Citron Lawyer Says O.C. Liable for Defense Costs : Courts: Attorney contends resistance is motivated by politics. County employees to take legal action on layoffs.

Former Treasurer-Tax Collector Robert L. Citron’s attorney said Sunday that Orange County is required to pay for his client’s defense in connection with the county’s investment debacle, and that efforts to stick Citron with those legal bills are politically motivated.

David Wiechert--the lawyer who is defending Citron in several class-action lawsuits as well as a host of governmental investigations--said he agreed Friday to extend the deadline for the county to decide whether to pay for Citron’s defense, only to spare his client the pain of hearing more bad news just before Christmas.

By the new deadline of Jan. 5, however, Wiechert said he will prove that Orange County must provide for Citron’s defense because the accusations concern activities the longtime treasurer-tax collector performed as part of his job.

“Bob is a man of limited means who’s led a modest lifestyle. The defense of these actions would devour his entire life savings,” said Wiechert, a former federal prosecutor who earns $240 an hour. “(He’s) just totally devastated. And who wouldn’t be? How many millions of dollars did he generate for them over the years? He’s just sick.”

Citron resigned the post he had held for 24 years just before Orange County became the largest municipality in U.S. history to file for bankruptcy Dec. 6. On Sunday, he told Wiechert he was too depressed to attend Christmas dinner at Wiechert’s Capistrano Beach home.

Also on Sunday, an equally distressed Orange County Employees Assn. held an emergency meeting and resolved to take immediate--although unspecified--legal action to prevent county officials from laying off workers.

In a statement released by Wiechert, Citron said: “During my years of public service for the county of Orange, I have worked closely, honestly and diligently with the Board of Supervisors and the county administration. I feel totally betrayed by the board and their administrators, who have done a complete about-face after all these years. They were certainly supportive when the county’s investments were yielding a substantial return.”

State law requires the county to defend Citron in civil lawsuits stemming from actions he took in the “course and scope” of his job, unless he is convicted of fraud or if paying for his defense would create a conflict of interest for the county. A conflict of interest could arise because both Citron and other county officials are targets of the same suits and investigations.

The county has 20 days to respond to Citron’s request for payment of his legal bills, which was made earlier this month.

Wiechert said that County Counsel Terry A. Andrus called him late Friday afternoon and said he had prepared a letter rejecting Citron’s request, but that he would prefer not to rush to a decision. The two men agreed to consider Wiechert’s formal, written request for payment--dated Dec. 16--rather than Citron’s oral request of Dec. 4 as a way to give both sides more time to hash things out.

“It was my hope that reasonable minds would prevail because I don’t think there’s any reasonable person who could believe that they don’t owe Bob a defense,” Wiechert said Sunday. “It’s a political decision . . . not a decision based in fact or law. . . . Some supervisor, or someone in the county counsel’s office, believes the public would not support paying for Bob’s defense.”

Andrus said Sunday that the rejection letter he prepared focused on the conflict-of-interest question, and mentioned nothing about fraud, misrepresentation or deception. Sources said all those issues were discussed during the drafting of the letter, which was not sent because the deadline was extended.

Andrus added that he felt “no political pressure” and that the Board of Supervisors has not yet made a decision whether to pay Wiechert.

County supervisors, reached at home on Christmas Day, conceded that agreeing to pay for Citron’s attorney would be politically unpopular, but said they would ultimately make their decision based on the facts and the law.

“Personally, I’m very upset about it. I do not want to spend taxpayer money to defend him. I’m sick to my stomach for the families that are having a miserable Christmas because of this man,” said Jim Silva, who will join the board in January. “But if that’s the law, I’ll stand by the law.”

Supervisor Gaddi H. Vasquez said Sunday that he plans to rely on Andrus’ advice in making the decision.

Board Chairman Thomas F. Riley, who will step down in January, said: “What we ought to do is what’s right. I hope we’re not going to do anything because the press (or the public) might object.” State Sen. Marian Bergeson (R-Newport Beach), who will take Riley’s place on the board, also acknowledged that the decision “has tremendous political implications.”

“This is always the case, where the public is outraged by a particular incident or individual and then under the provisions of the law there is a requirement that the public entity pay for the legal costs,” Bergeson said. “Everything is political . . . but the decision should be made on substantive information.”

Other supervisors could not be reached for comment Sunday.

While most people involved in the case took the holiday off, the Orange County Employees Assn. convened an emergency board meeting Sunday afternoon and voted to pursue immediate legal action against the county in response to last week’s announcement of widespread budget cuts and probable layoffs.

General Manager John H. Sawyer said the OCEA, which represents 11,000 workers, would go on the offensive “as soon as our attorneys can sort out the legal remedies available. The OCEA board is scheduled to meet again today at noon.

“We think the action of the Board of Supervisors was pretty disastrous,” Sawyer said Sunday. “A lot of hostility is developing among our members toward the county.”

The investment portfolio plunged at least $2.02 billion--27%-- in value this year, and Citron faces legal challenges from several directions. He is one of several county employees subpoenaed by the Securities and Exchange Commission, targeted for investigation by the Orange County district attorney’s office, and named in several lawsuits by bondholders who say they were deceived about the potential risk of the investments.

Wiechert was angered at the potential singling out of his client. “Why don’t you go ask the supervisors who’s paying their legal bills? Ask the auditors. Ask the lawyers who approved the disclosure statements” on the investments, Wiechert suggested. “If the county decides to defend certain individuals and not Bob, they’re selectively discriminating against him.”

Andrus said Sunday that no decisions have been made about whether to pay for the defense of other county officials.

Both Wiechert and Bruce Bennett, the county’s bankruptcy attorney, agreed that state law outlines a higher obligation for the county to defend Citron in the civil suits than in the SEC probe.

That the county has filed for bankruptcy protection makes the situation even more complicated, Bennett said.

“Even if the county is determined to be liable under state law, (Citron’s) claim may well be subordinated to the claims of other creditors,” Bennett said Sunday. “As is true with many parts of this case, there are difficult and complex issues involved here. We are still in the process of gathering facts and performing the required analysis.”