Jury Deadlocks in Trial of Former O.C. Budget Chief

Ending seven days of rancorous jury deliberations but resolving nothing, a judge declared a mistrial Friday in the first criminal trial stemming from Orange County’s $1.64-billion bankruptcy.

The action came after jurors deadlocked 9 to 3 in favor of acquitting former Orange County Budget Director Ronald S. Rubino.

Some tearful jurors hugged Rubino as they left the courtroom and expressed frustration that they could not exonerate him on charges that he helped former Treasurer Robert L. Citron skim nearly $100 million in interest earnings belonging to nearly 200 cities, school districts and other agencies. The money was not used for personal profit.

Dist. Atty. Michael R. Capizzi appeared unfazed by the jury’s vote and vowed to retry the case next month. “There was evidence that indicates criminal activity,” he insisted during an interview.

However, the majority of jurors said prosecutors failed to incriminate Rubino in the money-skimming scheme and presented little hard evidence during the three-week trial.

Among them was Christina Sinclair, who embraced Rubino outside the courtroom and said: “Good luck. I tried. I went to bat for you.”

Rubino said he was pleased with the juror’s sentiments, though disappointed that he did not get an outright acquittal.

“It wasn’t the victory that we wanted, but it was a victory,” Rubino said. “I was doing my job. I have done nothing wrong. Now I’m subjected to going through the entire process again.”

Some jurors said they were planning to write letters to Capizzi asking him to withdraw the two felony counts against Rubino.

“He doesn’t have a leg to stand on,” said Diana Chairez, a real estate agent from Anaheim. “Why are they wasting our money?”

Friday’s action came after jurors filed a stream of notes with visiting Superior Court Judge J. Stephen Czuleger in which they reported being hopelessly deadlocked and plagued by infighting.

After some coaxing by Czuleger, jurors continued deliberating for the entire day Thursday. But at 10:03 a.m. Friday jurors sent their final note to the judge.

It read: “We are currently a hung jury. However, there are some jurors who are basing their verdicts on assumptions and not facts that were introduced into evidence. These jurors no longer wish to deliberate even though the rest of us do. Please, please help.”

Czuleger later asked jurors if they felt they could break the deadlock with further instructions. Seven jurors said it was possible. Others complained that some jurors were unwilling to follow the judge’s legal instructions.

“We’ll go crazy in that room,” said juror Naholowaa Russell Edwards of La Palma.

Czuleger declared a mistrial and set Oct. 8 as the retrial date.

As jurors left the courtroom, those who voted for conviction--three women, ranging in age from 68 to 72--headed for the elevators.

“Never again. Never again,” muttered 71-year-old Julia Saakvitne, one of the three holdouts.

During the trial, prosecutors contended that Rubino, Citron and his former top assistant, Matthew R. Raabe, agreed to distribute 7.85% in interest earnings to the 200 agencies with money in the county-run investment pool. But the $7-billion pool was actually earning 11.5% at the time.

Prosecutors said the three men plotted in 1993 to skim interest earnings from the pool because they were worried that investors might be startled by the excessive interest Citron was earning and start asking questions about the heavy risks associated with such returns.

At the time, Citron’s risky investments were producing double-digit returns while the state investment pool was yielding less than 5%. Citron has testified that Raabe believed excessive returns would tip off the other investors to the risks he was running.

Rubino helped to set up a special fund--the Economic Uncertainty Fund--to receive the skimmed money so he could fill an unprecedented shortfall in the county’s budget and advance his own career, the prosecution alleged.

But the plan fell through when Citron’s bets on interest rates caused the investment pool to suffer a $1.64-billion loss in the fall of 1994, triggering the largest municipal bankruptcy in U.S. history.

Citron, who pleaded guilty to six felony counts of misappropriation and fraud, is cooperating with district attorney investigators and is scheduled to be sentenced in November. Raabe is expected to go to trial in January on the same fraud and misappropriation charges.

Prosecutors sought an indictment against Rubino largely on the basis of Raabe’s grand jury testimony that the former budget director masterminded the scheme. As part of Raabe’s agreement to cooperate with the grand jury, prosecutors said he would not have to testify at any trial until his case is resolved.

Citing his 5th Amendment rights against self-incrimination, Raabe refused to testify at Rubino’s trial.

The prosecution’s strongest evidence was Rubino’s handwritten notes on a spreadsheet that Raabe distributed in September 1993. The spreadsheet showed a 400% increase--from $25 million to $125 million--in new interest earnings. Scrawled on the spreadsheet were the words: “Moving 7.85% to avoid 10% yield.”

Prosecutors sought to tie the notes to the testimony of former Rubino aides Steve Franks and Pamela Leaning that Rubino rebuffed them when they asked if Citron’s unusually high interest earnings were achieved through legal means.

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.”

But Rubino’s attorney, Rodney Perlman, blunted that testimony. He got Franks to acknowledge that Rubino made the statement about the grand jury “jokingly.” And Franks conceded that Rubino told him how the treasurer had explained he was making a windfall by employing “aggressive investment practices.”

Jurors who voted for acquittal said they found Citron, who was called as a prosecution witness, to be one of the most credible witnesses in the trial. In unexpected testimony, Citron said he never told Rubino about the diversion scheme.