To get to the bottom of their stories, reporters are admonished—from journalism school on—to follow the money. But in Orange County there's often another revealing trail: sex.

Consider Tony Rackauckas. His wild-card rise to district attorney in 1999 was aided by wealthy contributors. Leading the list were onetime, self-described mafia suspect Patrick N. DiCarlo and recently resigned U.S. Ambassador to Spain George Argyros—the Newport Beach billionaire who somehow escaped criminal charges after his apartment empire swindled tens of millions of dollars from tenants by fabricating deductions from security deposits.

But it was sex that truly launched Rackauckas' first campaign—gay sex.

On a Saturday morning in Dec. 1995, investigators raided the Huntington Beach home of then-freshman Assemblyman Scott Baugh. Republican Mike Capizzi, then the county DA, wanted evidence of the GOP's illegal plot to ensure Baugh's victory by placing a fake Democrat on the ballot.

When investigators entered Baugh's home at 7 a.m., they found the assemblyman had an overnight guest: a handsome youth pastor from a local church. Baugh denied any romantic relationship with the man, and later married. A woman. Rumors swirled nevertheless. It didn't help that one of Baugh's closest pals at the time was Jeffrey Nielsen, a Republican activist/attorney now facing numerous felony charges that he repeatedly molested a 14-year-old Westminster boy and possessed gay child pornography.

Capizzi's raid on Baugh's home sparked an immediate firestorm. Within hours, Baugh friends Congressman Dana Rohrabacher and Republican businessman Michael J. Schroeder held a press conference to denounce Capizzi. The DA's office wanted to use private sex lives as a weapon in its criminal investigation of voter fraud, the men told the Weekly.They described the DA's tactics as an “un-American . . . home-invasion assault” by “Gestapo . . . thugs.” Joined by Baugh, they described their own personal epiphanies: civil libertarians were right to worry about government abuse of its awesome police powers.

“This is reminiscent of the way Nazis and gangsters act,” said a seething Rohrabacher, who, with the help of Schroeder and Baugh, began orchestrating Rackauckas' successful 1998 campaign to replace Capizzi.

The same alliance backed the next sheriff: Michael S. Carona.

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Fast-forward to this month and Orange County's latest sex scandal. Rohrabacher remains a congressman. Baugh had a successful stint in Sacramento and is now a corporate lobbyist and popular chairman of the local Republican Party. Rackauckas and Carona recently announced plans to seek third terms in 2006. Schroeder, an insurance executive, is an influential adviser to both the DA and the sheriff.

Schroeder is key. His reach is seemingly universal. His wife, Susan, works as Rackauckas' top media strategist. His best friend, Jon Fleischman, serves as Carona's top media/political consultant in the sheriff's department.

With the Rackauckas-Carona group dominating the county's $600 million annual law-enforcement apparatus, you might assume we'd be safe from government-run campaigns that use police resources to uncover sexual indiscretions.

Sadly, you'd be wrong.

On April 21 and 22, The Orange County Register—which had a conniption over the Baugh raid—published front-page articles detailing sexual rumors about former Assistant Sheriff George Jaramillo and his sister-in-law, Erica Hill.

“Carona knew Hill and Jaramillo had a sexual relationship,” the paper quoted from DA files. “Jaramillo showed Carona sexually explicit photographs of Hill. Carona also saw Jaramillo and Hill kiss and engaging in sexual activity.”

Why was Carona watching a colleague engage in sex? A Carona spokesman said DA investigators fouled up their notes: the sheriff hadn't actually witnessed sex.

The Registerwas silent about how it received the DA's investigation records, and it was silent too on information in those documents that would embarrass Carona. Instead, the paper's reporters selectively used sexual information to attack Jaramillo, information attributed to Bud Hood. According to his own grand jury testimony, Hood is a friend of Carona's and works on the sheriff's auto-theft detail. He didn't tell the grand jury he was once arrested during an encounter with a Las Vegas prostitute. The Registerreported that Hood claimed he was offended that Jaramillo showed him nude pictures of women and talked openly of his sexual conquests.

Though perhaps mildly titillating, the stories are tangential to the DA's case against Jaramillo and Hill. In fact, Rackauckas—with Carona's cooperation—arrested the pair last September on the most unsexy crime imaginable: misappropriation of public resources in connection with CHG Safety Technologies, a Newport Beach company hoping to market a laser gun to safely halt police pursuits.


One day before the first Registerarticle, Superior Court Judge John D. Conley, a respected former prosecutor, said he would comply with an OCWeeklyrequest that the DA's search warrant be made public on one condition: he did not want the sex stories leaked. In fact, before giving the media a copy of the DA's search warrant in the Jaramillo case, the judge redacted several sentences of a DA synopsis of an alleged 2000 weekend three-way sexual incident in San Diego. Deputy DA James Laird, who is prosecuting Jaramillo and Hill, assured Conley that he understood his concerns and promised there would be no leaks.

When the sex stories broke in the next day's Register, Jaramillo/Hill defense attorneys Joseph Cavallo, Jeffrey Friedman and Joseph P. Smith exploded. Friedman accused the DA's office of engaging in unethical “gamesmanship.” Smith called the leak a “disgusting smear tactic by Tony Rackauckas' office.”

Conley wasn't happy either. He believes his order was violated and has scheduled an evidentiary hearing to determine the source of the leak. He has tentatively named a suspect: Susan Kang Schroeder, Rackauckas' media director.

Susan Schroeder denies wrongdoing and claims that Jaramillo supplied the sex stories about himself and Hill to the Register. In the hallway outside Conley's courtroom, Cavallo called Schroeder's assertion “a pathetic joke.”

Schroeder stood nearby and laughed heartily. She then accused Cavallo of “smearing the DA's office to divert attention away from what his client did.”

Christine Hanley of the LosAngelesTimesasked why Jaramillo and Hill would leak embarrassing stories about themselves.

“Because they wanted to beat us to the punch,” Schroeder replied. And then she added, “Or make it look like it was us [who leaked the stories].”

Despite Judge Conley's intentions, the public may never learn the identity of the Register's source. Reporters rarely, if ever, expose confidential informants. But there's one undisputed fact: it was the DA's Bureau of Investigation (headed by Jaramillo enemy Don Blankenship) that collected the sex stories and placed them in official documents.

DA officials defend the tactic. They say they needed evidence of Jaramillo's “special relationship” with Hill to bolster their misappropriation of public resources case. In prosecutors' minds, Jaramillo forced CHG to hire his sister-in-law, whose employment was part of a con game against company owner Charles Gabbard.

Like much of the DA's case against Jaramillo and Hill, the rationale for exploring sex lives is bunk. Did the then-assistant sheriff really strong-arm Gabbard to hire Hill? Here's what Gabbard told prosecutor Laird about Hill: “She was qualified. She was doing the work and she took the burden off me. She was doing everything, so I made her VP [and doubled her annual salary to $60,000]. She deserved it. In fact, George didn't think it was reasonable to give her that much, but I did.”

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For the past week, Gabbard—who suffers from advanced emphysema—has provided colorful videotaped testimony in case he dies before the upcoming trial. Laird believes the 69-year-old businessman (and convicted felon arrested for murder, several armed robberies, embezzlement and illegal drug possession) is a star prosecution witness against Jaramillo.

But almost everything Gabbard has said on the witness stand either contradicts his earlier statements, exposes Sheriff Carona's complicity or helps the defense. There's no mystery why Laird has stood in court sweating profusely, fanning his face with a file folder and looking perturbed. The DA's case is simply unraveling. Could this be why someone leaked the sex stories?


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