Citron Sentenced to Year in Jail for Role in County Bankruptcy

After sternly scolding him for “gambling with public money,” a judge Tuesday sentenced Robert L. Citron, the once-revered but now disgraced former Orange County treasurer, to one year in County Jail and fined him $100,000 for skimming interest earnings from schools, cities and small agencies into a special county account.

“You failed in your oath, you failed in your obligations,” Superior Court Judge J. Stephen Czuleger told Citron before pronouncing his sentence. “Visiting vengeance on you would be very easy.”

Instead, Czuleger acknowledged Citron’s remorse, his cooperation with authorities, his frail health and his wife’s total dependence on him before handing down--and then setting aside--a six-year state prison term for the man blamed for the $1.64 billion in securities trading losses that pushed the county into bankruptcy in December 1994.

Only moments before, Citron stood before the judge, his hands shaking, his voice trembling, and said, “My life is in your hands.”

If the 71-year-old former official qualifies, authorities said, he might be eligible for a work furlough program that would allow him to serve part of his jail sentence at home.

But Orange County Sheriff’s Lt. Ron Wilkerson said that Citron must first be evaluated by the county’s medical staff and deemed fit before he could be assigned to the program, under which county inmates clean offices, pull weeds and pick up litter.

Even if he doesn’t qualify for work furlough, Citron could be back at home after spending roughly five months in jail, because of good time credits and early releases forced by overcrowded jail conditions.

Citing Citron’s lack of a criminal record and his nonviolent offense, Municipal Judge Pamela L. Iles said, “I’m sure they could find something for him to do. It depends on how brain-damaged he is.”

Citron was ordered to report to the jail on Jan. 10.

He will continue to receive his $89,000-a-year county pension, although Czuleger ordered Citron to pay as much as $11,000 to reimburse the county for his incarceration and his probation supervision, in addition to the fine.

In comments from the bench, Czuleger noted that Citron’s lawyer had called his client’s case a tragedy--a view that the judge did not share, saying, “tragedy implies [events] completely beyond the control of the individual. But there was a time when these actions were in the defendant’s control.”

Citron listened attentively, glancing over his shoulder at his wife, Terry, who cried softly while Czuleger said that he would substitute a year in jail for the six-year prison term, and ordered the former treasurer to serve five years of supervised probation and perform 1,000 hours of community service.

Then, the Citrons and a few friends left through a judge’s office, avoiding the jumble of reporters and television crews who had crowded the courtroom, along with attorneys and county officials anxious to learn the fate of the quirky man with a penchant for turquoise, Chryslers and the occult.

Reached later at his home, Citron said he had no comment on his sentencing.

After the hearing, Citron’s lawyer, David W. Wiechert, said that Czuleger, with whom he once worked in the U.S. attorney’s office in Los Angeles, had sent a strong message that “the right thing to do is admit your crimes. . . . [Citron] did all he could, coming in on the first day to admit his guilt.”

His sentencing closes a colorful chapter in the largest municipal bankruptcy ever, a story that began to unfold in late November 1994 with the discovery of massive losses in the $21-billion investment pool that Citron managed.

Within days of that discovery, panicked county officials went to Citron’s Santa Ana home and hastily talked him into resigning the treasurer-tax collector post he had occupied for 24 years. Shortly thereafter, one of the nation’s wealthiest counties filed for bankruptcy.

In April 1995, Citron pleaded guilty to six felony counts of defrauding and misappropriating interest from the accounts of the 200 agencies, school districts and municipalities that had deposited their reserves in the county-run investment pool. To this day, he remains the only public official connected to the financial calamity to openly admit any wrongdoing.

Ronald S. Rubino, the former county budget director, recently pleaded no contest to charges that he falsified public records, a misdemeanor, after his trial this summer ended in a hung jury that had voted 9 to 3 for his acquittal.

And Citron’s former assistant, Matthew R. Raabe, is scheduled to go on trial in January on the same charges Citron faced. Also still pending are civil accusations to remove from office two supervisors sitting at the time of the bankruptcy, Roger R. Stanton and William G. Steiner, as well as Auditor-Controller Steve E. Lewis.

Over the last two years, Citron has sat through dozens of interviews with investigators from the county as well as from federal agencies, testified several times before grand juries and at Rubino’s trial, and assisted county lawyers now suing the brokerage firm of Merrill Lynch & Co. and others for $3 billion.

Citron’s sentencing, delayed since last December, became a sideshow to the bankruptcy as details of his life began to emerge. Instead of the esteemed county treasurer with uncanny investment savvy he was once thought to be, Citron was exposed as a college dropout with the math skills of a seventh grader, and an abject failure in business who had lucked into a job with the county collecting delinquent taxes.

Psychologists testified that his ability to think and reason has been in a steady decline for years and he ranks in the lowest 5% of the population on standard tests that measure the deterioration of frontal-lobe brain functions.

For more than an hour Tuesday, Wiechert portrayed Citron as a widely misunderstood figure easily swayed by an ambitious underling, Raabe, and an aggressive securities salesman, Michael G. Stamenson of Merrill Lynch.

It defied reason, Wiechert said, to believe that a man with Citron’s obvious physical and mental limitations could become “the largest purchaser of securities in the world” without having been manipulated by others.

Wiechert said that not a single witness had come forward to urge that Citron be sent to jail and that remarkably no one wrote to the judge urging his incarceration. Nonetheless, the Orange County district attorney’s office sought a seven-year prison term and a $400,000 fine, a sentence Wiechert denounced as “ludicrous.”

In pleading for a probation sentence, Wiechert asked the judge, “Isn’t this the classic case [for leniency]? This is a frail man in the twilight of his years.”

“He’s a pariah,” Wiechert said. “Even poverty organizations wouldn’t accept him” to do community service, until a Santa Ana charity finally took him in as a volunteer last February.

For the most part, Czuleger followed the recommendation of a San Diego probation officer who earlier recommended that Citron receive probation and no more than a year in jail.

Responsibility for preparing the pre-sentencing report was passed off to the San Diego Probation Department after concerns were voiced that bankruptcy-related budget cuts suffered by the Orange County Probation Department might raise questions about its impartiality.

According to the 36-page probation report, Citron admitted his guilt but said he didn’t realize his actions were illegal. He repeatedly blamed Raabe for diverting more than $100 million in interest earnings from the pool investors to the county.

In the report, several Orange County officials voiced the same opinion about Citron: He was in way over his head as treasurer.

Citing Citron’s age, poor health, remorse and early admission of guilt, the report recommended probation and no more than one year in County Jail.

After the sentencing, Deputy Dist. Atty. Matthew Anderson, who presented the prosecution’s stiffer recommendation, said it was “hard to question” the judge’s decision. “ . . . The judge is an excellent judge. He reasoned this out appropriately.”

While Anderson said he felt seven years in state prison would have been more appropriate for the man who brought Orange County to financial ruins, he added, “It would be wrong to characterize this as a slap on the wrist.” Under the circumstances, he added, “this was a very strong sentence.”

Even those victimized by Citron’s deeds spoke kindly of the ex-treasurer after the sentencing.

Patrick C. Shea, who represented most of the government agencies who had been swindled by Citron, said none of his clients wanted to see Citron punished.

“Uniformly, the officers of these agencies had no interest in the former treasurer spending time in jail,” Shea said. “My clients would not receive a penny more” by locking Citron up.

With his early guilty plea and cooperation, Shea said, Citron “bought himself a lot of goodwill” among the pool investors.

Rodney M. Perlman, a Los Angeles lawyer who represented Rubino, called Citron’s sentence a “a measured response from the court. I think it is a tragedy for all involved that a man with his background and public service finds himself in this situation,” Perlman said.

“He never acted for personal gain,” Perlman continued. “He always thought he was acting in the best interest of the people in the county.”

But attorney William Mitchell, a spokesman for the Orange County Chapter of Common Cause--a government watchdog organization--thought the sentence was too soft.

“Given the enormity of the deception and the loss of social services for hundreds of people, this is no punishment at all,” Mitchell said, adding that the sentence sends a bad message.

But the judge said he thought county residents would be better served if Citron performed community service rather than sat behind bars.

“Certainly his life is all but destroyed,” Czuleger said. “He bears ultimate responsibility. If he were not there, what happened could not have occurred.”

The Full Story

* MITIGATING FACTORS: Citron’s remorse, cooperation with investigators and, at 71 and frail, his age influenced sentence. A26

* JUDGING THE JUDGE: J. Stephen Czuleger is praised by prosecutors and defense attorneys alike for his fairness and independence. A27

* NEXT CASE: Top Citron aide Matthew Raabe, whose trial begins in January, is the only ex-official still facing criminal charges. A28

* PARSING SENTENCE: Columnist Dana Parsons isn’t sure that Citron got what he deserved, or deserved what he got for that matter. B1