Charitable Giving?

Corporations are legally permitted to expend general treasury funds for charitable purposes.  Indeed, corporations are encouraged to contribute to charities in order to improve the communities in which they do business and to support the consumers that purchase their products or use their services.  State rules place parameters around the amount of money that can be allocated from corporate coffers to charitable entities with most rules allowing contributions that are reasonable in amount, related to a corporate purpose, and not distributed to "pet" charities.  With corporations now stepping into the giving role that large philanthropic families played in the 19th and 20th centuries (like the Mellon family, the Rockefeller family, etc.), and with charities relying more heavily than ever on corporate gifts, what are we to make of news today that dozens of charities are little more than scams initiated by individuals seeking easy windfalls?

CNN, together with the Tampa Bay Times and the Center for Investigative Reporting, released a stunning report today indicating that hundreds, if not thousands of charities are siphoning millions of dollars from charitable givers and enriching charity founders and executives and for-profit companies that are paid to solicit the charitable gifts.  This report indicates that thousands of charities pay for-profit vendors to raise their donations, sometimes spending more than 90% of the contributions on soliciting more contributions.  CNN reports that the worst charity investigated was the Kids Wish Network:

"Every year, Kids Wish Network raises millions of dollars in donations in the name of dying children and their families.  Every year, it spends less than 3 cents on the dollar helping kids.  Most of the rest gets diverted to enrich the charity's operators and the for-profit companies Kids Wish hires to drum up donations.  In the past decade alone, Kids Wish has channeled nearly $110 million donated for sick children to its corporate solicitors. An additional $4.8 million has gone to pay the charity's founder and his own consulting firms.  No charity in the nation has siphoned more money away from the needy over a longer period of time.  

But Kids Wish is not an isolated case, a yearlong investigation by the Tampa Bay Times and The Center for Investigative Reporting has found.  Using state and federal records, the Times and CIR identified nearly 6,000 charities that have chosen to pay for-profit companies to raise their donations.  Then reporters took an unprecedented look back to zero in on the 50 worst - based on the money they diverted to boiler room operators and other solicitors over a decade.  These nonprofits adopt popular causes or mimic well-known charity names that fool donors. Then they rake in cash, year after year. The nation's 50 worst charities have paid their solicitors nearly $1 billion over the past 10 years that could have gone to charitable works."

The Kids Wish Network is not alone.  This investigative report listed the 50 worst charities.  Below is a chart listing the top ten worst charities ranked by money spent on soliciting costs versus money spent on direct cash aid.

Are publicly traded corporations engaging in appropriate due diligence before spending general treasury funds on charitable contributions?  The report above indicates that there is an urgent need to engage in such diligence.

The 50 worst, ranked by money blown on soliciting costs

Totals from the latest 10 years of available federal tax filings

Rank	Charity name	Total raised by solicitors	Paid to solicitors	% spent on direct cash aid
1	Kids Wish Network	$127.8 million	$109.8 million	2.5%
2	Cancer Fund of America	$98.0 million	$80.4 million	0.9%
3	Children's Wish Foundation International	$96.8 million	$63.6 million	10.8%
4	American Breast Cancer Foundation	$80.8 million	$59.8 million	5.3%
5	Firefighters Charitable Foundation	$63.8 million	$54.7 million	8.4%
6	Breast Cancer Relief Foundation	$63.9 million	$44.8 million	2.2%
7	International Union of Police Associations, AFL-CIO	$57.2 million	$41.4 million	0.5%
8	National Veterans Service Fund	$70.2 million	$36.9 million	7.8%
9	American Association of State Troopers	$45.0 million	$36.0 million	8.6%
10	Children's Cancer Fund of America	$37.5 million	$29.2 million	5.3%

The Sordid Private Prison Corporation Agenda

"Kids for Cash" Judge Mark Ciavarella

News out of the United States this week in connection with the debacle that is the for-profit private prison corporation regime borders on deprave.  That the privatization of the prison industry in the U.S. (and abroad) is not now considered an epic failure is mystifying.  In Pennsylvania, Mark Ciavarella, Jr., the former juvenile court judge that orchestrated the "Kids for Cash" scandal, was formally sentenced to 28 years in prison for his role in sending children to jail in return for cash payments (the Third Circuit Court of Appeals upheld the sentence from his 2011 trial).  Ciavarella was found guilty in 2011 of "engaging in a pattern of racketeering and participating in a racketeering conspiracy through his receipt and transfer of $997,600 from individuals associated with the juvenile detention centers."  Ciavarella and former Judge Michael Conahan were both accused of sending children to private juvenile detention facilities, in Luzerne County, PA, often in violation of the kids' constitutional rights, in return for bribes and kickbacks from private prison owner Robert Mericle for the number of children that they sentenced to spend time in the Mericle-built private juvenile facilities.  Conahan pled guilty to racketeering in 2010, while Ciavarella cavalierly battled the indictment claiming that he received only a "finders fee" for assisting in the construction of the private prison facility.

As reported in 2011 by the Christian Science Monitor, the jury found Ciavarella guilty on 12 of 39 counts in his indictment. Aside from racketeering, he "was also convicted of failing to record the secret payments on judicial financial disclosure forms from 2004 to 2007, and for filing false tax returns for those same years. In addition, the jury found him guilty of engaging in a money-laundering conspiracy to conceal the payments."

The perverse incentives that attach when private corporations seek to control a public function like crime and punishment, including sentencing and imprisonment, literally overwhelms both judges and corporate executives. That a private prison company would actually bribe judges to fill their prisons is appalling.  Just as outrageous is that judges would, without remorse, destroy the lives of young kids by imprisoning them for minor crimes or misbehaviors, in order to receive bribes that the private industry seems more than willing to pay.

GEO Group Headquarters in Florida

Meanwhile, the GEO Group, Inc., one of the nation's largest private prison companies, has been lying to investors and the general public. The mantra of private prison companies is that they "do no harm" as they simply run prisons more efficiently and for lower cost than government can.  In repeating this mantra, the GEO Group and the Corrections Corporation of America (CCA) routinely claim that they do not seek to influence legislatures or lobby for longer sentences, for greater prison time or for the expansion of crimes that will ultimately lead to a stronger flow of prisoners into their prison beds, including claims that they are not involved in the criminalization of immigration.  This however, is reportedly not true.  Not only is there emerging evidence that private prisons run less efficiently and at greater cost than those run by states and municipalities, but GEO Group's public disclosures this year admitted to paying millions of dollars to lobbyists that are seeking to influence immigration policy by sending illegal immigrants into the private prisons.

The Nation reports:  "Earlier this year, one of the largest private prison corporations in the country sent out a statement to reporters claiming that it would not lobby in any way over the immigration reform debate. A new disclosure shows that the company, the Boca Raton–based Geo Group, has in fact paid an 'elite team of federal lobbyists' to influence the comprehensive immigration reform legislation making its way through Congress. . . .

In February and March, Pablo Paez, the Geo Group’s vice president of corporate relations, told media outlets, including the Financial Times and The Nation, that his firm would steer clear of immigration reform politics. . . . 'The GEO Group has never directly or indirectly lobbied to influence immigration policy. We have not discussed any immigration reform related matters with any members of Congress, and we will not participate in the current immigration reform debate.'

Geo Group’s quarterly lobbying disclosure tells a different story. A disclosure filed in April shows that the company turned to Navigators Global to lobby both houses of Congress on 'issues related to comprehensive immigration reform.' Navigators Global, a corporate government affairs firm founded by several Republican aides, has been retained by the Geo Group since 2011 . . . ."

The private prison industry is sordid, evidenced by judicial bribery and lying to investors and the public at large.  How long will we stand for this debauchery?

JP Morgan, Again?

Once again, JP Morgan Chase finds itself at the center of controversy.  Casual Wall Street observers must be asking themselves, "will these bankers never learn"?  This time government regulators are accusing the investment banking giant of illegally manipulating energy prices in order to drive up revenue for themselves and investors.  Regulators cite to a document indicating knowledge and approval of bank executives of schemes carried out by a group of energy traders in Houston. According to DealBook:

"Government investigators have found that JPMorgan Chase devised 'manipulative schemes' that transformed 'money-losing power plants into powerful profit centers,' and that one of its most senior executives gave 'false and misleading statements' under oath.

The findings appear in a confidential government document, reviewed by The New York Times, that was sent to the bank in March, warning of a potential crackdown by the regulator of the nation’s energy markets."

"You Can Sell Your Shares"

Howard Schultz - CEO Starbucks Corporation

Starbucks CEO Howard Schultz was very pointed when challenged by a shareholder at the coffee giant's annual meeting for publicly supporting marriage equality in the state of Washington.  When asked whether he felt that supporting gay marriage drove customers, and profits, away from Starbucks, Schultz essentially responded that he was not going to apologize for a year when shareholders received a 38% return on shares owned and that if shareholders were truly aggrieved by the political stance, then they could always sell their shares.

Forbes quoted CEO Schultz as follows when directly responding to a shareholder: “Not every decision is an economic decision. Despite the fact that you recite statistics that are narrow in time, we did provide a 38% shareholder return over the last year. I don’t know how many things you invest in, but I would suspect not many things, companies, products, investments have returned 38% over the last 12 months. Having said that, it is not an economic decision to me. The lens in which we are making that decision is through the lens of our people. We employ over 200,000 people in this company, and we want to embrace diversity. Of all kinds. . . .  If you feel, respectfully, that you can get a higher return than the 38% you got last year, it’s a free country. You can sell your shares in Starbucks and buy shares in another company. Thank you very much.”

Often, disgruntled shareholders have no real claim when a corporation takes a particular position or makes a certain economic decision that impacts share price and profitability.  Selling one's shares is always the bottom line alternative if shareholders are truly disenchanted with a companies strategic vision.

Schultz's decision to come out publicly in favor of marriage equality last year was a bold move, though trending in the United States has seen a dramatic shift to a majority of Americans now favoring marriage equality.

[photo courtesy of Adam Bielawski through Creative Commons]

End the Megabanks and the Debauchery of Capitalism Now

 

Can the tide be turning against the megabanks?

Item: the megabanks continue to strangle the economy by hoading more cash than ever which enables them to continue to trade derivatives with each other but utterly fails to fund credit expansion for growth. The Fed is printing money only to fund the massive quadrillion dollar derivatives casino; this is politically unsustainable.

Item: Recently the G20 identified the 29 megabanks deemed too big to fail globally and not a single one operated to enhance shareholder wealth based upon stock returns; a stunning record of failure of 0-29. In other words, the megabanks cannot justify their existence and should be terminated by the government of their nations ASAP.

Item: Bloomberg recently calculated the profitability of the megabanks in the US and found they make no money after accounting for their subsidized cost of capital. Basically, the taxpayer of the US pays $83 billion per annum to subsidize the megabanks. As I have long contended the megabanks are a leach upon our economy.

Item: Attorney General Eric Holder's absurd testimony of March that some banks (and individuals) are above white collar crime recently backfired in the form of bills to breakup the megabanks--a bill that is supported by two regional Federal Reserve Bank Presidents. There are now two bills pending that seek to end too big to fail.

Item: As anyone could predict, the lawlessness at the center of our economy breeds utter corruption. dre cummings recently noted that market rigging has expanded and it appears likely to me that no market is immune from manipulation by megabanks untethered to legal and capitalist accountability.  The Wall Street Journal recently reported that bankers lubricate this market manipulation with kickbacks and yet further corruption: "Several former brokers and bank traders said they witnessed brokers providing clients with cocaine or prostitutes."

Item: The so-called London Whale trade that cost JP Morgan $6.8 billion apparently led to big wins for a hedge fund called Blue Mountain Capital founded by a former Morgan alum. Further that same hedge fund recently hired the former Chair of Morgan's investment bank. So now we have a revolving door between the shadow banking system and the too big to fail banks whereby losses from government backed banks end up in the pockets of cronies with the ultimate payoffs hidden in the dark reaches of the hedge fund industry. On March 15th, the US Senate released a report that all but accused JP Morgan of securities fraud.

In coming days I will post on where this system formerly known as Western Capitalism is headed. I will post on Cyprus and how depositors and taxpayers ultimately pay when too big to fail banks become too big to bail. I will post on how this system seems destined to end with the confiscation of deposits in the form of negative interest rates or other wealth transfers to the megabanks. I will also post about the entire derivatives scam which have turned the megabanks into piggy banks for the hedge fund industry with the Fed providing funny money for the financial elite to play with.

But the point today is that we need not stand by idly and witness the debauchery of capitalism. Write your representatives and urge them to support this bill.

Everything is Rigged

Price fixing seems to be in vogue for Too Big To Fail megabanks.  Matt Taibbi at Rolling Stone weighs in on the most recent financial collusion amongst the big banks in "Everything is Rigged: The Biggest Price Fixing Scandal Ever."

Taibbi writes: "You may have heard of the Libor scandal, in which at least three - and perhaps as many as 16 - of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history - MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets.

That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.

Interest-rate swaps are a tool used by big cities, major corporations and sovereign governments to manage their debt, and the scale of their use is almost unimaginably massive. It's about a $379 trillion market, meaning that any manipulation would affect a pile of assets about 100 times the size of the United States federal budget. It should surprise no one that among the players implicated in this scheme to fix the prices of interest-rate swaps are the same megabanks - including Barclays, UBS, Bank of America, JPMorgan Chase and the Royal Bank of Scotland - that serve on the Libor panel that sets global interest rates."

Why and how did the manipulation of LIBOR and ICAP take place?  Taibbi answers:  "Dating back perhaps as far as the early Nineties, traders and others inside these banks were sometimes calling up the company geeks responsible for submitting the daily Libor numbers (the "Libor submitters") and asking them to fudge the numbers. Usually, the gimmick was the trader had made a bet on something – a swap, currencies, something – and he wanted the Libor submitter to make the numbers look lower (or, occasionally, higher) to help his bet pay off."

Austerity Bites: The Impact of Spending Cuts on Communities of Color

The University of Utah S.J. Quinney College of Law hosted a symposium in March 2013, entitled "Austerity vs. Growth: Lessons for the U.S. Economy."  While there, Professor Steven Ramirez delivered remarks entitled "Mythological Austerity," which he linked to yesterday.

Linked today is the presentation "Austerity Bites: Communities of Color and the Impact of Spending Cuts."  The argument herein suggests that austerity is never distributed equally across wealth levels.  Particularly, sequestration and austerity always seems to fall hardest and heaviest on those least able to afford it.

Mythological Austerity (Courtesy of the University of Utah)

Happy viewing!

http://www.ulaw.tv/videos/austerity-vs-growth-professor-steve-ramirez/0_mehvnw1r

My basic point is simply that Social security and Medicare have nothing to do with either the deficit or our national debt at this point. Entitlement reform makes sense but the real culprit is too big to fail banks and the Bush Tax Cuts (not to mention the GOP's ridiculous war in Iraq).

Bankers Above the Law II: Criminal Affirmance Runs Amok

Professor Mary Ramirez recently posted her University of Connecticut Law Review article on SSRN. It is available for free download.  Here is the abstract:

Recent financial scandals and the relative paucity of criminal prosecutions against elite actors that benefited from the crisis in response suggest a new reality in the criminal law system: some wrongful actors appear to be above the law and immune from criminal prosecution. As such, the criminal prosecutorial system affirms much of the wrongdoing giving rise to the crisis. This leaves the same elites undisturbed at the apex of the financial sector, and creates perverse incentives for any successors. Their incumbency in power results in massive deadweight losses due to the distorted incentives they now face. Further, this undermines the legitimacy of the rule of law and encourages even more lawlessness among the entire population, as the declination of prosecution advertises the profitability of crime. These considerations transcend deterrence as well as retribution as a traditional basis for criminal punishment. Affirmance is far more costly and dangerous with respect to the crimes of powerful elites that control large organizations than can be accounted for under traditional notions of deterrence. Few limits are placed on a prosecutor’s discretionary decision about whom to prosecute, and many factors against prosecution take hold, especially in resource-intensive white collar crime prosecutions. This article asserts that prosecutors should not decline prosecution in these circumstances without considering its potential affirmance of crime. Otherwise, the profitability of crime promises massive future losses.

The article does not include the deeply disturbing testimony of Attorney General Eric Holder that banks and criminals employed by banks are not subject to criminal procecustions on the same basis as ordinary citizens because that absurd testimony is too recent. Still, Holder's admission that some banks and their criminal employees are too big to jail certainly raises the importance and timliness of Professor Mary Ramirez' most recent installment seeking to restore balance to a ridiculously out of whack criminal "justice" system. 

What does it say about a society that rounds up young people of color by the thousands for relatively innocuous behavior while white collar criminals on Wall Street can crash global capitalism and corrupt the pinnacle of our economy with impunity? So much for any post-racial America.

The social construct of race still thrives in America and nowhere is this more obvious than in policies relating to incarceration.

The Re-Education of Barack Obama - Midwestern People of Color Legal Scholarship Conference

The Midwest People of Color Legal Scholarship Conference will be hosted by the Loyola Law School Chicago on April 19-21, 2013, and its theme is "The Re-education of Barack Obama."  After a divisive first term in office, the nation re-elected President Barack Obama despite a deep disaffect felt by both conservatives and progressives.  The Re-education of Barack Obama conference will seek to assess the policy victories and failures in the President's first term and will strive to provide progressive inspiration for second term policies and actions.  Professors and scholars of color from across the country will convene in Chicago and engage in this scholarly debate beginning on Friday, April 19th.

The program details are below:

MIDWESTERN PEOPLE OF COLOR LEGAL SCHOLARSHIP CONFERENCE

MWPOC

“The Re-Education of Barack Obama”

Loyola University Chicago School of Law

25 East Pearson Street, Chicago, IL

April 18-21, 2013

Schedule of Events

Thursday, April 18^th:

6:30-9:00 p.m.  Opening Reception, Loyola University Chicago School of Law

Video, State Senator Barack Obama, 1999 Speech Delivered at Loyola University

Friday, April 19^th:

8-8:50 a.m.  Continental Breakfast and Registration

8:50-9:00 a.m.  Welcome, Neil Williams, MWPOC

9:00-10:30 a.m.  Plenary Panel:  National Security and International Relations Policies

10:40 – 12:10 p.m.  Plenary Panel:  The War on Drugs and the Prison Industrial Complex

12:30 p.m.  Lunch

2:00-3:30 p.m.  Plenary Panel:  Capital Markets and Financial Regulation

3:40-5:05 p.m.  Plenary Panel:  Immigration Reform

5:15 – 6:00 p.m.  Concurrent Works in Progress

6:30 p.m. Dinner:  John Hancock Building, Signature Room at the 95^th

Saturday, April 20^th:

8-9:00 a.m. Continental Breakfast and Registration

9:00-10:30 a.m.  Plenary Panel:  Critical Supreme Court Cases

10:45 – 12:15 p.m.  Plenary Panel:  Effectiveness of the Affordable Care Act (ObamaCare) in

Eliminating Racial Health Disparities

12:30 p.m.  Lunch – Keynote Presentations, Ms. Janet Bell, Reflections on the Legacy of Derrick Bell; Professor Shavar Jeffries

2:00 – 3:30 p.m.  Concurrent Works in Progress

3:45 – 5:15 p.m.  Concurrent Works in Progress

5:30 – 7:00 p.m.  Concurrent Works in Progress

7:00 p.m.  Dinner: On Own

Sunday, April 21^st:

9-10:00 a.m.  Continental Breakfast

10:00-12 Noon  Roundtable:  Retrenchment:  Responding to the Law School Crisis

12 noon  MWPOC Business Meeting

1:00 p.m.  Adjourn