Orange County Retrial Rejected

Closing their books on Orange County’s historic bankruptcy, prosecutors on Friday abandoned attempts to retry the only county official sentenced to prison for his role in the 1994 financial collapse.

State and county prosecutors said they made the joint decision after considering the costs of prolonging the six-year case against former Assistant Treasurer Matthew R. Raabe, whose 1997 conviction was overturned last year.

Prosecutors said that even if they won a second conviction, Raabe would be unlikely to face stiffer punishment than the 41 days he already spent in jail.

The decision means that of the six county officials charged with wrongdoing in America’s largest municipal bankruptcy, Raabe’s brief stint behind bars is the toughest punishment anyone will serve.

In his first interview since his indictment six years ago, Raabe said he had lost sleep thinking about having to defend himself in court all over again.

“There’d be times I’d wake up in the middle of the night and wonder what was going to happen,” said Raabe, who has since married and works for a software company in the Silicon Valley. “My wife and I are trying to move on with our lives. We’re very happy this part of it is over.”

Raabe, 45, denied doing anything illegal while working for the county, but said he was misled by his boss at the time, former county Treasurer-Tax Collector Robert L. Citron. Citron assured him, Raabe contended, that their handling of the county’s finances was proper.

The abrupt end of the bankruptcy investigation was met with resignation and bitterness.

Orange County Treasurer John M.W. Moorlach, while maintaining that Raabe could be convicted again, said he understood the decision to drop the case.

“I really can’t see the point in spending $1 million or $2 million to get a six-month sentence,” Moorlach said. “Raabe’s a broken man today. Let’s just put an end to this chapter and move on.”

But others condemned the decision. Anti-tax activist Bruce Whitaker, a vocal critic of the county during the bankruptcy, called the cost of retrying the case a drop in the bucket compared with the $1.6 billion lost in the financial collapse.

The decision caps a legal drama that cast Raabe as the prime target of the district attorney’s $4-million criminal probe of the bankruptcy.

At his trial, prosecutors argued that Raabe siphoned nearly $90 million in interest earnings from cities and school districts. The money was deposited into the county’s general fund for use by county government.

Jurors found Raabe guilty on five counts of securities fraud and misappropriating public funds, and a judge sentenced him to three years in prison.

But he was released on bail after less than two months in jail, pending his appeal. In November, the 4th District Court of Appeal overturned his conviction, citing an “overwhelming” conflict of interest that the district attorney’s office had in the case. Under former Dist. Atty. Mike Capizzi, they noted, the office had been directly affected by the bankruptcy. Last week, an Orange County judge tossed out the original indictment against Raabe on similar grounds.

Raabe’s attorney said his client will not sue the county or anyone else over the case.

The county will now have to return $10,000 that Raabe paid in fines after his original sentence, said attorney Gary M. Pohlson. And Raabe’s criminal record will be erased, he said.

Until now, the Raabe conviction had been a bright spot in the bankruptcy-related prosecutions.

Citron agreed to a plea bargain that allowed him to serve his nine-month sentence in a work furlough program.

Former county Budget Director Ronald S. Rubino pleaded no contest to one record-keeping violation under a deal that allowed his record to be erased after a year.