Watchdog Agency Bids for Respect : Fraud: Regional office of U.S. trustee is viewed by experts as ineffective in fighting abuses. But new leader and more funds may change that.

Like the Los Angeles Clippers basketball team, the U.S. Trustee’s Office in Southern California has never received much respect--and for good reason.

The agency, created by Congress in 1978, is supposed to act as a national watchdog against bankruptcy fraud and ensure that cases are processed efficiently and thoroughly.

The Los Angeles office, however, has always been overworked and underfunded, leading to problems that have worsened as caseloads increased. Many local experts, including former staff members, view the agency as hopelessly disorganized and ineffective.

Yet, as with the Clippers, there is hope for the first time.

The regional office is to receive new funds to bolster its beleaguered support staff and has gotten fresh leadership from an ambitious bureaucrat named Marcy J. Tiffany, who pledged since becoming the region’s U.S. trustee last April to shake up the agency and improve its image.

“I think there will be a dramatic improvement in the next year,� she said in a recent interview. Among her goals: to curb excess administrative costs and inject a new aggressiveness in the private trustees who do much of the front-line oversight work.

Many bankruptcy experts say Tiffany, 42, is the most able official yet to hold the job of U.S. trustee for the Central District of California--an area that includes most of the Southland, with a population of more than 14 million.

She most recently headed the Los Angeles regional office of the Federal Trade Commission. Before that, Tiffany held a variety of private- and public-sector legal posts. She has undergraduate (philosophy), graduate (economics) and law degrees from UCLA.

As a public figure, Tiffany is overshadowed by her husband, Alex Kozinski, a judge on the U.S. 9th Circuit Court of Appeals. A well known and articulate conservative, Kozinski is frequently mentioned as a possible nominee for the U.S. Supreme Court.

Tiffany appears determined to make her mark by revitalizing the U.S. Trustee’s Office in much the same manner that she helped breathe life into the regional FTC office.

When she assumed the regional trustee job, the office was especially hard-pressed. Staff levels had seriously eroded; the filing system was in chaos. One of her first moves was to have everyone come into the office in casual clothes and do nothing but file papers for two weeks.

Most of her challenges, though, are not so easily addressed. One is to combat the prodigious cost of corporate bankruptcy reorganizations, known as Chapter 11s. She calls the escalating costs a “national scandal� that hits creditors the hardest.

“Too much is going to legal and administrative fees,� she said. “Something is wrong there.�

Tiffany said she is going to demand that law firms organize their bills in ways that can be understood and analyzed by her analysts and creditors. The present billing system is incomprehensible, she said.

Another challenge is the system of private trustees--a select group of accountants, lawyers and personal finance experts appointed to supervise personal bankruptcies, corporate liquidations and some Chapter 11 reorganizations.

The private trustees rarely probe into straight personal bankruptcies--known as Chapter 7s--because the task pays only $45 per case. Tiffany indicated that she wants the private trustees to be more aggressive and look for hidden assets.

If they do not, she warned, “they will be replaced.�