Triunfo financial practices reprimanded

Linda Parks In an effort to prevent further moves that have cost taxpayers hundreds of thousand of dollars in expenses and lost earnings, the Triunfo Sanitation District voted to sever its investment manage- ment contract with Wells Fargo Investments/Allegiance Capital, and change from an actively traded portfolio to a hold strategy.

The Triunfo board will ask Wells Fargo to refund high man- agement fees charged to the dis- trict and to investigate whether an inexpensive analysis can be done of the account and the district's future investment strategy.

The Triunfo Sanitation District (TSD) board oversees water and sanitation services for residents and businesses in Oak Park, North Ranch, Bell Canyon, Lake Sherwood and parts of Thousand Oaks. The district has no staff, but contracts with the Ventura Re- gional Sanitation District (VRSD) for management services, includ- ing the investing of taxpayer dol- lars.

TSD paid Wells Fargo more than $133,000 in fees for manag- ing an actively-traded bond ac- count. In addition, the agency could have made approximately $400,000 in additional income had the money been placed in a more conservative account, ac- cording to a report presented to Triunfo board members last week by Anita Lawrence, a financial consultant hired by the VRSD in August to review both agencies' investments.

Had Triunfo retained an ear- lier investment account in a county agency pool, it would have earned more than $687,500, com- pared with the $253,217 earned through the Wells Fargo/Alle- giance account, the report said.

Triunfo Boardmember and Ventura County Supervisor Linda Parks expressed frustration with the VRSD for not providing the Triunfo board with a full financial disclosure.

"We did not have that informa- tion to make a decision and we lost a half-million dollars," Parks said.

A 2004 audit recommending that the investment be changed was not brought to the attention of the entire Triunfo board, accord- ing to Parks. Two appointed Triunfo board members, Thousand Oaks Mayor Dennis Gillette and James Acosta of Saticoy, also sit on the VRSD board and were privy to the audit, Parks said. The two should have shared their informa- tion with the rest of the Triunfo board.

"I'm really thankful that we are in a hold situation now," Parks said. "We probably could have had $400,000 if there had been better stewards of our finances."

It is unclear why the audit was not given to the entire Triunfo board. Other board members said little during the presentation.

"I don't know because I was not here when Triunfo's policies were put into place," said Mark Lawler, who was hired a year ago to serve as Triunfo's district man- ager and VRSD's general man- ager. "Maybe they didn't want to make a change at the time because it would have meant locking into a lower rate."

But Lawler is pleased with the direction in which the board is now going.

"Holding the account now is good because we may have locked up high and may now reap the ben- efits," Lawler said. "I think we have a strong portfolio."

Parks also blamed former VRSD finance director, Ed Bushong, for making bad deci- sions prior to his retirement in 2004. She said Bushong recom- mended moving Triunfo's money to a checking account at City Na- tional Bank in Oxnard where it sat for more than two years not earn- ing interest. The error was not dis- covered until this summer.

The $2.5 million account has since been switched to a 4.5 per- cent interest-bearing version and VRSD has reimbursed Triunfo $100,000 for estimated interest loss.

At the time, Bushong also rec- ommended that both agencies move their investments to active management accounts with Wells Fargo/Allegiance. Triunfo's money had been with the more conservative county agency in- vestment pool, which uses a pas- sive investment strategy. The Wells Fargo/Allegiance account followed a more volatile strategy involving the trading of bonds.

Over the next few years both the VRSD and the TSD accounts fluc- tuated before dropping to their low- est levels in a decade. In addition, the management fees being charged by Wells Fargo and Allegiance were considered high compared with fees charged by other investment advisors, Lawrence said.

The blame should be directed at the entire Triunfo board for vot- ing to go with the investment, said Norma Callero, chairman of the TSD board. But Parks pointed out that she had made more than five motions over the past two years to reverse the decision and no action was taken.

Gillette expressed frustration as well.

"For 30 years this board has served residents well," Gillette said. "I know something happened four years ago that threw this board out of whack and it's been in tur- moil ever since."

But it was unclear whether Gillette was referring to when Parks began serving on the board, or to the ill-advised actions of the former VRSD finance director.

Boardmember Ron Stark made the suggestion to find a low-cost way to have the district's invest- ment account managed.

Sherrill Smith, who replaced Bushong as finance director, re- tired in August. The VRSD is conducting a search for a new fi- nance director. Andrew Palomares, the agency's fiscal operations man- ager, is serving as interim finance director.

The board will meet again at 5:15 p.m. on Mon., Oct. 23 in the Oak Park Library.