MOORLACH UPDATE — Election Night — November 3, 2010

Election nights are a tradition.  I can still remember my father taking me to a Republican election night event when I was a kid.  I must have caught the bug.

Election nights are usually a mix of good news and bad news.  Based on my personal perspectives, last night’s election results on the Federal level is good news.

On the state level, the news is bad, but not necessarily surprising.  The OC Register was at the statewide Republican event last night at the Irvine Hyatt and caught me in the crowd.  OC Register reporter Peggy Lowe provides the collaborative effort covering Brown’s victory in the first article.  This piece also appears on the MSNBC website.

On the county level, the news is outstanding.  Supervisor Nelson was successful in his runoff for his Fourth District seat and Shari Freidenrich was successful in her runoff election for the Orange County Treasurer-Tax Collector position.  We are blessed to have two very qualified individuals to serve the residents of Orange County for the next four years.  This is covered in the OC Register and the Voice of OC.

To all of the candidates, thanks for running for public office; it makes for a healthy process.  I believe everyone should run for office at least once during their lifetime just to appreciate the experience and the demands it places on candidates.  To the winning candidates:  Congratulations!


Brown beats Whitman’s big bucks


California voters chose a seasoned veteran over a rich rookie, handing Democrat Jerry Brown a second stint in the governor’s office and turning away billionaire Meg Whitman, who spent $142 million of her own fortune fueling the most expensive race in California history.

With 96.9 percent of precincts reporting as of 8 a.m. Wednesday, Brown had won the race with 3,942,019 votes, or 53.8 percent; Whitman had 3,015,066 votes, or 41.2 percent.

Orange County bucked the trend, with 57.8 percent of voters choosing Whitman, compared with 36.7 percent for Brown.

Brown, 72, is the oldest man elected to the executive office on a list that includes his father and Brown himself, who was the second-youngest governor when he was first elected in 1974.

He inherits a state with a host of troubles, including a double-digit unemployment rate, a cynical citizenry, and partisan gridlock in Sacramento.

Meeting with supporters in a refurbished theater in Oakland late Tuesday night, Brown claimed victory, saying he still had a "missionary zeal to transform the world" and that he would work on public education and renewable energy.

With a nod to the divisiveness of the voting, Brown said he will take as his challenge "forging a common purpose."

"The breakdown paves the way for a breakthrough," he said. "That’s the spirit I want to take back to Sacramento."

Whitman later conceded the race, saying: "It is time now for Californians to unite behind the common cause of turning around this state that we love," according to published reports. She said she had called Brown to wish him well, and added: "It is time now for Californians to unite behind the common cause of turning around this state that we love," she said.

"In many ways, this election was much bigger than Governor Brown or me. It was about the struggles and dreams of millions of Californians," Whitman added. "Our challenges are daunting and they won’t be solved by politics as usual. But we do need leaders in Sacramento to rise to the occasion and work together."

With a string of negative stories, including a failure to vote for 28 years, Whitman faced serious challenges from the get-go, even while outspending Brown $6 to $1. Brown countered with union-financed advertising that painted Whitman as a Gov. Arnold Schwarzenegger clone with an inability to do the daily, gritty job of governing.

"Polling showed voters want an insider to take care of problems as opposed to another outsider," said Orange County Supervisor John Moorlach, "so she’s suffering from the wasted years of Arnold, who was an outsider and accomplished not one thing of significance."

Even without the expensive final weeks reported, Whitman had spent $163 million, according to the California Secretary of State. But spending for Brown also contributed to a new record, with independent groups expending $31.7 million on the governor’s race, according to the Fair Political Practices Commission. About $25 million of that was spent by organizations backing Brown.

Nick Berardino, general manager of the Orange County Employees Association, said Brown will take on California’s economic problems.

"He has the experience and the know-how and political acumen like no other," Berardino said. "He’ll govern out of experience and institutional knowledge."

With polls nearing Election Day showing Brown with a double-digit lead, most voters said they’d rather not vote for either candidate.

Some 55 percent in an October poll by the Public Policy Institute said they were dissatisfied with their choice for governor. Coupled with other negatives — 87 percent said California is still in a recession and 79 percent reported distrust in state government — the new executive will be inheriting an apathetic citizenry pessimistic about the future.

Whitman switched course in the final days of the campaign. Instead of talking about job creation and school funding, two of her major themes throughout the race, Whitman told audiences that she was a victim of attacks by Brown.

"I have been called a liar, I’ve been called a whore and I’ve been called a Nazi by his campaign," Whitman said last week during a morning show appearance on Fox News Channel.

To the end of the campaign, Whitman couldn’t stop the national spread of the reports on her former housekeeper, who was in the U.S. illegally while working for Whitman. The story broke in September and painted Whitman, who had taken a tough stance on employers who hire undocumented workers, as hypocritical. Last week Whitman told Fox News that the housekeeper, Nicky Diaz Santillan, should be deported.

Whitman blamed Brown for the housekeeper controversy, along with Gloria Allred, the high-profile attorney who represented Santillan, and accused them of running a "massive smear campaign" against her. Brown’s campaign denied knowledge of the undocumented housekeeper when the story broke, but Brown blasted Whitman during an October debate, saying her bungled handling of the story showed she was unqualified to be governor.

Nelson easily retains county supervisor seat


Fourth District Supervisor Shawn Nelson on Tuesday easily beat Anaheim City Councilman Harry Sidhu to keep his seat for the next four years.

Longtime Huntington Beach Treasurer Shari Freidenrich beat 32-year-old Deputy County Treasurer Keith Rodenhuis in the race to become the county’s next treasurer-tax collector, overseeing Orange County’s $6 billion-plus treasury.

Nelson, through his campaign manager Audra Adams, declined to answer any questions from a Register reporter about his election on Election Night.

"He just wants to keep it an intimate thing with family, friends and supporters," Adams said. "We’ve all worked so hard."

Nelson’s campaign earlier sent out an e-mail today to 10,000 people inviting them to an Election Night party at The Matador Cantina in Fullerton. The e-mail was received by the Register and during a conversation last week Nelson promised to include a Register reporter in his election night plans in order to provide comment on the race.

A Register reporter who went to the Matador Tuesday night was greeted by Adams and turned away without being able to speak to Nelson.

"I’m really humbled by the support I’ve received from the voters so far," said Freidenrich, who was watching the results come in with friends in Huntington Beach.

Winning Tuesday’s election means inheriting a county where departments are cutting their budgets to the bone, capital projects are in a holding pattern and employees have been hit with layoffs, furloughs and a hiring freeze.

Five county supervisors oversee a $5.4 billion budget – mainly money from the state and federal government that passes through the county to fund social services programs. Supervisors really only have discretion over $688 million, about half of which funds public safety.

Nelson’s first-place finish in the June primary meant he was sworn in to take over the supervisor seat vacated by Chris Norby who left his term early for the state assembly. Nelson filled the seat left open by Mike Duvall, who resigned after he was caught on tape bragging about having extramarital affairs with two women.

Victory in the primary not only gave Nelson at least six months as a county supervisor, but also the advantage of having Orange County supervisor next to his name on the run-off ballot.

The road to victory for the county’s two newest elected officials has been an ugly one.

Freidenrich accused Rodenhuis of not being qualified to run for treasurer. She took him to court before the primary. A judge sided with Rodenhuis, who took the ballot title to the polls and was the top-vote getter in the June primary.

Freidenrich captured 54 percent of the vote. Rodenhuis won 45.5 percent of the vote to win.

Much of the squabbling in the supervisor’s race focused on Nelson’s decision to sign up for the most generous county pension after he campaigned his way to a June primary win on an anti-pension platform.

Sidhu, who still had the backing of the deputies’ union, but not their money this time around, called Nelson a hypocrite. He sent out glossy mailers with a caricature of Nelson with his hand caught in the cookie jar.

After being criticized for his pension choice, Nelson discovered he signed the pension paperwork before he was officially sworn in to his new post June 22. That loophole was enough for Orange County Employee Retirement Systems to negate his pension selection.

Nelson, whose brash style on the dais has already won him friends and enemies, then threatened to sue Sidhu if he claimed he had a county pension.

Sidhu, through his campaign manager Chris Jones, congratulated Nelson on a well-run campaign. For Sidhu, Jones said, it was all about the money.

"We just didn’t have the funds this time around to make it a competitive race," Jones said.

The winner of the treasurer’s race will take over an office which has been embroiled in controversy.

The supervisors stripped current Treasurer-Tax Collector Chriss Street of his investment powers after a judge ruled he breached his fiduciary duty in a private deal before Street came to work for the county.

Street, who was hand-picked by Supervisor John Moorlach to be his successor as treasurer, was ordered to pay $7 million. He is appealing.

The county’s money is invested instead by its chief financial officer.

Moorlach, who backed Freidenrich, has said that if Rodenhuis wins he will not vote to transfer the county’s investment powers back to Rodenhuis.

Contact the writer: 714-796-7829 or


Shari Friedenrich: Orange County’s Next Treasurer

Huntington Beach city Treasurer Shari Friedenrich was elected county Treasurer on Tuesday night, defeating Deputy Treasurer Keith Rodenhuis 54.6 percent to 45.4 percent, with all 2,080 precincts reporting.

The two were forced into a run-off after the June primary when they emerged as the leaders in a field of four.

The race for the county’s top financial post was thrown wide open in March when incumbent Treasurer/Tax Collector Chriss Street announced that he would not seek re-election after a judge ruled against him in a long-running civil fraud case that centered on his stewardship of a now-defunct trucking trust.

Supervisor John Moorlach, himself a former county treasurer, had supported Street four years before but after the fraud case he backed Friedenrich. Rodenhuis, Street’s deputy, led the June voting.



November 2


Dennis Walters of Bloomberg News had closure on one chapter of the OC bankruptcy saga in “Orange County’s Raabe Gets Felony Conviction Voided.”

A California appellate court has overturned the only jury conviction produced after the Orange County investment debacle, ruling that the local district attorney’s office faced conflicts providing a fair trial for assistant county treasurer Matthew Raabe.

John Moorlach, the current county treasurer, said it’s not surprising the appellate justices raised the conflict of interest issue.  Still, Moorlach, who raised a red flag over Citron’s investments during an unsuccessful election bid for the treasurer’s seat earlier in 1994, said it’s ironic “everyone who perpetrated this sad investment scheme is getting off,” leaving taxpayers with the bill.

Richard Marosi and Jean O. Pasco of the LA Times also covered the story in “Appeals Panel Voids Sole Jury Conviction in Bankruptcy – Courts:  O.C. prosecution of ex-deputy treasurer Raabe tainted by ‘overwhelming’ conflicts, justices find.  He served 41 days for nation’s largest municipal collapse.”

                “It is unfortunate that it may be that no one person will have incurred a significant punishment for their direct involvement in the largest municipal investment scheme loss,” said current Treasurer John M. W. Moorlach.


The staff of Orange Coast Magazine did a Thanksgiving theme for their November issue, of course, titled “Giving Thanks – Local Leaders Share What They Are Thankful For This Holiday Season.”  This is one worth repeating.  (If anyone still has a copy of this issue and doesn’t want it anymore, please pass it my way.)

                This Thanksgiving I am especially thankful for 25 years of marriage to my supportive wife, Trina, and for our three kids.

                Although life as an elected official is a very hectic one, and our two oldest are now college/career age, I am very thankful that the highest priority in our home is spending time together and enjoying each others’ company.”

                John M. W. Moorlach

                Treasurer-Tax Collector

                Orange County

November 3


The OC Register had four articles on Matt Raabe’s court decision.  It’s front page piece was titled “Raabe’s felony verdicts reversed – COURTS:  An appellate court cites ex-DA Capizzi’s possible conflict of interest in the O.C. bankruptcy case.”  It was written by Chris Reed and John McDonald.

                Treasurer John Moorlach, who while a private citizen warned that Citron’s gambles would backfire, lamented that “after the largest municipal bankruptcy in world history . . . no one is serving a serious sentence.”

                “In the end, the only people who really got punished were the taxpayers . . .  who still have to pay $950 million in bankruptcy debt,” Moorlach said.

In a column titled “What Happened To The Players,” updates were provided on Robert L. Citron, Roger Stanton, William Stiener, myself, Mike Capizzi, Ernie Schneider, Michael G. Stamenson, Ronald S. Rubino, and Steven Lewis.  Here’s mine, it will give you the flavor of the updates.

                The certified public accountant had warned of the risks of Citron’s investments.  He is now Orange County’s treasurer-tax collector.

Another column was titled “Bankruptcy Chronology” and included me in the Spring of 1994:

                Costa Mesa accountant John Moorlach challenges Citron for re-election, saying Citron is taking big risks with his investments.  County officials back Citron, and he easily defeats Moorlach.

Jonathan Lansner provided his reflections in “Culpability remains for ex-official.”  His column is worth a read from an historical perspective (especially for newer subscribers) and is provided below in full.

Seems a fellow named Matt Raabe, a name few but ultimate trivia freaks could remember, has been quasi-vindicated by a state appeals court for his role in Orange County’s 1994 financial snafu.

Raabe, for all of you who’ve forgotten, was the top assistant to Bob Citron, then-county treasurer and erstwhile investment whiz.

Raabe’s assignment, at its simplest, was to promote his boss as an investment genius. This served many people well — far more than just his boss.

You see, the longer Citron’s gamble played on, the longer many folks looked pretty.

Citron’s idiotic bond bets, when they worked, made the county’s budget balance while other counties withered under staff and services cuts. Until judgment day — Dec. 6, 1994, when the county admitted it was broke — politicians here could crow about how flush we were with cash and how well this government was managed.

Political powers weren’t the only beneficiaries of Citron’s dirty secret, as Raabe dutifully did the “How dare you challenge us?” song and dance for scores of audiences.

Wall Street loved the pitch as it churned Orange County’s portfolio, making Citron and his staff a toast of the investment crowd.

Muni bond investors soaked it up, too. In 1994, Orange County had to sell $600 million in unsecured notes alone to keep this gambit afloat.

Raabe also sang Citron’s reputation to any investor in the county pool who dared to question the wizard.

Raabe even tap-danced in front of the Securities and Exchange Commission, who heard cries of foul from people like Citron’s political opponent, John Moorlach. Regulators wanted to know what the treasurer was doing. But thanks in part to Raabe’s actions, they did nothing until after the county bets imploded.

Depending on whose testimony you believe, Raabe never bothered to tell anybody that Citron may have lost a step or two mentally in those fateful days. Or that the now-disgraced investor might use astrology charts to double-check his bets. Or how disorganized the treasurer’s investment records were.

But heck, why disclose that when losses mounted by the day and some of Citron’s own flock of government investors wanted to pull out their money — withdrawals that pushed the county investment pool to the brink.

In essence, Raabe was tried and convicted for what he actually did: mask the brewing disaster. Now, six years later, an appeals court says the Orange County District Attorney’s Office had no right to prosecute Raabe because the office was horribly conflicted by the financial mess that touched every corner of county government.

Fine. Legal nuance noted.

Just don’t forget: At the very least, Matt Raabe should have known Citron’s behavior had become reckless and unacceptable.

Raabe — like many other county officials at the time — should have asked tough questions. Raabe, because of his position, should have quit when he didn’t get the answers he needed.

There’s no defense for being the mouthpiece for a criminal — yes, for those who forgot, Citron pleaded guilty to crimes against the county.


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