Camarillo Plans to Sue 3 Firms, Ex-Treasurer for Fund Losses

Camarillo plans to file lawsuits against its former treasurer and three government securities dealers in an attempt to recover some of the $25 million lost last year in bad investments, a city official said Tuesday.

City Atty. Colin Lennard said that lawsuits will be filed against former Treasurer Donald F. Tarnow, as well as against three firms that sold the city securities investments that resulted in losses of $7.6 million.

Lennard would not specify the grounds for the lawsuits or say whether other securities dealers who did business with the city would be added to the suits. He said he did not know when the suits will be filed.

The three firms targeted are United Capital Corp. of Houston, American Money Market Securities of Irvine and Government Securities Dealers of New York, Lennard said.

Those companies are among more than 10 dealers that did nearly $1.7 billion in securities trading with the city before a falling bond market last spring sent the investments plummeting.

Handled City Investments

Tarnow, a longtime city employee who was fired in January, had near total control of the city’s investment funds. He arranged the investments, authorized bank transfers to pay for them and did the accounting of those investments, city officials said.

Tarnow and representatives of United Capital and Government Securities Dealers could not be reached for comment. Philip Kratzer, president of American Money Market Securities, said he has not been told by the city that his firm is going to be named in a suit.

“Don Tarnow had some losses on three or four trades, but he had an awful lot of profits, too,” Kratzer said. “I don’t know what they’re complaining about.”

Until last year, Tarnow had earned the city as much as $2 million annually investing the city’s surplus funds.

Tarnow’s boss, former Finance Director Larry Weaver, resigned from his post shortly after the investment losses were revealed earlier this year. City Manager Thomas W. Oglesby gave his notice of resignation last month. Both men said they were not aware of Tarnow’s bad investments until the money was lost. They said they resigned because they were responsible for his work.

Lost on Speculations

Tarnow lost the bulk of the city’s money through speculating on the resale of government-backed bonds. He used portions of the city’s $25-million investment fund to buy on margin as much as $270 million in bonds. Margin buying involves the purchase of bonds by paying only a portion of their price.

When interest rates began climbing last spring, the value of the bonds bought by Tarnow fell dramatically, forcing their sale at well below the price the city had paid for them.

Ventura County Assistant Dist. Atty. Toy White said her office is reviewing materials collected by the city on the investment losses. No decision has been made on whether there will be a criminal prosecution, she said.

City Council members would not comment on the plans to file the lawsuits.