Harford funds frozen in Pa. fraud case Rehrmann says action will not affect budget

October 12, 1997|By Lisa Respers | Lisa Respers,SUN STAFF

An investigation into allegations of fraud by a Pennsylvania financier has resulted in the freezing of $4.8 million of Harford County government funds.

In a news release issued late Friday afternoon, Harford County Executive Eileen M. Rehrmann said the county was notified Sept. 30 that the money was frozen by a U.S. district judge in Pittsburgh, who issued a temporary restraining order against Devon Capital Management Inc. and its sister company, Financial Management Sciences Inc.

According to the county, the Securities and Exchange Commission has accused Devon owner John G. Black of illegally using $2 million of investment proceeds to pay personal and business expenses; concealing investment losses; issuing fraudulent reports; and misrepresenting the value of clients' assets by $71 million.

According to the news release, Harford County gave $36 million over 1993 and 1994 to Mid-State Bank in Pennsylvania to be invested by Devon.

Officials said 90 percent of the money, used for capital construction, had been withdrawn for projects over the years and the $4.8 million was what remained of investment proceeds.

"This order [to freeze the assets] will not impact the day-to-day operations or the annual operating budget of Harford County," Rehrmann wrote. "I have directed Miles & Stockbridge, Harford County's bond counsel, to represent Harford County's interests and investigate the matter."

George Harrison, spokesman for the county executive, said officials would not comment further pending the investigation.

Councilman Mitchell Shank, a Republican from Havre de Grace, said members were briefed Friday by county officials about the freezing of assets. He said that an attorney for the county advised council members not to comment publicly.

Pub Date: 10/12/97

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.