Sunday, January 2, 2011

FL Pension Frauds

Lose a $ million here, $ 250 million in another idiotic real estate deal there, and it means the state of FL MUST cut contracted pension benefits for state employees.  Jeepers, JEB! must feel so proud.

[Doing one thing privately then saying another thing publicly is no way to build trust in a government agency with an already tarnished image. But that is exactly what Ash Williams, who oversees investments in Florida's pension fund, has been caught doing. The decision now for Williams' new bosses — who campaigned on reforming the State Board of Administration — is whether they have the same confidence in Williams as the outgoing governor, chief financial officer and attorney general.

When questions arose five months ago about the pension plan's $100 million investment with a South Florida mortgage company with ties to Williams, the executive director of the SBA told his bosses there was nothing untoward. He claimed staff members were considering a deal before he arrived on the job. What Williams did not disclose: The SBA staff and outside consultants had repeatedly rejected overtures from affiliates of Bayview Financial Holdings, and a deal only gained traction after Williams intervened on Bayview's behalf.

Williams has contended his personal connections to Bayview in no way influenced the SBA's investment in June. He formerly worked at a New York investment firm, Fir Tree Partners, where Bayview's owners are clients and Williams is also an investor. He argued his Wall Street savvy — rather than being a conflict of interest — ensured the agency was making a wise investment for pension beneficiaries.

But government documents obtained by St. Petersburg Times staff writer Sydney P. Freedberg under Florida's open records law paint a far fuller view of Williams' role in the deal. The public record suggests a leader disinclined to follow the very SBA investment procedures he so proudly touts publicly.

For 16 months, SBA staff members had repeatedly deflected overtures from Bayview employees and placement agents. They raised concerns about excess fees, and outside consultants expressed serious reservations about Bayview's experience. But in April 2009, a Fir Tree partner contacted Williams and promoted Bayview. Within a month, Williams scheduled a meeting with Bayview in his office, alerting his subordinates just the night before. Within two weeks after that meeting, SBA staffers had drafted an "approval memo" for a $100 million investment in Bayview that borrowed heavily from Bayview marketing materials and lacked a full discussion of the firm's litigation, reference checks and consultants' views.

While it took another year for the deal to be signed, Williams continued to be involved, including visiting Bayview. Even as the SBA staff continued to raise concerns about Bayview's operation, the deal was signed in June.

Rather than acknowledge the full chain of events when Freedberg began asking questions last year, Williams deflected, telling SBA trustees Gov. Charlie Crist, CFO Alex Sink and Attorney General Bill McCollum that he considered Freedberg's inquiry an attack on his personal integrity. He also suggested publicly that SBA staff members were the driving force behind the deal. Public records refute that.

If Williams' personal integrity was not the issue before, it is now. He was hired after the SBA staff had been caught misleading local government investors in the 2007 subprime mortgage meltdown. His job was to reform the agency and restore trust with the public. His lack of disclosure in the Bayview case indicates neither goal has been met. The next board of trustees — incoming Gov. Rick Scott, CFO Jeff Atwater and Attorney General Pam Bondi — will have to decide if they trust Williams to tell them the truth about how he and the SBA conduct business. If not, they should show him the door.]  emphasis added

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