Raabe Attorney Says He’ll Seek to Move Trial Out of the County : Courts: After lawyer enters not-guilty plea for former Citron deputy, he tells reporters that bankruptcy will bias all potential jurors here. Prosecutors oppose a change of venue.

Promptly after former Assistant Treasurer Matthew Raabe pleaded not guilty Tuesday to six felony counts relating to the county’s bankruptcy, his attorney served notice that he will seek to move the case out of Orange County because the ex-civil servant cannot get a fair trial here.

“There will definitely be a change of venue motion and you can all plan on that,” attorney Gary Pohlson told reporters as he escorted a silent Raabe out of the courthouse.

Pohlson said the intense publicity and sweeping fallout of the worst municipal financial collapse in U.S. history will likely touch the lives of all potential jurors in the county and possibly throughout the entire state.

When asked where he would like to try the case, Pohlson quipped, “France or something.”

Assistant Dist. Atty. Jan Nolan, who is prosecuting the case, said she did not think a change of venue was necessary and would oppose such a motion.

Raabe, who made his first court appearance since his May 16 arrest on six counts of securities fraud and misappropriation, pleaded not guilty during the brief hearing before Orange County Superior Court Judge David O. Carter.

Attorneys on both sides said they expected the trial to be a lengthy one that could drag on up to six months. Pohlson said he expects to file a flurry of motions, which could occupy two months of court time.

Another motion Pohlson said he is considering is a challenge to the grand jury indictment, which he suggested might be invalid because panel members may have conflicts of interest because they live in the county and are also affected by the bankruptcy.

“There are going to be numerous motions,” Pohlson said. “I imagine a lot of these motions are going to be hard fought.”

Raabe returns to court June 30 for the setting of a trial date.

In the meantime, Pohlson said, he and his client will be poring over the massive accumulation of evidence prosecutors have gathered. He said Tuesday that there are more than 1.2 million documents and 500 audiotapes and videotapes they have to review.

“At this stage, it is just me and Matt,” Pohlson said. “We’re just in the evaluation stage right now.”

Prosecutors told the court that over the next couple of days they will be seeking to verify that Raabe has about $60,000 in assets, primarily equity in his home, car and pension plan that should go to help pay for his court-appointed attorney.

“That’s a lot of money . . . and we feel it should be deducted from his attorney’s bills,” Nolan said after the hearing. Pohlson was appointed by the court to represent Raabe at taxpayer expense, because Raabe claimed that he lacked sufficient funds to provide an adequate defense that is his constitutional right.

Pohlson said his client is not trying to hide money. “Any assets that he has he is willing to turn over to the county at the appropriate time,” he said.

Raabe, who started with the county as an accountant in 1984 and worked his way up to second in command of the treasurer’s office, remains free on $200,000 bail.

Friends say he has not worked since he was fired by the county earlier this year. When Raabe was charged, Pohlson said he had been seeing a psychiatrist several times a week. On Tuesday, Raabe seemed tanned and relaxed but declined to talk to reporters.

In recent months, Raabe joined a religious group from which he said he drew moral support while waiting to see whether he would face charges for his role in transactions that led to the bankruptcy.

On April 27, nearly three weeks before Raabe was indicted, former Treasurer-Tax Collector Robert L. Citron pleaded guilty to the same six counts of securities fraud and misappropriation Raabe now faces.

Like his former boss, Raabe faces up to 14 years in prison and $10 million in fines if convicted.

The case against the 39-year-old accountant, as outlined by prosecutors in the grand jury transcripts released this week, will focus heavily on his alleged role in skimming interest that belonged to pool participants and dumping the county’s money-losing securities on pool investors.

Some $99 million in interest was improperly diverted and $306 million in investment losses were shuffled to pool participants, witnesses told the grand jury.

Nolan, in summarizing the case for the 19-member grand jury, said “interest was diverted” and “manipulated” and that the conduct was “willful” and “knowing.”

Through his attorneys, Raabe has vigorously denied the charges against him. As the second in command of the treasurer’s office, Raabe has maintained he only did what Citron told him to do--a point supported by some witnesses, including Joy Cubbin, a former senior accountant in the treasurer’s office.

Both Cubbin and Veronica Deves-Aguilera, an accounting analyst in the treasurer’s office, told the grand jury that in mid-1993 Raabe instructed them to divert interest to the county. “I understood that the decision was made by Bob Citron and Ron Rubino,” Deves-Aguilera said.

Rubino, the county’s former budget director, has denied any knowledge of the illegal diversions.

Beginning in late March, the grand jury heard testimony from 48 witnesses, including many who testified that Raabe personally assured them the investment pool was sound, had ample liquidity and that the treasurer’s office had contingency plans in case interest rates continued to rise.

But the grand jurors were also told that Raabe wasn’t the only salesman for Citron’s ill-fated investment strategy. Merrill Lynch & Co. brokers actively encouraged investments in the pool, and touted the county’s investment strategy to the former finance director of the Santa Margarita Water District and the city of Anaheim.

Deborah Shapiro, an investment officer for Anaheim, testified that she was approached by Merrill Lynch broker Michael G. Stamenson, the salesman who sold Citron most of the risky and complex securities on which the county investment pool lost nearly $1.7 billion when Citron’s gamble on interest rates proved dead wrong.

Shapiro said Stamenson advised her to have Anaheim borrow more to increase the city’s investment yield.

James W. Clark, former finance director for the Santa Margarita Water District, testified that Deborah Harris, a Merrill Lynch executive in San Francisco, told him that Citron’s risky investments contained “a series of safety nets” to protect the pool against a sudden shift in the market.

Asked if Harris and Merrill Lynch were aware of how Citron’s pool was structured, Clark responded, “Oh yes, certainly they were aware of it. And in fact, they were kind of advising me to do something similar with the [water] district’s portfolio” to “boost the yield.”

Merrill Lynch spokesman Timothy Gilles said: “It would be inappropriate to comment except to say Merrill Lynch acted properly and professionally in its relationship with Orange County.”