Deal Will Allow O.C. Official to Avoid Retrial

Orange County Dist. Atty. Michael R. Capizzi has struck a deal with defense attorneys to avoid a retrial of former budget Director Ronald S. Rubino on money-skimming charges resulting from the county’s bankruptcy.

Under a proposed plea-bargain arrangement, prosecutors will drop two felony counts accusing Rubino of helping former Treasurer Robert L. Citron skim nearly $100 million in interest belonging to other public agencies. In return, Rubino will plead no contest to a lesser charge: a misdemeanor accusing him of altering or falsifying a public record.

Rubino, who professed his innocence throughout a six-week trial that ended in mistrial Sept. 13, will receive no jail time and no fines, but will be given 100 hours of community service and two years unsupervised probation.

The agreement would allow Rubino, 44, to change his plea to not guilty a year from now, a move that could result in adismissal of the charge and clear his name.

Assistant Dist. Atty. Jan J. Nolan, the lead prosecutor in Rubino’s trial, declined to comment on the settlement.

“The only thing I can say is we’ll be in court for a status conference Monday afternoon and we’ll make a decision then as to whether or not to retry the case,” Nolan said.

But Charles Wehner, one of Rubino’s lawyers, confirmed that a deal had been struck.

“I regret to say this agreement has been reached that will be placed on record [in court] on Monday,” Wehner said, declining further comment.

Rubino also would not talk about a settlement, but he provided details in a letter delivered Thursday afternoon to each member of the Board of Supervisors. The board was set to decide next week whether to lift the spending cap on Rubino’s defense fees from $500,000 to $850,000.

The proposed settlement comes three weeks after visiting Los Angeles County Superior Court Judge J. Stephen Czuleger declared a mistrial in the case when jurors voted 9 to 3 for acquittal. At the time, jurors lobbied Capizzi not to retry the case, saying there was no evidence linking Rubino to any wrongdoing.

The proposed agreement will scuttle a retrial, which was scheduled to begin Tuesday.

Czuleger, who according to Rubino’s letter was instrumental in shaping the plea bargain, is expected to give his stamp of approval Monday when both sides meet in court for a hearing set to discuss a possible retrial.

In interviews after the mistrial, Capizzi vowed to retry Rubino, insisting that “there was evidence that indicates criminal activity.”

But since then, several jurors in the first trial, some county supervisors and members of the public have called on Capizzi to drop the prosecution. Board of Supervisors Chairman Roger R. Stanton also has turned up the heat on Capizzi by calling for a management audit of the district attorney’s office to determine the cost of bankruptcy-related prosecutions.

The plea agreement appears to be a face-saving move for the embattled district attorney.

By agreeing to a deal, Capizzi would secure a small punishment from Rubino, and he does not run the risk of suffering an outright loss in a second, costly trial.

For Rubino, the agreement means he does not have to undergo the emotional trauma and costs of a second trial, which he said has threatened to bankrupt his family. Rubino can also clear his name by asking the court a year from now to dismiss the remaining charge.

Insisting that he is not guilty, Rubino indicated in his letter that he felt pressured into accepting the deal because Capizzi would not drop the charges.

“Despite the jury’s 9 to 3 vote for acquittal, Mr. Capizzi has steadfastly refused to dismiss the indictment outright, and made clear his intention to seek a new trial on a new indictment at some unspecified time in the future,” Rubino’s letter states. “It was obvious he intended to continue this unfounded prosecution indefinitely without regard to the jury’s message or the cost to the public.

“A retrial, now or a year from now, could only result in a full acquittal or second hung jury. . . . It was with great discomfort that I accepted this plea agreement. . . . I am not guilty of any crime, but it is in the best interest of my family and friends, and of the public, to put an end to this ordeal. We cannot afford to continue the costly battle to prove my innocence.”

Legal experts, supervisors and several jurors who voted to acquit Rubino doubted that Capizzi’s prosecutors could secure a guilty verdict in the case.

Among the jurors who urged Capizzi to drop the case was Dianna Chairez, an Anaheim real estate agent.

“Mike, you have already tried this case once,” Chairez’s letter to Capizzi states. “I don’t know how much money you spent, but you are barking up the wrong tree. . . . If you try him again the result will either be the same or an acquittal. Either way you will look pretty silly. I hope you come to your senses soon.”

The agreement will close the book on the first criminal trial resulting from the biggest municipal bankruptcy in U.S. history.

During the first 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.

Prosecutors said the trio 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 investments were producing double-digit returns while the state investment pool was yielding less than 5%. Rubino helped to set up a special pot of money--the Economic Uncertainty Fund--so that 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 bankruptcy. The diversions were unearthed in an ensuing investigation.

Citron, who pleaded guilty to six felony counts of misappropriation and fraud, is cooperating with district attorney’s 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.

The prosecution’s strongest evidence was Rubino’s handwritten notes on a spreadsheet that Raabe distributed in September 1993, which 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 testimonies of former Rubino aides Steve Franks and Pamela Leaning, who said Rubino rebuffed them when they asked if Citron’s unusually high interest earnings were achieved through legal means.

“This is the kind of thing, if the grand jury ever asks, you don’t want to know,” Franks quoted Rubino as saying.

But Rubino’s attorney, Rodney M. Perlman, blunted that testimony.

He got Franks to acknowledge that Rubino made the statement about the grand jury “jokingly.” And Franks also conceded that Rubino told him how the treasurer had explained that he was making a windfall by employing “aggressive investment practices.”

Some jurors who voted for acquittal said they believed Rubino’s testimony that he did not know that Citron was depositing stolen funds in the county’s treasury.

Some said they also believed Rubino’s testimony that Citron was earning 7.85% for all pool investors but that the county was generating even higher rates--up to 15%--because the treasurer had made more lucrative investments on its behalf.

Rubino said in his letter Thursday that even if he was found not guilty by a second jury, “I cannot win.”

“The immeasurable permanent damage has already been done to my good name, my family and my finances. My financial resources are exhausted and the emotional price is simply too high to go through this process again.”