Ex-State Treasurer Is Named Orange County Litigation Czar : Finances: Thomas W. Hayes says creditors in the collapsed investment pool see him as someone ‘they could trust.’ He is a familiar player in the drama.

The first time former state Treasurer Thomas W. Hayes came to help lead Orange County out of its financial bind, he did so at the request of Gov. Pete Wilson.

Now Hayes, who helped peddle the remnants of the county’s collapsed investment pool, is returning to the hot seat at the behest of an often-fractious group of attorneys, financial advisers and public officials.

This time, the soft-spoken Hayes is coming to head the county’s legal battles to recover the hundreds of millions lost by investors when the county’s $1.7-billion pool went belly-up in December.

Hayes, 49, an accomplished money manager with a long background in government financial matters, is blunt as to why he is being asked back.

“They basically wanted somebody they thought they could trust,” said Hayes, who earlier this year withdrew as a candidate for the county’s chief executive officer.

Hayes’ name first surfaced to become the county’s litigation czar at the end of August after it became clear the pool participants were not happy with the county controlling the post-bankruptcy litigation, said county bankruptcy attorney Bruce Bennett.

Bennett and Patrick Shea, the attorney for the creditors’ committee, settled on Hayes as the one person “our respective clients could accept” to oversee the litigation, Bennett said.

“Tom was viewed by everyone in the case as a professional through and through,” Bennett said. “He’s not a stranger to anybody in the case. He’s met with every single pool participant at one time or another.”

In the process of restructuring the county’s investment pool, Hayes, who also served as the state’s auditor for a decade, earned a reputation as a straight shooter who would not favor the county’s interests over other pool investors, said Jon Schotz, financial adviser to pool participants.

“He is someone you can trust,” Schotz said.

In his new job, Hayes will make the final call on the work of the county’s attorneys, Schotz said. The attorneys will decide which brokers and other firms the county will pursue in the courts, but it will be up to Hayes to decide how hard to pursue them, whether to settle and for how much. He will also have “sole and absolute discretion” to decide when and how any money collected is distributed.

“He is going to make the decision if this is the best that we can do with X, Y and Z targets,” Schotz said. “We want Tom Hayes making decisions on how hard to push people like [broker] Merrill Lynch, not the county.”

Hayes, whose contract is expected to be finalized soon, agreed that he has a “fiduciary responsibility to all parties . . . the county and pool participants. Their desires are the same at this point in time.”

He said he does not expect the position to be a full-time job and plans to continue living with his wife, Mary, in Sacramento and serving as president of Metropolitan West Securities Inc., a Los Angeles-based brokerage firm.

In addition, he will serve on a five-member recovery plan oversight committee with two representatives from the county, a representative of the cities and another member of the pool participants.

Bennett said Hayes’ employment will end when the “last of the claims are fully pursued and collected,” which some say could take up to seven years. Hayes’ salary is being kept secret to keep bankruptcy defendants from gaining any insight about the county’s financial situation, Bennett said.

“My goal is to negotiate the best deal that I can on behalf of the taxpayers,” Hayes said.