Schneider, Raabe Fired by Popejoy : Bankruptcy: Orange County’s new chief executive dismisses the former administrative officer and initiates the assistant treasurer’s removal for their roles in debacle.

In his first personnel shake-up since taking office, Orange County’s new chief executive announced Saturday that he has fired former Administrative Officer Ernie Schneider and initiated the removal of Assistant Treasurer Matthew Raabe for their roles in the county’s massive financial crisis.

Aside from the dramatic resignation in December of veteran Treasurer-Tax Collector Robert L. Citron, Schneider and Raabe are the highest-ranking county officials to be ousted as a result of the billion-dollar collapse of the county investment pool, which led county government to file the largest municipal bankruptcy in U.S. history.

Schneider, a 24-year county employee who was demoted from his $140,000 job on Jan. 23, was dismissed effective Friday and formally notified by letter, CEO William J. Popejoy said Saturday.

Raabe, a civil service employee who is under criminal investigation and has been suspended with pay since Jan. 20, also was told Friday that he would be fired pending his right to appeal through a personnel board hearing, interim County Treasurer Thomas E. Daxon said.

“The decision to have these people leave county government was mine,” Popejoy said. “They are difficult decisions but they’re the correct decisions. I did it. It’s over, and let’s get on with business.”

Popejoy criticized Schneider, 48, for failing to exercise oversight of the treasurer’s office, which managed the $7.4-billion investment pool bearing money from nearly 200 cities, school districts and other agencies throughout Orange County and the state.

Schneider reacted Saturday with shock, anger and tears. He said that he had not been officially notified by Popejoy or Board of Supervisors Chairman Gaddi H. Vasquez about his firing.

“Common courtesy and decency would’ve dictated that I at least get a call from (Vasquez) instead of hearing it from a reporter,” Schneider said. “But this is characteristic of the way the entire matter (of his job status) has been handled from the first day.”

Raabe could not be reached for comment Saturday, and his attorney, Terry W. Bird, declined to offer any reaction.

Schneider’s future has been in limbo since he was removed from his post and demoted to an unspecified position.

Popejoy said he and Schneider met last week to discuss Schneider’s resignation. The discussions took place even as Schneider held out hope of receiving a job elsewhere in the county, possibly as director of Integrated Waste Management or head of the Dana Point Harbor remodeling project.

Schneider had the opportunity to resign but insisted on being terminated so he could collect six months’ severance pay, Popejoy said. Schneider earned $140,000 as chief administrative officer and will collect about $70,000 upon termination.

Popejoy said that he met “face-to-face with Schneider on Thursday and told him he was terminated.”

But Schneider said that as of Thursday he and Popejoy were still negotiating “details like vacation and a severance package” and other job possibilities with the county. According to Schneider, he called Popejoy on Friday to continue the discussion but “I never heard back from him.”

“We were negotiating other jobs for me. We had an agreement that if we couldn’t reach a consensus on another job, then that’s (his firing) what was going to happen,” said Schneider, sobbing during a telephone interview from his home. “I knew that his recommendation was going to be termination.

“I’ve been strung out for over a month. If this is what the board wanted to do, they should’ve done it 30 days ago,” Schneider said. “I consider this to be cruel and unusual punishment. After a quarter of a century of service to the county, I think I deserved better treatment than this.”

Vasquez declined to comment Saturday on Schneider’s firing “because it is a personnel matter and I don’t want to speculate why Popejoy made the decision.”

However, he said that Popejoy “has the board’s confidence” and that supervisors asked Popejoy to decide Schneider’s status.

Vasquez said that it was Popejoy’s duty, not his, to tell Schneider that he had been fired:

“That is a role that Popejoy was given as the county’s chief executive officer. That is his duty. He has been making some major decisions as the chief executive officer. He’s exercising the responsibility given to him.”

On Saturday, Popejoy said, “I’m very sorry to have to make this decision. But I feel that it’s in the best interest of the county.”

He viewed with skepticism Schneider’s comments at a recent state Senate hearing that he did not have any oversight over the treasurer’s office.

When told that Popejoy had sought to fire Raabe, Schneider said that he did not want his dismissal linked to Raabe’s termination.

“My issue is that I don’t want to be lumped with Raabe. I’m the scapegoat in this thing,” Schneider said. “These guys (Raabe and Citron) are the ones who did the investments. I didn’t do the investments.”

But Popejoy insisted that Schneider failed to properly supervise the treasurer’s office. “He obviously had some oversight over Citron. He sought his resignation and got it.”

Two days before the county filed for bankruptcy, Schneider led a group of county officials to Citron’s home and handed him a prepared resignation letter, persuading the longtime treasurer to step down.

Since Schneider was demoted, supervisors have reworked the county administrator’s job into a more powerful CEO position and gave Popejoy to the job two weeks ago.

Popejoy said he also wanted to remove Raabe from office and sent a letter to the acting treasurer last week that Raabe be fired.

On Saturday, Daxon said Raabe was going to be fired because “he exercised poor judgment and there was poor performance.” He specifically cited Raabe’s performance in accounting for the county’s investments and his judgment during the county’s $600-million bond offering last summer. The official statement accompanying the offer “was not consistent with the standards we now have in this office.”

“Potential investors should have been better informed,” Daxon said. “There was no detailed description of the portfolio that essentially people were asked to invest in. . . . We will not put out a similar statement while I am treasurer.”

Also, Daxon said, “interest was misallocated” among pool participants under Raabe’s direction.

Accountants poring over records of the county’s failed investment pool in January discovered that the treasurer’s office shifted at least $140 million in county losses into pool accounts shared by other public agencies. In addition, $75 million in interest due other pool investors was improperly skimmed into a county account.

“I’m not trying to pass judgment on whether it was legal or not legal, but it certainly was not allocated in a manner I would consider proper,” Daxon said.

Daxon said the decision to fire Raabe was made as part of his continuing review of the county treasurer’s office, which is not complete but “far enough along that I felt comfortable in taking the action which I did.”

“I think that it is not going to be possible for him to regain the public’s trust in his position,” Daxon said.

Technically, Raabe was given a “notice of intent to discharge” and county policy dictates that he has a right to a hearing and seven days to respond, Daxon said. No terms of Raabe’s severance can be revealed until after his hearing, Daxon said.

Popejoy noted that Raabe had evaded a subpoena to testify at the most recent state Senate hearings on Orange County’s bankruptcy.

“He’s evading a subpoena to testify. Evasion of a subpoena is an embarrassment to the county but is not the only reason he should be terminated,” Popejoy said.

He stressed that the decisions to fire Schneider and Raabe were made at his initiative, although he consulted with others in county government before doing so. Popejoy declined to say whom he consulted.

The firings came in advance of what is likely to be a crucial week in the Board of Supervisors’ attempt to resolve the county’s financial crisis. On Tuesday, Popejoy is expected to provide the supervisors with a detailed outline of the county’s financial morass and a timetable with specific steps to put the county’s finances in order.

Schneider said he harbored no ill feelings toward Popejoy. He described himself as a “loyal and dedicated county employee for the last 24 years,” and said he will “miss working with this outstanding group” of county employees.

But Schneider complained that this was the second time he had learned from the press that he was going to be fired. The first time was 30 days ago, on a Sunday night, when reporters called him at home with news that three supervisors were going to ask for his termination at a board meeting the following day, he said.

“The next day I had to sit in a board hearing room, surrounded by press for five hours, while my family sat at home and watched me go through agony. Do you have any idea the effect this had on me and my family? Then the board decided I was not going to be fired but would be reassigned. Now again I hear from the press about my termination. The courtesy of a phone call from Vasquez would’ve been appreciated. I think I deserved that much.”

* SEC-FUTURES MERGER: Securities official says congressional action not imminent. A12

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Profiles:

Matthew R. Raabe

Home: Santa Ana

Age: 38

Marital status: Divorced

Education: Mater Dei High School; Cal State Fullerton, bachelor’s degree in business administration, 1984

Occupational background: Hired as an auditor in auditor-controller’s office, 1984; became chief of treasury operations for county treasurer’s office, 1987; assistant treasurer, 1993; acting treasurer when Treasurer-Tax Collector Robert L. Citron resigned Dec. 4; demoted to assistant treasurer Dec. 23; placed on administrative leave Jan. 21.

***

Ernie Schneider

Home: San Clemente

Age: 48

Salary: $140,940 annually

Marital status: Married, one son

Education: Orange High School and Cal State Fullerton, bachelor’s degree in political science and master’s degree in public administration.

Background: 24-year county employee; former chief executive assistant to former Supervisor Bruce Nestande; became the top administrator for the county’s Environmental Management Agency, 1987; appointed chief administrative officer by county supervisors, 1989.