Despite Their High Hopes, Huachuca City Officials Discover Crime Doesn't Pay. By Jim Nintzel WHEN THE TOWN of Huachuca City agreed to pay $325,000 to Benson businessman Louis Demetroulis last month, they closed the last chapter in one of the most outrageous abuses of police power in Arizona history. "That's enough to keep them honest," says the 69-year-old Demetroulis, who had sued the town following his 1993 arrest by Patrick Halloran, an "independent contractor" who had signed a contract with Huachuca City to pursue forfeiture cases to fatten the town's coffers. A former deputy with the Cochise County Sheriff's Department, Halloran was at loose ends in the summer of 1992, so he began volunteering as an undercover detective for the Huachuca City Police Department. Before long, Huachuca City Police Chief Dennis Grey teamed Halloran with another volunteer officer, Michael Rutherford, and the two became the tiny town's "special investigations unit." Months later, Halloran's work paid off: The town received $88,000 for Halloran's work assisting a federal case. A few weeks later, hoping to pull in at least a half-million dollars a year through similar investigations, Grey signed a contract with Halloran, agreeing to pay him $50,000 annually as long as there were funds available from forfeitures. Halloran went right to work, spending thousands of dollars on meals, hotels and plane tickets while uncovering cases in Tucson, Phoenix and even California. Don Watola, an investigator with the Arizona Attorney General's Office, noted in a report: "The propriety of these investigations outside of the jurisdictional boundaries of Huachuca City lead one to believe that no other motivation existed other than to generate seizures and as a result, funding. As one federal law enforcement official termed it, 'collars for dollars.' The majority of those investigations occurring outside of the Huachuca City Police Department venue could have been better served if conducted by another agency. Convictions of those arrested are few, especially in those cases where HCPD was the primary investigative agency. Those actions conflict with the basic tenants of our system, prompting one newspaper article which probably accurately describes the actions as 'bounty hunting.' " In fact, early in their work as the special investigations unit, Halloran and Rutherford funded their operations with the proceeds from drug sales. In a series of what they called "reverse buys," the pair netted about $45,000 by selling more than 15 pounds of Marijuana, but never busted the dealers, allowing the dope to "walk," as Watola puts it in his report. In the first seven months of 1993, the special investigations unit's expenses totaled more than $123,000--including nearly $82,000 in salary and expenses for Halloran, who spent the money on everything from computers to condom-covered lollipops. Among Halloran's many investigations was the arrest of the elderly Demetroulis, who had retired to Benson and started a small-time used-car lot. The bust proved to be the undoing of the special investigations unit. After Halloran lured Demetroulis into a sting involving a "stolen" car, Demetroulis found himself behind bars while Huachuca City cops confiscated more than $30,000 worth of cars, tools and equipment from his shop. Days later, the trumped-up charges against Demetroulis were dropped, but Huachuca City kept his property, intending to take ownership under the state's forfeiture laws. Believing he'd been set up, Demetroulis decided to fight. He hired Sierra Vista attorney Richard Riley, who uncovered the contract between Halloran and Huachuca City. "I would never have tolerated this as county attorney," says Riley, who held Cochise County's top legal post for five terms. "I would have blasted them good. I've never seen anything like this." After five months of legal maneuvering, Demetroulis won his case and his property was returned. Meanwhile, after the contract came to light, the special investigations unit was almost immediately disbanded as the Attorney General's Office began an investigation. After months of examining Huachuca City records, prosecutors released a report slamming the town's operation. "The entire SIU venture by Huachuca City P.D. was fraught with problems from the onset of the unit," the report reads. "The total lack of control exercised by the Police Department, in particular Chief of Police Dennis Grey, combined with the inability of the two officers assigned to follow accepted police procedures, created a monster...." However, the AG's office declined to pursue a criminal case against anyone, "in part because the abysmal status of certain case files and accounting procedures would prevent proof of several points beyond a reasonable doubt during a criminal trial," according to Michael Cudahy, chief counsel with the AG's criminal division. "That's a hell of an excuse," says Riley, his voice dripping with disgust. "I think that would be an indication that the whole thing was very improper." Riley dismisses the state's investigation as a whitewash--or, in his words, "professional courtesy." "An individual would not get away with what Town of Huachuca City got away with, in my opinion," Riley says. "There was plenty of evidence of misconduct. I wonder about our Attorney General and whether he's really the caped crusader he professes to be or whether he's a politician." After winning the return of his property, Demetroulis sued Huachuca City for damages following the bust. Last month, the town settled with him for $325,000. Huachuca City Mayor Carole Vaughn, who failed to return a phone call from The Weekly, told the dailies the town settled to avoid the cost of going to court, not because officials had done anything wrong. Riley calls Vaughn's spin "baloney, of course," and says if it hadn't been for Demetroulis, Halloran would still be abusing police powers. "What is so interesting about this is that it would never have come to light if the Demetroulises hadn't stuck to their guns and gone into the hole financially to pursue this," says Riley. "So many people cave when faced with a situation like this." Part of the problem is the structure of forfeiture law, which "gives police too much power," Riley says. "We are quick to throw away the Constitutional rights we fought hard to obtain, in the name of the War on Drugs or to deter gangs or violence or some damn thing else." Demetroulis says he feels "great" now that the matter is behind him. "Maybe they learned a lesson, maybe they didn't," he says. "Time will tell."

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