Thursday, December 31, 2009

The Invisible Mayor

The Indianapolis Monthly's Michael Rubino delivers a New Year's present to Mayor Greg Ballard in the form of a critical analysis of his performance in office after two years. I suspect Ballard won't find it a fun read. Rubino's story opens with an event where Ballard is upstaged by the Colts' mascot, Blue, at a charitable event in Riverside Park:

They seem genuinely thrilled to see some guy sweating his tail off in a cartoon horse outfit. And then the unassuming man steps to the microphone.

“Ladies and Gentleman,” a disembodied voice intones, “please welcome Indianapolis Mayor Greg Ballard.”

Ballard receives polite applause and speaks for a short time—a few words about the wisdom of opening a savings account and his wife’s dedication to financial literacy. He makes another pass by the tables and their tchotchkes, and vanishes. The mayor of the nation’s 14th-largest city has been upstaged by a furry blue horse with googly eyes.

The disappearing act has become all too familiar to political observers of both parties—a fade into the scenery that has emboldened Democrats (already lining up, two years before the 2011 election) and frustrated Ballard’s fellow Republicans. “This is a constant struggle, especially within the administration,” says one GOP insider. “In politics, perception often becomes reality. And the real problem is, you can’t keep doing good if you’re not going to go out there and talk about it. It’s hard to get re-elected that way. I mean, when the tree falls in the woods and no one’s there to see it or hear it, it doesn’t make a noise, right?”

The charge isn’t that he is unfit for office. It’s that the office doesn’t fit him and, in public moments, seems to swallow him whole.
Rubino interviews a number of local Republicans for his story, including yours truly. Marion Co. GOP Chairman Tom John recounts an unmemorable first meeting with Ballard in December, 2006 where Ballard first told him that he was planning to run for mayor. Rubino describes how the anti-tax rallies of 2007 transformed Ballard's unlikely win over Mayor Bart Peterson. "At one rally in July, he called for an end to property taxes. “If you don’t cut off the head of the snake,” he said, “it just grows back again.” Ballard had morphed into a populist, promising public safety, tax relief, and an end to “country-club politics.” "Toward the end of the summer, Peterson hurt himself by backing a City-County Council-approved 0.65 percent increase in the Marion County income tax (COIT)," Rubino writes.

This line in his story sums up how I feel about Ballard: "When it comes to Ballard, Gary Welsh feels like he was sold a bill of goods. Worst part is, the political blogger did some of the marketing for the product he now considers faulty." Rubino goes on to detail my frustration with Ballard. "It wasn’t long after the election, though, before Welsh became disillusioned," he writes. "Ballard kept the Peterson COIT increase in place." "He disclosed on an addendum to his 'statement of economic interest' that he had received free memberships to two exclusive golf courses, a Columbia Club membership, and tickets to city sporting events." "In the year following his election, Ballard raised $1 million, most coming from major local law firms and Marion County’s corporate and private heavy hitters."

Rubino talks about State House denizens' frustrations with Ballard's handling of the CIB financial crisis. A GOP insider told Rubino that there was a deliberate attempt to lower Ballard's profile in the deliberations at the suggestion of a key lawmaker. "True or not, the perception remains that the guy who literally wrote the book on leadership did not demonstrate much publicly," Rubino writes “Decisiveness—the ability to reach timely decisions and to communicate them in a clear, understandable manner,” wrote the mayor in The Ballard Rules. “If you wait too long to announce an important decision, then you will be creating unnecessary uncertainty that may result in unintended consequences.”

Rubino chronicles Ballard's extensive travel itinerary since becoming mayor, not always in a positive light. There's the Ballard pickpocket victim at the NCAA Final Four in Detroit last year. There's the rude luncheon guest during a field trip to Denver to study mass transit. And there's his wife, Winnie, by his side on every trip. Rubino also checks in with one of the Democratic candidates for mayor. Melina Kennedy thinks Ballard lacks vision.

So what is Ballard boasting about as his accomplishments? Balanced budgets, reduce crime and improved performance by the Mayor's Action Center. His biggest initiative is still on the drawing board: a new management plan for the city's water and sewer systems. Rubino cites an unnamed GOP insider as claiming Ballard will run again and win re-election. “And he’ll win because, in truth, Indianapolis doesn’t pay attention to mayoral elections until a few weeks before it’s time to vote. They’ll run ads two weeks before the election, which is what people will remember.” Talk about a clueless insider.

Rubino's article is well worth a read during your spare time this New Year's holiday weekend.

Tuesday, December 29, 2009

Ballard Folks Not Reaching Out To Everyone On Straub's Appointment

I'm a big believer in the Second Amendment, but it isn't an issue I wear on my sleeve. Others who feel more strongly about the fundamental right of our citizens to bear arms have been contacting me to express their concern over Mayor Greg Ballard's new Public Safety Director appointment, Frank Straub. Gun owners are alarmed that Ballard has chosen someone with a history of supporting further government regulation of guns. In particular, they point to Straub's support a few years ago in congressional testimony for the federal law banning certain assault weapons. "My own personal perspective is we have way too many guns on the street and way too many people who own guns," Straub told the Star during a recent interview. He complained about the lack of a clear national policy dealing with guns. "The policy has to start at the federal level and then work its way down to the states and to the local level," he said. "Until we control the flow of guns between the states . . . you have a problem."

The Ballard administration seems more concerned about how Straub is perceived among the African-American community than the perception of him among a core constituency of the Republican Party. Ballard made Straub's announcement at Martin University. The first group of people with whom Straub met was a group of 25 black ministers. I suppose that's the same group that's always pimping for your tax dollars to fund their useless "crime-fighting" initiatives. His first interview was with race-baiting radio talk show host Amos Brown. Brown earlier questioned Straub's ability to serve as our city's Public Safety Director because he came from a lily-white suburban city. White Plains, New York, the city where Straub has served in a similar capacity, is actually as diverse of a population as Indianapolis. In his most recent column, Brown has already decided that the native New Yorker is likely doomed to failure. "Past performances by outsiders is the expected ill-omen for the new Public Safety Director Dr. Frank Straub, the first out-of-towner to head this critical agency," Brown writes in his latest column in the Indianapolis Recorder.

Gun rights activists are angered that Ballard seems to care less what they think about his new appointment than what the black community thinks of him. I'm also hearing that Sheriff Frank Anderson has complained to some folks that he was not consulted on the appointment, which a city ordinance apparently makes some mention as a requirement. Gun rights activists have sent numerous e-mails to Ballard's office. A staffer for Ballard, not the Mayor himself, sent e-mails responding to the concern of gun rights activists. The e-mail claimed Straub supports an individual's right to own firearms. "As Public Safety Director, his focus will be to regulate and monitor illegal gun ownership to ensure the safety of our communities," the e-mail reads. That's not good enough for some gun rights activists. I'm told that some activists may appear at the City-County Council committee hearing on Straub's appointment to express their dissatisfaction with his appointment, not that Mayor Ballard will care what they think.

I'm not really concerned that Straub will have any success with his big government ideas about gun regulation. I do think that Straub's views are completely in line with Ballard's current thinking on the issue based upon some of his public statements. Those views are completely at odds with candidate Ballard's views in 2007, but that's the case with most issues. Ballard believes that if he does everything the insider elites tell him to do that he will easily win re-election. I've got news for Ballard. Those folks are laughing behind your back about how they are able to manipulate you like a puppet. When 2011 rolls around, they have no intention of supporting you, even if they are contributing money to your campaign committee.

Monday, December 28, 2009

Did Rokita Let Stifel Off Too Easy?

Secretary of State Todd Rokita has reached a deal with Stifel, Nicolaus & Co. over $54 million worth of auction rate securities the firm sold to some of Indiana's most prominent investors. In October, Rokita brought administrative charges against the firm, alleging securities fraud. Under the terms of the settlement agreement, Stifel will begin repaying the 142 investors over the next two years. Although Rokita's original action charged Stifel with selling investments to its customers that were not suitable and failing to disclose risks associated with auction rate securities, Stifel is not paying any penalties to the state for securities violations and no securities licenses are being suspended. Nobody was required to disgorge commissions earned on the transactions? Also, if Stifel set aside a reserve fund to cover these losses of its customers, then why does it need two years to repay them? Perhaps Rokita shouldn't have been so quick to reach a deal. Are there ties to some of the individuals with Stifel and questionable stock trading activities by Tim Durham and his associates? Just asking. And while we're on the subject of auction rate securities, why do these investors get their money back when the Indianapolis waterworks department had to pay more than $60 million in penalties when it got tripped up in the auction rate bond meltdown?

The Tale Of Durham's 1930 Duesenberg

The sale of a 1930 Deusenberg at Auburn auto action last Labor Day weekend is causing a lot of consternation for Dowagiac, Michigan Mayor Donald Lyons. A Virginia businessman, who paid $2.9 million for the collector car, charges in a federal lawsuit that accused Ponzi scheme operator Timothy Durham, Lyons and others with an interest in the car defrauded him. James Scott accuses persons who held an interest in the car of running up the bid at auction to boost the selling price of the car. A story in the Dowagiac Daily News sheds more light on what transpired. Lyons told the newspaper that he and his wife did not do anything wrong and bid on the car in good faith. The details of the sale, however, don't look real good for Mayor Lyons.

Durham had agreed to sell the classic car to Lyons for $1 million prior to the auction. Because the car had already been advertised, and the museum on the grounds was to receive a donation from the sale of the car, Durham's Diamond Auto Sales was unable to consummate the agreement with Lyons. Instead, Lyons attended the auction with an agent, Mark Hyman. According to Lyons, nobody expected the car to go for more than $1 million at auction, and he fully expected to walk away with the car. Nonethless, Hyman continued the bidding against Scott for Lyons until the price reached $2.9 million. Lyons' last bid was $2.8 million.

The story gets interesting when you see what transpired after the auction. Durham offered to sell the car to Lyons for the original $1 million selling price if he transferred the funds within a week. Durham told Lyons and Hyman they could split the balance of the proceeds from the sale of the car to Scott for $2.9 million. Durham told Lyons and Hyman that he would transfer title to the car directly to Scott. Lyons and Hyman agreed to the deal and received their share of the proceeds from the sale. What they didn't know, according to Lyons, was that Durham never transferred title to Scott. As it turned out, Webster Business Credit Corp. held a lien on the car for money it had loaned to Diamond Auto. Following the sale, Diamond Auto never sent the money to Webster it needed to pay to extinguish the lien on the car. The bank is also named as a defendant in the lawsuit.

What do you think? Are Lyons' hands clean in this deal? The deal Durham offered him sounds an awful lot like the e-mails I receive from some Nigerian heir seeking assistance in obtaining the proceeds of a huge family estate. I just have to agree to facilitate the transfer of funds by handing over my banking information, and I get to keep a portion of the proceeds for just being a nice guy and helping out. We know how all of those deals end. If it looks to good to be true, it probably is. One would think that Mayor Dowagiac would have smelled something when he agreed to transfer $1 million to Durham so he could almost double that amount with his agent. Lyons is, after all, a very successful businessman. If Durham didn't pay off the loan to the bank with the $1 million he received from Lyons, what he do with that money?

Sunday, December 27, 2009

Obama Administration Dismantling Anti-Terrorist Safeguards

In case you haven't figured it out yet, the Obama administration has successfully dismantled basic safeguards to protect Americans from terrorist attacks over the past year. It's more important that we not offend the Muslims than it is to protect the safety and national security of our country. A man named Abdul is allowed to board an international, Detroit-bound flight from Amsterdam with a ticket he purchased with cash, he checks no luggage and apparently doesn't even have a passport. Big surprise when he tries to detonate explosives as the plane approaches its landing over Detroit. Like bin Laden, the terrorist comes from an extremely wealthy family, is well-educated and had been living in a swanky London apartment. His father, a Nigerian banker, had warned the U.S. embassy of his son's radicalized Islamic beliefs at least six months ago to no avail. Abdul had recently traveled to Yemen and may have had contacts with the same al-Qaeda-linked cleric that Major Nidal Hasan conversed prior to his shooting rampage at Ft. Hood that left more than a dozen soldiers dead and dozens of others wounded. The British wisely refused to renew the man's visa after he was placed on a terrorist watch list. Obama's DHS welcomed the man aboard, a decision that nearly ended the lives of at least 278 passengers.

Assessing Indy's Crime Rate

As we close out another year, it seems to be a tradition around this town to assess whether the crime rate in Indianapolis is getting better or worse. The Ballard administration has been telling us all year that crime rates are falling, but if you read the newspaper or watch local TV reports, you would never know that. I've never seen so many bank robberies, hold-ups and home invasions as what has been reported in the media over the past year. Not even downtown is immune from the crime.

For several months, the Ballard administration has been boasting that the number of murders in the city this year will be under 100, a first in several years. The City is telling the public the number of murder victims this year is 97 after the latest Christmas day shooting. "No matter what number it would be, it would be significantly less than what it was last year," Deputy Mayor Olgen Williams told WRTV. "It's still lives lost, but you can be thankful it's not as many as it was."

The website,, has chronicled the City's homicide rate for several years now. The website puts the number of murdered so far this year at 101. That's a big improvement over the 150 homicides reported in 2006. The City recorded 125 in 2007 and 124 in 2008. The highest number of homicides occurred in the City in 1998 when there were 162 homicides. To be sure, there has been fewer shooting deaths this year. I would be curious to see how many persons were shot, stabbed or beaten this year but managed to survive life-threatening injuries because of the excellent care they received from a local hospital. I suspect when those crimes are factored in, the violent crime rate in this City has improved only slightly, if at all.

According to the Indianapolis Star, the number of home invasions in recent years has been on the rise. It looks like Hispanics and low-income households are favorite targets of robbers according to the report. Since Ballard took office, 1,650 residents have had their homes robbed according to the Star. The largest concentration of home invasions occur on the Near Northside, Near Eastside and Near Southside.

Ballard keeps telling us that public safety is job number one. Perhaps it is, but I think any claims that the crime rate has improved since he's taken office are not likely to be taken seriously by the public. You only have to talk around to friends and neighbors to get a sense that things are getting worse. Don Harris told WRTV that he is closing his barber shop after 40 years of business because of the crime problem. His northeastside shop has been held up twice in the past couple of years.

Thursday, December 24, 2009

Merry Christmas

I'll be blogging sparingly until after the first of the year. Enjoy the holidays.

Most Area Contractors Shut Out Of Wishard Project

Sometimes the "Letters to the Editor" in the Star provide more information than the actual news stories. John M. Jaffe II pens a letter today saying that 80% of Indianapolis area contractors will be barred from the project. The Project Labor Agreement announced for the project according to Jaffe will allow only union contractors to bid for the work. Jaffe writes:

When citizens overwhelmingly voted for the city to help Wishard launch the project in November, we expected this private (non-government) project would provide jobs and boost our struggling construction industry. It now seems that most of us will instead get to watch as the same contractors that competed for the Central Library, Convention Center, airport expansion and Lucas Oil Stadium go shoulder to shoulder again while the remaining 80 percent of local construction contractors struggle to survive these economic times.

The PLA agreement will stipulate that only union labor can be employed on the project. Approximately 80 percent of all construction contractors in the Indianapolis area of the state are open shop (non-union).
I'll correct Jaffe on one point. The Wishard project is not a private project; it is a public project funded with public tax dollars.

I've said it before and it bears repeating. The construction cartel has a stranglehold on Indianapolis politicians. Their generous campaign contributions help ensure a steady pipeline of projects for them. Because this is a public works project, the law requires the government to pay the common construction wage, which is essentially the prevailing union wage rate. Non-union contractors can perform work on public works projects as long as they pay that rate; however, by limiting the participants to union shops only, the construction cartel can eliminate much of the competition for these projects. It's no surprise that the mayor's chief of staff and a lobbyist for the Greater Indianapolis Chamber of Commerce announced they were going to work for major Indianapolis area construction companies shortly after the passage of the Wishard referendum--their reward for a job well done.

Wednesday, December 23, 2009

Daily Durham Roundup

It's not looking like a holly jolly Christmas for businessman Tim Durham. The IBJ's Greg Andrews is reporting today that Durham's Obsidian Enterprises will be vacating its top shelf office space atop the Chase Tower in downtown Indianapolis in January. According to Andrews, the business hasn't been paying its rent and has agreed to give the space up.

The Star's Ted Evanoff has an interesting story about the second lawsuit investors brought against Durham's Fair Finance in a Ohio state court. Speculation abounds that this lawsuit, which does not name the roughly three dozen plaintiffs, involves the Amish. Evanoff says the Amish had been investing in the company for a generation at the time Durham bought the company from its Ohio owner in 2002. "Although no one has identified any of the plaintiffs in the lawsuit, two actions give people in Wooster and surrounding towns reason to believe some Amish families may have been caught in the Fair Financial case," Evanoff reports. "First, the lawsuit was filed by an established Wooster law firm known to Amish families," he says. "And, second, a legal procedure appears to have been employed to conceal the identity of 20 plaintiffs. Evanoff continues, "An organization called a limited liability company was formed to press the legal action against Fair Financial." "In Ohio, lawyers say, these so-called LLCs need not disclose their members in public."

There He Goes Again

Despite running on an anti-tax pledge as a candidate, Mayor Greg Ballard hasn't seen a tax increase he doesn't like since becoming mayor. Just call him tax and spend Ballard. Ballard plans to raise dozens of business fees to offset money he says the City will lose when the property tax caps kick into effect. I guess he's forgotten the tens of millions annually the City saved when the state picked up our unfunded pension liability and welfare costs last year and the higher sales tax we're all paying to offset the impact of property tax caps. According to the Star, the Ballard administration has no estimate of how much these fee increases will generate. The administration supposedly relied on the estimates of a private accounting firm the City hired to determine the true cost of administering each of the services. One hotel operator told the City he couldn't recall when anyone from the City had ever inspected his large downtown hotel despite paying an annual fee to the City. If you want to predict a future action by Ballard, just watch what Mayor Richard Daley is doing in Chicago to shore up his huge budget deficit. Ballard will follow along behind him with a similar proposal for Indianapolis. And for those who will say that a fee increase is not a tax increase, sorry, but those are the rules the Republicans set in 2007 when they determined how many tax increases occurred on Bart Peterson's watch.

Tuesday, December 22, 2009

Can Someone Explain These Higher Ed Cuts?

The Daniels administration ordered $150 million in cuts to higher education in response to plummeting state revenues from the Obama Depression. The cuts were unavoidable, but I'm having a little trouble understanding why one of the most affordable four-year colleges in the state is having to absorb the largest percentage cut. Indiana State University is being asked to absorb a 6.64%, or $10.4 million cut over the next 2 years. By comparison, fake college Ivy Tech is being asked to absorb the smallest cut of any higher education institution (and I use that term lightly in reference to Ivy Tech) of 3.4%, or $11.9 million over the next two years. Ivy Tech is best known for its ghost employment practices for the benefit of political hacks. It hires whatever political hack in make-work jobs the State House denizens order it to hire to secure its budget funding every two years. If only we had a real prosecutor in this town, we could put an end to that practice and the foolish, lavish funding of this fake institution. The higher education commission should be ashamed for letting off Ivy Tech so easily on the budget cuts.

Indianapolis Golf Course Bidding Process Raises Concerns

Ron West's R.H. West company opened the door to Indianapolis' nearly 20-year experimentation with the privatization of the City's golf courses. The administration of former Mayor Stephen Goldsmith awarded the first privatization contract for a city golf course to West's company in 1993 for the Winding River golf course in Decatur Township. Smith's company expanded the facility from a 9-hole course to an 18-hole course, including $1.6 million in capital improvement investments consisting of $400,000 of his own money and another $1.2 million in funds he borrowed from the bank. When the City sought proposals to rebid the contracts for the management and operation of the City's golf courses through an RFP process, West submitted a bid to continue operating Winding River and a new proposal to run Smock. Instead, the City's parks department chose another operator to take over Winding River and rejected West's bid for Smock without even the courtesy of a phone call or letter. He had to learn from a third party that he had lost out in the RFP process after nearly 17 years of successfully operating Winding River.

The City's experimentation with privatization of golf courses has been a big success and the Ballard administration is wise to continue this approach to running them. The parks department pays nothing to operate and maintain the golf courses under the privatization agreements. The City saves the cost of paying salaries and benefits to the employees, as well as all capital improvements to the facilities, which the private operators agree to absorb under the terms of the public-private agreements. The private operators returned about $1.25 million to the City on total golf course sales of approximately $9.2 million this year.

According to the IBJ, the City actually expects to receive less money from the private contractors under the new agreements the Ballard administration plans to execute with them than it currently receives. Annual revenues are expected to drop by two-thirds to just $400,000 to $450,000 annually. City parks director Stuart Lowry told the IBJ that the smaller revenues were worth the nearly $6 million in new improvements the parks department expects private operators to make over the next 10 years.

Instead of allowing West to continue operation of the Winding River golf course, the parks department has decided to award the contract to a company owned by Jerry Hayslett, who has had the contract to operate Eagle Creek since the Goldsmith administration. Hayslett is also being awarded a contract to operate several other city golf courses as well. This is very troubling to West. He testified before the City Council's Parks & Recreations Committee last week about his concerns. He noted that Hayslett had defaulted on a contract with the City of West Lafayette to operate golf courses there and simply walked away. According to West, a major vendor for the City's golf courses wrote a letter to Lowry complaining that Hayslett would not pay for the chemicals his company had supplied to him for the city golf facilities he manages.

West sought to inform the City-County Councilors present at last week's meeting about the way the private operators are able to borrow money to operate the golf courses. As West explains, a bank would never loan the money to a private operator to make capital improvements to the golf courses because they would not be able to lien or mortgage the city-owned facilities. To allow a private operator to find private financing, the City agrees to a termination fee in an amount that allows the private operator to repay any borrowed funds for capital improvements. That acts as security in the event the City decides to terminate the private operator's contract early due to dissatisfaction with his services.

In its proposal for Winding River, West agreed to pay off the balance of his $1.2 million loan and make new capital improvements at the facility of at least $860,000 during the first two years of a new agreement. He also agreed to share 5% of the sales revenues with the City. Winding River currently generates about $20,000 a year in revenues to the City after crediting the private operator with its $1.6 million in capital improvements. By all accounts, Winding River has enjoyed success and has been well-managed by West despite the introduction of several new golf courses near the Decatur Township golf course, which is generally less-populated than other areas of the county, and the loss of business the course lost when the City closed a bridge over White River providing access to the course for nearly a year.

By comparison, Hayslett has been fortunate to have a contract to operate Eagle Creek, perhaps the City's best golf course. Despite being one of the City's best golf courses and having 36 holes, Hayslett only pays about $42,000 a year to the City on annual sales of $1.1 million. Some smaller golf courses pay considerably more to the City. Sahm is generating $325,000 in annual revenues to the City on almost $100,000 in fewer annual sales. Pleasant Run returns $189,000 a year on annual sales of just over $750,000. According to West, Eagle Creek has actually declined under Hayslett's tutelage in terms of sales given the course's popularity and size.

Instead of awarding the contract for Smock to West, the City chose R.N. Thompson, which currently operates Coffin, Riverside and the Golf Academy. Coffin and Riverside are among the lowest performing golf courses in the City. The City likes the idea that Bob Thompson, owner of the R.N. Thompson, contributes to St. Mary's Child Center, a free preschool that serves 200 children around the city. The City suggests it needed to expand R.N. Thompson's stake in the city golf courses to continue that benefit for 200 children.

So why did West get shut out? He thinks it has a lot to do with politics. Hayslett is friends of former Mayor Goldsmith. He has also donated generously to the political campaigns of Republicans and Democrats alike over the years. One of the largest recipients of his political contributions has been Mayor Ballard. Hayslett contributed $4,000 to Ballard in 2008 alone. Campaign finance reports for 2009 contributions are not due until next month. West, on the other hand, is a well-respected businessman, who also serves on the Johnson County Council as a Republican. West's business operates a number of golf courses in Indiana.

I applaud West for having the courage to come forward and express his concerns to the Parks & Recreation Committee. Unfortunately, none of them seemed to really give a damn. The Democratic councilors on the committee, all African-Americans, seemed primarily concerned about whether minority contractors were being taken care of. Councilor Monroe Gray assured them they were being taken care of. The Republicans on the council seemed peeved that West had even bothered to waste their time with his testimony. With that, the committee gave its blessing to the new contracts. West warned them that the City could be left holding the bag if any of the private operators failed. By any objective standard, West's company would have had to score higher on his proposal than the one submitted by Hayslett for Winding River. It is troubling that the City would decide to award more facilities to Hayslett in the face of some troubling signs about his financial status. West is right. It smacks as politics at its worst.

Durham: I'm Shocked, Shocked By These Allegations

Indianapolis businessman Timothy Durham finally made his first appearance in the Wall Street Journal (subscriber accessible only), but I suspect it's not the story he once envisioned. In a rare interview since federal agents executed search warrants on his businesses last month and accused him of running a Ponzi scheme, Durham told the WSJ's David Kesmodel that he was shocked by allegations of wrongdoing on his part. "In an interview, Mr. Durham, 47 years old, said he was shocked by the FBI raids and feels 'emphatically' that the allegations 'weren't true,'" writes Kesmodel. Explaining why he loaned so much of Fair Finance's funds to businesses he controlled, Durham responded that he believed it was better "to invest in companies that you know the most about." "Such related-party loans were disclosed to investors and Ohio regulators," Durham told Kesmodel.

Kesmodel's story notes the political fallout from the Durham investigations. He cites the withdrawal of Tim Motsinger from the sheriff's race because "after returning all of Mr. Durham's campaign contributions . . . the loss of that money meant he couldn't compete." "The county's Republican prosecutor, Carl Brizzi, wrote on his blog that he 'should have conducted greater due diligence' before joining the board of one of Mr. Durham's firms this year," Kesmodel writes. He also quotes a spokeswoman for Gov. Daniels as saying he will not return the $195,000 Durham contributed to his campaign because the money is already spent.

Fishburn Running For Sheriff

WRTV is reporting that Sgt. Dennis Fishburn is running for Marion County sheriff as a Republican. The original candidate backed by the country organization, Tim Motsinger, was forced to drop out of the race after it was revealed that he had received a six-figure loan from Tim Durham, who is under investigation by the feds for running a Ponzi scheme. Another career law enforcement officer, Bart McAtee, is also seeking the Republican nomination. His father served as sheriff for eight years. WRTV explains Fishburn's entry into the race:

Fishburn said he decided to run after former Republican candidate Tim Motsinger dropped out of the race because of his ties with embattled businessman Tim Durham.

"At that point, I just felt like my calling was there and I should come forward," Fishburn said. "I know it's late in the game, but … I like being the underdog, because it just makes you work extremely hard."

Fishburn spent a lot of time fighting for justice for his son, Officer Jason Fishburn, who was severely wounded by Brian Reese in a July 2008 shooting.
If I'm being honest about Fishburn, his desire to capitalize on the tragic shooting of his son, also an IMPD officer, while in the line of duty is a bit unsettling to me. He could hardly contain his enthusiasm for standing in front of the TV cameras. Also, the guy has a been a police officer for 26 years (with the sheriff's department) and has only rose to the rank of sergeant. That should tell you something about his leadership skills.

Some of the Republican Party leadership have a beef with McAtee because his family backed Sheriff Frank Anderson, a Democrat, after his father lost a primary race with Lawrence Mayor Tom Schneider. Then-Sheriff Jack Cottey backed Schneider in that race. Cottey ordered an employee of the sheriff's office to manipulate the crime statistics to make it appear that crime had gotten worse when Joe McAtee had served as sheriff. Schneider's campaign used those manipulated statistics to smear McAtee in the primary. Sheriff Cottey lost a whistleblower lawsuit in federal court brought by an employee who Cottey fired that wound up costing taxpayers hundreds of thousands of dollars. That incident, along with Schneider's corrupt Lawrence water utility deal that enriched his political pals at the public's expense, led many Republicans to back Anderson in that race.

If the Republican leadership is going to try to force Fishburn down the throats of precinct committeepersons during next year's slating just to deliver a middle finger to the McAtees, then they had better find something in Fishburn's career that distinguishes him besides the fact that he likes standing in front of a TV camera talking about how his son got shot. Some of us tend to think a little more deeply about who our candidates should be than others. And while we're on the subject, if the Republican leadership in this county gave a damn about its credibility, it would have asked Marion Co. Prosecutor Carl Brizzi to step down so that someone else can be appointed to his office to clean up the mess he's created for himself and his office rather than looking for an opponent to run against McAtee. Do they not comprehend what a drag on the Republican ticket Brizzi will be next year if he is still in office?

UPDATE: Has anyone else noticed the Marion County GOP's website is still dark? The lights went out on it about the same time as most of the staff walked out the door and rumors swirled around about an embezzlement of funds and bounced checks. Does anyone care that the county party is sinking under the leadership of Ice Miller lobbyist Tom John?

Monday, December 21, 2009

Investors File Another Lawsuit Against Fair Finance

Lacking confidence that government prosecutors will take action to recover their money for them, investors in Fair Finance Co. filed another lawsuit in a Wayne County, Ohio state court today. The lawsuit seeks to recover $2.19 million invested in Fair Finance in the form of certificates of investment by 36 investors. The suit complains that investors are unable to redeem investments that have matured or receive interest payments from the company since it closed its doors on November 23, 2009 after federal agents executed a search warrant on the company's Akron, Ohio office and accused the company's owner, Tim Durham, of running a Ponzi scheme. The suit accuses Fair Finance of violating Ohio's securities law and engaging in fraud by making untrue statements to investors.

“As of today, we are confident of the allegations made in the Complaint, although we do not have enough information to make any prediction on the availability of funds to pay these claims," said J. Douglas Drushal, attorney for the investors. "Things are clearly amiss within Fair Finance and the misdeeds of its management have already caused considerable damage to its Certificate holders," Drushal continued. "In many cases, these investments represent the life savings of people who cannot afford to lose this money." "In other cases, the investments were college savings funds for children, or funds held for support in retirement." "If Fair Finance cannot make good on its obligations, it will have a devastating impact on very many lives." "We intend to leave no stone unturned in pursuing recovery for these plaintiffs." We also anticipate additional plaintiffs joining in the lawsuit in the near future,” Drushal concluded.

A class action suit was filed by attorneys in Indianapolis representing Ohio investors a couple of week ago in the federal district court in Ohio. “This case differs from the class action lawsuit filed recently in Summit County, in that our Complaint is just filed on behalf of the individual investors named as plaintiffs," an attorney for the investors stated. "By pursuing individual claims, our plaintiffs will maintain complete control over the resolution of their specific situation." "Being a local law firm, we are also able to be in direct contact with our clients in handling their individual questions."

Sunday, December 20, 2009

Obama Health Care Plan Includes $100 Million For Wishard Hospital?

I guess Sen. Evan Bayh agreed to support a massive government take-over of the health care industry in exchange for a $100 million give-away for the new Wishard Hospital boondoggle in Indianapolis. Powerline figured out that mystery funding language in the Senate bill points to the Wishard project:

A good candidate for the mystery $100 million may be Wishard Memorial Hospital in Indianapolis, Indiana. Wishard recently won approval for construction of a new hospital in downtown Indianapolis. If Wishard is not the intended beneficiary, they can make a credible case that they should be eligible for a share of the money.

Under Section 10502 of the Reid Amendment, the beneficiary of the $100 million must be "affiliated with an academic health center at a public research university in the United States that contains a state's sole public academic medical and dental school." Is it affiliated with an academic health center? According to its Web site: "Wishard is proud to be one of the leading providers of healthcare in the city of Indianapolis with physicians of the Indiana University School of Medicine providing a comprehensive range of primary and specialty care services." Are they owned by the University of Indiana? No. Are they affiliated? Looks like they are.
Hat tip to Scott Fluhr at Hoosierpundit.

UPDATE: AP is reporting that the money is intended for a hospital project in Connecticut that Sen. Christopher Dodd supports, although projects in other states, including Indiana's Wishard Hospital could vie for the money. So what's in the health care plan for Indiana for Bayh's vote? It seems there were big pay offs in the bill for just about every other wavering Democratic senator.

More On The Chicago Way

Dorothy Brown is the Cook County Circuit Court Clerk. The Democrat officeholder is running for a more powerful position, Cook County Board President. According to the Sun-Times' Michael Sneed, public aid recipients in Chicago may have been forced to circulate her nominating petitions for Cook County Board President as a condition to their receipt of public benefits. "Several public aid recipients, who have been called before the grand jury twice, complained they feared they'd be dropped from the job-training program (which is administered by the state Human Services Department) if they didn't circulate Brown's petitions as part of their training," Sneed writes. And who would be in charge of their job training program? "The recipients were receiving job training at Mother's House, a South Side social service agency managed by Hassan Muhammad, who, until recently, was a field director of Dorothy Brown's campaign," Sneed writes.

Sheila Kennedy Heads Over To The Dark Side

Although she called herself a Republican most of her adult life, these days former ACLU director and IUPUI political science teacher Sheila Kennedy has moved as far to the left as one can possibly move without declaring herself a communist. A perfect case in point is a comment she recently posted on her Facebook site in response to the Senate debate over the abortion language in the Obama health care plan. Hoosier Access' Josh Gillespie picked up on her hate-field screed directed at two moderate senators, Sen. Joe Lieberman (I) and Sen. Ben Nelson (D):
IUPUI professor and columnist for the Indianapolis Star Sheila Suess-Kennedy made a shockingly hate-filled statement on her Facebook account when commenting on the current health care debate in the Senate:

“I hope there really IS a hell, and that people like Joe Lieberman and that Nebraska Senator who would prefer that existing people die in order to prevent the aborting of potential people rot there forever.”

Potential person? The unborn human baby is not “potentially” a person, as if there is also the potential that he or she will be born a horse or an iguana. Left to the normal course of nature, a human fetus turns out to be (wait for it…) a human. The question is never whether or not the fetus is a person, but whether or not that person will be allowed to live or at least have a chance at living. The question is whether or not our society thinks it is moral to take life from innocents just because they have no voice at the moment.

The irony, of course, is that Sheila Suess-Kennedy evidently feels that it’s immoral and outrageous for people to want to protect innocent life, while at the same time having no scruples about condemning (even in theory) someone to everlasting punishment for having a view of life that conflicts with her own.

Unfortunately, this is not an isolated action on Kennedy's part. I noted during last year's presidential campaign how completely unhinged she became when Sen. John McCain named then-Gov. Sarah Palin, a pro-life mother of a child with Down syndrome, as his running mate. Kennedy's hatred for Palin (and McCain for that matter) was downright disturbing. As I wrote then:

Has anyone noticed how Sheila Kennedy has become completely unhinged over Palin's selection? Her recent blog entries over at the American Values Alliance rely heavily on the Daily Kos for sourcing and are just about as reliable. On McCain's decision to pick Palin, she writes, "It's also profoundly insulting to women, although I doubt the wrinkly old white guy realizes that." Unconcerned about accuracy, Kennedy said of Palin, "No doubt, voters will note those comments come the fall, along with her abuse of power issues, 2000 Pat Buchanan support and her hard-right creationism." Here, Kennedy jumps from hitting Palin for minimizing Obama's "community organizing" experience to accusing her of spitting in the face of parents with special needs children (Palin is one): "Decades ago, before the ADA and a raft of other legislation, schools had essentially no requirements to provide decent education for special needs children. Then a movement of parents, engaging in -- gasp -- community organizing changed that. And they continue to fight day in and day out for educational equity for children like Sarah Palin's. Too bad Sarah Palin just spit in their faces." Wow, Sheila! Do you really hate Sarah that much? And you're calling John McCain "despicable"?

When I first met Kennedy a few years back, it would have been hard for me to imagine those words coming from her mouth. Kennedy contacted me to compliment me on my blog and asked to have lunch with me. We had a very pleasant lunch together and then sometime later, after I posted some things that didn't sit well with her increasingly far left views, she turned on me with a vengeance. The tension I feel from her when I run into her in the grocery store couldn't be greater. If looks could kill, I would have been dead by now. I've since had conversations with some of her students and one of her colleagues at IUPUI. They all shared the view that Kennedy exhibits extreme bias against persons with whom she politically disagrees. Students expressed fear that she would give you a lower grade if she didn't like your political views. So much for all her talk about civil rights, eh?

UPDATE: To her credit, Kennedy now acknowledges that her comments were "uncivil."

Saturday, December 19, 2009

Water Company Spends More Than A Million On Rate Increase Request

WTHR's Mary Milz has a mind-blowing report on how Indianapolis Waterworks has spent more than $1 million on its efforts to increase water utility rates for Indianapolis residents this past year. Much of the money has been spent on lawyers and public relations representatives. The waterworks' executive director, Matt Klein, sounds like a complete buffoon trying to explain to Milz why he needed a public relations representative from Sease Gerig & Associates standing next to him while she interviewed him. Here's a bit of Milz' story:

Waterworks Executive Director Matt Klein joined the utility in March. "I know it's cost a lot. I'm not happy. I'm a rate payer too," he said.

Most of the $1.1 million, more than $700,000, has gone toward attorney fees, some as high as $445 an hour. That has Hunter wondering why city attorneys couldn't do the job or at least play a bigger role in the case.

"The rate case is a particular kind of regulatory act and we need to bring in people, lawyers and consultants with expertise, who know how to prosecute a rate case," said Klein.

Waterworks has also hired engineering, accounting and communications consultants.

After the utility lost its communications specialists in September, it signed a contract with Sease, Gerig & Associates. The contract calls for paying the firm up to $170 an hour to "assist in communicating...the need for the proposed rate hike," to work with members of the media, be a resource to Waterworks staff and "work with local government officials as needed to implement the strategic plan necessary to obtain IURC approval."
Republican City-County Councilor Benjamin Hunter expressed his outrage at how much money the water company has spent on consulting work. "Couldn't that duty be spread to someone else in the organization? Could someone else pick up the tab or could a city [public information officer] assist them in the meantime?" said Hunter.

Suffice it to say that the Ballard administration has been an utter disappointment when it comes to its handling of the water company. The corruption in its administration began under the Peterson administration when the former mayor negotiated a deal that called for the City to purchase the utility for more than double its actual value. That deal was loaded with consulting agreements that spread the wealth around to fatcat political cronies. That was followed by the one-sided privatization agreement with Veolia, which made even more fatcats a lot of money. Then there was the ill-fated decision to switch out of long-term bonds to variable rate bonds with all of the attending consequences and risks, which set taxpayers back at least another $60 million.

The Ballard administration made the Veolia contract even worse from the standpoint of the City's residents. It now wants to sell off the water company to a public benefit corporation; however, it first wants to jack water rates another 35% (that translates into a doubling of water rates under Ballard) to increase the value of the water company to a purchaser so it has a windfall of money to spend on public works-related projects. Again, the big winners will be the fatcat contributors who've donated millions to Ballard's re-election campaign committee since he took office two years ago.

More Fraud Allegations Against Tim Durham

He's been accused by the federal government of running a Ponzi scheme with his Ohio-based Fair Finance Company. The SEC is investigating him for securities violations regarding his acquisition and control of CLST Holdings. Now, Tim Durham is accused of pumping the price of a 1930 Duesenberg built for the publishing scion William Randolph Hearst that he sold at an auction in Auburn, Indiana in September for $2.9 million according to a report by the IBJ's Greg Andrews. He explains these latest allegations against Durham:

A Virginia businessman is suing Tim Durham, alleging he and other defendants committed fraud by manipulating the September auction of one of the Indianapolis businessman’s prized vehicles, a 1930 Duesenberg built for publishing scion William Randolph Hearst.

The plaintiff, James F. Scott of Charlottesville, Va., agreed to buy the vintage car for $2.9 million—a price Car Collector magazine called “amazing, particularly in these notoriously difficult times.”

The publication noted the price was $2.3 million higher than when it last changed hands, in 2003. After auction bids reached $850,000, just two people—Scott and Mark Hyman of St. Louis—dueled all the way up to the final price.

“The transaction has no relationship at all to ‘value,’” a Car Collector reporter wrote. “It’s just the stubborn determination of two bidders to have what I want when I want it, and having the resources to back it up.”

But now Scott—who participated in the auction at the Auburn Cord Duesenberg Automobile Museum in Auburn by phone—is crying foul. He alleges Hyman, owner of Hyman Limited Classic Cars, made his bids in consultation with Donald Lyons of Dowagiac, Mich.—“each of whom were stakeholders and/or owners of the automobile.”

As Andrews notes, the federal lawsuit filed in Fort Wayne does not detail the alleged financial relationship between Durham and the other bidder, Mark Hyman, who competed with Scott to purchase the classic car; however, he notes Durham attended the auction and sat with Hyman. "Worse, the suit says, the sellers have failed to provide Scott title to the Duesenberg, even though he has paid," Andrews writes. "According to the lawsuit, the auction house disbursed the full $2.9 million to Hyman," Andrews continues. "He then returned $1.95 million, and that money was routed to Lyons, a wealthy car collector who serves as Dowagiac’s mayor." "The suit seeks to rescind the sale and seeks triple damages—a sum approaching $10 million."

Dowagiac Mayor Donald Lyons becomes the latest politician tripped up in the scandals surrounding Tim Durham. The three-term mayor was re-elected to a fourth term last month.

Bankruptcy Trustee Accuses Councilor Bateman Of Taking Over One Million Dollars From Foundation

WRTV's Jack Rinehart first broke the story more than a year ago about how City-County Councilor Paul Bateman and other may have bilked a local non-profit organization, the Russell Foundation, out of more than one million dollars. Marion Co. Prosecutor Carl Brizzi declined to investigate, saying he had referred the matter to local U.S. Attorney Tim Morrison's office, where the investigation has languished since. A federal banruptcy trustee, however, is taking action to recover $1.3 million missing from the group from Bateman and others according to the Star's Jon Murray. As part of the alleged scam, Bateman and others are accused of cheating Dr. Arthur Sumrall out of $1.7 million, his entire life's savings. Murray writes:
Court filings contend that Paul Bateman, a Northeastside Democrat, was among at least eight people connected with The Russell Foundation who used its money on personal expenses, leading the economic development group into bankruptcy by May 2008.
Bateman, who has denied any financial abuse, is accused of misspending the largest amount. The others, including the foundation's founder, the Rev. Michael Russell, allegedly misspent a combined $600,000, according to complaints filed in U.S. Bankruptcy Court in Indianapolis in recent months.

Bateman, Russell and Manuel Gonzalez, a Carmel business consultant, were named in search warrants served in July 2008 by Marion County grand jury investigators.
Russell sparked the investigation by reporting the missing money to the prosecutor's investigation unit after the bankruptcy was filed, according to his lawyer.

No criminal charges have been filed, but the recent bankruptcy filings mark the first public attempt to assign financial responsibility for the foundation's decline.
So what did Bateman and his alleged co-conspirators do with the money? The bankruptcy trustee offers us a hint:

Court filings show Russell's group spent money on dress clothes and other perks for its volunteers. It purchased more than a dozen vehicles, including a stable of 2007 Dodge Caliber compacts, a 2007 Cadillac Escalade and several pickup trucks.
Another expense: $29,634.45 in dental costs for Russell, which he addressed in a response to the court last week, denying any misuse.

You can find earlier posts on the Russell Foundation here, here and here.

Brizzi Wants To Be Donald Trump Too

He's supposed to be the full-time prosecutor of our state's largest county. In recent weeks, we've learned about Marion Co. Prosecutor Carl Brizzi's penchant for following the stock investments of alleged Ponzi scheme perpetrator, Tim Durham, his largest campaign contributor, ala Martha Stewart. Now it emerges that Brizzi has been busy trying to become the next Donald Trump in the world of real estate investment with another political insider, John Bales.

Advance Indiana first made a financial connection between Brizzi and real estate developer John Bales more than a year ago when I disclosed Brizzi's participation in a proposed $30 million real estate venture headed by Bales that intended to buy up distressed properties in Florida's one booming real estate market. At that time, controversy erupted over the Ballard administration's decision to award a no-bid contract to Bales to help dispose of "surplus" park lands. Last week, Advance Indiana exclusively reported on Brizzi's investment in another Bales real estate venture, Curtailing Investments, LLC. Borrowing heavily on my original reporting (without attribution, of course), the IBJ's Cory Schouten uncovers more real estate investments by Brizzi since he became prosecutor seven years ago, mostly involving deals with Bales. One of Bales' companies initiated a deal that landed a lease for the office building where the prosecutor's office leases 72,000 square feet.

Brizzi first made news with his investments while in office two years ago when he emerged as one of five investors in Harry & Izzy's, a new restaurant chain launched by the owners of St. Elmos steakhouse, along with the Colts' superstar quarterback, Peyton Manning. Although Brizzi is barred under Indiana law from holding an interest in a liquor license because he is a law enforcement officer, he got around the bar on his 10% ownership stake in Harry & Izzy's that was raised by the state's ATC by getting an opinion letter from his friends in the state's Attorney General's office that carved out an exception for him.

While the Harry & Izzy's story garnered public attention, Brizzi's other real estate investments have largely gone unnoticed until now. According to Schouten's story today in the IBJ, Brizzi invested in the development of a Key Bank branch in Broad Ripple in 2005 as part of his investment in Curtaiing Investments, and he took an ownership interest in an office building in Elkhart, Indiana, which recently received a lucrative state contract to lease most of the space in that building for the state's Department of Children Services. Brizzi also considered buying an interest in property that is home to the Cafe Patachou restaurant at 49th Street and Penn earlier this year. Neither Brizzi nor Bales would return calls from the IBJ seeking comment from them on their real estate investments.

Schouten's story raises questions about whether Bales and Brizzi received a sweetheart deal from the state on the lease of the Elkhart property. Brizzi disclosed on his federal disclosure statement he filed earlier this year when he briefly considered a bid for U.S. Rep. Dan Burton's fifth district seat an interest in L & BAB LLC, owner of the Elkhart real estate, that’s worth $50,000 to $100,000. "One such building is at 1659 Mishawaka St. in Elkhart, where the Department of Child Services agreed in July 2008 to lease 13,000 square feet for $19.12 per square foot, or $248,500, per year," Schouten writes. "It’s one of the highest per-square-foot rates for a state agency, and well above the $6-$10 range for available Elkhart office space listed on LoopNet," he continues. "Other state agencies pay less for space in downtown Indianapolis." Unbelievable. We're paying more to rent real estate space in economically-depressed Elkhart than we are in downtown Indianapolis?

Brizzi also borrowed $325,000 in 2004 to invest in a couple of condominiums at a Broad Ripple condo project known as The Reserve. That project was developed by Bales, Steve Pittman and Barnes & Thornburg's Ben Pecar. Pecar, incidentally, was involved in that Florida real estate venture with Bales and Brizzi as well. It looks like Brizzi was able to flip both of those condos for a quick profit. He made $24,000 on one of the units he sold in 2006 according to Schouten. Brizzi owns a stake in two other companies, Vergina, LLC and CJB Management, LLC, according to Schouten, although I believe they may be one and the same, the latter being the name to which he changed the former, which appears to carry a sexual connotation.

So the question becomes: How can Carl Brizzi afford all of these investments on his $125,000 a year salary as a prosecutor, not to mention his stock portfolio? According to his divorce documents, he and his ex-wife owned three homes together, each with first and second mortgages. Brizzi is paying $1,000 a month in child support to his ex-wife for the couple's four children. Ironically, an ethics expert tells Schouten that it does not appear that any of Brizzi's investments violated the City of Indianapolis' ethics ordinances. Actually, Brizzi is considered a state officer. That is why he files a financial disclosure statement with the State of Indiana and not the City of Indianapolis. A tough federal prosecutor would likely find plenty of legal wrong with what has been publicly disclosed to date about Brizzi's investments. If this were Chicago instead of Indianapolis, U.S. Attorney Patrick Fitzgerald would have already convened a grand jury and began issuing subpoenas to investigate Brizzi. But we have interim U.S. Attorney Tim Morrison, the guy who inexplicably unfroze Durham's assets days after filing a forfeiture action in the U.S. district court in Indianapolis.

I'd rather not sit around and wait so see what happens to Brizzi. I will once again renew my call as an elected Republican precinct committeeman for Brizzi to resign his office immediately so we can appoint someone to clean up his tarnished office, and to run for election to his office next year.

Thursday, December 17, 2009

Espich: We've Been Had By The CIB

It takes a little longer for some folks to catch on to what I've been telling you for some time now: Indianapolis' Capital Improvement Board operates like a classic Ponzi scheme. Rep. Jeff Espich (R-Uniondale) is apparently the newest believer. He is reacting with outrage to the announcement this past week that the CIB is considering a proposal by Indiana University-Purdue University to divert millions of dollars in revenues intended to maintain the CIB's facilities to pay for repairs to the Natatorium. In a press release entitled "Rep. Espich Outraged With Indianapolis CIB," Espich has these words to say about this latest saga surrounding the CIB:

“I must be missing something,” said Rep. Espich. “Just a year ago, state government and the public were told that the CIB was broke and tens of millions in operational shortfalls were occurring annually. The state was asked to help ‘bail out’ the CIB. Many members of the General Assembly worked long hours to investigate, review and propose solutions.

“The legislature acted to provide additional state revenues and new taxes to help solve the problem. As a result of this assistance, Hoosier citizens are now paying more taxes. Now, we hear the suggestion that the CIB has so much money that some of the funds could be granted to others. If the CIB has extra funds, consideration should first be given to reimburse the state’s contribution.”

The Indianapolis campus is proposing that 40 percent of the hotel and food and beverage tax generated by University Place Hotel be assigned for use by the natatorium for a 16-year period. This percentage would generate an estimated $4.36 million over 16 years.

“With the state facing a revenue decline and difficult budget cuts, those funds could be directed to public education. I do not doubt the serious need for renovation at the Natatorium and that the facility is extremely important to the city of Indianapolis.”
If you want to really work yourself up in a lather, you should go over to the website and watch the video clip of this week's CIB meeting. You will be treated to incoming CIB President Ann Lathrop's explanation of why the CIB closed on a $9 million loan from the state this week. Lathrop said there was no immediate need for the money, but she thought it was the right thing to do to go ahead and borrow the money because there was "no prepayment penalty" and having that extra money would provide more "flexibility as we go into Pacers negotiations and any other challenges that we have in the future." No member asked her a single question about a decision she seemed to have made unilaterally to take out the loan.

It seems the university claims that only 40% of the repair and maintenance costs associated with the physical education portion of the Natatorium can be paid out of state funds. The 60% of the facility used for diving and swimming cannot be paid out of state funds, or so says the university. While IU has been engaged in a non-stop building boom for the past several decades, it has been unable to find adequate funds to properly maintain the facility, allowing serious deterioration to the building to occur from a leaky roof, among other things. The entire proposition of the CIB paying for these repairs is nonsensical. I think Indy Tax Dollars sums it up well:
Is one entitled to ask just how much financial support USA Swimming is prepared to offer for the rehab, operation and maintenance of this "perfect facility?" Has the responsibility for paying for what one uses completely disappeared?

For that matter, has common sense disappeared too? The CIB is mired in financial difficulties, among which are the thousands of dollars it already disburses for the support of organizations which have no valid claim on the tax dollars being so used.

Now IUPUI wants nearly $275,000 per year for 16 years to be diverted from CIB funds - which are already being diverted from legitimate governmental expenses - to " assigned for use by the natatorium...."

Even if the proposal is not outrageous on the face, we have two questions. Could we be a little more specific as to the meaning of the phrase "for use by?" And, based on precedent, isn't fair to predict that, without fanfare or even public mention, the 16 year period will probably be extended indefinitely? Like the Food and Beverage Tax - the revenue IUPUI is asking for!

Almost no taxpayers wear red suits and have long, white beards. We think the folks at IUPUI are old enough to be told there really is no Santa Claus.

Media Want Durham Search Warrants Unsealed

I heard late this afternoon that the Indianapolis Star and the Akron Beacon-Journal have gone to court asking the government to unseal the search warrants issued on Tim Durham's Obsidian Enterprises and Fair Finance last month. Will update you when I learn more.

UPDATE: I've obtained a copy of the filing the Indianapolis Star and Akron Beacon-Journal filed in U.S. Magistrate Sarah Evans Barker's court in the Southern District of Indiana today. The suit highlights the fact that it's only been five months "after notorious investment scam artist Bernie Madoff was sentenced to 150 years in prison," and "hundreds of elderly investors in Akron, Ohio, are worried that they, too, might have fallen victim to a Ponzi scheme." The investigation of Tim Durham is "déjà vu all over again" to them according to the complaint. "For them, transparency in the investigation is the only salve, a transparency that has so far been elusive due to the government’s failure to file executed search warrants, failure to file affidavits in support of search warrants and failure to file other supporting documentation in connection with the search of Mr. Durham’s Indianapolis office at Chase Tower and his Akron, Ohio, offices of Fair Finance," it reads.

The newspapers' complaint accuses U.S. Attorney Tim Morrison's office of violating federal rules of criminal procedure. "Federal officials have told reporters for both Newspapers that search warrants were executed for the offices," the complaint says. "However, in violation of the Federal Rules of Crim.P. 41(i) and S.D. Ind. L.R. 5.3(c), they filed nothing," the complaint continues. "U.S. Attorney Timothy M. Morrison confirmed to Beacon Journal reporter Jim Mackinnon that Search Warrant Documents exist and are “sealed.” "He unlawfully declined to disclose the location of the court documents . . . " The complaint says that Morrison intends to keep the search warrant document sealed until charges or filed, or indefinitely if charges are never filed.

The complaint says that news stories about the Durham investigation have generated more public interest in Akron, Ohio than any story in recent memory, including at least twelve investors, and the Star has experienced considerable public interest as well. The complaint points out the intense interest in Indianapolis because of the nearly $1 million Durham and his businesses have contributed to local politicians. "His wealth, power and influence have caused Indiana citizens to question the integrity of their political leaders," the complaint reads. "Transparency in the investigation into Mr. Durham’s financial affairs can only serve to enhance the public’s faith in its government." "The sealing of such documents only serves to undermine the integrity of the judicial process and enhance the perception that Mr. Durham’s political connections will save him."

The complaint alleges that investors in Fair Finance will be potentially harmed if the search warrants are not opened to the public and only Durham benefits from keeping them sealed. "The innocent investors, some of whom may take legal action on their own to recover funds, have a right to the search warrant information that outweighs any right by Mr. Durham or others to keep his alleged misdeeds private," it says. "If the government believed that disclosure of the search warrant information would jeopardize an on-going investigation, it should have offered evidence of such disclosure publicly," the complaint states. "Given that it filed and withdrew a complaint to seize Mr. Durham’s property all within seven days, and that there is no current criminal or civil action pending, it is highly unlikely that the government would be able to meet its burden." "Indeed, absent any action by the government, Search Warrant Documents must be released to provide information to the innocent investors who now must undertake recovery on their own." "Keeping such information private only serves to protect Mr. Durham, if indeed wrongdoing occurred, and the government, if indeed it failed in its oversight duties."

The complaint notes that investors have been forced to sit by and wait since November 24 when Fair Finance's eight offices in Ohio closed, denying them access to their invested funds. "The release of any court documentation that sheds light on the whereabouts of hundreds of millions of dollars of investors’ money would be advantageous to those third parties, rather than harmful to them," the complaint reads.

The most important point made in the complaint is the government's alleged violation of the federal rules of criminal procedure. "First, all search warrant papers must be filed pursuant to Fed. Rule Criminal P. 41(i), as mentioned above. And in the highly rare, but not unprecedented, cases where the government is able to show that sealing is necessary to achieve a compelling governmental interest and that sealing is narrowly tailored to serve that interest, there must be a cover sheet publicly filed to document the sealed records, pursuant to S.D. Ind. L.R. 5.3(c)." "All court documents filed under seal must be publicly docketed, and those filed under seal must be documented so that anyone opposed to sealing may seek judicial review. ," the complaint continues. Local court rules also requires the government to include a cover sheet with a caption, the name of the document, the contact information of the person filing the document and a motion filed requesting that the document remain under seal. None of these requirements were met by U.S. Attorney Tim Morrison's Office according to the complaint.

The complaint concludes, "The overriding public interest in recovering millions of dollars in investments for thousands of investors, as well as the overriding public interest in the integrity of the political system in which one influential person may have destroyed thousands of retirement dreams, require that all documents issued in connection with Fair Finance and Timothy S. Durham be public." "No criminal or civil case is active." "The public has a right to know what the government searched for and what it found." "Withholding that information violates the Newspapers’ common law right to access judicial records, as well as their First Amendment rights." "For all these reasons, the Newspapers respectfully urge this Court to unseal any and all Search Warrant Documents issued in this case, and to order the government to file such records as required by Fed. Rule Crim. P. 41(i)."

Here's a story by Jim Mackinnon in the Akron-Beacon Journal about the lawsuit. Still nothing from the Star.

Wednesday, December 16, 2009

Facts Are A Stubborn Thing

FSSA Secretary Anne Murphy has generally been given high marks in her efforts to restore confidence in the agency and salvage the ill-fated welfare privatization agreement her predecessor handed her with a hybrid plan. While Murphy was testifying this week before the House Ways & Means Committee, a Senate Democratic staffer was busy trying to discredit her testimony. The staffer e-mailed the federal regional administrator for Indiana questioning Murpy's testimony.

"She testified that a negative error rate doesn’t necessarily mean that an eligible person didn’t receive benefits… and that a positive error rate means someone got too much or too little in the way of benefits…is that accurate?," the staffer asked. Acting Deputy Regional Administrator Tim English for HHS responded, "Yes, it is accurate." He continued, "As we discussed, the negative error rate includes procedural errors (the case may in fact be ineligible)." "Also, the positive error rate includes both over and under issuances." Picking up on the Democratic theme that welfare error rates weren't a problem until Daniels became governor, the staffer asked English: "She told the Committee that Indiana hasn’t met timeliness standards for food stamps since 2002…is this accurate?" English's response: "Yes, it is accurate."

The Democratic staffer questioned English about whether his agency had given approval to Murphy's hybrid proposal for administering the agency's welfare services following her decision to terminate the privatization contract with IBM. Yes, it had been approved. The staffer wanted to know about the history of Indiana's error rate and whether the state is facing sanctions from the federal government because of its error rate. According to statistics provided by English, Indiana's error rate had actually been worse when the Democrats were in charge of welfare. In 2003, for example, Indiana's error rate was 10%. That compared to error rates under the Daniels' administration ranging from a low of 6.58% to a high of 7.51% last year. As for the timeliness of processing welfare applications, the worst year in recent years was in 2003 when the Democrats were still in charge. In 2003, 79.44% of applications were processing in a timely fashion. That compares to the 85.27% timeliness rate recorded by the Daniels' administration last year.

I suspect the answers the Democratic staffer received from English weren't exactly what she was hoping to learn when she asked them. The facts are a stubborn thing sometimes.

Tuesday, December 15, 2009

Wow, School Kids Can Now Sing About Allah But Not Christ

Damn, things have really changed since I was in school. The principal of Lantern Road Elementary School in Fishers thought he was teaching inclusiveness in a holiday production by having school children sing praises to Allah while not mentioning the word Christ. Children were assigned to sing the following lines praising Allah:

Allah is God, we recall at dawn,
Praying ‘til night during Ramadan
At this joyful time we pray happiness for you,
Allah be with you all your life through.”
Now contrast that with the lines they were given to sing in reference to Christ:

“I didn’t know there was a little boy at the manger. What child is this?
I’m not sure if there was a little boy or not.
Then why did you paint one on your nativity window?
I just thought if there was a little boy, I’d like to know exactly what he (sic) say.
"I'm not sure there was a little boy or not?" Who cares if the Christians are offended. I rarely agree with the AFA's Micah Clark, but in this case, he's dead on right. “(This show) affirmed Islam and negated Christianity," Clark observes. "I wouldn’t have had a problem if it had been equal to all faiths.”

UPDATE: There's more public school madness. A second-grader in a Connecticut school was suspended and ordered to undergo psychiatric evaluation for having the audacity to draw a picture of Christ on the cross.

Monday, December 14, 2009

City Inspector Charged With Auto Theft Scheme

Indianapolis police investigators are accusing a city code enforcement officer of scheming with a local tow truck operator to illegally seize abandoned vehicles and have them shredded for scrap metal at a controversial scrap metal company, OmniSource. Chad Frye, a 38-year-old code enforcement officer hired by the Ballard administration last April has been charged with theft, official misconduct and corrupt business practices according to WRTV's Jack Rinehart. He explains how the scheme was unraveled by city investigators:

Investigators said Frye, who was hired in April 2009, illegally towed and disposed of up to 10 vehicles, 6News' Jack Rinehart reported.

Indianapolis police Lt. Jeff Duhamell said that when Frye was asked to check on an abandoned vehicle complaint, he would tell authorities the vehicle wasn't there and would call a friend and have the vehicle towed to Two Little Bees Auto Parts, at 505 South Tibbs Ave.

Police said the plot unraveled when Penny Archie contacted the city on Nov. 11 about having her daughter's vehicle towed from the driveway of her west side home.

"They came out and towed it away," Archie said. "We just found out today that the guy that towed it, scrapped it. He stole the motor out of it, and police don't know where the rest of the car is."

The auto parts business stripped car and had them crushed, police said, before they went on to Omnisource to be shredded.

The city's exclusive abandoned vehicle contractor, Last Chance Wrecker, said they had never towed the vehicle.

Frye was arrested after police set up a sting and watched a vehicle being towed to Two Little Bees and followed it to Omnisource.

Police said they recovered two more vehicles that were involved in the same alleged scheme.

Investigators said Frye was cooperating in their investigation and told them that he got $20 to $50 per vehicle.

Duhamell said the investigation is ongoing and that other arrests could be made.

In the meantime, Archie wants the city to compensate her daughter for the cost of her replacement vehicle.

"I think that's pretty dirty when they was supposed to take it to a storage lot where my daughter could have picked up the car there," she said. "They weren't supposed to tear the car up."
You may recall that OmniSource was at the center of a controversy involving dozens of off-duty IMPD officers it employed at its Indianapolis scrap metal yards and charges that those police looked the other way as employees of the company purchased stolen scrap metal. At the same time, some of the those police officers were helping nail scrap metal competitors of OmniSource for purchasing stolen materials. That investigation seemed to die after it was turned over to the Marion County Prosecutor's Office just like virtually every other public corruption case in Marion County over the past seven years. OmniSource is represented by Barnes & Thornburg criminal defense lawyer Larry Mackey, who as this blog exclusively reported, wrote a letter to Carl Brizzi and IMPD Chief Michael Spears urging disciplinary action be taken against IMPD's lead investigator on the case for discussing allegations against OmniSource with reporters. Mackey also serves as finance chairman for Brizzi's campaign committee.