Moskowitz Refuses To Give Back The Blood Money

From the Daily News:

Lawmakers slammed Success Academy charter boss Eva Moskowitz Wednesday for accepting an $8.5 million donation from controversial hedge fund manager John Paulson.

Paulson recently bought $120 million of Puerto Rico's debt and has developed a luxury retreat for wealthy Americans fleeing rising taxes in the U.S.

His critics say he is exploiting the island's recent economic troubles.

"You should not be living and making a profit off the bones of Puerto Rico," said New York State Sen. Gustavo Rivera. "This is blood money."

"It's important Eva Moskowitz stand up and say we don't take dirty money," said City Councilmember Antonio Reynoso.

More from Reynoso:

“Tell me who your friends are and I’ll tell you who you are,” Mr. Reynoso said, quoting a popular Spanish proverb. “Right now, the message Eva Moskowitz is sending to us and the diaspora of Puerto Rico is that her friends are false, and they take advantage of the terrible financial policies in Puerto Rico that have crippled the residents and the citizens of Puerto Rico.”

Moskowitz's reply?

But Moskowitz dismissed the criticism, saying: "Success Academy is proud to accept money from John Paulson."

Hey, what's a little blood money when it will buy some extra "Test Prep Pampers" for the kids to wear during the school day?

City Teachers Had Better Start Asking Some Hard Questions About Their Pension Fund Before It's Too Late

Guest Post By Harris Lirtzman, former Director of Risk Management for the New York City Retirement Systems in the NYC Comptroller's Office from 1996-2002 and former Deputy State Comptroller for Administration from 2003-2007.

During the last few weeks, there’s been a lot of news about the way that the City invests the money that backs your retirement benefit and none of it is good.

There are few things less interesting to read about than the condition of your pension fund system.  But, other than the financial condition of the City that prints your paycheck and the insurance company that provides your medical coverage, there is nothing more important.

Two weeks ago, the City Comptroller released a report that contained information that didn’t surprise anyone who follows these things closely but which should scare the bejesus out of any active or retired New York City school teacher.  According to an article in the New York Times, “The Lenape tribe got a better deal on the sale of Manhattan island than New York City’s pension funds have been getting from Wall Street.” 

Turns out that the trustees of the City pension funds, including your fund, the Teachers’ Retirement System of New York City, have been investing the money that backs your pension in ways that have given almost all of the market’s gains for the last ten years right back to the Wall Street firms they hire to do the job as big fat fees

Surprised?  I didn’t think so.

Wall Street has spent the last twenty years convincing public pension fund trustees, like the ones who run TRS, that only a company like Goldman Sachs or JP Morgan Chase is smart enough to know how to invest your retirement money.  Our trustees bought this story lock, stock and barrel.  We all know how well Wall Street has looked after the rest of us the last ten years.  Wall Street knows a sucker when it meets one and our pension trustees have been suckered, good.

This stuff is a little complicated but hang with me for a minute or two:

• Over the last 10 years, the return on very basic investments like stocks and bonds—more than 80% of the City’s pension portfolio—has exceeded expectations by more than $2 billion, despite the financial crisis of 2008 and the recession that followed.
• But nearly all that extra gain—about 97% of it—has been eaten up by Wall Street management fees, leaving only $40 million behind for the benefit of City retirees.
• Around 20% of the City’s pension funds is invested in complicated and expensive things called “alternative investments,” such as real estate and hedge funds.  The City began to invest in these investments in 2000, just at the moment when they began to do significantly worse than other parts of the market.
• The combination of the poor underperformance of these alternative investments and the huge fees that Wall Street firms charge to manage them for the City cost the pension funds—your pension funds—more than $2.5 billion since the end of 2004.

According to a New York Times editorial, “Even non-experts can grasp a primal personal-finance principle: buy low-cost funds linked to the overall performance of the stock market, be patient and don’t try to outsmart the market or pay someone an arm and a leg to do it for you. That a succession of fund trustees would never have thought of this before and found ways to reduce the damage done by excessive fees, is incredible.”

So let’s ask some of our trustees—members of the UFT who sit on the TRS board—what they think about all of this.  The UFT has three representatives on the TRS board of trustees: Mel Aaronson and Sandra March, who’ve been members for more than 20 years, and Thomas Brown.  Rank-and-file teachers elect these members to the board in some election process you probably never knew about or can remember.

Michael Mulgrew, president of the UFT, said that “he was happy that his union’s pension fund, TRS, had been performing well.  But he said the fees paid to some managers were ‘ridiculous’ and should be renegotiated if those managers are retained.  Education’s always being put under reform; maybe some of these financial practices should be put under reform as well.”

Ya think?

Teachers in New York City: According to an independent industry analysis, TRS now has money in it equal to around 58% of the future pension benefits that it must pay to current and retired teachers over the next 30 years.  As a comparison, the New York State Teachers Retirement System—which covers teachers who work in schools outside of the City—has around 96% of the money in it required to pay teacher pensions in the rest of New York State.  That means that your retirement benefit is only 61% as secure as the retirement benefit of a teacher who works outside of New York City.

Teachers in New York City:  The City TRS had a total investment return of 17.6% in 2014.  As a comparison, the State Teachers System had a total investment return of 18.2% in 2014—your retirement fund did 3.3% worse than did the retirement fund for teachers in the rest of the state.
Teachers in New York City: In 2014, the cost to run the City pension fund, including administrative expenses and fees paid to Wall Street firms, was almost twice the cost it took to run the State Teachers System. 

The UFT trustees sitting on the board of the TRS—the trustees your union nominated and that you elected—are guilty of gross negligence and of “investing-while-stupid.”

Teachers of New York City, if you don’t want to eat cat food when you retire start asking Michael Mulgrew, Mel Aaronson and Sandy March some hard questions about how they manage your pension fund.  If you make a big enough ruckus now there is still time to protect your pensions.  If you wait much longer I guarantee you that it will be too late.

NYSED Employee Indicted For Stealing $2.5 Million

Been saying for a while now that the NYSED is rife for investigation:

"Attorney General Eric T. Schneiderman today announced the indictment of Keisha Relf Davis, an employee of the New York State Department of Education, and an accomplice for stealing over $2.5 million from the state by diverting funds to NYC-area driving schools for services that were never rendered. As alleged, Davis received bribes in the form of regular cash payments for her role in the scheme. Together, Davis and Steven Washington, the schools’ program director, have been charged today with 19 felony counts including Grand Larceny and Bribery and face up to 25 years in state prison."

“Today’s indictment sends a clear message: no one is above the law and there must be one set of rules for everyone,” said Attorney General Schneiderman. “Taking advantage of a government job to steal millions of dollars from New York taxpayers is a shameful violation of the public’s trust. My office must and will remain vigilant for such blatant acts of fraud.”

“These criminal actions are reprehensible and demand severe penalties,” said Kevin Smith, New York State Education Department Deputy Commissioner. “The employees of the Office of Adult Career and Continuing Education Services (ACCES) work toward the education and employment needs of New York State’s disabled adults. The actions of this one counselor exploited New York’s most vulnerable citizens for personal gain. When Education Department internal controls uncovered this criminal activity an immediate referral was made to the Attorney General for prosecution. Agency protocols will be tightened further to ensure that such criminality cannot again stand in the way of our mission to provide individuals with disabilities every opportunity for employment, economic self-sufficiency and independence.”

Davis was a vocational counselor for DOE’s Office of Adult Career and Continuation Education Services’ (ACCES) Vocational Rehabilitation program, which offers state-funded access to services like driver education to New Yorkers with qualifying disabilities and functional limitations. The investigation, which was conducted by the Attorney General’s Public Integrity Bureau, revealed that Davis allegedly worked in concert with Washington, the program director of Americana Commercial Driving School, in Manhattan, and Roadway Driving School, in the Bronx. (The owners of those two schools, Juani Ortiz and Juan Cabrera, respectively, pleaded guilty last month in connection with this scheme.)

According to the indictment unsealed today in Bronx County Court, Washington charged non-disabled customers $300 to $500 cash and required a copy of their Social Security card in order to receive driving lessons. He then provided the students’ information and cash payments – which constituted an ongoing bribery scheme – directly to Davis, who created, submitted and approved falsified documents indicating that the students received their training through the ACCES program. (The students were not aware that ACCES services were being applied for and approved in their names.)

As a result, the driving schools received almost $5,000 in reimbursement from the state for each of the roughly 540 students for whom Davis submitted ACCES paperwork. As part of the alleged scheme, Davis would keep the cash payments, Washington was paid 12% of each reimbursement and the schools’ owners pocketed the rest.

The indictment charges Keisha Relf Davis and Washington with one count of Grand Larceny in the First Degree (a Class B felony); one count of Grand Larceny in the Second Degree (a Class C felony); four counts of Falsifying Business Records in the First Degree (Class E felonies); and four counts of Offering a False Instrument for Filing in the First Degree (Class E felonies). The indictment charges Davis individually with two counts of Bribe Receiving in the Second Degree (a Class C felony), four counts of Forgery in the Second Degree (Class D felonies) and one count of Defrauding the Government (a Class E felony); it charges Washington individually with two counts of Bribery in the Second Degree (a Class C felony). The top count of the indictment carries a mandatory prison term, with a maximum sentence of 8 1/3 to 25 years. 

Somehow the former NYSED Commissioner, David Steiner, avoided indictment for taking bribes from Pearson in the form of overseas trips.

Still wondering how that happened.

Guess whether you get indicted or not depends upon whether you're stealing for yourself or taking bribes to help a well-connected multinational steal millions from taxpayers via no-bid contracts.

Another Banskter/Wall Street Mess

Gee, this story doesn't sound familiar at all:

Rodney Durham stopped working in 1991, declared bankruptcy and lives on Social Security. Nonetheless, Wells Fargo lent him $15,197 to buy a used Mitsubishi sedan.

“I am not sure how I got the loan,” Mr. Durham, age 60, said.

Mr. Durham’s application said that he made $35,000 as a technician at Lourdes Hospital in Binghamton, N.Y., according to a copy of the loan document. But he says he told the dealer he hadn’t worked at the hospital for more than three decades. Now, after months of Wells Fargo pressing him over missed payments, the bank has repossessed his car.

This is the face of the new subprime boom. Mr. Durham is one of millions of Americans with shoddy credit who are easily obtaining auto loans from used-car dealers, including some who fabricate or ignore borrowers’ abilities to repay. The loans often come with terms that take advantage of the most desperate, least financially sophisticated customers. The surge in lending and the lack of caution resemble the frenzied subprime mortgage market before its implosion set off the 2008 financial crisis.

Auto loans to people with tarnished credit have risen more than 130 percent in the five years since the immediate aftermath of the financial crisis, with roughly one in four new auto loans last year going to borrowers considered subprime — people with credit scores at or below 640.

The explosive growth is being driven by some of the same dynamics that were at work in subprime mortgages. A wave of money is pouring into subprime autos, as the high rates and steady profits of the loans attract investors. Just as Wall Street stoked the boom in mortgages, some of the nation’s biggest banks and private equity firms are feeding the growth in subprime auto loans by investing in lenders and making money available for loans.

And, like subprime mortgages before the financial crisis, many subprime auto loans are bundled into complex bonds and sold as securities by banks to insurance companies, mutual funds and public pension funds — a process that creates ever-greater demand for loans.

I'm sure this will all end well - just the way it all ended so well for the subprime mortgage wave and the investors who bought those subprime mortgages bundled into bonds and securities hawked by Wall Street.

KIPP Plans To Keep Padded Cell To Punish Students

Yesterday the Daily News reported a KIPP school in NYC uses a padded cell for "time outs" for children who act out in school.

One child was so distraught by the experience that an ambulance was called.

There has been much outrage about the KIPP padded cell story, but the DN reports today that KIPP plans to keep the practice going:

The tot cell stays.

Officials at an uptown New York charter school on Wednesday refused to back down from their controversial use of a padded cell to confine problem students after a Daily News investigation exposed the practice Tuesday.

Two young boys, 5 and 7, were repeatedly detained in the tiny, so-called “calm-down room” at KIPP Star Washington Heights Elementary School for acting up. The parents of both kids recently removed their boys from the school, saying they suffered panic attacks from the experience.

Despite opposition from angry parents, charter school officials said Wednesday they would still put uncontrollable students into the converted closet.

“We will review all situations on a case-by-case basis and continue to obtain prior parental approval if the use of the calm-down room becomes necessary to protect the safety of a child,” KIPP NYC Superintendent Josh Zoia told the Daily News.
In an open letter to parents posted on the school’s website, Zoia said “only a small handful of students have used the calm-down room and only in emergency situations.”

But the parents of the two boys placed there say the practice should end.

“It’s not working,” said Teneka Hall, 28, a full-time Washington Heights mom whose son, Xavier, was rushed to the hospital after he had a panic attack and wet himself while in the room. “It’s hurting the kids.”

Hurting the kids has always been the point at a "No Excuses!" charter school like KIPP where the entire structure of the school is built around breaking the will of the children, beating them into submission with rules, regulations and punishment, and finally remaking them into the compliant little "scholars" the KIPPsters want.

The padded cell for time outs fits right in with the KIPP philosophy of beat 'em til they're compliant.

No wonder they refuse to get rid of it.