One year after the largest municipal bankruptcy ever, the Orange County Grand Jury is set to deliberate whether to issue misconduct charges against two county supervisors and the auditor-controller, and possible criminal charges against the county's former budget director, several sources said.
The four officials--far fewer than the number once thought likely to be targets--are Supervisors Roger R. Stanton and William G. Steiner, Auditor-Controller Steve E. Lewis, and former Budget Director Ronald S. Rubino, the sources said.
The actions may be announced as early as Tuesday or Wednesday, if the grand jury accepts the recommendation from the district attorney's office to issue civil accusations against Stanton, Steiner and Lewis and criminal charges against Rubino, the sources said.
County prosecutors began summarizing the case against the officials on Friday, said the sources, who spoke on the condition that they not be named.
The supervisors and the auditor-controller are expected to be named in civil accusations, citing them with willful misconduct in office, the sources said. Rubino might be charged under the same sections of the California Government Code as former Assistant Treasurer Matthew Raabe, who faces trial on six felony counts of securities fraud and misappropriation of funds, the sources said.
Elected officials accused of misconduct in office have the same right to a jury trial as do criminal defendants. If the accusation is upheld, the penalty is removal from office.
Until recently, it was widely believed that the grand jury would also be asked to weigh civil accusations against the three former supervisors in office at the time of the bankruptcy--Gaddi H. Vasquez, Harriett M. Wieder and Thomas F. Riley. But once it was decided to seek civil accusations instead of criminal charges, the sources said, plans to proceed against the former supervisors were dropped because they were already out of office, rendering the penalty for willful misconduct moot.
Possible cases against other county officials who may have played a part in the events that led to the Dec. 6, 1994, bankruptcy filing hinges on whether it can be proved that they had both "knowledge and intent" to violate state laws, the sources said.
One of the sources said, "This isn't the end of the investigation by any means."
In fact, the source continued, as new information is received, "other criminal charges are possible" and will be presented to the next grand jury that takes office on Jan. 1.
The next grand jury is expected to turn its attention to possible cases against financial firms that might have contributed to the collapse of the county's investment pool and the $1.7 billion in securities trading losses, the sources said.
The current grand jury was asked, among other things, to focus on whether high-level county officials knew the precarious financial condition of the investment pool beginning in June, 1994, when the county proceeded to issue more than $1 billion in new debt.
The 19-member panel also was asked to consider the events that led to the skimming of millions of dollars in interest from other participants in the county's pool.
Rubino, who left his $95,500-a-year job in April, 1994, to enter the municipal finance business, is widely credited with developing the county's plan to replace lost state funds, which were shifted away from cities and counties by the Legislature, by issuing bonds and investing the proceeds in the county pool administered by former Treasurer-Tax Collector Robert L. Citron.
"Everything I did was aboveboard," Rubino told The Times in an interview last February.
Rubino did not return calls for comment on Friday. In October, he told a reporter he would not comment on grand jury matters.
It is unclear exactly what Rubino will be charged with, although sources said they will involve the same state laws under which Raabe was charged and to which Citron pleaded guilty in April.
Citron, who agreed to cooperate with the investigations into the bankruptcy, is scheduled to be sentenced later this month. He faces up to 14 years in prison and a $10 million fine.
Auditor-Controller Lewis, whose job is to oversee the county's financial affairs and approve the transfer of funds between accounts, has repeatedly said he acted properly. In 1993, he quietly circulated a 1991 audit of the treasurer's office that questioned the legality of Citron's investment practices.
Lewis declined recently to appear before the grand jury. Instead, he sent a lengthy letter defending his actions. He did not return calls for comment.
In the county's Hall of Administration for weeks now, "The mood has been somber and everyone is resigned to the fact that it is coming and it's going to be serious," one supervisor's executive assistant, who asked not to be named, said Friday. "Maybe there will be some sense of relief when it is over."
As the grand jury's term nears its Dec. 31 termination, Supervisors Steiner and Stanton, the aide continued, both seem "preoccupied" and somewhat "distracted."
Both men have tried to sway the grand jury's decision by forwarding legal arguments and other documents for the panel to consider. The action has delayed the process, sources said, adding that the grand jury had been earlier told that the case would be completed by Thanksgiving.
Stanton declined to appear before the grand jury when asked last month, the sources said.
Stanton's attorney, Wylie A. Aitken, said that he has been told by the district attorney's office that the supervisor may face a civil accusation. "I hear the same rumors everyone else has heard," he said. "We've been assured it is a civil proceeding and assured that he has not engaged in any wrongful conduct. There has been no allegation made that he acted in any way wrongfully or did anything improper."
Steiner took his case to the court of appeals this week in an unsuccessful attempt to delay the grand jury's action and to remove Dist. Atty. Michael R. Capizzi from the case, claiming he knew as much as any top official about Citron's "questionable or unlawful" investment practices.
Steiner said he has been dreading the grand jury's decision. "The anticipation is probably worse than the actual event," he said.
Allan H. Stokke, Steiner's attorney, said, "I'm still very concerned with the recommendations that are being made by [the district attorney] that's clearly in a conflict position."
On Nov. 28, Stokke met with Assistant Dist. Attys. Jan Nolan and Wallace J. Wade and was told that the case would be wrapped up before next Friday. In court papers, Stokke said Nolan and Wade told him that Steiner might be charged with the civil accusation for willful misconduct because "he failed to supervise the official conduct of another county officer [Citron] and failed to see that Mr. Citron faithfully performed his duties."
To bolster his case that Capizzi has a conflict of interest, Stokke convinced Superior Court Judge David O. Carter to unseal the record of a June hearing in which the grand jury tried to hire a special counsel to handle its civil investigation.
"I'm even more concerned with this new information where the grand jury felt it had a major conflict and allowed itself to be talked out of obtaining separate, independent counsel," Stokke said. "I'm still mystified by what could conceivably have convinced them to back down."
Stokke said that if the accusations are made next week, he would renew his attempt to have Capizzi removed as prosecutor.
Some county employees thought the grand jury charges would be announced Thursday when Mary Hennessy, the grand jury's secretary, showed up at the Hall of Administration.
When Hennessy told county workers she was delivering a grand jury report, they shrieked, one source said, thinking the charges had been announced.
But it was only the grand jury report on "the wider use of Orange County reclaimed water."