Local News in Brief : City Officials to Be Bonded

The Lawndale City Council has approved setting a $500,000 bond for the city treasurer and $50,000 bonds for the city manager, assistant city manager, accounting manager and city clerk.

The issue of bonding the city treasurer arose after the council discovered last fall that the city had lost $1.68 million in a speculative securities investment made by then-City Treasurer Ray Wood, who was fired Oct. 1.

Lawndale had no bond on Wood, but even if it had, the city would have had to show wrongdoing beyond simple negligence to collect on its loss, according to City Atty. David J. Aleshire.

Lawndale has joined five other cities and municipal agencies in a suit against E. F. Hutton, First Investment Securities and six individual brokers who handled the investments. The FBI and Securities and Exchange Commission are investigating the case, Aleshire told the Lawndale council Thursday.

The suit seeks at least $8.4 million in compensatory damages and $16 million in punitive damages, plus interest, legal and other costs and triple damages for claims the lawsuit makes under the federal Racketeer-Influenced and Corrupt Organizations Act.

Because E. F. Hutton has undergone a merger since the suit was filed in federal court Jan. 20, the suit will be amended to name Shearson Lehman Hutton as a defendant, Aleshire said. Also to be named is William F. Smith, the owner of firms that own First Investment Securities, Aleshire said.