Source: USA TODAY
A blue-ribbon Tennessee walking horse stallion might be worth $1 million or more when put up for sale, but it can earn that money back for a new owner in a year through stud fees as others try to cash in on his champion bloodline.
That’s part of what makes the walking-horse industry so lucrative for top breeders, trainers and owners, and what critics say drives a few unscrupulous horsemen to acts of “soring” to create high-stepping animals that appear to have a true champion’s talent, muscle and style.
Many believe that soring — painful cutting and chemical treatments on the animals’ legs to force the prized “Big Lick” high step that wins shows — is rampant in the industry. Some critics even say that no horse trained naturally, without abuse, could walk that way.
“It’s all about money,” said Dr. Gordon Lawler, an Indiana veterinarian who has owned walking horses for 40 years and sits on the board of the Franklin, Ky.-based National Walking Horse Association rival group to Shelbyville’s industry. “An owner will tell a trainer, ‘If you can’t do it, I’ll give my horse to another trainer.’ “
Others say money doesn’t motivate the true sportsmen in the walking horse industry.
“They’re in it for the love of the animal,” said Chad Williams, a longtime professional trainer whose stables north of here are used to train walking horses for top events like the annual Walking Horse National Celebration that put this city of about 20,000 on the equine map.
“Some of the owners whose horses I train bought this farm just to have a place to come to five or six times a year, and we have horses brought to us from as far away as Minnesota,” Williams said.
While most walking horses that Williams trains to compete in shows sell for $30,000 to $100,000, he has seen them fetch as much as $1.6 million.
He has one animal in his stables now — he won’t divulge the name to protect the owner’s confidentiality — that sold for $50,000 as a 2-year-old but went four years later for $150,000 with a string of blue ribbons to its credit.
Stud fees for champion stallions can run as high as $4,000 per mate, though horse owners say fees typically average about $2,500. But a stallion that nets $4,000 to sire a colt can be used perhaps 250 times a year, bringing in $1 million in stud money.
But whether those champions could win blue ribbons and command high prices — and big stud fees — without being subjected to the controversial practice of soring remains a controversial question.
Critics’ claim that every walking horse must be the product of mistreatment is ” just not true,” Williams says. “The horse doesn’t have to be miserable to step like that. We don’t abuse our horses, and anybody can walk into our barn and watch us ride these horses.”
Lawler, who has been around the industry for decades as an animal doctor and horse owner, scoffs at the notion that soring has been wiped out.
“I believe 90% or more are sored or pressure-shoed, or they can’t compete,” Lawler says. “They just can’t do the high leg kick without soring.”
The financial pressure is intense on trainers to prepare horses that can compete in shows such as The National Celebration, the top annual event held here in late August every year, Lawler says.
But horses in the Shelbyville celebration and related events — considered the pre-eminent ones in the sport — and those sanctioned by the rival Franklin, Ky., association in which Lawler participates have vastly different rules.
While the Shelbyville shows allow walking horses to compete wearing padded front shoes, the Kentucky group doesn’t permit that, requiring all horses in its competitions to perform flat-shod.
Formed in 1998 as a response to the growing criticism of the Shelbyville style of walking horse competition, the Kentucky association believes that even the padded shoes and the associated chains that the horses wear on their ankles are a form of abuse.
“We started out with padded shoes also but elected to eliminate that because too much can be concealed between the pad and the bottom of the foot, such as golf balls or pieces of metal to cause pain,” Lawler said.
Gap in prices
There is a big difference in prices — and stud fees that can be commanded — between high-stepping walking horses with padded shoes and the flat-shod ones that the Kentucky association favors.
“The top price for our horses is about $15,000, and most good ones sell for about $7,500,” Lawler said. “And the average stud fee is about $500. I have two that I get $200 for the stud fee.”
He says the big difference in costs — and expectations — is fueled by rich owners in the Shelbyville-style horse industry.
“It’s a total culture,” Lawler said. “You have rich owners who only come to show their horses to compete for a blue ribbon. Now, I’m not against anybody being rich. It’s a free country. But for them, it’s all about the glory. I don’t have enough money (to compete on that level).”
Lawler says soring is used to take horses with less natural talent and make them into competitors, thereby boosting their value on the open market for sales and stud.
But there’s really no way to turn an inferior horse into a champion, argues Bill Coleman of Shelbyville, a volunteer inspector for the industry — known as a designated qualified person, or DQP. Coleman works for the organization known as SHOW, which checks horses in competitions such as the Celebration.
The horse industry hires the inspectors to screen for compliance with federal and state regulations against soring.
Coleman said he has been around horses most of his life and decided to become an inspector because he got tired of abuse.
He believes the industry has cleaned itself up significantly since his organization was formed in 2009 and that owners and trainers now mostly try to do the right thing.
“A champion horse, trained and ridden without artificial aids, will still make it to the top,” he said.
Still, Coleman said his regular business as a homebuilder has suffered since he started inspecting horses because the rules checkups remain unpopular among people in the walking horse industry.
Bloodlines credited
The Shelbyville area’s biggest breeder, Waterfall Farms, has seven champion studs in residence and four stables mares waiting to be bred or give birth to their colts.
“I can tell you from my years of experience that soring is not going to make an inferior colt any better,” said operations manager David Williams, who said he is not related to trainer Chad Williams.
Soring isn’t in the genes, so an average horse sored to blue ribbons won’t be of much value as a stud, he said.
“Soring is like putting a beautiful dress on an ugly girl,” David Williams said. “The only way to raise a superior horse is to breed a superior horse. We study bloodlines and try to keep our success rate high.”
Waterfall Farms has some of the most-recognized walking horse champions available for stud service, including He’s Puttin’ on the Ritz, which Williams called “the Secretariat of the walking horse world,” a reference to the Triple Crown-winning thoroughbred of the early 1970s.
Lawler takes a harsher stance but sees reason for hope. He said recent publicity and court action against soring “will be the best thing that’s ever happened to the walking horse.”
“It doesn’t mean the (Shelbyville) Celebration has to come to an end. It just means they will finally have to play by the rules. And I will commend them if they can do that,” Lawler said.
Copyright © 2012 USA TODAY, a division of Gannett Co. Inc.
European stocks extend slide on growth doubts - The Canberra Times
European stocks declined for the fourth week in five as weaker-than-estimated manufacturing output in the US and China plus record unemployment in the euro area signaled that the global economy is slowing.
A gauge of construction and materials stocks tumbled after China's official Xinhua news agency said the country has no plan to begin large-scale stimulus of the economy. Bankia SA, the lender that Spain nationalized last month, plunged 35 per cent as it sought 19 billion euros ($24 billion) of state aid. Logica Plc surged 67 per cent as CGI Group Inc. agreed to buy the computer-services provider.
The Stoxx Europe 600 Index dropped 3.1 per cent to 235.09 this week as all 19 industry groups in the gauge slid more than 1 per cent. The benchmark measure has plunged 14 per cent from this year's high on March 16 amid mounting concern Greece will elect a government that refuses to cut spending and raise taxes, forcing the country to leave the euro. The selloff has left the gauge's valuation at 9.7 times estimated earnings, according to data compiled by Bloomberg.
“Investors are not only worried about Europe,” said Henrik Drusebjerg, a senior strategist at Nordea Bank AB in Copenhagen, where he helps oversee $US230 billion. “They're concerned world growth is abating. The fronts are being formed as the Greek election on June 17 is nearing and more and more rumors go round that Spanish banks will need a massive recapitalization.
US manufacturing slows
In the US, the Institute for Supply Management's factory index fell to 53.5 in May from 54.8 in April. The median forecast of 82 economists surveyed by Bloomberg News had predicted the gauge would drop to 53.8.
A measure of factory production in China, the world's second-largest economy, also slipped. The Chinese Purchasing Managers' Index retreated to 50.4 in May from 53.3 in April, the nation's statistics bureau and logistics federation said. That compared with the median estimate in a Bloomberg News survey of economists for a reading of 52. A reading above 50 indicates expansion.
A separate gauge of manufacturing output from HSBC Holdings Plc and Markit Economics showed a seventh straight contraction, the longest since the global financial crisis.
A gauge of manufacturing output for the 17-nation euro area contracted for a 10th month in May. London-based Markit Economics' PMI declined to 45.1 from 45.9 the previous month. The reading for May was the lowest since June 2009.
Record unemployment
The Stoxx 600 tumbled 1.9 per cent on June 1 as a report showed euro-area unemployment climbed to the highest on record as companies from Spain to Italy to cut jobs.
The jobless rate rose to 11 per cent in April and March, the European Union's statistics office said. That was the highest since the data series started in 1995. The March figure was revised higher to 11 per cent from 10.9 per cent.
The US Labor Department's monthly payrolls release showed that employers added 69,000 in May, fewer than the most- pessimistic forecast in a Bloomberg News survey. Payrolls climbed a revised 77,000 in April, a smaller number than initially estimated. The report also showed that the jobless rate in the world's biggest economy increased to 8.2 per cent last month from 8.1 per cent.
"The data flow has been disappointing,” said Graham Bishop, an equity strategist at Exane BNP Paribas in London. “The relevant thing to look for now is the likelihood of a policy response, rather than the growth outlook, which we know is disappointing.”
National benchmark indexes retreated in every western- European market this week except Greece. Spain's IBEX 35 Index tumbled 7.3 per cent. The U.K.'s FTSE 100 Index slid 1.7 per cent, France's CAC 40 slipped 3.2 per cent and Germany's DAX Index slumped 4.6 per cent.
Saint-Gobain retreats
Cie. de Saint-Gobain SA plummeted 8.4 per cent, its biggest weekly retreat in 2012. FLSmidth & Co. A/S, the Danish supplier of mining equipment, declined 7 per cent. Acciona SA, the Spanish infrastructure developer, sank 9.9 per cent.
“The Chinese government's intention is very clear: it will not roll out another massive stimulus plan to seek high economic growth,” the Xinhua news agency said in the seventh paragraph of a Chinese-language article on economic policy on May 29. “The current efforts for stabilizing growth will not repeat the old way of three years ago.”
Bankia tumbled 33 per cent this week. Banco Popular Espanol SA retreated 12 per cent and Bankinter SA dropped 18 per cent after Standard & Poor's cut the credit ratings of both lenders and Bankia to junk on May 25, after the close of European markets. The rating company cited Spain's weakening economy.
Spain's lenders
Data showed a net 66 billion euros of capital left Spain in March. The country's economy Minister, Luis De Guindos, said the balance-of-payments figures, which showed an outflow of 97 billion euros in the first quarter, didn't reflect “capital flight,” and underlined how Spanish banks were struggling to roll over funding on money markets.
Bayerische Motoren Werke AG, the world's biggest maker of luxury cars, dropped 5.1 per cent and Daimler AG retreated 6.7 per cent as a gauge of automakers sank 4.7 per cent.
ThyssenKrupp AG, Germany's largest steelmaker, declined 9.2 per cent after Chief Executive Officer Heinrich Hiesinger said it would be unrealistic to expect the steelmaker's Americas unit to post an operating profit next fiscal year, Euro am Sonntag reported.
Logica jumped 67 per cent after Montreal-based CGI announced it had reached an agreement to buy the U.K. computer-services provider in a 1.7 billion-pound ($2.5 billion) cash transaction, offering a premium of 59.8 per cent to its closing price on May 30.
Well, We've Officially Had A "Correction!" But Stocks Still Aren't Cheap - The Business Insider
Well, stocks are now down more than 10% from their recent peak--an official "correction."
So what does that mean?
Is it a "buying opportunity"? Are stocks cheap?
Not necessarily.
Over the short-term, the market could certainly snap back. And if the carnage keeps up, Ben Bernanke might announce some huge new quantitative easing program in addition to his zero-percent-interest-rates-forever policy. Or Congress might panic about the elections and suddenly address "Taxmageddon" and the fiscal cliff. Or Europe might suddenly bail out all its banks and kick the can down the road for a while.
And those initiatives might boost stocks.
On the other hand, stocks could now keep dropping until they enter a "bear market" (20% decline), or worse.
On that score, the bigger valuation picture is still not that encouraging, at least for long-term returns. Even after the recent pullback, stocks are still about 20% overvalued when measured on Professor Robert Shiller's "normalized" earnings--earnings adjusted to normalize profit margins. This is is one of the only valuation measures that actually bears some correlation to long-term future returns. (PEs based on a single year of earnings can often be highly misleading).
Specifically, even after the pullback, stocks are still trading at 20X cyclically adjusted earnings. As we can see in the following chart from Professor Shiller, over the past century, stocks have averaged about 16X those earnings. So we're still about 20% above "normal."
Importantly, though, 20X is a lot closer to normal than the ~24X recent peak. Stocks certainly aren't "cheap," but they're also not wildly overvalued anymore.
Wait, what are "normalized" earnings? Aren't stocks now astoundingly "cheap"?
In recent months, eager to suggest that stocks are cheap, most analysts have talked about the market P/E ratio relative to next year's projected earnings. And relative to those earnings, stocks do seem modestly "cheap" (12X, or something).
Unfortunately, measuring stock values against next year's projected earnings has a couple of flaws. First, no one knows whether those projections will materialize. Second, and more important, those projected earnings assume that today's record-high profit margins (see below) will persist.
St. Louis Fed
Corporate profit margins have now hit record highs. If they don't regress to the mean, it will be the first time in history that they haven't.
Over history, corporate profit margins have been one of the most reliably "mean-reverting" metrics in the economy. When margins get extended to super-high (today) or super low (2009) levels, they generally revert toward the mean. This radically changes the PE ratio.
Using single-year earnings often provides a very misleading impression of how "cheap" or "expensive" stocks are. When profit margins are abnormally high, as they are now, the PE seems misleadingly low. And when profit margins are abnormally low, as they were in 2009, the PE seems misleadingly high. The "normalized" PE ratio provides a much more meaningful view.
And measured on average profit margins, not today's super-high margins, the stock market is still a bit expensive. (We discuss this in detail here).
Sadly, this doesn't tell you anything about what the market will do next. As you can see in Professor Shiller's chart, the market has spent decades above and below the average.
What this PE ratio does tell you is that stocks still have lots of room to fall--20%, just to get back to normal, much more than that if they "overshoot."
And it also tells you that long-term returns are still likely to be sub-par. Through history, one of the most reliable predictors of next-10-year returns is the valuation level at the beginning of the period. Today's valuation level is not as high as yesterday's. But it's still higher than average.
But we're getting closer to "fair value." And that's good news for long-term investors who want a compelling long-term return. And bonds are now so expensive that stocks are highly likely to produce better returns than bonds over the next decade, even if the stock returns are sub-par.
See Also: ALBERT EDWARDS: The Stock Market Will Collapse To New Lows And All Hope Will Be Crushed
New Rules for Money Transfers, but Few Limits - New York Times
Both resent having to pay Western Union a $10 fee to send money abroad and an additional cut to convert dollars to pesos. But these charges have fueled the company’s record profits and made it a relative outlier in the financial services industry.
As billions of dollars in fee income has evaporated at the nation’s largest banks because of regulations passed in the wake of the financial crisis, the money-transfer industry has escaped the crackdown.
Soon, however, the companies, which are largely regulated by states, will be subject to new federal rules. Starting in February, they will have to disclose more to customers about transfer fees and currency exchange rates. The rules, part of the Dodd-Frank financial regulation law, will also require companies to give customers up to 30 minutes after a transaction to get a full refund.
But consumer advocates are raising alarms that money-transfer companies face fewer restrictions because the rules do not touch the pricing of services.
“You still have a situation where customers are subjected to these predatory products with no cap on fees or exchange rates,” said Oscar Chacon, the executive director of the National Alliance of Latin American and Caribbean Communities in Chicago.
Money-transfer companies say that they offer an invaluable service for customers who might not have access to traditional banks and who would otherwise have no way of transmitting money to their families.
“The money-transfer industry is very competitive, and consumers have a range of choices for sending money,” said Tom Fitzgerald, a Western Union spokesman.
Western Union, which dominates the money-transfer market, notes that it already discloses the amount of money being submitted, the exchange rate and the amount that the recipient will receive. It also tells customers that “in addition to the transfer fee, Western Union also makes money when it changes your dollars into foreign currency.”
MoneyGram, among the largest companies, said, “We believe the new rules essentially standardize across the industry our existing high level of disclosure, which should benefit anyone wishing to send funds.”
Mr. Esparza, who sends money to his children in Mexico City, said that the $10 fee would not be onerous if he were sending a larger amount, but that it seemed exorbitant for $50. “Western Union’s fees are just too high,” he said.
Ms. Gonzalez said that even though $10 might not seem like a lot, “In Mexico, that money goes farther.”
Aside from the transfer fees, Western Union and other similar services profit as they buy batches of currencies at a wholesale rate. The money-transfer companies do not disclose the spreads they benefit from when they set exchange rates.
“It’s a big profit center for these companies, borne on the backs of the people who can least afford it,” said Matthew Piers, a lawyer in Chicago, who successfully brought a lawsuit on behalf of Mexican immigrants against Western Union in 2000 that accused the company of misrepresenting exchange spreads.
Western Union did not admit or deny wrongdoing, but agreed to pay more than $400 million to settle the claims.
Referring to the money it makes off the spread, Western Union said in its 2012 annual filing, “we generate revenues based on the difference between the exchange rate set by us to the customer and the rate at which we or our agents are able to acquire currency.”
Western Union received $1.15 billion in so-called foreign-exchange revenue in 2011, up from $910.3 million in 2009.
For Javaid Tariq, a taxi driver in New York City who sends money monthly to his family in Pakistan, the exchange rate is particularly infuriating because of how much money he loses. When he sent $300 to his family in April, he received 89.2 rupees for every dollar, less than the 91.2 exchange rate that he checks each morning, he said. For his family, that means 599 fewer rupees, or more than a week’s salary in Lahore.
Frustrated, Mr. Tariq said, “They are taking this money from the people who can least afford it.”
Analysts expect the market for money transfers to grow. The value of cross-border transfers is expected to reach $437 billion in 2012, up from $387 billion in 2009, according to the Aite Group, a research and advisory firm. In the United States, this is led partly by a growth in transfers to China and India and an influx of immigrants from western and eastern Africa, said Larry Berlin, an analyst with First Analysis in Chicago.
Western Union and rival companies are poised to profit. Western Union, with the largest share of the market at nearly 18 percent, recorded $4.2 billion in transaction fees last year, up 4 percent from 2010. The fees accounted for more than 75 percent of the company’s total revenue last year. In the first quarter, profits totaled $247.3 million, up 18 percent from the year-ago period, and for all of 2011, net income was $1.16 billion, up 28 percent from the year before.
Western Union and MoneyGram, which has nearly 4 percent of the money-transfer market, according to the Aite Group, are primarily regulated by the states in which they operate. The new rules, however, fall under the oversight of the new federal Consumer Financial Protection Bureau.
In the buildup to the Dodd-Frank rules, Elizabeth Warren, in her former role as a special adviser to President Obama charged with forming the consumer bureau, warned that with money-transfer companies, “you put your money in and take your chances.”
The central idea behind the new regulations was that having more transparency would promote greater competition and allow immigrants to shop for better rates, said Betsy Cavendish, the executive director of Appleseed, a nonprofit organization focused on policy reform that provided public comment during the rule-making process.
In a February speech to the League of United Latin American Citizens, Richard Cordray, the director of the consumer bureau, emphasized that “with our rule, we hope to increase competition.”
But competitors have made little progress in penetrating the money-transfer market largely because Western Union has half a million locations in 200 countries and territories, making it more difficult for others to edge in, industry consultants said. Although there was some hand-wringing in the industry during the rule-making, analysts said that disclosure requirements would not significantly dampen the revenue at Western Union.
“There will be some one-time costs, but not anything significant,” Mr. Berlin said. Western Union, he added, already works to make fees clear to customers.
Already there are signs that competition might be slow to materialize, banking analysts said. They pointed to a growing number of partnerships between Western Union and banks that might have competed for a slice of the business.
Regions Financial, for example, just finished introducing Western Union’s money-transfer services through its 1,800 branches. U.S. Bancorp gives customers access to Western Union services through its online banking site.
Immigrant advocates argue that many people do not have time to shop for better rates.
“These are people working who are often working minimum wage jobs with very little savvy or time about where to price-shop,” said Francis Calpotura, the founder and director of the Transnational Institute for Grassroots Research and Action in Oakland, Calif.
Some immigrants complain that while there might be multiple options to send money from the United States, there are not as many in the countries where their families live.
Mr. Tariq, the taxi driver with family in Lahore, says he must use Western Union to send $300 a month because “they have a monopoly on stores and are in every post office.”
That makes him feel “like a hostage,” he said.
Stocks slump again; 10-yr yield near all-time low - Yahoo Finance
NEW YORK (AP) -- Unable to shake their worries about Europe, investors drove stocks to a four-month low Thursday and piled into bonds, sending the yield on the 10-year Treasury note close to an all-time low.
The Dow Jones industrial average posted its 11th loss in 12 days after a pair of discouraging economic reports further unnerved traders already concerned about a possible exit from the euro by Greece.
The Dow lost 156.06 points, most of it toward the end of the trading day, to close at 12,442.49. It is down almost 6 percent for May, and what had been a strong year for stocks has been reduced to a slender 1.8 percent gain.
The Standard & Poor's 500 stock index closed at its lowest point since Jan. 17.
The yield on the benchmark 10-year note hit 1.69 percent. That is lower than any 3 p.m. reading since at least 1953, according to records kept by the Federal Reserve.
According to other financial data providers, including Dow Jones and Bloomberg, the yield on the 10-year dipped slightly lower, to 1.67 percent, at other points in the trading day last September.
"It's still seen as one of the safest investments in the world," said Guy LeBas, chief fixed income strategist for Janney Montgomery Scott. "If you compare Europe's problems to our problems in the U.S., it doesn't look so bad over here."
The dollar and gold both rose as traders sought refuge in lower-risk assets.
Stock indexes opened lower on Wall Street following drops in European markets. The declines accelerated at mid-morning after the Federal Reserve Bank of Philadelphia said manufacturing slowed in the mid-Atlantic region for the first time in eight months. The report was far worse than analysts had been expecting.
In other trading, the Standard & Poor's 500 index fell 19.94 points to 1,304.86, its lowest close since Jan. 17. The Nasdaq composite fell 60.35 points to 2,813.69.
It is not much of a welcome for Facebook, which starts trading Friday in one of the most talked-about debuts in the history of the U.S. stock market.
Facebook set its price at $38 per share, which would raise $18.4 billion for the company and value it at $104 billion — more than Amazon.com and much more than long-established names like Disney and Kraft.
In Europe, Fitch ratings agency downgraded Greece deeper into junk territory on Thursday and warned that a Greek exit from the euro currency is "probable" if new national elections next month produce an anti-bailout government.
Fitch cut Greece's rating by one notch, from B- to CCC, the lowest possible for a country that is not in default.
Greece swore in a caretaker Cabinet that will hold power at least until next month's election. In elections earlier this month, Greeks gave strong support to politicians who rejected the tough budget cuts that came with the country's financial bailout.
"Europe is very much on investors' minds," said Brian Gendreau, market strategist at broker-dealer Cetera Financial Group. "It's been two years with multiple bailouts involving Ireland, Portugal and Greece, and things don't seem to be getting better."
German, French and Spanish stock markets all fell more than 1 percent.
Spain was forced to pay sharply higher interest rates to raise $3.18 billion in a debt auction Thursday. And shares of Bankia, which Spain nationalized last week, plunged 20 percent on a report from the newspaper El Mundo stating that depositors have withdrawn over $1 billion since last Wednesday.
In the United States, Caterpillar fell 4 percent, most of the 30 stocks in the Dow, after reporting that global sales growth of construction and mining machinery slowed between February and April.
Wal-Mart stock rose over 4 percent, the most in the Dow, after reporting a 10 percent jump in first-quarter income, beating Wall Street expectations.
The Conference Board said its measure of future U.S. economic growth fell in April after six months of increases. The drop came from fewer requests for building permits and a spike in applications for unemployment benefits.
Oil prices continued to trade lower, falling below $93 a barrel and extending a two-week sell-off, as traders worried about the potential impact on global growth from the European crisis. Crude oil has plummeted about 12 percent from $106 two weeks ago.
Energy companies fell. Chesapeake Energy declined over 3 percent, while WPX Energy fell over 4 percent.
— Media General soared 33 percent after billionaire Warren Buffett's company Berkshire Hathaway agreed to buy 63 newspapers from the company for $142 million.
— GameStop fell 11 percent after the world's largest video game retailer reported its first-quarter profit fell 9.8 percent, as fewer customers visited its stores and bought new games and systems.
— Sears Holdings rose 3 percent after the beleaguered retailer turned a profit in the first quarter, benefiting from a gain on the sale of some stores.
___
AP Business Writer Matthew Craft in New York contributed to this report.
Tax money pays for steaks - Dayton Daily News
Staff Writers Updated 10:17 PM Saturday, June 2, 2012
Funds that give Ohio county sheriffs and prosecutors the freedom to quickly and easily spend money to pursue and prosecute criminals have become a go-to source to pay for office parties, $40 entrees, employee gift cards and gas for one official’s daily commute.
And because of how the Furtherance of Justice funds are designed, sheriffs and prosecutors are encouraged to “use it or lose it,” meaning they must return all unspent money to county general operating funds at the end of each year. This means officials in some counties embark on spending sprees in December, buying tens of thousands of dollars in items such as office furniture, employee meals, computers and car wash tokens.
These are the findings of a Dayton Daily News investigation, reviewing three years of expenditures from the Furtherance of Justice funds in a seven-county area. Reporters also interviewed sheriffs, prosecutors and representatives of their statewide professional associations.
Guidelines for how sheriffs and prosecutors spend the money are intentionally vague.
Over the years, state officials have issued a patchwork of legal opinions as guidance. Now, the state auditor’s office is looking at peeling back some of the loose spending practices.
“There are instances where the expenditures appear to be outside the lines of the original intent of the statute, which is to identify, investigate and prosecute criminals,” said Bill Owen, the Ohio Auditor’s Office’s chief legal counsel, of expenditures auditors have found out in the field.
The FOJ funds are distributed annually from each county’s general fund, equal to one half of each sheriff’s or prosecutor’s salary. It is spent without the approval from commissioners and auditors required of other funds. This has made it a honey trap for some officials.
In the past year, two Ohio sheriffs have stepped down amid allegations they misspent FOJ funds. In March, state auditors ordered former Ottawa County Sheriff Robert Bratton to repay about $7,200 to the county after he used FOJ money to buy things like Cedar Point passes, belt buckles and cigars. In April, Delaware County Sheriff Walter Davis resigned from office amid allegations that he used FOJ money to pay for a hotel breakfast buffet with a female subordinate while at an out-of-state training event. In exchange for Davis’ resignation, a special prosecutor agreed to end a criminal investigation into the spending.
“Normally to spend any money, I have to go through the commissioners and auditor’s office,” said Greene County Prosecutor Stephen Haller. “But with the FOJ, I just write a check, like you would with your personal checkbook. I could see it could be tempting to someone who could want to misappropriate funds. It’s really not that difficult to do.”
“There’s multiple and good reasons to have this,” said Ohio Auditor Dave Yost. “But like any time you build flexibility into the system, there’s potential for abuse.”
The gas pump
When asked why the funds are needed, local sheriffs and prosecutors cite examples of imminent need in the midst of important cases: Detectives working late into the night need a bite to eat; investigators need money for an undercover drug buy; or a suspect or witness needs to be quickly transported from another state.
But the way the accounts are used is often different, the Daily News found.
Montgomery County Prosecutor Mat Heck between 2009 and 2011 billed taxpayers for about $4,000 in gas via FOJ to fill up his take-home, county-owned 2005 Dodge Durango. Receipts submitted to the county show Heck bought gas at filling stations near his Clayton home about two to three times a month.
Heck said in addition to driving to and from his home, he drives the SUV to meetings and crime scenes. Other staff members have access to it, too, he said. He said buying gas is cheaper than driving his personal car because of his office’s policy of reimbursing staff for 55 cents a mile.
“The most practical way to pay for it is out of the FOJ, and it’s also a legally appropriate way to do it,” Heck said.
Gift cards
Several counties use the fund to hand out employee perks, such as gifts or meals.
Butler County Prosecutor Michael Gmoser in December handed out $12,663 in Bridgewater Falls gift cards to his employees and two $100 performance bonuses to interns. Former Warren County Prosecutor Rachel Hutzel frequently dipped into the account for $25 gift cards to Target or restaurants such as Olive Garden or O’Charleys.
Gift cards can catch the attention of state auditors because there’s no way to track what they’re being spent on. It’s also illegal to spend public money on alcohol.
Gmoser defended the purchase: “Because of budget constraints we do not have the ability to give salary increases to my staff, but there are other mechanisms by which I can award their service, and that is what I did.”
The Warren County Prosecutor’s Office gave out $550 in $25 gift cards to employees over three years.
Prosecutor David Fornshell cut back on the practice substantially when he took office, but saw nothing wrong with it.
“Anytime that you recognize employees who work for a prosecutor for going above and beyond in a particular case, that increases the morale of an office,” he said.
Money and passports: Is George Zimmerman's plight racial? - HULIQ.com
Shouts of injustice may calm some down now that Travyon Martin’s shooter George Zimmerman has to report to jail in the next two days.
A judge has given Zimmerman 48 hours to surrender. The judge also revoked Zimmerman's $150,000 bond.
Zimmerman failed to report $200,000 raised and stored inside his PayPal account. He and his wife discussed the evasion during jail phone calls. The two used a special code to deceive listeners and discuss the funds.
A Florida judge ruled that Zimmerman’s deceit merits revocation of his bond. Furthermore, Zimmerman’s second passport was discovered.
Some argue that his $200,000 should not be included as personal finances because that money goes to his attorneys. Others say that Zimmerman’s lie, or attempted cover-up, really harms Zimmerman’s chances at trial. They asked how can a jury believe a man who hasn’t been honest with the courts?
Others have defended Zimmerman’s two passports, explaining that he likely lost the first and ordered a second. Still, wisdom, based in logic and the law not race, dictates that if Zimmerman’s second passport was needed because he lost the first, then an honest man would have reported recovering the first lost passport.
Zimmerman’s last name, particularly European, and Trayvon’s first name, particularly African American, have set off a string of events that have pit race and parties against each other.
Many older members of the African American community believe George Zimmerman wasn’t charged with murder immediately because his victim was black. A number of African Americans and lawyers for Trayvon Martin have stated over and over that had Martin been the shooter, Martin would be in jail.
Those on the opposite end of the race spectrum, those who believe Zimmerman is a white victim, are also prominent debaters in the Trayvon Martin shooting. Many argue that Zimmerman’s hope rests with Republicans and gun lobbyists who believe in Stand Your Ground and the right to bear arms in this country as long as the owner has a legal right (permit) to carry the weapon.
Others point to an African American President who has made only one comment on the Trayvon Martin shooting. Weeks after the murder and about a week after Trayvon Martin’s death saturated cable news, President Obama told the world that if he had a son, his son would look like Trayvon. These “others’ argue that Zimmerman’s become part of a federal “witch hunt”--a sly reference to Department of Justice Deputy Eric Holder, also African American.
Communities, black, white and other, have all cried “Justice for Trayvon” thus shunning any and all notions that they’ve gathered in Trayvon’s Martin name to race bait. For many, Zimmerman’s trial is about justice, not race.
Zimmerman shot an unarmed African American 17-year-old. His lawyers will argue self-defense. The 17-year-old had THC in his system. Zimmerman had been on a prescription drug that warns of upset to the psyche, particularly with moods that cater anxiety and aggression.
What his trial and the what the law mean to George Zimmerman isn’t clear. Past behaviors, inc luding a scuffle with police that merited a mug shot and criminal record suggest that Zimmerman has had problems with authority in his past. Lying about his finances has cast an old light on Zimmerman. A light that suggests Zimmerman owns a certain disrespect and casual disregard for the American Justice System
passport cover photo credit: Wikipedia
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