ProPublica

Hospices in Four States to Receive Extra Scrutiny Over Concerns of Fraud, Waste and Abuse

2 years 1 month ago

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Last week, regulators rolled out enhanced oversight for new hospices in Arizona, California, Nevada and Texas. The Centers for Medicare and Medicaid Services, which pays for most of American hospice care, announced that this change was spurred by “numerous reports of hospice fraud, waste, and abuse” and “serious concerns about market oversaturation.”

In November, ProPublica and The New Yorker highlighted that the four states were overrun with for-profit hospices, many of them sharing the same addresses and owners. Some of these hospices obtained licenses only to sell them to other entrepreneurs. Others appeared to be billing Medicare for “phantom” — that is, nonexistent — patients. Some did both. The government’s own data revealed a pattern of rapid hospice growth in the four states, far outstripping the demand for services.

Rapid Rise in Hospices Concentrated in West and Southwest

A ProPublica analysis of Medicare data reveals a sharp uptick in providers since 2018.

(Source: CMS data set of Medicare-certified hospices. Chart by Lena Groeger.)

During the new oversight period, which can last up to a year, Medicare and its contractors will now scrutinize the claims submitted by new hospices in these states before they pay them. This process — often known as “medical review” or “pre-pay review” — will make it more difficult for a hospice to bill the government for inappropriate patients or medically unnecessary services. Theresa Forster, vice president for end-of-life care policy at the National Association for Home Care & Hospice, praised this action, which all four industry trade groups had recommended. “This gives new hospices an opportunity to start off on the right foot and identify any problem areas from the start,” she said.

The change is part of a larger effort by CMS this year to address fraud, waste and abuse in its hospice program. In January, CMS overhauled its inspections of hospices, with the changes going into effect immediately. In March, the agency released a proposed rule that would require further analysis of the number of patients leaving hospice alive, the diagnoses provided on hospice claims and Medicare hospice spending. And in April, the agency made hospice ownership data public for the first time. The data will allow patients and families to better discern whether their hospice is for-profit or not-for-profit — a distinction that, as researchers have shown, can significantly affect the quality of care. “It’s plain and simple: families deserve transparency when making decisions about hospice and home health care for their loved ones,” Department of Health and Human Services Secretary Xavier Becerra said in a statement. “Shining a light on ownership data is good for families, good for researchers, and good for enforcement agencies.”

These reforms were prompted not just by the ProPublica-New Yorker story but by the continued pressure from lobbyists and lawmakers in its wake. This spring, during hearings held by the Senate Finance and House Ways and Means committees, members cited the investigation as they questioned Becerra on the agency’s next steps for tackling hospice profiteering. In one exchange, Becerra testified that his inspectors had “conducted some unannounced site visits of the hospices identified by that article” and that an audit of suspicious providers was underway. Legislators have sent a series of public letters to HHS, requesting urgent briefings and actions on hospice fraud, including two this summer. The most recent letter, released last week and signed by 26 representatives from both parties, applauded CMS’ commitment to addressing hospice abuse while also requesting further reforms, including targeted moratoriums in high-growth areas and standards to rein in deceptive marketing practices.

“This is an area that escapes partisan gridlock,” Rep. Earl Blumenauer, D-Ore., one of the letter’s signatories and coordinators, told me. “No one sympathizes with people who are cheating this system, particularly when you are involving some of America’s most vulnerable populations.”

Palliative care physicians have also been pushing for stricter guidelines. In April, the Journal of Palliative Medicine published a statement of “Core Roles and Responsibilities” signed by 325 doctors in the field. The group was motivated to issue the statement, it wrote, “out of concern for physician colleagues who may be asked to participate in hospice programs that are staffed, structured, and operated in ways that put patients and families at risk of poor care, and concomitantly expose physicians to violations of clinical and ethical standards.” Among other improvements, it called for hospices to strengthen their staffing, training and frequency of visits.

Ira Byock, the lead author and the former president of the American Academy of Hospice and Palliative Medicine, said that the condition of hospice care in the United States represented a “true public health crisis.”

This year has also seen a spate of further reporting, commentary and research on the profit motive in hospice, including a detailed report on private equity’s role in hospice care from the Center for Economic and Policy Research. Eileen Appelbaum, the center’s co-director and one of the co-authors of the report, “Preying on the Dying,” said that she has long been concerned about how investors can harm vulnerable patients and families. “Problems of asymmetric information — most patients and their caregivers have no prior experience with hospice care — further increase the difficulty of overseeing private hospice agencies,” the report notes.

Ben Marcantonio, the interim CEO at the National Hospice and Palliative Care Organization, the industry’s largest trade group, said that “in my experience, whether hospices are gaming the system is not a direct reflection of tax status. What we need is the right stewardship of taxpayer dollars, so the right delivery of care is provided at the right time with the right amount of resources.”

Blumenauer told me that he and other legislators were committed to checking in with CMS and trade groups like NAHC and NHPCO about ongoing, collaborative efforts to reform the hospice program. “Your article struck a chord on a series of levels,” he said. “We are going to continue pounding away on this issue.”

by Ava Kofman

A Scientist Said Her Research Could Help With Repatriation. Instead, It Destroyed Native Remains.

ProPublica

2 years 1 month ago

by Mary Hudetz

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Two decades ago, an anthropology professor at the University of Utah asked the National Science Foundation to fund research on Native American ancestors to determine when the cultivations of crops like corn first became prevalent in their cultures.

This story is part of The Repatriation Project, a series investigating the return of Native American ancestral remains.

The studies, according to the research proposals, would involve analyzing Ancestral Pueblo remains that museums had excavated around 1900 from some of the Southwest’s most sacred sites: a deep rift that winds through Bears Ears National Monument in Utah, an ancient village near cliff dwellings in Colorado and the remnants of a settlement at Chaco Canyon in New Mexico that dates back more than a thousand years. Nearly all of the remains were held at Harvard University’s Peabody Museum of Archaeology and Ethnology and the American Museum of Natural History in New York.

The analysis would destroy portions of the ancestral remains but yield valuable information, including a more precise date of when the individuals lived, Joan Brenner Coltrain, the Utah professor, said in the research proposals. This information could help the institutions finally return the remains to descendant tribes, she said at the time.

The NSF provided $222,218 under two grants for research that spanned eight years, starting in 2002. But the studies never resulted in Harvard or the AMNH repatriating human remains to any of the tribes that trace their ancestry to sites studied by Brenner Coltrain, including the Pueblo tribes of New Mexico and the Hopi in Arizona.

Instead, the work inspired even more destructive research on ancestral remains by other scientists supported by federal funding and done without the consent of tribes, many of which view such studies as a violation of their traditions and beliefs.

“There’s somehow this perspective that this kind of research will enhance us or benefit us,” said Theresa Pasqual, director of the historic preservation office for the Pueblo of Acoma. “What it does is it bolsters their careers; it bolsters their professional, academic standing. Let’s be real about it.”

In 1990, Congress passed the Native American Graves Protection and Repatriation Act, anticipating that within a decade federally funded museums and universities would return tens of thousands of ancestral remains and burial items. But as ProPublica reported this year, U.S. museums continue to hold the remains of more than 100,000 Native American ancestors, almost all of which they say are “culturally unidentifiable,” meaning they are unable to determine which tribe, if any, can rightfully claim them.

ProPublica found that by funding scientific studies on Native American human remains, the NSF and other federal agencies have created incentives for institutions to hold on to ancestors in ways that undermine the goals of NAGPRA. Federal agencies have awarded at least $15 million to universities and museums for such research since the law’s passage, a ProPublica review found.

As a result, tribes have been not only denied opportunities to reclaim and rebury their ancestors, but also excluded from having a say over the treatment of the remains.

“There’s this perverse sense of ownership, that ‘these are our samples.’ And ‘You know, we’re protecting it for the good of research,’” said Krystal Tsosie, a Navajo Nation citizen and assistant professor at Arizona State University whose research focuses on genetics and bioethics.

When another group of researchers was set to publish a study that had involved damaging Native American remains — including two from Chaco Canyon used in the Brenner Coltrain research — some on the team questioned the ethics of moving forward without permission or input from tribes. But an AMNH curator, who was listed as a contributor to the study, discouraged outreach to Pueblo leaders, according to previously unreported emails. Involving them could cause researchers to lose control of the project, he wrote.

The fallout from that study led the AMNH in 2020 to ban destructive research on human remains.

The museum said in response to questions from ProPublica that it has not repatriated the ancestral remains used in the studies because no tribes have formally claimed them under the law. Pueblo representatives have continued to visit the AMNH and meet with staff about its collection, the statement added.

Several tribal members and representatives interviewed for this story said museums’ demands that tribes initiate the repatriation process place an unfair burden on them to do the work of addressing the looting of Indigenous graves.

“The museums tend to think of all these objects as their personal property, and they don’t want to turn it back over to the tribes even though much of it was unscrupulously obtained,” said Kurt Dongoske, who is a tribal historic preservation officer for Zuni Pueblo in New Mexico.

The AMNH also said it is not aware of scientific research it authorized yielding enough information to allow for repatriation decisions.

Harvard, which declined to comment after receiving questions from ProPublica, has prohibited research on ancestral remains and items subject to NAGPRA under a temporary policy that allows an exception for studies done with tribal consent. The university has acknowledged publicly that as a premier research institution, it long ignored the wishes of tribal communities while benefiting from collections of their ancestral remains amassed through excavations and donations.

This year, the Interior Department is reviewing proposed regulations that would require institutions to halt research on Native American remains if requested by a tribe. The NSF said in response to written questions from ProPublica that it is committed to engaging more with tribes and is now beginning to standardize policies for funding research that impacts them. Under draft guidelines that could go into effect in January, the agency said, it would require all researchers to show that they have consulted with tribes on their research proposals before obtaining an NSF grant.

Still, the NSF and other federal agencies have continued to fund research on Indigenous remains in recent years.

Involving Indigenous groups in research can add to researchers’ understanding of ancestors’ lives and belongings, said Pasqual, of Acoma Pueblo. Without this context, scientific studies are incomplete, she said.

Pasqual’s background in archeology helps her understand how science’s view of her ancestors differs from that of her tribe’s culture. Scientists and museums, she believes, have long viewed ancestors’ remains as objects, specimens or property. Pueblo people have a continuing relationship with their ancestors and an obligation to steward them.

“There are a lot of folks who may see ancestors as being an open resource to do different types of DNA testing,” she said. “We recognize that there is an ethical obligation.”

Theresa Pasqual, director of the Acoma Historic Preservation Office, at Pueblo Bonito. (Russel Albert Daniels for ProPublica) Pueblo Bonito, a massive “great house,” once stood four stories tall, according to the National Park Service. (Russel Albert Daniels for ProPublica) “The Law Is So Vague”

For nearly two centuries, museums and universities used science to justify building and keeping massive collections of Native American human remains.

Harvard, which today holds the remains of 6,000 Native Americans, opened the Peabody museum in 1866 with a handful of pottery and other items, plus a small collection of Indigenous remains that were used to analyze the “anatomical characteristics” of the races, according to the museum’s first annual report, issued two years later.

By 1900, an AMNH anthropologist with medical training, Aleš Hrdlička, set up a makeshift laboratory in Chaco Canyon’sPueblo Bonito, a sprawling multistory settlement with hundreds of rooms and dozens of kivas, spaces that have long been used among Pueblo tribes and the Hopi for ceremonial and social purposes.

Hrdlička conducted his work as the expedition’s archaeologists cleared rooms in the “great house,” including a chamber the archaeologists labeled Room 33 where 14 people had been buried along with ceramics and thousands of pieces of turquoise. The team began taking remains and objects and sending them to New York by train, until concerns about looting at the canyon prompted a federal probe.

One of the expedition’s benefactors defended the work as a scientific enterprise, not a looting one. But the investigation still halted the excavation, and the investigator recommended making Chaco Canyon a national park to protect it.

Of the more than 150 ancestral remains from Chaco Canyon at the AMNH, Hrdlička helped unearth more than half, according to the museum’s inventory provided to the National Park Service under NAGPRA.

Doorways between rooms in Pueblo Bonito (Russel Albert Daniels for ProPublica)

David Hurst Thomas, a longtime archaeologist, said he considered the Chaco Canyon holdings to be the AMNH’s most important collection from the continent when he first stepped into his role as the museum’s curator of North American archeology in the 1970s.

“There are people who want to call that looting, and certainly by 21st-century standards that’s true,” said Thomas, who’s now retired. “But by late 19th-century standards, that’s one of the best digs in the country.”

Frustration that institutions had treated Native American ancestors as scientific specimens played a major role in driving Indigenous rights activists to push for federal repatriation legislation. When Congress passed NAGPRA in 1990, lawmakers anticipated repatriation would be completed within five to 10 years. As a result, the law is limited in how it addresses scientific analysis.

Vessels labeled with numbers at Pueblo Bonito in 1896. (American Museum of Natural History Library)

“The whole concept of NAGPRA was to return these collections to tribes, so that they would have rights over them. They would be able to authorize or not authorize testing,” said Melanie O’Brien, manager of the National Park Service’s National NAGPRA Program. “But that didn't happen.”

Congress simply did not envision that 33 years later institutions would be where they are now — holding tens of thousands of Native American remains they have designated as “culturally unidentifiable” and allowing them to be used for research, said O’Brien.

The law states that it should not be interpreted as authorizing new scientific studies to advance repatriation efforts. It also says that the only justification for halting repatriations in order to conduct research is if it is considered so important that the findings would be in the national interest. And even in such cases, institutions have three months from the study’s conclusion to return the human remains and items to tribes, according to the law.

No institution has ever sought an exemption for such a study, according to O’Brien.

Stewart Koyiyumptewa, the Hopi Tribe’s cultural preservation office director, believes NAGPRA should clearly acknowledge tribes’ right to have a say over studies of their ancestors, including those that involve taking and examining samples of their DNA. “But the law is so vague,” he said.

In a letter commenting on the Interior Department’s proposed regulations, Koyiyumptewa said clarifying this would help prevent remains or objects in museums pending repatriation from being used for scientific or museum work.

A photo taken during exploration of Chaco Canyon between 1898 and 1900. (American Museum of Natural History Library)

From the perspective of his culture, Koyiyumptewa said, samples extracted for DNA research and other studies still represent the remnants of a person and should be respected. “Even though the person may be deceased,” he said, “that small sample still has life.”

Alyssa Bader, who is Tsimshian and an assistant professor of anthropology at McGill University in Montreal, agrees that tribes should have a say over the treatment of biological samples of ancestral remains used in research.

But this work can be done ethically, Bader said.

She has collaborated with Indigenous communities to examine the diets of Tsimshian ancestors and how foods have changed in the distant and recent past. As her partners, Indigenous groups help shape research questions in ways that can benefit their communities.

This collaborative work requires more time and money but it is worth the investment, Bader said. “I 100% believe that it produces better research.”

Pursuing Research, Not Repatriation

Soon after NAGPRA’s passage, NSF records show, some institutions began to seek grants to preserve Ancestral remains for future scientific study, even though Congress had called for museums to be “expeditious” in returning them to tribes. At the time, many museums had not yet fulfilled the law’s requirement to inventory their collections.

It would take a full decade from the law’s passage — years longer than expected — for the American Museum of Natural History and Harvard to fully review their collections. The park service had extended deadlines for the institutions with vast collections to file inventories of the items and human remains that had been taken from Native American burials. In 2000, both finally reported that most of their holdings subject to the law could not be culturally affiliated, claiming they did not have enough information to make repatriation decisions.

Pueblo Bonito at Chaco Culture National Historical Park. This great house is the largest of all Chacoan great houses. (Russel Albert Daniels for ProPublica)

For example, the AMNH declared its entire Chaco Canyon collection to be “culturally unidentifiable.” In federal records, the museum said that people’s migrations from the canyon in the 1300s to villages in Arizona and New Mexico where their descendants now live left gaps in archaeologists’ knowledge about the region.

Martha Graham, who oversaw the museum’s NAGPRA compliance in the 1990s, told ProPublica that because multiple tribes claimed ties to the canyon, institutions needed even more time than the park service had granted them to consult with the tribes. Graham, who is from New Mexico and briefly worked for the park service at Chaco Canyon, said she appreciated the connection that the tribes, including the Hopi, had to the area. She left her job in 2001. But had she stayed, she would have pressed the museum to revisit its conclusion that it could not identify which tribes could reclaim what it held from the site, she told ProPublica. “We were pretty explicit, as I recall,” about the need for that to happen, said Graham.

In a statement, the museum said the work of “affiliating” collections did not end when it filed its inventory with the park service in 2000 and is ongoing. But the museum has not revised its decision, though it said it recognizes multiple Pueblo tribes’ ties to the canyon.

Thomas, the retired AMNH curator of North American archaeology, believed NAGPRA gave the museum even more reason to approve scientific research because it might help identify descendant groups for repatriation. He acknowledged in an interview that it was wrong to exclude tribes from decisions about such research.

An opening within New Alto, one of the great houses of Chaco Culture National Historical Park (Russel Albert Daniels for ProPublica) “Why Didn’t You Ask Us?”

Brenner Coltrain at the University of Utah pursued the first of two NSF grants in 2002, hoping to learn more about when farming became a central part of life for Ancestral Puebloans who lived more than 2,000 years ago on the Colorado Plateau. She began by analyzing human remains formerly buried in Arizona and Colorado and now held at Harvard’s Peabody museum, saying the work would “undoubtedly influence” the institution’s final repatriation decisions.

Brenner Coltrain did not grant an interview for this story. In an email, she told ProPublica that her work could help institutions make “informed decisions regarding repatriation” but “not ensure that repatriation will follow.”

The museum had granted Brenner Coltrain access to its collection on the condition that she share her findings with several tribes, including the Hopi, Pueblo of Acoma and Navajo Nation, according to her NSF research proposal.

Initially, the research involved having another Utah professor analyze mitochondrial DNA, or mtDNA, which was becoming increasingly prevalent in anthropological studies. Extracting it required pulverizing portions of bone. The genetic material, which is inherited from mothers, could help researchers learn more about trade routes, human migration and matrilineal lineages.

Brenner Coltrain and her colleague hoped to gather genetic information from more than three dozen ancestors. But they only had success with seven because the remains either were not well preserved or had lost bone mass.

The process was expensive and the results were disappointing, Brenner Coltrain said in a grant report to the NSF. It showed that the people from different ancient sites shared a common ancestry, a finding she said was “perhaps not surprising,” given what was already known about Native American genetics in the region.

But another form of destructive analysis that involved examining the bone chemistry of 80 ancestors led Brenner Coltrain to what she considered a more noteworthy finding: Corn had become a staple in the region by roughly 2,400 years ago. Her final reports did not say whether she shared this information with the tribes as Harvard requested.

Even though no repatriation happened following the first study, she successfully proposed similar research in a second NSF proposal in 2007. This time, she studied the remains of more than 140 ancestors held at the AMNH that had been excavated around the 1900s, mostly from Grand Gulch, a winding canyon within Utah’s Bears Ears National Monument. In the course of her work, she also extracted bone samples from the remains of at least two ancestors buried within Pueblo Bonito at Chaco Canyon, according to a paper she and her co-researchers later published.

Joel Janetski, a now-retired anthropology professor at Brigham Young University who worked with Brenner Coltrain on the second of the studies, said in an interview that the researchers had followed all appropriate guidelines. They did not consult with tribes, he said, because they would have had to go around the AMNH to do so and therefore jeopardize future opportunities to research its collection.

“It would have been inappropriate,” he said.

Pasqual climbs a mesa at Chaco Culture National Historical Park, a place she has visited frequently since she was a child. (Russel Albert Daniels for ProPublica)

As Brenner Coltrain’s NSF grant ended, another researcher took an interest in the Chaco Canyon ancestors whose remains she had analyzed. Stephen Plog, a University of Virginia archaeologist, obtained samples from her and sent them to a radiocarbon-dating lab for further analysis, he said.

He co-authored a paper about the research in 2010. No one raised concerns about his work, Plog said in an interview: “No reviewer, nor anyone else commented to say, ‘You know, do you think it’s really right to just do destructive analysis of human remains?’”

Next, he collaborated with researchers at Penn State, Harvard and the AMNH on a paper that again focused on the ancestors from Pueblo Bonito’s Room 33. Their work was supported by NSF funding. Using mtDNA, they showed that eight individuals buried together in the room descended from a woman laid to rest among them and that the group’s lineage spanned 300 years.

In late 2016, the team was prepared to report their findings in Nature, the leading scientific journal.

But before publication, an anthropologist who wasn’t involved in the project urged members of the team to reach out to tribes, according to interviews and emails exchanged among the researchers. It was too late to get consent for destructive analysis that had already happened. But the team could still engage with the tribes and discuss the research ahead of publication, suggested George Perry, a professor at Penn State and co-author of the paper.

Peter Whiteley, a cultural anthropologist at the AMNH, firmly opposed the idea, saying in an email to Perry and other researchers that involving tribes would result in surrendering scientific “decision-making” to them. The team should publish first and contact the tribes later, he said.

Whiteley knew the region, having spent much of his career researching and writing books about the Hopi tribe. Since the 1980s he had done this work in collaboration with tribal members or with tribal authorities’ consent, he wrote in an email to ProPublica sent via an AMNH spokesperson.

The team studying the ancestors of Pueblo Bonito’s Room 33 had asked Whiteley to contribute expertise on matrilineal cultures among the Pueblo tribes but did so only after the research had been completed. Whiteley called the proposal to engage with tribes pre-publication “naive.”

“If they had wanted Pueblo and Hopi involvement, the time to seek it was at the beginning of the research, not its conclusion,” Whiteley told ProPublica.

Despite opposition from others on the research team, Perry sent letters to Pueblo and Hopi tribal officers before the paper was published. The possibility that tribes might disapprove of the research was all the more reason to engage, he said.

In retrospect, Plog said, he understands arguments against doing the type of research on Native American human remains that he and the others pursued. But he said he participated in the belief that his findings had the potential to advance public perceptions of Native Americans by showing the culture at Chaco Canyon had rivaled other great ancient civilizations.

Petroglyphs on a wall in Chaco Canyon, one of the the physical traces left by the people who lived there (Russel Albert Daniels for ProPublica)

Koyiyumptewa, the Hopi cultural preservation office director, said he felt upset upon learning the research had been done without the tribe’s input.

“You know, why didn’t you ask us?” Koyiyumptewa said in an interview.

News headlines seized on the finding that the Ancestral Puebloans shared a matrilineal line. One read, “Girl Power,” another “Moms Rule!” But that was hardly revelatory to people like Pasqual, who trace their roots through Chaco Canyon and sustain cultures that center matrilineal ties.

“We could have told you that,” she said of the Pueblo of Acoma.

She and others say tribes have their own ways of understanding and appreciating their past.

In her youth, her father used to take her to Chaco Canyon and teach her about the people who built the great houses and how their practices extend to her and others in the present. She has since driven countless times from Acoma Pueblo to the canyon, 100 miles to the north, where she observes traces of Pueblo ancestors, their footholds embedded in the canyon walls.

“If the Pueblo people identify themselves as descendants, that should be enough,” Pasqual said.

Footholds embedded in a mesa make up an ancient road. 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by Mary Hudetz

“At What Point Does Profit Trump Safety?” Ex-National Cyber Director Presses Software Regulation Amid High-Profile Hacks

ProPublica

2 years 1 month ago

by Renee Dudley

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

Update, July 19, 2023: On Wednesday morning, Microsoft announced that it would be expanding logging access for its cloud customers at no additional cost. Users of basic-level 365 licenses will have detailed logs of email access and other types of log data previously available only to users of premium-level licenses. Microsoft also doubled the amount of time logs will be retained to 180 days for basic-level customers. Government and commercial customers will have the new features beginning in September.

“We are grateful to work in close coordination with CISA and our customers as we continue to invest in our built-in security and other protections,” Microsoft said in a statement.

The Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency, or CISA, lauded the action.

“While we recognize this will take time to implement, this is truly a step in the right direction toward the adoption of Secure by Design principles by more companies,” CISA Director Jen Easterly said in a statement.

In 2019, hackers launched one of the largest cybersecurity attacks in U.S. history, eventually infiltrating various government agencies, as well as scores of private sector companies. The White House later attributed the attack, known as the SolarWinds hack, to Russia’s Foreign Intelligence Service. But as U.S. officials scrambled to respond to this spying, they realized they were missing key information: critical log files, the digital records of activity on users' computers.

The feature, which allows users to detect and investigate suspicious activity in their networks, is included in high-end Microsoft 365 plans but not in the basic version then used by some government agencies. Other agencies didn't retain sufficient log data over a long enough time frame. Had logging been more widely deployed, it might have tipped off officials to the intrusion sooner and enabled them to better investigate after it had been discovered.

Against this backdrop, President Biden nominated Chris Inglis to become the country’s first National Cyber Director. Inglis, a former National Security Agency official who began his career as a computer scientist, would go on to oversee the development of the administration’s National Cybersecurity Strategy. And as he and his team at the White House drafted that document, he kept returning to the SolarWinds hack. Known as a supply chain attack, this far-reaching breach started with compromised software that was used by many high-profile customers. “Everyone along that supply chain assumed that security was built in at the factory and sustained along the supply chain,” Inglis said of the SolarWinds attack. “We now know that wasn’t the case.”

The issue emerged again this month when some victims of a cyberattack linked to China were unable to detect the intrusion because they held basic Microsoft licenses rather than the premium ones that include logging. Hackers had exploited a flaw in Microsoft’s cloud computing service to break into about two dozen organizations globally, including the U.S. State Department.

These types of incidents reflect a larger trend, Inglis said: Computer users find themselves bearing a disproportionately large share of the burden of defending against cyberattacks. In response, the new strategy proposes shifting more of that burden to software makers themselves. Indeed, following the most recent cyberattack by Chinese hackers, Biden administration officials called on Microsoft last week to make security features like logging standard for all users.

Microsoft said it is engaging with the administration on the issue. “We are evaluating feedback and are open to other models,” a company spokesman said in a statement.

Although the Biden strategy, which was announced in March, is not binding, it represents a significant change in the government’s approach. Among its proposals: advancing legislation that would hold tech firms liable for data losses and harm caused by insecure products. Inglis, who stepped down from his role as director earlier this year, recently spoke with ProPublica about the national strategy document and the administration’s push to make technology providers do more to protect users from cyberattacks. The conversation has been edited for length and clarity.

The Biden administration is talking about regulating cybersecurity. What would that look like in practice?

If you look at regulation of cyberspace at the moment, it’s mostly focused on operators. It’s not focused on those who build the cloud or major pieces of software. Governments need to consult with the private sector to understand what’s critical in those systems. We can use regulatory authorities that exist already, whether it’s the Department of Commerce, the FCC, the Treasury Department. When something is life- or safety-critical, you get to a place where you have to actually specify those things that you say are not discretionary. We did this with drugs and therapeutics. We did this with transportation systems. We need to do the same thing in cyberspace.

I’m reminded of a book I’m sure you’re familiar with, “The Cuckoo’s Egg,” Cliff Stoll’s story about the sprawling intrusion into U.S. government and military computer systems in the 1980s. Eventually, the trail led to West German hackers paid by the Soviet Union’s intelligence service, the KGB. These issues are not exactly new. Why has regulation never come up in this conversation before?

Well, I think it’s been brought up, but two things prevented it. First, we’ve thought about the idea that security is something that the technologists, the innovators, would actually take care of. They’ve always been of the mind that they would take care of it when they get around to it. But they’re always on to the next new innovation. So they never get around to it. We never double back to essentially build something in that wasn’t there at the start.

Two, we worried that too much regulation will actually suppress innovation and deny us the full benefit of technology. We still need to think about that. But it turns out that innovation is not a free lunch. I won’t cite any particular sources, but if you’re a good business person, you want to avoid any unnecessary cost. And so you’re always going to point out the downside of regulation.

You have alluded in this discussion to making products secure by design — the concept, which also is a focus of the national strategy document, that security should be built into digital products. What are some examples of this?

It’s pretty straightforward: Are the software or hardware systems meeting security expectations under reasonably foreseeable conditions? We’ve done that with automobiles. We have airbags, we have seat belts, we have anti-lock brakes. So what are the basic cybersecurity features that should be there at the get-go? Multifactor authentication or some reasonable equivalent to that. Some degree of segmentation so that if something gets into your system, it doesn’t rapidly race across. An easy way to patch vulnerabilities. The magic in the middle of that is that the vendor actually says, ‘I will take that responsibility.’ As opposed to saying, ‘Let the buyer beware. I’ll sell you the basic version. But if you want security features, then I’ll sell you a package on top of that.’ That’s nonsense.

That sounds like the whole Microsoft licensing debate in the wake of the SolarWinds attack, where the government lacked logging, a key security feature.

That’s right. Now, if you have an extraordinary security situation — you’re in the darknet, or you’re doing business in places where there’s very little jurisdictional authority exercised by the local police forces or the diplomatic cadre — then you ought to expect to pay more. But if you’re just an ordinary consumer, security ought to come along, built in.

I’m wondering how things are going to move ahead with this, given what seems to be the historic corporate outlook. When Microsoft President Brad Smith testified before Congress in early 2021, then-Rep. Jim Langevin of Rhode Island questioned him about charging extra for logging. Smith replied, “We are a for-profit company. Everything we do is designed to generate a return.”

So is Ford Motor Co. So is Tesla. It’s a pretty simple formulation, which is: At what point does profit trump safety? And the answer is, there is some reasonable alignment of the two. You can’t have all of one and none of the other. The businesses have to be able to sustain themselves; profit needs to be in the bargain. But they cannot deploy technologies that they know to be injurious to the welfare, health and safety of their customers. That is simply not the way this society works. I just think that companies that deploy products that have a detrimental effect on their customers either will find themselves [improving security] through self-enlightenment or market forces, or they should expect that they will be compelled to do that.

We should be pro-business. But business over the interest of the customers that it serves is essentially a graveyard spiral. It’s a race to the bottom. And so this is yet another moment where you have to align the interest of business with the interest of consumers that they will serve.

Help Our Journalists Report Important Stories About the Technology Industry

by Renee Dudley

How School Board Meetings Became Flashpoints for Anger and Chaos Across the Country

ProPublica

2 years 1 month ago

by Nicole Carr and Lucas Waldron

Time and again over the last two years, parents and protesters have derailed school board meetings across the country. Once considered tame, even boring, the meetings have become polarized battlegrounds over COVID-19 safety measures, LGBTQ+ student rights, “obscene” library books and attempts to teach children about systemic racism in America.

On dozens of occasions, the tensions at the meetings have escalated into not just shouting matches and threats but also arrests and criminal charges.

ProPublica identified nearly 90 incidents in 30 states going back to the spring of 2021. (That’s when the majority of boards resumed gathering in-person after predominantly holding meetings virtually.) Our examination — the first wide-ranging analysis of school board unrest — found that at least 59 people were arrested or charged over an 18-month period, from May 2021 to November 2022. Prosecutors dismissed the vast majority of the cases, most of them involving charges of trespassing, resisting an officer or disrupting a public meeting. Almost all of the incidents were in suburban districts, and nearly every participant was white.

In the course of our analysis, we examined hundreds of hours of footage — school board meeting feeds, social media posts and police bodycam videos — that revealed how the meetings became a forum for simmering anger over pandemic restrictions and, soon after, widespread fury over the belief that school boards are infringing on parental rights. In many cases, the heated discourse that started in the meetings spawned sweeping debates that ultimately restricted what could be taught in classrooms and reshaped the school boards themselves.

Explore our interactive story.

by Nicole Carr and Lucas Waldron

How One Woman Narrowly Avoided a Bad Deal With a “We Buy Ugly Houses” Franchise

ProPublica

2 years 1 month ago

by Anjeanette Damon

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

In the year since her husband died, Royanne McNair felt increasingly lonely in North Las Vegas. With most of her children and grandchildren in the Midwest, she decided to sell the house she and her husband had already paid off and move back to Ohio.

Her goal was to be there by July 29, the anniversary of her husband’s death.

Eager to find a buyer for the well-maintained, four-bedroom stucco house, she called a local HomeVestors of America franchise.

“I got a letter through the mail. That’s why I called them,” McNair, 69, said of the company known for its “We Buy Ugly Houses” slogan. “I just thought it would be easier for me to sell that way, not realizing how much money I would lose.”

A representative from the franchise, Black Rock Real Estate, came to her house and offered $270,000 on the spot. She signed a contract that evening.

But when McNair called one of her sons to share the news, he was dismayed. A quick internet search showed she could get much more for her home. So three days after signing the contract, she reached out to the company and said she wanted to cancel it.

The Black Rock representative countered by offering to raise the sales price by $14,000 — which McNair considered and even verbally agreed to, before calling again and asking to be let out of the deal. She said she didn’t hear back from the company after that.

An investigation by ProPublica this year found that HomeVestors franchises sometimes deploy aggressive tactics to bind homeowners to sales contracts, even when they no longer want to sell their homes, including filing lawsuits and recording documents on the property’s title. In response to ProPublica’s findings, HomeVestors prohibited its franchisees from clouding titles by recording documents to make it nearly impossible to sell to anyone else and cautioned that filing lawsuits to enforce a sales contract should only be done in rare circumstances.

Black Rock Real Estate — established in 2012 by Carl Bassett, a former appraiser — is among the most successful of HomeVestors’ 1,150 franchises. In 2021, it generated the company’s third-highest sales volume and won “Franchise of the Year.” Bassett, who has been recognized as one of the company’s “top closers,” also helps recruit and train new franchise owners.

McNair, believing she was free of her contract with Black Rock, listed her house with a real estate agent and within days received nearly 20 offers. She accepted one for $372,500 — more than $100,000 over Black Rock’s offer.

McNair was ecstatic. The new deal was set to close July 14. A search for lawsuits, liens and other obligations against the title that would prohibit the sale came back clear. She was on her way to getting to Ohio by the end of the month.

Then an envelope appeared at the office that was handling the sale’s escrow process. Inside was a copy of the Black Rock contract that McNair thought had been canceled. Its arrival immediately halted the sale.

In Nevada, and more than half of U.S. states, escrow offices, rather than lawyers, handle the process between the signing of a contract to sell a house and the deal closing. Escrow officers are neutral third parties who facilitate real estate transactions by ensuring no one else has a claim to the property and holding funds as the deal is executed. The escrow officer was duty-bound to freeze the process until a resolution was found for the competing contract to buy McNair’s home.

McNair was forced to hire a lawyer.

The escrow officer told McNair’s real estate agent, Ryan Grauberger, that the FedEx envelope had arrived without a name or return address, something Grauberger said he hadn’t seen in 24 years in the business. Neither had the escrow officer, he said.

“It’s a very dirty tactic,” Grauberger said.

After ProPublica contacted Bassett about McNair’s experience with Black Rock, he called her and promised to release her from the contract. He also offered to pay her legal expenses.

“Oh, he was so apologetic,” McNair said.

Among the reasons HomeVestors’ leadership gave for banning its franchises from clouding sellers’ titles and filing lawsuits excessively is that such practices create a public records trail that reporters and prosecutors can trace.

In McNair’s case, there was no public record trail to show who had sent the Black Rock contract to her escrow officer. In a brief phone conversation with ProPublica, however, Bassett acknowledged that his office did so. It did it because the escrow officer had refused to discuss the deal, noting that Black Rock wasn’t a party to the sale, he said.

“We believed we still had a contract with Ms. McNair,” Bassett said. “It had nothing to do with blocking the sale or trying to hurt her.”

Bassett said he never received the text message or the email McNair sent formally requesting to cancel the contract. He said Black Rock’s title company had reached out to her multiple times attempting to close the sale. (McNair said she was never contacted by Bassett’s title company.) Bassett said he learned of her desire to exit their deal when a ProPublica reporter emailed him.

“When we did get the opportunity, we did the right thing,” he said, chalking it up to a “misunderstanding.”

McNair provided copies to ProPublica of the text message and email she sent to Black Rock to cancel the contract. Unbeknownst to her, she had misspelled the recipient’s name on the email. The text message was sent to the office phone number, which Bassett said doesn’t receive text messages.

Asked about this transaction, a spokesperson for HomeVestors corporate office said: “Our priority was to make sure that the seller’s concerns were addressed and to ensure the seller is satisfied with the outcome of this process. We believe the franchisee achieved this by canceling the previously signed contract for the house. The other aspects of the transaction will be reviewed by HomeVestors.”

Steve Silva, a Nevada real estate lawyer since 2013, said he also has never heard of a contract appearing anonymously during escrow. The typical way of staking a claim to a property is a lawsuit demanding the seller be held to the contract, he said. That’s the type of action HomeVestors has told its franchises to take only rarely.

“Especially in light of the directive to not use the old tactic, it could be he was looking for a new way to try to find some pressure to get his agreement through,” Silva said.

Simply mailing a contract to an escrow officer could be a “risky move,” he added. Depending on how enforceable the contract is, such a tactic could open up a person to claims of interfering in a business deal or slandering title by making a false claim to the property, he said.

In McNair’s case, Grauberger said Black Rock did start an escrow process but never paid the $1,000 good-faith deposit required by the contract. “In my mind, it’s a dead contract,” he said.

Bassett declined to comment on why his company never made the deposit.

On July 14, McNair closed on the sale of her home arranged by her real estate agent and is on schedule to move to Ohio by the end of the month. “I’m exhilarated,” she said.

Bassett made good on his offer to pay McNair’s legal fees.

“I got a $600 check on my table,” she said.

But he also made another request. He told McNair that the Black Rock representative — a parent of five children — who got her to sign the contract could lose his job if ProPublica publishes a story about it. He asked McNair if he could record a statement from her and take her photograph. She said he wanted to publish his own story to “retract” what ProPublica reports. (Bassett said this is an inaccurate description of his conversation with McNair but declined to detail what he told her.)

“I’m not going to do it,” McNair said. “I don’t want to bother with HomeVestors any more.”

Byard Duncan contributed reporting. Mollie Simon contributed research.

by Anjeanette Damon

How to Use the Updated “Nursing Home Inspect” Database

ProPublica

2 years 1 month ago

by Ruth Talbot

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

“Nursing Home Inspect” makes it fast and easy to search thousands of recent government inspection reports, find information about specific nursing homes and discover new serious issues found by inspectors. Below are some tips to help you make the most of our database.

First, a little background.

Nursing homes receiving Medicare and Medicaid funding are subject to inspections to determine whether they are meeting requirements related to medical care, resident rights and safety. The facilities are inspected both routinely and when the government receives a complaint about a home. A nursing home’s failure to meet any of these requirements is called a “deficiency” and is documented in an inspection report.

These inspection reports and other nursing home data are compiled by the Centers for Medicare and Medicaid Services, which runs a site called Nursing Home Care Compare. Unlike the agency’s site, however, “Nursing Home Inspect” offers an advanced search function that allows you to search across all the reports at once. Also unlike CMS, our app allows searches by keywords, date ranges, states or territories, deficiency seriousness, report types and deficiency categories. So, for example, you can limit your search to finding any nursing home in Louisiana or Texas where inspectors documented serious deficiencies involving choking. Our app also provides summaries of the reports on each nursing home’s page to make them easier to digest.

As of today, the underlying database covers nearly 400,000 deficiencies from over 90,000 reports at over 15,000 homes. It is updated monthly to include new data and deficiencies. In addition to allowing you to search reports, the database also provides other information about nursing homes, including fines, whether the home is for-profit or nonprofit, staffing and capacity information, and COVID-19 vaccination information.
Understanding Inspection Reports
All deficiencies in a report have a seriousness score between A and L. These scores are assigned by government inspectors, not ProPublica. Scores are a combination of scope, or how widespread a problem is, and severity, or the level of harm inflicted. Broadly speaking, A is the least serious and L is the most serious. Letters J, K and L indicate residents were in “immediate jeopardy,” meaning they were at risk of serious injury, harm, impairment or death.

Inspection reports only focus on problems, not on whether residents get excellent care, so they should be used alongside other information such as staffing and ownership when assessing a home’s overall performance. Experts recommend that family members visit a home and see it for themselves before making decisions about where to place a loved one. Almost all nursing homes have been cited for some deficiencies, so citations are not necessarily an indication that a home is subpar.

On the flip side, the government isn’t aware of all problems in nursing homes, and some homes have not been inspected recently. If a home has not had a standard inspection in more than two years, it will have an “inspections delayed” flag at the top of its page. A home without recent reports may have undiscovered issues.
Find Homes Near You
ProPublica has redesigned its search experience to make finding nursing homes easier. When you type a word into search, it will auto-populate with relevant nursing homes, states and counties.

If you do not see the result you are looking for, you can narrow your search by choosing the type of result in the dropdown next to the search bar. For instance, if you are looking for a county, you can change the dropdown to “counties.”

If you do not see the search term you are looking for, you can select “Search all inspection reports and home names for …” or hit enter to view all results. Select the “homes” tab to see a list of homes with names that match your search. For instance, you can search for all homes with “view” in their name.

You can also go to a state, territory or county page and explore all homes in the area. For instance, if you are interested in homes near Chicago, you can go to the Cook County page or the Illinois state page. You can sort by lowest deficiency count or lowest total fines to find homes that haven’t been cited frequently.
Evaluating a Nursing Home
To make it easier to identify important characteristics of a home, a nursing home’s page may have one of several flags at the top. These show status indicators like whether the home is a “special focus facility,” meaning it has been cited by the government for having a history of serious quality issues; whether a home is behind on its inspections, meaning it hasn’t had a standard inspection in over two years; whether its staff vaccination rate is well below the state average; and whether the facility’s ownership has changed in the last 12 months.

Every page also has summary data about the home, including staffing levels, capacity information, and whether the home is for-profit or nonprofit.

If you’re looking for detailed information about a nursing home’s inspection history, there’s a section on each home’s page where you can review the last three inspection cycles (roughly 12-18 months each) and the last three years of complaint or infection reports.

Each report tells you the number of deficiencies found in the inspection, as well as the date of the report. To see more information about each deficiency, click the “read more” button to see the category, description and seriousness of each issue found.
Finding Recent Deficiencies
To make it easier to identify recent, serious problems in homes, ProPublica added a section for each state to highlight the most recent deficiencies that were categorized as putting residents in immediate jeopardy. These provide information on the type of deficiency and the home it occurred in, and they allow you to go to the report summary to view more information. Smaller states or states that are delayed on their inspections may not have any serious deficiencies in the last few months.
How to Do an Advanced Search
Our search engine looks through the narrative portion of the inspection reports — the part where inspectors describe conditions in the home and any deficiencies they have discovered. This is where you can find the most details about problems reported in a nursing home. Conducting an advanced search allows you to narrow down your results or combine multiple search parameters.
Text Search
Our search engine supports basic word stemming, meaning a search for the term elope will also produce results for elopes, eloping and so on. If you want to search for an exact term or phrase, put the words in quotation marks. For instance, if you want to search for medication, but not medicate or medicating, search for “medication”.

Advanced search also supports searching for multiple terms simultaneously. For example, if you want to search for reports that contain either theft or steal, you can enter theft OR steal and see results for deficiencies that contain either term. If you want to search for reports with both theft and steal in them, a search for theft AND steal will produce only deficiencies that contain both words.

You can also build more advanced queries. For example, (“theft” AND “steal”) OR rob will produce deficiencies reports that contain either both the words theft and steal exactly, or any version or the word rob (robbing, robbed, etc.).
Filters
The advanced search feature allows you to narrow your search by several criteria, including searching across multiple states, deficiency seriousness scores, deficiency categories and report types (standard reports, reports stemming from a complaint or infection reports) simultaneously.

Users can also search reports in a specific date range. For instance, if you are only interested in reports filed during the first six months of the COVID-19 pandemic, you can filter for reports dated between 3/11/2020 and 9/11/2020.
Term Tips
Inspectors may write up their reports differently. Try several search terms to be sure you’re getting the most complete results. For example, take a common problem like bedsores, which can develop if a resident is confined to bed and staff do not turn the person often enough.

Searching for the phrase “pressure sore” returns 2,318 reports. Searching for the word “bedsore” returns 84 results. Searching for the phrase “pressure ulcer” returns 14,018 results. But other words that also can return deficiencies related to bedsores include: decubitus, purulent and pus, as well as Stage III and Stage IV (phrases that describe the most serious and dangerous sores, but can also describe cancer progression). A search for “bedsore” OR “pressure sore” OR “decubitus” OR “purulent” OR “pus” or “pressure ulcer” returns 15,075 total results.

Some other searches that piqued our interest were: cigarette AND burn (found patients who were burned when allowed to smoke without supervision); conviction (found nursing home staff with criminal records); ignore OR mistreat OR rude (found residents who believed that staff had been unkind or neglectful).

A search for the words terminate OR suspend often produces results involving nursing home staff who were disciplined for alleged misconduct.

In the advanced search, you can also filter by deficiency categories such as “Quality of Life and Care Deficiencies” or “Freedom from Abuse, Neglect, and Exploitation Deficiencies.”
Understanding Search Results
When you search for a keyword, our app only returns the number of deficiencies that match the search criteria, not the overall number of deficiencies cited in each report. To count total deficiencies for a home or a specific report, you can visit the home’s page in “Nursing Home Inspect.”

Always read the reports and understand the terms in context by clicking on the PDF link in the search results. Some reports mention the words you’re searching in the text but they don’t describe a problem at the home. The word could be in a home’s policy statement or may describe past behavior.

The reports contain a lot of jargon and sometimes don’t make clear who is at fault for a problem. Don’t make assumptions. Verify information with the nursing home’s administrator.
Additional Information
Although the government is reporting nursing home deficiencies online, it does not report how each home plans to fix the problems. These “Plans of Correction” can be viewed at the nursing home or by submitting a Freedom of Information request to the government.

You can always view more information by going to CMS’ own website or downloading the raw data files.

Earlier reports or unredacted reports can be requested under the Freedom of Information Act.

If you write a story using this information, come across bugs or issues, or have ideas for improvements, please let us know!

Charles Ornstein contributed reporting.

by Ruth Talbot

We Updated “Nursing Home Inspect.” Here’s What Changed.

ProPublica

2 years 1 month ago

by Ruth Talbot

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

Join us for an upcoming live virtual event, “How to Use ProPublica’s Updated ‘Nursing Home Inspect’ Database.”

ProPublica has updated “Nursing Home Inspect,” our database that helps you find problems that inspectors identified in more than 15,000 U.S. nursing homes, to make it easier to search government reports and browse serious issues. We’ve added new data, a redesigned user interface and advanced search features.

We have expanded the database’s search capabilities, adding advanced search features that allow users to search reports in multiple states or territories, filter by type of inspection report, focus on inspections within a date range, and look specifically at reports with certain kinds of issues, also called “deficiencies.” These filters will allow journalists and others to quickly identify problematic homes in their searches, and will make it easier for curious researchers to ask advanced questions of the data.

Our new advanced text search features allow users to search for multiple terms simultaneously by separating terms using AND or OR or to search for exact phrases by putting terms in quotation marks. The search also allows users to search for a word like “elope” and automatically see results for other forms of the word, like “elopement” and “eloping.” For more information, please read our guide on how to use nursing home inspect.

To aid local journalists and others, we’ve added a section to each state or territory’s page highlighting serious deficiencies found in that location, allowing users to quickly identify homes that were recently cited for putting residents in immediate jeopardy. We’ve also added pages where you can see all nursing homes in a given county.

The database now also includes information on how many hours, on average, a registered nurse spends with residents and on nursing staff turnover, both of which experts say are indicators of the quality of care in a home. Pages for individual homes now show flags indicating whether the home’s ownership has changed in the last 12 months, whether the home is behind schedule on government inspections, and whether the staff’s COVID-19 vaccination rates are low relative to other homes.

In addition, we now have an expanded view of inspection reports that allows users to see detailed information about each deficiency, including its scope and severity, category and description.

ProPublica plans to continue enhancing “Nursing Home Inspect” with new data and features in the coming months. If you write a story using this new information, come across bugs or issues, or have ideas for improvements, please let us know!

by Ruth Talbot

FEMA Has So Far Paid Out Less Than 1% of What Congress Allocated for Victims of New Mexico Wildfire

ProPublica

2 years 1 month ago

by Megan Gleason and Patrick Lohmann, Source New Mexico

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

A couple months after two planned fires escaped to become the largest wildfire in New Mexico history, President Joe Biden promised to “fully compensate survivors.” Late last year, Congress allocated $3.95 billion to do so.

Seven months later, the Federal Emergency Management Agency has paid only about $3 million in claims.

Most of that went to the city of Las Vegas, New Mexico, which narrowly escaped the blaze but suffered damage to its water system. The rest — a total of $400,000 at most — has gone to individuals, an agency official acknowledged last week. The blaze burned hundreds of homes and over 530 square miles of land.

The pace of payments has frustrated fire victims and members of New Mexico’s congressional delegation, who in May urged FEMA to move more quickly. U.S. Rep. Teresa Leger Fernández, a Democrat from Las Vegas, said in a written statement on Thursday that her office will keep up the pressure.

“We know how painful and hard this process has been for those who lost so much,” Leger Fernández said. “We will continue to push to get payments out as fast and efficiently as possible.”

The Hermits Peak-Calf Canyon Fire grew out of two prescribed burns ignited by the United States Forest Service. In April 2022, fueled by high winds in a drought-stricken forest, they merged. Over the next few months, the fire rolled through Mora and San Miguel counties in northern New Mexico.

The Forest Service took responsibility for the blaze, and Congress tasked FEMA with paying victims through a new claims office.

At a news conference on Thursday, Angela Gladwell, director of that office, said that beyond the $3 million in claims that have been paid, several million dollars more are close to being paid out.

Even still, that would be a fraction of 1% of the money allocated by Congress.

There’s widespread agreement about the need to repair the Las Vegas water system, which was damaged when water laden with sediment and contaminants flowed into the treatment plant during heavy rains that followed the fire.
Angela Gladwell, head of the office at the Federal Emergency Management Agency responsible for paying victims of the Hermits Peak-Calf Canyon Fire, and David Maurstad, senior executive of FEMA’s National Flood Insurance Program, talk on Thursday about the office’s decision to pay flood insurance premiums for victims. (Megan Gleason/Source New Mexico)
At one point last summer, while the Gallinas River was contaminated, the city had in reserve just 21 days of clean drinking water for residents. When its reservoirs are full, the city has 200 days of water.

Las Vegas Mayor Louie Trujillo said the $2.6 million is the first installment toward what will ultimately be a $140 million project.

But he said he’s far more concerned about people dealing with the “slow and agonizing” process of being compensated by FEMA for losses to their homes, properties and livelihoods.

The $400,000 that has gone to individuals is surprisingly little, he said: “I don’t want to sound ungrateful, but my concern is not as much how efficient they’ve been for the city government, as they are about individuals who had losses.”

Gladwell said the claims office has received more than 1,500 notices of loss from more than 2,500 people, businesses, governments and other claimants since November. A notice of loss signals that a victim intends to make a claim for damages.

The office has formally acknowledged 850 of those notices, she said, which starts a 180-day clock to decide how much FEMA will pay.

Meanwhile, FEMA is winding down its emergency response, which came in the form of disaster assistance payments and, in some cases, temporary housing offered in the weeks and months after the fire.

FEMA offered housing to some people who had lost their primary residences, saying it would try to put trailers or mobile homes on their land. But in late April, Source New Mexico and ProPublica found that just two households had gotten housing on their land. Eleven others received housing at commercial parks that in some cases were miles away.

The rest of those eligible — people whose uninsured primary residences were destroyed or badly damaged — found other housing options, which in some cases was a friend or relative’s couch or substandard housing during a grueling winter.

The agency marked them as having found “another housing resource,” according to a FEMA spokesperson.

Since then, another couple has gotten housing on their land and another person got housing at a commercial park.

FEMA noted that terrain and weather, among other factors, made it hard to provide housing. It said it couldn’t place trailers on people’s land in many cases because of federal laws and its own requirement that trailers be hooked up to utilities.

Lawmakers who signed the legislation compensating victims for the federal government’s mistakes have said they wanted individuals and families to be paid first, and businesses, nonprofits and governments later.

At public meetings, FEMA officials have defended their rollout of the claims office. Creating a compensation program is a major undertaking for a federal bureaucracy, and this is the fastest FEMA has ever established an office, the agency said in May. The agency had to work quickly to create policies, open three field offices and staff up. About a dozen navigators, all locals, have been hired to guide victims through the process.

This is the second time FEMA has been in charge of compensating wildfire victims. The first one was also in New Mexico, when the National Park Service ignited a blaze that escaped and burned homes in Los Alamos in 2000.

Six months after legislation was passed to compensate victims of that fire, known as the Cerro Grande Fire, FEMA had paid about $20.5 million to individuals and businesses — about 4% of the $545 million eventually paid out. That $20.5 million included more than $10 million to 1,625 individuals, according to a news release at the time.

FEMA has not yet finalized its rules governing what types of losses and expenses will be covered for the Hermits Peak-Calf Canyon Fire. Gladwell has said those rules must be approved by higher-ups at FEMA, the Department of Homeland Security and the White House Office of Management and Budget.

She said Thursday she doesn’t know when the rules might be approved.

Even without final rules, FEMA officials stress that claimants can receive partial payments now for some losses.

“The claims process is operational today and ready to support New Mexicans who suffered losses by these fires immediately,” FEMA spokesperson Michael Hart said.

The office has announced it’s working with an office in the Department of Agriculture to help people calculate their losses. And it will now pay victims’ flood insurance premiums for up to five years.

Nov. 14, 2024, is the deadline for people to submit notice of loss forms to the claims office.

Were You Affected by the Massive Wildfire in Northern New Mexico? We Want to Hear From You.

by Megan Gleason and Patrick Lohmann, Source New Mexico

How Harlan Crow Slashed his Tax Bill by Taking Clarence Thomas on Superyacht Cruises

ProPublica

2 years 1 month ago

by Paul Kiel

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

For months, Harlan Crow and members of Congress have been engaged in a fight over whether the billionaire needs to divulge details about his gifts to Supreme Court Justice Clarence Thomas, including globe-trotting trips aboard his 162-foot yacht, the Michaela Rose.

Crow’s lawyer argues that Congress has no authority to probe the GOP donor’s generosity and that doing so violates a constitutional separation of powers between Congress and the Supreme Court.

Members of Congress say there are federal tax laws underlying their interest and a known propensity by the ultrarich to use their yachts to skirt those laws.

Tax data obtained by ProPublica provides a glimpse of what congressional investigators would find if Crow were to open his books to them. Crow’s voyages with Thomas, the data shows, contributed to a nice side benefit: They helped reduce Crow’s tax bill.

The rich, as we’ve reported, often deduct millions of dollars from their taxes related to buying and operating their jets and yachts. Crow followed that formula through a company that purported to charter his superyacht. But a closer examination of how Crow used the yacht raises questions about his compliance with the tax code, experts said. Despite Crow's representations to the IRS, ProPublica reporters could find no evidence that his yacht company was actually a profit-seeking business, as the law requires.

“Based on what information is available, this has the look of a textbook billionaire tax scam,” said Senate Finance Committee chair Ron Wyden, D-Ore. “These new details only raise more questions about Mr. Crow’s tax practices, which could begin to explain why he’s been stonewalling the Finance Committee’s investigation for months.”

Crow, through a spokesperson, declined to respond to ProPublica’s questions.

As ProPublica reported in April, Crow lavished gifts on Thomas for over 20 years, often in the form of luxury trips on Crow’s jet and yacht. One focus of the investigations is whether Crow disclosed his generosity toward Thomas to the IRS, since large gifts are subject to the gift tax. Another is whether Crow treated his trips with Thomas as deductible business expenses. (While the data sheds light on how Crow might have accounted for Thomas’ trips, there are no clear implications for Thomas’ own taxes, experts said.)

Crow’s entry into the world of superyacht owners came nearly 40 years ago. By 1984, his father, Trammell Crow, had forged his real estate fortune, and Harlan, then in his 30s, was taking an increasing role in the family business. That year, father and son worked together to erect the 50-story Trammell Crow Center in downtown Dallas. They also formed a company, Rochelle Charter Inc., with the purpose of leasing out their new yacht, the Michaela Rose.
The Michaela Rose in 2018 (Al Armiger/Alamy)
ProPublica’s trove of IRS data, which contains tax information for thousands of wealthy individuals, includes both Harlan Crow and his parents, who filed jointly. The data shows his parents with a majority share in Rochelle Charter. After they both died, Harlan Crow took full control in 2014.

ProPublica’s data for the company runs from 2003 to 2015. Rochelle Charter reported losing money in 10 of those 13 years. Overall, the net losses totaled nearly $8 million, with about half flowing to Harlan Crow. By using those deductions to offset income from other sources, the Crows saved on taxes. (The wealthy often find ways to deduct the expense of a private jet; the records don’t make it clear whether Crow is doing so.)

For Crow, the tax breaks from his yacht were just one way he was able to achieve a lighter tax burden. The tax code is particularly friendly to commercial real estate titans, and Crow generally enjoyed low taxes during that same period: He paid an average income tax rate of 15%, according to the IRS data. It’s a rate typical of the very wealthiest Americans but lower than the personal federal tax rates of even many middle-income workers.

Crow’s biggest deduction from the Michaela Rose came in 2014, when, after the death of his mother, Crow decided to renovate the yacht. The interior needed updating to fit more contemporary notions of glamour (for one, less gold plating). The work was expensive: Crow’s tax information shows a $1.8 million loss from Rochelle Charter that year.

In order to claim these sorts of deductions, taxpayers must be engaged in a real business, one that’s actually trying to make a profit. If expenses dwarf revenues year after year, the IRS might conclude the activity is more of a hobby. That could lead to the deductions being disallowed, plus penalties. Nevertheless, the ultrawealthy often pass off their costly pastimes, like horse racing, as profit-seeking businesses. In doing so, they essentially dare the IRS to prove otherwise in an audit.

For a yacht owner to meet the legal standard of operating a for-profit business, said Michael Kosnitzky, co-chair of the private client and family office group at the law firm Pillsbury Winthrop, “You have to be regularly chartering the yacht to third parties at fair market value,” typically through an independent charter broker.

ProPublica interviewed around a dozen former crew members of the Michaela Rose, some of whom spent years aboard the ship, and none said they were aware of the boat ever being chartered. ProPublica also reviewed cruising schedules for three different years. According to the former staff and the schedules, use of the vessel appears to have been limited to Crow’s family, friends and executives of Crow’s company, along with their guests.

Moreover, in an attempt to trademark the name of his yacht, Crow struggled to provide evidence that he chartered his ship. In 2019, an attorney representing Rochelle Charter filed an application with the U.S. Patent and Trademark Office for the request. This required demonstrating commercial use of the name Michaela Rose. The attorney, of the law firm Locke Lord, wrote that the name was used for “yacht charter services for entertainment purposes” and as evidence attached a brochure.

“This magnificent yacht has cruised the oceans of the world with a graceful and gentle motion found only on the most superior seagoing vessels,” the pamphlet said, and it went on to extol the vessel’s “fine, seakindly hull” and “mahogany paneled formal dining room” that seats 16. But it said nothing about chartering.
The second page of the four page brochure extolling the Michaela Rose (Obtained from the U.S. Patent and Trademark Office by ProPublica)
“Registration is refused because the specimen does not show the applied-for mark in use in commerce,” the USPTO’s attorney responded.

Crow’s attorney asked the USPTO to reconsider. The brochure was “provided by Applicant directly to its customers and potential customers,” he wrote. Wasn’t that enough?

When USPTO again refused, the attorney provided new evidence: screenshots of the websites superyachts.com and liveyachting.com. These show “links and references to yacht ‘Charter’ services offered in connection with Applicant’s MICHAELA ROSE mark,” the attorney wrote.

At this point, the USPTO agreed to approve the trademark, but the evidence was dubious. Hundreds of ships have profiles on superyachts.com whether they are available to charter or not. The LiveYachting page merely encouraged readers to contact a broker “for finding out if she could be offered for yacht charters.”

“Reviewing the file, it’s not clear to me that the yacht was actually offered for use in commerce in a way that would justify a trademark,” said Neel Sukhatme, a professor at Georgetown Law and visiting scholar with USPTO.

Since April, when the Senate Finance Committee first sent Crow a long list of questions about Thomas’ trips on his jet and yacht, Crow has refused to provide extensive answers. But last month, his attorney, Michael Bopp of the law firm Gibson Dunn, did shed some light on how his chartering business worked: Crow leased from himself. (Gibson Dunn is representing ProPublica pro bono in a case against the U.S. Navy.)

For Crow’s personal use of the Michaela Rose, including trips when the Thomases were guests, “charter rates … were paid to the Crow family entities” that owned the yacht, Bopp wrote in a letter to Wyden. The letter did not specify who, if anyone, paid when Crow’s friends, family or employees used the vessel or how he determined the charter rate. Crow’s spokesperson declined to clarify these details.

According to Bopp, then, whenever Crow used his yacht, Crow (or one of his businesses) would pay his own company, Rochelle Charter, and Rochelle Charter would put that down as revenue. On the other side of the ledger would go the considerable expenses of operating the yacht: maintenance, crew, fuel and other costs. If, at the end of the year, Rochelle Charter’s revenue from chartering exceeded those expenses, Crow would pay tax on that income.

But the taxes of the ultrawealthy often have an up-is-down quality. The clear incentive is to welcome losses, not profits. If, as happened most years for which ProPublica has data, Rochelle Charter’s expenses far exceeded revenue, Crow would save on taxes.

These sorts of arrangements “should be aggressively audited,” said Brian Galle, a professor at Georgetown Law and former federal prosecutor of tax crimes.

“Assuming that the uses of the yacht are mostly personal, Crow should not be able to take a deduction,” he said, calling “absurd” the idea that “the more personal use you get from the yacht, the more deduction you get to claim.”

Crow treated personal trips on his jet in a similar fashion, according to his attorney. Wealthy business owners often derive tax savings from their jets, since business-related flights are fully deductible, and the rich can often find ways to blend business and pleasure, as ProPublica has reported. The company that owns Crow’s jet is not in ProPublica’s data set, so it’s unclear if it reported net losses.

Bopp’s letter describes the standard way that jet owners account for nonbusiness guests: “Reimbursements at rates prescribed by law,” he wrote, were paid to the Crow business that owned his jet. The IRS has a “Standard Industry Fare Level” that jet owners use to calculate the value of a seat aboard a jet for any trip. The amount is roughly equivalent to the cost of a first-class commercial ticket, far below what it would actually cost to charter a jet.

The Senate investigation has also focused on an entirely different tax question: Given that Thomas’ trips on Crow’s jets and yachts could easily be valued in the hundreds of thousands of dollars, did Crow report them to the IRS as taxable gifts?

For each year that Crow gave gifts to someone that exceeded a certain threshold ($17,000 in 2023), he was required to file a gift tax return. That might or might not have resulted in a tax bill for Crow, depending on how much he’d already given to others over the course of his life. (The lifetime limit for total gifts is $12.9 million in 2023.)

But, according to Bopp’s letter, Crow didn’t consider the trips reportable. The gift tax, Bopp wrote, was created to prevent people from avoiding the estate tax by simply giving away assets before death. But Crow still owned his jet and yacht after hosting Thomas. “Value [was] not transferred out of the hosts’ taxable estates,” he argued. Therefore, no gift tax.

Tax experts told ProPublica, on the contrary, that these sorts of luxury trips should be analyzed as gifts.

Beth Kaufman, a partner with Lowenstein Sandler who specializes in estate planning and a veteran of the Treasury Department’s Office of Tax Policy, said she’d counseled clients on the issue. After one couple took their extended family on an exotic vacation, she said, she helped them calculate the reportable costs and file a gift tax return.

However, taxpayers rarely report these sorts of trips, experts said. One important factor is that the IRS has no way of knowing about gifts like these unless they happen to be uncovered in an audit. The agency has also signaled no interest in scrutinizing these kinds of interactions. In fact, experts weren’t aware of any audits related to gifts of this kind.

The result is a situation where, counterintuitively, the gift tax can be easier to avoid the richer the host is.

As explained in a recent paper by two law professors and a private practitioner, everyone agrees that giving $500,000 to a friend would necessitate filing a gift tax return for that amount. Using that $500,000 to buy an all-expense-paid yacht cruise for friends would be treated no differently. But if someone owns a luxury yacht and takes their friends on a cruise, the situation gets muddy. Crow’s attorney even argues there was no gift at all.

That “doesn’t square with fundamental notions of fairness,” said Bridget Crawford, one of the paper’s authors and a professor at Pace Law School.

How to apportion the costs for Crow and his guests is debatable, Crawford said. Crow might argue he would have gone on the cruise without his friends anyway, but at the very least, she said, some portion of the costs of the trip (e.g., the crew and food) should be allocated to his guests.

She and her co-authors urged Congress and the IRS to make it clear these sorts of gifts should be disclosed and provide guidelines for valuing them.

“A lot of these tax rules were developed in an era where there were a few millionaires and the tiniest number of billionaires,” Crawford said, “and now there are many. This is becoming a more visible problem.”

Do you have any information on Harlan Crow’s taxes? If so, email Paul Kiel at paul.kiel@propublica.org or reach him on Signal at 347-573-3039.

Justin Elliott, Joshua Kaplan and Alex Mierjeski contributed reporting.

by Paul Kiel

LA Promised to Preserve Low-Cost Housing. These Tenants’ Homes Were Turned Into Hotel Rooms Anyway.

ProPublica

2 years 1 month ago

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. Sign up for Dispatches to get stories like this one as soon as they are published.

Jaime Colindres’ third-floor room at the American Hotel in Los Angeles was tiny, but in it he painted expansive scenes of the American West on salvaged pieces of wood. Guitar sounds filled the halls, and neighbors kept their doors open. Some residents landed there when the city’s ruthless rental market slammed its doors on them, but they quickly soaked up the creative soul that creaked and hummed, rattled and swelled through the battered hotel.

That was 10 years ago.

The American is now a boutique tourist hotel in LA’s downtown Arts District. Nearly all of its longtime residents have been replaced. But the culprit is not gentrification. It’s the city’s failure to enforce its own laws to preserve affordable housing.

A 2008 city ordinance sought to protect residential hotels like the American. Residential hotels often offer single-room dwellings and are sometimes the only housing that elderly, disabled and low-income people can afford. But Capital & Main and ProPublica found 21 such buildings, including the American, offering rooms to travelers.

Under the ordinance, owners who convert or demolish residential hotel rooms must either build new units or pay into a city housing fund. None of the 21 have received clearances from the city showing that they’ve done either, according to Housing Department records. But the agency has cited only four of the hotels for residential hotel violations, even as some buildings went through obvious transformations and publicly advertise rooms on travel websites, the news organizations found. The American wasn’t one of the hotels cited.

This week, the city announced it would investigate all 21 hotels for violations of the law and review the resources needed to improve enforcement. “We are asking for a report on how this happened and recommendations for ensuring this does not happen again,” said Zach Seidl, a spokesperson for LA Mayor Karen Bass.

But the city’s action comes too late for some. The American’s unhindered conversion into guest rooms and suites upended the lives of many tenants who called it home. Their stories illustrate the impact that LA’s failure to preserve affordable housing has had on the city’s low-income residents.

If the Housing Department’s planned investigation reveals violations of the residential hotel law, the American’s owner Mark Verge said, “We’ll work it out.” Verge previously said he was unaware of the residential hotel law. In an interview, he denied that the conversion left his former tenants in difficult situations, noting that he allowed tenants who wished to stay during the remodel to do so. “That hotel was falling apart,” Verge said. “I literally made them the greatest hotel ever and the greatest place to live.”

The 118-year-old hotel was a hotbed of creativity in part because its low rents gave artists the freedom to focus on their craft. For about $500 a month, most tenants got rooms that were barely big enough to fit their beds, with bathrooms at the end of the hall. The hotel was a place where people turned when they had nowhere to go. Once there, however, they joined a community that many embraced.

“It was just a flophouse for all us artists and musicians,” said Christiaan Pasquale, a singer and guitarist who lived at the hotel in the 1990s and again in the 2010s. “You almost get trapped at the American because it was so fun and so cheap.”

The American was unique because of the community its residents built and because it stood as a cultural hub in the Arts District. Al’s Bar, a graffiti-splattered dive on the hotel’s ground floor, was iconic in the LA music scene. For many residents, the club, which closed in 2001, was a hangout where they unwound at the end of the day. The bar oozed punk rock attitude. It hosted “No Talent” nights, displayed work by major LA artists and staged live theater events as well as hosting big-name acts like Beck, Ry Cooder and Hüsker Dü.

The American was a housing safety net for Colindres, who had lived at the hotel in the 1990s and again for about five years in the early 2010s. And it was too for Arturo Núñez, a truck driver who had been at the American for about six years until, he said, he was driven away by a bedbug infestation in 2013 before Verge began the hotel’s transformation. Núñez would duck out of gatherings with his Teamster co-workers at Denny’s and rush home to be with his neighbors at the American.

“We talked the same language: music, poetry, painting,” he said.
When Arturo Núñez lived at the American, he said, he would duck out of gatherings with his fellow truckers and rush home to be with his neighbors.
New to the city, Jomar Giner, a 20-something transplant from Utah, ended up at the American in 2013 because it was her only housing option, she said. A would-be landlady had refused to rent to her because at the time Giner relied on disability payments. She was thrilled to learn that the punk bands she’d listened to as a teenager had played just a few floors below her room.

More important, at the American no one cared about her source of income, she said. She got a job as a barista at the coffee shop across the street from the hotel and quickly settled in.

“I became good friends with a lot of people,” she said. “They were really proud of the place.”
After moving out of the American, Jomar Giner earned a master’s degree in social work, partly to be part of the solution to homelessness, after witnessing the extremes in LA’s Arts District. (Kristina Barker, special to ProPublica)
But as the neighborhood gentrified, Verge, an LA entrepreneur, bought the hotel and planned to renovate it. He told residents that those who could endure the dust, noise and intrusions of a remodel could stay. Some did. But he also provided an incentive for tenants to move, offering them between $2,000 and $19,000, depending on how long they’d lived there, their age and how long they held out, according to interviews with eight current and former residents. Many of the American’s residents accepted Verge’s offers, they said.

“We were all just desperate at the time,” and the money sounded good, Pasquale said. “We all worked hard at our crafts — I was in a band and touring. Any money like that was a big chunk of change.”

As the American’s tenants moved out, several said, they struggled to find stable housing for as little as they had paid at the hotel.

Giner received a $3,000 payment and, with the help of her then-boyfriend’s parents, scraped together enough cash for the couple to move into a Koreatown apartment. Colindres, the painter, said he negotiated a buyout of $19,000 but struggled to find housing because of a two-decade-old eviction. Instead, he joined an exodus of artists to the desert near Joshua Tree National Park, about 140 miles east of Los Angeles, where a friend had offered him a place to stay.

But after a few years, Colindres grew tired of his hot, lonely surroundings. He said he returned to LA and slept in his car.

By then, the hotel was being advertised to nightly guests. Tourists had begun reviewing the American on Yelp in 2016, with one writing, “All in all, a decent stay for very little coin.”
Only a handful of long-term residents still live at the American today.
In the years since the hotel’s conversion, it’s arguably become even harder for the former residents to find a replacement for the housing they had at the American. Several former residents left the state to be closer to family or to find more affordable housing.

Today, Colindres shares a studio apartment with a friend, piecing together a living painting signs for businesses, faux finishes for decorators and, sometimes, movie sets for independent films. Occasionally he sells one of his paintings.
Colindres shows off his paintings at the friend’s apartment where he lives. (Robin Urevich)
Colindres said he doesn’t know how long he can stay in his place, and in LA, he said, “I have no place to go.”

Núñez, the truck driver, lives in his 1991 maroon Ford van with two cats, T.K. (for tiny kitty) and Orangey. He cooks on a propane stove — red chile with pork is his specialty, he said. The van is immobile, and he pays $100 per month from his Social Security check for a parking spot marked off with orange cones in a lot just a few blocks from the American.
Núñez lives in his van. He pays $100 a month to park in downtown LA, near the American.
On a blustery March afternoon, Núñez spotted Colindres across the parking lot and greeted him with elaborate tai chi-like gestures — a nod to Colindres’ longtime practice of the ancient Chinese art.

Núñez retrieved battered chairs from his van as the two sat and reminisced about the ups and downs of their days at the American.

“This is my neighborhood,” Núñez said, gesturing toward the hotel. “I’d move in now.”

But moving in isn’t an option. The American’s online hotel policies say guests can’t stay longer than 21 days.
A view of nightlife in the Arts District in downtown LA, home of the American

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

Close to 100,000 Voter Registrations Were Challenged in Georgia — Almost All by Just Six Right-Wing Activists

ProPublica

2 years 1 month ago

by Doug Bock Clark, photography by Cheney Orr 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.

On March 15, 2022, an email appeared in the inbox of the election director of Forsyth County, Georgia, with the subject line “Challenge of Elector’s Eligibility.” A spreadsheet attached to the email identified 13 people allegedly registered to vote at P.O. boxes in Forsyth County, a wealthy Republican suburb north of Atlanta. Georgians are supposed to register at residential addresses, except in special circumstances. “Please consider this my request that a hearing be held to determine these voters’ eligibility to vote,” wrote the challenger, Frank Schneider.

Schneider is a former chief financial officer at multiple companies, including Jockey International, the underwear maker. His Instagram page includes pictures of him golfing at exclusive resorts and a dog peeing on a mailbox with the caption “Woody suspects mail-in voter fraud” and the hashtag “#maga.” On Truth Social, the social media platform backed by former president Donald Trump, Schneider’s posts have questioned the 2020 election results in Forsyth County and spread content related to QAnon, the conspiracy theory that holds that the Democratic elite are cannibalistic pedophiles. In January 2023, he posted an open letter to his U.S. representative-elect encouraging “hearings to hold perpetrators accountable where evidence exists that election fraud took place in the 2020 and 2022 elections.”

The March 2022 voter challenges were the first of many from Schneider: As the year progressed, he submitted seven more batches of challenges, each one larger than the one previous, growing from 507 voters in April to nearly 15,800 in October, for a total of over 31,500 challenges.

Vetting Georgia’s voter rolls was once largely the domain of nonpartisan elections officials. But after the 2020 election, a change in the law enabled Schneider and other activists to take on a greater role. Senate Bill 202, which the state’s Republican-controlled legislature passed in 2021, transformed election laws in response to “many electors concerned about allegations of rampant voter fraud,” as the bill stated. Many states allow challenges, but officials in Georgia and experts say that in the past challengers have typically had relevant personal knowledge, such as someone submitting a challenge to remove a dead relative from the rolls. Georgia, however, is unusual in explicitly allowing citizens unlimited challenges against anyone in their county.

At first, voting rights groups were vocal about other aspects of SB 202, such as restrictions on absentee ballots, paying less attention to the 98-page bill’s handful of sentence-length tweaks that addressed voter challenges. The change to the challenges rule was “the sleeper element of SB 202,” said Rahul Garabadu, a senior voting rights attorney at the American Civil Liberties Union of Georgia.

Media outlets have reported on the high number of challenges and numerous cases of voters feeling harassed, impeded or intimidated by being placed into “challenged” status. But the outsized role of the small group of people making the challenges was less clear. ProPublica was able to determine that a vast majority of the challenges since SB 202 became law — about 89,000 of 100,000 — were submitted by just six right-wing activists, including Schneider. Another 12 people accounted for most of the rest. (ProPublica obtained data for all challenges logged in 30 of the state’s 159 counties, including the 20 most populous.) Of those challenges, roughly 11,100 were successful — at least 2,350 voters were removed from the rolls and at least 8,700 were placed in a “challenged” or equivalent status, which can force people to vote with a provisional ballot that election officials later adjudicate.
Gwinnett County elections supervisor Zach Manifold looks over boxes of voter challenges on Sept. 15, in Lawrenceville, Georgia. (John Bazemore/AP Photo)
Challenges from right-wing activists have proliferated in Georgia despite strict federal laws governing how voters can be removed from rolls. That’s in part because state and local election officials have struggled to figure out how to reconcile SB 202 with federal protections. This has resulted in counties handling challenges inconsistently, sometimes in ways that experts warn may have violated federal law, something they say may have been the case with Schneider’s March challenges.

In the run-up to the 2022 election, voting rights advocates warned that some challenges might create insurmountable barriers to people casting a ballot, such as by removing them from the rolls. But there were no published accounts of Georgians who ultimately did not cast a ballot as a result of being challenged. Schneider’s March challenges did lead to this kind of harm in at least one instance: An unhoused voter found his removal from the rolls too high a barrier to allow him to re-register in time to vote.

Schneider would not agree to an interview and did not respond directly to ProPublica’s written questions. In emails, he stated that challenges “only are acted upon” if the elections board approves them and wrote, “I have not been made aware of anyone that couldn’t vote based on anything submitted, if true.”

Even some voters who managed to remain on the rolls were still forced by challenges to fight to remain registered. In Fulton County, which encompasses most of Atlanta, an immunosuppressed cancer patient had to drive nearly two hours round-trip to a crowded hearing to defend his right to vote. At the same proceeding, a Black woman likened her challenge to voter intimidation.

“There is a clear imbalance of power between the individual bringing the challenges and the county and voters,” said Esosa Osa, the deputy executive director of Fair Fight Action, a voting rights advocacy organization. Elections officials and voters, she said, “currently have very little recourse once challenged, regardless of the merits of the challenge.”

Some activists have justified their efforts by claiming that people might exploit flaws in the voter rolls to commit fraud — for example, by voting under the name of a deceased person still on the rolls. Officials in multiple counties told ProPublica that they did not know of any instances of challenges resulting in a successfully prosecuted case of voter fraud. A spokesperson for the Georgia secretary of state’s office said it does not track this data.

ProPublica did find that challenges sometimes identified errors in the voter rolls, which are dauntingly complex databases that are forever evolving as people register, move, die or otherwise change their statuses. Many of these corrections would have happened anyway in the routine maintenance process, officials said and records showed, though sometimes at a pace slower than if activists submitted challenges.

“If all these challengers are finding is inconsequential errors that do not affect election results on the whole, but they’re placing real and harmful burdens on voters, then you have to wonder why they’re really doing this,” said Derek Clinger, a senior staff attorney with the State Democracy Research Initiative at the University of Wisconsin Law School. “It’s doing more harm than good.”

In 2018, Joseph Riggs, a longtime Forsyth County resident who identifies as a Democrat, became homeless after struggling with depression and other mental health challenges and began using a P.O. box as his permanent mailing address during what would be years of instability. Still, he made sure to vote in the 2020 presidential election and wanted to vote in the hotly contested 2022 Georgia senate race because he viewed its outcome as affecting social policy that would impact him.

But that spring Riggs received at his P.O. box a two-page letter from the Forsyth County elections office informing him of Schneider’s March challenge and asking him either to appear at a board hearing at 9 a.m. on a workday in June or to send in paperwork justifying his registration at a P.O. box, changing his registration or removing himself from the rolls. Around the time of the hearing, Riggs was living in a tent in the woods, within walking distance of the part-time jobs he was juggling at McDonald’s, Dollar Tree and a gas station. He worried that attending the hearing would require an expensive Uber ride and force him to take unpaid time off work. In the months beforehand, a state election official had also called Riggs to question him about his registration, he said, making him think fearfully of news reports of people being arrested for violating voting laws. And he said he did not remember seeing the option to send in paperwork. Ultimately, he did not contest his removal from the rolls.

Riggs said that after the county elections board removed him, he doubted that he could re-register because the letter and phone call led him to believe he now had no valid address. (According to the secretary of state’s office, unhoused individuals can solve this challenge by giving a residential address that is the “closest approximation” of the location they shelter at, such as a street corner, and then listing a separate mailing address, such as P.O. box. But Riggs was not provided with this information.)

“I was really angry,” he said. “When you’re homeless, your vote is the only voice you’ve got.”

Barbara Helm, who identifies as a Democrat, said she did not see the letter in her P.O. box notifying her of Schneider’s March 2022 challenge against her, as she had been struggling with addiction and homelessness. Nor did she know at first that she had been removed at the same June hearing as Riggs was called to, though election workers sent her another letter announcing her removal. It wasn’t until she contacted election officials during the in-person early voting period in October that she learned that she’d been removed from the rolls and that the window to re-register had closed.

“A lot of people have fought and died for voting rights,” said Helm. “I didn’t even know” the challengers and board “could do that to you.”
Barbara Helm, who lives in Toccoa, Georgia, said she did not see the letter in her P.O. box notifying her of the challenge to her voter registration.
Helm contacted the local Democratic Party about her plight, and its officials took up her case — she was mentioned as an example of voter suppression by Democratic gubernatorial candidate Stacey Abrams in a debate, though not by name, and her voting difficulties were covered in several news reports. Helm was eventually allowed to vote with a provisional ballot, which she believed only happened because of the attention to her case. (A lawyer for the Forsyth County board, Karen Pachuta, wrote to ProPublica that “the receipt of a provisional ballot in Forsyth County is not dependent on any particular person or circumstance receiving media or political attention.”)

A week after the election, Helm showed up to a board meeting to defend her provisional ballot and beg for her vote to count. “It kind of brought tears to my eyes when they approved my ballot,” she said.

Two other voters challenged by Schneider in March 2022 returned residency affirmations, obtained by ProPublica through records requests, in which they explained that they traveled throughout the year as engineers on projects around the nation and used the P.O. box as their residency address in lieu of a permanent one. The board rejected the challenges, allowing them to maintain their prior registrations.

Of Schneider’s initial thirteen challenges from March 2022, eleven were heard at the hearing that June, with the county election board upholding five and dismissing six.

In the lead-up to the 2022 election, the Forsyth County board ruled on about 31,500 challenges from Schneider and another 1,100 from two other challengers. In total, the board approved over 200 of the most serious type of challenge that immediately removes a voter from the rolls, known as “229s” for their section of Georgia code. The board also approved around 900 “230” challenges, which place voters into “challenged” status.

Of the 30 counties for which ProPublica reviewed voter challenges, Forsyth County was the most aggressive in approving them — in ways that voting rights lawyers warned may violate the National Voter Registration Act, a federal law regulating how voters can be removed from voting rolls.

When Joel Natt, the Republican vice chair of the board, sought to approve Schneider’s challenges against Helm and Riggs at the June 2022 hearing, Democratic board member Anita Tucker asked, “Madam Chair and Legal, does that violate the NVRA?”

Tucker expressed a number of concerns, according to an audio recording of the hearing obtained through open records requests. The concerns centered on whether the removals of Helm and Riggs violated the NVRA’s prohibition against removing voters in a systematic manner in the 90 days before a federal election.

In the hearing, Tucker argued that rather than immediately removing Helm and Riggs, “the best right procedure” was the NVRA’s process for voters whose residency is in doubt, which allows voters to remain on the rolls for around four years and protects them against being unable to re-register in time to vote. Tucker also questioned whether the batches of challenges — which had grown to encompass hundreds or thousands of voters, along with PDFs of alleged evidence of their ineligibility to vote, such as documents matching names to addresses outside the county — qualified as systematic challenges, and therefore shouldn’t have been allowed to proceed.

In response to Tucker’s questions, Pachuta, the board’s lawyer, warned, “There’s not clear case law on that. It could very well end up in litigation.” The lawyer explained that “there’s different opinions” on whether the challenges would fall under state code or the NVRA. She then advised that “because it is so close to the election, you have to review these items on an individualized basis.” (The NVRA allows consideration of individualized challenges during the 90-day protected window.)

Natt had originally motioned to remove Helm, Riggs and another voter as a block, until the lawyer advised that this could be construed as systematically processing a mass challenge. So Natt and the conservative board chair, Barbara Luth, reintroduced them one by one. Then the conservative board members outvoted Tucker to remove them from the rolls. Recordings show that the majority continued outvoting the Democratic minority while approving challenges one by one during many meetings. The board did summarily dismiss around 28,500 challenges, all from Schneider, because they were made using a fallible database-matching technique comparing Georgia voter rolls with the National Change of Address system, which a federal court had disallowed as systematic.

“I want to be clear that breaking down the challenges” to do them one by one “is still systematic and likely violating the NVRA,” said Andrew Garber, a counsel for the Brennan Center for Justice’s Voting Rights and Elections Program, who had concerns with the quality of evidence presented and the depth of evaluation.

“The Forsyth board certainly violated the spirit of the NVRA and likely its letter as well,” said Garabadu, the attorney with the ACLU of Georgia, which sent a letter to the board warning that its decision at a September meeting to remove voters within the 90-day window “was made in violation of state and federal law and we urge you to reverse it.”

Pachuta wrote to ProPublica that “I respectfully disagree with the suggestion that considering challenges ‘one by one’ is a violation of the NVRA. Rather, I believe established authority provides that the NVRA allows removals based on individualized information at any time.” She noted that the board spent “hours during its meetings conducting individualized reviews of various data sets to make the best collective decision(s) it could.”

After a ProPublica reporter described Riggs’ experience, Luth, the board chair, said that in the future the board might refrain from removing voters from the registration rolls within the 90-day window and just put voters under a challenged status, though she emphasized it would remain a case-by-case decision. “That’s better than taking them off the rolls,” she said. “That would be where my vote would go.”

Natt, who had argued forcefully at the hearing to remove Helm and Riggs from the rolls, called the removals “a mistake” and said, “We learned from it.” He expressed remorse to ProPublica over their difficulties voting. “I don’t want voters to feel burdened,” he said. “It pained me personally.” He emphasized that the board had been operating with limited guidance from state election officials and that they had no legal choice but to rule on the challenges. “We have to respect the challenger,” said Natt, and “we have to respect the challengee.”

South of the conservative, wealthy suburbs of Forsyth County, in the county that encompasses the liberal center of Atlanta, challenges were handled differently by the left-leaning elections board — but still caused problems for election officials and voters.

By the time Chris Ramsey received a letter requesting him to appear before the Fulton County board and “defend why the challenge to your right to vote should not be sustained,” he was six months into a cancer treatment that had suppressed his immune system. On his doctor’s advice, he had stopped teaching elementary school and had people bring him groceries rather than risk interacting with crowds. But Ramsey felt he had to defend his right to vote. So on a Thursday morning in March 2023, he braved rush-hour traffic from his home on the outskirts of Atlanta to downtown, drove in circles looking for parking, paid $20, trudged three blocks to the meeting and arrived “extremely exhausted,” he recalled. Still, he was angry enough to wait nearly two hours so that he could get his turn at the microphone.
Chris Ramsey was six months into cancer treatment that had suppressed his immune system when he received a letter requesting that he appear before the Fulton County elections board to defend his voter registration.
“I’m sorry, excuse my voice, I’m battling cancer,” he said hoarsely. He then proceeded to criticize the Fulton board for summoning him over a clerical error in his address that he’d previously tried to fix. But once he more fully understood that the board had just been following the law that the challenger had invoked, he suspected the challenger of having political motives. Ramsey, who identifies as a Democrat, told ProPublica, “I felt that it was a conservative person trying to make it easier for their politician to get where they need to be.”

Ramsey had been challenged by Jason Frazier, a member of the planning commission for the city of Roswell and urban farmer, who has filed almost 10,000 voter challenges in Fulton County. On a conservative podcast, Frazier described introducing other activists outside of Fulton County to the basics of voter roll analysis. He is also a prominent participant in frequent private conference calls about policing voter rolls hosted by the Election Integrity Network, a conservative organization focused on transforming election laws. During several calls, Frazier gave advice to more than 100 activists from at least 15 states, according to minutes provided by the watchdog group Documented.
Jason Frazier, a member of the planning commission for the city of Roswell and urban farmer, challenged Chris Ramsey’s vote and has filed almost 10,000 voter challenges in Fulton County.
The vast majority of the challenges handled in the March hearing that Ramsey attended had been submitted by Frazier, who had challenged about 1,000 people registered at nonresidential addresses, such as P.O. boxes or businesses, and another 4,000 people who he claimed lived at invalid addresses (including one member of the county elections board), most because they had the wrong directional component at the end of their street name — e.g., “SE” instead of “NE.” About a dozen people at the three-hour hearing spoke out against the challengers and Fulton officials’ handling of the challenge process. A woman who introduced herself as a survivor of domestic violence explained her use of a P.O. box as part of her “extraordinary lengths to try to protect myself and not keep my address public.” A mother complained about how addressing the challenge was taking her away from caring for her children.

“I don’t appreciate being collateral damage in this mission to clean up the voter rolls,” Sara Ketchum said to the board. Ketchum, who is Black and identifies as liberal, had temporarily moved for work from Atlanta to Washington, D.C., where she registered for a mailing address, but then returned to Georgia in time to vote. That D.C. mailing address became the basis for the challenge against her, submitted not by Frazier but by another prolific challenger. According to Georgia law, many people, such as university students, military personnel and traveling workers, may be legally registered to vote in one place but have a temporary mailing address while living in another.
Sara Ketchum, who lives in Atlanta, says a temporary move to Washington, D.C., became the basis for the challenge against her.
Ketchum told ProPublica that she felt the challenge was a type of intimidation, given Georgia’s history of white citizens using voter challenges to suppress the Black vote. “It put in perspective that voter suppression is real and it’s actually happening,” she said.

At the meeting, Frazier defended his challenges. “I’m free labor trying to help the system to make sure everyone can vote,” he said. “I’m not trying to suppress anyone. I just want clean voter rolls for a multitude of reasons,” including to make sure absentee ballots go to the right address. He insisted that challenges needed to be processed in a way that “doesn’t hassle anyone” and blamed election officials for not making it clear that people could have responded to the challenges in ways that did not include coming to the hearing in person.

Frazier did not respond to requests for comment or to a list of detailed questions.

When Frazier himself was challenged in 2022 for being registered to vote at a business address — he sells vegetables from his farm at his house — he decried it as a “frivolous retaliatory challenge” from someone he himself had challenged. The Fulton board did not approve the challenge against Frazier.

Recently, Fulton’s Republican Party has twice nominated Frazier to become a member of the county board of elections, which would give him oversight of its employees and data. But each time the county commission voted to reject him, with one commissioner criticizing him for undermining confidence in the election’s office’s work and calling him “not a serious nomination.” At the end of June, the county GOP sued the board of commissioners, seeking to have a judge force the commissioners to appoint Frazier to the elections board.
A person speaks in support of Republican elections board nominee Jason Frazier during the public comment portion of the Fulton County Board of Commissioners meeting in June. The board rejected the nomination of Frazier, who has challenged the registrations of nearly 10,000 voters in Fulton County, the largest base of Democratic voters in Georgia.
A ProPublica analysis suggests that Frazier disproportionately challenged Democrats. Georgia election data does not track party affiliation, so officials use primary voting histories as a proxy. Of the roughly 8,000 challenges by Frazier that ProPublica obtained, about 800 voters had most recently voted in a Fulton County primary. Of those, 78% voted in the Democratic race, compared to 67% of voters across the county. Several other challengers in Fulton County, including the person who filed the challenge against Ketchum, challenged more than 90% Democratic primary voters. (In Forsyth County, the challenges submitted by Schneider show a smaller disparity: 28% Democratic primary voters, relative to 22% for the county as a whole.)

Five of the six most prolific challengers identified by ProPublica, including Frazier, have assisted or been assisted by right-wing organizations, some leaders of which were involved in efforts to challenge the results of the 2020 presidential election.

Frazier has been a prominent participant in frequent private conference calls hosted by the Election Integrity Network, dispensing advice about how to police voter rolls to more than a hundred activists from Georgia and other states. In Gwinnett County, a trio of challengers associated with VoterGA, an organization with a stated mission of “working to restore election integrity,” needed dollies to wheel eight cardboard boxes loaded with tens of thousands of affidavits into the election office. Another Gwinnett County challenger targeted about 10,500 registrations using data provided by Look Ahead America, a conservative organization that offered data and guides for a “Ballot Challenge Program” in battleground states.

In response to questions, Look Ahead America released a statement describing how it “provided thousands of volunteers across ten states” with guidance on how to properly submit voter challenges. It also described itself as “a nonpartisan, nonprofit foundation.” Garland Favorito, the co-founder of VoterGA, did not answer ProPublica’s questions about Georgians working with the organization on their challenges and its leadership’s involvement in disputing the 2020 presidential election results. When pressed for comment, he only responded, “Yes it is a provably false blatant lie.” He declined to elaborate. The Election Integrity Network did not respond to detailed questions.

Fulton County removed the most voters from its rolls of any county that ProPublica examined — roughly 1,700 — but did so mostly during the first half of 2022 when the challenges began, before switching course. Cathy Woolard, the board chair at the time, explained to ProPublica that it had made the removals while taking advice from a county lawyer and that removals were “compliant with the law.” After hiring a special counsel with more experience, however, the board switched to placing voters in “challenged” status rather than removing them, in order to “minimally impact the voter” during the 90-day protected window. (The challenges were then resolved after the election.) If Forsyth County’s board had handled challenges in this way, Helm and Riggs would not have had their difficulties voting. “Fulton County’s objective is to make certain that anyone who is able to vote gets an opportunity to vote,” said Patrise Perkins-Hooker, the special counsel who became board chair on July 1. “We prioritized the right to vote for each of our citizens and protected that through the challenge process.”

Nadine Williams, the elections director for Fulton County, said in an email to ProPublica that the challenges had “significantly” impacted her workers “due to the short turnaround time to complete the challenge process.” (SB 202 requires that challenges that place voters in “challenged status” be considered “immediately” by the board and that hearings for challenges that remove people from the rolls be held within roughly a month of being filed.) Officials from multiple counties described processing the challenges as not just time consuming but also expensive, due to the extra demands on staff and the need to hold additional public hearings and send thousands of mailers, plus hire lawyers and technology consultants.

“If this was actually fixing something or finding criminal activity, it might be worth it. But it’s harassing other citizens, distracting us from important work and not achieving the desired result,” Woolard said. Challenges, she said, have “supplanted our priorities with the priorities of a very small group of people who did these challenges.”

Despite requests from some counties for clearer direction, state officials have issued limited guidance for how counties should handle challenges, mostly advising them to rely on their attorneys.

Zach Manifold, the head of elections for Gwinnett County, said that “counties are out there on their own trying to figure out” the potential discrepancies between state and federal law regarding voter challenges. Gwinnett is Georgia’s second most populous county and had the most challenges of any of the 30 counties ProPublica examined. Almost all of them were dismissed for inadequate evidence.

The lack of direction, the overwhelming volume of challenges and the complicated intersection between SB 202 and the National Voter Registration Act have resulted in boards handling challenges in divergent ways and with different impacts on voters — as evidenced by Forsyth and Fulton counties.

Among Georgia election officials, a sense has been growing that something needs to be done about the challenges. About a week before the 2022 election, Georgia Secretary of State Brad Raffensperger said that “we need some reform” on the challenge provision to “tighten that up” due to impacts on election officials, and he suggested that the legislature could change the law in 2023. (In the subsequent session, the Georgia legislature enacted no such measure, though it did pass another election-related bill.) In the February meeting of the State Elections Board, which can issue rules for interpreting election law, its chair, William Duffey, briefly noted that “we have already identified” challenges “as an issue that we need to address,” after a voting rights advocate raised concerns about how they were being handled disparately.

“If you have two different counties handling” analogous “challenges differently, we have an issue,” Edward Lindsey, a Republican member of Georgia’s State Election Board, told ProPublica, emphasizing that county and state election boards need to work together to solve the problem. “It’s incumbent on us to have a consistent system in determining who is and isn’t eligible to vote. That needs to be consistent across 159 counties.”

When ProPublica asked the secretary of state’s office about the inconsistent ways in which counties were handling the challenges, Mike Hassinger, a spokesperson, said: “We’re going to try to get the State Elections Board to issue guidance of some kind to answer all these questions that you have.” He said that county elections board members, who receive a small stipend for their part-time work, “are having to make these decisions affecting people’s franchise” and that the secretary of state’s office was going to encourage the state board to “give them some rules to go by.”

Asked if the inconsistencies ProPublica identified had led to internal discussions about how to update guidance around challenges, Hassinger answered, “Oh, hell yeah. Absolutely.” The secretary of state’s office subsequently issued a statement to ProPublica saying that the office had already been working on creating “uniform standards for voter challenges,” adding, “It is not ProPublica’s findings that prompted us to do so.” In another statement, the office said that it is “thankful” for “ProPublica’s additional information, and have asked the state election board to provide rules.”

Duffey, the chair of the State Election Board, said that he had not received recommendations regarding new rules from the secretary of state’s office and that he had been independently drafting a memorandum that would provide “an analytical process” to allow counties to discern if a challenge should be considered under state or federal law. He explained that past news coverage of voter challenges and complaints from election officials prompted him to ask himself during the 2022 election: “How can a county deal with that? And the fact is, they can’t. There was nobody out there that was trying to help them make the determination of how they ought to process these.”

He went on to say: “As a practical matter, they probably didn't have enough time to do it differently. But we do now. And now that the election is over, we intend to do that.”

Irena Hwang and Joel Jacobs contributed data reporting.
Correction
July 13, 2023: A caption with this story originally misspelled the first name of a voter. She is Sara Ketchum, not Sarah.
Correction
July 14, 2023: This story originally misstated the rank of Gwinnett County in terms of population. It is the second most populous county in Georgia, not the most populous.

by Doug Bock Clark, photography by Cheney Orr for ProPublica

Lawmakers Reintroduce Bill to Battle Nation’s Stillbirth Crisis

ProPublica

2 years 1 month ago

by Duaa Eldeib

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Federal lawmakers this week introduced a bill aimed at reducing the more than 20,000 pregnancies that end in stillbirth every year in the U.S.

The Maternal and Child Health Stillbirth Prevention Act would explicitly allow federal funding earmarked for mothers and children to also be used for stillbirth prevention, including initiatives that encourage expectant parents to be aware of and track their babies’ movements in the womb.

ProPublica has spent the past 18 months reporting on stillbirth, the death of an expected child at 20 weeks or more of pregnancy. The investigation found that a lack of comprehensive action, research and awareness, as well as stark racial disparities, have all contributed to a stillbirth crisis that exceeds infant mortality and far eclipses the number of babies who die of Sudden Infant Death Syndrome, or SIDS, each year. Research shows as many as 1 in 4 stillbirths may be preventable. But while other wealthy countries have been able to reduce their stillbirth rates, the U.S. has fallen behind.

“Stillbirth upends the lives of individuals and families from all demographics across the United States — devastating parents and families and increasing the risk of maternal mortality and morbidity,” Sen. Jeff Merkley, D-Ore., said in a statement on Tuesday.

“Investigative reporting has helped call public attention to this major public health concern,” he added, “and I will do all I can to address this crisis, including introducing the bipartisan Maternal and Child Health Stillbirth Prevention Act.”

Merkley and other lawmakers introduced a similar bill last year, but it never came up for a vote. On Tuesday, Merkley and Sen. Bill Cassidy, R-La., reintroduced the legislation, with more than a dozen lawmakers from both sides of the aisle joining as cosponsors. U.S. Reps. Ashley Hinson, R-Iowa, and Alma Adams, D-N.C., a co-chair of the Black Maternal Health Caucus, introduced the measure in the House on Wednesday.
Rep. Alma Adams, D-N.C., joined other lawmakers in support of the measure. (Bill Clark/CQ-Roll Call, Inc via Getty Images)
“Increasing access to stillbirth prevention saves the lives of babies and mothers,” said Cassidy, who is also a doctor.

The Iowa-based nonprofit Healthy Birth Day, which created the Count the Kicks app that helps pregnant people track their baby’s movements, championed the legislation.

“We’re absolutely thrilled because this legislation means lives saved,” said Emily Price, the group’s CEO.
Emily Price, CEO of the Iowa-based nonprofit Healthy Birth Day, said the legislation “means lives saved.” (Jenn Ackerman, special to ProPublica)
Despite working for years to try to raise awareness around stillbirth prevention and the Count the Kicks program, Price said she has heard from several state health departments that did not know that they could use money allocated under Title V Maternal and Child Health block grants for stillbirth reduction. This bill amends the Social Security Act to make it clear to public health officials that they can.

The measure would not provide additional funding, but in clarifying that public health agencies can use existing funds in these ways, lawmakers and advocates believe they can make progress in reducing the number of stillbirths.

Price said she is optimistic about the bill’s passage, in part because she said she has witnessed a recent shift around stillbirth awareness. Advocates and parents, she said, have “had enough.”

In March, the National Institutes of Health released a report that mirrored many of ProPublica’s findings. It called the U.S. stillbirth rate “unacceptably high” and laid out several recommendations to address it.

Price said her group circulated ProPublica’s stories in Washington to help lawmakers better understand the stillbirth crisis and its effects on families. Some of them had already read the stories, she said, and told her, “I understand what you’re fighting for.”

Emily Eekhoff, an Iowa mother, credits the Count the Kicks app with saving her daughter’s life. One morning in May of 2017, she said she noticed her baby’s movements had slowed from their usual pace. She tried pressing down on her stomach and drinking juice, but nothing helped. Her doctor told her to head to the hospital, and after monitoring and an ultrasound, she had an emergency cesarean section.

She didn’t realize how close she had come to delivering a stillborn baby, she said, until a nurse asked her how she knew to come in. When she told her about the app, she said the nurse could hardly believe it. Her daughter’s umbilical cord was wrapped tightly around her neck three times, and a doctor later said that if she had waited much longer to be seen, it might have been too late.

“One day could have made the difference between having her here or burying her,” Eekhoff said.

In addition to raising awareness about the importance of fetal movement, the legislation calls on health departments to fund other stillbirth prevention initiatives. Some of those include improving discussions on whether an expectant parent with certain risk factors should be delivered early, encouraging safe sleeping positions while pregnant and better screening for babies that are not growing as expected.

The American College of Obstetricians and Gynecologists and March of Dimes are among several organizations that endorsed the legislation. Dr. Verda J. Hicks, ACOG president, said in a statement that supporting the bill is part of the group’s “longstanding efforts to achieve the goal of preventing stillbirth” and will help doctors develop appropriate tests and interventions.

The legislation, she said, will also pave the way for more research and better data, especially when it comes to understanding the causes of a stillbirth and the racial and ethnic inequities. ProPublica found that Black women are more than twice as likely — and in some states about three times as likely — as white women to have a stillbirth. They also face nearly three times the risk of dying during or soon after childbirth.

“There’s no reason why the United States should have worse rates of stillbirth and maternal mortality than most wealthy nations,” Adams said. “The solutions exist, we just need the political will.”

by Duaa Eldeib

TitleMax Demands High-Interest Payments From Borrowers in Bankruptcy

ProPublica

2 years 1 month ago

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

How We Measured the Title Lending Industry in Georgia

ProPublica

2 years 1 month ago

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 Joel Jacobs, ProPublica, and Margaret Coker, The Current

Los Angeles Housing Department Will Investigate Residential Hotels

ProPublica

2 years 1 month ago

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

Senators Ask Billionaire Paul Singer and Power Broker Leonard Leo for Full Accounting of Gifts to Supreme Court Justices

ProPublica

2 years 1 month ago

by Justin Elliott, Joshua Kaplan and Alex Mierjeski

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

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 Justin Elliott, Joshua Kaplan and Alex Mierjeski

Senators Call for Further Oversight, Consumer Protections in Contract for Deed Real Estate Transactions

ProPublica

2 years 1 month ago

by Jessica Lussenhop

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.

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 Jessica Lussenhop

Outlaw Alliance: How China and Chinese Mafias Overseas Protect Each Other’s Interests

ProPublica

2 years 1 month ago

by Sebastian Rotella

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

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 Sebastian Rotella

How Recent State Laws Are Making It Harder to Sue Trucking Companies After Crashes

ProPublica

2 years 1 month ago

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 James O’Donnell, FRONTLINE

Illinois Leaves Three Administrators in Charge at Choate Despite Troubled History of Resident Care

ProPublica

2 years 1 month ago

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

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