Indianapolis mayor appoints three to city's bond bank.

CHICAGO -- Mayor Stephen Goldsmith of Indianapolis made nearly a clean sweep of the city's bond bank last week by appointing three new members to the board.

Goldsmith appointed Glenn Scolnik, principal of an investment firm in Indianapolis; Ellen Whitt, state director for U.S. Sen. Richard Lugar, R-Ind.; and Catherine Lawson, a civic leader, to three-year terms on the Indianapolis Local Public Improvement Bond Bank board.

Gene McFadden, a local businessman who has served on the board for three years, was the only member to be reappointed. The fifth member, Bob Salyers, was appointed by Goldsmith earlier this year.

The mayor said last month that he expected to put some new people on the board partly in response to controversy over a bond bank consultant's failure to disclose his business relationship with Mark Ferber, a former Lazard Freres & Co. partner. Ferber's dealings in Massachusetts are the subject of a grand jury people in that state.

Following an internal investigation into the relationship between the consultant, Fred Armstrong, and Ferber, the bond bank board in February exonerated Armstrong and renewed his consultant contract for a year.

Leaving the bond bank board are Larry Barrett, chairman since 1987, and Judy Singleton and Robert McConnell, all of whom were appointed by former Mayor William Hudnut.

Barrett said yesterday that he asked Goldsmith not to reappoint him.

"I told [Goldsmith] I had served my time," Barrett said.

McConnell said he would "just as soon not be reappointed." Singleton could not be reached for comment.

Scolnik replaced Barrett as chairman during an organizational meeting of the board last Friday, according to Jim Snyder, the bond bank's executive director.

Snyder said the board this summer will take up proposed language for a disclosure form for bond bank consultants. The board asked the city's corporation counsel to draft language for the form after the investigation into Armstrong's relationship with Ferber was resolved.

Last December, Indianapolis began an investigation after learning that Armstrong received $15,000 in January 1993 from Lazard for consulting work done in 1992 -- a time when Armstrong was employed as a consultant to the bond bank and Lazard was an underwriter on bond band debt issues.

The probe concluded that there was no apparent violation of state or local laws, but raised the possibility that Armstrong failed to disclose to the board a potential conflict of interest.

Armstrong, who created the bond bank in 1985 and served as its executive director until the end of 1991, has denied any conflict of interest in his dealings with Ferber. He has characterized the Lazard payment as reimbursement for expenses he incurred while working on deals not related to city government. Armstrong, who has been a consultant to the bond bank since 1992, has a contract that expires Dec. 31.

Last month, Goldsmith said he may not renew Armstrong's contract next year because of Armstrong's lack of disclosure. Goldsmith also said that Armstrong's role with the bond bank may be diminished in the future because the city has completed most of its major financings.

Indianapolis is one of several governments that has received subpoenas for documents from the U.S. Attorney in Boston and from the Securities and Exchange Commission in conjunction with ongoing investigations into Ferber's dealings with a Massachusetts bond-issuing agency. The investigations were sparked by revelations that Ferber maintained undisclosed fee-splitting contracts with Merrill Lynch & Co., while simultaneously acting as an independent consultant to the agency, which used Merrill as a swap counterparty.

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