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Posts Tagged ‘Lance Williams’



How Ace Inc. Aims to Ice Grand Inquisitor Issa

Friday, February 18th, 2011

Hopelessly hardcore California political junkies will recall the travail of the late Democratic Assemblyman Carmen Perino, who once suffered the indignity of witnessing his campaign manager’s arrest in a notorious murder-for-hire case in Stockton.

Reacting to the news of his key adviser being taken into custody in connection with a contract killing, Perino famously commented: “What he does on his own time is his own business.”

His off-the-cuff, see-no-evil comment came to mind this week, as Calbuzz mulled the matter of Rep. Darrell Issa, R-Unindicted, another cagey pol whose public career bears the stain of private scandal.

At the moment, Issa is the GOP’s It-Man, an erstwhile comic figure and back-bencher whose profile has remarkably and suddenly soared in his new role as the powerful chairman of the House Committee on Oversight and Government Reform.

It’s a perch from which he’s proclaimed his plan to serve as Chief Inquisitor of the Obama Administration, launching at his whim investigations of what he told Rush Limbaugh is “one of the most corrupt Presidents in modern times.” And, by extension, to launch his own bid to be treated by the Beltway’s mediaocracy as a Serious Person to be reckoned with, to hear Kurt Bardella, his peach-fuzzed flack, tell it to the New Yorker’s Ryan Lizza:

“My goal is very simple,” (Bardella) said. “I’m going to make Darrell Issa an actual political figure. I’m going to focus like a laser beam on the five hundred people here who care about this crap, and that’s it. We’ve been catering more to that audience, so Darrell can expand his sphere of influence here among people who track who’s up, who’s down, who wins, who loses. Then we can broaden that to something more tangible afterward.”

Such a modest young man.

Alas for the boss of the unfortunate Bardella, however, Issa’s ambitious self-reinvention and reclamation project faces a considerable political challenge, at least in his home state: overcoming his own biography.

From his expensive, but spectacularly failed, 1998 bid for the U.S. Senate to his short-lived 2003 pursuit of the governorship (after successfully bankrolling the recall of Gray Davis), the public memory of Issa in California bristles with words like “arrest,” “indictment,” “arson,” “concealed weapons” and “stolen cars.”

We admit that we’re hopelessly old-school about this kind of thing. Still, we can’t help but wonder at the wisdom of congressional Republicans investing their party’s mantle of moral authority in  a guy who took out a special, short-term, ginned-up fire insurance policy for his business, which mysteriously was burned down by a mysterious arsonist just a few mysterious weeks after.

Truth be told, Calbuzz has spent the last few, entertaining hours chuckling our way through the exhaustively and impeccably researched, 148 original source pages of “The Issa Files,” which documents in excruciating detail the evidence surrounding the 1982 fire that destroyed Issa’s Maple Heights, Ohio based (Go Mustangs!) company, the ashes from which arose his subsequent zillion dollar success in the car burglar alarm business.

As every schoolboy knows by now, the Issa volume was produced by a newly minted independent expenditure outfit called “Third Lantern” (see Longfellow, Henry Wadsworth), wrangled by Ace Smith, the redoubtable prince of the dark arts of campaign oppo research.

“As Congressman Issa begins his frivolous investigations, The Third Lantern will conduct our own examination of Mr. Issa’s behavior and prove he lacks credibility as a Congressional investigator,” our old friend Ace opined, in releasing the material. “The Third Lantern will release documents which will shed light on Mr. Issa’s history and demonstrate that he is solely motivated by partisan rancor of the lowest order.  Stay tuned while we investigate the reckless investigator and reveal the truths that he is so desperate to hide. “

As a politician, Issa has been trying for at least 15 years to escape the acrid stench of smoke and circumstance that links him to the episode. Astonishingly, he claimed to Lizza that he was shocked – shocked! – to hear tell that authorities in the Buckeye State considered the blaze to be arson:

Issa seemed unfamiliar with the insurance company’s fire analysis report concluding that the fire was arson, and said that, as far as he knew, it was officially declared accidental.

Ah, not so much.

For those with real jobs or other annoying responsibilities that keep them from  more amusing pursuits, here are some highlights from the Calbuzz Cliff’s Notes version of The Issa Files:

Page 18: Anonymous call received by local police or fire department sometime soon after fire:  “Unidentified caller said was deliberately set.”

Page 41: Local official reports that member of the Arson Bureau of the State Fire Marshal’s Office, says “his preliminary findings indicate arson,” and that another investigator “indicated possible arson because of low burn patterns.”

Page 45: Investigator relates conversation with insurance agent noting that Issa had just increased amount on his policy: “our Ins’d and his Ins’d increased their insurance coverage only 1 week before the fire.”

pp 47-8: Summary of the Maple Heights fire chief’s suspicions about the fire, including “All areas of (the building) was under automatic sprinkler grid except small area where fire originated.”

pp. 92-94: Fire Analysis concluded that “fire was of incendiary origin” because of “suspicious burn patterns,” and because “no accidental source of heating power was located at either of these two major areas of origin.”  Blue flames and heavy smoke both indicated presence of hydrocarbon accelerant.

Carmen Perino

Page 107: Insurance form shows that Issa increased insurance for the period August 19-September 18, 1982; the fire broke out in the early morning hours of September  7, 1982. The special policy covers 80% of loss.

As the New Yorker piece duly notes, much of the substance, if not the granular detail, of the ethical cloud that trails behind the Grand Inquisitor was brought to light by reporters like Lance Williams and Eric Lichtblau during Issa’s failed bids for statewide office in 1998 and 2003.

“Issa seemed tired of defending himself from these old stories,” Lizza reports.

We just bet he did.

Fishwrap: Jerry Gets Cosmic, Meg Prez Fever Grows

Saturday, June 12th, 2010

There are doubtless many reasons why Meg Whitman won’t accept Jerry Brown’s invite to 10 town halls around the state – strategy, scheduling and skittishness, for starters.

While she’s now agreed to one cheesy debate a couple weeks before the election, eMeg’s unwillingness to commit to more clearly derives from the knowledge that, in a sustained series of match-ups, she’s simply got no answer for Brown’s Zen Jesuit epistemological style.

Which was on full display the day after the primary in an interview conducted by ABC’s Diane Sawyer who, among other things, elicited this improvisational analysis of the deeper meaning of politics:

Well, at the end of the day, what really is this all about? The fundamental quest is: How do we touch our spirituality? How do we touch that innermost part of our being? And how are we open to that same thing in other people?

That’s the intimacy, the spirituality, that you don’t normally find in politics.But it’s the other side. After everything quiets down, you’re still yourself. And there’s still life and death. When I was studying in Japan, before you’d mediate … in the evening, someone would hit a block a few times. And then someone would intone: ‘Life and death is a serious matter. Time waits for no man. Do your best.’ And that, I think, could be the spirit of this campaign.

Or not.

When does eMeg leave for Iowa? Lost amid the well deserved criticism Brown is taking over the comparison he drew between Whitman and Nazi propaganda minister Joseph Goebbels are some other comments he made during his “jogging talk” conversation with Doug Sovern of KCBS:  his recycling of the Calbuzz theory that eMeg’s pursuit of the governorship is really about her desire to be president.

She wants to be president. That’s her ambition, the first woman president. That’s what this is all about.

For those who want in on the ground floor of this deal, there’s already a Meg Whitman for President 2012 (four years too early in our view) Facebook page. Remember you read it here first.

Politics of pensions: To date, Brown has spent much time talking about issues that are of great interest to him – town hall meetings, Meg’s massive financial advantage in the campaign, his alleged roots in the “mean streets” of Oakland  – but not so much about things that might actually affect actual voters – say, jobs, the economy or some specific ideas for dealing with the sorry state of the state’s finances.

On the latter point, Brown at some stage is going to have find a way to address the festering problem of public employee pensions: while his allies in labor would no doubt much prefer that he didn’t, there is growing resentment about the disconnect between the cushy retirement benefits that many government workers receive and the cat food prospects  available to what you like to call your ordinary people.

Exhibit A: voters this week in San Francisco – the only city where people actually like paying taxes – approved a ballot measure that requires increased contributions from new public workers and that begins to address the scandal of “spiking” pensions by which benefits are pegged to  often inflated salaries earned in the last year on the job.

Governor Schwarzmuscle has already made pension reform a centerpiece of this year’s budget battle, ensuring it will be a high-profile issue for months, at a time when reporters around the state – most notably Dan Borenstein and Ed Mendel – keep churning out reporting on excesses, and eMeg hammers on the problem every time she gives a speech.

That’s not to mention the related outrage that many labor agreements detailing pension benefits are top secret in jurisdictions around the state, as noted by the First Amendment Coalition:

Public unions in California turned distrustful of voters and ambivalent about government transparency. In the mid-1990s unions backed improvements to the Brown Act, California’s open meeting law, but also inserted a provision assuring that the public would have no access to collective bargaining agreements negotiated by cities and counties—often representing 70% or more of their total operating budgets—until after the agreements are signed.

What happens when voters and the press have no opportunity to question elected officials about how they propose to pay for a lower retirement age, health care for retirees’ dependents, richer pension formulas and the like? The officials make contractual promises that are unaffordable, unsustainable (and, in general, don’t come due until after those elected officials have left office). In the case of Vallejo, in northern California, this veil of secrecy, and the symbiotic relationship it fosters, has led to municipal bankruptcy.

Memo to Jerry: Add pensions to “Jogging Talk” file.

Press Clips: Don’t miss Tony Quinn’s excellent analysis of the right-wing’s historic primary losses. Karen Tumulty is worth reading on why CEOs struggle as electeds. Dan Walters takes the first stab at sorting out the Meg-Jerry exchange on Brown’s first incarnation budget record.

John Myers cuts to the heart of the eMeg-Krusty leadership argument. Lance Williams offers a post-Prop. 14 historic look at non-partisan voting in California. Rep. Anthony Wiener gets gored by a goat.

Goldman Sachs: A Case of False Equivalence

Tuesday, April 27th, 2010

One of the more persistently perverse practices of MSM journalism is the “false equivalence fallacy,” a technique too often seen in political stories, when reporters aim for even-handed balance but end up badly misleading readers.

A case study is the L.A. Times Saturday Sunday story, which posed “a phony evenhandedness,” as Ruth Marcus of the Washington Post once described false equivalence, between the connections of Meg Whitman and of Jerry Brown to the scandal-tainted investment bank Goldman Sachs.

A false equivalence fallacy occurs when someone falsely equates an act by one party as being equally egregious to that of another without taking into account the underlying differences which may make the comparison patently invalid.

In presenting an apples-and-oranges framework about the Goldman Sachs issue in the California governor’s race, the Times recalled political stories from the 2004 presidential race that matched unfounded charges about John Kerry’s record in Vietnam, where he won three Purple Hearts, with still-unanswered documentary questions about the service of George Bush in the National Guard or, more recently, cable TV shows that set up on-the-one-hand-on-the-other “debates” that include whack job “birthers” who charge that Obama was not born in the U.S.

Sometimes, attempts to present “balance” using the thin thread of commonality — e.g. Goldman Sachs — are wholly misleading. There really is an unbalance of connection and/or impropriety. One thing is actually more damning than the other and they cannot and should not be equated. This is a false equivalency.

Whitman’s links to Goldman Sachs are primary connections, which directly benefited her financially, both personally and politically; Brown’s are  secondary, at best, involving his sister’s employment at the firm and a complex policy decision about bond financing interest rates in Oakland, which was made a year before he was elected mayor there, which appears actually to have benefited the city during much of his tenure, and over which he had no direct control anyway.

Yet the Times story – online hed: “Whitman, Brown have ties to Goldman Sachs” – sends a clear message that these are matters of equal political weight, at a time when the bank has been charged with fraud by the SEC. Let’s look at the details:

Whitman’s connections to Goldman have been chronicled in detail by Lance Williams and Carla Marinucci.

1-Spinning. As CEO of eBay she steered millions of her company’s business to Goldman, a period in which she also engaged in “spinning,” a now-illegal insider stock deal in which the investment bank paved the way for her to buy early shares of hot IPOs. She was named in a congressional investigation of the practice and forced to return money she made from the deals to eBay after shareholders sued her. Her explanation: “It wasn’t illegal at the time.”

2-Directorship. Whitman was paid the equivalent of $475,000 in cash and stock options when she sat on Goldman’s board of directors for 15 months in 2001 and 2002. Among other actions, she served on the compensation committee, when it approved huge bonuses for Goldman’s current CEO, Lloyd Blankfein, and its previous chief executive, former Treasury Secretary Henry Paulsen, who oversaw the era of credit default swaps and consolidated debt obligations which is now the focus of the SEC fraud suit.

3-Contributions. Whitman has received at least $105,500 in contributions from Goldman executives to her campaign for governor, according to the Williams-Marinucci investigation.

Brown’s connections to Goldman, as set forth by Michael Rothfeld in the LAT:

1-Family. His sister, former state Treasurer Kathleen Brown, has worked for the bank since 2003, a family factoid that gains no elaboration, or further traction, in Rothfeld’s story as reflecting critically on Jerry Brown.

2-Oakland. A year before Brown took office as mayor, city officials did a deal with Goldman, known as an “interest rate swap,” in order to “guarantee Oakland stability in its debt payment,” according to Rothfeld. City officials renegotiated it in 2003 (before Kathleen went to work for Goldman BTW), paid off Goldman’s debt in 2005, but left the interest deal in place because canceling it would have cost $15 million, which was then considered a bad deal for the city.

At the time, Brown’s involvement consisted of a) being the non-voting president of the Oakland Joint Powers Financing Authority, which handled the negotiation and b) appointing the administrator in charge of borrowing for the city.  The Times story never even hints that Brown had anything to gain from the deal, even if he had had authority over it, and completely equivocates on the broader issue of whether or not it’s been a good deal for Oakland.

Today, because interest rates plummeted amid the Wall Street meltdown, the deal with Goldman is costing Oakland about $5 million a year, the story notes, but then adds this: “Oakland and Goldman officials say they believe the swap has benefited Oakland overall, though they provided no statistics to show that.”

Uh, so what exactly has Brown got out of his ballyhooed-by-the-Times  “connections” to Goldman Sachs?

Despite the total false equivalence between eMeg and Crusty’s* dealings with the investment bank, Rothfeld gave Whitman flack Tucker Bound a free hand to muddy the waters on an issue that threatens Whitman, allowing him to spin the non-event of Brown’s Goldman ties into the biggest scandal since Teapot Dome: “No matter how you look at it, Jerry and his sister were on both ends of a bad deal for taxpayers, and Goldman Sachs pocketed millions.”

Puh-leeze.

Fortunately for the Times, business columnist Michael Hiltzik presented a clearer-eyed view of the matter in a Sunday same day piece that recaps Whitman’s personal connections to the bank and drills down on the noxious “spinning” issue.

Yet the issue here isn’t anyone’s family connections or routine investments but Whitman’s acceptance of preferential treatment from a firm angling to do business with her employer…

As for her claim that no one ever suggested there was anything untoward about preferential allocations, not so. Financial regulators had been warning brokers for years that it was wrong to hand out hoards of IPO shares “to reward persons who could otherwise direct business to them.” Although that rule was directed at the brokers, not their customers, surely Whitman understood the concept of aiding and abetting. To avoid further confusion, the Securities and Exchange Commission later spelled out the rules: Offering such deals is now illegal.

And thank you for that.

P.S. For further understanding of what’s wrong with “spinning,” see the definitive Calbuzz piece by David Shapiro, a specialist on financial fraud at the John Jay College of Criminal Justice at the City University of New York.

* For the record, Calbuzz recognizes that the Simpsons character Herschel Krustofski, AKA Krusty the Clown and the Maitre d’ of Glee is spelled with a “K.” Our Department of Etymology and Copyright Infringement  is studying whether it would be appropriate to alter the spelling of “Crusty the General.”

Jerry, eMeg and the Goldman Sachs Connection

Tuesday, April 20th, 2010

Moments after Jerry Brown finished a press conference at the California Democratic Convention, where he had just challenged his Republican rivals to join him in a set of pre-primary debates, Calbuzz accosted him as he strode down the hall to his next event, trying to squeeze in one extra question.

“How about Goldman Sachs?” we asked him. “How important to the campaign is Meg Whitman’s connection?”

Brown’s eyes flashed red, smoke blew from his nostrils and fire flew off his tongue, but before he could answer, campaign manager Steve Glazer rushed up to protest: “We’re not giving not any walking interviews!”

And just like that, the presumptive Democratic nominee for governor thought better of his impulse, smiled slightly and said, “If I answer that, you won’t write about the debates.”

Brown, with Glazer keeping tabs

The hallway scene at the J.W. Marriott Hotel on Saturday morning spoke volumes about two important elements of Brown’s campaign for governor:

On one level it was a tribute to the indefatigable efforts of Glazer to work the impossible: keeping the famously undisciplined Brown from flapping his gums and straying from his appointed message.

It was also testament to Brown’s obvious desire to open a line of full-throated populist attack on GOP front-runner Whitman — portraying her as a tribune of corporate excess and Wall Street greed and using her multiple links to Goldman Sachs as Exhibit A in making the case.

With the Securities and Exchange Commission formally charging the huge investment bank with fraud last Friday, Brown’s campaign has been handed a fresh opportunity, not only to disrupt the Whitman campaign narrative that her executive business experience splendidly qualifies her for governor, but also to perform political jujitsu on the exorbitant campaign spending eMeg is fronting with her personal fortune.

At a time when public resentment runs high against Wall Street banks, and the obscene taxpayer bailouts they’ve received, the SEC’s fraud case against Goldman Sachs is a clear and high-visibility symbol of the avarice and recklessness that fed the recession-triggering sub-prime mortgage/credit default swap/collateralized debt obligation scandal (for those still trying to cut through the complexities of this, Michael Lewis’s “The Big Short” is a must-read).

No less a source than the Wall Street Journal, which included a sidebar on the governor’s race (subscription required) in its page one, double-truck Monday coverage of the SEC-Goldman case, forecast “the furor…could become a sticky issue” in the California campaign.

“Over the course of this campaign, I think the voters are going to be fully aware of Meg Whitman’s financial dealings at Goldman Sachs and they’ll hold her accountable for them,” Brown spokseman Sterling Clifford, told the Journal.

The esteemed Christian Science Monitor also weighed in with a piece on how the Goldman Sachs case could “roil” the governor’s race.

“Whitman has to demonstrate how she was not one of the black hats at Goldman Sachs. In other words, she’ll have to explain herself – not an enviable position for a candidate,”  Steven Schier, a political scientist at Carleton College in Northfield, Minn., told the Monitor.

Calbuzz has previously published a leading expert’s analysis of eMeg’s involvement in the stock “spinning” scandal, perhaps the most problematic aspect of her Goldman Sachs connection, while Lance Williams and Carla Marinucci have reported on others, in a fully detailed primer on the issue  published jointly by California Watch and the Chronicle.

Candidate Meg Whitman touts her experience at eBay, the online auction hous

e that made her rich, but her career and personal fortune are entwined with another company: the Goldman Sachs investment bank, a major player in public finance in the state she wants to lead.

Whitman’s relationship with the giant Wall Street firm — as investor, corporate director and recipient of both insider stock deals and campaign donations — could pose conflicts of interest if the Republican front-runner is elected governor of California, critics say.

Some Whitman boosters, led by Republican blogger Bill Whalen, have been whistling past the graveyard, arguing that because Brown’s sister, former state Treasurer Kathleen Brown, is a former Goldman Sachs executive, Jerry Brown will be loathe to gamble on going after Her Megness on the issue.

Putting aside the total false equivalency of the comparison, Calbuzz will be more than happy to take that bet.

Meanwhile, Over in Clovis: KTVU-TV got  eMeg to respond to Brown’s call for three-way debates:  “I think it’s a political stunt to avoid giving specifics. You know,  I have a very specific policy agenda that has been outlined and Jerry has not given a single specific plan on virtually any of the crises that face California.”

Whitman, of course, is right that the debate gambit was a political stunt. But a clever one that gave  the aforementioned Glazer license to reply:

“Perhaps because she has failed to vote for most of her adult life, Ms. Whitman doesn’t understand the voters need for straight talk and honest discussion in an election. Calling an unscripted debate about the serious challenges facing California a ‘political stunt’ shows total disregard for the voters.”

Furthermore, Glazer said,  “From the fake town hall she filmed for her infomercial (coming soon to a station near you) to the 48-page photo album she calls a ‘plan’ and using a business group as a front for attack ads, Meg Whitman has run a campaign wholly based on stunts.”