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Criminal Prosecution Begins in County Bankruptcy Debacle

August 12, 1996

SANTA ANA, Calif. (AP) _ Orange County’s former budget director played a spreadsheet shell game to help his bosses steal a ``truck full of money″ from schools and municipal service districts, a prosecutor said Monday at the opening of the first criminal trial in the county’s bankruptcy.

But Ronald Rubino’s attorney said it was questionable whether a crime had even been committed. Even if one had, said defense attorney Rodney Perlman, there is no evidence Rubino sought financial gain or knew he was doing anything wrong.

Rubino, 44, is among five officials accused of misconduct during the months leading up to the nation’s biggest municipal bankruptcy. He is charged with two counts of aiding and abetting misappropriation of funds.

On Dec. 6, 1994, Orange County requested federal protection from creditors after revealing $1.6 billion in investment losses. It took until this June for the county to engineer an agreement so it could sell bonds, cover its debts and emerge from bankruptcy. Among other things, the county had to mortgage the civic center, raise garbage fees, cut discretionary spending by 41 percent and eliminate 3,000 jobs.

At issue was the handling of revenue from investments by a pool of municipal agencies.

The county’s depleted investment pool had acted as a bank for schools, water and sewer districts as well as outside investors. Former Treasurer Robert L. Citron, who ran the fund, pleaded guilty to six counts of diverting more than $60 million from the investors into the county general fund.

The trouble began with the 1993-94 budget, said prosecutor Jan Nolan. Citron had gambled public agencies’ money on high-yield securities. When the investment was an early success, he hid the big profits to prevent the investment pool participants from learning how risky the venture was, Nolan said.

But the extra money had to go somewhere, she said.

At the same time, the recession had caught up with county finances, and Rubino was ``desperate″ for new income sources, she said.

So Rubino ``provided a home for this truck full of money,″ said Nolan.

``Citron came to him with this truckload of money, and (Rubino) said `I’ll put it in the general fund,‴ the prosecutor alleged.

She showed jurors budget spreadsheets scrawled with handwritten figures and notes by officials and employees, which she said including Rubino. They reveal the money trail, she maintained.

But neither Rubino nor others who took part in budget meetings saw anything wrong with the diversions, said Perlman, the defense lawyer. The participants included trained auditors who will be asked to testify, he said.

Rubino, who served the county for 20 years, was appointed, not elected, Perlman said. Others, notably Citron, made the decisions on where to get and spend money, he said.

``It was not Ronald Rubino’s budget. He was not the man who voted on the budget,″ Perlman said. ``He was a person who merely assisted the county supervisors in finding ways to pay for the services the county gives to all its citizens.″

Roger Stanton and William Steiner, the only supervisors remaining in office since December 1994, face civil complaints they failed in their sworn duty. The penalty would be removal from office. Auditor Steven Lewis is also named in a civil misconduct complaint.

All three as well as Citron are on the witness list for Rubino’s trial.

Matthew Raabe, Citron’s former assistant, told a grand jury that Citron and Rubino concocted the diversions, and the idea was Rubino’s. Citron has told investigators they were Raabe’s idea.

Raabe faces the same six counts Citron did, but his trial has been delayed until next year because evidence is still coming in, his attorney said.

Judge J. Stephen Czuleger was called in from Los Angeles for the Rubino case. Orange County judges were excused to avoid any appearance of a conflict of interest.

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