The Big Picture, Part 2:
The Secret Kanter Addendum and the Finance Committee
By Susan M. Halpern
Former Addison Councilmember (1992-1999)
In Part 1 of the Big Picture, we discussed Addison’s improper withholding of Lea Dunn’s memo, in violation of the Open Records Act. We learned that Lea Dunn’s memo refuted the accusations made by accountant Larry Kanter in the inflammatory presentations that Todd Meier used as the basis of his 2016 campaign of lies. Thus, we confirmed that had Lea Dunn’s memo been produced as it should have been, the TRUTH would have prevented Meier from orchestrating his outrageous, falsely-premised campaign.
We also learned that Addison’s attorneys were actually directed to process Open Records Act requests by doing all they could to find ways to withhold documents that were requested under the Open Records Act. This secret policy of exclusion was not publicly disclosed until now. It is not on any agenda I can find, and I don’t ever recall hearing about a vote to adopt it. But, since the attorneys report to the council, it stands to reason that the directive came from the council or some member of it. Think about that in the face of the constant lip service given to “transparency” by Meier and his cadre.
And, we learned that the attorneys followed this secret policy of exclusion, concealing Lea Dunn’s memo by falsely representing to the Texas Attorney General that Lea Dunn’s memo was a communication from a consultant to Addison’s attorneys, a contention on which the AG relied in agreeing with Addison’s position. Indeed, Addison continues to withhold documents based on its phony claims of privilege. All of what you’re reading is after reviewing a fraction of the information relating to Kanter.
All this demonstrates (a) the lack of disclosure and transparency that has epitomized the Meier regime, and (b) the inherent dangers in allowing one politician the exclusive power to control what Addison’s citizens hear and, even more importantly, what they don’t hear. That happened in Addison for years, as Meier used the power of our Town’s newsletter to manipulate issues and conceal important information. Thankfully, the current council has returned the newsletter to Addison’s fine staff, and we are clearly headed in a new direction in terms of achieving actual, real transparency.
But Addison’s is a cautionary tale, and we must understand all of what happened to make sure it never happens again. So, in Part 2, we turn to the issue of a SECRET addendum signed in connection with Kanter’s engagement letter that confirms the intent to keep his work concealed. We also discuss the Meier-led council’s misguided decision to form a “Finance Committee” with no defined mission, no oversight or accountability, and no rules regarding powers it should never have been exercising. As with Part 1, Part 2 will demonstrate a complete lack of transparency by the Meier-led regime.
A. The Secret Addendum to Kanter’s Contract: Setting Up an Argument To Conceal
1. As it turns out, the idea to try to conceal Kanter’s work by claiming attorney-client privilege was part of a secret plan that was apparently hatched very early on in Kanter’s engagement. To understand, we have to review documents relating to Kanter’s engagement, one of which you’ve likely never heard about before, and consider a timeline of sorts.
2. Kanter signed an engagement letter with Addison on April 23, 2014. That letter was the contract between Addison and Kanter, and described his work in very vague terms: “The purpose of this engagement is to provide consulting services to Addison regarding its current operational environment and how it may be modified or improved in light of recent profession wide developments in the areas of operations, policies, procedures and internal control environments.”
3. Let’s pause for a simple point regarding the attorney-client privilege. For something to be attorney-client privileged, it has to be seeking or rendering legal advice. The description of Kanter’s work clearly does not meet that definition. Kanter was not seeking or rendering legal advice. Thus, it is highly unlikely that any part of Kanter’s work could somehow be protected under the attorney-client privilege. There simply was no part of the description that implicated legal matters.
4. Kanter’s engagement letter contemplated presentation of “preliminary observations to the Town Council,” and stated that Kanter would collaborate with “the City Manager and Finance Committee of the Town Council.” However, there was no clear identification of the person/entity to which Kanter was accountable. That was a key omission.
5. Kanter’s engagement letter was signed by Meier, not by City Manager Lea Dunn. This was unusual to say the least, because Addison’s Charter provides that the Town’s business is conducted by the City Manager, not by the mayor. If you look at the many agenda items relating to contracts, they are always stated in terms of authorizing the City Manager to execute the agreement.
6. Just weeks after Kanter’s engagement letter was signed, the May 2014 election was held. Meier’s candidates (Moore, Carpenter and Heape) won, delivering a council majority to Meier. The new councilmembers were sworn in on May 19, 2014, and participated in their first regular meeting on May 27, 2014.
7. The second regular meeting of the new council occurred on June 10, 2014. At that meeting, Meier sought council approval of Addendum #1 to Kanter’s engagement letter. The circumstances surrounding this SECRETIVE document are highly irregular.
8. The request for council approval of Addendum 1 was placed on the council’s Consent Agenda as Item R2e, which read as follows:
“Approval of an amendment to the contract with Kanter Financial Forensics, LLC for the review of the Town’s financial and accounting practices in an amount not to exceed $37,500 plus expenses.”
Anyone reading this item would have reasonably concluded that the only change to Kanter’s contract was to increase the maximum dollar amount of Kanter’s engagement from $12,000 to $37,500. That conclusion was incorrect.
9. The reality of Addendum 1 was very different from the foregoing agenda description. Addendum 1 was actually an effort to (a) fundamentally change the nature of Kanter’s engagement, and (b) set Addison up, consistent with Meier’s directive, to argue for concealment of Kanter’s work product, which is ultimately exactly what Addison did in concealing Lea Dunn’s memo and a lot of other information from the public.
10. To accomplish these inappropriate goals, Addendum 1 first stated that Cowles & Thompson (City Attorney John Hill’s law firm), not Addison, was engaging Kanter. This was a complete fiction and it never happened. At all times, Kanter was engaged by the Town of Addison, although it was clear that he was reporting to Meier and his cadre.
11. Next, Addendum 1 stated that Kanter’s work would be run through Cowles & Thompson for the purpose of arguing for application of the attorney-client privilege. On this point, Addendum 1 (written by Kanter) provided:
“It is understood that we will report to Cowles & Thompson and the Town Manager. We understand that the work performed by us will be confidential, constituting a portion of your work product, and is to be regarded by us as being covered by the attorney-client privilege.”
In other words, Meier and his cadre were trying to CONCEAL Kanter’s work. So, they employed a fiction to try to create an argument for the application of the attorney-client privilege. And, they hid their attempt to do so by concealing the true nature of Addendum 1 from the public, instead misrepresenting that it only increased the dollar amount of Kanter’s contract.
12. Beyond the absence of an accurate description, Addendum 1 – the document itself – was nowhere to be found online. The public had no idea that the purpose of Addendum 1 was to try to hide Kanter’s work from the public.
13. The failure to include the document was unquestionably intentional. Addison’s online agendas typically include a link to relevant documents. But not in this case. If you look at the agenda, you won’t see any link to Addendum 1 on Item R2e. In addition, Addendum 1 was not included in the accompanying PDF packet online. And, you can’t find Addendum 1 in the minutes of the June 10, 2014 meeting that were approved at the council’s next meeting on June 24, 2014.
14. The council also had a work session on June 10, 2014 relating to Kanter, but there was no mention of Addendum 1 on the agenda, and the work session was not recorded, so its content is unknown. There are likewise no document links relating to the work session item.
15. The entire consent agenda at the June 10, 2014 council meeting was approved with no discussion of any specific item, including R2e relating to Secret Addendum 1. Consideration of the consent agenda, including the vote to approve it, lasted less than 2 minutes.
16. When you consider the absence of an accurate description of Addendum 1, the failure to include the document in the online materials, and then you watch the video of the June 10, 2014 council meeting, it is not at all clear that the council (except Meier and perhaps Blake Clemens) ever saw Addendum 1. It is quite possible that they believed that all they were voting for was the increase in approval of work by Kanter from $12,000 to $37,500.
17. Think about it another way. Any member of the council who had seen Addendum 1 should have immediately challenged the misleading and inaccurate description of the item in the council’s agenda. After all, Meier and Clemens were the ones who tanked the December 3, 2013 council meeting three and a half hours into it, after Meier’s motion to conduct a nationwide search for a new city manager failed, and literally as the council was about to vote on Chris DeFranciso’s motion to appoint Lea Dunn as the City Manager. Meier and Clemens suddenly claimed the meeting wasn’t properly noticed because although the meeting was noticed for Town Hall, the notice didn’t say “council chambers.” Funny how that level of detail was used to disrupt a meeting when Meier didn’t want what was about to happen, but a glaring misrepresentation in describing Addendum 1 drew not even a whisper.
18. Here’s another way of looking at it. If the council thought it was only voting on an increase in the dollar amount of Kanter’s engagement, then it approved nothing else. What was actually signed was fundamentally different, and may well have been unauthorized. Alternatively, if the council did approve all the terms of Addendum 1, then every last member of the council participated in a glaring misrepresentation to the public. Again: so much for transparency.
19. I don’t care who you support or who you voted for, these facts are irrefutable and describe behavior and tactics that are completely unacceptable. For those who have supported Meier, you need to understand that he has misled you as well. Meier has hidden behind your loyalty to excuse his improper conduct. Meier has also fed division in Addison, creating an “us and them” mentality that focuses attention away from his conduct.
20. This concealment by our government is inexcusable and unacceptable, and no true leader would demand that citizens – including supporters – look the other way.
21. On June 11, 2014, the day after the council meeting, Addison’s attorney, John Hill signed Addendum 1. Addendum 1 was not signed by any staff. In fact, it is entirely unclear whether Addendum 1 was ever seen by anyone on the staff, including City Manager Lea Dunn.
B. The Fallacy of SECRET Addendum 1 and the Reality of Meier’s Secret Regime.
22. Let’s talk about a few different issues here. First and foremost, you CAN’T do what Addendum 1 tried to do. You can’t CREATE a privilege. Privileges arise based on existing facts. You can’t create an alternative set of fictional facts so as to argue for the application of a privilege. Privileges exist or they don’t. And the attorney-client privilege did not exist with regard to Kanter’s work. Again, it’s not a close call.
23. It’s as simple as this: Addison couldn’t change the character of Kanter’s non-privileged work by running it through attorneys. The law doesn’t work that way. You can’t take non-privileged information and cloak it with privilege just by passing it through an attorney.
24. BUT THEY TRIED, DIDN’T THEY? And that’s the key. This is a clear, irrefutable example of how Meier and his cadre actually operated. It confirms all that Truth in Addison has been saying for a very long time regarding the appalling lack of transparency and outright deception that has defined the Meier regime. And for the privilege of being deceived and hoodwinked by Meier, we taxpayers paid Kanter more than $125,000.
25. Here’s another thing: Despite the wording of Addendum 1, Kanter was NEVER retained by Cowles & Thompson in connection with his engagement by the Town of Addison.
26. Indeed, Kanter always knew who had engaged him. Kanter’s billing statements were titled “Addison Billing Detail,” and were all sent to “Town of Addison Texas” at Addison’s Belt Line Road address. To my knowledge, Kanter did not send any statements addressed to Cowles & Thompson.
27. It is also very clear that despite the wording of Addendum 1, Kanter never reported to Lea Dunn or to Cowles & Thompson. As will be seen, Kanter actually reported to the Finance Committee, i.e., Meier, Clemens and DeFrancisco.
28. But here’s the important thing: Addendum 1 confirms the intent to try to improperly conceal Kanter’s work from the public. And, its timing confirms that the plan to do so was hatched very early on in Kanter’s engagement, facilitated by a council beholden to Meier.
29. And how about that newsletter that Meier was always claiming was the key to transparency? Was Secret Addendum 1 revealed there? Nope. Not a word about Secret Addendum 1 in our Town’s newsletter. In fact, in the newsletter, Meier made comments about Kanter’s work, and then stated that the council had shown its commitment to setting the “right tone at the top” because they “authorized [Kanter’s] continued work with us later in the evening in our consent agenda.” That’s it.
30. Obviously, Meier’s scant post about Kanter’s “continued work” wholly failed to provide full disclosure or anything resembling “transparency” regarding the improper secrecy that Addendum 1 actually sought to achieve. The TRUTH tells us that Meier was unquestionably concealing information from the public, and this is a great example of the manipulation of information and issues in our Town’s newsletter.
31. Also consider all this in light of the issues raised in Part 1 of this series. We saw that after the Town agreed to a termination without cause on March 29, 2015, ending Lea Dunn’s tenure in Addison, we heard nothing from Kanter for almost a full year, until Meier brought him back for his inflammatory campaign-related presentations in February and March 2016.
32. The picture takes shape very easily. Kanter’s real purpose was to assist Meier in his desperate efforts to find some way to get rid of Lea Dunn, whose appointment as City Manager Meier had fought for many months and more than 10 council meetings during 2012-13. But Kanter never found anything that would accomplish Meier’s real purpose. There simply was no smoking gun.
33. Nonetheless, the entire situation made it impossible for Lea Dunn to do her job. Think about it: the real “tone at the top” of Addison’s council was set by Meier and his cadre, who constantly attacked and undermined Lea Dunn. I’ve even heard about councilmembers freely discussing the “need” for Lea Dunn “to go.” Can you imagine how hard it was for Lea Dunn to work under these circumstances? And yet she did her job and did it well.
34. In the end, the council’s and the Finance Committee’s interference with the council/city manager form of government, aided significantly by Kanter’s meddling and abusive conduct, led Lea Dunn to offer her resignation, subject to receiving her severance. Contractually, it was a termination without cause.
35. “Without cause.” That means there was no cause to fire Lea Dunn. And of course, Meier immediately agreed to provide Lea with her severance package. It was easy for Meier to spend Addison’s taxpayer dollars to settle his political score over Lea Dunn’s appointment as Addison’s City Manager.
36. I submit that once Lea Dunn left Addison, with her severance approved on March 29, 2015, Kanter had no further purpose. That is confirmed in the few documents that I did receive in March 2016 in response to my Open Records Act request, because the last bill Kanter submitted was in March 2015. That’s right, once Lea Dunn was gone, it appears that Kanter stopped working for Addison.
37. That is, of course, until Meier brought him back almost a year later, in February 2016, to kickoff Meier’s campaign of lies. By then, Eric Cannon had also left to take another job. There was no one left to refute whatever Kanter said. So, Kanter was free to recycle the very same accusations he had made in his December 2014 memo, all of which had been refuted by Lea Dunn, point by point, in the memo Meier worked to conceal. Both Meier and Kanter clearly knew that what Kanter was saying had been refuted, but still they used it to create a public spectacle, including so that Meier could falsely claim that Addison was a mess until he and his cadre arrived to save the day.
C. Formation of a Finance Committee With No Rules, Guidelines or Accountability
38. On March 11, 2014, Addison’s council voted to form a Finance Committee. But it wholly failed to consider important issues regarding accountability and oversight, and that cost Addison dearly.
39. There was no notice to the public that the council was considering forming a finance committee. Item R5 was titled: “Discussion, consider and take action regarding a transitional audit, including authorizing an agreement for transitional audit services.” That description gave no notice that the council was considering the formation of a finance committee.
40. There is no such thing as a “transitional audit.” The term has no meaning in the accounting world. And, Addison had just completed its annual audit, and the audit was clean. But of course, Meier had to come up with some description to justify hiring Kanter.
41. Meier made the motion to form the Finance Committee. Meier stated that its “first charge” was “to assimilate what we heard tonight,” and then come to council with “next steps based on what we heard and what we’ve discussed tonight.”
42. The problem is that there is no record of the discussion Meier referenced. Apparently, that discussion occurred in connection with Item WS2, titled: “Discussion regarding a transitional audit.” There is no video of the work session, and the description of the work session gave no notice regarding the possibility that the council was intending to form a committee.
43. Meier suggested that he and Chris DeFrancisco (a banker) be put on this new, wholly undefined committee. Longtime Meier-supporter Blake Clemens asked to be appointed to the committee. The council acquiesced.
44. Aside from Meier’s comments, there were no rules or procedures established for this new committee. Most importantly, there were no requirements established for accountability to the council or the public, nor was that issue discussed.
45. In fact, it wasn’t until almost a year later, at the council’s March 10, 2015 meeting, that the council finally adopted what were called “guidelines” regarding the Finance Committee.
46. It was too little too late. By then, all of the events contained in Lea Dunn’s memo had occurred, including the litany of Kanter’s abusive conduct towards Addison’s staff. All during that time, the Finance Committee apparently operated without guidelines or rules.
47. The Finance Committee did not notice its meetings, did not publish agendas, and did not appear to have ever created or approved minutes of its actions. I assume that the public would not have been permitted to attend its meetings, even if some member of the public had been able to find out when they were meeting. In fact, it’s not even clear that the staff could have attended.
48. Aside from occasional “updates,” the council as a whole had no visibility to what this committee was doing. And, of course, the updates to council were filtered. The Finance Committee was free to operate in an unsupervised, unspecified manner, while concealing its activities from the public, the council AND ADDISON’S STAFF.
49. Pause here and consider the significant irony of all this in light of Kanter’s inflammatory attacks on Addison: the Finance Committee was set in motion and operated in an environment entirely lacking in rules, guidelines, controls, accountability and transparency.
D. In the Absence of Limitations and With No Accountability Requirements, the Finance Committee Began Taking Action as if It Had Authority to Do So.
50. It wasn’t long at all before the Finance Committee began to act like a body that had – well – power to act. In the absence of controls and accountability, the Finance Committee essentially became a council of 2 or 3.
51. And it’s clear that part of what the Finance Committee did was direct and supervise Kanter’s work. Kanter began to report to the Finance Committee, not Addison’s council. Kanter’s time entries clearly establish this. For example, on June 23, 2014, Kanter billed for a conference call with Blake Clemens “to provide update on progress and suggest a Finance Committee meeting,” and then Kanter billed time on June 30, 2014 to meet with the Finance Committee. Kanter’s time entry for June 20, 2014 read: “provided progress report.”
52. No one knows what was discussed in those meetings. There was zero transparency. The public had no clue and the council likely had no clue either.
53. But it’s even worse than that. Lea Dunn’s memo also makes clear that both Lea Dunn and Eric Cannon were EXCLUDED FROM MEETINGS OF THE FINANCE COMMITTEE, including meetings at which Kanter appeared and made presentations.
54. Think about that for a moment. While its name sounded benign, perhaps in an effort to suggest legitimate work, the exclusion of Lea Dunn and Eric Cannon from Finance Committee meetings unquestionably established the existence of a very different agenda. Ask yourself: What legitimate work could the Finance Committee have been conducting if it excluded the City Manager and the Chief Financial Officer from its meetings?
55. Look at it this way. If the Finance Committee was populated by members of the council, and members of the council were prohibited by Addison’s Charter from directing any employee except Lea Dunn, and Lea Dunn was being excluded from meetings of the Finance Committee, then what legitimate business could the Finance Committee have been conducting?
56. Here’s another interesting part of all this. I sent an Open Records Act request to Addison, asking for documents relating to the formation of the Finance Committee. After some back and forth, this is what I was told by the City Secretary:
“I was informed that the Finance Committee came from recommendations from Mr. Kanter. It was an ad hoc group put together to create the guidelines & policy which was then approved by Council. When the Mayor referenced the committee before those guidelines were adopted it was that ad hoc committee meeting with the City Attorney.”
I asked who the “informant” was, but got no answer.
57. It has Meier’s fingerprints all over it because it’s a classic attempt at revisionist history. Now all of a sudden the Finance Committee was nothing more than an “ad hoc group?” Meeting with the City Attorney?
58. It’s just not true. The fact is that the Finance Committee, acting primarily through Meier and Clemens, were supervising and directing Kanter’s work and meeting with him about it, to the exclusion of the council. Kanter’s timesheets establish what Meier and Clemens were doing, and remember, there are countless other documents that Addison continues to withhold. Who knows what else is there to be found.
59. But, there are a few documents that confirm what I’m saying. On September 11, 2014, Kanter wrote an email to the members of the Finance Committee (not the council), describing a meeting he had with CFO Eric Cannon. Kanter noted that Cannon had offered employment to a candidate who was not a CPA, but who was still sitting for the CPA exam.
60. Clemens replied all to this news: “I thought we agreed that whomever Eric chooses that they have both a CPA certificate and a good level of experience (govt accounting experience is not a requirement).” Meier replied: “No Blake, that is exactly how I recall it. Do you think we need to have a Finance Committee meeting and include Lea [Dunn]?”
61. Now think about that for a minute. There is no question what they were doing: the Finance Committee was directing who CFO Eric Cannon could and could not hire. And they’re ASKING whether they should include Lea Dunn. It’s utterly inconceivable that she would have been excluded in the first place.
62. In so doing, the Finance Committee usurped the authority of Addison’s City Manager, Lea Dunn, and appeared to violate Addison’s Charter:
“[N]o member of the Council shall give directives to any subordinate of the City Manager, either publicly or privately.”
(See, “Kanter and the Finance Committee: Circumventing Addison’s Charter,” (http://truthinaddison.com/?page_id=1316)).
63. So, by the Fall of 2014, the Finance Committee was doing far more than gathering information for the council. The Finance Committee was directing Kanter’s work and, apparently, the work of staff.
64. The lack of accountability and visibility also allowed Kanter to engage in the conduct described in Lea Dunn’s memo. Kanter was abusive to the staff. His manner was accusatory, and in at least one instance Kanter spoke in a “very raised voice” to a member of the staff (emphasis original in Lea Dunn’s memo).
65. The staff had nowhere to go, because Kanter’s work was hidden form the public both by his reporting to the Finance Committee and the secretive Addendum 1, which all concerned apparently hoped would forever conceal the truth from the public.
66. With Kanter reporting to the Finance Committee (essentially Meier and Clemens), and with the Finance Committee operating in an environment completely lacking in controls or accountability, it isn’t hard to see how Kanter was able to do Meier’s bidding in painting Addison’s staff and ultimately, Addison, in a bad light.
67. In reality, all of this was why Meier hired Kanter. First, Kanter’s purpose was to undermine and attack Lea Dunn and the staff. After Lea Dunn left in March 2015, Kanter’s work was completed for the moment. But then, Meier brought him back in February 2016 to disparage Addison by way of falsely claiming that its finances were in shambles, so that Meier could then claim that he and his cadre had saved the day as the basis for the 2016 campaign. It was ALL a lie.
68. It took careful planning to conceal what was really happening from the public. The Finance Committee took the business of the council away from the council, away from the public, and beyond the reach of the Open Records Act and the Open Meetings Act. Add to all that the attempt to cloak Kanter’s work with secrecy through the ill-advised SECRET Addendum 1, and you start to realize that not only was there a lack of transparency, but Meier and his cadre went to great lengths to achieve that lack of transparency, thereby deceiving the public regarding the real agenda of Meier and his cadre.
69. It was this lack of transparency and deceit that paved the way for Meier’s 2016 campaign of lies.
70. And of course, by the time Meier brought Kanter back in February and March of 2016, Lea Dunn and Eric Cannon were no longer around to refute Kanter’s presentations. And, they were never interviewed by the council or asked to comment or respond to Kanter’s allegations. And, Meier KNEW that what Kanter was saying HAD been refuted in Lea Dunn’s memo, that Meier was actively CONCEALING.
71. And here’s the other thing. As part of the deal for Lea Dunn to receive her severance package and to resign, Meier required the inclusion of a mutual non-disparagement clause. Stated another way, Meier BOUGHT LEA DUNN’S SILENCE. With our taxpayer money. And that paved the way for Kanter to do what we all witnessed, providing Meier with the basis for his campaign of lies, knowing that Lea Dunn could not respond to defend the staff and the Town from all these false allegations.
So now you know about the SECRET ADDENDUM 1, the real purpose of which was concealed from the public. And, you’ve learned about how the Finance Committee brought an additional layer of secrecy to Kanter’s work. All of which should be deeply disturbing to all Addison residents, including those who have supported Meier.
And, you need to recognize that I have only received a fraction of the documents that exist relating to all this. Additional documents continue to be withheld based on the false and inappropriate claims of attorney-client privilege.
It’s time to start realizing that Meier has USED his supporters to provide cover for his inappropriate conduct as mayor. Whoever you support, you should still demand TRUTH and TRANSPARENCY. Meier has provided neither to Addison.