County Controller Lewis Perseveres Through Adversity

SANTA ANA —  He has been publicly chastised by county supervisors, stripped of some of his key duties and accused of misconduct by the grand jury for his role in Orange County’s bankruptcy.

Through it all, Auditor-Controller Steve E. Lewis has continued to hold on to his job and collect his $104,500 annual salary.

He is one of the county’s lowest-profile elected officeholders, and one of the most controversial. Looking at his role in government, it is difficult to say whether county officials hate him or like him. Is he a culprit in the county’s financial collapse, or an unwitting scapegoat?

On one hand, the Board of Supervisors took away Lewis’ auditing staff and responsibilities and gave those duties to a newly hired internal auditor who is paid more than Lewis.

On the other, they appointed him to two important oversight committees watching over the treasury and county audit operations.

And while supervisors had once tried to pressure Lewis into resigning, more recently they have doled out $300,000 of taxpayer money to help him pay legal fees to defend himself against formal misconduct charges. The board is scheduled to consider on Tuesday whether to give him another $200,000 for his legal defense.

“It’s schizophrenic,” community activist Bruce Whitaker said of the county’s treatment of Lewis. “I don’t think he was the ultimate villain of the bankruptcy, but he sure didn’t sound the alarms that he should have. He should have done the honorable thing and resigned.”

But unlike the early days of the bankruptcy, when county officials almost gleefully took turns attacking Lewis, today there is very little criticism of the auditor at the Hall of Administration.

County Chief Executive Officer Jan Mittermeier, who once worked under Lewis and is said to be one of his supporters, declined to talk about him.

So, too, did Board of Supervisors Chairman Roger R. Stanton, who once belittled Lewis mercilessly during a board meeting, blaming the auditor for not preventing the bankruptcy.

Supervisors Jim Silva, Don Saltarelli and William G. Steiner said they believe Lewis is doing a fine job.

About the only county official willing to say anything bad about Lewis these days is Supervisor Marian Bergeson, who said she has no faith in him and wishes he would resign.

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As for Lewis, he remains somewhat of an enigma, a shadowy presence behind the scenes of county government who is seldom seen at board meetings or other functions representing his department. Frequently, Lewis’ top assistants appear before the supervisors when his department has business to conduct at their meetings.

Lewis declined to be interviewed for this article. He has repeatedly declined such requests for more than a year.

Lewis’ colleagues and friends say his avoidance of the public eye does not mean he hasn’t been doing his job. They contend that the auditing function that makes up half of his official title was in fact a small part of his job. Most of his time is spent paying the county’s bills and balancing the books, they say.

“He is a very hard worker,” said Clerk-Recorder Gary L. Granville, who works in the same building as Lewis. “I have a very high regard for him. He’s taken some strong stands with the board and shown a lot of courage. He’s an honest man.”

Robert Griffith, head of the county’s General Services Agency who frequently plays golf with Lewis on weekends, said Lewis continues to take his job very seriously and is a dedicated public servant.

“He’s tried not to let all the other stuff surrounding him get him down,” Griffith said. “He’s a very even-keeled guy.”

Some community activists, however, feel Lewis let county residents down.

“Everybody had so much affection and respect for him before the bankruptcy, but if there was one person who should have done something to prevent it, it was Steve Lewis,” said William Mitchell, a spokesman for the Orange County Chapter of Common Cause, a government watchdog group.

“He had little bread crumbs of information that something was wrong in the treasurer’s office, yet he didn’t follow through,” Mitchell added. “He’s shown a complete lack of willingness to accept any responsibility.”

There’s no disputing that the past 20 months have been tumultuous for Lewis. While fighting to survive professionally, he has also been supporting his wife in her personal struggle to overcome a serious kidney ailment.

His wife recently underwent a second kidney transplant after her body rejected the first one, which was donated by the couple’s daughter. Friends close to Lewis said his wife’s condition is still very serious.

“He’s been through a lot these past two years,” Griffith said.

When the bankruptcy hit, Lewis initially was hailed as a hero for warning of problems in the treasurer’s office in two internal audits years before. But critics lashed out at Lewis for burying those warnings in audits he kept from public scrutiny, and for approving improper transfers within the county’s investment pool.

Leading the charge against the auditor was former CEO William J. Popejoy, who called for Lewis’ resignation for failing to uncover then-Treasurer-Tax Collector Robert L. Citron’s risky investments. Stanton and former Supervisor Gaddi H. Vasquez joined in the attack.

Because Lewis is an elected official, the CEO and the board were powerless to force his resignation. When it became clear that the board might slash his department’s budget and reduce his staff, Lewis agreed to surrender his auditing responsibilities to appease his critics.

“Now the taxpayers are paying twice as much money for the same job,” Common Cause’s Mitchell said.

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Months after the deal was struck, Lewis suffered another setback when the grand jury accused him of not doing his job. The panel accused Lewis of failing to “accurately compute, compile, calculate and report the cash-flow projections for the county” and “failing . . . to determine the source, the existence and the misallocation of earned interest” when he learned that the county treasurer was transferring money belonging to other investment pool participants into county government accounts.

Despite the auditor-controller’s duty to oversee the county’s financial affairs, top Lewis staffers testified before the grand jury that they had little understanding of the county’s ill-fated investment strategy.

In fact, the testimony showed that staffers in the auditor-controller’s officer were largely in the dark about how Citron was borrowing and investing hundreds of millions of dollars on the public’s behalf.

Brian Sun, Lewis’ defense attorney, said his client did everything he could to monitor Citron and the county’s financial practices. He said Lewis urged KPMG Peat Marwick, an outside auditing firm, on more than one occasion to evaluate Citron’s investments.

“He was the only county official who was really asking any questions,” Sun said. “To ascribe blame to one person is ridiculous given the obvious systemic failure of county government and outside financial advisors.”

Additionally, Sun said Lewis repeatedly warned county officials not to rely on Citron’s interest earnings to balance their budgets.

The county auditor’s duties are narrowly defined, Sun said, and do not include finding fraud in every instance and gauging the soundness of county investments.

Sun added that Lewis feels “he was a victim of the politics surrounding the bankruptcy and was made a scapegoat.”

“Steve is a very decent guy,” Sun said. “He’s done nothing wrong.”