Prosecution Expected to Present Final Witnesses Today in Raabe Case

Prosecutors in the trial of Matthew R. Raabe plan to close their case today, having presented nearly two weeks of testimony that the former assistant treasurer was responsible for the scheme to skim nearly $90 million from the accounts of outside investors in the county’s ill-fated investment pool.

At the end of trial proceedings Wednesday, Superior Court Judge Everett Dickey told the jury of six men and six women that the final prosecution witnesses will be called today.

The judge told jurors that, subsequently, they would not be needed in court until next Thursday, disclosing that he and the attorneys in the case need time to deal with legal issues.

The judge’s remark was an apparent reference to a motion the defense plans to file, claiming the case should be dismissed before it goes to a jury because the prosecution presented insufficient evidence. Such motions are common and are rarely granted.

The prosecution’s calling of its final witnesses today means the trial is on course to be completed earlier than its mid-May estimate.

Raabe, 40, is charged with five felony counts of misappropriating public funds and securities law violations for allegedly lying to investors about the pool’s soundness.

The prosecution contends that Raabe diverted interest earnings from the pool into the county treasury to hide Citron’s risky but sometimes lucrative investment strategy.

Cities, schools and other government agencies might have withdrawn their savings from the county’s $7-billion municipal investment pool had they known about the risks, Deputy Dist. Atty. Matthew Anderson has asserted.

Raabe and his attorneys have denied the charges. During his cross-examination, defense attorney Gary Pohlson contended that Raabe was following the orders of his boss, former Treasurer-Tax Collector Robert L. Citron, who pleaded guilty to the same five charges that Raabe faces and is serving a one-year jail sentence in a work-release program.

Pohlson also claimed that the treasurer’s office had “smoothed” or “spread” interest for years to avoid highs and lows in the yields and that the procedure was not deemed improper. In addition, the defense is arguing that the investment pool operated like a mutual fund and that Citron, acting as the fund’s manager, had the authority to determine yields paid to pool investors.

So far, prosecutor Anderson has called 20 witnesses, including Raabe’s chief accuser, Citron, who testified that he approved Raabe’s idea to skim interest earnings belonging to the pool’s outside investors.

Other witnesses included some of Raabe’s subordinates in the treasurer’s office, who testified that he instructed them to divert some interest earnings from the investment pool to a county reserve account. The remaining earnings were distributed to the pool participants, they said.

On Wednesday, officials from several cities, school districts and other agencies testified that they did not know they were not receiving all their interest earnings and that they might have been alarmed if they knew the pool was earning higher interest rates than were being reported.

Anderson also played tape recordings of two presentations Raabe made to the Orange County Water District in 1994. At those meetings, Raabe tried to dispel concerns that the pool might incur any real losses.

“This last year was, we believe, a very successful year for our investment fund,” Raabe told worried water district officials just one month before publicly announcing a staggering $1.6-billion drop in the pool’s value and the decision to liquidate most of its holdings. “We don’t anticipate right now that we’re ever going to have to liquidate anything.”