FBI, STATE PROBING $3.3 MILLION BISD INSURANCE DEAL?

By Juan Montoya
Sources at the Brownsville Independent School District say that federal and state agents have been probing the details regarding the issuance of a $3.3 million insurance contract to a Houston firm without having been previously approved by the board.
The contract, purchase order and check were made out to McGriff and Seibels and Williams of Houston, Texas. The policies covered property, windstorm, hail, boiler machinery insurance.
 On January 13, a majority of the Brownsville Independent School District board told the administrators in charge they were not satisfied with the recommendation of McGriff.
Despite the fact that there had been four meeting of the Insurance Committee and that the Request For Proposals (RFPs) for the lucrative awards had been issued in early December 2014 and that four proposals had received, two were not considered and deemed unacceptable. The remaining two – although under two different company names – were said to come from firms associated with McGriff, also the insurance consultant to the BISD.
One trustee – Joe Rodriguez – said he was not satisfied with the choices recommended by the administration, namely Judy Cuellar, in charge of insurance, Rosie Peña, in charge of purchasing, Lucio Mendoza, Chief Financial Officer, and then-Superintendent Carl Montoya.
The administrators were told to rebid and to come back with a different recommendation.
"They thought they were paying too much to McGriff," said a BISD administrator.
From January 13 to the regular monthly board meeting February 3, the administrators did not come back to the board with an option for the board.
It wasn't until the day after the regular meeting, on Wednesday, February 4, that board members learned at the Budget Committee Meeting that under the item titled: "14. Discussion of Property Insurance renewal," that the district's administration had already approved the purchase and vendor of the insurance for the district without them being notified.
Under the pretext that an urgency existed because the insurance ran out on January 31, CFO Lucio on January 22, wrote Montoya and said that "after considering the time constraints to go out for new proposals for property insurance, trying to schedule committee meetings and the expiration of the property insurance policy...it is my fiduciary duty to protect the district assets to the bet of my ability. I would respectfully recommend that we renew the property insurance through the Texas Cooperative Purchasing Network (TCPN, or Texas Buy Board)."
That was the first of numerous irregularities surrounding the insurance contract.
The district insurance evaluation committee which recommended McGriff were Employee Benefits administrator Judy Cuellar, Payroll Administrator Kenneth Lieck, Warehouse Adm. Kent Wittenmore, CFO Lucio Mendoza, Finance Coordinator Mark Alaniz, and Belia Rodriguez, a representative from the purchasing dept.
The three BISD board members who head the insurance committee are Cesar Lopez, Jose Chirinos and Carlos Elizondo.
The other two companies who were not considered, according to Cuellar, was because they did not have the authority or permission to approach the companies McGriff already had contacted to be in their bid.
That strikes Klements as suspicious since Bordon's Insurance, the other company whose bid was allowed, lists the same identical insurance carriers as McGriff.
Insurance companies, experts say, only allow one agent to approach them and will not consider any others. To add insult to injury, they say that McGriff besides selling the BISD insurance, is also listed as its consultant (risk manager) with the Texas Cooperative Purchasing Network.
At least one representative of the companies excluded, Greg Kelment, of Klements Insurance, said the set up in effect prevents other brokers or their agents to offer any bids because McGriff has already "tied up" the bids.
Was the Bordon's quote simply a ruse to make the district believe that there were two different companies bidding when in reality the same insurance carriers are listed by both with the only difference being the lower quote price that favored McGriff?
The BISD board has since revisited the contract and now is in  a three-month service extension with McGriff while the district goes out for bids again in April.