Officials Indicted
AUSTIN–Two sitting and one former member of the State Board of
Education face criminal indictments over allegations that they
violated the Texas open meetings law, the Travis County attorney
confirmed Friday.
If convicted of the misdemeanor charge, board members David
Bradley, R-Beaumont, and Joe Bernal, D-San Antonio, and former
member Robert Offutt, R-San Antonio, face up to six months in jail,
a $500 fine, or both.
As members of the state board’s finance committee, the trio
helped direct investment decisions involving the $17.4 billion
Permanent School Fund. The allegations stem from an Aug. 30, 2000,
meeting at an Austin restaurant with three of their advisers, who
also face misdemeanor charges.
County Attorney Ken Oden said his 18-month investigation
continues. He said a Travis County grand jury, which indicted the
six Thursday, may bring additional indictments.
“The grand jury will continue to hear the evidence,” he said.
“Basically, my goal is to bring more accountability to the
management of those billions of dollars of public money that [was]
entrusted to that committee.”
Bradley has alleged that Oden, an elected Democrat, is playing
politics with the indictments. Phone calls to the other board
members were not returned Friday.
“I am disappointed that, after cooperating and waiting for the
county attorney, that he is now — two years later — pursuing a
false misdemeanor charge,” Bradley said Friday. “I am confident
that when the facts are told again, that I will be cleared of any
misdeeds.”
The three advisers also facing indictments — Russell Stein,
Brian Borowski and Joe Alderete — could not be reached for comment
Friday. Stein was working then as a hired financial consultant to
the board. Borowski and former San Antonio City Councilman Alderete
acted as informal advisers.
According to the indictments, the three advisers and three board
members — then a quorum of the state board’s finance committee —
participated in an illegal closed meeting at a downtown Austin
restaurant.
The indictments parallel earlier allegations in a report by the
bipartisan House General Investigating Committee. According to the
report, several Texas Education Agency employees witnessed one
board member dining with a financial adviser, while the other two
board members dined with other advisers at a nearby table.
Board members appeared to be reviewing documents related to the
hiring of Permanent School Fund money managers, the employees said.
The full finance committee reviewed money manager applications
later that day, and the full 15-member board eventually awarded
contracts based in part on committee recomendations.
State Rep. Pete Gallego, chairman of the House investigating
committee, said legislation vetoed by Republican Gov. Rick Perry
would have created a state board investment advisory committee and
mandated other reforms.
“This [grand jury action] underscores that there are problems at
the State Board of Education with respect to their handling of
certain investments, and it underscores that it was a gross error
of judgment on [Perry’s] part to veto legislation that would have
made some changes,” said Gallego, D-Alpine.
A Perry spokesman said the legislation, Senate Bill 512, had no
bearing on the allegations. The spokesman said Perry vetoed the
bill because of concerns about separation of power.
“The governor believes that state agencies, including the State
Board of Education, should abide by the state open meetings law
and, he has encouraged the State Board of Education to adopt a
strong ethics policy,” spokesman Ray Sullivan said.
The board’s handling of the Permanent School Fund investments,
which finance textbook purchases, has come under intense scrutiny
by lawmakers, the state auditor’s office and others in recent
years.
Despite questions about their own oversight, Bradley and Offutt
have led separate reform efforts that they claim brought more —
not less — transparency to the board’s investment practices. They
also raised competing allegations regarding fund oversight by Texas
Education Agency employees.
Peggy Venable, director of the conservative Texas Citizens for a
Sound Economy, said board critics want to distract attention from
the efforts of board members to protect the fund during a state
budget crunch.
“These efforts are being engineered by several legislators who
have been eyeing the $17 billion fund as a potential revenue source
to pay for their overspending,” Venable said.