SANTA ANA — They were like "Siamese twins," associates would joke; the bookish Orange County treasurer and the brash Bel-Air financial adviser, an odd couple linked by a series of roller-coaster bond deals that produced high returns and even higher risks.
But now the ride is over, and the relationship between Robert L. Citron and Jeff Leifer--seen as profitable by some, exclusionary by others--is drawing closer scrutiny.
Federal agents have subpoenaed records from Leifer's Santa Monica-based firm, Leifer Capital, and they are said to be focusing on his dealings with the county as part of their investigation.
Records and interviews show that Leifer, in his role of advising Orange County officials on how to structure their debt, has earned more than $1 million since 1990--much of it through work that was never put out to bid.
Supporters say the financier is one of the best in his field, but his close contacts to Citron, three decades his senior, have spurred complaints from competitors about Leifer's relationship with the county.
When Leifer was forced to resign from his public finance job at First Interstate Bank in Los Angeles about six years ago, Citron placed an angry call to Leifer's bosses, threatening to withdraw county funds from the bank, sources said. Citron did not carry out his threat, the sources said.
"Leifer and Citron were really as snug as a couple of bugs in a rug," said Timothy J. Schaefer, senior vice president with Evensen Dodge Inc., a financial advising firm in Costa Mesa.
"And it's been going on for a long time. My sense is that Jeffrey used Citron to increase his business with other Orange County agencies. His relationship with Citron pre-qualified him for a lot of the business he did in the county," he said.
In a brief interview, Leifer said he had not done anything wrong and that his advice to the county had nothing to do with its current financial troubles. He has not been accused of wrongdoing or mismanagement in connection with Orange County's financial debacle.
Citron also refused to discuss Leifer's work.
Leifer, 38, is a fast-talking entrepreneur equally at home crunching bond numbers or hobnobbing with Hollywood celebrities. He is also known for his astute politicking, serving as president of his class at UC San Diego, founding a young scientists group in Washington and helping in fund raising for environmental causes.
But the Yale management school graduate, unaccustomed to the type of exposure usually reserved for major Wall Street players, is clearly uncomfortable with his new position in the spotlight and has asked a press agent to handle all inquiries.
County officials and Leifer say he never played a part in actual investment portfolio decisions; rather he helped decide how to structure the debt and solicit bids from Wall Street underwriters.
Leifer's relationship with Citron dates back to the early 1980s, when Leifer was a young public financier with the now-defunct Los Angeles firm of Ehrlich-Bober & Co. Executives there split up the list of potential clients among government officials to contact for public financing contracts, and Leifer drew Citron's name. It proved a profitable stroke of luck.
Citron began using Leifer as his financial adviser on bond projects in the early 1980s. The relationship continued even after the Los Angeles native left Ehrlich-Bober to go to First Interstate Bank and then to start his own financial services firm in 1989.
Citron reported receiving $200 in dinners from Leifer in 1990 and 1991, and in the midst of a tough reelection campaign earlier this year, received a $1,000 contribution from him. Both donations were legal under state and federal laws.
Leifer is a fixture in municipal finance circles in California, serving on the state panel that advises agencies on debt sales. He counsels local governments on the types of bonds they need to cover various capital and operating costs and, in return, is paid fees that reach $100,000 or more, depending on the complexity and duration of the work, officials said.
Leifer Capital has served as financial adviser for about 70 government bond issues around the state in the last four years, records show. Orange County has been the cornerstone of his operation, issuing nearly two dozen notes worth about $1.7 billion under Leifer's guidance, according to Securities Data Co., a New Jersey-based company that tracks the bond market.
He has managed all this with a staff of five professionals crammed into small, nondescript suite in Santa Monica where a closet doubles as one of the offices.
Complaints have circulated for years that he was paid higher fees from Orange County than the standard rate in the industry. But it is difficult to determine whether the complaints are valid because of Leifer's informal relationship with the county.