Prosecutors Dropping Part of Moreno Corruption Case

In a surprise move just days before the planned start of a major political corruption trial, federal prosecutors said Thursday they’ve decided to drop one of two extortion charges against the Santa Ana councilman at the center of the case.

Prosecutors took the action after acknowledging in court that they were having trouble with a key witness. The witness is one of two businessmen who, according to prosecutors, Santa Ana Councilman Ted R. Moreno shook down as part of an elaborate extortion and money-laundering scheme during the 1996 election campaign.

Government attorneys declined to elaborate on their actions. The defense planned to present evidence at the trial of a prior misdemeanor accusation against the witness, Santa Ana property owner Jack Blackburn.

Prosecutors had charged that Moreno extorted $10,000 in campaign donations from Blackburn in exchange for help in rezoning some land the businessman owned. But in an interview Thursday, Blackburn said he didn’t try to influence the councilman’s vote with money.

“I have no love for Moreno, but at the same time I can’t say something that’s not true,” Blackburn said. “I didn’t give any money to Moreno to vote a certain way.”

Even with the dropped accusation, Moreno, 32, still faces charges that he conspired to extort and launder $31,000 from a gasoline station owner for favorable votes on a liquor permit. Former Councilman Tony Espinoza and unsuccessful council candidate Hector Olivares also face charges for allegedly taking part in the scheme.

The trial was scheduled to begin Feb. 3 at U.S. District Court in Santa Ana. But Judge Gary L. Taylor on Thursday postponed it to at least July, nearly two years after a grand jury indicted Moreno, Espinoza, Olivares and Roman Palacios on various charges.

Prosecutors alleged that Moreno and Espinoza attempted to win a majority on the City Council by extorting campaign contributions and funneling them to Olivares and Palacios. Palacios has pleaded guilty and is expected to testify against the others.

Moreno, who is free on bail, has denied any wrongdoing. His attorney called the government’s action a victory. “This is significant,” Edward Munoz said. “What this does is pare down the government’s case.”

Munoz said he intended to present evidence at the trial of a previous case Blackburn was involved with. Blackburn pleaded guilty in 1980 to charges of laundering campaign contributions on behalf of those trying to recall two Anaheim elected officials.

Blackburn is one of several key figures in the government’s case, which also accuses Moreno of laundering money and lying to FBI agents. Prosecutors said Thursday they will ask a federal grand jury to consider bolstering a money laundering charge against Moreno.

Prosecutors also allege that Moreno tried to extort money from a gas station owner who was seeking a license to sell beer and wine at his North Grand Avenue mini-mart.

Moreno met with the Santa Ana service station owner, Vaskin “Victor” Koshkerian, at a local restaurant and promised to support his application to the city for a conditional use permit, according to the indictment of Moreno. Sales of beer and wine would have added as much as $200,000 in annual revenue to the Grand Avenue Chevron station, prosecutors allege.

In return for their support, the indictment alleges, Moreno and three other council candidates asked for $31,000. The four allegedly had the service station owner write multiple checks in such a way that they would appear to come from separate sources, thereby avoiding limits on contributions from one source.

The indictment states that Moreno declared only $249 from the service station owner, when he received $16,000 in cash and an additional $747 by check.