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Did flood authority 'cover up' lost $51K, director's DUI?

Several authority board members have been concerned with the way the board president hired the agency’s top employee in March.

NEW ORLEANS — After Hurricane Katrina’s catastrophic floodwall failures, the Legislature replaced the old parish levee boards with regional flood protection authorities.

The idea was to root out corruption and secrecy at the politically charged levee boards and make flood protection oversight more professional.

But allegations of mismanagement and secrecy are back at the Flood Protection Authority – East, which manages 192 miles of walls and levees and 255 floodgates and closures on the east bank of Jefferson, Orleans and St. Bernard parishes. Several authority board members have been concerned with the way the board president hired the agency’s top employee in March without a vote of the board or any vetting process.

And the issue is taking on new significance this month as board members learn for the first time that the new boss, Kelli Chandler, was arrested for driving under the influence and crashing her car in Georgia during her time as the agency’s finance director, and less than two months later paid more than $50,000 in taxpayer money to a fictitious company with a Georgia address.

After crashing her personal vehicle on Interstate 20 near Atlanta in October 2017, Chandler was booked with driving under the influence of alcohol, drugs and glue or other inhalants. Georgia police records say a field sobriety test measured her at twice the legal alcohol limit.

Those charges were still pending when former board President Herb Miller promoted her from finance director to regional director in March of this year, boosting her salary from $137,500 a year to $171,000.

Chandler pleaded guilty in August of this year to counts of DUI and failure to maintain her lane and was sentenced to a year of probation, one day in jail and community service. According to court records, she surrendered her driver’s license to the court.

But authority employees say she still drives a personal car or motorcycle to work every day. Chandler said her attorney advised her the suspension of her license only applies in Georgia for a year and she can keep driving in Louisiana.

“The traffic offense in 2017 is a deeply regrettable incident that occurred during a time of great personal tumult in a particularly painful divorce,” Chandler said in a statement to WWL-TV. “It did not interfere with or impact the performance of my job and was resolved in the manner advised by legal counsel. Since being asked to serve as the regional director of the Flood Protection Authority, my focus has been and remains on leading this agency and keeping the region protected from flooding.”

More troubling to some board members, though, is the transfer of $51,500 in public money to a private and allegedly fictitious company that Chandler authorized in December 2017.

Emails obtained through a public records request show Chandler received an email that appeared to come from the board president at the time, Joe Hassinger. It reads, “Hi Kelli, I need you to send a payment for me now. Are you available to assist? Regards, Joe.”

Chandler responded that she would “take care of whatever you need.” An email from a different address listed as Hassinger’s followed with instructions to wire $51,500 to a bank account in Georgia under the name of James Diva Creationz.

A few hours later, Chandler’s boss at the time, then-Chief Administrative Officer Derek Boese, sent her an email asking, “Wire transfer all good?”

Chandler responded that it would have to wait until bank officials were back on Monday. She apologized and said, “I am not sure what it is for, but we don’t have any other options.”

On Monday, Dec. 11, 2017, Chandler emailed Hassinger to ask for more details about the transfer and got a long response.

“It is to complete an acquisition supply that we have been negotiating privately for some time now. An announcement is currently being drafted and will be announced next week once the deal has been executed, for now I don’t want to go into any more details. Until we are in a position to announce the acquisition, I do not want you discussing it with anyone in the office either, any questions please email me. Regards, Joe.”

Records show Chandler authorized the transfer that day. Four months later, Chandler filed a police report alleging the “Flood Authority’s email account was hacked and that James Diva Creations (sic) was a fraudulent account that the Flood Authority had never done business with.”

Authority spokeswoman Kimberly Curth said Hassinger’s email had been “spoofed” by the hacker. She said Chandler informed Boese about the transfer request after she received it, but neither of them knew it was a hack until a similar request came in four months later, prompting Chandler to alert the Flood Authority police and the FBI. The FBI’s cybersecurity unit came in to train the authority on better security.

WWL-TV reached out to Hassinger and Boese, who both left the Flood Authority earlier this year. Hassinger declined to answer questions. Boese said Chandler was just following orders from someone she thought was her boss but was really a hacker. He said he couldn’t remember why he asked her about the progress of the transfer.

He and the current board president, Mark Morgan, defended Chandler, saying many government agencies have been victimized by hacks. But Clay Cosse, who has served as the St. Bernard Parish representative on the board since 2016, said he’s more concerned that nobody ever reported the hack – or the loss of $51,500 – to the board.

“I have nothing, no written documents of the transfer,” Cosse said. “But I had heard from reliable sources that this happened. The money was transferred and it was covered up or kept away from the board.”

Curth said the payment didn’t meet the threshold to be reported in a public audit. She said the authority made an insurance claim and recovered about half the lost money.

Morgan issued a full-throated statement of support for Chandler and decried what he called “personal attacks on Ms. Chandler, our first female and first LGBTQ” regional director.

“Efforts to malign the regional director or (Flood Protection Authority) leadership by what one could assume is a disgruntled past or present employee or board member will not deter our regional director or the (Flood Protection Authority) from focusing on our mission to protect lives and property in Jefferson, Orleans and St. Bernard Parish from the risks posed by storms and storm surge,” Morgan said.

But Roy Arrigo, a new board member who was appointed to the Flood Authority board this summer, is concerned about the information now coming to light.

He said the board should have been informed of the issues and given a chance to review Chandler’s record before she became regional director.

“Those kinds of things tend to come out when you've got a good vetting process,” he said. “And I think that that's probably why it didn't come out. That's why we're just finding out about it now.”

Cosse and Arrigo say the agency’s bylaws grant the board, not the president, the authority to hire a regional director. The bylaws state: “The Board may hire a regional director who shall serve at the pleasure of the Board” and “the Board shall fix the qualifications, duties, and salary of the regional director.”

But a different provision in the bylaws states the board president acts “as the appointing authority for all employees of the Authority.” Miller said that’s why agency attorneys told him he had the power to name Chandler regional director.

Miller also said that prior to appointing Chandler, he “polled” the board members by phone and email about whether he should hire someone in house or go outside the agency. Miller said nobody objected to him hiring from among two in-house candidates, but Cosse said he “expressed total disapproval of the process” to Miller.

Polling board members in private is not allowed under the state’s open meetings law. When WWL-TV mentioned that to Miller, he said, “If you want to call it polling or not polling, I don't know what you call it. I wanted to know what they wanted to do.” 

Asked why he didn’t do that in public, he said, “I am not going to get involved in that.”

An attorney general’s opinion states it’s OK to poll board members over issues the board isn’t required to vote on.

The last regional director prior to Chandler, Bob Turner, was approved by the board after a national search, and other senior staff members were also hired by board resolutions.

Cosse said it’s time to call a special board meeting.

“Sounds like there's some serious problems here,” he said.

CORRECTION: The story incorrectly reported that Kelli Chandler's salary had been $105,000 when she was named regional director. In fact, her salary as finance director had already increased from about $110,000 in 2016 to $137,500 earlier this year when she was promoted and a raise to $171,000 a year.