Company Settles County Lawsuit

San Bernardino County officials Tuesday announced the settlement of a multimillion-dollar lawsuit against a brokerage accused of offering luxury trips, meals and call girls to county officials in exchange for investment deals. Supervisors agreed to accept $7.75 million from Salomon Smith Barney to settle its portion of the suit.

“Salomon Smith Barney did the right thing,” said San Bernardino County Treasurer-Tax Collector Dick Larsen, who led the county’s effort to recover money lost in a long-running corruption scandal. “They made the right business decision.”

As part of the same suit, the county agreed to accept $750,000 to settle its claim against a second company, CDC NVest Short Term Corporate Income Fund, and its former agent, Jeff Jackson, who also was accused of offering improper gifts to officials.

Larsen said he became aware of irregularities after noticing that the county had been hit with a $308,000 commission fee from Salomon Smith Barney for which the county, as a large investor, should have been exempt.

An investigation later revealed that an agent for the New England brokerage, Peter Morrison, earned the company about $4.75 million in fees from improper investments by the county. The county also lost out on as much as $24 million because of inappropriate investment choices, Larsen said.

The county’s suit, filed in August 2000, claimed that Morrison bribed three county officials into making investments with his firm. Former county officials--Chief Administrative Officer James Hlawek, Treasurer Tom O’Donnell and Investment Officer Sol Levin--accepted lavish dinners, cash payments of up to $1,000, and trips to Costa Rica, Paris and other vacation spots. Morrison also allegedly offered the men visits from call girls, though it is unclear if those offers were accepted, Larsen said.

Federal regulations bar securities firms from offering gifts worth more than $100 to government officials, and all county employees are required to report all gifts they receive. Hlawek, O’Donnell and Levin failed to report most of their gifts.

The three men are defendants in the lawsuit. Their portion of the suit is still pending, with a hearing scheduled for June 3.

In addition, the three men, who resigned from their county posts in 1999, pleaded guilty to criminal charges of bribery. Levin and O’Donnell were sentenced to 366 days in a halfway house earlier this year. Hlawek will be sentenced April 23.

Richard Marmaro, a Los Angeles attorney representing Morrison, said that despite the settlement his client is blameless.

“Peter Morrison did nothing wrong and there is no credible evidence that he did,” Marmaro said. Morrison, who also was named as a defendant, will be dropped from the suit as part of the settlement agreement. Once a top earner for the firm, Morrison has since retired from Salomon Smith Barney.