Bought out or sold out?

By Wally Kennedy

wkennedy@joplinglobe.com

PICHER, Okla. — It’s like walking through a bad dream for John Frazier as he steps through the rooms of his former home in Picher and sees the damage left by vandals.

It’s difficult for him to look at it and not feel frustrated by the toll that he says the buyout of Picher has taken on his life.

“But we’ve got hope now,’’ he said. “The lawsuits that the people here have filed against the trust offer the first signs of hope for those who have been cheated. I think we’re going to get to the bottom of this.’’

Frazier is one of more than 100 Picher residents who are plaintiffs in a class-action lawsuit filed on behalf of the relocated residents of Picher. The lawsuit alleges he and others lost thousands of dollars when the Lead-Impacted Communities Relocation Assistance Trust and its appraisal companies low-balled the value of their properties. He said he and others complained loudly about it when it happened, but no one stepped forward to help them.

“They just didn’t care. They didn’t have to care,’’ he said. “Their depositions show that.’’

Depositions collected in the lawsuit so far allege that:

n The trust appropriated private insurance payments for residents following a tornado that hit Picher without allowing those residents due process.

n The trust violated the state’s Open Meetings Act.

n A state official who was only to be a “spectator” of trust activities in fact ran the organization.

n Larry Roberts, the actual operations manager of the trust, set up a fake video camera in his office to “intimidate” Picher residents, according to the plaintiffs’ attorney.

Officials with the trust who are named in the lawsuit were contacted by telephone last week but declined to comment about the ongoing legal action. However, they have said previously that they feel the majority of Picher’s relocated residents received a fair deal or they would not have accepted the buyout from the trust.

Some residents have countered, however, that the decision whether to stay or leave Picher was not voluntary, but mandatory because of threatening statements by trust officials who suggested that water and sewer services in Picher would be shut off.

The depositions were videotaped. Copies of the videos have been circulating among the relocated residents of Picher. Popcorn parties have been held in homes where groups of people have gathered to watch trust officials respond to questions from the plaintiffs’ attorneys, Jeff Marr and John Wiggins, both of Oklahoma City.

The court battle, which started earlier this year, is now being waged before Judge Dana Kuehn in Tulsa County, and before Judge J. Dwayne Steidley in Ottawa County. Steidley, a judge from Claremore County, was assigned to the case when Ottawa County’s judges recused themselves.

Bulletproof?

Steidley is being asked by the plaintiffs’ attorneys to decide whether a state law that created the trust and made it immune from judicial review is constitutional. Lawyers for the plaintiffs, in a recent court filing, cite several precedents in state law that say every public trust using public money in Oklahoma must be subject to judicial accountability. By denying plaintiffs access to the courts, the act denied the plaintiffs due process.

Marr said, “The threshold issue of whether the trust can operate without judicial accountability has to be answered before that case goes further.’’

The plaintiffs’ filing also challenges the constitutionality of a state statute that permitted the trust to appropriate private insurance payments from Picher residents in the aftermath of the tornado that devastated the west and south sides of the town on May 10, 2008. That statute, the plaintiffs’ lawyers argue, took property from insured residents without due process and in violation of their right to equal protection and treatment by the trust when compared with the way the trust treated uninsured residents.

The lawsuit alleges that forms were created by the trust at the direction of J.D. Strong, Oklahoma’s Secretary of the Environment, that required buyout residents to assign their insurance proceeds to the trust in order for buyout residents to obtain money from the trust to move away from Picher. The lawyers for the plaintiffs described that effort by the trust “as nothing short of extortion by a public trust’’ and that the effort “robbed insured residents of their private insurance money for which they, not the trust, had paid premiums.’’

In his deposition, Dr. Mark Osborn, chairman of the trust, testified that within 24 hours of the tornado, “literally before dead bodies were all identified in the rubble, a secret meeting occurred involving LICRAT trustees, J.D. Strong and others,” according to the lawsuit.

That meeting was limited to four members of the trust and Strong. To comply with Oklahoma’s Open Meetings Act should five trustees be convened, the group was limited to four to maintain secrecy, the plaintiffs’ filing alleges. Osborn said last week he did not want to talk about the issues raised in the lawsuit.

A goal of the meeting was to “determine that any insurance proceeds will be deducted from trust offers,” according to the lawsuit.

In his deposition, Osborn said the trust, in fact, was able to save some of the taxpayers’ money allocated to it to buy out Picher residents by using insurance money instead.

Closed meeting?

In addition, the court is being asked to look at whether the trust violated Oklahoma’s Open Meetings Act by permitting the buyout contractors and a state employee — Strong — to attend closed-door sessions of the trust in which property values were assigned. If the court rules that there was willful violation of the law, the state and the trust could be forced to turn over the minutes and all other records associated with those closed-door sessions.

Osborn said in his deposition that the trust could invite anyone it wants into a closed-door or executive session. But the lawyers for the plaintiffs argue that state law only permits trust members, the trust’s attorney and the trust’s immediate staff to enter those meetings. The trust has only one staff member, Larry Roberts, who serves as operations manager.

The plaintiff’s case alleges that Strong has been in control of the trust since the beginning, though no document or law bestowed any power on him to involve himself in any of the trust’s affairs. His influence over trust activities, the plaintiffs’ lawyers alleged, is what led to the resignation of the trust’s vice chairman, Ed Keheley, and the trust’s first operations manager, Sonya Harris. Both resigned in 2007.

Keheley declined comment for the story, and Harris, who has moved from the area, could not be reached.

‘Organ grinder’

Lawyers for the plaintiffs argued in their filings that Strong “is legally only a spectator to the trust,’’ but, in fact, acts as its de facto manager. He is, they said, “the unconstitutional puppet master or organ grinder’’ for the trust.

The lawyers for the plaintiffs cited deposition testimony that showed the appraisal company, Cinnabar, sought Strong’s approval for appraisal contract money; that Strong ghost wrote documents for the trust’s chairman and for Gov. Brad Henry defending the trust’s behavior, and that he prepared talking points and agendas for the trust and its operations manager to use during public meetings.

In addition, the lawyers said that Strong attended the trust’s secret meetings, and that in one of those meetings, he discussed a trust challenge that they not “encourage buyout applicants to stay by offering septic and rural water until the very end of the buyout.’’

The plaintiffs’ lawyers in their petition also allege that Strong had a conflict of interest in that the state department he heads would profit from trust buyout policies, in that leftover trust money — which might result if plaintiffs were underpaid — reverts to the Oklahoma Department of Environment.

Strong did not return telephone calls for comment by deadline.

The trust, through its attorney, Scott Boughton, assistant attorney general in the litigation section of the Oklahoma Attorney General’s Office, argued in his motion that buyout residents do not have standing to challenge the trust because they have been bought out.

Boughton said he has advised his clients that they are free to talk about the case as private citizens, but he encouraged them not to.

“We’re not going to get into the merits of this case and we are not going to try this case in the media,’’ he said in a telephone interview on Friday.

The plaintiffs’ lawyers said that for the buyout to be truly voluntary the resident selling his property must be “unconstrained by interference.’’

The lawyers said, “The residents are clearly being forced to sell at a non-negotiable price to escape the danger they are living in or have lived in, not to mention the loss of public services.’’

In Tulsa County, the plaintiffs also have separate litigation against the primary appraisal companies, Cinnabar, and Van Tuyl and Associates, and the insurance companies that worked with the appraisal companies after the tornado. Judge Kuehn recently ruled that those entities do not have immunity from judicial accountability.

Video camera

In his deposition, Roberts said he installed a fake video camera in the trust’s office at Picher because he had concerns about his personal safety.

Marr, the attorney for the plaintiffs, claims the fake video camera was used to “intimidate’’ buyout residents and “is consistent with what the people of Picher have said about their treatment all along. That somehow they were treated by the trust as if they were inferior.’’

Roberts did not want to comment when contacted.

“By the time we are done, we’ll know what the motive was for the mistreatment of these people,’’ Marr said. “It is our opinion the trust did not fulfill its constitutional obligations in any respect and that the state was not interested in finding out what was going on here.’’

In his deposition, Strong said he had no recollection of Gov. Henry ever asking him for a written report about what was happening with the buyout at Picher. Information gleaned from Strong’s computer by the attorneys showed that he wrote the response to a petition that Frazier and other residents of Picher sent directly to the governor, requesting that the governor intervene because of the deplorable manner in which they were being treated by the trust.

Last year, a letter signed by 226 residents of Picher raised questions about the fairness and consistency of the buyout, and it was sent to numerous Oklahoma officials, including Henry. That letter specifically called for the replacement of Strong to restore credibility to the buyout procedure.

Paul Sund, Henry’s spokesman, could not be reached for comment.

More depositions, including those with representatives of Cinnabar and Van Tuyl, are planned. Computer records also have been subpoenaed. Other records that the state and trust have refused to turn over also are being sought. The plaintiffs’ lawyers are trying to put their lawsuit in Ottawa County on a fast track. If they are successful, the case in Ottawa County could go to trial before Christmas.

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