Online Public Notice Bill Rocks the Boat in Illinois

   By Diane S.W. Lee (Illinois Statehouse News) - 3/28/11  - All of those public notices printed in the newspaper will stay put, at least for now.
    House Bill 1869 proposed to move public notices printed in newspapers to local government and school district websites. The plan is stuck in House Rules Committee, traditionally known as a death sentence for legislation.
    As chief sponsor, state Rep. Frank Mautino, D-Spring Valley, said his proposal was meant to spark discussion.
    “It gave both parties, both sides of the argument, a reason to come and talk and see how they could make the notice requirements better,“ Mautino said, “while still requiring, and allowing for transparency, but possibly saving some money in the process for those that are required by the laws to report.”
    Local governments and school districts must print public notices in local newspapers to announce any action using tax dollars, such as upcoming public meetings or bids for government contracts. Under the proposal, the notices would still have to publish a note in a newspaper to refer readers to a website where the public notice is posted.
    But the shift could mean less money for newspapers, which have been struggling financially in recent years. Local governments only would have to buy and print a small reference, not the larger and more expensive full public notice.
    The Illinois Press Association, which represents roughly 480 newspapers statewide, opposed the measure. Josh Sharp, the association’s director of government relations, disagrees with the idea to move notices from newspapers to government websites.
    “That theory of how this process will work is dead,” he said. “We seem to be moving on now towards somehow finding some middle ground in terms of reformatting some notices and maybe combining notices.”
    Sharp said he hopes the plan will turn into a “cleanup effort” to change the consistency in size and formatting of public notices.
    State Rep. Michael Tryon, R-Crystal Lake, agreed the plan needs to be worked on “at length” to address some concerns of the media and public interest groups.
    “There are lots of different types of notices that could be reshaped, reformatted and provide better information,” he said.
    Tryon, a co-sponsor of the plan, said more people are turning to the Internet for news and information.
    “It shouldn’t be considered as an attack on the freedom of information at all,” Tryon said. “I think that the people that are working on it are trying to make it easier to access information.”
    David Morrison, deputy director of Illinois Campaign for Political Reform, said the information about what local school boards and local governments are planning would not disappear under the proposed law. He points out that a lot of people are looking to their computer for information, and the public information would be included.
    "There would still be a notice in the newspaper," Morrison said. "But getting it onto the Internet where Google or any Web crawler that could get a hold of it might make it more accessible to the public."
   Story courtesy of Illinois Statehouse News (originally posted 3/25/2011).

High Gas Prices Destroy Consumer Confidence

   NEW YORK - (BUSINESS WIRE) - 3/24/2011 - Consumer confidence in the U.S. fell last week to the lowest level since August of 2010 as more Americans became despondent over the economy.
   The Bloomberg Consumer Comfort Index dropped to minus 48.9 in the period to March 20 from minus 48.5 the prior week. The measure of the current state of the economy slumped to a 15-month low.
    The highest gasoline prices in more than two years weighed on families already dealing with rising grocery bills. The report showed confidence among households with annual incomes exceeding $50,000 fell to the lowest level since March 2010, representing a risk to consumer spending, the biggest part of the U.S. economy.
   For full CCI results, see: http://www.bloomberg.com/cci
   “Given the rise in fuel and food costs, households are clearly indicating frustration over the need to reduce discretionary spending to meet demand for basic necessities,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Even better-off households are feeling the pinch of rising prices, primarily at the pump.”
   A report from the Labor Department March 24 showed the number of Americans applying for unemployment insurance fell last week. Orders for U.S. durable goods, meant to last at least three years, decreased in February, according to figures released by the Commerce Department.
    Stocks rose on optimism European leaders will be able to find a solution to the region’s debt crisis. The Standard & Poor’s 500 Index increased 0.3 percent to 1,301.5 at 9:40 a.m. in New York.
    The Bloomberg Comfort Index, with records dating back to December 1985, fell to a record low of minus 54 in November 2008, while the peak of 38 was reached in January 2000. Readings averaged minus 45.7 last year.
    The latest results for the comfort index reflected worsening results for one of the three components.
    A gauge of Americans’ views of the economy fell to minus 86 last week, the lowest level since December 2009, from minus 80.3 the prior week. The share of households with a positive view of the economy dropped to 7 percent from 10 percent.
   The measure of personal finances improved to minus 5.5 last week from minus 7.7, the report showed. Forty-seven percent of those polled held positive views on their financial situation, up from 46 percent the previous week.
    The buying-climate index rose to minus 55.1 from minus 57.4. Those saying it was a good time to buy needed items climbed to 23 percent from 21 percent.
    Today’s report showed the strengthening labor market is doing little to lift consumers’ moods. The confidence index for Americans with full-time jobs fell to minus 38.4 last week, the lowest level since August, while it improved for those who were unemployed.
    Jobless claims declined by 5,000 to 382,000 in the week ended March 19, Labor Department figures showed today, in line with the median forecast of economists surveyed by Bloomberg News. The total number of people receiving benefits dropped to the lowest level in almost three years.
    Sentiment among women dropped last week to the lowest level since October 2009, the comfort report also showed.
    Although elevated, little change in fuel costs last week may have prevented the comfort index from dropping even more.
    The average price of regular gasoline at the pump was $3.55 a gallon on March 20, compared with $3.56 a week earlier, the highest since October 2008, according to AAA, the nation’s biggest motoring organization. The price jumped 39 cents in the three weeks ended March 13.
   “Consumer confidence paused this week after a two-week rout, continuing to march in time with the price of a gallon of gasoline,” Gary Langer, president of Langer Research Associates LLC in New York, which compiles the index for Bloomberg, said in a statement. At the same time, the index is “uncomfortably near its historic low” of minus 54, he said.
    Gasoline prices and the comfort index have shown a strong inverse correlation since 2004, according to calculations by Bloomberg economist Brusuelas. Additionally, changes in the four-week average of claims for jobless benefits have been in sync with the comfort gauge about 72 percent of the time.
    Americans are paying more for staple food items like cereal, and costs may climb further in the next few months.
   “In recent months we have announced a variety of pricing actions across our businesses,” Ken Powell, chief executive officer of General Mills Inc., the maker of Cheerios, said yesterday on a conference call. “Food manufacturers are managing through a period of rising and volatile costs for food ingredients and energy.”
    The Bloomberg Consumer Comfort Index is based on responses to telephone interviews with a random sample of 1,000 consumers aged 18 and over. Each week, 250 respondents are asked for their views on the economy, personal finances and buying climate; the percentage of negative responses is subtracted from the share of positive views and divided by three. The most recent reading is based on the average of responses over the previous four weeks.
    The comfort index can range from 100, indicating every participant in the survey had a positive response to all three components, to minus 100, signaling all views were negative. The margin of error for the headline reading is 3 percentage points.
    The responses are broken down by participants’ sex, age, income level, race, region of residence, political affiliation, marital and employment status.

Former Bank President, Loan Officer Indicted

   ATLANTA – 3/21/2011 – An indictment unsealed on March 21 charges two former top officers of FirstCity Bank of Stockbridge, Ga., Mark A. Conner, 44, formerly of Canton, Ga., and Clayton A. Coe, 44, of McDonough, Ga., with a variety of offenses including conspiracy to commit bank fraud and bank fraud in connection with misconduct at FirstCity Bank in the years before the bank’s seizure by state and federal authorities on March 20, 2009.
   In addition to the conspiracy and bank fraud charges, the indictment charges Conner with conducting a continuing financial crimes enterprise at the bank between February 2006 and February 2008, during which Conner’s and his co-conspirators’ crimes allegedly generated over $5 million in unlawful gross proceeds.
   A federal grand jury in Atlanta returned the sealed indictment against Conner and Coe on March 16, 2011.  Conner was arrested on the charges and taken into custody by federal agents at Miami International Airport yesterday morning, the two-year anniversary of FirstCity Bank’s failure, upon his arrival in Miami from the Turks and Caicos Islands in the West Indies. Conner made his initial appearance today before a federal magistrate judge in Miami, who ordered Conner to be detained as a flight risk pending his transfer by Deputy U.S. Marshals from Miami to Atlanta for trial. A formal detention hearing will take place in Miami on Thursday, March 24, 2011, at 1:30 p.m. Coe’s initial appearance on the indictment in the Northern District of Georgia has not yet been scheduled.
   “The entire country has felt the deep economic impact of failed banks. At the heart of this indictment is an abuse of power by key insiders, who are charged with tricking their own colleagues into approving millions of dollars in commercial loans to fund the defendants’ own personal business activities, and to enrich themselves at the bank’s expense,” said U.S. Attorney Sally Quillian Yates. “Along the way, these defendants also allegedly defrauded state and federal bank regulators and examiners, and at least ten other federally-insured banks in Florida and Georgia that invested in the fraudulent multi-million dollar loans.”
   Internal Revenue Service (IRS) – Criminal Investigation Special Agent in Charge Reginael McDaniel said of the case, “Honest and law abiding citizens are fed up with the likes of those who use deceit and fraud to line their pockets with other people’s money.  Those individuals who engage in this type of financial fraud should know they will not go undetected and will be held accountable.”
   According to the charges and other information presented in court: Conner served in a variety of top positions at FirstCity Bank between 2004 and 2009, including as vice chairman of the board of directors, as a member of the banks’s loan committee, as president, and later as acting chairman and chief executive officer.
   Coe served as a vice president and as FirstCity Bank’s senior commercial loan officer.  While serving in these positions, Conner, Coe and their co-conspirators allegedly conspired to defraud FirstCity Bank’s loan committee and board of directors into approving multiple multi-million dollar commercial loans to borrowers who, unbeknownst to FirstCity Bank, were actually purchasing property owned by Conner or Coe personally. 
   The indictment charges that Conner, Coe and their co-conspirators misrepresented the essential nature, terms and underlying purpose of the loans and falsified documents and information presented to the loan committee and the Board of Directors.  Conner, Coe and their co-conspirators then allegedly caused at least 10 other federally-insured banks to invest in, or “participate in” the fraudulent loans based on these and other fraudulent misrepresentations, shifting all or part of the risk of default to the other banks.  Coe’s bonus compensation was tied to the origination of FirstCity Bank loans, including the fraudulent loans with which he and Conner allegedly assisted each other.
   In the process of defrauding FirstCity Bank and the “participating” banks, Conner, Coe and their co-conspirators allegedly routinely misled federal and state bank regulators and examiners to conceal their unlawful scheme.  They also unsuccessfully sought federal government assistance through TARP and engaged in other misconduct in an attempt to avoid seizure by regulators and prevent the discovery of their fraud.
   The charge against Conner for conducting a continuing financial crimes enterprise carries a mandatory minimum sentence of 10 years in federal prison, a maximum sentence of life in prison, and a potential fine of up to $10 million.  The conspiracy and bank fraud charges against Conner and Coe, and a remaining charge against Coe for fraudulently influencing the actions of a federally-insured bank, carry a maximum sentence of 30 years in prison and a potential fine of up to $1 million on each count.  In determining the actual sentences for each defendant, the Court will consider the U.S. Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.
   “Today’s indictment marks yet another occasion where bank executives are alleged to have turned to criminal fraud in the midst of the financial crisis, including an attempt to obtain millions of dollars from the American taxpayer through the Troubled Asset Relief Program (TARP),” said Neil Barofsky, Special Inspector General for the Troubled Asset Relief Program (SIGTARP). “SIGTARP will continue to work with our law enforcement partners to bring those who engage in such crimes to justice.”
   Members of the public are reminded that the indictment only contains charges.  The defendant is presumed innocent of the charges and it will be the government's burden to prove the defendant’s guilt beyond a reasonable doubt at trial.
   This case is being investigated by Special Agents of the FDIC, Office of Inspector General; the Office of the SIGTARP; the FBI; and the IRS – Criminal Investigation.
   Assistant U.S. Attorneys Douglas W. Gilfillan and David M. Chaiken are prosecuting the case.
   Source: U.S. Department of Justice release.

State board reports 2,000 teacher layoffs in 2010

   By Diane S.W. Lee (Illinois Statehouse News) — 3/21/2011 — More than 2,000 Illinois public school teachers got pink slips last year, and superintendents claim state budget cuts and late state aid payments are to blame.
   The Illinois State Board of Education last week released its annual report of school districts statewide, showing public schools in 2010 laid off a total of 2,102 tenured and non-tenured teachers. That was 664 more layoffs than in 2009.
   However, 42 other school districts did not submit data last year, including the Chicago School District, meaning the number of teacher layoffs are likely higher than reported, according to ISBE spokeswoman Mary Fergus.
    “We know that it can mean a little less attention in the classroom,” said Fergus. “It can mean students aren’t getting access to some really great instruction that can enhance their education.”
The report also shows that since 2008, tenured and non-tenured teaching positions that were eliminated had increased from 39 percent to 66 percent in 2010. More non-tenured teachers were shown the door than tenured ones last year than in previous years.
    Schools are getting less money and are having to lay off teachers as a result of budget cuts, Fergus said.
    “General state aid has gone out on a timely basis, but a lot of the mandated categorical payments have been delayed,” Fergus said. “We’ve been running about a billion dollars behind in some of those payments at the state level, because of this very national recession that we’re in.”
   General state aid is the state’s largest education funding program, and categorical aid is state and federal money given to local school districts for special education programs.
   Crystal Lake School District lost more than $5 million in state funding in the past few years, said chief financial officer Susan Harkin. 
    “We certainly don’t have other avenues to really go out and raise more money, and certainly we aren’t in an environment to raise taxes, specifically, because that seems to be the only place we can go to,” Harkin said. “And for our situation, when we are 75 percent of budget in salaries and benefits, you really have to look at that line item to find some significant reductions to offset that larger loss in revenue.”
   As a result, the school district had to reduce staff by offering early retirement to teachers and leaving those positions unfilled, Harkin said. Fifteen teachers took early retirement last year, and 22 more positions will be left unfilled this year, she said. The district’s school board worked closely with the teachers’ union to freeze pay this year to prevent future reductions, she said.
    “Had they not worked with us to negotiate what we felt was a fair contract,” Harkin said, “we would have had to get into the layoff mode that a lot of school districts are in right now.”
   Kaneland Community School District had to work hard to prevent layoffs last year, because six non-tenured support positions were cut in 2009, said Superintendent Jeff Schuler.
   “Last year, we did reduce a number of folks, but then we worked with our teachers’ union to restructure the salary agreement,” Schuler said. “And, so that wound up preserving the jobs last year.”
    The school district can withstand late payments, he said, but budget cuts are more harmful because it is harder to replace lost revenue.
    “Quite honestly we already run on a pretty lean and a pretty efficient budget,” Schuler said. “And so anytime that we learn that we are going to get less revenue in the next year, that’s not going to be good for us, there’s no doubt about it.”
   Story courtesy of Illinois Statehouse News. Originally published 3/18/2011

Hedge Fund Adviser Confesses to Ponzi Scheme

   NEW HAVEN, Conn. – 3/16/2011 - Three men have been charged with various offenses stemming from a scheme to defraud investors and creditors of Fairfield County, Conn., hedge funds managed by one of the defendants, Francisco Illarramendi, 42, of New Canaan, Conn., announced David B. Fein, U.S. attorney for the District of Connecticut, and Kimberly K. Mertz, special agent in charge of the New Haven Division of the FBI.  As a result of the scheme, the investors and creditors of Illarramendi’s funds face potential losses of hundreds of millions of dollars.
   On March 7, Illarramendi waived his right to indictment and pleaded guilty before U.S. District Judge Stefan R. Underhill in Bridgeport, Conn., to two counts of wire fraud, one count of securities fraud, one count of investment advisor fraud and one count of conspiracy to obstruct justice, to obstruct an official proceeding and to defraud the U.S. Securities and Exchange Commission (SEC).
   On March 3, 2011, special agents from the New Haven, Conn., and Miami Divisions of the FBI arrested Juan Carlos Guillen Zerpa, 43, and Juan Carlos Horna Napolitano, 40, in Florida on federal criminal complaints charging each with engaging in a conspiracy to obstruct justice, to obstruct an official proceeding and to defraud the SEC.  Guillen is an accountant and a citizen of Venezuela, and Horna is a Venezuelan citizen living in Pembroke Pines, Fla.
   According to court documents and statements made in court, Illarramendi acted as an investment adviser to certain hedge funds.  Around 2006, one hedge fund he advised lost millions of dollars of the money he was charged with investing.  Rather than disclose to his investors the truth about the losses incurred, Illarramendi intentionally chose to conceal this information by engaging in a scheme to defraud and mislead his investors and creditors to prevent the truth about the losses from being discovered.  As a result of this scheme, the hedge funds and related entities managed and advised by Illarramendi currently have outstanding liabilities that greatly exceed the true value of their assets.
   “This investigation has revealed that Francisco Illarramendi operated a massive Ponzi scheme that has defrauded foreign investors of hundreds of millions of dollars,” Fein stated. “While the precise dollar losses will not be known for some time, based on this fast-moving investigation, we believe this case represents the largest white-collar prosecution ever brought by this office.  I want to commend the FBI and the SEC for their forceful pursuit of this fraud, and for their partnership in the Connecticut Securities, Commodities and Investor Fraud Task Force, which is actively investigating this and other financial fraud schemes.”
    From approximately 2006 to February 2011, Illarramendi engaged in a scheme to defraud his investors, creditors and the SEC by creating fraudulent documents, including a bogus debt instrument and a phony letter purporting to have been issued by an investment bank, as well as a fictitious asset verification letter falsely representing that one of the hedge funds, the Short Term Liquidity Fund (STLF), had at least $275 million in credits as a result of outstanding loans, when Illarramendi and others knew it did not have any such credits.  In addition, Illarramendi misled investors, creditors and the SEC about the true performance of the funds, the assets under management by the funds and the transactions being conducted by the funds and related entities.
   In pleading guilty, Illarramendi admitted that he used money provided by new investors to the funds to pay out the returns he promised to earlier investors, created fraudulent and misleading documents related to the funds’ assets, made false representations to his investors and creditors in an effort to obtain new investments from them and to prevent them from seeking to liquidate their investments, improperly commingled the investments in each individual hedge fund with investments in the other hedge funds and engaged in transactions that were not in the best interests of the funds and agreed to pay kickbacks to persons connected with those transactions.
   For example, on one occasion around 2008, Illarramendi created a fraudulent letter that purported to be a representation by an investment bank that assets of the funds and related entities were segregated from one another at the investment bank.   Illarramendi created the letter by using the letterhead of the investment bank.  Today, Illarramendi admitted that this document, which he sent from Connecticut to numerous foreign investors, was false.  Also in 2008, Illarramendi sent an e-mail to a creditor attaching a bogus debt instrument, which purported to be a credit linked note issued by the same investment bank with a face value of $30 million.  This document, too, was fabricated by Illarramendi.
   In addition, in 2010, Illarramendi used approximately $53 million from two funds he managed and controlled by transferring the money to entities affiliated with the Michael Kenwood Group LLC (MK Group), an entity that he also controlled, without disclosing the use of this money to all of the investors.
   Thereafter, in an effort to generate a sufficient return to fill the hole in the funds’ assets, Illarramendi used the approximately $53 million to invest in private equity companies.  The investments were made in the name of entities affiliated with the MK Group, and not in the name of the funds.
   Beginning in 2010, the SEC sought information and documentation from Illarramendi and the MK Group.  As part of its enforcement authority, the SEC served a subpoena for records upon, among others, MK Group.  In December 2010 and January 2011, the SEC conducted an enforcement-directed review of MK Group and related entities as part of its official enforcement investigation.  On Jan. 14, 2011, the SEC filed a civil action (SEC v. Illarramendi, et al., 3:11-CV-00078), seeking, among other things, to enjoin Illarramendi and entities related to MK Group from violating the federal securities laws and to submit an accounting of investor funds.  Subsequent to the filing of the SEC civil action, U.S. District Judge Janet Bond Arterton appointed, and sought input from, business advisers and a receiver to ascertain the assets and liabilities of the hedge funds affiliated with MK Group, among other tasks.
   In connection with the SEC investigation, Illarramendi, Guillen and Horna allegedly conspired to obstruct the SEC and the filed court action.  As set forth in court documents, with the assistance of Guillen and Horna, Illarramendi gave the SEC a fictitious asset verification letter.  That document represented that STLF had at least $275 million in credits as a result of outstanding loans to various companies.  Illarramendi has admitted that this representation was false: STLF had not made those loans and was not owed that money.
   Illarramendi has admitted that he agreed to pay Guillen and Horna more than $3 million for fabricating the letter and creating false support for the $275 million in loans.  It is alleged that on Jan. 24, 2011, $1 million was wired from a Swiss bank account to an account allegedly associated with Horna.  Court documents reveal consensual recorded telephone calls and other communications in which Guillen and Horna allegedly agree to create documentation so that the companies that purportedly owe the money would support the story if contacted by the SEC.  Further, it is alleged that, in January 2010, Guillen personally spoke to the SEC, told them that he had been asked to verify the existence of the loan portfolio, and reported that he had spoken to all of the companies and had begun receiving confirmation from them.  In pleading guilty, Illarramendi admitted that he and others conspired to obstruct the SEC investigation and civil court proceedings by creating and fraudulently attempting to substantiate a list of fictitious assets.
   When he is sentenced, Illarramendi faces a maximum term of 70 years in prison, fines, restitution for the full amount of the losses suffered by investors and creditors and forfeiture of assets.  A sentencing date has not been scheduled.
   Guillen and Horna are each charged with one count of conspiracy and one count of obstruction of an official proceeding.  They are both detained.  If convicted of the charges in the criminal complaint, Guillen and Horna each faces a maximum term of 25 years in prison.
U.S. Attorney Fein stressed that a complaint is only a charge and is not evidence of guilt.  Charges are only allegations, and each defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
   This matter is being investigated by the FBI with the assistance of the SEC, Boston Regional Office.
This case is being prosecuted by Senior Litigation Counsel Richard J. Schechter and Assistant U.S. Attorney Paul A. Murphy.
   U.S. Attorney Fein also acknowledged the substantial assistance provided by the U.S. Attorney’s Office for the Southern District of Florida.
   In December 2010, the U.S. Attorney’s Office and several law enforcement and regulatory partners announced the formation of the Connecticut Securities, Commodities and Investor Fraud Task Force, which is investigating matters relating to insider trading, market manipulation, Ponzi schemes, investor fraud, financial statement fraud, violations of the Foreign Corrupt Practices Act, and embezzlement.  The Task Force includes representatives from the U.S. Attorney’s Office; FBI; Internal Revenue Service – Criminal Investigation; U.S. Secret Service; U.S. Postal Inspection Service; U.S. Department of Justice’s Criminal Division, Fraud Section and Antitrust Division; SEC; U.S. Commodity Futures Trading Commission; Office of the Special Inspector General for the Troubled Asset Relief Program; Office of the Chief State’s Attorney; State of Connecticut Department of Banking; Greenwich, Conn., Police Department and Stamford, Conn., Police Department.
   Citizens are encouraged to report any financial fraud schemes by calling the FBI toll free, 855-236-9740, or by sending an email to ctsecuritiesfraud@ic.fbi.gov.
   Source: U.S. Department of Justice release

In Illinois, recording a cop is considered felony

   By Andrew Thomason (Illinois Statehouse News) — 3/14/2011 — If you're thinking about recording police or other law authorities working in Illinois, you better think twice. It could cost you 15 years in prison.
    Take the case of Sekiera Fitzpatrick. She was taken into custody for hiding a fugitive in her Danville home when she found out the hard way that taking a video or making a sound recording of an on-duty law enforcement official without permission is illegal.
   Fitzpatrick was arrested in July after Anthony Edwards, who was wanted on a warrant, used her apartment to hide from the police. Police said they responded to the apartment after receiving a tip. Before she was put in handcuffs, officers allowed Fitzpatrick to call her mother. But instead of making the phone call, she used her phone to record her arrest.
   Officer Eric Olson noticed Fitzpatrick was filming him and others, he told her that she didn’t have his permission to film or record him or other officers on audio.
    “I advised her she was going to be charged with eavesdropping for that,” Olson said in court according to records.
    That charge tripled the amount of prison time Fitzpatrick is facing because in Illinois recording an on-duty police officer without their permission carries with it the possibility of serving 15 years behind bars.
    Illinois’ penalty for knowingly recording audio of anyone without their consent is Class 4 felony. It is punishable by up to three years in prison. When someone like Fitzpatrick decides to record law enforcement performing their job, the charge gets ratchet up to a Class 1 felony and carries with it a maximum sentence of 15 years in prison. A Class 1 felony is the same class as someone who is charged with for having more than 11 pounds of marijuana.
    “Illinois is virtually unique in making it a crime to record on-duty police officers. That’s because of …, what I would say, is a defect in our eavesdropping act that other states and federal eavesdropping acts don’t have, which is we’ve extended the ban on eavesdropping from just private conversations to all conversations, whether or not they are private,” said Adam Schwartz, the senior lawyer for Illinois’ American Civil Liberties Union.
    Only two other states – Massachusetts and Oregon – have similar eavesdropping laws. Illinois’ statute referring to recording officials was enacted in 1994. An attempt to roll back the law 11 years later failed in the General Assembly.
   The ACLU is trying to get the law declared unconstitutional in federal court, claiming it violates the U.S. Constitution’s First Amendment. A favorable ruling by a federal judge would automatically trump any state law.
   The ACLU claims the ability to monitor and record on-duty police is tantamount to preventing police brutality and protecting civil rights.
    “For a small number of police officers, who are bending the rules and violating the constitutional rights of members of the public and then lying about it, the possibility that a civilian is going to make an audio/video recording of them, hopefully, will cause them to stop breaking the rules and be more honest,” Schwartz said.
    So far the ACLU hasn’t been successful in its attempts to get the law declared unconstitutional.
   While the ACLU opposes the law mainly from a civil liberties standpoint, some defense attorneys in the state look at it with a more practical view. They say the charge is excessive and can be used by prosecutors to stack charges on a suspect.
    “What they’ll do is they’ll add as many possible criminal charges as they can for the purpose of leverage," defense attorney Lewis Gainor said. "By adding a more serious charge to someone who is really not guilty of anything serious, you can leverage that in negotiations. You can basically coerce that defendant to pleading guilty to something because they always have the fear of the great offense.”
    Gainor was involved in such a case in 2007. The Cook County lawyer said his client in that case, Robin McDaniel, was going through a tough divorce, which included accusations of child abuse.
    Every time an allegation was made, the police would show up at McDaniel’s house. He would be detained, interrogated, and then let go because there wasn’t any evidence to back up the claims, according to Gainor.
“Eventually, he realized he’d been put through this hell, he decided he was going to try to protect himself, so he decided to record his interactions with the police,” he said.
  The police found out about McDaniel’s digital recorder during another encounter and charged him with a felony and a misdemeanor, both relating to eavesdropping. To avoid the possibility of jail time, McDaniel pleaded guilty to the misdemeanor in exchange for the state dropping the felony charge, according to Gainor.
    Is McDaniel’s case the norm? Is the state’s eavesdropping act a carrot on a stick that state’s attorneys use to convince people like McDaniel into accepting a lesser charge? Matt Jones, assistant director for administration at the Illinois office of the State’s Attorney Appellate Prosecutor, doesn’t think so.
    “The fact that it’s on the books means that it’s a tool in those cases where the facts warrant it," Jones said. "That’s like asking is a murder statute a useful tool for pursuing justice against those that commit homicide. The answer is yes, when the facts warrant it.”
    Jones said the charge is applied on a case-by-case basis, and isn’t automatically added to anyone who uses a cell phone to record police officers.
    “There are circumstances in each case where you have to look at everything. Every time a person dies doesn’t mean that it’s first-degree murder.”
    To hear Michael Allison talk his experience with Illinois’ eavesdropping act, though, it would seem he was talking about a murder charge.
    Allison said he was being harassed by an officer of the Robinson Police Department on Allison said was a “bogus” city ordinance violation while working on vehicles at his mother’s house in 2007.
    Then, over the course of two months, Allison recorded his interactions with the police four times. When he was slated to go to court for the ordinance violation, he asked for a court reporter. Allison’s request was denied, so he decided to take his Olympus DS-30 recorder into the court. He was confronted by Crawford County Circuit Court Judge Kimbara Harrel. The judge asked Allison if he was recording, and when Allison answered affirmatively, the judge told him he was going to be charged with eavesdropping.
    Each of those interactions, including the fifth and final one involving Harrel, turned into a Class 1 felony charge. Allison said he will fight his case in a jury trial, even though the Bridgeport resident is facing 75 years in jail.
    “In every instance I was just documenting my own words, and any instance of any kinds of threats, intimidation or harassment or any criminal activity on their part,” Allison said. “If you plea down to anything, you’re pleading guilty to something, and whatever that might be, I’m telling you I didn’t do anything wrong.”
    Fitzpatrick’s case, too, has yet to make a plea deal. At a hearing earlier this month — on the day that happened to be Fitzpatrick's 26th birthday — her case was set for a hearing on May 27. Her public defender declined to comment.
   Story courtesy of Illinois Statehouse News.

Could Illinois Benefit from Higher Pump Prices?

   By Diane S.W. Lee (Illinois Statehouse News) - 3/8/2011 - Illinois workers had to start paying more out of their pocket as a result of the state’s 67 percent income tax hike in January. Now, Illinois drivers are paying more out of their pocket at the gas pump.
   Political turmoil in the Middle East has created higher prices at gas pumps across the nation. But while drivers pay more at the gas pump, the state will pocket the money from the state’s gas sales tax, said Bill Fleischli, executive vice president of the Illinois Petroleum Marketers Association.
   “Usually when prices get up in this range in between $3.50 to $4 a gallon, I think you either see a flatness of volume or actually volume going down,” he said. “And on the sales tax side of things, the government will see an increase.”
   According to the Illinois Department of Revenue, the statewide tax on gasoline or gasohol is 19 cents per gallon, and 21.5 cents per gallon on diesel fuel.
   Revenue spokeswoman Sue Hofer did not have an estimate for the amount the state has collected in gas sales tax since the prices started climbing in late February. She said drivers will need to be more flexible.
   “How flexible is someone’s budget, and how flexible are their driving habits?” Hofer asked.
   According to AAA’s Daily Fuel Gauge Report, Illinois consumers are paying an average of $3.62 for a gallon of regular gasoline, up about 83 cents from a year ago. Statewide, consumers paid an average of $3.27 for regular gas a month ago, according to the report.
   When gas prices are high, people are more conservative with their finances, Fleischli said.
    “It stifles your spendable income you have,” he said. “They’ll go into our stores and still buy the things they need — milk and those kinds of things. But they won’t buy the soda pop and candy, things that are impulse buying. That seems to take a hi, when prices get higher than usual.”
   While regular drivers can absorb the cost of higher gas prices by driving less and carpooling more, truckers who drive for a living  may get hit with the cost at the pump, according to Don Schaefer. He is executive vice president of the Midwest Truckers Association, which represents 3,000 Midwest trucking companies.
   “Unfortunately in the trucking industry, in all transportation industries, it’s driven by the fact that you have to have goods and services moved from Point A to Point B on a timely schedule,” he said. “The consumer demands it. The shipper demands it. And there is really no option. You’ve got to make the delivery.”
   According to AAA, a gallon of diesel fuel in Illinois is costing on average $3.86 a gallon, up 90 cents from a year ago, and up 32 cents from a month ago.
   Story courtesy of Illinois Statehouse News. Originally published on 3/7/2011

Small Business Monthly Employment Index Up

   CLEVELAND -(BUSINESS WIRE) - 3/6/2011 - The February CBIZ Small Business Employment Index, a barometer for hiring trends among companies with 300 or fewer employees, increased by .25 percent through the month, after posting a decrease of 2.62 percent in January; almost a 3 percent upswing in net month over month. 
   “This month’s data shows a move back to positive hiring trends, after what we believed to be a seasonal decline in January. While the number isn't as high as we would like to see, it is representative of where we believe the cautious small business employer is as it relates to hiring,” CBIZ Payroll Services Unit President Philip Noftsinger said. “As we continue to move into 2011, the small business owner will continue to carefully watch demand factors and the overall economy to gauge whether the long-term investment in human resources is a safe bet.”
    Additional take-away points from the February data set include:
  • At-a-glance: The CBIZ Index focuses on hiring trends at small companies. The data shows that 24.7 percent of the companies surveyed increased payroll, while an additional 52.5 percent maintained headcount.
  • Large verses Small: Small businesses are often cited as the “engine of our economy,” as they create the majority of employment opportunities in the country. Large companies, described as those with more than 500 employees, often lag their smaller counterparts (small businesses and entrepreneurs) in terms of the speed of growth and hiring. This trend is expected to continue as the small business owner is able to stay nimble in the face of economic headwinds.
  • What to watch: While some might cheer any increase in hiring, and a gain against the high unemployment rate, additional layoffs at the federal level are likely coming in the months ahead as cost-cutting efforts are expected to begin in order to control the national deficit.
    “At present, small business owners are hesitant to take large risks as they continue to gauge needs of their customers, monitor big business activity in their backyards and what is to come next in terms of tax and healthcare policies,” Noftsinger said.
    Currently, CBIZ Payroll Services manages payroll services for approximately 3,000 businesses that employ fewer than 300 people. The sample reflects a broad array of industries and geographies corresponding to the markets across the United States where CBIZ provides services.


Nine people indicted in major credit union collapse

   CLEVELAND – 3/3/2011 - A 26-count indictment was filed against nine people accused of fraud that led to one of the largest credit union collapses in American history, the Department of Justice announced on March 2.
   St. Paul Croatian Federal Credit Union in Eastlake, Ohio, went into conservatorship and then forced liquidation in April 2010. That resulted in a $170 million loss to the National Credit Union Share Insurance Fund, making it one of the worst failures in history, according to a subsequent audit.
   “This was a major fraud perpetrated against shareholders, including by people whose job was to protect shareholders’ interests,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. “It constitutes self-dealing on the most outrageous scale.  We are committed to prosecuting everyone involved in this scheme, whether they are senior management of a financial institution or someone who submitted false loan applications.”
   Those charged, including their ages, residences and the charges filed against them are as follows:
DEFENDANT AGE ADDRESS CHARGES
Anthony Raguz 51 Mentor, Ohio One count bank fraud, One count bank bribery, Four counts money laundering
Koljo Nikolovski 48 Eastlake, Ohio 10 counts bank fraud, Three counts bank bribery, Five counts money laundering
Rose Ann Nikolovski 48 Eastlake Seven counts bank fraud, Three counts money laundering
Marko Nikoli 33 Eastlake Two counts bank fraud, One count money laundering
John Cendol, Jr. 48 Kirtland, Ohio One count bank fraud
Ruth Cendol 55 Kirtland One count bank fraud
Daniel Kocher 72 Euclid, Ohio One count bank fraud
Edward Watral 37 Creston, Ohio One count bank fraud
Jennifer Cerjan 33 Orrville, Ohio One count bank fraud
   The indictment alleges that Anthony Raguz was the chief operating officer of St. Paul and, in that capacity, he issued more than 1,000 fraudulent loans totaling more than $70 million to more than 300 account holders at St. Paul from 2000 to April 2010.
   “The St. Paul Federal Credit Union collapse resulted in one of the largest credit union failure ever investigated in U.S. history,” said Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland office. “This complex, large-scale investigation transcended international borders and will continue until all those involved are brought to justice.”
   The indictment also charges Raguz with corruptly accepting more than $500,000 in bribes, kickbacks and gifts from St. Paul customers who fraudulently obtained loans.  The indictment further charges Raguz with four money laundering counts for issuing checks totaling $371,800 drawn on his St. Paul account payable to The Vanguard Group.
   The indictment alleges that Koljo Nikolovski fraudulently obtained several loans from St. Paul and Raguz totaling approximately $2.9 million from 2003 through 2005 that were not repaid.  The indictment further alleges that Nikolovski was aided and abetted on some of those loans by Rose Ann Nikolovski, his ex-wife, and the other individuals named in the indictment.  Koljo Nikolovski was previously indicted in January on bank fraud and money laundering charges, and he is currently being held in pretrial detention.
   The indictment also charges Koljo Nikolovski with fraudulently obtaining several additional loans in 2009 totaling $2.7 million and failing to repay those as well.  The indictment further charges Nikolovski with corruptly giving Raguz $100,000 in exchange for Raguz approving and facilitating the fraudulent loans.
   The indictment also charges Nikolovski with five counts of money laundering, including the purchase of two Mercedes Benz automobiles for about $99,000 and $60,000, and a wire transfer of $2.3 million to a bank account in Skopje, Macedonia.  Nikolovski’s nephew, Marko Nikoli, is also charged with money laundering involving the purchase of the $60,000 Mercedes Benz.  Rose Ann Nikolovski’s is charged with three money laundering counts.
   If convicted, the defendants’ sentences will be determined by the court after review of factors unique to this case, including the defendants’ prior criminal records, if any, the defendants’ role in the offenses and the characteristics of the violations.
   An indictment is only a charge and is not evidence of guilt.  A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
   This case is being prosecuted by Assistant U.S. Attorneys John D. Sammon and Bridget M. Brennan, following an investigation by the Cleveland Offices of the FBI and the IRS-CI, with the assistance of the Eastlake Police Department.
    “It is Internal Revenue Service – Criminal Investigation’s responsibility when investigating financial institution fraud to focus on the flow of the money, which ultimately leads us to the beneficiaries of this illegal activity. This investigation cuts to the very core of the current economic crisis our nation faces,” said Jose A. Gonzales, IRS Special Agent in Charge.
   Source: Finance Fraud Enforcement Task Force

The Arms Debate

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