O.C. Sheriff Dogged by Scandals

A Newport Beach man’s dream of getting rich by selling law enforcement officials on a high-tech device that could end high-speed chases has pulled top advisors to Orange County Sheriff Michael S. Carona into a complex tale of cash, ambition and alleged influence-peddling.

No one involved has said Carona was aware of Charles H. Gabbard’s scheme to trade shares in his Mission Viejo company, CHG Technologies, for political contributions. But the growing scandal has evolved into a high-profile embarrassment for the sheriff, one of the state’s rising political stars, in part because of his image as a straight-talking cop beyond reproach.

Whether the situation will affect Carona’s political ambitions -- he has made no secret of his interest in a Republican run for lieutenant governor in two years -- remains to be seen. But experts believe he can ride out the storm as long as the scandal doesn’t grow.

Carona has declined to discuss the case, apart from declaring that he first learned of the questionable donations by reading of them in the newspaper last week. On Friday, he asked state Atty. Gen. Bill Lockyer to investigate the matter and has pledged to give up any contributions that were improper.

Concerns about the contributions developed out of a series of separate controversies involving two of Carona’s top administrators.

When Carona was first elected sheriff in 1998, he persuaded the Orange County Board of Supervisors to drop a requirement that assistant sheriffs, who are top administrators in the department, first serve at least two years as captain.

Then Carona appointed to those posts two friends: George Jaramillo -- a lawyer and former Garden Grove police lieutenant who managed Carona’s campaign -- and Don Haidl, an entrepreneur who was one of Carona’s top campaign fundraisers.

Problems began with the 2002 arrest of Haidl’s son Gregory, who is accused with two other youths of rape. They allegedly videotaped themselves having sex with an unconscious girl during a party at his father’s Newport Beach home.

As Newport Beach detectives were quizzing the younger Haidl at his mother’s Rancho Cucamonga home, Jaramillo, who was second in command of the 4,200-member Sheriff’s Department, appeared in uniform to advise the teenager not to speak with investigators, prompting complaints from Newport Beach police.

In October 2003, sheriff’s deputies caught the younger Haidl and two friends allegedly in possession of a small amount of marijuana.

Deputies did not arrest him on suspicion of drug possession, which could have led to revocation of his bail, but instead drove him home. That night, in a phone conversation that was recorded, a sheriff’s lieutenant woke Jaramillo to tell him what had happened.

Jaramillo and the lieutenant agreed not to record the incident in the activity log in hopes that the news media would not learn about it.

That recording became a key part of a probe by the Orange County Grand Jury, which was asked to determine if Jaramillo and other sheriff’s officials obstructed justice by giving Gregory Haidl preferential treatment.

On March 17, Carona, citing no specific reason, fired Jaramillo.

Shortly thereafter, FBI officials acknowledged that they had opened an investigation into political corruption involving Jaramillo; on March 20 agents removed unspecified evidence from his office.

Last week, Gabbard’s lawyer added yet another twist, revealing that the inventor’s company had paid $25,000 to Jaramillo and his wife for work in 2000 and 2001 as consultants.

Jaramillo agreed to help open doors for the company among law-enforcement officials, lawyer John Gladych said, so long as doing so did not compromise his duties with the Sheriff’s Department.

Gladych then disclosed that the company, which hoped to strike it rich with a laser device that officers could use to safely shut down the engine of a speeding car, also contributed heavily to Carona’s 2002 reelection campaign using methods that raise both ethical and legal questions.

He said the company asked up to 40 investors to allow $1,000 of their stake in the company to be diverted to the Carona campaign -- in some cases in exchange for shares in the company.

Several investors contacted by The Times confirmed this account, although some said their money was diverted without their knowledge.

The company also paid at least $45,000 for a birthday party and fundraiser for Carona, Gladych said, although no record of this expense on the campaign’s behalf is in the sheriff’s contribution reports.

Although many, if not all, of the individual campaign investors’ donations were reported, the company’s expense for the birthday party was not.

Gabbard, 67, and his live-in partner, Toni Van Schultze, met with an FBI agent in February and discussed their business association with Jaramillo, said CHG attorney Michael C. Olson.

In addition to Gabbard, the key figures in the controversy include Jaramillo’s wife, fundraiser Lisa Jaramillo, and Robert Levy, an Orange County lobbyist.

Gabbard is a convicted felon who served time for armed robbery, grand theft and drug possession in the 1960s and 1970s.

This was apparently not common knowledge when he ran for the Newport Beach City Council in 1994.

Gladych, Gabbard’s lawyer, said Levy and Lisa Jaramillo were responsible for the plan to give investors shares in CHG Technologies in return for contributions.

“This is what Levy and Lisa told [Gabbard] to do,” Gladych said. “He had no idea this is not an acceptable practice.”

But Levy said he was unaware of the contributions until public revelations last week, and Lisa Jaramillo angrily denied that she was involved.

“That’s a patent, bald-faced lie,” she said. “I have no knowledge of anyone who invested in Gabbard’s company.”

Everyone involved agrees that Gabbard helped raise money for Carona on two occasions: A breakfast gathering in February 2000 and the birthday bash in May 2000.

In between those two events, Carona joined other elected officials in writing letters urging the Legislature to support the technology, which it has not done.

Gabbard hosted the 45th birthday party for Carona because he believed the sheriff would help promote his device, said Olson, the CHG attorney, adding that the party was Levy’s idea.

“Levy told [Gabbard] this was a way to get Carona to help the company market the product,” Olson said. “If he could get Carona to endorse it, it could open doors for him.”

Yet Levy said he was out of the picture by then.

Levy said he was summoned sometime between the two fundraisers to the office of Gabbard’s lawyer at the time, where Gabbard, Van Schultze and her unidentified nephew confronted Levy over what they saw as a lack of results from at least $60,000 they said Levy encouraged Gabbard to contribute to political campaigns.

Levy said he was stunned by the figure, and that he told the group he never encouraged Gabbard to donate so much money.

“I remember telling them, ‘I don’t have a clue to what they were talking about,’ ” Levy said. “They just kept raising their voices.”

In June, about three weeks after the birthday fundraiser, Lisa Jaramillo wrote a letter on Carona’s campaign stationery thanking Gabbard for the party and $30,750 raised, adding that, “I’m hoping to collect the rest from you” in time to file the upcoming June 30 campaign statement.

Around the same time, Gabbard and his associates were collecting investments from people in Southern California, Michigan, Ohio and Pennsylvania -- many of whom said they invested after hearing relatives talk up Gabbard’s invention.

Some of the investors were also directed to write $1,000 checks to Carona’s campaign, for which they were given 1,000 shares in CHG, a practice that experts say may be illegal.

Apart from concerns about the contributions, Gabbard’s company, which his lawyer says is nearly broke, has become enmeshed in other legal problems.

The investments have become the subject of at least one lawsuit, and have given rise to yet another dispute over who owns some of the patents that some investors believed were the security for their investments.

Orange County investor Annie Molnar Fox filed suit last year alleging Gabbard used some of her $400,000 investment to pay off personal debts, lied about being a former Jet Propulsion Laboratory engineer with access to a satellite for use with the device, and failed to file required business and tax reports for CHG Technologies.

What, if anything, will emerge from the FBI investigation of the questionable contributions, and the attorney general’s, if he chooses to hold one, is unclear.

Tracy Westen, chief executive officer of the Center for Governmental Studies, a nonprofit political research organization in Los Angeles, said last week that it likely would be illegal for a campaign to offer stock in exchange for political contributions in cash of equal value.

If no crimes are found, the controversy could pass with minimal harm to Carona’s career, political observers say.

“I would think it would tend to blow over” unless the sheriff is connected directly to any unethical or illegal actions, said Joe Cerrell, a Democratic political strategist based in Los Angeles.

“I think for Carona to be damaged, they’ve got to link him to these problems. I don’t see it yet.”

But the political embarrassments, at least, could have been avoided, one ethicist said, had Carona not insisted on bringing his political allies into public service with him.

“That’s a throwback, basically, to the early 1900s where patronage was the norm,” said Rosemary O’Leary, a public administration professor at Syracuse University’s Maxwell School of Citizenship and Public Affairs.

“Since then we’ve had law after law to promote merit hiring and to discourage patronage hiring,” O’Leary said.

“It’s really, I think, a step backward.”

Yet some of the Orange County supervisors who approved the rule change allowing Jaramillo and Haidl to be hired said they still believe the sheriff should be free to name his own command staff -- and then be responsible for their performance.

“I don’t have any regrets. Mike may have some,” said Chairman Tom Wilson.

“It’s his department. ... He’s the elected guy. He doesn’t come over here and tell me who I should hire.”

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Times staff writer Stuart Pfeifer contributed to this report.