Law enforcement: Arrest officials hiding CAFR tax surplus billions, trillions

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Sheriffs and police will be highly motivated for arrests when they discover the cause of devastating budget cuts to vital infrastructure, including their own departments (and here), is the crime of major officials lying to hide literal billions and trillions of tax surplus dollars. These slashed budgets have terminated the jobs of friends, made their jobs more dangerous, and reduced their pay.

The crimes are “emperor has no clothes” obvious, and exposed by Comprehensive Annual Financial Reports (CAFRs) showing cash and investment funds in the billions and collective trillions while both parties’ “leadership” issue constant official statements that their agencies have no money and no option than austerity for essential public services.

These “leaders” have legal fiduciary responsibility for honest and complete communication regarding that money. The crime is fraud and non-disclosure when taxpayers have the right to be fully informed. This is similar to saying a budget/checking account has insufficient funds and therefore we must fire teachers, increase classroom sizes, and eliminate school programs while the cash and investment/savings account has 35 times the claimed shortfall.

Hiding the information in typical 300-page documents while publicly claiming there are no options than austerity is criminal fraud.

Here are three examples of CAFR data from public documents:

  • The state of California has $600 billion in cash and investments. This makes Governor Brown’s statements (and this 2-minute filmed statement) that the state must massively cut programs because of a $16 billion budget account shortfall a criminal lie. Indeed, the state’s investment fund grew by $67 billion last year alone. Californians have options the governor has legal responsibility to communicate in good faith honesty, and to submit data for public and independent consideration.
  • The even-more astounding amount is $8 trillion in surplus taxes from sampled data of California’s various ~14,000 government entities’ CAFRs.
  • When I looked through the CAFR for Los Angeles County and the City of Los Angeles, I quickly found $88 billion in just their investment accounts.

Officials never mention these cash and investment accounts that are taxpayers’ surpluses. When pressed, they resort to three known lies to deflect questioning:

  1. The funds are “designated” and can’t be used. This is a lie because the legislators also have the authority to “undesignate,” and responsibility to honestly communicate to the taxpayers the status of their investment and cash accounts.
  2. The funds are needed to pay for retirement benefits. This is a lie because $600 billion is not “needed” to pay an account that in a healthy economy has current member contributions roughly equal to retirement payouts (assuming Californians would want their tax money involved). It is a lie because responsible leadership would announce the $600 billion and $8 trillion, then honestly submit the data to independent analyses and public consideration (these would confirm the “emperor has no clothes” obvious that $600 billion as an “overtax” is tragic-comic looting that tremendously harms taxpayers).
  3. The funds are needed for “rainy days.” This is a lie because a state-owned bank could provide at-cost credit for budget shortfalls. Indeed, a state-owned bank providing public credit rather than private for-profit credit could have 2% mortgages that would cover all of California’s tax revenue. The only state with a state-owned bank is North Dakata; also the only state with continuing and increasing budget surpluses.

Here’s another massive crime: Clint Richardson documents on page 107 of California’s CAFR that the $6 billion annual interest cost and $164 billion in state debt are also cover-ups when contrasted with taxpayers’ investments. A sharp irony is that many of California’s “investments” are in other government debt securities. This means a net loss to taxpayers as one group pays another interest minus the cost of creating and managing the debt.

How big are these crimes?

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 $150,000/year, you would receive $150,000).

If the $8 trillion were returned, then each California household has been overtaxed by a present-day value of over half a million dollars ($500,000). And if we take our example of $150,000/year income, well, you’ll be happy to understand you’re owed a credit of ~$1.5 million ($1,5000,000). 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 while losing money in debt, and Wall Street’s scraps from corporate dividends? Or would they demand to know their other options and criminal prosecution of those who overtaxed them by trillions without telling them?

I’m in process of communicating with my local law enforcement to file a criminal complaint against appropriate parties. I’ll write to inform you of all official responses.

I invite you to contact law enforcement with criminal complaints of officials overtaxing by billions and trillions, and then never reminding us of our money while damning our communities to austerity.

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  • gozounlimited

    Could this have something to do with the cover-up?

    Schwarzenegger Bids California Farewell, Leaving Brown Burdened With Bonds

    Arnold Schwarzenegger swore after his first month as California governor that he’d rip up the state’s credit cards. Instead, the Republican former action- movie hero pushed through at least $52 billion of borrowing.

    Debt of the world’s eighth-largest economy almost tripled in Schwarzenegger’s seven years, to $91 billion on June 30 from $34 billion in 2003, state Treasury figures show. Californians owed $2,362 per person last year, up from $977 before he went to work.

    There would be more borrowing in Schwarzenegger’s first term. He endorsed a successful ballot measure in October 2004 authorizing $3 billion of general-fund-backed bonds for stem- cell research.

    Schwarzenegger’s “Economic Recovery Bonds,” was approved by voters in March 2004 along with a measure forbidding future governors from selling debt to fund deficits. More than $7 billion of those bonds remain outstanding, with taxpayers obligated until 2024, according to Lockyer’s office.

    In 2006, facing re-election, he proposed a $37.4 billion public-works bond package for roads, schools, housing and flood protection. Voters approved the debt in November, along with $5 billion of bonds for water supply. They also awarded Schwarzenegger a second term.

    Two years later, Schwarzenegger backed a successful ballot measure allowing the state to sell $10 billion of bonds for a high-speed rail line. In November 2009, the legislature approved his plan to ask voters this year for another $11 billion of bonds to overhaul the aging water system. He was forced to postpone the vote for two years in August as the budget fell $19 billion into deficit.

    The governor has also borrowed internally to balance budgets, including $1.9 billion of property-tax revenue meant for local governments in 2009, $1.6 billion owed to programs such as the Beverage Container Recycling Fund and almost $4 billion of deferred subsidies to schools and health-care clinics.

    California shares with Illinois the lowest credit rating of any state from Moody’s Investors Service. The A1 grade is Moody’s fifth-highest. Standard & Poor’s rates California A-, its fourth-lowest level for investment-quality securities. That hasn’t stopped investors from buying California bonds. The state sold $9.3 billion of long-term debt and $10 billion of one-year notes in 2010.

    “Nobody in Sacramento seems to care when we get downgraded and continue to pile on debt,” said Cohen of Envision Capital. “The day of reckoning will come: Hello Greece, Ireland; here comes California.”

    read more: http://mobile.bloomberg.com/news/2010-12-16/schwarzenegger-bids-california-farewell-leaving-brown-burdened-with-bonds?category=
    ***********
    Moody’s Downgrades $11.6 Billion of California TABs By One Notch

    (Jan. 19, 2012) — Uncertainty over implementation of the phase-out of California’s redevelopment agencies prompted Moody’s Investors Service to downgrade $11.6 billion of tax allocation bonds by one notch this week. The downgrade applies to TABs in California that are rated Baa2 and above. As an example, that means a TAB formerly rated A2 would now be rated A3 after the downgrade. “The downgrade primarily reflects near-term cash flow risks arising from legislation recently upheld by the state supreme court that dissolves all redevelopment agencies,” Moody’s said. “Effective February 1, 2012, every redevelopment agency statewide will be replaced by a ‘successor agency’ charged with winding down the redevelopment agency’s affairs. This wind-down includes the payment of existing debts according to their terms.
    ***********
    California Bonds Fail on Advice Bill Lockyer Couldn’t Refuse

    For California Treasurer Bill Lockyer, the offer from Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc. was too good to refuse.

    If California were willing to forgo competitive bidding for a $4.5 billion bond offering, the banks promised more orders from individuals and a lower bill to the taxpayers. The firms insisted that by negotiating with them, the state would benefit from its special relationship with the Wall Street troika and wind up with what two underwriters called a salutary “buzz” to boost demand for the debt.

    When the October offering failed to sell as planned, California was forced to accept 8 percent less money than it needed and to pay as much as $123 million more in interest than the banks said was sufficient for the market. And the threesome made $12.4 million on the deal, contributing to record bonuses in the securities industry a year after getting a total of $80 billion in a federal bailout.

    “Just because someone earns a big wad of money doesn’t mean that they can do what they say they can do,” said Marilyn Cohen, who watched the sale unfold from Los Angeles as president of Envision Capital Management, which oversees $250 million in bonds for individuals. “And shame on the state if they were drinking that Kool-Aid.”

    The California sale helped send the municipal-bond market to its worst month in a year. It ended a rally that had pushed borrowing costs for cities and states to a 42-year low, as measured by the Bond Buyer’s index of 20-year general obligation bonds.

    read more: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aWuY7slLZtoI
    ***********
    Firm urged hedge against state bonds it helped sell

    November 11, 2008| reported from Los Angeles.

    Goldman, Sachs & Co. urged some of its big clients to place investment bets against California bonds this year despite having collected millions of dollars in fees to help the state sell some of those same bonds.

    The giant investment firm did not inform the office of California Treasurer Bill Lockyer that it was proposing a way for investment clients to profit from California’s deepening financial misery. In Sacramento, officials said they were concerned that Goldman’s strategy could raise the interest rate the state would have to pay to borrow money, thus harming taxpayers.

    read more: http://articles.latimes.com/2008/nov/11/business/fi-goldman11

    • gozounlimited

      And This……

      New CBP Report Looks at Realignment, Which Has Nothing To Do With Your Car

      June 8, 2012

      For most Californians, the word “realignment” probably brings to mind something a mechanic does to keep their cars from pulling to one side or the other. In fact, it refers to a major policy shift the Legislature initiated last year: the transfer of several public safety, health, and human services programs – along with a dedicated source of funding – from the state to the counties beginning in 2011-12, as we explain in our new report. The public safety side of realignment has gotten the most media attention, and for good reason. Counties’ new responsibilities for managing, supervising, and rehabilitating “low-level” offenders and parolees will transform the state’s criminal justice system over the next several years as well as bring down state spending on prisons. Nonetheless, a little-known fact about realignment is that nearly two-thirds of the dollars – $3.9 billion out of $5.9 billion in 2012-13 – support health and human services programs, including Child Welfare Services, Foster Care, substance abuse treatment, and mental health services.

      While realignment is intended to be permanent, the current framework was adopted with the understanding that the Legislature and voters would need to finalize the details this year. That’s why state lawmakers and Governor Brown are now working on a long-term framework that is likely to be included in the final 2012-13 budget agreement. It’s also why the Governor has proposed a ballot measure for November 2012 that would place key realignment provisions in the state Constitution in order to ensure that counties will receive ongoing funding as well as to provide counties and the state with protections against certain unanticipated costs. These protections, along with the legislation currently under consideration, are central to building a long-term framework for realignment in 2012 and beyond.

      read more: http://californiabudgetbites.org/

      ***********
      Create the Crisis ….. Create the Cure

      If the state must raise taxes, what kinds of tax increases would be least harmful to the economy?

      The best option for increasing revenues is to broaden the base of existing taxes.This includes expanding the sales tax to services and eliminating unnecessary credits and deductions from the personal and corporate income taxes.

      California might also consider creating new taxes on negative externalities -meaning harmful activities like pollution. Were California to end the taxation of business inputs under its sales tax (as Professors Auerbach and McLure have recommended), while paying for this by implementing a new carbon tax, these changes would improve California’s environmental policy without harming the economy. A carbon tax could also be implemented in order to raise additional revenues.

      Additionally, California could raise revenues by closing tax expenditures and other gaps in the federal tax system. At a minimum, California should not conform to federal tax expenditures in California’s taxes. California could go even further by imposing a small positive tax on the use of claimed federal tax expenditures.

      Once these other methods have been exhausted, the best way to raise revenues is by increasing the rates of broad based taxes.

      read more: http://taxblog.com/dgamage/californias-tax-system-in-crisis-and-beyond/

      The taxpayer is getting the shaft….why?

  • Ranger

    This is an article that is a year old, and not one comment! This shows how unplugged from the system the public is!
    It is now 2014. I looked at the 2013 Comprehensive Annual Financial Report for Mecklenburg County, Charlotte North Carolina just last week.

    The first comment of the financial highlights from the auditor was:
    The city after the June 30, 2013 has exceed its liabilities by $9,000,000,000.00 !! That’s $9 Billion!!
    Yet, they showed the public the Budget Report claiming they had no money, and RAISED PROPERTY TAXES AGAIN!!!!

    I think that the Comptroller of the US said it best:
    We’d rather these reports not be in the public domain, but then again we all know that the people will never take the time to read a CAFR!!

    They know the people do not read! They know that if it isn’t on CNN or Fox that the major majority of the public will never see it!

    • Carl_Herman

      It’s over two years old, bro. And yes, having the facts isn’t enough 🙂

      Game on for you, Ranger: you’ll need some local people to help. Have fun with the challenge!

      • Ranger

        Not sure if fun would be the appropriate word. Sad to see that you are a taxpayer who nonchalantly shrugs it off like it’s a find the Treasure Game.

        This is YOUR money being not only taken from you, but used against you, and giving you not one red cent of the proceeds, when the entire proceeds are yours in the first place.

        This is exactly what I said in my first comment. That that American Public are lazy, non caring unless it slaps them in the face. And only when the problem effects their personnel lives will they notice. Then, it’s too late.

        You either work for one of these entities, or you somehow benefit from the Funds.

        I have shown this to several neighbors, and not one had your lackadaisical attitude as if this is just normal business. They were pissed!!

        But, somehow not you? I guess that Comptroller was right, the people just don’t care that they are being robbed, and the nation removed from their control.

        The American Idiots won’t be singing the happy tune once the system they so fervently depend on turns on them, and removes them from their homes.

        All evil requires to be successful is for good men to stand idly by and do nothing.

        Your sarcastic smile at he end of your first sentence points to you knowing and not caring, as if you are in on it. Therefore, keep in mind that we who are awake remember those who, either purposely or ignorantly stood in the way, or participated in this to benefit themselves, will be remembered when the shooting starts.

        Game on is right, hope you are prepared!!