MOHELA board hires attorney for Nixon's suit

Wednesday, February 15, 2006 | 12:00 a.m. CST; updated 9:32 a.m. CDT, Thursday, July 3, 2008

CHESTERFIELD, Mo. (AP) - Missouri's college loan authority says it hired a St. Louis law firm one day after Attorney General Jay Nixon sued the board of directors for allegedly holding secret meetings.

At issue is the board's approval of a plan to sell part of the Missouri Higher Education Loan Authority's portfolio as a way to generate $450 million for Gov. Matt Blunt's higher education initiatives. Nixon alleges the board violated the state Sunshine Law 12 times, including by holding private meetings before approving the plan in a four-minute public meeting Jan. 31.

Nixon asks in the lawsuit for a judge to invalidate the board's actions and assess penalties against its seven members. That would effectively scuttle the board's decision to back the sale of $2.4 billion in loan assets this year and the gradual sale of additional loans, which would finance Blunt's plan to fund university construction projects, scholarships and professors.

In a public meeting Wednesday, MOHELA's board announced it hired the firm Thompson Coburn LLP to handle Nixon's suit. The board meeting was held by teleconference and listened to by reporters and MOHELA staff members at the authority's headquarters in Chesterfield.

A spokesman for Thompson Coburn said the firm couldn't comment on pending litigation.

MOHELA Board Chairwoman Karen Luebbert said during the meeting that she complied with Nixon's request to attend a public hearing about Blunt's plan before Nixon filed the lawsuit.

``From my perspective, I'd say I'd cooperated with the attorney general,'' Luebbert said.

Board members decided to discuss Nixon's lawsuit at a later date. The next scheduled meeting is March 10, but some directors asked to hold a special session before then. No earlier meeting was set.

Blunt said Wednesday that Nixon's lawsuit just makes it more difficult to enact a good public policy. The Republican governor claimed Nixon, a Democrat who is running for governor in 2008, was playing politics to try to hinder Blunt's plan.

``I just think it just delays it, makes it more difficult, and it's not in the best interest of universities or students,'' Blunt told reporters at the Capitol.

The MOHELA board tabled a motion Wednesday to accept a new Sunshine Law policy. MOHELA staff told directors the plan to adopt a new policy was set in motion months before Nixon filed his lawsuit.

Board member John Greer proposed to delay accepting the new Sunshine Law policy because of the litigation.

It was difficult to know who was talking during the conference call because board members did not identify themselves. Two MOHELA spokesmen at the meeting said they were unable to identify the speakers but said minutes of the meeting would be drawn up within days.

A female director asked why the board shouldn't approve the new Sunshine Law policy, which simply asked the authority to obey existing law.

``Seems to be the timing of bringing this on might not be too appropriate,'' a male director said.

``We want to refrain from passing this because of perception?'' the woman asked.

``Yes. That's part of it,'' the man said.

Nixon's suit names as defendants all six directors as well as James Mauze, who recently had to leave the board because state Sen. Joan Bray, D-St. Louis County, blocked his confirmation. The directors are: Luebbert, Greer, Marilyn Bush, James Ricks, Gregory Fitch and Kathryn Swan.

None of the members would comment on the matter after Wednesday's meeting.

Nixon's lawsuit contends MOHELA's violations began around Jan. 19, when rumors first surfaced that Blunt wanted to sell the agency. The board failed to give proper notice of meetings on Jan. 20 and Jan. 24, Nixon alleges, and met improperly in closed sessions to discuss the proposed sale.

At the second meeting, the board also fired the agency's director, Michael Cummins, an action Nixon said can occur in closed session. Although the suit doesn't directly ask that Cummins be reinstated, Nixon spokesman Scott Holste has said that's among the potential consequences if a judge determines the meeting was held without proper notice.

MOHELA informed the public of the meetings in advance by posting a notice in the lobby of the authority's headquarters building, but Nixon's lawsuit alleges the notice was insufficient.

Associated Press writer Chris Blank in Jefferson City contributed to this report.

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