TOLEDO, Ohio (AP) _ Toledo’s city manager and treasurer have resignd, becoming the latest casualties of a Florida securities firm’s collapse in which Toledo stands to lose $19.2 million.
Earlier, the president and three other top officers of Cincinnati-based Home State Savings Bank, which closed after ESM Government Securities Inc.’s collapse, were fired by the state-appointed conservator who has taken over operation of the closed thrift.
Toledo City Manager David Boston submitted his letter of resignation today to Mayor Donna Owens, one day after he accepted Treasurer Dan Hiskey’s resignation. Both resignations are effective April 30.
Hiskey has said he takes ″a portion of the responsibility″ for investing city money in ESM without getting proper security for the money.
Boston, who refused to step down at Mrs. Owens’ request several weeks ago, said today that legal and financial matters now are under control and it is appropriate for him to quit.
On Tuesday, Pompano Beach, Fla., Finance Director Linda Schreiber-Baker resigned for health reasons, saying, ″Recent events have put me under great stress.″ She was responsible for investing $11.9 million of the city’s money with ESM.
Explaining the Home State firings, Columbus lawyer John Hartranft, one of the state-hired attorneys representing conservator Arlo Smith, said Tuesday that three of the executives were fired because of allegations against them in a suit Smith filed against Home State’s owners and executives. He said the firing came before the suit.
″I think when you’re going to allege that they’ve done things wrong and cost the institution $140 million, it’s inconsistent to keep them on the payroll,″ Hartranft said.
Smith, a retired Cleveland banker, was appointed to conserve Home State’s assets and help sell it to a buyer who can reopen it for depositors, who have been cut off from their money. Chemical Bank of New York has offered to buy it and is auditing the books this week.
Fired were Home State President David J.Schiebel, Vice President Robert J. Weeder, who oversaw Home State’s accounting division, Vice President Barry Randman and legal counsel Gehl P. Babinec.
Schiebel, Weeder and Babinec were among the defendants named in a $432 million lawsuit Smith filed March 25 against Home State owner Marvin L. Warner and other officers and directors. Randman is not a defendant in the suit.
Smith alleges that negligence or improper actions by the defendants led to the March 8 collapse of Home State, a Cincinnati-based thrift with 33 offices in southern and central Ohio.
Home State closed after a run on its accounts set off by the March 4 closing of ESM of Fort Lauderdale, Fla.
That led to the temporary shutdown of 69 other institutions in Ohio, more than half of which have since reopened for full service after meeting a new statutory requirement for federal insurance coverage.
Smith has said Home State stands to lose about $145 million through its dealings with ESM. In his lawsuit, he criticized the defendants for allowing Home State to enter into what he says were excessive, risky and inadequately collateralized loan deals involving securities transfers.
In Miami, Securities and Exchange Commission officials investigating the collapse of ESM put in a full eight-hour day Tuesday meeting behind closed doors with Home State owner Warner.
Charles Harper, director of the SEC’s Miami office, said the SEC would not comment but acknowledged that Warner and ESM founder Ronnie Ewton had been at the office.
ESM, which was shut down by the SEC, is accused of bilking more than $300 million from its investors, including several municipalities.
Meanwhile, officials at several other Ohio saving and loans hope customers will keep their faith following news that a New Jersey firm with which they had invested has filed for reorganization under federal bankruptcy law.
Bevill Bresler & Schulman Asset Management Corp. of Livingston, N.J., which lists six Ohio thrifts as creditors, filed for protection from its creditors Monday while it reorganizes. A federal judge froze the firm’s assets.
First Federal Savings & Loan of Wshington Court House, which the firm lists as a $4.4 million creditor, experienced ″some heavy withdrawals″ Tuesday, according to Executive Vice President Harold Thompson. He said deposits are federally insured.