With the primary just weeks away, new super PACs are popping up to boost — or bash — Newark Mayor Cory Booker’s candidacy in New Jersey’s crowded U.S. Senate special election.

A recently formed super PAC called the Mobilization Project made its foray into the race with a canvassing operation costing nearly $74,000 in support of Booker’s bid, Federal Election Commission filings today show.

That follows an effort from another new super PAC, American Commitment Action Fund, which announced a $100,000 online advertising campaign against Booker this week. FEC records don’t indicate the money has yet been spent.

(Update, 9:17 p.m.: A filing with the FEC on Wednesday night indicates American Commitment Action Fund spent an initial $13,030 early this week on ads opposing Booker's candidacy.)

American Commitment Action Fund is the super PAC arm of American Commitment, a conservative 501(c)(4) nonprofit organization that spent more than $1.8 million on the 2012 elections, according to federal records.

Less is known about the Mobilization Project, which filed its organizational paperwork with the FEC on July 15. The group does not have a website, and its treasurer, Gary Gruver, could not be reached for comment Wednesday.

The super PAC uses the former P.O. Box address of the September Fund, a liberal 527 organization founded by Harold Ickes, a political operative with close ties to Bill and Hillary Clinton.

The group, which also lists Gruver its treasurer, has not been active in recent elections, but spent nearly $5 million during the 2006 midterms, according to the Center for Responsive Politics.

Since the Mobilization Project and American Commitment Action Fund officially launched after the FEC’s mid-year filing deadline, the groups will not be required to disclose their donors until Aug. 1, according to FEC regulations.

Garden State voters will head to the polls on Aug. 13 for the primary election, while the general election is slated for Oct. 16. New Jersey Gov. Chris Christie called the special election shortly after Sen. Frank Lautenberg, D-N.J., died in June.

Aside from Booker — the favorite to win the seat — U.S. Reps. Frank Pallone, D-N.J., and Drew Holt, D-N.J., and Democratic Assembly Speaker Sheila Oliver have also entered the race.

On the Republican side, former Bogota, N.J., Mayor Steve Lonegan and physician Alieta Eck are running.

The Pallone campaign has repeatedly called on their fellow Democrats in the race to agree to a pledge dissuading outside groups from participating in the primary, similar to one introduced in recent Massachusetts Senate elections. But none of the candidates have signed on.

“There’s no need to have outside money in this race. Shouldn’t we all stand up and say ‘no’?” Pallone spokesman Jeff Carroll said. “Let’s have a clean race and set an example.”

Holt spokesman Thomas Seay said the campaign has not accepted Pallone’s call to limit outside group activity because “as written, the text of the pledge is nonsensical.”

However, he wrote in an e-mail that “it’s unfortunate outside interest groups are intervening in such an opaque and unaccountable way,” and that Holt would “work to overturn Citizens United and fight for public disclosure of all major political donors” if elected to the Senate.

Booker’s campaign could not be reached for comment.

But in a fundraising email to supporters Wednesday evening, Booker lamented that “we found out yesterday that a tea party super PAC is attacking us.”

Then, in making a pitch for money, he said: “We only have a few more hours to prove to everyone in New Jersey that we're stronger than this challenge ... a few more hours to prove that we will not be deterred by forces that want to distort my record and take our state and country backwards.”

The early flow of outside money into New Jersey is unlikely to subside. The San Francisco-based group Pac Plus pledged last month to spend $2 million in support of Booker’s candidacy, but so far, it has yet to report any expenditures.

New Jersey saw relatively little spending from outside groups — about $1.5 million — during the state’s 2012 U.S. Senate contest between Sen. Robert Menendez, D-N.J., and Republican nominee Joe Kyrillos.

Ben Wieder contributed to this report. 

America’s deserts are stark, quiet places, where isolation and the elements have long kept development at bay. To outsiders, these arid expanses may not seem like prized land.

But they are poised to play a key role — and perhaps, to serve as a battleground — in President Obama's plan to double U.S. electricity from wind, solar, and geothermal sources by 2020. To help ramp up that amount of clean energy, the White House has urged approval of an additional 10,000 megawatts of renewable energy production on public lands.

Estimates vary on exactly how many households would be served by the expansion, but the Obama administration says the 25 utility-scale solar facilities, nine wind farms and 11 geothermal plants it has approved on federal lands so far will provide enough juice to power 4.4 million homes.

One thing is for certain: the new drive for large-scale solar will require land. The U.S. Department of Interior's Bureau of Land Management so far has issued permits or is conducting environmental reviews for solar, wind and geothermal projects covering about 310,000 acres — an area around the size of Wyoming’s Grand Teton National Park. Many projects require that electric transmission lines be built over miles of open space to connect the remote renewable generating plants to the grid serving population centers.

The administration generally wins plaudits from environmentalists for its effort to expand energy that doesn't belch smoke, cancer-causing chemicals or heat-trapping carbon dioxide. But there is growing concern among a number of environmentalists, particularly in the West, about the impact on fragile ecosystems, plants and animals. Some have filed lawsuits that could slow the effort to devote more public land to renewable energy.

"We need a new model for the way public lands are managed that recognizes we can’t keep trying to divide the pie up between exploitation and preservation," said Janine Blaeloch, director of the Western Lands Project, a Seattle-based group that has filed a legal challenge to the program.

Renewables drive

As Obama noted in his State of the Union address, renewable energy from sources like solar and wind doubled in his first term. Economic stimulus funding in 2009 made it easier for projects to take shape. Despite the enormous growth, fossil fuels still dominate.Together, wind, solar and geothermal energy accounted for just 2 percent of U.S. primary energy consumption in 2012, government data show.

“Using less dirty energy, transitioning to cleaner sources of energy, wasting less energy through our economy is where we need to go,” Obama said at Georgetown University June 25, promising to issue enough permits to double the number of megawatts solar and wind projects generate on federal property. “And this plan will get us there faster.”

The abundant sunlight in desert regions makes them some of the world’s best locations for solar energy projects, and the nation’s largest environmental groups were quick to praise the new climate initiative. The Natural Resources Defense Council released a study showing 210,000 jobs would be added by 2020, along with lower electric bills in 11 of 14 states it examined.

But the effort to devote large tracts of public land to renewable energy has not been trouble-free.

Combined with stimulus financing that came with strict deadlines to break ground, a land rush ensued — and regulations were sometimes slow to catch up. That led to speculative investments, lawsuits, canceled projects and other complications.

David Lamfrom, a senior program manager for the National Parks Conservation Association who works in California’s Mojave Desert, said an area dentist even submitted a development application in the initial frenzy.

“You can’t make this stuff up,” Lamfrom said.

-------------------------
Don’t miss a single Center for Public Integrity investigation on the environment. 
Sign up now to receive special newsletters relevant to your interest.
-------------------------

Among the biggest flash points have been three projects located close to national park land in the California desert. One of those, a solar farmproposed near Death Valley National Park, was later abandoned by its bankrupt developer Solar Millennium.

Another solar project, First Solar's Desert Sunlight near Joshua Tree National Park, now under construction, was scaled back to one-fifth of its originally proposed size, and special lighting technology is being implemented to preserve night sky views. The developer was required to retain BLM-approved biologists to monitor bird activity, including bird deaths from collisions with solar panels, according to the project’s environmental impact statement.

But in recent weeks, an unanticipated environmental problem has surfaced at Desert Sunlight. More than a dozen migratory birds have been found dead, including water fowl that somehow landed at the desert construction site: an eared grebe, three brown pelicans and an endangered Yuma clapper rail. Jane Hendron, a spokeswoman for the U.S. Fish and Wildlife Service, said the developers won’t face any liability for the endangered animal’s death.

“We had not included it [in the company's permit] or addressed it, so there’s no way the solar company would have known or would have been prescribed any action specifically,” Hendron said.

She said the agency planned to begin monitoring the site and others more intensively to gather hard data on what might be confusing the birds. It’s thought that the reflective panels could look like fresh water to the migrating waterfowl, Hendron said, but little hard science on the phenomenon exists.

“We have to make decisions based on the best available science,” Hendron said, “but if you don’t have the science, you can’t just go out and make willy-nilly hypotheticals.”

The third controversial project adjacent to parkland is set to open later this summer as the world's largest solar plant, a 3,500-acre development in the Ivanpah Valley at the California-Nevada border near Mojave National Preserve.

The Ivanpah developer, Oakland-based BrightSource Energy, ended up spending years and millions of dollars relocating desert tortoises found living on the site and had to suspend construction for months. The company says it has spent $22 million taking care of the animals, which the federal government classifies as a threatened species, and plans to spend as much as $34 million mitigating the plant’s impact on their habitat.

Interior Secretary Sally Jewell visited the Ivanpah site, near Primm, Nevada on July 1 and praised the developers as “pioneers.”

Lamfrom uses a different word. “I call them dinosaurs,” he said. In his view, under new standards the BLM has adopted to take into account the potential environmental impacts, the projects might not be approved today.

Solar prize

The BLM says it works with local residents and conservation groups to mitigate projects' environmental impact. For example, in March, before the agency approved a 200-megawatt wind farm southeast of Las Vegas, it worked with Duke Energy's Searchlight Wind Energy to ensure that the project, though located on 9,300 acres, only disturbed 160 acres of land. A plan is being implemented at the site to protect bats and birds, and an ethnographic study is underway aimed at protecting cultural resources. Still, the Interior Department faces a lawsuit filed by Friends of Searchlight Desert and Mountains, who argue the plan threatens golden eagles and bald eagles that fish nearby in Lake Mojave, among other impacts.

Solar projects have become the biggest prize for developers as the BLM has worked to facilitate an “all-of-the-above” energy plan, a review of agency data shows. They produce more megawatts, in total, than wind or geothermal projects, on less land. They also will create about 50 percent more jobs, on average, than wind projects — at least according to claims made on permit applications.

But Lamfrom worries that the huge projects, if not properly managed, will spoil the desert’s sweeping vistas and mar places like Mojave National Preserve, Joshua Tree and Death Valley national parks with thousands of reflective panels. The projects also can require the clearing of huge swaths of native grasses and cacti.

Some environmentalists feel their views were ignored by the administration years ago.

The move to increase solar permits “just shows the utter blindness that there is in the administration,” said Blaeloch, of the Western Lands Project. “The ‘all-of-the-above’ approach — what kind of thing is that to say about what our energy policy is?” she said. “Let’s be a little more discerning."

Tracts used by solar projects become “private industrial zones” that the public can’t access, Blaeloch said, which is why her group and two others are suing the Interior Department in a bid to elicit changes to a key planning document released last year. The document established 17 solar energy zones, totaling nearly 300,000 acres, thought to provide the best conditions for plants with the least impact on the environment. But the document would still allow the BLM to approve projects on up to 19.3 million acres in Arizona, California, Colorado, Nevada, New Mexico and Utah — an area larger than the state of West Virginia -- although permits would be harder to get.

The goal, Blaeloch said, is to force the BLM to redo the document, called a Preliminary Environmental Impact Statement, to consider generating power from less-pristine sites. The Environmental Protection Agency does have an initiative to site renewable energy on old industrial and waste sites; the agency says more than 200 megawatts has already been sited on such sites, and it compiles an extensive list of contaminated sites that could be of use to renewable energy developers, posting it on its website. Blaeloch’s group contends that significant BLM land is also scarred and similiarly could be used for renewable energy projects.

Blaeloch said she understands the threat of global warming but believes more drastic lifestyle changes will be needed than what the president’s plan requires. Delicate public lands shouldn’t be sacrificed, she said.

The deserts “are as rich as old-growth forests,” Blaeloch said. “They may be a little harsher to be in and to walk in, but they have a huge amount of value to the planet and to species.”

David Quick, a BLM spokesman, said in a statement that the agency's approval process takes into account the need to balance environmental concerns. The process “ensures opportunities for all interested parties and stakeholders to be engaged in the review process and identify mitigation alternatives and the appropriate siting of projects to avoid resource conflicts to the greatest extent possible,” he said.

Bobby McEnaney, deputy director of the NRDC’s Western Renewable Energy project, acknowledged that solar development can be challenging. Still, he said the group didn’t think it was possible to generate enough energy to replace dirty fuels without some industrial-scale development. The NRDC is focused on making sure the administration’s renewable energy program doesn’t end when Obama leaves the White House, McEnaney said.

While he described others’ misgivings as a “very legitimate concern,” McEnaney said the BLM had existed historically to promote the use of public lands in addition to conserving them. With the growing threat of climate change, he said, “Unfortunately, we need it all.”

Julie Falkner, a senior policy analyst for renewable energy at Defenders of Wildlife, is measured in her assessment of the Obama program, saying she believes the BLM has learned from past mistakes.

“There’s an incredible value to having renewable energy go forward,” she said. “At the same time, it shouldn’t be done in a way that sacrifices the wildlife habitat that we’ve sought to protect over the last century.”

America’s largest corporations, while still overwhelmingly opaque about their politicking, are more transparent than ever before, according to a yet-to-be-published analysis of S&P 500 companies’ disclosure habits.

About 12 percent of S&P 500 companies now voluntarily disclose at least some of the so-called "dark money" contributions they make to 501(c)(4) “social welfare” nonprofit groups, which are not required to reveal their donors. Such groups frequently lobby the federal government and have together spent tens of millions of dollars advocating for and against political candidates since the Supreme Court’s 2010 ruling in Citizens United v. Federal Election Commission.

Another 6.4 percent of S&P 500 companies have voluntarily disclosed that they don’t contribute to 501(c)(4) nonprofits at all, according to the first-of-its-kind study, which the nonpartisan Center for Political Accountability is producing.

An even greater share of corporations — more than one-fourth — report at least some payments they make to nonprofit trade associations. Trade groups sometimes engage in political advocacy or electioneering activities and also aren’t legally compelled to disclose their donors.

The study shows a slow shift toward transparency, said Bruce Freed, the Center for Political Accountability’s president.

Shareholder pressure, changes in corporate governance standards and publicity from the Center for Political Accountability’s more detailed and annualcorporatetransparency index of S&P 200 companies contribute to this shift, said Freed, whose Washington, D.C.-based organization works to promote “responsible corporate political activity, protect shareholders and strengthen the integrity of the political process.”

-------------------------
Don’t miss a single Center for Public Integrity investigation on dark money, lobbying, and political contributions. 
Sign up now to receive our Money in Politics newsletter.
-------------------------

Sometimes, companies need little prompting, while others begin reporting on their own.

Utility company Edison International, health firm St. Jude Medical Inc., mining outfit Joy Global Inc. and New York Stock Exchange parent NYSE Euronext Inc. are among those who’ve recently revealed at least some of their 501(c)(4) donations without the Center’s prior knowledge, said Sol Kwon, who conducted much of the S&P 500 study’s research.

Companies who aren’t yet on board?

“They’re like King Canute, telling the tide not to come in,” Freed said. “Corporate political disclosure is really becoming a more mainstream practice, in whole or at least in part.”

Added Kwon: “These numbers tell a story of greater disclosure than I expected. There’s the creation of a virtuous cycle.”

The S&P 500 study will also note that of the companies the Center for Political Accountability investigated:

• About four in five publicly release at least some of their internal policies governing corporate spending. About one third provide detailed information about their policies.
• More than one in three publicize information about how their corporate boards provide oversight of political spending.
• About 23 percent release information about their contribution to state-level ballot measure campaigns, while another 6.4 percent disclosed that they make no such donations.

The Center for Public Accountability’s full study is slated for release later this month, Freed said.

Facing major budget and staff cuts, federal officials are scaling back several high-profile health care fraud and abuse investigations, including an audit of the state insurance exchanges that are set to open later this year as a key provision of the Affordable Care Act.

The Department of Health and Human Services Office of Inspector General, which investigates Medicare and Medicaid waste, fraud and abuse, is in the process of  losing a total of 400 staffers — or about 20 percent of the workforce — from its peak strength of 1,800 last year. About 200 of those staffers will have departed by the end of this year, and the other 200 are slated to be gone by the end of 2015.

“As OIG’s budget resources decline, so do our enforcement and oversight activities,” reads an agency document obtained by the Center for Public Integrity. The OIG noted that it “will not be able to keep pace” with the rapid growth of taxpayer-subsidized health care anticipated under the Affordable Care Act, the signature health reform effort of the Obama administration. 

Several of the canceled projects were included in the agency’s 2013 “work plan,” which serves as a barometer for suspected fraud or billing abuse.  

Among them:

● A planned audit into computer security at state marketplaces — known as exchanges — that will sell individual health insurance policies under the Obama health care law. The IG’s office said “time pressures” to get the exchanges up and running by October 1 may increase risks that states will fail to shield private medical information from “hacker exploits, unauthorized data access and data theft or manipulation.” In addition, the OIG document said, about $3.8 billion in grant money to develop the exchanges is “potentially at risk for wasteful spending.” Seventeen states are planning to run their own exchanges, while the rest will be operated by the federal government or in state-federal partnerships.   

● An investigation to determine if nursing homes overuse controversial antipsychotic drugs in treating the elderly and which of these drugs are prescribed most often. The canceled initiative was supposed to identify nursing homes that failed to follow federal rules requiring that patients “be free from unnecessary drugs.”  

● A probe into how well state governments and Medicaid managed care groups ferret out fraud and abuse. Medicaid health plans collect more than $100 billion in tax dollars annually for serving about 30 million low-income people and are set to add millions of new members under Obamacare.

● A review of drugs marketed under Medicare Part D without first being approved by the Food and Drug Administration for safety and effectiveness. Medicare paid more than $3 billion from 2006 through 2010 for these products, but officials said they are abandoning plans to recover money improperly paid to drug companies. 

● A study of crooked suppliers of costly durable medical equipment, such as wheelchairs and other medical devices used in the home, who manage to stay in business even after federal officials revoke their billing privileges. The durable medical equipment market has long been troubled by questionable expenditures. The audit was to target merchants in South Florida, a hotbed of Medicare and Medicaid fraud. 

-------------------------
Don’t miss a single Center for Public Integrity investigation on ObamaCare, Medicare, and public health. 
Sign up now to receive special newsletters relevant to your interest.
-------------------------

The inspector general’s office also is delaying an unspecified number of investigations into poor quality care in hospitals due to “significantly reduced” travel budgets and the high cost of paying experts to review medical files, which can cost $250,000 or more. This delay may result in a “potentially high-risk hospital not being reviewed” and “potentially erroneous claims not being reviewed,” according to the agency.

The cuts are “deeply regrettable,” said Malcolm Sparrow, a professor at Harvard University’s John F. Kennedy School of Government and health fraud expert. “We’d save a huge number of taxpayer dollars by doubling the size of these operations.”

Sparrow said fraud artists are adept at quickly figuring out how to exploit new health care initiatives and that officials have an obligation to “stay ahead” of them. “Otherwise three years from now we’ll be saying, ‘how could we not have predicted this mess?’ ”

Louis Saccoccio, chief executive officer of the National Health Care Anti-Fraud Association, said that OIG audits not only stem financial losses, but also can protect patients from harm. Money spent on these efforts “pays for itself many times over,” he said in an email.

OIG officials contend their investigations typically return $8 for every dollar invested. They reported fiscal 2012 expected recoveries of about $6.9 billion and more than 1,100 criminal and civil investigations of individuals or health care businesses.

News of the budget crunch first surfaced during questioning at a June 24 hearing of the Senate Committee on Homeland Security and Governmental Affairs. One official said at the hearing that existing staff was stretched so thin that the agency had failed to act on 1,200 complaints over the past year alleging wrongdoing — a number expected to rise.

The Obama administration has often touted its record for cracking down on health care fraud, pointing to recoveries of more than $10 billion since 2008, and noting criminal cases that busted major fraud rings.

But OIG records show that the agency has been in a hiring freeze since February 2012 and has offered two rounds of buyouts and early retirements this year. The HHS office is the largest such IG unit,  responsible for oversight of 24 cents out of every tax dollar spent by the federal government.

While sequestration has played a part, the IG’s funding problems are actually more complex, agency officials say. The agency is operating with “significantly reduced” [funds] due to the expiring of a $30 million per year appropriation from the Deficit Reduction Act of 2005 and the end of stimulus funding and other budget cuts, officials said.

“OIG will not be able to keep pace with the ACA (Affordable Care Act) expansion, maintain/expand our highly successful Medicare Fraud Strike Forces, or keep pace with the expanding Medicare and Medicaid enrollment and the expected need for growth to combat on-going health care fraud,” an agency document states.

As the financial overhaul known as the Dodd-Frank Act turns three this week, the law’s most controversial creation, the Consumer Financial Protection Bureau, is for the first time cracking down on mortgage lenders for encouraging loan officers to put borrowers in high-cost loans.

The agency filed a federal lawsuit Tuesday against Castle & Cooke Mortgage LLC and its president, an accomplished rodeo performer who professes to be “a big fan” of new rules aimed at helping consumers.

It’s the first time the new consumer cop — a creation of Dodd-Frank that drew sharp opposition from the financial industry — has taken action against the practice, which was pervasive in the years leading up to the housing meltdown and then banned under Dodd-Frank.

Castle & Cooke, based in Utah, is a privately held, non-bank lender of the sort that largely escaped the federal government’s scrutiny before the financial crisis focused attention on abusive lending. Its president, Matthew Pineda, founded it in 2005 for eccentric fruit billionaire David Murdock. (Murdock owns Castle & Cooke, Dole Food Company Inc. and collections of “animals, orchids, Chippendale mirrors and Czechoslovakian chandeliers.” He is the 190th-richest person in America on the latest Forbes list.)

By 2012, Castle & Cooke Mortgage had grown to lend $1.3 billion through about 45 branches in 22 states. The company knows “what people are looking for in today’s cluttered and confusing mortgage market,” and “it is not merely a matter of finding a team of people who can find a better rate,” a corporate website says.

The consumer bureau says Castle & Cooke Pineda, and senior vice president Buck Hawkins, violated a ban on paying loan officers more when they sell loans with higher interest rates and fees. Before the ban, it says, the company paid employees kickbacks for pushing higher-rate mortgages – “the higher the interest rates, the higher the loan officers’ commissions.” When the ban took effect, the suit alleges, Pineda and Hawkins devised a workaround: They lumped the incentives into quarterly bonuses – “the higher the interest rates of the loans closed by a loan officer in the quarter, the higher the loan officer’s quarterly bonus,” according to the complaint.

-------------------------
Don’t miss a single Center for Public Integrity investigation on consumer finance and corporate accountability. 
Sign up now to receive our Finance email newsletter.
-------------------------

The company said in an emailed statement it has cooperated with the investigation for more than a year “and anticipates an amicable resolution.” Pineda told The American Banker, “We don’t compensate loan officers based on the terms of a loan and we are not motivated to upsell.”

In a promotional video posted on Youtube last month, Pineda comes out as “a big fan” of new consumer protections, but says the changes have made it “a hard time” in the mortgage industry.

“It’s been definitely challenging to overcome some of the regulation that’s really always been there but never been enforced,” he says.

Indeed, although the bonuses are seen as a key “pro” of working for Castle & Cooke, they’re not the company’s only tool for motivating sellers. Employees compete for membership in the “Chairman’s Club” and “Jetsetter’s Club,” an honor bestowed on “top overall performers for their efforts to drive business in a number of areas that focus on production,” according to the company’s website.

Club members enjoy an “exclusive trip” to Lanai, the Hawaiian island that Murdock last year sold to Oracle Corp. founder (and fellow billionaire) Larry Ellison, reportedly for a half-billion dollars. Jetsetters get there on Murdock’s private jet.

A video from the 2011 retreat at the Four Seasons features couples wearing matching Hawaiian togs and kissing awkwardly in front of ocean vistas; Pineda giving a double-thumbs up; and an opulent awards dinner where Murdock, clad in a in white jacket, white shirt and gold tie, poses with each winner and his or her cut-glass award.

Before the financial crisis, loan officers typically got paid extra for selling mortgages with higher rates and fees. That encouraged them to steer borrowers toward mortgages with higher monthly payments. The risky, costly mortgages contributed a wave of foreclosures that sparked the global credit freeze and upended the U.S. economy.

The Dodd-Frank Act, passed in the aftermath of that crisis, created the consumer bureau to police unfair and abusive practices by consumer finance companies, including banned incentives for loan officers.

It’s not the first time Murdock has prospered in the aftermath of a real estate bubble. He started his career as a builder in the post-war housing boom in Phoenix, according to a Castle & Cooke website, and left for California “when the Arizona real estate market collapsed in the sixties.” He soon owned real estate, mining, oil and cattle companies.

The global impact of our latest international investigation has been astonishing:

• In South Korea, police and prosecutors raided the home of a former President, hauling away paintings and other big-ticket items;
• In Austria, one of Europe’s most famed bankers abruptly resigned;
• And, in Great Britain and France, national leaders have appeared on TV and promised to eradicate tax havens.

These far-flung events and many others can be traced directly to the International Consortium of Investigative Journalists’ groundbreaking probe into the secrets of offshore tax havens. ICIJ’s so-called “Offshore Leaks” project has sparked a sea change in international tax policies. So far, official investigations and inquiries have been launched in Israel, South Korea, the Philippines, Greece, Canada, India, Mongolia, Austria and Australia.

In Europe, the EU’s top tax official credits ICIJ with transforming tax politics, calling it “the most significant trigger” behind the region’s newfound resolve to crack down on offshore hideaways and global tax evasion. In Belgium, the secretary of state says “Offshore Leaks woke up many Belgians” and other Europeans as well. “We're in a completely different context today,” he says. “It’s a new world.”

In effect, ICIJ has helped change the atmosphere around offshore tax havens through transparency. ICIJ is a 15-year-old consortium of 160 investigative journalists in 60 countries. It operates as part of the Center for Public Integrity in Washington.

More than a year and a half in the making, the Offshore Leaks project is, I believe, the largest cross-border investigative reporting collaboration in history. The investigation has been cited more than 20,000 times by other media organizations around the world. And there is more to come.

Putting together a project with the depth and breadth of Offshore Leaks – and reporting across languages, time zones and cultures – is a massive logistical challenge. Team members are stretched across the globe, some with spotty Internet access and serious security concerns. Many work in countries where they have legitimate fear of retaliation from powerful figures in government or business.

Only an investigative powerhouse such as ICIJ could do this level of work and stand up to the pressures that it has produced. ICIJ is given credit for helping force significant changes in international policies aimed at fighting tax evasion.

The Center for Public Integrity is currently seeking support for ICIJ that will allow us to continue this crucial work probing hidden tax havens in many more countries. Individual contributions will be matched by a member of our Board of Directors. If you can help us, please do, so we can continue to change the world of hidden offshore tax havens. 

Please support ICIJ’s efforts to reveal a world dominated by the rich and powerful now.

Thank you. Until next week,

Bill

A pro-Barack Obama super PAC with no marquee candidate left to support has donated some surplus cash to — another super PAC.

Priorities USA Action contributed a quarter-million dollars to Senate Majority PAC— a super PAC that backs Democratic Senate candidates — in April, new Federal Election Commission filings show.

The contribution marks the first time the two top-spending Democratic super PACs during the 2012 elections have ever given money to one another, although they've forged a close relationship, including co-hosting a major fundraising event at the 2012 Democratic National Convention.

It’s likewise notable because super PACs, which first sprang into existence during 2010, rarely share money with one another, instead fundraising primarily from individuals, and in some cases, unions, for-profit corporations and nonprofit groups.

Senate Majority PAC— launched in 2010 by former aides to Senate Majority Leader Harry Reid, D-Nev., and previously known as Commonsense Ten and Majority PAC— has poured nearly $1.7 million into Senate races so far this year.

Most of this money went toward advertisements opposing Republican Gabriel Gomez in Massachusetts’ U.S. Senate special election. Rep. Ed Markey, D-Mass., defeated Gomez in June. It also this week made a $270,000 expenditure against Senate Minority Leader Mitch McConnell, R-Ky., an FEC filing shows.

The contribution from Priorities USA Action went toward efforts in the Massachusetts special election, Senate Majority PAC spokesman Ty Matsdorf said.

From the beginning of the year through mid-July, Senate Majority PAC brought in more than $3 million, and has about $980,000 left in its coffers.

The group’s largest contribution from an individual during this period came from DreamWorks CEO Jeffrey Katzenberg, a major Democratic donor who gave $100,000 in June.

Senate Majority PAC also received donations this year from two politically active liberal nonprofit groups: $35,000 from American Bridge 21st Century and just less than $59,000 from Patriot Majority USA.

During the 2012 campaign, Senate Majority PAC spent more than $37 million in support of Democratic Senate hopefuls, according to federal records.  

Priorities USA Action has yet to file its mid-year financial report with the FEC — filings are due by July 31 — but the group reported having more than $3.7 million cash on hand at the end of 2012.

The super PAC was founded by former Obama advisers Bill Burton and Sean Sweeney in 2011 to aid the president’s re-election bid, and spent more than $75 million doing so.

The group’s plans for the 2014 and 2016 elections, however, remain unclear, as its leadership has largely scattered.

Since the 2012 race, Burton joined the Washington, D.C.-based public affairs consulting firm Global Strategy Group. Spokeswoman Marcy Stech in February became EMILY’s List’s national press secretary. Compliance and Operations Director Megan Brengarth left in January to join Washington, D.C.-based firm Capitol Compliance Associates.

Representatives for Priorities USA Action could not be immediately reached for comment. 

One of the Navy’s newest warships suddenly found itself immobilized in the South China Sea on July 20, as the failure of one of its four diesel generators caused a shutdown of all its engines during its first operational deployment. It was not the first major glitch since the USS Freedom began to sail in 2008.

The crew was able to restart all of the engines and get the 3,000-ton vessel into Singapore for repairs the following day. But the incident could not have occurred at a worse time for the sea-going service.

The Freedom is part of a planned fleet of 52 fast, agile, modern Navy warships known as Littoral Combat Ships and meant to operate in shallow coastal waters around the globe, combatting everything from pirates to terrorists to small submarines. But it is suddenly under intense scrutiny as Washington debates whether to fund the production of eight more sister ships over the next two years.

So far, the Navy has deployed three of the $480 million vessels, and it has another sixteen on order or in production. It now wants Congress to approve the expenditure of $1.79 billion on four more of the ships in 2014, and to allocate a similar sum for four more the following year. On July 24, the House endorsed that proposal as it passed the defense appropriations bill for next year.

But some Senate lawmakers, citing recurrent cost overruns, maintenance problems, and unresolved design issues with the Littoral Combat Ships, are trying this summer to block that plan and force further development and modification of the vessels to occur before additional vessels are purchased. They depict this alternative approach — design before you buy — as a moneysaver.

-------------------------
Don’t miss a single Center for Public Integrity investigation on military spending. 
Sign up now to receive the Center's National Security email newsletter.
-------------------------

With large cuts looming in the defense budget due to steep national deficits, however, the last thing the Navy wants to do is postpone a major block purchase of vessels that it considers central to its future war-fighting plans. Critics of the Navy’s purchasing plan nonetheless got some new ammunition — in addition to the embarrassing engine failures in the western Pacific — at a hearing by a House seapower subcommittee on July 25.

There, auditors at the independent General Accountability Office warned that the Navy plan was risky. In a 71-page report, the GAO urged that Congress restrict the purchase of new littoral ships until the Navy completes ongoing technical and design studies, figures out how much it will cost to fix the vessel's problems, and reports to lawmakers on needed changes. It also said the Navy should slow its purchases after 2015, pending a full-scale internal review of the program.

Auditor Paul Francis told the subcommittee that the ship isn’t scheduled to complete operational testing with its warfighting equipment until 2019. “It is a ship in full-rate production but its operational effectiveness will not be demonstrated for years,” Francis said. The Navy, he added, “still does not know how well the ships will perform their missions, how well its unique crewing and maintenance concepts will work, or how much it will cost to equip and support the ship.”

If all of the planned ships are built, the Navy says, they will eventually account for 17 percent of its total fleet. The Navy says that a speedy deployment of the vessels will itself save funds, since each ship would carry about half the crew of the conventional ships they are expected to replace.

But a GAO graph presented with Francis' testimony documented in blunt terms the Navy's shrinking ambitions for the ships (even as their costs rise sharply). It notes, for example, that the vessels were primarily developed for use in major combat, but now are considered acceptable to use only in a "benign, low-threat environment" unless escorted by other, more capable ships. Initially meant to be self-sufficient fighting vessels, they would actually need protection and support.

Problems in the vessels that were previously flagged by the GAO include hull cracks and a superstructure that needed redesign as well as repairs. When one of the ships traveled at high speeds, it shook so much that it was difficult to accurately fire the ship’s 57mm gun.

Designed to be sailed by small crews in a networked battlefield, each littoral ship is supposed to come with three weapons modules — for anti-mine, anti-submarine and surface warfare — that can be swapped out in a few days depending on the mission. But so far, the modules have performed poorly.

According to a March 2013 GAO report, two of those delivered to date failed to meet Navy’s requirements while the third had to be restarted because the initial design failed. An airborne laser mine detection system, the report said, had “challenges” identifying mines and needed redesign. The anti-submarine warfare module didn’t perform any better than existing systems. And the Navy decided to cancel the surface warfare module’s missile launch system and replace its missile with another.

“I don’t think we can be confident the mission modules can do what we say they can do,” Francis said at the hearing.

The GAO’s report was not the message the Navy wanted to hear. Assistant Secretary of the Navy Sean Stackley told the panel that while the littoral ship program had “critical flaws” when it began, those problems have largely been fixed and the ships and production of their modules is urgently needed. “Now is not the time to slow the program and add to the cost,” he said.

Stackley added that the delivery of the modules was “a textbook case of best practices,” adding that “the greatest risk to our mission package program is not technical. The greatest risk is sequestration and budget reductions.”

Rep. Duncan Hunter, R-Calif., and several other lawmakers questioned whether the Navy’s most pressing need was for a ship for battling swarms of boats and catching smugglers, given the rapid expansion of China’s military might. “If you had to go up against a China or a North Korea, the LCS is not the ideal ship,” he said. It might help stop an effort to close the Strait of Hormuz, the Gulf chokepoint for oil exports, he said, “but for the Asia pivot, it’s not what you want.”

Rear Admiral Richard Hunt, director of the Navy Staff, responded that the littoral ship would be “part of the mix” in such a conflict, and could make a contribution in all three of its roles — demining, anti-sub warfare and surface combat.

But other lawmakers asked Navy witnesses to address a famous 2011 complaint by the Pentagon’s Office of the Director of Operational Test & Evaluation that the Freedom was “unlikely to survive in a hostile combat environment,” due to its armaments and light armor as well as a hull considered prone to catching fire if struck.

Hunt responded that the ship was designed to operate with escorts in a “higher threat environment,” and that its low radar cross section, maneuverability and speed will help it avoid being hit. “It is good enough to protect our sailors and extract itself from a difficult situation,” he said.

Stackley added that the ship’s automated fire-fighting systems and watertight compartments are designed to ensure it survives an attack. But after that, it’s expected to withdraw, he acknowledged.

Sen. John McCain, R-Arizona, a Navy veteran and longstanding Armed Services committee member, plans to seek an amendment to the Senate’s defense bill imposing conditions on the program before the Navy purchases can go forward. “The Navy plans for the Littoral Combat Ship to comprise over one-third of the nation’s total surface combatant fleet by 2028, and yet the Littoral Combat Ship has not yet demonstrated adequate performance of assigned missions. We need to fix it or find something else rapidly,” he said during a hearing attended by Navy leaders in May.

A July 22 Congressional Research Service report on the littoral ships said that if Congress decides to reduce the number of the new ships, the Navy could take up the slack by refurbishing old vessels to sweep mines, equipping cruisers and destroyers with weapons to counter small boats and deploying helicopters and drones to battle diesel subs.

Not surprisingly, the ship’s manufacturers — Lockheed Martin, the Marinette Marine Corp, Austal Ltd., and General Dynamics — hate this idea. Altogether, the four companies have employed 142 lobbyists who said in filiings that they lobbied on behalf of the littoral ship or shipbuilding in general since the beginning of 2006, including 85 former members of Congress and their staff, according to an analysis of lobbying registrations by the Center for Public Integrity. The companies’ PACs and employees have contributed particularly heavily to members of the House seapower subcommittee, giving at least $526,000 since the start of 2009.

Six contractors were aboard the Freedom when it sailed across the Pacific this spring for its first overseas deployment, nearly four and a half years after it was commissioned, so they could troubleshoot any problems with its propulsion, lubrication and air conditioning systems.

The need for such a contractor repair team on board a ship raised some hackles among House appropriators. “Navy ships are normally deployed in top material condition to ensure the ship can remain underway to accomplish its mission,” the committee said in its June defense bill report. “The Committee is disturbed by the number of problems this ship has experienced on its maiden deployment that appear to be beyond the crew’s capability to handle, especially given that the LCS should have been in an extremely high rate of readiness.”

But they gave the Navy all the funds it wanted, anyway.

Data reporter Alexander Cohen contributed to this article.

The governor of Delaware and the mayor of Atlanta, whose campaigns accepted possibly illegal contributions from an embattled Washington, D.C., businessman, said this week they will be donating the funds to charity.

Delaware Gov. Jack Markell’s office said Thursday that he will give $28,050 he received from Jeffrey Thompson to several charities, including the Boys and Girls Club of Delaware. Thompson’s former accounting firm was referred to by federal prosecutors as an “assembly line” of illegal donations to various candidates.

Also this week, Atlanta Mayor Kasim Reed’s spokeswoman Sonji Jacobs said that the mayor has also donated Thompson-related funds to various local and national charities. She offered no further details other than to say the information would be reported in the mayor’s September campaign disclosure forms.

The announcements come a little more than a week after the Center for Public Integrity asked Markell’s and Reed’s offices about donations to their campaigns received from the D.C. businessman and employees of his accounting firm, Thompson, Cobb, Bazilio & Associates.

Markell and Reed join several other politicians, including President Barack Obama, Maryland Democratic Gov. Martin O’Malley and Sen. Tim Kaine, D-Va., who have donated or returned portions of campaign contributions tied to Thompson.

-------------------------
Don’t miss a single Center for Public Integrity investigation on dark money, lobbying, and political contributions. 
Sign up now to receive our Money in Politics newsletter.
-------------------------

Long a major behind-the-scenes power player in D.C. local politics, Thompson has been implicated as the financier of what federal authorities call an illegal $650,000 “shadow campaign” that helped D.C. Mayor Vincent Gray win election in 2010.

Thompson has not been charged with any wrongdoing. His house and former accounting firm were raided by federal agents last March and an associate pleaded guilty last summer to running the “shadow campaign.” Thompson sold his majority stake in the firm last year.

Last month an employee and a consultant for Thompson’s former firm pleaded guilty in the U.S. District Court for the District of Columbia to making so-called straw donations to several campaigns. The two men — Lee Calhoun and Stanley Straughter — made donations in their names and their family members’ names and were reimbursed by Thompson or his firm.

Following one of the plea deals, U.S. Attorney Ron Machen said Thompson’s firm doubled as an “assembly line” of illegal donations that used “a special accounting system to keep track of the thousands and thousands of dollars it was plowing into political campaigns."

Thompson’s old firm released a statement last month saying its “former CEO may have violated federal campaign law by giving directions to reimburse, with his own funds or with corporate funds, employees and others who made such contributions.”

A spokeswoman for Markell says Thompson’s firm hosted a fundraiser for the governor’s campaign in 2007.

“To the governor’s recollection, Mr. Thompson attended that fundraiser only briefly,” said Catherine Rossi.

Both Calhoun and Straughter, along with their wives, are listed as each giving $1,200, the maximum allowed by state law, each to Markell’s campaign.

Another Thompson associate, Jeanne Clarke Harris, pleaded guilty last summer to giving straw donations on Thompson’s behalf. Her company, Details International, is also listed as giving $1,200 to Markell.

“We are not aware of any allegations that contributions by Mr. Thompson’s associates to Markell for Delaware were reimbursed by Mr. Thompson,” Rossi said in an email to the Center. “However, given the circumstances surrounding the Thompson-related contributions to other campaigns and out of an abundance of caution, Markell for Delaware will make a contribution to charity in an amount of $28,050.”

Thompson has also been a generous donor to federal candidates and campaigns and hosted a fundraiser for former Secretary of State Hillary Clinton at his accounting firm the same year as Markell’s fundraiser. Clinton’s campaigns received more than $50,000 from Thompson and employees of his former accounting firm, federal records show.

Atlanta mayor Reed’s campaign records show that he received more than 40 donations totaling more than $65,000 from Thompson and his associates when he ran in 2009. Calhoun, Straughter and Harris are all listed as Reed donors.

Thompson and his employees also gave $40,000 to local candidates in Pennsylvania, including $20,000 in 2007 to Philadelphia Mayor Michael Nutter’s campaign. A spokesman for Nutter did not return emails seeking comment.

Thompson donated $10,000 to former Gov. Ed Rendell’s campaign in 2006. Thompson also gave $10,000 in 2005 to Steve Westly’s failed bid to be California’s governor.

New York City mayoral candidate Bill Thompson Jr. received several donations worth more than $20,000 from Thompson associates and employees in 2005 when Thompson Jr. ran for city comptroller. Thompson Jr.’s campaign received four donations of $4,950 on the same day: one from Harris, one from Calhoun, and two from other employees at Thompson’s accounting firm.

John Collins, a spokesman for Thompson Jr.’s current mayoral campaign, said that what Thompson and his colleagues did was “wrong and unacceptable” but did not say the candidate had returned the funds.

Thompson Jr.’s comptroller campaign account is currently dormant, making it difficult to donate to charity any Thompson-related donations, he said.

Allegations of racial profiling of black youth surfaced in Florida and other states long before this month’s jury acquittal of George Zimmerman — the Florida man who shot unarmed black teen Trayvon Martin dead in 2012 after calling police and reporting that a “suspicious” youth was in his neighborhood.

But last week, following Zimmerman’s acquittal, youth protestors took their anger to Gov. Rick Scott and began camping in front of the Florida governor’s office. The protestors, mostly from the group “Dream Defenders," say they will stay put until Scott calls a special legislative session on racial profiling and the state’s “Stand Your Ground” law.

“We think ‘Stand Your Ground’ has created a culture that allowed Zimmerman to think that what he did was okay," said protestor Gabriel Pendas, according to the Tampa Bay Times.

The Republican Scott, who met briefly with protestors last week, was quoted saying: “I believe 'Stand Your Ground' should stay in the books.”

The governor said he would not call a special session on the law, but he did tell protestors: "I agree with you, we should not have racial profiling."

Florida’s Stand Your Ground law was adopted by Florida’s Legislature in 2005.

The law wiped out a person’s “duty to retreat” if facing a threat, and allowed people to make self-defense claims after attacking or killing people in public areas. Since the law’s passage, justifiable homicides in Florida increased from an annual average of about 13 between 2001 and 2005 to a record 66 in 2012, according to the Florida Department of Law Enforcement.

The proposal was pushed by the National Rifle Association, which contributed heavily to Republican legislators running for office and who control the Sunshine State’s legislature, as the Center for Public Integrity reported.

At Scott’s request, Florida’s Department of Juvenile Justice Secretary Wansley Walters met with the young activists outside his office on Monday.

According to the Miami Herald, Walters discussed problems affecting youth, including the so-called “school-to-prison pipeline.”

The phrase refers to the argument, catching on among juvenile court judges and probation officers, that overly harsh school discipline of students — suspensions, expulsions, ticketing, arrests — can actually increase, not decrease, kids’ risks of going on to more trouble with law.

-------------------------
Don’t miss a single Center for Public Integrity investigation on approaches to handling young people at risk. 
Sign up now to receive our Juvenile Justice newsletter.
-------------------------

The National Council of Juvenile and Family Court Judges is urging schools to back away from sending students accused of relatively minor infractions into courts, complaining that such interactions only increase students’ risk of failure at school.

Walters, during her discussion with Florida protestors, reportedly told protestors: “I am not a supporter of zero tolerance. I think when you work with kids things should be handled on a case-by-case basis.”

While Scott seems unwilling to yield to protestors’ demands, Florida’s Democratic minority Senate leader, Chris Smith of Fort Lauderdale, said he’s calling for a hearing on the Stand Your Ground law in September. Democratic leaders of the state’s House of Representatives, also controlled by the GOP, backed Smith's idea.

At least 21 states now have Stand Your Ground laws similar to that in Florida, according to the National Conference of State Legislatures.

At a rally in Indianapolis on Saturday, protestors on Saturday also called for the creation of a committee to review Indiana legislation that allows the use of deadly force to prevent themselves or someone else from serious harm.

In Anchorage, Alaska, demonstrators in on Sunday gathered signatures for a letter asking the legislature and governor to remove Stand Your Ground language from a self-defense law that was signed into law June of this year.

The Urban Institute found in states with Stand Your Ground laws, racial disparities in the justice system are accentuated. In these states, the killing of black people by whites were more likely to considered justified than the killings of white people by blacks, according to the analysis.

A recent federal assessment of Medicare’s fiscal health contained a shred of good news — the public health insurance program for the elderly is burning through cash at a slightly slower rate than expected. Yet declining health care costs haven’t bought much time. According to that May report by the Boards of Trustees for Medicare, the program is slated to run out of money in 2026, only two years later than previously forecast.

In order to cut costs and put Medicare on a stronger footing, many health policy experts say the program must stop covering procedures that do little to improve patient health or are not worth the price tag. But the Centers for Medicare and Medicaid Services (CMS), the agency that administers the program, has for the most part failed to implement such cost-cutting measures, because its authority is limited, cuts are controversial and Congress frequently interferes.

Washington state, however, is making the tough choices. In 2006, the legislature in the Evergreen State established its Health Technology Assessment, a program that evaluates medical procedures and devices paid for by state public employee insurance, worker’s compensation and Medicaid, the joint federal-state insurance program for low-income individuals and families. The assessment program is run by a state-appointed committee of 11 practicing doctors, nurses and health professionals. It’s charged with ensuring covered medical care is safe, effective and worth the cost. Its decisions are binding.

Since the program’s inception, the committee has cut coverage for 21 medical procedures and devices and set strict conditions for covering others, many of which Medicare continues to pay for. The procedures include popular and expensive treatments like arthroscopic knee surgery, back pain injections, CT heart scans, and lumbar fusion. By state estimates, the committee has saved Washington more than $40 million a year. If Medicare had followed Washington state’s lead and cut funding for the same procedures, experts say it would have saved billions.

Limiting or rationing care paid for by public insurance programs is at the center of the broader health policy debates and pits fiscally minded experts against the medical industry and some doctors, who bristle at government interference in patient care. From the vantage point of Washington, D.C., Washington state’s ability to limit health care spending by cutting or rationing procedures — the “third rail” of federal health care politics — is nothing short of miraculous.

 But in Washington state, which is known for its progressive politics, the measure, requested by former Democratic Gov. Christine Gregoire, sailed through the legislature, albeit with an appeals process amendment the governor vetoed. “Medicare should be doing this, but it gets rolled by the Congress,” said Dr. Robert Berenson, a health policy expert at the Urban Institute and former commissioner of the Medicare Payment Advisory Commission (MEDPAC), an independent agency that advises Congress on issues affecting Medicare. Berenson pointed to several high-profile examples of Congress meddling with coverage policy, including the case of the late Sen. Ted Stevens of Alaska, who at the behest of the PET scan industry almost single-handedly forced Medicare to cover the scan as a test for Alzheimer’s, a policy that existing science did not support.

-------------------------
Don’t miss a single Center for Public Integrity investigation on ObamaCare, Medicare, and public health. 
Sign up now to receive special newsletters relevant to your interest.
-------------------------

Congress interferes with Medicare coverage directly, Berenson said, by making laws requiring that the program cover certain services, and it influences policy indirectly by putting pressure on CMS at the behest of patients and the medical industry. Berenson added that there is no political will to cut services to seniors, even if individual procedures are not proven or cost far more than other options. “People are afraid of being accused of rationing care, death panels, that sort of thing,” Berenson said.

Washington saves, Washington spends

Like Washington, Oregon and Minnesota also have public committees that use safety, effectiveness and cost considerations to limit insurance coverage. But Washington is known to be the most aggressive, which has attracted the ire of doctors, the medical industry and others. In 2011, when the assessment program challenged the cost effectiveness of unlimited glucose monitoring supplies for diabetic children, The Wall Street Journal editorial board called it the “pro-diabetes board.” The program ultimately decided not to make any change to the policy.

In Washington, D.C., both patient advocates and the medical industry find receptive ears in Congress when program cuts are proposed. Thomas Scully, former Medicare administrator under George W. Bush, said both political parties have a “Dr. Jekyll and Mr. Hyde” personality disorder when it comes to Medicare spending. Republicans tend to be fiscally conservative, yet they don’t want government bureaucrats mandating what gets cut. Democrats tend to be more comfortable with big-government policy solutions, yet they chafe at limiting care for seniors.

Scully, who supports giving CMS more ability to make cost-based decisions about care, said the shrill political rhetoric from detractors is usually “complete b---s---.” “Should price and comparative-effectiveness be a factor? Yeah. Could you take it too far? Possibly. But you’ve got a long way to go until then.”

To understand the extent to which Washington state differs with Washington, D.C. on science and cost-based coverage decisions, consider vertebroplasty and kyphoplasty, two high-cost types of spinal surgeries. In 2011, Washington state ended coverage for both procedures, which treat compression fractures of the spine. The same treatments cost Medicare a total of more than $40 million that same year. Researchers, however, say there is little evidence that the surgeries lead to better long-term outcomes than no treatment at all.

Between 2009 and 2011, the Health Technology Assessment also reviewed three common, expensive and controversial treatments for chronic back pain: spinal injections, spinal stimulation, and transcutaneous electrical nerve stimulation.

The assessment committee ended coverage for three types of spinal steroid injections, which are short outpatient procedures intended to reduce inflammation and pain. That saved more than $4.5 million a year, according to the state. It stopped paying for small surgically-implanted devices that send electrical pulses to the spinal cord, which saved $1.8 million yearly. It also ended payment for pocket-radio-sized “TENS devices,” which deliver electrical current to nerves via electrodes attached to the skin, which saved another $900,000.

In each case, the committee voted that the evidence did not show the procedures and devices were safe, effective, or worth the money. Yet Medicare continues to pay for all of these services, to the tune of $285 million in 2011 alone, according to government data. The situation is the same for many of the other 29 procedures or devices cut back by the assessment.

Josiah Morse, the director of the Washington program, downplays the role of cost in the decisions. Morse said in most cases there isn’t enough research on the cost-effectiveness of medical technologies, so the committee makes most of its decisions based on safety and effectiveness. Yet the result is a cost-savings bonanza for the state.

“The federal government right now is not where the action is,” said Larry Kessler, a professor and medical cost-effectiveness expert at the University of Washington School of Public Health. “If someone makes a gold-plated heart valve that cost a million dollars, if it’s safe and effective, the FDA has to approve it,” Kessler said. “[The] system is set up to allow products to go on the market regardless of our ability to pay for it as a nation.”

Coverage Policy: How Washington stacks up to Washington

There are a number of reasons why Washington state is more efficient than Medicare at limiting coverage for expensive or ineffective procedures. Most importantly, the Centers for Medicare and Medicaid Services have no authority to consider cost in their coverage policy decisions. By statute, Medicare is required to provide care that is “reasonable and necessary,” said Donald McLeod, a CMS spokesman. “If it works, we pay for it without regard to cost.” In fact, Medicare pays for many procedures, drugs, and devices that are not proven to work. In one high-profile 2011 case, for example, the program decided to continue covering the drug Avastin for breast cancer, even after the Food and Drug Administration revoked the drug’s approval for treating that disease because it was not shown to be safe and effective.

That’s not to say Medicare never excludes procedures. In one high-profile case, CMS in 2009 decided not to cover the imaging procedure virtual colonoscopy for colorectal screening after finding there is not adequate evidence that it provides health benefits. Yet decisions like this one are relatively rare.

In 1989, Medicare proposed adding cost as a criteria for coverage decisions, but withdrew the plan after a vast outcry by the medical industry. Health policy experts differ on whether or not the “reasonable and necessary” language prohibits CMS from considering costs without additional guidance from Congress.

But that’s unlikely to happen anytime soon. Indeed, Congress is giving the opposite message. The Affordable Care Act includes a provision expressly forbidding Medicare from using cost-effectiveness to determine coverage or reimbursement, which is a legacy of a political compromise intended to soothe Republican concern over bean counters rationing care for the elderly to save a buck.

Nonetheless, as part of the health care compromise, Congress has set aside a growing amount of money to research the science behind medical procedures. The health reform law established the non-government Patient Centered Outcomes Research Institute, which is funded by a tax on insurers. The institute will help direct comparative-effectiveness research. And the 2009 economic stimulus provided $1.1 billion for comparative-effectiveness research to compare drugs, medical devices and procedures to find out which work best.

Some prominent Republicans are particularly concerned that comparative effectiveness research will take medical decision-making away from doctors. During the 2009 debate over health reform legislation, Sen. Orrin Hatch, R-Utah, echoed the claims of comparative effectiveness research detractors — that since patients are unique, what works for one may not work for another. Hatch said that limiting the procedures doctors can offer sets them up for malpractice lawsuits. The research “gives trial lawyers a powerful, government-backed tool that will increase the number of frivolous lawsuits instead of containing skyrocketing costs of health care,” Hatch wrote in a press release.

But unlike the Washington state program, federal initiatives on comparative-effectiveness research are purely advisory. The experts do not set policy, which leaves the process open to politics and health industry influence.

“I think they do not have the structure that made our program successful,” said Leah Hole-Curry, program director of Washington’s Health Technology Assessment until 2011. “If they [CMS] get a powerful group of representatives who think they made a bad decision, ultimately that’s who they report to.”

Hole-Curry said Washington state puts little stock in Medicare coverage decisions when it considers the same procedures. “There is low trust that the evidence becomes the basis of the decision, especially if it’s highly political,” she said. “There is a perception that CMS has to play within Washington, D.C., rules.”

Medicare coverage policy most often set far from D.C.

Yet when it comes to setting Medicare coverage policy, relatively few decisions are actually made in Washington, D.C. The Centers for Medicare and Medicaid Services administers the program, but the nuts-and-bolts processes of running the program, including making coverage decisions and paying claims, are performed mostly by private insurance companies that contract with the federal government. Each year, Medicare does institute a dozen or more “national coverage decisions,” often on high-profile or costly procedures. Other procedures are subject to so-called local coverage determinations by the regional insurance contract administrators. The result is a fragmented program in which a procedure Medicare pays for in New York is not necessarily covered in Kansas.

Detractors concede Medicare does not have the manpower to take on coverage decisions for all procedures, but they say regional administrators are frequently swamped by the influence of drug makers, medical device companies and local physicians, who often believe procedures work, even if the prevailing science says otherwise. Further, gathering and analyzing the data is time-consuming and expensive, and contractors have little incentive to put much effort into the process.

“If you are the contractor and you get paid for efficiency in processing claims, what’s the benefit of holding them up?” said Susan Bartlett Foote, a health policy expert and professor emeritus at the University of Minnesota School of Public Health.

When Medicare does go through the national coverage determination process, it is often swamped by the influence of physicians and manufacturers, as in the 2007 case of cardiac CT scans, a radiology procedure used to diagnose heart disease. CMS medical officers determined that there was little evidence supporting the scans. Yet when CMS released a proposed decision that would have put strict limitations on the procedure, the radiology industry mounted a frantic lobbying campaign that resulted in Medicare backing down.

Foote said Medicare coverage decisions traditionally influenced the coverage policies of state and private insurers, but she said that’s changing as private insurers and states like Washington have become more savvy at doing their own research. That has led physician groups and other medical industry interests to “coverage shop,” particularly when introducing a new technology or procedure. “They are always looking for what’s the best place to get something positive,” said Foote. They then leverage a positive outcome to push for coverage from other payers. “They will say, ‘Blue Cross Blue Shield was positive, so you better take a second look,’ ” Foote said.

Washington state faces industry pressure

Coverage shopping also means the decisions of Washington’s Health Technology Assessment have the potential to reverberate far beyond the state; medical societies and device manufacturers worry that failure to win a coverage battle in Washington could lead to lost coverage in other states. As a result, there’s strong industry interest in the program. In the years since 2006, when Washington passed the law establishing the assessment,  the medical industry has tried to limit the damage by pushing for more influence, Hole-Curry said. There have been failed requests for the committee to follow care guidelines set up by medical specialty societies and include “subject matter experts” as voting members of the panel.

The committee, which is supported by three full-time staff, holds public meetings, usually four times a year, to decide coverage rules based on evidence it receives from contracted researchers. Industry and the public have a chance to weigh in during the public comment period, which is 30 minutes at the end of each meeting. “There are some that say the program is not transparent enough,” Hole-Curry said. “I would recast that as there is not enough ability for industry to influence the program.” The program’s annual budget is $1.2 million.

That’s not to say that industry, and beneficiaries, have been unable to influence Washington decisions. When the program considered setting limits for glucose monitoring supplies for children (which Hole-Curry said account for two-thirds of the cost of treating diabetic patients in the state) it faced organized resistance by parents who protested that their children would die without unlimited supplies. “It was pretty effective, I must say,” Hole-Curry said. Diabetic children covered by state-funded programs continue to receive unlimited glucose monitoring supplies, unlike adults.

But so far, Washington’s legislature has not bent to industry pressure and continues to leave coverage decisions to the group of medical experts it assigned the task.  And other states are taking notice as they struggle with rising costs, especially for Medicaid. They have to, said Mark Gibson, director of the Center for Evidence-based Policy at Oregon Health & Science University, which staffs an evidence-based decision advisory project with 13 member states as diverse at New York and Arkansas. States, which are required to balance their budgets “can’t say, ‘we’ll borrow money to pay for it later like the federal government does,’” Gibson said.

At the federal level, however, Berenson of the Urban Institute says there is little will to follow Washington state’s path. “Congress is very proud that CMS does not do evidence-based coverage policy,” he said. That sort of policy, he said, “is currently a lost cause.”

If you pay attention and listen closely, you can hear it.

That’s the sound of the death rattle. Soon we’ll need to put the undertakers and gravediggers on notice. 

It is just a matter of time, no more than a few years, before we will be bidding farewell to the U.S. health insurance industry as we have grown to know it.

The big New York Stock Exchange-listed insurance firms have known for several years that their core business models are not sustainable, but they have dared not talk about it publicly. The demise of those companies started way before Barack Obama was elected president but, with the passage of ObamaCare, it has accelerated.

It is ironic, but the companies have become victims of their own success, or more accurately, victims of the prevalent industry business practices that contributed to that success.

Even more ironic: these companies, which got their start by assessing and assuming risk, have gone to great lengths in recent years, because of pressure from Wall Street, to shun as much risk as possible. That’s why with one notable exception — WellPoint — the big for-profit “insurers” are not looking at the new health insurance marketplaces, which will go online October 1, as opportunities. Aetna, Cigna and UnitedHealthcare have all said they will be participating in only a few of those state-based marketplaces, at least in 2014.

The big companies turned away from risk after realizing they could better meet shareholder profit expectations by simply administering the health care benefits of large employers, most of which now assume the financial risk of providing coverage to their workers.

As the big “health services companies” — the firms previously known as insurers — have competed aggressively for those clients, they have jacked up the premiums for their individual and small business customers to the point that both “covered lives” and revenues from the real insurance they sell have dwindled.

-------------------------
Don’t miss a single Center for Public Integrity investigation on ObamaCare, Medicare, and public health. 
Sign up now to receive our Health newsletter.
-------------------------

Only about 15 million Americans — less than 5 percent of the U.S. population — have sufficient resources to buy coverage on their own in the so-called individual market these days because of the hefty premiums. Many Americans who have been sick in the past can’t buy coverage at any price because insurers won’t sell it to them. And far fewer small businesses offer coverage to their employees now than a decade ago for the same reason: the premiums have become unaffordable. That is why almost 50 million of us are uninsured.

But just because the big companies are taking a wait-and-see approach to the new insurance marketplaces doesn’t mean there won’t be plenty of smaller companies competing for millions of individuals — individuals who work for small employers that no longer can afford to provide health benefits. One of the good things about ObamaCare is that by banning the discriminatory practices that have defined the industry for years, and requiring much more transparency in pricing, insurers will no longer be able to cherry pick the customers they want or entice us into buying plans that are profitable for them but of limited value to us.

And other provisions of ObamaCare will lower the barriers to new entrants in the health insurance market. New York, for example, recently granted a license to a new insurer — called “Oscar” — which has the potential to revolutionize the marketplace. New Yorkers and residents of at least 20 other states will also have new non-profit co-op health plans available to them on the online marketplaces.

Because these companies will not have the huge and costly bureaucracies of the big firms — and won’t have to answer to Wall Street — they will be able to offer policies with more affordable premiums than we’ve seen in the past. And the federal government will provide subsidies to millions of Americans to help them pay their premiums.

These changes will be transformative, in ways we can’t even imagine today. And the most recognized brands in today’s health insurance market will be known for something else. Not health insurance.

Don’t believe me? Well just look at history.

The big five “insurers” — Aetna, Cigna, Humana, UnitedHealth and WellPoint — have all changed radically in the past 25 years ago. When I went to work for Humana in 1989, it was known primarily as a hospital company. When I joined Cigna in 1993, it was a big multi-line insurance corporation, as was Aetna. Both had big property and casualty and financial services divisions. Under pressure from shareholders and Wall Street financial analysts, they sold those divisions to focus on managed care.

The other big multi-line insurers at the time were Prudential, which sold its health care operations to Aetna in 1999, and Travelers and MetLife, whose health care businesses are now part of UnitedHealthcare. United, now the largest of the big five, has only been around as a publicly traded company since 1984. WellPoint, the second largest, just turned 21 this year.

The point is this: big stock companies change rapidly in response to changes in the marketplace and the changing expectations of shareholders.

Five years from now, those companies will be largely unrecognizable. And their health “insurance” divisions will have been dispatched to the dust bin of business history. If not the cemetery.

Tailoring U.S. foreign aid programs to produce stability in Afghanistan has been an uphill slog. Lawmakers and auditors have repeatedly complained that gains have been small while costs have been high. So in December 2011, the U.S. Agency for International Development (USAID) started a new $203 million program to distribute aid quickly through provincial governments, in hopes of meeting urgent needs and strengthening local authorities.

A year and a half and nearly $50 million later, however, the program has awarded only a few grants and has so far spent most of the funds — at least $47 million — on overhead and meeting costs, activities of the sort that Washington specializes in. One USAID contractor said some of its employees expressed worry that the drawn-out grant process could “expose them to physical risk from angry local representatives or constituents,” according to a new Special Inspector General for Afghanistan Reconstruction (SIGAR)  report on the program.

The Stability in Key Areas program’s work to date has mostly consisted of training sessions, planning workshops, and communications tutelage for farmers, youths, women, and others. But it has yet to award funding for road graveling, dams, wells, canal construction, and other development assistance that auditors said USAID promised it would undertake to reduce poverty and improve Afghani lives.

One training session provided guidance to local government staff in a district known as Pusht-e Rod on how to conduct press interviews and “to bridge and spin” answers to the media, according to a quarterly report by one of USAID’s contractors. In the first three months of this year alone, one of USAID’s principal contractors — AECOM International Development — held 73 workshops or training sessions, many related to planning for grants.

In statement released with the report on July 29, Special Inspector General John F. Sopko called the findings “troubling.” He said “this looks like bad value for U.S. taxpayers and the Afghan people.” The report complained that auditors had no way to assess if these planning meetings are worthwhile until grant projects get off the ground.

As of July 1, USAID officials reported the program had 119 local community grants underway and paid out $285,194 in grant money. But this accounts for less than 1 percent of the $46.5 million specifically set aside for this purpose. The program awarded no grants at all in its first sixteen months, a delay that USAID blamed mostly on difficulties reaching a written agreement on the program with the Afghanistan government.

-------------------------
Don’t miss a single Center for Public Integrity investigation on defence spending. 
Sign up now to receive the Center's National Security email newsletter.
-------------------------

The slow pace has caused some “district stakeholders” to accuse contractor staff of “incompetence or even deception,” Sopko’s report stated. Several Afghan participants said they felt fatigued from the seemingly never-ending planning workshops. The report warned that “such disappointment may actually result in further destabilization of the Afghan government” — the opposite of what the program was meant to accomplish.

Sopko’s report called it “disconcerting” that USAID didn’t secure the government’s agreement before launching the program. But in a July 18 letter to Sopko, Sarah Wines, USAID’s acting mission director, emphasized that grants are just one part of the program’s efforts to stabilize the country. Contract officials must first talk with community members, identify problems and build relationships between government authorities and community groups before giving out awards, she said.

She said that ensuring these talks are successful is more important than giving out a large number of grants. Wines added that areas with weak local governments require more time to talk, plan and address problems before project funding can be awarded.

USAID said in a statement July 29 that the program has approved nearly 200 grants for $5 million, and will begin to more quickly distribute money under these grants in the coming months.

USAID’s contracts for the program with AECOM, a Fortune 500 company headquartered in San Francisco, and with Development Alternatives Inc. (DAI), a longstanding USAID contractor headquartered in Bethesda, Md., state that grants are “essential to … achieving the overall strategy and expected results.”

SIGAR’s audit, conducted from February to July 2013, said the initial contracts, all awarded by April 2012, were supposed to last 18 months. But the delays caused USAID to extend three of them.

AECOM officials did not respond to a request for additional comment by deadline July 29.

DAI spokesman Steven O’Connor echoed Wines’ comments that in order for grant projects to be successful, the program must first build up local governments in challenging areas of Afghanistan — a process that does not happen overnight.

“It’s not like people are sitting around twiddling their thumbs,” O’Connor said. “To disparage training sessions and community sessions is not helpful.”

A company run by Jonnie Williams Sr., the businessman whose gift giving to Virginia Gov. Bob McDonnell has drawn the scrutiny of federal law enforcement officials, donated more than $16,000 to the Republican Governors Association while McDonnell was in leadership positions at the organization, IRS records show.

The four in-kind donations from Williams’ company, Star Scientific, made while McDonnell was vice chairman and chairman of the RGA, could be for flights on a private jet.

These contributions, which have not previously been reported, add more items to lengthy list of gifts, loans and donations Williams has provided the governor, his family and his related organizations. McDonnell issued a public apology last week for embarrassing the commonwealth and repaid Williams $120,000 worth of loans.

Star Scientific is a Virginia-based dietary supplement manufacturer that is listed as having given nearly $9,000 to the RGA in 2011 and nearly $8,000 in 2012. The gifts come despite the company’s poor economic performance. Star Scientific lost $22.9 million in 2012 and $38 million the year before, and has lost money for ten straight years.

The donations are listed on RGA’s disclosure forms with the IRS as in-kind donations for “travel.”

The records don’t disclose what kind of travel was provided or for whom, and an RGA spokesman did not respond to multiple emails seeking comment.

But the dates of at least two of Star Scientific’s donations coincide with two out-of-state trips by McDonnell that helped boost his national profile, including a national TV appearance in New York City and a campaign event with GOP presidential candidate Mitt Romney.

-------------------------
Don’t miss a single Center for Public Integrity investigation on dark money, lobbying, and political contributions. 
Sign up now to receive our Money in Politics newsletter.
-------------------------

Star Scientific has donated more than $108,000 worth of private jet use to McDonnell’s 2009 campaign for governor and to his political action committee, Opportunity Virginia PAC, according to multiple media reports. Those donations were listed as in-kind travel contributions in state forms, according to the Virginia Public Access Project’s online records.

"They used the company plane to get from A to Z all the time," Jerry Kilgore, an attorney representing Star Scientific CEO Jonnie Williams, told the Washington Post in March.

Federal and Virginia law enforcement officials have been probing McDonnell’s relationship with Williams for at least several months, according to local media reports. Williams has showered McDonnell and his family with gifts, including a $6,500 Rolex, a suede jacket that cost at least $10,000, the use of a Ferrari and $15,000 for the catering at the wedding of one of McDonnell’s daughters, according to media reports.

Last week, McDonnell issued a statement saying he’d paid Williams back more than $120,000 in loans Williams had provided to McDonnell’s wife and a McDonnell-owned real estate company.

“I am deeply sorry for the embarrassment certain members of my family and I brought upon my beloved Virginia and her citizens,” McDonnell said in a statement. “I want you to know that I broke no laws and that I am committed to regaining your sacred trust and confidence.” 

Star Scientific has a long-running tax dispute with the state that may cost the company $1.7 million and has sought help from state officials for help promoting Anatabloc, a dietary supplement. McDonnell has said the company received no special treatment.

As governor, McDonnell has state-owned aircraft at his disposal. In 2011, the Postreported that McDonnell’s use of two state-owned airplanes and four helicopters had cost the state more than $200,000 for his trips both in and out of state.

Tucker Martin, a spokesman for McDonnell, said the governor’s travel on RGA-related business wouldn’t be paid for by the commonwealth.

“If the travel was related to the RGA, they would be responsible for the costs of that trip,” Martin said.

The D.C.-based RGA is one of the most active, well-funded and effective independent groups in state-level politics. Acting as a central depository and distributor of funds from wealthy individuals and corporate treasuries that are used to underwrite governors’ races in the states, the RGA put nearly $2 million into McDonnell’s 2009 campaign.

McDonnell also maintains close ties with the organization: Phil Cox, who served as McDonnell’s campaign manager, is the RGA’s executive director. The RGA’s finance director, Paige Hahn, was previously a fundraiser for McDonnell’s campaign.

McDonnell became vice chairman of the RGA in November 2010 and took over as chairman from Texas Gov. Rick Perry in August 2011 when Perry launched a presidential campaign. McDonnell’s term as chairmanship was an opportunity for an already ascendant politician to strengthen and develop ties with key donors and political operatives around the country.  

On Sept. 26, 2011, the RGA reported a $6,319 in-kind donation from Star Scientific. That same day, McDonnell’s official schedule said he participated in an education forum with several other governors hosted by NBC News’ Brian Williams in New York City.

Later that day, McDonnell was the featured speaker at a Republican Party fundraiser in New Hampshire, where attendees paid $100 per ticket and an extra $75 to have a picture taken with McDonnell, according to the Richmond Times-Dispatch. McDonnell’s wife, Maureen McDonnell, and two aides, including Cox, accompanied the governor to New Hampshire, according to the Times-Dispatch.

On Aug. 23, 2012, McDonnell appeared at a campaign event with GOP Presidential candidate Mitt Romney and nine other Republican governors in Aspen Colorado, where the RGA was having a meeting, according to a report by The Associated Press. That same day, the RGA reported a $4,293 in-kind donation for travel from Star Scientific a day after the event.

Star Scientific’s in-kind travel donations made in 2011 and 2012 are the only contributions the company has ever made to the RGA.

Rich Galen, the privately funded spokesman McDonnell hired to handle questions related to Williams’ relationship with the governor and to the RGA, said he had “no idea” about the nature of Star Scientific’s donations to the RGA.

Kilgore, Williams’ attorney, declined to comment citing an “ongoing investigation.”

It’s not uncommon for corporate entities to donate private flights to governors of both parties through the RGA or its Democratic counterpart, the Democratic Governors Association.

In 2005, Mitt Romney, who was governor of Massachusetts at the time, drew criticism for a private flight he took paid for by pharmaceutical giant Pfizer through the RGA. And former New Mexico Gov. Bill Richardson had to defend his use of corporate jets paid for by a tobacco company and a payday loan firm when he was chairman of the DGA from 2004 to 2006.

RESEARCH TRIANGLE PARK, N.C. — In the 1980s, toxicologist James Huff was a bane of industry’s existence.

A blunt Philadelphian, Huff helped supervise animal tests here at the National Institute of Environment Health Sciences, part of the National Institutes of Health. Mice and rats were dosed with chemicals, and Huff and his colleagues publicized the results when tumors sprouted. People needed to know about “blowout” carcinogens, Huff said. He didn’t care who was upset.

Now, three decades later, Huff cites industry’s growing and “perverse” influence on science. “They’re more clever, more sophisticated,” said Huff, 75, who retired this year but remains a guest researcher at NIEHS. “They spend a lot of time in Congress.”

Increasingly, industry is targeting Huff’s former employer and its parent, the Department of Health and Human Services — in particular, HHS’s Report on Carcinogens. Two lobby groups sued the agency after two widely used chemicals were listed in the report. In a victory for industry, lawmakers mandated additional, ongoing scientific reviews of the document. And, a trade association representing makers of fiber-reinforced plastics claimed credit for a congressional hearing last year that evolved into an open airing of industry grievances.

All this comes while the chemical industry is building muscle: In the midst of a prodigious expansion due to the availability of cheap natural gas, it spent $55.7 million on lobbying in 2012 — twice what it spent 10 years earlier, according to the Center for Responsive Politics.

The push may be having an effect. In June, for instance, two Republican members of the House Committee on Science, Space and Technology sent a letter to the director of the NIH, complaining about a journal article by NIEHS Director Linda Birnbaum.

The article — “When environmental chemicals act like uncontrolled medicine” — was published in the peer-reviewed Trends in Endocrinology & Metabolism. Birnbaum cited striking increases in diseases such as prostate cancer and breast cancer over the past 40 years and concluded, “Clearly we must look to the environment as the primary cause of such increases because the human genome has not changed over the same time period.”

-------------------------

Don’t miss a single Center for Public Integrity investigation on the environment. 
Sign up now to receive special newsletters relevant to your interest.
-------------------------

Her conclusion did not sit well with Reps. Paul Broun of Georgia and Larry Bucshon of Indiana. “Some of Dr. Birnbaum’s statements sound less like a presentation of scientific data and more like an opinion,” Broun, who chairs the Science Committee’s Subcommittee on Oversight, and Bucshon, who chairs the Subcommittee on Research, wrote in a June 13 letter to Birnbaum’s boss, NIH Director Francis Collins.

It was unclear, they contended, “whether the article represents Dr. Birnbaum’s personal views or reflects Administration policy,” raising “questions about the NIH commitment to transparency.”

The Republican-controlled Science Committee is facing transparency questions of its own. Critics, including a former member, say the committee has become a surrogate for industries that feel threatened by researchers like Birnbaum, who told the Center for Public Integrity her article was “appropriately cleared” by NIH officials.

“The tenor of the hearings in the last two years has been to attack scientists — particularly environmental scientists like Linda Birnbaum — on behalf of the industries that are affected,” said Brad Miller, a former Democratic congressman from North Carolina who served on the committee for a decade until January 2013. “I think it does affect the agencies’ conduct. They try to do their analyses in a defensive crouch because they are anticipating criticism for everything they do.”

Birnbaum, who oversees the NIEHS’s National Toxicology Program, which has tested nearly 2,900 chemicals for carcinogenicity and other health effects, has become a favorite target. Miller, now with the liberal Center for American Progress, said he suspects Broun and Bucshon wrote their letter “because her scientific work has caused some discomfort” in industry circles.

Broun is a physician and U.S. Senate candidate who has called man-made climate change a “hoax” and characterized evolution and the Big Bang theory of the universe’s early development as “lies straight from the pit of hell.” Bucshon, also a physician, is a self-described “long-term friend of coal.” Since 2010, each has received donations from political action committees for coal, oil and chemical companies.

Both declined interview requests from the Center.

In a written statement, Science Committee Chairman Lamar Smith, R-Texas, said the committee “invites a balanced panel of witnesses from across the spectrum” to hearings and encourages “an open, public and full discussion of issues.” Smith has received contributions from oil and chemical company PACs; the money, he said, had no impact on his actions.

‘Show trials’

Miller maintained that a number of committee hearings since the GOP takeover of the House in 2011 have been “show trials” designed to intimidate government scientists and promote pro-business positions.

On April 25, 2012, for example, the Subcommittee on Oversight (then called Investigations and Oversight) and the House Committee on Small Business’s Subcommittee on Healthcare and Technology convened to examine the science behind the Report on Carcinogens, a congressionally mandated document updated every few years by the National Toxicology Program.

The hearing turned into a gripe session for proponents of styrene, a chemical used in automobile and boat parts, rubber carpet backing, disposable cups and other products, that had appeared for the first time in the report the year before. Styrene had been listed as “reasonably anticipated to be a human carcinogen,” based on studies that found excesses of leukemia and lymphoma among workers exposed to the chemical and mouse studies that produced lung tumors. An industry group, the Styrene Information and Research Center, already had sued the Department of Health and Human Services over the listing, and its allies were eager to vent in Room 2318 of the Rayburn House Office Building.

Broun opened the hearing by saying that “concerns have been raised about how the [Report on Carcinogens] is developed and how its findings are communicated.” He called it a “highly influential” document used by regulatory agencies to make policy and cautioned against “arbitrary or capricious” condemnation of chemicals. “When concerns and fear are promoted with little actual risk,” Broun said, “commerce, small businesses and everyday citizens are impacted with no appreciable benefit to their safety.”

Rep. Paul Tonko, D-N.Y., deemed the witness lineup “very disappointing. In theory, we are examining the National Toxicology Program’s 12^th Report on Carcinogens. In reality, we are hearing the objections of one industry to the listing of one chemical. There is virtually no balance here, in my opinion, today.”

Birnbaum explained that preparation of the report, which lists 240 substances as either known or probable cancer-causing agents, was a multi-step process that “included expert advisory reviews, independent external peer review and drew upon the scientific expertise” of agencies such as the Centers for Disease Control and Prevention. Public comments were solicited six times, she said.

Critics were not persuaded.

A toxicologist with Dow Chemical Co., speaking on behalf of the styrene research group, questioned the scientific rigor of the National Toxicology Program. The vice president of a small manufacturer of custom showers and vanity tops said the listing of styrene “could make it very difficult for us to stay in business.”

The environmental affairs manager of a company that makes ballistic panels for the military said the firm had been receiving “anonymous phone calls saying things like ‘You do know that styrene causes cancer, don’t you?’ ” An official with the Small Business Administration warned that users of styrene faced tort lawsuits, higher insurance costs and more regulations.

Then-Congressman Miller, who’d chaired the Investigations and Oversight subcommittee before Broun took over, reminded his colleagues that “the styrene industry’s lobbyists do take credit for having scheduled this hearing.”

The American Composites Manufacturers Association later reported in its newsletter that it had convinced Congress to hold two hearings and a roundtable discussion on styrene and had “built a record” against the National Toxicology Program. “Unlike the industries that conceded after their product was listed,” the association said, “ACMA continues to work to remove styrene” from the report.

‘Truth in testimony’

“When substances are found to be harmful, we should make every reasonable effort to minimize the public’s exposure,” Rep. Smith wrote to the Center. He noted, however, that witnesses testifying before the Science Committee had seen room for improvement in the Report on Carcinogens, whose classifications “have the potential to be confusing.”

All witnesses sign “truth in testimony” agreements, Smith wrote, in which they disclose “relevant financial information. This agreement includes all information that is required to be disclosed under House Rules.”

Those rules allow wiggle room. A witness is asked, for example, whether he or she has received federal grants or contracts — but not whether they’re a paid consultant for, say, a chemical company. Democrats on the Science Committee tightened the rules to require such disclosure, but Republicans undid the change after they assumed control. Smith explained that the current rules maintain a “fair balance,” allowing the public to view the witness forms online without revealing too much “personal or sensitive financial information.”

Witnesses’ bonds to industry aren’t always obvious. At a May 2011 hearing, for instance, Michael Economides, identified as a professor of chemical and biomolecular engineering at the University of Houston, testified against stricter regulation of the controversial oil and gas drilling technique known as hydraulic fracturing. Under questioning from Miller, Economides said he was paid $1 a year by the university as an adjunct professor but made about $1 million annually from his oil and gas consulting firm.

In a telephone interview, Economides said, “I’m independent. I don’t belong to the oil companies. I just happen to know the technology and I teach it.” His résumé is publicly available, he said: “I don’t have anything to hide.”

Other witnesses who presented themselves as independent scientists or testifying on their own behalf turned out to have strong industry ties.

At a hearing in June, Jeffrey Holmstead, head of the Environmental Protection Agency’s air office under George W. Bush and now a partner at Bracewell & Giuliani, a Washington lobbying firm, said he was speaking in his personal capacity when he argued against a tougher EPA standard for ozone, a form of smog generated by industrial operations and motor vehicles. Holmstead’s firm has brought in nearly $24 million in fees from electric utilities and oil and gas companies since he took over its Environmental Strategies Group in 2006, records show.

“I didn’t consult with any clients before preparing my testimony or give anyone a chance to look at it, so it’s not as if I’m representing anyone’s point of view other than my own,” Holmstead said by phone. “I actually think [ozone regulation] is a very important issue, and it kind of trivializes it if you’re just talking about disclosure stuff.”

But Science Committee member Donna Edwards, D-Md., said, “It seems to us that there were instances that people appeared before our committee as independent experts when in fact they were industry lobbyists. We need to know that in advance.”

When Miller was its chairman, it was not uncommon for the Investigations and Oversight subcommittee to go after research and regulatory agencies for doing too little to protect public health, not too much. The Agency for Toxic Substances and Disease Registry, part of the CDC, was skewered at hearings on high levels of formaldehyde in trailers supplied to victims of hurricanes Katrina and Rita by the federal government, and on a cancer cluster linked to tainted well water at the Marine Corps’ Camp Lejeune in North Carolina.

Now, Miller said, hearings are constructed to “attack science as being incomplete, haphazard, half-assed. You’re never going to get a scientist to say, ‘No, we don’t need more research, we’re certain of this result.’ We need to have action on environmental exposures on the basis of the science we have at this point. We’re pretty sure there are chemicals that are doing bad stuff to adults and especially children.”

Tangling with industry

Birnbaum, director of the NIEHS and the National Toxicology Program since 2009, believes industry attacks on public health research have become more strident. She disputes allegations that her agency cherry-picks science to build cases against certain chemicals.

“We are the one federal agency that is not only developing new tests but conducting new tests and evaluating the potential toxicity of a variety of environmental chemicals and other kinds of public health hazards,” Birnbaum said. “Our evaluations are extremely transparent.”

James Huff joined the National Toxicology Program as it was ramping up in 1980 and remains an ardent defender.

Huff tangled repeatedly with industry over the branding of chemicals as confirmed or likely carcinogens following animal tests, known as bioassays. NIEHS had inherited the nascent bioassay program from the National Cancer Institute.

“They had a slew of publications that were sitting around,” Huff said of the NCI. “One of the things I was asked to do was scientifically beef up the technical reports that came out from each bioassay on rats and mice. We started knocking them out and presenting them at national meetings.”

Between 800 and 1,000 animals are used for each experiment; they eat, drink, inhale or absorb through the skin the chemical being tested. After two years, the animals that are still alive are killed and their organs examined for tumors.

“There’s nothing that has been as successful as the bioassay” for identifying human carcinogens, Huff said. “The problem is, it’s expensive, and it takes a long time, and then you have to fight industry when it’s one of their chemicals.”

This happened, for instance, with 1,3-butadiene, a chemical used to make synthetic rubber that was tested by the National Toxicology Program in the 1980s. “It was so carcinogenic that there were hardly any animals left after 50 weeks, so we cut the experiment down to 60 weeks instead of 104,” Huff said.

Representatives of the rubber industry asked Huff and his colleagues not to present or publish their results until the industry did its own studies. “We said, ‘Hell no, we’re not waiting,’ ” Huff recalled. “They were just devastated that we were coming out with this stuff.”

At the time, the workplace exposure limit for the chemical was 1,000 parts per million. It was lowered to 1 ppm in 1997, largely “because of our studies,” Huff said. Even that limit may be too high: “We still don’t know at what dose in animals butadiene is not a carcinogen.”

Some industry-backed scientists are dismissive of bioassays, saying tumors in rodents don’t necessarily portend tumors in humans. Huff, whose name appears on some 400 peer-reviewed papers, says industry has become more “formidable” in challenging such tests. “They know more. Government, likewise, seems to be more receptive to their arguments.”

As of August 2011, the American Chemistry Council, a trade association that represents companies such as Dow and ExxonMobil, had 53 panels devoted to chemicals from acetone to vinyl chloride, the council’s CEO and president, Cal Dooley, wrote in responses to questions from Rep. Edwards. The panels spring into action – with research and advocacy – when regulations are proposed or products otherwise come under scrutiny. They and other council divisions spent a combined $45.5 million on research from 2008 to mid-2011, Dooley wrote.

Years ago, Huff said, “You either got funded from the National Academy [of Sciences] or NIH or you didn’t get any money. The whole thing has shifted. There’s been a ton of money coming in from industry.”

This phenomenon carries risks, a 2012 report by the Union of Concerned Scientists, a nonprofit environmental advocacy group, concluded: “When funding their own studies, corporations may terminate or fail to report research with negative findings, tailor study designs to lead to desired outcomes, and overreport positive results. Companies may rely on the names of respected academics to publish corporate-funded research. And they may attack scientists whose research proves inconvenient.”

There is no reason to anticipate a letup. The natural gas drilling boom under way in Texas and other states, made possible by hydraulic fracturing of shale deposits, has prompted expansion plans by a host of chemical companies that use ethane – a natural gas liquid – as a feedstock. In a recent report, the American Chemistry Council said that nearly 100 projects, valued at $71.7 billion, had been announced as of the end of March.

Backlash against carcinogens report

Birnbaum, a toxicologist with more than 600 peer-reviewed publications on her curriculum vitae, spent 19 years with the EPA — “the federal government’s worst offender when it comes to overreaching regulations,” according to Congressman Smith — before coming to NIEHS.

She was sorely tested by the 12^th Report on Carcinogens, the 2011 document that listed styrene as “reasonably anticipated” to cause cancer and bumped up formaldehyde — used in adhesives for pressed-wood products and as a preservative in mortuaries and medical laboratories — from “reasonably anticipated” to “known to be a human carcinogen,” mainly on evidence that it can trigger leukemia. Two years earlier, a working group of the International Agency for Research on Cancer, part of the World Health Organization, had found “sufficient evidence” that formaldehyde caused leukemia.

The Report on Carcinogens’ 462-page styrene background document had 551 scientific references; the 512-page formaldehyde background document had 798. “We followed a very detailed process, which had been vetted extensively,” Birnbaum said.

Nonetheless, the report’s publication touched off a burst of activity. In June 2011, the Styrene Information and Research Center sued the Department of Health and Human Services, contending the styrene listing was “contrary to the weight of scientific evidence and opinion” and asking that it be struck from the report. This May, the U.S. District Court for the District of Columbia ruled in HHS’s favor, saying the report’s conclusions were well-documented and decrying the styrene group’s “scattershot approach in attacking [HHS’s] listing decision.”

The styrene research center — whose lobbying expenditures went from zero in 2009 to $570,000 in 2011, records show — did not appeal. Scientific evidence available to the National Toxicology Program while the Report on Carcinogens was under review “supported a conclusion that styrene does not represent a human carcinogen concern at any levels of exposure which the workers or the public might reasonably experience,” the group wrote the Center.

The American Chemistry Council twice sued HHS, seeking to obtain data underlying a federally funded study out of the University of California, Berkeley, linking formaldehyde to leukemia. The study helped inform the listing in the Report on Carcinogens. Dissatisfied with what it received through a Freedom of Information Act request, the chemistry council claimed HHS had violated federal law by refusing to release information. HHS said it had turned over all the pertinent records it could find.

This month, the D.C. district court granted an HHS motion for summary judgment dismissing one of the council’s cases; the second is pending.

In a statement to the Center, the council said it is seeking the raw Berkeley data “in order to analyze inconsistencies in the published report and to carefully evaluate the potential implications [of] the authors’ conclusion.” It added, “The federal government is denying open access to data that was funded by the American taxpayer and is preventing a comprehensive analysis of the data through time-consuming and expensive litigation.”

Marianne Engelman Lado, an attorney with the nonprofit environmental law firm Earthjustice, which intervened in the styrene case, suspects another motive: A “fishing expedition” for data that can be reanalyzed to create uncertainty. “They have turned things upside down so that industry science is somehow objective and academic science that is in part funded by the government but is independent is somehow less reliable,” Lado said.

Although industry litigation has had no discernible effect, lawmakers did attach a rider to a 2012 appropriations bill setting aside $1 million for reviews of the styrene and formaldehyde listings by two National Academy of Sciences panels. The results aren’t expected until August 2014.

“I think the whole thing is unnecessary,” Birnbaum said. “That was money that came out of the assistant secretary of health’s budget which, I think, probably could have been better spent.”

The aim, Huff said: “Delay the game.”

Sam Pearson contributed to this story.

The plight of foster kids and other vulnerable youth came into painful relief this week when the FBI announced raids in 76 U.S. cities to break up prostitution rings exploiting more than 100 teens.  

The minors were between 13 and 17 years old.

In addition to the FBI’s ongoing efforts to stop these criminal enterprises, the U.S. Department of Education and the Department of Homeland Security also have special programs to help educators identify at-risk children before they are lured into more trouble, as the Center for Public Integrity reported last February.

Schools are in a position to serve as the front lines of detection efforts, according to federal officials who attended a forum on child sex trafficking held in February at the Department of Education in Washington, D.C.

A California educator who spoke about her experiences at the forum was Jenee Littrell, director of guidance and wellness at the Grossmont Union High School District in San Diego County.

She said recruiters for pimps — boys and girls the same age of victims — befriend candidates at school or at parties, or online. They often zero in on kids in foster care and who have special needs, or who are suffering from troubled home lives.

Littrell said educators should take note if they start seeing kids talking about traveling to other cities, or flashing around money they didn’t have before, and buying their friends presents and lunch.

She also said her district was looking closely at how common disciplinary practices at schools have inadvertently increased the risk that troubled kids will hit the streets.

Littrell recounted how two girls at a school had become increasingly aggressive toward staff members who had no idea that both teens had become involved in child prostitution. When one of the girls was suspended for poor behavior, Littrell said, the student was discovered roaming a race track an hour later.

Alice Hill, a Homeland Security senior counselor, also attended the forum in February. She said that her department considers human trafficking, including the smuggling of minors, a “national-security threat.”

In 2011, a Center for Public Integrity report about minors caught along the U.S.-Mexico border highlighted cases of girls smuggled into the United States from Mexico and later forced into prostitution.

This week, when FBI officials announced the raids, they said that some vulnerable children were recruited into prostitution right out of foster homes.

In the San Francisco Bay Area— where 12 children were rescued this past week — Oakland Police Department Lt. Kevin Wiley spoke about how it takes more than police to help kids stay clear of those who will exploit them.

“They usually get into this because they are running away from something else,” said Wiley. “You’re trying to find out what brought them into this lifestyle in the first place. It goes way beyond law enforcement to solve this epidemic.”

Elections are notoriously tough for independent political candidates. And it appears just as difficult out there for super PACs touting politicians not affiliated with either major political party.

The super PAC icPurple Inc. — established in April 2012 to support “independent candidates to end gridlock and get our government back in the business of solving problems” — has terminated its operations, according to a recent campaign finance filing with the Federal Election Commission.

During the first seven months of 2013, La Jolla, Calif.-based icPurple raised less than $800, federal records show.

Such tepid fundraising came after the group raised more than $500,000 during 2012, ranking it among the nation’s most well-funded super PACs not directly aligned with either Republicans or Democrats.

The vast majority of the money icPurple raised — $325,000 — came from its founder, Ted Waitt, a co-founder of computer company Gateway, Inc. Another $55,000 came in the form of in-kind contributions from Waitt’s California-based private equity firm, Avalon Capital Group, Inc.

Waitt’s super PAC had aimed to buttress “viable” independent candidates in all 50 states at the federal, state and local level.

Its website called on dissatisfied voters to sign a “declaration of independents,” which included a pledge to “do everything in my power to elect capable-leaders who put their commitment to the People above party loyalty, and who will work across party lines to create a brighter future for all Americans.”

Waitt, who could not be reached for comment, last year told Mother Jones that “politics in this country is coin-operated,” and he said in an opinion column that “the future is bright for the independent movement.”

Tom Grueskin, treasurer of icPurple, declined to comment to the Center for Public Integrity.

-------------------------
Don’t miss a single Center for Public Integrity investigation on campaign finance, super PACs, and political contributions. 
Sign up now to receive our Money in Politics newsletter.
-------------------------

California, last year, instituted a new “jungle primary” system last year that pitted all candidates — regardless of party affiliation — together in primary contests. The top two vote-getters in each race then faced off again in November.

Taking advantage of the new system, icPurple spent more than $100,000 on advertisements promoting two independents who sought seats in the U.S. House of Representatives — Linda Parks and Chad Condit. Neither earned enough votes to advance to the general election.

icPurple also backed unsuccessful independent San Diego mayoral candidate Nathan Fletcher; independent Chad Walsh, who failed in his California state assembly bid; and independent Angus King of Maine, who won his U.S. Senate race.

Even as icPurple closes up shop, Loyola Law School professor Jessica Levinson predicts that others could take its place.

“I think we will see more of these independent super PACs,” Levinson said — particularly ones funded by “Silicon Valley millionaires and billionaires” who, like Waitt, frequently identify as socially liberal and fiscally conservative.

With or without super PACs, though, independent candidates typically face long odds in U.S. elections.

“In most places, independent candidacies are doomed from the start,” said Norm Ornstein, a scholar at the American Enterprise Institute. “That could change as the Republican Party moves so far to the edge that it creates an opening for mainstreamers, but I would not hold my breath.”

A super PAC quietly formed this spring by prominent libertarians has rushed to a quick fundraising start thanks to a small network of wealthy, like-minded donors.

Purple PAC, a super PAC created by former Federal Election Commission Chairman Brad Smith and Cato Institute founder Ed Crane, raised $575,000 from the time the group launched in early May through the end of June, new FEC filings show.

Only four donors contributed, but they provided significant cash. The group received two $250,000 contributions — one from Richard Masson, a Kentucky horse breeder, and another from Pennsylvania-based options trader Jeffrey Yass, who also sits on the board of the Cato Institute.

Washington, D.C., entrepreneur Philip Harvey donated an additional $50,000 to Purple PAC, while New York real estate developer Howard Rich chipped in $25,000, according to FEC records.

Smith, who currently serves as the chairman of the anti-campaign finance regulation group Center for Competitive Politics, said Purple PAC plans to make independent expenditures promoting “freedom-oriented” candidates who are fiscally conservative and socially moderate.

These are viewpoints Smith says a large number of voters hold, although they have little influence in Washington.

“Swing voters don’t feel that either of the major parties is representing them,” Smith said, adding the group intends to focus much of its resources on battleground states, as its name suggests.

-------------------------
Don’t miss a single Center for Public Integrity investigation on campaign finance, super PACs, and political contributions. 
Sign up now to receive our Money in Politics newsletter.
-------------------------

While the group has yet to formally back any politicians, Smith said it’s open to supporting federal office-seekers of either party. But candidates that generally agree with the super PAC’s ideology “tend to be in the Republican Party at this point in time.”

Smith also said he was pleased with Purple PAC’s initial fundraising haul, adding, “we think we can raise a significant amount of money.”

Three of the group’s four donors — Yass, Masson and Rich — gave federal-level Republican candidates tens of thousands of dollars during the 2012 election cycle. Rich was the only one of the three to give money to an outside group, contributing $25,000 to the libertarian-leaning Liberty for All Super PAC.

Rich is also the founder of the advocacy group Americans for Limited Government and has helped fund a number of other conservative-leaning nonprofit organizations in recent elections.

Harvey, meanwhile, gave $10,000 to the Campaign for Primary Accountability, an anti-incumbent super PAC that’s ramping up its operations again after a year’s worth of inactivity.

He also gave $8,000 to the Libertarian National Committee in 2012 and contributed $2,500 apiece to two Democrats: Rep. Steve Cohen, D-Tenn., and Roger Goodman, who unsuccessfully ran for Congress in Washington state.

Before Lehman crashed, there was “The Bear.”

Bear Stearns, once the nation’s fifth-largest investment bank, had been a fixture on Wall Street since 1923 and had survived the crash of 1929 without laying off any employees.

But in 2008, its customers and creditors didn’t much care about its storied history. They were worried that the billions of dollars of mortgage-backed securities on its books weren’t worth what the company claimed. En masse, they stopped doing business with Bear.

Within a few days, on Monday, March 17, Bear was gone — subsumed into JPMorgan Chase & Co. with the help of the Federal Reserve for a price that was approximately the value of its shiny new Madison Avenue office tower alone.

Bear Stearns failed largely because it had spent the previous five years gorging on subprime mortgages in what appeared to be an ever-rising housing market. When home prices started falling and those loans started to go bad, Bear’s creditors got scared and pulled their money out of the investment bank.

The demise of the 85-year-old firm was just a harbinger of what was to come. Six months later, Lehman Brothers collapsed under the weight of its own mortgage securities, sending first the financial system, and then the entire global economy, into a tailspin from which it hasn’t yet fully recovered.

Five years later, the executives that were in charge of Bear’s headlong dive into the cesspool of subprime mortgage lending hold similar jobs at the most powerful banks on Wall Street: JPMorgan, Goldman Sachs, Bank of America and Deutsche Bank.

The fact they were able to emerge unscathed from a financial crisis that wiped out $19.2 trillion of household wealth in the US and as many as 8.8 million jobs has become part of the legacy of the financial meltdown.

“The downside is very, very minimal for the people who decide to take risks in these institutions,” said Anat Admati, professor of finance and economics at Stanford Graduate School of Business and co-author of The Bankers’ New Clothes: What’s Wrong With Banking and What to Do About It.

“It’s clear that the ones at the top got the most in terms of compensation and suffered few consequences from these decisions,” she added.

Four of the executives, Thomas Marano, Jeffrey Verschleiser, Michael Nierenberg and Jeffrey Mayer, have been accused of making false statements in disclosures to federal regulators in a lawsuit brought by the Federal Housing Finance Agency, which oversees government-owned mortgage giants Fannie Mae and Freddie Mac.  They are among dozens of people and companies named in the lawsuit. 

All four denied all the allegations in a 179-page response to the lawsuit. 

The four "deny that the offering documents referenced contained material misstatements of fact or omissions of material facts," according to the answer jointly filed by the Bear Stearns companies and the individual defendants from Bear.   

Two other mortgage division leaders, Mary Haggerty and Baron Silverstein, were not named defendants in the lawsuit.

AMBAC Assurance Corp., a company that guaranteed some of Bear’s mortgage bonds and went bankrupt in 2010, accused Bear of fraud in a separate lawsuit that described actions by the six mortgage division leaders. AMBAC emerged from bankruptcy in May.

Yet all six continue to work at the top levels of their field, earning salaries and bonuses that have allowed them to live in luxury while the mortgages that made up the bonds they sold have defaulted at alarming rates.

“How is it that we could say that we learned something from the last crisis when we still have the same people running our companies for the future?” asked Jordan Thomas, a former attorney for the Securities and Exchange Commission who now runs the whistleblower practice at Labaton Sucharow in New York.

Four years, $29 million

Thomas Marano, who led Bear’s mortgage finance division, is perhaps the most telling example.

In the past four years he earned more than $29 million as head of Residential Capital, LLC,  the mortgage subsidiary of the former General Motors Acceptance Corp. (GMAC), which was bailed out by the government during the financial crisis. ResCap filed for bankruptcy last year.

As global head of mortgages, asset-backed securities and commercial mortgage-backed securities at Bear Stearns, he oversaw the underwriting and securitization of subprime loans from Bear’s mortgage subsidiary EMC Mortgage Corp.

His division oversaw the mortgage operation from start to finish. EMC would make or purchase mortgage loans, then pool thousands of them into mortgage backed securities, register them with the SEC and then sell them to investors.  

The FHFA, along with the State of New York, mortgage insurers, and other federal agencies and investors, said in lawsuits that Bear falsely assured investors and insurers in customer disclosures and SEC filings that the loans were subjected to rigorous underwriting standards.

The lawsuits said Marano’s unit was so hungry for new loans to securitize that they let the standards slide and knowingly included bad loans in mortgage pools.

Marano personally signed the SEC filings on at least $8.7 billion worth of residential mortgage-backed securities sold to Fannie Mae and Freddie Mac, according to documents included in the FHFA lawsuit.

“Defendants falsely represented that the underlying mortgage loans complied with certain underwriting guidelines and standards, including representations that significantly overstated the ability of the borrowers to repay their mortgage loans,” the lawsuit states.

Marano, the company and all the other defendants "deny there was an abandonment of reasonable due diligence procedures," according to court documents.  

"Individual defendants deny that the securitizations … contained material misstatements of fact or omissions of fact," the defendants’ response to the FHFA complaint filed in court reads.  

Marano also directed executives to withhold "every fee" from credit rating agencies that had lowered the ratings on the firm’s mortgages bonds, according to the AMBAC complaint.

In the majority of the securities signed by Marano, more than half the loans were delinquent, in default or foreclosed by July 2011, according to figures the FHFA included in its lawsuit. 

Marano, who has a 4,700-square-foot home in New Jersey and a vacation home in Park City, Utah, declined to comment for this story. He sold the New Jersey house to Old Pike Associates LLC, a limited liability corporation, for $99 in 2002 and the LLC also owns the Utah house. Old Pike’s address is Marano’s home address and the company lists Marano as CEO.  

Marano is managing member of another LLC, Old Pike Associates II, LLC, which was formed in March 2012. The company bought a $4.2 million dollar home in Tenafly, N.J., in December 2012, according to public records.

When Bear went under, “everybody and their brother descended on the place,” looking to hire the best talent, said Chad Dean, managing partner of Integrated Management Resources and a banking recruiter for 11 years.

“Nobody should be surprised that Bear Stearns people are still all over the Street in high-level positions at other firms,” Dean said. “It’s very competitive. There’s resumés flying all over the place.”

Sen. Carl Levin, D-Mich., who as chairman of the Permanent Subcommittee on Investigations led some of the most thorough inquiries into the causes of the financial crisis, echoed that.

“Just because Bear Stearns went out of business doesn’t mean everybody who worked for Bear Stearns was incompetent,” he said. He declined to discuss Marano and his colleagues specifically.

Warren Spector, who was co-president of Bear Stearns until he was fired in August 2007, said Marano was seen in the industry as a "rock star."

"He knew the business inside and out, and he could do every job, up and down the line," Spector said. “He was one of the best managers Bear Stearns ever had.” Spector said he has no knowledge of the specific accusations against Marano in any lawsuits.

One month after Bear’s sale, Marano was scooped up by Cerberus Capital Management, the private equity firm that was a majority shareholder of GMAC. By July, Marano was CEO and chairman of GMAC’s mortgage servicer, ResCap.

ResCap was one of the largest originators of home loans and the fifth-largest servicer of residential mortgage loans in the U.S. before it went bankrupt in 2012. The company had long been making huge bets on subprime mortgages.

Marano was brought in to clean up the mess. It was a difficult task.

When Lehman Brothers went bankrupt in September 2008 and credit markets froze, GMAC was among the companies that needed taxpayer help to survive. The company received a $17.2 billion taxpayer bailout through the Troubled Asset Relief Program (TARP).

Today, GMAC, which renamed itself Ally Financial in 2010, is still 74 percent owned by U.S. taxpayers. It is not clear when it will be able to repay the $13.75 billion it still owes the Treasury.

Because of the TARP bailout, Ally Financial was able to direct $8.6 billion to ResCap during the years Marano was in charge, according to a report by Christy Romero, the special inspector general for the Troubled Asset Relief Program.

Marano’s compensation is known because he was one of the 25 highest paid people at Ally Financial. Under the law, seven companies that received money from the TARP were required to submit their executives’ compensation packages to the U.S. Treasury for approval  and to disclose them in SEC filings. Special paymaster Patricia Geoghegan approved Marano’s 2012 $8 million compensation — $6.2 million in salary and $1.8 million in stock options — just weeks before ResCap filed for Chapter 11 bankruptcy on May 14, 2012.

“There’s absolutely something wrong with executive compensation that gives extraordinary rewards to executives while at the same time shareholders’ value is diminishing or destroyed,” said Amy Hillman, dean of the W.P. Carey School of Business at Arizona State University.

Most of ResCap’s bad loans were made before Marano took over the company. However, in 2010, when he had been at the helm almost two years, the firm was accused of improperly rushing through hundreds of thousands of home foreclosures without the proper paperwork.

One employee testified to signing up to 10,000 foreclosure documents a month without personally reviewing the details, making the documents illegitimate.

"Our company’s process for preparing foreclosure affidavits was flawed," Marano testified at a House hearing in November 2010. "There were affidavits signed outside the immediate physical presence of a notary and without direct personal knowledge of the information in the affidavit. These flaws are entirely unacceptable to me."

ResCap, Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup settled for $25 billion with the Justice Department over what became known as the "robo-signing" scandal.

In May Marano resigned as ResCap’s CEO but remained on its board. He told The Wall Street Journal that he was considering starting a hedge fund, a real-estate investment trust, or another mortgage originator and servicer.

Jeffrey Verschleiser

Marano was not the only Bear Stearns mortgage executive to land in a similar role in mortgage finance.

Jeffrey Verschleiser, who reported directly to Marano as head of asset-backed securities,   was hired as managing director at Goldman Sachs in 2008 and then promoted to global head of mortgage trading in March 2012.

Andrew Williams, a Goldman Sachs spokesman, declined requests for comment. Verschleiser’s lawyer declined to comment for this story and denied a request to speak to Verschleiser.

According to documents filed in the AMBAC lawsuit, Verschleiser encouraged Bear to short the stock of mortgage bond guarantors — essentially betting the price would fall — because he knew they would likely incur losses because of bad loans included in the mortgage pools.

"In less than three weeks we made approximately $55 million on just these two trades," the lawsuit quotes Verschleiser as saying in an email.

Verschleiser lives in a $10 million Fifth Avenue apartment in New York City in the same building as Barbara Walters. Former Los Angeles Dodgers owner Frank McCourt recently bought the top floor of the building, with a sprawling Central Park view, for $50 million.

Multiple media reports indicate Verschleiser spent upward of $1 million renting out the popular Hotel Jerome in Aspen, Colo., for the weekend of his daughter’s 2012 Bat Mitzvah.

Michael Nierenberg and Baron Silverstein

Michael Nierenberg and Baron Silverstein live in the tony New York City suburb of Port Washington and work together at Bank of America in the divisions that issue mortgage-backed securities and collateralized debt obligations.

Nierenberg led the adjustable rate mortgage and collateralized debt obligation desks at Bear Stearns, which underwrote $36 billion of CDOs in 2006 alone. He’s now head of mortgages and securitized products at Bank of America.

Silverstein, once a senior managing director at Bear and co-head of mortgage finance,  stayed at JPMorgan for a time after the acquisition and later moved to Bank of America as managing director in charge of the mortgage finance department.

Silverstein lives in a $3.7 million waterfront home with a tennis court and pool, according to Nassau County, New York records. The $6 million Nierenberg estate includes a tennis court, pool, boathouse, Jacuzzi, and boat dock. Public records show Nierenberg also owns a condo in Boca Raton, Fla.

Nierenberg’s lawyer declined to comment. He and Silverstein declined requests for interviews through Zia Ahmed, a Bank of America spokesman.

Mary Haggerty

Mary Haggerty was a co-head of mortgage finance at Bear.

The FHFA, in its lawsuit, says Haggerty cut back on the due diligence the bank was performing on its mortgage-backed securities. The move was designed "to make us more competitive on bids with larger sub-prime sellers," according to an email Haggerty sent to John Mongelluzo, vice president of due diligence, that is cited in the lawsuit.

Following the merger, Haggerty was retained by JPMorgan as a managing director in the securitized products group. Haggerty declined a request for an interview through JPMorgan spokesman Mark Kornblau. Kornblau also declined to comment on behalf of the company. 

Mary Haggerty bought a $950,000 apartment in New York City in 2005, according to the city’s property records.

Jeffrey Mayer

Jeffrey Mayer was co-head of fixed income at Bear Stearns and Marano’s supervisor. His division was responsible for about 45 percent of the bank’s total revenue, mostly from mortgage securitization, according to the January 2011 report of the Financial Crisis Inquiry Commission, a panel created by Congress to investigate the causes of the crisis.

Mayer didn’t respond to an email sent to his office requesting an interview. Mayer’s attorney didn’t respond to requests for comment.  Renee Calabro, a Deutsche Bank spokeswoman, declined to comment on his current salary.

Mayer owns a $3.7 million dollar home is Westport, Conn., according to county property records.

After Bear’s demise he was scooped up by Swiss banking giant UBS in 2008 and awarded a nearly identical position. Two years later he jumped to Deutsche Bank, as head of corporate banking and securities in North America.

Feds stay quiet

To date there have been few meaningful prosecutions or regulatory actions against any individuals who were in positions of power during the financial crisis.

The Justice Department unsuccessfully prosecuted two Bear Stearns hedge fund executives for fraud, saying they lied to investors about the health of the funds. Both were acquitted in 2009, and since then the DOJ has declined to criminally charge any top-level Wall Street executives. The SEC has settled cases with a handful of banks, including Goldman Sachs, for sums that come to only a fraction of the companies’ quarterly profits.

And in July, the trial of an SEC lawsuit against Goldman trader Fabrice Tourre began. Tourre was a mid-level Goldman Sachs executive who is accused of securities fraud related to the creation and sale of mortgage bond derivatives.

The Financial Industry Regulatory Authority has noted the lawsuits on the broker records of Marano, Mayer, Verschleiser and Nierenberg but none have had their licenses revoked.  All four are likely to be covered by Bear Stearns’ directors and officers insurance, so any potential judgment or settlement may be paid for them.

“The people [on Wall Street] most responsible have suffered little or not at all,” said Dean Baker, co-director at the Center for Economic and Policy Research, “You would like to see that they paid some consequence, but they really haven’t.”

Sarah Palin’s leadership political action committee has taken a fundraising nosedive this year — and most of the money it has raised isn’t directly going toward helping her fellow Republicans seeking office, new Federal Election Commission filings show.

SarahPAC brought in more than $460,000 during the first six months of the year, a sizable amount by most PAC’s standards. But the haul falls well short of what the former GOP vice presidential candidate and Alaska governor’s PAC raised at the same points during the past two years.

By the end of June 2012, for example, Palin’s PAC had raised nearly $1.2 million on the year. In 2011, that figure stood closer to $1.7 million.

SarahPAC spent about $500,000 during the first half of 2013 and had more than $1.1 million cash on hand through June 30, FEC filings indicate.

Palin’s PAC spent the vast majority of that money on consultants, travel, speechwriting and other logistical fees.

The only candidate who received a contribution this year from SarahPAC was Rep. Jason Smith, R-Mo., who won a special election for the state’s 8^th congressional district seat in June.

Small donors continue to be a boon for the group: About three-fourths of the funds SarahPAC has raised so far this year came from individual contributions of less than $200.

Palin’s overall popularity has also suffered of late, a Public Policy Polling survey released Tuesday indicates.

If Palin were to run for U.S. Senate against Democratic incumbent Mark Begich, D-Alaska, Begich would “cruise” to re-election, the poll states.