By Chriss Street, Newport Beach, CA.
The FBI confirmed that a Task Force has been assembled from the FBI, IRS, District Attorney’s and U.S. Attorney’s Office to investigate reports of political campaign corruption in Orange County, California. As America’s most Republican county, it is not surprising that a Democrat Attorney General under a Democrat Administration would put powerful Republican politicians in their cross-hairs. But with Orange County District Attorney Tony Rackauckas, a Republican and former Superior Court Judge, as part of the Task Force, my sources believe that over the next two months it is very likely the Supervisors homes will be raided and indictments will be issued for “pay to play” campaign corruption charges.
Although no details were made public about individuals or specific areas of corruption being investigated by the Task Force, Los Angeles FBI spokeswoman Laura Eimiller said it was formally created in April. Similar task forces have been active in San Bernardino and Riverside Counties in recent years, investigating a variety of corruption charges involving elected officials.
But my sources indicate that the investigation has been ongoing for almost a year. A secret Grand Jury has taken testimony from dozens of county staff members and a large number of vendors to the county’s CalOptima, which manages regional Medicaid hospital and out-patient services, and the Orange County Waste and Recycling, which manages the dumps, trash and environmental services.
In April, the Orange County Grand Jury called for the creation of a county ethics commission, citing the county’s 40-year history of corruption. Supervisors ridiculed the idea, claiming the OC Grand Jury was mistaken. But on June 24th, the California Fair Political Practices Commission, based on the findings of the Orange County Grand Jury alleging wide spread corruption at the highest levels of county government, confirmed they were investigating a majority of Orange County Supervisors and the CalOptima Board of Directors for potential conflict of interest violations of the Political Reform Act.
The next day at the Orange County Board of Supervisors’ meeting, Supervisor John Moorlach angrily accused Grand Jurors of using irresponsible headlines to cover badly focused probes that triggered state reviews. Supervisor Todd Spitzer made a motion to slash future panel members’ individual stipends from $50 a day down to $15. A month earlier, the Supervisors had retaliated against Grand Jurors by rejected a request for $20,000 in supplemental spending to cover the cost investigating the Supervisors.
As John Moorlach menacingly glared at current Grand Jury members, District Attorney Tony Rackauckas and many former Grand Jurors stepped up to the public podium and steadfastly defended the integrity Grand Jury report.
Nineteen years ago on December 2, 1994, I helped Allan Abelson of Barron’s Magazine write an editorial exposing Orange County Treasurer’s failed $22 billion investment scheme in derivatives. Three days later, the County was forced to file the largest municipal bankruptcy in the history of the world after losing over $2 billion on speculative bets. Although only Orange County Treasurer Robert Citron, a prominent Democrat, was convicted for fraud, the FBI set up a permanent political corruption unit in Orange County to keep an eye on the Republican Supervisors who had encouraged Citron’s high risk strategy in hopes of making windfall profits to avoid tax increases.
The FBI Task Force allows federal agencies and the District Attorneys’ office to cooperate on all aspects of a case, not just the portions that may fall under their own jurisdiction. The FBI has is supplied agents who are experts in investigating campaign corruption by public officials, such as solicitation of bribes, deprivation of services, election fraud or illegal foreign corrupt practices. The IRS is looking into questionable accounting entries and tracing money flows, as well as violations of federal tax laws.
When was elected Treasurer of Orange County and served from 2006 to 2010, I learned that the Orange County Supervisors have a very visible salary, and several virtually invisible income streams. The Office of Supervisor pays about $135,000 per year in fully disclosed salary, but each Supervisor is also paid fees for sitting on a number of non-transparent regional boards that can add up to another $135,000 a year. The FBI Task Force is focused like a lazar on the huge amounts of fees and political contributions that have been slushing through these invisible regional boards.
As America’s “Most Republican County”, Orange County Supervisors portrayed themselves as paragons of fiscal conservatism. But there has been increasing alarm among Orange County conservatives and libertarians over the Supervisors big increases in spending and the County’s deteriorating balance sheet. It seems the FBI Task Force on Supervisor corruption may soon be able to tell us where the money went. By Chriss Street.