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Top Manager Said to Be Slated For Dismissal

January 23, 1995

SANTA ANA, Calif. (AP) _ The Orange County Board of Supervisors met Monday to discuss the fate of their administrative officer, Ernie Schneider, and a spokesman for one supervisor said he will be fired.

The session followed news that $85 million in interest due to the 187 government agencies with money in county investment pools had been diverted to internal county funds.

It was the latest disclosure in a fiasco that has put the wealthy county in bankruptcy court with $1.69 billion in losses, a junk-bond rating on its public debt, 698 jobs eliminated and still no final plan to close a budget deficit estimated at $172 million through June 30.

``This is the worst possible scenario, that the pool participants have been cheated,″ said Dave Kiff, press aide to Supervisor Marian Bergeson.

Schneider’s lawyer, Jennifer L. Keller, did not immediately return a phone call for comment.

She said over the weekend that her client was being unfairly blamed for oversight that was not his responsibility. Schneider said former Treasurer Robert L. Citron ``was responsible for keeping the accounts straight.″

Citron’s lawyer, David W. Wiechert, declined comment.

Kiff said the board was considering firing some of Schneider’s deputies and that it is now apparent that Schneider, as the county’s top manager, must go even if there is no evidence he knew that money was diverted.

``If you did know it’s a major problem. But if you didn’t know there’s still a problem,″ he said.

It was unclear when the board would decide Schneider’s future. Kiff said it’s likely that someone with experience in both private business and municipal finance would be brought in as a temporary county executive to make the unpopular decisions including additional layoffs.

As Bergeson’s spokesman, Kiff’s statements on Schneider carry considerable weight. Supervisors Gaddi Vasquez and William Steiner generally have supported Schneider, while their colleagues Roger Stanton and James Silva have wanted him fired. Mrs. Bergeson is the swing vote.

The Arthur Andersen accounting firm, hired to help sort the county’s financial mess, turned up the diverted money on Friday afternoon.

The $85 million was interest for fiscal years 1994 and 1995, said Vasquez, the board chairman. Most of it went into a county Economic Uncertainty Fund that Schneider had set up in August 1993, a time when Citron’s risky investments were paying off handsomely.

The information on the diverted funds was provided to the Securities and Exchange Commission and the Orange County district attorney’s office, which are investigating the events that led to the bankruptcy filing.

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