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Millions of gallons of polluted water were freely flowing from sewage treatment plants into waterways. The fecal counts were real high and going up every year. That's former St. Tammany Parish President Kevin Davis. When he took office in 2000, he knew the problem was dire.
In the lake where all these rivers discharge, they would actually close the park for swimming because the counts were too high. And they didn't want people to get into the water. Plus you could visually see it. I mean, you drive in our neighborhoods and some of them
We have what they call this particular plant, we call it an elephant ear. But you knew right away if they were growing three feet tall, it was the discharge from the sewer going right into the ditches. By the summer of 2005, both the Louisiana Department of Environmental Quality and the United States Environmental Protection Agency had opened criminal investigations to determine where the dirty water was coming from.
In a bill of information filed in federal court, investigators identified the culprit: Southeastern Louisiana Water and Sewer Company, aka CELA. On August 22, 2005, the government officially charged CELA with a felony for violating the Clean Water Act.
Court documents detail the disturbing environmental crimes the company committed. And the most eye-popping fact was that Sela's crimes took place over the course of 11 years, from roughly 1991 to 2002. During that time, most of Sela's 30 sewage treatment plants in St. Tammany Parish had violated federal regulations that govern how to operate a wastewater treatment plant.
The EPA had collected and photographed foamy and chunky wastewater coming out of Sela outflow pipes and traveling through streams, rivers, and bayous all the way to Lake Pontchartrain.
On top of that, environmental investigators concluded that the whole time this was happening, Sela knew its treatment plants were overburdened and overcapacity. But the company continued to add more and more homes to its service area in order to increase corporate profits. And it gets worse. Investigators also determined Sela falsified documents to try and show its plants weren't overworked.
The end result of this scandal was that in December of 2005, Jared Rickey, Sela's owner and CEO, signed a plea agreement on behalf of the company. The government slapped Sela with a $2.1 million fine. But that fine was little comfort to the thousands of homeowners who'd suffered over the course of more than a decade from ongoing sewage and sanitation problems in their homes.
Take, for example, Randall and Vicki Tate. They were Sela customers from 1994 to 2002. In that time, the couple claimed they experienced repeated incidents of sewage backing up into their house, bouts of sickness, pets dying, miscarriages, rashes, and mold.
The Tates sued Selah and Jared in 2003, and it took five years before the suit was eventually settled. Families like the Tates were who Kevin Davis wanted to fight for when he was elected parish president. When he took office, two things became clear. Companies like Selah had to be held accountable, and private companies had to be stopped from monopolizing the wastewater treatment market in the North Shore.
I mean, there was several cases that the community brought to us in reference to charges for deposits, outrageous deposits that they wanted for a business to open. These were in the thousands. I remember a case there in Covington. I think they wanted $30,000 for a deposit for a pizza place that was going into an existing shopping center.
Kevin's solution was a long-term vision. He wanted to see St. Tammany government own a bigger slice of the sewer business pie. We did a study on it. The study came back and showed that
One way to help the citizens would be to develop a municipal water and sewer. We created a department of environmental services which handled water and sewer. So we created this department with the sole purpose of determining how do we provide water and sewer to our residents.
and help with the environmental issues that we were having from existing sewer facilities.
And that brings me to how all this connects back to Bruce Kachera. In 2004, a year before SELA pled guilty to its Clean Water Act violations, Bruce was put in charge of a plan to sell SELA to St. Tammany Parish. Now, some of you might be scratching your head asking, why in the world would the parish ever consider buying SELA?
The short and sweet of it is, Bruce and people at Sela knew that in order for Kevin Davis's grand plan for the parish to own more water and sewer to happen, the parish was going to have to buy existing utility infrastructure. Infrastructure that businesses like Sela already had in place. Unless it was going to tax its residents to death, the parish couldn't afford to build brand new pipes, pump stations, or well sites.
So even in the face of impending federal investigation, savvy folks like Bruce and Jared saw the handwriting on the wall early on, and they started forming a strategy to seize this business opportunity. - I was there about two and a half years.
This person worked closely with Bruce on a daily basis and knew that Cilla had been struggling financially throughout 2004 and 2005.
They were behind on collections after Katrina, after her getting Katrina, and they wanted to get back on track. We got back up and running and collecting and that kind of thing, but it was to get them to the point where they could get in a position to sell the company. So we knew, I knew from the beginning that they were selling it. I don't know if everybody knew that idea, but because that was, you know, it wasn't going to be a permanent thing for me to be there. I knew that.
Despite the company trying to climb out of financial trouble, and eventually being scarred with that Clean Water Act felony, Jared still wanted to make sure he got top dollar for Sela's utility infrastructure. Negotiations with the parish were going to last a few grueling rounds, so he put his best guy in the ring. Charismatic, charming, friendly, St. Tammany born and bred, Bruce Kachera.
Helping him from the get-go were two men, guys named Jerry Gilbert and Ken Dutrick. Ken owned an engineering and consulting firm, and Jerry had a background in banking and debt consolidation. Together, the three men signed a business agreement with Jared in November 2004. The document stipulated that in exchange for the trio finding a suitable buyer for Sela, Jared would pay them each a finder's fee out of the final sale price.
Depending on how much the company sold for, Bruce, Jerry, and Ken could have received hundreds of thousands of dollars each or possibly more. This kind of money was what Bruce had been after his whole career. He told Chris about it one night after they attended an NBA game together in New Orleans. He thought that this, that this, the water company sale, that was his like ticket. That was his ticket.
He was like, "Man," he goes, "I'm gonna be set up, you're gonna be set up." He goes, "That is your inheritance." He was counting on that thing to really set him up. Mary Ann, Bruce's ex-wife, said before they got divorced, Bruce often talked about how much money he would get once the CELA sale happened.
He believed he would receive some kind of commission on the sale of the water company and that would help pay off the house. He always believed whatever, you know, like if he had an agreement with someone, he believed that was going to happen. You know what I mean? It wasn't a question. It was going to happen the way the agreement was stated.
The only catch with the contract that Bruce, Jerry, and Ken had signed was that they had to bring a buyer to the table within three years of signing the agreement, or they wouldn't get a finder's fee. The group had until exactly November 15th, 2007 to find an entity that would consider purchasing Sela's utility assets. And you better believe Kevin Davis' golden goose, St. Tammany Parish, was at the top of their list.
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Between 2006 and 2007, Bruce met with representatives from the parish multiple times, while Jerry Gilbert and Ken Dutrick worked on assessing Selah's worth as a company.
The parish was the big fish the group wanted to land, and they didn't put much energy elsewhere to attract other buyers. In April 2006, the parish's environmental services director, a guy named Greg Gordon, had had several good interactions with Bruce and Jerry and was keen to gobble up Selah's assets in an acquisition as soon as possible. Greg wrote in a memo to Kevin Davis and other admin staff for the parish, quote,
It will jumpstart the consolidation program in a way few thought possible. It would display the administration as being serious about environmental issues. Taking over a large private utility company with a checkered compliance history will denote that seriousness and show citizens how our planning efforts culminated in a tangible outcome.
End quote.
After listing off a series of stats about how many plants Selah owned and how parish residents would be positively affected, Gregg then wrote about the downsides of buying Selah. Quote,
The second obstacle is the debt. The debt we will need to incur, along with the duration, may seem daunting to senior administration officials and council members."
The memo went on to address more nitty-gritty things, but the gist of it was that Greg definitely liked the idea of the parish purchasing Sela.
During the summer and fall of 2007, Bruce, Jerry, and Ken brought St. Tammany Parish to the table to talk specific hard numbers. Offers went back and forth several times that year. At one point, the parish offered Jared $39 million to buy Selah's assets, but Jared rejected and countered with $54 million. The parish held firm at $39 million, and eventually talks fizzled.
Kevin Davis told me he thought some of the counteroffers tossed around were outrageous.
I do remember them saying, I don't remember if it was $60 million or $70 million, but I know my team came back and said, well, they want an unbelievable amount. I said, well, we're not paying that amount. It's like anybody, here comes government, we can get more money for it. Well, we weren't paying more money for it. We did our due diligence and came out with the valuation that we thought it was valued at.
On October 29th, 2007, Jared lamented in an email to Bruce, Jerry, and Ken. Here's a short excerpt read by a voice actor.
By now, I'm sure we all know the disappointing news regarding the parish's incredibly low offer to purchase Sela. After consulting with my family, our lawyers, and CPA, we are going to reject their offer and not counter as we feel they are not dealing in good faith. On a personal note, I'm about as disappointed as it gets right now. It is painfully obvious they do not understand the value of this company or they refuse to pay it.
Jared then addressed a more pressing matter. Our contract will expire in several days and it does not appear any other potential buyers are forthcoming from the group. But if any potential buyers are brought to the table after the expiration date, I would be more than happy to sign a case-by-case contract like our current one.
I remain willing to sell SELA for a realistic price and would be excited to work with y'all if a buyer can be located. Thank you all for the work that was put into this. Please try and find me a buyer. And until then, we will continue to run SELA as we are, seeking to grow in customer count, territory, and revenue.
A few days later, Jared sent a letter to Kevin Davis stating he wasn't interested in selling the company for what he called a discounted price of $39 million. And that was that. The deadline lapsed for Bruce, Jerry, and Ken's business agreement with Jared, and none of them earned a finder's fee.
But then, in the spring of 2008, after a few friendly run-ins with the parish's environmental services director, Greg Gordon, Bruce revived negotiations again. I think that's the business magic everyone talks about Bruce having, in full effect. And Bruce's widow remembers this time well, because she'd just started dating Bruce, and the revived negotiations about selling Sela were something he talked about often.
Bruce had gone to a health club and ran into the guy that was in charge of it. And Bruce somehow got the conversation going again. He was glad to sell the company because they had all kinds of issues with the company and Jared with the DEQ and those sorts of things. So I think he was looking to move on to something else.
By the end of 2009, the parish gave Jared one final offer, $36 million to acquire Selah's assets.
Jared accepted and said his reason for taking an offer $3 million less than what he'd rejected two years earlier was because his family needed the cash and their real estate interests were suffering as a result of the U.S. housing market financial crisis. According to paperwork the parish's legal team dug out and sent to me regarding the acquisition, Selah's assets officially sold in March of 2010.
As far as I can tell, Bruce didn't earn a finder's fee for his role in making the deal happen. Around that time, Jared wrote him a $200,000 promissory note. But as I mentioned in the last episode, that same year, Bruce also wrote Jared a $250,000 promissory note. Jack Branch, Bruce's close friend, told me Bruce wasn't resentful for not getting a commission on the water company sale. It was more like he was just disappointed.
He said he thought it would work its way out sooner or later. But you could sense there was something, promises made and undelivered. You could just sense a bit of anxiousness around that topic.
The outcome of the Sela deal may have weighed on Bruce's mind, but in the end, it was what it was. Some folks like Jack, who worked in the business community of the North Shore and Greater New Orleans, felt the $36 million purchase price that the parish paid was too high, especially considering Sela's checkered past and the fact that some of its utility infrastructure had been in place since the early 1980s.
There was a lot of things mentioned around, you know, they overpaid. There was some questions in the investors and Merrill Lynch and the people that were funding this whole deal if it was really worth what they were paying for anyway.
According to correspondence and memos between the parish, SELA, and a consulting firm the parish hired to evaluate SELA's assets, banks and bond attorneys did frequently question if the profitability projections that Bruce, Jerry, and Ken provided about SELA were accurate.
The consulting firm for the parish repeatedly inquired about Selah's financial history and probed spreadsheets Jerry and Bruce had provided them. But any suggestion that the parish got hoodwinked is something former parish president Kevin Davis wholly rejects.
There are some people who say St. Tammany Parish paid way too much for this water and sewer company. What would be your response to those that think that? We use the factual information from the professionals.
on our acquisition costs. We weren't just sitting around a table making up numbers. We had professionals do all that. People who were consulting for us and doing the legwork, developing the cost, who had done it before. And it went through all public process. You know, there's nothing. So no, I don't, I think that with all the information we had and the professionals, it was a good acquisition at the time.
Someone who wasn't happy about the outcome of the Sela sale was Ken Dutrick. You see, Ken believed because he'd worked for so many years to bring the parish to the table as a buyer, he was owed a finder's fee. When he saw in the news that Sela's assets had sold to the very entity he'd spent countless hours trying to woo, he felt like Jared should have fulfilled the terms of the business agreement that he, Jerry, and Bruce signed years earlier.
Ken wrote Jared an email explaining this, but the issue went unaddressed. Ultimately, Ken sued Jared in St. Tammany Parish District Court. His lawsuit claimed that loose language in the business agreement, which at one point they amended, made Jared liable to pay the group individual finder's fees.
At the time, Ken had a lucrative engineering firm, and from what I've been told, he wasn't hurting for cash. He declined to do an interview for this show, but I've confirmed with his former attorney for this lawsuit that Ken took Jared to court more as a matter of principle. It wasn't so much about the money, though money was a factor. And that's how Bruce's kids understood it too.
Ken's like, I'm not trying to get money. I'm trying to, you did something wrong, and I want to try to, you know, force you to honor what you did. Ken's lawsuit was heated and lengthy. Bruce and Jerry were caught right in the middle of it. They were the only other men besides Jared who'd signed the business agreement, which meant their word mattered and could have swung the case in either Jared's favor or Ken's.
But Bruce and Jerry weren't about to turn on Jared. Bruce was Jared's employee, and both he and Jerry sat on the SELA board of directors. So they had way more to lose than Ken if they joined as co-plaintiffs.
I can imagine my dad and Jerry being more on the same side, being like, "Well, hey, we don't really agree with what's going on, but what are we going to do? We work for Jared. We're friends." Ken has no relationship with Jared or my dad or any of them. He could care less. He's an independent guy. He had his own engineering firm or whatever. And if he pissed off Jared and my dad and Jerry, he could care less.
But my dad and Jerry still had to deal with each other and with Jared. So they're not going to try to piss all them off. Chris says his dad was in no position financially or relationally to be disloyal to Jared.
The person responsible for not paying or honoring the contract because of the term may have expired was the person that was, you know, he was working for that was signing his check. So, you know, if you turn around and sue that person, what's going to happen? You know, you're not going to be working for that person anymore. And so now all the income that he has and all these other things, you know, that's not going to be coming in anymore. Now, all of a sudden, now he has to win a lawsuit or something.
you know, he's gonna be kind of, you know, out of luck for, you know, he's gonna have to find another job and all these other things. Ken's lawsuit dragged on for four more years. Jared was deposed twice, along with Jerry Gilbert and many employees from St. Tammany Parish government. But in the end, the judge ruled against Ken. When it went up on appeal, he lost again.
Covington attorney Scott Brunell, who I consulted for this show, happens to work in the same office building as the lawyer who represented Ken. In 2014, Scott personally reviewed the summary judgments handed down by the St. Tammany District Court judge and the justice who oversaw the appeal. And he's still a bit incredulous as to how they came to their conclusions.
The decision at the district court level, I found it to be unusual and I found it to be a stretch of the application of legal principles that were at issue. When referencing the performance of Ken's attorney, Scott had nothing bad to say.
He absolutely did a good job. He is an excellent attorney, and this was, in essence, a contract dispute, which is something he is very good at. I believe that in that case, he did some excellent lawyering. I just believe that the district courts
reach to get to the decision that it did and the way that the district court did it, postured it in a way at the appeals court that made it even more difficult to have it overturned. Number one, there's a lot of money in play. Number two, there were multiple contracts in play, which anytime there's multiples or amendments, things get messy. My opinion is that this case probably should have
gone to trial, whether or not that plaintiff sufficiently or materially contributed to consummating the sale is an issue of fact that the jury decides, meaning the jury could say yes or the jury could say no. In this case, however, the district court dismissed the case on summary judgment and did not allow it to go to a jury. Which brings me to the real kicker. There was one crucial piece of testimony that never made it into court.
The deposition of Bruce Kachera. Why? Because Bruce was killed just a few days before Ken's lawyer was scheduled to depose him. For Scott, that's a huge fact. Bruce's death was a very unfortunate development for the plaintiff and his attorneys in this case.
If I were the lawyer on this case, I would very, very much like to know what Bruce Kishara had to say. It is certainly an interesting turn of events that shortly before his scheduled deposition, he died. And his testimony would likely have been critical to that case. The word critical is an understatement. Because if Bruce had gone under oath, he was ready to tell. He said, I won't rely for the Rickey's.
They'll keep me happy till I testify, but he also said I won't lie for the Rickys. I think that something happened to trigger him to all of a sudden start doing, to start blowing his phone up like this. That's a panic. Something made him panic right there. That's on the next episode of CounterClock, episode 10, The Fallout. Listen right now.
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