Lee Zurik Investigation: Board doesn't like ‘Playing With Fire’

The New Orleans Fire Pension Board sent a letter to all of its membership, blasting a series of stories by FOX 8 News.

Our Playing With Fire series questioned spending, salaries, investments and the employment of the board's CEO.

The board comes out strong in its two-page letter, writing, "The stories run have committed a great injustice to the ongoing work the trustees perform by using selective editing, misrepresentation and distortion of many facts."

The board finds fault with our first story, which showed the CEO of the Fire Pension Board, Richard Hampton, received a $70,000 raise to his current salary, $165,000 a year.

"They are making business decisions that defy logic," Metropolitan Crime Commission head Rafael Goyeneche told us during the course of our investigation.

But while the Crime Commission said the numbers don't add up, the board said many pension leaders make more than Hampton, writing, "There were at least 6 salaries that exceeded $150,000, none of which were shown in the WVUE report."

That's true.  We showed what we felt were comparable examples: the heads of the state firefighters, police and City of New Orleans retirement systems.  Hampton made more than them all.

The higher salaries in the pension board's letter actually reference much larger, statewide retirement systems.   The head of the Teachers Retirement System of Louisiana makes $250,000; the head of the State Employees Retirement, $196,000.

But consider -- they each manage more than $10 billion in investments, while the New Orleans Fire Pension Board manages $195 million.

The heads of the statewide systems each manage about 140 employees or staff members; Richie Hampton oversees three.

And the state systems have more than 100,000 current or future retirees.  The New Orleans Fire Pension Board has 1,300.

The board also said it used a salary study to calculate Hampton's raise.  We requested that study.  In a Sept. 25 follow-up email, Hampton wrote, "I have contacted members of the personnel committee to provide the information they collected to conduct my salary study. I hope to get this information to you ASAP."

We never received a copy of that study.

We also questioned Hampton's dual role as a board member and employee.  Loyola law professor Dane Ciolino says he thinks it's a violation of the law.

"Under the Louisiana Code of Governmental Ethics, an appointed board member can't enter into a contract for compensation with the board on which he serves," Ciolino told us.

But the board called that "freelance opinion", and wrote to its membership that "the State Ethics Board was duly notified" about the arrangement.

But that notification came in an annual financial disclosure filing that thousands of candidates, elected officials and board members file every year.  The Ethics Board has a budget that allocates two people to review such filings.

The board also wrote, "The WVUE news report has created a very negative and unfair perception on board and fund expenditures… the majority of expenses incurred while board members were attending the fund's annual week-long educational and investment review."

The board's letter never addressed the question of alcohol purchases.

"There's no alcohol purchased under the pension fund credit card," Hampton told us during our investigation.

Even though Hampton said no, we tracked down a receipt from Muriel's that showed something different.  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.

Alcohol paid for with public money -- that's against state law.

The board wrote, "When the costs of meals are added together, the cost per member averaged $50 per meal."

If that's true, think about this scenario.  In July of 2009, the board charged a $2500 meal at Mr. John's Steakhouse.  Doing the math, at $50 a person, that means 51 people attended the dinner.

But the board employs four people and has 10 board members.  So who were the other 37 people who went to the dinner, eating out with public money?

In the letter, the board told members they have "always acted in the best interest of the fund's members… elected members of your board of trustees spend an average of 16 or more hours per month in meetings… no one works harder for their members than your board and your fund's professionals."

The letter doesn't directly address questionable decisions on investments made by the board.  But the pension board did say its fund manager, Joe Meals, would meet with all active and retired members in the near future.