watchdog

Sunday, June 28, 2009

HELP, THERE IS A ROBBERY IN PROGRESS IN MEMPHIS AT THE PENSION BOARD

Those of you who wanted to see the end of the long running term of Mayor Herenton probably did not count on Herenton's crony friends holding up the pension system when he left.

Now that our Mayor is getting a City of Memphis pension and a School System pension when he retires, he is going for the BIG BANANA in Washington to add Federal Perks to his haul. And the worst of it all is that it is legal.

For those of you who are not aware of the terms of our pension system, I have shown below a brief resume from the City of Memphis CAFR (Comprehensive Annual Financial Report) and the City of Memphis Retirement System showing the details of the system. Some important points are

  • The City of Memphis Retirement System is administered by a Board of Administration under the direction of the Mayor. Separate financial statement for the plan are not issued.
  • The assets of the plan are down 33% from July 1, 2008 to March 31, 2009.
  • As of June 30, 2008 there were 4070 retirees receiving benefits or entitled to receive them
  • There were 3056 active employees fully vested and 3165 non vested.
  • Generally employees may retire after 25 years of service regardless of age.
  • Those appointed people may retire after 12 years of service regardless of age due to the disastrous January 2001 pension resolution which Tom Marshall said would help the City get and retain good people.
  • ONE SIGNIFICANT PART OF THE PENSION SYSTEM IS THAT THE PENSION IS BASED ON A PERCENTAGE (2-1/4% OR 2-1/2%) OF AVERAGE MONTHLY COMPENSATION. THE DEFINITION OF AVERAGE MONTHLY COMPENSATION IS AS FOLLOWS. "THE HIGHEST AVERAGE MONTHLY COMPENSATION RECEIVED FOR ANY FIVE CONSECUTIVE YEARS OF SERVICE, OR THE MOST RECENT YEAR'S EARNING, IF GREATER".

Now do you see why Willie put his cronies in these high paying jobs last year? So they could increase their pension payout.

Also I have attached a list of employees and salaries from a 2005 open records request listed by top to bottom salary. Those with NO in a column are appointed employees. These salaries are up 5 to 7% from 2005.


 

 


Click here to see a 2005 list of appointed employees listed by salary many of whom will be retiring and start receiving their pensions


Click here to see the terms of the pension plan which is run by the Mayor and his cronies and which allows the pension to be increased after only one year at a new higher salary

Friday, June 26, 2009

HERENTON’S LAST BUDGET FARCE?

THE BUDGET FARCE IN MEMPHIS AND SHELBY COUNTY

The recent budget farce in the City of Memphis was acted out and the result is the confirmation that our government is run by an incompetent administration and a majority on the City Council that has never run a business and has never seen a public job that they do not love.

The annual farce started with our Mayor who predictably presented a $617 million dollar budget that was higher than the year before ($580 million). The City Council initially was determined to get tough with the Mayor this year and demanded that he cut the budget by $50 million dollars or about the amount that they previously cut from the Memphis City Schools. That cut is in litigation and may come along to add to our already existing highest in the state property tax rate. The Mayor's answer was the old trick that he has used before, presenting a budget with cuts in public safety, senior citizen centers, libraries etc. The City Council, of course, rejected this and then determined that they would go through the budget line by line and make the cuts they wanted.

After weeks of meetings of various subcommittees, they were able to come up with $14 million in savings. (Remember the old maxim about a camel is a horse designed by a committee). The defining characteristics of "design by committee" are needless complexity, internal inconsistency, logical flaws, banality, and the lack of a unifying vision.

Then enter Jim Strickland who at least had a plan and a unified vision, but alas, he did not have the seven votes. There was no majority to cut the pay raises for employees (3% on top of 5% the year before last). There was no majority to cut their own pay and those of top overpaid and incompetent City crony employees. There was no discussion of cuts in benefits which allow a 15 year employees to have off 13 weeks a year with pay. There was no discussion of the condition of the defined benefit pension plan and the deep losses in the plan's assets. (Please note that Keith McGhee, chief administrative office at a salary of about $145,000, is retiring at age 43). There was no discussion of the promised retiree health care benefits which has an unfunded liability of $823 million dollars.

We are cursed with an incompetent and self interested administration and a City Council with a majority that cares only about preserving their jobs and those jobs of City employees and have no interest in the tax payers of the city of Memphis. Unfortunately, the County Commission is very similar in structure and operation.

The end game is that the City and County will continue to lose population and tax base similar to many other cities in the country. Wake up America. We need to clean house and elect reform candidates who will put the interest of the tax payers first and operate government like a "for profit" business.

Monday, June 15, 2009

IS THIS A GREAT COUNTRY OR WHAT? LOCALS FLIP JUST ONE PROPERTY THREE TIMES AND MAKE OFF WITH $684,000

Last week there was an interesting article in the CA concerning fraudulent appraisals of properties. The lead conspirator was not named at that time. The appraiser would take low priced properties, get an inflated appraisal, and then through a series of transactions, the property was sold and mortgaged and the difference was pocketed. In many cases, Fannie and Freddie or some bank and eventually the taxpayers would end up eating the difference between what the parties paid for the property and the amount of the inflated mortgage. These people would flip the same properties three and four times in the period of a few years.

There are hundreds of these type transactions listed locally in Shelby County and DeSoto County and I have shown some listed in the attached pdf files. However the one that stands out is at 744 Melrose. Mykisha Williams bought the property in April 2004 for $145,000 and sold it in May for $385,00000 ($240,00000 profit). Then in January 2005 Gloria Buntyn bought the property for $170,000 and in February sold it to Mykisha Williams for $385,000. ($215,000 profit). Then in February 2006 Kieth Threatt bought the property for $190,000 and in May 2006 sold the property for $419,000 to Sanchez Richmond ($229,000 profit). Total profit $684,000 less a few expenses.

This is a good local example of what happens to large government programs where there are people just waiting to scam the system. We are talking hundreds of millions of dollars here and this is just in Shelby County Tennessee and Desoto County Mississippi. This is a local example of how this current economic crisis happened and who is responsible, namely scam artists and politicians buying votes. Are you listening Barney and Chris?

I have listed below just three pieces of local property. There are many more and I hope that the FBI is investigating these transactions.

Basically the scheme illustrated by the attached pages of transactions from Tom Leatherwood's site shows properties at 144 Person, 395 Edith and 744 Melrose. The scheme goes like this.

A foreclosed property is bought for a low price. The buyer then sells the property a few months later to an associate for three to four times the purchase price. An inflated mortgage is obtained and sold to Federal National Mortgage Association or a bank. Then later, the property is foreclosed after no payments are made on the mortgage. Then, unbelievably, the same cycle happens again to the same property just a few months later. Another example is shown below.

144 Person: Federal National Mortgage Association sells property to Washington Mutual Bank for $7500. The same day, Washington Mutual sells the property to Mykisha Williams for $7500. A little over a month later, Mykisha Williams sells the property to Melanie Wilkes for $60000. The same day Melanie Wilkes gets a 90% mortgage from Argent Mortgage for $54000. Argent Mortgage must have unloaded the mortgage to Wells Fargo Bank as they ended up buying it on the courthouse steps for $50000 on December 2005. Then in June 2006 Wells Fargo sells it to Keith Threatt for $18000 and in October 2006 Keith Threatt sells the property to Onitsha Paige for $59000 and Onitsha gets a mortgage for $50150. Unbelivably a third flip is in the process.

Look at the other two sheets showing 744 Melrose and 395 Edith.

I think you get the idea. I have also attached a list of transactions from Tom Leatherwood's site for Mykisha Williams and Southern California REO LLC. This is just the tip of the iceberg. There are hundreds of such deals in the records. Why is this happening? Is there no oversight? Why is no action being taken? Why is the paper concentrating on $5 payments for favors in the County Clerk's office when here it is obvious that millions are being lost.

Some of my friends say the government has only the best of intentions. Just look at the results and guess who gets to pay the bill for each of these transaction. THE TAXPAYERS AS USUAL TAKE A BATH AND THE GOVERNMENT SHRUGS OFF SUCH DEALS AS ISOLATED INCIDENTS.



Click here to see the transactions from Tom Leatherwood's site. This is one of hundreds of such local transactions


Click here to see the transactions on 395 Edith from Tom Leatherwood's site. This is one of hundreds of such local transactions


Click here to see the transactions on 144 Person from Tom Leatherwood's site. This is one of hundreds of such local transactions


Click here to see the transactions in which Mykisha Williams was involved from Tom Leatherwood's site. This is one of hundreds of such local transactions


Click here to see the transactions on this California outfit from Tom Leatherwood's site. This is one of hundreds of such local transactions

Monday, June 01, 2009

ANOTHER TURKEY COMING HOME TO ROOST?

Recently it was reported in an article in the Commercial Appeal that the Memphis and Shelby County Sports Authority was considering to again reconfigure the debt on the FedEx Arena. I have been trying for some time to get the most recent financial statement (December 31, 2008) from the Sports Authority but was told by the County Attorney that the document does not exist yet and to ask again on June 30, 2009.


I think it is instructive to see what was said in the December 31, 2007 document which is attached. In reading through the document, it sounds like the Captain of the Titanic saying that there is no danger to the ship from icebergs as the ship has a double hull. According to the article in the paper, “The refinancing and an accompanying transaction known as an interest-rate swap helped reduce the sports authority's payments to about 4.25 percent. However, the financial crisis pushed the interest rate to about 9 percent. Interest rates are low now, and the authority believes it could reduce its payments by switching to a fixed rate.” Read through the December 2007 document and you will read many statements that the risk of interest rate increase in the swaps was low.


Where does the money to pay these bonds and interest come from? The Senior Lien Revenue Bonds shall be payable from the following sources.


1) A $ 1.15 per seat use charge on paid Arena events..
2) Rebate of sales tax revenues to the City and the County for the exclusive use of the Sports Authority derived from NBA Franchise events, concessions and the sale of NBA franchised merchandise in the County.
3) City Hotel/Motel Tax Revenues derived from certain hotel/motel taxes imposed by the City pursuant to the provisions of City Ordinance 4824. (A 1.7% tax was added to the existing 5% plus the + the 8.25% sales tax for a total of 14.95%). This tax has been dedicated until 2016 to the payment of debt service for the expansion of the Cook Convention Center.
4) Certain County Hotel/Motel Tax Revenues (to the extent certain tourist
development zone sales tax increment moneys are received) and subordinate to certain pre-existing debt which is pledged for the Cook Convention Center Bonds, the County Bonds for the Pyramid and a specified amount to the Convention and Visitors Bureau.
5) Payments in lieu of taxes from the Water Division of MLG&W pursuant to that certain PILOT Agreement between the City and MLG& dated July 1, 2001. The payment will be $2.5 million per year until 2028.
6) A new 2% County-wide car rental tax imposed pursuant to Section 67-4-1907 of Tennessee Code Annotated.


If these revenues are not enough to pay the bonds, then the taxpayers are on the hook except that property taxes (ad valorem) are not to be used. (This restriction was the result of the 2001 petition by Heidi Shafer to get the taxpayers the right to vote on the building of the Arena). However we will still have to pay one way or the other or maybe we will get a bailout.



Click here to read the December 31, 2007 sports authority report describing swaps and derivatives which backfired