Following a legislative auditor’s examination that found numerous deficiencies in its operations, the Lafayette Public Trust Financing Authority could in short order have a new board of directors; the City-Parish Council will vote Tuesday on a resolution that, if approved, would dissolve the current board.
|Photo by Robin May
|LPTFA Chairman John Arceneaux with board attorney Richard Becker
According to the resolution, "The Lafayette City-Parish Council has dealt with this issue in the past, and the end result was the removal of the entire board." It's unclear, however, specifically what is being referenced and whether it pertains to LPTFA.
City-Parish Councilman Kenneth Boudreaux, who sponsored the resolution, could not be reached for comment.
Results of the examination of the LPTFA by Legislative Auditor Daryl Purpera's staff — a review requested by Councilman William Theriot — were released in mid-June. Purpera’s office concludes in the resulting report 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.”
The auditor also found a number of potential conflicts of interest involving the board’s attorney, Richard Becker, who has been providing the entity legal advice without a contract since 1998, and concluded that the LPTFA didn’t always comply with state public meetings law.
After the report was released, LPTFA board Chairman John Arceneaux issued a press release stating the agency had already instituted many of the recommendations in the report.
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 LPTFA is self-supporting and its operations, programs and projects are funded solely by self-generated revenues,” says Rebekke Miller, who joined LPTFA last year as program coordinator, becoming its first-ever employee. “The main source, but not limited to, is issuance of Single Family Mortgage Revenue Bonds and the re-investing of those revenues,” she says. “The LPTFA has never received any tax or other budget appropriation or funding from the city of Lafayette or the state of Louisiana for its operations and has never requested such funds.”
|C-P Councilman Kenneth Boudreaux|
If the council approves Boudreaux's measure, Lafayette Consolidated Government would advertise for candidates for a new board, which is operated on a volunteer basis.
Last week, when Councilman Theriot peppered Arceneaux with questions about Purpera's review, Boudreaux gave no indication that he was leaning toward dissolving the board. Boudreaux did, however, ask City-Parish Attorney Mike Hebert to look into whether the LPTFA board could be expanded beyond its five members, as is required in its bylaws. The IND has since learned that the LPTFA board violated its own bylaws by operating short of board members several years ago.
Arceneaux says that in mid-2008 four trustees resigned (after the state's so-called ethics overhaul that put into place financial disclosure requirements for volunteer members of public boards), leaving the board with a single trustee. On July 15 of that year, he and Jimmy Stagg were appointed by the council, he says, and it wasn’t until February of the following year that Ryan Marine was appointed.
“By tradition, the board is normally made up of one attorney, one mortgage banker, one CPA, one Realtor and one insurance agent,” Arceneaux writes to The IND in an emailed response. “As I understand it, each time the council appoints or re-appoints a trustee a public notice is placed in the newspaper by the council, and to my knowledge no additional resumes were submitted as a result of these notices.”
Arceneaux says the trustees attempted to reach out to CPAs and Realtors to solicit additional trustees, then expanded the search beyond these professions but did not receive any resumes from interested parties until mid-2011. On Oct. 15 of 2011 CPA Stacey Singleton and attorney Celeste White were both appointed.
While the auditor's report is disturbing on many fronts, The IND has long maintained that the board and Becker were complicit in allowing former Chairman Greg Gachassin to roll off the board and immediately become a high-paid consultant for LPTFA in 2009 in apparent violation of the state’s ethics code. Gachassin should have waited the required two years before doing business with the entity; last year he was charged by the Board of Ethics in a case that is ongoing.
Purpera’s staff also noted in its report that the board’s lack of an ethics policy led to the charges against Gachassin.
In charging him with violating the ethics code, 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 Uptown Lofts, where he got a $1 million fee, and has one with the Lofts at Olivier, a downtown project spearheaded by the LPTFA.
Boudreaux’s attempt to replace the LPTFA board brings to mind the 2010 removal of the Lafayette Housing Authority board members after a blistering independent audit of the agency uncovered gross mismanagement and led to an FBI investigation. City-Parish President Joey Durel moved swiftly to remove all but one of the board members, the last eventually resigning.
The argument to replace the LPTFA may be even more compelling because of the ethics charges against Gachassin. When The IND first exposed Gachassin’s ethics alleged ethics violations in an April 2011 cover story, “How Gachassin Games the System,” not one current or former board member would talk to the paper about why the board had allowed him to serve as chairman one day and roll off to serve as development consultant on its projects the next. Arceneaux, Stagg and Marine were all on the board at the time.
Presumably, all of them were well aware that the state’s Ethics Code has a two-year waiting period after board service ends and a financial relationship with the entity begins (that requirement was in place long before the 2008 ethics overhaul). We certainly know Becker was aware of the stipulation, because he acknowledged as much to this paper.
Yet Becker himself did nothing to protect the integrity of the board or the public interest it serves, failing to follow up on whether Gachassin sought an opinion from the Ethics Boar — which he obviously did not.