Mr. Toad's Wild Ride - Kane County Treasurer Reveals Obstruction
(Reprinted Memo from 9/15/2023}
COUNTY OF KANE
CHRISTOPHER J. LAUZEN, CPA MBA KANE COUNTY TREASURER 719 S. Batavia Ave., Bldg. A Geneva, IL 60134 Phone: (630) 232-3565 FAX: (630) 208-7549 www.kanecountytreasurer.org Date: September 15, 2023
To: Vern Tepe cc: Board Members
From: Chris Lauzen RE: "Mr. Toad's Wild Ride" INTRODUCTION I have publicly invited you to visit my office during at least three(3) Finance Committee meetings (please review video/transcripts) so that we could address any questions you have in as much detail as you desire. On Sunday, July 31, 2023, I sent you a private email, "Hi Vern, we don't seem to be getting along too well in public. I'm sure that people don't feel too comfortable listening to us. Assuming that your criticism is sincere and constructive, I invite you at your convenience to meet at the Treasurer's Office to discuss your concerns and answer your questions in more detail. Best, Chris". But you seem to insist on making this into your ego-gratifying public spectacle. Perhaps I'm the character Badger saying to your Mr. Toad in Kenneth Grahame's Wind in the Willows, " ... we animals never allow our friends to make fools of themselves beyond a certain limit; and that limit you have reached...0 bliss! 0 poop-poop! 0 my! 0 my!" I have been polite to you and obsequious for nine 9 months. But, after nine (9) months of your ugly political grandstanding, in an obverse way, I appreciate the opportunity that your redundant questions, now in written form, provide me in turn to put in writing once again the objective standard deficiencies of your mismanagement of county investments and finances while you've been onthe County Board. You seem to be trying to distract/disguise attention. During the February 2023 Finance Committee meeting, you "took credit" for your dismal performance during the last two and a half years that led me to run for Treasurer,"... and I personally worked with the former treasurer to do that". Your FY 11/30/2021and 11/30/2022 interest income lack of performance is a matter of public record in our audited financial statements for those years ,i.e., between interest income lost, taxpayer money wasted, and tax increase speeches (but Mr. "No Show" when vote was scheduled), you and the Ruling Majority have cost Kane County Taxpayers millions of their dollars squandered.
ANSWERS TO QUESTIONS REDUNDANTLY ASKED AND ALREADY ANSWERED Basically, you're unimaginatively asking again four (4) questions that have alreadybeen publicly answered:
1. Q: "Why aren't Cares, ARPA, and Emergency Rental balances reported in the Treasurer's Report?"
A: Because accounting and reporting for these balances are the responsibility and maintained by your Accounting/Finance Department in their detailed general ledger. Please ask Joe Onzick, Erica Waggoner and/or Peter Phillips(... Oh, but they're no longer there ... yet you're critical that I've successfully replaced three people on my staff.) 2. Q: "Why are reports for April, May, June, and July so-called 'completely different from ALL EARLIER REPORTS ... YET AGAIN! ... YET AGAIN! ... FINALLY, in the same format as the previous month' (your scolding words)?" A: As Oliver Wendell Holmes wrote, "Foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines." I answered your questions even before you asked them in a formal written presentation (Attachment A: "Treasury Report 2023" PowerPoint on February 28, 2023)that our office improved information in these reports in several fundamental areas, literally correcting "whopper" errors that you permitted to be propagated among the Board and the taxpayer public. (a) In April, as you and members of the FinanceCommittee have been told multiple times in public meetings, we switched from bankers and brokers selling us investments under the "suitability" standard (meaning: as long as an investment meets the literal statutory definition of eligibility, the bankers and brokers can sell us anything that we may be naive enough to buy) to professional nationally-recognized expert investment managers who hold themselves to the higher and stricter "fiduciary" standard (meaning: every decision they make must be on our behalf, not on their behalf). (b) In April, again as you were told and theFinance Committee discussed, we transitioned from brokers/salesmen holding our investment instruments to a safe third-party custodial bank that specializes in safekeeping assets. Coincidental evidence that this was a better approach is that in the month of May, one of the three brokerage firms that you were using literally went out of business. (c) Sorry to have to put it so bluntly, but your previous format had literally a "stupid" column ,i.e., Coupon Rate rather than Yield-to-Maturity Rate. As I explained as long ago as February 28, 2023 (within my first 90 days on the job), you and your Ruling Majority were significantly misleading the Board and, more importantly, the taxpaying public regarding your actual return on investment, i.e. in some cases the nominal Coupon Rate was 1Ox more than the true lower Yield-To-Maturity Rate. This Yield-to-Maturity Rate information was available to you on the internal spreadsheets, but was suppressed on the forms presented publicly. Rather than bragging about what you know about public finance, you should be ashamed of your lack of supervision over the function you argue was so good and for which you took partial credit.
(d) The titles on the columns are self-explanatory. On the one hand, you trumpet your competence... without credentials. On the other hand, you feign confusion/ignorance about the clearly labelled information. What is so hard for you to understand about ''Name of Security", "CUSIP" identifying number, "Date Purchased", "Maturity Date", "Yield-to-Maturity", "Purchase Amount", etc. Really... are you trying to kid the members of the Board to whom you distributed your so-called probing questions? Or, just political posturing, consistent with the expression "Politics is show business for ugly people". As Joe Biden would say, "C'mon, Man!" (e) I promised in the cover letter of my very first report in January, and in every report since then, that I would be making changes to improve the accuracy and usefulness of this information for the Board and the public. I have kept my promise. (Attachment B) 3. Q. "Interest for April and May are not included in ANY of the reports.They continue to be noted as 'TBD'... what are the numbers and why have they not been reported?" A: Not meaning to be rude, but you need to visit an ophthalmologist. You have been given charts listing your budgeted/projected amount ofinterest income for the year, my promised amount of $2 MM more (for which you and your Board Majority refuse to adjust your budget forecast), and each month's actual performance during the last two Finance Committee meetings; these charts have already appeared in three (3) publications in the County (Attachment C). The earlier charts were marked "Work in Progress" and "TBD" because those were honest assessments of where we were in making accurate, complete, and reliable calculations. But, the real questions you ought to be focused on, and giving the current Treasury team at least some credit for, is "How much interest income have we earned to date and how will you avoid squandering this windfall?" That's the point of that chart(!) Please catch up before you ignore Badger's advice to Mr. Toad about"... animals not allowing their friends to make fools of themselves." Nine (9) months of useless, destructive criticism of our team's work when your supervision of the previous two years is demonstrably misleading and costly to taxpayers. 4. Q. "What funds have been paid to the investment company?" A: PFMAM: $33,583.10 May I -August31, 2023 (invoices attached) ROI $552,305.91 (Attachment D) May 1 -August 31, 2023 Vectors: $10,475.00 May 1 -June 30, 2023 (invoice attached) ROI $303,252.59 (Att. E) (Recently and again, recognized as one of the "Top Gun" best performing investment managers in the U.S. Attachment F). We have paid $44,058.10 to make $855,558.50. You have paid $1,226,156.65 to spend $200 MM in COVID money. Clever critic! As fair-minded board members do their cost-benefit analyses, please remember that you have authorized $1,226,156.65 in 18 separate payments to Ernst & Young to spend $200 MM (Total Contract to E.Y. $1.9MM) in COVID and ARPA money. Conversely, the Treasurer's Office has paid $44,058.10 to make $855,558.50.
CONCLUSION
Your questions have been asked before and already answered, in many cases answered multiple times. You persist in attempting to play the politics of destructive misdirection. You are trying to distract from and disguise your own miserable, very expensive failure to manage county financial resources properly.
You consistently speak in favor of raising already-crippling property taxes and a host of other taxes, including sales tax on purchases. Yet, when the actual vote to raise property taxes was scheduled in October 2022, you failed to appear ... a "Georgie Porgie No-Show"(!)
As you can see, other people can choose to be just as unpleasant as you are.
Your mismanagement and arrogance have cost county taxpayers millions in lost interest income and have squandered in lot of wasteful government spending. Yet, as we work now to correct your previous negligence (i.e., tax-free municipal bonds, using coupon rates rather than yields-to-maturity, buying longer term bonds during a trough of historically low interest rates, etc.), all you can do is cackle at 1000% (lOx) improvement over your dismal past performance and FY 11/30/23 budget projection.
As Macbeth groaned as he was being taunted by the ghost of his murdered victim King Duncan, "Out, out brief candle! You're but a walking shadow, a poor player that struts and frets his hour upon the stage, and then is heard no more: it is a tale told by an idiot, full of sound and fury ... signifying nothing."
Quality is not an act, it's a habit. Henry Ford opined, "The only true test of value, either of men or of things, is that of their ability to make the world a better place in which to live." Mr. Tepe, your feigned ignorance and refusal to understand answers that you've been provided are not making the county, nor service to the county, a better place.
The current Treasury team's 1000% performance doesn't fit your agenda of raising property taxes, squandering public funds entrusted to you, and slandering political opponents.
You are an angry, objectively dishonest partisan politician. You and I are old enough to remember President Lyndon Johnson who was fond of saying "Any jackass can kick down a barn; but it takes a real carpenter to build one."
If you want to "play politics" don't do it in the Government Center Boardroom. Take your ugly "partisan politics" campaign out to the street, or more aptly into the alley gutter. You've tried to give the board legal advice on several occasions, without credibility; now, you're trying to give them lousy financial advice, without credentials.
Despite your carping and grandstanding political attacks on the Treasury team's reports, it is a matter of public record that you have asked the finance committee for "unanimous consent" to accept and post my reports and financial statements(!)
Please stop wasting our patience, time and money.
Kane County Treasury Report February 2023
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