by: countrycat

Fri Nov 06, 2009 at 17:09:23 PM CST

I would also renew my call for a special audit that answers the hard questions of how Alabama families were left in this predicament.

In a press release today, Agriculture Commissioner Ron Sparks upped the ante with a call for a “forensic audit” of the PACT program.

“I am calling for a full forensic audit of the PACT investment program,” Ron Sparks said. “If people unlawfully made money off the backs of thousands of Alabama families who invested in the PACT program, it’s time to go get our money back.”

Now, many people (including me!) have alleged that the Prepaid Affordable College Tuition program lost money money due to the incompetence of the investment managers and oversight failure of the PACT board.  But this is the first time I’ve heard any allegations of deliberate criminal activity.

Alabama Treasurer candidate, Jeremy Sherer, warns against using criminal investigations “as a political tool,” but agrees that a forensic audit is a good idea – as is an investigation should the facts warrant one:

We’ve seen too much of that in our politics. Alabama legal authorities should constantly operate in a state of due diligence to prevent abuse of power and corruption. However, if any information of substance is derived from the SEC investigation that might relate to PACT financial operations, state authorities most certainly should investigate any potential wrong-doing. 

More about this issue on the flip – including my personal impressions of Mr. Huff from seeing him in action at PACT Board meetings.

“…was involved with an “unlawful payment scheme” in connection with the Jefferson County sewer bond crisis that has driven the county to the brink of bankruptcy.”

Forensic audits are often done when there’s some suspicion of criminal activity, such as embezzlement or fraud.  So Sparks’ call for a “forensic” audit of PACT carries within its wording an allegation of wrongdoing. That’s a serious charge, and I’m not sure that Sparks is accusing Mr. Huff, but he is calling for more investigation into the matter. 

Jeremy Sherer agrees on the need for a forensic audit – no matter who’s been on the board or who owns what company:

A full forensic audit of PACT is appropriate regardless of the SEC’s investigation. PACT is a program that in 2000 was funded at 136%, presently PACT is funded at 62.3%. PACT has not been solvent since 2001, and in that time more than 12,000 new PACT contracts were sold by the State of Alabama. Either through legislative or legal action, the State of Alabama will eventually financially resolve the outstanding 45,000 PACT contracts. And, in doing so, it will spend hundreds of millions of dollars.

A full forensic audit is warranted so that state leaders can explain to PACT families and Alabama taxpayers where exactly the money went, and so that governmental entities might learn how not to manage funds entrusted to it by the hard-working people of Alabama.

I tried to look up Mr. Huff’s company on the Web, but found that the Web site links for ABI all seem to be broken.  The URL: http://www.abicapital.com/ gives a 404 server error.  The WayBack Machine’s (an Internet archive) last mention and page indexing of the company’s site was in March, 2008.  At that time, the Web site described the company this way:

ABI Capital Management, LLC was founded in 1999 by Willie Huff and Oliver Robinson as an Investment Advisory Firm and became NASD registered in 2000. We are a black-owned Investment Banking Firm located in Birmingham, AL.

The primary shareholder is Willie R. Huff who serves as Chairman of the Board.

Our business lines includes:

*Broker/Dealer selling corporate debt securities
*Municipal Bond Underwriter
*U.S. Government Securities Broker
*Municipal Securities Broker
*Investment Advisory Services

What’s the bottom line here?  I’m not sure.  A forensic audit seems like a great idea – if only to clear up any lingering questions about who did what, when, and why.

But I’m not sure we should immediately assume that anyone associated in any way with the Jefferson County sewer system is automatically a crook.

I’ll also note that Mooncat and I both discussed Mr. Huff on the way home from Wednesday’s board meeting – and all of it was complimentary.  As I read through the last few years of meeting minutes and have attended meetings in person, Mr. Huff has struck me as the only person on the PACT board with a substantial grasp of financial matters.

He’s been the lone dissenting voice in many cases when Callan Associates gave their terrible investment advice and sharply questioned their goals, methods, and investment choices.

He and fellow board member, Ricky Jones, led the opposition to the board’s decision to get out of equities NOW of all times because suddenly Callan thinks that “capital preservation” is “good financial stewardship.”

And finally…. Note that the PACT program undergoes an annual audit already.  The 2008 Program Audit is posted online at the PACT Web site.