State Bar Mulls Action Against Candidate Reed : Investigation: The Costa Mesa attorney, who is running for state Senate seat, is accused of advising both sides of Riverside County ballot measure.

The State Bar of California has found “reasonable cause” for disciplinary action against Costa Mesa attorney Dana W. Reed, a Republican candidate for state Senate in a special election next month, on charges that he worked at different times for both sides of a municipal ballot measure in Riverside County.

Reed acknowledged Tuesday that the bar has been investigating a complaint that he violated state conflict-of-interest laws by providing legal advice to proponents and opponents of an unsuccessful 1989 measure to legalize card casinos in Cathedral City. He denied any wrongdoing.

The State Bar conducted a yearlong investigation and, according to documents obtained by The Times, decided last summer that a violation may exist. However, no charges have been filed against Reed, who said he was questioned by investigators in December.

“We have concluded that there exists reasonable cause for the initiation of a formal disciplinary proceeding,” William W. Davis, assistant chief trial counsel for the State Bar, wrote last Aug. 29. “ . . . If no disposition can be reached between the State Bar and Mr. Reed, (we will) forward the matter to the Office of Trials for formal prosecution.”

Davis wrote the letter to an attorney for George Hardie, Cathedral City’s mayor pro tem and a partner in a controversial card club in Bell Gardens, who filed the complaint in 1989.

State Bar officials would neither discuss nor confirm the investigation. Ann Charles, a spokeswoman for the bar, said, however, the complainant would be notified if the allegations were dismissed.

Hardie said he has not been notified that the charges would be dismissed.

Reed denied that he ever worked for either side of the Cathedral City ballot initiative, known as Measure L. He said his only interview with State Bar officials about the issue was last Dec. 12 and that they did not indicate charges would be filed.

“I’ve done nothing wrong, and I welcome the bar’s investigation,” he said.

Reed is a leading candidate in the March 19 special election to replace former state Sen. John Seymour (R-Anaheim), who was appointed to the U.S. Senate last month by Gov. Pete Wilson. Reed is facing a field of 11 other candidates, including three members of the state Assembly.

Reed has been an attorney for 16 years and currently heads a firm that specializes in legal advice to dozens of political groups and campaigns throughout California. He served in then Gov. George Deukmejian’s administration as an undersecretary of business, transportation and housing.

The Times recently received the correspondence and a copy of the complaint from Hardie, who said he had no association with any campaign official or candidate in Reed’s race for the state Senate. Rather, Hardie said, he was upset that the bar has taken so long to conclude its case and has repeatedly complained about the delays to the bar and the governor’s office.

“I have no ax to grind in that regard,” Hardie said of Reed’s Senate race. “My motive is to get the State Bar off its duff.”

The Bicycle Club, in which Hardie is a partner, was seized by federal agents last April during a racketeering and money-laundering investigation. Hardie was cleared in October, however, and regained his ownership.

Hardie filed the complaint against Reed in September, 1989, which he said was shortly after he learned that Reed was working for an opponent of Cathedral City’s Measure L. Hardie said in his complaint that Reed helped him prepare the same ballot measure in early 1987 and 1988.

Voters rejected the measure in October, 1989.

Hardie’s complaint said that Reed participated in meetings where the proposed measure was discussed, particularly one in February, 1987. The complaint, obtained by The Times, also includes invoices from Reed--paid by Hardie--for services that allegedly included the hiring of an investigator to assess the potential opposition to the ballot measure.

Reed contended Tuesday that his work for Hardie was to prepare him for a City Council campaign, not the card club ballot measure. Hardie was elected to the council in April, 1988.

Hardie “doesn’t like me and he’s doing a very good job of making my life somewhat miserable,” Reed said. “He’s accused me of all kinds of things that are totally inaccurate.”

Reed also said he never worked against the measure, though he was hired by a client who was “philosophically opposed” to the plan. The client, whom he declined to identify, did not participate in the campaign, Reed said.

Political consultant Harvey Englander identified the client as a Las Vegas company seeking political research on the Cathedral City measure in 1988 and 1989. Englander said he and Reed were hired by Southwest Gaming, which owned a card club in Indio that would have been a competitor to any similar facility in Cathedral City, about a 20-minute drive away.

Englander said he and Reed reviewed the ballot measure for Southwest Gaming, but the company decided not to get involved when it appeared it would be voted down.

Hardie’s attorney, Michael D. Rubin of Rutan & Tucker, complained to Reed about the possible conflict of interest in July, 1989.

Reed responded that he was “outraged” at the allegation and that “no such ethical or legal breach has occurred.”

But Rubin wrote back one month later: “Your work . . . was to plan a program for the promotion and passage of a ballot measure authorizing the licensing of card clubs within Cathedral City. That is precisely what your clients are opposing in 1989.”

Reed said was he was unhappy about the ordeal caused by Hardie’s complaint, but he said it should not reflect on his professional performance.

“The State Bar gets about 5,000 complaints a month,” Reed said. “I think one complaint in 16 years of practicing law is not of great concern.”

Charles, the State Bar spokeswoman, said that the penalty for an attorney found guilty of violating state conflict-of-interest laws ranges from public censure to disbarment.