Outspoken in Support of Citron

SANTA ANA — Although he never appeared at the court hearing where the issue was debated, one of the most forceful advocates for public disclosure of the grand jury testimony of Merrill Lynch executives was Robert L. Citron, the man whose dealings with the Wall Street brokerage are generally blamed for causing Orange County’s bankruptcy.

The former county treasurer has made no public statements since he was subpoenaed to testify at a California Senate hearing in January 1995--just weeks after the county’s December 1994 financial meltdown, and three months before he pleaded guilty to multiple felony counts of securities fraud and misappropriating public funds.

But through his attorney, David W. Wiechert, a 41-year-old white-collar crime specialist, Citron has had plenty to say.

Wiechert, who liberally peppers his legal briefs and courtroom discourses with blunt, colorful language, found his arguments on behalf of the 72-year-old Citron full of irony.

For one thing, it put the silent Citron on the same side as attorneys representing media firms such as The Times, the Wall Street Journal and the Register, which have tried in vain to interview the ex-treasurer since the bankruptcy occurred.

For another, as Wiechert noted, “a disenfranchised convicted felon” was more interested in the public release of the grand jury proceedings than either the district attorney or Orange County government.

Whether the testimony is ever made public depends on the outcome of Merrill Lynch’s appeal of Superior Court Judge David O. Carter’s order last Wednesday that the transcripts be released.

The brokerage firm obtained an emergency stay of Carter’s order late Wednesday and has appealed the ruling at the trial court level as well as at the 4th District Court of Appeal in Santa Ana.

Citron’s belief, as expressed in legal briefs filed by Wiechert and in his occasionally emotional arguments expressed by his attorney at the hearing before Carter July 30, is that he was misled by the giant brokerage.

County Citizens Called Victims

Pacing back and forth in front of Carter, his voice often rising in angry tones, Wiechert declared, “The victims of this case are the citizens of Orange County [who] have borne the [$1.64-billion] loss that resulted from Merrill Lynch’s foisting of unsuitable securities on [Citron].”

Wiechert took strong exception to an observation by his former boss at the U.S. attorney’s office, Richard Marmaro, who represents Michael G. Stamenson, the Merrill salesman who sold Citron the bulk of the risky securities that toppled the county’s investment fund.

Marmaro implied that Citron and the press were seeking access to the transcripts for no other reason other “than satiating the idle curiosity of the public.”

Bristling, Wiechert told the court that was the kind of comment “you would [expect to] read in a two-bit magazine in a bathroom.”

“There can’t be a question that this is of paramount public interest . . . to determine the righteousness of the district attorney’s decision not to prosecute Merrill Lynch in exchange for $30 million,” he continued.

The district attorney’s agreement to scuttle the grand jury’s criminal investigation in exchange for the $30-million payment, he added, was “a terrible deal for the county.”

In an interview last week at his Costa Mesa office, Wiechert said Citron’s interest in seeing the testimony revealed was genuine.

“Bob has the personal feeling, which stems from his love of the county, that this information should be made public,” Wiechert said. “He has always hoped the full truth surrounding all the circumstances of the bankruptcy would be disseminated.”

While grand jury testimony regarding actions of county officials was released when charges were filed against some of the officials in December 1995, virtually no testimony about the role of Merrill Lynch or other investment firms involved has been made public.

And it may never be, because of the appeal of Carter’s ruling and because depositions taken in the county’s $2-billion damage lawsuit against Merrill Lynch are being kept secret by a court order that calls for destroying all evidence once the suit is resolved. The suit is pending in federal court.

After Carter’s ruling, J. Michael Hennigan, who represents the county in the $2-billion suit, said that “the county would not . . . oppose” a motion by the public to lift that protective order.

But if that doesn’t happen, or if the county’s lawsuit is settled before it goes to trial, Orange County citizens may still be deprived of knowing how executives from Merrill Lynch or other investment firms explained their involvement in the largest municipal bankruptcy ever.

This bothers Wiechert and Citron, who has already undergone 36 days of questioning by Merrill Lynch attorneys with the end of his deposition nowhere in sight.

“As his lawyer in the deposition that has seemingly lasted a lifetime . . . I’d like to have the it completed,” Wiechert said.

“And I think disclosure of the [grand jury] transcripts is the right thing to do. That would include disclosure of any testimony Bob gave.”

Merrill Denies Wrongdoing

Citron, who testified at the separate trials of former budget director Ronald S. Rubino and ex-assistant treasurer Matthew R. Raabe, has said little about his dealings with Stamenson or other Merrill officials.

Bound by the protective order in the civil case, Wiechert said he can’t disclose what has required 36 days of testimony from Citron. But he said it’s clear from what has been made public in the past that Citron and others in the county were at a severe disadvantage in trying to comprehend the complexity of the securities they purchased from Merrill Lynch.

“When you compare the talent on the sell side versus the talent on the buy side, it wasn’t a contest. That’s why I think it’s real important that [the grand jury testimony] should be disclosed,” Wiechert said.

Merrill, which has steadfastly maintained it did nothing improper in its dealings with Citron, vigorously opposed the release of the transcripts.

Wiechert’s representation of Citron began in Carter’s courtroom in late 1995, when he asked the judge to release grand jury testimony about former county budget director Ronald S. Rubino, and suggested he would take his request to the appeals court unless Carter released it to him.

It was around this time that Wiechert first suggested that Citron had been suffering from a steadily progressing case of dementia, a degenerative brain disease that might have affected his judgment.

Wiechert’s portrayal of Citron’s diminishing mental capacities was confirmed in large part by the sworn testimony of brain experts at his sentencing hearing late last year.

After dragging out the sentencing process for 20 months, Wiechert staged an emotional two-day hearing that landed Citron in a jail work-release program for one year, instead of state prison for seven years as the district attorney had sought.

Wiechert makes no secret of his fondness for the now frail former treasurer, who is due to be released from the sheriff’s custody in October.

“I like Bob,” he said.