Monday, November 30, 2009

"Ogden on Politics" Public Official Of the Month For November 2009

Okay, I have to admit I had someone else in mind for this position until this morning. My plan was to name Acting U.S. Attorney Timothy Morrison as public official of the month for taking the lead in going after white collar crime and political corruption in Indiana. Some examples include the Penn mortgage fraud and the Perry Township prosecutions as well as the raid and forfeiture action Mr. Morrison had filed against Indianapolis businessman and political contributor Timothy Durham. It appeared that we finally had someone willing to stand up to the insider political machine that runs Indianapolis and pursue much needed litigation to clean up the cesspool of political corruption in this city.

Then inexplicably U.S. Attorney Morrison dismissed the Durham forfeiture he had filed just days earlier saying he had been provided "assurances" that Durham would not dissipate his assets. I'm not even sure what that means, but I can't imagine the U.S. Attorney's Office would extend such graciousness to others forfeiture defendants. The extraordinary action by Morrison leaves only one logical conclusion - that people with substantial political clout worked over the weekend to pull the strings necessary to get the U.S. Attorney's Office to dismiss the Durham forfeiture lawsuit. Undoubtedly the lawsuit if allowed to proceed would expose the involvement of some very big names in the local political scene.

But I digress. This posting is about our newest state senator, Scott Schneider, whose district extends from northern Marion County into Hamilton County. I have known Scott for years and have always found him to be a man of integrity, a solid conservative who is a straight-shooter. Probably the best endorsement of Scott came from a liberal radio host, the last person you would think who would support Scott. He told me that he always admired the Schneider family and that Scott and his father were people in politics whose word you could count on. Scott, like Sen. Mike Delph, will bring a reform, good government view to the Statehouse.

Here's a brief biography of Scott Schneider from the State Senate Republican website:
A strong voice for taxpayers and an advocate of property tax caps, government efficiency and personal responsibility, State Sen. Scott Schneider was elected to represent Senate District 30 in July 2009. Schneider, Vice President of Sales & Marketing for Mister Ice of Indianapolis Inc., served two terms on the Indianapolis City-County Council from 1999 to 2007, where he advocated smaller government and lower taxes. Active in the local Republican party, he serves as Ward Chairman for Washington Township in Marion County. Schneider was a member of the Citizens’ Police Complaint Board under former Indianapolis Mayor Stephen Goldsmith and the Marion County Sheriff’s Merit Board from 1997 to 1999.

Volunteering in the community is also a priority for Schneider, who worked as a youth soccer coach for First Baptist Church in Indianapolis and as a volunteer assistant basketball coach for Arlington High School. In addition, Schneider has worked on local “Sack Hunger” and “Golf for the Cure” events.

He is a graduate of Heritage Christian School and Indiana Wesleyan University, where he majored in business and political science with a minor in economics.

Schneider and his wife Kristine have five children: Lauren, Hannah, Zachary, Luke and Emma. They are members of College Park Church.
Best of luck to Scott as he enters his first legislative session.

U.S. Attorney Timothy Morrison Drops Forfeiture Complaint Against Timothy Durham; Was Pressure From Politicians The Reason?

In a bizarre twist, the Acting U.S. Attorney for the Southern District Timothy Morrison announced today he is dropping the less than week old forfeiture case filed against Indianapolis Businessman Timothy Durham. Gary Welsh at Advance Indiana has details here.

The sudden dropping of the case on Monday morning came after a flurry of negative publicity Saturday and Sunday after the forfeiture complaint, filed in federal court last Tuesday, was discovered on-line.

According to the IBJ, U.S. Attorney Morrison indicates that now he has received the "appropriate assurances" that Durham's assets won't disappear, he is dropping the case. There is no indication what those "assurances" are or who provided them. To dismiss a case on those grounds is nothing short of bizarre and unprecedented. Further, no attorney has even entered an appearance on behalf of Durham in the case in order to negotiate a resolution to the case..

Clearly Durham's money and political contributions had earned him powerful friends in politics. Obviously someone intervened on Durham's behalf with the U.S. Attorney's Office, at the very least to provide those alleged "assurances."

The Revolving Door on the 25th Floor: Mayor's Chief of Staff Paul Okeson Takes Job With City Contractor & Political Contributor Keystone Construction

As the Indianapolis Star continues to shine a light on the legislative revolving door, the practice of sitting state legislators resigning then immediately becoming legislative lobbyists, the Star is ignoring an even worse revolving door situation in its own back yard.

It was announced last week that Mayor Greg Ballard's chief of staff, Paul Okesen, is leaving city government to begin work with Keystone Construction. Keystone is a major city contractor and a contributor to Mayor Ballard. In fact, a representative from Keystone accompanied Mayor Ballard on his latest overseas trip.

Prior to accepting the Chief of Staff position, Okeson had been manager of the Indianapolis office of Bernardin, Lochmueller and Associates, an Evansville-based planning, engineering and environmental firm that currently holds contracts with the Indianapolis Department of Public Works.

In short, Okeson went from a position with a city contractor to Ballard's Chief of Staff and is now leaving to work for another city contractor. His journey is the epitome of the executive revolving door.

For state employees, there is a one year waiting period before they can begin employment with a company doing business with the state. There is no such rule for municipal employees. Even the ethics code adopted this year by the Indianapolis City-County Council does not prohibit revolving door employment.

While the legislative branch revolving door is a problem, the executive revolving door in local government presents even more of a conflict of interest. Mayor Ballard like other Republican and Democratic mayors who proceeded him is aggressively seeking political contributions from those companies doing business or wanting to do business with the city. The relationship between those political contributions and who ultimately receives lucrative city contracts grows increasingly closer with the passage of each year. Indeed that relationship has become so close that the only apparent difference between Indianapolis insider politics and the pay-to-play politics of former Illinois Governor Rod Blagojevich seems to be that Gov. Blagojevich was more open about what he was doing.

The fact that contractors seeking city business can curry favor with the current administration by making political contributions is bad enough. But when those political contributors can also dangle lucrative jobs in front of key administration staffers, it creates yet another opportunity for undue influence with the administration. While Paul Okeson undoubted has strong qualifications for the position he received at Keystone, there is little doubt that, where it not for his influence and contacts within the Ballard administration, he would have been just another unsuccessful job seeker.

Sunday, November 29, 2009

Limits on Political Contributions Coming From General Assembly?

Democrats are bragging that U.S. Representative Baron Hill, the lone Democratic candidate reported as receiving money from Indianapolis businessman Timothy Durham, only took a few thousand in contributions. They gleefully contrast that to the hundreds of thousands in contributions taken by Republican candidates such as Marion County Prosecutor Carl Brizzi and Governor Mitch Daniels.

The misguided implication is that Rep. Hill was executing self-restraint in taking contributions from Durham. The fact though is federal candidates operate under much tighter contribution limits than do state and local candidates in Indiana. While, under federal law, Durham could only contribute a few thousand to federal candidates like Hill, there is no limit on how much he gives to state and local candidates. As a result, while Durham could legally only contribute a few thousand to Rep. Hill, he was able to contribute $150,000 to Marion County Prosecutor Carl Brizzi.

Under Indiana law the only limits on contributions to candidates are limits placed on corporations and labor unions. Indiana state and local candidates are not capped on how much they can receive from individuals, and non corporate business entities, as well political action committees. Even the limits on corporations and labor unions under Indiana law are problematic. Those limits are aggregate in nature. For example, corporations and labor unions can only give $5,000 total for all state-wide candidates and $2,000 to all candidates for members of the General Assembly. (See IC 3-9-2-4). These aggregate limits are often extremely difficult to enforce. For example, ascertaining whether a corporation has exceeded the $2,000 limit to General Assembly candidates, would require individually reviewing multiple finance reports from more than 200 candidate committees.

The system is also dated. LLCs are now as common if not a more common business entity than corporations, even for large businesses. Yet LLCs are treated differently from corporations under the law. Contractors doing business with Indianapolis that choose to form as an LLC can contribute as much as they want to Mayor Ballard. If those same businesses form as corporations, however, the company's contributions to ALL candidates for local offices would be capped at $2,000.

The system doesn't make much sense. Even worse though, in situations like those involving Durham, it leads to the appearance of impropriety, namely that Durham's $150,000 political contributions bought Marion County Prosecutor Carl Brizzi's cooperation in, at the very least, looking the other way.

Hopefully the Durham fiasco will shed light on a the problems with Indiana's political contribution law and will encourage the legislature to make needed changes.

Jim Shella's Indiana Week in Review Avoids Topic of Durham FBI Raid and Political Fallout; Vacuum for Media to Provide New Local Political Show

This week featured a huge story with the business offices of local businessman Tim Durham being raided by the FBI. Durham had been a huge contributor to, chiefly, Republican political types. Durham has given over $150,000 to Marion County Prosecutor Carl Brizzi and $200,000 to Governor Mitch Daniels. The fallout resulted in Tim Motsinger, who was probably the leading candidate Republican candidate for Marion County Sheriff, dropping out because of his ties to Durham and the fact Motsinger had received a $200,000 loan from one of Durham's companies, Fair Finance. The story also came out this week that Brizzi, who had been elected a board member of Fair Finance, resigned from that position and tried to distance himself from the raid. Unbeknownst to the media, at the same time the raid was going on, the U.S. Attorney's Office was filing to seize Durham's personal and business bank accounts, his home and three other properties. The allegations against Durham in the forfeiture complaint are wire fraud, money laundering, and one that many reporters are missing, tax evasion. In the end, it is almost always the tax allegations which are the ones that get you.

Obviously this is a huge political story, the biggest political story of the month and one of the biggest of the year. So how did Jim Shella of Channel 8, who hosts local political show Indiana Week in Review, handle the issue? He completely ignored it. As one can tell from reviewing his list of topics, Shella went out of his way to find non-Durham related topics on what otherwise would have been a slow news week:

-Casino bankruptcies
-Marlin Stutzman calls Evan Bayh an “empty suit”
-Dan Burton plays up his Washington experience
-Will Becky Skillman run for governor?
-Restoration of Obama family home in Tipton County
-Sarah Palin lookalike from Hamilton County

The knock on Shella is that as a political reporter, he is far too cozy with political insiders and does not want to challenge them with his reporting. When a reporter becomes friends with political types, the inevitable result is that the reporter doesn't want to do the tough stories that might harm his or her friends. That is human nature.

It has been obvious for a long time that IWIR has turned stale. Tuning into his show all you typically hear are the Republican or Democratic insider positions (and with Mike McDaniel you also get the view of a paid lobbyist) with little in the way of independent thought occasionally brought to the table by the non-Shella reporters. But I never believed Shella's coziness with insiders was so bad that he would deliberately ignore the Durham story, a story that cuts at the very heart of insider politics that dominate Indianapolis and, to a lesser degree, Indiana politics.

If there were ever a time for a news outlet to start a fresh show dealing with local politics, the time is now. IWIR is not going to address the tough issues or at least address the tough issues in such a way that is going to step on the toes of political insiders. Imagine the ratings a new show dealing with local politics in a fresh and independent way would receive. Within a month or two such a show would eclipse the viewership of IWIR. In a year, it would have double the audience of IWIR. People don't tune into shows like IWIR because they are clamoring to hear the Republican or Democratic positions on the issues. They do so because they want fresh, interesting and independent analysis of the news. They are not getting that from IWIR.

Saturday, November 28, 2009

U.S. Attorney Files Forfeiture Action Against Tim Durham's Properties and Bank Accounts Alleging Wire Fraud, Money Laundering and Tax Evasion

I'm not sure how the media missed this. I saw over at Indy Democrat that Jon Easter had indicated that someone had emailed him that the Fortville address that was Tim Durham's house had been listed in a foreclosure action filed on November 24, 2009. I looked up on the Pacer system used by the courts and found the lawsuit.

The lawsuit, filed by acting U.S. Attorney Timothy M. Morrison, alleges wire fraud, money laundering and income tax evasion. It contains the following facts:

6. Timothy S. Durham, and his companies and associates, have been involving in a scheme to defraud numerous persons of money by convincing those persons to buy "investment certificates" ... from Fair Finance, Co, an Ohio company, upon the representations that the money given to buy the investment certificates will be invested in low-risk, high yield, short term consumer debts, and the investors will receive high regular interest payments on their investments. In fact, that money was not invested in the types of investments represented to the investors. Instead, the money provided by victims of the scheme was used to make interest and redemption payments to earlier victims of the scheme, thereby lulling the earlier victims into believing that their money was being responsibly, and enticing new investors into the scheme in order to fund payments to the earlier investors.

11. Durham kept for his personal use a portion of the funds that were entrusted to him by the purchasers of the investment certificates contrary to the representations made to them.

12. The defendant property constitutes, or was purchased with, or was commingled with, the proceeds of the fraud scheme by Timothy S. Durham.

13. During the course of the fraud scheme perpetrated by Timothy Durham and his associates, Durham operated at least 2 holding companies and 19 operating subsidiaries, with approximately 77 individual bank accounts for these entities.
The lawsuit asks for the seizure of four properties owned by Durham, his main residence in Fortville, a home in Los Angeles and two properties in Henry County. The lawsuit also asks for the forfeiture of 18 bank accounts in the name of Durham personally and his businesses Fair Finance, Fair Holding, DC Investments, Fair Financial Services, Obsidian Enterprises, Obsidian Leasing, Fair Facility. The lawsuit also asks for the seizure of an automobile, a 2008 Bugatti Veyron, owned by Durham.

Friday, November 27, 2009

Mayor Ballard Announces Samantha Karn as New Corporation Counsel, Replaces Inexperienced Former Barnes and Thornburg Associate With Yet Another One

On Tuesday, I wrote about the problems at City Legal and how many of those problems was caused by inexperience at the helm of the agency. Chris Cotterill had only five years of legal exerperience under his belt when he was appointed head of this very important agency by Mayor Greg Ballard. Cotterill's lack of legal and administrative inexperience has repeatedly shown through as City Legal has been the source of repeated complaints during his tenure.

In government that spells a promotion though. Cotterill was recently bumped up to Chief of Staff for the Mayor.

Barnes & Thornburg Partner Joe Loftus, who is on the public payroll as counsel to the Mayor and lobbyist for the city, had been responsible for staffing City Legal. Instead of looking for seasoned attorneys, Loftus opted for inexperience and, preferably, Barnes & Thornburg ties. In addition to his mere five years experience, Cotterill had been a Barnes & Thornburg associate. Jonathan Mayes who heads the Litigation Division had only an unbelievable two years experience before his appointment to be head of the litigation division, an area more than any which cries out for an experienced attorney to assist other litigators.

Why would have Loftus have chosen inexperienced attorneys rather than seasoned professionals to head City Legal? The answer is that "seasoned" attorneys are not likely to be rubber stamps for whatever Loftus or insiders want done. They would have asked questions and placed their clients - the Mayor and the City - ahead of the agenda of insiders like Loftus.

Cotterill's promotion created a big opportunity to place as head of City Legal an experienced attorney who would offer the Mayor independent legal advice. As with the new appointments to the Capital Improvement Board, it was an opportunity that the Mayor blew bit time. It was announced this week that the new head of City Legal would be Samantha Karn. Ms. Karn was not sworn in as an attorney until October of 2004, giving her just five years legal experience. What law firm did she work? You guessed it Barnes & Thornburg.

The more things change, the more they stay the same.

Forging Deeds - Not a Crime According to Marion County Prosecutor's Office

While talking about the failure of the Marion County Prosecutor's Office to prosecute white collar crime, I was reminded of a real estate case I handled a couple years ago. My client owned two houses in Marion County as an investment. My client was shocked to learn one day that a "Robert Smith" had forged his name on two deeds to transfer the properties to Smith's corporation. Smith then turned around and sold the properties to two individuals.

Smith readily admitted to the forgery ... his unbelievable defense was that he had a right to forge the deed because he thought the properties had been abandoned.

My client took the forged deeds and other evidence to the Prosecutor's Office. You know what Prosecutor Carl Brizzi's office told him? This was a civil , not a criminal, matter and they would not prosecute.

The Marion County Prosecutor's Office will prosecute to the fullest extent of the law someone stealing a loaf of bread from a house, but if the person steals the whole house by forging a deed, well, the Prosecutor's Office won't get involved. Unbelievable.

LSAT Test Takers Jump Nearly 20%; The Poor Job Market for Attorneys Continues

ABA Journal reports that the number of people taking the Law School Admissions Test (LSAT) rose 20% from the previous year and is at an all time high.

Will that lead to increased numbers of students going to law school? The same article reports that the number of applicants to the University of Iowa College of Law School are up 53% over the previous year. The article points out though that applications at the Drake University Law School are the same as last year.

It only makes sense that if the number of people taking the number of LSAT rises, the number of law school applicants will rise. That will then lead to an increase in the number of students going to law school and eventually passing the bar. It is a chain reaction.

Regular readers of my blog will know that I often complain about how law schools dupe people into going to law school, suggesting the post-graduate education will afford them more employment opportunities and big salaries. Those students then get out of law school, after incurring huge student loans, sometimes as high as six figures, only to find out their education actually decreased their employment opportunities. If they are fortunate enough to land a legal job, they could well find that the pay is in the $30,000 to $40,000 range, without benefits.

The legal profession has for at least two decades suffered from having a lot more attorneys than there are legal jobs available for them. While partners of law firms, especially those in large firms, are still making big bucks, associate salaries have been depressed for years. Partners simply do not have to pay associates large salaries. If an associate does not want to work for $35,000 a year , there are 50 other fine attorneys willing to take his or her place.

This is a situation that one would hope the bar associations would take up. That is unlikely to happen though. Bar associations are run by the elites in the profession, those who profit off of the cheap labor that makes the already wealthy partners of the big law firms wealthier.

Wednesday, November 25, 2009

Durham FBI Raid Claims First Republican Victim: Tim Motsinger Out of Race for Marion County Sheriff

From Marion County Republican Sheriff Candidate Tim Motsinger's website:
Message from Tim

In light of the recent investigations concerning the non-campaign related business affairs of my campaign finance chairman, I have made the decision that it is appropriate to return any and all financial contributions and loans that my campaign has received from him or his affiliated

Unfortunately, this leaves my campaign in a non-competitive financial position.

Therefore, it is with regret that I have decided to end my campaign for the office of Marion County Sheriff.

I want to thank all the friends and loved ones that have supported my candidacy.

Certainly the entire financing of Motsinger's campaign wasn't based on Durham's individual and personal contributions. Motsinger, who had strong support among establishment Republicans, certainly would have been favored to win slating and probably the nomination as well. There is no reason to believe Motsinger could not have raised plenty of money, independent of Durham, to be competitive ina general election. Motsinger's withdrawing from the race would seem an extreme overreaction. I have never heard of a candidate dropping out because he or she lost a political contributor. One wonders whether there might be more to this story.

FBI Raids Offices of National Lampoon CEO Tim Durham, Next Day Company's Stock Rises 525%

Earlier this year, Indianapolis businessman Timothy Durham became CEO of Los Angeles-based National Lampoon, replacing former CEO Donald Laikin. Laikin had been arrested in December of 2008 and charged with allegedly manipulating the company's stock. In March of 2009, the Los Angeles Business Journal reported on the prospects of Durham turning around National Lampoon:

CAN Tim Durham resurrect one of the most venerated comedic brands in the country? A wealthy financier and playboy who has been thrust into the role of interim chief executive at National Lampoon Inc., Durham has spent the past
three months trying to apply the magic touch to save the company.

He has laid off roughly half of Lampoon's 30 employees, shrunk the size of its offices to save on rent, and shut down divisions that were bleeding money--including a college TV network and a satellite radio station.

At the same time, Durham has an eye on expanding the brand made popular by its now-defunct humor magazine and films such as "Animal House." After Lampoon spent years producing limited-release lowbrow movies and DVDs such as "National
Lampoon's Stoned Age," Durham wants it to make wide-release commercial films with big names like the Farrelly brothers.

In addition, he's weighing the idea of licensing the National Lampoon name to a restaurant group to build "Animal House"-themed sports bars and grills around the country.

"But my real focus is first and primarily to boost the movie side of the business," he said. "That's really, truly what I believe Lampoon is."

In his new role, Durham's been so busy keeping Lampoon afloat that he hasn't even had time to clean his desk, which is still cluttered with papers and photos left by his predecessor, Daniel Laikin. "Not my top priority right now," he told the Business Journal in an interview at National Lampoon's West
Hollywood headquarters.

Durham, who had known Laikin from their home state of Indiana, cuts a casual figure wearing jeans and a button-down shirt. He speaks with a slight Midwestern drawl that betrays his Hoosier roots.

Laikin was arrested in December and charged with allegedly manipulating the company's stock. He has since resigned, leaving Durham--who along with Laikin owns a majority of the company--to sort through the wreckage. Laikin's case is
pending trial.

Before Laikin became the company's chief operating officer in 2002, National Lampoon's primary business was licensing out its brand for commercial film fare such as "National Lampoon's Van Wilder." During his tenure, National Lampoon became a mishmash of businesses. It bought a series of comedy Web sites, launched a record label, a book publishing arm--even a travel agency--all aimed at the college crowd.

But the company hemorrhaged money and its stock languished at about 70 cents, down from $8 in 2004 before a split. Since the delisting, the stock is at 10 cents on Pink Sheets.

Now, Durham is dismantling much of what Laikin built. It's an approach that makes sense given that Lampoon doesn't have the resources to compete in many businesses at once, said David Morrison, president of Twenty-something Inc., a Philadelphia consulting firm.

"The company used to have this shotgun mentality where they just prayed that they'd hit something," Morrison said. "It's smart for the new CEO to dial back from that."

Durham is weighing some opportunities outside of film. He won't name the group he's talking to about the sports bars concept, but did say it's a privately held company that owns 20 to 30 well-known restaurant franchises. Durham's also planning to create a premium section of the National Lampoon Web site where subscribers would pay $10 to $15 a month to access content such as digital archives of the company's old humor magazine, and old clips featuring Chevy Chase and John Belushi.

He hasn't ruled out selling the company, or just shutting down operations and collecting the $1.5 million to $2 million a year on royalty and license fees that come in now.

"At this juncture, I'm listening to anybody's ideas and trying to find out which strategies make sense for us," he said.

A company in National Lampoon's situation should suit Durham's skill set. He made his millions conducting leveraged buyouts of small and midsize companies, turning the struggling ones into money-makers.

His private holding company, Obsidian Enterprises Inc., possesses a sprawling portfolio that includes a surgery center; a restaurant in South Beach, Fla.; a rubber recycler; and Car Collector magazine.

But the role of chief executive is a relatively new one for Durham, who prefers to take a hands-off approach to his companies, said acquaintances and business partners.

"The Lampoon thing, it's a different M.O. for Tim," said David Millard, an Indianapolis attorney at Barnes & Thornburg LLP who's worked with Durham in
the past.

The son of a dentist, Durham grew up in a small Indiana town. He isn't shy about wanting to play in the big leagues, though: He has said he dreams of becoming the richest man in the world, but acknowledges he lacks the discipline that would demand.

"I didn't have excess cash growing up," Durham told the Business Journal. "I paid my way through school; I paid for my first car. I know how much money it takes to live, and you don't have to have a lot. So anything I make beyond that is excess. And if it's excess, it's a game, right?"

The concept of playing to win is part of his philosophy.

"I don't think Michael Jordan got into the game of basketball or Tiger Woods got into the game of golf and said, 'You know what, I'm going to be mediocre today,'" Durham said. "If you're in the game, I think you have a desire to be the best."

His wealth and lifestyle have occasionally roiled the Midwest's more conservative sensibilities: He's hosted celebrities at his Indiana mansion and has been a guest at Playboy Mansion festivities in Los Angeles. His collection of dozens of cars has been the subject of some local talk. A birthday bash he threw for himself, at which he was photographed with scantily clad women, drew some jabs from the press.

But while Durham's activities might make waves in Indiana, friends say they would hardly raise an eyebrow in Los Angeles. And some criticism, they add, is overblown.

"Last time I checked, I didn't see him walking around with a posse of women," said Doug Bennett, a former president of National Lampoon, now president of Freedom Interactive, a division of media company Freedom Communications Inc.
in Irvine.

Durham, 47, shrugs off his critics and doesn't apologize for his lifestyle.

"I'm not running for political office," he said, "so I pretty much live how I want to live."

Since taking over Lampoon, Durham, a divorcee with one grown son and three grown stepsons, has temporarily moved to a house off Sunset Boulevard in West Hollywood--a residence he claims that Britney Spears was interested in buying. He wakes up at 4:30 each morning and gets on his computer to track his companies, which he says are worth more than $40 million.

"Though I don't know how you value anything with the economy these days," he said.

National Lampoon's offices are in a slate-gray three-story building on Sunset in West Hollywood, across the street from the Chateau Marmont and down the block from a strip club. It's an appropriate metaphor for where the company finds itself: somewhere between national prominence and less than reputable.

If Durham's bet on bigger films, the Internet and a handful of ventures such as restaurants pays off, National Lampoon could be catapulted back into the spotlight. It's a steep challenge, even his friends admit.

"Is there anyone (more) capable of turning the brand around than Tim? No," Millard said. "But is the battleship capable of being turned around? That's the question."

Durham has bet hundreds of thousands of dollars of his money that it can. According to Securities and Exchange Commission documents, National Lampoon owes Durham $756,945, which he loaned the company before Laikin was arrested when it needed working capital.

The new CEO described the investment as "basically putting money into keeping something afloat so you can find time to save it."

Now, the responsibility of rescuing it falls on his shoulders.

Apparently by the afternoon of November 24, 2009, the day of the FBI raid, investors had soured on Tim Durham as CEO of the company. National Lampoon's stock had fallen to 4 cents. The day after the afternoon FBI raid National Lampoon's stock rose 525% to 25 cents a share. Who made the most money from today's gain? Why, of course, Tim Durham, the largest National Lampoon stockholder.

The FBI Raid on Tim Durham's Business Offices; The Feds Act While State and Local Officials Stay on the Sidelines

Anyone who has followed my blog knows that I have long complained about my fellow Republican, Marion County Prosecutor Carl Brizzi ignoring white collar crime and political corruption. Indiana, and Indianapolis in particular, is a cesspool of political corruption, influence peddling and pay-to-play politics.

We had an example of white collar crime being ignored earlier this year when participants in the James Penn mortgage fraud scheme, probably the biggest mortgage scam in the history of the state, were prosecuted - not by the Marion County Prosecutor, but by the U.S. Attorney's Office. I complained on my blog that the Marion County Prosecutor and state regulators knew about the victims of the Penn scam and failed to take any action.

Yesterday we had yet another action taken by the feds when the FBI seized files from the businesses of Indianapolis businessman Timothy Durham. Durham's business had been the subject of an investigation by the FBI which apparently raised enough red flags to warrant a search warrant to seize files from Durham's businesses. Durham is a big contributor to Brizzi's campaign (to the tune of $160,000 by some reports) as well as other Republicans, and is a close personal friend of the prosecutor.

One has to ask the obvious question whether that same evidence that led to the FBI's raid were on Brizzi's desk and whether he chose to overlook it. Certainly any criminal wrongdoing would not be confined to just federal law; there are plenty of state laws that would have also been violated. The burden though shouldn't just fall on Brizzi. There are state regulators who would have been certainly tipped off. Undoubtedly they too, like in the Penn mortgage fraud case, knew of problems and had complaints from customers of Durham's businesses. What action did they take?

While Democrats are celebrating over the possible fall of a big Republican contributor who may take some big name Republicans down with him, they shouldn't be. The problem of white collar crime and political corruption is that it is a door that swings both ways. Indianapolis does not effectively have a two party system. We have an elite group of government contractors, law firms, and political power brokers that controls local politics, regardless of which party controls the 25th floor or the council.

Hoosiers should not depend on the feds to clean up our messes. It is time for state and local officials to be more diligent in doing their jobs. White collar crime is real crime with real victims. Let's not forget that.

Tuesday, November 24, 2009

FBI Raids Offices of Indianapolis Businessman Tim Durham

This picture on IBJ's home web page shows an FBI truck parked outside the Monument Circle offices of businessman Tim Durham's Indianapolis-based leveraged-buyout firm, Obsidian Enterprises.
I went to law school with Tim Durham. He was either valedictorian or close to it. I assisted Tim in his high class ranking by providing the foundation upon which his stellar academic ranking was achieved.
I did not know Tim terribly well in law school. He was a personable enough guy, easy to talk to. My classmates and I thought it was rather odd though when Tim, a single man in his mid-20s, suddenly started dating and quickly married an older, not overly attractive woman, who already had children. That older woman though happened to be the daughter of then City-County Council President and business tycoon Buert Servaas. When Tim parlayed that relationship (before it crashed and burned in a bitter divorce) and the connections it brought, into the opening of a business empire, my classmates and I understood Tim's strategy. He married to get ahead. Silly us. My classmates had thought hard work and being good lawyers would be our tickets to success. Tim though knew though relationships were more important to one's success.
Gary Welsh has an excellent post on the events today at Obsidian, along with links to previous stories. Likewise, IBJ has an article on the subject.

Wanted: Experienced Leadership at City Legal

The shuffling of the deck chairs on the Titanic, er Ballard administration, brings a new interesting opening. Chris Cotterill, head of City Legal, has moved over to become Ballard's Chief of Staff. That of course leaves Cotterill's old position open.

Among Indianapolis attorneys, the most consistent criticism of the Ballard administration has been the poorly run City Legal which carries the official name Corporation Counsel. Cotterill, who had only been an attorney for five years when he was appointed, simply did not have the experience for the job. The head of the extremely important litigation division of City Legal, Jonathan Mayes, only had two years legal experience when he was appointed.

Those of us who have been attorneys for a long time (I've passed my 22nd anniversary as a lawyer) know there is absolutely no substitute for experience. While City Legal is staffed by many fine attorneys with potential, most are young and need experienced leadership to guide them through the legal thicket. When the leaders of City Legal are as inexperienced, or more so, than the rank and file City Legal attorneys, it creates a huge problem.

Of course, inexperienced leadership at City Legal is no accident. I understand that Joe Loftus, partner at Barnes & Thornburg who is also on the public payroll as counsel to the mayor and lobbyist, hired every attorney over at City Legal. Loftus is no dummy. He knows young, inexperienced attorneys are unlikely to stand up to him when he gives them a questionable directive. That fact was on full display during the budget discussions culminating in the elimination of Channel 16 Rick Maultra's job. Cotterill completely immersed himself in a conflict of interest situation that was driven by Loftus' desire to help out his long-time client, AT&T. That Cotterill was perhaps violating the very city ethics rules he was supposed to help enforce didn't deter him down from helping Loftus, who was calling the shots behind the scenes.

While the promotion of Cotterill is in itself a questionable move, it does open an opportunity for Mayor Ballard to appoint a more experienced head of City Legal, someone who will show some independence and leadership. Let's hope Mayor Ballard takes advantage of that opportunity.

Monday, November 23, 2009

Proposed Regional Bailout of the Capital Improvement Board Flunks Economics 101

At least that's what a new task force formed by the Indianapolis City-County Council is proposing as a "solution" to the fiscal crisis faced by the Capital Improvement Board?

The notion is that the doughnut counties surrounding Marion County benefit from CIB's buildings such as Lucas Oil Stadium and Conseco Fieldhouse. Therefore, those counties need to pay up.

What is forgotten is that all but one of those counties has passed a food and beverage tax that goes in part to paying for the construction of those buildings.

Not good enough is the word from the task force. Members of the task force also want those counties to shoulder part of the burden as to the expense of operating those buildings. That notion, at least with regard to the professionals sports teams, the Colts and the Pacers, is misguided.

People who attend professional sporting events are almost all local. That is why economists, when evaluating the economic impact of professional sports, generally subtract out money spent by the locals. The reason why is simple. People only have so much discretionary income to spend. If they don't spend it on professional sporting events, they will spend it elsewhere in the community.

This is especially true when you look at residents who live in the doughnut counties. Professional sporting events in Indianapolis take discretionary spending out of their communities and relocate it to downtown Indianapolis. A father of four in Danville who decides to take his family to the game and spend $200 is not spending that money in Hendricks County. Hendricks County's restaurants, movie theatres, and other facilities lose the benefit of that $200.

Thus the task force is asking non Marion County residents to shell out more of their tax dollars chiefly for an activity - professional sports - that takes money out of their communities in favor of downtown Indianapolis. My guess is the residents of these doughnut counties are going to tell their legislators to reject this self-serving proposal.

While State Workers Are Laid Off, Members of Gambling Commission Head to Vegas

I missed this tidbit in the Star a week or so ago:

As the state Department of Administration laid off 33 employees Friday, some wondered why other options weren't chosen Gov. Mitch Daniels has told state agencies they can ask workers to take a voluntary furlough. Phillip Giddens, who was laid off as director of its "Greening the Government" initiative, and others questioned why the state didn't opt for mandatory furloughs and spread the pain among all workers.

Mark W. Everson, department commissioner, said the two biggest costs are utilities and personnel, and utilities are fixed: "Given that, we felt we needed to do this."

Other state employees pointed to expenditures they think are inappropriate in this economy, including a Las Vegas trip for three members of the Indiana Gaming Commission.

Ernie Yelton, executive director of the commission, said he, his deputy director and general counsel will attend the Global Gaming Exposition next week. He called it the "ultimate trade show for gaming," an important chance to get acquainted with new gaming devices and issues.

Before, he said, he would have taken more staff and attended more events. "I have no hesitation in justifying this trip," Yelton said.

He did not have a total estimate for the four-night trip's cost, but said the flights cost about $220 and hotel rooms are less than $100 per night.

It was announced that next year will be the second year in a row that state employees will go without raises. They are also being laid off. I understood that for further belt tightening to meet the fiscal criss, Governor Daniels had frozen all but essential travel for state agencies. Yet members of the Gambling (I refusing to call it "Gaming") Commission have found a way to head off for a four day convention in Vegas on the taxpayer dime? I agree with the comments to the article that it doesn't pass the "smell test."

I certainly applaud Governor Daniels handling of Indiana's budget during this crisis. However, there are still fiscal leaks in his agencies which need to plugged. Yelton is wrong. There is no justifying this trip in the middle of Indiana's fiscal crisis.

Saturday, November 21, 2009

Private Corrections: Cutting Corners to Increase Profits

The Indianapolis Star today raises a fuss about the Department of Corrections' pilot program in which they have decided to not serve lunch for three days a week. Meal service in Indiana's prisons is provided by a private contractor, Aramark under a 10 year, $258 million deal signed in 2005. At the time, Aramark bragged in a press release about saving Indiana $11.5 million dollars:

May 2005: Through a new program to manage food service operations at 30 correctional facilities statewide with ARAMARK Correctional Services (ACS), the Indiana Department of Correction will save an estimated $11.5 million a year. Department of Correction and the Department of Administration partnered to aggressively review the Request For Proposal (RFP) to promote cost-effectiveness, efficiency and to ensure opportunities for Indiana-based, minority and women-owned businesses.

“Operational excellence, cost-effective solutions and innovative opportunities for offenders are three elements I look for in defining the success of this business,” said J. David Donahue, Commissioner of the Department.
The Star's angle on the story is misplaced. The DOC for cutting lunch out three days a week is not in itself a huge deal. If the Star wants a much bigger story it might take a closer look at the whole idea of correctional privatization, both in Indiana prisons and jails. The latter is even more important because most inmates in Indiana jails have yet to be convicted and are often sitting in jail awaiting trial because they simply can't afford bail.

During the last two years, I have had a chance to learn about how private correctional companies are constantly cutting corners, endangering not only the lives of inmates, but also the general public. In Marion County, Correctional Corporation of America, out of Tennessee, runs Jail #2. Another private company, Correctional Medical Services provides medical at most of the other Marion County jails.

Some examples of problems that we have observed include:

  • At Marion County Jail #2, the private jail's physician admitted cutting out a round of medication because the company was "short-staffed." For inmates who were supposed to get medication three times a day, most would only receive their medication two times a day. The practice has apparently now been stopped.
  • Also at Jail #2, a CCA correctional officer reported numerous TV monitors at the jail that did not work leaving the area exposed.
  • Radios at Jail #2 were reported as not working.
  • Untrained, unarmed nurses have been ordered by CCA supervisors to escort dangerous inmates throughout Jail #2, again to save money on hiring and training more correctional officers.
  • Numerous HIPAA violations have been reported at Jail #2, including medical intakes being done in the presence of other inmates and Spanish-speaking inmates being called in to translate for other inmates going through medical.
  • Delays in inmates receiving medication in both Jail #1 and Jail #2 are common. Inmates who have prescriptions for expensive medication (like medication for HIV) often don't receive their medication in jail because it is too expensive. Private correctional nurses at Jail #2 report that they have been ordered to provide inmates with expired prescription medication or medication of other inmates who have left the facility.
  • Neither CMS or CCA are made to comply with Indiana jail regulations which require that jails continue to provide inmates with their prescribed medication when they are incarcerated. Inmates are often switched to cheaper medication than what they've been prescribed.
  • Razor blades at Jail #2 have been left out in open wastebaskets where they are fished out and made into weapons by inmates.
  • Inmates at Jail #2 burn holes in glass windows then lower string to friends on the ground. The friends attach contraband that is then pulled into the jail.
  • Contrary to the claims of Sheriff Anderson, I have confirmed that numerous violent inmates are being sent by the Sheriff's Department to lower security Jail #2, which jail houses inmates in a dormitory type fashion. This includes inmates who have already been convicted of violent felonies and others who are charged with serious felonies like rape. Inmate attacks at Jail #2 are not uncommon.

As with any private contractor, it is essential that we have public officials who will force private contractors to comply with their contracts and the law. Marion County Sheriff Frank Anderson has demonstrated time and time again that he has no intention of making private contractors comply with their contracts or the law. Considering the safety problems at Jail #2, a hostage situation there is inevitable. The only question is when.

What the Star is missing in its report is that this appears to be another failed privatization effort involving a long-term (10 years) given to a vendor. Aramark entered into a contract to provide meal services to inmates. If the company is not living up to its contract, it should be cancelled. Taxpayers and inmates should not have to bear the brunt of the failure of a private vendor to deliver services as promised.

Friday, November 20, 2009

The Star Advocates Lavish Public Spending On the Arts, Points to Carmel's Civic Theatre Boondoggle as Example of Good Public Spending

Today the Indianapolis Star editorializes about the need for more spending on the arts and laments the loss of the Indianapolis Civic Theatre to Carmel. The thrust of the editorial "Don't Let Curtain Fall on the Arts" is summed up in a quote from the editorial:

Carmel Mayor Jim Brainard contends that investing in the arts is a sound economic development strategy. "It's important to have cultural amenities, just like it's important to have professional sports teams,'' he told The Star's Jason Thomas.

That's an argument that Brainard's counterpart in Indianapolis, Greg Ballard, needs to hear and understand. While Carmel appears to be aggressively targeting Indianapolis' cultural institutions, the leadership in this city remains complacent.
First, I'm not at all certain why the Star believes that Mayor Ballard has somehow shortchanged the arts. Arts spending continues unabated. The City continues to pour millions into the Arts Council of Indianapolis which acts as a distribution mechanism for local arts spending. As I have pointed out previously, only a small percent of our tax dollars paid to the Arts Council actually makes it to the artists. (See additional column on this topic as well.) Most of the money is spent on the Arts Council salaries, other administrative costs or stashed away in investments, which now total several million dollars.

Second, the Star's citing professional sports investments as an analogy for why it makes economic sense to pour money into the local arts also fails basic economics. People who attend professional sporting events are typically local people spending their discretionary income. If they spend their money on going to the Pacers game or to the Indianapolis Symphony, that is money they don't spend to take the family out to the movies or to dinner. You don't have an increase in spending with the professional sports or the arts. You're simply moving around the spending.

Finally, it is mystifying why the Star would write an editorial praising the Carmel Regional Performing Arts Center as a good example of public spending while completely ignoring all the problems and scandals that have been associated with that project. Mayor Brainard low-balled private contributions to the Arts Center, leaving taxpayers picking up the tab. Further, he, his attorney and the city's spokesperson were put in control of the private foundation to run the Arts Center. I explained this set up in an earlier column.

A troublesome twist to this public-private setup is that Carmel Mayor James Brainard is one of the founding directors and an officer in the Carmel Performing Arts Foundation. [Foundation director Nancy] Heck, also a founding member, is the City's spokesperson. A third officer/founding member is Douglas Haney, who is Carmel's attorney. Heck and Haney both receive their positions through appointment by Mayor Brainard, as do a majority of members of the Carmel Redevelopment Commission.
Taxpayer money is being used to pay new artistic director for the Performing Arts Center, Michael Feinstein, a $500,000 (maybe more) annual salary. It is not clear though that Feinstein is going to actually have much time to earn that salary. As the IBJ notes:

It looks like Michael Feinstein, the high-profile Artistic Director of the Carmel Performing Arts Center, will have a busy 2010.

His show "All About Me" will be opening on Broadway in March. It's his first Broadway bow since 1990's "Michael Feinstein in Concert: Piano and Voice." More on the show from

Feinstein also owns his own NYC club, Feinstein's at Loew's Regency and, according to his website, will be serving as Director of the Popular Song Series for Live at Lincoln Center.

And that's not all. He's also now working on a proposed Broadway musical version of "The Thomas Crown Affair." Plus he's prepping a globe-trotting PBS TV series, "Michael Feinstein: Man on a Mission."

The question, of course, is: How much time will he have for Carmel?

Feinstein won't have any time of course. Carmel is using at least a half million dollars of taxpayer money to purchase Feinstein's name under the guise of his doing work in running a facility, work he is never going to do. (Which raises interesting ghost employment issues since tax dollars are being used to fund Feinstein's salary.) Because Feinstein is not going to be available to do the work, Carmel taxpayers are having to pay $200,000 more for an executive director to actually run the Carmel Arts Center.

For the Indianapolis Star to cite Mayor Brainard's Carmel financial misadventures as an example Indianapolis should aspire to is a frightening thought.

Speedway's Speedzone: Is The Westside Town Constructing Indianapolis' Newest White Elephant?

This year, talked to several residents of Speedway and attended a meeting where town planners discussed the Speedzone redevelopment. There seems to be a virtually unanimous sentiment that redevelopment is needed to revitalize the town. It is the details of the planned redevelopment, however, that have sharply divided the town.

The Indianapolis Star this morning explains the benefits that the advocates of the plan believe will bring to the westside town:

Thursday's ceremony, attended by nearly 100 people, was the kickoff for the town's $500 million revitalization effort.

Planners envision a vibrant Main Street with sidewalk cafes, high-end restaurants, race-related experiences and improved shopping options in renovated building fronts.

The plan also calls for new office buildings, a multistory parking garage and new lighting, landscaping and pedestrian-friendly pathways.

Civic leaders believe their public investment will help trigger $263 million in private funds throughout the 400-acre redevelopment site directly south of the Indianapolis Motor Speedway at the corner of 16th Street and Georgetown Road.

An estimated 2.5 million square feet of new, mixed-use space will be available in the redeveloped area.

Financial consultant Crowe Horwath estimates the project will create more than 2,000 jobs and a 10-year economic boost of $5.2 billion.

Local leaders expect the redevelopment to complement the racetrack, making the area a destination for visitors and a source of pride for residents and business owners.

"The future of Indianapolis is taking our strengths and building around them," David Wu, policy director for Indianapolis Mayor Greg Ballard, said during Thursday's groundbreaking. "So what would make more sense than to build up the areas around where the 'Greatest Spectacle in Racing' is held?"

The development will involve taking several homes and businesses through eminent domain and closing of several roads. This includes the closing of Georgetown Road between 25th Street and 16th Street to create a linear park to a serve as a buffer to the track.

Much of the redevelopment hopes revolve around the construction of a Speedzone racing theme park. The idea is that, with the racing park, Speedway will attract tourists 12 months out of the year. Daytona's racing park is cited as an example of where it has worked successfully.

First of all, last time I checked the city of Daytona was on the Atlantic Ocean in Florida, which state has warmer weather all year around and is already a tourist destination. Second, there is actually some dispute whether the Daytona racing park has worked. Nonetheless, that has not prevented supporters from plowing forward with the Speedzone portion of the project.

Color me as a skeptic. I don't buy for one second that a racing theme park is going to bring tourists to Speedway for 12 months of the year. People are not going to hop on a plane during the middle of winter to fly to Indianapolis just for the purpose of participating in the racing-themed activities provided at the Speedzone.

As is the tradition in Indianapolis, massive public spending is being used to try to leverage the private sector to open its wallet. That is a mighty dangerous road to go down. While there is merit to government spending to improve infrastructure, a definite need in Speedway, when government seeks to directly aid and direct private development, the effort usually fails. Subsidizing private development skews the course of normal economic development. If businesses are not willing to risk their money on a project, that is because they don't see the project as being profitable.

While I wish the residents of Speedway the best, I am doubtful that this project will succeed.

Thursday, November 19, 2009

Indy's Newest White Elephant?: Welcome to the New Marriott

Not sure how many people saw WTHR Mary Milz's story on the trouble filling hotel space in Indianapolis and the possible impact of all those hotel rooms in the new Marriott:

Indianapolis - It's the largest hotel in the state. The new JW Marriott is set to open in early 2011, but it's already raising some concerns about keeping it and other hotels full in a struggling economy.

If you're downtown, you can't miss it. Construction crews recently topped off the new JW Marriott and they're just a couple of months from finishing the three other Marriott hotels, which open in February.

"We've already booked those up for the Final Four," said Jeremy Stephenson, REI Investments.

Stephenson told city planners the project is on time and on budget. All told, Marriott Place will add 1,600 rooms to downtown Indianapolis. That's a 30-percent increase.

The new hotel's opening will coincide with the expansion of the convention center, which is meant to bring more business to the city.

But the opening of the complex comes at a time when existing hotels are struggling to fill their rooms. Thanks to the economy, business at downtown hotels is down 14 percent over last year.Even the races didn't quite fill the stands or the rooms.

"There's certainly some uneasiness. That's a lot of rooms coming into Indianapolis," said Phil Ray, Greater Indianapolis Hotel and Lodging Association.

Ray, who represents downtown hotels, says in the short-term it will be tough.

"It's one of those things where we know we'll have to work hard to fill in the gap and get more creative to bring people downtown," he added.

That means more pressure on the people who work to draw conventions here.

"Cities are doing more to entice conventions and they're cutting better deals. We have to try to respond in the competitive arena by coming up with our own packages," said Bill Benner, Indianapolis Convention and Visitors Association.

Of course, last year Indianapolis' City-County Council approved a hike in hotel taxes to give Indianapolis the highest hotel/sales tax in the country. Now the concern is being sounded that Indianapolis may not be able to fill its downtown hotel rooms when the new Marriott came on line. Gee, who could have seen that coming?

Wednesday, November 18, 2009

Star Does 180 Degree Turn; Now Demands Fair Elections

My what delicious irony. Today, the Indianapolis Star runs an editorial calling for redistricting reform so voters can have fair legislative elections

This is just over two weeks after the special referenda elections that took place across Marion County. In that election, Health & Hospital wrote a referendum question regarding the new Wishard Hospital that didn't bother to tell voters that they would be building a new hospital funded by bonds backed by property taxes. Nor did the question bother to mention how much H&H would be borrowing. One would think the editors at the Star would be outraged by the intentional misleading of voters by H&H, but think again. The Star uttered hardly a word in protest.

Then we have the questionable need for a special election for these referenda and the over $1 million cost to the taxpayers to put it on. The Star offered no criticism to this waste of tax dollars.

Then we had those supporting the Wishard and school referenda using public, i.e. taxpayer resources to promote their positions. The Star offered not one word of criticism over this abuse of tax dollars.

The Wishard PAC files a highly questionable report showing only three individual contributors to the campaign, but over $1 million from two non-profit corporations. The expenditure side only shows one payout, to a PR firm. You would think that this report would raise questions about proper disclosure and possible tax violations. Certainly it raises a red flag. The Star remains silent.

Then you have Election Day, where paper ballots were used and the Clerk's Office was totally dependent on the count reported by poll workers. In 42 of the 590 precincts there was a unanimous vote reported in favor of the Wishard referendum. In 29 more there was only one "no" vote reported. Typical results in these precincts include 179-0, 148-0, 193-1, 162-1. Those 71 precincts produced a margin of 3671-29, an astonishing 99.2% to .8% edge. For most newspapers, those results would raise a red flag as to whether there were discrepancies between the results reported by poll workers to the Clerk's Office and the actual ballot totals. While it obviously wouldn't change the Wishard result, it could raise major concerns about the accuracy of future paper ballot counts. But for the Star, which spent the last two months being little more than a cheerleader for the Wishard cause, it didn't even cause an eyebrow to furrow.

From beginning to end, the Star's editors expressed no interest in the fairness of the referenda special election. Now the Star does a 180 degree turn and opines for redistricting reform so voters can have fair legislative elections.

I'm sorry, but the mark of a real reformer is someone who argues for good government and fair elections even when doing so is against the ends they would like to achieve. Selective ethics are bad ethics. It is something the Star needs to learn.

Tuesday, November 17, 2009

The Outlook for Republican Fortunes In Congressional District 7; Could Carlos May Pull Off an Upset?

Last night, Carlos May, Republican candidate for the 7th District Congress, stopped by the monthly meeting of the Republican Liberty Caucus. It was my first chance to meet Mr. May. He's an impressive, energetic young man. As a former candidate myself, I always admire people who are willing to thrown their hat into the ring. Unless you have been a candidate, I don't think you can properly appreciate the amount of personal sacrifice involved in running for office, especially in a district that requires an enormous amount of work.

As a former candidate, someone who has worked on several campaigns and taught campaign strategy, here is my take on the district.

THE DISTRICT: Unlike many Republicans, I don't see the 7th District as unwinnable. Yes, it would take a good candidate, a lot of luck and an aligning of most of the planets, but it is winnable, especially in the upcoming mid-term election which history tells us will provide a backlash against the Democrats

Hopefully, Mr. May has done some homework studying the numbers in the district. A good campaign does not view the election as one big war, but rather a precinct by precinct battle. The goal (for a Republican candidate) is to move the numbers from the Democratic side of the equation to the Republican side. To understand the numbers in the district you compare apples to apples, oranges to oranges. Presidential election years have much higher turnout than other years. Turnout rates can make an enormous difference on outcome. 2008 gets compared to 2012. 2006 gets compared to 2010.

If Mr. May does this, he will find some encouraging news. The district is more Republican in off-year elections like 2010. In the last comparable election, 2006, the margin of victory for Julia Carson was 74,750 to 64,304. That is about 23 1/2 votes per precinct when you spread out the victory margin to the now 445 precincts that make up District 7. If Republican challenger Eric Dickerson could have flipped just 12 votes in each precinct his title would have been "Congressman." That is even before you consider that history says 2010, being the first mid-term election for an incumbent President, will be a great year for the out-party, the Republicans.

Here's some discouraging news, however. Julia Carson historically ran below the Democratic baseline. In other words there were Democrats who would vote straight ticket, except to scratch to vote against Julia Carson. There is little evidence Republicans, on the other hand, scratch for Julia Carson or even for Andre Carson. Andre though is showing signs of being a better candidate than his grandmother though. In 2006, Julia Carson received 53.7% of the vote, about the same total as Democrats running county-wide, which included several heavy Republican areas not in the 7th district. By 2008, Andre Carson was running several points ahead of those county wide candidates, winning 65% of the vote when compared to the Democratic county-wide baseline of 60%. Andre Carson won in 2008 by over 80,000 votes. He probably ran at about the 2008 baseline for District 7.

2008 could well turn out to be an aberration. Certainly 2006 is the appropriate yardstick since it is the last comparable election in terms of turnout. A wise candidate though would set the bar high enough that there is room for error. Mr. May should target changing the election results by 40 votes each precinct, which would require a flipping of 20 votes for each of the 590 precincts. That is a doable task.

REACHING OUT TO COUNTY ORGANIZATION REPUBLICANS: Outside of doing so to get by slating, Mr. May would be wise to not spend a great deal of time seeking the endorsement of county GOP leadership, who for lack of a better term, I will call "The Old Guard." While the Old Guard likes to have their rings kissed, they will offer him not one lick of help. Worse yet, they will become an obstacle. They will tell donors the 7th District is not winnable and to not contribute to a May candidacy. They have done that to other 7th District candidates and did it to mayoral candidate Greg Ballard in 2007. Before he stabbed them in their back almost immediately upon his election, Ballard's support came almost exclusively from the Republican Reform wing of county party. The Old Guard wanted nothing to do with him until the end when they saw the numbers switch. The Republic Reform wing of the local GOP has grown even larger, more outspoken and more organized, than it was in 2007.

THE NEW MEDIA: One good thing that is in favor of outsider, underfunded candidates like Mr. May is that the cost of candidates to reach out to supporters and potential voters has plummeted in the past decade with such advances as email and social networking sites. Further, even for paid media, there are now a number of cheap alternatives. In my 2000 House campaign, we were running cable TV spots for, literally, just a few dollars per spot. (I was fortunate in that my brother is a TV producer so it didn't cost me to produce the spots.) While the cost of cable advertising has risen, it is still much cheaper than the regular network advertising. While TV viewers have turned off network television, they have increasingly tuned into to cable television networks. Yet political candidates are still old school - buying incredibly expensive network TV spots that are seen by fewer and fewer voters. That's the only game they know.

CONCLUSION: I think Republicans have to be realistic about the difficulties in District 7. But realism does not include a conclusion the district is absolutely unwinnable and to simply write it off. The key is to write a winnable game plan and then to methodically execute it. And a little luck along the way wouldn't hurt.

Has A Local “Advocacy Group” Violated The Public Trust?

Has A Local “Advocacy Group” Violated The Public Trust?

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My Brizzi Speculation

Over at Indianapolis Times, blogger Terry Burns engages in speculation about the future of two term Marion County Prosecutor Carl Brizzi. In the comment section, blogger Chris Worden of IPOPA express the opinion that there is a 90% chance Brizzi is in the hunt of re-election.

It is a close call, but I think it is less than 50-50 that Carl Brizzi will run for a third term. I don't buy the suggestion made by Terry Burns - the Carl Brizzi is having trouble finding a job in the private sector. I have no doubt that, given Brizzi's contacts, he could land a well-paying job in the private sector, either at a law firm or in the business world.

The reason why I that Carl Brizzi won't seek a third term is that elected officials are by nature risk-adverse. Someone in office generally doesn't taken on challenges that are an up-hill battle. They wait for an opening and then go through that opening.

In 2002, when Brizzi first won, the Republicans still had a slight majority in the county and won the countywide offices.. By 2006, the county's electorate had changed enough where the Democrats had a significant majority county-wide. Brizzi was the only Republican county-wide candidate able to scale the hill and get elected.

By 2008, there was a 20% split in the base vote, with Democrats winning county offices by a whopping 60-40 margin. While those numbers were pumped up a bit by Obama's presence on the ticket, I think it's fair to say the partisan divide in the county will be no better than 55-45 in 2010, maybe closer to 56-44.

In 2006, Brizzi took advantage had an unqualified candidate opposing him and still barely won. Democrats are not going to make the same mistake in 2010 and nominate someone without a significant criminal law background.

Again, elected officials are risk adverse. Brizzi has already shown he can scale the hill once. Why not go out a winner and bide some time looking for other opportunities? That to me makes a lot more sense than trying to run the county-wide gauntlet again.

If Brizzi does decide against running, then the question has to be asked why he waited so long to declare. If there is a slating battle early next year, a candidate is not going to have much time to get known. That leaves any candidate he and/or the county chairman should choose to support at a decided advantage over any competitor. Therein might lie the real reason for the delay in the Brizzi announcement. Then again, I could be wrong.

Monday, November 16, 2009

Cheering for the Colts, Pacers While Holding on to My Wallet

Big game last night. The Colts were up against their nemesis, the New England Patriots. The Colts won 35-34 thanks in no small part to the Patriot's coach Bill Belichick's brain fart he had when he had the bright idea to go for it on 4th and 2 from the Patriot's own 28, with a 34-28 lead and 2:08 left int the game. The win gave the Colts a perfect 9-0 start to their season.

The Indiana Pacers meanwhile appear to have turned the corner. The team has now won four straight games, including a win this weekend over the Boston Celtics, one of the best teams in the Eastern Conference over the last two seasons.

I love sports and have always cheered for the Colts and Pacers. However, given the attitude of the owners of the two teams it has become increasingly difficult to remain a fan the past few years. This past year, when the Capital Improvement Board and the good people of Indianapolis were looking for a way out of the CIB's budget crisis, Irsay turned his back on the City. While Indianapolis taxpayers have transformed Irsay from a millionaire into a billionaire with the sweetheart Lucas Oil Stadium deal. Irsay does not appear to appreciate it in the slightest. During negotiations, he would not even throw a bone to the city that has made him fabulously wealthy.

This morning I heard a radio broadcaster bragging about Irsay's charitable offer of donating $1 to United Way for ever person who attended the game last night. That amounts to a whole $67,476. Once the United Way's six figure salaried administrators take their cuts, there might be $476 left over to be distributed to actual charities.

A billionaire like Irsay contributing $67,476 to charity is like me flipping a shiny nickel into the Salvation Army kettle this Christmas and then holding a press conference to brag about it. The $67,476, however, is in line with Irsay's other less than charitable offerings. In 2008, when the eastside of Indianapolis was hit with a tornado and southern Indiana experienced flooding, Irsay coughed up a whole $50,000 for the twin catastrophes...on the condition, of course, that the public would match that amount.

Across town, while the Simons, the owners of the Pacers, have proven to be better corporate citizens than Irsay. However, they too are trying to get deeper into the pocket of the Indianapolis taxpayers. Supposedly "negotiations" that could result in the taxpayers picking up $15 million in operating cost at Conseco, a building for which the Pacers get all the revenue, are "intensifying." The Simons saw the sweetheart deal the City gave the Colts, and want a similar deal. Actually it would be even better. While the CIB, i.e. the taxpayers, actually foot the bill to run Lucas Oil Stadium, at least they get 1/2 of the non-Colts revenue form the building. With Conseco, the Pacers get all of the revenu off the building, yet they now want taxpayers paying for the operation of the building.

When you're winning, it is easy to look the other way from the poor behavior of the team owners. It is doubtful Irsay's arrogance and ingratitude toward the people of Indianapolis would be tolerated were he were not putting a Super Bowl caliber team on the field year after year. But eventually Manning will retire and the golden age of Indianapolis professional football will end. One only hopes that, by then, Irsay has learned to become a better citizen of the community he has proven to be thus far.

Cheering for the Colts and Pacers would be easier if the owners of those teams were not so committed to screwing over Indianapolis' taxpayers to make themselves wealthier. Excuse me if I don't clap at the victory over the Patriots last night. I have to keep one hand free to hold onto my wallet.

Saturday, November 14, 2009

The Future of the City Market

As it is right across the street from my law office, the City Market is sometimes a lunch destination for me. I use the word "sometimes" instead of "often" because the food at the City Market is almost always overpriced and bland.

Instead, if I have time, I prefer to drive for 10-15 minutes to dine at one of the many fine ethnic restaurants that have sprung up on or near Lafayette Road on the northwest side of the city. Nothing beats the $5.95 lunch special at the Saigon Restaurant, which is located at 3103 Lafayette Road. The Saigon is not the only ethnic restaurant in the Lafayette Road strip. There are also restaurants featuring Mexican, Egyptian, Guatemalan, another Vietnamese, Pakistani, Indian, Liberian, and Salvadoran cuisine. In that Lafayette Square area you also have Ethiopian, Chinese, Japanese, Peruvian and Cuban restaurants.

Of course those restaurants, which generally offer authentic cuisine served by recent immigrants from their respective countries, could never afford the steep rent at the City Market or anywhere downtown for that matter. Apparently neither can Constantino's which is on its way to being evicted for unpaid rent. Constantino's, by providing fresh fruits and vegetables at reasonable price, was the epitome of the type of vendor those at the City Market has been trying to attract. According to its website, the City Market Foundation declares:

Established in the 1800’s as a market that the community relied upon for their daily staples of fresh meats, cheese, produce, and breads, City Market will once again offer this shopping experience to its customers.

I like history as well as anyone. But sometimes nostalgia for the past obscures reality. Like Moody Meats which earlier this year left the City Market, Constantino's sells products not well suited for those who come to the building. The fact is most patrons of the City Market are, and will be for the foreseeable future, downtown employees who primarily work 8-5, Monday through Friday. They never were going to go grocery shopping on their lunch hour and take their groceries back to their offices for the remaining four to five hours of work. The City and the Foundation that runs the City Market needs to stop romanticizing the past and be realistic about its future. When, instead of the free market, government tries to determine economic winners and losers, we taxpayers end up subsidizing failure. That's what has happened with the City Market.

There are business formats that would undoubtedly work at the City Market. A health club probably would do very well with thousands of city employees right across the street. A day care might also succeed. Likewise, certain chain restaurants would probably flourish. But trying to turn it back into what it was in the past, an open market where people can purchase "fresh meats, cheese, produce and breads," is simply a recipe for continued failure.