Torrance Officials Call for Reforms of Investment Policy

Stung by the possible loss of $6 million in an investment scandal, Torrance city officials are proposing sweeping reforms of the city’s investment process that would curtail the authority of the city treasurer while increasing the City Council’s oversight powers.

The proposals, described as the most significant in a quarter-century, come in the wake of disclosures that $6 million in tax money is missing in a scandal involving Steven D. Wymer, an Irvine-based investment adviser who was working for the city.

Under the reforms, the responsibility for investments--now held solely by City Treasurer Thomas C. Rupert--would be shared by other city officials including the council, the city manager and the finance director.

“There would be a team approach, with greater accountability to the council,” Mayor Katy Geissert said Saturday.

“All of this is in hindsight,” Geissert added, “and there’s no absolute guarantee that you have an air-tight system that will prevent the sort of fraud that we were caught in by Wymer. But I think it will provide some safeguards.”

Councilman George Nakano, who heads the finance committee, said he generally agrees with the proposals, adding: “We need all the checks and balances we can find.”

The City Council will review the proposals at its Tuesday evening meeting. Although final approval may not come for several weeks, Geissert said Saturday that she hopes for swift action on at least one proposal: requiring contracts like the one with Wymer to be approved by the council.

Council members say they did not know until recently about the 1988 contract with Wymer’s firm, Denman & Co. of Irvine. That contract was signed by Rupert, an elected official who has been city treasurer for 28 years.

Wymer, who advised other cities in California and Iowa, was arrested last month and has pleaded not guilty to 30 counts of securities fraud and other charges.

Meanwhile, Rupert has been under growing criticism in City Hall since the discovery in mid-December that the $6 million invested with Wymer is missing. City officials have not ruled out recovering some or all of the money and are conducting their own investigation.

Rupert oversees the city’s $77-million investment portfolio, including the $6 million that is missing, and under law must make monthly reports to the council. But those reports are considered “for information only,” and the council is not required to approve them.

The package of reforms, made public Friday night and given to the council to consider, is signed by Rupert, City Manager LeRoy J. Jackson and City Atty. Kenneth Nelson. Rupert could not be reached for comment Saturday.

If the reforms are passed, the treasurer would be required to prepare an annual report for the council with details of investment strategy planned for the upcoming year. That report would be reviewed by an “investment team,” possibly made up of Nelson, Finance Director Mary Giordano and a representative of the city manager’s office. The annual strategy for investments would have to be approved by the council.

The treasurer also would be required to report in detail every three months to the council’s Finance Committee. Monthly investment reports would also be expanded to include more information on how, and where, city money is invested.

Geissert and Nakano both called the proposals the most significant since 1965, when the council granted the treasurer authority to initiate and supervise the investment of city money.