Anatomy of a Plea Agreement : Background: Weeks of discussions inexorably left former treasurer with only one choice--lose much and gain nothing. He took it.

It could have blown apart at any moment, so tenuous were the talks and so fragile the details. And until Bob Citron placed that signature--so familiar to anyone who has received a tax bill from the county--on court papers indicating he was pleading guilty, prosecutors were not convinced they had a deal.

“It could have fallen apart any time up until the signature,” Assistant Dist. Atty. Jan J. Nolan said Friday.

But when the once-vaunted former treasurer-tax collector got assurances for two of the things he valued most--that prosecutors would not oppose a judge outside of Orange County to sentence him and that he could stay out of jail for as long as he cooperates with the government’s criminal investigation--Citron signed on the bottom line.

He did so even though his primary demand, that he not be subjected to federal charges, could not be met before the district attorney’s deadline.

In a plea agreement reached Thursday, Citron appeared to lose everything and gain nothing. He implicated his faithful assistant treasurer, Matthew Raabe. He subjected himself to fingerprinting, a booking mug and handcuffs. At age 70, he exposed himself to a possible 14 years in prison, a $10-million fine--and a legacy of disgrace.

But he made a first stab at rejuvenating his crushed reputation by stepping forward voluntarily, showing remorse and promising to help bring others to justice.

“Right now he’s one of the most hated figures in Orange County, if not the most hated,” said Jennifer Keller, one of the county’s leading criminal defense attorneys. “It’s his opportunity to really get back on the county team, to recoup some of the loss. And that gives him a track record to take to a judge.

“It also buys him time,” Keller said, noting Citron’s age. “Time may not heal all wounds, but it certainly lessens the pain.”

The prospects for a criminal case against Citron seemed strong as early as January, when it was discovered by outside auditors that his office had diverted about $80 million in interest earned by investment pool participants into county accounts, and that millions in improper securities were improperly transferred from the county to the commingled pool Citron managed for some 200 other local government entities.

As soon as Arthur Andersen & Co. accountants uncovered those problems, Citron’s defense crumbled. His attorney, David W. Wiechert, had been building a case, arguing that Citron lacked the financial expertise to create the county’s risky strategy and laying the blame at the feet of Merrill Lynch & Co. But the transfers and skimming shattered all that.

District attorney’s investigators spent months interviewing county employees and participants in the failed investment pool, and reviewing 1.2 million documents relating to the operation of the county treasurer’s office.

It wasn’t until the first week of this month that a deal between the former treasurer and the team of attorneys and investigators pursuing him began taking shape, days after the Orange County Grand Jury investigating the bankruptcy had begun issuing subpoenas to county employees.

Wiechert called Assistant Dist. Atty. Wallace J. Wade one morning and asked if he could come down and talk. They set up a 10 a.m. meeting for April 11, with Nolan.

The suddenness of the call surprised Nolan. She hadn’t expected to hear from Wiechert so soon.

But Wiechert was concerned by news reports that a grand jury had begun hearing testimony, and a new report from the state auditor detailing improper transfers and other problems in the investment fund. He told Wade and Nolan that Citron wanted to cooperate.

“Dave knew we had a number of investigators on the case,” Wade said. “He knew we were moving very quickly.”

Seated in padded blue chairs at a long conference table, Nolan and Wade laid out what they had, how it could be proved, and listed the penal and corporation codes they intended to charge Citron with violating.

During that first, hourlong meeting, Wade said, it was made clear to Citron that the investigation “was like a train moving very fast down the track. There would come a time when it would be very difficult to stop it.”

Nolan remembered feeling the beleaguered ex-treasurer was ready to come clean. “We got a sense at that meeting that he was getting close to making a determination that he was responsible for what happened, and he wanted to do something about it,” she said.

Wiechert was told that the grand jury would likely hand down indictments in the first or second week of May. Wiechert indicated that his client would be willing to cooperate with both the district attorney’s office and federal prosecutors, but wanted to make sure any deal included all investigating agencies. The county prosecutors promised to contact their federal counterparts.

Hanging over the proceedings was the involvement of the U.S. attorney’s office, which had been investigating the bankruptcy for months. Citron did not want to be prosecuted for the same crimes by both state and federal authorities, which could cost him extra years in prison. Ultimately, the veteran officeholder pleaded guilty to six felony counts. Two counts involve making false material statements in connection with the sale of securities. The other four counts involve misappropriation of public funds, failure to transfer public funds and maintaining false entries in a public record. He faces a maximum prison term of 14 years.

Despite his plea to state charges, Citron has received no assurances that he will not be prosecuted by federal authorities. Several defense attorneys, though, said it is likely the U.S. attorney’s office will use Citron’s testimony to secure federal indictments of others involved in the case, such as investment brokers and financial officials who did business with the ex-treasurer.

In particular, authorities are gearing up to prosecute Citron’s former assistant, Raabe, and Merrill Lynch, which the county contends illegally sold it most of the riskiest securities in Citron’s portfolio.

Attorneys for Raabe and Merrill Lynch steadfastly maintain their clients’ innocence, arguing that Citron alone was responsible for gambling the investments of nearly 200 cities, school districts and other public agencies. The portfolio lost $1.7 billion in the collapse of Citron’s investment scheme, though prosecutors say there is no evidence that Citron used any of his dealings for personal financial gain.

Discussions of a deal between the district attorney’s office and Citron began heating up last Monday afternoon, when Wade left an urgent message at Wiechert’s office.

Wiechert called back the next morning. Wade said he was ready to “go forward” Wednesday unless Citron preempted them with a guilty plea. He would not rule out the undignified option of arrest, complete with handcuffs, police cars and flashing lights.

Caught by surprise at the changed timetable, Wiechert asked them to wait for the U.S. attorney’s office to make a decision. Federal investigators told Wiechert they would talk with Citron, hear him out, consider a deal--but not until the following week.

What was the rush? Wade and Nolan said they were ready to go with their case. He could take the deal now or lose it.

Wade and Nolan arrived at Wiechert’s Costa Mesa law office Tuesday at 2 p.m. In his haste, Wade forgot the plea agreement, which had to be faxed over.

The three attorneys spent 2 1/2 hours hammering out the fine points. Nolan and Wade wanted Citron to plead on Wednesday. But Wiechert insisted he needed to talk to his client that day.

Later that evening, the negotiators left another voice mail message for Wiechert: The deadline had been extended to Thursday at 10 a.m.

Back at the office, the two prosecutors told Dist. Atty. Michael R. Capizzi and Chief Assistant Dist. Atty. Maury Evans that a deal might be close. District attorney investigators were told to get ready for Citron’s surrender Thursday morning. Wade told his wife to get a baby-sitter for Thursday night. They were going to celebrate.

But Wednesday dawned with an intense series of conference calls and faxes as the lawyers haggled over details.

The biggest sticking point was an ongoing argument over the reason Citron had committed one of the crimes detailed in the plea agreement. Nolan and Wade believed they could prove that Citron transferred securities from county accounts to his commingled pool to shift losses; Wiechert said the illegal transfers were made to boost the interest earned by the pool.

“By Wednesday, the whole thing was off,” Nolan remembered. “By the time of our last conversation Wednesday, Wiechert decided he wasn’t going to do it.”

All day the top brass in the district attorney’s office peeked in on the two prosecutors. Wade would say, “It’s 50% now.” “It’s about 60%.” “Maybe 75%.”

Nolan went home and climbed into bed, worn out and depressed. Wade, who thought the deal had a 40% chance to survive by the day’s end, left one last phone message for Wiechert to call him at home that night.

Shortly after 9 p.m., Wiechert called.

“He was calling to say thank you for leaving the door open,” Wade said. “I was convinced after our phone conversation that it was going to go down on Thursday.”

Thursday morning, Nolan came in wearing casual clothes, a bright purple silk skirt and top, convinced there would be no deal. But Wade wore his blue trial suit.

Citron arrived at Wiechert’s office at 8:30 a.m., and half an hour later they called the prosecutors. Once more, Wiechert asked Wade to wait for the federal authorities, begging for a meeting that day among the three parties.

The district attorney’s office would not wait for the feds. They were pressing forward.

It was a pivotal moment: Either Citron would sign the document or they would come arrest him, forcing a nasty fight. They set a new, 3 p.m. deadline.

Ultimately, the decision rested with Citron. He wanted to go voluntarily. It was the honorable thing to do.

But he would not sign the plea agreement until the language explaining the securities transfers was reworked. About 1:30 p.m., he won that battle.

Then, a new problem arose concerning the time element of one of the counts. The wording was corrected during a 3:30 p.m. conference call. Citron and his lawyer then and headed for the courthouse for a final meeting in the district attorney’s office.

Once again, the haggling continued. Finally, Citron and the attorneys signed the forms.

“I was surprised about how calm (Citron) was. I didn’t get the impression he was a basket case,” Nolan said. “I’m sitting across the table looking at this man and I couldn’t believe or comprehend that he could be responsible for such devastation in the county.”

At 4:50 p.m., Citron was led by district attorney investigators down a series of back hallways to a conference room to wait while the attorneys met with Superior Court Judge David O. Carter.

Forty minutes later, Citron ended the long ordeal by pleading guilty.

Times staff writers Matt Lait and Michael G. Wagner contributed to this report.