O.C. Refiles Lawsuit Against Merrill Lynch

Orange County on Wednesday refiled a $2-billion lawsuit against Merrill Lynch & Co., detailing new allegations that the Wall Street brokerage skimmed profits from county securities and then tried to cover up its alleged “unlawful investment scheme.”

The complaint once again accuses Merrill Lynch of triggering the county’s unprecedented bankruptcy by unlawfully extending billions of dollars in credit to then-Treasurer Robert L. Citron so he could invest in exotic securities that cost the county $1.7 billion.

The allegations against Merrill Lynch are detailed this time in a 105-page lawsuit, compared to the 49-page complaint that U.S. Bankruptcy Court Judge John E. Ryan dismissed last week on technical grounds.

In the revised lawsuit, county lawyers contend in greater detail that Orange County owned the securities in the pool and was indebted for billions of dollars in loans that Merrill Lynch advanced to Citron.

Merrill Lynch, which has 10 days to respond to the lawsuit, has consistently denied any wrongdoing.