Sunday, May 24, 2015

Star: BMV Fee Overcharging Problem May Have Been Attributable To Patronage System

The Star's Tony Cook and Tim Evans have a good story today pondering the possibility that the political patronage system that led to the hiring decisions regarding persons in key administrative positions at the Bureau of Motor Vehicles may have contributed to the agency's decision to illegally raise the fees charged for certain services by about $60 millions and to ignore subsequent concerns raised about doing so, which are now being refunded after a couple of class action lawsuits drew attention to the fact it happened. The story is very informative, though not surprising to those of us who follow state government.

In particular, the story examines the hiring of Harold Day as the BMV's chief financial officer. A video clip of his deposition in the legal proceeding accompanies the story. Day, who has no college degree, could aptly be described as an amiable dunce who was unable to answer the most basic questions, including which branch of government the BMV was a part. It never occurred to him that BMV bank accounts with balances between $5 and $20 million should be earning some interest, let alone whether the fees the agency was charging were legal. His only apparent qualification for the job was the fact that he was a ward chair in Perry Township and is married to Susie Day, a former Indianapolis City-County Council member and current Perry Township Trustee. Day was recommended for a state job the former Perry Township Trustee. Politics obviously drove the hiring of Day, notwithstanding a BMV spokesman's assertions to the contrary.

Day wasn't the only top official whose qualifications were examined. Ron Hendrickson, the former deputy commissioner in charge of driver's licenses has no college degree and previously worked as a snow plow operator and pizza shop owner who served as a precinct committeeman on the east side. Former BMV Commissioner Scott Waddell had a business degree from IU and formerly ran his family's business. He got the job due to his friendship with former state GOP chairman Jim Kittle. It's interesting that the lowest on the totem pole who got his job through political patronage, Mathew Foley, a deputy director, discovered the fee overcharges and recommended the agency correct the problem but ran into resistance from Waddell and his staff, who were more concerned about the impact the loss of the ill-gotten revenues would have on Gov. Daniels' budget priorities.

It's interesting that all of this happened on the watch of Mitch Daniels, just one of many bad decisions made while he was governor that will continue to haunt state government for years to come. To hear Star political columnist Matt Tully, you would think only bad things started happening in state government when Mike Pence became governor. Tully bases his opinion that Pence has been a disastrous failure as governor almost entirely on his decision to sign Indiana's version of the Religious Freedom Restoration Act into law and to pursue the JustIn information portal, neither of which cost Indiana taxpayers a dime. Wait until people figure out what a colossal boondoggle those Ohio River bridges prove to be when they have to start paying those tolls being levied to make big payoffs to more of Mitch's political cronies. It's unfortunate the Star hasn't examined those as closely as it has the BMV mess, which Pence inherited from Daniels. The $106 million penalty the state paid this month to Goldman Sachs to unwind another one of those messy interest rate swap agreements that happened on Mitch's watch was but another colossal and costly failure.

Saturday, May 23, 2015

Star Glosses Over $106 Million Termination Payments Paid To Goldman Sachs To Refinance Stadium And Convention Center Debt

More than a week after Advance Indiana told you about the nearly $106 million in termination payments the Indiana Finance Authority is paying to Goldman Sachs in order to get out from under risky interest rate swap bonds that should have never been utilized to construct Lucas Oil Stadium and the expanded Indiana Convention Center, the Gannett-owned Indianapolis Star gets around to writing an obligatory short news story buried in its higher priority coverage of anything related to the Indianapolis 500 this holiday weekend. Naturally, the newspaper's writer finds a way to put lipstick on a pig.
The state is paying $71 million to investment bank Goldman Sachs to allow refinancing of risky debt on Lucas Oil Stadium — a move than one economics expert said might be prudent, but also underscores the risk of the original deal.
Dan Huge, chief financial officer of the Indiana Finance Authority, said the $71 million will be offset by more favorable, fixed terms for $296 million in debt on the stadium. The payment to Goldman is included in the new financing.
Lucas Oil Stadium opened in 2008 at a cost of $720 million, including at least $620 million from taxpayers.
Huge said the cost of the debt — principal and interest — on the refinanced bonds is “at almost the same level as it was prior to doing this refinancing and making the termination payment.”
The previous debt involved “interest rate swaps,” a type of financial derivative that has been widely criticized as an inappropriate gamble with public money.
Princeton economics professor Uwe Reinhardt said the situation “wasn’t a big disaster, but it could have been.”
“It means I got my (butt) in a sling and now I have to get out of it,” he said. “Sometimes you have to pay the arsonist to prevent a worse fire.”
A separate bond issue will be used in part to pay Goldman Sachs $34.7 million to exit an interest rate swap deal for the Indiana Convention Center.
Goldman Sachs spokesman Michael DuVally declined comment.
In 2012, a top Goldman Sachs executive who worked in derivatives resigned and wrote in The New York Times that the company had become “toxic and destructive” in its pursuit of making money . . .
Notice the unwillingness of The Star to address just who it was who was responsible for getting us into the interest rate swap mess. The newspaper doesn't even bother to add the two termination payments together to get the much higher dollar amount, leading with the much lower figure and throwing in the additional amount further down in the story. Why are the same lawyers and financial advisers allowed to continue to reap professional reward for their past colossal failures from their past, imprudent advice? God forbid we focus on anything bad that happened on former Gov. Mitch Daniels' watch. It's just a "prudent" move that means we now owe an additional $106 million on stadium and convention center debt, which in all likelihood will never be paid off before someone decides it's time to tear down the buildings and replace them with new ones.

Friday, May 22, 2015

Ballard Loses It When Questioned About Illegal Vision Fleet Contract

Mayor Greg Ballard in typical fashion shows his backside when asked a question he doesn't want to answer about that controversial Vision Fleet lease agreement. Of course he broke multiple laws in ordering his administration to award a no-bid, 7-year, $32 million contract to his political cronies. Until this man is hauled out of the City-County Building in handcuffs and held to account for the multiple public crimes he has committed while in office, taxpayers have every reason to be weary of what he'll do with their tax dollars before his term runs out at the end of this year.

GenCon Sells Record Number Of Tickets: So Much For RFRA Fallout

It's just more proof that Indiana's image took no real hit from the manufactured news story about RFRA, which was never anything more than a ruse led by the Gannett-owned Indianapolis Star to advance the gay rights agenda by falsely claiming the law gave a license to Indiana businesses to discriminate against them in an effort to demonize people of faith and help drive Gov. Mike Pence from office. The annual big convention whose leaders had threatened to move it elsewhere if lawmakers didn't backtrack on the new law has sold a record number of tickets for this year's event at the end of July according to WISH-TV.

Some of us aren't prone to manipulation by mass media propaganda, which is pretty much what you get from mainstream media organizations in this country today. Something our local news media will never report on is just how lavishly Visit Indy and local convention folks wine and dine convention planners to host their conventions in Indianapolis, which basically operate under no code of ethics in the manner in which they are allowed to lobby convention planners. On cue from local officials, a few convention organizers who are very tight with Visit Indy officials played along with the act that they were concerned about RFRA, but they never had any intention of walking away from a city that is so generous with its taxpayer dollars. And that's a story Rafael "Don't Call Me" Sanchez will never report.

Thursday, May 21, 2015

Another IMPD Officer Arrested For Drunk Driving

The Indianapolis Metropolitan Police Department may not be interested in enforcing drunk driving laws against its own officers, but neighboring police departments aren't giving them a pass. A 7-year veteran of the police department, 32-year old Christopher White, was stopped while off duty by a Hamilton Co. Sheriff's deputy after he saw White operating his personal vehicle in a reckless manner, weaving in and out of his lane and crossing traffic lines.

After White failed field sobriety tests, a certified chemical test was performed and he tested more than double the legal limit at 0.182. He was charged with two misdemeanors, driving while intoxicated with a blood alcohol level of more than 0.15 and operating a vehicle while intoxicated and endangering another person. White has been placed on administrative leave pending an internal investigation. A first-time alcohol offense typically results in a least a 30-day suspension according to department policy. White is a Noblesville resident. Don't just love the fact that so many IMPD officers live outside Marion County?

While we're on the topic of drunk driving charges, remember Butler Toyota President Robert Butler being arrested for felony drunk driving charges last December after a car he was operating on I-465 on the city's northeast side struck two cars parked on the emergency shoulder, causing one of the vehicles to crush the legs of 25-year old Latin McKinney, who was trying to jump start his car? The quick actions of an Indiana State Trooper was credited with saving McKinney's life. Butler's blood alcohol level was more than double the legal limit at 0.184. Butler was charged by the Marion Co. Prosecutor's Office with two felony counts for operating a vehicle while intoxicated and causing serious bodily injury and causing serious bodily injury while operating a vehicle with a blood alcohol level greater than 0.08. On March 17, the prosecutor's office filed a motion to dismiss both felony charges, which Judge Annie Christ-Garcia signed the same date. Butler was directed to the BMV for a citation in lieu of the felony charges. Seriously? A different set of rules for the rich and powerful, eh?
Robert Butler makes his first court appearance.
Robert Butler (left) with his attorney Jim Voyles at his initial court appearance

Council's Attorney Says Vision Fleet Contract Void If Not Voidable As Committee Votes To Initiate Lawsuit Against Ballard Administration

The Public Works Committee of the Indianapolis City-County Council voted tonight to introduce a resolution at the next council meeting on June 8 authorizing the filing of a lawsuit on behalf of the council to have the controversial 7-year, $32 million contract the Ballard administration illegally entered into with Vision Fleet last year declared void. The committee's vote came after the council's attorney, Fred Biesecker, laid out his legal analysis showing that at least five laws were broken by the city when it executed the initial lease agreement in February 2014, as well as the subsequent Master Fleet Agreement it signed with the company four months later in June, which was backdated to give the appearance it had been executed last February.

For the first time we learned at tonight's meeting that it was a memorandum of understanding Mayor Greg Ballard himself signed in August, 2013, which singled out Vision Fleet to be the exclusive, sole source provider of a fleet of 425 electric and hybrid cars. In a scathing legal analysis of the subsequent actions taken by city legal to carry out the agreement broadly set out in the August 2013 memorandum of understanding, Biesecker described city attorneys disregarding basic legal principles a first-year law student would understand.

What Biesecker described was an initial agreement executed by the parties in February 2014 that was clearly described as a lease/purchase agreement on its face. Under the state's procurement law, the renting and leasing of goods and supplies are expressly subject to competitive bidding requirements and cars clearly involve the delivery of goods or supplies. The administration insists a later rendition of the agreement clearly makes it an agreement for services, which is not subject to the state's competitive bidding requirements. Biesecker pointed to a state law expressly providing that a services contract cannot involve the delivery of supplies unless the supplies are merely incidental to the performance of the contract. Biesecker could not understand how anyone could argue with a straight face that the fleet of cars is incidental to services being provided by Vision Fleet concerning fleet management.

A city ordinance required the contract approval process to go through OFM, not the Department of Public Works, followed by the approval of the lease agreement by the Board of Public Works, neither of which occurred. Under state law, lease/purchase agreements must expressly provide that they are subject to available annual appropriations and must be subject to renewal annually if it extends beyond the term of one year. The city's lease agreement with Vision Fleet says the exact opposite, binding the city to make payments to Vision Fleet through its term of at least seven years. Competitive bidding procedures are mandated for all contracts in excess of $150,000 instead of the no-bid, sole-source procedure city legal utilized. In no event, can a contract for supplies be made for a period of more than four years. Vision Fleet's lease agreement is for at least seven years for the hybrid vehicles and eight years for the electric vehicles.

Biesecker told council members he believed the administration figured out in May 2014 that its February 2014 lease agreement was clearly illegal on its face. Rather than void the agreement and re-do the contract approval process in accordance with state and local laws, city legal rewrote the agreement as a Fleet Management Agreement through gymnastic linguistics to make it appear to be a services agreement rather than a lease agreement. The second agreement, which was electronically executed on June 12, 2014 by the parties, was backdated to make it appear that it was originally executed in February 2014. It made no reference to the original contract, and it did not state that it superseded the originally-signed lease agreement, which led to the confusion over which agreement governed the terms of the vehicle lease agreement.

Mayor Ballard did not publicly announced the Vision Fleet agreement until last October. The council, which had heard nothing of the proposal prior to that announcement, immediately requested a copy of the contract. The administration did not provide a copy of the contract until December, and that copy was so heavily-redacted the council's attorney was able to ascertain little about it. Through negotiations, the administration eventually agreed to release an non-redacted version of the lease only after the council's attorney agreed to sign a non-disclosure agreement since it claimed the redacted information involved proprietary and/or trade secrets protected from public disclosure under state law. After the firestorm created over the administration's refusal to release the full version of the lease agreement, Vision Fleet sent the entire agreement to council members, but according to Biesecker, the contract has substituted the signature page from the February 2014 lease agreement as the signature page for the Master Fleet Agreement signed in June.

Biesecker told council members he believed there was a strong legal argument to be made that the contract that exists today with Vision Fleet is void on its face because of the legal deficiencies, if not a voidable agreement. He believes both versions of the contract contained the same fatal legal flaws regardless of the terminology used to gloss over the glaring legal omissions made in the original contract execution. Ballard's cake boy, David Rosenberg, addressed the council at that point to criticize Biesecker for putting Vision Fleet's reputation at risk as it sought to enter into contracts with other cities and organizations around the country. Council members quickly disabused Rosenberg of the notion the criticism was directed at Vision Fleet instead of the administration and, in particular, the city attorneys responsible for the legal blunders. The sole Republican council member present at the committee meeting, Janice McHenry, dissented from the Democratic members' vote to move forward in recommending the initiation of a lawsuit against the administration to void the lease agreement. She was concerned litigation would be wasting taxpayer dollars as if the $32 million contract itself wasn't a waste of taxpayer dollars.

Speaking of our law-breaking mayor, a little birdie tells Advance Indiana his honor met with DPS Director Troy Riggs, Deputy Director Valerie Washington and city attorneys today to discuss the Vision Fleet contract. In no uncertain terms, Ballard made it clear he wasn't about to terminate the illegal contract and that if anyone didn't agree with his position, they needed to seek employment elsewhere. It's like I told you, Ballard is Rod Blagojevich on steroids.

Ballard Blames Sloppy Legal Work By City's Attorneys For Vision Fleet Flap

M. Alex Beatty
The confusion over what contract governs the City of Indianapolis' 7-year, $32 million agreement with Vision Fleet to lease a fleet of more than 400 electric and hybrid cars is now being blamed by Mayor Greg Ballard on sloppy legal work by a couple of the city's attorneys, not internal confusion within his administration. WTTV's Russ McQuaid got the Mayor's reaction to the discovery that the City re-wrote a contract it initially entered into with the untested, unknown company in February 2014 and backdated contract documents without actually rescinding the first contract it signed.
. . . “No, I don’t think it was internal confusion,” the mayor told CBS4 Indy. “You’ve got to understand, in contract law, if the parties are not in dispute, the parties to the contract are fine with each other, so that’s not the problem. The problem is this is just sloppy legal work on a couple peoples’ part. That’s what it is.”
The “sloppy legal work” Ballard referred to included inconsistencies in contract language and submissions to city county councilors and reporters, backdated, undated and unnumbered signature pages and at least three different signature pages attached to various versions of the $32 million seven-year lease/rental/fleet services deal that promises to deliver 425 electric and electric-hybrid cars to Indianapolis’ municipal fleet by the end of this year.
An admitted example of the “sloppy legal work” described by his boss would be Corporation Counsel Andy Seiwert’s acknowlegement that his staff should have revoked an original Lease Agreement which was replaced by a backdated Master Fleet Agreement in the spring of 2014 . . .
Nonetheless, Ballard remains convinced the city's contract with Vision Fleet is a good one that will save the taxpayers money despite there being no evidence it will save one dime. The city attorney in charge of the legal work on the project was Alex Beatty. He's the same attorney the administration has put in charge of re-working the City's process of entering into real estate lease agreements after the one-sided, costly lease agreement the City entered into for the Regional Operations Center created a firestorm with council members. Beatty's LinkedIn profile lists the Vision Fleet lease as one of the transactions on which he served as lead counsel, along with that controversial recycling agreement with Covanta that raised a lot of eyebrows.

The fact remains that Ballard's administration illegally entered into yet another contract by failing to put the proposed lease agreement out for bid, and by failing to obtain the approval of the City-County Council. The Ballard administration has no fear of breaking the law because there is nobody to stop them from doing it. Marion Co. Prosecutor Terry Curry refuses to investigate the rampant corruption occurring in the Ballard administration either due to gross incompetence on his part or because of some corrupt deal he entered into with the Republicans not to investigate crimes committed by Republican officeholders in exchange for throwing last year's prosecutor's race in which Curry was re-elected. That was the first election in known history that the Republicans in Marion County did not seriously contest the prosecutor's race. The U.S. Attorney's Office in Indianapolis is perhaps the weakest office in the country when it comes to investigating and prosecuting public corruption.

Family Of Michael Lanter Believes He Was The Victim Of "Unprovoked Attack"

It has been almost a week since a 31-year old Carmel man, Michael Lanter, died from an apparent head injury he suffered when he was struck by another patron of the Chatterbox jazz club on Massachusetts Avenue in downtown Indianapolis. Police have still not identified the man who allegedly struck Lanter before he fell to the ground a very short time after entering the bar last Friday night, but a statement Lanter's family released to the media through their attorney indicates they believe he was the victim of an "unprovoked attack." The family's attorney, Ron Elberger, told the Indianapolis Star it was still premature to talk about civil litigation or potential criminal charges. “Right now it’s a matter of getting the trauma of the moment behind them,” Elberger said.

According to Lanter's obituary, he was a 2002 Carmel High School graduate where he played football and baseball. Carmel High School football coach John Hebert told The Star he had coached Lanter since he was about 12. "He was quick and tough and ran hard," Hebert said of the running back. Lanter graduated from IU's Kelly School of Business with honors before landing a job as a trader for Goldman Sachs in New York in 2007 after a short stint at ThinkEquity in San Francisco. In 2011, Lanter left Goldman Sachs to attend the University of Chicago's Booth School of Business where he earned an MBA. He briefly served as a consultant for Angelo, Gordon & Co. in New York before starting his own consulting company earlier this year.

News reports indicate that Lanter entered the Chatterbox shortly before midnight last Friday and initially argued with the bar's owner, David Andrichik, about paying a $7 cover charge before being admitted to the bar. The situation quickly escalated after bar personnel determined Lanter was too intoxicated to serve any alcohol. Lanter and another man at the bar got into a scuffle. The other man allegedly struck Lanter, causing him to fall and hit his head. By the time police arrived, the man involved in the altercation with Lanter had already left the bar. Police have since identified the man and interviewed him, although it's not clear yet what he told to police.

One rumor that has been circulating is that Lanter was actually struck by a member of the jazz band that was performing at the Chatterbox that night. The band was reportedly taking a break when Lanter arrived that night. According to that rumor, the band member was trying to be helpful to the bar's management after Lanter became upset about not being served alcohol. Earlier news reports indicated that Lanter lost his balance and fell after being struck by the other man in the neck area. Lanter was believed to have struck his head on the bar according to news reports, although another account Advance Indiana has heard says he struck his head on the edge of the raised stage where the band played.

Wednesday, May 20, 2015

Hogsett Pledges Same Ethics Reforms Ballard Promised But Failed To Deliver Upon

Indianapolis mayoral candidate Joe Hogsett (D) announced a series of ethics reforms he would implement if he becomes mayor. They make for good talking points, but if the past is prologue, little change will occur if he is elected mayor. Why? We've heard the same promises before and not delivered upon. Our local news media isn't real big on making ethics an issue so the politicians can talk a good game without delivering and never worry about suffering any negative consequences.

Hogsett wants to put restrictions on lobbying, provide greater transparency by making information easier to access on the city's website and curtail the use of no-bid, professional services contracts. If it sounds a bit familiar, it's because Greg Ballard made the exact same promises when he first ran for mayor in 2007. Yeah, he made a few changes here and there, but in the final analysis, those changes provided no real benefit and city government only became less transparent, not more transparent as promised.

Ballard set up an online lobby registration and reporting system that exempts many lobbying activities and the law's enforcement mechanisms are so weak that few, if any, persons lobbying the legislature bother to comply with the registering and reporting requirements. Yeah, Ballard set up an online database of all contracts, but the searching capability of the database for users is so byzantine that it's almost like looking for a needle in a haystack to find a contract contained in the database. Hogsett says he's going to create a "Disclose Indy" website where the public can more easily access contracts, ethics statements, campaign finance reports, crime stats, budgets and other public records. It sounds a lot like what Ballard promised and never delivered upon.

Hogsett picks up on the weak reporting under the city's current lobbying law, noting that only two gifts have been reported and no enforcement actions taken in the five years since it was first enacted. One of the problems is that there are a large quantity of free tickets being handed out for events at Lucas Oil Stadium, Banker's Life Fieldhouse and Victory Field that are funneled through the mayor's office, the CIB or Visit Indy, which current law seems to exempt. The mayor, members of his administration and council members are receiving thousands of dollars a year each in free tickets that are never reported because they aren't covered by the law. The statements of economic interest forms themselves are not designed to provide the public any useful information to detect many conflicts of interest that might arise while officials are carrying out their public duties.

Hogsett also says he will turn down free memberships at exclusive country clubs like Mayor Ballard and previous mayors have accepted. He also says he will avoid taking taxpayer-paid trips. That's not ethics reform in my mind. Ballard claims that the dozen or so junkets he and his wife have taken during his time in office were paid for by private donors of Develop Indy, not taxpayer dollars. It just so happens that those private donors are the very same people who are making off like bandits with those no-bid contracts and public subsidies Ballard has doled out to his campaign contributors. I don't see Hogsett proposing any curtailment on campaign donations from city contractors, which comprise most of the more than $2 million in campaign contributions Hogsett has received to date.

Hogsett talks about enacting a one-year cooling off period for city employees who helped oversee companies to which city contracts were awarded. If it's anything like the state's cooling off period, it's not going to be worth the paper on which it's written. He also wants to resurrect the city's two-term limit for mayors, which was repealed to allow former Mayor William Hudnut to serve longer than two terms in office. He served four terms altogether. That's an easy promise for Hogsett to make. I seriously doubt he wants to stay in the office for more than one or two terms. He doesn't seem to be the type who is content working at one place for a long period of time.

Finally, Hogsett is proposing a "top to bottom" audit of city finances. Ballard promised the same thing. Remember all of that "fluff" he promised to eliminate from the city budget, in particular all of those professional service agreements? It didn't take Ballard long to figure out those contracts were the bread and butter for his campaign fundraisers. That campaign promise, like most of  his campaign promises, fell to wayside before his first day in office.

Tuesday, May 19, 2015

James Hinchcliffe's Injuries Worse Than First Reported

 IndyCar driver James Hinchcliffe's injuries to his lower extremities during a horrific practice lap crash in Turn 3 at the Indianapolis Motor Speedway yesterday afternoon were much more severe than earlier news reports indicated. According to Racer's Robin Miller, the quick response of track safety crews and first medical responders likely saved his life. The veteran sports writer describes a gruesome injuries Hinchcliffe sustained when the car's wishbone suspension penetrated the car's safety cell and drove through and out his right leg and into his upper left thigh where it reached into his pelvic region. The significant blood loss alone was enough to endanger Hinchcliffe's life.
In the impact, which flattened the right side of the chassis, one of the suspension wishbones penetrated the Dallara safety cell, and subsequently caused the majority of the physical damage Hinchcliffe received. RACERhas confirmed through multiple sources that Hinchcliffe had the steel wishbone enter and exit his right leg, then enter his upper left thigh, and continue into his pelvic region before it came to a stop.
The suspension component pinned the 28-year-old in the car, leading the safety team to cut the wishbone from the chassis to allow Hinchcliffe's extraction.
With the multiple intrusions, Hinchcliffe experienced massive blood loss at the crash site, and despite the gravity of the soft tissue injuries to his lower extremities, stopping the bleeding became an immediate priority for the medical staff to address once he was pulled from the chassis.
After being placed in the ambulance, the doctors and technicians inside evidently stabilized Hinchcliffe's injuries. It's not known how long he was in surgery but it was "touch and go" for a while, according to the source.
Miller reports that Hinchcliffe is likely to be out for the rest of this year's season recovering from his injuries. Miraculously, the metal suspension rod that impaled his leg and thigh managed to miss the bones. Miller says observers are describing Hinchcliffe's crash as "among the most violent on record." Below is an illustration of the path the suspension rod followed according to Miller's description.