Business & Tech – RI Future

August 21, 2016August 22, 2016

Jeff Grybowski: GOP corporate lawyer turned CEO climate hero

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Jeff Grybowski didn’t set out to save the world from climate change. The CEO of Deepwater Wind, which just completed construction of the nation’s first offshore wind farm, wasn’t trying to be the first in the United States to commercially harness the offshore breeze and, in the process, potentially create a new sustainable industry for his home state.

“I freely admit that I didn’t know anything about energy before I started this,” he said, during an interview at Deepwater Wind’s downtown Providence office. “I didn’t think anything of it. I had no opinion.”

The Cumberland native and Brown grad was a corporate attorney in Providence, fresh off serving as chief of staff during conservative Republican Don Carcieri’s first term as governor, when a group from New Jersey approached him about the idea.

“It was the middle of 2008, that summer, when they called me and asked me how do we get a permit to build an offshore wind farm in Rhode Island,” he recalled. “I was doing regulatory law and we all started scratching our heads. But we were lawyers and we wanted to help answer the question.”

The process

Grybowski knew a thing or two about the regulatory process, both from his legal practice and his tenure in the executive branch at the State House, and that proved to be the name of the game.

“For offshore wind in the U.S. it’s never been about construction,” he told me. “It’s always been about the regulations and the legal structure that allows it to happen. Obviously we build things that are as big and as complex as an offshore wind farm. The offshore oil and gas, that stuff is much bigger. The question is can we as a society agree how to build these things, where to build them and what steps you need to take in order to get, let’s call it, community sign off. It was the newness of it, that was the biggest obstacle.”

The Block Island wind farm had to win approval from more than 20 federal, state and local government agencies before construction could start, he said.

“It was great that the U.S. Department of Energy says we think offshore wind is a huge resource and we should develop it,” he said, “but the reality is that really wasn’t as important to us as whether the town of New Shoreham thought it was a good idea.”

Navigating the regulatory process, Grybowski said, is Deepwater Wind’s “core competency.”

He explained, “You need to take it to not only all the agencies of the federal government and people who need to say yes, or who have a veto, and then you bring it down to the state government, all the different agencies, and then down to the local government. And all across that chain you have stakeholders who have the ability to influence the agencies. It’s a huge matrix. You’ve got to find a way to get yourself through that matrix of agencies and stakeholders, and that’s what I did.”

An energy transformation

Along the way, Grybowski also went from being the company’s legal counsel to being the company’s CEO. Eight years after the project was first conceived, Deepwater Wind just finished construction of the first offshore wind farm in the United States. The 5-unit array will produce 30 megawatts of power. Enough, Grybowski said, to power 17,000 average U.S. households.

It’s a relatively small amount of electricity, but Grybowski thinks it’s a big step in what he called an “energy transformation” away from fossil fuels toward renewable energy sources.

“I think offshore wind is about to become a huge component of this energy transformation,” he said. “As a native Rhode Islander I might have been quicker than others to recognize how ideally suited this state was because of our proximity to this enormous resource and because of some of the logistical advantages we have.”

It’s an obvious opportunity for the Ocean State, he thinks.

“We don’t generate a lot of resources locally,” Grybowski explained. “Coal gets shipped in. Gas gets piped in. We’re the end of the line from an energy perspective. But that’s one of the brilliant things about offshore wind for this region. We’re the beginning of the pipeline here because we control the resource. It’s right off our coast. It’s the single biggest natural resource that we have to produce energy in this region.”

The future for offshore wind

Deepwater Wind is already planning its second project. The company has leased 200 miles of ocean about 15 miles southeast of Block Island that could support 200 turbines, compared to the first farm’s five – or 1,000 megawatts compared to just 30. He thinks there is five times that much potential wind farm energy in the vicinity.

“There’s the capacity for 5,000 megawatts of offshore wind out there,” he said. “That’s just in the area that’s been identified in the near term, what could be developed in the next decade or so. That’s certainly not the limit of what we can do.”

Collectively, all the power plant in New England currently generates some 30,000 megawatts of power, Grybowski said. The northeast can expect offshore wind to meet a more substantial portion of its energy needs when it goes even farther offshore.

“That cable really isn’t that expensive,” he said. “It’s copper and plastic, so a little bit more really doesn’t matter that much. The other difference is it becomes deeper the further out you get so the steel structures that you have to use to put these on the ocean floor get taller and heavier. The equipment that you need to install it becomes bigger. Part of the science of the business is where is that sweet spot. Where is the sweet spot of the benefit of the wind versus the downside of the extra costs of getting to that wind.”

Grybowski added, “It’s a lot like the offshore oil business, forget about the resource. It’s the same kind of analysis we go through.”

Much of the offshore wind industry, he noted, is based on the offshore oil and gas industry. Deepwater Wind President Kris Van Beek relocated from the Netherlands to Providence. “He transitioned from offshore oil and gas to offshore wind and he moved to Rhode Island to do that,” Grybowski said. “He knows how to build things in the middle of the ocean.”

Rhode Island, energy exporter

It’s part of the energy transformation he spoke about.

“Unfortunately, the change from a micro-perspective seems really slow but I think the change is pretty inevitable,” Grybowski said. “It’s inevitable that, here in the Northeast, we are going to be building a lot of offshore wind in the coming decade. It’s impossible for us to meet our energy needs, and doubly impossible to address our energy needs and address climate change in a meaningful way, without building a significant amount of offshore wind.”

He was quite confident offshore wind would help us get the Ocean State to sustainability, boasting, “I think Rhode Island – for the first time in, maybe, forever – is going to be an energy exporter.”

June 26, 2016June 26, 2016

PawSox are still looking for money and one fan is not happy

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He’s a lifelong unionized worker, has gone to PawSox games for the last four decades, and knows cities intimately as a former telephone worker. Dan Murphy also went to every Listening Tour stop last summer when owner Larry Lucchino was trying to get a new stadium built by the taxpayers in Providence as one of the leaders of the grassroots resistance, vociferous in his rejection of the proposed deal then and now still opposed to public funding for renovations of private buildings, be it McCoy Stadium or the Superman building in downtown Providence.

Recently the pre-bid press conference was held at McCoy Stadium for “proposals from qualified firms to prepare a master plan study (the “Study”) of the McCoy Stadium facility and surrounding area located in Pawtucket, Rhode Island. The intent of the Study is to develop a master plan for significant repairs, upgrades, system replacements and/or improvements to McCoy Stadium and the surrounding area. The State of Rhode Island has regularly financed capital improvements to McCoy Stadium.” This comes more than a year after the late Jim Skeffington and Lucchino told the public a study had already been done and found that renovations for McCoy were too costly.

At a moment when bankruptcy is being floated in regards to the capital city, school buildings are in abject shambles, the birthing unit of a Pawtucket hospital is due to be closed, and unemployment and under-employment still high, Pawtucket Mayor Donald Grebien and state leaders are seriously considering this in two different instances. Murphy has read through the bid solicitation document for the PawSox and remains unimpressed.

“You can’t buy it with capitalism and pay for it with socialism, it doesn’t work that way,” he said. “If the state owns a piece of it and it looks like a good deal, then it’s worth considering. Other than that, no. To make rich people richer? No way! Neither one of those facilities is life-essential, like a hospital or a police-fire station combination or something to that effect. This is just a stadium and its just a building and they’re not going to make anyone any richer except for the people who own them.”

Click the Player Below to Listen to More of This Interview!

Is there any indication that Lucchino has any interest in keeping the team in Pawtucket for at least the next 25 years? “Oh God no. They’re shopping around, they’re holding their cards close to the vest. I think this whole song and dance they’re doing now with they’re supposedly rebuilding the trust and all that crap? They’re not looking to do that. They’re looking at the fans that go to a certain amount of games every year, and you can count on them like clockwork, they’re not bothering with them, just like they didn’t bother with us last year. They assume we’ll keep coming and if we don’t we’ll be replaced with the new hipster-type fans.”

Murphy’s years of going to the PawSox games have helped him learn about the neighborhood surrounding McCoy intimately. “I think their only investment in the community surrounding McCoy Stadium would be to level it and to build it into something that they want. That’s about it. If you recall when we were putting up with those dog-and-pony shows last summer, [team president Charles] Steinberg never really had anything good to say about the neighborhood around McCoy, he saw that as a negative, almost like it was a ghetto or a slum or something. It’s a lot of three-decker houses that were very well-kept and that’s a very clean neighborhood. Walk around it sometime! It’s a very clean neighborhood. But that whole neighborhood is going to get the kiss of death if Lucchino and his boys get their way.”

What is Lucchino like in comparison to late owner Ben Mondor? “Ben Mondor brought almost like a warmth, a trust, a friendship, a guy that you would sit down with and have a beer, even though his social and financial stature is way different than your own. He was a good guy. That’s the way he was looked at and people supported what he wanted to do because he never wanted to bring that stadium above the people who went there. He wanted to keep the team in Pawtucket, he wanted to keep the games being played there, he wanted to stay in that stadium if at all possible. He was your typical Rhode Islander, even though I believe he was from Canada originally,” he says.

“Lucchino, his history has been just build a stadium and flip it or rebuild a stadium and flip it. He’s not a baseball man, he’s a businessman and the same thing with his whole crew with him, his yes-men.”

“I don’t think they are above moving [the team] right when [construction] is starting to happen. It’s strictly business.”

If you like my reporting, please consider contributing to my Patreon!

June 20, 2016June 20, 2016

Wage theft law gets teeth

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Wage theft in Rhode Island may be a much bigger problem than robbery. And, as Steve Ahlquist previously reported, even high profile violators may be getting away with a slap on the wrist with workers left with little recourse.

Thanks to a bill introduced by Representative Shekarchi and Senator Nesselbush, now passed by the House and Senate, that will change upon the Governor’s signature.

In written testimony supporting the bill, the Rhode Island chapter of the Progressive Democrats of America (RIPDA) summarized how the bill makes a difference:

The bill improves the current law in several ways. First, in redefining “employee,” the protected class is broadened to generally include “independent contractors” (minus the groups that have been specifically excluded). Second, it provides for the State to suspend a non-compliant business’ license. Third, it allows employees to recover double damages and attorneys’ fees from a wage-stealing employer.

Not only does this bill deter unscrupulous employers from stealing from employees with suspension of a business’ license, but, for those who are deprived of their rightful wages, the bill gives a real solution. Instead of merely filing with the Department of Labor and Training, employees will be able to sue directly and recover twice as much as was stolen from them. Attorneys are encouraged to take meritorious cases — if successful, the employee’s lawyer is entitled to be paid by the employer.

The most financially vulnerable among us are targets of wage theft. The biggest challenge remains: Employees need to be aware of their rights, and have the courage to seek legal help when standing up to unethical and manipulative bosses.

May 30, 2016

Avon Theater owner Richard Dulgarian on Thayer Street parking meters

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If you have been up to Thayer Street within the past few months you probably have noticed a series of new parking meters being installed on the roadway. These new meters are part of an effort to raise monies for the city that have been wildly unpopular.

There are several issues that are coming up for patrons as they try to visit the stores. First, the meter system has proven to be confusing and not as user-friendly as hoped. Second, the maximum time limit for parking is in fact far too short for anyone who wants to go out to eat at Andrea’s Restaurant, have a few drinks at the bars, or see a movie at the Avon.

And that in turn leads to the third problem. The meters, which were billed by the city as a way to bring in more customers, are in reality chasing away business. Storefronts have been vacated and left that way for spans of time that have not been seen before. Grosses are down for businesses. One of the longest-lasting Providence shopping centers in its history which has brought in a consistent line of high-spending clientele is effectively being given a slow and painful death sentence.

Richard Dulgarian is the owner of several properties on College Hill and the Avon Theater with his brother Kenny. His family has been doing business on the street for decades and has started this petition online calling for the removal of the parking meters. He sat down for an interview with me and explained his consternation.

“First they did one street, then another street, then they came up with parking pay stations. It’s happening over the last year, I think, and every time one section goes in, it was affecting my business, it would go down a little bit. You know, it’s like peeling off a band-aid one little bit at a time, you keep thinking that was the last tug,” he says.

“It doesn’t make it pleasant. Next time you’re thinking of coming here, he’s going to remember parking meters didn’t work, he had to find a merchant to help him out, and he’s going to go somewhere else. These things are not friendly and our business has gone down. Not just ours, other businesses on the street, they’re all reporting their grosses are off up to 40%, some more, and how can you sustain that? We’re seeing vacancies like we’ve never seen before. I’ve been on the street forty years and, I’m not saying a business never went out of business, but within a couple of days something took its place. Now we’ve got eleven empty storefronts, last time I checked, and no one is coming in.”

“This administration has destroyed in a year what it took 50-70 years to build up!”

May 24, 2016

Corporate Reform Coalition takes on Vanguard Group via social media

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Last week, the Vanguard Group, a major investment management firm, thought it was being hip and trendy by opening its Twitter feed for an Ask Me Anything session wherein clients could post public questions. This did not go as they hoped, with users turning the opportunity into an effort to promote transparency and corporate political spending disclosures.

The Public Citizen press office said:

More than 65,000 current and prospective clients have written to Vanguard asking the fund’s leadership to change its voting habits and support disclosure at public companies. Since the U.S. Supreme Court’s 2010 decision in Citizens United opened the floodgates for corporate political spending, shareholders deserve to know how their investments are being spent, especially if these dollars are going to politics.

Rhode Island currently has two major clients with the firm. The first, TIAA-CREF, handles the retirement of some public employees, such as professors at Rhode Island College. The other client, CollegeBound Fund, handles savings of those who want to help build some capital to be used to fund a later academic career.

Letter in response to previous inquiries from investors.

So to better understand this, Rachel Curley, who was involved with this effort, sat down with an interview with me to help better explain the cause and, more importantly, what local investors connected to the Vanguard Fund might try.

March 24, 2016May 3, 2016

Questions raised about Invenergy’s Clear River Energy Center in Burrillville

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Kingston, Rhode Island, March 22, 2016 — On October 29 of last year, Invenergy Thermal Development LLC filed an application with the Rhode Island Energy Facility Siting Board to construct a fossil fuel —mostly fracked gas— power plant in Burrillville, RI, the so-called Clear River Energy Center (CREC). At its open meeting on January 29, the siting board excluded numerous groups from formal participation in the review of the CREC proposal. Among those groups are the Burrillville Land Trust, the Rhode Island Progressive Democrats and an array of grassroots organizations including Fossil Free Rhode Island.

Last year, the Federal Energy Regulatory Commission approved a build-out of the compressor station in Burrillville which started in the fall of 2015 and is part of an interstate pipeline expansion called the Algonquin Incremental Market (AIM) Project. This project has been highly controversial. In New York, the expanded pipeline would pass within 105 feet of critical infrastructure at the Indian Point nuclear power plant.

In response to this situation, last month Governor Andrew Cuomo of New York directed four New York state agencies to perform an independent safety risk analysis and asked the Federal Energy Regulatory Commission to halt construction of the pipeline until this review is completed.

Invenergy’s CREC proposal, which capitalizes on the AIM pipeline expansion, raises serious concerns about the cumulative impact of these various projects on public health in Rhode Island.

Last week, in an email to Directors Janet Coit of the RI Department of Environmental Management and Nicolle Alexander-Scott of the RI Department of Health, University of Rhode Island physics professor Peter Nightingale raised a number of questions about the cumulative impacts of fracked gas infrastructure developments on public health in Burrillville, RI. Among these are Spectra Energy’s AIM Project, Invenergy’s CREC, and Access Northeast, a project of Eversource Energy, National Grid and Spectra Energy. In addition, on December 1 of last year, TransCanada applied to the Energy Facility Siting Board to build yet another gas-fired power plant, Ocean State Power Phase III, in Burrillville. TransCanada seems to have abandoned the project for now, but who knows for how long?

Nightingale wonders: “How can a modeling done at average temperature and humidity conditions capture the true episodic nature of the impact of CREC and the other nearby pollution sources on public health? Human health is highly susceptible to episodes and these are smoothed out by taking averages. Temperature, humidity and sunlight fluctuate wildly in Rhode Island and, due to climate change, they are expected to vary increasingly fiercely during the lifetime of the proposed Clear River Energy Center.” Nightingale refers in this context to research by Hansen and Sato that found a more than ten-fold increase in weather extremes that occurred during the last 45 years, a time span comparable to the expected life time of the power plant Invenergy is proposing.   [3]

As part of the regulatory process of the siting board, Invenergy submitted a report produced by the ESS Group, an environmental consulting group, that claims to take into account the polluting background effect of other sources in Rhode Island near Burrillville. Data required for this was, as the ESS study mentions, supplied by the Department of Environmental Management. Obviously, no information is available yet for the new situation that was created by the 2015 compressor station build-out that is part of the AIM Project.

The environmental impact study performed by the Federal Energy Regulatory Commission before it approved the AIM Project pipeline expansion last year lists Providence County as “moderate nonattainment,” which means that the air quality is below the standard required by the Clean Air Act. The same federal study shows that the noise level of Spectra Energy’s compressor station was above the legal limit even before the last build-out started.

In addition to the public health risks posed by CREC, it is clear that building a 1-gigawatt fossil fuel power plant in Burrillville will be a serious impediment to the growth of green energy in Rhode Island and neighboring states. As Marie Schopac of Charlestown, a member of Fossil Free RI, remarked: “The financial investment in the wind farm will be all for naught if a gigawatt fracked gas power plant is built. Rhode Island needs a coordinated energy policy.”

Clearly, all of the above raises serious questions about the validity of the assessment of the impact of the newly proposed power station.

Hansen’s latest: Ice Melt, Sea Level Rise and Superstorms Video Abstract
Climate Science, Awareness and Solutions

March 7, 2016March 8, 2016

NORAD celebration private—for pooh-bahs only

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Governor Gina Raimondo’s office issued a press release with this title: “State, Congressional Leaders Hail 6th Consecutive Record Breaking Year for Auto Imports at Quonset’s Port of Davisville.” This was the reason for today’s celebration at North Atlantic Distribution, Inc. (NORAD) attended at Quonset by the governor and our congressional delegation.

As part of the “FANG needs YOU: To protest Governor Raimondo to confront Governor Raimondo” campaign, I went to the NORAD event to confront our governor about her support for fossil fuels.

When the governor passed, I asked her about the cost of the proposed gigawatt, fossil-fuel fired plant in Burrillville, aka the Clear River en Energy Center. Holding up my sign, I said: “Nice jobs program, Governor, $2.3 million per job. How do you justify that?” Even from within six feet, she did nor see nor hear a thing!

We seem to have a trend here, as observed by Lorraine Savard, who staged a respectful bird-dogging presence at the Cherry Blossom event at the State House earlier the same day. Referring to Governor Raimondo, Lorraine observed: “She is either ignoring me or she is afraid to look me in the eye.”

You’d expect that Governor Raimondo has friends who would be quite able to invest the $2.3 million for a comfortable early retirement of the 300 workers who might benefit from the construction without creating a sacrifice zone. But I’m loosing my thread.

I had the pleasure to exchange a couple of words with our senators and representatives. When I asked Congressman Cicilline if he was planning to join us in opposing the power plant, he replied that Burrillville was not his district. True enough, but not all that gutsy. Fortunately, he agreed with me when I replied that it was not my district either, but my world.

The NORAD celebration made twitter buzz; @QuonsetRI:

@jimlangevin: I never get tired of coming down to @QuonsetRI for these great announcements

One of Representative Langevin’s staff told me, when I asked his boss about Burrillville: “This is a different event, Peter.” I have to sleep on that one.

Unfortunately, Mike Miranda, private owner of NORAD, did get tired with me and my off-topic message. He asked me to leave the event, which he referred to as private. The press was there and my impression was that the public was invited, but I left. Do you blame me when I wonder how much state and federal money is spent on shuttling our leadership to and from these “private” events?

One final tweet from @QuonsetRI:

Mike Miranda, CEO & Pres. of NORAD: We’re likely only port in country w/ 7 diffrnt manufacturers snding cars here

Undoubtedly, what you see in the picture are all electric cars that soon will run on electric power generated by Invenergy’s fracked-gas power plant in Burrillville. We call those “zero-emission” emission vehicles and that’s how we implement the Paris Accord and the #CleanPowerPlan. Unfortunately, not only here in Rhode Island.

March 1, 2016March 1, 2016

Rep Ucci needs to disclose financial ties to Raytheon ahead of drone bill considerations

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The House Commission on Drones has shown itself, over the course of its three meetings, to be very pro-drone. The concerns of those who seek to profit from drones have been given every consideration, the concerns of privacy advocates, not so much. As bad as this is, Rep Stephen Ucci used to be a lawyer working for Raytheon, one of the biggest drone manufacturers in the world, and he has declined to reveal what, if any, financial ties he still has to the company.

“Raytheon has been aggressively moving into new markets,” says a typical stock investment website, “One area is drones, which are increasingly used for both military and civilian purposes. Raytheon is already the leader in the development and manufacture of drone sensors. As world demand for drones takes off, Raytheon will reap the spoils.”

Raytheon doesn’t just make drones, it makes the sensors that drones need to operate. Theoretically, a little bit of Raytheon could end up in every drone ever sold in the not too distant future. “Raytheon’s sensors are prized by the military for their unique ability to penetrate cloud cover. Raytheon continually develops lighter, high-reliability sensors—exactly what the military covets most,” wrote Investing Daily Managing Director John Persinos in 2013.

As drones become pervasive, cities and states are moving to enact meaningful regulations to restrict their use over issues of safety and privacy. In Rhode Island, State Rep. Stephen R. Ucci (D-42 Johnston/Cranston) helped to sponsor the legislation that created “The Special Legislative Commission to Study and Review Regulation of Drones and Unmanned Aerial Vehicles” and then got himself appointed to head up the committee. The 11-member House panel, which just finished hearing public testimony on drones for the first time last Thursday, has been tasked (by its organizers) to study and make recommendations about potential laws, rules and regulations that Rhode Island should adopt concerning the use of unmanned aerial vehicles.

Depending on the kinds of laws, rules and regulations that Rhode Island adopts, Raytheon and other drone manufacturers will either be helped or hindered in their efforts to market commercial and recreational drones in our state. This could mean more or less money for Raytheon and have real financial implications for anyone who maybe invested in the company, like Rep. Stephen Ucci.

Until very recently, Ucci was the senior counsel for the defense contractor Raytheon and general counsel for their Integrated Defense Seapower unit. Ucci’s job at Raytheon wasn’t just legal work. Speaking to the Providence Business News, Ucci said, “I review things from a legal perspective but also from a business perspective. Not a day goes by that I don’t learn something new.”

While at Raytheon, Ucci became the only attorney in the company’s history to receive the Raytheon Business Development Award. “Mr. Ucci has demonstrated ambition and achievement in the best sense. Professionally, he is the first Raytheon attorney to earn a Raytheon Business Development Award, meaning that he goes beyond providing legal advice to helping the company grow,” said Mark Murphy, editor of Providence Business News.

About two years ago Ucci moved from Raytheon to Locke Lord LLC, a law firm in downtown Providence. It is unknown if Locke Lord LLC has business ties to Raytheon, but depending on his financial ties to Raytheon, Ucci’s involvement in drone legislation potentially opens the door to allegations of conflict of interest. This is especially relevant since later today the House Corporations committee will be hearing testimony on the very first bill that has come out of the Drone Commission, H7511, which will ban cities and towns in Rhode Island from enacting any rules, regulations or laws regarding the operation of drones, if passed.

The bill, introduced by Ucci and cosponsored by virtually every legislator on the House Drone Commission, does nothing to answer the concerns of privacy advocates who testified on Thursday. This is a pro drone bill. Under this bill, instead of having to deal with the special concerns of individual town and city councils, drone advocates now only have to convince the reflexively pro-business General Assembly to pass laws in their favor. As demonstrated by the creation, makeup and behavior of the Drone Commission, this is easy to accomplish.

An email to Raytheon, the House of Reps and Ucci asking for clarification regarding Ucci’s present financial and political ties to Raytheon has gone unanswered as of this writing.

Until the public receives answers about this possible conflict of interest, the General Assembly should not be passing any pro-business drone bills that come out of this suspect commission.

February 19, 2016February 19, 2016

Richard Wolff explains why capitalism hit the fan in 2008 and why neoliberalism happened

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Richard Wolff is a Marxist economist of great talent who lays out in this brief discussion why neoliberalism had to happen as a system and why capitalism itself is simply unable to keep itself away from the danger zone. As we have gone again and again through crisis after crisis, it has become abundantly clear that an alternative is necessary, something he explains with a certain deadpan irony and zeal indicative of a mind worth giving attention to.

February 18, 2016February 17, 2016

Why Elizabeth Warren should not replace Scalia

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When Elizabeth Warren took Ted Kennedy’s seat in the Senate, America got an old fashioned New Deal/Great Society liberal in one of the major seats of power. She has been a thorn in the side of her neoliberal colleagues for years and needs to stay there.

Yet Sen. Alan Grayson, for reasons that should be held up to skepticism, has begun to circulate a petition asking “The President should appoint Warren right now, before the end of this week. That would make it a “recess appointment,” and Justice Warren could take office immediately. The obstructionists in the GOP couldn’t do anything about it.”

Whatever the motivation of Grayson, I think this is a terrible idea. Why?

In the first place, it would potentially limit whatever actions Warren might be taking to reign in the financial sector. She may have flaws in a variety of areas, but she has done some great things also that I think need to continue. Taking her away from that Senate seat would take away a great advocate for banking reform.

Second, it would effectively nullify the potential for a Sanders-Warren ticket in 2016. At this point it is almost impossible for Sanders to overcome the super-delegate fiasco, but there is the highly unlikely chance in Hades and Hyannis that things might change. But by taking away his most likely running mate, that would become more of an outside chance. And as Nate Silver has pointed out previously, a major element of the original base in the Sanders campaign came from when the Run Warren Run PAC dissolved this summer and sent its members to, as it were, Feel the Bern.

Third, does Grayson remember that raving psychopath Scott Brown, the Tea Party darling who made everyone miserable with his faux-rugged tough guy attitude and boneheaded behavior? What is to say that either

Warren would not be replaced in an electoral free-for-all that would allow all sorts of goofballs and doofuses near the levers of power, or
Governor Charlie Baker would not appoint someone with deep ties to the financial, tech, and pharmaceutical industries that find solace in the Boston area, particularly since Baker has long-standing ties to the medical-industrial complex?

This of course is assuming that the Democrats would act in good faith and actually want to hold the seat. But I do not think that is a sure thing. If one thing is abundantly clear from this election season, it is obvious that Bernie Sanders, whatever his flaws (and they are many), has absolutely horrified the banking and medical industries that are known Democratic Party donors. The whole charade of the debates and controversy involving the behavior of Debbie Wasserman Schultz is demonstrative of a party in the midst of a massive identity crisis.

On the one hand, the Democrats are the party of Wall Street, the tech/drug/education deform advocates that make no bones about busting public sector unions and raiding pensions to help out their buddies in the banks. On the other hand, their major voting demographics are sick to death of this status quo paradigm and want to return to New Deal/Great Society Keynesian economics under the auspices of Sanders and Warren, something Hillary Clinton and her donors would rather drink hemlock than allow.

I would go as far right now to predict that, if through some absurd miracle Sanders does win the nomination, the Clinton machine and their slimy weasel operatives like David ‘The Real Anita Hill‘ Brock and Sidney ‘Birther Numero Uno‘ Blumenthal, along with the godforsaken mainstream press (MS DNC/Clinton News Network/New York Time/Time Magazine/whatever other birdcage liner you can name) would go into overdrive and actually work against a Democratic Party victory to protect Wall Street. Why think something so radically insane?

Because the Clintons did it before!

Arguably one of the finest moments in American Left history in the past two decades was the “Battle of Seattle”, the 1999 protests of the World Trade Organization conference that saw everyone from green anarchists to the Teamsters take to the street to protest a job-killing policy initiative that could have furthered neoliberal hegemony for decades to come. Bill Clinton knew he was in hot water when Jimmy Hoffa Jr. could not be silenced. And yet, in an electoral year that in hindsight we know was so vital for so many reasons, Bubba nobly soldiered forth. In fact, it was only because delegates from the Global South looked outside and knew they would be crazy to sell their countries down the river on a platter that more damage was not done.

A year later, my editor at CounterPunch, Jeffrey St. Clair, and his writing partner, the late Alexander Cockburn, promoting their account Five Days That Shook The World: Seattle and Beyond, told a packed crowd that one could make a decent case that what killed Gore’s votes in key states was the events in Seattle. Activists and socially-conscious liberals who were disgusted by the police brutality and refusal of the Democrats to cede to the whims of democracy were finally fed up and went to vote for Ralph Nader. This is not to say that Florida and the actions of the Bush political machine were not real, it is to say that Florida would have just been a side-show story with no impact on the election had Clinton and Gore listened to what people thought about their wretched World Trade Organization. But back then, the corporations were more important than the voters.

What’s to say they would not do this again? It’s why I have been keeping my vote for Jill Stein squeaky-clean all year while everyone else goes nuts for Chairman Bernie.

February 16, 2016May 3, 2016

Recent power auction proves Burrillville power plant unneeded

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The Clear River Energy Center, a gas and oil fired energy plant proposed by Invenergy for Burrillville, Rhode Island is not needed, according to the results of ISO New England Forward Capacity Auction, the results of which were released last Monday. The results of the auction means that cost of energy in Rhode Island in 2019-2020 will be reduced and these lower costs have nothing to do with the energy offered by Invenergy.

[Note: Jerry Elmer had this to say in an email received after the story ran: “Energy and capacity are two different commodities. (The third component of electricity price is ‘ancillary services.’) The price of both energy and capacity are elements of the ultimate price of electricity that is paid by ratepayers (electricity customers) but energy and capacity are not the same thing. (That is, energy and capacity are not the same thing as each other; and energy and capacity prices are not the same thing as the price of electricity.) As components of the overall electricity market in New England, energy represents about 80% of the value (price) of electricity and capacity represents about 20%. (Ancillary services are a very, very small part of the price.)]

Forward Capacity Auctions (FCA) are somewhat complicated, and making sense of the ISO NE press release was a big lift, so I talked to Jerry Elmer, senior staff attorney at the Conservation Law Foundation (CLF), to get my head around it.

“Invenergy is planning to build a 900 – 1000 MegaWatt (MW) plant,” said Elmer, “Only 485 MWs cleared in that auction and got a capacity supply obligation (CSO). So what that tells you immediately is that the plant is not needed in RI. If the plant were needed it would have gotten a CSO of 900 MW.”

Hold up. Let’s take this a little slower.

The way electrical prices are determined in Rhode Island is through a series of annual auctions. Most recently we completed FCA 10 (Forward Capacity Auction 10). Power companies bid to supply energy and ISO NE takes the best offers at the lowest price. The companies in the bidding are then obligated to supply that power during the time period specified and at the determined price. This is the capacity supply obligation (CSO).

In the most recent auction, FCA 10, Invenergy cleared only 485 MWs, about half of what their proposed 900-1000 MW plant could produce.

Under the rules of ISO NE, a certain amount of energy must be locally sourced in each zone. Here in Rhode Island, we are in the South Eastern New England (SENE) zone and the amount of locally sourced power required is 10,028 MW.

As Elmer explained the math, “The zone cleared the auction at 11,348 MW. So do a thought experiment: Invenergy got a CSO for 485 MW. Take 485 MW out of 11,348 MW and you’ve got 10,843 MW in the zone without Invenergy. You’ve got a surplus. You’ve 500 MW more than you need, without Invenergy.”

This is not what Invenergy expected when they presented their plans for the new plant. “If you look at Invenergy’s filing with the Energy Facility Siting Board (EFSB),” says Elmer, “they were talking about how desperately the plant is needed, it’s needed in RI to keep the lights on, and that the clearing price of capacity is going to be much higher in RI than in the rest of the ISO NE pool, what they call ‘rest of pool.’”

In the previous auction, Rhode Island did not fare so well. The reason for this is that between FCA 9 and FCA 10 the zones were restructured. “It used to be, up until this auction, there were two separate zones,” said Elmer, “There was SEMA RI (SouthEast Massachusetts and RI), NEMA Boston (SouthEast Massachusetts and Boston), and ‘Rest of Pool,’ but for FCA 10, the ISO collapsed what used to be the NEMA Boston zone with the SEMA RI zone and made one SouthEast New England (SENE) zone.

“The interesting thing here is that Invenergy has been planning this plant for a couple of years and it is true that in the two previous actions, FCA 8 and FCA 9 one year ago, the SEMA RI zone cleared much higher than rest of pool. Invenergy was right about that. So they start this plan for this plant, and they figure that they are going to absolutely clean up financially.

“This is an import constrained zone, clearing price is double what the rest of the pool is, we’re going to put 900 or 1000 MW into this very high priced zone, we are going to make a fortune. This was their thinking.

“Between FCA 9 and FCA 10, ISO NE collapsed the NEMA Boston and SEMA RI zone into a big zone, and now, instead of the zone that includes RI being very constrained with a shortage of power, we now have an excess of power in the zone.”

Drawing the lines of the various zones has nothing to do with politics, said Elmer, “It’s nothing you can vote on or put political pressure on. It’s physics! It’s where the transmission does or does not exist.”

Let’s look at this from Invenergy’s point of view for a minute: Invenergy “thought they were supposed to have 900 or 1000 MW cleared, at a very high price,” said Elmer, “instead only half the plant cleared, 485 MW. What cleared went at exactly the same price as rest of pool, no premium, zero. The rest of pool came out 25 percent lower than last year’s clearing price, and the zone here [in Rhode Island] cleared at about half the price of last years price for this zone.”

This is great news for Rhode Island, but for Invenergy, not so much. “Here’s the kicker,” said Elmer, “Invenergy got a CSO for 485 MW. That means they have got to build the plant. They are on the hook. They posted a huge bond with the ISO called Financial Assurance (FA) just to be allowed to play in the auction. So now Invenergy has the worst of all worlds.

“It only sold half its capacity to the ISO and at a much lower price than anticipated, but they still have to build the plant, or as an alternative, they could sell their CSO between now and June 1, 2019 in one of the annual or monthly reconfiguration auctions that the ISO runs, and get out of the business altogether and not even build the plant.

“They are now forced to build the plant that will be much less profitable and lucrative than they thought, or get out of it.”

Currently, the EFSB is holding hearings to determine whether or not the plant will be built. In their filing with the EFSB, Invenergy’s two major arguments in favor of the plant were, “The plant is needed for system reliability, to prevent blackouts, to keep the lights on” and “The plant will end up lowering the bill for ratepayers,” said Elmer.

“What the results of the auction shows is that both of Invenergy’s main arguments are just wrong. They are false,” said Elmer, “The plant is not needed for system reliability, it is not needed to keep the lights on and the net effect on the clearing price is either zero or very close to zero because the plant wasn’t needed.”

“CLF is presenting three witnesses to the EFSB,” said Elmer, “one witness for each of the three arguments that Invenergy is making in favor of the plant. We’ve got one witness on the system reliability issue: Is the plant needed to keep the lights on? The answer is no and this auction proves it.

“We have a separate witness on the money issue. Will building the plant save money for rate payers? This auction result says no, the answer is no.

“And then we’ve got another witness on the climate change/carbon emission issues whose testimony is going to be that if the plant is built, it will be impossible for the state to meet its carbon emission reduction goals.”

This information is “absolutely all relevant to the EFSB. In fact, Invenergy is the party before the EFSB that raised these issues! CLF is not raising these issues. We’re addressing these issues because Invenergy raised them. In legal terms, Invenergy opened the door on each of these issues, we’re just walking through it. We’re not raising these issues, Invenergy’s raising these issues. The reason we’ve got witnesses addressing these issues is because Invenergy raised them!”

The arguments in favor of the plant that we are hearing from our elected leaders, such as Senator Sheldon Whitehouse, that Rhode Island suffers from an energy “choke point” and needs this plant for grid reliability, is simply not true any more, if it ever was. Given this new information, Senator Whitehouse should now feel very free to change his position on the proposed plant.

The low energy prices available now allows Rhode Island the luxury of planning a just transition to renewable energy sources and the time we need to concentrate on efforts to lower the amount of energy we need. Political leadership is needed to take advantage of this opportunity, and should not be squandered on an unnecessary fossil fuel plant that will harm Rhode Island’s environment and keep us addicted to fossil fuels for at least another half century.

February 9, 2016February 10, 2016

Why wait for the feds when AG Kilmartin can use the RICO Act against Raimondo’s pension scheme?

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Since the publication of Ted Seidle’s letter to various federal agencies regarding the Raimondo pension policies, the operative question has been when will the feds come knocking on Smith Hill? It is clear that Raimondo is desperate to rebuild her reputation with unions, hence the push for the union-friendly RhodeWorks project. But why wait when Attorney General Kilmartin has the RICO Act at his disposal?

The website NOLO.com, a free resource for legal information, says the following of the federal Racketeer Influenced and Corrupt Organizations Act:

It allows prosecution and civil penalties for racketeering activity performed as part of an ongoing criminal enterprise. Such activity may include illegal gambling, bribery, kidnapping, murder, money laundering, counterfeiting, embezzlement, drug trafficking, slavery, and a host of other unsavory business practices. To convict a defendant under RICO, the government must prove that the defendant engaged in two or more instances of racketeering activity and that the defendant directly invested in, maintained an interest in, or participated in a criminal enterprise affecting interstate or foreign commerce.

(1) racketeering activity means
(A) any act or threat involving murder, kidnapping, gambling, arson, robbery, bribery, extortion, dealing in obscene matter, or dealing in a controlled substance or listed chemical (as defined in section 102 of the Controlled Substances Act), which is chargeable under State law and punishable by imprisonment for more than one year;
(B) any act which is indictable under any of the following provisions of title 18, United States Code: Section 201 (relating to bribery), section 224 (relating to sports bribery), sections 471, 472, and 473 (relating to counterfeiting), section 659 (relating to theft from interstate shipment) if the act indictable under section 659 is felonious, section 664 (relating to embezzlement from pension and welfare funds), sections 891894 (relating to extortionate credit transactions), section 1028 (relating to fraud and related activity in connection with identification documents), section 1029 (relating to fraud and related activity in connection with access devices), section 1084 (relating to the transmission of gambling information), section 1341 (relating to mail fraud), section 1343 (relating to wire fraud), section 1344 (relating to financial institution fraud), section 1425 (relating to the procurement of citizenship or nationalization unlawfully), section 1426 (relating to the reproduction of naturalization or citizenship papers), section 1427 (relating to the sale of naturalization or citizenship papers), sections 14611465 (relating to obscene matter), section 1503 (relating to obstruction of justice), section 1510 (relating to obstruction of criminal investigations), section 1511 (relating to the obstruction of State or local law enforcement), section 1512 (relating to tampering with a witness, victim, or an informant), section 1513 (relating to retaliating against a witness, victim, or an informant), section 1542 (relating to false statement in application and use of passport), section 1543 (relating to forgery or false use of passport), section 1544 (relating to misuse of passport), section 1546 (relating to fraud and misuse of visas, permits, and other documents), sections 15811592 (relating to peonage, slavery, and trafficking in persons).,[1] section 1951 (relating to interference with commerce, robbery, or extortion), section 1952 (relating to racketeering), section 1953 (relating to interstate transportation of wagering paraphernalia), section 1954 (relating to unlawful welfare fund payments), section 1955 (relating to the prohibition of illegal gambling businesses), section 1956 (relating to the laundering of monetary instruments), section 1957 (relating to engaging in monetary transactions in property derived from specified unlawful activity), section 1958 (relating to use of interstate commerce facilities in the commission of murder-for-hire), section 1960 (relating to illegal money transmitters), sections 2251, 2251A, 2252, and 2260 (relating to sexual exploitation of children), sections 2312 and 2313 (relating to interstate transportation of stolen motor vehicles), sections 2314 and 2315 (relating to interstate transportation of stolen property), section 2318 (relating to trafficking in counterfeit labels for phonorecords, computer programs or computer program documentation or packaging and copies of motion pictures or other audiovisual works), section 2319 (relating to criminal infringement of a copyright), section 2319A (relating to unauthorized fixation of and trafficking in sound recordings and music videos of live musical performances), section 2320 (relating to trafficking in goods or services bearing counterfeit marks), section 2321 (relating to trafficking in certain motor vehicles or motor vehicle parts), sections 23412346 (relating to trafficking in contraband cigarettes), sections 242124 (relating to white slave traffic), sections 175178 (relating to biological weapons), sections 229229F (relating to chemical weapons), section 831 (relating to nuclear materials),
(C) any act which is indictable under title 29, United States Code, section 186 (dealing with restrictions on payments and loans to labor organizations) or section 501 (c) (relating to embezzlement from union funds),
(D) any offense involving fraud connected with a case under title 11 (except a case under section 157 of this title), fraud in the sale of securities, or the felonious manufacture, importation, receiving, concealment, buying, selling, or otherwise dealing in a controlled substance or listed chemical (as defined in section 102 of the Controlled Substances Act), punishable under any law of the United States,
(E) any act which is indictable under the Currency and Foreign Transactions Reporting Act,
(F) any act which is indictable under the Immigration and Nationality Act, section 274 (relating to bringing in and harboring certain aliens), section 277 (relating to aiding or assisting certain aliens to enter the United States), or section 278 (relating to importation of alien for immoral purpose) if the act indictable under such section of such Act was committed for the purpose of financial gain, or
(G) any act that is indictable under any provision listed in section 2332b (g)(5)(B) [Emphasis added]

So the question then becomes whether Raimondo and her associates have engaged in this behavior. And there are plenty of reasons to suspect so.

The first document to consult is one commissioned by the American Federation of Teachers, the Roosevelt Institute, the Refund America Project, and the Haas Institute titled All That Glitters is Not Gold: An Analysis of US Public Pension Investments in Hedge Funds. While the document does not specifically study Rhode Island, the lessons are applicable here and it says the following:

Key Findings: Hedge funds were responsible for an estimated $8 billion in lost investment revenue

Our findings suggest that these 11 pension funds’ hedge fund investments failed to deliver any significant benefits to the pension funds studied. Specifically, we found that:

Hedge fund net return rates lagged behind the total fund for nearly three-quarters of the total years reviewed, costing the group of pension funds an estimated $8 billion in lost investment revenue.
Despite lagging performance, hedge fund managers collected an estimated $7.1 billion in fees from the same pension funds over the period reviewed; on average, our estimates suggest that these pension funds paid 57 cents in fees to hedge fund managers for every dollar of net return to the pension fund.

Whereas hedge fund managers promise uncorrelated returns and downside protection, all of the 11 pension funds reviewed demonstrated significant correlation between hedge fund and total fund performance.

Recommendations:

Considering the implications of these findings for pension fund trustees, participants and consultants, we recommend that public pension funds currently invested in hedge funds immediately take the following steps:

– Conduct an asset allocation review to examine less costly and more effective diversification approaches. The review should include a complete analysis of past net performance of their hedge fund investments, as well as a comparison with low-fee alternatives.

– Require full and public disclosure from hedge fund managers and consultants, including complete disclosure of historical investment management and incentive (carry or profit-sharing) fees captured by hedge fund managers for the duration of their fund’s investments. Pension funds should also consider developing legislative policies requiring this level of disclosure. [Emphasis in original]

Before moving forward, it is worthwhile to recall here that the Governor has previously invoked a host of proprietary information reasons for not providing full disclosure of matters regarding the pension fund. In this sense, this document not only flies in the face of that logic, it is recommending things under the auspices of full disclosure laws that the Governor has said do not apply in this situation. As such, Attorney General Kilmartin could investigate further on this issue and hold people liable for failing to obey public disclosure laws.

Also notable is that, while the report does not deal specifically with the Rhode Island pension plan, it does discuss shortcomings of Daniel Loeb’s Third Point Capital, one of the firms the Rhode Island pension plan was invested in.

Here are further findings of this paper:

Indeed, our findings suggest that all 11 pension funds included in our analysis would have performed better having never invested in hedge funds in the first place. This has important implications not only for pension fund trustees, who have a fiduciary duty to prudently seek investments that provide the highest long-term returns for the lowest cost to the pension fund, but also for public employees, public employee unions, retirees and taxpayers, all of whom should be concerned about this overall negative impact that hedge funds are exerting on public pension funds. [Emphasis in original]

With that in mind, consider for a moment this information from Ted Seidle’s first audit of the pension, Rhode Island Public Pension Reform: Wall Street’s License to Steal:

[A] significant portion of the Treasurer’s wealth and income relates to shares she owns in two illiquid, opaque venture capital partnerships she formerly managed at Point Judith Capital—one of which she convinced the state to invest in on different, less favorable terms. Unlike the state which paid millions for its shares in one of the Point Judith funds, the Treasurer was granted shares in both of the venture capital funds for free… In a letter to the Rhode Island Ethics Commission requesting an advisory opinion concerning whether she had taken sufficient steps to avoid conflicts of interest relative to her ties to a venture capital fund in which the state had made an investment, the Treasurer represented that in 2007 the State Investment Commission entered into a ten-year contract with Point Judith in which the State agreed to invest $5 million dollars in the Point Judith II fund. She also represented that the State’s investment in the fund was passive, meaning that after signing the contract with Point Judith and making its investment commitment, the State Investment Commission had no say in the fund’s ongoing management or investment decisions.
The Treasurer notably failed to mention in her letter to the Ethics Commission that the state had not merely entered into a ten-year contract with Point Judith. Rather, the state was a limited partner in a fund managed by Point Judith as General Partner and, as a limited partner the state may have broad rights in the fund’s ongoing management, or investment decisions, the exercise of which may conflict with her rights and interests.
Further, as a Point Judith insider, she, or other investors, may have been granted special rights more favorable than those granted to the state, including special withdrawal rights; rights to receive reports from the partnership on a more frequent basis or that include information not provided to other limited partners; rights to receive reduced rates of the incentive allocation and management fee; rights to receive a share of the incentive allocation, management fee or other amounts earned by the general partner or its affiliates. If true, the Treasurer may literally be profiting at the expense of the state…Regardless, the characterization of the investment in the Point Judith II Fund as merely a ten-year contract in a passive investment as to which the state had no say is neither complete nor accurate.
In order to create further separation from her investment in the Point Judith funds, the Treasurer represented that prior to assuming office she placed all her right, title and interest in both funds into a blind trust designated as the Raimondo Blind Trust. While a blind trust may be of value in certain circumstances, where, as here, the sole assets of the trust, i.e. the shares in the two Point Judith funds, are illiquid, i.e. cannot be sold for a decade, no protection is afforded. The purpose of the blind trust is to keep the beneficiary unaware of the specific assets of the trust, so as to avoid a conflict of interest between the beneficiary and the investments.
In this case, the Treasurer knows precisely the assets held in the Blind Trust during her entire term as Treasurer and continues to enjoy cash distributions related to the Point Judith funds—payments exponentially greater than her state salary in the past year— and payments related to shares she was granted for free.
Rather than provide protection against conflicts, here the blind trust serves to enable the conflict of interest involving ERSRI to persist throughout her term.
Most important, in connection with granting the Advisory Opinion, the Treasurer did not indicate, and Ethics Commission did not consider, that the Treasurer would subsequently refuse to disclose to the public information regarding ERSRI’s investment in Point Judith II.
Ironically, the Blind Trust scheme she proposed to the Ethics Commission coupled with her nondisclosure policy regarding the Point Judith II fund, has resulted in only the public being “blind” as to the Point Judith II fund.
In short, in our opinion, this arrangement constitutes a misuse of the blind trust device. [Emphasis added]

This presents a host of not just interest conflicts but potential illegal market manipulation committed in totality on the state level. If Raimondo manipulated the public in portraying the investments of the pension in a fashion to personally benefit her, that would constitute a serious malfeasance for investigation by the Attorney General. Furthermore, as this matter has involved court proceedings in a variety of cases, there could be potential perjury charges brought.

We will continue to explore these documents and bring highlights in further reporting.

EDITORIAL NOTE: Following this report, it was indicated by readers that the aforementioned RICO Act is the federal as opposed the Rhode Island definition of the law. It is worth noting that, due to the interstate and international nature of the pension fund investments, the federal definition is still applicable and relevant. That law, Rhode Island General Laws Title 7 Chapter 15, says the following:

§ 7-15-1  Definitions. – (a) “Enterprise” includes any sole proprietorship, partnership, corporation, association, or other legal entity, and any union or group of individuals associated for a particular purpose although not a legal entity.

(b) “Person” includes any individual or entity capable of holding a legal or beneficial interest in property.

(c) “Racketeering activity” means any act or threat involving murder, kidnapping, gambling, arson in the first, second, or third degree, robbery, bribery, extortion, larceny or prostitution, or any dealing in narcotic or dangerous drugs which is chargeable as a crime under state law and punishable by imprisonment for more than one year, or child exploitations for commercial or immoral purposes in violation of § 11-9-1(b) or (c) or § 11-9-1.1.

(d) “Unlawful debt” means a debt incurred or contracted in an illegal gambling activity or business or which is unenforceable under state law in whole or in part as to principal or interest because of the law relating to usury.

§ 7-15-2  Prohibited activities. – (a) It is unlawful for any person who has knowingly received any income derived directly or indirectly from a racketeering activity or through collection of an unlawful debt, to directly or indirectly use or invest any part of that income, or the proceeds of that income in the acquisition of an interest in, or the establishment or operation of any enterprise.

(b) It is unlawful for any person through a racketeering activity or through collection of an unlawful debt to directly or indirectly acquire or maintain any interest in or control of any enterprise.

(c) It is unlawful for any person employed by or associated with any enterprise to conduct or participate in the conduct of the affairs of the enterprise through racketeering activity or collection of an unlawful debt.

(d) Provided, that a purchase of securities on the open market for purposes of investment and without the intention of controlling or participating in the control of the issuer, or of assisting another to do so, is not unlawful under this section if the securities of the issuer held by the purchaser, the members of his immediate family, and his or her or their accomplices in a racketeering activity or the collection of an unlawful debt after the purchase do not amount in the aggregate to one percent (1%) of the outstanding securities of any one class, and do not, either in law or in fact, confer the power to elect one or more directors of the issuer.

…

§ 7-15-7  Investigative demands. – (a) Issuance. Whenever the attorney general has reasonable cause to believe that any person or enterprise has knowledge or is in possession, custody, or control of any documentary material pertinent to an investigation of a possible violation of this chapter, he or she may, prior to and/or following the institution of a civil or criminal proceeding on the violation, issue in writing and cause to be served upon the person or enterprise a civil investigatory demand by which he or she may:

(1) Compel the attendance of the person and require him or her to submit to examination and give testimony under oath; and/or

(2) Require the production of documentary material pertinent to the investigation for inspection and/or copying; and/or

(3) Require answers under oath to written interrogatories.

(b) Power to issue. The power to issue investigative demands does not abate or terminate by reason of the bringing of any action or proceeding under this chapter. The attorney general may issue successive investigatory demands to the same person in order to obtain additional information pertinent to an ongoing investigation.

(c) Confidentiality. In the event the attorney general initiates a civil investigatory demand prior to a criminal indictment for violation of this chapter, then the commencement, contents, and results of the civil investigatory demand is held in the strictest confidence by the attorney general and shall remain so until the time that a civil action is commenced, indictment for violation of this chapter returned, or removal of the confidentiality is ordered by a justice of the superior court.

(d) Contents of investigative demand. Each investigatory demand shall:

(1) State the nature of the conduct constituting the alleged racketeering violation of this chapter which is under investigation and the provisions of law applicable to the conduct;

(2) Prescribe a reasonable return date no less than twenty (20) days from the date of the investigative demand, provided that an earlier date may be prescribed under compelling circumstances;

(3) Specify the time and place at which the person is to appear and give testimony, produce documentary material, and furnish answers to interrogatories, or do any or a combination of the above;

(4) Identify the custodian to whom any documentary material is to be made available;

(5) Describe by class any documentary material to be produced with such definiteness and certainty as to permit the material to be fairly identified;

(6) Contain any interrogatories to which written answers under oath are required; and

(7) Advise in writing the person upon whom the demand is served that the material or statements may constitute a basis for prosecution against the person.

(e) Prohibition against unreasonable demand. No investigatory demand shall:

(1) Contain any requirement which would be unreasonable or improper if contained in a subpoena or a subpoena duces tecum issued by a court of this state; or

(2) Require the disclosure of any material which would be privileged from disclosure if demanded by a subpoena or a subpoena duces tecum issued by a court of this state.

(f) Service of investigative demand.

(1) An investigative demand may be served by:

(i) Delivering an executed copy to the person to be served, or if the person is not a natural person, to any partner, executive officer, managing agent, general agent, or to any agent of the person authorized by appointment or by law to receive service of process on behalf of the person;

(ii) Delivering an executed copy to the principal office or place of business of the person to be served; or

(iii) Mailing by certified mail, return receipt requested, an executed copy addressed to the person to be served, or if the person is not a natural person, addressed to its principal office or place of business in this state, or if it has none in this state, to its principal office or place of business.

(2) A verified return by the individual serving any demand or petition setting forth the manner of service is prima facie proof of service. In the case of service by certified mail, the return shall be accompanied by the return post office receipt of delivery of the demand.

(g) Authorization to examine. The examination of all persons pursuant to this section shall be conducted by the attorney general or a representative designated in writing by him or her, before an officer authorized to administer oaths in this state. The statements made shall be taken down stenographically or by a sound recording device and shall be transcribed.

(h) Rights of persons served with investigative demands. Any person required to attend and give testimony or to submit documentary material pursuant to this section is entitled to retain, or, on payment of lawfully prescribed cost, to procure, a copy of any document he or she produces and of his or her own statements as transcribed. Any person compelled to appear under a demand for oral testimony pursuant to this section may be accompanied, represented, and advised by counsel. Counsel may advise the person in confidence, either upon the request of the person or upon counsel’s own initiative, with respect to any question asked of the person. The person or counsel may object on the record to any question, in whole or in part, and shall briefly state for the record the reason for the objection. An objection may properly be made, received, and entered upon the record when it is claimed that the person is entitled to refuse to answer the question on grounds of any constitutional or other legal right or privilege, including the privilege against self incrimination. The person shall not otherwise object to or refuse to answer any question, and shall not by him or herself or through counsel interrupt the oral examination. If the person refuses to answer any question, the attorney general may petition the superior court for an order compelling the person to answer the question. The information and materials supplied to the attorney general pursuant to an investigative demand are not permitted to become public or be disclosed by the attorney general or his or her employees beyond the extent necessary for legitimate law enforcement purposes pursuant to this chapter.

(i) Witness expenses. All persons served with an investigative demand, other than those persons whose conduct or practices are being investigated or any officer, director, or person in the employment of the person under investigation, are paid the same fees and mileage as paid witnesses in the courts of this state. No person is excused from attending the inquiry pursuant to the mandate of an investigative demand or from giving testimony, or from producing documentary material or from being required to answer questions on the ground of failure to tender or pay a witness fee or mileage, unless demand for the witness fee or mileage is made at the time testimony is about to be taken and unless payment of the witness fee or mileage is not made.

(j) Custody of documents. (1) The attorney general shall designate, from within the department of attorney general, an investigator to serve as racketeer document custodian and any racketeering investigators that he or she determines are necessary to serve as deputies to that officer.

(2) Any person on whom any demand issued under this section has been served shall make the material available for inspection and copying or reproduction to the custodian designated in the demand at the principal place of business of the person, or at any other place that the custodian and the person subsequently agree and prescribe in writing or as the court may direct, pursuant to this section on the return date specified in the demand, or on any later date that the custodian may prescribe in writing. The person may, upon written agreement between the person and the custodian, substitute copies of all or any part of the material for originals of the materials.

(3) The custodian to whom any documentary material is delivered shall take physical possession of it, and is responsible for its use and for its return pursuant to this chapter. The custodian may cause the preparation of any copies of the documentary material that are required for official use under regulations which are promulgated by the attorney general. While in the possession of the custodian, no material produced shall be available for examination, without the consent of the person who produced the material, other than for legitimate law enforcement purposes pursuant to this chapter. Under any reasonable terms and conditions that the attorney general prescribes, documentary material while in the possession of the custodian shall be available for examination by the person who produced the material or any authorized representatives of the person.

(4) Whenever any attorney has been designated to appear on behalf of the state before any court or grand jury in any case or proceeding involving any alleged violation of this chapter, the custodian may deliver to the attorney any documentary material in the possession of the custodian that the attorney determines to be required for use in the presentation of the case or proceeding on behalf of the state. Upon the conclusion of any case or proceeding, the attorney shall return to the custodian any documentary material withdrawn which has not passed into the control of the court or grand jury through its introduction into the record of the case or proceeding.

(5) Upon the completion of the investigation for which any documentary material was produced under this chapter, and any case or proceeding arising from the investigation, the custodian shall return to the person who produced the material all the material, other than copies of it made by the custodian pursuant to this section, which has not passed into the control of any court or grand jury through its introduction into the record of the case or proceeding.

(6)(i) When any documentary material has been produced by any person under this chapter, and no case or proceeding arising from it has been instituted within a reasonable time after completion of the examination and analysis of all evidence assembled in the course of the investigation, the person is entitled, upon written demand made upon the custodian, to the return of all documentary material. Provided, that no documentary material shall be tendered, delivered, or made available to any other state, federal, or municipal agency.

(ii) Anyone who knowingly and willfully violates the provision of this subdivision shall, in addition to any civil liability, be punished by a fine of not more than five hundred dollars ($500) and/or imprisonment for no longer than one year.

(7) In the event of the death, disability, or separation from service of the custodian of any documentary material produced under any demand issued under this chapter or the official relief of the custodian from responsibility for the custody and control of the material, the attorney general shall promptly designate another racketeering investigator to serve as custodian of the documentary material, and transmit notice in writing to the person who produced the material as to the identity and address of the designated successor. Any designated successor has all duties and responsibilities as to the materials imposed by this chapter on his or her predecessor in office as to them, except that he or she is not responsible for any default or dereliction which occurred before his or her designation as custodian.

(k) Enforcement of investigative demands for production. Whenever any person fails to comply with any civil investigative demand served upon him or her under this chapter requiring the production of documentary material, or whenever satisfactory copying or reproduction of that material cannot be done, and the person refuses to surrender the material, the attorney general may file in the superior court and serve upon the person a petition for an order of the court for the enforcement of the demand.

(l) Refusal of persons served to testify or produce documents. Whenever any natural person neglects or refuses to attend and give testimony or to answer any lawful inquiry or to produce documentary material if in his or her power to do so in obedience to an investigative demand served upon him or her under this chapter, he or she may be adjudged in civil contempt by the superior court until any time that he or she purges him or herself of contempt by testifying, producing documentary material or presenting written answers as ordered. Any natural person who commits perjury or false swearing in response to an investigative demand pursuant to this section is punishable pursuant to the provisions of chapter 33 of title 11.

(m) Motion to quash. Within twenty (20) days after the service of an investigatory demand upon any person, or at any time before the return date specified in the demand, whichever period is shorter, the person served may file in the superior court and serve upon the custodian a petition for an order of the court modifying or setting aside the demand. The time allowed for compliance with the demand in whole or in part as deemed proper and ordered by the court shall not run during the pendency of the petition in the court. The petition shall specify each ground upon which the petitioner relies in seeking relief, and may be based on any failure of the demand to comply with the provisions of this chapter or on any constitutional or other legal right or privilege of the person.

(n) Right of persons producing documents. At any time during which any custodian is in custody or control of any documentary material delivered by any person in compliance with an investigatory demand, the person may file in the superior court and serve upon the custodian a petition for an order of the court requiring the performance by the custodian of any duty imposed upon him or her by this chapter.

(o) Duty to testify. (1) If, in any investigation brought by the attorney general pursuant to this section, any individual refuses to attend or to give testimony or to produce documentary material or to answer a written interrogatory in obedience to an investigative demand or under order of court on the ground that the testimony or material required of him or her may tend to incriminate him, that person may be ordered to attend and to give testimony or to produce documentary material or to answer the written interrogatory, or to do an applicable combination of these. The above order is an order of court given after a hearing in which the attorney general has established a need for the grant of immunity, as subsequently provided.

(2) The attorney general may petition the presiding justice of the superior court for an order as described in subdivision (1) of this subsection. The petition shall set forth the nature of the investigation and the need for the immunization of the witness.

(3) Compelled testimony shall not be used against the witness as evidence in any criminal proceedings against him or her in any court. However, the grant of immunity does not immunize the witness from civil liability arising from the transactions about which testimony is given, and he or she may nevertheless be prosecuted or subjected to penalty or forfeiture for any perjury, false swearing, or contempt committed in answering or in failing to answer or in producing evidence or failing to do so in accordance with the order. If a person refuses to testify after being granted immunity from prosecution and after being ordered to testify, he or she may be adjudged in civil contempt by the superior court until any time that he or she purges him or herself of contempt by testifying, producing documentary material or presenting written answers as ordered. The above does not prevent the attorney general from instituting other appropriate contempt proceedings against any person who violates any of the above provisions.

February 8, 2016February 7, 2016

RI political leaders ignore evidence, pursue failed economic policies

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A new report calls into question many of the job growth strategies being pursued and implemented by our state leaders. “To create jobs and build strong economies,” say economists Michael Mazerov and Michael Leachman in their new report, “states should focus on producing more home-grown entrepreneurs and on helping startups and young, fast-growing firms already located in the state to survive and to grow ― not on cutting taxes and trying to lure businesses from other states.”

The report, “State Job Creation Strategies Often Off Base” takes advantage of new data accumulated over the last fifteen years “about which kinds of firms create jobs” and the data shows that the “vast majority of jobs are created by businesses that start up or are already present in a state — not by the relocation or branching into a state by out-of-state firms.”

The immediate takeaway from this report for Rhode Islanders is that Governor Gina Raimondo’s planned (yet not realized) trip to Davos and the time she spent trying to persuade General Electric (GE) to move to Rhode Island rather than to Massachusetts are wastes of time and money. Raimondo’s offer to GE was in the “same neighborhood” as Massachusett’s $140 million in state and city incentives and grants. Given the conclusions in this report, Rhode Island dodged a bullet when GE turned Raimondo’s offer down.

I asked the authors of the piece directly about the governor’s plan to travel to the World Economic Summit in Davos and they told me, “That is not where state economic development comes from and that’s really not where policy makers should focus. They should focus on homegrown businesses and try to stimulate startups and helping their businesses that are already in the state to find customers and find the skilled workers they need. Business recruitment accounts for such a tiny share of job creation and that’s really a major point of this paper. It is not where the priority should be placed.”

In other words, we are, as a state, pursuing failed economic and job creation strategies, and we will continue to fail unless we take this new data seriously.

On average, 87 percent of new jobs are created by businesses already in the state. In the chart below, you can see that Rhode Island is no outlier in this department. The remaining 13 percent of jobs come from out of state businesses branching into the state (think of a restaurant chain in Boston adding a store in Providence) or a business actually relocating into the state, as GE recently did when they moved to Massachusetts.

What kind of businesses stimulate job creation? The report stresses that “startups and young, fast-growing firms are the fundamental drivers of job creation when the U.S. economy is performing well.”

The report quotes economist John Haltiwanger and his colleagues as saying, “Overall, the evidence shows that most start-ups fail, and most that do survive do not grow. But among the surviving start-ups are high-growth firms that contribute disproportionately to job growth. These high-growth young firms yield the long-lasting contribution of start-ups to net job creation.”

The firms that take off are called “gazelles.” Think Google, Amazon, Tesla or Under Armour, or, in Rhode Island, think NuLabel. These kind of firms accounted for about 15 percent of all businesses, but were responsible for half of gross job creation from 1992-2011.

Failed Policies

In trying to create a “business friendly climate” that will lure small businesses to the state, our leaders, like leaders in many other states, have pursued strategies that are “bound to fail because they ignore the fundamental realities about job creation revealed by the new data and research discussed above.” A favorite failed strategy is tax cuts for “small businesses.”

These tax cuts are not properly aimed at young businesses, they are aimed at small businesses. Most small businesses don’t have employees or plan to add employees. And targeting tax cuts to young businesses has little effect because most young businesses spend so much money on new equipment, product testing and marketing that they have little in the way of taxable income in the first place.

Tax cuts don’t help a state’s business climate, but they do hurt a government’s ability to do the important work of funding education and maintaining a top notch infrastructure. The report cites an Endeavor Insight study that showed that only 5 percent of entrepreneurs cited low tax rates as a factor in deciding where to locate their company, whereas 31 percent cited access to talent (education) and a city’s quality of life as a factor.

Offering tax breaks and non-tax incentives to lure out-of-state companies to our state is also a losing game. In Rhode Island we are addicted to TSAs, Tax Stabilization Agreements, which allow companies and developers to avoid paying their fair share of taxes and shifts the businesses’ tax burden onto the rest of the city or state taxpayers. As the report clearly shows, “jobs gained due to firm relocation are such trivial factors in a state’s overall job creation record that they should not be a consideration in formulating state tax policy or economic development policy more broadly.”

A look at statements made at the recent Greater Providence Chamber of Commerce luncheon reveals that our elected leaders haven’t gotten this message yet.

Here’s Senate President Teresa Paiva-Weed talking about the importance of tax cuts:

Here’s Senate Majority Leader Dominick Ruggerio talking about tax stabilization agreements to spur development:

Here’s Senate Minority Leader Dennis Algiers on “broad-based” tax cuts, which we’ve seen are not only not effective, they are counter-productive:

Here’s Speaker of the House Nicholas Mattiello talking about how “incentives” (i.e. tax breaks) “attract new people to our state.”

Continuing to pursue strategies that have been shown to hinder rather than help in job creation would be foolish in light of the data in this new report. Instead, “policy needs to focus on encouraging entrepreneurship generally, helping new businesses to survive, and enabling businesses with the potential to become high-growth firms to fulfill that potential.”

February 7, 2016February 6, 2016

A social history of our economic downfall with David Harvey

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David Harvey is a Marxist geographer and thinker whose scholarship has included the history of neoliberalism, the meaning of Marx’s Das Kapital, and building a participatory democratic system in urban centers.

Here Harvey lays out the history of neoliberalism and the political system it entails. While many libertarian-capitalists embrace the ideas of neoliberalism under the auspices of pleas for freedom, it becomes abundantly clear listening to Harvey that the regimes of Pinochet and Deng have been anything but liberation. This is essential for anyone interested in knowing why America’s economy is so sluggish.

February 6, 2016February 7, 2016

Two major rip-offs Rhode Islanders should not pay for

In a touch of irony, two news stories came across my desk today that share a common trait, instances where the rich and well-to-do are trying to make the taxpayers fork out cash for what is not supposed to be a public problem. In fact, their issues are totally due to poor business decisions made by people who should have and did know better.

First was a letter co-signed by Pawtucket Mayor Don Grebien and PawSox chairman/owner Larry Lucchino. In half-repentant tones that would only be considered genuine by the naive or gullible, the two make the first thrust at what has been long-expected, namely, a taxpayer-subsidized “renovation” of McCoy Stadium that is totally unwarranted and undeserved, particularly considering that the building was just given a makeover some years ago. Invoking a baseless notion of “competitive advantages” given other teams in the minor leagues by “newer facilities”, they are starting the opening round of a public fleecing.

If baseball players are so disadvantaged by sub-standard facilities, why are there so many players from Central and South America playing in the major leagues? Every year the boys of spring include among them a sizable number of talented players who grow up in poverty, played in sub-standard settings, and were successfully scouted by Americans with alluring promises of glory. Of course when they arrive on our shores, they discover that the minor leagues pay a pittance of a salary and that their fantasies of glory may indeed be just that, but such are the empty promises of men like Lucchino. That Mayor Grebien would play ball with such a fleecing shows perhaps his constituents should think wisely about who gets their vote next November, particularly in light of how Lucchino is in the business of professional gentrification.

The other bit of news is equally laughable. It would seem that the Cardi Corporation and the Department of Transportation are in a bit of a public tiff over the deterioration of the ‘I-Way’ bridge that redirected traffic on Interstate 195 several years ago. After a car crashed into a guard rail several years ago, it was revealed that the structure failed to meet Federal Highway Administration requirements. Cardi is now expecting the state (read: taxpayers) to reimburse them for the construction of a new guardrail.

As irony would have it, I have had a source for some years who was intimately involved in the construction of the highway as a unionized construction worker and inspector. This source indicated that, from start to finish, there was a host of corrupt practices to be seen in the creation of the structure, from the fabrication of the skeleton beams in out of state to the pouring of the cement. The I-Way, as is the case with almost every public construction project in Rhode Island, was a magnet for buffoonish corruption of every kind. When it was revealed several years ago that there was a state office operating in the upper floors of a gentleman’s club, it was barely mentioned that the office was located in that venue because it was just adjacent to the I-Way and Cardi’s offices on Allens Avenue. Cardi knew very well that they were cutting corners when they built that bridge and they did so anyway because of the bizarre inter-relations between the construction business, the asphalt/concrete industry, and various political and criminal families that have always had your transportation safety solely at heart.

This is a no-brainer. Larry Lucchino and the Cardi Corporation do not deserve any public monies. Lucchino made a bad business decision by getting into a seamy deal with the late James Skeffington, who thought his connections to the Democratic Party machine made this an automatic venture capitalist success. The Cardi Corporation should have just built their bridge properly. Meanwhile, as two corporate bodies with deep pockets come begging for a bail-out, Providence and the wider state is in a severe economic situation. Our schools are crumbling, the impoverished are left to beg, and the social safety net is a joke in comparison with the rest of the world.

January 25, 2016January 25, 2016

Follow the money on Raimondo pension scheme: Is Providence bankrupt?

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For some weeks now, there has been a great deal of conversation around the idea that Providence is on the verge of bankruptcy. A new rule regarding budget statements is key to understanding why.

A brief by the Center for State and Local Government Excellence titled How Will State Unfunded Pension Liabilities Affect Big Cities? lays out an explanation for new rules of the Governmental Accounting Standards Board (GASB) that moved “unfunded actuarial accrued liability [UAAL] for public pension plans…from the footnotes of financial statements to the balance sheets of employers... Cities are now required to include on their balance sheets the pension accounting information currently in the footnotes of their financial statements and to report their share of the unfunded liability in cost-sharing plans. This calculation does not create new liabilities; it simply reallocates them from the state to the city.”

Translation by the Houston Municipal Employees Pension System: “Essentially, the UAAL is the amount of retirement that is owed to an employee in future years that exceed[s] current assets and their projected growth.” This means that Providence just went from $759,000,000 to $964,000,000 in pension liabilities that they could not fund in 2012.

Here is what Providence’s finances look like under the new GASB provisions:

Untitled-1 — Unfunded Actuarial Accrued Liability (UAAL) and UAAL Relative to Own-Source Revenue for Affected Cities, Before and Estimated After GASB 68, FY 2012

Of course, another aspect is what is being reported here. The shortfall is caused by the City having to report their portion of the liabilities of the State Pension, which we have been reporting is facing shortfalls because of shady fees imposed by Gov. Raimondo’s friends on Wall Street.

This is an issue that is going to affect all cities and towns in the state, not just Providence. It is worth noting that Woonsocket is also mentioned in this report.

January 21, 2016January 21, 2016

Follow the money on Raimondo pension scheme: the local sponsors

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Remember back when all the important people were lining up in droves to support then-Treasurer Raimondo’s pension policies under the false advertising of a crisis? Wouldn’t it be great if we could go back in time to look at who played along, willingly or unwillingly, in what is turning out to have been a complete and utter fraud so to perpetuate a massive heist at the expense of both the retired state workers and the taxpayers?

There is.

The webpage Internet Archive has a fantastic device called the Wayback Machine that captures snapshots of pages every few days across the internet. With absolute ease, one can look at the campaign pages of candidates, movie websites that have gone extinct, or even the frontpage of a newspaper or magazine on a historic date, say, the Times on 9/12/01.

We present now a little jaunt down memory lane, the EngageRI webpage that foisted this scheme on an unsuspecting public.

OCTOBER 2, 2011
 <a href="https://web.archive.org/web/20111002015933/http://engageri.org/"> Fallback link for browsers that, unlikely, don’t support frames </a>

DECEMBER 9, 2011
 <a href="https://web.archive.org/web/20111209015408/http://engageri.org/"> Fallback link for browsers that, unlikely, don’t support frames </a>

JANUARY 22, 2012
 <a href="https://web.archive.org/web/20120122012519/http://engageri.org/"></a>

MARCH 26, 2013
 <a href="https://web.archive.org/web/20130326175202/http://www.engageri.org/"> </a>

And lest we forget, here’s the people who were in charge!

Board of Directors

–President & Co-Chairperson 
Ed Cooney
Senior Vice President, Nortek, Inc.
–Vice President
Constance Pemmerl
Retired Financial Executive
–Secretary
Ted Long
Partner, Holland & Knight LLP
–Treasurer 
John Galvin
Chief Financial Officer, Collette Vacations
-Paul J. Choquette, Jr.
Vice Chairman, Gilbane Inc.
-Susan Arnold
CEO and General Counsel, Rhode Island Association of REALTORS, Inc.
-Kas DeCarvalho
Partner, Fontaine, DeCarvalho & Bell LLP
-Bradford S. Dimeo
Dimeo Construction Company
-James Diossa
Councilman – Ward 4, Central Falls City Council
-Michael McMahon
Founding Partner, Pine Brook Road Partners
-Dan Sullivan
 CEO and President, Collette Vacations

When the FBI, SEC, and US Attorney’s Office come looking to ask questions, they might do well to check in with these folks also.

January 19, 2016

First look at ‘Rhode Island Innovates: A Competitive Strategy for the Ocean State’

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Brookings Institute‘s new report, “Rhode Island Innovates: A Competitive Strategy for the Ocean State,” was formally presented to Governor Gina Raimondo and other government leaders this morning at the Rhode Island Foundation downtown.

The report can be accessed here.

The executive summary can be read here.

Perhaps the biggest surprise comes early on, when the report declares that Rhode Island’s economy is “less dire than middling.” To hear many people say it, Rhode Island is steps away from economic implosion. The Brookings report is more optimistic.

In the report Brookings offers a package of “initiatives and action steps” … that are “intended as a comprehensive package” of reforms. They see the culmination of these ideas as requiring “a new degree of partnership across the public, private, civic, and philanthropic sectors.”

There’s a lot to digest here in a two hundred page report, but some quick thoughts:

The word “poverty” occurs three times in the report, and two of those times in exactly the same context: merely noting its existence. In a state with over 14 percent poverty and nearly 1 in 5 children living in poverty, you’d think a report on creating a better economic climate might address the subject more forthrightly.
Brookings defines “good jobs” as jobs that “offer livable wages with benefits for full-time workers who have less than a four-year degree.” Nowhere in the report is the idea of raising the minimum wage mentioned, yet many of the sectors that Brookings see as having growth potential such as hospitality or shipping create the kind of low paying jobs you might see at a fast food restaurant or a warehouse fulfillment center.
Taxes: “it is important to keep in mind,” says the report, “that low taxes alone do not spur economic growth.” Yet the report then cites the fact that “Rhode Island ranks 45th in the nation in the Tax Foundation’s 2016 State Business Tax Climate Index.” Yet as economist Peter Fisher ably demonstrates, “Combining more than 115 features of state tax law into a single index number produces a state ranking that turns out to bear very little relationship to what businesses actually pay in one state versus another.” The Brookings Institute’s reliance on the Tax Foundation, which “represents the corporate view of tax policy” calls into question the supposed neutrality of this report.

As I get into the report more and have a chance to hear from others I’m sure I’ll have more to say on this report. In the meantime, I present it here for everyone to get their eyes on the page and contribute to the public discussion.

Here’s the slideshow off the Brookings site:

January 19, 2016January 18, 2016

Follow the money on the Raimondo pension scheme: Marvin Rosen

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Following the publication of a letter sent to the FBI, SEC, and US Attorney’s Office by Rhode Island’s Future, we chose to take a deeper look at the players and parties ripping off retired public employees. What we found was a massive mess of money, right-wing ideologues, and the attempted further bail-out of Wall Street at the expense of state and municipal workers that goes all the way to the top and which could end up shaking the foundations of the 2016 campaign in ways not imagined.

One of the figures that appears in this whole fracas is a man familiar to those who have paid attention to the less-publicized elements of that political machine unto itself known as the Clintons, one Marvin Rosen. Ted Seidle wrote in his letter to the federal authorities the following:

As noted in my first report, when asked by the SEC in 2009, ERSRI admitted that Fenway Partners Capital Fund III paid an influential intermediary, Marvin Rosen, of Diamond Edge Capital Partners $262,500 related to this investment and paid the firm a total of approximately $1 million related to four private equity investments. Mr. Rosen was a Democratic fundraiser linked to former President Bill Clinton whose firm earned millions in New York pension fund deals in 2005 and 2006 when Alan Hevesi was state controller. Fenway and Mr. Rosen were also was involved in a pay-to-play controversy related to the New Mexico state pension.

To delve into the history of Mr. Rosen is to journey into the dark underbelly of the Democratic Party, a party that has been co-opted and compromised by Wall Street since the days of Bill Clinton’s gubernatorial campaigns, if not earlier. Since the mid-1980’s, a brand of “New Democrats” has used the once-progressive mantle of the party to justify the adoption of neoliberal policies that a Reagan or Bush would only dream of trying to foist on the American public, be it “the era of Big Government is over” hollowing out of Welfare and other social safety net programs or “Tough on Crime” minimum mandatory sentencing guidelines. This cuts to the core of your standard DINO (Democrat In Name Only), be it Bill and Hillary Clinton or Gina Raimondo.

When one writes about Marvin Rosen, they must be cautious because of his tendency to sue over bad press. As such, what follows is copy from sources that have previously withstood the Rosen wrath. The first comes from the book Kentucky Fried Pensions by Chris Tobe, who kindly shared his materials with us to complete these stories. Tobe has been covering a similar pension scheme in the Bluegrass State and says the following:

The most colorful placement agent firm, hands down, is a small operation called Diamond Edge Capital Partners LLC led by Marvin Rosen. Eileen Kotecki, who was Al Gore’s and John Edwards’ main Presidential fundraiser, worked there for a time. [i] Glen Sergeon, a Diamond Edge partner and a former trustee of the New York Teachers’ Retirement Fund, collected around $5 million from private equity firms and hedge funds doing business with the Kentucky Retirement Systems (KRS). Sergeon used the money to buy a lavish Fifth Avenue condo. [ii] Forbes reported that, in addition to Kentucky, Diamond Edge was involved in the New York pay for play scandal: “Diamond Edge Capital Partners is another firm that was paid–$6.8 million–by money managers for lining up work with New York. In 2008 Sergeon joined Diamond Edge, where he teamed up with Marvin Rosen, a company partner and the former Bill Clinton fundraiser who arranged Lincoln Bedroom sleepovers for big donors. Later that year Sergeon landed Diamond Edge its first business with Kentucky.” [iii] Rosen and another Diamond Edge partner, Marc Correra, are being sued for their role as placement agents in New Mexico. [iv] Marvin Rosen as late as 2013 has been disclosed as a placement agent in Rhode Island. Pro Football Hall of Famer Lynn Swann has also worked for Diamond Edge.
But the most colorful Diamond Edge partner was Kenneth Ira Starr, known as Hollywood’s Madoff. [v] Currently serving a seven-year prison term, Starr managed the money of celebrities like Al Pacino, Uma Thurman and Lauren Bacall. Starr engineered a $33 million Ponzi scheme to swindle his clients and to impress his much younger, ex-stripper wife, Diane Passage. [vi] He was featured on the CNBC television show “American Greed” which focused on his rip-off of Sylvester Stallone and his obsession with, and subsequent marriage to, a pole dancer. [vii]
[i] http://www.bloomberg.com/apps/news?pid=newsarchive&sid=atwTqj6OjY7U How Pension Placement Agent Exploited Political Ties, Martin Braun & Gillian Wee: May 18, 2009
[ii] http://observer.com/2011/07/secret-agent-glen-sergeon-sells-in-the-village-buys-in-harlem/
[iii] http://www.forbes.com/forbes/2011/0523/features-pensions-glen-sergeon-auditors-secret-agent_3.html
[iv] http://www.bloomberg.com/apps/news?pid=newsarchive&sid=atwTqj6OjY7U
[v] http://www.huffingtonpost.com/2011/03/03/ken-starr-hollywoods-mado_n_830918.html
[vi] http://www.huffingtonpost.com/2011/03/03/ken-starr-hollywoods-mado_n_830918.html
[vii] http://www.cnbc.com/id/45554694

Of course, this begs the question what exactly is a placement agent?

Investopedia defines the term as “An intermediary who raises capital for investment funds. A placement agent can range in size from a small one-person independent firm to a large division of a global investment bank. Professional placement agents are required to be registered with the securities regulatory agency in their jurisdiction, such as the U.S. Securities and Exchange Commission. A placement agent operating in the U.S. must be registered as a broker or dealer.” When I discussed this with Tobe, he explained it as a job that has almost totally ceased to exist in the post-Citizens United era, but before then a placement agent functioned as a middle-man for big capital.

But that is only scratching the surface of Rosen’s history. Jeffrey St. Clair and the late Alexander Cockburn of CounterPunch! also have covered Rosen in their multi-decade stories about the Clintons. Their story, titled Clinton and the Cuban Fixer, is an impressive read worth the time. They write:

Marvin Rosen cut his teeth in Democratic Party politics back in 1980 when he was the Florida coordinator of Sen. Ted Kennedy’s doomed effort to wrest the Democratic Party nomination from Jimmy Carter. Though Kennedy did badly, Rosen proved himself a whiz at beating the bushes for money. By 1984 he was the leading fundraiser for Fritz Mondale. In 1988 Rosen served as finance chairman of the Dukakis campaign and, during the cash-strapped days of Clinton’s 1992 bid, was personally solicited by Gov. Bill himself to raise money, and celebrated the inaugural victory in the company of the Clintons and the Gores. Seeking to capitalize on such a long investment in time and effort, Rosen opened a D.C. office for his law firm in 1993 and immediately hired Ron Brown’s son Michael to be his director of legislative affairs. He also recruited Ted Kennedy’s new wife, Victoria.

They go on to explore Rosen’s connections to the infamous Cuban exile community located around Miami and other parts of Florida. For those readers who are unfamiliar, this bunch has a rather checkered past, including hair-brained anti-Castro efforts that date back to the darker days of the Cold War along with a bevvy of good-old-fashioned corruption and pollution of the Florida Everglades.

Another Cockburn/St. Clair piece featuring Rosen, excerpted from their book Dime’s Worth of Difference: Beyond the Lesser of Two Evils and titled All for Oil, Oil for One, explains the connections between Rosen and major fossil fuel corporations that have been looking to drill for oil in the Arctic National Wildlife Refuge and build a variety of pipelines across America, giving a great insight into why the Democrats are all in favor of the Burrillville natural gas plant despite sound science proving it would be a calamity.

ARCO [Atlantic Richfield Company]– the prime beneficiary of the new Alaskan oil bonanza–is one of the preeminent sponsors of the American political system. The oil giant maintains a hefty federal political action committee. In the 1996 election cycle, the ARCO PAC handed out more than $357,000. But this was only the beginning. Over the same period, ARCO pumped $1.25 million of soft money into the tanks of the Republican and Democratic national committees. The company contributed at least another $500,000 in state elections, where corporations can often give directly to candidates. At the time, Robert Healy was ARCO’s vice-president for governmental affairs. On October 25, 1995, Healy attended a White House coffee “klatsch” with Vice-President Al Gore and Marvin Rosen, finance chairman of the Democratic National Committee. A few days before the session, Healy himself contributed $1,000 to the Clinton/Gore re-election campaign. But from July through December of 1995, largely under Healy’s direction, ARCO poured $125,000 into the coffers of the DNC. [Emphasis added]

Need more be said?

The late Christopher Hitchens, for all his drunken sliminess and apologias for the Bush presidencies, did have a moment in his career where he contributed something useful by publishing his pamphlet No One Left To Lie To. In that slim volume, issued in the midst of the Clinton impeachment fiasco, he laid out an explanation for the Clinton strategy of triangulation, a term coined by the right wing political consultant Dick Morris. Hitchens defined it as such in a Book TV interview on C-SPAN 2: “Triangulation is three-card monte… You steal the Republican Party’s program, adopt it for the Democratic Party, hope you can bring the Republican Party’s donors along with you, which you often can, then you are faced with the task of shoring up or reassuring your own constituency, and that is done by means of a sort of cheap and superficial political correctness.” It can be said without much argument that this can very well sum up the Raimondo ideology very well, a miasma of reactionary ideals covered up by a clever game of neoliberal identity politics that passes doing the bare minimum for women’s rights as feminism. This also goes for her pension policies that benefit Wall Street while robbing Main Street.

Of course, all these points also can be applied with no modification or rejoinder to Hillary Clinton.

January 18, 2016January 17, 2016

Follow the money on Raimondo pension scheme: John Arnold

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The Raimondo pension scheme is just a test run of a larger agenda. If this is left to stand, it would clear the way for the privatization of Social Security and the total defenestration of the social safety net dating back to the New Deal years. Through a well-financed and insidious number of organizations including the Pew Charitable Trusts Foundation, the Bill and Melinda Gates Foundation, the Blackstone Group, and the Laura and John Arnold Foundation, as well as many others, a cunning and manipulative campaign has been created to deceive the general public into believing that retired teachers, firefighters, librarians, and civil servants are costing the taxpayers exorbitant amounts of money while your friendly Wall Street banker is in need of charity. And at the center of it all is Hillary Rodham Clinton, whose campaign is both financed by these crooks and soliciting the endorsements of unions from whose members the heist is being perpetrated against!

All this begs multiple questions. For example, where are the voices of Treasurer Seth Magaziner and Attorney General Peter Kilmartin in all of this? David Sirota argues in a report that “the “crisis” language around pensions is, unto itself, fraudulent“. What does this say about Gina Raimondo’s public statements and testimony made potentially under oath while the pension lawsuit was being litigated? Was she totally forthcoming when the SEC previously looked into these matters? Seidle writes in Rhode Island Public Pension Reform: Wall Street’s License to Steal:

[T]he General Treasurer’s practice of withholding information and intentionally providing incomplete disclosures regarding ERSRI’s investments results in: (1) misleading the public as to fundamental investment matters, such as the true costs and risks related to investing in hedge, private equity, and venture capital funds; (2) understating the investment expenses and risks related to ERSRI; and (3) misrepresenting the financial condition of the state of Rhode Island to investors… [A]n investigation by state or federal securities regulators would reveal intentional withholding of material information and misrepresentations regarding state pension costs. [Emphasis added]

This is a scandal in development that makes Operation Plunder Dome look like shoplifting penny candy from the corner store. There never was a pension crisis, just a public swindle. This whole notion of a crisis is a gigantic fraud. And not only are public sector retirees and employees paying for it, every single taxpayer in Rhode Island is being duped into shoveling piles of cash into Wall Street’s trough.

The first person to scrutinize is John Arnold, the ex-Enron trader who was able to send a nice donation to both the Raimondo and Obama campaigns at key moments. Consider this line from a webpage cataloging his nationwide rampage:

Arnold donated hundreds of thousands of dollars to Engage RI, the PAC behind Raimondo’s campaign to cut benefits and move workers into a “hybrid” retirement system that includes a 401(k) component. The Arnold Foundation also helped finance a Brookings Institution report and an Urban Institute report trumpeting Raimondo’s pension cuts.

While Enron has gone down in history as having close ties with George W. Bush, complete with Ken Lay holding the classic Dubya appellation of “Kenny Boy”, this should not be surprising. For some years now, the Wall Street political donations have flowed into Democratic Party coffers whereas the Republicans depend on patronage from the fossil fuel industries. The reason Bush and Lay were buddies came down to the fact that Enron as a company operated in both worlds, trading in energy futures (which ended up being fraudulent in the long run), which combined the sale of commodities on an exchange floor like Wall Street with the generation of relationships to fuel corporations such as the ones the Bush family made their millions from.

David Sirota writes the following about Arnold:

According to CNN/Money, John Arnold is “the second-youngest self-made multibillionaire in the United States.” Only Mark Zuckerberg is younger and richer – but that’s not the only difference between the two. Whereas Zuckerberg made his fortune building a brand-new social media technology, Arnold made his the old fashioned way: through the kind of financial speculation that destroys economies, harms taxpayers and wrecks public pension funds… Underscoring the potential corruption surrounding the pension system, Siedle also reports that state pension officials became the target of “pay-to-play” allegations and a Securities and Exchange Commission inquiry. Meanwhile, the Economic Policy Institute reports that the Pew/Arnold-backed pension system “actually increases costs to state and local governments and taxpayers while making retirement incomes less secure.” Specifically, because of the comparative inefficiencies of the defined contribution part of the state’s new hybrid pension plan, state taxpayers will be forced to make “upwards of $15 million a year in additional contributions while providing a smaller benefit for the average full-career worker. [Emphasis added]

All this obviates a simple question, why?

Screen Shot 2016-01-16 at 7.40.42 PM — From “The Plot Against Pensions” by David Sirota.

The answer is relatively easy. The over-hyped Dodd-Frank Act and recession backlash has made the typical practice of bailing out the Too-Big-To-Fail banks untenable. After 2008, it is simply impossible to carry on with business as usual. There was the logical and sane option of breaking up the banks and reinstating the Glass-Steagall Act, the law dating back to the aftermath of the 1929 crash that segregated risky Wall Street investment from typical consumer depositor banking. But President Obama, who has always been up to his eyeballs in money from firms like Goldman Sachs and Blackstone, an outfit that makes Goldman seem like child’s play, could not do that. So instead, Wall Street had to find a new source of revenue.

And what is perhaps the most trustworthy reservoir of cash to be found in America? The pension funds! Consider this line from Dan Pedrotty of the American Federation of Teachers: “Today, nearly $4 trillion is held in defined-benefit pension funds in our country on behalf of American workers for their retirement.” KA-CHING!

From "The Plot Against Pensions" by David Sirota. — From “The Plot Against Pensions” by David Sirota.

As with any fishing expedition, first you create the bait. Arnold has financed a “pension crisis” narrative through traditionally-dispassionate, objective venues that the public trusts immensely. For example, there was the shady report put out by the Brookings Institute that raised alarm bells. Or there was the nonsense news he financed for broadcast by the PBS division out of New York. There are all kinds of instances where Arnold’s plot is being rolled out. But you do not need me to tell you, just watch this delightful animated short created by the good union folks at AFSCME:

This of course helps to explain the motivation of why these folks are into education and push the charter school agenda. Besides the fact that it would break a major pillar of the union movement that could theoretically help union drives in the businesses of the Waltons (Wal-Mart and Sam’s Club) or the Gateses (Microsoft), it generates tons of revenue that goes into the pockets of the Wall Street investment firms! Consider also this point raised in The Plot Against America’s Pensions by David Sirota:

Like President George W. Bush’s proposal to radically alter Social Security, many of these plans would transform stable public pension funds into individualized accounts. They also most often reduce millions of Americans’ guaranteed retirement benefits. In many cases, they would also increase expenses for taxpayers and enrich Wall Street hedge fund managers…The goals of the plot against pensions are both straightforward and deceptive. On the surface, the primary objective is to convert traditional defined-benefit pension funds that guarantee retirement income into riskier, costlier schemes that reduce benefits and income guarantees, and subject taxpayers and millions of workers’ retirement funds to Enron’s casino-style economics…The bait-and-switch at work is simple: The plot forwards the illusion that state budget problems are driven by pension benefits rather than by the far more expensive and wasteful corporate subsidies that states have been doling out for years. That ends up 1) focusing state budget debates on benefit-slashing proposals and therefore 2) downplaying proposals that would raise revenue to shore up existing retirement systems. The result is that the Pew-Arnold initiative at once helps the right’s ideological crusade against traditional pensions and helps billionaires and the business lobby preserve corporations’ huge state tax subsidies. [Emphasis added]

It is worthwhile here to consider in closing some verbiage from Ted Siedle’s 2013 forensic audit:

Rhode Island’s state pension fund fell victim to a Wall Street coup. It happened when Gina Raimondo, a venture capital manager with an uncertain investment track record of only a few years—a principal in a firm that had been hired by the state to manage a paltry $5 million in pension assets—got herself elected as the General Treasurer of the State of Rhode Island with the financial backing of out-of-state hedge fund managers. Raimondo’s new role endowed her with responsibility for overseeing the state’s entire $7 billion in pension assets. In short, the foxes (money managers) had taken over management of the hen-house (the pension).

Indeed.

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Category: Business & Tech

Jeff Grybowski: GOP corporate lawyer turned CEO climate hero

PawSox are still looking for money and one fan is not happy

Click the Player Below to Listen to More of This Interview!

Wage theft law gets teeth

Avon Theater owner Richard Dulgarian on Thayer Street parking meters

Corporate Reform Coalition takes on Vanguard Group via social media

Questions raised about Invenergy’s Clear River Energy Center in Burrillville

NORAD celebration private—for pooh-bahs only

Rep Ucci needs to disclose financial ties to Raytheon ahead of drone bill considerations

Richard Wolff explains why capitalism hit the fan in 2008 and why neoliberalism happened

Why Elizabeth Warren should not replace Scalia

Recent power auction proves Burrillville power plant unneeded

Why wait for the feds when AG Kilmartin can use the RICO Act against Raimondo’s pension scheme?

RI political leaders ignore evidence, pursue failed economic policies

Failed Policies

A social history of our economic downfall with David Harvey

Two major rip-offs Rhode Islanders should not pay for

Follow the money on Raimondo pension scheme: Is Providence bankrupt?

Follow the money on Raimondo pension scheme: the local sponsors

OCTOBER 2, 2011
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DECEMBER 9, 2011
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JANUARY 22, 2012
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MARCH 26, 2013
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And lest we forget, here’s the people who were in charge!

Board of Directors

First look at ‘Rhode Island Innovates: A Competitive Strategy for the Ocean State’

Follow the money on the Raimondo pension scheme: Marvin Rosen

Follow the money on Raimondo pension scheme: John Arnold

Click the Player Below to Listen to More of This Interview!

Failed Policies

OCTOBER 2, 2011 <br /> <a href="https://web.archive.org/web/20111002015933/http://engageri.org/"><br /> Fallback link for browsers that, unlikely, don&#8217;t support frames<br /> </a>&nbsp;</p> <p>&nbsp;</p> <p>

DECEMBER 9, 2011 <br /> <a href="https://web.archive.org/web/20111209015408/http://engageri.org/"><br /> Fallback link for browsers that, unlikely, don&#8217;t support frames<br /> </a>&nbsp;</p> <p>&nbsp;</p> <p>

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MARCH 26, 2013 <br /> <a href="https://web.archive.org/web/20130326175202/http://www.engageri.org/"><br /> </a>&nbsp;</p> <p>&nbsp;</p> <p>

And lest we forget, here’s the people who were in charge!

Board of Directors

OCTOBER 2, 2011
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DECEMBER 9, 2011
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JANUARY 22, 2012
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MARCH 26, 2013
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