Last week Proviso Township High School District 209 chief financial officer Todd Drafall was excluded from a meeting hosted by the Proviso Township school treasurer’s office (PTTO) to discuss an investment with the Illinois Metropolitan Investment Fund (IMET) that has gone bad. There has been bad blood between the treasurer’s office and Drafall for a more than a year.
The PTTO invited the top financial person for 13 of the 14 school districts to attend a meeting on Jan. 23 for a briefing about an investment fund that was subject to a fraud and lost $50 million. Proviso District 209 was the only district not invited to the meeting. Drafall got wind of the meeting and showed up at the PTTO’s Westchester office Friday morning but was asked to leave.
“All of the districts except for Proviso high school received that email requesting that they come to a meeting at the Township Treasure’s office about the IMET potential losses,” Drafall said. “I did not receive that, several people sent it me. I did show up at 10 o’clock and was told that I would not be allowed to attend the meeting by the CFO and the Treasurer. To my knowledge Proviso High School (District 209) was the only one not in attendance and not allowed to listen to the information and ask questions.”
Drafall said that he was told that the information presented at the meeting would be sent to him Friday afternoon which it was. Drafall said that he could not share that information until after a meeting with the district’s financial oversight panel Tuesday afternoon after press time.
In answer to a Freedom of Information Act from the Forest Park Review, the PTTO sent a bank statement showing $2 million was in a “restricted” account.
PTTO treasurer Daniel Coglianese essentially confirmed Drafall’s account of what happened Friday, but didn’t go into detail in explaining why he and his chief financial officer, George Chirempes, didn’t want Drafall at the meeting.
“He left on his own accord,” Coglianese said. “He wasn’t invited to the meeting. We felt it was better to speak with 209 personally.”
Drafall has been persistent about demanding information from the PTTO about the extent of the possible loss in its investment in one of IMET’s short term money management funds going so far as to even filing a Freedom of Information Act request. The D209 Financial Oversight Panel requested the information from Drafall at a December board meeting and he couldn’t answer questions.
IMET was a victim of fraud when it purchased a short term security that was portrayed as being backed by federal guarantees when it was not. About $2 million of the PTTO’s investment in IMET’s Convenience fund is at risk although IMET and an investment advisor are aggressively pursuing the assets of those who perpetuated the fraud. The PTTO is just one of approximately 300 Illinois municipalities and other local government entities that invested in the IMET fund. The total IMET investment in the fraudulent securities has been valued at $50.4 million. However asset recovery efforts have already collected about 60 to 70 percent of the potential loss a lawyer for IMET said. Assets seized, which include five Florida hotels, have been placed in a trust and will eventually be liquidated and distributed to investors, such as IMET, who bought the fraudulent securities.
The PTTO handles financial and cash management affairs for 14 school districts including District 209 and Forest Park District 91.
Last year, Drafall and the PTTO butted heads after the PTTO refused to credit the district for $1.8 million in a bank account that had not been properly journalized.
Drafall and the district’s auditors complained the PTTO pools all the funds for 14 districts in a single ledger, clouding the transparency of the accounts. Drafall also has questioned the $160,000 paid to the PTTO yearly when the township treasurer doesn’t even have the computer capability to pay checks electronically, which could save $10,000 per year.
Coglianese’s frustration with Drafall was apparent in a letter he sent to Drafall on Jan. 9.
“Any projection of a loss at this time is premature and would probably be incorrect,” Coglianese wrote in his letter. “THERE IS NO LOSS of any of your funds.
You again are using trickery in your requests such as changing your wording by replacing the word “may” to “potential” loss to the same question. THERE IS NO LOSS! THERE IS NO LOSS! THERE IS NO LOSS.”
Coglianese went on in the letter to accuse Drafall of misrepresentation in stories previously published by the Forest Park Review and faulted him for arranging meetings with superintendents and politicians about the possibility of abolishing the PTTO. Essentially Coglianese told Drafall to stick to his own job.
“Has the oversight committee given you the direction for abolishing the Proviso Township Treasurer’s Office or for you to concentrate on School District # 209 finances?” Coglianese wrote.
“As Proviso Township School Treasurer for 27 years, I have never experienced an individual such as yourself.”
For his part Drafall said that he was troubled by the decision to exclude him.
“I’m a little frustrated,” Drafall said. “We’re trying to be very open about our finances. We post our audits, our monthly expenditures and revenues out on our web site so that everybody has a sense of the health of the district. To exclude us from that process because we asked questions is troubling. I don’t quite understand the reasoning for it. I am doing what I am required to do, both by my employer and essentially what I’m required to do professionally to understand where the funds are and what’s going on. And to be told that everyone can attend but you. Well it’s not very professional. I don’t think we’ve been out of line in anything that we’ve asked for.”