OKLAHOMA CITY — An internal auditor with the state agency that oversees $2.7 billion in real estate and other investments to support public education has been fired less than a week after reviewing conflict issues. interests raised by another senior employee about their boss, a governor appointee.
Erin Morgan, who worked for the Land Office commissioners for eight years, formally challenged her dismissal on January 11 by CLO secretary Elliot Chambers as unlawful or unreasonable.
While Tulsa World was denied access to Morgan’s official complaint to the state, World was able to use the Oklahoma Open Records Act to obtain another file from CLO showing that the case was ultimately closed. resolved when Chambers and Morgan signed a settlement agreement titled “Confidential”, prohibiting either party from disparaging the other.
But after her dismissal and before the settlement, Morgan escalated the conflict of interest issues she had documented from CLO’s Director of Commercial Real Estate directly to two state officials who are members of the commission that oversees CLO: State Superintendent Joy Hofmeister and State Auditor. and Inspector Cindy Byrd.
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The main concern reported to Morgan in early December involved a company called Victorum Capital, which was paid by CLO as an investment consultant.
Morgan reported being told that CLO Secretary Chambers had an existing personal investment relationship with Victorum, and that this relationship was never disclosed to the five Land Office Commissioners.
The council is chaired by Governor Kevin Stitt, and Lt. Governor Matt Pinnell and Agriculture Secretary Blayne Arthur are also members.
Morgan hand-delivered documents and notes to Hofmeister and Byrd in February, which the world obtained through a public records request to Hofmeister’s office.
In his notes, Morgan wrote that in light of the conflict of interest issues brought to his attention, it struck him as “odd” at a meeting of commissioners on Dec. 16 when the state auditor said voted no on two points: a new investment plan to allow for direct investments or “non-negotiable securities” and an extension of Victorum’s role at the CLO to manage those direct investments as well.
A director of the agency had approached Morgan and questioned this expanded role, as it would “essentially mean that Victorum Capital would watch itself”.
Morgan was fired less than a week after initially approaching Elliot Chambers in early January over the concerns. She claims he admitted to her that he pays to participate in Victorum Capital’s investment club and that they make investments on his behalf.
“I asked him if he considered it a conflict of interest that he conducted business with Victorum and continues to do business with Victorum outside of CLO. He said no,” Morgan wrote in the notes she shared with Hofmeister. “He was extremely angry and said he was alarmed that I was going this route of questions…He said he was offended and what I was saying was that he was doing the harmful activities that he was a crook and a villain. ” (sic)
Morgan wrote that she told Chambers it was her job “to assess the risks to the agency.” When asked if she was “investigating,” she said she told Chambers she was only gathering information ahead of an upcoming CLO audit committee meeting in case it was. “something I had to bring to their attention”.
Public records show that CLO’s attorney advised Hofmeister’s office on January 11 that Morgan had been fired and therefore the CLO’s internal audit committee meeting scheduled for the next day, January 12, was terminated. had to be cancelled.
Chambers and Morgan declined to be interviewed, with Morgan’s attorney citing the confidentiality agreement.
The Tulsa World was able to publicly obtain the March 15 settlement agreement signed by Chambers and Morgan. In exchange for the state’s release from any wrongdoing, Morgan was reinstated temporarily and on administrative leave so she could become fully invested in her public employee retirement account, agreeing to resign on May 1.
She was to receive back pay plus a lump sum payment of approximately $25,000 from the state, and in addition, the state was to pay her attorney a lump sum of $15,000.
Hofmeister said the commission overseeing CLO was never told of the deal and that she was advocating changes to ensure the commission has access to the work of the agency’s internal oversight employees in the future.
“The concerns raised by the internal auditor are alarming and need to be fully investigated,” Hofmeister told Le Monde on Thursday morning. “With regard to the dismissal and the circumstances surrounding it, we must take concrete steps to ensure that matters concerning the work and employment of an internal auditor are reported to the Commission.
Chambers also declined to answer questions about his personal ties and investments with companies doing business with CLO. But a spokesperson said Chambers disclosed such relationships to the agency’s in-house counsel.
“The Secretary has acted with the advice of the Board and the Commission in all matters relating to direct investments and will continue to do so as appropriate,” said David White, Director of Communications and Legislative Affairs at CLO.
Voting on Commissioners’ Questions
This December 16, 2021 committee vote to approve a new investment plan recommended by Secretary Chambers is the subject of ongoing controversy.
With only three of the five members present, the vote was 2 to 1, with Stitt and Pinnell voting in favor and Byrd voting against.
When the item was declared approved, State Auditor Byrd immediately objected, saying she “interpreted the absence of two other commissioners as two automatic negative votes,” state the official minutes of the meeting.
After the Governor’s attorney investigated the matter and consulted with the CLO staff attorney, it was again declared that the new investment plan had been passed by a majority of the members present.
A subsequent vote was also 2-1 to extend Victorum’s role to CLO, another action recommended by Chambers.
Consulted by the world on historic voting practices at the CLO, former Oklahoma Attorney General Drew Edmondson, a Democrat, said a 2-1 vote would mean an agenda item of the CLO would have failed and any related contract would be void and subject to taxpayer lawsuit if money was paid on it.
Former Oklahoma Republican State Auditor Gary Jones, who served on the CLO commission, agreed with Edmondson’s assessment – that any 2-1 vote should have been declared a failure . He said a majority of members must vote in the affirmative, not a majority of those present.
“You have five members for a reason,” Jones said.
The commission did not meet again until February, and at that time Hofmeister objected to the adoption of the official minutes of the December 16 meeting “as the true and legal record”. because she disagreed with the fact that a motion passed with two votes in the affirmative. and one vote against.
According to the official minutes of that February meeting, Hofmeister requested that the CLO consider seeking the opinion of an attorney general to clarify the matter in the future.
But she was told in late March by CLO’s attorney that Chambers “does not intend” to seek such an opinion.
On May 27, Hofmeister submitted his own formal request for a legal opinion on the matter to Attorney General John O’Connor, also appointed by Governor Stitt.
According to data requested from the Oklahoma Office of Management and Enterprise Services, CLO has seen 56% of its revenue from 57 full-time employees since Chambers was named CLO Secretary by Governor Stitt in July 2020.
Morgan is among 32 employees who left during this time, including layoffs and retirements. This figure also includes four accounting directors, who have resigned, as well as other senior managers.
Stitt’s appointment of Chambers was controversial because he had previously served as an executive at two separate companies, White Star Petroleum Holdings LLC and Chesapeake Energy, which were found to have failed to pay or underpaid Land Office commissioners. He also founded The Aurelian Companies, a multi-industry group of investment companies, whose business records with the Oklahoma Secretary of State indicate that he is still active.
Byrd and Hofmeister “were conspicuously absent” on the day Chambers’ nomination was approved by a 3-0 vote from the other commissioners, according to media coverage of the meeting by the Oklahoman newspaper.