Scandals Leave Orange Blue

This 110-year-old city, which boasts a listing on the National Register of Historic Places, streets of meticulously restored Craftsman bungalows and Victorians, a bustling Old Towne famous for its antique shops and tree-shaded traffic circle, has had an acutely misplaced sense of timing of late when adopting marketing slogans.

In 1994, city staffers sought to capitalize on the image being projected by some of the county’s younger and more affluent cities with the catch phrase, “They built a whole county around us.”

A few months later, after Orange County’s investment pool--with millions in city funds--collapsed and the county filed for bankruptcy, the slogan was quietly shelved.

More recently, city officials settled on describing Orange as “a big city with a small-town atmosphere.”

Once again, the motto became almost a prediction. While it was meant to conjure up the image of a small town’s friendliness, recent scandals reveal what some might say is the darker side of close-knit communities.

Top officials are facing a swarm of legal nightmares. The district attorney’s office is simultaneously investigating a multimillion-dollar embezzlement case involving the city’s longtime trash and recycling companies and alleged conflict-of-interest violations committed by the city manager.

The very public and controversial firing of the city’s police chief is heading inevitably toward a seven-figure wrongful termination suit. A recall campaign has been launched against the mayor and threatened for the two other councilmen who agreed to dump the police chief. And that’s just City Hall.

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Just up the Costa Mesa Freeway, past some of the residential subdivisions that fan across most of the city’s 26 square miles, there’s the headquarters for the Orange Unified School District.

There, an ideologically conservative school board has stirred local passions in recent years by doing such things as ridding the sprawling district of what it considered offensively liberal programs: psychological counseling and medical clinics on campus for low-income students. And trustees just this week captured national attention by winning a landmark court battle to scrap bilingual education for good in their heavily Latino schools.

But the board also showed signs of returning to the administrative upheavals that besieged the district for decades. Along with bid-rigging indictments, recall attempts, fiscal instability, sexual harassment scandals and labor strikes, the Board of Education presided over a revolving door of superintendents.

Last month, the district’s superintendent hired a private investigator to spy on his human resources director, who had taken stress leave after a year of hostile negotiations with a bitterly resentful teachers union.

The ensuing publicity, and behind-the-scenes squabbling, struck at least one trustee as the kind of bureaucratic infighting he had hoped was behind them all.

“Over the last six years, this district has gotten rid of the good-old-boy network,” said Bill Lewis, president of the Board of Education. “We could find ourselves back in the days when we were embroiled in personnel disputes. We had a good-old-boy network in our system and we got mired in problems. When that kind of network is running the government, it’s a prescription for disaster.”

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Political observers, both professional and amateur, have diagnosed the same symptoms at City Hall, which lately has come under the intensive scrutiny usually reserved for the school district.

Last spring, police began investigating allegations that Orange Disposal Service Inc., the trash-hauling company that has held the sole contract with the city since 1955, and Orange Resource Recovery Systems Inc., the affiliated recycling company, may have misappropriated more than $6 million in municipal funds.

The owners of the companies, Sam and Alyce Hambarian, have long been prominent on the city’s social circuit. Their Christmas party was considered almost a requisite for those seeking office. Their son Jeffery, the prime target of the probe, was also influential.

David L. Rudat, the city’s former fire chief who became city manager in 1995, attended the same high school, Villa Park, in the early 1970s as the Hambarian sons. Council members regularly golf with family members.

Rudat’s wife, Carol, sold a house for Jeffery Hambarian in 1995, earning a $13,375 commission. The district attorney’s office is now weighing conflict-of-interest charges since state law mandates that David Rudat should have abstained from any decisions regarding the Hambarians for a 12-month period after the commission was paid.

City Atty. David A. De Berry, who characterizes the conflict as a technicality, said in a confidential report that Rudat participated in at least 13 decisions related to the trash and recycling companies during the year after the sale, while the city was grappling with how and whether to investigate the reported thefts.

Allegations of real estate fraud also surfaced when the buyers of Jeffery Hambarian’s home discovered structural problems that had not been disclosed during the purchase; the buyers, who moved out of town, have been contacted by the district attorney’s office.

Rudat and his wife have angrily denied any impropriety. Carol Rudat has repeatedly stated that she did not discuss the listing of the home and its sale with her husband, adding that the two of them were too busy with work in 1995 to discuss much of anything beyond personal issues.

Then Police Chief John R. Robertson, whose detectives were learning that the losses city officials had sought to minimize were soaring out of sight, was suspended with pay in October. Personnel Director Steven V. Pham said police officers had filed “hostile workplace” claims against the chief, although it later developed that Robertson was being ousted primarily for investigating whether someone with access to Rudat’s copy had leaked to the media a sensitive affidavit detailing his department’s findings in the trash probe.

Last month, Robertson was formally fired by a 3-2 vote of the City Council after months of emotional public meetings, at which community activists had pleaded for his reinstatement.

Robertson said he was fired because he knew too much about City Hall corruption linked to the trash investigation. City officials wanted to shut him up, he said during a news conference.

More details about that dispute are expected to come out if, as expected, Robertson files a wrongful termination suit.

Fred Smoller, a political science professor and analyst at Orange’s Chapman University, said that the city’s problems mirror a national tradition.

“The politicians have been in bed with political supporters a long time, and that’s not unusual,” he said. “The parallel is really with the county government--this sense of cozy relationships.”

Politicians naturally schmooze with contractors and lobbyists, Smoller added. The difference here is that he can feel the sense of shame that pervades Orange, a city of about 130,000, and the personal nature of the political attacks.

One longtime resident who has worked on City Council campaigns and is close to those in power said he is, for the first time, shocked at the magnitude of the scandals.

“I have never seen anything like this,” said the resident, who spoke on condition his name would not be used. “It seems to be a scandal a week. This Hambarian thing is going to be monumental.”

And this is not the city’s first money scandal. Investor Steven D. Wymer was imprisoned in 1993 for swindling Orange out of $7.2 million, although most of that money was recovered last year.

Councilman Dan Slater, an Orange native and real estate broker, said he was taken aback when he came into office in 1994.

“After I was elected, I realized that the good-old-boy network was more entrenched than I ever imagined,” said Slater, who voted against firing Robertson. “Because Orange still has the look and feel of a small town, many of those in leadership roles have a hard time realizing we’re not.”

He recalled being startled at how provincial the separate government departments were.

“City employees were afraid to take stands or be progressive, because they determined for themselves that the political climate was not right,” Slater said. “I hope we can learn from our mistakes.”

Times correspondent Jean O. Pasco contributed to this report.