ORANGE COUNTY IN BANKRUPTCY : Assistant Treasurer Raabe Ducking Senate Subpoena : Probe: Official removed after discovery of fund diversions is ‘actively evading’ being served to testify. His attorney says he will not appear before panel voluntarily.

SANTA ANA —  Matthew Raabe, the assistant Orange County treasurer removed from his job last month after discoveries of improper interest diversions in the county’s failed investment pool, is evading a subpoena from a special state Senate panel probing the county’s financial fiasco, officials said Tuesday.

Tony Beard, chief sergeant at arms for the state Senate, said two of his deputies found the drapes drawn when they visited Raabe’s Santa Ana home twice on Monday and three times Tuesday. No one answered when they rang the bell or telephoned, he added.

“We’ve basically exercised all options that are construed as legal,” Beard said. “We’ve tried to do it as tactfully and professionally as possible. So far that’s brought us nothing.

“He’s actively evading a subpoena from the state Senate,” Beard added.

Raabe, 38, was one of 13 securities experts and top-ranking county staffers asked to testify Thursday in the third hearing on the Orange County financial crisis being held by the Senate’s special committee on local government investment.

Four other witnesses who declined to appear unless they were subpoenaed were all served successfully with subpoenas this week, Beard said. The other eight witnesses have agreed to testify, according to Scott Johnson, the committee’s chief counsel.

Raabe’s attorney, Terry W. Bird, did not return repeated calls for comment Tuesday. Raabe himself also could not be reached.

But Bird faxed a letter to the Senate committee Tuesday saying Raabe “would not voluntarily appear . . . (and) will not appear on Thursday absent a properly served subpoena directing him to do so.”

First hailed for raising questions about the risky investment practices of longtime Treasurer-Tax Collector Robert L. Citron, Raabe has come under increasing scrutiny in recent weeks as outside accountants discovered irregularities--and possible illegalities--in the $7.4-billion pool the county managed for itself and 186 local agencies.

Raabe, who became Citron’s top deputy in 1993, was placed on paid leave last month when the accountants found that at least $70 million in interest due local schools, cities and special districts was diverted to a county-controlled account.

“Mr. Raabe is ducking,” said state Sen. Rob Hurtt (R--Garden Grove), one of 10 members of the special committee. “He probably doesn’t want to be around, and I don’t blame him. I wouldn’t want to either. I think he’s in trouble.”

Hurtt and several other senators suggested that even if Raabe had come to Sacramento, he would likely plead the Fifth Amendment rather than answer certain questions because he is among the subjects of several criminal investigations into the Orange County debacle.

Sen. Quentin Kopp (I-San Francisco), who earlier this month accused Raabe of lying under oath during his first appearance before the committee, on Tuesday likened the assistant treasurer’s disappearance to O.J. Simpson’s behavior on the day he was arrested last summer.

“All he needs now is a Bronco, with Al Cowlings at the wheel,” Kopp said, recalling the nationally televised low-speed freeway chase that led to Simpson’s arrest.

“It’s indicative of his shame and his perjury previously to the committee,” Kopp said. “I think the man ought to be arrested immediately.”

Though the Senate has the power to issue an arrest warrant for a person evading a subpoena, the committee’s co-chair, Sen. Lucy Killea (I-San Diego), said she probably would not take that route. Instead, Killea and other senators said they plan to immediately subpoena Raabe to appear at the panel’s next hearing, scheduled for March 3 in Orange County.

“He’s not going to be able to do this (evade the subpoena) forever. If we don’t get him for this meeting, we certainly will for the next one,” Killea said. “If he comes and wants to plead the Fifth, why that’s his privilege. We’re not going to grant him immunity or anything like that. We have too clearly in our minds the Ollie North situation,” in which the former national security official had felony convictions overturned on appeal, because a congressional panel granted him immunity.

The senators hope to explore the breakdown of government accountability during Thursday’s hearing by questioning Auditor-Controller Steve E. Lewis, demoted County Administrative Officer Ernie Schneider and County Counsel Terry C. Andrus. All three officials agreed to testify before the committee voluntarily.

Lewis also testified last month, but senators said they wanted to interview him again because of recent disclosures regarding improper transfers he approved within the investment pool.

“Originally it looked like a case of just omission, a failure of individuals to communicate,” said Johnson, the committee’s lead staffer. “Now it appears that there was plenty of communication among staff and that they knew considerably more than they’ve shared.”

Also on the stand Thursday will be a host of Wall Street experts and others who were involved in the county’s bond deals. Al DeSpirito of Dean Witter Reynolds, who apparently spoke to Citron every morning to offer investment advice, and several investment bankers agreed to testify voluntarily.

Those who were served this week with subpoenas are:

* Paul Sachs, chief of the Arthur Andersen accounting team hired by the county after the bankruptcy to sort through its financial records;

* Jean Costanza, a partner with LeBoeuf, Lamb, Greene and MacRae, who has served as the county’s bond counsel for a dozen years, was present during an early inquiry by the Securities and Exchange Commission into the county fund last spring and hired an outside analyst to look at the fund last November;

* Ken Ough of Rauscher Pierce Refsnes, who helped design special investment deals for several Orange County school districts that borrowed huge sums hoping to reap profits in Citron’s pool; and

* Elke Cheveney, vice president of Merrill Lynch, the giant New York brokerage that sold the county the bulk of its securities.

Though the agenda is packed with people, several senators expressed confidence that Thursday’s hearing could be more productive than last month’s, in which Citron was the star witness.

“I thought the first (hearing) was pretty hit-or-miss as far as our questioning,” Hurtt said. “On Thursday we’re going to try and have a more coordinated series of questions, we’re going to try and follow a topic through so we can at least have a concise answer.”