Release Bankruptcy Testimony, Rackauckas Says

More than 9,500 pages of grand jury testimony examining the role of Merrill Lynch & Co. in Orange County’s 1994 bankruptcy should be made public, Orange County Dist. Atty. Anthony J. Rackauckas said as the California Supreme Court prepared to hear oral arguments in the case today.

“It is in the public interest to unseal the transcripts and make them available,” Rackauckas said Monday, reversing the position of his predecessor, Mike Capizzi, whom he replaced in January.

Rackauckas said taxpayers and others “should be able to examine the record” of what led to the county’s loss of $1.64 billion when its two investment funds collapsed.

Merrill Lynch sold most of the risky securities to former Orange County Treasurer Robert L. Citron, who resigned in the wake of the bankruptcy and eventually pleaded guilty to felonies.

Attorneys for Merrill Lynch will argue today before the justices in San Francisco that releasing the transcripts would invade the privacy of people who were not indicted. They argued in court papers that the release of witness testimony would overturn a century-old practice of keeping grand jury proceedings secret unless there is an indictment.

The grand jury abruptly ended its investigation in June 1998 after Capizzi accepted a $30-million settlement from the investment giant.

Attorneys for a coalition of newspapers and media entities, including The Times, have fought for public release of the transcripts. The testimony was ordered released by then-Superior Court Judge David O. Carter, but Capizzi refused and Merrill Lynch appealed the decision.

The 4th District Court of Appeal later ruled that Carter had the authority to release the transcripts.

The state attorney general’s office under former Atty. Gen. Dan Lungren sided with Capizzi, and continues to oppose the release of the transcripts under Atty. Gen. Bill Lockyer, said Gary Schons, senior deputy assistant attorney general in San Diego.