Grandview superintendent accepted free tickets from district vendor, federal agency investigating

GRANDVIEW, Mo. - The Grandview School District’s superintendent admitted he accepted free professional sports tickets from a longtime district vendor, a relationship that has apparently caught the attention of a federal agency.

On Tuesday, Grandview Superintendent Dr. Ralph Teran told 41 Action News he has received free tickets to Kansas City Chiefs and Kansas City Royals games from the St. Louis-based underwriting firm that has overseen multiple district bond issuances approved by voters.

Teran also said the district recently received an inquiry about the free tickets from the Securities and Exchange Commission (SEC).

Further details about how many free tickets Grandview’s superintendent and board members have received, along with why the SEC is interested, remain unclear.

“The district just received the inquiry on Monday, and is in the process of working with them to clarify the information being requested,” district spokeswoman Sheba Clarke said. “The district will continue to cooperate fully in the investigation.”

A spokesman for the SEC said he could neither confirm nor deny whether the agency is investigating.

41 Action News asked Teran about the tickets prior to Missouri State Auditor Tom Schweich's Tuesday night presentation about the Grandview district’s finances. That audit report criticized the district for mishandling funds related to bond projects.

“I’ve accepted tickets and gone to games,” Teran told 41 Action News, adding that he wasn’t sure if it was against district policy.

When asked if he was concerned about public perception, Teran answered, “Well, I think it is a concern because it’s something that people might have issues with.”

Teran received the tickets from L.J. Hart and Company, a firm that primarily underwrites the issuance of bonds for Missouri school districts and counties.

Last year, L.J. Hart paid a $200,000 fine for violating “pay for play” rules designed to keep corruption out of the municipal bond business.

41 Action News discovered the settlement between the Financial Industry Regulatory Authority (FINRA) and L.J. Hart, which revealed the firm “improperly gifted” over 2,000 tickets valued at $183,546 during a two-year period.

The settlement did not name ticket recipients, but said half of the tickets went to school superintendents across the state. Another third of the tickets were distributed to school board members.

According to the FINRA findings, some of the best tickets were valued at $260 apiece.

“L.J. Hart at times issued the most expensive tickets to clients the firm considered significant… clients that retained the firm for multiple high-dollar financing projects over a period of years,” the settlement read.

The firm has a lengthy history with Grandview. According to L.J. Hart’s web site, it has completed $36.5 million of bond issuances and refinancing since 2009.

According to Schweich’s audit, L.J. Hart received about $500,000 in underwriter fees from Grandview between 2008 and 2013.

Schweich criticized the district for allowing the firm to act both as financial advisor and bond underwriter for the projects, which he described as a blatant conflict of interest.

“If I'm giving you advice on how to handle the bonds and then say, ‘Oh by the way, I'm the best person to issue the bonds.’ Am I really going to give you objective advice?” Schweich told 41 Action News.

But the state auditor said Grandview is far from alone when it comes to being too cozy with bond firms. He estimated municipal agencies’ failure to competitively bid bond issuances cost Missouri taxpayers $10 million ever year because of higher interest rates.

Schweich has pushed for a state law that would require competitive bidding.

Meantime, Larry Hart told 41 Action News his company used the ticket program since 1994 as an “expression of appreciation” for clients. He also claimed his firm’s refinancing efforts have saved Grandview taxpayers more than $14 million in interest payments over the years.

Hart added the tickets were never used to win big business deals.

“L.J. Hart never used the tickets as an inducement to be retained on a specific pending or future project or as a means to induce a non-client into becoming a client,” read a mitigation statement Hart provided to 41 Action News.

Hart said he has changed his ticket program since the FINRA settlement. Now, an L.J. Hart employee accompanies ticket recipients to games, which he said complies with the financial regulator’s rules.

However, that arrangement still might violate policies of local school districts. According to Grandview’s policy, school employees are not allowed to accept gifts from vendors worth more than $50.

41 Action News has tried to find out if Grandview board members also received tickets.

Board President Cindy Bastian has not responded to a voicemail left Wednesday morning. Board Vice President Wayne Terpstra told 41 Action News he had “no comment.”

Former board member Don Fisher, who served from 2006-2012, said he had never been approached about free tickets and wasn’t aware of any fellow elected officials who had received them.

However, he worried that gifts always come with strings attached and said it should concern taxpayers.

“You don’t give out those kinds of things without expecting something in return,” Fisher said.

Ryan Kath can be reached at ryan.kath@kshb.com. You can follow him on Twitter or connect on Facebook.

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