Daily Archives: June 19, 2016

Will Trump and Charter Schools Be Another Scam? Just Look at Pal Carl Icahn’s School “Charity”

Truthout:

Most people know Carl Icahn as a real-life Gordon Gekko — the investor who helped drive Trans World Airlines to bankruptcy, selling the company’s prime routes and saddling it with debt, while pocketing millions for himself. Today, Icahn is once again in the national spotlight with Donald Trump, his former business associate, floating the possibility of making him Treasury Secretary.

Like Trump, Carl Icahn has also named a school after himself — seven charter schools in New York City to be exact (Icahn Charter School 1, Icahn Charter School 2, Icahn Charter School 3, etc.). And as with Trump University, the money trail suggests the organization running these schools may have served to enrich its billionaire founder, Icahn, at the expense of its own students. An AlterNet investigation finds that Carl Icahn appears to have treated his charity like a personal piggy bank, using it to make potentially tens of millions for himself while benefiting from tens of millions in tax deductions.

In 1997, Carl Icahn made a $100 million tax-deductible “contribution” to his public charity, the Foundation for a Greater Opportunity, scoring about a $45 million income tax reduction, according to an estimate by Gregg Polsky, a law professor at UNC. In January 2006, Icahn’s foundation suddenly sold back the stock gift to an Icahn corporation, Modal LLC. The $100 million gift in American Railcar Industries Inc. shares was conspicuously sold three days before the company was to go public, a process that often sparks a short-term hike in share value. The convenient date of the sale strongly suggests Icahn knew his limited liability corporation, rather than his educational charity, would make a killing off the public offering.

Three days after the sale was inked, American Railcar Industries went public, opening at $23.60 a share and jumping up almost 40 percent in a month. As of 2016, Icahn holds a majority stake in ARII and the company’s shares are up nearly 70 percent more than when Icahn reacquired them. Thus, even if his LLC held onto his foundation’s former shares, rather than selling in the initial surge, Icahn would be in line for tens of millions in profit.

“When he donates the $100 million, it’s not his asset anymore,” explains Marc Owens, a tax expert with the law firm Loeb & Loeb. “It can’t be transferred back other than as a sale at true fair market value. So Icahn basically induced the charity, presumably ignorant of the impending company’s public sale, into selling him the stock at an artificially low value.” 

Since the profits off the IPO surge went to Icahn, rather than his educational charity, Icahn was liable for a 25 percent “excess benefit” tax for that profit, potentially another 10 percent because of his role as director of the charity, and a “correction” to make “the charity whole by repaying the full excess benefit amount, plus interest,” according to Owens.

Yet on its 2006 tax forms, Icahn’s charity did not check the box indicating that it was aware of the existence of an excess benefit transaction, and almost a decade later Icahn has still not paid back $90 million owed to the charity (at least according to the foundation’s latest publicly available filings from 2014). “Because the note remains outstanding,” concludes Owens, “the tax law treats the transaction as a continuing event, despite the passage of time, a situation that has the makings of first class tax problem for Mr. Icahn. That’s all I can say.”

To summarize, Icahn’s initial $100 million gift to the charity in 1997 reduced his overall income tax bill by around $45 million. Then nine years later, just before the charitable “contribution” was about to surge in value, Icahn’s charity, operating “exclusively” for the good of low-income families, sold back the stock to Icahn, giving away tens of millions in potential post-IPO earnings to the billionaire. Since then, Icahn appears not to have paid an excess benefits tax for those earnings, or given the earnings back to the charity. As of 2014 records, the charity still lacks the $90 million in principal originally lost in the deal.

Icahn did not respond to AlterNet’s requests for comment.

Trump who says politicians that take money from Wall Street are puppets is holding a fundraiser by Wall Street heavy hitters

Trump said, “I don’t need anybody’s money. I’m using my own money . . . I’m not using donors.” Well, that was then, this is now. Now, Trump is panhandling for money  from Wall Street and is now lining his pocket with the same financiers that he criticized Hillary Clinton. Mr. Trump is now owned by Wall Street too.

Donald J. Trump is holding a fund-raiser in New York City next week to be hosted by a who’s who of the financial world, including John A. Paulson, whose hedge fund made billions betting on the collapse of the housing market.

Joining him are Stephen A. Feinberg, the secretive financier and founder of Cerberus Capital Management, and Peter Kalikow, the politically connected real estate magnate. Neither man had publicly announced his support for the Republican presidential candidate and presumptive party nominee, until now.

The joint Republican National Committee and Trump fund-raiser will take place on Tuesday, at an undisclosed location in the city, according to an invitation seen by The New York Times. Tickets are going for $50,000 a person, though the hosts are paying $250,000 a couple. Additional details, the invitation said, will be disclosed when a reservation for a seat is made.

It is a sign that a small, but growing, crowd in the financial world is warming up to the idea of backing Mr. Trump. The financial industry represents a crucial group for the presidential candidate as he prepares to face off with Hillary Clinton, his well-financed political rival, before the general election in November. Mrs. Clinton’s donor network includes the former hedge fund star George Soros, who recently warned against the “siren song of the likes of Donald Trump.” She also has the backing of some well-known Wall Street executives.

Read on.

 

Brandon Vandenburg guilty, faces 15 to 25 years for raping an unconscious female student

NASHVILLE, Tenn. (Reuters) – A Tennessee jury found a former Vanderbilt University football player guilty on Saturday for the June 2013 rape of an unconscious female student in a case drawing national attention to sexual assaults on college campuses.

The trial of Brandon Vandenburg, 23, was heard by a jury brought in from Memphis, 200 miles (300 km) from the university in Nashville, because of concern that media coverage had made it hard to find impartial local jurors.

In a retrial after his first conviction was thrown out in a mistrial, Vandenburg was once again found guilty of five counts of aggravated rape, two counts of aggravated sexual battery and one count of unlawful photography.

Vandenburg showed no emotion when the verdicts were read, although he did exchange emotional hugs with his defense team before he was escorted to jail.

He faces 15 to 25 years in prison for each rape charge when sentenced in July.

Read on.

However, the Stanford rape sentence differs from the Vanderbilt University rape sentence.Similar sexual assault cases of the accusers but different sentences for the crime:

The Stanford swimmer was convicted of sexual assault, not rape, after two students discovered him on top of an unconscious woman behind a dumpster. The four former Vanderbilt students, three of whom are black, were charged with aggravated rape. Vandenburg now faces the same sentence as Batey: a minimum of 15 years in prison with no parole.

The aggravated rape charges came into play under Tennessee law because the victim was unconscious and there was more than one alleged perpetrator. Two of the Vanderbilt players were charged with aggravated rape even though they did not have sexual contact with the woman because prosecutors considered them active participants.

In the cases of both Batey and Turner, the suspects and victims say they were drunk and remember little or nothing. Legal experts say that puts added weight on physical evidence, which was far more substantial in the Vanderbilt assault.

The Vanderbilt case included graphic evidence, such as cellphone videos and photos. No photo or video evidence surfaced in the case against Turner.

Meet Debbie Wasserman Schultz’s challenge for her Congressional seat