Reporting About Multiple Troublesome Real Estate Deal Connections Between Presidential Son-In-Law/Advisor Jared Kushner and Presidential Advisor Stephen A. Schwarzman, New York Times & Press Overlook Connections, Including Library Sale

Stephen Schwarzman and Jared Kushner captured in black tie together in 2007 around the time the Donnell Library sale was being concocted.  Schwarzman with Trump running his economic forum where the public infrastructure he wants to privatize was discussed.  Graph information about the benefit Schwarzman's Blackstone is getting from a Kushner-negotiated deal with Saudi Arabia for selling American infrastructure and where public employee pension fund money is being taken from to benefit the Trump family.  New York Magazine dubs Kushner the nepotistic "President-In-Law."  

Last August when the New York Times reported on the economic benefits of being politically connected to Donald Trump as president (The Benefits of Standing by the President, by Jessica Silver-Greenberg, Ben Protess and Michael Corkery, August 19, 2017) it came up with an impressive seemingly one-stop-shopping list of real estate deal connections between presidential son-in-law/advisor Jared Kushner and presidential advisor Stephen A. Schwarzman, the head of the Blackstone Group.  Of course, the bigger topic lurking was conflicts of interest.

As impressive as the list was when compiled, the question is what did it still leave out?  One thing it left out was the a library shrink-and-sink deal, the sale of the Donnell Library once owned by the NYPL, for a minuscule fraction of its value in what was essentially a no-bid transaction arranged in secret.

Here are the Kushner/Schwarzman transactions the New York Times listed in their article that day: 

•    In 2013, (before Mr. Trump was a candidate), Blackstone financed the purchase of warehouses and industrial buildings by Mr. Kushner’s family company.

•    Blackstone also made a loan, which has since been paid off, to Kushner Companies on a Rector Street property (2 Rector Street) in Manhattan.

•    In the summer of 2016, an entity controlled by Blackstone lent $376 million to Mr. Kushner’s company to purchase a large property in Brooklyn that the Jehovah’s Witnesses had operated for many years.

•    Separately, Mr. Kushner and his wife, Ivanka Trump, invested up to $500,000 in a fund that Blackstone manages.

•    Mr. Kushner urged the staff at his Commercial Observer newspaper, to place Jon Gray, the senior Blackstone executive at Blackstone who runs Blackstone’s real estate business, higher on its list of “Power 100” real estate executives and in 2016, Mr. Gray was No. 1 on that list.  (Blackstone is the largest commercial real estate investor in the world.)

And adding context, consider which is most important:

•    Mr. Kushner and his wife, Ivanka, attended what many described as the obscenely lavish 70th birthday party Mr. Schwarzman held for himself in February 2017 at his home in Palm Beach, Fla., near Donald Trump’s Mar-a-Lago estate.

•    Mr. Schwarzman speaks with Mr. Trump as much as once a week, typically (the Times tells us) “about the economy though also about social policy.”

•    When the national economic policy forum that Trump had created and put Schwarzman in charge of imploded following Trump's embarrassing racist Charlottesville comments, Schwarzman called Jared Kushner to give Trump a heads-up. Then, with the panel not yet announcing it was disbanding, Trump tried to claim it was his initiative.  (Infrastructure had been a key topic for the forum's moguls.)

A few months before the Times article, Bloomberg News zeroed in on the Kushner Schwarzman connections.  See: Kushners' Blackstone Connection Put on Display in Saudi Arabia, by Caleb Melby and Hui-yong Yu, May 25, 2017.

The Bloomberg article was far more direct in how it linked a $20 billion Saudi investment in Schwarzman’s Blackstone not just to Trump, but specifically to Jared Kushner and to a $110-billion arms sale to the country Kushner concurrently negotiated to the country noting that Schwarzman was with Kushner and Trump in Arabia when these deals were negotiated:

When Saudi Arabia announced last week a $20-billion investment in a U.S. infrastructure fund managed by Blackstone Group LP, many noticed that it came shortly after presidential son-in-law Jared Kushner personally negotiated a $110-billion arms sale to the country. What went unnoticed -- and is largely unknown -- is how important Blackstone is to the Kushner family company.

Since 2013, Blackstone has loaned more than $400 million to finance four Kushner Cos. deals -- two of which have not been reported -- making it one of the business’s largest lenders. And their ties go beyond the loans. Stephen Schwarzman, Blackstone’s co-founder and chief executive officer, heads Trump’s business-advisory council and was in Riyadh with the president and Kushner. The Saudi promise to invest in Blackstone’s fund drove the firm’s stock up more than 8 percent.

The Bloomberg article thoughtfully included a chart to make explicit how much Blackstone stock had gone up when Blackstone nailed, as the Times described it, “one of the biggest deals on Wall Street this year.”

By contrast to the earlier Bloomberg article, the triple-bylined Times article somehow neglected to mention the stunningly huge Kushner-negotiated arms deal at all, a deal which has all sort of implications given that Saudi Arabia is currently busily using its U.S. supplied arms to bomb and cut off food and water to the people of Yemen.  It’s not exactly fair to think that this arms deal is even hinted at by Times statements that, “Other deals involving chief executives with ties to Mr. Trump were announced during his visit to Saudi Arabia” or “In all, there were more than 40 signed agreements between Saudi Arabia and largely American corporations, including General Electric and the defense contractor Lockheed Martin.”  Nor should we be expected to cleverly discern the information when being told that the “guest list” for the business meeting that the “Saudis scrambled to put together . .  on the same weekend as Mr. Trump’s visit” included “an oil executive, defense contractors and a college president.” 

Given that the Bloomberg article had let the cat out of the bag covering the major points of the Kushner/Schwarzman real estate relations in May, the toned-down write up by the Times of essentially the same facts in August almost comes across as damage control together with a dutiful  checking of the box for the paper of record obligated to cover what is obviously major news.  Much of the Times article equivocally explained that there may or may not be indications of quid pro quo in Schwarzman’s and Kushner’s dealings and it almost sounds like an apology for Mr. Schwarzman being in Riyadh to say that:

Dozens of chief executives from across the United States faced pressure over the meeting. Some of them, speaking on the condition of anonymity, said they had felt they had no choice but to go if they wanted to do business in Saudi Arabia.

The Times article takes a sort of have your cake and eat it too approach, one that’s almost schizoid, about whether it is truly suggesting to its readers that there is anything bad about economic benefits that flow from being politically close to Trump and Kushner.  (With multiple bylines pastiched did some reporters have cake while others ate it?)  The article quotes  Schwarzman furnishing this profundity: “Public service is a core value for people of my generation . . . It’s a great privilege to be asked to help the country — even if it occasionally comes with some degree of criticism.”

The article also includes comments about Mr. Schwarzman from Kathryn S. Wylde, the president of the Partnership for New York City, a regular go-to person for quotes who can be depended upon to say nice things about powerful people.  Sinking any last possibility that the article’s ambiguity doesn’t do its job the article contains this direct statement: “There is no suggestion that Blackstone did anything wrong.”
                   
Nevertheless, the Times probably figured that they were leaving a sufficient trail of crumbs for any readers priding themselves on being astute about such things to read between the lines and between the ambiguity and the denials.  That includes those readers who would intuit the sort quid pro quo they consider abominable, as well as those eager to know what Mr. Kushner and Mr. Schwarzman are up to so that they can keep up with the competition and abreast of the latest tactics and status of what people can get away with.

The Bloomberg article writing about how “the sequence of the deals and the intertwined personal relationships of the principals raise concerns about conflicts of interest” is also different from the Times in that the Bloomberg article reported on the lack of transparency.  It said that of the “$400 million to finance four Kushner Cos. deals” that Blackstone has loaned since 2013, two “have not been reported.”  More specifically, that Blackstone “was quietly financing two Kushner endeavors,” that although documents didn’t show it, Blackstone was among the project lenders giving Kushner an “$88 million loan for the property at 2 Rector St.,” and that a “similar arrangement enabled Kushner Cos.’ purchase of five Jehovah’s Witnesses warehouse and printing buildings” and “again, Blackstone was among the undisclosed partners.”

This lack of transparency is an essential ingredient of the story.  It should not be glossed over.  It was wrong for the Times to neglect to mention it.

In May the Wall Street Journal reported how Kushner improperly didn’t disclose (just forgot to?) business ties and $1 billion in loans he owed with “personal guarantees to pay more than $300 million of that.”  (See: Trump Adviser Kushner’s Undisclosed Partners Include Goldman and Soros- Investments show ties to major finance and technology names, by Jean Eaglesham, Juliet Chung and Lisa Schwartz, May 3, 2017)

More specifically (and the list below includes Blackstone declining to comment):

Lenders to Mr. Kushner, either directly or via properties he co-owns, include Bank of America Corp. , Blackstone Group LP, Citigroup Inc., UBS Group AG, Deutsche Bank AG and Royal Bank of Scotland Group PLC. Royal Bank of Scotland didn’t respond to requests for comment; representatives of the other firms declined to comment.

The Times did eventually report separately about Kushner’s lack of disclosure (separately is not such a good thing), but in another example of the Times lagging months behind, it was finally reporting only in November about non-disclosures previously reported by others. 

The potential conflicts extend from the cabinet to the West Wing. Mr. Trump’s son-in-law, Jared Kushner, an adviser whose portfolio ranges from Middle Eastern peace to government technology, revealed over the summer that he had failed to disclose dozens of assets on his initial government ethics forms.

    “It is precisely because we have extraordinarily wealthy individuals running the government that we have no way of knowing what the conflicts of interest really are,” said Gary Kalman, executive director of the FACT Coalition, a network of anti-corruption groups. “They use complex structures to hide their money, both domestically and abroad.”

See:  Too Rich for Conflicts? Trump Appointees May Have Many, Seen and Unseen, by Nicholas Confessore, November 10, 2017.

Another layer texturing the information about the $20 billion Saudi investment in Blackstone is that the money is seed money for deals to privatize American public assets.  So you can bet that $20 Billion will be generating scads of spin-off deals.  Those deals may not benefit the American public, in fact you can expect them to diminish the public domain and the wealth of what is publicly owned, but beneficiaries like Jared Kushner are not likely to be far away.  The sale of the Donnell Library in which Kushner and Schwarzman each participated on opposite ends of the transaction, was essentially a prototype for the kind of selling off of public property that we ought to anticipate Saudi/Blackstone funds will be used for.  The Blackstone fund is looking to mobilize “more than $100 billion of purchasing power for infrastructure projects.”

There is more texturing to the Blackstone/Kushner/Saudi/Military arms deals to consider if you think about that how tight the behind-the-scenes alliance has been between the Saudis and the Israelis.  The same trip Trump and Kushner took in May going to Saudi Arabia also involved flying directly to stop in Israel next.  The Times noted more recently about that stop in Israel:

Last May, Jared Kushner accompanied President Trump, his father-in-law, on the pair’s first diplomatic trip to Israel, part of Mr. Kushner’s White House assignment to achieve peace in the Middle East.

Shortly before, his family real estate company received a roughly $30 million investment from Menora Mivtachim, an insurer that is one of Israel’s largest financial institutions, according to a Menora executive.

The deal, which was not made public, pumped significant new equity into 10 Maryland apartment complexes controlled by Mr. Kushner’s firm.

(See: Kushner’s Financial Ties to Israel Deepen Even With Mideast Diplomatic Role, by Jesse Drucker, January 7, 2018.)

When the New York Times finally got around to reporting about the nondisclosure of potential conflicts of interest by Kushner on his ethics forms and other Trump advisor/associate ’s business engagements that are generating potential conflicts of interest, it reported that among the investments Mr. Kushner initially failed to publicly disclose was a real estate technology start-up called Cadre.

According to PR published on the web, Ryan Williams, the “co-founder” and face of Cadre, a young (29-year-old) black fellow from Baton Rouge, Louisiana, who came from Goldman Sachs, had just recently started working at Blackstone’s real estate private equity group when he started “thinking about a new endeavor — disrupting the real estate industry at large,” i.e. starting Cadre.  He says that Blackstone had “approached him about working in their real estate group given his technology experience.”  (See: How this 50-person startup is planning to completely transform the real estate industry, by Taylor Majewski, April 5, 2017.)

As “Thrive Capital” Jared Kushner and his brother Joshua Kushner are backers and strategic advisers to Cadre.  Cadre’s offices are in the Kushner owned Puck Building.  In other words they are very much involved.

In a March 1, 2017 Real Deal article (Trump assumed the presidency January 2017) Ryan Williams explained his closeness with the Kushner brothers, styling himself as a metaphorical third brother:

Every day, I speak with Josh Kushner. Josh, an investor through Thrive Capital, brings his tech domain expertise. He played an incredible role early on helping to seed us and give us the capital to build the business. Josh and Jared are both like brothers to me. Jared was an adviser and not involved operationally day to day. He was always a great sounding board for us.

Assessing this undisclosed close business relationship that Jared has with his brother Josh, it is worth bearing in mind that when Jared Kushner wanted to contend that he was taking appropriate steps to deal with his conflicts of interest he transferred some of his questionable assets to  brother Joshua and to a trust overseen by his mother. Such laughably useless gestures are the family M.O. when it comes to ‘resolving’ conflicts of interest with Donald Trump putting his own business interests in the hands of his sons, Eric and Donald Trump Jr.  Ivanka, Trump’s daughter and Jared’s wife, similarly retains the benefits of her business “empire” through such trust and close family relationships.

The Times has editorially worried that the Saudi Arabian government might try to exercise influence over Donald Trump through companies that Trump Organization recently established in that country wanting to do real estate deals there.  Meanwhile, one of the Trump Saudi trip deals, unveiled concurrently with the Schwarzman infrastructure privatization investment and the arming of the Saudis, was for the Saudis to put $100 million into the hands of Ivanka for a “new foundation” she was proposing.

When quid pro quo arrangements (possibly illegal) are bilateral, i.e. people connected by being each on one side of a single transaction, it is easier to conceptualize, comprehend and identify them. When organizations are huge, diffuse and ubiquitous, identifying problematic conflicts of interest can be much more challenging. Some people think it’s sufficient to conclude that the system is defective if you know powerful players view themselves as all being in the same club looking out for each other.  Maybe so, but with multiple players and possible combination there are a lot of variations in between the simple bilateral and the `we are all in the same club' mentality.  They can be very hard to spot. 

When Connecticut Governor John Rowland resigned in 2004 in a bribery scandal one of the bribery schemes that was uncovered was an exceedingly difficult to detect three-way: Bribing the governor by having an antiques dealer pay him nearly twice the legitimate value when purchasing a condominium from him, while one step removed, that overpayment was funded and reimbursed by a business man who had the real interest in bribing the governor buying antiques from the dealer at an inflated price.

How do you spot these things, or know with any certainty when they have or have not happened?

Back in May WNYC’s Andrea Bernstein and Ilya Marritz produced a story alerting the public to another business deal partner quietly helping to fund Jared Kushner projects, an outfit called CIM Group, a private equity company based in Los Angeles.  (See: Trump and Kushner’s Little-Known Business Partner, May 25, 2017)

The story told how “CIM has done at least seven real estate deals that have benefited Trump and the people around him, including Kushner.”  These include:

    •    Kushner’s $340 million purchase of the Jehovah’s Witnesses Watchtower (“one of the biggest real estate transactions in Brooklyn history”).

    •    The trouble plagued Trump SoHo that could have gotten Trump family members criminally indicted that CIM rescued with “a reported $85 million lifeline.”  (Family investors include Donald Trump and his children Ivanka, Eric, and Donald Jr.)

    •    200 Lafayette Street, an office building.

    •    2 Rector Street, an office building.

    •    85 Jay Street, a parking lot in Brooklyn, (“for an eye-popping $345 million.”) 

The story raises a slew of concerns about CIM’s trustworthiness and its interest in influencing politicians including with donation of “tens of thousands of dollars to a series of statewide political action committees.”  It quotes Konrad Putzier, a reporter for the Real Deal magazine saying that “CIM stands out as being very secretive.”  It quotes Laurent Morali, the present president of the Kushner Companies saying of CIM that they “can work through complicated situations, are thorough and strategic.”

The story sniffs around for the traditional bilateral sort of quid-pro-quo concerns saying that the “full extent of CIM’s government ties is not known,” while telling us that public disclosure documents show that CIM “received annualized rent of $37.7 million from the General Services Administration and other federal agencies” and that it has “pursued an array of lucrative government contracts, pension investments, lobbying interests, and a global infrastructure fund, all of whose fortunes could benefit from a Trump presidency.”

And the article reports that CIM has gotten a great deal of its money from public pension funds.  This, with concerns of pay-to-play overtones when political donations are made, is something that Schwarzman’s Blackstone has also been involved in.  WYNC links to the information that public employee pension funds in at least seven states (California, New York, Texas, Arizona, Montana, Michigan and Missouri) have invested in a CIM fund benefitting Trump and his family.

From Reuters, the seven states where the money from public employee pension funds is going to help the Trump family.

As noted, WNYC was sniffing for problematic overly-cozy bilateral arrangements.

Here is something more to think about-  Schwarzman’s Blackstone also does business with CIM.  Blackstone did the following two deals (reported in 2017) with the CIM Group that could be viewed as infusing cash into the business:

    •    Blackstone Real Estate Partners bought 211 Main Street, an office building in San Francisco from CIM for $312.9 million or $750 per square foot, according to sources that were aware of the sale.  CIM reportedly acquired the property in 2009 for $113 million. (“Blackstone declined to comment when contacted for this story.”  March 29, 2017)

    •    The Blackstone Group provided a $360 million loan to CIM Group to finance 1440 Broadway according to a December 21, 2017 article in the Real Deal.

Conflicts of interest in government are a diminishment of the public realm because they mean, by definition, that decisions being made are slanted to be more beneficial to private interests than to the public whom government officials are supposedly in office to serve.  The idea that the public realm is susceptible to being sold off is what then makes infrastructure deals, selling off publicly owned American infrastructure, just as Schwarzman’s fund is setting up to do, such juicy attractions for the greedy.  The private plundering of the Donnell Library with Kushner on one side and, on the other, Schwarzman in a position of public trust as an NYPL trustee, is a prime example of just how heinously detrimental to the public the looting of its assets can be. . .  But we are increasingly at the mercy of those in power who would seek to enrich themselves by diminishing the public realm, claiming its various dismantled parts as their own territory.

One final symbolic irony, perhaps even an irony that’s forcefully intended: In 2011 a new slogan was raised, a cry adopted and resonating across the country, recognizing the public as the “the 99%” while power and  wealth were being wielded with increasing destructiveness by the “1%.”  It was raised by Occupy Wall Street a protest movement that took to the street and seized Zucotti Park in New York City in order to be publicly heard and seen.  Zucotti Park was once named Liberty Plaza Park, before it was renamed in honor of a real estate lawyer. . .

I’ve written previously in Noticing New York about how Zucotti Park and its occupation directly raised the question of the public realm and how we are shrinking the public domains both physical and cultural that the public is still permitted to occupy.

Although Zucotti Park is dedicated and supposed to be for the public, it is technically privately owned by an adjacent property that got zoning bonuses for providing the public with the park.  Ever since Occupy Wall Street was forcible evicted from the park, tight private ownership control has been exercised over the park to ensure that such meaningfully expressive protests don’t erupt there again.  The latest news about Zucotti: Schwarzman’s Blackstone acquired 49% ownership* of it and the adjacent building.  A trophy intended to be symbolic of someone’s victory?

(* NOTE: If you know real estate, you know the various structures whereby 49% can be actual control.)

This Year’s Seasonal Reflection: Yes We Are Now Living In Ratnerville, Locally and Nationally, And Yet We Hope And Work Towards Something Different

From our Thursday, December 24, 2009, A Christmas Eve Story of Alternative Realities: The Fight Not To Go To Pottersville (Or Ratnerville),

Every year since 2009 Noticing New York has engaged in the tradition of a seasonal reflection post as we reach the cusp of the new year.

The theme, borrowed from "Its' a Wonderful Life," has been that if enough is not done to oppose greed and the usurpation of our public commons and community we wind up living in "Pottersville," the fictional dystopian town that Bedford Falls became when the selfish banker Henry Potter (not Harry Potter) took it over when men who could not keep their spirit and will to fight alive let the greed triumph.

The theme has been that in the real world the fictional "Pottersville" is an all too real "Ratnerville."  That's "Ratnerville," as in Forest City Bruce Ratner taking over the entirety of a neighborhood for a monopolistically controlled megadevelopment.  Or you may recognize it equally well today as "Jared-Kushnerville" another New York City Developer, or recognize it by the name of Kushner's father-in-law, Donald Trump the nation's Distractor In Chief who also fledged in this city's real estate industry: That would make it "Trumpville."  Indeed, isn't that what we have as every wish and every good instinct of the public is ignored so that the greedy can grab more for themselves?

Isn't that exactly what he have when among the self-serving deals Trump put in his basket visiting Saudi Arabia this year was $20 billion to be invested with Stephen Schwarzman's Blackstone Group for privatizing America's public assets?

As we commiserate about what is happening nationally, commiserate that it has been a terrible year of seizures, it is important to remember how interconnected what happens on the national level is with what is happening here locally in New York City, how much of what is national was nurtured to awful fullness by this city's real estate industry.  A review of Noticing New York's seasonal reelections of years past reflects this.

Among other things, Jared Kushner and Stephen Schwarzman (aside from other deals they have been involved in together) have both been involved in selling off our New York City libraries.  That too has implications building upon implications, including national ones.

As for keeping our spirits up and keeping up the fight?:  One thing that involves is staying informed plus making sure that others can stay and get informed, and that is one reason fighting to save our public libraries is a critical fight that will give us leverage to win more of these fights to regain our beloved figurative Bedford Falls in the future.   If you click and use the link available here to visit Citizens Defending Libraries you will be one of the first to visit the new Citizens Defending Libraries main web page.  It's subject to some refinement and upgrading that you'll see in over the next days, but it is a good way to start the new year.  It may also be surprising to read there about how interconnected the library fight is to everything else we may be thinking about in term of regaining Bedford Falls.
 
Here are links to the prior Noticing New York ventures into seasonal reflection where you can read:

•    Thursday, December 24, 2009, A Christmas Eve Story of Alternative Realities: The Fight Not To Go To Pottersville (Or Ratnerville),

•    Friday, December 24, 2010, Revisiting a Classic Seasonal Tale: Ratnerville,

•    Saturday, December 24, 2011, Traditional Christmas Eve Revisit of a Classic Seasonal Tale: Ratnerville, the Real Life Incarnation of the Abhorred Pottersville,

•    Monday, December 24, 2012, While I Tell of Yuletide Treasure,

•    Tuesday, December 24, 2013, A Seasonal Reflection: Assessing Aspirations Toward Alternate Realities- 'Tis A Tale of Two Alternate Cities?.,

Wednesday, December 24, 2014, Seasonal Reflections: No Matter How Fortunate or Not, We Are All Equal, Sharing a Common Journey

•    Thursday, December 24, 2015, Seasonal Reflection: Mayor de Blasio, His Heart Squeezed Grinch-Small, Starts Gifting Stolen Libraries To Developers For The Holidays

•    Saturday, December 24, 2016, Noticing New York's Annual Seasonal Reflection

One must keep one's fighting spirit up.      

Manhattan District Attorney Cyrus Vance Scandals: Jared Kushner and Ivanka Trump- One! Harvey Weinstein- Two! Bill de Blasio Library Pay-To-Play Scandal- Three?

If you have been catching up with the news recently you know about the scandals involving Manhattan District Attorney Cyrus Vance.  . .

Vance's office was ready in 2012 to prosecute Ivanka, the daughter of Donald Trump and her husband Jared Kushner for real estate fraud, “allegedly duping prospective buyers in a failed Manhattan project dubbed Trump Soho” (a violation of the Martin Act).  Reportedly, against his staff's recommendations (and despite some damn good email evidence), Vance did not prosecute.  His receipt of campaign contributions was involved. . .   Now under the spotlight, Vance just gave back money, a $31,000 donation from Father (Donald) Trump's lawyer, Marc Kasowitz, he took in 2013 after dropping the case.  Another $9,000 from employees at Kasowitz’s law firm and $9,000 more raised at a breakfast hosted by Kasowitz was not returned.

That's one scandal!

Then there is the case of movie production mogul Harvey Weinstein whom a slew of women have now accused of sexual assault and harassment.  Vance made a decision not to prosecute Weinstein in 2015.  His decision not to prosecute was despite an very damning police sting audio tape that documented his harassment of an Filipina-Italian model Ambra Battilana Gutierrez in a Manhattan hotel.

Again, Vance's receipt of campaign contributions was involved.  . . The lawyer, Elkan Abramowitz, who helped Harvey Weinstein avoid charges (Vance's former law partner) reportedly donated $26,550 in campaign cash to Manhattan District Attorney Cyrus Vance Jr. (including $2,100 after Vance let Weinstein walk) plus, according to campaign finance records, his law firm gave Vance another $11,500, before Vance's Weinstein decision.

That failure to prosecute is scandal number two!

The media is beginning to notice and connect the two because of the similar behaviors on Vance's part.  The New York Times editorial board issued an editorial saying: "that eyebrows understandably soar skyward when a district attorney pockets cash from a lawyer who may have a client facing charges that could send that client to Attica.. . .  As lawyers might say, res ipsa loquitur. The thing speaks for itself."

Is there one more? 

. . . Now you might remember that until recently Cyrus Vance was working with US. Attorney Preet Bharara to investigate pay-to-play deals by Mayor Bill de Blasio.  And you may remember that one of those pay-to-play deals was the sale of the Brooklyn Heights Library.  Then Donald Trump fired Preet  (March 11, 2013) and just a few days later (March 16, 2013) all these investigations were dropped. . .  And?  We'd love to know more about what was involved.

Preet Bharara has since lifted the curtain to say that he believes that before he Trump fired him Trump was trying to “cultivate” a relationship with him where he'd be asked by Trump to do the wrong thing.

How hard do you think it would be to trace aspects of the Brooklyn Heights Library and other pay-to-play deals being investigated back to campaign contributions to Vance from those close to de Blasio or Democratic party operatives or involved developers wanting de Blasio's real estate favoring reign to continue undisturbed?:  The Times editorial noted that the list of Vance's donor's "is strewn with law firms and individual lawyers" some of whom "may have unsavory motives when they open their wallets."

But we don't even have to get to that kind of extensive cross-checking to bring us full circle to the Vance contributions we have already discussed.  We need only note that the Brooklyn Heights shrink-and-sink-a-public-library scheme replicated the previously executed Donnell shrink-and-sink-a-library and replace it with a luxury tower scheme.  That Donnell deal also involved a woefully lacking excuse for a valid "bid."  For both deals there was a significant overlap of people involved behind the scenes.  And, if you could have flipped people to get them talking, the trail led back to Trump son-in-law Jared Kushner as a principal financial beneficiary from the sale of Donnell . .

. . . It's probably not exactly what Trump supposedly had in mind when trying to "cultivate" a relationship with Bharara unless you want to think generally in terms of privilege exercised by a well-connected elite prone to take advantage of the commoners.

It's been suggested that an excuse for Vance's decision not to prosecute is that it is waste of his office's resources to prosecute the powerful who can fight back and bollix up prosecutions by hiring expensive lawyers and pay for 14 carat obfuscatory PR maneuvers regular folk can't afford.  (Similar to the Weinstein case, in 2011, Vance abandoned a sexual-assault case against Dominique Strauss-Kahn, the former managing director of the International Monetary Fund.). . .

. . .  On the other hand, shouldn't our first priority be to prosecute the powerful whose conduct entrenches corruption at the core of our system and warps our most important institutions?

Coincidentally or not, The New Yorker magazine got the ball rolling with major stories it respectively ran about both the Kushner/Ivanaka Trump and Weinstein failures to prosecute. . .

. . . We could hope that another New Yorker story might get the ball rolling on a third such story about the non-prosecution of de Blasio.  Maybe not: David Remnick, the New Yorker's editor is a trustee of the New York Public Library and investigating the Donnell Library sale or anything leading back to it would be unconformable for the NYPL trustees (and perhaps particularly Trump buddy Stephen Schwarzman).

Or we could hope that another prosecutor with power and authority, most obviously New York State Attorney General Eric Schniederman, could pick up the scent . . . But maybe not: It has been noted that Schneiderman also takes political donations from those he could or should be investigating-  How was it that the Times editorial put it about eyebrows understandably soaring skyward when a prosecutor  pockets cash from a lawyer who may have a client facing charges that could send that client to Attica?

Vance is running for office unopposed in the November 7th election.

Stephen A. Schwarzman The Man Making Deals To Privatize The American Public’s Infrastructure?: It’s Unforgivable (And Coming From Trump)

When Trump's visit to the Saudis wound up with Blackstone's Stephen Schwarzman walking away with a huge benefit for Wall Street plutocrats, a number of other deals detrimental to the public were struck at the same time.

Blackstone head Stephen A. Schwarzman is notorious for pocketing the most income of anyone in the world.  So you may very well find it annoyingly disproportionate that in 2016 it was reported that Mr. Schwarzman’s take home for the year in 2015 was $810.6 million.  That’s if that kind of extreme disproportion bothers you.

And if you are already unsettled by that information, consider that huge portions of Mr. Schwarzman’s income are taxed at less than half the usual rate, just 15%, because of the carried interest loophole that he lobbies hard to keep in place for his continued benefit.

Now consider this, which you can learn from Jane Mayer’s 2016 book, “Dark Money, (The Hidden History of the Billionaire Behind the Rise of the Radical Right)”: When asked whether his own taxes should be raised given the dire state of the economy, Mr. Schwarzman said, to the contrary, the poor are the ones needing to pay more in taxes.

Wth a huge part of his $810m 2015 income taxed at less than 1/2 the usual rate Stephen Schwarzman says poor should pay more taxes, not he.- Jane Mayer's "Dark Money."

There is even more to annoy you if you want to acquaint yourself with some of the ways that Mr. Schwarzman reportedly earns his money.

How is it that this man who believes we should take from the poor while simultaneously privileging the rich with such special and unequal advantage should have been given a key role in saying that our NYC libraries should be sold and shrunk, the books banished?  Should we add details about how the wealthy were benefitted by these library sales at the expense of the rest of us?

War as busine$$ tied to $$ flow to Ivanka (like HRC & Clinton foundation) and Schwarzman's Blackstone.

Now consider this about Mr. Schwarzman . . .  it’s news concerning the jeopardy other of our national public assets are likely to be prey to. . . Did you note what was reported when Donald Trump visited Saudi Arabia on weekend late this May?  Deals were made. .

    •    Trump signed arms deals to provide the Saudis a record $110 billion in arms (expected to total more than $350 billion over the next 10 years), which will, among other things help support Saudi Arabia’s continued bombing and decimation of Yemen.

    •    The Saudis pledged:

    •        a $100 million donation—made along with the United Arab Emirates—to a new foundation being proposed by Trump’s daughter Ivanka, a World Bank fund for women, (Does that sound too much like nepotistic crony capitalism an therefore antithetical to the public interest the way that it also sounded when the day that Trump and Ivanka dined with the Chinese President Xi Jinping at Trump’s Mar-a-Lago Florida resort, the Chinese government awarded Ivanka three new exclusive trademarks for her brand of jewelry, bags and spa services - with China, in the background, also granting preliminary approval for another 38 Trump name trademarks?  Or what about the way the China has now locked up three people who were arrested while they were investigating labor conditions at a factory manufacturing Ivanka Trump brand shoes?  Does it also sound uncomfortably like the Saudi donations to the Clinton Foundation that Donald Trump excoriated during the campaign?) AND 

    •        a $20 billion investment in Schwarzman’s private equity firm Blackstone Group firm (along with investment is some other U.S. Companies not apparently worth much mention) that is planned to be used as “cornerstone” seed money for privatizing U.S. infrastructure.

And there are those who believe that it's evident that there was yet one more qui-pro-quo sell out of the public interest was part of the bartering during the visit, another Trump give to the Saudis:

    •        The June 1st Rose Garden announcement by Trump that he was withdrawing the United States from the Paris Climate Accord.

The thinking on this as explained by oil and energy journalist Antonia Juhasz is that (while also pleasing the Russian petrostate):

Saudi Arabia has desperately been trying to stop the climate accord process for years, and does not want, for very obvious reasons, the world to declare its lack of an intent to continue to use carbon-based fuels. And Trump came back from Saudi Arabia and announced that the United States would be eliminating its commitments and pulling out of the Paris climate accord.

Mr. Schwarzman is also the head of Trump’s business advisory group, which the New York Times notes “lists infrastructure work as one of its topics for discussion.”  (He also sat beside Trump for the fanfare when Trump announced that he was deregulating Wall Street.)

The White House has been promoting this past week as “infrastructure week,” some say partly as a hoped for distraction from the James Comey testimony.  But the promotion of the pending infrastructure deals has been criticized for `baffling everybody with the total lack of details.'

The privatization of what are normally publicly owned assets and infrastructure often involves straight out transfer of legal title and ownership of public property into private ownership (sometimes it is a murkier transfer of sets of rights, licenses or leases), but the fashion among those promoting these deals is to call them "partnerships," and increasingly they are now being referred to by the jazzy initials "PPPs" as if they are something new; they are not (their promoters have had some of their plans in the works for decades).

The Wall Street PR is that "PPP" stands for "Public-Private Partnerships."  Those who understand better what the 'arrangements mean from the standpoint of public benefit are more inclined to reverse that and call them "Private-Public Partnerships" because of what happens when the private sector is put in the driver's seat to structure these deals in the way that most benefits the private sector.  "PPP" may also be thought of as standing for "Profit Producing Product": Unless you can contort these deals into producing profit (and immediate extra cost to the public) the private sector walks away from them.  If a deal involves a heavy-lifting challenge, government will be left to do it alone.

"PPP" could also easily mean "Profit Pitted against the Public" or "Profit Pummels the Public."

Private profit and public benefit tend to be focused on different goals and agenda, as apt to be at loggerheads than conveniently aligned for `partnership.'  Exactly who uses a certain road or certain public asset, at what time of day, day of the week or at what costs and with what ease of access and why they do so, is apt to involve all sorts of external public benefit calculations, but for the private sector seeking profit only one bottom-line objective controls: Pleasing the stockholders, building up their bank accounts.

Many, including the New York Times with a requisite quote from an expert in the field, warn that one problem with assuring the public interest is properly balanced and against the private sector’s greed when these deals are struck is that “public officials negotiating these arrangements sometimes lack the financial sophistication and advice to fully understand the deals.”  What is probably the far greater concern is that with all the pay-offs to public officials that come with crony capitalism, those same public officials are heavily pressured to at least pretend they don’t understand the harms to the public or excess benefit to the private sector.

It was unforgivable to make Stephen A. Schwarzman a decision-maker about selling and shrinking our NYC libraries given his expressed priority of soaking the poor while ensuring that his obscenely unfair  collection wealth continues full tilt.  It is highly instructive to see how those kinds of priorities played out with the sale of the Donnell Library, the first major library (a beloved central destination library in Manhattan) sold as an example of one of these "Private-Public Partnership"  See: Priorities To Be Replicated?: Private Luxury Now Abounding Where Former Donnell Library Stood, A "Replacement" Library Is Nowhere In Sight, Saturday, November 7, 2015.

Notably, one of the principal financial private sector beneficiaries of the Donnell Library sale was Jared Kushner, Donald Trump's son-in-law, Ivanka's husband, and now a key advisor/deal maker for Donald Trump as president.  Schwarzman was on one side of the deal pushing the library out of public ownership: Kushner was on the side that benefitted. . .

. . . All of this is worth remembering when we ask what is in store for us as the Saudis put billions of seed money into Schwarzman's hands intended to prime the pump for a wholesale sell off of American public assets to the private sector.

Donald Trump (Whose Son-In-Law Was In on Donnell Library Sale) Puts Library-Selling Stephen Schwarzman In Charge of Economic Policy

It’s like those Frankenstein meets the Wolfman horror movie mash ups that came out of the Universal Studios in the days of yore: Donald Trump, the self-styled `real estate mogul’ whose son-in-law was a principal financial beneficiary of the sudden and secretive sale of the Donnell Library for a pittance meets up with library-destroying Stephen A. Schwarzman, head of Blackstone, the world’s largest real estate investment firm (among other things), the NYPL trustee who helped push the Donnell real estate deal out the door to Mr. Trump’s son-in-law and was even rumored to be personally involved in the deal through his own companies beforehand.

CNBC has reported that president-elect Trump has announced who he will be meeting with frequently as president.   Blackstone CEO Schwarzman (of all people) is to chair a strategic and policy forum for Trump that will be comprised of “heads of some of the largest financial, industrial and media companies in the United States,” selected by Schwarzman.  See: MSNBC- Trump to meet 'frequently' with Blackstone's Schwarzman, other business titans to discuss policy, by Jacob Pramuk, Friday, 2 Dec 2016.
  
One can understand why appointing Schwarzman to such a position and meeting with him frequently would seem juicy in terms of opportunity to Trump given that, as just mentioned,  Schwarzman is the head of the world’s largest real estate investment company.  Think how resplendent and limitless that makes the business possibilities, although that’s not why Trump is supposed to be meeting with people as president.

The fact that Schwarzamn is involved in all or nearly all of the following seven lines of business should have significant attractions to Trump from a business point of view:

    •    private equity
    •    hedge fund
    •    real estate
    •    a large credit business that does highly leveraged credit,
    •    a mergers and acquisition group
    •    a troubled company restructuring business
    •    Raising money for other people in the alternative asset classes from institutional investors

When has the situation even been so ripe for turning a position in government into a money-making profit center?

There is a theory everyone is talking about concerning how we are not supposed to be “normalizing” all of the Trump excesses and the current far-ranging departures from precedent and what was previously viewed as good behavior and proper lawful comportment.  So you have to wonder when the New York Times, looking ahead to the Trump administration, writes an article finding possible precedent for what they foresee in the mega-conflict-of-interest scandals of the eight years that businessman Silvio Berlusconi was prime minister of Italy. . . And, it’s not just business; in the case of each man there have been legal proceedings to deal with charges of their illegally having sex with underage women.  (See: Trump's Potential Conflicts Have a Precedent: Berlusconi's Italy, by James B. Stewart, December 1, 2016.)

In what is possibly a somewhat “normalizing” comparison, the Times article says that Mr. Berlusconi's conflicts were “more blatant than Mr. Trump's potential conflicts, because he owned so much of the Italian media,” while neglecting to point out that there has already been talk about Trump starting his own television network.  Are we sure that’s no longer being thought about, because it’s certainly something that Trump’s campaign advisor, Roger Ailes, exiled from Fox News for sexual harassment, and Trump’s chief White House strategist, Steve Bannon, out of Breitbart News, would probably both love.  (Ailes and Trump were both in the news simultaneously for respective reports of sexual harassment, even as they worked together on the campaign.)

Unfortunately, a great deal of the “precedent” the Times challenged itself to go abroad to find in Italy with Mr. Berlusconi had already had groundbreaking precedent laid for Mr. Trump by Michael Bloomberg as mayor in New York City.  Some years ago Noticing New York wrote about the similarities between Bloomberg and Berlusconi, including the fact that they had neighboring homes in Bermuda.  Both Bloomberg and Berlusconi significantly repositioned where they stood on the charts of financial recognition while they held political office, racking up significant extra billions to inflate their wealth.  Bloomberg, like Berlusconi also had some media muscle to flex, including Bloomberg News, Bloomberg Radio on a local radio station he acquired, and Bloomberg cable television (even as the New York City was regulating cable companies).

The Donnell and other library-shrinking sell-offs were initiated in New York City under Bloomberg as mayor (although de Blasio, breaching the promises of his campaign, has continued pursuing them.)

During the campaign, several variations of a gimmick used by Trump emerged.  It cropped up with Trump’s side-stepping of federal income tax payments and his quid-pro-quo payments of elected officials (“When you give, they do whatever the hell you want them to do”): He asserted that because he had participated so heavily and successfully in a “rigged system” he was the one who knew best and was the best choice to “fix it,” including telling potential voters that  "Our campaign is about breaking up the special interest monopoly.”

There is actually some precedent in the way we recount history that might make such promises sound less absurd: When Franklin Delano Roosevelt appointed Joseph Kennedy as the first head of the Securities and Exchange Commission in 1934 there were gasps about the fox guarding the henhouse, as Kennedy was known for sharp deals taking advantage of insider trading and market manipulation.  Kennedy “knew all the fraudulent, questionable backroom ways of stuffing the pockets of finance’s fattest fat cats.”  Nevertheless, it is generally credited that Kennedy, because he knew so well how the system could be abused, knew how best to root out its problems and reform it and actually did exactly that.

There is hardly any reason to now believe that is where we are headed with Trump. Where is Trump headed? . .

. .   Because Trump, routinely self-contradictory and perpetually caught in lies, can’t be depended on to actually tell us where he is headed, we are supposed to now cultivate a talent for listening through his “cacophony of lies. . [and] nonsense” to hear what he is actually, bigger picture, saying, which according to Masha Gessen, among other things involves the message that he is powerful enough to lie without consequence, something our previous politicians pushing the envelope of false political promise have never before been so immoderate about.

Firmer ground to fall back to is the “pay attention to what I do, not what I say” rule, but that inevitably leaves one playing catch-up.

While it may be that rooting problems out of the system could involve at least a certain amount of stealth (to avoid being too obvious about too soon?), it doesn’t look from any of Trump’s appointments that he is surrounding himself with any allies who would assist in pursuing any kind of reform.

Trump may once have spoken about “draining the swamp” when he was elected while excoriating Goldman Sachs (and Hillary’s Goldman $peechs), but now people perceive that he’s actually `filling the swamp with alligators,’ including multiple Goldman appointments, even to the extent that it might even start causing succession problems back at Goldman.

Trump biographer Pulitzer Prize-wining David Cay Johnston is something of a self-proclaimed expert on Trump, having reported about Trump since the early 1980s.  If you believe Johnston, Trump’s specialty is ensuring he makes a personal profit no matter what does (even making money just campaigning for president) and very typically leaving other people worse off, short-changed as he exits, for instance through bankruptcy.  According to Johnston (better audio if you go to WBAI):

what Donald is a master at is finding a way to extract money from something, make a deal, get an enterprise, pull all the money he can out of it.  This is not a man who creates wealth.  This is not a man with a long-term viewpoint.  He is simply someone who, like a leach, sucks the lifeblood out of a business for himself, and then moves on.

With a huge dossier of back-up files, Johnston says that Donald “has for his entire life embraced con artists, swindlers, violent felons” with the very troublesome involvement of organized crime figures to boot.   David Cay Johnston has been writing for a while about increasing wealth inequality with books like “Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill)” (2008) and says that government policy now (and this was before it was known that Trump was headed to the White House) is “to take from the many to further enrich the few.”

Ergo, with what the corporations have been doing to us, extracting from the many to further enrich the few, it is perfect that Trump is teaming up with Stephen Schwarzman to chair a group of business leaders to set national policy that can proliferate such approaches throughout the economy.  That is Stephen Schwarzman, who, with Trump’s son-in-law Jared Kushner participating, extracted value from the many for the few with the sale of the Donnell Library.  It is already worried by those looking ahead at these things that when it comes to all the publicly-owned assets of the nation’s infrastructure Trump’s plans will be a “full-on privatization assault,” a “privatization fire sale” ensuring “that private, not common, interests determine where funding is focused.”

The whole situation is rife with possibilities for crony capitalism: Before even assuming office Trump and Vice-President Elect Mike Pence just gave tons of tax-payer money and exemptions from regulatory protections for the public to Carrier, a company that is moving 1,300 jobs from Indiana to Mexico (while, supposedly in return for that government `generosity' keeping just 800 jobs here- another 300 jobs weren't ever possibly going to be moved), while, at the same time, other companies all around Carrier are also moving jobs to Mexico.

No, the signs are terrible.  The fossil fuel extraction industry that profits when it destroys the environment that the rest of us depend on to live will have a climate change denier presiding at the head of Trump’s Environmental Protection Agency.  And since climate change destroys the entire planet there is no place to move.

In fact, another reason we need to stay here in this country to fix things, deal with these devils we are getting to know here, is that similar things are happening around the world.

Just as the invaluable Donnell Library was plundered in a shrink-and-sink sale so that a luxury hotel and condominium tower could be built on its site (with Trump’s son-in-law a principal financial beneficiary), so too is the Sheffield Library in England threatened with sale so it can be turned into a luxury “five-star hotel.”   The luxury hotel at the site of the former Donnell was sold to Chinese investors for a record-setting amount (none of this money ever went NYC libraries).  The Sheffield Library is similarly proposed to be sold to Chinese investors.

One floor of the building now housing the Sheffield Library houses the Graves art gallery, an art museum opened by wealthy businessman man John George Graves in 1934 dedicated to ‘the service of knowledge and art.’  While the library would be moved away, the Graves art museum would remain in the building with the luxury hotel presumably enhancing the hotelier’s business prospects.  That sounds rather like what happened with Donnell which was, before it was banished, in a valuable location for a cultural library, across the street from the Museum of Modern Art.   Now it’s the patrons of the luxury Baccarat Hotel that benefit from such convenient access to the museum.

Coverage from the Guardian and the Sheffield Star

Sale of the Sheffield library is vehemently being opposed, by, among others, actor Michael Palin, of Monty Python’s Flying Circus fame, who “has described the proposals as an embarrassment for the city of his birth.”

In a letter to the Sheffield Star Palin wrote:

The Sheffield Central Library embodies the very best aspects of civic pride. It's a fine building, built to give education and literacy a prominent place at the very heart of the city.

That a building, seeking to improve the lot of all Sheffielders, should end up as a hotel for the rich and privileged, seems a sad reflection on how little the city cares for its public service legacy.

There is a quote from Palin on display on the first floor in the library:

There is no institution I value more in this country than libraries.

In its day, Monty Python with Mr. Palin contributing brilliantly, brought us far-fetched laughable conceptions such as the government’s “Ministry of Silly Walks.”  Unfortunately, we are succumbing to much more far-fetched tragedies.  It looks like under Trump we will, in essence, have a new department of the government, headed up by Mr. Schwarzman: “The Ministry of Silly Ideas To Sell off Valuable Public Properties.”

Disclosure: I am a co-founder of Citizens Defending Libraries and on the board of the Committee to Save the New York Public Library.

Oddly Timed 2008 NY Observer Article Pumps Up “Ambition” For The Books- A Pitch To Those Who Would Like to Be Trustees of Brooklyn Public Library, If Not Actually Trustworthy

Found on the Massey Knakal a real estate firm website.  Text highlighted in yellow calls attention to the involvement of one of their brokers.   It is probably just a bizarre coincidence that there is a large ad for Baccarat given that when the Donnell Library was sold it was replaced, in part, by a luxury hotel using using the name.

I came up with a wonderful it-only-takes-a-little-reading-between-the-lines New York Observer article from 2008 about who should consider for themselves the prospect of becoming a trustee of the Brooklyn Public Library.

The article came out in February of that year, just a few months after Jared Kushner, the owner of the Observer (and Donald Trump’s son-in-law) had locked in a deal that benefitted from the sale of the Donnell Library that trustees of the New York Public Library tossed out munificently to the real estate industry.. . . The public, of course, losing out.

Interestingly, I didn’t come across the article on the Observer’s site; I came across it on the site of Massey Knakal, a real estate firm, where they had posted it, highlighting text in the article to show how one of their brokers, Landon McGaw, was participating.

The article starts out saying that maybe getting onto the exclusive NYPL board with Stephen Schwarzman of Blackstone (the world’s largest real estate investment firm plus much more) is out of reach when you are “jockeying for position” in New York,  but “what about Brooklyn” for opportunities?

Answer: “Cue J.P. Morgan, CitiGroup and Goldman, Sachs-and government employees (retired teachers and a Con Ed spokeswoman among them).”  Brooklyn is a borough of “Brooklyn's shiny new condos and brownstone conversions.”

Put into the words on one of the people reported on there is, “a eureka-moment story about . . . .  standing in Grand Army Plaza, the traffic circle outside of Prospect Park . . .  the imposing main branch of the BPL, and thinking, This place is changing. . . . `Why don't I engage the library?'"

Consider this startlingly frank assessment from the article (emphasis supplied):

Buried underneath the earnest and altruistic desire to help the library is, perhaps, a touch of social snobbery, a desire to use the opportunities afforded by the New Brooklyn to further one's station in life.

Then again, that's what nearly all New York-style charity has been about, and it's unrealistic to expect this new group to be any different. And it must be said that the barriers to entry are lower. .

The article spotlights BPL trustee Janet Offensend as being the BPL official leading the charge for the advertised transformation, bringing in a new set of individuals who “love a good party” (one must wonder about whether such phases are code words or dog whistles when buried in with the recitation of a lot of other altruistic claptrap.).  The article tells us about Ms. Offensend:

Janet Offensend, a fixture on the Brooklyn charitable scene for many years whose husband is the chief financial officer of the NYPL, is a library trustee who has helped marshal the Vanguard through its first few months.

What is not noted is that Ms. Offensend’s husband David Offensend, mentioned as the chief financial officer of the NYPL, is the one who arranged the sale of the Donnell Library in a deal benefitting the aforementioned Jared Kushner, owner of the Observer.  If you know that you don’t need dog whistles to figure out much more.

For further documentation about the recomposition of the Brooklyn Public Library Board of Trustees achieved in this era consider the following page of information from Citizens Defending Libraries:

Brooklyn Public Library Trustees- Identified + Biographical and Other Information Supplied

Point of disclosure: I am a co-founder of Citizens Defending Libraries, formed in 2013 in reaction to breaking headlines about library real estate deals benefitting developers, not the public.

The Observer article appears on the Observer’s website:

The Observer: Brooklyn's Bookish Ambition, By Doree Shafrir, February 22, 2008

And, as noted, on the site of real estate firm Massy Knackle.

One additional little secret to share: I also found the article because it mentioned Ethan Hawke.  Click for more information here: x

Real Estate Deal Revelations In Scott Sherman’s New “Patience and Fortitude” About NYPL Central Library Plan Fight: Observer-Owning Kushner Family In At Outset of Donnell Sale

I am reading and now am almost at the conclusion of Scott Sherman’s new “Patience and Fortitude- Power, Real Estate, and the Fight to Save a Public Library.”  It’s about the fight to save the famed 42nd Street Central Reference Library from the NYPL “Central Library Plan” that would have also sold off the Mid-Manhattan and 34th Street Science, Industry and Business libraries.

The book’s official release date is a few days from now, but ordering directly from the publisher makes it available earlier, which is the way I got copies.

I am fascinated to see how Mr. Sherman ties it all up, although I already suspect that there will be a few threads left tantalizingly hanging.  The book deserves a thorough Noticing New York review, which I hope I will get around to soon.

In the meantime, the book produces some revelations in what I already have read.  One of them involves confirmation of something that was easy to suspect but was never before reported: The Kushner family that owns the New York Observer was in on the sale of the beloved Donnell Library from the outset.

Two November 7, 2007 NY Times stories about real estate deals that turned out to be connected

Why was that easy to suspect?  As reported previously by Noticing New York, on November 7, 2007 the New York Times published two stories that reported separately (even in two different sections of the newspaper) about two real estate deals that ultimately turned out to be connected: The New York Public Library’s announced sale of the Donnell Library and Jared Kushner’s purchase, for a record-setting amount (taken home by Tishman Speyer) of 666 Fifth Avenue.  Jared Kushner is the owner of the New York Observer.

In my previous NNY reporting on these tandem sales I asked: “Did somebody know when 666 was bought that there was other potential value in the building?”  Why? Because ultimately $30.825 million was paid to the owners of 666 Fifth Avenue for `air rights’ freeing the Donnell site developer from restrictions that would have limited what could be built there.

The purchase of 666 Fifth Avenue announced December 2006 occurred in January 2007, ten months before the announced sale of Donnell.  The Times reporting that November said it was the “first major foray into the Manhattan office market, the buyer, the Kushner Companies.”

Scott Sherman’s book reveals that in 2007:

[Marshall] Rose moved rapidly to dispose of the Donnell Library.  Two bidders emerged: The Kushner family, which owns many properties in Manhattan, and a subsidiary of the Bermuda-based Orient-Express company, which owned the abutting “21" Club.

When Citizens Defending Libraries (I as a co-founder of CDL was part of the interview team) interviewed NYPL Chief Operating Officer David Offensend about the NYPL’s library sales he was evasive about the bid process that wasn’t public so it isn’t a surprise that only these two bidders “emerged.”    It is interesting that behind the scenes, the Kushners, looking to make a second major foray into the market, apparently understood the connection and what it meant in terms of the transaction that would ultimately be structured.

Certainly others understood too, but that connection was not furnished publicly at the time Robin Pogrebin was reporting about the announced Donnell sale.  She was misled by the NYPL’s description of a very different transaction involving only an 11-story hotel, not a 50-story luxury tower in which the inclusion of a luxury hotel would be only a small part.

As the Kushner deal to acquire of 666 Fifth was solidified by the end of 2006 at a then suspiciously high price, it looks all the more likely that the Kushners knew of the likeliness of a Donnell sale somewhat earlier that year. . .

. . .  That, checked against the reporting in Scott Sherman’s book, seems to mean that the Kushners knew the outlines of the deal that was shaping up before the NYPL board knew about or approved it.  Notwithstanding, the Kushners were apparently taking significant action presuming they knew how things would unfold.

2006 seems to have been an interesting year for the Kushners.  Jared Kushner acquired the Observer in July 2006.  Also, as the Times reports, his father was released from prison:

Mr. Kushner’s father, Charles B. Kushner, is a company founder and a newsmaker in his own right. A major Democratic fund-raiser, Charles Kushner was convicted last year of 18 counts of tax evasion, witness tampering and illegal campaign donations. He was released from prison earlier this year.

Interesting thing about the owner of the Observer being involved in this deal?: It’s one more New York City news organ less likely to do investigative reporting about New York City library sell-offs. . .

At 53rd Street accross from MoMA, the 97,000 square foot Donnell on land from John D. Rockefeller out of stone that matched Rockefeller Center's

Mr. Sherman’s book has other revelations.  There are, for instance, revelations concerning the loss the NYPL suffered selling Donnell.   Noticing New York and Citizens Defending Libraries have previously made the point that Donnell was sold to net the NYPL less than $38 million.  It turns out the NYPL netted far less than that.  The NYPL collected a gross price of $59 million for the 97,000 square foot library, much of which had been recently renovated.  It is so far costing the NYPL at least $21 million to build the much smaller 28,000 square foot, largely bookless, largely underground library that will `replace' Donnell in 2015 or maybe 2016.

Additional losses must be subtracted.  The NYPL paid millions to professionals to tell them that its essentially stupid real estate transactions were the opposite of that.  That’s the way that you cover your ass when are doing something that you shouldn’t.

But, if the NYPL had tried to build a library that replaced Donnell full scale it would have lost money on the transaction even taking just these figures into account.

There is more information that will come out associated with the cost of removing the books from Donnell.

Books ready to be shipped off, disappearing from Donnell.  Many illions of books that were in Manhattan Libraries are not there anymore.  And there is substantial cost associated with not having them there.

Mr. Sherman’s book identifies some other costs that turned out to be huge in comparison to how little Donnell was sold for:

the outfitting of a temporary replacement library for the Donnell in a cramped space on 46th Street, which turned out to be a very costly proposition–  [NYPL President] LeClerc and Rose had inked a rental lease whose terms called for payment of $850,000 for the first year (with possible increases thereafter), but the Library also spent nearly $5 million to outfit that new temporary facility.

Ergo, even before recognizing that the NYPL would have suffered a net loss if it had to build a full-scale Donnell, the $5 million to outfit the temporary replacement means that the NYPL netted less than $33 million for selling the library and from that there needs to be further subtractions of the $850,000 annual rents for all the years since Donnell closed in spring of 2008.

Meanwhile, the penthouse apartment in the 50-story luxury tower replacing Donnell is on the market for $60 million.  Several weeks ago another single lower-level condo unit in the building, 43A, sold for $20,110,437.50.  There is also a 114 guest room luxury hotel in the tower and earlier this year Chinese investors made that hotel, according to the Wall Street Journal, “the most highly valued hotel in the U.S.” after agreeing to buy it for “more than $230 million. . .  .more than $2 million a room.”

Having checked via the index, I know that there is one thing that Mr. Sherman didn’t report.

He reported how NYPL COO David Offensend (now replaced- not reported by Sherman- by Iris Weinshall, Senator Schumer’s wife) was a key driver of the Donnell sale and NYPL real estate plans.  Some flatteringly refer to Offensend as a `mastermind' of the plans.

But Sherman did not report that while David Offensend was engaged in such plans at the NYPL his wife, Janet Offensend was named to the board of the Brooklyn Public Library where she was instrumental in the introduction of parallel plans for the sell-off and shrinkage of Brooklyn libraries, including a sale very closely modeled on, almost exactly duplicating, the sale of Donnell: The sale of the Brooklyn Heights Library,   Brooklyn’s central destination library in Downtown Brooklyn on Cadman Plaza at the corner of Tillary and Clinton.*

(* The sale of Donnell was sudden and secretive, but the first ever public hearing about the sale of a major New York City library will be held Wednesday, June 17th, about the proposed sale and shrinkage of the Brooklyn Heights library.) 

On the left the Grand Army Plaza Library.  On the right the Brooklyn Heights Library.  Both central destination Brooklyn libraries were designed by Francis Keally, former president of the Municipal Art Society when it was a vital organization