Southern California’s status as a national fraud capital produces a steady stream of white-collar villains in and out of our courthouses. Almost always, the line between crooks and cops isn’t blurred. But the Newport Beach Police Department (NBPD), home to numerous fine officers as well as an embarrassing series of law-enforcement-corruption revelations for more than a decade, is once again ground zero in a scandal.

Like past NBPD messes—involving rigged promotions; retaliation against whistleblowers; liaisons with call girls at high-end hotels; free meals and cocktails from businessmen seeking favors; sex in patrol vehicles; evidence doctoring; perjury; racist radio codes when black citizens were spotted; and on-duty intoxication, fistfights and porn usage—the current predicament isn’t exactly trivial, though it begins with a photo and a cryptic, handwritten note found in a jail cell.

Those two items sparked the current battle raging inside Orange County’s Ronald Reagan Federal Courthouse, where onetime cops are accusing one another of being dirty. Because the criminal-justice system is based on the expectation that police are unwaveringly honest, the scene is worthy of public interest. Yet Eric Peterson v. City of Newport Beach undermines that rosy hope. No matter which side you pick to cheer for after studying the case, you’re stuck with a realization: Dishonesty is far too commonplace inside NBPD.

As with most crime stories, there was no hint of looming disaster at the outset. The majority of Peterson’s law-enforcement career depicts a successful, crime-solving cop with a blemish-free record. He spent his first five years at the Los Angeles Police Department before transferring to Newport Beach in 2001. After a stint in patrol, Peterson worked in the agency’s narcotics division, a spot that placed him on state/federal task forces. In 2006, U.S. Secret Service agents introduced him to Douglas Scott Frey, a then-36-year-old, Irvine-based, serial identity thief and drug dealer with extensive connections to scam artists across the nation. To win leniency for his own financial crimes, Frey became a confidential government informant for the Secret Service as well as the Bureau of Alcohol, Tobacco and Firearms; Peterson served as his primary NBPD handler.

With the snitch calling and emailing unwitting law-enforcement targets while hidden in various city jails, the partnership produced multiple arrests. In 2008, department officials routinely rotated Peterson back to patrol duties. Having collected numerous commendations and enjoying what has been described as the widespread admiration of his colleagues, he won promotion to sergeant two years later and served as a watch commander while overseeing field officers.

This is where the tale turns bizarre. On Christmas Day 2011, the Seal Beach Police Department, controlled by chief Robert Luman—who’d run NBPD before turning that agency over to his buddy Jay R. Johnson—conducted a search warrant-based raid on Frey’s cell in the city jail. Officers found a color photograph of a smiling Peterson wearing a commemorative football jersey for the alleged 9/11 charity Fallen2Light, which is tied to Frey and his ex-wife, Jessica Azbell, according to court records. Accompanying the image was a note stating, “Eric?” and “2k.”

If Johnson is to be believed, Luman didn’t inform him of the discoveries for more than six months, until July 12, 2012, and he did so without creating a paper trail with time stamps. Johnson’s position is that he wore the white hat throughout the controversy. His internal affairs (IA) investigation discovered not only the unauthorized 9/11 fundraising role, but also that personal contacts between the cop and Frey continued for four years after Peterson’s transfer to patrol.

Most surprising, Peterson had revealed the snitch’s identity to Leslie Conliffe, according to NBPD records. Conliffe, a former intern for Steven Seagal, is a literary agent at Intellectual Property Group in Los Angeles who represents screenwriters, authors and directors. Peterson arranged a meeting for the trio and, thanks to Frey, received a proposed “life rights” contract from Level 22 Productions to apparently feature his police heroics.

(Authorities busted Frey in 2006’s Operation Broken Trust, which captured crooks swiping credit-card information from Orange County mortgage companies and hotels to make expensive purchases, including for narcotics. I covered his March 2012 sentencing that let him walk out of court, with credit for pampered time served in local lockups, though he’d faced a maximum punishment of 78 months in prison. He stole more than $400,000.)

Peterson didn’t fare so well. The Newport Beach Civil Service Board rejected his cries of innocence after he erased his emails covering the time of his relationship with Frey and, in their view, feigned substantial memory loss. In November 2014, the board backed a year-old decision by Johnson’s management team to terminate Peterson, describing him as a liar whose conduct was “wrong” for a cop.

“The public and the department are justified in expecting the highest standards of behavior and conduct from police officers,” the board’s concluding statement reads. “The failure to be truthful is incompatible with police work and violates core requirements for honesty and integrity. It is commonly known and understood in police work that the failure to be truthful justifies termination.”

But in recent court filings, Newport Coast attorney Gregory G. Petersen claims Johnson, who retired earlier this year, and city officials violated California’s Public Safety Officers Procedural Bill of Rights by concocting a false narrative that squeezed the IA probe into a time frame to fit statute-of-limitation issues and conducting a prohibited ambush interview of his client for three-and-a-half hours.

“Simply put, exculpatory evidence disappeared, exculpatory leads were ignored, [and] the investigation was, by all standards of investigatory work, incompetent and focused on finding guilt instead of the truth,” Petersen advised U.S. District Court Judge Andrew Guilford, who is presiding in the case. “Both chief Luman and chief Johnson were known to the police labor-law community for many years as dishonest in these types of investigations and have a reputation for doing things that are somewhat shady in their investigations.”

Why target Peterson?

According to the attorney, NBPD management terminated his client to cover up presently unspecified evidence other officers committed wrongdoing “to retain high-grade informants,” evidence that may involve illegally hiding snitch records from defense lawyers in multiple other criminal cases.

Claiming the board already fairly resolved the dispute, the city’s private lawyers—who are also handling a federal lawsuit from an LA woman who claims NBPD officers stripped her and fondled her vagina after an alleged 2014 trespassing incident—want Guilford to dismiss the termination case.

But Petersen, who told the Weekly the problem at the department has been upper management—not rank-and-file officers, wants a fight in front of a jury, stating, “Here, a career police officer lost his future and his career by what he properly believes the evidence will show was a conspiracy to violate state and federal law in order to present a case to the civil service board that they knew, or should have known, was a fraud.”

A June 27 hearing is scheduled.