Thursday, August 11, 2011

Karma Pays a Visit to IURC Chairman Jim Atterholt

I woke up this morning to the a Star's story detailing an all too cozy relationship between IURC Chairman Jim Atterholt and Duke Energy.  Here is a snippet of the lengthy article:
Indiana's top utility regulator sent a private email last year to a top executive at Duke Energy Corp., recommending "confidentially, just between you and me" that the utility hire his personal choice as president of its Indiana operations.
IURC Chairman Jim Atterholt

James Atterholt, chairman of the Indiana Utility Regulatory Commission, wrote that the hiring decision was "none of my business," but he hoped the company would consider his candidate, then a lobbyist for Duke.

The Indianapolis Star obtained the email, along with scores of others to and from Atterholt, in an open-records request and from other public documents. In addition to lobbying Duke on a personnel matter, Atterholt:

Met privately for lunch and dinner with Duke executives, including James Rogers, the company's chairman and chief executive, while the company had numerous issues pending before the commission.

Is characterized in an email by a Duke executive as giving his blessing to the company's controversial hiring of the commission's top lawyer and chief administrative law judge, Scott Storms.

Regularly sent warm notes to Duke executives, inviting them to call him "at any time" for help.
And that is just the opening salvo of the article detailing Jim Atterholt's cozy relationship with a utility company he was charged with regulating.

I know Jim Atterholt very well.  Jim was a state representative when I ran for the house in 2000 on he northwest side of the city, a district next to his.  I had known Jim for years before that from being active in Marion County politics and considered him a friend.  You couldn't help but like Jim.  He was pleasant to be around, shared my values and didn't seem to be part of the Establishment GOP that dominated Marion County Republican politics.

After Jim lost his house seat, Governor Mitch Daniels appointed him as Commissioner of the Indiana Department of Insurance.  It was there that our paths crossed again in November of 2006, when I was hired as co-director of the newly-created Title Insurance Division, which is part of the Department of Insurance. Our task was to create a regulatory structure for title insurance and real estate closings in the State of Indiana, to let the industry know what the rules were and to enforce those rules.

At the Department of Insurance was a middle level supervisor (I'll call her "Karen").   Jim seemed to impose no limits on Karen whatsoever.  Karen came and went at the Department according to her own schedule, often coming as late as 11 pm or noon.  Probably half her time was spent traveling the country attending insurance seminars, a task she called "hot tub diplomacy."  She was so privileged, she didn't have to park in the parking garage.  The Department rented a surface space next to the Loughmiller Pub on Washington Street where she and a few others from the Department parked.

The days Karen was gone from the office were the good ones.  When Karen was in the office, her behavior was extremely erratic. One day she would tell an employee to do something, then the next day contradict those directs, completing forgetting what she had said originally.  Her time spent in the office involved finding ways to berate and intimidate employees. She would go out of her way to create tension, spreading rumors about what one employee supposedly said about another employee.  Karen was always paranoid that employees were out to get her, and would call certain one into her office to ask if they "had her back."   If she found out you had said bad things about her, Karen would not hesitate to retaliate, even to the point of having you fired.  As far as the work Karen did at the Department, the issue is better phrased as "what work?"  It didn't appear that Karen did any work at all. 

To say Karen's supervision of the Title Insurance Division was not helpful in achieving our goals, is to say the least.  The other co-director of the Title Insurance Division and I would have meeting after meeting with Karen where we spend hours on such critical topics as the size of margins on documents, the font we should use on memos, and what famous male-female duo we co-directors resembled.  At the outset, our division spent months languishing accomplishing absolutely nothing due to Karen's micromanagement of our Division about a topic, title insurance, that she knew nothing about.  It was only when Karen pulled back and gave us freedom to act that our division began to make progress on creating a regulatory structure.

Everyone at the Department complained about Karen.  It didn't matter if it was the lowest secretary or a Deputy Commissioner directly under Jim Atterholt.  The all complained.  People constantly pleaded with Jim to fire Karen.  Surprisingly Jim didn't defend Karen, a Democrat who he had inherited from a previous administration.  Jim repeatedly told me and others that Karen was incompetent, she caused problems within the Department, even that she had mental health issues.  Jim instructed me to work around Karen, to work directly with him instead of through the Chief Deputy Commissioner.  Once when I pointed out that Karen was threatening an employee with Parkinson's Disease for occasionally nodding off on the job (he was under heavy medication) which might have constituted a violation of ADA, Jim responded by saying that Karen could well be violating the law, but he wouldn't do employee  anything because she would eventually tire of picking on the employee and move on to someone else.

It is to this day a mystery at the Department of Insurance why Jim wouldn't do anything about Karen.  While no one suspected Jim of having an affair with Karen, the running joke of one high level IDOI employee was that Karen had incriminating pictures of Jim in bed with farm animals.  While admittedly a joke bordering on bad taste, it exemplifies the bewilderment  IDOI employees, from top to bottom, had about why Jim kept Karen at the Department, in a critical supervisor role no less.  When long Department of Insurance Deputy Commissioner Carol Cutter, was being considered to replace Atterholt, she pledged that, if hired, her first action would be to fire Karen.  Indeed that very first day on the job, Carol walked down to Karen's office and gave her the boot.

My downfall at the Department of Insurance came in September of 2007.  In addition, to the above, Karen had no problem violating laws and state personnel policies.  I learned that she was involved in diverting money from he Title Insurance Division dedicated fund to pay things unrelated to my division, a violation of Indiana law.  We had also advertised and hired a much-needed secretary for the division, who Karen then immediately moved to another division, but whose salary and benefits continued to be paid out of our fund, a state personnel violation in addition to involving an illegal diversion of funds.   I also had been contacted by an attorney representing a title insurance company which was threatening to sue the Department and the State of Indiana for defamation because of Karen's use of an enforcement website because of misleading information about regulatory action taken against the company that Karen had entered into an enforcement website.  What Karen would do is have the initial charge against the company listed, then the punishment. What was left out was that often what the company was charged with quite often wasn't what they were ultimately found guilty of.

I put together a memo that outlined these legal violations and other problems at the Consumer Protection Unit including the hostile work environment.   I asked Jim to take action.  He did. Within minutes of receiving the memo, Jim called me into a meeting with him, Karen and the Department's legal counsel.  At the meeting, Jim, my old friend, told me I had to resign or be fired.

While Jim's bizarre behavior protecting the troubled supervisor was only part of what I saw at the Department.  Similarly with what was exposed in today's article, Jim never understood his quasi-judicial role as Commissioner of the Indiana Department of Insurance.  He treated regulatory maters like he was still in the legislature, hobnobbing with the very people he was supposed to be regulating.  he was constantly in communication with them, even talking to those involved in enforcement actions. 

I remember one day Jim called me into my office and suggested that in our enforcement action against a title insurance company owner, who repeatedly violated the law, that we title insurance regulators only ask for a fine of a hundred dollars or so because the owner is a "good Christian."   Our efforts to enforce the rules against Affiliated Business Associations (ABA) in Indiana were derailed near the end of my tenure when Jim started getting calls from a present and former legislators who wanted the monopolization and the profits to continue for their buddies in the title insurance industry, which wouldn't have happened if Jim simply let me enforce the rules.

During the course of my subsequent whistleblowing lawsuit after being terminated, we deposed Jim Atterholt.  What I found shocking about Jim, even though a self-professed "Christian", Jim had no trouble lying under oath, especially if it was required to protect Karen. 

One such lie stands out.   I had at Jim's direction prepared a series of proposed bulletins.  In figuring out a way we could roll out these bulletins which were developed at Jim's direction, but without knowledge of Karen, my supervisor, Jim and I hatched a plan to have a scripted meeting with Karen.  At the meeting, Jim would pretend not to know of the bulletins and then, when hearing of them, would suggest we roll them out when he spoke at that year's 100 year anniversary of the Indiana Land Tittle Association.  Jim and I traded emails about meeting to discuss the plan.  Jim and I subsequently met in his office to discuss the plan to bypass Karen on the roll-out.

When asked about the scripted meeting under oath during a subsequent whisteblowing/wrongful termination case, Jim Atterholt flat out lied, saying he knew nothing about any such meeting and didn't participate.  Jim not only lied under oath, he did so recklessly, on an issue where he could easily be proved to have lied.   There were, after all, emails between Jim and me that contradicted his testimony.  There were also witnesses, my staff, at the very scripted meeting Jim swore under oath he didn't attend.

As a side note, I repeatedly made the Daniels' administration aware of problems at the Department of Insurance, including the very serious legal violations.  Not only did the Daniels' administration fail to investigate my whistleblowing allegations, the administration wouldn't even acknowledge that I had made those allegations.

To this day, it is hard not to like Jim Atterholt.  But Jim wears the fact that he's "Christian" on his sleeve, and doesn't hesitate to let people know he's driven by his faith.  As a Christian myself, i.e a Catholic, I don't get that.  Part of my Christian faith involves being honest and treating people fairly.  I couldn't sleep at night having done what Jim did.  Does he not think his actions are going to be judged by his Creator one day?  If Jim thinks he's going to get a pass on his conduct because he regularly goes to Church and professes his faith, he's worshipping a different God than I do.

To switch to another religion, Hinduism espouses the concept of "karma," the idea of retributive justice for one's actions.  Basically it means if you do evil, then evil will be done to you.  When I picked up this morning's paper and saw Jim Atterholt getting in trouble for having a cozy and improper relationship with an entity he regulates, I couldn't help but think the universe is dishing out a big helping of karma to Jim Atterholt.


Cato said...

Wake the f- up, Paul. These Krist-yuns don't respect Catholicism as the home of Christianity. Further, many of them refuse to accept Catholicism as Christian.

To them, Krist-yun is merely a social club, where the ends justify the means.

And why don't you think Atterholt nailed Karen? How many Republicans have we seen get caught banging their staffers for you to accept them for what they are?

Paul K. Ogden said...

Cato, I seriously doubt Jim Atterholt ever messed around with Karen. If you met Karen, you'd know why.

Paul K. Ogden said...
This comment has been removed by the author.
Paul K. Ogden said...

I would add Cato that we all had wild theories at the Department as to why Jim protected Karen, yet nobody had the theory you suggest. I agree under most circumstances it would be an obvious possibility, but if you met her you'd rule out that theory.

Downtown Indy said...

Many 'christian' handymen have scammed gullible homeowners into crappy asphalt sealing, shoddy roofing and writing checks for work that never got performed.

Calling yourself that is just another tool in the scammers toolkit.

Ghostwriter Judiciary said...

Who could "Karen" be? I'm pretty sure the Court of Appeals will out her in a few months.

Nicolas Martin said...

Nobody should be the least surprised by this. It is a central tenet of free market economic theory that regulatory agencies are captured by the industries they regulate. (In fact, the economic term is "regulatory capture.") This has been true since regulation began in earnest during the Progressive Era. Austrian school economists have been explaining and decrying this for decades.

Far from opposing regulation, existing, and especially large, companies welcome it. They then craft regulations to their advantage and have their own allies (or themselves) put in control of the regulating agencies. (A recent example is ObamaCare, which, despite its supposedly populist nature, is supported by every affected industry, including physicians, hospitals, and insurers.)

One of the most destructive forms of regulatory capture is occupational licensing. Industry after industry, aided by conservatives and liberals, has demanded to be licensed and gained control over the regulatory bodies that control the licensing, creating cartels. Now about one-third of all jobs in America require state licensing. Governor Daniels signed a bill requiring that massage therapists be licensed, despite claiming to support the free market, and you can be sure that no consumer demanded this licensing since it does not ensure quality and it increases prices. The massage licensing board is dominated by massage therapists, of course.

As B.K. Marcus has written,

"Another beneficiary of regulation—obvious to free-market economists but surprising to others—is the regulated industry itself. Through the phenomenon of 'regulatory capture' the existing corporate interests use the regulatory body as a cartelizing agent. Not only does the regulatory body act as a barrier to entry, lowering competition and raising prices, but it also blocks innovations that might threaten industry leaders."

Politicians are symbiotic beneficiaries of regulation since the regulated companies donate to them (bribe them) to game the system to the advantage of those regulated. They work hand-in-glove. This is the corrupt grease that lubricates the machinery of the system mutually controlled by Republicans and Democrats, and supported equally strongly by both. (They literally cannot survive politically without it.) This regulatory corporatism is at the center of what divides libertarians from conservatives and liberals in economic terms.

One of the most powerful books describing regulatory capture was actually written by a Marxist, Gabriel Kolko. In his essential work, The Triumph of Conservatism, Kolko shows how regulation evolved during the Progressive Era as powerful industrialists discovered that they could use the new agencies to block competition.

Economist Murray Rothbard explains Kolko's lesson in this essay:

Nobody can claim to understand American politics and economics without grasping the key role of regulation in enhancing both the power of government and regulated industries, at the expense of taxpayers and consumers.

Rhonda Lee said...

Nicolas Martin:
So you claim that regulating an industry actually is a bad thing? We should go back to sweat shops with no worker protections? are delusional...