Citron’s Friends Urge Judge to Be Lenient

The strange saga of Robert L. Citron, the man whose $1.64-billion securities trading losses brought about Orange County’s bankruptcy, drew closer to an end Monday as his friends told a judge that sending the former county treasurer to jail or prison would surely kill him.

Before a courtroom packed with former Citron colleagues, well-wishers and attorneys intently scribbling notes, Los Angeles Superior Court Judge J. Stephen Czuleger patiently listened to often-emotional pleas to spare the frail, 71-year-old Citron the seven-year prison term sought by the Orange County district attorney.

Czuleger said he would sentence Citron today and would bone up on the law overnight to see if he has the authority to limit his sentence to probation.

Citron, who pleaded guilty in April 1995 to six felony counts of defrauding depositors in the county-run investment pool and misappropriating their interest for the county, faces up to 14 years in prison and $10 million in fines.

But a San Diego probation officer earlier recommended in a pre-sentencing report that Citron receive no more than a year in county jail, probation and a fine.

Typical of the heartfelt support expressed for the man who served as the county’s elected treasurer and tax collector for 24 years was that of Gregory W. Sanders, a partner of the law firm Nossaman, Guthner, Knox & Elliott and a longtime friend and neighbor.

Sanders said he went to Citron’s home just days after Citron was forced to resign as treasurer and the county filed for bankruptcy in December 1994.

“Bob came down the hallway in his pajamas, all disheveled,” Sanders said, adding that the deeply distraught Citron said “he wanted to kill himself.”

But Sanders said it appeared to him that Citron’s exceptional regard for Terry, his wife of 41 years, “kept him from doing so.”

The prospect of serving seven years in prison, Sanders said, would be “tantamount to a death sentence. I think Bob would not survive seven years in jail and his wife wouldn’t either.”

The unusual two-day sentencing hearing began with psychologists telling the court Citron obviously suffered from brain impairment and was deteriorating rapidly when they examined him after the bankruptcy.

“Bob Citron was like an empty bottle on the ocean being pushed along by a wave,” said Dr. Colin Koransky, a clinical psychologist who examined and treated Citron and his wife. “When you looked out you saw the bottle but not the enormous force pushing it.”

Koransky said he referred Citron to three brain disorder specialists.

One of them, Elizabeth Stewart Parker, an Irvine neuropsychologist, told the court she was skeptical of the request by Citron’s attorney, David W. Wiechert, to examine his client.

“I don’t do a lot of forensic work,” Parker said. “I thought that this was a lot of hooey, and I was going to call a spade a spade.”

But Parker said Citron’s profoundly poor scores on standard psychological tests used to measure brain impairment changed her mind.

Citron scored among the lowest 5% of the population on a test measuring the ability to think, analyze and assimilate data. When she retested him a year later, Citron scored even worse.

Czuleger, who presided over the recent trial of former county budget director Ronald S. Rubino and watched Citron testify in that trial, asked Parker why it was that Citron’s brain deficits had not appeared to affect his recall and mastery of complicated securities transactions.

Whether the subject matter was “inverse floaters” or “reverse repos”--types of securities--Citron “knew it like a racehorse,” Czuleger said. “It was like a bell sounded and off he went.”

Parker responded that it isn’t uncommon for some patients with the type of apparent brain damage Citron has suffered to retain and recall subjects they have spent a long time mastering. It was also common, she said, for patients with such impairments to rely heavily on aides to compensate for their failing faculties.

That apparently was the sort of relationship Citron had in recent years with longtime assistant treasurer Raymond Wells, who told the court that sometimes no matter how often he explained certain financial concepts to Citron, he never understood them.

As a result, Wells said, Citron didn’t really comprehend how dangerous it was to pursue the investment strategies that eventually led to the collapse of the $21-billion county-run investment pool.

Wells testified that Citron had an extraordinarily close relationship with Merrill Lynch bond salesman Michael G. Stamenson, and that Citron relied heavily on the mammoth brokerage firm for advice--ignoring his own staff.

As they have throughout other court proceedings, a virtual battery of civil and criminal lawyers employed by Merrill Lynch monitored Citron’s sentencing.

Merrill Lynch corporate officials felt compelled to issue a statement from New York after the hearing, denying once again that the firm had acted improperly in any way.

Wiechert, Citron’s attorney, has asked the court to consider Citron’s frequent assistance to the district attorney and other agencies investigating the bankruptcy. And in a letter to the judge, county lawyers suing Merrill Lynch and seven other Wall Street firms for $3 billion cited Citron’s cooperation.

James W. Mercer, one of the lead attorneys for the county, testified that Citron is a potential witness in the county’s case and that his assistance has been “substantial, it is continuing, and to the best of my knowledge, he has been truthful.”

Citron was a “pigeon” in a scheme by Merrill Lynch to defraud the county and was “not aware of the [high] risks he engaged in,” Mercer said.

“Merrill Lynch [officials were] aware of material facts which they didn’t disclose to Mr. Citron,” Mercer said, adding that the investment pool’s financial collapse was caused in part by “a great deal of incompetence and dishonesty masquerading as expertise.”

Times staff writer Matt Lait contributed to this story.