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August 16th, 2014

8/16/2014

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I want to spend one more day shouting to the middle-class to WAKE UP!!!!!!  STOP LOOKING AT THE TV NEWS AND THINKING THIS MILITARIZED POLICING AND SPYING IS ONLY HURTING THE WORKING CLASS AND POOR.

The small government of neo-liberals and neo-cons gutted oversight and accountability and public justice.  We want to be clear----when equal protection disappears everyone is hurt but women and people of color the most.  The middle-class is seeing its life savings and investments shredded by fraud and corruption linked to this outsourcing of the public sector.  The unemployment in the US is at around 36% and is called a permanent fixture because that 36% is the middle-management that gave oversight and accountability to corporations and government.  All of this plays hard on people of color and the working class in the form of poverty issues, but it opens as well to the fact that 80% and soon 90% of American people will fall into this category.  Republican voters must see that small government effects all people's rights as citizens-----not just the poor and/or people of color.  It will come to your family!

WE MUST FIGHT AGAINST THIS ILLEGAL ATTACK ON OUR CONSTITUTIONAL RIGHTS AS CITIZENS, EQUAL PROTECTION UNDER RULE OF LAW, AND OUR BILL OF RIGHTS.

Baltimore City State's Attorney does not even have a white collar criminal unit and no funds to build one.  Rawlings-Blake and City Hall are overseeing a systemic fleecing of government coffers and have no interest in public oversight and accountability.  Baltimore City is one of a few governments not having routine audits -----it all happens because Johns Hopkins controls public policy and revenue in the city and does not want oversight and accountability.  They want only to control the symptoms of the poverty this creates.


Baltimore City Will Hire 2 New Prosecutors To Reduce Violence

July 11, 2013 7:01 PM

Mike Hellgren WJZ general assignment reporter

BALTIMORE (WJZ) — A new plan of action. The recent spike in city violence sparks local and federal lawmakers to enact a new plan of action.

The mayor, police commissioner and U.S. attorney appoint two special prosecutors to target violent offenders.

Mike Hellgren has more on the new partnership.

These two new experienced prosecutors are veterans of the system. They have not yet been selected; background checks are underway now. They will have the full resources of the federal government.




I shared with everyone that Maryland's Attorney General Doug Gansler ran with an agenda item being dismantling the prosecutor's office assign to provide oversight and justice from government malfeasance and corruption.  This office was created as a result of the Agnew years.  Well, fraud and corruption never left and the attorneys running for these state's attorney and Attorney's General offices simply ignore and defund agencies tasked with public justice.  There is so much business fraud in Maryland against citizens that people have to work hard to find an honest contractor and then watch them like a hawk-----just because these public justice agencies are dismantled.  These are the same agencies that protect people's civil rights as with police brutality and unconstitutional policing.  So, THIS AFFECTS EVERYONE FOLKS!

THINK WHICH GROUPS IN MARYLAND BACK NEO-LIBERALS LIKE ANTHONY BROWN AND DOUG GANSLER ----AND REPUBLICAN HOGAN WILL DO THE SAME-----LABOR AND JUSTICE LEADERS IN MARYLAND BACK THE VERY POLS DOING THIS DAMAGE.  MARYLAND HAS NO LABOR AND JUSTICE LEADERS THAT ARE NOT CAPTURED BY THIS PROCESS.


People need to see that the white collar crime that empties the Baltimore City coffers----and this happens all across Maryland----is directly related to the crime and violence in low-income communities.  If billions are stolen by Baltimore Development Corporation and Johns Hopkins through fraud and corruption then cuts to social services and community programs occur.  If Johns Hopkins writes policy that floods the city labor market with immigrants who are then fleeced of their wages ----or workers brought from out of state to work in Baltimore
-----high unemployment drives crime and violence.  The middle-class in Baltimore are being hit with car/home break ins/robberies because people are not able to be employed.  RAIDING CITY COFFERS WITH FRAUD AND CORRUPTION AND THEN BRINGING LABOR TO BALTIMORE WHO ARE THEN FLEECED OF WAGES-----all involving suspended Rule of Law and public justice.  THIS WILL AFFECT EVERYONE.

IT IS NOT ONLY THE UNCONSTITUTIONALITY OF POLICING--IT IS THE SUSPENSION OF RULE OF LAW FOR ALL WHITE COLLAR CRIME.


This report simply shows the pattern that exists throughout Baltimore City government.  If you look at the report on SAIC from yesterday and the corruption in that Hopkins corporation the problems are the same.  If you go further and look at the structure for Wall Street financial instruments filling our financial industry with fraud-----it is all the same model.  Creating multiple layers of service and responsibility and then claim it is all too complicated to audit.  Baltimore does not have a revenue problem----the revenue is being stolen and diverted to the same people.

IInside City Hall: What a federal audit tells us about city spending Baltimore ranks at the bottom of cities audited by HUD's Inspector General. Where, exactly, did the $9.5 million in homeless funds go?

Mark Reutter December 5, 2012 at 7:11 am


Homeless men and women sit near the city’s Harry and Jeanette Weinberg homeless shelter at 620 Fallsway.

Calling for audits has become a popular pastime at City Hall.

Mayor Stephanie Rawlings-Blake wants one to look at Comptroller Joan Pratt’s Municipal Telephone Exchange office, while Pratt is calling for numbers crunchers to sift through the contracts of the Mayor’s Office of Information Technology.

Councilman Carl Stokes has called for audits of all city agencies, something the mayor and majority of the City Council don’t want to do. But the mayor and Council did agree over the summer to audit selective agencies beginning in year 2014.

Given all the fuss, wouldn’t it seem that when an audit does appear, elected officials would rush to find out what it says about how the city spends money?

Such a report arrived last month. The Inspector General of the U.S. Department of Housing and Urban Development (HUD) released an audit of Baltimore’s use of $9.5 million for homeless programs awarded under President Obama’s 2009 Recovery and Reinvestment Act.

A Crash Nobody Heard

City Hall seems to be pretending that this audit does not exist, like the proverbial tree that fell in the woods with a crash nobody heard.

There’s been no comment about the report by top officials, not least by Mayor Rawlings-Blake, whose Office of Human Services and Homeless Services Program stand accused of ineptitude and mismanagement by HUD’s auditors.

The report says that the city did not properly monitor the homeless funds, paid sub-providers based on a preset formula rather than on actual expenditures, lost track of money in several instances, and paid city staffers according to estimates, not on the actual time they spent on grant activities.

Calling 100% of Baltimore’s homeless expenditures “unsupported” by required documentation, HUD’s Inspector General is recommending that the city either provide proof that its homeless payments were legit or return the dough – all $9,472,118 – to the federal government.

The Inspector General faulted Baltimore’s homeless program.

“Baltimore Was Delinquent”

While Rawlings-Blake and her staff haven’t publicly responded to the audit, the Homeless Services’ rebuttal to HUD was published in the report.

It’s revealing. The city admits that it violated federal regulations because it did not have the staff to ensure compliance and because it found the program’s regulations too complicated.

“The City of Baltimore was delinquent in monitoring the program’s sub-providers as required because we lacked resources to conduct an appropriate level of monitoring, both fiscally and programmatically,” Kate Briddell, director of Homeless Services, wrote.


She acknowledged a number of management infractions. Among them: “the fiscal director improperly directed the fiscal staff to draft funds . . . to reimburse itself,” the Board of Estimates approved a homeless contract “in error,” the language of another contract “was not amended in title or terms to accommodate” the federal program, and funds “that appear to be drawn” improperly from one account were in fact used without documentation for a related program.

After making these admissions, Briddell went on to deny that they had any real consequences. “[W]hile some of the paperwork was not completed or kept in a standard we would like, no waste, fraud or abuse was conducted during the course of administering this project,” she wrote.

Briddell’s statement was flatly contradicted by her own acknowledgment that the Prisoner’s Aid Association of Maryland did not properly handle $270,550 in homeless funds – HUD claims the group was double billing the government for clients they had placed in emergency housing.

Perhaps that’s why HUD’s reply to Briddell begins so bluntly: “We disagree with the city’s statements.”

At the Bottom of Cities Audited


To check whether other cities shared Baltimore’s managerial shortcomings, The Brew reviewed a dozen HUD audits of city and county governments that also received funds under the Homelessness Prevention and Rapid Re-Housing Program.

Compared to Baltimore’s 100% “unsupported” expenditures, HUD’s Inspector General found that less than 1% of the funds spent by New York City, Houston and San Francisco to be “unsupported” or “ineligible.” The exact percentages were: New York (0.6%), Houston  (0.48%) and San Francisco (0.7%).

The Los Angeles Housing Department was also audited. HUD found $29,004 of the $29.4 million awarded was not properly documented, or less than 0.001%.

Even the worst offenders – Buffalo with 6.6% unsupported documentation and Newark with 8.5% unsupported, according to HUD – look like like fiscal angels compared to Charm City.

HUD certified in its audit of Baltimore that it followed generally accepted government auditing standards.

Coming Back for More

The lack of sufficient internal controls has been a longstanding criticism of Baltimore government.

City departments, including the Mayor’s various offices handling criminal justice, CitiStat operations, information technology, health and human services, are budgeted a certain amount of funds for the fiscal year beginning July 1.

But the practice of letting departments come back for more funds during the year, through supplemental appropriations approved by the Board of Estimates, undercuts fiscal discipline, critics say.

This coupled with the lack of oversight by the City Council – the Budget and Appropriations Committee chaired by Councilman Helen Holton has yet to reconvene a hearing concerning agency spending last year – and the necessary checks and balances are absent.

Farming Out Responsibility

A larger issue brought out by the HUD audit was the lack of programmatic oversight by the city.
The Mayor’s Office of Human Services did not even hand out the homeless grants. The task was farmed out to its fiscal agent, the United Way of Maryland.

That process split up management functions, which effectively meant that nobody was minding the store and determining whether the sub-providers were actually fulfilling the needs of the homeless as well as meeting the requirements of HUD.

Until effective accountability is instilled at the top, the future audits promised for city agencies are likely to suffer the same fate as the HUD homeless audit – official silence from those in charge, leading to more public cynicism about the workings of local government.

_____________________________________________



Below you see the supposed Democratic candidate for Maryland Attorney General.  If you look at the issues you will never see or hear the words----massive corporate fraud and government corruption as any justice candidate's platform.  You see selected justice issues that are always aimed at low level criminals such as scammers targeting senior citizens.  The subprime mortgage fraud targeted seniors and the parking ticket settlement was a disgrace yet Frosh never mentioned the injustice---he instead looked at individual solutions to foreclosures.  The fact that Maryland was the source of the fraud----MERS operated out of Frosh's Montgomery County as well as Virginia's Washington beltway----Maryland was the hardest hit by subprime mortgage fraud-----and it is the state with the highest number of foreclosures happening even now.  All of this shows there is no public justice at work in this particular case.  I choose Frosh and his statement on protecting seniors as a way to show how these issues mean nothing.  Sure, there are scammers targeting seniors but that exists because there is absolutely no public justice agency in place preventing these predations.  Maryland TV programming is filled with businesses that scam people.  Our local and state agencies of Licensing and Regulation DLLR is a skeleton crew and this is what allows for contractors to act criminal at will.  Frosh never mentions this and will not do anything to change this.

If you listen to Republican candidate for Governor Hogan he will use the fraud and corruption issue but as with Frosh-----he means he will look at low-level scams like Food Stamp and Pension fraud and never mentions the systemic culture of corporate fraud and government corruption.  So, don't vote for a Republican just because neo-liberals have made the Democratic Party so corrupt.....

GET RID OF THE NEO-LIBERALS!  THEY ARE ONLY PROTECTING WEALTH AND PROFIT AND WILL NOT HOLD POWER ACCOUNTABLE.


Neo-liberals always talk about gun violence and control but they are the ones implementing the policies that kill labor and justice....creating the conditions for this increase in crime and violence.  So, if a candidate simply shouts a mantra of gun control and gun violence without shouting that the Maryland Assembly and Baltimore City Hall passes policy that creates the conditions for crime and violence----he/she will do nothing about solving these problems.
  Now, FROSH is definitely better than Jon Cardin but the point is Maryland never has a candidate for public justice that will provide public justice.

Google  '
Frosh and government corruption and corporate fraud' and you will get nothing.

THE GOVERNOR HAS THE ABILITY TO CREATE SPECIAL TASK FORCES AND PRESSURE MARYLAND AGENCIES TO ENFORCE LAW-----


neo-liberals like Brown will protect the fraud and corruption----Cindy Walsh for Governor will fight and reverse it!



PETER FROSH FOR MARYLAND ATTORNEY GENERAL



Issues Protecting Kids Online


Information technology has made our world more connected and productive than ever before. Unfortunately, the anonymity and freedom of the Internet have also created greater opportunities for crime, exploitation, and abuse. As a father of two daughters, I know firsthand the threats the Internet brings into the lives of young people today. Through that expe...

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Protecting Seniors Our seniors deserve the respect and care that they have earned throughout their lifetime. Maryland's senior population will only continue to rise in the coming years. As a result, the number of crimes against seniors will also increase. Far too often, scam artists perceive senior citizens as vulnerable and relatively wealthy due to their ability to access...

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Making Maryland Safer Protecting people - it’s what I have done in the courtroom and in the legislature. My number one priority as Attorney General will be keeping Maryland families safe. I have been a leader in keeping Maryland families safe by: Leading the fight for the Firearm Safety Act, landmark gun safety legislation that will prevent gun violence and save thousan...

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Protecting Maryland's Environment We know that the beauty of our state isn’t just something we enjoy, but it is also one of the things that make our economy strong. Responsible and sustainable utilization of our natural resources should be a guiding principle for Maryland businesses and individuals. Everywhere I go, Marylanders tell me they want clean water to drink and clean air to...

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Protecting Maryland Consumers As a young man, I was taught the importance of justice and fairness, and to stand up for those who can’t stand up for themselves. I have carried those values with me throughout my career in public service: championing laws to protect children from ingesting harmful chemicals in baby bottles and formula; expanding the Attorney General’s power t...

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The only oversight in Maryland comes from the Federal government and as we all know Eric Holder and Obama have made it their top priority to get rid of that with the help of Congress.  You see below that all of the agencies tasked with oversight and transparency are the ones cut in the attack of small government.  THAT IS ALL THESE NEO-LIBERALS AND NEO-CONS CARE ABOUT---HIDING THE FRAUD AND CORRUPTION TRAIL.

This is third world.  It is what Trans Pacific Trade Pact does----eliminates a sovereign nation's ability to limit corporate profit in any way.  I had a young black Republican in Maryland tell me WHAT'S THE MATTER WITH PROFIT?  Well, you are being sold a bill of goods if you do not understand the power of Rule of Law and Equal Protection and Bill of Rights in everyone's life.



Continued cuts to legislative branch budget hurt transparency, accountability, and capacity

.
by Matthew Rumsey
  • policy
July 9, 2013, 4:16 p.m.


This morning, the House Appropriations Committee's Legislative Branch Subcommittee marked up its FY 2014 funding bill, agreeing to a plan that would cut funding for Congress and legislative support agencies well below FY 2013 levels, and even beneath sequestration levels for most offices.

Committee leadership claimed that cuts were necessary to "lead by example" and help get the government's "fiscal house in order,"
but, in reality, the cuts will likely limit accountability, access to information, and the ability of Congress and the legislative support agencies to do their jobs efficiently and effectively
. The shrinking budgets could also make it more difficult for Congress to implement a number of important transparency initiatives.

Specifically, the plan would continue several years of cuts to House operations and the Government Accountability Office that have diminished the capacity of both bodies.

The GAO exists to help Congress fulfill one of its most important functions,
overseeing and improving the accountability and efficiency of the federal government, and pays for itself many times over through the cost savings that it identifies every year. Unfortunately, Since major budget cuts began three years ago the GAO has lost more than 14% of its staff and seen its ranks fall to the lowest staffing level since 1935. The GAO cannot continue to identify waste, fraud, and abuse in the federal government and help to save taxpayers billions of dollars every year if its budget keeps shrinking.

Meanwhile, the House has cut individual office budgets by more than 17% over the past few years, reducing Representatives' ability to understand and enact complex policy, communicate openly and efficiently with constituents, perform oversight, and do the job of governing that they were elected to do. Unfortunately, Congressional staffs have been shrinking since the late 1970's. These cuts will most likely accelerate that trend and further diminish Congress' policy expertise and ability to conduct oversight.

Finally, limited budgets could make it harder for Congress to move forward with important transparency reforms, including opening Congressional Research Service reports and reports from the Executive branch to Congress to the public.

The Senate Appropriations Committee is scheduled to mark up their Legislative Branch funding bill on Thursday. Hopefully they will push for funding necessary to ensure that Congress and its support agencies can do their jobs effectively.


_____________________________________________

The same forces dismantling public justice for citizens in poor communities is that dismantling oversight and accountability in government and corporations.  The idea is that chaos and unaccountability allows the few in the autocracy to control everyone else----and that is what people in third world nations
live with every day.  When my friends dread having to find a contractor to do simple work because everyone is fleecing consumers---the middle-class are losing  rights as the people in poor communities enduring 'stop and frisk', home invasions, zero tolerance, and now youth curfews......loss of citizenship.

EVERYONE NEEDS TO WAKE UP TO THE CULTURE OF CRIMINALITY WE HAVE IN GOVERNMENT AND CORPORATIONS.


Below you see the political culture of neo-liberals and neo-cons.....O'Malley is the mirror of Cuomo and both are raging Wall Street neo-liberals----Clinton's farm team.  If you have leadership in government openly committing fraud as you do today---you have no
Rule of Law being enforced anywhere.


I went to the Baltimore Comptroller's office for FOIA request on a statement made by Mayor Rawlings-Blake during a Board of Estimates meeting.  The mayor's lawyer Nilson was there and stated out loud that the FOIA would be used against the people included in a lawsuit to which the BOA employee stated.....well, we can lose that information.  This is so pervasive that a lawyer feels no problem with suggesting that information disappear.
  You can just see how this behavior is mirrored in the Baltimore City Police Department.

UNCONSTITUTIONAL CONDUCT!  PROVE IT!


Wednesday, Jul 23, 2014 09:30 AM EST  Salon


Report: Andrew Cuomo under federal investigation for allegedly thwarting ethics inquiries

The governor of New York and possible future presidential candidate may have tried to shield his donors Elias Isquith

According to a new bombshell report in the New York Times, New York Gov. Andrew Cuomo, widely expected to coast to reelection this fall and long rumored to have presidential ambitions, is under federal investigation for allegedly trying to thwart his own anti-corruption commission after it began looking at his political allies.......


Why Is the Cuomo Administration Automatically Deleting State Employees' Emails?

Wednesday, 13 August 2014 10:23 By Theodoric Meyer, ProPublica | Report

Governor Andrew Cuomo (Photo: Diana Robinson / Flickr)New York Gov. Andrew M. Cuomo’s administration — which the governor pledged would be the most transparent in state history -- has quietly adopted policies that allow it to purge the emails of tens of thousands of state employees, cutting off a key avenue for understanding and investigating state government.

Last year, the state started deleting any emails more than 90 days old that users hadn't specifically saved — a much more aggressive stance than many other states. The policy shift was first reported by the Albany Times Union.

A previously unpublished memo outlining the policy raises new questions about the state's stated rationale for its deletions policy. What's more, the rules on which emails must be retained are bewilderingly complex – they fill 118 pages – leading to further concern that emails may not be saved at all.

"If you're aggressively destroying your email, it looks like you're trying to hide something," said Benjamin Wright, a Dallas lawyer who has advised companies and government agencies on records retention.

ProPublica obtained the memo through a public records request.

In the June 18, 2013, memo, Karen Geduldig, the general counsel of the state's Office of Information Technology Services, described New York's decision to automatically delete emails as a way to cut down on the state's "enormous amount of email data."

But the state implemented the policy as part of a move to Microsoft's Office 365 email system, which offers 50 gigabytes of space per email user — enough to store hundreds of thousands or even millions of emails for each state worker. The state's version of Office 365 also offers unlimited email archiving.

The Office of Information and Technology Services declined to comment on the record. An official in the office said even though the state can store large quantities of email, it can still be difficult to manage.

"Just because you have a big house doesn't mean you have to shove stuff in it," the official said.

Geduldig's memo also pointed out that some federal government agencies and corporations automatically purge employees' email. "Such a system will aid the State in improving its email management," Geduldig wrote.

But many states take a different tack.

Florida, for instance, requires state employees to keep routine administrative correspondence for at least three years, and emails dealing with policy development for at least five years. Connecticut requires employees to keep routine emails for at least two years. Washington State requires workers to keep emails dealing with public business for two years, and emails to and from top officials for four years. Those states also do not automatically delete email.

"It shouldn't be an automatic process," said Russell Wood, the records manager for the Washington State Archives. "There should be some point of review in there."

Emails that qualify as "records" are supposed to be preserved under New York's policy. But determining which emails qualify and which don't — a task left up to individual state employees — can be mind-numbingly complicated.

The state's rules include 215 different categories of records — including two separate categories dealing with office supplies.

"We don't think it's plausible at all that agency personnel are going to meticulously follow" those rules, said John Kaehny, the executive director of the good-government group Reinvent Albany. If the rules for preservation aren't followed, emails will be purged by default.

The length of time emails are required to be kept varies by category. Any emails related to "human rights training," for instance, must be kept for six years. Emails concerning "agency fiscal management" must be kept for three years. Emails about "the development of internal administrative policies and procedures" must be kept for a year, but emails "used to support administrative analysis, planning and development of procedures" can be deleted as soon as they're "obsolete," according to the rules.

The governor's office has its own rules detailing which emails must be saved, with 55 categories, from emails of weekly reports to emails "related to Native-American affairs." Anything that doesn't fall into one of the categories "should be deleted" once they've been opened, the governor's office advises.

There is no internal or external watchdog to make sure the rules are being followed, Kaehny said.

The state also doesn't have a standardized system for preserving emails that do have to be saved, according to the Office of Information Technology Services official. State workers can save their emails by printing them out, pasting them into Microsoft Word documents or placing them in a special folder in the email program itself.

"Everyone does it differently, and some people are still learning how to do it," the official said.

Emails related to potential litigation and freedom of information requests are not supposed to be deleted under New York State's policy. But Karl Olson, a San Francisco lawyer who has represented news outlets including the Los Angeles Times in freedom of information lawsuits, said that deleting emails after such a short period of time might mean they're gone by the time reporters need to request them.

"It may take a while for evidence of misconduct to bubble to the surface," Olson said.

Emily Grannis, a fellow with the nonprofit Reporters Committee for Freedom of the Press, said New York's automatic deletion policy "strikes me as inconsistent with the goals of [freedom of information] laws, and to have such a short timeframe is particularly troubling."

Government agencies often adopt deletion policies to help protect themselves from potential lawsuits and freedom of information requests, said Mark Diamond, the chief executive of Contoural, a records management consulting firm. Getting rid of emails after 90 days, though, risks deleting correspondence that employees might need down the road. "I don't think it's a well thought-out strategy," he said.

Cuomo's aides have also developed a reputation for using their personal email accounts to conduct state business — a move that can make it more difficult to seek the emails under the state's freedom of information law. The Cuomo administration has denied that it does so, but a ProPublica reporter and others have, in fact, received such emails from officials.

New York isn't the only state that destroys unsaved email after 90 days.

California's governor's office, for instance, has automatically deleted employees' sent and received email after 90 days for more than a decade. But the office also requires employees to save far more than in New York, including official correspondence, memos, scheduling requests and other documents.







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June 04th, 2014

6/4/2014

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I like to refresh people's memory every now and then as to what I mean when I repeat -------recover corporate fraud of tens of trillions of dollars from last decade.  Many people do not know the US Treasury was literally fleeced by US corporations and especially the banks in massive fraud and this is what caused the economic collapse of 2008 and the national debt of $17 trillion now. 

SIMPLY REINSTATING RULE OF LAW AND RECOVERING THIS FRAUD WOULD PAY OFF THE NATIONAL DEBT AND MAKE GOVERNMENT COFFERS AT ALL LEVELS FLUSH WITH MONEY.


The citizens of America and our government are not impoverished----we've been looted and we have politicians in office protecting that stolen money.  That is what neo-liberals and neo-cons do----they work for corporate profit and wealth at the expense of labor and justice.  Do you hear your incumbent or candidate shouting---RECOVER TENS OF TRILLIONS OF DOLLARS IN CORPORATE FRAUD?  NOT A PEEP IN MARYLAND.

ALL CANDIDATES FOR GOVERNOR OF MARYLAND ARE NEO-LIBERALS AND NEO-CONS EXCEPT CINDY WALSH FOR GOVERNOR.


I am not even touching the surface with these posts as fraud hits every industry in the US.  My mention of the subprime loan fraud and the banking industry does not even mention the tens of trillions of dollars in all kinds of other financial frauds this past decade-----THE NUMBERS ARE HUGE.

Remember, all your pols know these frauds happened.....they know recovery is not that hard......and they know the people charged with justice----the Maryland Attorney General Gansler and Governor O'Malley for just two-----are aiding and abetting these crimes.  YET THEY GET THE STAGE AT ELECTION FORUMS AND DEMOCRATIC EVENTS!


OH, THAT'S WHY CINDY WALSH FOR GOVERNOR OF MARYLAND IS NOT ALLOWED IN ANY OF THE REINDEER GAMES!

HEALTH INDUSTRY FRAUDS IN THE TRILLIONS OF DOLLARS LAST DECADE

Let's take a look at what both government watchdogs and public policy organizations calculate to be a conservative look at how much money was stolen and from which agencies.  Since I just spoke of health care and corporate universities, below you see the health care fraud for the health industry at $200-400 billion each year.....that is billions of dollars stolen from Medicare and Medicaid in Maryland each year.  Which hospitals handled most of these patients?  Johns Hopkins and UMMS in Baltimore.  It does not take a rocket scientist to know the institutions handling most of the poor and seniors is where these frauds occur.  Padding fee for service is rampant and happening all over Maryland but it is not fee for service that is the problem as much as the fact that there is absolutely no oversight and accountability in these Federal programs.  They are being allowed to be gutted with fraud.

So, as your neo-liberal in Congress, the Maryland Assembly, or Baltimore City Hall pretend they have to gut social services, public services, public employees and their pensions and wages.......WE ALL KNOW IT IS THE FRAUD AND CORRUPTION.  THIS IS WHY CINDY WALSH FOR GOVERNOR OF MARYLAND IS NOT MENTIONED AT ALL IN THIS PRIMARY!  All the other candidates are involved in this system and will keep the status quo and that is why they have the place in the media.


Below you see a well-researched paper on health fraud.  Notice that the amount of fraud back in 1998 was $250 billion a year.....THAT WAS BEFORE CORPORATE FRAUD WENT ON STEROIDS IN THE 2000s


'It is clear to see why Americans consider this the biggest cause, when health care fraud was estimated to cost approximately $100 billion to $250 billion per year in 1998, or 10 percent to 25 percent of total health care spending'

An Undergraduate Honors Thesis by
Emily Fisher

April 2008

ABSTRACT
Health care fraud is an important and visible factor associated with increasing health care costs in the United States. Medicare and Medicaid contribute to a vast majority of those cost sand therefore must be heavily scrutinized. This thesis will investigate the types of fraud, who commits them, and why the health care system is more susceptible to fraud. More specifically, the problems and complications of current fraud investigation for Medicare and Medicaid are examined. This thesis will then evaluate how successful these initiatives were in reducing health care fraud and explore new suggestions for preventing health care fraud in the future.


________________________________________________
The amount of fraud in the subprime mortgage fraud was in the trillions and we have received a few hundreds of billions in settlement----I should say the US Justice Department settled for that much and much of the money was sent right back to those committing these frauds and not those defrauded.  The point was at the time of this first settlement that $25 billion was a postage stamp of a settlement meant only to try to keep the public from continuing legal recourse for the rest of the fraud.  Maryland was ground zero for this fraud as we are still seeing the repercussions across Maryland and the major tool for the fraud, MERS operated right here in the Washington suburbs of Maryland and Virginia.  It was a Maryland court that ruled MERS did not break law when EVERYONE KNOWS MERS BROKE LAW.  This ruling simply needs to be appealed to ever higher courts to negate that corrupt ruling.

The thing to remember is those developing this massive scheme targeted low-income specifically for the availability of taxpayer-backed FHA loans that had taxpayers paying all kinds of attorney fees, title fees, down payments----the whole nine yards on loans everyone knew would fail.  At each stage fraud and corruption was involved no matter how much they tell you it cannot be proven or an individual cannot be found----THE EVIDENCE IS ALREADY COLLECTED AND INDIVIDUALS HAVE BEEN FOUND.  THE POLS ARE LYING TO YOU AND ME.

Maryland is a mess because this fraud was allowed to go wild even as 50 states attorney general shouting this mortgage system was full of fraud back in 2005.  All that had to be done is for government officials to educate and warn people to stay away----instead the marketing increased.  This was O'Malley working for Baltimore Development and Johns Hopkins in Baltimore as these frauds had a second goal----clearing out the urban center of working and middle-class homeowners so big developers could own all real estate----which is what is happening now. 


TRILLIONS OF DOLLARS IN SUBPRIME MORTGAGE FRAUD HAS YET TO BE RECOVERED AND THAT IS BILLIONS OF DOLLARS FOR MARYLAND ALONE.


New Fraud Evidence Shows Trillions Of Dollars In Mortgages Have No Owner

By Alan Pyke on August 13, 2013 at 2:57 pm

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Share on email Thanks to forged documents, banks can’t prove that they own trillions of dollars in mortgages, according to recently unsealed court documents relating to a lawsuit the government decided to settle out of court for $95 million in 2012. The evidence gathered by Lynn Szymoniak, a Florida resident who fought off a wrongful foreclosure after three years of legal wrangling, could invalidate ownership claims to the homes in question. Yet foreclosures based on these documents continue to be approved.

The unsealed documents indicate Szymoniak, whose career as an insurance fraud investigator may have helped her piece together the complex web of documentary evidence, found invalid documentation underlying at least $1.4 trillion in mortgage-backed securities. The “robosigning” form of mortgage fraud – where banks forged documents that are legally required to transfer the ownership of a given mortgage – was ostensibly settled in the 2012 National Mortgage Settlement. Szymoniak received $18 million for her role as an expert whistleblower who helped build the pool of evidence used to achieve settlements over robosigning and retained the ability to press ahead to a trial with the banks that weren’t party to the government’s settlement, which she plans to do.

Other evidence of widespread mortgage fraud has recently surfaced.
Researchers looked at just one mortgage lender that was a major player in the subprime bubble. They found fraudulent misrepresentations of 9 percent of all loans sold off to financial firms seeking to package up loans into mortgage-backed securities, and in 93 percent of those misrepresentations, the lender knew it was lying about the nature of mortgages it was passing along. The researchers stress that the actual fraud rate is likely higher, as they only searched for two specific forms of misrepresentation.

Despite the growing mountain of evidence of fraud in both mortgage securitization and foreclosures, the federal government’s response has been feeble.
The 2012 settlement has failed to stop bank abuses. A much-touted program to provide relief to homeowners failed to serve nearly as many as intended, and half of the mortgages modified under it are back in default. And over the weekend, the Justice Department admitted it had dramatically inflated its successes in a yearlong task force targeting mortgage abuses.

______________________________________________

The entire online college business is one big fiasco meant to undermine the US higher education system that is ranked #1 in the world but is failing because of defunding and privatization schemes like this one.  Maryland is ground zero for these online colleges that simply have as a goal of forcing 80% of Americans into a substandard system of higher education that is cheap and poor quality.......which is why most students drop out!

If you listen to Maryland's data it will no doubt say these online courses are thriving because-----all data in Maryland is skewed.


Harvard, MIT Online Courses Dropped by 95% of Registrants

www.bloomberg.com

About 95 percent of students enrolled in free, online courses from Harvard University and the Massachusetts Institute of Technology dropped them before getting a completion...


The amount of for-profit education fraud is also in the trillions and it is infused with millions of student loans that are now subjecting these students to predatory education loan collection.  These students were lured to these programs and government officials knew they were bogus and allowed trillions of education dollars be funneled into these fraudulent programs and now they say-----there's no money for higher education funding for financial aid and grants for the working and middle-class students.....BECAUSE TRILLIONS OF DOLLARS IN FOR-PROFIT EDUCATION FRAUD HAS NOT BEEN RECOVERED!  Our students are being held captive to fraudulent loans and Obama has the US Department of Education run by Wall Street collection contractors.

I want to emphasize that none of what Obama and neo-liberals in Congress said would happen in accountability happened.
  In Maryland all of these for-profits listed in this article are still filling the Maryland airwaves with advertisements and have facilities operating and no accountability has happened.  Instead, Maryland citizens are straddled with this fraudulent student debt and our government revenue stolen in the trillions of dollars!

The article below is long but please glance through!



'The for-profit predatory colleges, in their mad dash to suck up as much as they can in Title IV funds, Pell grants, and other government subsidies, thus enriching their investors at the expense of students, prey on and then wolf down the most disadvantaged students they can find'.

Neoliberalism and the For-Profit, Predatory Educational Industry: You Can't Regulate a Criminal Enterprise

Thursday, 23 September 2010 11:55 By Danny Weil,

t r u t h o u t | Report | name.


You might have been following Secretary of Education Arne Duncan and his department's attempts to reign in the for-profit universities and colleges for their criminal activities. Perhaps you recognize some of these for-profit universities and colleges,
for they are well known due to their marketing and are heavily traded on the stock market - DeVry (ticker: DV), Grand Canyon Education (LOPE), as Apollo Group (APOL), ITT Educational Services (ESI), Kaplan (WOP) and Strayer Education (STRA). There are literally thousands of these schools in existence and most are online schools with office fronts that act as administration centers for the whole for-profit syndicate.

The Department of Education (DOE), after a 2010 Government Accounting Office (GAO) sting operation that unveiled the vile tactics of 15 of these predatory institutions, says it wants to adopt new regulations that would rein in the for-profit educational industry. Yet, this is not the first time the "industry" has been caught with its pants down and its fists full of dirty money. Earlier, in 2009, another GAO investigation was launched and similar acts of criminality were found (United States Government Accountability Office, Proprietary Schools: Stronger Department of Education Oversight needed to help ensure only eligible students receive financial aid, August 2009,).

Under Title IV of the Higher Education Act, any school can receive federal taxpayer funds in the form of student aid if it offers courses of study such as certificates, associate degrees, bachelor degrees, graduate degrees or professional degree programs. Proprietary schools offer a small percentage of bachelor degrees, but a substantial percentage of certificate degrees. Overall, the proprietary sector receives the smallest percentage of Title IV funds, 19 percent, as compared with the public and nonprofit, which is 48 percent and 33 percent, respectively. Although the majority of enrollees in these colleges are in four-year programs, the two-year proprietary schools account for a significant percentage of the proprietary customer base.



The Crime Scene

Before we discuss the proposed new regulations due to take effect on November 1, 2010, it is important to understand the for-profit college and university venture industry as a virtual crime scene.
For that is what it is. When one begins to think about the for-profit educational industry as a larcenous crime scene then it becomes ludicrous to even consider regulations of what are criminal acts; at the same time, it also becomes apparent how the for-profits work, and the human lives they decimate and destroy in the name of education when their sole motive is profit.

Any "cop on the beat" knows that when a crime scene is found, the first thing that is necessary is to put yellow tape around the area so that no evidence is tampered with and the crime scene can remain "clean and intact" for purposes of critical investigative scrutiny. Imagine yourself a detective arriving on the for-profit crime scene. The yellow tape is all around the "industry" carnage and now you must bend down and get yourself under the yellow tape and enter into the crime zone in an attempt to gather and bag evidence, obtain information and collect any clues as to how the perpetrators operate and who they might be. Looking around inside the circumference of yellow tape, one sees the following evidence of larceny, fraud, misrepresentation and theft:


  • Federal aid to students at for-profit colleges jumped from $4.6 billion in 2000 to $26.5 billion in 2009. Publicly traded, higher education companies derive three-fourths of their revenue from federal funds, with Phoenix University at 86 percent, up from just 48 percent in 2001 and approaching the 90 percent limit set by federal law. And the fact of the matter is that, although the default rate is climbing through the roof (see: "Predatory for-profit colleges and universities: the escalating default rate for student loans," July 13, 2010), the predator colleges continue to enroll more and more students knowing they cannot and will never be able to pay their loans.
  • What is being sold as education for "debt" are such phony degrees as Homeland Security degrees - cost $80,000 a year for a bachelors degree; or try $30,000 to get a "Surgical Technical" degree at Kaplan University that is itself fraudulent. Culinary and arts "education" is being peddled for more than $50,000! A whole swath of surveillance and criminal justice "degrees" are being auctioned off for as much, if not more ("Drive-by predatory colleges put students into debt purgatory and deficits into the stratosphere," April 11, 2010, Weil, Danny).
  • Kaplan, the for-profit predatory college whose name keeps popping up when one looks at fraud, misrepresentation, larceny of Title IV funds, theft of student funds, recruitment practices that parallel the military and many other issues such as poor professors, pre-packaged curriculum and failing colleges, has tried to privatize part of the Community College System in California.
  • Kaplan College in Pembroke Pines suspended enrollment following the federal investigation covered in the 2010 GAO report referenced above. They stopped enrolling new students after federal investigators uncovered incidents of high pressure and potentially fraudulent and misleading sales tactics.
  • A second Kaplan campus in Riverside, California, did the same thing. They also put new admissions on hold pending the results of an internal investigation ("Kaplan College suspends admissions at Pembroke Pines campus following federal investigation, Scott Travis," Sun Sentinel, August 5, 2010).
  • Students were enrolled in the CHI/Kaplan Surgical Technology Program year after year, but they were purposefully not being told by Kaplan and their personnel that, in all likelihood, externship sites, required for the SurgTech program would not be available. If verified from further investigations, the practices amount to concealment fraud, overt misrepresentation and possible theft of Title IV funds. CHI/Kaplan upper management, well aware of the lack of externship sites needed to permit students to complete their program, continued for years to recruit and enroll students in a program whose tuition costs approached nearly $24,000 a year. When the fraud was detected, the college then engaged in illegal practices designed to reduce the number of enrollees by forcing students out on technicalities. Hundreds of students were unable to finish their programs and had their personal lives and credit history ruined ("Whistleblower Exposes How Kaplan University Cheats Low-income Minority students and The Washington Post Benefits," April 18, 2010).
  • Kaplan is hardly alone in its hyperbolic predation. Corinthian College and the notorious Phoenix University have paid millions in whistle blower fines under Qui tam suits brought against the colleges.
  • The Apollo Group Inc., the company that owns the University of Phoenix, fraudulently misled investors in 2004 about student recruitment policies. The panel ordered the company to pay shareholders about $280 million (January 17, 2008, The New York Times, "Fraud by University Owner Is Found").
  • Jurors said Apollo officials "knowingly and recklessly" made false statements in a news release, a filing with the Securities and Exchange Commission and four conference calls with market analysts. By doing so, jurors said, Apollo violated federal securities laws (ibid).
The Washington Monthly found that in late 2009:

"The students who are flocking to these schools are mostly poor and working class and they rely heavily on student loans to cover tuition. According to a College Board analysis of Department of Education data, 60 percent of bachelor's degree recipients at for-profit colleges graduate with $30,000 or more in student loans - one and a half times the percentage of those at traditional private colleges and three times more than those at four-year public colleges and universities. Similarly, those who earn two-year degrees from proprietary schools rack up nearly three times as much debt as those at community colleges, which serve a similar student population. Proprietary school students are also much more likely to take on private student loans, which, unlike their federal counterparts, are not guaranteed by the federal government, offer scant consumer protections, and tend to charge astronomical interest - in some cases as high as 20 percent" ["The subprime student loan racket," Washington Monthly, Stephen Burd].

The criminal activity is not simply constrained to for-profit universities and colleges, as they like to refer to themselves. In December of 2009, the owners of the Business Computer Training Institute, or BCTI in Oregon, agreed to pay $3.2 million to settle six lawsuits by former students who attended its two Oregon campuses.

The lawsuits accused BCTI of fraud and unfair business practices, saying it lured students with inflated job-placement claims, but failed to provide the education it promised. The school closed in March 2005 under regulatory pressure ("Settlement with ex-students in Oregon," The Oregonian, Brent Hunsberger).

Then, there is ITT Educational Services,
which reported in 2009 that new student enrollment increased 27.2 percent to 27,738 in its third quarter. With private sector lending still in decline, the for-profit educator is increasingly funding growth through an internal loan program not much different than a payday loan center. As a result, growth metrics looked impressive for ITT at the quarter that ended September 30, 2009:

  • Total revenue per student increased 4.5 percent to $4,852 per student, helped by a five percent hike in tuition fees implemented in March 2009. Looking to 2010, management expects to raise tuition another 4 to 5 percent.
  •  The third-quarter operating margin improved 437 basis points to 36.1 percent, or $122.7 million, helped by lower advertising rates and more effective lead conversion rates (into enrolled students). ("Lessons not learned at ITT Educational Services," November 8, 2009, David Phillips, BNET online.)
As BNET online noted back in 2009, the notion of ITT lending money to students who then pay them back the money with interest through an internal loan program is shylocking:

"With a 10 percent unemployment rate in this country, the for-profit education industry is a playground for those in need of dreams. Do not be mislead by ITT's numbers, as the trail of money starts and ends back at ITT itself. Federal loan programs are falling short, so the company is dipping into its own coffers to help students cover this widening tuition gap. Up to 65 percent of its students need private lending, and analysts estimate that $100 million to $120 million in loans and scholarship assistance will need to come from ITT's internal lending program." [ibid]

Student Victims as Prey

The for-profit predatory colleges, in their mad dash to suck up as much as they can in Title IV funds, Pell grants, and other government subsidies, thus enriching their investors at the expense of students, prey on and then wolf down the most disadvantaged students they can find.

The for-profit predatory colleges sign up as many "borrowers" as they can - even pounding on homeless shelters to recruit bodies, looking for drug addicts they can enroll from recovery programs and all of this with debilitating consequences for borrowers who miss payments and borrowers' families. They set up at welfare offices, hang out at laundromats in low-income neighborhoods, recruit at public housing units, and their "recruiters" patrol the streets of distressed neighborhoods in automobiles or on foot looking for vulnerable working class bodies they can register for government cash.

As I noted at Dailycensored.com back in July of this year:

"You see, such disadvantaged students are desirable for the for-profit colleges because they qualify for federal grants and loans, which are largely responsible for the prosperity of the predators, the more bodies the colleges can 'ranch' the more money they make. When the students default and go back to alcoholism, drugs abuse, lock-down programs, mental institutions, prisons or the streets, you the taxpayer pay the government 97 percent of the loan, for you are covering the bet the students will graduate and pay their loan obligations, a bet not even Las Vegas would touch" ("For-profit predatory colleges and universities prey on the homeless while hedge fund operators get busy shorting the sector's stock: the next big economic bubble").

Many of the student-victims see the ads these syndicates run perpetually on TV hawking the educational degrees and the consumer life they promise to deliver. They promise the student this degree or that degree will bring them out of poverty or help them gain some of the material wealth they see on TV and in ads throughout their young lives. ("Stimulus Wreckage," Matt Smith, September 30, 2009 www.sfweekly.com.) They advertise themselves as conveyor belts to successful jobs in the middle of the Second Great Depression, spending as much as 50 percent of their revenue on marketing alone.

Many of the schools exclusively prey on low-income people and many candidates find out information about proprietary schools from presentations given or brochures left at food stamp offices, welfare offices or at low income housing projects. Cars with large signs on the doors have also been known to drive through housing projects slowly, like ice cream trucks (United States Government Accountability Office, "Proprietary Schools: Stronger Department of Education Oversight needed to help ensure only eligible students receive financial aid," August 2009).

The schools employ recruiters, who also attend staged or legitimate "job fairs," in an attempt to attract the unemployed, who they can then cannibalize at the fair itself. One young woman I recently talked to at the Phoenix University told me she was recruited this way. At a job fair, she was approached by an "academic counselor," who aggressively got her to the school's "financial aid counselor" the same day. These are drive-by schools, "disaster schools" without a doubt, and their tactics are ruthless, their owners are without conscience and their profits sheets are bulging.

The Public as Victims

According to Mark Kantrowitz, publisher of FinAid.org and FastWeb.com:

"Americans owe some $826.5 billion in revolving credit, according to June 2010 figures from the Federal Reserve. (Most of revolving credit is credit-card debt.) Student loans outstanding today - both federal and private - total some $829.785 billion.

"The growth in education debt outstanding is like cooking a lobster. The increase in total student debt occurs slowly but steadily, so by the time you notice that the water is boiling, you're already cooked. (August 9, 2010, Mary Pilon, "Student-Loan Debt Surpasses Credit Cards").

By Kantrowitz's estimations there is $605.6 billion in federal student loans outstanding and $167.8 billion in private student loans outstanding. His tabulations show that $300 billion in federal student loan debts have been incurred in the last four years; this, while Americans were asleep and the corporate media purposely concealed the story (ibid). The bad news: none of the debt is dischargeable in bankruptcy and, therefore, will be paid by the general taxpayer.

According to The Chronicle of Higher Education, "one in every five government loans that entered repayment in 1995 has gone into default. The default rate is higher for loans made to students from two-year colleges, and higher still, reaching 40 percent, for those who attended for-profit institutions." ("Government vastly undercounts defaults," Field, K., July 11, 2010.)

Corinthian Colleges, another large, publicly traded player in the predatory, subprime, education market, announced in July 2010 that more than half of the loans it makes to its students will go bad. No problem, the college still makes profits for its investors and CEO's. Like most of the predatory institutions, it gets its money from government Pell grants and Title IV funds ("The Chronicle of Higher Education, Why do you think they're called for-profit," July 30, 2010).

The Phoenix University (the Apollo Group) is saddled up this year alone to receive $1 billion dollars from Pell Grants, not to mention the other $4 billion it will get from Title IV funds (ibid).

This means that government taxpayers will be on the line to cough up the money already siphoned off by the for-profit predatory schools as defaults spiral out of control and bankruptcy eludes students as an option.

The Community and State Colleges as Victims

The community colleges of the state of California, reeling from debt, entered into a memorandum of understanding this year which would have allowed students to take courses at Kaplan University, the private, online school. When the manure began to ripen, and it was discovered that the "units" would not be transferable to UC or Cal State campuses, the deal was canceled. (Larry Gordon, "Community colleges cancel deal with online Kaplan University," Los Angeles Times, August 26, 2010)

The plan, basically contracting out education for profit, was intended in part to offer students at the state's 112 community colleges a way to take courses that might have been canceled or overcrowded because of state budget cuts. But some faculty, concerned about getting entangled with a proprietary school, especially one like the notorious disaster college Kaplan, revolted. Kaplan, in its efforts to commodify education, planned to charge students a whopping $646 for a three-credit class, compared with $78 at a community college. Why? This is part of their business plan and how they take Title IV money (90 percent of their money comes from Title IV government monies).

Walmart recently announced a deal with the for-profit American Public University System (hardly public, the stock is traded daily on the New York Stock Exchange and is the brainchild of Jim Etter ("The Chronicle of Higher Education, Why do you think they're called for-profit," July 30, 2010). The "university" is better known as the American Military University, which has developed into a publicly traded, for-profit behemoth that now sucks in veterans, either those in active duty or retuning from war. The university is also the home of Larry Forness, the "professor," who lectured students on the best means of using torture, such as injecting Muslims with pig blood ("Does the American Military University (AMU) teach torture to its students or has it taught torture in the past?" WikiLeaks, March 29, 2010). Now, with the veteran market cornered, the American Public University seeks to train nine-dollar-an-hour employees for Walmart under the auspices of higher education, using government funds and especially Title IV monies.

With the current economic devastation sweeping the nation like locusts, more and more students, through visible high-level marketing, are being seduced to attend for-profit colleges. The words to the song are always the same: you need an education; we offer the best-buy in online degrees; you can do the work at your home; times are tough; to get ahead, additional and high-paying work skills are needed to thwart off individual economic collapse; and on and on. The message is very clear; there is no systemic economic problem under the current economic regime that cannot be staunched with a good, for-profit education. Insipid individualism and the commodification of education itself are now joined in a fervent embrace. All of this creates the opening for the predatory, proprietary college system, while it leaves in its wake an economic devastation for public institutions and student lives.

November 19, 2009, California Community Colleges Chancellor Jack Scott (who forged the failed deal with Kaplan) delivered the keynote speech at the opening session of the Community Colleges League of California Annual Convention and Partnership Conference in Burlingame, California.

Chancellor Scott's speech, Living in Difficult Times, addressed the issue of the growing numbers of students crowding into community colleges and how, in these lean financial times, college leaders must find creative ways to do more with less funding. Focusing on the irony of the situation, Scott noted, "At the same time our funds have been reduced, our enrollments have surged."

This fall, statewide enrollment increased at California community colleges by more than 3 percent while the funding was cut by eight percent. Colleges reported, at the time of fall registration, 95 percent of course sections were completely filled, with many students on waiting lists and some turned away with no classes available.

As Peter Phillips from Project Censored reported late last year:

"Higher education has been cut in twenty-eight states in the 2009-10 school year and further, even more drastic cuts, are likely in the years ahead. California State University (CSU) system is planning to reduce enrollments by 40,000 students in the fall of 2010. The CSU Trustees have imposed steep tuition hikes and forced faculty and staff to take non-paid furlough days equal to 10 percent of salaries. Our current budget crisis in California and the rest of the country has been artificially created by cutting taxes on the wealthiest people and corporations. The corporate elites in the US, the top 1 percent, who own close to half the wealth, are the beneficiaries of massive tax cuts over the past few decades. While at the same time working people are paying more through increased sales and use taxes and higher public college tuition." ["The Higher Education Fiscal Crisis Protects the Wealthy," November 22, 2009.]

Countless numbers of Californians are flocking to the community colleges for job-retraining after losing their jobs in the economic downturn. Community colleges are also becoming increasingly popular because the California State University and University of California campuses are full and far too expensive; more veterans are utilizing the GI Bill benefits, and the economy is forcing many to look for affordable higher education options. (Paige Marlatt Dorr, director of communications
California Community Colleges)

When public social institutions like colleges and universities collapse and when veterans return with GI Bills and no public institutions to attend, this is all good news for the predatory colleges, their owners and shareholders. For, as public colleges turn away students in droves due to financial collapse, it means more and more students will flock to the for-profit college centers in hopes of receiving an education and this, of course, means that like vampires, the schools can get their hands on more public monies - the GI Bill funds, Pell Grants, Title IV funds - all this while public institutions starve.

Ah, the beauty of privatization, the free market. But it's hardly free as stated earlier, not with the large default rates in the billions that are shouldered by hard-working Americans who are forced to pay them. The only thing that is free is the public funds transferred to private coffers of these predatory institutions that see only an exchange value in education. The proprietary schools are now like privatized pike in a public lake.

Creating the Material Conditions for the Private Ownership of the Means of Educational Production: The Role of the Neoliberal State

Acting as a collection agency, the federal government collects taxes from ordinary citizens and then distributes the money to proprietary colleges through a middle man, usually Wells Fargo or Sallie Mae. A student must enroll and be accepted at one of the proprietary schools before they can receive Title IV funds in the form of grants, loans or campus-based aid through Sally Mae, Wells Fargo, or any other third party. The schools themselves must also be "approved" by the DOE in order to participate in receiving the Title IV funds. This means the schools must be licensed or otherwise legally authorized to provide higher education in the state they are located in; they must be accredited by an agency recognized for this purpose by the secretary of the US Department of Education and they must be deemed eligible and certified to participate in the federal student aid programs by the Department of US Education (United States Government Accountability Office, "Proprietary Schools: Stronger Department of Education Oversight needed to help ensure only eligible students receive financial aid," August 2009).

This is what is referred to in government parlance as the "triad" - the threshold colleges must meet for government funding. It is the DOE, now under the tutelage of Duncan, that must oversee this entire process and ensure that only eligible students receive Title IV monies in accordance with the triad mandates. The DOE, FSA, manages and administers student financial aid assistance under the Higher Education Act passed in 1965, also known as Title IV. The programs include: William D. Ford Federal Direct Student Loan Program (Direct Loan Program), the Federal Family Education Loan Program (FFELP), the Federal Pell Grant Project (Pell Grant), the Campus Based Aid Program or the Federal supplemental Educational Opportunity Grant (FSEOG), Federal Work Study (FWS) and the Federal Perkins Loan Program (administered directly by the Financial Aid office at each school). In 2008 alone, Title IV funds provided more than $85 billion dollars in student aid of which roughly 16 percent went to the proprietary schools and colleges. That's a lions share by any estimates, especially if you look at the 64 percent default rate, which is and will eventually be paid by taxpayers.

Currently, there is what is called a "90/10 rule" which applies only to proprietary schools. What this means is that at least 10 percent of student tuition must come from means other than student-loan funds. And then there was the "50 percent rule," which required a proprietary school to offer no more than 50 percent of its courses online. These rules were enacted to address rampant fraud among proprietary schools in the 1970s and 1980s. However, in February of 2006, the 50/50 rule was repealed in a reconciliation act passed by Congress. The bill, SB1932 passed the house by a slim margin, 216 to 214, but it then went on to slide through the senate. Now, the schools can offer all their classes online and this means no need for brick and mortar. Most are now "ghost schools," or disaster colleges that reside in office buildings and hardly offer any campus life other than vending machines and computers.

As to the 90/10 rule, which simply mandated that ten cents of every dollar the proprietary school took in had to be from another source other than the federal government, it, too, has been drastically eroded if not vitiated. In July of 2008, long before the $787 billion stimulus, the federal government increased its guaranteed educational loan limits by $2,000 per student. Why? According to Business Week, they were worried that privately funded lending would dry up in the recession, but one of the shocking implications of this move directly benefited the proprietary colleges. Now, with the federal government increasing its guaranteed educational loan limits by $2,000 per student under the new Obama rules, these monies are "counted" as part of the 10 percent by the proprietary schools, creating an accounting mish mash - a paper shuffling accounting system with no transparency and where no one can actually really trace the percentages.

Borrowers must begin repayment after dropping below half-time enrollment, according to the rules of Title IV. Usually, the default rate can be seen after nine months, or 270 days, when the borrower, in this case the student, has not obtained cessation of the debt through myriad and complicated processes, or, in the case of some students referred to deferment or forbearance due to hardship or disability (United States Government Accountability Office, "Proprietary Schools: Stronger Department of Education Oversight needed to help ensure only eligible students receive financial aid," August 2009).

The social policies of the neoliberal capitalist state are responsible for laying the groundwork for creating the material conditions for the private ownership of the means of educational production. This is no surprise. Take the current "stimulus" passed by the Obama administration.

According to an article in Business Week, a web site that covers the rapidly declining state of public education:

 "Career-oriented schools such as the University of Phoenix, a unit of publicly traded Apollo Group (APOL), have been benefiting from lean times as adults scramble for credentials they hope will help them find work. The stimulus enacted last month will accelerate this trend by providing an additional $15 billion in Pell Grants for students over the next two years. Apollo, which received more than three-quarters of its $3.1 billion in revenue from federal student aid in the fiscal year that ended Aug. 31, is well positioned to take advantage of the stimulus. Its Phoenix unit already is the biggest recipient of government student aid. In its most recent quarter, which ended Nov. 30, Phoenix boosted ad spending by 24 percent, to $88 million. Its enrollment rose in the quarter by 18 percent, to 385,000 students, who study at campuses in 39 states as well as online." ["For-Profit Colleges: Scooping Up the Stimulus," March 12, 2009, by Ben Elgin and Jessica Silver Greenberg.].

In a letter dated November 19, 2008, to Henry Paulson, then secretary of the US Department of Treasury, the American Association of Collegiate Registrars and Admission Offices along with the American Association of State Colleges and Universities, the Consumers Union, The National Consumer Law Center, the Project on Student Debt, the National Association for the College Admission Counseling, US Public Interest Research and the United States Students Association all wrote to urge Paulson to reconsider his plan to unleash the Bush stimulus monies for private student loans. They implored Paulson in the letter, noting that:

"Most students and families do not use private student loans to pay for college, nor should they." [Letter to Paulson, November 19, 2008, by the American Association of Collegiate Registrars and Admission Offices along with the American Association of State Colleges and Universities, the Consumers Union, The National Consumer Law Center, the Project on Student Debt, the National Association for the College Admission Counseling, US Public Interest Research and the United States Students Association]

The correspondence to Paulson indicated that only 8 percent of students currently use standard bank loans to attend university. This changed now that the banks are flush with money and looking for profitable investment strategies and new investment "opportunities." What could be better than to offer subprime loans to desperate young people looking for an education and a way to maintain civilian life? Yet, the fact is private loans are risky and expensive and lack the protections, oversight and regulations of safer federal loans. Furthermore, providers of private student loans already receive special treatment in bankruptcy at the borrower's expense. But the students don't; their loans are nondischargeable in bankruptcy.

The letter to Paulson went even further, noting the signing groups, unlike federal loans, have no real protections for borrowers and co-signers. And there is no limit to how high the interest rate can climb. The letter notes that private student loans are like subprime mortgages where the lowest income borrower is saddled with the highest interest rates and the worst terms. Not only this, but the letter goes on to point out that in cases of unemployment, disability or periods of no income - even death, their families have few options for relief (ibid).

The loans are impossible to discharge in bankruptcy courts, unlike other forms of consumer debt such as credit cards. As the associations indicated in their letter to Paulson, someone who racks up thousands of dollars buying skis on a credit card can get relief through bankruptcy. Yet, in the case of, say, a teacher saddled with private loans from the proprietary schools who can't work due to disability - she has no way out. The use of bailout monies now put the lenders' investments, or usury, in a privileged category at the expense of students and consumers.

It is criminal that billions of taxpayer dollars are allowed to be spent enabling lenders to continue to make these high risk loans, which then become defaults picked up by taxpayers. But, unfortunately, this is precisely what is going on; for Paulson, of course, didn't listen to the various gate-keeping organizations intent on protecting the public interest, nor did he care; he was more focused on bailing out his friends, not public citizens who have to work for a living. He doled out federal monies despite fervent warnings to major banks, for private student loans, just as he bailed out AIG and Goldman Sachs. The Fed bailed out the lenders of these student loans by allowing them to use subprime student loan assets as collateral for accessing federal funds. Now, the proprietary schools have another venue for slopping up funds headed for debt - thanks again to the actions of the federal government. This is legal crime committed during broad daylight hours, but, of course, no mention of it was reported in the corporate press.

But the story begins long before the stimulus bailout and Obama even thought about entering government. The DOE under George W. Bush and Rod Paige used government deregulation in an effort to help create a system of debt peonage for students, while offering larger and very profitable business opportunities to their friends, the proprietary colleges. Today, we see the chickens have come home to roost as Wall Street continues to find ways to bilk the American people and the corporate media continues to hide the crime scene. Kaplan College, for example, is owned by The Washington Post, a blood bank providing more than 62 percent of the paper's revenue ("Kaplan University: Blood Bank for the Washington Post," July 27, 2010). You can hardly count on them to run a story on the private ownership of the means of educational production.

As Sam Dillon, reporter for The New York Times, reported as early as March 2006:

"The power of the for-profits has grown tremendously," said Representative Michael N. Castle, Republican of Delaware, a member of the House Education and Workforce Committee who has expressed concerns about continuing reports of fraud. "They have a full-blown lobbying effort and give lots of money to campaigns. In 10 years, the power of this interest group has spiked as much as any you'll find."

Sally L. Stroup, the assistant secretary of education who is the top regulator overseeing higher education, is a former lobbyist for the University of Phoenix, the nation's largest for-profit college, with some 300,000 students.

Two of the industry's closest allies in Congress are Representative John A. Boehner of Ohio, who just became House majority leader, and Representative Howard P. McKeon, Republican of California, who is replacing Mr. Boehner as chairman of the House education committee.

And the industry has hired well-connected lobbyists like A. Bradford Card, the brother of the White House chief of staff, Andrew H. Card Jr.

The elimination of the restriction on online education, included in a $39.5 billion budget-cutting package, is a case study in the new climate. Known as the 50 percent rule, the restriction was one of several enacted by Congress in 1992 after investigations showed that some for-profit trade schools were little more than diploma mills intended to harvest federal student loans.

Since then the industry has grown enormously, with enrollment at such colleges outpacing that at traditional ones. In 2003, the last year for which statistics were available, 703,000 of the 16.9 million students at all degree-granting institutions were attending for-profit colleges. (March 1, 2006, New York Times, "Online Colleges Receive a Boost From Congress," Sam Dillon.)

Regulating the Criminal Enterprise

With the deficit growing astronomically due to two illegal wars, the bloated defense budget, bailouts to Wall Street and the costs of subsidizing the for-profit predatory colleges and universities, there was little the neoliberal state could do in light of the criminal activities of the private educational complex, but attempt to regulate the industry.

The new proposed rules by the DOE, due to be passed sometime in November 2010, would supposedly grant the DOE stronger authority to stop these for-profit "colleges" and schools from making false or misleading statements about financial charges. They do this regularly as the GAO report reveals and as the whole sordid history of the industry has shown. They also lie about the expected employability of their graduates, many claiming they can place students in gainful employment when, in fact, they cannot. The DOE also wants the predatory for-profit colleges, universities and schools to be barred from paying recruiters based on how many students they brought in. That's the practice now, and you can read about the whole recruitment corralling of students in an article I wrote back in 2009 entitled: "Private Predatory Colleges: How the neoliberal Alchemists Turn Debt into Profit and Citizens into Fools".

However, the most important and currently onerous "regulation" proposed for the for-profit educational industry would cut off federal aid to for-profit programs that repeatedly saddle students with debt that is defined as unaffordable under a new formula that takes earnings into account. This is the "gainful employment" rule that will drive a stake through the heart of many for-profit colleges and universities if it is passed in November of this year. The rule is all about assuring that the for-profits are offering an educational service that will prepare graduates for gainful employment. The problem - there is no employment.

It has long been believed by politicians and corporations that education is little more than a training ground for capitalist labor to eventually be exploited. Simmering education down to gainful employment is not a novel idea when one is laboring under these assumptions. Rather than see the entire enterprise of for-profit colleges as criminal, which it is, the government now seeks to rein in some of the "abuses" they see in the system they helped create. Regulating the material conditions for private ownership of the means of educational production can only come from starving the insidious institutions that fail to comply by withholding government subsidies. While certainly a start, the whole notion is problematic, for it leaves the predatory industry intact when anyone who has studied the crime scene can see that this criminal enterprise cannot be regulated; it must stopped. However, even this small bit of "rhetorical" regulatory posture has the billion dollar, for-profit industry on the offensive.

Corporations Fight the Neoliberal State Regulations With Faux, AstroTurf Groups

The for-profit, cybernetic educational industry has come forth on record, calling the illegal practices uncovered by the GAO a case of "bad apples." Kaplan officials said they found the disclosures "sickening." In a joint statement from Donald E. Graham, chairman and chief executive of The Washington Post Co., and Andrew S. Rosen, chairman and chief executive of Kaplan Inc.:

"They violate in every way the principles on which Kaplan is run. We will do everything in our power to eliminate such conduct from Kaplan's education institutions."

Similar to the movie "Casablanca," Graham, like the actor Claude Rains, seems surprised "gambling" is going on at Rick's Place. Yet, while the government is getting ready to step in and put into place policies that will allow the industry to continue its ownership of the educational means of production, albeit regulated, the for-profits are now busy building a faux revolution, akin to Dick Army's Freedom Works; or the fake coalitions put to together by the Koch brothers to fight any regulation of the coal industry; or the "Parent Revolution" out of Los Angeles controlled by Green Dot, a charter school CMO, which recruits parents to work for charter school legislation by disassembling public education. What these groups have in common is that they are heavily supported by legions of right-wing cash.

The New York Times of September 7, 2010, noted that:

"For-profit colleges have increased their lobbying against proposed Education Department rules to cut off federal financial aid to programs whose students take on too much debt for training that provides little likelihood of leading to a well-paying job" [For-profit colleges step up lobbying against new rules, New York Times, September 7, 2010.]

In addition to making personal visits to Capitol Hill, executives for many of the colleges have recently provided their employees with "personalized," standardized, form letters urging them to send them to Washington to fight the new regulations. They have also started a campaign to get their students to speak out against the new "gainful employment" regulation. Sound like the phony health care groups set out to battle Obama's health care reform? You betcha!

So far, The New York Times has found that the DOE has received about 45,000 letters on the proposed "gainful employment" rule within the last month.

John Sperling, the born-again Christian fundamentalist and founder of the nation's largest for-profit college, the University of Phoenix, emailed every member of Congress, seeking help opposing the regulations, and attached a sample letter to be sent to Education Secretary Duncan, asking him to withdraw them. He has conveniently married his new-found, fundamentalist religion with market fundamentalism.

Graham, the chairman and chief executive of The Washington Post Company, which receives 62 percent of its revenue from its various Kaplan educational businesses, visited Sen. Tom Harkin, Democrat of Iowa, whose Health, Education, Labor and Pensions Committee is holding hearings on the for-profit education industry. His goal: stop the regulations.

But the heavy, billion dollar players have done more than just urge employees and students to come out for their for-profit cause. The Education Management Corporation, the second-largest, for-profit company in the industry, hired DCI Group, a public relations firm, to contact its employees for information that could be used to create a "personalized" letter, which would then be delivered back to the employee for signature, along with a stamped, addressed envelope aimed straight at the DOE. ("Astroturf U: Goldman's For-Profit College Battles Obama Crackdown," Mother Jones, Andy Kroll, September 2, 2010.)

The AstroTurf group also drafted and is offering pre-crafted letters that students can use to send to their Congressmen. Mother Jones reported that:

"Some of the letters show little familiarity with the proposed regulations. For example, an Education Department official said, students at a particular school sent in dozens of hand-written letters asking for continued aid to for-profit colleges, but never mentioning the regulations. He said he called a letter-writer to ask whether the letter was intended as a comment on the regulations, and was told, 'This is what the school asked us to write.' He would not identify the school." [ibid]

This is not unusual and echoes the practices of many of these predatory colleges who have their professors write student papers so students can remain enrolled and thus beneficiaries of the federal dollars that end up in the coffers of the blood banks.

EDMC also has a web site, the Higher Education Action Center, guiding students or employees to oppose the regulations, offering their own "pre-crafted" letters. Argosy, a unit of EDMC, said last month in an email soliciting more comments that more than 2,000 people had used the site in the previous week.

The Real Problem Is the Private Ownership of the Means of Educational Production

Beginning in the Bush years, or actually before, the neoliberal state worked diligently to provide the material conditions allowing for the enormous growth of education for profit. In doing so, it has now created its own Frankenstein of debt and default that seeks refuge in the pockets of ordinary taxpayers. The for-profit industry, armed with billions of dollars and working off the disaster economics that has left the public sector unable to keep libraries open, let alone provide a decent opportunity for students to gain universal access to education, is now enabled with lobbyists and private firms to fight Washington tooth and nail against their proposed regulations. But this is hardly the point. For the regulations promise to leave intact a criminal enterprise that is not just a collection of bad apples, but is a rotten barrel of despair, financial ruin for students and moral outrage, not to mention the source of costs that will be thrown on the backs of ordinary Americans as students find there is no "gainful" employment under the economic policies of market fundamentalism and Wall Street crimes, and the defaults quicken. What all this means is that taxpayers may be on the hook for close to one trillion dollars or more.

Summary

I spoke to a young man of about 30 years old in my last sojourn at the Phoenix Institute in Oakland. When I asked him how his classes were going, he told me that they were going well, but he was living in his car with no job. However, he indicated, a bit animated, with the federal monies for school he received not only does he have the use of the computers and a warm place to go, but he can clean up in the office bathroom. This is privatized homelessness under Title IV that is parading as privatized education.

The free-market policies ruthlessly pursued through the calamitous corporatization over the last 30 or more years have imposed crushing and profound changes onto the lives of children and working adults. On National Public Radio, November 23, 2009, a student at one of these proprietary colleges was interviewed. She reported that she now pays $300 dollars per month to service her federal loans and that her parents had to take second jobs just to help her pay for her proprietary education. Currently, she cannot find a job, so her answer: she will borrow more money now to go on to graduate school, for in this way, she will not default on her loans, meaning wage garnishment, withheld social security and an inability to rent or buy a home. Debt peonage and a lack of public and civic life are forcing her and her family into the brutal margins of society (NPR, "All things considered," November 23, 2009).

Each and every day I receive letters and emails from students asking me what they can do to stop the predation. These are students whose lives are now ruined; they cannot get credit, they cannot involve themselves in any financial life and they cannot rent apartments or go to school.

Whistleblowers, known as Former Disgruntled Employees (FDE's) have written me telling me of the ghastly policies they have witnessed and/or participated in, but they dare not use their names or they will find that the power and authority of these for-profit dungeons of despair will literally blackball them from the industry overnight. I have spoken with countless lawyers who have told me they have no resources to fight the billion dollar industry attorneys.

There is no "college experience" at these proprietary schools; there are not even libraries at most of these schools or facilities where students can meet. At many of the proprietary schools that offer a "campus," one finds the colleges really languish in grimy storefronts in large office buildings along side other businesses, like insurance companies, mortgage outfits and financial institutions that share the office building rent. Usually the administration office of the "campus" is comprised of simply a desk and rows of computers; the food services are vending machines dominated by Pepsi and Coca Cola and the class rooms are rented to corporations when not in use by the proprietary school. At the Phoenix Institute's "campus" in Pasadena, California, the college sits in a large office building that shares tenancy with the Rand Corporation, harbored on the upper level floor. The college also makes $25,000 - $30,000 per month just renting out the classrooms when they are not in use (interview with former Phoenix employee).

As I chronicled back in 2009, for-profit predatory colleges for years marketed to the disenfranchised, the down and out, the sub prime students and, thus, they make up the "fringe economy" of other such predators like cash loans, payday loans, title loans for cars, check-cashing scams and the like. These "operations of higher predation" have been caught recruiting students at housing projects, welfare office, unemployment offices, laundermats in poverty stricken areas and, now, yes, the true down and out - the homeless and often drug addicted segments of our population, mostly minority. They actually enter homeless shelters where they rabidly prey and feed on the underclass of America ("For-profit predatory colleges and universities prey on the homeless while hedge fund operators get busy shorting the sector's stock: the next big economic bubble," July 19, 2010, dailycensored.com).

As any crime fighter knows, you cannot regulate larceny. What needs to be done is to build a sustainable economy that can provide a quality, public school experience for our nation's children. However, as long as education is boiled down to training for a capitalist society in ruins, this can hardly expect to take place. As the public sector diminishes due to the disaster capitalism of the last 30 years, we can only hope to see a few changes in the form of regulations. Until then, look for this storm to pass, as once regulations are passed, paying to get around them becomes part of the business plan as it always has been. In the interim, look for the for-profit educational scam that was and has been allowed to exist thanks to the partnership between business and the neoliberal state to be the next big financial bubble just waiting to burst.


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Below is a long article but please glance through it.  I am posting articles from the 2000s because it is then we know Reagan/Clinton started dismantling oversight and accountability in the name of smaller government.  Republican voters were sold on small government because they were told social programs would be axed-----but what global corporate pols had in mind was small government as a way to unleash unlimited fraud and corruption====just as exists overseas in developing worlds.  These US corporations steal much of overseas development money and now they are doing it here in America thanks to neo-liberals and neo-cons suspending Rule of Law.
 The actual amounts of defense industry fraud is in the trillions of dollars and the Wikileak documents exposing the defense industry expenditures that mainstream journalists will not investigate but international investigative journalists are show the absolute looting of our US Treasury by defense industry contractors just as happened in health care, the financial industry, the for-profit education industry, and the housing industry.  At each step your politicians knew it was happening and could have shouted loudly and strongly but you do not hear a word beyond a few soundbites at the time of an exposure.  MARYLAND IS KING OF THE FLEECING OF TAXPAYER MONEY FROM ALL LEVELS OF GOVERNMENT and this is why the poor are being made third world in poverty and the working and middle-class are seeing their taxes climb and fees and fines galore.



Obama is continuing to make it 'easier for contractors' and Trans Pacific Trade Pact simply tries to make all of this ignoring of US law legitimate by re-writing the Constitution without all that bothersome Citizens as Legislators,  Equal Protection, and Rule of Law stuff



"According to some estimates we cannot track $2.3 trillion in transactions," Rumsfeld admitted.  $2.3 trillion — that's $8,000 for every man, woman and child in America. To understand how the Pentagon can lose track of trillions, consider the case of one military accountant who tried to find out what happened to a mere $300 million.


'The Clinton-Gore Administration

From its beginning, the Clinton-Gore Administration has pushed for changes to make things easier for contractors through its Acquisition Reform program in the Defense Department. The initiative was the culmination of a long process of working closer with industry and its campaign contributors undertaken by the Democratic Party when it began targeting corporate campaign contributions more aggressively in the 1980s.

The defense industry succeeded beyond its wildest dreams in winning endorsement of its proposals after the 1992 presidential election. Their plans proved to be in the right place at the right time when Vice President Gore was looking for new changes to make through his Reinventing Government initiative. Industry wishes were compiled by a Congressionally-created committee known informally as the "Section 800 panel," which was industry-dominated. 19 The panel's report was completed soon after the Clinton-Gore Administration took office. Its recommendations helped shape the Reinventing Government plan, which was put together under a tight deadline and needed new proposals quickly'.




Defense Waste & Fraud Camouflaged As Reinventing Government
September 1, 1999 Table Of Contents

Executive Summary
Introduction
The Problem: Pentagon Waste Returns
Why We Need Oversight - 618% Overpricing
Acquisition Reform 101
A Detailed Study: Getting Good Prices Without Acquisition Reform
Acquisition Reform's Claims: Confusing What the Government Buys With How It Buys
The Cause: Why and How Is This Happening?
Today's "Acquisition Reform:" Rolling Back Yesterday's Reforms
Important Procurement Reforms of the 1980s and Their Current Status
Counterattack in the 1990s
The Clinton-Gore Administration
The Congress
Acquisition Reform - Not Really Adopting the Free Market
Monkeying with Oversight: Hear No Evil, See No Evil, Speak No Evil
Penny Wise, Pound Foolish
Acquisition Reform: "Streamlining" Dollars from Our Pockets
Paying for Luxury Hotels Again
Accepting Data That Need Not Be "Current, Accurate, and Complete"
The $435 Hammer That Won't Go Away
The Solution: How to Stop De-Inventing the Wheel
Appendix
Endnotes



Executive Summary


Overpriced spare parts horror stories from the 1980s taught us how to prevent fraud, and led to useful reforms. By the 1990s, however, defense industry interests dovetailed with Vice President Gore's Reinventing Government campaign, and new policies bypassed some of the earlier reforms.

In the name of adopting "commercial" practices, the Administration's defense Acquisition Reform effort has gone beyond cutting red tape into throwing out important protections against contractor abuse that are needed even in a more commercial environment. For example, a new greatly expanded definition for a "commercial" product has exempted many more purchases from normal oversight.

The problem has predictably begun to appear in the form of more overpriced parts stories:

  • AlliedSignal corporation was found to have overcharged the government for spare parts by as much as 618%. The government overpaid on the overall contract with AlliedSignal by 54.5%.
  • Prices were inflated by more than 1,000 percent on a variety of spare parts. For example, the Boeing price for a commercially-available $24.72 "spoiler actuator sleeve" was $403.39 - a markup of 1,532 percent. Another contractor charged $714 for an electric bell worth $46.68.
The cause - Acquisition Reform's new policies, including drastic staff cuts to oversight agencies:

  • The AlliedSignal cases provide examples of the government paying more for spare parts under the new "commercial" rules than it paid under the earlier reforms. As the Defense Department's Office of the Inspector General has noted, the loose definition of commercial items "qualifies most items that DoD procures as commercial items" [Emphasis added].
  • A Defense Department Inspector General's report indicates how adopting commercial practices has come to mean subservience to contractors and blind acceptance of their claimed costs and prices: "contracting officers shall require information ... when necessary to determine price reasonableness for commercial items, but there is a strong DoD [Department of Defense] preference not to use that mechanism and the Government has not asserted its right to have the data." [Emphasis added.]
  • Despite highly favorable dollar returns on taxpayer investment in oversight agencies, many of them have been gutted by personnel cuts. For example, the Defense Contract Audit Agency saves almost $10 for each dollar invested, but staff positions have been cut by 19% from Fiscal Year (FY) 1993 to FY 1997. As of 1998 the Administration scheduled it to suffer a total loss of more than 3,000 staffers - a 44% cut - over the period FY 1990 to FY 2002.
  • The Administration has pushed defense corporate mergers, at a time when Acquisition Reform has failed to create adequate competition, a key requirement for the government to benefit from commercial markets. As a Department of Defense Inspector General noted, "If anything, the risks may be greater today because there is such market dominance by a few very large suppliers. In this environment, getting cost information and maintaining audit rights is a prudent business practice. Failure to do so will be very costly for the Department and ultimately the taxpayer." [Emphasis added.]
The solution lies in making use of what we have already learned about preventing contractor abuse:

  • Restore meaning to the definition of "commercial."
1) Restore the definition of commercial as actual sale of items to the general public, not just to the government.

2) Restore the definition of commercial to mean substantial sales in a large free market.

3) Restore the definition of "competitive bidding" to be at least two bidders.

  • Clarify that the government can and should still negotiate actively for some commercial items.

  • Restore the use of cost or pricing data where prices are not set by a true free market.

  • Preserve funding for the auditors, investigators, and independent rule-setting Boards like the Cost Accounting Standards Board.

  • Defend the False Claims Act against industry assaults.

  • Improve price-based contracting by increasing competition and reversing the trend of mergers leading to fewer competing contractors.
Following Pentagon acknowledgment of "readiness" problems, and after the war in Kosovo, defense budgets - and procurement spending - are being increased sharply. For this reason it is especially imperative for us not to forget what we already know about good acquisition reform - there is no need to re-invent the wheel. If we do forget, the budget surpluses the Defense Department is enjoying will quickly be frittered away on overpriced weapons and parts, and the taxpayers' money will, once again, be wasted.

Introduction In the 1980s, as military spending boomed, numerous stories of waste in weapon buying surfaced in the media. The Project on Military Procurement, as the Project On Government Oversight was then known, along with others, brought to light $7,600 coffee makers, $435 hammers, and $640 toilet seats billed by unscrupulous defense contractors. The cases were disturbing because they implied that if such prices were being paid for simple items whose prices citizens understood, the total overcharging for complex weapons as a whole was enormous.

As a result of these revelations, measures were taken to tighten up oversight of defense contractors. Then, in the 1990s, the defense industry counterattacked, arguing that these reforms had gone too far. By 1994, with a Congress hostile to government regulation, and an Administration adopting a particularly accommodating relationship with business, the rhetoric of acquisition "reform" and "reinventing government" was used to justify moving beyond cutting red tape into bypassing key earlier reforms. For example, a new greatly expanded definition for a "commercial" product has exempted many purchases from normal oversight.

The results of these changes have already begun to show, with cases of gross overcharging for spare parts surfacing once again. The cause is an "Acquisition Reform" effort conducted by the Department of Defense (DOD) and supported by some in Congress. Acquisition Reform unabashedly seeks to reduce oversight of contractors and replace it with "trust," and has dovetailed with Vice President Gore's "Reinventing Government" campaign. The problem is that by going so far in reducing oversight, the reforms have thrown the baby out with the bathwater, resulting in cases of 618% overpricing again.

We already know how to protect against defense contractor abuses. We have been through many previous rounds of hyped reform initiatives that blew a lot of hot air but did not do much. But pushing the new "Acquisition Reform" too far and bypassing proven checks and balances now could actually make the situation worse - it is leading to de-inventing the wheel, not re-inventing it.

This report first looks at recent cases of defense contractor overcharging. It then examines the elements of Acquisition Reform that have caused the problem in more detail. The report concludes with suggestions for remedies.



The Problem: Pentagon Waste Returns Why We Need Oversight - 618% Overpricing Evidence of the results of loosening oversight is beginning to surface. A Department of Defense January 1999 report reveals that defense money is again being wasted on spare parts, as it was in the 1980s. In the report by the DOD Inspector General (IG), AlliedSignal corporation was found to have overcharged the government for spare parts by as much as 618%. The government overpaid on the overall contract with AlliedSignal by 54.5%. The irony is that these parts were bought under the new, much-touted "commercial" price system promoted by the Administration and Congress. According to the January 1999 investigation by the Inspector General: 1

The government "paid Allied prices that were higher than fair and reasonable in FYs [Fiscal Years] 1996 and 1997 when compared to the noncommercial prices paid to Allied in previous years." The parts included items such as gearshafts, wheels, nuts, bearings, seals, filters, and valves.

The Defense Department "paid a 54.5 percent premium for commercial parts from Allied" - in other words, were overcharged by more than 50%.

For parts that AlliedSignal did not even make itself, but merely bought from original manufacturers or dealers and then sold to the government, some items were variously marked up by as much as 294%, 325%, and 618%.

The Defense Department paid an even higher average markup in Fiscal Year (FY) 1997 (60.1%) than it did in FY 1996 (45.8%). It appears that in this case an Acquisition Reform "learning curve" is not being realized.

Defenders of the acquisition system argue that the government paid higher prices because the prices included more stocking services - but the Defense Department failed to use the services.

The Defense Department report blacks out the names of specific spare parts that were grossly overpriced. (See p.12 of Appendix A) Although contractors routinely claim such information is "proprietary," the real effect is that the public cannot easily find out how much they are overpaying for items they might recognize.

The Inspector General report on AlliedSignal followed 1998 IG reports of overcharging under "commercial" contracts with Boeing and Sundstrand corporations. The earlier reports (see "Acquisition Deform: A Study in Hasty Deregulation," Project On Government Oversight Alert, October 1997) found that:

Prices were inflated by more than 1,000 percent on a variety of spare parts. For example, the Boeing price for a commercially-available $24.72 "spoiler actuator sleeve" was $403.39 - a markup of 1,532 percent. 2

Sundstrand billed the government $6.1 million for parts that were worth only $1.6 million. 3 

Boeing charged $5 million for parts that were worth $3.2 million in the competitive market. 4

A contractor charged $76 for 57¢ screws. 5

Another contractor charged $714 for an electric bell worth $46.68. 6

The Inspector General found that higher prices were paid for "commercial" items than had been paid earlier because: 7

  • although Acquisition Reform allowed the Sundstrand items to be purchased under loose "commercial" item rules, in fact "there was no competitive commercial market to ensure the reasonableness of the prices";

  • Sundstrand "refused to provide DLA [Defense Logistics Agency] contracting officers with 'uncertified' cost or pricing data for commercial catalog items";

  • items were defined as commercial as long as they were merely "offered for sale, lease, or license to the general public" (emphasis added); and

  • in the Boeing case, "contracting officers accepted Boeing commercial catalog prices as fair and reasonable without adequate support for price reasonableness, even when DoD was the 'primary' customer procuring significantly larger quantities than other commercial customers and there was no competitive commercial market to ensure the price integrity. The contracting officers made no attempt to exert the leverage that a major customer ought to be able to exert to negotiate significant discounts, as is common commercial practice." 8
The DOD IG notes that the loose definition of commercial items "qualifies most items that DoD procures as commercial items" (emphasis added), with the result that:

"This opens up a major loophole for sole-source vendors to charge prices that cannot readily be evaluated for reasonableness. This concern will continue to grow as more companies merge and the aerospace industry becomes more of a sole-source environment." 9

Similarly, items under the loose definition can be merely "of a type" sold to the public, rather than a product that actually is sold to the public.

Acquisition Reform 101 The widely-promoted "Acquisition Reform" initiative emphasizes buying more products for the government on a "commercial" basis. "Commercial item" purchases bypass many of the protections and oversight put in place to prevent the infamous overcharging by defense contractors that occurred during the defense spending increases of the 1980s. The 1980s reforms included tougher Truth in Negotiations Act enforcement, re-establishment of the Cost Accounting Standards Board, strengthening of the False Claims Act, and passage of the Competition in Contracting Act.

The report on AlliedSignal provides examples of the government paying more for spare parts under the new "commercial" rules than it paid under the old rules. This is the opposite of what Acquisition Reform is intended to achieve. According to the Inspector General, the government "paid higher prices for commercial spare parts on the Allied corporate contract when compared to previous noncommercial prices for the same items."10

Astoundingly, government officials have been sent to training courses on commercial item acquisition run by the defense industry and taught by executives from AlliedSignal and Sundstrand! (See Appendix B)

Hinting that Acquisition Reform may have gone too far, the Inspector General report noted that if the government could not make commercial buying work as intended in the contract with AlliedSignal, it "will need to revert back to the previous buying practice of negotiating better prices for the spare parts ...."11

A Detailed Study: Getting Good Prices Without Acquisition Reform The government offices designing Acquisition Reforms have done precious little analysis of the actual effect of Acquisition Reform so far. Fortunately, a military officer undertaking an academic study has completed one of the few in-depth analyses to date comparing prices paid by commercial firms and by the government.

This study by Major Joseph Besselman examined a large number of DOD electronic, engine, and software commodity purchases. (See Appendix C) In contrast to the conventional wisdom that "commercial" prices are lower than what the government has obtained in the past, the report found that when the government is allowed to negotiate prices, and when the government has access to the manufacturer's cost data, it performs better than the commercial sector - obtaining even lower prices than commercial firms making similar purchases:

"Overall, weighted price difference analysis reveals the DoD outperformed the average commercial sector organization using commercial wholesale prices by 41.5 percent." 12

This key finding even held up when the government's costs of employing extra oversight and contracting people to gather cost data and negotiate prices is included:

"This research's case studies provide evidence that cost and pricing data enhances the DoD's buying position in high dollar value procurements, even when the costs of collecting that data are considered."13

The study sums up with guidance for how Acquisition Reform can avoid oversimplifying the real world in its enthusiasm for reducing oversight:

"The DoD's leadership needs to more realistically evaluate its push towards 'one size shoe fits all' public policy decisions as it tries to commercialize its operation to a greater degree. This research suggests that buying commercial items off commercial price lists will cost the taxpayer more money. Uniformly eliminating in-plant oversight personnel that collect cost and pricing data will adversely affect the DoD's purchasing power. Cost and pricing data is a valuable commercial sector tool the DoD buyer should exploit under the appropriate circumstances." 14

Government procurement practices are not all bad, and can successfully use commercial practices without necessarily abandoning other protections that have proven effective in preventing overpricing.

Acquisition Reform's Claims: Confusing What the Government Buys With How It Buys Reduced to its substance, Acquisition Reform is about changing the way the government buys goods and services, not changing what the Government buys. Acquisition Reform proponents argue that by changing how the Government buys, a lot of money can be saved. Yet, they produce little evidence to bolster their arguments - such as examples of prices lowered because of savings. In some of the instances where they do present "evidence," it is apparent that they have actually changed "what" they were buying instead of "how." In other words, it is an apples-and-oranges comparison.

For example, Steven Kelman, the Administration's former chief "point person" on acquisition reform as head of the Office of Federal Procurement Policy from 1993-97, tells stories of how the Government saved large sums by allegedly changing the way it purchased shipboard telephones. According to Kelman, under Acquisition Reform the Navy was able to reduce shipboard telephone costs from $400 to $20 per unit. When asked how the Navy did this, Kelman answered that they went from using custom telephone specifications (or "mil specs") to buying regular commercial phones. While this might be laudable if the phones really did not need to have special capabilities for a naval combat environment, it really has nothing to do with the "how" part of the buying process. Instead, what was changed was the "what" part - it was decided that commercial phones were capable of the job. It is like saying you reduced the price of a car from $40,000 to $20,000, but omitting the fact that you stopped buying Cadillacs and started buying Chevrolets.

Another instance comes from one of the most famous Acquisition Reform stories - the image of Vice President Gore smashing an allegedly overpriced ashtray on the David Letterman Show. The story was that by purchasing commercial ashtrays instead of using lengthy and almost unintelligible custom government specifications for these ashtrays, a lot of money could be saved. The Vice President pointed out to the television audience that ashtrays were only one example of Government custom specifications run amuck. But, what he failed to explain was that this was not a "how" to buy issue, it was a "what" to buy issue. Of course, it probably made no sense to continue purchasing custom made ashtrays (or chocolate chip cookies or t-shirts). But, it wasn't a procurement or contracting procedure change that made for all of the allegedly big cost savings. It was a decision to buy cheaper, standardized ashtrays, instead of the custom models.

According to Acquisition Reformers, the Government can save a lot of money if it changes the "how" part of the buying process. But, most of what the contractors (and their supporters in Congress and the Administration) want changed are exactly the parts of the "how" to buy process that ensure fair and reasonable contract pricing and value to taxpayers.


The Cause: Why and How Is This Happening? Today's "Acquisition Reform:" Rolling Back Yesterday's Reforms In the 1990s, the defense industry has taken up the offensive against what it saw as overbearing procurement reforms of the 1980s. Most of these reforms, however, were useful protections for the taxpayer against contractors that had already taken advantage of us in the 1980s. The reforms, including 35 procurement reform initiatives ordered by the Secretary of Defense in 1983, have had positive results: a DOD Inspector General report notes that "Implementation of the Competition in Contracting Act, enacted in 1984, and the 35 spare parts procurement initiatives resulted in dramatic increases in reported competitive procurements and savings from 1985 to 1988."15

Former DOD Inspector General Eleanor Hill noted the dangers of rolling back these reforms:

"We remain concerned about suggestions to limit or repeal controls that have been proven effective over time, such as the False Claims Act, the Truth in Negotiations Act, the Cost Accounting Standards, the statute that prohibits contractors from charging unallowable costs, and the Defense Contract Audit Agency. We believe that these controls have been critical to maintaining the Government's ability to adequately protect its interests in the acquisition area."16

Some of the key reforms targeted by the defense industry and their current status are described in the table.



 Important Procurement Reforms of the 1980s and Their Current Status Reform Purpose Status Today False Claims Act Strengthened 1986: The False Claims Act was originally Civil War-era legislation intended to halt war profiteering. Amendments to the Act in 1986 increased the penalties for fraud and encouraged whistleblowers to come forward when they were aware of defrauding of the government. The law has been under heavy assault by the defense industry. Industry claims that "innocent disagreements" are being prosecuted as fraud. The Defense Department has flirted with pushing changes to the Act, and has worked with industry to gather information to support weakening the law. DOD and the industry have repeated the theme that companies are deterred from doing business with the government for fear of alleged excessive vulnerability to fraud lawsuits. The Department of Justice, however, has strongly rebutted claims that the False Claims Act is burdensome and needs amending. Justice noted in a response to the claims of the Defense Policy Advisory Committee on Trade (DPACT), an industry group that, for example, "DPACT provides no support beyond mere assertion for the proposition that False Claims Act liability has any substantial effect on defense industry profits or on the industry's relationship with DOD. Moreover, analysis of the data available to us shows no such effect 17

So far, strong resistance from Congressional supporters of the False Claims Act such as Senator Charles Grassley (R-IA) and from the Department of Justice - bolstered by the fact that billions of dollars have been recovered for the taxpayers - have kept efforts to weaken the law at bay, but industry attempts to overturn the strengthened law continue.

Truth in Negotiations Emphasis 1980s: The Truth in Negotiations Act (TINA) requires that contractor data submitted to the government to be current, accurate, and complete. Enforcement and emphasis on TINA were boosted in the 1980s. Congress kept a close eye on the issue, and the General Accounting Office (GAO) did many reports that emphasized the importance of TINA. The Federal Acquisition Streamlining Act and the Federal Acquisition Reform Act (Clinger-Cohen Act) exempted so-called commercial item contracts from TINA. Using false and misleading logic, Acquisition Reform proponents have tried to link application of TINA and application of Cost Accounting Standards, suggesting that anywhere TINA does not apply, neither should the Cost Accounting Standards. Procurement Integrity Statute Created

1988: Amendments to the Office of Federal Procurement Policy (OFPP) Act attempted to prevent the types of corruption that were exposed by Operation Ill Wind. The scandal revealed that contracting officials were selling source selection information - the strengths and weaknesses of competing bids based on the proposals under review - so that their associates could strengthen their own proposals when they went into negotiations. The Amendments pulled together a variety of laws that prohibited revealing information to contractors and required that officials and contractor employees sign statements saying they were aware of the integrity laws.

In response to industry criticism that the legislation merely duplicated other laws, and was unnecessarily burdensome, the paperwork was simplified in the 1990s.

Cost Accounting Standards Board Reestablished

1988: The OFPP Act Amendments also re-established the Cost Accounting Standards (CAS) Board. The CAS Board sets accounting rules designed to achieve uniformity and consistency in the accounting practices contractors must follow when pricing contracts or submitting bills to the government. The original CAS Board was terminated in 1980 when Congress failed to continue its funding (after heavy defense industry lobbying to abolish the Board).

After a steady drumbeat of industry pressure, by 1999 the Board has been "demoted" as an organization within the Office of Management and Budget, Board Members and staff are largely being bypassed, a government-industry review panel has proposed dramatically raising the dollar thresholds for applying the Standards among other limitations on the Board's rules, and DOD-inspired legislation has been submitted to allow exemptions from the rules for any contract or any contractor.

Competition in Contracting Act Passed

1984: Several factors were behind the important Competition in Contracting Act. First, an influential GAO report concluded that only a small share of contracts were being competed, and noted that competed contracts brought down prices sharply. Also, scandals involving spare parts overcharging were caused in part by markups as prime contractors supplied parts to the government that were actually produced by subcontractors. Finally, the small business community lobbied to be able to sell more to the government directly.

The Act opened up competition by requiring contracts to be "fully and openly competed." The Defense Department's ability to choose whomever it wanted for a contract was narrowed.

The Act has been weakened. Technically, full and open competition is still in place, but now only to the extent that it is "consistent with efficiency." In many cases, the competition requirement is now just for a "reasonable opportunity to be considered" for a contract.

The rules have been bypassed in part by expanding another form of contracts, those in which specific deliverable products are not specified exactly in the contract, but the contractor is available to perform services or produce products if called upon. Major weapon contracts are not usually of this form. The new form of contracts - which are more like "supplier agreements" or "licenses to sell to the government" - were exempted by the Federal Acquisition Streamlining Act of 1994, so that requirements for full competition are much less robust.

Penalties Increased for Disallowed Costs

1985: The 1985 DOD Authorization Act increased the penalties for costs submitted for reimbursement by contractors that the government determines are not valid claims.

The statutes are currently still on the books, but are under industry criticism, since the industry feels the statute excessively "criminalizes" what they see as "civil" violations.


Counterattack in the 1990s Industry has lobbied hard to reverse or bypass many of the reforms of the 1980s. In the climate of cutting back government of the 1990s, both Congress and the Administration have pushed for loosening of oversight over defense contractors.

Part of the rationale for the reforms developed out of the overpriced spare parts scandals of the 1980s. The scandals were often the result of line items in "cost-plus" contracts - the type of contracts in which the government pays all of a contractor's permitted costs in executing a contract, plus an amount of profit on top. (Often the profit was set as a percentage of the total costs, creating an even stronger incentive to the contractor to push the direct costs as high as possible.)

The bad name that these cost-based contracts gave to defense procurement helped lead to official enthusiasm for price-based contracts - contracts based on a fixed price, agreed beforehand. The commercial world usually operates with price-based contracts. For example, a person contracting with a builder to construct a house would have to be pretty crazy or very rich to use a cost-based contract that allowed the builder to spend whatever he or she wanted, with a guaranteed profit on top. Instead, in the commercial world, a contractor has to keep down costs, or the expected profits will drop, or even disappear.

The new enthusiasm for price-based contracting had perfect timing to mesh with the new buzzwords of adopting best commercial practices and privatization popularized by the Clinton-Gore Administration and the Congress in the 1990s. Unfortunately, though, what Acquisition Reform began pushing was price-based commercial contracting without the normal constraints, appropriate incentives, and oversight. Price-based contracting does not work if it just means accepting whatever price a contractor asks.

Acquisition Reform has interfered with keys to getting good price-based contracts - the government's ability to bargain hard, to get the information it needs from a contractor to verify that prices are fair, and to analyze costs to make sure they are based on what things should cost, not what they did cost before, which may have been illegitimate itself. This is nothing new - the procurement system was documented suppressing government access to contractor cost data at least three decades ago. (see Appendix D) But now the effort to blind the government is much broader and has progressed much farther.

Above all, good price-based commercial contracting relies on a healthy level of competition. Yet many of the overpricing problems that have come to light under the new "commercial" Acquisition Reform rules involve inadequate competition. Much of the savings obtained in the 1980s were attributable to strengthened competition, including techniques such as "breaking out" the purchase of component parts from the prime contractor, who often does not make the parts, but purchases them from subcontractors and adds a large markup. Acquisition Reform's failure to promote adequate competition has been sorely compounded by the Clinton Administration's zealous promotion and subsidy of mergers in the defense industry, 18 which has drastically reduced the number of competitors in each sector of the industry.

It is only the lavish, unquestioning kind of price-based contracting that industry wants. But if Acquisition Reform is to work for the taxpayer and not solely for private contractors, it will have to adopt the normal kind of commercial price-based contracting, the kind that is not subservient to industry, but rather corroborates industry claims in a non-adversarial but informed fashion.

The Clinton-Gore Administration From its beginning, the Clinton-Gore Administration has pushed for changes to make things easier for contractors through its Acquisition Reform program in the Defense Department. The initiative was the culmination of a long process of working closer with industry and its campaign contributors undertaken by the Democratic Party when it began targeting corporate campaign contributions more aggressively in the 1980s.

The defense industry succeeded beyond its wildest dreams in winning endorsement of its proposals after the 1992 presidential election. Their plans proved to be in the right place at the right time when Vice President Gore was looking for new changes to make through his Reinventing Government initiative. Industry wishes were compiled by a Congressionally-created committee known informally as the "Section 800 panel," which was industry-dominated. 19 The panel's report was completed soon after the Clinton-Gore Administration took office. Its recommendations helped shape the Reinventing Government plan, which was put together under a tight deadline and needed new proposals quickly.

The approach of the Reinventing Government initiative was to blame the very procedures that were put in place to prevent waste and fraud, saying they were actually adding to the problem. As the first "National Performance Review" in September 1993 stated:

"In recent years, our national leaders responded to the growing crisis with traditional medicine. They blamed the bureaucrats. They railed against "fraud, waste, and abuse." And they slapped ever more controls on the bureaucracy to prevent it.

But the cure has become indistinguishable from the disease. The problem is not lazy or incompetent people; it is red tape and regulation so suffocating that they stifle every ounce of creativity." 20

Cutting out red tape is an undeniably worthy goal, and the National Performance Review identified many areas for improvement. The original report acknowledged that protections were usually put in place for good reason, but argues they got out of control:

"But not one inch of [government] red tape appears by accident. In fact, the government creates it all with the best of intentions ....

Because we don't want employees or private companies profiteering from federal contracts, we create procurement processes that require endless signatures and long months to buy almost anything."21

The difficulty in cutting red tape comes in deciding what really is red tape, and what are vital protections to prevent waste. Unfortunately, the defense industry took the wisdom of the Reinventing Government campaign and pushed it much too far, persuading its allies in Congress and the Administration to apply it where it benefits them alone. The industry has pushed to apply liberalized rules for "commercial" products to non-commercial products too - for example in attacking the Cost Accounting Standards, which apply only to non-commercial products.

If there is a common element to the various defense "Acquisition Reform" initiatives, it might be a reliance on trusting contractors to do the right thing, rather than keeping an eye on them with close oversight. The evidence is beginning to mount that -- as might be expected with reforms that weaken the government's ability to discover, correct, and deter contractor abuses -- these elements of Acquisition Reform are backfiring.

Receiving industry's views is necessary, as long as the relationship does not become too close, and government does not start working for private industry's interests rather than the public's interest. Just one example of how closely industry is involved in developing policy for the Clinton Administration is provided by a case of having industry representatives on the distribution list "for your review and coordination" of a government internal policy review. (See Appendix E)

In building their case for reducing oversight, contractors have claimed that the rules are excessively burdensome, and the Defense Department argues that, as a result, a lot of companies do not want to contract with the government. But the Department's claim about deterred companies is not very persuasive: leading the lobbying charge of contractors against these sensible rules are the largest existing defense companies, who have shown little reluctance to bid for government contracts - including Lockheed Martin, Northrop Grumman, Raytheon, Boeing, and associations that represent the major defense contractors, such as the Aerospace Industries Association. If the changes were really to benefit up-and-coming new competitors in the defense industry, why would the existing contractors push the changes so hard? The Defense Department has mentioned few companies that are refusing to do business with the government.

Furthermore, the defense industry has been highly profitable recently compared to other industries, raising questions about the claims that defense work is so burdensome, unprofitable, and unappealing that companies are deterred from doing it. According to a PaineWebber report, "Profit margins in the defense industry are at the highest levels in history; operating margins have increased from 6% in 1990 to over 12% in 1997." 22

The Administration has touted billions of dollars of savings from Reinventing Government and Acquisition Reform, saying they overshadow the new stories of overpriced spare parts. But even those claims have been challenged in a recently-released General Accounting Office (GAO) report, which points out substantial unsupported and double-counted "savings" in its examination of some of the claims. The GAO's conclusion regarding the claims of the National Performance Review (NPR), as the Reinventing Government effort is also known, was: "NPR claimed savings from agency-specific recommendations that could not be fully attributed to its efforts. OMB generally did not distinguish NPR's contributions from other initiatives or factors that influenced budget reductions at the agencies we reviewed." 23

The Congress The Administration's efforts got a boost when anti-regulation sentiment swept the Congress after the 1994 election. Congress expanded the Administration's initiatives with the Federal Acquisition Streamlining Act of 1994 and the Federal Acquisition Reform Act of 1996 (known as the Clinger-Cohen Act - one of its sponsors, Senator William Cohen, soon became Secretary of Defense.) (See Appendix F for a summary of legislative changes.)

The new laws made it easier for the government to buy "commercial" items, but they ended up making it too easy, by defining "commercial" too broadly. The original idea was to ease the government's ability to buy "off-the-shelf" items whose prices could be trusted because they were set by a free market. But the definitions are so broad that "sole-source" items bought from just one company, or items bought by the government alone, can count as commercial items and avoid normal rules. Items such as the C-130J military transport aircraft - a far cry from simple items like ashtrays, bolts, and hammers - have been declared "commercial" purchases.

In practice, contractors can claim a wide variety of products are "commercial" in order to stop government contracting officials challenging them on their high prices. A DOD Inspector General investigation found in one case that, "the contractor has declined to offer prices or provide cost data. The contractor is now claiming all the spare parts are commercial items, thus making it difficult, if not impossible, for DLA [Defense Logistics Agency] to negotiate fair and reasonable prices for the sole-source spare parts." 24

The laws allow contractors to sell "commercial" items without having to provide or certify cost and price data to prove that their prices are fair. The problem is that there is not always a single true "commercial price" to rely on if cost data is denied. In particular, so-called "catalog prices" or "list prices" sometimes are not the best commercial prices available. Discounts are usually available for large orders, for example, and the government often makes very large orders yet cannot use its purchasing power under the new system.

Acquisition Reform - Not Really Adopting the Free Market Acquisition Reform is drastically reducing access to cost data, reducing the number of government oversight personnel, and discouraging proactive price negotiating. Acquisition Reform proponents apparently believe that declaring something "commercial" creates market forces out of thin air - so that oversight is no longer needed and all the old rules and procedures can be thrown out.

An element of Acquisition Reform is that it is being used to discourage contracting officers from aggressively negotiating for discounts below "list" and "catalog" prices. There are various reasons why discounts from list prices may be justified, but the most basic is simply a discount for large purchase volumes. Again, this practice is not only a common large commercial firm practice, but also something almost every consumer shopper is familiar with - if you buy in bulk, you pay a lower price.

A simple analogy from our daily lives also illustrates that "commercial" prices are not set in stone. As most car buyers know, you do not necessarily have to pay whatever price the dealer puts on the sticker. Consumers trying to save money find out the "dealer invoice" price - that is, the seller's cost data - and can use that to bring down the exorbitant sticker price. Acquisition Reform, however, pretends that consumers and companies in the commercial marketplace do not gather cost data, and so it limits the government's ability to get the best out of commercial markets.

A June 1999 General Accounting Office study has found that under the new policies and procedures, government contracting officials were not challenging contractors' prices sufficiently:

"The price analysis performed by contracting personnel were often too limited to ensure that prices were fair and reasonable. For example, some contracting personnel believed that when the offered price was the same as the catalog or list price, it could be considered a fair and reasonable price. In several cases, contracting personnel did not use pertinent historical pricing information contained in contract files that should have raised questions about the reasonableness of offered prices. ... Finally, many contracting officers were not documenting in the contract file how they determined that a price previously paid for an item was fair and reasonable and, therefore, could be relied on in evaluating the currently offered price." 25

The legislation and the Administration's policy have blinded contracting officials: when the officials are not buying "off the shelf" items where prices are truly set in the commercial marketplace, they are effectively restricted (and subtly discouraged) from negotiating down from so-called "commercial" prices offered by defense contractors. 26At the same time, contractors no longer have to provide certified cost information to prove that their prices are fair, even when the items are being acquired on a sole-source basis. A DOD IG investigation found that:

"Acquisition reform legislation and the FAR [Federal Acquisition Regulation] still provide that contracting officers shall require information other than cost or pricing data which includes uncertified cost or pricing data when necessary to determine price reasonableness for commercial items, but there is a strong DoD preference not to use that mechanism and the Government has not asserted its right to have the data." 27[Emphasis added.]

Acquisition Reform defenders seem to pick and choose which parts of "commercial practices" to adopt. In particular, they have discouraged gathering cost data from suppliers, even though it is a practice often followed by large commercial companies. Large companies that buy from small companies have the leverage and the "market power" to get the smaller company to prove that its prices are reasonable. So should the government.

In addition to changing the rules, Acquisition Reform has used a variety of bureaucratic changes to reduce monitoring of the defense industry. The following sections look in more detail at how the Administration has made large-scale cutbacks in government personnel who negotiate, monitor, and oversee defense contracts.

Monkeying with Oversight: Hear No Evil, See No Evil, Speak No Evil A deep reduction in the number of auditors, investigators, and other government personnel who oversee defense contractors is underway. Congress has cut budgets of oversight agencies, and in 1994 ordered the elimination of 272,900 positions throughout the government over several years.28 The likely cost of this reduced oversight will be more fraud and higher prices for the government. Until contractors improve their performance record and eliminate fraud, oversight remains crucial for protecting the public purse. DOD Inspector General Eleanor Hill noted in 1998, "As personnel reductions in the acquisition workforce have occurred, we have also seen reduction in programs for fraud prevention, detection, and reporting." 29

The problem with simply trusting defense corporations - "contractor self-oversight" and "contractor self-governance," as it has been called - is that the contractors have not yet earned that trust. As the DOD IG says:

"While we understand the many benefits of the new emphasis on Government/industry teamwork, the Department should not assume that procurement fraud no longer occurs. To the contrary, our criminal investigators report that their proactive undercover efforts regularly reveal significant fraudulent activity. ... Many advocates of drastic changes in Government acquisition practices are unaware of, or choose to ignore, the fact that procurement fraud remains a threat to the DoD and the U.S. taxpayer." 30(Emphasis added.)

A report by the Project On Government Oversight found that the defense industry returned more than $850 million to the government just to settle fraud cases under the False Claims Act from 1994 to 1996. 31

Penny Wise, Pound Foolish Investment in oversight performed by agencies such as the Defense Contract Audit Agency, the Defense Contract Management Command, the DOD Inspector General's office, and the General Accounting Office produces a highly favorable return for the taxpayer. But large reductions in the DOD acquisition workforce and in these agencies in particular have already taken place, and more are planned. For example:

Defense Contract Audit Agency (DCAA) - Conducts audits of Department of Defense contracts.

"We used to get hundreds of [criminal case] referrals from DCAA. Now I think I can count them on one hand." - William Dupree, head of the Defense Criminal Investigative Service. 32

Saves almost $10 for each dollar invested. 33 Produced documented savings of $3.7 billion and an additional $2 billion in unallowable costs that contractors would otherwise have charged in 1997. 34

Staff positions cut by 19% from FY 1993 to FY 1997. 35 Scheduled to suffer an additional loss of more than 3,000 staffers, a 44% cut, from FY 1990 to FY 2002. 36

Defense Criminal Investigative Service (DCIS) - Part of the DOD Inspector General's office, detects, investigates and prevents fraud, waste, abuse, and other improper acts in the Defense Department.

"... there aren't any inspectors anymore. Because we're 'working with industry.' ... That's part of the problem: where will it unfold and how will it unfold if you've got the government almost in concert with the contractor?" - William Dupree, Defense Criminal Investigative Service 37

Recovered $466 million in FY 1996-97 fraud investigations. 38

Overall DOD Inspector General staff, which includes Defense Criminal Investigative Service, cut 21% from FY 1994 to FY 1997. 39 Planned cuts of 35% from FY 1995 to FY 2001, including a 37% cut in auditors and 26% in investigators. 40

Defense Contract Management Command (DCMC) - Manages defense contracts, including analysis, review, fraud investigation, and quality assurance assessments of contracts.

"Instead of workforce adjustments being a logical consequence of business process reengineering, the personnel reductions appear to have become a reform goal in and of themselves." - Eleanor Hill, Department of Defense Inspector General 41

Referrals of fraud cases by the Defense Logistics Agency, which includes the Defense Contract Management Command, have dropped by 47% since 1995. 42

80% cut in personnel at the Defense Logistics Agency's Office of General Counsel responsible for pursuing fraud cases.43 Total DCMC personnel cut 27% from FY 1993 to FY 1997. 44 Quality assurance staff at DCMC cut 54% from FY 1990 to FY 1996. 45

General Accounting Office (GAO) - Audits, investigates, and assesses defense and other government programs.

GAO's work "contributes to many legislative and executive branch actions that result in significant financial savings and other improvements in government operations." - GAO's 1999 "Status of Open Recommendations" report

Examples of GAO savings: "six GAO products on concurrency [buying designs while still testing them] and risk in the F-22 program were important influences on DOD actions to decrease concurrency, which included reducing the number of initial production aircraft from eight to six annually resulting in measurable savings of about $1.7 billion." Similarly, "the House and Senate Committees on Appropriations conferees reduced DOD's fiscal year 1998 operations and maintenance request by $199.3 million, based on funds we identified to be in excess of requirements." 46

GAO has been chopped a third in size from FY 1992 to FY 1996, losing almost 2,000 staffers. 47

Cost Accounting Standards Board (CAS Board) - Sets basic accounting rules for contractors covering $125 billion per year in noncommercial contracts - about $90 billion in defense.

"If anything, the risks may be greater today because there is such market dominance by a few very large suppliers. In this environment, getting cost information and maintaining audit rights is a prudent business practice. Failure to do so will be very costly for the Department and ultimately the taxpayer." - Eleanor Hill, Department of Defense Inspector General 48

Estimated to save the government over $6 billion a year. 49

The Office of Management and Budget (OMB) has made a variety of bureaucratic changes to weaken the Board and its small staff, and legislation to make further changes is under consideration in Congress. 50 At Congressional direction, a Panel has reviewed the Board. (See Appendices G and H.) The Panel suffered from blatant conflict of interest - half of its members were from industry, including Northrop Grumman, which has paid $3.3 million in recent years to settle fraud claims against it under the False Claims Act, 51 and AlliedSignal, which was recently found by a Defense Department Inspector General investigation to have grossly overcharged the government for spare parts. Not surprisingly, the Panel recommended weakening of the Board's Standards. (See Appendix I)

It does not normally make sense to cut back on highly profitable activities. Drastically cutting oversight personnel blinds the government in its oversight of tens of billions of dollars of contracts each year. This serves only to make the government and the taxpayer highly vulnerable to exploitation by an industry with a blemished track record. There can be non-monetary costs, too: in August 1999 a draft GAO report found that the Defense Security Service, which conducts background checks for security clearances, had a backlog of half-a-million cases. Officials cited as one cause the Administration's Reinventing Government personnel cutbacks at the agency - since 1989 the staff was slashed from 4,080 employees to 2,466. 52

Unfortunately, Vice President Gore's National Performance Review regards oversight personnel as part of the problem:

"As we pare down the systems of overcontrol and micromanagement in government, we must also pare down the structures that go with them: the oversized headquarters, multiple layers of supervisors and auditors, and offices specializing in the arcane rules of budgeting, personnel, procurement, and finance. We cannot entirely do without headquarters, supervisors, auditors, or specialists, but these structures have grown twice as large as they should be." 53

But auditors, investigators, and other oversight personnel - who produce large net savings for the taxpayer - should not necessarily be lumped together with general management personnel. Again, Reinventing Government plans took steps in the right direction, but then were pushed too far.

The ideological goal of reducing oversight to work more "in concert" with the defense industry may explain the rush to cut staffs without doing sufficient monitoring and assessment of whether more oversight can be done with less personnel. The situation is made all the more dire by the increasing demands being put on oversight agencies. In the next few years they will have to deal with:

  • A planned increase in the amount of spending on procurement contracts.
  • New requirements to balance the federal government's accounting books.
  • A newly-mandated outsourcing of work formerly performed by the government, which will increase the number of contracts, and hence management and oversight requirements.
  • A hampering of competition by the recent wave of defense mega-mergers. Competition used to be a silent ally in keeping contractors from playing games with the rules.
Acquisition Reform: "Streamlining" Dollars from Our Pockets Another illustration of how Acquisition Reform has gone off track is the Administration's proposals to start "streamlining" other contracting rules called the contract cost principles. 54 The initiative demonstrates the inconsistency of Acquisition Reform in claiming that it is merely trying to adopt commercial practices, but actually is asking for an even sweeter deal for industry.

Paying for Luxury Hotels Again The cost principles are used, for example, to determine which costs that a contractor wants to bill to the government under a contract are "allowable," or payable (e.g., salaries, material), and which are "unallowable" (e.g., costs of alcoholic beverages, club memberships).

Publicly, this streamlining is supposed to be about "Civil-Military Integration" - the merger of defense and commercial industries - which is supposed to bring technical and cost benefits. However, this latest initiative merely removes long-standing ceilings placed on defense contractor travel and relocation costs billed to the government. These ceilings - which ironically are based on commercial indices - limit contractors to the same reimbursements that Federal employees can receive for hotels, meals, and moving expenses.

Since the amounts that Federal employees may be reimbursed are set at standard commercial rates, however, contractors are already limited to operating as the commercial world does. The new initiative, however, wants to eliminate any constraints, and let contractors charge even more than commercial standards. The ceilings were originally put in place to curb abuses such as claims for luxury hotel suites and excessive meal costs while performing government contracts. (See Appendix J)

If the cost principles are weakened, horror stories about luxurious executive lifestyles at taxpayer expense are likely to come up once again. A recent GAO report notes how contractors charging travel rates much higher than the Federal standards contributed to excessive Department of Energy travel expenditures. Acquisition Reform should not be about making it easier for corporate officials to bill the taxpayer for $300-a-night hotel rooms. 55

Accepting Data That Need Not Be "Current, Accurate, and Complete" A final example of the heedless attitude prevalent in the Acquisition Reform era is that the Federal Acquisition Streamlining Act and the Clinger-Cohen Act now allow use of cost or pricing data that oftentimes is not required to be "certified." Such uncertified contractor cost or pricing data is that which "need not be current, accurate, and complete," and is therefore far less useful for determining whether prices charged to the government are fair or not.

Accuracy of cost information is not a trivial matter: yet another investigation by the DOD Inspector General, this time a not-yet-released study, was reported in June 1999 to have found millions of dollars worth of overcharging by AlliedSignal - and attributed them to the flawed, inaccurate, and outdated pricing information provided by the company. The IG reportedly concluded that at least $53 million could be saved through the year 2005 with better data. 56

In an Orwellian attempt to confuse the situation, uncertified cost data is now referred to in the government as "information other than cost or pricing data" and certified data is referred to as "cost or pricing data." Since uncertified data apparently cannot be relied upon, when submitting cost data, contractors should be required to certify the data.

The $435 Hammer That Won't Go Away Rocked by the spare parts horror stories of the 1980s, the Pentagon searched for some cover. They found it in the theories of a Harvard professor, Steven Kelman. Professor Kelman's theory was that the spare parts horror stories were a myth, and were caused by an accounting procedure called the "equal allocation of overhead." At the time, however, the equal allocation claim was exposed as bearing no relationship to reality.

Now, more than a decade later, Acquisition Reform advocates are turning to the same hoax, and astonishingly, Professor Kelman shows up as a major architect of Acquisition Reform - he was head of OMB's Office of Federal Procurement Policy during the early Clinton Administration. A December 1998 National Journal article quoting Kelman led with the alleged revelation that a famous defense scandal story from the Reagan years - the $435 hammer - was a "myth." By implication, all the other horror stories of overpricing were myths too. (See Appendix K)

According to this hoax, the outrageous overcharging of the day had a simple and innocuous accounting explanation: simple items like hammers had an amount of company "overhead" expenses allocated to them equal to the amount allocated to much more complex and expensive items. Allocating large amounts of overhead "equally," rather than in proportion to actual value, would naturally lead to bizarre outcomes like $435 hammers.

Unfortunately this convenient explanation was simply not backed up by the facts: contractors did not use such bizarre procedures - in fact they would not be permitted by Cost Accounting Standards. In the 1980s the Project On Government Oversight (then known as the Project on Military Procurement) worked extensively on Defense Department overcharging scandals and rebutted the equal allocation hoax when it first appeared. Simple examination of the data showed that allocation of the alleged equal amount of overhead as Kelman claimed would mean that many cheaper items found on contract price lists would actually have a negative price once the "overhead" was taken away. (See Appendix L) The Project On Government Oversight pointed out that the proponents of the hoax actually never produced cases of the "equal allocation of overhead," and in fact the Air Force was forced to admit there were no cases. (See Appendices M and N)

Pentagon whistleblower Ernest Fitzgerald traces the history of the "equal allocation" hoax in his 1989 book The Pentagonists. Fitzgerald presciently foretells that, "Doubtless in the future other writers as gullible as George Will and Professor Kelman will front for the Pentagon again." Who would have known that the original author of this hoax would return in the White House more than a decade later?

The Solution: How to Stop De-Inventing the Wheel Acquisition Reform is not necessarily what it sounds like - it is not reform in the old sense of tightening protections against contractor overcharging. To the contrary, it has focused on weakening or bypassing controls - and claiming that the free market will protect the government. But the real world is more complicated, and policies should be revised to take into account the complexities of the free market, and the necessary and desirable contracting and accounting procedures that aid the government in negotiating with large and powerful defense contractors. The following proposals, including suggestions for legislative changes, could help ensure that the new reforms do not come at the cost of crippling previous reforms:

Restore meaning to the definition of "commercial." Commercial status should only apply to items that are bought and sold widely in true free market. This would require:

  1. Restore the definition of commercial as actual sale of specific items to the general public, rather than the loosened definition of a commercial item as one not necessarily sold to the public, but merely "offered for sale."
  2. Also, restore the definition of commercial to mean a large free market -- one that has a substantial level of sales. The Federal Acquisition Reform Act (Clinger-Cohen Act) watered down standards defining a substantial level of commercial sales, and if there is not a large market with numerous buyers and sellers, the "prices" set by contractors should not necessarily be relied upon for government purchases.
  3. Finally, restore the definition of "competitive bidding" to require at least two bidders. The current alternative says that there is competition even if there is only one bid, as long as others could have bid. The phrase "sole-source commercial" is also an oxymoron - commercial exemptions should not apply when the supplier has a monopoly.
Clarify that the government can and should still negotiate actively for some commercial items. Make clear that government contracting officers have full authority to pursue the best commercial price by negotiating down from "list" prices. Commercial prices are sometimes negotiable to other companies and individuals, so there is no need or rationale to prevent the government from negotiating in such cases too. Make clear that the "commercial price" is not necessarily whatever a contractor chooses to claim or list in its catalog, but rather the price that the government or a company could negotiate, based particularly on the normal commercial practice of bulk discounting.

Restore the use of cost or pricing data where prices are not set by a true free market. Since commercial firms large enough to have "buying power" collect cost data from their suppliers, allowing the government to do so also is merely following best commercial practice. The data obtained should be "certified" data.

Preserve funding for the auditors, investigators, and rule-setting Boards like the Cost Accounting Standards Board. Many of the oversight officials save us far more than they cost. To keep cutting back on their numbers is to throw away money.

Defend the False Claims Act against industry assaults. The False Claims Act provides increased protections against fraud. It continues to be a target for industry lobbying. It, and the other reforms put in place to prevent abuses, should be strengthened and not weakened.

Improve price-based contracting by increasing competition and reversing the trend of mergers leading to fewer competing contractors. Ensure that adequate competition exists wherever possible, and where it cannot, negotiate vigorously based on cost analysis of what products should cost now, not extrapolations of what was paid (or overpaid) in the past.

If the Administration and Congress are serious about using Acquisition Reform to adopt best commercial practices, they need to focus more on the most basic ones - such as testing and developing products fully before buying them - and to give government officials the ability to make use of all best commercial practices, even when it means that defense contractors do not get everything they want.

Following Pentagon acknowledgment of "readiness" problems and after the war in Kosovo, defense budgets - and procurement spending - are being increased sharply. For this reason it is especially imperative for us not to forget what we already know about good acquisition reform - there is no need to re-invent the wheel. If we do forget, the budget surpluses the Defense Department is enjoying will quickly be frittered away on overpriced weapons and parts, and the taxpayers' money will, once again, be wasted.


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April 02nd, 2014

4/2/2014

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FOLKS, PUBLIC JUSTICE IS GUARANTEED UNDER THE US CONSTITUTION AND AMERICA HAS ONE OF THE BEST WRITTEN LAW PROTECTING THE AMERICAN PEOPLE AS CITIZENS.  RULE OF LAW AND EQUAL PROTECTION ARE THE CORNERSTONE OF OUR DEMOCRACY AND NEO-LIBERALS AND NEO-CONS ARE DISMANTLING THIS BECAUSE THEY NOW SEE THE US AS CONTROLLED BY GLOBAL CORPORATE TRIBUNALS AND NOT FEDERAL LAW.

IF WE DO NOT TAKE A STAND NOW BY VOTING FOR A GOVERNOR AND MAYOR/COUNTY EXECUTIVE WHO WILL SHOUT OUT FOR OUR CONSTITUTIONAL RIGHTS WE WILL BECOME A TOTALITARIAN NATION.  AS NOAM CHOMSKY SAYS----A NATION RUN BY CORPORATIONS CAN ONLY BECOME TOTALITARIAN.

Anthony Brown, Doug Gansler, and Heather Mizeur all expect to continue this dismantling of public justice.  Do you hear Heather, the supposedly progressive candidate shouting about Maryland's dismantling of public justice? Stop electing the same people killing democracy and Rule of Law.

I spoke yesterday about the systematic dismantling of our legal system including the decline of law school grads and hiring of lawyers in the US.  Today I want to look at how the public justice system is being made the step-child of corporate law firms designated as providing  the public 'PRO BONO' JUSTICE. 



Regarding rebuilding Rule of Law in Maryland:

As WYPR's Basu tries to convince people that the US did rise out of recession and that all the economic data was not just the FED's crony policies moving massive corporate fraud out of the country through merger and acquisition overseas and part two of the massive subprime mortgage fraud called the bundled foreclosures fraud that drove the housing market boom......NO ONE BELIEVES IT!  A recovery based on the wealthy of the world sending the money looted from their nations Treasuries over to the US in real estate purchases is not a recovery and is why these several years showed only growth in wealth at the top.  It is also why most academic and financial analysts call all of this activity crony and criminal and the Wall Street/FED connection now a cartel.  It is acting separately from the American economy and acting under no Rule of Law.  All of this is reflected down the government chain at state and local levels.  Ergo, wealth inequity.  Corporate NPR/APM feels our pain as it states 1 in 7 Americans are on Food Stamps all just waiting for Rule of Law to bring back tens of trillions of corporate fraud with government watchdogs stating each citizen in America will receive a few hundreds of thousands of dollars from fraud recovery.  

SIMPLY REINSTATING RULE OF LAW AND RECOVERING CORPORATE FRAUD TAKES MUCH OF THE NEED FOR FOOD STAMPS AND IMPOVERISHMENT GOES AWAY.  EASY PEASY!!!

I spoke last time about rebuilding public justice in Maryland by using committee appointments and using the governor's bully pulpit to get state agencies to DO THE JOB OF SERVING IN THE PUBLIC'S INTEREST.  Outsourcing for lawyers and creating grants for law schools to expedite law grads steeped in white collar crime and public justice will have new public justice employees in just a few years.  It is easy for the governor to do with no help from the corporate Maryland Assembly.  

Let's look at the other structures of public justice that have been deliberately 'broken' so as to eliminate the people's ability to access justice.  Now, remember, public justice is not only the poor, working and middle-class people can no longer afford legal representation for most crimes so this issue is about all citizens of Maryland seeking justice for corporate crime and government corruption.

Below you see an article from Ireland that speaks to the same thing happening in the US.  We know law school tuition is rising to create exclusivity and we know law firms are raising their fees to a point that the average person cannot afford to litigate.  THIS IS DELIBERATE.  This places most Americans into the hands of public justice and when the State and City Attorney have no white collar criminal agencies or government corruption agencies-----you go to legal aid or public non-profit legal teams like the National Lawyer's Guild or Maryland ACLU.  If you live in Maryland you know that the Maryland ACLU is silent on most civil liberties and civil rights violations and the system of funding legal aid and public justice --------pro bono volunteering of private law firms to help the public----is crony and not intended to provide EQUAL PROTECTION UNDER LAW.


THE MONEY SENT BY THE STATE TO FUND PUBLIC JUSTICE IS A JOKE.  HAVING CORPORATE LAWYERS DECIDE WHICH CASES THEY ACCEPT AS PRO-BONO AS PUBLIC JUSTICE??????   REALLY????

This is the problem and it is a joke.  So, first we rebuild the State and City Attorney's Office white collar crime and criminal justice offices so that pro-bono work by private law firms will rarely be needed.




Law fees rise despite lawyers’ protests
Tynwald buildings

Tynwald buildings

Published on the 27 June
2013
11:45


Legislation to increase various fees for litigants in the island has been approved by Tynwald despite a formal letter of objection from many of the island’s advocates.

The change will see big price hikes in the cost of, for example, taking out a small claim.

Speaking in Tynwald, Douglas East MHK Brenda Cannell said the points raised in the advocates’ letter were valid and the motion was being proposed without a full appreciation of the likely impact.

Onchan MHK Zac Hall said the advocates’ letter had been sent with the blessing of the Law Society. It was endorsed by 12 firms and ran into eight pages.

‘This will create a society where unscrupulous people will believe they can get away with it and the most vulnerable sections of society will be affected by this,’ he said.

Alex Downie MLC said three quarters of small claims were under £1,000 and the fee increase for these was £10 to £20. But Mr Hall said for small claims in the higher band the cost would rise from around £649 to £7,500.

‘That’s an outrageous increase,’ he said.


An amendment proposed by Onchan MHK Peter Karran to refer the matter back to the Social Affairs Committee was defeated 14 to 10 in Keys and seven to one in Legislative Council.

Treasury Minister Eddie Teare said the points in the advocates’ letter had been raised ‘at the 11th hour’ and added: ‘Access to justice is determined not just by court fees but also by fees charged by legal advisors and I feel they need to have a look in the mirror. I have done what I said I would do in May and I’m sticking to my guns. This fees order is still very reasonable and competitive compared with other jurisdictions.’

The increases were approved by 15 votes to nine in Keys and by seven votes to one in Legislative Council.

Law Society president Kevin O’Riordan told the Independent he felt access to justice for many was being jeopardised by cuts in legal aid and increases in court fees.

‘It’s not something lawyers are championing, except on behalf of their clients,’ he said.

‘Sadly, there has been an unfortunate lack of consultation with the legal profession on this issue as well as others of relevance to us. I understand the need to control spending, but not the apparent reluctance of the government to recognise that lawyers may have a useful contribution to make to the debate.

‘It is the client who has to pay court fees, which go to the Treasury rather than to the lawyers, so that we are not directly affected. Those who feel the impact of these increases will be the growing number of people who do not qualify for legal aid but are still of relatively modest means.

‘I also have to register disappointment at the Minister beating that tired old drum about excessive lawyers’ fees. He seems to be unaware of how much legal work is done by many advocates pro bono or at significantly discounted rates.’

____________________________________________


Now, I do not want to insinuate that these pro-bono groups do not have the intent to serve the people.  Why would we have such a huge private non-profit system of public justice unless we had no public justice in our State and City Attorney General's office?  This is the problem.  When you have individuals deciding which cases to take as pro-bono instead of an Attorney General's office pursuing all laws broken as is the duties of this office......you have lost Rule of Law and public justice.  So, in Maryland you will see no pro-bono work involving government corruption, white collar fraud, or corporate and wealth tax evasions----the major problems for the public.  Have a landlord problem?  You may get help.



The Pro Bono Resource Center of Maryland, Inc..,

(PBRC) is the statewide coordinator of volunteer legal services. Our mission is to promote equal access to justice in Maryland by coordinating and supporting volunteer civil legal services, providing resources and support for legal advocates for the poor, and promoting cooperation within the legal community.

About Us

PBRC is a separate non-profit organization which serves as the designated “pro bono arm” of the Maryland State Bar Association (MSBA). PBRC works closely with legal services providers and local bar association pro bono projects throughout the state to help recruit, train, recognize and support pro bono lawyers. PBRC also provides support services (click HERE) to volunteers and programs in the way of free or discounted training, a Pro Bono and Judicare Litigation Fund, mentors and technical assistance.


We have compiled a list of pro bono programs offering a wide range of opportunities for attorneys interested in providing free civil legal services to the disadvantaged. In addition to direct client representation, several programs operate advice clinics and mentoring and training opportunities for volunteer lawyers. Most programs provide malpractice insurance.

___________________________________________



So, Maryland has a network of lawyers working for private businesses doing the public's legal work because the Federal,  State, and local justice offices are no longer doing that. 
Below you see the duties of all levels of public justice.

SEE WHERE EQUAL PROTECTION UNDER LAW HAS GONE?



What Are the Duties of the United States Attorney General?
By Angela M. Wheeland


Protecting the Public


    The primary duty of the United States attorney general is to serve the best interests of the public within the United States jurisdiction. He is responsible for enforcing civil rights, preventing unfair consumer practices and improving the lives of United States citizens by proposing environmental protection laws and changes in criminal procedures.

*********************************

Now, Maryland's lawyers where ground zero for much of the subprime mortgage fraud and are indeed quite wealthy because none of the massive fraud has been recovered.  So, when lawyers 'donate' time for public justice, especially for subprime mortgage fraud and the foreclosures caused by these crimes.....there is a conflict here don't you think?  If I wanted to take to court the fact that these cases are not being pursued do I really contact these lawyers?  Of course not, that is the job of Maryland and Baltimore City Attorney.  IT IS THE DUTY OF THE STATE TO PROVIDE EQUAL PROTECTION UNDER LAW!

Do you think these law firms get tax write-offs for 'donating' this time?  YOU BETCHA!!!!!


The problem with foreclosure law is that the Maryland Attorney General signed off on settlements that were parking tickets and then sent the money to the state coffers where the money is now sent back to the banks for Enterprise Zone corporate development all creating profits for the banks committing the frauds.  Are these lawyers being trained to address this?  ABSOLUTELY NOT!

THIS IS THE JOB OF THE US ATTORNEY, STATE ATTORNEY, AND BALTIMORE CITY ATTORNEY----ERGO----PUBLIC JUSTICE.

The parking ticket settlements made these few years came with the requirement to rebuild white collar criminal justice agencies with these funds and Doug Gansler famously said 'I'll hire a lawyer to oversee the foreclosure process'.



 "Pro bono lawyers may be the only hope for many vulnerable or disadvantaged people throughout our state, many of whom have never before faced such dire circumstances."


IF NOT FOR THE KINDNESS OF STRANGERS AMERICANS WOULD HAVE NO PUBLIC JUSTICE-----ONLY ALL THIS IS ILLEGAL AS THE US CONSTITUTION GUARANTEES EQUAL PROTECTION AND RULE OF LAW.  THE PUBLIC JUSTICE SYSTEM CANNOT BE DISMANTLED.





Maryland Bar Bulletin
Publications : Bar Bulletin : March 2010     

|
Maryland Attorneys Donate 1.9 Million Pro Bono Hours to Help the State's Poor


~ Give close to $3 million in financial support ~

By Janet Stidman Eveleth

Despite the recession and our harsh economic times, Maryland lawyers donated close to 2 million volunteer hours in pro bono service in 2008, helping the state's poor with their legal needs. In addition, they contributed close to $3 million in financial support to increase legal services funding for the indigent. Traditionally, Maryland volunteer lawyers strongly support legal services to the poor and, when times are tough and people need help, lawyers step up to the plate and volunteer, giving their time, expertise and money to assist the needy.

One shining example of this is the state's Foreclosure Prevention Pro Bono Project where, in the six months this program was operational in 2008, 918 lawyers volunteered to first, undergo foreclosure training then help hundreds of Maryland homeowners in danger of losing homes to foreclosure. In 2008, these volunteers gave 13,737 hours in pro bono service to the Foreclosure Project and many accepted multiple homeowner cases.

According to the recently released 2008 Current Status of Pro Bono Service Among Maryland Lawyers Report (Report), Maryland-certified lawyers rendered 1,109,686 pro bono hours in 2008, an increase of 40,020 hours from 2007's 1,069,666 hours.  It also reports that 59.7 percent of Maryland's full-time lawyers volunteered for pro bono activity in 2008.  Over 22 percent gave 50 hours or more of pro bono service.

As always, lawyers hailing from rural regions like the Eastern Shore and Western Maryland rendered the most pro bono hours in the state while those in metropolitan areas tended to give the fewest. The Eastern Shore led the way with 80 percent of its attorneys giving pro bono service, followed by Western Maryland with 78 percent. The highest percentage of lawyers rendering 50+ hours also hailed from these two regions.

Somerset County captured the lead with 50 percent of its lawyers giving 50 hours or more of pro bono service, followed by Dorchester County with 45 hours and Queen Anne's and Talbot running neck and neck with respectively, 43.5 and 43.2.  "We are encouraged by the participation in these counties,"states Sharon E. Goldsmith, Executive Director of the Pro Bono Resource Center of Maryland, "becauseaccess to legal services is especially challenging in them."

Holding with tradition, the 2008 Report indicates that practitioners in Family/Domestic Law, Trusts/Estates/Wills, Bankruptcy, Personal Injury, and Elder Law give the most pro bono service and solo and small practitioners donate the most hours.  77.7 percent of Maryland's solo practitioners, and 71.4 percent of its small firm practitioners engaged in pro bono service in 2008, and about 17 percent of these practitioners volunteered for the Foreclosure Project.

Goldsmith, who oversees the Foreclosure Project, is delighted with its success. "The initial response of Maryland lawyers to the foreclosure crisis was unprecedented,"she exclaims. "These numbers indicate more than one third of the increase in pro bono hours in 2008 can be attributed to the Foreclosure Project."

"The Foreclosure Project continues to train and utilize volunteers in efforts to modify loans and identify creative solutions for sustainable homeownership,"she continues, "so we expect an even higher number of hours dedicated to the Project in the 2009 reporting cycle."

The Court of Appeals of Maryland has tracked attorney volunteerism across the state since 2002, reporting its findings each year in the Current Status of Pro Bono Service Among Maryland Lawyers Report. It is now in the process of compiling the 2009 results. All Maryland attorneys are required to file annual pro bono reports to the Court of Appeals. The 2009 forms were due February 15, 2010.

Attorney pro bono service is still voluntary in the state, but revisions to Rule 6.1 of the Maryland Rules of Professional Conduct, which took effect July 1, 2002, require all Maryland attorneys to file an annual Pro Bono Service Report with the Court. The form documents the number of hours of pro bono service the attorney rendered during the previous year. This pro bono summary gives the Court of Appeals a "snapshot"of the legal services landscape in the state.

Right now that landscape is very bumpy, given the bad economy, severe legal services funding shortages, the high unemployment rate and the soaring number of foreclosures. "In our current economic climate, legal services providers are being inundated with requests for help and have fewer resources with which to respond,"reports Goldsmith. "Pro bono lawyers may be the only hope for many vulnerable or disadvantaged people throughout our state, many of whom have never before faced such dire circumstances."

______________________________________


Those poor people losing their retirements, houses, savings, and forced into debt all because of massive corporate fraud and no justice to recover it-----THAT IS WHAT TRANS PACIFIC TRADE PACT (TPP) IS ALL ABOUT---- there is no public justice with global corporate tribunals say Ivy League schools behind the 1%!


If you audited the money Maryland sends for this pro-bono work and for legal aid you will see that nothing is done with money that either ends up in other projects or are simply pocketed by people offering little or no help.  I went to legal aid in Baltimore and found them handing my instruction forms telling me what I could do for myself because they do not go to court with you.  Now, I am a pretty sharp cookie and often go to court as my own legal representative but I know the courts are not friendly to people seeking to represent themselves.  So, having an agency that simply informs people how the system works do nothing for these people.  ANOTHER DEAD END!  WHAT PUBLIC JUSTICE YOU SAY!!!


The reason formerly middle-class people are clients of these private firms is that public justice that should have protected them is silent.  DOUG GANSLER IS THAT FACE AND HE NOW HAS A WAR CHEST FOR GOVERNOR FROM THE VERY PEOPLE FLEECING MARYLAND CITIZENS.  He should be up for aiding and abetting crime and he is running for governor!
  The lawyers colluding with the banks and corporations committing these frauds are now deciding which pro-bono cases to take.

THIS IS WHAT THIRD WORLD SOCIETY LOOKS LIKE-----AFGHANISTAN HAS NOTHING ON MARYLAND FOR FRAUD AND CORRUPTION.


Clients are up, funding is down for free legal aid

October 24, 2011 at 7:23 am
By Barbara Pash
Barbara@MarylandReporter.com

As the economy has slowed, the demand for free civil legal services has risen, but funding for those services has not increased.

Pro Bono Resource Center of Maryland logo“The situation is dire,” said Sharon Goldsmith, executive director of the Pro Bono Resource Center of Maryland. “The programs are feeling stretched beyond their limits. The funding is not there.”

The center — the pro bono arm of the Maryland Bar Association serving as a clearinghouse for lawyers’ volunteer services — is a statewide nonprofit entity. Nowadays, Goldsmith said, center volunteers are seeing “a lot” of formerly middle-income people who would not have qualified for free legal help before. This is “a whole new group of people” asking for help, she said, in addition to the low-income people already being served.

Demand rising

The center Groups providing free legal assistance served nearly 140,000 clients in fiscal 2011, 9% more than 2010. But during that same period, over 44,000 people seeking legal help were turned away for a variety of reasons like being a criminal, rather than a civil, case; over the income eligibility limit;  and not enough staff people and resources.

The Pro Bono Resource Center spearheaded coordination of volunteer legal services for the foreclosure prevention project, a 2008 state-wide initiative to deal with the home mortgage crisis. In 2010, the project was expanded to include mediation but the center continued to play a role in training attorneys and coordinating public workshops around the state.

In fiscal 2010, state and federal grants to the Maryland foreclosure mediation program amounted to $700,000; in fiscal 2011, the figure was $509,000 because of funding drops.

Although the number of foreclosure filings in court subsequently slowed down., since January 2011 they have begun to increase. “I doubt we will see an increase in funding,” said Goldsmith, who credits lawyers with stepping up their pro bono activity to compensate.

3,000 attorneys volunteer


Maryland Volunteer lawyer Services logoAt Maryland Volunteer Lawyers Service, the demand for legal services rose 6% from fiscal 2010 to 2011, straining the approximately 3,000 attorneys who donate their time there.

Many of the lawyers who work with MVLS are in solo practices or small firms. Their ability to volunteer is being limited by their need to earn billable hours, said Richard Chambers, deputy director. Many are also changing careers, Chambers said. In the last three years, the number of attorneys taking cases has decreased 20%, although other volunteers have picked up the slack, he said.

MVLS has boosted its private fundraising among corporations and law firms, whose support now accounts for 40% of its budget.

“We’d love to expand our phone intake. We’d love to have more outreach to the lower Eastern Shore, to St. Mary’s and Frederick counties. We can’t do it. We are at capacity” for clients, said Chambers. “We know there are probably thousands of people who qualify for our services.”

Too many clients, too few chairs

Maryland legal aid logoAt Maryland Legal Aid, the jump in clients is apparent “in our lobby any morning,” said Wilhelm Joseph, executive director.

“We used to add chairs as the room got full,” Joseph said. “Now, we don’t have enough chairs for all the people looking for help.”

The private nonprofit law firm saw nearly 70,000 clients in 2011, versus 62,000 in 2010 and 42,000 in 2006.  Legal Aid also now has a broader client demographic, which now includes “the former working class and the middle-class,” Joseph characterized. “They’ve been out of jobs for several months and are facing issues like getting unemployment and food stamps, and mortgage foreclosure.”

Since 2008, Legal Aid has seen default on debt and wage garnishment cases rise 30%. Unemployment insurance cases are up 153%. Public assistance cases are up 156%, and food stamp cases have increased 72%. In the same time period, the number of cases where Legal Aid just gave advice to clients they could not represent — often because Legal Aid was operating at capacity — has risen 28%.

Legal Aid’s annual budget is almost $25 million, with funds from federal and state grants, contracts with local jurisdictions through state agencies, and private sources. While funding has risen steadily over the years, the situation overall “is getting worse,” said Joseph.

“There is increased demand, funding is getting much more difficult, and operating costs go up,” he said.

Maryland Legal Services Corporation logoSusan Erlichman is executive director of Maryland Legal Services Corporation, whose annual budget of about $16 million is distributed to 35 programs around the state.

The corporation’s major funding sources are, by statue, interest on lawyer trust accounts and court filing fee surcharges. It also receives a small amount from the state abandoned property fund.

Though the corporation’s major funding sources are set by statute, its funds have decreased with the economy. From 2009 to 2011, trust account interest revenue fell from $7 million to $2 million — about 70%, Erlichman said.

In 2010, the General Assembly increased the court fee surcharge at MLSC’s request. The new income filled the interest funding hole.

“Without the increased surcharge, the whole legal services delivery system in the state would be in danger of collapse,” said Erlichman.

Nonetheless, the increased surcharge is scheduled to sunset in 2013, and she and others in the legal services community are doing what they can to ensure it continues. “It would leave us in a devastating situation,” said Erlichman.

__________________________________________________


Now, I have spoken about Barbara Mikulski and her role on the Senate Appropriations Committee in funding or not the budgets of justice agencies and as I have said the budget at the Federal level has never been smaller at a time of extreme corporate fraud against the US Treasury and American people.  She manages to get plenty of corporate welfare to the rich in Maryland but cannot get that funding for public justice even when democrats had a super-majority in 2009.

Below you see the same in Maryland.  As billions of dollars in Maryland are lost to fraud we just cannot seem to fund the agencies of public justice to recover that fraud.


SHEILA PUGH IS THE FACE OF THIS CRONYISM AND YET SHE IS NEVER CHALLENGED IN BALTIMORE.  SEE WHY MIKE MILLER LET'S HER PLAY THESE REINDEER GAMES!!!!

This is where all law that protects corporations from public justice happen as well.


Appointed by Senate President:
Thomas M. Middleton, Chair (410) 841-3616, (301) 858-3616
John C. Astle, Vice-Chair (410) 841-3578, (301) 858-3578

David R. Brinkley
Brian J. Feldman
Barry Glassman
Delores G. Kelley
Allan H. Kittleman
Katherine A. Klausmeier
James N. Mathias, Jr.
Catherine E. Pugh
Victor R. Ramirez

SENATE STANDING COMMITTEES FINANCE COMMITTEE

ORIGIN & FUNCTIONS The Finance Committee started in December 1831. Originally, it bore responsibility for reviewing all bills concerned with fiscal matters. In 1975, the review of budgetary and tax matters was assigned to a separate committee - the Budget and Taxation Committee.
Miller Senate Office Building, 11 Bladen St., Annapolis, Maryland, December 2003. Photo by Diane F. Evartt.


Legislation relating to banks and other financial institutions; commercial law, including consumer protection; credit regulation and consumer financing; economic and community development; and health and welfare matters is considered by the Committee. Bills concerned with horse racing and lotteries; insurance; labor and employment; State personnel issues; social programs; transportation; unemployment insurance; utility regulation; and workers' compensation also are reviewed by the Committee. The Committee has eleven members (Senate Rules 18; Code State Government Article, secs. 2-1103 through 2-1105).




Below you see why McFadden being challenged was a big deal for Mike Miller in keeping public justice out of the loop in Maryland Assembly.  He and Jones-Rodwell are on this committee because they are dedicated to keeping public justice away.  I'm not sure McFadden's challenger will be much better sadly as he is as crony.

It is the combination of Washington suburbs pols and the Baltimore City pols where most of the fraud and wealth from fraud go that give the state this completely third world crony system.


A governor can shout that these committees are not working in the public interest in funding and writing laws.  A government that protects wealth and profit are not working in the public interest and defunding public justice violates the US Constitution.
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Below you see Heather Mizeur on the Appropriations Committee where all of the policy that sends money to corporate welfare start.  This is why she supports public private partnerships and Wall Street credit bond leverage deals----she works for corporate welfare.  She was placed on this committee because she will tow the line.  At the same time this is where defunding of public justice occurs and is replaced by this idea of private pro-bono as public justice.  Note that Mary Washington------Johns Hopkins pol where all of state funding ends-----is on the Appropriations Committee too!

Now, the citizens of Maryland will have a hard time shaking all of the neo-liberal bugs from the rug at once, but the governor is the one that should be shouting that these committees and agencies are not working in the public interest and in fact much of these funding bills could be challenged in courts as not in the public interest.  This is how a first world democracy works.

When I asked Mary Washington to define fraud in the Maryland Assembly after the economic crash in 2008 caused by massive corporate fraud of which her employer, Johns Hopkins was a major recipient----she said-----OH, I DON'T THINK THEY WOULD WANT THAT!  OH, REALLY????? WHO ARE 'THEY' MARY?


THESE NEO-LIBERALS ARE NOT WARM AND FUZZY-----RUN AND VOTE FOR LABOR AND JUSTICE IN ALL PRIMARIES!

Appointed by House Speaker:
Norman H. Conway, Chair (410) 841-3407, (301) 858-3407
James E. Proctor, Jr., Vice-Chair (410) 841-3083, (301) 858-3083 Steven J. Arentz
Gail H. Bates
Wendell R. Beitzel
John L. Bohanan, Jr.
Steven J. DeBoy, Sr.
Adelaide C. Eckardt
Tawanna P. Gaines
Melony G. Griffith
Ana Sol Gutierrez
Guy J. Guzzone
Keith E. Haynes
Mary-Dulany James
Adrienne A. Jones
Tony McConkey
Heather R. Mizeur
Barbara A. Robinson
Theodore J. Sophocleus
Nancy R. Stocksdale
Kathy Szeliga
Mary L. Washington
John F. Wood, Jr.
Craig J. Zucker



__________________________________________________


SENATE STANDING COMMITTEES BUDGET & TAXATION COMMITTEE
Origin & Functions

Subcommittees

Miller Senate Office Building entrance, 11 Bladen St., Annapolis, Maryland, January 2014. Photo by Diane F. Evartt.


Appointed by Senate President:
Edward J. Kasemeyer, Chair (410) 841-3653, (301) 858-3653
Nathaniel J. McFadden, Vice-Chair (410) 841-3165, (301) 858-3165

Richard F. Colburn
Ulysses Currie
James E. DeGrange, Sr.
George C. Edwards
Joseph M. Getty
Verna L. Jones-Rodwell
Nancy J. King
Richard S. Madaleno, Jr.
Roger Manno
Douglas J. J. Peters
James N. Robey
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March 03rd, 2014

3/3/2014

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CORPORATE FRAUD RECOVERY AND TPP ARE THE TWO TOP ISSUES IN THIS ELECTION RACE. IF YOUR POL IS NOT MAKING THAT FRONT AND CENTER....THEY ARE NEO-LIBERALS WORKING FOR WEALTH AND PROFIT-----LOOK BELOW AT BERNIE SANDERS SHOUTING FRAUD NEEDS TO BE RECOVERED!!!!


Regarding the continued error in the phrase 'wealth inequity':

Again Basu tries to inform listeners of regional economic prosperity while failing to speak of the economic balance that will come when massive corporate fraud of tens of trillions of dollars comes back to government coffers and individual's pockets.  Until that rebalancing occurs, we cannot know one region's economic health over another.  Now, it so happens that the areas listed by Basu are indeed the areas front and center in these massive frauds along with the national corporate headquarters around Washington DC.  

WE ARE TELLING PEOPLE REPORTING THAT THERE IS GREAT WEALTH INEQUITY THAT YOU DO NOT CLAIM A BANK ROBBER RICHER THAN THE BANK FROM WHICH HE STOLE THE MONEY.

If you listen to pundits or politically align media like neo-liberal MSNBC you will hear this mantra....WE HAVE TO REVERSE WEALTH INEQUITY and not once do they say IT'S RULE OF LAW THAT WILL DO IT! They are pretending we are back in the 1960s and simply need progressive policies as if the massive public wealth fraud never happened.  Robert Reich is a neo-liberal economist who was part of the Clinton Administration as Labor Secretary when all the policy creating this third world status of our country to gain hold.  Nafta and breaking Glass Steagall assured this massive wealth inequity and unaccountable global corporate rule would occur.  Neo-liberals like Clinton, Reich, and Obama work to see that wealth consolidation indeed occurs in any way possible...ergo, suspension of Rule of Law.

IF A POLITICIAN OR PUNDIT IS SHOUTING THERE IS WEALTH INEQUITY WITHOUT SHOUTING FOR JUSTICE FROM MASSIVE CORPORATE FRAUD-----WHICH WILL ITSELF REVERSE THIS WEALTH INEQUITY----THEY ARE WORKING FOR THOSE COMMITTING THE FRAUD.

We know of course that New York City is ground zero for the frauds and therefor little of the wealth they claim is actually theirs......it is our home equity, retirement, pensions, health care, and public assets.  WE OWN MUCH OF NYC WEALTH.  San Francisco has legitimate wealth with the TECH industry although they are evading taxes.  This area is ground zero for subprime mortgage, defense, and for-profit education industry frauds.  So, when all of that wealth is taken from San Francisco's economy....they will be ranked differently in wealth inequity.  Washington is of course ground zero for all of the Federal contract fraud in the trillions of dollars and with it are the headquarters of all of the global corporations fat with fraud.  When those fraudulent gains come back to the citizens and government coffers, that area will be ranked differently.  So, you can see that Basu's willingness to spout stats that have no basis in reality makes US media on par with the Romanian media in free press.  FREE PRESS HOLDS POWER ACCOUNTABLE....IT DOES NOT PROPAGATE PROPAGANDA.  If the people at the top think the American people are going to let the stealing of tens of trillions of dollars go------they are indeed out of touch!





Should the federal government being doing more to investigate fraud in the financial industry?  Bloomberg Poll

Yes - 93% (4385 votes)

No - 7% (322 votes)

Total Votes: 4,707 Percentages may not add up to 100% due to rounding





The assets of the big banks mostly belong to the public as bringing back fraud and recovering damages would make these global banks into the regional banks we need them to be.  There is not a bank executive known to play the most obvious roll in these massive frauds that is not back working in finance earning tons of money again.  THIS IS SUSPENSION OF RULE OF LAW AND WHEN A GOVERNMENT SUSPENDS RULE OF LAW, IT SUSPENDS STATUTES OF LIMITATION.

Below you see only an example of the costs of damages to the American people.....there are tens of trillions in actual corporate frauds yet to be recovered.  Imagine allowing rogue financial firms like Moody's and Standards and Poor (S & P)......tell government pension managers that pensions have to be cut because 1/2 their value was lost in financial fraud that has yet to be recovered.

 THIS IS THIRD WORLD AND SHOWS WE HAVE A KLEPTOCRACY IN PLACE AND WE NEED TO SHAKE THESE BUGS FROM THE RUG.  NEO-CONS AND NEO-LIBERALS ARE THE BUGS MOVING ALL WEALTH TO THESE GLOBAL CORPORATE COFFERS.


Now, we know as well that all that time writing the Financial Reform Bill and yet not implemented and enforced has the economy ready to collapse yet again.  We know as well that neo-liberals took over from the neo-cons the oversight of corporate writing of TPP.  TPP negates all of what the Financial Reform Bill does.  Do you really think your pol did not know that ending US sovereignty with all the US Constitutional protections of WE THE PEOPLE AND BILL OF RIGHTS would of course make the Financial Reform Bill null and void?  OF COURSE THEY KNEW AS THEY SPENT THE TIME SUSPENDING FRAUDULENT ACCOUNTABILITY.  We will act as though we are doing something as we ignore that no justice in massive fraud occurs.





Five years ago today, Lehman Brothers went bankrupt.


Instantly and inevitably, the house of cards otherwise known as Wall Street collapsed.

But after getting bailed out by the American taxpayers, Wall Street is doing just fine.

The people of Main Street? Not so much.

Here are some numbers to think about this Sunday morning.

    Amount the crash cost the U.S. economy: $22 trillion

    How much everyone would get if that $22 trillion were divided equally among the U.S. populace: $69,478.88

    Assets of the four biggest banks in America — JPMorgan Chase, Bank of America, Citigroup and Wachovia/Wells Fargo — when they were “too big to fail” in 2008: $6.4 trillion

    Assets of those four banks today: $7.8 trillion

    Of the 63 former Lehman Brothers employees identified by a bankruptcy examiner as being aware of an accounting scheme Lehman used to mask its true finances, number who are employed in senior financial services positions today: 47

    Number of the 25 banks responsible for the bulk of risky subprime loans leading up to the crash that are back in the mortgage business: 25

    Chances that an American voter thinks that regulating financial products and services is “important” or “very important”: 9 in 10

____________________________________________



BERNIE SANDERS IS THE ONLY NATIONAL POL THAT SHOUTS OUT RECOVERING CORPORATE FRAUD IS A MUST.  WHETHER DEFENSE INDUSTRY FRAUD TO PROTECT VETERANS....WALL STREET FRAUD RECOVERY....OR THE FEDERAL RESERVE....GROUND ZERO FOR GREAT FRAUD-----

IF A POL IS NOT SHOUTING THIS---THEY ARE AIDING AND ABETTING.

See why saying there is wealth inequity in America before justice reverses much of this fraud is propaganda?




    
The Fed Audit

Thursday, July 21, 2011

The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. "As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world," said Sanders. "This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else."

Among the investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. "No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said.

The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse.  In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.

For example, the CEO of JP Morgan Chase served on the New York Fed's board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed.  Moreover, JP Morgan Chase served as one of the clearing banks for the Fed's emergency lending programs.

In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds.  One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.

To Sanders, the conclusion is simple. "No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed's board of directors or be employed by the Fed," he said.

The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.

The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo.  The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.

A more detailed GAO investigation into potential conflicts of interest at the Fed is due on Oct. 18, but Sanders said one thing already is abundantly clear. "The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street."

To read the GAO report, click here.


_________________________________


Below is a good analysis of the problem in Europe which of course is the same as that in the US.  This analysis has a second value because it shows that the same model of throwing Europe into sovereign debt crisis is now being used by US neo-liberals for the next Bain's Capital gutting of wealth assets from the public sector.  Remember, it was Iceland that from the start simply allowed the banks to default from the fraud and their economy is well on its way to being healthy while the US and Europe are still held hostage by TROIKA and WALL STREET/FED.  American academics have the same analyses showing direct cause and effect....proof of conspiracy to defraud.  We have all the data needed to show all of this CDS policy was a planned conspiracy that can be easily tried in court and won.

WE NEED LABOR UNION LAWYERS TO START ACTING AS US JUSTICE DEPARTMENT IN TAKING ALL OF THIS TO COURT AND DECRYING THE JUSTICE DEPARTMENTS SUSPENSION OF RULE OF LAW!


Anyone as nerdish as I am will like this research and analysis of how the same financial scheme brought to us with the subprime mortgage loan fraud with trillions of dollars of fraudulent loans insured with Credit Default Swaps by mainly one large insurance agency.....AIG all the time knowing these loans were toxic and all would collapse.  So, the Dodd Frank financial reform was to address this and of course nothing has been done and these same people are now thinking the subprime mortgage loan fraud was such a success as tens of trillions of dollars in fraud was left with the looters now think......let's do it again.

This time rather than the goal of capturing all of the nation's real estate holdings and consolidating land ownership to a few at the top.....this fraud has as its goal blowing up the public sector by super-sizing municipal debt and imploding the economy to make a crash that would create huge sovereign debt default.  You can do that only if you again use the Credit Default Swap insurance so that as everyone else loses all their wealth, you have this insurance that protects the very people imploding the economy.  None of this is legal as banks deliberately hid sovereign debt and municipal debt with financial instruments so more debt could be taken on.....ergo, the implosion we have in Europe in 2008.

This is important because the same thing is now happening in the US these few years of Obama's term as US state governors and mayors.....like O'Malley and Rawlings-Blake are doing to you and me what was done in the PIIGS nations in Europe.  Loading up municipal debt while insuring it all with Credit Default Swaps.  You know this is a plan as municipal bonds and public debt have never been allowed to use these CDS and now they are.  So, as governors and mayors load our government coffers with tons of debt tied to Wall Street financial instruments, the investment firms are protecting themselves from loss when the economic crash comes while the public sector.......MECU and the State of Maryland/City of Baltimore will default on their terms and lose most of the investment.

AGAIN, THIS IS ALL PUBLIC MALFEASANCE....IT IS ILLEGAL AND ALL TERMS CAN BE VACATED BECAUSE INVESTMENT FIRMS KNOW THIS IS ALL FRAUDULENT.

This article below is great and it is very long so I could not copy it here.......go to the webpage to see it in its entirety to see how these 1% are working to steal all that is public!


Analysis of European Sovereign Credit Default Swap during theSovereign Debt Crisis in Portugal, Ireland, Italy and Spain.
 byBerkay OrenA dissertation submitted in partial of theMSc Finance and InvestmentAtThe University of BrightonFaculty of Management and Information SciencesBrighton Business School(May 2013)


  Abstract

This thesis has represented the determinants of sovereign CDS spreads during currentsovereign debt crisis in periphery countries namely Ireland, Italy, Portugal and Spain. The period of analysis is between 4 March 2008 and 3 May 2012. After the demise of LehmanBrothers, the sovereign CDS market has attached significant attention and the credit marketshave been issue to an unprecedented re-pricing of credit risk. Moreover, Lehman Brothersdevastated investor confidence and decrease in the availability of credit. Massive assistanceof the banks was heightened public sector deficit. Thus it has led to high level sovereign debt.This means that the risk of default of sovereign became real in periphery countries. Thisthesis has been classified three phases. Firstly an analysis of credit default swaps and their use in the financial World. Secondly development of the European periphery economy on amacro level in Portugal, Ireland, Italy and Spain. Finally the statistical approach of ordinaryleast square is to be analysed. Main purpose of this thesis will identify sovereign creditdefault swaps associated with the current sovereign debt crisis.


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We want to remember that the reason Clinton and Bush targeted the low-income mortgage market for the subprime mortgage frauds was first, they wanted to consolidate real estate ownership and second they used the Federal assistance for these loans over and over again....this is where a large part of the fraud fleecing government coffers came.  They did it on purpose because they knew they would have someone in office that would suspend Rule of Law....if not Obama, Hillary, or Romney.  Sending low-income people to higher education and placing them in homes.....under programs filled with fraud was only cover for this massive fraud.  WE KNOW IF THE INTENT IS TO DO GOOD, YOU DO NOT ALLOW MASSIVE FRAUD OF THE PROGRAM TO OCCUR.  The same is happening today in the GREEN industry as a good program is riddled with fraud allowing 1/2 of the green spending to be defrauded.  

IF NO OVERSIGHT IS GIVEN AND NO JUSTICE IN PLACE....THE INTENT WAS INDEED TO DEFRAUD.

Below is a look at just the subprime mortgage fraud....we know that financial fraud was widespread and across corporate industries as well.  So, the few hundreds of billions of dollars collected in 'settlements' does nothing for tens of trillions of dollars in fraud.  THIS IS WHY ALL PUBLIC PROGRAMS, SERVICES, AND ASSETS ARE BEING HANDED TO PRIVATE ENTITIES UNDER THE GUISE OF STARVED GOVERNMENT BUDGETS.



Wall Street Bank Fraud Massive

Details
    Written by Dan McGookey

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The New York Times reported this week that Wall Street is now predicting that its Banks will be anteing up over $50 Billion in settlement payouts with the government and others as a result of their massive fraud perpetrated through the securitized lending system during the first eight years of this Century. Even this astounding number doesn't begin to tell the story of how widespread that fraud was, or the toll it took on this Country's economy, however.

Consider the fact that tens of trillions of dollars of wealth changed hands from Main Street to Wall Street in less than a decade through the vehicle known as securitized lending. That is the process whereby a mortgage loan is magically transformed into a stock certificate or security simply by bundling it with thousands of others and then selling "mortgage-backed certificates" (or stock) in that pool of loans. The problem was that the Wall Street Bankers were able to sell the stock in the loan pool at 10-20 times the face value of the loans. And the reason we say that tens of trillions of dollars shifted from Main Street to Wall Street by virtue of the corrupt securitized lending system is because it was city and state governments, retirement funds, insurance companies and the like who were the suckers buying up the absurdly over-priced stock. In other words, the money was stolen out of the wallets and purses of all Americans.

Even through the estimated amount of the penalties is tantamount to a slap on the wrist for the Banks, it at least serves to highlight the significance of Wall Street's corruption. And the news reports of that corruption will no doubt keep coming with increasing frequency as the depth of the fraud continues to be exposed. All we can hope for is that as that happens, our own Government's complicity in the scandal will be exposed as well.

Reverse Bank Robbery

The Wall Street Banksters obviously never read or simply didn't take heed of the following preaching of Socrates:

"Rather fail with honor than succeed by fraud."

Avoiding the Foreclosure Trap

As a homeowner struggling for mortgage relief with your bank, don't forget to be mindful of the following time-honored sage advice; "Forewarned is forearmed". Realize that the fraud involved with your mortgage didn't end after your loan's origination. Because foreclosure is a profitable business, there is a very good chance the fraud is continuing, along with your victimization.


Kate Eyster and Lauren McGookey contributed to this article.

Copyright 2014 Daniel L. McGookey


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Let's look at one other corporate fraud...this one tax fraud that is wide-spread and easy to find.  The IRS could  pay down much of the national debt itself by recovering corporate tax fraud yet we are told by neo-liberals those bad republicans are defunding the IRS.....indeed, it is being starved.  Yet, the financial settlements in the hundreds of billions requires that a percentage of all settlements go to rebuilding and strengthening fraud detection and prosecution......IT IS SELF-FUNDING.  So, all we need are state pols that shout loudly that none of this is happening----IT IS THE VOICE OF PUBLIC OFFICIALS THAT WOULD FORCE THESE CROOKS TO DO THE RIGHT THING.  IT IS THEIR SILENCE THAT IS DUPLICITOUS.  

IN MARYLAND, IT WAS ALL OF THE CURRENT POLS IN OFFICE THAT ALLOWED THIS MASSIVE CORPORATE FRAUD TO HAPPEN AND INDEED MUCH WEALTH INEQUITY IN MARYLAND IS A RESULT OF THIS FRAUD AND LACK OF JUSTICE!

Joe Biden's Delaware and Harry REid's Nevada are the two states with the most international business geared to off-shoring and hiding wealth.

THIS BILL WAS PASSED IN 2006 JUST AS THE DISMANTLING OF OVERSIGHT AND DEFUNDING WAS AT ITS HEIGHT.  REMEMEBER, THE RECOVERY OF FRAUD BY THE IRS SUPPORTS ALL THE OVERSIGHT AND ACTION NEEDED. THE IRS HAS PLENTY OF MONEY TO DO THE JOB WITHOUT CONGRESSIONAL FUNDING.

Trillions in fraud here....tens of trillions there.....makes for tons of lost revenue to the economy from corporate fraud at Federal, state, and local level.  When people like Basu or Robert Reich speak of wealth inequity as needing legislation and not Rule of Law...THEY ARE WORKING FOR WEALTH AND PROFIT.





Illegal Offshore Account Tax Fraud and Transfer Price Schemes Are Two Forms of IRS Tax Fraud That Can Be the Basis Of An IRS Whistleblower Reward Lawsuit



 by Illegal Offshore Account Tax Fraud Lawyer and Transfer Payment Tax Fraud Whistleblower Reward Lawyer Jason Coomer

Illegal Offshore Account Tax Fraud and Transfer Payment Tax Fraud are two forms of corporate tax fraud that are committed by large multinational corporations.  The IRS is offering rewards and protections for IRS whistleblowers and IRS informants that work through Illegal Offshore Account Tax Fraud Whistleblower Lawyers, Multinational Corporate Tax Fraud Whistleblower Lawyers, and Transfer Payment Tax Fraud Whistleblower Lawyers to identify tax fraud schemes that cost the United States millions of dollars.

Illegal Offshore Account Tax Fraud Whistleblower Lawyer, Multinational Corporate Tax Fraud Whistleblower Lawyer, and Transfer Payment Tax Fraud Whistleblower Lawyer, Jason S. Coomer, works with corporate tax fraud whistleblowers, illegal offshore account tax fraud whistleblowers, transfer payment tax fraud whistleblowers, and other corporate tax fraud whistleblowers to expose corporate tax fraud and other forms of tax fraud.  If you are the original source with special knowledge of tax fraud and are interested in learning more about a tax whistleblower lawsuit, please feel free to contact Illegal Offshore Account Tax Fraud Whistleblower Lawyer and Transfer Payment Corporate Tax Fraud Whistleblower Lawyer Jason Coomer via e-mail message.

Illegal Offshore Account Tax Fraud Lawsuit, Corporate Tax Fraud Whistleblower Reward Lawsuit, IRS Illegal Offshore Account Tax Fraud Whistleblower Reward Lawsuit, Transfer Price Scheme Tax Fraud Lawsuit, IRS Whistleblower Reward Lawsuit, & IRS Whistleblower Payment for Detection of Fraud Lawsuit Information

In 2006, the Tax Relief and Health Care Act that was signed into law included a whistleblower reward amendment that created mandatory reward language to the IRS to create a mandatory economic incentive to encourage tax fraud whistleblowers to step forward to help the government detect large scale fraudulent schemes.  By offering large potential rewards for reporting multimillion tax fraud schemes, the IRS has received hundreds of tax fraud tips from tax fraud informants regarding taxpayer fraud and massive violations of the tax code costing taxpayers Billions of dollars.  Many of the tips already received include fraud schemes of hundreds of millions and tens of millions of dollars.  It is estimated that this programs will result in hundreds of billions of dollars or even Trillions of dollars in tax fraud being detected.

The economic incentives in the Tax Whistleblower Reward Programs are designed to encourage insider tax fraud informants and tax fraud whistleblowers with knowledge and evidence of large tax violations and tax fraud schemes to step forward and report the massive tax fraud.  The IRS is hoping that there will be several tax fraud whistleblowers and tax fraud informants that will help them detect and collect on an estimated $3 Trillion in illegal offshore accounts as well as several other tax-avoidance schemes that have been perpetrated by billionaires and millionaires as well as large corporations.

The IRS Whistleblower Reward Amendment requires the Internal Revenue Service to pay rewards to whistleblowers who exposed large scale tax fraud and taxpayer fraud including major tax underpayments, violations of the Internal Revenue Code, or other fraudulent schemes to unlawfully not pay taxes.  The IRS Whistleblower Reward Program is aimed at large multimillion dollar fraud schemes and tax violations in that the total amount of fraud or underpayment of taxes in dispute would have to exceed $2 millions.

The IRS will pay the tax fraud whistleblower or tax fraud informant if the information presented substantially contributes to the collection of money by the IRS.  As such, the tax fraud whistleblower should have inside knowledge of and documentation of the tax fraud to be successful.     

Illegal Offshore Account Tax Fraud Lawyer, Corporate Tax Fraud Whistleblower Reward Lawyer, IRS Illegal Offshore Account Tax Fraud Whistleblower Reward Lawyer, Transfer Price Scheme Tax Fraud Lawyer, and IRS Whistleblower Reward Lawyer

Transfer pricing schemes involve the overpricing of imports and/or the underpricing of exports between related companies in different countries for the purpose of transferring profits or revenue out of the United States in order to evade taxes. The profits and revenue end up in a country that has a lower corporate tax rate than the US.  These fraudulent pricing schemes can be used both for stock manipulation and corporate tax fraud.  For more information on Corporate Tax Fraud Whistleblower Actions, please go to the following: Tax Fraud Whistleblower Reward Lawsuit, IRS Tax Fraud Whistleblower Award Lawsuit, and Corporate Tax Fraud Lawsuit Information web page.

Illegal Offshore Account Tax Fraud Lawsuit, Corporate Tax Fraud Whistleblower Reward Lawsuit, IRS Illegal Offshore Account Tax Fraud Whistleblower Reward Lawsuit, Transfer Price Scheme Tax Fraud Lawsuit, IRS Whistleblower Reward Lawsuit, & IRS Whistleblower Payment for Detection of Fraud Lawsuit Information

To qualify for a whistleblower award under section 7623 (b), the information must:

    Relate to a tax noncompliance matter in which tax, penalties, interest, additions to tax and additional amounts in dispute exceed $2,000,000.00

    Relate to a taxpayer, and in the case of an individual taxpayer, one whose gross income exceeds $200,000.00 for at least one of the tax years in question

If the information meets the above criteria and substantially contributes to a decision by the IRS to take administrative or judicial action that results in the collection of tax, penalties, interest, additions in tax and additional amounts, then the IRS will pay an award of at least fifteen percent, but not more than thirty percent of what the IRS collects.  26 U.S.C. at 7623(b)(1).

The IRS has authority to reduce the award to ten percent if the claim is based upon specific allegations disclosed in certain public information (e.g. government audits) and determines that the whistleblower's information was not the original source of information.  Further, the IRS also has the authority to reduce the award or not give an award if the whistleblower planned and initiated the actions that led to the tax underpayment.

The IRS Whistleblower Reward Program, Whistleblower Recovery Program, and IRS Corporate Tax Fraud Whistleblower Rewards

The Tax Relief and Health Care Act of 2006, signed into law on December 20, 2006 amended the Internal Revenue Code to provide rewards for turning in tax cheats including corporations and people that are committing tax fraud.  According to the IRS, the primary purpose behind the Tax Relief and Health Care Act of 2006 "was to provide incentives for people with knowledge of significant tax non-compliance to provide that information to the IRS."  The new program generally requires the IRS to pay rewards to whistleblowers if the information presented substantially contributes to the collection of money by the IRS.  The law created the IRS Whistleblower Office to receive, evaluate, and determine whether to pay the whistleblower an award.

The IRS has funded a robust IRS Whistleblower Program.  The new program focuses on large tax fraud and tax underpayment claims.  To qualify for the rewards, $2 million of taxes, penalties, and interest must be involved.  Individual taxpayers must have $200,000.00 of taxable income in any year.   The reward is from fifteen to thirty percent of the tax collected, depending upon the extent to which the whistleblower contributed to the additional collection.  If the IRS determines that the whistleblower's information was not the original source of information, but still contributes to the additional collection, the IRS can still award up to ten percent of the amount collected.

It is interesting to note that Congress passed the original tax whistleblower rewards law in March 1867 for people who reported tax crimes.  The law was enacted prior to a federal income tax, but was not effective because payment of the tax whistleblower reward was voluntary and no rewards were paid out until the rewards became mandatory through the 2006 amendment.

SEC Violation Whistleblower Lawyer, Financial Fraud Whistleblower Bounty Lawyer, SEC Whistleblower Incentive Program Lawyer, SEC Violation Lawyer, and Securities Fraud Whistleblower Lawyer

As a Financial Fraud Whistleblower Lawyer and Securities Fraud Whistleblower Lawyer, Jason S. Coomer commonly works with other powerful financial fraud and securities fraud whistleblower lawyers to handle large Securities Fraud Whistleblower Lawsuits, Securities Fraud Bounty Actions, Commodity Fraud Bounty Claims, and other Financial Fraud Lawsuits.  He also works on Medicare Fraud Whistleblower Lawsuits , Defense Contractor Fraud Whistleblower Lawsuits, Stimulus Fraud Whistleblower Lawsuits, Government Contractor Fraud Whistleblower Lawsuits, and other government fraud whistleblower lawsuits.

Illegal Offshore Account Tax Fraud Lawsuit, Corporate Tax Fraud Whistleblower Reward Lawsuit, IRS Illegal Offshore Account Tax Fraud Whistleblower Reward Lawsuit, Transfer Price Scheme Tax Fraud Lawsuit, & IRS Whistleblower Reward Lawsuit Information
by Illegal Offshore Account Tax Fraud Paid Informant Lawyer and Transfer Payment Tax Fraud Paid Informant Lawyer Jason Coomer

Illegal Offshore Account Tax Fraud Whistleblower Lawyer, Multinational Corporate Tax Fraud Whistleblower Lawyer, and Transfer Payment Tax Fraud Whistleblower Lawyer, Jason S. Coomer, works with corporate tax fraud whistleblowers, IRS tax fraud whistleblowers, and other tax fraud whistleblowers that are stepping up and blowing the whistle on IRS tax fraud, corporate tax fraud, IRS code violations, and other forms of tax fraud.  If you are the original source with special knowledge of tax fraud and are interested in learning more about a tax whistleblower lawsuit, please feel free to contact Illegal Offshore Account Tax Fraud Whistleblower Lawyer and Transfer Payment Corporate Tax Fraud Whistleblower Lawyer Jason Coomer via e-mail message.



_________________________________


Much of the wealth Basu speaks is tied to the Washington and San Franscisco, NYC is from this massive corporate fraud.  it is not real wealth.  Keep in mind that the defense industry budget is one of the largest.  NSA can see all, yet they could not build accountability into these computer systems.  Luckily, WIKILEAKS had a download of defense industry contracting and is now being reviewed by investigative journalists and international justice organizations.


JUST RECOVERING CORPORATE FRAUD WOULD PAY DOWN GOVERNMENT DEBT AT ALL LEVELS AND MAKE ALL PUBLIC TRUSTS AND PENSIONS FLUSH WITH MONEY! DO YOU HEAR YOUR POLS SHOUTING THIS?


 Grand Theft Pentagon, Massive Waste and Fraud

Politics / US Military Nov 21, 2013 - 12:39 PM GMT

By: Stephen_Lendman

Politics

Longstanding Pentagon operations reflect a black hole of unaccountability. Reuters published a two-part report. In July, it discussed the Defense Department’s “payroll quagmire.”

It’s bureaucracy is stifling. It’s “unyielding,” said Reuters. Active duty and retired military personnel are routinely cheated. Pay errors are widespread.

Correcting “or just explaining them can test even the most persistent soldiers.” Weeks or months pass without resolution.

Some personnel are cheated on pay. Others are penalized for overpayments. Their earnings are “drastically cut” unfairly. Precise figures are impossible to calculate.

At issue is “the Defense Department’s jury-rigged network of mostly incompatible computer systems for payroll and accounting, many of them decades old, long obsolete, and unable to communicate with each other,” said Reuters.

“The Defense Finance and Accounting Services (DFAS) still uses a half-century-old computer language that is largely unable to communicate with the equally outmoded personnel management systems employed by each of the military services.”

A December 2012 Government Accountability Office (GAO) report revealed unaccountable accounting. No way exists to assure correct amounts are paid. Errors can’t be tracked.

________________________________

As neo-liberals now pretend that wealth inequity exists and not simply a failure of justice to occur in moving money back to government coffers and individual's pockets, WE THE PEOPLE MUST SHOUT LOUDLY THE TRUTH---THAT JUSTICE WILL BE SERVED!!!



Bill Black: How Elite Economic Hucksters Drive America’s Biggest Fraud Epidemics



Posted on June 6, 2013 by Yves Smith

This article is part of an ongoing AlterNet series, "The Age of Fraud."

What do you get when you throw together economic fraudsters, plutocrats and opportunistic criminals? A financial crisis, that’s what. If you look back over the massive frauds that have swept the country in recent decades, from the savings and loan crisis of the 1980s to the 2007-'08 financial crash, this deadly combination always appears.

A dangerous cycle begins when prominent economists pander to plutocrats and bought politicians, who reward them with top posts, where they promote the perverse economic policies that cause fraud epidemics. Crises develop, and millions of people are ripped off. Those who fight for truth are ignored or ruined. The criminals get wealthier, bolder and more politically powerful, and go on to hatch even more devastating cons.

The three most recent financial crises in U.S. history were driven by a special type of fraud called “control fraud” — cases where the officers who control what look like legitimate entities use them as “weapons” to commit crimes. Each time, Alan Greenspan, former chairman of the Federal Reserve, played a catastrophic role. First, his policies created the fraud-friendly (criminogenic) environment that produces epidemics of control fraud, then he failed to identify those epidemics and incipient crises, and finally, he failed to counter them.

At the heart of Greenspan’s failure lies an ethical void in the brand of economics that has dominated American universities and policy circles for the last several decades, a brand known as “free market fundamentalism” or the “neoclassical school.” (I call it “theoclassical economics” for its quasi-religious belief system.) Mainstream economists who follow this school assert a deeply flawed and controversial concept known as the “efficient market hypothesis,” which holds that financial markets magically regulate themselves (they automatically “self-correct”) and are thus immune to fraud. When an economist starts believing in that kind of fallacy, he is bound to become blind to reality. Let’s take a look at what blinded Greenspan:

    Greenspan knew that markets were “efficient” because the efficient market hypothesis is the foundational pillar underlying modern finance theory.
    Markets can’t be efficient if there is control fraud, so there must not be any.
    Wait, there are control frauds! Tens of thousands of them.
    Then control fraud must not really be harmful, or markets would not be efficient.
    Control fraud, therefore, must not be immoral. As crime boss Emilio Barzini put it in The Godfather, “It’s just business.”

As delusional and immoral as this “logic” chain is, many elite economists believe it. This warped perspective has spawned policies so perverse that they turn the world of finance into the optimal environment for criminals. The upshot is that most of our elite financial leaders and professionals have thrown integrity out the window, and we end up with recurrent, intensifying financial crises, de facto immunity for our most elite criminals, and the rise of crony capitalism. Let’s do a little time travel to see exactly how this plays out.

How to Stoke a Savings and Loan Fiasco

The Lincoln Savings and Loan Association of Irvine, California was at the center of the famous crisis that rocked the financial world in the 1980s. A once prudently run company morphed into a casino when S&L associations became deregulated and started doing risky business with depositors’ money. Businessman, GOP darling, and anti-pornography crusader Charles Keating, ironically nicknamed “Mr. Clean,” took over Lincoln in 1984 and got the casino rolling. (It was a special kind of casino where the games were rigged – and not in favor of newlywed brides who were the subject of sexual extortion in Casablanca.) In a classic case of control fraud, Keating devoted himself to turning the company into a weapon of mass financial destruction and a source of wealth for his family. Keating’s “weapon of choice” for his frauds was accounting.

Keating went on a spree buying land, taking equity positions in real estate projects, and purchasing junk bonds. In 1985, the Federal Home Loan Bank Board (FHLBB), where I was the staffer leading the regulation efforts, grew alarmed at the new activities of savings associations like Lincoln. So we made a rule: S&Ls could not put more than 10 percent of company assets in "direct investments” – an activity that led to very large losses.

Alan Greenspan, chairman of an economic consulting firm at the time, urged us to permit Lincoln Savings to go full steam ahead. His memo supporting Lincoln’s application to make hundreds of millions of dollars in direct investments praised the company’s management (Keating) and claimed that Lincoln Savings “posed no foreseeable risk of loss.”

The FHLBB rejected Lincoln’s request to exceed the rule’s threshold because direct investments were a superb vehicle for accounting fraud – they made it easy to hide losses and to create fictional income. Nevertheless, Lincoln continued to violate the rule and created fictional (backdated) board consents with hundreds of forged signatures to make it appear that the investments were “grandfathered” under the rule. The hundreds of millions of dollars in unlawful direct investments were used for fraudulent purposes by Lincoln Savings’ controlling officers and caused enormous losses – many of them to elderly citizens who were conned into buying the junk bonds of Lincoln Savings’ holding company. The massive losses on Lincoln’s illegal direct investments were a major reason those bonds were worthless.

Hoping to use his political clout to continue the fraud, Keating hired Greenspan to lobby the senators who eventually became the known as the “Keating Five.” I remember well when these senators intervened at Keating’s request to try to prevent me and my colleagues from taking an enforcement action (or conservatorship) that would have saved over a billion dollars. (I took the notes of that meeting, which led to the Senate ethics investigation of the Keating Five.) The cronyism was so thick in Washington that William Weld, then a top Department of Justice official and later the Republican governor of Massachusetts, actually tried to gin up a criminal investigation of the regulators rather than Keating at the request of Lincoln’s lawyers who had just left the DOJ! Eventually, Keating and many of the senior managers of Lincoln Savings were convicted of felonies and Lincoln Savings became the most expensive failure of the S&L debacle.

When you look back on this expensive fiasco, you see that the work of respected professional economists was frequently called upon to support the fraudulent activities. One of the ways Greenspan tried to advance Keating’s effort to have the courts strike down the direct investment rule was to use a study conducted by a less famous economist, George Benston, who showed that S&Ls that violated the direct investment rule earned higher profits than those who didn’t. So he recommended the rule be dropped. Small problem: In less than two years all 33 of the companies Benston studied had failed. Most were accounting control frauds in which executives cooked the books to show fictional profits.

Keating had a talent for obtaining endorsements from prominent economists. He got Daniel Fischel to conduct a study that purported to show that Lincoln Savings was the best S&L in America. Fischel invoked the efficient market hypothesis to opine that our examiners provided no useful information because the markets had already perfectly taken into account any information to which we had access.  In reality, of course, this was nonsense, and Lincoln Savings was the worst S&L in the country.

Economists who pander to plutocrats have a great advantage over scholars in other fields: There is no reputational penalty among your peers for being dead wrong. Benston got an endowed chair at Emory, Fischel was made dean of the Univerisity of Chicago’s Law School, and Greenspan was made Chairman of the Fed. Those who got control fraud right and fought the elite scams and their powerful political patrons – people like Edwin Gray, head of the FHLBB, and Joe Selby, head of supervision in Texas – saw their careers ended.

Consider what that perverse pattern indicates about how badly ethics have fallen in the both economics and government.

How to Create a Regulatory Black Hole

Alan Greenspan was Ayn Rand’s protégé, but he moved radically to the wacky side of Rand on the issue of financial fraud. And that, friends, is pretty wacky. Greenspan pushed the idea that preventing fraud was not a legitimate basis for regulation, and said so in a famous encounter with Commodities Futures Trading Commission (CFTC) Chair Brooksley Born. “I don’t think there is any need for a law against fraud,” Born recalls Greenspan telling her. Greenspan actually believed the market would sort itself out if any fraud occurred. Born knew she had a powerful foe on any regulation.

She was right. Greenspan, with the rabid support of the Rubin wing of the Clinton administration, along with Republican Chairman of the Senate Banking Committee Phil Gramm, crushed Born’s effort to regulate credit default swaps (CDS). The plutocrats and their political allies deliberately created what’s known as a regulatory black hole – a place where elite criminals could commit their crimes under the cover of perpetual night.

Greenspan chose another Fed economist, Patrick Parkinson, to testify on behalf of the bill to create the regulatory black hole for these dangerous financial instruments. Parkinson offered the old line that efficient markets easily excluded fraud — otherwise, they wouldn’t be efficient markets! (Parkinson would later tell the Financial Crisis Inquiry Commission in 2011 that the “whole concept” of a related financial instrument known as an “ABS CDO” had been an “abomination”). Greenspan’s successor richly rewarded Parkinson for being stunningly wrong in his belief: Ben Bernanke appointed Parkinson — who had no experience as a supervisor or examiner — as the Fed’s head of supervision.

Lynn Turner, former chief accountant of the SEC, told me of Greenspan’s infamous question to his group of senior officials who met at the Fed in late 1998 or early 1999 (roughly the same time as Greenspan’s conversation with Born): "Why does it matter if the banks are allowed to fudge their numbers a little bit?" What’s wrong with a “little bit” of fraud?

Conservatives often support the “broken windows” theory of criminal activity, which asserts that you stop serious blue-collar crime by cracking down on minor offenses. Yet mysteriously, they never apply the concept to white-collar financial crimes by elites. The little-bit-of fraud-is-ok concept got made into law in the Commodities Futures Modernization Act of 2000, which created the regulatory black hole for credit default swaps. That black hole was compounded by the Commodity Futures Trading Commission under the leadership of Wendy Gramm, spouse of Senator Phil Gramm.

Enron’s fraudulent leaders were delighted to exploit that black hole, because they were engaged in a massive control fraud. They appointed Wendy Gramm to their board of directors and proceeded to use derivatives to manipulate prices and aid their cartel in driving electricity prices far higher on the Pacific Coast. In a bizarre irony, the massive increase in prices led to the defeat of California Governor Gray Davis (the leading opponent of the cartel) and his replacement by Governor Schwarzenegger – a man who was part of the group that met secretly with Enron’s leadership to try to defeat Davis’s efforts to get the federal regulators to kill the cartel.

How damaging was Greenspan’s dogmatic and delusional defense of elite financial frauds in the case of Enron? If you look closely, you can see that Enron brought together all the critical elements of a financial crisis: big-time accounting control fraud, derivatives, cartels, and the use of off-balance sheet scams to inflate income and hide real losses and leverage. On top of all that, many of the world’s largest banks aided Enron and its extremely creative CFO Andrew Fastow to create frauds. The Fed could have responded by adopting and enforcing mandates to end the criminal practices that were driving the epidemic, but it didn’t. Instead, Greenspan and other Fed economists championed Enron’s leadership and cited the company as proof that regulation was unnecessary to prevent control fraud. They were so extreme that they attacked their own senior supervisors for daring to criticize the banks’ role in aiding and abetting Enron’s activities.

Later, when risky derivatives activities and control frauds at large financial institutions were pushing us toward the catastrophic crash of 2007-2008, the Fed took no meaningful action based on the lessons learned from Enron. Greenspan and the senior leadership of the Fed had learned absolutely nothing, which shows how disabling economic dogma is to regulators – making them worse than simply useless. They become harmful, again attacking their supervisors for criticizing the banks’ fraudulent “liar’s” loans. When Bernanke placed Patrick Parkinson (an economist blind to fraud by elite banksters) in a supervisory role at the Fed, he sealed the fate of millions of Americans whose financial well-being would be sucked right into that regulatory black hole – and removed the ability of the accursed supervisors to criticize the largest banks.

How to Protect Predatory Lenders

Finally, we come to the mortgage meltdown of 2008, when the entire housing industry went into freefall. Central to this crisis is the story of the liar's loan — mortgage-industry slang for a mortgage that a lender gives without checking tax returns, employment history, or anything else that might reliably indicate that the borrower can make the payments.

The Fed, and only the Fed, had authority under the Home Ownership and Equity Protection Act (HOEPA) to ban liar’s loans by all lenders. At a series of hearings mandated by Congress, dozens of witnesses representing home mortgage borrowers and state and local criminal investigators urged the Fed to do this. The testimony included a study that found a 90 percent incidence of fraud in liar’s loans.

What did Greenspan and Bernanke do? Exactly nothing. They consistently refused to act.

Greenspan went so far as to refuse pleas to send Fed examiners into bank holding company affiliates to find the facts and collect data on liar’s loans. Simultaneously, the Fed’s economists dismissed the warnings from progressives about fraudulent liar’s loans as “merely anecdotal.” In 2005, the desperate Fed regulators, blocked by Greenspan from sending in the examiners to get data from the banks, resorted to simply sending a letter to the largest banks requesting information. The Fed supervisor who received the banks’ response to that letter termed the data “very alarming.”

If you suspect that the banks would typically respond to such requests by understating their problem assets significantly, then you have the right instincts to be a financial regulator.

By 2003, loan quality was so bad that it could only be explained as the inevitable product of endemic accounting control fraud and it continued to collapse through 2007 until the bubble burst. By 2006, over two million fraudulent liar’s loans were originated annually. We know that it was overwhelmingly lenders and their agents who put the lies in liar’s loans. Liar’s loans make the perfect “natural experiment” because no governmental entity ever required a lender or a purchaser (and that includes Fannie and Freddie) to make or purchase a liar’s loan. Banks made, and purchased, trillions of dollars in liar’s loans because doing so lined the pockets of their controlling officers.

The Fed’s leadership, dominated by economists devoted to false theory, was enraged when the Fed’s supervisors presented evidence of endemic control fraud by the most elite lenders, particularly in the making of fraudulent liar’s loans. How dare the supervisors criticize our most reputable bank CEOs by showing that they were making hundreds of thousands through scams?

Bernanke finally acted under Congressional pressure on July 14, 2008 to ban liar’s loans. He cited evidence of endemic fraud available since early 2006 – evidence which would have been available way back in 2001 had Greenspan moved to require examiners to study liar’s loans. Even in the face of overwhelming evidence, Bernanke delayed the ban for 18 months — one would not wish to inconvenience a fraudulent lender, after all.

We did not have to suffer this crisis. Economists who were not blinded by neoclassical theory, like George Akerlof (who won the Nobel Prize in 2001) and Christina Romer (adviser to President Obama from 2008-2010), had warned their colleagues about accounting control fraud and liar’s loans, as did criminologists and regulators like me. But Greenspan (and Timothy Geithner) refused to see the obvious truth.

Alan Greenspan had no excuse for assuming fraud out of existence, and his exceptionally immoral position on fraud and regulation proved catastrophic to America and much of the world. We cannot afford the price, measured in many trillions of dollars, over 10 million jobs, and endless suffering, of unethical economists.
0 Comments

February 05th, 2014

2/5/2014

0 Comments

 
I wanted to take today to look at what many people will consider dry and boring.....yet it is what makes you and I citizens.....civics 101 is knowing your Constitution and what your elected officials are legally bound to do in your name.  What I have shown is that none of this is happening at the Federal, state, or local level. 

YOU CANNOT BE A CITIZEN IF YOU DO NOT KNOW THE CONSTITUTION AND DO NOT HOLD YOUR ELECTED OFFICIALS RESPONSIBLE.  STOP BEING A COUCH POTATO.....WAKE UP.....AND GET ENGAGED!!!!!


Regarding Maryland acting as if TPP is already in force:

Now that everyone knows that neo-liberals have as a goal to end national sovereignty and create a system of City States in the US with global corporations running these fiefdoms......Johns Hopkins obviously being the Medici of our region, its good to know all of this can and will be reversed as all of it was built with a suspension of Rule of Law, Equal Protection under Law, and elections of politicians knowing acting against the public's interest....politicians are public servants required to work in the public's interest our they are committing public malfeasance.


Today I would like to give a brief civics lesson on State Constitutions to show how the state of Maryland politics today has absolutely no legal and Constitutional standing as public officials are openly allowing massive fraud and corruption permeate the business and government systems in the state and where all public policy is now written by corporate interests in the guise of quasi-governmental organizations I am sure are not legal in and of themselves.  The public has been locked out of public debate, writing public policy, and even have private corporate-run non-profits running our communities.  NONE OF THIS IS LEGAL------IT IS UNCONSTITUTIONAL -------AND THE PUBLIC ASSETS AND WEALTH BEING LOST THROUGH THE NEGLECT OF RULE OF LAW CAN AND WILL COME BACK.

What this means is that Johns Hopkins does not get to run the Baltimore region.  It does not get to write law, to have politicians hand all that is public into the hands of Johns Hopkins, or to openly allow massive fraud and corruption keep we the people and our government coffers empty.  ALL OF THIS IS ILLEGAL AND CAN BE REVERSED.

So, Johns Hopkins as VEOLA ENVIRONMENT taking control of water and waste......Johns Hopkins as Port of Baltimore taking all control of Inner Harbor commerce.....Johns Hopkins as public health taking control of all health care administration with no public transparency or input ................ Johns Hopkins taking control of all public education and schools with corporatization policy that sends profit directly to Hopkins-related education businesses........and Johns Hopkins as solicitor and installer in chief of national private corporate non-profits taking control of all aspects of public policy with directors in place to support all policy moved by the Hopkins-run Baltimore Development Corporation.


FOLKS......IT LOOKS AS IF IT IS DAUNTING TO TAKE CONTROL BACK FROM WHAT WE CAN A GREAT BLOOD-SUCKING SQUID WITH TENTACLES AROUND EVERYTHING.....BUT IT IS EASY PEASY.

All we have to do is break up the political machines in Baltimore and Maryland that keep these henchmen and women in office allowing all of this consolidation and control to be taken.  ALL OF MARYLAND'S POLS ARE NEO-LIBERALS...THEY ARE NOT DEMOCRATS AND WE SIMPLY NEED TO RUN AND VOTE FOR LABOR AND JUSTICE IN ALL ELECTIONS.....STOP ALLOWING THE DEMOCRATIC PARTY MACHINE IN THE STATE TO CHOOSE YOUR CANDIDATES WHILE IT IS CONTROLLED BY NEO-LIBERALS!

THESE POLITICIANS ARE SWORN TO SERVE THE PUBLIC!


You do not need to be a rocket scientist to know that handing all that is public to consolidated private hands at great loss to the public and a suspension of Rule of Law with no public justice is NOT IN THE PUBLIC INTEREST AND ALL CONTRACTS SIGNED UNDER THESE CIRCUMSTANCES ARE NULL AND VOID.  So, handing the Port of Baltimore and all its tens of billions in profit once coming to the state and now going to HighStar's leading shareholder Johns Hopkins.....NOT LEGAL.
NO CONTRACT DOING THAT IS LEGAL.

Handing all of the region's water and waste to VEOLA ENVIRONMENT with HighStar's leading shareholder Johns Hopkins ........NOT LEGAL.  NO CONTRACT DOING THAT IS LEGAL.

Billions of dollars lost to the State of Maryland and City of Baltimore from massive and systemic fraud and corruption for years and years.....NO STATUTES OF LIMITATION BECAUSE GOVERNMENT SUSPENDED RULE OF LAW AND EQUAL PROTECTION.


Now, if you look at Maryland's


WIKILEAKS
Malfeasance in office, or official misconduct, is the commission of an unlawful act, done in an official capacity, which affects the performance of official duties. Malfeasance in office is often grounds for a for cause removal of an elected official by statute or recall election.

The Maryland Constitution's Requirement to take the Oath of Office

and The Actual Oath of Office Public Servants in Maryland are Required to Take

Article 1, Elective Franchise

SEC. 9. Every person elected, or appointed, to any office of profit or trust, under this Constitution, or under the Laws, made pursuant thereto, shall, before he enters upon the duties of such office, take and subscribe the following oath, or affirmation: 

I, _______________, do swear, (or affirm, as the case may be), that I will support the Constitution of the United States; and that I will be faithful and bear true allegiance to the State of Maryland, and support the Constitution and Laws thereof; and that I will, to the best of my skill and judgment, diligently and faithfully, without partiality or prejudice, execute the office of ________________, according to the Constitution and Laws of this State, (and, if a Governor, Senator, Member of the House of Delegates, or Judge,) that I will not directly or indirectly, receive the profits or any part of the profits of any other office during the term of my acting as ___________ (originally Article I, sec. 6, renumbered by Chapter 681, Acts of 1977, ratified Nov. 7, 1978).




Statutory Law Listing Which Public Servants Must Take This Oath

§ 16-102. State Government

(a)  The oath prescribed by Article I, § 9 of the Maryland Constitution shall be taken and subscribed before the Governor by:

(1)  the Adjutant General;
(2)  the Attorney General;
(3)  the Comptroller;
(4)  the judges of the Court of Appeals and their clerks;
(5)  the judges of the Court of Special Appeals and their clerks;
(6)  the Secretary of State;
(7)  the State Reporter; and
(8)  the Treasurer.

(b)  On or as soon as practicable after the third Monday of January next after the election for Comptroller, the successful candidate for that office shall qualify by taking the oath prescribed by Article I, § 9 of the Maryland Constitution.

(c)  The Secretary of State shall maintain a book that records the oaths taken and subscribed under this section.

And, yes, the Governor must take the same oath:


§ 16-101. State Government

(a)   The Governor and Lieutenant Governor shall take and subscribe the oath prescribed by Article I, § 9 of the Maryland Constitution:

And Many Other Public Servants Must Take This Oath, as well

§ 16-105. State Government

Except for an officer specified in §§ 16-101 through 16-104 of this title, an officer elected or appointed to any office of trust or profit under the Maryland Constitution or a law of this State, including a mayor or other chief magistrate of a municipal corporation, shall take and subscribe the oath required by Article I, § 9 of the Maryland Constitution before a clerk of the circuit court or before a sworn deputy of the clerk.

Appointed Officials Must Take Constitutional Oath

§ 4-908. Governor - Executive and Administrative Departments

Each person appointed under this subtitle, within thirty days after his certificate of appointment has been issued and before entering upon the duties of his office, shall take and subscribe the constitutional oath of office before the clerk of the court in the county or Baltimore City, where the commission may be received. The clerk of the court shall transmit to the Secretary of State a certificate indicating that the person commissioned has taken the constitutional oath of office.



§ 3-202. State Personnel and Pensions


(b)  Before taking office, each appointed member shall take the oath required by Article I, § 9 of the Maryland Constitution.


Treasurer Must Take Another Oath in Addition to This Oath

§ 5-101.1.  State Government

In addition to the oath specified in Article I, § 9 of the Maryland Constitution, the Treasurer shall take an oath to discharge the duties of the Office of Treasurer faithfully, diligently, and honestly.




_____________________________________________



CONSTITUTION OF MARYLAND


DECLARATION OF RIGHTS. We, the People of the State of Maryland, grateful to Almighty God for our civil and religious liberty, and taking into our serious consideration the best means of establishing a good Constitution in this State for the sure foundation and more permanent security thereof, declare:

Article 1. That all Government of right originates from the People, is founded in compact only, and instituted solely for the good of the whole; and they have, at all times, the inalienable right to alter, reform or abolish their Form of Government in such manner as they may deem expedient.

Art. 2. The Constitution of the United States, and the Laws made, or which shall be made, in pursuance thereof, and all Treaties made, or which shall be made, under the authority of the United States, are, and shall be the Supreme Law of the State; and the Judges of this State, and all the People of this State, are, and shall be bound thereby; anything in the Constitution or Law of this State to the contrary notwithstanding.


Art. 4. That the People of this State have the sole and exclusive right of regulating the internal government and police thereof, as a free, sovereign and independent State

Art. 6. That all persons invested with the Legislative or Executive powers of Government are the Trustees of the Public, and, as such, accountable for their conduct: Wherefore, whenever the ends of Government are perverted, and public liberty manifestly endangered, and all other means of redress are ineffectual, the People may, and of right ought, to reform the old, or establish a new Government; the doctrine of non-resistance against arbitrary power and oppression is absurd, slavish and destructive of the good and happiness of mankind.

Art. 7. That the right of the People to participate in the Legislature is the best security of liberty and the foundation of all free Government; for this purpose, elections ought to be free and frequent; and every citizen having the qualifications prescribed by the Constitution, ought to have the right of suffrage (amended by Chapter 357, Acts of 1971, ratified Nov. 7, 1972). Art. 8. That the Legislative, Executive and Judicial powers of Government ought to be forever separate and distinct from each other; and no person exercising the functions of one of said Departments shall assume or discharge the duties of any other.

Art. 9. That no power of suspending Laws or the execution of Laws, unless by, or derived from the Legislature, ought to be exercised, or allowed. Art. 10. That freedom of speech and debate, or proceedings in the Legislature, ought not to be impeached in any Court of Judicature.

Art. 18. That no Law to attaint particular persons of treason or felony, ought to be made in any case, or at any time, hereafter. Art. 19. That every man, for any injury done to him in his person or property, ought to have remedy by the course of the Law of the Land, and ought to have justice and right, freely without sale, fully without any denial, and speedily without delay, according to the Law of the Land.


_____________________________________________

Keep in mind that it is the Governor and the Mayor of Baltimore charged with assembling a legal team to serve the interests of the public.  It is the same who would shout loudly and strongly if a State or City Attorney could not see fraud.  Could you imagine massive fraud and corruption going without justice if O'Malley and Rawlings-Blake used their bully-pulpit to out the AIDING AND ABETTING of crime?  Of course not.  So, these are the two executive offices that are failing to serve and as such are guilty of malfeasance.  If the entire system is corrupt what does a citizenry do?  First, make sure these executive positions are working for you and me.

The next problem for citizens at both the national and state/local level is the suspension of public justice.  Now, Congress and the Maryland Assembly can cut funding to public justice but as we all know RECOVERING CORPORATE FRAUD PAYS FOR ITSELF....NO FUNDING NEEDED.  So, while O'Malley and the Maryland Assembly pretends to fund public justice in the form of paying private lawyers to do PRO-BONO WORK.....which is where all the state's funding goes for public justice......the National Lawyers Guild....with state and local offices are supposed to be protecting WE THE PEOPLE against all of what I speak.



The Maryland Bar Association is so corrupt that if you look at all the fraud that happens in the state....it is the lawyers in the state getting much of the wealth.  Subprime mortgage loan fraud with MERS at the center?  Mostly involving Maryland Bar lawyers.

Now, every single Maryland Bar lawyer is not crooked of course, but to practice law in Maryland you must be a member of the Maryland Bar and as we know.......THERE IS NO PUBLIC JUSTICE COMING FROM EITHER THE NATIONAL LAWYERS GUILD OR THE MARYLAND BAR.
  Also remember, that the judge appointed by O'Malley and the Maryland Assembly nominating committee are choosing from this Maryland Bar population for the positions.  When you have a corporate state enforcing law selectively as if corporations run the state.....then the lawyers and judges will run their offices as such. 

YET, NONE OF THIS IS LEGAL.  LAWYERS CANNOT SIMPLY SUSPEND US CONSTITUTIONAL LAW TO PRETEND A COUP AGAINST THE US CONSTITUTION WITH PACIFIC TRADE DEALS IS ALLOWED AND THEN FOLLOW THOSE TRADE DEAL LAWS....WHICH IS WHAT IS HAPPENING IN MARYLAND BEFORE THE TPP IS EVEN PASSED.


Judges who knowingly facilitate unconstitutional law with rulings that pretend to be subjective when they are completely re-writing law are doing so illegally.  DOES ANYONE BELIEVE THAT THE MERS OPERATION IN MARYLAND'S WASHINGTON SUBURBS WAS A LEGAL METHOD OF TRANSFERRING HOUSE TITLE?  ABSOLUTELY NOBODY BELIEVES THAT and this needs to be appealed to higher court.  This is an example of courts ruling in ways that have nothing to do with existing law just to protect corruption in the state.

WE THE PEOPLE MUST GET ALL THESE SYSTEMS BACK TO WORK AND IT IS NOT HARD.  WE SIMPLY NEED TO SHAKE THE BUGS FROM THE RUG BY RUNNING AND VOTING FOR LABOR AND JUSTICE CANDIDATES AND STOP ALLOWING THE DEMOCRATIC PARTY CONTROLLED BY NEO-LIBERALS CHOOSE OUR CANDIDATES!


I want to end by saying that lawyers within the National Lawyers Guild are not bad people for not taking this on.  It is a huge problem that needs the whole of the communities to provide the support for these lawyers wanting to do good.  I  am a skeptic about the capture of these kinds of private organizations by people with no intent of serving the mission....so no doubt a little of both is happening!

National Lawyers Guild

From Wikipedia

The National Lawyers Guild (NLG) is a public interest association of lawyers, law students, paralegals, jailhouse lawyers, law collective members, and other activist legal workers, in the United States. The group was founded in 1937 as an alternative to the American Bar Association (ABA) in protest of that organization's exclusionary membership practices and conservative political orientation. They were the first US bar association to allow the admission of minorities to their ranks.

The group declares itself to be "dedicated to the need for basic and progressive change in the structure of our political and economic system . . . to the end that human rights shall be regarded as more sacred than property interests."[1]



National Lawyers Guild

409 Washington Ave, Baltimore, Maryland
(410)494-8119
University of Maryland School of Law
This page developed and maintained by National Lawyers Guild, University of Maryland Law Student Chapter


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I speak to people I know are lawyers about running for State/City Attorney to put public justice back on the map in Maryland and I hear time and again.....the problem with corruption and the suspension of public justice is that the Maryland Assembly is full of lawyers.  Indeed, it is.  Lawyers have always been the butt of jokes about trustworthiness and ambulance chasers.  Their job is to serve a client by making the law work in ways that benefit that client.  In Maryland, the Maryland Assembly is working for global corporations and corporate profit so whether is is written law, legal oversight, enforcement.....they will work against you and I to maximize profit for corporate shareholders.  Keep in mind, US corporations have spent these Obama years getting all kinds of free money from the FED and Congress and are buying back their corporate shares as fast as they can.  That means shareholders are increasingly Corporate Board members all part of that cabal of the richest.  So, when I say a neo-liberal is working for shareholders......that increasingly means only a very few people.  We know our pensions are simply used as fodder so when that is the case....you really are not a shareholder.

NOTE THAT ALL THE CANDIDATES FOR STATE AND CITY ATTORNEY ARE ALL PART OF THIS CRONY POLITICAL SYSTEM....WE NEED REAL PUBLIC JUSTICE CANDIDATES IN THIS COMING PRIMARY.....FEBRUARY 25TH IS THE DATE FOR FILING!


Lawyers in the Maryland General Assembly

SENATE OF MARYLAND (12). Senate President Thomas V. Mike Miller, Jr. (D), Calvert & Prince George’s Counties; Senator Brian E. Frosh (D), Montgomery County; Senator Norman R. Stone, Jr. (D), Baltimore County; Senator Allan H. Kittleman (R), Carroll & Howard Counties; Senator Robert J. Garagiola (D), Montgomery County; Senator Lisa A. Gladden (D), Baltimore City; Senator Robert A. Zirkin (D), Baltimore County; Senator Jamie Raskin (D), Montgomery County; Senator Joseph Getty (R), Baltimore & Carroll Counties; Senator Victor Ramirez (D), Prince George’s County; Senator Roger Manno (D), Montgomery County; Senator Bill Ferguson (D), Baltimore City.

HOUSE OF DELEGATES (32). Delegate Kevin Kelly (D), Allegany County; Delegate Jon S. Cardin (D), Baltimore County; Delegate Elizabeth Bobo (D), Howard County; Delegate Frank S. Turner (D), Howard County; Delegate Kathleen M. Dumais (D), Montgomery County; Delegate Brian J. Feldman (D), Montgomery County; Delegate Susan C. Lee (D), Montgomery County; Delegate Luiz R. S. Simmons (D), Montgomery County; Delegate Joseph F. Vallario, Jr. (D), Calvert & Prince George’s Counties; Delegate Mary-Dulany James (D), Cecil & Harford Counties; Delegate Susan K. McComas (R), Harford County; Delegate Michael D. Smigiel, Sr. (R), Upper Eastern Shore; Delegate Jill P. Carter (D), Baltimore City; Delegate Samuel I. (Sandy) Rosenberg (D), Baltimore City; Delegate Curtis S. (Curt) Anderson (D), Baltimore City; Delegate Keith E. Haynes (D), Baltimore City; Delegate Doyle L. Niemann (D), Prince George’s County; Delegate Dana Stein (D), Baltimore County; Delegate Jeff Waldstreicher (D), Montgomery County; Delegate Ben Barnes (D), Anne Arundel & Prince George’s Counties; Delegate Joseline Pena-Melnyk (D), Anne Arundel & Prince George’s Counties; Delegate Aisha N. Braveboy (D), Prince George’s County; Delegate Stephen W. Lafferty (D), Baltimore County; Delegate Kirill Reznik (D), Montgomery County; Delegate C. William (Bill) Frick (D), Montgomery County; Delegate H. Wayne Norman, Jr. (R), Harford County; Delegate Sam Arora (D), Montgomery County; Delegate Geraldine Valentino-Smith (D), Prince George’s County; Delegate C.T. Wilson (D), Charles County; Delegate Cathy Vitale (R), Anne Arundel County; Delegate Keiffer J. Mitchell, Jr. (D), Baltimore City; Delegate Luke Clippinger (D), Baltimore City.

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November 29th, 2013

11/29/2013

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THE MOVEMENT OF REAL ESTATE TO THE FEW AT THE TOP IS IN FULL SWING AND MARYLAND IS FRONT AND CENTER IN THIS MASSIVE FRAUD.  IT IS WHY THERE IS NO TALK IN MARYLAND JUSTICE CIRCLES ABOUT THIS MASSIVE FRAUD THAT TARGETED THE WORKING CLASS AND POOR.  MARYLAND IS STILL THE HIGHEST IN FORECLOSURES AS THE MIDDLE-CLASS ARE NEXT IN LOSING THEIR HOMES FROM THE DAMAGES OF THIS FRAUD!

THE SUBPRIME LOAN FRAUD CONTINUES!!!!!!

We are seeing every level of government working to protect corporate profits and shield corporate fraud and tax evasion as laws are passed making civil rights and liberties threatened.  This is happening in Baltimore City Hall, the Maryland Assembly, and US Congress.  I saw an article that stated democrats in Congress were behind this massive WalMart protest and yet------a supermajority of democrats could not find it in them to raise the minimum wage to $15 an hour or protect worker and retirement benefits.  So, as civil liberties and public justice are suspended.......corporate fraud is in full swing! 

THIS IS O'MALLEY'S MARYLAND---- 

I keep stating the obvious, but we must make it a mantra coming from all sectors of US society-----WE SIMPLY NEED TO RECOVER MASSIVE CORPORATE FRAUD IN THE TENS OF TRILLIONS TO REVERSE WEALTH INEQUITY!  SIMPLY REINSTATING RULE OF LAW WILL DO IT!

This is why I highlight all the avenues of corporate fraud that exist in Maryland and Baltimore.  Below you see that while Maryland passes laws against protesting......the corporations being protested are wanted for all kinds of fraud.  WalMart represents wage theft, tax evasion, and the social costs of poverty wages is huge. 

As you see REIT is a property tax law that adds to the 'you can bet on anything on Wall Street' casino atmosphere.  With all things Wall Street fraud is infused so, as cities and states lose property tax revenue by handing yet another corporate cost over to shareholders......we know that the major shareholders are not paying the taxes required from REIT.  Then you have the bizarre renting your business to yourself scheme showing there is no oversight for open infringement.

We simply need to enforce law..... and all that requires is a Rule of Law GOVERNOR AND MAYOR.  Fraud recovery pays for itself so if an attorneys office is captured.....an executive can do the deed!

With REIT fraud you not only have shareholders failing to pay for profits from this policy, you have corporations like WalMart getting tax breaks on taxes they don't pay......selling themselves as 'renters'.  Or the ultimate fraud in using REIT on subprime mortgage loan fraud recycled en masse from the FED as bundled mortgage buy-backs.



VISIGOTH ALERT!!!!!!!

Did you know that Maryland is tops with the REIT law that allows corporations like WalMart to 'rent to themselves'? WalMart not only steals from its employees but your Maryland neo-liberals allow them to steal from public coffers. So, while the Maryland Assembly claims poverty and cuts education and public services, it hands out so much in corporate subsidy as to make taxes profits!

WE ARE GOING TO HAVE TO MAKE SURE WALMART PAYS ITS RAIN TAX!!!!


Please look at the last article to see how Maryland is tied in to this FED mortgage bond buy-back scheme that simply takes these subprime loans off of banks' accounts and moves them to a newly created business that markets them as REIT investments!  

Remember, the FED is spending trillions of dollars on this buy-back and this Maryland corporation is loading itself with this discounted real estate. It was the Washington suburbs that was home of MERS-----the mortgage title laundering machine for the massive mortgage fraud.

Wal-Mart’s State Tax Evasion Ploy: Paying Rent to Itself

By Jesse Drucker
First published by The Wall St. Journal, February 1, 2007

As the world’s biggest retailer, Wal-Mart Stores Inc. pays billions of dollars a year in rent for its stores. Luckily for Wal-Mart, in about 25 states it has been paying most of that rent to itself — and then deducting that amount from its state taxes.

The strategy is complex, but the bottom line is simple: It has saved Wal-Mart from paying several hundred million dollars in taxes, according to court records and a person familiar with the matter. And Wal-Mart is far from alone.

IT’S A DEAL
The arrangement takes advantage of a tax loophole that the federal government plugged decades ago, but which many states have been slower to catch. Here’s how it works: One Wal-Mart subsidiary pays the rent to a real-estate investment trust, or REIT, which is entitled to a tax break if it pays its profits out in dividends. The REIT is 99%-owned by another Wal-Mart subsidiary, which receives the REIT’s dividends tax-free. And Wal-Mart gets to deduct the rent from state taxes as a business expense, even though the money has stayed within the company.

Partly thanks to sophisticated financial strategies like these, states’ tax collections from companies have been plummeting. On average, Wal-Mart has paid only about half of the statutory state tax rates for the past decade, according to Standard & Poor’s Compustat, which collects data from SEC filings. The so-called “captive REIT” strategy alone cut Wal-Mart’s state taxes by about 20% over one four-year period. Now several state regulators are trying to crack down on the strategy, used largely by retailers and banks, and some other states have changed their laws to try to end the practice. Yesterday, New York Gov. Eliot Spitzer included elimination of the loophole as part of his proposed budget, a fix he said would bring the state $83 million a year.

North Carolina tax authorities are challenging Wal-Mart, saying its REIT strategy was intended to “distort [the company's] true net income,” according to its filings in the case in Superior Court in Raleigh, N.C. The state calls captive REITs a “high priority corporate tax sheltering issue” and in 2005 ordered Wal-Mart to pay $33 million for back taxes, interest and penalties stemming from the REIT. The company paid it and last year sued the state for a refund.

The structure Wal-Mart is using features some unusual elements. Because REITs must have at least 100 shareholders to gain tax benefits, roughly 100 Wal-Mart executives were enlisted to own a combined total of around 1% of the REIT’s shares, without any voting rights. H. Lee Scott Jr., now Wal-Mart’s CEO, was listed as the REIT’s “managing trustee” from 1996 to 2004.

A single Wal-Mart real-estate official, Tony Fuller, represented the company both as tenant and landlord in its lease with itself. Ernst & Young LLP, the accounting firm that sold the strategy to Wal-Mart, also is the company’s outside auditor. In its internal sales training materials, the accounting firm explicitly labeled the strategy as a method to reduce taxes — a red flag to tax authorities, who often demand that tax shelters have other business purposes.

Wal-Mart attorneys say in court filings that the strategy is perfectly legal and that North Carolina is exceeding its authority. A spokesman for the Bentonville, Ark., company, John Simley, said Wal-Mart “is comfortable with its current structure and is in compliance with federal and state tax laws.” He added that the REIT structure was adopted to “more effectively and efficiently manage the company’s real-estate portfolio, including the impact on the company’s overall state tax planning.”

Regulators in at least a half-dozen states are going after companies that have trimmed their taxes through similar arrangements, including Regions Financial Corp.’s AmSouth Bancorp. unit; AutoZone Inc. of Memphis, Tenn.; and two units of Bank of America Corp. In a Massachusetts case against Bank of America unit Fleet Funding Inc., authorities call Fleet’s REIT arrangement a “sham” in court filings. They note that Fleet increased the salaries of the roughly 100 employees whom it made REIT shareholders to compensate them for personal income taxes stemming from ownership. The Multistate Tax Commission, an association of state revenue authorities, says it has started examining the use of captive REITs to avoid taxes, alerting states to the issue and proposing legislative fixes to close the loophole.

States collected more than $44 billion last year in corporate income taxes, out of $607 billion in total state tax receipts, according to the Nelson A. Rockefeller Institute of Government, a nonpartisan think tank associated with the State University of New York. But the average effective corporate state and local tax rate has dropped from 6.7% during the 1980s to about 5% during the first half of this decade, according to a recent report by the Congressional Research Service. This is in part because of the proliferation of state and local tax breaks, as well as tax shelters, according to several academic and government studies.

Some corporate state tax planners say arrangements like these are merely smart business, and that the loopholes exploited by companies should be fixed by state legislatures rather than litigated by state lawyers. Critics of the shelters complain they let companies use public services provided by local governments — such as police and fire protection or new highways — without having to shoulder their fair share of the costs. Meanwhile, the portion of state taxes borne by individuals is steadily rising.

Congress created REITs in 1960 as a way to allow smaller investors to put money in a wide portfolio of commercial real estate, spreading their risk. Congress also gave them a tax benefit: REITs aren’t subject to corporate income tax on the profits they pay to shareholders as long as they pay out at least 90% of the profits. The shareholders still usually get federally taxed on the dividends, which still count as income for them.

After a boom in REITs in the early 1990s, big accounting firms including Ernst & Young and KPMG LLP figured out that on the state level, they could pair the tax break on REIT dividends with a separate tax rule that allows companies to receive dividends tax-free from their subsidiaries. With the REIT as a subsidiary itself, two rules aimed at avoiding double taxation could be combined to effectively avoid any taxation at all.

The strategy worked especially well if the REIT was owned by a company incorporated, and claiming to do all its business, in a state such as Delaware or Nevada that often wouldn’t tax the corporate income anyway. That created an extra hurdle for other states to challenge the practice if they caught onto it.

Ernst & Young early on targeted the banking industry as a possible beneficiary of the captive REIT strategy. Like retailers, banks have branches in many states and often are liable for lots of state-level corporate tax. Ernst & Young targeted at least 30 banks, some of them its audit clients. The SEC generally permits that dual role as long as the firm’s fee isn’t contingent on the tax savings.

According to documents from a 1995 internal Ernst & Young sales training meeting reviewed by The Wall Street Journal, the accounting firm suggested banks put some of their income-producing assets, such as a portfolio of mortgages, into a REIT subsidiary, then use the double-tax break to “shelter” the income from state taxes. The REIT would issue a tiny number of non-voting shares to bank “officers and directors” to meet the 100-shareholder rule that REIT law requires.

U.S. banks “pay millions of dollars each year in state and local taxes,” read the Ernst & Young presentation to its sales force. “The FSI State Tax Financial Product we have developed can significantly reduce or eliminate this heavy tax obligation…” One section of the Ernst & Young sales package featured hypothetical questions from clients about the REIT shelter, and the proposed answers. To pass legal muster, many corporate tax shelters purport to have additional business purposes behind merely saving taxes. Ernst & Young, however, was blunt about the reason for its proposed strategy:

“Q: What’s the business purpose?
“A: Reduction in state and local taxes.

“Q: What if the press gets wind of this and portrays us as a ‘tax cheat’?
“A: That’s a possibility….If you are concerned about possible negative publicity, you can counter it by reinvesting the savings in the community.”

An Ernst & Young spokesman declined to comment on its REIT work, saying the firm was “prohibited from commenting on client matters.” The spokesman said he could not verify the authenticity of the internal sales training documents based on quotes provided by the Journal. However, he said the “limited language communicated in the internal memo does not reflect the quality and nature of the advice we provide to our clients.”

State authorities have had mixed records so far in pursuing back taxes and penalties in captive-REIT cases. AutoZone, the big auto-parts chain, won the right to deduct the dividends from its taxes in Kentucky but lost a preliminary round in Louisiana . The Hawaii Department of Taxation won a case involving a REIT used by Central Pacific Financial Corp., a bank holding company. AmSouth is in litigation with Alabama over tax benefits from its REIT.

Fleet Funding’s REIT, on which the company was advised by KPMG, has led Massachusetts to seek more than $42 million in back taxes, interest and penalties. BankBoston Corp. is in similar litigation with Massachusetts . Both banks have been acquired by Bank of America, which declined to comment on the litigation.

Fleet’s attorneys have said in court papers that its REITs were legitimate, and the fact that they were partly motivated by tax considerations does not legally undermine their valid business purpose — to raise capital, they say. A KPMG spokeswoman declined to comment on the Fleet case, but said it had stopped any involvement with “prepackaged tax products” before a 2005 agreement it made with the U.S. Justice Department over improper tax strategies that also led to the indictment of 17 former KPMG officials.

It’s unknown how many disputes have been raised over the strategy used by Wal-Mart and others, because such tax disputes are generally not disclosed unless lawsuits are publicly filed or the company reveals them in SEC filings.

Wal-Mart adopted its captive-REIT structure just as it was unwinding a previous strategy to reduce taxes that states had begun to challenge. For the first half of the 1990s, the retailer used a so-called intangible holdings company structure also used by many other corporations. Wal-Mart transferred its trademarks to a subsidiary called WMR Inc. in Delaware, which does not tax many forms of corporate income. Then it paid the subsidiary for the use of the brands. That allowed Wal-Mart to deduct those payments from its local income taxes in some states, while WMR’s income wasn’t taxed by Delaware.

Several states won challenges to the strategy, used by various retailers. Wal-Mart settled a dispute over its use of WMR in Louisiana — the details of the settlement are sealed — and lost on the main points of a case in New Mexico. Wal-Mart merged with WMR in February of 1997 and its use as a state tax avoidance vehicle was apparently discontinued, according to New Mexico court records.

In the meantime, Wal-Mart set up a new vehicle to control its state tax bill: captive REITs. In the summer and fall of 1996, Delaware corporate records show, Wal-Mart created a new hierarchy of subsidiaries: a REIT called the Wal-Mart Real Estate Business Trust; a Delaware-based parent company for the REIT, called the Wal-Mart Property Co.; and Wal-Mart Stores East Inc., parent of the Delaware firm. Wal-Mart Property owned 99% of the REIT’s shares, and 100% of the voting shares, according to Wal-Mart court filings in North Carolina and West Virginia. The company also set up a similar arrangement for its Sam’s Club stores.

To meet the 100-shareholder threshold required for REITs, Wal-Mart distributed a minimal amount of nonvoting stock, to approximately 114 Wal-Mart employees, according to a person familiar with the arrangement. The dividend payouts were nominal. The structure involved Wal-Mart’s top executive tier. The shareholders were generally executive vice presidents and above. David Glass, then Wal-Mart’s president and CEO, was listed as president of Wal-Mart Stores East on the lease agreement, and Paul Carter, then a Wal-Mart executive vice president, was listed as the president of the REIT.

Wal-Mart began transferring to the REIT ownership of the properties — the land and buildings — for hundreds of its stores in 27 states, real-estate records show. Then Wal-Mart Stores East signed a 10-year lease agreement with its REIT that took effect on Jan. 31, 1997, agreeing to pay a fixed percentage of the stores’”gross sales” as rent, according to a copy of the arrangement filed in the North Carolina case. Mr. Fuller, the Wal-Mart real-estate official, is listed as the contact for both the tenant and the landlord. The original lease was due to be renewed this week.

Wal-Mart could deduct from its state-taxable income the rent paid by Wal-Mart Stores East to the REIT. The REIT paid the majority of its rental earnings to its 99% owner, Wal-Mart Property Co., in the form of dividends. That company’s base in Delaware gave it another way to avoid liability for state taxes, since some states do require that dividends a REIT pays to its corporate owner be taxed, as the federal government does.

The Delaware subsidiary then paid the money back to Wal-Mart Stores East, the same subsidiary that made the payments to the REIT to begin with. Those payments to Wal-Mart Stores East weren’t taxed either, because dividends paid to a corporation by a subsidiary normally aren’t counted as taxable income for the parent company.

The result of the circuitous transaction: Wal-Mart could effectively turn rental payments to itself into state level tax-deductions in most of the states where the payments have been made. Under typical circumstances, rent paid to a third-party landlord also would reduce taxable income. But that would ordinarily be cash out the door, like most other tax-deductible expenses. Here, the majority of the tax-deductible rental payments came straight back to Wal-Mart.

The national tax savings have been significant. Over a four-year period, from 1998 to 2001, Wal-Mart and Sam’s Club paid company-controlled REITs a total of $7.27 billion that eventually came back to Wal-Mart in states across the country, according to a North Carolina Department of Revenue auditor’s report filed in court by Wal-Mart. Based on an average state corporate income tax rate of 6.5%, three accounting experts consulted by The Wall Street Journal estimated the REIT payments led to a state tax savings for Wal-Mart of roughly $350 million over just those four years. SEC filings show the company paid $1.18 billion in state taxes during that period. The loss of federal deductions that bigger state tax payments would have triggered brought the company’s effective tax savings overall down to about $230 million. Wal-Mart declined to comment on the figures.

It is not clear how much Wal-Mart has paid to its own REITs in the most recent five years. The yearly rental payments — on which the tax savings are based — are pegged to the “gross sales” of the stores, according to the lease agreement.

Underscoring that the rental payments were cashless Wal-Mart accounting moves, an affidavit filed in North Carolina by the company’s former controller, James A. Walker Jr., states that the payments were made by simply debiting the account of one subsidiary and then crediting the account of the other. “Wal-Mart Stores, Inc. served, in effect, as a bank for” both sides, the affidavit stated.

In 2005, after an audit, the North Carolina Department of Revenue issued a notice to Wal-Mart challenging the REIT structure. The state is site of about 140 of the company’s roughly 3,900 U.S. stores, including Sam’s Clubs. Wal-Mart paid the $33 million the state sought, and in March 2006 sued for a refund.

The company argues that the state does not have the authority to essentially combine the results of the subsidiary that did business in North Carolina with those of the Delaware-based unit and the REIT. The Delaware-based subsidiary, the company says, did no business in North Carolina and therefore was not taxable there. The company says in court filings that the REIT was qualified under federal law, that all the deductions were properly taken and that its North Carolina tax returns reflect its “true income.”


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REITs: Real estate investment scams may involve new development projects or buying, or beleaguered properties. Non-traded real estate investment trusts that are owned by banks or waiting for foreclosure or short-sale can be problematic for customers, as can investment funds purportedly tied to interest in real property that has no equity and is very leveraged.
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As you see here,  the Gary Kain was manager for Freddie and Fannie during the time of the movement of subprime loans into the hands of government insured agencies....$.800 billion in subprime loans were dumped on these government/taxpayer agencies during this man's term  as Obama has refused to protect taxpayers from this massive fraudulent dump by demanding these loans just be written off.  So, the man who knowingly  imploded Freddie and Fannie now works with a corporation getting the bulk of mortgage buy-backs from the FED at discounted prices and 0% mortgage interest rates and using REIT to make record profits.  These are foreclosed homes landing with an investment firm in bulk numbers and they are avoiding paying property taxes with REIT.  The same person creating the fraud is now heading a second round of profit-making from the fraud and it is based in Maryland.

MERS WAS MARYLAND BASED AND NOW THIS AMERICAN CAPITAL IS THE FRONT FOR MOVING MILLIONS OF HOMES OFF THE BANKS' BOOKS BY THE FED AND INTO THE HANDS OF CONNECTED INVESTORS.

SEE WHY OBAMA WENT TO MARYLAND POLS IN FILLING FEDERAL POSTS?  WE ARE FRAUD UNLIMITED!!!


We simply need to reinstate Rule of Law and we can reverse all this fraud and return wealth to the people!
Maryland and New York are key to this fraud because both states are the locations of the bulk of the fraud.


Bloomberg News MAR 28, 2013 10:18am ET

REITs Trigger Fed Warning as Gary Kain Tops $100 Billion

Gary Kain spent 20 years at Freddie Mac managing as much as $800 billion of bonds before the U.S. took over the company. Since 2009, he’s used his knowledge of the home-loan market to help turn American Capital Agency Corp. into the fastest growing mortgage debt investor.


American Capital’s assets grew to $100.5 billion at the end of last year from less than $5 billion three years earlier, making the Bethesda, Md.-based real estate investment trust the largest after Annaly Capital Management Inc., in an industry that’s drawing attention from investors and the Federal Reserve for its double-digit yields and rapid expansion.


REITs bought more than $100 billion of government-backed mortgage securities in 2012, the most since at least the credit crisis, and will purchase another $60 billion in 2013, JPMorgan Chase & Co. estimated this month. Fed Gov. Jeremy Stein pointed to the expansion of mortgage REITs, which have amassed almost $400 billion of the debt, during a speech last month on risky behavior in credit markets influenced by the central bank holding borrowing costs near zero for a fifth year and investors searching for high-yielding assets.

“Agency mortgage REITs deserve attention in particular because they have exploded in size,” said John Gilbert, chief investment officer at General Re-New England Asset Management, a unit of Warren Buffett’s Berkshire Hathaway Inc. that oversees $64 billion. “We’ve been dealing with the unintended consequences of monetary policy for a long time. We have to be on the lookout for the downside.”

American Capital, along with growing the fastest, has also been one of the most successful of the mortgage REITs. Since Kain, 48, was named chief investment officer, it’s returned 258%, including reinvested dividends, almost double the returns of a 34-company index.

The firm was started by private-equity financier Malon Wilkus and went public in February 2008, just as the Fed was responding to the biggest financial crisis since the 1930s.

Wilkus, chief executive officer of investment firm American Capital Ltd., hired Kain to help “navigate the evolving mortgage landscape,” he said in a statement at the time. The original management team had left in January 2009, about four months after the government seized Fannie Mae and Freddie Mac, when loan losses pushed the two firms to the brink of bankruptcy.

Kain, now president of the REIT, joined the firm when it held a little more than $2 billion and the Fed was preparing to start buying government bonds to resuscitate the housing market.

He took advantage of the central bank’s buying and used cheap borrowing costs to increase leverage for the REIT’s purchases of government-backed mortgage securities. The bets paid off, with the company returning 53 percent in 2009 including reinvested dividends.

Kain oversaw an average of about $700 billion during his last few years with the company, primarily government-backed mortgages. Since these bonds don’t take credit risks, his main responsibility was hedging for changes in interest rates. The portfolio also included non-agency mortgage-backed securities, including the subprime debt that helped fuel the housing boom and contributed to the company’s losses that led to the government rescue.

“A major emphasis of the subprime AAA portfolio was around hitting affordable housing goals so it was not as pure of an investment mindset,” Kain said.

When the government seized the company and sought to shrink the portfolio and the company’s imprint on housing finance, Kain said he “knew life at Freddie Mac was going to be very different” and started considering other options.

“His background was a perfect fit for American Capital,” said Jason Arnold, an analyst at RBC Capital Markets in San Francisco. “There’s been a lot of problems at Fannie and Freddie so it’s not surprising that someone would want to go out and do something else rather than be under the umbrella of the U.S. government.”

REITs have been among the biggest winners from government policies to resuscitate housing and stimulate the economy. The Fed has made it easier and cheaper for the companies to borrow through the so-called repo market. The central bank’s buying has also pushed up the value of mortgage bonds that REITs invest in.

Dividend yields that average about 12% have also lured investors seeking alternatives to corporate and government debt paying shrinking coupons. American Capital is yielding more than 15%.

Kain has applied knowledge from his experience at Freddie Mac to buy mortgage bonds that have a lower risk of refinancing, helping the firm return 17% this year. Since the debt typically trades above 100 cents on the dollar, homeowners taking out new loans when interest rates fall can erase the value of the securities.

The resurgence of REITs has attracted the attention of Fed officials and regulators, including the Securities and Exchange Commission, which has said it’s examining whether the companies should be allowed to continue borrowing without restrictions.

The concerns are overstated as REITs are limited by the quality of assets or lender confidence in how they manage their businesses, according to Kain.

“Fannie Mae and Freddie Mac were not regulated by the markets,” Kain said. “That was a key complaint which turned out to be very fair. There weren’t any market forces that were controlling the government sponsored enterprises. They could borrow money irrespective of their risk posture because of the implied guarantee” of the government, he said.

Kain’s team at American Capital, which includes longtime Freddie Mac colleagues Peter Federico and Christopher Kuehl, managed more in assets as of Dec. 31 than regional banks such as Keycorp and M&T Bank Corp. Kain is also chief investment officer of American Capital Mortgage Investment Corp., a separate REIT with $7.7 billion in assets that buys securities not backed by the government. The two companies have a staff of about 50 people, according to Wilkus.


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As with the s corporation, REIT is designed to allow corporations to shed tax responsibility ------
s corporations shed tax responsibility on profits and REIT sheds tax responsibility on property taxes.  REIT not only is used to avoid tax payment, it is used to get tax breaks under the guise of rental property.  In Baltimore/Maryland, billions of dollars have been lost to REIT in a few decades.

What can we do if there is a law allowing this you say????!!!!

What happens with REIT just as with s corporations is that the shareholders get the money saved from these laws and


THEY ARE REQUIRED TO PAY THE TAXES.  WELL, AS WITH ALL THAT IS FRAUD AND CORRUPTION----MOST SHAREHOLDERS DO NOT.  ALSO, AS THE ARTICLE ABOVE SHOWS ABUSES OF THIS REIT LAW ARE SO PERVASIVE THAT BRINGING BACK THE REVENUE LOST JUST FROM REIT WOULD BE IN THE BILLIONS OF DOLLARS FOR MARYLAND!



United States History From 2008 to 2011, REITs faced challenges from both a slowing United States economy and the late-2000s financial crisis, which depressed share values by 40 to 70 percent in some cases.[3]

Legislation Under U.S. Federal income tax law, a REIT /ˈriːt/ is "any corporation, trust or association that acts as an investment agent specializing in real estate and real estate mortgages" under Internal Revenue Code section 856.[1] The rules for federal income taxation of REITs are found primarily in Part II (sections 856 through 859) of Subchapter M of Chapter 1 of the Internal Revenue Code. Because a REIT is entitled to deduct dividends paid to its owners (commonly referred to as shareholders), a REIT may avoid incurring all or part of its liabilities for U.S. federal income tax. To qualify as a REIT, an organization makes an "election" to do so by filing a Form 1120-REIT with the Internal Revenue Service, and by meeting certain other requirements. The purpose of this designation is to reduce or eliminate corporate tax, thus avoiding double taxation of owner income. In return, REITs are required to distribute at least 90% of their taxable income into the hands of investors. A REIT is a company that owns, and in most cases, operates income-producing real estate. REITs own many types of commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels and even timberlands. Some REITs also engage in financing real estate. The REIT structure was designed to provide a real estate investment structure similar to the structure mutual funds provide for investment in stocks.[2]

Structure See also: List of public REITs in the United States In the United States, a REIT is a company that owns, and in most cases operates, income-producing real estate. Some REITs finance real estate. To be a REIT, a company must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends.[44]

To qualify as a REIT under U.S. tax rules, a company must:

  • Be structured as a corporation, trust, or association[45]
  • Be managed by a board of directors or trustees[46]
  • Have transferable shares or transferable certificates of interest[47]
  • Otherwise be taxable as a domestic corporation[48]
  • Not be a financial institution or an insurance company[49]
  • Be jointly owned by 100 persons or more[50]
  • Have 95 percent of its income derived from dividends, interest, and property income[51]
  • Pay dividends of at least 90% of the REIT's taxable income
  • Have no more than 50% of the shares held by five or fewer individuals during the last half of each taxable year (5/50 rule)
  • Have at least 75% of its total assets invested in real estate
  • Derive at least 75% of its gross income from rents or mortgage interest
  • Have no more than 25% of its assets invested in taxable REIT subsidiaries.
Because of their access to corporate-level debt and equity that typical real estate owners cannot access, REITs have a favorable capital structure. They are able to use this capital to finance tenant improvement costs and leasing commissions that less capitalized owners cannot afford.
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In Maryland and Baltimore our pols love making government offices rented from private owners.  That is yet another way to send public money to private hands that no one would think to be in the public interest.

  LOOK!!!!!!!  THERE'S A REIT FOR THAT!!!


CWH also owns 21.1% of the common shares of Government Properties Income Trust (GOV), a former subsidiary which owns properties that are majority leased to government tenants.

O'Malley and Rawlings-Blake has tied Maryland citizens to so many government office rentals that our public sector is just as much the renter society as the rest of us.  Make no mistake, these 1% do not want the public owning any real estate!
Think how much tax revenue is lost from this private building with the government as tenant and REIT!



Government Properties REIT: Do You Want To Be The U.S.'s Landlord?

Oct 13 2012, 07:22  |  about: GOV, includes: CWH

Combing through REITWatch 08-2012, my eye was caught by Government Properties Income Trust (GOV), a fairly recent property REIT with seemingly interesting financials, as shown in the table below:

(click to enlarge)

A property REIT's Price to FFO (funds from operations) ratio is the proper equivalent of P/E for this type of company.

The usual Price to Earnings ratio is not really applicable to REITs because:

  1. Net earnings are "artificially" lowered by significant depreciation and amortization linked to the sizable real estate assets owned by the REIT.
  2. Net earnings are increased by nonrecurring gains on sales from properties. In the case of an actively managed REIT (frequently buying and selling real estate), net earnings will be considerably affected.
By removing depreciation and gain on sales on properties from earnings, FFO (a non-GAAP measure) facilitates comparisons between REITs.

An intuitive way to look at it is to consider that FFOs are the collected rents, net of all charges whether from operations or financing. Basically, it's what is left in your pocket as a landlord/shareholder.

When a REIT shows a low Price to FFO, one would expect that to be a good sign (like a low P/E), but could also potentially indicate some difficulties in running operations, or too much debt, or some other significant negative. Looking at what seems like a no-brainer, our job as rational investors is to check that there are no red flags hidden somewhere.


The Obama REIT: A Secure 7% Yield

Jan 14 2013, 15:24  |  about: GOV   Seeking Alpha

Once again I'll come back to a high yield security for income seekers. Of course one of the risks in buying yield these days is related to the threat of higher bond yields that could negatively affect income stocks. What if there were a security that paid relatively secure dividends and benefited from all of the federal government expenditures that are expected to come with another four years of an Obama administration? Clearly I wouldn't be writing this article unless such a security did exist.

Government Properties Income Trust (GOV) is a REIT that owns $1.7 billion of office properties in 31 states (and DC) with 10 million square feet of rentable space. The majority of its space is rented to various governmental entities. Of its 82 properties, 60 are primarily leased to the federal government, 18 are primarily leased to state governments and one is leased to the United Nations. Whatever you may believe about our government finances, it is incomprehensible that governmental entities will simply go out of business (as could happen with a private enterprise), making these leases of a much higher quality. In fact, only about 7% of total revenue comes from private firms. GOV is well diversified geographically and despite receiving so much of its revenue from the federal government, just 10% of revenue comes from DC.



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Below you see the next phase of the massive mortgage fraud.  Remember, we have yet to have justice from the massive subprime mortgage fraud and the damages it did to the economy with the collapse of 2008.  Trillions of dollars lost from the fraud and tens of trillions of dollars in damages to individuals and government coffers yet to come back!  People who lost their homes in the actual fraud and those families losing their homes from the unemployment caused by the fraud all will be getting homes back as soon as Rule of Law is reinstated.

Neo-liberals had planned the movement of real estate ownership from the middle/lower class to a few at the top with this massive fraud.  Remember, this subprime mortgage scam started in the Clinton Administration as Robert Rubin and CitiBank started this financial scheme.  So, targeted fraud on the lower-class and the long economic downturn from the tens of trillions of dollars sucked from the US economy from fraud are the culprits of lost home ownership.  Now the Obama Administration has suspended Rule of Law and refuses to reverse the fraud and loss of homes.

In cities like Baltimore the movement of real estate is so crony and corrupt that you feel as though you were in Kabal, Afghanistan watching Visigoths looting the landscape.  City real estate agents have been sidelined as the city buys property and hands it to developers of choice.  Subprime mortgage fraud settlements so far simply help make people renters and fail to return those defrauded to home ownership. As this article shows the intent is to make most US citizens prey for these investment firms that created the fraud and now have been handed all the foreclosed homes.


SIMPLE REINSTATEMENT OF RULE OF LAW WILL BRING THESE HOMES BACK TO THOSE DEFRAUDED.  THE WEALTH PEOPLE LOST AS THE RESULT OF THE FRAUD WILL COME BACK AND PEOPLE CAN RETURN TO OWNING HOMES!


Skeptics Criticize Single-Family REITs


Published on: Tuesday, August 28, 2012 Written by: Rosa Eckstein Schechter inShare      

Single-family real estate investment trusts (REITs) are springing up in response to the rise in availability of distressed properties. The new funds focus on buying up blocks of foreclosed single-family homes to rehab and then use for rentals and sales are increasing. Critics argue it will reshape society by turning the majority of Americans into tenants and that there will be no regulations preventing abuse of the new system, which may include passing off maintenance and other responsibilities to the new tenants. It’s further believed that many purchasers have no rental management experience and are not concerned with getting any before they start renting. For more on this continue reading the following article from JDSupra.

As more and more investment chatter centers around the possibility of investing in the huge volume of single family homes that have, or will be, foreclosed upon in the United States, many are seeing an opportunity in Single Family REITs.  (Read our earlier posts about this blossoming investment vehicle here.)

However, there are those that are very concerned about what Rental REITs (both apartments and SFDs) will mean in the long run to the American economy - and the U.S. Citizen.  Here are some of their concerns and criticisms (with a hat tip to Yves Smith at Naked Capitalism for collecting most of these in his column and its commentary):

1.  The expected popularity of this investment vehicle, together with the decline in homeownership in this country, may mean that many Americans will be tenants to private equity landlords: it will change the very essence of our society.  These private equity landlords won't be like beloved Stanley Roper in the old Three's Company TV Series - nearby, quick to respond to complaints, always involved in maintainance.  Nope.  The worry is that Private Equity Landlords will be anonymous, unapproachable and possibly mysterious owners of properties without any regard for their tenants' concerns or the property's needs.

2.  This is a new concept, and even if Rental REITs have some interest in being good landlords, they've got no pattern to follow, no example in the past to use in figuring out how to be the Corporate Stanley Roper.  

3.  Gretchen Morgenson of the New York Times points to skullduggery happening in New York City with apartment REITs:  including suspicions of sending fake notices and fraudulent notices of non-payment (when payments have been made) to replace low paying tenants.

4.  Some are predicting that these new Private Equity Landlords are going to transfer the responsibility of maintaining the property to the tenant as part of the lease terms.  

5.  If the Rental REITs fails to meet its own obligations, like Tishman Speyer did a couple of years ago on a NY apartment REIT, a large number of tenants are suddenly in limbo - and may not even be aware that their Private Equity Landlord has defaulted on its own agreements.  

As more discussion occurs on this new investment vehicle, especially its latest version - the Single Family REIT, these and other worries will be a part of the conversation.  And they should be.  However, here's the big elephant in the room: there are unprecedented numbers of homes sitting on bank balance sheets right now because of all the foreclosures that have happened in this country.  We know the impact of this very well here in Florida.

Something needs to be done to move forward, and we have no pattern here for how to fix this mess.  It's something new.  

So, new answers are being developed like Single Family REITs, not in a sinister way to thwart the American Dream, but in an optimistic way to get the economy moving again.  Those homes have to get off the bank's shoulders so banks can get back to the industry of finance and not housing.


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Keep in mind that while Federal coffers are going dry from lack of revenue coming from corporations and massive corporate fraud.....and public services and assets are being used to pay for it......the stock market is making huge money from the ability of corporations not to pay property taxes!

Can you imagine how many people would invest in these stocks if shareholders actually paid the taxes required?

SIMPLY AUDITING SHAREHOLDER TAX PAYMENTS WILL BRING TRILLIONS OF DOLLARS BACK TO GOVERNMENT COFFERS AND END THIS RALLY AT THE EXPENSE OF THE PUBLIC!



REITs Set Record, Raise $51.3 Billion in 2011 January 20, 2012

The total returns of listed U.S. equity real estate investment trusts were approximately four times those of the broader stock market in 2011, according to the National Association of Real Estate Investment Trusts. REITs are securities that sell like stocks and invest in real estate directly through properties or mortgages.

NAREIT said the total return of the FTSE (Financial Times Stock Exchange) NAREIT All Equity REITs Index was up 8.28 percent for the year, and the FTSE NAREIT All REITs Index, which includes both equity and mortgage REITs, was up 7.28 percent, compared with a 2.11 percent gain for the S&P 500.

The more than 8 percent gain for equity REITs in 2011 came on top of a 27.95 percent gain in 2010 and a 27.99 percent increase in 2009—years in which the S&P 500 gained 15.06 percent and 26.46 percent, respectively. Equity REITs outperformed the S&P 500 for the past 1-, 3-, 10-, 15-, 20-, 25-, 30-, and 35-year periods, according to NAREIT.

Dividends Boost Performance

Much of REITs’ performance advantage has come from the stocks’ dividend payouts, since almost all of a REIT’s taxable income is paid to shareholders as dividends. The FTSE NAREIT All Equity REITs Index’s 8.28 percent total return in 2011 included a share price return of 4.32 percent, and the FTSE NAREIT All REITs Index’s 7.28 percent total return included a share-price return of 2.37 percent.

The dividend yield of the FTSE NAREIT All Equity REITs Index at December 30, 2011, was 3.82 percent, and the dividend yield of the FTSE NAREIT All REITs Index was 4.83 percent, compared to 2.22 percent for the S&P 500.

“The strong, continuing income stream from REITs is an important component of the appeal of REIT shares for investors,” said NAREIT President and CEO Steven A. Wechsler. “REIT dividends boost an investment portfolio’s performance in good times and help insulate it from downside shocks in turbulent market conditions,” he said.

REITs Set Capital Record

REITs raised a record amount of capital in the public markets in 2011, including a record amount of equity.

REITs raised $51.3 billion in public equity and debt in 2011, more than the $49 billion raised in the previous record year of 2006. Additionally, in spite of 2011’s volatile stock market, $37.5 billion of the capital raised in the year was in public equity, compared with $22 billion in 2006 and $32.7 billion in 1997, the prior record year for REIT equity offerings.






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September 30th, 2013

9/30/2013

0 Comments

 
Don't worry, just because your neo-liberals and US/State Attorney General have not allowed justice in the subprime mortgage/foreclosure crisis and left you with an entire industry of real estate with compromised housing titles....they already have developed another way to get your money......INSURANCE AGAINST HOUSING TITLE CLAIMS CAUSED BY MERS AND FRAUD.




Regarding Basu's great urban migration:

The decision to start the great migration came in the 1980s when Reagan started the corporate empire-building/Ayn Rand style of globalization that has corporation as City State modeled from the Medieval/Renaissance days of the Merchant Class/Medici-style of social structure. This is the goal set by Reagan and the 1% of the time and indeed, Baltimore's Master Plan was written in the 1980s. The creation of government structures that centralized government power....as with the mayor having all the power and the use of quasi-governmental organizations to hide public policy writing. So, picture the City State with the mote and castle walls protecting the gentry and the peasants outside living subsistance lives with the gentry coming around annually taking much of the peasants wealth in 'taxes' and you see where these Baltimore and Maryland 1% are going. Now, I am not a raging right wing anti-tax Tea Party person.....I am a progressive democrat who loves to pay taxes for a strong social safety net and public services. What we have today are rising taxes....not for social services or public services but for corporate welfare and enrichment at the top. So, there is a problem with taxation but it has nothing to do with subsidizing the poor....it is subsidizing the rich. This is what City State Master Plans are all about!

The second reason for the great migration to create urban centers is that these urban centers are more easily protected from threats of terrorism or angry mobs of peasants. If you are going to be Visigoths looting the Treasuries at home and around the world....you will make people angry and will need to protect yourself! Wall Street is now the most heavily securitized city in world history-----and they are home of the Visigoths....see the connection? There is nothing wrong with coming to the city to live as I am a lifelong city dweller. The problem is when the city is captured politically and socially and when it is the only game in town as all business and development happens there. People forced to come to get work....people forced to come because they cannot afford transportation....TOO MANY 'FORCED' HAPPENING!

As we heard Fraser Smith give his 'political analysis' of the Casino and the revenue expenditures....which by the way is true of the Baltimore Casino....all revenue is going to that one zone of development and in Baltimore that of course is the same 'Enterprise Zones' having received all the revenue these few decades. This is public money captured to the same areas of development ----the City State with the peasants outside the castle walls wasting into impoverishment as public assets disappear, employment in their communities disappear, and the peasants are made to rely strictly on the charity of patrons. THIS IS THE MARYLAND/BALTIMORE DEVELOPMENT PLAN.

This too was the reason for the subprime mortgage fraud that targeted these very urban areas----movement of all urban real estate to the 1% for control of castle residency. Believe me, you may be able to afford to live in the city now if you have a good job, but if this continues and reaches the goal of Manhattan, you will not and that can be in just a generation if left unchecked. So, your children and grandchildren will become those peasants outside the castle walls. THIS IS THE GOAL THAT BASU JUST WILL NOT SHARE WITH YOU! HE IS WITH THE BALTIMORE DEVELOPMENT CREW SO HE KNOWS!

What the immediate concern for most should be is that all of that foreclosed property probably is tainted with the MERS titling fraud as Maryland's subprime mortgage fraud hit Baltimore hard and the MERS process was created right here in the Washington suburbs to compliment the Wall Street bunding of these fraudulent mortgage loans. MERS laundered house titles over and over and over and over.....with the goal of generating tons of money from fees for doing just that. Lawyers and accountants scored big in this fraud -----committing fraud themselves to do this. The problem is that none of these title transfers that happened over and over and over again were legal registered with title agencies and now, many of these hundreds of thousands of homes in Maryland alone do not have titles with a clear ownership. Since it was all illegal anyone who was in this process at any stage has as much title to that house as the other. Now, much of the foreclosures went these few years to large investment firms now operating development corporations....this is what the FED QE was all about and they will take anyone to court who challenges their title to a property and they have the money to do so. No problem for the rich. It is the middle-class who are being called to come to Baltimore to buy a subprime foreclosure who may very well be hit with these ownership challenges....often from the same people who committed the fraud .....and they will not be able to afford to fight it in court. OH, MY, THERE GOES MIDDLE-CLASS ASSETS YET AGAIN!

The subprime mortgage fraud settlement from two years ago was just a parking ticket start to getting trillions back in fraud. Maryland still has billions coming back just from this subprime loan fraud. The terms of the settlement of $1 billion that Maryland Attorney General Gansler made required the hiring of lawyers to handle the legal aspects of just this one issue with MERS and house titling. There should be a process in place with the state attorney's office to make sure all these subprime loan titles are free and clear. THERE HAS BEEN NOTHING DONE BY GANSLER TO DO THIS. RATHER, HE IS SENDING ALL OF THE MONEY FROM THE SETTLEMENT BACK TO THESE INVESTMENT FIRMS AND DEVELOPERS TO SUBSIDIZE DEVELOPMENT OPERATION COSTS. There will be challenges as these same people who created this fraud and participated in the multiple turnovers of the property just need to wait until these blighted homes are rehabbed to come in and claim ownership....AND THEY WILL.

This is the problem. The solution is to get rid of your incumbent allowing all of these illegal action occur. DO YOU HEAR YOUR POL SHOUTING OUT AGAINST ALL OF THIS? I don't hear anything. So, run and vote for labor and justice candidates in all elections coming up. If your labor and justice organization is not running candidates.....they are not working for you and me. IT WILL NOT BRING CHANGE TO SIMPLY WORK ON THIS HOUSE BY HOUSE,....IT HELPS, BUT IT IS NOT A SOLUTION!


Mortgage-Title Fraud: A National Catastrophe
Oct 8 2010, 04:03  |  includes: BAC, JPM BOOKMARK / READ LATER X Bookmark Save this article to continue reading from your iPad Get the app »

It is impossible to overstate the severity of the real estate crisis in the United States which has been caused entirely by the reckless fraud of the nation’s largest banks – the Wall Street Oligarchs. We now have mortgage-fraud being openly acknowledged by the banksters, and on a scale never before seen in human history.

We have a single individual with JP Morgan (JPM) openly admitting that she and her team committed more than 18,000 acts of fraud per MONTH, while one Bank of America official admitted that she personally committed 7,000 to 8,000 acts of fraud monthly. Regular readers will recall that in a recent commentary I reported on two, separate anecdotes where the Bank of America attempted to foreclose on properties which did not even have mortgages.

In that same commentary, there was also an anecdotal report from a Florida lawyer who specializes in foreclosure proceedings, who stated that he regularly encountered (so-called) judges who were rubber-stamping these foreclosures without even looking at the documents. The lawyer also reported that one particular judge had already written her judgments (confirming foreclosure) before the foreclosure trial started.

We thus have the following chain of events, a Wall Street bank pushes a stack of 18,000 foreclosures in front of a small group of clerks (who make convenient patsies), and tells them they have to clear this many documents every month – knowing that it is impossible to process that volume and still follow mandatory legal procedures.

Stacks of these foreclosures are then pushed before judges. In the case of Florida, they are being processed by judges called out of retirement. Many of these people are likely no longer allowed to operate motor vehicles. These past-their-prime judges then rubber-stamp these fraudulent foreclosure documents, without even looking at them – effectively stealing the home from the homeowner through the coordinated fraud being committed by Wall Street banks and the U.S. government.

This is the sort of systemic horror-story which we would expect to hear coming out of some tiny, Third World country, with a ‘two-bit’ legal system – not from the Leader of the Free World. The crime-waves being confessed to by JP Morgan and Bank of America follow similar (if not worse) admissions by Ally Financial (GMAC’s mortgage subsidiary).


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Please do not allow these same neo-liberals who allowed all this massive fraud to move forward and now keeps us from getting justice set people up for yet more fraud down the road!




Foreclosure Fraud Cases: Banks and Mortgage Servicers Have an Achilles Heel, Title Problems Related to MERS

Posted By Larry Tolchinsky on August 2, 2011  Florida Law

One consequence of a Wrongful Foreclosure case, relates to the issue of clear title: the banks and mortgage lenders may not have it to convey to a buyer of the property.

As we all know, title to real estate is recorded in our public records because being able to trace the ownership chain of property is very, very important in the transfer of real property.  In Florida, land records can become history lessons because the land can be traced back — just like those family tree commercials on TV – to owners who lived hundreds of years ago.

Even today, there are land documents that document a Florida property’s ownership back to the days when the land was under Spanish rule, as well as that of England (England got part of Florida from Spain in exchange for Cuba as part of the treaty after the Seven Years’ War in the mid-1700s).   Florida land title isn’t wanting for its paperwork.

What is Title?

Each state in the United States has a long-established public records system that protects and documents the land within its borders.  Older land records are handwritten; for a period of years they were typed; now, many states record title via computerized systems with the older records scanned and organized via microfiche.

The land records are used to establish “title” to a piece of real property, or who has the legal right to own, use, possess or hold other rights in that piece of land (for example, mineral, water, or air rights).  The records are evidence of “title,” which is a legal determination based upon state law. The law of land title protects owners from someone stealing their property, squatting on their property, or even pillaging it (deforesting, etc.).

Sometimes when there is a controversy over who has title to or who has the right to sell a piece of land, it becomes a legal issue which is sometimes settled by a “quiet title” action.  Here is where the Foreclosure Fraud cases come into play:  the banks and/or mortage lenders may not have the ability to provide a buyer of the land with documentation that gives the selling institution clear title under Florida law.

MERS Created Chaos in Longstanding, Traditional Public Record Land Title Documentation


As Richard Zombeck pointed out in the Huffington Post this week, MERS (Mortgage Electronic Registration System) was set up by banks to streamline their ability to foreclose on homes throughout Florida and elsewhere.  Problem was, MERS apparently didn’t bother to follow the public record standards established under the state law.  They didn’t file their documents in the land records, among other things.  From HuffPo:

advocates and activists have long argued that mortgages transferred via the MERS system but not recorded with local registries of deeds are invalid and that land titles on thousands of homes are “clouded”. Homeowners with clouded titles could find it impossible to sell or refinance their properties without going to court to clean up problems.

Massachusetts Attorney General Announces Investigation Into MERS – A Really Big Quiet Title Investigation

This week, the Attorney General for the State of Massachusetts announced that Massachusetts will be investigating MERS and whether or not every single loan that went through its processing actually resulted in a cloud on title — which boils down to that state gearing up one big, big quiet title investigation.  If MERS did not follow Massachusetts state laws about protecting legal title during the transfer of the property, then the title is clouded — which most believe will be the case in an overwhelming number of cases.

What About Florida Land Titles?  Florida AG Bondi Can Act – And  So Can the Florida Homeowner

No word yet on what the Florida Attorney General will do: will Florida follow in the footsteps of Massachusetts?  It’s not clear. However, nothing stops an individual Florida citizen from protecting their rights to his or her land or any property they intend to purchase.  The first step?  Gathering all the land records that reference the property which can be found at the county public records department.  They are open to everyone.

Or, a homeowner or prospective buyer can hire an experienced real estate attorney versed in title issues and foreclosure fraud antics to advocate on their behalf.  Land title disputes and quiet title lawsuits can be complicated and stressful.  The complexities of legal title are why title insurance exists today and why their are title insurance attorneys.

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Don't worry, just because your neo-liberals and US/State Attorney General have not allowed justice in the subprime mortgage/foreclosure crisis and left you with an entire industry of real estate with compromised housing titles....they already have developed another way to get your money......INSURANCE AGAINST HOUSING TITLE CLAIMS CAUSED BY MERS AND FRAUD.



After Foreclosure, a Focus on Title Insurance


Posted on11 October 2010.


By RON LIEBER
Published: October 8, 2010  Stop Foreclosure Fraud.com

When home buyers and people refinancing their mortgages first see the itemized estimate for all the closing costs and fees, the largest number is often for title insurance.

This moment is often profoundly irritating, mysterious and rushed — just like so much of the home-buying process. Lenders require buyers to have title insurance, but buyers are often not sure who picked the insurance company. And the buyers are so exhausted by the gauntlet they’ve already run that they’re not interested in spending any time learning more about the policies and shopping around for a better one.

Besides, does anyone actually know people who have had to collect on title insurance? It ultimately feels like a tax — an extortionate one at that — and not a protective measure.

But all of the sudden, the importance of title insurance is becoming crystal-clear. In recent weeks, big lenders like GMAC Mortgage, JPMorgan Chase and Bank of America have halted many or all of their foreclosure proceedings in the wake of allegations of sloppiness, shortcuts or worse. And a potential nightmare situation has emerged that has spooked not only homeowners but lawyers, title insurance companies and their investors.

What would happen if scores of people who had lost their homes to foreclosure somehow persuaded a judge to overturn the proceedings? Could they somehow win back the rights to their homes, free and clear of any mortgage? But they may not be able to simply move back into their home at that point. Banks, after all, have turned around and sold some of those foreclosed homes to nice young families reaching out for a bit of the American dream. Would they simply be put out on the street? And then what?

The answer to that last question may depend on whether those new homeowners have title insurance, because people who buy a home without a mortgage can choose to go without a policy.

Title insurance covers you in case people turn up months or years after you buy your home saying that they, in fact, are the rightful owners of the house or the land, or at least had a stake in the transaction. (The insurance may cover you in other instances as well, relating to easements and other matters, but we’ll leave those aside for now.)



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The Great Recession is indeed the cause of this multi-generational housing.  The reasons of course are that people's retirement, savings, houses, and health care were stolen during the past decade of massive corporate frauds that move tens of trillions of dollars of public wealth to the top earners from these middle/lower class families all by fraud.  Experts say this is the grandest looting of society in human history.  As we watch neo-liberals working with republicans to cut all kinds of public and social programs to pay for the damages from that fraud...$16 trillion in debt could all be paid for by recovering corporate fraud..foreclosure fraud is left without justice taking people's homes, pension fraud having taken 1/2 the value of pensions and 401Ks..all losses caused by fraud..and health care fraud that has taken 1/2 of entitlement spending each year for these few decades..trillions lost to Medicare and Medicaid from fraud that has yet to be recovered.  Now, health reform covers the losses to Trusts from fraud by cutting patient access to health care and raising costs to people through co-pays and deductibles...all because of health fraud.

So, this family simply needs to vote for labor and justice and get rid of corporate neo-liberals so we can get busy with Rule of Law and recovering their life's savings and personal wealth!  We will see this reverse as people catch on!



3 generations, 1 roof: Multigenerational households on the rise in Howard County


By Pete Pichaske 2:27 p.m. EDT, September 16, 2013  Baltimore Sun

A giant blue tarp is flapping in the summer breeze on top of the two-story addition workers are building on their Sykesville house, and in the backyard, three generations of Beares are explaining why they decided to join the latest trend in household arrangements: multigenerational living.

“We were in a four-bedroom house, just the two of us,” says Paul Beares, 69. “We didn’t need a four-bedroom house anymore. We needed to downsize.”

“And we wanted to upsize,” says son David, 37, noting that he and his wife, Abby, had a third child last summer and not much extra space in their small Annapolis home. “Also, we were living in Annapolis, and our business is in Columbia. The drive stinks.”

“We wanted to be in Howard County,” says Abby, who grew up in Columbia. “And we wanted a place with some land.”

“My dad lived with us for a while,” says Paul’s wife, Susan, 66. “In fact, we’ve all had that three-generation experience, and all saw how it could work.”

“I like it that we’ll be able to see them (her grandparents) every day,” says Alivia, 8, joining the conversation. “They’ll be here to baby-sit us if Mommy and Daddy go out. And Babba (her grandfather) is around to help with the house.”

The Beares’ circumstances dovetail with the mutual needs and desires that multigenerational households can satisfy, but the family is hardly unusual in opting for this sort of arrangement. Not anymore.

Driven by a variety of factors -- the uncertain economy, the rising tide of young adults returning to live with their parents, a growing immigrant population with a strong multigenerational household tradition, a growing senior citizen population and increased interest in aging in place -- the number of such households is on the rise.

The ‘comeback’

A 2010 Pew Research Center Social and Demographic Trends study found that the number of Americans living in a household that included at least two adult generations rose from 28 million in 1980 to 49 million in 2008.

Noting that such extended families were common until World War II but declined in the ensuing few decades, the study concludes: “The multi-generational household has mounted a comeback.”

Statewide figures reveal the same trend, with the number of Maryland households with three or more generations increasing from 88,923 in 2000 (4.5 percent of all households) to 108,934 in 2010 (5.3 percent of all households), according to the U.S. Census Bureau.

Earlier figures for Howard County are not available, but the 2010 census found 4,163 such households in the county, 4 percent of the total, and those who keep an eye on such trends say multigenerational living is becoming more popular here as well.

“We’ve probably seen a lot more of it over the past 20 or 30 years,” says Dayna Brown, administrator of the county Office on Aging. She credited the increase mainly to people living longer and an increased desire of the elderly to age in place -- stay in the community rather than move to an assisted-living facility. To do that, she says, many rely on family caregivers, such as adult children.

“It’s growing,” agrees architect Karen Pitsley, owner of Transforming Architecture, a residential design firm based in Highland. Pitsley says she is fielding more and more requests to design second-floor master suites, in-law suites and other additions that will accommodate families combining resources under one roof.

“A lot of people in Howard County are looking for houses that will allow that,” she says. “With all the baby boomers hitting their 60s and 70s, there’s a much greater need for this now.”

While many cite the increasing numbers of elderly and the so-called “boomerang generation,” Michael Rendall, director of the Maryland Population Research Center and a professor of sociology at the University of Maryland, says economic forces are largely behind the move to multigenerational housing.

“The Great Recession is the root cause of the phenomenon,” he says. The trend is driven by the difficult job situation facing the younger generation, he says. But by pooling resources, both the younger and older generations are helped by the trend.

Rendall predicts that as the economy improves, the trend toward multigenerational households will reverse.

Others are not so sure.

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September 12th, 2013

9/12/2013

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As you listen to all of the revisionism of the financial collapse in 2008 at the same time we are memorializing 9-11, take time to see how the two are tied to each other.  Jihadists attacked Wall Street because they see US markets as evil and dangerous.  Several years later we have the economic crash and see that Wall Street is evil and dangerous!

PLEASE DO NOT ALLOW THESE NEO-LIBERALS TO REVISE WHAT HAPPENED AS THEY TRY TO SKIRT THE TRUTH AS TO HOW CRIMINAL THE US FINANCIAL SYSTEM IS AND HOW TENS OF TRILLIONS OF DOLLARS IN FRAUD NEED TO COME BACK TO GOVERNMENT COFFERS AND INDIVIDUALS!



Regarding a revisionist look at the 2008 financial collapse:

I think anyone left listening to NPR/Marketplace on WYPR knows what was presented was propaganda and not journalism so I will just give snippets that show most of what was presented was untrue. We do want to thank public media journalists before the 2010 corporate takeover of public media for their professional and accurate journalism. We know they did so knowing their jobs may be in peril. Professionalism requires commitment to integrity and honesty and those journalists pre-2010 had just that!

In a Peabody Award winning program, NPR correspondents argued that a "Giant Pool of Money" (represented by $70 trillion in worldwide fixed income investments) sought higher yields than those offered by U.S. Treasury bonds early in the decade. This pool of money had roughly doubled in size from 2000 to 2007, yet the supply of relatively safe, income generating investments had not grown as fast. Investment banks on Wall Street answered this demand with products such as the mortgage-backed security and the collateralized debt obligation that were assigned safe ratings by the credit rating agencies.[59]

As we all know, this mortgage fraud was conceived at the same time Clinton and his Administrative team, Larry Summers and Robert Rubin were breaking the Glass Steagall wall and this fraud had as its goal the movement of massive amounts of wealth to the top earners through fraud. A goal was to clear the poor and working class from urban centers where Master Plans across the country set affluent development and blowing up the FHA with debt as Wall Street wanted control of all mortgage business.

For anyone not believing when this collapse happened that the entire massive fraud was not planned, there is no doubt today. As the current report on NPR pointed out.....every single bank had credit default swaps (insurance) for all of these mortgage investments with AIG. It is ironic that the 9-11 memory falls at the same time as the anniversary of the 2008 collapse. The jihadist attacked Wall Street for the very reasons that brought the economic collapse just years later!

Five years from the collapse we have the same conditions as existed then....no financial reform, 600 trillion dollars in derivative leverage......little capitalization and an economy ready to collapse this time with bond debt. Again, this collapse will be fueled by fraud as all of the municipal bond/sovereign debt that has happened these several years happened through public malfeasance in collusion with Wall Street just as with the pensions thrown into the stock market in 2007 as the market crashed. Loading municipalities with debt so the next economic collapse created by the bond bubble would move more public assets to the top earners. This is a second phase of wealth redistribution to the top. As everyone in Maryland knows, O'Malley and Rawlings-Blake have leveraged the state and city with so much bond debt that when this crash happens next year.....and it will be much bigger than the 2008 crash....there will be no Federal rescue. Don't worry for the banks.....they already have their credit default swaps for bond investments!

THE AMERICAN PEOPLE HAVE YET TO RECOVER TENS OF TRILLIONS OF DOLLARS IN FINANCIAL FRAUD FROM THE PAST DECADE. REMEMBER, WHEN RULE OF LAW IS SUSPENDED....SO IS STATUTES OF LIMITATION.

Why do you think Maryland is still listed as the state still having mortgage foreclosures? We were ground zero for the mortgage fraud with MERS operating from the Washington beltway. Gansler gave what was the parking ticket settlement of $1 billion to the state fund so O'Malley could claim he balanced the budget (O'Malley used huge cuts in Medicaid to do the same----what a guy...he did that for families!) The money that should have gone to communities and people effected by the fraud went to developers to pad the cost of building new and affluent homes. Baltimore now has such high homelessness, crime, and poverty because in part  politicians have refused to demand justice for the citizens of Baltimore and Maryland. Almost nothing has been done to mitigate the damages of job loss and personal savings lost from the massive mortgage fraud in Maryland. We will bring the corporate fraud back as we rebuild the public justice system state by state!

Below you see some articles that completely negate the report just given by NPR/Marketplace. There have been no real stress tests....there is no real bank capitalization.....none of the financial reform has been enacted and most has been watered away.....the banks are as leveraged and bigger than before.....AND THEY ARE STILL COMMITTING FRAUD EVERY DAY WITH NO JUSTICE!



Class Dunce Passes Fed’s Stress Test Without a Sweat.

Bank Stress Tests Viewed As Fed Deception By Critics

Posted on March 19, 2012 in Bank Lending, Banking News

Every banker knows that public confidence in the banking industry is essential.

With the banking industry approaching a near meltdown last year, the Federal Reserve decided to conduct a series of “stress tests” on the country’s largest banks in order to restore confidence in the banking system. After reviewing the results of the stress tests, many critics now say that the tests were a deception by the Federal Reserve designed to deceive the public into believing that the banking system is sound when, in fact, it is not.

Gary Shilling, who remains bearish on housing and the economy, argues that the fundamentals for the banking industry remain weak in
Bank Stress Tests Don’t End The Pain.

The business climate for major banks around the world has changed remarkably in just four years. Decades ago, they set off on a huge leveraging spree. Then, starting in 2007, many institutions holding bad private and sovereign assets had to be bailed out by central banks and governments to prevent a collapse of the global financial system.

Even with help from the release of reserves for bad loans, U.S. banks’ return on equity was 6.8 percent in the fourth quarter, compared with 15 percent in the pre-crisis salad days. Return on assets, which skips leverage, is 0.76 percent, down from 1.4 percent.

Banks will also be faced with low returns on their basic business as slow economic growth, falling house prices, small returns on stocks, low interest rates and a flat yield curve persist in the remaining five to seven years of global deleveraging that I foresee. Consumer loans will be repaid on balance, and record nonfinancial corporate liquidity and slow economic growth will continue to curb borrowing and mergers-and- acquisitions activity. Then there are the huge counterparty risks on derivatives and potential large further write downs of troubled assets.


Do current prices reflect the continuing deleveraging of banks, persistent slow loan growth, further write-offs of bad real estate and other assets, compressed interest-rate margins, increased capital requirements and increasingly stringent regulation? I’m not convinced they do.  NO!

Jonathan Weil argues in a Bloomberg article that Fed testing of regulatory capital has no connection to reality when it comes to big banks surviving another financial crisis since banks that failed or needed huge bailouts during the crash of 2008 were classified at the time as “well capitalized” by regulators.  Weil goes on to describe the Fed stress tests as a “joke” when they tested Regions Financial Corp which still hasn’t paid back TARP money and has a negative tangible common equity of $525 million


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1000x Systemic Leverage: $600 Trillion In Gross Derivatives "Backed" By $600 Billion In Collateral

Submitted by Tyler Durden on 12/24/2012 10:07 -0400

There is much debate whether when it comes to the total notional size of outstanding derivatives, it is the gross notional that matters (roughly $600 trillion), or the amount which takes out biletaral netting and other offsetting positions (much lower). We explained previously how gross is irrelevant... until it is, i.e. until there is a breach in the counterparty chain and suddenly all net becomes gross (as in the case of the Lehman bankruptcy), such as during a financial crisis, i.e., the only time when gross derivative exposure becomes material (er, by definition). But a bigger question is what is the actual collateral backing this gargantuan market which is about 10 times greater than the world's combined GDP, because as the "derivative" name implies all this exposure is backed on some dedicated, real assets, somewhere. Luckily, the IMF recently released a discussion note titled "Shadow Banking: Economics and Policy" where quietly hidden in one of the appendices it answers precisely this critical question.
The bottom line: $600 trillion in gross notional derivatives backed by a tiny $600 billion in real assets: a whopping 0.1% margin requirement! Surely nothing can possibly go wrong with this amount of unprecedented 1000x systemic leverage.
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Keep in mind that US bank capital was as high as 70% before the Reagan/Clinton bank deregulation started and most financial experts wanted financial reform to have it restored to around 40%.  Neo-liberals moved it from what was 2% at the time of the 2008 crash to what you see below. I think these numbers are high. Needless to say.....this does nothing for bank health.

Bank capitalization means how much physical assets does a bank have to back loans and credit.  As we saw with the article above on the amount of leverage now....your neo-liberal and Obama found it hard to just raise the requirement to 9-10%.   This is what causes the need to bailout these banks....they  bet $600 trillion with just a few hundred billion of capital.

US Bank Capitalization

                                 2008       09         10         11          12
United States          9.3      10.9       11.1       11.2       11.3


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Giant Banks Now 30% Bigger than When Dodd-Frank Financial “Reform” Law Was Passed
Posted on April 17, 2012 by WashingtonsBlog

Size of Banks Killing Economy … But Giant Banks Have Only Gotten Bigger Since Financial “Reform” Enacted


For years, many high-level economists and financial experts have said that – unless we break up the giant banks – our economy will never recover, real reform will be blocked, and democracy and the rule of law will be corrupted.

So how did the government respond to the financial crisis which started in 2007?

Let the giant banks get even bigger.

As Bloomberg notes, the five banks that held assets equal to 43% of the US economy in 2007 before the financial crisis and the bank bailout now control assets that equal 56% of the US economy:

Two years after President Barack Obama vowed to eliminate the danger of financial institutions becoming “too big to fail,” the nation’s largest banks are bigger than they were before the credit crisis.



Five banks – JPMorgan Chase & Co. (JPM), Bank of America Corp., Citigroup Inc., Wells Fargo & Co., and Goldman Sachs Group Inc. — held $8.5 trillion in assets at the end of 2011, equal to 56 percent of the U.S. economy, according to the Federal Reserve.

Five years earlier, before the financial crisis, the largest banks’ assets amounted to 43 percent of U.S. output. The Big Five today are about twice as large as they were a decade ago relative to the economy, sparking concern that trouble at a major bank would rock the financial system and force the government to step in as it did during the 2008 crunch.

“Market participants believe that nothing has changed, that too-big-to-fail is fully intact,” said Gary Stern, former president of the Federal Reserve Bank of Minneapolis.

That specter is eroding faith in Obama’s pledge that taxpayer-funded bailouts are a thing of the past. It is also exposing him to criticism from Federal Reserve officials, Republicans and Occupy Wall Street supporters, who see the concentration of bank power as a threat to economic stability.

***

The industry’s evolution defies the president’s January 2010 call to “prevent the further consolidation of our financial system.” Embracing new limits on banks’ trading operations, Obama said then that taxpayers wouldn’t be well “served by a financial system that comprises just a few massive firms.”

Simon Johnson, a former chief economist of the International Monetary Fund, blames a “lack of leadership at Treasury and the White House” for the failure to fulfill that promise. “It’d be safer to break them up,” he said.

***

Regulatory burden could promote further industry consolidation, according to Wilbur Ross, chairman of WL Ross & Co., a private-equity firm.

“We think the little tiny banks, the 90-odd percent of banks that are under $1.5 billion in deposits, are pretty much an obsolete phenomenon,” he told Bloomberg Television on March 14. “We think they’ll all have to merge with each other, be acquired by bigger banks or something.”

***

In 2011, funding costs for banks with more than $10 billion in assets were about one-third less than for the smallest banks, according to the FDIC.

Some presidents of regional Federal Reserve banks have lambasted too big to fail. As Bloomberg notes:

In recent weeks, at least four current Fed presidents — Esther George of Kansas City, Charles Plosser of Philadelphia, Jeffrey Lacker of Richmond and Richard Fisher of Dallas — have voiced similar worries about the risk of a renewed crisis.

But the most powerful Fed bank – the New York Fed – and Bernanke’s Federal Open Market Committee, as well as Tim Geithner’s Treasury Department, have done everything possible to ensure that the the giant banks become too bigger to fail.



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As those getting their news other than WYPR/NPR/Marketplace know.....the Fed policy and a bond bill written by Obama and neo-liberals in Congress is blowing up the bond market. THIS IS DELIBERATE....REMEMEBER, THE EUROPEAN DEBT IS SO BAD BECAUSE GOLDMAN SACHS AND DEUTSCHE BANK COLLUDED WITH FINANCIAL MINISTERS TO HIDE SOVEREIGN DEBT SO MORE AND MORE DEBT COULD BE TAKEN ON, JUST AS IS HAPPENING IN THE US TODAY!

Dennis Slothower – the financial analyst responsible for 2011's "Letter of the Year" according to MarketWatch.com - now warns...

Why Stocks Could Collapse...
Beginning as Soon as September 30th!

The Fed has propped up the equity markets for months...
but that could soon come to a disastrous end!

According to Marketwatch.com, Dennis Slothower is the guru behind “The investment letter that evaded the 2008 crash...(and) is now the top performer." -- Marketwatch.com, October 6, 2011

Right now, Dennis is issuing another dire warning.

His technical indicators suggest that the market manipulation we’ve seen over the last several months is about to come to an end.

And with very real threats to this artificially inflated market coming from a potential U.S. debt downgrade...for the possibility of a European collapse...and a sluggish U.S. economy - the bottom could fall out of the U.S. stock market at any time.

This correction could begin as soon as September 30th – so it’s important that you take action now to prepare yourself.

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Whiteout Press Independent News for independent thinkers and independent voters!

November 30, 2011  Special thanks to Bloomberg Marketplace for their detailed reporting.

$700 Billion Bank Bailout was Secretly $7 Trillion November 30, 2011. Washington.

In 2008, President Bush, Secretary Paulson and Chairman Bernanke crafted a bank bailout program they termed TARP or the Toxic Asset Relief Program. It was created in the middle of the night, over a weekend, because if they didn’t act by Monday they said, there wouldn’t be an America anymore. With confusion and fear in his eyes, President Bush handed the reins of power to the former CEO of Goldman Sachs. And instead of limiting himself to the $700 billion Congress grudgingly approved, Hank Paulson printed $7 trillion dollars, funneled it through the Federal Reserve and handed it over to the world’s biggest banks with no strings attached and in total secrecy.

Hank Paulson, former Goldman Sachs CEO and architect of the bank bailouts

While watching Whiteout Press’ favorite morning business show, 'In Business with Margaret Brennan' on Bloomberg TV, the show was interrupted by a startling announcement. Bloomberg investigators had uncovered details that the most powerful men in Washington and New York were desperate to keep secret. In fact, Bloomberg had to sue the Federal government for access to the events of 2009 and 2010 regarding the US bank bailout. The Federal Reserve however, insisted all details of the largest bank bailout in the history of the world had to be kept completely secret from the American people.

The government fought releasing the secret details all the way the US Supreme Court. Earlier this year, Bloomberg won their lawsuit. Treasury and the FED weren’t going to surrender to the American people that easy however. The FED turned over 29,000 documents and details of 21,000 transactions made during the time period covered by TARP and the nation’s bank bailout. Attempting to handcuff Bloomberg investigators with an avalanche of documentation, imagine their surprise when Margaret Brennan’s show was interrupted yesterday with the unbelievable news that the bank bailout American’s were led to believe was only $700 billion, was actually $7.77 trillion. According to the NY Fed, the total amount of US currency in circulation in the entire world at the time was only $829 billion.

While the events are difficult to follow for anyone who’s not familiar with the strange way America’s banking and economic system works, not to mention all the government and Wall Street secrecy, here’s a novice’s view of what happened during the panicked early days of America’s economic collapse. When the $700 billion bank bailout authorized by Congress wasn’t going to be anywhere near enough to save banks like Goldman Sachs, JP Morgan, Citigroup and Bank of America, Ben Bernanke and the FED opened up the nation’s discount borrowing window – to the tune of $7.77 trillion dollars.


Republican Presidential candidate Ron Paul (R-TX) could do a much better job of explaining the almost criminal nature of the FED than this Whiteout Press author ever could. With his pledge to abolish the FED, Rep Paul might explain – imagine you Joe Citizen walk into your city hall and ask for a $10 billion dollar loan at zero percent interest. They give you, and only you, that loan because you’re ‘special’. You then loan that $10 billion out to others at 5, 10 or 20 percent yearly interest for things like homes, which are guaranteed by the taxpayers, so there’s no risk of nonpayment. When that $15 or $20 billion is paid back to you, you pay back the FED the original $10 billion and keep the rest.

Instead of loaning that $7.77 trillion to the American people as the American government intended, banks throughout the world took advantage of the US taxpayer and used that money to secretly cover massive losses the banks were suffering from their stupidly investing in their own worthless financial instruments – instruments the banks knew were worthless and doomed to fail. Like a modern day shell game, trillions of dollars floated from one banking institution to another, appearing to fill all balance sheet holes everywhere. Not all the banks used the money to fill holes however. Some used it to make massive profits.

The Bloomberg reporting revealed banks like Barclays, Banco Santander and BNP Parabas made a fortune on the US taxpayer program. Barclays turned their money into a $26.7 billion profit. Banco Santander profited $29.2 billion and BNP Parabas made $17.1 billion.

They weren’t alone. According to Bloomberg’s data, 97 different financial institutions around the globe turned their ‘discount window’ into profits during the two years of the financial crisis. The most suspicious part – the US government insisted on keeping every single transaction a secret. In one day alone at the end of 2008, the Federal Reserve gave out $1.2 trillion dollars to banks – the most on any day before or since.

For those who remember, Bank of America was accused of using its funds not to bailout underwater homeowners, but instead to purchase a bank in China. Bank of America made a profit of $14.2 billion using their ‘special’ discount borrowing privilege. Bank of America wasn’t the only player in the middle of the US financial collapse that made massive profits off the US taxpayer. Wells Fargo made $12.1 billion. JP Morgan made $13.8 billion, Goldman Sachs made $12.7 billion, American Express made $1.4 billion, Discover made $1.4 billion, US Bancorp profited $7.2 billion, HSBC made $11.6 billion, PNC Financial $1.4 billion, Lloyds made $9.6 billion and the list goes on and on.

Not all the banks that made massive profits off the US taxpayers during the peak of the financial crisis were well-known American brands. Foreign banks also made billions in profits, including the National Australia Bank, Bank of Toronto, Mitsubishi, Skandinavista, Chang Hwa, the Israel Discount Bank and dozens more.



Not all banks used the US taxpayers to make billions in extra profits. Some banks tried, and lost.

Among the banks that lost money on the secret loan program were Citigroup, losing $29.3 billion, Royal Bank of Scotland lost $45.3 billion, Credit Suisse lost $4.1 billion, Deutsche Bank lost $433 million, Fifth Third lost $1 billion, Wachovia lost $31.6 billion, Merrill Lynch lost $35.9 billion, Arab Banking lost $77 million, Allied Irish Banks lost $3.4 billion, Morgan Stanley lost $3 billion, Industrial Bank of Korea lost $559 million and the list goes on and on.

Readers can take their pick regarding which aspect of this story to be most angry about. Some will be outraged that for-profit banks are taking advantage of the US taxpayer and making billions in free money. Others will be angry that based on the above list, it appears the US taxpayer is also guaranteeing the profits of foreign banks all over the world. And some will be outraged by the fact that the entire story was kept secret from not only the American people, but also their representative in Congress and even officials at the FED.

Bloomberg asked one longtime critic of giant banks, Rep. Sherrod Brown (D-OH), to comment. “When you see the dollars the banks got, it’s hard to make the case these were successful institutions,” she says, “This is an issue that can unite the Tea Party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.”

Bloomberg also quotes other individuals who should have been aware of what was going on, but weren’t. Gary H. Stern, Minneapolis FED Chairman at the time, insists he, “wasn’t aware of the magnitude.” Rep. Brad Miller (D-NC), member of the House Financial Services Committee, says, “TARP at least had some strings attached. With the Fed programs, there was nothing.”

Misleading Shareholders

With hindsight being 20/20, Bloomberg looked at some of the biggest emergency borrowers and compared their financial situation with the outlook and forecasts made by the bank’s CEO’s to their shareholders. One such example is Ken Lewis, CEO of Bank of America. On November 26, 2008 he informed shareholders that BofA was, “one of the strongest and most stable major banks in the world.” We’ll let you the reader decide - Bank of America owed the US government a staggering $86 billion on that day.


Another example is JP Morgan Chase’s CEO Jamie Dimon. On March 26, 2010, he reassured his shareholders that JP Morgan didn’t need a bailout and only participated in the program in the beginning, “at the request of the Federal Reserve to help motivate others to use the system.” In reality, JP Morgan was still taking advantage of the emergency program and owed the US government $48 billion dollars more than a year after the program began.

As far as the American people go, the two Representatives of theirs in Congress that should have been made aware of what was going on, weren’t. Both the Republican and Democratic overseers of the massive bank bailout, Rep. Judd Gregg (R-NH) and Rep. Barney Frank (D-MA), both confirmed to Bloomberg they were kept in the dark.

“We were aware emergency efforts were going on” Frank said, “We didn’t know the specifics.” Congressman Frank announced his retirement earlier this week. Rep. Judd Gregg simply responded, “We didn’t know the specifics.” Former Congressman Judd Gregg is now employed by Goldman Sachs.

What’s Changed

Most Americans couldn’t explain how banks function or how the bank bailout worked if their lives depended on it. But most assume the US taxpayer loaned billions to banks to save the industry and avoid economic collapse, rampant unemployment and a housing crash. But if one were to take a step back and look at the new landscape, a new picture emerges of what the bank bailout was really about. In the five years from before the crisis in 2006 to after the crisis in 2011, the six largest US banks increased their assets, or money and property they own, from $6.8 trillion dollars to $9.5 trillion.

Dallas Federal Reserve President Richard Fisher summed up the thoughts of many when he called that fact, “un-American”.




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August 19th, 2013

8/19/2013

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PLEASE REALIZE THAT JUST BECAUSE WE HAVE POLITICIANS IN OFFICE THAT ARE AIDING AND ABETTING CORPORATE FRAUD AND REFUSING TO ENFORCE RULE OF LAW.....WE STILL CAN AND WILL PURSUE THIS.....WHEN A GOVERNMENT SUSPENDS RULE OF LAW IT SUSPENDS STATUTES OF LIMITATION!

TENS OF TRILLIONS OF DOLLARS TAKEN TO OFFSHORE ACCOUNTS FOLKS......THESE ARE VISIGOTHS!




Regarding Basu's statement of youth and home ownership:

Basu hit on two subjects put forward in this morning's local news...using foreclosure money to augment developer's costs in construction and the inability of youth to buy homes because of lack of income/personal wealth. Both involve an artificial poverty created by massive corporate fraud.

We want to continue to remember...everyone in government knew massive fraud was systemic in the housing market for years and that it would bring the economy crashing down and yet they allowed people to enter these contracts. Most people on the other hand did not know the economy was imploding with massive fraud and entered contracts....whether mortgages or education loans thinking they would have their 20-30 years to pay down and renegotiate these loans. These people grew up with a government that protected citizens from fraud and regulated business so that open fraud did not happen. These people who are trapped in this debt are for the most part not bad people....they are not irresponsible people....they are working class people who simply trusted institutions to do the right thing.
As subprime loan fraud brought the economy down and led to high unemployment ...... youth with loans were left unable to pay. Did the financial aid offices in these universities and all of the local politicians know that the economy was ready to collapse and that these students would be trapped with debt? YES!

Much of student debt is with for-profit career college debt that was as fraudulent as the subprime loans. From Kaplan to University of Phoenix.....all those for-profit education businesses have been investigated and found guilty of hundreds of billions of dollars in fraud. Private universities that allowed working class students to take on tens of thousands of dollars in debt at a time the economy was being brought to implosion did so simply to move money into university coffers. Private banks paid these loans to the schools and now private banks are fighting bankruptcy and are manning the Department of Education with credit collection agencies to get that dough.

All of this would be resolved if the US Attorney's office simply reinstate Rule of Law....investigate.....prosecute and bring back all the fraud to government coffers and individual's pockets. A War on Fraud funded by the few hundred billion in postage stamp settlements would bring tens of trillions of dollars in corporate fraud back....paying for itself....no taxpayer money or republican votes to do it. NEO-LIBERALS IN CONGRESS AND OBAMA REFUSE TO HOLD CORPORATIONS RESPONSIBLE SO AMERICANS ARE LOSING THEIR RETIREMENTS, HOUSING, EMPLOYMENT SO THAT MASSIVE FRAUD CAN STAND.

Does that youth living at home want a housing loan with banks known to be just a criminal as ever? The answer is NO! No one wants to do business with banks. Then there is the other major problem in foreclosure housing titles with millions of houses processed through MERS many of which now have no clear title and ownership challenged at any point. The subprime mortgage settlement would have addressed the clearing of this titling system but not a cent was spent on MERS fraud. In Maryland if developers are not buying huge bundles of foreclosures for urban development as we see in Baltimore's captured real estate market....the most toxic of foreclosures are being given to organizations like Habitat for Humanity. 'We are getting lots of foreclosures' Habitat tells me. I ask if they are clear titles and I get no response. What we are seeing is the same working class and poor buying homes that may again be taken from them in the future because of the MERS fraud. Don't forget, the MERS fraud was based in the Washington suburbs and it was a Maryland court that declared that MERS was not fraud. The level of corruption is staggering. TAKE OUT A BANK LOAN? ARE YOU CRAZY?


I want to revisit these frauds so that we remember that when a government suspends Rule of Law....it suspends Statutes of Limitations.  WE NEED TO KNOW THAT OUR ELECTED OFFICIALS KNEW ALL OF THIS WAS HAPPENING LAST DECADE.....DO YOU HEAR YOUR ELECTED OFFICIAL SHOUTING LOUDLY AND STRONGLY DEMANDING THE PUBLIC BE PROTECTED?


In Maryland the Maryland Assembly actually have laws that make it harder for citizens seeking justice from corporate fraud.  AND YOU KEEP RE-ELECTING THESE CORPORATE NEO-LIBERALS!


Homeowners’ Rebellion: Could 62 Million Homes Be Foreclosure-Proof? The financial juggling that helped cause the 2008 crisis may be coming back to haunt banks—and help homeowners. Document Actions
by Ellen Brown posted Aug 18, 2010 YES!

Photo by Sarah Gilbert

Over 62 million mortgages are now held in the name of MERS, an electronic recording system devised by and for the convenience of the mortgage industry. A California bankruptcy court, following landmark cases in other jurisdictions, recently held that this electronic shortcut makes it impossible for banks to establish their ownership of property titles—and therefore to foreclose on mortgaged properties. The logical result could be 62 million homes that are foreclosure-proof. Mortgages bundled into securities were a favorite investment of speculators at the height of the financial bubble leading up to the crash of 2008. The securities changed hands frequently, and the companies profiting from mortgage payments were often not the same parties that negotiated the loans. At the heart of this disconnect was the Mortgage Electronic Registration System, or MERS, a company that serves as the mortgagee of record for lenders, allowing properties to change hands without the necessity of recording each transfer.

A committed homeowner movement to tear off the predatory mask called MERS could yet turn the tide. MERS was convenient for the mortgage industry, but courts are now questioning the impact of all of this financial juggling when it comes to mortgage ownership. To foreclose on real property, the plaintiff must be able to establish the chain of title entitling it to relief. But MERS has acknowledged, and recent cases have held, that MERS is a mere “nominee”—an entity appointed by the true owner simply for the purpose of holding property in order to facilitate transactions. Recent court opinions stress that this defect is not just a procedural but is a substantive failure, one that is fatal to the plaintiff’s legal ability to foreclose.

That means hordes of victims of predatory lending could end up owning their homes free and clear—while the financial industry could end up skewered on its own sword.

California Precedent The latest of these court decisions came down in California on May 20, 2010, in a bankruptcy case called In re Walker, Case no. 10-21656-E–11. The court held that MERS could not foreclose because it was a mere nominee; and that as a result, plaintiff Citibank could not collect on its claim. The judge opined:

Since no evidence of MERS’ ownership of the underlying note has been offered, and other courts have concluded that MERS does not own the underlying notes, this court is convinced that MERS had no interest it could transfer to Citibank. Since MERS did not own the underlying note, it could not transfer the beneficial interest of the Deed of Trust to another. Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law.
  Notice that it was a Maryland court that reversed this and that no one took this to higher courts.....that is where we need to go!

In support, the judge cited In Re Vargas (California Bankruptcy Court); Landmark v. Kesler (Kansas Supreme Court); LaSalle Bank v. Lamy (a New York case); and In Re Foreclosure Cases (the “Boyko” decision from Ohio Federal Court). (For more on these earlier cases, see here, here and here.) The court concluded:

Since the claimant, Citibank, has not established that it is the owner of the promissory note secured by the trust deed, Citibank is unable to assert a claim for payment in this case.

The broad impact the case could have on California foreclosures is suggested by attorney Jeff Barnes, who writes:

This opinion . . . serves as a legal basis to challenge any foreclosure in California based on a MERS assignment; to seek to void any MERS assignment of the Deed of Trust or the note to a third party for purposes of foreclosure; and should be sufficient for a borrower to not only obtain a TRO [temporary restraining order] against a Trustee’s Sale, but also a Preliminary Injunction barring any sale pending any litigation filed by the borrower challenging a foreclosure based on a MERS assignment.

While not binding on courts in other jurisdictions, the ruling could serve as persuasive precedent there as well, because the court cited non-bankruptcy cases related to the lack of authority of MERS, and because the opinion is consistent with prior rulings in Idaho and Nevada Bankruptcy courts on the same issue.

What Could This Mean for Homeowners? The Poor People's Economic Human Rights Campaign holds a rally and press conference against the foreclosure of a house in Minneapolis.

Photo by Fibonacci Blue

Earlier cases focused on the inability of MERS to produce a promissory note or assignment establishing that it was entitled to relief, but most courts have considered this a mere procedural defect and continue to look the other way on MERS’ technical lack of standing to sue. The more recent cases, however, are looking at something more serious. If MERS is not the title holder of properties held in its name, the chain of title has been broken, and no one may have standing to sue. In MERS v. Nebraska Department of Banking and Finance, MERS insisted that it had no actionable interest in title, and the court agreed.

An August 2010 article in Mother Jones titled “Fannie and Freddie’s Foreclosure Barons” exposes a widespread practice of “foreclosure mills” in backdating assignments after foreclosures have been filed. Not only is this perjury, a prosecutable offense, but if MERS was never the title holder, there is nothing to assign. The defaulting homeowners could wind up with free and clear title.

In Jacksonville, Florida, legal aid attorney April Charney has been using the missing-note argument ever since she first identified that weakness in the lenders’ case in 2004. Five years later, she says, some of the homeowners she’s helped are still in their homes. According to a Huffington Post article titled “‘Produce the Note’ Movement Helps Stall Foreclosures”:

Because of the missing ownership documentation, Charney is now starting to file quiet title actions, hoping to get her homeowner clients full title to their homes (a quiet title action ‘quiets’ all other claims). Charney says she’s helped thousands of homeowners delay or prevent foreclosure, and trained thousands of lawyers across the country on how to protect homeowners and battle in court.

Criminal Charges? "MERS was and is used in a way so that the average consumer, or even legal professional, can never determine who or what was or is ultimately receiving the benefits of any mortgage payments."
Other suits go beyond merely challenging title to alleging criminal activity. On July 26, 2010, a class action was filed in Florida seeking relief against MERS and an associated legal firm for racketeering and mail fraud. It alleges that the defendants used “the artifice of MERS to sabotage the judicial process to the detriment of borrowers;” that “to perpetuate the scheme, MERS was and is used in a way so that the average consumer, or even legal professional, can never determine who or what was or is ultimately receiving the benefits of any mortgage payments;” that the scheme depended on “the MERS artifice and the ability to generate any necessary ‘assignment’ which flowed from it;” and that “by engaging in a pattern of racketeering activity, specifically ‘mail or wire fraud,’ the Defendants . . . participated in a criminal enterprise affecting interstate commerce.”

Local governments deprived of filing fees may also be getting into the act, at least through representatives suing on their behalf. Qui tam actions allow for a private party or “whistle blower” to bring suit on behalf of the government for a past or present fraud on it. In State of California ex rel. Barrett R. Bates, filed May 10, 2010, the plaintiff qui tam sued on behalf of a long list of local governments in California against MERS and a number of lenders, including Bank of America, JPMorgan Chase and Wells Fargo, for “wrongfully bypass[ing] the counties’ recording requirements; divest[ing] the borrowers of the right to know who owned the promissory note . . .; and record[ing] false documents to initiate and pursue non-judicial foreclosures, and to otherwise decrease or avoid payment of fees to the Counties and the Cities where the real estate is located.”  Let's look at Maryland's QUI TAM Laws...... The complaint notes that “MERS claims to have ‘saved’ at least $2.4 billion dollars in recording costs,” meaning it has helped avoid billions of dollars in fees otherwise accruing to local governments. The plaintiff sues for treble damages for all recording fees not paid during the past ten years, and for civil penalties of between $5,000 and $10,000 for each unpaid or underpaid recording fee and each false document recorded during that period, potentially a hefty sum. Similar suits have been filed by the same plaintiff qui tam in Nevada and Tennessee.

By Their Own Sword: MERS’ Role in the Financial Crisis MERS is, according to its website, “an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.” Or as Karl Denninger puts it, “MERS’ own website claims that it exists for the purpose of circumventing assignments and documenting ownership!”

Taking Financial Reform Into Our Own Hands
Why we can't let this financial reform bill be our only response to the economic crisis.

MERS was developed in the early 1990s by a number of financial entities, including Bank of America, Countrywide, Fannie Mae, and Freddie Mac, allegedly to allow consumers to pay less for mortgage loans. That did not actually happen, but what MERS did allow was the securitization and shuffling around of mortgages behind a veil of anonymity. The result was not only to cheat local governments out of their recording fees but to defeat the purpose of the recording laws, which was to guarantee purchasers clean title. Worse, MERS facilitated an explosion of predatory lending in which lenders could not be held to account because they could not be identified, either by the preyed-upon borrowers or by the investors seduced into buying bundles of worthless mortgages. As alleged in a Nevada class action called Lopez vs. Executive Trustee Services, et al.:

Before MERS, it would not have been possible for mortgages with no market value . . . to be sold at a profit or collateralized and sold as mortgage-backed securities. Before MERS, it would not have been possible for the Defendant banks and AIG to conceal from government regulators the extent of risk of financial losses those entities faced from the predatory origination of residential loans and the fraudulent re-sale and securitization of those otherwise non-marketable loans. Before MERS, the actual beneficiary of every Deed of Trust on every parcel in the United States and the State of Nevada could be readily ascertained by merely reviewing the public records at the local recorder’s office where documents reflecting any ownership interest in real property are kept....

After MERS, . . . the servicing rights were transferred after the origination of the loan to an entity so large that communication with the servicer became difficult if not impossible .... The servicer was interested in only one thing – making a profit from the foreclosure of the borrower’s residence – so that the entire predatory cycle of fraudulent origination, resale, and securitization of yet another predatory loan could occur again. This is the legacy of MERS, and the entire scheme was predicated upon the fraudulent designation of MERS as the ‘beneficiary’ under millions of deeds of trust in Nevada and other states.


Axing the Bankers’ Money Tree If courts overwhelmed with foreclosures decide to take up the cause, the result could be millions of struggling homeowners with the banks off their backs, and millions of homes no longer on the books of some too-big-to-fail banks. Without those assets, the banks could again be looking at bankruptcy. As was pointed out in a San Francisco Chronicle article by attorney Sean Olender following the October 2007 Boyko [pdf] decision:

The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

. . . The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail . . . .

 Nationalization of these giant banks might be the next logical step—a step that some commentators said should have been taken in the first place. When the banking system of Sweden collapsed following a housing bubble in the 1990s, nationalization of the banks worked out very well for that country.

The Swedish banks were largely privatized again when they got back on their feet, but it might be a good idea to keep some banks as publicly-owned entities, on the model of the Commonwealth Bank of Australia. For most of the 20th century it served as a “people’s bank,” making low interest loans to consumers and businesses through branches all over the country.

With the strengthened position of Wall Street following the 2008 bailout and the tepid 2010 banking reform bill, the U.S. is far from nationalizing its mega-banks now. But a committed homeowner movement to tear off the predatory mask called MERS could yet turn the tide. While courts are not likely to let 62 million homeowners off scot free, the defect in title created by MERS could give them significant new leverage at the bargaining table.

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While the state that was the source of MERS...(MD and VA) and whose lawyers were enriched by MERS business does not have the whistle blower laws to pursue fraud.....the Federal laws do. 
Why is this massive crime that targeted lower-class families important to everyone?  It sucked trillions from our economy....crippled it creating a cascade of wealth lost throughout the country.  The failure to enforce Rule of Law in these cases has given corporations a green light to act openly and we now have systemic fraud throughout US business with politicians openly AIDING AND ABETTING THESE CRIMES BY SIMPLY REFUSING TO ENFORCE THE LAW.  This lawlessness hurts everyone.



The following states have false claims laws (QUI TAM) that apply only to fraud involving Medicaid or other state healthcare funds: Arkansas, Colorado, Connecticut, Louisiana, Maryland, Michigan, Missouri, New Hampshire, Oklahoma, Texas, Washington and Wisconsin.

Keep in mind that many of these subprime loans involved Federal housing grants and loans so all of these frauds were punishable by the US Attorney who, with Obama....saw no fraud.


The False Claims Act (31 U.S.C. §§ 3729–3733, also called the "Lincoln Law") is an American federal law that imposes liability on persons and companies (typically federal contractors) who defraud governmental programs. The law includes a "qui tam" provision that allows people who are not affiliated with the government to file actions on behalf of the government (informally called "whistleblowing").



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TruthOut.org / By Danny Weil

  For-Profit Education Fraud Tied to Political Elite


A bipartisan group of the nation's political leaders have close ties to for-profit college scams. Now, an $11 billion lawsuit is forcing some of them into the spotlight. Photo Credit: Wikimedia Commons

April 20, 2012  |           On Friday, April 13, 2012,

Courthouse News reported a class-action lawsuit by students filed in federal court against the Art Institute of California and its owner, Educational Management Corporation (EDMC). As reported in Truthout, Sen. Olympia Snowe's (R-Maine) husband, former governor of Maine John McKernan, is chairman of the board of EDMC and a former CEO of the company.  The company also faces an $11 billion false claims lawsuit by the federal government and 11 states.

The lead plaintiff in the class-action suit, Chinea Washington, claims The Art Institute of California, Hollywood, led her to believe that federal grants and loans would cover the entire $89,000 cost for a bachelor's degree in interior design.

In November 2011, after three years of study, Washington was provided notice by the "college" that she had reached the federal loan/grant aggregate limit of $52,340 and that it would cost $37,000 to complete the degree. Washington dropped out with $52,160 in debt. Because The Art Institute's credits are not transferable, Washington has been swindled out of $52,000 and three years of her life.

The only way to describe $89,000 for a four-year degree with non-transferable credits from a non-academic college is as a fraud and a swindle, and that characterization possibly fails to convey the frustration and downright victimization students like Washington must feel.


Like subprime mortgages, for-profit colleges are a scam driven by payment of commissions to sales staff known as recruiters. The payment of commissions to high-pressure salespeople is so central to the scam that the umbrella trade group for for-profits, the Association of Private Sector Colleges and Universities (APSCU), has sued the federal government to overturn its ban on incentive pay.

It cannot be stated strongly enough: for-profit colleges could not engage in the ongoing exploitation of students and theft of federal money without the direct cooperation and assistance of the federal government in what can only be termed an immoral economy. The same forces that demonize everything government does or attempts to do are busy feeding from the government trough. The hypocrisy is untenable, the federal subsidies unfathomable and the lack of criminal prosecution unconscionable.

For-profit colleges are a kickback scheme where politicians enact favorable legislation and regulations that allow for-profit colleges to maintain access to student loans and grant money. The for-profit colleges then "give" a small cut of the federal money back to the politicians to enact favorable legislation.

In the cases of Senator Snowe and Sen. Dianne Feinstein (D-California), their husbands have operated under the cover of their wives as they directly benefited, and continue to benefit from, their positions as shareholders in for-profit college companies. Snowe and Feinstein are accomplices in the ongoing evisceration and defrauding of citizen taxpayers and students, which explains the pair's complete silence on this matter.

The so-called ruling class of government officials and elected politicians, to which Feinstein and Snowe clearly belong, is little more than a gaggle of white-collar criminals which facilitates and benefits from the diversion of taxpayer money into private coffers. It all takes on the appearance of legitimacy. Unfortunately, this is not a victimless crime. Like Washington, thousands of students who attend these subprime institutions are left with tens of thousands of dollars of nondischargeable debt which ends up ruining their lives.

There is a vast network of former and current government officials who actively participate in the for-profit college swindle. Some of the conspirators are well known, and include: Mitt Romney, Rep. Virginia Foxx (R-North Carolina), John Kline (R-Minnesota), Alcee Hastings(D-Florida), Trent Lott (R-Mississippi), Lamar Alexander (R-Tennessee), Steve Gunderson (R-Wisconsin), Virginia Democratic Party Chairman Brian Moran, Snowe, Feinstein, Nancy Pelosi (D-California), and John Boehner (R-Ohio). The group also includes Obama administration officials and supporters such as Lanny Davis, Anita Dunn, Hilary Rosen, Anthony Miller and Charles Rose.


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I want to emphasize that just because leaders in office are choosing not to pursue this fraud does not mean it is over....we are a Rule of Law nation with Equal Protection.....no government can choose not to enforce laws.

STOP ELECTING THESE NEO-LIBERALS WHO ARE WORKING FOR WEALTH AND PROFIT.



We saw the Washington Post bid to Amazon's owner but the Post family wants to hold on to Kaplan.....WONDER WHY?  FRAUD-FILLED PROFITS ANYONE!


Scandal at The Washington Post: Fraud, Lobbying & Insider Trading

Rusty Weiss  —   March 8, 2012
TruthOut

 
In the summer of 2010, business columnist for The Washington Post Steven Pearlstein lifted the veil on the little-known company operating procedure that involves an incestuous relationship between his own employer, and the scandal-plagued, for-profit university known as Kaplan.1 In his column, Pearlstein made the argument that while personnel in the newsroom may have nothing to do with Kaplan, they most certainly have “benefited from its financial success.”



So what is it about Kaplan that has been so beneficial to Post employees? Aside from being one of the largest for-profit colleges in the country, Kaplan is not only a subsidiary of The Washington Post, up until recently it has been the single most profitable aspect of the company. In 2009, the year prior to the Pearlstein article, Kaplan accounted for 58% of the Post’s revenue and generated the bulk of company profits, while newspaper and magazine publishing—in other words, journalism—accounted for a mere 19% of revenue and operated in the red.2 In 2010, Barron’s estimated that the value of The Washington Post company was roughly $8.5 billion, and that Kaplan represented about $5 billion.3 So it was no surprise when Pearlstein stated that Kaplan “has provided the handsome profits that have helped to cover this newspaper’s operating losses.”

With a financial resumé like that, and status as the cash cow keeping the Post afloat, why wouldn’t CEO Don Graham be singing the praises of Kaplan University? Perhaps because there is a longstanding history of allegations of fraudulent practices, with hundreds of millions of dollars of profits diverted to Kaplan executives. Perhaps it’s also Kaplan’s generation of such profit on the backs of poor students and returning war veterans, preying on their vulnerabilities only to later reward them with degrees of questionable value, massive student-loan debt, and little employment opportunity. Perhaps it is Kaplan’s curious hiring of lobbyists to influence legislation at the state and federal levels, including a former Obama staffer, Anita Dunn, just as the heat was being turned up on for-profit colleges to rein in out-of-control practices.

Whatever the reasons, Kaplan remains part of an industry that provides little educational value for its students—and raises many questions about how it has compromised the integrity of The Washington Post newspaper.

Student Complaints

In 2010, Bloomberg investigative reporter Daniel Golden relayed the story of Keith Melvin, a disabled Iraq War veteran who had been awarded a medal for “outstanding dedication to duty.”4 Upon returning home from his tour of duty, Melvin sought to pursue collegiate studies in the legal field. He performed an online search, filled out forms, and was eventually contacted by Kaplan University. The university convinced Melvin that it could further his educational pursuits through a litany of phone calls and e-mails, pressuring him to commit. One selling point that sealed the deal? Kaplan’s relationship with the prestigious Washington Post Company.



“With Kaplan having its credentials backed by The Washington Post, I thought, ‘How can this go wrong?’” Melvin said. “It sounded too good to be true, and it was.”

A former admissions adviser for Kaplan explained how The Washington Post was used in their sales pitch to prospective students.

“One of the things that I always said was, ‘As you may know, Kaplan is owned by The Washington Post, a paper known for having really high ethics,’ he said. ‘As you can imagine, The Washington Post would never involve itself in anything that would reflect poorly on its reputation.’”

But the prestige and high ethics promised by a relationship with the Post never materialized.  Melvin learned the hard way, as have other students, that the Kaplan experience consists of “high prices, uneven performance and shady marketing practices.”5 Worse, the university, for all of its selling points, has a dropout rate of nearly 70%, and those who do graduate earn well below the national average for college graduates—outcomes not exactly befitting of a money-making juggernaut and its supposedly ethical parent company.

Unfortunately, Melvin’s experience is not an isolated incident. Targeting and recruiting veterans is such a common practice among for-profit colleges that it prompted Senator Dick Durbin of Illinois to introduce legislation which would eliminate the financial incentive for these colleges to aggressively recruit veterans into pricey programs.6 A report in the Chicago Tribune explains that “military veterans are being aggressively recruited… because of their lucrative forms of federal aid, such as GI Bill funds and Department of Defense tuition assistance benefits.” Such funds are not bound by the 90/10 rule, which bars the for-profits from deriving more than 90 percent of their revenue from the Department of Education’s federal student-aid programs.

Veteran enrollment helps Kaplan circumvent the 90/10 rule, because GI Bill benefits don’t count as government assistance under the law. Congress further aided the for-profit industry by granting a $2,000 exemption per student to the 90/10 rule. Kaplan reported that it “got less than 87.5 percent of its receipts from federal student grants and loans in the fiscal year ended Jan. 3, 2010,” just short of the 90% cap.7  Putting a cap on this source of federal money means placing a limit on the university’s ability to generate revenue. As it stands, the 90/10 limit threatens access to billions of dollars in federal student aid in the for-profit industry.

While Kaplan targets and recruits veterans, in particular because of the federal funding opportunities, it certainly doesn’t restrict questionable tactics to these students. The student complaint board on their website shows over 130 current complaints by students at the college, ranging from general fraud, to misappropriation of funds, to “ignorant service.”8

In 2009, The Wall Street Journal reported on seven Kaplan campuses which had a three-year dropout rate over 30%, a clear indication that the university had been using aggressive marketing tactics to enroll students regardless of their ability to pay.9 Meanwhile, most students who do graduate discover that the grandiose promises of careers and large salaries were merely a sales ploy—and in fact, the product offered by Kaplan has substantially less value than that offered by traditional  public and private colleges.

A report from a leading for-profit research company explains that such universities are little more than “marketing firms who happen to market education.”10 A recent shareholder lawsuit against The Washington Post and its CEO Donald Graham was dismissed in December 2011 after the Post filed a motion to dismiss (pages 47-53).11 The lawsuit had alleged that the Post defrauded investors by engaging in deceptive and unethical business practices. The lawsuit was tossed, shockingly enough, because the motion to dismiss argued that the unethical practices were common knowledge, and therefore investors had not been misled. The Post essentially admitted that Kaplan had been running little more than a telemarketing scheme.12 In that filing, the Post stated that it was ‘no secret’ that the Kaplan Higher Education Corporation (KHE) operated under a business model that “depended upon the recruitment of low-income and minority students who were dependent upon federal loans and grants.” The Post concurred that the KHE was operating “football field sized call centers that made use of telemarketing techniques and sales goals.”

Marketing materials at Kaplan University show the depths to which recruiters were required to sink:

“If you can help them uncover their true pain and fear. If you get the prospect to think about how tough their situation is right now, if you talk about the life they can’t give their family right now because they don’t have a degree,” the flier instructs, “…You dramatically increase your chances of enrolling this prospective student. Get to their emotions, and you will create the urgency!”

With a university whose singular goal is to meet quarterly sales quotas by targeting low-income, minority, and veteran students, regardless of their ability to pay, it’s no wonder Kaplan’s business model results in consistent failure to serve the students they claim to help, along with consistently low graduation rates, high number of loan defaults, and a high level of dissatisfaction.

Executive Pay

Up until 2011, for-profit colleges had seen consistent double-digit growth in annual revenues, extracted from a litany of federal grants and loan programs under the Title IV program.13 The industry has been generating billions of dollars of revenue through predatory business practices akin to those in the subprime mortgage industry.14



For-profit universities earn money off the backs of service men and women, minorities, and low-income targets (some instances have recruiters seeking out prospective students in homeless shelters), with promises of government loans and grants, and post-graduation employment. At the same time, these colleges are using revenues obtained from the federal government to lobby politicians and weaken regulation. Politicians, backed by corporate influence, have facilitated the transfer of tens of billions of dollars of  public funds to these schools in the form of federal grants and loan programs. The result is a staggering level of profit with little of value provided to students or taxpayers.

So when a school like Kaplan pulls in  billions of dollars, who has benefitted the most?  The very people who are perpetuating the money-making scheme—the executives.

Between 2003 and 2008, executives at Kaplan received stock option payouts of $289 million dollars—nearly half of the school’s entire operating income during the same time frame.15,16 In 2003, Kaplan handed over $119 million in executive pay, more than double the university’s operating income that year, which came in at $58 million.

Nowhere is such lavish compensation more personified than with the case of Jonathan Grayer, former head of the Kaplan education unit, who resigned in 2008.17 Grayer’s resignation, after 17 years at the school, resulted in a $76 million severance package.18 The package included a $20 million bonus paid out in November of 2011, more than the university’s entire third quarter operating income of $18 million.

Meanwhile, The Washington Post, which reported over $6 million in losses during that same quarter, closed a majority of regional news bureaus, and was charged by The Washington Post Guild with “unjustly laying off employees and targeting employees of color.”19,20,21 Recently, they announced the buyout of up to 48 newsroom staff as a cost-cutting measure.

More importantly, under Grayer’s direction, Kaplan and the Post have been involved in the aforementioned shareholders lawsuit, more than a dozen whistleblower lawsuits, and have been the focus of multiple state and federal investigations.22

It can therefore be concluded that the Post did not reward Grayer based on academic performance, but rather on his ability to generate revenue for the company—ignoring the ethical quandary that his leadership created. This is why you do not have businesses in education!!

Government Regulation

Last summer, The New York Times reported that the Department of Education and Congress had placed Kaplan and other for-profit institutions under the microscope, because of their recruiting practices and high loan-default rates. The Education Department issued final regulations which will go into effect next July, “requiring career college programs to better prepare students for ‘gainful employment’ or risk losing access to the federal student aid that, on average, provides more than 85 percent of their revenue.”23



Further regulatory efforts will take effect in 2014, but will provide little protection for low- income students to avoid being shackled with unaffordable debt that cannot be discharged through bankruptcy.24 In fact, the 2014 regulations instituted by the Department of Education allow for schools like Kaplan to continue generating funds off the backs of students and taxpayers, allowing colleges to have a loan default rate of up to 40% in any one year, and up to 30% over 3 years.


Lobbying Against Regulation

Despite the announcement of weak regulatory measures, recent years have seen bi-partisan support in Congress against such regulations, and overall support for the controversial industry. The list of high-profile names that support these for-profit organizations include presidential candidates Ron Paul and Mitt Romney, Speaker of the House John Boehner, Dianne Feinstein, Jesse Jackson, and Nancy Pelosi.   Last year, Pelosi broke rank with her party and voted to keep billions of dollars in federal student aid flowing into the coffers of for-profit colleges.27 Boehner backed deregulation of the online learning industry, supporting the removal of a law known as the 50 Percent Rule back in 2006, eliminating legislation that had protected students by limiting how many could enroll in online courses.28  The rule was actually put in place back in 1992 in an attempt to curb waste and abuse of federal student aid programs by for-profit colleges. Repealing the 50% rule opened up the floodgates for online enrollment, allowing these colleges to acquire further capital from Wall Street for expansion.

The Obama administration has attempted to rein in for-profit colleges by imposing tighter regulations and limiting the role of private companies in student lending. They vowed to stop for-profit colleges from luring students with false promises. A New York Times article described it as “an opening volley that shook the $30 billion industry” where “officials proposed new restrictions to cut off the huge flow of federal aid to unfit programs.”

However, opposition to such regulations has continued to be an across-the-aisle effort, with Democrats and Republicans alike having accepted funds from such institutions, while simultaneously advocating on their behalf, ignoring the ongoing threat to veterans and low-income students.

Kaplan in particular has come under fire from liberal Democrats and the administration itself, for allegedly conning students into taking out federal loans for a mostly worthless education.  During The Washington Post Company’s annual meeting in 2011, Chairman Donald E. Graham acknowledged that his company had been hurt by congressional hearings and negative publicity over Kaplan’s controversial business practices.29 Representatives of stockholders have been repeatedly asking about the future of the company if profits are further cut by government regulation, with some suggesting that the Post may try to sell Kaplan in order to avoid further losses.

So what does one do when their billion-dollar cash cow is threatened? Lobby lawmakers to water down regulations on your behalf, of course.

While Graham refused to name any members of the House or Senate that he had personally lobbied during the annual meeting, there is little doubt that the Post has pulled out all of the stops in order to survive financially and stall regulations that would affect Kaplan. Graham called scrutiny of for-profit colleges an “unusual situation,” and assured shareholders that Kaplan had changed its ways in an attempt to prevent students from being saddled with too much debt, and nothing to show for it. Such lobbying hasn’t been limited to Graham’s speeches at shareholder meetings.

Roll Call had reported last year that “…Kaplan University, which is owned by the Washington Post Co., paid $110,000 to Akin Gump Strauss Hauer & Feld in the first quarter of this year to lobby on the issue and $90,000 to Ogilvy Government Relations.”30 At the end of 2011, funds directed to lobbying efforts were at their highest level ever for The Washington Post, topping out at $1 million, including a final tally of $210,000 to Akin, Gump et al, and $180,000 to Ogilvy.

Source: Open Secrets Blog

Cliff Kincaid of Accuracy in Media reported on the ties between these lobbying firms and lawmakers on both sides of the aisle:31

“Vic Fazio, a former Democratic Congressman from California, is a leader on the Akin Gump team, while GOP operative Wayne Berman leads the Ogilvy effort. The Washington Post Co. has also retained the Democrat- connected firm of Elmendorf Ryan to make its case.”

When adding in Elmendorf Ryan’s $160,000, over half-a-million dollars was spent on three major lobbying firms, with the singular goal of easing federal regulations related to Kaplan’s questionable business practices.



The Post, however, ramped up its lobbying efforts with the hiring of former White House communications director, and good friend to President Obama, Anita Dunn. Dunn played a key role in shaping the Kaplan message that abuse and misconduct were not industry-wide, while aiming to “blunt the impact” of the proposed regulations. She assured The New York Times that, while she has visited the White House roughly 80 times since her departure, she did not speak to colleagues about the issue.32

A major target of the Post and other education companies’ lobbying efforts has been the so-called “gainful employment” rules—rules that seek to tie the cost of higher education programs to the amount of money a graduate can expect to earn and loan repayment rates.

The resolution was designed to reduce the number of higher education loans that are going into default. Youth Today reported that in the first quarter of 2011 alone, “The Washington Post and its subsidiary Kaplan Inc. spent a total of $490,000 on lobbying, including paying five different lobbying firms,” focusing specifically on the gainful employment rules. The New York Times reported that the Post had spent a whopping $1.6 million in lobbying Congress on the gainful employment regulations alone. Bloomberg reported that, “publication of that rule was delayed last year, following a lobbying effort by for-profit colleges.”33

Donald Graham even took the unusual step of writing an editorial for The Wall Street Journal, which urged the White House to change the rules to “avoid disaster for low-income students.”34  A mere two months later, Graham threatened to impose his own disaster upon these same students, attempting to bully Congress into modifying the 90/10  rule, warning that he was willing to raise tuition rates on the financially struggling student body if they did not comply.

In the end, efforts to rein in regulations on the Kaplan money machine were successful and the threat of a major crackdown posed by the gainful employment rules had been averted after lobbying by Washington insiders. On June 2nd, rules handed down by the Department of Education had been significantly weakened.

The Times described it as such:

“…after a ferocious response that administration officials called one of the most intense they had seen, the Education Department produced a much-weakened final plan that almost certainly will have far less impact as it goes into effect next year.”

Millions From Insider Trading

In the summer of ’09, The Wall Street Journal did an exposé on for-profit colleges and their default rates, which featured the following statement:35

“For-profit schools are favorite targets of short-sellers, or investors who try to profit on bets that stocks will fall, and many have focused on default rates. For-profit schools receive more than $16 billion annually in federal student aid, and taxpayers are on the hook for loan losses.”


And with the recent victory at the lobbying table, the Graham family itself benefited after they had successfully kept their money-making machine intact.

In the days after the Obama administration announced a watered down version of the gainful employment regulations, stocks in every publicly traded college corporation rose, with some soaring in gains by over 20%.36 The message had been delivered—significantly weakened regulations would have little bearing on the industry’s profitability.


Armed with the knowledge that Kaplan’s stock rose after the regulation package was introduced, Post Chairman Donald Graham, sold off 24,000 shares in trusts benefitting family members, totaling $12 million. The timing raised eyebrows but the reasons seem clear, as Washington Post Company stock had jumped 9% immediately following reports of the new regulations, while settling back to near-average prices shortly thereafter.37



More curious was Graham’s insistence three months after the stock sales that “I have not sold a share of Washington Post Company stock in over 30 years nor has any trust for my benefit.”38 While the June selloff was not for Graham’s personal benefit, he did perform the transaction on behalf of his family’s trust.

As for the family stock selloff, Graham explains that, “I am also a trustee of several trusts for the benefit of other members of my family. From time to time, these family members who also started out life heavily concentrated in Post stock have asked their trustees to sell stock when, for example, they want to buy a house.”

But the claim of sporadic stock sales for occasional large purchases simply doesn’t ring true.  The Graham family has a history of multimillion dollar stock sales over the past four years, in which several of the transactions mimicked the post-regulation stock sale, with prices plummeting after the selloff. For instance:39

  • In April and May of 2008, the Graham family sold $29 million in stock at an average of roughly $675 per share, and within days the price dropped to $585 per share. (Chart A)
  • In August and September of that same year, the Graham family sold another $14 million in stock, then watched the stock price plummet from $600 per share to $400 per share.  (Chart A)
  • The aforementioned stock sale of $12 million this past summer was at a cost of $420 per share, dropping 100 points three weeks later, when quarterly reports showed a decline in yearly income of 50%.  (Chart B)
  • Publisher Katharine Weymouth—who is Don Graham’s niece—sold $45,000 in stock in June of 2011.
Chart A. Source: Market Watch, Wall Street Journal

Chart B. Source: Market Watch, Wall Street Journal

Additionally, according to a Daily Censored report last year, $20 million in sales were allegedly executed on behalf of Don Graham’s ex-wife’s in April of 2008.

Considering the Graham family’s apparent ability to predict major drop-offs in the company’s stock, one has to wonder about the legality of what appears to be insider trading taking place. At best, Donald Graham has not been honest in telling the media that the family only sells stock when it comes time to buy a house. They sell when they see the most potential for profit. With the post-regulatory stock sale, it is clear that the Graham family prospered by dropping stock immediately after the regulations were announced, possibly with knowledge in hand that future reports would show a year over year income drop of 50%.

Insider knowledge of Kaplan’s business performance, and The Washington Post stock value has been incredibly beneficial to the Graham family.

Summary

The Washington Post has seen a decline in newspaper circulation and journalistic business that they have been almost solely reliant on the success of their cash generating education business, Kaplan University. Chairman of the Post Company Don Graham has willfully turned a blind eye to allegations of fraudulent business practices, excessive student debt and hardship, and exorbitant executive compensation at the for-profit college. At the same time, Graham has actively engaged in lobbying to help generate profits on the backs of the very students he claims to serve, and also engaged in suspicious stock trading that has greatly benefited his family.

Even worse, The Washington Post remains a supposedly reputable staple of the mainstream print media, while refusing to report on one of its own despite media coverage from many other sources. The Post’s failure to report nearly all adverse news about Kaplan even prompted its former Ombudsman, Andrew Alexander, to write a piece which argued that the “Post needs to beef up its coverage of allegations against Kaplan.”40

Any company, such as Kaplan, that has been subject to so many government investigations and lawsuits, would be reported on by most responsible news organizations. Why does the Post bury its head in the sand on the Kaplan story, and is Graham personally responsible for suppressing such information?

It’s a question The Washington Post has yet to answer.





_____________________________________________________

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June 18th, 2013

6/18/2013

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Green Shadow Cabinet joins critical struggle to defeat the Trans-Pacific Partnership

June 17, 2013   Green Shadow Cabinet

The Green Shadow Cabinet stands united in opposition to the proposed Trans-Pacific Partnership (TPP), and is committed to defeating this Obama administration effort to enrich and empower global corporations at the expense of people and planet.

For three years, the Obama administration has engaged in 16 rounds of secret negotiations to develop the TPP. Those negotiations have included hundreds of representatives of global corporations. The TPP negotiations have excluded representatives of the vast majority of the American people. It is a fact that the TPP is global economic policy for the 1%, at the expense of the 99%.

Today, all five branches and 81 members of the Green Shadow Cabinet begin to act in concert to not only defeat the TPP, but to show America that another government with another global economic agenda is possible. There is an alternative to the corrupt political establishment that produces economic terrors like the TPP. Our Cabinet is proof of that alternative.

Daily this week, the Green Shadow Cabinet will release over a dozen statements in opposition to the TPP; these statements describe the threats posed by the TPP, and offer better alternatives. This month, our Cabinet members will begin participating in the broader movement against the TPP through actions and events across the United States and urge all Americans to join this effort. We are bringing our networks and communities into this critical struggle.

THE TPP THREATENS ALL OF US

If you oppose the industrial farming practices of Monsanto, Cargill and other giant food and agribusiness corporations, with their intense use of toxic herbicides and other harmful chemicals, production of untested genetically modified food, efforts to control the seed supply and patent life, their pollution of the water, air, soil and food supply, then you must oppose the TPP.

If you oppose the actions of the big banks and financial institutions that led to the world economic crash, exploding wealth inequality, risky investments that endanger the economic future, and their ability to dominate national economies, then you must oppose the TPP.

If you are committed to protecting the rights of working people to a living wage, the right to organize, and to safe working conditions, then you must oppose the TPP.

If you favor a free and open Internet where free speech is protected and creativity and communication flourish, then you must oppose the TPP.

If you understand that healthcare is a human right and that the inflated prices of pharmaceutical drugs should not be protected by law, then you must oppose the TPP.

If you want to see the air, waters and lands protected from toxic chemicals and pollution, and know that the ecological crisis of species extinction and environmental breakdown must be reversed, then you must oppose the TPP.

If you would live in a world where local, state, and national governments are allowed to take urgent action to deal with the global climate crisis, and to implement a Green New Deal, then you must oppose the TPP.

We look forward to working with you in the coming months to defeat the Trans-Pacific Partnership and to prevent its sister trade agreement, the Trans-Atlantic Trade and Investment Partnership, from following the same path. The first step is to stop enactment of Trade Promotion Authority legislation, also known as “Fast Track,” that would prevent Congress from holding hearings on the TPP or amending the TPP. There must be no end-run around the Constitution, or the right of the American people to petition the government for redress.

DEFENDING THE NEW WORLD

We know that another world is possible. We are building that world every day through local governments, cooperatives, community organizations, and publicly owned financial institutions.

Those who defend corporate capitalism also understand that another world is possible, and the Trans-Pacific Partnership is their attempt to foreclose our new world. The TPP gives major corporations legal personhood to sue in transnational courts dominated by judges who themselves are lawyers for major corporations. Under the TPP, corporations would be able to claim that environmental, labor, financial, health and other laws cost them profits, and to extract damages from our governments - and from us as taxpayers - if they enforce those laws.

The current administration in Washington D.C. is committed to passing the TPP and to defeating America’s grassroots movement for economic democracy. The Green Shadow Cabinet is committed to defeating the TPP, and to strengthening the U.S. democracy movement. We and our allies are the many, they are the few. Let us defend our communities and our future and stop the Trans-Pacific Partnership.

Statement of the Green Shadow Cabinet of the United States of America:

  • Jill Stein, President
  • Cheri Honkala, Vice President
  • Patch Adams, Assistant Secretary of Health for Holistic Health
  • Marsha Coleman-Adebayo, Government Transparency and Accountability, Director
  • Kali Akuno, Secretary of Racial Justice
  • Kris Alman, Assistant Secretary of Health for Data Privacy
  • Gar Alperovitz, New Economy Advisor to the President
  • Marc Armstrong, Secretary of Commerce
  • Ajamu Baraka, Public Intervenor for Human Rights
  • Bill Barry, Workers Rights Administration, Administrator
  • Roshan Bliss, Assistant Secretary of Education for Higher Education
  • Leah Bolger, Secretary of Defense
  • Steve Breyman, Environmental Protection Agency, Administrator
  • Mary Bricker-Jenkins, Aid to Families and Youth, Director
  • Ellen Brown, Secretary of the Treasury
  • Richard Bruno, Assistant Secretary of Health for Medical Education and Training
  • Shahid Buttar, Civil Rights Enforcement, Director 
  • Lee Camp, Commissioner for the Comedic Arts
  • Olveen Carrasquillo, Assistant Secretary of Health for Health Equity
  • Claudia Chaufan, Assistant Secretary of Health for System Design
  • Steven Chrismer, Secretary of Transportation
  • David Cobb, Commission on Corporations and Democracy, Chair
  • Khalilah Collins, Public Intervenor for Social Justice
  • Christopher Cox, Political Ecology Advisor to the President
  • Michael Crenshaw, People's Culture Bureau, Work Progress Administration
  • Maureen Cruise, Assistant Secretary of Health for Community Wellbeing
  • Ronnie Cummins, Administrator, Food and Drug Administration
  • Tim DeChristopher, Emergency Climate Action Coordinator
  • King Downing, President's Commission on Corrections Reform, Chair
  • Mark Dunlea, White House Office of Climate and Agriculture, Director
  • Steve Early, Workers Power Administration, Administrator
  • Robert Fitrakis, Federal Elections Commission, Chair
  • Margaret Flowers, Secretary of Health
  • George Friday, Commission on Community Power, Chair
  • Bruce Gagnon, Secretary of Space
  • Jack Gerson, Assistant Secretary of Education for K-12
  • Jim Goodman, Secretary of Agriculture
  • Philip Harvey, Full Employment Council, Chair
  • Howie Hawkins, Full Employment Council, Vice Chair
  • Kimberly King, Secretary of Education
  • Charles Komanoff, Assistant Secretary for Sustainable Urban Transportation
  • Bruce Levine, Assistant Secretary of Health for Clinical Mental Health
  • Vance "Head-Roc" Levy, Poet Laureate
  • Ethel Long-Scott, Commission on Women's Power, Co-Chair
  • Sarah Manski, Small Business Administration, Administrator
  • Ben Manski, White House Chief of Staff
  • George Paz Martin, Peace Ambassador
  • Gloria Mattera, Assistant Secretary of Health for Public Health Education
  • Richard McIntyre, U.S. Trade Representative
  • David McReynolds, Peace Advisor to the President
  • Gloria Meneses Sandoval, Secretary of Immigration
  • Richard Monje, Secretary of Labor
  • Suren Moodliar, Global Democracy Programs, Director
  • Jim Moran, Occupational Safety and Health Administration, Administrator
  • Carol Paris, Assistant Secretary of Health for Mental Health Systems
  • Sandy Perry, Secretary of Housing
  • Todd Price, Assistant Secretary of Education for Education Technology
  • Jesselyn Radack, National Security and Human Rights Advisor to the President
  • Jack Rasmus, Federal Reserve System, Chairman
  • Michael Ratner, Division of Civil, Social & Economic Rights, Director
  • Ray Rogers, International Labor Rights, Advisor
  • Anna Rondon, Assistant Secretary of the Interior for Indian Affairs
  • Lewis Rosenbaum, Public Media Administration, Administrator
  • Daniel Shea, Veteran's Affairs: Chemical Exposure
  • Diljeet Singh, Assistant Secretary of Health for Women's Health and Cancer
  • Kaitlin Sopoci-Belknap, Bureau of Water Preservation, Director
  • Robert Stone, Assistant Secretary of Health for Emergency and Palliative Care
  • David Swanson, Secretary of Peace
  • Sean Sweeney, Climate Change Advisor to the President
  • Clifford Thornton, Drug Policy Agency, Administrator
  • Brian Tokar, Director of the Office of Technology Assessment
  • Bruce Trigg, Assistant Secretary of Health for Drug Policy
  • Walter Tsou, Surgeon General
  • Kabzuag Vaj, Commission on Women's Power, Co-Chair
  • Harvey Wasserman, Secretary of Energy
  • Rich Whitney, Office of Management and Budget, Director
  • Richard D. Wolff, Council of Economic Advisors, Chair
  • Ann Wright, Secretary of State
  • Bruce Wright, Commission on Ending Homelessness, Chair
  • Stephen Zarlenga, Monetary Authority Board, Chair
  • Kevin Zeese, Attorney General
Click here to read other statements of the Green Shadow Cabinet and to learn more.
________________________________________________






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Vancouver Protests Demand "End to Silence" on TPP Resist! Corporatism, TPP
By Kristen Beifus and Stuart Trew, www.popularresistance.org
June 17th, 2013
North American fair trade activists put the spotlight on secretive international trade negotiations in Vancouver this weekend Vancouver, June 16, 2013 – Negotiators from 11 Pacific Rim countries met quietly in Vancouver this weekend to set new investment rules within the proposed Trans-Pacific Partnership (TPP). No announcement of this “intersessional” on investment was made to the public or the media.

People in Canada first learned about this TPP ‘mini’ negotiation from an article in the Peruvian media Friday. It was later confirmed by iPolitics.ca with no other details and has since been acknowledged by the federal government in a brief statement concluding the intersessional talks.

“It’s long past time to end the silence on the TPP,” says Kristen Beifus of the Washington Fair Trade Coalition. “It’s outrageous that this investor rights treaty is being developed behind closed doors. What they are negotiating will impact all of us, just as NAFTA has for 20 years, and we deserve to know what is being negotiated in our name.”

Activists from Canada, the U.S. and Mexico, under the banner of the TPPxBorder network, gathered in Vancouver this weekend to challenge the TPP investment talks. They held an emergency teach-in at Greenpeace Vancouver offices on Saturday night and projected messages about the unacceptable secrecy in the TPP negotiations on downtown buildings (see photo).

On Sunday, the same groups protested the TPP outside the offices of Pacific Rim — a Canadian mining company that is suing El Salvador for $300 million under international investment rules that say corporate profits should be protected from community opposition to mining.

“The Pacific Rim case epitomizes everything that is wrong with investment treaties and investment chapters in corporate rights deals like the TPP — and why it was important to protest the intersessional TPP meeting in Vancouver,” says Stuart Trew, trade campaigner with the Council of Canadians. “The investor-state lawsuits are not decided by the courts but by unaccountable commercial arbitrators. Canada’s had enough of that through NAFTA. The last thing we need is to expand this across the Pacific to countries that can’t afford it.”

The Trans-Pacific Partnership involves 12 countries around the Pacific (Canada, US, Mexico, Peru, Chile, Australia, New Zealand, Brunei, Malaysia, Vietnam, Singapore, Japan) and 600 international corporations which also participate in the talks. In addition to new investor rights rules, the TPP aims to extend patents for brand-name pharmaceuticals thereby driving up drug prices, put new restrictions on and even criminalize routine Internet activities such as file-sharing, and poses a threat to environmental and public health laws.

More information:
Kristen Beifus, Washington Fair Trade Coalition: 503-539-7471; kristen@washingtonfairtrade.org (in Vancouver)
Stuart Trew, Council of Canadians: 647-222-9782; strew@canadians.org (in Toronto)
For more information on TPP: TPPxBorder.org, TPPxBorder on Facebook, @tppxborder on Twitter

________________________________________________



Happening NOW in Brazil! Protesters have occupied the halls and the roof of congress! Hundred of thousands in the streets!

#Brazil #AnonymousBrasil #BrasilAcordou #OGiganteAcordou #protestobsb #changebrazil

Please watch and share:
http://www.livestream.com/anonymousBR

To learn more about the Brazilian uprising please watch:
http://www.youtube.com/watch?v=AIBYEXLGdSg&feature=youtu.be

All Power to the People!

KLM

_____________________________________________

I thank Margaret for this assessment that is right on.....I only ask why as she says that progressive leaders did not start to out this in 2011 as she acknowledges the leak occurred.  One can suspect that they did not want the 2012 elections hurt for the democrats but we all know that Third Way corporate democrats are working towards the same goals as republicans so we needed to get people on board with this fight years ago.  As it is now, Third Way corporate democrats will try to push these deals through Congress just as they did sequester......a massive spark of intense closed door negotiations with a quick vote that approves all of these trade deal agreements with no public input.  WE ALREADY KNOW THAT IS WHAT WILL HAPPEN AND THE CURRENT IMMIGRATION REFORM BILL IS ONE OF THESE EARLY TRADE DEAL ISSUES DISGUISED AS POLICY MEANT TO HELP EXISTING AMERICAN IMMIGRANTS.

As Margaret says here there is no way that global health systems will be anything but cutthroat and profit-driven and we know that the Affordable Care Act is simply moving that policy of global markets for market-based health care.
  Third Way corporate democrats and Obama are actually trying to force nations that have strong public health care to cut programs as these subsidies kill market competition.  See why they are gutting and killing the Entitlements with massive fraud and defunding just like our pension system?

I am not sure of some of these social leaders like Margaret and Green Party Jill Stein because none of them place the massive corporate fraud and recovery of Treasury bound payroll taxes out in the open.  I know that all of these issues are overwhelming but we need people to know that they are due tens of trillions of dollars and that we will get them back.
  They are providing a national voice to important issues


Trans-Pacific Partnership undermines health system
Medical corporations seek tools to protect their profits despite harmful effects on public health.
Last Modified: 17 Jun 2013 15:38 Margaret Flowers



Margaret Flowers, MD served as Congressional Fellow for Physicians for a National Health Program and is on the board of Healthcare-Now. She is co-director of It's Our Economy and co-host of Clearing the FOG Radio Show.

RSS People in the US pay the most for health services as there is no rational system for setting prices [Reuters] The Trans-Pacific Partnership (TPP) is a deal that is being secretly negotiated by the White House, with the help of more than 600 corporate advisers and Pacific Rim nations, including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. While the TPP is being called a trade agreement, the US already has trade agreements covering 90 percent of the GDP of the countries involved in the talks. Instead, the TPP is a major power grab by large corporations.

The text of the TPP includes 29 chapters, only five of which are about trade. The remaining chapters are focused on changes that multinational corporations have not been able to pass in Congress such as restrictions on internet privacy, increased patent protections, greater access to litigation and further financial deregulation.

So far, all that is known about the contents of the TPP is from documents that have been leaked and reports from NGOs and industry meetings. Unlike other trade deals, the White House refuses to make the text available to the public. In fact, the negotiators refuse to publish the text until four years after it is signed into law. Why are they being so secretive? Former US Trade Representative Ron Kirk said he opposed making the text public because doing so would raise such opposition that it could make the deal impossible to sign.

From the information available, one thing is clear about the impacts of the TPP on health care: the intention of the TPP is to enhance and protect the profits of medical and pharmaceutical corporations without considering the harmful effects their policies will have on human health.

We know that the TPP will extend pharmaceutical and medical device patents and provide other tools to keep the prices of these necessities high. This will make medications and treatments unaffordable for millions of people and raise the costs of national health programmes. At its worst, the TPP will provide a pathway to infect the world's health systems with the deadly parasite of for-profit health corporations that plague the US.

Patents keep prices high

Through the TPP, pharmaceutical and medical device corporations are seeking extensive patent protections using a process known as "Evergreening". The TPP gives 20 years of patent protection for pharmaceuticals and medical devices; however, patents can be renewed for another 20 years each time there is a change in an indication or delivery. For instance, if a drug is indicated for headaches, but then the pharmaceutical company finds that it is also helpful for stomach cramps or makes it a capsule instead of a tablet, a new patent may be issued. In reality, patents can be extended indefinitely under the TPP.

Doctors Without Borders criticised this practice, stating that patent protections in previous trade agreements raised the price of life-saving medications and made them unavailable to people in poorer countries. Patents prevent the production of low cost generic forms of medications. Yet it was the availability of generic medicines to treat HIV and other infectious diseases that allowed advances to be made in decreasing their impact in developing countries.

Because of the negative impact on public health from patent protections in previous trade agreements, such as the Korea Free Trade Agreement, former President Bush rolled some of these practices back. Unfortunately, the TPP will move them forward again.

In fact, the TPP goes farther than previous agreements by also requiring that surgical techniques, medical tests and treatments be patented. This will restrict the availability of these treatments, especially in health systems that have limited resources. 


India's top court dismisses drug patent case Doctors Without Borders also expressed concern that patent protections encourage innovation based on profit instead of the needs of people, particularly those in poor nations. Corporations do not see it as in their financial interest to address health conditions more prevalent in poor nations which do not have the financial resources to buy their products. But it is often in these situations treatments can have the greatest impact on quality of life.

Attacking public health systems

An area of great concern is language within the TPP concerning State-Owned Enterprises (SOEs). These are institutions that are fully or partially owned by governments. SOEs are very common in countries such as Vietnam, Malaysia and Singapore.

Corporate lobbyists are concerned that SOEs have "unfair advantages" over private industry. These advantages include government subsidies, preferred tax status, low finance rates and access to capital. According to a leaked chapter, corporate lobbyists believe that there is a conflict of interest because SOEs have political considerations such as functioning to provide basic goods and services for their population and believe that instead SOEs should operate strictly as commercial entities seeking profit.

The TPP requires SOEs to disclose any special advantages they receive and the government to give the same advantages to corporations. It also provides methods for corporations to sue governments if they believe that they are not being treated fairly. The text outlines punishments such as increased tariffs on exports from the country found in violation and suspension of any "tariff concessions" made to the country in violation on imports.

Text from a section of the TPP called "Annex on Transparency and Procedural Fairness for Healthcare Technologies" was leaked in June 2011. It reveals this conflict between medical industries that have strictly commercial interests and public health systems that are concerned about the health of the population. Medical industries are pushing on all fronts to keep their prices high while public health systems must negotiate to keep prices affordable and maximize what they can cover within their budgets.

To the medical industries, such price negotiation is one of the "unfair advantages" of public health systems. When a public health system negotiates a lower price, it is said to be exerting its market power. On the flip side, when a government extends patent protections to medical industries to keep prices high, this is not considered to be an unfair advantage granted by the government.

Medical industries are pushing for other concessions within the TPP to "level the playing field", also known as forcing public entities to operate as market-based entities, such as factoring the cost of not just research, development and production of drugs and medical devices, but also the cost of marketing them into what is considered to be a fair market price. And they only view prices negotiated without any government influence as fair. These provisions are significant because the TPP allows pharmaceutical corporations and others to challenge the legitimacy of any reimbursement decisions made by public health systems through the courts.

Patent and price protections for multinational pharmaceutical and medical device corporations based in the US will benefit their bottom line and their investor's pockets, but may bounce back and undermine public health systems in the US. The leaked text indicates that the above provisions only apply to health authorities under the jurisdiction of the federal government. However, the loopholes are large enough that all of the US public health systems, which include Medicare, Medicaid, Tricare and the Veterans Health Administration, can arguably be considered to be federal.

These systems already struggle within the market-based US health system that is most expensive in the world. The US health system wastes one third of health dollars on a bloated bureaucracy due to thousands of different health insurance plans, each with different rules. And people in the US pay the most for prescriptions and health services because there is no rational system for setting prices. High prices in the private health sector drive up prices in the public health sector too. For example, at present Medicare is prohibited from negotiating a bulk price for pharmaceuticals.

Over the past four years, there has been an increase in self-rationing in the US, patients avoiding or delaying necessary medical care and medications, due to health costs. At the same time, CEOs of health industries are the highest-paid in the nation. For the good of public health, we must reverse this trend towards greater privatization and lower the cost of care. But the TPP will protect the medical industries and give them greater power to use their wealth and the rigged trade tribunal court system to protect their profits.


This will undermine health systems in the US and abroad. High prices could bankrupt public health systems like those in Japan and Australia (ranked among the top in the world). Under the TPP, it is also possible that Japan's regulation of health insurance which includes controlling coverage, prices and profits would qualify it as an SOE that has unfair advantages. This could open the door for private multinational health insurance corporations to enter TPP signatory countries and demand access and that regulations are loosened.

As medical corporations gain greater wealth and power, we can expect to see further abuses to the detriment of human health. The TPP takes global health in the wrong direction. The losers in this negotiation will be the patients if the profits of corporations are permitted to come before the health of people.

Margaret Flowers, MD, served as Congressional Fellow for Physicians for a National Health Program and is on the board of Healthcare-Now. She is co-director of It's Our Economy and co-host of Clearing the FOG Radio Show.






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    Cindy Walsh is a lifelong political activist and academic living in Baltimore, Maryland.

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