An investigation of a Hillsborough County bond issue might have cleared officials of any wrongdoing, but it has left behind a lingering question worthy of Unsolved Mysteries.
Who sent the fax?
The investigation was sparked by an anonymous letter faxed to four county commissioners on April 15, hours before they were to award a bond underwriting contract worth about $1-million.
The letter claimed two county officials conspired to ensure that one investment banking firm, Morgan Stanley, got the contract to refinance $178-million in utility bonds.
After a two-month investigation, State Attorney Harry Lee Coe III concluded last week there was no evidence of criminal wrongdoing by county officials or Morgan Stanley.
Left unanswered: Who wrote the letter?
"I've not closed the file on that issue," said County Administrator Fred Karl.
But Coe has.
Although Karl asked Coe to try to find out who was behind the anonymous fax, the investigation barely touched on that question, records show.
"No evidence as to the source of the initial fax complaint has been obtained due to the lack of identifiable traceable characteristics being present to conduct further inquiry," wrote Rick Swann, who led the investigation.
Another agency, however, is still investigating some aspect of the bond deal. Coe refused to release three one-page letters in the file because of an active investigation involving another agency he refused to identify.
A lawyer with the Securities and Exchange Commission in Washington made an inquiry about Coe's investigation, records show. A spokeswoman for the SEC refused to confirm or deny that an investigation is under way.
The SEC is involved in a broad investigation of investment banking practices throughout the country. It is a highly political, often cut-throat business with millions of dollars at stake.
The fax suggests the letter was written by someone from a competing firm about to lose out on the county contract. The aim might have been to derail the commission vote to get another shot at the business.
If that's true, it would be a new low, even for the bond business.
Still, the strategy worked.
The County Commission, acting on a recommendation from Karl, voted Thursday to throw out the entire bond proposal and start from scratch, using a more straightforward approach with less room for subjectivity.
That gives all the bond firms another shot at the contract and could cost the county some of the savings it hoped to gain by refinancing .
That very concern is what drove the county to use the more subjective approach that has now been abandoned.
Mike Merrill, the county's debt manager who was the focus of the complaint, said in a deposition that the county Finance Committee chose to use the subjective approach, called a request for proposal, or RFP, because it would produce the most savings.
"My responsibility is to make sure that the county gets the best deal," Merrill said. "And before we even started this process, the committee debated a long time about whether we should do a competitive deal or an RFP. I think all of us would have preferred to do a competitive deal
. but the concern was
. we would leave money on the table.
. We didn't get as much savings."
Although Karl said Coe's investigation "vindicated" the county's procedure, the controversy created by the investigation might have raised too many doubts.
"It's just to the point where there's no way to rehabilitate the credibility of the arrangement," Karl said. "I would have just found it very hard to defend it."
County Commissioner Joe Chillura, who conducted his own informal inquiry, urged his colleagues to stick with the original proposals but divide the work among three or four firms, an idea first suggested by a consultant hired by Coe to help in his investigation.
That would have ensured the county was being fair with the competing firms without losing potential savings, Chillura said.
Chillura acknowledges he attends church with one of the investment bankers who would have benefited from his approach, and that he had discussed the situation with him. He insisted their relationship had no influence over his proposal.
"Bidding this thing is not going to yield the same savings as a negotiated proposal," Chillura said.
But the commission decided to play it safe, a compromise Chillura says he found more satisfying than simply giving the contract to Morgan Stanley.
Karl said he's unsure what procedures his staff will follow for future bond issues, that "for the time being I'm going to be reluctant to take anything to the commission that has any subjective judgment in it."
He said he's also unsure what to do about the unsolved mystery of the anonymous fax.
"It was an unfounded, malicious act," Karl said.
Senior Assistant County Administrator Ed Hunzeker is "exploring my options" to see if anything can be done about finding the identity of the fax sender.
"I don't want anyone to think they can do this again," he said.