GA = THE UNIVERSITY DAILY KANSAN
STATE
WEDNESDAY, NOVEMBER 20, 2002
Budget review team prepares for meeting
The Associated Press
TOPEKA, Kan. — A team appointed by Gov-elect Kathleen Sebelius to review public safety agencies planned its first meeting, and its chairman said he wanted the discussions to be open.
Sebelius, a Democrat, and her aides suggested last week that some meetings of the five government review teams she had appointed would be closed, when those teams discussed what recommendations they would make to her.
Sen. David Adkins, R-Leawood, leader of the governor elect's team on public safety agencies, said he wanted its meetings to be open.
"My hope is that the deliberations and considerations of the team that I'm heading will be open to public scrutiny and public participation," Adkins said.
His team is scheduled to meet at 10 a.m. today.
Meetings for the four other teams have not been announced.
Adkins lost the Republican primary in August to Attorney General-elect Phill Kline. Among the agencies Adkins' team will review is the Kansas Bureau of Investigation, which the attorney general oversees.
Adkins said that Kline promised as a candidate to shift $500,000 from the attorney general's budget to the KBI. Kline said he wasn't bothered by Adkins' review.
"I look forward to working with him and I'm anxious to
hear the governor-elect's ideas," Kline said. "The more brains on the job, the better."
Meanwhile, Sebelius spoke during the Kansas Farm Bureau's annual meeting in Manhattan. She promised that her new secretary of agriculture would coordinate rural development efforts and promote the state's agricultural products.
State officials and university economists have projected a $310 million deficit on June 30 from the current, $4.4 billion budget and have estimated the gap between expected revenues and spending commitments to be another $858 million for fiscal year 2004.
Sebelius and outgoing Gov. Bill Graves, a Republican, have yet to decide how to prevent the deficit in the current budget.
Graves has said he hopes they'll draft a joint plan, but Sebelius continued yesterday to insist that she was focused on preparing a fiscal 2004 budget.
During her gubernatorial campaign, Sebelius promised a top-to-bottom review of state government.
The review was her answer to questions about how she'd handle the state's budget problems and whether she would increase taxes.
She announced the appointment of her five teams last week and said they would have discussions in private so that team members could be more frank. She also said her aides wouldn't release a schedule of private meetings.
H&R Block to settle on lawsuit
The Associated Press
KANSAS CITY, Mo. — H&R Block said Tuesday it will settle a class action lawsuit filed in Texas that accused it of taking kickbacks from banks over loans made to clients awaiting tax refunds.
The proposed settlement, which still must be approved by a Texas judge who has criticized the company, would provide customers with coupons for tax services, software and a book but no cash.
The settlement could cost H&R Block $262 million, but only if 100 percent of the people affected redeemed all the coupons they received every year for five years, company spokeswoman Linda McDougall said.
Judge J. Manuel Banales of Kleberg County, Texas, had written attorneys earlier this month
saying he planned to order Block to repay $75 million for receiving undisclosed fees from banks in connection with the "refund anticipation loans."
Under the program, a customer owed a tax refund could receive most of the money in two to three business days with a loan from H&R Block's banking partners, with interest rates frequently exceeding 100 percent.
Plaintiffs have characterized the banks' fee to Block as a kickback.
The Texas lawsuit covers Texas customers who got the loans from 1992 to 1996; Block began disclosing the fees after 1996.
An attorney for the Texas plaintiffs, Edward Carstarphen did not immediately return a phone call from The Associated Press.
But one of the lead attorneys in
a federal class action lawsuit filed in Illinois said the settlement proves that H&R Block is "running scared" and is seeking to avoid a public trial over the refund program.
"Potentially, these cases are going to cost H&R Block hundreds of millions of dollars," said Michael B. Hyman of Chicago.
In the federal case, Block had agreed to pay $25 million in a settlement covering 17 million customers who borrowed against their tax refunds between Jan. 1, 1987, and Oct. 26, 1999.
In April, a federal appeals court in Illinois overturned that settlement, saying it did not do enough to ensure that the firm's customers were adequately compensated.
That ruling allowed the Texas case to proceed and on Nov. 7, Banales wrote that Block should
have disclosed the fees because it had a fiduciary duty to its customers, meaning it is supposed to look out for their financial best interests.
Block denied that it has such a duty and last week said it would appeal the planned order.
Block, which continued to deny liability, said that as part of the settlement, attorneys for the plaintiffs will withdraw all similar cases pending in Texas.
Shares of Block gained $2.35 or 6.7 percent, to close Tuesday at $37.53 on the New York Stock Exchange.
As part of the settlement, Block agreed to provide the clients with five $20 coupons that can be used for tax preparation and planning services over the next five years. They'll also get coupons for tax software and for a new tax planning book retailing at $14.95.
Westar CEO faces more legal woes
The Associated Press
TOPEKA, Kan. — Westar Energy chief executive David Wittig and a former bank officer pleaded innocent yesterday to illegally steering a $1.5 million loan for Wittig into a real estate investment for the banker.
Wittig received the loan last year from the Capital City Bank in Topeka, with the help of former president Clinton Odell Weidner II. A federal grand jury indictment alleges instead of using the money as documents suggested he would, Wittig turned it over to Weidner, who bought into an exclusive housing development planned outside Scottsdale, Ariz.
The charges against the two include money laundering, filing false documents, conspiracy and misapplication of bank funds. The indictment does not say why Wittig would allow the money to go to Weidner.
Wittig is on administrative leave without pay from his position as Westar's chairman, chief executive officer and president. Weidner left the Topeka bank earlier this year.
The allegations are not related to Westar's operations. Westar is the state's largest electric company, providing power to 647,000 customers, but it also has nonutility interests, most notably its 88 percent share of the Protection One security alarm firm.
The two men had their first appearance yesterday in U.S. District Court in Topeka to hear the charges against them and enter their innocent pleas.
U. S. Magistrate Judge James O'Hara scheduled their trial for Jan. 22, but attorneys for Wittig and Weidner said they needed more time to prepare an adequate defense.
Neither Wittig nor Weidner had any comment after the 45-minute hearing, and their attorneys declined comment. During the hearing, O'Hara reminded the two defendants that any statements could become part of prosecutors' case.
"You ought to be very careful about what you say and to whom you say it, both inside and outside the courtroom," O'Hara said from the bench.
The grand jury indictment alleges that Weidner helped Wittig increase his credit limit at Weidner's bank from $3.5 million to $5 million.
It also alleges that Weidner and Wittig said in documents that the money would be used by Wittig for business investments, stock purchases and the remodeling of Wittig's home.
Instead, according to the indictment, the money went to Weidner so that he could obtain a 50 percent interest in the Arizona