Bowes On Tax Presents

It's gotta feel good to get to tell the pundits, "How do you like me now?"

A day after I went on Abdul in the Morning and stated that Marion County Assessor Greg Bowes was in a tough position in his bid to become prosecutor because he works in an office that routinely gives bad news (passes out property tax bills), he announced that tax bills will be on time for the first time in four years, and an astounding 82% of rate payers will be seeing decreases in their property taxes. Nine percent will see decrease of 10% or more, Bowes states.

That's an awful lot of good cheer he gets to spread for 2010.

Of course, it comes with a cost to government services. Wish-TV reports the likelihood of further cuts in the arts and parks budgets because of lost property tax revenue. I understand that when money gets tight, "recreation" seems a lesser priority than core services, such as public safety. But when the outgoing Republican council prez, Bob Cockrum, tells you the public safety, police, and fire budgets can have some fat trimmed out of them, I listen.

I hope the council will go get that money first before making more cuts in arts and parks; otherwise, everything that makes Indianapolis a good place to live will suffer.

Bowes On Tax Presents

Idle Speculation About Child Abuse Deaths?

Normally, I use this blog to persuade you, valiant reader. Today, I'm going to provide facts and let you reach your own conclusions.

1. There are two annual publications of note in Indiana that deal with child abuse and neglect fatalties.

2. One report, which has no title, is prepared by the multi-disciplinary State Child Fatality Review Team, chaired by Dr. Antoinette Laskey, a forensic pediatrician from Riley Hospital for Children & the IU School of Medicine.

3. One report, entitled, "Child Abuse & Neglect Annual Report of Child Fatalities," is prepared by the Indiana Department of Child Services (DCS).

4. The reports review causes of "reported" child abuse and neglect deaths and provide recommendations to policymakers to lower the number.

5. Each report runs in state fiscal years. The "2007 report" covers from July 1, 2006, to June 30, 2007, which makes calling it the "2007 report" a misnomer. (This sounds like boring accounting goobledygunk, but it will be important later).

6. Among the "reported" fatalities, Indiana made a pretty drastic improvement for state fiscal year 2007. Going back the past five years, the annual reported abuse and neglect fatalities are as follows:

SFY 2003 - 51
SFY 2004 - 57
SFY 2005 - 57
SFY 2006 - 56
SFY 2007 - 36

7. The time it takes DCS to produce/release its report varies. It's quickest time to go public was 6 months in 2003. The longest time it has taken to produce a report is....this year. The clock is about to strike 2010, and DCS still has not produced its report for FY 2008, which ended 18 months ago.

8. In 2008, Governor Mitch Daniels ran for re-election.

9. DCS issued the SFY 2007 report in March of 2008, or only nine months after the close of the 2007 fiscal year. This was faster than 2005 (11 months) or 2006 (14 months).

10. Governor Mitch Daniels' campaign website issued a press release in April of 2008 touting the reduction in child abuse and neglect fatalties to 36. This release, in the same paragraph, celebrated the hiring of 800 new family case managers (a process which began in 2005).

11. The Governor's press release noted that that only 9 of the 36 kids who died had contact with DCS.

12. The general public has no precise idea how Indiana (and DCS) has done since July of 2007, as no report has been issued for the 2008 or 2009 SFYs. (Sure, we've seen child deaths in the paper, but that's hardly comprehensive).

13. If DCS completed its report in six months, as it did in 2003, we would know how we did for both SFY 2008 and 2009, specifically, whether there were more than 36 fatalities in either year, or whether more than 9 children were killed who had contact with DCS in either year.

14. What we learn in those reports might or might not serve as a compelling rationale for legislative funding. In the Governor's own press release, it states:

(Dr. Laskey) questioned whether the 36 child deaths reported Monday was truly an accurate number.

“I just don’t know what that number is,” said Laskey, a forensic pediatrician at Riley Hospital for Children and the IU School of Medicine. “I don’t know what that number means without looking at all the child deaths.”

The group issued a report last month that said the lack of financial support from the state and lack of a fatality network has severely curtailed the scope of child fatality review in Indiana.

Many states review every child death (including all natural deaths) each year,” the group’s report said. “Thorough reviews of all deaths have led to improved knowledge an prevention programs with measurable outcomes. Indiana needs to rise to this level.”

Child Services Director James Payne said some states try to review all child fatalities, not just those documented as abuse and neglect.

“We hope to be able to get to that,” he said. “There is an issue of commitment of persons not only by the department, but commitments of law enforcement and others. There is an issue of funding that has to go with that, but our goal ultimately is to look at all cases.”

15. James Payne runs the Department of Child Services. If there is an issue of "commitment" of persons in the department, he can remedy it or fire people.

16. James Payne has been an actively lobbyist for DCS at the Indiana General Assembly, and DCS has its own lobbyist. The Governor and Director Payne both have legislative liaisons.

17. Knowing the ways Indiana children have been dying over the past two fiscal years might serve as a clarion call for funding, legislative changes, or both at the current Indiana General Assembly session.

18. For example, if deaths from parents sleeping with their children have risen in either of those years, even by one, someone might rethink the decision to cut the public service announcement budget by 63% for ads warning against this practice.

19. The last report issued by Dr. Laskey's team in February of 2008 says the following:

"Many recommendations in this year’s report mirror those made for SFY2005."

20. The only way recommendations from a 2008 report would be made again is if nothing changed in 2007.

Are we really better at protecting children, or was SFY 2007 an anomoly? We still don't know. Let's hope we are as good as advertised and that an opportunity to make things better hasn't been squandered.

Idle Speculation About Child Abuse Deaths?

Electrical Workers Make Shocking Donation?

I consider the folks at IBEW Local 481 my brothers and sisters in arms.

I’ve phone-banked out of their hall at 1828 North Meridian Street on at least a dozen Democratic campaigns, and a few weeks ago, I attended Democratic Superior Court Judge David Dreyer's holiday party there. (Kountry Kitchen wowed again. If you haven't been, make a point of going - 1831 N. College Avenue).

So how do I explain the $5,000 IBEW Local 481 gave to Republican Carl Brizzi's 5th District Congressional campaign on May 13, 2009? (Technically the donation is from the IBEW PAC in D.C., but that doesn't happen without local boosting, and Brizzi's campaign lists it as a 481 donation).

Democrats have such strong relationships with unions, it's easy to expect them to support only Democrats. That's unfair. Unions are interest groups, and their leaders survive by safeguarding their members' interests. Sometimes unions have to keep peace with an incumbent Republican likely to win re-election. This may be why the IBEW supported Brizzi in 2006 when he ran against Democrat Melina Kennedy.

If you read contribution reports, you'll know car dealers donate to Attorneys General, manufaturers donate to Governors, and stock brokers donate to Secretaries of State. Why? To keep enforcement bodies out of their hair.

The offices Republican candidates do well garnering union support in are law enforcement-related (prosecutor, sheriff). This makes all the sense in the world. Were I running a union, I'd like the comfort of knowing a prosecutor wouldn't pounce on my local and get headlines only to say later, "Sorry, we were mistaken." As Tim Durham knows, you can't buy back credibility.

Just as often, though, unions have to choose the lesser of evils. Maybe the IBEW viewed Brizzi as the least offensive Republican candidate in a district certainly staying Republican. (The the other R candidates are Brose McVey, Luke Messer, Mike Murphy, and Dr. John McGoff). Brizzi certainly couldn't have done worse than Burton, who has a 14% lifetime AFL-CIO voting record.

I understand tough choices. What I don't understand is the timing. Brizzi repeatedly said he would not run unless Burton retired, so why not wait until Burton stepped aside?

I ask because at the close of September of 2009, Brizzi still had $22,000 in his federal campaign committee coffer. It would have been $23,000, but two weeks after receiving that IBEW donation, Brizzi gave $1,000 to Mike Pence.

Yes, the Mike Pence with 0% AFL-CIO rating in 2008 and a lifetime rating of 7%. You know, the chair of the House Republican Conference, committed to regaining GOP control at the midterm elections. Since Pence doesn’t have any real challenge this time around (sorry Dems), all the IBEW’s money could end in the account of a staunch opponent of organized labor. Less than fifty days after Brizzi's donation, Pence shipped $25,000 to the National Republican Congressional Committee.

The moral of the story is that giving a donation to a Republican at the inception of a five-way fire-fight that you don't even know he's in is not the same as giving it to him in a two-way shoot-out that's near the finish line. It’s also not the same as paying for independent expenditures that you control. When you hand over a check without conditions, all bets are off.

IBEW 481's history of massive donations, manpower, facilities, and political strategy to Democrats will always outweigh an occasional ill-fated decision like this, but I hope other unions will view this post as a cautionary tale.

Before you hand a check over to a "lesser evil," you might want a commitment that the candidate will use the money for his own race or refund it. Otherwise, you risk propping up those who would destroy everything you wish to preserve or achieve.

UPDATE: The International Union of Operating Engineers Local 103 also gave Brizzi $1,000 on May 27, 2009. They also gave $1,000 to now defunct Republican sheriff candidate, Tim Motsinger, on March 6, 2009, and another $500 on May 8, 2009, donations that illustrate nicely my point about unions and law enforcement R candidates. In folding up his committee, Motsinger stated:

I have made the decision that it is appropriate to return any and all financial contributions and loans that my campaign has received from him (Tim Durham) or his affiliated businesses.

As Local 103 isn't a Durham company, I'm assuming it didn't get its money back from Motsinger. Was it spent, or will there be another Republican committee benefitting from labor union generosity?

Electrical Workers Make Shocking Donation?

Tim Durham Goes Celeb Gossip Trashy

You know you've "made it" into the lifestyles of the rich an infamous when
Gawker shreds you. Whoever said the only bad press is no press probably didn't see the context in which Gawker put Tim Durham.

In a story entitled, "The Fake Decade," Gawker notes:

What's almost more interesting than the multi-billion dollar fraud Bernie Madoff perpetrated are the many other alleged Ponzi-schemers coming out of the woodwork in Indiana (Tim Durham, pictured above with friend Ludacris) or Florida or wherever else. It seems that the idea of living a lifestyle based on nothing but plausibility — nice literature, offices full of Eames chairs and a convincing tone of voice — was a pervasive one. It's too easy to use this as a metaphor for the wider economy.

Tim Durham Goes Celeb Gossip Trashy

How Wal-Mart Will Take Over the World: Simple Economics

It started with a simple idea at Sam’s Club. Construct a cheap warehouse, model it as a store, buy mayonnaise in five-gallon drums, and pass on bulk purchase savings to consumers. It worked like a charm in places where homes have adequate space to store pickles by the ton – the Heartland and rural America. (New York City? Not so much).

But then Sam realized something. If the companies were going to deliver the merchandise anyway, why not ask them to break it into smaller packages so they can be sold at a super-supermarkets called “Wal-mart?” Companies were so excited just to be on the shelves of such a growing enterprise, they all yelled, “Absolutely, Sam! We’ll break it up for you, and you help us do such a volume business, we’ll even give you the same rate we had when we were selling you toilet paper in the fifty packs!”

As every small store and artisan in hamlets throughout America closed their doors, one by one consumed by the behemoth, the industry giants of grocery –Kelloggs, Tyson, Jimmy Dean, Borden, and the like – didn’t think twice about all the little folk being gobbled.

Little did they know that the joke would ultimately be on them.

Even a decade and change ago, if you went into a Wal-mart, you noticed some “generic” products, mostly in the cereal aisle. Malt-O-Meal had a slew of cereals whose names and images came as close to trademark infringement as one could get. If you didn’t want to pay $4 for a 16-ounce box of Fruity Pebbles, you could pay $8 for 100 ounces of Dino Bites in a plastic bag.

There has always been a school of thought that a company could make roughly the same product as Kellogg but sell it for less because there’s no marketing overhead (no commercials with Tiger's wearing kerchiefs).

But about a year ago, I noticed something different. The “Great Value” brand, Walmart’s own, appeared in the cereal aisle. Quaker instant oatmeal was $3, but Great Value was only $2.10. Then Great Value appeared in the milk aisle for $1.89 per gallon, while Dean’s was $3.10. Then Great Value made graham crackers, which taste better than Keebler and cost $1.00 less per box. Every new trip reveals new Great Value. Now they have Great Value hamburger and turkey.

This is pure, unadulterated, diabolical genius by Walmart.

Think about this. How does cereal get made? Kellogg contracts with people for grains, then it either contracts with people to refine the grain into cereal or it uses employees to do it. Then it contracts with people to deliver the product, or it uses employees to deliver it to grocery stores. Under this model, the grocery store is selling nothing but space.

But what Walmart realized is that if we make our “space” the most valued on the planet, we can take it over. Walmart decided it would use its billions to contract directly with the people who make the grains and it would make its own food cheaper. Now you’re saying, “Yeah, but Chris, this is the Malt-o-Meal model, isn’t it? When was the last time you said Malt-o-Meal owned the world?”

True. But the difference is Walmart has the heft to make a “generic brand” legitimate just by putting its name on it. So I tell myself, well, seeing "Great Value" everywhere on the shelf helps build the brand, but Walmart might have to ultimately advertise. This week, I saw my first billboard for “Great Value.”

Word will spread, rest assured. And once people realize you can save $1.00 per gallon on milk (and damn near everything else) without being able to tell the difference, the “name brand” products will start getting demolished, and so will the name brand companies. In fact, the only place I haven’t seen the Walmart takeover yet is in the hygiene aisle. That might be the one safe haven for brand names. Nobody will live down using “Great Value” deodorant.

But the rest of the world will soon be owned by Walmart.

I'm not kidding.

So, on that uplifting note....Merry Christmas and Happy Holidays to all!

How Wal-Mart Will Take Over the World: Simple Economics

Amish-stad! Durham Swindles Old-School (Literally) Investors?

The Indianapolis Star speculates that a new group of Fair investors from Ohio who sued Tim Durham are Amish.

According to the Star, the Amish faith discourages resolving disputes through court proceedings, so an Amish collective may have formed a limited liability company solely to sue Durham, who now has famed defense attorney, Jim Voyles, on the payroll.

It's premature to say Durham and Fair targeted the Amish, but if you were going to run a scam on somebody, could you script a better victim class than people who: (a) don't sue; and (b) don't have internet access track the multitude of stories putting you around astronomically "lucky" stock successes, the lawsuits filed against you, and your connection with some companies with SEC entanglements?

If Durham did, indeed, swindle Amish folk, he should be forced to churn apple butter until the sales proceeds can pay off every cent.

Also, if this turns out to be true, it will be ironic that Secretary of State Todd Rokita was right about faith-based affinity fraud. He just got the wrong faith, and he failed to mention that the "preying" was being done by one of the Indiana GOP's biggest donors.

Amish-stad! Durham Swindles Old-School (Literally) Investors?

T'is the Season....

...for leadership changes.

A belated congratulations to Nancy Guyott, who is the first woman (and the youngest person of either gender) to be elected president of the Indiana AFL-CIO. She got elected on December 15, 2009, and already she has some in the conservatorati up in arms...for praying.

Yes, you heard me correctly. Nancy is actually being criticized because she led a prayer vigil for the Employee Free Choice Act, which the website "Indiana's Conservative Hardball" calls "the most evil piece of legislation to come down the pike in years...."

I'm not easily offended, but as a Christian, I do not think I'm out of line asking that somebody who puts a Bible quote on the top of his website refrain from mocking prayer. First, you look arrogant thinking you know what God cares about when people are joined in his name, and second, you make other Christians look like idiots by association.

What would Jesus do? According to ICH, apparently forget about the working poor and healing the sick and instead lobby for, what? A capital gains tax cut? When will we get the point in our country where we let prayers from all faiths and sects and purposes unite, not divide us?

This past week, the Marion County chapter of the Indiana Democratic African-American Caucus (IDAAC) held its annual election. Marshawn Wolley was re-elected president and State Senator Jean Breaux was elected vice-president, both by razor-sharp margins. Chief Deputy Marion County Coronoer Alfie Ballew was elected treasurer, and Janeane Minor was elected secretary.

Also this past week, the Marion County Bar Association held its annual elections. Its new officers are as follows:

President: Dana Phillips
President-Elect: Randle Pollard
Vice President: Zachary Myers
Treasurer: Noell Taylor-Allen
Recording Secretary: LaKesha Triggs
Corresponding Secretary: Felicia Howells
Board of Directors: The Honorable Judge Ricardo Rivera; Nate Lee; Juval Scott; Robyn Rucker; Ryan Gardner

Congratulations to all the new leaders. May your 2010 be blessed with wisdom.

T'is the Season....

Chairman Treacy Gives Ballard Lump of Coal for Christmas

Having landed in the new digs, Ed Treacy, the Marion County Democratic Party Chair, is now bringing the holiday poetry:

'Twas the night before Christmas, when all through the city,
No Mayoral vision appearing, not even for pity,
The citizens were worried, for their city they do care,
In hopes that the Mayor soon would be there,
The Republican Caucus nestled snug in their beds,
While hopes of bold vision danced in their heads,
And the city did brace for the coming cold snap,
Having just gotten over the last snow plowing flap,
When from city hall there arose such a clatter,
I sprang from the bed to see what was the matter,
Away to the window I flew like a flash,
Then did Steve Goldsmith appear, from the far distant past,
The moon on the breast of the new-fallen snow,
Gave the lustre of mid-day to objects below,
When, what to my wondering eyes should appear,
But a set of new problems, even worse I did hear,
With a misleading care for the local taxpayer,
I knew in a moment it must be the Mayor,
More rapid than eagles his supporters they came,
And he whistled, and shouted, and called them by name -
"Now, Cotterill and Vane! Now, Bego! Now, Brizzi and Karn!
On, Grand! On Loftus! On Durham and Vaughn!
To Chinatown go and seek out the cricket ball!
Now dash away! Dash away! Dash away, all!
As CIB taxes rose up to the sky,
When they meet with an obstacle, they cannot deny,
So new taxes on hotels around they flew,
With taxes on food and beverages too,
And then, in a twinkling, I heard from the news,
The Mayor did plan to raise fees, quite a few,
As I looked at the fees, increases galore,
No longer a friend to the tea partiers, not anymore,
He was threatening to veto any smoking ban,
And his advisors still haven’t concocted a plan,
A free cop car he had flung on his back,
And he looked like a peddler just opening his pack.
His eyes -- how they twinkled! His dimples how merry!
His cheeks were like roses, his nose like a cherry!
His droll little mouth was drawn up like a bow,
And somehow the original poem was so apropos,
The lack of a smoking ban with any teeth,
The smoke it encircled his head like a wreath,
He had a broad face and a little round belly,
That shook, when he laughed like a bowlful of jelly,
He was chubby and plump, a right jolly old elf,
And I laughed when I saw him, in spite of myself,
A phone call to Bales, parks traded for cash, instead,
Soon gave me to know I had everything to dread,
He is someone who once ran a car pool,
And despite what’s been said by his stooge, Abdul,
Just by laying his finger aside of his nose,
And by giving a nod, the taxes and fees they all rose;
He sprang to his sleigh, to his team gave a whistle,
And away they all flew like the down of a thistle,
But I heard him exclaim, ere he drove out of sight,
"Higher taxes to all, and to all a good-night!"

Chairman Treacy Gives Ballard Lump of Coal for Christmas

"Let My Brizzi Go" and Other Weekend Thoughts

I know I said I would, but I can't....because either (1) Harry & Izzy's isn't doing so well; or (2) Carl Brizzi may have committed perjury.

Carl Brizzi is a silent partner at Harry & Izzy's with a 10% stake.

On February 23, 2009, Carl Brizzi listed his "gross weekly income" on his child support worksheet under "penalties for perjury" as $2,500. That's $130,000 annually.

"Gross weekly income" under the Indiana Child Support Guidelines includes "income from any source including salaries, wages, commissions, bonuses, overtime, parnership distributions, dividends, severance pay, pensions, interest, trust income, capital gains, gifts, inheritances, and prizes. "Gross weekly income" also includes "imputed" income based on in-kind benefits, such as a company car, or say, a health club or country club membership.

Carl Brizzi earns $123,000 as our Marion County Prosecutor, which means that, for him to have been truthful on his worksheet, his income from all other sources could not have exceeded $7,000. (I've put aside completely the cash value of the complimentary memberships to the Columbia Club and Highland Country Club - $6,300 value alone - and the sports tickets).

Everybody knows that Harry & Izzy's is not St. Elmo's, which had $13.4 million in sales in 2007 and $12.9 million in 2008. But if you go to H&I's in the evening, it's almost always packed. I'm no expert, so I will defer to industry folk, but I've heard profit margins are 4-5% of sales on most restaurants, and if you're really doing it right, you can get up to 20%. If H&I did only $6 million in sales, Brizzi would have made $30,000 (10% of 5% of $6 million), not $7,000. Also, he has a real estate holding company. Did those properties not make money?

Anyway, working the math back, if the profit margin is 5%, it means Harry & Izzy's would have only had $1.4 million in sales last year ($1.4 x .05 x .10). For that place? Sorry, but there's no way Jeff Smith doesn't have his place humming better than that.

(I might add that I recall reading in the Wall Street Journal back in June that this is the first time in a long-while that restaurants are increasing their profit margins because they've been raising prices 3% annually to cover transportation costs that have now fallen off).

So how do we account for such a paltry profit for Brizzi?

In fairness to Brizzi, I suspect a lot of people shave their numbers to reach some agreed upon result between the parties. But don't tell me it's not perjury. Just say nobody cares about that type of perjury because it's "personal business"-justified lying, a la Bill Clinton. Of course, if anybody should care about perjury, wouldn't it be a prosecutor? I recall Ken Starr caring a great deal when he held that title.

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Even though he's a Republican, I give credit to Senator Travis Holdman for political courage for his bill to make it a Class C infraction to text while driving. Unlike the bill that restricted only teenagers (who couldn't vote), Holdman had the courage to go the "fully monty" legislatively speaking by making it apply to everybody. I don't know how you can know that texting has surpassed drunk driving as the leading cause of accidents and not support this bill (unless you're a Libertarian or really like accidents). Plus, the state will gets tons of money without raising taxes because everybody I know does it. Me?!? No comment.

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I was watching CSPAN last night, and I could have sworn I heard Arlen Specter refer to himself as a Republican. Maybe I was just dreaming. His speeches do have a way of making one drift in and out.

"Let My Brizzi Go" and Other Weekend Thoughts

PSAs (Politician-Serving Announcements)

I'm not going to recreate the wheel, as Mary Beth Schneider of the Indianapolis Star covered the issue of politicians using public service announcements for self-aggrandizement very well already.

But State Treasurer Richard Mourdock's new ad promoting the state's College Choice 529 savings plan is so over-the-top, I can't help kicking the tire a bit.

The ad starts with Mourdock in a red sweater sitting in front of a fireplace with stockings, no doubt hung by the chimney with care, and..oh, guess what? They actually show Mourdock hanging one himself. How festive!

Wedged between some text fade-ins that reminded me of the last time my contact slipped into the corner of my eye and then popped back folded over, Mourdock's ad centers on a blond toddler with the cute red bow in her hair as she sits on grandma's lap and a family exchanges gifts in the background. How adorable!

Mourdock will defend himself by contending critics are opposed to the substance of the ad. No, we're not. We just realize that too many politicans (some in my own party, I might add) see the substance as secondary to increasing their own visibility.

Here's how you know I'm right.

Take Richard Mourdock completely out of the ad, and put in any other human being, and unless you're Richard Mourdock, you'll see that nothing is lost. In fact, we might reduce the "creeped out by the overly bushy eyebrows" factor measurably. You could even use the Keller & Keller guy: "Tell your kids you..mean..business...about their educations!" Mourdock even gives himself a PR two-fer by referring Hoosiers to www.collegechoiceplan.com which has what in the top right corner? A picture of Richard Mourdock.

Must be nice to have a half million dollars to spend on yourself the year before you run for re-election. How much do you think he'll spend in 2010?

Until we demand he stops, as much as he wants.

PSAs (Politician-Serving Announcements)

The Williams-Durham Fallout

Democratic mayoral candidate Brian Williams is an idea machine. His columns for the Indianapolis Business Journal are all extremely thoughtful, as are his campaign website "letters." The website also has a few good “internet commercials.” (Yes, I did think his campaign slogan “braves ideas” was awfully close to Andre Carson’s “bold leadership,” but, hey, how many original campaign phrases are left?!?)

Brian may dispute this, but most people I talk with say he does not have deep grassroots support in the Democratic Party. But he fits a prototype of a Democrat who can win in an Indianapolis that is, respectfully, dominated by the wealthy, be they individual (think Simon, DeHaan, McAllister) or institutional (think Eli Lilly & Barnes & Thornburg).

Brian fits the potent “Peterson” model as a guy who came up Democrat but turned wizard in a largely Republican-dominated field, such as real estate development, finance, or mergers & acquisitions. This type of candidate can gain the support of, or at least negate the influence of, small “r” Republicans by virtue of the shared joy of capital formation.

A guy like Williams, running against a mayor that many Republicans can’t stand, could theoretically raise a lot of “cross-over” money, hop over “party insiders” and avoid slating, get on TV, and win a primary and general election. Just as Peterson did, Williams could say, “Hey, I’m a Democrat, but you have nothing to fear, Republicans.” (Of course, this might terrify Democrats. You decide).

Then came Tim Durham.

Durham’s legal troubles have been nauseatingly chronicled, and some pundits proclaimed Williams’ campaign was over. It will definitely be a tricky needle to thread for Williams.

Nothing damages an entire party like a good scandal, in particular one that has Playboy bunnies, fancy cars, and a yacht (think Lonely Island and T-Pain's “I’m on a Boat”). Accordingly, Democrats will work the phrase “Tim Durham” into everything, even when Carl Brizzi steps down.

Marion County Democratic Chair Ed Treacy on Christmas? “Democrats believe that Christmas is about giving…not about taking money in a ponzi scheme like Tim Durham, the Marion County Republican Party’s biggest donor.”

Ed Treacy on grilled cheese? “Democrats believe grilled cheese is pure Americana, a fusion of delicious ingredients for an even better taste, not a ripping apart of investor’s hearts and wallets, leaving a bad taste in their mouths, which is what GOP b.f.f. Tim Durham did.”

This one is actually true. Democratic prosecutor front-runner Terry Curry sent an e-mail to supporters today saying our contributions can “send a strong message to both the Republican Party and to their powerful friends that the Marion County criminal justice system is not for sale.” (Get ‘em, Terry!)

Can we dispute it would be logically challenging to churn the Durham angle in 2010 then hand the reins to a guy in 2011 who is “connected” with Durham? The answer lies in the nature of the connection and whether the voting public is indiscriminate.

Having reviewed a stack of legal documents, this is what I’m pretty sure I know. In 2000 or shortly thereafter, Brian became a member of Obsidian Capital Corporation, LLC (“OCC”). However, the operating agreement designated Williams, who only had a 5% share, as a Class B member, which meant he had no ability to control the management of the company any more than a minority shareholder can tell Bill Gates what to do at Microsoft. Williams also apparently signed the Obsidian Capital Partners, LLP operating agreement on behalf of an entity known as the 77th Street Partners. (In other words, if I'm reading the handwriting correctly, Williams was “down with OCP”). But, again, Williams had no managerial control.

As Williams pointed out in an interview with Amos Brown, in 2005, he and several other investors recognized that Durham was moving away from the stated mission he had given to Williams, which was the purchase and resale of manufacturing and distribution companies. According to Williams, he “started to extract himself, or tried to extract himself” from the relationship.

It’s unclear what specific steps Williams took, however, until December of 2007, when Williams and numerous other investors (who I’ll collectively call “the investors”) demanded through their counsel, John Taylor, that Durham “cash out” their interests.

A flurry of correspondence ensued. One e-mail from Taylor, dated March 12, 2009, states that the investors “do not regret” the investment they made, but they just wanted out. As an aside, nobody can attribute this alleged lack of regret to Williams, as it’s most likely legal puffery employed to make Durham a more amenable buyer.

In response, Durham’s counsel, John Egloff of Riley, Bennett, & Egloff (a big Mayor Ballard donor, by the way) asserted that neither Williams nor the other investors had any contractual basis to request a “buy out.” Nonetheless, Durham stated he would agree to an appraisal of the companies for the purpose of facilitating a purchase at fair market value.

For reasons unclear to me, the investors did not agree but instead gave Durham a deadline to make an offer in the range of 10x to 15x their initial investments. When Durham refused, Taylor seemed perplexed, and in a sales pitch I cannot ever imagine working (which I'll call "the Hyman Roth stategem") said essentially that the investors thought that Durham would want to share his largesse so people would know he made money for his partners. Clearly exasperated with Durham's incalcitrance, Taylor asks, “Is Tim just all washed up? Is that the underlying problem?”

Durham then turned the tables on the investors and on April 21, 2008, sued them in Marion County, claiming they were engaging in bad faith and arguably extortion by telling him to pay them inflated values to avoid litigation when they had no right legally to any “buy-out.” (Not to bore the non-lawyers, but under the operating agreement (a/k/a “the owners manual”) for Obsidian’s Capital Corp. LLC, only a vote of the majority of Class A members (Williams was Class B) could “terminate” the company, which would require it to pay all liabilities, sell all property, and distribute what’s left to the members. Without the ability to force the same, Williams had no way out, and the 3 other Class A members in addition to Durham were Durham associates).

Notably, in the counterclaim, Williams and the investors alleged that “Durham, Obsidian Capital, Obsidian Partners, Fair Finance, and Fair Holdings have been within the zone of insolvency or have been or are insolvent” and further, that Durham “has equity interests in over 50 companies.” Yes, you read that right. Fifty! In short, the investors suspected Durham was crashing in early 2008.

The next thing reflected in the Court file is a stipulation of dismissal, which is what parties do to say they don’t want to go forward because the case settled.

Then on January 9, 2009, the same group of investors filed separate suits against Durham in Hamilton County. The complaints said that Durham breached promissory notes held by the investors with a collective value of $313,130. Under the promissory notes, Durham was to pay three installments on 9-30-08, 12-31-08, and 3-31-09 to each investor. Durham made the September payments, but then failed to pay in December.

Initially, I thought these promissory notes were loans, which would have suggested that Williams and Durham was an ongoing concern. Williams clarified, however, that the notes were part of the Marion County settlement. This, of course, makes sense if you’re Durham. Instead of possibly having a judgment entered against you that people can see, you have a settlement on paper only.

The Hamilton County lawsuit concluded almost immediately with a settlement agreement, except this time the terms were more transparent. Durham was to make payments to all plaintiffs on the 15th of each month from February through June of 2009, with the greatest portion to be paid in the first month and lesser amounts each month thereafter.

This time Durham paid his debts on time, but this second settlement let him off with paying roughly 70 percent of the note values. For example, though his initial promissory note was for $43,510, Williams walked away with only $31,321 (paid out monthly in the amounts of $10,297, $5,320, $5,277, $5,234, and $5,194, respectively). 77th Street Partners’ initial promissory note was for $65,619, but it walked away with only $46,420 ($15,262, $7,885, $7,821, $7,758, and $7,694).

What kind of multi-millionaire needs six months to pay off a total of $219,000?

But back to Williams. What’s fair here? Williams’ situation is different than Brizzi's. When Williams got a whiff of something foul, he tried to get out, while Brizzi kept following Durham (and his stock picks) even when smoke surrounded him. Brizzi only stopped when the heat of public scrutiny sent him running off the board of Fair Finance.

Yes, Williams still touts his connection to Obsidian on his website, which might not seem the smartest politics at first blush. In fact, it almost reads as if Williams is taking credit for the name. It states:

Obsidian was a great name for a company that wanted to invest in manufacturing, service and distribution related companies. Entrepreneur Tim Durham warmed to the name and Brian invested in Obsidian Enterprises, a holding company with a diverse portfolio of businesses.

(The website for Gazelle TechVentures features the following description about their "advisor" Brian Williams: "Co-Founder of Obsidian Capital..." It's not clear if Williams can control what Gazelle writes, but they certainly exaggerate Williams' 5% interest to his detriment).

But all things Obsidian are catch-22's for Williams. If he tries to erase history, people will think he has something to hide. He does. But it’s only that he invested in Tim Durham, and he chose poorly. Does that make him unable to serve as Mayor? Is a person making a bad investment and losing his own money to an alleged ponzi schemer who hides information worse or better than a mayor making a bad investment despite available information and losing the public’s tax money?

Can we say Williams is any different than any of the savvy folk who got taken by Bernie Madoff? Can we expect Williams to read into Tim Durham’s soul in 2000 and foretell that he would be seduced by the money and power later? No, we can't.

But a lot of people still will.

Some will wonder how a guy whose campaign is based largely on being savvy found himself in a corporate entity with no clear ability to exit should things go awry, and we’ll ask why he wasn’t more aggressive in his “extraction” from Durham. (In fairness, Williams' reasonable defense is that you don't divorce your spouse the first day you think things aren't going well, and how can you fault a guy who simply trusted someone who turned untrustworthy?). We might even ask whether the investors took a 30% cut on the promissory notes because they feared that if they didn't get their money before the litigation flood gates opened up, they might end up completely empty-handed.

Being plagued with questions is what most of us do in hindsight....which is too bad because that’s not the kind of vision Williams was touting for Indianapolis.

The Williams-Durham Fallout

Rokita Contracts = Rokita Donors?

This is a cross-post from A Loyal Opposition, which is run by my keen-minded colleague, Spencer Valentine. If you haven't added it to the "must read" list, you should. http://www.aloyalopposition.in/.

Rokita Pay-to-Play Scam Even Bigger and More Wasteful Than

Back in October A Loyal Opposition posted a Fort Wayne Journal Gazette report on Secretary of State Todd Rokita’s use of public funds and contracts to bolster the donations to his campaign, presumably for Governor in 2012.

Now, ALO has found some even larger donations from contributors who hold even larger contracts.

It seems that Rokita has exponentially expanded the statewide voter file project into a nearly $26 million project to two firms Quest Information Systems who handled campaign finance and voter registration data for years for the state and added an oversight firm called Baker Tilly (formerly Virchow Krause) to this ever growing contract.

Baker Tilly is especially interesting here as they seem to be the Dick Cheney of the cabal. Originally, they were brought on to the contract in 2003 just to help review the request for proposals. In Cheneyesque style, they wrote themselves in to a permanent role as a partner with Quest in the project.

Thusly, Baker Tilly ballooned their one year/$900,000 contract to eight years and more than $8 million.

Quest Information Systems has grown their part of the project from $9.7 million to $17 million 5 years and 26 amendments later.

It is questionable enough when this project, like Governor Daniels FSSA privatization efforts, just seems to keep getting more expensive with no end in sight. But the fund-raising trail is the really bothersome part.

Between the two vendors the rascally Mr. Rokita has bettered his campaign committee by more than $23,000. Quest Information Systems, has contributed nearly $17,000 to Rokita’s election committee, with another $500 donated by Quest founder, President and CEO Steve McNear who has lots of other state contracts and has contributed more than $10,000 to Governor Daniels.

Mr. John Runte, listed as a Partner and Principal on Baker Tilly’s website has generously rewarded Rokita the Rapscallion’s bloating of their contract with $6,000 in campaign contributions.

The “no-bid” nature of this Baker Tilly contract is also to be questioned. The original contract was to review the RFP. But they were added to the project without becoming a separate bidder and have had this contract renewed 17 times without the state taking it out for further competitive bidding.

The original contract awarded to both firms in 2004 was for a total of $9.7 million. Some 43 amendments later, it totals $26 million dollars.
Rokita continues to use this “Pay-to-Play” scheme to his advantage. But one must ask why he wouldn’t. It has certainly proven itself advantageous to Governor Daniels. He’s just following in those footsteps.

Whatever you think of the campaign loot, one must wonder about Secretary’s fiscal management skills when this project just continues to cost more and add amendments.

Rokita Contracts = Rokita Donors?

When Did Carl Brizzi Get Mind-Numbingly Forgetful?

Greg Andrews at the Indianapolis Business Journal deserves a Pulitzer for his investigative work on the Tim Durham/Carl Brizzi nexus. He reports now that Prosecutor Brizzi's financial disclosure that he filed when he intended to run in the 5th Congressional District before Dan Burton decided to stay shows he owned stock in Red Rock, which was worth between $1 to $1,000. The value is not impressive until you realize the stock is worth pennies, so we might be talking about 10,000+ shares.

But it's not the value that troubles. It's that Brizzi had it at all.

First, this stock belongs to a Durham-dominated company that loaned millions to National Lampoon's, the company for which Durham took over operations as CEO when Dan Laikin pled guilty to trying to manipulate its stock value. The SEC also accused Dan Laikin of trying to manipulate the value of Red Rock, though in exchange for a plea of conspiracy with respect to National Lampoon's, the government dropped that charge.

(For those keeping score at home, that's three companies in which Brizzi has invested that have been investigated by the SEC).

But this from the IBJ story:

Brizzi declined IBJ’s requests for an interview about his investments. In an e-mail exchange, he initially said he did not think he owned stock in Red Rock. When presented with the disclosure, he said he thought he had sold it since the filing.

The financial disclosure report was filed in May of 2009. Brizzi can't remember that he didn't sell a stock that turned worthless after May of 2009? Sorry, but he is really giving credence to that classic lawyer joke: How do you know a lawyer is lying? His lips are moving.

Maybe he did forget. "Forgetfulness" is nothing new to Brizzi. In his initial Statement of Economic Interests for the 2004 calendar year, Brizzi states that the only gift he received was a crystal bowl and glasses worth an estimated $100 from his employees at the prosecutor's office. That's it.

In his 2004 amended statement, which he filed almost a year later, on December 22, 2005, he includes 2 tickets to the Indy 500, Brickyard, and F1, 2 tickets to a Notre Dame game, 3 tickets to a Colts game, and honorary memberships to the Columbia Club and Highland Country Club. The total value of all of these gifts is $8,779.

Now, how does somebody attend the triple crown of Indy auto racing and forget that they didn't pay to go? Would it be naive to think Brizzi went to the Columbia Club or Highland in 2004? If so, how would he forgot that he didn't take any cash out of his wallet?

In subsequent posts, I was going to dissect Brizzi's Statements further, including pointing out that he actually created a company called "Vergina," arguably the most tragically-named company in history. (Somebody please tell me this name has family significance. The post would have been titled "The Vergina Monologue." Ba da boom. I'm here all week. Tip your waitresses!) At least Brizzi had the good sense to change the name to to CJB Management.

But now I feel like I'm really piling on. Every Republican in Marion County of note is right now looking for a door through which to push Brizzi before this thing blows up and tarnishes their entire party and its leadership.

It may already be too late.

When Did Carl Brizzi Get Mind-Numbingly Forgetful?

Carlito Brizzi's Way? Forget the Unforgettable, Lawyer the Rest

Unless Carl Brizzi is an extreme glutton for punishment, he will not be Marion County prosecutor much longer.

I am not predicting shocking new revelations, though anybody who has studied his "Statements of Economic Interests," his divorce settlement, and the records at the recorder's office knows the math doesn't add up. (Stay tuned...unless I get scooped, good post coming!)

But what really doesn't add up are Brizzi's comments.

WTHR-13 asked Brizzi point blank whether Tim Durham loaned him money to buy stock. Here's what Brizzi said:

"Not that I can think of, no. To the best of my knowledge. I'd have to go back. I haven't explored any of that in terms of those stocks," Brizzi said.

Are you kidding me?!? Not that you can think of?!? I can tell you everybody who loaned me more than $5 over the past five years for any purpose, and Brizzi can't remember if he got money to buy a stock that his friend was, just coincidentally, investing in massively that year?!?

Nothing Brizzi says adds up, logically or mathmetically. For example, Brizzi told the Indianapolis Star that his Cellstar stock is worth $7,500. The day he made that comment, it was trading at $.10 per share, which means he has approximately 75,000 shares.

On Abdul in the Morning, however, Brizzi made the following comment when asked about the Cellstar investment and where he got the money:

I started buying Cellstar back in 2005. I don’t remember how much the initial investment was. It was far less than $10,000. Where did I get the money? Uh, I don’t know. It was in my bank account. I didn’t take any loans…or…umm…from Fair Financial or Fair Holdings. And it wasn’t a gift. I paid for it. Just like any of us…just like you would make an investment. My friends and I were looking at different stocks, different investments…I’ve been doing this now for almost fifteen years…

(Quick aside, at a holiday party last night, someone said a telltale sign of lying is when you repeat the question back. Her: "Were you cheating on me, Tiger?" Him: "Was I cheating on you?!!?" I'm not saying I buy it, but it's funny Brizzi did that with Abdul).

Here's the problem. Had Brizzi somehow gotten lucky enough to buy 75,000 shares on the day of its lowest offering price of that year ($.32 per share), it still would have cost $25,500. Of course, were that true, how could he have also told the Star he lost money on the stock? It ultimately paid dividends of $2.10 per share. So the math would be 75,000 x $2.10 = $157,500 - $25,500 (initial buy-in) - $16,500 stock value loss = $115,500. How is that an unrealized return on investment?

But when you really look at Brizzi's comments, you see the lawyer at work. He doesn't say he only bought Cellstar once. He says his "initial investment" was less than $10,000. The truth might be that he bought the stock repeatedly throughout the year, but if we knew the true purchase prices, we might wonder where he got the cash.

If you follow Brizzi's statements, you'll also see he's mastered the fine art of the misplaced modifier.

Permit me to explain.

You're at a party where your host has made some tasty potato salad and some hamburgers you wouldn't feed your dog. He asks, "How was the meal?" You don't want to hurt his feelings, so you reply, "You sure made some tasty potato salad and hamburgers." His mind will emphasize the adjective to conclude he made tasty potato salad AND tasty hamburgers. But you know you're emphasizing what was made - some tasty potato salad AND a non-described batch of hamburgers.

You may ask, "Well, how in the world does Brizzi go from knowing with certainty he didn't get money from Durham on Abdul to not being sure? Observe closely the quote:

"Where did I get the money? Uh, I don’t know. It was in my bank account. I didn’t take any loans…or…umm…from Fair Financial or Fair Holdings. And it wasn't a gift. I paid for it."

See the modifying phrase? Brizzi didn't take any loans....from Fair Financial or Fair Holdings. That's not the same as saying he didn't take any loans from Durham.

Say Durham gave him a wad of cash and said, "Pay me back whenever." Brizzi put it in his bank account, then he bought the stock. Under this scenario, everything he says is true. It wasn't a gift. He did pay for it. He did get it from his bank account.

See the fun you can have with words?

Carl Brizzi also wants to draw attention away from the GOP, so on Abdul he makes the following statement: “Tim has given generously to both Republicans and Democrats…”

When I heard the quote, it reminded me of when Jack Haley described his debut in the NBA as "the night Michael Jordan and I scored 52." (Jordan got 51 of those).

Brizzi wants us to believe that Durham has given generously to Republicans and given generously to Democrats. But what he really means is that (1) Durham has given generously collectively; and (2) he has given to both Republicans and Democrats, which is true.

In Tim Durham's entire life, he has given $1,000 to the DNC in 2000, $250 to former Bloomington Mayor (and now Obama appointee) John Fernandez in 2001, and $4,600 in 2007 to Congressman Baron Hill, a fellow Seymour resident.

Contrast that $6,000 to Dems with the half-million total donated to Richard Lugar, George W. Bush, Jon Elrod, the Indiana State Republican Central Committee, Brose McVey, the National Republican Congressional Committee, Rudy Guiliani, Lawrence Mayor Paul Ricketts, State Representative Mike Delph, David McIntosh, Governor Mitch Daniels, the Marion County Republican Central Committee, Attorney General Greg Zoeller, Superintendent of Public Instruction Richard Mourdock, House Minority Leader Brian Bosma, the House Republican Campaign Committee, the Greater Indianapolis Republican Finance Committee, Aiming Higher (Daniels PAC), now defunded Sheriff candidate Tim Motsinger, and, of course, Brizzi.

Yeah. Durham is bi-partisan.

But no amount of wordsmithing can save Brizzi. I'm basing this on political reality. Tom John, the Marion County Chair, knows full well that if Brizzi ran, he could not win now. The GOP's best chance to retain the prosecutor's office is to find quickly a substitute with prosecutorial bona fides who can put some high profile cases under his/her belt. As the Governor and the state GOP know full well that the Marion County prosecutor can investigate them, I'm getting from the grapevine that everybody is scouring the landscape for a quality replacement.

The sand in the hourglass is almost out.

Carlito Brizzi's Way? Forget the Unforgettable, Lawyer the Rest

An Open Letter to Carl Brizzi: Why Do You Get A Free Pass On Divorce Laws?

"Nobody is above the law."

Mr. Prosecutor, in its gravest expression, this quote means the famous, wealthy, and influential who commit illegal acts will be prosecuted, and if convicted, punished with equal fervor as the unknown, destitute, and friendless.

But, to me, it also means every governmental rule, regulation, ordinance, or law applies equally to all. We grant no exemption based on privilege or position. Do you agree as a matter of principle?

Every family law attorney in Marion County knows that when parents divorce, they have to attend a class called "Children Cope With Divorce." It costs $55, and it takes two hours to complete. Its purpose is to ensure that parents appreciate the psychological effects their children suffer by virtue of their conflict. It's an important message. Do you agree as a matter of principle?

Invariably, I have clients who are very amicable with their spouses, even during an emotional breakup. They are the rare few who possess the maturity to put their children first. They ask, "Why do I have to do this?" And I tell them, "Because it's required by the Marion County Family Law Rules." They are not entitled to "waive out" of the class.

As you may know, Mr. Prosecutor, Marion County is not alone. Boone County has the following Local Family Law Rule (LR06-FL00-BLR-17):

In the best interest of all minor children in a divorce action, Petitioner and Respondent shall be required to attend a divorce workshop addressing post-separation parenting and encouraging the ability of parents to enter into agreements concerning child-related matters. To this end, Parties are required to attend the workshop offered through Boone County Mental Health Association entitled “Helping Children Through the Divorce.” Parties are responsible for the payment of the cost of the program, with an allowance for waiver of the fee for indigence. Attendance is mandatory for all parties in a Dissolution of Marriage action if there are unemancipated children under the age of eighteen (18). This course must be completed prior to the Final Hearing. Failure to complete the workshop could result in a party having to show cause why s/he should not be held in Contempt of Court.

You know who got divorced in Boone County? You did, Mr. Prosecutor. According to the docket sheet on that case, your ex-wife filed her certificate of attendance on January 20, 2009. But you never did. The case was closed when you entered a settlement agreement on February 24, 2009.

To my knowledge, no account has ever been given that you are not a truly devoted father. There's no indication you struggle to appreciate how difficult your dissolution is for your children. But can you direct me to the "good Dad" or "elected prosecutor from another county" exemption to the Boone County Local Rule? I can't find it.

Also, Indiana Code § 31-15-2-6(b) provides:

At the time of the filing of a petition under section 4 of this chapter, at least one (1) of the parties must have been: (1) a resident of the county; or (2) stationed at a United States military installation within the county; where the petition is filed for three (3) months immediately preceding the filing of the petition.

How was your ex-wife able to file in Boone County? After all, she truthfully stated in her Verified Petition that she had been a Marion County resident before filing. When did you serve as our Marion County Prosecutor while living outside of our county, except when you resided with Tim Durham (in his Fortville (Hancock County) mansion) briefly during your divorce?

I have clients who would love to avoid the embarrassment of seeing their name in the divorce listing of the Indianapolis Star, and they could do this if they could just file in another county. I also have clients wanting to avoid being seen and having to "waste a Saturday" and $55 on a class they feel they don't need. You know what I tell them when they complain? You have to follow the law.

Do you agree as a matter of principle?

An Open Letter to Carl Brizzi: Why Do You Get A Free Pass On Divorce Laws?

Brizzi Gravitates Toward Troubled Companies?

Carl Brizzi's Statements of Economic Interest sure are interesting.

For example, his 2001 statement (signed on February 21, 2002) shows he held 440 shares of Owens Illinois, Inc. and no other business interests.

Then on his 2002 statement (signed on January 29, 2003), Brizzi adds 300 shares of Engineered Support Systems, Inc.

In other words, sometime before 2003 kicked in, Brizzi picked up the shares.

Then, on his 2003 statement (signed on January 26, 2004), all of his stock has disappeared, meaning he sold it.

Why does this matter?

Because in February of 2007, the SEC charged an executive, Ronald W. Davis, with insider trading with his broker, Michael Kopsky. Davis knew that in each of the first three quarters of 2003, earnings would beat expectations, so he had Kopsky buy the stock for his family and friends. Davis was the third Engineered Support Systems exec to face an SEC filing on a board that was also served by William H.T. "Bucky" Bush, the uncle of President George W. Bush.

In other words, Brizzi knew right when to get it and right when to get out.
Now I want to know who it was that put Brizzi onto Engineered Support Systems, Inc., too.

This is just the tip of the financial disclosure iceberg, folks. Stay tuned!

Brizzi Gravitates Toward Troubled Companies?

Daniels Says the Money's Gone?!?

When asked if he would return contributions from Tim Durham, Governor Mitch Daniels stated that the money "has been spent."

Hmm.

So when did the Governor unload the $160,000 that was still in his campaign committee account on June 30, 2009? And to whom did he give it, or on what did he spend it? He's not running for any office I'm aware of, or so he repeatedly tells us all.

If Daniels gave it to another Republican committee, say the Indiana State Republican Central Committee, does anybody think he couldn't get them to give it back? Last time I checked, he was the Governor and leader of his party.

What the Star was asking is whether a politician who gorges himself on ill-gotten gains should have to disgorge. And now we know where the Governor stands.

Daniels Says the Money's Gone?!?

Brizzi Talking Bull on Durham?

If you're in politics, do "due diligence" on your friends. There's a reason political folk call the scandal-plagued "radioactive" - everybody near them suffers from the fallout.

The Star reported yesterday that CLST Holdings, a Texas company on whose board Tim Durham serves, is under investigation by the SEC, most notably because CLST Holdings picked up "millions of dollars of receivables from Fair Financial."

But here's what intrigued me. The Star reported that CLST used to be a wholesale cellular phone provider, but it liquidated and is now just a holding company (a/k/a "an empty shell" that does nothing but hold other investments and manage them).

I immediately thought, "How curious" because Durham made a killing on Brightpoint stock. Brightpoint is a wholesale cellular phone company. I couldn't put my finger on it, but something smelled funny.

Well, the Star today connects some dots, and reveals that when Cellstar wound up operations, it's biggest buyer was "Plainfield logistics (and wholesale cell phone seller) Brightpoint, which paid $88 million in cash for CellStar's U.S. operations."

For those scoring at home, Durham makes millions on Brightpoint stock in 2005, then gets on the Board of a company that is a Brightpoint competitor, and he sells its pieces to Brightpoint, thereby forcing the CLST stock into the toilet. How did Brightpoint fare thereafter?

Inside Indiana Business reported back in 2006 that revenues from the acquired operations were expected to make Brightpoint $450 million in the first year, but this must be the gift that keeps giving.

This from a February 2009 filing with the SEC:

"The increases in wireless devices handled and revenues were primarily due to the impact of the Dangaard Telecom acquisition in July 2007 and the CellStar acquisition in March 2007. Excluding these acquisitions, revenue decreased 22%, primarily due to a decrease in wireless devices handled and average selling price brought on by a global economic slowdown in the second half of 2008."

But wait. Which tail was wagging which dog? Did I forget to mention that in 2006 Durham was buying shares of Cellstar at the same time Brightpoint was submitting an allegedly secret non-binding bid to buy Cellstar? In March of 2007, Durham stated, "Nobody believes it, but I was completely unaware of all that." We sure don't believe it now.

Oh, and as most of you may know from the Indianapolis Business Journal, Brightpoint is run by Bob Laikin, the brother of Dan Laikin. Dan was the CEO of National Lampoon until he pled guilty to conspiracy to commit securities fraud for trying to jimmy his company's stock through straw purchases. Who took over National Lampoon? Tim Durham, with whom Dan served on the NL board. To my knowledge, nobody has ever accused Bob Laikin of cutting corners, but isn't it conceivable that a sibling of a CEO might obtain insider information just by virtue of being around, and couldn't that sibling, if so inclined, share that information with a friend?

Yes, I'm speculating, but there are just too many coincidences and dirty pieces here for the puzzle to be clean, which gets me to Brizzi.

The Star reports that Brizzi bought CLST stock before Durham became a board member.

Umm, Carl, what in God's name would make you say, "You know what? I'm going to invest $10,000 in a struggling, Texas-based wholesale cell phone company?!?!" I'm supposed to believe you didn't get a wink or nod about CLST from a guy who was your biggest donor?

Brizzi's defense is that he lost money on the stock, which is worth about ten cents a share now. Sure, the stock lost value, but Durham was elected to the board to sell off the assets and distribute the proceeds to the shareholders. How much did Brizzi get on the distribution?

Also, where did Brizzi, a guy who has been on the public payroll longer than I can remember (since 2002 as Marion County Prosecutor, then under Scott Newman, and before that, under Dan Burton) get the money to invest in Harry & Izzy's? And how much did he invest? It's a nice spot (with great steakburgers, so kudos to Manager Jeff Smith), but there's no way that decor was cheap.

Brizzi needs to come clean on his finances. Whether he does or not will tell you whether he can. And if he can't, you won't see him on the ballot in 2010.

Initially, I was going to credit Brizzi for not throwing Durham under the bus. But given the extent of his relationship, Brizzi would have looked worse trying to disavow it. Moreover, I started wondering what Brizzi thinks about a "Durham recovery?"

In America, the wealthy usually recover, even from federal entanglements. Conseco crashed, and we thought Steve Hilbert was toast. Anybody think he's suffering at MH Equity Advisors? Michael Milkin did prison time for securities violations. His net worth now? $1.2 billion. Donald Trump went belly up. Anybody think he had to sacrifice hairspray? Excluding Madoff (who, even with over a billion swindled, got placed in the "crown jewel" of the federal system), big idea men stay big idea men. They know how to mobilize and capitalize on capital.

Even if Durham is charged criminally (and there's no indictment of any type yet) and serves time, five years from now, he will be back at it and wealthy again, and he'll remember a guy who publicly said "Tim and I are friends" in the present tense when the chips were down.

Brizzi is standing by his man. And with the cash and possible "favors" Durham has doled out, should any of us be surprised? That wouldn't be looking a gifthorse in the mouth; that'd be turning it into glue.

Brizzi Talking Bull on Durham?