In 2005, the U.S. Department of Justice announced in this press release that Anne Sholtz, a then-high-flying entrepreneuer instrumental in creation of the planet’s first smog cap-and-trade, had admitted to defrauding an obscure New York-based energy trader called AG Clean Air. Sholtz’s little-noticed plea and corporate bankrutpcies ignited a mess that still has many smarting and confused, while giving global warming skeptics such as Texas Rep. Joe Barton ammunition to question the prudence of Pres. Obama’s hope for a greenhouse gas market. Oh yeah, there’s also this issue of whether Sholtz, a former Caltech economist and owner of a resplendent mansion, perpetrated an earlier fraud –with the supposed help of ex-CIA and military operatives — that never went investigated or flagged by authorities. See my story about her and “Operation Bald Headed Eagle” for the particulars.
Now, lookie here. The apparent parent company of AG Clean Air, is one of the creditors of the Tribune Corp. bankruptcy. For those who don’t know, Tribune owns the Los Angeles Times, our hometown paper, the Chicago Tribune and other media assets. As this story shows, former Disney chief executive Michael Eisner is bidding to become Tribune’s post-bankruptcy chairman.
Here’s a crucial passage: “… Tribune and its creditors are still struggling to negotiate a settlement around charges that (Sam) Zell’s 2007 leveraged buyout was a case of “fraudulent conveyance,” meaning the transaction rendered the company insolvent from Day One. That settlement would serve as the basis for a plan of reorganization, but depending on how negotiations go, it could be months in coming or the case could easily devolve into litigation.
Nobody in the case doubts that senior creditors led by money center bank JPMorgan Chase and two hedge funds, Angelo, Gordon & Co. and Oaktree Capital Management, will end up owning Tribune by virtue of their $8.6 billion in claims …”
In a earlier article, the L.A. Times depicted Angelo, Gordon & Co. as a “distressed-debt hedge fund.” Here’s the company’s website, so judge for yourself.
When I contacted the company for comment about my last story on Shotz last summer, the PR flack initially denied there was a connection between AG Clean Air (which apparently stood for Angelo, Gordon Clear Air) and Angelo, Gordon & Co. until I disputed otherwise and said the court documents show the exact same New York address for both entities: 245 Park Ave., 26th floor, New York, NY 10167.
Coincidene? I think not.
Whether AG Clean Air still exists is not clear. That the parent is the same one entangled in the debacle that Sam Zell created with his highly leveraged Tribune purchase some years back seems undeniable.
Revelations that a growing plume of chromium-six-laced groundwater is spreading through L.A.’s acquifers and soil hasn’t captured the attention it deserves in a summer of high-anxiety about Afghanistan, the endless recession, the oil spill in the Gulf, and, of course, Lindsay Lohan’s rebab. The highly toxic industrial chemical has forced the L.A. Department of Water and Power to quietly close fifty-five wells after long downplaying the problem. Chromium-six, a.k.a. chrome-six and hexavalent chromium, owes much of its presence here to Cold War military production and plating operations. Until recently, L.A., Burbank and Glendale dealt with its chromium-six tainted water by dumping it in the Los Angeles River or blending it with clean supplies, because it is a difficult chemical to filter at traditional treatment facilities.
I’ve writing about the subject for close to sixteen years, and figured I’d post those stories from latest to oldest so those affected by this under-the-radar, oft-lethal chemical can understand its history without alarmism or apathy.
* The startling picture of smogged out L.A. was the cover shot for a Wired magazine feature story about Southern California’s epic fight for blue skies against it’s own people’s auto addiction. They were gracious to highlight our book, Smogtown: the Lung-Burning History of Pollution in Los Angeles, and interviewed me. Here’s a little blurb:
“… People in Los Angeles were very proud of their air,” said Chip Jacobs, one of the authors of Smogtown: The Lung-Burning History of Smog in Los Angeles. “They said that L.A. was the land of pure air, and that moving there could cure tuberculosis and alcoholism. They thought there had to be one simple answer.” The day after the first big smog, city officials pointed to the Southern California Gas Company’s Aliso Street Plant as the source of the thick cloud. The facility manufactured an ingredient in synthetic rubber called butadiene. Public pressure temporarily shut down the Aliso Street Plant, but the smog episodes continued to get even worse. Undeterred, Los Angeles Mayor Fetcher Bowron announced in August that there would be “an entire elimination” of the problem within four months. But the search for the culprit of the “gas attacks” — and the ensuing battle to curb the culprit’s emissions — was just beginning …”
* An interesting MSNBCpiece about scientists’ progress in creating artificial lungs. Gosh, L.A. would be the perfect test city.
” … Nearly 400,000 people die of lung diseases each year in the United States alone, according to the American Lung Association, and lung transplants are far too rare to offer much help. But how to replicate these spongy organs? Niklason’s team stripped an adult rat’s lung down to its basic structural support system, its scaffolding, to see if it would be possible to rebuild rather than start completely from scratch …”
* For now, forget using the prospect of a green-jobs bonanza to convince Congress and the American public to support the national climate bill stalling in Washington, D.C. From the L.A. Timesblog.
* Speaking of cap-and-trade, California and other regions, though not the first ones envisioned, may enact their own greenhouse market. Good luck getting voters to support it in this jobless recovery or keeping fraud at bay. From the L.A. Timesstory.
“As the nation’s most populous state and the world’s eighth-largest economy, California wields significant influence. International and national controls are needed to curb global warming, Gov. Arnold Schwarzenegger said Tuesday, “but California and the rest of the Western Climate Initiative partners are not waiting to take action.”
” … The Western initiative would cut emissions 15% below 2005 levels. It would transition the region to “a green economy that will reduce our dependency on oil, increase our energy security and create jobs and investment now,” Schwarzenegger said in a statement. The trading program would allow companies to meet targets by purchasing less expensive “offsets” from forests, agriculture or garbage dumps when companies in those sectors store carbon dioxide beyond what they would have emitted in the normal course of business …”
* I’ve probably written a dozen stories about L.A.’s unheralded crisis with deadly hexavalent chromium (otherwise known as “chrome-six,” or the Erin Brockovich chemical) creeping and moving through its acquifiers and land. In 2004, I did a series about it for Southland Publshing and in 2000 I covered the subject for the L.A. Times. Unfortunately, the problem is getting worse. Here’s the L.A. Daily Newscoverage (and the Daily News deserves lots of credit for its mid-1990s stories on chrome-six related to Lockheed Corp; I was lucky to have on the team that wrote about it). With all the focus on greenhouse gases and the drought, we’ve all forgotten about a deadly industrial poison spreading through wells and leaving local officials with tricky decisions to make.
Texas Congressman Joe Barton, along with fellow Republican Greg Walden, last year pressured the Justice Dept. to release documents on the secretive prosecution of former high-flying, emissions-broker Anne Sholtz. Barton, a global warming skeptic and longtime champion of big oil, made news again recently for his comments that the federal mandate for BP to set aside $20 billion for cleanup of the massive Gulf of Mexico oil spill amounted to a “slush fund” and shakedown. Guess what? He was forced to apologize.
Washington Post story on his outburst, which was curious to say the least. Here’s the official contrition from him in an MSNBC update.
I’m just wondering when Barton will get around to explaining why he and House lawyers and investigators were chomping at the bit to learn more about Sholtz and what her air pollution-exchange scandal says about a possible greenhouse gas cap-and-trade, when a national energy/climate bill was on the front burner, and why he’s allowed it slip from it from his political consciousness now that the bill’s propsects faded. Could it be Barton’s entire reasoning was to slam Obama, via California, and shield the petroleum sectors? Naw, couldn’t be.
In any event, my story on Sholtz — and it’s contexualized and expanded in our book Smogtown: the Lung-Burning History of Pollution in Los Angeles– won gold in the Southern California Journalism Awards Sunday night. I dislike even mentioning this, because I am ambivalent about subjective honors, but in this case I make an exception because after all these years, there is still more heat than light about the Sholtz caper and Barton’s real motives, let alone why the Justice Dept. handled her the way it did and all that CIA stuff.
It comes from Santa Barbara environmental activist, David Lange. Here’s his blog. David, a passionate concerned citizen, has an interesting soundtrack to it that speaks in metaphor. Very well done!
* Ensuring California’s millions of cars are as smog-free as possible has never translated into a system that’s corruption free, and never will.
From theL.A. Times: “A South Los Angeles smog check shop has been shut down by state regulators and may face criminal charges for routinely certifying pollution-belching vehicles as smog-free. Undercover surveillance by the state Bureau of Automotive Repair found that in a two-hour period, each of the 13 smog tests conducted at AM PM Smog at 6401 1/2 S. Avalon Blvd., was fraudulent … A state audit earlier this year found widespread fraud statewide, with almost one-third of older model vehicles failing surprise roadside tests even though they had earned passing grades at inspection stations …”
* Big stunner out of Washington, D.C. Politicians are politicizing the Gulf Oil spill to push for clean energy legislative, including a carbon “cap-and-trade” market. In Casa Blanca terms, I’m shocked at this dirty pandering. Restoriong gooey, tarry wetlands and petroleum-shellacked beaches and controlling the earth’s temperature are distant cousins of the green movement, or are they?
* So Aghanistan actually does have natural resources that don’t include Taliban grunts with scarves and AK-47s? As if the average Afghani will get any benefit from this.
From the New York Timespiece. “The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.
The previously unknown deposits — including huge veins of iron, copper, cobalt, gold and critical industrial metals like lithium — are so big and include so many minerals that are essential to modern industry that Afghanistan could eventually be transformed into one of the most important mining centers in the world, the United States officials believe …”
* Tell me this isn’t true, 30 years after a painful OPEC oil embargo that illuminated our need to wind down our dependence on fossil fuels, particularly from nations prone to hate and attack us, and intensity the search for clean, renewable energy. What was it George Washington proclaimed about foreign entanglements? Anyway, America’s addiction to cheap energy prices and our devotion to the status quo has done China wonders. They’re the country with the boundless solar power future.
From MSNBC. “… Solar power accounts for less than 1 percent of U.S. energy usage, according to the Solar Energy Industries Association, a trade group. And although many industry watchers see big potential, the giant U.S. market currently ranks fourth in solar electric capacity — behind Germany, Italy and Japan …”
* On this last note, all I can say is that it’s about time and why wasn’t the old anti-corruption unit able to competently prosecute and investigate the Anne Sholtz cap-and-trade fraud?
L.A. Timescoverage: “U.S. Atty. Andre Birotte Jr. announced Friday that he was creating a specialized unit to prosecute public corruption and civil rights cases, such as those involving politicians or police officers accused of crimes.
The move effectively restores a similar unit that was disbanded by Birotte’s predecessor, Thomas P. O’Brien, two years ago.
“My experience has taught me that oversight breeds public confidence in government, and public confidence breeds better government,” Birotte wrote in a memo circulated to his staff, a copy of which was obtained by The Times. “The public needs to be able to rely on federal law enforcement to act as a watchdog for public institutions and the individuals who hold positions of trust in those organizations …”
Here’s my little Op-Ed on the lessons of former emissions broker Anne Sholtz, who defrauded the very smog cap-and-trade she helped concoct. We write about her spectacular and alarming escapades at length, as well as about L.A.’s air pollution market, in Smogtown: the Lung Burning History of Pollution in Los Angeles.
“In the toxic air of Los Angeles is a primer on human nature as we debate a national cap-and-trade for greenhouse gases.
During the 1990’s, Southern California manufacturers, weary of decades of stern regulation, wanted a new way to shrink their emissions of sky-smudging, health-damaging oxides of nitrogen and sulfur. Their answer was the planet’s first smog cap-and-trade system. Its name was awkward — the Regional Clean Air Incentives Market, or Reclaim — but its implications seismic. Industry finally had flexibility in achieving its cuts, and a motive to reduce more than their yearly pollution cap. They could sell unneeded “credits” for profit!
Though environmentalists caterwauled about corporate sellout, the anti-smog officials were on board. For years, they’d been sandwiched between federal clean air mandates and industry accusations that they had crippled the region’s manufacturing muscle with overzealous rulemaking. Why not allow the market to be the magic?
Leading this vanguard environmentalism was Anne Masters Sholtz, a 30-something Caltech economics professor and aspiring emissions-broker. Her brokerage, which used the Web and advanced software to match trades, lined up heavyweight clients and enlisted marquee financial institutions as trade clearinghouses. Sholtz bought a spectacular hillside estate, won niche celebrity, and had a seemingly blue-sky future in the mecca of whiskey-brown air.
The problem is the system was vulnerable. During California’s electricity brownouts in 2000 and 2001, speculators made a killing off the boutique, $90-million-a-year market by hoarding credits the utilities needed to run full time. By then, Sholtz had twice fleeced the system.
In 1996, she misappropriated roughly $2 million in credits belonging to Chevron, then Mobil Corporation and another client and sold them to Southern California Edison. A few years later Sholtz lulled another client, a New York-based trading outfit called A.G. Clean Air, into believing she owned credits the company needed to complete a lucrative trade with Mobil. In truth the credits weren’t available.
Predictably, local regulators were in the dark about both episodes until industry complained to them. As her case illustrates, and Europe’s cap-and-trade scandals corroborates, even the best-intentioned oversight is laps behind sophisticated schemers, be they full timers or just desperate like Sholtz. Concoct a market anywhere, whether for beads or subprime mortgages, and they’ll show up.
Two House Republicans today are moving to unseal court records of Sholtz’s federal prosecution in a ham-fisted effort to hurt President Obama’s chances for a carbon market. If there’s chicanery with smog, imagine a trillion-dollar greenhouse market, they say. But the Sholtz case is too important for politicization, because global warming is a global threat now.
I’m against Obama’s plans because a more straightforward carbon levy seems more cost-effective and less contrived. Yet cap-and-trades can work, as they generally have in L.A., as long as we remember that to make a commodity out of something is to arouse temptation.”
To read the entire New York Times “Room for Debate” online forum, click here.
Here’s the link to my last story about Sholtz and L.A.’s cap-and-trade. It’s a tale of environmental fraud and foreign intrigue unlike any others.
“Metropolitan Los Angeles, extending to Riverside and Long Beach, remains the smoggiest city in the United States, with an average of more than 140 days a year of dangerous ozone levels, the American Lung Assn. reported Wednesday in its annual assessment.
All of the nation’s 10 smoggiest counties are in California, with San Bernardino, Riverside, Kern, Tulare and Los Angeles leading the pack. And the state’s cities and counties, with their ports, refineries, power plants and crowded freeways, rank near the top for particle pollution.
“This is not just a nuisance or a bother,” said Bonnie Holmes-Gen, the lung association’s California policy director. “Thousands of people are being rushed to emergency rooms. Thousands of people are dying early as a result of air pollution…. It is a crisis.”
The report comes at a time of conflict over the state’s efforts to slash emissions. Citing the recession-battered economy, trucking and construction firms are seeking to delay California’s rules to limit diesel pollution from operating big-rigs, forklifts and other equipment …”
Let Freddie Mercury reinforce the point: We are the champions … of smog … mostly by our own making!
“Californians: meet your sun. Or, rather, remember it.
Despite living in America’s premier green state, most of the state’s homeowners continue to rebuff solar power as a way to shrink their electricity bills, and simply plug into their local public utility much as their parents did.
The numbers paint the apathetic picture. Out of 7.7-million single family homes statewide, only about 50,000 have roof-mounted photovoltaic cells. In Los Angeles, the nation’s eighth sunniest city, only 1,627 homes boast solar hookups …”
There’s a lot more to say, and I will, but for now, I encourage you to read the opposing viewpoints and reader commentaries.
Right now, to reiterate, no matter California’s “status” as the greenest of greens, a meager 1 out of 154 homeowners currently use solar power. Does that sound like consumer acceptance to you? I fear we may learn how catastrophic this is as the environment continues to degrade and we experience an earthquake, terrorist attack or other awful event that knocks out power plants and leaves people with no way to electrify their lives and meet their needs until the juice is back on (and yeah, I know you need a fuel cell).
Anyway, here’s the link and I hope it proves a little thought-provoking. Just don’t buy into labels. Buy into the numbers and the big picture.
* Excellent perspective on the phoniness and promise of Earth Day from the Washington Post. Link.
* California Solar Initiative: billions on the line, millions of lives potentially at stake, and yet most are in the dark. For your enlightenment, link up. California: meet Spain. Link to New York Times story on their solar-lifestyle.
*Boeing scientists use organic remedies to remove toxins at Santa Susana Field Laboratory site. Enough said with the L.A. Daily News headline. Link.
*When it comes to long distance running, L.A.’s toxically perfumed air give local athletes that competitive edge. Coughing will knock you off that medal stand. See the L.A. Marathon. Link to L.A. Times blog.
* An EPA man of substance: where was this guy when I was reporting on chromium, et al? Link from the Patt Morrison radio show on KPCC.
* Now this is a real-mini, but will the Third World embrace it in the name of post-climate change and unglamorous function. At least GM is trying, which is better than wallowing in bankruptcy blues. Link to MSNBC story.
* A couple of morsels on California’s climate law, which right now is anything but orderly. L.A. Times story on opponents pouring in money for initiative to delay the climate-change-fighting legislation. Link. On the same subject of global warming, here’s what the California Air Resources Board projects will be the economic benefits of the bill. Link to L.A. Times piece.
