Allegations Fuel Fear, Strife in Orange County D.A.'s Office

TIMES STAFF WRITER

Veteran Orange County homicide prosecutor Mike Jacobs and his two colleagues built their case methodically and in total secrecy. By February 2001, they were ready to move.

The subject of their investigation wasn't a murder suspect or drug kingpin, but their own boss, Dist. Atty. Tony Rackauckas.

The three prosecutors flew to Sacramento and presented their dossier at the state attorney general's office. It accused Rackauckas of intervening in criminal investigations involving campaign contributors, misusing public funds and punishing enemies inside his office.

Their effort didn't result in an immediate investigation. But the allegations eventually helped spark a grand jury probe that ended last week with a report that accused Rackauckas of interfering in cases involving political supporters, punishing foes and mismanaging California's third-largest district attorney's office.

To his critics, the report finally sheds light on his behavior. To his supporters, it's filled with the lies of political enemies. But one thing is clear: Fear and political infighting divide the district attorney's office, and the grand jury report seems only to have worsened tensions.

"The walls have ears," said one veteran prosecutor who has tried to remain neutral. "No one says anything anymore, good or bad. I mean, would you?"

It wasn't supposed to be this way. Rackauckas was first elected in 1998 by a wide margin, with support from both Republican and Democratic leaders. But within a few months, several top managers in the office had turned against him and an atmosphere of unease and political retribution set in, according to interviews and grand jury findings.

Early on, Rackauckas ordered staff to search the computer hard drives of political opponents in the office. Office investigators were sent to stake out Rackauckas' adult son's house in Riverside County and to search for the boyfriend of one of his top lieutenant's daughters. He continued a close friendship with Newport Beach businessman Patrick DiCarlo, who had been the subject of probes by organized crime investigators from the district attorney's office--even giving him a gun for his birthday.

In the end, according to the grand jury, Rackauckas "set the wrong tone, which continues to the present, that loyalty to the district attorney, personally, is of prime importance, as compared to loyalty and dedication of prosecutors to the district attorney's office and its mission."

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Some of Rackauckas' former top managers said they quickly learned that their boss put a premium on loyalty.

At one of his first management meetings, Rackauckas carried a list with 15 names, all young prosecutors he wanted to fire because they had been hired by his predecessor. His staff talked him out of it, according to the report.

In January 1999, his first month on the job, Rackauckas told managers once loyal to the previous district attorney that they were no longer welcome in the office and placed some of them on leave.

"Right from the get-go, from the top down, there was a spirit of ill will and meanness," said Chris Evans, a former senior manager for Rackauckas who resigned in 1999.

Rackauckas has maintained these early critics of his administration created much of the tension. He said they did not want to go along with the radical changes he wanted to make and became disgruntled when they didn't receive the jobs and authority they believed they deserved.

"This whole thing began with a series of complaints that were politically motivated, and that's how it was driven all the way through," Rackauckas said in an interview last week.

One of those disillusioned was Jacobs. He was one of Rackauckas' strongest supporters during the election and was given the plum job of running the office's elite homicide prosecution team. But after he was on the job a year, Rackauckas transferred him.

Jacobs and others said they became troubled by the way their boss ran the office.

One point of contention was a nonprofit charity Rackauckas founded to help counsel troubled teens. Two of Rackauckas' campaign donors ended up with police-style badges that identified them as Orange County district attorney "commissioners" because of their work with the charity, according to the grand jury report.

When Rackauckas ordered investigators to conduct background checks on potential "commissioners," some prosecutors in the office privately accused their boss of misusing office resources.

Another source of concern: Rackauckas' relationship with DiCarlo, the businessman who had been investigated previously by the district attorney's office but never charged with a crime.

Shortly after he was sworn in as district attorney, Rackauckas celebrated with a dinner party at DiCarlo's estate on the Newport Beach coast.

A few months later, DiCarlo invited Rackauckas back to the house and told him he was receiving threats related to a business deal. Rackauckas ordered his organized crime unit to investigate. But when DiCarlo complained that one investigator was treating him like a crime suspect, Rackauckas ordered the investigator off the case.

Two weeks later, Rackauckas presented DiCarlo with a birthday gift--a Glock 9-millimeter handgun, according to the grand jury's report. DiCarlo later obtained a concealed-weapons permit from Sheriff Mike Carona, a move that allowed him to carry a gun at all times. According to the grand jury, DiCarlo said he carried the gun to protect himself from district attorney's investigators.

Rackauckas says those grand jury findings are "false and ridiculous."

Another source of discord was Rackauckas' involvement in a massive consumer protection case.

The case centered around the Arnel apartment management company operated by billionaire businessman George Argyros, whom President Bush recently named ambassador to Spain.

Prosecutors filed a complaint against Arnel in February 2001, seeking millions of dollars in restitution for tenants they believed unfairly lost security deposits. Rackauckas ordered his deputies to withdraw the lawsuit, which they did. He then took over negotiations without his prosecutors' knowledge, the grand jury concluded.

Both Arnel and the company's lawyer, Allan Stokke, had contributed to Rackauckas' 1998 campaign. In the months before that election, Stokke hosted a fund-raiser at the Balboa Bay Club that generated more than $30,000 for Rackauckas, the report noted.

To Jacobs and other prosecutors in the office, Rackauckas' actions seemed improper. A few weeks later, Jacobs met with senior state lawyers in the offices of Attorney General Bill Lockyer.

"It wasn't something I liked doing. I felt I had a duty to pass it on," Jacobs said.

Two months after the trip, Rackauckas served Jacobs with termination papers. The former homicide unit supervisor filed a wrongful termination lawsuit against Rackauckas. The suit is pending.

Rackauckas eventually withdrew from the Arnel case and allowed state prosecutors to take over. Several months later, Arnel agreed to pay $1.5 million to settle the case. Rackauckas said the settlement was for less money than he was seeking--proof, he said, that he was not playing favorites.

The district attorney strongly disputes many characterizations in the report and vows to set the record straight with a detailed response.

"From what I understand, [the testimony] was largely opinion and conjecture. Every time there was a rumor at the water cooler, there was testimony about it before the grand jury," Rackauckas said.

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Many of the issues raised in the report have been public for months. Wally Wade, a deputy district attorney, made Rackauckas' actions in the DiCarlo and Arnel cases centerpieces of his campaign to oust his boss earlier this year. Before the election, Rackauckas also closed down his foundation as part of a settlement with the state attorney general's office, which concluded that its finances were mismanaged.

Orange County voters reelected Rackauckas in a landslide victory.

After the election, Rackauckas announced that Wade and six other prosecutors who opposed his reelection would be moved out of the district attorney's office and into a new separate family support unit that will soon become a state agency, no longer part of the district attorney's office.

The grand jury's report left Wade feeling vindicated. Rackauckas supporters said they don't expect it to have a lasting impact, in the office or with the public.

But hopes that tensions in the office might be easing were dashed Friday with a new controversy. One deputy sent out an e-mail Friday imploring his colleagues to sign a letter supporting their boss.

Deputy Dist. Atty. Chris Kralick, head of the union that represents the office's 245 line prosecutors, immediately complained that the solicited support could have a chilling effect in the office. Those who didn't sign, he feared, could face retaliation.

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Times Staff Writer Jean O. Pasco contributed to this report.

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