The Connected Class con

In Congress, relatives lobby on bills before family members

Labor big a real heavy sleeper

Just another doze at the office for union’s ‘scarf-&-snore’ prez

IT’S A DREAM JOB: Mark Rosenthal, who pulls in $156,000 a year as head of Local 983 of District Council 37, nods off at his desk during one of a series of postlunch naps that have outraged members of the union’s executive board.

600 Long Island Rail Road Retirees to Lose Disability Pay in U.S. Inquiry

For a working schlub who commutes from the suburbs, the Long Island Rail Road disability scandal of 2008 was powerful evidence that the game of life is rigged.

Hundreds of railroad employees — engineers to white-collar managers — would retire in fine health as early as 50, then become instantly and lucratively disabled. If they took their phantom neck and back pain to the right doctor and to an obscure federal railroad board that almost never said no to a disability claim, the checks would start to flow. The daily grind turned into daily golf.

The scheme cost taxpayers more than a quarter of a billion federal dollars from 2000 to 2008. It also gouged the L.I.R.R., which had to pay for all those early retirees’ pensions and for overtime and training new employees. What was most shocking about this gravy train was how many L.I.R.R. employees were on it. Every year from 2000 to 2008, between 93 percent and 97 percent of employees over 50 who retired with 20 years of service got disability payments. Experts had to wonder what other workplace, besides the gulag, crippled so many of its workers.

$822,000 Worker Shows California Leads U.S. Pay Giveaway

Another double-dipper. Is this OK or not?
12/11/12 at 5:32pm by Kimball Perry

Could you get this kind of a deal in the public sector?

You’re 49 years old, you have 30 years in the retirement system, you make $78,600 annually with a high school diploma and your bosses are going to let you retire so you don’t lose automatic retirement pay increases and then hire you back at the same job so your total income will be over $110,000.

That’s exactly what is happening as Hamilton County’s Municipal Court judges appear to be helping out Andy Gillen, the Municipal Court (misdemeanors) administrator. Gllien said he also is a member of the Hamilton County Republican Party.

Municipal Court Judge Russell Mock said an entry is being circulated among the 14 Municipal Court judges that will allow Gillen to retire and then be rehired, or “double-dip.” Not all judges will sign the entry allowing it.

“It makes us look bad to the voting public,” Municipal Court Judge William Mallory, Jr., said, noting that assistant Common Pleas Court Administrator Bill Schoenfeld wasn’t allowed to double-dip.

“We need a policy that is a consistent policy,” Mallory said. “It creates bad blood.”

Despite that, Mock is championing Gillen’s double-dip by personally walking around to the other judges the entry that would allow it. Mock said if Gillen didn’t retire now, he would lose the automatic 3 percent increase now given to those vested in the Ohio Public Employees Retirement System.

Gillen said he never has contributed to Mock’s political campaigns or worked on Mock’s campaigns.

“He’s by far the most qualified person for the position,” Mock said of Gillen. Gillen has a special certification from the National Center of State Courts. But he doesn’t have a college degree or a law degree like Mike Walton, the previous Common Pleas (felony) Court Administration who retired three months ago, or Patrick Dressing, the current Common Pleas Court Administrator.

Gillen’s current $78,600 annual salary means he will get an annual pension of about $52,000 per year. When he is rehired 60 days after he retires, his new salary will be $59,000. That’s dirt cheap, both Mock and Gillen said, and a savings to taxpayers.

Gillen’s attempt to double-dip – it’s unclear if Mock will get the eight judge’s signatures that will make the double-dip an official judicial order – comes after Common Pleas Court Judge Ralph “Ted” Winkler last week allowed retired court reporter Deb Wallace to double-dip. She is the wife of Vince Wallace, Ted Winkler’s best friend. Vince Wallace works for Tracy Winkler, the judge’s wife. That created a stink because other court reporters have asked to double-dip and almost all have been turned down.
I’ll be updating this if Gillen is allowed to double-dip to tell you which judges voted for it and against it.

What do you think about double-dipping? Let us know.

There’s a word for this, it’s called: corruption. And there is a corollary: no accountability.

Ex-Board of Regents president got lots of perks
Bill Cummings
Updated 12:22 am, Friday, December 7, 2012

HARTFORD — Despite being paid $455,000 in 13 months, Connecticut’s former Board of Regents president charged taxpayers nearly $400 for gourmet coffee and a yearly subscription to Sirius XM radio so he could stay tuned-in while driving around in his free state car, among other perks.

Robert Kennedy also scarfed up about $1,800 in meals, including a $350 dinner with Gov. Dannel P. Malloy‘s former chief of staff Tim Bannon. And he charged $3,000 to a Exxon Mobil gas card and spent $78 on flowers for a staff member.

He was even reimbursed for highway tolls as low as 80 cents.

A review of Kennedy’s expenses by Hearst Connecticut Newspapers shows a never-ending flow of spending by the former president of the state Board of Regents for Higher Education.

“You just made my head explode,” said state Rep. Roberta Willis, D-Torrington, co-chair of the Legislature’s Higher Education Committee, when told of Kennedy’s spending. “You are talking to a person who makes $32,000 a year (as a part-time legislator) and works how many hours and you are telling me that someone who made almost $500,000 charged taxpayers $400 for gourmet coffee?”

Kennedy resigned in disgrace in October after nearly $300,000 in controversial raises were doled out to office staff without BOR approval. Outrage from lawmakers and others spilled from newspaper headlines for weeks.

Records obtained by Hearst through a freedom of information request detail hundreds of different types of expenses for which Kennedy was reimbursed beyond his base salary, including dinners, lunches, office supplies, internet equipment, gasoline, hotel rooms and an education conference.

Just $2,264 worth of Kennedy’s receipts were rejected by the BOR, and that happened only after Hearst Newspapers asked questions about a confusing accounting system the BOR used to reimburse its president.

“Many aspects of this arrangement are unsightly at best, especially given the current fiscal climate,” conceded Andrew Doba, a spokesman for Gov. Dannel P. Malloy.

Reached at his Baxter, Minn., home, Kennedy said his compensation followed the contract he negotiated with Malloy.

“There is nothing illegal or improper here,” said Kennedy, who previously was president of the University of Maine. “It’s all based on a contract negotiated with the governor’s office. I think it was all very much in line.”

Asked if he did anything wrong, Kennedy said “absolutely not.”


Records show that Kennedy collected $445,427 for 13 months of service as a state employee. That includes $377,000 in base salary allotted over 29 pay periods. He earned about $162 an hour.

His total pay includes a variety of extras, the result of the contract approved by Gov. Malloy.

Compensation included a $25,000 performance bonus last summer for his good work; a $24,781 payment last summer from his yearly unvouchered expense account [which the state calls an accommodation account]; a $13,527 accommodation payment in September, only weeks before he resigned, and $4,342 in unused vacation time.

He was entitled to $25,000 in moving expenses and used about $15,700 of that total.

Kennedy was named interim BOR president in August of 2011 by Gov. Malloy, months before the board governing the new system was established. He was approved as president by the General Assembly in January of 2012.

He was in charge of the state’s local four-year schools, including Western Connecticut State University in Danbury, the various community colleges and the Charter Oak system in Hartford. A separate president and board oversee UCONN.

In addition to vacation time, Kennedy was allowed eight weeks of personal development time, which amounted to “working” from his Minnesota home, a $36,863 Toyota Highlander SUV, and the state paid $15,183 for his health insurance.

He is also eligible for a $20,000 deferred compensation payment, but the regents elected not to send that payment.

During September and October of 2011, the state paid nearly $2,500 to house Kennedy at the posh Hawthorne at Gillette Ridge, a high-end apartment complex in Bloomfield that later became his permanent residence. The state earlier spent $3,500 to house him at the Homewood Suites Hotel in Hartford.

Days after resigning, Kennedy returned his second $25,000 accommodation account payment. However, he returned the full $25,000, not the more than $13,500 he actually received after taxes and other deductions. So in an ironic twist, the state is sending him a new check for $9,209.

That amount includes a $2,264 deduction for expenses deemed improper after a reexamination of his spending.

“He was charging Connecticut and now he’s getting paid back,” Willis said. “What you are telling me is incredulous and discouraging and disappointing.”

“It’s 19th century style patronage adjusted for inflation,” said Cullen Fergus, director of the conservative Yankee Institute, which promotes government accountability.

“It’s not the first time and it’s not the last time this will happen,” Fergus said. “But this never should have been done in the first place.”


Kennedy was installed as regents president during a rushed process that’s unique in recent Connecticut history.

Gov. Malloy, who is not known for his patience, decided to separate the community college and local four-year college system from UCONN, and the General Assembly went along, creating a new Board of Regents. The idea was to produce savings and efficiencies from a previously bloated system.

But Malloy opted to first hire a president for his new agency and negotiate a contract.

The BOR was formed after Kennedy’s contract was already inked and the deal was placed before the new BOR, which ratified it. Kennedy became permanent president in January 2012 when the General Assembly granted its approval.

What followed was confusion and controversy over how the BOR would operate, how Kennedy’s contract would be executed and what powers the executive team held.

The result is now well documented: Kennedy resigned after being linked to huge raises for staff, along with his executive vice president,Michael Meotti, a former state education commissioner and friend of the governor.

An early point of confusion centered on Kennedy’s accommodation accounts, which have previously been described as un-vouchered expense accounts. During an interview with Hearst, Kennedy said the accounts were actually established as an alternative to providing him an official residence, like the president of UCONN and the governor both receive.

“It’s common for a person in my position, a former college president, to have an official residence afforded to them. This is what the accommodation accounts were supposed to be for,” said Kennedy, who was provided an official residence as president of the University of Maine.

Willis, who as the higher education committee head guided the new regents system through the General Assembly, scoffed at the idea of a residence for Kennedy.

“There is no precedent here for that. This is a community college president and the Charter Oak system. We are not talking about the flagship university. He thinks he was a big frog in a little pond,” Willis said.

“The new system was created out of whole cloth. It was a political creation in some sense,” Kennedy said. “UCONN and the University of Maine are 75 to 150 years old. They have procedures in place to handle this. They have rules.”

As Kennedy began incurring expenses, whether for dinner or office supplies, he was told to submit receipts and staff would determine which account would be charged: regular business expenses, moving expenses or his accommodation account.

But Johnson said staff eventually realized the system was unworkable because his accommodation expenses were at his discretion.

In response to questions from Hearst, BOR staff reviewed its reimbursement system and produced a new accounting. Kennedy’s expenses were again categorized into three types: moving, business and accommodation. But this time the accommodation accounts were drawn down by specific expenses, which didn’t fit the other two categories.

The result was a discovery that Kennedy had exceeded his first accommodation account limit of $25,000 by $2,264. That money is being deducted from the over-payment by Kennedy when he returned his second accommodation money, Johnson said.

“Dr. Kennedy’s expenses have been reviewed and he has been charged for any non-business related expenses incurred and we are in a position to immediately recover that money on behalf of Connecticut taxpayers,” said BOR spokeswoman Colleen Flanagan Johnson.

Still, Johnson admitted “There was a serious failure in not having clear financial systems in place to properly account for expenses” after Kennedy took the helm at the regents.

Kennedy, who was interviewed on Wednesday, was unaware of the BOR reorganization of his expenses and did not know he was due to receive money for overpaying when he returned his final accommodation account payment.

Willis said she plans to look into the reimbursement process and requested the documents obtained by Hearst. “I may do something with this,” she said.

The committee chairwoman said given the lucrative contract Kennedy received and the open nature of the accommodation accounts should have been sufficient to cover any of his expenses, especially dinners and coffee.


The Malloy administration says Kennedy’s contract was competitive with similar institutions and the result of what the state must do to attract high level administrators.

“Across the country, presidents of public college systems have an array of other forms of compensation beyond just a set salary,” Doba said. “Connecticut has to compete with hundreds of other colleges in formulating compensation plans that are consistent with what similar institutions are offering.”

“They include such things as use of a home, a car, deferred compensation, relocation expenses, expense accounts, club dues, retention bonuses, retirement contributions, supplemental retirement plans and longevity bonuses,” Doba explained.

But a 2012 survey of salaries for presidents of big and small college systems casts doubt on the governor’s contention that Kennedy’s package was in line with the market.

The College and University Professional Association for Human Resources concluded that $272,500 a year is an average base salary for systems offering masters degrees, the most advanced degree offered by the four year colleges Kennedy oversaw.

The average pay for presidents in charge of systems offering doctorate degrees, like UCONN, is $480,000, the association determined.

Doba said it’s difficult to compare colleges and pointed out that averages group low cost states with high cost states, like Connecticut.

Kennedy said his tenure was filled with confusion and a lack of structure.

“There was ignorance about what works and does not work and what should be allowed.”

Suit alleges banks and mortgage companies cheated veterans and U.S. taxpayers

Some of the nation’s biggest banks and mortgage companies have defrauded veterans and taxpayers out of hundreds of millions of dollars by disguising illegal fees in veterans’ home refinancing loans, according to a whistle-blower suit unsealed in federal court in Atlanta.

The suit accuses the companies, including Wells Fargo, Bank of America, J.P. Morgan Chase and GMAC Mortgage, of engaging in “a brazen scheme to defraud both our nation’s veterans and the United States treasury” of millions of dollars in connection with home loans guaranteed by the Department of Veterans Affairs.

Accountants who can steal money and college presidents who deal the cheese to their families and friends, these people are the connected class. Overpaid athletes, Carl Crawford ($142 million – 7 years; .255 ba, 11 hr), Jayson Werth ($127 million – 7 years; .232 ba, 20 hr), and Adam Dunn (56 million – 4 years; 159 ba, 11 hr), these people belong to the connected class. My favorite story concerns Charlie Weis, former head coach at Notre Dame, who failed to resurrect Lou Holtz glory and was paid millions to go away. And of course: Albert Haynesworth “made almost $35 million in just 20 games for Washington.”

Public officials with juice are the connected class.

Pentagon rocked by $20m contract scam

Two U.S. Army Corps of Engineers employees and two businessmen were arrested in what prosecutors say may be the largest kickback and bribery scheme in the history of federal contracting.

For Water Authority, $500 an hour seems A-OK–ok/

Residents Outraged Over $19,000/Month Paid Leave For Fullerton Police Chief

Under his contract, Sellers could be eligible for up to 12 months of paid leave — a revelation that has left some local taxpayers outraged.

Top union leader steps down after pension revelations

The head of one of the largest labor unions in Chicago resigned Monday in the wake of reports that he had been receiving a six-figure city pension while participating in a second pension plan from his local union, in violation of state law.,0,7264267.story

Wayne County admits Mullin’s assistant got $15K severance

Detroit— Turkia Mullin wasn’t the first Wayne County official to receive a severance for leaving.

Turns out, she wasn’t the last either.

While apologizing for a controversy over a $200,000 severance to the county’s former economic development czar, county officials admitted Tuesday that her executive assistant, Sheri Galofaro-Mendez, got a $15,600 severance from her post with the Wayne County Economic Development Growth Engine, or EDGE, when she left in September. Galofaro-Mendez followed Mullin when she became director of the Detroit Metropolitan Airport and is now her executive assistant. Galofaro-Mendez also has agreed to follow Mullin’s lead and return the money, said Alan Helmkamp, a county assistant executive.’s-assistant-got-$15K-severance

Koch Industries’ history of bypassing, breaking rules includes sales to Iran

Former Koch employees in the United States and Europe have testified or told investigators that they’ve witnessed wrongdoing by the company. Sally Barnes-Soliz, now an investigator for the Department of Labor and Industries in Washington state, says that when she worked for Koch, her bosses and a company lawyer at the Koch refinery in Corpus Christi, Tex., asked her to falsify data for a report to the state on uncontrolled emissions of benzene, a known cause of cancer. Barnes-Soliz, who testified to a federal grand jury, says she refused to alter the numbers.

“They didn’t know what to do with me,” she says. “They were really kind of baffled that I had ethics.”

Cozy relationships and ‘peer benchmarking’ send CEOs’ pay soaring

THOUSAND OAKS, Calif. — As the board of Amgen convened at the company’s headquarters in March, chief executive Kevin W. Sharer seemed an unlikely candidate for a raise.

Shareholders at the company, one of the nation’s largest biotech firms, had lost 3 percent on their investment in 2010 and 7 percent over the past five years. The company had been forced to close or shrink plants, trimming the workforce from 20,100 to 17,400. And Sharer, a 63-year-old former Navy engineer, was already earning lots of money — about $15 million in the previous year, plus such perks as two corporate jets.

CEOs are the most privileged of the connected class. Lose your job through poor performance, get fired; maybe go postal. Forced out because the stock value drops, get paid for it. Carly Fiorina, an economic adviser to John McCain during the 2008 presidential campaign, is a prime example. She laid off thousands of Hewlett Packard employees; share value dropped by more than half; she went Hollywood. Her golden parachute was worth > $20 million. The combination of Phil Gramm, another story, and Fiorina compelled me to consider another candidate rather than McCain.

Outsize Severance Continues for Executives, Even After Failed Tenures
Published: September 29, 2011
The golden goodbye has not gone away.

Just last week, Léo Apotheker was shown the door after a tumultuous 11-month run atop Hewlett-Packard. His reward? $13.2 million in cash and stock severance, in addition to a sign-on package worth about $10 million, according to a corporate filing on Thursday.

At the end of August, Robert P. Kelly was handed severance worth $17.2 million in cash and stock when he was ousted as chief executive of Bank of New York Mellon after clashing with board members and senior managers. A few days later, Carol A. Bartz took home nearly $10 million from Yahoo after being fired from the troubled search giant.

A hallmark of the gilded era of just a few short years ago, the eye-popping severance package continues to thrive in spite of the measures put in place in the wake of the financial crisis to crack down on excessive pay.

Critics have long complained about outsize compensation packages that dwarf ordinary workers’ paychecks, but they voice particular ire over pay-for-failure. Much of Wall Street and corporate America has shifted a bigger portion of pay into longer-term stock awards and established policies to claw back bonuses. And while fuller disclosure of exit packages several years ago has helped ratchet down the size of the biggest severance deals, efforts by shareholders and regulators to further restrict payouts have had less success.

“We repeatedly see companies’ assets go out the door to reward failure,” said Scott Zdrazil, the director of corporate governance for Amalgamated Bank’s $11 billion Longview Fund, a labor-affiliated investment fund that sought to tighten the restrictions on severance plans at three oil companies last year. “Investors are frustrated that boards haven’t prevented such windfalls.”

Several years ago, the Securities and Exchange Commission turned a brighter spotlight on severance deals by requiring companies to disclose the values of the contracts in regulatory filings. More recently, the Dodd-Frank financial reforms required that public companies include “say on pay” votes for shareholders to express opinions about compensation — including a separate vote for golden parachutes initiated by a merger or sale.

Yet so far, few investors have gone to battle. Only 38 of the largest 3,000 companies had their executive pay plans voted down, according to Institutional Shareholder Services. Even then, the votes are nonbinding.

Severance policies typically call for a lump-sum cash payment, the ability to cash out stock awards and options immediately instead of having to potentially wait for years, and sometimes even bonuses. And that’s not counting the retirement benefits and additional company stock that executives accumulate, which can increase the total value of their exit package by millions of dollars.

Some critics believe investors have become inured to the hefty payouts. In addition, the continuing financial crises in Europe and the United States have pushed compensation into the backseat on the shareholder agenda.

“People are preoccupied with the bigger issues,” said Frederick Rowe Jr., a hedge fund manager and president of Investors for Director Accountability which has sought to curb excessive pay.

The Obama administration, meanwhile, seemed to lose its bully pulpit for compensation reform after most of the nation’s biggest financial companies repaid their government loans — and Kenneth R. Feinberg, its tough-talking pay overseer, moved on to tackle other issues.

Federal Reserve officials flagged golden parachutes as a concern when they began a compensation review almost two years ago, but their inquiry was limited to large banks — not all large companies. The findings of the review are expected to be made public in the next few weeks.

Over the last year, regulators have been pressing corporate boards to draft policies denying huge severance payouts to senior executives if the firm teeters on collapse. That still leaves wiggle room for managers to score big if they merely perform poorly.

Practices such as large cash payouts and having shareholders pay the tax bill for departing executives are on the decline, especially after the uproar over the $200 million-plus exit packages of Hank McKinnell of Pfizer and Robert Nardelli of Home Depot in the last decade

Mr. Zdrazil and other shareholder advocates say that investors have made some progress by pressuring companies to reduce the cash portion of severance packages to about two times salary from three. Now boards are under pressure to tighten the rules that speed up the ability of departing executives to cash out big chunks of stock. Only a few corporations, like Exxon Mobil, have policies where executives must forfeit their unvested stock options if they are forced out.

Some C.E.O.’s do not negotiate big payouts. Oswald Grübel, the chief executive of UBS who stepped down last week after a trader concealed more than $2.3 billion of losses, will receive $1.6 million (1.5 million Swiss francs), equivalent to the standard severance package of six months’ salary given to all senior executives at the Swiss bank.

Many chief executives continue to walk away with seven or eight-figure severance packages, according to an analysis by James F. Reda & Associates, an executive compensation consulting firm.

At Burger King, John Chidsey, its chief executive, departed in April with a severance package worth almost $20 million, despite severely underperforming McDonald’s. Michelle Miguelez, a Burger King spokeswoman, declined to comment.

The chief executive at Massey Energy was awarded a large severance contract despite presiding over a company barraged with accusations of reckless conduct and with legal claims stemming from one of the deadliest mining disasters in memory. In June, Baxter F. Phillips Jr. was awarded nearly $14 million in cash and stock severance after the company was sold to a competitor, Alpha Natural Resources. Ted Pile, a spokesman for Alpha Natural Resources, said his company was required to honor an employment contract “put in place before we acquired” Massey.

Another chief executive received severance payments after his company was accused of fraud. At Beazer Homes, Ian McCarthy was ousted as chief executive three months after the company settled with the S.E.C. for filing misleading financial statements. Mr. McCarthy was forced to repay about $6.5 million.

But what the government took away, Beazer’s board gave back. Mr. McCarthy was awarded a severance package worth about $6.3 million — and was reimbursed for up to $10,000 of legal fees associated with his termination. Beazer did not respond to a request for comment.

Perhaps the biggest reason that golden parachutes persist is that corporate boards hire superstar chief executives, rather than groom strong managers inside the company for the top job. That gives outsiders a stronger hand to demand all kinds of upfront stock awards and lucrative severance deals when they are hired. So when things do not work out, that “golden hello” turns into a “golden goodbye.”

That is what happened with Ms. Bartz, a hard-charging technology executive who was brought in to help turn around Yahoo in 2009. She was given a sign-on package worth over $47.2 million in cash and stock, and pay worth an additional $11.9 million in 2010, according to Equilar, an executive compensation research firm.

But after her plans to revive the beleaguered search giant failed to improve its results, Yahoo’s board fired Ms. Bartz this month. She walked away with a large allotment of deeply depressed stock options as well as cash severance worth about $5.2 million. The company said some of the stock was subject to future performance goals.

At Hewlett-Packard, its revolving door for chiefs has led to tens of millions in severance payouts even as thousands of employees have lost their jobs. In 2007, Carly Fiorina walked away with more than $21 million in cash-stock severance, after she struggled to turn around the company. Her successor, Mark V. Hurd, left with severance of more than $12.2 million after he was forced to step down amid accusations of an improper relationship.

Now comes Mr. Apotheker’s $13.2 million severance payout when the stock price was cut in half. That is made up of $7.2 million in cash, the ability to sell $3.6 million of restricted stock and a $2.4 million bonus. H.P., which paid $2.9 million to relocate Mr. Apotheker to California, will now pay to move him to Belgium or France and cover losses of up to $300,000 on the sale of his house.

On Thursday, H.P. released a regulatory filing showing that Meg Whitman, its new chief executive, would receive a sign-on package worth about $13.1 million, according to an analysis of the filing by Equilar. Much of the compensation comes from a stock option grant that is subject to certain performance targets. She also stands to collect severance if she leaves.

Lloyd Doggett, a Democratic representative of Texas and senior member of the House Ways and Means Committee, said excessive severance packages were “outrageous.”

“The whole concept that the only way to get rid of bad management is to buy them off is fundamentally wrong” he said.

The Connected class con

About Jerry Frey

Born 1953. Vietnam Veteran. Graduated Ohio State 1980. Have 5 published books. In the Woods Before Dawn; Grandpa's Gone; Longstreet's Assault; Pioneer of Salvation; Three Quarter Cadillac
This entry was posted in Politics and tagged . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *


nine + = 17

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>