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Legislative Updates

Legislative Update No. 123, Session 80
By Tim Lee, Executive DirectorPrinter Friendly ||| Print as PDF

January 9, 2009

TRS Chairman Steps Down

TRS Vice Chairman and TRTA Member Linus Wright Appointed Chairman

Mr. James Lee, former Chairman of the TRS Board of Trustees, is stepping down reportedly to pursue other business endeavors. Mr. Lee (no relation to Tim Lee, TRTA Executive Director) has served on the TRS Board since 2006.

Governor Rick Perry has named TRS Trustee Linus Wright to serve as the pension fund's new chairman. Mr. Wright is a long-time member of the Texas Retired Teachers Association and a champion voice for education retiree issues.

TRTA will continue to follow this story as it develops. The Houston Chronicle and the the Austin American Statesman are both reporting on this issue and those stories are provided below.

As always, thank you for your interest and support of the Texas Retired Teachers Association.

Austin American Statesman (www.statesman.com/publiccapital)

Lee leaves Teacher Retirement System board

By Kate Alexander | Friday, January 9, 2009, 11:49 AM

James Lee, the forceful board chairman of the state’s $80 billion teacher retirement system, has stepped down less than a year after taking the helm.

Gov. Rick Perry on Friday appointed Linus Wright, the board’s current vice chairman and a retired educator, to lead the Board of Trustees of one of the country’s largest public pension systems.

The moves will leave one seat for Perry to fill on the nine-member board.

Lee, a pioneer of the day trading industry, said he is buying a company and could no longer make the necessary time commitment to the board.

“I don’t think there is a more important agency or system in the state in terms of what we do or how many people rely on us,” Lee said. “I feel good about where we are, and it’s time to move on to my business interests full-time.”

He would provide no specifics about his new endeavor other than to say it is in the “professional services” industry and a public announcement should come later this month.

Lee has been a board trustee since 2006. Perry named him chairman last spring, and the state Senate was expected to hold a confirmation hearing soon.

As chairman, Lee initiated a series of major organizational changes, some of which led to controversial and divisive board votes.

Lee characterized the changes, such as the replacement of a long-time outside legal adviser, as necessary to shake up the system operating under a “broken strategy.” His detractors say they were heavy-handed moves to advance Perry’s political agenda, a charge that Lee disputes.

Lee’s most vocal critic on the board, Galena Park school superintendent Mark Henry, said the handful of controversial decisions over the past year should not overshadow the vast majority of issues on which the board has agreed.

And as a member of the retirement system, Henry said he appreciates the investment expertise and commitment that Lee brought to board.

“Jim has done a lot of good things to help move us forward,” Henry said, citing the broader investment strategy that Lee championed and improved communication with the system’s 1.2 million members.

Wright’s appointment will be well received because he is respected by educators and business people alike, Henry said.

Wright, 81, worked in education for 40 years as a teacher, coach, principal, superintendent of the Dallas school district and undersecretary for education under President Ronald Reagan.

“My main goal would be to stay the course that we have already established over the past 12 to 24 months,” Wright said. “Jim has established a course that we’re going to stay with.”

Houston Chronicle (http://www.chron.com/disp/story.mpl/metropolitan/6202865.html)

Houston investor who quit board had gambling debt

By R.G. RATCLIFFE Copyright 2009 Austin Bureau

Jan. 9, 2009, 1:01PM

AUSTIN — A Houston investor who resigned today as the head of the board overseeing Texas Teacher Retirement System investments had a $110,000 judgment against him from Bellagio Inc. in Las Vegas for an unpaid gambling debt.

Court records show the casino received a default judgment against James H. Lee of Houston last June after he failed to respond to the lawsuit. Lee said he only became aware of the lawsuit in December when the Bellagio hired a Dallas lawyer to collect the debt.

Jeff Hunt, a spokesman for Lee, said Lee and the Bellagio reached a financial settlement in December. Hunt said Lee's resignation was not related to the lawsuit and occurred because he is entering a new business venture in Houston.

Hunt said Gov. Rick Perry will name former Dallas school Superintendent Linus Wright to replace Lee as head of the retirement system board.

The Bellagio lawsuit filed in Las Vegas claims Lee gave the casino three checks on Oct. 8, 2005, with a total value of $130,000.

The Bellagio dated the checks on May 25, 2006 and presented them for payment to Wells Fargo Bank and were returned stamped "NSF," the lawsuit says. Copies of the checks filed with the lawsuit show they were on an account at a 1000 Louisiana Street branch of the bank in Houston.

The lawsuit states that prior to the action being filed Lee paid the casino $20,000 toward his debt, leaving a balance of $110,000.

The lawsuit was filed in November 2007. Las Vegas court documents indicate service was made by certified mail to Lee's Houston home.

Nevada District Judge Timmothy Williams last June entered a default judgment against Lee for $110,000 plus 18 percent interest per year, with interest starting on Oct. 8, 2005. The court order said Lee had failed to respond to the lawsuit.

Lee briefly spoke with the Houston Chronicle before turning questions over to Hunt, who serves as a spokesman both for Lee and the TRS board.

Hunt said Lee had believed the earlier payment he made to the Bellagio had settled his debt with the casino.

Hunt said Lee and his family moved to New Jersey to work on Rudy Guiliani's presidential campaign so were not at their Houston home when service from Nevada was made multiple times. Hunt said Lee was not aware of the lawsuit or the default judgment until an attempt was made to collect the debt in December.

Lee made a payment to Bellagio to settle the debt and received a letter from the casino regretting that the issue had ever become public, Hunt said.

Bellagio general counsel Bruce Aguilera of Las Vegas, who filed the lawsuit, did not immediately respond to a request for comment.

Hunt said Lee is leaving the TRS board because he believes its investment policies are now well positioned and he has a new business venture in Houston.

Hunt noted that the gambling debt occurred prior to Perry appointing Lee to the TRS board in February 2008. "Gambling's not illegal," Hunt said.

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