Tuesday, September 11, 2012

New video exposes the Culture of Cheating: Markowitz admits Brooklyn is not "1000 percent behind Atlantic Yards," as he told Chinese investors, but asserts, jocularly, it's "980 percent"

Remember how Brooklyn Borough President Marty Markowitz made a video in the fall of 2010, claiming that Brooklyn was "1000 percent behind Atlantic Yards?"

Such misleading support helped Forest City Ratner raise some $228 million in cheap capital from immigrant investors via the federal government's EB-5 program, an effort I've been dissecting for two years under the rubric "Anatomy of a Shady Deal."

Well, I finally got Markowitz to explain himself--sort of--and he admitted he was wrong, though not by much.

Valuable help

Markowitz's shilling, as well as cheerleading from city and state officials, helped the developer save tens of millions of dollars from 456 investors, given that the would-be immigrants, who park $500,000 in a purported job-creating enterprise in exchange for green cards for themselves and their families, care little about earning interest.

The middleman--in this case a federally-authorized investment pool called the New York City Regional Center--loaned the money to Forest City at below-market interest, and gets  to keeps the spread.

The loser? The public, since the intent of the law is to create new jobs, not simply to increase the profits of a developer by allowing it to substitute cheaper capital for existing capital, as seems to be the case here.

Thus Markowitz's role also highlights my new, ongoing Culture of Cheating series that aims to provide a framework for viewing the Atlantic Yards saga.

The original video

Markowitz was invited to China by Forest City Ratner, mindful that high net worth individuals there, from the country that supplies a large majority of immigrant investors, feel more confident about EB-5 project if they seem to have the participation and backing of government officials, even if that backing--as in this case--is only rhetorical.

He didn't go, likely because he was concerned about bad publicity, both about his role in the project and, more likely, his frequent overseas trips. Markowitz appeared in a video produced by the New York City Regional Center, standing before official flags and, even though he and the borough had no official role in the financing for the project, made preposterous claims.

"The largest company in Brooklyn is Forest City and I can assure you that their reputation is unbelievably reliable," he declared. "They're a great company to work with; they've worked very closely with government. The most important thing: they make a promise, they keep it." (Actually, promises of housing, jobs, and more have not been kept.)

Then he claimed Brooklyn backed Atlantic Yards "1000 percent."

(More on the video here, including why the subtitles are in Korean.)

Questioning Markowitz

On Tuesday, 11/29/11, after the MetroTech tree lighting ceremony, I caught up with Markowitz, with cameraman Jonathan Barkey in tow. (I'm not a big fan of such ambush tactics, but Markowitz has previously avoided questions about this topic and he's pretty much always on.)

"Is Brooklyn 1000 percent behind Atlantic Yards?" I asked.

"No, not 1000 percent," Markowitz responded, conceding, "I mean, I may have said that."

"That was my question," I countered.

"I would say it's 980 percent," said Markowitz, who was in a festive mood.

A better explanation might be, as Markowitz said upon holding a borough-wide "Thank You" in the wake of his 2001 election, "The days of being staid are over. I have no shame, it's OK."

(Video by Jonathan Barkey)

How much support?

Actually, the latest poll at the time, from Crain's New York Business in 2006, said 60% of Brooklynites favored Atlantic Yards, significantly because of promised jobs and affordable housing--none of which have been delivered at the rates promised.

At the tree lighting ceremony, when Markowitz talked up the Nets (see 3:25 of the video), there was no discernible response from the office workers and parents in attendance.

That said, Brooklyn's big enough to generate a vocal and significant fraction of support for the team and arena, especially since the team's rapid revamp this past July, even if it does not mean--as the New York Times conclusorily suggested--that "Brooklyn seems ready to adopt the Nets."

That doesn't mean widespread support for Atlantic Yards, however.

"No corruption"

"And I must tell you," Markowitz continued. "Once you get away from your--the area that you focus on, once you get past that, the people of Brooklyn celebrate this, It's going to be a wonderful page-turner in a positive way and, overwhelmingly, the people that support Atlantic Yards, including me, there was no corruption, no payoffs, no matter how much there are folks there that think that there are deep-seated whatever, it was based on the fact that we truly believe it's a good, positive thing for Brooklyn."

No findings of corruption, but, as I've argued, a "culture of cheating."

But the whiff of corruption (as noted by New York Times columnist Michael Powell) wafts toward Forest City Ratner, which is unindicted but mentioned in indictments of ally state Senator Carl Kruger and lobbyist Richard Lipsky, and of its lobbyist in Westchester's Ridge Hill case.

And the process behind Atlantic Yards suggests crony capitalism, such as anointing a developer public property before a Request for Proposals was issued, or hiring consultant AKRF to conduct a study with the express aim of finding blight, as opposed to "neighborhood conditions."

Again, while there's no official corruption, Markowitz's solicitation of corporate funding for his charities allows him to raise more money from such important players in Brooklyn than he could through the campaign financed system. (His largest contributor? Forest City Ratner.)

"That's my personality"

"Why'd you say 1000 percent, why'd you make that video?" I asked.

"Y'know why, because that's my personality, and you've got yours and I've got mine," Markowitz replied. " And I like to--I'm very [humorous*]. So that's the way I am."
(*I couldn't quite get the word Markowitz was going for--it sounded closest to "humorous," but it's not clear.)

"Fair enough," I said, encouraging him, though it's really not fair at all. It was not the time for an extended ethical debate, but "that's the way I am" is not exactly a defense for lying to potential investors.

(Neither is there much of an explanation beyond "That's the way I am" for his wife Jamie, as the Post reported, sticking her tongue out at a neighborhood activist in Coney Island.)

"Sometimes I'll say a million percent," Markowitz continued, jocularly. "I'm surprised I didn't say a million. I made a mistake there. We look at this differently..."

Having it both ways

Markowitz's explanation recalled a statement he made to the New York Daily News in 2002, when he got in hot water over saying he'd move a portrait of "old white guys" like George Washington: "I have to weigh my words a lot more carefully. [When] I was a state senator nobody ever listened to me."

He's been trying to have it both ways ever since--it's his personality to be a cheerful booster, but he also has responsibilities to honest and fair government.

As former Chief of Staff Greg Atkins said in a deposition, "When Marty hired me, he--the words he used [were], 'I don't need anybody to do the shtick I do, that I need someone to run the borough.'"

In this case, shtick was used to mislead investors who, not knowing much about Brooklyn, might have been inclined to believe Markowitz.

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