It's Elemental

For those of us who are not lawyers, deciphering laws can be challenging. I've found that reducing a law to its component parts, its elements, contributes to a better and clearer understanding not only of the law but its intent.

For example, first read Idaho Code 50-2017 - Interested Public Officials, Commissioners, or Employees as it appears in the link. I've chosen this law, because it defines when Idaho's public officials, commissioners, and employees have committed misconduct. Misconduct is cause for removal from their official position(s). At first glance, I.C. 50-2017 looks like one huge run-on sentence. It's not. Separate it into its component parts, bite-size chunks, and it's much easier to understand.

I've identified three major divisions in that law. Failure to obey the requirements of any or all those divisions justifies an allegation of misconduct. The three divisions are:

• Voluntary acquisition of personal interest or contract
• Involuntary acquisition of personal interest or contract
• Already owns or controls a property interest

I'll use the first major division, voluntary acquisition of personal interest or contract, to demonstrate how to reduce a law down to its elements. Note that each of the elements below is taken from the law cited, I.C. 50-2017.

1. No public official or

employee of a municipality or

employee of board or

commisson thereof or

commissioner of an urban renewal agency or

employee of an urban renewal agency

2. shall voluntarily acquire

3. any personal interest

direct or

indirect (e.g., corporate vehicles, using family members, etc.)

4. in any urban renewal project or

5. in any property included in any urban renewal project or

6. in any property planned to be included in any urban renewal project

7. in such municipality or

8. in any contract or

9. in any proposed contract

10. in connection with such urban renewal project.

By way of explanation, each numbered element must usually be satisfied if the violation of law is to be alleged. However, the word "or" in the law means just that. Satisfying any one or more of the elements or components connected with or is sufficient proof. If the connective and is used, then each element or component connected with and must be met.

So, let's use a simple hypothetical fact example: Suppose a Commissioner who is already a member of the local urban renewal agency purchases a piece of property inside his municipality's urban renewal district. Has s/he violated the law?

Look at each of the elements identified above. Here's how the facts would be applied to satisfy (or not) the corresponding elements:

Element 1. Satisfied upon showing the Commissioner is a commissioner of an urban renewal agency and was at the time the property was purchased.
Element 2. Satisfied unless shown that Commissioner was coerced into buying the property or otherwise acquired the property involuntarily.
Element 3. Satisfied when Commissioner's ownership of the property is shown.
Element 4. Satisfied by 5 (remember, the connective or is used here).
Element 5. Satisfied when records show property is included in urban renewal project.
Element 6. Satisfied by 5.
Element 7. Satisfied by showing project is included in the municipality.
Element 8. Satisfied by 7.
Element 9. Satisfied by 7
Element 10. Satisfied by 7.

The step-by-step analysis shows that each required element was met. The law concludes, "Any violation of the provisions of this section shall constitute misconduct in office." Thus, with all required elements of the violation having been shown, a citizen would be justified in concluding the Commissioner had committed misconduct in office.

There are some caveats for us laymen, however. One is that online law does not necessarily include relevant annotations and case citations. Another is that the "facts" used to prove violation of or compliance with the law must ultimately be admissible as evidence. Even "obvious" elements must be supported with hard evidence. What "everyone knows" isn't evidence. For example, "everyone knows" that So-and-So is a Commissioner with the URA, but that fact would have to be proven by evidence such as a copy of the URA's minutes identifying that Commissioner S0-and-So was present and voted at URA meetings during the time the alleged misconduct was occurring.

Nevertheless, even for a layman, going through this exercise of understanding the law and applying the facts to them is useful to becoming a better-informed citizen. If we suspect a public official has committed illegal misconduct, using this framework will help identify what we know and what we don't know. Making sure we have solid proof of each element helps us avoid wrongly accusing a public official.

It's not difficult. It's elemental.

US Intelligence Primer

For those readers interested in better understanding the functions and components of the US intelligence community, read Intelligence Issues For Congress.

This 23-page Report for Congress was updated February 27, 2007, by the Library of Congress, Congressional Research Service.

It briefly and simply (remember, it is written for elected officials) discusses such topics as:

• The Intelligence Community
• The "INTs": Intelligence Disciplines
• Integrating the INTs
• Intelligence Budget Process
• The 9/11 Investigations and the Congressional Response
• Oversight issues
• Ongoing Congressional Concerns (including collection capabilities, analytical quality, Iraq, international terrorism, and intelligence support to military forces)
• Issues In the 110th Congress (including quality of analysis, implementation of the Intelligence Reform Act [PL 108-458], ISR programs, terrorist surveillance program/NSA electronic surveillance, role of the CIA, role of the FBI, role of the Under Secretary of Defense for Intelligence, paramailitary operations and defense HUMINT, and regional concerns, CIA and allegations of prisoner abuse.

Use the Kroc Center

Monday in a Spokane newspaper blog, Coeur d'Alene's junior councilman Mike Kennedy posted an item about warming centers. He likes them. So now he's going to task the city staff to reinvent the wheel and figure out how to have warming centers for needy people during the winter. In other words, he wants the City to officially waive some of the life-safety codes that protect the very people he's trying to help.

Apparently Councilman Kennedy just realized that (1) there are homeless people in Coeur d'Alene (don't tell Mayor Sandi - acknowledging that doesn't sit well with her); (2) winters here are cold; and (3) the City Council just might be able to use this issue to deflect public attention away from how its urban renewal agency, the Lake City Development Corporation (LCDC), has been enriching the "impoverished" local millionaire developers but hasn't quite figured out how to do anything for the genuinely needy. Like keeping them from suffering in the streets from hypothermia and malnutrition. (There's no profit in human blight and deterioration.)

Rather than having city staff move with its usual glacial speed and stretching this idea out for as long as possible, here's my solution: Once the Mayor has declared the emergency, open the doors to the Kroc Center, put Salvation Army cots and blankets in the community room, fire up the kitchen and serve the people hot meals, and give them towels and access to the showers. The Kroc Center is properly zoned and presumably will meet all applicable city and life-safety codes.

How could the Salvation Army possibly refuse an opportunity to use its facility to help truly desperate people, maybe even save their lives? The Army's mission includes meeting human needs in Christ's name without discrimination. It's certainly a more important and benevolent use for the building than just providing a lap pool, a basketball court, and a climbing wall. Use Citylink buses to transport the people to the Kroc Center.

Now, let the city staff find something else to do.

"...When Greed Masquerades As Need..."*

I've been trying to find an original, simple way to explain my perception of what Coeur d'Alene's urban renewal agency, the Lake City Development Corporation (LCDC), is doing to Kootenai County residents.

Harvard University psychologist Dr. Daniel Gilbert beat me to the punch.

In his editorial comment in the Sunday New York Times (free online registration may be required), Dr. Gilbert anecdotally describes the psychological sleight-of-hand LCDC is using.
One phrase in the last paragraph of his column points to a growing public perception of LCDC's motives: "... when greed masquerades as need ..."

Thanks to Dan Gookin's The LCDC primer and Mary Souza's The City's Pulse newspaper column, people in Coeur d'Alene are beginning to ask good questions about LCDC's interpretation and administration of "urban renewal". When has a "blighted" condition been successfully abated? For that matter, why is premium waterfront property considered "blighted" simply because it has vegetation rather than buildings on it? Why do some multimillionaire developers "need" tax increment financing when other more conventional methods of financing are available for their profit-generating projects? What independent oversight prevents any LCDC Commissioner from using "inside information" from LCDC project applications to invest in assets certain to appreciate in value if the LCDC project is approved? What independent oversight prevents the LCDC Commissioners from manipulating the somewhat elastic geographic boundaries of the LCDC's urban renewal districts and then "steering" LCDC supported projects to enrich Commissioners, their business associates, and their families?

Urban renewal, properly used and conscientiously administered, can help truly blighted areas recover. Once recovery has occurred, the urban renewal project must end so the increment taxes go to improving the community, not enriching the urban renewal agency. Informed citizens are able to distinguish between greed and need. Urban renewal projects can be a legitimate means to an end, but they must never become the end themselves.
___________________________

*Daniel Gilbert, "Compassionate Commercialism," The New York Times, March 25, 2007 [newspaper on-line], available from http://www.nytimes.com/2007/03/25/opinion/25gilbert.html?th&emc=th; Internet; accessed March 25, 2007, at 2:00 P.M. PDT.

If Dirty Harry Got Elected...

What if an institutionalized Dirty Harry were running the City of Coeur d'Alene?

Remember the movies in which actor Clint Eastwood portrayed Inspector Harry Callahan, a fictional San Franciso police inspector who follows "...his own unconventional philosophy of justice using excessive force, ruthless methods, and 'the end justifies the means' principle without much regard for the rules and legal regulations of his profession."

The "unconventional philosophy" in the preceding paragraph exists. It has a name: noble cause corruption. As it applies to law enforcement officers, it is well-explained in the paper titled Occupational Stressors and Noble Cause Corruption: Understanding Inspector Callahan. The study was authored by Dr. David Sunahara and published by the Canadian Police College in September 2006.

The same noble cause corruption that can take root in law enforcement officers can infect elected and appointed officials, too. Look at the introduction in Dr. Sunahara's paper. It notes, "They act corruptly by stepping outside sanctioned means to achieve ends they deem worthy." But he goes on to say, "The nobility of the cause lies in the eyes of those officers (replace 'officers' with 'elected and appointed officials') who commit noble cause corruption. We cannot and should not assume that the ends they value, and use to justify their actions, are necessarily deemed worthy by the larger society."

How true.

It is only fair to note that when Clint Eastwood was serving as the mayor of Carmel-by-the-Sea, California, he left his Dirty Harry persona behind. Sadly, some of our local officials in Coeur d'Alene-by-the-Lake apparently retrieved and adopted it.

Executive Office of President Testimony Before Congress

The tie-in between the Executive Office of the President (EOP) and the recent firing of eight United States Attorneys has once again raised the possibility that Congress may try to subpoena presidential advisers and compel them to give testimony under oath on the firings.

This would be a contentious issue. To better understand it, read Presidential Advisers' Testimony Before Congressional Committees: An Overview. This 32-page document was prepared for Congress by the Library of Congress, Congressional Research Service, and updated April 14, 2004.

Misuse of Corporate Vehicles

"Corporate vehicles" does not refer to Fords, Chevrolets, Toyotas, Mercedes-Benz, Beemers, or any other motor vehicles.

"Corporate vehicles" refers to legal entities, including corporations, trusts, foundations and partnerships with limited liability. These corporate vehicles can and are used to launder assets in support of drug trafficking, terrorism, and public corruption.

How the assets are laundered is the subject of a report titled The Misuse of Corporate Vehicles Including Trust and Company Service Providers.

The report was produced in October 2006 by the Financial Action Task Force on Money Laundering (FATF). The FATF "...was established by the G-7 Summit that was held in Paris in 1989. Recognising the threat posed to the banking system and to financial institutions, the G-7 Heads of State or Government and President of the European Commission convened the Task Force from the G-7 member States, the European Commission, and eight other countries."

If you read nothing else in the study, read the Introduction and the Glossary. And don't be put off by the fact that the FATF is an international organization. The misuse of corporate vehicles is occurring in many communities in the United States.

Sunshine Week, March 11-17

March 11-17, 2007, is Sunshine Week.

Please take time to go to the link and read about it. Then participate.

Coeur d'Alene Planning Commissioner Mary Souza participated when she wrote an article headlined Our sweet, little community of Coeur d’Alene has been growing. The article was published on March 8, 2007, by the Coeur d'Alene Press.

I have little doubt Mary Souza will be vilified and have her personal character and motivation assailed by the very people who most fear honest, open government in Coeur d'Alene and Kootenai County.

Informed citizens who fearlessly insist on honesty and accountability from their elected and appointed officials are the best and most effective weapon against public corruption. Individual citizens asking thoughtful questions and being unwilling to accept nonresponsive or clearly deceptive answers from elected and appointed officials are just as important to good, honest government as the officials we select.

We, the People, sometimes forget that we have responsibilities of citizenship that equal or exceed the responsibilities of the hired help we elect to city, county, and state government. Let the hired help never forget that we are co-equal partners in government with them. If we fail to be diligent and attentive, if we allow corporate greed to control and corrupt city hall and its surrogates, we share with those whom we elected the responsibility for governmental failure.

Mary Souza's article asks that we simply look at what's happening and then meet our own personal responsibilities to ensure the government meets its responsibilities to all the citizens and that it does not become the tool of the corrupt.

It's not too much to ask.

FBI Use of National Security Letters - OIG Report

During the past few days there has been significant news reporting about the contents of a report by the US Department of Justice's Office of Inspector General. The report had been requested by Congress during its consideration of the USA PATRIOT Improvement and Reauthorization Act of 2005.

Here is a link to the unclassified version of the report entitled A Review of the Federal Bureau of Investigation's Use of National Security Letters.

Less Lethal

For years law enforcement has been looking for less lethal weapons as an alternative to deadly force. The prospect of less lethal weapons raises not only technical issues but also policy, training, and liability concerns.

In my February 16, 2005, blog post Theft, Gunfire, and Death in Hayden, Idaho: Part II, I wondered why Coeur d'Alene police officer Michael Kralicek entered an unsecured house in pursuit of the house's resident and chose to draw his department-issued TASER® rather than his handgun. The resident, Michael Madonna, had been ineffectively restrained by a Kootenai County deputy sheriff. Madonna was able to run into his house, pick up a handgun, and fire two rounds at Kralicek and the pursuing deputy. One of the rounds struck Kralicek with a disabling wound. I wondered if proliferation of less-lethal weapons (Kralicek was carrying three: an extendible baton, OC spray, and a TASER®), each with its own training requirements and policy boundaries, is forcing law enforcement officers to spend too much time making decisions, thereby placing their own lives at greater risk.

My concern expressed after the avoidable shootings of Michael Kralicek and Michael Madonna was somewhat validated by Spokane's Acting Police Chief Jim Nicks' comments following the death of Otto Zehm. During his arrest, Zehm was TASER'd and then restrained while in Spokane Police custody. He died while restrained. In her March 24, 2006, article headlined Officers in fight defended, The Spokesman-Review staff writer Jody Lawrence-Turner reports, "Nicks said his police department's policy regarding a Taser's use is the same as with all non-lethal weapons that officers carry. The protocol is if the tool doesn't work after two or three tries, move on to the next tool."

In November 2006, the US Department of Justice's Bureau of Justice Research and its Community Oriented Policing Services (COPS) program worked with the private Police Executive Research Forum (PERF) to publish Conducted Energy Devices: Development of Standards for Consistency and Guidance -- The Creation of National CED Policy and Training Guidelines. The report's principal authors were James M. Cronin and Joshua A. Ederheimer. This report focused on policies relating to conducted energy devices (CED), more commonly referred to by one specfic product's acronym "TASER®", a registered trademark of TASER International.

Additionally, the International Association of Chiefs of Police (IACP), the Bureau of Justice Assistance, COPS, the National Institute of Justice, and other organizations have joined together to create a website to provide an online clearinghouse for information about less lethal weapons. The clearinghouse's URL is Less-Lethal.org. The site "...was created by the Less Lethal Technology Working Group (LLTWG) to assist local, state and federal law enforcement agencies in developing, implementing and enhancing policies governing the use of less lethal technologies."

FBI Financial Crime Report for 2006

Interested in

• Corporate fraud
• Securities and commodities fraud
• Health care fraud
• Mortgage fraud
• Identity theft
• Insurance fraud
• Mass marketing fraud
• Money laundering and asset forfeiture?

Then read the Federal Bureau of Investigation's Financial Crimes Report to the Public - Fiscal Year 2006. Each of the "bullet" sections of the report provides an overview, statistical accomplishments, and case examples of the identified priority crime problems specifically addressed by the FBI's Financial Crimes Section. Where appropriate, suggestions are made in order to protect the public from being victimized by fraudulent activity.

Doin' the Laundry

I suspect many people have heard the term "money laundering" but haven't really given it much thought. This post will provide links explaining what money laundering is, however it will also ask the reader to consider how the money laundering process is also a very good model for removing or at least hiding the taint from almost any tainted asset such as land or political campaign contributions. Because the process can be applied to other assets, not just currency, the term "asset laundering" will be used interchangeably with "money laundering."

There is a very simple and functional explanation of the basic laundering process at the Howstuffworks webpage in a piece titled How Money Laundering Works by Julia Layton. Again, the process steps of placement, layering, and integration described in the Howstuff works post applies to other assets as well as currency.

In its simplest terms, asset laundering is undertaken because the movement of large amounts of cash or other assets still attract unwanted law enforcement, regulatory, or public attention. "Large" is a relative term here. Any amount of dirty money that exceeds some threshold amount is dirty and needs laundering. The cash proceeds of drug transactions are often laundered to disassociate the currency from the illegal commodity. Illegally large political campaign contributions can be laundered through small mom-and-pop businesses or shell companies (e.g., Limited Liability Corporation - LLC).

Land that would be tainted if retained by one entity can appear to have the taint removed through a series of land exchanges with other groups such as a "private" non-profit organization. While the transaction may be legal, the layering of exchanges follows the asset laundering process very closely.

Though drug money is often used to demonstrate how assets can be laundered, one of the most notorious and largest asset laundering schemes was laid out in The BCCI Affair, a report to the Committee on Foreign Relations of the United States Senate by Senator John Kerry and Senator Hank Brown, December 1992, 102d Congress 2d Session Senate Print 102-140. The Bank of Credit and Commerce International - BCCI, was a founded as a criminal enterprise disguised as a lawfully operating bank.

BCCI's criminality included fraud by BCCI and BCCI customers involving billions of dollars; money laundering in Europe, Africa, Asia, and the Americas; BCCI's bribery of officials in most of those locations; support of terrorism, arms trafficking, and the sale of nuclear technologies; management of prostitution; the commission and facilitation of income tax evasion, smuggling, and illegal immigration; illicit purchases of banks and real estate; and a panoply of financial crimes limited only by the imagination of its officers and customers.

Among BCCI's principal mechanisms for committing crimes were its use of shell corporations and bank confidentiality and secrecy havens; layering of its corporate structure; its use of front-men and nominees, guarantees and buy-back arrangements; back-to-back financial documentation among BCCI controlled entities, kick-backs and bribes, the intimidation of witnesses, and the retention of well-placed insiders to discourage governmental action.

For readers who have digested the simple but clear explanation from the Howstuffworks post on Money Laundering, a more comprehensive examination will be found in the US government Money Laundering Threat Assessment Working Group report U.S. Money Laundering Threat Assessment dated December 2005. The report discusses several vehicles often used to facilitate asset laundering. They include:

• Banking
• Money Services Businesses
• Online Payment Systems
• Informal Value Transfer Systems
• Bulk Cash Smuggling
• Trade-Based Money Laundering
• Insurance Companies
• Shell Companies and Trusts
• Casinos
  

Huge Insider Trading Scandal

The Seattle Times ran an article today headlined White-collar ring cracked. The Associated Press article was authored by Larry Neumeister. The Seattle Post-Intelligencer also ran an article headlined Brokers at "top-tier" firms charged in trading scheme. The P-I's article was based on material by Bloomberg News writers Patricia Hurtado and David Scheer. Both articles describe how top tier Wall Street brokerage firms' employees stole millions of dollars over a period of five years through insider trading. The defendants included husband-and-wife lawyers, registered representatives, compliance personnel and hedge-fund portfolio managers. And the top tier companies? UBS Securities LLC and Morgan Stanley & Co., Inc.

This scandal is huge.

Here is a link to the US Securities and Exchange Commission's Litigation Release No. 20022 dated March 1, 2007. This release identifies the individuals and companies involved both upstream and downstream, and it describes the nature of the schemes involved.

Here is a link to the complaint filed by the Securities and Exchange Commission in the US District Court for the Southern District of New York. The complaint names the defendants and their employers. Beginning on page 8, the complaint describes how each of the schemes worked.

"Bank Examiner! Halt or I'll Put On My Green Eyeshade!"

Okay, the title is a little far-fetched. It's really not likely that the next action figure toy from Hasbro, Inc. will be a bank examiner. Still, there are few finance industry professionals who do more to protect the money we put in banks insured by the Federal Deposit Insurance Corporation (FDIC).

The early detection of apparent fraud and insider abuse by bank employees is an essential element in limiting the risk to the FDIC's deposit insurance funds and uninsured depositors.

Included under each of the following subject areas is a summary of potential problems, a listing of warning signs of potential fraud and insider abuse and suggested action for investigation.

• Corporate Culture/Ethics
• Insider Transactions
• Loan Participations
• Real Estate Lending
• Secured Lending
• Third Party Obligations
• Lending to Buy Tax Shelter Investments
• Linked Financing/Brokered Deposits
• Credit Cards and ATM Transactions
• Advance Fee Schemes
• Offshore Transactions
• Wire Transfers
• Money Laundering
• Securities Trading Activities
• Miscellaneous

For an elaboration about each of these subject areas that includes a description of the potential problems, the warning signs, and suggested actions, see the FDIC Risk Management Manual of Examination Policies. The Warning Signs in particular are especially relevant to consumers since we may see them when conscientiously examining our monthly banks statements, applying for mortgage and other loans, or being sure we don't become victims of credit and debit card fraud and identity theft.