CAFR tax surplus trillions: L.A. County Sheriff’s first official response: denial

I spoke on the phone with Los Angeles County Senior Media Advisor Steve Whitmore. Below is the e-mail I sent to Mr. Whitmore that shows the L.A. County Sheriff’s first response:

Mr. Whitmore:

This e-mail:

  1. Documents our phone conversation today,
  2. provides you the evidence I find of criminal acts by officials at L.A. County and the State of California,
  3. and requests answers to questions regarding my criminal complaint. I have been directed to you with a criminal complaint, and expect whatever rights and promptness is customary promise from my having followed the instructions from my local Sheriff station and you. Please acknowledge receipt of this e-mail and when I can expect an official response.

The content of our conversation regarding a criminal complaint are published, with reposts of some of my articles that exceed ten million views (look here, here, here to start, overall CAFR articles here). I’d very much like to report a story of competence and justice under the law, Mr. Whitmore. And that said, I promise to report on exactly whatever I receive.

1. Our phone conversation:

I called my local law enforcement agency, Crescenta Valley Station, as an economics journalist wishing to file a criminal complaint regarding the State of California and Los Angeles County officials’ non-disclosure of hundreds of billions in tax surpluses. I was directed to the L.A. County Sheriff’s Headquarter Bureau and spoke with you.

I explained to you that County and State government claims of budget deficits that “forced no choice” except budget cuts seems to be a crime of fraudulent non-disclosure by officials with fiduciary responsibility to taxpayers for honest communication of our financial status. The financial fraud is similar to honestly reporting a shortage of funds in a checking account, but never mentioning that a savings account exists with 35 times the claimed shortage with the state, and 300 times the claimed shortage for the county.

I told you the evidence of this is the county and state’s Comprehensive Annual Financial Report (CAFR). I asked you if you were familiar with a CAFR. You did not answer the question, but instead asserted the existence of such funds, “Is not true.” After first requesting that I send the documented evidence via the postal service, you reluctantly agreed to accept it via e-mail.

2. The evidence: California’s Comprehensive Annual Financial Report (CAFR) shows a tax surplus of $600 billion dollars in cash and investments. This makes Governor Brown saying the $16 billion budget deficit with “no option” than austerity a lie from an official with legal fiduciary responsibility for full and honest communication regarding taxpayer money.

The even-more astounding amount is $8 trillion in surplus taxes from sampled data of California’s various ~14,000 government entities’ CAFRs.

Two years ago, I reported $88 billion in cash and investments in CAFRs for the County and City of Los Angeles. The 2011 Los Angeles County CAFR claims a budget deficit of $221 million (p. v), and states all county departments must cut 7% from their budgets (Sheriff’s must cut $15 million). The people of the County of Los Angeles have other options. The county has $66 billion in “Cash and Investments” (page 63). This means county officials currently and repeatedly claim public programs must be cut because of a $0.221 billion deficit in one public account while being silent about 300 times that amount in other public accounts.

County pension funds on page 47 show member contributions at $1.4 billion and benefit payments at $2.2 billion. Clearly a $0.8 billion cost has other options that officials are legally obligated to disclose than hoarding $66 billion as a tax surplus. If the county’s 3 million households received the $66 billion, each would receive $20,000.

If the $600 billion were returned to California’s 12 million households, each would receive $50,000. Or, if you prefer the money returned per average household income of $50,000, each household could receive a proportional amount (if your household earns $100,000/year, you would receive $100,000).

If the whole $8 trillion were returned, then each California household has been overtaxed by a present-day value of over half a million dollars ($500,000). Of course, these colossal investments should be considered by multiple and independent cost-benefit analyses to discover our options; we can’t simply all cash them in.

Californians do not know about this data revealed in the CAFR. If they did, would they choose the state’s management of austerity or insist on knowing our full options?

  1. Questions regarding my criminal complaint:
  • First, you told me the evidence I just documented of literal billions and trillion in tax surpluses don’t exist. Please explain what you meant.
  • County and State officials publicly and repeatedly claim budget deficits create no option than severe cuts, and never mention the billions in their own financial statements and collective trillions. In their official positions of fiduciary responsibility, is such silence a crime of non-disclosure and/or financial fraud? Please explain and document the applicable law. If the Sheriff’s find my criminal complaint merits investigation, with whom do I contact next? If the Sheriff’s claim this is not a crime, please provide the name, rank, and contact information of the person providing that conclusion.
  • When officials have been pressed about CAFR investment funds and cash, they provide three justifications I wanted to provide in case you claim they are valid. First, “these funds are designated”: if this is valid, designated by whom at the county and state levels, and isn’t this a matter of those who designate can just as easily redesignate and were always legally obligated to explain these funds to the public? Second, “these funds are for pensions”: if so, please explain how the magnitude of difference between tax surpluses and pension costs excuses officials never mentioning these funds as an option. Third: “these are rainy day funds”: if so, how are officials justified to not disclose these accounts and consider other rainy day options (such as a state-owned bank for at-cost credit for budget deficits)?
  • On page 107 of California’s CAFR we see $6 billion annual interest cost of the $164 billion in state debt. The claimed “necessity” of debt and that nearly $100 billion of California’s “investments” in other government debt securities means a net loss to taxpayers as one group pays another interest minus the cost of creating and managing the debt. Non-disclosure of funding by debt, and that buying debt securities that loses money is an “investment” also seems like a criminal act. Is it?

Again, I was directed to speak with you regarding a criminal complaint that I am also documenting as a journalist.

Please respond to make the Sheriff’s Department proud. Your brothers and sisters in law enforcement are one of the groups harmed by what I see as an “emperor has no clothes” obvious crime.

Law enforcement has been lied to that there is no money to fund your departments.

Law enforcement has suffered layoffs, decreases in job safety, and decreases in pay.

When the “99%” in law enforcement discover these facts, I predict they will be highly motivated for ethical investigation under the law.

Do you agree, Mr. Whitmore?

Thank you,

Carl Herman

This entry was posted in General. Bookmark the permalink.
  • Ray Leafgren

    Mr. Herman,
    Would you please tell us your training and background in “fund accounting,” the financial recording system of governments. The main premise of your email refers to the Assets portion of the balance sheet and leaves one to wonder to what extent you have analyzed the corresponding Liabilities and Fund Balance portion of the balance sheet, which represent the financial “claims” on the Assets (“Cash and Investments”).

    • Carl Herman

      Ray, you hint that someone requires specialized education. This is not required to understand fraud and non-disclosure of state CAFR cash and investment assets of $600 billion, L.A. County of $66 billion, and sampled data estimate for the 14,000 various CA CAFRs at $8 trillion. Why are you distracting from this “emperor has no clothes” glaring point?

      Here’s an example of the analysis stated in the article that you fail to address as prima facie evidence demanding independent professional cost-benefit analyses for the public to understand our choices:

      “Two years ago, I reported $88 billion in cash and investments in CAFRs for the County and City of Los Angeles. The 2011 Los Angeles County CAFR claims a budget deficit of $221 million (p. v), and states all county departments must cut 7% from their budgets (Sheriff’s must cut $15 million). The people of the County of Los Angeles have other options. The county has $66 billion in “Cash and Investments” (page 63). This means county officials currently and repeatedly claim public programs must be cut because of a $0.221 billion deficit in one public account while being silent about 300 times that amount in other public accounts.

      County pension funds on page 47 show member contributions at $1.4 billion and benefit payments at $2.2 billion. Clearly a $0.8 billion cost has other options that officials are legally obligated to disclose than hoarding $66 billion as a tax surplus. If the county’s 3 million households received the $66 billion, each would receive $20,000.”

      Readers and Ray: you don’t have to be a professional umpire to see for yourself when a baserunner is out at first base by thirty feet. You don’t have to be a Sheriff to see for yourself when a person blows through a traffic stop sign well over 30 mph.

      And, with whatever respect is due to Ray, I say you have your head up your assets if you can’t see for yourself collective governments do not “have” to over-tax Californians by $500,000 per household.

      I mean, really, Ray. You leave one to wonder to what extent you deserve to be a slave, and if you’re a minion of the 1% lying to the 99% that it’s ok to surrender a tax surplus of $8 trillion in California.

  • gozounlimited

    Sheriff Lee Baca said, “Deputy sheriffs and police officers have the public’s trust, they have leadership skills, and they care. [S.H.A.R.E.] Tolerance is a great example of our Department’s Core Values that each of us displays the courage to ‘stand against racism, sexism, anti-Semitism, homophobia, and bigotry in all its forms. ……

    Very Nice Sheriff Baca…….but what about Government Corruption? Financial Fraud? Sheriff Baca….time to expand your consciousness/knowledge and core values to see the ongoing crime you would prefer to deny. Your inaction is not acceptable ….. let’s see the courage your purport to have.

    Stand against tough stuff like government financial crimes and worry less about the social ills caused by the same financial crimes. You know the routine … if not you can contact your local Social Worker …. she will explain it to you.

    • gozounlimited

      This is timely …..

      Tom Ferguson: How Wall Street Hustles America’s Cities and States Out of Billions –

      Yves here. While the municipal swaps fiasco may seem like old news, this piece discusses a post-crisis type of swap which is even more appalling. The old scam was to talk local and state authorities who would have been far better served with old-fashioned fixed rate financing into doing floating rate financing and entering into a series of swaps to get a fixed rate deal, with a supposed improvement in funding costs. The problem is that many of those floating rate deals were auction rate securities, and when that market failed in early 2008, the borrowers were doubly hosed. The ARS went to penalty rates. In addition, payments on the swaps often kicked up shortly thereafter (due to the slow-motion failure of monoline guarantors, which was the hidden trigger behind both events. The downgrade of the monolines de facto downgraded the municipality, which led to increased payments on the swaps).

      The latest scam is more appalling. Municipal authorities would borrow fixed rate, then enter into a variable rate swap on the side. Earth to base, no responsible manager wants uncertain funding costs on a long-term capital investment. This is tantamount to the owner of a candy store borrowing money at a fixed rate from his bank to finance an expansion of his business, then betting at the racetrack to try to lower his costs. Not surprisingly, many of these swaps have proven to be costly time bombs.

      read more: http://www.nakedcapitalism.com/2012/06/tom-ferguson-how-wall-street-hustles-americas-cities-and-states-out-of-billions.html

  • Richard Dihlman

    Right on . I went to my state rep about this in Connecticut and they said they never heard about these; they said they would get back to me which they never did. If body language or facial expressions said anything they looked like they wanted to kill me. I also told them that some 2.68 billons dollars of state workers money was being stolen in deratives investments; still pursuing this matter but looking for help from someone more experianced in this field.

    • Carl Herman

      That’s why I’m pursuing this with law enforcement. The CAFRs prove non-disclosure/fraud. Good luck.

  • petar

    Carl, you are on the roll,

    Here is Wisconsin CAFR 2010
    http://www.scribd.com/doc/53733453/2010-CAFR-for-Wisconsin-Explained

    and city of Milwaukee,

    http://www.scribd.com/doc/54319771/2009-Cafr-for-the-City-of-Milwaukee-Explained

    as for fraud you are correct…

    Petar

    • Carl Herman

      Feel free to take on the data and communicate it to your local people :)

  • http://newmessage.org/av/nightmeditation.htm Fan of GreatWavesOfChange.org

    Carl
    This reminds me of one of the Great Waves of change that the planet, in so many different prophecies (Hopi, Mayan, Edgar Caycee, Jon Peniel’s, and countless indigenous people’s, etc.), these times have been foreseen for humanity to be going through in this time of great transition–to a worldwide cooperative community out of necessity more than anything. If the house is on fire, and you and the other tenants want to live, you either pitch in and put it out, or you risk perishing by ambivalence and wrong thought/wrong action. A few of the Great Waves are obvious, some not so, such as growing effects of climate change at a planetary permanent level, affecting loss of arable land and in some areas fresh water, growing economic (08 collapse and impending second one) and political instability (such as fraud/corruption/deception born of selfishness), accelerating resource depletion including energy & natural resources, environmental destruction & degradation, expanding competition for the remaining resources leading to expanding possible risk of harsh competition, conflict, and war are some of the Great Waves of change that humanity must now turn and face and begin to prepare for (which I saw and felt for me, started and ended, ultimately, with me: ready, willing, and able or not). The ready willing and able part parallels much of the work of truth showers everywhere now, reach the people reaching for this, or keep moving if they cannot reconsider their ephemeral conditioned firm ideas, beliefs, and thought forms that they have overly identified with instead of their deeper experience and inner knowing about things is my feeling.

    Thanks for saying it and showing your work Carl, as Walter Burien did/is, this is such a great issue you’re taking on, and if it makes you feel any better, I heard you and am considering how to look into and discover what you have found to my local area, which includes Colorado, Denver county & metro, Boulder city & Bo. County, school district, etc.

    Are there any how to’s of how to do this process that you describe? Certain areas to look under in the pdf itself in particular, such as the Investments section you mention and so on? Reason I ask, circumstantially its possible to do the work, but challenging in where to take it beyond that. If there were a bit of a how to, or suggestions, then I could follow that and not bother you/others. I haven’t searched around on such resources much admittedly, logistically time is tight and things are challenging. Thank you.

 

 

Twitter