ProPublica

by Margaret Coker, The Current, and Joel Jacobs and Mollie Simon, ProPublica, illustrations by Laila Milevski, special to ProPublica

This article was produced for ProPublica’s Local Reporting Network in partnership with The Current. Sign up for Dispatches to get stories like this one as soon as they are published.

Christina Cooper remembers it was a muggy summer night when she came to terms with a painful reality.

Bill collectors were after her for medical bills, and she owed several thousand dollars on her furniture. Weighing most heavily, though, was the $2,700 debt to Savannah, Georgia-based TitleMax, the nation’s largest title lender, which lends money at triple-digit annual interest rates in exchange for a customer’s car title. In Georgia, these “title pawns,” as they are known, are allowed to carry much higher interest rates than traditional loans, and defaulting on them means the company can repossess the car, a vital lifeline for rural families like Cooper’s.

The working mother of three didn’t know how to make the math work to pay what she owed. She couldn’t earn any more each month, and she was already relying on food stamps. Last July, she swallowed her pride and filed for Chapter 13 bankruptcy, a legal process that enables debtors to keep their assets while they work on regaining their financial footing. Normally, Chapter 13 bankruptcy clears some debts and reduces payments on others through a court-approved repayment plan that the debtor can afford.

But Cooper’s lawyer advised her to not include TitleMax, one of her largest creditors, as part of that repayment plan, which has her paying other creditors at an annual interest rate of about 5%. Instead, she would keep paying TitleMax directly at the original terms of the pawn — around 119% per year.

That’s because, in 2017, TitleMax won a key legal battle: A federal appeals court ruled that because the title lending industry in Georgia operates under state pawn shop statutes, companies could sidestep the protections available to debtors in a Chapter 13 bankruptcy.

Before filing for bankruptcy, “it was really hard to get by and feed my kids,” said Cooper, who earns about $2,000 a month working in sales for a regional furniture company based in Blackshear, Georgia. “Now, it’s still really hard.”

Every year, hundreds of Georgians file bankruptcy while owing money to title lenders. An investigation by The Current and ProPublica found that even though the pawn shop loophole applies to all title lenders in Georgia, TitleMax’s customers feel its impact the most.

To get a window into this issue, The Current and ProPublica obtained data on cases involving title lenders that were filed in 14 southern Georgia counties. We identified 142 title pawn cases filed from 2020 to 2022 that had court-approved repayment plans.

Bankruptcy Filers Rarely Get Relief From TitleMax

Title lenders in Georgia can sidestep Chapter 13 repayment plans and instead demand repayment at the high interest rate of the original title pawn contract. Here’s how often people who filed for bankruptcy were able to get relief from their title pawn debt.

Note: Percentages based on 142 cases filed from 2020 to 2022 across 14 counties in southern Georgia. Of those, 81 cases involved debts to TitleMax, and 63 involved debts to other title lenders. (Two cases involved debts to both TitleMax and another lender, and those two are counted in both groups.) Numbers for TitleMax don’t add up to 100% due to rounding.

An analysis of these cases shows that in more than 70% of bankruptcies filed by its customers, TitleMax had its debt excluded from their repayment plans, allowing the company to seize the car that served as collateral or recoup the full amount owed.

By contrast, debts owed to TitleMax’s competitors in Georgia were excluded from about 30% of their customers’ repayment plans, the analysis shows. (The news organizations sought bankruptcy case data from all eight of Georgia’s Chapter 13 bankruptcy trustees, but only one of them provided the data. For more, see our methodology.)

This difference reflects how proactive TitleMax is in going to court or invoking the legal loophole when the company is included in repayment plans, according to the analysis, as well as interviews with bankruptcy filers, attorneys and trustees.

The company’s aggressive legal stance has also led some Georgia bankruptcy attorneys, like Cooper’s, to preemptively exclude the company’s debt from their clients’ repayment plans to avoid fighting what they see as a losing battle.

“You hate to see it happen. If you have a TitleMax title loan, you are screwed,” said Elaina Massey, who oversaw the cases analyzed by The Current and ProPublica. As a bankruptcy trustee, she works with bankruptcy filers, verifies financial information and oversees repayments to creditors.

TMX Finance, the parent company of TitleMax, did not respond to requests for comment.

Bankruptcy experts say the legal loophole wouldn’t exist if it weren’t for a Georgia law that regulates title lenders as pawn shops — particularly a clause stipulating that the pawned property is “automatically” forfeited once the customer defaults.

Elaina Massey, one of Georgia’s eight Chapter 13 bankruptcy trustees. (Nicole Craine for ProPublica)

Georgia and Alabama are the only states that regulate title lenders this way, making them the only places where the appeals court’s ruling is applicable.

Liz Coyle, the executive director of Georgia Watch, the state’s leading consumer advocacy group, said she hadn’t known about the legal loophole and its impact on debtors until The Current and ProPublica contacted her about it.

“You’re joking. TitleMax can do that?” said Coyle, referring to the company’s ability to sidestep Chapter 13 protections. “We already knew how abusive these title lenders are, but this takes it to a whole new level.”

Coyle said the legal loophole is yet another reason to pass regulatory reforms for title lenders. Some Georgia lawmakers have been trying and failing for more than two decades to put title lenders under state banking regulation and usury laws.

In their push for reform, lawmakers’ primary goal has been to reduce sky-high interest rates that no other financial institution is allowed to charge. But the fact that reform could also have a positive effect for Georgians filing for bankruptcy could help rally more legislators to this cause, said state Rep. Josh Bonner, a Republican from Fayetteville who sponsored the most recent reform bill in March.

“Many of us want to help hardworking Georgians, and this law, as it stands, does not do that,” Bonner said of the state’s current title lending regulation.

Chapter 13 is particularly prevalent in Georgia, according to federal court data. For the past decade, Georgia has had the most Chapter 13 cases — an average of 23,000 per year — in the nation, despite having a fraction of the population of states like California or Texas. Per capita, Georgia’s rate of Chapter 13 filings is nearly triple that of the country as a whole.

Part of Chapter 13’s appeal to consumers is that some attorneys will file a Chapter 13 case for little or no money up front, a practice that is particularly common in Southern states like Georgia. Instead, attorneys, like creditors, get paid over the course of a court-approved repayment plan. By contrast, in Chapter 7 bankruptcy — the more common form of bankruptcy in most other states — the attorney fees are typically due before filing.

People who file Chapter 13 cases in Georgia are generally in the same demographic groups that title lenders target for their high-cost, short-term financial product, according to Coyle of Georgia Watch.

As The Current and ProPublica have reported, the nearly 500 title pawn storefronts in Georgia are disproportionately located in low-income areas and communities of color. Those same areas are home to a disproportionate share of Chapter 13 filers, ProPublica has reported.

Bankruptcy attorneys say that while title pawns may not be the only cause of their clients’ bankruptcy, that debt is often a precipitating factor. Clients “are struggling — and they are often struggling due to title loans,” said Lorena Saedi, a bankruptcy attorney who runs her own firm in Atlanta. The industry, she said, preys on them, and “by the time I meet them, they have little to no protection.”

Title lenders advertise their products as a quick way for people with bad credit to get desperately needed cash. But confusing sales practices and the high interest rates allowed by Georgia law can trap customers in a cycle of debt. Title pawns have a 30-day term, but they can be renewed indefinitely as long as borrowers make the monthly interest payment.

Most title pawns in Georgia take far longer than a month to pay off, including those issued by TitleMax and TMX Finance’s other brand, TitleBucks. Our analysis of vehicle liens placed by the two brands from July 2019 through the end of 2021 shows that at least 60% of their title pawns lasted six months or more.

If these recurring payments lead debtors to default, their vehicles could be repossessed, a particularly damaging outcome for the many Georgians who need their car to get to work.

To try to avoid repossession, some debtors turn to Chapter 13 bankruptcy. But that avenue of relief has been severely constrained since TitleMax won its 2017 appeals court case.

Think You Can Get Title Pawn Relief With Chapter 13 Bankruptcy in Georgia? Think Again. Every year, tens of thousands of Georgia residents who find themselves in financial need turn to title lenders for quick cash. Title lenders use the title to the borrower’s vehicle as collateral. In Georgia, unlike most states, these transactions are regulated under pawn shop statutes. These title pawns can carry much higher interest rates than traditional loans — up to 187% annually. Those high payments, coupled with other debts, have forced many Georgians to file for Chapter 13 bankruptcy. Chapter 13 keeps a filer’s assets from being repossessed and offers a repayment plan, usually with an interest rate of around 5%. But those protections weakened in 2017 when TitleMax won a legal battle to change how title pawns are treated in standard Chapter 13 proceedings in Georgia. Now even when a borrower has filed for bankruptcy, title lenders can repossess the car or insist on full repayment of the debt, unlike many other creditors.

The company launched its legal case in response to the financial difficulties of a customer in Columbus, Georgia, who had fallen behind on his title pawn and filed for bankruptcy. As was typical in Chapter 13, while the case proceeded, an automatic stay went into effect that prevented creditors like TitleMax from repossessing the debtor’s property. The proposed repayment plan had TitleMax being paid back at a 5% annual interest rate.

TitleMax went to court, arguing that when the debtor defaulted, state pawn shop statutes automatically transferred ownership of the car to the company. The bankruptcy judge initially denied TitleMax’s motion, ruling that a title pawn was like any other debt that was secured by property, and a federal district court judge affirmed that ruling.

TitleMax appealed to the 11th U.S. Circuit Court of Appeals, which ruled in the company’s favor in December 2017. Two of the three judges on the panel agreed with TitleMax’s rationale that Georgia law exempted the car from bankruptcy proceedings and made it TitleMax property: “The pawnbroker didn’t have a mere ‘claim’ on the debtor’s car — it had the car itself,” they wrote.

The third judge dissented, writing that the ruling enabled “Georgia title pawn lenders to invent loopholes in order to evade the jurisdiction of the bankruptcy courts.”

Bankruptcy attorneys in the state were taken aback by the ruling, which gave title pawns a unique status. “You know that saying? ‘If it looks like a duck and quacks like a duck and walks like a duck, it’s a duck.’ The 11th Circuit says, ‘It looks like a loan, it acts like a loan, but it’s not a loan,’” said R. Flay Cabiness, a bankruptcy attorney based in Brunswick, in southern Georgia.

The decision may have ramifications for hundreds of debtors in Georgia each year. By analyzing a random sample of Chapter 13 cases across the state, The Current and ProPublica estimated that about 2,500 people with title pawn debt filed for bankruptcy between 2020 and 2022. (This covers data for the state, not just Massey’s jurisdiction.)

Bankruptcy attorneys across Georgia have various strategies to help their clients discharge title pawn debt.

Smaller title lenders, which make up more than a half of the nearly 500 title pawn stores in the state, generally agree to be included in the court-approved repayment plan, as they don’t have the resources to wage protracted legal battles with their customers, said Marc Metts, a Douglas-based attorney who represents debtors in southern Georgia. “Those lenders are local, and these customers are local,” he said. “Generally, we can find a way to work together.”

TitleMax, however, has a more maximalist standard of operation, bankruptcy attorneys around the state said.

Brandon Honsalek, who practices in the greater Atlanta area, said he puts title pawn debt into repayment plans and then holds his breath waiting to see if TitleMax objects. Recouping every dollar is “a key part of their business strategy” even if it costs them billable hours to do it, he said. “They are the 800-pound gorilla.”

TMX Finance is by far the largest title lender in the state, with more than 200 store locations between TitleMax and TitleBucks. Its brands issue new title pawns for about 47,000 vehicles per year, more than half of all such new pawns issued in the state.

Cabiness, the lawyer in Brunswick, said that in his experience, TitleMax will intervene proactively to protect its rights. He counsels his clients with TitleMax debts to keep paying the company directly throughout their bankruptcy case.

That’s the same advice that Jamal McRae got from his attorney when he filed for bankruptcy last year.

Jamal McRae and his wife, Shaketha, describe themselves as hardworking Georgians, proud landowners in Coffee County, in an area about 130 miles southwest of Savannah near the state’s vibrant Black Belt.

Jamal McRae works for a transportation company that chauffeurs Medicaid patients for doctors’ appointments in larger Valdosta or Savannah. Shaketha McRae works as a tax preparation specialist. But the COVID-19 pandemic was tough on them, as it was on many rural Georgians. They worked fewer hours than they used to, as they had to help care for extended family members in two counties. “We couldn’t keep our heads above water, no matter how hard we worked,” Shaketha McRae said.

In the fall of 2021, expenses started to overwhelm them. Jamal McRae, because of his checkered financial past — he had filed for bankruptcy before — had few options for getting a loan. In November, he went to the TitleMax store in Douglas without telling his wife, whose strong views against the company were well known to him, thanks to her own past experience with it.

A TitleMax store in Douglas, Georgia. (Nicole Craine for ProPublica)

McRae took out two title pawn contracts, one for a GMC Yukon, which he used for work, and the other for a motorcycle, which their teenagers rode. The total amount of the title pawns — $8,100 — was more than twice his monthly income. The monthly interest payments alone totaled about $1,100, or nearly a third of his income.

In January 2022, McRae said, the bills — living expenses plus payments for a third family vehicle, on top of the TitleMax debt — became too much. He filed for bankruptcy, hoping to keep his vehicles from being repossessed, a strategy that had worked in his previous bankruptcy.

But McRae’s bankruptcy attorney told him that might not be possible. A court-approved repayment plan was created for McRae, but the TitleMax debt wasn’t part of it. McRae’s attorney told him to keep up with the payments under the original terms — or he would lose the two vehicles to TitleMax, despite the bankruptcy proceedings.

By contrast, McRae got relief on payments for the family’s third vehicle, a Toyota sedan, which was financed through a local car dealer. Under the bankruptcy plan, he is now making payments to the dealer at a 5% annual interest rate.

Jamal McRae didn’t pay TitleMax for four months while the bankruptcy case was being processed. That prompted the company to file for a motion in May to repossess the two pawned vehicles.

The following month, tragedy rocked the McRae family. Their 19-year-old son, Savion, was shot and killed. Their grief blurred out everything else — including their money problems. In close-knit Douglas, most people knew of their son’s death. TitleMax’s local store manager offered condolences but not any debt relief, Shaketha McRae said.

The parties struck a deal in August that compelled Jamal McRae to discharge his debt to TitleMax via six monthly payments of $1,677 — far larger payments than creditors in the repayment plan were receiving. But roiling with grief and barely able to get through daily routines, McRae did not make the payments. Later that fall, he told TitleMax’s store manager to go ahead and repossess the two vehicles because he didn’t have the cash to pay the company.

“It’s a horrible feeling. Here we are, still grieving our loss, and all this company cares for is its money,” Shaketha McRae said. “I don’t know how anyone is supposed to deal with all these pressures.”

TitleMax did not respond to requests for comment.

Down the road in Alma, Cooper was facing her own struggles.

Cooper had been taught, both by her parents and at church, that God helps those who help themselves. So she felt ashamed that she had fallen so far into debt, despite living frugally. “I was never someone who prayed for wealth,” Cooper said. Last summer, as bill collectors kept calling, “I was just praying for strength, so I wouldn’t get sick and miss a paycheck,” she said.

Cooper’s family helped her find a bankruptcy attorney. He didn’t try to put her title pawn debt into her repayment plan. He advised her that if she wanted to keep the family’s only car, she should pay off TitleMax at the terms the company demanded. “He said it takes a real wheeler-dealer to win against TitleMax,” she recalled.

Cooper’s court-approved repayment plan will last for three to five years. During that time, she will pay off her other creditors at either a 5% or 4% annual interest rate. Her bankruptcy plan set out $150 monthly payments for those debts and her attorney fees, compared to $337 per month to TitleMax, even though the title pawn debt was less than what she initially owed to the other creditors.

Cooper’s current employer is one of her creditors. She picks up as many shifts as she can to pay for gas and her children’s clothes and school supplies, after deductions made to satisfy her Chapter 13 obligations. Food stamps help offset rising costs and give her hope that she can get rid of the title pawn debt by the end of the year. Her biggest worry is that her aging Ford Escape will break down, leaving her without a way to drive to work.

“We live out in the country. It’s quiet and peaceful. But if my car stops working, then I stop working. I don’t know what would happen to us next if that happened,” Cooper said.

Cooper wants to stay in Alma, a town of about 3,000 that is known as the blueberry capital of Georgia. The quiet, the safety and the sense of community she has in her hometown makes her want to raise her kids there.

Staying in the country, though, comes with limitations, Cooper says. There are few high-paying jobs for people with young families like hers, and few opportunities for economic mobility. For now, her planning remains focused on the short term: working through her debt and managing the uncertainties of raising her rambunctious kids.

“I was scared when I filed for bankruptcy. But I knew that if I was going to make it in this world, it was my only option,” Cooper said. “One thing is for sure, for people like us, we have a lot of chips stacked against us.”

by Joel Jacobs, ProPublica, and Margaret Coker, The Current

This article was produced for ProPublica’s Local Reporting Network in partnership with The Current. Sign up for Dispatches to get stories like this one as soon as they are published.

When The Current and ProPublica began investigating the title lending industry in Georgia, we faced a daunting question: How do we measure an industry that nobody is tracking?

Title lenders provide quick cash in exchange for a car title as collateral. Many consumer advocates see the practice as predatory — title pawns, as they are known in Georgia, typically carry high interest rates, and borrowers can lose their car if they default. More than 30 states ban high-interest title lending entirely, but the industry is widespread in Georgia.

Title lenders in Georgia are considered pawn shops, a classification that exempts them from most state oversight and allows them to circumvent the state’s usury laws and charge up to 187.5% annual interest. While most financial institutions are regulated by the state’s Department of Banking and Finance, pawn shops are licensed by local governments, which have limited resources to monitor them.

State lawmakers on both sides of the aisle have tried for years to rein in title lending. But they have been stymied by the industry’s powerful lobbying efforts and by a lack of information.

Measuring the Scope of the Industry

To fill in the gaps, The Current and ProPublica started with a simple, but essential, task: counting the number of title lenders in the state.

Because there is no official statewide list of stores that offer “title pawns,” we turned to Google Maps and corporate websites. Ultimately, we found nearly 500 title pawn store locations, which span the majority of Georgia’s 159 counties.

We also found that these stores are disproportionately located in lower-income ZIP codes and those with higher proportions of people of color. These groups — who are more likely to lack access to other forms of credit — are the target customers for the title lending industry. Title lenders argue that they provide an essential service for communities that are underserved by other lenders, while critics say they ensnare these vulnerable borrowers in high-interest debt traps.

Title Lenders Cluster in Disadvantaged Communities

Title lenders are less common in ZIP codes with more white residents or more high-income residents.

Source: Georgia Department of Revenue; Google Maps; company websites; 2020 5-year American Community Survey

The Current and ProPublica also set out to measure the volume of title pawns in the state. While some states require title lenders to report how many loans they make, Georgia’s pawn shop statutes include no such mandate for statewide reporting.

But we identified an indirect way of tracking title pawns issued in the state: When customers take out title pawns, a lien is placed on their vehicle title, which gives the title lender an ownership interest that they can use to repossess the vehicle if customers default. This lien is registered with the Georgia Department of Revenue’s motor vehicle division.

After a series of discussions with the agency’s staff and filing multiple public records requests, we acquired a list of all electronic liens issued in the state from July 2019 through June 2022. Electronic liens accounted for around 95% of all liens issued in Georgia during this period. (The remaining 5% were handled with physical paperwork and tracked differently than the electronic liens.)

We cross-referenced the lienholders’ names and addresses in the data with our list of title lending store locations. During the three-year period, we found that Georgia title lenders placed liens on an average of more than 75,000 vehicles annually, and more than 60% of that volume came from TitleMax and TitleBucks, both operated by the Savannah-based TMX Finance, the largest title lender in the nation. These tallies likely underestimate how many title pawns are made, since the data we received only indicates the first electronic lien on a car from a specific lender and excludes cases where return customers received subsequent title pawns on the same vehicle from the same store.

The longer title pawns last, the higher the cost of borrowing: Even though title pawns have a 30-day term under state law, they can be renewed indefinitely as long as borrowers make the monthly interest payment. Unlike some other states that allow title lending, Georgia has no requirement that contracts can only be extended after portions of the principal balance are paid down.

After borrowers pay off title pawn debt or title lenders repossess the vehicle, the lien is removed from the title. By measuring the time from when the lien was issued to when it was removed, we could see about how long the borrowers were in debt. (It may take several days for the lien to be put in place after title pawn is issued and may similarly take some time for the lien to be removed after it is paid off.)

We found that at least 60% of the liens issued by TitleMax and TitleBucks from July 2019 through the end of 2021 were in place for six months or longer.

Our analysis may underestimate how long some customers were in debt because in certain circumstances electronic liens may be converted into paper liens, and the data we received only included the dates the liens were removed from the electronic system. It’s possible that in some cases a paper lien remained on the title after it was removed from the electronic system.

TMX Finance, the parent company of TitleMax, did not respond to requests for comment.

The Impact of a Legal Loophole

Faced with title pawn payments and other debts, some customers turn to bankruptcy as a last resort. Yet even in bankruptcy court, title lenders in Georgia have the upper hand.

In 2017, a federal appeals court ruling gave title lenders in the state a powerful legal loophole that allows them to demand that title pawns be repaid at their original high interest rates, instead of being subject to the lower-interest-rate repayment plans created in Chapter 13 bankruptcy proceedings. The ruling was based on the same state pawn shop laws that have enabled the industry to operate with little oversight.

Even though the loophole applies to all title lenders in the state, bankruptcy lawyers across Georgia told us that TitleMax customers feel its impact the most.

We wanted to get a broader picture of how this issue was affecting Georgians, but little information was publicly available about bankruptcies involving title lenders, so our first step was to identify which bankruptcy cases they’re involved in.

The federal electronic court record system, known as PACER, has information on which creditors are involved in a given bankruptcy case. But PACER charges a fee for every document viewed and cannot be comprehensively searched by creditor list, making it impractical for identifying every bankruptcy case with a title lender.

So The Current and ProPublica reached out to Georgia’s eight Chapter 13 bankruptcy trustees, who help facilitate bankruptcy cases and maintain data on cases within their jurisdiction. We received data from one bankruptcy trustee, Elaina Massey, whose jurisdiction covers 14 counties in southern Georgia: Appling, Atkinson, Bacon, Brantley, Camden, Charlton, Coffee, Glynn, Jeff Davis, Long, McIntosh, Pierce, Ware and Wayne. The data she sent us included Chapter 13 cases — a type of bankruptcy that puts the debtor on a repayment plan — where a title lender appeared as a creditor. These cases were identified by using searches for keywords including “title pawn” and the names of title lending companies.

We manually reviewed each case filed from 2020 to 2022 to determine whether title pawn debt was assigned to be paid through the repayment plan.

When title pawn debt is included in a bankruptcy plan, it can reduce the debtor’s burden significantly — debt paid through the plan during this period often had an annual interest rate of around 5%, while a title pawn paid outside the plan is likely subject to the initial contract terms, which can have an interest rate as high as 187.5% annually.

It can take several months for a repayment plan to be confirmed by a judge after the case is initially filed, and some cases are dismissed before the repayment plan is confirmed. Cases where the repayment plan was not confirmed by a judge as of April 2023 were excluded from the analysis.

Occasionally, a bankruptcy case listed a title lender as a creditor even though there wasn’t an active title pawn at the time of filing. These cases were excluded as well.

We grouped each case into one of three categories: ones where title pawn debts were included in the repayment plan, where title pawn debts were excluded from the repayment plan, or where the debtor gave up the vehicle. For the third category, it is generally unclear whether the debtor would have paid the title pawn through or outside the repayment plan.

The analysis included 142 cases total, two of which involved debt from TitleMax or TitleBucks along with debt from another title lender. In 58 of the 81 cases with debts from TitleMax, the debt was excluded from the repayment plan, meaning that the debtor was subject to the terms of the original title pawn contract. By contrast, title pawn debt was excluded from the plan in only 19 of the 63 cases involving other lenders.

Bankruptcy Filers Rarely Get Relief From TitleMax

Title lenders in Georgia can sidestep Chapter 13 repayment plans and instead demand repayment at the high interest rate of the original title pawn contract. Here’s how often people who filed for bankruptcy were able to get relief from their title pawn debt.

Note: Percentages based on 142 cases filed from 2020 to 2022 across 14 counties in southern Georgia. Of those, 81 cases involved debts to TitleMax, and 63 involved debts to other title lenders. (Two cases involved debts to both TitleMax and another lender, and those two are counted in both groups.) Numbers for TitleMax don’t add up to 100% due to rounding.

In cases where the debt was excluded from the bankruptcy plan, court documents do not show whether the title lender negotiated a lower interest rate or other changes to the repayment terms outside of court. It also may not be clear from the court documents whether the debtor ultimately paid off the title pawn through direct payments or had their car repossessed.

We were also curious how many Georgians filing for bankruptcy were burdened by title pawn debt, and therefore how many people might be impacted by this loophole statewide.

To estimate this, we conducted a random sample of 1,000 Chapter 13 cases filed in Georgia from 2020 to 2022. Case numbers were sampled from the Federal Judicial Center’s bankruptcy database, which lists every bankruptcy case filed nationwide (but does not include creditor information). Then, we programmatically compiled creditor lists from the corresponding cases in PACER.

Of the 1,000 cases sampled, The Current and ProPublica found 64 cases where title lenders were listed as creditors, or 6.4%. We counted all cases that included title lenders as creditors, regardless of how the debt was treated in the plan.

Extrapolating across the roughly 39,000 cases filed during this period in Georgia, we estimated that roughly 2,500 bankruptcy cases involved title lenders from 2020 to 2022, with a margin of error of 600 cases, based on a 95% confidence interval. This time period coincided with a significant nationwide decline in bankruptcy filings during the pandemic, and therefore this estimate may be an undercount if the volume of bankruptcies return to their pre-pandemic levels in the future.

Mollie Simon contributed research.

by Robin Urevich, Capital & Main, and Gabriel Sandoval, ProPublica

This article was produced for ProPublica’s Local Reporting Network in partnership with Capital & Main. Sign up for Dispatches to get stories like this one as soon as they are published.

The Los Angeles Housing Department said Tuesday that it will “immediately” investigate whether some residential hotels, which are required by city law to be reserved for low-cost housing, are instead renting rooms to tourists.

The city’s action came just one day after Capital & Main and ProPublica revealed that 21 residential hotels were advertising on travel websites and that the Housing Department had failed to stop their owners from turning housing units into hotel rooms.

Department spokesperson Sharon Sandow said in a statement that over the next six to seven weeks “the Housing Department will investigate all 21 of the hotels identified in the article and will, where warranted, issue citations and make appropriate referrals to the City Attorney's office.” The department will also review its enforcement efforts, she said.

The mayor’s office requested the Housing Department conduct the investigation, said Zach Seidl, a spokesperson for LA Mayor Karen Bass. “We are asking for a report back on all 21 properties in 45 days,” Seidl said. “In addition, we are asking for a report on how this happened and recommendations for ensuring this does not happen again.” The mayor’s office did not answer questions emailed to its staff ahead of the initial story.

In LA, residential hotels are supposed to provide housing of last resort for the city’s poorest people. The hotels consist of small basic rooms — some with shared bathrooms — and are sometimes the only housing that many elderly, disabled and low-income workers can afford.

Under a 2008 law, these hotels must remain residential, unless their owners either build replacements for the housing units they take off the market or pay into a city housing fund. The city has a list of about 300 residential hotels, defined as a building of six or more units that are the primary residences of their guests.

Capital & Main and ProPublica identified 21 residential hotels, with more than 800 dwelling units, that have marketed short-term rentals on their websites and on travel sites like Expedia and Booking.com. Because the city hasn’t tracked these conversions, the news organizations combed through the ads along with Housing Department inspection and enforcement records provided under public records requests.

It’s possible that other residential hotels might be offering nightly rentals as well. Seidl said the Housing Department’s report “will tell us how they are going to address all properties and next steps.”

“I think that is excellent news that the city will finally take seriously the place for residential hotel units within the whole ecosystem of permanent housing affordable to very low income tenants,” said Barbara Schultz, director of housing justice at the Legal Aid Foundation of Los Angeles.

Several of the hotels’ appeals to business and leisure travelers are hard to miss. The H Hotel in LA’s Koreatown welcomes guests with a grand piano in the lobby and offers champagne in its lounge. At the Arts District’s American Hotel — the former home of the legendary music venue Al’s Bar — guests can regularly be spotted rolling luggage to the front door. Hometel Suites’ website points to the hotel’s “luxury features and touches,” and a large banner on its facade bears the message “Book your stay today.” All three are designated as residential hotels, but none have been cited for violations of the law.

Asked about the city’s plan to investigate his hotel, Mark Verge, the owner of the American, said: “Whatever’s fair — I think that’s the key.” He noted that he’s been paying the city’s hotel tax for years and previously said he has openly advertised the American as a tourist hotel. If his hotel is found in violation following the city’s investigation, he said, “We’ll work it out.”

Hometel’s general manager Becky Hong said in an email, “We don’t have a plan to return for residential use.” The owner of the H didn’t respond to phone messages or emails requesting comment. The H’s operations manager said last month that he didn’t know if the hotel was violating the law but noted that the hotel’s management had asked the city to remove its residential designation.

City housing inspectors have cited only four of the 21 hotels under the 2008 law. Some hotels thwarted city enforcement by barring inspectors from entering their properties without administrative warrants, yet Housing Department records show inspectors didn’t obtain such warrants.

In interviews, LA housing officials had attributed the lack of enforcement in part to limited staffing. However, the Housing Department said that over the next four months it “will evaluate the resources needed to continue this important inspection and monitoring work, and will review its processes to determine where more capacity is needed to effectively enforce this ordinance.”

by Justin Elliott, Joshua Kaplan and Alex Mierjeski

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Senate Judiciary Committee Democrats have sent letters to two wealthy businessmen and a major political activist requesting more information about undisclosed gifts to Supreme Court justices.

The letters, sent Tuesday by Sen. Sheldon Whitehouse, D-R.I., and Sen. Dick Durbin, D-Ill., the committee chair, seek more details about an undisclosed 2008 luxury fishing vacation Justice Samuel Alito took that was reported last month by ProPublica. The letters went to three people: hedge fund billionaire Paul Singer; mortgage company owner Robin Arkley II; and Leonard Leo, a longtime leader at the Federalist Society, the powerful conservative legal group.

All three men played a role in paying for or organizing Alito’s 2008 vacation, but the letters go beyond that trip. The senators requested Leo and the businessmen provide a full accounting of all transportation, lodging and gifts worth more than $415 they’ve ever provided to any Supreme Court justice.

“To date, Chief Justice Roberts has barely acknowledged, much less investigated or sought to fix, the ethics crises swirling around our highest Court,” Durbin and Whitehouse said in a joint statement. “If the Court won’t investigate or act, Congress must.” The senators’ committee has announced it plans to vote on July 20 on a bill that would tighten Supreme Court ethics rules.

A spokesperson for Singer said he had received the letter and was in the process of reviewing it. Leo declined to comment but previously said that Alito could never be influenced by a free trip. Arkley and the Supreme Court press office did not immediately respond to requests for comment.

ProPublica reported last month that Singer flew Alito on a private jet to a luxury Alaska fishing vacation in July 2008. Alito did not pay for the trip, including his stay at the fishing lodge, which was owned by Arkley, a significant conservative political donor. Leo helped organize the trip and asked Singer if Alito could fly on the billionaire’s jet. The justice did not disclose the gift of the private jet trip in his annual financial disclosure, which ethics law experts said appeared to be a violation of federal ethics law.

In the years following the trip, Singer’s hedge fund had cases come before the court at least 10 times. Alito did not recuse himself. He ruled with the court’s majority in favor of Singer’s hedge fund in a 2014 case that pitted the fund against the nation of Argentina.

Alito wrote in a Wall Street Journal op-ed published before the ProPublica story that he had not known Singer was affiliated with the hedge fund, and he maintained that disclosure rules didn’t require him to report the private jet flight. A spokesperson for Singer said last month that the billionaire had “never discussed his business interests” with the justice and that Singer had not organized the trip.

The letters sent Tuesday represent a new phase in the Senate investigation of Supreme Court ethics.

This spring, ProPublica reported that Justice Clarence Thomas received decades of unreported gifts from Dallas real estate billionaire Harlan Crow. Crow took Thomas on private jet flights and yacht cruises around the world, paid private school tuition for the justice’s grandnephew and paid Thomas money in an undisclosed real estate deal. The Senate Judiciary Committee launched an investigation and wrote a series of letters to Crow, demanding a full accounting of his gifts to Thomas and any other justices over the years.

Thus far, Crow has resisted the senators’ probe. The billionaire’s lawyers have argued that Congress does not have the authority to investigate the gifts and that the inquiry violates the separation of powers. Thomas has defended himself by saying he took family trips with friends. Crow has said he never discussed pending legal matters with Thomas or sought to influence him.

Leo also joined Crow and Thomas during at least one undisclosed trip to the billionaire’s private resort in the Adirondacks. A painting Crow commissioned depicts Leo at the resort alongside the justice and the billionaire. In the new letter, the senators asked the longtime Federalist Society executive to provide details about any travel he’s ever taken with any Supreme Court justice.

The expanded investigation comes as the Senate Judiciary Committee prepares to vote on Supreme Court ethics reform. Following the Alito report, Durbin and Whitehouse announced that the panel would vote on a reform bill this month.

“To hold these nine Justices to the same standard as every other federal judge is not a radical or partisan notion,” Durbin and Whitehouse said in a joint statement, adding, “The belief that they should not be held accountable or even disclose lavish gifts from wealthy benefactors is an affront to the nation they were chosen to serve.”

The bill, titled the Supreme Court Ethics, Recusal, and Transparency Act, would significantly tighten ethics rules but in many cases leave the details up to the court itself.

The bill requires the court itself to create and publish a code of conduct within 180 days but doesn’t lay out in detail what rules it should contain. Lower court federal judges are already subject to a code of conduct, but it does not apply to the Supreme Court.

In other areas, the bill is more specific: It would tighten recusal rules, including in cases when justices accept gifts from litigants at the court or affiliates of litigants. If the proposed law had been in place when Alito sat on Singer’s case against Argentina, it appears it would have required the justice to recuse himself.

The bill would also require the court to create an ethics complaint process. Members of the public could submit complaints and investigations would be carried out by a randomly selected panel of five appellate judges. The panel could recommend that the Supreme Court take disciplinary action. It could also publish reports of its findings.

Under current law, justices are not required to — and rarely do — explain themselves when they do or don’t recuse themselves from a case. It’s a long-standing parlor game among Supreme Court watchers to guess what conflict or potential conflict led a justice to recuse himself or herself. The bill would end that. It would require published written explanations of recusal decisions.

The bill would also tighten some rules around the disclosure of gifts and of the funding behind friend-of-the-court briefs that are filed by outside groups in many high-profile cases.

The bill is already facing steep opposition, with influential Republicans in both the House and Senate coming out against legislative reforms. Minutes after Durbin announced the committee vote, the Twitter account for the Republicans on the House Judiciary Committee responded: “And that’s as far as it will go. God Bless Justice Alito!”

The response among Republican lawmakers has not been uniform, however. Sen. Lisa Murkowski, R-Alaska, introduced a bill this year that would require the court to adopt a code of conduct and create a process for investigating potential violations of it. Other Republican senators have encouraged Chief Justice John Roberts to take action to tighten the court’s ethical standards himself.

Sen. Cynthia Lummis, R-Wyo., told The Hill following the recent Alito revelations that she believes it’s in the Supreme Court’s “best interests to address this issue to the satisfaction of the public and use the standards that should apply to anyone in the executive or legislative branch with regard to ethics.”

by Jessica Lussenhop

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A U.S. Senate subcommittee on Tuesday heard warnings about alternative home financing deals that leave unwitting buyers financially devastated and unscrupulous sellers free to resell the properties.

“This gets to a point that I think all of you have made in one way or another, which is that these contracts are designed to fail, because that’s how the seller makes more money,” said U.S. Sen. Tina Smith, D-Minn., at a hearing of the Subcommittee on Housing, Transportation and Community Development, which she chairs. “The incentives are perverse.”

In an interview, Smith said an investigation by ProPublica and Sahan Journal about contract for deed practices in Minnesota prompted the hearing. The investigation examined the impact on Somali Muslim families in the Twin Cities area who said they signed deals they didn’t understand for homes with inflated prices and large down payments.

The subcommittee members discussed whether federal or state laws ought to apply to these deals and how consumers can be better protected.

“Are there appropriate protections states can make to make sure that the market works without a bunch of folks who should have a special place in hell?” asked Montana Sen. Jon Tester, a Democrat.

The hearing concerned several alternative home purchase methods, including contracts for deed, which are sometimes known as land contracts, as well as rent-to-own housing programs. Witnesses testified that low-income buyers, often people from communities of color who have been denied traditional mortgages or, because of their faith, choose not to use them, instead opt for these products.

Sarah Mancini, co-director of advocacy at the National Consumer Law Center, told senators these financial products are a “costly and harmful detour from homeownership.”

“NCLC estimates that the failure rate for these transactions is well above 50%,” Mancini said. “And this is a conservative estimate.”

The Sahan Journal-ProPublica investigation, published last year, discovered a rising market around the Twin Cities area for contracts for deed, which involve financing directly between a seller and buyer. Many members of the large East African Muslim community in Minnesota avoid paying or profiting from interest due to the principles of their faith, and investors have been offering them contracts for deed as a way to buy a house without paying traditional interest.

The investigation found that Somali Muslim buyers often did not understand that the contracts lack many of the consumer protections of a mortgage and contain large balloon payments. Until the final payment is made, which can be hundreds of thousands of dollars, the seller holds the ownership of the property, and a missed payment can result in an eviction in as few as 60 days.

Contract sellers say that they provide a needed alternate path to homeownership and that when used properly, they are a legitimate financial instrument. But Beth Goodell, supervising attorney at Mid-Minnesota Legal Aid, told senators that because state law offers so few protections, buyers are at risk of losing everything.

“My clients tend to have trusted the sellers,” Goodell said. “One of my clients said to me, ‘Why would this seller sell me a house that he knew I couldn’t afford?’ And the answer, ‘The seller would make a lot of money if you fail,’ was beyond her understanding.”

Mancini testified that she believes that contract for deed agreements fall under federal laws like the Truth in Lending Act, but that they are “being violated left and right, and no one is enforcing it.” She said that the Consumer Financial Protection Bureau and state attorneys general should be tasked with enforcement.

Last month, CFPB director Rohit Chopra testified in his semiannual report to Congress that he was also aware that contract sellers were “targeting certain immigrant groups” in Minnesota as well as elsewhere.

Smith said that she has spoken to the Minnesota attorney general’s office about possible enforcement actions and is interested in exploring changes in state law to better protect buyers.

“The Twin Cities has the worst racial homeownership gap between white families and Black families of any place in the country,” Smith said. “To see that legacy play out with these exploitative contracts that make it worse and not better is a terrible thing to see.”

by Sebastian Rotella

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PRATO, Italy — On a rainy June afternoon, six Chinese mobsters hurried across the plaza of a drab apartment complex near the medieval gates of this Tuscan textile capital.

Their targets, two gang rivals in their early 20s, were eating in a small Chinese diner. Drawing machetes, the attackers stormed in.

They hacked one man to death, splattering tables and walls with gore. The second victim fought his way out. Trailing blood in the rain, he staggered through the plaza pursued by his killers, who finished him off on the sidewalk around the corner.

The slaughter on Via Strozzi in 2010 was part of a startling escalation of mob violence in Prato, which has one of Europe’s biggest Chinese immigrant communities. The ensuing police investigation was long and difficult, leading as far as China. For the first time, Italian police mapped the rapid spread of the Chinese mafias that were terrorizing immigrant enclaves and leaving a trail of casualties across Europe.

As the investigation culminated in 2017, detectives made another ominous discovery: The kingpins in Italy had high-placed friends in Beijing. Telephone intercepts detected a meeting between an accused crime boss in Rome, Zhang Naizhong, and a member of a high-level Chinese government delegation on a diplomatic visit to Italy, senior Italian law enforcement officials say.

“A guy like Zhang does what the consulate doesn’t do, or does it better,” a senior Italian national security official said. “If you want in-depth street information, intelligence, you go to a guy like Zhang. He has a network, power, resources. He knows the diaspora. He is feared and respected.”

As the regime of President Xi Jinping expands its international power, it has intensified its alliance with Chinese organized crime overseas. The Italian investigation and other cases in Europe show the underworld’s front-line role in a campaign to infiltrate the West, amass wealth and influence, and control diaspora communities as if they were colonies of Beijing’s police state.

Around the world, China’s shadow war of espionage, long-distance repression, political interference and predatory capitalism is drawing attention and alarm. Governments and human rights groups have denounced in recent months a global network of covert Chinese police stations that spy on Chinese migrant communities and persecute dissidents — wherever they live. As ProPublica has reported, the Chinese state has sent illegal undercover teams to chase down fugitives in wealthy U.S. suburbs, surveilled and silenced Chinese students on foreign campuses, and allegedly supported the Chinese money laundering underworld that fortifies cartels inundating the Americas with deadly drugs.

But the rise of Chinese organized crime in Europe has caught authorities largely off-guard. An examination of it offers an unusually vivid look at a covert alliance in action. ProPublica has documented a pattern of cases, some of them unreported and others little-noticed internationally, in which suspected underworld figures in Europe have teamed up with Chinese security forces and other state entities.

The partnership appears to mix geopolitics and corruption for mutual benefit. Gangsters help monitor and intimidate immigrant communities for the regime in Beijing, sometimes as leaders of cultural associations that are key players in China’s political influence operations and long-distance repression, Western security officials say. ProPublica has learned that suspected underworld figures in Italy and Spain took part in launching several of the secret Chinese police stations that caused an uproar when their existence became public last year.

A Chinese police station in Prato was launched by leaders of the Fujianese community including Zheng Wenhua. He is one of the top defendants accused in the China Truck case, in which Italian anti-mafia authorities charged dozens of people in 2018. (Steve Bisgrove, special to ProPublica)

The Chinese Communist Party “takes the most powerful, richest, most successful figures overseas and recognizes them as the nobility of the diaspora,” said Emmanuel Jourda, a French scholar on Chinese organized crime. “And it doesn’t matter how they made their money. The deal, spoken or not, is: ‘You gather intelligence on the community, we let you do business. Whether legal or illegal.’”

In exchange for their services as overseas enforcers and agents of influence, the Chinese state protects the mobsters, Western national security officials say. Although supposedly wanted in China, a top figure in the Italian case traveled freely to his homeland and oversaw his European rackets from China without interference from authorities there, according to court documents and law enforcement officials. And in Europe — as in the United States — national security chiefs say the Chinese government refuses to cooperate with their investigations of Chinese organized crime.

Money is another driving force in the alliance. Diplomatically delicate prosecutions in Italy, Spain and France have resulted in convictions and fines against Chinese state banks that worked with Chinese criminals to launder the proceeds of widespread tax evasion, customs fraud and contraband. Chinese mafias have also become the preferred money launderers for the Continent’s drug traffickers, whose onslaught poses an unprecedented threat to several governments.

Stretching across Europe, the underground Chinese money networks pump billions of illicit dollars into China’s economy. During one recent year, police at Rome’s Fiumicino Airport arrested 16 couriers carrying a total of more than $41 million bound for China.

“It is hard to imagine that this activity is not welcomed by the Chinese authorities,” said the chief prosecutor in Prato, Giuseppe Nicolosi. “Large amounts of money are returning to China.”

The implications for the United States are urgent, authorities say, because the same tactics and networks plague Chinese American communities. U.S. law enforcement has tracked interactions between Chinese government operatives and Chinese American mobsters who harass dissidents, engage in political interference and move offshore funds for the Communist Party elite, U.S. national security officials say.

“Organized crime is doing services for the Chinese government” on both sides of the Atlantic, a veteran U.S. national security official said. “There are deals between organized crime and the Chinese government. The government tasks them to expand influence and become eyes and ears overseas. Once they get themselves established, there are locals they can corrupt. It’s a classic modus operandi.”

U.S. national security officials are also concerned because Europe is a vulnerable front in China’s offensive to divide and weaken the West. Until recently, Chinese malign activities were not a priority in Europe. Although U.S. intelligence agencies warned European counterparts about intensified contacts between the Chinese state and underworld, most security forces were busy with Islamist terrorists and Russian spies during the past decade, Western national security veterans said.

“When they started recognizing the threat, they didn’t have the resources,” said Frank Montoya, a former FBI counterintelligence chief.

Today, governments are scrambling to respond to what Europol, the agency that coordinates police cooperation on the Continent, has called “an increasing threat to Europe.” They have realized that the problem reverberates beyond Chinese immigrant neighborhoods and challenges national security and the rule of law.

“There was a lack of awareness of the danger,” said the chief anti-mafia prosecutor in Florence, Luca Tescaroli, whose jurisdiction includes Prato. He has created a unit to fight Chinese mafias. But, he said: “We cannot criminalize the Chinese community. We know they are also victims of intimidation, extortion and violence.”

The Chinese embassies in Italy, Spain and France did not respond to requests for comment from ProPublica. In the past, Chinese diplomats have denied involvement in transnational repression and other illegal activities abroad.

To assemble a picture of the intertwined agendas of the Chinese regime and its expatriate mafia groups, ProPublica interviewed more than two dozen current and former national security officials in Europe and the United States, as well as Chinese immigrants, human rights advocates and others. ProPublica granted anonymity to some sources because of safety concerns or because they were not authorized to speak publicly. In addition, ProPublica reviewed court documents, reports by governments and nongovernmental organizations, academic papers, press reports and social media posts.

The Boss From Beijing

Prato’s Chinatown starts just outside the stone ramparts, narrow lanes and Romanesque cathedral of the city’s historic center.

Its immigrant energy extends to the Macrolotto industrial park on the edge of town, where signs on warehouses and workshops mix Chinese words with names like Flora, Kitty and Style. More than 6,000 Chinese-owned businesses give Prato an outsized role in the diaspora.

Numbers like that tell the story of the second-biggest city in Tuscany.

Via Pistoiese in Prato’s Chinatown (Steve Bisgrove, special to ProPublica) Via Antonio Marini in Prato’s Chinatown (Steve Bisgrove, special to ProPublica)

In 1990, there were 520 residents of Chinese origin, according to an Italian government study. Today, officials say Prato has one of the largest Chinese communities in proportion to the city’s size in Europe: close to 40,000 out of a total population of about 200,000. That includes as many as 10,000 undocumented immigrants. Italy has Europe’s third-largest Chinese population after the United Kingdom and France.

The immigrants came initially to work in the mills and factories of this longtime hub of the textile and garment industries. Gradually, they became owners and employers. In 2019, voters elected two Chinese Italians to the City Council — a first.

Chinese employees at work in a textile company in the Macrolotto industrial park on the edge of Prato. The city has been a longtime hub of the textile and garment industries. (Marco Bulgarelli/Gamma-Rapho via Getty Images)

Still, life for many Chinese residents feels like a crossfire. Although the newcomers have invigorated the economy, some Italians accuse Chinese merchants of evading taxes, paying low wages and other shady practices. Non-Chinese robbers and thieves prey on them because of the belief that they carry large amounts of cash.

And Chinese immigrants, of course, were the prime victims of the rise of Chinese organized crime in the 2000s. As mobsters established themselves, unprecedented violence broke out among warring factions from Fujian, a coastal province known for smuggling and migration. Police in Prato started calling Fujian the Calabria of China, likening it to the mafia hotbed located in the toe of the Italian boot.

After the double murder on Via Strozzi in 2010, the half-dozen detectives of the local anti-mafia squad began an investigation christened China Truck. Despite the daunting language barrier and a lack of expertise on Asian mafias, it evolved into an all-out, eight-year effort to dismantle a criminal organization.

In 2011, witnesses told police about Lin Guochun, aka Laolin, the reputed boss of Prato, court documents say.

Lin had made his way from Fujian to Italy via Portugal and the Czech Republic, where he had allegedly ordered the murder of a rival smuggler of migrants, according to Italian court documents and Italian law enforcement officials. His empire encompassed extortion, gambling, contraband, prostitution and drugs. In Prato, he held court in his nightclub, a grim locale with dark glass walls that offered package deals of prostitutes and ketamine. His swaggering crew ruled Chinatown, court documents say.

In 2013, the father of a massage parlor owner told prosecutors that two of Lin’s thugs had demanded 100,000 euros and given him a beating that put him in the hospital with skull trauma and a broken nose, court documents say.

“My countrymen are afraid of them,” the battered extortion victim said, according to court documents. “They are part of an organization of cruel people who threaten and demand money ... if someone challenges them, they beat and wound and use other violent methods.”

Surveillance led to another breakthrough even higher in the criminal hierarchy. Police identified the alleged boss of bosses in Rome: Zhang Naizhong.

Zhang, a trim and dapper trucking executive, was from Zhejiang, a more prosperous province next to Fujian that sends many immigrants to Europe. After the slaying of one of Zhang’s rivals in Naples in 2006, a court convicted him of helping the accused killers escape, but appellate judges overturned the verdict, court documents say.

During conversations intercepted on the phone and in his BMW, Zhang described himself as a ruthless “madman” and ordered henchmen to threaten people, court documents say. Expounding on the “rules of the mafia,” he told a subordinate in 2013 that true loyalty meant being “ready to go to prison and to kill people,” court documents say.

“I’m the most powerful boss in Europe,” Zhang declared, according to court documents. “Ask anyone ... if you’re not a friend, you’re an enemy ... if you’re an enemy, then you’re finished! ... A guy can point a pistol at me and because of my personality ... I’ll tell him: ‘Pull the trigger!’ You understand, brother? ... I am the boss and so the boss can decide anything.”

Zhang teamed with Lin to conquer the market for the distribution of goods among Chinese business enclaves in Europe, court documents say. Working with police in other countries, Italian detectives charted the kingpins’ alleged war on competing transport companies, court documents say: murders in Italy; shootings and stabbings in Spain, France, Germany and Portugal; a litany of arson attacks, assaults and threats.

Back in Prato, though, the accused gangsters did not keep a low profile. In fact, some of them were active in the array of Chinese cultural associations that shape the social landscape in diaspora communities. The associations, often named for the province immigrants came from, do good works: sponsoring cultural and sports activities, distributing protective equipment during the pandemic, raising money for charity causes in their home provinces.

But suspected underworld figures and their associates held posts in the Fujian Overseas Chinese Association in Italy that enhanced their power on the street and at a political level, according to court documents, Italian law enforcement officials and Chinese media. Lin, the alleged Fujianese boss of Prato, appeared on a list of “consultants” to the association in 2016. Wiretaps, surveillance cameras and media reports documented meals, events and phone conversations in which Lin and other targets in the China Truck case interacted with prominent leaders of the Chinese community, Italian politicians, Chinese diplomats and visiting Chinese government officials.

In 2012, the president of the Fujian association in Prato intervened to resolve an underworld conflict involving Lin’s son, according to court documents and law enforcement officials. That same leader of the association later attended a conference in Beijing with top officials of the United Front Work Department, the arm of the Chinese Communist Party dedicated to political spying and interference overseas, according to photos and media reports. The United Front has become a dominant force in the diaspora, which it exploits to gain political and economic influence.

Such well-placed homeland connections appeared to pay off. Although Lin was wanted by Chinese police for past extortion offenses in China, he spent long periods there unmolested by authorities while he supervised his criminal enterprises in Italy by phone, according to Italian court documents and senior Italian law enforcement officials. He also enriched himself with investments in the Chinese mining sector, court documents and senior Italian law enforcement officials say.

Lin “succeeded in resolving the judicial cases in which he was charged, and was thus able to resume thriving economic activities” in China, a court document says.

As the investigation peaked in late 2017, detectives stumbled onto startling evidence of Lin’s influence in high places.

In interviews with ProPublica, Italian law enforcement officials said a series of intercepted phone calls revealed how close the Prato mob chief was to Chinese political figures. According to the Italian officials, on the morning of Dec. 11, Lin placed a call from Beijing to Zhang in Rome. Lin said an important friend, whom he described as a “boss from Beijing,” was visiting Rome. The boss had a busy schedule of meetings with Italian politicians, Lin said. But it would be good if Zhang could take him to dinner, see the sights, maybe a soccer game. Zhang then called his secretary and driver to organize excursions to the Vatican and the Colosseum for the VIP visitor. That evening, Zhang had dinner with him, Italian officials said.

Analyzing translations of the calls afterward, detectives came to an alarming conclusion: The “boss from Beijing” was a member of a Chinese delegation that had met with Italy’s prime minister at the time, Paolo Gentiloni, and his cabinet ministers. Led by China’s Vice Premier Ma Kai, the delegation included senior officials in China’s ministries of foreign affairs, development, industry and commerce.

“It’s very probable that Zhang hosted and dined with a senior official from the delegation,” a senior Italian law enforcement official said. “We suspect that it was a prominent member of the delegation.”

Police reconstructed the episode based on the translated conversations rather than physical surveillance, law enforcement officials told ProPublica, and could not identify the visitor or the reason for the sit-down. But the analysis indicated he was a government official, national security sources said.

Italian and Chinese diplomats declined to comment on the episode, which was first reported in Italian media.

Chinese state-mafia contacts like the one that allegedly took place in Rome are not unusual, Western national security officials said.

“China uses a range of proxies and cutouts, and organized crime is one of those proxies,” a U.S. intelligence official said. “We see a growing brazenness in [Chinese] malign influence operations.”

Sometimes, expatriate gangsters even set themselves up in foreign countries with the blessing and support of corrupt allies in the Communist Party elite back home, a veteran U.S. national security official said.

“The gangsters are told to go establish themselves in a certain country, given different business opportunities,” the veteran U.S. national security official said. “Transportation help, getting consumer goods out of China, the government helps organized crime there. Chinese corrupt officials can make it easy to move goods out of China.”

The Chinese politicians who meet with Chinese gangsters overseas “represent their government as well as their own self-interest,” he said.

Weeks after the mysterious encounter in Rome, Italian investigators rounded up dozens of suspects on mafia-related charges resulting from the China Truck investigation.

A police team swarmed a discreet hotel in Prato where Zhang was staying and arrested him and his adult son, Zhang Di, rousting them from their beds at dawn. The son got agitated and shouted at the officers, police said.

But his father, the accused boss of bosses, stayed cool while officers took him into custody.

Zhang Naizhong, a trucking magnate and accused mafia boss who is a top defendant in the China Truck case. “If you want in-depth street information, intelligence, you go to a guy like Zhang,” a senior Italian national security official said. “He has a network, power, resources. He knows the diaspora. He is feared and respected.” (Via YouTube)

Zhang and his son have pleaded not guilty. Their lawyers did not respond to requests for comment. Prosecutors also charged Lin, but he remains at large. Lin’s son was not charged.

The China Truck prosecution painted the first detailed picture of alleged mob activity among Chinese immigrants in Italy. Soon, even more evidence would emerge of a brazen alliance between accused expatriate gangsters and the Chinese security forces.

Outlaw Police

The headquarters of the Fujian Overseas Chinese Association in Italy occupies a corner building on Via Orti del Pero in the heart of Prato’s Chinatown.

The two-story structure looks bedraggled. It has blue steel doors, barred windows and fading sand-colored walls.

But in March of last year, the place made headlines. Chinese media announced “good news” from Prato: the inauguration of the Fuzhou Police Overseas Service Station in the Fujian association’s headquarters. Leaders of the association would work with officers of the Municipal Public Security Bureau in Fuzhou, the capital of Fujian province, to enable immigrants to renew Chinese driver’s licenses and do other bureaucratic tasks in Prato, a Chinese media report said.

The inauguration of the Fuzhou police station in Prato in March 2022. Among those at the opening was Zheng, also known as Franco, second from left.

Among six community leaders pictured beneath the station’s blue banner was the association’s executive vice president at the time: Zheng Wenhua.

Zheng, also known as Franco, seemed a puzzling choice to open a police station. Four years earlier, Italian authorities had accused him of being a top figure in the Prato underworld.

Investigators first identified him in 2011 when police stopped him in his Jaguar accompanied by an alleged enforcer for Lin, the reputed Fujianese mob boss, court documents say. Officers found a clasp knife and a marijuana cigarette in the car and confiscated Zheng’s license, court documents say.

In 2013, Zheng allegedly became involved in the aftermath of the incident in which two thugs beat up the father of a massage parlor owner. Zheng tried to silence the battered extortion victim by sending a “volunteer” interpreter into a police interview to control what he said, court documents say. In a phone call recorded by police, Zheng warned the victim not to implicate bosses, court documents say.

“Come on ... this could have consequences for Laolin...,” he said, according to the documents. “...And that would not be a good thing.”

During the China Truck raids in 2018, authorities charged Zheng with “a prominent role” in Lin’s crew overseeing the “management of clandestine gambling dens and exploitation of prostitution,” court documents say.

Yet Zheng remains a civic leader. He has met with visiting Chinese dignitaries including the mayor of Fuzhou, spoken at community events and attended a gala in February featuring the mayor of Florence and the Chinese consul, according to media reports and photos. In March, he was elected president of the Fujian association. (Zheng has pleaded not guilty and is free awaiting trial. He and other representatives of the Fujian association did not respond to requests for comment.)

And Zheng wasn’t the only one with alleged ties to both the underworld and the new Fuzhou police station in Prato. China Truck prosecutors charged another vice president of the association with helping Lin obtain fraudulent immigration papers. Photos at the Fuzhou police station show three more community leaders whose personal and business links to gangsters surfaced during the investigation, according to court documents and senior law enforcement officials. None of them were charged, though authorities seized five bank accounts belonging to one man.

Despite the celebratory Chinese media reports, the station was part of a global campaign of repression, according to Western officials and human rights advocates.

“You have criminals who terrify the community involved in a police station that further terrifies the community,” a senior law enforcement official said.

Safeguard Defenders, a human rights group, has revealed a network of more than 100 covert stations overseen by Chinese provincial police forces in more than 50 countries. Based in cultural associations, businesses and homes, the outposts help persecute dissidents and support Operation Fox Hunt, which deploys undercover police and prosecutors illegally across borders to track down people accused of crimes — justifiably and not — and take them back to China, according to Western officials and human rights advocates.

In Madrid, a video showed community leaders at a covert station of the Zhejiang provincial police talking via videolink with a fugitive in Spain and law enforcement officials in Zhejiang. In a typical pressure tactic, Chinese police and prosecutors back in Qingtian County sat with a relative of the fugitive, who eventually returned home and accepted a plea deal, according to Chinese media reports cited by the human rights group.

In Aubervilliers, a gritty Paris suburb, a Chinese French garment executive who managed a station admitted in a published interview to helping Chinese police “persuade” a fugitive to return to China in 2019, Safeguard Defenders found. Although no further details about the case were available, a senior French national security official told ProPublica that undercover Chinese police came to France and illegally repatriated two people during that time. The senior official did not say whether the head of the Aubervilliers station was involved.

After Safeguard Defenders issued its report last year, at least 12 countries began investigations. The U.S. reaction was the strongest. Targeting an illegal station in New York, federal prosecutors charged two Chinese American leaders with stalking and harassing dissidents for Chinese authorities including the Fuzhou police — the same force involved in the Prato station. (United Front officials also helped set up the New York station, U.S. authorities say.)

First image: Federal prosecutors say Chinese police used office space in this building in lower Manhattan’s Chinatown as a secret station in order to monitor and repress dissidents living in the United States. Second image: The exterior of the building, center. (Spencer Platt/Getty Images)

“It is simply outrageous that China’s Ministry of Public Security thinks it can get away with establishing a secret, illegal police station on U.S. soil to aid its efforts to export repression and subvert our rule of law,” the acting head of FBI counterintelligence, Kurt Ronnow, said at the time of the arrests in April.

In response, Chinese Foreign Ministry spokesperson Wang Wenbin accused U.S. authorities of making “groundless accusations.”

“There are simply no so-called ‘overseas police stations,’” Wang said. “China adheres to the principle of non-interference in other countries’ internal affairs, strictly observes international laws and respects the judicial sovereignty of all countries.”

The Chinese Embassy in Rome did not respond to a request for comment from ProPublica.

Some European national security officials downplayed the disclosures about the stations, echoing the Chinese government’s line that the outposts offer convenient consular-type services. The response to the problem in Europe has often been handled quietly by counterintelligence agencies rather than law enforcement. But most European officials interviewed by ProPublica said the stations aid spying.

“The suspicion is that the goal of these stations is to enable Chinese authorities to control and monitor the Chinese diaspora community,” Tescaroli, the Florence prosecutor, said.

There are 11 Chinese police outposts in Italy, more than any other country, and three in Prato. They multiplied during past Italian governments, which had notably close relationships with Beijing.

In 2016, Italy began a program that allowed visiting Chinese police officers to conduct joint uniformed patrols with Italian police. The stated goal was to improve protection of Chinese tourists and immigrants, but the patrol program fomented the spread of the unofficial stations, said Laura Harth, the campaign director of Safeguard Defenders. Photos show Chinese officers at the stations, sometimes joined by Italian police.

“They used the joint patrols to launch pilot stations,” Harth said. “China described it as one of its biggest achievements.”

Italian and Chinese police on a joint patrol in Milan in 2018. Italian national security officials said the patrols were largely symbolic, but they added that they have caught Chinese officers using visits as a cover to pursue people in the diaspora. (Emanuele Cremaschi/Getty Images)

Although Italian national security officials told ProPublica the patrols were largely symbolic, they said they have caught Chinese police officers using authorized visits as a cover to pursue people in the diaspora.

“But when they tried to do anything more than patrol, they were warned to stop,” a senior Italian national security official said.

The policing alliance was “a bad idea” because it “reinforced the fear” in the Chinese Italian community, a senior Italian law enforcement official said.

Across the Mediterranean, Spain is another place where the secret Chinese stations allegedly converge with the criminal underworld.

In Barcelona, two covert stations operate a mile apart in a translation agency and a restaurant, according to human rights activists and Spanish security officials. The stations are based in the Eixample, a central area of tree-lined avenues, stately modernist architecture and octagonal intersections.

As in Prato, the Fuzhou police administrate the Barcelona facilities from afar, and the staff are mostly Fujianese members of groups including the Association of Fujianese Entrepreneurs in Catalunya, according to Spanish officials and human rights advocates.

And as in Prato, community leaders affiliated with the stations appear in the organized crime files of law enforcement, according to the police of the Catalan autonomous region, a force known as the Mossos d’Esquadra.

At least five of those community leaders have records in Spain for crimes including human smuggling, falsification of documents, receiving stolen property, labor law violations and fraud, Catalan police officials told ProPublica. Police have detected at least two of those people at meetings with suspected Chinese mob figures, the police officials said.

The leaders involved in running the stations interact frequently with Chinese diplomats as well as Spanish politicians, according to police officials.

“These are people of great relevance in the Chinese community,” a police official said. “The local politicians may not always realize who they are meeting with.”

Representatives of associations and businesses tied to the Barcelona stations did not respond to requests for comment. The Chinese Embassy in Madrid also did not respond to a request for comment.

In France, authorities already knew about the Chinese stations and monitored them for intelligence purposes, a French national security official said.

After the revelations last year, French officials met with representatives of the Chinese Embassy and the Chinese community and told them to curtail the covert activities, a senior French national security official said. The senior official said a Chinese police attaché insisted he knew nothing about the matter — until French officials showed him a photo of himself at one of the stations.

China’s embassy in Paris did not respond to a request for comment.

Across Europe, investigators have discovered that the Chinese underworld makes itself useful to the Chinese state in another, crucially important arena: money.

River of Money

Imagine a vast river of cash flowing from Europe to China.

It flows from the booming marijuana industry in and around Barcelona, where Chinese mobsters are players in illegal growing and international trafficking.

It flows from the garment industry in the Aubervilliers area (the site of a covert Chinese police station and the French branch of Zhang’s trucking empire), where merchants have been charged with laundering money for drug lords.

Italian police count cash confiscated during a China Truck raid in Prato. (Via YouTube)

And it flows from shops, nightspots and warehouses in Prato and other Italian cities where the Guardia di Finanza, the agency that fights financial crime, has discovered a veritable underground banking system based on tax evasion, customs fraud and contraband.

This illegal machinery has pumped billions of dollars into the Chinese economy, authorities say. Although China has the most formidable police state in the world, law enforcement chiefs in Europe complain about its steadfast resistance to helping their investigations into organized criminal activity by Chinese migrants.

“We get no cooperation from the Chinese government,” said Tescaroli, the chief anti-mafia prosecutor in Florence.

Worsening suspicions of official complicity, Chinese state banks in Europe have emerged as active partners of money laundering organizations.

Exhibit A: the Industrial and Commercial Bank of China, a state-owned institution, the biggest bank in the world based on total assets.

In 2011, ICBC opened a branch in Madrid on a thriving downtown boulevard filled with museums, luxury hotels and cafe terraces. The bank’s visiting global chairman marked the occasion with Spain’s economy minister, who said the new branch would be a bridge to emerging markets.

A branch of the Industrial and Commercial Bank of China opened in Madrid in 2011. Spain’s economy minister said the new branch would be a bridge to emerging markets. (Juan Medina/Reuters)

Five years later, a dramatic scene played out when Spanish police officers raided the bank, seized piles of documents and arrested executives, escorting suspects out with their heads covered.

Spanish officers carried out a raid at the ICBC branch in Madrid in 2016. (Juan Medina/Reuters)

The bank had surfaced during investigations of Chinese criminal groups that smuggle contraband and evade taxes and customs duties — activities that generate stockpiles of cash. Surveillance of suspects moving cash led police to the ICBC branch in Madrid.

Thanks to wiretaps and an inside witness, police learned that bank executives set up an audacious system in which criminals delivered suitcases and boxes full of euros to the bank day and night, court documents say. The bank sent hundreds of millions to China through illegal mechanisms such as fake identities and fraudulent invoices. Managers advised crime bosses about how to transfer funds to China covertly. The Madrid branch did not issue a single alert about suspicious financial operations to Spanish authorities between 2011 and 2016, court documents say.

During the investigation, the top ICBC executive in Madrid became general manager at the bank’s European headquarters, indicating potentially wider corruption, prosecutors said.

“The close connection between this Spanish branch and the headquarters in Luxembourg indicates that this illicit conduct could repeat itself in other European branches,” prosecutors warned in court documents.

Chinese diplomats complained publicly and in talks with Spanish leaders about the case, according to Spanish national security officials. But in 2020, the general manager in Luxembourg and three Madrid executives pleaded guilty to money laundering charges. The Spanish court imposed sentences of three to five months and a $25 million fine. ICBC issued a statement saying the bank was law-abiding and had cooperated with authorities.

It was not an isolated case.

In France, the Bank of China paid a $4 million fine in 2020 to settle a prosecution for aggravated money laundering. Authorities charged that the state bank failed to notify French tax authorities about more than $40 million sent from 168 accounts during a two-year period. The money came from fraud, tax evasion and other illicit activities by Chinese entrepreneurs based in France, prosecutors said. Bank of China officials said in a statement that the settlement was not an admission of guilt.

In Italy, the Bank of China paid $22 million in 2017 to settle a case in which a whopping $4.7 billion went illegally to China. Executives aided and concealed transfers of cash from Prato and Florence during a four-year period, authorities said. The former director general in Milan and three other employees received two-year suspended sentences in the aptly named “River of Money” prosecution.

The bank said the settlement was not an admission of guilt.

The river of money has many tributaries, law enforcement experts say. Italian investigators have detected bulk cash loads smuggled to China in maritime containers, express mail packages and the luggage of airline passengers.

And police forces across Western Europe track couriers driving shipments of criminal proceeds east to Turkey, Bulgaria and especially Hungary, where it is easier to deposit and repatriate the funds in banks with little interference on either end, according to Italian prosecutors and other European officials. In a Spanish case, a jailed Chinese suspect told interrogators that a network smuggled cash “hidden in goods transported in vans” and used “passports of Chinese citizens to send the money as immigrant remittances” from the “Chinese Bank in Budapest, Hungary” to China, court documents say.

Italian investigators identified another bank in Hungary, China’s closest ally in Europe, that received more than $1.2 billion in clandestine cash deliveries from across the Continent and wired the money to China between 2017 and 2018.

Chinese financial crime networks pose “an elevated threat” in Europe, according to a recent French law enforcement report. They have become the preferred money launderers of the drug trade and act as brokers for international deals, delivering cash on demand so that cartels don’t have to transport funds across borders, European security officials say.

The clients are top drug traffickers: Italians, Albanians, Latin Americans and a violent Morocco-connected cartel, the Mocro Maffia, that has become a national security threat in the Netherlands and Belgium.

The trend resembles the rise of Chinese money laundering groups that have transformed the U.S. drug trade by giving fast and cheap service to Latin American cartels. As ProPublica has reported, U.S. national security officials say the Chinese state supports that activity.

European authorities have similar suspicions.

“It is a kind of state criminality,” a senior Italian law enforcement official said.

Striking Back

Five years after Italian police rounded up the accused gangsters in 2018, the continuing saga of the China Truck case illustrates progress and setbacks in the response to a threat that caught Europe largely unawares.

A total of 79 defendants are still awaiting trial in Prato. The proceedings have been slow because of the sheer scope of the case, the labyrinthine justice system and the laborious demands of translation. An acute lack of interpreters continues to plague the case. During the investigation, police at one point had to suspend wiretaps because taped conversations in the Fujianese dialect were piling up untranslated.

It is also Italy’s first prosecution of a Chinese organization for mafia-level conspiracy, which is a complex offense to prove. Appellate panels have questioned the evidence for the mafia-related charges, releasing defendants from pre-trial custody.

Last September, a court convicted some defendants for individual offenses and acquitted others such as Zhang, the alleged boss in Rome. In the case of Zheng, the community leader involved in the Prato station, the statute of limitations ran out on some charges against him. Lin is no longer facing trial because his whereabouts are unknown.

But Zhang, Zheng and the others still face trial on the mafia conspiracy charges.

Although it has been an uphill battle, authorities say they have disrupted the underworld.

“Like the Italian mafias, the Chinese mafia has understood, or is coming to understand, that if you are too violent, the police react,” a senior Italian law enforcement official said. “It is bad for business. Violence attracts attention. It has happened less since the China Truck prosecution.”

Europe is hurrying to respond to China-related threats. After an investigation, the United Kingdom’s minister of state security recently announced that the government had ordered China to shut down unauthorized police stations, calling them “unacceptable.”

Officials of the municipal police in Fuzhou, China, (top center panel) hold a videoconference with leaders of Chinese immigrant communities who operate stations for the Fuzhou police force in five cities including Barcelona, Spain, (bottom left panel) and New York City (top left panel). (Via Fuzhou Public Security Bureau)

The new Italian government of Prime Minister Giorgia Meloni has taken a tough line. Intelligence and law enforcement agencies have created units focused on Chinese organized crime and malign influence. A parliamentary anti-mafia commission will examine alleged wrongdoing in Prato’s Chinese manufacturing sector and illicit money flows to China. Public attention has led to the shuttering of the Fuzhou station in Prato.

As for the double homicide on Via Strozzi, the case opened a door into a secret world. Prosecutors charged 20 people in the murder and related crimes, winning convictions in the latter cases.

But the accused killers remain out of reach, authorities say, in China.

Kirsten Berg contributed research.

by James O’Donnell, FRONTLINE

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up to receive our biggest stories as soon as they’re published.

“America’s Dangerous Trucks” is part of a collaborative investigation from FRONTLINE and ProPublica. The documentary premiered on June 13, 2023, and is available to stream in the PBS App and on FRONTLINE’s website.

The trucking industry is engaged in a concerted lobbying effort that critics say will make it harder for victims of crashes to sue the companies involved and limit the compensation plaintiffs can win. In the past three years alone, the industry has helped prompt new laws in seven states including Texas and Florida, which rank among the highest in the nation for fatal truck crashes.

The industry says those new laws will help curb frivolous lawsuits and excessive payouts, but safety advocates say they instead shield trucking companies from legitimate liability after crashes and disincentivize the companies from working to prevent crashes in the first place.

The new laws come as fatal truck crashes are on the rise. More than 5,000 people die each year in crashes with large trucks, up by more than 50% compared with a decade ago. FRONTLINE and ProPublica’s recent documentary, “America’s Dangerous Trucks,” examined one gruesome kind of truck accident — underride crashes — and why they keep happening.

After a crash, the best way a survivor can receive compensation for serious injuries or the loss of a loved one is to sue the trucking company and driver, according to Joe Fried, an attorney in Georgia with two decades of experience in truck crash litigation who spoke to FRONTLINE. That’s because most truckers carrying general freight across state lines are required by law to have $750,000 in liability insurance, but lifetime medical costs after serious crashes can quickly exhaust that amount. Carriers may be ordered to pay more than that figure, but if the company goes bankrupt or does not have the assets to pay, victims may never receive it. The $750,000 minimum was set by Congress in 1980 and, despite numerous efforts to increase it, has remained unchanged.

In late 2019, one of the trucking industry’s most vocal leaders, Chris Spear of American Trucking Associations, described crash lawsuits as an “all-out assault” on the industry in a radio interview. In a speech to ATA members around that time, Spear announced curbing crash lawsuits as a “tier-one priority” for the organization and vowed to work with state governments and state lobbying groups to pass new laws to do so. Since then, the ATA has also said that crash lawsuits are becoming more frequent and expensive, therefore raising insurance costs for carriers.

Mark Geistfeld, a professor of civil litigation at NYU Law and the author of five books on liability, told FRONTLINE he’s heard similar refrains about frivolous lawsuits from industry groups since the 1980s. That’s when industry lobbyists began trying to pass what they called tort reforms at the state level. Geistfeld has examined tort reform since then, noting that while the movement is less active now than it was in the 1980s, industries like trucking are ramping up their efforts.

“They call it reform, but historically most of the reforms have been about cutting back on liability,” Geistfeld said, referring to the industry groups.

He called the issue of meritless lawsuits a “bogeyman,” as the legal system has ways of sanctioning plaintiff lawyers if they knowingly bring frivolous cases. Industries campaigning for tort reform, he said, are typically more focused on reducing the amount they’ll be liable to pay if found responsible. They do so through campaigns for new state laws that change things like how trials are conducted, set caps on damages or redefine what evidence can be produced at trial.

Iowa, Montana, West Virginia, Louisiana and Missouri have also passed new tort reform laws supported by the trucking lobby. They take different forms in each state: Louisiana and West Virginia repealed rules which had prevented defense lawyers from bringing in evidence about whether the plaintiff had been wearing a seatbelt, and a law in Missouri raised the bar for ordering a trucking company to pay punitive damages. Jeremy Kirkpatrick, spokesperson for the ATA, said the state laws mark “initial successes in a long term campaign.”

While negligent trucking companies should be held accountable, he said, the new tort reform efforts the ATA is supporting aim to restore “balance and fairness” to the litigation system and are not about reducing liability. When a trucking company’s insurance premiums go up after large verdicts and settlements, according to Kirkpatrick, leadership may cut costs by lowering wages, which can mean hiring less experienced drivers and can have a negative impact on safety.

“The trucking industry has become a target for plaintiff-attorney profiteering,” he said. “This is about reforming specific rules and practices that enable plaintiffs’ attorneys to inflate damages and engineer nuclear and disproportionate verdicts and settlements.”

Texas: Limits on Company Liability and Evidence

Texas, which ranked first in the nation for truck-related fatalities in 2020 with 643 deaths, passed a law in 2021 that says trucking companies cannot be sued for their role in a crash unless the driver has first been found liable by a court — a process called a bifurcated trial. It passed with support from the Texas Trucking Association, a state lobbying group and ATA member, which said the law will protect trucking companies from “biased and unfair courtroom tactics.”

Previously, according to trucking lawyer Fried, plaintiff attorneys could bring in evidence about a trucking company’s broader practices — such as how many other accidents it was involved in — to convey to the jury that the crashes were a systemic problem. It’s a practice long-derided by truck lobbying groups, which refer to it as “reptile theory” and say it wrongfully aims to rile up the jury against trucking companies to encourage larger verdicts.

The new Texas law changed that. In the first phase of the trial that determines compensatory damages, attorneys are now more confined to the facts immediately surrounding the specific accident and whether the company was negligent in hiring or vehicle maintenance before the crash. Broader evidence about the company’s past is only allowed if the driver or company is proven at fault and the trial moves to a second phase. It’s a legal change Fried expects trucking groups will try to bring to other states.

“This passed in Texas because the politics were ripe for it there,” he said. “But it’s definitely being pursued elsewhere.”

Florida: Shrinking the Window to Sue

The trucking lobby also notched a win in Florida, which ranks third in the nation for truck-related fatalities, with a law passed in March that made a number of changes to civil litigation that are particularly relevant to trucking. Alix Miller — president and CEO of Florida Trucking Association, an ATA member — lobbied heavily for its passage.

“Florida is one of the worst when it comes to trucking litigation,” Miller told FRONTLINE, saying that the state’s new law and others like it aim to make the legal system more balanced for defendants. The Florida law changes how medical bills are presented at trial by only admitting the amount paid versus the amount initially billed. It also reduces the statute of limitations from four to two years for personal injury cases.

Safety advocates say that a shorter time frame in which one can sue becomes an obstacle to victims in their effort to pursue accountability after crashes.

“When you talk to victims who have been through this, they will tell you that the first two to three years are completely disorienting,” said Zach Cahalan, executive director of Truck Safety Coalition, a group that provides resources and support to people involved in truck crashes and advocates nationally for safety regulations. He noted that victims often have to deal with a deluge of paperwork, medical bills, physical therapy appointments and other demands as they process the crash.

“By the time they realize that ‘Hey, I might need to pursue a civil trial,’” he said, “sometimes the statute of limitations is over.”

Iowa: Caps on Damages

Another path these laws have taken is to cap the amount of noneconomic damages awarded to plaintiffs — compensation for losses that, unlike medical bills or wages, cannot be easily measured, such as the loss of a child.

The Iowa legislature passed a law in April, supported by the Iowa Motor Truck Association, an ATA member, that caps pain and suffering payments to $5 million in accidents involving commercial vehicles, though it includes exceptions for certain situations of extreme negligence, like if the driver was intoxicated.

Supporters of the law say that plaintiff lawyers profit too much off of crash litigation and that the cap will help fix this. But Cahalan of the Truck Safety Coalition opposes such limits on damages, and he said instead that juries should continue to have agency in determining how much should be paid after a crash.

“Your ability to be made whole following a crash should not be arbitrary,” he said.

Geistfeld, from NYU Law, said that whether in trucking or another industry, the outcomes of tort reform efforts decide who is responsible for paying for the cost of injuries. They also shape the incentives that businesses weigh when deciding how to conduct their operations safely, he said.

“​​The idea, ultimately, is if the businesses are forced to pay for the liabilities of their drivers, then the businesses are going to adopt safety measures to try to make sure that they can do as much as possible to keep drivers from getting into crashes,” he said. “And that’s obviously good for society.”

by Beth Hundsdorfer, Capitol News Illinois, and Molly Parker, Lee Enterprises Midwest

This article was produced for ProPublica’s Local Reporting Network in partnership with Lee Enterprises, along with Capitol News Illinois. Sign up for Dispatches to get stories like this one as soon as they are published.

Allegations of patient abuse, cover-ups and misconduct continue to proliferate at a beleaguered facility for people with developmental disabilities, despite promises of reform from Illinois Gov. J.B. Pritzker and officials in his administration.

In a critical report released last month, the Office of the Inspector General of the Illinois Department of Human Services said there needs to be a “fundamental” change at Choate Mental Health and Developmental Center in the southern town of Anna.

“There are repeated instances of CMHDC staff conspiring to knowingly and deliberately cover-up misconduct that they either engaged in or witnessed. In addition, other CMHDC staff, fearing retaliation from their fellow employees or the loss of their job, have repeatedly failed to report misconduct or sought to report that misconduct anonymously,” the report said. “A fundamental overhaul of the system is needed to establish a new culture where the reporting of abuse is automatic and not an act of courage.”

Data obtained by Capitol News Illinois, Lee Enterprises Midwest and ProPublica shows that complaints of abuse and neglect at the facility have not abated. Since September, when the news organizations began publishing stories about abuse and neglect of patients at Choate, there have been 465 new complaints to the inspector general’s hotline for reporting maltreatment. Nearly half of those were made after the state’s March 8 announcement that it would begin moving some residents out of Choate.

Among the new allegations: a report from November of a patient found lying on a couch bleeding from his right ear. He told a worker that a technician hit him with a broom, according to a report obtained from the facility under a Freedom of Information Act request. No criminal charges were filed. The technician is still employed at the facility.

The inspector general’s report raises new questions about the management and administration of Choate, as well. Employees at the facility “raised concerns that CMHDC administration played favorites and was biased in their decision making,” the report said. “Another CMHDC employee stated that abuse and neglect occurred at the facility due to the systemic tone from the administration and nursing staff.”

The report also found “some indication that substandard work performance is seen and accepted by CMHDC supervisors and management.”

The findings about Choate administrators are particularly notable because Pritzker’s administration decided to retain the facility’s top three administrators in March when announcing a plan to reduce the size of Choate and move some residents to community settings or other state-run facilities.

All three administrators were previously indicted on felony charges in connection with their handling of an abuse allegation at the facility. Facility Director Bryant Davis and Gary Goins, who has served as quality assurance and improvements director, were both charged with official misconduct in 2021. Assistant Director Teresa Smith was charged twice with official misconduct and obstruction of justice, in 2020 and 2021. A judge dismissed the first case, finding there was not probable cause to sustain the charge. The prosecutor dismissed the most recent charges against the three administrators. Smith, Goins and Davis did not respond to requests for comment.

In explaining her rationale for keeping the administrators, IDHS Secretary Grace Hou said in March: “We’ve weighed a lot of different perspectives, but I think we need a leader who knows Choate inside and out, who has relationships with the residents and the parents and the staff to lead us through this challenging transition.” Pritzker publicly backed Hou’s decision at the time.

IDHS Secretary Grace Hou (Jerry Nowicki/Capitol News Illinois)

In her official response to the report, Hou wrote that her agency had hired new leadership, including Tonya Piephoff, the new director of the Division of Developmental Disabilities, and a chief resident safety officer, to oversee patient care at the state’s seven developmental centers.

“IDHS remains committed to ensuring that there is strong and stable leadership at Choate Mental Health and Developmental Center,” an agency spokesperson said in a written statement. “We are always assessing the strengths and capabilities of members of our leadership team. As the new Director of DDD, Director Piephoff’s responsibility is to ensure that every leadership role in that division is appropriately fulfilled, including those at Choate and of the transformation that is occurring at that Center.”

Hou’s written response to the OIG report also noted that the department has implemented new trainings, in partnership with Illinois State Police, that are “designed to improve reporting, safety, and care, including training for frontline and direct care staff on abuse reporting, investigations, retaliation, and code of silence.”

The department is installing cameras at the facility and overhauling staffing and training protocols, as recommended.

The status-quo approach to facility leadership has drawn criticism, including from a southern Illinois state senator and longtime proponent of reforming Choate but also keeping it open. Sen. Terri Bryant, a Murphysboro Republican, has said keeping the same leadership demonstrates a lack of commitment to Choate’s long-term success.

“This is a no-brainer. How do you change the culture of the facility and leave the people in place who allowed the culture to grow and flourish?” Bryant said in an interview. “This plan is a setup for failure. I don’t care how much money you are going to put into the buildings, you will change nothing without removing the leadership.”

The Retained Administrators

As facility director and assistant director, Davis and Smith are responsible for staffing, employee evaluations, responding to critical incidents and discipline at Choate, according to job descriptions; Goins is tasked with assessing patient care, developing corrective actions plans and staff training.

Davis, who has served as the facility director since 2014, is paid an annual salary of $133,000; Smith, who has served as assistant director since 2019, earns $111,000; and Goins, who has served as quality assurance and improvements director since 2019, is paid $106,000. Each has risen through the ranks at Choate over decades. Goins and Smith started at Choate as nurses, while Davis joined Choate staff in 2000 as a social worker.

Though the three were in charge and part of their job description included recommending discipline for workers found to have mistreated patients, the news organizations’ investigation showed employees often escaped serious consequences for abusing or neglecting patients.

Capitol News Illinois, Lee Enterprises Midwest and ProPublica reported in September that at least 26 Choate employees were arrested on felony charges related to patient maltreatment over a 10-year period concluding in 2021. Davis and Smith were in leadership while all 26 arrests took place; 16 of them occurred after Goins was promoted to leadership.

According to the agency’s records, in 25 of the 45 substantiated abuse or neglect incidents since 2016, IDHS responded with “retraining,” specifically providing employees with the written policy and having them sign to say they had read it. Almost no employees were fired for mistreating patients.

OIG investigations found workers who witnessed abuse but chose not to report it because they feared for their jobs and their safety. IDHS stated last month in response to reporters’ questions that no one has lost their job for properly reporting abuse or neglect.

The OIG report also laid out how staff, including supervisors, were involved in concealing abuse at the facility. In one particularly disturbing account in the report, workers told the OIG that abusers found ways to inflict pain on patients with developmental disabilities without leaving any marks or evidence. The methods, which they referred to as “DD Love,” included forcibly spreading patients’ legs wider and wider while they were in a seated position and, in at least one case, forcing a patient to stand with their arms above their head for long periods.

To change the status quo, the OIG report said, “the administration must be open to all ideas as to how to improve the level of care provided at the facility.”

Another former employee who was in leadership when several allegations of employee misconduct were leveled also returned to Choate on a temporary basis this spring. Steve Hartline, the longtime security chief who is also the mayor of Anna, where Choate is located, resumed his former position on a 45-day personal service contract that ended in May. From 2004 to 2019 — during Hartline’s tenure as security chief — patients were charged with dozens of felonies for scuffles with staff. The practice of charging patients ended in 2020 under Hartline’s successor, Barry Smoot.

Hartline did not respond to requests for comment.

The department defended the temporary hiring. “Mr. Hartline provides assistance in areas where he has significant experience. He is not serving in a policymaking capacity,” a department spokesperson said before Hartline’s contract ended in May.

Complaints Continue

Of the 465 new complaints of mistreatment at Choate to the inspector general since September, the office has accepted roughly half for investigation. To date, 51 did not include enough evidence to sustain them and 119 are still open. The OIG has brought on a number of full-time and temporary investigators to help process the complaints quickly.

Despite those numbers, in its report the OIG also found barriers to reporting abuse and neglect. Patients told investigators that they had to ask staff to use the phone and to identify who they were calling. They said that phones in the units were broken and that posters carrying the OIG abuse hotline number were removed. Patients also said they lost access to trust accounts, family visits and other privileges after reporting abuse by staff.

While there have been no criminal charges issued against Choate employees since March 2022, one employee pleaded guilty in February to a misdemeanor for abusing a patient. The patient was nonverbal and had the mental capacity of an infant.

Bradley Cross, a former mental health tech at Choate, is now seeking to withdraw that guilty plea, an effort that is still pending. In his motion filed in Union County court, Cross said the misdemeanor conviction had cost him a $60,000-per-year state job and thousands in legal fees.

He blamed news coverage for the punishment that included his firing.

“I agree(d) to a plea that, until this media explosion, could have been dealt with by a retraining or relocating me to another place to work,” Cross wrote in his motion.

Correction

July 11, 2023: This story originally misidentified the plea entered by Bradley Cross. He pleaded guilty to a misdemeanor, not a felony.

by Molly Parker, Lee Enterprises Midwest, and Beth Hundsdorfer, Capitol News Illinois

This article was produced for ProPublica’s Local Reporting Network in partnership with Lee Enterprises, along with Capitol News Illinois. Sign up for Dispatches to get stories like this one as soon as they are published.

This year, Illinois officials announced what seemed like a solution to the outcry over abuse and cover-ups at a state-run developmental center: Downsize the facility and move about half the residents elsewhere. Some of the roughly 120 relocated residents of the Choate Mental Health and Developmental Center would receive care in community settings. Others are expected to end up in one of the six developmental centers located in other parts of the state.

Gov. J.B. Pritzker and Illinois Department of Human Services Secretary Grace Hou said the plan would “reshape the way the state approaches care for individuals with intellectual and developmental disabilities.”

But a new investigation by Lee Enterprises Midwest, Capitol News Illinois and ProPublica has found that the problems at Choate extend to the other centers as well. People with developmental disabilities living in Illinois’ publicly run institutions have been punched, slapped, hosed down, thrown about and dragged across rooms; in other cases, staff failures contributed to patient harm and death, state police and internal investigative records show.

The Illinois State Police division that looks into alleged criminal wrongdoing by state employees investigates more allegations against workers at these seven residential centers than it does at any other department’s workplaces, including state prisons, which house far more people, according to an analysis of state police data.

It has opened 200 investigations into employee misconduct at these developmental centers since 2012 — most of them outside of Choate.

The state’s seven developmental centers, home to about 1,600 people, are situated from the bottom of the state at the edge of the Shawnee National Forest all the way north to the Wisconsin border. The oldest operating facility opened in 1873 and the newest one in 1987. They house dozens, and in some cases hundreds, of people with developmental disabilities in a hospital-like setting. These residents have a range of conditions: genetic, acquired from a problematic birth, or resulting from exposure to dangerous chemicals or from injury in childhood or adolescence.

As in other states, many of these facilities were built in small towns and rural areas. Today, they are short-staffed and at times chaotic and dangerous, according to a slew of reports and interviews with workers and advocates. This May, the safety concerns inside the developmental centers prompted a court-appointed monitor to urge IDHS to stop placing anyone covered by an expansive consent decree into any of the agency's developmental centers.

“Too many residents suffer physical injury, sexual assault and death to regard placement in such facilities as safe,” wrote Ronnie Cohn, the monitor and a New-York based expert on disability services, in a report that was prepared at the behest of a federal judge in ongoing proceedings.

Illinois is a stubborn outlier among states, continuing to funnel huge sums of money into institutional care. Many others have entirely shuttered or significantly downsized their state-run institutions. Illinois has about the same number of people living in them as do California, Florida, New York and Ohio combined. In Illinois, the lawsuit that led to the 2011 consent decree argued that the state had violated the civil rights of people with developmental disabilities by failing to offer enough options for community-based care. The next year, the state closed one of its centers and tried to shut another; that effort, to shutter the Murray Developmental Center in southern Illinois, failed in the face of union and community pushback. Now, the state is making space for 60 more residents at Murray, some of which will likely transfer from Choate.

“This is one of the most backwards states in the nation on everything we know how to measure when it comes to the care of people with developmental disabilities,” said Allan Bergman, a consultant from suburban Chicago who advises clients and governments across the U.S. on disability policies and programs.

We asked IDHS about the new reporting on issues within the state’s developmental centers. Agency spokesperson Marisa Kollias pointed out that the state had announced a broader review of every facility that IDHS operates as part of its response to the reporting on Choate. She said in a statement that the state has worked to “identify the root causes of misconduct” and correct them. Among recent improvements, IDHS has appointed a new chief safety officer, held numerous trainings on how to report abuse and neglect and ordered more than 400 security cameras for installation across all of its facilities by the end of the year, she said.

Additionally, IDHS acknowledged shortcomings in the community care settings that operate under the agency’s oversight. Kollias said that the community system had been financially neglected by the prior administration and noted that Pritzker’s administration has successfully advocated for millions of dollars in new spending for these programs. Funding for home- and community-based care has roughly doubled what it was when Pritzker took office to more than $1.7 billion, though advocates contend it’s still not enough after years of steep cuts.

State Police Investigations Rise

State police investigations of claims against staff at Illinois’ developmental centers are on the rise: Nearly 70% of them over the past decade were initiated since 2019, the year Pritzker took office.

Of the 200 state police investigations into employee misconduct over the past decade, 161 pertained to allegations of physical abuse and criminal battery; 25 to allegations of sexual assault and custodial sexual misconduct; and 10 to alleged criminal neglect of residents. Four were death investigations.

Of those cases, 22 led to convictions, almost all of them for abuse.

A spokesperson for the state police said the agency could not speak to the reasons for the increase or for the disparity in the volume of cases from IDHS facilities that it handled in recent years as compared with Illinois Department of Corrections prisons or other agency workplaces.

But Kollias, the IDHS spokesperson, said the department views the increase in state police investigations “as an improvement in accountability at the facilities.” She also noted that most cases did not lead to convictions.

Both the numbers and interviews show how difficult it is to pursue charges, even when investigations get underway. In the facilities outside of Choate, between 50% and 99% of residents have disabilities that are diagnosed as “severe and profound”; some of those individuals are nonverbal and unable to communicate in traditional ways. Investigative records show instances of employees failing to report abuse or working together to hide it, or a general reluctance on the part of state employees to share information with investigators. Even when there’s a conviction, state police investigators are not always able to fully determine what happened.

For instance, among the more recent physical abuse cases where a conviction was secured is one from Shapiro Developmental Center in Kankakee, a small industrial city on the outskirts of suburban Chicago. In 2020, a patient was found with U-shaped markings and dark bruising on his chest, back, arms, legs and genitals.

A nurse examined his injuries but dismissed them as a rash from medication. A physician who examined him the next day had a different take: She believed the markings were consistent with someone striking the patient with an object, such as a belt or cord. The U-shaped markings looked like they could have been from a belt buckle, she told investigators.

Police interviewed multiple employees who worked the night shift, but they offered little information. The patient was unable to provide police specific details of the incident. He was only able to tell them a female worker “beat the hell” out of him on the night shift by striking his genitals with an unknown object.

The patient’s treatment plan notes that he needs help managing behaviors that include irritability, agitation and outbursts. One employee admitted to police that she had slapped the patient across the face that evening after she had directed the patient to stop a problematic behavior and he told her to “shut up, bitch.” But the worker denied she was responsible for any of his more serious injuries. No one else came forward with any information.

The worker pleaded guilty last year to misdemeanor battery and received 12 months of court supervision. She was fired from Shapiro, but neither state police nor IDHS’ inspector general were able to determine the cause of the patient’s more extensive injuries.

Peter Neumer, the IDHS inspector general, said his department regularly encounters cover-ups at facilities across the state, which prompted him to push for a new legal measure enhancing the penalty options against those who attempt to stonewall or obfuscate investigators. Pritzker recently signed it into law.

The state police reports are not the only cause for concern. The inspector general receives and investigates all allegations of resident abuse and neglect. Some of those result in recommendations for civil penalties against employees, up to termination, and suggestions to address systemic failures. The most serious cases, where criminal misconduct is alleged, are also passed on to the state police.

Between 2013 and 2022, the inspector general investigated nearly 4,000 allegations from the developmental centers — with the most recent five years seeing a 45% increase in allegations compared with the earlier part of the decade.

There are also safety concerns documented in records from the Illinois Department of Public Health, which responds to complaints because it is responsible for ensuring compliance with Medicaid and Medicare regulations.

These records show that in addition to the abuse cases, residents have suffered from life-threatening mistakes and oversights by employees.

At Mabley Developmental Center, in the small north-central Illinois town of Dixon, a patient drank from a bottle of toilet bowl cleaner. The inspector general found that a worker had neglected the patient, who died of cardiac arrest three days later.

At Ludeman Developmental Center in Park Forest, in south suburban Cook County, a resident who was supposed to be closely supervised left the facility without permission and was later found walking barefoot across a busy six-lane street. In a different elopement case, a Ludeman resident suffered hypothermia after he went outside, unbeknownst to staff, one early fall morning when the temperature was in the 30s, wearing only a diaper and sat in the wet grass.

At Kiley Developmental Center in Waukegan, on the Wisconsin border, staff locked a disruptive patient in his room using a bedsheet tied across his door, an unauthorized form of restraint, according to health department inspection records. That same facility accidentally allowed an employee who the inspector general had previously found had abused a patient to return to work for two months before anyone noticed, according to staff interviews with health department surveyors. The worker has since been fired, according to a statement from IDHS.

Critical Staffing Shortages

This rise in allegations of violence and neglect comes amid significant staffing shortages, leading employees to work unsustainable and potentially dangerous overtime hours, according to an analysis of overtime records and interviews with more than a dozen employees at four facilities.

As of February, about 200 employees at developmental centers statewide — about 5% of the workforce — were unable to perform the job they were hired for pending the outcomes of abuse and neglect allegations with the state police or inspector general’s office. Most of them were on paid leave, including some who had been on paid leave in excess of two years. Others had been reassigned from their regular duties, and a small number had been suspended without pay pending the outcome of criminal court cases against them.

Neumer, the inspector general, said his office has prioritized working through cases more quickly to reduce the amount of time employees are out on leave. But in cases involving law enforcement, the inspector general cannot proceed with its internal investigation until a criminal case concludes, he said. Some cases linger for years with state police or prosecutors’ offices.

The staffing issues go well beyond those who are being disciplined. Across the state, about 570 jobs at developmental centers — more than 14% of positions — are unfilled.

AFSCME Council 31, the union that represents most workers at these 24/7 facilities, issued a report in December criticizing the state’s use of forced overtime to address chronic understaffing and raising alarms about its impacts on workers and residents.

In at least one case at Kiley, staffing shortages may have contributed to a patient’s death.

In February 2022, an individual with a known swallowing disorder was supposed to be closely monitored while eating. But on this day, a worker went home sick, leaving her unit short-staffed. While no one was watching, the resident choked and died, according to a report by the Illinois Department of Public Health. A worker told public health investigators that records were fabricated at a supervisor’s request to make it look as though the facility had provided proper supervision.

The inspector general’s investigation into the incident is ongoing, and the employees who were involved remain on leave. IDHS said in a statement that in response to the health department’s findings, Kiley staff received training on “providing sufficient direct care staff.”

That was the second time in two years that a patient at Kiley with a known swallowing disorder choked to death while eating unsupervised. In a 2020 case, according to a report by the inspector general, the man may have been dead for several hours before anyone noticed and called for help.

Kollias, the IDHS spokesperson, said that staffing shortages in health care are a nationwide problem and that the state has taken steps to more quickly fill positions. Contract staff are filling in at every center to ensure required staffing levels for each shift are met, she said.

Conditions Are “Beyond Dire”

In some of those facilities, employees have raised alarms to their higher-ups, as a security chief at Choate had done before the state took action to address problems there, email records obtained under a Freedom of Information Act request to IDHS show.

This January, Matt Comerford, a Mabley employee, sent an email to Hou, the IDHS secretary, seeking her immediate attention to conditions he described as “beyond dire.” In his letter, he said that patient injuries — including black eyes and, in one case, an open head wound that required 13 staples — could not be accounted for, and he accused staff, including administrators, of stonewalling investigators.

“It has become normal for staff to never seem to know anything about these injuries,” wrote Comerford, the facility’s business administrator. He concluded his letter by saying that he believed speaking out put his livelihood at risk. “But the risks of not speaking out are far too great for me to remain silent.”

Mabley’s clinical services director, Patricia Fazekas, a longtime employee who resigned in May, wrote about similar concerns in an “exit” survey obtained by the news organizations.

“The system is broken and they know if they complain they will be retaliated against,” she said of staff. If one were to visit Mabley, they would “witness abused and neglected individuals being cared for by verbally abused and neglected staff.”

In March, James Zarate, an assistant director at Kiley, emailed a different senior IDHS official, telling her that residents’ well-being was in jeopardy in that facility, as well. Kiley staff, he wrote, are receiving “little guidance or training” and the facility is “operating with a shortage of staff which is being exacerbated by a toxic work culture.” Six other Kiley employees, who spoke with a reporter on the condition that their names be withheld because they still work there, similarly expressed that staffing issues and mismanagement had created a problematic work environment that put residents and employees at risk of harm.

The department said that the concerns the employees raised in their emails were passed on to the appropriate oversight bodies, and that IDHS is “independently investigating the claims and will address issues fully and appropriately.”

Both Comerford and Zarate, who do not know each other, faced disciplinary action shortly after sending their emails and additional complaints to various oversight bodies.

The department said the disciplinary decisions it made against the employees were unrelated to their emails and complaints. Zarate, a new hire, was terminated as a “probationary discharge” after six months on the job. His final performance review said he had failed to perform his job duties satisfactorily, such as by not ensuring that staff completed tasks in a timely manner or seeking input from his superiors. He was specifically admonished because subordinates had reported to health department surveyors that a staffing crisis resulted in residents not receiving “active treatment.”

“Mr. Zarate has made this an acceptable response when not meeting expectations, resulting in a possible IDPH citation,” the performance review stated.

The department didn’t dispute that staffing challenges exist, but in a statement to the news organizations, it said such a response was problematic because “essential services are expected to be provided to residents despite staffing challenges.”

Zarate declined to speak for this article.

Comerford was placed on paid administrative leave for 10 weeks, then suspended for 20 days without pay. Paid leave, the department said, is not punitive. As for the suspension, a disciplinary letter from the department said Comerford had, among other alleged infractions, raised his voice and cursed during a meeting and took a call on his private cellphone. The department said he had, on multiple occasions, displayed conduct unbecoming of a state employee and failed to perform job duties in an accurate and timely manner.

In a statement, Comerford said that “a well-worn page of the DHS Mabley playbook is to discredit and defame those who address systemic injustices against the most vulnerable population.” He said that the department had lied about, exaggerated or taken out of context many of the circumstances that led to the claims against him. The department said Comerford had the ability to challenge the discipline and did not do so. “He served his disciplinary time and has returned to work,” IDHS said in a statement.

by Anna Clark, photography by Kristen Norman for ProPublica

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up for Dispatches, a newsletter that spotlights wrongdoing around the country, to receive our stories in your inbox every week.

In Detroit, the past was all too present. Houses, businesses and schools that once supported nearly 2 million people sat vacant. Old debts forced city leaders into impossible choices. There was not enough money for public safety, not enough for streetlights, not enough for parks, not enough for education — not enough, period.

In March 2013, an attorney named Kevyn Orr was appointed to take charge. He’d never received a vote and had never been vetted by the mayor or City Council. And yet, he assumed all the power that otherwise would be held by the mayor and council, as well as additional powers, such as the ability to unilaterally sell city assets. While local officials could attempt to veto certain decisions, the veto itself was subject to state approval.

Four months later, with the governor’s signoff, Orr led Detroit into the largest municipal bankruptcy in U.S. history. Orr had this authority because of Michigan’s expansive system for intervening in distressed cities and schools. His appointment by state officials as Detroit’s emergency manager intensified a debate about power and democracy that continues to this day.

In Michigan, the state has an unusual amount of discretion in initiating oversight, and its emergency managers have an unusual amount of authority, according to researchers. Compared with those of other states, Michigan’s takeover powers have also been among the most widely used. Since 2000, under various versions of the law, 10 Michigan municipalities have come under the control of at least one emergency manager. So did several public school districts, including Detroit’s.

The results were mixed and showed a clear trend, some studies found, toward intervening in majority-Black towns. One recent study found that the race and economic status of residents and the city’s reliance on state revenue were better predictors of a municipal takeover than financial distress indicators.

By 2017, 56% of Michigan’s Black residents had lived in cities governed by emergency managers or other state oversight measures, according to a widely cited lawsuit filed in federal court by a coalition of community leaders against Michigan’s governor and treasurer. Just under 3% of white people had the same experience, the complaint said. (The suit, which sought to overturn the law based on equal protection and voting rights, was later dismissed.)

Research by sociologist Louise Seamster contends that while Michigan’s emergency management law is ostensibly neutral, it “provides the logic to blame Black governance for structural disinvestment and White-led extraction.”

Early versions of Michigan’s emergency management law were more narrowly tailored, but in 2011, soon after Gov. Rick Snyder took office, lawmakers significantly expanded it. In a 2012 referendum, voters across the state rejected the expanded law. But four weeks later, legislators passed a bill that largely mirrored the earlier proposal and included an appropriation that made it immune from future referendums.

The first city to get a new emergency manager with expanded powers was Flint. Over three and a half years, four managers presided over a cataclysmic time in city history. After switching the water source, failing to treat the water properly and not sufficiently intervening as infrastructure corroded and health risks worsened, the city endured a crisis of extraordinary proportions.

Snyder, a Republican who was in office through 2018, has acknowledged that emergency management failed Flint. But he has also pointed to Detroit as evidence that the system worked, with the city on far more stable ground today than it was 10 years ago. (Snyder could not be reached for comment.) Proponents of the law have argued that an outside official is more free to make difficult but necessary decisions.

Others see Detroit’s experience with emergency management as atypical or even flawed. And some of the critics are now in power. Gov. Gretchen Whitmer, for example, advocated for repealing it in her 2018 campaign, and her press secretary said Whitmer will “work closely with the legislature if they take up legislation reforming the state’s emergency manager law.”

But there are few signs that will happen anytime soon.

Eric Scorsone, an associate professor and director of Michigan State University’s Extension Center for Local Government Finance and Policy, is among those who see flaws in the way the state has handled emergency management. A specialist in local government public finance, he’s worked at state agencies in Michigan and Colorado and as an adviser in Flint and Detroit.

Eric Scorsone, an associate professor and director of Michigan State University’s Extension Center for Local Government Finance and Policy, has grown increasingly skeptical of the state’s emergency management law.

Early on, Scorsone said, he didn’t like the expanded version of emergency management law but thought it might be necessary. “I’ve definitely changed my views,” he said. In a March presentation to the Michigan Senate’s general government subcommittee, Scorsone outlined alternative ways for the state to approach struggling cities and schools — including reforms to keep them from struggling in the first place. There was, he said on one slide, “no need to remove local democracy.”

In a conversation with ProPublica, Scorsone described three critical lessons from Michigan’s experience with emergency management.

1. Detroit Is Different

After 20 months as Detroit’s emergency manager, Orr resigned. Through bankruptcy, the city shed $7 billion in debt and restructured an additional $3 billion, creating more flexibility for investment in public services.

“A lot of people say, ‘Well, the Detroit bankruptcy is the big success story of the Snyder version of the law,’” Scorsone said. And Orr, he said, is “very good at what he does” and “very successful at navigating this complex legal environment.”

But Detroit’s story is unusual, Scorsone said. And whatever positive developments have unfolded in the city over the past decade, it’s not clear they can be solely attributed to emergency management.

Most notably: There were benefits in bankruptcy. While emergency management has been pitched by proponents as a way for communities to avoid bankruptcy, and the destroyed credit that comes with it, in Detroit, emergency management was actually a precursor to the Chapter 9 process. It is the only community that was put through bankruptcy by an emergency manager. The most significant changes in Detroit between then and now, Scorsone said, can be traced to what happened in bankruptcy court, where the city untangled itself from obligations to more than 100,000 creditors.

“You could argue that Kevyn having the powers he did was important to getting it done the way it was, and that may be true,” Scorsone said. (Orr didn’t respond to messages requesting comment.)

But he also noted that emergency managers make enormously consequential decisions “without open meetings, without freedom of information ... they didn’t have to release records.” Not only does the public not have a role in decision-making, but the process can be kept secret from them.

“I’m not convinced that a lot of what the EM does, like taking away transparency and really the elimination of collective decision-making — I mean, I guess I’m not convinced the cost is really worth it,” Scorsone said.

The bankruptcy ended with a much-touted “Grand Bargain,” an $816 million deal involving philanthropic and public donations that limited how deeply pensions were cut and spared artwork in the Detroit Institute of Arts from a forced sale. But this bargain, Scorsone pointed out, could have been made without bankruptcy — “that’s just negotiation.”

And the attorney general could have gone to the court and fought for pension rights, he said, which are guaranteed in the state constitution. The bankruptcy cut pensions for many retirees by 4.5% and eliminated cost-of-living increases. Retired police officers and firefighters were spared immediate cuts, but their 2.25% cost-of-living increases were reduced to 1%. Meanwhile, Scorsone noted, many creditors “ended up getting real estate and other stuff to get bought off.”

“Who really did make out in this bankruptcy?” he asked.

2. The Specter of Flint

As a fiscal adviser in Flint from 2019 to 2022, and in his continuing work with its City Hall, Scorsone said he’s reviewed what emergency managers did, “and it’s not a pretty picture, quite frankly.”

Both Detroit and Flint were led by emergency managers in 2013 and 2014, both overseen by Michigan’s Department of Treasury. Despite the state’s uniquely influential role in both communities, a late effort to negotiate a new agreement to keep Flint from leaving Detroit’s water department failed. Detroit lost its second-biggest customer, and Flint, it turned out, lost a reliable source of drinking water.

The new regional water provider that Flint intended to join was not yet built. So Flint rebooted the old riverfront plant and began treating its own water — a process that went catastrophically wrong. Not only was there excess exposure to lead from the waterafter the switch, but there were bacterial problems, unsafe levels of a disinfection byproduct and an outbreak of Legionnaires’ disease, which sickened at least 90 people and killed at least 12. As Kettering University associateprofessor and Flint resident Benjamin J. Pauli details in the book “Flint Fights Back,” the water activism in the city emerged from its democracy movement, where residents pushed back against emergency management.

Scorsone, who has also worked with Flint, said he reviewed what emergency managers did there, “and it’s not a pretty picture, quite frankly.” (Brittany Greeson/The Washington Post via Getty Images)

“I do think the Flint crisis did happen partly because Detroit was taking all the attention,” Scorsone said. As signs of trouble in Flint escalated — from residents protesting about health issues to a General Motors plant leaving city water because it corroded its machinery — Scorsone described the reaction of some state officials, including at the Treasury Department, as, “Yeah, whatever, it’s just Flint.”

Two of Flint’s emergency managers later faced criminal charges, under two different prosecution efforts, for their roles in the water crisis. Both indictments included charges of misconduct in office. In both cases, they pleaded not guilty and a judge later dismissed all charges against them.

3. There Are Other Ways

“Something I’ve learned over the 20 years I’ve been doing this now in Michigan is that we have created a bad public finance system,” Scorsone said. “And that system puts local governments at risk.”

In his recent presentation, Scorsone described how state restrictions curtail the revenue and spending of local governments, threatening to reduce critical public services, defer maintenance and investment in infrastructure and perpetuate inequality between communities.

There are a number of ways the state could support cities before they reach a point of crisis, he said. It could, for example, change its approach to property taxes. Restricting the tax base and rate, he said, has eroded the revenue of many cities.

The state could also change its practice of revenue sharing, he said. A 2019 fact sheet from the Michigan Municipal League, a statewide association, said that between 2001 and 2018, the state diverted $8.6 billion from local governments.

Such policies put communities on shaky ground even before the recession, Scorsone said. “Other states didn’t have this. Other states didn’t have a bunch of cities failing.”

“Instead of just realizing you have a bad system,” he said, state legislators passed the emergency management law to try to clean up problems after they’ve reached a crisis.

In a statement, the Treasury Department emphasized that it tries to work with municipalities and school districts to avoid financial problems. The emergency management law, the department said, “is a law of last resort — and all options must be explored and exhausted before its use.”

Whitmer’s office emphasized to ProPublica that no local governments are currently under emergency management, pointing to that as a sign her policies have bolstered their financial health. “The governor has always opposed the use of emergency managers because it has led to disastrous results for communities,” her press secretary said in an emailed response.

In the aftermath of the problems in Flint, a report from a bipartisan task force commissioned by Snyder recommended changes to the emergency management law, citing its lack of checks and balances and concern over managers making key decisions outside their expertise. And a growing body of research on the law has described troubling consequences.

But while some Democrats who were among the law’s critics are now in power, efforts to repeal or revise the law have yet to move forward. In February, shortly after the party took power in Lansing, a bill to repeal the law was introduced by Rep. Brenda Carter, a Democrat from Pontiac, which has had emergency managers. The bill, which has the support of Pontiac’s City Council members, was referred to a committee six months ago. Carter’s policy director said she’s working with House Majority Leader Abraham Aiyash, a Democrat from Hamtramck (another community affected by emergency management), on a companion bill to create an alternative system for assisting disinvested cities and schools.

Scorsone said that he and others “are pushing privately to say, ‘Look, now’s the time to change it, before you really need it.’”

In a statement to ProPublica, Senate Majority Leader Winnie Brinks, a Democrat from Grand Rapids, indicated dissatisfaction with the law, but she stopped short of specifying how to fix it.

“The way Gov. Snyder weaponized emergency managers created harm that will be felt by generations in certain communities throughout our state,” Brinks said. “He misused and overused a policy that is supposed to help governments in dire circumstances.

“I believe that there still needs to be an avenue where the state can assist in these situations, without usurping the role of democratically elected local leaders,” she added. “Any changes in the future will be the result of many long conversations with the input of cities, townships, school boards, residents and more.”

Scorsone pointed out that the state’s Treasury Department has all sorts of regulatory tools for budgets, accounting, auditing and more that can be used to support struggling cities and schools while avoiding emergency control.

“There’s other ways to deal with this kind of financial crisis that is more transparent, that is more effective, that doesn’t get rid of democracy and that is still going to get the outcomes,” Scorsone said.

by Robin Urevich, Capital & Main, and Gabriel Sandoval, ProPublica, photography by Barbara Davidson for ProPublica

This article was produced for ProPublica’s Local Reporting Network in partnership with Capital & Main. It was also co-published with LAist. Sign up for Dispatches to get stories like this one as soon as they are published.

By law, the American Hotel in downtown Los Angeles is supposed to be reserved for residents who can’t afford to live anywhere else. For decades, the building was a haven in the city’s sky-high housing market, where artists, musicians and people down on their luck could rent rooms for about $500 a month. At the end of the day, longtime tenants would hang out at Al’s Bar, a legendary punk and alternative rock venue on the ground floor where bands like the Red Hot Chili Peppers played long before they sold out stadiums.

But amid the largest homelessness crisis in the nation, the American’s owner has turned the building into a boutique hotel where tourists can book rooms for as much as $209 a night.

And the city has done nothing to stop him.

Long before Los Angeles Mayor Karen Bass declared a housing emergency last year, city officials recognized that affordable housing was vanishing and sought to address it by making it difficult for developers to scoop up the residential hotels whose single-room dwellings were the only places many people could afford. Residential hotels consist of small, bare-bones rooms, some with shared bathrooms and most with no kitchens, in aging downtown buildings and roadside motels. In 2008, the LA City Council passed an ordinance to place strict limits on the conversion of more than 300 such buildings, totaling nearly 19,000 rooms (about 15% of the city’s lowest-cost housing units today).

But seven years later, the American’s new owner, Mark Verge, called the residents to a meeting. He said he planned to remodel the crumbling building and, according to tenants, offered to pay them to move. For months before the meeting, rumors had swirled around the American, said Jomar Giner, a barista who lived there until late 2014. The main topic on everyone’s mind, she said, was: “They’re going to ask us to move, but where are we going to live?”

Many of the American’s residents said they took Verge up on his offer, unaware that his plan to eventually turn the American into a tourist hotel was supposed to be illegal under the residential hotel law. The conversion disrupted a tight-knit community that had lived at the hotel for years — including at least one person who said he ended up sleeping in his car.

Under the law, Verge was required to compensate the city for the loss of affordable housing by either building replacement units or paying into a fund for housing construction. In Verge’s case, that could have cost more than $10 million. But like many landlords, Verge did neither of those things, and the city Housing Department didn’t compel him to, even though the law provides for $250-per-day fines and jail time for violators.

Scouring city records and online advertisements, Capital & Main and ProPublica identified 21 residential hotels, totaling more than 800 dwelling units, that were supposed to be preserved as housing but that have recently been on offer to tourists.

“That is illegal by statute and problematic for several reasons,” because residential hotels are supposed to be for the city’s lowest-income people, said Deepika Sharma, a housing law professor at the University of Southern California. “These are the folks struggling the most.”

It’s a staggering loss considering the severity of LA’s affordable housing shortage and what it would cost to replace 800 dwellings: more than $475 million at the current average cost of nearly $600,000 for the construction of a single affordable unit.

Some hotels have done little to hide their boutique transformations, advertising “expertly crafted” cocktails in a lobby bar and “a whimsical home away from home” for $270 a night. The hotels list rooms on their websites, on travel platforms like Expedia and Booking.com and on outdoor signs.

The American says on its website that the hotel in LA’s Arts District provides “affordable options for guests who are looking to make the most of their visit to the city of angels without blowing their entire vacation budget.”

Yet none of the 21 hotels, including the American, have received clearances from the city that would indicate they’ve replaced the low-cost housing they’ve taken off the market, Housing Department records show. Nor have the owners taken the other option of paying the fee to the city’s Affordable Housing Trust Fund. And none have been fined or prosecuted for failing to comply.

LA Housing Department director Ann Sewill referred questions to her staff. “We need to enforce it better,” said Greg Good, a senior policy adviser at the agency. “We’re working 24/7 to get there, and we’ve got to get better.”

A man pushes his cart filled with aluminum cans past the American Hotel in April. He said he has lived in LA’s Arts District for some 40 years and currently stays in a small room inside a gas station.

Verge — who founded Southern California’s go-to apartment listing service, Westside Rentals, before selling it to CoStar Group, the parent company of Apartments.com — insisted he was unaware of the residential hotel law and of the American’s inclusion on the city’s residential hotel inventory. “I don’t know about this magical list,” Verge said, though records show the city informed his lawyer that the American was residential after he bought the hotel in 2013.

Verge said he has been paying the city’s hotel tax for years and noted that he has openly advertised the American as a hotel. “Do you know how many banners I’ve put on that thing?” he said. “I definitely don’t think I’m violating any law.”

The story of how Verge was able to convert the American into a tourist hotel underlines the city’s failure to preserve affordable housing — and how easily landlords have avoided the law.

“One of the Most Pro-Tenant Ordinances”

Today, more than one in 10 unhoused people in the U.S. — some 75,000 people — live in Los Angeles County. Far beyond downtown’s Skid Row neighborhood, tents and tarps are jammed together under bridges alongside overflowing shopping carts, broken-down bicycles and blankets. Men and women wrap themselves in ragged blankets under the overhangs of grocery stores and strip malls. They spread bedrolls in parks and next to the stars of celebrities on Hollywood Boulevard.

A roadside encampment in LA in December 2022. Mayor Karen Bass declared a state of emergency over the city’s homelessness crisis on her first full day in office. (Frederic J. Brown/AFP via Getty Images)

The human misery on display across the city made homelessness the central issue in the 2022 mayoral race and drove Bass to proclaim a housing emergency on her first day in office.

But in reality, the emergency has been coming for a long time. Nearly two decades ago, LA officials foresaw that rapid gentrification would eat away at residents’ ability to live in the city. Residential hotels were rapidly being converted to condos.

So, in 2008, the City Council voted to preserve the hotels with a law. LA’s then-housing director Mercedes Márquez — who now leads the mayor’s effort to combat homelessness — called it at the time, “without question, one of the most pro-tenant ordinances to come before the City Council in its entire history.”

City officials drew up a list of 336 hotels, using the state’s legal definition of a residential hotel: a building of six or more units that are the primary residences of their guests. Some were traditional single-room occupancy buildings with shared bathrooms. Others were motels with various claims to fame. One was the hotel where singer Janis Joplin was found dead; another served as the site of Julia Roberts’ apartment in the final scene of “Pretty Woman.”

By the time of the ordinance, the once-grand downtown hotels that served travelers in the early 20th century and the roadside motels that catered to mid-century motorists had fallen out of fashion with tourists. City officials determined they were being used as living spaces for local residents, not tourist accommodations.

The new law strictly limited what residential hotel owners could do with their properties. But Márquez and the city attorney’s office assured councilmembers it would stand up in court: A nearly identical San Francisco law had been upheld by California’s Supreme Court in 2002, and the U.S. Supreme Court had reviewed the case, affirming the state’s power to decide such issues. Márquez signaled that enforcement would be stringent.

Mercedes Márquez was appointed as LA’s chief of housing and homelessness solutions by Bass. (Gary Coronado/Los Angeles Times via Getty Images)

City councilmember Bill Rosendahl, who strongly supported the ordinance, asked Márquez somewhat tongue-in-cheek questions about a prime beachfront property in his district that had been designated as a residential hotel.

“My God, I could tear that down and build high-end condos and move in the rich. Does this stop me from doing that?” Rosendahl asked.

“Pretty much,” Márquez replied.

The law “is designed to make it difficult,” although not impossible, for owners to convert their buildings into condos or tourist hotels, Márquez told the City Council. Owners would first have to apply to the Housing Department for approval. They would then have to either replace all the residential housing units or pay a fee, set at the acquisition cost of nearby property plus the cost of constructing 80% of the replacement dwellings.

Márquez referred an interview request to the mayor’s press office, which did not make her available. And she did not respond to emailed questions.

“I would think the owners would find it quite onerous,” Gary Painter, an economist who specializes in housing at USC, said in a recent interview. “Anything that makes it harder for them to fully exercise their options on their real estate, they’re going to be upset about.”

Many hotel owners are indeed unhappy with the residential hotel designations. Ray Patel, who heads the North East Los Angeles Hotel Owners Association, said the law was an unfair attempt to shift the burden of LA’s housing problems onto hotel owners. “The city was trying to avoid the elephant in the room: how difficult it is to build housing,” he said. “There’s too much red tape.”

But in adopting the law with no opposition, the City Council decided that limiting hotel owners’ property rights was in the public interest because the loss of residential hotel rooms had become a housing emergency that affected elderly, disabled and low-income people “who are least able to cope with displacement in the Los Angeles housing market.” The council predicted that “unregulated conversion or demolition of residential hotels would lead to an unacceptable and socially harmful increase in homelessness.”

The ordinance allowed owners to appeal their designations by submitting tax records, housekeeping reports and guest registration records to prove their buildings had operated as traveler hotels. Patel, who owns the Welcome Inn on old Route 66 — Colorado Boulevard in the Eagle Rock neighborhood — said he submitted reams of paperwork, got his motel off the list and helped others to do the same. About 100 properties were removed, though others have since been added. The city’s most recent list contains more than 300 hotels.

Some hotel owners have tried to challenge the ordinance in court, arguing that the city’s designation of the motels as residential amounts to an unconstitutional government taking of private property. But last year, a federal judge dismissed one claim, noting that the ordinance falls within the city’s authority to promote residents’ health and welfare. And in 2015, the U.S. Court of Appeals for the Ninth Circuit rejected another hotel’s claim and upheld the ordinance as a “rational” attempt to preserve low-income housing.

Barbara Schultz, director of housing justice at the Legal Aid Foundation of Los Angeles, said the law is well-settled. Her 2002 lawsuit against the city’s redevelopment agency resulted in a settlement that preserved downtown residential hotels and sparked the city’s interest in an ordinance.

“The city is squandering a great opportunity to have more housing,” Schultz said. Without tight enforcement, she said, “people on the street who could be in housing are not.”

By the time Verge bought the American, the Housing Department had determined it to be a residential hotel in 2008 and again in 2011. City records show Verge’s attorney inquired about the American’s status, and in a 2013 letter, the department confirmed it was subject to the residential hotel law, providing him a copy of the ordinance.

“I don’t even recall anything like that,” Verge said in an interview, asserting that he bought the American because he intended to run it as a tourist hotel.

How Verge Turned the American Into a Tourist Hotel

Verge said in an interview that he wanted to buy the American in 2013 because of its rich history and his own memories of hanging out with friends at Al’s Bar. “We were kids from Santa Monica and liked to go there,” he said. It was, he added, a “different world.”

Mark Verge poses outside the American in June 2013, a month after he bought the property. At the time Verge purchased the building, it had more than 40 apartments. (Gary Friedman/Los Angeles Times via Getty Images)

Al’s Bar, located on the American’s ground floor, rose to fame in the city’s arts and music scene in the 1980s and 1990s as it attracted up-and-coming bands like Nirvana, Hole and Sonic Youth. Some tenants thought of Al’s as their living room where they played pool and drank beer. But it also attracted celebrities. Then-Gov. Jerry Brown and singer Linda Ronstadt once dropped in at Al’s, where graffiti covered the walls and a neon sign near the bar warned, “TIP OR DIE.”

First image: The band Tool performs at Al’s Bar in 1991. Second image: Patrons, including some American Hotel tenants, hang out at Al’s Bar in the 1990s. The bar closed in 2001. (First image: Lindsay Brice/Getty Images. Second image: Courtesy of Sally Mander Howard)

But above all, the American provided cheap housing for people who didn’t have other options. The American, which was originally called the Canadian, was built in 1905 as the one of the only Los Angeles hotels where African Americans were welcome. And ever since, it had been a refuge for people on the margins of society. It was a classic residential hotel that one former tenant dubbed “a flophouse for artists,” offering basic single rooms and shared bathrooms.

At the American, former residents said they needed no application or credit check. A month’s rent would buy a month’s shelter, no questions asked.

When Verge took over, the American was in bad shape. In 2012, a housing inspector had warned the building department that the hotel was in danger of collapsing.

Verge denied offering buyouts to move and said the residents requested relocation payments from him. “I’m not a cash for keys guy,” he said. But seven former residents interviewed by Capital & Main and ProPublica said they had received a buyout offer and knew of others who had as well. A printed notice provided by a former resident says, “the owner of the building would like to offer relocation assistance to anyone already considering a move.” The former residents said Verge also promised that if they were willing to endure the noise and dust of a remodel, he would let them stay. And some did.

Verge said the American had been partially operating as a tourist hotel when he bought it. But five tenants said that wasn’t the case. “They were all residents,” Giner wrote in an email. A photo published in the Los Angeles Times in 2013 shows Verge perched atop a pay phone outside the hotel. Just above him is a sign that reads, “Apartments for Rent,” with the name of his company, Westside Rentals.

Verge had started other hotels, restaurants and bars and seemed to bet that the American’s mystique would lure guests willing to lug suitcases up stairs and share bathrooms for a chance to drink in the hotel’s bohemian past. Graffitied walls, an Al’s sign and a giant mural of LA artist Ed Ruscha adorn the building’s facade, though most of the American’s artist residents and the noise and chaos of the hotel’s heyday are long gone.

A guest leaves the American Hotel in April.

For Verge, who once owned racehorses and was briefly the CEO of Santa Anita Park, it was a bet that paid off.

Yet Verge never applied to the Housing Department for permission to convert his new purchase, according to department records. And as he remade the American into a tourist hotel, Verge suffered no legal repercussions for failing to build replacement housing or pay the in-lieu housing fee to the city. Either option would have been costly: In addition to site acquisition, the cost of building affordable housing averaged about $450,000 per unit between 2014 and 2016, according to the Terner Center for Housing Innovation at the University of California, Berkeley.

Even when the American remodel began, it slipped undetected through a key enforcement mechanism in the residential hotel law: The Housing Department must approve building permit applications at residential hotels to ensure the owners aren’t converting rooms into tourist accommodations. 

Five times between 2014 and 2018, the American applied for building permits. Verge repaired a crack in an exterior wall and put a new roof on the building. He remodeled bathrooms and repaired drywall and stucco. But only one permit was ever reviewed for adherence to the residential hotel law, according to building department records.

In 2016, a housing inspector found 32 rooms had been remodeled and a laundry area had been added, noting “permit required.” Records show the inspector didn’t inquire about whether the rooms were redone for short-term guests and never followed up. Verge wasn’t cited for violations of the residential hotel law.

The Housing Department’s code enforcement director Robert Galardi told Capital & Main and ProPublica that the hotel was inspected last November, resulting in “minimal code violations with compliance obtained in a timely manner.” The inspection made no mention of the hotel’s tourist offerings, which the hotel advertises on a sandwich board sign just outside the front door.

Told of the tourist conversion, Galardi said he’d “conduct further investigation.”

Failure to Enforce

The Housing Department has plenty of mechanisms for enforcing the law, yet the city has used hardly any of them — even in the face of what appear to be violations.

The TikTok account of the Hometel Suites in Koreatown features videos of guest rooms and the reception desk as K-pop songs play in the background. Guests can dine on $115 steamed crab dinners at the hotel’s seafood restaurant. Years ago, the Housing Department had determined Hometel — once known as the Hamilton — to be a residential hotel, and in 2008 and in 2011 the department informed the hotel’s then-owners it was subject to the ordinance.

Galardi said his inspectors saw no evidence of short-term rentals at the Hometel when they visited the hotel in May 2019. But at least since March of that year, a three-story-tall banner on the facade has shown a family with suitcases on a luggage cart and the message “Book your stay today.”

General manager Becky Hong said neither she nor the owner would comment on Hometel’s residential hotel status or city enforcement, and she did not respond to emailed questions.

A review of more than 10,000 pages of Housing Department documents obtained under the California Public Records Act, including inspectors’ notes, correspondence and other enforcement records, along with interviews with housing officials, shows hotel owners have little reason to fear fines or prosecution for violating the residential hotel law.

Logan Altman, the former owner of the Ramona Motel in South Los Angeles, said when he bought the property in 2016, the previous owner had assured him he could rent out rooms on a nightly basis without fear of a city crackdown. “What I heard was enforcement was somewhat lax,” he said. “The seller said he hadn’t had any problems.” And neither did Altman, according to Housing Department records. He sold the motel to a nonprofit housing developer in 2021.

In the past 15 years, LA Housing Department data shows, the city has cited just 17 hotels under the law. However, the city’s recordkeeping seems deficient: Capital & Main and ProPublica found two additional hotels it cited by separately looking through enforcement records provided by the department. Only four of the 21 residential hotels that Capital & Main and ProPublica found marketing rooms to tourists have been given warnings by housing inspectors for residential hotel violations.

A block away from Hometel at the H Hotel, a neon H on the building’s brick facade signals the former East West Hotel’s new hip vibe. A Saturday-night stay ranges from $200 to $270, and a crystal chandelier hangs above the lobby near a lounge where guests can order brunch and $115 bottles of champagne.

The H Hotel, formerly known as the East West Hotel, on 8th Street in LA’s Koreatown First image: A vendor sells clothing and kitchen items on 8th Street near the H Hotel (black building in background). Second image: People dine at the H Hotel’s bustling restaurant, the H Cafe.

Last year, a housing inspector noted that Nojan Haddadi, the H Hotel’s operations manager, told him that the property is currently being used as a “transient hotel,” using the legal term for hotels that rent rooms to tourists. But the hotel, which is officially designated residential, never applied to convert to a tourist hotel, Housing Department records show. And there’s no evidence in the records that the department took any enforcement action against the hotel for violating the residential hotel law. Haddadi told Capital & Main and ProPublica that the hotel hasn’t accepted long-term residents since 2019. He said he didn’t know if the hotel was violating the law but noted that the hotel’s management has asked the city to remove its residential designation. The H Hotel’s owner, Mike Barry, declined to answer questions, citing advice from his attorney.

When asked why the Housing Department hasn’t enforced the law against the H Hotel, Galardi noted that his inspector was barred from entering without an administrative warrant. Haddadi said the hotel had been instructed by its attorney not to let inspectors in. Galardi wrote, “Moving forward, staff will conduct further investigation regarding tourist units.”

Throughout the inspection records, a pattern emerged: Hotel owners or their attorneys could dodge city regulators simply by refusing to consent to inspections without a court order.

The department could obtain such warrants, but Galardi said that its inspectors have not secured them — to enter either the H Hotel or others whose owners have barred inspectors.

Even when city inspectors have attempted to enforce the law, their efforts have proved futile because they haven’t always followed up to ensure compliance. Between 2016 and 2018, LA housing inspectors ordered the owners of the Studio Lodge, Hyland Inn, Central Inn Motel and Top Hat Motel to either return their rooms to residential use or obtain the required clearances to convert them.

But after inspectors said they’d return to ensure the violations were corrected, attorney Frank Weiser, who represented the Hyland, the Central Inn and the Top Hat, sent letters to the Housing Department that said they would not be allowed to reenter without administrative warrants. Housing department enforcement records show no evidence that inspectors obtained warrants — even though the hotels were also cited for fire safety and electrical issues that inspectors rated as “high severity” violations.

And until recently, travelers could still book rooms online at any of the three hotels.

The owner of the Central Inn and the manager of the Top Hat said they had recently begun providing short-term housing funded by local homelessness programs. But the Top Hat manager said the motel still does nightly rentals when there are vacancies, and both acknowledged they’d been offering daily rates until earlier this year. Neither hotel owner answered written questions about whether the nightly rentals violated the residential hotel law. The owner of the Studio Lodge didn’t return phone calls or emails seeking comment.

Weiser, who still represents the Hyland’s owner, said he thinks the hotel corrected its housing code violations. But he said of the residential hotel violations, “The bottom line: There was never any action taken by the city. I think that speaks for itself.”

Sharma, the law professor, who previously advised former LA Mayor Eric Garcetti on housing policy, noted the residential hotel law allows the city attorney to seek court orders to stop building owners from renting to tourists. “I think by even filing against a few buildings, it sends a message to the rest of the buildings that the city is watching,” she said. “That’s how enforcement works in larger scale.”

The residential hotel ordinance also required the Housing Department to file annual reports to the City Council and mayor, informing them of the total number of residential hotel units, any conversions or demolitions and the department’s enforcement activities. But in response to a public records request, the department told Capital & Main and ProPublica that it didn’t have any of the reports. The city clerk’s office said it has no record of receiving any, and Galardi said he didn’t think the reports were ever compiled.

Good, the Housing Department’s senior policy adviser, said that understaffing is an obstacle to enforcement, pointing out that a single inspector is assigned to all of the city’s residential hotels. “There are significant capacity issues,” he said. 

The bleak contrast between the American’s trendy remodel and the city’s homelessness crisis can be seen on the surrounding streets. On one recent day, a man pushed a shopping cart full of plastic bags past the hotel’s sandwich board advertising rooms and suites. On another, a man covered head to toe in dirty blankets stood against a graffitied wall as a tour group admired the art behind him.

Tourists on an arts walk pass a man draped in blankets in the heart of the Arts District in April.

As tourists spilled out of the American, many said they were shocked by the seemingly endless tents pitched on downtown sidewalks and were startled to learn that the American was supposed to be reserved for the city’s neediest residents. “I don’t like to hear that,” said Britt Booram, a realtor from Indianapolis as she got into a black van after checking out of the hotel.

Galardi said Capital & Main and ProPublica’s reporting had “gotten the ball rolling” on another potential enforcement tool to shut down short-term rentals in residential hotels: the city’s 2018 Home-Sharing Ordinance, which regulates listings on sites like Airbnb. But it’s rarely been used in the past. The city has fined just two hotels, and the planning department issued warning letters to a third hotel in 2020.

Only one of the three has stopped accepting online bookings. The others continue to advertise residential hotel rooms to tourists.

by Craig Silverman

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up to receive our biggest stories as soon as they’re published.

Oprah Winfrey looked upset.

The photo caught her midsentence, her left hand jabbing at the camera.

“They are twisting everything,” the TV icon was quoted as saying, under a red “BREAKING NEWS” banner.

The ad featuring the Winfrey image and quote ran on the conservative website DC Swamp Tales. It directed readers to a webpage that resembled a news article. The text spun a narrative about a television interviewer who unfairly berated Winfrey for promoting a revolutionary product that could “reverse Dementia instantly & for good.”

But there was no such dispute. Winfrey’s quote was fake, and her name and likeness were used without permission. The product, a low-dose, cannabis-derived gummy supplement, does not treat dementia, let alone reverse it.

“These ads are false. Oprah Winfrey does not have anything to do with these products,” Nicole Nichols, a spokesperson for Winfrey’s company Harpo Inc., told ProPublica.

Oprah Winfrey had nothing to do with this ad or the anti-dementia product it was touting, her spokesperson said. (Screenshot by ProPublica)

Such scam ads have proliferated on right-wing websites worldwide in the past eight months. They use fake endorsements from celebrities including Winfrey, country music singers Dolly Parton and Reba McEntire, Twitter and Tesla owner Elon Musk, actor Ryan Reynolds, Canadian prime minister Justin Trudeau and former German chancellor Gerhard Schröder to promote dubious medicines and cryptocurrency frauds. Conservative publishers make money from each click on a deceptive ad, exploiting their like-minded readers.

The ads were placed by AdStyle, an ad network whose corporate website lists it as being registered in Delaware with an office in Boca Raton, Florida. Its website said it is “trusted by” major brands including Toyota, Ikea, EA Games and L’Oréal. But Florida and Delaware corporate registries have no record of AdStyle, which appears to be operated by a Latvian couple living in Italy. Spokespeople for Toyota, Ikea and EA Games said they could not find any records of those companies working with AdStyle. L’Oréal did not respond to queries.

“These ads are certainly terrible,” said Kirsten Grenier Burnett, a spokesperson for McEntire. Spokespeople for Trudeau, Musk, Reynolds, Schröder and Parton either did not respond or declined to comment.

This month, after reporters contacted AdStyle, the “trusted by” assertion and the brand logos were removed from the company’s website.

Since November, reporters for ProPublica, Sweden’s Expressen newspaper, the Organized Crime and Corruption Reporting Project, and Paper Trail Media in Germany have viewed hundreds of AdStyle ads across scores of right-wing websites. The vast majority of the ads were outright scams or made seemingly exaggerated claims. “This 197-Year-Old Man’s Longevity Secret Makes Your Cells 4 TIMES Younger,” one pitch proclaimed.

AdStyle ads are often displayed on a network of more than a dozen U.S. conservative outlets connected to a lawyer whose clients have included former President Donald Trump. Advertisers pay AdStyle to show their ads to web users, and the company splits the revenue with its publisher partners. Its ads are easy to spot because they carry the AdStyle logo.

The prevalence of scam ads on AdStyle and its many partnerships with right-wing sites around the world exemplify how conservative publishers, politicians and operatives profit from fleecing their fellow right-wingers — and how some players take the strategy global. Even the editorially conservative National Review has acknowledged “the right’s grifter problem.”

Deceptive ads abound on Trump’s Truth Social network, while his former campaign chair Steve Bannon and other supporters face federal charges for running an alleged fraudulent donation scheme to build a privately funded border wall. (Bannon has pleaded not guilty to money laundering, fraud and conspiracy charges. Two other people have pleaded guilty.)

A recent New York Times investigation revealed how a group of conservative operatives had raised close to $100 million using robocalls that asked for money to help veterans and first responders. Only 1% of the money went to those causes. And this month ProPublica reported on an IRS whistleblower complaint alleging that leaders of 2020 election denialist nonprofit True the Vote had used donations for personal gain. True the Vote said the complaint was without merit.

Digital advertising has made it easy and lucrative to target people on the internet with scam ads and donation pitches. Besides AdStyle, other networks and social media platforms have carried scam ads. Earlier this month, Harpo filed two federal lawsuits against people and companies it said used Winfrey’s name and trademarks without permission to market weight loss and CBD gummies. Both cases are pending. Harpo did not sue AdStyle. Asked why, Winfrey’s company declined to comment.

It’s unclear who ultimately owns AdStyle and how much money it and its publisher partners earn from the scam ads. Ad networks like AdStyle act as a middleman by connecting advertisers with publishers. An advertiser signs up with a network, uploads the ads it wants to run, identifies the kind of people it wants to reach, and sets the price range it’s willing to pay each time someone views or clicks on an ad.

Meanwhile, the network signs deals with publishers to place ads on their websites in exchange for a share of the revenue. It’s unclear how AdStyle splits revenue with publishers, but ad networks typically take between 20% and 50% of the revenue generated.

Scam ads on DC Swamp Tales featured Elon Musk and Reba McEntire. (Screenshot by ProPublica)

In the U.S., AdStyle primarily works with right-wing sites operated by two companies, Saber Communications and Digital Communications LLC, located a few doors down from each other in Fredericksburg, Virginia.

The companies are owned by Andrew Coelho and Michael Rothfeld, political marketers with ties to former U.S. representative and presidential candidate Ron Paul and his son, Kentucky Sen. Rand Paul. Federal Election Commission records show Saber provided digital marketing services to Rand Paul and PACs that support him. Ron Paul’s 2012 presidential campaign paid Saber close to $8 million.

With names like Liberal Hack Watch, DC Dirt Sheet and DC Swamp Tales, most sites in the Saber/Digital Media Communications network publish content with a pro-Trump bent. Four other sites produce Christian content or travel and lifestyle advice for conservatives.

Through their websites, Rothfeld and Coelho collect the email addresses of American conservatives and target them with paid political and marketing messages.

“I am a professional junk mailer,” Rothfeld said in a 2012 talk to the Young Americans for Liberty National Convention, according to BuzzFeed News. “I am a professional telemarketer. I’m a professional spammer — like, a hundred million pieces of, emails a month. And I’m a professional negative campaigner. And I’m damn proud of all four.”

Until 2020, Digital Communications listed David Warrington as its registered agent. The Virginia-based Warrington was also the agent for at least seven now-defunct LLCs connected to websites in the Rothberg/Coelho network.

Warrington represented Trump in his dealings with the Jan. 6 congressional committee. His clients have also included Jessie Benton, a Texas political consultant convicted of illegally funneling money to Trump’s campaign on behalf of Roman Vasilenko, who has been described as a “Russian naval officer turned multilevel marketer.” Vasilenko, who was not charged, did not respond to requests for comment through his social media accounts.

Warrington said he represents Rothfeld, Coelho and their companies. He provided a statement from Saber about the AdStyle ads on its sites.

AdStyle is “by far our least active ad service, delivering less than 3% of total banner impressions on the sites we manage,” the statement said. “For the sites that still host their ads in low-priority positions, their ads currently generate an average of $11 per month per site.” He declined to comment further.

Rand Paul and the Trump campaign did not respond to requests for comment, nor did Ron Paul when he was contacted through his institute and social media accounts.

In Sweden, AdStyle works with Samnytt, one of the country’s leading far-right sites. In 2021, its publisher and political editor, Mats Dagerlind, was convicted in a Stockholm court of gross defamation against a Syrian-Swedish journalist for calling him a “jihadist undercover.” Dagerlind was fined about $2,800 plus court costs and given a suspended sentence. The site’s CEO is Kent Ekeroth, a politician affiliated with the Sweden Democrats, a nationalist party that pursues anti-immigration policies.

In a statement to the Expressen newspaper, Dagerlind said the site does not control the content of ads placed by AdStyle. “Due to political persecution from the establishment in Sweden, Samnytt has been blocked from using the more established ad exchanges,” he said. (Google Ads, for example, do not appear on Samnytt.)

In Germany, AdStyle places ads on far-right sites such as Journalistenwatch, which a previous ProPublica investigation identified as a source of false information.

“We don’t care because we think our readership is smart enough to not be scammed,” said Conny Axel Meier, a member of Journalistenwatch’s board and editorial team. “I don’t really care what advertising is going on. After all, we work with a lot of advertising partners. We don’t control the advertising, we don’t care, we can’t check them all.” He plans to continue working with AdStyle “as long as I don’t get a letter from a public prosecutor’s office,” he added.

The celebrities featured in the scam ads on these and other sites change depending on the location of the person viewing the ad. In Germany, scam ads featured Schröder and former tennis star Boris Becker. In Sweden, they used Stefan Persson, the majority owner of fast fashion retailer H&M and the country’s richest person. In each case, the ads placed by AdStyle sent readers to websites promoting fraudulent cryptocurrency investment schemes that can cause people to lose their life savings.

“These are 100% incorrect and false claims,” said Kristina Stenvinkel, a spokesperson for Persson’s family company. “It is very regrettable that there are people who fabricate and mislead by exploiting and using public figures for their own gain.”

On its LinkedIn page, AdStyle says it was founded in 2015 by “a small group of great minds in Boca Raton.” Its website gives an address there. But building management and a lessor of office space there said AdStyle isn’t a tenant.

AdStyle’s website said the company was “trusted by” major brands like Ikea and Toyota, both of which said they had no record of working with AdStyle. The logos were removed after journalists contacted AdStyle for comment. (Screenshot by ProPublica)

At least five profiles for current AdStyle employees on LinkedIn use headshots that exhibit characteristics of AI-generated images, such as mismatched earrings and unrealistic backgrounds. ProPublica could not find the employees in public records. One actual employee is Anna Bella Burjak, whose LinkedIn profile says she is the company’s director of business development.

Burjak is married to a web developer named Leonid Volinski, whose name appears in a domain registration linked to AdStyle. Originally from Latvia, the couple used to live in Israel but recently moved to a town roughly 60 miles from Venice, Italy.

When reporters visited the couple’s residence, Burjak and Volinski declined to comment. Within a day, AdStyle had removed the investment and dementia scam ads from the network, including the Winfrey ad.

“We have taken immediate action to reinforce our systems and processes, working diligently to enhance our ad approval mechanisms to better prevent the appearance of misleading or low-quality advertisements,” the company said in an unsigned email. “We are actively reviewing and refining our content moderation policies.”

Update, July 10, 2023: This story was updated to note that EA Games said it could not find any record of working with AdStyle.

by ProPublica

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up to receive our biggest stories as soon as they’re published.

A recently declassified intelligence community report on the origin of COVID-19 has taken a benign view of biosafety training that took place at a government lab in Wuhan, China, in November 2019, not long before the pandemic began there.

The safety training for staff at the Wuhan Institute of Virology was an aspect of an interim report by the Republican oversight staff of a Senate committee that last year concluded the pandemic was “more likely than not, the result of a research-related incident.” Last October, ProPublica and Vanity Fair delved into the inner workings of the team that produced that interim report and some outside experts’ views of its findings.

The intelligence report was issued in June in response to a law, passed unanimously, that required the director of national intelligence to declassify information regarding the origins of COVID-19. The report confirmed prior news accounts that the intelligence community is divided about the cause of the pandemic, but it did not provide specifics about how different agencies reached their conclusions. While some believe the virus likely first infected a human through a research-related accident, others say it’s more likely that the contagion naturally spilled over from animal to human. The report stated that “all agencies continue to assess that both a natural and laboratory-associated origin remain plausible.”

Last year’s report by the Republican oversight staff of the Senate Health, Education, Labor & Pensions Committee pointed to a November 2019 safety training at the WIV, as well as patents and procurements, as evidence of biosafety-related problems at the lab complex around the time the virus emerged in Wuhan. On Nov. 19, 2019, a senior Chinese government safety official arrived at the WIV to discuss a “complex and grave situation currently facing [bio]security work,” the report said. On the same day that the official arrived, the WIV sought to procure a costly air incinerator. The following month, WIV researchers applied for a patent for an improved device to contain hazardous gases inside a biological chamber, like ones used to transport infected animals.

In contrast, the intelligence report said the November 2019 safety training appeared to be run-of-the-mill rather than a response to a biosecurity breach. “We do not know of a specific biosafety incident at the WIV that spurred the pandemic and the WIV’s biosafety training appears routine, rather than an emergency response by China’s leadership,” said the report, which was drafted by the national intelligence officer for weapons of mass destruction and proliferation and coordinated with the intelligence community. The intelligence community agencies agreed on the underlying facts in the report but drew different conclusions from that information, according to an official familiar with the report.

The intelligence report is brief and does not mention the incinerator or device patent. It said that WIV officials in mid-2019 were “evaluating and implementing biosafety improvements, training, and procurements” in the context of Chinese biosecurity legislation.

Some WIV scientists have genetically engineered coronaviruses, the report said, but the intelligence community has no information “indicating that any WIV genetic engineering work has involved SARS-CoV-2, a close progenitor, or a backbone virus that is closely-related enough to have been the source of the pandemic.”

At the same time, the intelligence report did point to biosafety concerns. “Some WIV researchers probably did not use adequate biosafety precautions at least some of the time prior to the pandemic in handling SARS-like coronaviruses, increasing the risk of accidental exposure to viruses,” the report said.

The intelligence report confirmed previous news reports that several WIV researchers became sick in fall 2019, though it stated this was not proof that the scientists were infected through their work. The intelligence community “continues to assess that this information neither supports nor refutes either hypothesis of the pandemic’s origins because the researchers’ symptoms could have been caused by a number of diseases and some of the symptoms were not consistent with COVID-19,” the report stated.

The U.S. Centers for Disease Control and Prevention has a four-point rating system for biolabs based on the threats posed by the infectious organisms agents allowed there. Biosafety level 4, or BSL-4, labs are the most restrictive and designed to handle the most dangerous pathogens. According to the intelligence report, as of January 2019, WIV researchers were performing experiments with coronaviruses in BSL-2 labs, which have far fewer safeguards, despite knowing of “these virus’ ability to directly infect humans.”

“Separately, the WIV’s plan to conduct analysis of potential epidemic viruses from pangolin samples in fall 2019, suggests the researchers sought to isolate live viruses,” the intelligence report said.

While not revealing the evidence underlying its assessments, the report laid out the divisions within the intelligence community. The National Intelligence Council and “four other IC agencies” assess that the natural spillover of a virus from an infected animal is the most likely cause of the pandemic, according to the intelligence report. The report did not name the other four intelligence agencies.

Two federal intelligence agencies — the Department of Energy and the FBI — have landed on the other side of the bitter debate over the origins of the pandemic, assessing that a laboratory-associated incident is the most likely cause of the pandemic. The Wall Street Journal reported in February that the Department of Energy, which had previously been undecided about how the pandemic began, had come to support the lab-leak position with “low confidence” in response to new intelligence; the FBI reached its conclusion with “moderate confidence.” The intelligence report doesn’t mention the confidence levels of any agency.

While the Department of Energy and the FBI agree that the pandemic most likely resulted from a lab incident, the agencies reached the same conclusion for “different reasons,” according to the intelligence report. But the report didn’t say what those reasons were.

Although the March law required the director of national intelligence to declassify “any and all information” relating to potential links between the WIV and the origin of COVID-19, an annex to the report remains classified. According to the report, this was necessary “to protect sources and methods.”

Several Republicans were critical of the intelligence report and demanded more details.

by Umar Farooq

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up for Dispatches, a newsletter that spotlights wrongdoing around the country, to receive our stories in your inbox every week.

In September 2020, the Hopi Tribe’s four-decade effort to secure its right to water culminated in a court proceeding. The outcome would determine how much water the arid reservation would receive over the next century and whether that amount would be enough for the tribe to pursue its economic ambitions. Under rules unique to Arizona, the tribe would have to justify how it would use every drop it wanted.

The monthslong ordeal in Arizona’s Superior Court unfolded in video calls over shaky internet connections.

Chairman Timothy Nuvangyaoma called it “the fight of our lives.”

The U.S. Supreme Court ruled in 1908 that reservations have an inherent right to water. In the rest of the country, courts grant tribes water based on the amount of arable land on their reservations, relying on a 1963 U.S. Supreme Court precedent. But in 2001, Arizona developed its own method that was ostensibly more flexible to individual tribes’ visions for how they wanted to use their water by examining their culture, history, economy and projected population.

This new standard offered tribes an opportunity to shape their plans for economic development and growth beyond farming. But the Hopi case, the first adjudicated under this process, showed it also came at a high cost with uncertain outcomes.

Court records show that at the trial, experts brought in by the tribe, state and corporate water users argued over how many Hopi had lived in the area going back centuries and how much water they had used for crops and livestock. They debated the correct fertility rate of Hopi women and the viability of the tribe’s economic projects. And the court examined lists of sacred springs — sites the Hopi traditionally kept secret to preserve them — to decide how much water could be drawn from them for future religious ceremonies.

The legal battle, one of the tribe’s largest expenses in recent years, resulted in May 2022 with the court awarding less than a third of the water sought by the Hopi Tribe. That was the amount needed, the court said, “to provide a permanent homeland.”

“I would define it as modern-day genocide,” Nuvangyaoma said. “Withholding water, which is life for the Hopis, until an undetermined time is really a position to kill off a tribe that’s been here since time immemorial.”

Timothy Nuvangyaoma, the tribe’s chairman. A legal battle over water has been one of the tribe’s largest expenses in recent years. (Sharon Chischilly for High Country News and ProPublica)

The trial and decision carry profound implications for other Colorado River Basin tribes seeking water, especially in Arizona, where 10 out of 22 federally recognized tribes have outstanding claims. Water awarded to these tribes often comes out of the allocation states can use, leading to inherent conflict between tribes and states over the scarce resource. If the Hopi decree survives the tribe’s planned appeal, other tribes will be subjected to the same scrutiny of their way of life, said Rhett Larson, a professor of water law at Arizona State University.

“It’s a big deal for the history of water law in the United States of America and what it means to be a Native American tribe,” Larson said.

“To Provide for Our Existence”

The Hopi Tribe has inhabited villages in northeastern Arizona for more than 1,100 years. In the time since white settlers arrived, the Hopi Tribe’s water supply has been decimated by drought and coal companies’ unchecked groundwater pumping.

The reservation, established by the U.S. government in 1882, is entirely surrounded by the Navajo Nation. Both tribes use the same aquifer, with wells reaching thousands of feet into the ground. Three-fourths of the Hopi citizens living on the reservation rely on well water tainted with high levels of arsenic, according to tribal leaders and studies conducted with the Environmental Protection Agency. A heavy metal that leads to increased risk of developing cancer, cognitive developmental disorders and diabetes, arsenic is naturally present throughout Arizona, but pumping can increase its concentration in groundwater.

A worker examines equipment at one of the wells of the Hopi arsenic mitigation project. (Sharon Chischilly for High Country News and ProPublica)

According to Dale Sinquah, a member of the Hopi Tribal Council, concerns about the aquifer make it hard not only to find drinking water, but they also limit the construction of new homes and businesses allowing the community to grow.

The only other available water on the reservation is inconsistent, running in four major streambeds that are dry most of the year. Those four washes, which empty into the Little Colorado River, have likely been impacted by drought, with two showing a “significant decreasing trend” in recent years, according to the U.S. Geological Survey.

“We need another source of water off-reservation to provide for our existence in the future,” Sinquah said.

Dale Sinquah, a Hopi Tribal Council member, said that concerns about an aquifer make it difficult to find drinking water and limit the community’s growth. (Sharon Chischilly for ProPublica and High Country News)

The case involving Hopi water rights began in 1978, when the Phelps Dodge mining company filed suit against the state and all other water users to protect its claims in the Little Colorado River watershed. Under Arizona law, the only way to quantify a single water claim was to litigate all regional claims at once. Soon, the Hopi Tribe and thousands of others with claims became parties to the case in the Superior Court of Arizona.

The tribe put the court case on hold twice as it attempted to get water through out-of-court settlements. Those talks though would have required compromising with other users making claims to that water, including the Peabody Western Coal Co., which until 2019 pumped groundwater from the aquifer for its mining operations. Between 1965 and 2005, Peabody accounted for 63% of the water pumped out of the aquifer, and 31% between 2006 and 2019, according to the United States Geological Survey. Peabody did not respond to requests for comment.

In 2012, the Hopi Tribe appeared on the brink of a settlement with the state that would have provided the tribal nation with $113 million for pipelines and other infrastructure to bring groundwater to communities on the reservation. But that effort fell through when Hopi leaders refused to sign off on a guarantee in the settlement allowing Peabody continued access to the aquifer until 2044.

“We Don’t Think That’s Feasible for You”

Unable to reach a settlement, the Hopi Tribe’s pursuit of water for its homeland continued in court through Arizona’s untested legal process.

Due to the large number of parties and the underfunding of both the state courts and Arizona’s Department of Water Resources, the case moved at a snail’s pace. The department filed a key technical report on water availability in 2008. It took until 2015 for the department to finalize it for the court.

Non-Native-Owned Coal Mines Near the Hopi Tribe’s Reservation Pumped Groundwater for Decades

Low groundwater levels contributed to increased arsenic concentrations, forcing the tribe to fight for new water resources.

Tribal reservations and trust land are from 2018 U.S. Census Bureau data. (Lucas Waldron/ProPublica)

By then, the case had been overseen by four judges. They appointed three separate special water masters, who are key to producing a proposed decree for the court. Susan Ward Harris, the water master who delivered the 2022 decree, was appointed in 2015. Harris did not respond to requests for comment.

When its day in court finally came, the Hopi Tribe explained it wanted water for an economically vibrant future with farms, cattle operations, coal mines and power plants.

More than 90 witnesses testified. They included a long line of experts — for the tribe; the federal government; the state; the northern Arizona city of Flagstaff; and the Little Colorado River Coalition, which represented small cities, utilities, ranchers and commercial interests. They discussed the tribe’s projected population, argued over the accuracy of the census count of the Hopi and offered predictions of what the numbers would be in the future.

In the end, the court went with the lowest population projections put forward by Flagstaff and the state, and it decided to only include people living on the reservation full time.

The reservation’s population, currently about 7,000, would peak at 18,255 by 2110, Harris decided.

She also decreed the tribe would get water to only irrigate 38% of farmland it planned to. It was denied water for a cattle operation, saying it “would not be feasible, practical, or provide economic benefits,” based on the court’s assessment of the current market. Harris also declared the coal operations were not “economically feasible.” Some $10 billion in economic development projects, presented in detail to the court, were deemed unrealistic.

Water for ceremonial and subsistence gardens was also denied. The court publicly listed nearly 100 sacred springs with limits on how much water the tribe was entitled to use for religious ceremonies.

In total, the tribe had requested at least 96,074 acre-feet a year of water, and the Arizona water master recommended awarding just 28,988 acre-feet, all of it from the same depleted, contaminated aquifer and seasonal streams the Hopi already use. After four decades, they ended up in the same precarious position they’d started.

Nuvangyaoma said the decree suggested the state and non-Native parties believed the tribe was incapable of carrying out its ambitious economic plans. It closed the door on future growth and, overall, was “insulting.”

By refusing to count members who live part time on the reservation as part of the population, the court ignored the connection many Native Americans have with their land, even when they don’t live there permanently, he said. Many leave so they or their children can pursue an education; for work; or to live in homes with reliable electricity and water. In short, Nuvangyaoma said, they seek the very things Hopi leaders hoped that the settlement would help bring to the reservation, and that the tribe needed water to do. But the court said that because the reservation was not growing at the speed the tribe claimed it could, it couldn’t have the water — a circular logic that hobbles the Hopi.

“It’s very frustrating that you’re told that your population will peak at a certain amount when we don’t see it that way,” Nuvangyaoma said.

The Little Colorado River (Russel Albert Daniels for ProPublica and High Country News)

Even with Harris’ decree on the books, the Hopi Tribe still faces a long road to access its allotted 28,988 acre-feet of water. Funding for dams, pipes and other infrastructure will likely require congressional action and involve more negotiation with other water users, including the Navajo Nation, which draws from the same groundwater. “I suspect I will not be alive when it comes to fruition,” Sinquah, the tribal council member, said.+

Nuvangyaoma said the tribe will still pursue its plans for economic development, but with the understanding it cannot look to the state or federal governments for support.

Cities across the Southwest have, with government support, pursued economic development and growth in the ways they want, he said, whether it’s coal mining, raising cattle or farming the desert using water brought from far away.

“So why are we putting limitations on Hopi and making a decision for us saying, ‘Oh, well, we don’t think that’s feasible for you all?’” Nuvangyaoma asked. “Who has that right to tell us what is and what is not feasible for us?”

by Sharon Lerner

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up to receive our biggest stories as soon as they’re published. This story was co-published with the Guardian.

On his first day in office, President Joe Biden announced that his administration planned to scrutinize a Trump-era decision to allow the continued use of chlorpyrifos, a pesticide that can damage children’s brains. And with great fanfare, the Environmental Protection Agency went on to ban the use of the chemical on food.

“Ending the use of chlorpyrifos on food will help to ensure children, farmworkers, and all people are protected from the potentially dangerous consequences of this pesticide,” the head of the EPA, Michael Regan, said in his announcement of the decision in August 2021. “EPA will follow the science and put health and safety first.”

Yet when officials from around the world gathered in Rome last fall to consider whether to move forward with a proposed global ban on the pesticide, chlorpyrifos had a surprising defender: a senior official from the EPA.

Karissa Kovner, a senior EPA policy adviser, is a key leader of the U.S. delegation at a United Nations body known as the Stockholm Convention, which governs some of the worst chemicals on the planet. Chlorpyrifos is so harmful that the American government not only banned its use on food but also barred the import of fruits and vegetables grown with it. But Kovner made it clear that the U.S. was not ready to support taking the next step through the convention to provide similar protections for the rest of the world.

At the meeting, Kovner questioned whether the pesticide is harmful enough to merit being included on the Stockholm Convention’s list of banned and restricted chemicals. Some attendees said Kovner’s intervention ultimately stalled the effort.

“Her role is essentially to slow the process down and stop things from getting listed,” said Meriel Watts, a New Zealand-based scientist and pesticide expert who attended the Rome meeting and has participated in the Stockholm Convention process for years.

In an interview with ProPublica earlier this year, Kovner said that those who see her as unconcerned about public health and the environment misunderstand her job. “While I happen to work at EPA, what I represent is the United States,” said Kovner. “We are but one of many wheels — or one of many spokes in the wheels — of the U.S. government that works on” persistent pollutants that accumulate in living things.

Other spokes in that wheel include the Department of Commerce; the Office of the U.S. Trade Representative, where Kovner worked decades ago; and the Department of Agriculture, whose secretary, Thomas Vilsack, has raised questions about the EPA’s decision to cancel all food uses of chlorpyrifos.

Kovner said the rules governing restrictions under the Stockholm Convention are different than those that regulate chemicals in the U.S. She also said the positions she and her colleagues take at the Stockholm Convention are guided solely by scientific research. “We bring all of our science to the table,” she said. “It’s very hard to imagine that the convention has not been advanced significantly as a result.”

The EPA echoed Kovner’s comments that the criteria for restricting chemicals internationally are different than those EPA follows domestically. An agency spokesperson noted in a written statement that Kovner does not conduct the scientific review of chemicals. Kovner is just doing her job at the Stockholm Convention, the EPA spokesperson said, and is “a leader in advancing our U.S. domestic policies at the international level.”

For many of the experts who attend the Stockholm Convention meetings on behalf of polluted communities, though, Kovner and the whole U.S. delegation represent a puzzle. The EPA’s mission is to protect public health and the environment. “It has seemed so strange to me to see the U.S. EPA at these international meetings so determined to derail the listing of chemicals,” said Pam Miller, the executive director of Alaska Community Action on Toxics.

The U.S. is home to powerful chemical companies and lags behind much of the rest of the world in banning toxic compounds. The EPA says the U.S. delegation to the convention has supported restrictions on some chemicals. But observers say that the support has often come after countries agreed to carve out exemptions important to American industries.

“Many developing countries look at it [the Stockholm Convention] as an opportunity for greater protection,” said Joe DiGangi, a chemical expert who began attending the yearly meetings of the Stockholm Convention in 2005. “The U.S. often looks at it as a threat to their industry.”

Globe-Trotting Pollutants

More than two decades ago, the United Nations adopted the Stockholm Convention because individual countries’ restrictions could not prevent certain toxic chemicals from traveling across borders. Lofted into the air by smokestacks, gradually released from consumer products, and transported to the far reaches of the globe by water and wind, these persistent chemicals can accumulate in the environment, animals and humans. Often these pollutants wind up in the arctic, where they can be especially damaging because they get trapped in snow and ice and become less likely to dissipate. As a result, the Indigenous peoples of the arctic have high levels of these chemicals in their bodies.

Persistent organic pollutants, as these chemicals are called, lodge in fat cells, allowing them to spread from contaminated animals to anything that eats them. Humans sit at the top of this polluted food pyramid, and we can pass the chemicals to our babies through the umbilical cord before birth and through breast milk afterward.

The aim of the global treaty, which entered into force in 2004, is to protect people around the world from the most toxic of these pollutants. By banding together, countries gained increased leverage over the powerful companies that make and use the chemicals. The U.S. government, which has a long history of refusing to be bound by international treaties, has not ratified the Stockholm Convention, so it can only participate as an observer. But even without having a vote, American officials have been hugely influential.

The U.S. is known for throwing a wrench into the international convention’s efforts to restrict pollutants. “They’re usually seen as a country that raises objections to the regulation of chemicals,” said David Azoulay, a managing attorney at the Center for International Environmental Law who has attended meetings of the convention since 2011. Because the U.S. is not a voting member, Azoulay said, much of its efforts take place outside of the usual channels. “They are very active in the corridors,” he said.

Senior Environmental Protection Agency policy adviser Karissa Kovner at an environmental convention in Rome last year. (José Pinto-Bazurco/IISD/ENB)

Inside the meeting rooms, the U.S. often raises technical questions about the evidence supporting restrictions and advocates for exemptions. An EPA spokesperson told ProPublica that the U.S. “supports carefully crafted and narrowly tailored specific exemptions.”

At the most recent meeting held in late May in Geneva, more than 120 countries agreed to add two plastic additives to the list of substances slated for global elimination. The U.S. delegation went on record opposing the ban of one of them, a flame retardant chemical called Dechlorane plus, which has been shown to damage the liver and interfere with development in animal experiments.

Miller, of the Alaska environmental group, said she witnessed Kovner at an earlier meeting consulting with a representative of the aerospace industry and then suggesting exemptions to the proposed Dechlorane plus ban on their behalf.

Asked about the interactions, Kovner told ProPublica: “I talk to a wide range of stakeholders and that is absolutely 100% my job.” She added, “There are indispensable components of our NASA program that contain Dechlorane plus.” At the urging of Kovner and others, the Stockholm Convention’s member countries agreed to allow for certain uses of the flame retardant in replacement parts for the aerospace and auto industries.

Kovner was also in close contact with a powerful chemical industry trade group about the other compound, UV-328, which prevents plastic from deteriorating in sunlight. In order to be restricted under the Stockholm Convention, a pollutant must be shown to travel long distances. UV-328 was the first chemical that the convention decided met that criteria because it is transported by plastic debris that accumulates in bodies of water around the globe and in the migratory birds that eat it.

In April 2019, a representative from the American Chemistry Council, a trade group for chemical manufacturers, emailed Kovner to alert her of the proposal to consider limits on UV-328 under the Stockholm Convention based on its presence in microplastics, or pieces of plastic debris about the size of a sesame seed that accumulate in the environment and contain multiple chemicals.

“Wow — that’s quite a precedent. Holy moly,” she responded in an email, as the Greenpeace publication Unearthed has reported.

The chemical trade group representative wrote that they had seen several presentations about “getting microplastics into Stockholm.”

“Welcome to our future,” Kovner responded.

In March 2021, two months after the Stockholm Convention decided that UV-328 cleared the first hurdle to be considered for a ban, Kovner told attendees at a conference organized by the American Chemistry Council that the U.S. government disagreed with that decision and questioned the science behind it.

The following year, the U.S. spoke in favor of exemptions to a ban. And this May, the member countries of the Stockholm Convention agreed to ban UV-328 but allowed carve-outs for replacement parts for cars and industrial machines, among other products. The U.S. ultimately supported global restrictions on the chemical, an EPA spokesperson said, noting that an updated risk assessment “included a great deal of new information” and did a “good job ensuring that the questions” were answered.

The EPA spokesperson wrote, “The Agency fundamentally rejects the premise that EPA employees are inappropriately influenced by external forces.”

Doubts About Chlorpyrifos

It was reasonable to think that the U.S. might be more supportive of a global ban on chlorpyrifos. After all, while the EPA has not banned Dechlorane plus or UV-328, it has taken a strong stand on chlorpyrifos.

The Biden administration’s decision to ban the use of chlorpyrifos on food followed a controversial about-face made by the Trump EPA in 2017. Previously, the Obama EPA had decided it could no longer vouch for the safety of the pesticide on food. Resting its case on evidence that prenatal exposure to the chemical could have lasting effects on children’s brains, the agency began the process of revoking the permission farmers need to apply it to foods they grow.

But after Trump took office, the EPA halted its plans to ban the chemical. The Trump administration hadn’t disproven the research tying chlorpyrifos to ADHD, autism, lower IQ, and memory and motor problems in children, it had ignored it. President Biden’s promise to finish the job was in keeping with his campaign pitch to follow the science.

Yet just five months after the Biden EPA proudly announced it would no longer allow chlorpyrifos to be used on food, the U.S. delegation to the Stockholm Convention joined several other countries in questioning whether the pesticide lasts long enough in the environment to merit restriction under the criteria of the convention. The member countries ultimately decided chlorpyrifos did meet their criteria, and that meeting ended with a decision to move forward.

But the U.S didn’t drop it. At the September 2022 meeting in Rome, Kovner questioned whether the levels of chlorpyrifos found in arctic regions were significant enough to harm health and the environment, thereby warranting restriction under the treaty. And this time, questions she and others raised did cause the convention to delay action.

Member countries had drafted a risk profile, which presented evidence that chlorpyrifos is transported into remote regions and accumulates in plants and animals. The paper also detailed the toxic effects that very low concentrations of the pesticide can have on dogs, birds, fish, rats and bees. The most alarming section of the report lays out the evidence that chlorpyrifos can harm children who were exposed to the pesticide in utero. Even tiny amounts of the chemical can cause neurological problems.

Kovner called the risk profile into question, according to several people at the meeting.

“Every time she had the chance, she said she had doubts” about the report, said Emily Marquez, a senior scientist with Pesticide Action Network, who was part of the convention’s working group on chlorpyrifos.

There is evidence that that chlorpyrifos has spread around the world and can now be found in caribou, ringed seals, polar bears and other animals in the arctic, as well as in the ice, seawater and air of Antarctica, and in human breast milk in numerous countries, including the U.S. It is also clearly proven that the pesticide can cause serious harm.

Kovner did not question these facts, but rather their significance, according to Watts, the New Zealand-based scientist. “She sowed doubt in the minds of all the delegates about whether the levels that are being found in the arctic actually really matter at all,” Watts said of Kovner.

In an interview, Kovner acknowledged questioning whether the persistence of the pesticide met the treaty’s requirements and noted that “about 10 other countries” in addition to the U.S. raised similar concerns.

Representatives of China and India, which are both home to companies that produce chlorpyrifos, raised questions about the report, as did an official from the pesticide industry trade group CropLife International. But according to Watts, the U.S. delegation, through Kovner, presented the ultimate obstacle to approving the report.

“The U.S. amplified this opposition from India and China,” said Watts. “And in the end, a number of countries said, ‘We’re just not sure about this.’” Ultimately, the chlorpyrifos review committee decided to defer its consideration of the risk profile, and the process of restricting or banning the pesticide was delayed by a year.

“If it hadn’t been for those actions of Karissa, it probably would have gone through,” Watts said of the risk profile. “She effectively stopped it.”

In its emailed response to ProPublica, the EPA acknowledged raising concerns about whether the levels of chlorpyrifos in the arctic are high enough to cause harm and called for further research on the risk to Indigenous people. The agency pointed specifically to a 2014 study that concluded that chlorpyrifos should not be considered a persistent organic pollutant.

That study — the only one the agency cited in its response to ProPublica — was funded by a subsidiary of Dow Chemical, which at the time was the primary seller of chlorpyrifos. A co-author of that study, Canadian researcher John Giesy, worked as a consultant to Dow on a chlorpyrifos risk assessment in the late 1990s and on Dow’s comments to the EPA about chlorpyrifos, according to Giesy’s curriculum vitae. That same CV showed that, between 1996 and 1997, Giesy also led a $1 million assessment of the ecological risks of chlorpyrifos paid for by DowElanco, which was co-owned and later bought out by Dow. (Dow subsequently merged with another company and spun off its agricultural chemicals division, and the new company stopped making chlorpyrifos in 2020.)

In its written statement, the EPA said the European Union cited the Giesy study as one of the sources it considered when drafting its proposal to restrict uses of chlorpyrifos. “We feel confident that EU carefully considered the sources of information that it provided,” the spokesperson wrote.

The EPA is embroiled in litigation over its chlorpyrifos restrictions in the U.S. In a lawsuit filed in the U.S. Court of Appeals in St. Louis, growers of sugar beets, soybeans and other crops, along with an Indian chemical company that sells the pesticide, argue that the EPA’s ban is “arbitrary and capricious.” In a court filing, the EPA denied that assertion; the agency said that the use of chlorpyrifos on food was “not safe.” Still, the farmers insist that chlorpyrifos is the only tool they have to fight certain destructive pests and say the ban will cause tens of millions of dollars of crop losses.

These are the same claims the agricultural industry made for years while the EPA was weighing the safety of chlorpyrifos. Ultimately, the evidence of the environmental and health problems caused by the pesticide won the day — at least on the home front. Internationally, the fate of chlorpyrifos remains an open question.

For her part, Kovner says the U.S. is still open to the possibility of a global ban under the Stockholm Convention. “We look forward to discussions that may provide additional characterizations or clarifications to strengthen the argument for listing chlorpyrifos under that convention,” she said.

The next meeting of the international group is scheduled for October.

Do You Work With These Hazardous Chemicals? Tell Us About It.

by Eli Hager

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up to receive our biggest stories as soon as they’re published.

Starting this September, child protective services agents across Texas will be required to read parents their constitutional rights, the same way that police do for criminal suspects. Under a new law enacted by the state Legislature, caseworkers there will be informing parents under investigation that they have the right to remain silent, to have a lawyer present and to decline searches of their home or of their children without a court order.

The legislation will in many cases benefit Black, Hispanic and low-income families who often have their lives and homes upended by CPS officers. It was signed by Gov. Greg Abbott, a conservative Republican who previously has been criticized for pushing policies detrimental to those groups.

Meanwhile in New York state, an almost identical bill was blocked by state Senate majority leader Andrea Stewart-Cousins, a liberal Democrat. She prevented the measure, which had dozens of co-sponsors and a groundswell of grassroots support, from even getting a vote — showing how child welfare issues often defy typical partisan binaries.

Stewart-Cousins’ office declined ProPublica’s requests for comment about her reasoning.

The legislation was not advanced by leadership on the Assembly side either, though it did pass unanimously out of committee there.

Earlier this year, Stewart-Cousins and other top lawmakers in Albany received proposed changes to the bill from New York City’s Administration for Children’s Services, which is under the control of Mayor Eric Adams. The agency suggested removing the word “rights” from the bill text and watering down the list of rights that its caseworkers would have had to read to families.

The legislative efforts in both states came in the wake of a ProPublica investigation finding that child welfare workers — overwhelmingly without warrants — inspect the homes of roughly 3.5 million children nationally every year. Despite the Fourth Amendment’s protection against unreasonable searches and seizures, these government officers ransack families’ refrigerators and medicine cabinets and inspect kids’ bodies without informed consent.

They do so even if the allegation of potential child neglect that they are investigating, such as a kid missing too many days of school, has nothing to do with the condition of the home. They also sometimes use manipulative tactics, including threatening child removal or calling the police, to get inside residences, according to dozens of interviews with caseworkers, families and attorneys.

Nationwide, the searches ultimately reveal child abuse less than 5% of the time, federal data show.

The new Texas law has gotten little attention but will have a major impact on vulnerable families around the state, said Andrew Brown, associate vice president of policy at the right-leaning Texas Public Policy Foundation.

“In child welfare it’s not this clean Democratic or Republican issue,” he said, adding that the idea of reading parents their rights gained more bipartisan support as a result of not being a topic on the campaign trail.

The New York bill will be reintroduced again next year, said its lead sponsor in the state Senate, Jabari Brisport.

But the result may hinge on whether the idea finally garners support from the state’s top Democrats, including Stewart-Cousins.

“I think she should be voted out, because she doesn’t understand the basic bottom line of being a lawmaker,” said Joyce McMillan, a community organizer and leading family advocate in New York City. “Protect the constitutional rights of everyone — at minimum.”

by Caleb Bedillion, Northeast Mississippi Daily Journal

This article was produced for ProPublica’s Local Reporting Network in partnership with the Northeast Mississippi Daily Journal and The Marshall Project. Sign up for Dispatches to get stories like this one as soon as they are published.

In April, the Mississippi Supreme Court changed the rules for state courts to require that poor criminal defendants have a lawyer throughout the sometimes lengthy period between arrest and indictment. The goal is to eliminate a gap during which no one is working on a defendant’s behalf.

That mandate went into effect Saturday. But few of the state’s courts have plans in place to change their procedures in a way that is likely to accomplish what the justices intended.

A survey of courts by the Daily Journal, ProPublica and The Marshall Project found that some local court officials are unaware of the new rule. Others have not decided how they will respond. Some officials suggested that their current practice of appointing lawyers only for limited purposes will fulfill the new requirement, even though those attorneys do little beyond attending early court hearings.

That reporting suggests that impoverished defendants in many Mississippi counties are likely to remain deprived of meaningful legal assistance as they wait, often in jail, for prosecutors to decide whether to pursue felony charges.

“There’s really not a plan,” said Chuck Hopkins, a judge in a county-level justice court in northeast Mississippi’s Lee County. He fears that if officials don’t come up with one, the court could be “hung out there waiting for a lawsuit to happen.”

André de Gruy, who runs Mississippi’s Office of State Public Defender and is recognized throughout the state as an expert on indigent defense, said just four of the state’s 23 circuit court districts have asked him for advice on how to comply with the new rule. He responded by developing a model process they could use.

After someone is arrested for a felony in Mississippi, that person has an initial appearance in court. A judge informs the defendant of the charges against them, sets the conditions for being released from jail, and appoints a lawyer if the defendant can’t afford one. Under current rules, in many courts that lawyer handles just the initial appearance and, in some cases, an optional preliminary hearing when evidence is presented. After that, the lawyer exits the case.

Only after the defendant is indicted, which often takes months, is another lawyer appointed. Critics have dubbed the period between lawyers the “dead zone.”

Mississippi gives district attorneys unlimited time to indict someone after an arrest, and it’s among a handful of states where defendants can be jailed indefinitely as they await indictment, according to recent research by Pam Metzger, a legal scholar who runs the Deason Criminal Justice Reform Center at Southern Methodist University’s Dedman School of Law.

“Mississippi is among the worst of the worst on this issue,” Metzger said.

Cliff Johnson, a lawyer who pushed for the revised indigent defense rule, has documented how those two factors — the lack of an indictment deadline and the lack of legal representation in the “dead zone” — can cause defendants to be jailed for months or years. Without a lawyer, defendants may have a hard time fighting their charges or striking plea deals.

Cliff Johnson, head of the Mississippi office of the MacArthur Justice Center, speaks in Hinds County Chancery Court in Jackson in May. (Rogelio V. Solis/AP)

Johnson, who leads the Mississippi office of the MacArthur Justice Center, a civil rights law firm, said advocacy organizations like his will monitor courts for compliance with the new rule.

“This structural change means nothing,” he said, “if local judges don’t create and implement new comprehensive plans for indigent defense.”

Patchwork of Court Systems Handle Indigent Defense

The new rule on indigent defense makes one key change: It says a lawyer may not withdraw from a case pending indictment until another has been appointed.

Ordering that change now looks like the easy part. Implementing it is another story, largely because of the patchwork of courts in Mississippi.

Criminal defendants may move through as many as three different court systems, each with its own system of public defense, as they go from arrest to a plea deal or verdict.

Mississippi is one of only eight states without state oversight of public defense, according to the Sixth Amendment Center, which advocates for robust indigent defense. Instead, local governments bear almost all the responsibility of providing poor criminal defendants with an attorney, as guaranteed by the Constitution.

A few local governments employ full-time public defenders. Most rely on part-time public defenders or contract with private attorneys. They all generally have high caseloads.

Now, officials in those different court systems must figure out how to ensure that defendants maintain legal representation as they move from courtroom to jail to courtroom.

To understand how courts will do that, the Daily Journal, ProPublica and The Marshall Project contacted officials in all 23 circuit court districts, most of which cover more than one county, as well as more than a dozen officials in municipal courts and separate county-level justice courts. We spoke with more than 20 judges, public defenders, prosecutors, court clerks and private defense attorneys.

Only a few circuit districts said they were working to have a new policy by Saturday, including two on the Gulf Coast and one in southwest Mississippi. Many other court officials said they don’t know exactly how they’ll coordinate among the appointed lawyers who represent defendants, sometimes briefly, in court. Some officials worry they’ll have to pay to defend people who have charges pending in a different jurisdiction.

In Tupelo, located in northeast Mississippi’s Lee County, officials say they’re struggling to figure out how to bridge the gap between the municipal court, where people charged with felonies often have their initial appearance, and circuit court, where those charges are ultimately decided.

Indigent defendants are represented in Tupelo’s municipal court by a full-time public defender, Dennis Farris. He generally makes a case for a low bond so his client can be released from jail and advises the defendant on whether to request a preliminary hearing.

But after the initial hearing is held or the defendant waives their right to it, the municipal court loses jurisdiction over felony cases.

Dennis Farris, seen here in 2019, is the public defender in the city of Tupelo’s municipal court. (Adam Robison / Northeast Mississippi Daily Journal)

City officials agree that the new rule means Farris cannot withdraw from those cases, but they want local circuit judges to agree to appoint felony public defenders immediately after the preliminary hearing is held or waived so Farris can focus on the job he’s paid to do in municipal court.

Officials in the municipal court for Southaven, in the Memphis suburbs, want their circuit judges to agree to the same thing.

Farris spends most of every workday in municipal court, handling the steady stream of misdemeanors and felony initial appearances, with little time to tend to cases that will eventually be handled by another court system.

“If I’m still on those cases, what am I supposed to do? Send a bill to the county?” he asked. “I’ll do what I can. But I’m only one person.”

Lee County’s justice court faces a different, but common, challenge in following the new rule: The private attorney who handles indigent defense typically has a limited role. Dan Davis handles only bond reductions, weeks after a defendant’s initial appearance in court.

Davis doesn’t attend initial appearances and rarely requests preliminary hearings for his clients. He acts on behalf of defendants only if they remain in jail after 30 days. If so, he contacts them to gather information to file a bond reduction motion.

“If someone bonds out, my part is basically done” except in rare circumstances, Davis said. “They’re off my list.”

Given that the justice court has limited expectations of what he must do, Davis believes he fulfills his obligations to defendants.

He anticipates little change in how he does his job under the new rule. Since he never files motions to withdraw from his cases, Davis said, he will remain a defendant’s attorney until an indictment, and the new rule will appear to be satisfied.

But he believes it is “very unusual” for a defendant to require much legal assistance after bonding out. If he were to find his workload increasing, he may not want to keep the job. Hopkins, the justice court judge, said the county may need to find a full-time public defender.

Experts say during the first few months after someone is arrested for a felony, there’s important work to be done: interviewing witnesses, securing evidence, perhaps seeking an early plea deal. If someone is jailed for months without being indicted, their attorney can ask the DA what’s taking so long or file a motion to dismiss the case.

Justin Cook, the former head of the state public defender’s association, warned attorneys against superficial adherence to the new requirement.

“You owe an indigent defendant effective representation under the Constitution,” he said. “You are not nominally their lawyer. You are their lawyer, and you have duties and obligations to them.”

An Alibi That Grew Cold

A case in Hinds County that is wending its way through federal appeals shows what can happen if an appointed lawyer doesn’t act early and aggressively to investigate a defendant’s claims of innocence.

Sedrick Russell has spent more than 15 years arguing in court filings that he lacked representation after he was arrested for a nonfatal shooting with no eyewitnesses.

Sedrick Russell claims in court filings that he didn’t have a lawyer for 14 months while he was jailed at the Raymond Detention Center in Hinds County, Mississippi, awaiting trial. That includes eight months as he awaited indictment. (Rogelio V. Solis/AP)

From his arrest in December 2006 until February 2008, Russell claims, he spoke with a public defender just once, briefly. During that time, he sent seven handwritten letters to the court alleging that his right to a speedy trial had been violated and complaining that he hadn’t spoken to an attorney.

Russell has claimed in court filings that at his preliminary hearing in January 2007, he tried to tell a lawyer with the Hinds County Public Defender’s Office about an alibi. But he didn’t get far.

Russell claims that before the shooting, he got into a car driven by a friend he knew only as Ron Ron, and the two left the site where the shooting later took place.

“The assistant public defender who came to his preliminary hearing brushed off Russell’s request to get Ron Ron to testify, telling Russell, ‘It was just a preliminary.’ She never came back,” U.S. District Judge Carlton Reeves later wrote, after Russell had appealed his conviction.

In February 2008, the state trial judge removed the Hinds County Public Defender’s Office from the case and appointed a private lawyer, Don Boykin. Within about a month, Boykin told prosecutors that Russell intended to raise an alibi defense. But Boykin never found Ron Ron.

Russell was convicted in a jury trial in January 2009 and sentenced to two life terms because he had been deemed a habitual offender.

In April 2008, Sedrick Russell wrote to a judge and complained that he’d been deprived of meaningful legal representation and had lost contact with a potential alibi witness. (Obtained by Northeast Mississippi Daily Journal)

It took years for Russell to exhaust his appeals in state court. When he took his case to federal court, Reeves ruled that Russell had been denied his Sixth Amendment right to an attorney, even though, as far as the local courts were concerned, he was represented by indigent counsel the entire time. The judge determined that Russell had been “completely abandoned by counsel” for 14 months, including eight before he was indicted.

Reeves vacated Russell’s conviction but stayed his order pending an appeal to the Fifth U.S. Circuit Court of Appeals.

In May, the appeals court reversed Reeves’ ruling and reinstated Russell’s conviction. The three-judge panel ruled that Reeves had overstepped his limited authority to overturn a state court, given a federal law that sets a high standard for doing so. The court also expressed doubt about whether Ron Ron even existed, let alone whether his testimony would’ve exonerated Russell.

Alysson Mills, Russell’s federal court-appointed attorney, said her client intends to appeal to the U.S. Supreme Court.

Cook, who handles state-level appeals for indigent defendants, said at least half of the defendants he represents claim that key witnesses or other evidence have gone missing. But he can’t introduce new evidence on appeal, and even if he could, it can be difficult to verify those claims.

“Hopefully that is what will get remedied by this new rule,” Cook said. “People can meet with their lawyers and that investigative work can happen early.”

Gail Lowery, the head of the Hinds County Public Defender’s Office, said she has discussed Reeves’ ruling with attorneys in the office. She said she stressed the need to investigate cases early and to locate key witnesses or evidence before it can be lost.

Lowery said she doesn’t know whether Russell’s public defender ignored his alibi claim. She didn’t work there at the time, and two key people involved have since died. But if his claim was ignored, Lowery said, “that will never happen again.”

Gail Lowery, chief public defender for Hinds County, testifies about the need for more public defenders during a hearing hosted by the Jackson delegation of the Mississippi Legislature at the state Capitol in March. (Rogelio V. Solis/AP)

The public defender initially assigned to a case, she said, interviews the defendant, typically within a week of an arrest, and seeks to identify witnesses and key evidence.

“That pre-indictment time, it’s critical. We’ve been doing it, but we’re shoring it up in light of the changes” to the rule on indigent defense, Lowery said. “I’m reminding everyone, we need to be vigilant.”

She acknowledged, however, that there’s limited time for investigative work given caseloads and limited resources.

Johnson, the MacArthur Center head who pushed for the rule change, knows this.

“The next step in our fight,” he said, “is to convince legislators to provide our public defenders with resources equal to those given to prosecutors and law enforcement.”

by Mark Olalde and Umar Farooq, ProPublica, and Anna V. Smith, High Country News

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up for Dispatches, a newsletter that spotlights wrongdoing around the country, to receive our stories in your inbox every week.

At night, the lights of Lake Havasu City’s hotels, boat launches and neighborhoods reflect off the reservoir that gave this busy Arizona tourist town its name. The federal government dammed the Colorado River just downstream in the 1930s, providing the water and recreation opportunities that have allowed the community to flourish.

The opposite side of the reservoir is dark and so quiet that water lapping on the shore and bats clicking overhead can be heard over the distant hum of boat engines. This is the Chemehuevi Indian Tribe’s reservation in California. The water that rose behind Parker Dam to create Lake Havasu washed away homes and flooded about 7,000 acres of fertile Chemehuevi land, including where members grazed cattle.

The communities across the reservoir reflect the vast divide in economic opportunities between Indian Country and the rest of the West, which has been perpetuated, in large part, by who received water and who did not.

In 1908, the U.S. Supreme Court ruled that the federal government owed tribes enough water to develop a permanent home on their reservations and that their water rights would hold senior priority, meaning they trumped those of others. In the Colorado River Basin, most tribes, even in a drought, should get water before Phoenix, Las Vegas, Los Angeles and elsewhere.

More than a century later, only a few basin tribes have benefited from this system. Of those that have, some live near federally funded canals and pipelines that can deliver water to their land, others received money to build their own water systems and some negotiated for the right to market their water to other users. The Gila River Indian Community, for instance, recently struck a deal with the federal government to forgo using some of its water in exchange for up to $150 million over the next three years, depending how much water it conserves, and $83 million for a new pipeline.

But most of the basin’s 30 federally recognized tribes have faced seemingly endless barriers to accessing and benefiting from all of the water to which they’re entitled. The Chemehuevi’s reservation fronts about 30 miles of the Colorado River, yet 97% of the tribe’s water remains in the river and ends up being used by Southern California cities. The tribe never receives a dollar for it.

The Chemehuevi Reservation Fronts About 30 Miles of the Colorado River Boundaries of Native American reservations and trust land are from the 2018 U.S. census. (Lucas Waldron/ProPublica)

The water that has already been guaranteed to basin tribes but remains unused totals at least 1 million acre-feet per year — nearly one-tenth of the Colorado River’s flow in recent years and nearly four times the Las Vegas metro area’s allocation. If sold outright, this water would be valued at more than $5 billion, according to a ProPublica and High Country News analysis. For the Chemehuevi, a tribe with about 1,250 members, that means the amount of water it has on paper but doesn’t use would have a one-time value of at least $55 million.

Steven Escobar, the Chemehuevi’s tribal administrator, grew up testing his mettle against the Colorado River’s currents, swimming across its cold waters upstream of the reservoir. He still thinks of the river in terms of struggle. But now, it’s a struggle for the tribe to get the same help from the federal government to access water as others have, or, if not, to get compensation for what’s legally theirs.

“All that development and governmental support that they provide every state, that should be the same thing they provide to tribes,” Escobar said. “We’ve had to fight for everything out here.”

Steven Escobar, the Chemehuevi’s tribal administrator, says it has been a struggle for the tribe to get the same help from the federal government to access water as others have. (Russel Albert Daniels for ProPublica and High Country News)

As demand on the Colorado River far exceeds its supply, tribes worry that they’ll never receive the water they’re owed.

The Chemehuevi are left in a bind. The tribe doesn’t have the pumps or other infrastructure necessary to deliver its full allotment of river water to its reservation. While the federal government gave the tribe a grant to build a small reservoir, neither it nor the state of California has allocated money to build a larger delivery system.

Even as a backup option, the tribe is unable to lease its water to other users, like rapidly growing cities, or earn money by leaving it in the river to preserve the waterway. Antiquated laws and court rulings typically allow tribes to be paid only to conserve water they previously used. Any changes to how a tribe could market its water would take an act of Congress.

“This is a long-standing problem,” said Mark Squillace, a professor at the University of Colorado Law School. “From the perspective of the people using that water, why would they pay when they’re already getting it for free?”

The Law of the River at Work

A half-century ago, the Bureau of Reclamation began construction on a massive canal called the Central Arizona Project to send the waters that flooded the Chemehuevi’s land 336 miles across the desert to Phoenix and Tucson. The pumps that power the system, which help deliver the state’s share of the Colorado River, are the largest single consumer of electricity in the state.

Meanwhile, the Chemehuevi rely on a single diesel pump to draw water six stories up to the plateau where they live above Lake Havasu.

The Chemehuevi reservation in the foreground and Lake Havasu City in the background. The reservation fronts about 30 miles of the Colorado River, yet 97% of the tribe’s water remains in the river. (Russel Albert Daniels for ProPublica and High Country News)

For at least 50 years, the river’s decision-makers have recognized this disparity in water access. In 1973, a body called the National Water Commission submitted a report to Congress: “In the water-short West, billions of dollars have been invested, much of it by the Federal Government, in water resource projects benefiting non-Indians but using water in which the Indians have a priority of right if they choose to develop water projects of their own in the future.”

For tribes, the first challenge is securing their water rights. After the Supreme Court’s 1908 decision confirming tribes’ right to water, two paths emerged to quantify and settle the amount and details of those rights. Tribes could, with the backing of the Department of the Interior, negotiate with the state where their reservation is located. Or they could go to court. Fourteen basin tribes are still in the midst of this process, but either path they choose presents trade-offs.

Tribes that negotiate typically need to trade some of the water they believe they’re owed in exchange for money to build water-delivery infrastructure. They can also trade their water priority — leaving them more susceptible when allocations are cut, a reality that’s already threatening to curtail tribes’ water amid the West’s ongoing drought.

For tribes that choose to go through the courts to get their water, there’s no opportunity to negotiate for funding for canals, pipes and pumps, meaning there’s no way to move the water they’re awarded onto a reservation.

“It’s not enough to have the right to the water,” Squillace said. “You also have to have the infrastructure.”

Highlighting the difficulties in converting rights to water on paper into actual water on a reservation, tribes around the West that secured a negotiated settlement for their rights only increased their agricultural land use by about 9% and saw no increase in residential or industrial development, according to estimates from a recent study published in the Journal of the Association of Environmental and Resource Economists.

And if a tribe can’t move water, it often can’t monetize it.

Colorado River Indian Tribes farmland. The tribe recently got a bill through Congress that will allow it to make millions of dollars from leasing its water. (Russel Albert Daniels for ProPublica and High Country News)

Laws passed between 1790 and 1834, known as the Indian Non-Intercourse Acts, have the effect of prohibiting tribes from leasing water beyond the borders of their reservations without congressional approval. Settlements also typically bar them from permanently selling their water and often prohibit their right to lease it.

“This Is What’s Left”

Politicians packed a conference room at the Arizona Capitol in April, where they unveiled an agreement to pay the Gila River Indian Community millions of dollars to leave its water in Lake Mead. Officials took turns at the lectern extolling tribes for their role in preserving the Colorado River.

“We don’t have any more important partners in this effort than in Indian Country,” Deputy Secretary of the Interior Tommy Beaudreau said.

When the Gila River Indian Community negotiated its water rights, the Central Arizona Project had begun carrying Colorado River water near its reservation south of Phoenix and the tribe had some political clout after spending millions of dollars on lobbying. Those advantages allowed the tribe to negotiate tens of millions of dollars for infrastructure to deliver its water and the right to lease tens of thousands of acre-feet to nearby cities and a mining company. Its settlement has now made the tribe a well-compensated partner in conservation efforts.

“These are truly historic investments in directly tackling the challenge presented to our state and our region by the historic drought,” Gila River Indian Community Gov. Stephen Roe Lewis said during the April news conference announcing the deal to trade more water for money. The tribe declined requests for additional comment, as it is negotiating further water deals.

Colorado River Basin Tribes Face Hurdles Using Their Water Rights

Across the Colorado River Basin, tribes have fought for years to benefit from their water rights. But because of the fraught process to secure rights and move that water onto reservations, many have yet to realize the full benefit of what’s rightfully theirs. Here are a few examples.

In central Arizona, nearly two-thirds of the Yavapai-Prescott Indian Tribe’s surface water allotment flows down Granite Creek, where the town of Prescott can use it for free.

In Colorado, the Southern Ute Indian Tribe irrigates about a third of its arable land, as it searches for $100 million needed to repair a dilapidated canal system.

Just east of Phoenix, the Salt River Pima-Maricopa Indian Community is neither using nor leasing about 61,000 acre-feet of its water, the volume that 540,000 Phoenix residents use in a year. A clause in the tribe’s settlement bars it from leasing much water.

Several tribes have secured the right to lease, but it’s been case by case. With the support of Arizona’s senators, the Colorado River Indian Tribes got a bill through Congress that gives it that right. President Joe Biden signed it in January. The law helped in “stabilizing more of our sovereignty of our natural resources,” Chairwoman Amelia Flores said.

The law only gave that right to one tribe.

For the Ute Mountain Ute Tribe, the roadblock is a quirk in the laws that settled its water rights, which prohibits the tribe from using the portion of its water held in Lake Nighthorse, a reservoir in Colorado, for agriculture. But that’s precisely why the tribe needs it.

Chairman Manuel Heart is tired of neither getting the full allocation of water nor being compensated for leaving it in the system for the benefit of others.

“If you guys want to use it,” he said, “then pay us.”

Even if tribes were able to negotiate their way out of their water-leasing woes, for some, it isn’t about getting the highest price for a culturally significant resource.

The Tohono O’odham Nation leases just a fraction of its water and isn’t looking to market more. “We were told by our elders that we should never sell our water,” San Xavier District Chairman Austin Nunez said.

The Chemehuevi, by contrast, can’t access or lease most of their water. Their rights were quantified and settled via the courts in the 1960s, at a time when the tribe didn’t have federal recognition. So it didn’t receive infrastructure funding.

Escobar, the Chemehuevi’s tribal administrator, would prefer to use his tribe’s water, not lease it. He wants to expand pumping capacity and construct a cascading series of reservoirs. Once the Chemehuevi access the water, they could use it for more houses to bring enrolled members back to their land, new businesses to provide jobs and increased farming to grow the reservation’s economy.

Escobar talked about his dreams and the difficulty in developing Indian Country as he drove past the frames of unused greenhouses, evidence of a failed venture. Near a field where the tribe’s single tractor was working the soil, Escobar described the Chemehuevi’s agricultural plans. Behind him, Lake Havasu covered soil that could’ve been productive fields or pastureland. In front of him stretched sandy desert where the federal government said the tribe should harvest crops.

“This is what’s left,” he said of the tribe’s potential farmland that wasn’t submerged by the reservoir. “It’s sad.”

After the once-nomadic Chemehuevi fought for recognition of their tribe and their reservation, they partnered with the University of Southern California to develop a plan to farm 1,900 acres using the 11,340 acre-feet of water per year, about 3.7 billion gallons, that the government allotted them — at least on paper. But, in a good year, the Chemehuevi farm only 80 acres, growing melons for food, devil’s claw for basket weaving and cottonwoods for a riparian restoration project.

If it can’t transport more water to expand the farm, Escobar said, the tribe could accept leaving water in the river in exchange for compensation. “We want to be a benefit to the system,” he said, “but right now, they’re making it hard.” Many non-Indigenous people, and a few tribes, around the basin earn money limiting their water use, whether by fallowing farm fields or ripping out lawns.

Why shouldn’t all tribes be paid, Escobar asked.

The Gene Pumping Plant near Lake Havasu lifts water hundreds of feet to the Colorado River Aqueduct system, which delivers it to Los Angeles, San Diego and other cities. Southern California gets about 25% of its water from the Colorado River via the aqueduct. (Russel Albert Daniels for ProPublica and High Country News) How We Calculated the Monetary Value of Tribes’ Unused Water in the Colorado River Basin

Putting a dollar value on tribes’ water rights required establishing the amount that was quantified but unused. To do this, ProPublica and High Country News examined tribes’ settlements for the volume of their water rights. We found many of these documents in the University of New Mexico’s Native American Water Rights Settlement Project digital repository.

Once the amount was summed, we subtracted any water that had been developed on a reservation, leased to other users or injected into groundwater. We obtained these figures from Bureau of Reclamation and Central Arizona Project data, interviews with 20 tribes’ leadership and other sources. Research from the Ten Tribes Partnership and the Water & Tribes Initiative filled in data gaps.

To estimate the monetary value of this water, we consulted urban water districts, water sales consultants, tribes and researchers to find case studies where Colorado River Basin water had been leased, sold or otherwise marketed. This list of deals ranged from the Upper Basin System Conservation Pilot Program paying between $191 and $353 per acre-foot of water savings — adjusted for inflation — to Colorado-Big Thompson Project water shares selling for more than $90,000 per acre-foot this year. We gave extra weight to deals involving tribes, namely the Metropolitan Water District of Southern California paying the Fort Yuma Quechan Indian Tribe $185.56 per acre-foot via a forbearance and the federal government paying the Gila River Indian Community $400 per acre-foot for compensated conservation.

We then selected a discount rate — options ranged from 2.5% at Reclamation to 6% at the Texas Water Development Board — to convert an annual leasing or forbearance price into a one-time price to purchase that water.

Remaining conservative, we arrived at an annual price of $250 per acre-foot sold at a 5% discount rate — $5,000 to buy each acre-foot of tribes’ quantified-but-unused water rights.

by Lexi Churchill, ProPublica and The Texas Tribune, and William Melhado, The Texas Tribune

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A state district judge this week ordered the Texas Department of Public Safety to begin the process of releasing records related to the May 2022 Uvalde school shooting that the agency has shielded from the public for over a year.

The decision by 261st Civil District Court Judge Daniella DeSeta Lyttle marks a win for a coalition of news organizations, including ProPublica and The Texas Tribune, which sued the agency in August. The lawsuit sought the release of records that would bring more clarity to law enforcement’s failed response, including emails, video footage, call logs, emergency communications and forensic records.

“The public deserves a full accounting of what happened that day, and we’re glad that the judge has begun that process,” said Reid Pillifant, an associate attorney with Haynes Boone, a law firm that represents the news organizations. “We’re hopeful DPS won’t fight this decision, and we’ll begin the process of providing transparency.”

DPS did not directly answer the newsrooms’ questions, including whether it plans to appeal the court’s decision. In a statement emailed to ProPublica and the Tribune on Friday, a spokesperson for the agency said that the litigation is ongoing and that “the department will carefully consider its options when a Final Judgment is entered.”

Lyttle instructed DPS to submit a detailed list of redactions it wants to make to the public records by Aug. 31. The judge said that the court anticipated discussing the proposed redactions in September.

In its court filings, DPS has argued releasing records could interfere with an ongoing investigation into the shooting. The agency continued to defend this argument during a March hearing, which came months after the agency said its initial report was finished. DPS did not answer questions as to whether its investigation has been finalized. The agency has selectively disclosed some of the information during press conferences and in public hearings conducted by the state Legislature.

Uvalde District Attorney Christina Mitchell joined DPS in fighting the coalition’s lawsuit that month. She argued the disclosure could jeopardize any criminal charges she could seek in response to the agency’s investigation. Mitchell also claimed that “all of the families of the deceased children” had told her they supported withholding the records. But lawyers representing the majority of the families argued that was not true and joined the news organizations in support of the release.

“These Uvalde families fundamentally deserve the opportunity to gain the most complete factual picture possible of what happened to their children,” Brent Ryan Walker, one of the attorneys representing the families, wrote in March.

Mitchell did not respond to questions submitted by ProPublica and the Tribune on Friday.

The coalition has also sued the city and county of Uvalde for similarly withholding an array of records, including the layout of the school, which is set to be torn down. That lawsuit is ongoing.

Laura Lee Prather, a First Amendment lawyer also with Haynes Boone, said she hopes the lawsuit will, in the future, encourage agencies to produce information like 911 calls and body camera footage as quickly as possible.

“That’s how you promote trust in law enforcement,” Prather said. “It’s also how you prevent future tragedies.”

by Anjeanette Damon and Byard Duncan

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A California real estate investor continued to be involved with one of the country’s most successful “We Buy Ugly Houses” franchises years after pleading guilty to felony charges for misleading two elderly homeowners who signed below-market sales contracts.

Despite assurances from HomeVestors of America that it had cut ties with Cory Evans “a number of years” ago, the former co-owner of Patriot Holdings LLC was still engaged in the business as recently as March, according to interviews with former business affiliates and text messages and emails obtained by ProPublica.

After ProPublica asked the company in April how it had responded to Evans’ conviction for attempted real estate theft, his involvement in a franchisee group chat appeared to cease. His last message to the group was on March 8.

Dana Pope, who until 2022 ran a Los Angeles-based HomeVestors franchise, said that during her time with the company, “Cory was very much always in the office, always active.” She said, “He was training me. He was in every conference we ever had.”

A HomeVestors corporate spokesperson said this week that the company has documentation showing Evans’ ownership interest in Patriot Holdings was terminated in 2021 and his name removed from the franchise agreement. “Based upon your reporting and questions, we have initiated a review into Cory Evans’ ongoing involvement with Patriot Holdings,” she said.

Neither Evans nor Patriot Holdings’ owners responded to a request for comment. Evans is not listed as a “manager or member” of Patriot Holdings in current California business filings.

Evans caught the attention of law enforcement in 2019, after he misled two elderly Southern California homeowners into signing sales contracts, according to court documents. The deals stemmed from what HomeVestors characterizes in its training and marketing materials as “Ugly Situations”: One homeowner had developed a hoarding problem and feared her house would be seized by the city for code violations; the other faced foreclosure. Both “were desperate for help since they did not want to lose their homes,” and Evans “took advantage of their individual fears for personal gain,” a Ventura County District Attorney’s Office investigator wrote in an arrest warrant declaration.

Evans was charged with four felonies in December 2019. Two charges were dropped in exchange for Evans’ guilty plea to two counts of attempted grand theft of real property in August 2020. When he was sentenced in September 2020, he was given probation and ordered to pay restitution and drop lawsuits he had filed against the two homeowners. He also was prohibited from participating in real estate transactions for about a year.

After the conviction, HomeVestors could have immediately revoked Patriot Holdings’ franchise, which was co-managed by Evans, his brothers and another partner, according to the terms of the agreement. But the parties instead struck a deal, according to HomeVestors’ corporate spokesperson. The franchise could continue operating provided Evans was removed as an owner.

In April, a HomeVestors representative told ProPublica that Evans “has had no affiliation with HomeVestors for a number of years.” And in a May blog post, HomeVestors stated it had “required that Cory Evans be removed from Patriot Holdings.”

Yet texts, emails and interviews indicate otherwise.

From June 2022 to March 2023, Evans was active in a group text chat where Southern California HomeVestors franchisees exchanged advice and updates on events. He sent frequent meeting reminders and added and removed participants from the text group. He orchestrated regular franchisee meetings with a business coach. Ahead of a regional meeting in August 2022, he described a plan to “roll out the most recent products available for Homevestors franchise.” And in January, he announced a training “on the basics of taking calls and running appointments.”

A recent ProPublica investigation found that HomeVestors, which bills itself as the largest cash homebuyer in the country, taught its franchise operators to target people in desperate situations. The reporting found some franchisees used deception and targeted the elderly, the infirm and people close to poverty. In response to the report, two U.S. senators and the head of the Consumer Financial Protection Bureau called for more scrutiny of HomeVestors and companies like it. HomeVestors CEO David Hicks announced this week that he would step down on Aug. 1.

(Our reporters discussed their findings and potential reforms with outside experts in a recent virtual discussion.)

In response to ProPublica’s initial findings, a corporate spokesperson said the company works to weed out bad actors and would ban tactics that can trap homeowners in sales contracts. The spokesperson pointed to Evans’ removal from Patriot Holdings as an example of the company enforcing its ethical standards.

HomeVestors knew as early as January 2020 that Evans had been charged, according to a letter one franchisee wrote to the company’s then-general counsel, Bonnie DePasse. “You took the position that the company is standing behind the Evans and running a counter PR Campaign to minimize the damage,” the franchisee wrote. (A HomeVestors spokesperson said DePasse no longer works for the company and that the lawyer had reiterated “our company values” when communicating with the franchisee.)

Pope said when she joined HomeVestors in May 2020, Evans taught her how to interact with prospective sellers. Emails she received show Evans working with the franchise after the district attorney subpoenaed records from HomeVestors’ corporate offices. Two weeks after Evans pleaded guilty to the charges, he emailed Pope, “We don’t want to lose out on new leads coming in.”

(Highlighted and redacted by ProPublica)

Evans also attended HomeVestors meetings throughout 2021, Pope said. She shared with ProPublica an invitation to a February 2021 meeting that listed Evans and his brother Cody as hosts. She said she was unaware of his legal troubles at the time, even though they were covered by local news outlets. “Had I known all that was going on, I would have probably thought twice about buying that franchise,” she said.

That year, Patriot Holdings was listed among HomeVestors’ “Rising Stars.” Internal HomeVestors records obtained by ProPublica during its investigation also listed Evans alongside his brothers on the company’s 2021 “top sales volume” award. The HomeVestors spokesperson said he was mistakenly included on the award.

In addition to receiving numerous accolades from HomeVestors, Patriot Holdings remains one of its most profitable franchises. Two of Evans’ brothers, Cody and Chris, are development agents who recruit and train new franchisees. Until recently, they were touted on HomeVestors’ website as some of the “Best Real Estate Investors Nationwide.”

Beyond revealing Evans’ continued involvement with HomeVestors, the texts offer an unfiltered view of franchisees’ gripes and challenges. Franchisees celebrated an FTC crackdown on the online homebuying company Opendoor, exchanged tips on evicting tenants who use Section 8 housing assistance and mocked HomeVestors’ advertising agency, Imaginuity, for what they said was a poor return on the monthly marketing fees they paid to the company. (Asked to respond to the criticism, Charlie Calise, the owner of Imaginuity, said: “We won’t speculate on a series of communications that we were not part of.”)

In April, the chat focused on HomeVestors leadership’s all-franchisee webinar, during which the company laid out a plan to “bury” ProPublica’s story. After that meeting, one franchisee called the investigation a “left-wing, lunatic article, stating that Homevestors rips off old people and steals equity.” Another wrote, “I always worry when the company lawyer sends out and invite.”

After Hicks, the CEO, alerted franchise owners to ProPublica’s forthcoming story, text messages show, he and Chief Operating Officer Larry Goodman planned an in-person visit to franchises in Southern California. HomeVestors said the goal of the visit was to “give a company-wide update” that included information about ProPublica’s yet-to-be published story. The spokesperson said Hicks “does not recall seeing Cory Evans at the meeting.”

The month before that meeting — and more than two years after he was convicted — Evans went silent on the group chat. His Homevestors.com email address, which appeared to still be functioning in early April, stopped accepting messages in June.

Mollie Simon contributed research.