Auditor alleges firm lost contract with MSD over fire-district work

By MIKE ANTHONY

The longtime auditor of the Mehlville Fire Protection District has alleged his firm lost a contract with the Metropolitan St. Louis Sewer District “as retaliation” because of its involvement with the fire district.

Robert Offerman of Hochschild, Bloom & Co. told the Mehlville Fire Protection District Board of Directors last week that John Goffstein, a member of the MSD Board of Trustees and an attorney who has represented Mehlville Local 1889 of the International Association of Fire Fighters, created an impasse that prevented his firm’s contract from being renewed by the MSD board.

Goffstein, who was appointed to the MSD Board of Trustees in December 2005 by St. Louis Mayor Francis Slay, currently serves as board chairman.

During the June 23 meeting of the MFPD board, Offerman read a letter that stated, “I wanted to bring to your attention the situation that recently caused my firm and myself to lose a very large client as retaliation from the Mehlville Fire Protection District’s union. I have been the external auditor for the Metropolitan St. Louis Sewer District during the last three years. Mehlville’s union labor attorney (Goffstein) became a board member of MSD during that time frame.

“Our contract with MSD needed to be ratified annually by the Board of Trustees. The union labor attorney was able to create an impasse which prevented my firm’s contract being renewed by MSD,” Offerman’s letter stated. “I was in-formed by the union’s labor attorney that this action was in response to our involvement with the Mehlville Fire Protection District. The union’s attorney informed me that the union believes that I should have been ‘more outspoken’ against the directors at the district on their decisions to make changes at the district and specifically changes made regarding the district’s defined-benefit pension plan.”

Goffstein represented Local 1889 in a lawsuit filed just days after the MFPD Board of Directors voted on March 16, 2006, to adopt an amendment and two resolutions changing the district’s pension plan from a defined-benefit plan to a defined-contribution plan.

That lawsuit was settled last December two weeks after the Eastern District of the Missouri Court of Appeals af-firmed an August 2007 ruling by St. Louis County Circuit Court Judge Thea A. Sherry that dismissed the lawsuit filed against the board by Local 1889.

A St. Louis County Circuit Court judge also ruled against the union in an earlier lawsuit that sought to prohibit the board from implementing a disability-benefit contract with Standard Insurance and eliminating disability benefits from the district’s pension plan. In January 2007, the Eastern District of the Missouri Court of Appeals affirmed the dismissal of Local 1889’s lawsuit. In May 2007, the Missouri Supreme Court declined to hear the lawsuit.

Goffstein also represented Local 1889 in that suit.

On Monday, Goffstein told the Call he was reluctant to “dignify” Offerman’s comments with a response.

However, the attorney said Offerman’s claims were “not accurate and there were contrary professional accounting opinions. I just wasn’t in a position to vote one way or the other. I abstained. I didn’t call his contract up. He accuses me of manipulating the vote and things like that …”

In 2006, the MSD Board of Trustees approved an agreement with Hochschild, Bloom & Co. to serve as the district’s external auditor for the first year of a five-year engagement. Under the agreement, the term of the external auditor is renewed annually and the fee is set through a multiyear proposal process.

An ordinance to renew the contract was introduced at the February MSD board meeting. In March, the ordinance to renew the contract with Hochschild, Bloom to conduct an independent audit failed after Goffstein requested the measure be removed from the consent agenda and voted on separately, according to approved minutes.

Ellen Harshman and James Buford voted in favor and Bob Berry was opposed. Goffstein and Gerald Feldhaus abstained. The motion failed because adoption of an ordinance requires an affirmative vote by two members of the board appointed from the city and two members of the board appointed from the county.

In April, Berry’s motion for reconsideration of the ordinance was approved. Besides Berry, Buford, Feldhaus and Eddie Ross Jr. voted in favor. Goffstein was opposed. A motion to table the ordinance until the May meeting was approved with a 4-1 vote with Goffstein opposed.

In May, no action was taken by the MSD board on the ordinance for the Hochschild, Bloom contract.

At issue, Goffstein told the Call, was whether Hochschild, Bloom’s contract would be renewed.

“I said: ‘Look, I’m just not in a position to do anything but abstain on this.’ You cast hundreds of votes down there, literally, and on maybe — I don’t know — 1, 3, 5 percent of the time, you might have to abstain. Everybody abstains down there for one reason or another,” he said.

Asked if he abstained for a specific reason, Goffstein said, “… He was out in Mehlville and he had rendered an accounting opinion and he had done some other things out there and other accountants, other professional accounting opinions were inconsistent to his own on a couple of subjects. So rather than get into all that one way or the other, I abstained. He accuses (me) in his letter of saying that — he quotes me as saying that I did this because the Mehlville firefighters wanted me to do it. That wasn’t true at all. But the point is he did some things that were contrary to their interests …”

Goffstein also contended that Offerman “was pointed to this one event where (MFPD board Chairman Aaron) Hilmer allegedly took money out of the pension fund and it wasn’t a public meeting and put it into the general revenue fund, put the money into the general revenue accounts and did it outside of a public meeting. And he was pointed to that fact and then he refused to investigate it and other accountants were saying these were fiduciary breaches, specific fiduciary breaches … Suffice to say, that I was not in a position because I had exposure and experience with this guy and I saw him protecting boards down there. That was one of the things I said to him. I said: You know, if you’re going to protect this board, how do I know you’re not protecting staff at the MSD? … Be that as it may, how could I not abstain? I don’t think his letter even makes it clear that I abstained. I think I had a duty to abstain …”

In her ruling dismissing Local 1889’s lawsuit, Sherry wrote, “… “The court is not persuaded that there was credible evidence that the directors breached their fiduciary duty by modifying the retirement/pension plan under the facts presented to the court …”’

In his letter, Offerman stated, “… I was not personally involved with the district’s decision to terminate its defined-benefit pension plan. As the district’s external auditor, we do not get involved in management’s decisions regarding the operations of the district. Our job is not to draw conclusions on how the district spends its money. Our responsibility as the district’s external auditor is to be sure that the district has good internal control procedures and safeguards in place to safeguard assets and to be sure the district’s financial statements are prepared in accordance with U.S. generally accepted accounting principles.

“We do not get involved in decisions such as should the district buy a new pumper truck, remodel a firehouse or what level to set its tax levy for the year …”

Offerman also contended in his letter that during discussions with Goffstein, “it was stated that our firm was ‘anti-union, anti-labor movement.’ These statements are unfounded and completely not true. Myself and my firm are definitely not anti-union, anti-labor movement. Our firm actually represents some labor unions in the metropolitan St. Louis area and have many clients that are supported by labor organizations. I personally have and have had many family members who were members and/or officers of labor unions over the years…”

Regarding Offerman’s letter, Hilmer told the Call, “… This is really emblematic of what we’ve seen from John Goffstein for the last four years … After posing badly as a lawyer in a string of lawsuits suing MFPD, Mr. Goffstein now fails posing as a trustee at MSD. Instead of doing his job of representing his constituents, he’s more concerned with taking away Mr. Offerman’s job. Now I’ve seen people who are very good at posing. However, Mr. Goffstein’s actions show he is not.”