Ex-O.C. Aides Say Official Deflected Scheme Queries

Ex-Budget Director Ronald S. Rubino told two top aides they were better off not knowing too much about a multimillion-dollar account that began appearing in the Orange County treasury, the aides testified in court Wednesday.

The testimony was the strongest that prosecutors have yet elicited against Rubino, who is charged with helping then county Treasurer Robert L. Citron illegally skim $91 million belonging to nearly 200 cities and schools to solve the county’s budget problems.

Testifying at Rubino’s criminal trial, former budget manager Steven A. Franks said that when he asked Rubino why the county’s projected interest earnings had unexpectedly surged more than $75 million in 1993, he was told: “This is the kind of thing, if the grand jury ever asks, you don’t want to know.”

Franks acknowledged that Rubino made the statement about the grand jury “jokingly. Rubino was always joking and he had a quick wit,” he said.

But Franks said he recalled telling his former boss: “That doesn’t cut it, Ron”--a remark that Rubino “didn’t really answer,” he said.

Franks testified that on another occasion he asked Rubino if the county’s investment earnings were correct, and whether or not the earnings of other agencies with money in the county-run investment pool were being siphoned off for the county’s benefit.

According to Franks, Rubino responded: “That is the kind of thing you don’t want to get involved in.”

Another Rubino assistant, former budget coordinator Pamela Leaning, recalled during her testimony that Rubino said “you don’t want to know about that” when she and Franks asked about unexpected interest earnings.

But Rubino’s attorney blunted the impact of this testimony when both Franks and Leaning, under cross-examination, said they felt “absolutely” certain that nothing illegal was going on when they attended a Sept. 28, 1993, meeting at which the higher-than-expected earnings were discussed.

Prosecutors contend that Rubino, 44, helped skim millions into a reserve account where it could earn an additional $13 million in annual interest for the county. Rubino, the prosecutors say, aided the diversion to enhance his career.

Rubino’s attorney, Rodney M. Perlman, has argued during the trial that his client was a mid-level county employee who was simply following county policies and his bosses’ orders. Rubino was not aware of any illegal skimming operation and doubts that it occurred, Perlman has said.

Rubino’s is the first criminal trial stemming from the Orange County bankruptcy. Citron has pleaded guilty to the skimming and other fraud charges. But when he was called as a prosecution witness this week, Citron denied ever telling Rubino about the illegal diversions.

Instead, Citron said, the idea came from former Assistant Treasurer Matthew R. Raabe, who he said came to him in April 1993 to warn that about 200 governmental agencies with money in the investment pool might suspect that their reserves were being used for risky investments, if the county distributed all the money being earned on their deposits.

At the time, the county’s investment pool was taking in 11.5% in annual earnings, while the state of California’s investment pool was earning about 4%.