SANTA ANA — Former Orange County Budget Director Ronald S. Rubino testified in his own defense Wednesday and insisted that he knew nothing of a scheme to steal nearly $100 million in investment pool earnings belonging to cities, school districts and other agencies.
Rubino said it never occurred to him to question former county Treasurer Robert L. Citron about the money transferred into the county's Economic Uncertainty Fund, which provided a new source of revenue to help fill a shortfall in the county government's budget.
"I trusted him," Rubino said of Citron. "I would not want to be second-guessing an elected official. I had total confidence in Mr. Citron."
Rubino, 44, testified that if he had suspected any wrongdoing, he would have reported it to his boss, former Chief Administrative Officer Ernie Schneider.
But Rubino said he "didn't think [Citron] was doing anything wrong," even after the treasurer reported an unexpected 400% increase in the county's 1993 investment pool earnings. Instead of the $25 million he had previously estimated, Citron subsequently reported that the county treasury would receive $125 million that year.
Prosecutors contend that the unexpected $100-million windfall was credited to the county after Citron and Rubino agreed to distribute 7.85% in earnings to the 200 outside agencies with money in the county-run investment pool--not the 11.5% that the $7-billion pool was actually earning at the time.
Citron's wrong-way bets on interest rates caused the investment pool to suffer a $1.64-billion loss in the fall of 1994, triggering the largest municipal bankruptcy in U.S. history. The diversions were unearthed in an ensuing investigation.
Rubino's is the first criminal trial stemming from the county's bankruptcy. Citron is awaiting sentencing after pleading guilty to six felony counts of misappropriation and fraud.
Citron, who was called as a prosecution witness, testified that he never told Rubino about the illegal diversions.