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Finance

Maryland State Senator Jim Brochin. Wikipedia

IMPACT: Maryland bill would protect homeowners from investors buying debt

By Fred Schulte

Maryland lawmakers are sponsoring legislation to prevent Baltimore-area residents from losing their homes for failing to pay small municipal water bills —a stunning scenario detailed in a Center for Public Integrity story.

The legislation is aimed at preventing a repeat of what happened to Vicki Valentine, a Baltimore woman who lost her family’s mortgage-free home over what began as an unpaid water bill of $362. The Center told Valentine’s story in 2010 as part of an investigation into the impact of tax-lien sales on struggling property owners.

Counties in Maryland, like many other states, sell investors the right to collect unpaid property taxes and other municipal debts of $250 or more at auctions, which often are conducted online and can draw investors from all over the world. The law in Maryland allows lien holders to charge double-digit interest rates and in some cases tack on thousands of dollars in fees. Homeowners who fail to pay may face foreclosure on their property.

But the new bill introduced earlier this week in the Maryland General Assembly would prohibit tax collectors in the City of Baltimore and suburban Baltimore County from including residential property in the tax sale when the lien “arises solely from any unpaid water, sewer and other sanitary system  charges” and is less than $750 in total.

“We’re one of the few jurisdictions in the United States of America that thinks an equitable solution to not paying water bills it to take your house,” said State Sen. James Brochin, D-Baltimore County, the measure’s chief sponsor. “It’s predatory and bizarre.”

State Integrity Investigation

During her 2013 State of the State address, Republican Gov. Nikki Haley made several mentions of the South Carolina's multiple "F" grades from the State Integrity Investigation. Mary Ann Chastain/AP

Lawmakers in Southeast call for ethics reform

By Nicholas Kusnetz

As lawmakers in three Southeastern states prepare for the 2013 legislative session, they’re finding bipartisan agreement on an unlikely agenda: ethics reform. Leaders in South Carolina and Florida have begun work that lawmakers and watchdogs say could lead to the states’ first meaningful reforms in decades. And in Georgia, proponents of stronger rules are rallying behind a slate of measures they hope may finally pass in what has long been a recalcitrant Legislature.

The initiatives all seek some regulation of money and influence. The proposals take aim at independent political spending, asset disclosure and gifts from lobbyists in an effort to bolster transparency and rein in the spiraling costs of running campaigns. In some cases the reforms could go deeper, as lawmakers try to attack the roots of corruption by strengthening ethics oversight and enforcement.

“There’s been a real sea change in terms of the atmosphere around ethics reform,” said Josh McKoon, a Republican state senator in Georgia, which ranked last among the states for corruption risk in 2012’s State Integrity Investigation —a collaboration of the Center for Public Integrity, Global Integrity and Public Radio International.

Lawmakers in several other states — Missouri and Idaho among them — have said they may push reform in the 2013 session. But nowhere does it appear as likely as in the Southeast, where several factors, including a series of scandals, have pushed the issue onto the public agenda. Good-government groups and legislators in each of three states have used their rankings in the State Integrity Investigation to argue for substantive changes. Georgia and South Carolina received failing grades, and Florida received a C-minus.

State Integrity Investigation

Governor Haley invokes Integrity Investigation grades in State of the State speech

South Carolina Gov. Nikki Haley cited the Center’s State Integrity Investigation Wednesday night in her State of the State address, pledging an ethics reform process to improve the state’s dismal grades. The Palmetto State ranked 45th among the 50 states, with an overall grade of F from the state integrity project, a collaborative initiative of the Center, Global Integrity and Public Radio International. South Carolina also got an F in nine of the 14 specific categories weighed as part of the investigation.

The grades have generated a push for changes in the state. As a result, four separate panels are holding hearings and readying recommendations for reform legislation: one appointed by Gov. Haley; one Senate committee, and two House panels, one formed by each party.

Watch the relevant portion of Haley’s address at the 1:20 mark above.

State Integrity Investigation

From left: Former Ill. House Rep. Kevin McCarthy, Illinois State Capitol in Springfield. Ballotpedia, Wikimedia Commons

Revolving door swings freely in America's statehouses

By Nicholas Kusnetz

On October 26, 2011, the Illinois legislature passed a bill that authorized construction of a multi-billion-dollar smart grid and reshaped how utility companies seek approval for raising electricity rates. Consumer groups opposed the measure, saying it was a handout to utilities.

But the final blow for opponents came three months later when former state Rep. Kevin McCarthy, who had pushed the bill through the legislature only to resign after winning its passage, registered his own lobbying firm and signed his first clients. Prominent among them: Commonwealth Edison, one of the state’s largest utilities.

“It’s hard to believe that there wasn’t a quid pro quo for this,” said Scott Musser, an Illinois lobbyist for AARP, which opposed the bill.

McCarthy declined to comment. And despite the potential conflict of interest, his move seems to have been in full compliance with state ethics laws. In Illinois and 14 other states, there aren’t any laws preventing legislators from resigning one day and registering as lobbyists the next, according to data compiled by the National Conference of State Legislatures.

Most other states impose “cooling off” periods of one or two years during which legislators or government officials are restricted from lobbying or taking certain private-sector jobs. But a review by the State Integrity Investigation found that in several of those states, including Florida, Indiana and Utah, to name a few, the rules are riddled with loopholes, narrowly written or loosely enforced.

State Integrity Investigation

Rhode Island Gov. Lincoln Chafee AP

IMPACT: Rhode Island to publish more state records online

By Nicholas Kusnetz

The state of Rhode Island will broaden access to government information through a new online portal under an initiative announced Thursday by Gov. Lincoln Chafee. Chafee said many documents will be available immediately and that the state will continue to add audits, contracts and other financial documents to the website over the next 18 months.

“The people of Rhode Island deserve more and better information about the operation and management of their government,” said Chafee in a statement. “I believe that greater openness and transparency will ultimately strengthen our citizens’ faith in their government, bolster our national reputation, and increase our economic competitiveness.”

The new “Transparency Portal” provides easy access to government financial data and documents. Users can search for contracts by bid number or vendor, sort through government expenditures or file a public records request, all on one site.

Chafee, an Independent, has promised in the past to improve transparency. In June, he signed a bill that broadened the state’s public records laws.

Some documents published on the new site had been accessible elsewhere, while others, such as contracts, had to be requested through open records laws.

“It seems to be as much about accessibility as it is about transparency,” said John Marion, executive director of Common Cause Rhode Island.

Sexual Assault on Campus

The hallway between the locker room and the field at Notre Dame stadium shows the team's famous "Play like a Champion Today" sign. AP

Notre Dame case highlights complexities of campus sexual assault investigations

By Kristen Lombardi

Notre Dame’s high-profile re-emergence among college football’s elite has focused new attention on the university’s long-standing claims that it does things “the right way” — that football players are treated like anyone else on campus, with no special favors.

The boasts of lofty moral standards have long struck other schools’ fans as a bit sanctimonious. But they are getting fresh scrutiny now, in part because the bright lights of college football’s biggest stage have brought renewed attention to a two-year-old case involving a Notre Dame player and chilling allegations of sexual assault.

In August 2010, 19-year-old freshman Lizzy Seeberg accused the athlete of sexually assaulting her in his dorm. She filed a report with campus police, which sat on it for two weeks before even interviewing him. By then, Seeberg had committed suicide. Administrators would later convene a closed-door campus disciplinary hearing—three months after Seeberg’s death became national news—in which the player was found “not responsible.” In the university's only direct comment on the case, Notre Dame's president, the Rev. John I. Jenkins, told the South Bend Tribune in December 2010 that university police had conducted a "thorough and judicious investigation that followed the facts..." He acknowledged, however, that the inquiry could have been conducted "more quickly, perhaps." The player, who has not been publicly identified, reportedly has never missed a game, nor presumably will he miss tonight’s national championship contest with Alabama’s Crimson Tide. Meanwhile, a small but vocal number of critics are asking pointed questions about how this case was handled, and wondering aloud whether Notre Dame’s righteous rhetoric is really a fiction.

State Integrity Investigation

Stanford's Stepfan Taylor takes the ball during the second half of the 2012 Fiesta Bowl. A scandal involving gifts from bowl officials to state legislators has yet to bring about changes in lobbying or disclosure laws. Matt York/AP

Arizona still waiting for Fiesta Bowl fixes

By Kathleen Ingley

The Fiesta Bowl game and its many related events have become a football extravaganza that kicks off the new year for the Phoenix area with national publicity and a hefty  economic boost.

But over the past three years, the Fiesta Bowl has also become the source of continuous embarrassment in the Valley of the Sun, for bowl officials, civic boosters and state legislators, as well. And it isn’t over.

The parade of bad news began in December 2009, when the Arizona Republic exposed the Fiesta Bowl’s scheme of urging employees to make campaign contributions and then illegally reimbursing them. In March 2011, a special investigative committee revealed that the bowl had showered elected officials, mostly legislators, with lavish gifts.

That May, the Fiesta Bowl was fined $1 million by the organization that runs the biggest bowls, and put on one-year probation by the National Collegiate Athletic Association. Fiesta Bowl CEO John Junker, who was fired, and five other bowl employees have pleaded guilty to involvement in the illegal reimbursements. A lobbyist pleaded guilty to disclosure violations over a trip by legislators.

Now, as the 2013 state legislative session approaches, many Arizonans believe the Legislature has not one Fiesta Bowl scandal, but two.

The first is the tale of freebies: tickets to high-profile football games and bowl-paid jaunts around the country that dozens of legislators took from at least 2003 to 2010, often with family members in tow. The second is whether lawmakers intend to do anything about the behavior that was uncovered, or just carry on as if nothing ever happened.

Consumer Finance

Payday lender turned racecar rookie, Scott Tucker Level 5 Motorsports/Flickr

Payday lenders agree to stop 'deceptive and illegal' practices

By David Heath

Controversial lenders that claim to be owned by Indian tribes and offer payday loans over the Internet have agreed to stop practices that federal authorities say deceive borrowers and violate federal laws.

The agreement, filed in federal court, could save borrowers hundreds of dollars on each payday loan.

The Federal Trade Commission last year sued an Overland Park, Kan., company, AMG Services, to recover millions of dollars in revenues, alleging that borrowers were illegally deceived. The business was founded and is still managed by Scott Tucker, best known as an endurance race-car driver who recently won the Baltimore Grand Prix.

The Center for Public Integrity first exposed Tucker’s business practices in an investigation done with CBS News.

The case awaits trial. But the FTC argued that AMG Services was continuing to mislead thousands of new borrowers. Tucker and the representatives from the Indian tribes last month agreed to change the practices that the FTC said were illegal.

Borrowers previously had to give the lenders direct access to their bank accounts and have payments automatically withdraw from their checking account. But instead of a single payoff, the lenders would withdraw interest-only payments for months.

By drawing out the loan payments out, a $300 loan could end up costing the borrower nearly $1,000. The FTC said this was not properly disclosed under the Truth-in-Lending Act.

With the agreement filed in a federal court in Nevada, the lenders will no longer require access to a borrower’s bank account and the loans will be paid off in one payment. The lenders also agreed not to tell borrowers that they could go to jail or be sued if they didn’t pay the loan back.

Accountability

In 2010, Massachusetts gave $6 million in tax breaks to Smith & Wesson, which announced it was moving a hunting rifle division to the state from New Hampshire. AP

Gun manufacturers got more than $19 million in state subsidies

Taxpayers across the country are subsidizing the manufacturers of assault rifles used in multiple mass killings, including the massacre of 20 children and six adults at an elementary school in Newtown, Conn. last month.

Global Muckraking

Anonymous buyers, using tax shelters and hiding behind offshore secrecy, are taking over more and more blocks of luxury housing in the UK, particularly in London. AP

Best of 2012: International journalism

By The Center for Public Integrity

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