The financial advisory firm that was penalized by the U.S. Securities and Exchange Commission for deceptive practices was employed by various school districts in Fresno County to handle bonds – and also donated to campaign measures advocating for those bonds.
Keygent LLC, based in El Segundo, has served as a financial adviser for several bond dealings for Fresno Unified School District. According to campaign donor forms, the company contributed $10,000 to a committee that helped pass Measure Q.
Clovis Unified initially hired Keygent as a bond adviser in 2011. In January 2012, the company donated $10,000 to a committee called Citizens for the Future of Clovis Schools, which worked to pass Measure A. Keygent charged a minimum of $55,000 per bond sale for the district.
The bond advisory firm was hired in 2012 by Sanger Unified and also contributed $6,000 to the district’s Measure P campaign. In addition, Keygent gave $3,000 to Caruthers Unified’s Measure C campaign.
The SEC censured and fined Keygent and its leaders a total of $150,000, alongside former Clovis Unified superintendent and education consultant Terry Bradley after he shared five school districts’ private information with the company while it was negotiating to be hired by the districts.
Same track, different lap.
Fresno Unified Trustee Brooke Ashjian
In a statement Tuesday, Keygent said it did not ask for the information supplied by Bradley and did not change its proposals or fees based on the information. The settlement was reached without Keygent or Bradley admitting or denying the findings in the SEC’s investigation.
“This settlement will in no way impact our ability to continue providing high-quality and sound advice. We look forward to putting this matter behind us and focusing 100 percent of our energy on serving our clients,” the statement said.
A spokesman for Keygent denied that the company created any conflict of interest by contributing to bond issues it worked on, but said the company stopped contributing to those campaigns around 2012.
“Previously, it was the industry standard for vendors to make contributions to school bond campaigns. But there was an industry-wide shift in 2012-13 to discontinue making campaign contributions, and Keygent was on the leading edge of this issue and stopped making contributions,” said Keygent spokesman Nathan Ballard.
But Fresno Unified Trustee Brooke Ashjian worries that the story is too familiar. A federal investigation of the district’s no-bid construction contracts is underway, and a pending legal case questions district officials’ relationships with the contractors who received such deals. Harris Construction is one of two contractors named in the FBI investigation. The construction firm and its leaders also donated to Measure Q – a $280 million bond passed in 2010.
It’s part of this pay-to-play mentality.
Michael Turnipseed, California League of Bond Oversight Committees
“Same track, different lap,” Ashjian said Tuesday. “It’s the exact same story.”
Fresno Unified spokesman Miguel Arias did not comment by press time Tuesday and referred questions to the Measure Q campaign committee, which was overseen by Fresno Mayor Ashley Swearengin.
Clovis Unified spokeswoman Kelly Avants pointed out that Keygent was hired by the district prior to the company making campaign contributions, and said the committee that received the donation is separate from the district.
“It’s a completely separate entity. We intentionally never ask who donates to (bonds) because we don’t want to ever give the appearance that that matters to us,” she said.
Michael Turnipseed, president of the California League of Bond Oversight Committees, said it’s common for firms like Keygent to fund campaigns for bonds they ultimately may be hired to oversee – but that doesn’t mean it’s right.
“If someone finances the campaign basically knowing they’re going to get hired after the campaign and recoup their money once their measure passes, all the districts are doing is making back-door agreements to use public funds to pay for their bond campaigns,” he said. “It happens all over the place. It’s part of this pay-to-play mentality.”