CABs and consequences

By Joel Thurtell

Gray Davis.

If I were a member of the Poway Unified School District in San Diego and my name was

Penny Ranftle

Linda Vanderveen

Andy Patapow

Mark Davis

Todd Gutschow,

I’d be wondering how soon I’d make the list of California public officials  — like Gray Davis — who have been unelected in a recall election.

Dishonesty would be a major reason for removal.

Board members lied when they assured voters that a $105 million bond issue would bring no new taxes when interest on the debt runs to 1000 percent with a $1 billion payoff that will indeed mean new taxes if real estate doesn’t increase hundreds of percent in value.

How can the people trust school board members who sign up property owners for a royal screw job?

Stupidity would be another reason for removal.

When the nation has seen property values plummet in recent years, what kind of dumbie would gamble that property would increase 300 and 400 percent in order to pay a billion dollars of interest on 105 million of principal?

Was there some other reason why Poway school officials rolled over for underwriters, bond attorneys and financial advisers?

We know that in Michigan during the late 1980s and early 1990s, the aforesaid class of profiteers — underwriters and financial advisers in particular — spread their wealth among the patsies — I mean elected school board members and school administrators who were key to making the bond decision. Golf outings, lunches, trips to New York with stays in a fancy hotel, dinners and Broadway plays were the trinkets and baubles that lured Michigan school officials into betraying the trust of their electorate.

The expense of those enticements was billed back to the taxpayers, in a kind of dual fraud that boggles the mind.

First, take the bribe, betraying the public once.

Then bill the cost of the bribe back to the school district, insulting taxpayers a second time.

Recall might be the least of these school board members’ worries.

I don’t know that this kind of behavior took place in Poway. Maybe those school board members were simply dopes.

But we have seen that one Michigan school district — Pontiac — sued its bond attorney in a CAB deal and collected a $15 million settlement.

It doesn’t cost much to file a lawsuit. If residents of Poway wake up and discover they were lied to and screwed, that allegation would be more than enough to drop a civil complaint off at the county clerk’s office.

While Poway is the poster child for bad CABs with interest at 1000 percent, it is hardly the Lone Ranger in issuing its CAB monstrosity.

CABs were thriving in Michigan for five years, 1988-1993, before our Detroit Free Press articles followed by a legislative CAB ban stopped them cold. By then, more than 80 school districts had issued CABs, doubling the state schools’ debt from $2 billion to $4 billion.

California’s CAB debt since 2000 is estimated at $20 billion in principal with interest a question mark but possibly in the area of $70 billion.

It’s not clear how long schools in California have been issuing CABs. Since 2000, California has approved more than 1,000 CABs. A good guess would be that hundreds of California school districts have issued these nefarious obligations. In future columns, I’ll pin this down with more precision.

Right now, as I say, recall might be the least of these board members’ worries. Even civil litigation might be a minor worry for those individuals.

They can sue you, but they can’t put you in jail for being stupid.

But if school officials accepted favors of significant financial value from bond hustlers, as we found was the case in Michigan, there might be something for county prosecutors and the state attorney general to look into.