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Adventures in lousy governing

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* I suppose half is better than nothing, but I doubt this will quell the political outrage

State Treasurer Alexi Giannoulias and Illinois Attorney General Lisa Madigan have finally signed off on a $77.25 million settlement for losses in the state’s Bright Start 529 college savings plan.

Families with money in the affected Core Plus bond fund in the period between Jan. 1, 2008, and Jan. 25, 2009, will recoup a substantial portion –but not all — of their losses from OppenheimerFunds, Inc. […]

Overall losses for the plan’s Core Bond fund during that one-year period are estimated at about $150 million. A subsequent market rebound recouped some value. But the settlement restores slightly more than half of the losses shareholders suffered in the mismanaged fund.

I’d still like to see AG Madigan’s report on how this was allowed to happen.

* Sheesh

An initiative by Gov. Quinn to save taxpayers about $5 million annually by letting 1,000 inmates out of prison early is off to a rocky start — with dozens of burglars, repeat drunken drivers and financial criminals all being sent home for the holidays.

When the state Department of Corrections announced the program in September, it said that only “low-level, non-violent” criminals were to be let out and placed on home confinement ahead of their planned parole dates.

This is not the secret “Meritorious Good Time Push” plan that is now being investigated by Quinn’s administration after being enacted by Quinn’s administration. This is the very public early release for nonviolent offenders plan. More…

A Sun-Times analysis of the early-release list showed that, as of last week, there were 40 burglars, 18 felony DUI drivers, 28 financial criminals — including forgers and thieves — and one attempted robber among the inmates sent home early. Most of the other early-release inmates were incarcerated for drug crimes. Some had as much as one year shaved off their prison time.

And here are a few of the released prisoners…

VICTOR MORENO, 37

Crime: Financial exploitation of the elderly, disabled in Cook County

Case: Moreno promised to help a disabled person sell a house in the 1900 block of North Natoma in Chicago. The victim gave Moreno $15,000 in earnest money, but no closing date was set, prosecutors said. The victim learned Moreno was not a licensed agent and called police.

Sentence: Seven years

Original release date from prison: Sept. 12, 2010

LEO GUZMAN-RIVERA, 46

Crime: Driving under the influence, fourth offense, in Cook County

Sentence: Three years

Original release date from prison: May 20, 2010

JAMES AUGUSTA, 35

Crime: DUI, fourth offense, in Cook County

Sentence: Three years

Original release date from prison: July 22, 2010

That’s a whole lot of political damage to save $5 million.

* Meanwhile, remember WBEZ’s failed attempt to get the Quinn administration to open up the controversy-plagued Illinois Youth Center in St. Charles to reporters? Well, there was a demonstration at the site yesterday

A small group of protesters on Monday vowed to keep pressuring the state to investigate and clean up the Illinois Youth Center in St. Charles, where a 16-year-old detainee committed suicide in September.

About 20 people from Chicago gathered outside the medium-security male juvenile facility. The group demanded to go inside the center to examine the conditions, and wants Gov. Pat Quinn investigate the facility.

The group ultimately was turned away, but not before airing their concerns.

Protesters said they heard from former inmates that rodents often ate the prisoners’ food and left droppings in shower stalls and other areas.

They said the state needs to improve conditions at the facility, which houses many of the juveniles who enter the state’s justice system, according to its Web site.

* Speaking of criminal justice

Sneed is told the State Police Merit Board, which decides if a bad state cop needs to be fired, is financially impotent.

• To wit: The budget of the five-member board, which is appointed by the governor, “is so far down it’s impossible to conduct the amount of hearings that are needed,” a top source said.

• Translation: So a few state cops, including a handful busted for DUIs — who might otherwise be looking for a new job — are still working.

• The irony: A fully funded merit board, which is paid on a per diem basis, could ultimately save the state money by terminating officers.

* And Mike Lawrence sees nothing but gloom behind and ahead

Now Quinn forecasts a rebirth of responsible governance after the Feb. 2 primary. However, he will emerge from his battle with Dan Hynes as either the Democratic nominee facing Republican assaults for advocating significant tax hikes or a defeated, debilitated chief executive. That means his resolve to press for potent deficit antidotes could well wither in the heat of a general election contest, or lame-duck status could strip him of the influence he needs to muster sufficient support for them.

Meanwhile, we certainly cannot rely on the legislative branch to bear fiscally healthy fruit. Senate President John Cullerton rallied his Democratic troops to support tax increases in May without bringing Republicans to the table — a move that might have produced a bipartisan solution addressing spending issues as well. For his part, House Speaker Michael Madigan flexed his legendary discipline to suppress any good-government instincts that could stall his drive to build an even more muscular Democratic majority in his chamber. For their part, most Republican lawmakers have refused to help solve a problem that reached epic proportions under Democratic reign — never mind the future gets bleaker by the day for the young and old they claim to serve.

* Related…

* State can no longer leave colleges in ‘crisis mode’ : After seven years of steadily cutting the higher education budget, the state on July 1 stopped regular payments altogether. And while there used to be a capital bill every year to pay for new facilities, this year’s was the first capital bill for university facilities in about 10 years, and much of that money has not been released to the universities. Here are some of the numbers: The state is in arrears $445 million to the University of Illinois system, $125 million to Southern Illinois University, $37 million to Northern Illinois University and $28 million to Western Illinois University. The state’s other universities are in similar straits.

* Fight to keep Asian carp out of Great Lakes reaches Supreme Court - Michigan’s attorney general files a lawsuit that seeks to close two shipping locks near Chicago, sealing off the fish’s most direct route to the Great Lakes.

* Group chants outside youth home

* Time for answers to the prison mess: No blue ribbon commissions or panels or thorough reviews. No more hemming and hawing. This can only be seen as a serious mistake and a breach of trust that jeopardizes our safety. It’s time to own it, Governor.

* Payment mess threatens social service agencies

* Plug loophole in new open records law

* Officials say winter road services won’t be affected by budget

* Irony: Post-9/11 economy kept state from opening Thomson prison

* State’s decade memorable, but not always good

* Most corrupt state? Illinois a leader in the competition

* ‘Reform’ the Tammy way

* Durbin: Ill. due for $45 mil in defense spending

* Quinn appoints three to state education board

* Governor names 3 to state school board

posted by Rich Miller
Tuesday, Dec 22, 09 @ 6:49 am

Comments

  1. I am extremely disappointed in Lisa Madigan.

    Illinois families were bilked out of their hard earned cash by corrupt bankers (Has she even been paying attention to what’s been going on over the last few years with corruption in the financial industry?) and where is she? Settling with corrupt bankers, rather than fighting for Illinois families.

    Why is it that one of Illinois’ ‘best and brightest’ seems to have no trouble fighting pissant pay day loan sharks, fly by night mortgage operations, or telemarketing scams, but when it comes to REAL corruption (political or financial) where Illinois families need her the most, she is nowhere to be found?

    Comment by Where's my money, Giannoulias? Tuesday, Dec 22, 09 @ 7:09 am

  2. Not surprisingly Savage is waaaaay off. The Core Fund lost 85 million from the investment activities at issue, not 150 million (which is a number totally unrelated to this settlement issue). The settlment recovers a vast majority of that loss due to Oppenheimer’s breach. Additionally, Oppenheimer has the same issues in other states and Illinois (Madigan and Giannoulias) have been the leaders in recovering this money. (Go ask your other money mangers to give you your losses back, see what they say).

    The losses in this fund has been a primary attack on Giannoulias (despite the fact that even with this loss, Business Week and Consumer Reports both rank Bright Start in the top 5 of 529 funds nationally). So I respectfully disagree, Rich. This settlement will likely seal the primary deal for Alexi….

    Comment by heatmizer Tuesday, Dec 22, 09 @ 8:24 am

  3. Someone came in and cleaned up Alexi’s mess for him… how nice. This guy is a screw up and a coward. Why did he dodge the other candidates at the Springfield Register Editorial Board yesterday?

    Comment by truthtopower Tuesday, Dec 22, 09 @ 8:57 am

  4. (There’s No Place Like) Home for the Holidays

    Oh, there’s no place like home for the holidays,
    For no matter what crime you commit -
    When you’re released by a Governor with a friendly gaze,
    For the money - you can’t beat a political dimwit!

    Comment by VanillaMan Tuesday, Dec 22, 09 @ 8:57 am

  5. As a Bright Start parent — and admittedly someone who has supported Lisa and Alexi in the past — this is a great result.

    I’ve saved and invested for years for both my children — everything from bank accounts to the Coverdell Education Savings Account offered by State Farm to now the 529. It was not too long ago (6 years) that our financial advisors were telling us to avoid Bright Start.

    Now I can honestly say (even with my eldest slightly affected by this Core Fund situation) that I am VERY satisfied with Bright Start. Much better performance than my other accounts. And on this front, it is a nice holiday bonus to get a big chunk of my losses back and put them into better performing accounts.

    Thanks to both the AG and the Treasurer.

    Comment by Victoria Tuesday, Dec 22, 09 @ 9:28 am

  6. I dont think so truth2power. Giannoulias was able to clean up Oppenheimer’s mess and defend Illinois. This is a great day for him and an even better day for the families who have been taken advantage of throughout these tough time. This is just one more example of how Giannoulias is fighting for us and bringing those who are accountable to justice. Keep up the good work Giannoulias, and i cant wait for what you’ll do in DC

    Comment by jeepnomad Tuesday, Dec 22, 09 @ 9:37 am

  7. Everyone should keep up the heat on this St. Charles issue. Let the media in now.

    I had friends who went to “Charleytown” when I was a kid. They were stoners who stole. I don’t recall them saying it was too bad then. I wonder what the governor doesn’t want anyone to see now. That’s a big red flag.

    Comment by wordslinger Tuesday, Dec 22, 09 @ 9:55 am

  8. Only in 21st century Illinois is losing 50% of an investment a resounding victory….

    Kudos to our political leadership. If you were in the private sector, you’d be getting buried, not praised.

    Comment by Leroy Tuesday, Dec 22, 09 @ 10:03 am

  9. This is the 3rd 529 settlement this month! [Senator] Giannoulias, thanks for looking out for us/U.S.

    Comment by Nothin funny about OppFunds' mismanagement Tuesday, Dec 22, 09 @ 10:05 am

  10. Had Alexi been doing his job and keeping a close eye on the funds, and what Opp. was doing, losses could have been mitigated. Alexi was asleep at the wheel, and Illinois families lost tens of millions as a result.

    Comment by Anon Tuesday, Dec 22, 09 @ 10:17 am

  11. Alexi should be ashamed of himself. He was trusted with the hard earned money of the people of Illinois. Instead of securing the future of their children, parents now find themselves victims of Giannoulias’ gross mismanagement of their money. This is not a victory by any means. It is a sorry excuse for an apology. Alexi continuously misstates the situation. If he had any sense of decency, he would admit the grave disservice he did for the people of Illinois and apology. No wonder we are facing such hard economic times when we people like this serving in government. We deserve better than what we have seen from Alexi Giannoulias.

    Comment by BGSB Tuesday, Dec 22, 09 @ 10:18 am

  12. Just as he did during the Edgar administration, Mike Lawrence continues to report things as they really are; not how the politicos want to hear them.

    Comment by One of the 35 Tuesday, Dec 22, 09 @ 10:20 am

  13. Wow–team-Alexi is out in force this morning. The guy lost $150 million on his watch–and yes team-Alexi it was his watch, he knew eight months before he pulled the money out of the fund that it was heavily invested in mortgage backed securities, but failed to inform investors–gets just over 50% back because of the AG’s efforts and is patting himself on the back.

    The AG’s office did a good job trying to clean up his mess, but like a few thousand others I’m still out 50% on Alexi’s “savings plan.”

    Truly, adventures in bad government, bad judgement and revisionist history–business as usual for Alexi.

    Comment by Nothin funny about Alexi's Mismanagement Tuesday, Dec 22, 09 @ 10:22 am

  14. ==Only in 21st century Illinois is losing 50% of an investment a resounding victory….

    Kudos to our political leadership. If you were in the private sector, you’d be getting buried, not praised.==

    On the contrary, we’re too big to fail, so we’d be getting bailout money and dishing out bonuses.

    Comment by wordslinger Tuesday, Dec 22, 09 @ 10:27 am

  15. With two jobs, I am scraping by to pay my college tuition. I cannot even imagine what it is like to wake up one day and find all your college savings gone because it has been invested in risky investments. If Alexi had an ounce of decency, he would come forth and apologize for his horrible mismanagement. However, Alexi is the man who thought 2.5 million is a small amount so I doubt he realizes he ruined the futures of so many children.

    Comment by Alexi should be Ashamed Tuesday, Dec 22, 09 @ 10:42 am

  16. Early release prisoners Augusta and Guzman-Rivera obviously have serious problems with substance misuse. I wonder if those have been resolved. If not, we taxpayers have wasted the $40k a year it took to keep them in jail in the first place.

    As to Mr. Moreno-why on earth was he in jail. Couldn’t he have have been rehabilitated while on home monitoring and continued working. Assuming he served six years of a seven year sentence, what did we taxpayers get for the almost $250,000 we spent giving him free food, shelter, medical care, recreational services, educational services or so on. Wouldn’t it have made more sense to order him to give the victim his money back plus a fine plus court costs.

    It looks as if Guzman-Rivera and Augusta served
    about 2/1/2 years of a 3 year sentence. $100k each in other words. That would pay for some high-quality substance abuse treatment…plus, they would have presumably continued to work and pay taxes.

    Comment by cassandra Tuesday, Dec 22, 09 @ 10:50 am

  17. i’m curious as to why the chicago tonight piece on the 1000 early release program was so different from what the sun times is reporting, on its front page no less?

    chicago tonight’s portrayl of the program suggested that everything was smooth and going according to plan, but according to the sun-times things aren’t exactly smooth or going according to plan–at least not the plan that was present to the public.

    also, the chicago tonight piece failed to mention that this summer a mentally ill felon released early with a home monitoring device cut off his eletronic monitor, which apparently did not trigger any alarms. if any alarms were triggered, they were triggered late—AFTER he raped two women in the lincoln park area.

    it’s good to see rep. franks weigh in on the early release program mishaps. Too bad other lawmakers aren’t because they should be concerned about what the quinn administration is doing. Shame on them for not showing an interest, but hey its the holidays, so i guess they don’t feel like being bothered. the get full time pay and benefits for doing part time work. whatever.
    http://thesouthern.com/news/local/state-and-regional/article_a91b67dc-eeff-11de-ba97-001cc4c002e0.html

    Comment by Will County Woman Tuesday, Dec 22, 09 @ 11:02 am

  18. Rich, congratulations on a great headline to this thread: “Adventures in Lousy Governing.”

    Every single article posted by you under that headline made me cringe. Every single comment made in this threat trying to explain away the lousy governing or extolling it made me cringe.

    Any good State of Illinois government news to cheer us up just before Christmas? Anything? :-)

    Comment by Louis G. Atsaves Tuesday, Dec 22, 09 @ 11:11 am

  19. p.s.,

    because governor quinn knew about the secret early release program and that it was currently being used to cut costs, he won’t fire his director of prisons. so the investiagtion of MGT is just a big dog and pony show, and waste of time. quinn is probably too afraid that a fired and disgruntled randle would spill the beans and blab about exactly what all the governor knew and when. who needs that in the heat of a contested election year?

    Comment by Will County Woman Tuesday, Dec 22, 09 @ 11:24 am

  20. This IS good news. The Treasurer and AG did not grandstand, fingerpoint, or
    do anything other than fight for the citizens of Illinois. They solved a
    problem and helped people. Hopefully, in 2010 more of our leaders can
    follow that example. Good job Alexi and Lisa.

    Comment by Wrestlemania 2010 Tuesday, Dec 22, 09 @ 11:24 am

  21. With due respect to Rich’s provocative title and all the predictable hits on Alexi, this is a good settlement. Let’s have some honesty in breaking this down folks:

    (a) Illinois – or the State Treasurer’s Office, whichever you prefer – was the first to identify this problem and let everyone know;
    (b) If Oregon’s allegations are to believed, Oppenheimer was deceiving everyone (even after they were first confronted with the losses;
    (c) Instead of filing a lawsuit and scoring political points that way, Giannoulias and Madigan took the more politically risky move – but the RIGHT move: recover as much as you can, as quickly as you can so kids can pay tuition.
    (d) Finally – and VERY, VERY important: nobody is talking about how much of these were ACTUAL principal losses. How about that analysis? Are we just getting paper losses that have never been realized? What is the principal number?

    I commend Giannoulias and Madigan for working closely together and getting money back for Illinois families. After a year when people and institutions got absolutely killed and lost EVERYTHING – including what they put into the market – we should applaud this effort

    Comment by South Side Tony Tuesday, Dec 22, 09 @ 11:26 am

  22. Hard to believe the Bright Start settlement wasn’t announced with great fanfare Thursday afternoon…

    Comment by 47th Ward Tuesday, Dec 22, 09 @ 11:28 am

  23. Louis G. Atsaves -

    Buck up, old boy.

    You should do what I do when I’m depressed. Jump back into the Cap Fax archives. Turn the wayback machine back to like 2004. See, back in those days, money and good governance were plentiful. $10 million for stem cell research…8% COLA increases…money, money and more money for the CTA and RTA. Money for horse racing, money for sports stadiums, billion dollar parks, it seems endless when you got back and read about it now!

    Comment by Leroy Tuesday, Dec 22, 09 @ 11:30 am

  24. South Side Tony…if those were just paper losses don’t you think Alexi and his gang would say so? This was principle from working families who invested int the low yield/low risk fund. All Alexi did with this pathetic settlement was change the tag line from “he lost 85 million” to “he lost 70 million”. I don’t think that sounds appreciably better. He knows that, its why he is announcing this story Christmas week. A tried and true stragey for such damaging stories but unfortunately for him, his opponents (particularly kirk) have the resources to drive this message home. He may try to bury it today, but it will rise again in tv ads across the state.

    Comment by wise guy Tuesday, Dec 22, 09 @ 11:56 am

  25. I like Rich Samuels because he’s from the north shore but the guy was on the quinn payroll last night on chicago tonight. Not once did he mention as WCW suggested an alternative point of view. The thing was very one sided, dissapointing for someone who is usually one of their best.

    As a yalie the verdict would be more booooo than boola boola on the reporting.

    Comment by shore Tuesday, Dec 22, 09 @ 11:58 am

  26. A lot of people talk like they have not been hurt by this economic meltdown…what’s your secret? We’ve all been hit hard recently but atleast we have a treasurer & AG looking out for us. And you do have to take into consideration that “The lawyers for the state say that’s a good result, that pursing litigation could cost a fortune, take years, and might not get a better result.”

    Comment by Nothin funny about OppFunds' mismanagement Tuesday, Dec 22, 09 @ 12:00 pm

  27. (a)Illinois – or the State Treasurer’s Office, whichever you prefer – was the first to identify this problem and let everyone know;

    But as Greg Hinz has pointed out several times Alexi knew at least 7 months before he stopped putting my money into the fund that it was backed with toxic investments
    (b) If Oregon’s allegations are to believed, Oppenheimer was deceiving everyone (even after they were first confronted with the losses;

    Oppenheimer has settled in order to continue doing business in those states–which begs the question if they negligent as alleged–in spite of clearly saying in their prospectus which Alexi had and we didn’t–why are they still Alexi’s fund manager for the program?
    (c) Instead of filing a lawsuit and scoring political points that way, Giannoulias and Madigan took the more politically risky move – but the RIGHT move: recover as much as you can, as quickly as you can so kids can pay tuition.

    Madigan took on the case–Alexi bought an SUV with the funds that weren’t gutted, pointed fingers and refused any responsibility
    (d) Finally – and VERY, VERY important: nobody is talking about how much of these were ACTUAL principal losses. How about that analysis? Are we just getting paper losses that have never been realized? What is the principal number?

    My principle losses were around 28%–some were more, some were less, depends on when the money was put in.

    Bottom line Southside, nice attempt to prop about the boy wonder–but c’mon get your facts straight.

    Comment by Nothin funny about Alexi's Mismanagement Tuesday, Dec 22, 09 @ 12:08 pm

  28. Mike Lawrence for Governor

    Comment by downstate hack Tuesday, Dec 22, 09 @ 12:12 pm

  29. I was always suspicious of 529 plans in general - just WHY are the states even involved in this financial vehicle? - but could especially never see my way clear to put any money in Illinois’ plan. I thought investing in the Illinois plan was just begging to be robbed. There are tax advantages, but jeez. So we invested in a couple of other state plans, which have done more than all right, although I am not happy with the fee structure. If you want a 529 plan, shop around. The one in Illinois is not that attractive, even leaving aside the corruption issue.

    Comment by Excessively Rabid Tuesday, Dec 22, 09 @ 12:26 pm

  30. the fight between the Hoffman shills and the Alexi shills is amusing.

    But really, this is a great settlement for what would have been an extremely difficult case to win in court. The Core Fund (which I was invested in partially) lost about 38% in late 2008. The investments in the securities were not the issue. They were A+ rated by every major agency. It was the fact that the bonds were leveraged which was the major issue and Oppenheimer allegedly hid this from the states (Illinois, Oregon, New Mexico….on and on).

    Alexi was the first state treasurer to stop the flow into this fund and force Oppenheimer to redistribute. This resulted in about 10% of the 38% being gained back as of August (in other states, much less was gained back).

    Then he worked with the AG to prsecute and recover the rest.

    And, AGAIN, the loss in the fund was nowhere near 150 million.

    I can’t see how this is anything but a huge victory for Alexi and the investors. I am one of those investors and I am thrilled!! None of my other investments are paying me back for my losses.

    Comment by heatmizer Tuesday, Dec 22, 09 @ 12:28 pm

  31. Wiseguy, you’re wrong. I don’t know what the number is, but since I invest for a living, I can tell you for a FACT, that the principal was a mere fraction of the paper losses.

    My point is that neither you – nor really anybody reporting on this – is interested in this fact because you are only interested in the political hit. Thus your uninformed comment in response to my post.

    The TRUTH here – and I know all the political hyperbole here is more important to most – is this settlement makes what has become a fantastic program better. Look at the reports lauding Bright Start (many of which came out after the discovery of the losses) and give Alexi and Lisa their due credit for fixing the only blemish on Bright Start’s record.

    This is a victory

    Comment by South Side Tony Tuesday, Dec 22, 09 @ 1:00 pm

  32. Will Bright Start get back 50% of the cost of the SUV they felt the need to purchase?

    Comment by LincolnLounger Tuesday, Dec 22, 09 @ 1:08 pm

  33. heatmizer — Right on, watching the two sides go at it on this one is very entertaining to say the least.

    But I have to say the Hoffman folks have a point, if there was ‘misleading’ going on, why are we not getting a better deal?

    Comment by OneMan Tuesday, Dec 22, 09 @ 1:09 pm

  34. South Side,are you saying that nobody lost principal?

    Comment by wise guy Tuesday, Dec 22, 09 @ 1:16 pm

  35. No surprise on Alexi’s mismanagement of these funds…and Lisa Madigan was not being a very good watchdog on Bright Start…these two are poster children for those in IL who feel entitled to hold office because of who they are not because they ar egood public servants…

    The jury is still out for me on the havoc @ IDOC…it seems that Rich is very interested in using this issue to knock down Quinn to benefit Hynes…let’s watch the bias until the full story becomes available (as if…)

    Comment by Loop Lady Tuesday, Dec 22, 09 @ 1:23 pm

  36. Why is Quinn taking such a gamble for just 5 million dollars? That doesnt make any sense at all. If just one of those guys gets out early and does something stupid, he is toast. That seems like an awfully big risk for such puny savings.

    Comment by wise guy Tuesday, Dec 22, 09 @ 1:32 pm

  37. Hoffman’s people ought to head to the print shop and ordering the “56 cents” buttons. He needs to let people know that’s what Alexi did to every dollar invested in those funds.

    Comment by Barry Parkin Tuesday, Dec 22, 09 @ 1:41 pm

  38. Alexi knew for 7 months that this fund was tanking… How can you defend him losing over 80 million dollars?

    Comment by John M Tuesday, Dec 22, 09 @ 1:45 pm

  39. –”It looks as if Guzman-Rivera and Augusta served
    about 2/1/2 years of a 3 year sentence. $100k each in other words. That would pay for some high-quality substance abuse treatment…plus, they would have presumably continued to work and pay taxes”–

    psst, Cassandra, go run that name and come back and try your generalization again.

    Comment by Cindy Lou Tuesday, Dec 22, 09 @ 2:02 pm

  40. How can one release multiple DUI convicted felons and not consider that the Governor’s future is toast rather than may be as a result of these early releases?

    Did they run out of criminals who have committed financial crimes?

    I am sorry, but I have voted for PAt Quinn in the past, but will not longer support him

    Comment by Plutocrat03 Tuesday, Dec 22, 09 @ 2:04 pm

  41. CL-

    Run them where?

    My point is the same. Even in incarceration-loving America, we can’t afford to lock up individuals who are have problems with alcohol or drugs for life. Logically, unless we have proof that they have not only licked their addiction but can maintain sobriety outside of an institutional setting, they are as dangerous to the public as the day they went in. By the same token, if they have attained sobriety, it makes sense to move them into the community as quickly as possible to see if they can hang onto it while still on home monitoring.Because, they’ll be getting out sooner or later-in less than a year with regards to the 1000 early release inmates.
    The longer they are tested through supervised community release the better because we can’t afford to pay for lifetime supervision either.

    Comment by cassandra Tuesday, Dec 22, 09 @ 2:26 pm

  42. ==I was always suspicious of 529 plans in general - just WHY are the states even involved in this financial vehicle? ==

    Just a hint: “529″ is Section 529 of the Internal Revenue Code.

    If that’s not enough, it’s because 529 requires state involvement, and it gives tremendous tax breaks: no tax at all on the earnings from your investment, as long as you use them to pay for educational expenses.

    As to the investment losses, I know nothing about whether there was any fraud or negligence involved with the fund manager, but I do know that an awful lot of very smart people who pay serious attention to their investments lost a LOT of money in the last 2 years. Any bets on how much Warren Buffet lost? Without some promise in the first paragraph of very good evidence of chicanery by a specific person - Giannoulias or anyone else - I wouldn’t even bother reading to the end of the story.

    Getting such a large chunk back from Oppenheimer is a pretty strong hint something was wrong with Oppenheimer, but that by itself is nothing against Giannoulias.

    Comment by Anon Tuesday, Dec 22, 09 @ 2:27 pm

  43. Nuthin Funny about Alexi get your facts straight

    (a) But as Greg Hinz has pointed out several times Alexi knew at least 7 months before he stopped putting my money into the fund that it was backed with toxic investments
    - They were NOT toxic investments read the prospectus the Core Plus Fund was invested in A+ paper (as rated by Moodys, S+P) and Greg Hinz put a negative spin on his article but only points out that Alexi may have known that OPCO was in mortgage backed securities which are not toxic…. and A paper mortgage backed securities can be a good investment as well as a bad investment, that would be like the DOW falling 30% and saying that all stocks are toxic
    Also 7 months?????Really, the Core Plus Fund was tracking the benchmark until Sept. 10 check the chart!!
    (b) Oppenheimer has settled in order to continue doing business in those states–which begs the question if they negligent as alleged–in spite of clearly saying in their prospectus which Alexi had and we didn’t–why are they still Alexi’s fund manager for the program? - ONE FUND OUT OF HUNDREDS, Did you read the prospectus, you didn’t have it? Not that you would have read it anyway (I did) but it sounds like you didn’t ask for it or didn’t care to look for it. It was on OPCOs website and you could have asked for it as it says in the bright start manual, OPCO is a giant fund manager one bad fund does not make the whole company bad, JP Morgan had a similar bond fund lose 24%
    (c) Madigan took on the case–Alexi bought an SUV with the funds that weren’t gutted, pointed fingers and refused any responsibility
    -cheap shot … emost political figures have a car that has been paid for by the state or campaign contributions it was going to come out of one bucket of money or the other, some even opt for some seriously expensive state police details
    (d) My principle losses were around 28%–some were more, some were less, depends on when the money was put in.
    - yes timing is everything, how much of that 28% are you getting back, lets face it the core bond fund was availiable to the general public and other OPCO investors are they getting money back i doubt it.

    Bottom line “Nuthin Funny about Alexi”, nice attempt to distort the facts–but c’mon you don’t even know the facts and I’m tired of typing but there is plenty more that you don’t get.

    Comment by Billy Zabka Tuesday, Dec 22, 09 @ 2:48 pm

  44. Leroy- Really??? wasn’t it the private sector at Oppenhiemer who caused this mess, and secondly Alexi recoved 90% (77/85) of what was lost

    Comment by Billy Zabka Tuesday, Dec 22, 09 @ 2:50 pm

  45. Saying everybody lost money and therefore it is alright that this fund lost money is a grave misstatement of what has transpired. “Everyone is doing it” is hardly a justifiable defense for anything. The fact of the matter is that Giannoulias invested the college tuition of so many students in high high risk, toxic assets and knew the fund was on the downturn for SEVEN months. Time for Giannoulias to face the facts. He failed the people of Illinois.

    Comment by TruthTime Tuesday, Dec 22, 09 @ 2:51 pm

  46. Alexi surely doesn’t need me to defend him—and as a parent who is still smarting from what happened to my daughter’s Bright Start account, I am not inclined to do so—but I just don’t see any foot-dragging here. Seven months is not a particularly long time to find cause and culprit in these matters. In recent years, my husband, a trader, ferreted out two squirrelly cases that caused catastrophic draw-downs and WSJ headlines. One was outright fraud; the other was more like the D-doc off-roading Oppenheimer was engaged in here. Resolution and recovery took more than two years to realize but that wasn’t because the people driving the complaints lacked the will or smarts. Rather, it’s because the regulations related to these instruments are inadequate.

    Comment by Suzanne Tuesday, Dec 22, 09 @ 2:54 pm

  47. google Cassandra, if you can rattle talking points at me I’m sure you can manage to figure how to google your search term.

    Comment by Cindy Lou Tuesday, Dec 22, 09 @ 3:08 pm

  48. TruthTime - It is clear that you have read one or two headlines and know nothing about investing, SEVEN months i would doubt that you even know how to pull up the chart for the core bond fund but again it was trending with the benchmark index and dropped off on Sept. 10 less than three months before the money was pulled from the fund — “high high risk” is that your technical term for A rated paper call Standard and Poors or Moody’s if you want to complain

    Comment by Billy Zabka Tuesday, Dec 22, 09 @ 3:10 pm

  49. I want to hear it straight from Alexi’s mouth that he is not at fault and in no way could have prevented this. Until then, I will never vote for Alexi Giannoulias again.

    Comment by Where is Alexi? Tuesday, Dec 22, 09 @ 3:16 pm

  50. Alexi will fit in perfectly in Washington. His ability to throw people’s money down the tube will put the others to shame. We can add this accomplishment to his long and impressive resume. Oh wait…

    Comment by Jacob Marcos Tuesday, Dec 22, 09 @ 3:28 pm

  51. When Alexi said the other day that no one saw this coming I thought of George Bush. Failures that make it in life because of who they know. Really I read lots of economist that warned us it was coming. But, why would a banker that runs a state treasury waste his time reading about the economy?

    Comment by Anon Tuesday, Dec 22, 09 @ 3:53 pm

  52. i guess I will pipe up one last time.

    I like Alexi and was nominally a supporter, but, I was really interested in seeing a good match up between Alexi and Hoffman. I thought (and still think) Alexi is a strong progressive and Hoffman could be take on the corruption fighter mantle. But watching the goofiness that is the Hoffman campaign (how many times have they now had to publicly apologize for false statements?) and refusal to discuss issues over attacks has really dissappointed.

    Anyway, the last word should be that Alexi’s managment of Bright Start moved the fund from 47 of 49 to top five as rated by Money mag and Consumer Reports AFTER the Core Fund losses were public. I am an investor (and attorney and former inv. analyst) in Bright start, and although not happy with the losses, I am overall happy with the fund in the crazy 08/09 market (the 0-6 age base blended is up almost 27% this year)

    To say Alexi “threw away peoples money” is just really a lame attack. The Core fund was invested in A+ bonds (that is the equivilent of T-bills). They tanked in October (not “7 months” earlier) The Oregon AG found out in December that the funds were overly leveraged and in January (before any other state) Alexi forced Oppenheimer to shut the fund down and transfer the money, saving likely 10-20 million in additional losses.

    The total losses from the inappropriate leveraging is likely much closer to 85 million than 150 million. However, Illinois used the higher number to get more back for investors. Could they have litigated this for the next 3 years and maybe, without appeals, won a verdict for 100 million? Maybe. Maybe not.

    Again, this settlement, combined with Hoffman’s poor showing, sollidfies Alexi. He can start running against Kirk now and pretty much ignore Hoffman’s undoubtedly increasingly hyperbolic and desperate attacks.

    Comment by heatmizer Tuesday, Dec 22, 09 @ 4:17 pm

  53. this settlement only “solidifies” the losses. Until now he could hide behind Lisa skirt and pretend like he was going get people their money back. Today he has to say “look how great I am…I got you back 56 cents on your dollar”. Not a great campaign slogan. And heatmizer, you know that if this were a great deal he would be touting it in a big press conference, ad crews filming. Instead, a little press release to be lost in holiday activity. I think that says it all.

    Comment by wise guy Tuesday, Dec 22, 09 @ 4:59 pm

  54. Heatmizer, Billy Zabka and all the other Alexi shills,

    You can keep saying Alexi didn’t lose and Alexi did a good job and that 150 isn’t 85 blah blah blah. But here are a couple of facts that you seems to have difficulty with.

    1) Morningstar warned in 2007 that the fund was outperforming the benchmark by a meaningful amount and that there was something wrong with the fund. Don’t believe me? Ask Morningstar because that’s where I heard it.

    2) Alexi sold the fund to investors as a safe, cover your principal fund despite the fact that the prospectus mentioned that up to 50% of the proceeds could be invested in mortgage backed securities and junk bonds. Classic bait and switch.

    3) Even if you take everything the bright one has said to date - that he was first to know and first to confront Oppenheimer in April 2008 - he failed to warn consumers or take any corrective action until December 2008. It was during this period when most of the losses occurred.

    4) 56% is roughly the same percentage that other states recovered and it’s certainly not the 90% her promised in June. Not sure how Alexi is such a genius fighting for us when all he really did is get the same settlement everyone else did.

    In short, you can type until your fingers bleed, but you can’t change the facts. The boy wonder screwed up, probably because he was spending so much time thinking about his next office that he wasn’t doing his job in this one.

    Comment by Chicago Cynic Tuesday, Dec 22, 09 @ 5:06 pm

  55. It does not cost $40,000 per year for inmates at all IDOC facilities. Some are more expensive, some are much less. Minimum security facilities are much less expensive than $40,000 per year.

    I was inside at St. Charles a number of times under past administrations and did not see the kinds of neglect or abuse currently discussed. Wardens were genuinely concerned about all the youths in the facility. I understand much changed as the political appointees moved into the Warden positions with inadequate training and qualifications.

    Comment by In the Sticks Tuesday, Dec 22, 09 @ 6:24 pm

  56. Pfft, save your fingers, In the Sticks, actual costs per year does not entertain in Cassandra’s reasoning considering she also assumes one of these listed men served 6 of the 7 years and that the other two served 2 and 1/2 of 3 years.

    Comment by Cindy Lou Tuesday, Dec 22, 09 @ 7:07 pm

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