Federal prosecutors deny cover-up in Moonlight fire case

A canopy of burned pine trees on June 4, 2008, is a reminder of the damage caused by the Moonlight fire.
A canopy of burned pine trees on June 4, 2008, is a reminder of the damage caused by the Moonlight fire. Sacramento Bee file

Federal prosecutors in Sacramento have launched a blistering new attack on Sierra Pacific Industries and its lawyers, accusing the timber giant of “deception” and “scandal mongering” in its efforts to reverse a $100 million settlement it agreed to pay over the 2007 Moonlight fire, which burned huge swaths of the Plumas and Lassen national forests.

In more than 3,500 pages of court filings made late Tuesday, prosecutors in the U.S. attorney’s office in Sacramento rejected claims by Sierra Pacific that it was the victim of fraud and corruption by government officials who eventually gained a massive cash and property settlement in 2012 from the company, which was blamed for starting the fire.

“In the seven years since the fire, Sierra Pacific has devoted itself tirelessly to avoiding responsibility, employing a campaign of scandal mongering and unscrupulous legal tactics which continues to this day,” says a 127-page legal brief filed in U.S. District Court by U.S. Attorney Ben Wagner’s office.

The government contends Sierra Pacific’s efforts to overturn the settlement “lack integrity” and are based on false accusations, and that the company “only pretended to settle” the lawsuit it faced.

“This is professional misconduct of the worst kind,” the government brief states.

The filings are the latest development in an epic legal battle that has been waged for years between the government and Sierra Pacific, the state’s largest private landowner.

Investigators blamed a bulldozer operator for sparking the blaze on Labor Day 2007 when the machine’s blade hit a rock. The operator was an employee of a logging company doing work for Sierra Pacific, and federal prosecutors sued the company to recoup the costs of damage and firefighting efforts to stop the blaze, which raged for two weeks and burned 65,000 acres. Sierra Pacific eventually agreed to a settlement that called for it to pay $47 million to the federal government and hand over 22,500 acres of land.

But the Shasta County company has steadfastly denied responsibility and for three years fought the 2009 lawsuit federal officials filed against it. The firm agreed to the settlement in 2012 after losing a critical court ruling, but insisted the fight was not over. Last October, Sierra Pacific filed court papers accusing prosecutors of misconduct and unethical behavior in prosecuting the civil suit and said the settlement should be overturned because of “fraud upon the court.”

Among the claims made by Sierra Pacific are allegations that a veteran assistant U.S. attorney, E. Robert Wright, was forced out of his lead role in the case after he refused to “engage in unethical conduct as a lawyer.” Wright filed a declaration for Sierra Pacific in which he said he was removed from the case and replaced by a prosecutor with no previous experience in wildland fire cases.

Wagner’s office described a different set of circumstances, saying Wright’s departure from the office “embittered him enough to switch sides in violation of his duty of loyalty to the United States.”

“They try to create the impression that Wright is a celebrated veteran of the U.S. Attorney’s office, who received nothing but praise for his work,” the government’s brief states. “But in fact, his work was of mediocre quality and it was for this reason the Moonlight fire case was assigned to another attorney at the pleading stage, before discovery commenced.”

Wright, who retired in December 2010 at age 66, disputed the government’s claims, saying in a telephone interview with The Sacramento Bee that he had a duty to come forward with claims of wrongdoing, “and I did not lose that duty when I left the government.”

“My comment is simply that we have officials who are supposed to be diligently and honestly representing the U.S. government who are actually lying in papers they are filing with the court, and making up stuff five years after the fact,” Wright said.

William Warne, an attorney for Sierra Pacific, said the company is “focused on getting the truth out and obtaining justice, nothing else.”

The company has been fighting over the true cause of the fire almost from the beginning, and claims it is the victim of a fraudulent report and lies told under oath by investigators for the California Department of Forestry and Fire Protection and the U.S. Forest Service.

In 2014, the company won a legal battle over the fire when a judge ruled in a separate lawsuit against Sierra Pacific in Plumas County that Cal Fire was guilty of “egregious and reprehensible conduct” in its probe of the fire. That judge ordered the state to pay more than $32 million in penalties to Sierra Pacific and other defendants.

Judge Leslie C. Nichols, who retired from the Santa Clara Superior Court bench in 2009 and was sitting on special assignment in the case, said the state withheld documents and destroyed evidence in a bid to recover money from Sierra Pacific. Cal Fire has appealed the ruling, and federal officials said in their filings Tuesday that the judge’s order “was written by Sierra Pacific’s lawyers, who submitted 57 pages of proposed findings with no citations to supporting evidence.”

“Sierra Pacific’s lawyers even took the liberty of telling the county judge his inner feelings, writing in a footnote that he was ‘deeply troubled ...’ ” by evidence presented in a deposition, according to the government’s brief.

The accusations and warfare have been closely watched by some of Sacramento’s most prominent attorneys, and the U.S. attorney himself filed an eight-page declaration Tuesday stating that “ensuring that all attorneys in this office observe the highest standards of ethics and professionalism is very important to me.”

Wagner also noted that Sierra Pacific retained two of his predecessors, former U.S. Attorneys George O’Connell and McGregor Scott, and that they had paid him a visit in March 2012 to discuss the case.

“I had hoped that they wanted to talk about a potential settlement, but instead they wanted to make a pitch as to why I should dismiss the case,” Wagner wrote.

Wagner’s office claimed in the brief filed Tuesday that allegations it withheld any evidence in the case were meritless and that more than 130 witnesses provided depositions, some of whom were questioned for weeks.

“In what must be one of the most over-discovered cases ever in this district, the United States produced over 265,000 pages of documents in response to more than a thousand requests for production,” the brief states.

Call The Bee’s Sam Stanton, (916) 321-1091.

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