Merrill Asks Reversal on Grand Jury Transcripts

Attorneys for Merrill Lynch & Co. are continuing

their battle to keep secret the 5,000 pages of a grand jury testimony about the brokerage’s role in the Orange County bankruptcy.

In briefs filed with the 4th District Court of Appeal in Santa Ana, attorneys for the Wall Street giant have asked that a Superior Court judge’s order to publicly release transcripts of the testimony be overturned.

Judge David O. Carter, who oversees the felony criminal courts in Orange County and the grand jury that investigated Merrill Lynch, “has taken the extraordinary and heretofore unprecedented step of . . . ordering the immediate release of secret grand jury testimony,” Merrill attorneys argued.

That Thursday order was blocked later the same day, when Merrill attorneys got a temporary stay from the appeals court.

Attorneys representing a group of media organizations, including The Times, have argued that there is nothing in state law that prohibited Carter from ordering the grand jury testimony to be made public.

Countering Merrill Lynch’s stance on the matter, the media attorneys argued, “It cannot seriously be disputed that there is an overwhelming public interest in learning information that may provide enlightenment as the causes of, and responsibility for, Orange County’s disastrous 1994 bankruptcy.

“Moreover, the public has a strong interest in evaluating the propriety of the district attorney’s decision to forego criminal prosecution of Merrill Lynch and its employees in exchange for a $30-million payment--a significant portion of which is to be paid to the district attorney’s office itself,” the media attorneys said in their brief.

“The potential for a conflict of interest in such a settlement was not lost on [Carter] and warrants strict public scrutiny of the ‘deal’ cut between Merrill Lynch and Orange County officials. That scrutiny can only be exercised if the grand jury materials are released,” they argued.

Merrill Lynch paid $30 million last month in a settlement that ended the grand jury’s investigation only two weeks before its term was to expire. In his decision, Carter called the deal “extremely unusual and suspect.”

Kelli L. Sager, the lead attorney representing the media companies pushing for release of the documents, also criticized Dist. Atty. Michael R. Capizzi for his failure to promptly obey Carter’s order.

The district attorney’s office “delayed producing any materials for more than six hours,” giving Merrill Lynch lawyers time to seek the temporary stay from the appeals court, Sager wrote to Capizzi on Tuesday.

Capizzi could not be reached for comment, but his chief assistant, Maury Evans, denied that his office stalled the release of any transcripts.

“We can’t pass a magic wand over it,” Evans said, adding that the effort to access and distribute the voluminous records was underway when the stay was ordered.

The district attorney has wanted the documents to be made public all along, Evans said, but prosecutors determined that state law dictated that the transcripts remain secret.

“As officers of the court, we are duty bound to advise [the court] what the law is, and that’s what we did,” he said.

In a letter submitted to the appeals court justices Tuesday, the district attorney’s office criticized Carter for ordering that the documents should be made public.

The letter claims that the judge relied on “rumor, innuendo and hearsay” instead of facts in reaching his decision.

The letter also challenges Carter’s belief that release of the documents will allow the public to better understand what caused the fiscal crisis.