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Archive for the ‘Ethics’ Category

Jindal goes bat guano crazy by entertaining Goldman Sachs, Citigroup proposals to sell LA. State Lottery for quick cash

Posted in Budget, Corruption, DOA, Economy, Education, Ethics, Finances, Fraud, Governor's Office, Legislature, Legislators, Office of Group Benefits, Politicians, Privatization, Revenue on March 19, 2015| 19 Comments »

 

There’s nothing left to be said other than to say Bobby Jindal is bat guano crazy.

The Louisiana Office of Group Benefits (OGB) was cruising along in 2011, providing virtually complaint-free quick turnarounds on medical claims for state employees, retirees and their dependents.

But then Bobby Jindal saw a way to undercut premiums in his privatization scheme which allowed the state to be obligated for less in its share of matching premiums so that Jindal could rake in some extra cash to cover his backside, aka budget deficit.

The result, as just about everyone who follows this sham of an administration knows, was that the $500 million reserve fund was all but wiped out.

Bobby Jindal, after having first jerked $40 million in funding for state colleges and universities, reversed himself again by taking $30 million from a federal hurricane recovery fund.

Bobby Jindal has shrunk the state’s rainy day fund from $730 million when he took office to $460 million and a $450 million fund to subsidize companies for investing in the state has evaporated as is the $800 million balance in the Medicaid Trust Fund for the Elderly.

And after giving away billions of dollars in tax breaks, incentives, rebates and exemptions for business and industry in an effort to spur economic development, we learned today (March 18) that Louisiana’s unemployment rate was third highest in the nation. http://www.politico.com/magazine/story/2015/02/bobby-jindal-campaigning-114948_Page2.html#.VQoeJ005Ccw

The one constant in all this is the Louisiana State Lottery, which since a 2004 Constitutional amendment has dedicated proceeds to the Minimum Foundation Formula (MFP) for public education.

Since the lottery’s approval by voters in 1990 and its implementation in 1991, the lottery, which is mandated to transfer 35 percent of proceeds to the state treasury, has contributed $2.8 billion to the state.

In 2014, sales were $450 million and $161 million of that was transferred to the state.

Also, 2014 marked the 13th consecutive year that the lottery has transferred more than $100 million to the state.

Why do we tell you all this?

Well, only because the administration of Bobby Jindal is currently entertaining the notion of selling bonds that guarantee future State Lottery profits in order to raise some $467.7 million in one-time money to help plug a $1.6 billion hole in the state budget.

Wait. What? Sell the State Lottery?

Yup.

State Treasurer John Kennedy tells LouisianaVoice that the administration is “seriously considering” two separate proposals to take over the lottery and to pay the state one time money.

The two proposals were from Wall Street banking firms Goldman Sachs and Citigroup. While Citigroup did not specify an amount, Goldman Sachs said, “Based on lottery revenue growth of at least 1.5 percent annually, the state could raise approximately $428 million and preserve a minimum contribution to the MFP of $160.2 million.” Goldman Sachs Presentation – March 2015

Citigroup Presentation – March 2015

With 13 consecutive years of receipts of more than $100 million and total receipts of $2.8 billion since 1992, $428 million in quick cash appears to be a terrible deal for the state—not that Bobby Jindal gives—or ever gave—a flying fig about this state.

Let’s first take a look back at the history of lotteries in Louisiana.

In 1868, the Louisiana Lottery Co. was authorized and granted a 25-year charter after a carpetbagger criminal syndicate from New York bribed the Legislature into approving the lottery and establishing the syndicate as the sole lottery provider.

Because it was an interstate venture, 90 percent of the syndicate’s revenue came from outside Louisiana. Because it was so profitable, when efforts were made to repeal the charger, bribes to legislators ensured the effort’s failure.

Ten years after it was approved, Louisiana had the only legal lottery remaining in the company. When Congress passed a prohibition against operating lotteries across state lines, the Louisiana Lottery was finally abolished in 1895. When it was disbanded, reports of ill-gotten gains and bribery surfaced. http://www.library.ca.gov/crb/97/03/chapt2.html

But even more worrisome are the histories of the two Wall Street banking firms who submitted proposals for taking over the Louisiana Lottery.

And even though Kennedy said Commissioner of Administration Kristy Nichols has said the lottery won’t be sold, the mere fact that two proposals for just that scenario have been simultaneously submitted by Goldman Sachs and Citigroup cannot be considered as coincidence. Both investment banking firms pointed that similar actions have been taken by Oregon, Florida, Arizona and West Virginia.

And what about the integrity and professional ethics of the two companies?

That’s a fair question, so let’s look at the records.

Goldman Sachs:

Citigroup:

So now the administration suddenly receives “unsolicited” proposals for the sale of the Louisiana State Lottery from two Wall Street banking firms with checkered backgrounds. (But admittedly, it would be difficult to find a Wall Street bank—or banker—these days that is not under a similar cloud.)

A Division of Administration (DOA) source said Bobby Jindal feels that, unlike his desire to sell the remainder of the tobacco settlement in yet another desperate effort to raise one-time revenue, he would not need legislative approval to sell the State Lottery. “We feel legislative approval would be required, but the governor apparently feels otherwise,” Kennedy said.

The State Treasurer added that he felt if Bobby Jindal does intend to sell the State Lottery, “he will wait until after the legislative session has adjourned and then direct the Lottery Corporation to take the action.”

The nine lottery corporation members are appointed to staggered terms by the governor. Kennedy serves as an ex-officio member. Three members, Christopher Carver ($2,000), Heather Doss ($1,000), and Lawrence Katz, combined to contribute $8,000 to various Jindal campaigns since 2003.

 

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ATC Director Troy Hebert rivals his boss in cold-hearted demeanor: fires agent who is recovering from heart attack

Posted in ATC, Courts, Ethics, Governor's Office, Lawsuits, Teague on March 13, 2015| 9 Comments »

Troy Hebert strikes again. http://www.atc.rev.state.la.us/commissioner.php

The controversial head of the Louisiana Office of Alcohol and Tobacco Control (ATC), who already has racial discrimination lawsuits pending against him after settling similar claims, has fired a veteran ATC agent while the agent was recovering from a heart attack after first having failed to do so while he was on active duty in the Coast Guard Reserve.

Hebert fired agent Brette Tingle of Prairieville by letter dated Feb. 9 which was hand delivered to Tingle’s home where he was convalescing from a heart attack.

Hebert took the action based on accusations of payroll fraud and misuse of federal grant funds after three investigations by two separate state investigative agencies cleared Tingle of any wrongdoing—and after Tingle, who is white, testified on behalf of three black ATC agents who filed a federal discrimination lawsuit against Hebert. Tingle said Hebert told him, “I’m going to f**k with Charles (Gilmore) first, then with Larry Hingle” in an effort to force them to leave the agency. Gilmore and Hingle are two of the three black agents who have filed suit against Hebert and ATC.

Tingle’s attorney, J. Arthur Smith of Baton Rouge, in an 11-page letter, has appealed the firing, accusing Hebert of “agency shopping” in his attempt to build evidence against Tingle in retaliation for his testimony in support of his fired colleagues.

Hebert’s tenure since being appointed by Bobby Jindal in November of 2010 has been tumultuous at best and disruptive to the entire agency, according to several agents who have talked privately—and publicly—with LouisianaVoice.

One of the most absurd rules put in place by Hebert was one which requires agents to spring to their feet and offer a verbal “good morning, Commissioner” whenever Hebert entered a room where agents were gathered.

Another order which conceivably could have placed an agent’s life in danger was his instruction to an agent who had been working undercover in bars in New Orleans in efforts to buy illegal drugs from dealers to cease undercover activities and to return to patrolling those same bars in full uniform.

Hebert’s accusations of payroll fraud stem from a GPS tracking system installed on ATC vehicles which Hebert said showed Tingle’s vehicle was at his home during hours he said he was working.

In leveling that accusation against his former agent, Hebert ignored that fact that Tingle often worked undercover in tandem with other law enforcement agencies, including the Ascension Parish Sheriff’s Office and the New Orleans office of the Food and Drug Administration (FDA). Together, they would conduct regular alcohol and tobacco compliance checks and it was commonplace for one of the agents to leave his state vehicle behind while conducting checks since using the state vehicle would defeat the purpose of undercover work.

When Hebert’s office was found out of compliance and ineligible for more than $100,000 in grant money from the U.S. Drug Enforcement Agency (DEA), Hebert laid the blame at Tingle’s feet even though the ATC compliance officer was Louis Thompson and not Tingle, attorney Smith said, adding that Thompson had been in charge of compliance for ATC for the entire 10 years that Tingle served as part of the DEA task force.

“These allegations are your third attempt to defame, intimidate and retaliate against Mr. Tingle,” Smith said, “because he has assisted and participated in the investigation and proceedings in connection with the EEOC charge and subsequent litigation in the case of Charles Gilmore.”

Gilmore is one of the black agents who has filed a federal lawsuit against Hebert and ATC.

Coincidentally, when the Jindal administration decided to go after former ATC Director Murphy Painter, the Louisiana Department of Revenue (LDR), which is over ATC, immediately launched its own investigation of Painter and federal charges of malfeasance were brought against him. He was subsequently acquitted and then won his own civil defamation suit against his accusers.

It was first shown by LouisianaVoice and later in his trial that the charges against Painter were retaliatory in nature and initiated by the Jindal administration after a dispute over his refusal to issue a permit to Budweiser to erect a tent at Champions Square across from the Louisiana Superdome. https://louisianavoice.com/2013/02/06/emerging-claims-lawsuits-could-transform-murphy-painter-from-predator-to-all-too-familiar-victim-of-jindal-reprisals/

Oddly, LDR, which has known of the Gilmore allegations since October of 2012, has yet to interview anyone about Gilmore’s claims or to initiate an investigation into the charges.

In his letter, Smith said the first attempt to bring charges against Tingle “was initiated when you (Hebert) employed (Baton Rouge law firm) Shows, Cali & Walsh to draft documentation based on one-sided and uncorroborated information. This purported ‘legal opinion’ was found to be unreliable by the Office of Inspector General (OIG).”

No surprise there. Shows, Cali & Walsh, which held 16 contracts worth a combined $3 million, skated perilously close to sanctions last year over evidence manipulation in the case of overheating on death row cells at Louisiana State Penitentiary at Angola. https://louisianavoice.com/2014/01/03/baton-rouge-law-firm-with-3-million-in-state-contracts-faces-legal-sanctions-over-evidence-manipulation-in-angola-lawsuit/

“Your second attempt,” Smith continued, “was initiated in 2013-2014 when you sent a complaint to the OIG alleging that (Tingle’s actions) constituted a criminal mater.

“…OIG conducted an extensive investigation …and determined that your allegations were not accurate enough to be utilized in making a case of payroll fraud.”

Bear in mind here that Hebert is head of a law enforcement agency for the State of Louisiana and apparently does not have the capability of building a criminal case or even knowing what constitutes criminal activity.

Not that he hasn’t tried.

“Despite the overwhelming evidence supplied to you by the OIG, …you continued your campaign to defame, intimidate, and retaliate against Mr. Tingle by appealing to … the Louisiana Department of Public Safety (State Police),” Smith wrote.

“You again asserted your professed belief that your alleged facts rise to the level of a crime and you were again informed that your purported facts did not rise to the level of being sufficient to be utilized in a court of law.

“The practice of appealing to multiple investigatory agencies in search of an investigation that supported your ulterior purpose is known in law enforcement as ‘agency shopping’ and is improper,” he wrote.

Smith said that Hebert launched his first investigation into Tingle during the time when Tingle was on active duty in the U.S. Coast Guard and that following a year-long OIG investigation, Tingle and Hebert were informed by letter that indicated no charges would be brought against Tingle.

Even as Hebert was telling Tingle that he intended to get rid of two black supervisors, including Larry Hingle, he was also instructing Hingle to investigate Tingle and Hebert later told Hingle to also investigate Tingle’s wife, also an ATC employee who had recently retired.

Hingle joined Gilmore and a third black ATC agent, Daimian McDowell in filing a federal lawsuit against Hebert, ATC and LDR on Oct. 2, 2012, and Tingle was listed as a friendly witness for the plaintiffs.

More details of the events in Hebert’s office will be forthcoming in a subsequent installment this weekend. Space simply does not allow this full story to be told in a single post.

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How is it that a national newspaper provides a forum for presidential candidate Gov. Bobby to promote his agenda?

Posted in Elections, Ethics, Governor's Office, Grant, Grants, Health Care, Higher Education, Incentives, Politicians, Taxes on March 9, 2015| 10 Comments »

It’s one thing when Gov. Bobby scoots off to Iowa or Georgia or appears at a CPAC conference or on Faux News to spin his laughable look how great I am distortions about the “Louisiana Miracle.” It’s quite another when respected publications like the Washington Post or the New York Times, or even USA Today (aka McNewspaper) allow him space in their op-ed pages to spread his bovine excrement.

Gov. Bobby’s latest attempt to give unsuspecting readers and blind loyalists in the other 49 states his view of Louisiana through those rose-colored glasses is an op-ed in USA Today in which he, apparently oblivious to shame or any sense of irony, bloviates that he has succeeded in his promise “to make the economy bigger and the government smaller” and that he accomplished “what the federal government has failed to do.” http://www.usatoday.com/story/opinion/2015/03/08/tax-cuts-louisiana-gov-bobby-jindal-editorials-debates/24613069/

If you’re into gallows humor, you’ll love these excerpts from his piece which, if we didn’t know better, was written for Comedy Central rather than a national newspaper. Here are a few of the accomplishments for which he takes credit and which the rest of us somehow missed:

  • Balanced budgets. (WTF? Does a $1.6 billion deficit looked balanced to anyone else? Does patching the budget all seven years of his administration with one-time money appear “balanced”?)
  • (We have) over 30,000 fewer state workers, than when we took office in 2008. Well, not quite. The actual figures, according to the Department of Civil Service, show that 13,577 positions have been abolished and 8,396 state employees have been laid off. The difference between abolished positions and layoffs can be attributed to targeting vacant positions for abolishment. So the actual reduction in the number of employees is 72 percent lower than his claims. Just another Jindal lie.ELIMINATED STATE POSITIONS BY YEAR
  • Louisiana’s economy is stronger than ever. (Wait. What? The last time we looked, the median household income in Louisiana was eighth lowest in the nation and our poverty rate the third highest with 10.7 percent of all households reporting an income of less than $10,000 per year.
  • Louisiana has received eight credit rating upgrades. (Both Moody’s and Standard & Poor are threatening to degrade the state’s credit rating. Sarah Palin’s lipstick on a pig comment comes to mind here. It would be interesting to see how you square your pontifications with the facts here.)
  • Louisiana’s economy has grown nearly twice as fast as the national economy. (Quite simply, a lie. All surveys show the state’s economic growth rate to be slower than the nation as a whole and the state is generally ranked 34th. In fact the nation’s GDP growth in 2013 was 1.8 percent, compared to Louisiana’s 1.3 percent. Even Mississippi’s was higher.)
  • We have outlined ways to minimize budget reductions to vital services such as higher education and health care. (Tuition at state colleges has increased 52 percent, eighth highest in the nation, since Gov. Bobby took office and his refusal to accept Medicaid expansion has deprived health care to 270,000 Louisiana residents and forced the closure of one of Baton Rouge’s busiest emergency rooms.) http://www.cbpp.org/cms/?fa=view&id=4135
  • “I do not measure Louisiana’s success by the prosperity of our government. I measure it by the prosperity of our people.” (That being the case, you are a colossal flop as a leader, politician, governor, and as a human being because it is your policies that have mired this state in the mud of mediocrity. You have deliberately set this state on a disastrous course—a course which you, for whatever reasons, continue to defend—of destruction. You have destroyed higher education, you have destroyed health care, you have destroyed the state’s infrastructure, you have destroyed the economy, you have destroyed a $500 million reserve fund set aside to guarantee uninterrupted medical care for state employees, retirees and their dependents, you have obliterated a $1 billion surplus when you took office seven years ago, somehow turning it into a $1.6 billion deficit. And worse than all that, you have turned your back on your people and the job they elected you to do so that you might continue on your fool’s errand of chasing an impossible dream of become president while the metaphorical crops rot in the fields back home.)

As a means of returning to reality, Gov. Bobby might wish to take a look at the USA Today poll that accompanied his latest work of fiction. At last check by LouisianaVoice, the poll showed that 13 percent of readers strongly agreed with Gov. Bobby while 3 percent simply agreed. Two percent had no clue while 9 percent disagreed and 73 percent strongly disagreed. Bottom line: 16 percent were in accord on some level with what he wrote while a whopping 82 percent weren’t buying.

Gov. Bobby, it should be pointed out, has opposed equal pay for women, rejected grants that would have gone to early childhood development and to expand broadband internet services in rural areas of the state, rejected a federal grant to help develop a high-speed rail line between Baton Rouge and New Orleans and robbed funds from state agencies in order to patch over budget holes—things he never mentions in those stand up comedy acts at CPAC or in his op-ed pieces.

Even USA Today, apparently feeling some remorse for giving Gov. Bobby a stage on which to spew his rhetoric, was compelled to run its own piece in which it pointed out that not all is well in the land of gumbo and Mardi Gras. http://www.usatoday.com/story/opinion/2015/03/08/tax-cuts-state-louisiana-gov-jindal-kansas-gov-brownback-editorials-debates/24616613/

“Louisiana’s jobless rate has gone from much better than the national rate in 2008 to much worse,” the paper said, adding that Gov. Bobby “cherry-picks the years” on the economic growth rates and “doesn’t mention that since 2010, the state has lagged behind the national recovery.”

Pointing out that both Louisiana and Kansas have implemented huge tax cuts, USA Today says, “The results have been dismal. Growth has been sluggish in both states, and the plunge in revenue has devastated both states’ budgets.”

Recently, the Baton Rouge Advocate reported that Gov. Bobby spent 45 percent of 2014 outside the state as he chased the Republican president nomination. Jim Beam, writing in the Lake Charles American Press, said that in addition to becoming a national and international political critic, Gov. Bobby “continued to tell the rest of the world how great things were going back home. His listeners seldom bothered to check the facts.” http://www.americanpress.com/Beam-column-3-8-15

Beam, who has been around the state’s political scene for decades, noted that under Gov. Bobby, tax credits, exemptions and breaks given to business and industry which were projected to produce increased state revenue have not done so despite a cost of almost $7 billion per year.

After enduring seven years of non-stop sliding into economic and political oblivion under this administration, we have some unsolicited advice for Gov. Bobby:

Your term of office will end in approximately 10 months. Back the U-Haul up to the governor’s mansion, pile your belongings in it and hit I-10 and keep going. Don’t stop until you have settled in Iowa, New Hampshire, at some think tank in Washington, or on the Faux News set. Anywhere but Louisiana. Take Timmy Teepell, LABI apologist Steve Waguespack (who apparently does not believe in the First Amendment and who believes a college professor has no right to an opinion or the right to write a political column on his own time), and Kristy Nichols with you.

And please, whatever you do….don’t come back.

….And there’s really no need to wait until next January since you’ve already quit.

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Say it ain’t so, Bobby; tell us DHH (your area of expertise) is not a party to Ethics violation with Kliebert’s brother-in-law

Posted in Audit Reports, Commissions, Contract, Contracts, Corruption, DHH, Ethics, Health Care, Privatization, Transparency on February 26, 2015| 4 Comments »

There is more damage control awaiting the most ethical administration in Louisiana history and just as with the Bruce Greenstein saga, the Department of Health and Hospitals (DHH) is front and center.

The Louisiana Board of Ethics last Thursday (Feb. 19) voted to file ethics charges against Galen Schum, DHH Secretary Kathy Kliebert’s brother-in-law, because of his failure to comply with state law requiring him to report income he received from a company under contract to DHH. ETHICS CHARGES

On Nov. 17, 2011, while Schum was serving as Director of Regional Operations for the Office of Behavioral Health (OBH), Magellan Health Services signed a two-year contract with OBH to administer behavioral health managed care services for children and adults.

That contract, approved on Jan. 23, 2012, and which went into effect on Mar. 1, 2012, was originally in the amount of $354 million for two years, but was amended to a three-year contract for $547.78 million and is scheduled to expire on Saturday.

On Feb. 13, 2012, just three weeks after the contract was approved and just over two weeks before it went into effect, Schum submitted a job application to Magellan and was hired on Feb. 27, only two days before the contract took effect.

He resigned from Magellan on Jan. 31, 2014 but during the time he was employed there, he earned more than $146,000 in salary, according to documents obtained by LouisianaVoice.

Kliebert was serving as Deputy Secretary of DHH when the Magellan contract was approved on Nov. 17, 2011, and remained in that capacity until April 1, 2013, when she was elevated to her current position of Secretary.

State law (R.S. 42:1114) provides with respect to the filing of financial disclosure statements, “…that each public servant and each member of his immediate family who derives anything of economic value, directly, through any transaction involving the agency of such public servant or who derives anything of economic value of which he may be reasonably expected to know through a person which (1) is regulated by the agency of such public servant, or (2) has bid on or entered into or is in any way financially interested in any contract, subcontract, or any transaction under the supervision or jurisdiction of the agency of such public servant shall disclose the following:

  • The amount of income or value of any thing of economic value derived;
  • The nature of the business activity;
  • Name and address, and relationship to the public servant, if applicable, and
  • The name and business address of the legal entity, if applicable.

The disclosure statement is required to be filed each year by May 1 and shall include such information for the previous calendar year.

R.S. 42:1102 defines “immediate family” as the children of the public servant, spouses of his children, his siblings and their spouses, his parents, spouse and the spouse’s parents.

“Galen Schum violated …the Code of Governmental Ethics by failing to file a financial disclosure statement on or before May 1, 2013, disclosing income received during 2012 from Magellan Health Services, Inc., and on or before May 1, 2014…at a time when Magellan Health Services, Inc. had a contract with the Louisiana Department of Health and Hospitals—Office of Behavioral Health and while his sister-in-law, Kathy Kliebert, served as the Deputy Secretary and Secretary of the Department of Health and Hospitals,” the Board of Ethics document says.

The board issued a formal request that the Ethics Adjudicatory Board:

  • Conduct a hearing on the foregoing charges;
  • Determine that Galen Schum has violated (state law) with respect to the foregoing counts, and
  • Assess an appropriate penalty in accordance with the recommendation of the Louisiana Board of Ethics to be submitted at the hearing.

Other documents obtained by LouisianaVoice indicate that Schum, on Jan. 18, 2011, in his capacity as Director of Regional Operations for OBH, presented a report to the Louisiana Commission on Addictive Disorders on the status of OBH’s ongoing privatization efforts—efforts which led directly to the awarding of the Magellan contract.

It was at that same Jan. 18 meeting that Kliebert announced to the commission that she had been selected as the new DHH Deputy Secretary and would be leaving her position at OBH.

Schum also participated in a commission meeting on Oct. 11, 2011, at which time he gave the commission “a brief update on the Louisiana Behavioral Health Partnership,” according to commission minutes of that meeting.

Schum said that the selection of the Statewide Management Organization (SMO) had been completed and that Magellan Health Services “was the vendor selected to be the Louisiana SMO, and that the Office of Behavioral Health was currently involved in the contract negotiation process with Magellan.”

Finally, the minutes of a Magellan Governance Board meeting of June 20, 2012, indicate that Schum was employed as a Reporting Analyst for the company.

Magellan had come under sharp criticism from the Legislative Auditor’s office in August of 2013 in a report that said the administration’s privatization of mental health and addictive disorder treatment programs had created confusion and added costs for local human services district that provide the care. http://www.nola.com/politics/index.ssf/2013/08/audit_shows_privatization_of_m.html

That audit report, which examined privatization results at human services districts in Baton Rouge, Houma, New Orleans and Amite, said privatization had caused problems with claims payments which increased costs for the districts and made it more difficult for the districts to receive reimbursement for services. The report also said the districts lost money under a requirement that they use Magellan’s electronic health records system.

The Capital Area Human Services District in Baton Rouge, for example, told auditors that its administrative costs for billing claims had increased $270,000 a year since the privatization took effect. That cost was attributed to problems with claims reconciliation and collection, the audit said.

Meanwhile, the report said, DHH failed to ensure that Magellan processed claims in a timely manner, often taking weeks or months to process claims. The report also said DHH failed to penalize the company when it did not meet planning and technical benchmarks. “No sanctions have been imposed on Magellan for not meeting all required contract provisions,” it said.

Just another Jindaled state agency headed for yet another privatized train wreck.

But don’t say we never warned you.

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Fans of mystery, intrigue and political corruption can have a field day with DA motives in Livingston Parish investigation

Posted in Audit Reports, Auditor, Contract, Contracts, Corruption, Courts, Ethics, Fraud, GOHSEP, Lawsuits, Politicians, Waste on February 24, 2015| 8 Comments »

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.) https://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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