Pellicano taking his secrets with him to federal prison

Private investigator Anthony Pellicano will surrender this morning at the Federal Detention Center in downtown Los Angeles to begin serving a 33-month prison sentence -- taking his secrets with him.

Government officials accuse Pellicano of conducting illegal wiretaps, and suspect that some of the prominent lawyers and entertainment industry figures who hired him either authorized the surveillance or at least knew about it in advance. They would like Pellicano to cooperate with their investigation, but have had no luck.

In an interview on the eve of his surrender, Pellicano insisted that he had no intention of cooperating. “My clients and the lawyers who hired me are completely innocent,” Pellicano said in a telephone interview Sunday night -- his first public comment on the investigation since its scope became known. Pellicano’s attorney, Donald Re, took part in the interview.

“They did nothing wrong,” Pellicano said, referring to his clients and employers. “The government should leave them alone. And me, I’m going to take this punishment like a man. I will not participate in any way, shape or form with this investigation.”

Several witnesses in the case, who spoke to The Times on the condition that they remain anonymous, have complained about the conduct of the investigation. FBI agents attempted to intimidate them and asked leading questions, implying that they had participated in criminal activity without providing evidence, the witnesses said -- allegations that government officials de- nied.

Meanwhile, Pellicano said prosecutors have offered him leniency in exchange for identifying potential co-conspirators in his alleged wiretapping schemes. He said he has refused.

“One of the first rules of being a private investigator is that you must maintain the confidentiality of every client in every investigation,” Pellicano said. “Just as the government protects their witnesses, informants and sources, so do I.

“I’m going into jail with the attitude that I’m going to further educate myself. And I hope to come out smarter than when I went in.”

2 Men Subjects of Probe

Officials have notified two men that they are subjects of the wiretapping probe: Bert Fields, one of Hollywood’s most prominent attorneys who employed Pellicano on a number of cases; and Ray Turner, a former Pacific Bell employee.

Subject is a broad category that means a person is more than just a witness in the case but is not currently a target, a category that generally suggests criminal charges are likely. Some people who are informed that they are subjects of an investigation ultimately become targets; others do not.

According to sources familiar with the investigation, officials suspect that Pellicano paid employees at Pacific Bell to access telephone transmission boxes, locate specific phone lines and install devices that could record conversations. Pellicano would then dump data collected from those devices into a computer program and organize it to decipher conversations, the sources said.

The FBI recovered checks paid to Turner in Pellicano’s bookkeeping records, and agents are investigating whether he assisted Pellicano in wiretapping conversations, the sources said.

Turner could not be reached for comment, but he has denied wrongdoing.

In interviews with potential witnesses in the case, FBI agents have told people that their phone lines were tapped by Pellicano. So far, however, officials have not produced transcripts or recordings of the conversations to back up the assertion, according to witnesses who have been interviewed.

The witnesses who have complained about FBI actions in the case include one who said agents accused him of criminal activity and later tried to intimidate his friends and associates.

Another individual said an armed FBI agent showed up unannounced in the waiting room of a prominent law firm, flashed his badge and demanded to see an attorney who had hired Pellicano.

A third person who was present during an FBI interview characterized the agent’s line of questioning as “overly aggressive, unprofessional and bordering on dishonest.”

Assistant U.S. Atty. Daniel Sanders, who is supervising the investigation, declined to discuss the cases, but denied any suggestion of misconduct.

“This case is being conducted by highly experienced investigative agents,” Sanders said. “It has been at all times and will continue to be conducted in a professional manner. There is no intimidation being used in this case.”

Pellicano is going into custody after pleading guilty in October to charges of illegally possessing plastic explosives and hand grenades. The weapons were seized last year in a search of his office on Sunset Boulevard. Investigators were seeking evidence related to threats made against a Los Angeles Times reporter. He was not charged in the threats.

Files Are Encrypted

Federal agents searched Pellicano’s offices three times and seized 36 electronic devices, including computer hard drives and storage drives of encrypted files, according to court documents.

Law enforcement sources allege that the computers contained detailed bookkeeping records, wiretapping software and encrypted files of tapped phone conversation transcripts.

Information uncovered in the probe led agents to believe that Pellicano had the ability to redirect phone lines into his office, where he would then record conversations.

On the day that federal agents raided Pellicano’s office, they were accompanied by an expert from the phone company, who tested the phone lines but found no evidence that any of the active phone lines were currently intercepting calls, law enforcement sources said.

“The search warrants in my case were overly broad,” Pellicano said, adding that he was challenging the legality of the search. “Let me put it like this: They came into the grocery store looking for a box of cereal and cleared out the entire store. This overbroad search warrant opened up all of my confidential files to the scrutiny of people who have no right to review them. And now they are contacting those people and lying to them about what they’ve found.”

Reputation as Discreet

It is unclear whether the FBI has been able to crack the encryption code used to protect Pellicano’s files. But people close to Pellicano say he established a reputation in Hollywood as a discreet investigator who made it a practice to deliver oral -- not written -- reports of confidential information to his clients. They say it would be surprising for an investigator of his caliber to leave behind a trail of computer data that would implicate his clients in illegal activity.

Law enforcement sources say, however, that the wiretapping probe does not hinge entirely on data retrieved from the seized computers.

Even before the raid, they say, the FBI had obtained enough evidence of alleged wiretapping to convince a judge that there was probable cause to believe Pellicano was engaged in criminal activity.

After Pellicano’s arrest, authorities were deluged with calls from individuals who alleged that Pellicano engaged in illegal electronic surveillance, including wiretapping conversations that included two deputy district attorneys.

FBI agents also have approached and interviewed more than a dozen former employees at Pellicano’s firm -- a handful of whom were offered immunity in exchange for providing information about Pellicano’s alleged wiretapping activities.

So far, two former employees, Tarita Virtue and Wayne Reynolds, have testified in front of the grand jury, suggesting wiretapped conversations were transcribed in Pellicano’s office, according to sources familiar with the case. Virtue and Reynolds could not be reached for comment.

Times staff writers Greg Krikorian and Henry Weinstein contributed to this report.