One of Orange County's most controversial defense attorneys was arrested Tuesday along with his wife on suspicion of laundering $175,000 in drug profits. The arrests followed an FBI sting operation.
William Stewart of Newport Beach appeared in federal court Tuesday afternoon, shackled to a waist chain alongside his wife, Amalia, and a business colleague also arrested in connection with the alleged laundering.
Stewart, who for years controlled the county's million-dollar contract to represent indigents accused of crimes, told the judge he could not afford his own attorney and asked that the court appoint one for him.
As Magistrate Mark L. Goldman reviewed Stewart's file, he said: "You have a substantial income for a court-appointed attorney. It appears that you don't have any liquid assets."
Clad in a Ralph Lauren T-shirt and jeans, Stewart replied: "That's in essence the problem."
Goldman granted the request to have the U.S. government pay for a federal public defender to represent Stewart. But the judge warned Stewart that he may be required to repay at least a portion of his legal expenses later in the case.
Stewart, 55, held the lucrative county contract for indigent services for 15 years, despite drawing fire from Orange County judges over the way he handled his responsibilities.
Critics faulted the way he "sublet" cases to other attorneys while running a private import-export business out of Colombia, sometimes communicating with county officials by fax and phone.
Stewart also came under scrutiny when it was revealed that he regularly paid for limousine rides to parties and other events for judges and prominent county officials.
But after Orange County's 1994 bankruptcy, Stewart eventually lost his county contract as officials scrambled to cut costs where they could.
In recent years, the once-wealthy Stewart fell on hard times, federal prosecutors said. Two years ago, he was targeted by federal and state tax collectors, who together socked him with more than $1 million in tax liens.
Federal prosecutors allege that Stewart may have turned to money laundering as a quick way to turn his financial problems around.
"He was used to a certain lifestyle," said Assistant U.S. Atty. Carmen R. Luege after Tuesday's court hearing. "I'm not sure if he was able to keep that up after the end of the contract."
The investigation took more than two years and was a spinoff from an earlier case against an uncle of Stewart's wife.
Authorities tape-recorded conversations two years ago between Amalia Stewart and her uncle, Maximiliano Ramirez, while Ramirez sat in custody in Los Angeles on money-laundering charges. The pair spoke in code, and authorities launched a probe of Amalia Stewart, believing that she was trying to launder "several million dollars" through a Laguna Beach jewelry business that William Stewart owned, court records allege.
It was during that investigation that Amalia Stewart, 35, allegedly told an undercover agent that she used her husband's legal practice to launder money for drug dealers, according to documents.
The undercover agent asked the couple for help in laundering $50,000 and then another $125,000, with the promise of more work in the future if the two transactions were successful, Luege said. As part of the deal, the Stewarts were allowed to keep $24,000, Luege said.
The Stewarts funneled the money through accounts held by the William W. Stewart & Associates legal practice, according to court documents. Prosecutors allege they were helped by Bart Siggson of Yorba Linda. Siggson, who owns an Anaheim tanning salon, was charged Thursday on lesser charges stemming from the laundering scheme.
A federal grand jury last week indicted the Stewarts on nine counts of money laundering, carrying a maximum sentence of 235 years in prison and fines up to $5 million. On Tuesday, the couple was ordered to remain in custody until a bail hearing on Thursday.