Jerry Parks and the Teachers' Pensions
Adams, James Ring
"Jerry Parks and the Teachers' Pensions" Jerry Parks and the Teachers' Pensions RING ADAMS WHEN THE NAME LUTHER GERALD PARKS turned up on a long-sought list of pension investments, Lynda Hogue didn't have any idea who he might be....
...After much prodding from Hogue, reluctant bureaucrats finally produced a list of people who had gotten those loans...
...She complains that, as a potential critic, she wasn't even notified of the meeting...
...The story of corruption in Bill Clinton's Arkansas now involves sophisticated high finance with billions of other people's dollars—and the Teachers' pension fund is right at the heart of the scheme...
...A month before her death, Thompson had written a letter to Parks complaining of sexual harassment from his partner McIntire...
...McIntire has not replied to phone calls to his new company, ENA Investigations in Bryant, Arkansas...
...Clinton influence the AIRS backing for the Parks loan...
...American Contract Services became embroiled in a homicide investigation in September 1990 when one of its ex-employees, a former security guard named Margie Thompson, was found dragged to death on a country road near her home in Jacksonville, northeast of Little Rock...
...One of these was the Civil Service Trust Fund, which pays federal employee retirement checks...
...Rubin used the freed-up cash to pay interest coming due on Treasury bonds, sticking the trust funds with an IOU...
...I don't feel we should be greedy," Shirron told a meeting of teachers this February, in a drastic redefinition of fiduciary duty...
...In one especially high-flying performance, he lobbied a special session of the state legislature to pass a package of increased school spending, and paid for it with the state's largest general tax increase in twenty-five years...
...Mandatory spending cuts for fiscal year 1987 gave school districts their smallest increase in state aid for years...
...It later emerged that the Treasury had been planning the maneuver since early 1995...
...These figures reinforce the belief, widespread in Arkansas, that it takes considerable political clout to dip into the state pension funds...
...At first the campaign hired the Pinkerton agency z to provide its own guards...
...In a March 1987 letter to a concerned teacher, Clinton dodged responsibility...
...Though ATRS's blue-chip stocks have done very well, swelling its assets threefold over the decade and allowing its professional managers to claim they rank in the top quarter of all public pension funds, the fund also has a dark underside of political lending...
...Did Gov...
...The Parks murder, one of that year's few unsolved homicides in Little Rock, has long attracted more serious attention abroad than at home...
...Yet the loan raises serious questions, both for the Whitewater affair and for AIRS executive director Bill Shirron...
...Did the Parks loan and the other SBA lending meet federal standards for eligibility...
...ATRS pension director Bill Shirron refused to upset the apple cart...
...I did not originate the discussion," he wrote in an artfully phrased disclaimer...
...And where was Clinton, as the pension fund acquiesced in the 1987 raid...
...The state police did one hell of an investigation," Gary Parks told TAS, "but nothing came of it...
...for many, state funding actually decreased...
...Throughout all of this, the Teachers' fund loan stayed well in the background...
...And Lynda Hogue reports that her questions about the SBA program provoked a strange response from the AIRS bureaucracy...
...2 Office Park Circle, Suite 204, Birmingham, AL 35223 (205) 871-5731 FAX (205) 870-8211 CITATION The American Spectator • June 1996 37...
...In his best streak of original reporting, Stewart describes how Twin City's higher-ups renewed the mortgage on the Whitewater Development Company in 1988, giving the Clintons a highly unusual waiver on the requirement they submit a financial statement...
...Bringing a suit, he said in a recent defense of this decision, would only have hurt the schools...
...Whatever Parks learned from his inquiries, he became deeply enmeshed in the Clinton political machine...
...A prim and handsome blonde with the formal manners and iron will of a Southern lady, Hogue had spent several frustrating years petitioning the fund for a change in its retirement policy...
...It is a tale that, until now, had been largely the preserve of conspiracy theories about Bill Clinton's affairs or the death of Vincent Foster...
...That is the story told by his son Gary and reported in Britain's Economist and Sunday Telegraph, although it is not known who hired Parks or why...
...But when a tough-minded schoolteacher began finding out what was happening to her pension fund, she stumbled upon some stunning evidence...
...Governor Clinton signed into law a requirement that five to ten percent of the fund's assets be placed in Arkansas-related investments...
...Instead, Clinton devised an elegant system for getting his hands on the billions of dollars accumulating in the state'sfive pension systems...
...For his part, McIntire sent a letter a year later to the Arkansas Board of Private Investigators, charging that ACS officials had been involved in Thompson's death...
...But state revenues fell short over the next two years as the state's economy stalled, and per capita incomes grew at a rate below the national average for the first time in two decades...
...It was shady maneuvering by ATRS that first brought Lynda Hogue together with a group of educators curious about the fund's management...
...Lynda Hogue and her friends began to glimpse the workings of the system when they reviewed the materials for a special ATRS board meeting called for late April...
...Perhaps outsiders are quicker to read intimations of blackmail and political violence into a case that might also be explained as a business dispute II O G U E or a personal feud...
...During the same period, Gary Parks says, Twin City extended a line of credit to his father...
...Or was it a case of political favoritism...
...Parks and his partner of the time, Thomas D. McIntire, were listed as co-borrowers...
...But the only thing the ATRS board could do about it was to sue the state Board of Education to compel payment...
...So she finally ran for the board herself in one of the four state districts representing active teachers...
...Indeed, some of President Clinton's current congressional critics see his Arkansas divertissement as a model for his administration's strategy during the year-end federal shutdown crisis...
...3 34 June 1996 • The American Spectator Until recently, the murder of Jerry Parks seemed like only an insignificant Whitewater detail...
...Gary Parks says the loan papers were removed by federal agents, who made a highly unusual intervention in the murder case...
...The Park loan went through the Twin City Bank of North Little Rock, an institution that looms large in James Stewart's Whitewater best-seller, Blood Sport...
...Some of the answers to these tantalizing questions may be locked away in the Parks loan file, which is not now available either to the Parks family or to Lynda Hogue...
...One program in particular had caught her eye—Small Business Administration loans that had been funded by ATRS...
...Actually his company, American Contract Services Inc., held the contract to provide security for the downtown office building when the Clinton campaign moved in...
...the list was chronological, and Jerry Parks was one of the last names on it...
...On November 15, 1995, he authorized the liquidation of more than $6o billion in Treasury bonds and notes held by several of the trust funds which, in addition to Social Security, hold assets to cover future federal obligations...
...About a year ago, Bill Ray Lewis, another persistent pension fund critic who was assistant superintendent of the Harrison school district, had discovered a clear case in which money owed to the pension fund had been diverted to pay for Governor Clinton's political agenda...
...A $47,959 loan backed by the Small Business Administration went on the ATRS books sometime in late 1989 or early 1990...
...And this part of the portfolio has been a dog as a performer, ranking nationally in the bottom quarter...
...After a week-long hearing, the court dismissed both sides...
...Says Roy Drew, the Little Rock consultant and pension fund critic, "You haven't even scratched the surface...
...36 June 199 6 • The American Spectator The Parks loan would quickly have turned into a public relations nightmare for ATRS had anyone known about it...
...But, according to Gary Parks, the :4 Clinton people fired Pinkerton toward the end of the cam- paign and turned the job over to his father...
...At the same time, Gov...
...Parks countersued for some of the money he said McIntire had siphoned off...
...The early stories about Parks leaned heavily on his role as head of security for the Clinton-Gore national campaign headquarters in Little Rock...
...No one seems to have seen the stagnation as a consequence of the tax increase...
...The pension fund now holds just thirteen of these SBA loans, and Brewer says it is buying only one or so a year...
...According to their son, the couple needed the money to buy out their partner McIntire, whom they accused of overspending company funds and making sexual passes at employees...
...The Board gave him the go-ahead by a 6 to 2 majority, in a vote that later turned out to be illegal...
...Replying to a query from Lewis last December, Shirron wrote, "[Clinton] asked for the reduction in the state employer matching so that the school districts' aid would not be reduced...
...According to Mike Brewer, the ATRS head of Arkansas-related investments, local banks would originate the loans and then apply to the fund to buy the portions guaranteed by the SBA...
...The governor's role in the pension raid makes the episode one of national concern, not just a worry for Arkansas teachers...
...Parks was a Little Rock private investigator who at some time in the 1980's conducted surveillance on then-Gov...
...At first Education Director Tommy Venters asked the ATRS board to approve a reduction in the state contribution I R R O N rate to the fund, a move he said would free about $6.5 million for school aid...
...CITATION CORPORATION Supplying quality iron, steel and aluminum castings to the world...
...After Republicans refused to raise the federal debt ceiling, Treasury Secretary Robert Rubin simply arranged to draw on federal trust funds to meet current expenses...
...THIS IS THE JUICY APPLE CART THAT HOGUE THREATENS TO upset, and her discovery of the loan to Jerry Parks may be the surprise that does it...
...It was September 26, 1993, when Jerry Parks was shot to death in his car at a sparsely settled intersection just 5o yards past the western city limits of Little Rock...
...The roster of its political deals and pay-offs would take a separate article to recite...
...She beat the L Y N D A incumbent director by three to one, and could now start asking searching questions about the fund's investments...
...The American Spectator • June x996 All of Clinton's political biographies brag about his crusade as the "education governor" in 1983...
...As Bill Ray Lewis researched this history, he discovered that 35 the state attorney general had ruled in 1988 that the Education Department had no authority to hold back the money from the pension fund...
...Jerry Parks and the Teachers' Pensions ES RING ADAMS WHEN THE NAME LUTHER GERALD PARKS turned up on a long-sought list of pension investments, Lynda Hogue didn't have any idea who he might be...
...Only the Teachers Retirement Board had the legal authority to vote for a reduced contribution to the system, but the state Education Department went even further...
...The pension fund didn't make the loan directly...
...Board members were told that the previously unannounced April 23 meeting was necessary to meet a May 1 construction deadline...
...Clinton launched his plan in early 1985 with the stipulation for investment in Arkansas...
...It was a far different job than her regular position as a second-grade teacher in Jonesboro, but Hogue—along with a group of concerned colleagues—had gotten the feeling that their money was being plundered by various politicians...
...So McIntire petitioned Pulaski County Chancery Court to liquidate ACS so that he might retrieve his 5o percent share...
...With its access to the pension fund billions, ADFA has since turned into something of a parallel government, answerable only to directors and professional staff originally appointed by Bill Clinton...
...As interim financing to get construction started, ADFA asked for a $40 million line of credit for borrowing from the Teachers system...
...This empire, largely invisible to the average Arkansan, generated innumerable opportunities for political payoffs...
...Hogue had recently been elected as director of the Arkansas Teachers Retirement System (ATRS), the $4 billion fund that manages the pension money for all state teachers...
...A month later, Venters brought the same motion before the state Board of Education...
...The ATRS and the Arkansas Public Employees Retirement System (APERS), along with three smaller systems, provided a multi-billion dollar pool of capital available for skimming by a sophisticated bond-issuing apparatus that Clinton had devised and pushed into law—the Arkansas Development Finance Authority (ADFA...
...He says that right after his father's death, federal agents took papers from the family home and made a search for encrypted files in his father's computer, leaving it blank except for the booting sector...
...According to police reports, a gunman, still unknown, shot through the back window of Parks's 1993 Chevrolet, and then pulled alongside, killing him with three shots from a 9mm pistol...
...But the fact that pension fund money ended up with Jerry Parks, however indirectly, greatly JAMES RING ADAMS is an investigative writer for The American Spectator...
...The controversial plan called for ADFA to lease the prisons to the state Board of Corrections, which in turn would hire private companies to run them...
...This contract might seem less significant than some of the conspiracy theories have painted it, if it weren't for the emerging details about Parks's loan with the pension system...
...This was a significant question in the government's case against David Hale...
...Bill Clinton...
...Has the AIRS come forward as a potential witness in the investigation...
...So in early 1987 the state Department of Education turned to the teachers' pension fund for money...
...But the strange details are adding up...
...The probe ended in February 1992 with no action...
...ALL OF OUR ENDEAVORS ARE BASED ON TRADITION, TEAMWORK AND THE COURAGE OF ME HUMAN SPIRIT...
...That same legislation established ADFA, a bond-issuing entity which gave state politicians vastly increased access to the wealth of the pension funds...
...A later audit by the Legislative Joint Auditing Committee found that the Education Department had siphoned off more than $12 million due the fund, and that more than $8 million had come from money that the legislature had specifically earmarked for the retirement system...
...increases the possibility that his fate did indeed have some connection to the insider intrigues of Clinton's Arkansas...
...Is this connection a factor in the Parks murder case...
...Lynda Hogue didn't make the meeting, and the other trustees voted unanimously to approve the line of credit...
...More so than any governor in memory, Bill Clinton BILL S H had managed to mobilize the state government's fiscal machinery into a political powerhouse...
...Not surprisingly, this segment of the fund's investments is often little more than a bone tossed to political interests at the expense of fiduciary duty...
...We should share revenues with the system...
...Clinton pushed a branch-banking bill for which Twin City had lobbied heavily through a special legislative session...
...It took money that the legislature had appropriated for the pension fund and diverted it instead to the school aid program...
...If the Arkansas pension funds provide a model for Clinton's national conduct, and for baby boom politicians around the country, we can expect rough days ahead for the doctrine of fiduciary duty...
...Executive Director Shirron summoned the board on short notice to approve a $40 million line of credit for ADFA, so the development authority could finance the ground-breaking on two new state prisons...
...As the mid-1980's governor of Massachusetts, Michael Dukakis pushed a similar scheme in his Massbank proposal, but unlike in Arkansas, an effective bipartisan opposition kept it in check...
...But Teachers turned him down in a 6 to 5 vote...
...They were just scared to death," she says...
...Even today Brewer, the longtime director of the fund's Arkansas investments, says he knows nothing about it...
...He also made allegations of illegal drug use at the company...
...But Shirron now says that it was Clinton's idea after all...
...After going through the books for American Contract Services, Gary said that the $47,000 loan in 1989 was the largest lump sum received that year, except for the proceeds when Jerry and his wife Jane cashed in their IRAs...
...And that's how Hogue stumbled onto one of the most interesting—and least investigated—aspects of the Whitewater story...
...Administrators of pension funds are supposed to follow one guideline and one guideline only—to choose the combination of high-return and low-risk investment that will maximize the assets available to the members who will count on the fund to pay for their retirement...
...This case may remain one of the so-called Whitewater mysteries, but it underscores the distance we have come from a land deal in the Ozarks...
Vol. 29 • June 1996 • No. 6
