Month: March 2009

News

Controversial Plan for Overton Park?

Post author By
Post date March 6, 2009

Longtime activist and Vollintine-Evergreen resident Mary Wilder calls her neighborhood “the kink in the hose.”

“We get a lot of flooding. [Lick Creek] makes a 90 degree angle at Auburndale and the water comes flying through there,” she says. “Back in August, we had trucks and cars on the street and the water was up to their steering wheels.”

“It was a phenomenal amount of rain, I’ll give you that, but you’re supposed to plan for that.”

To mitigate Midtown’s storm water problem, the city of Memphis is considering installing a detention basin … in the middle of Overton Park’s greensward.

And that has eyebrows raised with community groups and involved parties.

To read more, visit Mary Cashiola’s In the Bluff blog.

News

Two Memphis Singers Make American Idol Finals

Post author By
Post date March 6, 2009

Alexis Grace and Lil Rounds, two soulful mamas from Memphis, will be bringing it to American Idol ‘s whopping huge national TV audience as the chart-topping contest for aspiring singers heads into the countdown for its eighth season on Fox (Channel 13, locally). After the auditions and initial elimination rounds, both are to be counted in the Top 13 finalists, and both are favorites of both fans and judges already.

Rounds was selected by call-in voters as one of three finalists from the 12 members in Idol’s Group III, who were televised in competition this week. Grace was one of the here contestants selected from Group I, who competed two weeks ago. From this point on, if the show observes its usual format, one singer — the person polling the fewest call-in votes — will be voted out each week.

Both Grace, who did a bluesy version of “I Never Loved a Man” in her competition round, and Rounds, who belted out “Be Without You,” won rave reviews from the show’s four judges – the carry-over trio of Simon Cowell, Randy Jackson, and Paula Abdul, plus a new arbiter, Tara DioGuardi.

Both Memphis entries are parents and will be juggling child-rearing duties with their weekly televised appearances.

Other finalists in this year’s American Idol competition are: Michael Sarver, Danny Gokey, Allison Iraheta, Kris Allen, Adam Lambert, Scott MacIntyre, Jorge Nunez, Jasmine Murray, Megan Corkery,  Matt Giraud, and  Anoop Desai.

Murray was added by the judges from Thursday night’s “Wildcard” round, composed of eight singers who hadn’t been selected in Rounds I, II, and II, is from Columbus, Mississippi, originally.

Opinion

Mistress of the Universe

Post author By John Branston
Post date March 5, 2009

Move over, John Grisham. Once again, the real news from a small town in Mississippi is better than fiction.

First there was Bernie Ebbers of Brookhaven, the builder of WorldCom, the telecom bomb, who is now serving 25 years in federal prison for financial fraud. Then there was Richard “Dickie” Scruggs of Pascagoula and Oxford, the lawyer who successfully sued Big Tobacco and was sent to federal prison last year for conspiring to bribe a judge.

Now comes James M. Davis of Dry Creek, the chief financial officer of Stanford Financial Group, who, along with Allen Stanford, was accused by the Securities and Exchange Commission of executing “a massive Ponzi scheme” valued at $8 billion. The SEC says Davis’ 35-year-old protégée, Laura Pendergest-Holt of Baldwyn, facilitated the fraudulent scheme.

In The Bonfire of the Vanities, Tom Wolfe popularized the phrase Masters of the Universe. As he wrote in a column in The New York Times last year, “The Masters of the Universe is a phrase from that book referring to ambitious young men (there were no women) who, starting with the 1980s, began racking up millions every year — millions! — in performance bonuses at investment banks.”

Pendergest-Holt worked part of the time in Memphis, gave financial advice on local radio stations, and earned $1 million in both 2007 and 2008. At Stanford Financial, she was a Mistress of the Universe. No glass ceiling for her; she was named to the investment committee when she was 31 and given the title chief investment officer. There was a corporate jet to take her and Davis from Baldwyn to Houston, Antigua, and Memphis — only 120 miles as the jet flies.

Baldwyn residents described Pendergest-Holt as one of the smartest young women ever to come out of the town. Davis is fifth-generation Dry Creek. He started a church in nearby Guntown. He was an angel investor for Baldwyn’s struggling downtown, giving it a touch of Oxford’s square, with stores such as Patina Décor, the Status Thimble, Kaffe at the Old Post Office, and Galerie d’Art. The marketing slogan: “Expect the Unexpected in Downtown Baldwyn.”

The names, the slogan, the Old English airs … as the FBI said about Stanford’s accounting: Somebody has to be making this up. But the names are real, as was Davis’ devotion to Baldwyn, say those who know him well.

“Jim Davis had a deep love and passion for small municipalities and realized that the heart is the downtown area,” said Baldwyn mayor Danny Horton. “Everybody in town is kind of shocked. Any news travels fast, but most people, like me, didn’t know about it. They probably would know more about the Friday night football games than about the dealings of Stanford.”

Business owners and bankers, however, are usually as familiar with finance as they are with football. There are two banks in Baldwyn: Regions and Farmers and Merchants. Stanford’s certificates of deposit (CDs) paid twice as much interest as their products. Managers at both banks declined to be interviewed last week.

Downtown Baldwyn would be a sorry sight without Davis’ investments — a vacant hardware store, an old movie theater now housing school offices, a vacant Whirlpool electronics store, a vacant drug store with sheets covering the windows. Davis also sank over $2 million into his home on a country road, where there isn’t a comparable property within 20 miles.

The FBI and SEC are not buying small-town innocence. They have Pendergest-Holt pegged as a liar with unusual gall. Early in February, at a meeting in Miami, Davis and Allen Stanford admitted to senior employees, including Pendergest-Holt, that they misused investor funds and faked financial statements.

“Incredibly, four days after the Miami meetings, Pendergest-Holt made a two-hour presentation to the [SEC] staff — and subsequently testified under oath — regarding the whereabouts of Stanford’s multi-billion dollar investment portfolio,” the SEC claims. During those presentations, she denied knowing anything about the status of the bank’s assets and said nothing about misappropriated funds.

Davis said this week that he will not cooperate with investigators, lest he say something self-incriminating. Considering what has happened to Pendergest-Holt recently, that was not unexpected.

Flyer Flashback News

Flyer Flashback

Post author By Michael Finger
Post date March 5, 2009

Last week’s cover story by John Branston spotlighted the Stanford Financial Group: “An international financial scam burns Memphis investors, nonprofits, and politicians.”

Well, not much has changed in 15 years. The March 3, 1994, issue of the Flyer included a story — yep, by John Branston — headlined “Prominent Memphians Caught up in Alleged Texas Scam.” The whole mess sounds depressingly familiar:

“Several prominent Memphians are trying to recover over $1 million they invested with a Houston socialite accused of operating a Ponzi scheme. Teresa Rodriguez was known as one of the sharpest business operators in Houston. She played on her ethnic background and political savvy to get business for her employment-contracts firm. Contracts from the Small Business Administration were supposedly so plentiful and profitable that Rodriguez could pay investors a 10 to 20 percent return per month.”

Just one problem: “Rodriguez was not registered as a minority contractor and had never received any SBA contracts.”

Memphians caught unawares included a former president of Union Planters Bank, a vice president of the Sara Lee Corporation, and the CEO of Le Bonheur Healthcare Systems, who lost every cent of their investment when Rodriguez’ house of cards came tumbling down.

As we went to press 15 years ago, investors had filed a lawsuit to recover their losses. Rodriguez eventually went to prison for mail fraud.

— Michael Finger

News The Fly-By

Brick Crumbles

Post author By Chris Davis
Post date March 5, 2009

CREDIT: by Justin Fox Burks

James Brigance, whose distinctive signs and murals can be found all over Memphis, died last week. He was 57.

Brigance, whose murals livened up some of Orange Mound’s bleakest stretches, hadn’t been well since 2005 when he was struck by a car while riding his bike on Lamar. Brigance was diabetic, and after the accident, his legs became gangrenous and had to be amputated, bringing the painter’s career to an abrupt end.

Brigance signed his walls “Brick,” a nickname that resulted from his skill at painting letters over uneven brick surfaces.

“A lot of people can’t paint on brick walls, you see, because it’s really a challenge,” Brigance told the Flyer in a December 2007 interview. “But it just came natural to me.”

Brigance studied art at Melrose High School, but he taught himself to draw in the dirt near the tiny house on Douglass Street where he grew up with six other brothers and sisters. He learned how to use oil paint and watercolors from his older brother Charles, another gifted artist who worked as a scene painter for Walt Disney.

In addition to painting Hawk’s Grill and the interior of the Melrose Booster Club, Brick created the original — and now iconic — paint job for Raiford’s Hollywood Disco, one of Memphis’ most storied night spots. He also painted the portrait of Robert Raiford that used to hang prominently on the club’s north wall.

Brigance never gave up hope that he would paint again. “I need to get some glasses so I can get all the details right,” he told the Flyer. “I need to get some legs. I need to get back on the walls before I get too old.”

The biographical materials distributed at Brigance’s funeral noted that his work was on display, not in museums, but in beauty shops, clubs, and grocery stores all over the Mid-South.

News The Fly-By

Curb Appeal

Post author By Mary Cashiola
Post date March 5, 2009

CREDIT: by Mary Cashiola

“Avocado green and rust orange will come back in style one day,” realtor Jason Gaia jokes as a handful of people reboard the passenger van.

They have just emerged from a foreclosed home — now being sold by a bank — with orange shag carpet and the previous owner’s dated floral curtains.

“With foreclosures, you want to look at the bones of the house,” Gaia says. “There’s always going to be something cosmetic.”

Last week, Gaia led (and played bus driver for) a tour of foreclosed properties across the Memphis area. As foreclosure rates have skyrocketed across the country, realtors and others have started doing similar tours to show potential homebuyers foreclosures.

Along for the ride were a loan officer, a contractor, and three prospective buyers. The tour was supposed to have as many as 15 buyers, but the impending inclement weather kept many people away.

“We get a lot of calls from people looking for deals,” Gaia says. “It’s the basic laws of marketing: supply and demand.”

Banks don’t publish a lot of information about foreclosures — sometimes not even a picture — so seeing the houses is a must. Of course, since most of them don’t have electricity, you need to go during the day.

Any house can become a foreclosure. Participants on Gaia’s tour saw a range of homes: a cozy High Point Terrace house built in 1948 and selling for $82,900, a three-bedroom, three-bath “Tuscan villa” in unincorporated Shelby County for $209,900, and a suburban zero-lot-line cottage with the electricity still on but the garage door missing.

“I’ll give you a tip,” Gaia says. “Wear a jacket. Vacant homes are always cold.”

Though many people assume buyers of foreclosed properties buy them as an investment, all of the potential buyers on the bus tour were looking for a home.

They were with the right tour guide. Six years ago, Gaia bought a foreclosed home with a hole in the roof to live in.

“You can get some great deals, and sometimes you get what you pay for,” Gaia says.

At one property, built in 2006, the list price is $148,000. It’s a three-bedroom, three-bathroom in a nice suburban neighborhood. When the original owners bought it, they paid $190,000. They had a second mortgage, but it’s the primary mortgage lender that foreclosed on it. Thus the bargain price.

The house had been on the market for 18 days and is a beauty. There’s no sign of anything that sometimes mars foreclosures: no pulled copper wires, no pests, and no damage.

“Foreclosures are not an overnight process,” Gaia says, allowing plenty of time for things to happen to the property. Foreclosures also mean a person or family displaced from the house.

“People get angry. They say if they can’t have this, no one can,” Gaia says. “I’ve gone into some houses and they’ve dumped a pile of dirt on the floor or they’ve taken a hammer and destroyed the cabinets.”

Sometimes the only difference between buying a house from another homeowner or from a builder is that it will often take banks longer to respond to an offer.

“It has to go before a review board with the banks,” Gaia says. “I’ve had situations where banks have responded quickly, and I have one we’ve been working on since December.”

But Gaia says that banks are also more willing in recent months to work with homebuyers. One of the houses on the tour offers to pay closing costs for the buyers.

Buying foreclosures can be a good deal for a homeowner, but it can also be good for an area as a whole.

“If we can start getting rid of some of the vacant homes in neighborhoods, it will help property values and stabilize the market,” according to Gaia.

Gaia’s next foreclosure tour will be April 4th. Though the first tour covered a wide area of Memphis, future tours will focus on a specific neighborhood.

For more information on future foreclosure bus tours, call (901) 259-7837.

Editorial Opinion

Take the Money, Governor

Post author By Flyer Staff
Post date March 5, 2009

It is a logical segue of sorts that Governor Phil Bredesen should have become a Democratic Party heretic on an important component of President Obama’s economic stimulus program at the very moment that the governor’s own last chances for becoming secretary of health and

human services were going out the window.

It may, of course, be pure coincidence that President Obama announced the appointment as HHS secretary of Kansas governor Kathleen Sebelius more or less simultaneously with the coming forward of Bredesen as someone who, at our press time, was still considering having his state opt out of accepting funds for extending unemployment benefits.

Should Bredesen follow through in declining to accept some $143 million in funding for that purpose, he would become the nation’s only Democratic chief executive to do so. Governors Bobby Jindal of Louisiana, Mark Sanford of South Carolina, and Haley Barbour of Mississippi, all Republicans, have declined the money, on the ground that to accept it for the stipulated two-year period would obligate the accepting states to continue paying the add-on unemployment benefits from their own more limited treasuries thereafter.

It is a view that has been challenged not only by the administration but within Bredesen’s own governmental jurisdiction. Hosting a collection of other local public officials last Friday, 9th District congressman Steve Cohen led them in deploring the Tennessee governor’s public hesitancy.

Challenging Bredesen to “listen to his heart,” Cohen said, “It’ll tell him what’s the right thing to do.” The congressman said the money in question is destined for “the Purple Hearts of this recession,” that the disbursement of the funds would be “temporary, targeted, and timely,” and that “if Tennessee doesn’t use the money, it’ll be spent somewhere else.”

In apparent response to the press conference, Bredesen issued a weekend statement: “I fully support the president’s economic recovery package. It will provide much needed jobs for Tennesseans and will help build a sound foundation for our economic future. The unemployment provisions are very important, and we will be looking at how to best use those to meet our needs in Tennessee. Tennessee is very grateful to President Obama for his vision on this issue.”

But as Bredesen spokesperson Lydia Lenker elaborated: “The Governor strongly supports the concept of getting more assistance into the hands of more unemployed workers in the tough economy. He’s simply taking some time to look at the best way to do that without creating a situation where Tennessee’s unemployment trust fund inadvertently runs into solvency issues three years down the road.”

Appearing at last week’s press conference along with Cohen were numerous other local public officials, among them state representative Jeanne Richardson, who addressed head-on Bredesen’s concern that accepting the unemployment funds would impose unaffordable long-term obligations on Tennessee. “That’s perverse logic, not to help people right now. You can’t predict the future,” she said.

We tend to agree with Richardson. We appreciate ex-businessman Bredesen’s budgetary concerns, but they seem to us unnervingly close to arguments once advanced by President Herbert Hoover at the height of the Great Depression. Now is now, and it requires direct action.

Opinion Viewpoint

Pay the Whistleblower!

Post author By Becky Clark Carter
Post date March 5, 2009

Our state’s budget crisis demands that state leaders devise new ways to protect taxpayers’ precious dollars — a significant part of which is lost annually through fraud, waste, and outright theft by state employees.

There’s one good way to encourage conscientious state workers to report those who misdirect taxpayer dollars. How? By funding legal protection for whistleblowers.

Statistically, most government fraud is observed and reported by employees (26 percent), while only 11.5 percent is discovered by external auditors and 1.7 percent by law enforcement. Frontline whistleblowers are less expensive than fraud investigators, and they enrich our budget by rescuing and recouping taxpayers’ losses.

But, as the Tennessee State Employees Association and the state comptrollers’ office can report, whistleblowers suffer retaliation from managers, perpetrators’ friends, department officials, and investigative officers, as well as from co-workers. Abuse can be brutal and relentless, taking a physical and mental toll.

In 33 years of working in Tennessee state fiscal offices and with TSEA, I often observed that managers discouraged workers from reporting violations that could embarrass their departments. They sometimes turned the investigation against the whistleblower with cruel and intimidating behavior.

There was the case of a supervisor who reported to her human resources office an employee who was absent most days but getting paid for massive amounts of hours and days not worked. Result? The supervisor was compelled to leave her own job when the HRO turned the investigation against her.

Another employee who reported the same perpetrator had her computer confiscated, then suffered various forms of intense retaliation from managers and from the perpetrator’s friends and finally had her job terminated. Both whistleblowers in this case are currently unemployed. Yet, though internal investigators produced documentation suggesting that the accused employee was guilty of misappropriating thousands of dollars in state funds, she was promoted and given a raise.

Why does this happen? Possibly because government differs from businesses, in that job security and promotion do not necessarily depend on quality performance or protecting assets. The primary motivator is often friendship or connections. Survival in some state offices depends on skillfully performing the reality-show dynamics of alliance-building, co-worker manipulation, and currying favor with managers. An ethical, hard-working employee can suffer by not investing in these dynamics.

In some cases in which employees report waste or fraud, their departments either do not want to be embarrassed or hesitate to take action against a popular employee. Co-workers circle the wagons around the perpetrator and attack the whistleblower for “rocking the boat.” The aforementioned promoted employee charged with theft had protective friends on all levels.

There are efforts at official remedial action from time to time. I helped state representative Mike Kernell of Memphis craft one such action: the Advocacy for Honest and Appropriate Government Spending Act. And there have been others: the Financial Integrity Act, Risk Management and Internal Control Requirements, and the Whistleblower Protection Statute.

What tends to make these remedies ineffective is the fact that whistleblowers must pay lawyers to protect themselves from inevitable retaliation and job loss. Lawmakers need to put fangs into these regulatory words-on-paper by funding the legal fees that whistleblowers incur. They also need to establish an entity that, with objectivity and uniformity, can mete out real consequences for fraud, thereby bypassing the biased “friendship-based” department officials.

There are abundant examples these days of heroic whistleblowers in the financial industry, people whose sensitive consciences and altruistic concern for the public’s welfare prompt them to shine a light on investment fraud.

Whistleblowers in government perform a similar service. After all, Tennessee taxpayers sacrificially “invest” their money in state officials and employees, trusting it will be returned to them through services and quality of life. An effective way to keep their money from being misdirected into the pockets of a few delinquent employees is to further invest a modest portion of it in paid legal protection for courageous, ethical whistleblowers. Protecting them will protect Tennesseans’ assets.
Becky Clark Carter is a former state employee who continues to be active with the Tennessee State Employees Association.

Politics Politics Feature

Odom’s Predicament

Post author By Jackson Baker
Post date March 5, 2009

CREDIT: by Jackson Baker

For much of last week, Gary Odom of Nashville, the leader of the Democratic Party in the state House of Representatives, was experiencing a dramatic reversal of fortune. Suddenly endangered were not only the laurels he seemed to have won by engineering the election of Democrat-friendly East Tennessee Republican Kent Williams as House speaker but, indeed, Odom’s own position of party leadership.

A rebellion swelled up in House Democratic ranks, ostensibly over remarks made by Odom during a visit to Memphis the weekend before last. Led mainly by close allies of former House speaker Jimmy Naifeh but including also Democrats close to Odom himself, like fellow Nashvillian Mike Turner, the party’s caucus chairman in the House, the challenge was based on two matters: What Odom said about the origins and timeline of Williams’ ascent to the speakership and what he said about Naifeh’s legacy as speaker.

The two issues conflate in the sense that both concern Naifeh’s role. On the question of how Williams came to be speaker, not only Odom but several specific others — including, importantly, Williams himself — concurred from the beginning that Naifeh knew nothing of the Williams ploy until 5 p.m. the evening before the vote. Until then Naifeh was by all accounts, including his own, still preoccupied with trying to round up votes for himself.

At the height of last week’s furor, Turner and state representative John Litz of Morristown, a Democrat and Williams confidant, held a press conference in which they outlined a counter-theory, one in which Naifeh had been an active collaborator in the maneuver which would see Williams cast his own vote, along with those of 49 Democrats, to overcome Republican House leader Jason Mumpower, who had expected to gain the speakership in a chamber which had a 50-49 Republican edge after last fall’s election.

On the surface, it would seem that the two extant chronologies are inconsistent with each other, though there are some who argue — à la left hands not knowing what right hands are doing — that the rival versions are compatible. The meta-issue would seem to be whether Naifeh comes off better as somebody who helped mastermind the Williams coup or as somebody who stayed free and clear of a plot which still riles partisan anger.

The other point of contention regarding Odom concerned the wisdom of his having offered opinions in Memphis regarding what he saw as the negative effect of Naifeh’s erstwhile support of income tax proposals on party fortunes and the need for Democrats to chart a different course regarding that still tender subject.

Perhaps Odom was indiscreet in having so spoken (to a handful of political adepts at an after-hours gathering following a formal reception for Williams and himself with local Democrats), and perhaps he regarded his remarks — though not accompanied by “off the record” or “between you and me” or any of the usual disclaimers — as meant privately rather than publicly.

In any case, there was nothing inherently treasonous or disrespectful about what he said, and, as somebody who strongly opposed income tax legislation during the legislative wars of the late ’90s and early 2000s, and as somebody who now has a position of influence within his party, Odom may have both a right and duty to espouse a different view on the issue than that which once prevailed in Democratic ranks.

Reality and protocol both dictate that Odom now make amends and pay some kind of public homage to the distinguished Naifeh, whom — it is well known — he considered challenging for the speakership had the Democrats maintained their House majority. But that is not the same thing as needing to backtrack on his political philosophy or his views concerning his party’s proper political tactics.

Odom’s fellow Democrats elected him to a leadership role two legislative sessions ago, in search of an aggressive, alternative mode. It would be ironic indeed if he should now be penalized for supplying it.

• The Republican field of gubernatorial candidates has grown by one — Lt. Governor Ron Ramsey of Blountville, who made a formal announcement of sorts in Greeneville at the weekend Lincoln Day Dinner sponsored by the Greene County Republican Women.

When Ramsey took the platform to announce the keynote speaker, state GOP chairman Robin Smith, he took note of the three declared gubernatorial candidates who had preceded him — District Attorney General Bill Gibbons of Memphis, 3rd District congressman Zach Wamp of Chattanooga, and Knoxville mayor Bill Haslam — and was reported as saying, “I am here in Greene County to announce that I am going to be a candidate for governor.”

Thus ended speculation that had been rife for several days about the imminence of a Ramsey announcement. Prior to that, there had been serious speculation as well about the likelihood of Ramsey’s ascending to the governor’s office through the departure of Governor Phil Bredesen, who had until recently been rumored to be a possible nominee for secretary of health and human services by President Obama.

The entry of Ramsey, from the Tri-City area of the state’s northeast corner, means that each of the state’s major population centers has been accounted for in the Republican primary field except for Nashville.

• Heading into next month’s March 7th precinct caucuses and March 28th county convention, the Shelby County Democratic Party may have a close contest on its hands for the position of party chairman.

Current party parliamentarian Van Turner won a straw poll held Wednesday night at the Hi-Tone Café by the Mid-South Community Organizers (formerly Memphis for Obama). And Turner has a fair amount of support from the reform coalition that made inroads in party organization at the pivotal party convention of 2005.

But lawyer Javier Bailey has the support of at least two major brokers in the local party, David Upton and Sidney Chism. And he has launched an aggressive and innovative campaign for the chairmanship, accumulating endorsements from public officials and prominent Democratic activists and advertising his candidacy with full-color mailers and messages on local cable TV channels.

Attorney Lee Harris, whose support derives from many of the same sources as Turner’s, is a possible dark-horse candidate. Meanwhile, current party vice chair Cherry Davis has bowed out of contention, while Shelby County commissioner J.W. Gibson‘s continued participation in the chairmanship race is in doubt. Current chairman Keith Norman, meanwhile, appears to have dropped the idea of running for reelection.

Both the precinct caucuses and the convention will be held, according to recent custom, at Airways Middle School. A new party executive committee also will be elected at the convention.

Shelby County Republicans, meanwhile, will be forced to reschedule their own caucuses, which were slated for the past weekend but canceled due to snow. The apparent consensus candidate for chairman is attorney Lang Wiseman.

• City councilman Jim Strickland, who was in the vanguard of efforts to deny or reduce the council’s traditional funding of Memphis City Schools and to amend residency requirements for new police hires, is taking the lead on yet another controversial issue.

As he proposed in remarks made to members of the Downtown Kiwanis Club last week, Strickland favors dealing with city government’s version of the current financial crisis by imposing immediate austerity measures — including a hiring freeze until the end of the current fiscal year.

Strickland, who would exempt first responders from the freeze, also told the Kiwanians that significant employee layoffs and pay cuts may be necessary. At the time last year that a council majority voted in favor of withholding significant portions of the council’s traditional allotment to the schools, Strickland abstained on the grounds that cutting back on new city hires should be pursued along with such a remedy.