News Column

The Augusta Chronicle, Ga., Sylvia Cooper column

August 24, 2014

By Sylvia Cooper, The Augusta Chronicle, Ga.

Aug. 24--You picked a fine time to leave them, Joe Jack­son, with commissioners trying to set the millage and minority bond underwriters working to hustle the city's multimillion utility bond deal away from the "all-white" firms.

I would say "steal" because it rhymes with "mill," but "hustle" is more apt.

We don't blame Jackson for leaving with four months left on his second term to focus on his business and three children who lost their mother, Mary Bea Jackson, in April after a long battle with cancer.

"I can either let the world raise my kids, or I can raise them," Jackson said last week.

He's looking for a job with regular hours that will allow him to do that. His business, Kirby Locksmith, is doing OK, he said, but he needs something with benefits.

"I'm looking on Web sites," he said. "I've put in applications at several places. My background is industrial electrical. I've been a maintenance guy all my life. I'm going to do what I've got to do to take care of my kids." He said he didn't have time to sit in commission meetings and listen to stuff "that's going to bankrupt this county."

"And going out with this minority firm with this guy that's done federal time is crazy," Jackson added, referring to Craig Walker, the vice president of IFS Securities, the firm doing the hustle. "People don't want to do what (Commis­sioner) Marion Williams wants to do -- take from our enterprise fund and spend it somewhere else. This county is almost bankrupt."

Jackson was referring to IFS Securities President Alex McKenzie's "adjusted proposal" at Tuesday's meeting, which was for the city to take the total $22.5 million of bond savings in upfront cash and spend it anywhere they want to. He said his company's lawyers said they could do that, although the city's bond counsel might not agree.

IF IT SOUNDS TOO GOOD TO BE TRUE, IT PROBABLY ISN'T: IFS came on the Augusta scene at a June commission meeting and made a pitch for minority inclusion in the upcoming refinancing. Company owner Angela Avery and Walker at first said they could save the city $30 million on the refinancing through a negotiated process instead of a competitive process, which they said excludes minority firms.

Avery noted that the city's current financial advisor, PFM Inc.; bond counsel McKenna Long & Aldridge LLP; and disclosure counsel Mur­ray Barnes Finister LLP are all white firms.

Since then, IFS has lobbied commissioners and other elected officials, playing the race card and accusing the city's financial advisor, Dianne McNabb, of charging inflated fees and a conflict of interest. And so far, it's worked. Several votes to refinance the debt with the above-mentioned team have failed, including one last week.

Before that vote, McNabb tried to defend herself from what she contends are libelous attacks on her personal and professional reputation, but Walker, McKenzie and Wil­liams kept interrupting her.

THE HARD SELL: In an Aug. 4 e-mail to Mayor Deke Copenhaver, Mayor-elect Hardie Davis, District 6 Commissioner-elect A.K. Hasan, commissioners and others, Walker says that since being hired by the city in 2007, McNabb "has been in charge of fees that average nearly double the amount before her appointment."

"The fees for FA, Bond Coun­sel and Special Coun­sel, all of which we have found no record of a procurement process for, are extremely high in comparison to other transactions of similar size and rating," he states.

Walker concludes the lengthy e-mail that examines the city's bond issues since 2000 by stating that Au­gusta has never used a black firm as a prime contractor with a black population of over 50 percent.

"Here the City has the perfect opportunity to end the troubled track record of economic apartheid, and we urge the Commissioners who believe in fairness and inclusion that the time for minority firm inclusion is now! I have been spending time in Augusta, I have met people, I have prayed in Au­gusta Churches with the people of this community. The psychological and devastating impact this historic economic apartheid has had on black people of Augusta is tremendous."

LETTING THE HAMMER DOWN: "We have included on this e-mail community members who are championing the cause of a Minority Prime Con­tractor with the City through this bond issue," Walker continued. "We want these community members and the incoming Com­­mis­sion members to see, when presented with a completely legitimate opportunity to incorporate inclusion of minority-owned firms, how this current commission responds."

WOULD YOU TRUST YOUR MONEY WITH SOMEBODY WHO'S BEEN CONVICTED OF MAIL FRAUD? Especially if they say the check's in the mail?

A jury convicted Walker of conspiracy to commit mail fraud, mail fraud, conspiracy to obstruct justice and subornation of perjury in March 1996. He was sentenced to 33 months in prison and two years of supervised probation, according to federal court records. He appealed, but a federal appeals court affirmed the conviction. He was out of the brokering business from 1995 through 2008.

Financial advisors are obligated to disclose any events that might influence their professional conduct or ability to advise their clients. The Financial Industry Regulatory Authority indicates that Walker reported a criminal misconduct in 1995; a bankruptcy in 2005 and a judgment/lien in 2008.

In 2009, the regulatory group expelled SBK-Brooks Investment Corp., a firm Walker was associated with.

THOSE WHO DON'T KNOW HISTORY ARE DOOMED TO FALL PREY TO SNAKE OIL SALESMEN: The only other unsolicited bond bid I recall Augusta officials enmeshing themselves in were utility bond swaps, or derivatives, the kind of unregulated financial voodoo that nobody understands but the ones selling them.

Augusta did two swaps, and lost big on the first one before it was refunded.

On the second one, an agent for Gardnyr Michael Capital Inc. convinced then-Commissioner Richard Colclough that a $160 million bond swap would be the best thing for Augusta since buttered bread.

Col­clough, with the help of slick consultants, convinced a majority of commissioners to vote for the swap. Soon after the deal was consummated, interest rates fell.

Implementing the swap cost the city about $3 million in fees to broker Gardnyr Michael; Deutsche Bank; IMAGE Consulting, a Pottstown, Pa., firm; and Kilpatrick Stockton, which split $75,000 with then-city Attorney Stephen Shepard.

So the attorneys took home big fat paychecks, and Augusta seemed such a fertile field to keep plowing, Gardnyr Michael set up an office on Courthouse Lane. But then Commissioners Don Grantham and Jerry Brig­ham, the only ones who voted against the swap, convinced their colleagues to get out of it in 2007, and with McNabb's assistance, they did.

___

(c)2014 The Augusta Chronicle (Augusta, Ga.)

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