Rubino Case Doomed Before Trial Started

The criminal case against former county Budget Director Ronald S. Rubino--whose bankruptcy-related trial ended with a hung jury and plea agreement last month--began unraveling weeks before the first prosecution witness took the stand.

It was the first week of July, prosecutors recall, and Rubino’s chief accuser had just told them he was going to invoke his rights under a still-secret agreement with the district attorney: He was refusing to testify until his own trial was resolved.

With Rubino’s Aug. 12 trial date fast approaching, prosecutors pondered how to avert another, possibly lethal setback: a second key witness would exonerate the former budget director--as court records show he had repeatedly advised prosecutors--unless he could be kept from testifying. Ultimately, he couldn’t.

The twin setbacks, legal experts say, provide the most likely explanation why Dist. Atty. Michael R. Capizzi agreed to back away from his pledge to retry Rubino on felony charges carrying a nine-year prison term. This week, Capizzi instead settled for a single misdemeanor conviction that drew a punishment of 100 hours of community service.

“They were on fairly thin ice in going after Rubino” in the first place, said Robert Pugsley, a professor of law at Southwestern University School of Law.

When one key witness backed out, and the other contradicted their case scenario, prosecutors had little left to offer the jurors who deadlocked, 9 to 3, for acquittal.

The reluctant witness was Matthew Raabe, the former assistant treasurer who had testified in a secret grand jury proceeding that Rubino crafted the scheme to skim $93 million from the accounts of school districts and cities that kept their reserves in the Orange County Investment Pool.

The prosecution’s unwanted witness was former Treasurer-Tax Collector Robert L. Citron, who surprised everyone in the courtroom--except the glum-faced prosecutors--when he testified that he never told Rubino the money being funneled into county coffers was stolen. Citron has maintained that it was Raabe’s idea to skim interest because he believed excessive returns would tip off pool investors to the treasurer’s casino-type risks.

After losing Raabe as a witness, prosecutors sought to repair their crumbling case.

They asked the trial judge, J. Stephen Czuleger, to have Raabe’s grand jury testimony read to the jury. The judge declined, saying he couldn’t because Raabe was available to testify in person.

Rubino had been indicted only after Raabe, ignoring the advice of his attorneys, agreed to cooperate with the same prosecutors who want to send him to prison.

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Two days before Thanksgiving last year, Raabe surprisingly agreed to submit to questioning before the grand jury, where he testified that he was present at a July 1993 meeting where the diversion plot was hatched.

But to secure that testimony, prosecutors had to give Raabe a written guarantee that he wouldn’t have to testify before the end of his own trial on six bankruptcy-related fraud and misappropriation charges.

When Rubino insisted on a speedy trial, and Raabe’s was still tentatively scheduled in the far distant future, Raabe pulled out his copy of the secret agreement and declined to testify.

Forced to keep their end of the bargain, which experts said was neither unusual nor imprudent at the time it was signed, prosecutors reluctantly struck Raabe from their witness list--a week before the Rubino trial.

Pugsley, the law professor, said prosecutors should have made a decision then whether to drop the case against Rubino.

Without Raabe’s testimony, jurors would only hear Citron’s testimony that Rubino knew nothing of the diversion scheme, Pugsley said.

Pugsley said prosecutors should have weighed the credibility of Citron versus Raabe even before getting Rubino indicted.

“Once Citron had pleaded guilty,” said Pugsley, “his incentive for protecting anyone other than himself was minimal.” In other words, Citron was more believable than Raabe because Citron had nothing left to lose.

“It seems to me that prosecutors chose to hear what they wanted to hear. . . . They listened to Citron when he incriminated Raabe, and they listened to Raabe when he incriminated Rubino. They ignored Citron’s assertion that Rubino had no role. . . .”

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In an interview Thursday, Assistant Dist. Atty. Jan J. Nolan said she decided to proceed to trial even though Raabe’s missing testimony “created a big hole in the evidence. I felt the evidence was sufficient to convict Rubino without Raabe,” Nolan said.

Once the trial was underway, it became clearer day by day that prosecutors had no smoking gun.

“I thought the prosecuting attorney [Nolan] was saving the incriminating evidence for the end,” said juror Dianna Chairez in a letter urging Capizzi not to retry the case. “You know, like the TV show ‘Columbo’? “

Witness after witness for the prosecution failed to lay a glove on the budget director. Many spoke about him in glowing terms, saying he was a brilliant and devoted county employee.

Charles Hulse, a top official in the auditor-controller’s office, was apparently called to testify that Rubino tried to dissuade others from alerting the Board of Supervisors to Citron’s excessive interest yields. Instead, Hulse testified that Rubino did no such thing.

Ernie Schneider, the county’s former chief administrative officer, appeared as a prosecution witness and testified that Rubino was within the bounds of county policy when he proposed creation of a special treasury account where supposedly surplus investment pool earnings would earn extra income for the county. Schneider said he would have been disappointed if Rubino hadn’t proposed it.

Although she couldn’t put Raabe on the stand in person, Nolan tried her best to present his version of events to jurors, once drawing an admonition from the judge to stay away from “hearsay” evidence.

“Let’s face it,” Czuleger told the lead prosecutor, “you don’t have Raabe’s testimony and you want Raabe’s testimony.”

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The judge said she could not have other witnesses quote Raabe’s remarks to them, because Rubino would not have the opportunity to cross-examine Raabe about them.

Then came the testimony of Citron. The public had never been told what Citron had to say about Rubino’s role in the diversion.

But court transcripts show that Citron had defiantly insisted--”no, no, no”--when investigators for the district attorney suggested in interviews that must have known the county treasury was receiving stolen money.

To prove that Rubino was guilty of aiding and abetting the commission of a felony, prosecutors first had to prove at Rubino’s trial that Citron committed a crime. The easiest way to do that, experts say, was to put Citron on the stand and simply ask him if he had pleaded guilty to six felonies.

But to avoid giving defense attorneys a chance to cross-examine Citron, prosecutors asked the defense to stipulate, or agree, that the jurors could be told that Citron had pleaded guilty to six felonies and had accepted responsibility for the money-skimming scheme.

“But the defense would [agree] to nothing,” said prosecutor Nolan.

That left the prosecution with no choice but to put Citron on the stand, where he effectively exonerated Rubino.

Citron’s testimony convinced some jurors that Rubino was not guilty.

“When Robert Citron said, ‘I never told [Rubino] where the money was coming from,’ I began to wonder if Ms. Nolan thought she was the defense attorney for Mr. Rubino,” said Chairez, the juror, in her letter to Capizzi.

Jurors deliberated for seven days, before declaring themselves hopelessly deadlocked.

The judge who apparently felt the prosecution wouldn’t fare any better in a second trial summoned the attorneys to his chambers in Los Angeles and suggested a negotiated settlement.

Facing the choice between the second trial Capizzi had promised and a compromise that the trial judge was trying to broker, prosecutors were confronted with another unpleasant problem--Raabe’s waffling on his testimony.

After insisting in his grand jury testimony that the interest diversion scheme was hatched in July 1993, Raabe was now saying that it actually occurred in April 1993.

Transcripts of a May 30, 1996, interview of Raabe quoted Nolan as saying the change represents “in my mind [a] major time discrepancy.”

“Now when you tell us that it started in April . . . and we have absolutely nothing to corroborate those statements or any documents that are consistent with Mr. Rubino having known of the interest diversion as early as April, or it was his idea as early as April, you can see where your testimony may not be credible.”

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When the parties met in the judge’s chambers two weeks ago, the prosecution still wanted a conviction, while Rubino was defiantly maintaining his innocence, and insisting on an outright dismissal. The judge came up with the compromise.

Prosecutors would get a small conviction if they filed a third felony count alleging falsification of county records. Rubino would plead no-contest to the third charge and receive no jail time and no fine. He would get his acquittal, but he would have to wait a year to have the misdemeanor dismissed and his record cleared of the conviction.

As the judge announced the deal this week, Nolan rose to say it was the district attorney’s understanding that Rubino was pleading no-contest to a felony.

Czuleger corrected her, saying “based on all the evidence, all of my knowledge, and from reading thousands of pages of grand jury transcripts,” he was treating the charge as a misdemeanor.

Nolan said Thursday prosecutors agreed to negotiate a plea because it achieved their goal to hold Rubino accountable for “a crime of moral turpitude and a crime against the county.”

Rubino’s defense attorney, Rodney M. Perlman, disagreed, saying the events supported the defense’s contention that the case against Rubino “was a prosecution in search of a crime and a theory.”

“They do not now nor have they ever had any evidence of any wrongdoing. And they forced Mr. Rubino to [accept the misdemeanor plea] under the threat of having to live another 18 months under this charge” while they prepared for a retrial of the felony charges, Perlman said.

“He could not and would not put his family through it,” Perlman added.

* LOW PROFILE

How Auditor-Controller Lewis’ self-effacement may have cost him more defense funds. B1