HHC's Medicaid Bilking Scheme With ASC More Sinister Than Earlier Believed

Details of previously-undisclosed put options with James Burkhart, the former CEO of American Senior Communities now under investigation by the Justice Department, reported in the latest edition of the IBJ reveal an even more sinister fraud on taxpayers than earlier believed was occurring. The IBJ apparently believes its readers are really stupid because the manner in which these details are reported makes it sound like a deal that could put Burkhart back in ownership and control of most of its nursing homes is presented as a sound and prudent arrangement.

As a refresher, the Marion Co. Health & Hospital Corporation formed a partnership with American Senior Communities to bilk the federal government out of Medicaid dollars. Under the scheme, referred to as upper payment limits, HHC pretends it owns nursing homes that are in fact owned and operated by American Senior Communities. The nursing homes operated under this fictional ownership arrangement receive $71.54 per patient per day from Medicaid more than the federal program pays to other for-profit and non-profit nursing homes because HHC also operates a county hospital in Indianapolis. Despite the fact its state charter limits its operations to Marion County, HHC fictionally owns about 78 nursing homes scattered across the state. From 2003 to 2014, HHC passed on to American Senior Communities $452 million as its 50% share in form of management and rental fees.

With the arrival of the Affordable Care Act and other changes in the health care market, HHC anticipated that the UPL program it has relied upon to build its $750 million Eskenazi Hospital would soon be coming to an end. That spawned the idea of "put options" which would allow American Senior Communities or an alternative party to acquire the fictional interest HHC has in the nursing homes. While HHC is selling its fictional interest, it's actually making a large payment to the holder of the put option who exercises the right to acquire its fictional interest. In this case, the holders of the put options are ASC and Burkhart. ASC holds put options on 13 nursing homes, while Burkhart holds put options on 63 of the nursing homes. Unknown to the public until now, HHC paid Burkhart's Crusader Healthcare Services a $4 million kickback to just to sign put option agreements with HHC covering 63 of its nursing homes. Burkhart will be paid tens of millions more by HHC if the put options are exercised by HHC. One put option agreement alone requires HHC to pay $16.5 million to Burkhart and his business partner in Crusader Healthcare Services, Robert D. New. New is a partner in the put options for 45 nursing homes, while Burkhart alone owns put options for 18 nursing homes.

. . .  None of the agreements require Crusader to pay anything to acquire ownership of the facilities. In fact, the contracts promise to give Crusader all accounts receivable as well as title to the nursing homes’ physical assets—but not its real estate.

The terms were made so attractive to Crusader because the most likely scenario under which HHC would transfer ownership would be if the nursing homes became ineligible for extra federal funding that is now enriching the entire nursing home industry in Indiana. Without that extra funding, some homes might close or deteriorate in quality, disrupting care for their elderly residents.

The put option contracts are publicly available because HHC, which also operates Eskenazi Health hospital, is supported by the taxpayers of Marion County.

HHC cannot exercise its nursing home put options until September 2017, at the earliest. And right now, HHC has no plans to do so.

“Under the circumstances as they exist today, the prospect that we would exercise those puts is extremely low,” Gutwein said.

The put options require that American Senior remain manager of the nursing homes at the time ownership transfers from HHC to Crusader. But it appears that Crusader could replace American Senior as manager after that point.

A spokeswoman for American Senior declined to discuss whether the company or its owners worried about being replaced as manager if Burkhart’s Crusader became owner of the nursing homes.

“We believe it is unwise to address speculative questions; subsequently we have no comment,” American Senior spokeswoman Sherri Davies wrote in an email . . .

Naturally, the IBJ only spoke to interested persons about these less than arms length transactions designed to defraud taxpayers out of tens of million more in tax dollars. The IBJ's J.K. Wall only spoke to Barnes & Thornburg attorneys. One is Larry Mackey, who is representing Burkhart in the criminal investigation despite the fact that his law firm also supposedly represents the interests of HHC, a fact not mentioned by the IBJ story. “For Jim Burkhart the motivation was genuine,” Mackey wrote in an email. “As an owner of facilities, he could ensure that resident care would not suffer if HHC transitioned out of the business and he would continue his growth in an industry he cares deeply about.” Mackey said the Jackson family, which owns ASC, wanted to get out of the nursing home business and the other parties trusted him. HHC's Matt Gutwein concurred. ASC has already sold its real estate interest in 17 of its nursing homes to Maryland-based Omega for $203 million. Wall turned to Barnes & Thornburg's Mike Grubbs, who helped broker most of the agreements in Indiana between nursing homes and county hospitals, for further help in writing his story. Grubbs tells Wall that the UPL program will come to an end if nursing homes are forced into a managed care arrangement under that will do away with fee-for-service for the care provided to nursing home patients.

Obviously, Barnes & Thornburg is not a disinterested party. How it can simultaneously represent the interests of Burkhart in the federal criminal probe and HHC is anyone's guess. I've also previously pointed out a fact that seems of no interest to our local news media regarding the conflict of one of HHC's board members. American Senior Communities and HHC were both represented by Krieg DeVault until a few years ago. Krieg's managing partner, Deborah Daniels, sister of former Gov. Mitch Daniels, sits on HHC's board. She believes she has no conflict of interest in serving on HHC's board despite the fact that her law firm has performed legal work for ASC for many years. She apparently believes she has no conflict of interest because she has never personally performed any legal work for ASC, although the company has been a major client of the law firm she manages. It's sort of like how Barnes & Thornburg's Bob Grand saw no conflict of interest in him serving as president of the Capital Improvement Board, which negotiated one-sided deals with the Simon-owned Indiana Pacers, while his law firm represented the Simon family interests.

I don't know which is more disturbing: the fact that such corrupt deals and arrangements are permitted to occur; or the fact that our local news media is incapable of reporting on them for the fraud on taxpayers they are. It's just further confirmation of my belief that only people who lie, cheat and steal get ahead in this country. The rest of us just get eaten and spit out for the pleasure of the corrupt elites. Wall's story gives no indication the kickbacks Burkhardt is allegedly under investigation for receiving has anything to do with the sweetheart put options he negotiated with HHC. I can't imagine what he could have been doing that was any more corrupt. If there were any justice in this world, this entire team of fraudsters would be rounded up to spend the rest of their lives in prison, but you know that will never happen.

House Ethics Committee Chairman On Ozdemir's Payroll, Supports Publicly-Financed Soccer Stadium

State Rep. Greg Steuerwald (R-Avon) chairs the House Ethics Committee and has stood front and center in the efforts to tighten up ethics rules governing state lawmakers' conduct following last year's public uproar over former State Rep. Eric Turner's lobbying efforts on behalf of legislation impacting his family's nursing home business. A key change in a new ethics code covering House members' conduct requires them not to vote on or sponsor legislation in which they have a personal financial interest, along with not carrying out any public or private advocacy on such issues.

"That is a very high standard," Steuerwald said in commenting on the new ethics code. "It began as a judicial standard and has slowly incorporated itself for lawyers and now we have put that standard here for the House members." It's also a standard Steuerwald failed to satisfy when he supported and voted on legislation that would have provided public financing of an $87 million soccer stadium for Ersal Ozdemir's Indy Eleven minor league professional soccer team.

No other state lawmaker knows the deepest and darkest secrets of the shadowy Turkish immigrant better than Rep. Steuerwald, who also serves as Assistant Caucus Leader for the House Republicans. Ozdemir and a former business partner, Jason Ellis, have been embroiled in contentious litigation since 2012 in which they've traded serious accusations of misconduct against each other. Ozdemir fired first with the filing of a lawsuit in Marion County against Ozdemir by Barnes & Thornburg's Edward Smid on June 5, 2012, which sought protection against Ellis disclosing confidential business information. The case was moved to Hendricks County the following month on the motion of Ellis' attorney, Scott Treadway, based upon improper venue, where it now sits in the courtroom of Superior Court Judge Mark Smith.

Curiously, after the case was moved to Hendricks County, Ozdemir added Steuerwald, who maintains a full-time law practice in Danville, Indiana, to his well-seasoned Barnes & Thornburg-led litigation team. Steuerwald's appearance dated August 17, 2012 lists him as representing Ozdemir and a string of his companies, including Keystone Construction Corp., Keystone Group, LLC, Keystone NCS, LLC, Keystone SBC, LLC and Keystone WFLS, LLC.

Separately, Ellis filed a lawsuit against Ozdemir in Hamilton County the following year, which wound up in Superior Court Magistrate David Najjar's coutroom as a special judge after a change of judge. Judge Najjar entered an order staying those proceedings on December 6, 2013 pending resolution of the Hendricks County litigation, and he also signed an order on February 4, 2014 sealing some of those court records on the motion of Ellis' attorney.

In Ellis' lawsuit, a copy of which the IBJ posted online here, he accused Ozdemir of defrauding Ellis out of his 20% ownership interest in Ozdemir's construction and real estate development business. In his complaint charging Ozdemir with breach of fiduciary duty, conversion, fraud, breach of contract and securities fraud, Ellis claimed Ozdemir had cut him out as a partner and shareholder of his business, created inaccurate accounting records, commingled assets and over-billed clients and customers, among other things. Ellis' lawsuit also accused Ozdemir of billing Keystone for lavish personal expenditures, including a multi-million dollar mansion he built for himself in a gated Carmel community. [Read more at the IBJ's website  on Ozdemir's "No-holds-barred tactics" that lifted him as a construction and real estate developer.]

According to Hendricks County court records, a bench trial scheduled to begin in that contentious litigation on April 13, 2015 was canceled per an order issued by Judge Smith on February 11, 2015. To say this case has been protracted by numerous discovery disputes between the parties is being generous. Protective orders, contempt proceedings and efforts to keep court records sealed have been par for the course. Ozdemir's attorneys were fighting to quash Ellis' attorneys' attempt to depose Ozdemir as late as last year more than two years after the litigation commenced, which Judge Smith granted. Throughout it all, Steuerwald was immersed in this ongoing saga playing out in a Hendricks County courtroom as a part of Ozdemir's litigation team.

All members of the Indiana General Assembly are required to annually file a Statement of Economic Interest. Steuerwald's most recent statement on file with the House Clerk lists his law firm where he's a partner, Steuerwald Hannon Zielinski & Witham, LLP, as his employer and sole business interest. His statement adds a disclaimer at the bottom of the form in which he states: "Pursuant to the Rules of Professional Conduct applicable to members of the Indiana State Bar Assoc. & Indiana Supreme Court, clients & related matters are confidential matters." Members of the public would have no way of knowing Rep. Steuerwald has been representing the person seeking the largest public subsidy before the legislature this year for years by reading his Statement of Economic Interest.

Fortunately, because court records are public, we can learn that Steuerwald is employed by Ersal Ozdemir in litigation critical to his ongoing, extensive construction and real estate development businesses. Yet he wasn't obliged under House rules to disclose that financial relationship he has with Ozdemir when he came before the House of Representatives with a team of powerful lobbyists to convince state lawmakers they should make Indiana taxpayers finance a new stadium for Ozdemir's Indy Eleven soccer team. Steuerwald was one of 58 House members who supported and voted in favor of SB 308 on its third reading passage on February 27, 2014, which included public financing for Ozdemir's $87 million stadium project. A copy of the roll call can be viewed here. The public financing of the stadium was stripped from SB 308 in conference committee before its final passage.

Ozdemir hired Joe Loftus, an attorney at the same law firm Ozdemir has hired along with Rep. Steuerwald to represent his interests in the litigation with his former business partner, to lobby the Indiana General Assembly to approve public funding for a new soccer stadium, along with Faeger Baker Daniels' Murray Clark and Ice Miller's Carl Drummer. Barnes & Thornburg also brought aboard last September as part of its lobbying team, Michael O'Brien, who serves as the Hendricks County Republican Party Chairman where Steuerwald's district is located. I'm sure that doesn't put any added pressure on a judge who must stand for election in a one party-ruled county like Hendricks County. Several attorneys at Barnes & Thornburg have been generous contributors to Steurerwald's campaign committee in the past, including Bob Grand and Bruce Donaldson.

It gets better. Steuerwald's amended Statement of Economic Interest states that his wife began work for Midwest Constructors, LLC in January of this year. According to Midwest Constructors' website, the firm has been or is currently involved in at least three projects involving Ozdemir's companies, including the controversial Broad Ripple Parking garage for which the City of Indianapolis gave $6.5 million in public funds to Ozdemir to build, the publicly-subsidized City Way project's Alexander Hotel on which Keystone Construction served as construction manager and Butler University's parking garage project that Ozdemir's Keystone Construction was awarded a contract to build. Midwest Constructors also participated in the J.W. Marriott publicly-financed hotel project and Lucas Oil Stadium, both of which are within the PSDA area which would be expanded to provide additional funding to the Capital Improvement Board for the Indy Eleven soccer stadium under HB 1273 as introduced. It was also recently awarded work on the $81 million Market Square Tower project that Indianapolis taxpayers are shelling out over $20 million in subsidies to see built. I'm sure Midwest Constructors' hiring of Steuerwald's wife is just a coincidence.

Will the State House press corp asked Rep. Steuerwald about his conflict of interest? Do you think Rep. Steuerwald will still be publicly supporting and voting in favor of HB 1273, the legislation Rep. Todd Huston (R-Fishers) re-introduced this year seeking again to force Indiana taxpayers to publicly-finance construction of Ozdemir's new soccer stadium? The House Ways & Means Committee has scheduled HB 1273 for a public hearing next Monday morning at 9:00 a.m. Stay tuned.

Ersal Ozdemir (Indianapolis Star/Danese Kenon Photo)

UPDATE: An observant reader points out to Advance Indiana that State Rep. Bill Fine (R-Highland) is Michael O'Brien's father-in-law. Fine is a freshman lawmaker this year. Additionally, O'Brien's spouse, Sarah Fine O'Brien, is a Pence appointee to the Indiana State Board of Education. She is a first-grade teacher at River Birch Elementary School in Avon.

Billboard Industry Has Purchased Indianapolis City-County Council

Fellow blogger Pat Andrews has done a great job sounding the alarm bells about the subterfuge the corrupt lobbyists for the billboard industry have been engaged in the backrooms with members of the Indianapolis City-County Council, whose votes are pretty easy to purchase if we're being honest. Apparently for all the lip service paid by many members of the council to the notion of "building better neighborhoods," nothing trumps a few expensive steak dinners at the Capitol Grille or St. Elmos, free Colts and Pacers tickets, topped off with very generous campaign contributions to finance their re-election campaigns next year.

For those of you unfamiliar with the current law, which was worked out under former Mayor Bart Peterson, digital billboards are not permitted in Indianapolis. The billboard industry has devoted tremendous legal resources to overturning that law unsuccessfully over the past decade. Some of you may recall how the industry tried to upend the law as Mayor Greg Ballard was coming into office in 2008 by hiring then-Marion Co. GOP Chairman Tom John to lobby the Ballard administration to prevent the removal of ten billboards owned by Lamar which the City had obtained legal authorization to have torn down. The billboard lobbyists even hired the City's former corporation counsel to work on their behalf. As public pressure mounted, Mayor Ballard blocked moves already underway within his new administration to acquiesce to Lamar's lobbying power.

Under current law, the Metropolitan Development Commission alone has jurisdiction to initiate changes in the City's zoning laws. The lobbyists have successfully worked in the backrooms to convince a bipartisan group of council members to initiate recommended changes to the City's zoning law to prod the MDC into adopting amendments to permit digital billboards. The proposed ordinance in front of the "council for hire" was written by Bose Public Affairs Group, which represents Lamar. Councilor Mary Moriarty-Adams (D) introduced Proposal No. 250 on behalf of Greg Hahn, the lead lobbyist at Bose Public Affairs Group, which is the same lobbying firm associated with the law firm where Democratic mayoral candidate Joe Hogsett is now a partner. The other major billboard company, Clear Channel Outdoor, Inc., is represented by Barnes & Thornburg's Bob Grand and all that that implies. If their proposal would become law, the existing billboard companies would conveniently hold a monopoly on digital billboards in Marion County.

I've posted compelling testimony provided to the Metropolitan & Economic Development Committee by Marjorie Kienle on behalf of Historic Urban Neighborhoods of Indianapolis ("HUNI"). She pretty much covers the universe of issues which should be foremost in the council members' minds if their votes hadn't been bought. There were two no votes cast by Vop Osili (D) and Jeff Miller (R); however, their comments made clear that they are on board with the concept in general. I learned many years ago when I worked for the Illinois legislature that among the sleaziest lobbyists in the hallways at the State House were the lobbyists for the billboard industry. Not much has changed after all these years. These people will do whatever it takes to get what they need, even if it means standing the process on its head. The council should be embarrassed by how it's being used by this industry, but it takes a lot to shame this council.

The Plot Against Public Education

Politico's Bob Herbert has a spot-on, lengthy analysis over at Politico titled, "The Plot Against Public Education: How Millionaires and Billionaires are Ruining Our Schools." This is a must read for anyone who wants to see how you're being fooled every day by the so-called education reform advocates who are more about profiteering at the expense of our public education system in this country.

Bill Gates had an idea. He was passionate about it, absolutely sure he had a winner. His idea? America’s high schools were too big . . .

That was Bill Gates’s grand idea. From 2000 to 2009, he spent $2 billion and disrupted 8 percent of the nation’s public high schools before acknowledging that his experiment was a flop. The size of a high school proved to have little or no effect on the achievement of its students. At the same time, fewer students made it more difficult to field athletic teams. Extracurricular activities withered. And the number of electives offered dwindled.

Gates said it himself in the fall of 2008, “Simply breaking up existing schools into smaller units often did not generate the gains we were hoping for.”

There was very little media coverage of this experiment gone terribly wrong. A billionaire had had an idea. Many thousands had danced to his tune. It hadn’t worked out. C’est la vie . . .

Corporate leaders, hedge fund managers and foundations with fabulous sums of money at their disposal lined up in support of charter schools, and politicians were quick to follow. They argued that charters would not only boost test scores and close achievement gaps but also make headway on the vexing problem of racial isolation in schools.

None of it was true. Charters never came close to living up to the hype. After several years of experimentation and the expenditure of billions of dollars, charter schools and their teachers proved, on the whole, to be no more effective than traditional schools. In many cases, the charters produced worse outcomes. And the levels of racial segregation and isolation in charter schools were often scandalous. While originally conceived a way for teachers to seek new ways to reach the kids who were having the most difficult time, the charter school system instead ended up leaving behind the most disadvantaged youngsters.

Sound a lot like what you've been hearing from the education profiteers here in Indiana? It gets better.

Few people would accuse  Gates of acting out of greed. For other school reformers, however, a huge financial return has been the primary motivation. While schools and individual districts were being starved of resources, the system itself was viewed as a cash cow by so-called education entrepreneurs determined to make a killing . . .

Think about the upcoming rollout of new national academic standards for public schools, he urged the crowd. If they’re as rigorous as advertised, a huge number of schools will suddenly look really bad, their students testing way behind in reading and math. They’ll want help, quick. And private, for-profit vendors selling lesson plans, educational software and student assessments will be right there to provide it.” . . .

The former Florida governor Jeb Bush was another prominent figure in the front ranks of the corporate push for public education dollars. He hosted an education conference in San Francisco in the fall of 2011 at which Murdoch was the keynote speaker. In the audience were corporate executives, supporters of market-oriented education and elected officials responsible for the laws and policies that regulate corporate access to public education dollars. Using his allies and contacts from his days in the Florida statehouse and his relationship with two former presidents, Bush was tireless in his promotion of the corporate education agenda. With Bob Wise, the former West Virginia governor, he started an organization called Digital Learning Now!, which took on the task of persuading state legislators to make it easier for companies to get public funding for virtual schools and for the installation of virtual classrooms in brick-and-mortar schools.

In June 2010 Bush gave the commencement speech to graduates of a huge, for-profit virtual school in Columbus, Ohio, called the Electronic Classroom of Tomorrow. Bush used the occasion to extol the virtues of online learning, but in fact the Electronic Classroom of Tomorrow was a particularly poor example. Mother Jones examined the school’s track record: “In 2010, barely half of its third graders scored proficient or better on state reading tests, and only 49 percent scored proficient in math, compared with state averages of 80 percent and 82 percent, respectively. ECOT’s graduation rate has never exceeded 40 percent.”The amount of money in play is breathtaking. And the fiascos it has wrought put a spotlight on America’s class divide and the damage that members of the elite, with their money and their power and their often misguided but unshakable belief in their talents and their virtue, are inflicting on the less financially fortunate.

Those who are genuinely interested in improving the quality of education for all American youngsters are faced with two fundamental questions: First, how long can school systems continue to pursue market-based reforms that have failed year after demoralizing year to improve the education of the nation’s most disadvantaged children? And second, why should a small group of America’s richest individuals, families, and foundations be allowed to exercise such overwhelming—and often such toxic—influence over the ways in which public school students are taught?

In case you haven't noticed what's happening in the IPS school board elections as of late, just follow the large sums of money suddenly flowing into the hands of the candidates backed by these corporate elites who are seeking to profiteer at the expense of public education. The out-of-state education profiteers are pouring money into the campaigns of their puppet school board candidates who now pretty much control the IPS board.

Mourdock Quits Before End Of Term

I think I've let it be known in the past just how little respect I have for public officials who quit the public office to which they were elected for selfish reasons as opposed to compelling personal reasons. State Treasurer Richard Mourdock is leaving office four months before the end of his four-year term supposedly so he can take advantage of a change in the law governing public employees retirement benefits. It's one thing if he had left the office to which he was elected because the voters had elected him to another office; it's quite another to quit your elected job just so you can draw a higher pension benefit after just shy of eight years as a state officeholder.

Gov. Mike Pence moved quickly to name Dan Huge to finish the remainder of Mourdock's term. Huge is the former CFO of the Capital Improvement Board and current chief operating officer of the Indiana Finance Authority. In a manner of speaking, he's a stooge for Barnes & Thornburg's Bob Grand and Brian Burdick, who in case you didn't know it are the people who are actually in charge of running the State Treasurer's Office. Most recently-elected State Treasurers were all under their thumb, with the exception of Joyce Brinkman. When Brinkman refused to take orders from Grand and Burdick, they saw to it that her butt was kicked to the curb and that she was permanently banished from Republican Party politics in this state. Grand and Burdick tried unsuccessfully to install their handpicked candidate, Marion Mayor Wayne Seybold, to the office but were thwarted by state GOP delegates when Seybold lost out to Mourdock staffer, Kelly Mitchell. It remains to be seen whether Mitchell can run the office herself if she wins in November, or whether she's been told in no uncertain terms who has to be in charge if she knows what's good for her political future.

I feel similarly about the decision of Gov. Mike Pence to name State Rep. Steve Braun (R-Zionsville) as the state's new director of the Department of Workforce Development. Braun is a candidate for re-election this November and, although Pence announced his appointment this week, he won't actually take office until after he wins re-election in his safely-Republican district. It's too late to name another Republican candidate to take his place on the ballot; therefore, he'll just pretend his running for re-election. Then the Republican precinct committeepersons will be called together to name his successor, who will have the privilege of serving a full two-year term without before ever having to face the voters. This practice is becoming way too common, allowing lawmakers to be chosen in backroom deals by political power brokers rather than the voters.

UPDATE: Kelly Mitchell released the following statement about being shocked and surprised about learning of Mourdock's resignation today. She says she told Pence not to appoint her to the office she is now seeking. Who does she think she's kidding? She was never offered the appointment. Pence is, after all, Bob Grand's stooge.

“I was shocked and surprised by the news of Treasurer Mourdock’s resignation today. Since I learned of this, people have approached me asking if I would be interested in being appointed by Governor Pence to finish the current term. I gave this serious thought. Because I care deeply about the office and state, the prospect of joining the office immediately and helping Hoosiers in that new role is exciting.

“However, for nearly a year, I have been making my case to voters that I have the experience and vision required to be voted the next State Treasurer. I’m confident I can earn their trust, so I have called Governor Pence and asked not to be considered to be appointed at this time.

“Given that the next 60 days are the most intense days on the campaign trail, my focus right now is to be sure that the voters of Indiana get to know me and my values, and that I work hard to earn their vote on Election Day. I look forward to continuing to share my vision for the office and earning your trust between now and November 4. I would be humbled to be elected your next Indiana State Treasurer and to begin my service to our great state then.”

Pence Keeps The Doors Revolving At FSSA

Surprise! He's back. I can't say that I'm surprised since I never thought Gov. Mike Pence cared much about ethics, but it's rather galling for him to name former FSSA Secretary Michael Gargano in a new deputy secretary role where he will be in charge of operations and the Healthy Indiana Plan. Just last month I wrote about Gargano going to work for an FSSA contractor awarded contracts during his previous tenure in top FSSA roles shortly after he departed the agency in January, 2013, apparently unaffected by the state's revolving door law. Prior to his last stint at FSSA, Gargano owned a consulting firm that not only provided consulting work for the agency but also provided consulting work for ACS, the controversial company awarded a contract worth hundreds of millions of dollars to manage welfare services for the agency. Pence named Carmel psychiatrist John Wernert as Secretary, replacing Gargano's successor, Debra Minott, who Pence fired last week after a little more than a year on the job. Pence isn't fooling anyone with Wernert's appointment. Everyone knows that Gargano will be the de facto head of the agency. Barnes & Thornburg's Bob Grand, ACS's attorney, wouldn't have it any other way, and we know that Gov. Pence does whatever he's ordered to do by Grand. Government in Indiana sure works to enrich Gargano and his wife, Ann Lathrop, who works for another state contractor, Crowe Horwath, and also once worked at ACS.

Kelly Mitchell Prevails On Third Ballot As GOP Nominee For State Treasurer

Kelly Mitchell entered the state treasurer's race as the least known and undisputed underdog among the three candidates seeking the Indiana GOP nomination for state treasurer. After months of mud-slinging between the two leading candidates, Marion Mayor Wayne Seybold, who had the backing of the party establishment, and Don Bates, who enjoyed significant support from Tea Party activists, both front-runners began to look unelectable to the party faithful in what should otherwise be an easy win for a statewide Republican candidate running for a down-the-ballot office. As Bates and Seybold tarnished one another's images, Mitchell appeared to grow on the party's rank-and-file as the safest choice.

Mitchell entered the race with the endorsement of her boss, State Treasurer Richard Mourdock, who many blamed for his own defeat in the 2012 Senate race against Democrat Joe Donnelly after resoundingly defeating six-term incumbent Sen. Richard Lugar in the Republican primary much to the chagrin of the party establishment. Mitchell has worked for the past several years in the state treasurer's office as the director of the local government investment pool. Unlike her boss, Mitchell was not linked to the Tea Party or the establishment for that matter, which worked to her advantage. Many rank-and-file delegates frown on being told by establishment folks like Bob Grand who they have to support for statewide office. Grand, who co-chaired Seybold's campaign, uses his extraordinary clout within the state party apparatus to direct millions of dollars in public funds to his law firm and even larger sums to the clients and political cronies his law firm represents, a fact that rubs many the wrong way for good reason. Grand's support of Seybold's candidacy may have had as much to do with his undoing as the perceived corruption and cronyism in Seybold's city administration that has dogged his campaign.

The first round of balloting proved how evenly divided state GOP delegates were. All three candidates received more than 30% of the vote on the first ballot with only 62 votes separating the first-place finisher, Seybold, and the third place finisher, Bates. But on the second ballot, support for Seybold and Bates hemorrhaged, while Mitchell surged into first place. Still, no candidate had reached the magical majority vote required to be nominated. By party rules, Bates was dropped from the third round of voting. Bates opted against endorsing either of his opponents, although it had become clear for all to see that Bates and his strongest supporters wanted nothing to do with Seybold. Mitchell easily won the third round of balloting by a margin of 860 to 497 over Seybold.

Mitchell's victory comes as a big disappointment to Indiana Democrats, who had hoped that the GOP would nominate either Seybold or Bates, both perceived as having enough personal foibles to make an otherwise unwinnable race within the party's reach. Democrats last week turned to a newly-arrived career politician from Illinois, Mike Boland, who had previously served as a state representative in Illinois for 16 years. Boland only moved to Indiana after losing a state senate race in the 2012 Illinois Democratic Party. This is the Democrats' worst nightmare. The GOP has nominated an all-female ticket. Mitchell joins Secretary of State Connie Lawson and State Auditor Suzanne Crouch, both of whom were unopposed, as the party's statewide candidates this year. Democrats have nominated Beth White for secretary of state. Mike Claytor, who recently left his retirement home in Florida and moved back to Indiana, is the Democrats' candidate for state auditor.

Perhaps the most absurd comment during the balloting came from the obnoxious, egomaniac radio talk show host, Abdul-Hakim Shabazz, who declared in a Twitter post, "The Indiana Tea Party is Dead!" following Bates' loss, which is a bit ironic given that he wooed Tea Party activists during his earlier radio career in Indiana after moving here from Illinois before he started accepting payola from party establishment folks to blather propaganda that contradicts his past musings. Shabazz also tried to seize on Richard Mourdock's comments to further marginalize and drive him out of the party. Shabazz couldn't explain why party delegates were so outraged by Mourdock's comments to delegates warning about our country's drift towards a Nazi-styled government that they nominated his employee and his personal choice to succeed him as state treasurer. Shabazz, by the way, still drives a car with an Illinois license plate after moving to the Hoosier State nearly a decade ago, a blatant violation of Indiana vehicle registration and tax laws. Emmis Communications must be really hard up for radio talent to hire an ass hat like Shabazz after he was fired from his last radio job at WXNT after one too many ethical lapses.

Former Family & Social Services Administration Head's New Job Raises More Revolving Door Questions

When Michael Gargano first joined the Family & Social Services Administration as a senior-level political appointee in the Secretary's office, he left behind a consulting firm he founded, Watertown Group, which had not only provided consulting work for FSSA but also ACS, the politically-connected IT company which would later become embroiled in a legal tug-of-war between ACS' former partner in the privatization of the agency's welfare services, IBM, after FSSA fired IBM and retained ACS alone to fulfill the contractual duties FSSA previously hired IBM to perform. The welfare privatization deal FSSA entered into with ACS was worth hundreds of millions of dollars to the firm.

Gargano left FSSA at the end of Mitch Daniels' term in office in January 2013 after Pence opted to name a new secretary to run the agency and just three months later joined another technology company that is under contract to perform services for the very agency he had administered. This blog raised concerns then about Gargano's prior consulting work before joining the agency, concerns that are renewed by his post-employment after leaving FSSA last year.

Gargano joined Indianapolis-based CSpring on April 15, 2013 according to an announcement released to the media as the company's managing director. According to the firm's website, Gargano has "overall responsibility for CSpring's business development and service delivery efforts . . . to ensure each aligns with CSpring's vision and growth strategy, while expanding the firm's client and project portfolio." The firm's website identifies two specific projects that it provides to Gargano's former employer. One project is described as providing enterprise architecture and engineering (EAe20X) for the agency. A second project is described as providing senior advisory and policy analysis services regarding the FSSA's Medicaid reporting to the agency's data manager and director of health informatics. The contract amount for the original multi-year contract from 2011through 2013 was $568,400 with an amendment valued at $128,470.

Indiana law imposes a one-year cooling off period that applies to former state employees under particular circumstances. As the former head of FSSA, Gargano was prohibited from accepting employment for a one-year period from the last day of his state employment from an employer with whom 1) he engaged in the negotiation or administration of a contract on behalf of a state agency and 2) was in a position to make a discretionary decision affecting the outcome of the negotiation or nature of the administration of the contract.

The state's cooling off law prohibited Gargano from accepting employment from an employer if the circumstances surrounding the hire suggest the employer’s purpose is to influence him in his official capacity as a state employee. Gargano would also be prohibited from lobbying the executive branch for his new employer during the one-year cooling off period.

As FSSA's former Secretary, Gargano may also be subject to the post-employment rule’s “particular matter” prohibition in his potential employment. This restriction prevents him from working on certain particular matters indefinitely if he personally and substantially participated in such things as a business transaction or a contract with his new employer. This latter prohibition extends to the life of the matter at issue.

The database of formal opinions issued by the Indiana State Ethics Commission does not include any opinions sought by Gargano after he left his state employment. A written advisory opinion issued by the Commission that a former appointee's new employment does not violate the cooling off and particular matters prohibitions is conclusive proof that the former employee is not in violation of the law.

By comparison, Gargano's successor, Anne Murphy, sought and obtained a formal advisory opinion from the Commission when she obtained employment as Vice President of Government Affairs for Community Health Network upon her departure from the agency. Gargano worked as chief of staff for Murphy prior to succeeding her as the agency head on November 5, 2010. Mitch Roob served as Gov. Daniels' first Secretary of FSSA before he stepped down in 2008. Roob had been heavily criticized for his big push to privatize the agency's welfare services, particularly since his former employer, ACS, became a major benefactor of those efforts. The fact that Gargano had also previously provided consulting services to ACS before joining the agency further heightened conflict of interest concerns.

More recently, the former head of FSSA's Division of Disability and Rehabilitative Services under Gargano obtained an advisory opinion from the Commission in December, 2012 seeking permission to leave his state employment and form a new consulting firm that would be employed as a subcontractor for Health Management Associates working on its contract with FSSA's Office of Medicaid Policy & Planning. The Commission approved the Director's post-employment work as a subcontractor of HMA based on his representations that he had not previously performed any work at the agency for OMPP and would screen himself off from performing any work for DDRS, the division in which he was formerly employed.

In June, 2012, another former FSSA employee received an advisory opinion that allowed her to perform work for a software consulting firm during the cooling off period. The former employee served in various capacities at the agency, including Deputy Director of the Division of Family Resources (“DFR”), Director of Aging, CFO, Appointing Authority for the DFR, and Chief of Staff. The Commission ruled that she could help her new employer respond to an RFP released by the agency during the cooling off period despite the fact that she had signed off on the prior contract issued to the current vendor for those same services.

A refresher on Gargano's incestuous ties: He's married to Ann Lathrop, the president of the Capital Improvement Board who works as a consultant for Crowe Horwath, which has a bunch of state and local government contracts. Lathrop and Mitch Roob cut their teeth in Indianapolis politics working for former Mayor Steve Goldsmith. Roob told people long before Daniels' election as governor that he would be named FSSA Secretary, and that he would privatize the agency's welfare services. ACS was awarded a similar contract in the state of Texas while Roob was still employed there. Roob kept his word and, to no one's surprise, his former employer was part of the team led by IBM that was awarded the contract to privatize the agency's welfare services. All three worked at one point or another for ACS. Goldsmith, working in concert with ACS's attorneys/lobbyists at Barnes & Thornburg, including Bob Grand, Joe Loftus and then-City-County Council President Ryan Vaughn, who doubled as a lobbyist for Barnes & Thornburg before becoming Mayor Ballard's chief of staff, engineered the 50-year privatization agreement for Indy's parking meter assets for ACS. Bob Grand, who previously served as President of the Capital Improvement Board, arranged for Lathrop's appointment to the CIB to ensure that the CIB would approve the more than $200 million in subsidies awarded to his law firm's client, the Indiana Pacers. It is rumored that Goldsmith, who has never been registered as a lobbyist with the City of Indianapolis despite all the time he spent on the 25th floor advising Ballard, received a $600,000 consulting fee for his role in getting the parking meter privatization deal awarded to ACS. Another former Goldsmith staffer, Skip Stitt, worked for ACS in Washington when Indy decided to privatize its parking meters. Stitt once employed Mike Huber, Ballard's former economic development deputy who ran the efforts inside the Ballard administration to privatize the parking meters, and who now runs the Indy Chamber. And of course, Gargano worked as a consultant for ACS before he went to work for FSSA. Can it get any more incestuous?

Zoeller Wants A "Soft Repeal" Of The 17th Amendment Allowing Direct Election Of U.S. Senators

Add this to the long list of disappointments I've had with Attorney General Greg Zoeller since I made the mistake of supporting him for the Republican nomination at the 2008 Indiana GOP convention. Zoeller is now supporting a "soft repeal" of the 17th Amendment to the U.S. Constitution, which took away the right of each of the 50 state legislatures to choose a state's U.S. Senators and gave that right to the voters of the 50 states. Zoeller is pissed off because his buddy Sen. Richard Lugar got dumped by Republican primary voters in the 2012 primary election after 36 years in the Senate so he now thinks only state lawmakers of the respective political parties should be allowed to nominate their respective candidates for U.S. Senate. He favors an outright repeal of the 17th Amendment but because his proposal won't require the difficult and cumbersome process of enacting a constitutional amendment, he supports the soft repeal route. From the Northwest Indiana Times' Dan Carden:

Hoosiers never again would vote in a primary election for U.S. Senate candidates if the decision were up to Indiana Attorney General Greg Zoeller.

Zoeller is among a growing number of state's rights conservatives who favor a so-called "soft repeal" of the 17th Amendment that would empower members of the General Assembly, instead of voters, to nominate each party's U.S. Senate candidates.

Voters still would have the final say on who represents Indiana in the Senate. But Zoeller, a Republican, believes giving the General Assembly's control of selecting candidates could revive the idea that U.S. senators are ambassadors of a state's government and not entirely free agents.

"If they had to come back ... and get renominated each six-year cycle, they'll be less likely to pass statutes that stuck it to states," Zoeller said. "Would we have an unfunded mandate if they had to come back and explain it to members of the Legislature?"

Speaking earlier this year to the Federalist Society of Indianapolis, an association of politically conservative lawyers and judges, Zoeller said the proper relationship between states and the federal government was "slaughtered" when the 17th Amendment, providing for popular election of U.S. senators, was ratified in 1913.

In the century since, the federal government has come to view states as entities it controls, instead of the co-equal sovereigns the framers of the Constitution intended, Zoeller said.

That relationship urgently needs to be rebalanced to bring an end to overreaching federal regulations and unconstitutional laws, and to cut down on the number of legal challenges, he said. Zoeller said he's felt obligated to file against the federal government in the past six years . . .

Only an elitist scumbag would support such a proposal to further erode the right of the people to choose their elected representatives. Primary voters in Indiana are already cut out of the process for choosing other statewide offices, including the office Zoeller holds, secretary of state, treasurer and state auditor, who are all chosen by a small group of delegates elected to the state convention. Over the years, interest in being a delegate has waned because most races are decided before delegates make it to the state convention so many are appointed by county chairmen rather than being elected by primary voters. That means that only guys like Bob Grand get to decide who holds statewide office in Indiana. One of the driving forces behind the enactment of the 17th Amendment was the increasing number of vote-buying scandals that surrounded Senate elections when they were decided by state lawmakers. America has already become an oligarchy for all practical purposes instead of the republic our founders intended when they crafted the U.S. Constitution so I suppose this is just one more nail in the coffin.

I'm still waiting for someone in the media to investigate the more than $800,000 Zoeller has paid out to his former boss, Steve Carter, to handle the state's tobacco settlement requirements. The State of Indiana is losing $63 million in tobacco fund settlements because an arbitrator last year determined that the state had made to little effort to recover money from cigarette companies that weren't a part of the original deal. Great job, Greg and Steve.

Marion City Officials Unable To Account For $2 Million In TIF Bond Proceeds For Failed Redevelopment Deal With Korean Businessman

The Marion Chronicle-Tribune continues to perform investigative journalism virtually every other major newspaper in Indiana has ceased doing. "Where did the money go?" seems to be a common theme of their reporting of late and for good reason. In 2009, the administration of Mayor Wayne Seybold obtained approval from the town's council to issue up to $2.5 million in tax increment financing ("TIF") bonds to a little-known Korean businessman from Ontario, California, to purchase and redevelop the city's recently-closed YMCA building on Third Street. Five years later, the building sits undeveloped and has been put on the selling block for unpaid taxes. No visible work has been done on the building, and the property generated no bids when it was offered at a tax sale last year. When the Chronicle-Tribune set out to learn what happened with the money through a public records request, it learned that city officials couldn't account for how at least $2 million of the bond proceeds had been spent.

This saga began when Korean businessman Michael An's Global Investment Consulting, a Nevada corporation, approached city officials in 2009 about redeveloping the vacant YMCA building. An's local business representative was Chad Seybold, brother of Mayor Seybold. An's $6 million redevelopment plan included adding a dry-cleaning business, men's clothing store, women's clothing store, spa, hotel and restaurant to the vacant building after renovations. An told city officials that the project would add between 80 to 90 new jobs with an annual payroll of between $1 to $2 million. Anyone who drove by this location, knew a little about Marion's economic situation and turned on his or her brain for a few minutes would quickly conclude it was a half-baked deal that had no realistic chance of success. Unfortunately, no due diligence was performed before proceeding with the investment of public tax dollars in the project.

An was described to local officials as "a Korean-born investor and retired businessman in California." According to Nevada Secretary of State corporation records, An appears to be the sole shareholder of Global Investment Consulting. An individual by the name of Claude Brock, who serves as a registered agent for multiple businesses, is identified as the company's registered agent. A Google Earth view of the business address for Brock shows a high-rise residential building a few blocks off the Las Vegas strip. A business address in Santa Ana, California is also listed, which appears as a small residential house on Google Earth. The Indiana registered address for Global Investment Consulting according to the Secretary of State records is the vacant YMCA building with An listed as the registered agent at that address. That foreign registration occurred the same month that Marion's common council approved the issuance of $2.5 million in TIF bonds for the project. Global Investment Consulting's business address is listed in its Indiana filing as a post office box in Cucamonga, California.

Further research reveals that Global Investment Consulting is listed as one of the few regional centers in Indiana certified for the controversial foreign immigrant immigrant visa program known as EB-5, although it doesn't appear to have operated as a regional center. Under this immigrant visa program, foreign investors can get a green card for investing at least $1 million in a qualified American investment, or $500,000 if the business investment is made in an area that qualifies as a depressed economic area.

The EB-5 program's controversy was raised in a December 15, 2012 investigative series by the Indianapolis Star titled, "The China Letter." The investigative series focused on Monica Liang and her controversial role as a former consultant to Mayor Seybold and the Indiana Economic Development Corporation's former executive director, Mitch Roob. Liang, a Chinese immigrant, had defrauded a Chinese billionaire out of $50,000, which she represented to the billionaire was part of a plan to invest in a building that she owned in downtown Marion that was to be redeveloped as a nursing home for veterans.

According to the Star, Liang had misrepresented to Ao Yuqi, the Chinese billionaire, that Gov. Mitch Daniels, Mayor Seybold and Mitch Roob were shareholders in the company that planned to redevelop her building. Ao had expected to obtain a green card as part of his investment in the project as an EB-5 investor. Liang, who was in her early 40s, later died under bizarre circumstances after going into cardiac arrest while a Chicago attorney, Thomas Gehl, who was advising her on the EB-5 program, was visiting her at her apartment in Carmel a short time after Roob had fired her as a consultant to the IEDC after learning of her misrepresentations and fraud and had stepped down as head of the state agency. Roob denied to the Star that he had a sexual relationship with Liang, who had traveled on trips to China with Gov. Daniels and Mayor Seybold as part of larger trade delegation to Asia. It is unclear what, if any, role Liang may have had in introducing Michael An's investment to Marion city officials, although it would have been consistent with her economic development activities with the city during that time period.

An's Global Investment Consulting entered into a loan agreement with Marion for $2.5 million as part of the redevelopment plan for the YMCA building he acquired in February, 2009 in which the city agreed to take out the $2.5 million bond "for financing the construction of the project to create additional employment opportunities in Marion, Indiana, and to benefit the health, safety, morals and general welfare of the citizens of Marion and the state of Indiana." The bond indenture and related loan agreements were prepared by Barnes & Thornburg's Bruce Donaldson, while London Whitte's Bob Swintz acted as the city's financial adviser on the transaction. First Farmers Bank & Trust, which held a $5 million mortgage on the YMCA building, acted as trustee. Repayment of the bonds were to be paid out of TIF revenues generated by Global Investment Consulting's redevelopment project. Obviously, no revenues have been generated by the now-defunct project to pay debt service on the bond issue. According to the Chronicle-Tribune, the city refinanced the outstanding bond obligation less than two years later  in February, 2011 as part of a new $5.8 million bond issue. Swintz told the Chronicle-Tribune that the refinancing was undertaken to get a lower interest rate. The bonds are not scheduled to be paid off until 2021.

Shockingly, Marion city officials were unable to produce bank statements, receipts, vendor invoices, or check or wire transfer records to account for how more than $2 million in bond proceeds were spent for An's project. Mayor Seybold, who is a Republican candidate for State Treasurer this year, refused to comment on the missing documentation according to the Chronicle-Tribune. Naturally, An was nowhere to be found. The city's development director, Lisa Dominisse, produced just 16 pages of records in response to the newspaper's request. The documents were primarily invoices from business entities tied to the redevelopment project. Half of the 16 pages, according to the newspaper, pertained to expenses related to renovation and construction of the former YMCA building. "Three Global Investment Consulting invoices from 2009 and 2010 list purchases or services like 'roofing' and 'brick work,' but none was accompanied by supporting documents like receipts for the purchases or vendor invoices for the services," the Chronicle-Tribune reported.

Together, the invoices contain 27 line items. Five line items, totaling $98,033, are listed under “Michael An,” the CEO of Global Investment Consulting: “building purchase” ($54,754), “architectural drawings” ($15,000), “attorney fee” ($20,120), “accountant fee” ($6,000) and “water removal cost — basement — new sump pump” ($2,159).

The other 22 line items, totaling more than $1.9 million, are listed under “World Enterprise Group Inc.” with a federal tax identification number next to the company name. These line items include the “roofing” and “brick work” as well as “elevator,” “HVAC” and “plumbing,” for example.

World Enterprise Group was created by An, who is also listed as the company’s president, on May 6, 2010, according to state corporation records.

The city’s record-keeping has repeatedly been cited in annual state audits. Concerns noted in multiple years’ audits include omission of entire city hall departments from annual financial reports, transfer of funds without city council approval and inconsistent bank balance reconciliations.

After Gallaway deferred questions about bond financial records to the bond trustee at the bank, First Farmers Bank & Trust Vice President Tade Powell referred questions to the bank’s general counsel, Stephen Wilson.

Wilson confirmed the bank’s role as trustee, essentially meaning the bank was hired by Marion to hold and disburse the bond proceeds.

“The bond proceeds were deposited into an account held and maintained by the Trust Department of First Farmers Bank & Trust, and these bond proceeds subsequently were disbursed by the Trust Department in payment of (i) the costs of the issuance of these bonds, and (ii) costs of the of renovating the former YMCA building in the City of Marion, including site development,” Wilson said by email.

Wilson did not respond to follow-up questions about the lack of records like bank statements for the account that held the loan proceeds.

The Chronicle-Tribune also detailed bond proceeds paid out to the bond lawyers and financial advisers for the transaction:

• $35,000 went to national law and lobbying firm Barnes & Thornburg, which served as bond counsel;

• $25,000 went to Indianapolis-based financial firm London Witte Group, which served as financial adviser;

• $10,000 Marion-based law firm Kiley Harker Certain, whose partner Thomas R. Hunt served as counsel for Marion’s Economic Development Commission;

• $10,000 went to Marion-based law firm Spitzer Herriman Stephenson Holderead Musser and Conner, whose lawyer Herb Spitzer served as counsel for Marion;

• $2,500 went to First Farmers Bank & Trust Wealth Management, which served as trustee; and

• $25,000 was kept by First Farmers Bank & Trust, which bought the bond.

Advance Indiana uncovered another 200 pages of documents online related to the original bond issue, which can be accessed by clicking here.

The Chronicle-Tribune has blasted Seybold's management of the city's finances at length in recent editorials. A recent editorial accused Seybold of "aggressively spreading untruths about public matters that will affect the city for decades," including a claimed $2 million surplus in the city's budget. According to the editors, the surplus was only made possible because Seybold chose not to pay back the amount due on a $1.7 million loan to the water utility, which was originally scheduled to be repaid  in 2012, and delayed payment of other bills "until next year and beyond." The editors insist that Marion's financial situation has been propped up by piling up more debt to be paid off by future generations. The newspaper attacked Seybold for spending $7,000 in public funds to tout a surplus it claims truly doesn't exist.

One of the running feuds Seybold has with the editors of the Chronicle-Tribune is over the categorization of TIF-related debt. Seybold insists that it's not really city debt because repayment of the debt relies on property tax revenues generated by TIF economic development projects. The developers are the one's repaying the debt he argues; however, when the projects fail as has happened frequently in Marion and elsewhere around the state, the taxpayers are left holding the bag. As the Chronicle-Tribune's editors say, "That is a distinction without a difference." The editors point out that the city has been forced to redirect money generated by other projects within TIF districts to repay all of the projects like An's that failed to pan out.

The Chronicle-Tribune's Karla Bowsher has taken Seybold to task for doling out city contracts to the same people who are backing his campaign for State Treasurer, including Barnes & Thornburg's Bob Grand, who co-chairs his committee with Lake County attorney Dan Dumezich, and Jim Higgins, a partner at London Witte.

London Witte Group has served as financial adviser to the Seybold administration on general matters and particularly on bond transactions since at least 2005, making in the neighborhood of at least $25,000 to $30,000 per transaction, records shows. Barnes & Thornburg has served as bond counsel since at least 2005, making in the neighborhood of $35,000 to $50,000 per transaction.

Seybold pointed out that he has also worked with other firms on such matters during his three terms as mayor, although he has for years regularly used London Witte Group and Barnes & Thornburg for bond transactions.

"You're barking up the wrong tree. I don't make decisions of that kind," Seybold said. I try to hire really good people.

Grand agreed with Seybold ’s hiring of Barnes & Thornburg. "He did the best thing for the city because be got the best firm for the city, he said. "Our qualifications we could put up against anybody."

Barnes & Thornburg partner Brian Burdick, named on Seybold's campaign letterhead, is general counsel for the Indiana Bond Bank, according to the firm's website.

The Indiana Bond Bank is one of the boards that the state treasurer chairs in addition to his duties as the state's chief investment officer. Of the 13 boards the treasurer sits on, the Indiana Bond Bank may be the busiest, said Ball State University political science professor Ray Scheele, because so many local governments are authorized to raise money via bonds.

The Indiana Bond Bank helps local governments secure various types low-cost financing. According to the 2013 annual report of the current state treasurer, Richard Mourdock, the bond bank issued about $517 million in debt on half of local governments during the 2013 fiscal year . . .

It's unfortunate that you won't see this kind of reporting in the Indianapolis Star. Previously, this blog built on original reporting by the Chronicle-Tribune on how state and Marion city officials invested tens of millions of our tax dollars in a company founded and controlled by a California businessman who defrauded more than 500 investors out of $160 million through a Ponzi scheme remarkably similar to the one perpetrated by Indianapolis businessman Tim Durham. The public in Indianapolis doesn't have a clue about what's happening with the hundreds of millions of dollars that have been borrowed and invested in TIF projects, virtually all of which benefit developers that have contributed heavily to Mayor Greg Ballard's and other local politicians' campaign committees. The City of Indianapolis is paying huge fees to the same bond lawyers and financial advisers upon which the City of Marion is relying. We've demonstrated time and time again that city finances are being dictated by those same players. The Indiana State Treasurer's Office is similarly controlled by these same people and apparently will continue to be if these self-serving people get their way. Meanwhile, the taxpayers always wind up getting stuck with the bill for the bad deals this corrupt bunch of actors concoct on behalf of public officials whose decision-making is obviously blinded by the campaign support they receive from them.

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.

Ballard Coughs Up $15 Million Stowed Away In Different Funds To Avoid More Tax Increases

By hook or crook, Mayor Greg Ballard has been trying to force the City-County Council to accept permanent tax increases to close what has been described as a $15 million budget deficit. He sold the council on expanding the base of the IMPD taxing district, a permanent property tax increase, and he's been trying to force an even larger, permanent property tax increase by eliminating the homestead property tax credit. This from the guy who went before the House Ways & Means Committee his first year in office and asked the legislature to eliminate all property taxes. At the same time, we've witnessed hundreds of millions of tax dollars being diverted under this mayor for the personal business use of his big campaign contributors. After months of wrangling over the budget, an agreement is announced where $15 million in found funds is uncovered to shore up the supposed budget deficit, including:

• $5.7 million just sitting in an escrow fund leftover from the deal to sell the water and sewer utilities to Citizens Energy several years ago;
• $6.9 million borrowed from a "fiscal stability fund" that currently holds about $80 million; and
• $2.4 million from the city's rainy day fund.

Most importantly, the deal ensures that the CIB's 40% increase in its operating budget will remain intact, which we've come to understand is Mayor Greg Ballard's number one budget priority in city government because of all the free tickets he receives to Colts and Pacer games and concerts and other events hosted at the CIB's venues. The budget will supposedly allow IMPD to hire 30 new police officer recruits next April, a number that is needed just to replace retiring police officers. Police will still get the pay raises provided under their contract, and there will be plenty of money to continue boosting the pay of Mayor Ballard's mayoral staff. Next year, Ballard will be back seeking even more tax increases because future tax diversions he has on his plate will continue to erode the tax base relied upon to fund basic city services. The local media will never report these facts to you, but that's how it is. It's unfortunate that the City-County Council lacks members or staff who have the ability to uncover the constant shell games that are played with city funds. Who knows what you'll find hidden away. The convoluted way the City keeps its books would make it a piece of cake for an unscrupulous insider to steal millions of dollars annually without ever being noticed.

UPDATE: The  council voted to approve the budget tonight by a vote of 26-2. Councilors Robert Lutz and Christine Scales voted against its approval. Interestingly, the engrossed proposal voted on by the council omitted the language retaining the homestead property tax credit, a difference of about $11 million. There was no debate on the budget's passage, which is quite telling given that it's the most important vote council members make during the year.

The only debate occurred over the passage of the CIB's budget, which came in response to comments by Councilor Frank Mascari in opposition to their budget because it includes more subsidies for the Pacers. Naturally, Bob Grand's stooges on the council, Aaron Freeman and Ben Hunter, spoke up in defense of the continued subsidies. What really upsets me is the disingenuousness of councilors' explanations for their actions. Repeatedly, there is reference made to binding agreements and state laws that tie the hands of the council, specious claims that the council illegally sought to impose a PILOT on the CIB, and that the agreements with the sports team requires these subsidies.

The CIB had a long-term, binding lease agreement with the Pacers, which required the Pacers to pay all maintenance expenses on Banker's Life Fieldhouse. Herb Simon threatened to break that lease agreement with the City, for which he would have been subject to draconian penalties, unless the CIB agreed to fork over tens of millions of dollars to his team annually. Ostensibly, these payments are to cover the maintenance costs on Banker's Life Fieldhouse, which the Pacers were contractually obligated to pay since they pay no rent and retain all of the revenues the facility generates. These numbers are inflated. It doesn't cost that much money to maintain Banker's Life Fieldhouse. Besides, the CIB had already been paying for any extraordinary capital expenses for improvements to the facility and continues to pay those extraordinary expenses, even after handing out $10 million a year to the billionaire Pacers' owner.

As to the PILOT, the council had statutory authority to impose a PILOT on the CIB since its inception. Lucas Oil Stadium and Banker's Life Fieldhouse are used exclusively for the benefit of the for-profit businesses of the Colts and Pacers. Go anywhere else in the state where publicly-owned property is being used exclusively by a business for its personal business use and property taxes are levied upon those businesses. That's the law. That's what is required by the Indiana Constitution. Only in the Twilight Zone known as the CIB is it considered anathema to make a private business pay property taxes on publicly-owned property used for private purposes. The CIB and the Pacers, which both pass out a ton of free tickets to state lawmakers just like they do for council members, convinced the legislature to pass a horrible law that repealed the statutory authority of the council to collect a PILOT on these facilities. What else is new? Our state legislature could care less what the Indiana Constitution requires or whether taxpayers are treated fairly under our state's tax laws. As long as everyone is getting their free tickets to the games, everyone at the State House and the City-County Building is happy. The council voted to approve the CIB's budget on a 19-9 vote.

City-County Council Chooses Subsidizing Pacers Over Funding Cops

The people running the longest-running Ponzi scheme in Indianapolis history, otherwise known as our Capital Improvement Board, are quite blessed by the combination of the feeble-minded and corrupt who predominantly populate our Indianapolis City-County Council. The budget hearing of the CIB before the Municipal Corporations Committee this week reflects just how shallow the discussions become when it comes to discussing our local government finances.

In case you've been asleep, the CIB plans to increase its budget by close to 40% next year, and it's currently running about a $90 million operating budget surplus that will still be about $57 million at the end of next year and about $90 million the following year. Councilor Frank Mascari (D) attempts to understand why the CIB is not paying off the $34 million note it owes to the Circle Centre Mall investors, who allowed their dividends from their investment in the mall to be used to help finance the construction of Banker's Life Fieldhouse, or the $18 million it took out with the state of Indiana when it cooked its books to make it appear that it was going broke in order to trick state lawmakers and city council members into approving tax increases, state subsidies and the state loan. Former CIB President Bob Grand and the board's current president, Ann Lathrop, cooked up that scheme as a ruse to come up with money to fund subsidies for Herb Simon's Indiana Pacers, which coincidentally was represented by Grand's law firm. Remember how the council assured everyone that there wasn't any money for the Pacers included in the CIB bailout?

Suspending disbelief, Lathrop attempted to claim with a straight face that it was necessary to maintain these large cash reserves in each of the upcoming years at this level in order to ensure that it would be able to pay of the $34 million note to the mall investors, and two, $9 million payments remaining due to the state of Indiana in years 2019 and 2020. She gave the impression the CIB was at risk of defaulting on this debt if there was any effort made to divert any of its reserves for other purposes, such as shoring up the city's problem in funding public safety. It's currently setting aside $5.6 million a year in a sinking fund to pay off the mall investors' note in 2017, and it plans to continue that sinking fund in order to have money to pay off the state's $18 million loan in years 2019 and 2020. Lathrop brags that one of the reasons the CIB's budget reserves are so flush is because it found a one-time savings of $20 million by refinancing old bond indebtedness. Yet, despite these huge cash reserves, she says it would be imprudent to pay off early the debt owed to the mall investors or the state. The mall owners have demonstrated their lack of concern about when they're paid on at least two occasions when it added many years to the maturity date for its notes. It's not like the Gannett-owned Indianapolis Star, one of the note holders, is making money off the CIB's Ponzi scheme while planning to relocate its offices into space in the mall formerly occupied by Nordstrom. Paying interest on debt you could pay off when you're sitting on such large cash reserves is more prudent? Please.

Lathrop is well-schooled in disinformation so some translation is required. What she can't tell you straight up is that the CIB plans to give even larger subsidies to the Pacers than the current $10 million a year it's been giving to them for the past four years, and it wants additional money set aside in reserve for other future endeavors, such as hosting another Super Bowl or building a new facility for the city's new professional soccer team, Indy Eleven, which is owned by Mayor Ballard's bag man, Ersal Ozdemir. The 2014 budget includes $11 million for an additional subsidy to the Pacers, plus another $10 million in unspecified improvements to Banker's Life Fieldhouse. Since these subsidies have begun, Herb Simon's Pacers have been paying none of the operating and maintenance expenses needed to run the Fieldhouse as required under the terms of their original lease agreement, which allows the Pacers to use the facility rent-free and retain all of the revenues the facility generates. Hey, it costs a lot of money for a billionaire to keep a younger wife happy, but I digress.

Councilor Mascari lamented the fact that nobody from the Pacers organization is even asked to come before the council to explain why they need to receive multi-million dollar subsidies annually. Councilor Aaron Freeman (R) dressed down Councilor Mascari for suggesting that the problem with the CIB's budget had anything to do with the Pacers. Incredibly, he suggested that the CIB had a legal obligation to pay all of the expenses for operating the Fieldhouse since it owned the building, notwithstanding the original lease. Freeman explains that he has a law office and has to pay all of the expenses and this is no different. He says we could lose the Pacers and be stuck paying all of the expenses, which is exactly where we are today with them using the Fieldhouse.

Well, first of all, Freeman doesn't own the building where his law office is located. Freeman is an employee of the law firm of Voyles, Zahn and Hahn, which leases space from another law firm which owns the building. Coincidentally, Freeman's law firm boasts on its website that it has represented a number of  "Indiana sports greats," which includes Colts and Pacers players, but I'm sure that doesn't influence his views towards the CIB offering generous multi-million dollar subsidies annually to the billionaire owners of the Pacers and the Colts who employ his law firm's multi-millionaire clients. Furthermore, the Pacers' lease agreement requires them to pay a huge penalty if they break their lease by moving their team to another city. They would actually be doing the CIB a big favor financially if they packed their bags and left town so we no longer had to pay these absurd subsidies to them. The CIB could at least generate some revenues to offset the costs of maintaining the damn building from concerts and other events like other cities with publicly-owned arenas without an NBA team do. See Kansas City's Sprint Arena, for example.

These budget discussions are absurd and embarrassing. It's like taking candy from a baby. Most of the council members either lack the intelligence to grasp and comprehend what's being told to them, or they understand what's being told to them and have ulterior motives for going along with this racket. For some, getting free tickets to the Pacers and Colts games is all it takes to buy their votes, and the CIB has plenty of tickets available to them on demand, along with plenty of free food and drinks. My councilor, Vop Osili, was only concerned about why the CIB and its vendors didn't employ more minorities. He operates an architectural engineering firm, which benefits from government set asides for minority contractors. Is he going to complain about how much money the CIB is spending? Of course not. Don't forget that these same people are looking to punish you because there's not enough money in the budget to pay for public safety. Chew on that is they vote to saddle you with higher taxes.

Representing The Star Has Its Advantages

If you're the law firm that represents the Indianapolis Star, it apparently comes with the privilege of getting the newspaper to write glowing news stories and columns about your attorneys. After I recently posted a blog post about the firm's power broker, Bob Grand, celebrating over drinks with several Republican council members the ouster of Republican City-County Councilor Christine Scales from the Republican caucus, the Star's Russ Pulliam responded by penning a column titled, "The private, generous side of Bob Grand." Those who follow this blog regularly know that Grand has played a central role in the corrupting of state and local government the past decade. The Star never published a story on the highly unusual ouster of Scales from the caucus, only mentioning it in passing in an unrelated story about the council meeting that took place following the highly-divisive vote inside the Republican caucus. It certainly didn't mention that Grand celebrated Scales' ouster over drinks at a local bar with three male council members behind her ouster following the meeting.

Whether it's been the privatization of FSSA that cost taxpayers hundreds of millions of dollars for the benefit of his client, ACS, for which he also engineered the corrupt parking meter lease deal in Indianapolis, the awarding of the corrupt exclusive real estate leasing agreement by the state to his client, John Bales, or the scheme he devised as Mayor Greg Ballard's CIB President to make it appear that the CIB was insolvent in order to gain passage of several tax increases and new subsidies by the state that have left the organization flush with cash (a surplus in excess of $70 million ) to hand out to his firm's billionaire sports team owner client, Herb Simon, Bob Grand has played a central role.

Today the Star has a story press release glorifying another Barnes & Thornburg attorney, Jason Barclay, who Grand placed as a high-level adviser in the administration of Mitch Daniels to aid the firm's clients. The story is titled, "Rising Star: Government experience helped Jason Barclay become a high-stakes litigator."

As a special counsel and policy director for Daniels, Barclay got to help the firm from the inside land the corrupt privatization deal that has made hundreds of millions of dollars for its client, ACS, and millions of dollars for his law firm defending the corrupt deal. Barclay got the task of defending with lead defense attorney Larry Mackey, the infamous Oklahoma City bombing prosecutor, John Bales in his public corruption trial in South Bend while working across the table from another former Barnes & Thornburg attorney who led the government's badly-failed prosecution of the case. Bales had the good fortune of not only having the law firm which had helped set up the corrupt exclusive state leasing agreement for him defending him, he had one of the senior advisers in Daniels' administration at the time the deal was hatched on his defense team. Several observers said the federal prosecutors could not have done a worse job in prosecuting Bales. The prosecutors didn't even call Paul Page, who pleaded guilty in the conspiracy at the heart of the prosecution, as a witness or the government whistle blowers who talked to the IBJ's Cory Schouten, the investigative reporter who blew the scandal wide open. Gee, I wonder why?

In the Star story, Barclay's boasts include working for David Gergen, a sleazy disinformation agent for the New World Order who worked for several former presidents to deal with scandals, including Nixon's Watergate, Ford's pardon of Nixon, Reagan and Bush's Iran-Contra and Bill Clinton's multiple scandals. Barclay says he was hired to work for Gergen directly out of college to help  him write his self-serving book, "Eyewitness to Power: The Essence of Leadership from Nixon to Clinton." He also boasts of working for former FBI Director Robert Mueller, who had just taken the reins of the FBI when 9/11 happened and Eric Holder in his earlier stint at the Justice Department, perhaps the most corrupt Attorney General in the history of the United States.

A story you will never read about in the Star, which is represented by Barnes & Thornburg, is the fact that Barclay's law firm employed as one of its top partners the man behind the infamous Huston Plan in the Nixon administration. The Huston Plan was authored by Tom Huston, a senior Nixon adviser and former CIA agent assigned to work at the White House by the Interagency Committee on Intelligence headed by FBI Director J. Edgar Hoover. The Huston Plan advocated domestic burglaries, illegal electronic surveillance and U.S. mail tampering to target persons viewed as domestic enemies of the administration. Huston was a man ahead of his times, if you will. What was vilified by the media in Nixon's times is now deemed a necessity by today's useless government propagandists who now control the Operation Mockingbird media. You also won't read anything about the firm's initial, behind-the-scenes efforts at helping convicted Ponzi schemer Tim Durham when the acting U.S. Attorney inexplicably withdrew a civil forfeiture action the government had filed against his assets, forcing the defrauded investors of Fair Finance to seek the appointment of a bankruptcy trustee through an involuntary bankruptcy proceeding to attempt to recover their stolen assets.

Like Gergen, it always helps when you have reporters like Jill Phillips at the Star writing press releases for you under the cover of being a legitimate reporter. Since Barclay learned the corrupt Washington ways from Gergen, who I think epitomizes everything wrong with government in Washington today and the way our news media has become nothing more than a propaganda arm of the ruling elites, I'm sharing with you two contrasting videos. In the first, Vanderbilt trust fund baby and fake CNN News anchor Anderson Cooper as he gives a hand job to Gergen while he's supposed to be conducting a serious discussion. In the second, you see a real investigative reporter, Alex Jones, confront Gergen about his participation in annual events hosted by the exclusive Bohemian Grove, where the corrupt New World Order leaders gather to wander the forest buck naked, hire gay porn actors to serve as their personal valets and worship at the altar of a large, sculpted owl during bizarre sacrificial rituals. It pretty much summarizes the reality of American journalism today where you get nothing but propaganda from the mainstream media and must turn to alternative media to learn the truth about anything happening in this country.