More trouble is brewing for the City of Duluth.

This time it involves two of the city's top financial employees.

City officials say Finance Director Genie Stark and payroll manager Jackie Morris have been put on paid leave pending an investigation.

LeAnn Wallace joins us from the newsroom... LeAnn is this all about?

Pat. City officials are not commenting on the details of the employee suspensions.

They confirmed the employees were suspended last Friday, the same day the city announced it had lost 2.3–million in a 3 million dollar investment.

The monetary loss stems from an investment decision Stark was involved in last May, to move forward with a plan to invest in Mainsail Two, an asset–backed commercial paper.

The investment was encouraged by Merrill Lynch...but it quickly went south.

"It was represented to us as a very sound investment by Merrill Lynch. Moody's and the Standard & Poor's rated it very highly."

Despite the vote of confidence the city recently learned it was a bad investment. On Friday of last week Mayor Ness announced the city has lost 2.3–million dollars.

As finance director Stark is in charge of city investments.
To make matters worse the investment failed at a time the city is already facing a $610,000 budget short–fall.

No one in city hall said the suspensions are related to the Mainsail investment decision but they didn't say it wasn't either.

City Councilor Jim Stauber says he doesn't know why the finance leaders are suspended but he did say Stark always provided the council the information it requested and was very helpful.

"She has done an exceptionally good job helping us weed our way through many financial crises. She often spoke to the council and did presentations and did memos for us, you know, an exceptional employee no doubt, but I have no idea what this is about."

The city is considering filing a lawsuit against Merrill Lynch in the hopes of recovering at least part of the loss... Pat.

LeAnn what's next with the suspensions?

Pat city officials are refusing to say anything other than to confirm the city finance leaders are under suspension pending an investigation.