CAMARILLO : $25-Million City Suit Is Settled for $20,000

Camarillo has reached a settlement with a former city treasurer who was accused of causing the city to lose $25 million in investments nearly four years ago.

As part of the settlement, Donald Tarnow will pay the city $20,000 and agree to drop any further claims, Mayor David Smith said. In return, Camarillo will drop its $25-million lawsuit against Tarnow.

Smith said the recent settlement releases the city from any legal costs incurred by Tarnow. The former treasurer claimed that the city had to pay all his legal fees because he was a city employee at the time the loss occurred.

Tarnow could not be reached Thursday for comment.

In the settlement, Tarnow also agreed to drop a lawsuit that he filed against the city after Union Bank sued both him and Camarillo. Union Bank is seeking to recover $1.7 million in loans, Smith said.

City officials say that in 1987 all of the city’s savings--about $25 million--were lost after Tarnow borrowed funds to finance highly speculative investments, including long-term government securities. The bond market fell, the city says, and Tarnow was caught holding more than $270 million worth of bonds that he was forced to sell at a loss.

Smith said he was relieved to have the case brought to an end.

“It has gone on and on. It was time to bring it to a conclusion,” he said.