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Monday, December 09, 2019 {{ new Date().getDay() }}

Reprinted with permission from ProPublica.

 

As a deputy assistant secretary for policy and economic development in the Department of the Interior’s Bureau of Indian Affairs, Gavin Clarkson oversees a small program that guarantees loans for Indian businesses. His “expertise in the areas of law, finance and economic development are a valuable asset,” noted Secretary of the Interior Ryan Zinke in a statement announcing the appointment, which took effect on June 11 and didn’t require Senate confirmation.

Zinke didn’t mention it, but Clarkson is particularly well acquainted with the loan guarantee program he now supervises: He played a key role in a convoluted transaction that flopped and left the Interior Department fending off a $20 million liability that is still in litigation years later. That sum represents about 25 percent of the amount the program can guarantee in a year, and until the case is resolved, that money cannot be used to guarantee new loans.

Clarkson, a member of the Choctaw Nation of Oklahoma, is a former law professor who has taught at the University of Michigan and New Mexico State, and been involved in several businesses. He referred questions to a department spokeswoman, who did not respond to questions sent by email.

The story begins with what sounds like an improbable idea: In 2008, the Lower Brule Sioux tribe in South Dakota decided to buy a nearly insolvent Wall Street financial services company. The tribe, which was receiving federal aid to reduce poverty, according to a report by Human Rights Watch, turned to Clarkson to obtain a loan, and a loan guarantee from the Interior Department. (The guarantees are intended to encourage banks and other entities to lend to Indian businesses that might not otherwise find funding. The government agrees to reimburse any covered debt that the borrower fails to pay off.)

The tribe was hoping to raise $22.5 million with $20 million of it guaranteed, but Clarkson wasn’t able to gather anything close to that amount. Instead, using a company he helped create for the occasion, he borrowed $3.5 million from private investors and then loaned it to the tribe. But Clarkson still managed to obtain a guarantee for $20 million. (He accomplished this by moving $19 million in debt from the brokerage to his company, according to a report about the episode, and convincing the Interior Department to treat it like a loan.)

Ultimately, things went badly awry. The brokerage went bankrupt a few years later and the loan guarantees had enough problems to generate a report by the inspector general of the Interior Department, as well as ongoing litigation. The inspector general’s report, released in March, criticized both the entity requesting guarantees in this instance and the Interior Department staffer who approved them. (The report was made public in redacted form, with the names of individuals blacked out.)

The original application for loan guarantees should have raised several red flags, according to the inspector general. Companies that qualify for guarantees are supposed to be active lenders, but Clarkson’s company had never made a loan before. The Interior Department staffer in question did not verify whether the loan had been funded, prompting the inspector general to conclude there’d been “neglect.” Finally, the guarantee was for a much larger sum than is typical for the program.

In 2012, Clarkson’s company sold the $20 million in guarantees to a life insurance company and used the cash to pare down old debt and pay tribal leaders, according to the IG report. Clarkson and his company were paid $327,500, according to a filing in a related lawsuit.

In 2013, the brokerage defaulted. At that point the life insurance company that held the guarantee sought to recover $20 million from the Interior Department.

The department rejected the claim, saying the loan had never met the conditions of the guarantee. The life insurance company appealed within the agency but lost, and then sued in federal court. The government has asked the judge to throw out the case.

The IG report concluded that the loan guarantee “departed from” department guidelines but didn’t find any criminal violations. A federal grand jury investigated the episode, according to a spokeswoman for the IG, but did not hand up any indictments.

Still, the fiasco generated criticism both inside the tribe, according to the IG’s report, and outside. Said Arvind Ganesan, the director of Human Rights Watch’s Business and Human Rights Division, who researched the deal as part of a broader report on the Lower Brule Sioux: “It’s pretty disturbing that he’s now in charge of a department that’s being sued over a deal that he arranged and that went so badly.”

Header image source.

 

 

Many Democrats are getting nervous about the upcoming presidential election. Ominous, extensively reported articles by two of the best in the business—the New Yorker's Jeffrey Toobin and The Atlantic's Barton Gellman—outline Boss Trump's plot to keep control of the White House in 2021 no matter how the American people vote.
Trump is hardly making a secret of it. He's pointedly refused to commit to "a peaceful transfer of power."

"Well, we're going to have to see what happens," is how he answered the question. He added that after we "get rid of the ballots"—presumably mail-in ballots he's been whining about for weeks--"there won't be a transfer, frankly. There'll be a continuation."

Of course, Trump himself has always voted by mail, but then brazen hypocrisy is his standard operating mode. If you haven't noticed, he also lies a lot. Without prevaricating, boasting, and bitching, he'd be mute. And even then, he'd still have Twitter. He recently tweeted that the winner "may NEVER BE ACCURATELY DETERMINED" because mail-in ballots make it a "RIGGED ELECTION in waiting."
Gellman gets this part exactly right in The Atlantic: "Let us not hedge about one thing. Donald Trump may win or lose, but he will never concede. Not under any circumstance. Not during the Interregnum and not afterward. If compelled in the end to vacate his office, Trump will insist from exile, as long as he draws breath, that the contest was rigged.
"Trump's invincible commitment to this stance will be the most important fact about the coming Interregnum. It will deform the proceedings from beginning to end. We have not experienced anything like it before."
No, we haven't. However, it's important to remember that Trump makes threats and promises almost daily that never happen. Remember that gigantic border wall Mexico was going to pay for? Trump has built exactly five miles of the fool thing, leaving roughly two thousand to go.
His brilliant cheaper, better health care plan? Non-existent.
On Labor Day, Boss Trump boasted of his unparalleled success in strong-arming Japan into building new auto-manufacturing plants. "They're being built in Ohio, they're being built in South Carolina, North Carolina, they're being built all over and expanded at a level that we've never seen before."
Not a word of that is true. Two new plants, one German, another Swedish have opened in South Carolina, but construction began before Trump took office. Auto industry investment during Barack Obama's second term far exceeded Trump's. His version is sheer make-believe.
But back to the GOP scheme to steal the election.
First, it's clear that even Trump understands that he has virtually no chance of winning the national popular vote. He's been polling in the low 40s, with no sign of change. To have any chance of prevailing in the Electoral College, he's got to do the electoral equivalent of drawing to an inside straight all over again—winning a half-dozen so-called battleground states where he defeated Hillary Clinton in 2016 by the narrowest of margins.
At this writing, that looks highly unlikely. The latest polling in must-win Pennsylvania, for example, shows Trump trailing Joe Biden by nine points. That's a landslide. Trump's down ten in Wisconsin, eight in Michigan. And so on.
So spare me the screeching emails in ALL CAPS, OK? Polls were actually quite accurate in 2016. Trump narrowly defeated the odds. It can happen. But he's in far worse shape this time. Furthermore, early voting turnout is very high, with Democrats outnumbering Republicans two to one.
Hence, The Atlantic reports, "Trump's state and national legal teams are already laying the groundwork for post-election maneuvers that would circumvent the results of the vote count in battleground states."
The plan is clear. Because more Democrats than Republicans are choosing mail-in voting during the COVID pandemic, Trump hopes to prevent those ballots from being counted. Assuming he'll have a narrow "swing state" lead on election night, he'll declare victory and start filing lawsuits. "The red mirage," some Democrats call it.
"As a result," Toobin writes, "the aftermath of the 2020 election has the potential to make 2000 look like a mere skirmish." With Trump in the White House urging armed militias to take to the street.
Mail-in votes take a long time to count. Things could definitely get crazy.
True, but filing a lawsuit to halt a Florida recount was one thing. Filing suits against a half dozen states to prevent votes from being counted at all is quite another. Public reaction would be strong. Also, winning such lawsuits requires serious evidence of fraud. Trumpian bluster ain't evidence.
The Atlantic reports that GOP-controlled state legislatures are thinking about sending Trumpist delegations to the Electoral College regardless of the popular vote winner—theoretically constitutional but currently illegal.
Fat chance. If that's the best they've got, they've got nothing.
Anyway, here's the answer: Vote early, and in person*.

[Editor's note: In some states, receiving an absentee ballot means that a voter can no longer vote in person* or may have to surrender the absentee ballot, including the envelope in which it arrived, at their polling place. Please check with your local election authorities.]