Citron Says He Suffered ‘Dementia’ for 4 Years : Bankruptcy: Ex-treasurer argues in legal motion that diminished mental capacity justifies probation for six felony convictions.

Contending that he suffered from a mental impairment called “dementia” for four years before his bad investments pushed Orange County into bankruptcy, former Treasurer-Tax Collector Robert L. Citron demanded access Monday to any evidence gathered by county prosecutors that might persuade a judge to sentence him to probation.

The surprising legal argument, contained in an 11-page motion to Orange County Superior Court, marked the first time Citron has formally asserted a claim of diminished mental capacity during the time he was pursuing the flawed investment strategy that cost participants in the county-run investment pool a staggering $1.7 billion in losses.

Citron, 70, faces up to 14 years in prison and $10 million in fines after his April guilty plea to six felony counts of securities fraud and misappropriation of funds stemming from his role in the county’s financial collapse.

In papers filed in Judge David O. Carter’s court, the former treasurer cited his mental impairment as one of four mitigating factors that should be considered when Citron comes up for sentencing Dec. 29.

The other factors that he said the judge should consider were:

* “County representatives and outsiders who were far more sophisticated and knowledgeable about matters concerning securities and accounting” also should share the blame with Citron for the investment debacle.

* Citron was misled by financial and legal experts he relied on.

* The former treasurer has a history of “law-abidingness.”

David W. Wiechert, the attorney who filed the motion on behalf of Citron, could not be reached for further comment. Citron has avoided making any public statements for almost a year.

In a court hearing last month, Wiechert said his client was “in a state of decline” during the months leading up to the county’s Dec. 6 bankruptcy filing, the worst municipal bankruptcy in U.S. history.

As part of his plea agreement, Citron was obligated to cooperate with ongoing local and federal investigations.

At last month’s court hearing, Carter rejected Wiechert’s request for additional delays in sentencing, noting that the one-year anniversary of the bankruptcy was fast approaching, and that Citron’s value to the county grand jury was limited since its term expires Dec. 31.

“This is a little unusual,” said Assistant Dist. Atty. Wallace Wade of Citron’s motion. “I know Mr. Citron is entitled to some of this [investigative] material, and we will try to release that information.”

But, Wade added, “we are still in the middle of a lengthy investigation.”

The premature disclosure of some of the information Citron seeks might hinder the county’s continuing investigation.

That information being sought appears to include everything gathered by the district attorney’s office since last year that might incriminate others yet to be charged: “all information . . . indicating that Orange County supervisors, administrative officers or budget officials were aware of, participated in, or directed the criminal activities that are charged against Mr. Citron.”

Citron also seeks all the information pertaining to the activities of Merrill Lynch & Co., from internal memoranda “expressing reservations about any county securities transactions,” to all the correspondence on the sale of $600 million in taxable notes last year “between Matthew Raabe and Merrill Lynch while [Citron] was vacationing.”

Raabe, Citron’s former assistant treasurer, faces the same six felony counts to which Citron pleaded guilty. His trial is pending.

Citron’s motion also seeks information about Albert J. De Spirito, a Dean Witter Reynolds vice president who testified before a California Senate committee. Citron claims he consulted De Spirito daily and that he knew the funds of other agencies had been skimmed into a county account.

Citron also seeks any information “reflecting that county attorneys or auditors, in-house as well as outside professionals, knew of or participated in the crimes charged against [Citron], or knew of or participated in any scheme to defraud pool participants, investors . . . or the Internal Revenue Service.”

In an earlier letter to the district attorney seeking this information, Wiechert asked for “communications” between Raabe and lawyers at Leboeuf, Lamb, Leiby & MacRae, who advised the county on bond issues, “relating to the inflation of revenue figures to permit increased borrowing.”

In the same letter, Wiechert also asked for all information indicating that county employees or “outside attorneys attempted to conceal the existence of an informal [U.S. Securities and Exchange Commission] investigation . . . in the Spring 1994.”

A hearing on Citron’s motion is scheduled for Nov. 28.