ORANGE COUNTY IN BANKRUPTCY : For O.C. Bondholder, Legal Action is Mainly a Matter of Principle : Courts: Retiree says he doesn’t really need the money, but he’s still mad enough to sue.

Leetate Smith is a wealthy man who could live quite comfortably without dividends from his $15,000 worth of Orange County bonds.

But the 77-year-old retiree was so irked by what he perceives as the irresponsibility of the Orange County treasurer-tax collector’s office that he gladly accepted the chance to become one of the first to sue the county, which last week admitted that its investment portfolio has lost at least $1.5 billion of the value since Jan. 1.

“I really feel sorry for so many people. I think of how many people counted on the (bond) income,” said Smith, a retired insurance company president and onetime professional saxophonist.

Smith’s lawyer, Edward M. Gergosian of San Diego, said he expects that dozens of names will eventually be added to the class-action lawsuit as other owners of Orange County bonds come forward.

Named as defendants in the suit are former County Treasurer-Tax Collector Robert L. Citron, his then-assistant Matthew R. Raabe, County Auditor-Controller Steve E. Lewis and the stock brokerage Merrill Lynch, which underwrote much of Citron’s bond trading.

The Orange County government is not named separately as a defendant, Gergosian said, because it has petitioned for Chapter 9 bankruptcy protection.

The suit, filed Thursday in U.S. District Court in Santa Ana, was followed within hours by another nearly identical one also seeking class-action status. The principal plaintiff in the second suit is a woman named Janice Morgenstern, who could not be reached for comment.

“When promises are made about the safety of the pool and how pool money is invested and we find that they are completely false, it makes us feel like there is good cause to file suit,” Gergosian said. “I believe a lot of people invested in this (with) pension funds, retirement plans, looking for a fixed return.”

That was certainly the case for Smith, who had set up a family trust for himself and his wife, Myra, to see them through retirement. He is affluent enough that he refers to his Orange County bonds as “such a small amount I can’t even remember who sold it to me.”

Still, it is part of a nest egg built from a lifetime of work that started at the age of 17, when he left his native West Virginia to work as a musician aboard the liner Normandie in the 1930s, then the reigning queen of the Atlantic.

“As soon as I got out of my mother’s womb, I knew I was going to get out of West Virginia,” he said. He went back only briefly to attend college after a stint in the Army Air Corps during World War II.

Smith was headed to work in Mexico City for American Airlines as an junior executive when he had a chance encounter one day in Phoenix when he went to buy some clothes. The stranger persuaded Smith to try the insurance business, which became his life’s work.

Smith is a former chairman of the Independent Order of Foresters, a fraternal benefit association based in Toronto. Smith has lived in Beverly Hills, the San Fernando Valley and, for the past 22 years, about 30 miles north of San Diego in Rancho Santa Fe, where he and his wife raised two daughters.

Today, he lives the kind of model retirement to which most American aspire: consulting to the insurance industry, occasional fly fishing in Montana and sailing regularly.

Preparing for retirement, Smith said he bought bonds funds--usually not individual bonds. And when Orange County filed for bankruptcy protection Tuesday, Smith knew his strategy was a sound one.

“Fortunately it’s the smallest bond I have,” he said. “I was really nervous. This is not going to affect me at all.”