Sheriff’s Charity Group Probed

A federal grand jury has ordered a nonprofit foundation run by Orange County Sheriff Michael S. Carona to turn over its bank records, financial documents, contracts and correspondence as part of a criminal investigation, a sign that scrutiny of the sheriff’s inner circle is expanding.

The federal probe is the third investigation into organizations or people connected with the sheriff, who has been considered one of the state GOP’s rising stars.

The grand jury ordered that copies of all records relating to the Mike Carona Foundation be turned over, according to a subpoena, a copy of which was obtained by the Los Angeles Times. Signed by Assistant U.S. Atty. John D. Early, the subpoena asked that the foundation turn over the material to the Internal Revenue Service by Sept. 22.

Disclosure of the subpoena comes after last week’s arrest of former Assistant Sheriff George Jaramillo on corruption charges. Jaramillo, whom Carona fired six months ago, allegedly used county patrol cars and helicopters in demonstrations to promote a product developed by a company that was paying him as a consultant.

Another assistant sheriff, Donald Haidl, resigned the previous week to focus on his son’s rape trial. The son, Gregory Haidl, and two friends are facing a second trial; they are accused of gang-raping an allegedly unconscious 16-year-old girl in 2002, at the elder Haidl’s Corona del Mar home. The first trial ended with a hung jury.

Meanwhile, the state’s Fair Political Practices Commission has been investigating whether campaign donations to Carona in 2002 were laundered.

Carona declined to comment on the federal investigation. He said the foundation, based in Newport Beach and operating with minimal overhead and an unpaid staff, works to help at-risk youths.

“We try to put every penny we get into nonprofit organizations that are changing kids’ lives,” Carona said.

Michael Schroeder, the foundation’s attorney, declined to confirm the subpoena but said, “To my knowledge, there is no investigation of the Mike Carona Foundation.”

The subpoena demands a laundry list of items from the foundation, going back to Jan. 1, 1998, about two years before its incorporation. The requested items include:

All financial records, including a list of bank accounts related to the foundation; all associated records, including checks, withdrawals, deposits and monthly statements; names of donors and contributors; the original application for IRS exemption and any IRS audits, reports or letters; a list of prior and current board members; all correspondence, including handwritten notes, e-mails, faxes, letters.

It also asks for records of spending and/or donations by the foundation, made to any individuals and public or private organizations; agreements between the foundation and individuals or organizations; tax returns and related forms; and minutes of all meetings and resolutions since its inception.

The subpoena does not explain why the financial documents and correspondence are needed, nor what the investigation is focusing on. Early declined to comment, and the IRS agent involved in the probe could not be reached for comment. Other law enforcement sources familiar with the case said the foundation is one of several areas the panel is exploring.

The foundation was incorporated in December 1999, with a mission to curb juvenile delinquency among California’s underprivileged children through educational and social programs.

The most recent tax return available from the foundation was filed in 2002 and shows Carona as president. The seven members of the board, who serve as unpaid volunteers, once included Jaramillo but no longer does and includes Haidl, who has now asked to be replaced. Haidl’s sister Peggy is listed as vice president and secretary.

The foundation’s tax returns show that after raising $22,000 in its first two years, it raised $625,050 in 2001 and gave $15,000 to the Hispanic Education Endowment Fund.

In 2002, the foundation reported an ending balance of $484,159 after raising $100,000 and giving $199,800. Some of the groups listed as recipients that year were the Hispanic endowment fund, the Orange County Rescue Mission and Olive Crest children’s home in Santa Ana.