Scope Grows in Capitol’s Slow-Moving FBI Inquiry

SACRAMENTO —  Four months after the FBI’s late-night raid of Capitol offices, federal authorities continue to gather evidence of possible corruption by legislators in an investigation that has turned out to be wider in scope and slower moving than initially believed.

Sources familiar with the investigation say progress has been slow because federal prosecutors are being extraordinarily thorough and because the FBI is pursuing any lead that might help build a case against a public official.

One source said federal investigators have been looking into wide-ranging allegations of illegal activity including the personal financial dealings of legislators, possible sexual harassment of employees and lobbyists and drug use in the Capitol.

Guilty Plea

The FBI sting operation, dubbed Brispec--for bribery-special interest--has already led to the indictment of a former Yolo County undersheriff who pleaded guilty earlier this month to extorting money from a local developer.

A second indictment may soon follow, according to sources who agreed to speak if they were not identified.

Because no lawmaker has yet been charged with a crime, attorneys representing targets of the investigation are questioning the quality of the evidence against their clients. And legislators unconnected to the case complain that it is unfair to leave the named targets dangling for so long without charges being filed or a public exoneration.

“If there is not a strong case, they’ve done a lot of damage to people that they shouldn’t have done,” one impatient legislator said. “They should have walked away unless they had a great, locked-up case.”

However, sources familiar with the inquiry contend that the lack of indictments against legislators and others is no indication of what may follow.

“One thing leads to another,” a source said. “There are no deadlines, and the case does have a life of its own.”

These sources close to the federal investigation continue to maintain that prosecutors have solid evidence against several targets, including videotaped recordings of public officials accepting payments from undercover agents.

But prosecuting public corruption cases is rarely as simple or as relatively swift as convicting bank robbers.

And U.S. Atty. David F. Levi, who heads the Brispec operation, has a reputation as a meticulous taskmaster who wants no surprises in court and spends whatever time is needed to build a case before taking it to trial. Levi, for the most part, has refused to comment publicly on the investigation.

‘Ducks in a Row’

Potential witnesses in cases that may grow out of the investigation say Levi will not go ahead with a prosecution until he is ready. He is insisting on having “all his ducks in a row” before asking the federal grand jury to file an indictment, said one of those witnesses. “He doesn’t want to have egg on his face.”

Other sources said the Brispec cases could be filed over a period of many months, even years, depending on the willingness of targets to cooperate with authorities and the development of evidence against a potentially larger group of elected officials.

In some cases, Levi may await the completion of an investigation by the Internal Revenue Service before going ahead with an individual prosecution if there is a possibility of tax fraud charges being filed in addition to charges of political corruption. Department of Justice policy generally encourages federal attorneys to file related criminal charges against an individual all at once and discourages repeated prosecutions.

The sting became public Aug. 25 after about 30 FBI agents raided the Capitol offices of four legislators--Assemblyman Pat Nolan (R-Glendale), Assemblywoman Gwen Moore (D-Los Angeles), Assemblyman Frank Hill (R-Whittier), and Sen. Joseph B. Montoya (D-Whittier)--and two legislative aides. Another target of the sting is former Sen. Paul Carpenter (D-Cypress), a member of the State Board of Equalization.

Carpenter’s offices have not been searched, but last Tuesday the board’s staff received a grand jury subpoena requiring that he turn over his date books and calendars by Dec. 28, according to a Carpenter aide.

Bogus Companies

All of the lawmakers had received payments--campaign contributions or honorariums--from bogus companies set up by the FBI. The “firms” were trying to win support for special-interest bills that would help them establish a shrimp-processing plant near Sacramento.

Although not an initial target of the sting, Yolo County Sheriff Rod Graham was implicated earlier this month when his former undersheriff, Wendell Luttrull, pleaded guilty to charges that he had extorted money from a West Sacramento developer in exchange for added protection and the inflation of crime statistics around a proposed marina/condominium project. The exaggerated crime picture was designed to make local government eager for the development.

In a statement to the court, Luttrull said that Graham had ordered him to collect the campaign contributions--$2,000 in cash and a $1,650 check from one of the phony FBI companies--and that the two had agreed to conceal its source.

Graham, recently hospitalized with a bleeding ulcer, has refused to comment specifically on the allegations. But earlier this month he issued a statement to “apologize . . . for the embarrassment that these circumstances have caused. I can only ask that I be given the same consideration that anyone gets when they are confronted with these kinds of circumstances.”

Since the raid, the federal grand jury has met repeatedly to review the copious evidence retrieved by investigators--including bank records, telephone logs, campaign contribution reports, financial disclosure statements and employment records. And a string of witnesses has been called to appear.

On Friday, for example, several aides to Montoya were called to testify, according to sources familiar with the investigation.

But because the grand jury meets in secret, little is known about the direction of the investigation or the timing of indictments.

Backup Computer Tapes

However, federal authorities have not yet retrieved backup computer tapes that contain copies of numerous documents purged by legislative staff members on the day after the FBI raid. The Times has reported that employees of the Assembly Republican caucus had deleted sensitive political records because they feared that they could be accused of improperly doing political work on state time and equipment. But it is not clear whether the potentially incriminating documents are included on the backup tapes.

Legislative Counsel Bion Gregory refused to turn the tapes over to federal investigators but did agree to allow some review of their contents, according to sources familiar with his actions. The tapes were placed in a neutral place for safekeeping until the dispute could be resolved. But in the last two months, since the controversy came to a head, the FBI has been occupied with other aspects of the investigation and has not aggressively pursued the computer records.

Meanwhile, the two legislative employees who were suspended from their jobs for refusing to allow the erasure of the tapes have quit their positions at the Capitol. The employees, Paul Huelskamp and Michael Parr, were suspended for two weeks in September after they saved the computer tapes and then tipped the FBI about what they believed was an unusually high number of purgings in the days after the Capitol office raids. When they returned from their paid suspensions, the two were stripped of their duties at the legislative counsel’s office and assigned “less sensitive” jobs.

In November, Parr moved to a job with the California Highway Patrol’s data-processing unit. Huelskamp said Friday that he will leave his state job before Christmas to take a position as a computer programmer with Infodata Inc. of Falls Church, Va.

Both employees said they were not forced from their jobs but left when it became apparent that they were no longer welcome around the Legislature.

“They didn’t harass me,” Huelskamp said. “All they did was take my responsibilities away. They just sat me there. In effect, they were saying, ‘We don’t want you here. Go find a job somewhere else.’ ”

Times staff writers Mark Gladstone, Richard C. Paddock, Jeffrey L. Rabin and Daniel M. Weintraub also contributed to this story.