$25-Million Loss : Camarillo Shrugs Off Fiscal Fiasco

Share via
Times Staff Writer

On the day after Camarillo residents learned their city had lost virtually all its savings--about $25 million--in bad investments, Kevin G. Staker expected to get a rise out of the normally staid Ventura County city of 47,000.

Staker, a local attorney and chairman of a citizens group that is critical of city fathers for failing to detect the losses, showed up early at the Los Nogales Elementary School auditorium to set up benches for the group’s meeting Tuesday--seats he hoped mobs of angry residents would fill.

Instead, 18 people showed up. And despite the new audit that pinpointed the city’s losses at $25 million, the group voted against mounting a City Council recall drive, which had been under consideration. The vote failed mainly because no one would volunteer to lead the effort or gather any of the 5,200 signatures needed to place the issue on the ballot.


Then, in a flurry of name-calling and accusations, several people stormed out of the meeting after learning that five group members had already served three of the Camarillo City Council members with notices that they intended to recall them.

“I’m going to recommend that the committee be dissolved,” Staker said of the 4-month-old Camarillo Committee of Concerned Citizens, which he said had completed its purpose: to find out why the money was lost.

The scandal that in many other cities would have thrown City Hall watchdogs into a frenzy has caused barely a ripple in Camarillo. With all the elements for a major controversy--staggering financial losses, hints of criminal wrongdoing, repeated criticisms of the council in local newspaper editorials--the only thing apparently missing has been community outrage.

With few exceptions, the 100 or so residents who attended last week’s regular council meeting after the release of the final audit heaped praise on the five-member City Council.

Although officials estimate that it will take the city years to recover from the $25-million loss, most of those who spoke at the council meeting directed their dismay at the five citizens spearheading of the recall movement. One speaker called the citizens members of a “radical, political fringe group.”

People here have always been pretty content with the way their city has been run, past and present city officials suggested in interviews. They say that residents of Camarillo, who are referred to as Camarillans by the local newspaper, have been blessed with a low crime rate, good schools and weather that nearby Oxnard Plain farmers joke is so good that it is hardly worth conversing about.


“Most cities have City Hall gadflies, but that’s never seemed to be the case in Camarillo,” said Vice Mayor Sandi Bush, a 14-year resident who is in the middle of her second term on the council. Along with Mayor Thomas S. Martin and City Councilwoman Charlotte Craven, she was served with a recall notice last week.

Council members Michael D. Morgan and F. Burrows Esty were not served with recall papers because their terms expire in November, the group of five recall supporters said.

Bush concedes that the council bears some responsibility in the losses, but said most residents agree that the policy-making body is elected to make major decisions rather than to oversee the details of city administration.

“People are not being apathetic about the losses,” Bush said. “But there is a large group who trust us to do the job.”

Bush and other city officials say the only two issues that have mobilized residents in great numbers in the last 15 years have been the opposition to commercial jets at the Camarillo Airport and support of the city’s growth-control law.

The current council’s unanimous support of those positions has provided some political insulation from the potentially harsh ramifications of the $25-million investment loss, officials said.


So far, the only casualties have been City Hall bureaucrats.

Former City Treasurer Donald F. Tarnow, who single-handedly transacted the highly speculative investments, was fired in January for failing to tell the council about the losses. Former Finance Director Larry Weaver, Tarnow’s boss, who auditors say should have known something funny was going on as early as March of last year, announced his resignation shortly after Tarnow was fired.

And last week, City Manager Thomas W. Oglesby, Weaver’s boss, submitted his resignation to the council, effective June 30. Auditors from Arthur Andersen & Co. concluded that if Oglesby didn’t know of the bad investments, he should have. In his resignation letter, Oglesby agreed.

Plan Backfired

Tarnow last year began trading heavily in government securities, hoping to make the city millions of dollars by betting on changes in interest rates that would boost the value of bonds that he bought on credit. That high-risk investment strategy seemed to work when interest rates were falling in late 1986, but backfired last spring when rates again climbed and the bond market fell.

Tarnow eventually was caught holding more than $270-million worth of bonds that fell dramatically in value. He was forced to sell the bonds at a loss and use the cash remaining in the city’s savings accounts to pay off the money he owed securities dealers.

All told, Tarnow lost $21.7 million in the bond market, involving hundreds of short-term transactions that totaled nearly $1.6 billion between December, 1986, and July, 1987. He lost the city another $3.2 million by investing in two business ventures with money from employee benefit accounts in a manner that City Atty. Colin Lennard said could have been illegal.

Tarnow, a longtime city employee who in the past had earned the city as much as $2 million a year investing the city’s investment account, has denied any wrongdoing in the losses. He managed to keep most of the losses from his bosses until last December because he alone made the investments and maintained the accounting records, which auditors say were not kept current.


Checks Bounced

The losses came to light only after city checks started bouncing, which proved embarrassing for a city that prided itself on paying cash.

When news of the bounced checks first surfaced, Marshall E. (Bud) Dodson had just moved into town. The former Westminister, Colo., resident had decided to retire in Camarillo with his wife, after 25 years in the trucking business.

Dodson, 58, said he hadn’t intended to become involved in local politics, having had his fill serving on the Westminister City Council for 10 years. But now he is the leader of Camarillo’s recall movement and believes that he can rouse local residents in supporting that campaign.

Some residents have been afraid to speak out against the council, Dodson said, because they fear making enemies in the close-knit community. “But I don’t have a business or any personal friends that are serving on the council,” he said.

Dodson said he has no political ambitions in Camarillo, but was prompted to lead the recall campaign because he believes the council has shown it does not have the expertise to run the city properly. He speaks of a “silent majority” of residents who are angry but have yet to find a way to take action.

Roderick B. Moore, a 20-year resident who served on the council from 1974 to 1982, agreed. “I think we have the type of people who don’t like violent action--and in my opinion a recall is considered violent action--and are puzzled about what to do,” he said.


The firing and resignations of top city administrators are likely to take some pressure off the City Council, but a recall movement could eventually catch fire, said Moore, who opposes a recall.

“There are a lot of people talking about the losses, and they are flabbergasted that something like this could happen here,” Moore said. “People may sign the recall petitions just because now all of America knows that Camarillo lost their damn money.”