Senate Approved Surveillance Abuser as Federal Judge

The U.S. Senate informed the citizenry that most Congressional actions are simply for show in approving serial surveillance abuse Valerie Caproni as a Federal Judge for the Southern District of New York.  The Senate approved Caproni by a vote of 73-24. Loyal soldiers get their reward, even when they've been unjust.

I imagine during the vote Senator John McCain tweeted about his visit to the Gadhafi Ranch and played poker on his I-Phone. 

Update 9-19-13:   Private plaintiffs claim Iran owns part of 650 Fifth Avenue in New York and are legally pursuing forfeiture.  Who stands to make a bonanza in such a case?  Also, the Southern District of New York is the lynchpin for holding onto intrusive surveillance.

Auditing Governor Perry's Texas Enterprise Fund

Governor Rick Perry's Texas Enterprise Fund report to the Legislature is full of the same lies and misrepresentations regarding a $35 million TEF award to Vought Aircraft Aviation in 2004, then owned by The Carlyle Group.

How would you like to have $35 million in Texas taxpayer money for over six years and not have to provide a single new job, much less the 3,000 promised?  That's what Vought did under Carlyle Group ownership years.  In 2010 Carlyle monetized Vought via a sale to Triumph, just as their first TEF report to the state came due.

I wrote Representative Drew Darby with my concerns in 2009, believing he had influence via his legislative subcommittee assignments.  After Darby wrote me back about oversight provisions (or lack thereof), Governor Perry renegotiated the deal in secrecy as Carlyle worked behind the scenes to sell Vought.

Vought, Carlyle Group, the City of Dallas weren't the only ones over-promising and under-delivering.  The Standard Times reported on local TEF recipient Hirschfeld Steel

Hirschfeld Industries received $500,000 from the Texas Enterprise Fund in 2008. The San Angelo-based company was set to produce 225 full-time jobs by 2013 with an annual payroll of $8 million and to invest $40 million in a new plant and expansion.

That was when Hirschfeld Industries had partnered with Martifer to make wind towers, but since then Martifer, a Portuguese company, left Hirschfeld and its plant in West Texas.

According to the latest compliance report Hirschfeld submitted at the beginning of the year, the company had produced 37 of the 225 jobs promised, with an average salary of $35,000 to $39,000.

The latest version of the contract states that Hirschfeld must pay back $861 in damages per job that it is short. It can also roll over credits from years when the company creates more jobs than the contract specifies.

Hirschfeld Industries has paid $264,000 in damages, according to a governor’s office report.

When asked about working with the state, Hirschfeld deferred comment to the state.

Latest version of the contract?  Does that mean Rick Perry renegotiated this deal as well in 2010?

In 2008 Hirschfeld's private equity investors and owners pulled $28.2 million from the firm in partner distributions.  Since money is fungible, did TEF's $500,000 go straight out as partner distributions?

Both Vought and Hirschfeld have deep pocket private equity owners.  Both sought public subsidy for their operations.  Neither wants to speak to their failures to provide the promised jobs or how they profited from TEF grants.

The Texas Legislature repeatedly allowed the Governor's office to persist in its lies and misrepresentations.  A hapless media couldn't find Perry's bald faced untruths during his Presidential run.  Let's hope an auditor offers more in accountability than the Legislature or the media.  Both have been sorely lacking.

Government-Corporate Monstrosity Rewards Malfeasor Caproni

Politico reported:

TODAY IN CONGRESS – The Senate meets at 2 p.m. and at 5:30 p.m. votes on the nominations of Valerie E. Caproni and Vernon S. Broderick to be United States District Judges for the Southern District of New York.

The Guardian had this to say about Caproni:

A former senior FBI official implicated in surveillance abuses is poised to become a federal judge in one of the US's most important courts for terrorism cases. 

Caproni, the FBI's General Counsel from 2003-2011, lied to Congress with no consequences:

In an April 2008 House hearing, Caproni told lawmakers that if a phone number obtained from a telephone company using a nonjudicial subpoena ostensibly authorized by the Patriot Act was unrelated to a "currently open investigation, and there was no emergency at the time we received the records, the records are removed from our files and destroyed". 

In fact, the NSA, at the time of Caproni's testimony and today, stores phone records such as phone numbers on practically all Americans for up to five years, whether or not they are connected to an "open investigation". 

Caproni left "public service" to work for Northrop Grumman, a huge defense and intelligence contractor.  Northrop's latest 10-K stated:

We conduct the majority of our business with the U.S. Government, principally the Department of Defense (DoD) and intelligence community.

Northrop named her Vice President and Deputy General Counsel, Litigation and Investigations. 

Rather than face perjury for false testimony Caproni stands to land a federal judgeship, courtesy of President Obama's nomination.  How close did she get to that plum appointment in today's Senate meetings?

Employers Dump Retirees to Extend Health

Extend Health, a division of Towers Watson, is in the midst of an explosion in demand as employers race to drop retirees from their group insurance plans.

IBM got attention recently, but they follow a heralded list of employers.   Prior to its purchase by Towers Watson for $435 million, Extend Health filed for an IPO.  Their S-1/A stated:

Extend Health is a leading provider of health benefit management services and operates the largest private Medicare exchange in the United States. 

We have provided an effective alternative to traditional group Medicare health plans for over 150 private and public sector clients, including over 30 Fortune 500 companies such as Caterpillar, General Motors, Honeywell and Whirlpool, and we have helped hundreds of thousands of retirees and their dependents navigate to, evaluate and choose a health plan using our proprietary exchange platform and decision support tools. 

Employers are moving thousands of retirees from group health insurance plans to individual Medicare Advantage plans. Such plans have historically been the most profitable for health insurance companies. Extend Health exists to make this happen.

Our substantial revenue growth from fiscal 2009 to fiscal 2010 was driven by the successful transition of a group of General Motors’ retirees in fiscal 2009, resulting in a 202% year-over-year increase in active core members.

The addition of 110,000 IBM retired employees should drive another significant revenue boost and membership increase. 

The HIll reported IBM's move but it failed to mention a prominent retired Congressman, who served on Extend Health's board from 2009 to Towers Watson's purchase.  Rep. Dick Gephardt held nearly 57,000 shares of Extend Health.  The S-1/A stated:

Richard A. Gephardt has served on our board of directors since February 2009. Mr. Gephardt currently serves as President and Chief Executive Officer of the Gephardt Group, LLC, a multi-disciplined consulting firm, and as a consultant for The Goldman Sachs Group, Inc. since January 2005. Mr. Gephardt served as Strategic Advisor from June 2005 until April 2010 at the law firm of DLA Piper in the firm’s Government Affairs practice group.  

Gephardt serves as a director on the board of the Ford Motor Company, an auto manufacturer, Centene Corporation, a health care provider, CenturyLink, Inc., a communication services company, Spirit Aerosystems Holding Incorporated, a supplier of commercial airplane assemblies and components, and United States Steel Corporation. Mr. Gephardt previously served on the board of Dana Holding Corporation, an auto parts manufacturer and supplier, from January 2008 to March 2009.

Centene is a health insurance company which focuses on subsidized small employer and Medicaid coverage.

It's hard to find a board nowadays without an ex-Congressman or CMS chief on it.  Dr. Mark McClellan, head of the Center for Medicare/Medicaid from 2004-2006 sits on Extend Health's Advisory Board. 

The spate of employers dumping retiree health insurance will enrich corporations and their various ex-public servant board members and consultants.  What will it do to retirees?  I expect it to add more financial pain and complexity to their lives.

Frankly, Human Resource's selling these moves as "an opportunity for more flexibility, more choices, and the chance to customize plans" shows how far the HR bar has fallen.  I'd wager Towers Watson has draft language on positioning the dumping of retirees from employer group plans and that it says nothing about abdicating its longstanding commitments to workers.

The twisted part will come in increased Executive Incentive Compensation from dumping retirees.  It may take some time to work its way through the belly of the snake, but rest assured, it will.

IBM Dumps Retiree Health Insurance to Private Exchange

IBM will control the growth in retiree health insurance costs by ending retirees' enrollment in the company's employer-sponsored health insurance plans.  WSJ reported:

International Business Machines Corp plans to move about 110,000 retirees off its company-sponsored health plan and instead give them a payment to buy coverage on a health-insurance exchange, in a sign that even big, well-capitalized employers aren't likely to keep providing the once-common benefits as medical costs continue to rise.

The move, which will affect all IBM retirees once they become eligible for Medicare, will relieve the technology company of the responsibility of managing retirement health-care benefits. IBM said the growing cost of care makes its current plan unsustainable without big premium increases.

IBM will shift the growing cost of care to retirees:

IBM told retirees that its current retiree coverage will end for Medicare-eligible retirees after Dec. 31, 2013, according to documents reviewed by The Wall Street Journal and confirmed by IBM.

"Cost increases under our current retirement group health care plan are no longer sustainable for you," IBM said in the notices. "Health care costs under IBM's current plan options for Medicare eligible retirees will nearly triple by 2020, significantly impacting your premium and out of pocket costs," the notice said.

Instead of subsidizing retiree health premiums directly, IBM will give retirees an annual contribution via a health retirement account that they can use to buy Medicare Advantage plans and supplemental Medicare policies on the exchange, as well as pay for other medical expenses. Retirees who don't enroll in a plan through Extend Health won't receive the subsidy.

Echoing a common move in the pension arena, IBM turned a defined benefit health insurance benefit into a defined contribution plan, one with handcuffs.

Note that IBM received nearly $13 million in Early Retiree Reinsurance Program (ERRP) funds to "keep retiree health insurance more affordable."  Any obligations related to this money disappear on January 1, 2014. 

Cash rich IBM's move means the employer will do less, something I predicted when PPACA passed.  Will IBM's retirees be able to accommodate the extra burden for health care costs during retirement?  That remains to be seen.

Expect more companies, even municipal governments, to follow IBM's move.  Workers should expect to shoulder a greater portion of their retirement and health care.  The latest shedding of employer health insurance should come September 19 via the U.S. Census Bureau's American Community Survey.

Employers, like IBM, will do less, courtesy of Uncle Sam.  I don't trust Uncle Sam's promises to backfill, not given his empty pockets.  Workers are on their own, as evidenced by this recently released Census statistic.

22 percent of households experienced one or more possible "hardships" in fulfilling their basic needs in the previous 12 months. These hardships included difficulty meeting essential expenses, not paying rent or mortgage, getting evicted, not paying utilities, having utilities or phone service cut off, not seeing a doctor or dentist when needed or not always having enough food. 

Many are expected to lose a portion of their Social Security benefits to fund lower corporate tax rates for the IBM's of the world.  That's not justice, but Red and Blue love PEU "Just Us."  PEU affiliates need lower taxes and politicians aim to please. 

Update:  Time Warner Inc. did likewise. Energizer straight out eliminated their retiree health and life insurance benefit.  The City of Fort Worth plans to shift retirees to Medicare Advantage plans as well.  Newport News Shipyard, a division of Huntington Ingalls, shocked employees with their announcement.  An employee said in response, "Their word means nothing.  God knows how much more it's going to cost us." 

Carlyle Group Schooled Wanda Makes PEU Move with AMC Entertainment

The Globe and Mail suggested investors stay away from AMC Entertainment's upcoming IPO. 

AMC Entertainment Inc. is inviting investors to an initial public offering with back-row seats and no chance of buttered popcorn.

Reasons for spurning the IPO include AMC's already bloated debt position, the company's need for major capital investment for theater upgrades, shareholders getting less than standard voting rights.

The real mystery, then, is why Wanda doesn’t put the money in itself, rather than ask outsiders to underwrite its risky investment plan. The Chinese group’s revenue is 10 times that of AMC, and box office sales in China are still growing. If Wanda is reluctant to follow its investment, it’s hard to imagine a storybook ending to this movie.

Wanda's move is typical PEU, where storybook endings mean monetization at levels many times the initial equity investment.  An IPO is but one vehicle for PEU's to profit.  How much did Wanda charge AMC in management fees and how much did they pay themselves in special dividends and distributions? 

They can see in AMC Entertainment's books the tools JPMorgan, The Carlyle Group and Bain Capital used to pull money out of AMC.  My guess is this is a form of Chinese PEU imitation.   It has the odor of many PEU deals.

Hillary & Bill's Upcoming PEU Events

WaPo reported on Hillary's talk at the Carlyle Group Investor Annual Meeting which begins September 9th:

$200,000 That is what Carlyle Group is paying former secretary of state Hillary Clinton to speak at its annual investor conference in Washington next week. (Politico reported the engagement earlier.) Private equity has been very, very kind to the Clintons. Last year, Carlyle paid a similar amount to Hilary’s husband, former president Bill Clinton.

President Bill Clinton privatized USIS, the government department that ran security checks.  The Carlyle Group made big money from holding an ownership stake in USIS from 1999 to 2007.

Hillary recently spoke to KKR's investor group for $200,000.  KKR is another private equity underwriter (PEU).

Next up for the PEU Clintons is the other CGI, Clinton Global Initiative Annual Meeting vs. that of Carlyle Group Investors.  Interestingly, the Clinton Global Initiative confessed to handling money poorly, personally enriching the Clinton's close contacts.  America's Royal Bubba Family will headline their CGI event which runs from Monday, September 23 to Thursday September 26 in New York City.

Directly following CGI 2013 is an event Bill Clinton headlined last year, the Concordia Kids Summit. 

How many CGI members will head from the Closing Plenary to the NYSE for Concordia's welcome reception on Thursday afternoon?  Bill was the draw last year.  It's not clear who will fill his role in 2013.

Concordia will announce a number of major speakers, including our keynote speaker, over the coming weeks. Our confirmed speaker list includes a number of current and former Heads of State as well as business leaders from Fortune 500 companies and small and medium enterprises.

It'd be too much to ask for Hillary to speak at Concordia 2013, given Concordia is the Red version of public-private partnerships.  Nevertheless, Red and Blue love PEU.

Update 9-23-13:  FireDogLake didn't like the smell of CGI either.