County Accused of Hiding Truth on Bankruptcy : Speech: Jerry Patterson, former local political leader and now a city attorney, says officials either are not ‘telling all the facts’ about the failed pool or are covering them up.

Orange County officials are not “telling all the facts” in the bankruptcy of the county investment pool and might be “trying to cover up” information about how the financial crisis evolved, a former U.S. representative said Saturday.

Jerry M. Patterson, a former mayor of Santa Ana and Democratic congressman from North County, made the charges in a speech to the Orange Coast League of Women Voters. Currently, he is the city attorney for a number of local cities, including Lake Forest, which has been in a legal fight with the Board of Supervisors over the development of El Toro Marine Corps Air Station.

“Orange County is not telling all the facts. . . . Maybe (the bankruptcy) is too complicated. Maybe they’re trying to cover up,” Patterson said. “The county either didn’t know what it was doing or has other reasons for not telling us.”

Patterson, a former member of the House Banking Committee who was defeated by Republican Robert K. Dornan, did not elaborate on his charges.

Orange County filed the largest municipal bankruptcy in U.S. history in December. About $5 billion in funds from nearly 200 governmental agencies and special districts is tied up in the investment pool, which has lost about $1.7 billion.

Although Patterson accused county officials of withholding information about the bankruptcy, he also laid most of the blame for the crisis on the giant investment firm of Merrill Lynch & Co. Former Orange County Treasurer-Tax Collector Robert L. Citron, who directed the investment pool before his resignation in December, said he acted on investment advice from Merrill Lynch counselors. The county has filed a lawsuit against the brokerage house.

“We all know it was Merrill Lynch’s fault. Merrill Lynch wasn’t harmed by this (bankruptcy),” Patterson said.

Merrill Lynch spokesman Tim Gilles said Patterson’s comments are “part of a pattern by Orange County officials to try to shift the blame to Merrill Lynch.”

“In fact, it’s the reason why the county filed the lawsuit against Merrill Lynch. It’s an attempt to avoid responsibility for their own failure of oversight. They’re trying to make a scapegoat of Merrill Lynch,” Gilles said.

Patterson warned that unless the county can reach an agreement with the other cities and governmental agencies that have filed claims against the investment pool, the issue will have to be resolved in court by lawyers who will probably earn millions in legal fees.

Some officials have called for downsizing or privatizing some county programs in order to cut costs and ease the financial crisis caused by the bankruptcy. However, Patterson said it is “stupid” for the county to sell revenue-generating services.

John Wayne Airport, which is county-owned, has been the subject of inquiries by public and private companies interested in acquiring the facility.

Patterson, who spoke at the Seacliff Country Club, criticized the Board of Supervisors for failing to provide leadership during the bankruptcy and said that perhaps it is time to make the supervisors’ positions a part-time job, since only 12% of the county is actually governed by the board.