By KENNETH OFGANG
Staff Writer

A bankruptcy trustee has sued Citrus Municipal Court Judge Patrick Murphy, two attorneys, and 12 other individuals or organizations in connection with the alleged concealment of funds from creditors of a friend of Murphy, the MetNews learned yesterday.

The suit comes at a time when Murphy is reportedly under investigation by the FBI, the Internal Revenue Service, and the Los Angeles Office of District Attorney in connection with what role he may have played in the movement and disposition of the funds.

One of the defendants in the civil action, Encino sole practitioner Paul Ottosi, said he was served yesterday with the complaint filed April 8 in U.S. Bankruptcy Court in Los Angeles. Ottosi acknowledged that he held funds amounting to nearly $2 million, which he said he did at Murphy's request.

The pleading was filed by the Century City firm of Danning, Gill, Diamond & Kollitz on behalf of trustee David A. Gill. It accuses the defendants, based on information and belief, of possessing property belonging to the bankruptcy estate of George Taus, and of "having failed and refused...to turn over the Funds to the Trustee."

The complaint notes that the defendants deny possession of estate funds, and asks for a declaratory judgment, a turnover order, an injunction against dissipation, damages for conversion, avoidance of fraudulent transfers, imposition of a constructive trust, and an accounting.

Among Murphy's co-defendants are Taus, Ottosi, attorney and former Azusa Mayor Stephen Alexander, and Irwindale paralegal Maryanne Baumgarten.

The complaint, which contains allegations tracking those made in other court cases and in interviews conducted by the MetNews in recent weeks, seeks to recover some $1.9 million.

"[S]ome or all of the funds, or the proceeds thereof, may have been transferred to Murphy," the complaint, drafted by attorney Bazoian Phelps, alleges.

The bulk of the funds, $1.286 million, came from the liquidation of Taus' Individual Retirement Accounts in September 1996, four months after Taus signed a marital settlement agreement providing for an equal division of the money between himself and his former wife, Susan Taus, according to the complaint.

The brokerage houses which held the IRA monies last month sued George Taus in U.S. District Court to recover Susan Taus' half of the money. Susan Taus brought a claim against the companies, Smith Barney Inc. and Prudential Securities, Inc., for those funds and prevailed recently in a National Association of Securities Dealers arbitration proceeding.

Besides the IRA money, the trustee alleges, Taus misappropriated $300,000 in cashier's checks, $84,000 from liquidation of stocks, and nearly $279,000 from his children's Uniform Gift to Minors Act accounts.

The funds, the complaint avers, were deposited by Taus in a Nevada bank under his own name, then transferred to an account in the name of Copex International, Inc., a Nevada corporation and a defendant in the trustee's action, at the same bank.

Copex was formed in November 1996 and headed by a friend of Taus, Arnold Secord, also named as a defendant by the trustee. A month after the corporation was formed, the pleading says, the funds were transferred to Ottosi's trust account.

The complaint alleges that Ottosi subsequently transferred the funds to Baumgarten, who transferred them to Alexander. The Azusa lawyer, an unsuccessful candidate for the Citrus Municipal Court in 1996, kept $200,000 and passed an undisclosed amount of money to others, possibly including Murphy, the trustee's complaint alleges.

Ottosi confirmed yesterday that he received the wire transfer, which he said was in the amount of $1.855 million. He had agreed, he said, to receive the trust funds as an accommodation to Murphy, who was a friend of his at the time.

Ottosi--who also confirmed being contacted by the FBI and the Criminal Investigations Division of the Internal Revenue Service in connection with the case--said he was told at the time that the money was Murphy's. The judge, he said, asked him to hold the funds in anticipation of subsequent divorce proceedings between Murphy and his wife, Pasadena attorney Susan Sweetman-Murphy.

Ottosi said he expected to serve as a neutral trustee of the funds, disbursing them between the Murphys according to court order or joint instructions. But he was subsequently instructed to turn the money over to Baumgarten, he said.

The money was turned over to Baumgarten, Ottosi said, on instructions from Murphy. Murphy told him the money was to be turned over as a purported settlement of a sexual harassment claim by Baumgarten, who also uses the name Maryanne Bender, against Copex, Ottosi said.

Ottosi said he has a purported settlement agreement in his possession, and that it was handed to him by Murphy. He asked the judge who was going to cover his fees, he said, and was told that "Taus is supposed to give you $100,000."

Ottosi said he had not yet read the complaint with which he was served yesterday, but commented emphatically that he was "the one person who never received a dime" of the Taus money.

Besides the money turned over to Alexander, Baumgarten gave about $1.56 million to seven individuals and a corporation, the complaint alleged. The trustee also set forth that about $130,000 may still be in a Charles Schwab investment account in Baumgarten's name, but that "Baumgarten does not claim an interest" in that money.

Repeated calls to the jurist over the past few weeks have gone unanswered. However, Murphy was on medical leave for a period of several weeks ending April 12.

Baumgarten and Alexander also have not returned a reporter's phone calls. Attorneys for the trustee did not return a call placed late yesterday afternoon.

Baumgarten is presently embroiled in Los Angeles Superior Court litigation with Alexander. Baumgarten sued for the return of the $200,000, but voluntarily dismissed her claim.

Court documents show, however, that Alexander has a pending cross-complaint against Baumgarten, who is in bankruptcy, claiming she promised to pay him more than $300,000 and provide $8 million in financing for an offshore bank and insurance company.