Posted on 10/20/2002 5:45:59 AM PDT by GailA
Taxpayers pick up tabs for officials' NYC jaunts County expenses folded into bond debts
By Marc Perrusquia perrusquia@gomemphis.com October 20, 2002
On Broadway, he saw Jekyll & Hyde.
After the show, then-Shelby County Mayor Jim Rout stepped into a limo, a jet-black Cadillac that ventured into the Manhattan night.
For Rout, the 1997 outing in the Big Apple was magic. He had little idea how portentous it would be.
Over three years in the mid-1990s, Rout and other county officials, and their families, spent at least $73,000 on six New York trips - costs paid for, in whole or part, by taxpayers.
The tab included $15,000 on limousines and sedans, $3,700 for Broadway shows and more than $25,000 spent at The Ritz-Carlton, The Waldorf-Astoria and The Plaza hotels.
A dinner costing $1,100 at Central Park's renowned Tavern on the Green included $168 in tips alone, records show.
Shelby County taxpayers could be paying on these tabs for decades.
That's because many charges, accumulated during Manhattan bond sales, were entwined with closing costs on long-term loans for county building projects.
Those loans helped amass a record $1.4 billion debt, a daunting chasm that's costing taxpayers more than $100 million a year.
News of the New York trips comes amid a spate of disclosures about dubious county spending. State auditors have demanded an independent examination of county travel and credit card spending, and criminal investigators are reviewing the use of government credit cards.
The county, which built a reputation on sound management and austere spending, now is struggling with its own financial Jekyll-and-Hyde image.
"I had no idea . . . the county was paying for it," said County Atty. Donnie Wilson.
Records show Wilson ordered a limousine in November 1997 that racked up $516 in charges on a six-hour trip from Manhattan to Se caucus, an outlet shopping haven in the New Jersey Meadowlands across the Hudson River.
Like some officials, Wilson said he believed bond underwriters paid for the limos, hotels, Broadway shows and expensive dinners as part of a time-honored tradition in the big-spending culture of the New York financial world.
"There's been that assumption all along," agreed Rout, now back in private business after his second mayoral term expired Sept. 1.
If Rout and Wilson are correct, the New York trips paint a dicey scenario that collides head-on with the county's conflict-of-interest policy prohibiting county officials from accepting items of value.
First Tennessee Bank advises the county on financial concerns, and while First Tennessee paid many of the expenses up front, records show the bank then passed a large number of costs on to the county.
A June 1995 invoice from First Tennessee shows the bank billed the county $46,287 in connection with a $130.7 million general obligation bond issue. The invoice contained $19,686 in travel costs, including $8,492 for transportation, $8,182 for hotel rooms and $511 for entertainment.
"Our records indicate that this invoice was paid from the Debt Service Fund out of the proceeds of the 1995A Refund ing Bond Issue," county finance administrator Mike Swift said in a written response to questions from The Commercial Appeal.
One by one, officials passed the buck when asked if all the New York travel had been handled in a similar fashion.
County Finance Director John Trusty would not take a reporter's call but passed word through a secretary that questions should be referred to Kim Brukhardt, Mayor A C Wharton's spokesman.
Brukhardt said Friday she had contacted several officials but had no definitive answer.
"You'd have to look on a case by case basis," she said.
Terms differed in each closing, and Brukhardt said she was told travel costs could be paid by underwriters, First Tennessee or the county, depending on those terms.
There have been no out-of-town bond closing trips since 1999, Brukhardt said. No immediate reason was given.
At the bank, senior vice president Jim Vogel declined comment. Vogel's name appears repeatedly in records obtained by The Commercial Appeal that document the New York expenses. Many of the charges were paid, up front at least, on Vogel's credit card or appear in expense vouchers Vogel submitted to the bank.
Asked who paid the charges, whether they were folded into closing costs and what his role was on the trips, Vogel gave the same answer: "I don't have any comment on that."
First Tennessee spokesman Kim Cherry said client confidentiality precluded the bank from comment.
Whether the county, the bank or underwriters ultimately paid the charges, they are troublesome, according to a New York business professor.
"It smells if somebody you're doing business with starts wining and dining you," said Lawrence J. White, professor of economics at New York University's Stern School of Business.
"Then you've got to ask: Are the decisions that you are making being made on the merits or are they being made because this guy's been doing favors for you?"
White described the New York bond underwriting business as "a free-spending, wining-and-dining culture."
Public officials who wander into that culture should exercise caution, he said. White, a former federal employee, said he routinely turned down requests by for-profit firms to pay his way for, if nothing else, appearance's sake.
County policy states no officer or employee "shall accept any service or item of value, directly or indirectly, from any person, firm or corporation having dealings with the county, upon more favorable terms than those granted to the public generally."
The policy also says no official may receive "any part of any fee, commission or other compensation in connection with any dealings with the county ."
Commission Chairman Walter Bailey said he didn't see any conflict in the New York trips.
Bailey said he, too, assumed bond underwriters paid the travel charges, which he termed "a toast to an accomplishment."
"That toast came after all of the decisions had been made," said Bailey, who stayed at the Waldorf-Astoria in a May 1995 trip - charges placed on Vogel's American Express card.
"The timing took out the conflict," Bailey said.
Wilson, the county attorney, said he saw no conflict, saying the New York expenses were business courtesies offered to county officials for years, possibly decades.
Underwriting companies routinely provided limousines to pick up county officials at the airport and shuttle them between hotels and business offices, he said.
Invoices reviewed by the newspaper show charges totaling $15,535 in 1996 and 1997 from New York limousine provider London Towncars Inc. The bills include a $66-an-hour trip to Secaucus and an evening trip to the theater by Rout that incurred overtime charges of $49 an hour.
"It was a customer, public relations-type situation," Wilson said.
Not everyone believed the charges came without cost to the county.
"It would be part of the bond expenses - I understood that," said Commissioner Julian Bolton, who said he traveled to bond functions while serving as chairman in 1995.
"I think some of it was folded into the bond closings," said former commissioner Clair Vander Schaaf.
Records show Vander Schaaf traveled to New York in November 1996 with a friend, Shannon Sims, and others, including Rout, Wilson, chief administrative officer Jim Kelly and their wives and former finance director Henry Marmon.
Records indicate First Tennessee requested reimbursements for travel by spouses, family members and friends, and officials interviewed for this story said they routinely made such reimbursements.
In May 1997, Rout's son, Jimmy, incurred a $1,788 bill at The Ritz-Carlton, where he stayed in a $359-a-night room and charged $29 for movies and games.
Records show Rout reimbursed First Tennessee $633 that June from campaign funds, a payment he said probably involved airfare for his wife. Rout said he recalls repaying his son's charges with a personal check.
Several New York trips involved "swap" closings or refinancing to receive lower interest rates, Rout said, noting county officials always tried to get the best deal for taxpayers. He said recent news about large spending by the county is troubling to him.
"It obviously disappoints you," Rout said. "But we had, I thought, a very good run for the eight years as it relates to the things we accomplished."
- Marc Perrusquia: 529-2545
http://www.gomemphis.com/mca/local_news/article/0,1426,MCA_437_1490324,00.html
Great seats, huh? Rout office 'comped' $6,133 in prized tickets
By Michael Erskine erskine@gomemphis.com October 20, 2002
As 'NSync mania raged in April 2000, members of the Shelby County Commission had no trouble snagging seats for the band's sold-out teen scream bonanza at The Pyramid.
And taxpayers footed the $1,293 bill.
Between September 1997 and March 2001, taxpayers paid at least $6,133 for tickets that landed commissioners, county employees and other elected officials in prime seats for events at The Pyramid and other venues, records show.
Commissioners say they did not knowingly accept tickets paid for by taxpayers.
Typically, tickets were purchased - charged to former mayoral aide Tom Jones's county credit card - when event promoters made no complimentary passes available.
Commissioners and members of the Memphis City Council receive a pair of free passes from The Pyramid for most, but not all, nonsporting events. They also get passes from the University of Memphis to basketball and football games on request.
The county, in light of a recent audit, claims Jones owes county government $6,133 for the tickets, alleging those were personal expenses.
Jones, former mayor Jim Rout's senior adviser, is under investigation by the FBI and the Shelby County District Attorney General's office for use of his card for personal expenses.
Jones's attorney, Robert Spence, declined comment for this story. But in an Oct. 9 letter that accompanied a line-by-line rebuttal to the county's audit, Spence told County Atty. Donnie Wilson that "auditors knew or should have known that these expenses were incurred at the request of either senior staff members, the Mayor or a County Commissioner.
"In most cases, Pyramid charges were made to the card by others ."
Of 35 ticket charges identified by The Commercial Appeal, 15 are explained in the audit and Jones's response as tickets for commissioners. Some ticket charges had no explanation; others were identified as tickets for legislators or employees.
The audit, which claimed Jones "misdirected" more than $125,000 in county funds for his personal benefit, determined he still owes $87,483 for personal items, including the ticket charges.
Spence has vehemently objected to the audit's findings, saying Jones has repaid the county almost $50,000 and owes no more.
Mayor A C Wharton said the audit still has to be reviewed - a process that may begin this week - and could be adjusted if needed.
"I'll be the first to admit if there are errors," Wharton said. "I would be tickled pink if we could zero out all of these alleged charges."
Commissioners and other officials frequently requested tickets from Jones and Bobby Lanier, assistant to the mayor, according to commissioners and Lanier.
Lanier also sought tickets at times to recognize county employees.
The practice raises questions regarding the county's conflict of interest policy, which forbids officials and employees from accepting items of value.
Since the mayor usually doled out the 24 passes to the mayor's luxury box at The Pyramid, Jones and Lanier looked for other ways to satisfy the commissioners' requests for event tickets.
Jones's credit card number was on file at The Pyramid. All it took was a phone call by Jones or Lanier to secure seating in a block reserved by the arena management, typically in the lower level.
Commission administrator Calvin Williams often would field requests from commissioners and call Jones or Lanier.
Other times, commissioners and even some state legislators contacted Lanier directly, seeking a freebie or two.
The $1,293 charge for the 'NSync tickets was made to the Pyramid's ticket office on April 10, 2000. In Jones's response to the audit, he suggested auditors "consult with Calvin Williams who said the county commission wanted these tickets."
"If he made the notation, I stand by that," Williams said last week.
On May 25, 1999, records show three charges, totaling $313.05, for tickets to the Beale Street Music Festival for "mayor and commissioners."
Last year, county taxpayers paid $637 for tickets on Feb. 16 so state legislators could attend the Southeastern Conference women's basketball tournament at The Pyramid, records show.
Lanier handled that request. He said he can't remember which legislators asked him for tickets, but said it was the practice of the mayor's office to try to provide them.
"If we're going to take legislators out to eat when you're in Nashville and then they call and want to come to your town for a show or entertainment, I don't see anything wrong with it," Lanier said.
"If I thought there was anything wrong with it, I wouldn't have ever done it."
Commissioner Cleo Kirk said he often requested tickets - but not for his personal use. Friends would call and ask for tickets for community youth groups, with requests for as many as 15 or 20 tickets, to see such events as the Harlem Globetrotters, ice skating and wrestling, he said.
Kirk fielded so many requests that he gave his friends Williams's number to call directly.
Kirk said he wasn't aware until just recently that some of the tickets had been charged to the county.
"I just thought they had some close connection with the folks over there. I had no idea it was costing the county," Kirk said.
"If he (Jones) can identify the ones that belong to me, I'd pay them back myself."
Commission Chairman Walter Bailey said he once gave back a ticket he received that did not appear to be a complimentary ticket.
"If it didn't say 'comp,' I didn't want it, or I would pay for it out of my own pocket," Bailey said. "I wouldn't have the taxpayers pay a dime for my fun and frolic."
Commissioner Julian Bolton said he contacted Williams and Lanier from time to time with ticket requests but always assumed the passes were comps.
Commissioner Marilyn Loeffel said she was always unclear about how the ticket situation worked. She'd sometimes ask staff whether tickets would be available for an upcoming show.
"But I've never said, 'Get me tickets no matter how you get them,'" Loeffel said.
Williams said he suspected the tickets for commissioners sometimes were paid for by the mayor's office.
"Sometimes I would call Tom at the last minute, an hour or two before some show, and common sense would tell me he had to go the extra mile to get the tickets," Williams said.
But the administrator denied that commissioners had any idea they were ever getting tickets paid for by taxpayers.
"All they know is that I handed it to them. They didn't know the mechanics on how the tickets were obtained," he said. "They would request them. I would find a way to get them."
Williams said he felt Jones "did what a person in his position had to do to keep a good working relationship with an office he had to work with every day."
Williams said he didn't know who made requests for what shows. The newspaper has been unable to locate a log of ticket requests.
But he said all commissioners, with the exception of former officials Buck Wellford and Mark Norris, received tickets from him at some point.
"We felt like if our neighbors didn't get that kind of treatment, why should we just for being commissioners?" said Norris, who is now a state senator.
Wellford said it was no secret that extra tickets could be had with a call to the mayor's office.
"I think it was generally known around the commission office that the administration would try to accommodate someone if they really wanted to attend a special event," he said.
Cheapskates to boot.
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