Who the Hells in Charge?

A simple question knocked the smile off Anthony J. “Tony” Rackauckas' face in a March 9 interview: Does traditional organized crime operate in Orange County?

The powerful district attorney turned the palms of his hands out and up toward the reporter, opened his mouth . . . and said nothing. He stared with a pained expression as if his just-finished lunch was giving him trouble. He fell back in his dark leather chair and then leaned forward over the cluttered desk inside his surprisingly modest, 10th-floor corner office in Santa Ana. After he took a sip of lukewarm coffee from a burgundy, leaf-decorated mug, a smile reappeared on the DA's face.

“I don't . . . ” said Rackauckas. And then he abruptly stopped speaking. “I don't want to . . .” He stopped again and glanced at Tori Richards, his press secretary. “It's hard for me to say, well, like, 'There is no problem,' you know? But I think we are in pretty good shape here. We don't have organized crime, you know, any of the traditional [New York or Chicago Mafia] families operating out of Orange County. From time to time, we have somebody in Orange County who we learn has connections with one or another of the traditional families. And then our organized-crime unit tries to keep track of them to make sure that they don't get involved in any crime.”

It is odd that an organized-crime question—especially an uncomplicated one—should frustrate the usually unflappable Rackauckas. Or maybe it's not so strange: a scandal involving organized crime is threatening to make the DA's first term his last.

Rackauckas is a respected former Superior Court judge, a high-profile former homicide prosecutor, and a law-and-order politician whose campaign for DA three years ago was enthusiastically endorsed by the local Republican machine and its fat-cat contributors. By any reasonable measure, Rackauckas appeared an invincible candidate for reelection in 2002.

But the DA's public image has taken a savage beating lately. In early February, a behind-the-scenes intraoffice battle exploded into public view from the mysterious depths of the DA's clandestine organized-crime unit. The controversy centers on Patrick N. Di Carlo, a multimillionaire Newport Beach businessman and frequent contributor to Republicans such as Congressman Christopher Cox (Newport Beach). Legitimately or not, members of the organized-crime unit have long viewed Di Carlo with suspicion. That point is not in dispute, even by Di Carlo. In numerous legal documents—including a six-page complaint he filed with the Board of Supervisors in 1988—the 64-year-old Pennsylvania native has acknowledged that Orange County's organized-crime cops have investigated him since 1977.

Di Carlo's Newport Beach Estate
Photo by Jack Gould

To the horror of some law-enforcement officials, five additional key facts are also not in dispute:

•Rackauckas met and accepted $3,500 in contributions from the Di Carlo family after he announced his DA candidacy in 1998; shortly thereafter, the man who nowadays decides who does and doesn't get prosecuted for crimes in Orange County has become close friends with Di Carlo.

•In April 2000, Di Carlo—who possesses a concealed-weapon permit issued by the county sheriff—went to Rackauckas, said he was the victim of a Mafia extortion attempt after a business deal went sour, and asked the DA to use his office's resources against a Las Vegas man with direct family connections to an infamous New York City-based organized-crime syndicate.

•Rackauckas' organized-crime unit investigated but quickly focused on Di Carlo—not as a victim, but as a possible suspect. After Di Carlo complained to Rackauckas, the DA ordered the officers to “immediately cease” their probe into his friend's activities and to hand over their investigation file.

•After the incident, Rackauckas ignored his officers' concerns and, along with DA prosecutor Michelle Clesceri, took Di Carlo up on his proposal to go into business together. In July 2000, incorporation papers filed with the Nevada secretary of state's office show, they created an Internet shell company called Ecourt.com Inc.; to the DA, it “seemed like a good venture idea,” but, he said, the business never got off the ground.

•In February, Rackauckas outraged many observers when he indefinitely suspended investigators Barry Foye and Lyle Wilson, both of whom had dealt with Di Carlo. Rackauckas later asked the attorney general to determine if the two had violated any laws after a secret recording of the businessman being interrogated ended up in the hands of an Orange County Register reporter.

Di Carlo's attorney Aitken: “What
we have here is our own little Rampart.”
Photo by Davis Barber

The scandal has divided the DA's office into two camps. Some employees shrug off the controversy as a petty, if messy, misunderstanding undeserving of scrutiny. Other staffers are mortified and angry. In a campaign to underscore their displeasure with Rackauckas, DA employees last month created an unsparingly hostile website (members.tripod.com/solidarityii). On the site, they say their office is in “ethical free fall” and “there is nothing impressive about Mr. Rackauckas' conduct.” In his interview, Rackauckas recoiled at the mention of the website and conceded that “an unhealthy situation” exists in his office. He says he worries that criminals are receiving “a dangerous signal” that county prosecutors have “lost their focus.”

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Rackauckas may have had other, more serious worries. If a March 8 report by veteran private investigator Mike Madigan is true, Rackauckas visited the Santa Ana branch of the FBI in October and “demanded to know if his phones were tapped” by the agents.

“For some reason, he was afraid to use his phones,” said Madigan, who refused to identify his source for the information.

The DA declined to confirm or deny the report, but it is clear that with his political lifeline fraying a few alarmed Republicans—even former Rackauckas supporters—are now scurrying to find a challenger for next year's election.

“Who would have thought this mess could have happened in the Orange County district attorney's office?” said one veteran law-enforcement source who spoke on condition of anonymity. “I have no idea what Tony has been thinking. I can't decide if he is corrupt or stupid.”

Patrick Di Carlo's two-story, five-bedroom, five-bathroom, Mediterranean-style mansion (valued at more than $3 million) sits on an exclusive 7,000-square-foot lot behind a gated bridge to Newport Beach's picturesque Harbor Island. When the gates to Harbor Island open, $100,000 cars and window-tinted, chauffeur-driven limousines emerge. Di Carlo's neighbors include billionaire George Argyros and Robert Ferrante, a onetime Di Carlo associate and owner of the looted, 1980s, Irvine-based Consolidated Savings & Loan. (In 1982, Ferrante—an Orange County native—said he was the victim of a Mafia hit when a hooded gunman shot him six times in Redondo Beach.) Di Carlo's waterfront property is registered in the name of Agincourt Inc., one of his numerous companies scattered around the country. Rackauckas and his wife, Kay, who is also an Orange County prosecutor, have spent the night in the house with Di Carlo and his wife, Mary Jane, whom the DA affectionately calls “M.J.”

It's difficult to say what Di Carlo—an avid sports and history buff, says Rackauckas—makes of the scandal. According to his attorney, Wylie Aitken, Di Carlo agreed to the Weekly's request for an interview. Then a series of “scheduling” issues during an 11-day period prevented a meeting. But based on interviews with Aitken, Rackauckas and the numerous records Di Carlo supplied to us, it is clear that the businessman views himself as an innocent casualty of out-of-control organized-crime cops hell-bent on smearing his reputation.

“What we have here is our own little Rampart [in the DA's organized-crime unit],” said Aitken, referencing a division of the Los Angeles Police Department currently under investigation for routinely violating constitutional rights, planting evidence and shooting handcuffed suspects. “For a long time, they operated unbridled.”

Asked why officers have allegedly singled out Di Carlo for abuse, Aitken—one of California's most prestigious plaintiff's attorneys—didn't hesitate. “That is a good, good question,” he said. “What is it that this gentleman has done? No one has ever articulated anything to me. In my humble opinion, he is a victim.”

Remarkably, both Aitken—a self-described Robert F. Kennedy Democrat who is chairman of the congressional campaigns of Representative Loretta Sanchez (D-Garden Grove)—and Rackauckas, a die-hard conservative Republican, agree that Di Carlo is a victim of “vigilante” detectives acting on “personal vendettas.”

Di Carlo “is nothing other than an honest businessman. . . . I enjoy his company,” Rackauckas said. “He makes sure all of his T's are crossed and his I's are dotted because he understands that he might be investigated any time of the day or night.”

But some law-enforcement officials—including federal agents—apparently are not swayed by the DA's endorsement. They believe the organized-crime unit's probes of Di Carlo—who has complained that he was the target of two threatened but unexecuted mob hits—irreparably taint the relationship between the DA and the businessman. “If [veteran investigators] were treating Mr. Di Carlo as a suspect,” employees wrote on the anti-Rackauckas website, “then perhaps they had good reason.”

And perhaps they didn't. In off-the-record interviews, law-enforcement sources failed to provide any solid information that indicates Di Carlo has committed any crime. More important, after 24 years of government investigations, not only has Di Carlo never been convicted of a crime but he also has never even been charged with one.

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There is ample evidence that organized-crime cops have a long, possibly sordid history when it comes to Di Carlo. In 1989, George P. Wright—a former federal organized-crime task-force officer—rocked Orange County with an alarming expos on the organized-crime units of the Sheriff's Department and the DA's office. The units had “degenerated into little more than spy groups” operating on personal whim and without constitutional or moral conscience, Wright alleged in The Twisted Badge. The book detailed how the county organized-crime units had allegedly harassed a municipal judge, a college professor, an attorney and a newspaper reporter—all of whom had personally angered powerful local politicians. Now chairman of the criminal-justice department at Santa Ana College, Wright also described how in the mid-1980s, the organized-crime cops worked strenuously to nail Di Carlo.

Wright's book and court documents tell the story of James Rosoff, an undercover operative for the DA's organized-crime unit from the late 1960s through the 1980s. In a 1985 deposition filed in connection with a separate lawsuit, Rosoff said under oath that he had been assigned to Di Carlo because “there was some sort of strife and battle going on between the investigators and Mr. Di Carlo.” The officers wanted Rosoff—an expert in white-collar crime—to dig up anything he could on Di Carlo after one of his business associates, W. Patrick Moriarty—an Anaheim fireworks manufacturer—was convicted in one of California's largest and most colorful bribery scandals. Rosoff said he was also ordered to encourage Di Carlo's banks to accuse him of crimes.

When apparently no credible evidence of such crimes as racketeering, bribery or conspiracy was unearthed and the banks refused to participate, Rosoff and the organized-crime units spent weeks in hopes of arresting Di Carlo for, of all things, driving under the influence of alcohol, Rosoff said. On two occasions, the operative lured the businessman to the Chanteclair Restaurant near John Wayne Airport in Irvine for drinks. An unsuspecting Di Carlo, however, managed to get home without incident even though local patrol officers had been ordered to arrest him as soon as he left the restaurant.

The following excerpt from the Rosoff deposition gives further insight into the mindset he said existed in the organized-crime unit:

Question: Were you aware that they wanted to get Mr. Di Carlo?

Answer: Yes, I was definitely aware.

Question: Did they ever use the words “we want to get him”?

Answer: They certainly did.

In August 1988, Di Carlo filed a $40 million pre-lawsuit complaint against the Sheriff's Department and the DA's office for illegal surveillance, violation of bank secrecy laws, suborning perjury, invasion of privacy and obstruction of justice. According to the complaint, the law-enforcement agencies had been telling Di Carlo's business associates that he was “under investigation for international fraud and organized-crime activities” and calling him a “con man.” Di Carlo, who ultimately did not pursue the suit because of legal costs, also accused the officers of spreading rumors that he was in the “Witness Protection Program from an Eastern state.” He added that over the course of several months, members of the organized-crime unit were known to enter restaurants where the Di Carlo family was dining and “sit in close proximity and stare” at him.

Despite their inability to make a case, the officers' campaign managed to drive clients and business partners away and put Di Carlo—a father of seven—into financial straits, said Aitken. In a January 1990 letter to the DA's organized-crime unit, Di Carlo officially complained once again that its officers were still harassing him with “incessant inquiry” into his businesses and spreading slanderous rumors that they had a “big file” on him. He demanded that the officers either charge him with a crime or leave him alone. Di Carlo said in the complaint that he was “beginning to wonder whether a private individual in this county is afforded any protection under the Constitution.”

Near the end of the interview with the Weekly, Rackauckas had taken off his gray suit jacket and rolled up the sleeves of his white button-down shirt to his elbows. There were circles around his eyes, and he slouched in his chair. He told the reporter he was leery of the interview, but he didn't dodge a single question and supplied records to support his case. Far from giving short, detail-free answers, the DA spoke much of the time so openly that Richards, his press secretary, urged him to narrow his responses.

It was during the 1998 campaign when a member of then-DA Michael Capizzi's organized-crime unit advised his boss's replacement to stay away from Di Carlo because “maybe he is crooked, maybe he has some kind of shady past,” Rackauckas said. “They had this vague notion that he was connected to the mob, but clearly, they had no support for that whatsoever. When I asked for supporting evidence, I didn't get any.”

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The DA said Di Carlo explained that he had been “treated rather heavy-handed” over the years by the organized-crime investigators. Rackauckas went back to the investigators. “I asked them, 'Could you tell me what it is [Di Carlo] has done?' And, really, they never came up with anything.”

But the DA said his investigators were insistent that “something is wrong with that guy.” He then demanded their file on Di Carlo. “All I got was a manila folder with two newspaper articles that talked about Moriarty and a sheet of paper that named Pat Di Carlo as an associate of the mob. That was it. There was nothing of value,” said Rackauckas, who added he decided the accusation was baseless and ordered his men to discontinue their Di Carlo probe. A couple of weeks later, however, Di Carlo called Rackauckas and said that investigator Wilson had ignored the order by contacting and frightening Elton Johnson, one of Di Carlo's potential business partners. The alleged insubordination infuriated the DA.

Last month, Rackauckas learned that his officers may also not have been totally forthcoming to him. Despite assurances that they had destroyed the entire Di Carlo file, a tape of an April 2000 interrogation of Di Carlo somehow made its way from the organized-crime unit to the desk of an investigative reporter at the Register. The “shocked and surprised” DA suspended investigators Wilson and Foye, an officer Di Carlo originally fingered as his nemesis in the 1980s, and asked the Riverside district attorney and state Attorney General Bill Lockyer to determine if any laws were broken. Investigations are under way.

Neither Wilson nor Foye responded to requests for interviews. But several law-enforcement sources said they have complete confidence in the two veteran investigators, described as “real professional, straight-laced” cops who “do everything by the book.” In a move that underscores the division within the DA's office after the investigators were suspended, three ranking prosecutors—including assistant DA Michael Jacobs—flew to Sacramento on Feb. 6 to ask the attorney general to look into what they see as Rackauckas' misconduct in office. Their concerns also include suspicions that the DA may have misappropriated public funds for his private foundation that gives out official-looking badges to local businessmen who contribute money.

Aitken sees the complaints against Rackauckas as a diversion without merit. He claims the investigators are “arrogant, antagonist and unprofessional.” Di Carlo's lawyer says he trusts the DA, whom he first met when the two men took opposing sides in the fight over the successful recall of anti-death-penalty state Chief Justice Rose Bird in 1986. “If Tony Rackauckas had the slightest belief that Patrick Di Carlo was in any way upside-down, he wouldn't have anything to do with him.”

For his part, Rackauckas summed up the story this way: “It seems like a personal vendetta” against Di Carlo by an organized-crime unit that wanted to “operate without a great deal of supervision.”

Said DA spokeswoman Richards, “Somebody here obviously isn't telling the truth.”