Tuesday, May 19, 2009

The Mercer Trial: Winners and Losers

The Mercer trial, which involved Milwaukee County suing Mercer for giving faulty advice regarding the pension deal, is over. Mercer and the County have agreed to a $45 million settlement. According to TMJ4, Mercer will be wiring the transfer of funds on Wednesday morning. Due to the foresight of the County Board and a resolution they had passed some time ago, this money will be solely used for the purpose of making payments to the pension fund, saving the taxpayers from that burden, and cannot be used to fix the holes in Walker's budget.

As in anything this large and complicated, there are many players involved. Most of these people end up being winners and losers at the same time, while some don't come off that well, and some are pure winners.

Let's take a look:


Mercer is a winner and a loser in this settlement. They obviously lose because they ended up paying out $45 million plus attorney fees. Even though Mercer issued a statement stating that they are admitting to no wrongdoing, they aren't really fooling anyone. No one, and especially not pension actuaries, will give up $45 million dollars just for the hell of it. They screwed up, and by paying out this much money, they are tacitly admitting as much.

They are also winners in this as well. Given the current state of the economy, they ran a serious chance of having the jury go against them. First, the judge refused to allow Mercer to use Gary Dobbert's conviction as part of their defense, and that was to be a large part of it. And even though the jury is supposed to be as objective as humanly possible when they weigh the evidence, they are still human. They know the economy sucks right now, and they know that the County basically represents the tax payers best interest (in this specific case anyhow). It would not be hard to conceive that they could subconsciously see Mercer as a representative of the people that did ruin the economy.

Over all, they were probably wise to offer this settlement. If they finished the trial, they could have easily ended up paying more, and they would have suffered a large blow to their reputation.

County Board

The County Board also fits into both categories. The Board wins big in the sense that they are vindicated of being the sole perpetrators of the pension fiasco.

As Supervisor John Weishan told me this evening, "This vindicates the County Board. You don't get $45 million for just being a nice guy. It wasn't the County Board or the evil politicians that created this. We were given bad information from them."

Supervisor Weishan said that the decision to accept the settlement offer was a good one. The County's lawyers pointed out that if they tried to go for the whole thing and won, it would have gone to appeals court and would have had a good chance of being knocked down. Meanwhile, the County would have only racked up even higher legal bills. Add to this that if the decision was fifty-fifty as to who was at fault, the County would have collected nothing.

The Board also wins by having $32 million dollars to go to help shore up the ailing pension fund. The settlement is not nearly enough to get it caught up, but it will help go a long way towards doing so.

The Board also wins because it was they who had the foresight to pursue this lawsuit over Walker's objections and to have the foresight to pass a resolution stating that any money awarded could only be used for the pension fund.

The Board does lose though. No matter that the fact is that Mercer tacitly admitted to being at least at fault, there are some that will continue to blame the Board, or decry that the settlement wasn't enough, or what ever other complaint they may dream up before they would absolve the Board, and admit that they were wrong. Also, the supervisors that were recalled also lose. Where do they go to get there good names back? And does anyone expect the Charlie Sykeses, the Mark Bellings, and the CRGs to admit that they were wrong and apologize? I didn't think so. That would make them look too much like the hucksters that they really are.

Scott Walker

Scott Walker wins in the sense that this will help cover his butt and the way he willfully failed to fully fund the pension fund for the last seven years. He also wins in that he will not be forced to testify. I do have to admit that a part of me was really looking forward to that day, when Walker would have to admit that for the past seven years, Walker has been blaming the Board for being solely responsible for the pension scandal. Walker even resisted filing the lawsuit to begin with, even though you couldn't tell by his grandstanding on the trial's opening day.

Walker loses a lot in this. As mentioned, he did not want to even file the lawsuit to begin with. No doubt the fact that it would show him to be the liar that he is made him the most hesitant. As recently as last November, Walker was making radio commercials accusing the Board as being solely responsible. Today, he issued a press release in conjunction with Board Chairman Lee Holloway. In said release, Walker basically admitted he lied:
“We think the evidence has shown that the elected officials, including County Supervisors, who voted for the pension enhancements did so based on the wrong information that they received from Mercer.”
While not exactly an admission of lying, or an apology, that is probably the best the Board can expect from him.

Walker also loses because it illustrates that he put his political aspirations before the good of the County when he refused to sue the Reinhart, Boerner Van Deuren law firm, who had approved the pension plan as being legal and on the up and up. The reason Walker refused to sue was because campaign donor and head of the RPW at the time was Rick Graber worked there. By this refusal, Walker has cost the taxpayers another potentially large reward and more tax relief.

The Taxpayers

The taxpayers win in the sense that they just got to keep $32+ million of their money instead of having it go to try to shore up the pension fund. They still lose because it happened in the first place. They also lose because even more money could have been given back if Walker hadn't blocked the lawsuit against Reinhart et al.

The Lawyers

Come on, you know that they're the big winners. The County's attorneys are walking away with a $13 million paycheck, and they didn't have to take the trial all the way to the jury verdict. I'm sure the attorneys for Mercer were also handsomely paid for their work as well.

UPDATE: Well, that didn't take long. The morning's edition of the local paper has Chris Kleismet of CRG fame scrambling around to spin things his way:

Chris Kliesmet, a spokesman for Citizens for Responsible Government, said the settlement was a victory, but a disappointingly low amount. The group drove the pension-related recalls against supervisors.

"The notion that this vindicates them is baloney," he said. Supervisors should have asked more questions about the benefits before voting for them, he said.

I find it somewhat bemusing that Kleismet chastises the Board for not asking more questions when his group is backing a certain county executive-governor wannabe who hates it when the Board asks too many questions, because that means he can't get his scams through.


  1. why doesn't Kliesmet run for office????

  2. I look forward to having someone other than the joker Kleismet quoted when it comes to county affairs. He speaks for very, very few in this county.

  3. Of course Kleismet has to be nice to Walker, after all, that's his sugar daddy.