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* Sun-Times…
For the second time this year, Gov. Pat Quinn has suspended state funding to the scandal-scarred United Neighborhood Organization, the biggest charter-school operator in Illinois.
A Quinn spokeswoman said Thursday the state has frozen the final $15 million of a $98 million state school-construction grant that the Illinois Legislature promised UNO in 2009 to help build a network of charter schools.
“As a result of our own internal review conducted earlier this year, we have not approved any new projects, and we have suspended future capital projects,” spokeswoman Sandra M. Jones said. […]
Quinn restored the state funding in early June, saying he was confident UNO had implemented reforms, including the appointment of a new board chairman. Longtime UNO boss Juan Rangel stepped down as board chairman but has remained as the charter operator’s $250,000-a-year chief executive. Rangel served as Mayor Rahm Emanuel’s 2011 campaign co-chairman.
Less than three weeks after the state restored funding, Quinn’s Department of Commerce and Economic Opportunity — which oversees the grant — got a letter from the SEC requesting documents about UNO.
* Quinn had cited the appointment of Martin Cabrera Jr. as the reason why he restored funding. Cabrera is a close ally and business partner of powerful Chicago Ald. Ed Burke, who personally asked Quinn to restore UNO’s funding. Burke was a major contributor to Quinn’s 2010 campaign.
But Cabrera Capital Markets, which Martin Cabrera founded and runs, was one of two underwriters for a $37.5 million 2011 UNO bond issue. And when the SEC came calling, Cabrera beat a retreat and abruptly resigned as UNO’s chairman.
Cabrera Capital Markets has become a major national player. The company has nine office locations, including NYC and LA, and it was one of Facebook’s underwriters for the social network’s 2012 IPO.
* Needless to say, an SEC investigation into a bond deal for a charter school outfit which has gazillions of political ties to every major Democratic political player in this state could turn out to be very enlightening indeed.
However, allow me once again to complain about the federal government’s priorities here. We get an SEC investigation into a relatively minor bond deal, while the banksters who shoved the world’s economy off a cliff are still walking free. And while the US Attorney for southern Illinois uses the Sherman Antitrust Act to shut down and prosecute a Metro East tax sales ring, the Justice Department refuses to even consider the possibility of prison for the eager, knowing and willing participants in the greatest financial scam the planet has ever seen.
I’m not complaining about the local investigations one bit. I just wonder why it’s always the little fish who are targeted, while the monster fish swim away.
posted by Rich Miller
Friday, Oct 18, 13 @ 11:44 am
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Monster Fish too Big to failet.
Comment by x ace Friday, Oct 18, 13 @ 11:51 am
Rich, I agree with your point about a lack of prosecution for the financial collapse. I think that the trend of regulators turning a blind eye (aka, settling for fractions of the damage caused) is slowly reversing. One needs only to look at the recent settlement between the CFTC and JPMorgan over the “London Whale” trades to see that. Regulators weren’t going to just let JPM back out of this one. They had to - for the first time in……a while - admit wrongdoing, and pay a much steeper penalty as a result.
Does admitting wrongdoing over one trade = jail time for those who knowingly sold risky mortgages and derivatives? No. But is it a start? We’ll see.
http://dealbook.nytimes.com/2013/10/16/jpmorgan-to-pay-100-million-and-make-admission-of-wrongdoing-in-london-whale-pact/
Comment by Empty Chair Friday, Oct 18, 13 @ 11:53 am
How does the underwriter of a bond issue turn around and serve as the chairman of the organization the bond issue benefits? I know we have our unique political standards in Illinois but I thought that the underwriting business had national rules or standards.
Comment by DuPage Dave Friday, Oct 18, 13 @ 11:53 am
–“As a result of our own internal review conducted earlier this year, we have not approved any new projects, and we have suspended future capital projects,” spokeswoman Sandra M. Jones said. […]–
Huh? Was that internal review before or after you resumed funding? The SEC had nothing to do with it? C’mon.
Let the chips fall where they may. Chicago ain’t ready for “school reform” if it means taxpayer money for clout-heavy insiders like UNO and Rauner.
In regards to the larger question, the generous explanation that I’ve seen offered is that the Justice Department can’t pursue criminal charges against the Big Fish because it would throw world finance into a tizzy and send the economy off the rails again.
A more cynical explanation would be that the Big Bankers have plenty of pals in-and-out of the revolving doors of government/finance in both parties and all over the world.
Some big fines, no admission of guilt, and see you at the cocktail party later tonight.
I mean, Obama has Jamie Dimon into the White House on a regular basis. If there is a bigger ongoing criminal enterprise asking for a RICO than JPMorgan Chase, I don’t know what it is.
Comment by wordslinger Friday, Oct 18, 13 @ 11:59 am
I like to imagine that by getting the small fish, they are hoping for them to flip on the biggies…but, that never seems to work. The small fish are too afraid of the big ones.
Aren’t the capture of small fish better than no fish at all? At least from the public’s standpoint?
Comment by Belle Friday, Oct 18, 13 @ 12:09 pm
I take it the Feds/SEC didn’t learn their lesson in the recent failed Marc Cuban prosecution, unless what they are really interested in are press clippings.
To echo your observation Rich, AIG gets bailed out, Lehman fails, and the big banks feast off of TARP - the mortgage industry tanks, the middle class gets squeezed out of their homes, people lose their jobs….and not one person has gone to jail or has even been prosecuted for a trillion dollar debacle?! “oh, but that $37 Million Dollar deal…now that is something to look into!” Gimme a break…
Comment by GetOverIt Friday, Oct 18, 13 @ 12:20 pm
Apparently the Big Fish investment bankers did not break any laws, so they cant be prosecuted and put in jail.
The problem is that they themselves wrote all the complex regulations that govern their own activities. They controlled elected politicians with massive contributions to campaigns and propaganda think tanks, both democrats and republicans (makes no difference to them).
A good solution to curbing the enormous power of these plutocrats is not apparent to me, but without a drastic set of changes in taxation and influence it will only get worse, as there is no limit to greed.
Comment by cod Friday, Oct 18, 13 @ 12:23 pm
In other charter and Cabrera news, the Chicago Plan Commission, which is chaired by Emanuel appointee Martin Cabrera Jr. just yesterday gave zoning approval for a new Noble Charter high school right across the street from the existing Prosser H.S. A parent quoted in the Sun-Times notes this high school had its funding cut by $1.2 million at the same time CPS would put $1.3 million into the new school.
See Sun-Times article: tinyurl.com/othel7k
BTW, Bruce Rauner is a patron of Noble Charter schools and serves on its board.
So when does the Chicago charter school issue became something in the gubernatorial election. And how would somebody like Rauner as GOP nominee go about attacking Quinn and Chicago Democrats on this UNO scandal when he has all the same ties?
Comment by hisgirlfriday Friday, Oct 18, 13 @ 12:48 pm
===Apparently the Big Fish investment bankers did not break any laws===
Please. They could bust ‘em for picking their feet in Poughkeepsie. One of the charges that GRyan was convicted of was a $200 tax beef. $200.
Comment by Rich Miller Friday, Oct 18, 13 @ 12:48 pm
DuPage Dan is dead on about the obviously conflict here. This is a welcoming gift for Chicago’s new U.S. Attorney.
If this scandal continues to expand, will UNO damage the charter school movement the way the parking meter fiasco has doomed big privatization deals?
Comment by Thomas Friday, Oct 18, 13 @ 12:50 pm
===Apparently the Big Fish investment bankers did not break any laws===
Read the civil settlements where they “admit no wrongdoing.”
If Tony Accardo had the ways and means to pull that stuff, he would have been locked up forever.
Comment by wordslinger Friday, Oct 18, 13 @ 1:05 pm
Hopefully Thomas!
I don’t know why any GOP candidate hasn’t jumped on this issue yet. It contrasts with Rauner and highlights his ties to Rahm AND it reminds voters of those Chicago Democrats and their insider deals and kickbacks to cronies. Instead of being looking heartless and saying I’m cutting off money in Springfield for Chicago schools, go populist and say you’re cutting off Springfield money for Chicago charter schools and support legislation to give Chicago taxpayers an elected school board again and end Rahm control of schools. Again that let’s you make Rahm an issue against Rauner.
I don’t get the calculation otherwise unless they’re scared of Rauner trying to paint them as tools of the CTU if they go against charters, but its not like they’re gonna get any of that money with Rauner hoovering it all up so why not take the populist angle and get the Chicago free media hit by taking on Rahm/Rauner?
Comment by hisgirlfriday Friday, Oct 18, 13 @ 1:07 pm
Quinn again shuts off UNO money …until he gets a call from Eddie Burke again. It’s all legit
Comment by Hank Friday, Oct 18, 13 @ 1:28 pm
Them that got gets, them that don’t don’t.
Comment by Living in Machiaville Friday, Oct 18, 13 @ 2:12 pm
Burke and Madigan have major ties to the UNO. Quinn is going to need those Hispanic votes controlled by Rangel so don’t expect the cash to be witheld for long.
Comment by Fed up Friday, Oct 18, 13 @ 2:33 pm
A lot of the markets and instruments created by those big fish, led directly to the crash, were entirely unregulated — and the GOP in Congress are still trying their best to keep it that way.
The priorities of the US Attorneys do seem skewed toward the less powerful.
Comment by walkinfool Friday, Oct 18, 13 @ 3:07 pm
With democrats like these the big fish don’t need their GOP friends in Congress.
Comment by Ruby Friday, Oct 18, 13 @ 3:08 pm
So PQ is agin it after he was fer it after he was first agin it. Ok. Got it.
Comment by Arthur Andersen Friday, Oct 18, 13 @ 3:35 pm
Walk in fool.
Obama is president,he appointed good friend loyal democrat Eric Holder attorney General. The US Attorney for New York is a loyal Dem. No the GOP aren’t the ones protecting Jaime Dimon and the fat cats from Wall Street.
Comment by Fed up Friday, Oct 18, 13 @ 3:46 pm