truthout--2020-10-01--If Kushner Companies Default on Near-Record Loan, Taxpayers May Be on the Hook

After the news broke in May of last year that government-sponsored lending agency Freddie Mac had agreed to back $ 786 million in loans to the Kushner Companies , political opponents asked whether the family real estate firm formerly led by the president ’ s son-in-law and top adviser , Jared Kushner , had received special treatment .
“ We are especially concerned about this transaction because of Kushner Companies ’ history of seeking to engage in deals that raise conflicts of interest issues with Mr. Kushner , ” Sens .
Elizabeth Warren , D-Mass.
, and Tom Carper , @ @ @ @ @ @ @ s CEO in June 2019 .
The loans helped Kushner Companies scoop up thousands of apartments in Maryland and Virginia , the business ’ s biggest purchase in a decade .
The deal , first reported by Bloomberg , also ranked among Freddie Mac ’ s largest ever .
At the time , the details of its terms weren ’ t disclosed .
Freddie Mac officials didn ’ t comment publicly then .
Kushner ’ s lawyer said Jared was no longer involved in decision-making at the company .
( He does continue @ @ @ @ @ @ @ , according to his financial disclosures , including from some properties with Freddie Mac-backed loans . )
Freddie Mac packaged the 16 loans into bonds in August 2019 and sold them to investors .
But Kushner Companies hadn ’ t finished its buying spree .
Within the next two months , records show , Freddie Mac backed another two loans to the Kushners for an additional $ 63.5 million , allowing the company to add two more apartment complexes to its portfolio .
A new analysis by ProPublica shows Kushner Companies received unusually @ @ @ @ @ @ @ it obtained with Freddie Mac ’ s backing .
The loans allowed the Kushner family company to make lower monthly payments and borrow more money than was typical for similar loans , 2019 Freddie Mac data shows .
The terms increase the risk to the agency and to investors who buy bonds with the Kushner mortgages in them .
Moreover , Freddie Mac ’ s estimates of the Kushner properties ’ profitability — a core element of any decision to back a loan — have already proven to be overly optimistic .
All @ @ @ @ @ @ @ biggest loan package delivered smaller profits in 2019 than Freddie Mac expected , despite the then-booming economy .
The loan for the largest property lagged Freddie Mac ’ s profit prediction by 31 % last year .
U.S. taxpayers could be responsible for paying back much of the nearly $ 850 million in Freddie Mac financing if Kushner Companies defaults and its properties drop significantly in value .
Freddie Mac said that ’ s unlikely .
But during the last real estate crash , taxpayers had to bail out the agency and its @ @ @ @ @ @ @ the tune of $ 190 billion as the agencies plunged into the government equivalent of bankruptcy .
( The agencies ultimately repaid the money and more . )
The involvement of Jared ’ s sister Nicole Kushner Meyer adds to questions about whether the family sought to exploit its political influence .
Meyer , who shares her brother ’ s slight build , porcelain features and dark chestnut hair , lobbied Freddie Mac in person on behalf of Kushner Companies in February last year , a timeline of the deal obtained by ProPublica @ @ @ @ @ @ @ for invoking her brother ’ s name while doing Kushner Companies ’ business .
In a statement , Freddie Mac said it does “ not consider the political affiliations of borrowers or their family members.
” It called ProPublica ’ s analysis “ random , arbitrary and incomplete ” and asserted that the Kushner loans “ fit squarely within our publicly-available credit and underwriting standards .
The terms and performance of every one of these loans is transparent and available on our website , and all the loans are current and have been @ @ @ @ @ @ @ Companies did not respond to calls and emails seeking comment .
Emails to the White House seeking Jared Kushner ’ s comment were not returned .
There ’ s no evidence the Trump administration played a role in any of the decisions , and Freddie Mac operates independently .
But Freddie Mac embarked on approving the loans at the moment that its government overseer , the Federal Housing Finance Agency , or FHFA , was changing from leadership by an Obama administration appointee to one from the Trump administration , Mark Calabria , @ @ @ @ @ @ @ chief economist .
Calabria , who was confirmed in April 2019 , has called for an end to the “ conservatorship , ” the close financial control that his agency has exerted over Freddie Mac and Fannie Mae since the 2008 crisis .
The potential for improper influence exists even if the Trump administration didn ’ t advocate for the Kushners , said Kathleen Clark , a law professor at Washington University specializing in government and legal ethics .
She compared the situation to press reports that businesses and associates connected to Jared @ @ @ @ @ @ @ receive millions from the Paycheck Protection Program .
Officials could have acted because they were seeking to curry favor with the Kushners or feared retribution if they didn ’ t , according to Clark .
And if Kushner Companies had wanted to avoid any appearance of undue influence , she added , it should have sent only nonfamily executives to meet with Freddie Mac .
“ I ’ d leave it to the professionals , ” Clark said .
“ I ’ d keep family members away from it.
” The Freddie Mac @ @ @ @ @ @ @ terms on multiple points .
All 18 loans , for example , allow Kushner Companies to pay only interest for the full 10-year term , thus deferring all principal payments to a balloon payment at the end .
That lowers the monthly payments but increases the possibility that the balance won ’ t be paid back in full .
“ That ’ s as risky as you get , ” said Ryan Ledwith , a professor at New York University ’ s Schack Institute of Real Estate , of 10-year interest-only loans .
@ @ @ @ @ @ @ of time , and you ’ re not getting any amortization to reduce your risk over time .
You ’ re betting the market is going to get better all by itself 10 years from now.
” Interest-only mortgages , which notoriously helped fuel the 2008 economic crisis , represent a small percentage of Freddie Mac loans .
Only 6 % of the 3,600 loans funded by the agency last year were interest-only for a decade or more , according to a database of its core mortgage transactions .
Kushner Companies also loaded @ @ @ @ @ @ @ usual for similar loans , with the loan value for the 16-loan deal climbing to 69 % of the properties ’ worth .
That compares with an average 59 % , according to data for loans with similar terms and property types that Freddie Mac sold to investors in 2019 , and is just below the 70 % debt-to-value ceiling Freddie Mac sets for loans in its category .
“ What we generally have seen from Freddie and Fannie , ” said Andrew Little , a principal with real estate investment bank John @ @ @ @ @ @ @ is they will do 10 years of interest-only on lower-leveraged deals.
” Loans right at the ceiling are “ not very common , ” Little said , adding that “ you don ’ t see deals this size that commonly.
” Meanwhile Freddie Mac and its lending partner overestimated the profits for the buildings in the Kushners ’ 16-loan package by 12 % during the underwriting process , according to the agency ’ s data .
Such analysis is supposed to provide a conservative , accurate picture of revenue and expenses , which @ @ @ @ @ @ @ of an apartment building .
But the level of income anticipated failed to materialize in 2019 , financial reports show .
The most dramatic overstatement came with the largest loan in the deal , $ 120 million for Bonnie Ridge Apartments , a 960-apartment complex in a suburban part of Baltimore .
In that case , realized profits last year were 31 % below what Freddie Mac had expected .
“ That ’ s definitely a significant amount , ” said John Griffin , a University of Texas professor who specializes in forensic @ @ @ @ @ @ @ He co-authored a recent paper highlighting as worrisome loans in which projected profits exceeded actual profits by 5 % .
“ It ’ s a problem when underwritten income is inflated or overstated , ” he said .
“ That is a key metric that determines the safety of the loan.
” Griffin ’ s paper found that 28 % of all loans examined had projected profits that were 5 % or more greater than what the properties actually earned in their first year .
Some instances of underperformance could be caused by @ @ @ @ @ @ @ but “ such situations should be relatively rare.
” Yet in the case of Freddie Mac ’ s estimates in the Kushner deal , 13 of the original 16 loans met or exceeded the 5 % threshold — many by a considerable amount .
Freddie Mac said it followed normal underwriting guidelines in assessing the Kushner buildings , including securing an independent appraisal and looking at historical property performance .
It said investors who examined the riskiest portion of the debt also expressed no concerns .
If the underwriting had been on target @ @ @ @ @ @ @ loans would still have been within Freddie Mac ’ s credit parameters , data shows .
But the resulting analysis would have suggested the Kushner Companies has a smaller cushion to sustain its loan payments .
It could also have affected the interest rate the company pays .
Thinner margins accompanied by relatively high rates of debt provide less wiggle room if the properties , or the economy , run into trouble .
As Kushner Companies has seen before , that wiggle room can disappear quickly .
Freddie Mac ’ s main business @ @ @ @ @ @ @ loans from the lenders that originated them , then selling them to investors as securities .
The arrangement takes the debt off banks ’ balance sheets , freeing them to make more loans .
Freddie Mac and Fannie Mae are privately owned , but they have been financially backstopped by the federal government and are required to meet goals for lending on affordable housing .
Single-home loans are still Freddie Mac ’ s primary business , but since the 2008 economic crisis , the agency has greatly expanded its financing of apartment complexes @ @ @ @ @ @ @ of the Kushner family , whose real estate holdings have spanned the mid-Atlantic and Midwest in recent years , with thousands of units scattered across suburbia .
The company sold off 17,500 apartments in 2007 , after the family ’ s patriarch , Jared ’ s father , Charles Kushner , returned from prison for convictions on illegal campaign contributions , tax evasion and witness tampering .
After Jared became CEO in 2008 , the company turned its ambitions to high-profile commercial properties in New York City , a foray that turned sour @ @ @ @ @ @ @ up control of its marquee $ 1.8 billion building and headquarters , 666 Fifth Avenue , after being unable to keep up with its loans .
Another piece of prime Kushner Companies Manhattan real estate , retail space in the old New York Times building near Times Square , was headed for a potential default in 2019 , and foreclosure .
( The New York Times reported in August that the foreclosure action was put off at the last minute , so negotiations with a lender could continue . )
Kushner Companies eventually @ @ @ @ @ @ @ up its apartment portfolio .
In the eight years before Trump entered the White House , the company and its partners secured a total of $ 581 million in Freddie Mac financing , according to data from the firm Real Capital Analytics first published by Bloomberg .
By the end of 2018 , Kushner Companies had amassed 21,000 apartment units .
Some of those loans didn ’ t fare well .
They included a series of supplemental loans , or second mortgages , taken out on properties in Maryland that Kushner Companies owned @ @ @ @ @ @ @ of the Kushner share was not clear ) .
Landlords often use such second loans as a way to extract large amounts of cash from their holdings .
A lender had originated 10 such loans to Kushner Companies and its partners in 2015 , and Freddie Mac planned to sell them to investors , or securitize them , once the properties demonstrated income consistently high enough to cover the debt payments .
For four of the properties , however , profits dipped in 2016 , and two more were in little better shape @ @ @ @ @ @ @ securitized the six loans , for $ 40 million , by inauguration day in 2017 .
Mortgage industry experts say poor profits at underlying properties can lead Freddie Mac to delay selling off the loans as bonds , fearing they will be rejected by investors .
By the time Freddie Mac offloaded the last of Kushner ’ s second mortgages in April 2017 , they had racked up above-average lag times between their origination and securitization , compared with other loans in their debt packages , data shows .
( Freddie Mac said @ @ @ @ @ @ @ Within 10 months of the sale of the loans to investors , one of the complexes landed on the servicer ’ s watchlist for mortgages at a heightened risk for default .
Another soon followed , and another the year after that .
All 10 complexes , which were built in the early 1970s or earlier , exhibited upkeep issues alarming enough to earn a flag in Freddie Mac data for “ deferred maintenance ” problems .
( A Freddie Mac spokesman said the issues identified were almost all related to exterior asphalt @ @ @ @ @ @ @ an exterior drainage system in need of repair . )
At one property , a representative of Kushner Companies and its partners blamed residents of the nearby neighborhoods , who are primarily Black and low-income , for its declining profits and a rash of evictions : “ The main driver is the client base in the area , ” the servicer reported the borrower as saying , Freddie Mac records show .
Kushner Companies had other problems , too .
In 2017 , ProPublica reporter Alec MacGillis documented the company ’ s practice @ @ @ @ @ @ @ tenants ’ lawyers called illegal , fees to occupants of some of those complexes .
Tenants also claimed Kushner Companies ’ property management arm , Westminster Properties , at times neglected basic repairs and allowed the property condition to deteriorate , including raw sewage flowing out of one kitchen sink .
The complaints spurred a lawsuit filed in October 2019 by the attorney general of Maryland , Brian Frosh .
Frosh accused the management company and its partners of charging “ illegitimate fees ” and having “ rented apartments and townhomes to consumers @ @ @ @ @ @ @ and have conditions that can adversely impact consumers ’ health and well being.
” ( Westminster has defended its conduct in legal filings for the suit , which remains active . )
Kushner Companies first approached Freddie Mac in August 2018 through Berkadia Commercial Mortgage , then abandoned its application without explanation in mid-October of that year .
Berkadia did not return messages seeking comment .
In February 2019 , Berkadia approached Freddie Mac again and informed the agency that Kushner Companies wanted to move forward .
It ’ s not clear what @ @ @ @ @ @ @ things had changed in the interim .
The rates on 10-year Treasury bonds had dropped , a circumstance that typically fuels borrowing and the securitized lending that Freddie provides .
And the Obama appointee in charge of the FHFA was gone , leaving an interim Trump appointee in place .
Six days after rekindling its interest , Nicole Kushner Meyer and two Kushner Companies executives , President Laurent Morali and Chief Operating Officer Peter Febo , met with Freddie Mac officials , along with representatives of Berkadia and an advisory firm , documents @ @ @ @ @ @ @ say which Freddie Mac officials attended .
The meeting covered the “ business plan for assets , track record and general overview of the Kushner Companies.
” Meyer followed up , documents say , sending multiple emails to a senior Freddie Mac official , who was not identified .
Meyer has been serving as a principal at Kushner Companies since 2015 , according to her LinkedIn profile .
She caused a stir in 2017 , when she invoked her brother on a trip to China to pitch potential investors for a Kushner Companies @ @ @ @ @ @ @ .
The company was seeking investors to participate in a government program known as EB-5 , which grants visas to foreigners who make high-dollar investments intended to create jobs in struggling areas .
Freddie Mac said Meyer did not mention Kushner by name during the meeting .
The agency also said no one connected to the White House asked that the deal be done .
But the political sensitivity was obvious to Freddie Mac , whose officials emailed each other in the weeks after the meeting , expressing a desire to minimize press @ @ @ @ @ @ @ a person with knowledge of the situation .
They also took the unusual step of notifying FHFA , their regulator , of the transaction , the timeline shows .
Freddie Mac and FHFA both declined to say why Freddie made the notification except to say that it was necessary as part of the agency ’ s conservatorship .
( One source suggested deals above a certain dollar amount require such notification . )
In March , Kushner Companies was able to move fast to lock in a favorable interest rate , documents show @ @ @ @ @ @ @ which is needed to request a lock on a component of its interest rate .
Freddie Mac ’ s website says that single loans are eligible for such a procedure , but that groups of loans must obtain additional approval .
The day after Kushner Companies submitted its application , documents show , Freddie locked the rate for all 16 mortgages .
Through a spokesman , Freddie Mac said that such locks are an important part of its business model , and that timing is at the borrower ’ s discretion .
Kushner @ @ @ @ @ @ @ in another way : Freddie Mac had granted Lone Star Funds , a private equity firm managing $ 85 billion in global investments , interest-only terms for only the first three years of its seven-year mortgages when it had acquired the same apartment complexes in 2015 .
As a result , Lone Star had been able to borrow more money .
But it soon faced a sharp hike in its monthly payments , when it added principal to interest .
Freddie Mac completed its due diligence for the Kushner Companies deal and on @ @ @ @ @ @ @ Companies and its partner , Torchlight Investors , took ownership of the 16 properties , with $ 785,803,000 in loans pledged .
Torchlight did not respond to questions .
The properties were largely in the Washington , D.C. , and Baltimore suburbs .
Their average construction date was 1980 , almost a decade older than the other properties Freddie approved for similar loans in 2019 .
From a profit standpoint , the 16 properties were a mixed bag .
Appraisers pegged their value as having increased 2 % overall in the previous four @ @ @ @ @ @ @ value , according to the analysis .
The Kushners also benefited from another provision that increased the deal ’ s risk .
Groups of loans are often cross-collateralized , meaning that if one defaults , the lender can seek to seize others to recoup their losses .
The strategy provides an extra hedge against risk for the lender .
The Lone Star properties were cross-collateralized under their previous loan .
But not those for Kushner Companies .
( A Freddie Mac spokesman said cross-collateralization is not required and each of the company ’ @ @ @ @ @ @ @ . )
Another curious phenomenon emerged in the disclosures for the new loans : The reported profits for seven of the Kushner buildings in 2017 were higher than those listed for the same buildings and same year in prior loan documents .
For some properties , the difference was slight .
But for others , it was more substantial .
At one Kushner complex , for example , the Apartments at Cambridge Court in suburban Baltimore , the 2017 net operating income was nearly 6 % higher in the new loan filing than @ @ @ @ @ @ @ in an old disclosure .
In May , ProPublica reported a pattern of similar discrepancies in bonds that hold mortgages across the commercial real estate industry .
And the paper by Griffin , the University of Texas finance professor , and his colleague Alex Priest also found a pattern of such profit alterations , suggesting multiple institutions are manipulating historical financials to downplay risk and bolster more aggressive lending .
Financial data on how the 18 Kushner properties are faring in this year ’ s economic slump is not yet available .

This story is co-published with WNYC.
After the news broke in May of last year that government-sponsored lending agency Freddie Mac had agreed to back $786 million in loans to the Kushner Companies, political opponents asked whether the family real estate firm formerly led by the president’s son-in-law and top adviser, Jared Kushner, had received special treatment.
“We are especially concerned about this transaction because of Kushner Companies’ history of seeking to engage in deals that raise conflicts of interest issues with Mr. Kushner,” Sens. Elizabeth Warren, D-Mass., and Tom Carper, D-Del., wrote to Freddie Mac’s CEO in June 2019.
The loans helped Kushner Companies scoop up thousands of apartments in Maryland and Virginia, the business’s biggest purchase in a decade. The deal, first reported by Bloomberg, also ranked among Freddie Mac’s largest ever. At the time, the details of its terms weren’t disclosed. Freddie Mac officials didn’t comment publicly then. Kushner’s lawyer said Jared was no longer involved in decision-making at the company. (He does continue to receive millions from the family business, according to his financial disclosures, including from some properties with Freddie Mac-backed loans.)
Freddie Mac packaged the 16 loans into bonds in August 2019 and sold them to investors. But Kushner Companies hadn’t finished its buying spree. Within the next two months, records show, Freddie Mac backed another two loans to the Kushners for an additional $63.5 million, allowing the company to add two more apartment complexes to its portfolio.
A new analysis by ProPublica shows Kushner Companies received unusually favorable loan terms for the 18 mortgages it obtained with Freddie Mac’s backing. The loans allowed the Kushner family company to make lower monthly payments and borrow more money than was typical for similar loans, 2019 Freddie Mac data shows. The terms increase the risk to the agency and to investors who buy bonds with the Kushner mortgages in them.
Moreover, Freddie Mac’s estimates of the Kushner properties’ profitability — a core element of any decision to back a loan — have already proven to be overly optimistic. All 16 properties in the firm’s biggest loan package delivered smaller profits in 2019 than Freddie Mac expected, despite the then-booming economy. The loan for the largest property lagged Freddie Mac’s profit prediction by 31% last year.
U.S. taxpayers could be responsible for paying back much of the nearly $850 million in Freddie Mac financing if Kushner Companies defaults and its properties drop significantly in value. Freddie Mac said that’s unlikely. But during the last real estate crash, taxpayers had to bail out the agency and its larger sibling, Fannie Mae, to the tune of $190 billion as the agencies plunged into the government equivalent of bankruptcy. (The agencies ultimately repaid the money and more.)
The involvement of Jared’s sister Nicole Kushner Meyer adds to questions about whether the family sought to exploit its political influence. Meyer, who shares her brother’s slight build, porcelain features and dark chestnut hair, lobbied Freddie Mac in person on behalf of Kushner Companies in February last year, a timeline of the deal obtained by ProPublica shows. She has previously drawn criticism for invoking her brother’s name while doing Kushner Companies’ business.
In a statement, Freddie Mac said it does “not consider the political affiliations of borrowers or their family members.” It called ProPublica’s analysis “random, arbitrary and incomplete” and asserted that the Kushner loans “fit squarely within our publicly-available credit and underwriting standards. The terms and performance of every one of these loans is transparent and available on our website, and all the loans are current and have been consistently paid.”
A spokesperson for Kushner Companies did not respond to calls and emails seeking comment. Emails to the White House seeking Jared Kushner’s comment were not returned.
There’s no evidence the Trump administration played a role in any of the decisions, and Freddie Mac operates independently. But Freddie Mac embarked on approving the loans at the moment that its government overseer, the Federal Housing Finance Agency, or FHFA, was changing from leadership by an Obama administration appointee to one from the Trump administration, Mark Calabria, Vice President Mike Pence’s former chief economist. Calabria, who was confirmed in April 2019, has called for an end to the “conservatorship,” the close financial control that his agency has exerted over Freddie Mac and Fannie Mae since the 2008 crisis.
The potential for improper influence exists even if the Trump administration didn’t advocate for the Kushners, said Kathleen Clark, a law professor at Washington University specializing in government and legal ethics. She compared the situation to press reports that businesses and associates connected to Jared Kushner and his family were approved to receive millions from the Paycheck Protection Program. Officials could have acted because they were seeking to curry favor with the Kushners or feared retribution if they didn’t, according to Clark. And if Kushner Companies had wanted to avoid any appearance of undue influence, she added, it should have sent only nonfamily executives to meet with Freddie Mac. “I’d leave it to the professionals,” Clark said. “I’d keep family members away from it.”
The Freddie Mac data shows that Kushner Companies secured advantageous terms on multiple points. All 18 loans, for example, allow Kushner Companies to pay only interest for the full 10-year term, thus deferring all principal payments to a balloon payment at the end. That lowers the monthly payments but increases the possibility that the balance won’t be paid back in full.
“That’s as risky as you get,” said Ryan Ledwith, a professor at New York University’s Schack Institute of Real Estate, of 10-year interest-only loans. “It’s a long period of time, and you’re not getting any amortization to reduce your risk over time. You’re betting the market is going to get better all by itself 10 years from now.”
Interest-only mortgages, which notoriously helped fuel the 2008 economic crisis, represent a small percentage of Freddie Mac loans. Only 6% of the 3,600 loans funded by the agency last year were interest-only for a decade or more, according to a database of its core mortgage transactions.
Kushner Companies also loaded more debt on the properties than is usual for similar loans, with the loan value for the 16-loan deal climbing to 69% of the properties’ worth. That compares with an average 59%, according to data for loans with similar terms and property types that Freddie Mac sold to investors in 2019, and is just below the 70% debt-to-value ceiling Freddie Mac sets for loans in its category. “What we generally have seen from Freddie and Fannie,” said Andrew Little, a principal with real estate investment bank John B. Levy & Company, “is they will do 10 years of interest-only on lower-leveraged deals.”
Loans right at the ceiling are “not very common,” Little said, adding that “you don’t see deals this size that commonly.”
Meanwhile Freddie Mac and its lending partner overestimated the profits for the buildings in the Kushners’ 16-loan package by 12% during the underwriting process, according to the agency’s data. Such analysis is supposed to provide a conservative, accurate picture of revenue and expenses, which should be relatively predictable in the case of an apartment building.
But the level of income anticipated failed to materialize in 2019, financial reports show. The most dramatic overstatement came with the largest loan in the deal, $120 million for Bonnie Ridge Apartments, a 960-apartment complex in a suburban part of Baltimore. In that case, realized profits last year were 31% below what Freddie Mac had expected.
“That’s definitely a significant amount,” said John Griffin, a University of Texas professor who specializes in forensic finance and has studied mortgage underwriting. He co-authored a recent paper highlighting as worrisome loans in which projected profits exceeded actual profits by 5%. “It’s a problem when underwritten income is inflated or overstated,” he said. “That is a key metric that determines the safety of the loan.”
Griffin’s paper found that 28% of all loans examined had projected profits that were 5% or more greater than what the properties actually earned in their first year. Some instances of underperformance could be caused by bad luck, the paper acknowledged, but “such situations should be relatively rare.” Yet in the case of Freddie Mac’s estimates in the Kushner deal, 13 of the original 16 loans met or exceeded the 5% threshold — many by a considerable amount.
Freddie Mac said it followed normal underwriting guidelines in assessing the Kushner buildings, including securing an independent appraisal and looking at historical property performance. It said investors who examined the riskiest portion of the debt also expressed no concerns.
If the underwriting had been on target, and reflected lower expectations, the loans would still have been within Freddie Mac’s credit parameters, data shows. But the resulting analysis would have suggested the Kushner Companies has a smaller cushion to sustain its loan payments. It could also have affected the interest rate the company pays. Thinner margins accompanied by relatively high rates of debt provide less wiggle room if the properties, or the economy, run into trouble. As Kushner Companies has seen before, that wiggle room can disappear quickly.
Freddie Mac’s main business has historically been buying bundles of home loans from the lenders that originated them, then selling them to investors as securities. The arrangement takes the debt off banks’ balance sheets, freeing them to make more loans. Freddie Mac and Fannie Mae are privately owned, but they have been financially backstopped by the federal government and are required to meet goals for lending on affordable housing.
Single-home loans are still Freddie Mac’s primary business, but since the 2008 economic crisis, the agency has greatly expanded its financing of apartment complexes.
Apartment complexes have been the specialty of the Kushner family, whose real estate holdings have spanned the mid-Atlantic and Midwest in recent years, with thousands of units scattered across suburbia. The company sold off 17,500 apartments in 2007, after the family’s patriarch, Jared’s father, Charles Kushner, returned from prison for convictions on illegal campaign contributions, tax evasion and witness tampering.
After Jared became CEO in 2008, the company turned its ambitions to high-profile commercial properties in New York City, a foray that turned sour. In 2018, the company gave up control of its marquee $1.8 billion building and headquarters, 666 Fifth Avenue, after being unable to keep up with its loans. Another piece of prime Kushner Companies Manhattan real estate, retail space in the old New York Times building near Times Square, was headed for a potential default in 2019, and foreclosure. (The New York Times reported in August that the foreclosure action was put off at the last minute, so negotiations with a lender could continue.)
Kushner Companies eventually resumed its residential focus and began bulking up its apartment portfolio. In the eight years before Trump entered the White House, the company and its partners secured a total of $581 million in Freddie Mac financing, according to data from the firm Real Capital Analytics first published by Bloomberg. By the end of 2018, Kushner Companies had amassed 21,000 apartment units.
Some of those loans didn’t fare well. They included a series of supplemental loans, or second mortgages, taken out on properties in Maryland that Kushner Companies owned in partnership with others (the size of the Kushner share was not clear). Landlords often use such second loans as a way to extract large amounts of cash from their holdings.
A lender had originated 10 such loans to Kushner Companies and its partners in 2015, and Freddie Mac planned to sell them to investors, or securitize them, once the properties demonstrated income consistently high enough to cover the debt payments. For four of the properties, however, profits dipped in 2016, and two more were in little better shape. Freddie Mac still hadn’t securitized the six loans, for $40 million, by inauguration day in 2017.
Mortgage industry experts say poor profits at underlying properties can lead Freddie Mac to delay selling off the loans as bonds, fearing they will be rejected by investors. By the time Freddie Mac offloaded the last of Kushner’s second mortgages in April 2017, they had racked up above-average lag times between their origination and securitization, compared with other loans in their debt packages, data shows. (Freddie Mac said the wait time was normal.)
Within 10 months of the sale of the loans to investors, one of the complexes landed on the servicer’s watchlist for mortgages at a heightened risk for default. Another soon followed, and another the year after that. All 10 complexes, which were built in the early 1970s or earlier, exhibited upkeep issues alarming enough to earn a flag in Freddie Mac data for “deferred maintenance” problems. (A Freddie Mac spokesman said the issues identified were almost all related to exterior asphalt and concrete, with one instance of an exterior drainage system in need of repair.)
At one property, a representative of Kushner Companies and its partners blamed residents of the nearby neighborhoods, who are primarily Black and low-income, for its declining profits and a rash of evictions: “The main driver is the client base in the area,” the servicer reported the borrower as saying, Freddie Mac records show.
Kushner Companies had other problems, too. In 2017, ProPublica reporter Alec MacGillis documented the company’s practice of charging aggressive, and what some tenants’ lawyers called illegal, fees to occupants of some of those complexes. Tenants also claimed Kushner Companies’ property management arm, Westminster Properties, at times neglected basic repairs and allowed the property condition to deteriorate, including raw sewage flowing out of one kitchen sink.
The complaints spurred a lawsuit filed in October 2019 by the attorney general of Maryland, Brian Frosh. Frosh accused the management company and its partners of charging “illegitimate fees” and having “rented apartments and townhomes to consumers that are distressed, shoddily maintained, and have conditions that can adversely impact consumers’ health and well being.” (Westminster has defended its conduct in legal filings for the suit, which remains active.)
Kushner Companies first approached Freddie Mac in August 2018 through Berkadia Commercial Mortgage, then abandoned its application without explanation in mid-October of that year. Berkadia did not return messages seeking comment.
In February 2019, Berkadia approached Freddie Mac again and informed the agency that Kushner Companies wanted to move forward. It’s not clear what explains the renewed interest. But two things had changed in the interim. The rates on 10-year Treasury bonds had dropped, a circumstance that typically fuels borrowing and the securitized lending that Freddie provides. And the Obama appointee in charge of the FHFA was gone, leaving an interim Trump appointee in place.
Six days after rekindling its interest, Nicole Kushner Meyer and two Kushner Companies executives, President Laurent Morali and Chief Operating Officer Peter Febo, met with Freddie Mac officials, along with representatives of Berkadia and an advisory firm, documents show. The records don’t say which Freddie Mac officials attended. The meeting covered the “business plan for assets, track record and general overview of the Kushner Companies.” Meyer followed up, documents say, sending multiple emails to a senior Freddie Mac official, who was not identified.
Meyer has been serving as a principal at Kushner Companies since 2015, according to her LinkedIn profile. She caused a stir in 2017, when she invoked her brother on a trip to China to pitch potential investors for a Kushner Companies development in Jersey City, New Jersey. The company was seeking investors to participate in a government program known as EB-5, which grants visas to foreigners who make high-dollar investments intended to create jobs in struggling areas.
Freddie Mac said Meyer did not mention Kushner by name during the meeting. The agency also said no one connected to the White House asked that the deal be done.
But the political sensitivity was obvious to Freddie Mac, whose officials emailed each other in the weeks after the meeting, expressing a desire to minimize press coverage of the deal, according to a person with knowledge of the situation. They also took the unusual step of notifying FHFA, their regulator, of the transaction, the timeline shows. Freddie Mac and FHFA both declined to say why Freddie made the notification except to say that it was necessary as part of the agency’s conservatorship. (One source suggested deals above a certain dollar amount require such notification.)
In March, Kushner Companies was able to move fast to lock in a favorable interest rate, documents show. It submitted a financing application, which is needed to request a lock on a component of its interest rate. Freddie Mac’s website says that single loans are eligible for such a procedure, but that groups of loans must obtain additional approval. The day after Kushner Companies submitted its application, documents show, Freddie locked the rate for all 16 mortgages.
Through a spokesman, Freddie Mac said that such locks are an important part of its business model, and that timing is at the borrower’s discretion.
Kushner Companies’ full-term interest-only loan proved exceptional in another way: Freddie Mac had granted Lone Star Funds, a private equity firm managing $85 billion in global investments, interest-only terms for only the first three years of its seven-year mortgages when it had acquired the same apartment complexes in 2015. As a result, Lone Star had been able to borrow more money. But it soon faced a sharp hike in its monthly payments, when it added principal to interest.
(Freddie Mac said full-term, interest-only loans are more common when the pool of mortgages examined is restricted to larger, conventional loans. Nonpublic data shows they made up roughly 20% of such loans over the last three years, the agency said.)
Freddie Mac completed its due diligence for the Kushner Companies deal and on May 22 of last year, Kushner Companies and its partner, Torchlight Investors, took ownership of the 16 properties, with $785,803,000 in loans pledged. Torchlight did not respond to questions.
The properties were largely in the Washington, D.C., and Baltimore suburbs. Their average construction date was 1980, almost a decade older than the other properties Freddie approved for similar loans in 2019.
From a profit standpoint, the 16 properties were a mixed bag. Appraisers pegged their value as having increased 2% overall in the previous four years. Four of the properties lost value, according to the analysis.
The Kushners also benefited from another provision that increased the deal’s risk. Groups of loans are often cross-collateralized, meaning that if one defaults, the lender can seek to seize others to recoup their losses. The strategy provides an extra hedge against risk for the lender. The Lone Star properties were cross-collateralized under their previous loan. But not those for Kushner Companies. (A Freddie Mac spokesman said cross-collateralization is not required and each of the company’s loans met credit parameters without it.)
Another curious phenomenon emerged in the disclosures for the new loans: The reported profits for seven of the Kushner buildings in 2017 were higher than those listed for the same buildings and same year in prior loan documents. For some properties, the difference was slight. But for others, it was more substantial. At one Kushner complex, for example, the Apartments at Cambridge Court in suburban Baltimore, the 2017 net operating income was nearly 6% higher in the new loan filing than it had been for the same year in an old disclosure.
In May, ProPublica reported a pattern of similar discrepancies in bonds that hold mortgages across the commercial real estate industry. And the paper by Griffin, the University of Texas finance professor, and his colleague Alex Priest also found a pattern of such profit alterations, suggesting multiple institutions are manipulating historical financials to downplay risk and bolster more aggressive lending.
Financial data on how the 18 Kushner properties are faring in this year’s economic slump is not yet available.
Tired of reading the same old news from the same old sources? So are we! That’s why we’re on a mission to shake things up and bring you the stories and perspectives that often go untold in mainstream media. But being a radically, unapologetically independent news site isn’t easy (or cheap), and we rely on reader support to keep the lights on.
If you like what you’re reading, please consider making a tax-deductible donation today. We’re not asking for a handout, we’re asking for an investment: Invest in a nonprofit news site that’s not afraid to ruffle a few feathers, not afraid to stand up for what’s right, and not afraid to tell it like it is.
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truthout--2020-10-01--Federal Judge Rejects Attempt to Block Mail-In Voting in Montana

A federal judge on Wednesday rejected an effort by the Trump campaign and Republican National Committee to block an expansion of mail-in voting in Montana after the GOP plaintiffs failed to present to the court a single example of voter fraud in the state within the past two decades .
“ This case requires the court to separate fact from fiction , ” Judge Dana Christensen of the U.S. District Court for the District of Montana wrote in his 46-page ruling ( pdf ) .
“ Central to some of the plaintiffs ’ claims is the contention that the upcoming @ @ @ @ @ @ @ , will fall prey to widespread voter fraud .
The evidence suggests , however , that this allegation , specifically in Montana , is a fiction.
” Christensen went on to note that during hearings on the lawsuit filed last month against Montana ’ s secretary of state and Democratic Gov .
Steve Bullock , the Trump campaign and RNC “ were compelled to concede that they can not point to a single instance of voter fraud in Montana in any election during the last 20 years.
” “ Importantly , Montana ’ @ @ @ @ @ @ @ recent primary election did not give rise to a single report of voter fraud , ” Christensen wrote .
“ There is no record of election fraud in Montana ’ s recent history , and it is highly unlikely that fraud will occur during the November 3 , 2020 general election.
” In a statement on Wednesday , Bullock applauded the court ’ s decision to uphold his directive allowing all counties in Montana to conduct the November elections almost entirely by mail — an option thus far chosen by 46 of Montana @ @ @ @ @ @ @ is nothing more sacred in our democracy than the right to vote , and no duty of government more important than to keep its citizens safe , ” Bullock said .
“ I ’ m pleased that today ’ s decision will enable hundreds of thousands of Montanans to vote safely — in person or by mail — this coming election .
Montanans can rest assured that our local election administrators will preserve the security and integrity of the election process.
” Christensen ’ s ruling represents the latest blow to the Trump @ @ @ @ @ @ @ effort to curtail state expansions of mail-in voting during the coronavirus pandemic .
As of mid-September , Buzzfeed counted “ at least 11 cases where the Trump campaign has asked judges for permission to intervene to defend state and local policies that voting rights advocates argue will make it harder for people to safely vote during the pandemic.
” “ That ’ s in addition to more than half a dozen lawsuits the campaign has filed with the Republican National Committee contesting efforts by Democratic governors and other state and local officials to @ @ @ @ @ @ @ .
Paul Smith , vice president at Campaign Legal Center , said in a statement following the Montana decision that every state in the U.S. “ should ensure that every eligible citizen has a convenient way to vote in the election , ” which is just over 30 days away .
“ Absentee and mail voting are important ways to ensure that seniors and others at high risk from Covid-19 can safely participate in the election and have their vote counted , ” said Smith .

The Trump campaign and Republican National Committee failed to cite a single instance of fraud in the state.
A federal judge on Wednesday rejected an effort by the Trump campaign and Republican National Committee to block an expansion of mail-in voting in Montana after the GOP plaintiffs failed to present to the court a single example of voter fraud in the state within the past two decades.
“This case requires the court to separate fact from fiction,” Judge Dana Christensen of the U.S. District Court for the District of Montana wrote in his 46-page ruling (pdf). “Central to some of the plaintiffs’ claims is the contention that the upcoming election, both nationally and in Montana, will fall prey to widespread voter fraud. The evidence suggests, however, that this allegation, specifically in Montana, is a fiction.”
Christensen went on to note that during hearings on the lawsuit filed last month against Montana’s secretary of state and Democratic Gov. Steve Bullock, the Trump campaign and RNC “were compelled to concede that they cannot point to a single instance of voter fraud in Montana in any election during the last 20 years.”
“Importantly, Montana’s use of mail ballots during the recent primary election did not give rise to a single report of voter fraud,” Christensen wrote. “There is no record of election fraud in Montana’s recent history, and it is highly unlikely that fraud will occur during the November 3, 2020 general election.”
In a statement on Wednesday, Bullock applauded the court’s decision to uphold his directive allowing all counties in Montana to conduct the November elections almost entirely by mail — an option thus far chosen by 46 of Montana’s 56 counties.
“There is nothing more sacred in our democracy than the right to vote, and no duty of government more important than to keep its citizens safe,” Bullock said. “I’m pleased that today’s decision will enable hundreds of thousands of Montanans to vote safely — in person or by mail — this coming election. Montanans can rest assured that our local election administrators will preserve the security and integrity of the election process.”
Federal court blocks Trump/GOP effort to prevent vote by mail in Montana Trump campaign “cannot point to a single instance of voter fraud in Montana in any election during the last 20 years,” judge wrote https://t.co/kxi26R53ur pic.twitter.com/I4ZGnAGNlH — Ari Berman (@AriBerman) September 30, 2020
Christensen’s ruling represents the latest blow to the Trump campaign’s nationwide, multi-million-dollar legal effort to curtail state expansions of mail-in voting during the coronavirus pandemic. As of mid-September, Buzzfeed counted “at least 11 cases where the Trump campaign has asked judges for permission to intervene to defend state and local policies that voting rights advocates argue will make it harder for people to safely vote during the pandemic.”
“That’s in addition to more than half a dozen lawsuits the campaign has filed with the Republican National Committee contesting efforts by Democratic governors and other state and local officials to expand mail-in voting,” Buzzfeed noted.
Paul Smith, vice president at Campaign Legal Center, said in a statement following the Montana decision that every state in the U.S. “should ensure that every eligible citizen has a convenient way to vote in the election,” which is just over 30 days away.
“Absentee and mail voting are important ways to ensure that seniors and others at high risk from Covid-19 can safely participate in the election and have their vote counted,” said Smith.
Tired of reading the same old news from the same old sources? So are we! That’s why we’re on a mission to shake things up and bring you the stories and perspectives that often go untold in mainstream media. But being a radically, unapologetically independent news site isn’t easy (or cheap), and we rely on reader support to keep the lights on.
If you like what you’re reading, please consider making a tax-deductible donation today. We’re not asking for a handout, we’re asking for an investment: Invest in a nonprofit news site that’s not afraid to ruffle a few feathers, not afraid to stand up for what’s right, and not afraid to tell it like it is.
This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.


truthout--2020-10-01--GOP-Led Inquest Decried as Effort to Suppress Florida Voters With Felony Records

Florida Attorney General Ashley Moody ’ s call for state and federal investigations into billionaire Michael Bloomberg ’ s effort to raise millions to pay off court fees to help Florida felons restore their voting rights was a “ gross abuse ” of power , “ voter suppression , ” “ a fearmongering tactic used before ” and based on a “ fundamental misconception ” of anti-corruption laws , according to experienced campaign lawyers and former federal election regulators .
“ It ’ s not just that an investigative process and grand jury proceedings would likely extend past Election Day @ @ @ @ @ @ @ seen this fearmongering tactic used before , ” said Jonathan Diaz , legal counsel at the Campaign Legal Center in Washington , D.C. , founded by Trevor Potter , a Republican and ex-Federal Election Commission ( FEC ) chair .
“ There are countless examples of elected officials or law enforcement announcing ‘ bombshell ’ investigations like this with no evidence of actual wrongdoing ( for example , recently in Texas and Georgia ) and indeed , no actual conclusions that any misconduct has taken place.
” It ’ s “ outrageous and @ @ @ @ @ @ @ the vote and deny citizens their constitutional right to vote , ” said Benedict Kuehne , the Miami attorney whose team recently won a settlement to save digital images of ballots if there ’ s a presidential election recount .
“ Not at all unexpected .
But still an abuse of power.
” The fray is the latest development in one of the nation ’ s most important voting rights battles .
Two years ago , a majority of Floridians approved Amendment 4 , which restored voting rights for nearly 1.4 million former @ @ @ @ @ @ @ government responded by passing laws and going to court to impede the rights ’ restoration , mainly by requiring former felons to pay off all court fees and fines before being eligible to register to vote .
As legal battles are continuing in the courts — where delays mean that these Floridians won ’ t necessarily be eligible to vote this fall unless they pay fees that typically are between $ 500 and $ 5,000 — many celebrities and philanthropists have been making donations to the Florida Rights Restoration Coalition ( FRRC ) @ @ @ @ @ @ @ , to help pay the fees .
The FRRC raised about $ 6 million in the past year for that effort , the Miami Herald reported , noting that celebrities like NBA star LeBron James contributed .
To date , FRRC has helped about 4,000 people pay off their fines , NPR reported , noting that an estimated 775,000 former felons have unpaid fines .
But a September 22 Washington Post report that said Bloomberg had raised $ 16 million to help about 32,000 people clear those debts prompted Florida Gov .
Ron @ @ @ @ @ @ @ Ashley Moody ( both are Republicans ) to launch federal and state anti-corruption investigations into Bloomberg ’ s effort .
Beyond the obvious election-year politics , the issue is what constitutes illegal vote-buying .
“ I sent a letter to the Florida Department of Law Enforcement and the Federal Bureau of Investigation into potential violations of election laws , ” Florida Attorney General Ashley Moody said via email .
“ And I have instructed the Statewide Prosecutor to work with law enforcement and any Statewide Grand Jury that the Governor may call.
” @ @ @ @ @ @ @ and federal authorities to investigate whether Bloomberg ’ s efforts , as reported in The Washington Post , violated state and federal laws that make it illegal to give another person anything of value in exchange for their vote .
That Washington Post report quoted an unnamed Bloomberg adviser who said that paying the fines “ immediately activates tens of thousands of voters who are predisposed to vote for Joe Biden.
” “ Governor DeSantis has asked that my office review recent allegations found in the enclosed September 22 , 2020 Washington Post @ @ @ @ @ @ @ Moody ’ s letter to the FBI and Florida Department of Law Enforcement .
The letter cited a 2016 advisory opinion from Maria Matthews , Florida Division of Elections director , to a now-defunct political committee , saying that “ [ e ] ven otherwise innocuous offering of an incentive simply to vote could run afoul ” of corruption laws .
Moody concluded , “ it appears further investigation is warranted.
” The preceding paragraph in that 2016 opinion , which was not cited in Moody ’ s cover letter but was found @ @ @ @ @ @ @ Division of Elections had concluded in the 1980s that Florida law “ does not prohibit a person from giving an elector ‘ a gift certificate or other consideration if the consideration is not intended to buy or corruptly influence another ’ s vote.
’ ” That advisory opinion identifies a tipping point — whether a gift is tied to an explicit vote .
Its ambiguity — “ [ it ] could run afoul ” — is the hinge upon which Florida Republicans have launched an investigation into Bloomberg , implying , but not @ @ @ @ @ @ @ line into vote-buying .
That peg was all that right-wing media needed to start attacking Bloomberg .
On the other hand , the clearer prior precedents in Florida Department of State advisory opinions , and Florida and federal laws that absolve Bloomberg of any wrongdoing , are what has drawn extraordinarily strong denunciations of Moody ’ s actions by voting rights attorneys , former campaign finance regulators and Florida Democrats .
“ Let ’ s not forget that Florida has spent the last year telling federal courts that these legal debts are simply @ @ @ @ @ @ @ with voting and are therefore not a poll tax — but as soon as someone like [ former New York ] Mayor Bloomberg shows up and offers to help pay them , Florida turns around and accuses him of illegally buying votes , ” said the Campaign Legal Center ’ s Diaz .
“ The state can ’ t have it both ways : either it ’ s charging people to vote in violation of the Constitution and this is a poll tax , or it ’ s not , and Mayor Bloomberg @ @ @ @ @ @ @ to help people become eligible [ voters ] .
” Another former Federal Election Commissioner , Karl Sandstrom ( appointed by President Bill Clinton ) , said that Florida Attorney General Moody was misapplying legal standards by citing an ambiguous state agency opinion to launch a federal and state anti-corruption probe .
“ The Florida attorney general ’ s reading of the relevant statutes flies in [ the ] face of the rule of lenity which is [ a ] well-established principle of criminal statutory interpretation that requires a court to apply any @ @ @ @ @ @ @ that is most favorable to the defendant , ” he said .
“ Under her interpretation , a corporation that gives employees time off to vote would be guilty of a felony if the corporation expected that were likely to prefer one candidate over another.
” “ This [ gambit ] raises voter suppression to a whole new level , ” said Chris Sautter , an election lawyer specializing in post-election recounts .
“ What next ?
Will they start prosecuting voter protection lawyers who advise voters on their rights to cast a @ @ @ @ @ @ @ other seasoned election lawyers said that Bloomberg ’ s effort was legal .
“ I ’ m not a neutral expert on this , ” said Joseph Sandler , one of the Democratic Party ’ s top campaign lawyers .
“ But we do advise on this issue all the time , and there ’ s no doubt in my mind this is legal because payment of the fine is not tied to whether the person agrees or promises to commit to vote at all , let alone to vote for a particular @ @ @ @ @ @ @ — which go to corruptly influencing a person to vote a certain way — do not remotely apply .
The threats of prosecution for this are indeed a gross abuse [ of power ] .
” Inside Florida , Democrats made the same point .
Moody was wrong on the vote-buying law .
“ I think the fundamental misconception ( whether inadvertent or deliberate ) is that enabling people to cast a vote is the same thing as telling them , or demanding of them , to vote in a particular way for @ @ @ @ @ @ @ not what is happening here , ” said Joseph Geller , a Democratic state legislator and veteran of Florida ’ s 2000 presidential recount .
“ These potential voters are being freed to vote , but there is no insistence or requirement as to how they will exercise their discretion as to which candidates they will vote for.
” Of course , it is impossible to separate the timing of Moody ’ s call for state and federal investigations from the 2020 election cycle .
Her action ’ s purpose was to deter @ @ @ @ @ @ @ for whom Bloomberg was poised to clear the existing court fees .
“ Our thoughts are : yes , donors can pay off the fines and fees of Floridians .
The Florida AG ’ s outrageous letter is a blatant voter suppression tactic that has no basis in law , ” said Corey Goldstone , a Campaign Legal Center spokesman .
“ We ’ re treating it more like a press release than a serious legal filing .
None of these people have to vote , no one has been induced to take @ @ @ @ @ @ @ are contributing to the Florida Rights Restoration Council merely allows people to be eligible to vote — something that most people enjoy cost-free.
” This article was produced by Voting Booth , a project of the Independent Media Institute .

Florida Attorney General Ashley Moody’s call for state and federal investigations into billionaire Michael Bloomberg’s effort to raise millions to pay off court fees to help Florida felons restore their voting rights was a “gross abuse” of power, “voter suppression,” “a fearmongering tactic used before” and based on a “fundamental misconception” of anti-corruption laws, according to experienced campaign lawyers and former federal election regulators.
“It’s not just that an investigative process and grand jury proceedings would likely extend past Election Day, but also that we’ve seen this fearmongering tactic used before,” said Jonathan Diaz, legal counsel at the Campaign Legal Center in Washington, D.C., founded by Trevor Potter, a Republican and ex-Federal Election Commission (FEC) chair. “There are countless examples of elected officials or law enforcement announcing ‘bombshell’ investigations like this with no evidence of actual wrongdoing (for example, recently in Texas and Georgia) and indeed, no actual conclusions that any misconduct has taken place.”
It’s “outrageous and likely an extortionate threat designed to suppress the vote and deny citizens their constitutional right to vote,” said Benedict Kuehne, the Miami attorney whose team recently won a settlement to save digital images of ballots if there’s a presidential election recount. “Not at all unexpected. But still an abuse of power.”
The fray is the latest development in one of the nation’s most important voting rights battles. Two years ago, a majority of Floridians approved Amendment 4, which restored voting rights for nearly 1.4 million former felons. Florida’s Republican-led state government responded by passing laws and going to court to impede the rights’ restoration, mainly by requiring former felons to pay off all court fees and fines before being eligible to register to vote.
As legal battles are continuing in the courts — where delays mean that these Floridians won’t necessarily be eligible to vote this fall unless they pay fees that typically are between $500 and $5,000 — many celebrities and philanthropists have been making donations to the Florida Rights Restoration Coalition (FRRC), which led the Amendment 4 campaign, to help pay the fees.
The FRRC raised about $6 million in the past year for that effort, the Miami Herald reported, noting that celebrities like NBA star LeBron James contributed. To date, FRRC has helped about 4,000 people pay off their fines, NPR reported, noting that an estimated 775,000 former felons have unpaid fines.
But a September 22 Washington Post report that said Bloomberg had raised $16 million to help about 32,000 people clear those debts prompted Florida Gov. Ron DeSantis to ask the state Attorney General Ashley Moody (both are Republicans) to launch federal and state anti-corruption investigations into Bloomberg’s effort.
Political Theater
Beyond the obvious election-year politics, the issue is what constitutes illegal vote-buying.
“I sent a letter to the Florida Department of Law Enforcement and the Federal Bureau of Investigation into potential violations of election laws,” Florida Attorney General Ashley Moody said via email. “And I have instructed the Statewide Prosecutor to work with law enforcement and any Statewide Grand Jury that the Governor may call.”
On September 23, Moody asked state and federal authorities to investigate whether Bloomberg’s efforts, as reported in The Washington Post, violated state and federal laws that make it illegal to give another person anything of value in exchange for their vote. That Washington Post report quoted an unnamed Bloomberg adviser who said that paying the fines “immediately activates tens of thousands of voters who are predisposed to vote for Joe Biden.”
“Governor DeSantis has asked that my office review recent allegations found in the enclosed September 22, 2020 Washington Post article and relevant law,” began Moody’s letter to the FBI and Florida Department of Law Enforcement. The letter cited a 2016 advisory opinion from Maria Matthews, Florida Division of Elections director, to a now-defunct political committee, saying that “[e]ven otherwise innocuous offering of an incentive simply to vote could run afoul” of corruption laws. Moody concluded, “it appears further investigation is warranted.”
The preceding paragraph in that 2016 opinion, which was not cited in Moody’s cover letter but was found in attached documents, said that the Division of Elections had concluded in the 1980s that Florida law “does not prohibit a person from giving an elector ‘a gift certificate or other consideration if the consideration is not intended to buy or corruptly influence another’s vote.’”
That advisory opinion identifies a tipping point — whether a gift is tied to an explicit vote. Its ambiguity — “[it] could run afoul” — is the hinge upon which Florida Republicans have launched an investigation into Bloomberg, implying, but not concluding, that he has crossed a line into vote-buying. That peg was all that right-wing media needed to start attacking Bloomberg.
On the other hand, the clearer prior precedents in Florida Department of State advisory opinions, and Florida and federal laws that absolve Bloomberg of any wrongdoing, are what has drawn extraordinarily strong denunciations of Moody’s actions by voting rights attorneys, former campaign finance regulators and Florida Democrats.
“Let’s not forget that Florida has spent the last year telling federal courts that these legal debts are simply criminal penalties that have nothing to do with voting and are therefore not a poll tax — but as soon as someone like [former New York] Mayor Bloomberg shows up and offers to help pay them, Florida turns around and accuses him of illegally buying votes,” said the Campaign Legal Center’s Diaz. “The state can’t have it both ways: either it’s charging people to vote in violation of the Constitution and this is a poll tax, or it’s not, and Mayor Bloomberg has done nothing wrong by donating funds to help people become eligible [voters].”
Another former Federal Election Commissioner, Karl Sandstrom (appointed by President Bill Clinton), said that Florida Attorney General Moody was misapplying legal standards by citing an ambiguous state agency opinion to launch a federal and state anti-corruption probe.
“The Florida attorney general’s reading of the relevant statutes flies in [the] face of the rule of lenity which is [a] well-established principle of criminal statutory interpretation that requires a court to apply any unclear or ambiguous law in the manner that is most favorable to the defendant,” he said. “Under her interpretation, a corporation that gives employees time off to vote would be guilty of a felony if the corporation expected that were likely to prefer one candidate over another.”
“This [gambit] raises voter suppression to a whole new level,” said Chris Sautter, an election lawyer specializing in post-election recounts. “What next? Will they start prosecuting voter protection lawyers who advise voters on their rights to cast a ballot?”
Democrats and Florida Lawyers React
Outside of Florida, other seasoned election lawyers said that Bloomberg’s effort was legal.
“I’m not a neutral expert on this,” said Joseph Sandler, one of the Democratic Party’s top campaign lawyers. “But we do advise on this issue all the time, and there’s no doubt in my mind this is legal because payment of the fine is not tied to whether the person agrees or promises to commit to vote at all, let alone to vote for a particular party or candidate. The relevant statutes — which go to corruptly influencing a person to vote a certain way — do not remotely apply. The threats of prosecution for this are indeed a gross abuse [of power].”
Inside Florida, Democrats made the same point. Moody was wrong on the vote-buying law.
“I think the fundamental misconception (whether inadvertent or deliberate) is that enabling people to cast a vote is the same thing as telling them, or demanding of them, to vote in a particular way for a particular candidate. That is just not what is happening here,” said Joseph Geller, a Democratic state legislator and veteran of Florida’s 2000 presidential recount. “These potential voters are being freed to vote, but there is no insistence or requirement as to how they will exercise their discretion as to which candidates they will vote for.”
Of course, it is impossible to separate the timing of Moody’s call for state and federal investigations from the 2020 election cycle. Her action’s purpose was to deter voting by the roughly 32,000 former felons for whom Bloomberg was poised to clear the existing court fees.
“Our thoughts are: yes, donors can pay off the fines and fees of Floridians. The Florida AG’s outrageous letter is a blatant voter suppression tactic that has no basis in law,” said Corey Goldstone, a Campaign Legal Center spokesman. “We’re treating it more like a press release than a serious legal filing. None of these people have to vote, no one has been induced to take any particular action. The donors who are contributing to the Florida Rights Restoration Council merely allows people to be eligible to vote — something that most people enjoy cost-free.”
This article was produced by Voting Booth, a project of the Independent Media Institute.
Tired of reading the same old news from the same old sources? So are we! That’s why we’re on a mission to shake things up and bring you the stories and perspectives that often go untold in mainstream media. But being a radically, unapologetically independent news site isn’t easy (or cheap), and we rely on reader support to keep the lights on.
If you like what you’re reading, please consider making a tax-deductible donation today. We’re not asking for a handout, we’re asking for an investment: Invest in a nonprofit news site that’s not afraid to ruffle a few feathers, not afraid to stand up for what’s right, and not afraid to tell it like it is.
This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.


truthout--2020-10-01--New Technologies Should Be Regulated by Government — Not by Those Who Profit

Humans are inventing new technologies at a breakneck pace , adding to the thousands of previous innovations that have created vast wealth and greatly expanded the possibilities for human well-being .
But technology has also created the climate emergency , the H-bomb , and a world so filled with plastic that you are probably breathing plastic microparticles as you read this , with unknown consequences for your health .
As technologies become more powerful , the question then becomes how to get the most benefits with the least harm .
In recent decades , this question has taken on new @ @ @ @ @ @ @ ’ t really have the capacity to eradicate ourselves from the planet or to end civilization .
Now — with nuclear weapons and more — we do .
Trial-and-error learning is not an option for technologies with massive destructive power .
We don ’ t know what the effects of nuclear war might be — and we can ’ t run the “ nuclear winter ” experiment to find out if clouds of dust will blot out the sun , shut down agriculture and starve all of humanity to death .
Trial and @ @ @ @ @ @ @ have to prevent the experiment .
The answer is a human invention called “ technology assessment.
” Between 1972 and 1995 , Congress supported its own in-house think tank called the Office of Technology Assessment , or OTA .
The Republican-dominated Congress defunded OTA in 1995 , thus causing it to lose much of its capacity to foresee and forestall environmental and social harm that could be avoided or mitigated by sensible government policies and actions .
During its brief existence , OTA produced 750 high-quality reports on a wide range of problems @ @ @ @ @ @ @ resolve , such as job loss from automation , the benefits and costs of mammograms , the feasibility and cost of the Strategic Defense Initiative to shoot down incoming nuclear-armed missiles , and the accuracy and reliability of lie-detector tests .
Now Congressmen Mark Takano ( D-California ) and Sean Casten ( D-Illinois ) have proposed legislation to restore OTA , co-sponsored by 50 Democrats and one Republican .
On September 24 , the bipartisan House Select Committee on the Modernization of Congress approved a recommendation to add policy staff to “ a @ @ @ @ @ @ @ is facing calls to regulate many complex technologies , such as genetically-engineered foods and drugs , cosmetics containing substances not found in nature , plastic microparticles now found everywhere on Earth , new technologies to expand the use of fossil fuels ( e.g.
, fracking , carbon dioxide sequestration below ground ) , and proposals to send mirrors into space to divert sunlight and cool the Earth , among many other proposals .
The enabling legislation that created OTA in 1972 was never repealed ; Republicans in 1995 simply defunded OTA .
OTA @ @ @ @ @ @ @ , it had about 140 employees and an annual budget just under $ 35 million ( in 2019 dollars , less than 1 percent of the $ 3.9 billion it costs to run Congress for a year ) .
Today , faced with the rapid proliferation of technologies more powerful and more dangerous than any previously known , restoring OTA would seem like a wise investment .
Forms of Technology That a New OTA Could Evaluate If Congress succeeds in reviving the OTA , it would likely take on the task of evaluating @ @ @ @ @ @ @ such as drones , social media , lethal self-directed military weapons , and ways to minimize damage from wildfires .
In addition , it could take on cutting-edge technologies such as nanotechnology , synthetic biology and artificial intelligence ( AI ) , which present new possibilities but also new and unimaginable risks .
Nanotechnology is the manipulation of matter measuring less than 100 nanometers ( one hundred billionths of a meter ) in size , far smaller than the eye can see .
A human hair is about 80,000 nanometers wide .
Nanotechnology @ @ @ @ @ @ @ by atom , molecule by molecule .
For better or worse , many consumer products now contain nano-size particles .
In his 1986 book on the glowing promise of nanotechnology , K. Eric Drexler saw the future in nano-scale robots , which he labeled “ assemblers.
” These “ nanobots ” would be able to assemble individual atoms under software control , allowing the efficient creation of anything and everything .
A nano-manufacturing household appliance would allow everyone to grab software off the internet to guide the creation of anything they wanted or @ @ @ @ @ @ @ yet , but a lot of people are working on it , and many are wondering what the dangers might be .
Synthetic biology is the manipulation of DNA molecules to create new forms of life that have never existed on Earth before .
These new life forms would be designed and constructed in laboratories for specific purposes : to create fuel oil , for example , or to manufacture a drug to cure a particular disease .
In 2010 , a U.S. Presidential Bioethics Commission recommended against government regulation of synthetic biology @ @ @ @ @ @ @ practitioners of the technology .
Artificial intelligence ( AI ) is the creation of machines that can approach or exceed the human capacity to think .
The holy grail is “ artificial general intelligence ” ( AGI ) — a machine that has the same mental ( and perhaps emotional ) abilities as a human .
Hundreds of billions of invested dollars are being poured into a feverish effort to produce the first AGI .
Among AGI researchers , there is widespread concern that controlling an AGI is an unsolved problem , and @ @ @ @ @ @ @ could spell disaster for humanity if the machine were given a poorly specified goal .
Among AI researchers , this is known as the “ paperclip problem.
” An AI given the goal of maximizing the production of paperclips might create havoc pursuing that narrow goal .
Synthetic biology , nanotechnology and AI are now being combined to assemble new life-forms under software control .
What could possibly go wrong ?
Government involvement in technology assessment through a body such as a revived OTA is crucial because government is the only entity that @ @ @ @ @ @ @ .
Each new technology creates a new set of problems , and each new problem in turn requires one or more solutions , each of which is likely to create additional problems .
As this trend continues , society becomes more complex .
Increasing complexity in turn requires more complicated rules to define acceptable behavior .
This , in turn , requires government to grow larger .
For example , now that school lecturers are using laser pointers to highlight their PowerPoint slides , anyone can buy a laser pointer and aim it @ @ @ @ @ @ @ , just for fun .
This has been shown to disorient pilots and crew , creating danger for everyone aboard , so government has been forced to make it illegal to shine your laser pointer at airplanes , and these rules have to be enforced , which creates new requirements and duties for government .
Thus , government grows larger .
The market is not going to solve the lasers-pointed-at-airplanes problem .
Wall Street is not going to fix the climate emergency or control the proliferation of nuclear weapons or require that plastics @ @ @ @ @ @ @ accumulate in the environment .
Corporate managers may personally desire to be “ socially responsible , ” but so long as they answer to shareholders expecting a hefty return on investment , they will pursue technologies that increase their profits , regardless of their ill effects on workers , community and the natural world .
It is impossible to imagine a Republican-dominated Congress reviving the OTA .
Even though OTA was overseen by a board that is , by law , half Republican and half Democrat , Republicans have long complained that OTA @ @ @ @ @ @ @ of new technologies , which many believe are essential for growing the economy to avoid recession or depression .
A Congress controlled by Democrats would surely be more sympathetic to funding an agency that could offer it unbiased science and technology advice .
However , technology corporations may not find it in their interests to have Congress well-informed about the pros and cons of various regulatory possibilities , so restoring OTA would almost certainly require a coordinated citizen campaign to make it happen .

Humans are inventing new technologies at a breakneck pace, adding to the thousands of previous innovations that have created vast wealth and greatly expanded the possibilities for human well-being. But technology has also created the climate emergency, the H-bomb, and a world so filled with plastic that you are probably breathing plastic microparticles as you read this, with unknown consequences for your health.
As technologies become more powerful, the question then becomes how to get the most benefits with the least harm. In recent decades, this question has taken on new urgency. Until 1945, humans didn’t really have the capacity to eradicate ourselves from the planet or to end civilization. Now — with nuclear weapons and more — we do.
Trial-and-error learning is not an option for technologies with massive destructive power. We don’t know what the effects of nuclear war might be — and we can’t run the “nuclear winter” experiment to find out if clouds of dust will blot out the sun, shut down agriculture and starve all of humanity to death. Trial and error won’t do. We have to prevent the experiment.
The answer is a human invention called “technology assessment.” Between 1972 and 1995, Congress supported its own in-house think tank called the Office of Technology Assessment, or OTA. The Republican-dominated Congress defunded OTA in 1995, thus causing it to lose much of its capacity to foresee and forestall environmental and social harm that could be avoided or mitigated by sensible government policies and actions. During its brief existence, OTA produced 750 high-quality reports on a wide range of problems that Congress was trying to understand and resolve, such as job loss from automation, the benefits and costs of mammograms, the feasibility and cost of the Strategic Defense Initiative to shoot down incoming nuclear-armed missiles, and the accuracy and reliability of lie-detector tests.
Now Congressmen Mark Takano (D-California) and Sean Casten (D-Illinois) have proposed legislation to restore OTA, co-sponsored by 50 Democrats and one Republican. On September 24, the bipartisan House Select Committee on the Modernization of Congress approved a recommendation to add policy staff to “a restored Office of Technology Assessment.” Congress is facing calls to regulate many complex technologies, such as genetically-engineered foods and drugs, cosmetics containing substances not found in nature, plastic microparticles now found everywhere on Earth, new technologies to expand the use of fossil fuels (e.g., fracking, carbon dioxide sequestration below ground), and proposals to send mirrors into space to divert sunlight and cool the Earth, among many other proposals.
The enabling legislation that created OTA in 1972 was never repealed; Republicans in 1995 simply defunded OTA. OTA was never expensive; at its peak, it had about 140 employees and an annual budget just under $35 million (in 2019 dollars, less than 1 percent of the $3.9 billion it costs to run Congress for a year). Today, faced with the rapid proliferation of technologies more powerful and more dangerous than any previously known, restoring OTA would seem like a wise investment.
Forms of Technology That a New OTA Could Evaluate
If Congress succeeds in reviving the OTA, it would likely take on the task of evaluating technologies and possible regulations for new technologies such as drones, social media, lethal self-directed military weapons, and ways to minimize damage from wildfires.
Today, faced with the rapid proliferation of technologies more powerful and more dangerous than any previously known, restoring OTA would seem like a wise investment.
In addition, it could take on cutting-edge technologies such as nanotechnology, synthetic biology and artificial intelligence (AI), which present new possibilities but also new and unimaginable risks.
Nanotechnology is the manipulation of matter measuring less than 100 nanometers (one hundred billionths of a meter) in size, far smaller than the eye can see. A human hair is about 80,000 nanometers wide. Nanotechnology builds new things by assembling them atom by atom, molecule by molecule. For better or worse, many consumer products now contain nano-size particles. In his 1986 book on the glowing promise of nanotechnology, K. Eric Drexler saw the future in nano-scale robots, which he labeled “assemblers.” These “nanobots” would be able to assemble individual atoms under software control, allowing the efficient creation of anything and everything. A nano-manufacturing household appliance would allow everyone to grab software off the internet to guide the creation of anything they wanted or needed. We’re not there yet, but a lot of people are working on it, and many are wondering what the dangers might be.
Synthetic biology is the manipulation of DNA molecules to create new forms of life that have never existed on Earth before. These new life forms would be designed and constructed in laboratories for specific purposes: to create fuel oil, for example, or to manufacture a drug to cure a particular disease. In 2010, a U.S. Presidential Bioethics Commission recommended against government regulation of synthetic biology, opting instead for self-regulation by the practitioners of the technology.
Artificial intelligence (AI) is the creation of machines that can approach or exceed the human capacity to think. The holy grail is “artificial general intelligence” (AGI) — a machine that has the same mental (and perhaps emotional) abilities as a human.
Hundreds of billions of invested dollars are being poured into a feverish effort to produce the first AGI. Among AGI researchers, there is widespread concern that controlling an AGI is an unsolved problem, and that failure to control such a machine could spell disaster for humanity if the machine were given a poorly specified goal. Among AI researchers, this is known as the “paperclip problem.” An AI given the goal of maximizing the production of paperclips might create havoc pursuing that narrow goal.
Synthetic biology, nanotechnology and AI are now being combined to assemble new life-forms under software control. What could possibly go wrong?
Managing Technology
Government involvement in technology assessment through a body such as a revived OTA is crucial because government is the only entity that can impartially assess and control new technologies.
In 2010, a U.S. Presidential Bioethics Commission recommended against government regulation of synthetic biology, opting instead for self-regulation by the practitioners of the technology.
Each new technology creates a new set of problems, and each new problem in turn requires one or more solutions, each of which is likely to create additional problems. As this trend continues, society becomes more complex. Increasing complexity in turn requires more complicated rules to define acceptable behavior. This, in turn, requires government to grow larger. For example, now that school lecturers are using laser pointers to highlight their PowerPoint slides, anyone can buy a laser pointer and aim it at an airplane or helicopter flying overhead, just for fun. This has been shown to disorient pilots and crew, creating danger for everyone aboard, so government has been forced to make it illegal to shine your laser pointer at airplanes, and these rules have to be enforced, which creates new requirements and duties for government. Thus, government grows larger.
The market is not going to solve the lasers-pointed-at-airplanes problem. Wall Street is not going to fix the climate emergency or control the proliferation of nuclear weapons or require that plastics be made biodegradable so they do not accumulate in the environment. Corporate managers may personally desire to be “socially responsible,” but so long as they answer to shareholders expecting a hefty return on investment, they will pursue technologies that increase their profits, regardless of their ill effects on workers, community and the natural world.
It is impossible to imagine a Republican-dominated Congress reviving the OTA. Even though OTA was overseen by a board that is, by law, half Republican and half Democrat, Republicans have long complained that OTA reports are biased against the rapid introduction of new technologies, which many believe are essential for growing the economy to avoid recession or depression. A Congress controlled by Democrats would surely be more sympathetic to funding an agency that could offer it unbiased science and technology advice. However, technology corporations may not find it in their interests to have Congress well-informed about the pros and cons of various regulatory possibilities, so restoring OTA would almost certainly require a coordinated citizen campaign to make it happen.
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