The DAs Friend

A civil war raging inside the Orange County district attorney's office grew out of a financial crisis in an obscure Hollywood film company. At the center of that story—involving alleged organized-crime figures, federal securities violations, and threats of extortion and murder —is Patrick N. Di Carlo.

Di Carlo is a millionaire Newport Beach businessman as well as a political supporter, business partner and friend of the county's first-term district attorney, Anthony J. “Tony” Rackauckas. But some of Rackauckas' own agents say they suspect Di Carlo is tied to organized crime—something Di Carlo, who has never been charged with a crime, vociferously denies.

Di Carlo is a 64-year-old Pennsylvania native who, by his own admission, has found himself on the business end of organized-crime investigations for the past 24 years. But in 1998, he found a new friend in Rackauckas. Then a superior court judge, Rackauckas was running for district attorney. Di Carlo's family contributed $3,500 to the campaign, and suddenly Di Carlo the outsider was an insider. Within months of his victory, Rackauckas went into a short-lived Internet business with Di Carlo and has spent the night at Di Carlo's $3 million estate on Harbor Island in Newport Beach. Their wives became good friends, Rackauckas says.

So when Di Carlo found himself in big trouble last year, he went to his friend the DA.

Di Carlo told Rackauckas he had worked in 1999 or 2000 as a consultant for Toronto-based New Cinema Partners. New Cinema is a relatively young company registered in Nevada and operating in Hollywood. During his work there, Di Carlo asserts, he uncovered suspicious financial arrangements and major violations of federal securities laws. For reasons that remain unclear, Di Carlo says he severed his relationship with the company and attempted to return $150,000 in fees and expenses. (New Cinema Partners officials did not respond to several requests for comment.)

That's when his trouble began. Di Carlo asserts that a New Cinema investor—whom Rackauckas told the Weekly has direct family ties to a major New York City-based organized-crime syndicate—wanted the money returned to him, not to company coffers. To press his point, the man allegedly told Di Carlo he knew the whereabouts of two of Di Carlo's out-of-state children and expressed insincere concern for their safety.

Di Carlo wanted his friend Rackauckas to assign investigators to the case. The DA turned the matter over to his agents in the county's organized-crime unit. But Rackauckas says his agents—the same agents who had been investigating Di Carlo for decades —didn't believe Di Carlo's story. They quickly turned the tables, investigating Di Carlo not as a victim of a mob shakedown but as a suspect himself.

Enraged, Di Carlo called Rackauckas to tell him to get the investigators to back off. Rackauckas asked his agents what they had on Di Carlo; he asserts the agents had nothing, and he pulled them off the case.

A year later, in February 2001, the conflict over Di Carlo's case went from hushed conversations in the hallways of the DA's Santa Ana headquarters to the pages of The Orange County Register and the Los Angeles Times. But it was a highly sanitized version, a story reduced to intraoffice politics, personality conflicts or a petty scandal in which Rackauckas used his authority to stop the investigation of a man whose family made generous contributions to the DA's 1998 political campaign. Three of Rackauckas' prosecutors ultimately called on the state attorney general to investigate their boss.

But both papers ignored the more intriguing allegation: that some of Rackauckas' own agents think Di Carlo is not just a political supporter but also a mobster.

Is he? Both Rackauckas and his critics cite Di Carlo's experience with the New Cinema investor as evidence for their opposing positions. Rackauckas says the New Cinema story demonstrates his friend Di Carlo “is nothing other than an honest businessman” who went to law enforcement when he became the victim of a mob shakedown.

But Rackauckas' agents say Di Carlo's run-in with an alleged mob figure after working at New Cinema Partners is consistent with his pattern of contacts with questionable associates. In the early 1980s, Di Carlo asserts that a hitman planned to kill him at the Balboa Bay Club in Newport Beach. A few years later, Di Carlo found himself entangled in a sensational bribery case involving his partner, Anaheim businessman W. Patrick Moriarity. Prosecutors investigated but never charged Di Carlo in that case, though Moriarity was convicted of bribing state senators.

And now comes Di Carlo's encounter with the angry New Cinema Partners investor, whom Rackauckas insists is a low-ranking mobster. Last year, the film company landed veteran Hollywood producer, director and screenwriter Damian Lee. Perhaps best known for writing and producing Death Wish V, starring Charles Bronson, Lee was reportedly working on thriller flicks with Dolph Lundgren and Steven Seagal and a Damon Wayans comedy when he quit last month as president and chairman of the board after only nine months on the job. Company officials offered no explanation for Lee's departure but said they will hire an investment-banking firm to “explore solutions to address the current situation.”