Justices Refuse to Reinstate D.A. in Bankruptcy Suit

SAN FRANCISCO —  The state Supreme Court refused Wednesday to reinstate the Orange County district attorney’s office as the county’s lawyer in a bankruptcy-related civil suit against County Auditor-Controller Steve E. Lewis.

The suit seeks to remove Lewis from office. A state appeals court ruled in March that Dist. Atty. Michael R. Capizzi’s office had an apparent conflict of interest and must be removed from the suit.

The state’s high court unanimously denied review of the case Wednesday. The suit against Lewis will now be reassigned to Atty. Gen. Dan Lungren’s office.

The county grand jury, at the request of Capizzi’s office, accused Lewis of approving excessive county debts and failing to oversee the actions of former Treasurer-Tax Collector Robert L. Citron, whose risky investments resulted in losses of $1.64 billion.

Lewis, who remains in office during the case, sought to disqualify Capizzi’s office, saying his right to a neutral prosecutor was violated by the district attorney’s extensive involvement in the case.

Overturning a lower-court decision, the 4th District Court of Appeal found a “strong appearance of conflict.”

The court said Capizzi’s office remains subject to Lewis’ budgetary authority and was a “direct victim” of Lewis’ alleged misconduct because of budget cuts after the bankruptcy.

Capizzi immediately ordered a hiring freeze and later had to submit budget plans eliminating jobs, cutting expenses, rescinding promised pay raises and reducing enforcement in certain areas, the court said. The budget cuts were later restored.

The court said Capizzi also may have been personally involved in Lewis’ case, citing the district attorney’s telephone call to a county supervisor about a pending vote on whether the county would pay for Lewis’ defense. Although Capizzi denied lobbying the supervisor on the issue, the call was an “apparent attempt to limit [Lewis’] resources to defend himself,” the court said.

Capizzi also served on a three-member council that managed county operations for a time after the bankruptcy. He met regularly with William J. Popejoy, the newly appointed county administrative officer, who asked Lewis to resign. Capizzi denied discussing the issue with Popejoy.

Considering all the evidence, “the district attorney’s apparent personal interest [in the case] is manifest, not only because his office was a direct victim of the conduct charged . . . but also because of his possible personal involvement,” said Justice William F. Rylaarsdam in the 3-0 appellate ruling.