Court Says D.A. Can Pursue Recycling Firm

In a significant decision moving forward a long-delayed municipal-fraud case, an appeals court on Friday ruled that the Orange County district attorney’s office can prosecute the head of an Orange recycling firm even though the investigation was marred by conflicts of interest.

The decision means prosecutors probably can proceed with a preliminary hearing against Jeffrey Hambarian, who was charged in 1998 with masterminding an alleged fraud and embezzlement scheme that bilked the city of $4 million.

Hambarian had argued that the district attorney’s office should be removed from the case because the city of Orange paid for part of the investigation--a conflict of interest because a victim of a crime should not be allowed to underwrite the costs of an investigation.

Though justices of the 4th District Court of Appeal in Santa Ana agreed the arrangement posed a conflict of interest, they said the situation could be corrected if the district attorney’s office reimbursed the city.

“Allowing victims to help underwrite the cost of prosecuting a case . . . is not a practice we favor,” reads the opinion. “The district attorney can avoid the potential problem by reimbursing the city for . . . expenses, purging the conflict.”