Fines settle MOHELA suit

Loan agency admits its members violated open-meetings law.
Friday, December 29, 2006 | 12:00 a.m. CST; updated 3:36 p.m. CDT, Sunday, July 20, 2008

JEFFERSON CITY — The state’s student loan agency acknowledged Thursday that it violated Missouri’s open meetings law while scrambling to come up with an alternative to Gov. Matt Blunt’s proposal to sell that agency’s assets.

In a settlement to a Sunshine Law lawsuit brought by Attorney General Jay Nixon, the Missouri Higher Education Loan Authority and its board members agreed that “various procedures and communications” last January had broken the law. But they denied those violations were committed “knowingly, purposefully and/or willfully.”

The agreement filed in St. Louis County Circuit Court requires each of MOHELA’s board members at the time to pay $1,000 to the state. The student loan agency will cover their fines, said executive director Raymond Bayer Jr.

Blunt’s plan to use MOHELA assets for college construction projects has undergone several revisions in the past year. The settlement does not affect the viability of the latest plan, which would siphon $350 million from MOHELA for college projects and in return guarantee the loan agency continued tax-exempt bonding allocations to underwrite additional loans. That plan still needs legislative approval.

Nixon’s lawsuit alleged 23 Sunshine Law violations from Jan. 20 to Jan. 31 for giving improper notice of meetings, posting “inadequate and misleading” meeting agendas, wrongly closing meetings and holding a series of “hub-and-spoke, clandestine communications” among board members that allowed them to secretly reach decisions before their public meetings.

The lawsuit had sought fines of as much as $115,000 — a maximum of $5,000 per violation — against each board member. Six of MOHELA’s seven board members have since left the agency, most as a result of the controversy.

Although the fines were significantly less than originally sought, Nixon said they were substantial and the largest won by his office in a Sunshine Law case. Also important, Nixon said, was legal acknowledgment that a series of one-on-one private discussions among the members of a governmental body violates the open-meetings law.

The attorney general’s lawsuit had been scheduled to go to trial Jan. 22. The settlement document states it was entered into solely to avoid continued litigation and its costs.

The lawsuit claimed MOHELA held an illegal meeting on Jan. 20, after executive director Mike Cummins heard rumors of a potential sale of the student loan agency. It alleged that former board member James Mauze — a Blunt appointee — then arranged a series of illegal secret conversations with former board members Gregory Fitch, James Ricks and Kathryn Swan to orchestrate the firing of Cummins at a closed Jan. 24 meeting.

Although the settlement invalidates the vote to fire Cummins, that does not mean he gets his job back, Nixon said, because Cummins signed a severance agreement worth more than $830,000 with MOHELA in October.

After the board’s first choice turned down the interim executive director’s job, Nixon’s lawsuit claimed, former board Chairwoman Karen Luebbert then illegally polled individual board members Jan. 25 in deciding to offer the job to Bayer.

The lawsuit claimed that from Jan. 26 to Jan. 30, Luebbert again had a series of one-on-one discussions with board members about developing an alternative to Blunt’s proposal to sell off MOHELA’s assets. That alternative then was officially approved within minutes, without any substantive public discussion, at a quickly called Jan. 31 meeting in Blunt’s office.

After Nixon sued, the MOHELA board invalidated that vote and held a public hearing at which it once again endorsed the alternative plan.

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