In 2003, a San Diego County grand jury indicted Jon McAnally and his wife, Tamara, owners of a construction contracting business, on charges of conspiring to defraud the California State Compensation Insurance Fund.
The investigation began after a dispute arose in 2001 between the McAnally’s firm, JDM Enterprises, and another contracting firm, Landco Construction Inc., which had hired JDM as a subcontractor. When the dispute was not resolved, Landco filed a complaint with the San Diego District Attorney’s Office alleging that JDM had misled the insurance fund about the status of its employees so as to pay less in workers compensation insurance.
The insurance fund conducted an audit and alleged that JDM owed $375,000, although the McAnally’s provided documents they contended showed they only owed $30,000. They contended that JDM’s bookkeeper had made a mistake—that there was no intent to defraud the insurance fund.
On March 28, 2003, a search warrant for records was served on Tamara McAnally at JDM by an investigator for the District Attorney’s office. Her husband was in Hawaii on a construction job.
Three days later, on April 1, 2003, Tamara received a telephone call from the investigator, who asked her to meet at JDM with “his partner.” Ten minutes later, the investigator arrived with Ernest Marugg, a deputy district attorney—although Tamara said he did not identify himself as a prosecutor.
Tamara later said that Marugg did not talk about the investigation, but instead talked about personal matters, including her marriage and family. He gave her his cell phone number and urged her to contact him at any time if she had questions or concerns.
In May, 2003, a grand jury indicted John and Tamara. The grand jury heard evidence that JDM had not paid its employees, had misclassified employees as independent contractors and encouraged employees not to file claims for injuries as work-related.
The McAnallys contended the evidence was false, but agreed to plead guilty to avoid prison. On April 19, 2004, they both pleaded guilty to one count of conspiring to commit insurance fraud. They were required to pay restitution of $422,000 at the rate of $400 a month, and to send copies of all payments to the prosecutor, Marugg. As part of the plea agreement, the prosecution agreed to cooperate with the state contractor licensing board to allow Jon McAnally to keep his contracting license.
Although the McAnallys began making the restitution payments, they began receiving delinquency notices and a collection agency began making demands for payment. In August, 2004, the state contractor licensing board suspended McAnally’s license.
What allegedly happened next is spelled out in a federal civil rights suit filed by the McAnally’s in 2011:
Tamara McAnally reached out to Marugg and supplied proof of payments. Marugg allegedly promised to intervene, but, according to the McAnally’s, did nothing to resolve the issue.
However, Tamara contended, Marugg did begin inquiring about her personal life, including her marriage to Jon. By the end of 2004, the couple was facing financial ruin and their marriage was teetering.
Because she believed Marugg was trying to help her, she began to confide in him that she was taking antidepressants and seeing a therapist due to the stress. In January, 2005, Tamara said, Marugg offered to reduce her and Jon’s felony convictions to a misdemeanor. He later told her that he could expunge both of their convictions as a way to convince her that he had affection for her, she said.
Tamara began to view Marugg as a friend and he began to contact her by email and by telephone. In August 2005, Tamara applied for a real estate license and Marugg volunteered to write a letter on her behalf.
Moving into 2006, the McAnallys were still attempting to get their contracting license restored and Marugg was continuing to say that he was trying to help, according to the couple. In June 2006, Marugg asked Tamara to come to his office for coffee and to discuss the matter as well as his assistance in her application for a real estate license, Tamara said.
Instead of going into his office, she said, they drove to a coffee shop. On the way back, Marugg allegedly attempted to hold her hand, put his hand on her thigh and attempted to kiss her. Tamara rejected his advances. Later that day, Marugg sent an email from his computer in the district attorney’s office saying, “I can’t stop thinking about you.”
Marugg began emailing and calling as much as 10 times a day in pursuit of a sexual relationship, telling her that he knew she was not guilty of any crime, that he loved her and that “I wish I had a time machine.”
This went on until the fall of 2008 when Tamara finally stated that she could not betray her husband and that she would never have a sexual relationship with Marugg.
In 2009, Marugg stopped responding to requests for help from the McAnallys, who were still trying to get their contracting license restored.
In November 2009, a woman named Kim Alvarez called Tamara and asked why Tamara’s phone number was on her boyfriend’s phone. During their conversation, Tamara learned that Kim and her former husband had been prosecuted by Marugg in 2001 and that Marugg had pursued a sexual relationship with Kim.
Kim told Tamara that Marugg had admitted to her that he had numerous relationships with female defendants whom he had prosecuted for insurance fraud. Kim pleaded guilty to a misdemeanor fraud charge in 2003. She later began dating Marugg and married him in 2010. They both filed for divorce in 2011.
The McAnallys began investigating Marugg and learned that in 2001, Marugg allegedly had an affair with the woman who worked for the state compensation insurance fund who performed the audit on the McAnally’s records.
They learned that other criminal defendants had filed complaints with the District Attorney’s Office alleging Marugg was having inappropriate relationships with female criminal defendants and falsifying evidence.
They also discovered that the insurance fund gave grants to the District Attorney’s Office based on convictions obtained—receiving nearly twice the grant money as Los Angeles County, although San Diego County has only half as much population.
An internal investigation by the District Attorney’s Office revealed that Marugg allegedly had relationships with or pursued relationships with more than a half dozen women that he had prosecuted. The District Attorney’s Office then allowed Marugg to retire in 2010 and did not pursue any further disciplinary action—including not reporting him to the California State Bar.
On April 11, 2011, Tamara, 41, filed a motion—which was joined by Deputy District Attorney Damon Mosler—asking that her conviction be vacated. On May 16, 2011, San Diego County Superior Court Judge David Danielson signed and order declaring her factually innocent, ordering all records of her arrest and prosecution sealed for three years and then to be destroyed.
Marugg, who was 70 when he retired, denied he had any romantic interest in Tamara or any other women he prosecuted.
In 2012, Jon McAnally sought to vacate his conviction, but was denied.
– Maurice Possley