Raabe Found Guilty in O.C. Finance Case

SANTA ANA — Matthew R. Raabe, the former assistant Orange County treasurer who was briefly hailed as a hero and then quickly labeled a villain after the county’s 1994 financial collapse, was convicted Friday of misappropriation of public funds and securities fraud violations stemming from the bankruptcy.

His conviction on five felony counts makes Raabe the first Orange County official to face a prison sentence for crimes rising from the county’s record-setting bankruptcy.

Raabe, 41, sat stoically as each guilty verdict was announced, and walked out of court two hours later after posting $25,000 bail.

The jury that heard the case against him deliberated for a little more than two days before returning the guilty verdicts, which could put Raabe behind bars for up to 13 years and subject him to fines of up to $10 million.

Raabe’s attorneys said Friday they will appeal the verdict.

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The verdicts represented a rare victory for Dist. Atty. Michael R. Capizzi, who vowed to hold former county officials accountable for crimes contributing to the county’s bankruptcy, the largest municipal collapse in the nation’s history.

County officials decided to declare bankruptcy Dec. 6, 1994, after discovering that the county-run investment pool managed by former Treasurer Robert L. Citron had lost $1.64 billion on highly risky Wall Street securities.

On Friday, Capizzi, who is planning a run for state attorney general next year, trumpeted the jury’s verdict.

“There is a sense of satisfaction of a job well done for those attorneys and investigators who worked so hard,” Capizzi said. “I don’t feel any vindication is required. We were doing what we were required to do and investigating criminal conduct.”

Assistant Dist. Atty. Jan J. Nolan, who stepped in to finish prosecution of the case when the lead prosecutor had a family emergency, said she was pleased but not altogether surprised by the verdict.

“There was extremely strong evidence against Mr. Raabe,” Nolan said. “I feel there was no doubt how this jury would go down, but I’m very glad they did.”

The district attorney’s office has not decided whether it will seek the full 13-year prison term for Raabe, or agree to a lesser punishment. But Nolan said it’s “a little late” now for Raabe to admit his crimes and seek leniency from the court.

Nolan also rejected defense attorneys’ claims that Raabe was being singled out for harsh punishment, while other, more guilty parties were getting off.

“Mr. Raabe is not a scapegoat of anything,” Nolan said.

Citron pleaded guilty to the same felony charges soon after the bankruptcy and cooperated fully with authorities, but Raabe “has none of those things going for him. . . . He put the county though this for 2 1/2 years. Now, he is paying the price,” Nolan said.

But defense attorney Gary Pohlson said his client is indeed being made a scapegoat.

“I’m shocked that they could find this man guilty,” Pohlson said. “This was a very good man who did nothing but work hard for this county for so many years.”

Pohlson said that despite the verdict, he does not regret the decision to keep Raabe from taking the stand during the trial, and insists that his client was unfairly singled out by overzealous prosecutors eager to hold someone accountable for the bankruptcy.

“He didn’t expect to be convicted,” Pohlson said. “He truly believed that he would be acquitted. He’s a strong person. He’s obviously been through a lot. All he said to me was, ‘You did everything that you could’ and ‘I’ll be OK.’ ”

Some jurors had tears in their eyes as the verdicts were read and none looked at Raabe.

Afterward, some admitted that it had been a difficult decision, because Raabe seemed to be a decent person who was well thought of by co-workers, who seemed uncomfortable testifying against him.

“It would have made it easier for some of us to feel good about this decision if some of the dollars had ended up in Mr. Raabe’s pocket,” said juror Scott Hall, a resident of Orange. “The jury wanted very much to find a way to make this all right and find a way not to convict Mr. Raabe. Ultimately, it was clear that there was none.”

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Although Raabe was accused of skimming $90 million from the investment pool accounts of outside investors, he was never suspected of taking anything for himself. All of the money was put in an account for the benefit of Orange County.

A female juror who declined to give her name said the deliberations were difficult.

“It was hard because he seemed like a nice guy. We felt badly for him. But a crime was committed.”

She and other jurors said they had mixed feelings about Raabe facing the possibility of a lengthy prison sentence.

Judge Everett W. Dickey, who presided over a trial spanning five weeks, ordered Raabe to return to court Monday to discuss which county should be asked to prepare Raabe’s probation report. Orange County officials were thought to have a conflict of interest.

Dickey ordered that Raabe post bail, which his attorney quickly began arranging from a courtroom telephone.

Nolan had asked that Raabe be taken into custody. In making her case, Nolan reminded the judge of a bizarre 1995 incident in which a distraught Raabe led authorities on an afternoon chase in a mall parking lot before surrendering later at a bail hearing.

“This is a state prison case,” Nolan said to the judge.

In the immediate aftermath of the bankruptcy, Raabe was temporarily promoted to acting treasurer, and was hailed for helping the county begin repairing the bankruptcy’s damage. After some weeks, however, the interest-skimming scheme was uncovered, and Raabe was fired and later indicted.

The chase that Nolan mentioned occurred as investigators tried to make sure he was surrendering to authorities as promised.

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Raabe, his attorneys and family members huddled in the back of the courtroom for two hours until he was able to post bail and walk out of court.

“There’s nothing I have to say,” Raabe said as he departed the courthouse.

Raabe, who has moved to Northern California, will be staying with his mother in Orange County over the weekend, one of his attorneys said.

Richard Schwartzberg, another of his attorneys, said the family stands behind Raabe.

“They all know he has a good heart,” Schwartzberg said. “I think they’re hurting, they’re scared. They don’t know what the judge is going to do.”

He said prosecutor Nolan is “going for the jugular” in trying to obtain the toughest sentence possible.

Legal experts say Raabe could expect the harshest sentence yet to be handed down in connection with the bankruptcy.

Unlike Citron, who publicly expressed remorse and agreed to plead guilty even before he was charged, Raabe has vigorously fought the charges against him from the outset, causing the county to incur heavy defense and prosecution costs.

In addition to the prosecution’s hefty investigative costs and those of the court, Raabe’s attorney had billed county taxpayers $550,000 by the end of October, 1996, the last date such figures were available to the public.

Capizzi disclosed late last year that his office had spent at least $2.5 million on its criminal investigation into the county bankruptcy. In addition, the Board of Supervisors has paid out more than $2 million to defend those charged.