It was great to see everyone again.  We had I think a very good meeting.  It was decided that as a group we will focus on the following:

[ ]:  Will talk with Sally Dreeves at a high-level just posing certain questions around Premier Health to see if the board is concerned about the misappropriations of monies sent to Premier Health and how will they ensure the LLC’s recently created are profitable investments for the Defined Benefit plan?  What rate of return is the board expecting from these companies?  Who is holding the CEO accountable if the ROI is not achieved?   

[ ]:  will try to produce a muni contact listing

[ ]:  Will contact Rick Jones or Mike Cox to see who or what our next steps might be for bringing this information forward to the membership or press.

[ ]:  Will provide some talking points regarding information I discovered on the financial statements of Premier Health and MERS.

Please don't send emails or discuss what our plans are with anyone outside of this team.  We must keep this information confidential until we know what we are going to do with the findings. 

Talking Points:

As of 12/31/2007 MERS DB plan has provided MERS Premier Health Trust with $10,350,000.00 monies that have been removed from the DB plan to fund Premier Health Trust as a surplus note of 8% annum.  But this note has no stated maturity or repayment date. The principal and interest are to be paid only upon the dissolution of the Premier Health.  This means that MERS DB plan continually gives money to Premier Health Trust which they never have to repay back unless Premier Health Trust is dissolved.  All of this information is contained in Footnote #5 of the Premier Health Trust financial statements ending 12/31/2007. 

Also, according to the MERS Premier Financial Statements of 2007 foot note #5 

1.  MERS Premier Health Trust has no employees and all services are contracted from MERS defined benefit plan.  So, this means that the salaries and all administrative costs for the employees working for Premier Health insurance are also being taken from the MERS defined benefit plan and not reported as a cost to MERS Premier Health Trust.  All of these costs are being absorbed by MERS and added to the MERS DB administrative costs. 

2.  According to the 2005, 2006 and 2007 MERS Premier Health Trust had a net loss of -213,600, -1,488,400, -5,122,348 respectively for each of the years totaling -$6,824,388. 

3.  What is the contingency plan for MERS defined benefit in regards to MERS Premier Health Trust? How much money are the board and their members willing to absorb to fund MERS Premier Trust?  We are now at $10 million when does the bleeding stop?   

4. Also, on a much smaller note: MERS defined benefit is also investing into LLC's through the private equity portion of the MERS defined benefit portfolio.  These two start-up companies are a way for MERS to hide administrative costs.  These costs are now being buried in the private equity piece of the DB investment portfolio.  The two companies are TEGRIT and COBALT Community Research.   

TEGRIT are the GRS [actuary Gabriel, Roeder and Smith] consultants that are being paid to support the MERS MAPS system.  In years past, MERS paid internal resources and PeopleSoft for the maintenance of the applications and database.  Why did MERS feel it was necessary to create an LLC company to house these costs?  By creating an LLC these costs is not part of the MERS administrative costs.  These costs are now taken directly out of the private equity piece of the DB portfolio.  What rate of return are the MERS board members expecting to see for the LLC's?  10% 15%?  How will the MERS board members hold the CEO accountable for producing a rate of return that is equal to or above what the private equity portfolio returns?  Jeb Burns [MERS chief investments officer] once [said] that the MERS private equity piece in the portfolio returned on an average of  17%.  I do not believe TEGRIT can produce a rate of return of more than 17% when most fortune 500 technology companies are lucky if they can get a 5% return each year. 

COBALT Research:  This was a company where William St. Amour's salary and any of his direct reports are being booked.  Just like TEGRIT solutions these costs are being taken out of the MERS private equity piece and not being accounted for in the MERS administrative costs. 

Lastly...I just noticed on the MERS web site they are looking to hire a Comptroller for TEGRIT.  I have cut and pasted the piece that says that TEGIT is a company of MERS (see below).  This is unbelievable.  So not only does TEGRIT have a CEO that is paid in upwards of $250,000 they are hiring a Comptroller too.  When we issued the FOIA request of MERS for the financial statement of TEGRIT their response was "MERS does not own, use, possess, or retain the requested financial records.  Cobalt and TEGRIT are both independent legal entities separate and apart from MERS." and it also stated that MERS has invested private equity assets into these companies they do not have copies of their financial statements".  How do MERS board members expect to hold the CEO accountable for these investments if they are not reviewing the financial statements?    Also, how can MERS place an advertisement on Career Builder looking for a Comptroller and state that TEGRIT is an LLC of MERS of Michigan Company?  Something smells very fishy here.....

This was from the advertisement on Career Builder looking for a Comptroller for MERS: 

The Municipal Employees' Retirement System (MERS) is a statewide retirement plan and tax-qualified trust that municipalities may adopt for their employees. MERS offers employee benefit programs: defined benefit, defined contribution and hybrid plans, and group insurance products. MERS serves cities, counties, hospitals, libraries, medical care facilities, road commissions, townships, villages, and similar units of local government.

This position will support Tegrit Financial Group, LLC, a MERS of Michigan Company.

Enjoy you summer and keep in touch.

Thought you might be interested in some details about MERS. 

Upon Kathy House's retirement, Lynda was placed in an interim position as the Officer.  Not long after this announcement, the Marketing staff was pulled into a meeting with Carrie Lombardo and the Insurance staff to inform us that these two departments were merging into a newly created office of marketing and employer services known as OMES with Carrie leading the way and demoting Lynda back to a manager (while maintaining the same pay as an officer). 

Not long after that we were moved into a new building and told we were going to be split into teams to accomplish improved sales.  Therefore the 4 employer relations representative jobs were going to be dissolved and we would all need to re-apply for a different job.  They included Regional Manager (5 positions), Benefit Plan Advisor which was the sales position (2) and the Benefit Plan Coordinator (2 positions).  All ER relations reps applied for the regional manager positions and went through the interview process with Lynda, Carrie, Jennifer Mausolf (now a Marketing Manager who doesn't manage anyone), Caryn Mateer and Ginny Gibson the Insurance Manager. 

Only one rep was offered a Regional Manager position, it was the newest MERS employee who had not finished her training and one who had not yet been sent to municipalities alone.  Two other employees were promoted to Regional Manager, Rob Noa and Sue McNally. 

From there MERS proceeded to hire Caryn Mateer's brother for a Regional Manager position.  His name is Tony Radjenovich and also Michael Strader who is an alleged friend of Carrie Lombardo's husband.  They were provided no formal training other than one meeting on how to interpret an annual valuation and were sent out to "service" the participating municipalities.  Multiple complaints have been filtering in on the regional managers as they have no clue what they are talking about and providing the membership incorrect information. 

In the meantime, MERS created a company called Tegrit Financial Solutions out of the private equity portfolio.  You might want to dig into this a lot further as the employees of this company are being filtered through MERS Premier Health as MERS members when they actually work for a private company.  Therefore, violating the rules set forth by the Office of Insurance with the State of Michigan.  This information was provided in conversation by members of Finance.  The CEO of Tegrit is Stephen Garrow from New York. 

Although my name will appear on the email, I offer this information on an anonymous basis and offer you good luck in obtaining more data. . . .

We had our meeting with Representative Rick Jones today at my house. Just [ ] and I were there. [ ] described for Rick the financial improprieties taking place at MERS and gave him documentation. He is going to talk to someone in the Attorney General's office and see if they are interested in pursuing the matter.

Rick had already been involved in a lawsuit against MERS over MERS' claim that they didn't have to pay property taxes on vacant land owned by MERS adjacent to the office. Apparently it went all the way to the Michigan Supreme Court, which decided in favor of MERS. Legislation was then introduced to clarify the matter, but it never got out of committee.

Our issue is that MERS is using money from the municipalities' pension funds to finance MERS-initiated business ventures, including a health insurance company called Premier Health, an IT company called Tegrit, and another company called Cobalt Community Research (I don't remember what they do). (Doesn't this sound a bit like Enron?) Chances are, these companies will never turn a profit, but the losses won't be apparent because MERS is paying a good share of their expenses and hiding the fact with deceptive accounting.

What we don't know is who benefits from these ventures. The managers of these companies are likely making good money, but what does Anne get out of it? Is it just an ego thing, where she gets to be a big shot wheeler-dealer? Or does she somehow benefit financially? Curious people want to know.

[ ] also told Rick about MERS' generous tuition payment program. [ ], [ ] and [ ] all were in Masters degree programs at U of M which cost over $100,000 if completed. [ ] and [ ] completed theirs. [ ] withdrew when [ ] quit MERS. [ ] quit either before or soon after completing [ ]. None of them were required to repay MERS.

Other news: [ ] reports that [ ] got fired over a minor infraction of company rules.

[ ] emailed me . . . with some comments. He pointed out that Premier Health and Cobalt are nonprofits, so by definition they cannot turn a profit, and cannot be justified as a private investment (unlike Tegrit). He also wonders if there are legitimate (business) needs for the tax exempt structures:  to have a venture separate from MERS, or are the structures simply to skirt constraints that would apply to MERS as a quasi-governmental entity.  For example, labor rules, salary constraints, accounting for how the money was spent to the MERS board. [ ] wonders if for Anne, it's more the latter - to skirt rules that would otherwise apply, pay higher salaries, hire her friends, and maintain closer control.

Regarding Cobalt, [ ] says since it is a 501c3 plan, it's required to be pretty transparent.  We should be able to get a copy of the form 990 if we don't already have it; it would disclose a lot of details of the source of funds and what they were used for.  The same thing goes for MERS Premier Health.

He says he thought you told us you thought Cobalt might be a shell entity to conduct surveys regarding municipalities' satisfaction with MERS services.  If MERS is a large donor, it would apparently be at least a conflict of interest for this company to perform the service for MERS, unless the relationship was properly disclosed to Municipalities.  Maybe not illegal, but potentially at least a little deceptive.

[ ] says that Steve Garrow, the Tegrit CEO, is an old buddy of Anne Wagner's from a long way back.  He used to be a broker at Hoenig and eventually started his own brokerage firm, Fano Securities.  It doesn’t look like he necessarily has the education or experience to be the CEO of an IT company.

[ ] also noticed in the minutes for the 12/8/2004 MERS board meeting that an old buddy of Anne's, Tim Farmer, became a board member. [ ] says Farmer was a broker in town and Anne was his assistant years ago before she started at MERS. The minutes say that he, along with Sally Dreves, would officially become board members 1/1/2005. I (Steve) could find no mention of him in the minutes for subsequent meetings. He vanished.

Did you see Rick Jones getting zapped by a Taser on the news tonight? If you missed it, it is on the Lansing State Journal’s website.