Saturday, August 18, 2018

Kriseman questions Baker’s management of St. Pete’s investments

ST. PETERSBURG — Rick Baker makes no bones about it: he’s a hands-on mayor.

In nearly every interview and every candidate forum over the past six months, St. Petersburg’s mayor from 2001-10 has presented himself as someone who sweats the details.

But in the final days of the city’s combustible mayoral race, Mayor Rick Kriseman’s latest attack ad questions whether Baker really kept his eye on the ball when the city lost $11 million in investments after its former Wall Street advisor was wiped out by the 2008 financial crisis.

PREVIOUS COVERAGE: Read more about St. Petersburg politics from Tampa Bay Times reporter Charlie Frago.

"That’s just sleepy, sloppy management," read a recent post on Kriseman’s Facebook page, alongside a photo of Baker with his eyes closed.

Did the city really lose millions under Baker’s watch? At first, yes.

But the story doesn’t end there.

• • •

In 2012, the city sued Wells Fargo to recover about $11 million lost when city investments overseen by Lehman Brothers that evaporated along with the firm itself during the Great Recession.

The city was hardly Lehman’s only victim, of course. The storied investment bank had $639 billion in assets but $619 billion in debt. It disappeared after making the largest bankruptcy filing in history on Sept. 15, 2008.

Wachovia Global Securities managed the city’s Lehman investment portfolio, before being acquired by Wells Fargo in 2009. So when St. Petersburg filed suit in federal court to recover its Lehman losses, it sued Wells Fargo. The trial started in federal court in Tampa in March 2012.


Trial begins in city of St. Petersburg’s lawsuit against Wachovia (March 27, 2012)

Former St. Petersburg Mayor Rick Baker takes stand in Wells Fargo trial (March 30, 2012)

City of St. Petersburg wins $10.4 million verdict against big bank (April 3, 2012)

City attorneys argued that Wachovia officials were too heavily invested in Lehman to warn the city about the firm’s impending collapse.

Wells Fargo attorneys argued that city officials weren’t reviewing Wachovia’s reports, which would have alerted them to Lehman’s problems.

A Tampa Bay Times reporter covered the trial, and Baker was called as the city’s last witness. The former mayor testified for 15 minutes. He told jurors that when he took office in 2001, he signed a contract allowing the city to invest in securities lending, a riskier form of investments.

Baker testified that he didn’t know specific details of the city’s investments. He said that he delegated to his staff the responsibility of monitoring the Lehman portfolio.

That dovetailed with the city’s argument, that officials didn’t really understand what its investment advisor was doing.

• • •

Kriseman has now seized on that episode — Baker telling the jury he wasn’t much involved in managing the city’s investments — as belying the image Baker has projected as a hands-on leader.

"He took the stand and testified that he was decidedly more detached in the management of our investment portfolio," Kriseman told the Times. "He left responsibility for follow up to staff, that certainly doesn’t quite jibe with his hands-on image."

In the end, the city won. A federal jury ordered Wells Fargo to pay $10.5 million, meaning the city recovered all but about $600,000 from its original investment.

Add about $1.2 million in legal costs and the city ended up losing about $1.8 million.

But the Kriseman campaign’s ad said Baker’s inattention "lost the city millions."

Though the city’s argument that Wachocia was responsible for the losses prevailed, afterward one juror told the Times that the city was also negligent.

Baker points to that payout and the city’s overall financial returns during his tenure, which ranged from 2.3 percent to 5.7 percent as evidence he didn’t drop the ball.

"I would say in terms of overall investment financial response to the Great Recession, I think we did a very good job in preserving city’s assets," Baker said this week. "Nothing went south. We got our money back and had a positive return on our investments."

But the city had to go to court to get most of its money back, Kriseman said.

"He put the city in a position that the only way to get the money back was to litigate it," Kriseman said. "It’s an issue of mismanagement, really. If you’re going to tell the public you’re a great manager and you have your eye on the ball all the time, this clearly shows he didn’t."

Baker dismissed the mayor’s assertions as desperate, last-minute attack to counter Kriseman’s own recent bad publicity in regards to continued fallout from the 2015-16 sewage crisis and Hillsborough County identifying a baseball stadium site for the Tampa Bay Rays.

"The mayor has had a really, really bad 10 days," Baker said Wednesday. "They are just trying to find anything they can throw up against the wall at this point."

Contact Charlie Frago at [email protected] or (727)893-8459. [email protected]


Rick vs. Rick: Closing Albert Whitted sewage plant could impact St. Petersburg mayor’s race (May 29, 2017)

Rick vs. Rick: Which St. Petersburg mayor paid the highest salaries at City Hall? (June 12, 2017)

Next big fight in St. Petersburg’s mayoral race: the science and politics of climate change (June 16, 2017)

Only one Rick will march in St. Pete Pride (June 22, 2017)

Rick vs. Rick: St. Petersburg sewage crisis edition (June 24, 2017)

Baker fought recycling in St. Pete, Kriseman embraced it. Will it matter in mayor’s race? (July 29, 2017)

Rick vs. Rick vs. Irma: How to run for mayor during a hurricane (Sept. 19, 2017)

Rick v. Rick: How have they handled St. Pete’s homeless problem? (Oct. 14, 2017)

Which Rick is worse at managing the city’s piggy bank? (Oct. 19, 2017)

In St. Petersburg mayor’s race, Rick vs. Rick is also Rays vs. Rowdies (Oct. 21, 2017)

Democrats line up to help Kriseman battle Baker (Oct. 31, 2017)

Romano: A fresh start for Florida to protect abused children

Romano: A fresh start for Florida to protect abused children

The worst job in Florida is available, once again.Mike Carroll has announced his pending resignation as secretary of the Department of Children and Families, giving someone else the privilege to be an underfunded, second-guessed punching bag. For no ...
Published: 08/18/18
Pinellas commission candidate faced stalking, abuse claims

Pinellas commission candidate faced stalking, abuse claims

ST. PETERSBURG — A political newcomer seeking a Pinellas County Commission seat has faced accusations of physical abuse and stalking from her former fiance, who twice sought court-ordered protection from her.Both allegations came after Democrat Amy K...
Published: 08/17/18

Two Seminole council members face challengers

SEMINOLE — Six candidates have filed to run for two open seats on the City Council.Incumbents Chris Burke, first elected in 2012, and Trish Springer, elected in 2015, face challenges from former council member Dan Hester, who served from 2005 to 2010...
Published: 08/16/18
In Republican race for Pinellas County Commission seat, Rep. Kathleen Peters outpacing field

In Republican race for Pinellas County Commission seat, Rep. Kathleen Peters outpacing field

As the Aug. 28 primary election approaches, three Republicans are battling to represent a Pinellas County Commission district that hasn’t witnessed a competitive contest for more than 15 years.State Reps. Larry Ahern of Seminole and Kathleen Peters o...
Published: 08/16/18
Romano: Con artist or Florida politician? You decide

Romano: Con artist or Florida politician? You decide

Decorum matters, and so the attorney’s language was appropriately measured.In seeking to have a constitutional amendment thrown off the ballot, a motion filed in Leon County used words such as "misleading’’ and "ambiguity’’ and "wordsmithing.’’That’s...
Published: 08/16/18
Veteran Hernando politicians take oversized contributions, run afoul of campaign finance laws

Veteran Hernando politicians take oversized contributions, run afoul of campaign finance laws

BROOKSVILLE — With primary Election Day at the doorstep, two Republican candidates vying for seats on the Hernando County Commission found themselves in uncomfortable spots over potential filings with the Florida Commission on Ethics.And a third Repu...
Published: 08/15/18
Q&A: A Watergate trickster talks dirty politics, then and now

Q&A: A Watergate trickster talks dirty politics, then and now

CLEARWATERNearly half a century ago, Martin Kelly made the mistake of his life.He was a senior at the University of Miami when he decided to take part in what would become one of the most infamous political scandals in U.S. history: Watergate. He was...
Published: 08/15/18

Pasco Political Notebook for Aug. 17

Republican Club hosts candidate forum at meetingThe West Pasco Republican Club will host an "Election Extravaganza" candidate forum at its meeting Aug. 21 at Heritage Springs Country Club, 11345 Robert Trent Jones Parkway, Trinity. A social time will...
Published: 08/13/18
Updated: 08/15/18
Early voting in Pasco: Here’s what to remember when you head to the polls

Early voting in Pasco: Here’s what to remember when you head to the polls

Early voting Pasco County begins Saturday and runs through Aug. 25, with 11 locations across the county for voters.Polls are open from 9 a.m. to 5 p.m. Saturday and Sunday, from 10 a.m. to 6 p.m. Aug. 20-24, and from 9 a.m. to 5 p.m. on Saturday, Aug...
Published: 08/13/18
Largo election cancelled as incumbents stay with no opposition

Largo election cancelled as incumbents stay with no opposition

LARGO — There will be no suspense in the city when elections arrive Nov. 6. In fact, there will be no election at all, because all four city commissioners whose seats were up were re-elected by default when no one came forward by the end of the candi...
Published: 08/13/18