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Did D.A. Give Argyros a Break in Tenant Case?

July 29, 2001|DANA PARSONS

George Argyros may not be able to get to Madrid quickly enough. Somewhere in Washington, D.C., his nomination to be the next U.S. ambassador to Spain awaits a hearing date. Meanwhile, his Orange County property management company faces consumer-fraud allegations that could lead right into Argyros' office.

If that happens, he can and should kiss his ambassadorship goodbye.

Against that backdrop, a classic political question begs to be answered: Did Argyros, arguably the county's most influential political power broker, get an undeserved favor from Dist. Atty. Tony Rackauckas?

The question is a no-brainer to Steve Douglass, a former 30-year Downey Police Department supervisor, but most recently an investigator for the Orange County district attorney's office. Douglass, 57, who quit the D.A.'s office in March, was the sole investigator in a 15-month consumer-fraud probe into allegations that Argyros' company, Arnel Management Co., systematically withheld tenants' security deposits.

Douglass says his investigation convinced him that Arnel, with Argyros' knowledge, ripped off tenants for years. The investigation, conducted under veteran Deputy Dist. Atty. Wendy Brough, led to a civil complaint earlier this year that named both Arnel and Argyros.

Enter Rackauckas.

After reviewing the evidence, he ordered Argyros' name removed. The case then was filed, but Rackauckas also reversed that action, saying the case had been filed prematurely--that is, before settlement talks had been exhausted. He then assigned a new negotiating team.

That was six months ago. Then, in April, Rackauckas sent the case to the California attorney general's office, saying he was doing so to avoid the appearance of impropriety.

Although conceding that Rackauckas has the authority to take the actions he did, Douglass says they were unjustified and likely done for political reasons.

Rackauckas says Douglass isn't an attorney and, therefore, isn't qualified to assess his decision-making. He denies giving Argyros a break and agrees that the evidence Douglass gathered against Argyros' company is strong.

Former Employee Raises Questions About Case

Douglass worked closely with Brough, whose tenure in consumer fraud dates to the mid-1980s. She could add much-needed perspective to this dispute, but she declined to comment, referring me instead to Rackauckas' spokeswoman.

We are left then with Douglass and Rackauckas, and I spoke to both at some length last week. Each began by saying the same thing: They approached the case with a neutral eye toward Argyros, who is a major Republican Party fund-raiser and personal friend of President Bush. Douglass, in fact, says he didn't know who Argyros was when he got the case.

"In the beginning, we realized that if all we had were tenants saying they got ripped off and Arnel Management saying 'No, these were legitimate charges,' how do you prove that?" Douglass says. "We knew that kind of case would never go very far.

"So we started talking to former employees and we were told it was systematically done. Some were surprised there hadn't been legal action taken more quickly. Some said they quit because they couldn't stomach what the company had done. There were few, and I mean very few, who felt that what the company was doing was honest."

Douglass wouldn't detail the evidence that he says implicates Argyros. "That decision [to name him in the complaint] wasn't made early on, because we didn't have enough evidence, but at some point during the investigation, there was enough evidence to convince us he should be charged, and he was named on the complaint."

Douglass says it was obvious that because of Argyros' high profile as a businessman, political figure and community activist, the decision was fraught with implications.

"If you don't have enough to charge the owner of a company, you don't charge him," Douglass says. "If you've got enough, you do. After having the evidence and everybody [in the consumer fraud office] agreeing it should be done, and you do it and then you're told to take the person's name off the complaint, I've never seen it happen before and I've never talked to anyone who'd seen it happen before."

He says Argyros' attorneys refused to make counteroffers after the D.A.'s office indicated it would seek $5.3 million in restitution and fines. That, Douglass says, led to the filing of the complaint.

Douglass, who quit shortly after the controversy surfaced last spring, is in the process of moving out of California with his family. He quit mainly to spend more time with his ailing wife, and not over the case, he says.

D.A.: Evidence Didn't Warrant Listing Argyros

Rackauckas says Douglass has misrepresented the situation.

His decision to remove Argyros' name, he acknowledges, was one over which reasonable attorneys might differ.

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