Costas answers Lumenus controversy attacks

2014-03-01T18:15:00Z 2014-03-01T21:36:16Z Costas answers Lumenus controversy attacksBy Phil Wieland, (219) 548-4352

VALPARAISO | The controversy surrounding the proposal to enroll up to 30 Chinese students in the senior class at Valparaiso High School next year continued at last week's council meeting.

The School Board's handling of the contract with Lumenus USA, which residents criticized as being done without any public discussion, received an additional spanking from Councilman Mike Baird. The contract has since been withdrawn by Lumenus.

During the public comment portion of the meeting, Norman Hellmers directed a number of questions to Mayor Jon Costas about Lumenus and Costas' involvement in the proposed contract.

Hellmers repeated his comments from the recent School Board meeting that Lumenus and its CEO Eric Froelich are listed as real estate and not educational entities, and that the company's principals were interested mainly in profit. Hellmers said Costas' involvement as a public official appeared to be a conflict of interest.

He asked about the mayor's financial interest in the company and whether he did any Lumenus business while at City Hall. He asked whether it would be a conflict of interest to use his mayor's position to solicit business for his company in China and the U.S. or if the fact three School Board members contributed to his mayoral campaign put them in conflict?

"Someone's personal business interests would normally be their own private affairs, but, when one has a part ownership in an entity with which the (schools) still has an approved agreement, it makes that person's business the public's business," Hellmers said.

Costas said he plans to meet soon with Hellmers to answer his questions, which he said were too numerous and complicated to address at the council meeting. He said he and the other board members of Lumenus were surprised by the public reaction to the contract.

"We never wanted this type of consternation over a project that could have great benefits for the schools," Costas said. "Apparently this was not the right time to address that, so we withdrew it with no plans to bring it up again. There are more important things for the School Board to address: finding a new superintendent and the facility needs.

"We presented a prototype plan. We don't have any students, but until we have a plan, we can't promote it in China or anywhere."

Costas said he has an 11 percent interest in Lumenus, which he said "is an investment I can afford to lose."

"It is a startup company, and I know the risks associated with it. The Lumenus group has no interest in real estate. A number of entities were formed to attempt to get a state grant. The University Promenade buildings are owned by a separate entity not associated with Lumenus, and Lumenus has leased a portion of the space for its offices, classrooms and for the students' living quarters."

He said he has not done any Lumenus business at City Hall, and the trips he made to China for Lumenus were paid for with private funds. Although he has followed the law on public disclosure of his involvement and the donations to his campaign were public record, he understands the public's concerns.

"I sometimes don't think of myself as mayor," Costas said. "I've always been a small businessman and entrepreneur, and I don't realize that aspect as much as I should. I have a keener sense now that my involvement is not just as a private person, and I need to be more careful with my private life.

"Hindsight is 20/20, and, in retrospect, it probably would have been better, if we wanted to do this, to divest myself of my investment to proceed with it."

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