Duffy Used $61,802 of Secret Fund : Sheriff: Under court order, Duffy reveals how he spent money from his seized drug assets account.

San Diego County Sheriff John Duffy distributed more than $60,000 in seized drug proceeds from a secret $1-million checking account he created to bypass the county’s spending approval, according to a summary of the account released Wednesday under court order.

Forced by court order Tuesday to turn over the $1.044 million he gathered in the secret account, Duffy also was under Superior Court Judge Harrison Hollywood’s order to show during a hearing Wednesday how he spent the money.

Almost all of the $61,802 he spent went to the district attorney’s office for its participation in drug busts and to various city governments that contract with the Sheriff’s Department for service and were entitled to share in the proceeds.

But Duffy also spent $5,400 for an attorney to defend himself in a civil lawsuit. County auditors warned Duffy in June that spending drug money for attorneys was improper when they discovered that he paid nearly $70,000 earlier this year to the same law firm for the same purpose.

Hollywood asked a court-appointed certified public accountant to verify Duffy’s account. Duffy attorney Janet Houts said the sheriff has asked U.S. Atty. Gen. Dick Thornburgh to audit the entire county drug fund account.

The county’s sheriff for 20 years, Duffy’s last term has been marked by continual controversy. He has been feuding with the Board of Supervisors for months over who controls the money and property the Sheriff’s Department seizes in drug raids.

The sheriff had control of the money until July, when supervisors voted to usurp his spending authority. At the time, Duffy wanted to spend $450,000 on laptop computers for his department. Supervisors wanted the money spent on security measures at the South Bay jail in Chula Vista.

Duffy lost the battle, but decided he would no longer let county supervisors determine how the money was spent. He said the county had violated federal guidelines for how the money can be spent.

In September, he opened a checking account with the San Diego office of Security Pacific National Bank and deposited 11 checks totaling $372,697. A week later, he added eight more checks that totaled $303,689. On Nov. 1, the day after county auditors discovered the secret account, Duffy deposited 17 more checks that totaled $423,109. The account earned $6,745 in interest.

Assistant County Auditor William J. Kelly said Wednesday it appears that Duffy earned 5% to 6% interest on the secret account. The county treasury earns 9%, he said.

County officials said that Duffy violated a county ordinance that requires all funds be deposited into the county treasury.

Duffy wrote 15 checks from the secret account, most to the district attorney’s office and the cities of Vista, Encinitas, Poway, Lemon Grove and San Marcos, city governments that contract with the Sheriff’s Department and share in the drug bust proceeds.

One check, in the amount of $5,400, went to Duffy attorney Martin J. Mayer to defend the sheriff against deputies involved in the so-called “Rambo Squad” case at the El Cajon jail.

Duffy previously had paid nearly $70,000 to the same law firm, which county auditors rejected as an improper expenditure and asked him to repay.

Duffy wrote a check Tuesday in the amount of $1,044,429--the entire amount of the fund--which Judge Hollywood had ordered him Friday to deposit in a court-controlled trust fund.

At the sheriff’s request, Hollywood ordered the county to deposit drug money not contained in the secret account into the court’s trust fund, where it is to be frozen until the matter is resolved. Hollywood said he did so to show both parties that he is impartial.

The county turned over $555,000 and was allowed to exclude $1.2 million the county already appropriated from the sheriff’s budget.

Of the $1.2 million, the appropriations included: $404,300 approved for the Chula Vista Jail improvements; $241,675 for a electronic bracelets for prisoners who were participating in a home surveillance program; and $50,000 for a study on whether to establish a regional crime lab.

Hollywood has asked retired Superior Court Judge William Yale to mediate the dispute among Duffy, the Board of Supervisors, county counsel and sheriff-elect Jim Roache. Roache, who is to be sworn in Jan. 7, was in court Wednesday and said he was concerned about how the drug funds can be spent in the future.

All parties agreed to a Dec. 20 mediation date, although they will try to meet earlier. Hollywood also asked the county counsel to study how other counties resolve disputes over drug funds.

Roache said he had not taken a position on whether the sheriff or supervisors should have authority over the money until his attorney, Everett Bobbitt, studies federal and state laws that govern the use of the money. He said he disagreed that Duffy was permitted to use the money for attorney’s fees.