John Haggerty, a Queens Republican Party operative, is in hiding after news broke that he cannot fully explain how he spent an approximate campaign finance payment of $750,000, which was channeled by Mayor Michael Bloomberg's ill-fated th3rd t3rm re-election campaign through a $1.2 million payment to the Independence Party of New York state.
Sunday, February 21, 2010
Saturday, February 20, 2010
By LOUISE STORY and MICHAEL BARBARO
Published: February 19, 2010
Mayor Michael R. Bloomberg of New York has decided to remove his fortune from a private equity firm founded by his longtime friend, 10 months after that firm became embroiled in a scandal involving the state pension fund.Librado Romero/The New York Times, left; Jin Lee/Bloomberg
The mayor is shifting about $5 billion from Quadrangle into a new investment firm devoted solely to his interest and that of his charitable foundation. About a dozen employees of Quadrangle will join the new enterprise, suggesting the move is not being driven by a desire to change investment strategy. According to a letter that Quadrangle sent to its investors on Friday, the mayor was seeking privacy and flexibility for his investments.
In assets, Quadrangle will shrink by more than half, leaving the firm only private equity investments in the media and telecommunications industries. The setback caps a year of struggle for Quadrangle, after Steven Rattner — the founder who is Mr. Bloomberg’s friend — departed last year to run the Obama administration’s automobile task force. Mr. Rattner was linked to the New York pension fund investigation within months of that appointment and stepped down from his government role last summer.
No charges have been brought against the firm or Mr. Rattner by the attorney general of New York or the Securities and Exchange Commission, which are both investigating Quadrangle’s past dealings with the New York state pension fund.
Mayor Bloomberg’s private fortune — built around his media business, Bloomberg L.P. — fueled his improbable victory in the 2001 mayoral campaign and helped secure a close re-election last fall.
His decision to relocate his money may fuel speculation about his political ambitions: he is considered a potential candidate in the presidential campaign of 2012. If he were to run, he would undoubtedly finance the campaign himself, at a staggering cost. His aides previously put the price tag at $1 billion.
The mayor’s decision to disentangle himself from Quadrangle ends a chapter in a partnership that elevated Mr. Rattner into greater prominence in government and business, and that allowed Mr. Bloomberg to take bigger risks with his overall fortune, which is estimated at $15 billion, including his large stake in the media company.
Since leaving government, Mr. Rattner has been writing a book on the automobile industry, scheduled for a fall release, and has not said if he is looking to return to finance.
It is unclear whether Mr. Rattner might work with the mayor again. As the pension investigation unfolded, Mr. Bloomberg has steadfastly defended Mr. Rattner. At the time, the mayor praised his work and called him “a great public servant.” Initially, the mayor said he had no plans to take his investments elsewhere.
Mr. Bloomberg and Mr. Rattner remain close, frequently dining together and speaking by telephone, according to mutual friends.
Questions about Mr. Rattner’s involvement with the state pension fund emerged when the S.E.C. filed a case against middlemen who helped investment firms like Quadrangle garner business from the state. One of the middlemen was producing a movie called “Chooch,” and a company owned by Quadrangle made a deal to distribute that low-budget film, according to the S.E.C., which was investigating kickbacks.
Spokesmen for Quadrangle and Mr. Rattner declined to comment.
A spokesman for the mayor, Jason Post, said: “The fact that the mayor will be hiring the same team Quadrangle put together to manage these funds shows how pleased he is with their performance, which has been excellent. He has nothing but good things to say about the job Quadrangle has done.”
Mr. Post said that the mayor’s decision to move his money out of Quadrangle was unrelated to the state pension fund investigation.
Quadrangle has spent the last year trying to refashion itself without Mr. Rattner and focus on private equity. Investors in one of the firm’s funds voted last spring to allow the firm to continue making new investments, even though they had an option to withdraw their capital when Mr. Rattner left.
Mr. Rattner cut his ties with Quadrangle when he became a special adviser to the Treasury Department, though he still had substantial money invested with the firm. Mr. Rattner is a prominent Democratic fund-raiser, and seemed to relish the return to Washington, where he began his career as a reporter for The New York Times.
Mayor Bloomberg accounted for a substantial part of Quadrangle’s business, but because he paid lower fees than other clients, his business was less profitable for the firm.
The mayor’s selection of Quadrangle in 2008 to manage his investments was unexpected: at the time, the firm was known for brokering and investing in media deals, not as a money manager. When the firm created a new division to handle Mr. Bloomberg’s money, called Quadrangle Asset Management, it had just one client: Mr. Bloomberg.
Quadrangle recruited Alice Ruth, who had managed the personal fortune of Gordon Moore, Intel’s co-founder, to run the unit. Ms. Ruth will join the mayor’s new money management office.
Under guidelines approved by New York City’s conflicts of interest board, the mayor’s investment portfolio is managed like a blind trust, though he retains control and access to certain investment decisions, and receives regular updates on its performance.
Quadrangle’s private equity business has remained separate from the asset management unit. The firm’s first private equity fund, raised in 2000, has already returned the full amount to its investors and retains stakes in several companies. The firm’s second fund, raised in 2005, has about $500 million left to invest and was up 19 percent last year, according to the investor letter.
Despite his reputation as a financial wizard, Mr. Bloomberg did not fare particularly well in the stock market in 2008. His tax returns, abridged for presentation to the news media, showed that he lost millions on his investments as the entire market plunged, including those managed by Quadrangle.
Friday, February 19, 2010
FOR RELEASE: Immediately April 23, 2003
MTA HID HALF A BILLION DOLLARS IN 2002 BUDGET,
FARE INCREASE BASED ON MISLEADING INFORMATION
Two Financial Plans: One Public, One Secret
Only after he subpoenaed the MTA and required testimony of officials did Hevesi's office learn of the internal plan, which showed that the MTA secretly moved funds to reduce its 2002 surplus and create a deficit in 2003. Hevesi announced a reform proposal to change the secretive culture of the MTA to make it more accountable.
"The MTA claims to be the most open agency in government, but that claim is a fraud. The MTA secretly moved resources to slash the reported 2002 surplus and create a deficit in 2003, apparently to justify a fare increase. New York City also moves funds between years, but it discloses the information," Hevesi said. "It is an outrage that this public agency blatantly misled the people it is supposed to serve."
The Comptroller's budget review found that:
- 2002 Surplus Shrunk: The MTA's December 2002 Plan, which was the basis for the public hearings and the fare increase, showed a 2002 surplus of $24.6 million. Previously undisclosed MTA documents show that if the MTA had not planned to move $512.5 million in available resources from 2002 into 2003 and 2004, the 2002 surplus would have been $537 million.
- 2003 Deficit Created: The public December Plan showed a 2003 deficit of $236 million. However, internal MTA documents show the agency hid $319 million by not counting it as a 2003 resource when it was available, but allocating the funds to 2004. If all the funds available to be used in 2003 were included, the MTA would have shown a 2003 surplus of $83 million.
- Resources Shift Again: As the Comptroller's Office was concluding its review of the December Plan, the MTA Board approved a new Plan on March 27, 2003. Once it had passed the fare increase, the MTA shifted resources again, this time from 2004 back into 2003.
- Still Hiding Money After Getting The Fare Increase: The MTA March Plan, which included higher revenues from the fare and toll increases, shows a 2004 surplus of $60 million. Only a limited review of this plan was possible before the Comptroller's report was completed, but it uncovered the surplus could be well over $140 million. Internal documents reveal another $27.5 million in undisclosed reserves. Also, the Plan includes none of the savings from the new labor agreement with the Transport Workers Union.
- Can't Use 5-Year Plan for Planning: Despite its stated commitment to multi-year planning, the MTA produced a legally mandated five-year plan only after the Comptroller demanded it. Moreover, the five-year plan produced by the MTA is useless in determining whether future fare increases will be needed again as soon as 2005.
"No doubt the MTA will claim that a fare increase is necessary because of the deficit expected in 2004. The fact is if it had not hidden money, the MTA would have had a large surplus in 2002 and a small surplus in 2003. Thus a fare increase might not have been necessary in 2003," Hevesi noted. "The public and elected officials have a right to know the truth and debate the timing and amount of fare and toll increases based on facts, not a distorted picture created by the MTA to make it easier to push through an increase. While it may have made sense to raise fares in 2003 to smooth out the budget gaps, there were a number of choices. Metrocard and E-ZPass permit an endless combination of fare and toll increases and discounts, so there was more flexibility than the MTA admitted. Indeed, the MTA itself has already delayed implementation of the fare increase from March to May."
After twice asking for and not receiving all requested data, on February 19, 2003, Hevesi took the extraordinary step of issuing subpoenas for records and testimony from the MTA for information regarding the financial plan that was approved by the MTA Board on December 18, 2002. Pursuant to the subpoenas, the Comptroller's Office received 18 cartons of material and took 32 hours of testimony from senior MTA officials in eight sessions over the next month.
The December plan showed a two-year gap of $951 million, including $235.8 million in 2003 and $715.7 million in 2004. The MTA used those alleged gaps to justify raising subway, bus, and commuter railroad fares by as much as 33 percent and tolls on the MTA's largest bridges and tunnels by $.50.
A rapid rise in debt service costs is the driving factor behind the projected 2004 budget gap. Debt service costs are projected to total $1.3 billion in 2004, more than double the 2003 amount. By 2010, debt service costs are projected to reach $1.7 billion, due to an increased reliance on debt to finance the 2000-2004 capital program because the State is not contributing to the current capital program.
The Comptroller's report also found the following:
- The MTA has a secretive budget process, making it very difficult to check the accuracy of its numbers or the reasonableness of its estimates for the future.
- In a number of cases, the budget office did not maintain appropriate working papers to document how it arrived at numbers in the Plan. In several cases, the working papers did not match the numbers in the December Plan.
- MTA staff found it difficult to recreate their own budget numbers in several critical areas. In some cases, MTA officials could not even recall how they calculated a particular number or cited professional judgment as the sole basis.
- MTA budget staff said that much of the information for their budget preparation came from the individual agencies that make up the MTA. However, when the Comptroller's Office checked a sample of agency data, the numbers did not always match.
- MTA financial reporting is not clear and accessible, making oversight and accountability difficult.
- The different MTA agencies use different financial plan formats, making comparisons hard.
- The MTA's own plans are not updated frequently. The March 2001 plan was not updated until the December 2002 Plan.
- It is difficult to track important developments from one plan to the next. There was no explanation of many of the changes between the March 2001 and December 2002 Plans.
- New York City presents to the public two detailed financial plans, one before gap closing actions and the other showing the effect of those actions. The MTA combines the two, which makes it difficult to understand and quantify the factors causing the gaps.
- The MTA does not publish the detailed revenue and expenditure assumptions and methodologies behind its forecasts, which means they are not subject to review.
- The MTA is arbitrary in its response to legal requirements to report on its finances.
- It had ignored Section 1269-d of the Public Authorities Law that requires it to produce a new five-year financial plan every year. The last one was completed in 1999.
- Only when the Comptroller demanded the required five-year plan did the MTA finally provide one.
- However, the MTA arbitrarily changed the format of the plan so that it cannot be compared to past plans and used plainly unrealistic assumptions - defeating the purpose for this financial planning tool.
- Thus the new five-year plan is of little use in determining if additional fare increases will be needed in 2005 or beyond.
"The MTA has repeatedly claimed to be the most open agency in city or state government. Our review proves that in fact the MTA has a culture of secrecy, arrogance, lack of accountability and contempt for the public," Hevesi said.
Hevesi announced the following reform measures to change the secretive culture of the MTA and make it accountable to the people it serves. First, using his constitutional authority from Article 10 Section 5 to supervise the accounts of public corporations, such as the MTA, the Comptroller will promulgate detailed regulations that will compel the MTA to submit its budget and financial plan in a manner that is transparent, timely and reasonable. The reporting will be modeled on the budget standards derived from the Financial Control Act and the New York City Charter, which result in detailed and transparent reporting of New York City's budget.
Second, the Comptroller will draft and submit to the Legislature and Governor legislation that will give to the Comptroller the authority to formally determine the accuracy, transparency and reasonableness of the MTA's budget and financial plan before the MTA can vote for any future fare and toll increase.
"The public has lost confidence in the MTA. The only way to restore that confidence is to ensure that all future financial reports are accurate and fully disclose the true condition of the agency. These proposed reforms will ensure that the true financial status of the MTA will be readily available to the public," Hevesi said.
Click here for a copy of the full report.
# # #
HOW THE MTA HID MONEY & CREATED A DEFICIT IN 2003In its internal version of the December Plan, the MTA planned a number of actions that moved resources that were available in 2002 to future years.
Transferring Funds to Other Years Slashed the 2002 Reported Surplus
- The MTA planned to transfer $182.5 million from its 2002 budget to an off-budget Stabilization Account that would be drawn down in 2003. If the MTA had done nothing, this money would also have been available in 2003, so the only plausible reason for putting it into this off-budget account was to hide it from the public.
- The MTA planned to transfer $125 million in 2002 to its Corporate Account that would be drawn down in 2004 and used to fund a reserve. The reserve, which was not disclosed by the MTA in the December Plan, inflated the size of the two-year budget gap.
- The MTA planned to transfer $65.8 million from 2002 to 2003 by prepaying debt service costs.
- The MTA also planned to transfer $139.2 million from 2002 to 2004 by prepaying debt service costs.
- In total, these four actions reduced the projected 2002 surplus by $512.5 million. If these actions had not been taken, the projected 2002 surplus would have been $537 million, instead of the $24.6 million the MTA reported to the public.
A Surplus in 2003 Was Turned Into a Deficit
- The MTA planned to shift $264.2 million in surplus resources from 2002 to 2004 through debt prepayments and off budget accounts.
- The agency had another $54.8 million in undisclosed resources available in 2003, which it planned to use in 2004.
- Had the MTA used all the resources available for 2003, it would have had a surplus of $83 million, instead of the deficit it showed in its December Plan of $235.9 million.
The March 2003 Plan also Has Undisclosed Funds
- On March 27, 2003, the MTA Board approved the March Plan, which includes fare and toll increases and shows a surplus of $59.8 million by the end of 2004, including a $40 million reserve.
- Most of the surplus resources that were shifted from 2002 to 2004 in the December Plan were shifted to 2003 in the March Plan to help fund the Transport Workers Union (TWU) agreement and reportedly an increase in debt service costs.
- A review of the internal version of the March Plan found undisclosed reserves of $27.5 million, which would raise the surplus to $87.3 million.
- The March Plan includes the cost of the new agreement with the TWU, but not any productivity savings from newly gained management rights. Productivity savings could amount to more than $60 million, which could increase the 2004 surplus to about $140 million.
For more information:
Albany Phone: (518) 474-4015 Fax:(518) 473-8940
NYC Phone: (212) 681-4825 Fax:(212) 681-4468
The New York City subway system, called the MTA, has lost $400 million, and the unstoppable NYC blogger Suzannah B. Troy says that, "as usual," the hardest hit will be, "New York City's most vulnerable."
As we all know, the MTA has a history of keeping two sets of financial plans.
Thursday, February 18, 2010
Performance Management, Performance Appraisals, Employee Reviews, and Appraisal Forms
One of the leading New York City bloggers gives her review of Mayor Michael Bloomberg, the New York City Council and its Speaker, state officials, and federal politicians.
Suzannah B. Troy describes a method of performance management that is based on putting LoJack security tracking devices on taxpayer money, and then using those LoJack tracking systems to evaluate and review performance by our politicians.
Sunday, February 7, 2010
Blame Bloombo Dicto 4 closing of St. Vincent's
The New York Post reported that financial tycoon and New York City Mayor Michael Bloomberg doesn't know how to keep a hospital open.
"I don't know. You don't want to pre-judge. People want to keep it open. It would be great if you could find a ways to do it. I will say, I find it hard to see how you could do that. You might be able to get it through another six months...."
Saturday, February 6, 2010
If he wants better Homeland Security for NYC, Bloombo Dicto can begin by restoring first responders.
After Mayor Michael Bloomberg proposed a city budget that would close up to 20 fire houses, the th3rd t3rm mayor last week asked Homeland Security Secretary Janet Napolitano to increase the city's federal anti-terror funding.
Before he asks the federal government to supplement the city's costs of funding programs that are important to preventing or responding to threats by terrorists, the mayor should see what the city can do for itself, namely, restore the cuts he's threatened to make to FDNY.
The mayor must seriously take into consideration that he has a role in protecting what clearly is the terrorists' No. 1 target.
The city's security is a city responsibility, and we can't afford to let local politicians get in the way. The way that the mayor is playing budgetary games with the FDNY's presence in many neighborhoods is irresponsible in the minimum, and is a threat to the city's security in the maximum.
This post is a satirical and tragic twist of a real news article published by The New York Daily News. You can't make this stuff up.
Monday, February 1, 2010
So, now that New York City voters have elected him back to office, following his ill-fated run at a doomed third term, look at what happens next, naturally :
Mayor Michael Bloomberg has proposed a city budget that would shut down up to 20 fire companies.
Hypothetically, it may take a longer time for fewer fire fighters to respond to more fires than they could have reasonably been expected to fight in the past. Delayed or prolonged response times by fire fighters can result in serious injuries, fatalities, more expensive losses connected to property damage, and devastation of neighborhood economies. The FDNY plays a critical role in the safety and security of the city.
Meanwhile, in an article in today's newspaper, The New York Times reports that the mayor's proposed closings will have dire consequences. "Response times could creep up," the article's reporter, Al Baker, concluded.
This is the objective reporting from a member of the newspaper's journalism staff, not to be confused with the editorial board, which, as you may recall, in October 2009, "enthusiastically" endorsed the mayor's karmically-doomed third term.
It makes you wonder whether we live in a dangerous city because of terrorists, or because the mayor wants to see the city go up in flames.