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Ex-Official Says Rubino Urged Illicit O.C. Fund

Bankruptcy: Former administrator Ernie Schneider praises work of one-time budget director on trial.


SANTA ANA — The county's former top administrator testified Wednesday that ex-Budget Director Ronald S. Rubino was the county official who proposed setting up the special treasury account where supposedly surplus investment pool earnings would earn extra income for the county.

But Ernie Schneider, who was fired from the county's top job two months after the county declared bankruptcy, defended Rubino's proposal as "the prudent and rational thing to do."

Said Schneider: "Had Ron not come to me with that suggestion, I would have been disappointed."

Schneider was called as a prosecution witness in the trial of Rubino, who is charged with two felony counts of aiding and abetting then-Treasurer-Tax Collector Robert L. Citron in the illegal diversion of millions of dollars from the investment pool accounts of cities, school districts and other government agencies.

Citron has pleaded guilty and is awaiting sentencing. He is expected to testify against Rubino in the next few days.

Although Schneider was fully aware of the plan to create the county's so-called Economic Uncertainty Fund--and welcomed the extra income it provided for the county's general fund--he has always maintained he was unaware that the money pumped into the fund was illegally misappropriated from the accounts of other investors in the county-run investment pool.

For the Record
Los Angeles Times Thursday August 22, 1996 Orange County Edition Metro Part B Page 2 Metro Desk 2 inches; 46 words Type of Material: Correction
Rubino trial--A headline in the Metro section on Aug. 15 mischaracterized the testimony of former county official Ernie Schneider. He testified that ex-Budget Director Ronald S. Rubino proposed setting up a special treasury account where supposedly surplus investment pool earnings would earn extra income for the county.

The prosecution contends that Rubino was an architect of the illegal diversion scheme. Rubino's attorney, Rodney Perlman, has argued during the trial that his client was a mid-level county employee who was simply following county policies and his bosses' orders.

Rubino's is the first criminal trial stemming from the financial collapse of the investment pool and the county's subsequent declaration of bankruptcy in December 1994.


Schneider was asked by Assistant Dist. Atty. Jan J. Nolan, the prosecutor in the case, to explain why he didn't question the fact that Citron had reported $125 million in surplus interest earnings budgeted for 1993.

"Ron told me that Bob [Citron] did it, [and] we just left it at that," Schneider said. "For 33 years, [Citron] consistently performed above expectations, [and he was accountable] to no one but the electorate. I didn't ask him how he did it."

Schneider said he concurred with Rubino's proposal to place the surplus interest in the Economic Uncertainty Fund, because the plan meshed with county policy that "one-time money" should not be spent on programs that needed a "constant revenue stream."

Under cross-examination by Perlman, Schneider spoke glowingly of Rubino, whom he described as a "friend," and an "excellent employee" who was "creative and innovative."

Schneider said Rubino had saved the county millions of dollars, but that both he and Rubino had made some enemies in county circles.

Schneider testified that Sheriff Brad Gates had asked him to fire Rubino after the budget director recommended against building a jail the sheriff wanted.

Earlier on Wednesday, Superior Court Judge J. Stephen Czuleger told jurors that the trial will be shortened by about two weeks because about 130 investment pool participants would no longer be required to testify.

According to the judge, the prosecution and defense attorneys agreed that, if the witnesses were called, they would testify that they did not consent to have their interest earnings diverted into the county's Economic Uncertainty Fund. They would also testify that they had no contact with Rubino and that Citron had a good reputation as a financial manager, according to the stipulation.

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