Robert L. Citron, the Orange County treasurer whose bad bets on exotic Wall Street investments resulted in what at the time was the largest municipal bankruptcy in U.S. history, died Wednesday. He was 87.
Citron died at St. Joseph Hospital in Orange of complications from a heart attack, said his wife, Terry Citron.
Until the 1994 financial collapse, Citron was a low-key bureaucrat who won praise from Orange County supervisors for earning much higher yields from the county’s complex array of investments than many other government agencies. His investment pools attracted funds from governments around the country as well as from schools, cities and public agencies.
The county declared bankruptcy Dec. 6, 1994, buffeted by losses that, when the final count was tallied, amounted to $1.64 billion. The county was forced to postpone repayments on bonds it had sold, ruining its credit rating, but eventually repaid its creditors in full. The bankruptcy sent shock waves through Wall Street and the municipal bond markets. It also made national headlines, with some asking how such a prosperous county could become insolvent.
A grand jury investigation would later find that the treasurer who over the years won so much praise for his investment skills relied upon a mail order astrologer and a psychic for interest rate predictions as the county’s treasury began to falter.
Citron pleaded guilty to six felony counts, including filing false statements to participants in the Orange County Treasury Investment Pool. His lawyer, David Wiechert, submitted medical testimony indicating that Citron was in the early stages of dementia.
Citron was sentenced to work in the county jail, sorting inmates’ requests for personal items by day before returning to his home in Santa Ana. He never spent a night behind bars but worked for months in the jail’s commissary. He remained on probation until 2002.
In a 1997 interview with The Times, Citron insisted that he was duped into making rashly imprudent investments by Merrill Lynch. He became a key witness in Orange County’s $2-billion lawsuit against the investment giant. The suit said that Citron was a “pigeon” for greedy brokers at the investment house.
Merrill Lynch maintained that the bankruptcy was Citron’s fault. It later settled the case with the county, paying $400 million.
A third-generation Californian, Citron was born in Los Angeles on April 14, 1925, according to public records, and grew up in Burbank. Because he had asthma as a child, his family moved out to the town of Hemet in the foothills of the San Jacinto Mountains. His father, Jesse, was a doctor who earned a measure of fame for being liquor-loving W.C. Fields’ doctor and weaning him off Scotch.
Citron rose through the ranks of the county’s treasury department to become county treasurer-tax collector, a post he held for 24 years. He was one of the few Democrats to hold countywide elected office in a region dominated by Republicans. He lived in Santa Ana, just a few miles from work, and was famous for his long hours. In a 1994 interview, his wife told The Times that the weekends were hardest for her husband because he could not go to work.
“He can barely stand the weekend at home,” she said. “He can’t wait to get back. I think he’d go crazy without that job.”
The bankruptcy tarnished Citron’s name as well as the county’s. County government slashed hundreds of jobs and cut budgets. Orange County’s repayment plan siphoned money from four county departments every year, affecting projects big and small.
Citron’s assistant, Matthew Raabe, was convicted of fraud and misappropriation and served 41 days in jail before the verdict was overturned. Taxpayers spent $1 million on his defense. The county’s financial director, Ronald S. Rubino, was tried on fraud and misappropriation charges, but a jury deadlocked in favor of acquittal. He pleaded no contest to one record-keeping violation under a deal that allowed his record to be erased after a year. County Supervisors Roger R. Stanton and William G. Steiner were indicted by a grand jury on grounds of failing to safeguard public funds. The indictment was later dismissed by an appeals court ruling that said failing to do their jobs wasn’t a crime.
Citron is survived by his wife of 57 years.
Times staff writers Shelby Grad and Robert J. Lopez contributed to this report.
