Robert Citron

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Robert Citron
Treasurer-Tax Collector of Orange County, California
In office
Personal details
BornApril 14, 1925
DiedJanuary 16, 2013 (aged 87)
Political partyDemocratic Party
Alma materUniversity of Southern California (did not graduate)

Robert Lafee Citron (April 14, 1925 – January 16, 2013) was a longtime Treasurer-Tax Collector of Orange County, California, when it declared Chapter 9 bankruptcy on December 6, 1994. The bankruptcy was brought on by Citron's investment strategies,[1] which seemed to be an effort to earn high incomes for the county, without raising taxes, through risky, leveraged positions in bonds. The strategy paid out at first. In 1994, a cash crunch occurred when interest rates increased and financiers for the county required increased collateral from the county.[2] It was later revealed that Citron relied upon a mail-order astrologer and a psychic for interest rate predictions as the county's finances began to falter.[3]

Early life[edit]

Born in Los Angeles, Citron grew up in Burbank and Hemet. His father, Jesse, was the doctor who put an end to alcoholic W. C. Fields's love of scotch.[4] He attended the University of Southern California but did not graduate.[5] The younger Citron made his career in the Treasurer-Tax Collector's department before winning election to the top job.[6]

Treasurer-Tax Collector[edit]

Citron controlled several Orange County funds including the General Fund, the Investment Pool, and the treasury Commingled Pool. He sent out the county's tax bills with catchy slogans, such as "Taxes paid on time never draw fines."[7] He won re-election seven times; in his last election victory, his opponent, John Moorlach, charged that his handsome gains were the result of risky betting.[7]

As controller of the various Orange County funds, Citron had taken a highly leveraged position using repurchase agreements (repos) and floating rate notes (FRNs). The loss incurred by the use of these financial instruments reached the amount of $2 billion and was caused by being too highly leveraged for rising federal interest rates.[7] In other words, if federal interest rates had not risen, the massive trading position would have been a substantially profitable position; if interest rates did rise, the trading position would result in substantial losses. In fact, rates rose.

The Orange County funds, managed by Citron, were worth $8 billion.[7] However, Citron went out to the repo market and leveraged the County Pools to amounts ranging from 158% to over 292%. To obtain this degree of leverage, he used treasury bonds as collateral. Profits of the fund were excessive for a period of time and Citron resorted to concealing the excess earnings. He pleaded guilty to improperly transferring securities from the Orange County General Fund to the Orange County Treasury Commingled Pool.

County bankruptcy[edit]

Although regulators and the county's financial counterparties had already begun scrutinizing Citron's risky investment strategy as early as 1992, following an article in the trade publication, Derivatives Week, the county's finances did not begin to unravel until early 1994.[8] At that time, the Federal Reserve Bank began to raise US interest rates, causing many securities in Orange County's investment pools to fall in value. As a result, dealers were requesting extra margin payments from Orange County. These extra margin payments were funded in part by another bond issue made by Orange County; the size of that bond issue was $600 million. However, this fix proved to be only temporary. In December 1994, Credit Suisse First Boston (CSFB) realized what was going on & blocked the "rolling over" of $1.25 billion in repos ("rollover" essentially means issuing another repo when the previous one ends, but at the new prevailing interest rate). At that point some claim that Orange County was left with no recourse other than to file for bankruptcy.[9] Others would argue that Orange County's decision to enter bankruptcy protection was voluntary.

Facing 14 years in prison, Citron pleaded guilty to six felony counts and three special enhancements.[10] Charges also included filing a false and misleading financial summary to participants purchasing securities in the Orange County Treasury Investment Pool.

While in bankruptcy, every county program budget was cut, about 3,000 public employees were discharged, and all services were reduced. Citron was sentenced to one year of work release and five years of supervised probation, and performed 1,000 hours of community service.[11][12][13] He served a year in prison, where he was allowed to work in the commissary.[14]


Citron died at the age of 87 on January 16, 2013.[4]

See also[edit]


  1. ^ Jacque, Laurent L. (2010). Global Derivative Debacles: From Theory to Malpractice. Singapore: World Scientific. ISBN 978-981-283-770-7. Chapter 14: Orange County, pp.  221–244.
  2. ^ Missing or empty |title= (help)
  3. ^
  4. ^ a b "Robert Citron, treasurer at center of O.C. bankruptcy, dies". Los Angeles Times. January 16, 2013.
  5. ^ Martin, Douglas (17 January 2013). "Robert Citron, Culprit in California Fraud, Dies at 87". The New York Times. Retrieved 28 July 2017. CS1 maint: discouraged parameter (link)
  6. ^ Sforza, Teri (2019-12-07). "Here's how Orange County went broke". Orange County Register. Retrieved 2019-12-08.
  7. ^ a b c d Greenwald, John (December 19, 1994). "The California Wipeout". Time Magazine. Retrieved 2007-07-22. CS1 maint: discouraged parameter (link)
  8. ^ "Tape Shows Merrill Gave '92 Warning on O.C. Pool : Bankruptcy: Two years before collapse, top salesman is heard on tapes telling Citron of firm's concern that investments were too concentrated in high-risk derivatives". Los Angeles Times. 1995-12-01. Retrieved 2021-04-07.
  9. ^ Reckard, E. Scott (30 January 1998). "O.C. Bankruptcy Case Settled by First Boston". Los Angeles Times. Retrieved 25 July 2012. CS1 maint: discouraged parameter (link)
  10. ^ Platte, Mark; Matt Lait; Debora Vrana (28 April 1995). "Citron Pleads Guilty to Felonies". Los Angeles Times. Retrieved 30 October 2011. CS1 maint: discouraged parameter (link)
  11. ^ "Ex-Treasurer Freed In California County". The New York Times. 25 October 1997. Retrieved 30 October 2011. CS1 maint: discouraged parameter (link)
  12. ^ Wagner, Michael G. (19 December 1995). "Report Urges Citron Be Spared Prison Time". News Article. Santa Anna, CA: Los Angeles Times. Retrieved 30 October 2011. CS1 maint: discouraged parameter (link)
  13. ^ Unknown (27 April 1995). "PEOPLE VS. ROBERT LAFEE CITRON". Retrieved 30 October 2011. CS1 maint: discouraged parameter (link)
  14. ^

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