Lee Zurik Investigation: ‘Playing With Fire’… at the wine bar

Five is a small number compared to the amount of people who work for City Hall.

You see, for the City of New Orleans, 4,000 employees only need five credit cards.

"If I used it more than three or four times, I'd be surprised by it," says Mayor Mitch Landrieu.

So why does a small pension fund, with only three employees and 10 board members, need 11 credit cards -- more than double City Hall?

The New Orleans Firefighters Pension and Relief Fund gives a credit card to all but one board member.

"That was something prior to Mr. [Louis] Robein's tenure as [board] attorney," says Richard Hampton, CEO of the Fire Pension Fund.  "A previous attorney recommended that we do that."

When we reviewed a few years of credit card statements, we found some pricey meals.

"These board members are supposed to be serving their membership," says Metropolitan Crime Commission head Rafael Goyeneche.  "And, with these credit cards, it appears that they're serving themselves and some of their friends and guests to… not fast food but, you know, top-notch, top-dollar restaurants that are costing their membership."

One of the costliest, a $2500 meal at Mr. John's Steakhouse, charged by Secretary-Treasurer and CEO Richard Hampton.  And one Saturday night in July 2010, Hampton charged another expensive meal at Mr. John's: $2300.

When we ask Mayor Landrieu if he ever charges such pricey meals to city credit cards, he replies, "No…. the last time I charged something on the credit card was at Subway."

The board seems to like Tommy's Restaurant in the Warehouse District: Charges there ranged from $900, charged two years ago on New Year's Eve, to $1500.

When we ask Hampton why he spent such amounts at such upscale restaurants, he responds, "Everything we do is within the state governing statutes.  We're in compliance with our expense policy.  We're in compliance with codes of ethics."

But that may not be true.

Let's take a look at the board's policies.  It says expenses will be reviewed by the board's expense review committee.  But the board has no expense review committee.

"I review all the expenses," Hampton tells us.  And when we tell him it didn't appear that he was following policy, he says such as expenses as we're reporting "are approved prior to attending any conferences or any seminars that the board has to expend any money for."

The policy also says expenses need to be submitted with receipts.  They couldn't give us one for any of the meals, or for travel.

"There's been no abuses," Hampton insists.  "I review the credit card statements and as long as everything that I see on that statement is in compliance with our rules and our expense policy, there's not an issue."

The legislative auditor writes that the credit card statement is not adequate and recommends requiring those detailed receipts.  Without them, we can't tell who's eating meals or what they're buying.

We asked Hampton about an instance one February, when the Fire Pension Fund spent $1100 at Tommy's Wine Bar. He said, "It was all food.  Any expense that would have had to do with alcohol was separate, and would have been paid by another source."

That's right -- they said the Fire Pension Board never charged any alcohol.

"There's no alcohol purchased under the pension fund credit card," Hampton says.  "If anybody drank alcohol, it was purchased by an outside investment manager."

That brings us to the only receipt we were able to track down, from Muriel's: a total payment of $2700.  The receipt shows 28 people attended this dinner.  The Fire Pension Board charged $420 for an open wine bar, $420 for an open liquor bar, and $140 for unlimited beer.  The bill was signed by Board President Bud Carrouche.  That's alcohol paid for with public money, against state law.

"What we've seen is that, when you give out credit cards and don't have adequate checks and balances, the required documentation and justification, that you're going to see abuses," says Goyeneche.

The board CEO defends the spending.  "You're cherry-picking different expenses from different periods of time," says Hampton.  "If you'll look at those times, you'll see that they are directly in line with a week-long educational conference that all our members attend.   And if you look at those charges for an entire week of what was expensed, you can break it down less than 50 dollars a member per meal."

But according to the Muriel's bill, the board paid $50 per person for the alcohol, $50 per person for the food: a total of not $50 but $100 per person.

Some of the meals were less expensive: $105 at Drago's; $98 at Bozo's.  And to be fair, the credit card expenses don't come close to those at the Public Belt Railroad.

But spending on hotel rooms in New Orleans, restaurants and some travel raise questions.

Consider board member Nick Felton, who charged trips to Washington, D.C. to the board.  One included a $1200 flight, ultimately paid for by taxpayers.    The board never approved Felton to travel to D.C., but still footed the bill.

When we ask Hampton about this, he says, "I'd have to look and see about that."  We never got an answer.

The board did get back to us on some questions we had about retired firefighter Wallace Bailey.  He's been off the board since 2008, but still has a credit card.

Bailey sits on the City Board of Trusts, which oversees a number of funds including the old Firefighters Pension Fund.   Bailey used his Fire Pension Board credit card at Belk's clothing store, J.C. Penny, Winn-Dixie on New Year's Eve, the Astor Crown Plaza Hotel on Canal -- all paid for after he left the board in 2008.  We don't know why the Fire Pension Fund should be paying for any of that.

We've been showing you the results of our month-long probe into the Fire Pension Board: a salary increased by $70,000 in one year; board members possibly breaking state ethics law; questionable spending with board credit cards, including the purchase of alcohol.

All fit under the umbrella of administrative costs: the cost to run the office, to run the organization.  A particular statistic helps tell the story of this board.

In 2010, the New Orleans Fire Pension Board spent $1.2 million on administrative costs, or $660 per member of the pension system.  Compare that to a cost of $146 per member for the state Fire Pension Board, and $87 per member on administrative costs for the state's Municipal Employee Retirement System Board.  And many of those high costs for the New Orleans system were put on those 11 credit cards.

In one instance, even though the board says one thing, the itemized receipt shows something else.

"It raises issues," says Goyeneche.  "If they can't govern the conduct of their board members, how can they be entrusted to manage the business needs of their membership.