Camarillo Will Settle Suit, Write Off $4.15 Million in Investments
The Camarillo City Council on Wednesday night approved a $550,000 settlement with a brokerage firm, saying it has abandoned hope of recovering the rest of $4.7 million lost through bad investments with the company.
“Given the circumstances, it’s the best we can do,” Mayor Sandi Bush said about the settlement of the city’s lawsuit against United Capital.
The suit was one of four filed by the city in an attempt to recoup some of the $25 million in city funds lost in 1987 by former Treasurer Donald F. Tarnow through speculative investments.
United Capital agreed to pay Camarillo $250,000 once the settlement becomes official in a few weeks, City Atty. Colin Lennard said. The remaining $300,000 will be paid in monthly $10,000 installments--at 10.5% interest--during the next 2 1/2 years, Lennard said.
Bush said the city decided to settle after it discovered Camarillo is near the end of a long line of creditors seeking funds from the Houston firm. The city learned in September, she said, that the Justice Department has sued the firm to recover $10 million invested by the Marine Corps.
No Money for Trial
Councilman Michael Morgan said he would prefer that the city “sue these people to the hilt.” But Morgan said he realizes that the city does not have the money for a court case that could drag on for years.
The city already has spent $290,000 in its attempt to recover the lost funds, Lennard said.
The city also paid $220,000 for an audit to assess the damage of Tarnow’s investments. And this month, the council agreed to pay $20,000 to a Los Angeles executive search firm to find a new finance director.
Former Finance Director Larry Weaver and City Manager Thomas W. Oglesby resigned after Tarnow was fired last January.
Bush said the city is still seeking $1.6 million from American Money Market Securities of Irvine and $1.7 million from Government Securities Dealers of New York. The city filed another lawsuit against Tarnow for unspecified damages.
Tarnow lost about $22 million by speculating on the resale of government-backed bonds and $3 million by investing in failing businesses.