Countywide : Proposed SEC Settlement to Be Considered by Supervisors

The Board of Supervisors Tuesday is expected to consider a settlement proposal that would close a federal investigation into the largest municipal bankruptcy in U.S. history without any additional county officials being criminally charged.

Though several county leaders declined to discuss the matter Friday, sources revealed earlier this week that the U.S. Securities and Exchange Commission is considering a settlement in which some officials, without admitting wrongdoing in the past, would sign consent decrees agreeing not to do anything wrong in the future.

Instead of assigning blame to any individuals, the SEC apparently plans to cite Orange County as a government entity for failing to abide by securities laws, sources said.

Both county officials and “Orange County” received notification that the SEC might charge them with violating securities laws. Because the government is being cited, the Board of Supervisors is authorized to accept or reject the settlement proposal.

Some activists have criticized the proposal as a “slap on the wrist.” But others said Friday that closing the SEC probe could bolster bankruptcy recovery efforts.

“I hope this will help us move on and not keep focusing on the past,” said Carole Walters, a leader of the Committees of Correspondence, a citizen watchdog group.

The county filed for bankruptcy on Dec. 6, 1994, after the collapse of its investment pool. The subsequent $1.6-billion loss was blamed on risky investments by former Treasurer-Tax Collector Robert L. Citron.

Citron has pleaded guilty to six felony counts of securities fraud and misappropriation of funds, and is scheduled to be sentenced in February. Former Assistant Treasurer Matthew Raabe faces six felony charges related to the bankruptcy.

The Orange County Grand Jury charged Supervisors Roger R. Stanton and William G. Steiner with civil “willful misconduct.” They face removal from office if the accusations are found to be true.

The grand jury also indicted former Budget Director Ronald S. Rubino on two felony counts related to the bankruptcy.