Should a citizen's past financial woes stand in the way of that citizen serving on a public board overseeing millions of dollars?
That question has split El Paso County commissioners since it's come to light that their latest appointee to the county's Retirement Plan board filed for bankruptcy in 1993 and faced foreclosure of a property in 2010, according to court records reviewed by the Indy.
At issue is the Jan. 24 appointment of Michael Pennica, founder and president of Pennica Financial Group, Inc. Commissioners say they didn't know about Pennica's financial history before they appointed him to help oversee the $261 million fund, and they're split about whether to change the rules now for applicants.
Commissioners Amy Lathen and Sallie Clark say candidates for the retirement board should be required to disclose a bankruptcy. Commissioners Dennis Hisey and Darryl Glenn didn't express an opinion in their response to questions, but Peggy Littleton considered the questions "prying into the personal lives" of citizens who volunteer to serve the county.
All bankruptcies go through federal court and are open public records.
Pennica would say only this to the Indy: "So what does my past have to do with me volunteering my time for the community? Why does that matter? You haven't made any mistakes in your life, right? This right here is going to be viewed as a personal attack. You might want to be very careful, because slander is a very serious issue. So, I'll tell you what, you go ahead and you write your story, and I'll do what I have to do."
The record shows...
Pennica and his wife at that time, Cheryl, filed for bankruptcy in March 1993 in Ohio to discharge consumer debt, though how much wasn't immediately available. The bankruptcy became final the following December, while the Pennicas were involved in a divorce action. They were allowed to keep their 1992 Chevrolet Astro in what court papers describe as a "no assets" case.
According to documents submitted with his retirement-board application, Pennica served in the Air Force for 23 years and joined the financial services industry in 1993, the same year he filed for bankruptcy. He moved to Colorado Springs in 1996.
He has served on boards for the Make-A-Wish Foundation Colorado, the Greater Colorado Springs Chamber of Commerce, Goodwill Industries, Colorado Springs Conservatory and Southern Colorado Better Business Bureau Foundation, his application for the retirement board says.
According to the Financial Industry Regulatory Authority, an independent regulator for securities firms in the United States, Pennica is currently registered as a financial services provider with J.W. Cole Financial, Inc., of Tampa, Fla. He has an office at 411 Lakewood Circle, a property owned by Pennica Financial Group, Inc., the local financial services company he incorporated with his wife, Carol, in December 1999.
In 2007, the couple bought a property on Langdale Way through a public-trustee deed, meaning it had been foreclosed upon, county land records show. Pennica transferred the property to his wife in February 2010. Two months later, CitiMortgage filed a foreclosure notice on a $634,200 loan taken out by the Pennicas.
The home was sold the following September for $450,000, and the foreclosure action was withdrawn in October. (County records show the sale was a short sale, meaning the bank agreed to take less than was owed on the loan.)
Today, the Pennica Living Trust owns a $390,475 home in the Broadmoor Bluffs area. Pennica Financial owns eight condominiums at the Satellite Hotel for which it paid a total of $288,000 in four separate sales from 2002 to 2006.
Commissioners say they weren't aware of Pennica's personal financial history when they appointed him to replace Brian Larson, who resigned from the retirement board due to a job move out of El Paso County.
The appointment followed a review of eight applicants by Littleton, the commission's liaison to the retirement board. Pennica was among four that she interviewed, along with Lathen, Hisey and a staff member.
In response to the Indy's questions, Lathen, the commission chair, says in an e-mail the county doesn't check backgrounds of volunteers who apply for boards and commissions. She also notes no candidates for the retirement board mentioned anything negative about their pasts, leading her to wonder if the rules should change.
"I believe that very specific questions related to financial background and history might be prudent to develop for this board in particular," Lathen writes. "Specifically, bankruptcy disclosure should be required."
In an interview, Clark notes a bankruptcy shouldn't disqualify someone from serving. But later she says, "I think especially when you're dealing with a lot of money it would be an important disclosure" so that commissioners could "ask the right questions."
Meanwhile, Littleton suggests "that whomever it is that has you prying into the personal lives of those who serve on volunteer boards possibly has a sinister agenda." While she doesn't explain further, it's no secret that county staff and elected officials are at odds with the retirement board over the board's hiring a consultant for $650,000 to install a benefits tracking system without consulting the county's IT department. The dispute triggered an anonymous tip to the Indy that Pennica's background makes him ill-suited to serve, and that his appointment was a political favor done by Littleton. Littleton says she knows Pennica only through casual contact at community events.
"I would encourage you to not run a story that would discourage those citizens who are interested in volunteer boards from serving," Littleton writes. "These citizens are not running for elected office, they are merely trying to become involved in their community with their time and talent."
Commissioners, who appoint two members to the five-member retirement board, are due to fill another position in coming weeks.