Prosecutors Apologize, Calling Memo a ‘Bad Joke’

The Justice Department’s campaign finance task force has apologized in federal court in Los Angeles for an internal memo that referred to a Democratic fund-raiser and her Washington-based lawyer as “lesbian lovers.”

The comment, penned in the memo by a staff prosecutor, was a “bad joke,” a task force representative told the court.

It was directed at Maria L. Hsia, who is awaiting trial on charges of laundering political contributions through monks and nuns at a Buddhist temple in Hacienda Heights, and her criminal defense lawyer, Nancy Luque The memo’s existence surfaced last week during Hsia’s trial in Los Angeles federal court on tax evasion charges brought by the task force.

“On a bad day, a government prosecutor exhibited some poor judgment and some poor taste that was unfortunately hurtful to the defendant and her counsel,” task force lawyer Joseph Laplante told U.S. District Judge Richard A. Paez, according to a transcript of the proceedings.

He apologized to Hsia, Luque and the court on behalf of the Justice Department for “the pain and anxiety . . . that this unfortunate event has caused.”

Laplante said that fellow prosecutor Gregory E. Tortella, who made the notation, had personally apologized to Hsia and Luque.

A department spokesman in Washington said Thursday that the matter is being reviewed by the Office of Professional Responsibility for possible disciplinary action. Tortella, who put together the tax case against Hsia, declined to talk about his comment.

An angry Luque said the prosecutor’s words “are as patently false as they are offensive.”

Hsia’s trial lawyer, Kenneth M. Barish, filed a motion for a mistrial.

During a hearing last Friday outside the jury’s presence, he said Tortella’s “bizarre” remark was part of a pattern of prosecutorial misconduct.

Barish accused Tortella of getting Hsia’s former tax preparer to change his testimony to fit the government’s theory of the case and of misusing grand jury evidence subpoenaed in the campaign finance investigation.

In seeking permission from his superiors for an indictment, he said, Tortella submitted a memorandum that excluded exculpatory evidence gathered during the probe.

Barish also argued that the tax case was intended to wear down Hsia and her defense team by piling on charges against her in addition to the campaign fraud case. He said Hsia’s determination to vigorously fight the campaign fraud charges filed in Washington has angered the task force “so greatly that it will stop at nothing.”

Luque, who successfully defended Julie Hiatt Steele in an obstruction of justice case brought by Whitewater prosecutor Kenneth W. Starr, has been fighting the campaign finance charges against Hsia. A federal judge in the District of Columbia dismissed five of the six charges against Hsia, but an Appeals Court recently reinstated them.

Except for acknowledging Tortella’s comment about Luque and Hsia, Laplante denied all of Barish’s allegations against the prosecution team.

Paez said that Tortella’s remark was “unfortunate, unnecessary and poor judgment,” but he declined to declare a mistrial because he said there was no showing that jurors were aware of the comment and, therefore, they had not been prejudiced.

The “lesbian lovers” notation might never have been discovered were it not for an accident. The reference was blacked out when the memo was turned over to Hsia’s defense. But a lawyer representing a government witness in the case happened to have seen the original version and tipped off Barish. Hsia’s lawyer went to Paez who ordered the prosecution to turn over the unexpurgated original.

The controversy over Tortella may prove to be the least of the prosecution’s troubles. The jury trial has not gone well for the task force team.

Their star witness, Hsia’s former tax preparer, Richard Tsai, gave conflicting and often confusing testimony on the witness stand. As a final resort, the prosecution was forced to impeach him with his own grand jury testimony.

Paez took note of that during the hearing on the mistrial motion while jurors were absent. Referring to Tsai, he said, “He was inconsistent here on the witness stand. He was inconsistent with his testimony before the grand jury. He was inconsistent with the matters he told the the government.

“I guess,” the judge added, the prosecutors “are stuck with what they have done.”

Hsia is accused of failing to file a personal income tax return for 1994, filing false personal returns for 1995 and 1996 and assisting in the filing of a false return for her business.

In his opening statement to jurors May 6, Tortella said Hsia deliberately fed Tsai false information and diverted money from her immigration consulting business, Hsia & Associates, to cheat the Internal Revenue Service. But Barish has pinned the blame on Tsai who, he said, made mistakes in processing her tax returns and in handling her business and personal financial accounts.

Both sides rested Thursday after an accountant testified for the defense that the IRS actually owed Hsia money. The case will go to the jury after closing arguments. If convicted on all charges, Hsia could receive up to 10 years in prison and an $850,000 fine.

No firm date has been set for the campaign finance trial, which will be held in Washington. Hsia is accused of funneling campaign cash from unidentified sources through clerics at the Hsi Lai Temple to the Clinton-Gore campaign in 1996. Vice President Al Gore’s attendance at a fund-raiser there is expected to dog his presidential campaign.

Hsia is accused of using the monks and nuns to launder contributions to Don Knabe’s successful 1996 race for Los Angeles County supervisor, the 1994 reelection campaign of Sen. Edward M. Kennedy (D-Mass.) and the 1996 reelection effort of his son, Rep. Patrick J. Kennedy (D-R.I.).