EXTERNAL AUDIT OF MAYOR GLOVER’S HAND-PICKED FINANCIAL ADVISOR RELEASED

by Elliott Stonecipher

 The report of the external audit investigationof (Calvin) Grigsby & Associates, Shreveport city government’s financial advisor, has been presented to the City Council.  Grigsby was the personal preference of Shreveport Mayor Cedric Glover when selected in 2007, and has been the subject of several investigations and official actions in various jurisdictions.

Calvin Grigsby

The report presents evidence of many seriously questionable practices in the City of Shreveport’s financial management, and follows the recent admission by Mayor Glover that he and his administration had “forgotten” to schedule an election for a quarter-cent sales tax renewal for fire and police salaries.

Can we get away with it?

The City Council’s investigation of Grigsby has been underway since last year, and was specifically authorized by Council Resolutions No. 281 of 2011 and No. 71 of 2012, the passage of which were led by Councilman Michael Corbin via his City Council Audit & Finance Committee post.  Professional assistance in the effort has been provided by Shreveport CPA Jeff Cole (pro bono), the Lafayette, Louisiana law firm Laborde & Neuner, and Baton Rouge CPA firm Postlewaite and Netterville.

The report of the audit investigation’s lead attorney, Frank Neuner, Jr., is dated October 19, 2012, and was then delivered to City Council Clerk Arthur Thompson.  A summary letter of findings – attached to this email – and other addenda and documentation combine to form the final report.

Included among the key findings of the investigation are the following:

1.  The 2007 hand-picking of Grigsby by Glover, with the Council’s ultimate approval, is described as “ … not considered in the original memoradum analyzing submitted proposals.”  The report states additionally that ” … no formal grading of proposals … occurred …,” and that, “Best practices require the formal grading and ranking of proposals submitted in reply to an RFP (request for proposals).”  Current City Councilman Rob Webb strongly and publicly opposed Glover’s hiring of Grigsby as the supposed “selection process” finally came before the Council for approval.

2.  In its review of City payments made to Grigsby, the report cites “three major problems“:

—  Grigsby & Associates failed to maintain and provide adequate documentation of its services to justify payment;
—  the firm billed for services that may not have been compliant with the Contract; and,
—  some payments to the firm were not properly approved.

Quoting the report, “Grigsby & Associates received total payments in the amount of $677,333 of questionable costs.”

Zip the Lip3.  Grigsby’s contract is “… silent regarding payment for swap activities associated with bond issuance.

4.  In the section entitled “Judgments, Indictments, and/or Rulings Against Grigsby & Associates,” are the following:

—  ” … the Firm has not maintained authorization to do business in the State of Louisiana at all times during its performance of the Contract,” a deficiency it did not correct until the audit investigation was underway.

—  “Public records also reveal numerous negative disclosures regarding actions brought against the Firm, prior to and during (emphasis added) Grigsby & Associates’ performance of the Contract.”

—  The report notes that Grigsby & Associates agreed by “Acceptance, Waiver and Consent” to FINRA (Financial Industry Regulatory Authority) actions against it for “… violations of SEC (Securities and Exchange Commission), FINRA and MSRB (Municipal Securities Rulemaking Board) Rules, including

…..  conducting a securities business while failing to maintain the minimum required net capital,
…..  failing to make and preserve accurate computation of its net capital,
…..  failing to timely report purchase and sale transactions effected in municipal securities, and
…..  failing to maintain a supervisory system for supervision reasonably designed to achieve compliance with applicable laws, regulations, and rules related to timely reporting.”

—  The report stresses, in addition to the above-noted past regulatory actions, a pending action against the firm by the State of Illinois.  The Illinois action is intended to “ … determine whether an Order should be entered against Grigsby & Associates, Inc., and Calvin Grigsby which suspends or revokes their dealer and salesperson registrations respectively, prohibits them from offering or selling securities in the State of Illinois and granting such other relief as may be authorized under the Act …”.  

Shreveport city government’s responsibility for further action in this matter falls completely on the City Council.

Sources confirm that copies of the Neuner report documents have been delivered to Caddo Parish Sheriff Steve Prator and Caddo Parish District Attorney Charles Scott.  No verifiable information about any interest in the matter on the part of the U. S. Attorney or federal investigators is available.

Elliott Stonecipher

Elliott Stonecipher’s reports, essays and commentaries are written strictly in the public interest.  No compensation of any kind has been solicited or accepted for this work.  This work is protected, and no other use of it is permitted without the written consent of Mr. Stonecipher.