.....ting is a big risk for an insurance corporation's lawyer,hence no "claim" unless you
The Virginian-Pilot
THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Tuesday, October 3, 1995 TAG: 9510030252
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY MARC DAVIS, STAFF WRITER
DATELINE: PORTSMOUTH LENGTH: Long : 178 lines
``I LOST EVERYTHING.'' ATTORNEY'S MISTAKES, LIES HELP COST COUPLE THEIR HOME AND BUSINESS
When Frank and Gayle Galiney found themselves victims of a bad lawyer, their first reaction was to try to get compensation.
The lawyer, Joseph James Basgier Jr. of Virginia Beach - who has surrendered his license and is awaiting sentencing on embezzlement charges - had botched the Galineys' lawsuit. He missed a filing deadline, then covered up by telling the Galineys their case was still pending.
The deception went on for years. Over time, the Galineys lost their home, their business and their credit, in part because of Basgier's mistakes. When they finally discovered the lie, they convinced Basgier to pay them $50,000 for his mistake, plus another $131,000 over 10 years.
But when the monthly payments stopped, the Galineys found themselves up a creek.
They couldn't collect from Basgier's legal malpractice insurance. He had none.
They probably can't collect criminal restitution, even though Basgier has pleaded guilty to embezzling $80,000 from his former law firm and other clients. He didn't embezzle from the Galineys.
Finally, they can't collect from a State Bar fund that pays victims of crooked lawyers. That's because Basgier didn't steal anything from them. He just loused up their case.
And so the Galineys have learned a lesson that victims of Peninsula lawyer David Murray learned in 1992, after Murray stole $42 million from clients, then killed himself:
In Virginia, neither the State Bar nor the state courts guarantees that victims of dishonest or incompetent lawyers are fully protected.
``I thought,'' Gayle Galiney says, ``there are supposed to be systems in place to keep these sort of things from happening.''
Frank Galiney is angrier. ``The bar is definitely there for the good of the attorneys and not the good of the public,'' he says. ``They should have better checks and balances somewhere along the line.''
What went wrong?
It began with a lawsuit filed late.
Galiney owned four bowling alleys and three used-car lots, but he had a problem. He owed a lot of money to a finance company. He had guaranteed many loans from the finance company to his customers, so they could buy his cars.
But then the customers started defaulting on the loans, and Galiney was on the hook.
That was trouble. Over two years, the bad debts ran into serious money. Galiney paid back $125,000 in 1986 and 1987, according to court papers.
Galiney thought this was a fraud. He thought the finance company was making him pay off loans that had nothing to do with his car business. And the debts were threatening his businesses and his home.
So Galiney sued.
``I thought it was a simple matter,'' Galiney says. ``I was going to get my money back.''
Galiney went to a lawyer friend, Robert Steinhilber of Virginia Beach. Steinhilber passed the case to a partner, Jim Basgier, who drew up the lawsuit and filed it in Norfolk Circuit Court. That was in 1988.
For three years, the case bounced from court to court.
By the final bounce, it was too late. The last lawsuit was filed in 1991, beyond the three-year limit.
A judge threw it out. Galiney would get no money.
After an angry confrontation, the Galineys say, Basgier admitted his mistake. ``He laid it on the line,'' Gayle Galiney recalls. ``He could not find a legal remedy for the situation. He started begging and crying.''
So the Galineys struck a deal: To remedy the error, Basgier paid them $50,000 cash and agreed to pay another $131,000 over 10 years. He even signed a promissory note.
But by then, the Galineys had lost their bowling alleys, their car lots and their fancy home in Point Elizabeth. ``I lost everything over this mess,'' Frank Galiney says.
Basgier and his attorney could not be reached for comment. Basgier declined to comment after his criminal hearing in August.
Galiney acknowledges that not everything was the lawyer's fault. Galiney admits making some business mistakes that contributed to his own financial downfall. And he did not really lose everything. He and his wife still live in a comfortable house with a swimming pool near Craney Island.
Still, Galiney says, if he had known the truth about his lawsuit, he might have made different business decisions.
``Maybe I should have been smarter,'' Galiney says, ``but I relied on (him) as an officer of the court.''
After the shock wore off, the Galineys went after Basgier's legal malpractice insurance.
Nine of 10 Virginia lawyers have it. It protects them from a client's claim of injury arising from a mistake, just like a doctor's medical malpractice insurance.
But Basgier didn't have it. He had let his policy lapse, Galiney said.
That was possible because the Virginia State Bar and the Virginia Supreme Court do not require lawyers to have malpractice insurance. They simply hope that most lawyers realize the wisdom of insurance.
``We want all of our lawyers to have malpractice coverage,'' says Michael W. Smith, a Richmond attorney who is president of the State Bar. ``It doesn't make any sense not to have it. It would be similar to driving your automobile without insurance. It wouldn't be a very smart idea.''
For a while last year, in response to the Murray disaster, the bar considered requiring malpractice insurance of all lawyers. But a committee rejected the idea, saying it would ``lull the public into a false sense of security.''
``The key point here,'' the committee wrote, ``is that malpractice insurance policies currently exclude dishonest and intentional acts. Thus, mandatory malpractice insurance would have offered no protection to clients against losses like those involved in the Murray case.''
It would, however, have protected clients like Frank Galiney against sloppiness like Basgier's.
``Why don't they require lawyers to have malpractice insurance?'' Galiney asks. ``That at least would be some little benefit to the public.''
Next, the Galineys turned to a little-known State Bar fund. It is called the Client Protection Fund and it pays people who have lost money to dishonest lawyers.
But that has problems, too.
Mainly, the fund is too small - it would go broke if it paid every valid claim. So the State Bar limits how much each wronged client can collect. The cap is $25,000, no matter how big the claim.
The State Bar also will not pay more than 10 percent of the total fund to clients of any single bad lawyer. That way, one attorney's many criminal acts, like Murray's, can't break the bank.
Unfortunately, it also means that victims of one lawyer get very little compensation.
Murray's clients, for example, filed claims for millions of dollars. In the end, 23 clients split $55,000 because the fund had just $550,000 in the bank.
Bar officials know the fund is too small. ``Demands upon the fund will continue to be unmet in significant part, so long as the 10 percent limit remains in force,'' the fund's chairman wrote last year.
So the bar is trying to make it bigger. Every year, the bar is chipping in an extra $200,000 until the fund reaches $3 million. At that rate, it could take a while because the fund also is paying out about $200,000 in claims.
Still, the fund today is triple the size it was during the Murray scandal - $1.5 million, as of last month. That means it can pay up to $150,000 for one bad lawyer.
To victims of Basgier's embezzlements, the fund has already paid a total of $30,080, including one payment for the maximum $25,000. Another claim is pending.
But the Galineys got nothing.
``They told us we're not eligible,'' Gayle Galiney says. ``It's only for people that lawyers actually took money away from.''
Finally, the Galineys sought criminal restitution from Basgier.
That probably will fail, too.
In August, Basgier pleaded guilty to three counts of embezzlement. In return, prosecutors dropped one count of forgery - the only count related to the Galiney matter.
Technically, that means the Galineys are not victims of Basgier's crimes.
Despite this, a prosecutor asked Judge Edward Hanson in August to order $50,000 restitution from Basgier to Frank Galiney. ``He lost his business as a result of the defendant's actions,'' prosecutor William Monroe argued.
The judge disagreed. If the Galineys want their money, Hanson said, they will have to sue Basgier.
Hanson will officially rule on the restitution issue Oct. 10, when Basgier is formally sentenced. The plea agreement calls for no jail time, but 10 years of court-ordered good behavior.
Basgier, 44, has already lost his law license. He surrendered it in March 1993 with disciplinary charges pending at the State Bar. He now works as a title searcher.
``I really have no desire to see Jim (Basgier) go to jail,'' Frank Galiney says. ``He's going to be punished enough in life with what he's lost. In essence, he's lost more than I have. . .
``But if nothing else, he should be held accountable to everyone. I would be happy with one-third of what he owes me. Just something.'' ILLUSTRATION: MOTOYA NAKAMURA
Staff
[Color Photo]
Gayle and Frank Galiney probably won't be able to collect much from
the lawyer who misled them. He had no malpractice insurance.
PAYING FOR LAWYERS' MISDEEDS
Year-by-year payouts from the Virginia State Bar's Client Protection
Fund, in thousands of dollars.
STAFF Chart
SOURCE: Virginia State Bar
melissadaylong.blogspot.com
Showing posts with label Bexar. Show all posts
Showing posts with label Bexar. Show all posts
Thursday, April 17, 2008
Tuesday, September 04, 2007
Don't surrender 'cause you can win
Thursday, May 24, 2007
'Cause love's gonna conquer it all, all
[ CELINE DION Lyrics ]
"That's the way it is"
All The Way...A Decade Of Song
(center text)
I can read your mind and I know your story
I see what you're going through
It's an uphill climb, and I'm feeling sorry
But I know it will come to you
Don't surrender 'cause you can win
In this thing called love
When you want it the most there's no easy way out
When you're ready to go and your heart's left in doubt
Don't give up on your faith
Love comes to those who believe it
And that's the way it is
When you question me for a simple answer
I don't know what to say, no
But it's plain to see, if you stick together
You're gonna find a way, yeah
So don't surrender 'cause you can win
In this thing called love
When you want it the most there's no easy way out
When you're ready to go and your heart's left in doubt
Don't give up on your faith
Love comes to those who believe it
And that's the way it is
When life is empty with no tomorrow
And loneliness starts to call
Baby, don't worry, forget your sorrow
'Cause love's gonna conquer it all, all
When you want it the most there's no easy way out
When you're ready to go and your heart's left in doubt
Don't give up on your faith
Love comes to those who believe it
And that's the way it is
When you want it the most there's no easy way out
When you're ready to go and your heart's left in doubt
Don't give up on your faith
Love comes to those who believe it
And that's the way it is
That's the way it is
That's the way it is, babe
Don't give up on your faith
Love comes to those who believe it
And that's the way it is.
"That's the way it is"
All The Way...A Decade Of Song
(center text)
I can read your mind and I know your story
I see what you're going through
It's an uphill climb, and I'm feeling sorry
But I know it will come to you
Don't surrender 'cause you can win
In this thing called love
When you want it the most there's no easy way out
When you're ready to go and your heart's left in doubt
Don't give up on your faith
Love comes to those who believe it
And that's the way it is
When you question me for a simple answer
I don't know what to say, no
But it's plain to see, if you stick together
You're gonna find a way, yeah
So don't surrender 'cause you can win
In this thing called love
When you want it the most there's no easy way out
When you're ready to go and your heart's left in doubt
Don't give up on your faith
Love comes to those who believe it
And that's the way it is
When life is empty with no tomorrow
And loneliness starts to call
Baby, don't worry, forget your sorrow
'Cause love's gonna conquer it all, all
When you want it the most there's no easy way out
When you're ready to go and your heart's left in doubt
Don't give up on your faith
Love comes to those who believe it
And that's the way it is
When you want it the most there's no easy way out
When you're ready to go and your heart's left in doubt
Don't give up on your faith
Love comes to those who believe it
And that's the way it is
That's the way it is
That's the way it is, babe
Don't give up on your faith
Love comes to those who believe it
And that's the way it is.
Labels: Corpus Christi, creed, love
Wednesday, August 15, 2007
commissary deal ~Close ties helped seal commissary deal......Beneficial
Web Posted: 07/29/2007 12:38 AM CDT
Todd Bensman
Express-News
In the summer of 2005, a determined effort by Bexar County Sheriff Ralph Lopez to privatize the county jail commissary stores — which generated some $2 million a year in gross sales — was on the verge of foundering.
In Texas, elected sheriffs enjoy wide leeway and independence in managing and operating county jails, including the jail commissary, where inmates can purchase everything from snacks to toiletries.
But Lopez had met strong resistance from several board members of a nonprofit "Benevolent Fund" corporation that he had established several years earlier to run the commissaries. They saw no good reason to contract out the operation to a private vendor of Lopez's choice, Premier Management Enterprises, or any other business.
The deal seemed all but dead when Premier's fortunes took an abrupt turn for the better. Some board members, including the chairman who staunchly opposed the deal, resigned. The new leaders of the board along with a new member, all allies of Lopez, would push the Premier contract through the rough patch.
Within weeks of the contract approval by the sheriff's Benevolent Fund board in August 2005, Lopez, an avid golfer known to travel the country playing at elite resorts, was visiting Costa Rica, where he spent time on the greens with Premier officials at the expense of Premier's principal owners, Patrick and Michael LeBlanc.
Later, less than a month after the contract was officially inked, board Chairman John Reynolds was allegedly depositing the first of four checks totaling $27,500 from Premier into accounts named for charities that were "shells" and "fronts," according to court documents filed by a district attorney investigator.
And within four months, board Vice Chairman John E. Curran III was preparing to cut his own financial side deal with Premier. Curran's temporary worker company, PersoNet, now provides the very commissary employees that Premier uses to carry out the contract Curran helped along as vice chairman.
In a recent interview, Curran said his own ongoing business with Premier, based in Louisiana, to supply the jail commissaries with about a dozen temporary workers is worth between $12,000 and $15,000 a year to him.
Curran said he did nothing criminally or ethically wrong, and that he verbally disclosed the relationship with Premier to the sheriff and abstained on relevant votes once his company had Premier's business in April 2006.
"I had the sheriff's permission prior to doing any business with Premier, and I asked the board's permission. Both granted it," Curran said. "I wanted to be sure there was no conflict of interest. I did not want anyone to find out in the newspaper, or any other way, that one of my clients was Premier."
The sheriff did not reply to several telephone messages last week. Neither Reynolds nor his attorney returned messages requesting comment for this article.
Even if no laws were broken, disclosures about Premier's generosity toward elected and appointed officials who have helped it win lucrative contracts have left — at the least — a public perception of wrongdoing in how the sheriff and his allies conduct business.
"Ugh," Bexar County Judge Nelson Wolff groaned when told of Premier's arrangement with Curran's company. "This thing's worse than it already has been. This is not good at all. Nothing about it looks good. Whether you've violated a criminal act or an ethics issue, or neither, it's still not appropriate behavior. It looks bad."
District Attorney Susan Reed's public corruption investigators, joined by the FBI and the Texas Rangers, are conducting interviews and have sought grand jury subpoenas regarding Reynolds. On several occasions, he's invoked his Fifth Amendment right against self-incrimination in response to subpoenas, according to court documents. First Assistant District Attorney Cliff Herberg said his office would not discuss the investigation.
Curran acknowledged that investigators have questioned him about PersoNet's relationship with Premier.
Asked if he had ever shared any of the Premier revenue with Reynolds or anyone else, Curran replied: "I'm not sharing my revenue with anyone but my kids. My staff is not donating to anybody. There's just nothing there."
One of Premier's attorneys, Tonya Webber of Corpus Christi, wrote in an e-mail reply, in part, that: "Temp-to-hire services are a prudent business practice. This was an arms-length transaction documented in writing with an experienced temp-to-hire company." Webber said she wasn't at liberty to respond to specific e-mailed questions, such as why Premier chose a Benevolent Fund board member's company, rather than more than a dozen other area licensed temp worker companies.
Created in 2002 by Lopez, the Benevolent Fund appears to be the only one that exists in the state for the purpose of running a jail commissary. Sheriffs in other counties have contracted the job directly with private companies in line with state laws that allow them to do so without competitive bidding.
Because of the Benevolent Fund's unique existence and function, said Lauri Saathoff, a spokeswoman for the Texas attorney general's office, the question of how the state's conflict of interest law might apply has never come up.
"We don't have any previous attorney general's opinions for a board like this," Saathoff said in response to an Express-News request.
Three-way alliance
Curran's ties to the sheriff and Reynolds date to the late 1990s when Curran worked as a senior analyst in the Bexar County Personnel Division. Close alliances were built among the three over the years, each assuming positions of potential benefit to the others.
Lopez and Reynolds have known each other for at least 15 years; Lopez has hired Reynolds as his campaign manager for years and once made Reynolds his chief of staff.
Curran began serving on various boards alongside Reynolds, doing business with a deputies' union considered aligned with Lopez, and working on the sheriff's campaigns that Reynolds managed.
While Reynolds was chairman of the West San Antonio Chamber of Commerce, which he helped found, Curran was treasurer.
Reynolds also nominated Curran in 2004 for appointment to the Alamo Workforce Development board, one of 28 such boards across the state that spend Texas Workforce Commission funds to help the unemployed find work.
Curran and Reynolds also share a connection through the Bexar County Sheriff's Deputies Law Enforcement Organization's union. The fact that LEO routinely hires Reynolds as its paid lobbyist has led to the perception among some deputies that Lopez wields some influence over the organization.
LEO also has given consulting contracts to Curran to conduct salary surveys the union uses to justify pay raise requests, he said. And Lopez's wife, Nancy, served at one time with Reynolds on a now-defunct nonprofit fundraising arm of LEO.
Curran, for his part, said he has donated PersoNet's "time and energy" to man phone banks soliciting past Lopez election campaign contributors and will again for the sheriff's 2008 re-election campaign.
When Lopez founded the Benevolent Fund, Curran was among the first whom the sheriff asked to serve on it.
The alliance between Curran, Reynolds and the sheriff would come into play at a critical moment during the summer of 2005, in ways that would yield fruit for more than just Premier.
Opposition to proposed contract
Starting in early 2005, when commissary revenues were approaching record highs of $2 million under Benevolent Fund board management, Lopez began pushing for Premier to run the jail annex commissary, the smaller of two, on a six-month trial basis. If that worked out, the contract would be expanded to the main jail commissary.
Rather than contract out the commissary at first, Lopez had opted to set up a Benevolent Fund with a seven-member board to do the job in-house. He has authority to nominate and appoint members.
Lopez said last month that he later wanted to switch to Premier because the commissary operations were outgrowing the limited expertise of board members and it was time for professional management.
"None of us had experience," Lopez said. "Running a jail is not just putting guys in jail. It's detention ministries; it's banking and other services. It's all comprehensive."
Some of the sheriff's subordinates on the board immediately opposed the change. But the endeavor did not run into serious trouble until the eve of a scheduled board vote on the pilot contract June 22, 2005.
The chairman at the time, Deputy Chief Amadeo Ortiz, released the results of a background investigation of Premier that he had quietly commissioned from the Houston law firm McFall, Sherwood & Breitbeil. The report was generally critical of Premier and cited specific examples where another company in which the LeBlancs also were shareholders, LCS Corrections Services Inc., had faced legal challenges to their operations.
The background report — and a financial analysis projecting an initial revenue loss of $103,790 if Premier took over — raised sufficient concern for Reynolds to table the Premier contract that day, according to meeting minutes and two former board members. Ortiz, who resigned from the board shortly after that meeting and is running for sheriff against Lopez, said he believes he knows why.
"It would have failed a vote at that time," said Ortiz, guessing the board would have voted 4-2 against Premier. "My fellow board members didn't like the contract because there was nothing wrong with the way the commissary was being run."
Even the sheriff momentarily wavered in his support for Premier because of the background report. But Lopez was soon pushing again. And in the sheriff's corner, Ortiz and another board member said, were the only two who had supported the proposal all along and who would go on to break the stalemate: Curran and Reynolds, "the two Johns," as Ortiz and other board members sometimes referred to them.
Doing 'business with friends'
On Aug. 9, 2005, Reynolds and Curran called a special meeting. Ortiz had by then resigned, and the two other board members were out of town, at least one of whom was firmly opposed.
Reynolds and Curran were joined by Dr. Bert Cecconi, a 71-year-old dentist and occasional candidate for local political office who had recently been added to the board. Only weeks earlier Reynolds has asked him to join the board as a favor to the sheriff, Cecconi recalled in an interview last week. He said he'd gotten to know Reynolds and Lopez over the years at Saturday morning community breakfast meetings downtown.
The three, enough for a quorum, elected Reynolds the new board chairman and Curran the new vice chairman. Lopez put in a brief but rare appearance at the meeting.
Then, according to meeting minutes, the trio "approved and unanimously recommends implementation immediately" of the Premier annex commissary tryout program.
Curran acknowledged the purpose of that Aug. 9 special meeting.
"That meeting was called to help get things going forward," he said. "We were just trying to coordinate it to get things up and going."
Cecconi, who described himself as a "passive member" of the board, said he served for just four meetings, dropping off shortly after signing the Premier contract.
Cecconi was given to believe the Premier deal was a routine matter requiring little scrutiny.
"To me, I thought it was like a machine with Cokes coming out of it or something. I didn't know it was a major deal," Cecconi said last week about transferring the $2 million a year jail commissary operations to Premier. "I probably just said, 'OK.' I didn't give it much thought, for better or for worse."
Later that month, from Aug. 20-23, the sheriff, who frequently played golf with Premier's owners, traveled to Costa Rica, his office calendar shows. Lopez recalled last month that the LeBlancs paid all of his expenses to Costa Rica for an undisclosed business trip, unrelated to county affairs, that included tee time.
Lopez still refuses to fully disclose the business purpose of the trip, only that it involved a favor to his Premier friends, a foreign ambassador and a senator, neither of whom he would name in deference to a confidentiality agreement he said he struck with all involved. He also said he was not paid.
"The LeBlanc people paid for the Costa Rica trip," the sheriff said. "I was over there carrying my resume with me for credibility for part of the trip."
From August on, Lopez and Premier would encounter no more dissent.
After several resignations, the board, under the guidance of Chairman Reynolds and Vice Chairman Curran, would reconstitute itself with new members who would continue clearing the path for Premier's pilot six-month contract.
On Oct. 19, 2005, Cecconi, as board secretary, signed the contract with Premier for the pilot program, a copy of the agreement shows. A short time later, Cecconi dropped off the board. He told the Express-News his dental practice had gotten too busy.
About three weeks after the contract was signed, Premier wrote a $5,014 check for "consulting" to Systems Analysts Inc., described as Reynolds' "alter ego," according to allegations by district attorney investigators. Three more Premier checks, totaling another $22,500, to Reynolds-controlled accounts would follow, according to court filings.
Webber, Premier's attorney, said last month when asked about the checks that there is no evidence of Premier being connected to any alleged wrongdoing.
Curran's firm gets hired
Once Premier had its signed the pilot contract, Curran said a company official asked him for advice about staffing the limited operation.
Premier was going to need only four of its own workers. Curran said he offered to let Premier conduct interviews in the offices of PersoNet, free of charge, as a favor.
As vice chairman, Curran continued to consider and discuss Premier's status until about February 2006, by which time the tryout period was more than half over, and it was clear to board members that Premier would secure a five-year contract to run both jail commissaries.
Curran confirmed that was about when Premier first broached the topic of his company getting paid to provide commissary workers for the anticipated expansion. He said he tried to refer the business elsewhere but that the company insisted on PersoNet.
"They said, 'We need employees,'" Curran recalled. "I recommended a couple of different avenues for them because I am in the business, and they chose not to follow those, so ..."
While there are a dozen licensed temporary staffing companies in the greater San Antonio area, Curran said Premier preferred to do business with him because "I guess it's all networking. You like to do business with friends."
During the February 2006 board meeting, minutes show, Reynolds disclosed Curran's pending business relationship with Premier. The sheriff, Reynolds announced, had requested that Curran's company "bid" on work to supply Premier with workers.
Curran's fellow board members then approved a motion that he recuse himself "from voting on matters that may create a conflict of interest with the (Benevolent) Fund's activities," according to the minutes.
When the time came for the Benevolent Fund to extend the contract in April 2006, Curran abstained. PersoNet had penned its deal with Premier.
Once Premier had all the commissary business, the Benevolent Fund no longer needed to employ the 13 commissary workers. Some were laid off; others were encouraged to reapply to Premier for their old jobs, at substantially lower pay and with no benefits, according to two former employees.
PersoNet handled the initial reapplication process, bringing some of the old commissary employees into PersoNet's fold as temporary workers. It also became the equivalent of Premier's human resources department, outsourced.
Curran said he hopes his company grows with Premier, which has contracts elsewhere in South Texas.
"We want them to do well, both as a board member and as a client," Curran said. "Their success — just like all my other clients' success is — if I can help them be more successful, then I'm successful.
"That's business."
tbensman@express-news.net
News Researcher Julie Domel contributed to this report.
Todd Bensman
Express-News
In the summer of 2005, a determined effort by Bexar County Sheriff Ralph Lopez to privatize the county jail commissary stores — which generated some $2 million a year in gross sales — was on the verge of foundering.
In Texas, elected sheriffs enjoy wide leeway and independence in managing and operating county jails, including the jail commissary, where inmates can purchase everything from snacks to toiletries.
But Lopez had met strong resistance from several board members of a nonprofit "Benevolent Fund" corporation that he had established several years earlier to run the commissaries. They saw no good reason to contract out the operation to a private vendor of Lopez's choice, Premier Management Enterprises, or any other business.
The deal seemed all but dead when Premier's fortunes took an abrupt turn for the better. Some board members, including the chairman who staunchly opposed the deal, resigned. The new leaders of the board along with a new member, all allies of Lopez, would push the Premier contract through the rough patch.
Within weeks of the contract approval by the sheriff's Benevolent Fund board in August 2005, Lopez, an avid golfer known to travel the country playing at elite resorts, was visiting Costa Rica, where he spent time on the greens with Premier officials at the expense of Premier's principal owners, Patrick and Michael LeBlanc.
Later, less than a month after the contract was officially inked, board Chairman John Reynolds was allegedly depositing the first of four checks totaling $27,500 from Premier into accounts named for charities that were "shells" and "fronts," according to court documents filed by a district attorney investigator.
And within four months, board Vice Chairman John E. Curran III was preparing to cut his own financial side deal with Premier. Curran's temporary worker company, PersoNet, now provides the very commissary employees that Premier uses to carry out the contract Curran helped along as vice chairman.
In a recent interview, Curran said his own ongoing business with Premier, based in Louisiana, to supply the jail commissaries with about a dozen temporary workers is worth between $12,000 and $15,000 a year to him.
Curran said he did nothing criminally or ethically wrong, and that he verbally disclosed the relationship with Premier to the sheriff and abstained on relevant votes once his company had Premier's business in April 2006.
"I had the sheriff's permission prior to doing any business with Premier, and I asked the board's permission. Both granted it," Curran said. "I wanted to be sure there was no conflict of interest. I did not want anyone to find out in the newspaper, or any other way, that one of my clients was Premier."
The sheriff did not reply to several telephone messages last week. Neither Reynolds nor his attorney returned messages requesting comment for this article.
Even if no laws were broken, disclosures about Premier's generosity toward elected and appointed officials who have helped it win lucrative contracts have left — at the least — a public perception of wrongdoing in how the sheriff and his allies conduct business.
"Ugh," Bexar County Judge Nelson Wolff groaned when told of Premier's arrangement with Curran's company. "This thing's worse than it already has been. This is not good at all. Nothing about it looks good. Whether you've violated a criminal act or an ethics issue, or neither, it's still not appropriate behavior. It looks bad."
District Attorney Susan Reed's public corruption investigators, joined by the FBI and the Texas Rangers, are conducting interviews and have sought grand jury subpoenas regarding Reynolds. On several occasions, he's invoked his Fifth Amendment right against self-incrimination in response to subpoenas, according to court documents. First Assistant District Attorney Cliff Herberg said his office would not discuss the investigation.
Curran acknowledged that investigators have questioned him about PersoNet's relationship with Premier.
Asked if he had ever shared any of the Premier revenue with Reynolds or anyone else, Curran replied: "I'm not sharing my revenue with anyone but my kids. My staff is not donating to anybody. There's just nothing there."
One of Premier's attorneys, Tonya Webber of Corpus Christi, wrote in an e-mail reply, in part, that: "Temp-to-hire services are a prudent business practice. This was an arms-length transaction documented in writing with an experienced temp-to-hire company." Webber said she wasn't at liberty to respond to specific e-mailed questions, such as why Premier chose a Benevolent Fund board member's company, rather than more than a dozen other area licensed temp worker companies.
Created in 2002 by Lopez, the Benevolent Fund appears to be the only one that exists in the state for the purpose of running a jail commissary. Sheriffs in other counties have contracted the job directly with private companies in line with state laws that allow them to do so without competitive bidding.
Because of the Benevolent Fund's unique existence and function, said Lauri Saathoff, a spokeswoman for the Texas attorney general's office, the question of how the state's conflict of interest law might apply has never come up.
"We don't have any previous attorney general's opinions for a board like this," Saathoff said in response to an Express-News request.
Three-way alliance
Curran's ties to the sheriff and Reynolds date to the late 1990s when Curran worked as a senior analyst in the Bexar County Personnel Division. Close alliances were built among the three over the years, each assuming positions of potential benefit to the others.
Lopez and Reynolds have known each other for at least 15 years; Lopez has hired Reynolds as his campaign manager for years and once made Reynolds his chief of staff.
Curran began serving on various boards alongside Reynolds, doing business with a deputies' union considered aligned with Lopez, and working on the sheriff's campaigns that Reynolds managed.
While Reynolds was chairman of the West San Antonio Chamber of Commerce, which he helped found, Curran was treasurer.
Reynolds also nominated Curran in 2004 for appointment to the Alamo Workforce Development board, one of 28 such boards across the state that spend Texas Workforce Commission funds to help the unemployed find work.
Curran and Reynolds also share a connection through the Bexar County Sheriff's Deputies Law Enforcement Organization's union. The fact that LEO routinely hires Reynolds as its paid lobbyist has led to the perception among some deputies that Lopez wields some influence over the organization.
LEO also has given consulting contracts to Curran to conduct salary surveys the union uses to justify pay raise requests, he said. And Lopez's wife, Nancy, served at one time with Reynolds on a now-defunct nonprofit fundraising arm of LEO.
Curran, for his part, said he has donated PersoNet's "time and energy" to man phone banks soliciting past Lopez election campaign contributors and will again for the sheriff's 2008 re-election campaign.
When Lopez founded the Benevolent Fund, Curran was among the first whom the sheriff asked to serve on it.
The alliance between Curran, Reynolds and the sheriff would come into play at a critical moment during the summer of 2005, in ways that would yield fruit for more than just Premier.
Opposition to proposed contract
Starting in early 2005, when commissary revenues were approaching record highs of $2 million under Benevolent Fund board management, Lopez began pushing for Premier to run the jail annex commissary, the smaller of two, on a six-month trial basis. If that worked out, the contract would be expanded to the main jail commissary.
Rather than contract out the commissary at first, Lopez had opted to set up a Benevolent Fund with a seven-member board to do the job in-house. He has authority to nominate and appoint members.
Lopez said last month that he later wanted to switch to Premier because the commissary operations were outgrowing the limited expertise of board members and it was time for professional management.
"None of us had experience," Lopez said. "Running a jail is not just putting guys in jail. It's detention ministries; it's banking and other services. It's all comprehensive."
Some of the sheriff's subordinates on the board immediately opposed the change. But the endeavor did not run into serious trouble until the eve of a scheduled board vote on the pilot contract June 22, 2005.
The chairman at the time, Deputy Chief Amadeo Ortiz, released the results of a background investigation of Premier that he had quietly commissioned from the Houston law firm McFall, Sherwood & Breitbeil. The report was generally critical of Premier and cited specific examples where another company in which the LeBlancs also were shareholders, LCS Corrections Services Inc., had faced legal challenges to their operations.
The background report — and a financial analysis projecting an initial revenue loss of $103,790 if Premier took over — raised sufficient concern for Reynolds to table the Premier contract that day, according to meeting minutes and two former board members. Ortiz, who resigned from the board shortly after that meeting and is running for sheriff against Lopez, said he believes he knows why.
"It would have failed a vote at that time," said Ortiz, guessing the board would have voted 4-2 against Premier. "My fellow board members didn't like the contract because there was nothing wrong with the way the commissary was being run."
Even the sheriff momentarily wavered in his support for Premier because of the background report. But Lopez was soon pushing again. And in the sheriff's corner, Ortiz and another board member said, were the only two who had supported the proposal all along and who would go on to break the stalemate: Curran and Reynolds, "the two Johns," as Ortiz and other board members sometimes referred to them.
Doing 'business with friends'
On Aug. 9, 2005, Reynolds and Curran called a special meeting. Ortiz had by then resigned, and the two other board members were out of town, at least one of whom was firmly opposed.
Reynolds and Curran were joined by Dr. Bert Cecconi, a 71-year-old dentist and occasional candidate for local political office who had recently been added to the board. Only weeks earlier Reynolds has asked him to join the board as a favor to the sheriff, Cecconi recalled in an interview last week. He said he'd gotten to know Reynolds and Lopez over the years at Saturday morning community breakfast meetings downtown.
The three, enough for a quorum, elected Reynolds the new board chairman and Curran the new vice chairman. Lopez put in a brief but rare appearance at the meeting.
Then, according to meeting minutes, the trio "approved and unanimously recommends implementation immediately" of the Premier annex commissary tryout program.
Curran acknowledged the purpose of that Aug. 9 special meeting.
"That meeting was called to help get things going forward," he said. "We were just trying to coordinate it to get things up and going."
Cecconi, who described himself as a "passive member" of the board, said he served for just four meetings, dropping off shortly after signing the Premier contract.
Cecconi was given to believe the Premier deal was a routine matter requiring little scrutiny.
"To me, I thought it was like a machine with Cokes coming out of it or something. I didn't know it was a major deal," Cecconi said last week about transferring the $2 million a year jail commissary operations to Premier. "I probably just said, 'OK.' I didn't give it much thought, for better or for worse."
Later that month, from Aug. 20-23, the sheriff, who frequently played golf with Premier's owners, traveled to Costa Rica, his office calendar shows. Lopez recalled last month that the LeBlancs paid all of his expenses to Costa Rica for an undisclosed business trip, unrelated to county affairs, that included tee time.
Lopez still refuses to fully disclose the business purpose of the trip, only that it involved a favor to his Premier friends, a foreign ambassador and a senator, neither of whom he would name in deference to a confidentiality agreement he said he struck with all involved. He also said he was not paid.
"The LeBlanc people paid for the Costa Rica trip," the sheriff said. "I was over there carrying my resume with me for credibility for part of the trip."
From August on, Lopez and Premier would encounter no more dissent.
After several resignations, the board, under the guidance of Chairman Reynolds and Vice Chairman Curran, would reconstitute itself with new members who would continue clearing the path for Premier's pilot six-month contract.
On Oct. 19, 2005, Cecconi, as board secretary, signed the contract with Premier for the pilot program, a copy of the agreement shows. A short time later, Cecconi dropped off the board. He told the Express-News his dental practice had gotten too busy.
About three weeks after the contract was signed, Premier wrote a $5,014 check for "consulting" to Systems Analysts Inc., described as Reynolds' "alter ego," according to allegations by district attorney investigators. Three more Premier checks, totaling another $22,500, to Reynolds-controlled accounts would follow, according to court filings.
Webber, Premier's attorney, said last month when asked about the checks that there is no evidence of Premier being connected to any alleged wrongdoing.
Curran's firm gets hired
Once Premier had its signed the pilot contract, Curran said a company official asked him for advice about staffing the limited operation.
Premier was going to need only four of its own workers. Curran said he offered to let Premier conduct interviews in the offices of PersoNet, free of charge, as a favor.
As vice chairman, Curran continued to consider and discuss Premier's status until about February 2006, by which time the tryout period was more than half over, and it was clear to board members that Premier would secure a five-year contract to run both jail commissaries.
Curran confirmed that was about when Premier first broached the topic of his company getting paid to provide commissary workers for the anticipated expansion. He said he tried to refer the business elsewhere but that the company insisted on PersoNet.
"They said, 'We need employees,'" Curran recalled. "I recommended a couple of different avenues for them because I am in the business, and they chose not to follow those, so ..."
While there are a dozen licensed temporary staffing companies in the greater San Antonio area, Curran said Premier preferred to do business with him because "I guess it's all networking. You like to do business with friends."
During the February 2006 board meeting, minutes show, Reynolds disclosed Curran's pending business relationship with Premier. The sheriff, Reynolds announced, had requested that Curran's company "bid" on work to supply Premier with workers.
Curran's fellow board members then approved a motion that he recuse himself "from voting on matters that may create a conflict of interest with the (Benevolent) Fund's activities," according to the minutes.
When the time came for the Benevolent Fund to extend the contract in April 2006, Curran abstained. PersoNet had penned its deal with Premier.
Once Premier had all the commissary business, the Benevolent Fund no longer needed to employ the 13 commissary workers. Some were laid off; others were encouraged to reapply to Premier for their old jobs, at substantially lower pay and with no benefits, according to two former employees.
PersoNet handled the initial reapplication process, bringing some of the old commissary employees into PersoNet's fold as temporary workers. It also became the equivalent of Premier's human resources department, outsourced.
Curran said he hopes his company grows with Premier, which has contracts elsewhere in South Texas.
"We want them to do well, both as a board member and as a client," Curran said. "Their success — just like all my other clients' success is — if I can help them be more successful, then I'm successful.
"That's business."
tbensman@express-news.net
News Researcher Julie Domel contributed to this report.
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