By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends most of her time in Asia researching a book about textile artisans. She also writes regularly about legal, political economy, and regulatory topics for various consulting clients and publications, as well as writes occasional travel pieces for The National.
We’ve become all too inured over the last several years to seeing the obviously guilty walk away from one corporate or public policy crisis after another, with nary a slap on the wrist.
Against that backdrop, I see some wee cause for optimism in yesterday’s news from Flint, Michigan, of all places– a place usually not synonymous with optimism, especially as it has recently endured its water crisis.
As reported today by the Detroit Free Press in this article:
Michigan Attorney General Bill Schuette’s criminal investigation of the Flint water crisis moved a step closer to the highest levels of state government Tuesday as he brought felony charges against two former emergency managers who reported to former Treasurer Andy Dillon and were appointed by Republican Gov. Rick Snyder.
Schuette, who also charged two former City of Flint public works employees Tuesday, would not say how far the investigation would go, only that it will follow the evidence and nothing is off the table.
“We are closer to the end than we are to the beginning,” he told reporters.
Schuette charged Darnell Earley and Gerald Ambrose, both former Emergency Managers, with multiple 20-year felonies– conspiracy and false pretences charges– for failing to protect Flint citizens from health hazards caused by contaminated drinking water. I should emphasize that both managers were appointed by Governor Snyder, under the authority of the state’s emergency management law.
Schuette also announced that Earley and Ambrose, along with ex-City of Flint executives Howard Croft and Daugherty Johnson, also face felony charges of false pretenses and conspiracy to commit false pretences arising from the roles they played in arranging bond issuances to pay for a portion of a water project described in greater detail below.
The latest criminal charges are the third round of criminal charges brought in this investigation by Schuette, who has also previously filed a round of civil law suits against two water supply engineering firms, Veolia and Lockwood. Schuette has thus far filed a total of 43 criminal charges against 13 current and former state and local officials since the start of his investigation, and has interviewed approximately 200 witnesses.
Several current and former state employee previously criminally charged are today scheduled to appear for a court hearing in Flint, according to this account in the Detroit News. The criminal charges arise from the alleged failure of these government workers to perform their respective roles in protecting public health. Those scheduled to appear are Stephen Busch, Patrick Cook, Michael Glasgow, Corrine Miller, Nancy Peeler, Michael Prysby, Adam Rosenthal, Robert Scott and Liane Shekter-Smith, according to the Detroit News.
Schuette’s Summary of What Went Wrong
To those readers new to this story, allow me to quote at length from Schuette’s summary of what went wrong:
The false pretenses and conspiracy to commit false pretense charges against Earley and Ambrose are based on the Defendants gaining authorization to borrow millions using the alleged reason of an environmental calamity.
Without the funds from Flint, the Karegnondi Water Authority (KWA) Pipeline would have to be mothballed. However, as a bankrupt city, Flint needed the Michigan Department of Treasury’s approval to get loans.
Emergency Manager Earley’s attempts to get funds in January and February of 2014 were rejected because the City was in receivership, had a $13-million deficit and no credit rating. State law banned the City from accumulating any more debt.
However, the Defendants allegedly used the Home Rule City Act emergency bond clause, created to deal with cases of “fire, flood, or other calamity,” to borrow the tens of millions required to pay for Flint’s portion of the KWA. The clean-up of a troublesome lime sludge lagoon – holding by-products of water treatment – became the vehicle to get a state waiver for the bonds.
To make the situation even worse, tucked inside the 15-page Statement of Purpose for an upgrade of Flint’s Water Treatment Plant system was a one-paragraph requirement that bound the city to use the Flint River as an interim water source, and the Flint Water Treatment Plant as the sanitizing and distribution center.
The Flint Water Treatment Plant, however, was not ready to produce safe, clean water to the citizens of Flint. Regardless, the Defendants mandated the City to use the Flint Water Treatment Plant as part of the deal to get the ability to issue bonds.
Defendants Croft and Johnson allegedly pressured employees of the Flint Water Treatment Plant to get the plant in working order before April of 2014, the scheduled date for re-start. When the deadline closed in, rather than sound the alarm, the defendants allegedly ignored warnings and test results and shut off the pipes pulling clean water from Detroit, and turned on the Flint River valves.
Who Knew and When Did They Know It?
Now, dear readers, I should confess at this point, that I’ve not been following the twists and turns of this sordid story very closely. But I will venture that I don’t think those indicted yesterday were able to pull off their alleged shenanigans while keeping the whole matter a closely-guarded secret. Turning to the Detroit Free Press again:
“So many people knew that that plant was not ready — and yet it was done,” said Andrew Arena, the former special agent in charge of the FBI in Detroit, and now Schuette’s lead investigator. “That’s the thing that shocked me.”
The question is how far up the state chain of command did this knowledge extend? And that makes the key test of whether my cautious optimism is misplaced– and that instead this is yet another case of legal misdirection, chasing small fry when the ultimate decision makers get a free pass– if Schuette continues to follow the evidence right up the state chain of command– potentially extending as far as Governor Snyder himself.
At least on what we can see from the outside, Schuette seems to be building a slow, methodical case. The managers just indicted could presumably turn on political masters in order to save their own skins. In fact, If convicted of all charges, Earley and Ambrose are looking at spending the next 46 years in prison, while Croft and Johnson would get off with a mere maximum of 40 years, according to The New York Times in this piece. That reality provides plenty of incentive to cut a plea and serve up anyone those indicted can.
Flint Mayor Karen Walker apparently concurs, with the New York Times reporting, “She said she saw the charges as an indication that the investigation may reach still higher.”
It’s at present too soon to tell who Schuette’s ultimate targets are– that will ultimately involve not only an assessment of the legal situation but raw political calculation as well. Thus far, he’s holding his cards close to his chest and not revealing more than he has to.
To return to the Detroit Free Press:
At least one member of Snyder’s cabinet, Department of Health and Human Services Minister Nick Lyon, has already been publicly identified as a target of the investigation, though Schuette has denied there are any targets other than those who are charged and no charges were announced Tuesday against Lyon.
Flawed Emergency Management System
I’ll close by pointing out one problem that’s well-known to those who’ve been following this issue more closely: the way the Michigan’s emergency management system remove key decisions from democratic control and places these in the hands of managers who are effectively insulated from accountability. According to the New York Times:
The claims also reopened a longstanding debate in Michigan over the state’s emergency management provision, reviving questions about whether the system removes power and control over local issues from those residents who come under state oversight.
Michigan is not alone in using “systems of state oversight for fiscally troubled municipalities and other local government entities,”– and in fact, approximately 20 states employ some form of such systems, according to the New York Times. But the Flint water crisis has spotlighted the particular flaws in the Michigan system. During Governor Snyder’s term of office, he’s appointed emergency managers in several Michigan cities, including Benton Harbor, Detroit, Flint, and Hamtramck.
As the New York Times elaborates:
For years, governors here have appointed emergency managers as a way to efficiently cut debts and restore financial stability in the most troubled cities. But residents of some majority-black Michigan cities, including Flint, argue that the intense state-assigned oversight disenfranchises voters, shifts control from mostly Democratic cities to the state’s Republican-held capital and risks favoring financial discipline over public health.
Mayor Karen Weaver said that she was thankful Flint was now getting this level of “accountability,” but that the entire episode revealed a fundamental flaw of state-ordered oversight in any city. “That’s what was missing when we had an emergency manager,” Ms. Weaver said. “Our voice was taken.”
Post hoc criminal charges are an inadequate– albeit long overdue– way of redressing the harms the water crisis has imposed on Flint residents. Ultimately, this crisis probably would not have occurred if citizens had a way of exerting more effective democratic control over decision makers– and the state’s emergency management law had not thwarted such accountability.
Indeed, again turning to the New York Times:
Melissa Mays, a Flint resident and activist on the city’s water crisis, said it was a significant step that the state-appointed managers would be held to account. “The biggest thing for us is to see the emergency managers on there because for the longest time we were told they were untouchable.”
Yet although legal remedies are inadequate, if Schuette’s investigation is assiduously pursued– wherever it might lead– this is the best hope on offer that Flint residents will receive some form of justice, however imperfect, for the harms done to them.
A good example of “delegating authority”.
The Big Fish assign the Little Fish tasks that are impossible to complete, without corner cutting. While hiring little fish who are disposed to corner cutting.
Knowing that they will do what you want done, without being told to do it. Standard business practice.
“Buffers’?……..(laughs)………yeah, the family had all kinds of ‘buffers’……..”
In other words, the political version of Bill Black’s control fraud.
The tragedy of Flint is strong evidence that the nation needs an aggressive advocate for environmental protection in charge at the Environmental Protection Agency (EPA). Scott Pruitt, a lap dog of the fossil fuel industry, and Trump’s nominee for the post, is not that person. Bill Schuette, the Michigan Attorney General who is leading the case against Earley and Ambrose, is a Republican, so it is possible for a Republican to be a good EPA Administrator, although it is not likely.
Here is what causes Flint Michican, where large corporation Veolia is also being sued.
The enemy is the stock market, which is not the free market. This is being propped up to benefit very few of us, chiefly those with pensions ( almost all government) and major university endowments. As to the latter, only 1% of schools have half the endowment money. They also invest it in the dark netherworld of hedge funds, which likes to pursue litigation for a living, often against small business
The big companies use their money , plus borrowed money, to buy back their own stock. This leaves zero money for R&D, and not even for safe operations. If you graph disasters due to cutting corners starting with the Titanic, you will see an exponential increase due to this effect.
If they go to prison, I think the image of every man, woman, and child poisoned by the lead contaminated water should wallpaper their cell. I also think the only beverage they should ever have while incarcerated should be drawn from the Flint River.
Lastly, that river needs to be cleaned up. People were hurt by the polluted water, but also think of the wildlife that suffers. Clean it up so that it runs clean again.
The river wasn’t the source of the lead – the problem was that the river-water was better at pulling lead out of the pipes than the old water supply.
I think it’s a travesty that the media has been colluding to keep quiet about this, but the ultimate cause of the lead pipe corrosion was the presence of a dangerous chemical known as dihydrogen monoxide in the Flint River. There is abundant evidence that the Flint Water Authority was literally filling their pipes to the brim with this dangerously corrosive chemical for people to drink, yet the media has conveniently memory holed this fact.
Oh and they may have been adding some other antibacterial chemicals etc to the DHMO that enhanced its corrosiveness, which may be problematic for them.
Very funny, jgordon. ;-)
For the most thorough analysis of the dangers of dihydrogen monoxide, I recommend dhmo.org.
“…You know when fluoridation began? 1946!”
It all becomes clear.
They basically deliberately poisoned the residents is my understanding.
and coincidentially, Reuters reports 3000 US communities have higher lead levels than Flint:
You beat me to it. I was going to comment on the “we’re closer to the end than to the beginning” remark quoted in the article, by pointing out all the other instances we now know of.
I don’t find much cause for celebration, here. Sure, someone’s being held accountable for this one instance, but as someone once said, “the whole damn system is guilty as hell.” Until the whole damn system is indicted, I’m not getting too cheery…just sayin’…
You also beat me to it. Just one more similarity between the U.S. and the Roman empire.
That article is mostly about exposure to lead from old paint or from nearby lead mines or smelters. Here’s a CDC article about lead in drinking water:
Here’s an NIH article:
So in some cases, a change in procedures caused the problem, which is what happened in Flint.
In many of those cities, the greatest lead contamination is from lead paint particles and dust. Flint has that problem, also.
This is a very positive development–I just hope that the AG is able to either reach plea agreements to go after the really big fish, including Snyder, or at least is able to obtain convictions. Too many times in recent years we’ve seen the obviously guilty walk away on acquittal because the criminal justice system is also broken.
The odds of a Republican AG indicting a Republican Governor do not seem to me to be very high. Hope I’m wrong. But isn’t easier just to pin the rap on the underlings? This:
… says Schuette is considering a gubernatorial run in “2008.” Pretty sure that’s a typo and the writer means 2018.
The emergency managers are black, I think that this was done for just such an eventuality.
This being a state prosecution, anybody know what limits there are, if any, on Snyder pardoning folks, including himself, if the heat gets too close?
Also, as to Edward’s comment above about the Roman Empire, I know he’s thinking in terms of general decline, but as far as water goes, if I’m not mistaken parts of Italy are still served by aqueducts and pipelines built by the Romans thousands of years ago.
Some authorities claim that widespread lead poisoning was one of the causes of the decline and fall of the Roman empire. Some disagree.
Also responsible, some say, for the violent crime boom. Which tracked amazingly well with the introduction of….and removal of…leaded gasoline.
Sadly Nestle is about to take a lot more water.
Alarmingly there is a push for privatization of water. As usual that would lead to:
1. Worse service
2. Higher prices
3. Less accountability when things go wrong
4. Employees working for said privatized organizations are often screwed out of their pensions and benefits
Neoliberalism is a cancer on the well being of society I’m afraid.
“Flint Water Crisis: Michigan AG Pursues Felony Indictments Against Former Emergency Managers”
Keep in mind that the Michigan AG is also pursuing the Trump voters who will give him the promotion he hopes for. When he indicts the governor — pigs will fly.
Another interesting take. The change of Flint’s drinking water was part of a larger conspiracy to force the Detroit Water Supply into private hands.
What I want to see is the financial people (i.e., Wall Streeters) involved in this conspiracy hauled out and strung up right next to Snyder. I’m figuring about 20 years ought to do it, but I’d put money that these people will be protected from even being named, with this conspiracy aspect being buried entirely. Different rules, you know.
Follow the money as they say. Though not yet criminally changed, Veolia employees likely should be. The switch to Flint water was always about the money, as it has been reported that Flint’s water being purchased from the Detroit system was far less expensive then first asserted by the state, and far less expensive that the poisoned water Flint produced from the river water.
The corrosion problems with the river water were common knowledge among the professionals and overseers of the Flint system. It appears Veolia was brought into the decision process in order to fabricate the technical support for what was a pre-determined goal. It was reported that in Veolia’s contract an absolutely standard work element, assessing whether the might be potential corrosion effects, was not in their negotiated scope. This omission is glaring, and given the prior knowledge that such a problem was in fact present, it screams collusion to deceive. Veolia is among the world’s largest operators of privatized municipal water systems. They would never have been so blatantly remiss in the professional duty unless someone important asked them to do it, or promised them something in return
If I was prosecuting I would accuse the professionals of Veolia involved with intent to cause public harm, or something. Unless they face jail time they are not going to talk. .
This is a perfect example of the vacuity of arguments against infrastructure that are constantly being heard. Digging up and replacing pipe is not necessarily skilled work, although the engineering and equipment operation is. And even if it is, it’s not a four year degree track. It’s just training. Like companies used to do all the time.
As I like to say, we don’t even need to INVENT anything to put people to work. We just need to find the money. Maybe in the Pentagon’s couch cushions?
I lived 3 doors down from this kid in DC, and I’ve seen him running around since he was a baby. It was on Capital Hill. We must have got a little lead…the service line from the Water Main to our townhouse WAS lead. The prior owners had replaced the plumbing in our house with copper, and we’re blessed my daughter didn’t get poisoned. With a background in Historic Preservation, I know that their house, located on a prominent corner was built in probably the late 1890’s, about 15 years before ours. Likely had lead pipes all throughout the house which exacerbated the damage. Needless to say this was an African American family that had this thrust upon them. https://www.washingtonian.com/2006/08/01/why-is-lead-still-poisoning-our-children/
There weren’t any shovel-ready projects in 1933, either, but in six months from the day Roosevelt appointed him Harry Hopkins had hired six million people to work for the Civil Works Administration, an administrative feat that far exceeded what the Army had been able to do in the Great War. That argument was always a lie.
I wonder if the entire debacle was planned years in advance for elite Wall Steet investors so they could jack up the prices of calcium EDTA, the chelator for lead toxicity and incidentally for retained gadolinium.
It’s the next big thing as millions are going to realize that they have been poisoned by gadolinium-based contrast agents used for MRIs and the only way to get it out is through chelation. This is the treatment I do and have spent upwards of $100k to get well and my employer-sponsored plan has paid upwards of $300k.
Apparently EDTA chelation therapy removes not just lead but also calcium deposits from arteries and veins, and there has been some evidence that regular chelation therapy can keep people with cardiovascular problems alive. Very controversial. Anyway, my late husband (who had had two major bypass surgeries) was treated in the 90s with EDTA chelation by a D.O. in private practice who charged, if I recall correctly, $50.00 per treatment. Treatments were every week and it was a 3 hour process. My husband hated going for those treatments, although they were not painful, and certainly did him no harm. After about 18 months, he stopped going. Six or seven months after that, he was denied access to a cardiologist by his internist “gatekeeper” (who knew nothing of the previous chelation therapy) but certainly did know about the bypasses. That genius said “you just need to get your blood sugar under control.” He did so, and about a month later, suffered a fatal heart attack.
Anyhow, my point was, EDTA chelation used to be very inexpensive and often prescribed “off-label” for conditions other than lead poisoning.
I’m worried they are going to jack the prices up not only for EDTA but a newly approved chelator, DTPA which is approved by the FDA for plutonium, americium, or curium poisoning. DTPA also chelates lead and gadolinium and is currently being considered for approval for the chelation of gadolinium as it is supposedly more efficacious than EDTA for gadolinium.
I’m sorry to hear about your husband. Mainstream medicine is something I stay away from. In fact, after I found out I was sick from gadolinium they refused to help me. I couldn’t even get a biopsy so I had tissue left over from a breast biopsy and sent that to Mayo to be tested for gadolinium. It was in my breast tissue. Expert after expert told me, oh it can’t be gadolinium that is making you sick it is safe. A toxic metal that breaks away from the chelate/ligand in the vial is safe according to them. They really don’t care about the patients only ordering profitable exams. Now they know that we retain it in our brain. If you want to read my story I was featured in an article on ProPublica.
Interesting to note that as soon as Trump is officially the president-elect (that is, the Electoral College votes have been cast), then this happens.
I guess old Obama can no longer be counted upon to protect the guilty, they way he did by appointing Covington & Burling’s point man, Eric Holder (at the direction of Citigroup — please recall those leaked emails), to protect the banksters.
Chain of Title by David Dayen
I am delighted that emergency managers are being indicted. The people of Michigan resoundingly voted down the idea of emergency management but it was done anyway. It has been as wretched an idea as we thought it would be, all the way through.
Being black has nothing to do with it. Immorality exists in every human group. I find it weird that this needs to be stated.
Here’s an update from the end of another piece from the excellent Detroit MetroTimes
“Just another note about the caring, sharing Snyder administration: We noted that that master of “relentless positive action” Gov. Snyder was going to help Flint residents — right after exhausting his stays and appeals to a federal judge’s ruling that he help Flint residents.
A federal judge ruled Nov. 10 that Lansing must ensure that every Flint resident has a water filter, bottled water deliveries, or had signed off that they didn’t need any help. The Snyder administration, however, decided to fight the ruling, using state taxpayer dollars to seek stays and appeals. Last Friday, a federal appeals court refused a stay, and told the Snyder administration — for the third time now — to begin delivering bottle water.
Gov. Snyder, of course, is a paragon of kindness. But he says he just can’t abide the state having to pay $10.5 million a month to ensure water access for the people his skinflint emergency managers, now under indictment, poisoned. That’s too much money, his spokesperson says.
The fact that this battle is being fought around Christmastime adds a strange dimension to the battle. Pastor Allen Overton of the Concerned Pastors for Social Action, whose members are religious leaders in Flint and environs, released a statement: “My holiday wish for Flint is that the State of Michigan stops fighting this court order and gets back to work securing safe drinking water for every person in Flint.”
Meanwhile, Gov. Snyder, who opened the year with an unexpected $575 million surplus, joined his toadies on the Flint Receivership Transition Advisory Board in a response worthy of Ebenezer Scrooge: The burden of delivering water and installing filters in Flint would be “insurmountable” and the effort required would be “Herculean.”
Now would be an excellent time of year for a real-life enactment of A Christmas Carol, to have Gov. Snyder visited by three spirits of Christmas, and to have the calculating nerd governor to recognize the Emergency Manager Law for what it is: part of the heavy chains and lockboxes he’s fated to carry through the world when he dies. Wouldn’t it be incredible to see Snyder handing out Christmas hams in Flint, declaring his change of heart on Christmas Day?
But he needn’t be as extravagant as spending $10 million a month: If he wants a source of water, all he need do is look to the groundwater Nestlé is sucking up and selling out of state, as amply demonstrated in this week’s cover story. Nestlé gets to take hundreds of millions of gallons of Michigan groundwater without paying more than a few thousand dollars in application fees. Maybe, by cutting out the middleman, Snyder can really do some good for the people of Flint.
Who knows? One thing is certain: Weirder Christmas wishes have come true. (Or at least been made into movies.)”
This is a nationwide problem, folks.
One problem is the Great American Suburban Dream is a gigantic Ponzi Scheme. All of the low density suburban single use zoning, endless freeway interchanges and arterial commercial strips….expensive, and it will never generate the tax revenues to replace all the thousands and thousands of miles of pipes. And older, smaller industrial cities (like Flint) will never have the tax base to provide basic services.
You can already see the problem in older suburbs outside the elite “favored quarters”. Throw in industrial collapse….
Big fleas have little fleas upon their backs to bite them
little fleas have less fleas and so on ad infinitum.
Sooner or later the big fleas will be caught.
You do understand this:
“The false pretenses and conspiracy to commit false pretense charges against Earley and Ambrose are based on the Defendants gaining authorization to borrow millions using the alleged reason of an environmental calamity.
Without the funds from Flint, the Karegnondi Water Authority (KWA) Pipeline would have to be mothballed. However, as a bankrupt city, Flint needed the Michigan Department of Treasury’s approval to get loans.
Emergency Manager Earley’s attempts to get funds in January and February of 2014 were rejected because the City was in receivership, had a $13-million deficit and no credit rating. State law banned the City from accumulating any more debt.”
points the finger right back at the Gov. Rick Snyder as both Ambrose and Earley were hand picked by Snyder to be Emergency Managers by Snyder. Did the City of Flint really have a water crisis or not? Detroit would have let them stay. The new pipe line did need Flint on it to help pay for expenses. There was no urgency to leave as it was also lost revenue to Detroit which had lost ~$732 million (2003-2013) in revenue sharing from the state helping to force it into bankruptcy. Flint lost ~$55 over the same period of time. >50% of Michigan revenue is generated out of Metro-Detroit as it is the busiest trading partner with Canada. There is more to this.
The state has allocated a couple of $million to pay for Gov. Snyder’s defense. Schuette is hoping to run for Gov. in a Repub controlled state (to date). Do you think Schuette will mess with Snyder? This is just a side show by Schuette to gain status for when he runs for governor and an effort to protect Snyder by misdirecting the attention.
Mean while The Republican controlled House in Washington closed its investigation of Flint water. Jerri, welcome to Naked Capitalism. I write for Angry Bear and am a resident of Michigan.
Another aspect of the case that gets overlooked. I’m a little out of touch with the details, but if you’re interested google is your friend. The Michigan legislature, at Rick Snyder’s urging, passed a revision of the Emergency Manager law that made them virtual dictators. The voters, surprisingly, rescinded the law in a referendum, by rather a large majority. So Snyder and the legislature passed the law again, this time including a provision that prevented the voters from including it on a referendum again.
In the early days of the story, the Free Press found some evidence that the real reason Snyder insisted on cutting off Flint from the Detroit water supply was because his friends were expecting to be able to buy up the Detroit Sewage and Water Department for pennies on the dollar if they could cut off DSWD’s revenue stream. They had some evidence, but I don’t remember what it was.