Monday, August 31, 2009

Council Passes Panhandling Ordinance, Fails To Fix Drafting Flaw That Allows Ordinance To Be Applied To Political Speech

During the the Public Safety and Criminal Justice Committee meeting which considered the panhandling ordinance, I pointed out that there was a flaw in the drafting of the panhandling ordinance which could, contrary to Councilor Mike McQuillen's claim, cause the ordinance to be applied to political speech. As I pointed out at that time, that if the ordinance is seen as applying to political speech the odds of it being held constitutional decreases substantially. Unfortunately, the Republicans and Democrats were so locked into their partisan positions that nobody bothered to fix the drafting flaw in the ordinance

Let's examine the ordinance. (The emboldened language is the new language):

It shall be unlawful for a pedestrian to sit, stand or move within or upon a roadway, or a median between two (2) roadways, or within the public right-of-way not exceeding fifty (50) feet from the traveled portion of any intersection controlled by an automatic traffic signal or stop sign, for the purpose of or while engaged in (by oral or written methods):

(1) Soliciting, or peddling, selling, advertising, donating or distributing any product, property, or service, including but not limited to tickets, handbills newspapers or other printed material, to or from an occupant of a vehicle in the roadway; or,

(2) Conversation or discourse with an occupant of a vehicle in the roadway.


Thus, the elements of the new offense under the ordinance are:

1) Person is within 50 feet of an intersection; and

2) a) The person is soliciting, peddling, distributing , etc. OR

b) Conversing or having discourse with a person in a vehicle.

To summarize, in order to have an offense under the new language it must be 1 + 2a or 1 + 2b.

The 1+2b option allows for the ticketing of purely political political protesters. Let's say that health care protesters are downtown at a street corner. They ask motorists stopped to honk if they want health care reform. They're not soliciting money or passing out literature. But the political speech is a violation of the ordinance.

Frankly, anyone who went to law school should have quickly spotted this drafting error in the ordinance. I know of three lawyers on the Council, Ryan Vaughn, Bob Lutz, and Barb Malone, all Republicans. I can't believe they are all such bad attorneys that they missed the elementary drafting mistake in the ordinance.

Contrary to Councilor McQuillen's assurances at the committee meeting, even if the panhandling ordinance applied strictly to commercial speech, the odds of it being upheld are hardly certain. Even if it is in the end upheld as constitutional, as McQuillen says it will, the City will be out tens if not hundreds of thousands of dollars in legal fees and expenses defending the ordinance. However, once you factor in the drafting error allowing the ordinance to be applied to political speech, the odds of it being found unconstitutional dramatically increase. If the City loses its defense of the statute, it will be not only have to pay their own attorneys but also the prevailing side's legal expenses.

Most likely, City Legal will farm out the legal work defending the ordinance to Barnes & Thornburg, which will hand the City a sizable six figure legal bill defending the inevitable lawsuit. In the end, the effect of the ordinance will be that politically-connected lawyers make hundreds of thousands of dollars defending the ordinance while the effect the ordinance has on panhandling is minimal at best.

IPS Board Approves Budget, Fails To Demand Details From Commissioner Eugene White

Last Friday, the Indianapolis Star reported that Indianapolis Public Schools Superintendent Eugene White presented the budget to the IPS School Board using summaries instead of providing details. Board member Kelly Bentley objected saying that White should have provided a detailed budget to the Board. The budget ended up passing 6-1, with Bentley being the lone dissenter.

The Star article contained this little nugget:

Board member Marianna R.Board member Marianna R. Zaphiriou told Bentley that she felt her request -- and the suggestion that other board members weren't
asking enough questions -- was wrongheaded.

"Part of that implication is that some of us should feel uncomfortable, and we don't," she said. "I have no reason to want that level of information. I don't feel the need to request that information."

Superintendent Eugene White told Bentley she was welcome to make an appointment and go line by line through the budget with district finance officials. But he said he wouldn't waste the board's time by giving them the entire budget to review.

"We have not and we don't intend to give you the specificity of each of those items," White said. "It would be too prohibitive for you to go through that.... We're not going to bring that to you. We're asking you to approve the budget, and to go any deeper than that would take a lot of your time and be ridiculous."

One wonders what is worse - Board Member Zaphiriou's refusal to do her job as a public official or Commissioner White's arrogance. But actually there is something worse - the collective failure of the IPS Board to demand details before voting to approve a budget. Those who voted that way should be voted out at the next election for not doing their jobs as elected officials.

Unfortunately the failure of IPS Board members to do their job is not something that is confined to that august body. Rather you also see it with the Indianapolis City-County Council. Councilors too often do not seem to want to ask tough questions or demand details. Once Republican at-large councilor, Ed Coleman, started asking questions about the Capital Improvement Board, and instead of being praised for doing his job as a councilor, he became a target. Coleman felt so much pressure that he left the Republican Party to become a Libertarian.

This is the budget season. Numerous committee meetings are being held at which various aspect of the administration's 2010 budget is being discussed. Councilors need to be asking tough questions and demanding details. Doing so is not a partisan thing. It's part of doing one's job as an elected official.


Note: Over at Indiana Barrister, Abdul is dueling it out with IPS Superintendent Eugene White. Kudos to Abdul for asking for issuing a public records request for details of the IPS budget. It is a shame that it takes a member of the media to make a request that every member of the board should have demanded before voting to approve the budget.

Sunday, August 30, 2009

Nine Year Old Leads Five Police Departments On High Speed Chase

Since this didn't end in tragedy we can label it as "funny." Eighty miles an hour? The Star reports:

A 9-year-old Greenfield boy who led cops on a chase today took to the wheel because he wanted to stay out later to play with his friends, police said.

“He was upset because he had to come in,” said Derek Towle, deputy chief of the Greenfield Police Department.

According to Towle, the parents of the boy told police he was told he had to be home at 8 p.m. and he wasn’t happy. The boy went home, showered and was put to bed before he snuck out of the house with a set of car keys he took from his mother’s purse along, with $1 and a cell phone.

The parents didn’t find out the boy had taken 2005 silver Chevrolet Aveo until police called to notify them from the cell phone the boy took earlier.

At 11:30 p.m. Saturday, police got a call of a possible drunk driver who was swerving on U.S. 40.

The boy led five police departments from Greenfield, Knightstown, Hancock County, Henry County and the Indiana Conservation Department on the chase for about a half an hour before he was finally stopped about two miles west of Knightstown.“He was on his way out of town,” Towle said. “Evidently, he didn’t want to be home.”

Police described the boy as 4 foot 3 inches tall and weighing 62 pounds. “That’s why we got the call that there was a drunk driver because he was having a hard time negotiating the car,” Towle said. He said there’s no history of the boy ever driving a car said the boy has been treated for depression and attention deficit disorder.

The boy was arrested for fleeing law enforcement and faces charges. Towle said officials hope to get the boy to counseling.

The boy crossed the median on U.S. 40 and was heading east on the west bound lanes at about 80 miles per hour at least twice during the chase, Towle said.

“This could’ve ended very tragically,” he said. “But thank goodness it didn’t.”

Saturday, August 29, 2009

Marion County GOP Chairman Continues To Exercise Bad Judgment, Refers to Possible Ballard Opponents As A "Bunch of Clowns"

One of the most basic rules one learns in Campaign Politics 101 is that you never deride your opponents' ability to run a strong campaign. During a campaign you can question what your opponent stands for, but when evaluating their chances you are always to speak in reverent tones and insist that it will be a tough race. Part of the reason is strategic. If donors think it is a slam dunk race, they don't contribute, volunteers don't volunteer, the electorate is not motivated to go to the polls. Another reason is that deriding your opponent's abilities looks tacky and puts you in a bad light. Voters do not like arrogance and love to punish it whenever they can.

Marion County GOP Chairman Tom John continues to prove that he's does not know much about campaign politics. This morning's Star brings this quote from John regarding the prospective Democratic candidates for Mayor in 2011:
"It's just like a bunch of clowns getting out of a clown car at the circus. It's just kind of a joke right now," Marion County Republican Chairman Tom John said. "It's a good sign there's so many of them, because it shows they really don't have a campaign against this administration."
While I'm bothered by the insider status of most of the Democratic candidates, they are hardly "clowns." Melina Kennedy was a former Deputy Mayor under former Mayor Bart Peterson. Joe Hogsett, who has been rumored as a candidate, is a former Secretary of State. Other possible candidates include Dr. Woody Myers, a well-respected former state Health Commissioner, Kip Tew, a former state Democratic chairman, and Jose Evans, a sitting city-county councilor. Indianapolis businessman Brian Williams has already filed to run as a Democrat.

These are serious candidates who can run serious campaigns. John ought to be troubled the fact that so many big name Democrats are willing to line up to challenge Mayor Greg Ballard. What John ought to be even more concerned about is that there is so much opposition to Ballard within his own party that he is likely to have substantial and vocal opposition in the GOP primary in 2011. In that primary, the Republican opposing Mayor Ballard will most likely point out the truth: that the Mayor has repeatedly broken campaign promises, including not to raise taxes and pursue ethics reforms, and sold out his former supporters and populist roots, to cozy up to insiders who are seeking trying to make as much money as they can off of the City.

Should Mayor Ballard survive the 2011 primary, which is not a given, he will face enormous obstacles to re-election, especially given so many grass roots Republicans have given up on supporting him. Marion County GOP Tom John would be well advised to take off the rose-colored glasses and have a reality check.

Friday, August 28, 2009

City of Indianapolis and Sheriff Frank Anderson Budget $4.5 Million Extra For Private Jail Company While Shortchanging Retired Sheriff Deputies

Over at Advance Indiana, Gary Welsh picked up on excellent story from Jack Rinehart of WRTV in which he reveals that the City has decided to withhold paying $3 million to the pension funds of retired Marion County deputy sheriffs in order to help balance the budget. Previously the City's unfunded pension liability for public safety officers had risen to $400 million last year before it was wiped out last year when the state agreed to assume responsibility for that debt. Now, with a clean slate courtesy of the state, the City is beginning to run up the pension debt again.

The irony is that while the $3 million is not being paid into the pension fund, the City and the Sheriff's Department has decided to give a private company, Corrections Corporation of America, an extra $4.5 million next year on the duibious claim that the Sheriff's Department is now three months behind paying on the CCA contract to run Jail #2. Not coincidentally CCA has made thousands in campaign contributions to both the Sheriff and the Mayor. If that's not enough, CCA is represented by Barnes & Thornburg, the law firm which practically runs the 25th floor and whose partner, Joe Loftus, is also paid counsel and advisor to the Mayor.

The $4.5 million arrearage claim is highly questionable given how payments are made under the CCA contract and that the deficit supposedly existed since 2004 and is only now being mentioned. Last fall, the Sheriff got permission to pay CCA nearly a quarter of a million dollars. The claim the Sheriff's representative made to the Public Safety Committee at that time was that the money was for an inflation adjustment CCA decided to take and the money was needed for inmate meals. As I pointed out in a previous post, the Sheriff's claim was phony. The inflation adjustment in the CCA contract is automatic and inmate meals are included in the per diem paid to CCA. The Sheriff does not pay separately for inmate meals at Jail #2.

Retired Marion County Sheriff Deputies need to be demanding answers as to why their pension is not being funded so that the City and the Sheriff can pay millions more to a private company. The Council needs to be asking for concrete financial documentation showing the $4.5 million arrearage owed to CCA before agreeing to pay the bill. To demand any less is to do a disservice to the good men and women who have served the Sheriff's Department and are now depending on the City to properly fund their pensions.

RIP Senator Edward Kennedy

Ted Kennedy was not a man without problems. You had the embarrassment if not crime of Chappaquiddick. You had the boozing and the womanizing. You can't overlook that as part of his life and legacy. But I have a lot more respect for Senator Kennedy than some of my fellow Republicans.

Senator Kennedy stood up for what he believed in. You knew what constituency he supported and he was remarkably consistent in standing up for that constituency. That's why big name Republicans found a friendship with the Lion of the Senate and were able to work with him on issues. They respected him because he was consistent philosophically and not a situational liberal, like so many Democrats are today.

While no one should emulate Kennedy's private life, local Democrats would be well advised to emulate Kennedy's public life. Most are liberals only when it is convenient. They have no problem supporting corporate welfare and soaking working men and women to give away money away to big money interests. As far as standing up for the poor and downtrodden, local Democrats will do that if they think there is something to gain politically in doing so. Local Democrats, like local Republicans, practice a form of elitist politics which places the needs and wishes of ordinary Americans well behind the interests of big money interests which dominate this City's politics.

That is not the lesson of Kennedy's career.

Indianapolis Star Urges General Assembly To Tell The Racinos "No"

It appears the editors over at the Indianapolis Star has finally found a corporate welfare scheme that goes too far. The racinos - the horse tracks in Shelbyville and Anderson which now feature limited forms of other gambling - came before a summer committee of the Indiana General Assembly asking for a bailout. It seems that they made a bad bet when they paid a high licensing fee to the state for the right to convert the horse tracks into racinos. One wonders if the racinos offer their customers the right to get out of bad bets they made as they are asking to do here. My guess is "no."

The Star's editorial weighs in on the matter:

Advocates for Indiana's once-burgeoning gambling industry argued for years that the only way to save the state's outpaced horse tracks was to throw up a couple of casinos just outside the clubhouse gate. They finally reached the home stretch last year when the General Assembly, whose members freely partake in the casino lobby's generosity, gave horse tracks in Anderson and Shelbyville the authority to fire up 2,000 slot machines.

Critics said even then that the gambling lobby soon would be back for more. It didn't take long.

Fifteen months after opening the so-called racinos, the operators are now not only crying poverty but also asking for hefty tax breaks. It's actually the second time the casino owners have tried to escape an agreement they freely entered into last year. This spring, the Indiana House, at the casinos' behest, approved $75 million in tax breaks for the two operations. Thankfully, the proposal died in the Senate.

But the state's gambling interests are as persistent as a slot jockey with a cup full of quarters. On Monday, they once again appealed to a legislative study committee for tax relief because business -- and imagine this amid the deepest recession in 70 years -- is bad.

The committee's chairman, state Sen. Luke Kenley, is appropriately skeptical. "We need to remember that they voluntarily entered into this agreement, and all the terms and conditions were known at the time they did that,'' Kenley told The Star's Bill Ruthhart.

It's not as if questions weren't raised about the racinos' viability before they opened. Standard & Poor's assigned credit ratings of "B,'' the sixth highest grade, to each operation's debt. Such debt, according to Standard & Poor's, carries "significant speculative characteristics.''

In other words, the companies gambled on their new casinos' profitability. Now, they want a state bailout.

Let's imagine, for the sake of argument, that the General Assembly does eventually give in to this special interest. What will lawmakers tell the thousands of other Indiana businesses -- from auto dealers to jewelry stores -- struggling because business isn't as brisk as it once was? For that matter, what will lawmakers tell the more than 10 percent of Hoosiers who are currently unemployed? When will they get their tax breaks?

While this is a good editorial, one wonders why the Star's editors couldn't muster a comparable sentiment when it came to the bailout of the Capital Improvement Board. For years the secretive CIB has been horribly mismanaged and has entered into giveaway deals with professional sports teams. Despite massive debt, the CIB is still insisting it wants to pick up the Pacers' operating costs on Conseco Fieldhouse, a facility for which the Pacers get all the revenue, even though there is no contractual requirement that these costs be picked up. Yet through the CIB saga the last several months, the Star's editorial pages has never once opined against throwing more tax money at the problem, i.e. the CIB, never asked for reform of the CIB, and never came out against the CIB giving away $15 million more to the Pacers.

Let's say "No" to the racinos. But we also need to be saying "No" to the CIB.

Wednesday, August 26, 2009

Panhandling Ironies

I can't leave the panhandling issue without noting the delicious ironies present during the debate. Matthew Tully in his column this morning quotes Don Welsh, CEO of the Indianapolis Convention and Visitor's Association complaining about panhandling. Tamara Zahn, President of Indianapolis Downtown, Inc., was also present in the audience during the debate. Welsh and Zahn have salaries measured in the hundreds of thousands, courtesy of taxpayers. They are constantly coming before the council begging for millions of dollars of taxpayer money, most of which ends up going to the salaries of officers and top employees of their organizations, or being stashed away in investments. Yet these people complain about a panhandler on a street asking for a dollar? Give me a break. I'd much, much rather give a panhandler a dollar than contribute to Welsh and Zahn's outrageous salaries. (FYI, I don't recommend the giving money to panhandlers on the street or professional panhandlers who come before the council. They both tend to mispend people's money and then just come back asking for more.)

I'm not going to spare the Democratic members of the Council though who often bring hypocrisy to a new level. On the panhandling issue, they fall all over themselves to appear to be the advocate of the downtrodden, the poor who have no choice but to panhandle. The other night though I was talking about the poor who can't afford to bail out of jail, and pay outlandish phone charges fees to call loved ones. Sheriff Frank Anderson has a contract with a private company that rewards the Sheriff for the right to fleece the poor on phone calls by funnelling millions into his commissary account, which he then uses to buy fancy new motorcycles and pay millions to his private law firm. Council Democrats know all about this. They also know about the fact that many inmates, again people who are often too poor to afford bail, are often not being provided with their medication by the private companies that do medical at the jails under contract with the Sheriff. As a result, many are injured and dying as a result. Yet has a single Council Democrat stepped forward to speak out about concern for these poor members of our community? Nope, not a single one.

Ironically the only councilors who have expressed any interest in the issue is some of the Republican councilors. It's hard not to use the word "hypocrisy" when describing the Democrats' expressed concern for the poor when it comes panhandling and their utter lack of concern regarding the fleecing of inmates on telephone calls and poor medical treatment they receive at the hand of private companies. This is exactly why Republicans don't take Democrats seriously when they claim to be for poor and downtrodden. The Democrats' concern for those folks seem awfully selective.

The Legal Cost of the Panhandling Ordinance

Matthew Tully pens a column this morning in which he discuss panhandling and the need to consider the very serious concerns on both sides of the issues. It is a sentiment I agree with. This is one of those issues where there is very legitimate concerns on both sides.

I came away from the debate though unconvinced that the laws on the books are somehow inadequate. Most of the examples cited by councilors and members of the public in support of the ordinance were of things that were already illegal under existing law. Timothy Maguire, chairman of the Marion County Libertarian Party, did an excellent job of questioning whether there was an actual need for a new law when existing laws are being underenforced.

One thing I think councilors fail to appreciate is the legal cost that will be involved in defending this ordinance in court. There is a flawed portion of the ordinance which if it passes as is, would prohibit people from being within 50 feet of an intersection and engaging in political speech with motorists. For example, someone on a sidewalk encouraging people to honk the horn if they oppose the abortion could be covered by the ordinance. While the ordinance is clearly aimed at panhandling which is not strictly political speech, the flaw in the drafting of the ordinance would allow it to be applied to verbal political speech.

Even setting aside that possible and likely unconstitutional application to political speech, the panhandling ordinance itself rests in a very gray area of the law. The Courts have overwhelmingly held that panhandling is speech that is deserving of some protection. The decisions require that the ordinance be: 1) narrowly tailored to 2) serve a significant government interest; and 3) that there be alternative methods of communications. These are very fluid concepts that are decided on a case by case basis. There is no black and white when it comes to whether an ordinance like this would be found unconstitutional. No one knows.

What does this mean? It means that the City will inevitably spend tens if not thousands of dollars in court defending the constitutionality of the ordinance. If the City uses City Legal to defend the ordinance and City Legal prevails, $50,000 would be a good estimate of the amount spent defending the lawsuit. If, as quite possible, the City hires a big, politically-connected company to defend the lawsuit, such as Barnes & Thornburg, you could be talking $300,000 in legal fees for the City. Should the Plaintiff prevail, because it is a constitutional claim, the law requires the City to pay the Plaintiff's attorney's fees. Now you're talking about the cost of defending the ordinance approaching half a million dollars.

Councilors should be calculating what the ultimate cost of the ordinance will be (with legal expenses considered) and whether passing such an ordinance is worth it. Is it really worth passing such an ordinance if it costs $1,000 per panhandler cited under the ordinance? One can be totally in favor of the ordinance and conclude that the cost of the ordinance is simply not worth it when you consider what little the ordinance probably accomplishes.

Tuesday, August 25, 2009

Hank Bosworth: Man of Many Hats

One has to wonder how Henry (Hank) Bosworth has enough hours in the day. Bosworth, one of Marion County Sheriff Frank Anderson top people, pulls down $59,200, the second highest salary of any special deputy in the the Sheriff's Department. Bosworth is also Police Services Coordinator for Indianapolis Downtown, Inc., an organization that pockets millions in taxpayer money. According to IDI's 2007 tax return, the most recent tax return available, Bosworth was being paid $51,400.

If that's not enough, Bosworth is also Chief of Police for the Homecroft Police Department. If you scroll down the link to theSouthsiderVoice, you'll see Bosworth (wearing the Homecroft hat) at a meeting in Southport discussing vandalism.

Thursday my summer break ends and I start back to work at my second job teaching political science at the University of Indianapolis. I feel seriously underemployed when compared to Bosworth.

Monday, August 24, 2009

The Need for Bipartisanship And Independent Thinking On The Council

While watching the Indianapolis City-County Council over the past year, one thing that strikes me is how poisoned the atmosphere has become with partisan politics. Partisan politics is certainly not unusual in a legislative body, nor is it always a bad thing. But despite the tensions in Washington, D.C., very few votes in Congress actually come down to party line votes where the parties line up on opposite sides. It's the same with the Indiana General Assembly. Despite the fact that the Indiana House is very competitive, few actual votes come down to party line events.

When I view the Council, I see a completely different situation. Virtually every contested vote (those where significant number of members are on both sides of the issue) comes down to Republicans lining up against Democrats. Indianapolis' government is certainly the exception when it comes to the partisan divides which dominate ordinary legislation. In Congress and at the General Assembly you see a lot of "mixed votes," votes where significant numbers of Republicans and Democrats are on both sides of the issues.

Certainly things like redistricting and the budget understandably are resolved on party line votes. But there is no reason for an issue like the panhandling ordinance, which is to be heard in committee tonight, to be subject of a party line vote. Undoubtedly there are Democrats who are concerned about the solicitations and public safety. Republicans on the other hand should be concerned about the constitutionality of the ordinance and the likelihood the City will shell out tens if not hundreds of thousands of dollars in legal fees (most likely to a well-connected law firm) to defend the ordinance.

Recently the Republican council members voted almost unanimously to pass the first Capital Improvement Board tax increase, a 1% increase in the hotel tax to give Indianapolis the highest hotel tax in the country. You cannot tell me that if a Mayor Peterson had proposed the tax increase, Republican Council members would have been screaming at the top of thier lungs as Democrats lined up for the tax increase. Either the hotel tax increase is right or it is wrong. The fact that it is proposed by a Democrat or Republican Mayor, doesn't change that fact.

The lack of independent thinking is also a problem on the council. Republicans on the council went along with the tax increase without even asking for the first reform from the CIB. The CIB has been running deficits for a decade and yet no Republican who voted for the tax increase even bothered to make as a condition of his or her vote that the CIB be reformed...rather they just gave it more taxpayer money to continue its mismanagement. Why? It is an "us v. them" attitude. If a Republican Council member asked for reform, that person would immediately become a target and labeled as an opponent of the Mayor's position on the issue.

The Council majority needs to operate as a separate entity, not an extension of the Mayor's Office. People from the Mayor's Office have no business regularly being allowed in the Council Majority Caucus meetings. That doesn't happen in the Indiana General Assembly or the U.S. Congress. The reason why is that a legislative body needs to act as an independent body. It is the same with the Council. The Council can't act as an independent body if people from the Mary's Office are allowed in Council strategy meetings. Their presence alone is intimidating, even before getting into strong-arm tactics when councilors suggest they might want to take a different position than the Mayor.

While the Council's actions demonstrate a bitter partisan divide, the fact is Republican and Democratic voters in Marion County don't have such stark divisions. Council members from both parties would be wise to start representing their constituents more and their party leadership less.

Jail Guard Arrested For Soliciting Sex; Was a Jumbo Snickers Part of the Offer?

It's hard not to find humorous a guy who tries to solicit sex using a a candy bar and a Coke or a pack of smokes.

Today's Indianapolis Star reports:

A rookie Marion County Jail guard was arrested and accused of soliciting sex from a customer at a gas station where he moonlights on security duty.

Deputy Paul Wagner, 25, was charged preliminarily with soliciting prostitution and official misconduct while working at the Speedway station in the 5100 block of East Washington Street, said Col. John Layton of the Marion County Sheriff's Department.

Wagner was under surveillance by the Sheriff's Department when he offered a female customer a candy bar and Coke or a pack of cigarettes for oral sex, authorities said. Layton said the woman, who was not a prostitute but a regular customer at the gas station, had complained that Wagner had harassed her before.

The Sheriff's Department set up the sting and arrested Wagner early Saturday.

Wagner was charged with official misconduct because he was wearing his sheriff's uniform at the time.

Wagner has been with the department for 10 months and was suspended without pay.

Moonlighting by Indianapolis Metropolitan Police Department officers, more than half of whom work second jobs, has come under close scrutiny over concerns the system in place now leaves the city open to safety and liability issues, as well as embarrassing or even potentially criminal instances of corruption.

Sunday, August 23, 2009

Sorry, But It Is Called A "Kickback"

I notice over on Abdul's blog that he has accused me of claiming the Sheriff had committed a crime during a council committee meeting. Of course, I did no such thing. Rather I simply used a contractual term that certain people either mistakenly or intentionally chose to misconstrue. Let me explain.

When a contractor rewards government with a payment for contracting with the contractor, that's called kicking money back, i.e. a "kickback" provision in the contract. There is a kickback provision is in the inmate telephone contract. Per the contract, the money kicked back by Evercom/Securus gets channelled into the Sheriff's Commissary Fund. There are actually two kickbacks in the telephone contract. One is worth at least a $1 million a year. The other I'm not sure about because I didn't have the other document that provides the formula for that payment. There is no dispute that those provisions are in the contract or the money gets channelled in to the commissary fund.

When I mentioned the "kickback" contractual term during the meeting, Sheriff Anderson and others immediately and inaccurately suggested that I was accusing the Sheriff of a crime. My guess is they probably knew I wasn't but were trying to stir up the Democrats on the Council.

Not once did I say the kickback provision was criminal nor did I even say it was illegal. Rather what I was trying to ask was 1) how much money the telephone contract was raising; and 2) the legal basis by which that money goes into the commissary fund rather than the general fund. I'm sorry, but don't we have the right to know this information? Contrary to Attorney Kevin Murray's suggestion, I have no litigation pending whatsoever about this matter.

For the record, kickback provisions in privatization contracts are not at all illegal. Whether they are a good policy is a different story.

ICVA Considers Taking Out Loan, Putting Taxpayers More Deeply In Debt

The Indianapolis Business Journal Saturday reported on the latest hair-brained scheme being launched by insiders wanting to get their hands on more taxpayer money - the Indianapolis Convention and Visitors' Association is considering borrowing money for marketing. According to the IBJ:

The money would be used to add sales and marketing staff, to advertise in trade publications, and to beef up the ICVA’s presence at gatherings for trade show and convention planners. It would also enhance the ICVA’s ability to fly prospective customers here for site visits. Extra funds would also be used to market the city to leisure travelers in neighboring cities, such as Chicago, Cincinnati and Louisville.
In the article, Don Welsh, ICVA, CEO, says that the ICVA spends 85 percent of its $10.5 million budget on sales and marketing, with the rest going toward administration, finance and information technology. Welsh is playing fast and loose with the numbers. As I have previously reported:

In its 2007 tax return, the ICVA showed revenues of $12,159,994 almost all of which came from taxpayers. For an organization allegedly starved for cash, the ICVA had $1,549,267 stashed in mutual funds and equity securities. The organization paid out salaries of $4,326,029 and provided benefits worth $692,734, for a total employee expense of $5,018,763. Thus employee expenses make up an incredible 41% of its budget. And that is not counting other overhead expenses. As with numerous non-profit organizations funded by Indianapolis taxpayers, most of the tax dollars get swallowed up in overhead.

As far as individual officer salaries at ICVA, former ICVA President and CEO Robert Bedell pulled in $353,777 in salary and benefits. Reportedly, the new ICVA President/CEO Don Welsh makes substantially more. It is a safe be that his combined salary and benefits total over $400,000. According to the 2007 report, Alfred Bennett, V.P. Sales made $142,579, Matthew Carter, V.P. Strategic Development made $143,343, Mary Huggard, V.P. Communications and Development pulled in $144,637, and James E. Wallis, V.P. of Administration and Technology, made $136,858. Those are just the officers. Obviously the top employees are also pulled down substantial sums of money.
What Welsh undoubtedly is doing is moving over employee and officer salaries from "administration" to "sales and marketing." Sorry, but that is not the way it's done. Salaries and benefits are "administrative" costs. The fact than an organization is involved in "sales and marketing" does not change that fact.

The ICVA hog at the taxpayer trough is long in need of being put on a diet. Rather than ask for more money or borrow more that the taxpayers need to pay back, the ICVA might consider cutting some of the fat out of its administrative budget. A good place to start is with Welsh's lavish salary and benefits. Do we really need to pay one person nearly a half million dollars annually (Welsh's estimated salary and benefits) to run the ICVA?

IBJ Discusses Democratic Challengers to Mayor Ballard's Re-Election; Mayor Ballard's Coming Primary Opposition

Saturday's Indianapolis Business Journal outlines the potential Democratic challengers to a Ballard second term. The field includes an impressive array of well-connected candidates including former Sectetary of State Joe Hogsett, Melina Kennedy, Woody Myers, Kip Tew, Councilor Jose Evans and Brian Williams.

I found these two comments particularly interesting and worth commenting on.

But not everyone can run. If the wide field of Democrats is able to unite behind a “strong, well-organized, well-financed” candidate, that person should present a formidable challenge to Mayor Ballard, said Hogsett, a partner at Bingham McHale and a former Indiana secretary of state and chief of staff for then-Gov. Evan Bayh. "
Hogsett is being extremely kind in his assessment of what is needed to defeat Mayor Ballard in a re-election effort. Mayor Ballard comes into the election with about a 45% base Republican vote. He has gone out of his way to alienate Republicans by backing off on virtually all of his campaign promises and snubbing his die hard supporters who backed the Mayor when he was seen as having no chance against Peterson. Last time I checked, you can't get to 50% when you start at 45% and start subtracting. It would not take a strong Democrat candidate to beat Ballard. It would merely take a Democrat who is able to fog a mirror.

Now let's move on to the comment of a former law school classmate of mine, Kip Tew.
“It feels like we’re drifting,” said Tew, 47, who most recently headed the Obama campaign in Indiana. “The last time the city voted for an outsider, we see where it’s gotten us. I think [Ballard] is a nice guy, but there’s no real vision for what he wants to do.”
Tew is a smart guy and knows better. Ballard is in no way an "outsider." He might have been elected as an outsider, but from Election Night on he's turned his administration over to insiders. He not only is now a certifiable insider, he, probably more so than any Mayor before him, has simply turned over his administration to those seeking to profit off of taxpayers. Contrary to Tew's claim, Mayor Ballard does have a "vision" and that "vision" is to continue full steam ahead with the country club politics which has dominated this city for the past few decades, regardless of which party controlled the Mayor's Office or the Council.

Although the reporter, Corey Schouten, mentions the names of potential Republican candidates - Mark Miles and Murray Clark - who might run if Ballard doesn't seek re-election, what is missing from the story is that almost certainly Ballard, because of his alienation of the reformers and populists in his Republican base, will have an opponent in the 2011 Republican primary. It is something that I am considering, although a final decision doesn't have to be made until several months into 2010. There may well be others who are fed up by Ballard, who are interested in running. I can't speak for others, but if it is me, I will certainly make it known to the Republican electorate how Mayor Ballard turned his back on so many of his campaign supporters, has broken campaign promise after campaign promise, abandoned ethics reforms, and turned over his administration to self-interested insiders who are busy stuffing their pockets with taxpayer money.

The first step in a successful campaign is that you consolidate your base. Ballard has so deeply alienated so many mainstream Republicans, reconciliation is out of the question. In order to win a general election, he has to get about 90% of the normal Republican-leaning voters in Marion County to vote for him. Right now, he would not even come close to getting 90% of the Republican vote. In fact, any name on a ballot in the GOP primary against Ballard would most likely get a sizable 30% or more protest vote. A credible candidate could close the gap even more. With the Mayor being able to solicit campaign contributions from contractors doing business with the city, which Mayor Ballard has a history of doing, it would be tough to come up with enough financial backing to get to 50% against a sitting Mayor in a primary. But one of the advantages of modern technology is that low budget candidates now have ways of communicating with possible supporters that is much cheaper than running TV or radio ads, or doing expensive direct mail.

I think Schouten did a good job with the article, as he was concentrating on the Democratic side of the equation. But one should not forget the preliminary round taking place in May of 2011. There are a lot of angry Republicans out are eager to cast a vote against Mayor Ballard and in favor of a Republican, who unlike Ballard, is truly against continuing country club politics in Indianapolis. The Marion County GOP deserve to have a leader who will live by his words. Mayor Ballard has proven that he is not that leader.

Friday, August 21, 2009

Cool...Terry Burns of Indianapolis Times Attacks Yours Truly

I love it when Democrats start attacking me, someone who is a big critic of fellow Republicans like Mayor Greg Ballard and Prosecutor Carl Brizzi. It shows they're worried that reformers in the Republican Party might actually take over. He's right too. The Democrats have a lot more to fear from populist, reform-minded Republicans who can reach out to independents and Democrats, than country club Republicans who would be luck to get 44% of the vote in a county-wide race.

Apparently, Terry Burns of the Indianapolis Times did not like it that I went to a council committee meeting and dared question Sheriff Frank Anderson about his commissary fund, and the millions he makes off of the inmate telephone contract. Or that I dared asked that the Sheriff provide some documentation regarding the sudden revelation that he needs an additional $4.8 million in taxpayer funds to pay a contract arrearage for a private jail contractor (CCA) that has existed for years, but he only recently bothered to tell anyone about. Or that I asked if he ever pursued indemnification for attorney's fees from the private jail contractors. Apparently if you question anything the good Sheriff does, that means you believe in a "conspiracy." For those scoring at home, the Sheriff and his representatives refused to provide any answers or provide any documentation regarding the $4.8 million.

What I particularly like is that Burns (as other Indianapolis Democrats) has no problem throwing over the side traditional Democratic constituencies. Democrats I thought were supposed to be for the "downtrodden" and "helpless." Apparently that doesn't apply to inmates in a jail who die or get injured because they don't get their medication because a private company is cutting corners to make more money. Or it doesn't apply to hard-working nurses who are made by a private correctional company to escort inmates with violent felony histories throughout a low security facility because the private company doesn't want to endanger their profit margin by hiring more security. Speaking of which, I thought Democrats were against privatization. Apparently the local Democrats are perfectly fine with privatization when the contractors are contributing money to Democrats.

FYI, none of those so-called "frivolous lawsuits" have been dismissed.

Here is Burns' hard-hitting piece:

Conspiracy theories and other strange things

Disgruntled Republican, mayoral hopeful and political wingnut Paul Ogden put on a quite a show the other day before the City-County Council's Public Safety Committee.

Apparently, Ogden couldn't find a health care town hall meeting to disrupt so he brought his act to the City-County Building instead. The performance was vintage Ogden, plenty of unsubstantiated allegations, a hint of paranoia, unbridled innuendo and rousing conspiracy theories. (Watch out Paul, I think I see a guy over there on the grassy knoll!)

Anyway, Odgen's [sic] attempt to hijack the committee's public safety budget hearing proved futile. (Remember, this is the same guy who's filed countless frivolous lawsuits challenging the operations at Marion County Jail II.)

While we won't get into the specific charges leveled by Ogden (they don't merit the space), let's just say that he clearly doesn't understand contracts or the Indiana code. However, the most disturbing part of Ogden's clownish performance was his ability to weave some clearly strange and bizarre conspiracy theories. No wonder the GOP figures that its better off with out him. Maybe the Libertarians have an opening.
Thanks Terry! Keep the attacks coming.

Dispensing With the Lies Told About the Simons' Right to Terminate the CIB-Pacers Conseco Fieldhouse Contract

This morning I take a closer look at the Pacers-CIB Conseco Fieldhouse Contract. What I have tried to do is take it apart and simplify it so that lay people can understand a very complex and poorly written contract. Still the analysis is terribly dry and I apologize for that.

As an initial side note, one thing I have not heard discussed is that even thought Pat Early of the Capital Improvement Board signed the contract on November 1, 1999 it wasn't until 7 1/2 months later, on or about June 15, 2000 that the Simons finally signed the agreement. I just think it rather odd that a contract of this magnitude would not be signed contemporaneously. Oddly though they wrote the contract (actually there is a financial agreement and operating agreement which I'll often refer to as a "contract" for simplicity sake) in such a way that the effective date was the date on the agreement, not the date the last party signed the contract, which is the norm. They also don't have dates next to the parties signature which a good attorney would have included, especially in a situation like this where the parties are not in the same room signing the agreement on the same day.

Now let's examine more closely that "Early Termination Right" contained in Section 4 of the Financial Agreement


First there is no right to terminate early in the first 10 years of the contract. I don't think anyone questions that.

Now, let's look at how the early termination right in Section 4 of the Financial Services Agreement works. For the erlyy termination right to apply it requires:

Written Notice to the CIB within 30 days of the Pacers notifying the NBA of its intent to relocate the Indiana Pacers. First though ALL of the following conditions must be met:

(1) Pacers have experienced a "significant net cash flow loss" for the fiscal year for the previous season
(2) Pacers reasonably expect that they will produce a "significant net cash flow loss" for the following fiscal year;
(3) Pacers reasonably believe it will produce a cumulative "net cash flow" from July 1, 1997 through the end of the contract.
(4) the CIB does not within 60 days of the "early termination notice" agree to subsidize the Pacers in an amount which covers the "net cash flow loss" for the following fiscal year;
(5) the Pacers intend to structure a sale which triggers the CIB's First Refusal Rights or the Pacers intend to sell or transfer all or a substantial portion of its assets

Thus it is critical to look at the CIB's "First Refusal Rights." That is contained not in the Financial Agreement but in the Operating Agreement. In that provision, it says that if the Simons or the Pacers notify the CIB of "meaningful negotiations" and is prepared to accept an offer to sell the Pacers stock, or all or a substantial portion of the Pacers' assets, then the CIB has 45 days to basically match that offer.

To simplify there are three conditions that must be met before the Early Termination Right kicks in: 1) notice of intent to relocate the team; 2) proof of financial loss ; and 3) a sale of the team.

Repeatedly the tall tale has been told that since the Pacers (allegedly) are losing money, the Simons simply have a right to cancel the contract and relocate the team. Not true. To terminate the contract they also have to be selling the team.

But even if the Pacers were to exercise the Early Termination Right, they still have to pay the penalty outlined in Section 5 of the financial agreement. Contrary to the claim that first appeared in the State audit review of the CIB, the contract says nothing about agreeing to a mutually agreed penalty for early termination. Rather two formulas are provided.


There are two formulas which we will label "A" and "B."

A: Penalty is 1) Aggregate Advance Amount not yet forgiven (basically the CIB advanced utilities at Market Square Arena that is being forgiven on a declining basis every year); and 2) an amount equal to the "applicable termination percentage" (which is in Exhibit B of the Financial Agreement) multiplied by the net sales proceeds. That applicable termination percentage starts out at 50% in 2009 and declines about 3% to 6% every year.

Here's how that formula for "A" works: If the Pacers sell for $300 million in 2009 (the Pacers franchise was valued at $303 million by Forbes in December of 2008), then the penalty under "A" is:

$15 million (approximate balance of Unforgiven Utilities from MSA) + $150 million ($300 million x 50%). PACERS EARLY TERMINATION PENALTY UNDER "A" = $165 million.

B: Penalty is $50,000,000 plus "Applicable Scale Amount" which is located in Exhibit A. This is an amount that starts out at $184 million in 2009 and 2010 and then declines about $9 to $10 million every year.

Here's how the formula for "B" works: If the Pacers exercise the early termination provision in 2009 or 2010, the PACERS EARLY TERMINATION PENALTY UNDER "B" is $50 million + $184 million = $234 million.

Under the contract you are supposed to Use "A" for the penalty, unless "B" is less. Thus the penalty the Pacers would owe to the CIB and the taxpayers, should they sell the team for $300 million and terminate the contract in 2009, would be $165 million.

Translation? The penalties are so substantial the Simons have absolutely no leverage to demand $15 million from the CIB/City. People who keep peddling the notion that the Pacers can simply pick up and move if they are losing money apparently do not understand the contract or have another agenda.

See the Star's take on the meeting by clicking here.

Thursday, August 20, 2009

Derek Redelman Responds Regarding His Role in the Senate District 30 Vacancy Caucus

Below is an email (reprinted with permission) from Derek Redelman who wanted to clarify his role with respect to what transpired before and during the Senate District 30 Caucus. Although I didn't mention Redelman directly on my blog, I did make a flip comment on Advance Indiana that I lost all respect for him when it was mentioned that Redelman had supported the insider candidate Ryan Vaughn. I was disappointed to hear that he may have cut a deal with Republican insiders to try to get ahead politically. I had always admired Redelman as a fighter for education reform, an issue near and dear to my heart. Redelman writes though to inform me I had the facts wrong:

Your post-mortem on the District 30 Caucus was just brought to my attention.

It should be corrected that I was NOT working for Ryan Vaughn, nor any of the candidates for that matter. Indeed, you could probably confirm that by talking with any of them – including Scott and John. In my meetings with each of the four candidates, I did make clear that I had been asked to consider the council seat if Ryan got appointed. I also told each of them that I had interest and was considering
it. I just felt it was important for them to know that directly from me, rather than hearing it as a rumor. I also told each of them that my potential interest would have absolutely no impact on my vote at the Caucus – and it did not. In fact, in the end, I made calls to party leadership and sent out an e-mail the day before the caucus letting everyone know that I had decided, regardless of the Caucus outcome, that I would not seek the Council seat.

So, at this point, I could claim to have been on any side of this battle. Certainly I did nothing publicly to support any of the candidates; nor did I assure any of the candidates privately that they would get my support. On the day of the caucus, I would not be surprised if three of the four candidates were counting me in their column – which is perfectly okay with me since I consider each of them friends (another reason that I did not endorse or work for any of them). In the end though, I will say that I am very happy with the outcome and am very confident that Scott will make a terrific state senator.
Thank you, Derek, for writing and giving me your feedback as well as your willingness to allow me to publish your email.

Just Answer the Questions, Sheriff Anderson

Last night I attended a meeting of the Public Safety Committee at which the budgets of the Prosecutor's Office, the Marion County Courts, the Clerk's Office, and the Sheriff's Department were discussed.

I arrived to ask the Sheriff's about the money he was receiving off the Evercom Correctional Billing Services aka Sercurus contract. The Sheriff contracts with the private company to provide phone services for inmates in the Marion County jail. As one might expect considering the company has a monopoly and a captive audience with loved ones desperate to keep in contact with inmates, the cost of the phone calls are extremely expensive.

In exchange for entering into the Evercom/Sercurus contract, the telephone company is required to, in addition to providing the service, pay money to the Sheriff. (The Sheriff is real sensitive to the term "kick back" but that is the term normally used to describe such provisions in privatization contracts.) The payments consist of two different types, referred to as Option 1 AND Option 2. I didn't have the language governing how Option 1 payments were to be calculated. But I did have a 2008 amendment to the contract, which changed Option 2 to $91,300 paid to the Sheriff every month, or $1,095,600 annually.

That money, and whatever is paid under Option 1, according to the contract gets paid into the Sheriff's commissary fund, which basically falls outside the normal budgetary review of the council. Both Republican Sheriff Jack Cottey and now Democrat Sheriff Anderson have engaged in questionable spending out of the commissary fund. In a story published by the Indianapolis Star last year, it was revealed that the Sheriff Anderson has used the commissary fund to pay over $1.5 million in legal fees to the law firm Locke Reynolds (which is now Frost Brown Todd), which is where the Sheriff's private attorney Kevin Murray works. Gary Welsh at Advance Indiana has reported how Sheriff Anderson funnels legal work to Murray's firm.

There is a question first whether the telephone money should be funnelled into the commissary account which the Sheriff and not the council has primary control over, and second whether the money is being spent appropriately. For example, IC 36-8-10-21 certainly does not appear to allow for commissary funds to be spent by the Sheriff to hire private outside legal counsel, which not coincidentally is a major campaign contributor of his. A side question is why the telephone contract was handled as one for "professional services," which normally covers such things as legal and accounting work, etc. Typically contracts for professional services do not have to go through the same bidding process as other contracts, and not coincidentally end up going to companies that are campaign contributors. One would not think that a phone service provider should be classified as a "professionial service."

During the course of the Sheriff's presentation, it came out that in the category of "Other Services and Charges" was an increase of $6,166,352 in the Sheriff's budget. During questioning it was explained that approximately $4,800,000 of that amount included payment to Correctional Corporation of America, which runs Jail #2 off of Washington Street. The claim was that the Sheriff's Office had for years been behind on paying CCA under its contract, to the point where now the Sheriff was three months and millions in arrears. Supposedly the Sheriff got behind because of a difference in the count of inmates housed at Jail #2. Having read the Sheriff-CCA contract, the claim had a phony ring. Under the contract, CCA provides a count every month and the Sheriff is billed accordingly.

Further, there is another reason the $4.8 million arrearage claim has a phony ring. As I previously reported, in November of 2008, the Sheriff's Department came before the Council making the claim that they needed to transfer money so from one category to another in its budget, so as to pay out to CCA nearly $223,683 that Sheriff's spokesman Doug King said was owed to CCA. Again, the proposal was included in a non-descript resolution that failed to even mention the name of the private jail contractor. The resolution claimed the money was to go for "inmate meals" and "contractual costs." During the Sheriff's presentation, King explained that the "contractual costs" was because CCA had decided to take an inflation adjustment on the contract and the Sheriff needed the money to pay for meals at Jail #2.

Whether King personally knew it or not, the assertion was bogus. The inflation adjustment in the CCA-Sheriff contract is automatic on 1/1 of every year. It's not something one "chooses" to take or not. As far as the inmate meals at Jail #2, under the contract that is specifically included in the per diem paid to CCA. Never was there a mention to the Public Safety Committee at that time of being behind on paying the CCA contract. Last night though the Sheriff's people claimed that they had been behind for years and are now trying to catch up.

At the end of the Sheriff's presentation, the public was invited to make comments and ask questions. As I stood at the front of the room, I quickly found myself joined by Murray, only inches away. As I tried to speak, he almost immediately began interrupting. He said that I had "pending litigation" against CCA and the Sheriff and that I was attempting to "conduct discovery" through a council meeting.

My understanding is that Murray is not a trial attorney and thus may not understand that there is no way you could do "discovery" during a council meeting. Further, I would note that not a single quesiton I attempted to ask the Sheriff or his representatives had anything whatsoever to do with any matter in litigation. I would add that my law firm has yet to make a penny on any of the CCA/Sheriff litigation. I can't say the same for Murray's law firm which is still, despite the Indianapolis Star story, representing the Sheriff on cases where the Sheriff is also already represented by City Legal. I can only assume that, once again, the Sheriff is using the commissary fund to pay Murray's law firm, even though the statute does not allow for the that fund to be used for the payment of legal fees to a private law firm.

Bottom line, neither the Sheriff nor the Sheriff's representation offered any documentation regarding the alleged $4.8 million arrearage owed to CCA, which makes up part of the $6,166,352 increase in "Other Services and Charges" in the Sheriff's budget. I asked for answers regarding how much inmate telephone money from the Evergreen/Securus contract was being channelled into the Sheriff's Commissary fund. No answer was provided. I did not get to ask how the commissary money has been spent. I asked whether the Sheriff has ever enforced the indemnity provision in the CCA and other private contracts to recover legal expenses he paid out when he gets sued because of something the contractor allegedly did. The Sheriff and his representatives would not answer the question.

It could be that Sheriff Anderson has ready explanations to all these questions. But when a person acts like they have something to hide, my experience is that the person generally has something to hide. In light of the pay-to-play scandal of our sister state, Illinois, it is time that Sheriff Anderson be asked direct questions regarding the money going into and out of the commissary accounts and the Sheriff's questionable pay outs to private contractors, including his personal law firm. If Sheriff Anderson is unwilling to answer the questions, and provide financial documentation to back up his answers, then he should not be in public service.

See also:

A Hostage Situation Waiting To Happen: Marion County Sheriff Frank Anderson Houses Inmates Charged With Violent Felonies At Low Security CCA/Jail #2 (Wednesday, August 12, 2009)

Sheriff Frank Anderson's Jail Contract Monitor for CCA/Marion County Jail #2 is Nowhere to Be Found; Call for Department of Justice Investigation (Wednesday, July 22, 2009)

How Private Correctional Companies Use Phony Industry Group Audits to Mislead Government Officials: the ACA Audit of Marion County Jail #2 (Monday, January 5, 2009)

Did Sheriff Anderson Mislead the Council Into Giving Private Jail Company Nearly a Quarter of Million Dollars It Was Not Entitled To Receive? (Monday, December 15, 2008)

Where Indianapolis Can Get Money for Crime Surveillance Cameras: Enforce Indemnity Provisions in Private Correctional Contracts (Thursday, December 11, 2008)

Message to Indianapolis City County Council and Other Elected Officials: No Transfer of Annex Inmates to CCA/Jail #2 (Thursday, December 4, 2008)

That Road to Evansville

On Monday, the Indianapolis Star contained an article by reporter Bill Ruthhart discussing the cost overruns on the I-69 extension to Evansville. It was followed up by a Star editorial on Wednesday suggesting it would have been better to have used existing I-70 and U.S. 41, widening and upgrading the latter, rather than build a new extension. The Star editorial opined that the I-70/U.S.41 option would have had far lower construction cost and far less property acquisition and loss of forest and farmland.

Early in my legal career, working as a Deputy Attorney General, I had to make a number of trips to Evansville. I worked in the eminent domain section of Attorney General Linley Pearson's office. There were a number of acquisitions taking place in the Evansville area, some of which resulted in litigation.

Since that time, I have made additional trips to Evansville. By now, I probably have 50 total under my belt. In the course of those trips, I have taken every route to Evansville of which there are many. I feel that practical experience gives me a unique perspective on traveling in southwest Indiana.

I cringe when I hear I-70/U.S. 41 mentioned as a viable alternative to building I-69. Of all the routes I ever traveled to Evansville, the I-70/U.S. 41 route which takes one through Terre Haute is the longest and takes the most time to travel. The route is over 200 miles and runs nearly four hours long. The most direct route is S.R. 67/S.R. 57, which takes about 3 hours and 20 minutes and is around 170 miles long. Another alternative is S.R. 67/U.S. 41 which is a little longer in terms of time and distance, but has fewer stops.

The problem with the I-70/U.S. 41 is not the fact it needs to be upgraded. In fact, the road in interstate-like for most of its distance between Terre Haute and Evansville. There is a delay getting through Terre Haute stoplights, but absent that, there are very few stops between Terre Haute and Evansville.

No, the problem with the I-70/U.S. 41 route is that Terre Haute, quite simply, is not on the way to Evansville. It's a little like going to South Bend, by traveling first to Fort Wayne.

I find mystifying the estimates that show only five minutes or so difference between the I-70/U.S. 41 route and a new interstate I-69 going much more directly to Evansville. The new stretch of highway, estimated at about 145 miles, would be about 60 miles shorter than the route through Terre Haute. I'm not sure how a trip 60 miles shorter would translate into only five minutes.

Even if the I-70/U.S. 41 route were a viable option, it would only address the need for a better Indy-Evansville road. it would do nothing to fix the lack of good roads in SW Indiana, most of which is not even close to I-70 or U.S. 41. Additionally, you have the rarely spoken of problem of heavy trucks being on narrow state roads in the region. Driving on U.S. 231 in SW Indiana can be a harrowing experience. Imagine a very narrow hilly road where virtually every other vehicle is a semi. Without an interstate in the region, those semis end up on regular roads, causing substantial damage and endangering the public.

While the editorial talks about loss of farmland and forest, that is a complaint that has arisen with respect to ever interstate ever built. Can you imagine though what Indiana would be though without I-65? While we have to be mindful of those concerns when building the interstate, those concerns don't override the importance of the project to a part of the state that has long been economically depressed and isolated from the rest of the state. Southwest Indiana deserves access to an interstate like every other part of the State. We need to find a way to make this happen.

Wednesday, August 19, 2009

Where Indianapolis Mayor Greg Ballard Went Wrong

These are off the top of my head. I'll be revising them as the day progresses.

1. SURROUNDING HIMSELF WITH ELITIST INSIDERS/SHUTTING REFORMERS OUT OF HIS ADMINISTRATION: On Election Night, Ballard talked about how his election singled the end to country club politics in Indianapolis. Then that very night he allowed himself to be cornered by two of the ultimate insiders, Barnes & Thornburg Partners, Bob Grand and Joe Loftus. From the moment on he was elected he has surrounded himself with insiders and shut out the reformers who had laid the groundwork for his election.

2. REFORM IN INDIANAPOLIS GOVERNMENT: Ballard not only has not ended country club politics in Indianapolis, he has all but turned his administration over to the elites who have traditionally run the city regardless of which political party controlled the Mayor’s office or the Council.

3. BIG LAW FIRMS: Ballard promised the end to big law firm domination of city government, then he took it to new levels, allowing two partners of Barnes & Thornburg to sit in on key meetings and make other decisions.

4. REFORM IN MARION COUNTY GOP: Ballard failed to push for changes in the county GOP organization, including the replacement of Tom John as chairman who he feuded with during the campaign. Ballard has said nothing about strong-arm tactics within the GOP and has even participated in using those tactics in the Senate District 30 vacancy election and on council votes.

5. SACRIFICING THE FUTURE OF THE MARION COUNTY GOP: Ballard’s election gave the Marion County Republicans an enormous opportunity to put the party on a more populist course that could ensure the Republicans viability as a majority party in the county. Instead, Ballard let his administration be taken over by insiders who had no interest in his re-election or the election of a majority GOP Council in 2011, but who were instead interested in using their positions to cash on Ballard's election victory. Marion County Republicans will pay a heavy price for decades for this missed opportunity.

6. TAKING THE BLAME FOR FORMER MAYOR PETERSON’S MISDEEDS: Ballard has taken the fall for several Bart Peterson post-campaign shenanigans apparently at the urging of aides. This includes a December 2007 alteration of a 22 year old agreement which allowed Susan Williams and her Indiana Sports Corporation to sell the Pan Am Plaza without paying the taxpayers the $6 million penalty required under the contract.

7. CONFLICT OF INTEREST APPOINTMENTS: Ballard appointed Bob Grand to head up CIB despite having an enormous conflict of interest as attorney for the Simons who own the Pacers. Numerous other examples exist where this administration has treated conflicts of interest as something that can just be dealt with by a wink and a nod.

8. ETHICS REFORM: Ballard has almost completely abandoned ethics/good government reforms he talked about during his campaign.

9. TAX INCREASES: Ballard abandoned his opposition to tax increases. He has embraced numerous tax increases despite his campaign promises.

10. FAILURE TO DEMAND REFORM OF THE CAPITAL IMPROVEMENT BOARD: Even if asking for tax increases for the CIB bailout were defensible, it was imperative that Ballard at least demanded reform in how the CIB did business, which practices led to the huge deficit. Ballard, however, did not ask for a single reform of the CIB and instead simply advocated throwing more money at a problem and twisted arms on the council to get the tax increase plan through.

11. MISINFORMATION: Ballard continually attempted to mislead the public about the CIB bailout, claiming it was all about the convention business, when the CIB budget deficit was clearly about excessive subsidies given to professional sports. The public clearly was not buying the spin Ballard was selling.

12. CONTINUED SUPPORT OF TAXPAYER GIVEAWAYS: Ballard supports giving $15 million plus more of taxpayer money to billionaire Simons even though there is no necessity to do so under the Pacers’ contract. Numerous other examples exist where the administration falls over itself to give away taxpayer money to insiders who have traditionally profited off of taxpayers.

13 GUNOWNERS: Ballard has taken aim squarely at gunowners , the most Republican loyalty there is. Ballard advocated registration and claims his administrations’ policies don’t have to comply with the 2nd Amendment, in direct opposition to the position taken Attorney General Greg Zoeller.

Tuesday, August 18, 2009

Real Estate Investor Indicted For Mortgage Fraud; The Need For Indiana Attorney General to Establish Real Estate Fraud Unit

Today's Indianapolis Star today reports that a federal grand jury has indicted Robert Andrew Penn on conspiracy to commit wire fraud, wire fraud, and conspiracy to launder money. According to the allegations, Penn, who now lives in Naples, Florida, had owned and operated several businesses that borrowed $12.6 million from 2003 through 2005 as part of 114 alleged fraudulent real estate transactions.

The Indianapolis Star describes how the alleged schemes would work:
In one example, officials say LaFavers, acting for Realty Options, agreed to buy a home at 2050 N. Delaware Street for $235,000 in 2004. Then another conspirator, acting for Robert Penn, recruited someone identified as a "straw" borrower to purchase the same house.

A false appraisal showing the property was worth $370,000 was submitted to Argent Mortgage, officials say, along with a $333,000 loan application that falsely showed the borrower was providing the down payment from her bank account.

In the Windsor Village matter, Realty Options entered a deal with Homevestors, a firm associated with Indianapolis real estate investor Jerry Jacquess, to buy 184 duplexes from the same owner for $50,000 each. According to officials, Penn and unnamed conspirators received inflated appraisals showing the bulk of the properties were worth $120,000 each.

Penn and his wife then recruited straw purchasers, including relatives in Virginia, to form what the Penns called an investment club to buy the properties for $120,000 each. The mortgages were made by Argent, Countrywide, Peoples Choice and The Money Station, officials say.

Donald Brown also aided the deal by forming Brown Funding bank to make it appear to the lenders that the straw purchasers had access to a large volume of cash in the fund, the indictment says. Brown and Jacquess were indicted earlier with Tamara Penn.
Those of us who have worked in the real estate regulatory field, know the name Robert Penn quite well. As head of the title insurance division at the Indiana Department of Insurance, I was naturally very interested in any title company agents or agencies who had aided Penn in his allegedly fraudulent schemes. In virtually any real estate fraud situation, the person committing the fraud will use the same title company time and time again, knowing that at the very least the title company would look the other way when it comes to fraud. I believed title insurance agencies and agents had a higher duty than to simply turn a blind eye to obvious elements of fraud.

The regulation of real estate though involves a number of different players. The Attorney General regulators appraisers and real estate agents. The Department of Financial Institutions regulates lenders. The Secretary of State is over mortgage brokers. The Department of Insurance regulates title insurance agents. Then you have state and federal law enforcement officials and prosecutors. Since any sort of real estate fraud involves multiple players, regulated by multiple agencies, at the very least you need incredible cooperation and active involvement of the regulators.

The case of Robert Penn highlights a problem with the prosecution of real estate fraud. Certainly the Marion County Prosecutor Carl Brizzi had evidence of all of Penn's alleged criminal activities and never bothered to bring charges. As a result, it was left to the feds to prosecute. The feds though just have time to concentrate on the most extreme cases involving millions and can only prosecute violations of federal law. Violation of Indiana criminal law, which might make for a better prosecution, can only be tackled by county prosecutor.

Certainly I would blame Brizzi for never tackling the severe problems with real estate fraud in Marion County, including those supposedly committed by Penn. White collar crime has victims too, a fact that Brizzi seems to often forget.

But there is a reason why county prosecutors often are reluctant to tackle real estate fraud. Real estate fraud is extremely complicated. It is difficult to prosecute crimes when prosecutors and their deputies lack the understanding of the complexities of real estate transactions, the role of the various players, and the how these schemes can be pulled off.

That's where the Attorney General can play a vital role in assisting prosecutors. The time is long past for the Indiana Attorney General to set up a mortgage fraud unit to provide real estate expertise to local county prosecutors wanting to prosecute mortgage fraud. The Attorney General could even providea Deputy Attorney General who could be sworn in by county prosecutors to conduct the prosecution or sit as second chair assisting a less knowledgeable prosecutor.

Real estate fraud is not going away. Indiana with its patchwork regulatory structure and county prosecutors who are reluctant to prosecute something they don't understand, is an inviting target for any schemer wanting to commit real estate fraud. The time is right for Attorney General Greg Zoeller to take action to make Indiana less inviting for people like Robert Penn.

Monday, August 17, 2009

NUVO Examines Charter Schools; Gordon Gekko Provides A Valuable Lesson About Real Life to a "Teacher of Teachers"

I went to my mailbox this morning to find my Indianapolis Star had shrunk again, this time the city/state section having bitten the dust. Fortunately, I occasionally find other sources of quality local reporting, sometimes in the strangest of places. In the past I have been critical of NUVO for its failure to fill the news void left by the Star. Today, though I must write to commend NUVO and author Josefa Beyer for a well-written and balanced article “IPS vs. Charters” (

Beyer contrasted a charter school, The Project School, with IPS 20, a school that is closing. Surprisingly, NUVO gave a positive impression of the free-market charter and didn’t sugar-coat the flight of students from IPS, as told through the story of School 20.

However, the most interesting part of the article was one of the so-called experts interviewed: Professor Robert J. Helfenbein, Jr., a “teacher of teachers” at Indiana University. Set aside for a moment that the standard model of training teachers is wisely under attack by Indiana Supt. of Public Instruction Tony Bennett who seeks to get people who actually know their content into classrooms and limit the number of classes designed to teach a teacher to teach. Helfenbein’s comments demonstrate an ignorance of the high school civics' terms “democracy” and “free market,” somehow juxtaposing the former term for a political system and the latter economic term as somehow being antonyms. Helfenbein also demonstrates a lack of appreciation for the real world, where performance, competition, and improvement count. NUVO reports on Helfenbein’s comments regarding charter schools:

As a teacher of teachers at the Indiana University School of Education, professor Robert J. Helfenbein Jr. watches the district charter debate with growing concern . . . Helfenbein doesn’t think the market method can replace the democratic method.

“’If we’ve been following the economy the last six months, it’s crazy,’ says Helfenbein, referring to the economic meltdown that has gripped the country and even globe. ‘Do you want to trust your children to these forces?’”

So charters are the market method? OK, I'll bite on that. But traditional public schools are the "democratic method.” Huh?

Traditional public schools are the opposite of democratic. They are government schools. Government tells parents which school their children must attend, regardless of how bad the school may be. If the parents wish to take their children out of the public school system, they have to pay tuition at a private school, assuming, of course, the private school will allow the student to enroll and the parent can afford it. Other options include applying for a limited spot in a magnet school, which can deny enrollment for any reason, or enroll in a public (yes, they are public) charter school.

Of all these, only public charter schools are tuition-free and require open admission to any student. What can be more democratic than charters? Parents of any means can make the free choice to enroll or leave a charter school. They can enroll at will and “vote with their feet” by leaving if they don’t like the school for whatever reason. District schools, on the other hand, are more reminiscent of the Soviet Block days of mandating where a student went to school and what he studied. What, exactly, is the difference between the Communist system and a district such as IPS? Oh, yeah, the Soviets actually educated their children.

Helfenbein continues:

“Any business model has an acceptable loss, but what’s an acceptable loss to a fifth-grader?” What? An acceptable loss to a fifth-grader? Recess, if he loses his homework? Lunch money to a bully?
Giving the teacher of teachers the benefit of the doubt, I’ll assume he is trying to paint charters as business-oriented and implying that any business will have losses. However, if the stakes are the education of a child, I continue to assume, the potential loss is too high to risk an education on a charter school. Does every student in a charter school “win?” (whatever that means). No. But Helfenbein’s implication is that the safer bet for the fifth grader is to stay in a district school where, I can only assume, Helfenbein believes all students win.

Helfenbein concludes with this observation: “It comes down to a democratic society. There is a limit to self-interest.”

I contend there is no limit to self-interest if the education of your child is at stake. The only thing most sane parents will not sacrifice for the collective is the future of their own children.

Contrast the looniness of Helfenbein, with the timeless words of Wall Street's Gordon Gekko: “. . . greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, for knowledge has marked the upward surge of mankind.”

Moral views on "greed" aside, Gekko made a profound point – men and women, for centuries, have been driven by the desire to improve, to do better for their children, and to gain the skills and knowledge necessary to achieve in life. When one is motivated to achieve, whether to get rich or just put food on the table for their kids, people work harder, get smarter, and look for any way to improve as a necessary step on the path to meeting this goal. It is that basic notion that advocates of charter schools understand and academics like Mr. Helfenbein, who are isolated from real life experiences, do not.