Zurik: Jaw-dropping spending found in retirement board's records

Published: May. 6, 2015 at 6:29 PM CDT|Updated: May. 7, 2015 at 2:05 AM CDT
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NEW ORLEANS (WVUE) - A state lawmaker says the legislative auditor will open an investigation into a public retirement board, following our findings of inappropriate spending there.

"All I see is liquor right now," says Rick Franzo of the group Concerned Citizens of St. Tammany, looking over one of the receipts we uncovered. "Well, somebody's living the good life."

This is a statewide retirement board, one that touches nearly every parish in Louisiana.

"And they're living the good life off of taxpayers' money," Franzo says. "It's terrible."

The Municipal Employees Retirement System, or MERS, manages retirement accounts for many of the cities in this state, including Slidell, Mandeville, Covington and Bogalusa on the North Shore, and also Gretna, Lafitte, Hammond and Thibodaux - the list is long. Their executive director, Bob Rust, runs the system. He earns $215,476 a year, and also has a public credit card.

"Boy, and they spend money," Franzo comments. "They're not afraid to spend the dollars. I could see that those were big dollars - everything is big dollars."

On September 15, 2013, Rust took a group to Palace Café in New Orleans. Two credit card charges totaled $1,546.63. The party drank well, ordering Makers Mark, Tanqueray and tonic, a Cosmopolitan and Grey Goose. All totaled they ordered two bottles of wine, an additional seven glasses of wine and 23 mixed drinks.

"If these are public funds – and I believe they are – then they cannot be used in the manner that these funds are being used," says Loyola law professor Dane Ciolino.

Ciolino points to several opinions written by the state attorney general on alcohol and the use of public funds. "There is no ambiguity about that," he says. "If funds are public funds, they can't be used for alcohol."

In 2012, Rust charged a $2,900 meal at Ruth's Chris Steakhouse in Baton Rouge. That included $717 on beverages. The year before, the bill topped $3,000.

"Almost $3,200 at Ruth's Chris Steakhouse," Franzo notes. "And the citizens of Louisiana are paying for this. This is crazy. This is just really way over the top."

Rust charged a $700 training meal at Juban's Restaurant, $1,600 at GW Fins, $1,000 at Bon Ton, a $100 lunch meeting at Galatoire's in Baton Rouge, more than $1,000 for an actuarial education dinner at Mansur's on the Boulevard. Most meals were documented with little explanation; we have no idea why it was necessary for the public to pay the bill.

"I don't know how it can be justified," says La. Representative Kevin Pearson, who chairs the House Retirement Committee. That role automatically gives him a seat on every statewide retirement board, including MERS.

Pearson says MERS gets money two ways. For example, the City of Slidell is in the system. Employees of the city contribute to MERS, and the City of Slidell also contributes taxpayer money to the system. MERS invests the revenue but also uses some of it to operate.

"The people that are putting into these retirement programs, they should be screaming livid, because that's money coming out of their pockets," Franzo says. "It's also money coming out of the taxpayers' pockets."

The state's attorney general also has written, "Public funds cannot be utilized to purchase flowers." But that didn't stop MERS. The office bought flowers for the husband of an employee. On the card they wrote, "Get well soon. Sorry we couldn't find you a marijuana plant. Hope you enjoy - your friends at MERS."

As we analyzed Rust's credit card spending, our focus turned to a series of trips. April 2012, Rust spent Easter Sunday at the Marriott Grand Hotel in Point Clear, Alabama. He paid for two rooms, both under his name, paid for meals, gas and a rental car. The total, $3642.51, was charged to his public credit card.

So what public work was he doing on Easter weekend at the Grand Hotel in Point Clear, Alabama?

"Yeah, I would question that too," Pearson says.

"Easter bunny conference?" Franzo asks, incredulously.

Records show Rust said it was to plan an educational conference. Each summer, the retirement system does hold a conference at the Grand Hotel to train board members, usually in late June or July. Rust is saying he went there nearly two months earlier to plan the conference - over an Easter weekend.

"I don't know if that's something you need to go visit so much, to plan," Pearson says, "certainly over the phone… you certainly know the venue, certainly if you've been there… I know. Doesn't look good."

One year earlier, in 2011, Rust took two conference planning trips. Records show the first was to Sandestin, Florida over Easter weekend. The trip included a $1,200 room, meals at the Marlin Grill and Bistro Bijoux.

One of the documents shows this was for "educational conference planning." But remember, that yearly educational conference he apparently was planning for is in Point Clear, Alabama, not Sandestin - which is 128 miles away.

"What are they going to do, drive back from Sandestin every day to Point Clear?" Franzo asks. "And back and forth? I mean, it's crazy."

Same year as that Sandestin trip, Rust took another weekend getaway, this one to the Grand Hotel. That included a $1,500 hotel charge and $293 for a rental car. His wife was listed as an additional driver.

"We're paying for the family vacation," Franzo tells us.

And another trip, Memorial Day 2014, Rust used public funds to once again pay for a Point Clear trip. He writes on the receipts that this was for a MERS conference.

We ask Pearson if he'd heard about MERS holding a conference over Memorial Day. "No, no, not at all," he tells us.

Receipts show Rust was considered a "VIP." On that trip, he didn't use public funds to pay for his room - but he did for the $545 rental car and meals. Again, that's all for what he called a "conference." By the way, MERS' annual conference did take place - two months later.

"They're questionable activities, questionable charges," Pearson acknowledges.

Rust declined repeated requests for an on-camera interview, but did write us a letter claiming MERS "holds no public funds."

The House Retirement chairman says Rust is wrong. "It would be hard not to consider those public funds," Pearson tells us.

Pearson wants the legislative auditor or state inspector general to take a look at Rust's spending.

Franzo calls it a "blatant abuse of our money, and people need to be screaming about it."

Rust told us in his letter that MERS' administrative budget is $1.1 million, a small share of the overall money MERS takes in yearly.

But the questionable trips and pricey meals have Franzo, a North Shore taxpayer, outraged. He says the members of the system, current and future retirees, should feel the same about a public employee in control of their future, their retirement.

"They should all be quite upset by it," Franzo says. "This is their money. This is their future. This is their retirement money."

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