Sunday, December 26, 2010

Diane Crosier and Dan Puplava cozied up to Life Insurance of the Southwest, among others

See all Diane Crosier posts.
See all Daniel Puplava posts.

Diane Crosier and Dan Puplava recently cozied up to Life Insurance of the Southwest, a company whose agents, Anthony Pavia and James Sanford, altered a document that I signed in 1999. The falsified document, approved by Chula Vista Elementary School administrator Lowell Billings, can be seen at the bottom of this page.


Hotel Stays, Flights and a $400 Bottle of Wine
December 26, 2010
by Emily Alpert
December 26, 2010

When San Diego County Office of Education employees flew to Boston to learn more about a company they were considering doing business with, they didn't need to worry about the bill.

The company paid for their flight to Boston. It also paid for their hotel stay. And when of the employees, Dan Puplava, picked out a bottle of wine from Napa Valley over dinner, he wasn't really sure who paid, but believes it was either the company or its marketing company. He thought the bottle cost $400.

"Here the bottle of wine would be, like, 150 bucks," Puplava later testified. "Out there it was outrageous."

Puplava manages a program that helps school district and charter school employees invest for their retirements. Four years ago, he and supervisor Diane Crosier made the visit to Aviva, a company they were weighing whether to do business with, to learn more about its investment products.

It wasn't their only trip. Between 2006 and 2008, the employees repeatedly took trips to visit companies the program worked with or was considering working with, paid for by those same companies.

Crosier is supposed to publicly report gifts she gets from companies or people related to her work. Yet the trips aren't listed on her economic disclosure reports. Ethicists say the free trips are also problematic because workers could be improperly swayed by gifts from companies they negotiate with.

"It smells bad," said Jessica Levinson, director of political reform for the Center for Governmental Studies in Los Angeles. "They're clearly trying to influence them."

The County Office argues that the free trips did not compromise its integrity and helped spare resources. Trips to visit companies are indeed common among other investment programs run by government agencies, a way to keep up with vendors and the services they offer. But several other government programs surveyed by voiceofsandiego.org don't let companies pick up the tab.

"We don't want to be beholden to anyone," San Diego County Treasurer-Tax Collector Dan McAllister said. His office runs a similar program for county employees and pays for its own trips to see vendors. "We will turn down offers like that because we never want to leave the impression that there is a conflict."

Boston wasn't their only destination. They took several other trips on the tab of companies they were visiting: In Philadelphia, Crosier and Puplava met with Lincoln Financial, a company they were considering to manage their brokers. In Ohio they stopped in to see both Meeder Financial, which helps school employees manage their money, and Nationwide, their investment platform.

In Dallas they visited Life Insurance of the Southwest, a company that provided a special kind of investment plan for the program. In Utah they visited the company that administers the program, National Benefit Services. And they repeatedly visited Aviva's marketing company in Santa Barbara...

California also sets dollar limits on gifts to public employees, which bar them from taking more than $420 worth of gifts from each source each year. The rules are supposed to reduce the sway of money in government and allow the public to keep an eye on how public officials could be influenced.

In response to questions from voiceofsandiego.org, the County Office wrote in an email that it believed Crosier had followed the gift rules. But despite repeated questions, it would not specifically explain why the trips could be legally left off the forms. In an email, Crosier said only that the trips were not included "due to discussion with legal counsel."...

The investment program that Puplava manages is offered by a consortium of dozens of school districts and charter schools, which have joined together to get employee benefits at a lower cost. That pact, known as the Fringe Benefits Consortium, is run by the County Office of Education. The program has more than $210 million in assets and more than 6,500 participants.

The program says it offers a less expensive investment option to public school teachers. Attorney [XX], who fielded questions on behalf of Crosier and Puplava, said the agency had hired good, honest people.

"It's unfair to demonize people who have otherwise done great things," [XX] said in an interview earlier this year. "Public employees have saved millions because of their efforts."

But ethicists said the problem isn't whether Puplava and Crosier are good people. Taking the gifts could open Crosier and Puplava up to improper influence that public employees should try to avoid, they said.

Crosier and Puplava advise the committees that decide which companies get contracts with the program or what investments it can offer to employees.

[XX] said they don't give their opinion on companies. But La Mesa-Spring Valley School District Superintendent Brian Marshall, who sits on the executive committee, said that when vendors are up for approval, Crosier typically makes a recommendation to the committee...

The gifts came to light because the program is tangled in a lawsuit. Nearly two years ago, the consortium run by the County Office of Education sued a group of investment advisers it had terminated, accusing them of stealing trade secrets and other violations.

The advisers sued back, claiming the consortium had baselessly fired them.

After the Union-Tribune story on Puplava came out, County Office of Education employees Dan Puplava and Diane Crosier filed a defamation suit against one of the advisers, Barry Allred, and a former consultant, Scott Dauenhauer. Crosier claimed the two had given false information to a Union-Tribune reporter "to enact an unethical revenge."

Crosier's suit also argued that private emails between Allred and Dauenhauer were defamatory, including claims that did not appear in the newspaper. In one of those e-mails, Allred said Crosier and Puplava had accepted paid trips to Boston, Colorado, Utah, Ohio and Santa Barbara.

Attorneys for Allred and Dauenhauer declined comment for this article or didn't respond to phone calls by deadline. In their court filings, they attempted to counter the defamation claims by arguing that the emails about the trips were factual, quoting Puplava's testimony about his Boston trip.

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