VOICE OF DETROIT: The city's independent newspaper, unbossed and unbought

Participants in Oct. 10, 2012 forum (l to r)
Frederick Headen, who criticized Detroit’s number of city workers, Edward Plawacki, Douglas Bernstein, a trainer of prospective EM’s, Judy O’Neill, a co-author of PA 4 and also an EM trainer, and Charles Moore, a witness for Orr/Jones Day at the bankruptcy trial who said he felt public officials did not have enough business acumen to run their cities.

By Diane Bukowski

November 7, 2013 

(Editor’s note: up-to-date coverage of bankruptcy trial proceedings including former State Treasurer Andy Dillon’s testimony will be forthcoming shortly. Meanwhile, the following.) 

DETROIT—U.S. Bankruptcy Judge Steven Rhodes has stricken from the record a request for a hearing on his recusal in the Detroit bankruptcy case which Mary Diane Bukowski, a city retiree creditor and official eligibility objector, as well as editor of Voice of Detroit, filed Nov. 6. 

The request cites Rhodes’ participation as chair, without subsequent disclosure during the bankruptcy trial, in an Oct. 10, 2012 forum on Chapter 9 bankruptcy filings and Emergency Managers. 

Detroit city retirees and supporters protest outside court as Gov. Rick Snyder testifies Oct. 28, 2013.

Five of six speakers were pro-EM, including accountant Charles Moore of Conway McKenzie, a major witness in the current trial. Others included a co-author of Public Act 4, the predecessor to the current EM law PA 436, and emergency manager trainers. Discussion about Detroit’s situation was held according to various news articles, with speakers stating that outside managers needed to take over from elected officials. 

No speakers represented city retirees, workers, union leaders, or retirement system officials. 

 (See earlier VOD story at http://voiceofdetroit.net/2013/10/27/a-thousand-take-streets-to-stop-detroit-bankruptcy-repeat-action-mon-oct-29-12-n-as-snyder-testifies-rhodes-should-recuse-self-led-pro-em-forum/.) 

Bukowski’s filing stated that Rhodes violated Canons 2 and 4 of the U.S. Orders of Conduct for federal judges by allowing the appearance of impropriety as well as raising questions regarding his impartiality in the matter. 

Bukowski’s filing can be accessed at  MDB request for hearing on Rhodes recusal.

Judge Rhodes replaced it with a six-page order denying the motion (click on DB Rhodes order MDB motion. 

Judge Rhodes makes clearly definitive point at Oct. 10, 2012 forum.

Judge Rhodes states in part, “The Supreme Court has held that in evaluating whether a judge’s impartiality might reasonably be questioned, the inquiry is from the perspective of a reasonable observer who is informed of all the surrounding facts and circumstances.” 

He stated additionally, The United States Court of Appeals for the Sixth Circuit has held, “A district court judge must recuse himself where a reasonable person with knowledge of all the facts would conclude that the judge’s impartiality might reasonably be questioned. This is an objective standard.” 

He went on, “In characterizing a “reasonable person,” the Seventh Circuit observed: “In addition to being well-informed about the surrounding facts and circumstances, for purposes of our analysis, a reasonable person is a “thoughtful observer rather than … a hypersensitive or unduly suspicious person. . . Finally, a reasonable person is able to appreciate the significance of the facts in light of relevant legal standards and judicial practice and can discern whether any appearance of impropriety is merely an illusion.”

Jan. 31, 2005: $1.5 BILLION POC loan from UBS AG and SBS pressed on city council by (l to r) then CFO Sean Werdlow, who later that year took a job with SBS, Bill Doherty of SBS, Joe O’Keefe of Fitch Ratings, Stephen Murphy of Standard & Poor’s, and former Deputy Mayor Anthony Adams. Photo by Diane Bukowski.

As editor of the Voice of Detroit, and as an investigative reporter for the weekly Michigan Citizen from 2000 to 2010, Bukowski has extensively researched and covered issues relating to the Detroit bankruptcy filing for 13 years, including the predatory and likely fraudulent  $1.5 billion Pension Obligation Certificates loan pressed on the City by criminal bank UBS AG and its minority partner Siebert, Brandford and Shank.

Rhodes further cites Canon 4 of the Code of Conduct, which Bukowski also cited, including the following: “Complete separation of a judge from extrajudicial activities is neither possible nor wise; a judge should not become isolated from the society in which the judge lives. As a judicial officer and a person specially learned in the law, a judge is in a unique position to contribute to the law, the legal system, and the administration of justice, including revising substantive and procedural law and improving criminal and juvenile justice. To the extent that the judge’s time permits and impartiality is not compromised, the judge is encouraged to do so, either independently or through a bar association, judicial conference, or other organization dedicated to the law.”

Rhodes continues, “In this case, a reasonable person with knowledge of all of the facts would know that I was only the moderator of the program and made no presentation at all. Instead, my role was limited to introducing the speakers and asking occasional questions to keep the presentations moving, focused and concise. Certainly, I heard the speakers’ presentations and found them informative, but this proves nothing more than my interest in the law and in my community.” 

Bukowski requested in her filing that Rhodes disclose his comments at the forum, which was not video or audiotaped, as well as his connections with the speakers (e.g. who selected them among other factors). She cited a news article which indicated “broad-ranging discussion” of the issues was held after the panel presentation, and included a photo of Judge Rhodes evidently making a strong point. 

Rhodes concludes, “The motion to disqualify is denied. Not for Publication.” 

Attorney Gail Wilson (second from left), a member of the Official Retirees Committee, leaves funeral for her husband, renowned Pres. Leamon Wilson of bus mechanics Local 312, with son Leamon E. Wilson at side April 15, 2013.

Rhodes also struck from the record a motion filed by the Official Retirees Committee for additional representation by Dentons. EM Kevyn Orr asked for the formation of that committee, which Rhodes referred to the U.S. Trustee to appoint. Although it was suspected that the Committee would be biased toward Orr as a result, in fact it has strongly opposed Orr/Jones Day positions on the bankruptcy and conducted blistering cross-examinations of Orr and Governor Rick Snyder. 

Inquiries have been made to the Retirees Committee regarding this matter and will be reported upon receipt.

Sign the petition and Stand with Detroit: http://www.standwithdetroit.org/ .

This video and webpage are authored by the AFSCME International Union. Suggestions I made when I signed the petition: BOYCOTT MICHIGAN PRODUCTS! GENERAL STRIKE ACROSS U.S. to save the nation’s largest and poorest Black majority city, with its proud history of labor and Black resistance to the banks and corporations which have devastated our beloved city.

Retiree Juanita Scott, shown on the video, worked with me at the Health Department before it was destroyed by Bing, Snyder and the banks, for many years. She was a union steward and is a stand-up sister. We went through strikes and grievance battles and efforts to stop the privatization of our historic department. Our Local, AFSCME 457, founded the Coalition to Stop Privatization and Save Our City in 1992 and kept the battle going for many years afterwards.  

Herman Kiefer Health Complex a few years before it was dismantled. This building is now an empty shell, with services run by the private “Institute for Population Health” at Jim Holley’s Considine Family Center (a former city recreation center) on Woodward. Wayne County is supposed to take over Vital (Birth and Death) Records, which has documents going back to the 1800’s, a valuable historic resource for the people of Detroit. It is not yet determined WHERE it will be located.

See some VOD articles on to the Detroit Health Department and our Local’s resolution, sent to the AFSCME International in 1992, to investigate a moratorium on debt to the banks, at the links below.

Diane Bukowski, editor VOD

http://voiceofdetroit.net/2013/04/01/afscme-local-457-called-for-moratorium-on-debt-to-banks-in-1992/

http://voiceofdetroit.net/2012/05/21/detroit-founded-health-dept-in-1825-it-previously-ran-3-hospitals-including-detroit-general-5-clinics-physician-home-visit-services/

http://voiceofdetroit.net/2012/05/21/city-wants-to-replace-health-dept-with-private-institute-for-population-health/

http://voiceofdetroit.net/2012/08/10/did-city-directors-steal-fed-for-private-agencies/

City retirees and supporters protest outside federal courthouse in downtown Detroit Oct. 28 as Michigan Gov. Rick Snyder, depicted as the devil in signs, testifies.

Snyder, Orr,  “non-expert” witnesses testify in favor of bankruptcy  

Contrast in Stockton: pensions, assets untouched, pension bonds hit

 Analysis

 By Diane Bukowski

 November 3, 2012

DETROIT – As Round One of the Chapter 9 bankruptcy eligibility trial wraps up here in the nation’s poorest and largest Black-majority city, it has become clear that Wall Street is calling the shots. Michigan Gov. Rick Snyder, Detroit Emergency Manager Kevyn Orr, and the trio of well-paid “non-expert” consultants who testified in the first two weeks of the trial are obeying. 

One, Kenneth Buckfire, said “everyone knows” that retirees will only get 16 cents on the dollar.  Another, accountant Charles Moore of Conway McKenzie, admitted that actual actuaries (not accountants) have not yet determined a final figure relating to alleged pension underfunding. The Proposal to Creditors presented by Orr June 14 said it was $3.5 billion, while the most recent finalized reports say it is $646 million. 

Current developments in the Stockton, CA bankruptcy filing, transpiring under elected city officials, are making the Street all the more determined to set a precedent in Detroit by slashing public pensions and assets through an unelected “emergency manager,” while preserving billions in payments to bondholders. 

MOODY’S ON STOCKTON  

“Under Stockton’s plan, the unfunded accrued pension liability of its retirees remains untouched, and the city will continue to fully fund its required contribution to CalPERS [California Public Employee Retirement Systems],” Moody’s Investors’ Service reported Oct. 15. “We estimate that the city’s unfunded accrued pension liability, from both pension plans held by CalPERS, is approximately $500 million.” 

Moody’s concurrently lowered its rating on the city’s $125 million worth of “pension obligation bonds,” peddled by the notorious Lehman Brothers, from “Ca” to “Caa3.” According to Reuters, Stockton pension bond holders face a loss of 50 to 65 percent of principal in the plan of adjustment, which would be paid by insurer Assured Guaranty. 

(L to r) Jan 31, 2005: Former city CFO Sean Werdlow, Bill Doherty of SBS, Joe O’Keefe of Fitch Ratings, Stephen Murphy of Standard & Poor’s, former Deputy Mayor Anthony Adams press for $1.5 BILLION POC loan from UBS AG, SBS at Council table. Werdlow was hried by SBS in Nov. 2005, remains there.

The global criminal bank UBS AG sold $1.5 BILLION worth of the same type of bonds to Detroit in 2005-06, an evidently fraudulent deal. Instead of going after UBS AG, as Stockton went after Lehman, Orr wants to protect UBS AG’s grand heist through a “forbearance agreement” on $279 million of related interest-rate swaps. That will be debated during the plan adjustment phase of the case, to follow if U.S. Bankruptcy Judge Steven Rhodes confirms bankruptcy eligibility. 

U.S. Bankruptcy Judge Stephen Rhodes chairs forum on Chapter 9 and EM’s on Oct. 10, 2010.

His confirmation is likely, despite arguments by attorneys for retirees, who say that the city is not eligible because the bankruptcy filing was done without exempting public pensions, protected by the Michigan Constitution, as they are in California.

After Denton’s attorney Anthony Ullman, representing the Official Retirees Committee, grilled Orr Oct. 28, Rhodes asked Ullman off the record, “May I ask you a question about your line of questioning regarding the Michigan Constitution—is it your position that it prohibits the city from asking retirees to negotiate [on cuts to pensions]?” 

Rhodes chaired a forum on Chapter 9 and emergency managers in October 2012, whose participants included accountant Charles Moore of Conway McKenzie, a key witness for Orr/Jones Day in the trial, and attorneys, one who co-authored Public Act 4, the predecessor to EM Act PA 436, and two who trained emergency managers. (See http://voiceofdetroit.net/2013/10/27/a-thousand-take-streets-to-stop-detroit-bankruptcy-repeat-action-mon-oct-29-12-n-as-snyder-testifies-rhodes-should-recuse-self-led-pro-em-forum/. 

SNYDER: “I DON’T RECALL” PENSION-CUTTING DISCUSSIONS

Protesters outside courthouse demand prison for top criminals.

The “Proposal to Creditors” Orr presented June 14 calls for cessation of all city payments into its pension plans. It says, “There must be significant cuts in accrued, vested pension amounts for both active and currently retired persons.” 

The State Constitution, Art. 9, Sec. 24 says:

“The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof which shall not be diminished or impaired thereby. Financial benefits arising on account of service rendered in each fiscal year shall be funded during that year and such funding shall not be used for financing unfunded accrued liabilities.”

 Orr has announced that as of Jan. 1, 2014, current and retired workers’ health care benefits, unprotected under the Constitution, will be eliminated, replaced with a $125 a month stipend to be used under Obamacare. He has also proposed a $9 billion sell-off of Detroit’s Water & Sewerage Department, the third largest in the country, and signed a state lease of Belle Isle, the nation’s largest public island park. 

Noreen and Kenneth Buckfire square-dancing at event in NYC they chaired: “New York New York’s a Wonderful Town.” No wonder–Wall Street’s there.

Snyder testified that EM/bankruptcy-related efforts to score a direct hit on public pensions and assets began “two and one-half years ago.” He said the state would back up Detroit pension funds, as implied in Art. 9, Sec. 24, only under a judge’s order. 

Snyder was asked whether he met with Kenneth Buckfire and Jones Day attorneys on June 5, 2012 to discuss a contingency plan if the state’s original Emergency Manager law, Public Act 4, was overturned, and the use of Chapter 9 bankruptcy as an “end-run” around Michigan’s constitutional protections of public pensions. 

“I don’t believe so,” he replied. 

Shown an email from Heather Lennox of Jones Day indicating that she was “going with Kenneth Buckfire June 5, 2012 to meet with the governor in Michigan,” he said, “I recall meeting with Buckfire, not this specific meeting. I literally do thousands of meetings.” 

Asked whether he recalled the Jones Day attorney or Buckfire talking to him about state  public pension protections at the meeting, he replied, “I don’t recall.” 

Miller Buckfire, a subsidiary of Stifel Financial, embroiled in numerous securities fraud actions across the U.S., and Jones Day were hired in January, 2013 as the city’s “investment banker” and “restructuring consultant” respectively, after City Council approval, despite a public outcry. 

SNYDER IGNORED TOP ADVISORS ON BANKRUPTCY APPROVAL 

Gov. Rick Snyder, Detroit EM Kevyn Orr during a jolly moment.

Regarding any discussions with Orr during preliminary EM interviews over whether “vested pension benefits could be reduced or modified under Chapter 9,” Snyder repeated, smiling smugly, “I don’t recall.”   

Eventually, city retirees in the audience shouted out “I don’t recall” prior to one of his final responses. 

Snyder admitted that he authorized Orr to peremptorily file bankruptcy on the city’s behalf only three months after the EM’s appointment, despite the disagreement of his own top advisors. 

Attorney William Wertheimer, representing a group of individual city retirees known as the Flowers plaintiffs, displayed an email from state records regarding Orr’s formal request for bankruptcy approval, dated July 8, 2013 and forwarded to Snyder on July 12. 

Former State Treasurer Andy Dillon was showing signs of exteme wear and tear back in 2011, during Detroit Financial Review Team meeting.

The email chain includes, among others, Snyder’s chief of staff Dennis Muchmore, top adviser Richard Baird, and former State Treasurer Andy Dillon, who recently resigned in the midst of a messy divorce and allegations of alcoholism. 

“Andy [Dillon] . . . and Baird are in favor of a more deliberative approach at your end, not an authorization but more in the nature of probing and questioning Kevyn’s assumptions/conclusion,” Muchmore’s email says. “. . . I favor this approach primarily because I think we should exercise the Governor’s ability under PA 436 to place conditions on his authorization for a bankruptcy filing. These could include such items as pre-approval by Treasury and/or the Governor of any plan in bankruptcy Kevyn might wish to submit for example. The conditions could also include such items as pre-approval for anything having to do with vested pension benefits, General Obligation debt, or the disposition of certain assets or assets greater than a certain amount in value.” 

Dillon is expected to testify, apparently on behalf of eligibility objectors since Orr/Jones Day rested their case Nov. 4, on Nov. 5. 

KEVYN ORR:  “STAR” FOR JONES DAY; FIRM MET WITH STATE BEGINNING MARCH 2012 TO ENSURE EM, CHAPTER 9 

National Action Network march outside Jones Day Cleveland offices March 25, 2013.

Although Orr resigned from the global Jones Day law firm prior to his appointment March 18 as EM, another email made it clear he is taking orders from the pro-corporate, ultraconservative, racist leaders of the firm.

Jones Day represents most of the world’s largest banks and most of Detroit’s major creditors, including UBS, Siebert, Brandford and Shank, JPMorgan Chase, Deutsche Bank, and others. Many have been caught up in global scandals over interest-rate fixing under LIBOR and the ISDAfix, among other crimes.

An email from Corrine Ball, a Jones Day partner, to Orr dated Jan. 15, 2013, ironically the birthdate of Dr. Martin Luther King, Jr., regarding Orr’s proposed appointment as EM, was admitted into evidence. 

Corinne Ball of Jones Day: “Driving Miss Daisy”

“Kevyn- there are diversity related issues, you have to be the star on this stuff and be able to discuss what we can provide,” Ball wrote. 

Another email dated Feb. 11, 2013, said, “Preparation for the EM appointment is important. We must prepare for an orderly transition, not a flash landing. Not sure the state, Dillon, Baird, and the Governor are really thinking and preparing on an operational level. It would be a better process if the firm is well prepared. Jones Day should be there before the EM is in place.” 

Dentons attorney Anthony Ullman of the Official Retirees Committee asked Orr, “Were you aware that Jones Day was in discussion on March 24, 2012 with the state of Michigan about the possibility of the repeal of Public Act 4?” 

Ullman displayed a two-page Jones Day email, referring to a meeting with a “state treasury official” about achieving a “Consent Agreement” before the referendum election, as a step towards the installation of an Emergency Financial Manager. 

Anthony Ullman of Dentons represents Official Retirees Committee.

The City Council passed that consent agreement on April 4, 2012, less than two weeks after the email, and the anniversary date of Dr. King’s assassination. PA 4 was defeated by 53 percent of Michigan’s voters Nov. 4, 2012. 

“As such, state legal counsel and Jones Day provided guidance on whether a Chapter 9 filing could be upheld if PA4 was pulled back?” Ullman asked Orr. 

Orr testified he was “not aware” of that. 

“Are you aware that Jones itself was involved in suggesting an appropriations measure to PA 436?” Ullman asked. PA 436 was enacted in Dec. 2012 including a financial provision which made it referendum-proof. 

“I never heard that from anyone at Jones Day,” Orr said. 

“Prior to the Chapter 9 filing, were you aware of any legal precedent allowing an Emergency Manager to use Chapter 9 bankruptcy to trump the state constitution?” Ullman asked Orr, who has boasted that federal law trumps state law. 

Orr: I have an even more powerful Chapter 9.

“I handled cases involving federal law over state law, but whether I was I aware of specific cases [involving Chapter 9]—I don’t think there were any specific cases,” Orr replied. 

During his testimony, Orr admitted to making what one city retiree called “threatening” statements about his powers during a “public meeting” held at the Wayne State Law School’s tiny Spencer Partrich Auditorium on June 10. 

The statements were played back from the videotape: “I have a very powerful statute—I have an even more powerful Chapter 9. I don’t want to use it but I’m going to accomplish this job—that will happen—Pay me now or pay me later. That is going to happen.” 

At one point during his testimony, Orr said “Chapter 9 had been considered since 2005.” 

Protest at court Oct. 28: Photo: WW

Orr denied knowledge that he would receive bonuses to his $275,000 salary for early conclusion of the Chapter 9 proceedings, set out in one communication admitted into evidence.  He said he was under pressure because his term is 18 months. However, PA 436 provides for the Governor to extend that term, and for a state-appointed “transition team” to govern city affairs for an indefinite period once the EM leaves. 

Other emails to Orr from Jones Day partners were introduced into evidence. 

They stated variously, “Food for thought – the Bloomberg Foundation has a keen interest in this area, about financial support for the project and  particular for the EM,” and “Making this a national issue is not a bad idea. It provides political cover, and more than enough patronage to allow either Bing or Snyder to look for higher callings  in the Cabinet, Senate or corporations.  Further this would give you cover and options are on the back end to make up for your lost time here.” 

Attorneys for retirees and unions contended that Orr had no intention to negotiate in good faith, a requirement for bankruptcy eligibility approval. They introduced a “roll-out plan” for events included in the June 14 Proposal to Creditors, which allowed a period for counter-proposals and review that ended July 19.

Orr also changed the date on his Executive Order declaring Bankruptcy.

Orr admitted that he crossed out the date July 19 at the top of the bankruptcy petition, replacing it with “July 18.” 

Thirtieth Circuit Court Judge Rosemarie Aquilina.

He said the date was moved up because three lawsuits, filed earlier by Flowers et al, Weathers et al, and the city’s retirement systems asking a state judge to bar any bankruptcy filing without a specific exemption for public pensions.

Thirtieth Circuit Court Judge Rosemarie Aquilina  ruled in favor of the plaintiffs during a meeting July 18, as Orr was filing the bankruptcy petition at 3:47 p.m. the same day. Rhodes later put a bankruptcy stay on the state lawsuits, along with two federal lawsuits challenging the constitutionality of PA 436, before U.S. District Court Judge George Caram Steeh. 

“I was getting ready to lose control,” Orr said.  “I ignored the lawsuits for almost three weeks. . . . I was concerned one of the lawsuits could undermine my authority under PA 436 to get the job done.” 

Asked “What authority?” Orr responded, “All of my authority.” 

Oct. 28 protest at federal courthouse in Detroit.

Attorney William Wertheimer, representing the Flowers plaintiffs, who re-filed in bankruptcy court, asked Orr, “Have you ever in your meetings or communications with the governor or his staff in any way communicated to him that it was your intention as the representative of the City of Detroit to make a legal claim that state would be obligated to pay any pension obligations under Art 9 sec. 24? In any of your conversations with the governmor, did you ever communicate that because of state law in Michigan, pensions are sacrosanct?” 

Resorting to Engler’s ploy the previous day, Orr said, “I don’t recall.” 

To many further questions, he pled attorney-client privilege, claiming attorneys were present at his meetings with the governor. 

On Oct. 28, before Snyder’s testimony, attorneys grilled Orr about statements in the Proposal for Creditors that the city’s pension systems are underfunded by $3.5 billion. 

Charles Moore of Conway McKenzie testified Oct. 24 that he conveyed that figure to Orr, although Moore is not an actuary, and also that actuarial analyses of the level of pension underfunding have not yet been completed. 

Attorney Ullman asked, “Was it your understanding that Milliman, Inc. said the systems are $0.6 billion underfunded, and perhaps significantly more once appropriate actuarial assumptions are made?  As of June 30, 2011, most recent actuarial reports showed the pensions’ unfunded actuarial assumption liability (UAAL) at $646 million. The OPEB (Other Public Employment Benefits) stood at $5. 7 billion.  Utilizing more current dates and or/more conservative foundations could cause that liability to rise into the billions of dollars?” 

Orr admitted that was the case. 

(Further reports on earlier testimony by Guarav , Charles Moore, and Kenneth Buckfire will be forthcoming if time permits. Meanwhile, readers can hear the  audiotapes of the bankruptcy hearings to date by going to http://www.mieb.uscourts.gov/apps/detroit/DetroitBK.cfm and clicking on “Hearing audio files” under “Quick Links.” A PDF file will download. Click on the paper clip icon on the upper left side, and audiotape will come up.)

Related articles on Stockton bankruptcy:

http://www.reuters.com/article/2013/10/15/stockton-downgrade-idUSL1N0I500W20131015

http://www.nytimes.com/2012/09/04/business/how-a-plan-to-help-stockton-calif-pay-pensions-backfired.html?_r=0

https://fiscalbankruptcy.wordpress.com/2013/10/08/10-8-13/

Detroit city workers on strike at the Wastewater Treatment Plant Sept. 30, 2012: BACK OFF OUR PENSIONS!

Commentary by John Riehl, Chairman of the Board of Trustees of the Detroit General Retirement System

John Riehl

September 28, 2013

It is far easier to be a Monday morning quarterback than to play the game Sunday night.

The current review of more than a quarter of a century of how the General Retirement System handled excess earnings has presented some assumptions that belie the intentions of the system’s board at that time.

The mandate of the GRS Board of Trustees is to best serve the interests of its union and nonunion members and beneficiaries. The benefits authorized by the board must be consistent with the approved benefit provisions adopted by the City of Detroit and various unions. The board does not negotiate benefits or have the authority to grant benefits not authorized by the plan.

In the 1980s, when GRS investments earned returns significantly higher than the assumed rate of return, the board, as the pension plan administrator, disbursed the approved benefit — the 13th check, which was discontinued in 2011 — to the retirees. Those earnings were generated, in part, by assets they contributed to the plan while they were employed.

Detroit city retirees protest outside bankruptcy hearing Aug. 19, 2013.

These additional returns also were credited to the employees’ annuity accounts, encouraging more contributions. Millions more were credited to the City of Detroit to reduce its future contributions.

A retiree excess-earning reserve fund was established to set aside monies for the specific purpose of funding a 13th check in years that might not be so profitable.

From 1985 to 2006, 54% of the excess-earnings funds distributed went to the employees, 31.9% went to the City of Detroit and 14% went to the retirees, including interest and the excess-earning reserve fund.

Lehman Bros. collapse due to predatory, fraudulent mortgage lending triggered global economic meltdown. Ernst & Young did Lehman Bros. books, is now advising City of Detroit.

Some say that if the board had invested those excess earnings funds over the 23-year period, the pension fund would be in better shape today. Given the numerous factors that influence fund performance over such a long period, it’s impossible to predict whether that’s true.

One thing is certain, the world changed with the global financial crisis of 2008. The GRS, and all public and private pension systems, would be in a much stronger position today had it not occurred.

Another factor is a shrinking work force. In 1985, the GRS represented 11,679 retirees and 13,385 active City of Detroit employees. Today, the GRS represents 11,730 retirees, and 5,525 active employees, not including Police and Fire Retirement System beneficiaries. That’s significantly fewer employees paying into the fund than years past — and it’s made an impact.

Protest in Detroit in 2009.

Meanwhile, struggling retirees put money back into the local economy, employees were able to save more for their future, and the city had fewer contribution obligations to pay to the fund.

We are presently funded at 77%. Comparatively, the Wayne County and State of Michigan pension systems are funded at 46% and 65.5%, respectively.

The current GRS Board has made decisions that have resulted in a top quartile performance for the last several years. We are well-managed, transparent, accountable and fiscally responsible. Today, the challenges before us are different than any we have experienced, but we are well-equipped and ready to meet them.

(VOD editor: Story on recent bankruptcy hearings which focused largely on pension issues, featuring Gov. Rick Snyder, EM Kevyn Orr, and others will be up shortly.)

Protesters outside federal court in downtown Detroit during Mich. Gov. Rick Snyder’s testimony at Detroit bankruptcy trial.

“Detroit is the battleground chosen by Wall Street to crush the last vestiges of American democracy by creating “the template for direct corporate rule.” Finance capital recognizes that it can no longer coexist with democratic institutions, which are most easily destroyed by attacking Black rule in the cities.”

By BAR executive editor                   

Glen Ford 

October 30, 2013

“If we don’t do something real soon, I think you’ll have to agree that we’re going to be forced either to use the ballot or the bullet. It’s one or the other in 1964. It isn’t that time is running out — time has run out!” – Malcolm X, “The Ballot or the Bullet,” Cleveland, Ohio, April 3, 1964.

A half-century after the man once known as Detroit Red spoke those words, the last grains of sand are trickling from the hour glass of what has passed for democracy in America. The principle of one-person, one vote – or any meaningful franchise, at all – is no longer operative for the majority of Black people in the state of Michigan, whose largely African American cities are run by emergency managers accountable to no one but Rick Snyder, the venture capitalist in the governor’s mansion. The same bell is tolling for every urban center in the land, as hegemonic finance capital creates the template for direct corporate rule through the systematic destruction of Detroiters’ citizenship rights.

Malcolm X–known during his time in Detroit as “Detroit Red.”

The 82 percent Black metropolis has been reduced to a Bantustan in both the economic and political senses of the term. Surrounded by some of the richest counties in the nation, the impoverished city exemplifies a national racial wealth gap that is more profound than that which existed in South Africa at the height of apartheid, as detailed by Jon Jeter in this issue of BAR (See “Worse Than Apartheid: Black in Obama’s America”). The Emergency Manager law, passed by the Republican state legislature after rejection by voters in a referendum, makes the Bantustan analogy complete, with a Black corporate lawyer overseeing the dismantling of every mechanism of local democracy. Kevyn Orr’s ascension as plenipotentiary of Wall Street is also the ultimate logic of the most vulgar current of African American politics, which seeks only Black representation at the highest levels of power, no matter whose interests are served. Wall Street long ago scoped this Black weakness, and has exploited it at every political level.

“The same bell is tolling for every urban center in the land.”

Kevyn Orr

Detroit’s dissolution also sounds the death knell for a generation’s dreams of authentic “Black Power” through purely electoral means in collaboration with corporate “renaissance” schemes. The Black masses have never been envisioned as part of any “renewal” of the cities under corporate auspices.

U.S. Pres. Barack Obama

Rather, investment is contingent on Black disempowerment and removal – the corporate axiom from which the Emergency Manager regime logically flows. Barack Obama, as loyal (and lawyerly) a servant of the banks as Orr, accepts the validity of the premise, which is why he raises no principled objection to Detroit’s disenfranchisement, either in its particulars or as a model for urban America.

The drama unfolds in bankruptcy court, a venue whose rules were written almost entirely by the financial capitalist class. By virtue of the Emergency Manager law, Detroit is represented in court by its nemesis, Kevyn Orr – which is like imposing Newt Gingrich as chief counsel for the NAACP. (The Detroit NAACP seeks to halt the proceedings on voting rights grounds.)

U.S. Bankruptcy Judge Steven Rhodes co-chairs a pro-EM, pro Ch9 bankruptcy forum on Detroit and other cities on Oct. 10, 2012, a year before current trial.

Orr’s office is referred to as “the city” in both legal terms and by idiot corporate media, who confuse the public by reporting, as did Detroit PBS correspondent Christy McDonald, this week, that the issue is “whether the city can go ahead with its bankruptcy” process. In fact, hardly an elected official or candidate exists that openly supports bankruptcy, especially under Kevyn Orr’s terms (Detroit holds a meaningless mayoral and council election, next week).

Orr may be the most hated man in Detroit – a fact that would be noted by every media outlet in the nation, if the metropolis were largely white. But the Detroit model for democracy’s demolition is depicted as a white supremacist morality play, in which corruption and incompetence are the inevitable fruits of Black majority rule, which must be extirpated by any means necessary. White Americans, in general, can be distracted by the slightest hint of ghetto graffiti from seeing their own futures written on the wall.

“Detroit is represented in court by its nemesis, Kevyn Orr – which is like imposing Newt Gingrich as chief counsel for the NAACP.”

International People’s Assembly protesters march outside Orr’s luxurious digs at Detroit’s Westin Book Cadillac Oct. 5, 2013.

Kevin Orr, ensconced in a $5,000 per month luxury penthouse condominium paid for by one of Governor Snyder’s private slush funds with contributions from secret corporate donors, is building the template for urban democratic dissolution from scratch. He is a crude and unimaginative man, doing Wall Street’s bidding with little finesse in the bright light of day. His arrogance is buttressed by the certainty that he is backed by the real rulers of the American State, Wall Street, and that the outcome in Judge Steven Rhodes’ federal bankruptcy court will create precedent to render all of America’s cities servile and neutered. Orr is also aware that his coloration provides perfect cover for his mission – added value for his services, well worth the luxury suite. (The judge ruled that Orr’s accommodations were irrelevant to the case.)

Former Ala. Governor George Wallace confronts US AG at doors of Univ. of Alabama to stop integration. Now Orr is turning federal government protection for civil rights on its head, trying to use the feds against the majority Black city of Detroit.

First-responders, revered in the post-911 United States, are crucified along with the rest of the city rabble. Orr ejected 8,000 city retirees under age 65 from their city-paid $605 per month health insurance, including police and firefighters. The state constitution specifically forbids impairing pensions, which average only $18,000 a year, yet Orr testified that he thinks federal law allows him to override those protections. He and the governor, who was subpoenaed by unions, both claimed they didn’t start out wanting to bankrupt the city – but why would Snyder hire bankruptcy lawyer Orr unless that were the intention? The lying duo claimed they never conspired to push Detroit into the venue, and that it was the unions that refused to negotiate in good faith. Apparently, “good faith” means negotiating away rights guaranteed by law.

“Orr ejected 8,000 city retirees under age 65 from their city-paid $605 per month health insurance, including police and firefighters.”

Barclay’s on King Street in London: “Brittania rules the waves”–banks rule the world.

Orr admitted that he never even raised the subject of getting the state to help Detroit out of its fiscal difficulties. And, why would he? His mission is not to save the city, but to break it into auctionable pieces and to garnishee its remaining revenue streams for bankers. His opening fiscal reorganization plan would pay off Bank of America and UBS, who have already made millions on a 2005 derivatives scheme with the city, establishing Britain’s Barclay’s Bank as the super-priority creditor with dibs on $4 million a month in Detroit casino revenues if the city defaults.

To ensure that the city can never escape the clutches of capital, the contract would allow Barclay’s to immediately declare Detroit in default if Emergency Financial Manager rule is ended for any reason – that is, the corporate plan calls for the permanent cessation of democracy in Detroit.

Occupy Wall Street protesters.

That’s the plan for the whole country. Wall Street recognizes that it cannot effectively consume the public sphere as long as the public retains the electoral democratic mechanisms to stop it. In other words, concentrated capital can no longer coexist with even the thin gruel of American democracy. The Black polity is the weakest link in the U.S. democratic armor. White folks won’t protect it, and Black folks have the least resources to defend it. The generals of Wall Street have purposely chosen Detroit as the decisive battleground, where the power of massed capital will be hyper-charged by an endemic, unreconstructed racism that can reliably be expected to deny that democracy is really at stake, at all. It’s just, you know – “the Blacks.”

And even some Black folks will agree.

BAR executive editor Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com. 

Should Judge Rhodes recuse himself? He chaired pro-Ch9 forum with trial witness Charles Moore, PA 4/EM advocates in Oct. 2012  

Judge has ignored motions to lift stay on higher-level U.S. District Court lawsuits re: constitutionality of PA 436/EM before eligibility trial 

He has not yet ruled on Orr’s $349 million Barclay’s “debtor-in-possession” loan which Detroit City Council has twice nixed 

Crowds took the streets outside federal courthouse to stop Detroit bankruptcy Oct. 23, 2013.

By Diane Bukowski 

October 27, 2013 

Protester decries Orr appointee’s racist statement on hoodies.

DETROIT – At least one thousand city retirees and their supporters, including leaders of virtually the entire union movement, and many from community and faith-based organizations, took the streets in front of the federal courthouse in downtown Detroit for hours on Oct. 23. 

At the start of the march, the crowd was big enough to circle the building without a break.

Inside, U.S. Bankruptcy Judge Steven Rhodes kicked off the eligibility trial in Detroit’s Chapter 9 Bankruptcy case, the largest in the nation’s history. The filing is also only one in the country initiated by an unelected official, Detroit Emergency Manager (EM) Kevyn Orr, under state Public Act 436. 

Early on, Judge Rhodes ruled definitively that he recognizes Orr as the official representative of the city of Detroit, and in an unprecedented move extended bankruptcy protection to state officials including Mich. Governor Rick Snyder, who is to take the stand Mon. Oct. 28. 

Protesters decried banks’ role in Detroit takeover.

Rhodes’ impartiality is seriously open to question. More than a year ago, he chaired a forum on Chapter 9 bankruptcy and EM’s which featured Charles Moore of Detroit consultant Conway McKenzie, a chief witness in the trial. Also on the panel were a drafter of PA 4, PA 436’s predecessor EM law, and EM trainers. The possibility of a Detroit Chapter 9 bankruptcy was discussed at the forum long before Kevyn Orr was a gleam in the eyes of the banks and Michigan Gov. Rick Snyder. 

The presence of protesters in unprecedented numbers showed that many are increasingly distrustful of Rhodes’ ultimate ruling in the case and sense that broad mass action is necessary to stave off the destruction of Detroit. 

“We’re coming off of the wall” 

“They think they’ve got our backs to the wall,” said Ed McNeil, a member of the Official Retirees Committee as well as top executive assistant to Al Garrett, president of AFSCME Council 25. “But we’re going to come off that wall. We’re going to fight in whatever way we have to.” 

Ed McNeil of AFSCME Council 25 speaks at rally.

He noted that Detroit financial czar Mike Illitch is planning to build an $881 million hockey stadium and upscale housing/retail complex in midtown Detroit, athough Illitch’s Red Wings owe the city $70 million in taxes. DTE, which is set to run the newly-formed Public Lighting Authority, shutting down Detroit’s Public Lighting Department, owes another $170 million, McNeil said. 

“These same banks demanding their money are the ones who drove 200,000 Detroiters out of their homes through predatory mortgages and illegal foreclosures,” Attorney Jerome Goldberg, a member of the Detroit Debt Moratorium Coalition, said. “Chase Bank is paying $13 billion to settle a Justice Department lawsuit related to these practices and still may face criminal charges. Orr serves the banks at the expense of the workers with predatory lending not only to homeowners but to the city itself.” 

Jerry Goldberg of Detroit Debt Moratorium NOW!

Keith Johnson, president of the Detroit Federation of Teachers, referenced Orr’s answer on a 60 minutes show to the moderator’s question, “What do you say to the workers who will lose their small pensions?” Orr said only, “Sorry.” 

“We don’t need your apology,” Johnson said. “We are all here today, the UAW, AFSCME, the American Federation of Teachers, all of us—we are ONE.” 

Should Rhodes recuse himself? 

Rhodes is pressing ahead at breakneck speed with the eligibility trial, despite broad outstanding issues objectors have asked to be addressed prior to the trial, related to District Court level constitutional matters. News reports have indicated Rhodes expects the trial to last five days, despite a 132-page order he issued Oct. 24 listing a multitude of issues to be debated.

(Click on http://www.mieb.uscourts.gov/apps/detroit/SelectedOrder.cfm and hit “Orders,” then hit “Amended Final Pre-Trial Order #1354.”)

On Oct. 10, 2012, Rhodes chaired a Federal Bar Association (FBA) of Eastern Michigan Bankruptcy Committee forum, called “Between a Rock and a Hard Place–Municipal Entities in Distress.” In its notice of the forum, the FBA said it was “a panel discussion on emergency managers and Chapter 9 bankruptcy.” 

Pro-EM forum Oct. 20, 2013: (l to r) Frederick Headen, Edward Plawecki, Judge Steven Rhodes, Douglas Bernstein, Judy O’Neill, Charles Moore.

 Rhodes declined comment on his stance during the Southfield-based forum, which involved a broad discussion after the panel presentations. Rhodes was hardly an expert on Chapter 9 bankruptcy at the time, having handled only one other much smaller Chapter 9 case. That was the 1994 case of “Addison Community Hospital Authority.” In it, Rhodes barred the “Concerned Citizens for Addison Community Hospital” from intervening as a group. Addison is located just south of Jackson, Michigan. 

Anti-bankruptcy protesters Oct. 23, 2013.

The FBA and the U.S. Trustees’ office both said that the forum was not videotaped or transcribed, but the Oakland Legal News gave a brief description. A broader article in the Flint-Genessee Legal News expanded on the panelists’ comments, which were universally critical of public officials as opposed to business executives, advocating downsizing of city workforces and land. 

Neither quoted Rhodes directly. 

The company Rhodes kept  

“Frederick Headen, Director of the Bureau of Local Government Services in the Michigan Department of Treasury, discussed the various Michigan statutes relating to emergency managers,” said the Oakland Legal News. 

Protesters included very senior retirees. Grey Panthers speaker said bankruptcy is an attack on all older people in violation of federal law.

“Edward J. Plawecki, Jr., General Counsel/Director of Government Relations at Pierce Monroe & Associates, discussed how the Michigan emergency manager statutes work in practice. Charles M. Moore, Principal at Conway MacKenzie, discussed the practical realities of emergency managers, ways municipalities can avoid emergency managers and otherwise deal with financial distress issues. Judy A. O’Neill, Partner at Foley & Lardner, discussed Chapter 9 bankruptcy issues, including constitutional concerns, contract, and plan confirmation issues. Douglas C. Bernstein, Shareholder at Plunkett Cooney, spoke on Chapter 9 eligibility and filing challenges.” 

Conway McKenzie has a one-year $19.3 million consultant contract on the Detroit bankruptcy case, and has already been paid nearly $3 million. The firm’s Charles Moore is one of the chief witnesses Orr plans to call in the Detroit Chapter 9 eligibility hearing. 

“Why aren’t municipalities addressing these issues?” Moore asked during the forum, according to the Flint article, referring to what had been termed excess numbers of municipal workers in Detroit. 

Protesters demand jail for those pushing bankruptcy and theft of pensions.

“If this is what is causing financial distress, why aren’t leaders taking more action, as companies would, to address them? . . . .Many times those elected officials have no experience in business at all. . . . No politician ever gets rewarded for solving tomorrow’s problems today. So you have a situation where you see the trends happening, but there’s no incentive to act, even if the leader knew what to do. They’re not equipped with crisis management skills or expertise.” 

O’Neill helped draft Public Act 4; she and Bernstein trained EM’s 

According to the Foley & Lardner website, Judy O’Neill “assisted with drafting Public Act 4 [the predecessor to PA 436] . . . and has assisted at two Emergency Manager training sessions.” She “practices in bankruptcy, insolvency, reorganization, commercial transactions, and corporate law, concentrating on issues arising under the bankruptcy code.” 

Retirees came out en masse.

PA 4 was resoundingly defeated in a state referendum at the polls in Nov. 2012, with only four of 83 counties approving it.  PA 436 was birthed in the dead of the night during a lame-duck session of the Michigan state legislature, which added an appropriations clause to prevent another referendum. 

“What we’ve heard from everybody here today is that every method of implementation is replete with litigation,” O’Neill said at the forum according to the Flint article. “Even Chapter 9, which probably has the strongest hold, has this eligibility fight that consumes resources and time.”

Protesters brought their babies and children.

Bernstein, often quoted in the daily media as a bankruptcy expert, also helped train candidates for emergency manager positions along with other Plunkett Cooney Associates, according to their website.  Plunkett Cooney itself held a similar forum in April of that year.

According to the Flint paper, Headen said during the forum that he has served on 16 financial review teams, five each under former Michigan Governors John Engler and Jennifer Granholm, and six “so far,” under Snyder.“ He took a highly anti-union, anti-worker stance in his remarks. 

Headen denounces number of Detroit unions, workers 

Public safety workers don’t even have Social Security to fall back on.

“Back in January our review team was in Detroit,” the paper quoted Headen. “The city at that time had between nine and ten thousand employees. It also had 48 bargaining units, one of which I believe had only one member. The state of Michigan, by contrast, has about 50,000 employees with less than half a dozen bargaining units. In Detroit, 65 people are doing payroll while we have 15 people doing payroll for the entire state of Michigan.” 

Plawecki appeared to be the only participant taking a somewhat measured view. 

“I hear all the time that we [Detroit] have too many police officers,” Plawecki said according to the Flint article. 

“Well, if you look at a study that says for 700,000 people you should have 5000 officers, statistically that’s too many. However, you can’t look at it that way. A geographical analysis would show that just two precincts in Detroit — the 7th and the 9th — are larger than the entire cities of Cleveland or Paris. So when you’re talking about resources you would have to move firefighters or officers from one side of the city to the other. You’ve got to look at the size of the land when you look at the size of the services.” 

Protesters by the hundreds.

One attendee at the forum defended Rhodes’ role. 

“I attended the forum,” Attorney Thomas R. Morris said in an email to VOD. “I recall some speculation by the speakers regarding the possibility of a chapter 9 filing by Detroit, but the topics which I recall as being the primary topics of discussion were past appointments of emergency managers or emergency financial managers. Judges are not precluded from participating in educational programs, and in fact are encouraged to do so. I do not see anything improper about Judge Rhodes having participated in the forum. I do not speak on behalf of any client or organization in this regard, but only on my own behalf.” 

Rhodes has not ruled on motions to lift stay on PA 436 lawsuits 

Rhodes earlier denied eloquent motions filed by the Official Retirees Committee, constituted at Orr’s request, to stay the bankruptcy proceedings until a higher-level U.S. District Court determines matters of constitutionality vis-à-vis the state and the federal government. 

Cancel the Debt banner has been at every rally against EM Orr and bankruptcy case.

The Committee said in its filing, “. . . if Chapter 9 is as broad as the Emergency Manager [Kevyn Orr] contends, then Chapter 9 is unconstitutional and the City cannot be a debtor in Chapter 9.” 

Rhodes has not yet ruled on motions filed by the Michigan NAACP et al and Phillips et al to lift the stay on two lawsuits challenging the constitutionality of PA 436, the Emergency Manager law which put Orr in place. The suits have been pending before U.S. District Court Judge George Caram Steeh since before Orr’s July 18 Chapter 9 filing, and challenge Orr’s capacity to file bankruptcy as an unelected official. 

More babies showed up; their futures are at stake.

Clearly angry at Rhodes’ stay, Steeh ruled, “Although it is not apparent that any interests of the City of Detroit bankruptcy proceedings are implicated in the case, the plain language of the stay order would apply to this lawsuit. In accordance with the broadly worded Extension Order issued by the bankruptcy court, this court will abide by the stay unless and until such time as an order issues lifting or modifying the stay to permit the captioned matter to proceed.” (Emphasis added in Phillips brief). 

Firefighters were out in force.

According to his Oct. 24 order, Rhodes appears to be planning to decide the constitutional questions himself during the eligibility trial, despite his lower role in federal court. He has said that objectors can still appeal his actions to the District Court.

Meanwhile, however, Orr is moving full speed ahead with the dismantling of Detroit, having ordered a state lease of Belle Isle, a takeover of the Public Lighting Department, and a $349 million “debtor-in-possession” loan from Barclay’s, a chief participant in the global LIBOR interest rate-rigging scandal.

Barclay’s loan awaits Rhodes approval 

Protesters compared Detroit takeover to apartheid.

Orr’s Barclay’s proposal must still be approved by Rhodes. The loan is intended to pay off UBS AG and Bank of America, other LIBOR participants who have been sued by government regulators across the world,  on a $250 million swap deal.

The deal is related to the disastrous 2005 $1.5 billion pension obligation certificate loan pressed on Detroit by Wall Street ratings agencies Standard and Poor’s and Fitch, and implemented by former Detroit CFO Sean Werdlow, who promptly took a position with UBS AG’s minority partner in the deal, Siebert, Brandford and Shank. 

That deal would cut off any further action by Detroit to recoup the losses it suffered on the debt when the stock market crashed in 2008, or the cancellation of the entire debt if it was negotiated under fraudulent circumstances. Attorney Vanessa Fluker demanded at the City Council hearing on the debt that Orr obey the dictates of PA 436 and investigate any criminal actions which contributed to the city’s financial crisis.

Protesters chanted, “Whose streets? Our streets! Whose city? Our city!”

Related stories:

http://voiceofdetroit.net/2013/10/27/jpmorgan-said-to-reach-13-billion-u-s-settlement-on-mortgage-bond-sales/

http://voiceofdetroit.net/2013/10/22/a-grand-heist-detroit-city-council-people-say-no-to-banks-em-barclays/

http://voiceofdetroit.net/2013/10/09/constitutional-civil-human-rights-before-detroit-bankruptcy-groups-say-protest-tues-oct-15-10-am/

http://voiceofdetroit.net/2013/09/28/nan-to-protest-detroit-bankruptcy-filing-tues-oct-15-10-am-fights-police-brutality-in-ohio/

http://voiceofdetroit.net/2013/09/23/detroit-retirees-residents-committee-blast-bankruptcy-filing-at-court-hearings/

http://voiceofdetroit.net/2013/09/17/official-retirees-committee-in-detroit-bankruptcy-blasts-em-orr-gov-snyder-asks-for-stay-pending-higher-court-ruling-what-will-judge-rhodes-do-sept-19/

http://voiceofdetroit.net/2013/09/09/illitch-plans-881-million-red-wings-stadium-project-with-public-funds-despite-detroit-bankruptcy-filing/

http://voiceofdetroit.net/2013/09/09/detroit-bankruptcy-filing-slows-michigan-bond-sales-84-high-interest-rates-cited/

http://voiceofdetroit.net/2013/08/27/secrecy-of-detroit-bankruptcy-docs-release-of-casino-taxes-swaps-retirees-committee-at-issue/

http://voiceofdetroit.net/2013/08/20/detroit-bankruptcy-objections-raise-possible-bank-crimes-related-to-poc-debt-and-casino-tax-deal-hundreds-protest-banks-in-downtown-detroit/

http://voiceofdetroit.net/2013/08/20/detroit-schools-set-to-pay-hefty-rates-on-92-million-bond-due-to-city-bankruptcy-filing/

http://voiceofdetroit.net/2013/08/16/state-stays-lawsuits-vs-em-law-pa-436-citing-detroit-chapter-9-bankruptcy-filing/

http://voiceofdetroit.net/2013/08/16/no-banker-left-behind-in-detroit-bankruptcy-case/

http://voiceofdetroit.net/2013/08/12/rush-to-detroit-bankruptcy-judge-sides-with-em-orr-aug-2-approves-retirees-committee-prematurely-sets-breakneck-deadlines/

http://voiceofdetroit.net/2013/07/29/war-retirees-workers-residents-v-wall-street-in-detroit-bankruptcy-judge-throws-out-state-claims/

http://voiceofdetroit.net/2013/07/23/detroit-bankruptcy-snyder-orr-want-retirees-suits-dumped-while-creditor-ubs-announces-high-profits-hearing-wed-july-24-10-a-m-judge-rhodes/

Civil settlement does not exempt Chase officials from criminal prosecution

By Tom Schoenberg, Dawn Kopecki, Hugh Son & Dakin Campbell

Oct 20, 2013

JPMorgan Chase & Co.’s record $13 billion deal to end U.S. probes of its mortgage-bond sales would free the nation’s largest bank from mounting civil disputes with the government while leaving a criminal inquiry unresolved.

Protesters in Birmingham, Alabama, where Montgomery County bankruptcy resulted in cancellation of 75 percent of debt to Chase due to bank’s fraudulent practices. Sewage customers, however, were burdened with higher rates. JPMorgan and Chase are among Detroit’s largest creditors in its current bankruptcy.

The tentative pact with the Department of Justice increased from an $11 billion proposal last month and would mark the largest amount paid by a financial firm in a settlement with the U.S. The deal wouldn’t release the bank from potential criminal liability, at the insistence of U.S. Attorney General Eric Holder, according to terms described by a person familiar with the talks, who asked not to be named because they were private.

The jump in legal expenses forced Jamie Dimon, chairman, president and chief executive officer of JPMorgan Chase & Co., last week to report the bank’s only quarterly loss on his watch.

“To not get the waiver from criminal prosecution is not good,” said Nancy Bush, a bank analyst who founded NAB Research LLC in New Jersey. “What we’re looking for in a settlement of this size is certainty from things like the criminal prosecution of a company. The Street wants certainty.”

Chase CEO Jamie Dimon

JPMorgan Chief Executive Officer Jamie Dimon, 57, personally discussed the deal with Holder after markets closed Oct. 18 as the banker sought to end probes that have beset his firm and resulted in its first quarterly loss under his watch. The agreement, which isn’t yet final, includes $4 billion in relief for unspecified consumers and $9 billion in payments and fines, according to another person briefed on the terms.

The payouts would cover a $4 billion accord with the Federal Housing Finance Agency over the bank’s sale of mortgage-backed securities, that person said. The deal, which may be announced in the coming week, also resolves pending inquiries by New York Attorney General Eric Schneiderman, the people said.

Dwarfing Pay

Metro Detroiters protest Chase’s proposed eviction of Gregorio Martinez outside local Chase branch in Detroit.

The settlement would amount to more than half of JPMorgan’s record $21.3 billion profit last year, or 1.5 times what the firm’s corporate and investment bank set aside to pay employees during this year’s first nine months. Only seven companies in the Dow Jones Industrial Average earned more than $13 billion in 2012, according to data compiled by Bloomberg. Some portions of the deal, such as relief to homeowners, would probably be tax deductible for JPMorgan.

The outline of the tentative accord was reached during a telephone call between Holder, Dimon, JPMorgan General Counsel Stephen Cutler and Associate U.S. Attorney General Tony West, said the person. The settlement’s statement of facts is still being negotiated.

Bondholder Concerns

Holder told Dimon that a release from the criminal inquiry wouldn’t be forthcoming as part of any deal, said the person familiar with their talks. The accord will probably require JPMorgan to cooperate in criminal investigations of individuals tied to wrongdoing associated with the bank’s mortgage practices, said the person.

JP Morgan and other banks don’t want to be “saddled with costs” to reimburse homeowners, the victims of their fraud.

Brian Fallon, a spokesman for the Justice Department, and Matt Mittenthal, a spokesman for Schneiderman, declined to comment.

The possible inclusion of homeowner relief has revived concerns among mortgage-bond investors that efforts to ease the financial burdens of millions of Americans may lower the value of instruments held by Wall Street money managers.

The Association of Mortgage Investors, representing mutual funds and pensions, urged Holder in an Oct. 7 letter not to let banks saddle them with costs associated with relief for mortgage borrowers. Banks settling claims of underwriting lapses often service debts in bonds held by others, who can wind up bearing the burden of breaks granted to homeowners.

Talks Intensify

JPMorgan’s push to settle the mortgage probes and other cases required a $7.2 billion charge in the third quarter, causing the bank to report a $380 million loss on Oct. 11. The firm has tapped $8 billion of $28 billion in reserves set aside since 2010 to cover its legal expenses.

Protest in 2010 against Chase and We.lls Fargo in Fruitvale neighborhood of Oakland, CA

Those costs follow three years of record profits that have driven the stock higher. JPMorgan’s shares have climbed 72 percent since the end of 2008, compared with a 48 percent gain in the KBW Bank Index of 24 U.S. firms. On the day the firm reported its quarterly loss, the stock closed little changed. It has since climbed 3.4 percent.

“It looks like they are gradually becoming able to put the past and the crisis behind them,” said Craig Pirrong, professor of finance at the University of Houston’s Bauer College of Business whose research includes risk management. “It’s an expensive history lesson, and they are not out of the woods yet.”

JPMorgan’s push to end the mortgage probes intensified last month after the U.S. Attorney’s office in Sacramento, California, told the bank it was preparing to bring a case. Authorities there already had concluded there were civil violations and opened a criminal probe, JPMorgan said in an August regulatory filing. Continue reading →

Aiyana Jones’ grandmother Mertilla Jones marches Oct. 21, 2013 with familes of Davontae Sanford, Lamar Grable, Cornell Squires, and other victims of Detroit police killings and brutality.

Schlenkerman convicted previously of 7 felonies, domestic violence

Davontae Sanford still fighting to withdraw guilty plea after six years

Charles Jones/Chauncey Owens’ trial begins next week 

Schlenkerman at Charles Jones exam Jan. 26, 2012.

By Diane Bukowski

October 28, 2013 

DETROIT – As the first-degree murder trial of Charles Jones and Chauncey Owens begins next week, VOD has learned that the chief witness against Jones, “jail-house snitch” Jay Schlenkerman,  as Jones’ attorney termed him, was charged with three more serious felonies in April, adding to a long list detailed in earlier VOD stories.

Schlenkerman pled guilty to the offenses “Operating while intoxicated,” “Police Officer—fleeing—Third Degree; and “Operating-License Suspended, Revoked, Denied” in front of Wayne County Circuit Court Judge Michael Callahan in July, according to court records. But he was mysteriously allowed to withdraw his guilty plea in August, then later had his bond reduced from $60,000 to $5,000 and was freed on tether in September.  Click on Schlenkerman ROA to read details of charges and actions against Schlenkerman.

Previous charges against ‘jail-house’ snitch Jay Schlenkerman, per court records.

The statute cited in the second charge indicates that it involved a vehicular collision. Schlenkerman’s original attorney withdrew from his case Sept. 20, and was replaced by court-appointed attorney Ronald P. Weitzman. 

“This doesn’t make any sense,” Aiyana’s grandmother Mertilla Jones said. “How does he keep getting away with beating on women and fleeing from the police, when if he was Black, they would have whipped his a- – and locked him up?” 

Schlenkerman was convicted of six felony counts involving drunk driving beginning in 2000, one felony count of assaulting a police officer, and a slew of misdemeanor domestic violence charges, including one in 2011 where he nearly killed the victim. He served two years in the Michigan Department of Corrections and shorter sentences in local jails. (See box at right.)

An advocate for Davontae Sanford noted that the withdrawal of Schlenkerman’s guilty plea contrasts harshly with Sanford’s case, based on a confession made at the age of 14 to four drug-house murders in 2007.  An Appeals Court just ruled, over the objection of the prosecutor, that Vincent Smothers, who has confessed to the killings and exonerated Sanford, must be allowed to testify at Sanford’s next plea withdrawal hearing. 

“The disparity vis-a-vis Davontae Sanford in [the prosecutor] fighting to keep his ill-advised induced plea in place while Mr. Schlenkerman’s request was not even contested speaks volumes of the shady deals they cut with the real criminals at that corner on St. Antoine!” said paralegal Roberto Guzman. 

Assistant Prosecutor Maria Miller, chief of communications for Wayne County Prosecutor Kym Worthy, had not responded to a request for a statement before this story went to press. Schlenkerman’s attorney Weitzman said he could not comment due to attorney-client privilege. 

Roberto Guzman leads chants during joint Oct. 21, 2013 march at Frank Murphy Hall.

Wayne County Circuit Court Judge Richard Skutt is hearing the Jones/Owens cases, with jury selection for Owens set for Mon. Oct. 28 and for Jones on Tues. Oct. 29. They are charged with killing Je’Rean Blake, 17, two days before Detroit police conducted a military-style raid on the Jones’ home, seeking Owens as a suspect in that case, and ended up shooting Aiyana Jones, 7. 

The two are co-defendants, but will face separate juries. 

Judge Skutt earlier barred Schlenkerman’s testimony against Jones, but the prosecutor appealed and Judge Skutt’s ruling was overturned at the state Appeals and Supreme Court levels. Jones has languished at the Wayne County Jail since Nov. 2011 awaiting decisions from the higher courts before going to trial. 

Aiyana Jones and little brother Carlos, who was in the house with the rest of her family when she was shot to death/Photo Dominika Jones

Schlenkerman and Owens were incarcerated at the Wayne County Jail Dickerson facility in 2011. Schlenkerman falsely testified at Jones’ preliminary exam in Jan. 2012 that he had been convicted of only one felony despite his actual record. He then claimed that Owens told him in great detail that Jones had given him the gun to kill Blake. 

Jones was not charged until 17 months after Aiyana’s killing by Officer Joseph Weekley.  Jones, Aiyana’s mother Dominika Jones and their toddler sons, grandmother Mertilla Jones, uncle Vincent Ellis, cousin Mark Robinson and great-aunt   Robinson were present in the lower flat on Detroit’s east side as police, pouring from a military vehicle,  tossed an incendiary grenade inside, stormed the house, and killed Aiyana with an MP-5 submachine gun. 

Aiyana Jones’ father Charles Jones is comforted by her great aunt JoAnn Robinson and cousin Mark Robinson the morning of her death; Mark warned cops children were in house.

Chauncey Owens, Jones’ co-defendant, lived upstairs from the Jones’ family with his long-time fiance’ Krystal Jones, Aiyana’s aunt. Unlike daily media stories have said, he was not “hiding out” there when the home was invaded. It was his residence. Evidence at the Weekley trial called into question whether he was actually guilty in the death of Blake. His attorney David Cripps asked for a complete transcript of the Weekley trial file in order to defend his client.

Owens refused to testify against Charles Jones repeatedly during the exam proceedings and was charged with contempt of court by 36th District Court Judge E. Lynise Bryant-Weekes as a result.

Court records also show that Owens’ NEVER stated he gave Charles a gun, despite daily media reports that he confessed that in order to plead guilty to a second-degree murder charge. That plea deal was withdrawn after his refusal to testify against Jones, which resulted in Prosecutor Moran’s use of ‘jail-house snitch’ Schlenkerman instead.

Chauncey Owens refused to testify against Charles Jones at preliminary exam.

Weekley, who has been free on bond since Aiyana’s death, was charged with involuntary manslaughter and reckless discharge of a firearm. His trial resulted in a hung jury on June 18, after the prosecution appeared to deliberately undermine the case by failing to challenge numerous questionable statements and evidence produced by Weekley’s defense attorney.

Weekley is scheduled for re-trial on December 4, 2013. Wayne County Circuit Court Judge Cynthia Gray Hathaway, who is hearing his case, admitted that she and Asst. Prosecutor Robert Moran wanted Weekley’s trial set after the Jones/Owens trial.

According to Schlenkerman’s former fiancé, he has a history of functioning as a jail-house snitch, explaining why he is still free after 13 years of serious offenses. 

He was incarcerated at Dickerson for only six months in her domestic violence case, one among many filed by other women.  In court documents, she related the following:

Police file photo of some of Schlenkerman victim’s injuries after he beat her in face with his belt.

“Early morning, 1:30, he came home drunk and proceeded to beat me with a belt in face, upper body, vaginal area and groin, made me sleep in the bathroom, peed on me, and wouldn’t let me leave. He stuck his fingers up my butt and then in my mouth and told me that’s what a dirty whore tastes like.” 

She said she was held against her will in her home for three days, that Schlenkerman threatened to kill her, and that he had raped her before.  Brownstown Township police cited “kidnapping” in the first report they filed with Michigan State Police, but Wayne County Assistant Prosecutor Opolla Brown changed the charge to misdemeanor domestic violence. 

Medical records in the court file show she was treated for a closed head injury, physical and sexual abuse, post-traumatic stress syndrome, likely leakage of cerebro-spinal fluid through her nose, and that she was experiencing “night terrors.”

Members of the Jones family including Aiyana’s aunt Krystal Jones at left, during Oct. 21, 2013 protest.

Related stories:

http://voiceofdetroit.net/2012/05/15/judge-throws-out-jail-house-snitch-statement-against-aiyana-jones-dad-charles-jones/

http://voiceofdetroit.net/2012/02/01/aiyana%e2%80%99s-dad-faces-trial-for-murder-based-on-%e2%80%9cjail-house-snitch%e2%80%9d-jay-schlenkerman%e2%80%99s-testimony/

http://voiceofdetroit.net/2012/01/10/schlenkerman-brutally-abused-women-lied-served-mdoc-time-for-repeat-dui%e2%80%99s-but-is-%e2%80%98jail-house-snitch%e2%80%99-in-jones-case/

http://voiceofdetroit.net/2011/12/24/prosecution-uses-%e2%80%98jail-house-snitch%e2%80%99-against-aiyana%e2%80%99s-dad-after-owens-again-refuses-to-testify-in-murder-case/

ABSTRACT

of

Exposing Judges’ Unaccountability and Consequent Riskless Wrongdoing:

Pioneering the news and publishing field of judicial unaccountability reporting

and

a Plan of Action to Achieve Legislated Judicial Reform

Based on Transparency, Accountability, Discipline by Citizen Boards, and

Liability of Judges and Judiciaries to Their Victims

Dr. Richard Cordero, Esq.

By Dr. Richard Cordero, Esq.

Judicial Discipline Reform

New York City

Dr.Richard.Cordero.Esq@gmail.com

http://Judicial-Discipline-Reform.org/OL/DrRCordero-Honest_Jud_Advocates.pdf

This study analyzes official statistics of the Federal Judiciary, legal provisions, and other publicly filed documents. It discusses how federal judges’ life-appointment; de facto unimpeachability and irremovability; self-immunization from discipline through abuse of the Judiciary’s statutory self-policing authority; abuse of its vast Information Technology resources to interfere with their complainants’ communications; the secrecy in which they cover their adjudicative, administrative, disciplinary, and policy-making acts; and third parties’ fear of their individual and close rank retaliation render judges unaccountable.

Their unaccountability makes their abuse of power riskless; the enormous amount of the most insidious corruptor over which they rule, money!, as well as other social and professional benefits make doing wrong to grab them tempting; and millions of in practice unreviewable cases make the temptation ever-present.

These are the means, motive, and opportunity for judges to do wrong and for their wrongdoing to be inevitable.

Judges do wrong in such regular, widespread, and coordinated fashion as to have turned wrongdoing into their institutionalized modus operandi and the Judiciary into the safe haven for judicial wrongdoers.

Their abuse of power entrusted to them by We the People is a betrayal of trust. Engaging in it and giving priority to covering it up to protect themselves and their peers injure in fact people’s rights, property, liberty, and life; and deprive the People of their fundamental human, civil, and due process right of access to fair and impartial courts.

Exposing the existence, scope, and gravity of their wrongdoing to the national public will cause such outrage as to enable the media and voters to force legislated, rather than voluntary, judicial reform, lest politicians be voted out of, or not into, office; this is realistic, as the Tea Party precedent shows.

The exposure is started by the study, whose publication will pioneer the news and publishing field of judicial unaccountability reporting. It can be continued at a presentation by the author held at a law school attended by its members and those of business, journalism, and IT schools, civil rights advocates, and the media.

Edward Snowden

The evidence of judges’ wrongdoing will introduce the call for ‘reverse surveillance’ over them by We the People, as opposed to the mass surveillance over the People by the NSA with judges’ rubberstamping approval revealed by Edward Snowden.

The presentation can give rise to the formation of a multidisciplinary team of students, professors, journalists, and civil rights advocates to conduct reverse surveillance through a Follow the money! and IT Follow the wire! investigation.

The team can organize the first of a series of multimedia conferences to report to the national public its findings and expose judges’ pattern of disregard of the law. It can announce the formation of a multidisciplinary academic and business venture to promote:

1. the establishment of local chapters to surveil, report, and advocate reform

• a) based on transparency, accountability, discipline, and judges’ and the Judiciary’sliability to their victims, and
• b) implemented with the aid of citizen boards;

2. the creation of a for-profit institute to conduct IT research, educate, publish, etc.; and

3. the submission of articles on judges’abuse of power and secrecy for publication in a volume that can lead to a periodical.

Such reform will be of historic proportions although it will only implement foundational principles of our republic:

We the People are the only source of sovereign power, who entrust a portion of it to each public servant and to whom each is accountable, for none is beyond our control or above the law.

The reform can begin in the Federal Judiciary and extend to Congress, the Executive Branch, the states, and the rest of the world. A new We the People-government paradigm can emerge: the People’s Sunrise.

Those who are instrumental in its emergence can become recognized here and abroad as the People’s Champions of Justice.

For information on staging the presentation, contact Dr. Cordero at Dr.Richard.Cordero.Esq@gmail.com.

Dare trigger history!

http://Judicial-Discipline-Reform.org/OL/DrRCordero-Honest_Jud_Advocates.pdf

©2013 Richard Cordero. All rights reserved. A license is hereby granted for distributing and reprinting this article, provided it is distributed and reprinted in its entirety, without addition or modification and with inclusion of this copyright note; proper attribution is made to the author, Dr. Richard Cordero, Esq.; and its link accompanies it: http://Judicial-Discipline-Reform.org/OL/DrRCordero-Honest_Jud_Advocates.pdf >Lsch:8.