On April 28, 1975, the board of directors of Calhoun First National Bank was called together for a special meeting by Richard T. Newell, an examiner from the Atlanta office of the comptroller of the currency.

"I remember that morning only too well," recalls one board member. "Newell was tough and he was mad. He had bloodshot eyes from working all night."

A dark, baldish man with a no-nonsense manner. Newell had made a surprise visit to the bank a few days earlier and immediately immersed himself in the books. On that April morning he revealed his findings to the board, to the shock of some outside directors.

Newell said that the Calhoun First National Bank was in perilous condition because of poor management, uncollected loans and a blizzard of overdrafts written by insiders. He also raised questions about bank chairman Bert Lance's use of overdrafts to help finance his unsucessful 1974 Georgia gubernatorial bid.

The overdraft abuses, which Newell found amounted to hundreds of thousands of dollars, involved the accounts of Lance, his wife, LaBella, and her relatives, the Davids. The comptroller of the currency would later describe them as "unsafe and unsound banking practices."

Newell, in his April, 1975, surprise visit, also found that only one nonfamily member had comparably large overdrafts. His name is Bill L. Campbell. Just three months after Newell made his discovery, Campbell, a vice president at his menor, Bert Lance to the FBI for embezzling nearly $1 million from the bank.

Campbell pleaded guilty without implicating anyone else in his crime, and on Dec. 28, 1976, he began serving an eight-year sentence.

Recently, however, Campbell has had a change of heart. Last month, in preparing for the Lance hearings, three staff members of the Senate Governmental Affairs Committee visited Campbell at the federal penitentiary in Atlanta. Campbell told the three staff workers that Lance played a role in his embezzlement.

Then, on Friday, Oct. 7, two attorneys from the Securities and Exchange Commission visited Campbell at Lexington, Ky., a minimum security peninterntiary where Campbell, who suffers from diabetes, had been moved.

The Washington Post has learned that in a six-hour tape-recorded interview with the SEC enforcement division attorneys. Campbell recited his allegations of Lance's role in the embezzlement, his knowledge of the use of the bank for Lance's campaign and what he knew about allegedly questionable financial deals by Lance and his associates. One of the SEC attorneys returned here to Calhoun - to check out the leads furnished by Campbell. SEC officials refused to comment on the latest interview.

Robert Altman, a Washington attorney representing Lance, said his client would not comment on any allegation by Campbell. Lance, said Altman, would stand on his statements made during the Senate hearing.

The findings of the SEC and other agencies are expected to be turned over to a three-man panel at the Justice Department which will decide whether to impanel a grand jury.

Campbell, during telephone interviews with The Washington Post, described the surprise visit to the bank by Newell as the beginning of the end for him. "He just came in and went to work." Campbell recalled. "We didn't have any warning."

Newell demanded drastic surgery to save the bank. Some $225,000 in overdue loans was written off and Lance and others were ordered to stop writing overdrafts as if the bank's assets were their own. The overdrafts that could not be paid were converted to interest-bearing notes.

Newell also reported to the comptroller's office in Washington about Lance's political overdrafts, which eventually brought the case to the attention of the Justice Department. The case was terminated by the U.S. attorney in Atlanta in a controversial decision made on the eve of Lance's nomination as director of the President's Office of Management and Budget. Lance resigned the position on Sept. 21.

A nagging question is why Newell was the first to turn up these practices, when recent disclosures show that they had been going on for years.

Accoring to sources inside the bank. Lance and otehrCalhoun bank officials usually knew at least a week in advance of when federal examiners were going to arrive. Campbell told both the SEC and the Senate staff workers about this, according to investigative sources.

He told them that when examiners were due, insiders with big overdrafts took out loans at other banks to cover temporarily the overdrafts. This allegation was confirmed by a bank employee, a board member, and a substantial stockholder od the Colhoun bank. Federal officials siad they were unaware of the practice.

The examiners apparently only reviewed the current overdraft list in the course of their examinations, according to bank sources and federal officials.

Sources here say that once the examiners left he bank - normally after being given a dinner party with bank officials - the insiders repaid the cooperating banks and went back on the overdraft list.

The overdraft practices had been going on for at least a decase, according to knowledgecable sources here, and probably longer. It was Newell's surprise arrival in April, 1975, that both revealed the extent of he practices and eventually put an end to them.

Newell told internal Revenue Service agents, who were called in by the comptroller last summer to investigate whether Lance had been given special treatment in the past, that prior to visiting Calhoun he had reviewed three earlier examinations. He concluded, he said, that the Calhoun First National examination "would be a breeze, in that this was a clean and enjoyable bank to examine."

Newell told the IRS that he reviewed reports on Calhoun done in 1972, 1973 and 1974 before coming here for his own examination which turned up, the IRS report said, "serious problems in the bank."

The earlier reports had glossed over the problems which Newell encountered. Moreover, Campbell told investigators that Newell was the first examiner in his experience to arrive unannounced.

Newell ordered that the overdrafts - about $400,000 among eight family members - the converted into interest-bearing notes. Some of the family members also had long-stand unpaid loans. Sources say these amounted to more than the total of the overdrafts, and Newell told the family that the loans had to be repaid.

Newells discoveries of 1975 have had a devasting and continuing impact on people here.

One is LaBella's brother, Claude Barker David, who must now repay notes and overdrafts estimated to be as much as $10,000 by sources with direct knowledge of the family's bank dealings. Soon after Newell's visit,he put up his farm outside town for a $200,000 loan from National Bank of Georgia, the Atlanta bank where Lance was chairman at the time.

Now, sources familiar with David's affairs say he may have to sell his home, florist shop and real estate to help satisfy his debts, many of which come due in the spring. David refuses to comment.

Another family member feeling the effect of Newell's actions is Linda David, widow of LaBelle's brother. Beverly Banks David a school official in Jefferson City, Mo., who committed suicide in November, 1974.

When the widow and her lawyer returned to Calhoun to settle the estate she reportedly was shocked to learn that her late husband had overdrafts at the Calhoun bank of about $70,000 and loans of $170,000.

Though the bank has informed her of the overdrafts and notes, he has been unable to get an accurate accounting of the debts.

LaBelle Lance's mother and stepfather, Ruth and Ronald Chance, also had sizable notes and overdrafts.

Most of the overdrafts, which were converted to notes, were moved away from Calhoun First National Bank. This immediately, improved Calhoun's troubled balance sheet, which, in turn, led the comptroller's office in Atlanta to cancel a disciplinary agreement with the bank.

That embarrassing agreement was canceled on Nov. 22, 1976, just when Lance was being considered for a high post in his friend Jimmy Carter's incoming administration. The troublesome notes were put into other Georgia banks where Lance had financial interests, but which were not under scrutiny by authorities - NBG in Atlanta. Northwest Georgia Bank in Ringgold, Cohutta Banking Co. in Cohutta, among others. The Washington Post learned from federal investigators and bank sources.

Some local residents blame the financial woes of the David family on Bert Lance, who almost by default became top executive of the Calhoun bank and manager of the family's troubled financial affairs. One Calhoun First National board member observed that Lance came along when the family's fortunes were in decline. "They looked to the young man for guidance," he said. "What has happened is tragic because they treated him like a god."

LaBelle's grandfather, A.B. David, acquired a major interest in the bank during the 1920s. But he soon discovered that his sons were not cut out [WORD ILLEGIBLE] be tough-minded bankers.

William B. David, who went off to the Air Force, is a retired colonel and bank board member who is known as the thrifty son. He was not among the family overdrafters listed by the comptroller.

Tom B. David, who is more interested in civics and charity than in banking, ran the bank for a time before Lance took over. One local businessman described him as never able to say no to a borrower. He appears to have had the same problem with his own finance; he had long overdue notes and overdrafts when Newell reviewed his account in 1975.

The third son, Claude B. David, LaBelle's father, died in the 1940s. One friend called going to the bank to collect a sports bet from Claude and watching him get the money from the bank till "I asked him once how he kept track of the money he took out of the bank," recalled the friend. "He told me. "If they find money missing from the bank at the end of the day, its probably mine."

A. B. David groomed a local attorney. Otto C. Langford, to succeed him, Langford's son is general counsel of the bank, a board member, and Bert Lance's "country lawyer." His daughter, Judy, is married to President Carter's son Jack.

The elder Langford died in the 1960s, and Tom David filled in for a time as bank president until Lanfe was ready to take over.

Lance, who had married LaBelle in 1950, gained entire to the bank and because of the importance of the bank to this town of 6,000. Lance became the most influential man in town. But the marriage did not make him wealthy.

A. B. David reportedly left an estate of bank stock and land worth $350,000 to be divided nine ways.

Nor did Bert bring money to the marriage. His father, now 91 years old and living with his wife one block from LaBelle's mother and stepfather, earned a modest living as a school official.

Bert Lance's earnings at the bank, while comfortable, could hardly be called grand. A bank official estimates that Lance's salary, bonus and dividends from Calhoun bank stock never totaled more than $60,000 a year.

Yet, in 1974, when he ran from governor of Georgia, Lance made a voluntary disclosure that he and LaBelle had a net worth of $3.1 million.

Lance has always projected a conservative image - suits invariably charcoal or pinstrip, shirts white, ties muted silks. He even insisted that the Lincoln Continental provided by the bank - and still parked in his driveway here - be black with a black interior.

But for all this, it is clear that the Lances, like the Davids, were far from conservative when it came to spending.

Lance, who loves planes but does not pilot them himself, acquired two while here at the bank even though the bank already had a plane. He also had a pilot, who was on the bank payroll. The use and financing of Lance's planes are under Justice Department review for possible criminal prosecution.

LaBelle's spending sprees are almost legend here. In 1974, for example, the local high school that she and Bert attended was being torn down. LaBelle arranged to buy all the bricks and have them shipped to their farm outside Calhoun, where she had planned to use them to construct a new house. Bert persuaded her to drop the idea though she did acquire the old beams from the school and they are being stored for use in some Lance house of the future.

LaBelle did have a six-room house transported from town to the farm then remodeled. She named it "Eagle's Nest" while their own farm house is called "Lancelot."

In addition to the large white house here in town and the farm houses a few miles out, there are the 50-room mansion in Atlanta and the beach home at the famous spa for the wealthy. Sea Island, Ga.

LaBelle is also described here as having a weakness for the stock tables in the Wall Street Journal. She often told relatives and friends how much she enjoyed delving into the listings, choosing investments. This may suggest why, when Lance disclosed his assets last year after being named budget director, his holdings included several hundreds thousand shares of stock in 137 corporations, many of them virtually unknown to sophisticated investment analysts.

During the recent hearings before the Governmental Affairs Committee, Sen. Jacob K. Javits (R-N.Y.), obviously bewildered by Lance's finances, suggested that the General Accounting Office be asked to do a cash flow analysis of Lance. That request was apparently abandoned after Lance resigned.

Committee staff members had considered, then abandoned, efforts to learn about Lance's cash flow from R. Merrill Dobbs, who is Lance's personal accountant, the accountant for the Calhoun bank, and a member of the bank's board of directors.

But the SEC is picking up where the Senate staff members left off, turning to Dobbs as a key to the mystery of Lance's finances.

The SEC also decided to visit Campbell in prison after learning that the Senate staff workers had been impressed by his story.

The Justice Department criminal fraud section also has discussed visiting Campbell's Lexington prison with his lawyer, Robert Finnell of Rome, Ga.

When the three Senate staff members visited Campbell in the Atlanta federal penitentiary last month, the embezzler was advised by his lawyer against swearing to his allegations.

Later, Finnell went to Washington, at the Senate committee's request, to brief other members of the staff. At that time he offered the committee a sworn statement by his client.

According to three committee staff members close to the investigation, all eight staff members who interviewed Finell left the meeting convinced that the Campbell story should be pursued. "Those of us who didn't go to [see Campbell in] Atlanta went into the meeting highly skeptical," recalls one staff member.

But Campbell's credibility was attacked by Lance and some senators, who correctly noted that Campbell had never before mentioned any involvement by Lance. His attorney in the embezzlement case, the federal prosecutor and the FBI agent on the case, all stated that Campbell had never even suggested that Lance was involved. Finally, during the last day of the Lance hearings Sen. Abraham Ribicoff (D-Conn.) said that Campbell had been "totally discredited."

Campbell said in the course of telephone interviews that the reason he did not immediately implicate Lance in the embezzlement was because he was afraid of the banker, Campbell, who never finished high school, worked as a tractor salesman, a telephone lineman and a farmer before he was hired by Lance in 1968. He rose to a vice president of the bank six years after being hired as a $300-a-month part-time employee.

Campbell's own financial undoing was his decision in 1971 to buy a 480-acre cattle farm on the out-skirts of Calhoun which was eventually built into a $750,000 investment. In his recent interviews with SEC and Senate staff members he said Lance counselled him to buy the farm. Campbell said Lance envisioned relocating a state agricultural experiment station to the Campbell farm and using the current site of the station for a lucrative industrial park.

Campbell began purchasing the acreage and developing the property in 1971 with the proceeds of overdrafts which reached as much as $197,000 at one time from Calhoun First National. At the time he began buying the land he was being paid $700 a month, according to bank sources. When embezzlement was reported to federal authorities by Lance. Campbell was being paid $24,000 a year-not even enough to make interest payments on his loans.

A bonding company suit challenging the bank's claim for $984,000 due to the embezzlement disclosed internal memos warning Lance as early as May, 1971, that Campbell hand outstanding loans in his wife's name of $258,000. Yet neither Lance nor other bank officials did anything to correct the situation, the bonding company alleged.

The case was settled last February for less than half the claim sought by the Calhoun bank.

In February, 1975, just after assuming the presidency of the National Bank of Georgia, Lance authorized an uncollateralized $100,000 loan to Campbell. In mid-July, despite the objections of an NBG officer, lance authorized $25,000 more to Campbell, according to published reports. The effect was to move Campbell's debts out of Cahoun First National Bank, by then under Newell's critical scrutiny.

On July 31, just 17 days after approving the loan to Campbell. Lance called the FBI to report that he had discovered the embezzlement.