Lawyers Make Final Appeals to Raabe Jury

The criminal trial of former Orange County Assistant Treasurer Matthew R. Raabe came to a close Tuesday with prosecutors arguing that he devised the plan to steal millions from cities, schools and special districts, and his attorneys countering that the money wasn’t really stolen, merely held in reserve.

Citing a litany of documents, tape recordings and testimony presented during Raabe’s trial, Assistant Dist. Atty. Jan J. Nolan told jurors there was little doubt that Raabe masterminded the scheme to skim money from the accounts of depositors in the ill-fated Orange County Investment Pool.

But defense attorney Gary Pohlson argued that his client did nothing wrong, because the county alone had the right to determine the earnings due the 187 cities, school districts and local agencies with money in the county-run pool.

“They need to blame someone for the bankruptcy,” Pohlson said, adding that Raabe was being made a “scapegoat” for the county’s financial collapse in December 1994.

The jurors--six men and six women--are expected to begin deliberations today, Raabe’s 41st birthday, after receiving instructions from Superior Court Judge Everett W. Dickey.

Raabe is charged with five felonies that include lying to the outside investors about the safety of their deposits in the county-run investment pool, and illegally skimming some of their earnings into a county account. If convicted, he faces up to 14 years in prison and $10 million in fines.

During a trial spanning five weeks, the prosecution contended that Raabe sought the approval of his boss, former Treasurer-Tax Collector Robert L. Citron, to divert nearly $90 million of the cities’ and schools’ earnings to plug a large shortfall in the county’s 1993 budget.

On Tuesday, Nolan told jurors that Raabe and Citron wanted to be “heroes to everybody” by “taking from the rich and giving to the poor.”

Raabe, she said, also had another purpose: to conceal the fact that Citron was for a time earning double-digit interest rates, which could have tipped outside depositors to the risky nature of his investments.

The investment pool that Citron ran had lost $1.64 billion by early December 1994, prompting the county to declare the nation’s largest municipal bankruptcy.

Citron and Raabe were eventually charged with crimes that were uncovered as a result of a financial post-mortem following the bankruptcy filing.

Citron pleaded guilty to the same crimes that Raabe was charged with and is serving a one-year jail sentence in a work-release program that has him doing clerical work for the jail during the day and spending nights at his Santa Ana home.

Nolan, who took over the prosecution after Senior Deputy Dist. Atty. Matthew Anderson had to quit the case to deal with a family emergency, portrayed Raabe as an official who had considerable influence in the treasurer’s office.

He was college-educated, a certified public accountant, a spokesman for the treasurer’s office, and someone Citron relied upon, she said.

“Raabe was probably the smartest man in the treasurer’s office,” Nolan said.

Anticipating defense arguments that Raabe was merely putting the money aside in a reserve for the benefit of pool investors, Nolan said there was not a scrap of evidence to suggest that.

Nolan also noted that Ernie Schneider, the county’s former chief administrator, testified that when county officials were trying to assess the financial damage just before the bankruptcy filing, Raabe refused to say how much of the skimmed money in a county treasury account belonged to pool investors.

Instead, Raabe said that he would write the number on a piece of paper and give it to his lawyer.

“Consciousness of guilt, perhaps?” Nolan suggested.

Pohlson opened his closing argument by suggesting that the district attorney’s office had based its prosecution on a false assumption that the fund manager, Citron, could not set the rate of return.

Because the county alone was held liable for the billions of dollars borrowed in the Citron-run pool, it “fits that he who takes the risk get the reward,” the defense lawyer said.

“This is a good, honest, hard-working man who’s trying to do the best he can,” Pohlson said, noting that several prosecution witnesses had attested to his client’s “good character.”

Pohlson also sought to combat testimony by Citron that Raabe proposed the diversion scheme.

“It doesn’t make any difference whose idea it is,” he said. “They all believed it was lawful.”

The defense attorney took an unusual position in defending Citron, who had testified against Raabe, saying he felt sorry for the former treasurer who had worked hard to earn “this county millions of dollars.”

“Citron pleaded guilty to crimes he didn’t commit,” Pohlson said. “He should have been sitting next to Mr. Raabe defending himself.”

Pohlson urged jurors to consider a legal memorandum from Deputy County Counsel Robert Austin that it might have been legal to set aside interest earnings in a reserve pool.

“There has never been a more not-guilty person than Matthew Raabe,” Pohlson said as he ended his closing argument.

In her rebuttal, Nolan sought to undercut the defense’s contentions that the treasurer’s office could set the interest rates. She produced documents on which Raabe had stated that interest was distributed to pool investors “based on their average daily balances.”

The law clearly required Raabe to distribute all of the interest and he didn’t follow it, Nolan said, asking jurors to return guilty verdicts on all five counts.