Lawyer Keeps His Eye on Budgets--Including O.C.’s

In one lawsuit, he hammered out an agreement with the state of California that required lawmakers to return $119 million they had plundered from special accounts to balance the budget.

In another case, he reached a settlement with the cities of Los Angeles and Long Beach to repay $6 million they had grabbed from their port revenue.

Attorney Richard I. Fine devotes most of his time these days to battling the government--or as he puts it, making sure elected leaders spend public money for its intended purposes without siphoning off a dime to resolve budget crises.

The Century City lawyer who once worked as a government attorney has filed 20 lawsuits on behalf of taxpayers against public agencies across the state over the last three years. In the process, he has secured agreements that require officials to return more than $200 million to various accounts they have raided--earning himself $2 million in attorney fees.

His latest target is Orange County, and the complicated bankruptcy recovery plan that Fine challenged in a lawsuit filed last week. Fine contends the county illegally diverted $50 million a year from transportation, redevelopment, flood control and recreational uses to repay $880 million in bonds the county issued to emerge from bankruptcy.

Two weeks ago, Fine won another legal victory when a Los Angeles Superior Court judge declared unconstitutional a state law that permitted Los Angeles County to tap $50 million in Metropolitan Transportation Authority funds to help avert last year’s budget crisis.

In a tentative ruling, Judge Richard C. Hubbell found that the law violated a state constitutional provision that prohibits special statutes from benefiting only one county; the county’s lawyers will ask the judge to reconsider his ruling in a hearing next month.

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Orange County’s special-purpose legislation was nearly identical, Fine said.

“These lawsuits only exist because the politicians didn’t do their job,” said Fine, 56, from his Century City high-rise office. “If there is someone to blame, they should look in the mirror.”

But some government officials question Fine’s motives. They say his lawsuits have more to do with exploiting the system than keeping a vigilant eye on government accounting practices.

“I can sum it up in three words: fiscal ambulance chaser,” said one state finance official familiar with lawsuits Fine has filed against the state. “It seems he has found a niche in the litigation field in which he has been successful, and no doubt profitable.”

Elected leaders criticize Fine for threatening delicate financial plans they say are designed to preserve vital services at a time when funding is becoming increasingly scarce.

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In Los Angeles County, for example, supervisors say the $50-million MTA transfer last year was essential to keep the beleaguered health-care system operating.

Repaying the money, they warn, would punch a huge hole in county finances and create a devastating scenario.

“We may end up having to close some of our clinics and reduce beds in our hospitals,” said Supervisor Yvonne Brathwaite Burke. “There [could be] many victims as a result of his lawsuit. It’s really a tragedy.”

If Fine’s Orange County lawsuit on behalf of the Committees of Correspondence, a watchdog group, is successful, it could force the county to restructure its bankruptcy recovery plan and make the sort of serious budget and personnel cuts the plan avoided.

“Instead of facing the problem head-on by reducing costs, the politicians used an end run by passing special laws that spread the cost of the debacle to all of California’s taxpayers,” Fine said. “These kinds of legal shenanigans are not new to our state.”

Special legislation like the sort that benefited Los Angeles and Orange counties has been illegal in California since the state Constitution was amended in 1878, Fine said.

The plaintiffs whom Fine represents have little sympathy for the difficult decisions that elected leaders say they face. Indeed, many say they are angered by how their tax dollars get spent and that Fine’s lawsuits provide a legitimate vehicle to pursue their outrage.

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Raymond Veltman, a retired business owner from Brentwood and the plaintiff in the MTA lawsuit, said he opposed the transfer because the transportation funds were being improperly diverted from what he considered their original purpose.

“Politicians are being unfair to the voters, their constituents, by not telling us what they are doing,” said Veltman, 72, who served two years on Los Angeles’ Transportation Commission.

“They should know that when they run for office, they are going to be held accountable.”

Veltman learned about the MTA fund transfer by reading press accounts of the state law that made it possible. At the time, he wondered whether the transfer was legal and asked Fine to look into the matter.

The two knew each other after having worked together on a previous class-action lawsuit against the state.

In that case, the pair targeted port cities that had sought to use state-administered harbor trust funds to pay for municipal services. Veltman once owned a trucking company that served ports across the state, and he learned about the issue in a trade publication.

The Legislature in 1992 allowed cities to tap port revenue during the next two years to make up for local funds the state had grabbed to balance its budget. As a result, Los Angeles and Long Beach transferred $69 million and $21 million, respectively, from their harbor trust funds.

Fine argued that the transfers were illegal because the funds were intended to be used to promote commerce, fisheries, navigation and other harbor-related activities.

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In the end, the cities agreed to restore $3 million each and to refrain from seeking millions more in reimbursements for services they had provided to the ports. In addition, the cities--along with San Diego, San Francisco and Oakland--all agreed not to seek additional port funds.

Fine did not set out to fight the government when he launched his law career nearly 30 years ago. Ironically, the Milwaukee native started out in government.

After earning his law degree from the University of Chicago and a doctorate in international law from the London School of Economics and Political Science, he served as an antitrust lawyer for the federal Department of Justice in Washington from 1968 to 1972.

In fact, he worked in the same department as J. Michael Hennigan, one of the lawyers suing Merrill Lynch & Co. on behalf of Orange County, Fine said.

He moved to Los Angeles in 1972 to practice international law at a private firm. A year later, he went to work for the Los Angeles city attorney’s office, where he headed the antitrust division.

Fine founded his own law firm in Los Angeles in 1974 and spent the next two decades building a lucrative practice handling international legal matters, as well as antitrust and securities cases.

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By outward appearances, he does not come off as an aggressive, hard-boiled litigator. Instead, he seems more like an affable professor--what with his trademark bow ties, rosy cheeks and round-rimmed glasses.

“I never thought when we took the first case that we’d have so many other cases,” Fine said. “But then it just came out of the woodwork. People just kept calling.”

Fine said he has resolved 11 of the 19 lawsuits he has filed since 1993. He has lost one--a case in which he alleged that the Los Angeles County Board of Supervisors and the county auditor illegally shifted money from various internal accounts to the county general fund in the 1994 fiscal year.

Fine said that taxpayer litigation now accounts for about 80% of his practice. But he expects the suits to diminish in the coming years. He says he will devote more time to his antitrust cases and to his year-old role as honorary consul general to the Kingdom of Norway. Fine was chosen for the post by Norwegian officials he met through his involvement in the Los Angeles World Affairs Council.

“When the government learns not to take the money anymore, when they stop misappropriating the funds,” he said, ‘the business will fall off.”

Contributing to this report was Times staff writer Michael G. Wagner.