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Fraud Charges Dismissed in Case Tied to O.C. Bankruptcy

July 07, 2001|JACK LEONARD | TIMES STAFF WRITER

A judge on Friday threw out fraud charges against Orange County's former assistant treasurer, Matthew Raabe, for his role in the county's 1994 bankruptcy, abruptly derailing prosecutors' efforts to keep the long-running case alive.

The ruling comes eight months after an appeals court overturned Raabe's 1997 conviction on identical charges, the only jury verdict against a county official involved in the historic financial collapse.

Prosecutors vowed earlier this year to retry Raabe. But Judge Kazuharu Makino decided Friday instead to toss out the case, saying former Dist. Atty. Mike Capizzi had serious conflicts of interest when his office sought and won a grand jury indictment against Raabe in 1995.

The ruling brings to an end--at least for now--a legal drama that cast Raabe as the prime target of the district attorney's office in its two-year, $4-million criminal probe of the bankruptcy.

Frustrated, prosecutors said they will meet with Dist. Atty. Tony Rackauckas next week to weigh whether to take further legal action or drop the case. They could file a new set of charges against Raabe and argue that the office does not still have a conflict because Capizzi is no longer in charge. Another option is to ask the state attorney general's office to review the case.

But Raabe's defense lawyer expressed hope that prosecutors would end the legal battle, hailing the latest court ruling as a major victory for the former high-level county official.

"There's no reason to pursue this case anymore," said attorney Gary M. Pohlson. "Mr. Raabe has paid a dear price. This case is 6 years old, and hopefully the D.A.'s office will agree with me."

Raabe, who now lives in Northern California, was not in court Friday and could not be reached for comment.

At his 1997 trial, prosecutors successfully argued that Raabe siphoned nearly $90 million in interest earnings from local cities and school districts. The money was deposited into the county's general fund for use by county government.

Jurors found Raabe guilty on five counts of security fraud and misappropriating public funds. A judge later sentenced Raabe to three years in prison.

But the financial administrator was released from jail on bail after 41 days pending his appeal. That stint behind bars was the longest served by any county official convicted in the financial scandal.

In November, the 4th District Court of Appeal overturned his conviction, citing the "overwhelming" conflict of interest that the district attorney's office had in the case. Under Capizzi, they noted, the office had been directly affected by the bankruptcy.

On Friday, prosecutors argued that they should be allowed to retry Raabe on the same charges and that the original indictment should stand. Any conflict of interest on the part of prosecutors would not have swayed grand jurors who indicted Raabe, prosecutors argued.

But Makino disagreed. In a decision similar to the appellate court's ruling, the judge found the conflict of interest was enough to throw out the indictment.

Until recently, Raabe's case was a bright spot in the district attorney's mixed record on bankruptcy-related prosecutions.

Raabe's boss, former Treasurer Robert L. Citron, agreed to a plea bargain that allowed him to serve his nine-month sentence in a work furlough program in exchange for cooperation. Citron worked in a jail commissary during the day but was allowed to go home at night.

In the case of former county Budget Director Ronald S. Rubino, a jury deadlocked in favor of acquittal. He later pleaded no contest to one record-keeping violation under a deal that allowed his record to be erased after a year.

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