Zurik: MERS chief defends big spending in letter to board

Published: May. 11, 2015 at 9:24 PM CDT|Updated: May. 12, 2015 at 2:05 AM CDT
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NEW ORLEANS (WVUE) - The head of a local retirement system says he did nothing wrong. Bob Rust sent a memo to his MERS board members, defending the spending that we uncovered in our "Swiped" investigation.

Rust's interpretation of the law differs from that of Loyola law professor Dane Ciolino, or even that of the state attorney general. Both say buying alcohol with public funds is illegal.

"There is no ambiguity about that," Ciolino told us in an April interview. "If funds are public funds, they can't be used for alcohol."

Still, Rust told his board members in a letter, "Yes, alcohol was an optional beverage, which is permissible at a conference." But nothing in the law says alcohol is permitted at any conference, as Rust alleges.

The main point of Rust's letter is to tell members that no retirement funds or taxpayer dollars were used for any of the questionable expenses we highlighted.

The Municipal Employees Retirement System, or MERS, has two checking accounts: one funded by members and taxpayers, its operating account, the other an educational fund account that is funded by investment companies. They act as sponsors for MERS' yearly educational conference.

Legal experts say that educational fund, filled with self-generated dollars, is also public money.

"Whether those funds are generated through taxes, whether they're generated through fees, whether they're generated through other self-generation efforts – they all, at the end of the day, are going to wind up in the hands of that public body and be public funds," Ciolino said.

But Rust's letter indicates that, because the money was self-generated, the spending on alcohol and some trips was not a problem.

Each summer, MERS holds its educational conference for board members. A few months before that conference, Rust takes a yearly educational conference planning trip - often over holiday weekends.

Rust said he takes those planning trips over holiday weekends because "I went when my work and personal calendar would allow." Rust added, "To not go on-site and plan this event each year would be like planning a wedding over the phone or online."

One member of Rust's board, La. Representative Kevin Pearson, says that's a stretch.

"I don't know if that's something you need to go visit so much, to plan," Pearson told us.

Rust wrote that the planning trips were "to reserve space among the various venues."

And Rust defended a Sandestin trip he took in 2011 He wrote it, too, was for conference planning, even though it was more than 100 miles away from where MERS holds its conference.

Rust wrote, "We were exploring other venues to determine if there was a better location for our conference." Rust spent more than $2,000 to explore that potential future conference site.

Rust also wrote, "The education conference fund paid for most of the planning trip expenses. Any amounts paid by the system were minimal not material."

But that's not true. For example, Rust charged $1231.14 for Sandestin reservations – again, not paid out of the educational account. Still, Rust calls that a minimal charge.

Rust also told board members that a charge at the "Palace Cafe" was paid with sponsorship money, out of the educational fund. But a receipt clearly shows $1,000 at the Palace Cafe was paid for out of the general operating account. Documents show what Rust alleges in the letter to his members is wrong.

And Rust did not address some questions we raised in his letter. Board members brought guests to that yearly educational conference; Rust brought his wife and son. Even the state Division of Administration appointment to the board, Marsha Guedry, brought her husband. Rust also didn't mention the lavish gift baskets each board member received. One conference attendee took photos of last year's 15-item gift basket, which included a duffel bag, a monogrammed shirt, a cap, a luggage tag, a bottle of wine, smoked provolone, a laundry bag, and a cutting board shaped like Louisiana - all paid for with public funds.

Rust also told his members, "WVUE declined our offer and aired their report without any input or clarifications from MERSLA."

That is also not true. Rust declined our repeated requests for on-camera interviews. They made no one available. We did, however, cite Rust's major points in a letter he sent us a week prior to our initial report.

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