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ORANGE COUNTY BANKRUPTCY / Merrill Lynch Criminal Investigation
Settlement

Voices

June 20, 1997

"It's a total sell-out. . . . This settlement establishes a woeful precedent. The district attorney's office aggressively pursued and caused to be charged six county officials for their role in the events surrounding the county's bankruptcy, none of whom had personally profited from their actions. Yet it has given Merrill Lynch a pass for an amount that is mere pocket change for the broker, even though Merrill Lynch profited more than any other firm from the county's investment purchases and financing."

David W. Wiechert, attorney for former County Treasurer-Tax Collector Robert L. Citron

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"Merrill Lynch would not pay out $30 million if they didn't feel that they were in trouble. . . . Any time you can get money coming into the county we're happy. We just don't want to give the impression that this thing is over, because it's only beginning. This is just a token payment from Merrill Lynch for the crimes it committed against the county."

Jim Silva

Orange County Supervisor

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"It's the first time Merrill Lynch in any way is acknowledging responsibility and the first time Merrill Lynch is starting to reimburse the county for money that they lost due to Merrill Lynch's misconduct. I think it portends an eventual settlement of this dispute in the civil action. . . . The people who were the most responsible really haven't been held accountable. Why should Merrill Lynch be held to a harder standard? The people who were elected to do the job weren't. These were business people. They did something wrong. In business, you don't go to jail. You pay money."

Bill Mitchell, former chairman of Common Cause

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The agreement "strengthens Merrill Lynch's hand in the civil litigation with Orange County. It doesn't face all the bad publicity. It now has the ability to claim that this is just a matter of dollars and can present the appearance, and possibly the reality, of vigorously litigating this."

Geoffrey Miller, professor of commercial law at New York University

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"It's a departure from the usual behavior to vindicate justice. If you can't find probable guilt in seeking an indictment, you go home. You do not go home with $30 million in your pocket. Once you have an indictment, it's possible to have a plea bargain to the extent they entail some acknowledgment of responsibility. In this case, there is substantial money but not the slightest acknowledgment of responsibility. The public law enforcer has a greater responsibility. It is unusual for a criminal law enforcer to accept this halfway house. . . . In lieu of an acknowledgment, [Capizzi] has agreed to allow Merrill to pay a fine."

John Coffee, securities law professor at Columbia University Law School in New York

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