Chris Murray

As I write this at 7:30 in the morning,  I'm gulping coffee, trying to get awake.  I woke up a half hour ago, when it was still pitch dark outside.  My body was screaming at me to stay in bed, but I couldn't sleep any longer.  I had to get up to go to work.

Thank you daylight savings saving time.

Last Sunday at 2 am, we Hoosiers had to set our clock forward an hour so that, as Spring approaches, we will have an extra hour of sunlight at the end of the day.  Of course that means one less hour of sunlight at the start of the day.  You can't magically create an extra hour of sunlight by adjusting the clock.

Several years ago when then Governor Mitch Daniels pushed for Indiana to observe daylight saving time, I never bought the claimed financial benefits of DST that he suggested.  Still, I was agnostic about the concept.  But in the years since the adoption of DST, I have grown to hate it.  My internal clock very much does not like it.  I am so tired of these groggy late winter, early spring mornings.  And I think it's a bit weird that the sun doesn't go down until 9:30 pm in the middle of the summer.   Seems unnatural.

I also question why Indiana is in the eastern time zone instead of the central.  Chicago is in the central time zone, while New York City is in the eastern.  Last time I consulted a map, Indiana is closer to Chicago than New York.

But I will go one step further.  Why do we need to have time zones at all?  The idea of time zones is that at noon, everyone, regardless of where they live, will have the sun (approximately) directly overhead.  Why is that important? 

Sir Sanford Fleming, a Canadian engineer, came up with the idea of time zones back in 1878.  His idea was to divide the world into 24 time zones, each 15 degrees of longitude apart.  That's because the Earth rotates 15 degrees every hour, or 360 degrees in 24 hours.

Fleming was trying to address the problem of "local time."  Communities were setting their time based on the sunlight, again with noon being the time when the sun was directly overhead.  Fleming noticed the problem of train passengers continually having to reset their watches as they traveled.

Well, you know what...155 years later, we are still having to reset our watches when we travel across time zones.  Fleming's innovation didn't change that.

Given our modern world, an era of instant communication and rapid travel, there is no longer any reason for the antiquated concept of time zones.  In fact, in an era of worldwide commerce, we'd be much better off with a universal clock, and in fact many professions use one - Coordinated Universal Time (UTC).

When I bring the notion of everyone in the world being on the same time, people are baffled.  If under universal time, it is 8 a.m., then they'd have to go to work even if it's the middle of the night, right?  No, of course not.  Instead of adjusting the clock for the sunlight, let local businesses, schools, etc., adjust the hours they are open for the daylight hours in their area.

Of course, acceptance of this concept would be made easier by discarding a.m., p.m. in favor a of a 24 hour clock.

Andrew Kluth, writing for Bloomberg, seems to get what I'm talking about:

The whole notion of time zones rests on a fundamental delusion. It suggests that a number — seven, 12 or 21 — should tell us when to get up, eat lunch or go to bed. We should instead be taking our orders from the interplay of planetary rotation and circadian rhythm.

Hence the idea of transitioning to a simpler but superior system. It would combine one global time with several billion individual — and biological — times.

The single global time is necessary because the railways and telegraphs of the 19th century represented only the beta version of globalization, whereas our Zoom-and-Slack era is the real deal. That’s why pilots, who’d rather not crash in the multinational airspace, already use Coordinated Universal Time. It’s the successor to Greenwich Mean Time, but abbreviated UTC rather than CUT, to appease (whom else?) speakers of French.

We should all use UTC. Initially, this would be weird, even hilarious. New Yorkers would have to get used to having breakfast when the clock seems to say noon, Shanghainese when it shows midnight. But we’d quickly sort it out.

Tell me: At 70 degrees temperature, would you be comfortable, boiling or frozen dead? That rather depends on whether we’ve chosen Fahrenheit, Celsius or Kelvin, wouldn’t you agree? But the temperature hasn’t changed, and we know the one that feels right.

In the same way, after adopting UTC everywhere, we might also reconnect with natural time. We’d start listening to our bodies again, and associate different numbers with dawn, noon, night and so forth.

Better yet, almost all of us (except those along the longitude of London) would have to revisit our conventions — when school should start, when work should end, and so forth. This would force even bureaucracies to become temporarily flexible. School might start later to accommodate the patterns of teenage brains. Work should finish before dark, lest the blue light of our computers wake us and ruin our subsequent sleep.

Making time in one sense absolute — setting the clocks to the same number worldwide — would be efficient in our global economy. Leaving the interpretation of that number up to us could help re-synchronize us with natural light, aiding everything from digestion to sleep. Albert Einstein meant it differently, but in that most important sense, time really is relative. 

Last week, Florida Senator Rick Scott and head of the National Republican Senate Committee released a 11 point GOP agenda for the upcoming election that included a tax increase on one half of all Americans.  Scott says, correctly, that half of Americans don't pay income taxes.  Scott says those Americans need to have "skin in the game."  

Democrats immediately pounced while Republicans ran away as fast as they could.  Senator Scott then went on Fox, claiming he wasn't proposing a tax increase at all.  Naturally the Fox hosts went along with the absurd claim.

Senator Rick Scott (R-FL)

Let's go over the math.  If I pay $0 in taxes one year, then pay $500 in taxes the next, is that an increase in taxes?  Yes!   

Scott is in fact proposing that we raise taxes on the poor and middle-class Americans.  Not a good look.  

Now GOP Senate leadership is trying to distance itself from the tax increase idea.  Politico reports:

Asked about the proposal at a press conference on Tuesday, [Senate Majority Leader Mitch] McConnell firmly stated that Scott's plan was not his vision.

"Let me tell you what would not be a part of our agenda," McConnell said. "We will not have as part of our agenda a bill that raises taxes on half the American people, and sunsets Social Security and Medicare within five years."

"That will not be part of the Republican Senate majority agenda," he reiterated. "We will focus instead on what the American people are concerned about: inflation, energy, defense, the border and crime."

McConnell's rebuke of Scott -- a rare public admonishment of one of his top lieutenants -- demonstrated fissures within the GOP over how to win key Senate races that could determine which party controls the upper chamber after the November elections.

The ethically challenged Scott may have been the worst governor in America when he led Florida.  Fortunately for Scott, he is now in a chamber where his awfulness is overshadowed by other Senators on his side of the aisle.  

***

OOP's short takes:

• Early on, I thought President Biden's State of the Union speech had a chance to be one of the best ever given.  Then he started into the laundry list...the list of accomplishments and policy objectives every President seems compelled to include in the State of the Union speech. As a result, the speech droned on for about 45 minutes longer than it needed.  With the Russian invasion of Ukraine, Biden had the perfect opportunity to break the laundry list tradition and he refused to take it.
• Regardless, Biden proved the "Dementia Joe" nonsense is just that - nonsense.  He proved himself to be very articulate and in command.  He doesn't have a 95 mile an hour fastball any more.  But it's 90 mph, which is good enough.

I am so tired of the lack of civility in today's public discourse.  Recently, a Carmel-Clay School Board meeting featured parents acting the fools, interrupting the proceedings.  The Board finally had to adjourn. For the time being, the Board will only be having virtual board meetings due to the uncivility of the Carmel parents.

Those were probably right-wing activists.  But such foolishness is not confined to the right side of the political spectrum.  In Arizona, liberal activists interrupted Arizona Senator Kyrsten Sinema who was trying to teach a college class at Arizona State University.   After class, Sinema proceeded to the bathroom but was trailed by activists who continued to yell at her.  One of those activists followed her into the restroom, continuing to videotape the confrontation.   The video continued to roll as the Senator entered a stall to do her business.  The activist then uploaded the video to social media, apparently thinking the confrontation was some sort of "win."  It was not.

The filming may have also been illegal.  Arizona's law on video recording says:  

It is unlawful for any person to knowingly photograph, videotape, film, digitally record or by any other means secretly view, with or without a device, another person without that person's consent under either of the following circumstances:

    1. In a restroom, bathroom, locker room, bedroom or other location where the person has a reasonable expectation of privacy and the person is urinating, defecating, dressing, undressing, nude or involved in sexual intercourse or sexual contact.

    2. In a manner that directly or indirectly captures or allows the viewing of the person's genitalia, buttock or female breast, whether clothed or unclothed, that is not otherwise visible to the public.

It is unlawful to disclose, display, distribute or publish a photograph, videotape, film or digital recording made in violation of subsection A of this section without the consent or knowledge of the person depicted.

...

Thus, the video recording and the publication of that recording could constitute two separate crimes, indeed felonies.  Although law enforcement is reportedly investigating the incident, the mainstream media seems intent on ignoring that investigation and the fact that the recording may well have been illegal.  Sinema though noticed the Arizona statute as has some far right, less than credible media outlets such as Epoch Times, Washington Times and Fox News. 

The activist who videotape Sinema in the bathroom needs to be prosecuted.  And if any Arizona State students were involved in the interruption of her teaching, they need to be expelled.  People need to learn the lesson that one's free speech rights do not include the right to interrupt classes or public proceedings. And those rights certainly do not permit the videotaping of public officials in the bathroom.

***

I've long described myself as a libertarian conservative.  It might be time to rethink the first part of that description because of my next two rants.

Sports gambling.  I am tired of all those ads trying to entice new gamblers by promising them risk-free first bets.  It reminds me so much of the practice of drug dealers giving away free samples to entice new customers.  For many people, gambling is an addiction that can destroy their lives.  Just ask former Colts quarterback Art Schlichter.  While I know opportunities are going to be available for people who want to gamble, I don't think making it easy for them is good public policy.  The sports gambling industry has to know that the tobacco industry style regulation is coming down the road.  Those TV ads promoting sports gambling may be short-lived.

And don't get me started on the NFL going from steadfast opposition to sports gambling to warmly embracing it...and making money in the process.  

And, no, I am not going to call it "gaming."  Removing the "b" and "l" to create a new word isn't clever.  "Gaming" is GAMBLING.

Facebook, et al.   Our public discourse is poisoned.  Facebook and other social media outlets have played a role in that poisoning by using logarithms which cause people to be exposed to more and more extreme content.  As the recent whistleblower said, Facebook likes to stoke anger as anger keeps people coming to Facebook.  These social media companies need to face regulation.  One of the first changes needs to be treating them as a publisher, and thus liable for content.  One of the next steps needs to be regulation of the logarithms which have acted to stoke anger and outrage.  Unless that is done, things are going to get worse.  Political violence, maybe even a coup, are not that far down the road.

OOP's short takes:

• Trashelle Odom's statement to police about Corey Lewandowski is a must read.  

Married Trump donor told police she feared for safety when Corey Lewandowski told her he killed man | Daily Mail Online

If you want to go find out what's going on in a community, go to a barbershop.  This week my hair had gotten so shaggy I was in a desperate need for a cut.  So I made an appointment with my Brenda of Jack's Barbershop located in the City Market.

Now Brenda likes to talk...a lot.  She knows I often ride my bike downtown when I'm not having to wear a suit to court. So the topic is often about bicycling.

On this day though, she told me about a bicyclist riding in a downtown bike lane (I believe it was the Michigan Street bike lane) who had been run over by a state police car doing a right hand turn who didn't see the bicyclist in the bike lane.

Indeed for motorists that right turn blind spot has always been a problem.  I was always taught not to rely solely on the mirrors before moving over or turning right, but also took a quick glance over my right shoulder.  That is because cars can be driving at your rear bumper in the lane to your right and not be visible in your mirror.

Now imagine being in the same situation, except you're in the right lane and there is a bicycle lane to your right.  Given cars downtown have to stop at lot or slow down for other traffic, it's easy for a bicyclist (who is much harder to see than a regular car) to approach on the right into a blind spot and never be seen as the car turns to the right.  The bicyclist gets hits.  It's called a "right hook" and it's a danger that increases with bike lanes.

It is understandable to want to blame the motorists who deserves blame.  But too many bicyclists entering bike lanes think they're riding in a magical place where they no longer have to worry about the dangers of riding a bike in traffic.   That leads to bicyclists making mistakes such as not being on guard for right hooks.

Downtown is an easy place to ride a bike. This city is blessed with wide traffic lanes and it is usually easy to keep up with the traffic.  In a traffic lane it was easy to manuever out of obstacles and easy to be seen by the motorists doing what bike safety experts tell you to do - "ride wide."  Now confined to a little strip of pavement along side of the road, the bicyclist is actually more likely to be hit at, and certainly so at intersections.

Then there are the ridiculous New York Street bike lanes that run so close to parked cars that cars often have their tires in the bike lanes.   One of the things you never, never do on a bike is ride right next to parked cars.  It is difficult to look over the left shoulder to catch a rapidly approaching bike before opening a car door to exit the vehicle. As a result the bicylist hits the car door or suddenly must swerve out into traffic.  This is called "dooring" and it is a danger that increases greatly when bike lanes are placed right next to parked cars.

The video below is not of Indianapolis but it shows a fairly close right hook and near dooring in the same video.

That was not the first story Brenda told me about bike accidents.  One time she told me that during a single week she had four customers who had been hit riding bicycles on the downtown bike lanes.   The downtown bike lanes are dangerous and should be avoided.

Glenda Ritz, Superintendent of Public Instruction

The Indiana Law Blog, via NPR State Impact Indiana, linked to the lawsuit filed yesterday by Indiana Superintendent of Public Instruction Glenda Ritz against members of the Indiana State Board of Education and the Director of the Legislative Services Agency.   As way of background, the Education Board members have been unhappy for what they believe is an unnecessary delay in the issuance of A-F grades for the 2012-2013 school year.  The Education Board members, via a letter dated October 16, 2013 to Senate President Pro Tem David Long and Speaker Brian Bosma ask that those leaders intervene and appoint the development of the grades (using DOE information) to the LSA. Page 3 of the letter contains the signature of the nine board members, which most notably contains Democrat Gordon Hendry, whose wife is Democrat operative Jennifer Wagner.   Page 2 of the letter (which likely is quite brief) is missing from the materials.
By letter dated October 18, 2013, President Pro Tem Long and Speaker Bosma direct George Angelone, Executive Director of LSA to obtain data from the Department of Education, of course headed by Ritz, in order to begin developing the grades.

The lawsuit by Ritz, in which she alone is the Plaintiff, contains two counts, first, that the Board, sans Ritz, violated the open meetings law and, second, that the duty delegated to LSA is outside of its statutory authority.  Ritz's attorneys on the lawsuit are two attorneys who work for her at DOE.

The lawsuit raises a number of interesting issues.  Those issues along with some general observations are as follows:

• Attached to the eight page complaint are 19 pages of exhibits.  Complaints do not have to be accompanied by exhibits to "prove" certain things in the complaint. (There is an exception when one sues for breach of contract - the rules require you attach the contract.)  When an attorney is unnecessarily attaching exhibits like that it is generally about making certain information public through the vehicle of litigation.   This is particularly true when there is a concern that a complaint might be summarily dismissed and that information might not otherwise be made public.
• Is a "meeting" in cyberspace in which board members use modern technology to make a decision about how to proceed a meeting, i.e. a "gathering" for purposes of Indiana's Open Meetings law.
• Ritz is the only Plaintiff.  She is a state official, heading a state department, suing state officials and a state agency.  They are going to attack her standing to be a plaintiff as well as the DOE's ability to prosecute the lawsuit.  (More on that in a second.) I think it would have been wise to have also named a private (non-government official) as a Plaintiff.
• There is a statute that says that only the Attorney General's Office, or legal counsel he designates, is authorized to represent state officials in court.   Expect AG Greg Zoeller to swoop into the lawsuit and argue that the DOE attorneys had no authority to file the litigation.
• On a related note, this lawsuit presents AG Zoeller with the perfect opportunity to invoke the Zoeller doctrine, perhaps even expand its reach. That doctrine holds that the Indiana Attorney General is not only the attorney for the state of Indiana but also the client, i.e the decision-maker regarding how to proceed in a lawsuit  AG Zoeller summed up the Zoeller doctrine in a letter he wrote when he refused to defend Indiana's immigration law:  

  "Sometimes my state clients mistakenly believe they are responsible for making legal decisions about a case, as a private client who hires a private lawyer might be. In fact that responsibility rests not with the client but solely with the attorney general. Part of the AG’s job description is to reconcile conflicting legal views of multiple officials and harmonize our state’s legal position before the courts, so that we don’t have competing viewpoints creating chaos for judges in choosing which voice to listen to. Ultimately, my true client is our system of justice and the people of Indiana, rather than individuals who hold government positions"
  

  That the Zoeller doctrine is flat out wrong has been discussed by me elsewhere and is too cumbersome to discuss again here. But AG Zoeller will quite possibly go to Court and invoke the doctrine by saying that Ritz has no authority to take position on behalf of the State of Indiana, that only he is authorized to do that.
•  Moving to problems on the Defendants' side, do legislative leaders, without authority from the full membership have the authority to speak on behalf of the entire 150 member General Assembly in terms of delegating an  executive agency task to the LSA?
• Is determining A-F grades within the statutory scope of the authority of LSA?
• As Gary Welsh aptly notes on his blog, there is a substantial separation of powers question raised as to whether the legislature can take a statutory duty away from executive departments/agencies like DOE and State Board of Education and delegate that duty to LSA, a legislative agency.

My bet is on Zoeller intervening early on and asking that the lawsuit be dismissed for standing reasons and for the reason that the DOE has no authority to initiate litigation without his express approval as Attorney General of the State of Indiana.

by Charles Ornstein

Over the weekend, the U.S. Department of Health and Human Services began unveiling its effort to fix Healthcare.gov, the home for the federal insurance marketplace. Part of that was a blog post soliciting comments from folks who have tried the site.

"Most importantly, we want to hear from you, and make sure that your experience with HealthCare.gov is a positive one.  If you have any comments, either complimentary or critical, please let us know by sharing your feedback at https://www.healthcare.gov/connect/.  We've already heard so many stories of individuals getting health insurance for the first time, and we are dedicated to making that possible for all Americans."

The Obama administration has not always been transparent about Healthcare.gov: A case in point is how HHS has withheld the number of people who have been able to successfully enroll. But in this instance, the administration allowed comments to the blog post to be seen by all (after moderating them and removing identifying information). Commenters’ identities were not verified and they are identified by whatever name they entered.

As of yesterday afternoon, we counted more than 500 comments. My colleague Mike Tigas pulled them from the site, and I’ve been analyzing the feedback.

“Repeal Obamacare,” several commenters wrote, making political statements based on the website’s problems.

Some urged patience: “Turn off the TV and stop listening to the naysayers,” Darlene wrote. “Its [sic] better to wait patiently and get great health care than to get emotional and frustrated and wind up with NO healthcare...”

Others, like Kim, offered to help: “I have a home office and am VERY tech savvy. I would like to be able to help in whatever way I can.”

By and large, however, the feedback has been negative. While some comments root for the site’s failure, many are from people who’ve tried to use the site without success. Some pose specific questions; others voice general frustrations. Because their identities and contact information isn’t listed (for understandable reasons), there was no way to verify their stories.

The problems touch people from all over the country. The posts below have been trimmed for length, but the original grammar and spelling are used (even if they contain errors).

Wrongly Listed As Jailed

“Website said my wife and I were ineligible due to current incarceration. We have never been arrested in our lives, both 63!!!!!!!!!!!!!!!!!!!!!!!,” Fred wrote on Oct. 21.

Health Problems Made Worse

“I have a pre-existing condition .... a-fib.....and actually had an attack after getting frustrated with this confusing mess,” Bill wrote on Oct. 22. (A-fib refers to atrial fibrillation, an abnormal heartbeat.)

Daughter is Not a Daughter Anymore

“I am having difficulty with my account,” Joanna wrote on Oct. 22. “It appears that my daughter was added twice so that I now have two daughters with the same name and social security number. I am unable to delete one of them.  Also, the drop down menu that relates to what relationship someone is to another is faulty. I choose that my husband is the father of our daughter and that my daughter is a dependant [sic] to me and my husband. What it actually shows though is that my daughter is a stepdaughter to her father and that my daughter is now both my husband and I's parent. “

Compromised Identity

“I can sign in ... but cannot see the plans available to me — they claim my identity has been compromised. So frustrating!” Rhonda wrote on Oct. 22.

Going in Circles

“I have been trying to get into the system since the beginning,” Marion wrote on Oct. 22. “I have created 3 different accounts and am not able to log into any of them. When I request the user ID or to reset the password it throws me back to the log in page where I can't login because it says I don't have an account. When I try to reset the password with the email I used it, I never get an email to validate my account. I won't let me create another account telling me I already have an account. I feel like I keep going around in circles. Will I ever be able to set up an account? “

Groundhog Day

“I've now filled out that same application multiple times and even though there are hitches and glitches, I do manage to get to the point where I should be able to shop,” wrote one person whose name is listed as “likebillmurrayingroundhogday, on Oct. 21. “However, once at that point, there is no place for me to shop! The system just kicks me back to starting the application again. It's like "Groundhog Day."

Blocked

“After many attempts I did manage to set up an account with a log in and password,” Francine wrote on Oct. 23. “NOW when I'm about to get to the meat and potatoes and go shopping a red box pops up and says "you can only do one application per state". WTF? Several times I was able to find a page that asked me if I was a Florida resident with a yes and no button and it appears that after the site drops off my computer it moves this from yes to no. I can no longer find this page, so this site has BLOCKED me.”

Circular Security Questions

“I get an error message after I answer the security questions that say the answers can't be the same, but they aren't the same. If people are getting past this error message, I would like to know how,” Samara wrote on Oct. 20.

Name Not Unique

“I've been trying to create an account since program inception (October 1).  I continually get a variety of crazy messages, the most recent being that I could not create an account because my first name, last name and email address are not unique!” Tom wrote on Oct. 20. “What the devil does that mean?  Most people use their names in their email address, so it's never going to be "unique."  I need health insurance for my 61-year-old wife and the Marketplace appears promising.  Clean this mess up!”

Insurance Agents Stymied

“I am insurance agent also President of Insurance Agency (50+ Insurance Agents plus 30 employees),” John wrote on Oct. 21. “We have 1000's of customers who want to sign up for health insurance and most will be subsidized. We have tried everyday since 10-1-2013. Maybe 2 applications have been processed. I have spent well over 250K getting ready for the ACA roll-out. My agency has been writing individual and small group insurance for over 25 years. We have marketed the uninsured and lower income. We have held events to get pre-enrollment applications. We just want to help people get the insurance they need.  What can you do to help me?”

Application Counselor Frustrated

“I am employed as a Certified Application Counselor in Scranton, Pennsylvania and I have not been able to successfully assist the approximately 50 people that visited me looking for assistance,” Suzanne wrote on Oct. 21. “I created an account for myself prior to October 1st to walk myself through the system and have not been able to successfully log in since October 1st.  Needless to say, I am as frustrated as the consumers who visited me are.  I hope the log in situation is fixed soon.”

ProPublica fellow Mike Tigas contributed to this report.

To brush up on today's congressional hearings, see Charles Ornstein's quick guide.

by Jake Bernstein

A version of this story was co-published with The Washington Post.

In the spring of 2012, a senior examiner with the Federal Reserve Bank of New York determined that Goldman Sachs had a problem.

Under a Fed mandate, the investment banking behemoth was expected to have a company-wide policy to address conflicts of interest in how its phalanxes of dealmakers handled clients. Although Goldman had a patchwork of policies, the examiner concluded that they fell short of the Fed’s requirements.

That finding by the examiner, Carmen Segarra, potentially had serious implications for Goldman, which was already under fire for advising clients on both sides of several multibillion-dollar deals and allegedly putting the bank’s own interests above those of its customers. It could have led to closer scrutiny of Goldman by regulators or changes to its business practices.

Before she could formalize her findings, Segarra said, the senior New York Fed official who oversees Goldman pressured her to change them. When she refused, Segarra said she was called to a meeting where her bosses told her they no longer trusted her judgment. Her phone was confiscated, and security officers marched her out of the Fed’s fortress-like building in lower Manhattan, just 7 months after being hired.

“They wanted me to falsify my findings,” Segarra said in a recent interview, “and when I wouldn’t, they fired me.”

Today, Segarra filed a wrongful termination lawsuit against the New York Fed in federal court in Manhattan seeking reinstatement and damages. The case provides a detailed look at a key aspect of the post-2008 financial reforms: The work of Fed bank examiners sent to scrutinize the nation’s “Too Big to Fail” institutions.

In hours of interviews with ProPublica, the 41-year-old lawyer gave a detailed account of the events that preceded her dismissal and provided numerous documents, meeting minutes and contemporaneous notes that support her claims. Rarely do outsiders get such a candid view of the Fed’s internal operations.

Segarra is an expert in legal and regulatory compliance whose previous work included jobs at Citigroup and the French bank Société Générale. She was part of a wave of new examiners hired by the New York Fed to monitor systemically important banks after passage in July 2010 of the Dodd-Frank regulatory overhaul, which gave the Fed new oversight responsibilities.

Goldman is known for having close ties with the New York Fed, its primary regulator. The current president of the New York Fed, William Dudley, is a former Goldman partner. One of his New York Fed predecessors, E. Gerald Corrigan, is currently a top executive at Goldman. At the time of Segarra’s firing, Stephen Friedman, a former chairman of the New York Fed, was head of the risk committee for Goldman’s board of directors.

In an email, spokesman Jack Gutt said the New York Fed could not respond to detailed questions out of privacy considerations and because supervisory matters  are confidential. Gutt said the Fed provides “multiple venues and layers of recourse for employees to freely express concerns about the institutions it supervises.”

“Such concerns are treated seriously and investigated appropriately with a high degree of independence,” he said. “Personnel decisions at the New York Fed are based exclusively on individual job performance and are subject to thorough review. We categorically reject any suggestions to the contrary.”

Dudley would not have been involved in the firing, although he might have been informed after the fact, according to a Fed spokesman.

Goldman also declined to respond to detailed questions about Segarra. A spokesman said the bank cannot discuss confidential supervisory matters. He said Goldman “has a comprehensive approach to addressing conflicts through firm-wide and divisional policies and infrastructure” and pointed to a bank document that says Goldman took recent steps to improve management of conflicts.

Segarra’s termination has not been made public before now. She was specifically assigned to assess Goldman’s conflict-of-interest policies and took a close look at several deals, including a 2012 merger between two energy companies: El Paso Corp. and Kinder Morgan. Goldman had a $4 billion stake in Kinder Morgan while also advising El Paso on the $23 billion deal.

Segarra said she discovered previously unreported deficiencies in Goldman’s efforts to deal with its conflicts, which were also criticized by the judge presiding over a shareholder lawsuit concerning the merger.

Her lawsuit also alleges that she uncovered evidence that Goldman falsely claimed that the New York Fed had signed off on a transaction with Santander, the Spanish bank, when it had not. A supervisor ordered her not to discuss the Santander matter, the lawsuit says, allegedly telling Segarra it was “for your protection.”

‘Eyes Like Saucers’

The New York Fed is one of 12 regional quasi-private reserve banks. By virtue of its location, it supervises some of the nation’s most complex and important financial institutions. After the 2008 financial crisis, disparate voices pointed to failures of enforcement by the New York Fed as a key reason banks took on too much risk.

Even Fed officials acknowledged shortcomings. After Dodd-Frank, new examiners like Segarra, called "risk specialists," were hired for their expertise. They were in addition to other Fed staffers, dubbed "business line specialists," some of whom were already embedded at the banks.

Segarra believed she had found the perfect home when she joined the New York Fed's legal and compliance risk specialist team in October 2011. It was a prestigious job, insulated from business cycles, where she could do her part to prevent another financial meltdown. Her skills, honed at Harvard, Cornell Law School and the banks where she had worked, consisted of helping to create the policies and procedures needed to meet government financial regulations.

As part of their first assignment, Fed officials told Segarra's group of risk specialists to examine how the banks in which they were stationed complied with a Fed Supervision and Regulation Letter issued in 2008.

The letter, known as SR 08-08, emphasizes the importance of having company-wide programs to manage risks at firms like Goldman, which engage in diverse lines of business, from private wealth management and trading to mergers and acquisitions. The programs are supposed to be monitored and tested by bank compliance employees to make sure they are working as intended.

“The Fed recognized that financial conglomerates should act like truly combined entities rather than separate divisions or entities where one group has no idea what the other group is doing,” said Christopher Laursen, an economic consultant and former Federal Reserve employee who helped draft the supervisory letter.

In 2009, a review by the Fed had found problems with its efforts to ensure that banks followed the policy, which also says that bank compliance staffers must “be appropriately independent of the business lines” they oversee.

Segarra’s team included examiners placed at nine other “Too Big to Fail” banks, including Citigroup, JPMorgan Chase, Deutsche Bank and Barclays.

Segarra said her bosses told her to focus on Goldman’s conflict-of-interest policies. The firm had long been famous for trying to corral business from every part of the deals it worked on. “If you have a conflict, we have an interest,” is an oft-told joke on Wall Street about the firm’s approach.

The year before Segarra joined the Fed, for instance, Goldman had received a drubbing from the Securities and Exchange Commission and a Senate subcommittee over conflicts related to Abacus, a mortgage transaction the bank constructed. The SEC imposed a $550 million fine on the bank for the deal. A January 2011 Goldman report concluded that the firm should "review and update conflicts-related policies and procedures, as appropriate."

Initial meetings between the New York Fed and Goldman executives to review the bank’s policies did not go well, said Segarra, who kept detailed minutes.

When the examiners asked in November 2011 to see the conflict-of-interest policy, they were told one didn’t exist, according to the minutes. “It’s probably more than one document — there is no one policy per se,” the minutes recount one Goldman executive as saying.

The discussion turned to the name of the group that oversaw conflicts at Goldman: “Business Selection and Conflicts Resolution Group.” Segarra’s supervisor, Johnathon Kim, asked if business selection and conflicts were, in fact, two different groups. He was told they were not, the minutes show.

Goldman officials stated that the bank did not have a company-wide conflict-of-interest program, Segarra’s minutes show. Moreover, the head of the business selection and conflicts group, Gwen Libstag, who is not a lawyer, said in a subsequent meeting on Dec. 8 that she did not consider what her staff did a “legal and compliance function,” according to Segarra’s minutes.

“That’s why it’s called business selection,” another Goldman executive added. “They do both.”

Given the Fed’s requirements, the regulators were stunned, Segarra recounted in an interview. “Our eyes were open like saucers,” she said. “Business selection is about how you get the deal done. Conflicts of interest acknowledge that there are deals you cannot do.”

After the Dec. 8 meeting, the New York Fed’s senior supervising officer at Goldman, Michael Silva, called an impromptu session with Fed staffers, including Segarra. Silva said he was worried that Goldman was not managing conflicts well and that if the extent of the problem became public, clients might abandon the firm and cause serious financial damage, according to Segarra’s contemporaneous notes.

A Chinese Wall In Their Heads

As part of her examination, Segarra began making document requests. The goal was to determine what policies Goldman had in place and to see how they functioned in Kinder Morgan’s acquisition of El Paso. The merger was in the news after some El Paso shareholders filed a lawsuit claiming they weren’t getting a fair deal.

Although Segarra reported directly to Kim, she also had to keep Silva abreast of her examinations. Silva, who is also a lawyer, had been at the Fed for 20 years and previously had served as a senior vice president and chief of staff for Timothy Geithner while he was New York Fed president. As a senior vice president and senior supervisor, Silva outranked Kim in the Fed hierarchy.

Segarra said James Bergin, then head of the New York Fed’s legal and compliance examiners, noted at a November meeting that there was tension between the new risk specialists and old-guard supervisors at the banks. Segarra said the tension surfaced when she was approached in late December by a Fed business line specialist for Goldman, who wanted to change Segarra’s Dec. 8 meeting minutes.

Segarra told her Fed colleague that she could send any changes to her. When Segarra next met with her fellow risk specialists, she said she told them what had transpired. They told her that nobody should be allowed to change her meeting minutes because they were the evidence for her examination.

Around that time, Silva had a meeting with Segarra, she said. According to her notes, Silva warned her that sometimes new examiners didn’t recognize how they are perceived and that those who are taken most seriously are the most quiet. Segarra took it as more evidence of tension between the two groups of regulators.

Bergin, Silva and Kim did not respond to requests for comment.

By mid-March 2012, Goldman had given Segarra and a fellow examiner from the New York State Banking Department documents and written answers to their detailed questions. Some of the material concerned the El Paso-Kinder Morgan deal.

Segarra and other examiners had been pressing Goldman for details about the merger for months. But it was from news reports about the shareholder lawsuit that they learned the lead Goldman banker representing El Paso, Steve Daniel, also had a $340,000 personal investment in Kinder Morgan, Segarra said.

Delaware Chancery Court Judge Leo Strine had issued a 34-page opinion in the case, which eventually settled. The opinion castigated both El Paso’s leadership and Goldman for their poor handling of multiple conflicts of interest.

At the New York Fed, Goldman told the regulators that its conflict-of-interest procedures had worked well on the deal. Executives said they had “exhaustively” briefed the El Paso board of directors about Goldman’s conflicts, according to Segarra’s meeting minutes.

Yet when Segarra asked to see all board presentations involving conflicts of interest and the merger, Goldman responded that its Business Selection and Conflict Resolution Group “as a general matter” did not confer with Goldman’s board. The bank’s responses to her document requests offered no information from presentations to the El Paso board discussing conflicts, even though lawsuit filings indicate such discussions occurred.

Goldman did provide documents detailing how it had divided its El Paso and Kinder Morgan bankers into “red and blue teams.” These teams were told they could not communicate with each other — what the industry calls a “Chinese Wall” — to prevent sharing information that could unduly benefit one party.

Segarra said Goldman seating charts showed that that in one case, opposing team members had adjacent offices. She also determined that three of the El Paso team members had previously worked for Kinder Morgan in key areas.

“They would have needed a Chinese Wall in their head,” Segarra said.

Pressure To Change Findings

According to Segarra’s lawsuit, Goldman executives acknowledged on multiple occasions that the bank did not have a firm-wide conflict-of-interest policy.

Instead, they provided copies of policies and procedures for some of the bank’s divisions. For those that did not have a division-wide policy, such as the investment management division, they offered what was available. The policy for the private banking group stated that employees shouldn’t write down their conflicts in “emails or written communications.”

“Don’t put that in an email in case we get caught?” Segarra said in an interview. “That’s a joke.”

Segarra said all the policies were missing components required by the Fed.

On March 21, 2012, Segarra presented her conclusion that Goldman lacked an acceptable conflict-of-interest policy to her group of risk specialists from the other “Too Big to Fail” banks. They agreed with her findings, according to Segarra and another examiner who was present and has requested anonymity.

Segarra’s group discussed possible sanctions against the bank, but the final decision was up to their bosses. A summary sheet from the meeting recommended downgrading Goldman from “satisfactory” to “fair” for its policies and procedures, the equivalent of a “C” in a letter grade.

A week later, Segarra presented her findings to Silva and his deputy, Michael Koh, and they didn’t object, she said. Reached by ProPublica, Koh declined to comment.

In April, Goldman assembled some of its senior executives for a meeting with regulators to discuss issues raised by documents it had provided. Segarra said she asked Silva to invite officials from the SEC, because of what she had learned about the El Paso-Kinder Morgan merger, which was awaiting approval by other government agencies.

Segarra said she and a fellow examiner from New York state’s banking department had prepared 65 questions. But before the meeting, Silva told her she could only ask questions that did not concern the El Paso-Kinder Morgan merger, she said.

Nonetheless, SEC officials brought it up. Goldman executives said they had no process to check the personal holdings of bankers like Steve Daniel for possible conflicts, according to notes Segarra took at the time. Asked by Segarra for Goldman’s definition of “conflicts,” the bank’s general counsel, Greg Palm, responded that it could be found in the dictionary, she said.

“What they should have is an easy A-B-C approach to how to manage conflicts,” Segarra said. “But they couldn’t even articulate what was a conflict of interest.”

Goldman declined a request to make Palm available for comment.

As the Goldman examination moved up the Fed’s supervisory chain, Segarra said she began to get pushback. According to her lawsuit, a colleague told Segarra in May that Silva was considering taking the position that Goldman had an acceptable firm-wide conflict-of-interest policy.

Segarra quickly sent an email to her bosses reminding them that wasn’t the case and that her team of risk specialists was preparing enforcement recommendations.

In response, Kim sent an email saying Segarra was trying to “front-run the supervisory process.” Two days later, a longer email arrived from Silva, stating that “repeated statements that you have made to me that [Goldman] does not have a [conflict-of-interest] policy AT ALL are debatable at best, or alternatively, plainly incorrect.”

As evidence, Silva cited the 2011 Goldman report that called for a revamp of its conflict-of-interest procedures, as well as the company’s code of conduct — neither of which Segarra believed met the Fed’s requirements.

While not commenting on Goldman’s situation, Laursen, the consultant who helped draft the Fed policy, said the idea is to police conflicts across divisions. “It would need to be a high-level or firm-wide policy,” he said, that “would identify the types of things that should not occur and the processes and monitoring that make sure they don’t.”

In its email to ProPublica, Goldman cited a May report from its Business Standards Committee that says the company completed an overhaul of its business practices earlier this year that included new policies and training for managing conflicts.

Before Segarra could respond to Silva’s email, Koh summoned her to a meeting. For more than 30 minutes, he and Silva insistently repeated that they did not agree with her findings concerning Goldman, she said.

Segarra detailed all the evidence that supported her conclusion, she said. She offered to participate in a wider meeting with New York Fed personnel to discuss it further. Because Fed officials would ultimately have to ratify her conclusions, she let them know she understood that her findings were subject to change.

Silva and his deputy did not engage with her arguments during the meeting. Instead, they kept reiterating that she was wrong and should change her conclusions, she said.

Afterward, Segarra said she sent an email to Silva detailing why she believed her findings were correct and stating that she could not change them. There was just too much evidence to the contrary, she said in an interview.

Three business days later, Segarra was fired.

Segarra has no evidence that Goldman was involved. Silva told her that the Fed had lost confidence in her ability to follow directions and not jump to conclusions.

Today, Segarra works at another financial institution at a lower level than she feels her qualifications merit. She worries about the New York Fed’s ability to stop the next financial crisis.

“I was just documenting what Goldman was doing,” she said. “If I was not able to push through something that obvious, the Federal Reserve Bank of New York certainly won’t be capable of supervising banks when even more serious issues arise.”

ProPublica research director Liz Day contributed to this story.

by Isaiah Thompson, Special to ProPublica

When Rochelle Bing bought her modest row home on a tattered block in North Philadelphia 10 years ago, she saw it as an investment in the future for her extended family — especially for her 18 grandchildren.

Bing, 42, works full-time as a home health assistant for the elderly and disabled. In summer when school is out, her house is awash with grandkids whom Bing tends to while their parents work. And the home has been a haven in troubled times when her children needed help or a father went to jail. One of Bing’s grandchildren lives there now.

“That’s the only reason I bought my home — I needed stability for my children,” Bing said. “And if anything was to happen to me, they would have a home to live in.”

But four years ago, something happened that imperiled Bing’s plans. In October 2009, police raided the house and charged her son, Andrew, then 24, with selling 8 packets of crack cocaine to an undercover informant. (Upon entering the house, police reported finding unused packets, though not drugs, in a rear bedroom.) Rochelle Bing was not present and was not accused of a crime. Yet she soon received a frightening letter from the Philadelphia district attorney’s office. Because Andrew had sold the drugs from inside his mother’s house, a task force of law enforcement officials moved to seize Bing’s house. They filed a court claim, quickly approved, that gave Bing just 30 days to dissuade a judge from granting “a decree of forfeiture” that would give the DA’s office title to the property. Bing was devastated.

“For me to lose my home,” she recalled recently, “for them to take that from me, knowing I had grandchildren - that would have hurt me more than anything.” And so Bing resolved to do what whatever was necessary to keep the house.

She had no idea how long and how difficult that fight would be.

On its face, Bing’s predicament might seem implausible if not unjust. How could someone who’s neither accused nor convicted of a crime be forced to give up her property because of another’s misdeeds? But stories like Bing’s are increasingly more common as Philadelphia and other jurisdictions have embraced the expansive power of forfeiture as a crime-fighting tool.

The idea behind forfeiture is simple enough: drug kingpins, embezzlers, racketeers and other offenders should not be able to keep the financial fruits of illegal acts. Prosecutors often ask a judge to seize the money, vehicles or real estate of a person convicted of a crime.

But authorities can also use civil law to seize assets before the criminal case is adjudicated or, as with Rochelle Bing, even when no charges are brought against the owner.

Doing so offers prosecutors considerable advantages. Unlike the “proof beyond a reasonable doubt” required in criminal law, prosecutors seeking civil forfeitures face a much lower standard. Usually, they need only prove that a “preponderance of evidence” connects the property — not its owner — to a crime. Technically, the property — not the owner — is named as the defendant.

Bing’s name, in fact, appears nowhere in the case involving her own home, listed in court filings as “Commonwealth of Pennsylvania v. The Real Property and Improvements Known as 2544 N. Colorado St.”

Over the last two decades, forfeitures have evolved into a booming business for police agencies across the country, from the federal Drug Enforcement Administration to small-town sheriff’s offices. Although there is no single tally of all this activity – the information is buried in the budgets, court records and annual reports of thousands of individual agencies — the available data makes clear that billions of dollars in cash, cars, real estate and other assets are being confiscated nationwide every year via civil forfeitures.

One measure is the growth of a program in which federal law enforcement officials seize property on behalf of local authorities in exchange for a share of the proceeds. In 2000, officials racked up $500 million in forfeitures. By 2012, that amount rose to $4.2 billion, an eightfold increase.

Bing is among a significant number of property owners not charged with any crime who lost their home or have battled for years against forfeiture actions. Other similar cases reviewed by ProPublica include an elderly widow, two sisters who shared a house, a waitress and hospital worker caring for two children, and a mother of three whose family wound up homeless. All stemmed from drug charges brought against a family member.

Critics argue that the power to pursue civil forfeiture has been abused by prosecutors and is creating a new class of collateral victims. Often they are minorities like Bing without the financial resources or legal know-how to protect their assets.

And prosecutors typically prevail. Of nearly 2,000 cases filed against Philadelphia houses from 2008 through 2012, records reviewed by ProPublica show that only 30 ended with a judge rejecting the attempt to seize the property.

“On the federal level, you tend to see bigger cases get attention — kingpins and that sort of thing — which is what Congress intended with forfeiture,” says Louis Rulli, a law professor at the University of Pennsylvania and director of its civil legal clinic, which does some pro bono work for homeowners facing forfeiture.

“But coming after the parents and the grandparents, who have nothing to do with it?” he says. “The logic does not hold up to me. The folks we’re talking about have usually owned their homes a long time. They’re paid up on their homes; they’re good residents of Philadelphia.”

Rulli worries, too, about the effect on poor and minority residents. “If one sits in court and watches,” he says, “you will see a disproportionate impact on African Americans and Latinos.”

Philadelphia Freedom?

The Philadelphia DA’s office defends forfeiture as a tool for the public good. In the case of forfeited houses, that means protecting neighborhoods from “nuisance properties” which serve as a base for illegal activities.

In a statement, the DA’s office said that its goal in forfeiture actions was “to establish responsible property ownership,” not to seize houses. “In those cases in which the legal owner was not the party arrested for drug dealing and he or she can establish that they had no knowledge of the illegal behavior,” the statement said, “the Commonwealth works with them to settle those cases and the property is not forfeited.”

But that’s not how the law looked to Bing and others who’ve spent years battling the city in court.

Records show that Philadelphia uses forfeiture on a scale and in a way unlike any other county in Pennsylvania. Since 2008, the next three largest counties in Pennsylvania – Allegheny, Montgomery and Berks – have taken fewer than a dozen houses combined, even though they operate under the same state drug laws enabling forfeiture.

By contrast, the Philadelphia DA’s office files forfeiture motions on 300 to 500 private residences annually. It seizes and sells as many as 100 or more properties each year, bringing in more than $1 million annually in real estate sales alone. In 2010, the year the DA went after Bing's house, it acquired 90 houses via forfeiture and auctioned 119 properties for $1.2 million.

The money went directly to the DA’s office and to the Philadelphia police department, including the narcotics units involved in raids that resulted in the forfeitures.

Forfeiture reports obtained from Pennsylvania’s Attorney General give only a general breakdown of how these funds are spent. The records show that the bulk of Philadelphia’s forfeiture money goes to “salaries” (the report does not say whose), and “municipal task force support.” The reports include a line-item for money spent on “Community Based Drug & Crime Fighting Programs” and “Witness Relocation and/or Protection Expenses.” In recent years, both of those items read “$0.00.”

Money from housing sales in 2010 represented about a fifth of all the DA’s $5.9 million in forfeiture income that year. The rest was generated by seizure of cash, cars and other property. Last fall, a story by this reporter in The Philadelphia City Paper disclosed that the DA’s office moves to seize virtually every dollar in cash found by police in stops — even amounts of $100 or less. Under the law, prosecutors need not secure a conviction in the underlying criminal case to keep the cash.

The money raised through forfeiture is handled outside the city’s budgeting and appropriations processes. The law requires only that it be used to enforce Pennsylvania’s drug laws. Critics and experts who study the issue say that gives prosecutors a powerful motive to step up the pace of forfeitures.

“The idea that law enforcement can raise money on its own, through this self-help practice of forfeiture — it’s subversive to the idea of democratic accountability and rule of law,” said Eric Blumenson, a research professor of law at Suffolk University.

Blumenson has criticized the reliance on forfeiture, saying it prompts law enforcement officials to over-emphasize drug prosecutions at the expense of other crime-fighting.

“Prosecutors and police are only too happy to use forfeiture, because it fills their coffers. And why would they stop? They’ve become dependent — you can look at it as an addiction by itself,” Blumenson said.

Prosecutors and police view the issue differently. In an interview last year, officials from the Philadelphia DA’s office last defended the practice as a means of improving civic life.

“Everything is approached from a public safety perspective,” said Beth Grossman, who heads the forfeiture unit. “You have people suffering on their blocks, where their homes are, because of drug-dealing properties. And it’s not fair.”

A Lack of Lawyers

Every weekday, Courtroom 478 in Philadelphia’s City Hall fills with people — most are poor, black and Latino — trying to get back seized property. An administrative judge presides, interacting entirely with assistant district attorneys, who effectively run the show. Some property owners are represented by a lawyer; most are not. Many have been there before, often a dozen or more times, only to have their cases rescheduled over and over. Some have spent years in legal limbo until the case is decided, even longer on appeal.

According to multiple accounts, Tracy Clements was sitting on the sofa on the first floor of her North Philadelphia row house on April 21, 2010, when her brother, William Clements burst in followed by police in hot pursuit. William Clements was arrested and convicted seven months later on drug-related charges.

Neither Tracy, 49, who worked on an assembly line and cared for a son in the house, nor her sister, Sheila, 56, who worked for the IRS and was out of town visiting a daughter at Penn State, were charged with a crime. The two had inherited the house from their mother when she died in 2008. They had played there as children. When their brother William was released from prison, according to their attorney, Jonathan Freedman, they refused to let him live there again.

In the meantime, they were served a notice of forfeiture from the DA’s office. “We had to appear 17 times in court,” their attorney, Jonathan Freedman, said in an email. “Had I charged the clients a merely reasonable fee it would have cost them more than the house is worth!”

The sisters ultimately had their day before a judge. The Hon. Rayford Means, Jr., denied the DA’s motion, saying, “They’re innocent owners. They knew nothing about the drugs, had nothing to do with the transaction.”

The DA disagrees, and has appealed, arguing that at least one of the sisters, Tracy, was home during the drug transactions on the porch, and must have known they were occurring. Prosecutors argue that she turned a blind eye to the crimes. The DA cited policy testimony indicating that a mirror with cocaine residue was found in her bedroom, though Tracy Clements testified in court that she knew nothing about the mirror and that it hadn’t been in her room when she left for work that day.

The Clements sisters, at least, had professional legal representation; many facing forfeiture do not.

Unable to afford an attorney, Takeela Burney chose to fight the forfeiture of her house alone after her son was arrested on May 6, 2010, for a single sale of $20 worth of cocaine from the house.

Over the course of the next two years, Burney would appear several times in court in an effort to save her house.

Because many real estate forfeiture cases are resolved through deals with prosecutors, most of the homeowners contesting their forfeiture cases never appear before a judge.

Burney, however, eventually appeared as her own lawyer before Judge Paula Patrick, on May 13, 2012. When a prosecutor called a Philadelphia police officer as a witness, Burney didn’t seem to know what to do. Rather than cross-examine the officer, she attempted to explain her side of the story to Judge Patrick, court records show.

Patrick said “that it was not her turn to tell her story,” according to an appellate court’s summary of the case. When asked if she had any questions for the officer, she answered, “Not at this time,” as if she’d have another chance to challenge the testimony. Judge Patrick granted the DA’s motion for forfeiture.

At the very last moment, Burney contacted the Philadelphia Volunteers for the Indigent Program, a legal aid group which agreed to take on her case. Burney’s attorney, Matthew Lee, filed a brief arguing that his client had never been informed of her right to a jury trial and that a lawyer should have been appointed for her.

An appeals court blocked the forfeiture, ruling that Burney deserved to know of her right to a jury trial. The judges did not address the question of whether Burney was entitled to a court-appointed lawyer.

Writing for the majority, Judge Renee Cohn Jubelirer said: “We understand the importance of denying criminals the proceeds of their crimes and the need to make our communities safer.”

“However, it is also our obligation to assure that these laudable goals are achieved within constitutional boundaries. These boundaries become more apparent where there is no alleged criminal conduct of the homeowner.”

Practice of Forfeiture is Widespread

Philadelphia is hardly alone in its aggressive pursuit of forfeiture.

In Washington, D.C., the City Council recently held hearings on a bill that would impose new limits on cases arising from cars linked to crimes. For years, the Metropolitan Police Department has seized cars by the hundreds and required owners to post “bonds” if they wanted to contest that action.

Last May the D.C. Public Defenders Service filed a class-action lawsuit against the city, asserting that the practice violates the U.S. Constitution's Fifth Amendment’s guarantees of due process. They argued that car owners who can’t afford to put up money are deprived of their property without any judicial review.

The D.C. City Council is considering change in the law, including putting the money from forfeitures into the city’s general fund rather than law enforcement budgets. (The Attorney General for the District of Columbia opposes this bill, as does the city administration).

Darpana Sheth, an attorney for the libertarian-leaning nonprofit Institute for Justice who testified at a recent hearing alongside the D.C. Public Defender Service, endorses that idea. “Having the people charged with enforcing the law seizing property and benefiting from that property is unconstitutional – specifically, the concept of ‘neutrality’ in due process,” she said. “They can’t be neutral if they have a financial stake.”

Last year, police officials in Tenaha, Texas, agreed to various monitoring and reporting conditions after being sued by the American Civil Liberties Union for stopping drivers, mostly minorities, and seizing their cash and other property. Tenaha police often did not charge the motorists with any crime but threatened them with arrest if they didn’t agree to forfeit their possessions, according to the lawsuit. In settling the case, Tenaha officials denied that the traffic stops were unconstitutional.

The Teneha case drew national attention – briefly, at least – to the larger issue of forfeiture. But the revelations underscored how little is known about forfeiture practices nationwide.

“The problem is when police departments are able to seize assets in hundreds of thousands of dollars – they’re going to,” said Vanita Gupta, an attorney with the ACLU. “I worry with the Tenaha case that people will think, ‘Oh that’s just Tenaha.’”

“Every police department in Texas is pocketing money from forfeiture,” she said.

(Gupta has a point. Data compiled by the Institute for Justice, which has been a vocal critic of forfeiture, shows that 759 law enforcement agencies in Texas alone reported proceeds from forfeiture in 2008, the most recent year that data was available.)

The Search for a Fairer System

Spurred by similar reports of the abuse in the late 1990s, former Rep. Henry Hyde, R-Ill., held a series of hearings on forfeiture, prompting the passage of the Civil Asset Forfeiture Reform Act of 2000.

The law addressed several key shortcomings in federal forfeitures, providing “innocent owners” with a defense against being punished for the crimes of a relative or friend. It also provided for the appointment of an attorney when a homeowner faced the loss of his or her primary residence and was too poor to afford legal help.

Those reforms did not extend to the local level, where forfeiture is often governed by state laws.

In 2010, the Institute for Justice released a report entitled “Policing for Profit,” which represented one of the first attempts to catalogue each state’s laws regarding forfeiture. It found that most offered minimal protections to property owners.

North Dakota, for example, is among the few states that impose limited restrictions on the practice, prohibiting forfeiture of a home co-owned by someone not accused of a crime.

Critics have been pushing local legislators to enact additional rules.

Forfeitures in cities like Philadelphia and Washington, D.C., are conducted through civil laws. One way to eliminate the inequities of that system would be to conduct property seizures only through parallel laws in the criminal code.

Such laws come into play only after an accused criminal has had his or her day in court. The ACLU’s Gupta said this would rule out one of the more unfair results of the civil cases, which is that people are arrested, lose their property and are then ultimately acquitted on the criminal charges.

“There are a few jurisdictions where they use criminal, not civil forfeiture – meaning they’ll still seize assets, but once someone is convicted,” Gupta pointed out. “It begs the question, why do we use civil forfeiture at all?”

The courts of Allegheny County, Pa., have answered that question, requiring local judges to pursue property seizures in most cases through the state’s criminal statute and then only after the person involved in the case is convicted. That practice began under the late Judge Robert Dauer, president judge in the county’s trial courts, and continues to this day. In 2009-2010, the county did not seize a single house.

“Our policy was we had to have a conviction and it had to make some reasonable sense why we were going after forfeiture,” recalls Pennsylvania Superior Court Robert Coville, who headed up the Allegheny County District Attorney’s office for 21 years.

Coville says that as DA he supported using criminal, not civil, forfeiture as a matter of principle.

“It’s based on fairness,” he says. “I would be very restrained as a prosecutor or a solicitor for the city, going in on the theory of an allegation or the presumption of something we don’t have – namely, a criminal conviction against the owner for some kind of illegal conduct.”

Coville declined to comment on the specifics of this story, as legal issues around forfeiture very well may come before him in his role as an appellate judge. But speaking from his experience as a former county prosecutor, he said he is troubled by the idea of supplementing police and prosecutor budgets with money from forfeitures.

“I can understand why someone would want to do that in this day and age,” he said. But “is there an incentive for police and prosecutors to go after property only for the value? That gets into a whole other bag of issues.”

Other legal experts see the right to representation – especially in cases involving something as important as a home -- as the single best way to curb injustices.

“The main defenses to civil forfeiture are called ‘affirmative defenses’ – you must raise them or you waive them,” says University of Pennsylvania professor Rulli. “I think lack of counsel is a big deal. Do these people know their rights? Are they learning it from the DA? What is the DA saying to people? Is DA saying you have a right to assert innocent owner?”

Matthew Lee, the lawyer for Takeela Burney, said the recent ruling that his client was entitled to be informed of her right to a jury trial was a step in the right direction. “I was hoping that they would say you have a right to a lawyer,” Lee said, “but what they did ultimately hold is that these cases are really more like criminal cases than civil cases and that a lot of the constitutional protections in criminal cases should apply.”

Rochelle Bing’s case illustrates the value of legal counsel. Like Burney, Bing couldn't afford a lawyer herself. She eventually was referred to the University of Pennsylvania Legal Clinic where law students took on her case without charge.

Bing’s fight to save her home dragged on for two years and required her or her attorney to appear in court no fewer than 23 times. Finally, prosecutors settled the case, allowing Bing to retain ownership if she agreed not to let her son visit when she wasn’t home. (Her son, who negotiated a guilty plea to one count of possession with intent to distribute, had already finished serving his sentence he received.)

Bing said she would have agreed to that condition at the outset.

Isaiah Thompson can be reached at isaiah.thompson@gmail.com and @isaiah_thompson.

by Paul Kiel

A version of this story was co-published with the St. Louis Post-Dispatch.

In 2009, consumer advocates in Washington State decided to try a new approach to regulating payday loans. Like reformers in other states, they’d tried to get the legislature to ban high-cost loans outright — but had hit a brick wall. So, instead, they managed to get a law passed that limited borrowers to no more than eight payday loans in one year.

Lenders would still be free to charge annual rates well into the triple digits, but the law would eliminate what critics say is the worst aspect of payday loans: borrowers caught in a cycle of debt by taking out loans over and over.

At least in Washington, most payday loan borrowers didn’t take out eight loans in a year. Data from 2009, the last year before the reform bill went into effect, shows how many people in 2009 took out one to four loans, five to eight loans, and so on. Two-thirds of these borrowers took out eight or fewer loans in 2009.

But the people who take out only a few payday loans do not drive industry profits. That becomes clear when, instead of looking at the number of people, one looks at the number of loans. Then the trend flips: About two-thirds of loans went to borrowers who took out nine or more loans in 2009.

In other words, one-third of payday loan borrowers accounted for two-thirds of payday loans made in Washington State in 2009.

The Consumer Financial Protection Bureau found a similar imbalance when it studied a national sample of payday loans earlier this year: Lenders reaped three-quarters of their loan fees from borrowers who had more than 10 payday loans in a 12-month period.

As expected, Washington’s reform has not affected most borrowers. According to the 2011 report from state regulators, only about 24 percent of borrowers had taken out the maximum eight loans over a 12-month period.

But the total number of payday loans has plummeted. In 2009, Washington borrowers took out more than 3.2 million payday loans. In 2011, the last year for which data is available, the number had plunged to 856,000.

During the same time, the number of payday loan stores in the state dropped by 42 percent.

The law “worked way better than we expected,” said Marcy Bowers, director of the nonprofit Statewide Poverty Action Network.

Meanwhile, the industry, which opposed the 2009 law, has recently pushed legislation to allow high-cost installment loans in the state. As we report, that’s a typical response by the industry to unwanted legislation.

Washington’s law has proven a model for other states. Delaware passed a law in 2012 that limited payday loans to five in a 12-month period. Earlier this year, consumer advocates pushed a similar law in California, but it stalled.

Asked for comment about Washington’s law, Amy Cantu, a spokeswoman for the Community Financial Services Association, the payday lenders’ trade group, said lenders work closely with state regulators and cited the group’s best practices, which include offering customers a payment plan when they want more time to repay a loan.

by Blair Hickman and Christie Thompson

In 1994, Bridget O’Connor began an internship at Rockland Psychiatric Center, where one of the doctors allegedly began to refer to her as Miss Sexual Harassment, told her that she should participate in an orgy, and suggested that she remove her clothing before meeting with him. Other women in the office made similar claims.

Yet when O’Connor filed a lawsuit, her sexual harassment claims were dismissed because she was an unpaid intern. A federal appeals court affirmed the decision to throw out the claim.

Unpaid interns miss out on wages and employment benefits, but they can also find themselves in “legal limbo” when it comes to civil rights, according to law professor and intern labor rights advocate David Yamada. The O’Connor decision (the leading ruling on the matter, according to Yamada) held that because they don’t get a paycheck, unpaid interns are not “employees” under the Civil Rights Act -- and thus, they’re not protected.

Federal policies echo court rulings. The laws enforced by the U.S. Equal Employment Opportunity Commission, including the Civil Rights Act, don’t cover interns unless they receive “significant remuneration,” according to commission spokesperson Joseph Olivares.

“At least with respect to the federal law that we enforce, an unpaid intern would not be legally protected by our laws prohibiting sexual harassment,” Olivares said in an email to ProPublica.

It’s unclear how many interns are sexually harassed at work. The commission doesn’t keep those statistics, according to Olivares. And as the Chicago Tribune detailed in 2011, interns often don’t know where to turn when faced with harassment or can fear retaliation from bosses they look to for future jobs or recommendations.

“You can understand perhaps why there haven’t been more cases,” said Yamada. “If you’re a young student, and have been trying to get a career off the ground, the bind that puts someone in is significant, because there’s retaliation.”

Olivares noted that while federal laws don’t protect unpaid interns, company policies and state or local laws could sometimes broaden workplace protections.

In June, Oregon passed a law expanding discrimination and harassment protections to interns, whether they are paid or not. According to Charlie Burr, spokespersonfor the state’s Bureau of Labor and Industries, Oregon is the first state to pass such protections.

“Those principles of protecting people in the workplace have been in place for a long time, but they’ve never applied to interns,” said Oregon Labor Commissioner Brad Avakian. “It really left them with few options.”

Oregon’s law protects interns from sexual harassment and discrimination based on race, religion, gender, disability, and sexual orientation and covers wrongful termination tied to discrimination — but it doesn’t create an employment relationship or impact wages, an issue the state was careful to avoid, according to Avakian.

The idea for the law came from Carole Delogu, a former unpaid intern in the state’s Bureau of Labor and Industries, after she read an article in the Public Interest Law Journal on the workplace protections not afforded to interns.

“I was in disbelief,” Delogu said, of her reaction to the loophole. “Interns are in a fragile place, they want to get their foot in the door, so they don’t complain.”

So Delogu brought her concerns to the Labor bureau, and helped draft a proposal to close the gap in protections. Under the new law, Delogu hopes “more people will be able to stand up for their rights.”

D.C. has made similar strides to protect interns. Council member Mary Cheh lobbied successfully to extend the D.C. Human Rights Act protections against sexual harassment to interns after hearing the story of one intern’s sexual harassment claims against her employer, a massage and body therapy center in Friendship Heights. The intern’s case was dismissed because she was unpaid.

Yet as Maurice Pianko, attorney and founder of Intern Justice, points out: if for-profit employers paid their interns when they should (and usually they should be paid), protection from discrimination and sexual harassment would automatically apply.

“It’s a surprise to me to see that there are still companies not paying their employees,” Pianko said. “If any general counsel wants to find out the law they can, and honestly I don’t know what they’re thinking.” 

by Abrahm Lustgarten

When the Environmental Protection Agency abruptly retreated on its multimillion-dollar investigation into water contamination in a central Wyoming natural gas field last month, it shocked environmentalists and energy industry supporters alike.

In 2011, the agency had issued a blockbuster draft report saying that the controversial practice of fracking was to blame for the pollution of an aquifer deep below the town of Pavillion, Wy. – the first time such a claim had been based on a scientific analysis.

The study drew heated criticism over its methodology and awaited a peer review that promised to settle the dispute. Now the EPA will instead hand the study over to the state of Wyoming, whose research will be funded by EnCana, the very drilling company whose wells may have caused the contamination.

Industry advocates say the EPA’s turnabout reflects an overdue recognition that it had over-reached on fracking and that its science was critically flawed.

But environmentalists see an agency that is systematically disengaging from any research that could be perceived as questioning the safety of fracking or oil drilling, even as President Obama lays out a plan to combat climate change that rests heavily on the use of natural gas.

Over the past 15 months, they point out, the EPA has:

·      Closed an investigation into groundwater pollution in Dimock, Pa., saying the level of contamination was below federal safety triggers.

·      Abandoned its claim that a driller in Parker County, Texas, was responsible for methane gas bubbling up in residents’ faucets, even though a geologist hired by the agency confirmed this finding.

·      Sharply revised downward a 2010 estimate showing that leaking gas from wells and pipelines was contributing to climate change, crediting better pollution controls by the drilling industry even as other reports indicate the leaks may be larger than previously thought.

·      Failed to enforce a statutory ban on using diesel fuel in fracking.

“We’re seeing a pattern that is of great concern,” said Amy Mall, a senior policy analyst for the Natural Resources Defense Council in Washington. “They need to make sure that scientific investigations are thorough enough to ensure that the public is getting a full scientific explanation.”

The EPA says that the string of decisions is not related, and the Pavillion matter will be resolved more quickly by state officials. The agency has maintained publicly that it remains committed to an ongoing national study of hydraulic fracturing, which it says will draw the definitive line on fracking’s risks to water.

In private conversations, however, high-ranking agency officials acknowledge that fierce pressure from the drilling industry and its powerful allies on Capitol Hill – as well as financial constraints and a delicate policy balance sought by the White House -- is squelching their ability to scrutinize not only the effects of oil and gas drilling, but other environmental protections as well.

Last year, the agency’s budget was sliced 17 percent, to below 1998 levels. Sequestration forced further cuts, making research initiatives like the one in Pavillion harder to fund.

One reflection of the intense political spotlight on the agency: In May, Senate Republicans boycotted a vote on President Obama’s nominee to head the EPA, Gina McCarthy, after asking her to answer more than 1,000 questions on regulatory and policy concerns, including energy. 

The Pavillion study touched a particular nerve for Sen. James Inhofe, R-Okla., the former ranking member of the Senate Environment and Public Works committee.

According to correspondence obtained under the Freedom of Information Act, Inhofe demanded repeated briefings from EPA officials on fracking initiatives and barraged the agency with questions on its expenditures in Pavillion, down to how many dollars it paid a lab to check water samples for a particular contaminant.

He also wrote a letter to the EPA’s top administrator calling a draft report that concluded fracking likely helped pollute Pavillion’s drinking water “unsubstantiated” and pillorying it as part of an “Administration-wide effort to hinder and unnecessarily regulate hydraulic fracturing on the federal level.” He called for the EPA’s inspector general to open an investigation into the agency’s actions related to fracking.

When the EPA announced it would end its research in Pavillion, Inhofe – whose office did not respond to questions from ProPublica -- was quick to applaud.

“EPA thought it had a rock solid case linking groundwater contamination to hydraulic fracturing in Pavillion, WY, but we knew all along that the science was not there,” Inhofe said in a press release issued the day of the announcement.

Others, however, wonder whether a gun-shy EPA is capable of answering the pressing question of whether the nation’s natural gas boom will also bring a wave of environmental harm. 

“The EPA has just put a ‘kick me’ sign on it,” John Hanger, a Democratic candidate for governor in Pennsylvania and the former secretary of the state’s Department of Environmental Protection, wrote on his blog in response to the EPA news about Pavillion. “Its critics from all quarters will now oblige.”

** 

Before fracking became the subject of a high-stakes national debate, federal agencies appeared to be moving aggressively to study whether the drilling technique was connected to mounting complaints of water pollution and health problems near well sites nationwide.

As some states began to strengthen regulations for fracking, the federal government prepared to issue rules for how wells would be fracked on lands it directly controlled.

The EPA also launched prominent scientific studies in Texas, Wyoming and Pennsylvania, stepping into each case after residents voiced concerns that state environmental agencies had not properly examined problems.

The EPA probe in Pavillion began in 2008 with the aim of determining whether the town’s water was safe to drink. The area was first drilled in 1960 and had been the site of extensive natural gas developmentsince the 1990’s. Starting at about the same time, residents had complained of physical ailments and said their drinking water was black and tasted of chemicals.

The EPA conducted four rounds of sampling, first testing the water from more than 40 homes and later drilling two deep wells to test water from layers of earth that chemicals from farming and old oil and gas waste pits were unlikely to reach.

The sampling revealed oil, methane, arsenic, and metals including copper and vanadium – as well as other compounds --in shallow water wells. It also detected a trace of an obscure compound linked to materials used in fracking, called 2-butoxyethanol phosphate (2-BEp).

The deep-well tests showed benzene, at 50 times the level that is considered safe for people, as well as phenols -- another dangerous human carcinogen -- acetone, toluene, naphthalene and traces of diesel fuel, which seemed to show that man-made pollutants had found their way deep into the cracks of the earth. In all, EPA detected 13 different compounds in the deep aquifer that it said were often used with hydraulic fracturing processes, including 2-Butoxyethanol, a close relation to the 2-BEp found near the surface.[1]

The agency issued a draft report in 2011 stating that while some of the pollution in the shallow water wells was likely the result of seepage from old waste pits nearby, the array of chemicals found in the deep test wells was “the result of direct mixing of hydraulic fracturing fluids with ground water in the Pavillion gas field.”

The report triggered a hailstorm of criticism not only from the drilling industry, but from state oil and gas regulators, who disagreed with the EPA’s interpretation of its data. They raised serious questions about the EPA’s methodology and the materials they used, postulating that contaminants found in deep-well samples could have been put there by the agency itself in the testing process.

In response, the EPA agreed to more testing and repeatedly extended the comment period on its study, delaying the peer review process.

Agency officials insist their data was correct, but the EPA’s decision to withdraw from Pavillion means the peer-review process won’t go forward and the findings in the draft report will never become final.

“We stand by what our data said,” an EPA spokesperson told ProPublica after the June 20 announcement, “but I do think there is a difference between data and conclusions.”

Wyoming officials say they will launch another year-long investigation to reach their own conclusions about Pavillion’s water.

Meanwhile, local residents remain suspended in a strange limbo.

While controversy has swirled around the deep well test results -- and critics have hailed the agency’s retreat as an admission that it could not defend its science -- the shallow well contamination and waste pits have been all but forgotten.

The Agency for Toxic Substances and Disease Registry, the federal government’s main agency for evaluating health risk from pollution, has advised Pavillion residents not to bathe, cook with, or drink the water flowing from their taps. Some have reported worsening health conditions they suspect are related to the pollution. They are being provided temporary drinking water from the state in large cisterns.

**

The EPA opened its inquiry in Dimock, Pa., after residents provided it with private water tests detecting contaminants and complained that state regulators weren’t doing enough to investigate the cause.

When an elderly woman’s water well exploded on New Year’s morning in 2009, Pennsylvania officials discovered pervasive methane contamination in the well water of 18 homes and linked it to bad casing and cementing in gas company wells. In 2010, they took a series of steps against the drilling company involved, citing it for regulatory violations, barring it from new drilling until it proved its wells would not leak and requiring it to temporarily supply water to affected homes.

But residents said state officials hadn’t investigated whether the drilling was responsible for the chemicals in their water. The EPA stepped in to find out if residents could trust the water to be safe after the drilling company stopped bringing replacement supplies.

Starting in early 2012, federal officials tested water in more than five dozen homes for pollutants, finding hazardous levels of barium, arsenic and magnesium, all compounds that can occur naturally, and minute amounts of other contaminants, including several known to cause cancer.

Still, the concentration of pollutants was not high enough to exceed safe drinking water standards in most of the homes, the EPA found (in five homes, filtering systems were installed to address concerns). Moreover, none of the contaminants – except methane -- pointed clearly to drilling. The EPA ended its investigation that July.

Critics pointed to the Dimock investigation as a classic example of the EPA being overly aggressive on fracking and then being proven wrong.

Yet, as in Pavillion, the agency concluded its inquiry without following through on the essential question of whether Dimock residents face an ongoing risk from too much methane, which is not considered unsafe to drink, but can produce fumes that lead to explosions.

The EPA also never addressed whether drilling – and perhaps the pressure of fracking – had contributed to moving methane up through cracks in the earth into their water wells.

As drilling has resumed in Dimock, so have reports of ongoing methane leaks. On June 24, the National Academy of Sciences published a report by Duke University researchers that underscored a link between the methane contamination in water in Dimock and across the Marcellus shale, and the gas wells being drilled deep below.

The gas industry maintains that methane is naturally occurring and, according to a response issued by the industry group Energy In Depth after the release of the Duke research, “there’s still no evidence of hydraulic fracturing fluids migrating from depth to contaminate aquifers.”

**

In opening an inquiry in Parker County, Texas, in late 2010, the EPA examined a question similar to the one it faced in Dimock: Was a driller responsible for methane gas bubbling up in residents’ water wells?

This time, though, tests conducted by a geologist hired by the agency appeared to confirm that the methane in the wells had resulted from drilling, rather than occurring naturally.

"The methane that was coming out of that well … was about as close a match as you are going to find," said the consultant, Geoffrey Thyne, a geochemist and expert in unconventional oil and gas who has been a member of both the EPA’s Science Advisory Board for hydraulic fracturing, and a National Research Council committee to examine coalbed methane development.

The EPA issued an “imminent and substantial endangerment order” forcing Range Resources, the company it suspected of being responsible, to take immediate action to address the contamination.

But once again, the EPA’s actions ignited an explosive response from the oil and gas industry, and a sharp rebuke from Texas state officials, who insisted that their own data and analysis proved Range had done no harm.

According to the environmental news site Energy Wire, Ed Rendell, the former Governor of Pennsylvania, whose law firm lobbies on behalf of energy companies, also took up Range’s case with then-EPA Administrator Lisa Jackson.

Internal EPA emails used in the EnergyWire report and also obtained by ProPublica discuss Rendell’s meeting with then-EPA Administrator Lisa Jackson, though Range has denied it employed Rendell to argue on its behalf. Neither the EPA nor Rendell responded to a request for comment on the Parker County case.

In March 2012, the EPA dropped its case against Range without explanation. Its administrator in Texas at the time had been assailed for making comments that seemed to show an anti-industry bias. He subsequently lost his job. An Associated Press investigation found that the EPA abandoned its inquiry after Range threatened not to cooperate with the EPA on its other drilling-related research.

Agency critics see a lack of will, rather than a lack of evidence, in the EPA’s approach in Parker County and elsewhere.

“It would be one thing if these were isolated incidents,” said Alan Septoff, communications director for Earthworks, an environmental group opposed to fracking. “But every time the EPA has come up with something damning, somehow, something magically has occurred to have them walk it back.”

**

So where does this leave the EPA’s remaining research into the effects of fracking?

The agency has joined with the Department of Energy, U.S. Geological Survey and the Department of Interior to study the environmental risks of developing unconventional fuels such as shale gas, but those involved in the collaboration say that little has happened.

That leaves the EPA’s highly anticipated national study on hydraulic fracturing.

When the EPA announced it was ending its research in Pavillion, it pointed to this study as a “major research program.”

“The agency will look to the results of this program as the basis for its scientific conclusions and recommendations on hydraulic fracturing," it said in a statement issued in partnership with Wyoming Gov. Matt Mead.

That national study will concentrate on five case studies in Pennsylvania, Texas, North Dakota and Colorado.

It will not, however, focus on Pavillion or Parker County or Dimock.

Nor will it devote much attention to places like Sublette County, Wy., where state and federal agencies have found both aquifer contamination and that drilling has caused dangerous levels of emissions and ozone pollution.

It will be a long time before the EPA’s national study can inform the debate over fracking. While the agency has promised a draft by late 2014, it warned last month that no one should expect to read the final version before sometime in 2016, the last full year of President Obama’s term.

The LA Times is now bolstering the claim of WikiLeaks' lawyer that Michael Hastings claimed he was being investigated by the FBI in a conversation with her a few hours before her death. The LA Times confirms that Hastings also sent an e-mail hours before his death claiming "close friends and associates" were being interviewed by the FBI and he was going to "go off the radar for a bit."

The e-mail titled "FBI Investigation re NSA" sent to KTLA said Hastings was working on "a big story" and was going to disappear. Hastings warned colleagues to have counsel present if the FBI came to interview them. Hastings sent the e-mail to friends and colleagues and blind-copied his friend Staff Sgt. Joe Biggs according to the LA Times.

Biggs supplied the email to KTLA and said he and Hastings met when the journalist was embedded with Biggs’ unit in Afghanistan in 2008, KTLA reported.

Hastings, 33, died about 4:30 a.m. Tuesday when his 2013 silver Mercedes slammed into a tree in Hancock Park and burst into flames. The car was going so fast, the engine was found more than 100 feet away from the crash, authorities said.

Since Hasting’s death, wild conspiracy theories have bloomed on the Internet, implying he was murdered by powerful forces wanting to silence him.

According to the LA Times' story, Hastings was doing research on a new privacy lawsuit filed by Tampa Bay socialite Jill Kelley, who is suing the FBI and Department of Defense for identifying her as the person who reported threatening e-mails she had received from Paula Broadwell, the author and biographer with whom Gen. David Petraeus was having an affair. Petraeus stepped down as CIA Director shortly after details of his relationship with Broadwell became public. Hastings planned to meet with a representative of Kelley in L.A. next week to discuss her privacy lawsuit according to the report.

This blog exclusively reported last November that an unnamed attorney at the White House, Michael Gottlieb, was the person Kelley had visited at the White House several times before the Petreaus scandal became public. Gottlieb's identity was made by simple deduction--he was the only attorney on the White House staff who had worked in Afghanistan at the same time Broadwell was working on her biography of Petraeus, "All In" while he was serving as commander in Afghanistan. Within hours of the initial blog report, someone within the Executive Office of the President" began visiting this blog frequently.

The FBI denies it was investigating Hastings. The FBI similarly denied it had ever investigated Tamerlan Tsarnaev until his mother came forward and claimed the FBI had interviewed her son and her on multiple occasions. Russian authorities later confirmed they had also alerted both the FBI and the CIA about Tsarnaev's activities.

The LA Times says the investigation of Hastings' death is still under investigation, although an earlier report claimed that police said they did not believe foul play was involved despite obvious evidence the car was exploded by a bomb. Witnesses said they heard what sounded like a bomb exploding before his car became completely engulfed in flames and came to rest against a palm tree in the median along Highland Street in Hollywood. Parts of the car, including the car's transmission, were found one hundred feet down the street from the car. Toxicology tests on Hastings will take several weeks according to the report.

Hastings' friend Sgt. Biggs tells KTLA he is very alarmed by the events of this week. “It alarmed me very much,” Biggs said. “I just said it doesn’t seem like him. I don’t know, I just had this gut feeling and it just really bothered me,” he said. Biggs told KTLA he wants to know the truth about what happened to his friend. “I’m going to be willing to help and do whatever I can and make sure that people look into this story and make sure they find out whatever happened.”

KTLA has also identified the videographer with LoudLabs whose car's dash cam captured the footage of Hastings' car running a red light just minutes before the explosion and crash and the footage of Hastings' burning car and crash scene as Scott Lane. “There’s no cars that are following him,” Lane said. “He flies by and 10 seconds, 20 seconds, 30 seconds goes by… No cars are following him.” Lane's opportunistic timing has drawn attention, particularly since he seemed so anxious to put words in the mouths of potential witnesses and videotaped a Miller Lite bottle in the middle of the median a distance from Hastings' car to suggest he was driving while under the influence of alcohol. Melrose and Fairfax Blog, which appears to have some affiliation with LoudLabs, made a point of assuring readers that Lane had nothing to do with Hastings' death.

Some people have accused LOUDLABS of being part of the conspiracy for being so close and arriving at the scene of the crash so quickly.  But M&F can attest that LOUDLABS has a knack for getting around Los Angeles and creeping the streets during the midnight hours, and just happened to be nearby when the Michael Hastings tragedy happened.

The footage LL captured of Hastings' car running a red light showed that no one was following him or other vehicles made him crash, and Scott Lane from LL even got interviewed on major news networks with his story.  Lane stated that he was not involved in any conspiracy, and he also mentioned believes that high speeds alone led to the crash.  However, conspiracy theorists are still propositioning that Hastings' car might have been micro-chipped, thereby causing the high speeds and brake failure leading to the crash.

UPDATE: Check out this video discussing the technological ability to remotely control your automobile. It's pretty scary stuff when you think about it.

Michael Hastings, the 33-year old investigative reporter whose reporting from Afghanistan for Rolling Stone magazine ended the career of Gen. Stanley McChrystal, the supreme commander in the American-led war in Afghanistan, after McChrystal shared his candid criticism of the Obama administration, died in fiery, single car crash in Hollywood early Tuesday morning.

LA Weekly reports that Hastings, who has reported extensively on the CIA, was believed to be working on a new story for Buzzfeed about the CIA when his late model Mercedes inexplicably crossed the median, smashed into a tree and burst into flames. If you look at the YouTube video below, you will notice at about the 5:00 mark an image of what appears to be the car's engine much further down the street from where Hasting's car impacted a tree, which seems highly out of place.

Hastings' death is remarkably similar to the death of lobbyist Ashley Turton, a Washington lobbyist whose car inexplicably crashed in the garage at her home, burst into flames and burned her alive. Investigators speculated that Turton, who was said to be under the influence of alcohol, was believed to have lost consciousness when her low speed collision led to the fiery explosion of her late model BMW. Turton was a former Hill staffer for U.S. Rep. Rose DeLauro, who was married to White House staffer Dan Turton. Her employer, Progress Energy, was in the midst of a major merger with Duke Energy at the time of her death.

Interestingly, the person who uploaded the video to YouTube from an obscure source, LoudLabs News, makes the point of showing a Miller Lite beer bottle laying in the median a short distance from Hastings' car. The person taking the video footage seems anxious to put words in the mouths of possible witnesses as to how the crash occurred. LoudLab News was founded by a man named Scott Pacheco in 2012. The videographer arrived at the crash scene well before emergency responders.


UPDATE: The last piece Hastings wrote was titled, "Why Democrats Love To Spy on Americans":

Glenn Greenwald’s exposure of the NSA’s massive domestic spy program has revealed the entire caste of current Democratic leaders as a gang of civil liberty opportunists, whose true passion, it seems, was in trolling George W. Bush for eight years on matters of national security.

“Everyone should just calm down,” Senator Harry Reid said yesterday, inhaling slowly.

That’s right: don’t panic.

The very topic of Democratic two-facedness on civil liberties is one of the most important issues that Greenwald has covered. Many of those Dems — including the sitting President Barack Obama, Senator Carl Levin, and Sec. State John Kerry — have now become the stewards and enhancers of programs that appear to dwarf any of the spying scandals that broke during the Bush years, the very same scandals they used as wedge issues to win elections in the Congressional elections 2006 and the presidential primary of 2007-2008 . . .

The state of affairs, in other words, is so grave that two sitting Senators went as close as they could to violating their unconstitutional security oaths in order to warn the country of information that otherwise would not have been declassified until April of 2038, according to the Verizon court order obtained by Greenwald.

Now, we’re about to see if the Obama administration’s version of the national security state will begin to eat itself.

Unsurprisingly, the White House has dug in, calling their North Korea-esque tools “essential” to stop terrorism, and loathe to give up the political edge they’ve seized for Democrats on national security issues under Obama’s leadership. The AP spying scandal — which the administration attempted to downplay at the time, even appointing Eric Holder to lead his own investigation into himself —was one of the unexpected consequences of one of two leak investigations that Obama ordered during the 2012 campaign . . .

In short: any so-called credible DOJ/FBI leak investigation, by its very nature, would have to involve the Obama administration invasively using the very surveillance and data techniques it is attempting to hide in order to snoop on a few Democratic Senators and more media outlets, including one based overseas.

Outside of Washington, D.C., the frustration that Wyden and Udall have felt has been exponentially magnified. Transparency supporters, whistleblowers, and investigative reporters, especially those writers who have aggressively pursued the connections between the corporate defense industry and federal and local authorities involved in domestic surveillance, have been viciously attacked by the Obama administration and its allies in the FBI and DOJ . . .

The attitude the Obama administration has toward Manning is revealing. What do they think of him? “Fuck Bradely Manning,” as one White House official put it to me last year during the campaign.

Screw Manning? Lol, screw us.

Perhaps more information will soon be forthcoming.

Former NSA employee Wayne Madsen adds:

Back in November of 2010, I was flipped through the introduced council resolutions when I stumbled upon one that had not been reported on yet.  I proceeded to write about it in an article that appeared on my blog on November 16, 2010:

Little noticed last night was the introduction of Resolution 298, 2010. Authored by Council President Ryan Vaughn, the resolution has a digest that reads:

Chief of Staff Ryan Vaughn

DIGEST: amends the Code to unify franchise zone tow contracts and abandoned vehicle tow contracts for efficient removal, storage and disposal of impounded or abandoned vehicles under the authority of the department of code enforcement, and further to provide authority for employees of the department of code enforcement to direct the impoundment of vehicles declared a public nuisance.

The current situation has the City divided into zones and towing companies that want a contract in that zone engage in a bidding process.

Vaughn seeks to change that. Instead of city business spread out among several towing companies, Vaughn wants a "Franchise Wrecker Service" to be awarded an exclusive contract to tow and store vehicles on behalf of the City or anyone who contracts with the city. The administration, through its Director of Code Enforcement (with input from the Director of Public Safety and the IMPD Chief) would have the right to award the exclusive contract. The contract will be based on specifications provided by the Department of Code Enforcement in a request for proposal, request for invitation to bid or request to quote. See 611-206.

Pursuant to Vaughn's proposal, all impounded or abandoned vehicles identified by the City or City contractor would have to be towed by the Franchise Wrecker Service and stored on that company's lot. The proposal explicitly prohibits those vehicles from being stored on lots owned by the City or County. 611-205(a). When claiming a vehicle, the owner gets charged a towing fee and a per-day storage fee as provided in the contract entered into between the city and franchise wrecker. 611-205(b). There is no limit in Vaughn's proposal on how much these towing and storage fees will be.

Vaughn's resolution expands the definition of impoundment to include the removal (by the city or a city contractor) of vehicles from private property. 611-202. Of course the Franchise Wrecker Service is the company which gets paid the towing and storage fees.

Almost certainly Vaughn and city leaders have in mind which wrecker company they want to steer this lucrative exclusive contract to....

Following a council committee meeting a couple weeks later I again reported on what the ordinance would do, including this paragraph:

Vaughn's proposal would eliminate the bid requirement with the administration instead choosing which company receives the monopoly contract. The change in the ordinance would award one mega contract to a towing company which then could subcontract out to other companies to tow in the zones. Instead of the city picking those companies, the company awarded the contract could pick who they choose to partner with.

At the time Council President Ryan Vaughn introduced and pushed through the 2010 measure changing the law in order to allow the Ballard administration to award a non-competitive bid, monopoly towing contract, Vaughn was employed by the law firm Barnes & Thornburg.  In May of 2012, Vaughn left the Council Presidency and Barnes & Thornburg to became Mayor Greg Ballard's Chief of Staff and, thus, and in a position to influence the awarding of the towing contract. That same year, Barnes & Thornburg partner Bryan Burdick filed to lobby Indianapolis city officials, including Vaughn, on behalf of AutoReturn.  And who wins the lucrative contract in May of 2013?  AutoReturn, of course..

For now years, city officials have peddled the nonsense that the Broad Ripple Parking Garage, that monstrosity located at the southwest corner of College Avenue and Broad Ripple Avenue carries a price tag of $15 million.  Lately some stories have even suggested the cost was as much as $16.5 million.

I have long said that number is fiction.  People may not remember it but early on a media outlet (I believe the Indianapolis Star) priced out similar sized parking facilities and found out that they do not cost $15 million but rather in the $5 to $7 million range.

Why is this important?  Under the contract entered into by the City with Keystone Construction and its partners, essentially the first $6.35 million of the project comes from the public.  By saying the 342 space parking garage costs $15 million, it can be claimed that Keystone, the developer, is paying for most of the cost of the garage, for which Keystone and its allies gets 100% of the parking revenue, 100% of the commercial rents and 100% ownership.  We, the public, get zip. 

Undoubtedly, there was a calculation that media outlets would simply report the $15 million cost without demanding proof.  And that calculation has been right.

The Muncie Star-Press reports that the City of Muncie is building a six floor parking garage with 342 spaces next to the Ball State University campus.  The cost?  $5 million.

ExactTarget has become one of the largest employers in downtown Indianapolis, growing to more than 1,000 employees since the company's founding in 2000. So yesterday's news that it has been acquired by San Francisco-based Salesforce.com for $2.5 billion creates some cause for concern about the company's future in Indianapolis.

The company has had a lot of help from taxpayers along the way with its phenomenal grown through sate and local economic development incentives worth tens of millions of dollars, including personal and real property tax abatements on several downtown properties which houses the company's employees. The latest tax benefits were just approved in April by the Indianapolis City-County-Council. Councilor Brian Mahern spoke out against the generous public support for the company that other councilors outspokenly defended, noting the company's commitment to remaining in Indianapolis. Now all bets are off.

The Star's John Russell reports that the buyout will net a huge payoff to the company's top officers and directors. Although ExactTarget has never made a dime in its existence, racking up losses of tens of million annually, those 13 executives and directors will be $640 million richer thanks to the buyout. ExactTarget's CEO Scott Dorsey will receive $70.5 million for his 3% share of the company's shares.

Dorsey was in San Francisco for yesterday's announcement. In an interview, he offered no assurances about the company's future in Indianapolis. “It’s very early," Dorsey said in an interview Tuesday morning shortly after the deal was announced. “I’m not in a position to talk too much about the future.”

This is one of those occasions when I wished we had a lot more public reporting requirements for our elected officials. I have a hunch that there are some state and local officials who are much wealthier today as a result of this buyout, who have been very generous with taxpayer support of ExactTarget, but because public reporting requirement for those officials is totally useless, we'll never know how those public officials benefited from their support of generous public subsidies for the company.

by Christie Thompson

On Wednesday, the Guardian published documents revealing the government has been collecting months’ worth of telephone “metadata” on millions of Verizon customers. The Washington Post and the Guardian followed with news that both the National Security Agency and the FBI have been pulling Americans’ data from major web companies like Facebook and Google. 

Since 9/11, the government has been collecting enormous amounts of information on citizens. But most of the data grabbing is done in secret. What do we know about what the government knows? Here’s our reading guide to the government's growing surveillance.

Bush Lets U.S. Spy on Callers Without Courts, New York Times, December 2005

In 2005, the New York Times broke the story of warrantless wiretapping under President George W. Bush. The National Security Agency previously listened in on calls in which both parties were abroad, but monitoring expanded under Bush to include U.S. calls and emails made to overseas contacts. Officials said it was an attempt to track “dirty numbers” that were linked to al Qaida.

NSA has massive database of Americans' phone calls, USA Today, May 2006

Yesterday’s Guardian report isn’t the first we’ve heard of the government collecting Americans’ phone records. In 2006, USA Today revealed that the Bush administration was collecting call records of Verizon, AT&T, and BellSouth customers without going through the courts.

Top Secret America, Washington Post, July 2010

As the U.S. counterterrorism system grew to encompass thousands of government agencies and private contractors, it became “an enterprise so massive that nobody in government has a full understanding of it.” The Washington Post reported the NSA was collecting 1.7 billion emails, phone calls, and other communications every day, “overwhelming the system's ability to analyze and use it.”

The Secret Sharer: Is Thomas Drake an enemy of the state?, New Yorker, May 2011

Obama promised to increase transparency, but he’s pursued more leak investigations than any other U.S. president. Former NSA executive Thomas Drake faced charges under the Espionage Act for leaking documents on the agency’s growing surveillance of private citizens (he eventually pled guilty to a much lesser charge.) Drake’s case is a window into the NSA as domestic spying took off.

The Surveillance Catalog, The Wall Street Journal, February 2012

Plenty of governments are spending to spy on their citizens. Documents obtained by The Wall Street Journal reveal what’s in governments’ toolbox. Some software enables governments to translate and analyze voices from massive wiretaps to discern what’s being discussed, or to steal data from “hundreds of thousands” of targets.

The NSA Is Building the Country’s Biggest Spy Center (Watch What You Say), Wired, March 2012

The “Utah Data Center” may sound like just another office park, but the National Security Agency’s $2-billion project will soon be home to the biggest database of U.S. citizens’ personal information, from private emails to bookstore receipts. When it opens In September 2013, it will also be where codebreakers work to crack into heavily encrypted data.

U.S. Terrorism Agency to Tap a Vast Database of Citizens, The Wall Street Journal, December 2012

The National Counterterrorism Center was once only allowed to store data on citizens if they were terror suspects or related to an ongoing investigation. Not anymore. The Wall Street Journal details the “sea change” in policy under Obama, that lets the center collect and examine information on any U.S. citizen — whether or not they’re suspected of a crime.

I have had a chance to watch several of the hearings of the Homestead Tax Credit Commission which is considering a recommendation as to the possible (almost certain) elimination of the local homestead tax credit by the Marion County/Indianapolis government.  Here are some observations.

First, an explanation of the homestead tax credit is in order.  Actually there are three separate homesteads  tax credit/exemptions on residential property.  The most familiar is the state homestead tax deduction which equals up to 25% (17% state and 8% county) of your gross tax according to current Indiana Code (IC 6-1.1-20.9), depending upon your taxing district.

Then you have the local option income homestead tax credit.   A county cannot change that.

What is on the table for possible elimination is the COIT property tax credit. COIT stands for county option income tax.  That COIT tax credit refers to a portion of the COIT used to reduce homeowners' property taxes.   Only a few counties have the COIT tax credit.

What happens is that approximately $12.5 million in county option income tax in Marion County, is used each year to reduce property taxes for those who have homesteads.. The money, even though originating as local income tax, gets distributed as if it were property tax.

Mayor Greg Ballard and some of those on the council, particularly Republicans, support the elimination of the COIT tax credit.  This means the local COIT won't be used to reduce property tax bills.  In other words, many residents will see an increase in their property taxes if the COIT homestead credit is eliminated. 

Instead of the $12.5 million of the COIT being used to reduce property taxes,, the COIT money would be distributed under the COIT allocation for local government.  That skews the winners and losers in the fierce battle among local governments for taxpayer dollars. The chief winner if the COIT homestead credit is eliminated would be the City of Indianapolis, which would gain more than $8 million of the $12.5 million in COIT funding. The losers would be schools and libraries which are funded chiefly by property taxes.

Another loser is Marion County homeowners.  Those people who are not at the 1% cap will see a rise in their property tax bill, not a huge rise, but an increase nonetheless.

Politically, Ballard and the Republicans seem to believe they can sell the public that the credit should be eliminated because it is "antiquated".  But by any measure though, the proposal is an increase in the property tax, the most unpopular tax there is.  Mayor Peterson lost his re-election bid in 2007 in no small part to increasing property taxes, for which he really only had a minor role.  In this case though the Ballard administration would be 100% responsible for pushing through the Council a property tax increase. The Republicans best bet is that Democrats on the Commission and the Council will agree to go along with the property tax increase and share the blame with Republicans for doing so.  It wouldn't be a smart thing for Democrats to do, but my guess is they will do it.

Urban expert Aaron Renn, publisher of the Urbanophile blog, and I are having an interesting email exchange about paying better salaries to upper level management in government.  Renn, for whom I have a great deal of respect,  argues to attract top level executive talent to government, we need to pay higher salaries.  I won't publish his email as I never publish emails without consent.  But I will publish my email (with a few minor revisions) as it represents the philosophical difference I have with him regarding executive pay:

Aaron,

Your comments reflect a fundamental disagreement I have with many people who argue for high CEO, government and nonprofit managerial salaries.  Namely that you measure what we should pay these managers by what others are paying.

I don’t buy that. To me the question is not what others are paying for a position, but what salary is required to attract someone to a job who is capable of doing the job well.  The fact is we’re not talking baseball shortstops where there are only a few people on the planet who can play as well as Derek Jeter.  That’s why Jeter is paid, rightfully, a lot of money.  But if there were a ton of shortstops that play as well as Jeter, for much less, do you pay Jeter a lot of money anyway?   No.

We’re talking about managerial jobs that literally thousands of people can do and do every bit as well as the small pool of top level managers who continually get recycled.  Look at the CEOs who consistently lose money for their company.  I venture to guess that plenty of people who can lose money every bit as well as the those CEOs

There are tons of people out there who could have done a better job than [former Public Safety Director] Frank Straub, as evident from his performance.  Even with [IndyGo Manager Gilbert] Holmes, I don’t see the special talent that he brings to the position that makes him somehow different from hundreds if not thousands of people who could fill that position.   Again, these are not baseball shortstops where there is only a handful of people who can hit .300, with power, while playing excellent defense.

The people who occupy these managerial type positions like to think they bring special, unique talents to the mix.  But they don’t.  They like to think that because it justifies their high salaries.  But those salaries that they are paid is based on what others are paying, not what one has to pay to attract that level of talent in a free market.  It’s just not a free market when it comes to executive talent.  Look who sits on corporation boards approving CEO salaries...other CEOs and people making high executive salaries.  They're not going to bite the hand that feeds them.

If I was Mayor, I would take the Moneyball approach to getting people…reaching out to people who are outside the normal circle of recycled managerial talent.  I venture to say that I could put together a team every bit as good as those Mayors paying high salaries to the same recycled managers.

Added Note:  That does not mean I would put 20 something year old kids in charge of managerial positions with no oversight as was going on in the Indianapolis Department of Metropolitan Development.

City-County Councilor Christine Scales has shared with her fellow Republican council members a cautioning story out of Broward County, Florida that should give pause to efforts by Mayor Greg Ballard to spend millions of Rebuild Indy funds on a new east side sports facility that he hopes will host international cricketing events. A community in a part of Florida where tourists flock is now questioning the wisdom of spending $10 million on the nation's first internationally certified cricket stadium. The Sun-Sentinel has the story on Lauderhill's sticky wicket that's costing Broward County taxpayers dearly.

More than five years after Broward County opened the nation's first internationally certified cricket stadium, promoters can count on one hand how many international matches have been held there — and still have three fingers to spare.

It's unlikely things will get better any time soon for the $10 million multipurpose stadium at Central Broward Regional Park in Lauderhill, although it was sold to taxpayers as a high-profile, tourist magnet.

So far, the stadium has produced less than $100,000 a year in rental and parking revenues, mostly by hosting lower-level competitions, local cultural events and various sporting attractions. Tourism officials say cricket generated only $3 million last year, barely a half-percent of the county's sports-based tourism dollars.

"We told them repetitiously it wasn't going to draw the hype they were stating," said Lauderhill resident Alan Brown, who supported the park but not the emphasis on cricket. "They focused all their energy into something they felt was going to be an economic boon."

The stadium was promoted by local cricket enthusiasts and endorsed by U.S. and Caribbean cricket officials who saw it as a natural draw given the area's sizeable Caribbean population. It is being paid for through a voter-approved $400 million park bond passed in 2000 and is part of the $72 million regional park, the county's most expensive.

Observers cite the lack of a stadium business plan, ignorance about how the cricket world operates, and an uncooperative national cricket organization as reasons for not drawing the international matches that would fill the stadium and area hotels and restaurants . . .

The taxpayers of Indiana get to finance $100 million in new improvements to the Indianapolis Motor Speedway owned exclusively by members of the Hulman-George family. If the family decides it wants to sell the IMS at any time in the future based on a substantially higher market value thanks to the gift from Indiana taxpayers, it is permitted to do so and the new owners can receive the benefit of the generous gift unless a five-member commission made up of appointees of the Governor decides there is not good cause for the sale of the IMS. Last-minute changes to the bailout legislation approved by the General Assembly removed a provision in the House-passed version that would have barred a sale of the IMS as a condition to the granting of the $100 million gift; otherwise, the IMS owners would be compelled to repay the "loan."

Don't believe the news reports that call it a loan. Remember the CIB called the $43.5 million it gave to billionaire Herb Simon's Indiana Pacers a loan. They count on the sheeple being too stupid to figure out that a transfer of money from one entity to another without any real obligation to repay is a gift, not a loan. Assuming Gov. Mike Pence signs this horrible piece of legislation into law, I have no faith that anyone who represents real taxpayers will be appointed to sit on the 5-member commission. Look at the members of the Indiana Stadium and Convention Building Authority. It includes corporate executives from Wellpoint, Eli Lilly, Cummins, former Lt. Governor John Mutz and Barnes & Thornburg lobbyist Joe Loftus. It's a political cronies dream made in heaven. The Indiana Motorsports Commission will be no different. Only people handpicked by lobbyists for the Hulman-George family will get to serve on the Commission.

It's not the 10% income tax cut he sought, but the budget deal Republican legislative leaders announced today gives Gov. Mike Pence a significant part of the tax reductions he sought. The plan announced today provides for a 5% reduction in state income taxes phased in over the next four years, but it immediately repeals the state's inheritance tax retroactive to January 1, a big boost to family-owned farms and small businesses. Planned reductions in the state's corporate tax rates will continue, along with similar tax cuts for financial institutions. Together, the tax reductions will save Indiana taxpayers $1.1 billion over four years. Gov. Pence wasted no time in declaring victory:

“Today Hoosier taxpayers won a great victory. The agreement reached between our administration and legislative leaders will be the largest state tax cut in Indiana history. The combination of a 5 percent individual income tax cut, inheritance tax repeal and additional tax relief for businesses is the right tax relief at the right time and will give a much needed boost to working families, small businesses and family farms. 
 

I am grateful for the leadership of Senate President Pro Tem David Long,  Speaker Brian Bosma and other key fiscal leaders for working diligently with our administration to craft this historic package of tax relief. Their efforts demonstrate the commitment of the General Assembly to put taxpayers first.”
 

This is quite a different place than Pence found himself in January when he first announced his tax cut plan. Legislative leaders scoffed at his original plan, but in the end, gave him part of the tax cuts he sought and additional cuts he didn't seek. Part of that change of heart was due to altered revenue projections showing the state taking in $290 million in higher revenues over the next two years than had originally been projected. According to the Star, the budget deal announced today includes the following spending highlights:

■$215 million per year increase for roadwork, plus $200 million per year for a reserve fund for future work.

■A 2 percent increase for K-12 education funding in 2014 and 1 percent in 2015, plus $30 million in additional money will be provided for high performing schools and $300 million to a tuition reserve fund .

■$70 million to pay back bonds at the Indiana State Museum, and $58 million for the Forensics and Healthy Science Labs.

■$206 million for new university projects and $66 million per year for university performance funding.

■$250 million to a reserve Medicaid contingency fund. It authorizes the governor to negotiate an expansion of Medicaid through the Healthy Indiana Plan or a similar model with the federal government.

■$35 million for additional caseworkers and hotline improvement at the Department of Child Services — $5 million more than the Senate had proposed.

■a $120 million annual surplus and a $2 billion reserve.

indiana politics civil rights law

Remember all the sob stories about how badly the mid-town TIF was needed to bring development to areas of Indianapolis' northside that are supposedly struggling with redevelopment of struggling neighborhoods? The first beneficiary of that new TIF district may be an $18 million development project in Broad Ripple that includes a Whole Foods store, which is being proposed by the politically-connected Browning Investments firm. The proposed site is located within a block of the city-financed Broad Ripple mixed use/parking garage development near the village's busiest intersection. A petition drive to block $5 million in proposed TIF funding for the project has been launched. According to the petition found at the Change.org website, organizers complain that the 5-story, 35,000-square foot Whole Foods, which would be built only 100 yards from The Good Earth store, will have an adverse affect on local retail establishments. The petition questions why $5 million in TIF funds is being used to build another Whole Foods store less than two miles from an existing store. Residents are urged to contact Mayor Greg Ballard and their city-county council member, along with the Broad Ripple Village Association, which is backing the deal, to urge opposition to TIF funding for the project.



According to an Indianapolis Star article on the proposed new development last week, the developer is seeking the TIF funds to pay for drainage and sewage improvements at the proposed site. The owner of The Good Earth store expressed his concerns about the city providing economic incentives to a new chain store located so close to his store. That article notes that Sunflower Market closed its store on Broad Ripple Avenue shortly after North Carolina-based Fresh Markets opened up a gourmet grocery store at 54th and College. See, Matt Tully. This is who John Barth was really interested in helping when he fed those sob stories to you about why this mid-town TIF was created.

I had to laugh when the City of Carmel's police department held a big press conference the other day to brag about busting a few Asian women who ran massage parlors that offered massages with happy endings for prostitution. Now it turns out that the undercover police officer used in the sting against them was allowing the women to fondle his genitals each time he received a massage from them. Yep, that's right. This police office got paid to get hand jobs from accused prostitutes before charging them with prostitution. The Star's Ryan Sabalow has a story today questioning the police technique used to ensnare the women:

About 1 p.m. on Dec. 19, a man walked into the Dove Spa, a massage parlor in a nondescript Carmel commercial strip, and asked for the services of one of the women working there.

What the woman didn’t know was the man was an undercover police officer, wearing a wire. And what the woman did next, detectives now allege, was illegal: In exchange for $100 plus a $35 tip, she fondled the officer’s genitals.

Four more times the officer went back, according to a probable-cause affidavit released this week. During that time, over five months, the officer also visited a massage parlor in Zionsville. And each time, he allowed the women — all Chinese immigrants — to fondle him in exchange for cash, all in a fight against prostitution and human trafficking.

Officers say such methods led to a victory for Carmel and Zionsville on Wednesday, when 30 officers raided two businesses, arresting six people — four alleged prostitutes and two alleged pimps.

But the methods police say were needed to shut down a sophisticated prostitution ring were criticized Thursday by legal and law-enforcement experts and women’s advocates as excessive, unnecessary and misapplied to an investigation that involved possible human trafficking.

They say that prostitutes can be arrested and charged in Indiana as soon as an agreement to pay for a sex act is made. Intimate contact was not required. Plus, some said, if the women indeed had been victims of sexual exploitation, working in the sex trade against their will, the sex acts they performed on the officer only contributed to their humiliation, exploitation and degradation.

“How do you simultaneously say you’re protecting them by arresting them, but then you’re victimizing them by your undercover stuff?” said Eugene O’Donnell, a former New York police officer and prosecutor who’s now a professor at John Jay College of Criminal Justice in New York. “If they’re in fact exploited and ... their free will is overwhelmed by the people they’re working for, then are you helping them or are they being doubly victimized? Is this official victimization by the state?” . . .

This reminds me of the IMPD officer who worked undercover at the NIFS men's locker room. He would take showers without drawing his curtain and play with himself until he enticed someone else in the showers to play along with him before charging them with public indecency and hauling them out of the gym in handcuffs. A Marion County judge rightfully dismissed the cases after he testified what he did. Keep an eye on this case. This case is going to make national headlines before it's all over and the Carmel Police Department is going to have egg all over its face.

It appears that the other community in the United States that took a run at cricket as economic development flopped.  Will Indianapolis learn from this city's mistake or will our city leaders insist Indianapolis will be different and charge full speed ahead into the cricket business?   I'm guessing the latter.

Journalist Peter Della Pena reports in a story printed on ESPNCrickInfo among other places:

In a move that could strike a devastating blow to the development of cricket in America, the

city of Lauderhill, Florida is in the process of initiating a business plan to redevelop the cricket stadium inside the Central Broward Regional Park into a facility more suitable for other sports and activities that will generate enough revenue to sustain the operating costs of the facility. In a sternly worded letter by Lauderhill Mayor Richard J Kaplan addressed to ICC chief executive David Richardson dated April 9 and obtained by ESPNcricinfo, Kaplan blames the USA Cricket Association for the facility's lack of revenue from marquee cricket events mainly due to the governing body's failure to facilitate such events.

"After several years of under utilization by our sanctioning cricket body USACA, the City of Lauderhill and Broward County have had to look at other alternative uses for the stadium that will sell tickets to fill seats," Kaplan wrote. "As a result, Broward County is about to release an independent business plan which will advise government officials that it is time to consider a reconfiguration of the stadium to a sport that can better sustain the facility and provide an economic return."

The 20,000 capacity stadium opened in November 2007 as part of a $70 million county park complex. It is the only ICC approved ODI stadium facility in North America. Since it opened though, the stadium has been a lightning rod for criticism among local media and taxpayers in south Florida. An article in August 2009 in the South Florida Sun Sentinel titled, "Broward Built It, But Cricket Hasn't Come" detailed frustrations from the local community at the paltry attendance figures drawn for cricket matches in the stadium. An editorial in the same newspaper in August 2011 about the Central Broward Regional Park referred to the facility as "a legendary example of Broward officials setting taxpayer money on fire."

Kaplan's letter to Richardson is particularly stinging in his summary of USACA's credentials and reputation stating that the organization "is still suffering from management issues" and that its "long sordid history of suspensions and poor governance has plagued a territory with the greatest potential." The mayor goes on to state that the pair of Twenty20 matches staged at the stadium in Lauderhill last year between the West Indies and New Zealand proved that the city and county were capable of staging world class events, but despite encouragement from local government officials and business leaders, USACA has failed to help make similar events happen.

This seems to be the predominate way the Indianapolis Star reports the news these days. If you have a good story that doesn't fit the narrative of your editorial page, just sit on it until reporting it will make no difference. Four days after Gov. Mike Pence signed into law the $100 million taxpayer bailout legislation for the Indianapolis Motor Speedway, supported by the newspaper's editors, it runs a story by motorsports reporter Curt Calvin announcing that the IMS has reduced seating capacity at the track by 10%.

Since last year’s Indianapolis 500, thousands of grandstand seats overlooking Turn 3 at Indianapolis Motor Speedway have been removed.

Gone, too, are several rows of seats on the front straightaway, reducing capacity at the venerable venue by another couple of thousand.

Those alterations follow the removal of the First Turn Terrace, a bleacher section that five years ago sat on the inside of Turn 1. It was torn down to extend the IMS road course.

The result of the changes means the May 26 Indy 500 will have the smallest seating capacity since 2000, the last time the Speedway had a major makeover.

In 2004, The Indianapolis Star inspected the world’s largest sports facility and counted 257,325 seats. Today, that figure is at 235,000.

That’s an estimated 11,600 seats removed in the North and Northeast Vistas, 5,136 gone in the Turn 1 infield and the loss of the low-row seats.

It adds up to nearly a 10 percent reduction in capacity, although IMS officials declined Wednesday to reveal the actual total, a closely guarded secret since Tony Hulman bought the facility in 1945 . . .

I guess the fact that IMS officials had already resigned themselves to smaller track attendance was of no importance to the Star's readers as lawmakers debated whether to give them $100 million in public subsidies to make improvements to the track. The odds are very good that any improved viewing stands will mean an even larger contraction in the seating capacity of the track.

This has to be one of the more unusual investigative pieces done by one of the Indianapolis Business Journal's excellent reporters. The latest edition of the IBJ features a front-page story by Chris O'Malley titled, "Oesterle sells land, reaping millions, Angie's List $6.3 million price exceeded assessed value." It's quite the case of self-dealing by a man the publication has followed throughout his business career and upon whom it has heaped plenty of glowing praise and adoration. Some critics would argue that the publication has been a bit too generous in its coverage of Oesterle and the business he co-founded with Angie Hicks because of his close relationship with its chairman and owner, Mickey Maurer, who also sits on the board of directors of Angie's List. That's why the scathing story in today's edition comes as such a surprise.

O'Malley explains how Oesterle formed a separate company, Henry Amalgamated, in which he owns a 70% stake, to acquire nearly 40 parcels of property on the city's near eastside. Karl Northern owns the minority interest. That company, in turn, leased their property at premium lease rates to Angie's List for its expanding headquarters and operations. The combined assessed value of the properties owned by Henry Amalgamated is just $2.625 million; however, Angie's List is acquiring the properties from their CEO's company for $6.25 million. Oesterle defends the sale, claiming that no cash is exchanging hands, at least cash that came from his hands. That's because Mayor Greg Ballard, who has received large campaign contributions from Oesterle, was very generous with your tax dollars and gave Oesterle's company $4.6 million in incentives from the downtown TIF district after the company pledged to keep its headquarters in downtown rather than relocating to the suburbs. Oesterle allowed the value of those incentives to go to Angie's List as part of the sale.

The parcels Henry Amalgamated bought with city incentives, mostly on the western edge of Angie's campus, were not sold to Angie's at a profit, Oesterle told the IBJ. he said those parcels were simply transferred to Angie's from Henry Amalgamated, with no money exchanged. Essentially, then, the value of city incentives went to the company itself.

"It was almost four blocks of real estate. I thing [Angie's] got a very good deal," said Oesterle, prefacing his comments by saying he was speaking on behalf of Henry Amalgamated and not Angie's List.

Just how good the deal was for Oesterle's Henry Amalgamated is hard to say.

No one involved in the transaction would say how much Henry paid for older parcels, those bought without city incentives. It's also unclear how much money Henry has invested in renovating buildings, ranging from old houses to old trucking firms in and around the campus.

I think the better response is that both Oesterle and Angie's List got a good deal. It was the taxpayers, as usual, who got left holding the bag. O'Malley cites SEC records as showing Angie's paid Henry about $1 million in rent, of which $735,590 was credited to Oesterle's stake in Henry. That contrasts with the CEO salary he earned that same year of $736,149.

O'Malley spoke to one Angie's List director, John Biddinger, who defended the transaction. Biddinger, who chairs the board's audit committee, told O'Malley that the company hired outside experts to appraise the properties, a process he described as "deliberative, taking about a year." O'Malley's story has no comment from Mickey Maurer and makes no mention of the fact that the IBJ's owner sits on Angie's List board of directors.

Incidentally, O'Malley's story mentions that Henry Amalgamated is named after Oesterle's best friend, Henry Hauser, with whom he co-owned an advertising agency that went by the name Young Isaac, Inc. in Columbus, Ohio. Hauser and Oesterle sold Young Isaac to People To My Site, Inc. in 2008 for an undisclosed price. Hauser formerly served on the board of directors of Angie's List. I would be curious to know if Angie's List contracted any of its marketing services to Young Isaac during the period of time that the company was racking up tens of millions of dollars in losses annually while spending a shit load of money on advertising. What am I talking about? Angie's List has never turned a profit in its 18 years of doing business. Tim Durham must be sitting in that federal prison cell down in Kentucky scratching his head wondering where he went so wrong with his Fair Finance compared to how well Oesterle has done with Angie's List despite not earning a single dollar of profit in its nearly two decades of existence.

Yesterday's raid on City Hall by the FBI was attention grabbing, to say the least.  The arrest of two City employees, one who ran the Land Bank (Reggie Walton), and one who had worked as a special assistant to Mayor Ballard himself (John Hawkins) and more recently as an aide to Walton, demonstrated how high up the alleged scheming crept.  Of course, the investigation continues and the recent cacophony of shoes dropping could continue apace.

Reggie Walton sat down at his desk on the 20th floor of the City-County Building a few days after he signed off on the deal, and the thought hit him.

I just made someone a millionaire.

Once the light of day was shed on the Land Bank policy of selling without restrictions, one would have thought that a) restrictions would be placed on sales of City-owned property in the future and b) any corrupt practices would stop due to the exposure.  But, evidently not.  No restrictions were placed on either the policy or the corrupt practices.

On to the press reaction to Mayor Ballard's absence yesterday.  Reported by the Star this morning, is the fact that the FBI informed the Mayor's office Monday night, of its intention to execute a search warrant Tuesday morning.  Ballard and his administration had time to work out how to proceed on Tuesday.  Hiding all day was their answer.  This hiding, by our duly elected but frequently gone Mayor, seems to have stepped over a line for some in the media.  I'm happy that they had a line to step over, but I am kind of stunned that they didn't notice his absence from any real governing heretofore..

So, what's the recent count?  Two City Councillors.  One City attorney who worked as a business partner of a Prosecutor.  A Deputy Prosecutor.  A Code Enforcement Officer having cars towed, crushed, and sold for metal.   All those found or plead guilty.

Hopefully Hogsett and the Public Integrity Working Group will continue the joyful sound of dropping shoes; and do so until even those in high places trading power for millions, will take pause and wonder if its worth it to continue bilking the Citizens of Indianapolis.


UPDATE: Here's Pawn Star's Rick Harrison showing off his favorite Super Bowl ring.

This should not come as a surprise.  If you have a company and you hire the right lobbyists, i.e those that work at Barnes and Thornburg, which law firm all but runs Indianapolis city government, you will win contracts.  The Indianapolis Business Journal reports:

Indianapolis will choose a San Francisco-based company to oversee city-ordered towing under a contract expected to be authorized Thursday afternoon.

Ryan Vaughn

AutoReturn is in line for a five-year contract for towing management services, pending approval by the Board of Code Enforcement.

The city issued a request for proposals in December that requested $1.5 million in annual guaranteed revenue, Department of Code Enforcement spokesman Adam Baker said. The money would come from fees collected from people whose cars are towed after accidents, abandonment or illegal parking.

...

Byran Burdick

City records show Brian Burdick of the law firm Barnes & Thornburg LLP lobbied on behalf of AutoReturn in 2012 and 2013. Mayor Greg Ballard's chief of staff, Ryan Vaughn, is a former Barnes & Thornburg attorney.

...Responses to the city's RFP won't be made public until Department of Code Enforcement Director Rick Powers signs a new contract, Baker said.

Translation:  We won't know which company had the best bid until the contract is signed when it's too late to do anything.