Protesters at Bank of America Aug. 19, 2013 joined retirees’ march outside bankruptcy courtroom the same day in downtown Detroit. Bank of America is a major creditor in Detroit’s bankruptcy, but protesters said it helped cause the city’s economic decline through predatory lending, fraudulent mortgages and illegal foreclosures and evictions.
By Nate Raymond
Mon Sep 23, 2013 2:45pm EDT
NEW YORK (Reuters) – Bank of America Corp heads to trial this week over allegations its Countrywide unit approved deficient home loans in a process called “Hustle,” defrauding Fannie Mae and Freddie Mac, the U.S. government enterprises that underwrite mortgages.
In what would be the government’s first financial crisis case to go to trial against a major bank over defective mortgages, jury selection is set to begin in federal court in New York on Tuesday, barring a last-minute settlement.
Angelo Mozilo co-founded Countrywide in 1969 and built it into the largest mortgage lender in the U.S. Countrywide wasn’t the first to offer exotic mortgages to borrowers with a questionable ability to repay them. In its all-out embrace of such sales, however, it did legitimize the notion that practically any adult could handle a big fat mortgage. In the wake of the housing bust, which toppled Countrywide and IndyMac Bank (another company Mozilo started), the executive’s lavish pay package was criticized by many, including Congress. Mozilo left Countrywide last summer after its rescue-sale to Bank of America. A few months later, BofA said it would spend up to $8.7 billion to settle predatory lending charges against Countrywide filed by 11 state attorneys general.–Time Magazine photo and caption.
The trial is also a reminder of the billions of dollars in legal liabilities Bank of America has incurred as a result of its 2008 acquisition of Countrywide Financial Corp, which became a poster child of the mortgage meltdown.
The U.S. Justice Department filed the civil lawsuit in 2012, blaming the bank for more than $1 billion in losses to Fannie Mae and Freddie Mac, which bought mortgages that later defaulted. Since then, new evidence and pre-trial rulings by U.S. District Judge Jed Rakoff have pared the case back.
Bank of America has said the lawsuit’s claims are “simply false” and that it “can’t be expected to compensate every entity that claims losses that actually were caused by the economic downturn.”
A spokesman for the bank declined comment ahead of the trial, which is expected to last five weeks.
‘HIGH SPEED SWIM LANE’
The government lawsuit stems from a whistleblower case brought by former Countrywide Financial Corp executive Edward O’Donnell.
It centers on a program called the “High Speed Swim Lane” – also called “HSSL” or “Hustle” – that government lawyers say Countrywide initiated in 2007 as mortgage delinquency and default rates began to rise and Fannie and Freddie tightened underwriting guidelines.
Rebecca Mairone, a key figure in Countrywide’s fraudulent mortgage practices, now works for J.P. Morgan Chase.
Countrywide pushed to streamline its loan origination business through the program, eliminating loan quality checkpoints and paying employees based only on the volume of loans they produced, according to the lawsuit.
The result was “rampant instances of fraud and other serious loan defects,” including in the mortgages sold to Fannie and Freddie, despite assurances Countrywide had tightened underwriting guidelines, the Justice Department said.
The process was overseen by Rebecca Mairone, a former chief operating officer of Countrywide’ s Full Spectrum Lending Division. The Justice Department added her as a co-defendant in January.
Mairone left Bank of America in mid-2012 and is now a managing director at JPMorgan Chase & Co.
Marc Mukasey, a lawyer for Mairone at Bracewell & Giuliani, said in an email it was “a shame the government is wasting time and money on a case that is utterly devoid of merit.”
Fannie and Freddie’s estimated “gross loss” on loans in the Countrywide program was $848.2 million, according to court papers. The “net loss” – the loss caused by the portion of loans the Justice Department says were materially defective – was $131.2 million.
While the jury will determine if the bank is liable, any penalty would be up to Rakoff, a judge well-known for his rulings in financial crisis cases.
March in the Detroit neighborhood of the Cullors family, which faced eviction by BOA, on Nov. 10, 2012.
In 2010, Rakoff rejected a $33 million settlement between Bank of America and the U.S. Securities and Exchange Commission over claims it did not properly disclose employee bonuses and financial losses at Merrill Lynch, which it acquired at the end of 2008.
The bank ultimately agreed to a renewed settlement paying $150 million in an accord Rakoff “reluctantly” approved. In November 2011, he rejected a $285 million settlement between the SEC and Citigroup Inc, challenging the long-standing practice of settlements without admissions of wrongdoing.
U.S. District Court Judge Jed Rakoff
In the “Hustle” case, Rakoff dismissed claims against the bank under the False Claims Act but allowed the case to instead proceed under a provision of the Financial Institutions Reform, Recovery and Enforcement Act, a 1989 federal law passed after the savings-and-loan crisis.
The law, which provides a longer statute of limitations of 10 years, has become the basis of several government civil lawsuits over the financial crisis.
The case is U.S. ex rel. O’Donnell v. Bank of America Corp et al, U.S. District Court, Southern District of New York, No. 12-01422.
(Reporting by Nate Raymond; Editing by Eddie Evans and Grant McCool)
Retirees and residents protest at bankruptcy court hearing Aug. 19, 2013.
“Grandma, are we being made slaves again?”—Retiree’s grandson
“A small group of racist white men and the banks who have controlled Detroit for decades are to blame. Cancel the debt.” — Resident
By Diane Bukowski
September 21, 2013
DETROIT – Dozens of individual objectors to Detroit’s bankruptcy filing joined forces with the “Official Retiree Committee” during morning and afternoon hearings Sept. 19, to call for a stay on eligibility proceedings until a higher court can hear key constitutional matters, and to demand dismissal of the case.
Slavemaster Rick Snyder attacks Michigan’s majority-Black cities with EM laws.
Sheila Johnson, a city retiree with 28 years, wept during the 10 a.m. session for individual objectors. She said her husband has run a business in Detroit for the last 40 years, providing jobs for up to fifteen families.
“He gave up his future hoping that we could depend on my pension. We paid our taxes, but there is millions in taxes that should still be paid to the city. We are not bankrupt. I cannot go to sleep at night. My nine-year-old grandchild asks me, ‘Grandma, are we being made slaves again?’ I did not vote for Kevyn Orr, we do not need a dictatorship or a slavemaster. I am not a slave.”
U.S. Bankruptcy Judge Steven Rhodes said he will rule on the Retirees’ Committee motion request, argued during a 3 p.m. hearing, within the next several days.
Retirees Committee attorney Claude Montgomery of Dentons LLP.
The eligibility objections are key in the bankruptcy, attorney Jerome Goldberg told VOD, because once the judge confirms eligibility, the case largely moves from the realm of state law to federal law, which has no protection for public pensions.
EM Kevyn Orr “not the sharpest knife in the drawer”–bankruptcy objector Hassan Aleem.
During the morning session, many individual speakers demanded outright dismissal of the case, questioning the authority of the city’s unelected Emergency Manager Kevyn Orr and Gov. Rick Snyder’s to file what they said is a bogus case riddled with fraud by the banks and corporations which have devastated Detroit. They also said they have been denied due process, being notified of the filing only days before the eligibility objection deadline, if at all, and were therefore unable to find attorneys in that time.
Following are in-depth summaries of many objectors’ remarks, which were skimpily reported in the daily media. They are in alpabetical order, as they were taken in court. The entire hearing can be heard on the court’s website at http://www.mieb.uscourts.gov/apps/detroit/DetroitAudio.cfm.
“Emergency Manager Orr is not an elected official,” testified city retiree Hassan Aleem Sept. 19 in front of U.S Bankruptcy Judge Steven W. Rhodes. “Nowhere in the City Council Journal does it indicate where they voted for the bankruptcy. . . .Orr never has been the sharpest knife in the drawer. Recent emails showed he was selected because he was Black. We are talking about people’s livelihoods here. We are being stabbed in the back and robbed.”
Objector Dempsey Addison (r) with (l to r) Chris Griffith and Cecily McClellan at first Occupy Detroit march in 2011.
The Detroit Free Press reported Sept. 22 that a poll has shown 75 percent of Detroiters strongly oppose any attack on city pensions, which Orr and Snyder have repeatedly said in public and in private emails is a prime goal of the bankruptcy filing. If they are successful, cities in other states with constitutional public pension guarantees across the U.S. face a domino effect, according to many observers.
“The people of Michigan voted down Public Act 4,” testified Dempsey Addison, president of the Association of Professional and Technical Employees (APTE). “Orr is not qualified to file. The city is not insolvent. Detroit has a plethora of revenue streams available. The city catalyzed the bankruptcy by shutting down federally-funded departments including Human Services, Workforce Development and the Health Department. Planning and Development is next. All of these employees, and their pensions and health care were funded by the federal government.”
U.S. Pres. Barack Obama at Detroit area Chrysler plant after company declared bankruptcy in 2010. The feds bailed out GM and Chrysler with billions of taxpayer dollars.
Officials from U.S. President Barack Obama’s administration including Attorney General Eric Holder, Housing and Urban Development Secretary Shaun Donovan, Transportation Secretary Anthony Foxx, and Gene Sperling, director of the White House National Economic Council will be in Detroit Sept. 27, to meet with “state and local elected officials and community leaders,” according to the Detroit News.
Ironically, Detroit Mayor Bing and City Council President Saunteel Jenkins have said they are hoping for an outcome to include federal grants to the city. However, Bing initiated the shutdowns of the three departments, supported by Jenkins and the Council majority.
Objector Russ Bellant
“On June 22, 2013, EM Orr announced he plans to transfer Public Lighting Department customers to DTE,” Library Commission President Russ Bellant testified. “They are planning to pull PLD meters and replace them with DTE meters, eliminating millions in revenue collection for the city. DTE gets to use the PLD grid for five to seven years, however, while it gets its own grid set up. This violates express prohibitions of PA 436 which say, ‘An emergency manager appointed for a city or village shall not sell or transfer a public utility furnishing light, heat, or power without the approval of a majority of the electors of the city or village voting thereon, or a greater number if the city or village charter provides, as required by section 25 of article VII of the state constitution of 1963.’ I am asking this court to issue a declaration opposing this.”
Bellant pointed out the constant elimination of city workers from all departments is eroding the retirement systems’ funding base.
Attorney Charles Brown testified that the global Jones Day law firm, Orr’s former employer and now the city’s hired legal guns, has “financial and ethical” conflicts representing Detroit in the bankruptcy, since it also represents most of the city’s major corporate creditors in other cases.
“No other Chapter 9 bankruptcies are taking place with emergency manager laws usurping the City Charter approved by the people,” Brown said. “This filing violates the Tenth Amendment, which says, ‘The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”
Lorene Brown said, “The people of Detroit are hurting, oppressed, and suffering. I am calling on the pastors of this city to join others in declaring the Year of the Jubilee—canceling all debts [to the banks].”
Jubilee is a concept originating from various religious sources world-wide that calls for the people’s debts to be forgiven, among other provisions.
Moratorium Now! demands cancellation of city’s debt May 9, 2012.
Paulette Brown said she just retired from her position as Manager I in the city’s Wastewater Treatment Plant.
“I worked with people who sacrificed their health and safety to ensure that the customers of the Department have clean water. We worked in unsanitary conditions involving the presence of feces and raw sewage, going above and beyond the call of duty. For that, we are supposed to receive life-time medical benefits and pensions based on an agreed-upon formula. Michael Vick went to jail for cruelty to animals. Who’s going to prison for cruelty to retirees?”
During her objection, this reporter pointed out to Rhodes that the Official Retirees Committee, formed by his order at Orr’s request, has joined forces with the pension funds and unions in opposing bankruptcy eligibility. She said that no investigation has been undertaken of likely criminal factors involved in the $2.8 billion of Pension Obligation Certificates debt to UBS AG and Siebert, Brandford and Shank, including the undisputed fact that then CFO Sean Werdlow, who pressed for the loan in Feb. 2005, got a job as a Managing Director with Siebert that year and was in that position when the debt was re-negotiated from a 14 to a 30 year term in 2006. She requested that the entire debt be eliminated from eligibility consideration. (Click on Mary Diane Bukowski affidavit for eligibility objection 2.)
Mike Illitch plans to build $881 million hockey stadium complex as Detroit goes through bankruptcy.
“A federal court should decide whether the EM laws are legal,” said Leola Regina Crittendon. “I object to my tax dollars going to the EM to spend while billionaires who already owe the city millions of dollars are building a new hockey stadium. Orr will outsource all city jobs to non-residents, and has said he plans to sell our city’s assets.”
Louis Dukens, an architect, decried the devastation of the Detroit Public Schools under emergency managers. He said architecturally sound and beautiful schools have been demolished to build inferior structures, benefiting contractors, citing Martin Luther King, Jr. High School as an example.
“The city is not bankrupt,” said David Dye, citing Detroit’s 2012 Comprehensive Annual Financial Report (CAFR). He said debt not due until the future has been invalidly included in the claimed budget deficit.
Objector David Dye (Facebook photo)
“The Securities Exchange Commission and the Commodities Future Trading Commission have convicted [some corporate creditors of the city] of fraud,” Dye noted. “They are also implicated in the LIBOR and ISDAfix scandals. . .But Kevyn Orr has only sought to investigate the pension boards, not banks who are already convicted of criminal activity and manipulating interest rates.”
LaVern Holloway said, “My voting rights have been violated. Snyder broke the law with Public Act 436, a mirror image of what the voters rejected in PA4. PA 436 is unconstitutional—it established a new form of government in Michigan. It is a violating of the Voting Rights Act and the 15th Amendment, which says the right of citizens to vote shall not be denied or abridged. . . .Now we have an emergency manager who has called us ‘dumb, lazy, happy and rich.’”
JoAnn Jackson is the wife of a city retiree.
Objector JoAnn Jackson testifies at City Council hearing on hockey stadium Sept. 5, 2013.
“Mr. Jackson worked for the Public Lighting Department at the Mistersky Plant for 30 years, six to seven days a week. He retired in 200o and in 2002 he developed kidney disease. I am concerned about his pension and health care. He takes 16 pills a day jus tot stay alive. He paid into the annuities in the pension system from day one. We’ve paid our dues.”
Retired city attorney Michael Karwoski, who is on the nine-member Retirees Committee, said Orr is misrepresenting reality, claiming pensions are not an issue until the plan confirmation. He said Orr made it clear in his Proposal to Creditors that he plans to enact “significant cuts” in accrued vested pensions, in violation of PA 436. He cited Section 12 (m) ii of PA 436, which says, “The emergency manager shall fully comply with the public employee retirement system investment act, 1965 PA 314, MCL 38.1132 to 38.1140m, and section 24 of article IX of the state constitution of 1963, and any actions taken shall be consistent with the pension fund’s qualified plan status under the federal internal revenue code.”
Karwoski said “It is appropriate for the court to sever pension benefits from the bankruptcy proceedings.”
Althea Long said, “I object to the EM saying he is going to sell off assets, but saying nothing about making large corporations pay what they owe.”
A number of speakers including Lou Ann Pelletier noted that “pensions are not a debt but a binding obligation entered into with good faith by city workers.” Pelletier also noted that the likely majority of retirees are women and people of color, constituting a protected group of people under the Civil Rights Act of 1964.
Objector Sam Riddle stressed that current cases initiated by AFSCME and the NAACP challenging the constitutionality of PA4, currently pending in federal court in front of U.S. District Court Judge George Caram Steeh, should be expedited and heard before the bankruptcy case.
Objector Mike Shane at rally vs. banks May 4, 2013.
“PA 436 requires the investigation of criminal conduct [that led to the crisis], but that has not been done,” said Mike Shane. “The role of the banks in the destruction of Detroit’s tax base was admitted in Orr’s deposition. One hundred thousand people have been evicted illegally after predatory loans by the banks, which have been fined tens of millions of dollars. Property and income taxes dropped precipitously, but the banks have refused to pay property taxes on the foreclosed homes. The banks have been convicted of money laundering, bribery, rigging mortgage securities and municipal bonds, and manipulating the LIBOR, metal markets, ISDAfix, and recently loans to ethanol manufacturers.”
Attorney Tom Stephens testified, “The bankruptcy court is not the proper forum to litigate the issues [including the constitionality of PA 436]. The bankruptcy has been shoved down our throats through the Jones Day/Orr form of government. It is well established that courts have the power to stay proceedings pending other judicial proceedings,” referring to the AFSCME and NAACP federal challenges.
Jean Vortkamp related a recent incident in her community where a young man who had been shot to death lay in the street for five hours while hundreds of his family members and friends gathered.
Objector Jean Vortkamp.
Weeping, she said, “His body lay there because of the cutbacks in EMS. Other cities that have gone through bankruptcy have not received relief, only more cutbacks. There is no more room for austerity. Retirees in my community are suspicious that they are trying to lower the senior population. There is a small group of racist white men and the banks who have actually controlled Detroit for decades. They are to blame. Cancel the debt. Leave the good people of Detroit in power.”
Retiree William Curtis Walton said he retired early under duress.
“This [bankruptcy] move is coldly calculated, an unethical, immoral breach of the public trust,” he said. “The city and Orr have not bargained in good faith with the retirees. Orr’s actions are diametrically opposed to the state Constitution.”
Councilwoman JoAnn Watson
Detroit City Council members JoAnn Watson and Brenda Jones also testified.
“The federal bankruptcy code does not allow involuntary filing,” Watson said. “Neither the City Council nor the elected Mayor voted on the filing. The State of Michigan has material conflicts with the City of Detroit. The State Treasurer [Andy Dillon] admitted the same in my office.”
Watson referred to the 1998 agreement between former Mayor Dennis Archer and former Gov. John Engler which guaranteed revenue-sharing payments to the city in exchange for the city’s giving up its right to tax non-residents who work in Detroit.
“At least $220 million in revenue-sharing was never paid,” she said. “We have lost hundreds of millions more from people who work in the city but continue to live elsewhere.”
Councilwoman Brenda Jones
Jones said, “The conspiracy that led to this bankruptcy began with the pretense of a ‘consent agreement.’ Then the unions came up with many cost-savings in negotiations that were done in bad faith by the state.
Objector Carl Williams noted that PA 436 never received a two-thirds vote as required to overturn a public referendum, the repeal of PA 4.
That section says, “Any law submitted to the people by either initiative or referendum petition and approved by a majority of the votes cast thereon at any election shall take effect 10 days after the date of the official declaration of the vote. No law initiated or adopted by the people shall be subject to the veto power of the governor, and no law adopted by the people at the polls under the initiative provisions of this section shall be amended or repealed, except by a vote of the electors unless otherwise provided in the initiative measure or by three-fourths of the members elected to and serving in each house of the legislature.”
(L to r) Bruce Bennett of Jones Day, contractor Kenneth Buckfire, and EM Kevyn Orr at meeting with creditors June 14, 2013.
In rebuttal, Bruce Bennett of Jones Day said, “I have found Detroit filled with talented advocates. I hope to convince them to become allies rather than opponents. . . .No one is ever going to convince anyone in this room that the bankruptcy case is a good thing. But this is better than the alternatives. Sometimes leaving things the way they are is worse.”
He added that Orr cannot reach a debt adjustment plan on his own, that it must be approved by the bankruptcy judge.
To date, however, Rhodes has concurred with Jones Day attorneys on virtually every issue.
People’s attorney Leonard Eston and family members after Dr. Martin Luther King, Jr. Freedom Walk in Detroit June 22. 2013
By Diane Bukowski
Sept. 18, 2013
DETROIT – Leonard Eston, 66, a dedicated and militant people’s attorney, passed away unexpectedly September 15, 2013 at Detroit Receiving Hospital. He had been hospitalized for a heart attack earlier at Henry Ford Hospital but was recuperating, said his friends.
Cornell Squires
“Leonard truly fought for the people through thick and thin,” said his associate and long-time friend Cornell Squires. “He was a criminal defense attorney who got calls from all over the U.S. because of the number of not-guilty verdicts he won while practicing law. His nickname was ‘Rough-house Leonard,’ because he learned to be aggressive in court, since meeker tactics didn’t work. The ‘Hanging Judge,’ Geraldine Bledsoe Ford, would not try any cases where he represented the defendant, because he stood up to her. He was a high-caliber, passionate and kind attorney who loved the people he represented.”
Squires said Eston was instrumental in freeing many wrongfully convicted prisoners during his career, including one who was serving a life sentence and later went on to become a successful businessman.
In recent years, Eston continued using his legal skills to help the people, despite losing his law license after a spate of grievances filed and upheld by mainly white legal professionals. The first grievance involved Eston helping a client secure his settlement check and file from a white attorney who was refusing to give it to him. U.S. District Court Judge Lawrence Zatkoff, the judge who gave killer cop Walter Budzyn a new trial for the murder of Malice Green, denied Eston’s last attempt to regain his license in 1996.
Lady of Justice, logo for People’s Task Force website.
But, as legal counsel for the We the People for the People, and the Detroit People’s Task Force, working closely with Squires and others, Eston continued fighting for the people as a paralegal, said those he helped.
Linda Ingram of Port Huron and her son were among the many who benefited from Eston’s dedication.
“My son was on trial for murder,” Ms. Ingram said. “I don’t know what my family would have done without Mr. Eston. He was a good man. He said my son’s lawyer didn’t represent him properly, and he helped him file appeals. He has a court hearing Monday where we will know if he will win a new trial. Mr. Eston didn’t even know my son, and I was hoping that when he came home they could meet. I loved and appreciated him greatly.”
Eston and Squires, with We the People for the People, also interceded on behalf of families whose children were illegally being kidnapped by Child Protective Services and the Wayne County Juvenile Court, largely due to poverty and federal incentives that provide payments per head to foster care agencies for every child taken from his or her home.
Luis and Cecilia Espinoza family was reunited after lawsuit filed with the aid of Squires and Eston.
Among them were the family of Luis and Cecilia Espinoza, Mexican-Americans living on Detroit’s southwest side. CPS and the Court seized their five-year-old daughter Genoveva, and later tried to take their other four children. At one point, the court returned Genoveva but ordered the mother out, leaving the father, who worked, to take care of the children by himself. Squires said he and Eston filed a lawsuit which re-united the entire family.
Ed Wilcox, who Eston also assisted in recent years, said, “He stepped in to do paperwork to keep my lawsuit alive. He was a genius. I’ve seen his work ethic. He was old school, up there with the big boys. He loved doing his work and was highly dedicated to his profession. He went all the way; he didn’t do any half job. He went until you couldn’t go anymore.”
Eston, others intervened to support Detroit Corporation Counsel Krystal Crittendon’s lawsuit against disastrous PA4 Consent Agreement.
Eston also helped a Chicago woman win back her home after her son was targeted by the police, said Squires.
Eston made the news last year when he and others from We the People for the People fought to continue former Detroit Corporation Counsel Krystal Crittendon’s lawsuit against Detroit’s Public Act 4 “consent agreement.”
Ingham County Circuit Court Judge William Collette summarily threw out her case, refusing to recognize new City Charter language that allowed her to independently sue the state without the permission of the City’s Mayor or City Council. Collette said during the hearing that he had his mind made up from the beginning, and that Crittendon did not have standing to sue.
Crittendon contended that the city could not sign a contract with the state under city ordinances and state law because the state owed it more than $300 million in revenue-sharing payments and other fees.
Tyrone Travis
Eston, Squires, James Cole, Jr., Clifford Stafford, and Tyrone Travis filed to intervene on Crittendon’s behalf in the case as taxpayers.
Voice of Detroit covered their story, quoting from the lawsuit, “On June 13, 2012, the Michigan Court of Claims by Judge William Collette erroneously dismissed this Civil Action by rendering an “arbitrary” “capricious” “unfounded” “harsh” “untenable” judicial decision that was inconsistent and clearly contrary with “Fundamental Fairness;” “Due Process of Law” and “Equal Protection of the Law.”
The Detroit Free Press interviewed Eston about the case as follows.
“The lawsuit, filed on behalf of the residents and “We the People for the People,” a Detroit constitutional and human rights organization, says the state is acting in an illegal manner and causing Detroiters substantial injuries by denying them municipal services such as police and fire department protection, street lighting and recreation opportunities for young people,” says the Free Press article by Matt Helms.
“The lawsuit says Collette’s decision to dismiss Crittendon’s challenge was arbitrary and harsh and erroneously ignored Detroit’s taxpaying residents.
Ingham County Circuit Court Judge James Collete at hearing on Crittendon’s lawsuit.
“One of the men, Leonard Eston, 65, an attorney and west-side resident, said that he and the other men want Collette to decide whether they have the standing to proceed with Crittendon’s lawsuit. “We have to protect our rights,” Eston said.
“Eston argued Collette’s rebuff of Crittendon’s challenge based on whether she has the legal standing to do so ‘is a technical issue and illegal,’ so we’re asking the court to let us intervene and let the case move forward.
“Judge Collette needs to answer to it,” he said. “The state is choking us out of our money and trying to appoint an emergency manager.”
Kevin Carey (l) with People’s Task Force: family members of prisoners wrongfully convicted due to crime lab errors. Carey passed earlier this year.
Eston and Squites recently spoke passionately at the funeral of their friend Kevin Carey, another dedicated activist who died too young, on June 22, 2013. Carey was the Executive Director of the People’s Task Force, for which Eston and Squires provided legal assistance. The Task Force focused on freeing wrongfully incarcerated prisoners. Carey passed at the age of 57.
The same day, Eston, Squires, family members and friends marched earlier in the 5oth Anniversary “Freedom Walk” down Woodward Avenue, which commemorated Dr. Martin Luther King, Jr.’s on June 23, 1963, the day Dr. King first gave his “I Have A Dream” speech.
Eston graduated from Wayne State University Law School in 1972, during a time when African-American law students mobilized against discrimination at the school as well as throughout Detroit and the country. His friends say he never lost the fighting spirit of those times.
He is survived by his son Oscar Eston, a college student and accomplished basketball athlete who has been scouted by the Indiana Pacers, his mother, a daughter, and many other family members, along with countless numbers of people who benefited from his dedication over his illustrious lifetime.
Squires said We the People for the People will hold a special memorial after the family hour and funeral, and that they plan to set up a fund in Eston’s name to provide legal defense for the poor.
FUNERAL ARRANGEMENTS FOR LEONARD ESTON
SATURDAY, SEPT. 21, 2013
FAMILY HOUR 10 A.M.
FUNERAL 11 A.M.
ST. JOHN AME CHURCH
505 BEECHWOOD, 1 block n. of Visger
RIVER ROUGE, MICHIGAN
(Sept. 20: VOD has just received word that arrangements may have been changed to Pine Grove Church at 1833 Electric in River Rouge, so if the church above is the not the correct venue, map below shows PINE GROVE BAPTIST CHURCH location.)
City retirees, called out by AFSCME Council 25, protest at federal courthouse Aug. 19, 2013.
Challenges use of city bankruptcy filing to impoverish retirees, residents
Orr-requested Committee questions constitutionality of PA 436, says Ch. 9 would be “unconstitutional” under Orr’s interpretation
Opposes $300 M pay-off to UBS AG and Bank of America
Hearing Thurs. Sept. 19, Federal Courthouse, 231 W. Lafayette
By Diane Bukowski
Sept. 17, 2013
Rose Roots, pres. of AFSCME Retirees Subchapter 98, speaks at courthouse protest Aug. 19, 2013. Ed McNeil, Exec. Asst. to AFSCME Co. 25 Pres. Al Garrett, represents Chapter 98 on the “Official Retirees Committee.”
DETROIT – In a stunning development in Detroit’s Chapter 9 bankruptcy case, an appointed “Official Committee of Retirees” is asking to stay an eligibility trial until a higher-level U.S. District Court rules on matters including the constitutionality of Public Act 436, the “Emergency Manager” Act, and the primacy of Michigan’s protection of public retiree benefits.
“. . . 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,” the Committee says in one of a series of motions filed during the past week.
The Committee’s motion to the eligibility trial, set for Oct. 23, is to be heard Thurs. Sept. 19 at 3 p.m. before Judge Steven W. Rhodes in courtroom 716 at the federal courthouse located at 231 W. Lafayette. Rhodes has scheduled the bankruptcy eligibility objections of 109 individuals for a hearing earlier that day, at 10 a.m, in Room 224 of the same courthouse. He is asking objectors to be present by 9 a.m.
Rhodes earlier postponed a hearing on “legal” eligibility objections from Sept. 18 to Oct. 15 at the request of many creditors.
Michigan Gov. Rick Snyder and Detroit EM Kevyn Orr at press conference on bankruptcy filing July 19, 2013/Photo Diane Bukowski
In its filings, the Official Retirees Committee portrays a conspiracy between Michigan Gov. Rick Snyder and Orr to violate the state constitutional rights of the city’s retirees and residents, as well as their federal rights under the Tenth Amendment, which balances state and federal obligations to citizens.
It also blasts Orr’s attempt to pay off creditors UBS AG and Bank of America in a “swap termination” deal that would end up costing the city $350 million in bonds, more than it would save. It says that the deal, joined with corporate development plans, would greatly diminish funds available for pensions and other public needs.
Orr boasted during a July 19 press conference that he would have the retirees’ committee appointed, evidently to skirt the role of the retirement systems and unions in the bankruptcy case. Rhodes later granted his motion, and U.S. Trustee Daniel McDermott appointed a nine member committee.
“It is unusual that a debtor would ask for an opposing committee to be appointed,” Orr said at the time.
The Committee, however, appears to have taken its role to heart with a vengeance, belying the assumptions of some (including VOD) that it would be nothing but a puppet formation.
The Committee’s nine members are Edward McNeil, representing AFSCME Retirees’ Sub-Chapter 98, Michael J. Karwoski, a retired city attorney, Shirley Lightsey, president of the Detroit Retired City Employees Association (DRCEA), Donald Taylor, president of the Retired Detroit Police & Fire Fighters Association, Wendy Fields-Jacobs of the UAW, attorney Terri Renshaw, former deputy police chief Gail Wilson Turner, Attorney Gail Wilson, and Robert Shinske, Detroit Firefighters Association treasurer.
Its legal counsel is Brooks, Wilkins, Sharkey & Turco, PLLC, based in Birmingham, Michigan, along with attorneys from Dentons US LLP and Dentons Europe LLP, based in New York City and Washington, D.C.
After obtaining an order from Judge Rhodes extending the Aug. 19 deadline for filing bankruptcy eligibility objections to Sept. 16, the Committee filed its objection Sept. 10, three weeks after its formation Aug. 22. The objection disputes Orr’s insistence in his “Proposal to Creditors” that retirees and residents alike must sacrifice their pensions, health care, and assets. (Click on DB retirees committee objection to eligibility 805 to read Committee’s entire objection. Also click on Mary Diane Bukowski affidavit for eligibility objection 2 to read affidavit and attachments cited in sidebar at left.)
The Committee notes that it is joining with the eligibility objections filed by Michigan AFSCME Council 25 and its Retirees Subchapter 98, the International UAW, various Retiree Associations, and the Detroit Retirement Systems, thwarting what appeared to be an attempt by Orr and the city’s retained counsel, Jones Day, to divide and conquer.
COMMITTEE SAYS CHAPTER 9 UNCONSTITUTIONAL ACCORDING TO EM ORR’S INTERPRETATION.
The motion further declares, “In addition, should the Court determine that such authorization [for eligibility] can be found as a matter of state law, notwithstanding the proscriptions of the MICH. CONST. Art IX, § 24 (the “Pension Clause”), then Chapter 9 must be found to be unconstitutional as permitting acts in derogation of Michigan’s sovereignty and the right of the people of Michigan to define and control the acts of their elected and appointed officials.”
Later in that motion, in a section titled, “THE EMERGENCY MANAGER MARCHES DETROIT TOWARDS CHAPTER 9 INTENDING TO IMPAIR PENSIONS,” the committee says, “Prior to his appointment, the Emergency Manager knew that ‘the new [emergency manager] law is a clear run around the prior initiative that was rejected by the voters in November’ in an effort to terminate employee retirement benefits,” quoting a published email from Orr. It first cites WWJ reporter Vickie Thomas’s interview with Orr: http://detroit.cbslocal.com/2013/05/12/kevin-orr-releases-financial-plan-for-city-of-detroit/
WWJ reporter Vickie Thomas (l) and Diane Bukowski (to her left) during Orr press conference June 14. 2013
It cites numerous other instances in which Orr and Snyder made clear that the primary objective of the bankruptcy filing was to attack public pensions, thereby endangering municipalities across the U.S.
In a section titled, “ACCEPTANCE OF THE CITY’S AUTHORIZATION TO FILE ITS PETITION WOULD RENDER CHAPTER 9 UNCONSTITUTIONAL,” the motion says, “24. MICH. CONST. art. IX, § 24 provides that vested pension rights ‘shall not be diminished or impaired.’ The Emergency Manager contends that he may use Chapter 9 of the Bankruptcy Code, 11 U.S.C. § 901 et seq. to “trump” the Pension Clause, and intends to ask the Bankruptcy Court to approve a plan that would diminish those vested rights. . . .But that application of Chapter 9 would violate the Tenth Amendment to the U.S. Constitution.”
Thirtieth Circuit Court Judge Rosemarie Aquilina.
The motion also quotes and concurs with 30th Circuit Court Judge Rosemarie Aquilina’s order barring Gov. Snyder from approving the bankruptcy filing, saying that Snyder had no authority to do so unless he exempted the city’s pension systems from harm under the State Constitution.
It questions Rhodes’ authority to stay all legal actions against Detroit officials as well as Snyder, State Treasurer Andy Dillon, and other state entities. So far, U.S. District Court George Graham Steeh has temporily dismissed lawsuits initiated by AFSCME and the NAACP in his court, pursuant to a state filing citing Rhodes’ action. U.S. District Court Judge Paul Borman has remanded the lawsuit filed by the pension funds challenging Snyder’s authority to approve the bankruptcy filing, which Judge Aquilina granted and then stayed, back to her court.
In its motion opposing a Forbearance Agreement between the City of Detroit, UBS AG, SBS Financial and Merrill Lynch (Bank of America), filed Sept. 16, the Committee says it is joining with virtually every other city creditor. (Click on DB Retirees comm re FA to read entire motion.)
The Forbearance Agreement relates to Orr’s vaunted “haircut” to those banks, pledging to pay 75 cents on the dollar for what is owed on “interest-rate” swaps, at the same time he threatened the retirement systems with payment of 10 cents on the dollar.
The motion says that the swaps are not an obligation of the city, but agreements between third parties. It notes that the city has said it will assume at least $300 million in bonded debt to pay off UBS AG, SBS, and Merrill Lynch (Bank of America).
UAW Local 600 workers protest at Bank of America, one of creditors in Forbearance Agreement, Aug. 19, 2013.
“ . . .[T]he Committee is concerned that the steps the City must take to actually consummate the Forbearance Agreement will tie up the City’s assets in a manner that leaves the City without any resources to provide the promised retirement compensation (both pension and healthcare benefits) to its retirees. As a practical matter, implementation of the Forbearance Agreement is entirely dependent on the City’s finding debtor-in-possession financing (“DIP Financing”). The City is intending to use DIP Financing (a) to pay the Counterparties a significant percentage of their newly recognized secured claim against the City and, (b) for City redevelopment programs as part of the City’s transition plan. The City will most likely pledge all its free assets, including the casino revenue, to the DIP financers.”
Billionaire Mike Ilitch would profit from public funds in $881 million Red Wings arena development center project.
The motion continues, “The Forbearance Agreement and related ‘settlement’ are inequitable or unfair in that they force the City to finance operations with draconian cuts to the retirees’ benefits and pensions while the City borrows to prefer entities that have no legitimate claim as creditors over the retirees who hold a constitutionally protected, higher priority claim.”
One recently announced “redevelopment plan” in Detroit is an $881 million Red Wings Arena and retail and housing development in the Cass Avenue community area. It would be 61 percent publicly funded, including the use of federal Empowerment Zone credits to profit Detroit billionaire Mike Illitch, who owns the Red Wings and the Detroit Tigers. Bloomberg Businessweek blasted that project in a Sept. 5 article titled, “Detroit Billionaires Get Arena Help as Bankrupt City Suffers.”
Dan Gilbert let out racist rant againt LeBron James for leaving Cavaliers to go to Miami Heat.
Former Detroit Mayor Dennis Archer and billionaire Dan Gilbert, owner of the Greektown Casino and a proposed buyer of the failed Wayne County Jail project, recently met with members of President Barack Obama’s staff to discuss “leveraging federal funds” as well. They are planning an entertainment complex in the area surrounding Greektown Casino. Gilbert also owns the Cleveland Cavaliers.
In a bombshell allegation, Florida medical examiner Dr. Shiping Bao claims that Florida state prosecutors were biased against Trayvon Martin and purposely threw the case, and he is suing the state for $100 million, reports WFTV.com.
According to Bao, the medical examiner, state attorney’s office, and Sanford Police Department all felt that Martin “got what he deserved.” Bao also claims that he received the strong, though subtle, message not to speak on certain things:
Trayvon Martin with his dad Tracy Martin.
“He was in essence told to zip his lips. ‘Shut up. Don’t say those things,’” said Bao’s legal counsel, legendary Attorney Willie Gary.
Bao’s allegations come swiftly on the heels of him being fired from his position as associate medical examiner.
Volusia County released a letter on Tuesday, stating that Bao was fired last week. Spokesman Dave Byron declined to give a reason for Bao’s termination, citing “county standard personnel practices,” reports CBS News.
Gary said Dr. Bao was made to be a scapegoat and was wrongfully fired from the medical examiner’s office. He said his client was prepared to offer proof that Martin was not the aggressor.
Attorney WIllie Gary, who represents Dr. Shifing Bao
Gary said prosecutors never asked Dr. Bao a question crucial to their case.
He wanted a question that would have allowed him to explain to the jury with scientific evidence how there was no way Trayvon Martin could have been on top of George Zimmerman, Gary said.
Gary said that question never came.
As previously reported by NewsOne, on July 13th, a jury of George Zimmerman‘s peers found him not guilty of murder in the shooting death of 17-year-old Trayvon Martin, who was unarmed on the night of February 26, 2012, when Zimmerman profiled, followed, and ultimately shot him through the heart.
George Zimmerman
During the trial, Bao offered controversial testimony that conflicted with some of his earlier statements, leaving some in the courtroom shocked:
I believe he was alive for one to 10 minutes after he was shot. His heart was bleeding until there was no blood left,” Bao told prosecutor Bernie de la Rionda.
“His brain is still alive?” prosecutor Bernie de la Rionda asked.
“Yes,” Bao replied.
“He can still feel pain in other words?” the prosecutor asked.
“Yes,” he replied.
“He was still in pain,” he continued. “He was still in suffering.”
UBS AG pressed predatory 2005 $1.5 billion POC loan on Detroit
EM Kevyn Orr cited loan as a prime cause of city’s crisis
Archer’s former debt manager was point man for loan
UBS had close ties to Obama
By Diane Bukowski
September 11, 2013
U.S. Rep. John Conyers at Detroit bankruptcy forum Sept. 7, 2013.
DETROIT — U.S. Congressman John Conyers (D-Detroit) reported during his forum on Detroit’s bankruptcy Sept. 7 that he has been able to have little contact with President Barack Obama on the matter.
However, former Detroit Mayor Dennis Archer, an advocate of the bankruptcy filing, and a group of business leaders including his gambling buddies Dan Gilbert of Quicken Loans and the Greektown Casino and Matt Cullen of Rock Ventures got an extensive audience with top aides to the President Aug. 29, according to the Detroit News.
Also present in the White House meeting were Kresge Foundation CEO Rip Ranson, and Henry Ford Health Systems CEO Nancy Schlichting. The News said it was held “to discuss Detroit’s struggling finances and to determine how the city could maximize existing federal programs and grants,” said the News.
Archer reported, “It was a very productive meeting.”
But, said the News, “White House officials explicitly ruled out any federally financed bailout or special legislation to support the cash-strapped city. Instead, they pushed for ways the administration could help the city’s business and political leadership leverage existing federal tools to speed the restructuring and soften the blow of bankruptcy.”
Gilbert’s co-czar of downtown Detroit, Mike Illitch, is already taking advantage of federal Empowerment Zone funds to build an $881 million hockey stadium and adjacent private development.
Conyers said Sept. 7 that he would “make sure by legislation that we provide a backstop to protect public pensions,” along with other plans. Evidently, according to those White House officials, the Obama administration does not plan to support his efforts. (VOD—separate story on the bankruptcy forum still to come.)
White House meeting participants also appeared to take Detroit’s bankruptcy as a done deal, although U.S. Bankruptcy Judge Steven Rhodes has not yet determined whether Detroit is even eligible to file for bankruptcy. During a hearing Sept. 10, Rhodes moved the date for hearings on legal eligibility objections from Sept. 18 to Oct. 15, likely delaying the start of the eligibility trial, currently set for Oct. 23.
Archer, who told Fox 2 Business News in an interview July 19 that he favored the bankruptcy, and blamed it on the pension funds, may have played a key role in drowning Detroit in the debt Emergency Manager Kevyn Orr has blamed for the bankruptcy filing.
LeBron James, now free with the Miami Heat, formerly “enslaved” to the Cleveland Cavaliers according to Dan Gilbert.
Archer is also close ally of Gilbert, who owns the Cleveland Cavaliers (and is famous for his racist rant about star LeBron James leaving to go to the Miami Heat), Quicken Loans, and the Greektown Casino. Archer has been working with Gilbert and Cullen to get casino gambling in Ohio and is also seeking to partner with him on the retail center he referred to in the Fox 2 interview at right.
According to a Feb. 10, 2005 article in Bloomberg Businessweek, Archer was on the payroll of UBS AG at the time that the behemoth global bank and its minority partner Siebert, Brandford and Shank loaned the city $1.5 billion in controversial “Pension Obligation Certificates (POC’s),” intertwined with interest rate swaps backed by Bank of America’s Merrill Lynch, in 2005. In 2006, they re-negotiated the deal.
At the time, UBS AG was the largest underwriter of municipal bonds nationally and had the most consultants on its payroll.
(L to r) Then Detroit CFO Sean Werdlow, formerly Detroit debt manager under Dennis Archer, Joe Doherty of SBS, Joe O’Keefe of Fitch Ratings, Stephen Murphy of Standard and Poor’s, and then Deputy Mayor Anthony Adams press UBS/SBS POC deal on City Council Jan. 31, 2005/Photo Diane Bukowski
“The Zurich-based bank paid $2.4 million last year to 28 consultants, including Dennis Archer, former Detroit mayor, and Ray Sullivan, a spokesman for President George W. Bush when he was governor of Texas,” said Bloomberg.
The magazine noted that such payments to former politicians were coming under increasing scrutiny by the Municipal Securities Rulemaking Board, for possible corruption. It reported more than 80 percent of municipal bonds were privately arranged across the country at the time, without competitive bidding.
“Last year, the MSRB sought to ban underwriters from hiring consultants,” Bloomberg said. “In a notice filed April 5, 2004, on the proposal, the MSRB wrote: ‘Some consultant practices challenge the integrity of the municipal securities market.’
“In the notice, the rulemaking board said political contributions by consultants may conflict with its 1994 pay-to-play rule, called G-37, which bars underwriters from contributing more than $250 to local officials who award bond work.”
It said such “sales are more expensive for taxpayers, six academic studies have shown. A 2002 study of 148 New Jersey sales by University of Connecticut professor Mark Robbins found that governments using competition saved $1.26 million.”
Bloomberg said it talked directly to Archer.
Shirley Franklin, former Mayor of Atlanta
“Former Detroit Mayor Archer said his political connections raised no ethical issues in his work as a consultant for UBS,” the magazine reported. “He said he had a personal friendship with Atlanta Mayor Shirley Franklin and held a fund-raiser for Franklin when she was running for office in 2001. He said that relationship had nothing to do with Atlanta choosing UBS to manage an $849 million bond sale in September for the city’s water system.”
Later in the article, Bloomberg said Archer told them, “At the end of the day, it’s the municipalities that make the decision. They’re not going to be influenced by Dennis Archer or anybody else.”
With regard to this story, Archer responded to an email from Voice of Detroit asking whether he thought the POC debt should be disallowed due to conflicts of interest with the following comments:
Former Detroit Mayor Dennis Archer/Photo Black Past
“I had no involvement. I did not consult on the loans and I did not receive any remuneration. I had no involvement with Sean Werdlow regarding the loans. Sean worked in the Finance Department when I was mayor. Sean was not a direct report to me. He resigned from his position before I left office and began to work for the DMC. I had no conflict of interest. I was not involved in the transactions. I did not follow what was occurring in the Kilpatrick Administration as it relates to his appointees.
“Thus, beyond what I have just answered, I have no additional response to the assertions. I did not meet with President Obama as he was not present at our meeting. Moreover, the POC debt was neither raised nor discussed. I have no position on the debt as I am not involved in the proceeding before Judge Rhodes. My legal practice area does not include bankruptcy, and therefore have formulated no position regarding any assertion that the POC debt should be disallowed.”
Wall Street bull
The 30-year POC’s constituted a risky bet on the vicissitudes of Wall Street, during the glory days of the housing market boom, which turned out to be built on the quicksand of predatory home mortgage lending. The global economy crashed in 2008. Detroit defaulted on its payments and ended up turning its casino tax revenues over to a trustee to guarantee future debt payments.
Many other cities, including those who have preceded Detroit in filing bankruptcy, such as San Bernadino, California, were also caught up in the pension obligation certificates craze of the period.
Henry Sciortino
Former Mayor Kwame Kilpatrick held an economics forum in Jan. 2005, during which Henry Sciortino, head of the Pittsburgh Intergovernmental Cooperation Authority, cited a pension bond deal as partially responsible for the city’s debt default takeover. He called POC’s “one of the seven deadly sins of municipal finance.”
The point man for the POC deal in 2005 was Detroit’s Chief Financial Officer Sean Werdlow, at the time an appointee of former Mayor Kwame Kilpatrick.
Werdlow previously worked in the city’s Finance Department from 1995-99, becoming head of its debt management division during the Archer administration.
A Werdlow resume says during that time he “maintained total responsibility for the daily operation of the Debt Management section of the Finance Department. Coordinated and managed the City’s capital financing activities, systematically reviewed and evaluated financing opportunities, provided direction to Investment Bankers on optimal financial structures and served as the liaison between the City and rating agencies and other interested financial parties.”
Sean Werdlow, photo from SBS website.
After a brief interlude as Vice-President of Finance and Treasurer for the Detroit Medical Center from 2000 to 2002, Werdlow returned to city government as Kilpatrick’s CFO.
He likely used his ties with Wall Street ratings agencies to get Stephen Murphy of Standard and Poor’s and Joe O’Keefe of Fitch Ratings to the City Council table on Jan. 31, 2005. This reporter covered those Council hearings for the Michigan Citizen (MC) at the time.
Murphy and O’Keefe were apparently leery of their role there. Ratings agencies, although paid by the banks, do not normally intercede to help them get loans.
“It took a lot to get them here,” Werdlow told the Council.
“Werdlow objected loudly when Councilwoman Sharon McPhail got a representative of Fitch Ratings, a bond rating agency, to admit his company had ‘frequently been apprised’ of the city’s plan to use layoffs and service cutbacks to deal with a $300 million budget deficit,” the author’s first MC article said.
Former DFT Pres. Janna Garrison and former Councilwoman Sharon McPhail at 2001 rally against charter schools in Lansing.
“The representative, Joe O’Keefe, said his agency currently rates the city’s credit as ‘A, with a negative outlook,’ unless the city enacts those cuts.”
Despite vehement objections from pension trustees and union leaders, Werdlow insisted that the city had to borrow enough to cover 30 years of its obligations to the city’s pension systems, instead of borrowing only enough for the coming year.
A short-term borrowing would constitute a “soft liability,” whereas the long-term borrowing would be a “hard liability,” said Werdlow and others. While both ratings agency reps demurred for a while, Murphy finally said it would be “financially prudent” to make the debt a hard liability.
A week later, the City Council caved and voted for the POC debt. In November of that year, Werdlow took a top management position with Siebert, Brandford and Shank, now known as SBS Financial, and remains in that position. SBS Financial has remained a party to numerous loans to the city since then, as uncovered by an FOIA filed by Detroit retiree David Sole, an objector in the bankruptcy proceedings.
Werdlow was contacted by email about this story, but it is unclear if the email address was correct. VOD has received no response from him.
Pres. Obama himself is well-known to have close ties with a former UBS top manager.
Pres. Barack Obama shakes hands with his friend Robert Wolf, formerly of UBS, one of Obama’s major campaign fundraisers.
Obama has received major campaign contributions from his friend Robert Wolf, at the time he worked for UBS. Wolf was characterized in news reports as the “largest contributor” to the campaign. Wolf served as President and Chief Operating Officer of UBS Investment Bank, as well as Chairman and CEO of UBS‘s Group Americas division. He was a member of UBS’s Group Executive Board from 2008-2010.
Obama appointed Wolf to the President’s Economic Recovery Advisory Board from 2009-2011, then to the President’s Council on Jobs and Competitiveness from 2011-2013, then to the Homeland Security Advisory Council’s Border Infrastructure Task Force in 2012, and in June 2013, to the President’s Export Council.
VOD has reported extensively on the involvement of UBS in fraudulent schemes world-wide, from the rigging of world interest rates as a member of the LIBOR (London-Interbank Offered Rate) board to the $1.5 billion fine exacted from UBS by the U.S. Department of Justice related to other fraudulent practices.
Kevyn Orr
VOD has also called on the Justice Department and its Fraud Division to investigate the 2005-06 UBS POC loan to Detroit for evident conflicts of interest and likely outright criminality. Under Public Act 436, Detroit EM Orr is supposed to investigate possible criminal activity that has led to Detroit’s debt crisis. In the case of the POC loan, although Orr admitted in his June 14 Proposal to Creditors, ‘The City has identified certain issues related to the validity and/or enforceability of the COPS [POC’s] that may warrant further investigation,” he has refused to do so.
(See portion of Orr’s recent deposition by attorney Jerome Goldberg at orr dep extracts, in which he admits to knowledge of fraudulent activities for which UBS and Bank of America have been charged by the U.S. Dept. of Justice and the U.S. Securities and Exchange Commisision. Orr skirted the question of his obligation under PA 436 to investigate possible criminal activities that led to Detroit’s debt crisis.)
VOD calls again for the cancellation of the city’s entire debt to UBS, SBS, and the Bank of America including swaps, hedges and penalties, rather than including it as part of the outstanding “pension liabilities” Orr has used as an excuse to file bankruptcy.
The debt is NOT a debt of the pension systems, which vehemently opposed it, It is a debt set up under false pretenses through contrived “non-profits” called the Detroit General Retirement System Trust and the Detroit Police and Fire Retirement System Trust. It is a likely criminal instrument set up by predatory lenders and their lackeys in city government.
At the 1997 groundbreaking for a 40,000-seat ballpark for Major League Baseball’s Detroit Tigers, Michigan Governor John Engler said the stadium would symbolize the city’s renewal.
Michigan Gov. Rick Snyder and former Gov. John Engler
Michigan Governor Rick Snyder approved a plan to put public money toward a $450 million downtown arena on behalf of the the National Hockey League’s Red Wings and their billionaire owners.
Ford Motor Co. (F) Chairman William Clay Ford Jr., whose family owns the National Football League’s Lions, said in 1999 that his new 65,000-seat dome would “showcase the city’s turnaround.”
Now that Detroit has become the biggest U.S. municipality to declare bankruptcy, it’s Republican Governor Rick Snyder’s turn to tout a comeback spurred by a stadium for a suburban fan base financed with help from city taxpayers. Snyder approved a plan to put public money toward a $450 million downtown arena on behalf of the the National Hockey League’s Red Wings and their billionaire owners.
Rev. Charles Williams (in blue hat) and other pastors from Detroit and Benton Harbor during rally outside Gov. Rick Snyder’s residence MLK Day 2012.
The 18,000-seat complex and a planned $200 million private development nearby would transform a blighted area into one with apartments, offices, restaurants and shops, says Snyder, who controls the city through an appointed manager. Critics call the plan a giveaway to Mike Ilitch, owner of the Red Wings, the Tigers and the Little Caesar’s pizza chain.
“It’s going to be very tough, in my opinion, to make the case that the city of Detroit should go into bankruptcy so they can simply go in and just raid pensions or give money to the Red Wings,” said the Rev. Charles Williams II, senior pastor at Historic King Solomon Baptist Church in the city.
Hockeytown Agonistes
City retirees protest attack on pensions outside courthouse Aug. 19, 2013
Detroit, a former auto-building powerhouse, on July 18 filed the largest U.S. municipal bankruptcy after years of decline. The city of about 700,000, which lost half its population in the past 50 years, has more than $18 billion in long-term debt and an operating deficit close to $400 million. Snyder’s emergency manager, Kevyn Orr, has proposed reducing pension and health-care benefits for employees and paying holders of $2 billion in unsecured bonds an average 18 cents on the dollar. The distress is so deep that 40 percent of the city’s streetlights have gone dark.
Yet six days after the Detroit’s filing, an arm of state’s economic development corporation gave preliminary approval to sell $450 million in tax-exempt bonds to finance a 650,000-square-foot facility to replace Joe Louis Arena, the home of the Red Wings since 1979.
‘Momentum Shift’
The Red Wings, one of the six original teams in the NHL, have won 11 Stanley Cup championships, the most of any franchise in the U.S. Hockey and the Red Wings are so popular in Detroit that fans, many of whom travel to games from across the region, refer to the city as Hockeytown, a coinage trademarked by the team.
Gov. Rick Snyder, DTE CEO Gerry Anderson, and MEDC head Michael Finney.
Final approval for their new home is expected in November, said Michael Finney, president of the Michigan Economic Development Corp. The arena, which Finney said Detroit officials have approved, would be owned by a new public authority and leased by the Red Wings. Construction is to be finished in 2017.
Snyder said today that the arena would be “a huge momentum shift” for economic activity in the corridor between Detroit’s downtown and the Midtown district, which has experienced an influx of businesses and residents.
Catalyst Project
Planned Red Wings arena development would be cater corner to Comerica Park and Ford Field.
He said the new arena would tie in with nearby baseball and football stadiums. The corridor also is to get a new light-rail commuter train.
“It’s something that hopefully will be a tax-base generator,” Snyder said during a conference call with reporters. “Not the arena as much per se, but all the surrounding development.”
Construction would create 4,380 jobs and as much as $1.8 billion in new economic activity, according to Snyder and Olympia Development of Michigan, a company controlled by the Ilitch family.
John Hahn, a spokesman for Olympia Development, said the Ilitch organization has been committed to Detroit and the state for 31 years and was making another “substantial” investment downtown.
“We have a tremendous opportunity through this large-scale project to create jobs, stimulate economic activity and have a positive and lasting impact on our community,” he said in a prepared statement.
City and state officials point out that the public money that would partially back 30-year arena bonds had been previously targeted to economic development projects in downtown Detroit.
Meaningless Pursuit
Snyder goes after Black majority cities in the “Comeback State.”
Snyder, who has dubbed Michigan the Comeback State because of auto industry’s post-recession revival, may find that his projections collide with reality.
A 2002 study looking at whether construction jobs rose in St. Louis as a result of downtown arenas for the St. Louis Blues hockey team and Rams football team found they didn’t significantly affect construction employment.
Another study by economics professors Dennis Coates of the University of Maryland in Baltimore and Professor Brad Humphreys of the University of Alberta found that income per capita in metropolitan areas didn’t fall during player strikes, supporting an “emerging consensus” that professional sports don’t have an impact on local economies.
“There’s always a debate about does this really pan out?” Orr, the emergency manager, said in a July 25 interview. “The reality is we are so needy of some economic development, I can’t see how we don’t pursue it because if we don’t, what’s left?”
Tapping Schools
Detroit children have been protesting tidal wave of school closings, beginning with 50 in 2004, long before other cities were hit. More than half of the city’s schools are now closed. This photo shows protest July 1, 2004.
Almost 60 percent of the funds to pay for the arena would come from taxpayers. Bonds would be backed by a combination of about $15 million in annual payments from Detroit’s Downtown Development Authority and $11.5 million from Olympia. Wayne County may also provide support, according to a July 24 memo.
In December, Michigan’s legislature revived the ability of the development authority to take a portion of school-tax revenue generated by property on 615 downtown acres. The money, which had gone toward economic-development bonds, would be used for debt service on a project meeting the characteristics of a new Red Wings arena.
The levy generates about $13 million, said Bob Rossbach, a spokesman for the authority.
The money otherwise would have reverted to public schools and the state’s school-aid fund, according to a legislative analysis. The state will reimburse the district to make up shortfalls, just as did before 2011, said Rossbach.
“It’s not taking money from Detroit Public Schools and putting it into economic development,” Rossbach said. Continue reading →
Israeli nuclear and chemical weapons manufacturing facility at Dimona (image by sodahead.com)
By Saed Bannoura – IMEMC News
September 11, 2013
A newly-discovered document of the U.S. Central Intelligence Agency revealed Monday by Foreign Policy magazine shows that the U.S. agency had decisive evidence dating back to at least the 1980s that Israel had a stockpile of chemical and biological weapons.
The revelation comes in the midst of the reported use of chemical weapons by the Syrian government on August 21st, although there is still no clarity as to whether the regime or the rebels carried out the attack, or whether it was an accident.
While U.S. President Barack Obama threatened to go to war with Syria over the attack, the Syrian government has denied responsibility, and has agreed to a proposal by the Russian government to open its stores of chemical weapons to international inspection and destruction.
The document revealed by Foreign Policy magazine on Monday shows that, in addition to building up a nuclear stockpile of an estimated three hundred nuclear weapons during the 1960s and 70s, the Israeli military also developed an extensive stockpile of chemical and biological weapons.
The 1983 document stated that U.S. spy satellites had identified “a probable CW [chemical weapon] nerve agent production facility and a storage facility… at the Dimona Sensitive Storage Area in the Negev Desert. Other CW production is believed to exist within a well-developed Israeli chemical industry.”
“While we cannot confirm whether the Israelis possess lethal chemical agents,” the document adds, “several indicators lead us to believe that they have available to them at least persistent and nonpersistent nerve agents, a mustard agent, and several riot-control agents, marched with suitable delivery systems.”
The single page of a larger CIA report was discovered at the Ronald Reagan Library in California in its unredacted form – the report had been released several years ago to the National Archives, but was heavily censored.
According to the Foreign Policy report, “Israeli historian Avner Cohen, in his 1988 book Israel and the Bomb, wrote that Israeli Prime Minister David Ben Gurion secretly ordered that a stockpile of chemical weapons be built at about the time of the 1956 war between Israel and Egypt. The CIA, on the other hand, believed that Israel did not begin work on chemical weapons until either the late 1960s or the early 1970s.
The article included the following assessment from the 1983 CIA report: “Israel, finding itself surrounded by frontline Arab states with budding CW [chemical weapons] capabilities, became increasingly conscious of its vulnerability to chemical attack. Its sensitivities were galvanized by the capture of large quantities of Soviet CW-related equipment during both the 1967 Arab-Israeli and the 1973 Yom Kippur wars. As a result, Israel undertook a program of chemical warfare preparations in both offensive and protective areas.”
The Israeli government has harshly criticized the Syrian government for its alleged use of chemical weapons three weeks ago, and has encouraged President Obama’s pledge to respond militarily.
Israel did sign the Convention to Ban Chemical Weapons, but the Israeli Knesset (Parliament) never ratified the treaty. Israel has never opened its nuclear facility or its chemical weapons stockpile to international inspections.
IMEMC is a media center developed in collaboration between Palestinian and International journalists to provide independent media coverage of Israel-Palestine.
The President’s speech Tuesday night repeated all of the lies the United States has been telling about Syria to justify war — and shows that war may be delayed, but is not off the table.
The biggest lie being told right now is that Assad agreed to give up his country’s chemical weapons because of the United States’ “credible military threat.”
What has really happened is that the warmakers in the Pentagon, and their backers on Wall Street, ran into a gigantic brick wall of resistance. They were forced to back down for the time being.
Protesters lined Woodward Avenue in Detroit Sept. 8 to stop war on Syria.
They wanted to go to war right now. But when Kerry said on Monday, “All Assad has to do is give up his chemical weapons,” Syria and Russia called his bluff.
Backing up this move was mass sentiment against war and an anti-war movement that sprang up overnight.
At that very moment, the U.S. was desperately looking for a way out of its stated plans. It was clear that Obama would not get approval for an attack on Syria in the House. And internationally the White House was not getting support, either.
Detroit rally Sept. 8 against war on Syria.
As soon as Obama saw a way out, he took it. This was a tactical retreat – one that gives the anti-war movement more time to mobilize.
It also gives the warmakers more time to mobilize. The goals of the 1% have not changed one iota. They just couldn’t wage the war they wanted when they wanted.
The direction of the competing proposals in the UN Security Council and Congress is to put Syria in the same position as Iraq in 2003. The United States will demand compliance and, like Iraq, it won’t matter what Syria does – the U.S. will claim it is not complying.
Protest in Washington D.C. Sept 7, 2013
Now is the time for the anti-war movement to demand the unilateral disarmament of the Pentagon. The United States has the world’s largest stockpiles of conventional, nuclear and chemical weapons. Right now babies are being born in Fallujah, Iraq, with staggering rates of birth defects because of exposure to depleted uranium used by the U.S. military.
As much as the world is against war, the profit-hungry demands of the 1% constantly compel it to go to war. The U.S. wants complete domination of the Middle East and its vast oil resources. And the 1% wants to break up the alliance of forces that have the capacity to resist the dictates of the United States and Israel.
Only the peoples’ movement can stop war, which the U.S. will try again in Syria later. The struggle continues. The anti-war nerve touched by the latest announced attack was unemployment, poverty, the just-announced cuts in food stamps, Trayvon Martin, low wages, students’ debt burdens and furloughed workers.
All those issues remain, and so does the need to fight for “Money for jobs, not for war!”
International Action Center c/o Solidarity Center 147 W. 24th St., FL 2 • New York, NY 10011 212-633-6646 http://www.iacenter.org
Art Papapanos (r) of the DEGC presents Illitch stadium proposal to Council committee Sept. 5, 2013. Slide shows proposed new DDA boundaries and project area. Next to it is portrait of the late City Council President Erma Henderson.
95-year project to be 61% publicly-funded, tax-exempt
Utilizes remaining Empowerment Zone bond credits
Expands DDA to create “city within a city,” displacing residents, businesses
Eliminates millions in city fees assessed under Joe Louis Arena plan
Cato Institute: no communities have benefited from sports projects
By Diane Bukowski
Sept. 8, 2013
Marion and Mike Illtich. Illitch is one of Forbes “400 Richest Individuals” in U.S.
DETROIT – As Detroit bankruptcy proceedings present a massive threat to city assets and workers’ pensions, downtown czar Mike Illitch plans to replace Joe Louis Arena with a new tax-free Red Wings hockey stadium and adjacent private developments at a cost of at least $881 million, 61 percent publicly-funded.
An estimated $536 million would come from tax increments “captured” by the Downtown Development Authority, including school, library, city, county and state taxes.
These figures differ from previously announced lower amounts because they include an estimated cost of bonds to be issued by the Michigan Strategic Fund. The bonds would utilize the remainder of Detroit’s federal Empowerment Zone credits, set to expire at the end of 2013. They cover 30 years of a 95-year agreement, according to a report from the City Council’s Legislative Policy Division (LPD).
Gov. Rick Snyder is jeered by protesters in Benton Harbor at its annual Blossom-time Parade in 2011, called a dictator.
Art Papapanos, vice president of board administration at the Detroit Economic Growth Corporation (DEGC), described plans for an “Events Center” and “Catalyst Development Project, during a Council committee meeting Sept. 5. He said they would be located in a Downtown Development Authority area expanded to include land north of I-75 (the Fisher Freeway), west of Woodward, south of Charlotte and east of Grand River.
The project takes advantage of Public Act 396 of 2012, signed by Michigan Governor Rick Snyder in Dec. 2012. That Act amends the Downtown Development Authority Act of 1975 to exempt a DDA in a city of more than 600,000 residents from all taxation on its earnings or property, including real estate transfer taxes.
MAP OF PROPOSED EXPANSION OF DDA DISTRICT (ALL AREA N. OF I-75), WITH ILLITCH PROJECT AREA OUTLINED IN PURPLE. HOCKEY ARENA WOULD BE W. OF WOODWARD, S. OF TEMPLE, EAST OF CASS, N. OF 1-75.
“When Proposal A passed, it limited a DDA’s ability to capture revenue streams,” Papapanos said. “[The new Act] says show us a project of at least $300 million to recapture the revenue stream. So we presented a $650 million project, $450 million for the arena and $200 million for the ancillary area.”
Papapanos said the DEGC wants the Council to approve the expansion of the DDA district amend the DDA Tax Increment Finance Plan, and approve the contribution of 37 city-owned parcels of land there at no cost.
Federally-assisted Detroit Empowerment Zone in red. Funds will expire Dec. 31, 2013.
He said that Illitch’s Olympia Development of Michigan will also fund three stations on the proposed Woodward Corridor M-1 rail line. The Catalyst Development Area surrounding the arena would include retail and residential construction and modernization.
Papapanos said the Council must vote on the plan within 60 days, but the LPD report says the real urgency comes from the amended expiration date on Empowerment Zone funds. A Council vote on the project was set for Nov. 12, with a discussion by the full Council sometime in October.
Council members Saunteel Jenkins (l) and James Tate (r) favor the project.
Council Neighborhood and Community Services Committee chair James Tate said regarding the project, “What excited me is the Empowerment Zone aspect.”
Councilwoman JoAnn Watson, who did not run for next year’s term, was angry.
“This proposes a free transfer of city-owned land,” she said. “State law requires any transfer to be at fair market value. We need information from the assessor’s office.”
Watson also objected to the fact that the city is not included as a party in the “Concession Management Agreement” (CMA) covering the project. The parties are Olympia Development of Michigan (an Illitch holding), the Michigan Strategic Fund, and Wayne County.
Councilwoman JoAnn Watson
Council President Saunteel Jenkins agreed that the value of city land for the project should be assessed, but appeared to accept that the city would not be party to the CMA.
Watson added that hundreds of millions in city fees and surcharges from Joe Louis Arena will be lost and questioned what will happen to the facility.
“This would be an opportunity for a replica of the agreement put together by Mayor Coleman A. Young and Bella Marshall for Joe Louis Arena to provide compensation for the city,” Watson said. “Every time they appear on TV, why not demand a share before approving this agreement?”
Red Wings fans pour into Joe Louis Arena.
In Dec. 2012, the Detroit News reported that Illitch’s Red Wings owed the city up to $70 million in cable television rights and millions more in rent, concessions and other revenue and property taxes. The LPD report says only a fraction of that amount, owing since 1980, has been paid since then pursuant to negotiations with Illitch Holdings.
During a Council hearing in 2011, a city analyst from the Assessor’s office said many other fees associated with the city’s sports franchises, including income taxes from Tigers, Lions and Red Wing team members, had not been paid. Watson eventually estimated outstanding corporate debt to the city at $800 million.
Marie Burton says: “We are not rats or dogs, we are human beings.”
Watson also demanded a task force to monitor the hiring of city residents and businesses similar to that utilized for Comerica Park and Ford Field. Illitch’s proposal says he will comply with Exec. Order 1, which requires 51 percent of the workers on the project to be Detroit residents.
Empowerment Zone funding requires 37 percent of the workers to come from the Empowerment Zone itself but does not set wage levels or hours worked. The proposal says a third-party task force will be set up, but does not indicate who will choose it.
Detroit residents present expressed outrage during comments restricted to one minute by committee chair James Tate, who threatened their removal if they exceeded the time limit. Tate also unsuccessfully attempted to limit questions from Councilwoman Watson, and refused to have LPD’s David Whitaker give a summary of their report.
“People are being removed under this project, and they have no idea where they’re going,” Marie Burton said. “You know these people are going to burn your stuff down, tear it down brick by brick. People need decent housing with flowers and trees, and the city needs its tax dollars. Give us respect. We are not rats or dogs, we are human beings.”
Atty. Tom Stephens of DREM and Jerry Balenger, owner of the downtown building housing Cliff Bell’s Jazz Club and the Bucharest Grill, vehemently opposed the Illitch plan.
Representing “Detroiters Resisting Emergency Management,” Attorney Tom Stephens said, “[Publicly-funded sports arenas have] not worked as an economic development strategy to create high-quality living wage jobs, either in Detroit – where taxpayers funded both Comerica Park and Ford Field during the same years that the city slid into its current fiscal crisis and bankruptcy—or anywhere else . . . .Desperately needed financial assistance has long been and is still being denied to children mired in poverty, to public safety, transit, education, health, environmental protection . . .and other social necessities. lWhy should elected officials appropriate hundreds of millions of tax dollars to benefit a multibillionaire owner of a sports franchise?” (Click on TStephens coments for Stephens full written comments.)
Cliff Bell’s before and after renovation.
A Cato Institute study cited in the LPD report found that not one community has benefited economically from similar sports arena projects anywhere in the U.S. in previous years.
Jerry Balenger, owner of the building housing the popular Cliff Bell’s Jazz Club and Bucharest Grill on Park Avenue in the DDA area, said Illitch is employing a “scorched earth policy.” He said the DEGC has not consulted with other business owners in the district, who are trying to ameliorate 27 years of blight there. He said Illitch wants to build a wall around his holdings with this project, located diagonally north of the Illitch’s Detroit Tigers’ Comerica Park and the Detroit Lions’ Ford Field.
Bill McMasters (r) of Michigan Taxpayers United says plan is for a “city within a city” controlled by secret interests with taxing power. Chris Jackson, who favors the project is at left.
Forbes Magazine lists Illitch as one of the “400 Richest Americans.” He owns the Red Wings, the Detroit Tigers, and Little Caesar’s Pizza, as part of the $1.7 billion Illitch Holdings empire, along with large amounts of land in downtown and midtown Detroit. His wife Marian owns the sole controlling interest in the Motor City Casino, and is also involved with Gateway Casino Resorts, LLC and other gambling enterprises.
Bill McMasters, head of Taxpayers United of Michigan, which has 300 members from Detroit, called the project the “creation of a city within a city by a secret organization with taxing power by people who are not elected.”
He showed a Freedom of Information Act request he submitted to the DEGC and the DDA asking for a list of tax breaks given to major companies in Detroit Renaissance Zones. A denial letter from Papapanos, who identified himself as the “FOIA Coordinator for the DDA only,” said the DEGC is not a “public body” and therefore not subject to FOIA and Open Meetings Act laws. He said the DDA does not keep such records. (Click on McMasters FOIA and response for full letter detailing all businesses McMasters wants information on. Click on DEGC Directors 2010 2011 for most recently available listing of directors.)
The DEGC staffs the DDA and numerous other city authorities. Its board members represent a broad range of major corporate CEO’s in the region.
Pastor Alonzo Bell
Pastor Alonzo Bell of the Martin Evans Missionary Baptist Church on the city’s east side said he bought property adjacent to the church land, but now is losing it because the tax rates have skyrocketed.
“This shows the inequality of billionaires getting tax breaks for profit,” he said. “Everybody in the City of Detroit needs to get a tax break.”
Ray Litch said Cass Alumni Association wants to build baseball fields for students on old Cass in proposed new DDA area.
Laverne Holloway said, “This is an absolute shame! People keep saying Detroit is destroyed and worthless, but people are coming every day with their hands out for more public money. Mike Illitch owes us $200 million. PAY THE MONEY! We need every single dime every corporation owes us collected first.”
Ray Litch, Vice-President of the Cass Tech Alumni Association, said they have been planning to construct a field for “boys and girls” baseball on the site of the old school, since razed. He said the football field built with the new school is too small.
Laverne Holloway speaks against Illitch plan.
Others, primarily from businesses and construction unions, favored the proposal.
They included Ken Harris, President and CEO of the Michigan Black Chamber of Commerce, which he said has 72,000 members in the state and 32,000 in Detroit, and the largest Black supplier data base in the country. He said Detroit is ranked #4 across the nation in numbers of Black entrepreneurs.
“I commend Mike and Marian Illitch for their history of supporting us,” he said.
Proposed plan for Queen Lillian office complex.
Chris Jackson, who is partnering with Jenkins Construction in the Queen Lillian medical building project just north of the expanded DDA, said the project will be an “opportunity for Black businesses and developers.”
Toney Stewart, Delegate of Local 687 of the Michigan Regional Council of Carpenters and Millwrights (MRCC), said, “We need jobs!” The Carpenters Union has 14,000 members across the state, the vast majority of them white males. The MRCC is a major contributor to the campaigns of powerful politicians state-wide.
