NEWS ANALYSIS : ORANGE COUNTY IN BANKRUPTCY : Indictment’s Magic Word: ‘Willfully’ : Courts: Raabe is expected to say he only did Citron’s bidding. D.A. must prove he knew the truth about county investments.

The most important word in the indictment handed down Tuesday against former Orange County Assistant Treasurer Matthew R. Raabe may be “willfully.”

It appears six times, one for each felony count of securities fraud, embezzlement and falsifying government documents for which Raabe faces the prospect of 14 years in prison and $10 million in fines if convicted.

And unless prosecutors can prove that Raabe did those things willfully --knowing it was wrong but pressing ahead anyway--he may go free, legal experts said.

“The tough thing is for the prosecution to prove fraudulent intent,” said UCLA Law School Professor John Shepard Wiley Jr., a former federal prosecutor who specializes in securities fraud. “If there’s no direct proof of a guilty mind, that leaves open the defense that I, as a defendant . . . might be dumb, but I’m not crooked.”

Santa Ana defense attorney William J. Kopeny said the fact that there is no evidence Raabe profited personally from the crimes could bolster his attempt at a “good soldier” defense.

“The real question is, ‘Why would he do it?’ ” Kopeny said. “If the answer is, ‘I was just doing my job . . . I was just following my boss,’ that might be very convincing.”

Raabe’s boss, former Treasurer-Tax Collector Robert L. Citron, pleaded guilty to the same charges April 27, implicating his top deputy and handing prosecutors perhaps their best weapon against Raabe by promising to cooperate with their investigation.

Further bolstering the prosecutors’ arsenal is a long paper trail: Raabe signed most documents leaving the treasurer’s office, and for the last year before the county investment fund’s collapse, acted as Citron’s spokesman.

“The key question is going to be, ‘What was his understanding of what Citron was telling him to do?’ ” said Jennifer Keller, treasurer of the Orange County Bar Assn. “If Citron kept him in the dark [and] only informed him of things he was doing after the fact, that’s a far cry from Raabe actively participating with Citron in misappropriating funds.

“Citron sounds like in many ways he was a real one-man band,” she added. “It will be interesting to see in what way [prosecutors] show otherwise.”

Like Citron, Raabe was offered a deal in which he could plead guilty and stay out of jail while helping law enforcement authorities.

But Raabe insists he is innocent, and his defense thus far hinges on the idea that he was simply assisting Citron.

“They had different jobs, different responsibilities. They had different levels of knowledge,” said Terry W. Bird, one of Raabe’s two attorneys. “It’s really going to come down to people who were at two different levels of the operating chain in the treasurer’s office.”

Though Citron has met with district attorney’s representatives more than half a dozen times since his guilty plea last month, he was not among the 48 witnesses who testified before the grand jury that indicted Raabe. Instead, that list was filled with employees at the treasurer’s office and finance officials at local agencies that invested in the county’s collapsed portfolio.

Experts suggested Tuesday that prosecutors probably would avoid using Citron in the case against Raabe because a jury might frown on a boss cutting a deal and pointing the finger at his No. 2.

“The concept of Raabe on trial with Citron as his accuser is patently ridiculous,” said one local attorney who insisted on anonymity because he represents another client in the case. “Anyone who watches that case or sits on a jury is going to think the roles are reversed: Raabe should be testifying against Citron.”

Still, Citron’s plea--which specifically stated that he committed the crimes “with the assistance of” Raabe--hurts Raabe’s position.

“If Citron had decided to go to trial, then there could have been a united front,” noted David Biggs, a professor of criminal law at Western State College of Law. “Citron says, ‘I did it, I’m guilty, I did this criminal act.’ That puts the second in command in a difficult position. [Raabe’s] kind of stuck between a rock and a hard place.”

Before the case comes close to trial, the prosecution could face a variety of other challenges, legal analysts said.

Several attorneys said the grand jury’s indictment could be set aside because of pretrial publicity--a tactic that was effective in forcing a preliminary hearing in the O.J. Simpson murder case--or because of potential conflicts of interest. The grand jurors, as Orange County residents, could be considered some of the “victims” of Raabe’s alleged crimes, experts said.

The district attorney’s office presents a similar problem. Its members could be accused of conflict of interest because they have been hurt by the county’s massive financial crisis as well.

Another lawyer who asked not to be identified because he is involved in the case pointed out that the district attorney’s office’s budget has been cut by millions of dollars because of the financial crisis, that individual prosecutors’ salaries and retirement benefits have been jeopardized and that because Dist. Atty. Michael R. Capizzi is elected, community outrage over the county’s bankruptcy could politicize the case.

“The district attorney has been involved in a policy-making role and an administrative role in the fallout from this particular debacle,” attorney Kopeny noted. “His view of whether or not there is a crime may be driven by political motivations or bureaucratic pressure.”

Department heads such as Capizzi are potential witnesses in the case as well, Kopeny said.

Gary M. Pohlson, Raabe’s lead attorney, vowed to pursue all such challenges if he stays on the case.

“I think every Orange County employee has a conflict,” Pohlson said Tuesday. “If I’m the lawyer, we’re going to look at every one of those kind of motions.”

Tuesday’s activities could help the lawyers launch an attack on the district attorney’s office’s motivations. It asked for $1 million bail--a figure that shocked legal experts. Judge David O. Carter set the figure at $500,000.

Raabe’s attorneys had just over an hour’s notice to surrender their client, though they had told prosecutors for months they would make him available at any time and place.

“It’s ridiculous. Setting bail at that amount is motivated by political considerations. It doesn’t have anything to do with reality,” Bird said.

“It’s unmakeable for him. He’s not a rich guy. He’s broke,” Pohlson added. “It would have the effect of putting a ‘no bail’ on him. That’s the same thing you would do with a capital murder case, with someone facing the death penalty.”