Senate to Reopen O.C. Fiscal Probe

The state Senate agreed Wednesday to reopen its investigation of the fiscal collapse of Orange County, hoping to find out if witnesses perjured themselves in testimony last year.

Sen. Quentin L. Kopp (I-San Francisco), a member of the special Senate committee that investigated the bankruptcy and recommended remedial legislation, told the Senate he feared that Orange County officials and others “misled and deceived” the committee at its hearings.

He said his preliminary comparison of recent testimony made before the Orange County Grand Jury investigating the bankruptcy and statements given early in 1995 to the Senate committee showed “inconsistencies.”

Last month, the grand jury accused county Supervisors Roger R. Stanton and William G. Steiner and Auditor-Controller Steve E. Lewis of willful misconduct in office in connection with the financial scandal that cost the county $1.64 billion. Former county Budget Director Ronald S. Rubino was accused of aiding in the alleged misappropriation of public funds.

Kopp did not detail any inconsistencies, but said that public officials and other witnesses who appeared before the special Local Government Investments Committee appeared to have given unreliable testimony.

Stressing that the Legislature must make decisions based on accurate testimony, Kopp told his colleagues that “the integrity of the state Senate is at stake . . . to be able to rely upon testimony presented to any committee.”

Technically, the committee went out of business at the end of the year. But Kopp successfully appealed Wednesday to the Senate Rules Committee to reactivate the panel for a special investigation into potentially false testimony.

Announcing the decision later on the Senate floor, President Pro Tem Bill Lockyer (D-Hayward) said the committee will vigorously pursue the issue.

Kopp said he intends to call as witnesses leading figures in the Orange County bankruptcy case, including Stanton; bond attorney Jean M. Costanza; Michael Stamenson, a salesman for Merrill Lynch; Jeff Leifer, a securities dealer; former County Administrative Officer Ernie Schneider, and Terry C. Andrus, former county counsel.

No date was set for the committee to start hearings, but Sen. William A. Craven (R-Oceanside), the co-chairman, indicated that the panel would move quickly because the Senate wants to learn whether “somebody took advantage of us.”

But Senate Republican Leader Rob Hurtt of Garden Grove, a member of the special committee, cautioned against reopening a wide-ranging investigation at a time when local and federal authorities are pressing their own probes.

In response, Kopp insisted that the committee would examine only whether witnesses had testified truthfully before the Senate panel.

In Orange County, Schneider, the former chief administrator, voiced anger at the notion that he may have misled the committee last year.

“I told the grand jury the same thing I told the senators: I told the truth,” said Schneider, who was fired after the bankruptcy. “I’ve paid enough of a price for this whole thing. I’m not interested in going back to Sacramento.”

He noted that he faces no criminal or civil charges. “Why don’t they concentrate on those people who have been accused of something?” he said.

Ingram reported from Sacramento and Platte from Orange County.