My review shows that there is clearly a lack of quantifiable evidence necessitating this ordinance.

That’s what Anchorage Mayor Dan Sullivan stated on August 17, 2009 when he vetoed Anchorage Ordinance 2009-64, the Anchorage equal rights ordinance, which had been passed the previous week by a vote of 7 to 4 by the Anchorage Assembly.

AO 64 briefly added sexual orientation and gender identity to the list of personal characteristics in Title 5, Anchorage’s equal rights code, which prohibits discrimination based on those characteristics in employment, housing, financial practices, education, and practices of the Municipality of Anchorage. Its passage on August 11, 2009, followed a protracted period of public testimony at the Anchorage Assembly, with accompanying sign-waving and letter-writing both by ordinance supporters and those who opposed equal rights.

We know there is discrimination in the Municipality of Anchorage against LGBT people. Indeed, we presented quantifiable evidence from two previous studies on sexual orientation and sexual orientation bias in Alaska and Anchorage. But those studies were conducted in the 1980s, and Mayor Sullivan chose to ignore both them and the firsthand testimony of more recent incidents of antigay/antitrans discrimination that Anchorage residents testified to before the Assembly.

Many of us know a friend or a loved one who has experienced discrimination. In the absence of legal protections, LGBT people — especially transgender individuals — are vulnerable to unfair treatment. We know those stories are out there. We just need to document them.

That’s why we need your help.

If you are an LGBT person who lives, works, or spends time in Anchorage — or if you’ve lived/worked/spent time in Anchorage in the past — please complete the Anchorage LGBT Discrimination Survey.

It takes about 10 minutes to complete the survey. All survey responses are completely confidential, and survey administration has been designed to ensure the privacy of all respondents.

We need your help whether or not you have personally experienced discrimination.

To make sure that there is only one person per survey, and to ensure that only members of the LGBT community participate, a valid PIN number is required for your survey to be counted. But it’s simple. Just:

1. Contact the Project Manager, Shelby Carpenter, at scarpenter@akclu.org or at 907.263.2006 to get a PIN.
2. Go to http://alaskacommunity.org/ to complete the survey.
3. Paper surveys are also available upon request.

The Community Survey Task Force has extended survey data collection to March 31, 2011 in order to give more people time to respond. Please pass the word along to other LGBT folks who live, work, or spend time in Anchorage, Eagle River, Chugiak, Peters Creek, Eklutna, Girdwood.

Thank you for your help with this important study!

Related posts:

1. My letter to Mayor Sullivan: Please let AO 64 stand
2. Anchorage’s LGBT Discrimination Survey
3. Delay by "task force": My testimony to the Anchorage Assembly

For other news stories & posts on this topic, see my bibliography on all things Sullygate.

Emailed on 13 April 2010:

Honorable Elvi Gray-Jackson
Honorable Dan Coffey
Honorable Patrick Flynn, Chair
Honorable Chris Birch
Honorable Harriet Drummond
Honorable Mike Gutierrez
Honorable Jennifer Johnston
Honorable Debbie Ossiander
Honorable Bill Starr
Honorable Sheila Selkregg
Anchorage Municipal Assembly

Dear Members of the Anchorage Assembly:

My name is Melissa Green. I have been a resident of Anchorage since 1982 (excepting a three-year period in Seattle), am a 19-year employee of the Justice Center at University of Alaska Anchorage, and have lived in Assembly District 4 since 2001. Though this letter is especially intended for my representatives on the Assembly, Elvi Gray-Jackson and Dan Coffey, this information is important enough to send to all of you.

I am writing to urge passage tonight of Assembly Resolution No. AR 2010-92 providing for an independent legal counsel to review and report to the Assembly on $193,000 in public monies paid out to the George M. Sullivan Irrevocable Life Insurance Trust.

The March 22 memorandum from Deputy Municipal Attorney Rhonda Fehlen Westover leaves many questions unanswered. The background timeline in the memorandum notably omits anything about the Sullivan Trust that occurred between 1984 and 2002. In particular, no mention is made of January 7, 1992, when former Mayor George Sullivan’s so-called “premiums” were reduced to $833.67 per year (see http://www.henkimaa.com/2010/03/20/a-sullygate-timeline/#1992) or of November 29, 1995 when Mr. Sullivan’s “premiums” were again reduced, this time to $555.84 (see http://www.henkimaa.com/2010/03/20/a-sullygate-timeline/#1995). Nor does the memorandum make any attempt to explain how these “premium” reductions were calculated, contrary to the Salary and Emoluments Commissions original resolution 82-1, which provided that Mr. Sullivan’s life insurance was to be provided “at the same rate and with the same coverage as in existence on January 1, 1982.” According to a memorandum from then-Manager of Records and Benefits Susan Lindemuth on February 18, 1982, the premium amount therefore should have been $1,042.20 per year, an amount confirmed in an August 4, 1982 letter from Susan Lindemuth to Mr. Sullivan.

No one with the Municipality or Assembly has yet explained this, or even made any attempt to explain it. Nor has anyone explained why the Municipality apparently never informed Aetna that George Sullivan had ceased to be an MOA employee when his accrued leave ran out on October 31, 1982. According to the letter of March 21, 2002 from Melissa K. Dietrick, Key Account Manager at Aetna (included as Exhibit M in the Westover memorandum),

The Municipality included Mr. Sullivan on the most recent life insurance census (from 2001) in the category of eligibility identified as, “all permanent employees covered under the Anchorage Municipal Employees Association Agreement, who are scheduled to work on a regular basis 20+ hours per week.” Aetna must assume that individuals listed on the census are eligible under the definitions of the plan. It is the employer’s responsibility to administer the eligibility of the benefit plan.

In other words, the Municipality lied to Aetna about Mr. Sullivan being a permanent employee covered under the AMEA agreement. No one has yet explained who exactly promulgated this lie, why they promulgated it, or why it persisted for what appears to have been the entire period of this so-called “life insurance policy” — leading to a considerable payoff earlier this year for the beneficiaries of the Sullivan Trust.

Furthermore, even if Mr. Sullivan had been covered by the MOA’s group insurance, he could not have been covered for $193,000. Per Ms. Deitrick’s letter,

However, the amount of life insurance for this eligibility group is not equal to $193,000. This group’s basic life insurance benefits are limited to $15,000 or $30,000. The premium for Municipality of Anchorage group life insurance is $.16 per $1,000 of coverage. or $28.80 annually for $1 5,000 benefits and $57.60 for $30,000.

Which again brings us to the question: who calculated the “premiums” in 1992 and 1995?

From other correspondence with Aetna’s Lynda Gable on January 30, 2002,

This means Muni kept those dollars on hand in the claims funds. I don’t know if intent was to have them handle a death claim directly, but Aetna never received any premiums. The insurance fund was the reserves that Muni held and those funds were never submitted to Aetna nor included in any of our premium calculations from a risk standpoint to the best of my knowledge. [emphasis added]

Which would seem to indicate that the changes in Mr. Sullivan’s “premiums” in 1992 and 1995 were based on something other than what his risk really was — and in contradiction to an email from Susan Lindemuth earlier on January 30, 2002, that

He was covered as part of the MOA group and therefore, part of that “risk”. There was no separate policy with Aetna or any other insurance carrier for him…and no separate “premium” was paid to any outside party. As the life insurance rates changed over the years, he was informed and paid the appropriate premium amount…or the kids paid on his behalf.

We had a split funded agreement with Aetna…so we paid the “retention” monthly and funded the life insurance claims when incurred. His coverage amount ($93,000 [sic]) was included in the volume reported to Aetna.

I have twice suggested to Assembly Chair Patrick Flynn that Susan Lindemuth should be contacted to address these questions (once on his blog on March 10, and again on March 11 when he was a guest on the Shannyn Moore Show on KUDO 1080 AM). Ms. Lindemuth’s apparent close relationship with Mayor Dan Sullivan’s chief of staff Larry Crawford — who was also City manager under mayors George Sullivan, Tom Fink, and Rick Mystrom, both of the latter under whose administrations the “premium” reductions took place — gives even more strength to the appearance of possible conflicts of interest, at best; and back-room dealmaking and public corruption at worst (see http://www.henkimaa.com/2010/03/22/sullygate-the-lindemuthcrawford-relationship/).

Ms. Westover’s memorandum points out that Mr. Sullivan, at his retirement from municipal employment, could have converted his group life insurance benefit to an individual whole life policy, but that he did not do so in part because of his reliance on the SEC Resolution 82-1 and his supposed continued participation in the MOA group plan. But had Mr. Sullivan converted in 1982, his private insurance premium at the outset (per a February 18, 1982 memo from Susan Lindemuth) would have been $961.00 per month ($11,532 per year) — which would have added up to over $285,000 over the past 25 years in the unlikely event his premiums would have remained the same. Instead, Mr. Sullivan and his family paid a total of $19,662.84 (per Dennis Wheeler’s February 2, 2010 memorandum to the Assembly) — a fraction of the cost of a private policy. Mr. Sullivan’s expectation of such a high rate of return for his Trust’s beneficiaries could in and of itself been a strong financial motivation for backroom dealing, so long as Mr. Sullivan had allies who were effect it.

After that, all that would be necessary would be a succession of administrations and assemblies who would simply throw up their hands and say “we have no choice but to pay” without investigating further. So far, that’s what we’ve had. But as a citizen of the Municipality of Anchorage, I hold that the Assembly has a responsibility to me and other Anchorage citizens to find out the truth of these matters.

Besides the questions listed in the language of AR 2010-92, here are some of my questions:

• Did Records and Benefits Manager Susan Lindemuth, or those under her supervision, fail to inform Aetna when his “life insurance policy” became effective on January 1, 1983 that he was in fact no longer an employee of the Municipality?
• Did Records and Benefits Manager Susan Lindemuth, or those under her supervision, fail to inform Aetna when the George M. Sullivan Irrevocable Life Insurance Trust was set up at the end of 1983/beginning of 1984 that he was in fact no longer an employee of the Municipality?
• Why was Aetna apparently never told that George Sullivan was a nonemployee until the fact came to light at latest in 2002?
• Why did Aetna apparently never receive information about George Sullivan such that he was not included in the risk for calculating premiums (per information given by Aetna in 2002)?
• How, then, were Mr. Sullivan’s so-called “premiums” reduced in 1992 and 1995? How were those “premiums” calculated?
• Were members of the Sullivan family and/or agents of the Sullivan Trust at any time aware of any of these failures on the part of municipal employees?
• To what extent were other municipal employees, up to and including municipal attorneys, city managers, and other appointed members of the administrations of mayors Tony Knowles, Tom Fink, Rick Mystrom, George Wuerch, Mark Begich, Dan Sullivan, and acting mayor Matt Claman aware of these failures?
• Why did it take until February 2010 for these questions to be asked — only after the monies were paid out to the Sullivan Trust?

Even if the Assembly can take no legal action to recover the public monies you authorized the Municipality on February 16 to pay out for this supposed “life insurance” policy, you can — and should — take action to find out why these missteps were taken, and who was responsible for them — no matter who they are.  That can happen if an independent investigation is undertaken, as called for in AR 2010-92.  I urge you to pass it.

Thank you.

Sincerely,

Melissa S. Green

Related posts:

1. Sullygate: MOA Dept. of Law analysis; Ethics Board rules against Mayor Sullivan
2. Taking a Sullygate break
3. Talking about Sullygate on the Shannyn Moore radio show

For other news stories & posts on this topic, see my bibliography on all things Sullygate. (Fully updated as of 4/12/2010)

I took a Sullygate break for a couple of weeks, & everyone in Anchorage was pretty much focused on the last week’s municipal elections anyway.

But it’s time to break silence: the Assembly will be taking up the matter again at tomorrow night’s Assembly meeting (April 13).  That’s because there’s still a resolution outstanding related to the George M. Sullivan Irrevocable Life Insurance Trust, which was not dealt with at March 23 Assembly meeting.  This is Resolution No. AR 2010-92 introduced by Assemblymember Harriet Drummond [Ref #1] (you can also read the full text of the resolution in my March 20 post [Ref #2]), which shows up as agenda item 11.B under “Old Business” on the Assembly’s April 13 agenda.   As I summarized in my March 23 “livetweeting” post,

Drummond’s resolution: it was moved & seconded to postpone it indefinitely on the grounds that the memo from the deputy municipal attorney (in combination with the Ethics Board ruling today) had answered all questions — which it hadn’t. But — that motion failed along fairly predictable liberal v. conservative lines. Another motion postponed it to the April 13 meeting, after the municipal election. [Ref #3]

The other resolution discussed that evening, introduced by Matt Claman, was postponed indefinitely — effectively killing it. As I wrote on March 23,

Claman’s resolution: also moved & seconded, by the same people (Birch/Ossiander) to postpone indefinitely. This motion succeeded with a vote of all except Claman, mainly because his resolution called on the Sullivan “insurance” matter to be sent to the Ethics Board; but now the Ethics Board has already ruled.  Claman had written the resolution before knowing that Mayor Sullivan had apparently taken the matter to the Ethics Board himself. [Ref #3]

Reviewing the Ethics Board “ruling”

The “ruling” by the Municipality of Anchorage Ethics Board was less a “ruling” than an informal advisory opinion, prepared at Mayor Dan Sullivan’s request for such an opinion.  Basically, the Ethics Board — by means of a memorandum from Ethics Board Chair Marissa K. Flannery — said that Mayor Dan Sullivan had no direct financial interest in the George M. Sullivan Irrevocable Life Insurance Trust (in fact, by the rules of the trust, he was prohibited from benefiting from it himself); but —

The Board finds that your obligation to the Trust as a fiduciary creates a private interest that is distinct from the public interest at large. As such, the Board believes that you should have made a disclosure to the Board of Ethics on or before the City was required to take action related to the Trust. [Ref #4]

Mayor Sullivan had presented a copy of his father’s death certificate to the MOA Benefits Department in late 2009; the Ethics Board says that at that time, or shortly thereafter, he should have disclosed the potential conflict of interest to the Ethics Board because “Municipal employees who work under your direction would be required to take some official action related to the Trust.” [Ref #4] Mayor Sullivan also should have told the Ethics Board exactly how he proposed to manage the potential conflict of interest, so that the Ethics Board could review it to ensure that his approach was “sufficient to maintain the integrity of the decision making process” under municipal law. [Ref #4] The Ethics Board made no formal review of those factors, and to the extend it discussed them, depended upon Mayor Sullivan’s own account of the steps he had taken in his March 18, 2010 letter requesting the advisory opinion, as well as further information provided by him and by the Employee Relations Department earlier on March 23.

Now that I’ve looked at the Ethics Board memorandum more closely, seems to me that media reports after it was issued were titled a little more strongly than warranted.  For example, the Anchorage Daily News story, posted at ADN’s website on March 23, was originally titled “Board rules against Sullivan in trust deal” — creating a false impression  (1) that the memorandum was a formal “ruling” rather than an advisory opinion; (2) that the Ethics Board found more strongly against Sullivan than it in fact did.  Later, after that evening’s Assembly meeting, the article was lengthened and its title was made far more accurate: “Mayor should have revealed potential conflict, board rules — INSURANCE: City employees would have to act on the matter” [Ref #5] — but not before it had an effect on the title of my own post discussing the memorandum (before I’d had a chance to review it myself) — “Sullygate: MOA Dept. of Law analysis; Ethics Board rules against Mayor Sullivan”. [Ref #6]

Basically, the memorandum was important — but not nearly as big of a deal as some comment made it out to be:

1. It was not a formal opinion or ruling, but rather an advisory opinion, issued at Mayor Sullivan’s request.
2. It was not the result of a formal investigation of Mayor Sullivan’s actions to ascertain if they conformed with municipal law, but was based instead on Mayor Sullivan’s own account (and those of the Employee Relations Department).
3. It gave out no sanctions.

Whether it should have — that’s another story.  Section 2 of Assemblymember Matt Claman’s proposed resolution AR 2010-105 would have provided:

The current Mayor shall submit the question of whether he had a conflict of interest, and if so, how the conflict should be managed, to the Ethics Board for public hearing, complete review, and written report. [Ref #7]

But as the Assembly voted on March 23 to table Claman’s resolution indefinitely — effectively killing it — it is unlikely that any such formal ethics investigation, complete with public hearing and full review and report, will ever take place.  If Mayor Sullivan’s intent in requesting an advisory opinion was to forestall a full and public review, he succeeded.

It’s possible that if a full formal ethics review had taken place, it would have given pretty much the same findings that the Ethics Board made in its informal advisory opinion. Or it could be that the Ethics Board would find that Mayor Sullivan’s actives were even more questionable ethically. Either way, we’ll never know.

Reviewing the MOA Department of Law’s memorandum

A day before the Ethics Board memorandum came out, the municipal Department of Law issued a memorandum — by Deputy Municipal Attorney Rhonda Fehlen Westover — regarding the Sullivan Trust. Westover’s review was undertaken at the request of Assembly Chair Patrick Flynn. [Ref #8] I first saw the memorandum on March 23, before that evening’s Assembly meeting.  As I wrote at the time,

[T]he opinion of the MOA lawyers is very clearly that the MOA was obligated to pay, given that they could find no indication that MOA had ever informed the Sullivan Trust or its agents that George Sullivan was not in fact covered by the Muni’s group plan with Aetna.  While I remain suspicious of a backroom deal, so far there is no proof of one.  But there are still outstanding questions that to my mind demand investigation, such as why Aetna was apparently never told that Sullivan was a nonemployee until the fact came to light at latest in 2002; why Aetna in 2002 reported never receiving information about Sullivan such that he was not included in the risk for calculating premiums; or why his so-called “premiums” were reduced in 1992 and 1995. [Ref #6; emphasis added]

These questions still remain: Westover’s memorandum does not answer them.

Nearly two weeks after the Westover’s memorandum, Assembly Chair Flynn wrote on his blog,

In reviewing the available facts it appears at least four mistakes occurred during the decades-long process that led to the disbursal of these funds:

1. Back in 1982 the Assembly should never have passed the resolution calling for the extension of life insurance benefits to George Sullivan.  I don’t dispute that former Mayor Sullivan led an extraordinarily distinguished public service career but using public resources to extend special privileges almost invariably leads to, at the very least, the perception of impropriety.
2. When it first became apparent that the city’s private insurance carrier (Aetna) would not carry a life insurance policy for a former employee, in 2002, then-municipal attorney Bill Greene’s assertion that the city had to continue providing coverage without any apparent attempt to seek redress stuns me.  In my opinion his decision that, “there is no option to not provide the coverage,” represented an abdication of his duty to our city.  That said, once other municipal officials went along with Mr. Greene’s interpretation I do think the obligation was cemented.
3. As mentioned above, Mayor Dan Sullivan’s failure to disclose his role as trustee continues to surprise me.  I’ve witnessed him recuse himself on at least one other matter and Assembly members regularly provide disclosures on the record for even tenuous connections to issues before us.  I cannot understand why he wouldn’t have thought to do so, especially since I don’t think the outcome would have changed dramatically.
4. Finally, I take responsibility for the fact that the Assembly failed to get more of the information now available on the table prior to voting.  We relied on the Department of Law’s summary but should have asked for more details, and I apologize that we didn’t. [Ref #9]

But Mr. Flynn’s summation almost entirely ignores the questions I raised above.  After listing the four errors he ascertained, he went on,

So now what?

On one hand I honestly feel that a third-party review of this issue will reach the same conclusion reached by myself and the Department of Law; like it or not, the city was/is obligated to make this payment.  On the other hand, I also feel that the third-party review of financial matters in the waning months of the Begich administration will find no significant evidence of impropriety.  And since I supported the latter intellectual consistency suggests I should support the former, right?  Yet some might argue that, even if something was amiss in either circumstance, there likely isn’t any action the Assembly could take in response.  A reasonable point, but others argue we should at least get all the facts on the table. [Ref #9]

Nothing here about the problems that I’ve been elucidating on this blog from the very first, all of which seem to go back to the actions — or inactions — of longtime MOA Records and Benefits Manager Susan Lindemuth and those under her supervision.  Whether or not these actions, or inactions, were taken at the behest of the Sullivan family, the Sullivan Trust, or their agents; whether or not the Sullivan family, the Sullivan Trust, or their agents were aware of them — there is ample evidence in the record of something having gone awry in MOA Records and Benefits handling of the Sullivan “insurance” matter which demand answers.  Even if the Assembly can take no legal action to recover the public monies it paid out for this supposed “life insurance” policy, it can — and should — take action to find out why these missteps were taken, and who was responsible for them — no matter whose door they lead to.  And the only way that can happen is if an independent investigation is undertaken, as called for in Harriet Drummond’s resolution.

I’ve already suggested that an independent investigation is necessary due to the potential for conflicts of interest due to the relationship between Susan Lindemuth and Mayor Sullivan’s chief of staff Larry Crawford (also city manager under mayors George Sullivan, Tom Fink, and Rick Mystrom). [Ref #10] As early as March 10 I wrote in a comment on Mr. Flynn’s blog,

Start by asking Susan Lindemuth, who was Manager of Records & Benefits when this stuff was first set up. I’ve been told she now works in HR at the Alaska RR. [Ref #11]

On March 11, when Mr. Flynn was a guest on Shannyn Moore’s radio show on KUDO, when I called in and again mentioned the necessity to talk with Ms. Lindemuth, Mr. Flynn said that he knew Ms. Lindemuth well — which makes sense, given that he himself, according to his Assembly biography, works with the Alaska Railroad Corporation in marketing and logistics.  It’s likely that Mr. Flynn himself might have mixed feelings about following the evidence where it may lead, if only out of friendship — which further underscores the need for an independent investigation.

Here yet again is a list of questions — by no means necessarily comprehensive — to which the citizens of Anchorage deserve an answer:

• Did Records and Benefits Manager Susan Lindemuth, or those under her supervision, fail to inform Aetna when his “life insurance policy” became effective on January 1, 1983 that he was in fact no longer an employee of the Municipality?
• Did Records and Benefits Manager Susan Lindemuth, or those under her supervision, fail to inform Aetna when the George M. Sullivan Irrevocable Life Insurance Trust was set up at the end of 1983/beginning of 1984 that he was in fact no longer an employee of the Municipality?
• Why was Aetna apparently never told that George Sullivan was a nonemployee until the fact came to light at latest in 2002?
• Why did Aetna apparently never receive information about George Sullivan such that he was not included in the risk for calculating premiums (per information given by Aetna in 2002)?
• How, then, were Mr. Sullivan’s so-called “premiums” reduced in 1992 and 1995?  How were those “premiums” calculated?
• Were members of the Sullivan family and/or agents of the Sullivan Trust at any time aware of any of these failures on the part of municipal employees?
• To what extent were other municipal employees, up to and including municipal attorneys, city managers, and other appointed members of the administrations of mayors Tony Knowles, Tom Fink, Rick Mystrom, George Wuerch, Mark Begich, Dan Sullivan, and acting mayor Matt Claman aware of these failures?
• Why did it take until February 2010 for these questions to be asked — only after the monies were paid out to the Sullivan Trust?

Got any more questions?  Add them in comments.

But more importantly: call or email your Assembly representatives and demand an independent investigation. Tell them to pass Assembly Resolution AR 2010-92 at tomorrow night’s Assembly meeting.

Update 4/13/2010: Another legal analysis

And maybe that legal analysis from Deputy Municipal Rhonda Westover wasn’t so on top of the legalities after all.  Check out this morning’s post at The Mudflats, where Mudflatter “Legal Eagle” discusses the memorandum’s flawed legal reasoning. The analysis begins:

The MOA Dept. of Law’s memorandum analyzing the insurance payout is high flawed, and conclusory at best. It ignores several important legal principles, and conflates lines of contract law. It’s clear that it was written to support Dennis Wheeler’s contention that there was an enforceable contract, without a thorough analysis of Alaska law. [Ref #12]

Read the rest of the analysis at The Mudflats.  Then write or call your Assembly representative(s) and demand passage or AR 2010-92.

References

1. Resolution No. AR 2010-92, a resolution of the Anchorage Municipal Assembly to authorize engaging the services of independent legal counsel to review and report to the Assembly on the legal and contractual obligations, if any, and the authority of the Assembly, if any, regarding payment of $193,000 in municipal funds to the George M. Sullivan Irrevocable Life Insurance Trust, and providing for an appropriation. Assemblymember Harriet Drummond. Scheduled for discussion at the 23 March 2010 Anchorage Assembly meeting.
2. 3/20/2010. “Sullygate: Two resolutions to be introduced at Anchorage Assembly on March 23″ by Melissa S. Green (Henkimaa). Includes full text of resolutions to be introduced by Assemblymembers Harriet Drummond and Matt Claman.
3. 3/23/2010. “The Daily Tweets, 2010-03-23: Livetweeting Assembly meeting w/ Sullygate resolutions” by Melissa S. Green (Henkimaa).
4. 3/23/2010. “Re: Request for Advisory Opinion 2010-1″ by Marissa K. Flannery, Chair, Municipality of Anchorage Board of Ethics.
5. 3/23/2010. “Mayor should have revealed potential conflict, board rules — INSURANCE: City employees would have to act on the matter” by Rosemary Shinohara (Anchorage Daily News). A briefer version of this article was originally published on the ADN website as “Board rules against Sullivan in trust deal.”
6. 3/23/2010. “Sullygate: MOA Dept. of Law analysis; Ethics Board rules against Mayor Sullivan” by Melissa S. Green (Henkimaa).
7. Resolution No. AR 2010-105, a resolution of the Anchorage Municipal Assembly, regarding payment of $193,000 in municipal funds to the George M. Sullivan Irrevocable Life Insurance Trust. Assemblymember Matt Claman. Scheduled for discussion at the 23 March 2010 Anchorage Assembly meeting.
8. 3/22/2010. AR 2010-33: “Memorandum to Assembly Chair Patrick Flynn and Assembly Members re: Appropriation for George M. Sullivan Irrevocable Life Insurance Trust” by Rhonda Fehlen Westover, Deputy Municipal Attorney. Municipality of Anchorage, Office of the Municipal Attorney.
9. 4/3/2010. “Matters of (the George Sullivan) Trust” by Patrick Flynn (Patrick Flynn’s Blog).
10. 3/22/2010. “Sullygate: The Lindemuth/Crawford relationship” by Melissa S. Green (Henkimaa).
11. 3/10/2010. “Insurance information” by Patrick Flynn. (Patrick Flynn’s Blog).
12. 4/13/2010. “Municipality’s Legal Memorandum Looks Hinky. Show Us the Contract!” by Mudflatter “Legal Eagle” (The Mudflats).

Related posts:

1. Taking a Sullygate break
2. Sullygate: MOA Dept. of Law analysis; Ethics Board rules against Mayor Sullivan
3. Sullygate: Two resolutions to be introduced at Anchorage Assembly on March 23

For other news stories & posts on this topic, see my bibliography on all things Sullygate.

This is a brief update by way of saying, I’m taking a breather from Sullygate (the George Sullivan “life insurance” matter of concern to citizens of Anchorage) to focus a bit on writing.  I’ve got a deadline on a story I’m working on.

But I will be coming back to it.  In particular, to take a closer look at the memorandum issued the other day —

• 3/22/2010. AR 2010-33: “Memorandum to Assembly Chair Patrick Flynn and Assembly Members re: Appropriation for George M. Sullivan Irrevocable Life Insurance Trust” by Rhonda Fehlen Westover, Deputy Municipal Attorney. Municipality of Anchorage, Office of the Municipal Attorney.

— as well as the Ethics Board opinion issued on March 23.  Looking at first week of March for these.  I’m especially interested in the memorandum because of contentions made by certain conservative members of the Assembly on Tuesday that it answered all the questions.

No it didn’t.  It answered some but not all.

I’ll at least try to update my bib tonight.  My hands have been so achy I haven’t taken time to do so yet.

In the meantime, take a look at the comments on my first post mentioning the memorandum; and my livetweet of Tuesday’s Assembly meeting.

Related posts:

1. Sullygate: MOA Dept. of Law analysis; Ethics Board rules against Mayor Sullivan
2. Sullygate: Two resolutions to be introduced at Anchorage Assembly on March 23
3. Sullygate: Why we need an independent investigation

I’ve been Sullied! — a pin made by my friend Stef, who also made the Equality Works pins worn by me & lots of others last summer during public testimony on the Anchorage equal rights ordinance, which passed but was vetoed by Mayor Dan Sullivan.

Most of today’s tweets came from my livetweeting at the Anchorage Assembly meeting, where two resolutions related to Sullygate — the payout of $193,000 to the George M. Sullivan Irrevocable Life Insurance Trust of which Mayor Dan Sullivan is trustee — were introduced.  My March 20 post “Sullygate: Two resolutions to be introduced at Anchorage Assembly on March 23″ has the full text of both resolutions, one from Assemblymember Harriet Drummond and the other by Assemblymember Matt Claman.

Three events closely preceded the Assembly meeting, two of which I discussed in my post just before this one: (1) Deputy Municipal Attorney Rhonda Westover completed & distributed a memorandum which reviewed the history & legal aspect of the Sullivan “insurance” matter; & (2) the Muni Board of Ethics issued a ruling which found against Mayor Dan Sullivan, stating that he should have disclosed his potential conflict of interest with regard to his dual role as mayor and as trustee of the George M. Sullivan Irrevocable Life Insurance Trust.  I haven’t seen the actual Board of Ethics decision yet; I have seen (& posted) the Westover memorandum, & will be writing about that sometime in the next few days.

Event (3) was a rumor posted at a blog called Alaska WTF and discussed also at Immoral Minority alleging an extramarital affair between Mayor Dan Sullivan & a young woman named Bernadette Wilson who had apparently been hired by the Municipality as a party planner, and whose marriage to Chris Fournier had allegedly been wrecked as a result of the alleged affair.  The event Wilson apparently planned for the Muni was the last of several budget issues brought up (though without mentioning Wilson’s name or any monetary amounts) by Dianne Holmes at about 6:00 PM (after discussion of the two resolutions was over),  prompting a lengthy and detailed defense by Assemblymember Dan Coffey of MOA contracting practices in general and  event planning in particular under Mayor Sullivan as opposed to in the prior administration; Coffey by his own statement had “heard that there might be a comment like this” prior to the meeting. (So had I.)  I think we’re likely to be hearing more about the alleged affair in the next few days.

Update 3/24/2010: See the detailed account at The Mudflats of this incident at the Assembly, “The Strange Tale of the Mayor and the Party Planner”. As I commented there, Dianne Holmes had a 3-minute opportunity to comment, mentioned several budget issues, & only at the very tail end of it had one sentence in which she questioned contracting out for event planning — to wit, “That is my fourth question—why are we paying for event planners when the past administration seemed to do that in-house? “ She mentioned no names, no amounts. And then out came Coffey comes with a lengthy, detailed reply to that once sentence (ignoring the three other substantive budget issues Homes had mentioned) that was all outsize to the single sentence of her her “event planner” question — which was clearly prepared ahead of time — & which he even prefaced by saying he’d been warned she might say something about that.  Per the Mudflats post,

Interestingly, Mr. Coffey said he had heard “something like this” might be coming, and he was armed with a giant list of every sole source contractor that the previous administration had hired – speech writers, pollsters, the whole enchilada.  Then he tallied up the entire amount that the LAST administration paid out to all these wildly different positions.

As I commented at Mudflats, “The Coffey doth protest too much.”

The Mudflats post goes into background explaining who Bernadette Wilson is. Amongst other things, she worked on Dan Sullivan’s mayoral campaign and was the event coordinator for the Mayor’s Unity Dinner last September.

My summary of discussion on the resolutions

Drummond’s resolution: it was moved & seconded to postpone it indefinitely on the grounds that the memo from the deputy municipal attorney (in combination with the Ethics Board ruling today) had answered all questions — which it hadn’t. But — that motion failed along fairly predictable liberal v. conservative lines. Another motion postponed it to the April 13 meeting, after the municipal election.

Claman’s resolution: also moved & seconded, by the same people (Birch/Ossiander) to postpone indefinitely. This motion succeeded with a vote of all except Claman, mainly because his resolution called on the Sullivan “insurance” matter to be sent to the Ethics Board; but now the Ethics Board has already ruled.  Claman had written the resolution before knowing that Mayor Sullivan had apparently taken the matter to the Ethics Board himself.  (I heard some speculation that Mayor Sullivan had done so in an attempt to “pull a Palin” — that is, to bring a complaint against himself in hopes they’d let him off the hook, much as Sarah Palin when governor had filed an ethics complaint against herself with the Alaska Personnel Board in the Troopergate matter in an attempt to forestall the Alaska legislative investigation on Troopergate.)

My earlier tweets of the day

(The Assembly livetweet is below.)

• RT: @shannynmoore: is on the air…not flying…just radio…www.kudo1080.com // I thought you were just addicted to breathing. #
• RT: @celticdiva: RT @markos: Americans love success. USA Today poll: 49-40 support #HCR (via @Shoq) // I know I sure support it. in reply to celticdiva #
• American Medical Association: “Historic House Passage of Health System Reform Important Step Forward” http://bit.ly/ad4Boj #hcr #
• USATODAY.com “Opinions turn favorable on health care plan” http://bit.ly/9v9NKh #
• Robert J. Elisberg: GOP Applies for Health Care for Self-Inflicted Wounds http://huff.to/clOipk #hcr #
• USATODAY explains provisions of health reform bill http://bit.ly/cEm3b4 #hcr #
• MOA Ethics Board rules against Dan Sullivan in trust deal http://bit.ly/9M4dz9 #
• RT: @OTOOLEFAN: The Tea Party Movement is really just The Sour Grapes of Wrath. White grapes. #

Anchorage Assembly meeting

• I’ll be livetweeting the Anchorage Assembly meeting tonight, at least the Sullygate(s) portions. Heading down to the Assembly chambers now. #
• Livetweeting Assembly meeting on #sullygate Early stages of agenda right now. #fb #
• Consent agenda – Drummond’s is item B2 #fb #
• I see John Aronno of Alaska Commons over there, my old pal from last year’s AO-64 meetings, which were lots mote crowded. #fb #
• RT @crossedgenres: Terrific review of ” @crossedgenres Year One” at Tangent Online! http://bit.ly/abTbSK incl my story! #fb #
• Birch on Drummond’s resolution. He moves to postpone indef, Ossiander seconds. Based on Westover’s memo (asst muni atty) #fb #
• Claman asking Westover abt today’s Ethics Board decision #fb #
• Here’s AK Muckraker (Mudflats) sitting next row up from me. #fb #
• I didn’t find copies of the resolution on the wall coming in, so I’m going from memory. #fb #
• Drummond: Dept of Law & ethics stuff shd have been before Feb 2. There are still ?s that aren’t purview of Bd of Ethics #fb #
• Drummond also gives h/t to ADN for its story – good on ya Sean Cockerham #fb #
• Sorry for my typos using my iPod touch #fb #
• Coffey says nothing more to examine. I disagree there are still big ?s abt why the “premiums” went down, how Lindemuth screwed up #fb #
• Gutierrez: why was this check booked on 2009? #fb #
• Starr (like other conservatives here) think We know enough #fb #
• Motion to postpone indefinitely failed now talking abt until next mtg on Apr 13 – approved #fb #
• Claman’s resolution 2010-105 – put $19300 in escrow #fb #
• Birch moves to postpone indef Ossiander seconds #fb #
• Cons feel this res already answered by Ethics board determination. This res written before Claman knew Dan Sullivan went to EB himself #fb #
• Ossiander sounds very irritable tonight #fb #
• Everybody’s ignoring why check was booked last year long before Assembly even heard of this issue. #fb #
• Everybody also ignoring why did the “premiums” go down – possible misconduct by MOA employees #fb #
• Coffey: “Its politics not substance” #fb #
• Flynn supports indef postponement of this (but not Drummond res) #fb #
• Gray-Jackson: we’re still discussing b/c public is outraged #fb #
• Claman’s res postponed indef by vote of all except Claman #fb #
• There’s another item of Sullygatish interest I believe w/ in next hour, stay tuned #fb #
• Chambers filling up maybe on bike plan? Nice to be here w/out a lot of redshirts #Fb #
• Not sure if the other Sullygatish item I thought might be coming up will come up after all. #fb #
• But Drummond resolution will come up again Apr 13 – guess I’ll have to write letter abt probs w/ “insurance” still outstanding…. #fb #
• …b/c MOA Dept of Law memo from Westover didn’t cover all ?s #fb #
• @celticdiva I uploaded MOA Dept of Law memo today — see my most recent blog post. in reply to celticdiva #
• Leaving Assembly meeting shortly — gotta get home & let the dog pee. Outside. #fb #
• @celticdiva “I’ve been Sullied!” buttons made by buttonmaker extraordinaire Stef G. who also made Equality Works buttons last summer. in reply to celticdiva #
• Packing up & heading home to take care of dog, cat, & writing. #fb #

And lastly…

… a post-Assembly retweet of one of my favorite Twitterers, Jane Espenson of Buffy, Angel, Battlestar Galactica, & Caprica writing & producing fame.

• RT: @CapricaSeven: This is my tweet number 1066. Commonly known as the “Battle of Hastings” tweet. // I love tweeple w/ a sense of history #

Related posts:

1. Sullygate: Two resolutions to be introduced at Anchorage Assembly on March 23
2. Taking a Sullygate break
3. Sullygate: Why we need an independent investigation

I’ve acquired a copy of the MOA Department of Law memorandum prepared at the request of Assembly Chair Patrick Flynn for Flynn and the rest of the Assembly by Rhonda Fehlen Westover, Deputy Municipal Attorney, and sent on to them yesterday, & now I’ve uploaded it to my website.

• 3/22/2010. AR 2010-33: “Memorandum to Assembly Chair Patrick Flynn and Assembly Members re: Appropriation for George M. Sullivan Irrevocable Life Insurance Trust” by Rhonda Fehlen Westover, Deputy Municipal Attorney. Municipality of Anchorage, Office of the Municipal Attorney.

I’m on my laptop right now, which doesn’t have the full Adobe Acrobat software on it, so I haven’t been able to make bookmarks in the document for easy navigation.  I’ll do that later from home.  The document includes Westover’s background on the case and how the resolution calling for the $193,000 payout was prepared for the February 2, 2010 introduction in the Assembly; analysis providing the legal reasoning for why the MOA Department of Law believed the Muni to be obligated to pay out; & lots of attachments.  Some of the attachments are ones we’ve already seen, but there are a few additional ones.  For example, we now have the paperwork showing that the original trustee of the George M. Sullivan Irrevocable Life Insurance Trust was former Municipal Attorney Theodore Berns.

I’m still reading it, & I don’t have time to write any real analysis of it.  The legal reasoning makes some sense to me (myself being a non-attorney); though I wonder if it’s a full analysis in light of Alaska Statute of Frauds, AS 09.25.010.  Any attorneys out there who can read the memorandum & the Alaska Statute of Frauds & tell us what you think?

But the opinion of the MOA lawyers is very clearly that the MOA was obligated to pay, given that they could find no indication that MOA had ever informed the Sullivan Trust or its agents that George Sullivan was not in fact covered by the Muni’s group plan with Aetna.  While I remain suspicious of a backroom deal, so far there is no proof of one.  But there are still outstanding questions that to my mind demand investigation, such as why Aetna was apparently never told that Sullivan was a nonemployee until the fact came to light at latest in 2002; why Aetna in 2002 reported never receiving information about Sullivan such that he was not included in the risk for calculating premiums; or why his so-called “premiums” were reduced in 1992 and 1995.  As Harriet Drummond said at the February 16, 2019 Assembly meeting,

I was so concerned about this item that I called my insurance agent today and talked to her quite a bit about it.  I sent her the documents.  She was number one, shocked that in paragraph 3, on the second page where it said the premium varied from $1,042,00 in 82 to $555.00 since 1995, she says how did that happen?  Insurance costs never go down, they always go up.  And, her question to me, was how did the Municipality continue to accept premium payments from whom if there was no policy in existence, it was illegal for the Municipality to accept premium payments because the Municipality is not an insurance company, and is thus acting inappropriately. [Ref #1, page 7]

Even if Mayor Dan Sullivan committed no wrong, it’s worth an investigation to find out why and how the Municipality failed in its reponsibilities.  Many of the questions lead to Susan Lindemuth, who was Manager of Records and Benefits for the Muni from 1970-2002.

Meantime, the Anchorage Daily News has just reported that the Ethics Board has ruled against Mayor Sullivan, stating that

the mayor should have disclosed a potential conflict when he first presented his father’s death certificate to the city benefits department to start processing of the life insurance claim in late 2009.

The mayor should have told the Ethics Board about the potential conflict then because city employees who work under his direction would have to act on the matter, the board said. [Ref #2]

Should be an interesting Assembly meeting tonight.

Update: Livetweeting Assembly Meeting

Assuming the wifi connection at the Assembly Chambers will be decent enough, I’ll be livetweeting the meeting.  See my Twitter feed @yksin.

References

1. 3/22/2010. AR 2010-33: “Memorandum to Assembly Chair Patrick Flynn and Assembly Members re: Appropriation for George M. Sullivan Irrevocable Life Insurance Trust” by Rhonda Fehlen Westover, Deputy Municipal Attorney. Municipality of Anchorage, Office of the Municipal Attorney.
2. 3/23/2010. “Board rules against Sullivan in trust deal” by Rosemary Shinohara (Anchorage Daily News). Story as of 3:23 PM.

Related posts:

1. Taking a Sullygate break
2. Sullygate: My letter to the Anchorage Assembly in support of Assembly Resolution AR 2010-92
3. Sullygate: Why we need an independent investigation

I’ve written previously about the relationship between Susan Lindemuth and Larry Crawford. [Ref #1] Now a contact has brought my attention to the following record found through a database maintained by the Municipality of Anchorage Property Appraisal Division, which shows that Lindemuth and Crawford are 50/50 co-owners of the property which we already knew they both lived at (per searches on both their names at whitepages.com).  The record shows they purchased the property in January 2006.

You can find the record yourself by searching on the term Crawford Larry at the MOA Property Appraisal database.

Again, Susan Lindemuth was Manager of Records & Benefits for the Municipality of Anchorage from April 1970 to October 2000 — spanning the administrations of George Sullivan, Tony Knowles, Tom Fink, Rick Mystrom, & a few months into the George Wuerch administration.  (She has served since then as Director of Human Resources with the Alaska Railroad Corporation.) [Ref #1] Due to her longtime position with the Muni, she shows up several times in the record that has so far been made public about the George Sullivan “life insurance” policy.  She’s a central figure: her name appears numerous times in the timeline I posted early Saturday morning. [Ref #2] A commenter on my timeline post, Valley Independent, provided a great summary of Lindemuth’s responsibilities in the George Sullivan “life insurance” matter:

At best, Ms. Lindemuth failed to obtain and file documented proof that the insurance company would continue to cover George Sullivan after he could no longer be considered an employee; at worst, she was not truthful with the Salary and Emoluments Commission back in 1982. Either way, the Salary and Emoluments Commission failed to insist on seeing something in writing from Aetna confirming this. The lesson to be learned from this is that board and commission members need to be wary of taking the word of staff members as gospel.

In January, 1984, when the trust arrived on scene, Ms. Lindemuth should have reviewed the contract in effect with Aetna to make sure Mr. Sullivan was covered. Presumably, she would have discovered that only active employees were covered, and then elicited something in writing from Aetna at that time stating that he was, indeed, covered, or not. Assuming Aetna declared him ineligible for coverage, it would have been appropriate then to explain to the Sullivans that he could not be covered under the muni plan, and since nothing else had been contemplated by the Commission or Assembly, his premiums were being returned.

This has me wondering how many times the Aetna contract has been renewed by the muni, and whether Ms. Lindemuth was involved in the contract review process? If so, with her special knowledge, she should have been looking specifically for that item, and raising the issue when she saw only active employees were covered, with no provision for former mayor Sullivan.

My guess is that the “premium” adjustments were based on some spreadsheet of standard rates put together by Aetna…. Given that this was an unusual item, and that dealing with a former mayor could be a politically charged event, Ms. Kendrick’s letter should have been reviewed by Ms. Lindemuth, who, knowing the back story, should have questioned it. Likewise that of Ms. Barbeau, in 1995. [Ref #2, reader comment by Valley Independent]

Furthermore, as best I understand, Lynda Gable of Aetna established in an email to Karen Moore on January 30, 2002 that Sullivan’s “premiums” were never sent to Aetna; from Aetna’s POV, he was never included in the risk for premium calculations — despite Susan Lindemuth’s earlier email that day to Karen Moore that he was in the risk and that his coverage amount had been in the volume reported to Aetna. [Ref #2; see quotations from emails for January 30, 2002]

Larry Crawford is Mayor Dan Sullivan’s chief of staff.  He was also city manager under three previous mayors — George Sullivan, Tom Fink, & Rick Mystrom.  It was during the Fink administration in 1992 and the Mystrom administration in 1995 that reductions in George Sullivan’s “premium” were made — both during times that Crawford was city manager.  We now know, based on a letter written by (current) Assemblymember Dan Coffey to a constituent and quoted in full in a comment at The Mudflats yesterday, that there was a review of the Sullivan “insurance” issue during the Mystrom administration.  As city manager, Larry Crawford was almost certainly in on discussions at that time (as Wuerch’s city manager Harry Kieling was in 2002 and Begich’s city manager Dennis LeBlanc was in 2007).

(I’ve reproduced the comment with Coffey’s letter in full below.)

The apparently close relationship between a known key player in the Sullivan “insurance” matter, and another who was a member of several administrations — including the current one —  does not prove that either committed any wrongdoing with regard to the “insurance.” As I’ve written previously of them, “correlation does not mean that there’s necessarily a cause & effect relationship.” [Ref #1]

But with the possibility of conflicts of interest, it does make it all the more imperative to have an investigation of the “insurance” matter that is independent of any Anchorage mayor’s administration, past and present.

Comment at The Mudflats including Assemblymember Dan Coffey’s letter

Here’s the comment by Mudflats reader sueinak which includes the full text of Dan Coffey’s letter to her:

sueinak Says:
March 21st, 2010 at 4:27 PM

Here is a response I received from Dan Coffey after contacting all assembly members to asking them to delve further into the Sullied waters of the so-called insurance policy. Coffey seems to be interjecting some opinion on an unrelated issuse of union business & Begich along with a long trail of blame to the question asked:

Dear Ms *******:

Thanks for your inquiry. I am happy to respond.

Here is what I know. Much of what I know resulted from my inquiries prior to voting for the appropriation. Some facts, I have learned subsequently.

Deputy City Attorney Rhonda Fehlen is preparing a report which will be ready shortly. Ms. Fehlen is a career public attorney, not a political appointee. Rather than releasing the information that I have learned based upon my inquiries both before and after my vote, I will await her report. This report will outline in detail information from 1982 when the Assembly and Salaries and Emoluments commission dreamed up this idea. the Knowles administration supported this idea. The report will also detail information about ongoing reviews of this isue by other administrations throughout the years. I knew before my vote on the appropriation that the Mystrom and Wuerch administrations both reviewed this issue.

There is one piece of information which I learned after my vote on the appropriation. This issue (the 1982 action by the assembly and the salaries and emoluments commission) was review by the Begich administration in 2007. Their conclusion was that the MOA was liable.

I also learned that Mayor Sullivan does not receive any of the money under the trust.

Finally and only for what it is worth, this whole idea was a bad idea from the beginning. However, in my judgment, what was done in 1982, affirmed by the Knowles administration, re-affirmed by at least 3 subsequent administrations, premium payments by the Sullivan family over 3 decades, and the legal opinion of the department of law, all led me to approve the appropriation.

I would like to undo the Begich union contracts which result in an average union police man costing us $158,000.00 and an average union fireman costing us $137,000.00 coupled with the “closed shop” IBEW” contract which requires that all work (not just electrical work) done that relates to ML&P and departments of the MOA where IBEW is the bargaining units represents the workers, MUST be done by union contractors. Add up these costs and were talking 10s of millions over 5 years. The Sullivan issue pales in comparison.

Regards,
Dan K. Coffey
Anchorage Assembly
3606 Rhone Circle
Suite 100
Anchorage, Alaska 99508
Phone: 274-3385
Fax: 274-4258
e mail:
web site: http://www.itscoffeytime.com [Ref #3; emphasis added]

References

1. 3/16/2020. “Sullygate & Chronos, god of time” by Melissa S. Green (Henkimaa).
2. 3/20/2010. “A Sullygate timeline: 1982-2010″ by Melissa S. Green (Henkimaa).
3. 3/21/2010. “Sullygate and the Time Machine o’ Scandal – Get Ready to Ride!” by Jeanne Devon (The Mudflats); see comment #11 from sueinak.

Related posts:

1. Talking about Sullygate on the Shannyn Moore radio show
2. Sullygate: My letter to the Anchorage Assembly in support of Assembly Resolution AR 2010-92
3. Sullygate update 2: “Five administrations have been aware of this”

• Completely mindfried after finally completing my mondo Sullygate timeline. Check it out – http://bit.ly/cq8Qzs #fb #
• Complete #Sullygate timeline — 193,000 “life insurance” payout to Sullivan trust http://bit.ly/cq8Qzs #fb #
• Harriet Drummond comments @ that Matt Claman is also introducing a resolution re: #Sullygate ethics http://bit.ly/cq8Qzs #
• RT: @nethenekhthon: Spent the last six hours writin downtown with @yksin. Fabulousness. // The fabulousness was mutual! Enjoy your reading! #
• Homeward bound for the evening. Good thing I have leftover pizza from last night, don’t feel like cooking. #

Related posts:

1. Pawsore
2. Taking a Sullygate break
3. Sullygate: Two resolutions to be introduced at Anchorage Assembly on March 23

A comment by Assemblymember Harriet Drummond, on my Sullygate timeline post earlier today [Ref #1] alerted me to the fact that a second resolution besides her own, by Assemblymember Matt Claman, will be introduced at the March 23 Anchorage Assembly meeting.  This resolution, she said, would send “the whole mess [of the payout to the George M. Sullivan Irrevocable Life Insurance Trust] to the Ethics Commission in addition to asking for the return of the $193,000 until things are clarified.”

“We may choose to take up both of these resolutions together,” she said.  “At any rate you won’t have to wait long into the night to see what happens so do come.” The Assembly meeting begins in the Assembly Chambers located in the Loussac Library at 3600 Denali, Room 108 beginning at 5:00 PM.  It will also be broadcast in Anchorage on Channel 10 with rebroadcast the following Friday and Monday at 5:00 p.m.

I’m providing the full text of both resolutions in this post; here’s a little menu for easy navigation.

Agenda | Drummond resolution | Claman resolution | Note | References

Anchorage Assembly’s March 23 agenda

• Assembly’s March 23 agenda on the Anchorage Assembly website

Harriet Drummond’s resolution

This shows as item 9.B.2 on the March 23 agenda:

• Resolution No. AR 2010-92, a resolution of the Anchorage Municipal Assembly to authorize engaging the services of independent legal counsel to review and report to the Assembly on the legal and contractual obligations, if any, and the authority of the Assembly, if any, regarding payment of $193,000 in municipal funds to the George M. Sullivan Irrevocable Life Insurance Trust, and providing for an appropriation, Assemblymember Drummond.

I previously discussed this resolution in an earlier post on March 10:

Assemblymember Harriet Drummond, the sole member of the Anchorage Assembly who voted on February 16 against the $193,000 “insurance” payout, released a resolution yesterday which at this point is scheduled for reading at the Assembly on March 23, 2010.  The resolution calls for investigation by an independent legal counsel into the numerous legal & ethical questions surrounding the $193,000 payout. [Ref #2]

That post also discussed Mayor Dan Sullivan’s reaction to the resolution:

Responding to release of the resolution, Mayor Sullivan yesterday told KTUU Channel 2 News,

It’s unfortunate that Ms. Drummond is playing politics with the death of my father. For 28 years, in good faith, we made payments to meet the obligation of this contract. Five administrations have had no problem with this. [Ref #3]

However, Mayor Sullivan and city attorney Dennis Wheeler have so far failed to produce a copy of any contract, or anything indicating that the Anchorage Assembly had authorized the Municipality of Anchorage itself to act as an insurance company.  As explained in my original post on this issue, the 1982 Anchorage Assembly and the Commission on Salaries and Emoluments both intended that George Sullivan would be covered under the Municipality’s group insurance plan — neither Assembly nor Commission contemplated that the Municipality itself would act as an insurance provider or that the Municipality itself would pay a death claim out of public monies.  Mayor Sullivan and city attorney Dennis Wheeler have also failed to produce any paperwork showing that any Assembly from 1982 to the present authorized the Municipality to act as an insurance company on behalf of George Sullivan and his family. [Ref #2]

Here’s its text:

ANCHORAGE, ALASKA
AR NO. 2010–92
A RESOLUTION OF THE ANCHORAGE MUNICIPAL ASSEMBLY TO AUTHORIZE ENGAGING THE SERVICES OF INDEPENDENT LEGAL COUNSEL TO REVIEW AND REPORT TO THE ASSEMBLY ON THE LEGAL AND CONTRACTUAL OBLIGATIONS, IF ANY, AND THE AUTHORITY OF THE ASSEMBLY, IF ANY, REGARDING PAYMENT OF $193,000 IN MUNICIPAL FUNDS TO THE GEORGE M. SULLIVAN IRREVOCABLE LIFE INSURANCE TRUST, AND PROVIDING FOR AN APPROPRIATION.

WHEREAS, pursuant to Assembly Memorandum No. AM 76-2010, the Assembly was requested by and on behalf of the Mayor to appropriate One Hundred Ninety Three Thousand Dollars ($193,000.00) from the Areawide General Fund (Fund 101) for disbursement to the George M. Sullivan Irrevocable Life Insurance Trust; and

WHEREAS, Assembly Memorandum No. AM 76-2010 declared that disbursement would be made under a life insurance contract; and

WHEREAS, Assembly Memorandum No. AM 76-2010 did not disclose that the George M. Sullivan Irrevocable Life Insurance Trust was administered by the Mayor in his private capacity as the son of George M. Sullivan and Trustee of the life insurance trust; and

WHEREAS, Assembly Memorandum No. AM 76-2010 did not disclose that no life insurance policy was in place and no written life insurance contract existed; and

WHEREAS, AR 2010-33 was passed and approved by the Assembly, on February 16, 2010, authorizing disbursement subject to receipt of proper documentation from the George M. Sullivan Irrevocable Life Insurance Trust; and

WHEREAS, the full circumstances purporting to legally obligate the Municipality to make a payout of $193,000.00 in public funds are more complicated than provided in the summary under AM 76-2010; and

WHEREAS, the payout of $193,000.00 in public funds for life insurance without a life insurance policy in place has raised many concerns in the mind of the public and one or more Assembly Members, including these questions:

• What is the legal basis for asserting the existence of a life insurance policy or contract?
• What is the legal basis for asserting a contractual obligation in the absence of a written contract?
• What is the legal authority of the Salary and Emoluments Commission to authorize an employee benefit after employment has terminated?
• Were the legal requirements, procedures and process under Charter Section 5.08 (c) properly followed? [See note below]
• What, if any, is the extent of a municipal obligation to make payment of $193,000 in life insurance without a life insurance policy?
• What is the current Assembly’s authority to approve or disapprove a life insurance payment in the absence of a life insurance policy?
• Is this disbursement recognized in the FY 2010 General Government Operating Budget?
• What process should be used under the Ethics Code to ensure that an elected public official does not sit on both sides of a municipal transaction?
• Under what public purpose are public funds being disbursed as life insurance? and

WHEREAS, the current Mayor is also actively serving as Trustee of the George M. Sullivan Irrevocable Life Insurance Trust, creating a situation in which he serves on both sides of a significant financial transaction involving public funds; and

WHEREAS, as Mayor, the incumbent is required to represent and act in the Municipality’s best interests; and

WHEREAS, as Trustee of the George M. Sullivan Life Insurance Trust, the Trustee has a fiduciary duty to the Trust to represent and act in the best interests of the Trust and its beneficiaries;

NOW, THEREFORE, the Anchorage Assembly resolves:

1. Because the events surrounding the creation and administration of a special benefit for the Honorable George M. Sullivan occurred after he was no longer in office and over the course of several mayoral successions without a full and public review before the Assembly, the Assembly authorizes an independent legal review to include the following:

• The authority of the Salary and Emoluments Commission, after the mayor or other elected official has left elected office, to authorize a special life insurance benefit;
• Whether a special life insurance benefit was legally effectuated for George M. Sullivan, when, and by whom or under what actions;
• The legal obligations and risks to the Municipality concerning the special life insurance benefit (prior to payment);
• The authority of the Mayor to request an appropriation when the Mayor also currently serves as Trustee of the George M. Sullivan Irrevocable Life Insurance Trust, without disclosure of the potential for conflict of interest;
• The public purpose under which disbursement of public funds is allowed as life insurance proceeds, without a fair market life insurance policy or premium payments.
• The authority of the Anchorage Assembly to approve an appropriation of public funds for this purpose.

2. The services of independent legal counsel shall be selected by the Internal Auditor, the Municipal Clerk and Assembly Counsel under a small procurement contract not to exceed [$5,000 – $10,000], and an appropriation of [$ 10,000] for this purpose is approved.

3. Until the Assembly is assured by independent legal counsel that payment of $193,000.00 in public funds is legally appropriate, the Mayor, in his private capacity as Trustee for the George M. Sullivan Irrevocable Trust, is respectfully requested to return any funds disbursed under AR 2010-33 to a special account to be held by the Municipality.

PASSED AND APPROVED by the Anchorage Assembly this ______day of ____________, 2010.

______________________________
Chair

ATTEST:
____________________________
Municipal Clerk

Matt Claman’s resolution

This shows as item 9.B.7 on the March 23 agenda:

• Resolution No. AR 2010-105, a resolution of the Anchorage Municipal Assembly, regarding payment of $193,000 in municipal funds to the George M. Sullivan Irrevocable Life Insurance Trust, Assemblymember Claman. (addendum)

Here’s its text:

ANCHORAGE, ALASKA
AR NO. 2010–105

A RESOLUTION OF THE ANCHORAGE MUNICIPAL ASSEMBLY, REGARDING PAYMENT OF $193,000 IN MUNICIPAL FUNDS TO THE GEORGE M. SULLIVAN IRREVOCABLE LIFE INSURANCE TRUST.

WHEREAS, pursuant to Assembly Memorandum No. AM 76-2010, the Assembly was requested by and behalf of the Mayor to appropriate One Hundred Ninety Three Thousand Dollars ($193,000.00) from the Areawide General Fund (Fund 101) for disbursement to the George M. Sullivan Irrevocable Life Insurance Trust; and

WHEREAS, Assembly Memorandum No. AM 76-2010 declared that disbursement would be made under a life insurance contract; and

WHEREAS, Assembly Memorandum No. AM 76-2010 did not disclose that the George M. Sullivan Irrevocable Life Insurance Trust was administered by the Mayor in his private capacity as the son of George M. Sullivan and Trustee of the life insurance trust; and

WHEREAS, AR 2010-33 was passed and approved by the Assembly, on February 16, 2010, authorizing disbursement subject to receipt of proper documentation from the George M. Sullivan Irrevocable Life Insurance Trust; and

WHEREAS, the full circumstances purporting to legally obligate the Municipality to make a payout of $193,000.00 in public funds are more complicated than provided in the summary under AM 76-2010; and

WHEREAS, the current Mayor is also actively serving as Trustee of the George M. Sullivan Irrevocable Life Insurance Trust, creating a situation in which he both signs the check as Mayor, and receives the funds as Trustee, thus serving on both sides of a significant financial transaction involving public funds;

WHEREAS, the payout of $193,000.00 in public funds for life insurance without a life insurance policy has raised many concerns in the mind of the public;

WHEREAS, as Mayor, the incumbent is required to represent and act in the Municipality’s best interests; and

WHEREAS, as Trustee of the George M. Sullivan Life Insurance Trust, the Trustee has a fiduciary duty to the Trust to represent and act in the best interests of the Trust and its beneficiaries; and

WHEREAS, prior to submitting AR 2010-33 to the Assembly, the current Mayor did not refer the matter to the Municipal Ethics Board to determine whether he had a conflict of interest in representing the Trust in dealings with the Municipality;

NOW, THEREFORE, the Anchorage Assembly resolves:

Section 1. Until the Assembly and the public are afforded an open and full disclosure to assure that payment of $193,000.00 in public funds is legally appropriate, the Mayor, in his private capacity as Trustee for the George M. Sullivan Irrevocable Trust, is respectfully requested to place all of the $193,000.00 in funds in an escrow account with instructions to the escrow agent to maintain the escrow until full disclosure and review by the Ethics Board under the Ethics Code and Section 2 of this Resolution is complete, and the Assembly has the opportunity to take action after requirements concerning mayoral disclosure and Ethics Board action on potential conflict have first been met. The Mayor, in his private capacity as Trustee for the George M. Sullivan Irrevocable Trust, may request that all of the $193,000.00 be held in a special, segregated account by the Municipality, in lieu of a third-party escrow agent.

Section 2. The current Mayor shall submit the question of whether he had a conflict of interest, and if so, how the conflict should be managed, to the Ethics Board for public hearing, complete review, and written report.

PASSED AND APPROVED by the Anchorage Assembly this ______day of ____________, 2010.

____________________________

Chair

ATTEST:

____________________________
Municipal Clerk

Note

Among the questions asked in Drummond’s resolution are:

• What is the legal authority of the Salary and Emoluments Commission to authorize an employee benefit after employment has terminated?
• Were the legal requirements, procedures and process under Charter Section 5.08 (c) properly followed?

Here’s the relevant portion of the Municipal Charter, with the provision she’s asking about in bold:

Section 5.08.  Commission on salaries and emoluments.

(a)   There is established a commission on salaries and emoluments of elected officials. The commission is composed of five members appointed for terms of four years. The commission shall be composed of at least one business executive, one representative of a nonpartisan voters’ organization, one person with experience in public administration, and one representative of a labor organization.

(b)   No member of the commission shall be employed by the municipality during the term for which he is appointed, nor shall he hold elective municipal office during his term or within one year thereafter.

(c)   The commission shall establish the compensation, including salaries, benefits, and allowances, if any, of elected officials. A decision of the commission to adjust the compensation of elected officials shall not affect seated elected officials, but shall affect those elected officials seated after the election following approval of the decision. A decision of the commission not affecting the compensation of elected officials takes effect at the beginning of the next fiscal year of the municipality. A decision by the commission is subject to initiative and referendum in the same manner as an ordinance.

(d)   The commission shall afford an opportunity for the public to be heard before rendering any decision that changes the compensation of an elected official. At least every two years, but not more frequently than every year, the commission shall review the compensation of elected officials. The commission shall render its decision with respect to salaries not later than 30 days before the end of the fiscal year of the municipality.

Reading paragraph (c) it is indeed clear: Although former Mayor George Sullivan remained technically a muncipal employee through October 1982 until his accrued leave ran out, his term in office as an elected official ended on January 2, 1982, when Tony Knowles took office — nearly two months before the Commission on Salaries & Emoluments passed its Resolution 82-1 on February 24, 1982.  At that time, he was no longer an elected official.  So this is a pretty good question: did the Commission have any legal authority to adjust the compensation of someone who was no longer an elected official?

Thus, the resolution calls for the requested independent legal review to determine

The authority of the Salary and Emoluments Commission, after the mayor or other elected official has left elected office, to authorize a special life insurance benefit[.]

References

1. 3/20/2010. “A Sullygate timeline: 1982-2010″ by Melissa S. Green (Henkimaa).
2. 3/10/2010. “Sullygate update: A bibliography, Shannyn Moore’s guests, & Drummond’s resolution” by Melissa S. Green (Henkimaa).
3. 3/9/2010. “Assembly member questions legality of insuring late Sullivan” by Mike Ross (KTUU Channel 2 News); emphasis added

Related posts:

1. Taking a Sullygate break
2. Sullygate: My letter to the Anchorage Assembly in support of Assembly Resolution AR 2010-92
3. Sullygate: MOA Dept. of Law analysis; Ethics Board rules against Mayor Sullivan

For other news stories & posts on this topic, see my bibliography on all things Sullygate.

Sullygate is the nickname that’s been coined (possibly by me — I’m not really sure) for all the stuff surrounding former Anchorage Mayor George M. Sullivan’s “life insurance policy” through the Municipality of Anchorage, which culminated in a February 16 vote by the Anchorage Assembly to pay out $193,000 from public monies to a trust headed up by Sullivan’s son, current Mayor Dan Sullivan.

This is a very heavily annotated timeline of the Sullivan “life insurance” issue based on sources that have so far been made public. A big thanks to Sean Cockerham and David Hulen of the Anchorage Daily News, who made public records requests in the process of preparing Sean’s really fine investigative piece,  and posted the documents at the ADN website for the benefit of concerned Anchorage citizens like me.

This is a really long post; I was happy to learn that WordPress (my blogging software) supports internal navigational links: these will help you get around.

1967 | 1982 | 1984 | 1987 | 1992 | 1994 | 1995 | 2000 | 2002 | 2003 | 2007 | 2009 | 2010 | References

Please comment, especially if you find errors or can clarify some of my own questions.  This sentence is the very last sentence I’m writing in this post: it is to say that I’ve been at this a very long time and my mind’s too muddled by tiredness now to even proofread — so really, please let me know if you find errors so I can fix ‘em. — Mel

A later note, 3/22/2010: Corrections from this date on (mostly thanks to corrections made by readers) are marked with strikeout for deleted text & underline for added text. Thanks for your corrections, readers!

1967

George Sullivan elected mayor of the city of Anchorage.  He continued as mayor through January 1982, including during unification of the Anchorage city and Greater Anchorage Area Borough governments into the unified Municipality of Anchorage (which took place in 1975).

1982

January 2, 1982. George Sullivan ends his last term; Tony Knowles inaugurated as mayor. [Ref #1]

Tony Knowles administration 1982—1987

Manager of Records and Benefits: Susan Lindemuth

January 19, 1982

Per an article by Sean Cockerham in the Anchorage Daily News,

The minutes from the Jan. 19, 1982, Assembly meeting show that Assembly member Gerry O’Connor, who died in 2005, proposed that the city provide life insurance for the retiring Sullivan. O’Connor, according to the minutes, said he felt Sullivan’s insurance should be continued because he had triple bypass surgery and “was probably unable to pass the physical to qualify for private insurance.” [Ref #2]

The Anchorage Assembly, in AR 82-30, resolved:

That the Commission on Salaries and Emoluments be requested to consider directing that life insurance coverage be provided to former Mayor George M. Sullivan for the remainder of his life at the same rate and with the same coverage as in existence on January 1, 1982. [Ref #3, p. 1]

February 18, 1982

Susan Lindemuth, Manager of Records and Benefits, wrote in a memo to Ruby Smith, Municipal Clerk,

When he left office, Mr. Sullivan’s life was insured for $193,000. The figures I am quoting are based on a continuation of that level of insurance.

If the Municipality continues Mr. Sullivan’s coverage as a member of the group, it will cost the Municipality $86.85 per month or $1,042.20 per year…. This premium could be paid either by the Municipality or Mr. Sullivan.

Mr. Sullivan is eligible to convert his insurance to an individual policy.  At his age, continued coverage would cost Mr. Sullivan $961.00 per month…. [Ref #3, page 2; emphasis added]

Note the emphasized words: Lindemuth was talking about the MOA’s group insurance plan.

February 24, 1982

The Salary and Emoluments Commission met. Its minutes show that the Commission was concerned whether Sullivan was eligible for inclusion under the Muni’s group insurance plan with Aetna.

There was still concern by the Commission whether the insurance company would allow someone who was no longer employed by the Municipality to remain part of the group plan and pay the month premiums out-of-pocket. [Ref #3, page 6 (page 2 of minutes)]

Susan Lindemuth, Manager of Records and Benefits, told them that the insurance company would cover him:

In response to questions by Mr. Lounsbury, Ms. Lindemuth stated there is no problem as far as the insurance company is concerned in continuing George Sullivan in the insurance program after his completion of service with the Municipality and has drawn his last paycheck.  She further stated that the Municipality would just add an amendment to the policy saying George Sullivan is eligible to continue participation. [Ref #3, page 6 (page 2 of minutes)]

Thus reassured, the Commission passed Resolution 82-1, which provided:

Section 1. That the Municipality shall provide life insurance coverage to former Anchorage Mayor George M. Sullivan at the remainder of his life at the same rate and with the same coverage as in existence on January 1, 1982.

Section 2. That the cost of providing said life insurance coverage shall be borne in full by Mayor George M. Sullivan.

Section 3. This resolution takes effect at the beginning of the next fiscal year of the Municipality. [Ref #3, page 9]

Nothing in the Commission’s minutes indicate that the Commission at any time contemplated providing coverage for the former mayor in any way other than via the Muni’s group insurance plan.

July 12, 1982

In January 2007 (during the Begich administration), Joanne Hanscom, health care plan administrator/privacy officer, put together a timeline of things she found in the file regarding Sullivan’s life insurance, including this item:

July 12, 1982 – Handwritten note to Barb (Municipal Manager’s office – last name unknown) from Susan Lindemuth stating she doesn’t see any problem with self paying, but she did have a problem with the same rate. Barb responded agreeing with her. [Ref #4, page 2]

August 4, 1982

In January 2007, Joanne Hanscom found the following in the file:

August 4, 1982 – Letter to Mr. Sullivan from Susan Lindemuth telling him how much he is entitled to ($193,000) and that the annual cost was $1,042.20. [Ref #4, page 2]

October 31, 1982

George Sullivan’s accrued leave ran out, thereby ending his employment by the Municipality. [Ref #1; Ref #2, page 14]

November 10, 1982

In a memorandum to the Commission, Susan Lindemuth reported on the status of Sullivan’s insurance,

The provisions of Resolution 82-1 of the Salary and Emoluments Commission state that George Sullivan will be allowed to continue his life insurance coverage under the Municipality’s group plan at his expense for the remainder of his life.  The amount of coverage will be that in effect on January 1, 1982 ($193,000) and the premium rate will also be that in effect on January 1, 1982 ($77.20).  The resolution is to take effect January 1, 1983. [Ref #2, page 14; emphasis added]

This is further confirmation of Lindemuth’s clear understanding of the Commission’s intent: that Sullivan’s insurance coverage was to be under the Municipality’s group insurance plan, not as some kind of separate contract or individual insurance plan covered in some other way (as would eventually be contended in 2010 by George Sullivan’s son, Mayor Dan Sullivan, and his city attorney Dennis Wheeler).  But note that here, Lindemuth gives a different premium rate for what was in effect on January 1, 1982 — $77.20/month, which calculates to $926.40 annually –  than she gave the Commission on February 18, 1982 — $86.85 per month, or $1,042.20 per year — and that she also gave to George Sullivan in her August 4 letter to him.  No explanation for this discrepancy was offered.

Lindemuth’s memorandum continued,

Mr. Sullivan retired from the Municipality on October 31, 1982.  So that there would be no break in his insurance coverage, he was allowed to make the premium payments for November and December. Mr. Sullivan has already provided for monthly payment of the premium amount to the Municipality.  To the extent that the premium amount exceed that paid by Mr. Sullivan, the Mayor’s Office benefits account will be charged for the difference. [Ref #2, page 14; emphasis added]

At its meeting on that date, the Commission discussed Lindemuth’s report:

Chairman Millsap stated that attached to the Agenda was a status report on the life insurance coverage for Mr. Sullivan. He stated the letter was very self-explanatory and that everything had been taken care of. [Ref #2, page 12; emphasis added]

This acceptance of Lindemuth’s report is yet another confirmation that the Commission’s intent was for Sullivan to be covered by the MOA’s group plan.  However, there was a problem:

Ms. [sic] Lounsbury stated he was questioning the last sentence — “to the extent that the premium amount exceeds that paid by Mr. Sullivan, the mayor’s office benefits account will be charged for the difference.”

Ms. Gotham stated that is not what this commission said.

Mr. Lounsbury continued by saying that Mr. Sullivan is to pay what the premium is.  The commission didn’t set any certain amount, they just said you pay the premium.

Chairman Millsap requested the Recording Secretary obtain clarification from Susan Lindemuth. [Ref #2, page 12; emphasis in original]

In other words, there was a conflict between Section 1 of the Commission’s Resolution 82-1, which provided that Sullivan’s insurance would continue at “the same rate” (same premium), and Section 2, which provided that Sullivan would bear the cost of the premiums in full.

November 17, 1982

In another memo to the Commission, Susan Lindemuth explained the rationale for the questioned sentence:

Judy Flitter has asked that I clarify the last sentence in paragraph two of my November 10 memo.

When planning for the implementation of Resolution 82-1, the meaning of “at the rate in effect as of January 1, 1982″ was questioned.  Municipal Attorney Jerry Wertzbaugher interpreted it to mean that Mr. Sullivan would not be required to pay for increases in life insurance premium payments subsequent to January 1, 1982.  To the extent that those rates will increase… the Municipality will have to pick up the difference. [Ref #2, page 15]

November 22, 1982

At the Commission’s direction, Judy Flitter, wrote a memo to Lindemuth clarifying the Commission’s intent:

The decision from the Salary and Emoluments Commission was to allow former Mayor George Sullivan to retain the policy but to pay any premiums himself.  They did not intent [sic] for any monies to be taken from the current Mayor’s budget.  The statement from the commission is: The bill is to be sent to Mr. Sullivan for the difference per thousand per month. [Ref #9, page 16]

So problem solved: in spite of the “at the same rate” provision in Section 1 of Resolution 82-1, Sullivan was required to pay the full premiums himself even if they went over the premium rate that had been in effect on January 1, 1982. (The Commission said nothing explicitly about whether Sullivan would pay less than that rate in the unlikely event that the premiums somehow happened to go down.)

This memo was later (in January 2007, during the administration of Mark Begich) summed up by Joanne Hanscom as follows:

November 22, 1982 – Memo from Judy Flitter (Clerk’s Office) to Susan Lindemuth reiterating the fact that Mr. Sullivan would need to pay the premiums himself, not the Mayor’s office. [Ref #4, page 2]

Thus the record makes clear that as of November 1982, the Commission on Salaries & Emoluments, which had acted at the behest of the Assembly, both intended & understood that George Sullivan’s life insurance would continue through the MOA’s group plan with the MOA’s insurance provider; and that the Commission had made this intention clear to the Muni’s Manager of Records and Benefits, Susan Lindemuth.

It’s also clear that as of November 1982, the Commission believed — as Chairman Millsap stated at the November 10 meeting — that “everything had been taken care of.” [Ref #2, page 12] But in January 2007, Joanne Hanscom would write,

There has been no life insurance policy in place since he [George Sullivan] left municipal employment. [Ref #4, page 2]

If there was no life insurance policy in place, that would be contrary to the Commission’s Resolution 82-1, and also contrary to the  Susan Lindemuth’s November report to the Commission indicating that everything was in place.

But why did Hanscom believe that no life insurance policy was in place?  For the answer to that, see the next item.

1984

January 8 or 9, 1984

The next known item in our chronology is again provided by the January 2007 timeline put together by Joanne Hanscom, accompanied by her speculation (in bold):

January 9, 1984 – Letter to Susan Lindemuth from James Hickey (Aetna) regarding the group policy number 392680 and George Sullivan. I do not think anyone at MOA informed Aetna that Mr. Sullivan was no longer employed by the municipality.  However, he was kept on the census and Mr. Sullivan kept making the annual premium payments. [Ref #4, page 2; emphasis added]

If Hanscom’s 2007 speculation is correct, it seems that despite what Susan Lindemuth had assured the Commission during its February 24, 1984 1982 meeting about amending the group insurance policy to include Sullivan as an ex-employee, that MOA did not in fact amend the policy or inform Aetna.  It’d be nice if this letter was made public, so we could see exactly what Aetna understood at the time about George Sullivan’s eligibility, and therefore what led Hanscom to make this speculation.

But wait a minute.  According to an email on January 30, 2002 (during the Wuerth Wuerch administration) from Karen Moore to Lynda Gable,

I see a letter in the file from Aetna (James Hickey) regarding “Assignment of Group Coverage” that set up a trustee for his [George Sullivan's] irrevocable trust and dated 1/8/84. [Ref #5, page 7]

There’s a discrepancy in the dates here (January 8 or January 9?), but that is undoubtedly the same latter from James Hickey.  And it appears that this is when the George M. Sullivan Irrevocable Life Insurance Trust was set up.

It should go without saying that as Manager of Records and Benefits, it was Lindemuth’s responsibility to ensure that Aetna was properly informed that Sullivan was not, in fact, any longer a municipal employee; and if it turned out that there was a problem after all in covering him under the group plan, it was her responsibility to ensure that the Commission on Salaries and Emoluments and the Anchorage Assembly were also informed.  Did Lindemuth believe she had informed Aetna?  Did she believe in good faith that Sullivan was in fact covered by the group insurance policy?  Did all this mess arise out of a mistaken belief that everything really was set up properly in the way the Commission understood it to be at the end of 1982?

1987

Tom Fink became mayor.

Tom Fink administration 1987—1994

City manager: Larry Crawford
Manager of Records and Benefits: Susan Lindemuth

1992

The timeline put together in January 2007 by Joanne Hanscom again gives us our next item:

January 7, 1992 – Letter to Mr. Sullivan from Christine Kendrick, MOA Records and Benefits employee, informing him that his new premium was $833.76 per year. [Ref #4, page 2]

If Joanne Hanscom’s speculations are correct, Sullivan was not covered by the MOA’s group insurance policy with Aetna, and in fact was completely uninsured.  It’s therefore not accurate that this was even a “premium.”  Who, then, set the “premium” amount? As an employee of Records and benefits, Christine Kendrick would have been under the supervision of Susan Lindemuth.  Did the so-called premium change on Lindemuth’s authority?  If not her authority, then whose?  Did MOA Records and Benefits believe in good faith that Sullivan was covered by the Muni’s group policy, with the “premium” set by Aetna?  What were the real group insurance premiums set by Aetna at that time?

But see January 2002, where it becomes apparent that Aetna could not have calculated premiums for George Sullivan.  As Lynda Gable of Aetna would write in 2002,

The insurance fund was the reserves that Muni held and those funds were never submitted to Aetna nor included in any of our premium calculations from a risk standpoint to the best of my knowledge. [Ref #5, page 4; emphasis added]

1994

Tom Fink’s term as mayor ended, and Rick Mystrom became mayor.

Rick Mystrom administration 1994–2000

City manager: Larry Crawford through June 1998;  George Vakalis thereafter
Manager of Records and Benefits: Susan Lindemuth

January 8, 1994

In an article explaining how Tom Fink and other Anchorage mayors often continued to draw paychecks after their terms had ended (due to unused annual leave), Peter Blumberg of the Anchorage Daily News wrote,

Tony Knowles, Fink’s immediate predecessor and also a candidate for governor, stayed on the payroll for five months following his departure from the mayor’s office and he still buys health insurance from the city. George Sullivan, who preceded Knowles as mayor, stayed on the payroll 10 months beyond his last day in office and he still buys life insurance from the city, according to Lindemuth. [Ref #6; emphasis added]

But the Municipality was not then (nor is it now) a life insurance company.  Was Lindemuth knowingly mischaracterizing what Sullivan was “buying” from the Muni?  Or, in line with my “this was just a mistake” theory, did Lindemuth simply not understand the true situation regarding Sullivan’s eligibility under the Muni’s group plan with Aetna? Or is there some third alternative that I’m missing?

Note that Knowles’ health insurance was a very different matter from the life insurance that Sullivan was putatively buying from the Muni.

1995

November 29, 1995

Again from the timeline prepared by Joanne Hanscom in January 2007:

November 29, 1995 – Letter to Mr. Sullivan from Pamela Barbeau, MOA Records and Benefits employee, informing him that his new premium amount is $555.84 per year. [Ref #4, page 2]

Here we have the same questions that we have with the change in the so-called “premium” in 1992.  Rather than repeating them here, I refer you back to that year.  It remains a question as to how Sullivan’s so-called “premium” was calculated.

2000

Rick Mystrom’s term ended and George Wuerch became mayor.

George Wuerch administration 2000–2003

City manager: Harry Kieling
Manager of Records and Benefits: Susan Lindemuth through October 2000;
Karen Moore by y January 2002

October 2000

Susan Lindemuth was Manager of Records and Benefits until October 2000, at which time she retired from municipal employment and went to work at the Alaska Railroad as Director of Human Resources. [Ref #7]

2002

January 2002

George Sullivan’s son Dan, then a member of the Anchorage Assembly, came to the city to pay the annual “premium.”  Deputy Employee Relations Director Karen Moore (also identified in one email as Manager of Records and Benefits) had no knowledge of the life insurance arrangement and initiated a flurry of emails to figure everything out.

January 30, 2002

Karen Moore to Lynda C. Gable of Aetna:

Do you recall or know of anything in file regarding life insurance on former Mayor Sullivan.  Diane Pain is no longer working for us and all I find in the file is a resolution providing for Mayor Sullivan to have continued coverage.  The premium is paid annually.

Any clues for me? [Ref #5, page 1]

Lynda C. Gable replied:

I have no idea.  Is he possibly covered as an elected official or something currently?  Given he potentially is not an active employee, I don’t know how they were classifying him to be eligible — and also might be concerned about the contract actually recognizing him as eligible….

My concern is if we imply to him there is coverage but if there is no contractual basis — his claim could actually be denied if he passes away.  So, I think some digging is in order to make sure everyone is on the same page. [Ref #5, page 1]

Note the concern here with a contract.  If there was such a contract, it would have to have been around November 1982, when per Susan Lindemuth November 10, 1982 memo to the Commission on Salaries and Emoluments which seemed to indicate that everything was a go.  But there was no reference in that memo to any communication actually made between the Muni and Aetna indicating an actual contract to continue Sullivan on the group plan; and in fact the first communication between Aetna and the Muni that we’re so far aware of is that of January 8 or 9, 1984, when James Hickey sent his letter regarding “Assignment of Group Coverage” — the same letter that would later lead Joanne Hanscom to speculate, “I do not think anyone at MOA informed Aetna that Mr. Sullivan was no longer employed by the municipality” [Ref #4, page 2]

Karen Moore also wrote to Susan Lindemuth:

Can you shed some light on the continued life insurance for George Sullivan?  His son Dan wants to pay the premium, but I can’t find anything in file that says who is covering the risk, only that the Salary and Emolument Commission passed this resolution saying the MOA must continue to provide life insurance. [Ref #5, page 2]

Susan Lindemuth replied,

George has been paying for it.  A check for the annual premium was sent to the MOA and deposited in the insurance fund.  I wouldn’t think it matters who (from the Sullivan family) pays for it…but it isn’t an MOA expense. [Ref #5, page 2]

Moore then wrote back,

Yes, that makes sense.  Who was on the risk?  There is nothing int he file to indicate who to pay the premium to… [Ref #5, page 4; ellipsis in original]

Lindemuth replied,

He was covered as part of the MOA group and therefore, part of that “risk”. There was no separate policy with Aetna or any other insurance carrier for him…and no separate “premium” was paid to any outside party.  As the life insurance rates changed over the years, he was informed and paid the appropriate premium amount…or the kids paid on his behalf.

We had a split funded agreement with Aetna…so we paid the “retention” monthly and funded the life insurance claims when incurred.  His coverage amount ($93,000 [sic]) was included in the volume reported to Aetna. [Ref #5, page 4; all ellipses in original; emphases added]

Now, I don’t understand insurance practices that well, so I don’t exactly know what “split funded agreement” means, or what a “retention” is.  And — “funded the life insurance claims when incurred” — does that mean that the Muni only sent the monies to the insurance company when the policy holder actually died, and the claim was made?  Could someone who understands insurance better than I do clue me in by writing an explanatory comment?

(But see that second bolded sentence: “His coverage amount ($93,000 [sic]) was included in the volume reported to Aetna.” That’s not what Lynda Gable of Aetna will write just two blockquotes below.)

In any case, Karen Moore forwarded Lindemuth’s explanation to Lynda Gable at Aetna with the following introduction:

Here’s what Susan Lindemuth is saying.l  Under the minimum premium arrangement, MOA apparently deposited his premium into the insurance fund.  Since we have changed coverage arrangement to fully insured, how would this affect his coverage? [Ref #5, page 4]

Lynda Gable replied,

This means Muni kept those dollars on hand in the claims funds.  I don’t know if intent was to have them handle a death claim directly, but Aetna never received any premiums.  The insurance fund was the reserves that Muni held and those funds were never submitted to Aetna nor included in any of our premium calculations from a risk standpoint to the best of my knowledge.  How much life insurance is he supposed to have??? [Ref #5, page 4; emphasis added]

Based on this, it seems that (1) the Muni never passed Sullivan’s “premiums” to Aetna; (2) Aetna didn’t know Sullivan was thought by anyone at MOA to be on the Muni’s group plan; (3) even if Sullivan had legitimately been on the group plan, since his premiums were never sent or apparently reported to Aetna, Aetna could not make an accurate calculation of his insurance risk — and so, I’m guessing, the changes in his “premiums” in 1992 and 1995 were based on something other than what his risk really was. And am I correct that this contradicts Lindemuth’s assertion that “His coverage amount ($93,000 [sic]) was included in the volume reported to Aetna”? Are there any insurance whizzes out there who can confirm or correct my reading on this?  Even in 1982, when the continuation of the life insurance was supposedly set up, George Sullivan was 59 and had recently had triple bypass surgery — which had to have had an impact on his risk.

The email conversation continued with Karen Moore answering Lynda Gable’s question about the amount of coverage Sullivan was supposed to have:

Amount was $193,000.  I see a letter in the file from Aetna (James Hickey) regarding “Assignment of Group Coverage” that set up a trustee for his irrevocable trust and dated 1/8/84.  I also found a memo from Susan Lindemuth to the MOA Clerk’s office that gave the premium under Aetna group coverage and the cost of converting coverage at his then age.  I can see why he wouldn’t have wanted to convert it. [Ref #5, page 7]

Here again (because I’ve already quoted that part of this message) is a reference to the setting up of the George M. Sullivan Irrevocable Life Insurance Trust in January 1984. (And again, recall something about the letter from James Hickey led Joanne Hanscom in 2007 to believe that the MOA had never informed Aetna that Sullivan was no longer a muncipal employee.)  The memo from Susan Lindemuth to the MOA Clerk’s office that Moore mentions appears to be the memo of February 18, 1982, which I quoted near the beginning of this chronology.

Lynda Gable replied,

Unfortunately this is one piece of history I don’t have.  Conversion is definitely expensive and really intended for those individuals who can’t get replacement life insurance if they needed to pass a physical.  If you sent us copies of any documents you have, we can have some research done.  At this time, I can’t really promise an outcome — not having the historical knowledge or [sic] what would have continued to make him eligible after he left office.  We’ll look forward to the documents to continue our review. [Ref #5, page 7]

That’s all the emails we’ve seen between Karen Moore and Lynda Gable on January 30, but there must’ve been at least one more based on what Karen Moore wrote to Employee Relations Director David Otto that afternoon at 3:38 PM:

At your direction, I have researched Mayor Sullivan’s life insurance situation with the MOA.  Here is what I have found out.

On February 24, 1982, by resolution of the Salary and Emoluments Commission (Resolution 82-1), Mayor Sullivan was granted life insurance for the “remainder of his life at the same rate and at the same coverage as in existence on January 1, 1982.”  A memo dated August 4, 1982 from Susan Lindemuth set out that the coverage amount was $193,000 and that the monthly premium was $77.20. [That would add up to $926.40 annually; but according to Joanne Hanscom in 2007, the August 4, 1982 item was not a memorandum but a letter to George Sullivan giving an annual premium rate of $1,042.20; Ref #4, page 2.] Another memo from the Clerk’s office in support of the Salary and Emoluments Commission clarified that Mayor Sullivan was to pay the premium himself.  Other than assigning the proceeds to an irrevocable trust and identifying a trustee, that is the only documentation in the file.

For clarification on who was on the risk, I emailed Susan Lindemuth.  Susan indicated that under the former “split premium” agreement with Aetna, MOA paid retention monthly and funded the life claims as they incurred.  Susan included Mayor Sullivan in the group.  When we went fully insured in March of last year, we no longer fund or pay life claims as they incurred.  that risk belongs to Aetna.  Our agreement (contract) with Aetna was and is to cover active lives.  In email conversations with Lynda Gable, long time account executive for Aetna’s MOA coverage, Aetna is not aware of Mayor Sullivan’s continued participation in the active group insurance.  Lynda tells me they would have denied payment when it became evident that he was not an active employee.  Susan indicated that premiums received from Mayor Sullivan were deposited in to the insurance fund.  I suspect she intended to have the MOA pay any death claim from the 603 account, rather than have Aetna pay the claim and then reimbursing Aetna. [Ref #5, page 11]

This is another paragraph it’d really help if someone who understands insurance could explain to me — I understand some parts, but others are fuzzy to me.  What is clear is that Aetna had no knowledge of Sullivan, and could not have calculated his “premiums” because of that.

Bottom line is that Aetna does not have a policy for Mayor Sullivan, nor would they cover him under our group plan since it is limited to active employees.  We can rectify this by any one of the following:

1. Set up a sub-fund in 603 in the amount of $193,000 to be paid out upon Mayor Sullivan’s death

2. Don’t fund the $193,000 and pay it when he dies from some source to be identified at that time, upon Assembly approval.

3. Set-up sub fund in 603, credit past premiums and continue to add yearly premiums as paid.  MOA to fund difference upon his death and with Assembly approval.

The family premium payments should go into an account that would then reduce the overall liability to the MOA as yearly premiums are paid.  For example, the family has paid nearly $18,000 since 1982.  Therefore, the actual MOA liability is $175,000, since $18,000 has been received and deposited into the 603 fund.

Once we decide how to proceed, I will document the file to make sure that future employees will know how to handle this situation when it comes time to pay out. [Ref #5, page 11]

February 4, 2002

Karen Moore wrote to Glenn Smith, city risk manager:

Harry [presumably city manager Harry Kieling] suggested I forward this onto you to see if you had any creative ideas on how to fund this.  Read my email — it’s pretty self explanatory.   Bottom line, he can’t be on the active group insurance because he isn’t actively employed anymore…. [Ref #5, page 12]

The email she forwarded was a February 1 email from David Otto which probably included her lengthy January 30 email to him as an attachment.  This email and its attachments became part of a thread of emails that ultimately included the Municipality’s chief financial officer Kate Giard, city manager Harry Kieling, Office of Management and Budget Director Cheryl Frasca (who is also Mayor Dan Sullivan’s budget director), city attorney William Greene, and city risk manager Glenn Smith.

February 4 or 5, 2002 (date header missing from email, but probably Feb. 5)

Chief financial officer Kate Giard wrote a email (with a long chain of attached emails, as mentioned above) whose recipients included  Harry Kieling, Cheryl Frasca, William Greene, and Glenn Smith:

Folks,

We had better get together on this issue.  We just can’t make payments of this nature from the self insurance or any fund without assembly approval.  Mr. Sullivan had an insurance policy, apparently, for the last several years for which he paid premiums.  The policy in effect was an illegal commitment unless the Assembly approves it.  I would recommend we get together with legal to see what we have here. [Ref #5, page 12; underline in original; bold emphasis added]

February 5, 2002

From Glenn Smith to the same recipient list:

Kate; they were not recommending to use our SIF [I believe this stands for self-insurance fund].  Depending on what action ER [employee relations] has to take will determine what route to take with the Assembly.  I would like to see [Commission on Salaries & Emoluments] resolution 82-1 if there is a meeting on this.— One thing for sure this must be worked out and we must be positive this is the only former employee that is in this situation. [Ref #5, page 13]

There is then a lapse of over a month in the emails that have been made publicly available.

March 9, 2002

This is in the same email stream as above, from city attorney William Greene to Kate Giard and David Otto, with a cc: to Kathie Meyer. I don’t know who she is, but she is otherwise unrepresented in the 2002 emails.  In any case, here’s Greene’s email:

WHERE ARE WE ON THIS????  IS LAW TO DO SOMETHING???  We will obtain AR 82-1 and provide [Ref #5, page 13]

AR is the prefix for Assembly resolutions; Greene was apparently confusing Resolution 82-1 of the Commission on Salaries & Emoluments with an Assembly resolution.  (The Assembly resolution which asked the Commission in 1982 to see if the life insurance benefit could be provided to Sullivan was AR 82-30. [Ref #3, page 1])

March 12, 2002

Greene followed up himself three days later with an email address to Cheryl Frasca, Kete Giard, and David Otto:

Be glad to meet, but don’t think its necessary.  Karen Moore’s three options are it and number three seems the most reasonable.  There is no option not to provide the coverage.  I’m copying the underlying documentation to you all. via internal snail mail. [Ref #5, page 13; emphasis added]

Greene gave no explanation for his opinion that “there is no option to provide the coverage” — the first time, in the record so far made public, that this claim was made after it became crystal clear that Sullivan was not covered by the MOA’s group plan.  It’s unknown from the emails whether a meeting in fact took place, or which specific documents Greene had examined to lead him to this opinion.

The option he deemed the “most reasonable” was the third option described in Karen Moore’s long email to David Otto on January 30, 2002:

3. Set-up sub fund in 603, credit past premiums and continue to add yearly premiums as paid.  MOA to fund difference upon his death and with Assembly approval. [Ref #5, page 11]

March 13, 2002

The following day, Kate Giard replied to William Greene’s “there is no option to not provide” email with another, addressed to the same recipient list (William Greene, Cheryl Frasca, David Otto):

Cool.  I’m all for not meeting if Otto’s shop has the ball and the matter is concluded.  Do we have to budget for it each year til th eold gentleman passes on? [Ref #5, page 11]

William Green replied,

You need to read the optional solutions mentioned in the preceding e-mail.  The answer to your question depends on which alternative is chosen, but I suggest that something be done soon or MOA will have to come up with nearly $200K all of a sudden. (I trust this is life and not double indemnity.)  I’m outa here unless someone needs legal help. [Ref #5, page 11]

March 21, 2002

Melissa Deitrick of Aetna sent an email to Karen Moore (cc’ing to two other people who I believe were with Aetna) with an attached file “Sullivan Letter.doc.”  The text of the letter is not included in the materials made publicly available, but the text of the email gives the gist:

Karen, I have mailed you the signed, hard-copy of this letter today.  As you probably suspected, Aetna does not have the former mayor on the group insurance policy due to lack of eligibility.  I did confirm with Ann Wells that premium for the basic and supplemental life insurance is only paid for active employees who meet current group eligibility guidelines.

Though I did not include this in my letter to you, it may be that there is an individual life insurance policy for the former mayor currently in place.  However, it is not through Aetna.

Our legal department advised the Muni return the premium money paid for the mayor’s $193,000 life insurance coverage. This would only apply for the period after the mayor was ineligible for the Aetna coverage.  Of course, this would not be appropriate if the premium money is used for payment on a non-Aetna policy.

The bottom line situation from Aetna’s perspective is that Anchorage’s former mayor is not eligible for the current life insurance coverage, and does not have $193,000 life insurance policy underwritten by Aetna.  If there were a death claim filed for this benefit, Aetna is not financially liable.

Please understand that this determination was made based on available information and on our insurance coverage records.  If you find records which indicated otherwise, please provide them to me for review.

If you have additional questions or need to discuss this issue in detail, you are welcome to call me at the number listed below. [Ref #5, pages 14-15; emphases added]

As we know from Susan Lindemuth’s January 30 email to Karen Moore, Sullivan had no separate policy with any other carrier.  [Ref #5, page 4] His life insurance was with Aetna, or nothing.  And since it was not with Aetna — it was nothing.

Karen Moore subsequently forwarded Melissa Deitrick’s email to David Otto with the following introduction:

Aetna has researched their files and cannot find a policy for Mayor Sullivan.  As indicated below, he cannot be covered under our active group plan.  The best solution seems to be to create an account within 603 (where his premiums have been deposited over the years), credit that account the amount of premiums received and then fund the difference between premiums collected and the $193,000 amount set forth by the salary and emoluments commission resolution at the time of death.

What I need is some direction on how to set this up, and then document it so future Benefits Managers don’t have to guess what’s happening when Dan Sullivan comes in and pays the premium.

Perhaps we should set up a meeting with Kate Giard and someone from legal to be sure this is done according to hoyle??? [Ref #5, page 14]

March 22, 2002

David Otto forwarded Karen Moore’s email (complete with a copy of the email from Melissa Deitrick which advised the Municipality to refund the “premiums” — to muncipal attorney William Greene and chief financial officer Kate Giard.  His intro said, simply,

For our discussion [Ref #5, page 16]

William Greene replied to Otto and Giard,

Dave:  My eyes aren’t that good even with glasses.  Someday it will be your turn.  I’d be glad to participate, but I don’t know what I might add.  Your solution seems appears to make sense to me.  Kate can tell how to do it.  The only thing that’s left is to document, get the $, and put a notice somewhere where it won’t be forgotten.  If there’s something else I can do, please let me know. [Ref #5, page 16]

The record doesn’t indicate if there actually was any face-to-face discussion in which Greene participated.

What’s striking to me here is that Aetna’s legal advice to return the premiums was not only ignored, but didn’t even rate a mention.  There is no evidence that anyone, much less William Greene himself, gave any consideration to legal advice that contradicted Greene’s assertion in his email of March 13, based on legal (or some sort of) reasoning that was never explained to anyone, that “There is no option not to provide the coverage.” [Ref #5, page 13]

Nor, damningly, did anyone appear to take note of the statement made by Aetna’s Lynda Gable in her January 30 email that “The insurance fund was the reserves that Muni held and those funds were never submitted to Aetna nor included in any of our premium calculations from a risk standpoint ….” [Ref #5, page 4; emphasis added] That’s a pretty big problem there, because it indicates that the reductions in Sullivan’s so-called “premiums” in 1992 and again in 1994 were absolutely based on something other than what Sullivan’s real risk from an insurance standpoint was.  Not to mention his “premiums” were lower by over $400 than what the Commission on Salaries and Emoluments had authorized in 1982 — which again, per Resolution 82-1, was supposed to be “the same rate… as in existence on January 1, 1982.” [Ref #3, page 9]

Furthermore, in spite of CFO Kate Giard’s statement on February 4 or 5 that “The policy in effect was an illegal commitment unless the Assembly approves it” [Ref #5, page 12], no one informed the Assembly, much less asked the Assembly to approve it. Was it not, then, still an illegal commitment?

March 27, 2002

OMB director Cheryl Frasca — who, again, holds the same position in the current administration) — wrote to Kate Giard,

My assumption is that this issue is getting addressed outside of the budget process.  If that’s incorrect, I need to know. [Ref #5, page 18]

Kate Giard replied, copying her email to David Otto, city manager Harry Kieling, William Greene, and Karen Moore:

Cheryl, et. al.

My recommendation is that the potential payout amount goes into your fund balance “reserve” account and leave it at that.  If you put it in the budget, it’s just going to lapse every year.  Its not so much money, thank god, that when the unfortunate event occurs, we simply take the money out of the reserve and get assembly approval for payment.  (My recollection is that the total is somewhere in the $150,000 range.  If it is much higher than that, my recommendation may change.)

As long as ER has all of the documentation showing that a prior Assembly intended to provide this benefit and can also show that in the past there was, in fact, no insurance policy acquired with the proceeds paid to us by the Sullivan family, then we do have an obligation to pay, as required by prior assembly action. [Ref #5, page 18]

Again, the problem here is that neither the 1982 Assembly nor the Commission on Salaries and Emoluments had contemplated paying the benefit out of public funds.  The intended Sullivan to go on the group insurance with Aetna.  The Commission in 1982 was in fact told (by then-Manager of Records and Benefits Susan Lindemuth) that he was on the group insurance with Aetna.  But this was untrue.  Appparently he never was.  And by taking these actions without attending to the 1982 Assembly’s intent re: group insurance, and without informing the 2002 Assembly of the problems that had been discovered, Wuerch’s officials usurped authority that did not in fact belong to them.

Back to Giard’s email –

We could terminate this obligation by simply telling the Sullivan family we will no longer provide this insurance….I would not recommend that course of action, however, it is an option the Administration may consider. [Ref #5, page 18]

Why would she not recommend that course of action?  And why was it up to the Administration? — how about the Assembly, which was the body that had actual authority in the matter?

Giard again –

We could also try to acquire a life insurance policy for the former Mayor, but the cost would very likely be prohibitive, given his age. [Ref #5, page 18]

Instead, it would continue to be dirt cheap, at the rate established through unknown means in 1995 of $555.84 per year. [Ref #4, page 2]

And finally, the end of Giard’s email:

In summary, I would recommend that you put aside the payout amount as part of the reserve of fund balance and when Mayor Sullivan dies, we will obtain assembly approval and pay out the proceeds. [Ref #5, page 18]

April 2, 2002

There are a few more emails in the 2002 record which mostly have to do with the technicalities of where to deposit the “premiums” when they were paid.  The final email in the record was a long string of such emails, with the last page — a forwarded copy of Kate Giard’s March 27 email — marked in the margin with handwritten notes:

How to handle Sullivan Life Insurance

1. Collect premium annually in Jan (Dan usually comes in & pays)
2. Deposit to 603 Fund
3. When proceeds need to be paid out — pay out of 603 fund
4. Needs Assembly approval when payout is made. [Ref #5, page 23]

2003

George Wuerch’s term ended and Mark Begich became mayor.

Mark Begich administration 2003–2009

City manager: Dennis LeBlanc

2007

January 3, 2007

Three emails from this date from the Begich administration about the Sullivan “life insurance” have been made available to the public. The first is the most important, and has already been referenced, because it includes the timeline that Joanne Hanscom, health care plan administrator/privacy officer, put together.  The timeline was an attachment to an email she wrote addressed to Begich’s city manager, Dennis LeBlanc; deputy city manager Mike Abbott; and chief finance officer Jeffrey Sinz, who had also served as Wuerch’s director of OMB after Cheryl Frasca joined the administration of Governor Frank Murkowski.

Joanne Hanscom’s email reads,

I am attaching information for an MOA liability on Mayor George Sullivan that I am not sure you know about.  I would like to discuss this at our Thursday meeting if possible.  I will be bringing the paperwork I have, but if you would like your copy sooner, please let me know. [Ref #4, page 1]

The timeline in the attachment has an introduction:

The MOA will have to payout $193,000 to the estate of Mayor George Sullivan upon his death. Mr. Sullivan has continued to pay the monthly premium costs. This cost was based on the amount of the premium at the time of his leaving office, and was to include any changes to that premium.  This is according to Resolution 82-1 that was adopted on January 19, 1982. [Ref #4, page 2]

As I’ve written previously [Ref #9], this is incorrect: Resolution 82-1 did not in fact say anything about changes to the premium, but did say specifically  that Sullivan was to pay the same rate that was in force on January 1, 1982.  A later clarification in November 1982 said that if the premium went up, Sullivan still had to pay the full amount.  The Commission said nothing about lowering the premiums.

The attachment continues,

There has been no life insurance policy in place since he left municipal employment. The total amount that Mr. Sullivan has paid is $17,995.32 per the receipts that I have found.   The family has not yet paid the 2007 premium. [Ref #4, page 2]

I’m not going to repeat the full timeline here: it can be seen on page 2 of Reference #4, and I’ve already included most of what it says as quotes in the timeline I’m writing here.  I’ll just include the last two items, because they render the understanding she had of the some of the 2002 material:

• March 21, 2002 – Letter to Karen Moore from Melissa Deitrick (Aetna) informing the MOA that Aetna does not have an individual policy on Mr. Sullivan and that because of Mr. Sullivan’s age he is not eligible for an individual policy and is not eligible for the group policy because he is not an active employee.  Aetna also recommended that the MOA return all of the premium payments paid to the MOA by Mr. Sullivan.
• March 27, 2002 – E-Mail from Kate Giard (CFO) to Cheryl Frasca (OMB) on how the MOA needs to handle this situation.  When the unfortunate happens the MOA should get assembly approval and then take the money out of reserves. [Ref #4, pages 2-3]

Mike Abbott replied to Hanscom’s email,

This is an interesting little nugget.  do we need to set reserves aside at this time?  Have we “booked” this liability? [Ref #4, page 4]

January 24, 2007

The following day, Hanscom replied,

At this time I am not aware of reserves being set aside or that the liability has been booked.  It is on the agenda for tomorrow. [Ref #4, page 5]

And that’s it for what we have from the Begich administration.  We have no information at the moment on what Begich administration officials other than that they did not inform the Assembly of their findings.

2009

Following Mark Begich’s election to the U.S. Senate, Matt Claman was Acting Mayor from January to July 2009 when Dan Sullivan’s term began.

Dan Sullivan administration 2009–present

City manager: George Vakalis

July 1, 2009

Dan Sullivan took office as mayor.  He appointed as city manager George Vakalis, who had also been the second city manager during the Rick Mystrom administration; and Cheryl Frasca as budget director, a position she’d also held during the Wuerch administration. As chief of staff, Sullivan appointed Larry Crawford, who previously had been city manager under mayors George Sullivan, Tom Fink, and Rick Mystrom.  I’ve written in a previous post about Crawford’s relationship with Susan Lindemuth, the Manager of Records and Benefits during most of the period covered by this timeline. [Ref #9]

September 23, 2009

George Sullivan died at home from complications of lung cancer at the age of 87. [Ref #1]

2010

February 2, 2010

Resolution No. AR 2010-33, entitled “A resolution of the Municipality of Anchorage appropriating $193,000.00 from the Areawide General Fund (Fund 101) Fund Balance to the Employee Relations Department BP 2009 Operating Budget (Fund 101) for disbursement under life insurance contract to the George M. Sullivan Irrevocable Life Insurance Trust” [Ref #10, page 3] was introduced as addendum on the agenda of the Anchorage Assembly.

It was accompanied by a memorandum, AM 76-2010, prepared by the Department of Law under the supervision of municipal attorney Dennis Wheeler with the concurrence of Nancy B. Usera, Employee Relations Directory, and city manager George Vakalis.  Its purpose was to explain the resolution:

This resolution requests appropriation of One Hundred Ninety Three Thousand Dollars ($193,000.00) from the Areawide General Fund (Fund 101) to the Employee Relations Department 2009 Operating Budget Fund (Fund 101) for disbursement under a life insurance contract to the George M. Sullivan Irrevocable Life Insurance Trust. [Ref #10, page 1; emphasis added]

But to date, no one has produced a contract.  Now that you’ve read through this timeline, you’re better prepared to notice the omissions in the history Wheeler provides in the memorandum:

In 1982, the Assembly approved Assembly Resolution 82-30, a resolution asking the Commission on Salaries & Emoluments to consider directing the Municipality to provide life insurance coverage for Mayor George M. Sullivan for life.  (See AR 82-30, attached hereto.)  Thereafter, the Commission directed the Municipality to provide life insurance to Sullivan, at his cost, for the remained of his life.  (Commission Resolution 82-1, attached.)  Mayor Sullivan left municipal employment in October 1982.

To meet the directive from the Salaries & Emoluments Commission, the Municipality added Mayor George M. Sullivan to the MOA group life insurance plan with Aetna.  The amount of insurance purchased by Mayor George M. Sullivan was $193,000; the annual premium has varied, from a high of $1,042.20 in 1982 to $555.84 since November 1995.  A total of $19,662.84 in premiums was received by the Municipality and deposited into Fund 603 prior to 2002, and then into the 735 Fund thereafter. [Ref #10, page 1; emphasis added]

In fact, as we now know, (1)  despite the November 1982 indications made by Susan Lindemuth to the Commission, Sullivan was apparently not in fact added to the Muni’s group plan with Aetna; and (2) the “annual premium” amount varied for unknown reasons, because Aetna never received any premiums or information on Sullivan from which to calculate his risk and premiums; (3) as became absolutely clear in 2002, if not before, the Municipality never received any “premiums” from George Sullivan or his family, because Sullivan was not insured and was not part of any “risk.”  Which isn’t to say that the Municipality didn’t receive money from the Sullivans — but the payments were not for “life insurance.” To continue to maintain the fiction that they were is — to be very polite — not accurate.

I am not a lawyer, but I can read these documents and see these facts.  Dennis Wheeler is a lawyer.  How can he not see?

In March 2002, Aetna informed the Municipality that Mayor George M. Sullivan was not eligible for group life insurance plan because he was no longer an employee; Aetna was not carrying an individual policy on Sullivan, nor would Sullivan qualify for an individual policy, due to his age.  The Municipality was similarly unable to secure an individual policy on Sullivan.  However, the Municipality continued to accept the annual premium payments, with payout to be appropriated in full following the passing of Mayor George M. Sullivan.  The good mayor passed in October 2009, and this Resolution appropriates the funds to the trustee of the George M. Sullivan Irrevocable Life Insurance Trust, the appropriate legal entity for the disbursement, to meet the commitment of the Municipality…. [Ref #10, page 1; emphasis added]

As I wrote in my first post on the Sullivan “life insurance,” this is technically true: early 2002 was when the Wuerch administration was “informed” by Aetna. But the phrasing is ambigous, making it easy for readers (that is, the Assembly) to believe that up until then, Aetna had him covered.  Or that Aetna wasn’t completely flummoxed when Karen Moore asked them about him.  Or that the Muni itself wasn’t caught completely flatfooted when then-Assemblymember Dan Sullivan walked into City Hall in January 2002 to pay the “premium” because the person who knew anything about Sullivan’s so-called “life insurance policy” — Susan Lindemuth — was no longer a municipal employee.

Joanne Lindemuth Hanscom again:

There has been no life insurance policy in place since he [George Sullivan] left municipal employment. [Ref #4, page 2]

January 9, 1984 – Letter to Susan Lindemuth from James Hickey (Aetna) regarding the group policy number 392680 and George Sullivan. I do not think anyone at MOA informed Aetna that Mr. Sullivan was no longer employed by the municipality.  However, he was kept on the census and Mr. Sullivan kept making the annual premium payments. [Ref #4, page 2; emphasis added]

Lynda Gable of Aetna in 2002,

The insurance fund was the reserves that Muni held and those funds were never submitted to Aetna nor included in any of our premium calculations from a risk standpoint to the best of my knowledge.  How much life insurance is he supposed to have??? [Ref #5, page 4; emphasis added]

This is information that the Dennis Wheeler had on hand when he and the Department of Law prepared the memorandum.  But this is not information that they included in the memorandum so that the Assembly would be fully informed.  In fact, Assembly members didn’t even learn that Mayor Dan Sullivan was the trustee of the George M. Sullivan Irrevocable Life Insurance Trust until the first news stories began to come out two weeks after AR 2010-33 passed.

February 16, 2010

By a vote of 9-1, the Assembly appropriated $193,000 to the George M. Sullivan Irrevocable Life Insurance Trust. [Ref #1].  The only Assembly member who voted against the appropriation was Harriet Drummond.  However, Mike Gutierrez was not present at the meeting.

One last item

When I was on Shannyn Moore’s radio show last Friday, she told me that the earliest posting of this issue was on December 30 or 31.  Further, items for the Assembly’s agenda must be given to the clerk two weeks in advance; if you don’t get it in time your item goes on an addendum to the agenda.  That’s where Resolution No. AR 2010-33 was located at the February 2 Assembly meeting: on the addendum.  Why was it filed too late to get on the regular agenda, when the December 30/31 posting shows that people in Dan Sullivan’s administration were dealing with it as much as a month before?  The appearance is of an item that was stealth-added to the agenda in order to minimize Assembly & public attention before it came up for a vote on Feb. 16.

I suppose with this timeline I could go into some of the stuff said after the news stories began to come out, but I’m pretty tired now and so are my hands.  So this is it for now.  But if you’ve made it this far, you are now a great deal more informed about this than you were before.   I hope that people will write questions & comments, because even as long as I’ve been at this, I’ve probably missed some stuff.

References

1. 3/3/2010. “George Sullivan timeline” (Anchorage Daily News).
2. 3/3/2010. “City life insurance payout for former mayor raises eyebrows — $193,000: Assembly honors ‘82 deal that puts city money into George Sullivan’s trust” by Sean Cockerham (Anchorage Daily News).
3. 1982 Municipality of Anchorage documents relating to former Mayor George M. Sullivan’s life insurance. Contains the same documents provided in a PDF by the Anchorage Daily News, except that I’ve placed them in chronological order & provided bookmarks (table of contents).
4. 2007 Begich administration emails. Contains the same documents provided in a PDF by the Anchorage Daily News, except slightly reordered & provided with bookmarks (table of contents).
5. 2002 Wuerch administration emails relating to former Mayor George M. Sullivan’s life insurance. Contains the same documents provided in a PDF by the Anchorage Daily News, except that I’ve placed them in chronological order (as best I could) & provided bookmarks (table of contents).
6. 1/8/1994. “Municipality still paying Fink’s salary” by Peter Blumberg (Anchorage Daily News).
7. Susan Lindemuth public profile at Linked-in.
8. 3/10/2010. “Sullygate update 2: ‘Five administrations have been aware of this’” by Melissa S. Green (Henkimaa.com).
9. 3/16/2020. “Sullygate & Chronos, god of time” by Melissa S. Green (Henkimaa.com).
10. 2010 Assembly Resolution & memorandum relating to a payout of $193,000 to a trust in the name of former Mayor George M. Sullivan. Contains the same documents provided in a PDF by the Anchorage Daily News, except slightly reordered & provided with bookmarks (table of contents).
11. AR NO. 2010–91: Resolution submitted by Assemblymember Harriet Drummond on March 9, 2010 calling for an independent investigation of legal & ethical questions surrounding the $193,000 “insurance policy” and payout. Currently scheduled for discussion at the 23 March 2010 Anchorage Assembly meeting.

Related posts:

1. Sullygate: My letter to the Anchorage Assembly in support of Assembly Resolution AR 2010-92
2. Sullygate: The Lindemuth/Crawford relationship
3. Talking about Sullygate on the Shannyn Moore radio show