THE ANGOLA 3: BLACK PANTHERS AND THE LAST SLAVE PLANTATION
Narrated by Mumia Abu-Jamal, this film features interviews with former Panthers, political prisoners and revolutionaries. – The Angola 3: Black Panthers and the Last Slave Plantation tells the gripping story of Robert King Wilkerson, Herman Wallace and Albert Woodfox, men who have endured solitary confinement longer then any known living prisoner in the United States.
Temporary structures are constructed around a building at Angola State Penitentiary in West Feliciana Parish, La., Monday, May 9, 2011. A convoy of buses and vans transferred inmates with medical problems from Angola, which is bordered on three sides by the Mississippi River, while other inmates were moved to buildings on higher ground as part of an effort to prepare for possible flooding. (AP Photo/Patrick Semansky)
Politicized through contact with the Black Panther Party while inside Louisiana’s prisons, they formed one of the only prison Panther chapters in history and worked to organize other prisoners into a movement for the right to live like human beings. This feature length movie explores their extraordinary struggle for justice while incarcerated in Angola, a former slave plantation where institutionalized rape and murder made it known as one of the most brutal and racist prisons in the United States. The analysis of the Angola 3’s political work, and the criminal cases used to isolate and silence them, occurs within the context of the widespread COINTELPRO being carried out in the 1960’s and 70’s by the FBI and state law enforcement against militant voices for change. Narrated by Mumia Abu-Jamal, The Angola 3 features interviews with former Panthers, political prisoners and revolutionaries, including the Angola 3 themselves, and Bo Brown, Geronimo (ji Jaga) Pratt, Malik Rahim, Yuri Kochiyama, David Hilliard, Rod Coronado, Noelle Hanrahan, Kiilu Nyasha, Marion Brown, Luis Talamantez, Gail Shaw and many others. Portions of the proceeds go to support the Angola 3.
CURRENT STORY–Herman Wallace, dying, leaves prison after 41 years of solitary confinement
By Chevel Johnson of Associated Press
October 2, 2013
U.S. District Chief Judge Brian Jackson in Baton Rouge overturned Herman Wallace’s 1974 murder conviction in the death of Angola guard Brent Miller.
Wallace left correctional center by ambulance Oct. 1, Tuesday to go to New Orleans hospital for treatment of advanced terminal liver cancer.
NEW ORLEANS — A 71-year-old Louisiana prisoner who spent 41 years in solitary confinement and is now dying of cancer was released late Tuesday from prison, his attorneys said.
Herman Wallace
Late Tuesday, U.S. District Chief Judge Brian Jackson in Baton Rouge denied the state’s motion seeking to block his earlier order overturning Herman Wallace’s 1974 murder conviction in the death of Angola prison guard Brent Miller.
Jackson had also ordered a new trial because women were unconstitutionally excluded from the grand jury that indicted Wallace in the guard’s death. He ordered that Wallace be immediately released.
Wallace and two other inmates convicted in the 23-year-old guard’s slaying came to be known as the “Angola 3.”
Wallace, of New Orleans, was serving a 50-year armed robbery sentence when Miller was fatally stabbed in 1972. Wallace and the two others convicted in Miller’s death were moved to isolation at the Louisiana State Penitentiary in Angola. In 2009, Wallace was moved to “closed-cell restriction” at Hunt Correctional in St. Gabriel and recently was taken to the prison’s hospital unit.
Amnesty International USA last year delivered a petition to Louisiana Gov. Bobby Jindal’s office, containing 65,000 signatures from people around the world who called the men’s solitary confinement inhuman and degrading.
The group’s executive director, Steven W. Hawkins, welcomed the court’s ruling involving Wallace. “Tragically, this step toward justice has come as Herman is dying from cancer with only days or hours left to live,” he said in a statement. “No ruling can erase the cruel, inhuman and degrading prison conditions he endured for more than 41 years.”
Steven W. Hawkins, Exec. Director Amnesty International
Wallace’s attorneys said the freed prisoner left a correctional center in St. Gabriel by ambulance Tuesday evening and was expected to go to LSU Interim Hospital in New Orleans for treatment of advanced terminal liver cancer.
“Tonight, Herman Wallace has left the walls of Louisiana prisons and will be able to receive the medical care that his advanced liver cancer requires,” his legal team said in a statement.
Earlier Tuesday, Jackson overturned Wallace’s 1974 murder conviction in Miller’s death.
“The record in this case makes clear that Mr. Wallace’s grand jury was improperly chosen in violation of the Fourteenth Amendment’s guarantee of ‘the equal protection of the laws’ … and that the Louisiana courts, when presented with the opportunity to correct this error, failed to do so,” Jackson wrote.
Black Panthers Herman Wallace and Albert Woodfox with Angola prison in background.
He added, “Our Constitution requires this result even where, as here, it means overturning Mr. Wallace’s conviction nearly forty years after it was entered.”
George Kendall, one of Wallace’s attorneys, told The Associated Press in an earlier telephone interview the decision gives his client “some measure of justice after a lifetime of injustice,” but his response was tempered by the grim outlook for Wallace’s health.
“He’s pleased,” Kendall said of Wallace’s reaction after hearing of Tuesday’s ruling, “but he’s quite ill.”
Wallace, whose birthday is Oct. 13, has been diagnosed with terminal liver cancer. Kendall said he “ceased receiving treatment a couple of weeks ago.”
Herman Wallace and Albert Woodfox in 2002–unbeaten, unbowed.
Kendall said the state had filed notice it would appeal Jackson’s ruling. A telephone message left with East Baton Rouge Parish District Attorney Hillar C. Moore III’s office was not immediately returned. The state Department of Public Safety and Corrections referred all questions to Moore’s office.
Kendall said his client has asked that, after his demise, they continue to press the lawsuit challenging Wallace’s “unconstitutional confinement in solitary confinement for four decades.”
“It is Mr. Wallace’s hope that this litigation will help ensure that others, including his lifelong friend and fellow ‘Angola 3’ member, Albert Woodfox, do not continue to suffer such cruel and unusual confinement even after Mr. Wallace is gone,” his legal team said in a written statement.
Kendall said Woodfox won full habeas relief last year but the state has appealed that as well. The case is pending before the 5th U.S. Circuit Court of Appeals.
U.S. Congressman John Conyers and Robert King, 2013.
In 2010, Woodfox was moved to the David Wade Correctional Center in Homer, where he remains in custody.
Woodfox and Wallace have continued to deny involvement in Miller’s killing and say they were targeted because they helped establish a prison chapter of the Black Panther Party at the Angola prison in 1971, set up demonstrations and organized strikes for better conditions in the prison.
The third man, Robert King, was released after 29 years in solitary confinement. King, convicted of killing a fellow inmate in 1973, was released in 2001 after his conviction was reversed and he pleaded guilty to the lesser charge of conspiracy to commit murder.
DETROIT — The Reverend Charles Williams acted as a kind of a facilitator today at his church here on 14th street in Detroit. He holds monthly meetings at the King Solomon Missionary Baptist church for the “National Action Network,” a kind of neighborhood clearing house for getting priority issues addressed, where the various groups show up at each others’ events when numbers are key to gaining notice.
Rev Charles Williams II at one of NAN’s 10 a.m. Saturday meetings at Historic King Solomon Baptist Church.
At last month’s meeting he said, “I feel an enormous amount of power in this room,” then indicated, “You can’t have just a little democracy,” and used the story about the walls of Jericho as an illustration of how even small numbers matter when you have a heavy- duty reputation.
This month when I got to the meeting, a minister from Jackson, Michigan was talking about how his son Joe Hines was beaten by more two dozen white police officers in Columbus, Ohio near the Ohio State University campus. Mr. Hines’ beating tapes made it to U Tube, and that prompted a guy named Jose’ to contact the Reverend Hines so the march in Columbus would be, “For Joe and Jose” because Jose’ told him that he recognized some of the same officers that beat him and knocked his teeth out in the video.
Mr. Hines said that both the young men who were beaten told him that they were sure that something good would come out of the pain and abuse that they were made to feel.
Rev. Williams said that Yvette Dukes, NAN’s attorney is going to do everything she can to help and would be looking into the matter.
Joe Hines in 2010
“We are going to light this issue up,” he said, noting that it seemed like these two young didn’t do anything but the right thing and were beaten up any way,
“Just like the state department issues travel advisories, we should issue a school advisory, they will wake up to the pocket book issue,” as a comment on how things are in and around the Ohio State campus.
“I think the suffering of the four little girls in the Baptist church in Alabama fifty years ago to the day will lend faith to our feet no matter what religion we may be and we will be going to Columbus,” he said as he made a temple bell gesture with his thumb and forefinger.
Joe Hines after beating in 2012/photo by brother James Hines
Then Rev. Williams turned his attention to the Service Employees International Union’s one day strikes of fast food restaurant employees for a decent living wage.
“This all ties in with bankruptcy,” he said. “Public bankruptcy, private bankruptcy. It’s important for us to help our young people take on responsibility. They won’t have time to get involved in all this violence. When people take their job seriously, when they have a mortgage that helps to solve the violence problem too.”
As I was getting an espresso and a danish in the church vestibule and getting ready to go, Krystal Crittendon was already addressing the assemblage on what was planned to address the suburban/ex-urban banks vis-a-vis Detroit’s pensioners and bankruptcy. (See notice at head of article.)
Davontae Sanford’s family and supporters outside appeals court after Aug. 8 hearing. His mother Taminko Sanford-Tilmon and his stepfather Jermaine Tilmon are at right.
Court panel orders testimony of hit man Vincent Smothers, who confessed
Says Smothers’ confession “wasthe most significant evidence in defendant’s actual innocence proceeding”
Blames Pros. Kym Worthy’s office for not granting Smothers immunity to testify
By Diane Bukowski
September 27, 2013
Vincent Smothers (l) confessed to killings for which Davontae Sanford (shown at 14) was convicted.
DETROIT – A Michigan appeals court ordered Sept. 26 that admitted hit man Vincent Smothers and his attorney be allowed to testify on behalf of Davontae Sanford, currently serving a sentence of 37 to 90 years for four murders on Runyon Street on Detroit’s east side in 2007.
Sanford, 14 at the time, confessed to the killings during a lengthy police interrogation, without an attorney or parent present. The case has drawn international publicity.
Smothers, serving 50-100 years for 10 other drug-related killings, said in a sworn affidavit and in an AP interview last year that he and an accomplice committed the murders on Runyon, and that Sanford was not involved. He earlier confessed the killings to Detroit police, but Wayne County Prosecutor Kym Worthy did not charge him or his accomplice, and refused to drop charges against Sanford.
Davontae’s parents Taminko Sanford-Tilmon and Jermaine Tilmon at their wedding in July.
“I’ve been crying tears of joy all day,” Sanford’s mother Taminko Sanford-Tilmon said. “I’m overwhelmed. We’ve been praying for this for so long with so many people, and God is now moving. But it’s just the beginning, because we have to go back in front of the same judge and replay it all over again.”
Sanford-Tilmon said she has not talked to her son yet, but talked to him just two days ago, after he came out of “the hole.” Sanford has experienced ongoing harassment from the guards at the Ionia Correctional Facility, his mother has said. Sanford-Tilmon has five children and just married her long-time fiancé Jermaine Tilmon in July.
Wayne County Circuit Court Judge Brian Sullivan refused to allow Sanford to withdraw his guilty plea on a claim of innocence after Smothers’ confession. The Appeals Court sent the case back to him for an evidentiary hearing, while retaining jurisdiction. The hearing ended up lasting two years. Sullivan repeatedly denied defense motions to allow Smothers or his attorneys to testify, discovery on Smothers’ other cases, and expert testimony.
Kim McGinnis, now Judge at Tribal Court in Santa Fe, N.M.
“This is a big victory for Davontae,” Sanford’s attorney Kim McGinnis, assigned by the Michigan State Appellate Defenders Office (SADO) to the case, said.
“The appeals court vacated the trial court’s decision and sent it back with pretty clear instructions on what testimony should be permitted. It remanded it so that Smothers would have the opportunity to testify, and it said a much lower standard of proof is required to approve Davontae’s request to withdraw his guilty plea than what the trial judge wanted. We can also get into Smothers’ files now on his other cases to show the clear correlations with the Runyon Street killings, and produce expert testimony on false confessions and interrogations.”
The Appeals Court, composed of Judges Mark T. Boonstra, David H. Sawyer, and Christopher M. Murray, heard oral arguments in the case Aug. 6 of this year. Judge Sawyer remarked during the hearing, “There is a chance that we have an innocent man in jail right now,” countering Judge Murray’s evident reluctance to find that Judge Sullivan had “abused his discretion.”
Gabi Silver, Smothers’ defense attorney.
The panel ruled in summary, “[W]e vacate the trial court’s order denying defendant’s motion to withdraw his guilty plea and remand for further proceedings regarding the admissibility of Dr. Fulero’s and Ira Todd’s proposed expert testimony on false confessions and police interrogation techniques . . . and for reconsideration of defendant’s motion to withdraw his guilty plea after affording defendant an opportunity (1) to present attorney Gabi Silver’s testimony regarding Smothers’ statements to her concerning the Runyon Street homicides . . . (2) to present expert testimony that satisfies the remaining requirements of MRE 702 . . . (3) to obtain discovery of Smothers’s other homicide case files and to present admissible evidence revealed by that discovery . . . .and (4) allow Smothers the opportunity to testify if he does not exercise his rights under the Fifth Amendment.” (Click on Davontae Sanford appeals decision 9 26 13 for full opinion.)
Pros. Kym Worthy testified at state legislature against ban on juvenile life without parole.
By press time, Prosecutor Worthy’s office had not responded to a request for a statement on whether she would now drop charges against Sanford, as she just did in a similar case, that of Raymond and Thomas Highers.
The two brothers, who are white, served 25 years in prison for murder until new witnesses came forward saying they saw a group of young Black men enter the victim’s home just before the murder, then heard a gunshot. The brothers were granted a new trial, and expressed shock and elation when Worthy dropped the charges Sept. 25.
“Just as we did 26 years ago, we firmly believe in the evidence in this case,” Worthy said in a statement on the Highers case. “We have worked diligently to bring this case to trial. With the passage of time, it is an unfortunate reality that this case cannot be put back together, and we must dismiss it. Sadly, in this case, justice was not done.”
Taminko Sanford and Mertilla Jones at rally for Aiyana and Charles Jones, and Davontae Sanford April 23, 2012.
Roberto Guzman (shown in top photo, center bottom) a paralegal who has supported the Sanford family with rallies and other actions, said, “We need to push the argument that vis a vis the Highers brothers, the evidence of Devaontae’s innocence is much more overwhelming than the evidence of the Highers’ innocence!”
Sanford has also received support from the family of Aiyana Jones, killed by Detroit police at the age of 7 in 2010. They demonstrated with the Sanford family in front of the Frank Murphy Hall in downtown Detroit earlier this year, demanding justice for Davonate, Aiyana, and her father Charles Jones, who is awaiting a murder trial based largely on statements of “jail-house snitches,” according to his attorney.
Appeals Court found WCCC Judge Brian Sullivan “abused his discretion” in Sanford case.
McGinnis, now a Judge in the Pueblo of Pojoaque Tribal Court in Santa Fe, New Mexico, said she hoped that Worthy would at least allow Sanford to plead “not guilty” and go to trial without further evidentiary hearings in front of Sullivan.
“We’ll be delving into an investigation of all of Smothers’ other crimes, so it will be a little while before we get back to court,” McGinnis said. She said she still must confer with her colleagues in SADO on trial strategy.
In their ruling, the appeals court did find that Judge Sullivan abused his discretion in a number of instances, after first requiring that “the trial court shall assess the evidence of actual innocence and exercise its discretion in determining whether that evidence is sufficiently compelling that it would be an abuse of discretion to not allow defendant to withdraw his plea.”
Wayne Co. Asst. Prosecutors Robert Moran and Patrick Muscat. Moran is prosecuting both Aiyana Jones’ father Charles and her killer cop Joseph Weekley, while Muscat prosecuted Sanford during evidentiary hearing.
The Court said additionally, “We agree with defendant, however, that the trial court abused its discretion by not allowing Smothers’s counsel, Gabi Silvers, to testify regarding Smothers’s statements to her pursuant to Smothers’s waiver of the attorney-client privilege.” It said Michigan Rules of Evidence allow hearsay testimony in such circumstances.
The court also blamed the prosecution, stating, “The error in excluding Silver’s testimony was not harmless. . .The reliability of Smothers’ confession to the Runyon Street homicides was the most significant evidence in defendant’s actual innocence proceeding. The trial court was not convinced that Smothers’s statements to Williams were sufficiently clear and convincing to establish that Smothers, not defendant, was the perpetrator. But neither Williams nor any other officer thoroughly questioned Smothers about the Runyon Street homicides. There is a high likelihood that Silver’s testimony would have provided more details of Smothers’ purported involvement in the Runyon Street homicides.”
House on Runyon Street where killings occurred in 2007.
It also said the Prosecutor’s office could have offered Smothers immunity in return for his testimony, in order to allow his cross-examination.
“The prosecutor’s fairness argument is somewhat disingenuous because the prosecutor ould avoid any perceived disadvantage by petitioning for use immunity under MCL 767.6,” the court said. “ . . . .However, the prosecutor’s own unwillingness to request use immunity for Smothers’s testimony, despite the prosecution’s position that Smothers was not involved in the Runyon Street homicides, is the barrier to cross-examination of Smothers.”
During the course of the evidentiary hearing, Smothers twice invoked his Fifth Amendment rights on the advice of his attorney. But later, he agreed to testify regardless of the consequences in a sworn affidavit and an interview with AP reporter Ed White.
During that interview, Smothers said, “He’s not guilty. He didn’t do it. . . .I understand what prison life is like; it’s miserable. To be here and be innocent – I don’t know what it’s like. He’s a kid, and I hate for him to do the kind of time they’re giving him.”
According to earlier accounts, Smothers decided to voluntarily confess to 12 hit killings, most of them drug-related. He said he changed his mind about his way of life after killing Rose Cobbs, a teacher. She was the wife of a Detroit police officer who commissioned the hit outside a CVS pharmacy in Detroit while the officer was inside. The officer, who later allegedly hanged himself, was said to be having an affair with another woman.
Smothers told White in the interview, “I understand people think I’m a monster. Over the course of my young adulthood, I developed a hard heart where people didn’t matter. When you grow up in the city there’s just certain facts of life.”
The visit of Obama administration to Detroit this Friday can be an important development in restoring hundreds of millions of dollars in federal funds to the City of Detroit to alleviate the financial crisis facing the city. But this will not be the case if Obama’s officials choose to meet with and listen to Governor Snyder, EM Orr, Mayor Bing and other officials who have deliberately withheld federal funds from Detroit to further their agenda of privatization, union busting and subsidies for the banks. Here is a list of concrete ways the Obama administration can funnel needed funds to Detroit by executive order.
Mich. Dept. Human Services head Maura Corrigan and Gov. Rick Snyder withheld federal funds from Detroit Human Services Dept. and forced its closure.
The Obama administration can order the release of hundreds of millions of dollars of CSBG funds to the City of Detroit, under the auspices of the City and administered by City workers. In October 2011, State DHS head Moira Corrigan illegally withheld these funds from Detroit in an effort to force the city to give up the right to administer the grants.
As a result, funds have been withheld from the neediest Detroiters for whom CSBG grants offer rental, heat, and food assistance. Bing and City Council unfortunately capitulated to Corrigan’s illegal acts. Restoring the CSBG grants to the administration of the city, by the same workers who effectively worked the program from years (perhaps minus a few rotten supervisors), would mean dozens of workers would be restored to the city’ workforce. Their wages and benefits would be paid out of the federal grant, helping to put a halt to the deliberately depleting of the pension fund by Snyder.
Services for Detroit’s children like Head Start are desperately needed.
Similarly, the Obama Administration can restore the administration of the Detroit Headstart program to the City of Detroit, which administered it for over 40 years until Mayor Bing inexplicably and illegally ceded control to a Denver based outfit with the consent of the Obama administration. Restoring the administration of the Headstart program to the City of Detroit would immediately bring $25 million in funds to the city, and employ 40 city workers. Like with CDBG, their wages and benefits would be paid out of the federal grant, helping to put a halt to the deliberately depleting of the pension fund.
Protesters from Occupy Detroit and Moratorium Now! outside Detroit home facing foreclosure.
The Obama administration could order Snyder and the Michigan State Housing Development Authority (MSHDA) to immediately remove the impediments it has imposed on the release of the $500 million in federal Helping Hardest Hit Homeowner Funds to serve their purpose, helping homeowners remain in their homes. For example, 10,000 Detroit homeowners face losing their homes to tax foreclosures despite the availability of hundreds of millions of federal funds to pay delinquent property tax bills. Snyder’s and MSHDA’s deliberate withholding of these funds is contributing to the loss of homes, decline in neighborhoods and depletion of Detroit’s population and tax base. In addition, it is contributing to the City’s deficit as Detroit is paying $82 million in chargebacks to the County for lost value of tax foreclosed homes, which could be avoided if the Hardest Hit Homeowners Funds were released. Incredibly, in a recent deposition, Orr did not even know what chargebacks were despite their huge role in Detroit’s deficit.
The Obama administration, through the Securities and Exchange Commission and the Justice Department, could order an investigation of the banks whose subprime lending practices in the city were the major factor in destroying the City’s tax base over the last decade. Similarly, the SEC and Justice Department could launch similar investigations to those carried out across the U.S. with regard to municipal bond practices of banks like Chase, UBS and Bank of America, Libor Manipulation by the banks with regard to Detroit’s bonds, and the use of the ISDA Fix by the banks to calculate termination fees on interest rate swaps. In addition the SEC and the Justice Department should investigate the role of the “ratings agencies”, Standard and Poors, Moody’s and Fitch, in encouraging sub-prime mortgage lending in Detroit, as well as “encouraging” the City to be placed in onerous interest rate swaps in 2005-2006, then lowering the City’s bond rating, placing these bond deals in default to benefit the banks who pay the agencies.
Protest against EM Kevyn Orr and Snyder in Hart Plaza July 12, 2013.
Whenever there is a State of Emergency is declared, it is the policy of the Secretary of Housing and Urban Development to place a 90 day moratorium on foreclosures and foreclosure-related evictions, which can be extended by executive order. Foreclosure moratoriums were put into effect after Katrina and the hurricane in New Jersey. The basis for placing an Emergency Manager and subsequent bankruptcy on Detroit was Snyder’s Declaration of a State of Financial Emergency. Based on this emergency declaration, HUD Secretary Donovan should immediately impose a moratorium on foreclosures and foreclosure-related evictions in the City of Detroit.
• In addition, because Fannie Mae and Freddie Mac, agencies of the federal government, along with HUD, own the vast majority of mortgage loans in Detroit, the Obama administration should stop all foreclosures and foreclosure-related evictions by these federal agencies. In addition, considering the fact that virtually all residential mortgages in Detroit are severely underwater, contributing to people just walking away from and abandoning their residences, the Obama administration should reduce the principal on all mortgage loans owned by Fannie Mae, Freddie Mac or backed by HUD, to the actual value of the home.
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.
