NYSED Acknowledges School Administrators Can Use APPR As Weapons Against Teachers

Coming on the heels of the acknowledgement by Chancellor Farina that teachers who teach at Renewal Schools may have their APPR ratings adversely affected comes this news:

The Department of Education is moving to upgrade the ratings of teachers at Brooklyn’s Dewey HS who were rated as “ineffective” after they challenged grade-fixing by then-principal Kathleen Elvin, The Post has learned.

Elvin was fired on July 8 after DOE investigators substantiated that widespread grade-fixing went on at Dewey to boost graduation rates — a practice students mockingly referred to as “Easy Pass.”

...

Teachers complained that Elvin and other administrators punished them with poor ratings for refusing to participate in the fraud.

The “ineffective” ratings of at least four of 16 tenured teachers who received them were overturned following appeals to a state arbitrator, sources said. 

Those teachers had to sign a confidentiality agreement not to discuss the changing of their ratings.

...

Records revealed that half of Dewey’s 101 instructors got ratings of either “ineffective (16 teachers) or “developing” (35 teachers) in the 2013-14 school year.

That 50 percent failure rate compared to a citywide average of only 8 percent.

Given an "ineffective" rating for refusing to participate in fraudulent behavior involving grade-fixing.

Gee, that doesn't sound like an "objective" evaluation system to me.

And NYSED admits as much by overturning at least four of the "ineffective" ratings of tenured teachers who appealed them.

There may be more overturned ratings - we don't know the exact number because of the confidentiality agreements

But what we do know is this - if Elvin and her assistant principals used APPR as a weapon against teachers to perpetrate their fraud, other principals and assistant principals can use APPR as a weapon against teachers for other reasons as well.

Had Elvin not been exposed in the grade-fixing scandal, these teachers at Dewey would still be working with "ineffective" ratings on their records.

You can bet there are other administrators elsewhere who have handed out "ineffective" ratings for a variety of reasons that have nothing to do with the effectiveness of the teacher.

We learned from Chancellor Farina this week that APPR is a sham when she acknowledged that "effective" teachers can have their ratings adversely affected by switching schools and going to teach  in a school with high poverty/high homelessness demographics.

And now we've learned from the NYSED that teachers can have their APPR ratings manipulated by administrators with agendas - such as the one by Kathleen Elvin, which was, join her in her grade-fixing fraud or receive and "ineffective" rating for the year.

Audit Analysis Finds New York Charter School Sector Rife With Fraud

Ben Chapman in today's Daily News:

New York State charter schools have made more than $28 million in questionable expenditures since 2002, according to a new review of previous audits of the publicly funded, privately run schools.

The Center for Popular Democracy’s analysis charter school audits found investigators uncovered probable financial mismanagement in 95% of the schools they examined.

Kyle Serrette, executive director of the progressive, Washington-based group, said the review of previously published audits showed the schools need greater oversight.

“We can’t afford to have a system that fails to cull the fraudulent charter operators from the honest ones,” said Serrette. “Establishing a charter school oversight system that prevents fraud, waste and mismanagement will attack the root cause of the problem.”

An oversight system for charter schools in New York State?

Ha, that's a laugh.

You can literally lie about everything other than your birth date on your application as head of a charter school and the New York State oversight entities (the Board of Regents and NYSED) won't catch you.

Even after your caught, no one at the oversight entities will take responsibility for giving charter approval to a fraudulent lead applicant - they'll instead try and pass the buck to one of the other entities.

The political establishment will make excuses for the fraudulent behavior, minimizing it is a "mistake" instead of the criminal behavior it is.

And the school will STILL open, despite it's birthing by a fraudster, so long as said fraudster "resigns" from the board of trustees.

Chapman's Daily News article comes at a sensitive time for charters because they are looking to increase or eliminate the charter cap in the spring but are having to live down the "Dr" Ted Morris Jr. fraud fiasco I referenced above as Exhibit A for why charters are a problem.

And now comes this:

The state controller’s office and state Education Department have audited 62 of New York’s 248 charter schools, according to Serrette’s report. All told, Serrette’s group estimates wasteful spending at charters could cost taxpayers more than $50 million per year.

Eighteen audits targeted charters in New York City, representing about 9% of the 197 charters in the five boroughs. Each audit found issues.

• A 2012 audit found Brooklyn Excelsior Charter School was paying $800,000 in excess annual fees to the management company that holds its building’s lease.
• A 2012 audit of Williamsburg Charter High School revealed school officials overbilled the city for operations and paid contractors for $200,800 in services that should have been provided by the school’s network.
• A 2007 audit of the Carl C. Icahn Charter School determined the Bronx school spent more than $1,288 on alcohol for staff parties and failed to account for another $102,857 in expenses.

And that's just what's been found with financial audits.

Imagine top to bottom investigation of charter practices, including state test scores (which are self-graded at high school charters), attrition rates and special education services.

There's a reason Eva Moskowitz sued to keep audits from happening at her charter chain (and won that suit, though that victory came before changes to the auditing procedures in last spring's state budget agreement.)

There's a reason why the charter school sector is in the game to sue the city and state comptrollers to limit the audits that were decreed legal and necessary by last year's budget agreement.

They don't want anybody looking into them because they understand the charter sector is a Wild, Wild West industry where pretty much anything goes.

If that isn't obvious after the "Dr" Ted J Morris Jr fraud fiasco, I don't know what it is.

But it's even more true after these the Center For Popular Democracy's audit analysis.

The key takeaway from Ben Chapman's DN story is:

Eighteen audits targeted charters in New York City, representing about 9% of the 197 charters in the five boroughs. Each audit found issue...investigators uncovered probable financial mismanagement in 95% of the schools they examined.

Not every charter was audited but every charter that was audited had issues.

What that says to me is, it's time to target every charter school for auditing.

And since neither oversight body at the state level (the Regents or the NYSED) managed to catch the fraud of "Dr" Ted J Morris Jr, the con man who claimed to have a BA, an MA, a Ph.D, and an MSW (he may not even have a high school diploma), the state and city comptrollers need to be the leads on these audits.

When the oversight bodies that are supposed to hold charters accountable don't care to do their jobs and make excuses for a lack of oversight when fraud is exposed via the news or blogosphere, it means those oversight entities should no longer have oversight responsibilities.

The aggressively pro-charter Regents Chancellor Merryl Tisch and the former charter school founder NYSED Commissioner John King are part of the problem with charters, not part of the solution.

Lt Governor Duffy Makes Excuses For Charter School Con Man "Dr" Ted Morris

We've already seen how nobody at the Board of Regents or the New York State Education Department wants to take responsibility for giving a charter school to a con man who lied about having a BA, an MA, a Ph.D, a MSW (yeah, that's a new one) and maybe even his high school diploma.

Now we get this doozy from Lieutenant Governor Robert Duffy:

This man is young/made mistakes but can learn/succeed. Young charter school founder Ted Morris Jr. resigns http://t.co/oupYcSoZlZ via @DandC
— Robert Duffy (@LtGovDuffyNY) November 26, 2014

Lying about credentials and work experience on a state application for a charter school is a "mistake"?

What exactly, under this definition of "mistake," entails "fraud"?

Is cheating okay?

How about stealing?

It is amazing how much these pro-charter people are willing to forgive when it comes to charter schools and charter school folks.

It seems accountability is only for public schools and public school staff.

Like so much around the charter school/public school divide, there are two sets of rules here and the one for the charters is awfully forgiving.

Dr. Ted Has Left The Building

It took a little more than a day for Dr. Ted Morris Jr., charter school prodigy, to go to former charter school prodigy/current fraud:

Breaking: Ted Morris, he of suspicious resume, resigns from board of trustees of Greater Works Charter School. #ROC
— Justin Murphy (@CitizenMurphy) November 26, 2014

Morris submitted his resignation shortly after this story was published: http://t.co/nUwNTgo6rD #ROC
— Justin Murphy (@CitizenMurphy) November 26, 2014

Now comes the work of holding the Board of Regents accountable for giving approval to this fraud's charter school and using this fiasco as Exhibit A when Cuomo, King and Tisch look to raise or eliminate the charter cap in New York State.

If Dr Ted Morris Jr, huckster extraordinaire, could get a charter in New York State now before the cap is lifted or eliminated, just wait and see what happens after the cap is increased or ended completely.

Here's One Critic De Blasio Should Appreciate Having

They say you can know the mark of a man by the enemies he has - here's one enemy that Mayor de Blasio should be happy to have:

It’s a tale of the 1% city for Bernie Madoff.

The convicted swindler, cooling his heels in a North Carolina federal prison camp, is no fan of the progressive financial policies and vision touted by Mayor de Blasio.

“I’m not a great fan of redistribution of wealth,” the 75-year-old Wall Street villain said during a long, ranging interview with Politico.

...

The former Democrat, who now identifies as an independent, says he voted for President Obama in 2008, but would not have in 2012 because the president policies have become “too socialist.”

Dunno what Madoff is talking about - banksters are doing as well or better under the "Socialist" Obama as they did under Bush the Capitalist.

As for Madoff not being a fan of redistribution, that's not true.

He surely liked to redistribute other people's money to himself through fraud and criminal activity.

In that way, I suspect he isn't all that different from many of the "capitalists" on Wall Street these days.

Bloomberg's DOE Manipulates Graduation Rates

The Mayor of Money has hailed graduation rate increases as another piece of proof that is education reforms have worked.

But just as the test scores were jive, just as the crime stats are jive, just as the emergency response times are jive - the graduation rates are jive too:

Dozens of struggling city high schools allowed students to use a mishmash of makeup assignments — sometimes requiring little or no work — to earn credits for classes they initially flunked, sources say and data show.

For the first time, the Department of Education has made credit-recovery data publicly available by school — and it shows nearly 40 schools awarded between 5 percent and 31 percent of their credits to kids through makeup work in 2011-12, while close to three dozen gave between 5 percent and 46 percent of their credits that way the previous school year.

Most credit-recovery programs occur over the summer, when students try to learn the course work that eluded them during the year.

But many shortcut programs also cropped up after the department started using credit accumulation as a factor in grading schools in 2007 — putting pressure on them to come up with quick fixes for credit shortages.

“It’s a big issue at the school . . . the reason the principal does this is to make our school look good on our progress report,” said a former teacher at the Academy for Language and Technology in The Bronx, where 13 percent of credits came from makeup work in 2011-12.

The ex-teacher said that students would use an online program called Apex to read passages and answer simple questions — but that no one would prevent them from looking up the answers.

“They just accumulate easy credits rather than learn anything,” the former teacher said.

As I've written before, if there were ever a true independent auditing of the Bloomberg Years, they would find so much manipulation of data and out-and-out fraud from these people that they would be frog-marching Bloomberg administration officials out for months in handcuffs.

The have phonied up everything, put in place policies that forces phonied up data ("Improve or you're fired!" tends to do that sort of thing), but the press has largely ignored the manipulation.

Certainly they have not blamed Bloomberg himself for any of this.

You can bet if de Blasio is elected in November, that will change.

In any case, no wonder Bloomberg is planning on having all the emails and other data from his administration erased before he goes.

That's a great way to ensure his fraudulent legacy never sees the light of day with the public.

Outside Contractor Who Stole $2.7 Million From NYCDOE Sentenced For Fraud

Let's see there was CityTime and the 911 system boondoggle and the NYCHA computer system mess and the FDNY GPS's that don't work and ARIS and the Willard Lanham fraud and the Judith Hederman fraud and now this:

A Pennsylvania man was sentenced today to 57 months behind bars for fooling the Department of Education into paying him $2.7 million after he lied about providing special-education and bilingual services to students.

Nelson Ruiz, who collected the taxpayer-funded cash from 2008 to 2012 through six companies he controlled, will also serve three years of supervised release following his prison sentence for defrauding DOE and also furthering the scheme by bribing an agency staffer. Ruiz, 36, of Shohola, Pa., copped a plea to masterminding the scheme in December.

Before being sentenced in Manhattan federal court, his lawyer, Don Savatta talked openly to Judge John Koeltl about how Ruiz started the scam by “accident,” first submitting “incorrect” invoices to DOE that he wound up being paid for. Savatta said Ruiz then purposely submitted phony papers a second time as a “test” -- and after DOE still couldn’t catch the false information and paid him again, Ruiz couldn’t stop himself from repeating the process.

“Mr. Ruiz acknowledges it was greed and easy money that drove him and is embarrassed and ashamed that it did not stop years ago,” Savatta told Koeltl.

Ruiz through his plea deal agreed to fork over the $2.7 million related to the crime.

We are so lucky we have had fiscal genius Mike Bloomberg to steward this city for the last 12 years.

I mean, how could this city have survived with Mike Bloomberg?

If Only Bankers Were Treated Like Teachers...

From NBC News, an administrator is arrested for cheating on Regents exams:

A department head at a New York high school has been accused of changing two students' answers on state tests to give them a passing grade.

The Westchester County district attorney says 54-year-old Allison Risoli of Peekskill was arraigned Monday on false-document charges.

A call to Risoli's attorney was not immediately returned.

The district attorney said Risoli altered answer sheets for January exams in history and geography several days after the tests were taken at Peekskill High.

Meanwhile in the HSBC money laundering case:

BILL MOYERS: You’re working on a story right now that’ll come out in a couple of weeks on the HSBC settlement. That’s the, tell me about that, why it interests you.

MATT TAIBBI: Well, the HSBC settlement was a really shocking kind of new low in the history of the too big to fail issue. HSBC was a serial offender on the money laundering score. They had been twice given formal cease and desist orders by the government. One dating back as far as 2003, another one in 2010 for inadequately policing the accounts in their system. They laundered over $800 million for cartels in Colombia.

BILL MOYERS: Drug cartels?

MATT TAIBBI: Drug cartels in Colombia and Mexico. They laundered money for terrorist connected banks in the Middle East. Russian gangsters. Literally, you know, I talked to one prosecutor who’s, like, “They broke basically every law in the book and they did business with every kind of criminal you can possibly imagine. And they got a complete and total walk.” I mean, they had to pay a fine.

BILL MOYERS: $1.9 billion, a lot of money.

MATT TAIBBI: It’s a lot of money. But it’s five weeks of revenue for the bank, to put that in perspective. And no individual had to suffer any consequences at all. There were no criminal charges no individual fines, which was incredible. Incredible.

Incredible indeed.

If only these bankers who laundered the drug money had changed some answers on a Regents exam - then they'd face some accountability.

Cuomo Strokes Himself

Sad Andy Cuomo worried that the corruption arrests of State Senator Malcolm Smith and Assemblyman Eric Stevenson is taking the winds out of his "I, the Sun King, have made Albany work!" meme:

Tragically, I was not able (or, for that matter, invited) to be with Gov. Cuomo during the U.S. Attorney Preet Bharara's #tawdrygraft presser on the case against Assemblyman Eric Stevenson. I'm sure that would have been some must-see TV. 

Cuomo's statement on the unsealing of the corruption complaint against the Bronx lawmaker does two things, and it does them in a specific order.

First, the governor reminds the public that as attorney general, he locked up a few dirty dealers himself. Then he gives Bharara & Co. a pat on the back for a job well done.

What's an AG-turned-governor to do, really?

It's reasonable to think he wouldn't be totally thrilled with hearing Bharara roll out his second bombshell investigation of this week by asserting that a "show-me-the-money culture in Albany is alive and well" after the four years Cuomo spent as New York's top legal authority before winning his current Second Floor office in a campaign that emphasized his will to restore integrity to the Empire State.

At the same time, given that very track record, there's no choice but to send a "we includes me" message about supporting the feds' probes of venal pols. 

Here's the governor's full statement:

“The allegations of public corruption by City and State officials revealed this week are appalling. New Yorkers deserve a government that is as good as the people it serves and the events of the last few days fail this and every standard of public service.

"As Attorney General I prosecuted numerous public corruption cases, including putting former Senator Espada and Comptroller Hevesi behind bars, and believe firmly that anytime the public’s trust is violated, we must act quickly and aggressively to hold the guilty parties accountable.

"I commend US Attorney Preet Bharara, District Attorney Robert Johnson and their partners in law enforcement on their dedication to prosecuting corruption at every level.

"Those of us committed to the public and honored to hold its trust have zero tolerance for the actions brought to light this week, and will continue to use our power to fight to ensure integrity and trust to government in New York.”

Three things to say here.

First, as I noted earlier this week, Attorney General Andrew Cuomo refused to put even one bankster responsible for the '08 collapse behind bars.

Not even one.

As the Times notes here, he investigated lots of the banksters, but he never pulled the trigger on even one indictment.

Perhaps he didn't want to anger his donor base before running for governor in '09?

Or perhaps he was too busy taking suitcases full of cash from them in hotel rooms?

Hard to know, but on Wall Street criminality, Cuomo was a zero.

Next, as I pointed out earlier this week, Preet Baharara has the same track record on Wall Street crime that Cuomo has.

Not one bankster responsible for the '08 collapse scalp in Preet's belt.

Not one.

These guys can bump chests and measure legal brief sizes over the political corruption all they want.

The fact is, they're putting guys who took $20,000 or $50,000 bribes behind bars while the guys at Goldman and AIG and JP Morgan Chase and Citigroup and BoA and Lehman and Bear Stearns who stole billions get off scott free.

Want to bump chests, fellas - put some banksters in jail before they wreck the economy again.

Finally, note the snarkiness from Celeste Katz on the Cuomo presser.

Can't say for certain, but it sounds like Little Andy is mad at her and had her barred from it.

For a guy who thinks he's so tough, these reporters do get under his skin, don't they?

Who's Cuomo Kidding?

Governor Cuomo, he of the Committe To Save New York campaign slush fund of unmarked bills and contributions from corporate and Wall Street donors is dismayed over the Smith/Halloran indictments:

The allegations are very serious,” Cuomo said after announcing a budget-boasting event in Buffalo. “I was the attorney general. I spent more time working on political reform and political corruption than probably any attorney general in modern political history.”

“I hope that he [Smith] fully cooperates with the investigation and I hope the investigation is thorough and speedy and gets to the facts,” Cuomo continued. “But it is very, very troubling. We have zero tolerance for any violation of the public integrity and the public trust.”

The financial collapse brought about by unethical and criminal activity on Wall Street at firms like Bear Stearns, Lehman Brothers, AIG, Goldman Sachs, BoA, Citigroup and JP Morgan Chase all happened on Cuomo's watch as attorney general.

He indicted not one person responsible for any of that mess.

Not one.

For Cuomo to bang his chest over "political corruption" while he allowed the Wall Street and hedge fund crooks to steal with impunity and then took campaign donations from them is a joke.

But of course you'd have to think some of the unnamed corporate and Wall Street donors in Cuomo's Committee To Save New York slush fund are the same people Cuomo allowed to steal with impunity.

You wouldn't know, of course, because Cuomo refuses to release the names.

We did, however, learn he took $2 million in gambling money from casino operators before he miraculously developed a plan to expand casino gambling in the state.

Quite frankly, if Malcolm Smith and Dan Halloran belong in jail for tossing around $40,000 dollar bribes, Andrew Cuomo belongs in jail for taking million dollar bribes from his Wall Street and corporate backers - the same ones he left off scott free for the '08 collapse - and the gambling interests and using that money as his political slush fund to bludgeon opponents and talk himself up as the greatest thing since Moses.

Juan Gonzalez: Malcolm Smith Scheme Dumbest Thing Ever

Juan Gonzalez gets this exactly right:

Federal prosecutors allege that state Sen. Malcolm Smith (D-Queens) conspired to bribe two key Republican Party bosses in a failed attempt to capture that party’s nomination for mayor.

What could Smith and his alleged co-conspirators possibly have been thinking?

Did they learn nothing from watching a string of fellow lawmakers in Albany and on the City Council carted off to jail?

Did they imagine they could simply fix political races by passing tens of thousands of dollars in unmarked envelopes in shadowy meetings?

Even if this outlandish plan had succeeded and Smith had landed the Republican endorsement, did he really think he could win a Republican primary against far better financed candidates like supermarket mogul John Catsimatidis or former Deputy Mayor Joe Lhota?

And what chance would Smith have on a Republican ticket against any of the Democrats who have been building their campaign organizations for years?

Simply delusional. 

But having watched Smith just a little over the past couple of years after his various charter school scandals (you can see information about two of them here), he had gotten away with his unethical behavior and crookery for so long that perhaps he thought he could get away with this too.

Impunity breeds arrogance and it seems that Malcolm Smith thought he was both immune from accountability and was as arrogant as could be.

Bloomberg Claims Halloran, Smith Indictments Are Call For More Politicians Like Himself

Our unindicted criminal mayor, the man who finagled three elections via unethical and/or potentially criminal activity with the Independence Party, told reporters today that the criminal indictments of State Senator Malcolm Smith, City Councilman Dan Halloran and others on bribery and fraud charges are an example of why the country needs more "non-partisan" elections that elect politicians like, well, himself:

Mayor Michael Bloomberg today argued that the U.S. attorney's complaints against State Senator Malcolm Smith and Queens Councilman Dan Halloran present as strong an argument as any for nonpartisan elections in New York City.

"All of this comes out of the fact that we have partisan elections when cities aren't partisan," said Bloomberg today, during a press conference about education in Queens.
...

"If you go back to 2005, I think it was, I think I spent $7 million of my own money trying to convince everybody that we should have nonpartisan elections," said Bloomberg (who has very much played the partisan game when he's needed to, and contributed millions of dollars to the controversial Independence Party, which provided him a crucial non-major-party line to run on). "We are the only big city in the country that has partisan elections. The only one. ... But I could not get any newspaper or any good government group or any union or anybody to back it."

"Generally speaking, partisan elections deprive the public of the right to pick their own leaders because the only people that vote and the only elections that matter are the fringe group of whether it's one party or another party," he continued. "And maybe they make good choices, maybe they don't. But it's very hard to argue that it is democratic. It is not. And that's where all this craziness comes from."

Bloomberg is of course full of it on multiple accounts here.

First, as Capital NY points out, Bloomberg has gamed the election system more than once by changing party affiliation the way he changes tuxedos.

First he was a Democrat, then a Republican, then an "independent," then he was a Republican again.

If anybody has made a sham out of "partisan elections," it's our "non-partisan" mayor whose only allegiance is to himself and the corporate state of affairs.

Next, he's corrupted elections all over the country by using his billions as a bludgeon against anybody or anything he doesn't like.

The Bloomberg M.O. goes like this:

Agree with the mayor, receive Bloomberg largess.

Go against the mayor's wishes and the mayor's PAC drops a bunch of money into your opponent's campaign bank account and runs commercials against you.

The mayor's PAC has threatened politicians all across the country on a multitude of issues, most specifically gun control and education reform.

A billionaire soon-to-be ex-mayor with billions to toss into politics to influence elections for years to come is much more corrosive and damaging to the political system then two bit crooks like Smith and Halloran taking and/or receiving $50,000 in small cash bribes.

Finally, as I pointed out earlier and as the Capital NY article points out as well, the mayor has bribed Independence Party officials through three election cycles to put him on their "non-partisan" ballot line and fool people into thinking it's some independent ballot line rather than a sham front for Bloomberg.

Is that fraud perpetrated by Bloomberg, a sham that twice won him the votes that meant the difference between winning and losing the election) any less corrupting that Halloran and Smith's shenanigans?

It would be nice if the journalists covering him would call him on his b.s. to his face and ask him how his PAC, his Independence Party shenanigans, and his party switching isn't crazy too?

Smith, Halloran Arrested For Pittance Compared To Bloomberg's Independence Party Bribes

When you look at the details of the alleged criminal wrongdoing by Dan Halloran, Malcolm Smith, the Republican Party operatives and the Westchester pols arrested on bribery and fraud charges this morning, you realize that there really wasn't a lot of money being thrown around.

The NY Times account has Halloran receiving $20,000 in bribes, negotiating $40,000 or $50,000 in bribes for GOP officials to finagle Smith's name onto the GOP ballot even though Smith was a Democrat, Smith complaining that the operatives were trying to shake him down for more.

Contrast those five figure bribes with the bribes Michael Bloomberg handed out to Independence Party figures through three election cycles, as chronicled by the Daily News back in December 2102:

Much ado about next to nothing, Mayor Bloomberg said of this series of editorials about the Independence Party. “What’s the big deal?” he asked.

To answer the question: The big deal is that a clique of political operatives with no claim to broad public support has played a powerful role in determining who runs New York — notably Bloomberg — while making dupes of voters.

By the thousands, New Yorkers have mistakenly joined the Independence Party when enrolling to vote. Intending to have no political affiliation, these voters instead checked the “Independence Party” box — empowering the group to exploit an illusion of popular strength.

Still more seriously, Independence leaders have exercised the authority to back candidates by stocking legally mandated governing panels with the names of unwitting people, many of whom have no idea they are listed as party members.

Bearing the earmarks of orchestrated fraud, the tactics represent a distortion of the democratic process as it has been established by state law and court rulings.

...

 

No New York official has built closer ties to Independence leaders or benefited more from their support than Bloomberg. He ran as their candidate in three mayoral campaigns, twice scoring votes on the Independence line that exceeded his margin of victory.

...

The history of how he secured the favor offers both a look at Independence Party power playing and an understanding of how determinedly the mayor courted the Newmanites. As you might expect, money played a key role.

Roll the clock back to 2001. Although Bloomberg opened what seemed the world’s largest checkbook, he was handicapped as a Republican running in a Democratic city.

Only three modern Republicans — Fiorello LaGuardia, John Lindsay and Rudy Giuliani — had made it into City Hall. All had succeeded by running as the GOP candidate and as the candidate of a second party. No dummy, Bloomberg reached out to Independence Party state Chairman Frank MacKay.

Word came back that Bloomberg needed Newman’s blessing. So the aspiring mayor made a pilgrimage to 60 Bank St., a West Village townhouse where Newman lived with his followers.

Among those in residence were Gabrielle Kurlander and Jackie Salit. The New York Times described the two women in Newman’s 2011 obituary as his life partners in an “unconventional family of choice.”

The Bloomberg-Newman meeting brought the Jewish businessman billionaire face to face with a man who was an avowed Marxist, plus a Jew with a record of making anti-Semitic pronouncements, plus an unaccredited psychological counselor who espoused patient-therapist sex known as “friendosexuality.”

Newman was in charge because he and his adherents had taken control of the Independence Party, an organization founded in the 1990s by breakaway Republicans. Now, he gave his stamp of approval — and the ballot line — to Bloomberg.

But trouble erupted when Newman’s firebrand ally Lenora Fulani declared four days after 9/11 that the attack was “all too much the result of how America has positioned itself in the world.” She added: “It is easy to forget that the attack . . . itself was an act of revenge.”

Bloomberg called on Independence Party leaders to disavow Fulani’s statement, announcing: “I will not campaign on their line, and I will urge people not to vote for any candidate on that line, myself included.”

Newman refused a disavowal. Bloomberg backed down and kept the line rather than heighten his risk of defeat. The strategy worked. He scored 59,000 Independence votes, almost twice the slim margin of victory that put him into City Hall.

No politician forgets numbers like that. Bloomberg was soon solidifying bonds with Newman.

Over the years, he contributed $400,000 of his personal wealth to New York City Independence Party accounts. He also gave a total of $650,000 to two causes run by Newman followers: the All Stars Project, a nonprofit that works with underprivileged children, and a theater group that showcases propaganda plays written by, you guessed it, Newman.

Meanwhile, the city Industrial Development Agency enabled the All Stars Project to buy and renovate a W. 42nd St. building with the help of $12.75 million in triple-tax-free bonding. The city is not on the hook for the debt, and the administration says the financing program is open to all qualified nonprofit groups.

Bloomberg pushed the deal over opposition from City Council Speaker Christine Quinn, then-Controller Bill Thompson, then-Public Advocate Betsy Gotbaum, Manhattan Borough President Scott Stringer, Queens Borough President Helen Marshall and then-Bronx Borough President Adolfo Carrion.

The opponents cited anti-Semitic remarks by Fulani. Bloomberg, who had called the statements “despicable,” said they were not legal grounds for spurning the All Stars.

Thanks to the financing assistance, the All Stars have a modern theater complex that will be home in the 2012-13 season to seven shows, three of them Newman-related — including a production called “Carmen’s Place,” book and music and lyrics by Newman. Photographs of Newman adorn the lobby and offices that are viewable from the street.

In 2005 and 2009, Newman again gave the Independence ballot line to Bloomberg — delivering him 75,000 votes in 2005, less than the mayor’s margin of victory, and 150,000 votes in 2009, more than his winning margin.

 Meanwhile, Bloomberg was also working with state chairman MacKay, a former nightclub owner and talent agent who has prospered by providing clandestine help to the mayor.

In 2008, Bloomberg poured $1.35 million into one of MacKay’s fund-raising accounts. MacKay spent most of the money on consultants in a hidden attempt by the mayor to support the reelection of three Republican state senators. After the election, MacKay paid himself a $60,000 “consulting fee.”

In 2009, as Bloomberg sought a third term, he sent an additional $1.2 million to MacKay for the purpose of hiring Republican operative John Haggerty to monitor poll sites for election fraud — a task that was likely to prompt charges of voter intimidation.

By routing the funds through MacKay, Bloomberg kept the activity under wraps — until the Manhattan district attorney charged Haggerty with stealing $1.1 million of the mayor’s money to buy a house. Haggerty was sent to prison.

Seriously, compared to Bloomberg's criminal legacy with the Independence Party, the Smith/Halloran/GOP operatives mess is penny ante.

Count up the bribes Bloomberg gave to people in the Independence Party as chronicled by the NY Daily News.

$400,000 to the personal accounts of Independence Party figures.

$650,000 in charitable contributions to charities run and/or affiliated with Independence Party figures.

$12.75 million in tax breaks to a charity run by an Independence Party figure.

$1.35 million laundered through the fundraising account of the Independence Party chairman, which the Independence Party used to re-elect three Republican state senators.  The Independence Party chairman paid himself $60,000 for enabling that money laundering scheme by the mayor.

$1.2 million to Independence Party operatives to intimidate voters at the polls - $1.1 million of which was "stolen" by John Haggerty.

And those are the bribes and money laundering events that we know about.

You can be sure there are more behind the scenes.

Bloomberg has used the Independence Party to engineer three terms in City Hall, to re-elect three Republican state senators so that his policies would be promoted in Albany and has paid Independence Party officials and affiliates handsomely in return.

If Smith and Halloran have been arrested on charges of trying to rig the 2013 mayoral race, why isn't Bloomberg sitting in a cell next to them for successively rigging three mayoral elections and three state senate elections?

Well, you know what they say:

Steal a little and they throw you in jail.

Steal a lot and they make you Mayor4Life.

State Senator (And Charter School Founder) Malcolm Smith Arrested For Trying To Rig NYC Mayoral Election

Big news in the mayoral race this morning:

State Sen. Malcolm Smith and city Councilman Dan Halloran were arrested this morning on charges they were plotting to rig this year’s mayoral election through fraud and bribes.

The pols allegedly formed an alliance built on cash payments and fraud to get Smith — one of the state’s top Democrats — placed on the GOP mayoral ballot, sources said.

FBI agents arrested them both at their Queens homes shortly after 6 a.m.

...

As agents took Smith and Halloran into custody, the feds raided the homes of Bronx Republican Chairman Joseph Savino and Queens GOP Vice Chairman Vincent Tabone, who were arrested on charges of wire fraud and bribery. They allegedly agreed to take bribes to get Smith on the ballot.

Also hauled in this morning were Noramie Jasmin, the mayor of Spring Valley in Rockland County, and her deputy mayor, Joseph Desmaret.

All six are going to appear in White Plains federal court today.

At Smith’s home, two FBI agents led the grim-faced senator – in a business suit -- from a back door to an unmarked car.

Three FBI agents spent more than 30 minutes inside the home before arresting the powerful pol. A woman inside the home refused to open the door for a reporter.

After the agents took off, a Smith neighbor said "I'm glad he's arrested."

Love it - even the neighbor is glad Malcolm Smith is being carted in handcuffs.

Usually when the FBI and the police come for these guys, the neighbors are like "I can't believe this is happening!  He's such a nice guy!"

Not Malcolm Smith's neighbor - he's happy about the arrest.

And what was the plot Smith and Halloran had cooked up?

Smith was trying to buy off Republican leaders because he needed the party’s support in at least three boroughs in order to run as a GOP candidate without even changing his own party affiliation, the sources said.

“It’s incredible,” a source said of the alleged plot.

To get on the GOP ballot, Smith allegedly enlisted Halloran, a Republican, to set up meetings with party leaders and negotiate thousands of dollars in bribes. The money was masked as payments for legal and accounting services, sources said.

Halloran allegedly collected thousands in bribes for himself along the way, the sources said.

He is separately charged with taking bribes from a consultant in return for up to $80,000 in City Council discretionary funding.

The feds were already investigating Halloran when they got wind of the alleged ballot-manipulating plan in November, the sources said. Smith met with his alleged co-conspirators as recently as February.

FBI spokesman Martin Feely, reached late last night, declined to comment.

Noramie Jasmin, the mayor of Spring Valley in Rockland County, and her deputy mayor, Joseph Desmaret, are also expected to be taken into custody today as part of the probe — although it was unclear how it relates to Smith.

The Rockland pair is accused of taking bribes in return for approving the sale of village land to a private concern. In addition to cash bribes, Jasmin is accused by the feds of demanding a secret ownership stake in the company that bought the property from her community.

 Smith, of course is one of the scummiest pols in NYC:

Smith is facing heat for his ties to a shady Queens nonprofit, the New Direction Local Development Corp., which The Post found misused charitable funds intended for victims of Hurricane Katrina.

Smith, representing much of southeastern Queens, was also involved in an embarrassing Aqueduct casino bid-rigging scandal, which remains under investigation by the FBI.

Never missing a chance to make headlines, Smith last year stunned the state’s political establishment by joining forces with Republicans to form a first-of-its-kind coalition to run the fractured state Senate.

By joining the Independent Democratic Caucus — along with four other Democratic renegades — Smith allowed the state Republican Party to keep control of the Legislature’s upper house.

Smith also once served as the majority leader of the state Senate, after Democrats captured control of the chamber in 2008.

Chaos reigned during Smith’s tenure and, by June 2009, two members of his conference had joined with GOP senators to oust Smith and trigger another crisis at the Capitol.

His brief period of leadership was considered a flop, and his Democratic Party subsequently lost control of the chamber to the Republicans.

 Let's not forget the charter school scandal Smith was involved in a few years ago:

School officials don't believe Senate President Malcolm Smith's claim that a charter school he founded was forced out of a public school into fenced-in trailers that resemble a prison.

"There was no reason to move to those cages," said Claude Monereau, principal of Middle School 53 in Far Rockaway, the building that housed Smith's charter school, Peninsula Preparatory Academy.

Monereau's comments follow a Sunday Daily News report that revealed Peninsula moved out of MS 53 into trailers on property being developed by one of Smith's top campaign donors. The developer uses the school as a selling point to hawk his houses.

Confronted by reporters, Smith claimed the developers' needs had nothing to do with the move. Instead, he said Peninsula asked MS 53 for more space due to expanding enrollment, and that MS 53 and the Department of Education turned them down.

DOE spokesman Jack Zarin-Rosenfeld said the school never requested to expand, and Monereau said there was no reason to move. Monereau said MS 53 had plenty of room when Peninsula moved out in 2008.

"Smith claimed the school moved because there was not enough space. That's baloney," Monereau said. "I don't know what they're talking about. Before they left, we walked through the building in June. We thought that they were going to stay."

"There must have been something cooking. How are you going to leave a school and put those children in those cages?"

Of course there was something cooking - money from Malcolm Smith's campaign donor going to Malcolm Smith for moving the school to his development to use as a selling point.

Smith also diverted state funds to the school as payback for campaign donations from board members of the school:

State Senate President Malcolm Smith steered $100,000 in state funds to a Queens charter school he helped found, the Daily News has learned.


The money was earmarked this budget year for educational programs at Peninsula Preparatory Academy Charter School in Far Rockaway.


Smith was a founder of the school, which was chartered in 2004, and an original board member. His spokesman said he divested ties to the school when he became Senate minority leader in November 2006.


Rep. Gregory Meeks (D-Queens), a close ally of Smith's, is still listed as a board member.

In 2006 and 2007, Smith received a total of $12,000 in campaign donations from Steven Klinsky, who founded the school's management company, Victory Schools Inc.


Victory has been the school's management company since 2004, according to a company official. The charter school's latest tax documents show it paid $762,322 in management fees.


While there does not appear to be anything illegal about Smith's steering tax money to the school from local assistance funds that he controls, the move raised some eyebrows.


"I don't know if it's inappropriate under the law, but it points to the influence the charter school association has on the crafting of legislation as a real special interest," said Richard Ianuzzi, president of the powerful state teachers' union.

Smith had served on the board of the charter operator, Victory Schools Inc., until he resigned from it in 2006.

 

Peninsula Preparatory Charter School was slated for closure by the DOE, but parents sued to keep it open and won that battle.

It is still taking students for the 2013-2014 school year.

 

But it's founder, Malcolm Smith, is facing trial on bribery and fraud charges.

I'll have more later on this, but I wanted to make the connection between Smith's arrest today and his shady charter school doings in the past.

Another Bloomberg Consultant Scandal Revealed

These outside consultant scandals in the Bloomberg government just keep accumulating:

Investigators were called in to examine an $11.5 million city technology contract yesterday after Comptroller John Liu uncovered what he described as questionable billings that could lead to “potential fraud.”

The comptroller lashed out at managers at the Department of Consumer Affairs, charging they were so obstructive that he aborted the audit in midstream and sent his findings to the Department of Investigation.

“These red flags are risk factors that signal potential fraud and that’s what makes the agency’s interference especially troubling,” Liu said.

Liu’s office had been examining a contract signed in 2007 with Gartner Inc. to oversee an online payment system being built for businesses that are licensed by the DCA and other city agencies. The original deal was for $2.7 million. It has since grown to $11.5 million, with $10.4 million paid.
Among the findings of the aborted audit:

* Consultants who were paid between $210 and $298 an hour submitted some time sheets that appear to have been “created” just for the auditors.

* One time sheet, supposedly from January 2011, listed a Gartner project manager who didn’t start working on the project until February 2012.

* The DCA paid Gartner $113,000 for specialized training of its chief information officer, Christopher Montgomery, that had nothing to do with the contract. Montgomery left in April to become chief technology officer at NJ Transit. He didn’t return calls.

* The DCA failed to claim $65,000 of a $250,000 discount offered by Gartner.
In a letter to Consumer Affairs Commissioner Jonathan Mintz, Liu’s audit chief, Tina Kim, said the level of obstruction by Mintz’s agency made the audit impossible.

Andrew Spender, a spokesman for Gartner, issued a statement saying it had “fully cooperated” with the comptroller.

DCA spokeswoman Abigail Lootens called Liu’s report “irresponsible” and said the DCA “made each requested witness and every one of thousands of documents fully available.”

Lootens insisted there was no hanky-panky with the time sheets.

“They weren’t created,” she said. “A new copy was printed out to fulfill the auditor’s request.” Officials also said that the project’s initial $2.7 million cost was only for a first phase.

I've said it before, I'll say it again:

If any independent auditor ever got to look at the Bloomberg books on technology contracts, consultants and they like, they would find massive fraud on a Boss Tweed scale.

But the fix is in on that kind of thing, so instead we get a DOJ smear campaign against Comptroller Liu for alleged campaign finance fraud.

Meanwhile the outside consultants hired by Bloomberg are robbing the city blind and nobody seem to do anything about it until it becomes so egregious that it cannot be ignored (a la CityTime.)

Another Tutoring Company Found To Have Bilked DOE Out Of Millions

Bloomberg claims he will have to cut 2,500 teacher jobs over the next two years as a result of losing the 4% increase in state aid that was contingent upon a new teacher evaluation agreement.

Of course the majority of the cuts will come from schools rather than the central Tweed budget.

And even as Bloomberg is claiming he has to cut these teaching jobs in order to keep the city budget in the black, we get word of another consultant company bilking the DOE out of millions:

A substitute teacher was busted yesterday for an alleged long-running tutoring scam that overbilled the Department of Education for hundreds of thousands of dollars in federal funds.

Michael Logan, 48, of White Plains, allegedly recruited former students to help in his scheme, hiring them as “aides” for after-school tutoring in The Bronx at the Monroe and Columbus high schools, which racked up $2.3 million in bills between 2005 and 2012.

But instead of helping disadvantaged students boost their grades, Logan had them round up signatures from kids at sports practice to falsify attendance sheets for the now-defunct TestQuest tutoring company, court papers say.

And if they couldn’t find enough students to fill out the forms, Logan — a TestQuest manager — allegedly told the aides “to sign the sheets themselves.”

“I already got paid, this is how you get paid,” he said, according to a Manhattan federal-court complaint.

Logan has been barred from teaching pending the outcome of his charges.

Meanwhile, the feds yesterday joined a whistle-blower suit against TestQuest, claiming its management “knew about, deliberately ignored or recklessly disregarded the fraud.”

TestQuest founder and CEO Tiffany Hott didn’t respond to an e-mail seeking comment.

The TestQuest bilking is not an isolated incident. 

Comptroller John Liu found another tutoring company - a company the DOE just gave another multi-million dollar contract to - has bilked the DOE out of millions over the past few years and is under federal investigation:

The largest provider of after-school tutoring services for city public schools pupils, Champion Learning Center LLC, has been under investigation since last summer by the Manhattan U.S. attorney’s office, the Daily News has learned.

The federal probe came to light this week after City Controller John Liu refused to approve a new $4.5 million contract the Department of Education awarded the company in November.

“There is sufficient reason to believe that the proposed contractor is involved in corrupt activity,” Liu said in a Jan. 11 letter to the Department of Education, a copy of which The News obtained under a Freedom of Information request.

The firm, Liu noted in his letter, has twice been found to be improperly billing the city for its services — once by the department itself and once by Liu’s auditors. As a result, Champion has been forced to repay more than $6 million since 2009.

In addition, Liu said, the firm revealed in an Oct. 9 update to the city’s VENDEX system that it is the target of an ongoing federal civil probe.

 

Now neither of these instances of overbilling or fraud involving Champion Learning Center or TestQuest add up to $250 million.

 

But these are the instances of fraud and overbilling that have been caught.

 

I could add the Willard Lanham fraud of the DOE for $1.4 million and the Judith Hederman fraud of the DOE for $43 million to the Champion and TestQuest fraud and we're starting to get into some real money here.

 

Not to mention the CityTime fraud ($600 million stolen) and the 911 system that is now $1 billion overbudget and years overdo.

I bet if an outside auditor looked at the other DOE and city contracts with outside companies, they'd find many other instances of fraud and overbilling too.

So Bloomberg can play prudent fiscal genius with his last budget all he wants - the truth is, this $250 million in lost aid is nothing compared to the money Bloomberg has allowed the outside consultants to steal during his tenure as Incompetent-In-Chief.

No Wonder Occupy Was So Threatening To Them

Naomi Wolf:

Last fall, I argued that the violent reaction to Occupy and other protests around the world had to do with the 1%ers' fear of the rank and file exposing massive fraud if they ever managed get their hands on the books. At that time, I had no evidence of this motivation beyond the fact that financial system reform and increased transparency were at the top of many protesters' list of demands.

But this week presents a sick-making trove of new data that abundantly fills in this hypothesis and confirms this picture. The notion that the entire global financial system is riddled with systemic fraud – and that key players in the gatekeeper roles, both in finance and in government, including regulatory bodies, know it and choose to quietly sustain this reality – is one that would have only recently seemed like the frenzied hypothesis of tinhat-wearers, but this week's headlines make such a conclusion, sadly, inevitable.

Indeed - the fixing of LIBOR and the fact that regulators including the current Secretary of the Treasury and then head of the Federal Reserve Bank of New York did nothing serious to stop it and never exposed it to the public is the biggest example of a system that is rigged beyond measure.

If they fixed LIBOR and the regulators knew it and did little to nothing to stop it, then frankly nothing in the financial system can be trusted, no one in the financial world can be trusted, no one in regulation or government can be trusted to put things right.

The system is rigged and rotten to the core.

Naomi Wolf is quite right when she says no wonders the criminals in power reacted so violently to the Occupy protests.

They know they're standing on dominoes that are tottering.

The crookedness and criminality are so widespread that they are too difficult to hide anymore.

And so the oligarchs respond with violence and repression and control.

Expect to see much more of this from the elite and their security apparatus as the rot at the core of the system continues to become apparent:

Hundreds of Los Angeles police in riot gear, shooting rubber bullets, clashed with Occupy L.A. protesters and street artists attending a sidewalk chalk-drawing event dubbed "Free Chalk for Free Speech" as part of the monthly L.A. ArtWalk. Several injuries and 19 arrests, mostly for "vandalism." For drawing in chalk, in the rain? Overreact much?

Ah yes - using rubber bullets on protesters armed with chalk.

That's where we're at today.

And soon, the drones.

NYPD Manipulates Crime Stats

So says a new study conducted by John Eterno and Eli Silverman:

An anonymous survey of nearly 2,000 retired officers found that the manipulation of crime reports — downgrading crimes to lesser offenses and discouraging victims from filing complaints to make crime statistics look better — has long been part of the culture of the New York Police Department.

The results showed that pressure on officers to artificially reduce crime rates, while simultaneously increasing summonses and the number of people stopped and often frisked on the street, has intensified in the last decade, the two criminologists who conducted the research said in interviews this week.

“I think our survey clearly debunks the Police Department’s rotten-apple theory,” said Eli B. Silverman, one of the criminologists, referring to arguments that very few officers manipulated crime statistics. “This really demonstrates a rotten barrel.”

Dr. Silverman, professor emeritus at John Jay College of Criminal Justice, and John A. Eterno, a retired New York police captain, provided The New York Times with a nine-page summary of the survey’s preliminary results.

...

Dr. Eterno and Dr. Silverman have previously argued that the Police Department’s longstanding focus on reducing major felony crimes has given rise to “a numbers game.”

Their survey is likely to rekindle the debate, which flared up earlier this year after The Village Voice detailed the case of Adrian Schoolcraft, an officer in the 81st Precinct in Brooklyn who secretly gathered evidence, including audio recordings, of crime-report manipulation. Shortly after Mr. Schoolcraft presented the evidence to police investigators, his superiors had him involuntarily committed to a psychiatric hospital, saying he was in the midst of a psychiatric emergency.

The survey, conducted earlier this year, was financed by Molloy College. Dr. Eterno and Dr. Silverman e-mailed a questionnaire to 4,069 former officers who had retired since 1941. Roughly 48 percent — 1,962 retired officers of all ranks — responded.

The respondents ranged from chiefs and inspectors to sergeants and detectives. About 44 percent, or 871, had retired since 2002. More than half of those recent retirees said they had “personal knowledge” of crime-report manipulation, according to the summary, and within that group, more than 80 percent said they knew of three or more instances in which officers or their superiors rewrote a crime report to downgrade the offense or intentionally failed to take a complaint alleging a crime.

One officer, who retired in 2005, wrote that he heard a deputy commissioner say in a “pre-CompStat meeting” that a commanding officer “should just consolidate burglaries that occurred in an apartment building and count as one.”

“Also not to count leap-year stats.”

Another respondent, who retired in 2008, wrote, “Assault becomes harassment, robbery becomes grand larceny, grand larceny becomes petit larceny, burglary becomes criminal trespass.”

Dr. Eterno, now director of the graduate criminal justice program at Molloy College, said he was startled by the responses.

“What we’ve been able to document here is how many times they’ve seen these manipulations,” he said. “It’s three or more times. That translates, conservatively, into at least 100,000 manipulations, if you extrapolate out the responses to the 35,000 officers on the force.”

As I shared with you before, I have personal experience with NYPD cops trying to discourage my wife and I from reporting a crime.

She had her wallet picked on 34th and 6th. When we walked into a crowd outside Victoria's Secret, she had her wallet. When we walked out of that crowd and got to the PATH station one block away, her wallet was gone.

The responding cops refused to file a crime report. They said since we had not actually seen anybody steal the wallet out of her purse and she had not felt anybody put their hands into her purse, it would be classified as "lost."

Later that night, someone tried to use a credit card from that "lost" wallet to buy a Happy Meal at a McDonald's in Washington Heights .

Trying to use someone else's credit card is a felony, so now the cops had to file a crime report. But each precinct fought for the report to be filed somewhere else. Should the midtown Manhattan precinct file it, where the wallet was lifted? Or should the Washington Heights precinct file the report, where the credit card was used?

The cops from both precincts made the issue as difficult and as big a pain in the ass as possible - like they were pissed they had to file a report.

I've heard from other people, including some who work for the NYPD, that fraudulent reporting is a daily occurrence in Bloomberg's New York, but two summer's ago, I got an upfront seat to it.

With this new study, we have more proof that Bloomberg's policing "miracle" is as fraudulent as his education miracle.

The "Crisis In Accountability" in New York Starts With Andrew Cuomo And His Wall Street Cronies

The New York Post reports the following:

It’s your toxic mortgages at work.

Goldman Sachs investment banker Jeffrey Verschleiser, accused in lawsuits of illicitly profiting from bad mortgages that led to the 2008 meltdown, is spending $1 million to take over a swanky Aspen, Colo., hotel for his Upper East Side daughter’s bat mitzvah, sources said.

Verscheisler is taking over the luxury Hotel Jerome for the entire weekend, and perks for the guests reportedly include autographs from pro skiers.

The Aspen Daily News reports that Verschleiser also rented out the city-owned Aspen Recreational Center, which will close at 4 PM today instead of the usual 9 PM so that the Verschleiser party can take it over.

Gonna be a nice weekend for the Verschleiser family.

And why wouldn't it be?

When you see how much money this crook stole with impunity on Wall Street while the authorities - including then Attorney General Andrew Cuomo - stood by and watched, how could it be otherwise?

So how did Jeffrey Verschleiser get into this position where he could buy up half of Aspen for his daughter's Bat Mitzah?

Matt Taibbi takes up the story from there:

The story begins at Bear Stearns, where Verschleiser used to work, up until the company exploded, in large part because of him personally.

Back in the day, you see, Verschleiser headed Bear’s mortgage-backed securities operations. Toward the end of his tenure, his particular specialty began with what at the time was the usual industry-wide practice, putting together gigantic packages of crappy subprime mortgages and dumping them on unsuspecting clients.

But Verschleiser reportedly went beyond that. According to a lawsuit later filed by a bond insurer called Ambac, Verschleiser also masterminded a kind of double-dipping scheme. What he would do is sell a bunch of toxic mortgages into a trust, which like all mortgage trusts had provisions written into their pooling and servicing agreements (PSAs) that required the original lenders to buy the loans back if they went into default.

So Verschleiser would sell bad mortgages back to the banks at a discount, but instead of passing the money back to the trust, he and other Bear execs allegedly pocketed the funds.

From the Atlantic story by reporter Teri Buhl:

The traders were essentially double-dipping -- getting paid twice on the deal. How was this possible? Once the security was sold, they didn't have a legal claim to get cash back from the bad loans -- that claim belonged to bond investors -- but they did so anyway and kept the money. Thus, Bear was cheating the investors they promised to have sold a safe product out of their cash. According to former Bear Stearns and EMC traders and analysts who spoke with The Atlantic, Nierenberg and Verschleiser were the decision-makers for the double dipping scheme.

Imagine giving someone a hundred bucks to buy a bushel of apples, but making a deal with him that he has to buy back any apples that turn out to have worms in them. That's what happened here: Bear sold the wormy apples back to the farmer, but instead of taking the money from those sales and passing it on to you, they simply kept the money, according to the suit.

In an email one Bear exec called the bonds Bear was hawking "sacks of shit."

Mmm - but that was lucrative shit for Jeffrey Verschleiser, wasn't it?

But it gets worse.

Back to Taibbi:

So did Verschleiser himself know the mortgages were bad? Not only did he know it, he went so far as to tell his colleagues in writing that it was a waste of money to even bother performing due diligence on the bad bonds:

Jeffrey Verschleiser even said in an e-mail that he knew this was an issue. He wrote to his peer Mike Nierenberg in March 2006, "[we] are wasting way too much money on Bad Due Diligence." Yet a year later nothing had changed. In March 2007, Verschleiser wrote to Nierenberg again about the same due diligence firm, "[w]e are just burning money hiring them."

One of the ways that banks like Bear managed to convince investors to buy these bonds was by wrapping them in bond insurance through companies like Ambac, commonly known as “monoline” insurers. Investors who knew the bonds were insured were less worried about default.

Verschleiser, seeing that Bear had gotten firms like Ambac to insure its “sack of shit” bonds, saw here a new opportunity to make money. He first induced the monolines to insure the worthless bonds, then bet against the insurers! (Is it any wonder this guy ended up hired by Goldman, Sachs?) From the Atlantic story again:

Then in November 2007, Verschleiser wrote to his risk committee that he knew insurers for mortgage securities were going to have big financial problems. He suggested they multiply by ten times the short bet he'd just made against stocks like Ambac. These e-mails show Verschleiser's trading desk bragging to firm leadership that he made $55 million off shorting insurers' stock in just three weeks.

So in essence, Verschleiser was triple-dipping. First he was selling worthless “sacks of shit” to investors, representing them as good investments. Then, he kept the money from the return sales of the wormy apples. And then, on top of that, he made money by betting against the insurers he was sticking with these toxic assets

Surely New York Attorney General Andrew Cuomo or the SEC or some other regulatory body stepped in to put handcuffs on this man until he could be tried for fraud?

Nope.

As the NY Times reported April 14, 2011, not one major participant in the financial collapse of 2008 has been criminally prosecuted and sent to jail.

That holds for Jeffrey Verschleiser.

As Taibbi writes,

We all know what happened from there. Bear, Stearns went under, thanks in large part to insane schemes like Verschleiser’s, and all of us were forced to pick up at least part of the tab as the Fed spent billions subsidizing Bear’s emergency takeover by JP Morgan Chase. In subsequent litigation, Chase has steadfastly refused to buy back the bad mortgages dumped on investors by the likes of Verschleiser, and has even fought tooth and nail to prevent the information in the Ambac suit from being made public.

Ambac went into Chapter 11 bankruptcy in 2010 for a variety of reasons, some of which had nothing to do with its losses in deals like these. But certainly Ambac and other monoline insurers like MBIA suffered for having insured worthless mortgage bonds sold onto the market by the Verschleisers of the world. Ambac in its suit asserted that it paid out over $641 million in claims related to the bonds from the Bear deals.

With all of this, though, Verschleiser landed happily on his feet. He reportedly heads Goldman’s mortgage division now. And after cutting a mile-wide swath of losses through the American economy, helping destroy two venerable firms in Bear and Ambac, bilking the taxpayer for untold millions more (he is also named in a lawsuit filed by the Federal Housing Finance Agency for allegedly speeding bad loans onto securitization before they defaulted), Verschleiser is now living the contented life of a proud family man, renting out a 94-room hotel for three days for his daughter’s Bat Mitzvah.

Andrew Cuomo said this week there is a "crisis of accountability" in New York.

He was talking about the school system and was alleging that public school teachers are unaccountable because they refuse to be evaluated by a system that utilizes student test scores and a value-added measurement with a large margin of error and wide swings in findings from year to year.

Pointedly, he was NOT talking about a justice system that allows a Jeffrey Verschleiser to criminally triple-dip his way to a very wealthy and lucrative lifestyle with impunity.

Taibbi writes:

Anyway, given that much of Verschleiser's questionable behavior is in writing, his case sure seems court-ready. But for whatever reason, he has not been indicted.

One can almost understand a regulator not wanting to take on the whole circular securitization scheme -- Bear lends money to corrupt mortgage firm, mortgage firm makes bad loans, Bear packages bad loans and sells to investors, then takes the proceeds and creates more bad loans -- because it is so complex and difficult to prove.

But in this case there are simple issues of fraud and theft that could be taken on without having to prosecute broader crimes related to securitization. But prosecutors, apparently, just blew those off. In the current environment, regulators even miss the layups.

And therein lies the REAL crisis in accountability in New York and the country at large.

Andrew Cuomo himself, along with the other regulators who let these crimes go largely uninvestigated and entirely unpunished, need to be held accountable, as do crooks like Jeffrey Verschleiser.

Bloomberg Refuses To Take Responsibility For CityTime Corruption

It's not his fault!!!!!!!!!

Mayor Bloomberg today insisted most of the problem with his scandal-scarred CityTime payroll project was cost over-runs – not corruption.

“The biggest expense was that they started out by underestimating the complexity and cost of the project and then, as they went along, kept adding things. That’s the biggest chunk,” Bloomberg said this morning on his radio show.

He added: “But there was an unconscionable amount of fraud.”

His comments seemed to reject allegations from Manhattan U.S. Attorney Preet Bharara, who blasted the CityTime project on Monday as “one of the largest and most brazen frauds ever committed against the City of New York.”

Bharara was, at the time, announcing yet another indictment of consultants connected with the computerized payroll project – Reddy and Padma Allen, a husband and wife who co-owned a subcontractor called TechnoDyne L.L.C. That brings the total number of indictments to 11 people and one company, TechnoDyne.

The indictment claims that “virtually the entirety of the more than $600 million that was paid to [the main contractor, Scientific Applications International Corporation] was tainted directly or indirectly by fraud.”

The scandal has tainted Bloomberg’s third term, but he has largely dismissed suggestions that he or his administration is at fault.

“The system is now up and working and it seems to be working,” Bloomberg said on the radio this morning. “There was an enormous amount of fraud. How much it really is, will be, and how much you can recover, you know, you won’t know.”

Wow - the Mayor of Accountability takes no accountability for the CityTime mess.

In fact, he doesn't even agree that it is a mess at all.

Sure, he acknowledges there was corruption and overruns that just couldn't be helped, but overall he thinks the project is just great.

Just great.

Talk about a lack of accountability.

Let's review.

The U.S. attorney said the following about the CityTime project:

The CityTime project was "corrupted to its core."

The fraud was "epic in magnitude, duration and scope."

$600 million dollars of the money the city paid for the project was either directly or indirectly tainted by the criminality.

This crime one of the "most brazen frauds ever committed against New York City."

That's what the U.S. attorney working on the case said about the matter.

11 people have been indicted in the scheme so far.

The U.S. attorney promises more indictments to come.

In Bloomberg's world, this is nothing to blink at.

You see, these were private consultants from the private sector, not unionized employees from the public sector, so really, what's the matter if the project goes nine years over the time it was supposed to be completed and increases from the original $63 million pricetag to somewhere over $700 million dollars?

So what if the consultants working on CityTime extended the project by years in order to steal $600 million dollars?

So what if the company hired to work on the technology project stole $400 million and had no other major clients (in fact, probably wouldn't have existed if not for the CityTime money)?

So what?

In the words of another great manager of government projects, former Secretary of Defense Donald Rumsfeld, "Shit happens!"

Ah, but can you imagine if the $600 million dollars had been stolen by unionized and public employees?

Oy vey, Bloomberg would have been talking all the day long about how crooked the city employees are, what a disgrace the unions are, how everybody involved needs to go to jail, yadda yadda unions suck yadda...

Same goes for what the editorial boards at the tabloids - the Times, the Murdoch Street Journal, the Post and the News.

They NEVER would let this theft - the worst EVER committed against the City of New York - pass with nary a bad word about the crooks, the companies themselves that enabled this thievery or the system that so was so lacking in oversight that the crooks oversaw themselves.

And yet, because these are private consultants working for private companies, well, what can we do about it?

Shit happens, you know?

The double standard applied to this crime is emblematic of our times (as I noted in this earlier post here.)

But $600 million stolen dollars is STILL $600 million stolen dollars.

So here is what ought to happen in this case:

The mayor ought to be arrested himself for criminal negligence in this matter.

Certainly he ought to be called to account and made to publicly state how it was that the worst fraud in the history of New York City was committed on his watch and continued for years after a whistleblower alerted the city to the matter.

And he ought to NOT be allowed to lay off thousands of teachers and close senior centers and firehouses in order to save a few hundred million when he has not only allowed $600 million to be stolen by the private consultants but plans to spend another $900 million on private consultants and tech spending for the NYCDOE next year, a bonanza of corruption and fraud that should not be allowed to go forward without significant scrutiny by outside entities independent of the mayor.

The Mayor of Accountability needs to to be held accountable himself for the corruption in the CityTime case, as well as the DOE corruption that has already seen one outside consultant arrested for stealing $3.6 million and a top DOE official resign because the company she was overseeing was stealing money from the DOE (even as she was sleeping with one of the owners.)

And these are just the crimes that have been revealed so far under Bloomberg's watch.

Remember, Bloomberg doesn't have to give a lot of details about how he spends money in capital projects, so who knows how much money the crooked consultants are getting away with in the no-bid contracts they've been handed by Bloomberg.

It is time for Bloomberg to go.

Time to go, old man.

Bermuda is calling.

And so is Sing Sing.

Enough is enough.