RICHARD’S RANTS - The Ponzi Scheme is named after Charles Ponzi who in the 1920's made famous the type investment fraud where you think you are investing in some enterprise like a gold mine or a Fortune 500 company, but in reality your money goes from your hand into the crook’s pocket.
So why doesn’t the crook go to jail with his first theft? Because he gives you back “dividends.” The brilliance of Ponzi was that he was not selling something physical like a car which you would soon discovery had no engine, but instead he was selling you’re a promise. His promise is that over time, your “investment” will yield you much, much more than you gave him.
For example, if you give him $10,000.00, then each year, he will give you a $1,400.00 “dividend,” while swearing that your original $10,000.00 is safe. Most people will let their $10,000.00 earn 14% for decades.
As 90% of the readers know, the Ponzi scammer is paying the $1,400.00 per year dividend from the cash which your friends and relatives gave him after you told them that he was “such financial genius.” As Equity Funding showed in the 1970's, math requires that all Ponzi schemes crash.
The more cash the Ponzier stuffs into his own pocket, the less he has to dole out to the dummies who think they are receiving “dividends.” Thus, Ponzi schemes need more and more new dupes until the scammer simply cannot raise enough new cash to pay the old “dividends.”
Welcome to the 21st Century Los Angeles, where City Hall has a new, improved Ponzi Scheme. Our Wannabe Mayors have been around for three terms and so too have most of their buddies like The Fat One, El Jefe, The Oily One, The Con.
The most ingenuous part of L.A. Ponzi Scam is that it is legal! It is legal the same way credit default swaps are legal on Wall Street. Well, perhaps it isn’t exactly legal, but our City Attorney won’t investigate and the D.A. sees no evil, hears no evil, and is running for State Attorney General.
Here’s how the LA Ponzi Scheme works. Your property tax dollars are your investment in city services which are your dividends. Through a variety of mechanisms like the Community Redevelopment Agency (CRA, renamed VARP), the tax dollars are diverted into the pockets of the Grand Masters of the Ponzi Scam, i.e. mostly developers.
The City pretends that it is in the business of providing services and it takes tax dollars in order to invest in services just as Charles Ponzi took cash to invest in “securities.”
Many of your tax dollars not are invested on the services. The “dividends” which the tax payers expect are streets, city staff, fire stations, a fully staffed and equipped police department, parks, libraries, etc. As we all know, the city is slashing services, while it is showering cash on the Grand Masters of the Ponzi Scam.
Billionaire Eli Broad gets $52 M for a parking garage for his downtown art museum where he rents the land from the city for $1 per year.
The CRA’s Hollywood-Highland Complex costs $625 M to construct and then is sold to CIM Group for $201 M and the city gives CIM Group an additional $30 Million. It looks like $454 Million is missing.
After CIM turned the properties along North Western Avenue into blight, the CRA agrees to give CIM Group $17.3 Million.
We all know about the extra $1.4 million that someone pocketed from the Cesspool on Vine by the appraisal fraud.
But, ooops, all is not well in Theft Land. Property tax dollars are not the endless. In 2010, the wannabe mayors tried to reach every parcel in the City with AB 2531 which would have brought Kelo Eminent Domain to all of the City so that the wannabe mayors could take anyone’s property along with its incremental tax dollars. Former Gov Arnie, however, vetoed the bill and now most of the property in the city is out of reach of the Ponziers. Thus, the city is scrambling in oh so many ways to gouge the citizens. Did it ever occur to a Ponzier to cut back on the theft? Silly question.
Wannabe mayors and their cronies say, “Let’s make property owners pay for all the sidewalk and tree root repairs which City hall has refused to do. That will save us millions of dollars.”
“Better yet” chimes in Ponzi crony, “when the property owner does not take care of the trees and sidewalks, we’ll hire my brother-in-law to do it and then the City will charge the property owner an extra 40% administrative fee. That will make us hundreds of millions of dollars.”
“Fantastic,” says the Oily Ponzier, “we’ve turned a cost-center into a profit-center.”
“Of course,” chimes in Fat Ponzier, “we get to dole out exemptions to our friends, right?”
Not to be out-done, the City Attorney has a great way to dig deep into property owners’ pockets. “City employees will become free roaming searchers for code violations. The city will cite the owner, the city will determine that the citation is valid, the city attorney will prosecute the owner in a special administrative hearing set up and run by the city, and then the city will collect from the owner or put a lien on his property.”
“Of course,” chimes in Fat Ponzier, “we get to dole out exemptions to our friends, right?”
Coming down the pike from wannabe mayors and their merry band of looters is “The End Prop 13 Campaign.” First, the city will raise the property taxes on the small business owners (you know, those guys that wannabe mayors say are oh so vital to LA that they must give One Million Dollars to AEG’s architect to move from Santa Monica.) After the Ponziers eat through the revenue from Commercial Prop 13 Tax Increase,” the Ponziers will raise residential property taxes.
Wannabe mayors and their gaggle of Ponzi buddies are right about one thing. Even if the property tax revenues are not endless, the gullibility of Angelenos is.
(Richard Lee Abrams is an attorney in Los Angeles. He can be reached at: [email protected] ) –cw
Tags: City Hall, Ponzi Scheme, Los Angeles, City Hall, Mayors, Eminent Domain
CityWatch
Vol 9 Issue 88
Pub: Nov 4, 2011
