Transparency International's Corruption Perceptions Index for 2012

I agree with Cristoph Wilcke that the perceived increase in corruption after the "Arab Spring" might be caused by people simply having higher standards and being more willing to judge public servants.

Newly Released Index Finds Perceived Corruption Increased After 'Arab Spring'
by SOPHIA JONES
NPR
December 05, 2012

As demonstrations continue to rage in Cairo, nearing almost two years after the revolution's onset, perceived corruption in Egypt and neighboring countries has worsened, according to a newly-released index.

Transparency International's (TI) 2012 Corruption Perceptions index ranks countries from 0 to 100 based on perceived levels of public sector corruption — 100 meaning no perceived corruption. Egypt dropped six places and now ranks 118th out of 176 countries.

Following Mubarak's downfall and Egypt's first democratically elected president, Mohamed Morsi, hopes were high. But now, after Morsi's power grab yielding him near absolute power and a controversial draft constitution in the works, anger has once again consumed Cairo's streets.

"We know that frustration about corruption brought people out onto the streets in the Arab world," TI's Middle East and North Africa director, Cristoph Wilcke, told Reuters. A democratic transition has not easily come to Egypt. Morsi is now facing allegations similar to those that toppled Mubarak's regime, and protesters are now demanding Morsi be held accountable and step down.

"As far as we can tell, very little has happened on the ground ... as far as putting in place systems that we know work to prevent corruption," Wilcke said.

Syria, currently engulfed by bloodshed, fell 15 places in the index to 144th. Tunisia fell two places, now ranking 75th, and Morocco fell eight slots to 88th out of 176 countries. While the numbers across the board look bleak for the region, Libya climbed eight places to 160th, following the Libyan civil war that ended last October, a hopeful sign for the rest of the region.

In comparison, the United States ranks 19 on the list, just below the United Kingdom. Israel takes 39th, and Cuba ranks 58, following Jordan, which has recently seen an uptick in protests. Greece, where protests over unemployment and corruption have been exploding since 2010, ranks at 94, the same as Colombia and India. Somalia is perceived as the most corrupt country in the world.

Around 78 percent of the Middle East and North Africa is perceived as corrupt – though it's not the lowest on the corruption totem pole, compared to 95 percent of Eastern Europe and Central Asia seen as corrupt, and 90 percent of Sub-Saharan Africa. (See here for a series of interactive infographics).

While the effects of the Arab Spring have yet to fully surface, and the transition to true democracy is far from over, Wilcke stressed that a worsening in Middle Eastern countries' rankings may merely be a result of people acknowledging and addressing the issue of corruption, not necessarily because corruption is increasing. "It's not possible to change things over night," he said...

Study: Statehouses at High Risk for Corruption

Study: Statehouses at High Risk for Corruption
By WAYNE PARRY
Associated Press
March 19, 2012 (AP)

State governments lack transparency and accountability to citizens, and remain at high risk for corruption, according to a new study of all 50 statehouses.

Not a single state received an A in the State Integrity Investigation ranking, a product of the Center for Public Integrity, Public Radio International and Global Integrity.

"It's telling that no state received an overall grade of A," said Caitlin Ginley, a staff writer for the Center for Public Integrity and a project manager on the study. "In every state, there's room to improve the ethics laws, the level of transparency on government proceedings, the disclosure of information, and — most importantly — the oversight of these laws.

"One of the major findings was that even when ethics laws are passed, they are difficult to enforce and lack meaningful consequences for violators."

Only five states got rankings of B, led by a surprising recipient: New Jersey. It got a B-plus, with an overall score of 87 out of a possible 100.

Despite — or perhaps because of — recent corruption scandals, New Jersey got the top ranking because of steps it took to combat corruption, including tough ethics and anti-corruption laws it adopted in response.

New Jersey has a colorful tradition of corruption in government, including a U.S. congressman taking a bribe from an FBI agent posing as a wealthy Arab sheik, a Jersey shore councilman caught on tape bragging to an undercover officer that he would never get caught because "I could smell a cop a mile away," and a decade-long string of 150 state and local officials who were either convicted or pleaded guilty to federal corruption charges. The cases ranged from Motor Vehicle Commission employees selling fraudulent licenses to politicians peddling their influence for kickbacks.


Cases stemming from the 2009 roundup of 44 people in what was dubbed by the feds as "Operation Bid-Rig" are still working their way through the courts.

But that history of corruption also led to strong reforms designed to prevent it in the future. Among them was a law prohibiting campaign contributions by most firms doing business with the state.

"It's nice to be recognized for being ahead of the curve," said Michael Drewniak, a spokesman for Gov. Chris Christie, a former U.S. attorney who prosecuted many of the recent cases. "The governor is proud of the changes he's made and the resources he's made available to the public in terms of government transparency. Government operates and behaves better when it's open and transparent, and taxpayers feel informed and a part of the process when they can see how their money is spent, who is getting contracts and who's on the payroll and such."

The report found that states with well-known scandals or histories of corruption often have the toughest laws and enforcement that bring them to light. Conversely, the report found, so-called "quiet" states may be at higher risk for corruption, with fewer means to bring corrupt practices to light.

Reporters in each state researched 330 corruption risk indicators across 14 government categories, including access to information, campaign finance, executive accountability, legislative accountability, judicial accountability, budgeting, civil service management, procurement, internal auditing, lobbying disclosure, pension fund management, ethics enforcement, insurance commissions, and redistricting.

Rounding out the top five states were: Connecticut (B, 86), Washington state (B-minus, 83), California (B-minus, 81) and Nebraska (B-minus, 80).

Nineteen states got grades of C, and 18 got a D. Eight states got an 'F,' with grades of 59 or lower: North Dakota, Michigan, South Carolina, Maine, Virginia, Wyoming, South Dakota and Georgia.

Individual reports for all 50 states can be found at http://www.stateintegrity.org.

California's political watchdog panel eases its approach to ethics issues

California's political watchdog panel eases its approach to ethics issues
The Fair Political Practices Commission has eased restrictions on gifts to lawmakers, called fewer open meetings and stopped notifying the public of pending investigations. Some good-government advocates are angry.
By Patrick McGreevy
Los Angeles Times
February 14, 2012

Reporting from Sacramento -- Three decades after Gov. Jerry Brown played a key role in creating a state political watchdog, the panel — now dominated by his appointees — has retreated from its aggressive approach to ethics enforcement.

As part of a top-to-bottom rewrite of regulations in the last year, the Fair Political Practices Commission has eased restrictions on gifts from lobbyists to lawmakers, scaled back its open meetings and stopped notifying the public of pending investigations. Its job is to enforce laws on election campaigns, lobbying and conflicts of interest involving public employees, including the governor.

Commission Chairwoman Ann Ravel, whom Brown appointed in February 2011, said she was trying to make rules fair, clearer and easier to comply with and to focus on the worst offenders rather than on those who make minor mistakes. But she has outraged some good-government advocates along the way.

"I think the agenda is to basically castrate the commission," said fellow Commissioner Ronald Rotunda, a Chapman University law professor appointed by the state controller.

The panel prosecuted some big cases against politicians in the five years before Ravel took over, assessing them large fines, and tightened restrictions on the activity of public officials. Ravel, a veteran government attorney, said Brown gave her no marching orders when he appointed her.

"What we want to do is make sure that public officials use their positions for the good of the public and aren't doing it for their own self-interest," she said in an interview in her downtown Sacramento office.

The commission was born as part of the Political Reform Act, an initiative co-authored by Brown and approved by California voters in 1974 after a series of political scandals. So that no single official has undue influence over it, two members are appointed by the governor and one each by the attorney general, secretary of state and controller.

But because Brown was California's attorney general before becoming governor a year ago, he has appointed the majority of commission members. He also made the body's top attorney a political appointee rather than a civil servant, which allows the governor to replace the person who advises the commission and politicians on what's allowable.

Brown declined to be interviewed. His spokesman, Gil Duran, said the governor has no specific agenda for the commission but supports what his chairwoman is doing.

"The governor believes Ann Ravel is doing an outstanding job and operating in the best traditions of an independent agency, advancing the public trust in a practical and intelligent way," Duran said.

Brown's first appointee to the commission, in 2009 when he was attorney general, was controversial. He tapped Lynn Montgomery, who had managed the gubernatorial run of former Lt. Gov. Cruz Bustamante six years before. The campaign paid one of the largest fines in FPPC history.

"To appoint somebody who had a history of being involved in a campaign that crossed the line in the most egregious way in ethics law violations is troubling," said Kathay Feng, president of California Common Cause.

And the governor has had a sometimes contentious relationship with the commission.

In 1981, the FPPC called for a criminal investigation into whether key aides to then-Gov. Brown had perjured themselves, destroyed some records and withheld others to thwart a probe of possibly improper political activity in the governor's office. State law bars government resources from being used for campaigns or other political purposes.

Brown denied any wrongdoing by his office, which challenged the FPPC's jurisdiction in the matter, and prosecutors filed no charges. But Brown's reelection campaign later reimbursed the state $2,000 for the use of its computers.

Brown opposed the commission in court in 1990, after voters approved Proposition 73, which placed limits on campaign contributions. Then chairman of the state Democratic Party, he was part of a lawsuit to nullify the measure, which he called "one of the most pernicious campaign laws ever enacted." His side won.

He battled the commission again in 2000, when he was mayor of Oakland and was pursuing an ambitious redevelopment program for the city. The FPPC found that Brown had a conflict of interest because the program could have affected the value of his residence. Accusing the panel of applying the law too broadly, Brown sued and won in an appeals court.

Ravel had also argued from the outside for the FPPC to ease up. As Santa Clara County counsel in 2003, she won relaxed conflict-of-interest rules for county supervisors.

One of her first acts as commission chairwoman was to rescind public notices about pending investigations. Her predecessor, Dan Schnur, a former GOP strategist who now runs the Jesse M. Unruh Institute of Politics at USC, had posted such information on the panel's website in hopes of deterring politicians from misbehaving.

Ravel argued that public airing of allegations that had not yet been substantiated violated the due-process rights of those accused.

She also canceled about half of the commission's monthly meetings, which Schnur also questioned. "It's important for the political community to know that the body responsible for its oversight is meeting on a regular basis," Schnur said.

Ravel's biggest dispute with open-government advocates has involved the overhaul of gift regulations.

State law requires officials to disclose gifts they receive and bars them from accepting gifts worth more than $10 from lobbyists. Ravel noted that the FPPC had allowed exceptions over the years if an official was dating the lobbyist or was a guest in the lobbyist's home.

The dating exemption is now written into state regulations, with a requirement that officials refrain from action on issues involving those with whom they are in a "dating relationship."

That will prevent abuse, Ravel said, without poking the government's nose into people's personal lives.

"The fact that somebody getting an engagement ring from somebody and they truly have a relationship — I don't consider that a serious problem," she said. "And I don't think that's the FPPC's issue."

Feng of California Common Cause disagreed, saying, "Potential corruption does not stop just because the relationship has entered the bedroom."

A bribery scandal is being investigated at the state's Community Care Licensing office in San Diego,

News 8 Exclusive: State licensing employees accused of taking bribes
Jun 28, 2011
By David Gotfredson

SAN DIEGO, Calif. (CBS 8) -- A bribery scandal is being investigated at the state's Community Care Licensing office in San Diego, a division of the California Department of Social Services.

Officials confirm the employment of three state inspectors has been terminated after they were accused of taking thousands of dollars in bribes from operators of local residential care facilities for the elderly.

The state licensing inspectors worked at the offices of Community Care Licensing in Mission Valley. They are identified in court documents as Conchita Valero, Lydia Williams and Christina Nepomuceno.

The employees held the job title Licensing Program Analyst (LPA) and, as such, they inspected and licensed assisted living homes for the elderly in San Diego County.

According to a search warrant dated June 2 obtained by News 8, investigators are now seeking bank records to try to prove that the state inspectors were taking bribes from the owners or operators of several assisted living facilities.

Iris Ramirez, 49, runs four senior care homes in Mira Mesa under the name Ambassador Senior Retreat.

The search warrant alleges Ramirez bought airline tickets to fly LPA Valero and LPA Williams to the Philippines for a vacation, and also gave Valero $2,800 in cash.

In exchange, Ramirez's licenses were fast tracked and "completed in two months or less" instead of the average "five to six months," according to the warrant.

When interviewed by investigators, Ramirez "stated that the airline tickets were a ‘gift'; a ‘thank you' for licensing her facility so quickly," the warrant alleges. Each airline ticket cost $1,044, the warrant reads.

"Ramirez admitted to paying LPA Valero $2,800 cash and that LPA Valero was ‘probably' not documenting deficiencies at the facilities in exchange for the money," according to the warrant.

Contacted at her home in Murrieta, Ramirez told News 8 the airline tickets and the $2,800 in cash were gifts and she refused to answer questions.

"I don't want to say anything more. Sorry," said Ramirez.

Also named in the search warrant is the Eternal Sunshine Care assisted living facility on Quince Street in San Diego's Oak Park neighborhood, owned by Selma Teer, 36.

The search warrant claims Teer had purchased a home in Mira Mesa that she hoped to license as a Community Care facility; and gave LPA Nepomuceno $3,000 in cash.

When Nepomuceno left on medical leave from work, the search warrant claims Teer left the following voice mail message on Nepomuceno's state-issued cell phone:

"(You are) not returning my call. You are not paying my money back. You want a bribe for my application for my license. You lied. You are such a liar. You want a bribe, do your job. You don't do your job; you give me my money back."

In an interview at her Oak Park facility, Teer denied using the word "bribe" in the voicemail message, and said she did not bribe anybody.

"I don't even know what a bribe is. I don't know the meaning of it," Teer said.

Teer told News 8 she believed the $3,000 in cash she paid to LPA Nepomuceno was a loan, and that the payment was set up by her former business partner, Iris Ramirez.

"Iris Ramirez is the one that put me in this position," Teer said. "I'm 100% helping people. So you help people and this is what you get."

The search warrant also names Happy World residential care facility in Poway, once run by 56-year-old Maria Blume; and the Golden Touch III facility in Mira Mesa, formerly operated by Blume's nephew, who gave LPA Williams $5,000 in 2009, according to the records.

Blume initially told News 8 she would answer questions about the bribery allegations, but then did not return a message left on her cell phone seeking comment.

A spokesperson for the California Department of Social Services declined to comment on the ongoing investigation but did confirm the employees in question are no longer on the payroll.

"Each employee has a right to privacy and I'm not going to discuss personnel matters," spokesperson Michael Weston said. "I can just tell you that these three individuals no longer work for the Department of Social Services."

The bribery allegations remain under investigation by the Department of Social Services and no criminal charges have been filed against any of the state employees or the facility operators.

On Monday, News 8 requested access to the public inspection files for all seven assisted living facilities in question. Weston said the records will be made available in the coming days after confidential information is removed.

DA Absent from SEDC Embezzlement Case

DA Absent from SEDC Embezzlement Case
May 9, 2011
by Will Carless
Voice of San Diego

We've been asked one question a lot in the days since former Southeastern Economic Development Corp. officials Carolyn Y. Smith and Dante Dayacap were charged with embezzlement and misappropriation of public funds: Why didn't San Diego District Attorney Bonnie Dumanis prosecute this case?

Back in 2008, when the SEDC scandal was first breaking, Mayor Jerry Sanders announced at a press conference that he had asked Dumanis to investigate the alleged wrongdoing at the agency. Sanders' move came after a city commissioned audit found SEDC's compensation practices had risen "to the level of fraud."

As I pointed out recently, Dumanis has a special Public Integrity Unit that she created back in 2007, before the SEDC scandal broke.

I put the question to Dumanis' spokesman, Steve Walker, in an email.

His response:

The Attorney General's Office is the appropriate agency to handle this prosecution. Since this is a pending case, the District Attorney's Office will have no further comment at this time.

The California Attorney General's Office does prosecute plenty of people accused of misusing public funds. The state AG investigated the wrongdoing at the city of Bell, for example.

Gary Schons, who heads up the local office of the attorney general, wouldn't go into the matter when I called him. He simply said that his office also has a specialty in prosecuting these sorts of cases.

But, while the AG is an appropriate agency to do the prosecution, it's unclear why Walker would categorize the AG as the appropriate agency. In other words, why is the AG more appropriate than the DA's Public Integrity Unit?

The case, which focuses on a clandestine system of bonuses we uncovered in this story back in 2008, fits the stated scope of the unit, which Dumanis created specifically to root out misuse of public funds and corruption by public and elected officials.

Smith and Dayacap were highly paid, high ranking public officials. (Both made far more than the mayor in 2007.)

Why the AG brought the case instead of Dumanis is unlikely to become public.

As a rule, prosecutors don't discuss pending cases because they don't want to give the impression that they're attempting to try the case in the media, said Professor Heidi Rummel, a former prosecutor and expert in criminal law at the University of Southern California.

Prosecutors want "to avoid any potential unfairness or prejudices to the defendant before he has his day in court," Rummel said.

That Dumanis' office isn't prosecuting the case is irrelevant because, as a public prosecutor, she represents the government as much as her colleagues at the Attorney General's Office, Rummel said. As such, she should be as wary of prejudicing the case by what she says publicly as she would be if her office was prosecuting it.

The precaution of not talking about a case extends not just to the case itself, but also to the reasons why a prosecutor did or didn't take the case on, Rummel said.

Complicating the SEDC matter is the fact that the original investigation wasn't done by the DA or the AG or even any state agency. It was done by the FBI, which usually teams with U.S. Attorney's Office to prosecute the subjects of its investigations.

I learned in court on Wednesday that Dayacap had received a "target letter" from the U.S. Attorney's Office more than a year ago. But at some point between then and now, the federal government decided not to prosecute and instead the case ended up at the state level.

(FBI spokesman Darryl Foxworth wouldn't comment on the case either.)

Certainly, the passing-around of the Smith/Dayacap prosecution has confused the two defendant's lawyers. Jerry Coughlan, who is defending Smith, and Marc Carlos, who's representing Dayacap, both told me on Wednesday that they had no idea the Attorney General's Office was involved in the case before their clients were served with arrest warrants.

If I find out any more about why Schons, not Dumanis, brought the case, I'll pass it along.

How to Drown 'Enron By the Sea'

How to Drown 'Enron By the Sea'
January 2, 2011
by Liam Dillon

In September 2004, The New York Times bestowed a nickname upon San Diego that the city has yet to shake: Enron by the Sea.

Though Enron, the famously corrupt Texas energy company, is long gone, the reference to San Diego's financial failures remains. Just last month, the national media revived it when discussing San Diego's reputation in stories about Mayor Jerry Sanders' plan to foist 401(k)-style retirement plans on most new city employees.

Like many folks, I wouldn't mind seeing "Enron by the Sea" go to sleep with the fishes. But how? The most surefire way is to end the city's series of budget problems. Deficits now stretch back a decade and most observers point to 1996, the year the city hosted the Republican National Convention and began underfunding the pension, as the beginning of the city's modern money woes. Budget problems predate the most recent recession, though the economic downturn certainly hasn't helped matters.

Here are five issues the city should address before it can declare victory over the many-headed hydra that is the city budget. All of them will be discussed in one form or another in the coming year.

Solve the Pension Problem

This one is a no-brainer. But as the last six years have proven, meaningful pension reform can be one of the hardest changes to make.

What could happen in 2011, though, is that city leaders could decide what the pension reform endgame looks like. Decide to develop or pursue legal strategies, such as forcing employees to share investment burdens. Decide to cut salaries or exclude certain compensation from pension calculations — if it's legal. Decide to lobby state and federal officials to change rules guaranteeing certain pension rights or for a negotiated bailout.

It's clear that the city's annual pension payment will continue to put a crushing burden on its ability to provide basic services over the next 15 years. City employees also deserve to know when leaders will stop going after benefits that have been promised to them and perhaps stop with misleading attacks.

Also worth noting is the city's $1 billion-plus deficit for another retirement cost: health care. Negotiations on reforming this benefit, which doesn't enjoy the same guarantees as pensions, are expected this year.

Solving the pension problem doesn't mean resolving everything at once. Lawsuits, for example, often take years. But the city needs to develop a clear finish line.

Fix Stuff

To figure out that San Diego is broke, you need to look no further than at what is broken. Estimates of the city's backlog of repairs for its buildings, streets and sidewalks approach $1 billion. Fixing streets alone will cost $377.5 million.

Despite an infusion of new bond money, streets continue to deteriorate to the point that people are filling potholes on their own.

A comprehensive report on the city's maintenance backlog was expected over the summer, but has yet to materialize. Getting a grip on needed repairs will help determine how much San Diegans must pay to maintain the parts of the city they touch and feel every day. The quicker the better. Spending $1 on street repair now, according to an estimate in a recent city audit, will eliminate or delay the need to spend $6 to $14 to fix streets in the future.

Restore Some Services

In summer 2013, San Diegans will celebrate the grand opening of a new downtown main library. As long as it's not a Saturday.

Budget cuts made over the past decade have degraded city services already. Operating hours, for example, at branch libraries have decreased by 30 percent to 36 hours a week over the past decade. The main library now is closed Saturdays.

Restoring at least some of the library hours and other cuts, most notably the rotating closures of city fire engines, will be central to the city's full recovery.

What Will Redevelopment Pay For?

Both our own Scott Lewis and the Union-Tribune editorial board have noted that redevelopment — the subsidizing of private sector development to fix rundown neighborhoods — has become the City Hall flashpoint.

And why shouldn't it? Time and again, people ask me how city leaders can consider $2 billion worth of big building projects while begging for new taxes to keep police officers and firefighters on the streets. The answer always is that redevelopment dollars are separate from the dollars that fund police and fire services, and redevelopment money can pay only for things like schoobraries and Chargers stadiums.

Now, even with downtown redevelopment continuing for 20 years longer than expected there's a growing consensus that redevelopment money still can't pay for everything. City leaders are going to have to make choices, and they won't be happy ones. Have redevelopment money take over debts, freeing up cash for police and fire services, or build a Chargers stadium?

Add lingering questions about the fiscal impacts of last fall's downtown redevelopment state legislation on other city neighborhoods and you have an issue central to San Diego's financial future.

Define the Role of the Public and Private Philanthropy

Catch nearly anyone who has spent time studying the city's budget for long and they'll tell you, most of them privately of course, that the city should charge all residents for trash pickup and collect greater fees for storm water. Together, according to a recent estimate, the city would collect an additional $60 million-plus a year if both fees were in place.

Given San Diego's reputation as an anti-tax city and recent history, both of those ideas don't appear to be coming soon. Still, no current city leader has made a sustained push to explain why San Diegans should consider these fee hikes for equity or other reasons.

At the same time, the role of the private sector in city affairs has increased, though in fits and starts. Funding for fire pits on the city's beaches, a national cause célèbre, now appears to come from philanthropy after years on the budget chopping block. A plan to create a gathering place in Balboa Park relies heavily on private financing. Opportunities for greater direct involvement from the private sector to provide city services, notably through volunteering, exist.

The definition of the city's structural budget deficit hinges on the word "structural." San Diego's structure is such that the city is set up to spend more money than it collects. Though Proposition D, a sales tax/financial reform measure failed in November, the potential fix to the problem remains simple. The city must cut costs, increase revenues or do some combination of the two.

Until that happens, San Diego will continue to drown in Enron's sea of red ink.

Randy "Duke" Cunningham regrets guilty plea

Disgraced ex-congressman Randy "Duke" Cunningham regrets guilty plea
Nov 22, 2010
CBS Channel 8 San Diego

SAN DIEGO (CNS) - In his first media interview since going to prison, Randy "Duke" Cunningham said he regrets pleading guilty almost five years ago to conspiracy and tax evasion charges, and that he did so on the advice of his lawyers when he was physically and emotionally weakened.

The former GOP congressman from Rancho Santa Fe is serving eight years and four months in the Federal Corrections Institution in Tucson after admitting to taking $2.4 million in bribes from two defense contractors in exchange for steering government contracts their way.

During the nearly hourlong interview with The San Diego Union-Tribune, he also said his visitors have included former Republican Reps. Duncan Hunter of Alpine and Ron Packard of Carlsbad but his only family member who has come is his son. He said his wife, whom is in the process of divorcing him, and their two daughters do not communicate with him.

The 68-year-old former Navy fighter pilot also told the newspaper he fears the prostate cancer that caused him to drop nearly 100 pounds during the scandal has returned.

Upon his sentencing in 2006, Cunningham told a judge his decision to plea guilty was not made under duress. But to the Union-Tribune this month, he said he was pressured by lawyers who said it would costs millions to fight the charges and he could spend the rest of his life in prison.

Those lawyers could not be reached for comment, according to the newspaper.

Would Lorie Zapf bring "strategic fraud" to City Council?

Would Lorie Zapf bring "strategic fraud" to City Council?
by Pat Flannery
Blog of San Diego
May 24, 2010

Lorie Zapf, a candidate for City Council District 6, is attempting to turn a bust into a boon. Last week Dave Maass of CityBeat broke a story busting her for being in default on her family home in Clairemont. Responding to CityBeat Ms. Zapf tried to paint herself as the champion of all families who are attempting to negotiate a modification of their mortgage with their lender.

Maass asked me for my (real estate) opinion on the veracity of Zapf's claim, that "strategic defaults" are now commonplace. I told him it was "B.S." Lenders do not modify loans for borrowers who have the means to make their payments. Modification is for families who have genuine hardship, not slick real estate professionals like Zapf's husband.

Before responding to CityBeat I pulled the relevant Deed of Trust and the Notice of Default from the County Recorder. The loan on which the Zapfs are in default is an interest-only Home Equity Line of Credit (HELOC). A quick look confirmed that Zapf's "explanation" to CityBeat was indeed B.S. HELOC rates are already the lowest rates available.

Reporter Maass was now caught between two opinions on "strategic defaults". Mark Goldman, a real estate lecturer at SDSU, was telling him "In order to just have the bank consider your request, they pretty much force you into going into default. There’s a lot of people in that situation.” A classic example of "Those who know, do. Those who profess to know, teach". But the journo handbook requires that reporters call know-all professors.

Then CityBeat asked me to research another Zapf Notice of Default, this time in Las Vegas. Was this too a "strategic default"? So I dug out all the Zapf documents on their property at 2446 Craigie Castle St., Henderson, NV. It is a 4 bedroom, 2 bathroom single-family house built in 2004. The Zapfs bought it from the builder, Dell Web of Arizona, on September 10, 2004 for $511,875 as a second home.

It was a "second home" because they used "second home" financing. They got a $417,950 first loan and a $52,277 second, both from Countrywide. Wife Lorie would have to be intimately involved. A husband can't get "second home" financing without a wife's full cooperation. Their combined 1st and 2nd loans, $470,277, was 92% financing. That kind of loan-to-value ratio is not available for investment properties. If Eric rented out this property as an "investment", he defrauded his lender and Lorie was equally responsible. Yet that is exactly what Lorie told Channel 10 they did. She said it was an investment property, owned by her husband...

New Jersey:

Mayors, rabbis arrested in NJ corruption probe
Jul 23, 2009
Reuters
By Edith Honan

NEWARK (Reuters) - Dozens of New Jersey politicians, officials and prominent rabbis were arrested on Thursday in a sweeping federal probe that uncovered political corruption, human organ sales and money laundering from New York to Israel, officials said.

The 10-year investigation, dubbed "Operation Bid Rig," exposed influence-peddling and bribe-taking among a network of public officials and a separate multimillion dollar money-laundering ring that funneled funds through charities operated by local rabbis, said the U.S. Attorney's office in Newark, New Jersey.

The cast of the 44 arrested featured Hoboken, New Jersey, Mayor Peter Cammarano, who took office three weeks ago in the industrial city visible across the Hudson River from New York.

Others accused were mayors of nearby Secaucus and Ridgefield, state Assemblymen, a deputy mayor, city council members, housing, planning and zoning officials, building inspectors and political candidates.

"New Jersey's corruption problem is one of the worst, if not the worst, in the nation," said Ed Kahrer, assistant special agent in charge of the FBI's white collar crime and public corruption program in New Jersey, who has worked on the investigation since it began in July 1999.

"It has become ingrained in New Jersey's political culture," he said, calling corruption "a cancer."

Central to the investigation was an informant who was charged with bank fraud in 2006 and posed undercover as a real estate developer and owner of a tile business who paid off officials to win project approval and public contracts in northern New Jersey, according to documents in the case.

The public officials stand accused of taking bribes for pledging their help getting permits and projects prioritized and approved or steering contracts to the witness...

"The politicians willingly put themselves up for sale," said Acting U.S. Attorney Ralph Marra. "The victims are the average citizens and the honest business people in this state. They don't have a chance in this culture of corruption."

The public corruption uncovered by the informant led him to the separate money-laundering network by rabbis who operated between Brooklyn, Deal, New Jersey, and Israel, authorities said. They laundered some $3 million for the undercover witness between June 2007 and July 2009, authorities said.

"These complaints paint a disgraceful picture of religious leaders heading money laundering crews acting as crime bosses," Marra said. "They used purported charities, entities supposed set up to do good works as vehicles for laundering millions of dollars in illicit funds."

HUMAN KIDNEY SALES

Rabbis accused of money-laundering were Saul Kassin, chief rabbi of a large Syrian Jewish synagogue in Brooklyn; Eliahu Ben Haim, principal rabbi of a synagogue in Deal; Edmund Nahum, principal rabbi of another synagogue in Deal; and Mordchai Fish, a rabbi at a synagogue in Brooklyn.

The probe also uncovered Levy Izhak Rosenbaum of Brooklyn, who is accused of conspiring to broker the sale of a human kidney for a transplant. According to the complaint, Rosenbaum said he had been brokering sale of kidneys for 10 years.

"His business was to entice vulnerable people to give up a kidney for $10,000 which he would turn around and sell for $160,000," said Marra.

Several of the public officials were accused of taking bribes of just $10,000, authorities said. Cammarano, at 31 the youngest ever mayor of Hoboken, was charged with taking $25,000 in bribes, including $10,000 last Thursday...