O.C.’s Bankruptcy Tab at Least $2.5 Million

The highly charged criminal investigation and prosecution of officials involved in the Orange County bankruptcy has cost taxpayers at least $2.5 million so far, lawyers and others involved in the case said Friday.

That’s on top of the more than $2 million taxpayers have spent on the defense for the officials.

The prosecution cost was revealed by Dist. Atty. Michael R. Capizzi during private conversations with county supervisors prior to last Tuesday’s board meeting. Capizzi was lobbying the supervisors not to order a financial audit of his office.

But the supervisors later approved the audit anyway, with an angry Board Chairman Roger R. Stanton lashing out at Capizzi’s office and likening his experience as a target of the bankruptcy investigation to “what people went through in Germany during the 1930s.”

The supervisors’ vote came only two weeks after the 4th District Court of Appeal threw out the civil accusation charging Stanton and Supervisor William G. Steiner with willful misconduct for failing to properly oversee longtime Treasurer-Tax Collector Robert L. Citron’s dangerous investment practices.

Capizzi’s office filed a six-page petition Wednesday to the appellate court, asking the justices to reconsider the dismissal because of some “unartful babbling” by a deputy district attorney during oral arguments and a factual error by the three-judge panel.

On Friday, the court issued a one-word reply: “Denied.”

Steiner said he fully expects Capizzi to file an appeal with the California Supreme Court, especially since the veteran prosecutor acknowledged Thursday that he had formed a committee to explore a run for state attorney general.

“How many times does the district attorney have to be told no?” Steiner said. “I’m not going to be intimidated or lose any sleep over their obsession with this case, even if they appeal it to the Supreme Court.”

Capizzi said his office was still evaluating further appeals but was “leaning in that direction.”

Capizzi said he provided some supervisors with “an educated guess” that his office has spent “about $2.5 million or $2.6 million” and defended the expenditure as “a mere pittance compared to the [millions] paid to all of the various and sundry civil attorneys and experts to mop up the bankruptcy.” He said his estimate represents “our cost of the investigation, the prosecution and the continuing investigation. That’s for two years of work.”

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Capizzi said the audit would likely duplicate one being performed now for the Orange County Grand Jury, and he denounced the board’s approval of another audit as a “vindictive” act.

Stanton said he was surprised that Capizzi could now pinpoint the prosecutorial costs when only two weeks ago “he said, ‘We don’t keep accounts like that.’ I felt that was a ludicrous statement at the time.”

Stanton said there was nothing vindictive about the board’s order to audit Capizzi’s office.

Attorneys for Stanton and Steiner have frequently criticized the use of dozens of lawyers and investigators as a waste of taxpayer resources to remove elected officials from office, instead of concentrating on the financial firms that may have had a hand in the county’s $1.64-billion investment loss.

“I heard the [$2.5-million] figure from one of the supervisors,” said Wylie A. Aitken, Stanton’s lawyer. “It came out when Mike Capizzi was lobbying the supervisors to not vote [for] the audit motion.”

If Capizzi was willing to admit the cost is $2.5 million, Aitken said, “my belief is it is obviously much greater. I would think over $3 million.”

Allan H. Stokke, Steiner’s attorney, said, “I wonder how they calculated that. My bet is, you could calculate it a lot higher.”

That cost is in addition to the defense bills approved by the Board of Supervisors thus far, including: $250,000 for Stanton; $300,000 for Steiner; $665,000 for former Budget Director Ronald S. Rubino; $300,000 for Auditor-Controller Steve E. Lewis; and $600,000 approved by the Superior Court for the defense of former assistant treasurer Matthew Raabe.

Supervisor Jim Silva, the only board member to vote against the audit, said Friday he felt that the board should have awaited the results of an $86,000 audit of Capizzi’s office being conducted for the grand jury.

“That should be finished before any other audit takes place,” Silva said, adding that he also opposed the new audit because it contained “no timeline” and amounted to “a blank check” for whichever auditing firm is selected.

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Silva said that when Capizzi met with him before Tuesday’s vote, the district attorney pointed out that his office “has had 29 audits in the last umpteen months.”

Assistant Dist. Atty. Wallace J. Wade, who heads the bankruptcy prosecution, said the office has never formally tried to quantify the cost of the prosecution.

“We handle tens of thousands of cases a year, and we don’t sit down and keep track of tenths of an hour that private attorneys have to,” he said. “It would be a colossal waste of time for us to do that and a waste of taxpayer dollars.”

The criticism seems certain to continue, especially if Capizzi takes the dismissal to the Supreme Court. The appellate decision dismissing the charges becomes final Dec. 26, and an appeal must be filed within 10 days thereafter.

Aitken said, “I do expect him [Capizzi] to go to the Supreme Court. It’s so obvious that everything has fallen into place. He is running for [state] attorney general and this is what this [case] was about from the beginning.”

Stokke, Steiner’s lawyer, said he also believed that Capizzi would make another appeal.

“I think this [the appellate petition] signals a continued wasting of the taxpayers’ funds,” Stokke said. “They simply just can’t let this thing die.”

Wade said the continued criticism of the district attorney’s office is misguided.

“It’s unfortunate that the [defense] attorneys want to keep trying this in the newspaper. If this were any other case, we would just go ahead and study our options and proceed accordingly.”

He added that “it seems like every event provides some chance for them to make media hay out of this situation.”