The Latest Diversion Involves the Truth : Public Still in the Dark About Key Details of Bankruptcy

We are coming up on two years since Orange County declared bankruptcy, and accountability is still being sorted out. One would think we would have a more complete picture of what happened by now, but some of the old players are still dodging and darting like downfield runners escaping tacklers.

The central figure in the case, former Treasurer-Tax Collector Robert L. Citron, has pleaded guilty to six counts of securities fraud and misappropriation of funds. However, very little responsibility overall has been accepted even now by him or by the other key officials. Even in copping a plea, Citron cast himself as the victim, claiming he suffers from dementia and that he was taken advantage of by the county’s financial advisors, who deny any such thing.

On it goes. With the recent testimony in the trial of former Budget Director Ronald S. Rubino on money-skimming charges, with confusion surrounding the actions of the auditor-controller’s office, and with the lingering doubt about the role of supervisors, the public still does not have a clear idea of exactly what happened in a central bit of chicanery in the bankruptcy saga. That is, the diversion of money belonging to pool investors into the county treasury.

Last year’s grand jury testimony was an important starting place. It was so stunning that state Sen. Quentin L. Kopp (I-San Francisco), investigating the bankruptcy in Sacramento, said he had seen a “level of fraud and deceit that . . . is unparalleled in my 25 years in public service.”

Transcripts detailed finger-pointing as well as the deception. The supervisors and ranking officers were said to be ill-equipped to come up with solutions, or unwilling to do so. Testimony revealed cronyism and back covering.

Very few questions were asked as long as Citron came up with a way to replace money that was being taken by the Legislature. Aides testified that supervisors lacked the financial backgrounds to understand paperwork that preceded the devastating borrowings in 1994.

There are other reminders, in the current Rubino case and elsewhere, of just how elusive accountability is.

Auditor-Controller Steve E. Lewis, who should have resigned long ago, has acknowledged in testimony to the Securities and Exchange Commission that he was worried about the county’s excessive borrowing months before the bankruptcy but that when he brought concerns to Citron and then-Assistant Treasurer Matthew Raabe, he was assured the investments were safe and therefore didn’t press for detailed explanations. The grand jury testimony revealed an auditor’s staff in the dark about how Citron was borrowing and investing hundreds of millions.

In retrospect, surely the county auditor had responsibility to look beyond assurances that all was well. We now know how important that was, considering that Citron has portrayed himself as a financial neophyte, and considering that Raabe has said that he didn’t understand fully the investment fund’s complexity.

Now in recent testimony in the Rubino case we have Citron saying he never told Rubino what he was doing, namely siphoning millions from schools, cities and agencies to the county treasury. The former budget director is charged with aiding and abetting that diversion. Despite this testimony and that of Rubino saying he knew nothing of the scheme, Raabe is on record as saying Rubino was an architect of it. Obviously, somebody is not telling the truth.

In the end, the public ought to know what really happened in the diversion, even though it may take a while longer to get to the bottom of it as the bankruptcy recedes into the past. But perhaps more important, all this artful dodging ought to be instructive for the future.

The county, and in particular the supervisors, must redouble efforts to be sure that so much of the public’s money is never again put at risk by loose accountability.