Since I joined the Orange County Register’s Editorial Board in 1987, the biggest local issue remains the $1.7 billion 1994 Chapter 9 county bankruptcy. Unfortunately, both the news page and our Editorial Board ignored the warnings by private-sector accountant John Moorlach concerning how Treasurer-Tax Collector Bob Citron was engaging in risky investment strategies that caused the disaster. At least the Los Angeles Times, which then had an extensive OC Edition, also missed it, claiming Moorlach’s prognostication was “a bum rap.”
Citron beat Moorlach in a re-election bid. When things went south, he then resigned and Moorlach was appointed as his replacement, repairing county finances.
I bring this up for two reasons.
First, current Treasurer-Tax Collector Shari Freidenrich is running for re-election against former top deputy Dana Schultz. When Schultz challenged her boss for the seat in January, Freidenrich fired her. In a move that signaled the coming power grab, County CEO Michelle Aguirre intervened, keeping Schultz on the payroll to continue managing the very investments Freidenrich was elected to oversee.
Second, Moorlach, for whom I served as press secretary when he was a state senator, is sounding a new alarm. In a March 2 op-ed in the Register, he charged, the Board of Supervisors, through Aguirre, “has pirated the Treasurer’s office and is now plundering it.”
The situation involves speculation about interest rates and personnel problems in Freidenrich’s office.
In February 2025, the Board voted unanimously to take management of the county’s $17 billion investment portfolio from her, and give it to Aguirre. The Register reported, “The action comes amid complaints from former staff members who allege a toxic atmosphere in Freidenrich’s department and an overly aggressive management style.” The county HR department issued a warning in 2022.
At the time in 2025, I wrote, “OC voters want sound investments, not HR drama.”
Board Chairman Don Wagner, who is running for California secretary of state, reiterated to me the reason for this transfer of responsibilities from Freidenrich to Aguirre: “The purpose of the change was not anything other than to take it out of the hands of the dysfunctional treasurer and make sure we had eyes on it.”
The Board also replaced an Oversight Committee Moorlach had set up with a new Investment Oversight Committee, according to the county website, under which “the dedicated staff responsible for oversight of the investments and monitoring activity has not changed.”
I talked to David Carlson, president of DMC Companies and a lecturer at UC Irvine, and for 10 years chair of the original Oversight Committee. He said the Board of Supervisors ignored the 478,368 voters who re-elected Freidenrich in the 2022 election. He said there are three factors in county investments: liquidity, safety and yield. “You could get higher yield by ignoring safety or liquidity.” The key is balancing each of the three, “without threatening any one of the three. And Shari was just masterful at doing that. And Orange County was in the top 1% of investments among California counties.”
He said putting the county itself in charge of the investments “makes no sense” and was “shortsighted and irresponsible.”
In response, Schultz told me, “I have a very capable team. They are overseeing all the investments. We daily monitor all the economic forecasts. We are investing in very stable and secure investments.” Freidenrich replied she’s running on her record and is working on her personnel skills.
The problem in 1994 was Citron “bet” interest rates would stay low. Basically, he borrowed short-term money and invested it in long-term bonds. As the OC Grand Jury explained after the bust, he “borrowed $2 for every $1 on deposit, increasing the investment pool by $13.0 billion.” When Federal Reserve Board Chairman Alan Greenspan instead raised rates, the portfolio imploded.
In his op-ed, Moorlach warned about the situation now in 2026: “And the weighted average maturity has been extended to such a length that this information is no longer provided to the Board or the public. Can you say, ‘betting on the direction of interest rates,’ again?”
In other words, the county is once again locking itself into long-term bets. If interest rates pivot, the county’s investments could once again become handcuffs.
This is why we have elections and it’s why it’s a problem for the Board of Supervisors to have meddled in the work of the elected treasurer.
In the 12 weeks until the June 2 primary, Freidenrich and Schultz should debate this issue, and the HR one as well. Voters this year also will decide three of five Board seats. Whoever wins, Freidenrich or Schultz, the Board should return the investment portfolio’s management to the treasurer-tax collector’s office. The county’s investment pool should not be put at risk due to an HR tussle.
Back in 1995, after his appointment, our Editorial Board met with Moorlach. When I asked him how he predicted the bankruptcy, he quipped, “My uncle is Alan Greenspan,” then the Fed chairman. They’re not related. The point was, nobody can predict the direction of interest rates. Today, with the war in Iran roiling global markets, that’s more true than ever and safety must be the major concern of any government investment fund.
It seems to me, if a crisis is solved, and the solution keeps working, you should keep it. Granted, I worked for him, but I don’t want to be wrong and Moorlach to be right a second time. I’m voting for Freidenrich.
John Seiler is on the Editorial Board of the Orange County Register.