The Louisiana Legislative Auditor delved into the books and operations of the Lafayette Public Trust Financing Authority, turning up an entity that is flying by the seat of its pants.
In July 2012, after the Louisiana Board of Ethics filed charges against development consultant Greg Gachassin, Lafayette City-Parish Councilman William Theriot asked City-Parish attorney Mike Hebert for guidance in asking the Legislative Auditor to investigate the Lafayette Public Trust Financing Authority, the entity entangled in the ethical dilemma.
|Photo by Robin May|
|Legislative Auditor Daryl Purpera cited potential conflicts of
interest for LPTFA attorney Richard Becker, left, who has been providing the entity with legal services without a contract or
formal board approval since 1998. At right is LPTFA
board member Jimmy Stagg.
The LPTFA is a public trust set up in 1979 to benefit the city of Lafayette, and while the City-Parish Council appoints its board, approves its bylaws and bond issues and has the authority to inspect its books and records, it does not directly control the board - and has no say in how it spends the millions of dollars it is entrusted to oversee.
The IND was first to report that on June 14 of last year the Louisiana Board of Ethics voted to charge Lafayette developer Gachassin and his Cartesian Co. with violating the state's Code of Governmental Ethics while he was chairman of the LPTFA's board of trustees and again after he resigned from the public trust's board. The Ethics Board's action is much like filing a civil lawsuit against Gachassin; the case is ongoing, awaiting a judge's decision on whether Gachassin is entitled to records and files of everyone interviewed during the investigation. The Ethics Board is fighting release of the information, asserting that it is confidential.
In filing the charges, the Ethics Board spells out how the local developer laid the foundation for lucrative work with the LPTFA while he was serving as an appointed board member from November 2003 to November 2009. His alleged violations involved Villa Gardens, a single-family low-income development on Patterson Street, and Cypress Trails, a low-income apartment complex on Sophie Street in north Lafayette. In both cases, Gachassin's Cartesian Co. signed $500,000 consulting contracts with partnerships associated with those projects, which were backed financially and/or initiated by the LPTFA. Gachassin had a similar consulting contract with the controversial Uptown Lofts, a gig he purportedly made $1 million on, and the Lofts at Olivier, a downtown project spearheaded by the LPTFA.
After Theriot made his request, Legislative Auditor Daryl Purpera stepped in to look at the public trust's internal controls, and what his office found isn't pretty. The report was released to Lafayette Consolidated Government June 19 and posted to the auditor's website Monday.
|City-Parish Councilman William Theriot|
In a June 19 letter to LPTFA board chairman John Arceneaux, Purpera says the inquiry was launched after questions "were raised by public officials and their constituents." Read more about the role the public, including community activist Carol Ross, and officials like Theriot played in bringing to light the shortcomings of an entity that controls millions of public dollars here.
The LPTFA's board is authorized to pursue a wide variety of purposes deemed "essential public functions conducted in the public interest," including housing and mortgage financing, education, cultural and civic projects, health care, correctional facilities, water and sewer, mass transit, energy and transportation, according to Purpura's report. It's worth noting that the public trust recently pledged $2.6 million to help fund the plan for turning the Johnston Street Horse Farm into a passive public park. While all of these projects appear to be allowable, the audit points out that the board has no formal selection process, leaving everyone in the dark about the criteria it uses, nor does it have strategic plan for both short- and long-term goals and objectives.
For starters, and among the most damaging findings considering the Ethics Code violations Gachassin is facing, the investigation implies that the LPTFA's lack of a code of ethics led to the charges against Gachassin. The group has no written policies or procedures, nor does it have an ethics code or any training policy for board members to guide its business practices, according to the report: "Such controls, if developed and implemented, could aid the Trustees in ensuring they are in compliance with applicable legal and ethical requirements."
The IND has long argued that the LPTFA board and Becker were complicit in Gachassin's ethical dilemma, as not one of them raised any questions when he rolled off the board one day and began pulling down hundreds of thousands of dollars the next day in contract work tied directly to the public trust.
Purpera's office concludes that the LPTFA needs substantive improvements in its system of accounting and management controls, noting deficiencies in accounting controls over numerous years, with material weaknesses reported in audits as recent as last year. That report stated that management "had failed to take all steps necessary to ensure that an effective system of internal control was in place. ... This condition resulted in the auditors proposing numerous and material audit adjusting journal entries."
Shockingly, the LPTFA does not even prepare or adopt an annual budget, despite that it is required to do so by state law.
The auditor also found a number of potential conflicts of interest involving the board's attorney, Richard Becker, who has been providing legal services for the past 14 years at fees ranging from $85 to $250 per hour, plus expenses, without a formal or written contract and without ever having been approved by the board (the auditor states that such formalities would be good business practice). Before 2012, Becker's firm also provided some accounting and record-keeping services to LPTFA, and virtually all of the records were stored at the law firm's office. The audit recommends the board consider the following when contracting for legal services in the future:
The auditor also noted the potential conflict of interest Becker's firm has in representing other governmental entities, like LCG (C-P attorney Mike Hebert has since gone into practice with Becker's firm), the Planning and Zoning Commission and the Lafayette Housing Authority, whose interests may not always align with those of the LPTFA.
Among other findings: the LPTFA has not always complied with the state's Open Meetings Law, does not hold annual meetings and does not keep the spirit of the Open Meetings Law by holding regularly scheduled meetings (it is the master of "special meetings"). It also does not always clearly state the business to be discussed at its meetings.
Read Purpera's full report here.
On Monday at about 5 p.m., more than two weeks after it responded in writing to Purpera's findings (a letter which is included in the auditor's report) the LPTFA publicly addressed the findings in a press release:
Among those changes are the complete review and adoption of amended by-laws (by both the LPFTA Board and the Lafayette Consolidated Government in the first quarter of 2013), adoption of new accounting practices utilizing outside council expertise, and on-going work towards the adoption of a strategic plan. Several of these new practices were under implantation prior to even the start of the Auditor's review.
"We take our role in the Lafayette community very seriously and are always open to recommendations to help increase our efficiency and transparency and assist us improving our projects and processes," said the chairman. He added "While most of what is contained in the short 20 page report amount to recommendations, not directives, LPTFA is committed to following best practices in all areas of our operations. We will adopt additional changes over the coming weeks. But I will say we are pleased with the numerous areas of the report that acknowledge our compliance with law and our high standards in our current operations."
LPTFA projects in the Lafayette area have included a $2.6 million grant for the first phase funding new Lafayette Central Park (located at the old Lafayette Horse Farm), funding for the Rosa Parks Inter Modal Transportation Center, development of the Acadiana Center for the Arts, and Uptown Lofts, the newly opened affordable housing near downtown (a project which was recently awarded a green housing award by the Affordable Housing Tax Credit Coalition's 19th Annual Charles L. Edson Tax Credit Excellence Awards). Among current projects, LPTFA is working on the development of the downtown live-work Artist Lofts.