Support For Marriage Discrimination Amendment In The House Collapses

Three years ago, the proposed marriage discrimination amendment easily passed the House of Representatives on a bipartisan, 70-26 vote. A survey of House members reported in the Star this evening now shows an equal number of members planning to vote for and against HJR-3 and more than a dozen votes short of the majority required for its passage. The Star poll of lawmakers shows 38 plan to vote for it, while 38 plan to vote against it. Thirteen lawmakers told the Star they are undecided, 11 of which are Republicans, and eleven members refused to comment. More than a third of the House members who voted for the amendment three years ago now plan to vote against it, including several Republicans. Not a single member has switched from opposing to supporting the amendment.

Indiana Lobby Protection Commission Hiding Data From The Public

Once upon a time, the Indiana Lobby Registration Protection Commission provided real-time data on its website about which individuals, organizations and businesses were registered to lobby the legislature at any given time, including all compensated lobbyists hired to represent those interests and the subject matter on which they were lobbying. Of course, once upon a time the ILRC was under the control of the Indiana Secretary of State until corrupt lobbyists and lawmakers became concerned that the office was getting too serious about enforcing Indiana's lobby registration and reporting laws, which were already among the weakest in the country. The law was changed to put it under the control of the legislative leaders so the fox could guard the chickens.

If you want to learn anything about who is lobbying whom on what this session, you will find nothing on the ILRC's website other than data from previous years. The most current data is dated July 3, 2013. Gift reports haven't been updated since 2012. This is done intentionally to keep the general public in the dark about what is happening at the State House. If this data had been provided to the public in real time, we wouldn't have had to wait for a report in the IBJ that pay-to-play contractor Ersal Ozdemir had hired a team of lobbyists months ago to lobby state lawmakers this session to subsidize the construction of an $87 million soccer stadium he plans to build for his new professional soccer team, Indy Eleven. [Note: Ozdemir's number one fan is his next door neighbor in a tony Carmel neighborhood, IBJ publisher Mickey Maurer]

Indiana's lobby registration and reporting laws are a joke. Essentially, lobbyists can put down on the forms anything they want without fear of any consequences for lying on the forms, particularly about gifts they provide lawmakers. Most dishonest lobbyists don't fully disclose the extent of the gifts they give to lawmakers, who have a gentleman's agreement with corrupt lawmakers not to disclose them so the lawmaker can avoid reporting them on their financial disclosure forms as well. A few years ago, I uncovered credible evidence that Advance America's Eric Miller was not properly disclosing his lobbying activities on the organization's reports filed with the ILRC. My evidence was bolstered by admissions Miller had made during a recorded interview with a former Star reporter, Brendan O'Shaughnessy, who interviewed Miller about the findings of my investigation of his organization. Miller, of course, is at the forefront of current legislative efforts to place the marriage discrimination amendment, HJR-3, on the state's ballot this year for consideration by voters.

I later filed a complaint against Miller with the ILRC. After several months passed and I heard nothing, I contacted the then-executive director Sarah Nagy and inquired about the status of my complaint. She told me that it couldn't be acted upon because I had only filed one copy, not the five copies that were required, even though there was no such requirement noted at the time to file a complaint. After I provided the additional copies, Nagy told me that the commission met behind closed doors to discuss it at its next regularly-scheduled meeting and informed me that unless I furnished the tape recording O'Shaughnessy had made of his interview with Miller, the ILRC could not act on my complaint. When I contacted O'Shaughnessy, he told me that he destroyed the tape despite me telling him how valuable the statements made on it were to prove Miller's wrongdoing. Inexplicably, O'Shaughnessy had been ordered off the investigative story by his editor, Dennis Ryerson. When I contacted Ryerson, he confirmed the tape had been destroyed and that the newspaper would not participate in providing any evidence to the ILRC against Miller. When I informed Nagy that the Star had destroyed O'Shaughnessy's recorded interview with Miller, I received the following response from her:

The full Commission has reviewed your complaint, along with your supporting materials. There is insufficient showing on your part to merit further investigation. Should you have additional and verifiable evidence, you may re-submit your complaint. At this time, the matter is closed.

It was bad enough that the Commission refused to act on the credible documentary evidence I provided but absolutely shocking that the state's supposed newspaper of record would actually destroy evidence that could be used to prove Miller's violation of the state's lobbying law. A few years later, the ILRC fired Nagy after she had haggled with lobbyists for months over how to interpret a new ethics law the legislature passed in 2010, which accomplished very little other than window dressing.  The law lowered the threshold at which lobbyists are required to report their spending on lawmakers, from $100 to $50, and banned them from taking legislators on out-of-state junkets, both of which unscrupulous lobbyists and lawmakers have no problem skirting. The Attorney Disciplinary Commission later initiated a complaint against Nagy after some of her clients complained that she took money from them for work she never performed, primarily post-conviction relief petitions for criminal defendants. The Supreme Court agreed to a voluntary suspension of her law license in 2012 after Nagy blamed her inaction on client files due to a medical disability.

If you take a look at the people appointed to serve on the commission overseeing the ILRC, it's not surprising that the agency is so ineffective at regulating and enforcing the lobby registration and reporting laws. Current members include two former lawmakers, Sue Scholer and Joe Micon, both from Lafayette, Jan Abbs, a former attorney for the Indiana Senate now working as a corporate attorney in Muncie, and Evansville attorney Terry White. The current part-time executive director of the ILRC is Charles Harris, a former staff attorney for the legislature who was responsible for drafting tax legislation. He left the legislature to accept a job at Ivy Tech as a Vice President of Development and now has a private law practice, in addition to working as the ILRC's part-time director. The commission has a budget of about $280,000 annually for 2 full-time employees and one part-time employee. So if you're not happy about Eric Miller's current actions regarding the advocacy of HJR-3 at the State House, blame the ILRC and the Indianapolis Star.

Below are links to my original research on the lobbying activities of Advance America and Eric Miller:

Advance America's Lobbying Reports Belie The Extent Of Its Lobbying Activities
Advance America's Tax Returns Misleading And Deceptive
Miller's Self-Dealing At Advance America Escalates
Miller And Advance America Abuse Non-Profit Status
Miller Enriched By Self-Dealing At Advance America
Miller Helping Miller
Miller Gloats Over Defeat Of Lobbying Reform
More Miller Self-Dealing To Report
Legality of Advance America's Payment To Miller's Law Firm Questioned
Miller Turns To Pulliam For Help
Miller Speaks Out On Election And His Future, Avoids Accountability

The Indy Chamber of Anti-Commerce Wants Suburban Taxpayers To Bail Out City Of Indianapolis

No legitimate business owner would pay membership to belong to the organization called the Greater Indianapolis Chamber of Commerce. It exists solely for the benefit of a few corrupt businesses that use government as a tool for self-enrichment at the expense of all the rest of us; it could give a damn about rank-and-file business owners and taxpayers. More importantly, it is now an extension of the municipal city government since it merged with Develop Indy under one umbrella organization that is heavily funded with city taxpayer dollars. Against that backdrop, it comes as no surprise that this anti-business, anti-taxpayer organization is proposing a commuter tax on suburban taxpayers to funnel more money into the most corrupt, mismanaged municipal government in the state of Indiana to further enrich their self-dealing business interests. The group's head, Mike Huber, who lacks any basic understanding of what it takes to run a business because he's been on the government payroll virtually his entire adult life, tells the IBJ what a wonderful concept a commuter tax is, an additional income tax of up to one-quarter percent on suburban workers who commute to Marion County:

This is one of the most significant, if not the most significant, fiscal issues facing Indianapolis' ability to invest in its amenities, and therefore, is a serious nine-county issue," said Huber, a former deputy mayor under Mayor Greg Ballard.  

For this press release masquerading as a news story, the IBJ drags out the usual suspects to concur in Huber's view. The multi-millionaire businessman Jeff Smulyan of Emmis Communications claims it's a "fairness issue" that he feels strongly about. "You can't be a suburb of nothing," he says. The reporter would lead us to believe that Mayor Ballard hasn't decided where he stands on the issue, but it quotes his chief of staff, Ryan Vaughn, as saying, "We absolutely believe there needs to be a discussion about it." Of course, Vaughn answers to Barnes & Thornburg's Bob Grand, not Mayor Ballard, who handed control of city hall to Grand and his law firm the day he was sworn into office. Westfield Mayor Andy Cook, another fake Republican mayor, says he believes that "we need to spread some of the costs Marion County is facing to the suburbs," Cook said. All of these sorry characters are also supporting state legislative efforts to raise everyone's local income taxes to fund a mass transit boondoggle to stretch Indianapolis' IndyGO system into the suburban counties.

Instead of blaming people who flee Marion County to live in the suburban counties for Indianapolis' fiscal woes, why don't they do some introspective thinking about what it is they are doing wrong in the first place that makes people choose to live beyond the borders of Indianapolis?. Clearly, consuming a disproportionate share of the available tax dollars to fund world-class sports facilities and luxury hotels and luxury housing projects for pay-to-play contractors has done little to stem the general trend of people with means gravitating towards the suburban counties.  Notice that Huber's concern is focused on the city's ability to fund "amenities," not basic city services. By all accounts, there has been no shortage of funds when it comes to funding whatever luxury amenities the downtown mafia envisions; it's funding of basic city services and our schools that always comes up short. Every time our taxes are raised under the guise of paying for basic city services, the powers that be play shell games with the additional revenues that prevent the added tax burden from being allocated to the priorities sold to the public in the first place to gain approval of tax increases. Fellow blogger Fred McCarthy has the right idea about this bad notion:

Various over-sold and over-used property tax schemes have put municipal functions in financial need.  Now we have a proposal to exacerbate the problem by increasing income taxes without ever looking over the shoulder to check where current revenues are used - or abused. 

For one who spent a lifetime career with a variety of business associations, it is a tragic reversal to see one of the largest of such organizations support new taxation without a single suggestion that the need for a serious review of current spending policies should come first.

President Reagan was surely correct when he said the closest we’ll ever come to perpetual motion is the initiation (and funding) of another government program

Ozdemir Trying To Force Taxpayers To Pay For Downtown Stadium For His Soccer Team

The IBJ is reporting that Ersal Ozdemir has hired State House lobbyists to lobby Indiana state lawmakers to create a state funding mechanism for an $87 million soccer stadium he wants to build for his new professional soccer team, Indy Eleven, at an undisclosed location in downtown Indianapolis. According to the report, Ozdemir claims without substantiation that his professional soccer team will generate at least $8 million annually in tax revenues, and that he plans to ask state lawmakers to allow his professional sports franchise to capture up to $5 million annually for stadium costs. “We’re just asking for the money we’re going to create,” Ozdemir said.

Ozdemir wants his organization to be allowed to capture admissions take revenues he anticipates that his team will generate from ticket sales, as well as a portion of state sales and income tax revenues from the downtown Professional Sports Development Area, which was created to allow the Capital Improvement Board to capture revenues to pay the operating and maintenance expenses on Lucas Oil Stadium, none of which are paid by Colts' team owner Jim Irsay. The CIB has also been subsidizing Herb Simon's Indiana Pacers to the tune of at least $10 million a year for the past four years, which like the Colts, pay absolutely no rent for using a sports facility built with taxpayer dollars.

According to the IBJ, former Indiana GOP Chairman Murray Clark, is heading up a team of lobbyists hired by Ozdemir this session in an effort to convince lawmakers to enact legislation authorizing the public subsidy for Indy Eleven's proposed stadium. The team plans to play at IUPUI's Carroll Stadium, which holds up to 11,000 until a new stadium is built, which would hold up to 18,500 fans.

Ozdemir, a Turkish immigrant, has experienced a meteoric rise in his profile as a construction and real estate developer over the past decade that has coincided with large campaign contributions he has doled out to the politicians. Mayor Greg Ballard, one of the largest recipients of campaign contributions from Ozdemir, handed one of his businesses $6.5 million in taxpayer cash to build a mixed retail/parking garage in Broad Ripple after Ozdemir hired Ballard's former chief of staff, Paul Okeson, as a high-paid executive. Ballard also initially appointed Okeson to serve on the Capital Improvement Board that overseas the downtown sports facilities, where he briefly served as the CIB's treasurer. Okeson left the CIB after Ozdemir submitted a proposal to manage the CIB's facilities during a period of time that it considered outsourcing that work.

The CIB, which got a big taxpayer bailout a few years ago after the CIB cooked its books to make it appear that it was insolvent, that included new taxes and state subsidies, is now sitting on more than a $70 million cash surplus while the city of Indianapolis pleads poverty in paying for basic city services. Ballard at that time appointed attorney/lobbyist Bob Grand to head up the Capital Improvement Board despite the fact that his law firm represented Simon family interests, including the Indiana Pacers. Grand brokered the state bailout plan that resulted in tens of millions of dollars in new subsidies flowing to his law firm's client.

Did Marion's Mayor Wayne Seybold Gamble The City's And His Future On A Ponzi Schemer?

Larry Polhill (Left) with Gov. Mitch Daniels and Mayor Wayne Seybold

Marion Mayor Wayne Seybold, along with Gov. Mitch Daniels and other state and local economic development leaders, stood shoulder to shoulder with a San Bernardino, California businessman, Larry Polhill, in December, 2012 to announce economic development incentives to lure Cafe' Valley, a Phoenix-based baked goods supplier, to build a $48 million facility at the site of the former Thomson plant in Marion to anchor its eastern U.S. operations. The terms of local economic development incentives were not made known at that time, but Gov. Daniels pledged $5.8 million in conditional tax credits on behalf of the Indiana Economic Development Corporation based on the company's investment plans and more than 100 new jobs the company promised to create when the facility opened in the spring of 2014 and at least 400 jobs by 2018. The new jobs will pay only about $12 an hour. Seybold told the Chronicle Tribune that he was very excited about what he described as a "sweet deal" for the city and a project that Café Valley's Polhill described as being "well underway.":

 “We’re excited that they’re taking one of the most blighted areas in the city and really enhancing it,” he said.

City officials hope the project could be the catalyst for further development at the former television and electronics factory. With one notable exception, it has been largely empty since it was closed in 2004.

Café Valley plans to demolish part of the building’s southwest portion, near the corner of South Adams and 38th streets, ultimately utilizing one-third of the 60-acre property. The exact configuration is still being determined, as is the final cost.

Larry Polhill, Café Valley principal partner and board of directors member, said the company was “well underway” with designs for the new facility and securing food processing equipment.

He said the company hoped to have its financials finalized by early next year in order to break ground by March 2013.

“We’re on a very tight timeline,” he said.

Polhill said the company hoped to receive New Markets Tax Credits from the federal government in order to secure financing for the project. If they do not receive them, it could derail the project.

These credits incentivize investors who build in low-income communities and are allocated once per year.

“Hopefully there will be some new allocation after the first of the year,” Polhill said.

What neither Mayor Seybold nor Gov. Daniels mentioned to the public was that Café Valley's Polhill, an officer and one of the company's three directors, was embroiled in a bankruptcy of his San Bernardino-based private equity real estate firm, American Pacific Financial Corp., in a Las Vegas federal bankruptcy court and an investigation by the Securities & Exchange Commission looking into allegations that he had defrauded nearly 500 investors out of $160 million through a Ponzi-like scheme that closely resembled the one run by Indianapolis' Tim Durham through his Ohio-based Fair Finance Company. Concerns raised by a member of Marion's common council were brushed aside months later when a complex local TIF financing deal that puts Marion taxpayers on the hook for tens of million of dollars raised questions about Polhill's bankrupt private equity firm and an ongoing SEC investigation. As Councilwoman Joselyn Whitticker expressed her concerns according to the council's minutes from a special meeting of the council on February 25, 2013:

There is not a person in this room, nor on this Council, who does not believe in the growth of the City of Marion and they want it to prosper, but, based on some things that have happened in the immediate past and some things that have been put with the Café Valley deal, it puts us in limbo. And based on some information she has regarding one of the principals, she has deep concerns and those deep concerns regard the whole issue of a primary principal who has been repeatedly and is, at this point, in the SEC and it is on the grounds of fraudulent misrepresentation and omitting of facts and that’s Mr. Larry Polhill. This is public knowledge and this came from the SEC. She also has concerns because with somebody and that case is ongoing.

Whitticker was expressing doubts about a plan by the financially-pressed city to provide $4.2 million to Café Valley to acquire the Thomson property and perform demolition work, and to issue two separate bond issues totaling up to $26.5 million for distinct purposes. An initial Series A bond issue in the amount of $14.5 million was described to council members as the "meat" of the deal. The first bond issue included the $4.2 million to allow Marion's Growth Council to purchase the property, $5 million for Café Valley for site preparation, $2 million to refinance old debt and the balance for a built-in reserve fund and fees associated with the bond issue.

In 2012, the city backed a $2 million loan for Earthbound Recreational Vehicles with county economic development income tax (EDIT) revenues. Earthbound Recreational Vehicles closed down a short time later, leaving taxpayers holding the bag to repay the $2 million loan. The city's financial advisers insisted that the old debt needed to be refinanced with the new debt. Council members were told that taxes generated from the new facility would be recycled to pay off the newly-issued bond debt.

City officials agreed to move forward with the issuance of the Series A bonds payable over 25 years without knowing whether Café Valley would succeed in obtaining the additional funding it needed for the project, which it intended to obtain from New Markets Tax Credits made available through the federal government as part of President Obama's economic stimulus plan. A second Series B bond issue of up to $12 million was described as the "carrot" to entice Café Valley to remain and expand in Marion after the City acquired the needed land and expended millions for the new improvements. Polhill attempted to explain to council members how his company would obtain financing using federal tax credits at its February 19, 2013 meeting in a way only a snake oil salesman could do it:

Larry Polhill told the Council he heard a lot of definitions of things today that have been a lot different than reality, he believes. Federal tax credits are, in fact, tax credits, not tax dollars. They are federal dollars which are credits against somebody’s income taxes. Not Café Valley. Somebody in the country will buy those tax credits and that generates cash for them to bring to this community. President Obama signed $7,000,000,000 of additional federal tax credits just in January which is why this project is going forward. They can bring $40,000,000, maybe $50,000,000 of those tax credits to Marion or they could end up somewhere else. Those credits, that $7,000,000,000, there are people standing in line for it. We’re at the head of the line at this point and they want to bring those credits to Marion. And this is not a handout by any stretch. People have asked, well (inaudible), and he’s really getting frustrated answering answering those questions so he apologizes for his tone but, you know, this is a $50,000,000 project. It’s a $25,000,000 bank loan. It’s personally guaranteed by him and the other principals of the company so he thinks they’ve got a lot of skin in this game. They backstopped the city’s tax bonds to the extent that the city is signing on that. He doesn’t know what more they expect them to do, Polhill said. Now they got a $25,000,000 bank loan to start with, they have state tax credits for $5,000,000, they got the TIF contribution for (inaudible) $5,000,000, which is, by the way, limited at $10,000,000. So if the city’s counsel is good and sells those credits for more, that’s a benefit to the city. They don’t get another penny over that amount.

In other words, it's just free money waiting to be claimed by someone, even business owners under investigation by the SEC for defrauding innocent investors. Council members were equally confused about the lease on the property the city was acquiring on Café Valley's behalf as it was the source of the company's personal financing for the project. Polhill told them that city taxpayers aren't paying for the lease; rather, this was just a mechanism "in order to get the bonds." Nobody seemed to understand or be able to explain the lease of the property to Café Valley, let alone who was actually going to wind up owning the property after all was done and said so the council turned to its TIF lawyer on the project, Barnes & Thornburg's Bruce Donaldson, to explain:

Bruce Donaldson with Barnes & Thornburg told the Council essentially the company is going to own the site. It’s going to lease it to the Growth Council and then the Growth Council is going to lease it right back to them. Each side is $1.00 and then the Redevelopment Commission joins the lease for purposes of making the payments on the bonds. And so the lease is a mechanism to get the Redevelopment Commission’s TIF, which is the primary source, the project TIF, the primary source of repaying the bonds into the transaction. So the lease is really just a, like Larry said, a mechanical, it’s an accommodation by the company to allow them to have an asset to lease, to access the Redevelopment Commission TIF money, Donaldson said. Thompson asked, is this a lease to own? Donaldson replied, the company will own the project and it will continue to own it throughout the lease and then when the lease is over, the company will own the project. Thompson stated, okay, not that he really understands but he appreciates what he’s said because it’s helped him a little bit.

So did you get that since the council member who asked the question obviously didn't understand after Donaldson got through explaining it? The use of the term "lease" is all smoke and mirrors to put the taxpayers on the hook for the debt incurred to build Polhill's $50 million facility as a TIF-funded project. Polhill's Café Valley will own the property from the get-go, throughout the term of the 25-year lease and after the bonds are retired, assuming the company is still around at that point.

Seybold still insisted the complicated financing arrangement did not represent any long-term debt for the city. “That doesn’t become debt of the city,” Seybold told the Chronicle-Tribune. “It’s not like we go out and take a bond to build something. This is all based on the property tax and the ability of the company to pay their property taxes. …“If the project were not to happen, then the company would cover those bond payments until someone else came along. As long as the taxes are paid, then the bond gets paid. If they don’t get paid — if there’s a shortfall — then the company covers that.”

Needless to say, the city went forward with the Café Valley project and broke ground on the project on March 31, 2013, even after the Chronicle-Tribune brought to Seybold's attention the fact that the company had previously purchased land in Spartanburg, South Carolina where it had planned to base its eastern U.S. operations until the company scrapped the project in 2011. Polhill told the newspaper that the company had purchased a former pie plant in Spartanburg and discussed economic development incentives with officials there but that it was a lower priority than a new facility it built in Phoenix that year. Marion's development director, Darren Reese, dismissed the concern: "People buy and sell facilities all the time." The company is still projecting an opening date this spring and has hired its first employees to assist in the hiring of full-time workers for the facility. See a timeline of events for the project as detailed quite nicely by Frank Stahl at Indiana Policy Review here.

Meanwhile, the SEC concludes its investigation of Polhill's American Pacific Financial Corp. last September and concludes that "he falsely presented investment opportunities that were safe and reliable based on collateral that didn’t always exist, and his fraudulent misrepresentations left investors with nothing to show for their investments when APFC declared bankruptcy.” The SEC found that Polhill had issued promissory notes to nearly 500 investors under the false premise that they were secured by specific properties or other collateral. The notes offered investors interest payments of between five and seventeen percent per year. According to the SEC, Polhill had used money raised from investors to buy and sell real estate, and to acquire distressed assets, including Café Valley with the company he started back in the last 1970s. Polhill's company consistently paid interest on the investors' notes until it ceased making payments in 2008. By 2010, investors suspicions grew when APFC filed for Chapter 11 bankruptcy protection in the U.S. bankruptcy court in Las Vegas, listing debts of $152 million owed to nearly 500 creditors.

According to the San Bernardino Sun, the court-appointed bankruptcy trustee, Christopher Barclay, described what he found as a "number of failed investments and poor management decisions" made by APFC's president, Larry Polhill. Barclay described Polhill's management of the company as "Byzantine." Based on his recommendation, the bankruptcy was converted to a Chapter 7 liquidation proceeding "in an effort to find the most beneficial resolution for the company's many creditors." Polhill told the newspaper that he had made a settlement offer to the investors, but the investors complained that it was only for a fraction of what they had invested with APFC. "My parents lost their life savings," said Derick, who did not want his last name used for fear of retaliation against his parents. "They're in their 80s now and they can't really recover that money. They lost $100,000." At the urging of defrauded investors, State Rep. Joe Baca (D-San Bernardino) asked the district attorney, Michael Ramos, to investigate the investors' allegations of fraud. The DA's office told them their best recourse was to pursue a remedy in civil court. Ramos' office later told investors it was "looking into the matter and to be patient," but nothing ever became of that investigation.

The SEC's investigation found that, although some of Polhill's businesses were successful, most had failed, a fact never disclosed to APFC's investors. In the complaint announcing a settlement reached with Polhill under which he agreed to be barred from acting as the officer or director of any public company, the SEC laid out the fraud claims against Polhill and the securities law violations that he committed:

The SEC alleges that Polhill made several material misrepresentations to investors. Specifically, he told investors that the notes were secured by collateral when no such security interest existed. He failed to disclose that the collateral securing some investors' notes already had been pledged to other lenders. Polhill represented that he would notify investors if their collateral went into default when that was often not the case. For instance, one investor's note specifically stated it was secured by property located in Hesperia, Calif., that was owned by APFC and pledged as collateral. However, APFC sold the collateral in 2004, and neither Polhill nor APFC informed the investor that his collateral had been sold and there was no longer any asset securing the note.

The SEC's complaint charges Polhill with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) and Rule 10b-5 of the Securities Exchange Act. Polhill has consented to the entry of an order that permanently enjoins him from violating these laws and permanently bars him from acting as an officer or director of any public company.

Yeah, Polhill's scheme to defraud investors was remarkably similar to the Ponzi scheme Tim Durham ran with his Fair Finance Company that defrauded small Ohio investors out of more  than $200 million. The SEC's complaint against Polhill specifically references his use of Café Valley notes that he personally signed to defraud investors in the scheme:

As another example, over 80 investors held notes from APFC note offerings from 2004 to 2008. These notes specifically stated that the notes were secured by accounts receivable owed by Cafe Valley, a privately-held bakery, and the notes claimed this account receivable had been pledged as collateral for the notes. However, Polhill and APFC never disclosed that this collateral was already subject to a senior bank loan.

Even worse, the complaint says that Polhill continued issuing promissory notes listing as collateral for businesses that had already failed without notice to the investors. When one of Polhill's cousins who had invested in APFC learned of the fraud, Polhill substituted his collateral for him without notifying the other investors. The complaint alleged that Polhill soliticited investors across the country but never registered any of the securities he offered to investors in violation of federal securities law. Polhill also offered investors the opportunity to invest in limited partnership, which were also not registered, and comingled funds raised from those investments with APFC's funds in the form of loans to APFC that were used to pay interest on the uncollateralized promissory notes. The SEC's complaint stated, in part:

Polhill and APFC did not maintain the collateral pledged as security for the notes throughout their terms, and often sold or lost the original pledged collateral without notifying investors.  APFC and Polhill also did not notify investors when collateral went into default and did not offer investors the options of (i) reducing their loans; (ii) accepting substitute security; or (iii) placing their funds in trust pending their approval of a replacement security as required under the terms of the promissory note. Finally, APFC and Polhill did not hold the pledged collateral in safekeeping and available for inspection by the investors upon request.

In fact, APFC and Polhill had no procedures or safeguards in place to track the status of investor collateral and ensure that appropriate notice was being provided in the event of default.

Furthermore, even when Polhill was fully aware that collateral securing investor notes was impaired, he did not tell investors. For example, in one instance, Polhill's cousin held one of the APFC notes. When his cousin learned that the collateral was no longer available, the cousin asked Polhill for substitute collateral. Polhill agreed, and substituted new collateral to secure the note. However, Polhill did not inform any of the other investors holding that note that the collateral was impaired . . .

A website titled, APFC Ponzi Scheme, was created to expose Polhill as a "criminal" and a pathological liar." It should be noted that no criminal charges have been filed to date against Polhill. Information gleaned from the Internet indicates that Polhill grew up in Illinois where he first went into business in the late 1960s with his former high school business teacher, Bill Guymon, who still works for him, as a partner in buying a gas station in South Beloit, Illinois. Polhill, who describes himself as a "professional opportunist," later moved to California and began raising money for a number of business ventures, including a space launch provider, a health club, several Illinois food manufacturers, an Internet service provider, a trucking company and various real estate investments. Kelly Space & Technology in San Bernardino is one of Polhill's proudest investments. A news article from The Press-Enterprise in San Bernardino from several years ago describes a civil lawsuit that a 39-year old man, Gregory A. Letterly, filed against Polhill, a former family friend that he alleged had sexually molested him repeatedly when he was a pre-teen boy in the early 1970s during trips to the Salton Sea, Big Bear Lake and Lake Havasu. Polhill told The Press-Enterprise that he denied all of the allegations in Letterly's "unfounded" lawsuit at the time.

Earlier this year, Advance Indiana noted that Marion's financial woes were becoming a financial albatross for Seybold's statewide campaign this year for the Republican nomination for State Treasurer, which will be decided by delegates to the Republican State Convention in Fort Wayne in June. Seybold recently asked the city council for authorization to borrow $12.8 million in tax anticipation notes after the city began the calendar year with only $320,000 in its general fund. A recent State Board of Accounts audit criticized the city for having a "lack of financial controls" that led to recurring problems with  "overdrawn cash balances, bank account reconciliation concerns and questions about funds use" according to the Chronicle-Tribune. Seybold was also recently sued in Grant County Superior Court for an unpaid personal credit card bill in the amount of $5,357 owed on an American Express credit card issued by Centurion Bank. When Seybold announced his campaign last June, he said he had the support of more than 50 state lawmakers, municipal officeholders, and national and state and community leaders.

Witness Describes Shooting At Purdue To Exponent

A student tells the Purdue Exponent that he was standing in his lab classroom in the Electrical Engineering Building on Purdue's West Lafayette campus when 23-year old Cody Cousins, a teaching assistant in the engineering department, shot another teaching assistant, 21-year old Andrew Boldt, at point blank range multiple times with a gun only feet away from him. Here's how Andrew Pawling described the shooting:

Andrew Pawling was simply attending his second lab class of the semester on Tuesday when he heard “pop” sounds in his classroom just a few feet behind where he was standing.

“As I was turning around I heard another pop, then I saw my (teaching assistant) fall to the floor. The guy got on top of him and then shot him in the face, once or twice and maybe two more times,” Pawling, a junior in the College of Engineering, said.

He witnessed Andrew Boldt, his teaching assistant for ECE 362, being killed “point blank” on Tuesday afternoon by an unrecognizable male who had entered the classroom through the one and only door. The suspect was not a student in the class that had about 10 to 15 students in it at the time, according to Pawling, and the shooter stood between many of the students and their only escape out.

“(Andrew) was obviously trying to stop him. I don’t think he really had any chance to really fight back much,” Pawling said. “I wish I could have helped him, but by the time I realized what was happening he already got shot in the face two times and there wasn’t really anything I could do.”

Pawling told the Exponent that he was close to the door and turned and ran away, warning others as he fled the building that there had been a shooting. Pawling relayed to a police officer outside the building what he witnessed. Another female witness told the Exponent that she came upon Cousins shortly after the shooting kneeling outside the building with his hands on his head near the bus stop without a coat in the extreme cold weather conditions. She proceeded to ask him if he was okay. “He said something like, ‘Stay away,’ ” Liu said. “I stood aside and waited for awhile and I noticed that there was blood on his hands (and) on the shoes. So I thought he was injured and waiting for some professional help ... Then I saw the police cars coming and I heard the sirens and the police came and arrested him.”   “He looked so calm ... He kind of looked sad,” Liu said.

It remains a mystery what, if any relationship, there was between Boldt and Cousins. Both worked as teaching assistants for Professor Stephen Meyer, who has declined media requests to discuss the shooting. Meyer sent out an e-mail shortly after the shooting requesting that any witnesses to the shooting contact police immediately, a message heeded by Pawling, who had returned to his apartment after telling police about the shooting. He later contacted police and went in for questioning according to the Exponent.

UPDATE: Now the story is that Cousins not only shot Boldt, including two shots at point blank range to the face after he fell to the ground, but he also stabbed him before leaving the gun and knife laying on the floor in the lab classroom as multiple witnesses looked on. The picture of a calm, well-lied student is changing as well. A teaching assistant, Ashley Eidsmore, describes Cousins as an "all-around rude individual." Professor Thomas Talavage said he was "intense and aggressive" about his projects and "didn't like to be told he was wrong." From the Journal & Courier's report on Cousins' arraignment today:

Court documents allege that officers who entered the building saw bloody footprints in the area of Room 067. Inside the classroom, police discovered the body of 21-year-old Andrew Boldt.

Boldt had been shot and stabbed, police said. Officers recovered a handgun, a knife and several spent shell casings near his body.

Witnesses in the room reportedly said they saw Cousins stab and shoot Boldt. Surveillance footage also showed Cousins in the building.

Information about the type of handgun used and the number of shots fired was not included in the affidavit.

House Elections Committee Votes 9-3 Along Party Lines To Advance Marriage Discrimination Amendment To Full House

House Speaker Brian Bosma got his wish. All nine Republican members of the House Elections Committee, including at least one closeted homosexual, voted for HJR-3, the proposed constitutional amendment that would enshrine the state's statutory prohibition on the legal recognition of marriages between persons of the same sex in the constitution's bill of rights. The committee's three Democratic members present for the vote all voted against the amendment. How some of these people can look themselves in the mirror is beyond me.

Indianapolis Bar Association Survey Results For Judicial Candidates

	Number of Replies	Yes	No	Approval %		Number of Replies	Yes	No	Approval %
Democrat					Republican
Kimberly J. Brown (i)	230	23	207	10.0%	Cynthia J. Ayers (i)	390	321	69	82.3%
Karen Celestino-Horseman (c)	115	61	54	53.0%	Rom Byron (c)	103	79	24	76.7%
Annie Christ-Garcia (i)	224	201	23	89.7%	David J. Certo (i)	298	269	29	90.3%
Barbara Cook-Crawford (i)	216	184	32	85.2%	Patrick "PJ" Dietrick (c)	104	94	10	90.4%
Angela Dow Davis (c)	150	79	71	52.7%	Kurt M. Eisgruber (i)	204	195	9	95.6%
David J. Dreyer (i)	433	388	45	89.6%	Therese A. Hannah (c)	66	62	4	93.9%
Shatrese M. Flowers (c)	210	129	81	61.4%	Gary L. Miller (i)	379	312	67	82.3%
Mark A. Jones (c)	255	246	9	96.5%	Marilyn A. Moores (i)	217	168	49	77.4%
Christina R. Klineman (c)	163	146	17	89.6%	Timothy W. Oakes (i)	366	325	41	88.8%
Jonathan C. Little (c)	80	22	58	27.5%	Marc T. Rothenberg (i)	208	197	11	94.7%
Sheryl L. Lynch (c)	169	123	46	72.8%
James B. Osborn (i)	220	210	10	95.5%
Marcel A. Pratt, Jr. (c)	211	175	36	82.9%
Todd A. Woodmansee (c)	124	59	65	47.6%

Responses to this statement: I recommend (candidate name) for judicial office.

2014 Survey Group Statistics:
Total Number of Deliverable Emails: 4,377 (2012 total: 4,323)
Total Returned: 1,201(2012 total: 1,150)
Response Rate: 27.8% (2012 rate: 26.6%)Survey Group:
-Indianapolis Bar Association attorney members
-Marion County Bar Association attorney members
-Attorneys with the Marion County Prosecutor’s Office
-Attorneys with the Marion County Public Defender’s Office

The Indianapolis Bar Association has released the results of a survey it took of its membership concerning the candidates seeking election to the seats up for election on the Marion County Superior Court and the Circuit Court. Only about 27% of the 4,377 bar association members offered an opportunity to participate in the survey responded to it, which indicates utter apathy among most bar members towards the election of judges in Marion County. I always make it a point to respond to the survey. Typically, I don't pass judgment on many of the candidates because I lack any professional knowledge of their capabilities, particularly with respect to those who practice primarily in the criminal courts since I only practice in the civil courts.

Because so few attorneys participate in the survey, attorneys from the larger law firms have a disproportionate influence in the survey results because they go out of their way to encourage their attorneys to complete the survey in accordance with their desire to see their preferred candidates scored higher than other candidates. I'm a Republican and can't really quarrel with the survey results for the Republican candidates, all of whom received pretty high marks; however, the low rating given to one of the Democratic candidates, Karen Celestino-Horseman, is totally unfair. Even though I don't agree with Karen on very many political issues, she's a very hard-working, knowledgeable and experienced attorney who has earned better than the 53% favorable recommendation result she received in the survey. Clearly, this is a case where there is an organized effort on the part of certain attorneys to score her lowly in an effort to discredit her candidacy. Judge Kimberly Brown's 10% rating, the lowest in the survey, is understandable given her suspension as a judge as a result of a highly-publicized disciplinary complaint against her. I don't know enough about the other three Democrats receiving low ratings, Angela Davis (52%), Jonathan Little (27.5%) and Todd Woodmansee (47.6%), to characterize their survey results. I would note that Woodmansee does have one prior concluded disciplinary action against him and one that is currently pending, which may have affected his rating. I would add that the lowest rated candidates, other than Judge Brown, were all non-incumbents.

Because of the byzantine system unique to Marion County, the process of electing judges begins and ends with the slating conventions held by the respective major political parties. Each party nominates half of the number of superior court judge positions to be filled in the general election, which means that whoever wins the primary automatically wins the general election. It's nearly impossible to win the primary election unless you're first slated at the party's slating convention. Only rarely is a candidate successful in bypassing the slating process and winning one of the coveted spots in the primary election. Judge Kimberly Brown, a Democrat, was one such candidate, and she's been effectively taken out of the race due to her suspension from the bench. Typically, candidates who fail to win at slating will drop out of the primary election. Judicial candidates are compelled to pay up to $24,000 to be slated by their respective candidates, which seems a bit unseemly to most legal ethicists but it's the system that has been in place only in Marion County for decades now.

UPDATE: I've been advised that Todd Woodmansee dropped out of the race.

Purdue Professors Under Fire For Joking With Students About Shooting During Lockdown

As campus-wide texts alerted students on Purdue's West Lafayette campus that the school was on lockdown due to a shooting in the campus' Electrical Engineering Building, some students complained that their professors treated the incident as a joking matter. A YouTube clip uploaded by Anthony Casazza, recorded comments Professor Rebecca Trax, a continuous term lecturer at the Krannert School of Management, made to her students after one of the students in her classroom alerted her to a text message students had just received alerting them to a shooting on campus. Trax's reaction suggests that she wasn't receiving the same text message notification students were receiving during her class, presumably because she wasn't holding her cell phone during class.

Trax responded, "Is it asking us to do anything?" Trax then joked about catching the shooter in her lecture hall that holds approximately 300 students according to Casazza. She joked about the involvement of Purdue's engineering students and said she would have her teaching assistant tackle anyone who came in the lecture hall's door. "Okay, you engineering students, what are they doing to you?" the accounting professor rhetorically asked. "Okay, let's focus. I know this is kind of disruptive," she continued as some students can be heard laughing. "We cannot lock the doors due to fire marshal regulations," Trax told her students. According to Purdue Review, Trax was not the only professor dismissive of the text alerts sent campus-wide concerning yesterday's shooting. Read more here.

UPDATE: The Journal & Courier is reporting that police detained a Purdue Exponent student reporter and seized his camera while he was covering the shooting yesterday at the Electrical Engineering Building. Police claimed they seized the camera for potential evidence. The student reporter was held for questioning by police for nearly two hours. The student's camera equipment was later returned. The story notes that federal law prohibits the search or seizure “of any work product materials possessed by a person reasonably believed to have a purpose to disseminate to the public a newspaper” or a similar form of public communication. The Exponent has more:

Exponent photo editor Michael Takeda, a junior in the College of Technology, was slammed to the ground by the Purdue Police after being found in the Electrical Engineering Building taking photos. The area had not been closed off to the public at the time.

The officers confiscated Takeda’s camera and photos, detained and questioned his whereabouts within the building, which was then on lockdown after being held by the police for roughly three hours.

“I understand the severity of this event, and I respect that. But as a working journalist, I wish I had my rights not violated (and my rights) enforced,” Takeda said.

Takeda was released from the police. However, it was only after Frank LoMonte, executive director of the Student Press Law Center, prodded the University that Takeda’s belongings were bequeathed to him.

“They were very cooperative, and they recognized right away that this was a serious situation that required their immediate attention,” LoMonte said.

LoMonte said, though the University was helpful in releasing Takeda’s belongings, it was just the police’s instinct to retrieve his belongings, despite the possible infringement of a federal law.

Here's another YouTube clip taken in a lecture hall in the same building where the shooting occurred where initial reaction upon hearing and seeing police outside the building was laughed off until someone enters the room a few minutes later and asks the students to evacuate the room.

It looks like there's a lot of disbelief among the friends and acquaintances of the shooting suspect, Cody Cousins. The Journal & Courier reports that he once worked as a student reporter for the Exponent in 2011.

The news of Cody Cousins' alleged involvement in Tuesday afternoon's fatal shooting at Purdue University came as a shock to Thomas Gräber, a friend and former classmate.

The two met in 2009 when they sat next to each other in a philosophy course at Purdue, said Gräber, who is currently enrolled at Vincennes University.

The picture Gräber described of Cousins — a man he said enjoyed playing basketball, shopping, going to the bar and writing — is anything but the description of a killer.

"It's obvious he is intellectual, well-spoken, courteous and respectable," Gräber said. "He was one of those guys who you could sit down and have real good heart-to-hearts with.

"I'm in shock. I'm confused. I don't want to believe that this actually has happened. … Cody is a very nonviolent person, politically and personally. He would never tell a story about getting in a fight."

Cousins, of Centerville, Ohio, was a teacher's assistant for professor David Meyer, which seems to be the lead connection between Cousins and the man he is accused of killing — Andrew Boldt, 21, who also was a teacher's assistant for Meyer.

Springboro Schools Superintendent Todd Petrey said Cousins graduated from Springboro High School in 2008.

During his time as a student, Petrey said Cousins didn't have disciplinary problems and excelled academically. He pointed out that Cousins was especially strong in the area of technology.

"Our prayers and thoughts go out to the Purdue victim's family and Cody's family," Petrey said.

The Purdue Exponent confirmed that Cousins worked as a staff reporter for one semester in 2011. No one in the newsroom was able to give any insight into Cousins' personality, history or hobbies . . .