MOORLACH UPDATE — Sweet Sixteen — March 17, 2011

Myopic.  It’s interesting to observe someone who is shortsighted.  From an overall perspective, it would be less expensive for a city to contract with the Orange County Sheriff’s Department for police services than to fund its own police department.  Empirical studies in Orange County have proven this to be the case.  The big hurdle is the deputy sheriff’s union.  AOCDS is focused on keeping unincorporated islands unincorporated because they are serviced by the Sheriff’s Department.  This is inefficient and stretches patrol cars over a wide geographic area.  It significantly impacts response times.  It also reflects a meddlesome nature that deters cities from seriously considering switching over their police services to the Sheriff’s Department.  After all, if a city retains the Sheriff’s Department, it also gets its union.

Focusing on retaining islands over potentially acquiring entire cities is shortsighted.  If AOCDS really wanted to provide leadership and protect the jobs of its members, it would take a bigger picture approach.  Myopic.  While we’re on the topic of meddling, the OC180NEWS article below provides the latest Rossmoor update.

BONUS:  Allow me to wish you a happy St. Patrick’s Day.  For me, March 17 has a different significance.  On March 17, 1995, I was appointed by the Orange County Board of Supervisors to serve as the County’s Treasurer-Tax Collector.  So, it’s sweet sixteen for me.

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Association of Orange County Deputy Sheriffs Funds Rossmoor Public Opinion Survey

Dolores Barr, Editor and Publisher, OC180NEWS.com

With Orange County pushing to rid itself of unincorporated islands, there is almost no doubt that governance of Rossmoor will change, but public opinion about the direction of that change is not exactly obvious. Thus, the Association of Orange County Deputy Sheriffs, AOCDS, the deputies’ union, has volunteered to fund a professional public opinion survey to find out what the residents of Rossmoor actually want.

The Rossmoor Community Services District, the only elected body fully devoted to Rossmoor, has tentatively decided to ask the county to give it expanded authority to cover police services, animal control, and trash collection – all services currently provided by Orange County. One reason the RCSD Board is considering this move is concern the county might contract with Los Alamitos to provide police services to Rossmoor.

If OC hired Los Alamitos to patrol Rossmoor, the OC Sheriff’s Department would lose the work. But, RCSD’s application to the Local Agency Formation Commission, affectionately known as LAFCO, doesn’t stand a chance of approval without a solid documentation of public opinion supporting the idea.

Not only will the RCSD need a bulletproof public opinion survey, they will need to overcome the objections of Orange County District 2 Supervisor John Moorlach, who also happens to be the Chair of LAFCO.

“The problem is that AOCDS wants them [Rossmoor] to stay unincorporated. So by the very nature, there is a conflict in whatever survey is going to come out because the party sponsoring the survey wants the result that it [Rossmoor] stays unincorporated,” Supervisor Moorlach told OC180NEWS. If the survey is “something that’s really independent and honest [LAFCO would consider it], but if it’s biased by the donor, then it will be a waste of money. It will just be a propaganda thing.”

AOCDS is donating $10,300 to the RCSD to pay for the survey, plus about $4,000 to pay the cost of mailing a question and answer flyer to all Rossmoor households. The survey will be a telephone survey of about 400 households and should be completed in time for the April 12 RCSD Board meeting.

Among the issues to be covered by the survey are “questions regarding annexation of Rossmoor by the City of Los Alamitos, the provision of County municipal services including police services, the annexation of the southwest corner of Rossmoor (Fish Co., etc.) by Los Alamitos and the provision of additional services to be provided by the RCSD,” according to a statement released by the RCSD. “The poll will be conducted by a reputable polling company.”

The RCSD hired Newport Beach pollster Probolsky Research to do the job.

“We do public opinion research. We specialize in city and special districts, basically the local and regional government market,” Adam Probolsky, Chairman and CEO, Probolsky Research, told OC180NEWS. “All our projects are based on sound research methods, and statistically valid techniques, so any research we do is objective, balanced, and in an effort to get an accurate and clear picture of community sentiments.”

With sheriff deputy jobs at stake, a county policy which clearly says things are not staying the same, Los Alamitos waiting in the wings, and public interest sparked by recent events, it is safe to imagine the results of the survey will be closely scrutinized by opposing sides.

“We’re going to get objective information so that the [RCSD] board can feel comfortable with whatever position they take,” RCSD General Manager Henry Taboada told OC180NEWS. “They’re not going to go contrary to public opinion, particularly when it’s such a sensitive issue.”

But, LAFCO Chairman and District 2 Supervisor Moorlach is skeptical of the union funded survey.

“You can certainly use language in a survey that gets you the answers you want,” Moorlach told OC180NEWS. “The union wants a certain outcome – that may bias the survey.”

FIVE-YEAR LOOK BACKS

2006

March 17

In late 2005, after I had announced my intentions to run for Supervisor, Chriss Street decided to run for my upcoming vacant seat of Treasurer-Tax Collector.  Thanks to the newly enacted “2.7% @ 55” formula, my Assistant Treasurer-Tax Collector Gary Cowan tendered his resignation and retired in March of 2006.  In order to pursue reasonable succession management and after a legally brief recruitment period, Chriss Street was the selected candidate to replace Gary Cowan.  Chriss Street applied because he stated he was concluding his relationship as the liquidating trustee of Fruehauf Trailer Corp.  Chriss had informed me that there were no skeletons in the closet or no issues of concern with his former employer or any other business dealings.

Before the filing period closed, another candidate jumped into the race; a former extra-help clerical employee in the Treasurer-Tax Collector’s office that did not leave a memorable impression.  Consequently, I endorsed Chriss Street.

Literally a week after the filing period to run for public office closed, up comes the news of a lawsuit concerning his role with Fruehauf Trailer Corp.  This came as a complete shock to me.  I knew that Chriss had ruffled some feathers due to the nature of the bankruptcy industry, but I didn’t have a clue of the extent his successor trustee was going after him.  To learn about the case and the issues from the media was very disconcerting.  My first reaction was to protect a friend as he provided me what appeared to be plausible explanations to refute the claims made in the lawsuit.

Kate Berry of the Los Angeles Business Journal had one of the first articles on the subject, “Treasurer-Hopeful Street in Pension Fight,” and it was printed in the Orange County Business Journal.  Needless to say, this was an awkward revelation just as the campaign was officially underway.  The entire article is provided below.  It will give you a perspective of the bombshell this litigation filing was on Chriss Street’s campaign and, indirectly, on mine.  In the early days, right after the filing, Chriss Street provided explanations to deflect the severity of the charges.  By the time the case went to trial, it became all too clear that what the liquidation instructions were, and what Chriss Street did, were very different.  Chriss Street would end up losing the case and be required to pay the Fruehauf liquidation trust some $6 million.

Why Chriss Street chose to run for public office will always be perplexing.  I can only speculate that he thought he could use a friend’s credibility to get him a reasonably paying job, from which he could not be fired for the next four years, as he litigated the matter.

 

Chriss Street, the former investment manager running for Orange County Treasurer-Tax Collector, is in a game of hardball stemming from his days as a trustee in the murky world of bankruptcy reorganization.

Street’s successor at the retirement plan of Fruehauf Trailer Corp., which filed for bankruptcy in 1996, claims Street inflicted "serious economic damage" during his eight years as a trustee.

Street oversaw the trust of the truck trailer maker from 1997 until last year. The trust included a pension plan that was taken over in 2004 by the federal Pension Benefit Guarantee Corp.

The charges are in a preliminary report filed this week in U.S. Bankruptcy Court in Delaware.

Daniel Harrow, the new trustee, alleges that Street engaged in "mismanagement, conflicts of interest and greed" when he oversaw the $100 million pension plan.

Harrow, a managing director at Libra Securities LLC, did not return several phone calls seeking comment.

He was appointed trustee by Fruehauf’s creditors, which include Maryland Shipbuilding and Drydock Co., Jacksonville Shipyards Inc., and Mercer Co.

The company has several thousand creditors, including major bondholders and hedge funds that are trying to recoup money.

Street said he stands by his work at Fruehauf and called Harrow’s charges a "drive-by shooting."

"Working in bankruptcy is a hard and difficult environment," Street said.

Street is known as one of those who called Orange County’s bankruptcy in the early 1990s, along with John Moorlach.

Moorlach, Orange Country treasurer who is running for supervisor, has endorsed Street as his successor.

On his web site, Moorlach said his endorsement of Street comes from knowing him since the days of the bankruptcy in 1994.

Harrow takes aim at expenses charged to Fruehauf by Street in his report.

The 63-page report claims that at least $11.7 million in pension money "appears to have been consumed in trust overhead and expenses."

From 2001 to 2005, the pension plan paid nearly $500,000 in expenses for hotel and restaurant charges, a trip to DisneyWorld, a charter plane for Street, clothing and book purchases and a speeding ticket and a parking ticket Street received in Laguna Beach, according to the report.

Street said he stands by the expenses, which he said were business related.

He said he disputes the charter plane item, which he said was paid for with frequent flier miles used to get him from Alabama to Atlanta on a small connector jet.

According to the report, Street put his wife, Victoria Cox Street, on the trust’s payroll, and took all-expense paid trips to Hawaii, Brazil, Chile, Argentina and Mexico.

Street’s response: the trips were company retreats or related to business at Fruehauf and its Mexican arm.

Street’s wife worked at Bank of America Corp. before and "filled a gap" at Fruehauf after another worker left, he said.

The report describes a "highly unusual" arrangement in which Street’s personal credit card was paid "without the need to submit an expense report, trip report or any explanation of the business purposes of the expense."

Fruehauf’s Mexican subsidiary couldn’t get a credit card of its own and relied on Street’s, according to Street.

The report takes issue with Street on other matters.

As trustee, Street failed to liquidate the trust’s main asset and instead engaged in two acquisitions of bankrupt companies, according to the report.

He co-mingled assets of the pension plan with assets that were supposed to be sold to pay off creditors, the report alleges.

The pension was overfunded when Street took control, according to the report. Six years later it was underfunded by $7 million at the time the Pension Benefit Guaranty Corp. stepped in, it said.

Street called his work at Freuhauf a "fantastic reorganization" that yielded 80 cents on the dollar for most creditors.

His work at Freuhauf is the subject of ongoing federal investigations by the Department of Labor, Pension Benefit Guaranty for possible violations of the federal Employee Retirement Income Security Act, according to the report.

The document was filed as part of continued litigation between creditors and Street. The aim of the creditors is to get federal officials to file civil charges to recoup money paid to or expenses incurred by Street.

Street called the effort a bid by the creditors to get out of money owed to him. His last check from Fruehauf bounced, he said.

The creditors represented by Harrow are "opportunists" who came in late in the game, according to Street.

March 18

Martin Wisckol of the OC Register covered the lawsuit filed against Chriss Street in “Trustee:  Official abused firm funds – O.C.’s assistant treasurer is accused of fiscal misconduct as a bankrupt trailer firm’s asset manager.”  The article covered the matters addressed in the suit and made the following mentions of me:

                Street, along with current Treasurer-Tax Collector John Moorlach, are widely credited with being the first to discover the county’s 1994 bankruptcy.

                That bankruptcy was caused largely by investment of county money by then-Treasurer Bob Citron.  Moorlach is credited with helping restore the county’s stability and improving its bond ratings.  His successor will pick up oversight of $5.7 billion in county and special-district investments.

                Moorlach, who is leaving the office to run for county supervisor, has endorsed Street – and named him assistant treasurer in January.  Moorlach said protections are in place to ensure that something like the 1994 bankruptcy cannot happen again.

The Associated Press picked up the OC Register’s piece on the Chriss Street/Fruehauf Trailer Corp. story and it made it to numerous papers around the state under the title “News items from around California.”  It was printed in the Monterey Herald, the Bakersfield Californian, the San Luis Obispo Tribune, the San Jose Mercury News, the Contra Costa Times, and the Sacramento Bee.  Talk about my being blind-sided.  Argh!

                Street is considered the front-runner in the June election for county treasurer-tax collector.  He was named assistant treasurer in January by incumbent John Moorlach, who is leaving the post to run for county supervisor.

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