Dr. Louis J. Cella Jr., an Orange County physician, hospital developer and political donor whose convictions on tax evasion and Medicare fraud charges in the late 1970s set off a cascade of corruption investigations that altered the county's political landscape, died Nov. 7 in Palm Springs after a long neurological illness. He was 87.

His death was confirmed by the Wiefels funeral home in Palm Springs, where he settled after completing his prison term.

Cella was the state's largest political campaign contributor in 1974, when he lent and donated more than $500,000 to 60 candidates and causes in that year's primary and general elections. The recipients included many top local and state officeholders of the 1970s, including Controller Kenneth Cory, Gov. Jerry Brown, Lt. Gov. Mervyn Dymally and Secretary of State March Fong Eu. Cella mainly supported Democratic candidates even though he was a registered Republican.

His generosity threw a spotlight on his finances as a major owner of two Orange County hospitals, Mission Community in Mission Viejo and Mercy General in Santa Ana.

In 1975 he was the focus of an Internal Revenue Service investigation, which examined in particular a print shop operated by the hospitals that had produced a large volume of political campaign materials for candidates Cella supported. Cella also had failed to file a personal income tax statement for three years.

Orange County Dist. Atty. Cecil Hicks launched a separate probe to determine whether Medicare and Medi-Cal funds were used to subsidize the political printing operation.

In January 1976, Cella and three associates were indicted on 171 felony counts alleging misuse of about $2 million diverted from the hospitals for political and personal purposes. In June of that year, Cella was convicted in federal court on 22 counts of conspiracy, tax evasion and Medicare fraud and given a five-year prison term.

In 1978, on the eve of his state trial, he pleaded guilty to 10 felony counts. He was ordered to pay a $50,000 fine and sentenced to two state prison terms to run concurrently with the federal sentence.

The Cella case unfolded during a tumultuous era in Orange County politics in the 1970s, when more than 40 public officials and their aides were indicted. Among them were three county supervisors who were recipients of Cella's largesse: Robert W. Battin, who was convicted for using his county staff to support an unsuccessful 1974 campaign for lieutenant governor; Ralph A. Diedrich, who was found guilty of bribery and conspiracy to commit bribery; and Philip L. Anthony, who was convicted of laundering campaign funds.

Political analysts later cited the wave of scandals and convictions of Democratic office-holders as a major factor in the downfall of Orange County's Democratic Party. Another factor was the loss of Cella as the party's richest funding source.

"The Cella case brought a major change, not just in Orange County politics but statewide," said former Los Angeles Times reporter Tracy Wood, whose work helped alert state and federal authorities to the improprieties. "It came at a time when political reform was an important issue and highlighted the impact one person with money and determination could make on who gets elected to boards of supervisors, the Legislature and statewide offices."

The son of a doctor and a dressmaker, Cella was born Aug. 21, 1924, in Providence, R.I. After graduating from Providence College in 1945, he attended the University of Vermont medical school, but, according to a 1975 Times article by Wood, Richard O'Reilly and Don Smith, he was expelled for cheating. He later earned his medical degree at Marquette University in Milwaukee in 1948.

He moved to Southern California in the mid-1950s, joined the Santa Ana Clinic and began buying real estate and medical facilities.

His main ally in business and politics was Richard O'Neill, a Mission Viejo land baron who in 1974 donated nearly as much as Cella — more than $400,000 — to political campaigns.

With O'Neill, Cella built Mission Community Hospital in 1971 and Mercy General in 1973. The hospitals, which now operate as Mission Hospital Regional Medical Center and Coastal Communities Hospital, respectively, were known in the 1970s as among the most luxurious and expensive in the county.

After serving 31 months in federal prison, Cella was released in 1980 and worked at a free clinic for farmworkers in Coachella.

His first marriage, to Marian M. Morgan, ended in divorce in 1977; she died in a car accident in 1985. His second wife, Beverly Johnson, died in 2006. He is survived by two sons, Edward B. Cella of Los Angeles and L.J. Cella of Marin County; and two grandchildren.

elaine.woo@latimes.com