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Clerk transferred county’s estimated $600 million portfolio in violation of county investment policy

Commissioners to be asked today to change policy after the fact to allow Brock and Sen. Richter to make switch without BCC approval

City Desk Naples-Marco Island, Florida
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Gina Edwards
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Clerk transferred county’s estimated $600 million portfolio in violation of county’s investment policy

Commissioners to be asked today to change policy after the fact to allow Brock and Sen. Richter to make switch without BCC approval

By Gina Edwards

Naples City Desk

Dec. 9, 2014 -- Collier Clerk of Courts Dwight Brock transferred the county’s estimated $600 million investment portfolio on Nov. 24 to a firm that wasn’t authorized by Collier County Commissioners — in violation of the county’s investment policy — documents obtained by Naples City Desk show.

A revised investment policy headed to Collier County Commissioners today would strip out a requirement — after-the-fact — for Brock to get elected Commissioners’ approval to move the county’s securities to a new custodian. 

The after-the-fact change provides evidence of the lengths county staff and Brock have been willing to go to accommodate Florida Sen. Garrett Richter, R-Naples, who is a founder of First Florida Integrity Bank.

Live Update: Commissioners approve new policy delegating bank and custodian selection to Brock

Collier Commission Chairman Tom Henning offered a motion to approve the new investment policy with no discussion and Commissioner Tim Nance seconded it. Commissioner Georgia Hiller asked to delay a vote on the new policy, noting that the new policy strips out authority for the Board of County Commissioners to approve the bank and the third party custodian designated to keep the county’s investment portfolio and gives that power to the Clerk, Collier Clerk of Courts Dwight Brock.

Hiller said the county’s staff and consultant should have time to separately review the policy change. Henning said the County Manager’s staff had already been involved with the proposed changes. Commissioners Donna Fiala and Penny Taylor made no comments and the board voted 4 to 1 to support the new investment policy with Hiller opposed. The agenda item approved also directs the county attorney to prepare a future item to repeal the existing ordinance that first established the county’s investment policy in 1987. 

Collier Commissioner Georgia Hiller has accused Brock of illegally steering the county’s lucrative banking services contract to Sen. Richter’s First Florida Integrity Bank. Hiller contends Richter’s bank should have been removed from consideration because it didn’t submit a qualified bid, including by failing to offer a qualified custodian to hold the county’s securities. She has also accused Brock of allowing First Florida Integrity Bank to change and effectively lower its bid after-the-fact. Brock and Richter have denied wrongdoing.

Collier Commissioners, in a 3 to 2 vote in September, approved Brock’s selection of First Florida Integrity Bank, and in an extraordinary change, voted to waive any bidding irregularities after the fact. The Board of County Commissioners entered into a contract with Brock and First Florida Integrity Bank on Nov. 1 which designated the custodian of the county’s investment portfolio as Connecticut-based Infinex Financial Group, a broker-dealer not a custodial bank.

Richter acknowledged in an interview with Naples City Desk on Nov. 18 that Infinex didn’t comply with the county’s investment policy. Naples City Desk broke the story that Brock switched the portfolio custodian to Louisiana-based First National Bankers Bankshares on Nov. 18, after obtaining documents through a public records request. Brock didn't respond to questions or requests for comment from Naples City Desk. 

County Attorney Jeff Klatzkow and County Manager Leo Ochs both said at the Commission meeting on Nov. 18 that neither knew of them in advance about Brock and Richter’s change of custodian.

Hiller asked the county attorney and county manager if the change by Brock and Richter was illegal.

The county’s external auditors are required to scrutinize and report on whether Brock has complied with the investment policy voted on by Collier County Commissioners in his handling of the county’s investment portfolio.

Brock’s handling of the county’s investments has come under scrutiny since September when Commissioner Hiller pushed for information about who is managing the county’s portfolio. Former Collier Commissioner Fred Coyle had pushed for more disclosure about Brock’s handling of the county’s investments in early 2014, but he didn’t have majority support until Hiller sided with Coyle and Commissioner Donna Fiala to ask for a consultant’s review of the county’s investment policy, which hasn’t been updated in more than 10 years.

Carrying out the Board of County Commissioners’ investment policy and safeguarding the county’s hundreds of millions of dollars is the Constitutional obligation of Collier Clerk of Courts Dwight Brock, the county’s independently elected comptroller.

Naples City Desk reported in October that Brock’s money manager, a 76-year-old employee who lives in Arizona and makes $86,000 a year, hasn’t had an annual performance evaluation since 2007, according to a copy of his personnel file.

Clerk’s employee John Kannengieser’s personnel file didn’t contain evidence that he had obtained eight hours of annual continuing education for at least 10 years even though annual continuing education is required by the county’s investment policy, Naples City Desk first reported.

The continuing education provision in the county’s investment policy is required by state law — Florida Statute 218.415. A failure by Kannengieser to receive the annual continuing education would be a violation of the county’s investment policy, which is set by the Board of County Commissioners.

Brock has declined to answer questions about Kannengieser posed by Naples City Desk, but he told the Naples Daily News this week that Kannengieser hasn’t had an evaluation since 2007 along with other employees in his organization because he hasn’t given merit increases since the recession hit.

“Every supervisor in my office has been a little lax in doing evaluations,” Brock told the Naples Daily News. “I just cracked down on that, so they’ll start doing them again immediately.”

The revised investment policy requires not only that employees handling investments receive annual continuing education, but that the Clerk himself complete 8 hours of continuing education each year.

The policy inserts new ethical requirements including that “Employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Also, employees involved in the investment process shall disclose any financial interests in financial institutions that conduct business with the Board or Clerk.”

The existing policy only requires that Brock’s employees disclose “material” interests to the Clerk. The existing policy also doesn’t ban Brock’s employees involved in investment decisions from receiving gifts or entertainment from investment companies. Rather, the existing policy states that employees must disclose to Brock if they have received gifts or entertainment.

“Employees shall also disclose any gifts or entertainment received as a result of their employment in regard to the investments of Collier County,” the investment policy states.

The proposed new investment policy also doesn’t ban Brock’s employees from receiving gifts or entertainment.

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Reporting by: Gina Edwards

Dateline: Naples, Fla., Dec. 9, 2014

 

Contact Gina Edwards at 239-514-1336 or by email at ginavossedwards@gmail.com 


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