Posted on 03/30/2004 4:47:16 AM PST by Wally_Kalbacken
Jackie Barrett met the investment adviser in Fort Lauderdale, during an event honoring the Rev. Martin Luther King Jr.
The Fulton County sheriff had been invited to speak. Byron Rainner, who said he worked for MetLife, a national insurance and investment company, was part of the host committee, and he approached Barrett with a business proposal.
That chance meeting, in February 2002, later prompted Barrett to give Rainner $7 million from county tax lien proceeds to invest.
The investments — made after Rainner, his firm and a business associate donated a total of $4,000 to the sheriff's re-election campaign — not only violated state law, says the county auditor, but could also end up costing the county millions of dollars.
Sometime today, Fulton County officials expect to know for certain whether $5 million of that money has been returned, as Barrett says it has. There's no record of Barrett's office getting that money back, county officials said.
County commissioners are also demanding the remaining $2 million be paid back by 5 p.m. Wednesday.
Karen Handel, County Commission chairwoman, fears the money is gone for good.
A $200,000 check — received last July as the first installment on the $2 million — bounced.
"I am not optimistic," Handel said. "I hope the money shows up."
"At best, one could say this is just startlingly poor judgment and more mismanagement," she said. "At worst, there could be something criminal."
The meeting between Barrett and Rainner in Florida and the events that followed provide a look at an investment strategy gone awry. And they paint a clearer picture of questions that surfaced after the money had been invested with at least two companies with troubled pasts.
Rainner could not be reached for comment. It's not clear how long he worked for MetLife.
Funds from tax liens
The $7 million that Barrett invested came from tax liens. On the first Tuesday of every month, tax-delinquent and foreclosed property is auctioned off on the steps of courthouses across the state, an ancient rite that is alive and well in Georgia.
The bulk of the proceeds from the property auctions are used to pay back taxes.
Once the debts have been paid, any remaining money is supposed to be given to property owners who ask. Unclaimed surpluses derived from those sales remain with the county sheriff's department.
Barrett — whose department does not answer directly to the county commissioners — chose to invest surpluses from the auctions through Rainner.
After that February 2002 meeting in Fort Lauderdale, 13 months passed before Barrett gave Rainner the $7 million to invest. It's not clear how much money was in that surplus fund. Nor it is clear what steps Barrett took to research Rainner's background.
In the end, a little more than $5 million was invested with MetLife, and some of it was in the form of stocks, which is not permitted under state law, according to a March 22 memo from County Auditor Skip Remter to Barrett.
The rest — about $2 million — was invested with the Provident Capital Investment Co., then transferred to the Royal Institute of Finance, and invested as corporate bonds.
That kind of investment also is not allowed under state law, Remter said.
Both the Provident Capital Investment Corp. and the Royal Institute of Finance had been in existence just a few months before they received the county's money, the auditor said.
According to the Georgia secretary of state's office, neither company is registered with the state as investment advisers. And neither company appears to be registered with the Securities and Exchange Commission.
Court documents show the Royal Institute of Finance is owned by investment manager Andre Brady, who has been accused by the federal government and at least six states of misusing money entrusted to him.
Reached by phone at his office in Miami on Friday night, Brady contradicted the auditor's report and said his office has not received "a dime" of the Fulton County sheriff's department's money.
Asked for return
The sheriff said she knew the potential investment options for the money were highly restricted, and she said she told Rainner about those limitations.
Within a few months, Barrett said, she got nervous — though she wouldn't say why — and asked for the money to be repaid.
She said the sheriff's department has recouped $5 million from MetLife. And she said she was informed by the Provident Capital Investment Co. that the $2 million invested with that firm could not be repaid because the company didn't have it.
Provident offered $200,000 as part of a repayment schedule, Barrett said. The first check, which arrived in July 2003, was returned for insufficient funds, and no other payments were ever received, Barrett said.
Fulton County officials are still trying to figure out what happened after that and before auditors found the improper investments last week — eight months later.
Barrett said she "hit the roof" when she got the bad check. But she did not report it to county finance officials or the county manager's office, she said.
The sheriff would not say what actions, if any, she took to try to get the money back. Barrett did say Monday that she would return the campaign contributions made by Rainner, his firm and a business associate.
Handel, the County Commission chairwoman, said such behavior is unacceptable from the county's chief law enforcement officer.
"That is a serious concern," Handel said. "It is very troubling to me. All of us want an explanation."
Erik Friedly, a spokesman for Fulton County District Attorney Paul Howard, said, "We know so little about it at this point we really can't even say that we will or will not look into it."
The sheriff said she would be forthcoming as the investigation unfolds.
Meanwhile, county officials are trying to get to the bottom of what happened, verify the return of the $5 million from MetLife and see if the $2 million shows up by Wednesday's deadline.
"That certainly is my hope," Barrett said.
— Staff writers Beth Warren and David McNaughton contributed to this article.
Fulton County problems and Atlanta problems overlap greatly - but are not perfectly coterminous. There is a reason to expect slightly better performance from Fulton County employees than from the City of Atlanta - but it's a very thin margin of difference.
In the City of Atlanta, when Mayor Franklin came aboard to clean up the Augean mess left by Bill Campbell - a consulting firm did a benchmark profile of Atlanta versus like sized cities. It reported that Atlanta has 30% more employees than cities of the same size elsewhere in the US and that it's total payroll was 22% below cities of a similar size. So you have a large number if poorly educated and poorly paid people staffing the City of Atlanta - and it shows.
When it comes to Fulton County - you cannot believe the inefficiency and ignorance of the Fulton County Court Clerk's staff. I breathe a sigh of relief when I realize that a case can be tried in any other Metro Atlanta county.
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