City Council Overlooked Regular Reports on Investment

Torrance City Council members have been receiving written reports for nearly three years showing that millions of dollars of city funds were invested with Denman & Co. of Irvine, a firm run by a man charged with securities fraud.

But the investment apparently did not catch the attention of city officials, even when it was listed with a rate of return consistently higher than the yield of other city holdings. At one point, a report showed the investment earning 17.7%.

Council members have said they did not realize that City Treasurer Thomas C. Rupert was using Steven D. Wymer’s firm until Wymer was arrested last month and it was disclosed that $6 million in city money is missing. Wymer has pleaded not guilty to 30 counts of securities fraud and other charges.

Now, some council members are calling for more oversight of Rupert’s job.

“Without heaping any criticism on Tom, I’m just recommending that we go to an appointed city treasurer,” Councilman Dan Walker said. “When the time comes for a change in city treasurer, I’d like to know that the office is under the supervision of the city manager’s office and the City Council, not independent of them.”

Yet a review of city records shows that the council repeatedly was given written reports that showed the Denman & Co. holding. Starting in April, 1989, the investment appeared in regular reports that Rupert sent to the City Council.

Monthly treasurers’ reports are required by the City Charter as well as a 1985 state law that Rupert said he helped draft. Most investments in the reports are certificates of deposit held by a number of banks. Only basic details are listed, such as the names of banks and rates of return.

“You see a proliferation of banks, varying rates of interest . . . they’re not terribly revealing,” Mayor Katy Geissert said of the reports.

Council members appear to have paid little attention to the Denman & Co. listing.

Councilman Timothy Mock recalls discussing the Denman & Co. account with Rupert about a year ago. He does not remember, however, how the subject came up.

“It was a very brief conversation saying that things were working out well . . . and that we were getting higher returns and he was pleased with that,” Mock said. “In fact, he sort of bragged about it.”

Other council members admit that they gave the reports little more than a cursory glance.

“As with most reports, you look to the bottom line, and the bottom line in these always was that our finances were safe, they were insured and they were getting good returns,” Walker said.

Councilman Mark Wirth said that although the reports’ contents are reviewed by the council, “I haven’t seen anything that I see as unusual.”

City Finance Director Mary Giordano said no one in her office is required to review the reports. “They’re prepared by our elected city treasurer for our City Council,” Giordano said.

City Manager LeRoy J. Jackson stressed that Rupert--not the city manager--handles investments for the city. “The treasurer’s office is an independent office operating under charter and council authority,” Jackson said.

Acting on a council request, Jackson is reviewing the nature of city investments and hopes to present his own report by Jan. 28.

There was nothing wrong with the council’s failure to question Rupert, Councilman Bill Applegate said, because Rupert is an independent elected official.

“He’s not answerable to us,” Applegate said. “He’s answerable to the people.”