Los Angeles County's top prosecutor has warned that a budget proposal by Gov. Arnold Schwarzenegger would so weaken court sentencing guidelines that if a swindler such as Bernard Madoff were to be brought to justice in California he would not face state prison time.

In a letter obtained by The Times, District Attorney Steve Cooley has asked Schwarzenegger to abandon his proposal to change state sentencing guidelines so certain felonies such as fraud or grand theft, known in justice circles as "wobblers," would be prosecuted as misdemeanors.

Facing a $24-billion budget shortfall, Schwarzenegger has proposed the change in sentencing guidelines to save $1 billion over three years by shifting 23,000 criminals from state prisons to local jails and re-entry programs.

"If Bernie Madoff had committed his crime in California under the proposed statute, his ... scam which has destroyed countless lives and fortunes, would have been a misdemeanor," Cooley wrote to the governor. "Such scams are commonplace in California."

Today, Cooley's office is joining Insurance Commissioner Steve Poizner in Los Angeles in also warning that the proposal would decrease the penalties for insurance fraud.

"This drastically reduces investigators' ability to locate, investigate and prosecute costly insurance fraud and related crimes," Poizner's office said in a statement. Cooley questioned whether the prisoner reduction goals would be met and said such sweeping changes require a thorough review.

"The arbitrary reduction of the 73 crimes listed in your most recent budget proposal will have a serious impact on public safety, disproportionately affect many vulnerable victims in society, and usurp the role of the public prosecutors in determining what crime to charge," Cooley wrote in the letter, dated June 17.

A representative of the governor's office did not immediately respond to a request for comment.