SANTA ANA — After nearly a year of investigation by the district attorney's office, the Orange County Grand Jury is poised to accuse some current and former supervisors and the county auditor-controller of misconduct in the largest municipal bankruptcy in history, several sources said.
The inquiry involves possible criminal and civil violations, sources said, and may include actions against several other top officials and county employees.
While it is unclear whether the grand jury will indict county officials or employees for their part in the events leading to the bankruptcy, the sources said, it is nearly certain that the panel will issue "civil accusations" against those supervisors, Auditor-Controller Steve Lewis and some of the other officials.
"Anyone who had knowledge of what was going on, took an official action, or failed to disclose what they knew may be in trouble," said one source who spoke on the condition that his name not be used.
Because grand jury investigations are secret by law, sources interviewed said they could not be named.
The grand jury may take action by Thanksgiving, sources said.
If the grand jury chooses to issue civil accusations of "willful misconduct" against public officials, the accused officials are entitled to present a defense at a trial. If the accusation is upheld by a jury, the official is removed from office.
But, said one source, "the door is not closed on criminal indictments; in fact, the door is very much wide open."
Mario Lazo Jr., foreman of the 19-member grand jury, said he is prohibited from discussing pending grand jury matters.
Chief Assistant Dist. Atty. Maury Evans could not be reached for comment.
William G. Steiner and Roger R. Stanton are the only supervisors still on the board who were in office when the county's investment portfolio lost $1.7 billion and forced the bankruptcy filing.
Harriett M. Wieder and Thomas F. Riley left the board last year when their terms ended. Neither could be reached for comment. Riley is hospitalized in Minnesota. Gaddi H. Vasquez, who resigned recently, also could not be reached.
And neither Stanton, the board's current chairman, nor his lawyer returned calls for comment.
Steiner said he would not comment on the grand jury's investigation.
But, Steiner added, "the D.A.'s office is very thoughtful and methodical. Their actions are not going to be based on some imposed deadline [such as the expiration of the grand jury's term]. They will proceed only when they have solid evidence for a prosecution."
Lewis, who has repeatedly defended his actions as appropriate, also declined to comment. "Mr. Lewis is not going to talk about the grand jury," his secretary said.
At least five current and former staff members of Steiner and Stanton were subpoenaed this week to testify before the grand jury. They received three-page subpoenas ordering them to bring telephone records, personal calendars and correspondence, said one staff member who was subpoenaed.
"What's going on is there's this need to blame someone," said the staff member, who asked not to be identified. "People are pointing fingers at each other and everyone's getting real nervous."
Because the grand jury's term expires at end of the year, sources said, the panel and the district attorney's office want to conclude the cases against county officials before then. The district attorney's office does not want to have to educate a new panel about the county's role in the bankruptcy and the events leading to it, sources said.
The jury term's expiration in December "is driving a lot of what's happening right now," said one county official of the recent flurry of subpoenas. "There's been an increase in intensity."
The official, who asked not to be identified, said, "There's a lot of speculation that Mario Lazo and the grand jury want to put their stamp on this case and that's why they wanted to be there for 18 months. The grand jury wants to bring closure to this before their term is over."
Earlier this year, the grand jury sought a six-month extension of its term so it could continue hearing the criminal case and complete its own civil investigation of the bankruptcy.
Steiner and Stanton were called back to testify before the grand jury last week, sources said.
For the officials and some of the staff members facing civil accusations and possible criminal charges, sources said, the grand jury is considering the same state securities laws that former Treasurer-Tax Collector Robert L. Citron pleaded guilty to violating last April and that formed the basis for the indictment of former Assistant Treasurer Matthew R. Raabe last May.
Orange County filed for bankruptcy Dec. 6, 1994, after it was revealed that the county investment pool managed by Citron had lost nearly $1.7 billion in risky securities transactions.
Citron pleaded guilty to six felony counts including securities fraud and misappropriation of funds. He faces up to 14 years in prison, but has yet to be sentenced. Raabe is awaiting trial.
As part of his agreement to plead guilty, Citron has cooperated with the investigations by the district attorney, the U.S. Securities and Exchange Commission and the U.S. attorney's office.
In court papers filed recently, the district attorney said Citron has met with investigators 16 times and that his "cooperation will be necessary to the ongoing criminal investigation for several more months."
Former Finance Director Eileen Walsh, who testified extensively before the grand jury recently, said she was admonished not to discuss the questions she was asked.
But, she said, "it's sad but true that the entire county culture here tends to go along to get along. Unfortunately, some good people got caught up in what this county calls 'being a team player.'
"I am glad the truth is emerging and I hope the taxpayers keep their eye on the ball in reforming county government," Walsh said.