Orange County Investments

The current head of Merrill Lynch & Co. not only knew of the high investment risks Orange County was taking two years before its bankruptcy, he also helped devise a company plan for dealing with then-Treasurer Robert L. Citron, according to sworn depositions made public this week.

Luis Villalobos, who founded Tech Coast Angels, an Orange County angel investment group that expanded throughout Southern California to become one of the biggest in the nation, has died. He was 70. Villalobos died Thursday at St. Joseph Hospital in Orange because of a lung condition, said his wife, Ora-Zoe Villalobos. The idea behind Tech Coast Angels was to "make early-stage investments that will make money for us as individual investors," said John Kensey, a consultant who attended Harvard Business School with Villalobos and was one of TCA's founding members.

A major credit rating agency criticized the county's fiscal recovery plan in a report Friday that said the plan would not prevent the county from defaulting on its bonds and includes no solid alternatives if parts fall through. "Even if all of the elements of the announced recovery plan are put into place as expeditiously as possible, it appears impossible for the county to make full and timely debt service payments this summer," the 10-page report by Moody's Investors Service said.

The success of Orange County's post-bankruptcy investments has led Treasurer John M.W. Moorlach to create a new investment fund that will earn a lower rate of return needed to comply with federal tax rules. Federal regulations say the county cannot invest tax-free money from government agencies, schools and special districts to make an excessive profit. Specifically, under the county's bankruptcy refinancing plan, the county cannot earn more than 6.

Montebello has arranged to borrow about $16.5 million from a division of Sumitomo Bank to avert a financial crunch stemming from the city's involvement in Orange County's ill-fated investment pool. The funds will allow the city to pay an $11.4-million debt due in June and provide cash to avert immediate budget cuts, officials said. Currently, more than $30 million of city funds is frozen in the Orange County pool. The financing arrangement with Sumitomo Trust and Banking Co.

Despite a year-end government financial crisis, Orange County's economy is destined to expand in 1995, analysts and business leaders say. The general economic underpinnings are solid, experts say, although the coming months will bring misery to those who lose their jobs in the wake of the county government's $2.02-billion loss in the bond market and its Dec. 6 bankruptcy filing.

As department heads submitted plans Monday to immediately slash more than $40 million from Orange County's operating budget, creditors and outside experts began fashioning their own proposals to resolve a mounting cash crisis. The chief executive of the Orange County Transportation Authority said his agency might be willing to make a short-term loan in exchange for a promise that it would get back 100% of the $1.1 billion it poured into the now-failed county investment fund.

The success of Orange County's post-bankruptcy investments has led Treasurer John M.W. Moorlach to create a new investment fund that will earn a lower rate of return needed to comply with federal tax rules. Federal regulations say the county cannot invest tax-free money from government agencies, schools and special districts to make an excessive profit. Specifically, under the county's bankruptcy refinancing plan, the county cannot earn more than 6.

The city has put its $3-million share of the Orange County bankruptcy settlement in a state investment pool while officials consider the best use of the money. Council members have differing views on what to do with the settlement, calling for it to be spent on parks, roads or to offset a reduction in the city's utility tax. City Administrator Bob D'Amato has proposed that it remain invested and that the city use the interest it earns for various projects.

The city has put its $3-million share of the Orange County bankruptcy settlement in a state investment pool while officials consider the best use of the money. Council members have differing views on what to do with the settlement, calling for it to be spent on parks, roads or to offset a reduction in the city's utility tax. City Administrator Bob D'Amato has proposed that it remain invested and that the city use the interest it earns for various projects.

The current head of Merrill Lynch & Co. not only knew of the high investment risks Orange County was taking two years before its bankruptcy, he also helped devise a company plan for dealing with then-Treasurer Robert L. Citron, according to sworn depositions made public this week.

One little, out-of-state drug outfit sees some big opportunities in Orange County. Golden Pharmaceuticals Inc., a Golden, Colo.-based maker of drugs using radioisotopes, has invested in three companies here and expects to nearly quadruple its revenue in the fiscal year ending Aug. 31, said Glen Weaver, chief financial officer. Golden had earnings of about $1 million on sales of $4 million in its previous fiscal year, he said.

A major credit rating agency criticized the county's fiscal recovery plan in a report Friday that said the plan would not prevent the county from defaulting on its bonds and includes no solid alternatives if parts fall through. "Even if all of the elements of the announced recovery plan are put into place as expeditiously as possible, it appears impossible for the county to make full and timely debt service payments this summer," the 10-page report by Moody's Investors Service said.

Montebello has arranged to borrow about $16.5 million from a division of Sumitomo Bank to avert a financial crunch stemming from the city's involvement in Orange County's ill-fated investment pool. The funds will allow the city to pay an $11.4-million debt due in June and provide cash to avert immediate budget cuts, officials said. Currently, more than $30 million of city funds is frozen in the Orange County pool. The financing arrangement with Sumitomo Trust and Banking Co.

One of Orange County's oldest and largest investment banking firms kicked off its annual Valentine's week matchmaking fest for cash-hungry technology companies and potential investors by announcing that it has a new name. Walter Cruttenden III, chairman of what used to be Cruttenden & Co., said the name has been changed to Cruttenden Roth to mark the involvement of investor Byron Roth, who bought a 15% share of the company last year and became its president.

One little, out-of-state drug outfit sees some big opportunities in Orange County. Golden Pharmaceuticals Inc., a Golden, Colo.-based maker of drugs using radioisotopes, has invested in three companies here and expects to nearly quadruple its revenue in the fiscal year ending Aug. 31, said Glen Weaver, chief financial officer. Golden had earnings of about $1 million on sales of $4 million in its previous fiscal year, he said.

The crooks are winning Orange County's war on investment fraud. And their latest victories may push Orange County over the top in a three-way contest with New York City and the Miami-Fort Lauderdale area for the notorious distinction as America's fraud capital, according to a host of federal and state law enforcement officials.

There has been a lot of discussion about the county returning 100% of the money that school districts invested in the ill-fated Orange County investment pool. Orange County cities believe that all investors in the pool must be made whole. The public funds invested in the pool are needed to maintain police, fire, maintenance, recreation and other services required for the community's health and safety.

As department heads submitted plans Monday to immediately slash more than $40 million from Orange County's operating budget, creditors and outside experts began fashioning their own proposals to resolve a mounting cash crisis. The chief executive of the Orange County Transportation Authority said his agency might be willing to make a short-term loan in exchange for a promise that it would get back 100% of the $1.1 billion it poured into the now-failed county investment fund.