Thursday, September 17, 2009

Ballard Insider Uses City Position to Promote Interest Of Telecom Client While Costing Taxpayers Millions

One of the most powerful political operatives in the city, Joe Loftus has held high-level positions in the last two Republican administrations. During the 1990s, Loftus, a partner at the politically-connected law firm Barnes & Thornburg, served as the City’s legislative lobbyist and as senior deputy Mayor. In the administration of Greg Ballard, Loftus is the city’s lobbyist at the Statehouse and acts as the administration’s special counsel.

Although employed by the city in the 1990s and today, Loftus has never stopped representing his private business clients, even when the interests of those clients appear in direct conflict with his taxpayer-funded roles with the city.

In the 1990s, while lobbying for the city and serving as deputy mayor, Loftus was also the chief lobbyist for Ameritech. While serving in yet another public role, as the Mayor Goldsmith’s appointee to the Cable Franchise Board, Loftus tried to eliminate the city’s cable agency which had local regulatory power over the cable TV providers at a time in which Ameritech was considering entering the Indianapolis market place to provide video service. Loftus also championed the privatization of the City’s TV access channels (‘Channel 16’). As it turned out, the only solution was to leave the station alone, unless it was to sell commercials as suggested by those entities participating in the Request for Proposal process.

Fast forward to 2007. Newly-elected Greg Ballard assigned Loftus the responsibility for setting up his administration. This responsibility included hiring the attorneys at the Office of Corporation Counsel (OCC). Not surprisingly, many of those attorneys, including the head of OCC, Chris Cotterill, came from Loftus’ firm, Barnes & Thornburg. Although Loftus told a reporter during the transition he would not take a position with the city, in fact it is later reported by the Indianapolis Star that Loftus makes a combined $115,000 as lobbyist for the city and to act as the administration’s special counsel. In addition, Loftus’ law firm Barnes & Thornburg was paid $211,000 to lobby for the city in 2008.

As he did in the 1990s, and now as an agent of the Ballard administration, Loftus is using his position to block the efforts of the city’s telecom agency, now called the Telecom and Video Services Agency (TVSA), to enforce compliance of the video TV providers regarding benefits to Indianapolis available under state law. This includes Loftus’ client, AT&T (the former Ameritech) which now provides video service in certain sections of Indianapolis.

The executive director of the TVSA, Rick Maultra, has advocated, on behalf of the City, petitioning the IURC for enforcement of several non-compliance issues against the video providers. These issues include the funding for the government and educational access channels, the connection to AT&T of the educational access channels and other City benefits that would cost the video providers millions of dollars long term. Such pursuit of compliance is consistent with Indiana law. The video providers, like AT&T, have certain provisions under the State law to abide by for using public assets for private gain. The catch is that it is up to any given city to petition the IURC when violations occur, which requires the City’s legal department’s involvement. AT&T, does not want to pay the fees and Loftus is more than willing to do the bidding for his client, even though it costs taxpayers millions of dollars that the city desperately needs.

To press the issue of the video providers not complying with the State video Franchise Law, Maultra needs the assistance of the attorneys in the Office of Corporation Counsel; attorneys appointed by none other than Joe Loftus. Loftus hired Logan Harrison, a Barnes & Thornburg attorney, at OCC and assigned him the responsibility of representing Maultra and TVSA. Harrison reports to Cotterill, the City’s Chief Attorney. Both Cotterill and Harrison have virtually declined all assistance to Maultra’s office in his efforts to enforce compliance of matters regarding Bright House, Comcast and particularly AT&T.

As head of the OCC, Cotterill has the chief responsibility to screen complaints filed under the City’s new ethics rules. Nonetheless, Cotterill has immersed himself in a situation involving an almost certain conflict of interest. At best, Cotterill is deliberately turning a blind eye to a conflict of interest involving the person who hired him, Joe Loftus. At the worst, he is directly involved in a plan to use OCC to aid Loftus’ client, AT&T, by putting up a firewall to protect AT&T against the compliance pursuits of the Telecom & Video Services Agency.

In 1998, Maultra was working with the City-County Council to pass a right-of-way ordinance that would have brought tens if not hundreds of millions of dollars to City coffers. The premise, which is used by many cities around the country, is that if a private entity is using a public asset for private gain, then the City should be compensated for that use. While this was being studied and discussed by the City-County Council, Loftus, as chief lobbyist for the City under Goldsmith and Ameritech’s (AT&T’s) chief lobbyist, pursued and got passed HB 1376, which reduced the City’s ability to be compensated for right-of-way use. Little surprise that the passage of such a law greatly benefited Ameritech, one of the chief users of the City’s public right-of-way.

Fast forward to the present Administration. Given the City’s financial shape and need to augment funding to repair the infrastructure, Maultra circulated the right-of-way idea to City Legal and the Mayor’s Office. At a minimum, he had hoped the City would at least pursue the present State law that Loftus got passed which would be recovery costs only for wear and tear by streets cuts. At best, Maultra had hoped that the State law, given the circumstances in which it was passed and the Ballard Administrations’ appearing before the State legislature to address its financial woes, could be repealed. Perhaps the timing might be such that the legislature would embrace such a non-taxpayer solution to the City’s problems by attaching what are essentially user fees. Pursuit of right-of-way compensation sounds like a more profitable idea than allowing private companies to put their names on public assets.

By the summer of 2009, Maultra’s efforts had made him a top target for Loftus. The proposed 2010 budget released by the Ballard administration showed Maultra’s executive director position and assistant at the tiny TVSA being eliminated, which considering how small the agency is, virtually eliminates the office. However, the fact TVSA produces more revenue than it costs to run the office, belies the elimination of the positions as some sort of cost-cutting measure. Rather it almost certainly was a naked power play by those in the Ballard administration, i.e. almost certainly Loftus, to eliminate the person knowledgeable and responsible for exacting compliance of the video providers, all of which benefits greatly the video providers and particularly Loftus’ client AT&T. For that Maultra had to go.

If there was any question who was behind the effort to eliminate the executive director position, it was answered during the days leading up to the Administration and Finance Committee meeting to hear the presentation of the budget. Representatives of AT&T called to lobby councilors in support of the elimination of Maultra’s position. What the Ballard administration, i.e. Joe Loftus, apparently did not count on was that Republican at-large member Barb Malone would cross over to vote with the Democrats for an amendment to restore funding for the executive director position. Councilor Ryan Vaughn, a Barnes & Thornburg attorney, and whose law firm represents AT&T which was making calls supporting the elimination of Maultra’s position, did not even bother to identify his conflict at the council committee meeting or abstain from voting.

Councilor Ed Coleman, who was at the committee hearing in a non-voting capacity, noted that the Controller’s Office gutted the 2009 accomplishments of the budget that was sent to the City-County Councilors as they consider the Agency’s fate. Such accomplishments included discovering a missing franchise fee check from AT&T for $182k and the Agency discovering the cable industry was attempting to pass legislation at the state to transfer 2% of the franchise fee responsibility to the satellite providers. The Agency caught the legislation and advised OCC and the Controller’s Office. The legislation later died and the Controller’s Office estimated the cost savings to the City was $1.5 million a year as a result.

Unfortunately the saga may not have ended with the committee vote. Behind the scenes, Ballard administration officials are busy making calls trying to line up a floor amendment for Monday’s full council meeting, an amendment that would once again eliminate the telecom agency executive director position, the person most knowledgeable about the State law and the legal compliance issues affecting Loftus’ client, AT&T.

Loftus has a history of twisting the arms of Republican council members to get what he wants and has often been described as ruthless in dishing out retaliation when council members vote against his wishes. Hopefully though, the Republicans on the council will have the backbone to stand up to him. The move to eliminate the executive director of TVSA should be seen for what it really is – a Ballard administration insider using his position behind the scenes in an ethically-challenged effort to aid the insider’s private legal client by getting rid of the city's chief compliance watchdog. It is an effort that the council should soundly reject on Monday.


Citizen Kane said...

When is someone on the council or the community going to stand up against this corruption!

Paul K. Ogden said...


Apparently Cotterill is distributing a memo claiming that we should forego collection of millions of dolars in rights of way fees from telecoms because they would simply pass along the fees to the public. That is so disigenous. Cotterill is part of the same administration that wants to charge private companies for naming rights to public assets. According to Cotterill's theory, we taxpayers would end up paying for that too because the company could just pass along the cost. It doesn't work that way.

The short explanation is that Cotterill is a young attorney who is being duped by the man who hired him, Joe Loftus, to engage in a conflicted scheme to help out Loftus' client, AT&T, avoid paying rights of way and other fees. If AT&T can simply pass along these fees, why are they making calls to councilors in support of the elimination of Maultra's job?