Former county Assistant Treasurer Matthew Raabe, who has been charged with six felonies for his role in Orange County's bankruptcy, has been secretly cooperating with prosecutors and has willingly appeared before the grand jury, authorities said Friday.
The disclosure of Raabe's cooperation came Friday during a court hearing on the upcoming sentencing of former Treasurer-Tax Collector Robert L. Citron, whose risky investments plunged $1.7 billion in value and forced the county into bankruptcy Dec. 6, 1994.
"Mr. Raabe spent a good part of one day and a short time of the next day answering our questions and cooperating with us," Deputy Dist. Atty. Matt Anderson told a judge.
Anderson declined to elaborate on Raabe's cooperation or explain why the former assistant treasurer has decided to work with the same prosecutors who are seeking to put him in prison. Anderson, however, said the district attorney has made no agreement with Raabe for leniency.
"I don't know how [Raabe's cooperation] will impact his impending criminal case," Anderson said.
Gary M. Pohlson, Raabe's attorney, said his client came forward because "he wants to do the right thing. He wants the people of this county to know who was responsible for the problems of this county."
Pohlson confirmed Friday that Raabe has met with the district attorney and appeared before the grand jury, which is investigating the bankruptcy debacle. He said his client is not looking for special treatment.
"We truly believe we're going to win this thing," Pohlson said.
The defense attorney acknowledged it was an unusual move given Raabe's impending trial but said: "This is something that Matt truly wanted to do. I know some people might say this sounds weird and naive of me to let him do, but this is what he wants."
Raabe was indicted in May on six felony charges that he and Citron deceived unsuspecting school districts, cities and public agencies into sinking money into the ill-fated county investment pool.
Prosecutors contend that Raabe helped Citron skim about $80 million in interest earnings for the county that belonged to other investors. Two of the charges against Raabe involve making false statements in connection with the sale of securities. Four counts concern alleged misappropriations.
Raabe, who did not personally profit from the county's investment losses, has portrayed himself as an unsophisticated underling who simply carried out his boss's orders.
Raabe has pleaded not guilty to the charges. He faces up to 14 years in prison and up to $10 million in fines if he is convicted of the same charges that Citron pleaded guilty to in April.
Sources close to the bankruptcy investigation speculated that Raabe decided to discuss other officials' culpability in an attempt for leniency in his case. The timing of Raabe's cooperation may have been influenced by Citron's recent bid to obtain a sentence of probation, several court observers said. In court filings, Citron has claimed he has suffered from dementia since 1993 and that Raabe made many critical decisions in the treasurer's office.
Raabe's testimony also may be important to a potential charge against former County Budget Director Ronald S. Rubino, who is credited with the idea of issuing county bonds solely to invest in the county's investment pool, a source said.
Pohlson said he believes Raabe is finished assisting the grand jury, which sources say is considering issuing civil accusations next week against Supervisor Roger R. Stanton, Supervisor William G. Steiner and Auditor-Controller Steve E. Lewis. The grand jury also is considering a criminal indictment against Rubino, the sources said.
The revelation of Raabe's cooperation came during a hearing to update Orange County Superior Court Judge David O. Carter on the status of the prosecutor's sharing of information with Citron's attorney on issues relevant to Citron's sentencing.
In preparation for Citron's Dec. 29 sentencing, the defense has requested materials gathered during the district attorney's yearlong investigation into the bankruptcy.
Citron sat quietly in court Friday as his attorney, the prosecutor and the judge discussed the Raabe interview in a private sidebar discussion. Another hearing is set Tuesday to further discuss the sharing of information, which defense and prosecuting attorneys said was progressing as ordered and is nearly completed.
Times staff writer Michael G. Wagner contributed to this report.