This is a series of 10 blog posts at El Dorado Magazine from 2009 that outlined the premise of Paradise Lost? The purpose of this re-post is to educate or remind people of California political shenanigans that began in earnest in 1981 with High Speed Rail, again in 1997 with the Bay Bridge Design fiasco. A prelude to the current Twin Tunnels and High Speed Rail boondoggles?
In addition, these posts show how conflicts of interest, cronyism in its defining form, and corruption have come together in its perfected form by way of the 2009 historic water legislation which the enabling of the Delta Stewardship Council and its on-the-rise cohort the Delta Conservancy.
This series of blog posts also reveal just how high and deep the ethical violations and well, cover-ups truly go. (As of 2/6/14, I more clearly state, this is how perfecting collusion to perpetuate fraud is done.)
Original link: http://eldoradomagazine.com/
(As of 2/6/14 this link is no longer valid.)
Paradise Lost
Part One
Beginning in 1981 and continuing through 2008, an interconnected series of transportation and land use bills were introduced and passed in the California State Legislature. These bills benefited politically-powerful insiders with billions of dollars in profits that were achieved through ethically and legally prohibited means.
There are at least eight transportation and/or land use legislative processes that these actions include. Among them are the first bullet train bill in 1982, followed by the Bay Bridge selection process in 1997. They also include the Catellus Development-Mission Bay project in San Francisco in 1997, the Headwaters Forest acquisition in 1999, the Desert Wildlands Act of 2000, and back to the new high-speed rail project of 2001-2002.
These political processes all had many elements in common. The players who put these corrupt political practices in action were all part of the same group based in San Francisco, and operating from Washington, D.C., the State Capitol in Sacramento, and San Francisco City Hall.
The methodology this political machine has employed to produce multi-billion-dollar profits through a corrupt political practice has been refined almost to an art form by the insiders of this group.
Usually, the process begins with a news story that floats the idea: whether it’s a train or a bridge or an airport expansion. Both the first bullet train and the Bay Bridge processes were born with front-page stories boosting the idea. On the bullet train it was a front-page story in the New York Times, published on April Fools Day, 1981. The Bay Bridge deal began with a front-page story published in the San Francisco Chronicle on January 9, 1997.
What both stories essentially did was to “float” these ideas (a high-speed train, a new Bay Bridge) in front of the public partly as a way to gauge the political support for each project. Both “floats” had the requisite effect; both projects gained sufficient public support to proceed, and both produced huge stock profits.
Both projects were empowered by the language of the bills that produced them. On the bullet train and Bay Bridge bills, each was a so-called “spot” or “space-saver” bill. What this means is that both bills were largely empty shells when they were introduced until a deal had been made to fill the “spot” or “place.” Neither bill had to do with trains or bridges until they were amended during the course of their legislative process.
When the bills were amended it was with language that either directly named the corporation about to receive the multi-billion dollar contracts, or seemed tailor-made for that corporation to do so.
Most of these bills were written by Mehdi Morshed, the former legislative transportation consultant who is now the executive director of the California High-Speed Rail Authority. Morshed began his career as a transportation committee consultant in the legislature, as did Morshed’s wife Linda. Mehdi Morshed also wrote the new piece of legislation for high-speed trains in California (a bill sponsored by then-State Senator Jim Costa in 2002) which produced a hefty profit for insiders at URS Greiner and Lockheed-Martin in 2001-2002, and he has also participated in drafting language for other transportation and land use projects, some of them directly related to the Bay Bridge or high-speed rail.
It is supposedly illegal to write legislation targeting a specific corporation, but this has never been enforced on these projects.
What we seem to have here is almost a form of political gangsterism practiced by a very effective and methodical political machine. The main players from this machine are U. S. Senator Dianne Feinstein, her husband, multi-millionaire investment banker Richard C. Blum, and former San Francisco Mayor Willie L. Brown Jr.
The FeinBlum/Brown Machine was also aided by the lobbying firm of Nossaman, Guthrie, Knox and Elliott, and Nossman’s main transportation lobbyist, former California State Senator John Foran. This group led by Foran handled the lobbying on five of these bills. Another key player was Morshed, the former legislative staffer who is now the executive director of the California High-Speed Rail Authority.
All of the aforementioned politically corrupt processes can be illustrated with charts analogous to the two attached charts that document the Bay Bridge and the second bullet train bill. The figures derived for these charts are all a matter of public record. The documents from which they were acquired include listings of political campaign contributions, political lobbying reports, legislative bill histories, and stock issuance and stock sales that were supplied by the principals to the Securities Exchange Commission.
The prime beneficiary of the Transcam and Landscam acts is Senator Feinstein’s husband, investment banker Richard C. Blum.
On the Bay Bridge selection process, URS Greiner, a company that was then owned by Blum, was first in line for the contract. URS turned a billion dollar profit from a near threefold increase in stock prices of URS shares during the Bay Bridge selection process.
Insiders at URS, including Blum, also made significant profits from the stock options they issued themselves during this process. Nearly 3 million shares of URS penny stock was issued to four companies held by Blum that became worth almost $74 million. Another 1.1 million shares of URS penny stock were issued to Blum’s fellow board members at URS. These stocks grew in value to almost $25 million during the Bay Bridge selection process of 1997-98.
The Catellus Development/Mission Bay project, which proceeded through the legislature at the same time the Bay Bridge deal got underway, also benefited the corporation who sponsored the bill. This bill allowed development to proceed along San Francisco’s waterfront through a land swap between the State of California and the City of San Francisco. The Mission Bay project proved to be a billion dollar windfall for Catellus, and much of the $4 billion project has now been finished.
Not long after the Mission Bay project was passed, the Headwaters Forest deal went through. This effort, negotiated by Senator Dianne Feinstein at the behest of the Clinton Administration, proved another windfall bonanza for the sponsoring corporation, in this case timber company Maxxam Corporation. The day the deal went through, on March 1, 1999, Maxxam’s stock price per share increased by $9.89, and insiders at Maxxam made a fortune by cashing out over 1.32 million shares of stock.
A year later, in southern California, Catellus Development reaped an even richer harvest than Maxxam when it traded a huge tract of mostly worthless desert property for valuable state lands within urban centers. This massive land exchange bill, authored by Senator Feinstein, resulted in a net gain to Catellus of $11 to $15 billion, due mostly to the fact that the desert lands were revalued prior to the exchange; so the property values increased dramatically, some by over 300%. A forthcoming part of this series will describe exactly how this process occurred.
Copies of all these documents have been presented by the author to the following investigative agencies in charge of prosecuting political corruption: the FBI, the SEC, the IRS, the U.S. Attorney General’s office, the U.S. Attorney’s office in Sacramento, CA, California Governor Arnold Schwarzenegger, the California State Attorney General’s office, and to Jerry Brown personally, the Fair Political Practices Commission (FPPC), the California Auditor General’s office, the San Francisco County Grand Jury’s office, the Sacramento County District Attorney’s office and the Sacramento Police Department. Not one of these agencies has taken any action against anyone involved in these schemes.
A series of whistle-blower claims were filed with the Internal Revenue Service and the State Auditor General’s office by this author and other citizens regarding the way these processes have been used to benefit insiders. A subsequent story published on this blog will detail how these agencies responded to whistle-blower claims and calls for investigations; another blog installment details the lack of action by a number of public citizen watchdog associations, who have likewise declined to move against this powerful insider band.
In an email to the public interest law firm Judicial Watch, the author laid out the possible law and ethics violations that these eight separate acts have comprised. They include violations of the Securities Exchange Act of 1933 prohibiting insider trading, violations of conflict-of-interest prohibitions as applied to legislators and lobbyists, at both the state and federal level, possible income tax evasion or code violations, business and political codes-of-ethics violations, and more, bringing up the possibility that these acts could be litigated under the RICO (organized crime) statutes, in that they involve many of the same political players in each case.
In a series of articles that will be published on this blog, we will examine all these political processes chronologically and see how this intricate game of multi-billion-dollar profiteering has progressed over the past three decades.
This reporter witnessed and reported these acts while they were occurring, and had his documentation vetted by legal counsel. This counsel verified the documents’ authenticity and said he believed these acts could be litigated under the fair Political Practices Act of 1974, specifically the section that prohibits lawmakers from taking part in a political process that benefits them financially.
The author stands by his figures and his sources, and none of the published work on these subjects has ever been criticized for inaccuracy. All the principal characters named herein were given ample time to respond to the allegations after being apprised by the author of what he intended to publish. None of them have offered comment.
