While there's evidence a police retirement system invested "more with their hearts than with their heads" in a Texas golf course and development, that's not enough to put a stop to the $30 million project, a state judge ruled Friday.
State District Judge Michael Caldwell refused to issue a preliminary injunction against the Municipal Police Employees' Retirement System, or MPERS, to stop the Boot Ranch project and appoint someone else to manage the $1 billion fund.
The ruling came in a class-action lawsuit three south Louisiana police chiefs filed last week, saying trustees engaged in "glaringly poor investment choices" and "placed the lives of the citizens of Louisiana in danger" by forcing police department budget cuts to pay higher retirement fund costs.
In a hearing that lasted more than eight hours, Caldwell said the plaintiffs had failed to prove the fund and its members were in immediate jeopardy of suffering irreparable harm if the Boot Ranch investment were allowed to proceed as planned.
"I have empathy and sympathy for the plaintiffs in this case," Caldwell said. "I'm in a state retirement system and it's all I have. I know I want folks taking care of business. But this comes down to a matter of law."
The ruling does not affect plans to seek a permanent injunction against MPERS, or the lawsuit, filed on behalf of the 9,500 full-time Louisiana police officers whose retirement savings are managed by the fund.
Much of the hearing Friday focused on the relationship between MPERS and professional golfer Hal Sutton, who has been involved in the fund's two golf courses in north Louisiana and is coordinating the Boot Ranch project.
Attorney Randy Zinna testified that the retirement system has an "endorsing and consulting" contract with Sutton that pays him $180,000 annually, for which he is obligated to "make appearances at certain times."
Sutton - who has never been involved in a major golf course development - also stands to make millions on the Boot Ranch project if it is successful, even though he has invested no money in it, according to testimony.
MPERS Chairman Henry Dean testified that Sutton doesn't actually manage the Olde Oaks Golf Course in Shreveport or the Golf Club at Stonebridge in Bossier City. Rather, Dean said, General Manager Martin Stewart is "influenced" by Sutton.
Sutton is expected to be "rubbing elbows with potential investors" for Boot Ranch at the Ryder Cup during the next two months. Said Dean: "Those are the people he's wining and dining and selling the dream to."
Sidney Cook, a representative of the Boot Ranch project, testified there still is no written guarantee from Sutton on the investment, no project prospectus and no market studies of the potential success of such a development.
Zinna testified board members nonetheless decided "the only reason not to go forward with Boot Ranch is if Hal Sutton is not involved."
Robert E. Couhig Jr., a New Orleans attorney who represents the three police chiefs who sued MPERS, later referred to the testimony about Sutton to argue that the board had not made a prudent investment.
"The man they were paying $180,000 told them it was a good deal and they believed him," Couhig said. "That same man doesn't have to put up a nickel but stands to make tens of millions of dollars. Of course he thinks it's a good deal."
Also at issue is the fact that the board has not pursued legal action against former state Rep. Mike McCleary of Baker, whose company defaulted on its contract to manage the Olde Oaks Golf Course in Shreveport after promising the board a 10-percent return on its investment.
Dean testified the board isn't certain it can pursue legal action against McCleary, who is the former chairman of the House Retirement Committee.
"If we can collect, we will, but I don't know if we can," Dean said, adding that he doesn't know if McCleary "has the wherewithal to pay that back."
MPERS attorney James Percy said the plaintiffs failed to present a full picture of the retirement system's portfolio.
"No one is suggesting these dollars aren't extremely important," Percy said. "But this is a retirement fund, and it's absolutely inappropriate to take a snapshot in time - to freeze-frame it and say, 'There's this much loss and there's the harm.' "
Source: Saturday State Times/Morning Advocate (Baton Rouge, La.)
