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Former Budget Official Denies Wrongdoing, Says He Relied on Citron

August 29, 1996

SANTA ANA, Calif. (AP) _ Orange County’s former budget director testified at his fraud trial Wednesday that he never realized the county was cheating schools and cities in the fiscal year before its bankruptcy.

At the first criminal trial resulting from the county’s $1.6 billion investment loss, Ronald S. Rubino said he merely worked with other people’s figures in ever-harder struggles to balance budgets at a time when discretionary funds were drying up.

``It was like climbing up a greased pole. You couldn’t get to the top. You couldn’t fix it,″ Rubino said.

Rubino said he never suspected that a huge surge in earnings on county investments during the 1993-1994 period was due largely to the skimming of interest. The money should have been paid to 200 school systems, cities and local agencies that had invested in the county treasury’s commingled pool.

But, Rubino said, as budget director he had no authority to audit anyone and relied on then-county Treasurer Robert L. Citron for estimates and explanations about the earnings.

``I trusted him,″ he said. ``I had all confidence in him. If I thought he was doing something wrong I would have reported it to my boss.″ At the time, that was county Administrator Ernie Schneider.

According to Rubino, Citron said he could earn extra money for the county _ but not other investors _ because his staff could handle only a limited number of lucrative but tricky special investments that needed extra monitoring against changes in interest rates.

``Did he ever ask you to help him steal money from the commingled pool members?,″ asked defense attorney Rodney Perlman.

``No,″ Rubino replied.

The defense rested after Rubino’s full day on the stand and prosecutors said they would present no rebuttal witnesses.

Both sides planned to spend Thursday working on jury instructions and exhibits.

The county filed the biggest municipal bankruptcy case in U.S. history in December 1994 when Citron’s bets on stable or falling interest rates unraveled. The diversion of funds, made possible by the earlier success of Citron’s bets, was discovered in the ensuing investigation.

Rubino is accused of two counts of aiding and abetting the scheme by Citron and Assistant Treasurer Matthew Raabe. He set up the county’s Economic Uncertainty Fund, which received at least $93 million in other people’s money.

When trial opened Aug. 5, Superior Court Judge J. Stephen Czuleger predicted it would take three months. But both sides chopped their witness lists and put it on a fast track.

Citron has pleaded guilty to six fraud counts and is cooperating with prosecutors in hopes of a light sentence. Raabe has pleaded not guilty to the same charges and is awaiting trial.

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