Rackauckas Defends Actions in Campaign Donor’s Case

Under scrutiny for intervening in an extortion case involving a friend, Dist. Atty. Tony Rackauckas said Wednesday that he has ended his personal involvement in a massive consumer protection investigation involving a key campaign contributor.

The case involves Arnel Management Co., an apartment firm owned by developer and Republican Party donor George Argyros. Arnel is accused by prosecutors of unfairly keeping security deposits of potentially thousands of tenants. Arnel could face several million dollars in fines and an order to repay hundreds of thousands of dollars to former tenants.

Deputy district attorneys filed a civil lawsuit against Arnel several weeks ago. But Rackauckas concluded that the lawsuit was filed prematurely, before a final settlement conference was held.

So, Rackauckas said, he intervened, turning the case over to a new prosecutor for settlement negotiations.

“My involvement only came about as a result of the case being accidentally filed,” Rackauckas said in a statement released Wednesday. “Our main goal is to reimburse potentially thousands of people who feel they have been aggrieved. If the case settles, it allows us to accomplish this goal years earlier than if the matter went to trial.”

Some critics, however, describe Rackauckas’ actions as unusual, especially given the $1,000 Arnel contributed to his campaign. Critics say Rackauckas should have tried to distance himself from the case.

“This is more than unusual: It has never been done before,” said Jan Nolan, a private attorney who spent three years managing the Orange County district attorney’s consumer protection unit.

“The question is: ‘Why is Tony personally interceding, particularly when it involves a political supporter?’ ” said political watchdog Shirley Grindle, who supported Rackauckas’ opponent in the last election.

Rackauckas said that he was personally involved in the case only briefly and that his decisions will bring the best result.

“It was the right thing to do at the time,” he said in the statement. “I feel strongly that Arnel and Mr. Argyros should not be treated any more harshly or subject to less scrutiny because Mr. Argyros happens to be a high-profile community figure.”

Controversy started last April, when a friend and political contributor, Patrick DiCarlo, told Rackauckas that he was being extorted as part of a business deal gone bad.

Rackauckas assigned the case to his organized crime unit, which had previously investigated DiCarlo but never prosecuted him. Within a few weeks, Rackauckas pulled two investigators off the case after DiCarlo complained that he was treated like a suspect, not a victim.

Rackauckas asked the attorney general to consider criminal charges against both investigators last week when he discovered that evidence thought to have been destroyed was distributed to members of the public.

Three of Rackauckas’ own prosecutors asked the state attorney general to investigate their boss for obstructing justice in the DiCarlo case and for allegedly misusing office resources in a private charity in his name. Rackauckas said he’s done nothing wrong.

Tensions in the office continued to mount this week, when attorneys set up a Web site encouraging colleagues to report alleged misconduct by their boss to the attorney general, state bar and news media. The site also seeks deputy prosecutors’ support in opposing Rackauckas in next year’s election.

The relationship between Argyros and Rackauckas goes beyond the single political contribution. Both men opposed Measure F, which sought to stop construction of a commercial airport at the abandoned El Toro Marine base. Argyros was a major donor to the opposition against Measure F; Rackauckas wrote a ballot statement against the measure, which passed overwhelmingly.

Joseph Gatlin, chairman of the Orange County Grand Jury, said he and his colleagues are concerned about the controversy within the district attorney’s office.

Gatlin said he believes it’s important for everyone to allow the attorney general’s probes to take their course. He noted that employee complaints often amount to little more than “sour grapes.”

“I’m impressed Rackauckas turned it over immediately to the attorney general to clear his name,” Gatlin said.