County Cuts Ties With Brokerage

San Bernardino County ended its relationship with brokerage Salomon Smith Barney on Thursday after the county treasurer concluded that the municipality paid as much as $308,000 in potentially avoidable commission fees as part of transactions overseen by his predecessor, who last week pleaded guilty to federal bribery charges involving the awarding of county contracts.

County Treasurer Dick Larsen said that he is requesting outside legal counsel to help determine if any wrongdoing was committed in former Treasurer Tom O’Donnell’s handling of the county’s securities trading. O’Donnell left office in November 1998.

Larsen said the Salomon Smith Barney branch in Newport Beach had purchased on behalf of the county retail-class shares instead of institutional shares in the Federated Government Obligation Fund in fiscal 1997-98. Larsen said the retail shares carried a commission while the institutional shares did not, and he questions why O’Donnell and the brokerage opted for retail shares.

Larsen said the county may also have paid an additional $700,000 in avoidable commission fees for earlier transactions.

“If there were any improprieties involved in this matter, it’s my intention to pursue full restitution to the county taxpayers,” he said.

Calls to the brokerage’s office in Newport Beach were referred to the company’s corporate office in New York. A spokesman there could not be reached for comment.

Last week, O’Donnell and Sol Levin, the county’s former investment officer, agreed to plead guilty to charges of conspiring to accept bribes. They face up to five years in prison when they are sentenced in March.

O’Donnell, Levin and James J. Hlawek, the county’s former chief administrative officer, who is expected to plead guilty soon, are accused of taking bribes from a financial consultant in exchange for lucrative government contracts.