O.C. IN BANKRUPTCY: THE GRAND JURY’S CHARGES : 19 Citizens Certain to Leave Their Mark as Service Nears End : Law: Run-in with district attorney over possible conflict speaks to controversial panel’s independence.

SANTA ANA — It wasn’t exactly 19 citizens with subpoena power terrorizing county officials for the alleged misdeeds that caused the largest municipal bankruptcy ever.

But the 1994-95 Orange County Grand Jury was by no means a puppet whose strings were pulled by the district attorney.

In fact, it accused Dist. Atty. Michael R. Capizzi of having a conflict of interest, and it asked the presiding judge to let it hire its own independent counsel to investigate the bankruptcy.

Capizzi disputed that he had a conflict, arguing that if the grand jury conducted its own civil investigation, anybody later indicted could argue that the jurors had been tainted by their own investigation.

The district attorney responded to the controversy by threatening to impanel a second grand jury to hear his criminal cases.

The two sides later reached an uneasy truce when the grand jury withdrew its request for counsel, and both the grand jury’s civil, and Capizzi’s criminal, investigation continued.

In the end, this contentious and controversial body that serves as both the county’s civil watchdog and also secretly determines whether probable cause exists to issue an indictment for a crime will have left its mark on Orange County when its term expires Dec. 31.

The grand jury will have indicted two high-ranking county officials, handed up civil accusations against the last two supervisors to preside over the events that led to the bankruptcy and issued several critical reports on the operation of county government.

“It’s certainly been an interesting experience,” grand jury foreman Mario Lazo Jr. said recently, adding that he is prohibited from commenting on the investigative matters until the panel’s term expires.

“A lot of actions were taken [Wednesday], but as you know, we can’t comment on them. These hearings will go on into the next year,” before a new grand jury, Lazo said.

The grand jury asked for and received a six-month extension to its normal one-year term so that it could conduct its civil investigation of the bankruptcy and spare the district attorney the task of having to re-educate 19 new jurors in the middle of his criminal investigation.

Although grand jury matters are required by law to be kept secret until an official indictment or accusation has been issued, for months it has been an open secret among some county officials that the jurors have often had strong disagreements among themselves, often delaying the investigative process.

“You had all the normal problems associated with trying to get consensus from 19 people,” said one official who worked with the grand jury and asked not to be identified. “That meant delays and delays, often over some very small and petty details.”

That also should not be surprising, the official continued: “It’s in the nature of who these people are. They tend to be a self-selected group of talky, opinionated citizens.”

Nevertheless, the grand jury managed to issue three reports strongly critical of county government.

* In September, it blamed the Board of Supervisors for a string of failures that led to the county’s investment debacle, stating, “the foundations of this financial disaster were clearly built on ineffective management.”

For that report, the grand jury hired Kroll Associates, an international consulting firm that specializes in business controls and digging up information for private and public clients.

* In August, the grand jury recommended that county government be drastically revamped, making the Board of Supervisors a part-time body, eliminating some special districts and appointing, rather than electing, the treasurer-tax collector, the auditor-controller and the clerk-recorder.

“Confidence in government must be rebuilt,” the grand jury said in that report.

When that report was issued, grand jury member Walter Jones said, “We had somebody say the solution [to the county government’s problems] was a firing squad.”

* In another report issued in August, the grand jury recommended that the supervisors require lobbyists to publicly reveal who they work for and that they ban campaign donations from people and companies seeking to do business with Orange County.

Grand jurors noted in that report that in the past four years, no contract worth more than $1 million had been awarded without lobbyists being involved.

Last week, Superior Court Judge David O. Carter unsealed the records from the stormy June hearing when the grand jury tried to hire Richard A. Stavin, a former prosecutor, as its independent counsel.

The record of the hearing had been sought by Supervisor William G. Steiner, who unsuccessfully petitioned the California Court of Appeals to forestall the grand jury’s action and disqualify Capizzi as prosecutor.

Steiner too contended that Capizzi had a conflict of interest and should not present the case to the grand jury, arguing in court papers that Capizzi knew as much as any ranking county official about “questionable or unlawful” investments of former Treasurer-Tax Collector Robert L. Citron.

During the June hearing, Presiding Judge James L. Smith said that “it is bound to be viewed from a public relations point of view as a negative reflection upon the district attorney’s office if private counsel is appointed.”

It is unclear from the record why the grand jury withdrew its request to hire Stavin.

But after the hearing record was opened, Steiner’s attorney, Allan H. Stokke, said of the grand jury’s action, “I think it’s amazing. I can’t see how they all avoided the problem by somehow just sweeping it under the rug.”

Stokke called the grand jury apathetic for not acting sooner when the county marched toward bankruptcy, and he called them gullible for yielding to pressure from the district attorney’s office to file the accusations against county officials.

“These same people sat on their hands for six months before the December 1994 bankruptcy,” Stokke said. “They did nothing. It seems ludicrous for this grand jury to make an accusation against Bill Steiner, a man with many, many years of serving the public.”

Controversy over this grand jury actually began before it took office July 1, 1994.

It was sworn in after an extensive effort to recruit qualified and representative women and minorities. The result was a panel of eight women and 11 men, including two blacks and three Latinos, whose ages ranged from 33 to 74.

Diversity became an issue with the grand jury since the 1992-93 panel issued a report calling for a three-year moratorium on national immigration, blaming illegal immigrants for a variety of social ills and prompting the League of United Latin American Citizens to file a civil rights complaint.

This grand jury was led by Lazo, a Havana-born graduate of Harvard University and the Wharton School of Business, and the first Latino foreman in the jury’s history.

Times staff writer Lee Romney contributed to this report.

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Grand Jury Profile

The 19-member grand jury that on Wednesday issued civil accusations and one indictment stemming from the county’s bankruptcy is comprised of 11 men and eight women, with an average age of 63:

*--*

Name Residence Occupation H. Bennie Boillot Santa Ana Retired Gilbert Cruz Westminster Retired Wilbert Johnson Santa Ana Retired Royal Lord Tustin Retired Mary Markus Garden Grove Retired Richard Donnelly Huntington Beach Retired Walter Jones Mission Viejo Retired Ivan McKinney Santa Ana Retired Mary-Evelyn Bryden Fullerton Retired Terry Meckler* Irvine Self-employed Laird Grant Mission Viejo Career development counselor Mary Kitagawa Anaheim Retired Robert Linn Placentia Retired Viola R. Sadler Anaheim Retired Yuuji Tamura Placentia Retired Mario Lazo Jr. Santa Ana Heights Retired Robert Fauteux Villa Park Retired Louis Molina Anaheim Retired Diane West Corona del Mar Temporary worker

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* Resigned recently for health reasons.

Source: Orange County Grand Jury