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Archive for September, 2014

Majority Whip Rep. Steve Scalise PAC contributions second to Landrieu as LouisianVoice tracks PAC money in Congress

Posted in ALEC, American Legislative Exchange Council, Campaign Contributions, Congress, House, Lobbyist, PACs, Senate on September 7, 2014| 7 Comments »

With $1.1 million reported U.S. Rep. Steve Scalise, the House Majority Whip, is slightly ahead of Rep. Charles Boustany’s $984,000 but less than half of U.S. Sen. Mary Landrieu’s $2.6 million to rank as the second leading recipient of contributions from political action committees (PACs) among Louisiana’s congressional delegation, according to information provided by the Federal Elections Commission.

While opponents in congressional races are quick to point out opponents’ vulnerability to political influence from special interest groups, each of the state’s eight-member (two senators and six representatives) accept contributions from PACs.

And it’s very important to them that they accept this money in private and out of the public eye. The last thing they want is for us to be watching to see where they get their funding.

It is this practice that is becoming more and more grating to the individual voters who do not have the means to match PACs on a dollar-for-dollar basis. And that imbalance long ago tipped the scales in favor of pharmaceutical companies, Wall Street banks, oil companies, tobacco (disguised under innocent-sounding corporate names) and defense contractors, to name only a few, at the expense of the interests of John Q. Citizen.

The various business and industry lobbyists, once a rare animal in Washington, had by the late 1970s become such a force that they outnumbered the 535 members of Congress 130 to one. The number of companies with offices in the nation’s capital grew from 175 in 1971 to 2,445 a decade later.

By 1978, nearly 2,000 different trade associations employed 50,000 staff members in Washington and in 1980 the U.S. Chamber of Commerce employed 45 full-time lobbyists.

They are all there for one reason and one reason only: to feed the beast and with each election (every two years for House members and every six year for the Senate) the beast grows ever-hungrier and it is the American voter who is being devoured.

Each incumbent has accepted PAC contributions but not all challengers have. For this reason, LouisianaVoice has taken on the project of providing a sampling of PAC contributions to each candidate for the House and Senate where applicable. Contributions to each candidate will be duly reported over the coming weeks.

Our fourth installment, presented here, is on the PAC contributions to U.S. Rep. Steve Scalise.

ALTRIA GROUP PAC: $6,500

  • Altria Group, Inc. (previously named Philip Morris Companies Inc.) The name change alternative offers the possibility of masking the negatives associated with the tobacco business,” thus enabling the company to improve its image and raise its profile without sacrificing tobacco profits,
  • According to the Center for Public Integrity, Altria spent around $101 million on lobbying the U.S. government between 1998 and 2004, making it the second most active organization in the nation.
  • Altria also funded The Advancement of Sound Science Coalition which lobbied against the scientific consensus on climate change.
  • Daniel Smith, representing Altria, sits on the Private Enterprise Board of the American Legislative Exchange Council (ALEC).

AMERICAN AIRLINES: $2,000

  • American was accused of hiding repeated maintenance lapses from the FAA. Repair issues included such items as faulty emergency slides, improper engine coatings, incorrectly drilled holes, and other examples of shoddy workmanship. The most serious alleged lapse was a failure to repair cracks to pressure bulkheads; the rupture of a bulkhead could lead to cabin depressurization. It is also alleged that the airline retired one airplane in order to hide it from FAA inspectors.
  • AMR Corporation filed for Chapter 11 bankruptcy protection in 2011, and American announced capacity cuts in July 2012 due to the grounding of several aircraft associated with its bankruptcy and lack of pilots due to retirements. American notified more than 11,000 workers of possible job loss as part of its bankruptcy reorganization, and cut flights in September and October 2012.
  • As of November 2013 American Airlines and American Eagle received $10 million in annual federal subsidies.

AMERICAN BANKING ASSOCIATION PAC: $9,500

  • The financial crisis of 2007-2010 led to a sweeping overhaul of the United States financial regulatory system. The ABA spent $4.38 million on lobbying Congress in the first two quarters of 2011 alone. The ABA lobbied the White House, the departments of Agriculture, Treasury and Labor, and regulators such as the Federal Reserve, Commodity Futures Trading Commission and Securities and Exchange Commission.
  • As soon as the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law on July 21, 2011, the American Bankers Association announced it would continue to lobby for fewer regulations on the Volcker Rule, derivatives regulations, and other pieces of the bill.

AMERICAN PETROLEUM INSTITUTE: $2,000

  • To help fight climate control legislation, API supports the Energy Citizens group. A leaked summer 2009 memo from API President Jack Gerard asked its member companies to urge their employees to participate in planned protests (designed to appear independently organized) against cap-and-trade legislation. “The objective of these rallies is to put a human face on the impacts of unsound energy policy and to aim a loud message at [20 different] states.” Gerard said that API would cover all organizational costs and handling of logistics. In response to the memo, an API spokesman told media that participants will be there (at protests) because of their own concerns, and that API is just helping them assemble. Texas residents who were not employed by the energy industry were turned away from the event.

BANK OF AMERICA CORP. PAC: $2,000

  • Bank of America (BOA) received $20 billion in the federal bailout from the U.S. government through the Troubled Asset Relief Program (TARP) in 2009, as well as a guarantee of $118 billion to cover potential losses by the company—in addition to the $25 billion given to them in the fall 2008 through TARP. The additional payment was part of a deal with the U.S. government to preserve BOA’s merger with the troubled investment firm Merrill Lynch. Since then, members of Congress expressed concern that some of the recipients had been accused of misusing the bailout money and that loan applicants (particularly small business owners) were denied loans and credit card holders faced stiffer terms on the debt in their card accounts.
  • BOA received an additional $5.2 billion in government bailout money, channeled through American International Group (AIG).
  • On August 3, 2009, BOA agreed to pay a $33 million fine, without admission or denial of charges, to the U.S. Securities and Exchange Commission (SEC) over the non-disclosure of an agreement to pay up to $5.8 billion of bonuses at Merrill Lynch. The bank approved the bonuses before the merger but did not disclose them to its shareholders when the shareholders were considering approving the Merrill acquisition in December 2008. New York State Attorney General Andrew Cuomo commented after the suit and announced settlement that “the timing of the bonuses, as well as the disclosures relating to them, constituted a ‘surprising fit of corporate irresponsibility.”
  • In 2010, the bank was accused by the U.S. government of defrauding schools, hospitals, and dozens of state and local government organizations via misconduct and illegal activities involving the investment of proceeds from municipal bond sales. As a result, the bank agreed to pay $137.7 million, including $25 million to the Internal Revenue service and $4.5 million to state attorney general, to the affected organizations to settle the allegations.
  • On October 24, 2012, the top federal prosecutor in Manhattan filed a lawsuit alleging that BOA fraudulently cost American taxpayers more than $1 billion when it sold toxic mortgages to Fannie Mae and Freddie Mac. The scheme was called ‘Hustle’, or High Speed Swim Lane.
  • In August 2014, BOA agreed to a near-$17 billion deal to settle claims against it relating to the sale of toxic mortgage-linked securities including subprime home loans, in what was believed to be the largest settlement in U.S. corporate history. The bank agreed to pay $9.65 billion in fines and $7 billion in relief to the victims of the faulty loans which included homeowners, borrowers, pension funds and municipalities.

BRIDGE POINT EDUCATION PAC: $3,000

  • In 2011, Senator Tom Harkin (D-Iowa) chaired a hearing of the Health, Education, Labor, and Pensions Committee that examined Bridgepoint Education, Inc., which had experienced near-exponential profit growth despite low graduation rates. Bridgepoint purchased two universities both were near bankruptcy—Ashford University in Iowa and the University of the Rockies in Colorado. When it purchased Ashford University in 2005, the university had less than 300 students but today has over 78,000 students, 99 percent of whom are online.
  • Harkin was critical of the fact that despite such growth of the company, student success was lacking. Sixty-three percent of students who enrolled at Ashford University during the 2008–2009 school year withdrew before completion of their respective programs. Harkin noted that Bridgepoint recorded more than $216 million in profits in 2010—86.5 percent of which came from federal funds. Harkin said of those figures, “In the world of for-profit higher education, spectacular business success is possible despite an equally spectacular record of student failure. Bridgepoint is a private company, but it is almost entirely dependent upon public funds … I think this is a scam, an absolute scam.”

BRISTOL-MYERS SQUIBB EMPLOYEE PAC: $2,000

  • The company was caught up in an accounting scandal in 2002 over a significant restatement of revenues from 1999 to 2001, the result of an improper booking of sales related by offering excess inventory to customers to create higher sales numbers. The company settled with the U.S. Department of Justice and the Securities and Exchange Commission for $150 million. In 2002, the company was involved in illegally maintaining a monopoly on Taxol, its cancer treatment, and it was again sued. The company settled for $125 million.

CAPITAL ONE FINANCIAL CORP.: $5,000

  • In July 2012, Capital One was sued for misleading millions of its customers, by charging them for payment protection or credit monitoring when they took out a card. The company agreed to pay $210 million and to refund two million customers.
  • In August 2014, Capital One and three collection agencies entered into an agreement to pay $75.5 million to end a consolidated class action lawsuit alleging that the companies used an automated dialer to call customers’ cellphones without consent.
  • In 2014, Capital One amended its terms of service to create a right for it to “contact you in any manner we choose”, including a” personal visit . . . at your home and at your place of employment.” It also asserted its right to “modify or suppress caller ID and similar services and identify ourselves on these services in any manner we choose.”

CHESAPEAKE ENERGY CORP. PAC: $10,000

  • Former Chief Executive Aubrey McClendon borrowed $1.1 billion against his stake in thousands of company wells. The loans, undisclosed to shareholders, were used to fund McClendon’s operating costs for the Founders Well Participation Program, which offered him a chance to invest in a 2.5 percent interest in every well the company drills. McClendon in turn used the 2.5 percent stakes as collateral on those same loans. Analysts, academics and attorneys who reviewed the loan documents said the structure raised the potential for conflicts of interest and raised questions on the corporate governance and business ethics of Chesapeake Energy’s senior management. The company disagreed that this is a conflict of interest or a violation of business ethics.
  • Current CEO Doug Lawler was responsible for laying off over 800 employees—roughly 16 percent of the workforce—within a few months of taking the position. Lawler released waves of employees over the course of a few months. All of the layoffs culminated in October of 2013 when Lawler released a staggering 800 employees nationwide, 640 of whom were from the corporate office in Oklahoma City.
  • In June of 2014, the state of Michigan filed felony fraud and racketeering charges against Chesapeake Energy, alleging that the company canceled hundreds of land leases on false pretenses after it sought to obtain oil and gas rights. Chesapeake Energy disputed all charges.

CHEVRON EMPLOYEES PAC: $10,000

  • In 2003 a class action lawsuit against Chevron was sued in Ecuadorian court for $28 billion for making residents ill and damaging forests and rivers by discharging 18 billion US gallons of formation water into the Amazon. Chevron claimed that agreements with the Ecuadorian Government exempted the company from any liabilities.
  • In 2011, Ecuadorian residents were awarded $8.6 billion, based on claims of loss of crops and farm animals as well as increased local cancer rates. The award was later revised to $19 billion on appeals, which was then appealed to the Ecuadorean National Court of Justice. Chevron described the lawsuit as an “extortion scheme” and refused to pay the fine.
  • Chevron’s activities at its century-old Richmond refinery have been the subject of ongoing controversy. The project generated over 11 million pounds of toxic materials and caused more than 304 accidents. The Richmond refinery paid $540,000 in 1998 for illegally bypassing waste water treatments and failing to notify the public about toxic releases. Overall, Chevron is listed as potentially liable for 95 Superfund sites, with funds set aside by the EPA for clean-up.
  • Chevron’s operations in Africa have also been criticized as environmentally unsound. In 2002, Angola became the first country in Africa to levy a fine on a major multinational corporation operating within its borders when it demanded $2 million in compensation for oil spills allegedly caused by Chevron.
  • On October 16, 2003, Chevron U.S.A. settled a charge under the Clean Air Act, which reduced harmful air emissions by about 10,000 tons a year. In San Francisco, Chevron was ordered to spend almost $275 million to install and utilize innovative technology to reduce nitrogen and sulfur dioxide emissions at its refineries. In 2000, after violating the Clean Air Act at an offline loading terminal in El Segundo, California, Chevron paid a $6 million penalty as well as $1 million for environmental improvement projects.

CITIGROUP: $3,500

  • In 2003, Citigroup published an investment brochure advising clients that “There is no ‘average consumer…Economic growth is powered by and largely consumed by the wealthy few.”
  • Heavy exposure to troubled mortgages compounded by poor risk management led Citigroup into trouble as the subprime mortgage crisis worsened in 2008. Citigroup announced on April 11, 2007, that it would eliminate 17,000 jobs, or about 5 percent of its workforce. Even after brokerage firm Bear Stearns ran into serious trouble in summer 2007, Citigroup decided the possibility of trouble with its CDO’s was so tiny that they excluded them from their risk analysis. With the crisis worsening, Citigroup announced on January 7, 2008 that it was considering cutting another 5 to 10 percent of its 327,000 member-workforce.
  • By November 2008, Citigroup was insolvent, despite its receipt of $25 billion in taxpayer funded federal TARP funds. On November 17, 2008, Citigroup announced plans for about 52,000 new job cuts—on top of 23,000 cuts already made during 2008.

COMCAST: $10,000

  • Comcast’s customer satisfaction often ranks among the lowest in the cable industry.
  • With $18.8 million spent in 2013, Comcast has the seventh largest lobbying budget of any individual company or organization in the United States. Comcast employs multiple former U.S. congressmen as lobbyists.
  • Comcast also supports lobbying and PACs on a regional level, backing organizations such as the Tennessee Cable Telecommunications Association and the Broadband Communications Association of Washington PAC. Comcast and other cable companies have lobbied state governments to pass legislation restricting or banning individual cities from offering public broadband service. Municipal broadband restrictions of varying scope have been passed in a total of 20 US States, including Louisiana.

DUKE ENERGY: $4,000

  • In 1999 the EPA initiated an enforcement action against Duke Energy for making modifications to old and deteriorating coal-burning power plants without getting permits under the Clean Air Act.
  • In 2002, researchers identified Duke Energy as the 46th-largest corporate producer of air pollution in the United States, with roughly 36 million pounds of toxic chemicals released into the air annually. Major pollutants included sulfuric and hydrochloric acid, chromium compounds, and hydrogen fluoride. The Political Economy Research Institute ranks Duke Energy 13th among corporations emitting airborne pollutants in the United States.

EMPLOYEES OF NORTHROP GRUMMAN PAC: $9,000

  • From 1990-2002, Northrop Grumman contributed $8.5 million to federal campaigns. The company gave more than $1 million to federal candidates in 2005-2006 election cycle, compared to $10.6 million given by all defense contractors in the same cycle. This was behind only General Dynamics and Lockheed Martin in the defense industry. Former Northrop Grumman Electronics Systems chief James Roche served as Secretary of the Air Force for two years under George W. Bush. Roche was eventually nominated to head the Army, but was forced to withdraw his nomination among accusations of mismanaging a contract with Boeing and of failing to properly handle the Air Force sexual assault scandals of 2003. At least seven former officials, consultants, or shareholders of Northrop Grumman held posts in the Bush administration.
  • Northrop Grumman has dealt with multiple scandals during its history. In 1995, Robert Ferro, an employee for TRW, a company acquired by Northrop Grumman, discovered that satellite components manufactured for the U.S. Air Force were faulty and likely to fail in operation. TRW allegedly suppressed Ferro’s report and hid the information from the Air Force, even after a satellite in space equipped with the faulty components experienced serious anomalies. Ferro later sued Northrop Grumman in federal court under the federal whistle-blower law. In April 2009 Northrop Grumman agreed to pay $325 million to settle the suit. Ferro was awarded $48.8 million of the settlement.
  • The company was sued in 1999 for allegedly knowingly giving the Navy defective aircraft. This suit sought $210 million in damages. Then in 2003, the company was sued for allegedly overcharging the U.S. government for space projects in the 1990s. Northrop Grumman paid $111.2 million to settle out of court.
  • In 2010, Virginia’s computer operations experienced a week-long computer outage. Northrop Grumman operated these systems under a $2.4 billion contract. As a result, as many as 45,000 citizens could not renew their driver’s licenses prior to their expiration. Computer systems for 26 of the state’s 89 agencies were affected and some data may have been permanently lost.

EXXON MOBIL CORP. PAC: $2,500

  • ExxonMobil has drawn criticism from scientists, science organizations and the environmental lobby for funding organizations critical of the Kyoto Protocol and seeking to undermine public opinion about the scientific conclusion that global warming is caused by the burning of fossil fuels. Mother Jones Magazine said the company channeled more than $8 million to 40 different organizations that have employed disinformation campaigns including “skeptical propaganda masquerading as journalism” to influence opinion of the public and of political leaders about global warming and that the company was a member of one of the first such groups, the Global Climate Coalition, founded in 1989. ExxonMobil’s support for these organizations has drawn criticism from the Royal Society, the academy of sciences of the United Kingdom. The Union of Concerned Scientists released a report in 2007 accusing ExxonMobil of spending $16 million, between 1998 and 2005, towards 43 advocacy organizations which dispute the impact of global warming. The report argued that ExxonMobil used disinformation tactics similar to those used by the tobacco industry in its denials of the link between lung cancer and smoking, saying that the company used “many of the same organizations and personnel to cloud the scientific understanding of climate change and delay action on the issue.” These charges are consistent with a purported 1998 internal ExxonMobil strategy memo, posted by the environmental group Environmental Defense, which said:

“Victory will be achieved when

  • Average citizens [and the media] ‘understand’ (recognize) uncertainties in climate science; recognition of uncertainties becomes part of the conventional wisdom;
  • Industry senior leadership understands uncertainties in climate science, making them stronger ambassadors to those who shape climate policy;
  • Those promoting the Kyoto treaty on the basis of extant science appear out of touch with reality.”
  • In 2003, the United States Attorney for the Southern District of New York announced that J. Bryan Williams, a former senior executive of Mobil Oil Corp., had been sentenced to three years and ten months in prison on charges of evading income taxes on more than $7 million in unreported income, including a $2 million kickback he received in connection with Mobil’s oil business in Kazakhstan. Documents filed with the court said Williams’ unreported income included millions of dollars in kickbacks from governments, persons, and other entities with whom Williams conducted business while employed by Mobil. In addition to his sentence, Williams must pay a fine of $25,000 and more than $3.5 million in restitution to the IRS, in addition to penalties and interest.

 GENERAL DYNAMICS: $2,000

  • In 2008, General Dynamics agreed to pay $4 million to settle a lawsuit brought by the US Government claiming a GD unit fraudulently billed the government for defectively manufactured parts used in US military aircraft and submarines. The US alleged that from September 2001 to August 2003 GD defectively manufactured or failed to test parts used in US military aircraft.

GLAXOSMITHKLINE PAC:  $1,000

  • In July 2012 GSK pleaded guilty to criminal charges and agreed to a pay $3 billion to settle the criminal charges as well as civil lawsuits in the largest settlement paid by a drug company at the time. The criminal charges were for promoting Paxil and Wellbutrin for unapproved uses and failing to report safety data about Avandia. GSK paid $1 billion to settle the criminal charges. The remaining $2 billion was part of the civil settlement over unapproved promotion and paying kickbacks, making false statements concerning the safety of Avandia; and reporting false prices to Medicaid.

KOCH INDUSTRIES: $10,000

  • From 1999 to 2003, Koch Industries was assessed more than $400 million in fines, penalties and judgments. In 2000, for 300 reported oil spills which had taken place across six states, Koch paid the largest civil fine ever imposed on a company for the illegal discharge of crude oil and petroleum products. The company agreed to pay a $30 million civil penalty, improve its leak-prevention programs and spend $5 million on environmental projects.
  • In 1996, an 8-inch-diameter steel pipeline operated by Koch Pipeline Company ruptured near Lively, Texas and began leaking butane gas. The vapor cloud ignited when two residents drove their pickup truck through the flammable vapors to get to a neighbor’s house to report the leak. The two were killed in the explosion. In 1999, a Texas jury found that negligence had led to the rupture of the Koch pipeline and awarded the victims’ families $296 million—the largest compensatory damages judgment in a wrongful death case against a corporation in U.S. history.
  • In 2000, a federal grand jury returned a 97-count indictment against Koch Industries for excess emissions of 85 metric tons of benzene, a known carcinogen. In 2001, Koch Industries was fined $20 million, of which $10 million was a criminal fine and $10 million to clean up the environment.
  • In 2008, Koch Industries discovered that the French affiliate Koch-Glitsch had violated bribery laws allegedly securing contracts in Algeria, Egypt, India, Morocco, Nigeria and Saudi Arabia after an investigation by Ethics Compliance officer, Egorova-Farines. After Koch Industries’ investigative team looked into her findings, the four employees involved were terminated. Egorova-Farines reported her findings immediately, and even after Koch’s investigators substantiated the findings, her “superiors removed her from the inquiry in August 2008 and fired her in June 2009, calling her incompetent.”
  • Koch Industries has spent more than $50 million to lobby in Washington between 2006 and October 2011.
  • The company has opposed the regulation of financial derivatives and limits on greenhouse gases. It sponsors free market foundations and causes and is one of the leading benefactors of the American Legislative Exchange Council (ALEC).
  • According to the Center for Responsive Politics, many of Koch Industries’ contributions have gone toward achieving legislation on energy issues, defense appropriations and financial regulation reform. Koch Industries has been criticized for the role the company plays in affecting climate change policy in the U.S.

LOCKHEED MARTIN EMPLOYEES’ PAC: $2,000

  • Lockheed Martin received $36 billion in government contracts in 2008, more than any company in history. It does work for more than two dozen government agencies from the Department of Defense and the Department of Energy to the Department of Agriculture and the Environmental Protection Agency. It’s involved in surveillance and information processing for the CIA, the FBI, the Internal Revenue Service (IRS), the National Security Agency (NSA), The Pentagon, the Census Bureau and the Postal Service.
  • Lockheed is listed as the largest U.S. government contractor and ranks third for number of incidents, and 21st for size of settlements. Since 1995 the company has agreed to pay $606 million to settle 59 instances of misconduct.
  • Through its political action committee (PAC), the company provides low levels of financial support to candidates who advocate national defense and relevant business issues. It was the top contributor to House Armed Services Committee chairman Howard P. “Buck” McKeon (R-California), giving more than $50,000 in the most recent election cycle. It also topped the list of donors to Sen. Daniel Inouye (D-HI), chairman of the Senate Appropriations Committee before his death in 2012.
  • Lockheed Martin Employees Political Action Committee is one of the 50 largest in the country. With contributions from 3,000 employees, it donates $500,000 a year to about 260 House and Senate candidates.
  • In March 2013, Maryland State Senate Majority Leader Rob Garagiola, while he was said to be dating a Lockheed Martin lobbyist, cosponsored a resolution which would give Lockheed Martin tax rebate worth millions of dollars related to hotel taxes paid at its CLE facility in Bethesda, MD. This was after Montgomery County Council refused to pass a similar resolution.

MARATHON OIL EMPLOYEES PAC: $12,000

  • Marathon gave $250,000 to the Supriya Jindal Foundation and Gov. Bobby Jindal’s administration promptly awarded Marathon subsidiaries $5.2 million in state funds.

MERCK & CO.:  $5,000

  • A US Justice Department fraud investigation began in 2000 when allegations were brought in two separate lawsuits filed by whistleblowers who alleged that Merck failed to pay proper rebates to Medicaid and other health care programs and paid illegal remuneration to health care providers. In 2008, Merck agreed to pay more than $650 million to settle charges that it routinely overbilled Medicaid for its most popular medicines. The settlement was one of the largest pharmaceutical settlements in history. The federal government received more than $360 million, plus 49 states and Washington, DC, received over $290 million. One whistleblower received a $68 million reward.
  • From 2002 through 2005 the Australian affiliate of Merck sponsored the eight issues of a medical journal, the Australasian Journal of Bone and Joint Medicine, published by Elsevier. Although it gave the appearance of being an independent peer-reviewed journal, without any indication that Merck had paid for it, the journal actually reprinted articles that originally appeared in other publications and that were favorable to Merck. The misleading publication came to light in 2009 during a personal injury lawsuit filed over Vioxx. Nine of 29 articles in the journal’s second issue referred positively to Vioxx. In 2009, the CEO of Elsevier’s Health Sciences Division, Michael Hansen, admitted that the practice was “unacceptable.”
  • In December 2013, Merck agreed to pay a total of $27.7 million dollars to 1,200 plaintiffs in a class action lawsuit alleging that the company’s osteoporosis drug had caused them to develop osteonecrosis of the jaw.

 MICROSOFT CORP. PAC: $8,500

  • One of Microsoft’s business tactics, described by an executive as “embrace, extend and extinguish,” initially embraces a competing standard or product, then extends it to produce their own version which is then incompatible with the standard, which in time extinguishes competition that does not or cannot use Microsoft’s new version. Various companies and governments have sued Microsoft over this set of tactics, resulting in billions of dollars in rulings against the company.
  • Microsoft has been criticized for its involvement in censorship in the People’s Republic of China. Microsoft has also come under criticism for outsourcing jobs to China and India. There were reports of poor working conditions at a factory in southern China that makes some of Microsoft’s products.
  • To avoid providing stock options and medical and retirement benefits to employees, Microsoft hires thousands of temporary workers (temps) for the designing, editing and testing of its software. When a federal judge (upheld by the U.S. Supreme Court) outlawed the hiring of temps for longer than six months, Microsoft got around the ruling by laying off its temps for 100 days and then rehiring them.

MORGAN STANLEY: $2,000

  • In 2003, Morgan Stanley agreed to pay $125 million in order to settle its portion of a $1.4 billion settlement brought by New York Attorney General Eliot Spitzer, the National Association of Securities Dealers, the United States Securities and Exchange Commission, (SEC) and a number of state securities regulators, relating to intentionally misleading research motivated by a desire to win investment banking business with the companies covered.
  • Morgan Stanley settled a sex discrimination suit brought by the Equal Employment Opportunity Commission for $54 million in July 2004. In 2007, the firm agreed to pay $46 million to settle a class action lawsuit brought by eight female brokers.
  • In July 2004, the firm paid NASD a $2.2 million fine for more than 1,800 late disclosures of reportable information about its brokers.
  • In September 2004, the firm paid a $19 million fine imposed by NYSE for failure to deliver prospectuses to customers in registered offerings, inaccurate reporting of certain program trading information, short sale violations, failures to fingerprint new employees and failure to timely file exchange forms.
  • The New York Stock Exchange imposed a $19 million fine on January 12, 2005 for alleged regulatory and supervisory lapses, the largest fine ever imposed by NYSE at the time.
  • In 2005, a Florida jury found that Morgan Stanley failed to give adequate information to Ronald Perelman about Sunbeam thereby defrauding him and causing damages to him of $604 million. In addition, punitive damages were added for total damages of $1.450 billion after the firm’s attorneys infuriated the court by failing and refusing to produce documents, and falsely telling the court that certain documents did not exist. The ruling was overturned in 2007.
  • Morgan Stanley settled a class action lawsuit in 2006 by both current and former Morgan Stanley employees for unfair labor practices instituted upon those in the financial advisor training program. Employees of the program had claimed the firm expected trainees to clock overtime hours without additional pay and handle various administrative expenses as a result of their expected duties. Morgan Stanley settled for $42.5 million.
  • In May the firm agreed to pay a $15 million fine after the Securities and Exchange Commission accused the firm of deleting emails and failing to cooperate with SEC investigators.
  • FINRA announced a $12.5 million settlement with Morgan Stanley in 2007 over charges that the firm’s former affiliate, Morgan Stanley DW, Inc. (MSDW), failed on numerous occasions to provide emails to claimants in arbitration proceedings as well as to regulators. The company had claimed that the destruction of the firm’s email servers in the September 11, 2001 terrorist attacks on New York’s World Trade Center resulted in the loss of all email before that date. In fact, the firm had millions of earlier emails that had been retrieved from backup copies stored in another location that was not destroyed in the attacks. Customers who had lost their arbitration cases against Morgan Stanley DW Inc. because of their inability to obtain these emails to demonstrate Morgan Stanley’s misconduct received a token amount of money as a result of the settlement.
  • In July 2007, Morgan Stanley agreed to pay $4.4 million to settle a class-action lawsuit for incorrectly charging clients for storage of precious metals.
  • In August 2007, Morgan Stanley was fined $1.5 million and paid $4.6 million in restitution to customers related to excessive mark-ups in 2,800 transactions. An employee was charged $40,000 and suspended for 15 days.
  • Under a 2008 settlement with New York Attorney General Andrew M. Cuomo, the firm agreed to repurchase approximately $4.5 billion worth of auction rate securities. The firm was accused of misrepresenting auction rate securities in their sales and marketing.
  • In April 2010, the Commodity Futures Trading Commission announced the firm agreed to pay $14 million related to an attempt to hide prohibited trading activity in oil futures.
  • The Department of Justice sought a $4.8 million fine from Morgan Stanley for its part in an electricity price-fixing scandal. Con Edison estimated that the crime cost New York state consumers about $300 million. Morgan Stanley earned revenues of $21.6 million from the fraud.
  • Morgan Stanley agreed to pay a $5 million fine to the Commodity Futures Trading Commission and an addition $1.75 million to CME and the Chicago Board of Trade after employees improperly executed fictitious sales in Eurodollar and Treasury note futures contracts.
  • On August 7, 2012, it was announced that Morgan Stanley would have to pay $4.8 million in fines in order to settle a price fixing scandal, which has been estimated to have cost New Yorkers $300 million.

MONSANTO CO. CITIZENSHIP PAC: $1,000

  • In 2003, Monsanto reached a $300 million settlement for manufacturing and dumping of the toxic chemical polychlorinated biphenyls (PCBs) in Alabama.
  • In 2004, Monsanto, along with Dow and other chemical companies, were sued by a group of Vietnamese for the effects of its Agent Orange defoliant, used by the U.S. military in the Vietnam War. The case was dismissed.
  • In 2005, the US DOJ filed a Deferred Prosecution Agreement in which Monsanto admitted to violations of the Foreign Corrupt Practices Act and making false entries into its books and records. Monsanto also agreed to pay a $1.5 million fine. The case involved bribes paid to an Indonesian official.
  • The Monsanto Company Citizenship Fund has donated more than $10 million to various candidates since 2003. In 2011, Monsanto spent about $6.3 million lobbying Congress and the U.S. Department of Agriculture about regulations that would affect the production and distribution of genetically engineered produce.
  • US diplomats in Europe have worked directly for Monsanto.
  • Monsanto gave $186,250 to federal candidates in the 2008 election.
  • Monsanto spent $8.1 million opposing the passage of Proposition 37 in California, making it the largest donor against the initiative. Proposition 37, which was rejected in November 2012, would have mandated the disclosure of genetically modified crops used in the production of California food products.
  • More recently, as of October 2013, Monsanto and DuPont Co. are backing an anti- labeling campaign with roughly $18 million so far dedicated to the campaign.

NATIONAL RIFLE ASSOCIATION POLITICAL VICTORY FUND: $4,500

NEWS CORP. PAC: $1,000

  • In 1999, The Economist reported that NewsCorp paid comparatively lower taxes and NewsCorp Investments made $20.1 billion in profits over the previous 11 years but had not paid net corporation tax. It also reported that after an examination of the available accounts, NewsCorp could normally have been expected to pay a corporate tax of approximately $350 million. The article explained that in practice, the corporation’s complex structure, international scope and use of offshore tax havens allowed News Corporation to pay minimal taxes.
  • In July 2011, NewsCorp closed down the News of the World newspaper in the United Kingdom due to allegations of phone hackings. The allegations include trying to access former Prime Minister Gordon Brown‘s voice mail, and obtain information from his bank accounts, family’s medical records, and private legal files. Allegations of hacking have also been brought up in relation to former Prime Minister Tony Blair, and the Royal Family.

 PHARMACEUTICAL RESEARCH & MANUFACTURERS OF AMERICA (PhRMA): $2,000

  • Former Congressman Billy Tauzin (R-Louisiana) resigned from Congress and began work as the head of the Pharmaceutical Research and Manufacturers of America, or PhRMA, a powerful trade group for pharmaceutical companies. Two months before resigning as chair of the committee which oversees the drug industry, switching from regulator to lobbyist, Tauzin played a key role in shepherding through Congress the Medicare Prescription Drug Bill, a bill which was criticized by opponents for being too generous to the pharmaceutical industry.
  • This link was explored at great length in an April 1, 2007 interview by Steve Kroft of 60 Minutes. The report, Under the Influence, pitted Rep. Walter B. Jones (R-N.C.) and Rep. Dan Burton (R-Ind.) against Tauzin and accused him of using unethical tactics to push a bill that “the pharmaceutical lobbyists wrote.” Along with Tauzin, many of the other individuals who worked on the bill are now lobbyists for the pharmaceutical industry.

 

PFIZER, INC. PAC: $6,500

  • In September 2009, Pfizer pleaded guilty to the illegal marketing of the arthritis drug Bextra for uses unapproved by the U.S. Food and Drug Administration (FDA), and agreed to a $2.3 billion settlement, the largest health care fraud settlement at that time. Pfizer also paid the U.S. government $1.3 billion in criminal fines related to the “off-label” marketing of Bextra, the largest monetary penalty ever rendered for any crime. Called a repeat offender by prosecutors, this was Pfizer’s fourth such settlement with the U.S. Department of Justice in the previous ten years.

SAFARI CLUB INTERNATIONAL PAC: $1,000

  • SCI has been criticized by the Humane Society for supporting the hunting of endangered African antelope at fenced game ranches in Texas and Florida and for giving awards for the hunting of big cats and elephant, lion, rhino and buffalo in Africa.
  • In 2005, controversy erupted over tax write-offs taken by big game hunters for donations of trophies to museums. IRS rules allowed only the fair market value of such donations to be deducted. In most cases, the donations were worth only a fraction of the claimed value, and often accumulated in museum storage facilities.
  • For the tax year ending June 2006, SCI reported $2.9 million in revenue from SCI publications, $3.2 million in membership dues, $205,967 in interest on savings and temporary investments, $75,771 from sales of assets other than inventory, $6.9 million from special events such as the annual convention, $156,014 from sales of inventory, and $6,089 miscellaneous income.
  • In 2007, the New York legislature earmarked $50,000 of public funds for SCI.

GOLDMAN SACHS GROUP PAC: $4,000

  • A federal appeals court upheld the conviction of former Goldman Sachs Group Inc director Rajat Gupta, one of the biggest successes in federal prosecutors’ long-running probe to stop insider trading on Wall Street.
  • Federal prosecutors and Securities and Exchange Commission officials also investigated whether a senior Goldman investment banker, Matthew Korenberg, fed inside information to a Galleon Group portfolio manager named Paul Yook, according to separate reports in the New York Times and the Wall Street Journal.

HOME DEPOT PAC: $10,000

  • In July 2005, former employee Michael Davis filed a whistleblower lawsuit against the Home Depot, alleging that his discharge was in retaliation for refusing to make unwarranted backcharges against vendors. Davis alleges that the Home Depot forced its employees to meet a set quota of backcharges to cover damaged or defective merchandise, forcing employees to make chargebacks to vendors for merchandise that was undamaged and not defective.
  • In the settlement of the litigation, Home Depot changed some of its corporate governance provisions. Home Depot also agreed to pay the plaintiff’s counsel $6 million in cash and $8.5 million in common stock.

UNITEDHEALTH GROUP PAC: $5,000

 

  • In 2010, UnitedHealth Group spent more than $1.8 million on lobbying activities to achieve favorable legislation, and hired seven different lobbying firms to work on its behalf. In addition, its corporate political action committee spent an additional $1 million on lobbying activities in 2010.
  • In 2006, the Securities and Exchange Commission (SEC) began investigating the conduct of UnitedHealth Group’s management and directors, for backdating of stock options. Investigations were also begun by the Internal Revenue Service and prosecutors in the U.S. attorney’s office for the Southern District of New York. The investigations came to light after a series of Wall Street Journal stories in May 2006, claiming backdating of hundreds of millions of dollars worth of stock options by UHC management. The backdating apparently occurred with the knowledge and approval of the directors, according to the Journal. On October 15, 2006, CEO William McGuire was forced to resign, and relinquish hundreds of millions of dollars in stock options. In December 2007, the SEC announced a settlement under which McGuire would repay $468 million, as a partial settlement.
  • In June 2006, the American Chiropractic Association filed a national class action lawsuit against the American Chiropractic Network (ACN), which is owned by UnitedHealth Group and administers chiropractic benefits, and against UnitedHealth Group itself, for alleged practices in violation of the federal Racketeer Influence and Corrupt Organizations Act (RICO).

WALMART STORIES PAC: $4,000

  • Wal-Mart is the beneficiary of $96.5 million in economic development subsidies in Louisiana and $1.2 billion in tax breaks nationwide. http://www.walmartsubsidywatch.org/state_detail.html?state=LA Yet, in 2011, Walmart, four of whose owners are among the 11 richest Americans, decided to roll back health care coverage and to increase premiums for its employees. (Does this sound familiar, Bobby Jindal?) Wal-Mart still boasted that 90 percent of its employees had health coverage, neglecting to mention that more than half of those got their coverage through their spouses’ group coverage. The company provides no health coverage at all for new part time employees despite the company’s 24.7 percent gross profit martin that same year.
  • An April 2012 New York Times investigative report revealed that a former Walmart executive alleged that, in September 2005, Walmart de Mexico paid bribes throughout Mexico in order to obtain construction permits, information, and other favors. Concerns were raised that Walmart executives in the United States concealed the allegations. Reportedly, bribes were given to speed up construction permits, which gave Walmart a substantial advantage over its business competitors. A follow-up investigation by The New York Times published December 17, 2012, revealed evidence that regulatory permission for siting, construction, and operation of 19 stores were obtained through bribery.
  • A paper published in Farm Foundation in 1997 found that some small towns can lose almost half of their retail trade within ten years of a Walmart store opening.
  • A 2004 paper by two professors at Penn State University found that counties with Walmart stores suffered increased poverty compared with counties without Walmarts due to displacement of workers from higher-paid jobs in retail stores which customers no longer choose to patronize. A study in Nebraska looked at two different Walmarts, the first of which had just arrived and was in the process of driving everyone else out of business by cutting their prices to the bone. In the other Walmart, “they had successfully destroyed the local economy, there was a sort of economic crater with Wal-Mart in the middle; and, in that community, the prices were 17 percent higher.”
  • The Economic Policy Institute estimates that between 2001 and 2006, Walmart’s trade deficit with China alone eliminated nearly 200,000 U.S. jobs. Another study found that a new store increases net retail employment in the county by 100 jobs in the short term, half of which disappear over five years as other retail establishments close.
  • Walmart has been criticized by labor unions, community groups, grassroots organizations, religious organizations, environmental groups, and even Walmart’s own customers and employees. They have protested against the company’s policies and business practices, including charges of racial and gender discrimination. Other areas of criticism include the corporation’s foreign product sourcing, treatment of product suppliers, employee compensation and working conditions, environmental practices, the use of public subsidies, the company’s security policies and slavery. Wal-Mart denies doing anything wrong and maintains that low prices are the result of efficiency.

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Fleming PR flunky tries to separate his boss from Payday Loans but we have Secretary of State’s corporate records

Posted in Campaign Contributions, Congress, Lobbyist, Media, PACs, Public Records on September 5, 2014| 26 Comments »

Occasionally we manage to strike a raw nerve with our blog posts about political shenanigans in Louisiana. Our post on Tuesday (Sept. 2) about U.S. Rep. John C. Fleming’s campaign contributions apparently was a case in point.

But it wasn’t the fact that Fleming, a Republican from Minden and a physician, has taken more than $200,000 from special interest political action committees (PACs) this election cycle.

Nor was there any dispute about our claim that Fleming brooks no dissenting opinion and blocks access to his Facebook page to anyone who disagrees with him.

But apparently, he doesn’t want it known that he once owned and/or operated a payday loan company.

On Friday (Sept. 5) we received a terse email from Fleming’s communications director, one Doug Sachleben, protesting that part of our post as being incorrect.

Sachleben did not say whether he works out of Louisiana or Washington, but that really is irrelevant. Here is the verbatim content of his email:

In your piece on my boss, the portion below is wrong. Rep Fleming has never owned or operated a payday loan company. I’d appreciate if you removed that.

 Doug Sachtleben

Communications Dir.

Rep John Fleming

He then lifted a quote from our Tuesday blog post, apparently for our benefit:

“Fleming, a doctor who apparently did not make enough money as a medical practitioner, once ran a payday loan company, an enterprise that offers short-term loans to low income families at the friendly annualized interest rate of up to 390 percent.”

Well, we hate being wrong. That’s why we researched our story in advance.

Accordingly, we went to our original source, the corporate records contained on the Louisiana Secretary of State’s web page.

In response to Sachleben, we copied and pasted a number of corporations listed in John C. Fleming’s name. These included Fleming Expansions, Fleming Acquisitions, Minden Family Care Center (a Professional Medical Corporation), Fleming for Congress, LLC, 1 Subway, LLC, Fleming Payday Loans, LLC.

Each of the corporations included the name of John C. Fleming as either an officer or an agent and in some instances, both. In a few cases, Fleming’s wife Cynthia also was listed as an officer.

More importantly, each of the six corporations had the same domicile address: 119 Homer Road in Minden.

Fleming and his wife also were owners, officers and agents in a dating service, Fleming Dating Development, Inc.

We replied to Sachleben, attaching a copy of the Fleming Payday Loans, LLC corporate records.

He wrote back this explanation:

At that time there were a lot of employees requesting advances on their paychecks. To pay people in advance of their work would have been problematic for many reasons and an accounting nightmare. The Fleming Group formed an LLC on paper with the thought of offering temporary interest-free loans to only its employees to accommodate their requests. The more it was considered, the more problematic it appeared; so they scrapped the idea entirely. There was never any desire or consideration to get into the payday loan industry as a business.

Wow.

In his incredulous clarification, he neglected to explain how a “problematic idea” managed to be incorporated on September 2, 2004, and the affidavit to dissolve was not filed until Aug. 4, 2009—a year after he elected to Congress. Why would Fleming leave a “problematic idea” on the books for five years when he would have been required to file annual reports, tax returns and other paperwork?

And while he’s at it, perhaps Sachleben can also offer either a denial of those campaign contributions (taken directly from Fleming’s campaign finance reports) or explain why his boss would accept funds from outfits with such tawdry records of fraud, influence peddling and other unsavory activity.

Here are the Secretary of State’s web page printouts on Fleming’s corporate entities:

 

FLEMING EXPANSIONS, L.L.C. Limited Liability Company MINDEN Active

 

Previous Names
Business: FLEMING EXPANSIONS, L.L.C.
Charter Number: 34627521K
Registration Date: 4/20/1998

 

Domicile Address
119 HOMER RD
MINDEN, LA 71055

 

Mailing Address
119 HOMER ROAD
MINDEN, LA 71055

 

Status
Status: Active
Annual Report Status: In Good Standing
File Date: 4/20/1998
Last Report Filed: 3/27/2014
Type: Limited Liability Company

 

Registered Agent(s)

 

Agent: MIKE TOLAND
Address 1: 119 HOMER RD
City, State, Zip: MINDEN, LA 71055
Appointment Date: 3/30/2011

 

Officer(s) Additional Officers: No 

 

Officer: JOHN C. FLEMING
Title: Member
Address 1: 119 HOMER ROAD
City, State, Zip: MINDEN, LA 71055
FLEMING PAYDAY LOANS, L.L.C. Limited Liability Company MINDEN Inactive

 

Previous Names
Business: FLEMING PAYDAY LOANS, L.L.C.
Charter Number: 35772196K
Registration Date: 9/2/2004

 

Domicile Address
119 HOMER ROAD
MINDEN, LA 71055

 

Mailing Address
C/O JOHN C. FLEMING
119 HOMER ROAD
MINDEN, LA 71055

 

Status
Status: Inactive
Inactive Reason: Voluntary Action
File Date: 9/2/2004
Last Report Filed: 8/18/2008
Type: Limited Liability Company

 

Registered Agent(s)

 

Agent: JOHN C. FLEMING
Address 1: 119 HOMER ROAD
City, State, Zip: MINDEN, LA 71055
Appointment Date: 9/2/2004

 

Officer(s) Additional Officers: No 

 

Officer: JOHN C. FLEMING
Title: Manager
Address 1: 119 HOMER ROAD
City, State, Zip: MINDEN, LA 71055

 

FLEMING FOR CONGRESS, L.L.C. Limited Liability Company MINDEN Active

 

Previous Names
Business: FLEMING FOR CONGRESS, L.L.C.
Charter Number: 36736015K
Registration Date: 4/30/2008

 

Domicile Address
119 HOMER ROAD
MINDEN, LA 71055

 

Mailing Address
119 HOMER ROAD
MINDEN, LA 71055

 

Status
Status: Active
Annual Report Status: In Good Standing
File Date: 4/30/2008
Last Report Filed: 4/8/2014
Type: Limited Liability Company

 

Registered Agent(s)

 

Agent: MIKE TOLAND
Address 1: 119 HOMER ROAD
City, State, Zip: MINDEN, LA 71055
Appointment Date: 11/30/2011

 

Officer(s) Additional Officers: No 

 

Officer: JOHN C. FLEMING, III
Title: Manager
Address 1: 119 HOMER ROAD
City, State, Zip: MINDEN, LA 71055

 

MINDEN FAMILY CARE CENTER (A PROFESSIONAL MEDICAL CORPORATION) Business Corporation MINDEN Active

 

Previous Names
PARK CITY HEALTH SERVICES (A PROFESSIONAL MEDICAL CORPORATION) (Changed: 3/14/2012)
Business: MINDEN FAMILY CARE CENTER (A PROFESSIONAL MEDICAL CORPORATION)
Charter Number: 34480626D
Registration Date: 12/19/1994

 

Domicile Address
119 HOMER RD.
MINDEN, LA 71055

 

Mailing Address
119 HOMER RD.
MINDEN, LA 71055

 

Status
Status: Active
Annual Report Status: In Good Standing
File Date: 12/19/1994
Last Report Filed: 12/3/2013
Type: Business Corporation

 

Registered Agent(s)

 

Agent: MIKE TOLAND
Address 1: 119 HOMER RD
City, State, Zip: MINDEN, LA 71055
Appointment Date: 12/2/2010

 

Officer(s) Additional Officers: No 

 

Officer: JOHN C. FLEMING, M.D.
Title: President, Director
Address 1: 1240 COUNTRY CLUB CIRCLE
City, State, Zip: MINDEN, LA 71055

 

Officer: CYNTHIA B. FLEMING
Title: Director, Secretary
Address 1: 1240 COUNTRY CLUB CIRCLE
City, State, Zip: MINDEN, LA 71055

 

FLEMING ACQUISITIONS, L.L.C. Limited Liability Company MINDEN Inactive

 

Previous Names
MAIL BOXES 1, L.L.C. (Changed: 10/8/1999)
Business: FLEMING ACQUISITIONS, L.L.C.
Charter Number: 34525360K
Registration Date: 4/25/1996

 

Domicile Address
119 HOMER RD.
MINDEN, LA 71055

 

Mailing Address
119 HOMER RD.
MINDEN, LA 71055

 

Status
Status: Inactive
Inactive Reason: Voluntary Action
File Date: 4/25/1996
Last Report Filed: 5/2/2012
Type: Limited Liability Company

 

Registered Agent(s)

 

Agent: MIKE TOLAND
Address 1: 119 HOMER ROAD
City, State, Zip: MINDEN, LA 71055
Appointment Date: 4/8/2011

 

Officer(s) Additional Officers: No 

 

Officer: JOHN C. FLEMING, JR.
Title: Member
Address 1: 119 HOMER RD.
City, State, Zip: MINDEN, LA 71055

 

Officer: CYNTHIA B. FLEMING
Title: Member, Manager
Address 1: 119 HOMER RD.
City, State, Zip: MINDEN, LA 71055

 

Officer: MIKE TOLAND
Title: Manager
Address 1: 119 HOMER ROAD
City, State, Zip: MINDEN, LA 71055

 

1 SUBWAY, L.L.C. Limited Liability Company MINDEN Active

 

Previous Names
Business: 1 SUBWAY, L.L.C.
Charter Number: 34529383K
Registration Date: 5/31/1996

 

Domicile Address
119 HOMER RD.
MINDEN, LA 71055

 

Mailing Address
119 HOMER RD.
MINDEN, LA 71055

 

Status
Status: Active
Annual Report Status: In Good Standing
File Date: 5/31/1996
Last Report Filed: 5/12/2014
Type: Limited Liability Company

 

Registered Agent(s)

 

Agent: MIKE TOLAND
Address 1: 119 HOMER RD
City, State, Zip: MINDEN, LA 71055
Appointment Date: 5/16/2011

 

Officer(s) Additional Officers: No 

 

Officer: JOHN C. FLEMING, JR.
Title: Member
Address 1: 119 HOMER RD.
City, State, Zip: MINDEN, LA 71055

 

Officer: CYNTHIA B. FLEMING
Title: Member
Address 1: 119 HOMER RD.
City, State, Zip: MINDEN, LA 71055

 

Officer: MIKE TOLAND
Title: Manager
Address 1: 119 HOMER ROAD
City, State, Zip: MINDEN, LA 71055

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Notable Quotables (in their own words)

Posted in Boards, Courts, Ethics, Lawsuits, Legislature, Notable Quotables, Retirement, State Police on September 4, 2014| 1 Comment »

“Despite the special counsel’s recommendation, I would strongly urge that as chairman, you ask the board to authorize the system attorneys to file the necessary documents to obtain a final declaratory judgment on this amendment. That judgment will provide the necessary finality to this matter.”

—State Police Superintendent Mike Edmonson, in a letter to Frank Besson, chairman of the Louisiana State Police Retirement System Board.

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LSPRS Board votes unanimously not to defend lawsuit by Treasurer Kennedy to overturn Edmonson Admendment

Posted in Boards, Corruption, Courts, Ethics, Governor's Office, Judges, Lawsuits, Legislators, Legislature, Retirement, State Police on September 4, 2014| 18 Comments »

State Police Superintendent Mike Edmonson did a sudden about-face, the Louisiana State Police Retirement System (LSPRS) Board was unanimous in its decision to allow board member and State Treasurer John Kennedy sue the board, and before the board could adjourn, State Sen. and 6th District Congressional candidate Dan Claitor filed his own lawsuit but Kennedy said he would go forward with his litigation anyway.

Just another day in the soap opera we know as Louisiana state government.

And it could only happen in Louisiana.

The LSPRS Board was meeting to wrestle with the problem of Act 859 which started out as Senate Bill 294 by State Sen. Jean-Paul Morrell (D-New Orleans), a bill ostensibly dealing with police officer disciplinary matters but which morphed into what retired state trooper Robert Landry described as an “underhanded, unethical, unconstitutional” amendment giving Edmonson an extra $55,000 per year in retirement income.

Special legal counsel Robert Klausner, a renowned pension system authority from Florida, advised the board that it had no legal standing to file suit in an attempt to have the new law declared unconstitutional but added almost parenthetically that any citizen of Louisiana could file suit.

“Could I file?” Kennedy asked. “I’m a taxpayer.”

Klausner said that Kennedy could indeed initiate litigation and if the board failed to defend it, legal expenses would be minimal and the matter could be settled once and for all as opposed to waiting to see if the legislature would repeal the act next year and if Gov. Bobby Jindal would sign such a bill.

While the board was tossing the issue back and forth and speculating whether or not Attorney General Buddy Caldwell would take it upon himself to defend such a suit should the board refuse to, Claitor left the meeting and apparently called his attorney to instruct him to file suit on behalf of Claitor.

Earlier, Claitor had spoken to the board, saying that passage of the Edmonson Amendment was not open or transparent. “It was an unconstitutional act because it was not published in advance, and was not germane to retirement issue. “I would ask that you exercise your fiduciary duty,” he said. Apologizing for having voted for the amendment because he was told that conference committee had addressed his earlier concerns about police disciplinary matters, he said, “I’m sorry to ask you to clean up this mess.”

The “mess” occurred when State Sen. Neil Riser, a member of the conference committee composed of three members each from the House and Senate, inserted the crucial language that gave Edmonson his financial windfall.

Basically, the amendment allowed Edmonson to revoke his decision years ago to enter into the state’s Deferred Retirement Option Plan (DROP) which froze his retirement at 100 percent of his captain’s salary of $79,000. The revocation would have allowed him to instead retire at 100 percent of his $134,000 colonel’s salary.

LSPRS actuary Charles Hall told the board that the upfront cost of fully funding the benefits at their present, or discounted, value would be a $359,000 investment to cover the increased benefits for Edmonson and a Houma trooper who also happened to qualify under language of the amendment. That amount is $59,000 more than the original $300,000 estimated cost provided three days after the amendment’s passage. Kennedy pointed out that the actual cost would be in excess of a million dollars and he asked Hall to provide him with a computation of those figures.

Hall said he received a request to “call a trooper to discuss a bill” on the Friday before the Monday, June 2 adjournment of the legislature.

He said it became clear in his conversation with the state trooper that “they wanted to introduce an amendment to enhance (Edmonson’s) benefits.”

After a few routine questions, Kennedy asked Hall if he knew the name of the trooper whom he was asked to call and to whom he subsequently talked.

“Charles Dupuy,” Hall answered.

Dupuy is Edmonson’s Chief of Staff who has benefitted from a 52 percent increase, from $80,500 to $122,200, since Edmonson’s appointment as State Police Superintendent by Gov. Bobby Jindal in January of 2008. Dupuy’s wife, Kelly Dupuy, also has received increases in salary, from $65,000 to $80,600.

It was the first time that anyone has officially identified Dupuy as the source of the Edmonson Amendment.

Dupuy, a member of the LSPRS Board, was not in attendance at Thursday’s board meeting.

Riser, who first denied any involvement with introducing the amendment during the conference committee meeting in June but later admitted his complicity but said he did not realize it would benefit only two people.

Hall, however, in speaking to the board on Thursday cast doubt on that part of Riser’s story as well when he said it was believed that the amendment would affect only one person—Edmonson.

“This act has hurt the reputation of the state,” Kennedy said. “Someone pushed hard for this law. If I sue and the attorney general decides to defend it, I will begin taking depositions. I will send out subpoenas and we will find out who was behind this.”

Kennedy said he would foot the cost of the litigation which he said would be minimal provided the attorney general does not opt to defend the law.

The board, which had been seen as heavily stacked with Edmonson and Jindal loyalists, had been expected to display reluctance to go against the two. Instead, board members were unanimous in authorizing Kennedy to proceed with personal litigation in his “individual capacity.”

But even as Kennedy was making his offer, Claitor was already setting in motion his own litigation which he obviously had instructed Baton Rouge attorney Jack Whitehead to prepare and to stand by to file with the 19th JDC clerk’s office.

In fact, Whitehead even prepared a press release to accompany Claitor’s lawsuit, making it obvious that Claitor had planned the move well in advance of the board meeting.

Claitor, in his petition, asked the court to find Act 859 unconstitutional on four grounds:

  • Act 859 failed to meet the “one object” requirement of the Louisiana State Constitution;
  • The act did not meet the germaneness requirement of the state constitution;
  • No public notice was provided as required by the constitution for retirement-related legislation and the bill itself never indicated proper notice was given, also in violation of the constitution;
  • The source of funding for the increased benefit is the LSPRS “Employment Experience Account,” which is reserved as the source of future cost of living benefits and payments toward the system’s unfunded accrued liability.

To read the full text of Claitor’s litigation, click here: Press Release Letter & Petition

Baton Rouge Judge Janice Clark issued a temporary restraining order until she can hold a hearing on Sept. 16. To read her order, click here: CLAITOR VS LSP

The real kicker came when a two-page letter from Edmonson to the board was read. In that letter, Edmonson said he fully supports assertions “from legislators and others that the bill should be repealed.”

Then, addressing board Chairman Frank Besson, Edmonson said, “Despite the special counsel’s (Klausner) recommendation, I would strongly urge that as chairman, you ask the board to authorize the system attorneys to file the necessary documents to obtain a final declaratory judgment on this amendment. That judgment will provide the necessary finality to this matter.”

That represents a complete 180 from Edmonson’s earlier admission that a “staffer” had originally approached him about the prospects of the amendment’s benefitting him and his instructions to proceed.

It was a move of necessity brought on by a groundswell of sentiment against the amendment by retired state troopers which forced Edmonson to have a change of heart in an effort to save face and to avoid further embarrassment to his boss, Gov. Jindal. Because make no mistake, he wanted that money and Dupuy, no matter what anyone says to the contrary, did not take this upon himself as a solo act. It’s pretty obvious that Dupuy initiated the amendment at the direction of his boss who in turn had the blessings from the Fourth Floor and Riser was simply the instrument by which the amendment was inserted. That makes Jindal, Riser, Edmonson and Dupuy all complicit in a devious little scheme to reward Edmonson at the expense of every other state employee, including state troopers and retirees across the board.

That’s the way this governor and his band of sycophants work.

To read Edmonson’s letter, click here: EDMONSON LETTER

Kennedy, when told after the meeting adjourned of Claitor’s lawsuit, said, “That’s great. I’m glad. But I’m still moving forward with my own lawsuit. This is a bad law and it must be addressed.”

 

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LSPRS Board takes up Edmonson Amendment Thursday; nepotism at LSP okay as long as you keep it in the family

Posted in Boards, Corruption, Governor's Office, Lawsuits, Legislators, Legislature, Legislature, Legislators, Public Records, Retirement, Senate, State Police on September 3, 2014| 16 Comments »

If anyone has any hopes that the matter of the Edmonson Amendment will be resolved Thursday when the Louisiana State Police Retirement System (LSPRS) Board meets, it might be worth your while to consider a few developments in the Department of Public Safety (DPS) on the watch of Superintendent of State Police Mike Edmonson, aka “Precious.”

We have already examined the placing of “consultant” Kathleen Sill on the state payroll and paying her $437,000 plus $12,900 in air travel for 21 flights for her between Baton Rouge and her Columbia, S.C. home.

And we told you about DPS Undersecretary Jill Boudreaux’s taking a $46,000 cash payout incentive to retire at her $92,000 per year salary as Deputy Undersecretary, plus about $13,000 in payment for 300 hours of accrued annual leave and then re-hiring two days later—with a promotion to Undersecretary and at a higher salary of $118,600—while keeping the incentive payment and annual leave payment.

We even told you about then-Commissioner of Administration Angelé Davis ordering her to repay the money but resigning before she could follow through on her instructions. Under her successor, Paul Rainwater, the matter was quietly forgotten.

But we didn’t tell you about Boudreaux’s son-in-law Matthew Guthrie who, while employed in an offshore job, was simultaneously on the payroll for seven months (from April 2, 2012 to Nov. 9, 2012) as a $25 per hour “specialist” for the State Police Oil Spill Commission.

Nor did we tell you about John W. Alario, the son of Senate President John Alario (R-Westwego) who serves as the $95,000 a year director of the DPS Liquefied Petroleum Gas Commission. (We had earlier told you about his wife, Dionne Alario, who was hired in November o 2013 at a salary of $56,300 to work out of her Westwego home supervising state police personnel in Baton Rouge—something of a logistics problem, to say the least.)

Or about Danielle Rainwater, daughter of former Commissioner of Administration Paul Rainwater, who works as a “specialist” for State Police.

And then there are the spouses brought into the fold.

Jason Starnes has benefitted from two quick promotions since 2009 as his salary jumped from $59,800 to $81,250, an increase of almost 36 percent.

As if that were not enough, his wife Tammy was brought in from another agency on Jan. 13 of this year as an Audit Manager at a salary of $92,900. So not only does she now make nearly $11,700 a year more than her husband, she also is in charge of monitoring the agency’s financial transactions, including those of her husband.

In January of 2008, just before Edmonson was named Superintendent of State Police by Gov. Bobby Jindal, State Trooper Charles Dupuy was pulling down $80,500. Today, as Edmonson’s Chief of Staff, he makes $122,200, a bump of nearly $42,000, or 52 percent. Dupuy, it should be noted, is the Edmonson staffer who originated the drive to push the Edmonson Amendment through the Legislature on the last day of the session that gives his boss a $55,000 pension boost because the amendment allows Edmonson to revoke his decision to freeze his retirement at 100 percent of his $79,000 captain’s salary some 15 years or so ago to 100 percent of his current colonel’s salary of $134,000.

Kelly McNamara and Dupuy, both troopers, met at work and eventually married and Kelly Dupuy’s star began ascending almost immediately. Her salary has gone from $65,000 in 2009 to $80,600 today

Doug Cain serves as State Police Public Affairs Commander at $79,000 per year but the position appears to have been created especially for him, according to payroll records.

State Civil Service records for most promotions indicate whether or not the person being promoted is moving into a slot previously occupied by someone else. In Cain’s case the “Former Incumbent” block on the promotion form is blank indicating there was no one in that position prior to Cain’s being named to it.

The same is true for Edmonson’s brother Paul Edmonson.

On Sept. 7, 2011, Paul Edmonson was promoted from lieutenant to Captain, filling the spot previously held by Scott Reggio. On Oct. 10, 2013, Paul Edmonson was again promoted, this time to the rank of major. This time however, he was promoted into a spot in which there was no incumbent, indicating that the position was created especially for his benefit.

His rise has been nothing less than meteoric. Since December of 2006, less than eight years ago, he has gone from the rank of sergeant to lieutenant to captain to major at warp speed and his pay rose accordingly, from $57,500 to $93,000 a year, a 62 percent increase—all under the watchful eye of his brother.

And keep in mind all this transpired while the rank and file state troopers—and other state employees—were having to make do without pay raises.

As his reward for taking care of his people in such a noble way, Dupuy and State Sen. Neil Riser (R-Columbia) conspired, along with Gov. Bobby Jindal, to sneak the amendment to Senate Bill 294 during the closing minutes of the session that allowed Mike Edmonson a “do-over” on his decision to enter the state’s Deferred Retirement Option Plan (DROP) which froze his retirement at his pay at that time.

The major problem with that little plan is that it leaves other state troopers and state employees who similarly opted to enter DROP and then received significant promotions or raises out in the cold because the amendment does not afford the same opportunity for them.

Accordingly, a group of retired state troopers have indicated their willingness to litigate the matter should the LSPRS board not decide to challenge the amendment in court themselves.

And it’s not at all likely the board will take that decisive step—for two reasons, neither of them sound.

First, Florida attorney Robert Klausner, an authority on pension law, advised that the amendment is unconstitutional and that the board should simply ignore it and refused to pay the increased pension should Edmonson and one other trooper caught up in the language’s net apply for the higher benefits.

The board would have a difficult time justifying such action, however, because it is bound by the Louisiana Constitution to comply with laws passed by the Legislature. The only recourse to that action would be to file a lawsuit formally challenging the constitutionality of the amendment. To ignore it would solve nothing, several attorneys and State Treasurer John Kennedy, a member of the board, have said.

Second, the LSPRS board is stacked heavily with those who are unquestionably Edmonson and Jindal loyalists. It was Jindal who signed the bill into law as Act 859 and his Commissioner of Administration Kristy Kreme Nichols is an ex-officio member of the board, assigning as her designee Andrea Hubbard. No way she’s going against the administration.

State Sen. Elbert Guillory (R/D/R-Opelousas), chairman of the Senate Retirement Committee, is nothing short of wishy-washy as evidenced by his constant switching from Republican to Democrat and back to Republican. He is Jindal’s lap dog and would cut his throat before invoking the governor’s ire and potential endorsement for lieutenant governor.

Dupuy is a member as well but should be run off by a mean, biting dog if he does not abstain from voting for his obvious conflict of interest as Edmonson’s Chief of Staff as well as the one who originally pushed the amendment.

A couple of other members are active troopers and they are a lock for bucking litigation since their boss will be watching and waiting for any sign of weakness or betrayal.

The only certain vote in favor of litigation will come from Kennedy when the board convenes Thursday at 3 p.m. in the Louisiana State Employees Retirement System LASERS) Building at 4501 United Plaza Blvd. in Baton Rouge.

And unless Chicken Little was correct about the sky falling, Kennedy’s will be a lone voice when the dust settles.

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