CORRUPTION WATCH-President Donald J. Trump and his adviser Kellyanne Conway use “Alternative Facts,” which Meet the Press host Chuck Todd correctly identified as “Falsehoods.” In 2014, our own Judge Allan Goodman made the same observation about Eric Garcetti and his use of Alternative Facts when His Honor rejected Garcetti’s update to the Hollywood Community Plan. As judges often do, Judge Goodman used polite legalese, saying that Garcetti used “fatally flawed data” and “wishful thinking” -- which we know mean Lies and Myths. 

How Lies and Myths and Alternative Facts crashed the economy in 2008. 

Lies, Myths and Alternative Facts (LMAFs) resulted in the Crash of 2008 which devastated millions of Americans. The crash grew out of the ethos of Alternative Facts which originated from corrupt business practices right here in the Los Angeles area. Mortgage lenders like Countrywide and Indymac Bank were selling defective mortgages to Wall Street. (A defective mortgage is one in which the lender knows that the homeowner cannot pay off the loan and will default.) Wall Street would then bundle together defective mortgages and sell them to pension funds, foreign countries, etc. (Goldman Sachs executive and Trump’s Secretary of Treasury-designate Steven Mnuchin made his multi-million fortune by buying Indymac Bank after the Crash of 2008.) 

We need to focus on how LMAFs crashed the economy in 2008 because, once again, they are at work both nationally and locally. Unless we stop this massive and near perpetual disinformation, life will become much worse for everyone. 

Normally, a Wall Street investment firm like Goldman Sachs selling junk mortgages would result in investors not buying any more products; but the nature of defective mortgages was covered up by a second corrupt practice: The investment houses would guarantee the buyers that if the income from the bundled mortgages dipped below a certain amount, the investment firm itself would make up the difference. Thus, all those pension funds, foreign countries, etc. felt safe in buying the bundled mortgages. 

However, there was a third level of fraud. The insurance sold by the investment houses to guarantee that the bundled mortgages would pay out the benefits was not insurance. Insurance should require the investment house to set aside insurance premiums to pay off the claims. Goldman Sachs et al were not putting those “premiums” into accounts so they would have the cash to pay future claims. Rather, they counted the premiums as regular income and spent the premium money. If State Farm spent all the premium money it collected, it would have no money to rebuild your home if it burned down. Likewise, when the investment firm spent all the “premiums” from the “insurance” it sold to buyers of the bundled, defective mortgages, it had no stock pile of cash to pay the claims. 

Then, there was the fourth level of fraud. Insurance may only be sold to people with an insurable interest in a house or person. Thus, I cannot take out fire insurance on my neighbor’s house and my neighbor may not take out insurance on my life.   

This is what occurred with bundled defective mortgages. Wall Street executives who created the defective bundles bought the “insurance” that would pay executives when their bundles failed. How long do you think you would be alive if MS-13 owned a $25 million dollar life insurance policy on your life? This is the criminal core of the Crash of 2008. Wall Street executives intentionally created defective bundled mortgages, then bought “insurance” on them. It’s the same as betting against a race horse you just drugged. 

Since the bundles of defective mortgages had been designed to fail in order for the “insurance” to pay off, Wall Street executives started buying worthless mortgages from Countrywide, Indymac Bank and similar mortgage lenders. The faster the bundled defective mortgages failed, the sooner the Wall Street executives would collect on their “insurance.” 

Because so many mortgages were being “sold,” the public erroneously assumed that people were buying all these new homes. Thus, billions of dollars were diverted to housing construction. All the mortgage companies wanted was a signature on a piece of paper, then they’d sell it to Wall Street with no regard as to whether the home “buyer” was employed or even existed. It got to the point that mortgage companies were inventing buyers and selling fake documents to Wall Street. 

Wall Street executives did not care if homeowners could not afford the homes or that these homeowners were non-existent. The worse the mortgages became, the faster the bundles crashed and the faster the executives would put in their insurance claims. They called the insurance “credit default swaps” solely to evade any insurance regulations. 

Because these Wall Street executives sold trillions of dollars of “insurance” on defective bundled mortgages, investment firms were faced bankruptcy unless one of two things happened: 

(1) The U.S. government could immediately insure all mortgages. 

Then no bundled mortgage would fail and no one could make a claim under the “insurance” (credit default swap.) No investment house would face failure as there would be no insurance claims based on defective mortgages. The cost to the government to start up such a program overnight could have been as high as $100 billion. 

(2) The U.S. Government could bail out the Wall Street firms. 

Using this approach, all the bundled mortgages would fail and Wall Street executives could collect their trillions of dollars through “insurance claims.” That is why the Obama-Geithner chose to bail out Wall Street – to make certain Wall Street firms had enough cash to pay off the crooks who had perpetrated the greatest economic crime in world history. Trillions of dollars flowed to Wall Street firms while Main Street went bankrupt. This corruptionism is also the origin of the Politics of Revenge that has brought us President Donald Trump. 

Lies, Myths and Alternative Facts underlie the current LA housing market. 

The current high prices for Los Angeles residential real estate is similarly based on Lies, Myths and Alternative Facts. 

LMAF #1: There is no high demand for housing in Los Angeles. 

Just as people incorrectly believed there was a huge demand for housing between 2002-2007 because it appeared that so many homes were being purchased, the high price of Los Angeles houses does not mean there is a demand for housing. As we learned in 2008 and forgot by 2009, crooks can manipulate markets thereby deceiving millions of people into believing there is a demand for housing. But there is always a crash. 

LMAF #2:   There is no single LA Housing market. 

In reality, Los Angeles has several markets for homes and what happens in one housing market does not always affect another market. Each situation requires analysis based on real facts. 

Families who want to buy a home in Echo Park are not driving up the cost for mansions in Bel Air. There is a stratification by price range for Los Angeles housing, but there is bleed over between nearby prices ranges. For example, after the City had 22,000 rent-controlled units destroyed and allowed judges to improperly eject poor people from their rent-controlled homes, four things resulted: 

• Those people who could afford places in the next higher housing bracket bid up the rents for apartments which were just above the rent-control level. 

• Those who could not afford to pay more than the low rent-controlled prices, e.g. the elderly and disabled on fixed income, became homeless. We do not add their rent of Zero Dollars to the cost of housing.   

• Rental agencies reported that average rents had increased and used that biased data to raise rents. 

• People believed that higher rents reflected an increased demand when in reality it reflected the fact that the Garcetti Administration reduced the supply of apartments for poor people by destroying rent-controlled housing. 

The forces threatening Middle Class neighborhoods are more deceptively insidious. 

As written in previous CityWatch articles, the worse threat to Los Angeles Middle Class is that homes are no longer valued by their value as Living Space but rather by their value as Speculative Investments. Because developers know that they can re-zone any property to anything that they want, they buy homes in lower priced residential areas where they plan to build two to eight houses on a single family lot. 

The lot where the developer plans to put a Granny Flat is worth more to him as Speculation than it is worth to a family as Living Space. Because the developer knows that he can bribe his way to a Small Lot Subdivision, the price of the “family home” zooms into the stratosphere. A small parcel with 8 homes, each separated by 6 inches, is worth far more money to a developer than the family can afford. 

A middle class family does not have to be in direct competition with a developer to be faced with a detached home’s Speculative Value. The realtor who sets the listing price researches recent sales prices for comparable homes. If two streets over, a home which was worth $300,000 for Living Space sold for $1.2 million on its Speculation Value, then the new home is priced at around $1 million even if the Living Space value is less than one third as much. 

The evils which flow from residential properties’ prices being based on Speculative Value. 

People, who pay attention to facts and the laws of economics, as opposed to Lies, Myths and Alternative Facts, know that certain evils always follow the “market dislocations” caused by LMAFs. 

(1)   The Middle Class moves away. 

It’s a form of osmosis where upwardly-mobile middle class families move away from the High Cost, Low Opportunity cities like Los Angeles to Low Cost, High Opportunity cities like Nashville, Denver, or Austin, Texas. Los Angeles is already experiencing a significant net loss of its Family Millennials too this trend. 

(2)   The reduced demand for housing does not lower housing prices. 

Prior to the Crash of 2008, there was virtually no demand for housing, yet the prices continued to increase. Mathematically, all financial frauds collapse; but until they do, prices show little or no indication of the bust that is a few months or weeks away. Prices remain high because they are based on the public believing the LMAFs. Eventually, however, people see reality and the crash arrives. 

(3)   Millions of homeowners who bought high are stranded in homes worth far less than the equity they have in those homes. 

This drop in prices often wipes out families’ “nest eggs” since they have dumped all their cash into mortgages for homes which were inflated by two, three or four times of their true value by the Garcetti Administration’s disinformation. They can neither sell nor renegotiate these mortgages. 

People who purchased homes based on inflated Speculative Values live in finance hell. They must continue paying these mortgages based on old values that are much higher than the new lower values. Since they dumped all their extra cash into their homes, they do not have adequate insurance or stocks, pensions or other investments. They are often “house poor” – with every cent tied up in the house. They just have to pray they can hold on until a better economy returns. 

When the economy turns down, people are laid off. If a lay-off happens to a family that is “under water” with its mortgage, it may be headed for the streets. There will always be a kind and loving Steven Mnuchin ready to foreclose on that family, even if it was only 27 cents short in a payment. 

The need for Residential Mortgage Insurance. 

Since Obama-Geithner refused to institute Residential Mortgage Insurance (RMI,) once people are laid off, they needlessly lose their homes. Sure, they may find decent jobs – a year after their homes’ foreclosure -- but that’s of no help to them or the economy. Residential Mortgage Insurance is like fire insurance where the insurer makes up the short fall in the mortgage payment due to a financial disaster. 

For example, if the Mom is laid off and the family lacks $1,500 on the $4,000 mortgage, the insurance pays the $1,500. This government insured program is good for the general welfare of the nation because it will stop a crash in the housing market like what happened in 2008. But Obama-Geithner thought a complete crash was preferable, and thus, they refused to institute RMI on even an emergency basis. Now, the nation is again vulnerable. 

The Big Lie on which the LA residential housing market rests. 

It is fraudulent to insist that there is demand for dense housing, that people want to live in mixed-use projects next to freeways, that people want Granny Flats or that people want to pay $850,000 to live in a house six inches away from another with no yard, no garden, no place for a dog, and no room for the kids to pitch a tent. Thus, we are paying taxes on billions of dollars of city bonds to construct the very type of dense housing which is emblematic of the fraud eating away at our economy. 

We know that Garcetti is still feeding us a diet of Lies and Myths, just as we know that Family Millennials are moving away from LA to places where they can afford to buy a detached home with a nice yard with fruit trees and plenty of space. Worse yet, the decent employers are following the Family Millennials out of town.

(Richard Lee Abrams is a Los Angeles attorney. He can be reached at: [email protected]. Abrams views are his own and do not necessarily reflect the views of CityWatch.) Cartoon: LA Times. Edited for CityWatch by Linda Abrams.

BUTCHER ON LA-On Saturday, January 21, 2017, an estimated 750,000 people took to the streets of downtown Los Angeles in support of the Women’s March on Washington organized as a day of action, celebration, and protest in cities across the country and world. A local announcement billed it as an event for: “Everyone who stands for human rights, workers’ rights, civil rights, and compassion for our shared humanity.”

It was wonderfully festive, totally unorganized, peaceful as could be. About half of the participants, by my observation, were young (mostly) women who'd never marched before; the rest were all the rest of us. It was joyous and magical! 

Said one participant, echoed by many, backed by so much pink: “There was an incredible politeness from the majority of the protesters. People were so close and I had never had so many boobs bump into me but everyone was saying ‘sorry’ and ‘excuse me.’ It was amazing!  There was a variety of people there from old to young and of all races. The women who spoke were amazing. Janet Hahn was great and I think made us proud to be Angelenos.” 

There was no appreciable parade route. My adult son Steven, his friend Raj and I walked from City Hall to Pershing Square, got as close as we could, and along with a mass of other people, turned around where we were to march back to City Hall. I saw bunches of LA City traffic officers but no police. Of course there was no need as it was peaceful, safe for babies and children and dogs, and so many women. Everywhere you looked, in every direction. I’ve been in large marches and rallies and this was by far among the largest of LA gatherings. 

For me, it felt historic. To march with my son – on the weekend just before my 60^th birthday – felt glorious and so very hopeful!

(Julie Butcher writes for CityWatch, is a retired union leader and is now enjoying her new La Crescenta home and her first grandchild. She can be reached at [email protected] or on her new blog ‘The Butcher Shop - No Bones about It.’) Prepped for CityWatch by Linda Abrams.

MUSING WITH MIRISCH--In a city in which an election was won four years ago by seven votes, every vote should count. But only the votes that should count should count. And that’s a problem in Beverly Hills.

Voter fraud is real. It’s alive. It’s happening. And we have to stop it. Whether or not it happens at the federal level, we know it happens at the local level. We have seen it ourselves and our own investigations have proven it happens.

Last night at a marathon City Council meeting, the Beverly Hills City Council at my request unanimously agreed to launch an Anti-Voter Fraud Initiative. The initiative will attempt to use every tool at the Council and City’s disposal to protect the integrity of our local election, the next of which is March 7 (and in which I and the vice mayor are up for re-election). 

We will attempt to inform our own voters to help report suspected instances of unauthorized voters (“If you see something, say something”), as well as continue to lobby the Secretary of State, our DA and other officials to take the matter of suspected voter fraud seriously and to take action. The decision to launch the Anti-Voter Fraud Initiative follows a Monday meeting of the City’s Sunshine Task Force which we created to make our city a model of transparency and good government.

Yes, we are frustrated.

Our frustration and the decision to educate, lobby and take whatever local action we can to deal with voter fraud is preceded by two Council study sessions in which we discussed the matter with representatives from the local registrar-recorder and the Secretary of State, one meeting more exasperating than the other. We shouldn’t have to self-police and we are extremely limited as to what we can do locally to put an end to voter fraud.

Some background information is in order, particularly for those who aren’t familiar with Beverly Hills, beyond the stereotype, or suggest that voter fraud doesn’t exist.

In 2008 a local developer won a referendum by 129 votes which granted a controversial building entitlement. The developer spent millions of dollars prior to the election with all manner of expensive propaganda. The grass-roots group opposing the developer’s plans suspected that many voters who had voted in Beverly Hills were not bona fide or legal residents of the City, but nonetheless voted in the election.

In a Herculean effort, volunteers canvassed the city, going door-to-door to investigate the claims of voter fraud. They uncovered 569 documented cases of voters who were not entitled to vote in our local election. The group of phony voters included random people registered at unsuspecting residents’ addresses, non-U.S. citizens, Beverly Hills residents’ adult children who themselves were domiciled elsewhere, etc. That’s right: there were 569 documented cases of illegal voters in an election which had been won by 129 votes. The math is pretty simple.

The citizens’ group turned over their voluminous documentation over to the local DA’s office, which complimented them on their meticulousness and then proceeded to do... absolutely nothing. No indictments. No prosecution. No convictions. Nothing.

Fast forward to the months preceding the Nov. 2016 election: the same developer who had won the tainted 2008 election was now attempting to pass an initiative to build a 375-foot skyscraper in Beverly Hills. As in 2008, the developer spent millions of dollars in campaign propaganda (it turns out that the developer ended up spending more than $1000 per vote in a losing effort), and reports of potential illegal voters arose once again. The City received a list of over 500 voters registered at a few business addresses. As a Council colleague remarked, the limited number of business addresses makes this seem like an organized effort. We turned the list over to the Los Angeles County Registrar Recorder, who sent letters out to these 500 registered voters, informing them that their voting status would be placed on hold pending their verifying that they actually lived in Beverly Hills and were entitled to vote here.

It turns out that only two of the over 500 registered voters ended up verifying that they actually live in Beverly Hills.

If we had not been provided with a list of unauthorized registered voters, which we forwarded to the registrar with the request to invalidate the registrations pending further confirmation, we could have had 500 illegal voters in the November election. This is in a City in which, as mentioned, a councilmember won election in 2013 by a mere seven votes.

At our Council study session earlier this month in which we asked for representation from the local registrar, the Secretary of State’s office and the DA, only the registrar seemed to take the problem of voter fraud seriously. The Secretary of State’s representative gave answers which actually decreased our confidence in its ability to protect the integrity of our voting process and raised the frustration levels of the entire Council. After having refused to prosecute the widespread 2008 voter fraud, the DA’s office refused to even send a representative to our Council meeting, even after I followed up the initial refusal with a letter to County DA Jackie Lacey, personally asking her to send a representative to discuss this serious issue. Their job is not just to prosecute voter fraud (something they evidently refuse to do, as was the case in 2008) but also to help us avert such crimes which undermine our electoral system. This nonchalance was both shocking and stupefying.

At that meeting, as confirmed by our City Clerk, we pointed out various ways in which voter fraud could occur and evidently had occurred: people could simply register at houses where they did not live, either with or without the bona fide residents’ knowledge or they could register at business addresses, as they had done in the past. At the polls, they could comb through the voter rolls and see who had not voted and simply get replacements to vote in their stead. There is effectively no way under our current system to avoid or deal with most of these situations, particularly if the local DA’s office is unwilling to take action.

According to today’s Washington Post: “Multiple investigations of the extent of in-person voter fraud — someone showing up to vote fraudulently — have found that it’s not a significant problem.” Well, if these “investigations” are anything like our own experience, this is a prime example of a self-fulfilling conclusion. Our Secretary of State’s office and our own DA seem unwilling to investigate or even acknowledge the problem. Small wonder that ostrich “investigators” - in opposition to grass-roots residents - are finding that voter fraud is “not a significant problem.” See no evil. Hear no evil... You get the picture.

Our situation is different from President Trump’s claims of voter fraud in that many (though not all) of the phony voters in Beverly Hills are US citizens who simply don’t live in Beverly Hills and therefore are not entitled to vote in municipal elections. But the problem remains a serious one at any level of government and we deserve to have faith in the integrity of our electoral system at all levels of government.

On Tuesday, the National Association of Secretaries of State issued the following statement: “We are not aware of any evidence that supports the voter fraud claims made by President Trump, but we are open to learning more about the administration’s concerns.”

How about also being open to learning about the concerns of cities in which elections are won and lost by seven votes? How about taking action in instances in which voter fraud clearly has taken place and in which there are ongoing attempts to rig our elections?

Whatever the situation at the national level, we in Beverly Hills are committed to doing whatever we can to protect the integrity of our local elections, even if we do not receive the support from the authorities who are tasked with doing so. Because if the integrity of our electoral system is not protected, if bad actors know that they can literally get away with voter fraud without any consequences, then we can expect to see this phenomenon spread and grow, further undermining our democracy.

Local government, when done right, is the best form of democracy because it is closest to home. For it to mean anything, though, the elections in which the residents choose their local leaders and decide on local issues must be on the up and up. Sacramento, we have a problem.

And so the Beverly Hills Anti-Voter Fraud Initiative is born. Let’s hope other cities and municipalities join us to create a coalition against voter fraud. Our democracy is too precious to allow its very fundament, our elections, to be subverted.

(John Mirisch is the Mayor of Beverly Hills. He has, among other things, created the Sunshine Task Force to increase transparency, ethics and public participation in local government. Mayor Mirisch is a CityWatch contributor.)

-cw

 PLATKIN ON PLANNING-In writing and speaking about Measure S, the Neighborhood Integrity Initiative, I have recently encountered an emotionally charged argument that Measure S is a ruse by old geezers (baby boomers like myself) living in single-family homes. Apparently the boomers want to maintain their property values at the expense of Millennials -- that is, the 20 and 30 somethings. Curiously though, the old geezers who own and run the four large real consortiums funding the opposition to Measure S and devising the anti-S arguments repeated by these Millennials play no role in this imaginary generational conflict. 

While one of the great lessons from the recent presidential election was the enormous support from Millennials for the two most progressive candidates, Senator Bernie Sanders and Dr. Jill Stein, these anti-S Millennials are apparently outliers. Their belief, nevertheless, that market magic can cure urban ills -- especially overpriced rental housing, poor job creation, and inadequate transit ridership -- needs to be addressed. 

In their view, since Measure S jump-starts LA’s legally required but moribund General Plan process, and then reinforces the new plans with well-defined rules on how developers can adulterate them, these strengthened land use regulations will stymie vast market forces. If unleashed by even more deregulation, the private market will create a cornucopia of cheap housing and alternative transportation modes for Millennials. 

As a parent of two Millennials, let me explain why this bewildering belief in market magic, which we usually associate with Garcetti-type neo-liberal politicians and their developer patrons, is bunkum. Whatever their ages, those who have drunk this Kool-Aid only need to look outside their apartment or house windows to debunk these market magic myths. In LA, they will see what happens when private greed substitutes for rational city planning: homeless encampments, billboards and super-graphics, McMansions in the shadows of luxury towers, crumbling sidewalks, a patchwork of risky bike lanes, gridlocked streets full of potholes, widespread building code violations, demolition of rent stabilized apartments, illegal evictions, sagging overhead wires, treeless boulevards, and barely paved alleys filled with discarded couches. 

Then, it they go to City Hall, they will see pay-to-play politics on open display at the City Council. There, every big real estate project, such as the Caruso luxury tower near the Beverly Center, obtains its special spot-planning and spot-zoning ordinances by a consistent 15-0 margin. For them, the LA Times exposes of developer contributions to elected officials to obtain land use entitlements barely registers. 

I suppose a few people, whatever their age, welcome these byproducts of deregulation, but most of those opposing Measure S, including Millennials, have not yet come to terms with what actually lies ahead if Measure S fails. 

They will rediscover LA’s status quo. Their expected rosy future will be nothing more than the broken present that the corporate funders of anti-S ads wish to maintain. It is the dystopia we already live in, not the utopia they imagine will result from the full-on deregulation of private land in Los Angeles. 

The plethora of affordable market housing and low income housing that the anti-S corporate funders promise is just a ploy. It will not appear because, like today, developers want to maximize their profits. That is why they build luxury housing and then repeatedly claim – despite zero evidence – that these unaffordable units actually create affordable housing through filtering and over-supply.  

This is why I have also previously suggested that anyone who seriously believes that market magic is a panacea for Los Angeles should screen Bladerunner. (Photo, above) It is an extreme, free market vision of the dystopia we already live in. 

Why ‘market magic’ does not work in Los Angeles 

Los Angeles is already a city with virtually no effective regulation of land. Yes, land use laws and regulations are still on the books, but they are peripheral to day-to-day decision-making and code enforcement. Nearly every waiver from LA’s legally adopted plans and zoning sails through in unanimous votes, including the spot-zone changes and the spot-General Plan Amendments that the City Council routinely grants through special ordinances. 

As for LA’s rampant violations of the City’s zoning and building codes, it up to residents to phone them into the Department of Building and Safety (LADBS). Once there, they apparently disappear into a time warp because nothing ever happens. Developers therefore know they can game the permitting and inspection system because the LADBS code enforcement function is in deep hibernation. 

The free market apparently means developers know they are free to do whatever they want: illegal demolitions (that ignore regulations for asbestos and lead paint), billboards, supergraphics, McMansions, bootlegged signs, garage conversions, and even unpermitted remodels have become routine. 

This stark reality means that any Angelenos who imagine that a free market utopia is waiting in the wings should stop believing their lying eyes. The Los Angeles they already live in reveals market magic hard at work, and it will only get worse if Measure S fails on March 7. Then, an even more deregulated Los Angeles will pull them -- including Millennials – down further. Still more expensive housing will appear when the City Planning Department, City Planning Commission, and the City Council continue to sideline the General Plan, adopted zoning, and the California Environmental Quality Act. 

The free market is the culprit, not planning and zoning 

As for the other part of the free market equation, economic inequality will increase when developers can build what they want, where they want, when they want through easily obtained zone variances, zone changes, and General Plan Amendments. Their underlying parcels will quickly appreciate in market value when planning and zoning restraints are removed. But this windfall does not come out of thin air; it comes out of the pockets of tenants who are painted into a corner by systematic rent increases, overcrowding, and cutbacks in public services. Of course, they are the lucky ones because they do not yet need to live in cars, garages, or on the streets. 

Furthermore, the downward mobility experienced by many Millennials does not result from cities sticking to their legally adopted plans and zones. It is exactly the opposite. Apparently some Millennials have succumbed to the developers’ claims that existing zoning holds back housing construction. But, LA’s status quo already has more than enough zoning where developers could build apartments, but choose not to. 

There are no legal barriers to the construction of three to five story market rate and affordable apartments on LA’s long commercial corridors. Instead, the barriers are strictly self-imposed. Such buildings are not as profitable as luxury high-rise towers with sky-high rents. The free market adored by Measure S opponents is the real culprit, not zoning and planning rules. 

Final word on who benefits from the defeat of Measure S 

All we need to do is follow the money since a defeat perpetuates the pay-to-play status quo in Los Angeles. That means anti-S claims about large, unplanned real estate projects (i.e., unrestrained real estate speculation) generating transit ridership, jobs, and affordable housing will be quickly exposed as the disingenuous arguments of self-serving opportunists. 

While luxury high-rise towers and shopping centers are certain to appear through spot-zones and spot-plans, anyone who imagines that they will usher in these social benefits will get a harsh dose of reality. None of these imagined social benefits have appeared in the past and present, and none will appear in this future.

(Dick Platkin is former LA City planner who recently taught courses on sustainable city planning at USC and CSUN. He is also a former union officer, who worked hard to create labor-neighbor alliances in Los Angeles. Please send corrections or comments to [email protected].) Edited for CityWatch by Linda Abrams.

EASTSIDER-You don’t need to be a rocket scientist to know that CalPERS has taken some hits over the past months. There was the series of articles in the LA Times, OpEd pieces everywhere from the Sacramento Bee to a pretty concerted attack in a variety of electronic media. Almost all were directly aimed at CalPERS and the two court cases bobbing up at the California Supreme Court on the “California Rule.”

While that’s been going on, the CalPERS Board of Directors has been more concerned with visiting Monterey for a retreat and deciding who gets to be their President and Vice-President, than in real governance. Witness the puff pieces CalPERS has been issuing: “CalPERS joins Global Sustainability Benchmark for Real Assets Program,” “Diverse Director DataSource joins Equilar Diversity Network,” and “CalPERS Adopts Environmental, Social and Governance Strategic Plan.” 

My favorite was “CalPERS Honored as Sustainable Business of 2016.” Really, you can read it here. 

While the puff piece was actually about conservation, the double entendre of CalPERS’ own fiscal sustainability is impossible to ignore. Indeed, new CEO Marcie Frost noted in her lead article in the winter issue of their magazine PERSPECTIVE that “...one of my immediate priorities will be ensuring the long-term sustainability of the fund.” I wish her luck. 

Underneath the Rhetoric 

Underneath the happy face public persona of the Board and their CEO, I believe that a much darker change is occurring. Namely, the joint has been turned over to and is being run by a bunch of self-serving lawyers. 

Now lawyers, used properly, are a very good thing -- that’s why we have them to keep us out or get us out of trouble. Lawyers, given carte blanche, on the other hand, can be a very scary thing. Just look at the law firms involved in the Panama Papers overseas money laundering for the rich, or, closer to home, note the fact that around half or more of our elected politicians in California are lawyers. No wonder the State is in trouble. 

Let me give you a specific example regarding the dearth of any transparency at CalPERS, that’s been organized and orchestrated by their very own General Counsel. Readers of my column will recall that I wrote a pretty scathing piece about the hiring of a sleazebag Florida attorney named Robert Klausner to be their Fiduciary Counsel, even though he was scandal-ridden and not even licensed in the State of California. 

The process of hiring Klausner was so shoddy and manipulated by then CEO Ann Stausboll, that I characterized it as a Betrayal of Public Trust.  

Well, the combination (maybe a little bit) of my articles and a lot of heat from the Naked Capitalism blog must have struck home. The NC folks partnered up with California’s First Amendment Coalition and an excellent attorney (Karl Olsen) to actually sue CalPERS and their attorneys for violating the Public Records Act. 

You can read the tale here, [[[   http://www.nakedcapitalism.com/2016/08/calpers-tainted-fiduciary-counsel-robert-klausner-departs-after-nc-publicizes-his-dubious-history.html ]]] and it says a lot about CalPERS General Counsel Matthew Jacobs ethics. Reads like a soap opera, except they’re playing with billions of dollars of public funds. 

When Klausner magically departed around August with no notice and no explanation as to why or how he was dumped, I became very interested in what was going to happen next. After all, look at the process that brought us Klausner. So I did what any red blooded American would do -- I filed a Public Records Request. 

Hiding Behind Lawyers While Rome Burns 

Orchestrated by General Counsel Jacobs, here was the dance. I wrote in mid-October asking for any and all documents regarding CalPERS search for a new fiduciary counsel. In mid-November I get a letter saying that they are “searching” and will get back to me by the end of November. 

On November 30, they send me a letter which says, basically, that everything I have asked for is exempt on the grounds of attorney-client privilege and confidentiality. So, I get a copy of the Solicitation Bid for Outside Counsel. Period. Have a nice life, pound sand. 

Then, as I am searching through Board Agendas to find out what if anything ever actually happened regarding outside fiduciary counsel, I find this gem buried in the Day 3 Agenda covering a spiffy little “offsite” Board/Executive Retreat which was held January 17-19 in Monterey CA, at the Monterey Tides. (It’s evidently hard work to be on the CalPERS Board.) 

9:05 am                  Fiduciary Training

Open Session          (Points Ballroom) 

A little digging around and I discover that the presenter for this event was one Ashley Dunning, a Partner at Nossaman LLP, one of the “mid-sized hot list” California-based law firms. Parenthetically, our very own Richard Riordan was a name partner in this same firm before he became Mayor of the City of Los Angeles. 

I also got a copy of the 75-Slide Power Point presentation Dunning gave to the Board and assembled multitudes at the session. I wonder how many Board members went to sleep as soon as the lights dimmed and the power point cranked up. C’mon. 

Upon further investigation, I note that Dunning was a partner at Manatt, Phelps, the Democratic Party powerhouse lobbying/law/consulting firm. Notice I said, was, because Nossaman LLP proudly announced in a January 6 Press Release, that she was joining the firm as Partner and Co-Chair of the firm’s Pension and Investments Group. 

Gee. Given the January 6 announcement and the January 19 presentation, does anyone doubt that she has a deal with Matthew Jacobs and is the new fiduciary counsel for CalPERS? Ya gotta love how General Counsel Jacobs wheels and deals beneath the shield of attorney-client privilege. I wonder if the tame Board ever even voted. 

Final disclosure. According to the Marin Independent Journal, Ms. Dunning does not come cheap. She was advising the Marin County Pension Board at $580/hour until her switch to Nossaman, and racked up in the neighborhood of $400,000 in one year’s billings.  

The Takeaway 

CalPERS CEO Marcie Frost is new to the job and had very little transition time when former CEO Ann Stausboll suddenly retired. Therefore she is very dependent on her executive staff, including particular lawyers like General Counsel Matthew Jacobs. 

If history is a guide, the vast majority of the Board is more interested in who gets to be their President and Vice-President and who gets to go off on junkets, than in any serious oversight of their staff. All you have to do is watch a video of their meetings. 

So everyone defaults to doing what the lawyers say. It further seems clear that the lawyers are only interested in what I characterize as a “siege mentality,” a hide-and-seek attorney-client privilege governance model used to make sure no one will really know what they’re up to. That ain’t good. 

For example, the Board recently granted Ted Eliopoulis, their Chief Investment Officer, a huge bonus ($135,000) that was probably impermissible under CalPERS own rules. Ignoring the terrible optics, this was granted just as CalPERS had to admit that the Fund’s return on investment for 2016 was a paltry 0.6%. Anybody see a disconnect here? 

Lordy, Lordy. All greased by the General Counsel. At the risk of being churlish, I note for the record that Mr. Eliopoulis has a JD. Does anyone believe that Ted is going to go against whatever Matthew Jacobs wants? 

Meanwhile, the Board of Directors proudly announces the re-election of Feckner as President and Jones as Vice-President. This is Rob Feckner’s 13^th term as President. Jones scores a mere 3^rd term as Vice-President. Bang up job, guys. 

Personally, I think all of this demonstrates that the staff, led by elder statesman and General Counsel Matthew Jacobs, has a ring in the collective nose of the Board of Directors; they don’t do boo without staff telling them what they should do. 

Or take a look at an even more acerbic analysis of “The Role of Conflicted Lawyers At CalPERS”. 

And I thought the process that CalPERS used to hire Robert Klausner was sleazy. I had no idea what stone wall hiding really was until the lawyers got involved. 

On the other hand, they might just want to be a bit more open and transparent. In a recent federal court case blocking Aetna’s pull-out out of Obamacare in all but four of the fifteen states they serviced: 

“Aetna executives had moved heaven and earth to conceal their decision-making process from the court, in part by discussing the matter on the phone rather than in emails, and by shielding what did get put in writing with the cloak of attorney-client privilege, a practice Bates found came close to ‘malfeasance’.” 

Hmm...

(Tony Butka is an Eastside community activist, who has served on a neighborhood council, has a background in government and is a contributor to CityWatch.) Edited for CityWatch by Linda Abrams.

THE EVE OF DESTRUCTION-As I write this, rescuers in central Italy are desperately trying to pull victims out from a hotel that was buried in tons of snow by an avalanche. 

The avalanche was caused by a series of earthquakes. 

Although they can be extremely destructive, earthquakes are natural phenomena. 

On January 18, we learned that public education in Los Angeles was buried by a million dollar avalanche in the form of a single contribution to a local school board race by former mayor and billionaire Richard Riordan. 

Riordan is only one of many billionaires who have decided to use their vast resources in an attempt to drown out electoral competition. But there is no precedent for a million dollar campaign contribution in a municipal school board race. 

In the world of Education Reform, the GOP and the billionaires have found common ground in their rampage against the spirit of public education. We all know their names: Walton. Gates. Bezos. Zuckerberg. Individuals whose money buys them tremendous political clout. Consider this from Besty DeVos, Donald Trump’s nominee to become Secretary of Education: 

“My family is the largest single contributor of soft money to the national Republican Party…I have decided, however, to stop taking offense at the suggestion that we are buying influence. Now, I simply concede the point. We expect to foster a conservative governing philosophy consisting of limited government and respect for traditional American virtues. We expect a return on our investment; we expect a good and honest government. Furthermore, we expect the Republican Party to use the money to promote these policies and, yes, to win elections.”  

Few confirmation nomination hearings were as depressing as multi-billionaire DeVos’ pathetic stumbling over understanding federal mandates or even basic education questions. This is a woman who never studied education or attended public school or sent her children to public school; she has never held an education position. DeVoss listed as her qualifications for the position in the form of Letters to the Editor and press releases. She claims that she would still be nominated even if she hadn’t contributed over $200 million to the GOP -- that she wasn’t buying the influence she claimed earlier that, well, she was intent on buying. 

In a December, 2010 New Yorker profile on Eli Broad entitled, “The Art of the Billionaire: How Eli Broad took over Los Angeles,” former mayor Antonio Villaraigosa provided this swooning support: “What is Los Angeles -- when they write the chronicles of LA -- without Eli Broad? He can close his eyes and see the future.” 

In the shadow of Hollywood, Villaraigosa parrots one of the great confrontation scenes in cinematic history. When Jack Nicholson’s 1940’s PI Jake Gittes goes up against multi-millionaire Noah Cross (John Huston somehow channeling contemporary Eli Broad) and demands to know why brute power is so important to him, he says: “Why are you doing it? What could you buy that you can’t already afford?” 

Cross gleefully (and horrifically) responds, “The future, Mr. Gittes! The future!” 

And yes, that future is the common denominator that these financial titans are determined to buy for their own and on their terms. 

Broad’s tremendous (and outlandish) financial support has provided the backing for much of LA’s and the nation’s Ed Reform movement through his goofy, self-aggrandizing “Broad Academy” of superintendents. His greatest achievement was forcing the installation of academically and ethically challenged John Deasy to head LAUSD. After his tumultuous reign and disastrous stewardship of its finances and pedagogy, Broad took Deasy back into his secret lair, providing him ample compensation for training other “leaders” of his same mindset. Deasy rarely slinks back into public view, only choosing rare editorial appearances in the safe, rich confines of the Campbell Brown right-wing School Reform publication, The 74 (which also runs its sister LA School Report.) Follow the dominoes. It’s funding is through – sigh -- Betsy DeVos. 

In blue, blue, blue California, you are obviously going to get nowhere if you adhere to a Right Wing social agenda. The neo-liberal Education Reform Democrats eschew that portion of the GOP horror show and pretend that they are not connected to Neanderthal thinking. 

It is no surprise that the billionaires have been very quiet about DeVos’ nomination because they know they are wading into dangerous territory by supporting her. They actually support many of her privatization and charter initiatives, but of course her repugnant other right-wing beliefs are areas they are loathed to get mixed up in. 

This has always been the conundrum for Ed Reform Democrats who share the same Education Reform mentality with some of the most grotesque reactionary figures of the Republican Party. The Democrats who are running for school boards (and here in California, they are all “proud” Democrats) and who garner billionaire dollars may think Trump, DeVos and other Republicans might be wrong about economics, gay rights, Civil Rights, Women’s Rights, environmental policies or taxes, but they believe the Right Wing are geniuses about Education Policy. 

The sole issue that separates the Education Reform Democrats from their GOP counterparts is vouchers, which, ironically, Charters also have huge financial incentive to oppose. 

This was the California Charter School Association’s take on Betsy DeVos after Trump nominated her for the Education Secretary position: 

“We congratulate Betsy DeVos, a longtime supporter of charter schools, on her appointment as Secretary of Education. Mrs. DeVos has long demonstrated a commitment to providing families with improved public school options and we look forward to working with the administration on proposals allowing all students in California to access their right to a high quality public education. We encourage DeVos and the new administration to craft broad policies allowing all students and families to continue accessing the quality educational options they deserve.” 

Monica Garcia, the school board representative of LA’s 2nd District, is a long time Ed Reform favorite of billionaires and CCSA. She is not a Progressive. Right Wing education champions endorse her and her pedagogy. A Betsy DeVos stewardship of education would find quite an ally in Garcia in many areas they both support. Her championing of John Deasy’s pedagogy, charters and privatization has been miserable for the children of LA and stand in stark contrast to the fundamental ideals that Progressive educators value. 

Although School Board President Steve Zimmer’s voting record hardly seems to warrant Riordan’s financial assault on him -- since he actually has supported many of the things Riordan demands -- the name of Riordan’s organization, “LA Students for Change, Opposing Steve Zimmer for School Board 2017,” is just too stupid to be real. But, alas, it is. 

If only there was some Progressive Billionaire who would front an organization called, “Students Opposed to Dick Riordan’s Green Hose Spraying Millions of Students.” That would be an attention getter and as legitimate and accurate a moniker. 

With the advent of Trump’s absurdly plutocratic administration -- whose members’ portfolios and bank accounts boast their vile ability to influence public policy -- Richard Riordan’s fat, gold and diamond-encrusted finger on the scale has coarsened our Democracy. The whole idea and philosophy of Public Education will be lost under the weight of this dirty cash that opposes and oppresses it. 

I’m afraid that there is very little Progressives can do on horseback when confronted with the tanks and artillery Riordan and his billionaire kin can muster. Guerilla fighting in the hills might be our only recourse as we hope for a more enlightened time to re-emerge. 

The billionaire and Republican Party policies are going to define public education from now on. I have no idea how long it will take for us to dig out from the blizzard of grim policies that will smother us. The Supreme Court’s valentine to the rich through their Citizens United decision has also brought us a climate change of crisis in the role of politics and finances. 

Richard Riordan and the other plutocrats are single-handedly buying the “future” they insist we all must endure. 

Grab your shovels now, Progressives.

(Joshua Leibner taught in LAUSD public schools for 20 years. He is a National Board Certified teacher.) Edited for CityWatch by Linda Abrams.