In Orange County, It’s Part of the Landscape : Robert Citron is one of many brought down by the lure of high profits, quick fixes.

When we try to understand how Orange County Treasurer Robert Citron went bad, we might draw on our wisdom about inner-city crime: He came from a bad neighborhood and was under pressure. You could see it coming, and no one stepped in.

While many ignored the warning signs, the Los Angeles Times over the past decade described Orange County in news stories as “a big league of con games,” the “nation’s investment fraud capital,” the “white-collar fraud capital” and the “center of financial crimes in the Southland.”

The best-known criminal in the neighborhood, of course, was Charles Keating, whose Irvine-based Lincoln Savings and Loan ripped off innocent and unsuspecting thrift depositors, costing taxpayers $2.7 billion. That’s 33 times the money stolen in bank robberies nationally in 1992.

There was Janet Faye McKinzie, who drove a Rolls Royce through the 1980s while looting Santa Ana’s North American Savings and Loan. Sammy Davis Jr. sang at her wild parties. McKinzie was sentenced to 20 years in prison in 1990. Her partner, Duayne Christiansen, died in a one-car crash on a vacant road the day the feds seized his thrift in 1987.

Between 1981 and 1993, 46 financial institutions in Orange County were seized for insolvency or mismanagement--more than any county in California.

In 1991, there were 62 FBI agents in Orange County, mainly working on white-collar felonies, up from 17 agents in 1978.

Investigators received as many as 9,000 complaints yearly about Orange County “boiler rooms,” the finance equivalent of crack houses, where con artists took the life savings of retirees with the lure of a quick high-profit fix.

How to explain this 1980s culture of junk-bond junkies and twisted career criminals? A criminologist at UC Irvine opined, “money is every third word here.” A federal regulator shrugged and asked, “If you’re going to steal $50 million, why live in Buffalo?” Investigators said Newport Beach was a preferred address because “it sounds classier on the phone than, say, Pomona.”

This was the toxic environment in which Citron was expected to manage other peoples’ money. With rampant moral breakdown and a parlor atmosphere of lawlessness all around him, Citron didn’t have a chance. His homeboy politicians expected him to bring back as much loot as possible, turning a blind eye to his risky business so they wouldn’t have to raise taxes or cut services like education.

Citron turned to the dudes in Rolexes, Merrill Lynch and their lawyers, who had given $80,000 to Orange County politicians, including himself, since 1987. Merrill Lynch’s law firm was bond counsel on at least 15 bond deals with Orange County.

Best of all, the money guys were clean. They weren’t breaking any securities laws that might bring down heat because their campaign contributions were structured through employees in California, not from the central gang back on Wall Street.

The game was so exciting that apparently no one who was playing with Orange County’s money took a serious look at Kevin Phillips’ book, “Arrogant Capital,” about the “financialization of America” and the rise of bond traders as modern pirates.

“Financialization is not nirvana, but a late stage of great economic powers heading into trouble,” the conservative Phillips wrote. States become “unable to roll back their public debt once it gains momentum because the vested interests (are) too great.” The rich get richer on speculation, according to Phillips, “while large parts of the nation wither and stagnate.”

As we enter a permanent deficit economy, the traders also take over the political centers where public investments are made and loans are sought. In the 1992 national elections, securities and investment firms were top donors of “soft” money--slush funds among friends, really--to the two major parties.

Right after his election, President Clinton exploded at his advisers, “you mean to tell me that the success of the (economic) program and my reelection hinges on the Federal Reserve and a bunch of (expletive) bond traders?” Now more familiar with the way the deal goes down, President Clinton has named a Goldman Sachs trader to be Secretary of the Treasury.

So consider all this when judging Citron. Who was there in his neighborhood, in the state, indeed in our great nation, to be a responsible role model for him? Who to counsel respect for law? Who to instruct in right and wrong?

He is a product of a new culture of the overclass. Until we break the cycle through restoration of respect for basic values, we will only produce more Robert Citrons.