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Three Atlanta mayors have testified in the unfolding scandal that centers on misuse of the city’s investment portfolio. None of the three offered much help to either side in the case. Former mayors Maynard H. Jackson Jr. and Andrew J. Young chose their words carefully, disavowing any direct knowledge of the scandal, while cautiously offering that one of the defendants — investment broker Raymond J. McClendon — was a trusted friend. Mayor Bill C. Campbell, on the other hand, seemed to relish the chance to spar with attorneys in a related civil suit, Arnold v. City of Atlanta, No. 1:97-CV-3503 (N.D. Ga. May 20, 1999). Campbell used his deposition testimony to berate the media, criticize the competence of the city’s former financial officer, and even suggest that the federal investigation had racial overtones. A federal jury on Tuesday convicted McClendon of 28 counts of mail fraud. The jury cleared Theresa Stanford, the city’s former chief investment officer, of some counts of mail fraud but found her guilty of nearly two dozen similar counts. A federal grand jury indicted McClendon and Stanford nearly a year ago on charges that they “knowingly and willfully devised a scheme to defraud the City of Atlanta.” U.S. v. McClendon, No. 1:99-CR-462 (N.D. Ga. Sept. 9, 1999). According to the indictment, Stanford colluded with McClendon to give the investment broker and his former firm, Pryor, McClendon, Counts & Co., preferential treatment over other broker dealers. In return, Stanford and her husband, Charles Stanford, allegedly received financial gratuities from McClendon, in part through money McClendon funneled to a company owned by Charles Stanford. McClendon, who made the bulk of the city’s security trades in U.S. Treasury securities, allegedly rigged the trades so his investment firm always profited while the city absorbed an estimated $18 million in losses. MAYOR CAMPBELL DEPOSED Campbell’s deposition was taken May 20, 1999, in connection with a wrongful termination civil suit filed against the city by Terrence Arnold, who temporarily assumed Stanford’s duties when Campbell removed her as Atlanta’s CIO in 1994. Arnold claimed he later was fired in retaliation for alerting Bell to Stanford’s investment practices and for refusing to steer business to minority-owned firms. Campbell acknowledges that Jackson’s chief financial officer, Michael J. Bell, brought the allegations of possible trading improprieties by Stanford and McClendon’s investment firm to his attention shortly after he took office in 1994. Bell has been a key source of information for prosecutors and investigators with the U.S. Securities and Exchange Commission, which also has been investigating the allegations against McClendon and Stanford. Bell says he first notified members of the mayor’s transition team about the improprieties shortly after the 1993 election. The following June, Campbell approved an internal investigation of the city’s financial investments. But, for more than five years, he declined to take any formal action against Stanford other than relieving her of responsibilities for the city’s investments. Campbell said he didn’t fire Stanford because Bell, who left the city in December 1994, “never made a recommendation for her to be terminated. “The truth is, I thought Theresa Stanford should have been terminated from the very outset,” Campbell said. The mayor fired Stanford last year, several months before she was indicted. While the mayor didn’t defend Stanford, he saved his harshest words for Bell, who is now DeKalb County’s director of finance. “This is a guy who I thought was incompetent and still believe to be incompetent, that made, in essence, recommendations that I could not support.” Campbell noted that Stanford had filed a race and gender discrimination suit against Bell in 1993 after he began questioning her about the Pryor, McClendon security trades. She eventually dropped the suit. “I did not believe that Michael Bell was able to adequately interact on a professional level with his African-American subordinates. � “I don’t believe Michael Bell was able to get along with anybody, white or black,” Campbell continued. “I have never met a person that worked with Michael Bell in the City of Atlanta that had anything charitable to say about him. I do not believe that I’ve ever run into anybody — African-American, white, Asian, Hispanic — that ever thought that Michael Bell was a reasonable person to deal with while he was working for the City of Atlanta.” RACISM QUESTIONS Did the mayor believe the allegations against Pryor, McClendon — one of the largest minority securities firms in the country — were racially driven? “Could have been,” Campbell answered. “Very possible.” Campbell also said he found newspaper accounts no more credible than Bell. “First, I don’t believe what I read in the newspapers,” he said. “As I’ve indicated to you, perhaps more than any other person in Atlanta, I have seen inaccuracies, absolutely wrong conclusions, wrong facts, statements. So the fact that � an allegation appears in the newspaper, that in and of itself does not mean that all of Atlanta’s government runs out and takes immediate action based on what’s in the article. It just doesn’t happen that way. If that were the case, we might as well turn over the operation of government to the publishers of The Wall Street Journal and The Atlanta Journal-Constitution. “I must tell you that I don’t believe a single word that is quoted or written in The Atlanta Journal-Constitution. Not a single word. I put no stock in any article that’s written. Nothing whatsoever. �. It is so horribly inaccurate and biased that there is no reason for us to use it as a reference source on any level whatsoever.” The mayor indicated he doesn’t trust any newspaper. “I would not put any stock or believe necessarily anything that’s read or quoted in any newspaper, by the way, unless I am assured that it was transcribed from a recording, just as I doubt this court reporter could not scribble what was being said by us at this rate of speed accurately.” In June 1994, after a story surfaced in The Atlanta Journal-Constitution about questions raised by the internal audit Bell had requested, Campbell ordered the city law department to conduct its own inquiry. But in his deposition, the mayor acknowledged that the law department had no staff “that I’m aware of that has the kind of financial background that would allow them to do a complicated investigation. “I think they did the best they could with the personnel they had available,” Campbell said. The law department report noted “an ominous appearance of impropriety” and suggested that an outside law firm be hired to continue the investigation. Campbell said he had “no recollection at this time” as to whether he supported that recommendation. After Bell’s departure, Campbell said the allegations of financial malfeasance “slipped to what is proverbially called the back burner.” “It was no longer a primary focus,” he said. Besides, Campbell said news accounts of alleged investment improprieties elicited “nothing unusual” from his constituencies in Atlanta’s black community. “I would hazard to say that 99.9 percent of the black community doesn’t have any idea who Pryor, McClendon or what Pryor, McClendon is or what they do or what they’ve ever done,” Campbell said. The Wall Street Journal“is not a publication that has a wide circulation in the African-American community, and the Journal-Constitution is certainly not an organ that is respected in the African-American community. If there is any monolithic thought, it’s that the newspaper, the daily newspaper, does not reflect the broad, diverse opinions [and] views of the African-American in all his complexity. I think any notion that there was widespread discussion pro or con or agitation about Pryor, McClendon is preposterous.” JACKSON TESTIMONY On July 25, federal prosecutors called Jackson to testify against McClendon, a close friend, former campaign contributor, and the city’s investment officer during one of Jackson’s mayoral terms. Jackson said he also knew Stanford, who became the city’s investment officer during his third mayoral term between 1990 and 1994. And he knew Stanford’s husband, Charles. Jackson said that neither Stanford nor McClendon disclosed the business relationship between Charles Stanford and Pryor, McClendon. He learned of it only after it became “public knowledge.” “I was surprised to hear about it,” Jackson said. Jackson said if he had learned of the allegations against McClendon while he was still in office, “I would have talked to Ray McClendon about it. He and I were very close friends, are very close friends, I hope.” There probably would have been “an official inquiry,” he acknowledged, “mainly on the issue of disclosure” regarding McClendon’s business dealings with Charles Stanford. Jackson said Stanford should have disclosed her husband’s relationship with McClendon. “But whether or not that arises to an offense or to a crime or something is a different matter all together,” he said. YOUNG TESTIFIES A week after Jackson testified, Young took the stand as a defense character witness on McClendon’s behalf. Young said he first met McClendon after he became mayor. McClendon was working for an organization that bought discounted mortgages with federal funds and then made home loans to low-income buyers. Young, who served as mayor from 1982 to 1990, called McClendon’s reputation for truthfulness and honesty “very good.” “In order to get the kind of financial investment that he was able to get � you had to have a very good reputation,” Young said. But Young admitted he was unfamiliar with the allegations against McClendon. “In fact, you don’t really know anything about the facts of the case?” Assistant U.S. Attorney Russell Vineyard asked the former mayor. “That’s true,” Young responded.

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