Closing their books on Orange County's historic bankruptcy, prosecutors on Friday abandoned attempts to retry the only county official sentenced to prison for his role in the 1994 financial collapse.
State and county prosecutors said they made the joint decision after considering the costs of prolonging the six-year case against former Assistant Treasurer Matthew R. Raabe, whose 1997 conviction was overturned last year by an appeals court.
Prosecutors said that even if they won a second conviction, Raabe would not likely face stiffer punishment than the 41 days he already spent in jail.
"It would not be in the best interest of the people of this community to repeat this entire process," Dist. Atty. Tony Rauckackas said in a prepared statement.
The decision means that of the six county officials charged with wrongdoing in the nation's largest municipal bankruptcy, Raabe's brief stint behind bars is the toughest punishment anyone will serve.
Raabe said he felt enormous relief at the news. In his first interview since his indictment six years ago, he said he had lost sleep thinking about having to defend himself in court all over again.
"There'd be times I'd wake up in the middle of the night and wonder what was going to happen," said Raabe, who has since married and works for a software company in Silicon Valley. "My wife and I are trying to move on with our lives. We're very happy this part of it is over."
Raabe, 45, denied doing anything illegal while working for the county but said he was misled by his boss at the time, former county Treasurer-Tax Collector Robert L. Citron. Citron assured him, Raabe contended, that their handling of the county's finances was proper.
The abrupt end of the district attorney's bankruptcy investigation was met with a mixture of resignation and bitterness.
Orange County Treasurer-Tax Collector John M.W. Moorlach said Raabe could be convicted again, but he understood the decision to drop the case.
"I really can't see the point in spending $1 million or $2 million to get a six-month sentence," Moorlach said. "Raabe's a broken man today. Let's just put an end to this chapter and move on."
But others condemned the decision. Anti-tax activist Bruce Whitaker, a vocal critic of the county during the bankruptcy, called the cost of retrying the case a drop in the bucket compared to the $1.6 billion lost in the financial collapse.
"Somebody had be held accountable, and now it appears that no one will be," Whitaker said.
The decision caps a legal drama that cast Raabe as the prime target of the district attorney's $4-million criminal probe of the bankruptcy.
At his trial, prosecutors 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 securities fraud and misappropriating public funds. A judge later sentenced Raabe to three years in prison.
But the financial administrator was released on bail after less than two months in jail, pending his appeal. In November, the 4th District Court of Appeal overturned his conviction, saying the district attorney's office had an "overwhelming" conflict of interest in the case. Under then-Dist. Atty. Mike Capizzi, they noted, the office had been directly affected by the bankruptcy.
Last week, an Orange County judge tossed out the original indictment against Raabe on similar grounds.
Frustrated, prosecutors said they spent this week going over the case in painstaking detail. Eventually, they said, the only practical option was to discard the case altogether.
"I'm sure there will be people who aren't happy with this decision no matter how we proceeded," said district attorney spokeswoman Tori Richards. "In an ideal world, we wouldn't have had it overturned by the court of appeal."
Raabe's attorney said his client will not sue the county or anyone else over the case.
The county will now have to return $10,000 that Raabe paid in fines following his original sentence, said Raabe attorney Gary M. Pohlson. And the former county official's criminal record will be scrubbed clean, Pohlson said.
Until now, the Raabe conviction was a bright spot in the district attorney's mixed record on bankruptcy-related prosecutions.
Citron agreed to a plea bargain that allowed him to serve his nine-month sentence in a work furlough program in exchange for cooperation. His jail commissary job allowed him to go home at night. He kept his county pension.
In the case of former county Budget Director Ronald S. Rubino, a jury hung 9 to 3 in favor of acquittal; Rubino later pleaded no contest to one record-keeping violation under a deal that allowed his record to be erased after a year.
Civil misconduct charges brought against two county supervisors and the auditor-controller were dropped after the same appellate court declared conflicts by Capizzi's office. The attorney general's office declined to pursue the charges.