L.A. County Prosecutors Fight Over Newhall Case

Prosecutors in the district attorney’s office are trading unusually public charges of recklessness and unprofessional conduct over the way Dist. Atty. Steve Cooley and his top deputy narrowed an investigation into alleged environmental crimes by one of Los Angeles County’s largest land developers.

At the center of the dispute is Newhall Land & Farming Co., which wants to build more than 20,000 homes on ranchland in the northern part of the county.

Until last April, Deputy Dist. Atty. Diana Callaghan was investigating allegations that Newhall had tried to hide the widespread presence of an endangered plant on the land slated for development. The presence of the plant could slow plans to develop parts of the ranch and substantially increase the company’s costs. The company denies that its actions violated the law.

When Callaghan and her supervisor proposed searching the developer’s offices as part of a perjury and conspiracy investigation into the company’s actions, the case was taken from them by Chief Deputy Dist. Atty. Curt Livesay. He called the proposal legally flawed and instead, without telling the environmental prosecutors, set in motion a more limited search.

Since then, prosecutors have filed a misdemeanor charge against Newhall. According to a source familiar with the case, prosecutors are discussing settling the matter with the developer.

Callaghan was transferred to a job she objected to after The Times inquired about the case. She and the head of the environmental crimes unit, Richard Sullivan, are skeptical of their superiors’ motives.

“I don’t think the D.A. was willing to take on a company as big as Newhall,” Callaghan said in an interview.

Top officials in the district attorney’s office heatedly deny that.

“Fear of Newhall has not in any way, shape or form influenced the decisions we’ve made in pursuing a course of action,” said Deputy Dist. Atty. Janet Moore, who is now directing the investigation.

Cooley and his top aides say the approach proposed by Callaghan and Sullivan was deeply flawed. Their proposal would have been “reckless and unethical,” Cooley said.

Top district attorney’s officials say the actions proposed by Callaghan and Sullivan could have exposed investigative information that prosecutors had promised to keep confidential. Their own actions, they say, were guided by the law and a desire to save the endangered plant, the San Fernando Valley spineflower.

Cooley added that he doubts that perjury charges against Newhall “would have withstood scrutiny.” But he said that his prosecutors will decide whether additional charges will be filed and that the investigation is continuing.

Newhall, a publicly traded development company, plans to build 21,600 homes along the Santa Clara River at the northwestern edge of Los Angeles County. County supervisors approved the project in early 1999. After a lawsuit, a judge ordered the developer to rewrite key environmental documents, stalling the project. Supervisors are scheduled to vote on those new documents in March.

Newhall is a major donor to county and state officials. Since 2000, it has contributed $248,000 to state and local political campaigns, including $10,000 to the reelection of Democrat Gov. Gray Davis.

Cooley, a Republican, received $500 from the firm for his campaign in 2000. His highest-profile supporter in that race, Supervisor Mike Antonovich, who represents the area that includes Newhall Ranch, has received more than $70,000 from the firm over the years.

Livesay said he made his decisions in consultation with other prosecutors -- including the author of the office’s search-warrant manual -- with no eye toward external pressures.

“I don’t know Newhall. I don’t know anybody up there,” he said. “It’s ludicrous to think that I would make any decision based on some defendant’s status in the community.”

The foot-tall San Fernando Valley spineflower unfurls its dime-size blooms for only about six weeks annually, but it has disrupted two of the region’s highest-profile developments.

Long believed extinct, the plant was found on the proposed Ahmanson Ranch development near Calabasas in 1999. The following year, Newhall Land & Farming reported the discovery of one small stand of the plants on the Newhall Ranch.

When the judge delayed the development, Newhall stopped searching for spineflowers. The company argued that, even though there probably were other flowers on its property, it could locate them when it was closer to building. In April 2001, the company filed environmental documents citing only the original find of spineflowers.

Environmentalists contended that there must be more flowers on the property, but the developer replied in papers filed in October 2001 that the “known” location of the plants was the single stand disclosed earlier, according to records.

Weeks later, investigators for the California Department of Fish and Game told the district attorney’s environmental crimes unit that they had information that Newhall knew of other spineflowers on its land.

That allegation is central to the legal arguments.

“I considered it highly significant,” said Sullivan, head of the environmental unit. “If, in fact, a developer were filing false information” in an environmental impact report, that “undercuts the whole process.”

Sullivan assigned the case to Callaghan. In April 2002, she sent him a memo outlining her investigation into the possibility of charges of perjury, filing false documents and destruction of native plants. Callaghan listed locations that needed to be searched as quickly as possible, because the spineflower at that time was in the middle of its brief blooming season.

Callaghan suspected that Newhall had concealed the number of spineflower sites “to avoid the types of mitigation measures and changes ... required in the neighboring Ahmanson Ranch project,” according to the confidential memo. “The changes in their plans, coupled with the mitigation measures, would cost Newhall millions of dollars, in addition to the millions they are spending to develop the project.”

Sullivan approved Callaghan’s request for a search of Newhall’s offices and land. But there was a complication: Fish and Game was demanding that its attorneys review any warrants and appeared apprehensive about pursuing a criminal case, Sullivan said. So he told his superiors that “the will of Fish and Game seemed to be questionable.”

On April 18, two days after being sent the warrants, Sullivan’s immediate superior signed off on them. Later that day that official sent Callaghan an e-mail reporting that his superior, Assistant Dist. Atty. Peter Bozanich, also had approved.

Because the search would include the office of one of Newhall’s lawyers, it needed final approval from Livesay, the chief deputy district attorney.

Livesay and Bozanich say they were troubled by the proposed warrants. Bozanich said he never approved the package, but sent it along to Livesay and flagged it as problematic.

“I was really concerned we were going in a traditional ... fashion and we were not focusing enough on saving the spineflower,” Livesay said. He asked Moore, who worked as an agricultural inspector for eight years before becoming a deputy district attorney, to review the case.

“Our approach was to focus at what’s really important and keep a species from disappearing from the face of the planet,” said Moore, currently the head of the district attorney’s hard-core gang unit.

She and Livesay had a significant concern about protecting the information they had received from Fish and Game if they searched areas outside of Newhall’s property.

But Sullivan argued that his colleagues risked missing the most important aspect of the situation. “We considered this case predominantly a ... corruption case,” he said. “My concern was that the office was shifting the focus of the case from corruption and fraud involving environmental impact reports to the misdemeanors involving the flowers.”

Callaghan also spoke with Moore. Moore, Callaghan said, told her that nothing about the case should be put in writing, talked about the possibility of settling with Newhall without filing felony charges and said senior officials in the district attorney’s office were “nervous” about the case.

According to Callaghan, Moore indicated that Cooley was concerned about the possibility of public embarrassment from the case, referring to it as “Steve’s O.J.” -- a reference to the O.J. Simpson case, which troubled the office under Cooley’s predecessor.

Moore has said she does not recall making such statements.

Sullivan said he made his concerns clear to his boss in a May 7 meeting and reemphasized them in an e-mail. He was then directed to turn over all investigative documents to Moore. He said he heard nothing else about the case until May 22, when he was looking for a district attorney’s investigator to serve an arrest warrant in an unrelated matter. All the investigators were gone.

According to Sullivan, when he asked where they were, he was told they were searching Newhall’s property and had been ordered not to tell anyone in the environmental crimes unit.

The next day Sullivan met with Livesay. The chief deputy suggested that Sullivan’s unit resume control of the case, saying he needed someone to continue to investigate and to file charges based on what was discovered during the search.

Sullivan refused. “I was pretty hot,” he recalled.

Livesay said the failure to notify the prosecutor had been accidental. “Sullivan was upset that I took him and his team off the case,” Livesay said. “I did, and I did it for good reason.”

Ultimately, Sullivan requested a transfer out of the environmental crimes unit.

Callaghan also requested a transfer. After The Times initially inquired about the Newhall case in December, Callaghan was transferred to the office’s complaints unit, which handles the filing of most criminal cases.

It was a unit she had specifically asked not to be sent to, she said, referring all other questions to her supervisor, Sullivan.

Livesay said that Callaghan’s transfer had nothing to do with the Newhall case, which she had not worked on for months, but that he could not further discuss personnel matters. “This is in no way connected to spineflowers,” he said. “She asked me to leave that unit” -- the environmental unit.

The limited search uncovered numerous spineflowers on Newhall’s property. It also turned up evidence that the developer had terraced hillsides holding the flowers and had spread hay that enticed cattle to munch on the plants, according to court records.

Although no longer assigned to the case, Sullivan urged other prosecutors to follow up with a search of Newhall’s offices. The discovery of the flowers, he said, provided ample grounds for searching company records to see whether environmental documents had been falsified.

Recent filings by the company indicate what those records contained. According to the filings, Newhall, two years before the search, had found an undisclosed number of plants that appeared to be spineflowers but were never sent to a lab for testing. Those “unconfirmed” spineflowers were in addition to the one stand of spineflowers the company had reported.

The filings also show that a surveying company working for Newhall was not asked to turn over all of its maps of spineflower sites before suspending its searches in 2000. The maps, which have now been made public, show thousands of other spineflowers.

Finally, the filings show that, in 2001, Newhall found another patch of spineflowers elsewhere on the Newhall Ranch land.

Instead of following the course Sullivan was pushing for, the district attorney’s office followed a more modest course: Rather than conducting more searches, prosecutors filed the single criminal charge of illegally altering a streambed. The office said it could not charge Newhall with illegally destroying the flowers for two reasons -- the statute of limitations had lapsed without the presentation of a case by Fish and Game and the state had yet to provide a needed legal opinion.

Newhall contends that there are no legal grounds to charge it with additional crimes and says the work that might have destroyed spineflowers last year was legal farming. Spokeswoman Marlee Lauffer said the company had voluntarily approached Fish and Game with its initial spineflower find before the plant was placed on the state’s endangered species list in August 2001.

“I think we’ve been very forthright about the existence of spineflowers on our property,” she said.

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Development dispute

Some Los Angeles County prosecutors and state Fish and Game inspectors believe that the Newhall Land & Farming development company has concealed the number of San Fernando Valley spineflowers that grow on its land. The following is a timeline of key dates in the dispute:

May 1999: San Fernando Valley spineflowers, which had been believed extinct, are found on the Ahmanson Ranch development in eastern Ventura County.

May 2000: Newhall announces it has found a single stand of spineflowers on the site of its proposed Newhall Ranch development in an area called Grapevine Mesa. A document written by a prosecutor alleges that the developer also found spineflowers at sites other than Grapevine Mesa. Newhall finds other “unconfirmed” spineflowers that are not sent to labs for testing and not announced. Instead, it halts its surveys on its property and says it did not ask its surveyors what other flowers they had found.

April 2001: Newhall files an addition to its environmental impact report, disclosing the “one small population” of spineflowers at Grapevine Mesa but does not mention any other flowers.

May-June 2001: Newhall conducts additional spineflower surveys and finds the plant at another site on its property called San Martinez. It does not announce the finding.

August 2001: Newhall begins grading hillsides in what state Fish and Game inspectors say is an effort to destroy spineflowers. The developer says it is simply farming its land.

October 2001: Responding to criticism from environmentalists that it has not looked hard enough for spineflowers, Newhall says in public documents that its April 2001 filing about the Grapevine Mesa discloses the “known” stand of spineflowers.

April 2002: The district attorney’s environmental crimes unit proposes searching Newhall’s property and offices, as well as those of Newhall consultant Impact Sciences, to look for spineflowers and evidence of crimes of perjury and filing false documents.

May 22, 2002: The district attorney’s office and Fish and Game search Newhall’s property, though not its offices or those of its consultant. They find several stretches of spineflowers and the remains of others.

November 2002: Newhall files new environmental documents disclosing the 2-year-old “unconfirmed” spineflower locations, as well as the year-old San Martinez discovery. The company also reveals that its surveyors had found other spineflowers in 2000.

Sources: District attorney’s records, court filings and environmental reports by Newhall and its contractors.

Los Angeles Times