Will Deal Boost Capizzi’s Political Capital?

As he mulls a run for state attorney general, Orange County Dist. Atty. Michael R. Capizzi’s agreement this week to accept $30 million from Merrill Lynch in lieu of seeking a criminal indictment against the company could cut both ways, political observers say.

The payment could be used to showcase Capizzi to voters as a can-do prosecutor who elicited a substantial sum from a company accused by the county of responsibility in its 1994 bankruptcy.

Or it could be spun as a closed-door deal letting Merrill slide on future criminal culpability while paying what amounts to a month’s worth of profits for the investment giant.

“I think Mike looks pretty good in this one,” said Republican consultant Eileen Padberg, a Capizzi supporter. “To voters in Orange County, $30 million is a ton of money. It would have cost another $30 million to get any more.”

Political consultants elsewhere in the state said Capizzi’s bankruptcy results resonate much deeper in Orange County, a crucial support base for his statewide run.

Voters in other areas are likely to be more impressed by the county’s other big prosecution news this week: the death penalty for convicted killer John J. Famalaro, said Ron Smith, a Sacramento-based consultant advising Capizzi on the attorney general’s race.

“For all of those who were saying, ‘Look at all of the money he’s spending on these bankruptcy prosecutions,’ [the Famalaro prosecution] neutralizes that,” Smith said

Smith said he expects Capizzi to formally announce his campaign in the fall to run to replace state Atty. Gen. Dan Lungren, who will run for governor in 1998. Capizzi’s support base comes from endorsements from 46 of the state’s 58 county district attorneys, as well as voters in Orange County, Smith said.

Already announced for the attorney general race is Chief Deputy Atty. Gen. David Stirling, a Republican and former La Habra assemblyman who worked as a business executive and Sacramento County Superior Court judge before becoming Lungren’s top deputy in 1989.

For Republican groups weighing the attorney general’s race, the hot topic isn’t the bankruptcy but Capizzi’s political prosecutions of local Republicans and how those cases fare, said consultant Allan Hoffenblum of Los Angeles. The felony trial of GOP campaign aide Rhonda Carmony goes to the jury Monday; Assemblyman Scott R. Baugh’s felony trial is set to begin this summer.

On the flip side, traditionally Democratic-voting Latino groups are furious with Capizzi for his investigation of voter fraud allegations involving the Santa Ana-based group Hermandad Mexicana Nacional, Hoffenblum said. Those voters for the first time will be able to affect GOP candidates in next year’s open primary.

Stirling already has secured support from many vocal Orange County GOP conservatives--and most of the county’s legislators--who accuse Capizzi of wasting taxpayer money by pursuing questionable political prosecutions.

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Capizzi critics also point out that, of five bankruptcy-related prosecutions, charges were dismissed against two county supervisors, and the county’s former budget director pleaded no contest to a single misdemeanor after a jury deadlocked in favor of his acquittal.

“Capizzi has been hurt by his failure to get convictions against the supervisors and that’s something voters can easily understand,” Hoffenblum said.

Of Capizzi’s successes, former Treasurer Robert L. Citron pleaded guilty to felonies and is in a jail work-release program; assistant treasurer Matthew R. Raabe was found guilty of his role and has yet to be sentenced.

Stirling, in Orange County on Thursday, said he intends to campaign heavily against Capizzi on his home turf.

“Orange County will be very important for me whether Mike Capizzi is an opponent or not,” Stirling said. “I’ve been all over the state and I just haven’t seen him doing much of anything. He does have the support of several of the D.A.s but you have to be able to carry your own county.”

Getting the public excited one way or the other about the Merrill settlement would be a challenge because it involves a more esoteric crime in the public’s mind, said Robert Pugsley, professor at Southwestern University of Law in Los Angeles.

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Business crimes--the kind done with computer keystrokes and wire transfers--aren’t perceived by voters as serious as gun-in-the-face crimes, he said. Capizzi also can argue that the money obtained from Merrill in avoiding criminal prosecution can be used to fund the enormous costs of pursuing the company through the county’s civil lawsuit against it.

“The disparity between [losing] $1.6 billion and [gaining] $30 million may be something that he will be badgered with as the campaign goes on,” Pugsley said. “Though he had a good case and I don’t think there’s much doubt he would have found a very sympathetic jury, the cost in time and expense of successfully bringing a suit would have been enormous. He can argue that it’s better doing it this way and letting the real restitution come from the civil suit.”