Brief hiatus

I’ll be away from home for a little over two weeks, and my access to the internet will be very limited, so I apologize to the readers of my fledgling blog that there will not be much in the way of new content during that stretch of time.

Of course, when I return, I have much more to write about, so expect a blitz.

–Daniel Jack Williamson

Ohio’s dropouts

It’s about males.

Two-and-a-half weeks ago at Lorain County Community College, I attended the Hispanic Leadership Conference (which I’ll detail more in a future posting). During the conference, one of the workshops I attended was titled “Closing the Achievement Gap.”  The presenter was Nelson Ramirez, formerly a director at two non-profits: Lorain County Community Action Agency (which, among other things, administers Lorain County’s Head Start program); and El Centro de Servicios Sociales, a social service agency serving Lorain’s Hispanic community.  Currently, Nelson Ramirez is a Project Manager in Governor Ted Strickland’s administration who has been assigned to work on an initiative to close the achievement gap among the various population groups in Ohio’s primary and secondary schools.  A great deal of emphasis is being placed on improving high school dropout rates and lobbying the General Assembly for including these initiatives in the biennial budgets.

More than a dozen countries lead the USA with higher high school graduation rates, which is sobering considering that the world’s superpower isn’t leading the pack.  While Ohio’s graduation rate is higher than the nation’s average, there are glaring discrepancies between population groups. One might expect, just from anecdotal evidence, that Hispanics and African-Americans lag behind Caucasians in high school graduation rates.  There’s more to it, though.  Across all racial/ethnic lines, there is a gender dimension to the dropout rate, with males dropping out at a much higher rate than females, and that’s where it becomes all about the males.

To be sure, female dropouts do have troubles of their own, while dropouts of both genders earn less than those who have higher levels of education (and thus pay less in taxes), female high school dropouts have lower per capita incomes as adults than do their male dropout counterparts.  But though female high school dropouts may need to rely on government social programs like WIC, food stamps, and Medicaid, they don’t cost Ohio nearly as much per person in government expenditures as male dropouts do.  That’s because male dropouts have a significantly disproportionate tendency to become imprisoned.

Currently, about 24% of all Ohio teens are dropping out.  High school dropouts comprise nearly 75% of the inmate population at state prisons.  **gulp**

It is estimated that the average high school dropout in the criminal system (ONE individual–am I being redundant?) will require the state to shell out $1.5 million to $1.8 million over the course of that dropout’s lifetime as a direct consequence of that dropout’s criminal activity, alone.  That’s just the cost of the criminal activity IF there is no drug abuse being factored in.  If there is a drug addiction problem, add in a few hundred thousand more, and that the overall cost over a lifetime will balloon to $2.3 million.

Along with the gender and racial/ethnic dimensions of Ohio’s dropout rate, there is a geographic dimension, too, as one might expect since African-Americans and Hispanics are not uniformly spread throughout Ohio’s population in rural, suburban, and urban settings.  As one would expect, dropout rates are usually higher in urban settings, and this leads us to a new statistic: poor performing high schools, or “dropout factories,” which are high schools that graduate 60% or less of each incoming freshman class.  80% of the nation’s dropout factories are located in 15 states, which means the other 35 states are home to only 20% of the nation’s dropout factories.  Ohio is in the group of 15 states.  In Cleveland, Akron, Toledo, Columbus, and Cincinnati school districts, at least half of the high schools are dropout factories.  **gulp**  60% of Ohio’s African-Americans attend dropout factories.  **gulp**  Therefore, the target of the initiative to improve Ohio’s graduation rates is primarily the African-American male high school freshman.

It is relatively easy to predict who is most likely to drop out.  They are already lagging behind classmates in the 4th grade.  A 3rd grade reading level is the point of divergence between those that are likely to graduate and those that are likely to drop out.

Of course, dropping out is an individual decision.  Only 22% of dropouts believe that they were not personally responsible for dropping out.  The reasons given for dropping out include: they didn’t find classes interesting; they missed too many days of school and couldn’t catch up; they spent much of their time with people who weren’t interested in school; they had were given wide latitude in whatever they chose to do with very few ground rules laid down by their parents/guardians; they were failing in school; real life events got in the way of school; and parents/guardians tried to become involved way too late in the educational process.

The strategies outlined in Governor Strickland’s initiative to improve the graduation rate (beyond identifying the key population groups) are:

  • Attendance and behavior monitors
  • Focus on achievement in core courses
  • Tutoring as an academic support
  • Counseling/Mentoring
  • Small learning communities for greater personalization (such as school within a school)
  • Catch-up courses
  • Homeroom, teams, or looping
  • Ninth Grade Academies or transition programs
  • Tiered approach to providing behavioral and/or academic support
  • Focus on positive effects for diverse students
  • Focus on positive effects for students with disabilities
  • Career/College awareness
  • Family engagement
  • Community engagement
  • Ensuring partnerships between high schools and feeder middle schools

The attempt to intervene with these actions is taking place at the boundaries between 8th and 9th and 10th grades.  Naturally, I pointed out that the challenges could be addressed in much earlier years in a child’s education.  There is a desire by the Governor’s administration to address these challenges in earlier years, but so far, they are working to at least get the ball rolling, and this is their starting point.  The chief argument being used in lobbying the General Assembly for appropriations for this initiative is that it is less costly to the state than taking no action to reduce the dropout rate.

Over all, Nelson Ramirez gave a very thought-provoking lecture that concluded with vigorous discussion, as you might imagine.

Defrauding homeowners AND the IRS

Today’s Cleveland Plain Dealer has a sub-prime lender story written by Mark Gillispie detailing just how widespread mortgage fraud is in this country. They don’t mention any Wall Street banks or financial institutions that are exempt from having played a role in the mortgage fraud perpetrated by sub-prime lenders. In fact, in describing the scope of the mortgage fraud industry, the applicable term was “systemic.”

Systemic. That’s downright scary.

Why scary? The Plain Dealer cites the words of Anthony Accetta, a founder of a private investigation firm that specializes in finance, who is also a former federal prosecutor with a history of prosecuting mortgage fraud during the 1970’s, and who worked as a private attorney on behalf of investment banks in the years between his work as a federal prosecutor and his work in private investigations.

“This is a national catastrophe, and the perpetrators [on Wall Street] are not being prosecuted,” Accetta said. “It’s one of the easiest cases to prove because there are plenty of witnesses and plenty of evidence out there.”

So, why the failure to prosecute? Here’s the most chilling part:

Despite the FBI and SEC investigations, Accetta said he doesn’t think the U.S. Justice Department “has the stomach” to prosecute these companies, out of fear it would undermine confidence in those financial institutions and our capital structure.

“So you’re left with prosecuting individuals,” Accetta said. “This was systemic. It had nothing to do with this individual or that individual. There was no individual in any of the investment banks who could have stopped it even if they wanted to.”

Do you see why this is scary?

OUR CONFIDENCE IN THE ENTIRE CAPITAL STRUCTURE OF THE U.S. WOULD BE SHAKEN IF WE KNEW THE WHOLE TRUTH.

The Plain Dealer also put together this clever graphic to show how all the financial players fit together to perpetrate their particular aspect of mortgage fraud.

I noticed a puzzle piece that hadn’t been added in, and that’s the part about how companies write off losses from foreclosures when they file taxes with the IRS. Let me add some detail about my prior blog entry, “Sub-prime lender as tax evader.”

When the seller first bought the house (as a buyer), the seller went to a broker in Middleburg Heights who said it would be easy to get a loan at about 5.25%. The seller became furious when the loan that was offered was an Adjustable Rate Mortgage that in just three years would charge interest of over 13%. The seller demanded a fixed rate mortgage. The broker countered with a mortgage fixed at 7.5%. The seller accepted the mortgage offer, even though it was a far cry from the 5.25% the mortgage broker had cited at the outset. The original mortgage loan amount was $133,000.

The mortgage originator was Wilmington Financial, but almost immediately, Wilmington Financial sold the mortgage to JP Morgan Chase. Though JP Morgan Chase became owner of the loan, loan payments were processed by Lytton Loan Servicing. Lytton Loan Servicing claimed to be just a “middle man,” not the loan owner itself. After the seller experienced a precipitous drop in income and had difficulty making house payments, the seller declared bankruptcy, and JP Morgan Chase was the creditor who was owed the most. JP Morgan Chase also forged ahead with foreclosure proceedings. The seller listed the home for sale, and a buyer came forward to buy it. After negotiations between JP Morgan Chase and the buyer, a sale price was agreed upon at $129,000, which was just a few hundred dollars less than the principle still owed on the mortgage. Being that close, JP Morgan Chase graciously permitted that the mortgage would be shown as “paid-in-full,” and the culmination of foreclosure proceedings was averted. That was in 2006.

Fast forward to 2008. The seller is told by the IRS that thousands of dollars in taxes are owed dating back to 2006. The seller discovers that a 1099 form was submitted to the IRS imputing nearly $64,000 of income to the seller. This imputed income was represented as the amount charged off in a short-sale real estate transaction. The seller was never sent a copy of this 1099.

$64,000 was written off in the wake of a sale of $129,000, when the original mortgage amount was $133,000? Does that even pass the smell test?

JP Morgan Chase, the mortgage owner prior to the real estate transaction, was not the company that submitted the 1099 form. It was Lytton Loan Servicing. A quick check of the seller’s credit report also shows an EXISTING mortgage as delinquent, with the creditor listed as Lytton Loan Servicing, who was always represented as nothing more than a “middle man” that processed the payments on behalf of JP Morgan Chase.

The Mortgage Forgiveness Debt Relief Act of 2007 is now in effect to help sellers escape from getting smacked with 1099 income from charged-off amounts incurred in a short-sale of their home. Nevertheless, I still think cheating the IRS by vastly inflating write-offs, and playing shell games among companies (and, prior to the Act, a quick submission to the IRS of the 1099 with a failure to submit a 1099 to the seller in order to delay the onset of whistle-blowing), is an overlooked aspect of the sub-prime mortgage fraud crisis.

In addition to the FBI and the SEC, the IRS might want to do some investigating of its own.

Redfern makes good on his promise

Prior to state Dem leadership calling upon Ohio Attorney General Marc Dann to resign or be impeached, I criticized the Democrats, and mentioned Redfern by name, for being slow to break their silence.  Kevin DeWine, deputy chair of the Ohio Republican Party had already staked out a position.

This past Monday, Chris Redfern was among Ohio’s Democrat leaders that signed a letter addressed to Marc Dann expressing their displeasure and asking for his resignation or face impeachment.  Later, it was revealed that the Ohio Democrat Party had removed all mentions of Dann from its website and Redfern caused a stir in the blogosphere indicating that the party would no longer endorse Dann.  Today, the Ohio Democrat Party is holding a convention and the news has already come out that the votes are in, and the ODP has officially stripped Dann of the endorsement they gave him in 2006.

The noose is tightening, Marc Dann.

While Redfern has carried out the ultimatum made by the ODP, there is still one thing that remains that continues to stick in my craw.  Since Marc Dann has refused to resign, the state Dem leadership promised to begin impeachment proceedings in the Ohio House.  So far, the impeachment process has not yet begun.

I’m extremely disappointed.  Perhaps I’ll complain to my state representative.  Oh, by the way, I currently live in Sandusky, so that means that my state rep is . . . CHRIS REDFERN!!!!!

Ahem . . . !

In Barrett’s wake: Barrett leaves law firm; replacement search extended

The Elyria Chronicle-Telegram and the Lorain Morning Journal have reported that former state rep Matt Barrett no longer works at the law firm of Miraldi and Barrett, his father’s firm.

The Ohio House 58th District replacement search committee of the Ohio House Democratic Caucus has extended their deadline for application submissions by a week.  There were seven original applicants, but only three actually resided in the district.  The three current applicants each come from a different county in a district that includes the eastern third of Seneca County, all of Huron County, and the parts of Lorain County that are west and south of Oberlin (which is in the 56th District).  From Attica in Seneca County is Mary Fleure, whose occupation is senior caretaker.  I have not met her, and her name is not widely recognized.  From Norwalk in Huron County is a retired judge, Thomas Heydinger.  I’ve opined that his appointment would make the most sense to me.  From Amherst in Lorain County is Frank Janik, an assistant county prosecutor.  I featured Janik in a prior blog entry, as well.

Lorain newspaper: Dann can no longer be AG

The Morning Journal published an editorial stepping up their demand that Dann resign or be impeached. I really liked this passage the most:

“Ohioans cannot allow the politicians in Columbus to go weak-kneed now and let him off the hook with legalistic mumblings and excuse-making.”

It’s nice to know that the newspaper in Lorain has an opposite view on impeachment than Lorain’s state rep, Joe Koziura does. By the way, voters of the 56th District have a choice in November. They can vote for Stipe.

Pho on the stalled effort to impeach Marc Dann

Pho offers thoughtful analysis of why Dann hasn’t been impeached yet, even though state Democrat leaders promised to.  I’m not convinced of the need for further evidence against Ohio AG Marc Dann, and I think my prior post and my comments at Pho’s post provide the gist of why I think impeachment out to go forward in an expedited manner.