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Trial of Raabe, Ex-Citron Aide, to Begin Today

March 24, 1997|DAVAN MAHARAJ | TIMES STAFF WRITER

SANTA ANA — Mastermind or scapegoat?

The outcome of The People vs. Matthew R. Raabe will hinge on that question.

When Raabe's trial opens here today, a jury of six men and six women will hear sharply different depictions of the role he played more than two years ago in the Orange County treasurer's office as the county careened toward the nation's largest municipal bankruptcy.

Raabe, prosecutors contend, was among the architects of a nefarious scheme to conceal his boss' exceedingly risky but sometimes enormously lucrative investment strategy, by skimming $100 million in excess interest earnings that might have alarmed the cities, schools and other government agencies that kept their savings in the county's $7-billion municipal investment pool.

His defense attorneys, however, will portray Raabe as the unsuspecting underling who merely carried out the instructions of his boss, convicted Treasurer-Tax Collector Robert L. Citron.

If the prosecution's view prevails, Raabe, who is so broke that his attorneys are being paid with taxpayers' money, faces the possibility of $10 million in fines he could hardly pay, and 14 years in prison.

And any prison sentence for Raabe would be the first--as well as the last--meted out to any of the officials caught up in a $2.5-million bankruptcy investigation conducted by the office of Dist. Atty. Michael R. Capizzi. Another $2 million in taxpayers' money has gone to hiring defense attorneys for those charged.

The other two officials who faced the possibility of prison, Citron and former Budget Director Ronald S. Rubino, have both avoided spending any time behind bars. Citron was sentenced to a year in jail but is serving the term in a work-release program that lets him spend his nights at home. Rubino got two years of unsupervised probation and must perform 100 hours of community service.

Citron pleaded guilty last year to the same six felony counts that Raabe faces: misappropriation of public funds and lying to investors in the county pool.

Rubino pleaded no contest to one count of falsifying public records. Prosecutors were forced to work out a plea bargain with Rubino after his trial last September ended with the jury deadlocked 9 to 3 in favor of acquittal.

Robert Pugsley, a professor at Southwestern University School of Law, opines that Capizzi's prosecutors "will be looking for a more hard-hitting result this time."

The trial that begins today is a far cry from the future that Iowa native Raabe envisioned as a child when he moved to Orange County with his family in 1960. Raabe appeared to be on the fast track when he got a job with the county's auditor-controller in 1984, the year he graduated from Cal State Fullerton with a degree in business administration.

He quickly worked his way up in the bureaucracy at the auditor-controller's office, moving a few years later to the office of the treasurer-tax collector. By the time he became assistant treasurer, Raabe was widely viewed as the heir-apparent to Citron, the longest serving and best entrenched county official.

To many colleagues, Raabe already was the de facto treasurer. Because Citron had a speech impediment and shied away from public events, it was Raabe who gave the pitches to potential pool investors, assuring them that the county's investment fund was a sound, safe place for their cash.

And when the investment pool suffered $1.64 billion in losses in December 1994, forcing the county into bankruptcy, it was to Raabe that desperate county officials turned for help in sorting out the financial mess.

When Citron was forced to resign on Dec. 4, 1994, Raabe was appointed by the Board of Supervisors to take Citron's place. Only three months later, however, he was fired by then-Chief Executive Officer William J. Popejoy after the county's outside financial advisors discovered the misappropriation of millions of dollars in interest belonging to pool investors.

In May 1995, Raabe was hit with a grand jury indictment charging him with multiple felonies: embezzlement for his part in the interest-skimming operation and violations of securities laws for misrepresentations he allegedly made to outside pool investors.

Since then, Raabe's life has been a shambles. His lawyers say that at one time he was seeing a psychiatrist four times a week and has been taking medication for depression.

While Raabe's attorneys have been plotting his defense, investigators for the district attorney have been stitching together their case against him.

Working from "the bunker," a windowless chamber one floor beneath the County Courthouse, investigators have been poring over reams of documents to isolate Raabe's role in the interest-diversion scheme.

Prosecutors secured the indictment against Raabe after several witnesses testified that he repeatedly misled investors about the soundness of their pooled investments while helping to skim some of their interest earnings into a county account.

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