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Friday, September 17, 2004

Eastlake Update -- Quiet Day of Reflection

Not a lot of new news. Cleveland Plain Dealer reported on the loans gone bad for Eastlake and ODOT, that I mentioned yesterday. Their piece adds a little more detail and it looks bad for former Mayor Dan DiLiberto.
[ODOT spokesman Brian] Cunningham and attorneys for ODOT contend that a letter DiLiberto signed in support of the second loan is proof city officials knew of the previous $2.4 million in payments.

DiLiberto's letter, dated Aug. 5, 1999, says that he and the city engineer had reviewed the previous payments to Chiappetta and that "all disbursements to date have been appropriate and in accordance with the original construction contract."

The letter then explains that Chiappetta needs the money because of cost overruns.

Guard said he never saw the letter.

"I don't know how the letter was written or why," [Eastlake City Engineer Steve] Guard said. "I can't explain that."

DiLiberto said he assumed the $615,000 was the first payment to Chiappetta. He said he did not read the letter before he signed it.

But he did say that the late William Petro, who represented Chiappetta, read a letter to him over the phone and faxed a copy of it to his office. DiLiberto said his secretary then typed the letter on city stationery for his signature.

The secretary, Addie Zingale, said she did not recall specifically whether DiLiberto read the Aug. 5 letter but said DiLiberto normally would read correspondence before signing it.

"Why wouldn't he read it?" Zingale asked. "Especially a letter that short."

DiLiberto and Masterson look to be taking the fall for a lot of Eastlake's problems. Wonder who else they will take with them. This story looks to be gaining more traction, and of course, the idea of the city being on the hook for another $2.4 million is insane.

Meanwhile, Eastlake residents feel "betrayed" by their elected officials. Go figure. You mean we are not feeling positive about how they have handled these things?

Given what these ongoing scandals and the budget deficit, I can't imagine what it is doing for property values in the city for the short term. Right now, I'm glad I rent.


Personal Note

Today I took Angie to an art class at the local Fine Arts Association. It's for 2-3 year olds. Usually I leave this stuff to the wife, but they only had classes in the weekdays, so I get to go. Things could have gone better. Angie doesn't take structure real well at the moment. The bright side, I think classes can only improve after that. That's why there has been no blogging for the day (last post excepted).

No posting tomorrow. I have to leave the house by 5:30 am to get to Pittsburgh, to tailgate for the Nebraska-Pitt game. My friend Lee, better be bringing the Makers Mark.

Mainstream Fisking

Jack Shafer at Slate takes down Lewis Lapham's bloated beast. Shafer is no conservative or Republican, and he does his best to take down some of the VRWC crap.

Stein and Lapham would have you believe that conservative foundations both outweigh liberal foundations and suppress the liberal message with their big spending. But that's not the case. Stein estimates assets of $2 billion for the eight major conservative family foundations in 2001, which sounds gargantuan. But that's chump change compared to the holdings of liberal foundations. Writing in the American Prospect in 1998, Karen Paget notes that none of these conservative foundations rank in the top 10 American foundations measured by assets, and most don't even break into the top 50.

What sort of media do liberal foundations fund? The liberal John D. and Catherine T. MacArthur Foundation, which reported assets of $4.2 billion in 2003, made grants of $7.5 million to various liberal media projects, including Public Radio International ($2.5 million), WNET documentary films ($800,000), WGBH documentary film ($400,000), and other TV, documentary, and radio initiatives, according to the foundation's annual report.

The Schumann Center for Media and Democracy (assets of $60 million in 2002) gave money to liberal media organizations in 2003 at rates that would make a Scaife faint. The group's federal Form 990 records it giving $4.3 million away to Florence Fund ($2 million), Sojourners magazine ($500,000), an investigative fund for ($277,785), the Nation Institute ($115,000), and various radio, film, and magazine projects (the Washington Monthly and the American Prospect got piddly amounts). It also paid Bill Moyers, host of PBS's Now, $200,000 to serve as its president.

Paget argues persuasively that conservative foundations are more effective than liberal foundations because they're better at giving money away, not because they give more of it away. Conservatives tend to 1) give general support, letting the grantee decide how to spend the money; and 2) they tend to renew those gifts year after year, letting the grantee take root as an institution and freeing it from running in circles on the fund-raising wheel. Conservative magazines such as Commentary, the American Spectator, the National Interest, the Public Interest, the New Criterion, and Policy Review have flourished because of steady funding by benefactors.

Liberal foundations, on the other hand, tend to limit their donations to specific projects and don't make multiple deposits over the years. In other words, a liberal propaganda mill exists; it just operates under different philanthropic principles than the conservative one.

It's a long read, but very good stuff.

Thursday, September 16, 2004

Just Deport Him

Fawaz Damra, the Palestinian Imam at the Islamic Center of Cleveland, who helped raise money for terror groups while pretending he supported interfaith outreach and dialogs is facing sentencing. It is likely that he will be stripped of his citizenship because of lying on his naturalization forms -- subjecting him to deportation -- but federal prosecutors have also asked that he be sentenced to 5 years of incarceration. He was convicted of lying on his immigration forms by failing to disclose his affiliations with terror groups.

I really don't see much point in imprisoning him. He's a preacher. The last thing needed, is for him to become a prison preacher seeking more converts. All the while, the US paying to keep him locked up. Just get him out of the country.

Eastlake -- Today's Update

Looks like Lake County is in the technical phase of investigating. The County Prosecutor has stated that while it wasn't illegal to charge and collect more money than was needed for the sewer levy, the illegal act took place when they spent the excess money on something other than the sewer project. Duh. That was already clear that you needed a local common pleas court to approve other uses. Nothing in the article sadly for what the penalties are for not getting permission. I'm guessing at this point there is none. The city just has to pay back the difference to the taxpayers.

The County also doesn't want to pay anything to look into the scandal. Eastlake is going to get the tab if Lake County has it's way:
Patricia A. Nocero, assistant county prosecuting attorney, summed up the city's error in a memo to Eastlake Law Director Joseph R. Klammer dated Tuesday.

"What happened was this - the county collected the full amount of the sewer levy, and the city used the excess sewer levy funds for general fund obligations, without obtaining an order of court to do so," the memo states.

The memo goes on to say that all responsibility for investigating the matter lies with city officials.

"This office wants to make clear that, as law director for the city of Eastlake, it is incumbent upon you to investigate all actions of the prior administration, particularly the finance director and mayor, as their actions relate to the improper or illegal spending of the excess amounts collected for the sewer levy," the memo states. "It is also incumbent on the city to cause an audit to be conducted concerning the spending of the levy funds and to address the results of that audit."

Klammer maintains that the city did nothing wrong and that the problem might be that the county set the wrong millage rate in certain years.
Lake County is scrambling to protect the Auditor's office that failed to notice this problem; and never would have had Eastlake not gone broke and gotten deeper financial scrutiny. Looks like their plan is to push it all off on Eastlake if possible. This will be interesting, and a test for the Eastlake law director. It looks like it is all on him to find the legal standard to press Lake County to accept some of the blame. An amusing sidefight to keep an eye on.

Eastlake is also scrambling to figure out it's liability on some defaulted loans with the Ohio Department of Transportation (ODOT). This one may be even clearer in illegal activity and even forged documents -- man, forgeries are all the rage this week.
Allegations of document forgery and misrepresentation have been made in the continuing dispute between the city of Eastlake and the Ohio Department of Transportation over an estimated $3.015 million in loan payouts to area developer John Chiapetta.

Eastlake Engineer Steve Guard said Wednesday that his required signature was not on any of the five Exhibit C forms that resulted in ODOT's payment of $2.4 million to Chiapetta's company, Eastlake Land Development Co., for scheduled work at Eastlake Industrial Park.

Those payments were made in 1999 by ODOT's State Infrastructure Bank to Chiapetta's company for installation of roads, underground utilities and other improvements to the 38-acre site off Erie Road.
Guard said that in the fall of 1999, Chiapetta submitted to him an Exhibit C form requesting payment of $615,000. The form included an invoice saying the work was performed. Guard signed the form.

"Since I didn't know about the previous payments, I signed the form because I assumed the request for $615,000 was the first of the five planned draws for Chiapetta's company," Guard said.

After he signed the form, Guard said Chiapetta went to then-Eastlake Mayor Dan DiLiberto and asked DiLiberto to write and sign a letter stipulating that the city had approved payment of an additional $615,000 to Eastlake Land Development Co.

The documents were submitted to ODOT for payment.
Chiapetta subsequently defaulted on the loan, triggering ODOT's filing of a lawsuit against Chiapetta's company and the city of Eastlake for recovery of all money paid out for development of the industrial park.

"I was as surprised as anyone when Chiapetta defaulted on his loan payments," Guard said.

The city of Eastlake also filed a lawsuit against Chiapetta and Eastlake Land Development Co. That case was filed in 2002 in Cuyahoga County Common Pleas Court.
Shocking to find out that a land deal in Eastlake involving the former Mayor Dan DiLiberto was shady and may have involved illegal activity. I only moved here in 2001. Even before I moved here, I had heard DiLiberto had a shady rep. So I have to ask the other residents of Eastlake, "Why the hell did you keep electing this guy?" He was mayor for what, 10 years? The longer someone like that is in office, the more likely he is to eff things up because you start to feel like you won't get caught. To some degree, this can't be shocking that so much has gone wrong and now coming to light. He bailed, and it's all breaking loose.

Chiapetta is looking at criminal charges for this stuff, and more if this rumor piece from local alt-weekly Cleveland Scene is true.
The hot rumor at last week's Democratic Executive Committee meeting in Mentor was the prospect of a criminal indictment against John Chiappetta, head honcho of E&W Services, the sheet-metal manufacturer that received a boatload of state money, only to sink under the weight of massive, mysterious debt ("Mr. Big Stuff," November 11, 2001).

If Chiappetta confesses his sins, the political gossip goes, he may shed light on those of some prominent Lake County officials -- like former Eastlake Mayor Dan DiLiberto, who lured E&W from Mentor with the help of generous incentives, including a brand-new facility. At least one executive in Chiappetta's company donated heavily to DiLiberto's last mayoral campaign.

Though Chiappetta left his employees with stacks of unpaid health-care bills, he had plenty of dough for politicians. Betty Montgomery, Jim Petro, Steven LaTourette, and Bob Taft all cashed Chiappetta's checks. All of which gives Punch the sneaking suspicion that we're in for another round of pay-for-play scandal, just in time for the holiday season.

It's the 3rd item on the list.

Wednesday, September 15, 2004

L'Shona Tova

A happy healthy New Year to all as we go into 5765. The parents and grandparents wish we were with them tonight, but are settling for the fact that we will be in for Yom Kippur.

The fighting over the election is well under way in my family, which is just part of the normal gatherings. Kind of funny to learn that I am considered a swing vote in the Rich family this year. Some Glenfiddich could always help swing my vote. I'm not saying I take bribes for a vote in the "swing" state of Ohio -- because that would be illegal -- I'm just saying it could be persuasive.

Check Back Later

This story may go no where, like the ballot initiative it hoped to have in Cuyahoga County, but it's worth noting for now.
The Cuyahoga County Board of Elections promises to investigate claims that employees threw out valid signatures on petitions seeking an overhaul of county government.

But first, the board needs to figure out exactly what, and whom, it's supposed to investigate.

Mike Wise, co-chair of the county Republican Party, dropped a bombshell on Friday, saying a board employee brought the claims of misconduct to him.

On Tuesday, Wise amended the story when talking to The Plain Dealer, saying "two or three" employees had approached him. He refuses to identify the employees to the newspaper or the elections board.

Given the incompetence of the Cuyahoga County Republican Party, the number of screw-ups by the petition gatherers on their own, and the general weird vibe I get about this claim; I have my doubts. Still something to keep an eye on considering the problems at the Board of Elections in recent years.


Eastlake -- When Confronted, Preach Patience

Interesting. That's the word I'll use to describe the subtext of the news and editorials for today regarding the property tax scandal. I think we can safely call it a scandal now.

The News-Herald (N-H) lead story was on the scandal today. The story through out a lot of numbers regarding the ballpark and costs, but declined to put them in any context.
Acting City Finance Director Michael Vukovich said revenue coming in this year for the stadium will be enough to cover payments on stadium debt that come due in December.

The city has about $26 million in loans out on the stadium.

That is $13.6 million in short-term notes and two long-term bonds totaling $12.5 million.

Payment is due on the notes and bonds in December.

The payment on the bonds, which will be the first principal payment so far on stadium debt, will be $620,000.

Vukovich said he is working with the city's financial adviser, Michael Sudsina, to determine whether the notes should be turned into long-term bonds in December.

The city generates about $800,000 in revenue annually to be used for stadium debt payments.

Current and future revenue is generated by:

* Rent paid by the Lake County Captains - $5,631,200 through 2026.
* Lease payments from the Lake County Visitor's Bureau - $2,411,370 through 2013.
* Sprint cellular tower - $1,251,855 through 2031.
* Nextel cellular tower - $577,920 through 2034.
* Naming rights to Classic Plaza - $199,999 through 2017.
* Parking lot fees - about $2,520,365 through 2027.
* Local motel bed tax - about $1,734,487 through 2034.
* Cup-holder advertisements - $15,000 through 2004.

To date, these sources have brought
in $1,444,529.

Future projections of stadium debt show the city will end up paying a total of $37 million in interest and principal on stadium loans by 2027, when the debt is expected to be paid off.

So far, the only state money granted for the stadium was $850,000 from the Ohio Arts and Sports Commission.

The city is still waiting for $4 million promised in a federal transportation bill sponsored by U.S. Rep. Steven C. LaTourette, R-Concord Township.

Approval of the bill is not expected until next year and could be vetoed by the president in 2005. City officials also are waiting for the sale of naming rights for the stadium, which they hope will bring in $5 million.
The naming rights pricetag hasn't changed in the 2+ years they started trumpeting the money they'd get from it. They have boxed themselves in because they don't want to drop the price to what some company might actually pay since they would have to admit they made another overestimation on what money would be brought in. They originally claimed the stadium would cost only $15-17 million and would be paid for by those fees, naming rights and grant money. Seems they immediately missed the mark, yet kept hiding it.

The article refuses to even give a *ahem* ballpark figure on the amount of money used to pay on the ballpark debt. Despite as recently as Monday when a N-H article acknowledged that it was around $2 million.

This scandal resulted in 2 editorials today. One from the Cleveland Plain Dealer Editorial Board (PDEB), and one from the N-HEB. Both speak of the mistakes and fingerpointing and the need for investigating all the way through Lake County as a whole. But on Eastlake, well...

The PDEB gets to the key issue of the ballpark and why Eastlake residents are upset:

In addition, Masterson, who now serves as the finance director in Green, engaged in a suspicious sleight of hand when he used the sewer money to pay interest on loans for the city's new and heavily indebted minor league baseball stadium, and for a new municipal complex.

After the story was published, a regretful Masterson insisted he didn't know his manna from heaven was actually sewer taxes. But that's exactly the kind of thing a finance director should know.

Spending sewer money on the ballpark was particularly grating, because former Mayor Dan DiLiberto had promised that it would be paid for through grants and other revenue sources. They haven't materialized.

Now the city must pay off the ballpark's $27 million debt, as some critics had long predicted, and dig the municipal government out of its own emergency - a $3.2 million deficit.

You know, it seems that while it may be illegal to use levy money for a different debt, there are no actual penalties for the municipality or person who acts to do so. I have yet to see anything on that subject. That seems like an interesting issue.

The N-HEB, on the other hand, keeps the ballpark issue at arms length and prefers to keep the whole thing vague and unsubstantiated.

City officials said they believed Masterson used the extra money to pay off debts other than the sewer debt, including loan payments on the Eastlake Ballpark and the new City Hall, but that was conjecture. They said they were not sure how much may have been used for that purpose.
"Believed?" "Conjecture?" "Not sure?" Do they read their own articles? Do they read another paper? Nope. Nothing to see here. Move along. The Eastlake Ballpark is a good thing. Never blame it for any of the problems. The editorial is also angling for making Masterson, Eastlake's former finance director, the sole scapegoat in this. They want to absolve the present powers in the Lake County Auditor's office, and even cut slack to former mayor Dan DiLiberto.

The PDEB and the N-HEB conclusions area also fascinating in their differences.

Still, fairness calls for Eastlake to explore the issue. It also calls for Lake County officials to repair any gaping holes in their tax collection system. No taxpayer in Lake County should have faith in the Lake County Budget Commission until it does.
Until all the evidence is in, and all the figures have been reconciled, the public should resist any temptation to fix blame or jump to conclusions based on deeply held prejudices that many of the residents seem to have.

The time will come when all the facts will be laid out and will be authenticated.

Only then will it be time to arrive at conclusions as to who is at fault.
Move along people. Let the people in charge when this all went to hell investigate and assign blame. Trust them, and us. Don't actually think for yourself or what seems readily apparent.

Good luck to the News-Herald in trying to get back credibility after all this.

Tuesday, September 14, 2004

Eastlake -- Deny, Deny, Not My Fault, Deny

Fingerpointing between the City and County; denials of wrongdoing by the former Mayor and Finance Director for Eastlake; denials of wrong doing from the Lake County Auditor's office; accusations by the Lake County Prosecutor; denials of wrongdoing by Eastlake from the City Law Director; and more integrity destroying cover-up of the money going to the ballpark. Pretty much all in one article.
City and county officials are pointing fingers at each other when asked who is to blame for the error, which some officials believe could total $5 million.

Dowd said since 1994, the annual estimates submitted to the county by Finance Director Jack Masterson were inflated by about $50,000 a year.

The tax estimates from the city are certified by the county auditor and then by the Lake County Budget Commission.

Masterson, who had served as finance director for Eastlake since 1990, resigned in May to take a job as finance director for Green Township in Summit County.

Dowd said he believes city officials knew about the overcollection several years ago.

"In our opinion, yes, they did know," Dowd said. "We provided them the total dollars needed. The city would have known the dollars being collected were in excess."

But city officials disagree.

City Law Director Randy Klammer said his initial investigation into the matter finds that the city asked for only what it needed to cover the sewer debt.

"We have yet to reach a conclusion on the exact dollar amount that was overcollected," Klammer said. "My department is researching it, but from my initial research, any alleged responsibility rests with the county budget commission. The county budget commission sets the millage. From our initial review, the schedule submitted by the city seems to be correct."
I'd like to say someone is going down for this, but I doubt it. The cross accusations and the rarity of this sort of thing happening, makes it unlikely it will be sorted out quickly and the two people most likely responsible are no longer in power.

The thing in there is Dowd's, the chief deputy auditor for Lake County, accusation that the City, presumably Masterson and maybe Mayor DiLiberto knew what they were doing is big. Under state law, if Eastlake wanted to use any of the money for another purpose, it needed prior authorization from a court.

Masterson denies any wrongdoing, and former Mayor DiLiberto -- who has previously been amazingly unavailable -- issues his denials and claims cluelessness.
"I knew nothing of it," DiLiberto said. "That's up to the finance director. He brings the figure to the county and then brings the proposal to council for approval. I knew nothing of the overage."
I'm actually very excited by that part. You are now seeing DiLiberto trying to push it all off onto Masterson. Rats. Meet the sinking ship. Sinking ship? How many are you taking with you?

Now of course, the Lake County Auditor's office is scrambling because they have been screwing up by not catching this for 16 years, and wouldn't have caught it now if it hadn't been for the oversight committee looking into things. You would think that an auditor's office might notice these things. They are not going to take the blame easily.
Dowd acknowledged that the auditor's office failed to detect that the city of Eastlake had for 16 years been collecting far more tax revenue than was needed to make annual debt payments for the sewer project.

However, Dowd said in Ohio, it is the responsibility of the municipalities, agencies and institutions receiving property tax revenues to apprise county auditors and budget commissions of overpayments. In the Eastlake case, Dowd said the county auditor's office expected to get that information from then-Finance Director Jack Masterson.

"Mr. Masterson would have known each year when he got his settlements how much the city was collecting on the sewer levy," Dowd said. "Procedurally, in our opinion, when the city saw collections were in excess of what they should have been for that levy, the finance director had the obligation to notify our office that there was a potential problem. We were never notified."
Now for the final issue. The ongoing attempts by the News-Herald to tank any claim of integrity regarding the ballpark issue.

The only part of the story referencing the ballpark:
City officials said they believe Masterson used the extra money collected to pay off other debt, including loan payments on the Eastlake Ballpark, although they are not sure how much was used for that purpose.
Now on Saturday, the Plain Dealer broke the story about this. Funny thing, they had some numbers
A Plain Dealer review of records shows Eastlake used at least $2 million of the money to make payments on loans for a new municipal complex, which opened in 1994. And $1.6 million more has gone toward interest payments on loans for Eastlake Ballpark, home of the Lake County Captains, a minor league affiliate of the Cleveland Indians.
It also has Masterson admitting he used sewer money to pay interest on the ballpark loans.

Just for additional amusement, they did not post an editorial on the N-H site today. I got a Jackson that says it had something regarding Eastlake.

The idiocy and short-sightedness of the News-Herald is astounding. This is a regional paper that gets its subscribers and customers by covering local news in Lake and Geauga County better than the Cleveland Plain Dealer. People don't pick it up or subscribe because of their AP and wire news stories. If they want that, they can get more of those and at a cheaper price by subscribing to the PD. If the News-Herald can't be trusted to report honestly on local news, then why bother subscribing?

Monday, September 13, 2004

Eastlake Budget Woes

Well, the News-Herald had no choice but to run an article about Eastlake overcharging on property tax for the last 16 years. They are even forced to admit that money went towards paying interest on ballpark loans -- though only in passing.
While reviewing the city's recovery plan, city officials realized the city's property owners have been overcharged at least $5 million since 1988.

About $2 million was used to pay interest on loans for the Eastlake Ballpark, city officials said.
That was the total mentioned regarding the ballpark. I'm loathe to say it, but the News-Herald has finally convinced me that it has let its support for the ballpark effect the way it reports the budget story in Eastlake. The plain fact is that the ballpark and the money it cost and will cost the city is inexorably intertwined. Yet the News-Herald stories have done their best to redact any references to the ballpark and its costs, except obliquely. As I have pointed out before, the editorials make practically no mention of the ballpark in relation to the budget deficit -- and in one memorable one went out of its way to say that the ballpark was not the reason for the budget problems, nor will it be.

I don't like to make such an accusation, because it goes to a central principle of the paper. It's integrity and reputation to report honestly on what is occurring. My impression is that either in the reporting or in the editing of the story (and I suspect the editing portion) there is a conscious effort to minimize and downplay the relation of the ballpark costs and future burdens. People are noticing, and it can only hurt the N-H's cred and eventually its bottom line when people cancel subscriptions. Bias is one thing. Omitting facts and reality is something far more serious.

The other thing about this piece, is that you now see council members openly attacking and turning on former Mayor Dan DiLiberto and Finance Director Jack Masterson.
"We are faced now with another $5 million we don't have," Councilman Ted Andrzejewski said. "That's really something. I'm just disgusted that the former mayor and finance director let this occur. They need to be held accountable."

"When the former mayor was saying no taxpayer money would be used to pay for the stadium, he was already using it."

Mayor George Spinner met with Lake County Prosecutor Charles Coulson and county Auditor Edward Zupancic on Friday to discuss the issue.

Coulson and Zupancic, along with county Treasurer John S. Crocker, sit on the county budget commission.

"I'm not sure exactly what our obligation is at this time," Spinner said. "We are trying to move forward and we keep having big setbacks. It's very frustrating, trying to get the community back on its feet."

Councilman Robert J. Mahler, who has been on council 10 years, said council relied on Masterson and county officials when it came to the tax budget.

"You just about totally rely on your finance director," Mahler said. "That's totally with the finance director and the county. You would think that between the two of them, they would figure something out, but I don't assume anything anymore."

Because residents will need to be reimbursed, the State Planning and Supervision Committee overseeing the city's finances will need to take the loss into consideration, said City Council President Chuck Hillier.
The Council knows that they have to distance themselves as quickly as possible. Councilwoman Curtis must be sweating about the recall in November. Right now, I'm guessing she is toast.


(Copyright © 2002-2005 Chas Rich All rights Reserved.);
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