Orange County D.A. Ordered Off Bankruptcy-Linked Case

A state appeals court Friday removed Dist. Atty. Michael R. Capizzi from the bankruptcy-related misconduct case against Orange County Auditor-Controller Steve E. Lewis, saying the district attorney’s office has conflicts of interest “so grave as to render it unlikely [Lewis] will receive fair treatment.”

The scathing, 11-page ruling by the 4th District Court of Appeal questioned whether the district attorney’s office could properly investigate and prosecute any of the six public officials charged with bankruptcy-related misdeeds because the office had suffered financially.

As a victim of the bankruptcy, the judges said, it could be argued that the office was hardly impartial.

The appeals court also questioned Capizzi’s “personal involvement” in the Lewis case, particularly a conversation the district attorney had with former county Supervisor Don Saltarelli a day before he was to vote on Lewis’ request that his defense attorneys be paid with taxpayer funds.

Capizzi has said he placed the call after watching Saltarelli on a television program describe the charges against Lewis as “civil accusations.” Capizzi said he called Saltarelli to inform him that the accusations were actually criminal.

“Although he denied the call was an attempt to persuade Saltarelli to vote against furnishing a defense for [Lewis],” the court wrote in its opinion, “a reasonable inference could be drawn that [that] was the district attorney’s intent.”

“The apparent attempt to limit [Lewis’] resources to defend himself adds substantial weight to the appearance of a conflict,” it added.

In disqualifying the district attorney, the justices also noted that Capizzi was on the distribution list of Lewis’ audits of the ill-fated county investment pool, whose collapse caused the December 1994 bankruptcy.

The court cited the audits as “evidence potentially implicating the district attorney in the alleged misconduct which led to the financial disaster.”

If the appeals court’s order stands, the case against Lewis would be transferred to the California attorney general’s office for prosecution. But state officials said Friday that they would immediately appeal the decision in concert with the Orange County district attorney’s office.

Deputy Dist. Atty. Devallis Rutledge said his office is still reviewing the ruling and probably won’t decide whether to appeal for several days.

Capizzi’s office lost its most recent appeal to the California Supreme Court, which rejected his bid to have misconduct charges reinstated against Supervisors Chairman William G. Steiner and former Supervisor Roger Stanton, who were charged with failing to prevent the bankruptcy--charges that were tossed out by the same appeals court.

Rutledge disputed many of the points made in the ruling, and said it should not be viewed as critical of the district attorney’s office.

He also rejected the court’s contention that the district attorney’s office should not be prosecuting bankruptcy cases because of the losses it and other county departments suffered.

“In a sense, everyone in the county was a victim of it,” he said. “That doesn’t mean [prosecutors] are so directly and personally affected that their judgment is impaired. If that is the case, we couldn’t try any cases in Orange County.”

Lewis could not be reached for comment. But his attorney, Brian Sun, hailed the opinion as a vindication for the embattled auditor.

“We are very hopeful that the district attorney will look upon this as a strong signal not to waste anymore taxpayer dollars pursuing Mr. Lewis and these meritless accusations,” Sun said. “We hope this is a step toward the end of this painful and needless process.”

Sun said the appeals court has yet to rule on his request to review the overall merits of the case. If convicted, Lewis faces removal from office.

The district attorney’s office’s record on bankruptcy cases has been mixed.

Robert L. Citron, whose wrong-way bets on interest rates caused the financial collapse, pleaded guilty to six felony counts of falsifying documents and misappropriating public funds. He was sentenced to a year in jail and ordered to pay $100,000 in fines. Citron, 71, performs clerical work at the jail during the day and goes home at night.

A jury deadlocked 9 to 3 in favor of acquitting former Budget Director Ronald S. Rubino for felony charges related to the bankruptcy. Rubino later pleaded guilty to one misdemeanor count under an agreement that will allow him to change his plea to “not guilty” in one year.

This week, the trial of former Assistant Treasurer Matthew R. Raabe, who faces the same charges as Citron, got underway in Orange County Superior Court.

It remains unclear what impact, if any, the appeals court ruling could have on the cases of Raabe, Rubino and Citron. Their attorneys were unavailable for comment Friday.