Hearing in Shelley Case Delayed

Lawmakers agreed Wednesday to delay a hearing at which besieged Secretary of State Kevin Shelley was expected to be questioned under oath about his handling of allegedly misspent federal election funds.

Shelley’s much-anticipated appearance before the Joint Legislative Audit Committee, which originally was set for today, was postponed until Feb. 22.

With speculation swirling that Shelley might resign in the face of multiple investigations of his political and professional conduct, legislative leaders of both parties said the delay would give them more time to prepare to interview Shelley, a Democrat, and his aides.

Shelley, who has consistently denied any intentional wrongdoing, plans to appear before the committee, spokesman Sam Singer said.

“The secretary intends to testify,” he said. “And that’s still his stated position.”

Besides the legislative inquiry into the handling of voting-reform money and a pending audit by the U.S. Election Assistance Commission, Shelley faces investigations by a federal grand jury and the attorney general into his political fundraising and the hiring of a Shelley supporter’s son.

He also has been the subject of a recent Personnel Board audit that found that he had created an “abusive” work environment.

Sources close to Shelley said he had been weighing the best course of action -- including resignation -- for his office, himself, his family and his party.

Lawmakers are investigating a December state audit that concluded that Shelley’s office mishandled some of the $81 million in federal money that California has received under the 2002 Help America Vote Act. Congress intended the money to modernize voting equipment, build a statewide registry of voters and otherwise upgrade the nation’s election system.

Auditors examined the expenditure of $47 million. They blamed Shelley’s office for poor planning and oversight, disregarding state contracting rules, delaying the allocation of money to counties to buy voting machines and spending some of the money on “voter outreach” contractors who often appeared more focused on raising Shelley’s political profile than registering voters. State auditors concluded that California could be forced to return some of the federal money.

The 14-member Joint Legislative Audit Committee includes Democrats and Republicans from the Assembly and Senate. Each party has hired independent attorneys to help its members prepare to question Shelley and his aides. Using as a model the 2000 legislative inquiry into alleged misdeeds by then-Insurance Commissioner Chuck Quackenbush, a Republican who eventually resigned, Republicans and Democrats have agreed to share documents and interview witnesses together.

They also have agreed to limit their inquiry to the expenditure of Help America Vote Act funds.

Democrats hired former assistant U.S. attorney Malcolm Segal to lead their inquiry. A white-collar criminal defense lawyer, Segal is managing partner in the Sacramento law firm of Segal & Kirby.

Republicans hired James Sweeney, founder of the Sweeney, Davidian & Greene law firm in Sacramento. Sweeney served as chief counsel to former Secretary of State Bill Jones in 1997 and 1998.

“They both said -- Mr. Sweeney and Mr. Segal -- we need a couple of weeks,” said Senate President Pro Tem Don Perata (D-Oakland). “Fix a date, we’ll work off of a date, and then we’ll advise the committee further.”

Assembly Speaker Fabian Nunez (D-Los Angeles) said that his appointees to the audit committee were prepared for a hearing today but that “the new counsel convinced us otherwise.”

Senate Minority Leader Dick Ackerman (R-Irvine) said the lawyers needed time to review evidence and design a roadmap for the hearings. Ackerman said that Shelley should not testify until the panel has heard from his aides, but the order of witnesses has yet to be agreed upon.

Were Shelley to resign before Feb. 22, his testimony may not be needed, Ackerman said. “It depends on what the evidence shows,” he said. “See what’s out there.”

But as long as Shelley is in office, Ackerman said, “it would be inappropriate to not ask him to give his explanation.”

The audit committee convened one hearing, on Jan. 10, at which Shelley’s special counsel, Tony Miller, testified about reforms that had recently been made to improve the office’s handling of the federal money. With Assemblywoman Nicole Parra (D-Hanford), the committee chairwoman, threatening to subpoena Shelley, the secretary agreed two days later to testify at a future hearing.

Perata praised the delay that was announced Wednesday, saying that “there seemed to be a little stampeding going on.”

“Everybody was sort of salivating to get to Kevin Shelley, which did not seem like it was the real point after a while,” Perata said. “What we were trying to do was to define the problems that existed that was putting this [Help America Vote Act] money in jeopardy.”

Times staff writer Tim Reiterman contributed to this report from San Francisco.