A place were I can write...

My simple blog of pictures of travel, friends, activities and the Universe we live in as we go slowly around the Sun.



November 01, 2023

$168 million in loan interest as a result of fraud

Trump and company saved $168 million in loan interest as a result of fraud, banking expert testifies

By Lauren del Valle, Kara Scannell and Jeremy Herb

A banking expert testified Wednesday that Donald Trump and his company benefited more than $168 million by obtaining favorable loan terms on transactions where the former president personally guaranteed the loans.

The New York Attorney General’s office called Michiel McCarty to testify about his assessment of the $168 million in ill-gotten gains.

McCarty analyzed the lending documents related to transactions at issue in this case for the following Trump Organization properties: 40 Wall Street in New York, The Doral Golf Resort & Spa in Florida, Trump International Hotel & Tower in Chicago, and the Old Post Office project in Washington DC.

McCarty calculated the difference in interest payments that Trump might have paid with a commercial real estate loan that would have had a much higher interest rate than the rate he obtained by personally guaranteeing the loans on the basis of financial statements that inflated his net worth.

He determined the Trump Organization saved on interest for the properties:

$72,908,308 for the Doral Resort;

$53,423,209 for the Old Post Office loan;

$17,443,359 for Trump International Hotel & Tower in Chicago;

and $24,265,291 for 40 Wall Street.

Trump’s attorney Chris Kise argued repeatedly in objections that the expert should not be permitted to suggest what loan rate Trump Org. could have gotten because no trial evidence has shown the lenders would have changed the loan terms if they knew Trump’s net worth was inflated based on the asset valuation in his financial statements.

Judge Arthur Engoron overruled the defense objections, reminding Kise of the summary judgment that already found Trump and his company liable for fraud before the trial started.

“I decided they were ill gotten. He’s not deciding that – he’s deciding the number,” Engoron said.

McCarty testified that lenders price an interest rate based on the risk they associate with the transaction.

“Risk is a representation of the probability of default. As [probability of default] goes up you have to compensate for the potential for loss. To do that you raise the interest rate,” McCarty said.

McCarty said he agreed with Engoron’s assessment of the lenders’ risk exposure in the loans with Trump Organization that were backed by Trump.

“The subject loans made the banks lots of money, but the fraudulent [financial statements] cost the banks lots of money. The less collateral for a loan, the riskier it is, and a first principal of loan accounting is that as risk rises, so do interest rates. Thus, accurate [financial statements] would have allowed the lenders to make even more money than they did,” Engoron wrote in his summary judgment ruling.

McCarty said that had Trump went with a commercial loan that relies on the risk rating of the actual property. The Doral Resort and the Old Post Office loans held lower credit ratings at the time of the transactions because they were considered riskier projects that required high spending to renovate Doral and convert the Old Post Office into a hotel.

$1.3B for 3 new massive transmission lines

Biden administration announces $1.3B for 3 new massive transmission lines to shuttle clean energy

By Ella Nilsen

The Biden administration is announcing it will spend $1.3 billion of new federal funding to help create three new, massive electrical transmission lines in the Southwest and New England, in an effort to improve the nation’s power grid and get more renewable energy into America’s homes and businesses.

The lines will span from Arizona to New Mexico, another from Nevada to Utah and a third running through Vermont and New Hampshire and extending into Canada.

Energy Secretary Jennifer Granholm and White House national climate adviser Ali Zaidi said at a briefing the lines will bring a significant amount of new wind, solar and Canadian hydropower onto the grid, adding about 3.5 gigawatts of additional electrical capacity to the grid – enough to power around 3 million homes.

Even so, the Energy Department has concluded the US needs about 30 gigawatts of additional interregional capacity added to its grid. While the three projects announced Monday are being built with money from the bipartisan infrastructure law, spurring more could be challenging with a divided Congress.

Granholm said a recent Department of Energy report found “we need to seriously build out transmission in order to improve reliability and resilience, and of course, to lower energy costs and relieve congestion on the grid. And that’s exactly what these three projects that we selected are going to do.”

Several attempts to build out new electrical transmission in New England and to connect the region to Canada’s hydropower resources in the past decade have failed due to local opposition from both environmental groups and local landowners. But Zaidi said the projects were also selected with an eye toward building in existing rights-of-way and adding capacity to existing lines to try to alleviate concerns.

“I do think the approach to find existing right of ways or creative right of ways that are less disruptive is one that we are finding successful across the country,” Zaidi told reporters, speaking about a Midwest transmission line being built across existing railroad infrastructure. “One of the things we’re seeing with developers, and that we’re eager to be a partner on, is finding low-conflict paths to connect low-cost energy to consumers who are excited to see that translated to lower bills.”

Construction will start on the Southwest lines in 2025. The New England project, which requires building and burying an underground transmission cable, will break ground in 2026. Depending on construction timelines, the projects could be operating by 2027 or 2028.

"I know nothing.. I am stupid... I just sign what they tell me to....."

What to know about Donald Trump Jr.’s expected fraud trial testimony

By Lauren del Valle

Donald Trump’s eldest son, Don Jr., is expected to begin testifying in the civil fraud trial against the family and their business as soon as Wednesday.

Donald Trump Jr. is named as a defendant in the $250 million lawsuit brought by the New York attorney general’s office against the former president, his company and several executives, including three of his adult children.

The lawsuit accuses Trump Jr. and his brother Eric of knowingly participating in a scheme to inflate their father’s net worth to obtain financial benefits like better loan and insurance policy terms.

“As Executive Vice Presidents, the three children were intimately involved in the operation of the Trump Organization’s business,” the complaint states

While the attorney general’s team had planned to call Trump Jr. on Wednesday, it’s possible his testimony could slip a day. The attorney general’s office finished up its questioning of Trump Organization executive David Orowitz on Wednesday morning.

The attorney general’s team then called expert witness, Michiel McCarty, to testify. He’ll be questioned and cross-examined before Trump Jr. takes the stand.

McCarty is expected to give his professional estimation of Trump’s ill gotten gains based on his inflated financial statements that the judge can order Trump and his co-defendants to pay in disgorgement for the fraud claims.

In a deposition taken last year, Trump Jr. distanced himself from the financial statements Judge Arthur Engoron has already ruled to be fraudulent in a summary judgment before the trial began.

“I had no real involvement in the preparation of the Statement of Financial Condition and don’t really remember ever working on it with anyone,” Trump Jr. said.

“Again, people may have asked me about stuff tangentially that I gave them an answer to that they may have then utilized as a basis of knowledge to come up with whatever, but, no, not specifically as it relates to, you know, knowledge about the financial statement,” he added. Donald Trump Jr. has worked in commercial leasing for the Trump Org., including the company’s 40 Wall Street property at issue in the lawsuit.

Trump Jr. became a trustee of his father’s revocable trust when he took office and certified the statements of financial condition in 2017, 2018 and 2019.

He testified in his deposition that he relied on the accounting and legal departments at Trump Org. when he signed the paperwork.

“Those people would have more intimate understanding of the specifics of those things. And whoever was bringing me a document, if it was more accounting, it was probably from accounting. If it was more legal, it would be from legal. And, ‘Hey, are we okay signing this document? Do you believe it to be honest and accurate?’ And if they were okay with it, they’d have much more knowledge than I would ever be able to amass, so I would sign it,” he testified.

Eric Trump, whose name has been invoked at trial in relation to valuations for New York properties like Seven Springs and Briarcliff Manor, is expected to testify after his brother later this week.

Ivanka Trump was originally named in the lawsuit from New York Attorney General Letitia James, but an appeals court dismissed the claims, saying they were too old. However, the AG’s office is still seeking to question Ivanka Trump about her involvement in a number of properties, among other matters, and she is tentatively set to appear in court next week.

America is not a democracy????? This fucker wants to live in the Bronze Age again....

Why Speaker Johnson says America is not a democracy

Opinion by John Avlon

It might surprise you to learn that the new speaker of the House, Mike Johnson, has said ”we don’t live in a democracy.”

Merriam-Webster’s definition of democracy is “government by the people; especially rule of the majority.” That’s the way most Americans experience elections: The person with the most votes wins. It’s true in every race except president (thanks, Electoral College), from mayor to senator to governor. And since the nation’s founding, voting rights have steadily expanded. Generally, this is celebrated as progress toward a more perfect union.

But majority rule seems to be a problem for Johnson. He described it in the past as “two wolves and a sheep deciding what’s for dinner” (a quote often misattributed to Benjamin Franklin). Instead, Johnson has said that the Founders set up America as a constitutional republic “because they followed a biblical admonition.”

There’s a lot to work with here – particularly the “biblical admonition” bit, given the Founders’ conscious decision to leave the word “God” out of the Constitution, as well as the Bill of Rights’ prohibition on the establishment of any state religion. In contrast, Mother Jones reported that Johnson has called for “biblically sanctioned government” and promoted the notion that the United States is a “Christian nation.”

Given that one of Johnson’s few well-known positions before attaining the speakership was his strenuous effort to help overturn the 2020 election, it’s important to understand that his dismissal of majoritarian democracy is part of a right-wing trend.

For example, Utah Sen. Mike Lee tweeted “We’re not a democracy” in the run-up to the 2020 election: “Democracy isn’t the objective; liberty, peace, and prospe[r]ity are. We want the human condition to flourish. Rank democracy can thwart that.” Lee explained his terminological embrace of “constitutional republic” over democracy as being a way to avoid “the excessive accumulation of power in the hands of the few.”

But after the 2020 election was decisively won by Joe Biden, the likes of Lee and Johnson did not seem so concerned with constitutional processes or the excessive accumulation of power. They were among the many Republicans who tried to overturn the election without any evidence of mass fraud, choosing to defend Trump’s lies because it offered the chance for their party to stay in power. The ends justified the means.

On the surface, disregarding the popular vote is an odd look for self-styled populists. But of course, Republicans have won the presidential popular vote only one time since 1992. This has not curbed their ideological ambition. In that time, they’ve picked five conservative supreme court justices and abolished the constitutional right to abortion, which 63% of Americans, according to Gallup polling, opposed overturning.

This is where Johnson’s discomfort with majority democracy starts to track with his extreme evangelical beliefs.

Both were essential elements in his selection as speaker. Just a day before his elevation, the speaker designate, Rep. Tom Emmer, was attacked from the right for his decision to certify the election as well as his vote to protect gay marriage.

In contrast, Johnson checked every right-wing litmus test, from embracing election lies to opposing equal rights for gays and lesbians. Crucially, he was more genial and humble than higher-profile right-wingers like Rep. Jim Jordan, who tried and failed to claim the speakership. But with a few days of belated vetting, it’s clear that Johnson is the most socially conservative speaker in living memory.

He can be fairly described as anti-gay as well as anti-abortion. Johnson supports a national abortion ban after a fetal heartbeat is detected, though 69% of Americans support abortions being legal in the first trimester, according to Gallup polling. He’ll blame abortion for school shootings – and feminism – but not guns.

Johnson also opposes marriage equality, which is the law of the land and supported by more than 70% of Americans, according to a Gallup poll. He’s also supported criminalizing gay sex and even described heterosexual sex outside of wedlock as evil. Seriously. Here’s the full quote: “States have always maintained the right to discourage the evils of sexual conduct outside marriage, and the state is right to discriminate between homosexual and heterosexual conduct.”

For those keeping score, that’s states’ rights for discrimination but not reproductive self-determination.

This isn’t all past activism, either. His wife’s counseling company’s operating documents – notarized by Johnson – equate homosexuality to bestiality and incest as sins in the eyes of God. (Notably, the company website was taken down after Johnson reached the speakership.)

As recently as last month, Johnson dismissed as a fiction that the idea of separation of church and state applies to keeping Americans free from the power of the church on his husband-and-wife podcast, unironically called “Truth Be Told.” His comments on guns came after the mass shooting in Maine last week.

These are presumably sincere but extreme positions, untempered by moderation and unconcerned with popular opinion. Typically, winning elections requires attracting votes beyond the base and governing requires reasoning together with opponents.

But Johnson is part of a generation of conservative politicos who’ve never had a competitive election. Johnson went from being a right-wing activist lawyer lobbying for a creationist theme park to being a state legislator who ran twice with no Democratic opposition.

As the author of “Laboratories of Autocracy” and former Ohio Democratic Party Chair David Pepper details, Johnson has three times won his heavily gerrymandered House seat by 30 points or more because the seat has been drawn to ensure that no Democrat has a prayer of winning it. This structural dynamic means that congressmen like Johnson can essentially ignore anyone who isn’t on the far right and stay in power.

Republicans have been busy replicating this incentive structure as a core election strategy. It was reflected in the Republican-led North Carolina’s legislature erasing up to four Democratic congressional seats this past week. This is designed to undercut the will of the people in a state where there are more registered Democrats and independents than Republicans. It is an attempt to artificially secure partisan power by reducing representative elections.

This empowers extreme positions like the election lie litmus test. The knowledge that candidates will only have to win a partisan primary to stay in power — rather than win a competitive general election — emboldens tribal politics to the point where there is a creeping contempt for majority democracy. It can get dressed up as constitutional law or parade around as a naked power grab.

We saw a sinister snapshot of this dynamic the night Johnson secured his party’s nomination for speaker. Earlier that day, former Trump lawyer Jenna Ellis tearfully confessed that she had misled the nation by promoting Trump’s election lies. But when asked by ABC News correspondent Rachel Scott whether he still stood by his efforts to overturn the 2020 election, Johnson shook his head in dismay that such a question would even be asked. Other representatives laughed dismissively in a riot of group-think while North Carolina Rep. Virginia Foxx told the reporter to shut up.

This is the sound of the ends justifying the means. This is what happens when dismissing majoritarian democracy and denying facts becomes an acceptable strategy to hold on to power. Election subversion is just one of the tools available when you’re intent on imposing an agenda disconnected with the beliefs of a majority of your fellow citizens.

Risky gambit

Mike Johnson tests his new power with risky gambit on Israel

Analysis by Stephen Collinson

New House Speaker Mike Johnson is already tying Washington in new partisan knots.

The Republican majority’s rookie leader is painting deep red conservative lines on the blank page of his career in top-level politics, staking out a risky showdown with Democrats and even Senate Republicans over Israel funding that could either build his power base or fracture his authority from the start.

Johnson’s tactics suggest that he is either likely to be as much a hostage to hard-right conservatives as his predecessor Kevin McCarthy was – or that, as one of them himself, he is resolved to use his tenure to stoke fresh chaos and confrontation.

His decision to seek huge cuts to Internal Revenue Service funding to pay for a $14 billion emergency aid package to Israel shows that even an ally fighting an existential war is not immune from the stunt politics of a House GOP that spends more time pleasing conservative media than running the country. The Louisiana Republican is also opening new wounds in the GOP. His refusal to accept President Joe Biden’s request to tie together aid to Israel and Ukraine also set up a confrontation with Senate Minority Leader Mitch McConnell, raising the prospect of a new round of Republican-on-Republican tension following three weeks of internal feuding over the speakership. Johnson will meet for the first time Wednesday with the full Senate GOP Conference at its lunch, according to a GOP aide.

Johnson’s willingness to stage the first battle of his tenure over the Israel package will also burn precious time just over two weeks ahead of a possible government shut down if new federal funding isn’t approved. His muscle flexing may be an attempt to build political capital among hardliners as he positions himself for the far bigger funding fight in which he could face the kind of painful concessions to keep the government open that toppled McCarthy. But if he pushes McConnell and the Democratic-run Senate too far, he could create new animosity that will shape the coming funding showdown.

Johnson’s moves are particularly interesting because he was largely unknown outside the House GOP until he emerged as a fallback speaker candidate after three weeks of self-destructive party clashes to replace the ousted McCarthy. Johnson is also new to managing a fractious GOP conference that far more experienced speakers, most recently McCarthy, found impossible to control. An early test will come over how he navigates resolutions condemning the behavior of members of both parties – which some will see as a distraction as the deadline to fund the government nears. His first significant moves in the top job will also be critical to setting expectations for the country’s newest high-ranking political leader, who will – if he survives – play a vital role in the run-up to the 2024 election as the GOP seeks to cling to its tiny House majority or even expand it.

But the immediate House showdown over Israel and Ukraine funding also underscores how Washington’s partisan angst, deepened by anti-government extremists in the GOP conference, is undermining President Joe Biden’s efforts to exert US leadership overseas amid multiple crises. US adversaries like China and Russia are relying on domestic dysfunction in Washington to bolster their challenges to US power and perceptions of the country’s capacity to fulfill its global commitments. “US leadership and credibility is at stake here,” Beth Sanner, a former deputy director for National Intelligence, said on “CNN News Central” on Tuesday. “The Republicans say Biden isn’t showing strength. Well, they are actually making it a lot harder for this president to show strength and US leadership by handling the funding in the way that they are with all this shenanigans,” Sanner said.

Johnson surprises by picking Israel funding as his first test of credibility

Johnson’s hard ball play on Israel funding came as a surprise given that some of the urgency for ending the speakership impasse last week was to swiftly clear a funding package following the Hamas attacks. Johnson’s move to offset the $14.3 billion price tag with cuts to IRS funding included in Biden’s Inflation Reduction Act means further certain delay for the bill. It does honor conservatives’ demands for steep spending cuts that will also be at the centerpiece of the coming collision over government funding. But it’s unclear whether Johnson can deliver given that Democrats control the Senate and the White House. The Biden administration on Tuesday formally threatened to veto the House GOP’s standalone Israel aid bill.

The new speaker could have multiple motivations.

The inclusion of the offsets could indicate that Johnson needs to placate his most hardline members even to pass a measure as popular as Israel funding. That would spell early problems for his speakership since it would show that he is just as constrained by the tiny GOP majority – he can afford to lose only four votes and still pass legislation on a party-line vote – as McCarthy was.

Alternatively, Johnson could be aiming to drive a wedge among Democrats at a time when conservatives are focusing on pressure building on the president from his hard left wing, which has criticized Israel’s response to the terror attacks and thousands of civilian deaths in Gaza. Forcing some Democrats to vote against funding for Israel could lay the groundwork for future campaign ads ahead of the next election. The National Republican Congressional Committee seemed to confirm this strategy in a post on X on Monday that read: “Extreme House Democrats have a decision to make: IRS audits of middle-class Americans or supporting Israel.”

One Jewish Democrat, Rep. Jared Moskowitz of Florida, accused Republicans of politicizing aid for Israelis “in their greatest time of need.” He added: “They’re setting a political trap. It’s completely outrageous. It’s not serious policy,” he said. “I’m not falling for the trap, because they want us to vote no,” he said, vowing to back the Israel aid despite his opposition to trimming IRS funding.

However it plays out, Johnson will likely have to change course when an Israel funding bill returns to the House after action in the Senate, where Democratic leadership opposes the IRS offsets. At that point, however, Republicans may be ready to pocket their political goals after jamming Democrats and placating some of their right-wing members. Still, all this will take time that the House can ill afford with the government due to run out of money after November 17.

The government shutdown clock will also tick down a few more hours on Wednesday as Johnson seeks to deal with a trio of political controversies that reflect the uproar in the narrowly divided House. The chamber is expected to vote on a censure resolution introduced by GOP Rep. Marjorie Taylor Greene of Georgia against Democratic Rep. Rashida Tlaib, a Palestinian American from Michigan who has severely criticized Israel. Then the House is expected to take up a Democrat-filed resolution condemning Greene for having “fanned the flames” of apparent racism, antisemitism and anti-LGBTQ+ rhetoric. The House will also turn to attempts to expel New York Rep. George Santos, who is facing multiple criminal charges including wire fraud and identify theft – to which he has pleaded not guilty. The attempt to oust the freshman Republican is a long shot, largely because his departure would further narrow an already minuscule GOP majority that leaves Johnson with almost no room for maneuver.

Johnson tees up a head-to-head with McConnell

Johnson’s decision to use his new power to tee up a challenge with McConnell – who has decades more experience in both the House and the Senate – represents a daring move and shows how the far right-wing of the GOP disdains the political titans of the establishment.

McConnell – a particular target of ex-President Donald Trump, who’s the front-runner for the GOP nomination in 2024 – renewed his call on Tuesday for funding for Israel and Ukraine to be tied together. His stance reflects the bipartisan majority in the Senate for a position that Biden says is vital to US credibility abroad. Even before the Israeli-Hamas war erupted, the multi-billion dollar pipeline for arms and ammunition that is helping Ukraine survive its onslaught from Russian President Vladimir Putin was under threat, amid rising Republican opposition – partly fueled by Trump’s resistance to backing the Kyiv government. The aid package also contains funding for Taiwan – another key Biden administration foreign policy – and a request for more financing for southern border projects, which is typically a Republican priority.

McConnell on Tuesday delivered a deadpan lesson on the reality of divided government in Washington – one that hard-right House members don’t want to hear: “In order to make a law, it has to pass both bodies and be signed by the president.”

But Kentucky’s other GOP senator, Rand Paul, backed Johnson’s position, arguing that it might be essential to his survival in the speakership. “I think the speaker is smart to separate out the Israeli aid. I think he’s also frankly smart to do the conservative thing and actually pay for it by taking money from somewhere else in the budget,” Paul told CNN’s Manu Raju. The senator also accused McConnell of trying to undercut Johnson and of going against the base of the GOP. “I think McConnell’s position is very, very unpopular in Kentucky but also very, very unpopular in the United States, and I think ultimately will fail or bring down the speaker, which I don’t think is a good idea,” Paul said. Some other Senate conservatives are also at odds with their leader, backing the decoupling of Israel and Ukraine aid.

Johnson will meet for the first time Wednesday with the full Senate GOP Conference at its lunch, according to a GOP aide.

But Senate Majority Leader Chuck Schumer warned that Johnson had sacrificed Israel’s interests to make a nakedly political point.

“The new speaker knows perfectly well if you want to help Israel, you can’t propose legislation that is full of poison pills,” the New York Democrat said. “This House GOP proposal is clearly designed to divide Congress on a partisan basis.”

The controversy led senior administration officials on Tuesday to forcefully argue that US credibility was at stake around the globe.

Secretary of State Antony Blinken told the Senate Appropriations Committee there were “clear links” between the wars in Israel and Ukraine. He argued that since the US had cut off Russia’s military supply lines after the invasion of Ukraine, Moscow has turned to Iran – a key backer of Hamas – for support with military technology. Russia had in turn, Blinken said, supplied advanced military technology to Tehran that threatens Israel’s security. “Allowing Russia to prevail with Iran’s support will simply embolden both Moscow and Iran,” the top US diplomat warned.

At the same hearing, Defense Secretary Lloyd Austin warned that a failure by the US to continue supporting Ukraine would hand victory to Putin and critically endanger the safety of NATO states.

“If Putin is successful, he will not stop at Ukraine. And if you’re a Baltic state, you’re thinking ‘I’m next.’ And, you know, there’s no question in my mind that sooner or later, he will challenge NATO and we’ll find ourselves in a shooting match.”

Trees

It takes more than trees to build a livable city

Why green cities might not be the panacea we think they are.

By Marin Cogan

Des Fitzgerald’s new book, The Living City: Why Cities Don’t Need to Be Green to Be Great, reads like a provocation. The idea of green cities — urban spaces where trees and plant life are integrated to make the environment more sustainable and livable — is so prevalent that there are very few cities in the United States and around the world that aren’t pursuing it in some form.

Fitzgerald, a professor of medical humanities and social sciences at University College Cork, Ireland, doesn’t think the explicit goal of adding more trees is bad, exactly. He acknowledges that planting more trees can have a cooling effect on a warming planet and can benefit people living in cities. But, he writes, he wanted to consider why “so many planners, architects and policymakers [are] so fixated on nature as the solution to all of the city’s problems.” Fitzgerald, who previously co-wrote a book about the intersection of mental health and urban living, started noticing in recent years that people talk about trees as a miracle cure for the challenges cities face, especially the psychological well-being of city dwellers. There’s the rise of forest bathing, park cities, and “one tree per child” campaigns. Fitzgerald wants readers to consider some of the less savory historical antecedents of the movement and question the dichotomy between the city and the natural world that he thinks we take for granted.

A lot of the ideas in Fitzgerald’s book are counterintuitive. You don’t need to agree with all of them to appreciate his book, which takes many of the shibboleths of modern urban planning and architecture and turns them on their heads.

This interview has been edited for length and clarity.

You’re interested in what the tree symbolizes, more so than the tree itself. The tree as a moral project or as a political project, right?

Exactly — what kind of cultural work we’re doing when we get involved with trees. There’s a quote in the book from someone who says trees are a bipartisan issue, which is sort of true. It’s a stupid thing to say, but it’s an interesting thing to say. There’s no ideology that cannot be advanced by the tree. You have right-wing ecologism and left-wing ecologism. Part of what I find tricky about this kind of uncritical tree veneration is that politics gets covered over a bit, and we kind of forget that there’s all sorts of not-good cultural associations being carried along there.

I can imagine someone reading this and thinking, “What bad cultural associations could people possibly attach to trees?”

On the most basic level, it’s worth reminding ourselves that until very recently in human history, forests were places of terror and fear and the unknown. Today, there’s a certain privilege in being able to enjoy green spaces. You have to have a particular kind of body. In many parts of the world, you have to be racialized in a certain kind of way, to be able to be in the forest in a non-threatening way. All of that gets forgotten.

But the bigger thing is that the political movements that advanced nature over urban space, that wanted to get people out into nature, and out of cities for their own moral goods — it’s not a good movement. A Jamaican-American historian, Dorceta Taylor, wrote this really brilliant history of the environmental movement in the United States, and she convincingly describes what happened in the early days of the environmental movement in the US as basically a response to anxiety about threats to racialized masculinity. You’ve got elite men in urban spaces suddenly feeling anxious and threatened, not least by the arrival of immigrants from places that were then thought to be in some ways less civilizationally developed — Ireland, for example. What’s at stake in the movement into places like Yosemite or the discovery of the West, aside from the erasure of Indigenous communities who were already there, is an attempt to recover a sense of virile white masculinity, as opposed to the threatening masses who are coming into the cities.

That is just something we don’t think about, especially at the [urban] planning level.

What made you want to write about green city initiatives?

When I first started to think about this topic seriously, it was around the time that a campaign was emerging for London to declare itself the world’s first National Park City. It was really the website of that initiative that gave me the sense that there is something interesting happening. It was a very animalistic vision, like what if there were otters in the river? It was this takeover of urban space by wildness, as represented by things like otters and beavers, that just struck me as a very strange vision. Like something was wrong here that needed to be corrected, and there were these wild objects that are going to help us make good on it.

The other thing that really struck me is the language of mental health, the sense that what green space is really going to do is have a transformative effect on the mental health of people in urban spaces, a great problem that has been with urban civic leaders since at least the mid-19th century. It was just so obvious to me that if you wanted to take urban mental health seriously, that is not where you would start.

Where would you start? Why does that seem unserious to you?

I do think that cities have a role in the production of mental distress for some people. The city is a source of stress in a whole bunch of different ways: noise and light, but also inequality and precarity and things like poor housing, [job] insecurity, migration status, dealing with bureaucracy. These are just things that stress people out that conglomerate in urban spaces. So if you are living in a city and you may have some kind of biological predisposition that elevates your risk of developing major psychosis, and that runs into a big stressor — let’s say housing precarity — those two things together will significantly increase your likelihood of experiencing a psychotic episode, or whatever it is.

I find that very convincing, and it’s a story that is really important and that we need to stay with, as researchers. It’s with that complexity in mind that I find the idea that trees are going to intervene, it just seems not serious. If you really want to have a transformation of urban mental health, you could just do what they did in the 1950s: build massive blocks of housing, which is literally the opposite of the green cities people think you need. It’s modernist housing blocks on the edges of cities. You get people decent, secure places to live, where they have some sense that their kids have a stake in the place.

That’s the kind of thing that would have a transformational effect on people’s mental health in urban space. It would take out so many stressors.

What about the climate element to this? Obviously, there really are benefits to planting more trees as the planet warms, but I wonder if you see it being used as a feel-good workaround for a more difficult problem?

I think undeniably, trees have a major effect on making cities more livable as the world gets warmer. They have a cooling effect, they provide shade, they let water run off. I have a maybe inappropriate nervousness about this book being read as anti-environment, so I need to stress that I absolutely do think that one way that cities are going to need to make themselves more sustainable in the future is by having more organic matter in urban space.

But without being facetious about it, if we are serious about climate change, and if we are serious about even mitigation, let alone solving the problem, I just can’t believe that this is where we would start. This just feels like, not quite a Band-Aid; it’s almost more like a transference. It’s like we can’t deal with the problem so let’s do this thing that kind of feels like dealing with the problem. It’s nice, anyway, because it’s planting trees. No one’s going to object to that, and that kind of makes us all collectively feel like we’re resolving these issues.

You survey a lot of the research in your book about the effect that nature and natural environments have on us. The research does seem to support the idea that it has a positive effect, no?

I feel confident that immersion in nature has some kind of calming effect and that for some people it will be good for their mental health. There’s a lot of really good research in this space and a lot of people are doing important work trying to really get down to the biological specifics of what’s going on. We are very far from making any good sense of it or getting anywhere near a point where we can make policy prescriptions on the basis of it. That’s not because people are doing bad work, it’s just because we’re very early in that process and it’s such a complicated thing.

Washington, DC, and many other American cities are really struggling right now in various ways that, as someone who loves cities, I find hard. Gun violence is a huge problem in the US, as is traffic violence, the housing crisis, and the death of a lot of downtowns as people work from home. Certain cities just feel ill-equipped right now to deal with these issues. Maybe it’s a failure of leadership, rather than the cities themselves, but it’s hard to take in.

A lot of this is familiar. We have a lot of dereliction in Cork. A lot of buildings are basically closed and there’s no one to take them over and that is not because the economy is bad, it’s just because of completely changing life patterns about where people are shopping, working, all those things. I also think it’s important to think about the city in the absence of this desire for repair. The kind of fantasy we often have about what a good city is — which is that kind of bustling town center, there’s no homelessness — that’s never a good space for everybody.

It’s not that I’m against urban improvement or anything like that, but I think we need to think really carefully about what I think we’ve collectively decided a good city looks like.

It’s maybe this notion that to love cities is to love people and to retreat from the city is to retreat from humanity, to retreat from its problems and to try to pretend like they don’t exist.

Yeah, I think we need to stop thinking about the city as a technology that’s gonna fix society. That’s what I mean about trying to get over that horizon of repair, of always fixing things, of wanting someone to take over a derelict store because there’s homeless people sleeping in front of it. That kind of repair is always tricky and ambiguous.

For anyone who lives in a city right now, there is this sense of, not quite despair but a sense that the city is not in good shape. I think that’s a common global urban experience right now, at least in Europe and North America. I just wonder about the people who are not participating in the conversations. Is there a sense of what a good city might look like for people who are currently sleeping in front of storefronts? I don’t think we think enough about, for instance, the perspective of kids in urban space. Not to be the classic man who has kids and starts to care about these things, but I am suddenly aware of how hostile to kids urban spaces are. Really, it’s impossible for me to let them run around or let them have any kind of freedom. Is anyone even asking kids about what a good urban space looks like?

One of the things that I enjoyed about the book was that, despite the provocations, you have a lot of nuance. There’s a lot of subtlety. Is there anything else you’d want readers to take away from this conversation?

One thing I would really like people to take from this book that’s maybe not on the surface is a kind of anti-utopianism. I’m not anti specific utopias, but anti the idea of utopia. I start off the book by writing about a city that’s being built in Saudi Arabia called Neom and a chunk of that city that’s called The Line. To me, it really crystallizes so much of the vacuity and danger of so much utopian urban thinking. They’ve recruited really serious people, like major architects and serious designers, in the service of what is an objectively dreadful project. Dreadful in its own terms, aesthetically, and dreadful for the people who were already in that space before you broke ground on it. And yet it is buoyed along by an uncritical commitment to utopia on the part of some, hopefully, naive people who are driven by a kind of desire for the perfect future urban space. What I’d like the book to do is to really get us to think critically about the fact of having an urban vision in itself, rather than living in, and making sense of, the spaces that are already around us.

Seems stumped

The Supreme Court seems stumped by two cases about free speech online

The justices appear to have no idea when they should get involved with online disputes between government officials and their constituents.

By Ian Millhiser

A pair of Supreme Court cases asking what limits the First Amendment places on government officials who use social media seemed to perplex the justices on Tuesday. The arguments in O’Connor-Ratcliff v. Garnier and Lindke v. Freed featured a cacophony of questions about cat pictures, spontaneous grocery store conversations, and a simply dizzying array of proposed legal rules — none of which seemed likely to fully inform public officials what they may and may not do online.

The cases involve similar issues. In O’Connor-Ratcliff, two school board members in California blocked a pair of constituents on Facebook or Twitter, and then were sued for doing so. In Lindke, a city manager in Michigan blocked a member of the public from his Facebook page, and was likewise rewarded for doing so with a lawsuit.

Ordinarily, of course, a dispute over a social media user’s decision to block someone online would never belong in federal court. But the First Amendment rules governing public officials are very strict, and they almost never permit a government official to engage in “viewpoint discrimination.” So, if such an official blocks someone because they disagree with that person’s opinions or do not want those opinions to appear next to their own social media posts, that potentially raises very serious constitutional problems.

That said, the specific question presented to the Supreme Court in O’Connor-Ratcliff and Lindke is not whether these officials violated the First Amendment. Instead, the two cases deal with a surprisingly difficult threshold question: whether those officials were acting within the scope of their authority as government officials — or, to use the language of the law, whether they were engaged in “state action” — when they blocked the offended plaintiffs.

As a general rule, the Constitution only constrains government officials when they are exercising state authority. An off-duty police officer, for example, can tell a friend they meet at a bar to “shut up,” even though the First Amendment would prohibit a cop from policing a law-abiding citizen’s speech while the cop is on duty.

But, as the arguments in O’Connor-Ratcliff and Lindke revealed, it is exceedingly difficult to come up with a legal test that can sort through which social media activity by government officials counts as state action and which activity is merely private action that is beyond the reach of the Constitution.

The internet has made a difficult constitutional question nearly impossible

The Supreme Court has long fretted over the fact that it is very difficult, at least in marginal cases, to determine whether a particular act by a government employee should count as state action or private action. As the Court said in Jackson v. Metropolitan Edison (1974) — a case decided long before anyone had even uttered the word “Twitter” — “the question whether particular conduct is ‘private,’ on the one hand, or ‘state action,’ on the other, frequently admits of no easy answer.”

So it’s probably not surprising that the justices spent far more time poking holes in the proposed sorting mechanisms various lawyers proposed to them on Tuesday than they did articulating anything that even vaguely resembled a workable legal test to distinguish between state and private action online.

Both Hashim Mooppan, the lawyer representing the school board members in O’Connor-Ratcliff, and the Biden administration (which filed briefs in both cases arguing for narrow constraints on when government officials can be sued for their social media activity) placed a great deal of weight on the fact that the social media accounts belonged to the defendants themselves and not to the government. As the Justice Department argued in its brief, when past cases have asked whether someone may be excluded “from a forum ... the existence of state action generally depends on whether the government itself owns or controls the property to which access has been denied.”

But none of the justices seemed open to extending this rule to online disputes; some of them openly mocked the proposal. As Chief Justice John Roberts quipped, there is no physical component to a Facebook page — it’s just a “gathering of protons” — so it seems quite odd to apply traditional concepts of property to virtual space.

Similarly, Justice Clarence Thomas questioned whether someone’s personal Facebook page counts as their private property at all. Facebook, after all, has the final power to delete or block a user. So why shouldn’t all social media accounts be understood as the property of a social media company and not of the individual or government entity whose name is on that account?

The lower courts in these two cases split on whether to use a legal test that is comprehensive and predictable, or one that provides more flexibility for judges to make precise decisions in difficult cases. The United States Court of Appeals for the Ninth Circuit, which heard the O’Connor-Ratcliff case, preferred a more flexible test that, among other things, asks whether a government official appeared to be acting within the scope of their job when they posted online.

The Sixth Circuit, meanwhile, opted for a more rigid-seeming test that asks whether the government official acted pursuant to an official “duty” or “authority” when they posted something online.

While a majority of the justices appeared to prefer the Sixth Circuit’s approach to the more flexible Ninth Circuit framework, however, it soon became clear that the Sixth Circuit’s framework raises as many questions as it answers. The Sixth Circuit, for example, defined an official’s duties to include only the formal obligations they are required to fulfill under a statute or other official policy. So if there’s no formal rule instructing a public official to post online, that probably means their online activity is not state action.

But this creates problems of its own. One of them, which several justices alluded to during the argument, is how the Court should approach “customary duties.” Elected officials, in particular, spend a tremendous amount of time communicating with constituents online and offline about what the government is doing and how the official is doing their job. As Justice Sonia Sotomayor said, elected officials tell her all the time that they are “on duty 24 hours a day.”

But most states don’t have laws that explicitly order elected officials to answer a constituent’s questions if they run into that constituent in the grocery store. And most states don’t have official rules requiring officials to maintain social media sites. So how is a court supposed to determine which of these communications are on-the-job communications and which ones aren’t?

As Justice Samuel Alito suggested, it is difficult to determine the scope of an official’s unwritten, customary duties. A too-expansive definition of those duties could lead to an official being sued because they blow off a constituent who wants to criticize a town mayor’s policies while the mayor is buying ice cream at the corner store.

And then there’s another problem: What should courts do with a government official who uses the same social media account both to conduct official business and to post personal content?

Suppose, to paraphrase a hypothetical offered by Justice Neil Gorsuch, that an official uses their Facebook account both to post cat pictures and to discuss official business. Now suppose that one of that official’s constituents hates cats, and posts so many nasty responses to the cat-related posts that the official eventually blocks the constituent. Because blocking this constituent will also exclude them from the official’s government-related content, did the government official violate the First Amendment here?

I could go on at some length listing the many difficult questions that various justices raised over the course of the arguments. But the important overarching point here is that these cases are very difficult. And it’s not clear that it is possible to come up with a clear-cut legal test that will easily allow judges to distinguish between state and private action online.

That’s terrible news for public officials, who may be reluctant to use social media if they don’t know what they need to do to avoid being sued. It’s also terrible news for their constituents, who may lose an important channel that allows them to communicate with their government. And it’s terrible news for the courts, which could be bombarded with lawsuits from online trolls if the Court hands down a vague legal test that can easily trigger future lawsuits.

But none of these unfortunate realities change the fact that there are no easy answers in O’Connor-Ratcliff and Lindke.

9 Boris bombshells

Cabinet of ‘fuckpigs’ and a team with ‘no plan’: 9 Boris bombshells from the UK’s COVID inquiry

Dominic Cummings and Lee Cain’s evidence rocked Westminster Tuesday.

BY MATT HONEYCOMBE-FOSTER AND ANDREW MCDONALD

From sweary tirades against the Cabinet to a prime minister convinced he was the mayor from “Jaws,” Tuesday was an eye-opening day at Britain’s official inquiry into the COVID-19 pandemic.

In a day of high drama, Boris Johnson’s former top aides — ex-chief adviser Dominic Cummings and former director of communications Lee Cain — took the stand, shedding light on how the British state struggled to get to grips with the magnitude of the crisis that unfolded in 2020 and 2021.

Plenty of key players — including Johnson and current PM Rishi Sunak — are still to put their side of the story across. But POLITICO has rounded up nine major claims from a big day at the inquiry, which saw a mass of previously private WhatsApp messages and internal government emails disclosed for the first time.

1) Britain’s COVID-19 ‘plan’ that wasn’t

Testimony from Cain on Tuesday morning painted a deeply unfavorable picture of the British state’s preparations for the COVID-19 pandemic.

Just weeks before the country was plunged into a full-scale lockdown, Johnson — who Cain said had likened the virus to “swine flu” and initially feared creating media panic by amping up the dangers — unveiled a “coronavirus action plan” on how the government would contain the spread.

But, Cain told the inquiry, the plan had little detail, and was “clearly only useful as a communications device.”

“There was a strategy — but there wasn’t a plan,” Cain said. “If this is the plan, then we clearly don’t have a plan.”

2) Sunak feared lockdown’s economic toll

While much of the evidence focused squarely on Johnson’s Downing Street, the current occupant of No. 10 was closely involved in the pandemic — and some of the inquiry proceedings — too.

Rishi Sunak was then the top finance minister at the all-powerful Treasury. One exchange between Cummings and Cain on WhatsApp, just days before Britain locked down, suggests Sunak had warned Johnson about the impact the measures would have on the economy.

“Rishi saying bond markets may not fund our debt etc,” the Cummings text to Cain on March 19 2020 reads.

And that appeared to have a powerful sway on Johnson as he mulled whether or not to lock down. Referring to Johnson, Cummings said the former prime minister was “back to Jaws mode wank” — an apparent sweary call-back to Johnson’s love of the mayor from the Steven Spielberg classic “Jaws,” who fights to keep the beaches open despite the threat from the hungry shark.

Given previous inquiry sessions have thrown up concern from scientific advisers about Sunak’s flagship “eat out to help out scheme” later that year, the current prime minister may face uncomfortable questions of his own when he is eventually asked to face the inquiry.

3) Johnson had the ‘wrong skillset’

Cain told the inquiry he believed Johnson’s governing style simply wasn’t suited to the crisis.

Johnson’s leadership mode was picked apart in minute detail during the hearings, with the then-prime minister described as a man who liked to sound out different voices for some time before coming to a settled view.

Cain put it diplomatically, saying COVID was the “wrong crisis for this prime minister’s skillset.” Johnson, he said, showed “great strength” during Brexit in allowing competing ideas to flourish before making a decision — but that “oscillating” didn’t work for coronavirus.

Cummings, however, didn’t hold back, disparaging a prime minister who veered all over the place. “Pretty much everyone calls him the trolley, yeah,” the former chief aide said.

4) Big doubts about summer 2020 easing of restrictions

Cain made clear that there were real concerns in government about Johnson’s decision to reopen schools, workplaces, shops and restaurants in the summer of 2020.

Sending people back to such venues would, Cain said, only have worked if Britain was “intent on never having to do suppression measures again” — yet the government had clear advice at the time that it would have to lock down again once the virus spread.

Sure enough, a second lockdown followed in October 2020 to prevent what Johnson warned would be a “medical and moral disaster” for the National Health Service.

5) Johnson talked about letting the elderly ‘accept their fate’

A diary entry from the government’s mild-mannered then-Chief Scientific Adviser Patrick Vallance said Johnson appeared to believe COVID was “nature’s way of dealing with old people.”

That chimes with evidence from Cain and Cummings, whose WhatsApps with Johnson show the former PM telling colleagues he “no longer buy[s] all this NHS overwhelmed stuff.”

Pointing to data showing “hardly anyone under 60 goes into hospital (4 percent) and of those virtually all survive,” Johnson even quipped: “Get COVID and live longer. Folks I think we may need to recalibrate.”

6) Cummings hated the Cabinet — and still hates Matt Hancock

Dominic Cummings has never tried to hide his disdain for the Westminster and Conservative establishment — and WhatsApps he sent to Cain express that hatred in colorful terms.

After Johnson rejected a call from Cummings to brief the Cabinet about an upcoming reshuffle, Cummings raged that he was making a “big big mistake” in the next message.

“At the moment the [Westminster] bubble thinks you’ve taken your eye off ball, you’re happy to have useless fuckpigs in charge, and they think that a vast amount of the chaotic news on the front pages is coming from No 10 when in fact it’s coming from the Cabinet who are ferral [sic],” he texted.

Cummings also emphasized the importance of sacking health chief Matt Hancock, whose name kept on cropping up.

The inquiry saw messages from Cummings accusing the then health secretary of having “lied his way through this” and “killed people” amid intense focus on the protection of care homes for the elderly and disabled during the pandemic. Hancock will get the chance to respond when he eventually faces the inquiry.

7) Britain’s top official came under heavy fire

A key player referenced several times in Tuesday’s evidence was Mark Sedwill, who served as Britain’s most senior civil servant — known as the Cabinet secretary — before he was replaced by Simon Case in a Johnson clear-out.

Messages from Cummings claim Sedwill spent a meeting in the early days of the pandemic “babbling about chickenpox,” which the former No.10 aide said showed a fundamental lack of understanding about the severity of the virus in the vital Cabinet Office.

Cummings said Sedwill — a Whitehall and security veteran who was appointed by Theresa May and who led the Home Office before taking on one of the biggest jobs in the British state — had been a skilled diplomat. But he argued Sedwill “did not have visibility of the fundamental disasters that were unfolding inside the Cabinet Office.”

In a further twist, Cummings said he later “begged” Johnson not to fire Sedwill because of the disruption it could cause in the government machine. He described the move as unfair to Sedwill on a personal level, and said it ended up setting off a “bomb across the whole system.”

“It was a total disaster,” Cummings said of the firing. Sedwill is yet to put his side of the story across.

8) Cummings’ swearing scrutinized

“Did you treat individuals in Downing Street with offense and misogyny, Mr Cummings?” Inquiry Lead Counsel Hugo Keith asked rather pointedly.

“Certainly not,” Cummings replied.

Moments later, a message Cummings sent Cain in the summer of 2020 about the senior civil servant Helen MacNamara flashed on the inquiry screen.

“If I have to come back to Helen’s bullshit with PET [the government’s propriety and ethics team] — designed to waste huge amounts of my time so I can’t spend it on other stuff — I will personally handcuff her and escort her from the building,” Cummings wrote.

“I don’t care how it is done but that woman must be out of our hair — we cannot keep dealing with this horrific meltdown of the British state while dodging stilettos from that cunt,” he added.

Cummings apologized for his language and said it was “obviously appalling.” But he said the overall issue he was complaining about — related to time he felt was wasted with pointless meetings amid a collapsing Cabinet Office — was a “thousand” times worse.

Pressed on his language and whether he is misogynistic, Cummings hit back.

“I was much ruder about men than I was about women,” he said.

9) Cummings appeared to block Johnson on WhatsApp

Transcripts of WhatsApp exchanges show Cummings appeared to block Johnson on the messaging app immediately after a blow-up that precipitated his late 2020 exit from No. 10.

Cummings and Cain left government in November 2020. Johnson had accused the pair of damaging briefings against his leadership and making infighting worse.

In texts revealed by the inquiry, Johnson messaged Cummings to take aim at a host of media briefings against him, including claims he “can’t take decisions,” would be “out in 6 months” and that his partner, Carrie, was “secretly forging lockdown policy.”

“Are you responsible for all that crap? No? Then look at it from my point of view. This is a totally disgusting orgy of narcissism by a government that should be solving a national crisis,” Johnson added. “That’s why I wanted to talk and see what we could jointly do to sterilize the whole thing. But if you really refuse then that’s up to you.”

The inquiry continues — with top representatives from Britain’s health service grilled Wednesday.

Why are the GOPers so crazy?? This shit...

The House GOP’s Proposal: Israel Aid by Defunding The IRS

Because billionaires shouldn’t have to pay too much in taxes, right?

JULIANNE MCSHANE

House Republicans are proposing funding $14 billion in aid to Israel by cutting additional money for divisions of the IRS tasked with making sure wealthy people and tax cheats pay their fair share, according to a new bill filed Monday.

The proposal—which would allocate money for weapons and “military education and training” for Israel, among other things—seeks to undo the funding to the IRS that came from last year’s Inflation Reduction Act. That law allocated $80 billion to the agency over the next decade; $20 billion of that was later cut in a deal to raise the debt ceiling. The GOP legislation calls for further cuts to the IRS, specifically the division tasked with enforcement and conducting investigations into financial crimes. 

The bill would also eliminate a task force intended to design a free direct e-file tax return system that could wind up competing with TurboTax—a change that the company, and politicians, particularly Republicans, have fought. Advocates have said such a system could save taxpayers billions of dollars, and millions of hours of prep time, per year. 

The GOP’s latest bill matches $14 billion Biden’s funding request for Israel in number—but not in its proposed approach. White House press secretary Karine Jean-Pierre said that helping “the wealthy and big corporations cheat on their taxes” to fund aid to Israel’s war effort is “the definition of backwards.”

The proposed $14 billion in aid to Israel is already roughly four times what the US normally provides per year. And while Biden’s proposal sought to bundle aid to Israel with aid to Ukraine, as my colleague Noah Lanard pointed out, neither his nor the GOP proposal specifically earmarks any aid to deal with the humanitarian crisis unfolding in Gaza—where more than 8,500 people have been killed by Israeli air strikes since Oct. 7, according to Gaza health authorities. (Biden’s proposal instead asks for about $9 billion for humanitarian aid for Israel, Palestine, and Ukraine collectively.)

The thought of—as my colleague David Corn put it in Mother Jones‘ internal Slack channel—”letting billionaires cheat to pay for bombs to drop on civilians” is jarring, particularly given the more than 3,500 children that Gaza health authorities say have been killed by the Israeli airstrikes; heartbreaking photos and videos have shown kids covered in blood and dust and collapsing while coping with living through the trauma of war and losing loved ones. 

Defunding the IRS, though, has been a priority for House Republicans for decades, as my colleague Michael Mechanic has reported. Past removals of funding have led to less audits of the super-wealthy. The latest bill bears several similarities to the Family and Small Business Taxpayer Protection Act, which House Republicans passed earlier this year in a bid to rescind 90 percent of the proposed funding to the IRS via the Inflation Reduction Act. (That bill has yet to come up for a vote in the Senate.)

The GOP funding bill is unlikely to pass muster with Senate Democrats, who have called for bundling aid to Israel and Ukraine—and counted the Inflation Reduction Act, and its increased funding for the IRS, as a win.

I am shocked... Truly I am... I can't believe china would steal secretes... I am shocked....

Bay Area company alleges former partners ripped off entire Chinese outpost with 'criminal syndicate'

By Stephen Council

A Bay Area medical device company alleged in a lawsuit last week that its former business partners “brazenly” stole money, employees and trade secrets as part of a “criminal enterprise.”

In a lawsuit filed Friday in the United States District Court’s Northern District of California, Lumenous Device Technologies accused former employees of its partner company in China of operating as a “criminal syndicate.” The suit specifically alleges that the employees, after trying and failing to oust Lumenous as the joint venture’s owner, embarked on a criminal spree, stealing $12 million, equipment and trade secrets, and then started a new company based on Lumenous’ intellectual property.

Lumenous’ lawsuit portrays the scheme, which allegedly began in January 2022, as a well-organized feat of criminal racketeering, claiming in the suit that the former employees broke laws regarding extortion, wire fraud and economic espionage.

The dispute stems back to 2002, when Santa Clara-based Lumenous formed a subsidiary in China called Jiangyin Peier Technology Co. to manufacture and sell its products to customers in Asia and the Middle East, according to the filing. Ownership percentages at JYPT varied over the years, but Lumenous was a constant — and the key designer, developer and innovator behind the subsidiary’s products, the filing says.

Lumenous mostly deals in stents, the hyper-precise wires that help hold open blood vessels in patients with coronary artery disease. JYPT accounted for about 80% of Lumenous’ revenue, the lawsuit says. 

By 2021, “JYPT was thriving,” the lawsuit says, and preparing to go public. But the IPO process hit a snag due to a “ministerial defect that complicated JYPT’s ownership picture,” the filing states. Lumenous CEO Todd Dickson allegedly told JYPT general manager Shen Bin that they’d need to delay the IPO to reaffirm Lumenous’ ownership legally.

“Where Dickson saw a modest hurdle to overcome, Defendant Shen smelled blood in the water,” the suit says.

The filing alleges that Shen and her colleagues at JYPT “sprang into criminal action,” which the suit claims was done in pursuit of higher earnings from an eventual IPO if Lumenous was no longer the owner of JYPT. The suit dubs the resulting chain of events the “Shen Enterprise.”

In January 2022, the filing alleges, they kicked off two potential plans — to offer Lumenous a smaller stake in a new version of the firm, or to take JYPT’s property outright if Dickson and Lumenous refused the smaller stake. Shen told Dickson that the new firm would drop his and Lumenous’ stake from around 69% of JYPT to around 27%, the filing said, “with the understanding that the Shen Enterprise would be able to successfully steal the business’s assets, including trade secrets and cash, if Lumenous refused.”

One defendant, in an email cited in the suit, wrote, “Our direction is very clear: set up a new platform and the team will become a major shareholder. We deserve it.”

JYPT’s board of directors, led by Dickson, voted to fire Shen a few months later. JYPT employees pushed back in a letter, calling the decision “invalid” and saying that they would keep working under Shen. The suit alleges that Shen and her colleagues later transferred more than $12 million out of JYPT bank accounts, and argued in Chinese court that JYPT should be dissolved.

After failing to oust Lumenous or dissolve JYPT, the suit says, Shen and her colleagues started a new company, Jiangyin Zhongpei Technology Co., allegedly taking stolen physical equipment and trade secrets from Lumenous and JYPT with them. The suit adds that the new firm promised its workers they’d honor JYPT’s benefits and compensation rates, with the “vast majority” of employees at the new firm coming from the old one.

“To this day,” the suit says, “Zhongpei continues to operate under the Shen Enterprise’s direction, using Lumenous trade secrets to line the Shen Enterprise’s pockets.” It calls the new firm a “sham company” born of Lumenous’ work and investments. The lawsuit asks for a jury trial.