Banker Comes Home to Help Ailing County : Profile: Chris Varelas grew up here and now is back with a Wall Street team helping officials devise a recovery plan.

In high school, Chris Varelas had a part-time job hawking peanuts at Anaheim Stadium. During college, he spent summers greeting guests at Cafe Orleans on Disneyland’s Main Street.

A decade later, at 32, the Wall Street investment banker has returned to his childhood home to don a new apron, this time leading a desperate treasure hunt to help rescue bankrupt Orange County from its nightmare.

When Varelas flew west Dec. 9 with a team of analysts from Salomon Bros., he brought only one suit, expecting to return on a night flight. It was 31 days before he made it back to New York. Nearly eight months later, the affable deal-doer is still here, holed up in the Hall of Administration, down the street from the stadium where he played soccer as a teen-ager.

With voters’ rejection last month of Measure R, a proposed sales-tax hike for bankruptcy recovery, Varelas has emerged from his behind-the-scenes role as a number-crunching negotiator to become a leading spokesman for the county’s Plan B, which relies on taking taxes from other government agencies. He was the original architect of a plan to take transportation taxes for the recovery effort, an idea that the Legislature approved early Sunday to help both Orange and Los Angeles counties out of their fiscal woes.

Salomon Bros. has collected nearly $14 million for its Orange County work, but for Varelas, a vice president at the prestigious firm, the assignment has a personal tug.

“You can’t help but be excited about returning home again to help out in a crisis,” he said. “One thing you always ask yourself is, ‘Is this the best course of action for the client?’ In this case, that’s the residents of Orange County. My father is a resident of Orange County. Inside, I’m a resident of Orange County.

“I’ve never invested as personally. I’ve never lost sleep before. I’ve never felt such a burden of responsibility.”

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The second of three children born to a Greek immigrant mother and Greek-American father, Varelas led a fairly sheltered suburban life in Anaheim Hills, graduating from Canyon High in 1981 and then staying close to home, earning an economics degree at Occidental College in 1985 and then working at Bank of America in Los Angeles making loans to diamond and gold jewelers.

At the University of Pennsylvania’s Wharton School of Business, roommate Paul Hynek made a list on the dorm-room wall of things Varelas, then 25, had never done: tried drugs, driven a stick shift car, cooked a meal, done a load of laundry. While at Wharton, Hynek recalls, Varelas’ underwear was stolen from the laundry room. Since he had never bought his own underwear before, either, his mother sent him new ones by overnight mail.

A more recent roommate attests that Varelas still does not feel comfortable even boiling water, and his rented cars always have automatic transmissions.

But during his five years in the mergers and acquisitions department at Salomon, Varelas has built a reputation as a skilled negotiator who uses empathy, patience and good humor instead of force to get what his clients want. Before Orange County, he worked on about 50 deals, including Northrop Corp.’s 1994 acquisition of Grumman--named “deal of the year” by a trade publication--the Circle K bankruptcy and ongoing work for Woolworth’s and Chrysler.

“Instead of trying to be this Gordon Gecko kind of guy, he was a really user-friendly banker,” a client said. “I think he’s very shrewd. He acts like a folksy guy to make people think, ‘Hey, maybe we can bamboozle him,’ but I think that’s just his shtick.”

Michael Carr, one of two Salomon managing directors who lead the acquisitions department, said Varelas is unflappable in the face of complexity and controversy.

“One tends to think that good negotiators are screamers and yellers. They beat you up and the last person to leave the room alive wins,” Carr said. “Chris isn’t that way. He stays at the table. He’s persistent.”

Just ask younger sister Lea Varelas, who has followed her brother to Occidental, and to Salomon.

“He’d be watching TV and we’d negotiate whether I could change the channel or not,” she laughed. “We’d have our Halloween candy and we’d start bartering: ‘I’ll trade you three Reese’s for a Hershey’s.’ You never just gave something away. He can creatively find some value to give someone without giving up what’s valuable to him.”

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In Orange County, Varelas heads a finance team of bankers, underwriters and lawyers whose projects have ranged from issuing two sets of uniquely crafted bond deals to helping negotiate settlements with short-term note holders and local agencies that lost millions in the county’s sunken investment pool.

Salomon traders also helped liquidate $20 billion of complex securities in the pool in the first weeks after the county’s bankruptcy and have continued to manage the pool’s funds.

Besides his creative financing ideas, Varelas also has another skill crucial to the team: He “speaks Bennett,” and often translates the sophisticated, technical talk of bankruptcy attorney Bruce Bennett for the rest of the team.

“When you ask him complicated, unusual questions, it’s not, ‘Well, that will take a week.’ He knows 90% of the general and specific directions you need off the top of his head,” Sheriff Brad Gates said. “He’s almost like an encyclopedia in the investing and finance fields.

“There’s no limit on his time,” Gates added, noting that Varelas often slaves past midnight and attends meetings on weekends. “He’s available whenever you need some answers.”

Many of Salomon’s proposals have fallen flat: A plan to turn trash into cash by importing waste into the county’s landfills drew far less interest than expected; asset sales netted only about half the money Varelas predicted, and Measure R, the pillar of the county’s original recovery plan, was murdered at the polls.

But those closely involved with the case point out that there also have been surprising successes: the sale of $236 million in insured recovery bonds to help repay pool investors; a refinancing of outstanding Teeter notes that will bring about $150 million in new revenue, and the near-unanimous agreement of note holders to give the county an extra year to pay back $800 million of debt.

Now Varelas is charting a new path in municipal finance, trying to divert revenue from cities and special districts to the county itself.

“Really, what [mergers and acquisitions] is, is knocking down roadblocks. You’re always trying to find the yeses instead of the nos. You definitely need to be an optimist, to think that you can get from A to B, or A to Z, even though there is no guideline or precedent on how you get there,” Varelas explained. “You definitely have to enjoy making things up as you go along. You can’t make the whole map and then start the journey. You have to just start and know there are going to be some wrong turns along the way.”

That kind of talk is typical Varelas, who studied philosophy in college and often tosses around quotes from Aristotle and others. During a recent Caribbean vacation, he spent two hours debating the existence of truth while the rest of the resort was partying.

Varelas has always cultivated a Big Brother role, serving as a resident adviser for two years in college and now, at Salomon, overseeing the 25 analysts in his department. Colleagues say he is the first to toss a football around the office after hours and is always available to chat. Using his connections in the jewelry business, he has helped 75 friends get good deals on diamond rings.

“They revere the guy. They spill their guts to him. He calls them back in the middle of the night,” Carr, his boss, said. “He has a reputation for really caring for people in a business that’s not really known for that.”

Those personal qualities were tested in Orange County, when a 24-year-old Salomon analyst suddenly died of heart failure last May. Varelas was the first to inform Barry Benge’s parents of the crisis--later, he went with them to see the young man’s body, helped pick out his casket and traveled to Florida to speak at the funeral.

“That’s the phone call that’s every parent’s worst nightmare, and he handled it with a lot of courage and dignity,” Barry’s father, George Benge, said, breaking into sobs anew. “This is nothing you can prepare for in business school. It’s just a matter of either you have it when the time comes--or you don’t.”

Varelas has had recent tragedies of his own: His older brother suffered a stroke this spring, and his mother died of brain cancer at age 60 last July.

He is thankful for the Orange County case that allows him to be closer to his grieving dad, sharing Sunday golf games and occasional dinners and offering free financial advice for the family business. But his one regret is that his mother is not here to clip items about him from the newspaper as her friends and neighbors have.

“My mom would always ask me, once a month, ‘So what, actually, do you do?’ ” he said, smiling at the memory. “If she were still alive, she could finally see: ‘This is what my son does for a living.’ ”

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Profile: Christopher Varelas

At 32 years old, Christopher Peter Varelas is Salomon Bros.’ lead financial adviser working on Orange County’s bankruptcy recovery. A profile:

Born: July 23, 1963

Hometown: Springfield, Mass.

Residence: New York City, but now staying at the Westin South Coast Plaza hotel

Marital Status: Single

Education: Bachelor’s degree in economics, Occidental College, 1985; master’s degree, Wharton School of Business, University of Pennsylvania, 1990

Career: Commercial loan officer for diamond and gold jewelers, Bank of America, 1985-88; vice president, mergers and acquisitions, Salomon Bros., 1990 to present

Attitude: “One thing you always ask yourself is ‘Is this the best course of action for the client?’ In this case, that’s the residents of Orange County. My father is a resident of Orange County. Inside, I’m a resident of Orange County. . . . I never lost sleep before this case. I’ve never felt such a burden of responsibility.”

Source: Christopher Varelas