After the Fall, Citron Silent, Defenders Few : Profile: Long career marked by credibility, work ethic and financial acumen ends in an extraordinary twist.

For years, Robert L. Citron was lauded as the genius whose aggressive investment strategies brought in millions of dollars for Orange County and other governments. He was a popular figure--particularly for a Democrat in a Republican bastion.

But on Monday, if there was anyone in political circles who still thought he was up to the job, they weren’t saying so--or at least not very loudly.

Not even Citron himself.

Holed up in his Santa Ana home after resigning in the midst of the county’s financial crisis--Citron remained silent.

It was an extraordinary twist in the political career of a man whose credibility and work ethic and ability to gain reelection had rarely been challenged in more than two decades of public service.

The first hint of trouble had come last spring, as Citron faced his first political opponent since he was elected treasurer in 1970. Citron was almost aghast that anyone--especially his Republican challenger, John M.W. Moorlach--would question his handling of the county’s billions.

“My reputation is so good as to the types and the quality of investments that I do,” he said at the time. “I’m not blowing my own horn here, but I am recognized nationally for my investment ability and by the state of California.”

Citron’s opinion of himself was echoed then by many others--Democrats and Republicans--including Orange County Board of Supervisors Chairman Thomas F. Riley, who told The Times: “I don’t know how in the hell he does it, but he makes us all look good.”

One of his longtime friends, Republican businessman Doy Henley, remembered teasing Citron during the most recent campaign.

“How come you’re the only county treasurer that’s getting this” return on the investment? Henley would ask jokingly. “He never answered me on that one. . . . He’s the kind of guy that could not do well with a lot of criticism. He had never had any criticism.”

Now, in what has proven to be not only a looming financial disaster but also a political embarrassment for top Orange County officials, no one was looking good--especially not Citron.

The man known as a “fighter” who would never give up ultimately gave in after a barrage of unprecedented criticism.

Citron received support Monday from some outside the political circle, like Howard Hughett, a board member of the Orange County Trojan Club, where Citron was known as an unabashed cheerleader for his alma mater. (His car is equipped with USC vanity plates and a horn that plays the university fight song, and past Christmas cards featured him and his wife, Terry, attired in Trojan colors.)

“I don’t think he should have” resigned, Hughett said. “Why should he?”

Operating in relative obscurity for so many years, Citron was rarely seen on the local political circuit of dinners and fund-raisers.

But he was a veteran of the internal political battles of Orange County government.

Early in his career, he was reprimanded by the Orange County Grand Jury for unjustly criticizing the head of the county’s data-processing department. And in one of his first run-ins with Sheriff Brad Gates, Citron accused Gates of trying to “con” the county in order to get more money for his departmental budget.

When he learned this year that Gates would not be joining the county’s $2-million gang prosecution program--funded with proceeds from Citron’s investments--he was one of the few county officials to publicly criticize the sheriff. Gates threatened to “have a heck of a lot to say” if Citron ever verbally attacked him again.

Citron was confident, then. He was the hero.

He had helped write the state law more than a decade ago that allowed local government treasurers across the state to engage in his innovative investment planning. During the last decade, his investments yielded an average return of 9.03%--nearly double that of some comparable investment pools.

He was known as a man who worked around the clock and rarely took vacations. The “gifts” he listed on financial-disclosure forms were mostly dinners with investment advisers.

In September, 1993, for example, he reported a dinner with seven investment firms--with each firm chipping in $14.06 to cover the bill.

He also reported a $22 Christmas wreath from Bradford and Marzec Inc., a Los Angeles firm, and a $9.48 pocket calendar from Callan Associates.

As the only Democrat in elective office in Orange County government, Citron said he tried to separate his personal politics from county business. He once hosted a fund-raiser for Assembly Speaker Willie Brown in his Santa Ana home, and in recent years gave only token campaign contributions to recipients including U.S. Sen. Dianne Feinstein and the local and state Democratic Party organizations.

But in what he would later blame as the reason Republicans had targeted him in his most recent election, Citron sent out a letter using his official title in 1990 on behalf of then-Assemblyman Tom Umberg, the Garden Grove Democrat. The Democratic Assemblyman beat Republican Curt Pringle, and county GOP Chairman Thomas Fuentes never forgot it.

With the backing of the local Republican leaders, Moorlach entered the race this year and began criticizing Citron’s investment portfolio, calling it too risky.

Never having been challenged before--his last fund-raiser had been held eight years ago when he thought he might have an opponent--Citron reached into his own pocket and jump-started his reelection campaign with an $11,000 loan to himself. And then he began raising money, including some from firms that do business with the county.

During the last campaign, Citron raised $51,222--a large amount for a race usually ignored by voters. About one-third of the donations came from attorneys, investment bankers and brokerage firms, including $3,000 from members of the county’s brokerage firm, Merrill Lynch.

As pressure mounted in recent days for Citron to resign, some of his financial backers in the investment community did not want to comment. Some quickly hung up when they heard his name.

Republican activists who failed to unseat Citron in the June primary were now smug.

“Over the past few days, we had a lot of people calling in for a recall effort,” said Bill Christianson, executive director of the county GOP. “Today, we’ve had people calling in and saying, ‘We told you so.’ ”

Republican Vice Chairwoman Jo Ellen Allen echoed the sentiment and laid part of the blame at the feet of the Board of Supervisors--all Republicans--who chose to back Citron instead of listen to Moorlach’s concerns.

“They should have looked at it and instead they chose to ignore it,” Allen said. “It sounds to me like (Citron) must be in more trouble than he thought, otherwise he would have stuck this out.”

For his part, Moorlach urged the county Monday to set up an independent citizen panel to review the financial crisis and said he would consider taking on the treasurer’s job if the supervisors ask him. But there is a chance that may not happen, since he has been a loud critic of the supervisors for refusing to heed his warnings.

State Sen. Marian Bergeson (R-Newport Beach) said Citron’s resignation was “probably was the appropriate thing to do” from a political standpoint.

“But there’s a concern as far as having the ability to bring aboard the expertise that we need at a time when we have to come up with some solutions,” said Bergeson, who joins the Board of Supervisors next month. During the campaign, she had withdrawn her endorsement of Moorlach because she feared his criticism of Citron might harm the county’s investment pool.

Some city officials who had gained from Citron’s financial success before being shocked by the downfall were saddened by his decision to step down.

Seal Beach City Manager Jerry L. Bankston called the resignation “tragic.”

And La Palma City Manager Pamela Gibson said she felt sorry about how a once glowing career had ended.

“I feel bad his career, which has been so successful and so beneficial to everyone involved, has to end this way,” Gibson said. “I think it’s very, very sad and I wish it would be otherwise.”

Citron Moments

Orange County Treasurer-Tax Collector Robert L. Citron’s 24-year career as a relatively low-profile public official has been largely successful and sometimes pointed:

* Election: First elected county tax collector in 1970. Became treasurer in 1973 when Board of Supervisors combined the positions.

* Politics: Only elected Democrat in Orange County government. Ran unopposed between 1970 and 1994 but faced unsuccessful election challenge in June primary from Republican John M.W. Moorlach, a certified public accountant who blasted his investment strategy as risky.

* Most recent annual salary: $100,339

* Galling Gates: In one of his first public run-ins with County Sheriff Brad Gates in 1977, Citron accused the sheriff of engaging in “a con game” by asking for more money in his budget than he needed and also subjecting the county to costly legal settlements. Gates responded that he didn’t expect “someone who manages a very small operation, performing relatively simple and predictable tasks, to understand the dynamics” of running the Sheriff’s Department.

* Investors: Citron managed funds from 185 cities, school districts and other government agencies. Yields from his investment pool have been consistently the highest in the state.

* Lobbying: Successfully lobbied the state in the 1970s to expand the investment options of government agencies. Citron’s success over the years lured Santa Barbara and other municipalities from outside Orange County, along with nearly all local agencies, to contribute to investment pool. In the county, only San Juan Capistrano and Garden Grove did not contribute.

* Investment strategy: Relied heavily on using investment pool’s Treasury bills and bonds as collateral to borrow short-term at low interest rates and investing the borrowed funds in mid-term corporate bonds and securities that pay higher return rate.

* Returns: Averaged 9.03% return during the past decade, nearly double that of some comparable investment pools. However, in the past three years, returns have declined steadily, dropping as interest rates increased.

* Best return: 16.9% in 1982.

* Recognition: Named by the trade magazine City & State as one of the best county finance officers in the nation in 1988. Honored in December, 1993, by County Board of Supervisors for generating enough interest revenue through his investments to bankroll a new gang-suppression program run by the district attorney’s office.

* Current status: Citron announced his resignation Monday, less than a week after disclosures that his risky investment strategy led to a $1.5-billion drop in the county’s portfolio, now valued at $18.5 billion.

Source: Times reports