O.C. Prosecutors, Rubino Strike Deal to Avoid a Retrial

In what appears to be a face-saving move for embattled Orange County Dist. Atty. Michael R. Capizzi, prosecutors and defense attorneys have struck a deal 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, the judge will dismiss two felony counts accusing Rubino of helping then-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 a hung jury Sept. 13, will receive no jail time and no fines--only 100 hours of community service and two years of unsupervised probation.

The agreement allows Rubino, 44, to change his plea to not guilty a year from now, a move that could result in an outright dismissal of the charge and clear his name.

“The district attorney has assured me and [the trial judge] that this ends all proceedings against me related to my county employment and Orange County investments, borrowings and bankruptcy actions,” Rubino said in a letter outlining the deal to the county Board of Supervisors. A copy was obtained by The Times on Thursday.

Assistant Dist. Atty. Jan J. Nolan, the lead prosecutor in Rubino’s trial, declined to comment on the reported 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,” said Wehner, who had pushed for an outright dismissal of the case. He declined further comment.

Rubino also would not talk about a settlement, but he provided details in his 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 $855,000.

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 overwhelmingly--9 to 3--in favor of acquittal. At the time, some jurors pleaded with Capizzi not to retry the case, saying there was no evidence linking Rubino to any wrongdoing.

The agreement will scuttle a retrial, 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.

Capizzi’s decision to settle the case contradicts his earlier pledges to retry Rubino.

In interviews after the mistrial, Capizzi vowed to try again to make the charges stick, insisting “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 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 carefully crafted compromise.

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

For Rubino, the agreement means he doesn’t 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 was 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 Raabe, agreed to distribute 7.85% 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 risky 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 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 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.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

How the Deal Would Work

The plea-agreement apparently struck between prosecutors and former County Budget Director Ronald S. Rubino offers something for everyone:

* Prosecutors will file a felony charge accusing Rubino of falsifying records. Rubino is expected to plead no contest, and is assured that the judge will reduce it to a misdemeanor.

* Prosecutors end up with a limited victory, without risking a mistrial like the one last month that had jurors vote 9 to 3 to acquit Rubino.

* The judge avoids a retrial by dismissing all previous felony charges. Taxpayers have already contributed $500,000 to Rubino’s defense cost--he was a county employee at the time of his alleged actions--and county supervisors were poised to give him $355,000 more.

* While Rubino would not fight the misdemeanor, his felony prosecution would cease. And if he completes a year of unsupervised probation and 100 hours of community service, the misdemeanor would be dropped and his record wiped clean.

RUBINO’S VIEW

Excerpts from Ronald S. Rubino’s letter to the Board of Supervisors, dated Oct. 3.

“It was obvious [Mr. Capizzi] 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 a second hung jury.”

“It was with great discomfort that I accepted this plea agreement with the Orange County District Attorney. In entering this plea, I continue to unequivocally assert my full and complete innocence to any and all allegations against me.”

“My wife and I have dedicated 100% of our time and energies this year to assisting the legal team in hopes of holding down the defense costs. We spent our family savings, borrowed money from my family, and utilized our retirement savings for living and legal expenses.”

“We cannot afford to continue the costly battle to prove my innocence. Even if I am found not guilty by a jury, I cannot win.”

“The malicious and false accusations against me have been extremely costly to our family, friends and Orange County’s taxpayers. Our lives have been put on hold for nearly two years, with Sharon and I not able to maintain employment, travel or live a normal family life.”