2 Orange County Officials Dismissed : Crisis: New chief executive dismisses ex-CAO Ernie Schneider and Deputy Treasurer Matthew Raabe, citing their roles in investment pool collapse.

In his first personnel shake-up since taking office, Orange County’s new chief executive announced Saturday that he has fired former Chief Administrative Officer Ernie Schneider and initiated the removal of Deputy Treasurer Matthew R. 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 $1.7-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 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 more than 170 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 my job status) has been handled from the first day.”

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

Popejoy said he and Schneider met last week to discuss Schneider’s possible resignation, but Schneider insisted on being terminated so he could collect six months’ severance pay. Schneider earned $140,000 as chief administrative officer and will collect about $70,000 upon termination.

Popejoy said 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,” as well as other job possibilities with the county.

“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, sobbing during a telephone interview from his home. “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.”

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.”

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.” He said that Popejoy “has the board’s confidence.”

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

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

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 back 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 next day, he said. The board later decided to reassign him.