2 Merrill Efforts to Stay Release of Files Denied

SANTA ANA — Merrill Lynch made two attempts to keep secret testimony about its dealings with Orange County before the bankruptcy, but appeals court justices Friday took only 30 minutes to deny both.

Attorneys for the brokerage once again had asked the 4th District Court of Appeal to stay its order affirming a superior court judge’s decision to release grand jury transcripts. It also sought, in the event further appeals fail, a modification of the appellate court’s order to avoid “unwarranted and unintended invasion of personal privacy and/or confidential business information” contained in the testimony.

The appellate court, without comment, denied both requests.

But Merrill Lynch promises to press the legal fight over the media’s drive for the release of 5,000 pages of testimony heard by the grand jury that investigated whether the brokerage or its executives violated state criminal laws in their dealings with the county.

The brokerage plans to appeal the decision to the state Supreme Court as soon as Monday.

“We believe we are entitled to a stay, and we intend to continue taking the appropriate steps to obtain one,” Merrill Lynch spokesman Timothy Giles said in New York.

The 4th District Court of Appeal’s order Thursday essentially affirmed Superior Court Judge David O. Carter’s directive last week to Dist. Atty. Michael R. Capizzi that he release testimony heard by the grand jury that grew out of the $1.64-billion county bankruptcy, the largest municipal bankruptcy in U.S. history.

Merrill Lynch last month paid a $30-million settlement to the county in exchange for an end to the grand jury’s investigation, two weeks before its term expired.

Grand jury testimony is made public when criminal indictments are issued, but remain secret otherwise.

But Carter called the deal with Merrill Lynch “extremely unusual and suspect” and ordered the immediate release of the grand jury testimony. An unprecedented ruling, the judge concluded that there was no state law that infringed upon his inherent authority overseeing the grand jury to order the testimony unsealed.

He also cited the overriding public interest in disclosure, a position backed by attorneys for the news media, including The Times, as well as those representing former county Treasurer Robert L. Citron. They had argued that unless the grand jury testimony was released, the public would have no way of judging whether the district attorney was right to strike such a deal, or whether Merrill Lynch had bought its way out of a likely criminal indictment.

But before the transcripts could be released, Merrill filed for a stay.