O.C. Quits Paying Legal Fees for Citron, Raabe

Suggesting that fraud or corruption charges may be forthcoming in the improper diversion of millions from the county’s bankrupt investment pool, Orange County officials have decided to stop paying the attorneys of former Treasurer-Tax Collector Robert L. Citron and his chief deputy, Matthew Raabe.

Both men are under investigation by the Orange County district attorney’s office and federal law enforcement authorities who are looking into the county’s financial collapse.

Citron, 69, resigned just before the county became the largest municipality in U.S. history to file for bankruptcy protection Dec. 6. Raabe, 38, was placed on administrative leave Saturday in response to last week’s discovery of the improper diversion of about $85 million in interest due local agencies.

State law requires a government entity to pay for the defense of employees unless the matter in question is beyond the scope of that employee’s job, or the employee committed “actual fraud, corruption or actual malice.”

*

County Counsel Terry C. Andrus sent letters Wednesday notifying David Wiechert, Citron’s lawyer, and Terry W. Bird, who represents Raabe, that the county would terminate payment of their bills in 10 days.

Andrus’ letter said the county’s decision was “based on recent information concerning possible accounting irregularities that would indicate . . . acts beyond the scope of employment, and suggests that (the) government code section (dealing with fraud) may be applicable.” The Board of Supervisors voted earlier this month to pay Citron and Raabe’s attorneys’ fees for civil litigation and preparation for inquiries by the Securities and Exchange Commission and the state Senate. But the board cautioned that it would likely withdraw its support if there was any suggestion of criminal matters.

Officials were mostly mum about the reversal.

“It follows previously established board policy,” Supervisor Roger R. Stanton said of Andrus’ letter, declining to comment further.

Andrus also refused to discuss the letter.

But one top-ranking county official, who spoke on the condition of anonymity, said “this is going to make a lot of people nervous,” noting that the decision hints at impending criminal prosecution.

Wiechert, who charges $240 an hour, said he may challenge the decision, and quipped that his bills for a year would be less than the nearly $250,000 the county was charged by a Los Angeles public-relations firm for three weeks of work in December.

“We’re very grateful for the county’s support to date and we will evaluate the cited reasons for the county’s withdrawal of their defense in light of their legal obligation,” Wiechert said.

Meanwhile, supervisors submitted their nominations Thursday for interim chief executive officers.

County Administrative Officer Ernie Schneider was demoted from the top job Monday and replaced by Health Care Agency Director Tom Uram. Uram is expected to remain in the post only a few weeks, and be replaced by an interim chief executive officer.

The interim CEO would help steer the county through the current fiscal crisis for about six months while a nationwide search is conducted for a permanent CEO who is expected to be given more authority than his predecessors.

Among the persons nominated by county supervisors Thursday:

* Wes Bannister, 57, a former Huntington Beach city councilman who ran unsuccessfully for state insurance commissioner in 1990. Bannister, a Republican, runs an insurance firm.

* Ed Dundon, 63, retired superintendent of the Garden Grove Unified School District.

* Hugh Hewitt, 38, a Newport Beach lawyer who co-hosts the public television show, “Life and Times.”

* Gary Hunt, 47, executive vice president for corporate and legal affairs for the Irvine Co.

* Jan Mittermeier, 55, the manager of John Wayne Airport.

* Sanford C. Sigoloff, 64, a Los Angeles businessman who was nominated by Gov. Pete Wilson last year as acting superintendent of public instruction. Sigoloff now serves on the state Board of Education.

Bannister admitted he is a “long shot” for the job, but said he called Supervisor Jim Silva to inquire about it after reading about the position in the newspaper. “The article said the person they wanted to select should have a business background and be conversant in politics. I said ‘Gee, they just described me,’ ” Bannister said. “To me, it’s very important to resolve these problems in Orange County. I don’t even care if I get paid.”

Silva also submitted Dundon’s name, while Supervisor Marian Bergeson suggested Sigoloff. Stanton nominated Hewitt. Steiner nominated Hunt on the condition that he take a leave of absence from the Irvine Co. Vasquez nominated Mittermeier.

Times correspondent Shelby Grad contributed to this report.