Monday, December 6, 2010

Former Barnes and Thornburg Attorney Samantha Karn Finds Three Present and Former B&T Attorneys Not Guilty of City Ethics Violation (w/correction)

A long-time fixture in city government, Rick Maultra, on August 10, 2009 was called into the Indianapolis City Controller David Reynold's office and told that that his TVSA director position was being eliminated in the next budget.

As TVSA director, Maultra had been responsible for ensuring telecom law was followed and had urged Indianapolis to charge telecom fees for the use of rights-of-way as other cities had done. The rights-of-way fees were worth millions.

Maultra's position though brought him into conflict with Barnes & Thornburg partner, Joe Loftus, who is on the city's payroll to advise the mayor and lobby the legislature for the City. Loftus though had, and still has, another client, AT& T.  In a previous year, Loftus had appeared before the General Assembly, as a lobbyist for Ameritech (which became AT&T) on HB 1376 that limited cities to "recovery costs" from utilities for use of rights-of-way. While his position pushing for a bill that helped his utility client avoid paying fees to municipalities was an obvious conflict with his representation of Indianapolis, Loftus didn't let a little thing like ethics get in his way. Loftus succeeded in getting the bill passed. Even though Indianapolis can still get "recovery costs" under existing law, the City doesn't even try to collect the money, a situation that Loftus and his AT&T client like.

If rights of way fees weren't going to be collected, Maultra thought at least AT&T and other telecoms should comply with existing law on other matters. Logan Harrison, a city attorney who had been recruited by Loftus from Barnes & Thornburg, told Maultra that his boss, then head of Corporation Counsel Chris Cotterill, had ordered him not to pursue compliance issues against the telecoms, including AT&T. Cotterill is also a Barnes and Thornburg alumnus recruited by Loftus. Indeed sources say Loftus hires everyone who works at Corporation Counsel.

By 2009, Loftus had gotten tired of Maultra and launched a scheme to get rid of the TVSA director by eliminating his position in the 2010 budget. Ryan Vaughn, a Barnes & Thornburg attorney, and now council President, cast three separate votes to eliminate Maultra's position. Vaughn made no effort to recuse himself despite the fact that his law firm's client, AT&T and its lobbyist Joe Loftus, Vaughn's boss, was behind the effort to get rid of Maultra.

Although it escaped under the media's radar, Maultra on December 26, 2009, filed an ethics complaint against Loftus, Harrison, Cotterill and Vaughn. To recap, Loftus and Vaughn are presently attorneys at Barnes and Thornburg. Cotterill worked also worked for B&T while Harrison previously worked for Ice Miller and clerked at the Attorney General's Office before he started working at City Legal. So who investigates the complaint? Samantha Karn, herself former Barnes and Thornburg attorney who was also recruited by Joe Loftus and who by then had been elevated by Loftus to head of Corporation Counsel.

Karn summarily dismissed the complaint. In her opinion, Karn reaches the incredulous conclusion that as a lobbyist, Loftus was not an "official, appointee or an employee" of the City. I can only suppose that Karn is unaware that Loftus is on the City's payroll to the tune of $115,000 as "special counsel" to the Mayor, a fact that the Indianapolis Star has reported.

Karn states in a footnote the disingenuous nonsense that it is actually Mayor Ballard who hired Cotterill and Harrison. Of course, technically that is true...but she is all too aware of Ballard is merely a rubberstamp for whoever Loftus chooses. Loftus is the one who made the decision to hire Cotterill, Harrison, and Vaughn.

Karn, like Cotterill, is yet another example of the type of inexperienced attorney Loftus prefers for leadership positions at City Legal. When appointed corporation counsel last year, Karn only had five years experience, just like Cotterill did when he was appointed. Harrison had only only three months experience as an attorney before being hired by Loftus at City Legal as Assistant Corporation Counsel, with the job of drafting city contracts and advising city agencies on legal and ethical issues.. Jonathan Mayes, who had previously been head of litigation at City Legal, only had two years of legal experience. Loftus knows perfectly well that older, experienced attorneys are likely to question his dictates while younger, inexperienced attorneys like Cotterill, Harrison, Karns and Mayes, are more likely to do exactly what Loftus tells them, even if doing so violates the law or the ethics rules that attorneys and city employees must uphold.

The handling of Maultra's termination and his subsequent ethics complaint epitomizes how Loftus and his Barnes & Thornburg gang do business. They don't win by being right about the law. They win by putting decision-makers in key positions, making them indebted to them, then pulling their strings whenever they need a favor. In this scenario, Loftus pulled the strings of everyone involved - Cotterill, Harrison, Vaughn and Karn - to get Maultra canned and the subsequent ethics complaint dismissed.

The need to follow ethical guidelines and avoid conflicts of interest only apply to "other" people not to the Barnes and Thornburg crowd who run our city government. Isn't it time we cleaned the corruption out of city government?

Pictured from top to bottom: Joe Loftus, Chris Cotterill, and Ryan Vaughn.

Correction: I received bad information about Logan Harrison having worked at Barnes & Thornburg so I made a correction. However, while perusing his on-line resume, I was shocked to find he only had three months experience as an attorney when appointed Assistant Corporation Counsel. No one who is an attorney for three months has anywhere near the experience to handle the duties Harrison identifies that he does for the City in that resume:
  • Responsible for drafting, implementing, and managing contracts for nine city agencies
  • Advise Indianapolis boards and agencies on day-to-day operational issues, real estate acquisitions/transactions/leasing, disciplinary matters, benefits, compensation, public purchasing, budgetary, employment issues, messaging, and policy initiatives
  • Responsible for compliance with all local, state, and federal laws and regulations Draft ordinances and resolutions for agencies and present policy analysis to city agencies
  • Oversee, implement, and advise agencies and boards regarding state and city ethics compliance, public access, and public records
    Advise and create solutions to consolidate agencies, boards, commissions and/or abolish irrelevant government/bureaucracy
This is yet another example of Loftus hiring inexperienced attorneys for jobs far over their experience level. It's all about being able to control them.


Diana Vice said...

Yes, it is about time, Paul. I saw them use their influence in the Tremco debacle to the detriment of taxpayers. I have to wonder what else has gone on behind the scenes that we don't yet know about. As the FBI investigates the political shenanigans in Indy, I hope that they don't overlook all the lawyers involved.

Nicolas Martin said...

Utilities don't pay right-of-way fees, consumers do. The cost is simply passed along in bills, so it is a hidden tax of the sort that Mr. Ogden professes to oppose.

Many people think that corporations pay taxes. They don't. They collect, taxes; and consumers pay them in the form of more expensive products.

Paul K. Ogden said...


That is one of the biggest myths out there. Businesses can't just automatically pass along tax or fee increases to consumers. Ask any business owner. It depends on the market and the competition the business owner faces. But the notion that any tax paid by corporations or other businesses can simply be shuttled through to the consumer is not reality.

If this were the case, why would AT&T oppose paying rights of way fees so the point where they lobbied for a bill in the legislature about the fees and got Maultra fired for advocating them? By your claim, telecoms wouldn't have to pay those fees anyway. The fact is the competitive market doesn't allow telecoms to simply pass along any rights of way fees.

So should we eliminate businesses from paying gasoline taxes despite the fact semis destroy our roads? Should we eliminate postage for retailers since they could just pass along the cost.

The fact is these same Republican councilors who made this philosophical right of way argument with regard to telecoms, jumped to raise fees on scores of city businesses.

Telecoms use the rights of way, they should pay for them. Regardless, the rest of the issue simply involved Maultra trying to enforce existing law unrelated to the rights of way fees.

Blog Admin said...

Nicolas, I just read a story where a small business owner in New Castle decided to work for free so he can still support his few remaining employees without jacking up the price to his clients. He could've raised prices, but he chose not to.

When faced with a cost of increase in services, businesses have a choice. They can find ways to be more efficient within, or they can pass it along to consumers. If they pass it along to consumers, don't be surprised if they take their business elsewhere.

Nicolas Martin said...

Of course businesses can't pass their tax costs along where competition doesn't permit, but most of the time they can. (I didn't use the word "automatically.") When they can't they are driven out of business, or out of state or country, to what politicians pejoratively call "tax havens." Or they lobby congress for imposition of tariffs and other fees that "level the playing field."

A competitive market does allow telcoms to pass along corporate taxes because all telcoms are subject to the same levies. Where providers are able to skirt taxation, such as online VoIP providers, the savings are passed to consumers.

You are simply pointing out that there are exceptions when businesses cannot "automatically" pass taxes to consumers, but those are exceptions created by additional governmental regulatory distortions. Governments always try to take the most that they can without killing the golden goose (except for those that happily feast on the goose).

All of the products that we purchase include hidden corporate taxes passed through by companies. It is true that some of the corporate tax burden is redistributed through lower wages, dividends, etc., so not every dollar can be passed to consumers.

So, yes it is true that not all and not always are corporate taxes passed along to consumers, but consumers bear the brunt, if indirectly, in higher prices.

Nicolas Martin said...


How would increased business efficiency change the impact of a fixed corporate tax? If a business were to become more efficient, it may have higher net profits, and be subject to higher tax. It may be penalized for better business practices.

Nicolas Martin said...

Here's a nicely simplified piece on the impact of corporate taxes from The Foundation for Economic Education.

Who Bears the Tax Burden?

Nicolas Martin said...

@ Paul

Who do the rights of way belong to? In a just system they would be private property, and utilities would need to make their deals with property owners. It might be in the interest of the property owner to charge nothing for access, or be deprived of the product offered by the utility.

In no way does it benefit consumers for government to usurp property rights and then charge utilities for access to properties that government has no right to regulate.

Utilities should bear all of the real costs of their works, but as capital costs not as regulatory fees. It benefits no consumer of electricity, Internet, natural gas, or cable TV for a government to swipe a big chunk of utility money for its own advantage. Fees also tend to thwart competition since the biggest companies are best able to afford expensive regulations.

Blog Admin said...

My example isn't just taxes, it can apply in a lot of situations as a cost of doing business. Businesses are often expected to provide certain amenities, often paying for it out of their own pocket in hopes of luring customers in to purchase their goods or service.

Let's take wireless Internet, or Wi-Fi. It wasn't all that long ago where you'd probably need to know the area of town you're in to identify a spot with wireless Internet access, and then you'd have to hope it was free. Starbucks was still charging for Internet access 2-3 years ago.

Now it's just like air conditioning or clean restrooms. It's something many restaurants are just expected to provide. And Starbucks didn't raise prices at the same time they rolled out their free wireless network. Somehow they managed to get that additional service without passing along the price to consumers.

IndyNorth2South said...

The right-of-ways belong to the public for which the local government is to be the steward of on behalf of the public. Local government, accept those controlled by an AT&T lobbyist, receive pay for public use of private gain. It does not take a genius to realize that continued utility street cuts on any given street or public easement is going to take an incremental life expectancy off that street with each cut.

Those who use the public assets should pay the public (local government) for the use of that asset. Other than cable, that is not done. Rick Maultra was a watchdog respective of cable/telecom municipal,state and federal laws and all contracts on behalf of the City. The AT&T lobby, which includes AT&T's chief state lobbyist Joe Loftus. who by Mayor Ballard's own admission, set up his government, wanted Maultra's institutional and national knowledge of cable and telecom right-of-way law.......gone. Maultra was trying to invoke those articles of the state video law that benefitted the City. Attorneys by Loftus would not allow that to happen. Maultra's own attorney was appointed by Loftus of AT&T.

Loftus looks for ways to deflect away from AT&T's fiduciary responsibility to pay right-of-way fees on phone and Internet and single out the Water Company or parking meters to raise municipal revenue. Of course the latter two would never pass on rates to the public in the form of some tax. I think I would much rather have the private users of public assets pay for their use. Something that Maultra was plugged into.

Cato said...

Paul, this is a very corrupt city where power is consolidated in a few very dirty hands. It shows no hope of improving. I don't know how anyone can stand living here.

Lilly said...

-Will the FBI be investigating the utility corruption in local government like is being done at the Indiana Utility Regulatory Commission? I understand that there are many former AT&T executives who are now self regulating themselves at the State level. That seems to pale greatly for what Duke Energy has done that is being investigated.

-I remember Maultra producing those wonderful documentaries on Indiana Hitsory for TV. Later, he advocated on behalf of Indianapolis consumers on cable matters and remember him to be very aggressive to do what was right, especially on matters of the Federal Communications Commission on customer standards. So you are saying AT&T's chief lobbyist works for the City and he got rid of Maultra for essentially doing his job that would cost AT&T money? That sounds like corruption and I though Greg Ballard made a campaign promise to get rid of corruption. Am I missing something?