By Michael Romain
Maywood — Recently released Freedom of Information Act (FOIA) documentation has flashed another spotlight on the Village’s murky credit card accounts, the existence of which the public only realized after a lawsuit filed by four Maywood residents in 2011.
Before the suit, there were intimations among some citizens that certain Village officials had credit cards, but no hard proof. According to a September 21, 2011, report by the Better Government Association (BGA), when Cheryl Ealey-Cross put in a FOIA request for the credit card statements of then Village manager Jason Ervin, she was told that Ervin had neither an expense account nor a credit card of his own. Her request went unacknowledged by the Village, in violation of the Freedom of Information Act. This prompted the lawsuit.
As with most spin, the Village’s claim was partly true. Ervin didn’t have his own expense account or credit card; he was merely the guardian of an expense account comprised of three credit cards—two in his name and one in the name of Village finance director Lanya Satchell—that was shared by several Village officials and their spouses (primarily Ervin, then-Mayor Henderson Yarbrough and the Board of Trustees). Call it communal property.
As a result of the suit filed pro bono by Kirkland and Ellis, one of the country’s biggest law firms, streams of documents demonstrating the exact nature of the ‘communal’ accounts poured into Mrs. Ealey-Cross’s possession.
According to a February 4, 2012 BGA report, “Records show trips to Las Vegas, Montreal, San Antonio, Washington, Florida and Denver, to name a handful. One expense totaled $1,017 at the Omni Hotel in Los Angeles […] All told, Maywood officials charged nearly $150,000 on credit cards in 2009 and 2010.”
Of course, that the trips were taken does not constitute sufficient evidence of wrongdoing. In fact, Village Ordinance 36.06 allows the mayor and the board to use public expenses to travel to no more than two municipal conferences, in or out of state, in addition to business expenses “directly related to the performance of public office.” According to the Village’s budget for fiscal year 2013-2014, each trustee and the mayor were budgeted $6,000 and $14,000, respectively, for expenses in 2011 and 2012.
But these provisions don’t explain the seemingly arbitrary extravagance noted in more than 100 pages of American Express corporate card statements detailing a range of expenses incurred by Village officials between 2009 and 2010. The statements were accompanied by more than 100 pages of invoice listings from June 2001 to October 2011. This new documentation is the result of a FOIA request filed by a source who wanted to remain anonymous.
While the most outlandish of these expenses have already been reported on by the BGA, the nature of the charges reflects what appears to be a broken financial oversight system. When this expense account was first brought to light in 2011, former Mayor Yarbrough alleged not to have known about it, then-Village manager Jason Ervin could not show complete documentation confirming that the Village was reimbursed by officials who inappropriately brought their spouses along on the tax payer-funded trips and apparently officials weren’t required to provide receipts or fill out reports explaining the purpose of their expenses—one of the most basic elements of any adequate record-keeping process.
According to a source, Mr. Ervin was able to circumvent the board approval process for these credit card expenses by calling the bank himself and requesting that it authorize the purchases.
What’s perhaps even more troubling is that the documents suggest that Trustee Audrey Jaycox, the chairperson of the Village Board’s finance committee at the time—the very entity responsible for holding the unelected Village Manager accountable—may have accrued nearly $30,000 in travel expenses between 2009 and 2013 that have yet to be accounted for (these expenses don’t include personal chargebacks).
The 2009-2010 American Express statements show that the taxpayers paid for Ms. Jaycox to take seven trips in 2009, eight in 2010 and four in 2011—in obvious violation of Ordinance 36.06, which, as mentioned, only allows for up to two municipal conferences per trustee per year. Some of Ms. Jaycox’s destinations include Los Angeles, Cleveland, Tampa, Memphis, Philadelphia, Las Vegas, Washington, DC, Houston, New Orleans and Phoenix.
That Ms. Jaycox took more than two taxpayer-financed trips is a point beyond dispute. What’s less clear is whether the additional trips constitute “business expenses that are directly related to the performance of public office”—a matter Ms. Jaycox has yet to address. Moreover, it’s unclear whether or not Ms. Jaycox reimbursed the Village for the expenses she incurred in excess of the $6,000 each trustee is allocated. Ms. Jaycox could not be reached for comment.
With Mr. Earvin now a Chicago alderman and Mr. Yarbrough out of office, the status of this ‘shadowy’ expense account is unknown. Mayor Edwenna Perkins, one of the ‘Maywood Four’ who filed the 2011 lawsuit against the Village, said that, to her knowledge, the expense account still exists and is currently controlled by finance department director Lanya Satchell.
When asked if the same lack of reporting standards still apply to the account, Mrs. Perkins simply stated, “it’s still not handled as a separate line-item,” meaning that the board doesn’t authorize particular charges. In other words—same old, same old.
Mrs. Perkins did, however, point to the possibility that reform might be looming on the horizon. Since the new Mayor’s swearing-in, Ms. Jaycox has been relieved of her duties as head of the Board’s finance committee and the Village attorney, Michael Jurusik, has suggested that the Village “setup something different.”
Unfortunately, the precise nature of this different system is still vague at this point, while the individuals who shepherded the current insufficient system in its dark ‘heyday’—namely Trustee Jaycox, Ms. Satchell and Mr. Jurusik (who provided a degree of legal cover for the unaccountable expense account)—remain precisely in place.
This may be a classic case of what in the world of finance is referred to as the ‘agency problem’. To rephrase a definition provided by investopedia.com: An agency problem is, “A conflict of interest inherent in any relationship where [Village officials are] expected to act in [the public’s] best interest. The problem is that the [officials] who [are] supposed to make the decision that would best serve the [public] [are] naturally motivated by self-interest, and the [officials’] own best interests may differ from the [public’s] best interests.”
The agency problem begs the question: Can real reform happen when the people most responsible for this particular financial reporting fiasco are the very ones tasked with trying to implement its solution? More as this story develops. VFP