Target bank sues Hale Glen Burnie Bancorp group claims illegal tactics

Banking

March 11, 1998|By Bill Atkinson | Bill Atkinson,SUN STAFF

Glen Burnie Bancorp executives and directors have retaliated against a takeover attack, suing a former director and Edwin F. Hale Sr., chairman of First Mariner Bancorp, accusing them of illegally soliciting proxies and votes from stockholders.

The lawsuit also alleges that Hale and Susan Demyan, the former director, are working to combine First Mariner illegally with Glen Burnie Bancorp's subsidiary, Bank of Glen Burnie.

The suit was filed Monday in Anne Arundel County Circuit Court by F. William Kuethe Jr., president and chief executive of the $225 million-asset Bank of Glen Burnie, Chairman John E. Demyan -- Susan Demyan's cousin -- along with 10 other directors.

This latest volley -- in a fight that has gone on for more than a year -- came two days before Bank of Glen Burnie's annual meeting tomorrow.

"They are saying anything and everything that comes to their mind trying to win this election," said Kuethe. "We just feel, at some point, we have got to slam the door in his [Hale's] face and let him know he does not have a totally free ride in harassing us."

Hale, the Baltimore shipping executive, said he had not yet been served with the lawsuit and could not comment.

Susan Demyan said she had not seen the suit, but defended herself by saying that everything she has sent stockholders had been reviewed by her attorney and was free of erroneous statements.

"I am very careful with what I am doing," she said.

The executives' lawsuit alleges that Susan Demyan is trying to win votes with "false and misleading proxy solicitation materials and communications." It also claims that she and other defendants misrepresented the bank's stock price, saying that it has declined -- even though it has risen 19 percent in recent months.

Susan Demyan also distributed portions of a lawsuit filed against the bank recently that alleges that Kuethe and John Demyan -- Susan Demyan's cousin -- concealed information about a string of fraudulent loans made to a single borrower that resulted in millions of dollars in write-offs. That lawsuit was filed by shareholders Neil C. Williams and Michael Demyan. Michael Demyan is John Demyan's uncle.

The directors' lawsuit says the claims in the Williams-Michael Demyan lawsuit are "false and baseless."

Susan Demyan wants to oust Bank of Glen Burnie's board in favor of a new slate that includes former Maryland Gov. William Donald Schaefer. Schaefer is a director emeritus of First Mariner, which last month offered to buy Bank of Glen Burnie.

The offer, its second, was rejected last month, and Glen Burnie Bancorp instituted a "poison pill" to block a hostile takeover.

First Mariner owns about 5,551 shares of the company's stock and is waiting for Federal Reserve Board approval to buy another 170,883 shares. That would boost its stake to 19.5 percent.

In an unrelated development, Kuethe and director Eugene P. Nepa were accused yesterday of sexual harassment by Dorothy Lis, an employee who complained to the Equal Employment Opportunity Commission in Baltimore.

In a statement, Kuethe said the bank is taking the complaint "seriously and are investigating."

Pub Date: 3/11/98

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