By Peter Maguire
By Charles Lam
By Charles Lam
By Andrew Galvin
By R. Scott Moxley
By Gustavo Arellano
By R. Scott Moxley
By R. Scott Moxley
Orange County doesn't usually supply Hollywood with fodder, but on Nov. 14, 2003, a wily, foul-mouthed 67-year-old Newport Beach businessman wearing an oxygen mask spilled secrets that startled a detective in the district attorney's office.
Punctuated by coughs and wheezing courtesy of a terminal illness, Charles H. Gabbard's story involved dirty cops, slick lobbyists, extortion, murder, state legislation, the unlawful dissemination of the Haidl gang-rape video, tainted contributions to Sheriff Mike Carona, a midnight theft tied to a proposed laser device for ending police pursuits and, I'm not making this up, Shaquille O'Neal.
Don't laugh. Detective Mike Welch and his boss, DA Tony Rackauckas, didn't dismiss Gabbard as a lunatic. His wild story—which until now had been confidential—sparked FBI interest and a 10-month DA investigation. As a result, Assistant Sheriff George Jaramillo—the sheriff's closest adviser—became the highest ranking Orange County cop ever charged with corruption.
"This is a sad day for Orange County law enforcement and the people of Orange County," Rackauckas said last September at a press conference to announce the arrest of Jaramillo, who was charged with six felonies. "A person sworn to protect and serve the public has violated a sacred trust."
The DA quickly claimed there was "no evidence" of wrongdoing by Carona, Gabbard or anyone else. He then refused to field questions. "I think the evidence is how we've spelled it out, and I wouldn't want to go beyond that," said Rackauckas. "I don't think that would be appropriate."
An investigation that began like an unwieldy outline for a James Ellroy novel supposedly now boiled down to just two villains: Jaramillo and his sister-in-law, Erica Hill, who was charged as an accomplice, and a less-than-wild plot: petty greed.
It was fiction.
* * *
Extensive law-enforcement interviews and documents obtained by the Weeklyprove that the case against Jaramillo and Hill is not only riddled with holes but also so weak that convictions are unlikely if the case goes to trial this fall. According to these records, investigators:
• disregarded blatant campaign fund-raising crimes involving contributions to Carona, who recently announced his 2006 re-election bid;
• uncovered evidence of an apparent quid pro quo in which the sheriff offered Gabbard county jail inmates as free labor;
• ignored the actions of several other local cops who had financial relationships with Gabbard;
• launched the case based on Gabbard, a onetime violent career criminal with deep personal animosity against Jaramillo and with no compunction about lying repeatedly during FBI and DA interviews;
• focused on Jaramillo, despite uncovering exonerating evidence, and explored at least five different legal theories for an arrest before settling on less serious conflict-of-interest and misappropriation-of-public-resources charges.
How did the DA's office get into this mess?
* * *
On March 14, 2000, Carona personally issued written orders for Jaramillo and 17 other members of his command staff to go to the old El Toro Marine Corps Air Station at 3 p.m. two days later. Working with Gabbard, the sheriff had arranged for his deputies to witness a 90-minute demonstration of Gabbard's HALT System, which was touted as using laser technology to safely end police pursuits. Gabbard wanted cops to support his product in hopes that his company, CHG Safety Technologies, could win a lucrative state monopoly for the device. The product seemed, at least initially, to work, and as far as the deputies—including Jaramillo—knew at the time, Gabbard was merely a wealthy local inventor infuriated by crooks who risked officers' lives during car chases.
The image wasn't quite accurate. Gabbard began his adult life on the righteous path. Between November 1957 and January 1959, he applied to become a policeman in Los Angeles, Palm Springs, Placentia and Santa Ana. Each department rejected him. The Missouri native then began a 22-year crime spree that landed him in several California prisons. Charges included armed robberies, violent escape from prison, vagrancy, attempted robbery, numerous parole violations, possession of dangerous drugs, embezzlement and murder.
This is Gabbard's 2003 explanation to the Orange County DA for the 1963 murder charge: "My crime partner got shot. We were a couple of drunks trying to rob a store. Uh, you know, just bullshit like that. . . . And, uh, in fact, uh, we were on our way up [to Santa Maria] to see my wife and kids. We were divorced, so I wanted somebody to be a witness so that she couldn't say I beat her or something. Well, we [he and his crime partner] were shitfaced anyhow, uh, but I wouldn't have known if I, I, I just, you know . . ."
In early 2000, Gabbard learned he had at least one thing in common with Carona: both used lobbyist/fund-raiser Bob Levy, a former U.S. marshal with impressive ties to law-enforcement political-action committees as well as liberal and conservative political machines throughout California. Gabbard and Carona quickly decided they could use each other. The sheriff, who'd won his powerful job a year earlier, wanted campaign contributions to help frighten off potential challengers in 2002. Gabbard already had Irvine P.D. officers Denny Jenner and Phil Povey plugging his device, but he believed Carona's Boy Scout image would add legitimacy to his plans to make millions of dollars selling the HALT System to police departments across the nation.
Gabbard, Levy and Carona struck an unwritten deal. In exchange for sponsoring HALT demonstrations, publicly praising the product and writing a product endorsement on Orange County Sheriff's Department letterhead to the state Legislature, Carona would get thousands of dollars in campaign contributions. According to information contained in DA files, Carona asked Levy to get $100,000 from Gabbard and CHG stockholders.
The sheriff was so elated by the prospective fund-raising coup that he apparently offered an additional concession. On Feb. 18, 2000—10 days before the first of two Newport Beach fund-raisers sponsored by CHG for Carona—Levy sent Gabbard a handwritten memo, which has been obtained by the Weekly.After outlining details of the upcoming fund-raiser at the exclusive Pacific Club, Levy wrote that the sheriff "would like you to know that you could use certain inmates for soldering work" to mass produce the HALT product.
Four years later—with the DA's office in hot pursuit of Jaramillo, detectives met with the sheriff, who'd agreed to field questions only if his answers were not recorded. Interview notes show that Carona claimed "he didn't recall" offering Gabbard use of inmates. "However, if he did, he doesn't believe that would have been illegal," wrote DA investigator Dina Mauger after the May 5, 2004, interview. "Carona said he is always looking for work for inmates to keep their morale high and to provide service to the community."
What, if any, inmate work Carona arranged for Gabbard's private company isn't known. According to his numerous emissaries, the sheriff refuses to agree to an interview with the Weeklyunless all questions are submitted in advance for his approval. Speaking to other news outlets, Carona has hinted that he's comfortable with scrutiny focused solely on Jaramillo, his former longtime best friend, closest adviser and second in command at the 3,000-plus-employee agency. The sheriff says he is "disappointed" that Jaramillo might have been involved in unethical activities.
Gabbard certainly wasn't disappointed in Carona. The sheriff spent untold thousands of taxpayer dollars to hold a HALT demonstration at El Toro on March 16, 2000, and six days later sent a glowing product-endorsement letter to state officials considering a plan, Senate Bill 2004, to mandate Gabbard's product on all California vehicles. "Our profession and our communities would be well-served" if the plan was approved, the sheriff wrote. He didn't tell legislators that CHG had become his largest fund-raiser.
After Carona's endorsement, Gabbard claimed he was asked to sponsor an official race car with Carona's name on it. Instead, he arranged for the sheriff's 45th birthday party on May 18, 2000, at Villa Nova restaurant in Newport Beach. It wasn't so much a party as a fund-raiser that poured illegal contributions into Carona's campaign. Someone took a picture of a smiling sheriff with Gabbard next to a $60 cake.
* * *
It's against the law to evade contributions limits, reimburse a contributor or conceal a contributor's true identity. In a Feb. 8, 2004, interview with FBI agent Tony Alston and DA investigator Mike Welch, Gabbard and his live-in girlfriend, Toni Van Schultze, a beauty-shop owner also active in CHG management, initially denied that almost $40,000 in contributions to Carona were illegal.
Is that illegal?
VanSchultze:It was their money. It was people that we knew, and like I said, we support the Orange County sheriff.
Even when the FBI agent persisted with questions, Gabbard and Van Schultze continued to lie. Alston finally told them that he had "done a little research" on Carona's campaign committee and discovered questionable contributions tied to Gabbard's events. The agent repeated his questions and got a new answer: "maybe" there had been illegal contributions.
Eventually, Gabbard and Van Schultze admitted that they wanted to raise lots of money for Carona because "this was what we had to do for our [HALT] legislation that we needed." The problem was that the couple couldn't find legitimate contributors who wanted to donate to the sheriff. A plan was devised to reimburse reluctant Carona contributors with cash or stock in CHG.
"I see," the FBI agent said after Gabbard outlined the reimbursement scheme.
Then Gabbard blurted out, "George [Jaramillo] said it was legal!"
"It was George's idea?"
"Yeah. George said this was the way to get the money to Sheriff Carona's campaign."
"Do you remember when that happened?"
"Well, that was . . . Uh . . . I don't know."
Jaramillo may have carried out questionable acts while he was assistant sheriff, but masterminding the fund-raising sham was not one of them. The prime witness to this fact would be Gabbard himself. He has repeatedly told investigators that Carona didn't introduce him to Jaramillo until March 16, 2000—two and a half months after the sheriff, Levy and Gabbard came up with the demos and endorsement idea in exchange for contributions.
Despite Gabbard's criminal background, his lies in interviews and his admission to bankrolling fake contributions, Rackauckas decided he needed Gabbard to catch Jaramillo. On April 20, 2004, the DA's office acknowledged Gabbard's glaring inconsistencies in a memo but nevertheless gave him immunity from prosecution. Five months later, Jaramillo—who'd been fired by Carona in March in a self-styled management shake-up—and Hill were arrested.
News of the charges dominated all seven Los Angeles-OC television newscasts. Video captured Rackauckas spelling out the crimes: "Mr. Jaramillo diverted sheriff's deputies, patrol cars and county equipment away from protecting the community and used them to market [Charlie Gabbard's] products." In the days before he filed the charges, Rackauckas returned a four-year-old $1,000 contribution from Gabbard.
* * *
As second in command at the sheriff's department for five-plus years, Jaramillo served as Carona's hatchet man—the guy who'd occasionally bully staff, reporters and outsiders so that the sheriff could get his way while maintaining his carefree Andy Griffith persona. Critics say Jaramillo is an egomaniac with questionable impulses. Fans say Jaramillo—who declined to be interviewed for this story—is a loyal friend as well as a brilliant, tireless worker who put himself through law school while he worked as a Garden Grove cop. Most agree, however, that Jaramillo loves to multitask, which might have contributed to his downfall.
After Carona introduced Gabbard to Jaramillo at the El Toro demonstration, the assistant sheriff saw the chance to participate further in helping end the seemingly endless number of high-speed police pursuits that often air on LA newscasts. He also understood that the potential financial windfall would be great for those connected to HALT.
During a lunch meeting at Antonello's restaurant in Santa Ana, Jaramillo gave Gabbard free advice on how to market his product. On Aug. 30 and Sept. 30, 2000, the sheriff's department and CHG held additional HALT demonstrations for the media, including one aired on America'sMostWanted.
The more Jaramillo learned about CHG, the more he understood that Gabbard lacked management experience, an opinion shared by numerous bankers who considered but rejected loans to the business. In October 2000, the assistant sheriff encouraged Gabbard to hire Erica Hill, his sister-in-law. Hill—whom Gabbard described as exceptionally organized—found a company in disarray and an owner desperate for guidance. Hill's salary was set at $60,000 per year, and she soon ran the office as Gabbard's health deteriorated.
On Nov. 3, 2000, Gabbard signed a management-consulting agreement with Jaramillo. For one year's worth of part-time work, CHG would pay the assistant sheriff $15,000. Gabbard hoped to use Jaramillo's law-enforcement contacts, sales ability, legal expertise and bilingual skills—especially with the hope of marketing HALT overseas. The consulting deal spelled out that Jaramillo would not use any county resources to assist CHG.
Three days later, Jaramillo received a county counsel opinion on his deal with CHG. Deputy County Counsel Barbara Stocker essentially told Jaramillo that the pact was okay if the work was permitted by the department's policies and if the income was reported to proper authorities. She cautioned that he "would be disqualified from participating in any dealings between the company" and the county.
Stocker's memo won't help the DA convince a jury that Jaramillo was up to no good: his CHG contract was permitted by his department's policies, he reported the consulting income and the source on public disclosure forms (where the Weeklyoriginally found the revelation in March 2004) and to the IRS as well as paid taxes on it, and he didn't need to disqualify himself from any fees because the HALT System was never seriously considered for purchase by the county.
Even though Carona saw his best friend daily at the office and had occasional contact with Gabbard and Hill, the sheriff claims he had no idea that Jaramillo had the yearlong consulting gig. It's a difficult assertion to believe. County records reviewed by the Weeklyshow that the assistant sheriff submitted a vacation leave request in early 2001 in order to travel on his own time for CHG. That trip—to visit police departments in Chicago and New York City as well as the White House—was the beginning of the end of Jaramillo's relationship with CHG. The assistant sheriff discovered Gabbard's dirty secret.
In March 2001, Jaramillo met Gabbard at Costa Mesa's Mimi's Café to confront him about his criminal record. The assistant sheriff, who had aspirations to follow Carona as sheriff, said he could not be part of an organization run by a convicted felon whose rap sheet included murder. He suggested Gabbard sell his share of the company and leave. Gabbard said "never." Law-enforcement sources say they parted on unfriendly terms.
It's unclear how the DA will explain what happened next. Despite the break in the consulting arrangement and the fact that CHG never paid Jaramillo another dollar, the company and the sheriff's department held three more media demonstrations for HALT. For example, prosecutors allege that Jaramillo committed a felony by organizing a demonstration on April 8, 2002—more than 14 months after his last CHG paycheck. The assistant sheriff wasn't even in the state at the time. Sheriff Carona had sent him to a two-day "Citizen's Corps Council" meeting in Knoxville, Tennessee. According to flight records obtained by the Weekly, Jaramillo arrived in Orange County at 9:45 p.m.—long after the demonstration had been completed. Nevertheless, the DA's office alleges Jaramillo and Hill solely masterminded a scam to misappropriate public resources (such as a police cruiser and staff time) for private gain.
But there's another, perhaps more plausible explanation. The fact that there were HALT-OC Sheriff's Department demonstrations before, during and after the CHG-Jaramillo consulting arrangement suggests the acts were not necessarily connected. It was, after all, Jaramillo's job to get favorable publicity for the department, and HALT events were simply irresistible to TV news producers across the country. Time and again, news segments featured a proactive OC Sheriff's Department working hard to solve the police-pursuit problem.
The publicity didn't match the product, however. Sources say the device was rife with design flaws that helped discourage potential investors. It also didn't help that state legislatures had civil-liberty concerns about forcing people to place CHG chips in their vehicles' taillights. For example, what if crooks stole HALT devices from cops and began terrorizing drivers? By mid-2003, the company that Carona once said should win a state-mandated monopoly worth multimillions of dollars annually had crashed.
* * *
Charlie Gabbard doesn't hide animosity well. When he showed up to talk to DA investigator Welch that first time in November 2003, he was seething. He blamed Jaramillo for CHG's financial woes. (In following weeks, he'd admit that the ex-assistant sheriff was "lucky that I'm on oxygen [pumps], otherwise I would throw him out of the 11th floor window.")
During the course of the 45-minute interview, Gabbard slurred his words, answered questions that weren't asked and often couldn't finish his thoughts. But he was clearly on a mission: to badmouth Jaramillo and Hill. He hinted that they had tried to wrest control of CHG—possibly with the help of then-Laker Shaquille O'Neal.
"[O'Neal] left a message to call," said Gabbard. "So I went on, and I called him, and it was really him! And he had a LoJack on his car, and it was, was stolen, and he didn't get it back, so we had the GPS, and plus we had the HALT System. Well, the, uh, um, he came down, and Erica immediately took control. And I mean she had him eating out of her, um, hand, so to speak. And she flew off a couple of times to go different places. Shaq bought the tickets to go to Oregon and someplace else, and when I told her that's a no-no, I did it in a nice way."
Although he couldn't recall details, Gabbard said he felt forced to offer O'Neal 50 percent ownership in CHG. For unknown reasons, the proposal collapsed. By the time the interview was over, a rambling Gabbard claimed without an iota of proof that Jaramillo had illegally obtained a copy of the Haidl gang-rape video and was showing it to friends, had extorted him because of his criminal history, and had blocked a Sheriff's Department investigation into an alleged midnight theft of CHG property. He literally ran out of breath with accusations. Welch was forced to stop the tape recorder several times so Gabbard could compose himself.
None of his claims stuck. Ten months later, the DA's office ultimately found a highly technical statute, California Penal Code Section 424—the misappropriation of public funds—to charge Jaramillo for alleged conflicts of interest. Oddly, not once did investigators ask Gabbard the key question: Did he pay Jaramillo to conduct the demonstrations? The attempt to nail Hill, who has never been a public official, with misappropriating public funds seems an even larger stretch.
But in the end, Deputy DA James Laird is stuck with Gabbard as a star witness. Does that mean the case is in trouble? Here's Gabbard's explanation to the FBI on why he can't keep his stories straight: "Sometimes I can't even remember what the hell day it is."
[This article was published on Wednesday, April 13, 2005.]