date has been set for the jury trial he demanded.

Standing before the supervisors, Lewis broke his yearlong public silence on the subject, calling the charges against him “twisted” and urging the supervisors to increase his defense spending cap from $300,000 to $500,000--the same amount that supervisors approved for the defense of former Budget Director Ronald S. Rubino.

“I am being made a scapegoat for this bankruptcy,” Lewis said. “I’ve dedicated by life to this county. . . . I need your help and support. . . .

“I am asking for the same fairness and requesting the same treatment as others,” Lewis said.

Several county officials who spoke on the condition that they not be identified by name said the board’s action Tuesday was meant to compel Lewis to step down, a move that would make the charges against him moot, since the only punishment they carry is removal from office.

If Lewis resigned, the officials said, he could be offered another job with the county, and the supervisors would likely consider paying his outstanding legal bills.

Several supervisors have harshly criticized Lewis, contending that he inadequately oversaw the activities of former Treasurer-Tax Collector Robert L. Citron, whose risky investment practices resulted in $1.64 billion in losses to the county-run investment pool and subsequently the county’s bankruptcy.

Lewis declined to answer questions after the board meeting. But friends said the setback comes at an especially difficult time for the auditor, whose wife is seriously ill with kidney problems and recently underwent a risky transplant operation with a kidney donated by the couple’s daughter.

“Steve Lewis is a sincere, hard-working and earnest public servant. The county has been his life,” said Gary L. Granville, the county clerk-recorder who works in the same building as Lewis. “I can’t imagine what the board is thinking.”

Without the additional funds he requested from the county, Lewis is left facing about $200,000 in unpaid legal bills and with the added burden of covering all of his future defense costs.

County officials said that Lewis has recently discussed settling his case with others in county government. But Lewis’ attorney, Brian Sun, insisted Tuesday that the auditor is “committed to defending himself” and expects to be vindicated in court.

“Steve Lewis is the kind of guy who would have stepped down long ago if he felt it was in the best interests of the county and his family,” Sun said. “He feels his integrity has been impugned . . . and is prepared to defend himself fully.”

Sun questioned why the board refused to spend more than $300,000 for Lewis’ defense while agreeing to provide much more for Rubino, who faced criminal charges related to the bankruptcy.

A jury deadlocked 9 to 3 last month in favor of acquitting Rubino. On Monday, Rubino pleaded no contest to one misdemeanor count under an agreement with prosecutors that will allow him to reverse his plea to “not guilty” and have his record wiped clean in one year.

Lewis, along with Supervisors William G. Steiner and Roger R. Stanton, faces civil charges. A state appeals court is now considering a request by the two supervisors to dismiss their cases. Steiner and Stanton were the only supervisors who supported Lewis’ request.

Steiner said the board’s rejections sends a troubling message. “County employees need some assurance that they will be defended for actions they make in good faith,” he said.

But other supervisors said they simply couldn’t support additional defense payments to Lewis, who earns a $104,500 salary even though the board stripped him of some of his auditing duties in the bankruptcy’s aftermath.

“I feel great compassion for him and am sensitive to the problems he is facing,” Supervisor Marian Bergeson said. “But basically, I have a responsibility to act in the best interests of the county and the taxpayers. I feel he should have stepped down. That would have resolved the problem.”

Supervisor Jim Silva said he would not vote to increase Lewis’ defense cap at this time, but might consider covering some additional legal bills if he was eventually found not guilty in court.

“I have a problem with a carte blanche approach,” Silva said. “The taxpayers have suffered enough with this bankruptcy. There has to be a limit on the amount we spend.”

Lewis, 52, has worked for the county for 31 years. He was hired as an entry-level accountant fresh out of San Diego State University in 1965 and worked his way up through the auditor’s office. In 1984, he was elected auditor-controller and ran unopposed in the last three elections.

When the bankruptcy first hit, Lewis was praised for having uncovered problems in the treasurer’s office in two internal audits. But critics later faulted him for not highlighting his concerns and for failing to uncover Citron’s risky investment practices. He was also criticized for approving improper transfers within the now-failed investment pool.

In the months following the bankruptcy, then-county CEO William J. Popejoy repeatedly called on Lewis to resign. After the board threatened to slash his budget and reduce his staff, Lewis agreed to relinquish some of his auditing duties and take a 7.5% pay cut. The board could not then--and cannot now--fire Lewis because he is an elected official.

The Orange County Grand Jury eventually accused Lewis of failing to do his job--a charge the auditor has strongly denied.

Supporters said that Lewis continues to work diligently for the county and that his auditing duties represented only a small part of is overall job, which also involves paying bills and balancing county books.

“I think there has been a lot of world-class finger-pointing going on,” Granville said.

In his statement to the board, Lewis stressed that his office enjoyed an excellent reputation before the bankruptcy and that he is attempting to keep his legal bills as low as possible.

Steiner was also scheduled Tuesday to request that his defense cap be doubled to $500,000. But the supervisor decided to withdraw the proposal until the state appeals court rules on his dismissal request. If his case is dismissed, Steiner said he would need only an additional $38,000.

After rejecting Lewis’ request for additional funds, the supervisors agreed to increase Rubino’s defense spending cap to roughly $650,000. The additional amount will cover all of Rubino’s outstanding legal bills.