Thursday, January 7, 2010

Got “Bilked?” The New York Times Biased Report on Federal Investigation Involving Forest City Ratner

What’s your definition of “bilk”? We think that these days “bilk” generally evokes the concept of someone being swindled out of something valuable by fraud, trick or deceit, as in any of the following usages in the New York Times (here and here- at the risk of going just a tad too far to be sure we make our point):
. . . Irving Picard, the trustee for the investors bilked by Bernard L. Madoff, . .

. . . where Mr. Stanford, 59, has been held since he was indicted in June on charges of bilking investors through a scheme involving Antiguan bank certificates.

Marc S. Dreier, once a high-flying New York lawyer who orchestrated an elaborate fraud scheme that bilked hedge funds and other investors of $700 million. . .

Corporations bilking customers for profits with whiz bangs and geegaws?

The military industrial complex and crooked war profiteers bilked us many times over the bank bailout cost. . .

. . The New York Times detailed how Wachovia had provided bank services to fraudulent telemarketers who bilked the elderly of hundreds of millions of dollars.

A man convicted of bilking Colombians out of hundreds of millions of dollars in a pyramid scheme has been extradited to the United States.

. . . the plaintiffs sued Interior in 1996, alleging that Interior's mismanagement of the land accounts had bilked American Indians out of billions of dollars since the accounts were created in 1887.

. . . Texas financier R. Allen Stanford’s trial on charges he bilked investors out of $7 billion as part of a massive Ponzi scheme . .

Accused Florida Ponzi mastermind Scott Rothstein has decided to plead guilty to charges he ran an investment scheme that bilked clients out of more than $1 billion . . .
Times Says Ratner Was "Bilked" by Public Officials

Why do we want to be so sure of the meaning conveyed by the New York Times use of word “bilk”? Because of the story the Times wrote today about a federal corruption case in Yonkers where three individuals, two of them public officials, have been indicted for taking improper payments in connection with two development projects in Yonkers. One of them is Forest City Ratner’s $630 million, 1000-apartment, 81-acre Ridge Hill project. The Times reported that Forest City Ratner has allegedly been bilked by the public officials. Specifically, the Times article said that the indicted public officials:
. . are accused of bilking two developers of tens of thousands of dollars and funneling the money and other favors to Ms. Annabi in return for her support.
(See: Ex-Official in Yonkers Faces Charges of Corruption, by Nate Schweber, January 6, 2010.)

Ratner, a Specialist in Public Officials, Is “Bilked”?

So the Times is reporting that Forest City Ratner, a real estate firm whose specialty is collecting government subsidies through its relentless cultivation of public officials, was outsmarted (as the press release from the U.S. Attorney’s Office for the Second District says) by:
SANDY ANNABI, the former Democratic Majority Leader of the Yonkers City Council, charging her with conspiracy, bribery, extortion, false statements, and tax crimes. The Indictment also charges ZEHY JEREIS, the former head of the Yonkers Republican Party, and ANTHONY MANGONE, a Westchester County attorney
How ironic that the very same day, prior to news of the indictments emerging, Atlantic Yards Report had run two stories about the additional new funds in the form of campaign contributions that Forest City Ratner was sending in the direction of New York politicians it hopes to influence. Two of those politicians are public officials who have been asked to investigate Forest City Ratner’s Brooklyn Atlantic Yards project: Andrew Cuomo, the State Attorney General, and Thomas DiNapoli, the State Comptroller. Cuomo is, of course, also valuable for Ratner to cultivate since Cuomo is likely to become governor after challenging the sitting governor, David Paterson, in the primaries. (See: Wednesday, January 06, 2010, Ratner, no longer a campaign contribution "refusenik," is already investing in Cuomo and DiNapoli 2010 and Wednesday, January 06, 2010, More "sewer money" from Forest City to Housekeeping accounts, including $10,000 from a Cleveland Ratner to New York Senate Republicans.)

Public Official’s Pathetic End of the Deal

But is the Times anywhere near accurate in representing that well-heeled Forest City Ratner got the short end of the bargain when Ms. Annabi sold her City Council vote to approve Forest City Ratner’s $630 million 81-acre project? The Times’ own story makes Ms. Annabi’s end of the bargain sound rather pathetic:
“She went from council member to council member for sale,” said Joseph M. Demarest Jr., the assistant director in charge of the New York field division of the Federal Bureau of Investigation. “She sold her vote for baubles and trinkets.”
And the Times reported that the Forest City Ratner Ridge Hill project “is the city’s largest private undertaking.” It sounds to us instead as if Forest City Ratner got a pretty good deal and likely everything it was bargaining for. It doesn’t look at all like it was swindled.

How It Adds Up In the Ratner Scheme of Things

Without any apportioning, the Times reports that for both the Forest City Ratner project and the other project involved Ms. Annabi allegedly accepted a figure just under $167,000. Mr. Jereis was also receiving funds at the rate of $5,000 a month for 12 months. The two January 6th Atlantic Yards Report stories mentioned above (subtracting to prevent double counting) respectively report on $20,600 and $72,064 in campaign contributions. And that’s nothing when you move on to start aggregating Ratner’s other expenditures for influencing politicians like the $400,000 that was paid to former U.S. Senator Al D’Amato’s lobbying firm “in 2006 and 2007 to lobby federal legislators regarding eminent domain and other issues important to the developer of the $4 billion Atlantic Yards project in downtown Brooklyn.”

As we previously made the point, Forest City Ratner is a mega-maestro when it comes to cultivating politicians for the purpose of subsidy collection and their other goal, the avoidance of competition.

Misuse of “Bilked” Misleads on Necessary Distinctions

A lot hinges on the inaccurate impression the Times conveyed with its apparent misuse of the word `bilked’ including whether Forest City Ratner will likely, itself wind up indicted or cripplingly besmirched. The way the Times reports it, it seems as if neither of these things is likely to happen, but the Times has notoriously displayed a continually recurring bias when it comes to reporting about Forest City Ratner. Yet again, the Times article on the ongoing federal investigation is another instance where the Times did not report its business partner relationship with Forest City Ratner.

In our professional life as a public official we often encountered firsthand the quandary and importance of making certain distinctions along these lines. Background searches on candidate firms that public agencies are deciding whether or not to do business with sometimes disclose situations where those firms have had documented interactions with organized crime. (Real estate and construction can be a rough business.) It may be clear that a firm paid bribes to criminal intermediaries to obtain the award of construction contracts by a rigged bid. Often enough, public officials were involved. The question then becomes whether the firm can be considered the victim, whether it can be considered to have had no choice but to pay a gate-keeping criminal enterprise in order to obtain business that it should otherwise have been freely able to obtain by honest bid. On the other hand, the firm is not always the victim. Sometimes the firm itself initiated events because a rigged bid, sidestepping a legitimate one, was its preferred option for obtaining the contract.*

(* We must note that in the case of Atlantic Yards there was never any meaningful competitive bid on the proposal to give Forest City Ratner a monopoly on the 22 acres it sought and was awarded. This was apparently due to Forest City Ratner’s political influence.)

Depending on How the Story Is Told . . .

You can see that the distinctions are not easy to make and will depend on how someone tells the story and shades the facts. While a jury needs proof beyond a reasonable doubt to hand down a criminal conviction the question of whether a public agency should do business with a firm that was not actually convicted involves many more shades of gray. (It’s usually the people working at a firm who get convicted, not the firms themselves. If individuals do get convicted, they get replaced, though sometimes the same pattern of conduct is repeated by those who step in to replace them.)

We lay out the importance of making these distinctions because essentially the same issues are coming into play with respect to what will happen vis a vis Forest City Ratner in the ongoing federal investigation in Yonkers. Was Forest City Ratner the victim or was it willingly complicit or perhaps the initiator of the scheme? Was it extorted against its will to bribe Ms. Annabi or, given that it was a rather good deal for them, was it exactly what FCR wanted? If it was the latter, then Ratner was not the victim: Instead it was the Yonkers public that was “bilked” by Ratner’s scheme. Tellingly, as to whether Forest City Ratner was willingly going along with the conspiracy that was charged, it has been reported that:
At no time during these meetings and agreements with Jereis did Ratner go to the FBI, according to two sources familiar with the investigation.
This was not in the Times story. (See instead: Yonkers pol Sandy Annabi took bribe to OK Ratner deal, feds say, by Robert Gearty and Greg B. Smith, January 7th 2010, Daily News, Thursday, January 07, 2010, From the U.S. Attorney on the Yonkers case: "the developer enlisted the [now-indicted] Jereis," but he "demanded" a consulting contract from FCR and Forest City Ratner Allegedly Did Not Tell the FBI About Political Operative's Alleged Bribery Scheme.)

We are also left wondering how one of the scheme quid pro quos that is alleged with respect to Zehy Jereis, the other public official, could have been effected without Forest City Ratner’s willing complicity: Two weeks after Annabi switched her vote Forest City Ratner signed a contract hiring Jereis as a "real estate consultant" for $60,000 at $5,000 a month. If it was after the vote had already occurred, what compelled Forest City Ratner to follow through on executing that contract except for “honor among thieves” and perhaps wanting to have a good reputation in place when they sought to buy their next politician?

1 comment:

George said...

If or when criminal proceedings of any kind are initiated against Ratner, he will be prohibited from working on City contracts. Atlantic Yards will be over before it begins.