O.C. Bankruptcy Conviction Voided

The sole jury conviction stemming from Orange County’s historic 1994 bankruptcy was tossed out Wednesday by an appeals court, which ruled that former Assistant Treasurer Matthew R. Raabe did not receive a fair trial and that prosecutors had overwhelming conflicts of interest.

The ruling, if upheld, means that of the six county officials charged with misdeeds in America’s largest municipal bankruptcy, the most time anyone will probably spend behind bars is the 41 days Raabe served before being released on bail pending his appeal.

In a stinging opinion, justices said former Dist. Atty. Michael R. Capizzi should never have taken on the Raabe case because his office was directly affected by the county’s financial collapse.

Capizzi had an additional conflict, the justices ruled, because he served as one of three managers who ran the county in the weeks after the declaration of bankruptcy.

“A prosecutor is not disinterested if he has . . . an ax to grind against the defendant,” the justices wrote, citing language from a similar case.

A spokesman for the state attorney general’s office, which is handling the appeal, said it hasn’t decided whether to drop the case or ask the state Supreme Court for a review.

The ruling comes three years after a jury convicted Raabe on five felony counts for concealing the county’s risky investment strategy by siphoning nearly $90 million in interest earnings from local cities and school districts. A judge later sentenced Raabe to three years in state prison.

Raabe, who was released on $25,000 bail after serving less than two months of his three-year term, declined to comment. He relocated to Northern California after the trial.

Raabe was a prime target of the district attorney’s office in its two-year, $4-million criminal probe, and his conviction was considered a high point of the probe.

Raabe’s boss, former Treasurer Robert L. Citron, agreed to a plea bargain that allowed him to serve his nine-month sentence in a work furlough program in exchange for cooperation. Citron worked in a jail commissary during the day but was allowed to go home at night.

In the case of former county Budget Director Ronald Rubino, a jury deadlocked 9 to 3 in favor of acquittal; he later pleaded no contest to one record-keeping violation under a deal that allowed his record to be erased after a year.

Civil misconduct charges brought against two county supervisors and the auditor-controller were dropped after the same appeals court declared conflicts by Capizzi’s office. The attorney general’s office declined to pursue the charges.