Category: Media

DeLay Tried to Shut Down Casino Abramoff Wanted Closed

Associated Press
Tuesday, January 10, 2006

Washington

Former House Majority Leader Tom DeLay tried to pressure the Bush administration into shutting down an Indian-owned casino that lobbyist Jack Abramoff wanted closed – shortly after a tribal client of Abramoff’s donated to a DeLay political action committee, The Associated Press has learned.

The Texas Republican demanded foreclosure of the casino, owned by the Alabama-Coushatta tribe of Texas, in a Dec. 11, 2001 letter to then-Attorney General John Ashcroft.  The Associated Press obtained the letter from a source who did not want to be identified because of an ongoing federal investigation of Abramoff and members of Congress.

“We feel that the Department of Justice needs to step in and investigate the inappropriate and illegal actions by the tribe, its financial backers, if any, and the casino equipment vendors,” said the letter, which was also signed by Texas Republican Reps. Pete Sessions, John Culberson and Kevin Brady.

Sessions’ political action committee received $6,500 from Abramoff’s tribal clients within three months after signing the letter.  A spokeswoman for Sessions said he considers gaming a state issue.  She said the tribe was circumventing state law and Sessions signed the letter in defense of Texas laws.

Ashcroft never took action on the request.  The Texas casino was closed the following year by a federal court ruling in a 1999 lawsuit filed by the state’s attorney general, John Cornyn, now a U.S. senator.

Kevin Madden, DeLay’s spokesman, said DeLay’s actions “were based on policy considerations and their effect on his constituents.  Mr. DeLay always makes decisions with the best interests of his constituents in mind.”

The letter was sent at least two weeks after the Mississippi Band of Choctaw Indians, a tribal client of Abramoff’s, contributed $1,000 to Texans for a Republic Majority, or TRMPAC.  That political action committee is at the center of the campaign finance investigation that yielded money laundering charges against DeLay and forced him temporarily out of the majority leader’s job.

The letter was also sent to Interior Secretary Gale Norton; the U.S. attorney for Texas’ eastern district; the chairman of the National Indian Gaming Commission and Texas Gov. Rick Perry, who took over when Bush was elected president.

Its author appears to have been unfamiliar with the Alabama-Coushatta.  It said the tribe was based in “Livingstone,” and that the tribe had opened a casino “against the wishes of the citizens of Alabama.”  The tribe’s reservation is in Livingston, Texas.

At the time of the letter, Abramoff was working for the Louisiana Coushatta and had portrayed the Alabama-Coushatta’s Houston-area casino as a threat to his client’s casino.

The revelation comes as DeLay has said he has given up trying to regain the majority leader post.  DeLay had insisted until Saturday that he would reclaim the job after clearing his name in the campaign finance investigation.

DeLay is awaiting trial on charges he funneled corporate contributions – largely banned in Texas elections – through TRMPAC and the Republican National Committee to the campaigns of several GOP state legislative candidates.  On Monday, an appeals court denied his request that the charges be dismissed.

The Mississippi Band of Choctaw Indians made the TRMPAC contribution on Nov. 28, 2011, according to court documents.  An attorney for the Choctaw declined comment on how the tribe decided on contributing to TRMPAC.

Abramoff pleaded guilty to federal charges and is cooperating with investigators whose bribery probe is now focusing on several members of Congress and their aides, including a former DeLay aide.  Abramoff’s former business partner Michael Scanlon, DeLay’s former press aide, also has pleaded guilty in the case.

The contributions are not necessarily illegal, but DeLay’s association with Abramoff is under scrutiny.  DeLay has taken overseas trips paid for in party by Abramoff, and his national political action committee used a skybox leased by Abramoff to treat donors to a concert.

The Alabama-Coushatta were never clients of Abramoff or Scanlon.  But Abramoff targeted the tribe in his work for the Louisiana Coushatta, first trying to shut down their casino and then trying to become a lobbying for the Alabama-Coushatta.

He and Scanlon were in a panic a month before the letter when the Alabama-Coushatta’s chief said the tribe was opening a casino.

In e-mail, they discussed getting an official to threaten to jail the tribal chairman.

According to court documents, Abramoff also used the Alabama-Coushatta to carry out one of his bribery schemes.

Federal investigators have alleged that Representative 1 – later identified as Rep. Bob Ney, R-Ohio – agreed in June 2002 to introduce and pass a legislative provision that would eliminate a federal ban against commercial gaming of for the Alabama-Coushatta “at Abramoff’s request.”

Abramoff pleaded guilty to telling Ney in June 2002 that a client, the Tigua tribe of Texas, was raising money for Ney’s trip to Scotland.  The Tigua had turned down Abramoff’s request for the money.

Alabama-Coushatta Chairman Ronnie Thomas and McClamrach Battise, a tribal council member, said the tribe wrote a $50,000 check to Abramoff’s Capital Athletic Foundation after the tribe was approached by the Tigua.  But the tribe was not told the charity belonged to Abramoff.  The foundation cashed the tribe’s check on July 24, 2002, the same day the Alabama-Coushatta closed its casino.

“We never knew Abramoff was in the picture,” Battise said.

Carlos Hisa, lieutenant governor of the Tiguas, said he did not tell the Alabama-Coushatta that Abramoff wanted the money.

“We told them it was for a golfing trip and certain individuals from Congress were going to go that were going to help us with our cause,” Hisa said.  “Abramoff had told us even from the very beginning the entire thing was top secret.  Only a few could know because the language was going to be sneaked in.”

Hisa said he regrets not being more truthful.  “I didn’t set out to do any damage to the tribe,” he said.

Documents show Abramoff hoped to eventually be on the tribe’s payroll, making millions for helping them reopen the casino DeLay wanted shut down.  Abramoff was pressing a Tigua representative to get the Alabama-Coushatta to sign over 10 percent of the tribe’s future gaming revenues to a “foundation” he would later designate.

Frederick Petti, an attorney for the Alabama-Coushatta, has filed a demand letter for return of its $50,000 and damages with Greenberg Traurig, Abramoff’s former employer.

Greenberg Traurig spokeswoman Jill Perry would not answer questions about the letter but said in an emailed statement that the firm demanded Abramoff resign when he told them of his conduct.  The plea agreement has revealed further conduct the firm was unaware of, she said.

Historic Rights Were Hard-Fought

Book Review by Frederick R. Petti
Miranda: The Story of America’s Right to Remain Silent by Gary L. Stuart
Printed in Arizona Attorney
January 2005

First, my disclaimers.  My firm provided funds that helped make possible the publication of Gary Stuart’s Miranda: The Story of America’s Right to Remain Silent.  Moreover, the book speaks glowingly of my former partner, the late John Frank, as well as my current partner, Peter Baird.  Finally, I am blessed, along with Jim Belanger and Steve Hart, to carry forward this firm’s rich tradition of practicing criminal law, a tradition built on the efforts of former Lewis and Roca lawyers such as the late John Flynn, Robert Jensen, Michael Kimerer, Jordan Green and Ed Novak.

Having said all that, Mr. Stuart’s book is a pretty good read.  It will never be confused with Anthony Lewis’s Gideon’s Trumpet, a superbly written history of how one semi-literate drifter from Florida convinced the U.S. Supreme Court to reverse its earlier holding inBetts v. Brady and find that indigent defendants were entitled to a free lawyer in non-capital state criminal cases.  But Stuart’s work follows a structure similar to that ofGideon’s Trumpet, providing a history of the Miranda decision that begins with the investigation that led to the arrest of Ernesto Miranda in connection with a series of sexual assaults and robberies that occurred in Phoenix in 1962 and 1963.

The book is at its best when it details how a young Phoenix police detective, Carroll Cooley, traced down various leads to connect Miranda with a 1953 Packard sedan used in the rape of an 18-year-old women who worked at the downtown Paramount Theater.  Stuart then describes how Cooley and his partner used the results of an inconclusive lineup to convince Miranda – without using what we now call Miranda warnings – to confess to one rape, on robbery and one attempted robbery (a photo of the actual lineup can be viewed on the Arizona State Archives Web site at http://photos.lib.az.us).

Stuart next takes his reader through Miranda’s trials.  On consecutive days, Miranda was first tried and convicted of robbing a young woman of eight dollars following a bungled attempt at a sexual assault, and then tried and convicted of raping another woman.  Miranda had the same counsel for both trials, and the prosecutor and the judge were also the same.

Although the author is critical of Miranda’s trial counsel in general, Stuart notes that Miranda’s lawyer did have the foresight to object to the admission of Miranda’s confessions in both cases, arguing that in the absence of warnings concerning his right to counsel and that his statements would be used against him, the confession was involuntary and should be suppressed.  Of course, the object was overruled, and Miranda’s confession was upheld by the Arizona Supreme Court.

After discussion the background of the four companion cases that were joined with Miranda’s before the U.S. Supreme Court, Stuart takes his reader through John Frank’s development of the Miranda brief and his decision to allow John Flynn to argue the case to the Supreme Court.  Stuart notes that, “The combination of Frank’s written brief and Flynn’s oral advocacy produced a lucid yet wholly extemporaneous quality, as if he were merely speaking his mind and heart honestly, without forethought.”

Stuart points out that Frank’s Miranda briefs were based on a defendant’s Sixth Amendment right to counsel.  But during oral argument Flynn, in response to a question from Justice Stewart, made the “bold assertion that the Fifth Amendment, not the Sixth, made Miranda different from its predecessors.”  Stuart argues that Flynn’s bold assertion to Justice Stewart may have been the spark that generated the firestorm.

The Court ruled that from June 13, 1966, forward no confession was admissible in any court of law unless the suspect was first warned and advised of certain basic constitutional rights and procedures under the Fifth Amendment.

Stuart devotes the rest of his book to Miranda’s retrials (he was convicted even though his confession to Detective Cooley was suppressed), his death in 1976 and the enduring legacy of the case that bears his name.  Of particular interest is discussion of the Dickersoncase, in which the Fourth Circuit held that under 18 U.S.C. § 3501 (a law passed by Congress in 1966 in response to Miranda), a confession was admissible as long as it was voluntary, regardless of whether the Miranda warnings were given to a defendant.  In a 7-to-2 decision, the Supreme Court upheld Miranda, holding that Miranda, being a constitutional decision of the Court, may not be in effect overruled by an act of Congress.

Stuart’s Miranda is good and an easy read.  The author takes the time to let his reader know about all the lawyers in Arizona who played a role in Miranda, and it is a who’s who in the Arizona bar.  We all should be grateful that Stuart did such a find job recounting the history of what is arguably the most important case in criminal law.  And he reminds us what an important role lawyers in Arizona had in that case.

Texas Tribe Names Abramoff, Reed in Suit

By Suzanne Gamboa
The Associated Press
Wednesday, July 12, 2006, 7:40 PM

WASHINGTON – A Texas Indian tribe filed a federal lawsuit Wednesday alleging that ex-lobbyist Jack Abramoff, former Christian Coalition leader Ralph Reed and their associates engaged in fraud and racketeering to shut down the tribe’s casino.

The Alabama-Coushatta tribe of Livingston, Texas, alleged the defendants defrauded the tribe, the people of Texas and the Legislature to benefit another of Abramoff’s clients – the Louisiana Coushatta Tribe – and “line their pockets with money.”

“Ultimately, the defendants’ greed and corruption led to the Alabama-Coushatta tribe permanently shutting its casino.  The funding for economic programs evaporated, over 300 jobs were lost in Polk County and the Alabama-Coushatta tribe has spent years struggling to recover and revitalize its economy through other means,” the tribe said in its lawsuit, obtained by The Associated Press.

The lawsuit also names Abramoff’s ex-business partner Michael Scanlon, a former aide to former Rep. Tom DeLay, R-Texas; Neil Volz, a former aide to Rep. Bob Ney, R-Ohio; and John Van Horne, Abramoff’s former colleague at his law and lobbying firm, Greenberg Traurig.

Although the tribe alleges Greenberg Traurig was part of the scheme, it did not name the firm as a defendant.  Attorney Fred Petti said the tribe is in settlement discussions with the firm.

The tribe did not specify how much money it is seeking in the lawsuit.  Petti said it is asking for the amount of revenue it lost since it was forced to close down its casino.  The casino operated for only nine months and shut down in 2002.

“It’ll be in the tens if not the hundreds of millions of dollars,” he said.

Without its casino, the Alabama-Coushatta tribe has lost opportunities to improve housing, roads and education programs for its members, said tribal chairwoman Jo Ann Battise.

“What we’re looking for through this lawsuit is the right to make our own decisions, the right to run our own gaming operations, the right to have the same opportunity as other tribes across the nation,” Battise said in Austin, Texas, where the lawsuit was filed.

Abramoff, Scanlon and Volz have pleaded guilty in a public corruption probe involving Abramoff’s former tribal clients and possibly members of Congress.  The Alabama-Coushatta never hired Abramoff.

The Alabama-Coushatta’s casino, on its reservation north of Houston, was closed in 2002 by a federal court ruling in a 1999 lawsuit filed by the state’s then attorney general, John Cornyn, now a U.S. senator.

The Alabama-Coushatta said Abramoff and others conspired to defeat a bill in the 2001 Legislature that would have allowed it to operate gaming on its reservation.  Reed helped to rally Christians against the bill with a group he formed, Committee Against Gambling, the tribe alleged.

The tribe, which says it has strong Christian values, alleges Reed’s group called state legislators, sent targeted mailings to voters and ran radio ads against the bill without revealing their true origins, preventing the tribe from fighting back.

“They made it appear as if they were operating on behalf of religious groups, but in fact they were operating on behalf of the Louisiana-Coushatta,” Petti said.

Lisa Baron, communications director of the Reed for Lt. Governor campaign, said in a statement: “This frivolous lawsuit is utterly without merit.  The illegal casino violated Texas and federal law and was ordered closed by a federal judge.  As a longtime opponent of casino gambling, Reed was happy to work with Texas pro-family citizens to close it.”

Attempts to get comment on Abramoff’s behalf were not immediately successful.

Reed’s work made the opposition to the tribe’s casino appear to be based on Christian concerns, not competitive concerns from its sister tribe, the Alabama-Coushatta said.

Had the public or tribe known the Louisiana Coushatta tribe was the main opponent, Christian groups would have been “less mobilized.”  Because the Texas and Louisiana tribes share family ties, Louisiana Coushatta members would have opposed the attack on their sister tribe, the Alabama-Coushatta said.

“They pitted Christian against Christian, tribe against tribe and cousin against cousin,” the tribe said.

The tribe also alleges that Abramoff fraudulently bilked it of $50,000 and used it to “bribe” Ney with a golfing trip to Scotland in exchange for “fixing” its gaming problem.  In his guilty plea, Abramoff said Ney accepted the trip knowing the tribal clients paid for the trip.  Ney has repeatedly said he is innocent of wrongdoing.

The suit was filed in the U.S. District Court’s western district of Texas in Austin.

Flexing Majority Muscles, Democrats Issue 3 Subpoenas

The New York Times
By: Neil A. Lewis and Eric Lipton
Jim Rutenberg contributed reporting from New York
April 26, 2007

In a vivid display of their new power, Democrats across Capitol Hill on Wednesday approved a flurry of subpoenas to fuel a series of investigations of the Bush administration.

The House Committee on Oversight and Government Reform issues three subpoenas in quick order.  One was to Secretary of State Condoleezza Rice to answer questions about the administration’s prewar claims about Iraq’s weapons programs and two were to the Republican National Committee and its chairman to be questioned about whether the party’s e-mail system was used by Bush officials to conceal some of their actions.

The Senate Judiciary Committee authorized but did not issue a subpoena for Sara Taylor, the deputy to Karl Rove, President Bush’s chief political adviser.  The committee wants to question Ms. Taylor about the White House role in the dismissal of eight United States attorneys.

And, in what could be a significant development in the investigation of the dismissals, the House Judiciary Committee moved toward granting a form of immunity from prosecution to Monica Goodling, a senior aide to Attorney General Alberto R. Gonzales until her recent resignation.  Ms. Goodling, who was deeply involved in the dismissals, has invoker her Fifth Amendment rights to decline to give testimony that might be self-incriminating.

But a grant of immunity could allow the committee to force Ms. Goodling to answer questions about just how involved the White House, and particularly its political office, was in choosing which prosecutors should be dismissed and whether the decisions were based primarily on a desire to help Republican causes or on performance shortcomings of the prosecutors, as Justice Department officials have said.

As the House Oversight Committee voted along party lines to approve the subpoenas, the atmosphere in the room was rich with themes of retribution and settling scores.

Republicans said the Democrats were using their new majority to support “fishing expeditions” and “witch hunts” solely to embarrass President Bush.

Representative Tom Davis of Virginia, the committee’s ranking Republican, said the subpoenas were “an effort to get high-profile administration figures under oath, before the cameras, for the sake of political theatrics.”

Representative Henry A. Waxman of California, the recently installed committee chairman, savored his new status as he turned aside Republic efforts to quash the subpoenas or limit them.  Reflecting on the years when Republicans controlled the oversight committee during Bill Clinton’s presidency, Mr. Waxman said more than 1,000 subpoenas were issued to the executive branch.

“When President Bush took office, I saw the other extreme,” he said.

The Republicans who controlled the committee issued only four subpoenas in six years to executive agencies, Mr. Waxman, said, none directly to the Bush White House.

The ability to investigate is part of Congress’s authority to conduct oversight of the executive branch, separate from its better-known function of enacting legislation.

In joining the battle Wednesday, Mr. Waxman received committee approval to subpoena both the Republican National Committee and its chairman, Robert M. Duncan.

The subpoenas are intended to explore the R.N.C. e-mail accounts used by at least 37 White House employees and find out if agencies other than the General Services Administration received improper political briefings from the White House.  On Jan. 26, a senior aide to Mr. Rove briefed G.S.A. employees about which Democratic members of Congress the Republican Party hoped to unseat in 2008.

Blair Jones, a White House spokesman, said Wednesday night that White House officials provided 20 briefings about Republican electoral prospects for senior officials in various agencies in 2006 and 2007.  He said the briefings, first reported by The Washington Post in its Thursday editions, were given by members of the political affairs staff including Sara Taylor and Scott Jennings.

“It’s entirely appropriate for the president’s staff to provide briefings to appointed officials throughout the government about the political landscape in which they implement the president’s policies and priorities,” Mr. Jones said.  Republicans tried to amend the motion seeking the subpoena to include records from the Democratic National Committee.  In arguing that case, Mr. Davis suggested that the sauce appropriate for a goose could also be used with a gander.

He also objected to seeking testimony from Ms. Rice, saying that in previous Congressional appearances she had answered all possible questions about prewar intelligence.

Tony Fratto, the deputy White House press secretary, responded more caustically.  He said Ms. Rice could not testify about her advice to the president while she was his national security adviser.

“Beyond that, there may be no more singularly analyzed and exhaustively studied and testified issue than the one Chairman Waxman wants to dredge up again,” Mr. Fratto said.

When Ms. Rice arrived in Oslo, Norway, on Wednesday for a meeting with NATO ministers, she declined to comment on the subpoena.

Ms. Goodling’s testimony about the dismissal of the United States attorneys could be revealing because of her regular interaction with the White House, which has rebuffed requests by Congressional investigators to turn over documents or make available White House officials for sworn interviews.

Representative John Conyers Jr., the Michigan Democrat who leads the Judiciary Committee, said of Ms. Goodling on Wednesday before the committee’s action, “She was apparently involved in crucial discussions over a two-year period with senior White House aides and with other senior Justice officials in which the termination list was developed, refined and finalized.”

Committee officials said it would be at least a month before Ms. Goodling testified, because the Justice Department would have a chance to respond to the request.

In San Diego and Arizona, corruption investigations created peril for Republicans, and in Seattle and New Mexico, some Republican leaders argued that local prosecutors were not taking action on voter fraud.

Suspicion intensified this week that politics might have played a role in the ouster of the former United States attorney in Phoenix, Paul K. Charlton.  News reports have said that the Justice Department may have held up an investigation of Representative Rick Renzi, Republican of Arizona, who is facing accusations that he used his influence as a congressman to engineer a land swap benefiting a business associate.

Lawyers close to the case, confirming an article that appeared Wednesday in The Wall Street Journal, said the department had been slow to approve search warrants or other crucial steps in the investigation, which had started in 2005.

“I don’t have sufficient knowledge to venture a judgment on the question of whether it is related to politics,” said Fred Petti, an Arizona lawyer and former federal prosecutor involved in the case.  “But I have been surprised at how slowly the matter has progress.”

In response to the reports, Brian Roehrkasse, a Justice Department spokesman, denied any impropriety.  “The Department of Justice under Attorney General Gonzales has never interfered with or attempted to influence a criminal prosecutor, including a public corruption case, for partisan political reasons,” Mr. Roehrkasse said.

Alabama-Coushatta Settle Lawsuit Against Former Abramoff Firm

By Suzanne Gamboa

Washington (AP) – A Texas tribe who casino was shut down after being targeted by convicted ex-lobbyist Jack Abramoff and several lawmakers settled a racketeering lawsuit against Abramoff’s former law firm, a tribe official said Tuesday.

The law firm, Greenberg Traurig, wasn’t named in the federal lawsuit filed by the Alabama-Coushatta tribe against Abramoff, former Christian Coalition leader Ralph Reed and their associates.  But tribe attorney Fred Petti said the settlement resolved things with all parties.  Terms weren’t disclosed.

“We are satisfied with the settlement and are pleased to have the Abramoff matter resolved,” JoAnne Battise, the tribe’s chairwoman, said in a statement.  “We are now focused on restoring our right to game so that we may create employment and business opportunities for us and our neighbors in the surrounding region.”

Announcement of the settlement came the day before the Texas House was to consider a bill that would open the door for the Alabama-Coushatta and Tigua tribes to conduct Class 2 gaming – such as pull tab and electronic bingo or games with prizes – on reservation land.  Right now, only the Kickapoo tribe of Eagle Pass can legally run a casino in Texas.

Abramoff has been cooperating with the government after pleadings guilty in January 2006 to conspiracy, mail fraud and other charges admitting to bilking his Indian tribe clients out of tens of millions of dollars with promises to influence the decisions of Congress and the Interior Department.

The Alabama-Coushatta became entangled in the Abramoff scandal as Abramoff tried to drum up business from another tribal client, the Louisiana Coushatta, whose members are related to the Alabama-Coushatta.

The Alabama-Coushatta alleged in the lawsuit the defendants defrauded them, the people of Texas and the Legislature to “line their pockets with money” and benefit the Louisiana Coushatta tribe.

Abramoff told the Louisiana Coushatta that the Alabama-Coushatta’s casino, on its reservation near Houston, was competing for clients.  He enlisted the help of Reed to launch opposition to the Alabama-Coushatta’s casino.

Several Texas Republican members of Congress, including former House Majority Leader Tom DeLay, signed a letter demanding the Justice Department shut down the casino.  It was closed in 1999 when a federal court ruled on a lawsuit brought by John Cornyn, then the state’s attorney general.  Cornyn is now a Republic U.S. senator.

The Alabama-Coushatta had alleged that Abramoff and others conspired to defeat a bill in the 2001 Texas Legislature that would have allowed it to operate gaming on its reservation.  Reed helped to rally Christians against the bill with a group he formed, Committee Against Gambling, the tribe alleged.

Trial of a Lifetime – Where do you turn when your business personal values are challenged?

The Audit Report (Volume 11, Issue 1)

By:  Kirk Boone

In 2011, one of my first audits and site inspections with TMA was transformed into the experience of a lifetime.  It offered the opportunity to be a witness in a way that I had never imagined.

Two and a half years ago, I wrote an article in The Audit Report cautioning readers not to miss the forest for the trees.  It urged readers to beware when an opinion of value uses the right definitions and equations, but the final result doesn’t make sense.  As a government assessment professional, be wary when asked to make broad percentage reductions in value, without being certain that the compenents and cost amounts used to calculate assessed value were accurate in the first place; the initial value may have been too low!

A property tax case that TMA has been involved with for the past three years was all about not missing the forest for the trees.  It taught me that when we don’t have the answers, we have to rely on other sources to get where we need to be.  Trusted sources include: knowledgeable individuals, organizations like IAAO, and companies like TMA.  One knowledgeable individual that took on this assisgnment with me was Tom Tucker, PPS and Vice President of Operations for TMA, one of the nation’s top experts in auditing.  Tom led the cost reconciliation portion of the assignment, while I led the economic obsolescence analysis portion.

This case involved a taxpayer in Arizona:  Phoenix Cement.  Phoenix Cement is a great asset for the community in which it is located, Clarkdale, Arizona in Yavapai County.  Phoenix Cement provides a great amount of tax base for the area.  They are, for good reason, a pride of their owners, the Salt River Pima-Maricopa Indian community.  In recent years, they have been recognized multiple times for their safeety, efficiency, quantity, and quality.

Phoenix Cement asked the county for a $60 million reduction in value for each of the years 2010 and 2011, primarily due to what they felt was obsolescence not considered in the county’s appraisal.  The taxpayer had every right to appeal their value and ask for this reduction.  However, this case also involved a county that chose to investigate closely before acting.  The county reached out to Tax Management Associates, Inc. for advice.  Yavapai County, Arizona learned TMA only works for state and local government and we have a 30 year history of providing quality by design in the area of property tax consulting and auditing.  This was the largest property tax reduction request in the county’s history; and if granted, would result in a huge refund that would fall on the backs of other taxpayers in Yavapai County.  That is something the county assessor, Pam Pearsall, did not take lightly.  Pam wanted to ensure all taxpayers of Yavapai County were treated fairly.

The taxpayer’s argument: Cement production has decreased every year since its peak in 2005.  It had decreased to a low point in 2009 and 2010, to about half of the 2005 levels.  The demand just wasn’t there, classic economic obsolescence, right?

Our responses: Before reducing a value based on the reported amounts shown on the tax listing (rendition form), let’s verify the reported amounts are correct through a book audit.

Additionally, prior to calculating economic obsolescence, let’s verify it really exists.  In other words, don’t just look at the calculations, but examine all surrounding facts.

First, the book audit.  The reported amounts on the taxpayer’s rendition were incorrect.  The TMA audit found approximately $60 million in unreported costs ranging from supplies and spare parts to actual equipment and fixed assets.  Remember, the taxpayer requested a reduction in value of about $60 million.  The taxpayer expert’s initial proposed total value was $57 million.  What if the assessor had just accepted $57 million and not requested assistance from other sources?  The taxpayer filed a motion in limine to prevent any discussion in the ensuing trial of the amounts found by TMA.  The taxpayer’s attorney referred to these unreported amounts as “noise” being introduced to detract from the true issue of obsolescence.  The motion in limine was denied.

Second, the economic obsolescence.  The principle of anticipation states that value is the present worth of future benefits, not past benefits.  Market activity and economic indications leading up to the appraisal dates of 2010 and 2011 indicated an upcoming strong recovery in cement manufacturing.  Phoenix Cement had prepared for this market recovery and made plans to expand production, installing $30 million in new equipment leading up to the years in question, even though production was down.  Finally, we argued that it’s not proper to compare all years to the peak year, as the taxpayer’s appraisal asked the county to do.  Doing so makes normal years of production appear to be bad years.  The inutility penalty calculation in the taxpayer’s appraisal, in our opinion, was unwarranted.

As a staff member of the North Carolina Property Tax Commission, I was forbidden by the NC Administrative Code to be a witness in a Property Tax Commission trial.  However, as a TMA employee, I was asked to not only be the county’s expert witness, but their only witness.  My first experience as a witness was going to be a big one.  A four-day bench trial was held in January 2014.  I’m not going to lie, I was apprehensive.  There were times that I didn’t have the answer, but I relied on those other sources of knowledge and strength mentioned earlier.  Tom Tucker flew to Arizona to provide support during the week of trial.  Our legal team, consisting of Roberta Livesay and Joseph Hourigan, was well-versed and extremely knowledgeable – seemingly on top of everything.  The whole TMA team was behind Yavapai County.  IAAO, ASA, and other texts were reviewed in great depth that week.  The source of strength that stands out most for me occurred when the county assessor, perhaps sensing my anxiety, handwrote a prayer for me.  I put it in my pocket only seconds before I stepped on the witness stand.  I’ll keep it forever and I’m happy to share the words of that prayer with others.

The court agreed that the taxpayer failed to report all taxable property for each of the subject years.  The judge accepted everything TMA found in the book audit.  The court further agreed with TMA’s expert testimony that there was no additional economic obsolescence to be considered in the county’s appraisal.  There are normal production cycles in the cement industry and all years of production are not expected to be at the same levels as the peak year.  Buyers of cement manufacturing equipment are aware of this expectation when investments are made in production equipment.  The court also allowed the fullest penalty allowed by law.  Rather than a reduction for tax year 2010 from $117,159,130 to $57 million, the judge affirmed an increase in value from $117,159,130 to $152,525,388.  The 2011 year was afforded a similar increase.  Belowing is a link to the ruling.

I can now be a first-hand witness to not miss the forest for the trees.  It’s a saying that can be applied in both property tax and in life.  Remember to reach out to the right resources when you may not have all the answers.  Do you know who you can reach out to for help?  To view the final decision of this case, please visit our website at www.tma1.com.

© 2020 Pettibriones Law

Theme by Anders NorenUp ↑