SANTA ANA, Calif. – LAWFUEL – The Legal Newswire – Michael S. Carona, the elected sheriff-coroner of Orange County, has been named in a wide-ranging corruption indictment unsealed today that accuses him and several close associates of scheming to exploit Carona’s position for personal benefit, including accepting cash and appointing to the position of assistant sheriff an unqualified businessman who paid bribes.
The 10-count indictment charges Carona; his wife, Deborah Carona, who was appointed to the Orange County Fair Board of Directors while he was sheriff; and attorney Debra Victoria Hoffman, who as part of the scheme was appointed to the State Advisory Group on Juvenile Justice Delinquency Prevention and the California Council on Criminal Justice, which Sheriff Carona chaired. All three, who, among other things, are accused of concealing the illegal benefits they received, are expected to surrender to federal authorities at the United States Courthouse in Santa Ana tomorrow morning.
In addition to the indictment, prosecutors today unsealed charges previously filed against two Carona associates, businessman Donald Haidl and attorney George H. Jaramillo, who as part of the scheme were made assistant sheriffs. In addition to criminal informations, prosecutors unsealed the plea agreements under which Jaramillo and Haidl previously pleaded guilty. Jaramillo pleaded guilty to honest services mail fraud and tax fraud, and Haidl pleaded guilty to a tax offense.
The indictment alleges a conspiracy in which the five defendants schemed to get Carona elected and to corruptly use the office of sheriff to enrich themselves. In addition to the conspiracy, the indictment charges Carona with witness tampering, including his attempt to convince Haidl, as recently as August, to lie to a federal grand jury.
According to the indictment, Haidl illicitly paid cash – specifically, regular monthly payments of $1,000 in cash – and other benefits to Carona, his campaign and his friends in exchange for full access to the resources of the Orange County Sheriff’s Department and a “Get Out of Jail Free” card. Carona also allegedly provided benefits to Haidl’s friends and family, including Haidl’s son, who was arrested twice during Carona’s tenure.
The indictment outlines a conspiracy that began in 1998, when Haidl allegedly made several $1,000 “conduit contributions” to Carona’s campaign. The illegal contributions were made with checks that were written by people who were reimbursed by Haidl, which concealed the true source of the contributions. Soon after the June 1998 election in which Carona was elected Sheriff, Haidl allegedly financed a Lake Tahoe vacation for Carona, Jaramillo and their spouses. And for years following his election, according to the indictment, Haidl made regular payments of approximately $1,000 per month in cash to Carona and Jaramillo. In total the conspirators, including Carona, accepted cash, gifts, loans and other compensation that totaled more than $350,000.
In January 1999, Carona appointed Haidl to the position of assistant sheriff for reserves. Around the same time, Carona caused family members, friends and business associates of Haidl to be made reserve deputies. Around this time, Haidl caused Carona and Jaramillo to be appointed to a newly created “board of directors” at a company owned by Haidl’s uncle. Carona and Jaramillo received $1,000 monthly checks from the company, even though they did not provide any services to the company.
During Carona’s tenure, the relationship between the sheriff and Haidl allegedly continued with a series of other illegal acts, including a transaction in which Haidl gave a boat to Carona in 2001, Carona provided preferential treatment for Haidl’s son, and Carona and his associates used Haidl’s yacht and private plane.
Haidl also allegedly gave Hoffman and Jaramillo a $110,000 cashier’s check the day before Carona was elected sheriff in 1998, money that was used to revive Jaramillo, Hoffman and Associates, a law firm that Jaramillo and Hoffman had founded. A portion of this loan was repaid through an agreement in which Carona and Jaramillo, among others, would refer legal cases – including those involving Sheriff’s Department employees – to another lawyer, who would kick back legal fees to members of the conspiracy. In 1999 and 2000, Haidl also allegedly gave additional checks worth approximately $65,000 to Hoffman at Carona’s request.
The indictment goes on to allege that Carona and Jaramillo entered into an agreement with the owners of a paintball business in which the businessmen would pay tens of thousands of dollars in cash in exchange for Carona using his influence to help the businessmen obtain land in Orange County for a recreation facility.
Carona, Hoffman and Deborah Carona, covered-up and concealed the cash payments, loans, gifts and other benefits from Haidl and others through false statements under penalty of perjury in their Statements of Economic Interests and other public documents, allegations that are part of the conspiracy charges against each of them and the honest services mail fraud charges against Carona and Hoffman.
Carona is also accused of witness tampering, which includes encouraging Haidl to give false testimony to a federal grand jury investigating the sheriff. The indictment alleges that as recently as August 13 Carona, in a recorded conversation, encouraged Haidl to withhold evidence and to make false statements to the grand jury.
Hoffman is accused of bankruptcy fraud for failing to disclose various economic interests, including the loan and payments from Haidl, among other omissions.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
In proceedings on March 6, 2007 that were unsealed today, Haidl pleaded guilty to filing a fraudulent federal income tax return for 2002 after using hundreds of thousands of dollars from partnerships, trust accounts and businesses he controlled to pay some of his son’s legal fees and failing to report this money as income, which caused a tax loss of between $200,000 and $400,000. In his plea agreement, Haidl admitted making illegal payments to Carona and Jaramillo. He is scheduled to be sentenced by United States District Judge Andrew J. Guilford on June 23, 2008, at which time he faces a maximum statutory sentence of three years in federal prison.
Jaramillo pleaded guilty on March 13, 2007, to filing a false tax return for 1999 and to honest services mail fraud for filing a false financial statement required because he too was a member of the State Advisory Group on Juvenile Justice Delinquency Prevention. In his plea agreement, Jaramillo admitted that Haidl made cash payments to Jaramillo from 1998 through 2002, Haidl paid off Jaramillo’s lease on a Mercedes-Benz, and Jaramillo filed a series of Statements of Economic Interest that failed to report, among other things, money, gifts, and loans he received from Haidl. Jaramillo is also scheduled to be sentenced by Judge Guilford on June 23, 2008, at which time he faces a statutory maximum sentence of 23 years in federal prison.
“This investigation did not focus on career personnel with the Orange County Sheriff’s Department, but centered on elected and appointed individuals who allegedly abused their power and violated the public’s trust,” said Acting Assistant Director in Charge of the FBI in Los Angeles, Peter Brust. “The charges alleged in the indictment never called into question the integrity of rank-and-file Orange County Sheriffs Department personnel. FBI Agents and Orange County Sheriff’s deputies work hand in hand every day combating crime on many fronts. The FBI is committed to continuing these strong relationships that exist in the form of joint task forces devoted to fighting terrorism, organized criminal enterprises, the exploitation of children, bank robberies and other criminal activity in Orange County.”
Debra D. King, Special Agent in Charge of IRS – Criminal Investigation in Los Angeles, stated: “Nobody is above the law, including public officials. Crimes committed by these figures violate the public trust. The indictment of Michael Carona on conspiracy, witness tampering, and public corruption-related charges serves to assure the public that their officials are, and will be, held accountable for their actions. Further, the indictment announced today helps to assure the public that their officials cannot use their office for their own financial enrichment or personal political gain.”
Peter C. Anderson, United States Trustee for the Central District of California (Region 16), stated: “By working together with the United States Attorney’s Office and the federal law enforcement agencies, the U.S. Trustee Program is able to fulfill its mission of protecting and preserving the integrity of the bankruptcy system.”
The cases against Carona and the other defendants are the result of an investigation by the Federal Bureau of Investigation and IRS-Criminal Investigation, which received substantial assistance from the U.S. Trustee Program, which is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.
SUMMARY OF CHARGES IN THE INDICTMENT
Count 1: Title 18, United States Code, Section 371: conspiracy (All three defendants) – maximum sentence of five years in prison and fine not to exceed $250,000.
Counts 2-5: Title 18, United States Code, Sections 1341, 1346: mail fraud depriving the public of the right of honest services of a public official (Carona and Hoffman) – maximum sentence of 20 years in prison and fine not to exceed $250,000 per count.
Counts 6-7: Title 18, United States Code, Section 1512(b): witness tampering (Carona only) – maximum sentence of 10 years in prison and fine not to exceed $250,000 per count.
Counts 8-10: Title 18, United States Code, Section 152: bankruptcy fraud (Hoffman only) – maximum sentence of three years in prison and fine not to exceed $250,000 per count.
CONTACT: Assistant United States Attorney Brett A. Sagel
Assistant United States Attorney Kenneth B. Julian
Release No. 07-137