CHICAGO -- At least three local Ohio governments involved in an investment scandal are scheduled to give sworn testimony tomorrow to the Securities and Exchange Commission, sources say.

Government officials and others involved in the matter said yesterday that the SEC's Chicago office in a preliminary probe has been contacting people involved in the investment troubles. Current and former officials from. the Vermilion and Danbury school districts and the city of Englewood are to give depositions to SEC

The broker who sold some of the investments in question has already been interviewed by the SEC, the officials said.

One source familiar with the investment scandal speculated the SEC may be collecting information to decide if there is enough evidence of wrongdoing to go forward with a more formal investigation.

Mary Keefe, the regional director of the SEC's Chicago office, would neither confirm nor deny whether the SEC is looking into the local governments' investments.

Rosalie Townsend, treasurer of the Vermilion School District, said SEC officials called her earlier this month about the sales practices of broker Ken Schulte and his former employer, Hart Securities.

While at Hart, Schulte sold the district interest-only stripped mortgage-backed securities that resulted in a loss of $147,000 for the district, Townsend said.

She said she will meet tomorrow with SEC officials. No documents related to the investments have been requested from the district, she said.

Eric Smith, Englewood's city manager, also confirmed that he will give testimony tomorrow about the $ 51,000 the city lost through interest-only mortgage-backed investments that Schulte sold when he worked at Murchison Investment Bankers in Houston, before joining Hart.

Englewood and the Vermilion district are two of the approximately 18 counties, cities, villages, and school districts that lost about $8 million because of investments in what Ohio auditor Thomas Ferguson last year called "high risk" and possibly illegal investments. Vermilion, Englewood, and several other governments have filed for arbitration before the National Association of Securities Dealers, charging fraud and misrepresentation involving their investments.

Townsend said that in the Vermilion case, the fraud was involved in written and verbal assurances by Schulte that the investment principal was "totally secure."

"It wasn't," she said. "I think all of us have a story to tell. [Schulte] told us all the same thing. None of it was true."

Harold Geringer, Schulte's attorney, said his client met last week with SEC officials "seeking information." Geringer said Schulte has not been told he is a target of any investigation. "There is no allegation by any agency," Geringer said.

Paul Francis, an attorney representing Texas-based Hart Securities, said yesterday that his client has been contacted by the SEC. "It looks like a preliminary investigation," Francis said, adding that no target of the investigation was identified and no subpoenas have been issued.

Francis said the SEC has not requested any documents or a meeting with Hart officials.

"We believe neither Hart nor Mr. Schulte did anything wrong," Francis said. "People are looking scapegoats for decisions that were made, and they didn't like what happened in the market."

Dennis Taylor, an attorney representing Murchison, said that to his knowledge, his client has not been contacted by the SEC. Both Taylor and Geringer have denied any wrongdoing on the part of their clients in the investments sold to the governments.

Keefe said the SEC's Chicago office, which covers nine Midwest states, including Ohio, does do preliminary investigations that sometimes turn into full investigations, including the issuance of subpoenas.

So far the investment scandal has not affected any of the debt ratings on 11 of the 18 governments that are rated by Moody's Investors Service. None of the governments were rated by Standard & Poor's Corp.

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