Auditor Charged With Theft Likely to Lose Suit

     PASADENA, Calif. (CN) – The 9th Circuit seemed unlikely Wednesday to revive claims from a Long Beach auditor who went to prison after using city documents for a lawsuit.
     Long Beach employed auditor and attorney Earl Hobbs for more than two decades before it fired him in 2002 over his pursuit of a class action against AT&T and Verizon for alleged unconstitutional tax-collection practices in several cities.
     Elected city auditor Gary Burroughs’ assistant James Squires filed a criminal complaint against Hobbs, claiming that Hobbs supported the lawsuit by stealing audit documents he used to investigate the cellphone companies in Long Beach.
     Hobbs said police raided his home and “held his disabled wife at gun point” before confiscating all his personal files.
     An initial charge of grand theft against Hobbs ended in a mistrial, but he was ultimately convicted in 2006 and sentenced to three years formal probation, serving 180 days in jail.
     An appeals court overturned the conviction in March 2008, however, because of an improper jury instruction. Since Hobbs had already served his sentence by then, the district attorney decided not to retry the case.
     Hobbs next sued Long Beach, Burroughs and Squire for $3.5 million, alleging malicious prosecution under the First Amendment of the U.S. Constitution.
     His 12-page complaint claimed that Burroughs and Squires falsely testified that the audit documents were confidential, though they knew the papers could not have been embezzled because they were public records.
     In the summer of 2010, U.S. District Judge Percy Anderson granted the defendants summary judgment and qualified immunity, ruling that there was no evidence Burroughs and Squires “intentionally lied” to the trial court.
     Hobbs’ appeal went before a three-judge panel of the 9th Circuit on Wednesday where a dubious Judge Susan Graber asked how the conviction reversal canceled out a finding of probable cause.
     “It seems to say nothing about guilt or innocence,” Graber said of the state court ruling.
     Hobbs’ attorney, Henry Josefsberg, answered that “the only fair reading” of the ruling was that prosecutors were not going to get a conviction on a felony charge of grand theft, and that there was too little evidence to prove the documents were confidential.
     “The prosecution must demonstrate a level of confidentiality in these documents to obtain a felony conviction,” Josefsberg said. “Without confidentiality these documents have no particular value at all.”
     But deputy city attorney Theodore Zinger said there was “conclusive evidence” to support probable cause under California law.
     “Probable cause is a very low standard,” Zinger noted. “You don’t have to guarantee a conviction for there to be probable cause. It’s a lower burden.”
     Zinger disputed that the audit documents had no value. He said the audit cost the city roughly $42,000, and that the information was “possibly worth millions of dollars” to Hobbs in the class action.
     Judge Raymond Fisher asked Zinger, “Where’s the support for the belief that they were clearly confidential?”
     The attorney said it was the city’s “custom and practice” that documents remain confidential during an audit. Under Certified Public Accountant guidelines, an auditor is not “supposed to divulge client information,” he added.
     Judge Fisher took up that concern with Josefsberg during rebuttal. The judge said it was “boggling to the mind” that Hobbs, “an auditor in a position of trust,” could use the city’s audit documents for a different purpose.
     “Why does an auditor, an employee of the city, have the right to go out and put his lawyer’s hat on, and in furtherance of his auditing duties, file a lawsuit?” Fisher asked.
     Josefsberg shot back: “Just as if he’d put his public citizen hat on and went out and said ‘look, AT&T is trying to bamboozle the city.'”
     Judge Graber remained unconvinced.
     “If you think that a public entity is doing something that’s wrong, and it’s in the public interest to say it, it’s one thing to write an editorial, and it’s another to make private use of that information for your own financial gain,” Graber said.
     Josefsberg said after the hearing that he appreciated the panel’s “concern,” noting that there was “probably” probable cause on the misdemeanor charge against Hobbs.
     “There’s nothing I can do to dance around that,” Josefsberg said. “But at no point did they [the prosecutors] present competent, unperjured evidence that would show that the value of that paper would have amounted to a felony.”
     Judge Johnnie Rawlinson joined Judge Graber and Judge Fisher on the panel. Hobbs was present at counsel’s table.

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