March 25, 2015
To: Maryland Attorney General Peter Frosh
Securities Division/The Criminal Investigations Division
200 St. Paul Place, Baltimore, MD 21202;
Baltimore State's Attorney
120 East Baltimore Street, 9th Floor
Baltimore, MD 21202
2600 Lord Baltimore Drive
Baltimore, MD 21244
From: Cindy Walsh
Citizens Oversight Maryland's
2522 N. Calvert St
Baltimore, Maryland 21218
RE: Public Malfeasance and Securities Fraud in Maryland
The citizens of Maryland have endured billions of dollars in losses from investments made by Maryland public officials with public assets, public sector pensions, and public services and programs. The use of Wall Street investment instruments over a few decades has shown over and over to be handled in ways that cost the public those billions of dollars even as government agencies are reporting these investments as sound and beneficial. Last decade while national financial analysts and government watchdogs were shouting of a systemically criminal subprime mortgage fraud that would bring the entire economy down, Maryland and especially Baltimore found itself one of the heaviest promoters of these subprime mortgage loans and the number of victims show this. Baltimore and Maryland were center in the LIBOR fraud as well as pension frauds. Public pensions were moved from the then safety of the bond market in 2007 into a collapsing stock market and tied to the worst of Wall Street banks used to keep those banks afloat and pensions lost ½ value because of these investment moves a novice would know were bad for Maryland pension-holders. Showing no regard to these systemic criminal activities by Wall Street banks exposed in entirety after the 2008 economic crash, Maryland public officials went right back to wheeling and dealing with Wall Street financial instruments knowing the risks were higher with the nations economy and national debt from all of this fraud reaching $17 trillion and more.
Maryland public officials know the public will lose in these financial deals and they are working against public interest.....tying the citizens of Maryland with so much future debt and losses from bad investment deals that the billions lost the last decade will become far greater this coming decade.
Maryland is one of the richest states in the nation and it is the most wealth inequitable as well because the public policy tied to economic growth, taxation, and public works and services is allowed to be deliberately skewed to the favor of a few. The Maryland Constitution does not allow for its citizens to be sorely used by its public officials. There is an oath taken to serve the people and uphold the Constitution and laws of Maryland. Maryland has plenty of revenue sources yet tapped to complete projects that are always tied to Wall Street leverage. It is choice and not necessity that places Maryland taxpayers and citizens in harm's way with each of these investment schemes.
The latest and soon to be most damaging investment scheme is municipal bond leveraging as a way to load the state and City of Baltimore with so much debt that government coffers will be empty for decades in advance to pay for what the current Maryland Assembly and Baltimore City Hall deems worthy projects. This negates the right of citizens to vote politicians into and out of office to make changes these voters see fit. It is the enormity of this deliberate indebtedness that constitutes malfeasance and it is done with the knowledge that yet another economic crash is soon to come created by the very over-extension of this sovereign and municipal bond debt. These financial institutions and these politicians involved in credit bond leverage do so knowing the adverse consequences these deals will have for the citizens of Maryland. This is done with the knowledge of doing harm, it is deliberate, and done with malice. The national and international media has spoken of the results from the current bond market actions taken by Wall Street. Any person taking the time to read and understand the stock market as all elected officials making these financial laws should knows where this Wall Street policy with bonds were leading----both world-wide and nationally. Much has been written by financial experts and citizen watchdog groups since 2009 when these bond policies were made super-heated and much has been written these last two years shouting that another economic crash is eminent this time by credit bond leverage fraud. As the time for the bond market collapse gets closer, the Maryland Assembly and Baltimore City Hall adds more and more credit bond leverage just as was done with the subprime mortgage loan fraud when in 2005 financial analysts made public the systemic fraud then 2006 and 2007 saw record amounts of subprime mortgage loans more toxic than ever. This is what is happening now in the municipal bond market.
These Maryland agencies tasked with keeping the economy and our Maryland Treasury sound will tell you Moodys or S & P rating corporations have given Maryland AAA so how can these investments be bad? Moodys and S & P are the very rating corporations known to be central in the rating fraud for subprime mortgage loans giving the most toxic AAA ratings and they are the same corporations having no recourse for their part in that fraud. Maryland has tied property taxes to assure these credit bonds----and a bad deal will mean that Maryland citizens owning real estate will see the brunt of the fallout. Not the corporations mind you because they have had all of their property taxes removed in these financial deals---it will be residents and small businesses that feel the brunt for decades. One term of an election does not warrant political decisions tying the citizens of Maryland to what everyone knows is very bad and illegal public policy.
The number one financial tool selling on Wall Street these few years is the Credit Default Swap protecting investment firms against loses from these municipal credit bond deals. Governments do not have this insurance only the 'stakeholders' investment firms will be covered when this coming economic crash from a collapsing bond market hits. What happens when this crash comes? These deals are written such that the State of Maryland will not be responsible for losses and so the localities like Baltimore City which has super-sized its exposure will be responsible for all of these bond obligations and will no doubt be pushed to default and probably into bankruptcy. All of the public assets tied to these bond deals----public schools, museums, State Center, public housing, parks, roads etc will likely fall into the hands of the private investors. This does not even address the fact that these deals add billions onto the overall cost to taxpayers and it does not address the fact that financial analysts know that interest rates and inflation will soar with the coming crash making the losses to the citizens of Maryland enormous.
IT DOES NOT TAKE A ROCKET SCIENTIST TO SEE THIS IS WHERE THESE POLICIES LEAD AND IT IS PUBLIC MALFEASANCE AND FRAUD TO SET THE CITIZENS OF MARYLAND AND THEIR ASSETS UP FOR THESE LOSES!
The State of Maryland owes the City of Baltimore $700 million dollars from an Algebra Project lawsuit a decade ago for failure to fully fund Baltimore City schools. The Maryland Court of Appeals awarded this amount and the Maryland Assembly simply refused to pay. The settlement from the subprime loan fraud for Maryland has $700 million dollars in the Treasury for the communities in Baltimore hit the hardest with this fraud and that together would pay the $1 billion deliberately tied to credit bond debt these politicians know will go bad.
The terms of Martin O'Malley have seen these credit bond deals soar and this 2014 Maryland Assembly session brought more bond deals than ever. Many are tied with our public school buildings and real estate. It appears the only explanation for all of this debt when the State of Maryland has plenty of revenue sources for cash for these projects is to deliberately create the conditions for default and hand these public assets to those investors 'stakeholders' tied to these credit bond deals. It is clear. There is a pattern of public losses to these bad Wall Street investment deals and we are demanding that these bond deals end now -----those made over these few years and those now in the pipeline in the Maryland Assembly and Baltimore City Hall. Citizens Oversight Maryland will be taking this to court as wrongful actions.
Thank you for ending this round of public malfeasance and financial fraud,
Citizens Oversight Maryland
2522 N Calvert St
Baltimore, Maryland 21218
cc: Governor Larry Hogan; Maryland Assembly leaders Mike Busch and Mike Miller; Maryland Assembly House and Senate Committee Chairs. Baltimore Mayor Rawlings-Blake; Baltimore City Council members.
Bond Binge Pushing Leverage Toward Financial Crisis Peak
by Charles Mead 11:56 AM EDT
August 28, 2013 Bloomberg Financials
A Bond Market Collapse Is Imminent As Junk-bond ETF Short-interest Soars And Mutual Fund Giants Began Turning Down People Hoping To Invest In Funds That Buy Junk Bonds
Submitted by IWB, on December 2nd, 2012
Read more at http://investmentwatchblog.com
For immediate release:
Wednesday, April 3, 2013
Mayor, City Schools Board and CEO Applaud Final Passage
of Construction Funding Legislation
Legislation creates new partnership
among city, state and district; allows implementation of City Schools’ 10
-year buildings plan to begin(Baltimore, MD)—After a week of amendments and debate in both chambers of the Maryland General Assembly, the House of Delegates the finishing touches yesterday on legislation that
establishes funding and oversight for Baltimore City Public Schools’
10-year buildings plan. The final passage of the bill, which now goes to the governor to be signed into law, will result in an approximately $1 billion
investment in new and modernized school buildings and allow the district to move forward with implementing the plan.
General Obligation Bonds Click here for the Official Statements.
General Obligation debt, which is backed by the pledge of the full faith and credit of the State, finances State-owned capital improvements, such as prisons and colleges, and various State capital grants to local governments and private non-profit organizations. Projects funded include local public schools, local jails, water treatment facilities, museums, rehabilitation of historic structures, and private treatment centers for the developmentally and physically disabled.
The State's General Obligation bonds have been assigned the highest credit rating by Moody's Investors Service, Inc. (Aaa), Standard and Poor's (AAA) and Fitch Ratings, Inc. (AAA). One of only ten states in the nation to hold a Triple-A credit rating from all three major credit rating agencies, Maryland's low interest rates are attributable to these superior ratings.
PROJECTED GENERAL OBLIGATION BONDS
JUNE 30, 2014 AND JUNE 30, 2015
Bonds Outstanding - June 30, 2013 $8,005,802,067
Issued Fiscal Year 2014 1,216,404,000
Redeemed Fiscal Year 2014 (613,979,450)
Refunded Fiscal Year 2014 (245,880,000)
Bonds Outstanding - June 30, 2014 8,362,346,617
Projected Issuance Fiscal Year 2015 1,022,875,000
Redeemed Fiscal Year 2015 (658,368,717)
Bonds Outstanding - June 30, 2015 8,726,852,900