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.
Melissa S. Green