Archive for the ‘Auditor’ Category

No sooner did we call U.S. Sen. David Vitter out for potential improprieties for using his Senate franking privileges to gain an edge over his three opponents in this year’s gubernatorial election than our old friend C.B. Forgotston send us evidence of an even more flagrant misuse of his office for similar reasons.

It’s enough to make you wonder what the hell goes through these politicians’ minds except that we already know: they are so convinced they are above the law that they couldn’t care less what the great unwashed think about their flaunting of the rules.

We’ve previously reported Jindal’s acceptance of tainted campaign contributions from the Horsemen’s Benevolent and Protective Association (non-profits are prohibited from making campaign contributions), laundered money from a St. Tammany Parish bank board of directors (without the 11 directors’ awareness they were “contributing” $5,000 each to Jindal) and the head of Florida’s largest-ever Ponzi scheme who funneled $30,000 in contributions to Jindal from himself, his wife and his law firm.

Within an hour of posting the story about Vitter’s use of franking privileges to promote his gubernatorial campaign, LouisianaVoice’s email exploded with messages about Jindal’s latest post on the governor’s web page, paid for by Louisiana taxpayer dollars.

The first email was from Forgotston, who has fired off a letter to Inspector General Stephen Street demanding an answer to his inquiry as to the legality of Jindal’s “press release” on Tuesday.

So what, exactly, is all the fuss about?

Quite simply, Jindal used the state computer and web page (and presumably a state employee) to gin out a “press release” personally attacking one of Jindal’s probable opponents for the Republican nomination for president under the headline “Gov. Jindal: Senator Paul unsuited to be Commander-in-Chief.” http://www.gov.louisiana.gov/index.cfm?md=newsroom&tmp=detail&articleID=4965

Paul, a U.S. Senator from Kentucky, is an announced candidate for the Republican nomination. https://randpaul.com/

And what did Paul do or say that prompted Jindal to ignore legal constraints on the use of state web pages? Apparently, Paul said something to the effect that ISIS exists because of the U.S. hawkish foreign policy—a claim, by the way, that we cannot entirely disagree with.

“This is a perfect example of why Senator Paul is unsuited to be Commander-in-Chief,” Jindal whined.

Except he did his whining on a state-funded web page and that immediately invoked the wrath of a number of readers and Forgotston, who once worked as a legal counsel for the legislature, is not the one you want to tick off when it comes to matters concerning the state constitution.

In his email to Street, Forgotston began by describing the Jindal press release as “a violation of Louisiana Constitution, Article XI, 4.”

In case you don’t want to take the time to open the link, it says that while there is no prohibition against the use of public funds to disseminate factual information about a proposition appearing on an election ballot, “no public funds shall be used to urge any elector to vote for or against any candidate or proposition, or be appropriated to a candidate or political organization.”

“It (the press release) clearly urges a vote against U.S. Senator Rand Paul for President of the United States,” he said. “The press release was issued by state employees (the release contained the names of Shannon Bates Dirmann and Shannon, Deputy Communications Director for the Governor’s Office) and has no disclaimer that public funds were not used.

“If this is not a violation of the law, please advise why it isn’t,” Forgotston said. He ended his email by writing, in all caps, “A RESPONSE IS REQUESTED,” which he said “is not directed to any recipients of his email other than the State Inspector General.”

In case any of our readers also would like to submit a similar question to the OIG, here is Street’s email address: stephen.street@la.gov.

Forgotston said he will also share his concerns with Legislative Auditor Daryl Purpera.

As Forgotston himself is fond of saying: you can’t make this stuff up.


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State Treasurer John Kennedy on Tuesday told the House Appropriations Committee that the Division of Administration exerts extortion-like tactics against legislators and takes the approach that it should not be questioned about the manner in which it hands out state contracts and that the legislature should, in effect, keep its nose out of the administration’s business.

Kennedy was testifying on behalf of House Bill 30 by State Rep. Jerome Richard (I-Thibodaux) which provides for reporting, review and approval by the Joint Legislative Committee on the Budget (JLCB) of all contracts for professional, personal and consulting services totaling $40,000 or more per year which are funded exclusively with state general fund (SGF) or the Overcollections Fund. HB 30


Kennedy, in a matter of only a few minutes’ testimony, attacked figures provided by three representatives of the Division of Administration (DOA) who objected to the bill because of what they termed additional delays that would be incurred in contract approval and because of claimed infringement upon the separation of powers between the legislative and administrative branches of government.

Here is the link to the committee hearing. While Kennedy spoke at length on the bill, the gist of his remarks about DOA begin at about one hour and 13 minutes into his testimony. You can move your cursor to that point and pick up his attacks on DOA. http://house.louisiana.gov/H_Video/VideoArchivePlayer.aspx?v=house/2015/may/0526_15_AP

That argument appeared to be a reach at best considering it is the legislature that appropriates funding for the contracts. It also appeared more of a smokescreen for the real objections: DOA’s, and by extension, Bobby Jindal’s wish that the administration be allowed to continue to operate behind closed doors and without any oversight, unanswerable to anyone.

DOA representatives tried to minimize the effect of the bill by downplaying the number and dollar amount of the contracts affected (which raises the obvious question of why the opposition to the bill if its impact would be so minimal). The administration said only 164 contracts totaling some $29 million would be affected by the bill.

Kennedy, however, was quick to jump on those figures. “The numbers the division provided you are inaccurate,” he said flatly. “The Legislative Auditor, who works for you,” he told committee members, “just released a report that says there are 14,000 consulting contracts, plus another 4600 ‘off the books.’

“The fiscal notes of 2014 by the Legislative Fiscal Office—not the Division (DOA)—said the number of contracts approved in 2013 by the Office of Contractual Review was 2,001—not 160—professional, personal and consulting service contracts with a total value of $3.1 billion,” he said. “I don’t know where DOA is getting its numbers.

“To sum up their objections,” he said, “it appears to me that DOA and more to the point, the bureaucracy, is smarter than you and knows how to spend taxpayer dollars better than you. That’s the bottom line. They don’t want you to know. This bill will not be overly burdensome to you. Thirty days before the JLCB hearing, you will get a list of contracts. If there are no questions, they fly through. If there are questions, you can ask.”

Kennedy tossed a grenade at DOA on the issue of separation of powers when he accused the administration of blackmailing legislators who might be reluctant to go along with its programs.

“Let’s talk about how the division’s advice on contracts has worked out,” he said. “The Division advised you to spend all the $800 million in the Medicaid Trust Fund for the Elderly. Now they have zero in that account. In fact, they pushed you to do that. Some of you were told if you didn’t do that, you’d lose your Capital Outlay projects. How’s that for separation of powers? How’d that work out for you?

“My colleagues from Division who just testified against the bill are the same ones who told you to take $400 million out of the (Office of Group Benefits) savings account set aside to pay retirees’ and state employees’ health claims. How’d that work out?”

Kennedy didn’t stop there. He came prepared with an entire laundry list of accusations against the administration.

“My colleagues from Division are the ones who told you, ‘Look, we need to privatize our health care delivery system,’ which I support in concept. They sat at this table and I heard them say we would only have to spend $600 million per year on our public-private partnership and (that it would be) a great deal ‘because right now we’re spending $900 million.’ I thought we’d be saving $300 million a year. Except we’re not spending $600 million; we’re spending $1.3 billion and we don’t have the slightest idea whether it’s (the partnerships) working. How’d that work out for you?

“I sat right here at this table and I heard my friends from Division say we need to do Bayou Health managed care. You now appropriate $2.8 billion a year for four health insurance companies to treat 900,000 of our people—not their people, our people,” he said. “There’s just one problem: when the Legislative Auditor goes to DHH (the Department of Health and Hospitals) to audit it (the program), they tell him no.”

Kennedy said that pursuant to orders from DOA, “the only way they can audit is if they take the numbers given him (Legislative Auditor Daryl Purpera) by the insurance companies.

“This is a good bill,” he said. “It’s not my bill. My preference is to tell Division to cut 10 percent on all contracts and if you can’t do it, you will be unemployed. But this bill allows you to see where the taxpayer money is being spent.

“I have more confidence in you than I do in the people who’re doing things right now,” he said.

Kennedy said he was somewhat reluctant to testify about the bill “but I’m not going to let this go—especially the part about separation of powers.

“You want to see a blatant example of separation of powers?” he asked rhetorically, returning to the issue of the administration’s heavy handedness. “How about if I have a bill but you don’t read it. You either vote for it or you lose your Capital Outlay projects. How’s that for separation of powers?”

That evoked memories from November of 2012 when Jindal removed two representatives from their committee assignments one day after they voted against the administration’s proposed contract between the Office of Group Benefits and Blue Cross/Blue Shield of Louisiana.

“Everything they (legislative committees) do is scripted,” said Rep. Joe Harrison (R-Gray), speaking to LouisianaVoice about his removal from the House Appropriations Committee. “I’ve seen the scripts. They hand out a list of questions we are allowed to ask and they tell us not to deviate from the list and not to ask questions that are not in the best interest of the administration.” http://louisianavoice.com/2012/11/02/notable-quotables-in-their-own-words-142/

Rep. John Schroder (R-Covington) asked Kennedy what his budget was to which Kennedy responded, “Less than last year and less that year than the year before and probably will be even less after this hearing. But you know what? I don’t care.

“There’s nothing you can say to get Division to support this bill,” he said. “They’re just not going to do it.

“You can’t find these contracts with a search party. But if you require them to come before you, you can get a feel for how money is being spent that people work hard for and you can provide a mechanism to shift some of that spending to higher priorities.

“Next year, you will spend $47 million on consulting contracts for coastal restoration. I’m not against coastal restoration; I’m all for it. But these consultants will not plant a blade of swamp grass. Don’t tell me they can’t do the job for 10 percent less. That $47 million is more than the entire state general fund appropriation for LSU-Shreveport, Southern University-Shreveport, McNeese and Nicholls State combined.

“Under the law, agencies are supposed to go before the Civil Service Board and show that the work being contracted cannot be done by state employees but that is perfunctory at best,” Kennedy said.

To the administration’s arguments of delays in contract approvals and infringements on the separation of powers, Rep. Brett Geymann (R-Lake Charles) dug in his heels. “This is not a bad thing,” he insisted. “We’re not going to go through every page of every contract unless someone calls it to our attention. It doesn’t matter if it’s 14,000 or 14 million contracts. The number is immaterial. If there’s an issue with a contract, we need to look at it.”

For once, the administration did not have its way with the legislature. The committee approved the bill unanimously and it will now move to the House floor for debate where Jindal’s forces are certain to lobby hard against its passage.

Should the bill ultimately pass both the House and Senate, Jindal will in all likelihood, veto the measure and at that point, we will learn how strong the legislature’s resolve really is.

But for Kennedy, the line has been drawn in the dust.

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By MIKE STAGG (Independent filmmaker, citizen activist, political strategist – Special to LouisianaVoice)

For the past seven years, as Louisiana has lurched from one fiscal crisis to another, the State of Louisiana has paid the oil and gas industry $2.4 Billion in severance tax exemptions. Despite that massive transfer of public wealth into private hands, the oil and gas industry used its influence inside the Department of Natural Resources and the Jindal administration, to limit—and for three years shut down—audits that would have revealed whether the industry’s severance taxes and royalty payments to the state were accurate.

These facts have been hiding in plain sight, contained in five performance audits of the Department of Natural Resources and the Louisiana Department of Revenue conducted by the Legislative Auditor since 2010. Two of those audits focused on royalty collections from oil and gas produced on state-owned lands and water bottoms. Another focused on severance tax collections; yet another dealt with mineral leases handled by the State Mineral and Energy board, while the fifth audit examined how the Office of Conservation has handled the orphaned and abandoned well cleanup program.

The cozy relationship between DNR and the oil and gas industry is explicit in the department’s regulation of the industry. That coziness, when extended to state finances, has proven disastrous for the Louisiana treasury and its residents. DNR is responsible for collecting oil and gas royalties, which account for roughly seven percent of state General Fund dollars, or approximately $800 million per year.

For a three-year period, between July 2010 and July 2013, DNR had jurisdiction to determine the accuracy of severance taxes and royalty payments.

And DNR let industry have its way.

Audits on royalty revenue dropped. Audits on severance tax revenue all but stopped, even as the state’s financial condition continued to worsen. In short, when it came to providing rigorous oversight to ensure that the royalty and severance tax payments were accurate, DNR’s Office of Mineral Resources deferred to the oil and gas industry while programs that serve the citizens of Louisiana were cut, primarily in healthcare and higher education, the unprotected portions of the state General Fund.

DNR’s relationship with the oil and gas industry is a blatant example of regulatory capture. Regulatory Capture is a form of political corruption that occurs when an agency, created to act in the public interest, advances instead the special concerns of the industry it is charged to regulate.

Severance taxes are the constitutional expression of our, as Louisiana citizens, shared claim on our state’s vast mineral wealth. Exempting severance taxes negates the public claim on that mineral wealth and undermines our ability to invest in ourselves as a state.

Severance tax exemptions are direct payments from the state to the oil and gas producers after the companies have submitted their exemption certificates. Royalties are the property owners’ share of the proceeds from the sale of oil and gas produced from wells on their land. For purposes of this story, royalties are the state’s share of the revenue from oil and gas produced on state-owned lands and water bottoms after severance taxes have been paid.

Since the mid-1980s, Louisiana Department of Revenue has published an annual report on tax exemptions called “The Tax Exemption Budget.” In that document, the department identifies each tax exemption and quantifies the cost of each exemption to the state.

It makes clear that tax exemptions are in fact a spending of state funds — here’s how the LDR explains it in every report: “Tax exemptions are tax dollars that are not collected and result in a loss of state tax revenues available for appropriation. In this sense, the fiscal effect of tax exemptions is the same as a direct fund expenditure.”

Between 2008 and 2014, according to the Tax Exemption Budget, the State of Louisiana paid oil and gas companies more than $2.4 Billion in severance tax exemptions. Those checks went out at the exact same time that our legislature cut funding for programs like aid to families of children with disabilities, behavioral health programs, home health care, and programs that assisted victims of domestic violence. During that same period, state funding for higher education was also cut by more than $700 million as the tuition and fees paid by those attending technical colleges, community colleges, and state universities were jacked up to cover the difference.

The first performance audit on royalty collections was released in July 2010. Royaltieshttps://app.lla.state.la.us/PublicReports.nsf/B6B5DE331E9D48818625776E005CFDA5/$FILE/00018070.pdf The Legislative Auditor found that DNR’s Office of Mineral Resources took a lackadaisical approach to verifying the accuracy of royalty payments from the 1,888 active mineral leases on state-owned lands and water bottoms.

The Legislative Auditor noted that severance taxes and royalties are connected, that both are dependent on the amount of oil and gas produced, as well as the price of the resource.

Desk audits compared the volume of oil and gas sold to the volume of oil and gas produced, which ensures that royalty payments are properly calculated. These audits also help ensure that production wells on state lands are submitting properly calculated royalty payments.

The Legislative Auditor found that the Office of Mineral Resources (OMR) had not conducted a single such audit in a decade. Despite the Auditor’s recommendation that it resume these audits, OMR waited another three years before getting around to doing so.

The Legislative Auditor also found that OMR did not compare royalty reports against severance tax reports filed with the state Department of Revenue, nor did it compare royalty reports to production reports submitted elsewhere in DNR.

In its response to the Legislative Auditor’s Royalty performance audit findings, on June 24, 2010, DNR announced that “As part of the Streamlining Commission’s recommendations, OMR will take over LDRs severance tax field audit program and the two audits will be integrated beginning July 1, 2010.”

In September of 2013, the Legislative Auditor released a follow-up performance audit on royalty collections. https://app.lla.state.la.us/PublicReports.nsf/DB918AD8E33411F286257B490074B82A/$FILE/00031C97.pdf

The auditors were dismayed to find that the revenue produced by OMR’s audits had fallen below the levels reported in 2010.

The Auditor also found that that the State Mineral and Energy Board had waived 45% of the $12.8 million in penalties that were assessed against companies by OMR for late payment of royalties.

Neither the Office of Mineral Resources nor the State Mineral and Energy Board seemed at all concerned about the fiscal impact their indifference to generating revenue had on the programs that Louisiana residents depend on. Their primary concern was with not inconveniencing their friends in the oil and gas industry.

The Legislative Auditor conducted an audit on severance tax collection procedures in the

Louisiana Department of Revenue in 2013 but, because severance tax audit functions had been transferred to the DNR in 2010, auditors had to return to the Office of Mineral Resources close on the heels of the second royalty collections audit. https://app.lla.state.la.us/PublicReports.nsf/AC044A6D3709B90C86257BE30065348B/$FILE/000351F7.pdf

In this audit, the Legislative Auditor found that oil and gas industry complaints about the LDR’s use of GenTax software (which identified possible nonpayers of severance taxes) led first, to LDR shutting off the software, and second, audit power being transferred to DNR.

The scale of the oil and gas production not audited as a result of that shift was staggering. DNR’s field audits ignored oil and gas production on private lands — which comprises 98.1% of all oil and gas leases in Louisiana — for a three-year period.

Revenue from severance tax audits fell 99.8% from the levels produced by the Department of Revenue once responsibility was transferred to the Office of Mineral Resources. The actual dollar amount fell from $26 Million in 2010 to $40,729 in Fiscal Year 2012.

For the three-year period that DNR’s Office of Mineral Resources had responsibility for severance tax audits, the industry essentially operated under an honor system.

Prior history shows why this was a problem. In the late 1990s, the Mike Foster administration filed lawsuits against more than 20 oil and gas companies claiming they had shortchanged the state by as much as $100 million on severance tax payments. Now, for three years as recurring revenue shortfalls continued, the Office of Mineral Resources ignored that history.

During this time, the Haynesville Trend emerged as the most productive shale gas field in the country.

Even though the severance tax exemption on horizontal drilling meant that the state was denied severance tax revenue for much of that play, companies still managed to game the exemption system at taxpayer expense.

Under the rules for severance tax exemptions, the state pays back the taxes already paid once it receives the exemption certificate from the company — plus “Judicial Interest” which in the period covered by the audit averaged about 4.5%.

That is, the state had to dip into non-exempt severance tax payments in order to cover the interest costs on those certificates that the companies chose to sit on for several months.

The Audit found that over the course of four fiscal years running from 2009 through 2012, the Department of Revenue issued 13,818 severance tax refund checks totaling $360,190,583. An extra $23,859,012 in interest was tacked on to that. https://app.lla.state.la.us/PublicReports.nsf/CF6244B77E3A958686257C30005E80B1/$FILE/000368DA.pdf

In addition, the Auditor found that the Department of Revenue overpaid severance tax exemption refunds by $12.9 million between July 2010 and May 2012.

The decline in audit revenue, the interest paid to companies on the gaming of the severance tax exemption process, the overpayment of severance tax exemption refunds, the decision by the State Mineral and Energy Board to waive 45% of fines for late payment of royalties combined to benefit the industry at taxpayer expense to the tune of $68 million.

These gifts to the oil and gas industry were made at a time when the industry was already receiving $2.4 Billion in tax exemptions and at a time when every dollar the state did not collect translated into a cut to programs that Louisiana residents depended on.

The Auditor also pointed out that hiring additional auditors within DNR and LDR would produce a great return on the state’s investment. Each auditor costs a department between $50,000 and $60,000 per year, but they bring in an average of $1.3 million per year. LDR said it had requested additional auditors in its budgets but they were never approved by the Jindal administration.

Oil and gas companies control all of the information used in the severance tax and royalty payment process. The industry has used this power to its advantage and to the state’s detriment.

Vigilant auditing can close that information gap.

The Office of Mineral Resources has shown little interest in that kind of work. DNR’s abdication of its oversight role on royalty revenue has had an outsized impact on Louisiana because of the role that revenue plays in state finances. When added to the three-year period when DNR failed to perform severance tax audits, the agency has likely cost the state hundreds of millions of dollars over the past seven years.

That is corruption.

Not all of this went unnoticed. In the 2014 legislative session, Sen. Rick Gallot (D-Ruston) and Rep. Joe Harrison (R-Gray) introduced concurrent resolutions to order LDR, DNR and the Legislative Auditor to agree upon a means to conduct a thorough audit of oil and gas production, severance taxes and royalty payments. Gallot’s resolution passed the Senate by a vote of 35-0. https://app.lla.state.la.us/PublicReports.nsf/D6A0EBE279B83B9F86257CE700506EAD/$FILE/000010BC.pdf

But by the time the resolution reached the House floor in early June, the oil and gas industry and the Jindal administration recognized the threat the audit posed, so they joined forces to kill it. SCR 142

The resolution had to be killed to keep the secret.

In the midst of a prolonged and deepening fiscal crisis, the Jindal administration and the industry did not want legislators and the public to question whether the severance taxes and royalties paid to the state were accurately calculated.

The Department of Natural Resources betrayed the trust of the people of this state. It failed its fiduciary responsibility twice; first, as collector of royalty payments, and again during the time it served as chief auditor of severance tax collections. It has repeatedly put the needs of the industry above the needs of the people of this state.

For the oil and gas industry, $2.4 Billion in severance tax exemption payments were not enough. Its greed is so great that, in a time of fiscal constraints on state government, it went out of its way to cheat the state out of still more money. It used its power and influence in the Department of Natural Resources and its ties to the Jindal administration to do so.

By these acts, the oil and gas industry has shown itself to be unworthy of the trust we have placed in it.

For Looting Louisiana in our time of fiscal need, the oil and gas industry must be stripped of its severance tax exemptions. Under the Louisiana Constitution, we are entitled to the full benefits of this state’s mineral wealth.

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Troy Hebert is nothing if not:

  1. inconsistent
  2. obfuscating
  3. controversial
  4. all the above

Hebert, Bobby Jindal’s brilliant (sarcasm, folks, sarcasm!) choice to succeed former Director of the Louisiana Office of Alcohol and Tobacco Control (ATC) Murphy Painter after Team Jindal set Painter up on bogus criminal charges, has stumbled into one administrative fiasco after another.

In fact, the manner in which Hebert has run his office might even be considered a microcosm of the Jindal administration, so frighteningly reminiscent is it to the way he seems to emulate his boss.

Just as Jindal attempted (unsuccessfully) to flex his muscles (figuratively, of course; it be absurd to suggest otherwise) after Painter refused to knuckle under to demands from former Chief of Staff Steve Waguespack that a permit be issued to Budweiser to erect a tent at major Jindal campaign donor Tom Benson’s Champion’s even though Budweiser had not met the legal permit requirements, so has Hebert attempted to destroy the careers of agents serving under him for reasons that consistently failed to rise above the level of political pettiness.

Jindal, who accused Painter of abusing his office, apparently overlooked the fact that Hebert, while serving in the Louisiana Legislature, nevertheless saw nothing wrong with working under a state contract for debris cleanup after Hurricane Katrina.

Not only was Painter acquitted in his federal criminal trial, but he then sued his accuser in civil court—and won.

Likewise, Hebert has been sued by former agents for racial discrimination and has been forced to settle at least one such claim. Other complaints are pending as this is being written. Part of the basis for those complaints was Hebert’s confiding in Tingle that he was “going to f**k with” two black agents and that he intended to break up the “black trio” in north Louisiana—in reference to agents Charles Gilmore, Daimian McDowell and Bennie Walters.

And in the case of Brette Tingle, Hebert went to the extreme of attempting to get three different agencies to say there was a criminal payroll fraud case against Tingle—and in each case he failed to get his needed approval. Tingle’s sin? He was listed as a witness for the three black agents who have lodged EEOC complaints against Hebert. That left Hebert with only one logical course of action (logical in Hebert’s mind, that is). He fired Tingle while Tingle was recuperating from a heart attack.

ATC employees Terri Cook and Sean Magee tracked GPS locations of agents and emailed agents and their supervisors on a daily basis so that any issues, discrepancies or inconsistencies raised by the GPS reports could be addressed in a timely manner.

Yet, despite Hebert’s claims that Tingle was not working when he said he was or that he made an unauthorized trip into Mississippi, the issues were never raised by Cook or Magee, according to Tingle’s attorney J. Arthur Smith.

In fact, Smith pointed out that Tingle traveled to Kiln, MS. On May 2, 2012—at Hebert’s express approval—“to obtain surplus gun cleaning kits from his (Tingle’s) Coast Guard unit which were then issued to agents in your (Hebert’s) presence at a meeting at the Baton Rouge ATC headquarters with all enforcement agents as well as business division employees present.”

Smith also said that Tingle “was assigned FDA compliance checks (for tobacco sales to minors) while out on sick leave.” Upon his return to work, Mr. Tingle informed (Hebert) that he could not complete the assigned compliance checks because of other collateral duties which Hebert had assigned him. “These collateral duties included meeting with Trendsic Corp. and newly hired IT employee Keith McCoy to discuss several ideas that Mr. Tingle brought to you and that you wanted implemented before Mr. Tingle left on military leave.

“In this conversation,” Smith continued in his March 10 letter to Hebert, “you instructed Mr. Tingle to ‘get someone else to do those checks.’ Mr. Tingle also served a hearing officer and Internal Affairs Investigator for the ATC. These collateral duties, as well as your special assignments to him, were not part of Mr. Tingle’s regular job duties. You never at any time excused Mr. Tingle from performing these additional responsibilities,” he said.

Moreover, Smith noted, Tingle, Hebert initiated reprisals against Tingle because of statements provided by Tingle in a federal EEOC racial discrimination action filed against the ATC and Hebert even though Tingle “received the highest marks on his annual performance evaluation of all ATC enforcement agents. You signed this evaluation in July 2012,” Smith said.

That same month Hebert contacted Tingle, who was on vacation, by telephone in July of 2012, Smith said, to inquire into specifics concerning programs and initiatives that were part of an ATC pilot program for the New Orleans area initiated by Tingle. Upon learning of Tingle’s participation as a witness in the discrimination matter, however, Hebert claimed on Oct. 4, 2012, that Tingle had committed payroll fraud and further told OIG investigators that no such pilot program existed, according to Smith’s letter to Hebert.

The pilot program, Tingle said, involved programs not being done in other parts of the state. For example, a plan promoted by the AARP to improve blighted areas. ATC, he said, worked with AARP to provide alternative business plans to bar owners who have had their licenses suspended or revoked.

Hebert and New Orleans Mayor Mitch Landrieu held a joint press conference in July of 2012 to announce the program that Tingle initiated. http://www.nola.gov/mayor/press-releases/2012/20120717-mayor-landrieu-and-atc-commissioner-troy/

It was during this press conference that Hebert called a vacationing Tingle for information on the pilot program.

Tingle said Hebert has never followed through on any of the facets of the program.

In mid-January of 2013, Hebert launched an investigation into Tingle’s wife, Traci Tingle, who had recently retired from ATC, claiming that she had falsified state documents and that she had released personnel records to someone outside ATC.

The nature of the personnel records Hebert accused Traci Tingle of releasing was not made clear because Hebert never explained what they were. The state documents referred to, however, were inventory reports in which Traci Tingle had affirmed that the ATC had office equipment in an office in Vidalia, across the Mississippi River from Natchez. Hebert claimed “there was no Vidalia office,” Smith said, but when an ATC employee contacted the Vidalia Police Department about the matter, the Vidalia Police Department confirmed there was an ATC office in that town and that the office still contained ATC equipment.

It was unclear why Hebert would assert that ATC had no office in Vidalia unless the claim was made as a means of attempting to incriminate Traci Tingle.

What is clear, however, that Hebert is molding the agency into his personal fiefdom. He claims he has never fired a black agent but the evidence says otherwise. He also doesn’t say much about intimidating blacks—or transferring one from Shreveport to New Orleans without so much as day’s notice—to the point that they leave of their own accord.

The thing to keep uppermost in mind is that he is Jindal’s hand-picket director, specifically plucked from the legislature to succeed the man whom Jindal railroaded out of office with bogus criminal charges that were subsequently laughed out of court—all because that man, Murphy Painter, insisted that applicants (even those connected to big campaign donors like Tom Benson) conform to the rules when submitting applications for permits.

LouisianaVoice saw a railroad job then and we called it just that—when no other members of the media would come to the defense of Painter. We’re again seeing a railroad job and again, we’re calling it just that.

Jindal, of course, does not preside over the ATC Office but his policies, like a certain substance, flow downhill.

And right now, they’re stinking up the ATC Office.

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By Robert Burns (Special to LouisianaVoice)

When Hurricane Gustav struck south Louisiana on Sept. 1, 2008, almost three years to the day after Katrina, it set in motion a series of events that would ultimately:

  • upset the Livingston Parish political structure;
  • leave the parish facing a bill for more than $40 million in cleanup costs;
  • see a call for but never a follow up on an investigation into the formation of a fictitious corporation (at a fictitious address headed by a fictitious person) which somehow managed to be the only bidder on a lucrative contract;
  • result in the arrest of another contractor who was also serving as an FBI informant to help root out fraud, and
  • leave residents more than six years later still wondering who are the good guys and who are the bad guys.

First, some background.

The massive cleanup that followed Gustav required fast action and, regrettably, such fast action oftentimes opens the door for governmental abuse. The Federal Emergency Management Agency (FEMA) declared that to be the case in Livingston Parish’s cleanup, and the agency denied an astounding $59 million in clean-up costs.

Crucial to FEMA’s decision was Corey delaHoussaye, a contractor hired by Livingston Parish to assist with U.S. Army Corps of Engineers permitting issues nearly a year after the storm struck.  DelaHoussaye, coincidentally, also served as an FBI informant during the cleanup.  Livingston Parish District Attorney Scott Perrilloux, along with the State Office of Inspector General (OIG), have accused  delaHoussaye of submitting his own fraudulent invoices for hours they assert he did not perform work as part of his $2.3 million billings.  DelaHoussaye attorney, John McClindon, contends that the OIG got a search warrant for delaHoussaye’s residence on July 17, 2013 but delayed executing it and arresting delaHoussaye for eight days so it would coincide with a council meeting to approve delaHoussaye’s final $379,000 in invoices.  DelaHoussaye wasn’t paid, and he sued the parish for nonpayment.

Meanwhile, Perrilloux sought an indictment against delaHoussaye, but he came up one vote short in an 8-2 vote of the grand jury in December of 2013.  Undeterred, Perrilloux proceeded with a bill of information containing 81 counts, including 73 of filing false public records, but last Friday Perrilloux dropped 19 of those 73 counts.

On Monday, 21st Judicial District Judge Brenda Ricks ruled that insufficient evidence exists to proceed with a trial—a major victor for delaHoussaye.  Perrilloux presented only one witness during Monday’s hearing: OIG investigator Jessica Webb, who testified that, during times delaHoussaye charged the parish for hours worked, he sometimes was at an anti-aging clinic, at Greystone Country Club playing golf, or at Anytime Fitness working out.

McClindon, calling the OIG’s investigation “half baked,” said the OIG’s office seized his client’s computers and “looked at what they wanted to look at,” ignoring emails and failing to talk with anyone.

Similarly, at the trial of Murphy Painter, former director of the State Office Alcohol and Tobacco Control (ATC), former OIG investigator Shane Evans testified that he merely “wrote down” what ATC employee Brant Thompson said to him regarding Painter’s being “manic depressive, out of control, and selectively enforcing alcohol statutes,” and admitted the OIG did zilch to corroborate Thompson’s assertions even though it was Thompson’s initial characterization that reportedly prompted Gov. Bobby’s firing of Painter. (Subsequent details later revealed Painter’s firing was steeped in the time-honored tradition of Louisiana politics as usual.) http://louisianavoice.com/2013/02/06/emerging-claims-lawsuits-could-transform-murphy-painter-from-predator-to-all-too-familiar-victim-of-jindal-reprisals/

A company called Comprehensive Business Solutions, with an address on Coursey Boulevard in Baton Rouge, was created by someone named Patterson Phelps of Mandeville in March of 2010, according to corporate records filed with the Secretary of State’s office.

That date was just prior to the Livingston Parish Council’s issuing invitations to bid on a lucrative contract for cleanup.

The only problem is there is no such business at the address given and in fact, never was, and no one has been able to ascertain who Patterson Phelps is, other than speculation that it was an alias for a member of the parish council who was attempting to obtain the contract for himself.

A spokesperson for the Secretary of State said the corporate papers were filed electronically with payment made by credit card and that no records exist that would reveal who was actually responsible for creating the shell company.

The parish council did indicate it would instruct Perrilloux to conduct an investigation into the identity of the mystery person, but no results of any investigation, if it was ever conducted, have been made public.

Perrilloux, apparently fuming over Ricks’ ruling, said after the hearing that he would proceed with trial anyway and added, “Just because they wear a black robe doesn’t mean they know everything.” Legally, Perrilloux cannot proceed with a trial unless Ricks’ ruling is overturned by the First Circuit Court of Appeal or the Louisiana Supreme Court. He later said he would appeal the decision.

Brian Fairburn was Livingston Parish’s Emergency Manager and Coordinator for Homeland Security at the time Gustav struck.  His job was to hire monitors who would oversee operations to ensure FEMA reimbursement eligibility.

Fairburn testified that Mike Grimmer, then-Livingston Parish President, indicated to him that he had grave concerns regarding some of the itemized charges on the FEMA project worksheet and likely would not sign off on it.  When asked why, Fairburn indicated Grimmer told him, ‘“The costs are too high and we have permitting issues.’ (He) specifically told me we were taking kickbacks, that we were just out there creating work for these contractors to do.”  When asked whom Grimmer asserted was taking kickbacks, Fairburn responded, “Jimmy McCoy (Councilman from District 2), and he included me as being in on it also.” Fairburn added that Grimmer, “tried to ruin McCoy,” and that he “wanted to show that there was trouble, corruption, and crime in the parish.”  Fairburn also testified that he was terminated soon after the Gustav project but added that when Layton Ricks defeated Grimmer for parish president, he was rehired.

Brian Fairburn testified that during a meeting on November 26, 2008, Eddie Aydell of Alvin Fairburn and Associates (no relation to Brian) expressed serious reservations about proper permitting with the Army Corps and that Aydell was “scared” the Corps would assert that permits should have been issued before work was begun.

It was at that juncture that delaHoussaye was hired to assist with permitting issues.  Brian Fairburn said that McCoy said that the parish “would not” be obtaining any Corps permits and that Grimmer “shut the project down,” after which the Corps issued a cease and desist order on drainage projects.

FEMA’s attorneys were not happy with state and parish attorneys’ attempts to turn the hearing into a trial of delaHoussaye, and they strongly objected to 20 exhibits and depositions, including photographs of delaHoussaye and his son, which they said were unrelated to the hearing.  FEMA attorney Linda Litke said, “delaHoussaye was hired a year after the disaster in 2009 to basically go through the documentation and clean up the mess……  The parish attempted to criminally indict him…..They have now attempted to proceed with criminal action against him without an indictment.  It is reprehensible that they would bring this documentation in this case……DelaHoussaye is a confirmed FBI informant.  He was a whistleblower, and that is why the parish has gone after him.”

Perhaps the most riveting testimony was that of former Parish President Mike Grimmer, who testified that McCoy signed a contract addendum even though Grimmer was the only one with authority to do so.  He said he was “unaware the contract addendum was even out there.”  He indicated the addendum greatly increased the prices, including an increase in the per linear foot price.

Grimmer stated that he got calls from irate homeowners regarding crews, “trespassing on their properties….. and the trees had been taken with no permission.”  Grimmer also testified he obtained invoices for payment on work performed at local schools and North Park which had already been paid by other local agencies.  He referenced Legislative Auditor Daryl Purpera’s report which he testified that he’d requested.  He said it reinforced his concerns about documentation problems for cleanup operations. Grimmer’s response took “no exception” to the report.

That report also cited a contractor for hiring direct family members of Council members McCoy and Don Wheat which the report said may have violated ethics laws, so the matter was referred to the Louisiana Ethics Board.  Wheat, Councilman from District 6, responded angrily to the report and stated that Gov. Jindal’s GOHSEP’s Office had indicated the FEMA report was “fundamentally flawed” and on appeal and that Purpera, “continued with the same flaws and I urge you to correct your mistakes.”

Grimmer expressed shock when he attended an Office of Emergency Preparedness (OEP) meeting in May of 2009 and a $42 million tab for wet debris removal was “dropped in my lap.”  Grimmer asked for a breakdown and, on June 9, 2009, he got one and an indication that the final tab was estimated at $92 million.  He refused to sign off on the $42 million and verbally instructed all work to cease, and the Army Corps followed up with a written cease and desist order shutting down all drainage work.

FEMA attorneys then provided the panel with a handout of a power point presentation created by Grimmer entitled, “The Truth about the Debris Cleanup.”  Slides were presented depicting:

  • an oak tree removal for $8,415;
  • two other single-tree removals for $6,570 and $4,600, and
  • a pile of limbs for $2,805.

Grimmer said those types of vastly inflated costs prompted his decision to shut down the entire project.

Grimmer, over the objections of state and parish attorneys, last May told a three member arbitration panel that he alone would have been accountable to Purpera if he’d approved the project worksheet and that contractors, monitors, councilmen, and others would all be “gone and happy.”  He expanded on how the whole episode and his decision had adversely impacted him in the community, with long-time friends and business associates distancing themselves from him and people being angry at him but that, “at the end of the day,” he felt he’d made the right decision and felt vindicated by Purpera’s report.

Cross examination at that hearing focused on Grimmer’s frosty relationship with council members and his having referenced five such members as “the five amigos.”  Grimmer confirmed McCoy and Wheat were included in the five.  Grimmer admitted that delaHoussaye shared the fact that FBI investigator Steven Sollie had contacted him and that he was cooperating in an FBI investigation of the Gustav cleanup operations.  State and parish attorneys sought to get Grimmer to admit that he “had no interest” in the project’s costs until he obtained knowledge of the ongoing FBI investigation, a charge Grimmer vehemently denied.  Grimmer also indicated that, though he couldn’t remember which one, a FEMA monitor was paid $20,000 to make debris FEMA-eligible.

The panel ruled in FEMA’s favor.

If Perrilloux follows through and if the state’s and parish’s appeal hearing of FEMA’s decision is any guide, a trial is likely to air some of the dirtiest elements of Livingston Parish political corruption.  Louisiana Voice has obtained a transcript of the 2,197 page appeal hearing, and the contents are interesting, to say the least.

Perhaps that may be why delaHoussaye attorney McClindon said after Ricks’ ruling, “It would probably be best for us all to sit down and work this whole thing out.”

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