Daily Report

This Morning's Headlines / Tue, April 16, 2013


Court situation still uncertain in Stanford Group case

Four years after local investors filed a class-action lawsuit against Stanford Group Co., lawyers still are arguing over which court should handle the case. The investors want it heard in state court, while six insurance companies are fighting for it to remain in federal court. Meanwhile, a seventh insurer is arguing in favor of an arbitration panel in Bermuda. The case was originally filed in August 2009 in Baton Rouge state court, and last December, state District Judge Michael Caldwell certified that anyone in Louisiana who invested with the Stanford Group after Jan. 1, 2007, could join the class action. That decision is under review by the First Circuit Court of Appeal. But then in March, six of the insurance companies named as defendants had the case moved to federal court, arguing it was the more appropriate venue. Attorney Phil Preis, the attorney representing the investors, argues in a memo to the judge that insurers are playing "a cruel and expensive hoax" on the courts and the investors. "[They] have attempted to delay this proceeding by placing a heavy thumb on the scales of justice with the tremendous resources the SEI Insurers bring to bear," Preis writes, "all in an effort to thwart the payment of their policy limits in excess of $100 million dollars to these elderly people, who have received no justice from the judicial system in four years." Late last week, U.S. District Judge James Brady dismissed one motion from defendants SEI Investments Co. and SEI Private Trust Co. asking him to ignore the state court's order on class certification, as well as another from Endurance Specialty Insurance advocating the Bermuda arbitration panel, pending his decision on whether the case will remain in federal court. —Penny Font

Galvez Plaza stage sculpture now on track for end of May completion

Downtown officials say delays in completing the Galvez Plaza sculpture and stage cover are nearing an end. Construction on the nearly $1 million, stainless steel sculpture and stage cover at North Boulevard Town Square came to a halt earlier this year because of an ill-fitting piece of the massive overhead crest. The piece was reordered from fabricators in Kansas City and is expected to arrive this week. That should clear the way for completion of and live performances on the downtown stage by the end of May, says DDD Executive Director Davis Rhorer. Officials had hoped the project would be complete in time for the April start of the spring concert season, including last weekend's Blues Festival and the ongoing weekly Live After Five concerts. But the mistake in the sculpture, which doubles as a stage cover, has postponed the project's conclusion by several months. "We'll probably plan something special for it; it's a very special piece," Rhorer says, comparing the sculpture to Cloudgate in Chicago's Millennium Park. He calls it an "architectural and engineering wonder." Rhorer says the reordered piece did not impact the total cost of the structure, which was paid for with state sales tax rebates dedicated to River Front Master Plan projects. You can check out a rendering of the project here. —April Castro

LaPolitics by Maginnis: Federal probe hangs over state government

The Baton Rouge offices of CNSI, in a nondescript, two-story building behind a beauty salon on Florida Boulevard, look like a neutron bomb went off there. Room after room of neat rows of desks sit ready and waiting for 100 or so employees, who likely won't be coming back. The place bustled with activity until a month ago, when it emptied with the cancellation of the firm's huge state Medicaid claims processing contract, after it attracted the interest of a federal grand jury. The laid-off employees, many of whom had uprooted their lives and moved to Louisiana to work on setting up the new online system, are the first victims of a federal investigation that could claim more, both within CNSI and state government. The only other casualty so far is Department of Health and Hospitals Secretary Bruce Greenstein, himself a former CNSI executive, who announced his resignation the week after a federal subpoena was made public. The subpoena ordered the Division of Administration to hand over all documents submitted by CNSI and three other companies that competed for the $185 million contract in 2011. Beyond that, the U.S. attorney's office in Baton Rouge has not indicated where its probe is headed. Company President Adnan Ahmed and senior account executive Larry Iverson said in a recent interview they, too, are waiting for someone to tell them what this is all about, as they have not been contacted by the U.S. attorney or the FBI. Read the full column here.

(John Maginnis publishes LaPolitics Weekly, a newsletter on Louisiana politics, at LaPolitics.com.)

Furniture store and gallery to revive former Brandt's Maisonette site

When Greg Brandt abruptly closed Brandt's Maisonette in September 2011, he called the Mid City site where the gourmet French restaurant had operated for several years "the worst location in Baton Rouge." Perhaps it was not ideal for a high-end eatery. But a local purveyor of vintage and eclectic furniture is willing to give it another chance with a soon-to-open business that bills itself on its website as part retail space, part gallery and part interior design studio. Called Studio C, the establishment is located at 3786 Government St. and is the brainchild of Greg Vernice and Damien Boisvert, who recently returned from New York City, where they were in the retail furniture and design business. Merchandise will include vintage and eclectic furniture, accessories and art. The redevelopment of the vacant building is yet another boon, however small, to Mid City's primary commercial corridor—which over the weekend was the site of an event encouraging businesses and shoppers to return to and reimagine Government Street—and nearby businesses couldn't be happier about their new neighbors. "Anything that reclaims empty buildings is a good thing," says Dan Swetman, who works across the street from Studio C at Arnold and Associates, which does office furniture and design. —Stephanie Riegel

Black Caucus scales back tax proposals

A day after a House committee declined to review several bills that called for phasing out Louisiana's income taxes, Rep. Katrina Jackson, D-Monroe and chairwoman of the Legislative Black Caucus, is pulling caucus-backed bills that would have cut both personal and corporate tax rates. In a statement released late Monday, Jackson says the fiscal impact of the tax cuts, as calculated by the Legislative Fiscal Office, "are drastically different from the unofficial numbers previously discussed with us," jeopardizing a commitment to caucus constituents "to only offer legislation which positively enhances the state's budget." However, the caucus will continue to back "a unified tax court, a unified e-filing system," and an "internet sales collection structure," as well as House Bill 623, which raises taxes on cigars and cigarettes. The higher tobacco tax is expected to raise $64 million the first year and $129 million in subsequent years; 40% would be dedicated to the Medicaid Trust Fund, 10% to retirement costs, and 50% toward a special fund for health care education and research. HB 623 would raise the cigarette tax from 36 cents to 68 cents per pack and increase the tax on cigars invoiced by the manufacturer between 8% and 15% of the invoice price.

Providence employees now own 100% of company's stock

Baton Rouge-based Providence Holding Co. says it has established an employee stock ownership plan by which 100% of the company's stock is in the hands of its nearly 200 employees. Under the plan, all full-time employees retain ownership interest in a trust holding their shares of company stock. The stock ownership structure offers the ability to maintain local ownership and control, company officials say in a press release announcing the transition. It also is useful in retaining and attracting employees, they say. "When I and my fellow owners, Todd Black and Yousheng Zeng, made the decision to transition ownership, we could think of no better buyers than those who ... helped us to build the company," reads a prepared statement from Rich Major, speaking on behalf of the company's board of directors. "While the former owners of Providence will continue their involvement with the company through positions on the board of directors, we are confident that the new leadership and talent-laden employee base will continue high-quality services and the expansion of Providence." The announcement comes on the heels of a two-year effort to transition leadership and management roles to key employees within the company, officials say. The company has more on the announcement at its website here.

News roundup: Federal judge blasts Army Corps of Engineers for failing to protect N.O. during Katrina … Consumer prices drop on cheaper gas … U.S. housing starts surpass 1 million in March

When the levee breaks: Industrial Canal lock-widening work did not contribute to the failure of floodwalls bordering the Lower 9th Ward during Hurricane Katrina, a federal judge has ruled. As The Times-Picayune reports, in what U.S. District Judge Stanwood Duval said is likely his last ruling involving Katrina levee and floodwall failures, he lambasted the U.S. Army Corps of Engineers for decisions he says were responsible for those failures, as well as the legal process that has granted the corps immunity from paying for the billions of dollars in damages caused by the flooding. Read the full story here.

What goes up: U.S. consumer prices declined last month as the cost of gas fell sharply and food prices were unchanged. The tame reading is the latest evidence that the sluggish economy is keeping inflation in check. The consumer price index declined a seasonally adjusted 0.2% in March, after jumping 0.7% in February, the Labor Department reports. Gas prices fell 4.4%, halfway reversing February's 9.1% increase.

Hammering it home: U.S. homebuilders broke the 1 million mark in March, reaching the highest level since June 2008. The gain signals continued strength for the housing recovery at the start of the spring buying season. The overall pace of homes started rose 7% from February to March to a seasonally adjusted rate of 1.04 million, the Commerce Department reports. Apartment construction, which tends to fluctuate sharply from month to month, led the surge: It jumped nearly 27% to an annual rate of 392,000, the fastest pace since January 2006. More details can be found in the full story here.

Today's poll question: Are you glad that legislators have effectively killed Gov. Bobby Jindal's push to eliminate state income taxes during this session?

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