ORANGE COUNTY IN BANKRUPTCY : Schneider Caught Up in Middle of a Maelstrom : Profile: County’s chief administrator was involved in oversight of fund. He’s been consumed by crisis.

Ernie Schneider was on county government’s fast track. At 37, he became the chief executive assistant for then-County Supervisor Bruce Nestande. At 39, Schneider leapfrogged over four older rivals to become head of the Environmental Management Agency, the county’s planning department and largest, most powerful bureaucracy.

At 42, the Board of Supervisors tapped the tireless West German immigrant to become the county’s administrative officer, one of the highest-paid government positions in the state.

But at 47, Schneider now finds himself surrounded by an enormous fiscal calamity that threatens the economic well-being of 187 governmental entities, including the one he has worked for almost 25 years.

On Tuesday, more fallout from the nation’s largest municipal bankruptcy reached Schneider’s office, when the federal Securities and Exchange Commission subpoenaed him seeking a broad range of documents related to his possible dealings with bond brokerages, including Merrill Lynch, the county’s top underwriter.

What the SEC and other watchdog agencies find in their broadening investigation of the county’s financial collapse could determine the future of one of the area’s more respected and knowledgeable government officials.

“Schneider has incredible attention to duty and an enormous energy level. But I think he is dying a little bit every day because he is so conscientious,” said County Supervisor William G. Steiner. “I would hate to see Ernie Schneider become a scapegoat for this.”

Yet Schneider has been in the middle of the situation from the start. He sat on the county’s investment oversight committee when County Treasurer-Tax Collector Robert L. Citron was pursuing what turned out to be a disastrous investment strategy.

Schneider’s office received a copy of an internal audit by Auditor-Controller Steven E. Lewis released in August, 1993, that assessed Citron’s performance as treasurer in 1991.

Lewis concluded that Citron was bending the law to maximize returns from his investments, making risky financial deals and refusing to consult the committee that Schneider sat on. The audit also was distributed to the Board of Supervisors and the district attorney. Nothing happened.

The county administrative office as well as several department heads share responsibility for placing items that the Board of Supervisors considers on its consent calendar, which is usually reserved for routine items that are all approved by a single vote. Some of Citron’s now-controversial bond issues that involved hundreds of millions of dollars appeared on the consent calendar and were passed by the board without debate or even a question.

According to the county’s agenda rules, contracts exceeding $500,000 in value should be placed on the board’s discussion calendar, where there is potential for more consideration and debate. Though the CAO’s office is required to enforce the agenda rules, Citron has the power to place items on the consent calendar without the office’s review.

“I have the utmost admiration for Ernie Schneider,” said Shirley Grindle, a longtime government activist who authored a series of county campaign finance reforms. “But I don’t think he is going to come out of this clean if he knew about that audit. He could come in for some severe criticism.”

Schneider declined to comment Tuesday except to say that the SEC action was a routine request for documents. He has said during the crisis that the oversight committee had no power to force Citron to do anything. Sharing duties with Schneider on the panel were Citron and Assistant Treasurer Matthew Raabe.

Neither the CAO nor the Board of Supervisors can be held responsible for what another public official elected countywide has done, Schneider has said. “Responsibility for managing the pool lies with a separately elected official, and that was Bob Citron.”

Schneider, however, was one of the first people in county government to seriously heed warnings about the investment pool after Raabe confronted him in early November and threatened to quit. County sources said Schneider then formed a management team to review the status of the $20-billion portfolio. By then it was too late.

Since the fund collapsed more than two weeks ago, Schneider has been consumed by the crisis. Long known as a workhorse, he has been putting in even longer days figuring out how to keep the county government in operation, and helping to make hard decisions about potential cuts in personnel, and county services and capital improvement projects.

Schneider also has briefed the cities, utility districts, and schools that rely on funds from the investment portfolio to meet their financial obligations. And it was the county administrative officer who personally met with Citron at his Santa Ana home on Dec. 4, hand-delivering the resignation letter that Citron signed.

“I don’t see how he is still walking,” Supervisor Steiner said. “Everyone else on his staff has had some time to rest.”

Schneider has a reputation for self-confidence, assertiveness and a willingness to accept responsibility, once saying upon his appointment to the Environmental Management Agency that “the buck stopped at my desk in this deal.”

Known as a consensus builder with an extensive knowledge of Orange County government, he has been praised repeatedly for his management style and the treatment of his staff.

In his leisure time, Schneider surfs, lifts weights and runs in marathons. A favorite lunchtime haunt--before it closed--was the Santa Ana YMCA, not far from the county administration building.

“I have had nothing but positive dealings with him,” said Costa Mesa City Manager Allan L. Roeder. “He has been upfront and direct with me. That’s not to say that he tells me what I always want to hear. But I found him to be credible in what he tells me.”

Roeder said he does not know whether Schneider committed any wrongdoing or ethical breaches related to the investment pool. But he said he and other city leaders have been disappointed lately by the total lack of information coming out of the county about the fiscal crisis. He added, however, that the situation might not be Schneider’s fault.

Supervisor Thomas F. Riley, a former Marine Corps brigadier general who is retiring after 20 years on the board, described Schneider as “loyal, trustworthy and courageous”--words right out of the Boy Scout creed.

“I would be disappointed if this challenges his ability to remain as CAO,” Riley said.

Supervisor Roger R. Stanton, who has been critical of Schneider in the past, declined to comment Tuesday. Stanton recently moved to take some of the responsibility for handling the crisis away from the county administrative officer.

At Stanton’s request, the Board of Supervisors went along with his idea to set up a management committee to review proposed budget cuts. On the panel are new Supervisors Chairman Gaddi H. Vasquez, Sheriff-Coroner Brad Gates, Dist. Atty. Michael R. Capizzi and Thomas E. Uram, head of the county Health Care Agency.

Whether or not Schneider ends up shouldering any of the blame, the job he holds could be redefined and his office subject to restructuring. Steiner said the board might give the position the same responsibilities as a corporate chief executive officer, giving him greater authority over county departments, and possibly eliminating some elected positions.

The Board of Supervisors has complained in the past that it is difficult to oversee and take concrete steps against an elected department head, such as the county treasurer, auditor-controller, the tax assessor and the county clerk-recorder.

“Right now, the CAO can’t tell the county auditor and county treasurer what to do or any elected department head what to do,” Steiner said. “If the CAO is going to be held to a high level of responsibility, his role has to be strengthened.”

Profile: Ernie Schneider

Occupation: County administrative officer

Age: 47

Born: Christmas Day, 1946, in Bad-Kissingen, West Germany

Home: San Clemente

Family: Married, one son

Education: Bachelor’s degree in political science and master’s degree in public administration from Cal State Fullerton

Salary: $140,940