I’ve reported on occasion on Robert Beale. Mr. Beale was tried on tax evasion charges, but attempted to arrest the judge.
That last tactic—attempting to intimidate the judge—didn’t work out. He received 11 years at ClubFed when he was sentenced last month. It got worse earlier this week when he was convicted of conspiracy to impede an officer and obstruction of justice.
When California’s budget was passed I noted that it was full of smoke and mirrors. It was based on an optimistic scenario rather than a realistic scenario.
So far, it’s only off by $3 billion; the Los Angeles Times notes that, “Capitol budget analysts say preliminary data indicate the problem will probably grow to at least $10 billion.”
The crisis will be worse in California than in other states because capital gains are a high percentage of the personal income tax created. (In California, there is no preferential tax rate for capital gains.) With the stock market dropping there will likely be few capital gains to report on tax returns that are filed next year.
Governor Schwarzenegger has called a special legislative session beginning next Wednesday to deal with the crisis. Don’t expect anything other than more smoke and mirrors. Democrats want a top-to-bottom review of the state’s tax code (that means they want increased taxes) while Republicans want business tax cuts.
Alan Fabian seemed to have everything. He was an entrepreneur, a political fundraiser, had numerous “successful businesses”—in short, he appeared to have everything.
But it was a fraud. Actually, multiple frauds.
Mr. Fabian may have, at one time, actually been a successful enterepreneur. However, in 2001 he began a Ponzi scheme, defrauding investors in his businesses while paying himself a salary of $800,000 a year. He filed tax returns with fictional deductions. One of his shell companies went into bankruptcy in 2004; this may have led to the government investigation.
In 2007, while Mr. Fabian knew that he was soon to be indicted, he accepted another $500,000 loan (which was supposed to go to a non-profit he started). Instead, some of the proceeds were used on a family vacation to the Middle East…a vacation that began with a private plane trip to Israel.
Earlier this year Mr. Fabian pleaded guilty to two counts (one each of mail and tax fraud) out of the 26 he was charged with. On Friday he was sentenced to nine years at ClubFed. Judge Catherine Blake noted when sentencing Mr. Fabian that he had a, “…consistent, repeated, sophisticated pattern of fraud…[with] at least six [years] of grossly illegal and deceptive conduct….”
He will begin serving his sentence just before the New Year.
Proposition 12 would issue $900 million in bonds to provide loans to California veterans to purchase homes and farms. It would cost $59 million a year to repay the debt (for thirty years).
Supporters say that the Cal-Vet Home Loan program has been a huge success; the measure was placed on the ballot by a unanimous vote in both the State Assembly and State Senate. Opponents say that the bond measure would cost the state money and the screening in the program needs to be tightened.
That’s the end of the propositions on the state ballot. Next week I’ll look at Orange County Measure J and Irvine Measures R and S.
If you’re a California resident you know that we have a dysfunctional legislature. One of the main reasons for this is that back in 2001 the Democrats and Republicans in the legislature drew up new districts. They made a deal, and made all but a couple of seats “safe.” That’s called gerrymandering, and almost every legislative district in the state is gerrymandered.
For example, my Assembly, State Senate, and Congressional seats are extremely safe Republican districts. While there’s a Democratic candidate for each office, it’s not going to matter–all the Republican candidates will win in a cakewalk. Similarly, almost every Democratic candidate will win easily. When the districts aren’t competitive you tend to get legislators who are highly partisan and don’t compromise.
Proposition 11 would change how redistricting is done in California. There would be a commission to handle redistricting for the state legislature. While this measure has almost no direct fiscal impact, eliminating the dysfunctional legislature can only be a boon to California.
Remember to vote on November 4th.
Proposition 10 would issue $5 billion in bonds. These bonds would then be used to provide $3.425 billion to aid consumers purchase high fuel economy or alternative fuel vehicles. Another $1.25 billion would be used for research and development of renewable, solar, and win energy. There would also be grants to cities.
Like any measure with bonds there is a cost. For this measure it’s $335 million a year. Given the current credit market it’s likely that’s an understatement of the expense.
Proponents argue that Proposition 10 would help lead California to energy independence. Proposition 10 is supported by the AQMD. Opponents, including some consumer groups and the California Federation of Teachers, argue that this measure would remove money from other programs.
No matter where you stand on this remember to vote on November 4th.
There’s a scandal in New York involving the Governor’s Chief of Staff. Charles O’Byrne is Chief of Staff to New York Governor David Paterson. He makes a good salary ($178,500 a year). He also owes $200,000 in back taxes—he didn’t file tax returns from 2001 through 2005 (from the news story it appears the unpaid taxes are New York state income taxes).
Mr. O’Byrne blames bouts of clinical depression for the failure to file tax returns. Republicans in the state senate are trying to make hay on this, and are starting an investigation. Governor Paterson (who succeeded to office after the Eliot Spitzer scandal) promises to soon disclose Mr. O’Byrne’s tax records.
In any case, if you are an elected government official, or if you are a high staff member of such an official, make sure you pay your taxes. You can be that if you don’t the opposition—be it Republicans or Democrats—will use this against you politically.
Proposition 7 has done something this election cycle that I would have thought was impossible: It is opposed by almost everyone. The opponents include the Republican Party, the Democratic Party, the United Farm Workers Union, the California Chamber of Commerce, and the California Taxpayers’ Association.
What would Proposition 7 do? It would require utilities to generate 20% of their power from renewable sources by 2010 (with that percentage increasing to 40% by 2020 and 50% by 2025).
Proponents argue that Proposition 7 would help solve global warming, increase renewable energy use, and wouldn’t cost much to California. Opponents argue that it would cut small wind and solar companies out of the market, would dramatically increase rates for everyone, and would dramatically hurt the economy.
Remember to vote on November 4th.
Proposition 6 requires specific funding for police and law enforcement, and adds several new crimes (mainly gang-related) to the penal code. It also changes sentencing, generally tightening (lengthening) sentences, especially for gang-related offenses. It is also estimated to cost at least $500 million annually, and potentially could have a one-time cost of $1 billion.
Proponents argue that it fights gangs, and helps crime victims. Opponents argue that it spends money needlessly.
No matter how you feel make sure you vote on November 4th.
Proposition 5 is one of the few non-bond initiatives that could impact taxes on this year’s California ballot. Proposition 5 changes sentencing for drug offenses, which may be good or bad depending on your views.
It definitely impacts taxes, though. The initiative allocates $460 million to expand treatment programs for drug offenders; it increases costs by over $1 billion for expanding drug treatment and rehabilitation programs. It may also save over $1 billion by decreasing prison and/or parole operating costs.
Proponents argue that it will increase treatment programs, decrease prison overcrowding, and save money. Opponents argue that it shortens parole for some violent drug offenders, would cause damage to schools, sets up two new bureaucracies, and increases social costs.
This is a very complex proposition that deserves perusal before you vote.
