Pro Publica

by Christie Thompson

The Pentagon announced this week that a sergeant working in the military’s sexual assault prevention office had been charged with — you guessed it — sexual assault. This news came just a week after the officer in charge of the Air Force’s rape prevention program was arrested for sexual battery. 

An estimated 26,000 service members were sexually assaulted in 2012, according to the latest government report. That’s up from 19,000 in 2010, despite recent claims that the military has been focusing more on prevention efforts.

Amid the growing controversy, Congress is hurrying to draft new legislation and Obama has called for stricter punishment for sexual offenders. All officers in the sexual assault prevention office will be re-screened and re-trained, the Pentagon announced. As lawmakers and military officials debate what to do next, we’ve rounded up some of the best journalism on sexual assault in the military.

Did we miss any? Let us know in the comments below, or tweet them to us with the hashtag #muckreads.

The Invisible War, documentary, June 2012

The academy-award nominated documentary has helped bring the military’s rape crisis to national attention. Filmmakers interviewed victims and military personnel to reveal the overwhelming obstacles to prosecuting military rape, and how inadequate efforts have been so far to curbing sexual assault.

Trauma Sets Female Veterans Adrift Back Home, New York Times, February 2013

According to the Pentagon report, 48,100 women reported military sexual trauma last year, which studies say makes them nine times more likely to suffer from PTSD. This two-part New York Times series documents the struggles facing women veterans who’ve suffered from sexual assault, including homelessness and unemployment.

The Rape of Petty Officer Blumer, Rolling Stone, February 2013

The story of one naval officer’s rape details the consequences victims face for coming forward — consequences that keep most victims from reporting sexual attacks. After telling her superiors she had been raped, Rebecca Blumer was accused of lying, sexually harassed, denied promotions and ultimately discharged.

Rape victims say military labels them 'crazy', CNN, April 2012

A CNN investigation found another way the military handles rape accusations: labeling victims as emotionally unstable. After reporting a sexual assault, multiple service members were diagnosed with a personality disorder and discharged. Their abuse allegations were ignored.

The Enemy Within, National Journal, September 2012

What is it about the military that makes sexual assault so pervasive? The National Journal digs into the policies behind the statistics, and the legal loopholes exploited by sexual predators.

Pentagon grapples with sex crimes by military recruiters, Washington Post, May 2013

Active service members aren’t the only ones vulnerable to sexual assault. A recent series of scandals across the country exposed military recruiters accused of sexually abusing young people looking to enlist.

Betrayal in the Ranks, The Denver Post, 2004

The Denver Post spoke with more than 60 victims about their battle for justice, and the psychological trauma that lasted long after their assault. Many felt the military blamed them for their rape, while shielding their attackers from punishment. 

by Paul Kiel, ProPublica, and Mitchell Hartman, Marketplace

This story was co-produced with Marketplace. Listen to their coverage.

Seven years after Congress banned payday-loan companies from charging exorbitant interest rates to service members, many of the nation's military bases are surrounded by storefront lenders who charge high annual percentage rates, sometimes exceeding 400 percent.

The Military Lending Act sought to protect service members and their families from predatory loans. But in practice, the law has defined the types of covered loans so narrowly that it's been all too easy for lenders to circumvent it.

"We have to revisit this," said Sen. Dick Durbin, D-Ill., who chairs the defense appropriations subcommittee and is the Senate's second-ranking Democrat. "If we're serious about protecting military families from exploitation, this law has to be a lot tighter."

Members of the military can lose their security clearances for falling into debt. As a result, experts say, service members often avoid taking financial problems to their superior officers and instead resort to high-cost loans they don't fully understand.

The Department of Defense, which defines which loans the Military Lending Act covers, has begun a process to review the law, said Marcus Beauregard, chief of the Pentagon's state liaison office.

The act mainly targets two products: payday loans, usually two-week loans with annual percentage rates often above 400 percent, and auto-title loans, typically one-month loans with rates above 100 percent and secured by the borrower's vehicle. The law caps all covered loans at a 36 percent annual rate.

That limit "did do a great deal of good on the products that it covered," Holly Petraeus, the Consumer Financial Protection Bureau's head of service member affairs, said in an interview. "But there are a lot of products that it doesn't cover."

Representatives from payday and other high-cost lenders said they follow the law. Some defended the proliferation of new products as helpful to consumers.

A 400 Percent Loan

In June 2011, when Levon Tyler, a 37-year-old staff sergeant in the Marines, walked into Smart Choice Title Loans in Columbia, S.C., it was the first time he'd ever gone to such a place, he said. But his bills were mounting. He needed cash right away.

Smart Choice agreed to lend him $1,600. In return, Tyler handed over the title to his 1998 Ford SUV and a copy of his keys. Tyler recalled the saleswoman telling him he'd probably be able to pay off the loan in a year. He said he did not scrutinize the contract he signed that day.

If he had, Tyler would have seen that in exchange for that $1,600, he'd agreed to pay a total of $17,228 over two and a half years. The loan's annual percentage rate, which includes interest and fees, was 400 percent.

Tyler said he provided his military ID when he got the loan. But even with an annual rate as high as a typical payday loan, the Military Lending Act didn't apply. The law limits the interest rate of title loans — but only those that have a term of six months or less.

In South Carolina, almost no loans fit that definition, said Sue Berkowitz, director of the nonprofit South Carolina Appleseed Legal Justice Center. The reason? Ten years ago, the state legislature passed consumer protections for short-term auto-title loans. In response, lenders simply lengthened the duration of their loans.

Today, plenty of payday and auto-title lenders cluster near Fort Jackson, an army base in Columbia, legally peddling high-cost loans to the more than 36,000 soldiers who receive basic training there each year.

Tyler's loan showcases other examples of lenders' ingenuity. Attached to his contract was an addendum that offered a "Summer Fun Program Payoff." While the loan's official term was 32 months, putting it outside both South Carolina's regulations and the Military Lending Act, the "Summer Fun" option allowed Tyler to pay off the loan in a single month. If he did so, he'd pay an annual rate of 110 percent, the addendum said.

Michael Agostinelli, the chief executive of Smart Choice's parent company, American Life Enterprises, told ProPublica he wants his customers to pay off their loans early. "They're meant to be short-term loans," he said. He also said that customers who pay on time get "a big discount." In Tyler's case, he would have paid an annual rate of 192 percent if he had made all his payments on time.

But Tyler fell behind after only a couple of payments. Less than five months after he took out the loan, a repo company came in the middle of the night to take his car. Three weeks later, it was sold at auction.

"This was something new, and I will never do it again," Tyler said. "I don't care what type of spot I get in."

American Life Enterprises companies operate nine title-lending branches in Nevada and South Carolina. Agostinelli said loans to members of the military are rare for his companies but that service members might go to a title lender for the same reason anybody else does: They need money immediately and discreetly.

Loans similar to the one Tyler took out are broadly and legally available from stores and over the Internet. QC Holdings, Advance America, Cash America and Ace Cash Express — all among the country's largest payday lenders — offer loans that fall outside the definitions of the Military Lending Act, which defined a payday loan as lasting three months or less.

The annual rates can be sky high, such as those offered by Ace Cash Express in Texas, where a five-month loan for $400 comes with an annual rate of 585 percent, according to the company's website.

Ace Cash is among a number of payday lenders just outside the gates of Lackland Air Force Base in San Antonio, and it has four stores within three miles of Fort Hood in Texas.

A 2012 report on the Military Lending Act by the Consumer Federation of America found there had been no drop in the number of payday lenders around Fort Hood since the 2006 law went into effect.

Amy Cantu of the Community Financial Services Association of America, which represents the payday industry, said payday lenders are careful to screen out service members for their short-term products. But she acknowledged that payday companies may provide soldiers and their families with other types of loans. "We welcome more products in the market," she said of the trend of payday lenders increasingly offering longer-term loans. "Options are good for consumers."

Earned a Purple Heart, Lost a Car

Some lenders apparently haven't bothered to change their loan products in response to the law.

A 2011 federal class-action suit filed in Georgia's Middle District alleges that one of the largest auto-title lenders in the country, Community Loans of America, has been flouting the law. The suit names among its plaintiffs three soldiers who took out what appeared to be classic title loans. All agreed to pay an annual rate of around 150 percent for a 30-day loan. All had trouble repaying, according to the suit. One, an Army staff sergeant and Purple Heart recipient, lost his car. The other two managed to pay interest but almost none of the principal on their loans for several months.

The company was fully aware that its customers were soldiers, because they presented their military identifications, said Roy Barnes, a former governor of Georgia who is representing the plaintiffs.

Community Loans, which boasts more than 900 locations nationwide, argued in court that the transactions were not covered by the Military Lending Act because they weren't loans but sales. Here's how Community Loans said the transaction worked: The soldiers sold their vehicles to the company while retaining the option to buy back the cars — for a higher price. In early 2012, the judge rejected that argument. The case is ongoing.

Community Loans, which did not respond to numerous calls and emails, has been making loans to service members through businesses with various names.

Leading up to the gates of Fort Benning in Columbus, Ga., Victory Drive is crowded with lenders. Among them is Georgia Auto Pawn, a Community Loans of America storefront where one of the plaintiffs in the class action, an Army master sergeant, took out his loan.

Just another half-mile down the road is a lender advertising "Signature Loans for the Military." The lender goes by the name of Title Credit Finance, but the parent company is Community Finance and Loans, which shares the same corporate address as Community Loans of America.

A billboard for Title Credit Finance promises to rescue borrowers: Showing a picture of a hamster on a wheel, it says, "Avoid the title pawn treadmill," referring to customers who get caught paying only interest month after month.

Title Credit Finance offers installment loans, a product which, as the company advertises, does seem to provide "CASH NOW The Smart Way" — at least when compared to a title loan. Interest rates tend to be lower — though still typically well above 36 percent. And instead of simply paying interest month upon month, the borrower pays down the loan's principal over time.

But the product comes with traps of its own. Installment lenders often load the loans with insurance products that can double the cost, and the companies thrive by persuading borrowers to use the product like a credit card. Customers can refinance the loan after only a few payments and borrow a little more. But those extra dollars typically come at a far higher cost than the annual rate listed on the contract.

At TitleMax, a title-lender with more than 700 stores in 12 states, soldiers who inquire about a title loan are directed to InstaLoan, TitleMax's sister company, which provides installment loans, said Suzanne Donovan of the nonprofit Step Up Savannah. A $2,475 installment loan made to a soldier at Fort Stewart near Savannah, Ga., in 2011 and reviewed by ProPublica, for example, carried a 43 percent annual rate over 14 months — but that rate effectively soared to 80 percent when the insurance products were included. To get the loan, the soldier surrendered the title to his car. TMX Finance, the parent company of both TitleMax and InstaLoan, did not respond to multiple calls and emails seeking comment.

Another lender on Victory Drive is the publicly traded World Finance, one of the country's largest installment lenders, with a market capitalization of about $1 billion and more than 1,000 stores around the country. World was the subject of an investigation by ProPublica and Marketplace earlier this week. Of World's loans, about 5 percent, approximately 40,000 loans, are made to service members or their families, according to the company. Active-duty military personnel and their dependents comprise less than 1 percent of the U.S. population, according to the Defense Department.

Bill Himpler, the executive vice president of the American Financial Services Association, which represents installment lenders, said the industry's products had been rightfully excluded from the Military Lending Act. The Pentagon had done a good job preserving soldiers' access to affordable credit, he said, and only "tweaking the regulations here or there to tighten them up" was necessary.

The Commander and the Collectors

It's not known how many service members have high-priced loans. The Pentagon says it intends to conduct a survey on the matter soon and issue a report by the end of the year.

But some commanders, such as Capt. Brandon Archuleta, say that dealing with soldiers' financial problems is simply part of being an officer. Archuleta, who has commanded soldiers in Iraq and Afghanistan, recalled fielding numerous calls from lenders trying to track down soldiers who were delinquent on debts.

"In the last 12 years we've seen military officers as war fighters, we've seen them as diplomats, we've seen them as scholars," Archuleta said. "But what we don't see is the officer as social worker, financial adviser and personal caregiver."

While some soldiers seek help from their superior officers, many don't. That's because debt troubles can result in soldiers losing their security clearance.

"Instead of trying to negotiate this with their command structure, the service member will typically end up refinancing," said Michael Hayden, director of government relations for the Military Officers Association of America and a retired Air Force colonel. "It'll typically start out with some type of small crisis. And then the real crisis is just how you get that loan paid off."

Soldiers who hide their debt often forego the military's special aid options. Army Emergency Relief and the Navy-Marine Corps Relief Society offer zero-interest loans. But in seeking that help, a soldier risks alerting the commanding officer to his or her troubles, particularly if the sum needed is a large one.

Russell Putnam, a legal-assistance attorney at Fort Stewart, says he often finds himself making a simple argument to soldiers: "A zero percent loan sure as heck beats a 36 percent plus or a 25 percent plus loan."

From our partners at Marketplace:

by Blair Hickman

Monday, we co-published a story with Marketplace on installment loans, a growing industry that offers quick money to low-income borrowers – and is flying under regulators’ radars.

Installment loans are the cousins of payday loans. They exist in at least 19 states, mostly in the South and Midwest, and offer borrowers with poor credit easy access to money. World Finance, a billion-dollar installment loan company, has more than 800,000 customers across the U.S. World and other installment lenders often put their stores near military bases.

Yet as our story explains, installment loans can be “deceptively expensive.” Lenders often persuade borrowers to renew their loans over and over, pushing the effective annual percentage rate sky-high. If state law caps the rate, installment lenders often sell borrowers a slew of unnecessary insurance products. World says it informs borrowers in writing of the terms of its loans, that it renews loans only if its customers want to, and that it provides a valuable financial service to many satisfied customers.

So how could regulation be strengthened? How do installment lenders fit into a shifting debt industry? And what does the everyday borrower need to know if they’re considering taking out an installment loan?

Join us for a live discussion this Thursday, May 16, at 2 PM ET, with Marketplace’s Mitchell Hartman and ProPublica’s Paul Kiel.

 We encourage you to leave questions in advance in the comments below. You can also tweet questions with the hashtag #BeyondPayDay. 

by Christie Thompson

The current hunger strike at Guantanamo has entered its fourth month, with resistance growing to involve 100 detainees. More medics have been flown in to assist with force-feeding 29 inmates, and five are currently hospitalized. The strike began after searches of inmates’ Korans, but has grown into a protest of indefinite detention.

“The situation is desperate now. People are fainting with exhaustion every day,” wrote detainee Samir Naji al Hasan Moqbel in a recent New York Times op-ed.

We’ve covered the details of detainees’ cases, and the Obama administration’s back and forth on closing Guantanamo. Now we’re bringing together a group of journalists to answer your questions about the U.S.' most controversial prison. 

What’s the latest on the ongoing strike? How likely is Obama to keep his renewed promise to close the prison? And how do you report on a facility so hidden from the public? On Friday at 2 pm ET, ProPublica’s Cora Currier (@coracurrier) will be joined by Carol Rosenberg of the Miami Herald (@carolrosenberg), Ryan J. Reilly of the Huffington Post (@ryanjreilly), and Charlie Savage of the New York Times (@charlie_savage) to discuss what’s going on at Gitmo.

You can weigh in by joining the live chat held here, or tweet your questions with the hashtag #GitmoChat.

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by Kim Barker and Justin Elliott

The same IRS office that deliberately targeted conservative groups applying for tax-exempt status in the run-up to the 2012 election released nine pending confidential applications of conservative groups to ProPublica late last year.

The IRS did not respond to requests Monday following up about that release, and whether it had determined how the applications were sent to ProPublica.

In response to a request for the applications for 67 different nonprofits last November, the Cincinnati office of the IRS sent ProPublica applications or documentation for 31 groups. Nine of those applications had not yet been approved—meaning they were not supposed to be made public. (We made six of those public, after redacting their financial information, deeming that they were newsworthy.)

On Friday, Lois Lerner, the head of the division on tax-exempt organizations, apologized to Tea Party and other conservative groups because the IRS’ Cincinnati office had unfairly targeted them. Tea Party groups had complained in early 2012 that they were being sent overly intrusive questionnaires in response to their applications.

That scrutiny appears to have gone beyond Tea Party groups to applicants saying they wanted to educate the public to “make America a better place to live” or that criticized how the country was being run, according to a draft audit cited by many outlets. The full audit, by the Treasury Department’s inspector general for tax administration, will reportedly be released this week. (ProPublica was not contacted by the inspector general’s office.) (UPDATE May 14: The audit has been released.)  

Before the 2012 election, ProPublica devoted months to showing how dozens of social-welfare nonprofits had misled the IRS about their political activity on their applications and tax returns. Social-welfare nonprofits are allowed to spend money to influence elections, as long as their primary purpose is improving social welfare. Unlike super PACs and regular political action committees, they do not have to identify their donors.

In 2012, nonprofits that didn’t have to report their donors poured an unprecedented $322 million into the election. Much of that money — 84 percent — came from conservative groups. 

As part of its reporting, ProPublica regularly requested applications from the IRS’s Cincinnati office, which is responsible for reviewing applications from nonprofits.

Social welfare nonprofits are not required to apply to the IRS to operate. Many politically active new conservative groups apply anyway. Getting IRS approval can help with donations and help insulate groups from further scrutiny. Many politically active new liberal nonprofits have not applied.  

Applications become public only after the IRS approves a group’s tax-exempt status.

On Nov. 15, 2012, ProPublica requested the applications of 67 nonprofits, all of which had spent money on the 2012 elections. (Because no social welfare groups with Tea Party in their names spent money on the election, ProPublica did not at that point request their applications. We had requested the Tea Party applications earlier, after the groups first complained about being singled out by the IRS. In response, the IRS said it could find no record of the tax-exempt status of those groups — typically how it responds to requests for unapproved applications.)

Just 13 days after ProPublica sent in its request, the IRS responded with the documents on 31 social welfare groups.

One of the applications the IRS released to ProPublica was from Crossroads GPS, the largest social-welfare nonprofit involved in the 2012 election. The group, started in part by GOP consultant Karl Rove, promised the IRS that any effort to influence elections would be “limited.” The group spent more than $70 million from anonymous donors in 2012.

Applications were sent to ProPublica from five other social welfare groups that had told the IRS that they wouldn’t spend money to sway elections.  The other groups ended up spending more than $5 million related to the election, mainly to support Republican presidential candidate Mitt Romney. Much of that money was spent by the Arizona group Americans for Responsible Leadership. The remaining four groups that told the IRS they wouldn’t engage in political spending were Freedom Path, Rightchange.com II, America Is Not Stupid and A Better America Now. 

The IRS also sent ProPublica the applications of three small conservative groups that told the agency that they would spend some money on politics: Citizen Awareness Project, the YG Network and SecureAmericaNow.org. (No unapproved applications from liberal groups were sent to ProPublica.)

The IRS cover letter sent with the documents was from the Cincinnati office, and signed by Cindy Thomas, listed as the manager for Exempt Organizations Determinations, whom a biography for a Cincinnati Bar Association meeting in January says has worked for the IRS for 35 years. (Thomas often signed the cover letters of responses to ProPublica requests.) The cover letter listed an IRS employee named Sophia Brown as the person to contact for more information about the records. We tried to contact both Thomas and Brown today but were unable to reach them.

After receiving the unapproved applications, ProPublica tried to determine why they had been sent. In emails, IRS spokespeople said ProPublica shouldn’t have received them.

“It has come to our attention that you are in receipt of application materials of organizations that have not been recognized by the IRS as tax-exempt,” wrote one spokeswoman, Michelle Eldridge. She cited a law saying that publishing unauthorized returns or return information was a felony punishable by a fine of up to $5,000 and imprisonment of up to five years, or both.

In response, ProPublica’s then-general manager and now president, Richard Tofel, said, "ProPublica believes that the information we are publishing is not barred by the statute cited by the IRS, and it is clear to us that there is a strong First Amendment interest in its publication.”

ProPublica also redacted parts of the application to omit financial information.

Jonathan Collegio, a spokesman for Crossroads GPS, declined to comment today on whether he thought the IRS’s release of the group’s application could have been linked to recent news that the Cincinnati office was targeting conservative groups.

Last December, Collegio wrote in an email: “As far as we know, the Crossroads application is still pending, in which case it seems that either you obtained whatever document you have illegally, or that it has been approved.”

This year, the IRS appears to have changed the office that responds to requests for nonprofits’ applications. Previously, the IRS asked journalists to fax requests to a number with a 513 area code — which includes Cincinnati. ProPublica sent a request by fax on Feb. 5 to the Ohio area code. On March 13, that request was answered by David Fish, a director of Exempt Organizations Guidance, in Washington, D.C. 

In early April, a ProPublica reporter’s request to the Ohio fax number bounced back. An IRS spokesman said at the time the number had changed “recently.” The new fax number begins with 202, the area code for Washington, D.C. 

For more on the IRS and nonprofits active in politics, read Kim Barker's investigation, "How nonprofits spend millions on elections and call it public welfare", our Q&A on dark money, and our full coverage of the issue.  

by Jesse Eisinger

This was co-published with The Washington Post.

President Obama signed the Dodd-Frank financial reform law in July 2010, hailing it as an overhaul to prevent the kind of crisis that hit the world economy in 2008 and one of the signature achievements of his first term. Almost three years later, much of the big stuff the law calls for is on hold, under legal and legislative assault, or still working its way through the regulatory intestines. According to a law firm that tracks the legislation, only 38 percent of the 398 Dodd-Frank rules have been imposed, while regulators haven't yet publicly put forward versions of almost a third of them.

Is this the face of success? A new book, "Act of Congress," by Robert Kaiser, an associate editor and senior correspondent for The Washington Post, gives that question a qualified yes. "The story of Dodd-Frank does demonstrate that Congress still canwork," he writes, "and it shows how, but only in extreme circumstances."

To a Beltway expert such as Kaiser, that a dysfunctional and hyperpartisan Congress passed such a sweeping bill constitutes a small miracle. He concludes that "the big banks and Wall Street institutions never gave up trying to shape the bill to serve their interests, but that they had little success." As former Massachusetts Congressman Barney Frank, whose name is on the bill, says: "Money is influential [in Congress], but votes will kick money's ass any time they come up against each other. . . . Public opinion drove that bill." At another point, Frank declares, "The big banks got nothing."

Kaiser's account reminds you of those fairy tales that end with the wedding and don't follow up to see how the prince and princess's married life turns out. "Act of Congress" doesn't cover what happened after the law's enactment. In large part because of the ongoing, messy aftermath, many students of finance don't see Dodd-Frank as much of a triumph at all. In the wake of this generation's worst global financial and economic crisis, Congress passed the bare minimum of what was necessary. Dodd-Frank did not restructure the financial industry. It did not remake the financial regulatory architecture. Instead, the law tinkered around the edges, increasing regulation for this, expanding the power for that. Congress left much of the toil to financial regulators with limited resources. Troublingly, this has given the banks another opportunity, out of the public eye, to wrest exemptions that emasculate the rules.

Kaiser's book is roughly divided into two parts. The first covers how the House version of the law, shepherded by Frank, came to be; the second half covers the work of then-Sen. Christopher Dodd of Connecticut in his chamber. The legislation is both men's capstone achievement, and both left Congress after it was passed.

The author has delivered a blow-by-blow account of the tawdry compromises, Republican intractability and factional fighting within the Democratic Party that went into making the law. Congress comes across as the nation's grandfather: antiquated, inconsistent, as slow-moving as it is dull-witted. The book is in part an elegy for the Congress — particularly the Senate — of yore, the Senate of Dodd's father, Thomas J. Dodd.

Kaiser repeatedly characterizes today's Congress as "dysfunctional." But he doesn't demonstrate that so much as he shows Republican obstructionism. The Democrats — Frank, Dodd and their staffs — repeatedly seek compromise with the other party. Dodd gives significant ground without ever having a true negotiating partner. Instead, he has Sen.Richard Shelby of Alabama, the ranking Republican on the Senate Banking Committee. Kaiser gives us a damning portrait of Shelby's evolution from a reasonable, though conservative, voice for a certain level of banking regulation into a partisan hack and the cat's paw of his extreme staffers. Shelby repeatedly flirts with working on the bill and then capriciously withdraws, unfairly denounces Dodd for not working in bipartisan fashion and assails the bill with inaccurate attacks.

And when the bill emerges from committee, Sen. Mitch McConnell of Kentucky, the Republican leader, moves to filibuster it, giving up only when some Republicans defect.

This isn't dysfunction so much as a demonstration of the Republican leadership's lack of interest in doing anything about a reckless and out-of-control financial system that gave the country such a terrible global crisis. More broadly, Kaiser's account once again shows how unserious the modern Republican Party is about policy, how beholden to special interests it is and how determined to not give any victories to the Democrats and a president it views as illegitimate.

With its focus on Congress, Kaiser's account underplays the work of financial industry lobbyists and the White House. Kaiser does point out that the financial industry employed 2,700 lobbyists (including 1,447 former government employees) to work against reform in 2009 and 2010, spending more than $750 million. By contrast, groups advocating reform to the system spent a paltry $5 million. But the author doesn't show us much actual lobbying. And given the modesty of the eventual law and the myriad delays in implementation, Frank's crowing that the banks got nothing for all of this dough rings false.

Obama White House officials, especially then-Treasury Secretary Timothy Geithner, play only bit parts in Kaiser's book. The White House created the template for the House version of the bill, which was "generally cautious," he writes. But then throughout the many months of negotiations, White House officials made only rare appearances. When the law was finally enacted, Dodd was angry that the Obama administration took so much credit. But since Kaiser hasn't focused much attention on the White House's contribution, it's hard to evaluate who has the better claim. According to other reports, Geithner and his staff played a large role, often working to blunt more radical reforms. In one case, the Treasury secretary personally lobbied against the Brown-Kaufman amendment, a truly transformative and dramatic proposal that would have set high capital requirements on banks and put limits on their size.

Frank is the star of this book. The congressman lives up to his reputation as brilliant and witty. But he is also a flawed boss who leaves to his staff the difficult job of bringing less brilliant colleagues around to his way of thinking. Dodd isn't nearly as interesting a character. If Dodd has a core ideology or set of principles, Kaiser didn't find them. Instead, Dodd wants to get something, anything, done — and it's important for that something to be bipartisan.

Kaiser enjoys pointing out the intellectual limitations of our nation's politicians, and we enjoy reading about them. At one point, Rep. Jeb Hensarling, a Republican from Texas, attacks what he thinks is a taxpayer-funded bank bailout fund. He likens it to his college fund, which he and his wife have "because we intend to send our children to college." The author writes slyly, "This bit of rhetorical wizardry seemed to please Hensarling." Like many Republican charges about Dodd-Frank, Hensarling's comparison was erroneous. The banks, not taxpayers, were going to pay for the fund. But his objection also made no sense. The fund was more like insurance. Buying fire insurance doesn't mean you are counting on your house to burn down.

By contrast, Frank understood the complexities of financial regulation. But perhaps being smart in this context wasn't such a good thing. Smart legislative and regulatory solutions may embrace flexibility and exemptions that banks can later exploit. Regulations that create clear, bright lines may seem simplistic and dumb. But such rules tie regulators' hands, freeing them from banking influence.

Dodd-Frank may have been too smart for its own good.

by Mike Tigas and Sisi Wei

Use our database to find almost 616,000 tax-exempt organizations and see details like their executive compensation, revenue and expenses, as well as download their tax filings going back as far as 2001.

by Christie Thompson

When the Obama administration released its 2013 Drug Control Strategy recently, drug czar Gil Kerlikowske called it a “21st century” approach to drug policy. “It should be a public health issue, not just a criminal justice issue,” he said.

The latest plan builds on Obama’s initial strategy outlined in 2010. Obama said then the U.S. needed “a new direction in drug policy,” and that “a well-crafted strategy is only as successful as its implementation.” Many reform advocates were hopeful the appointment of former Seattle Police Chief Kerlikowske as head of the Office of National Drug Control Policy signaled a shift in the long-lasting “war on drugs.”

But a government report released a day after the latest proposal questioned the office’s impact so far.

“As of March 2013, GAO’s analysis showed that of the five goals for which primary data on results are available, one shows progress and four show no progress,” the report by the Government Accountability Office found. For instance, the GAO noted that there’s actually been an increase in HIV transmissions among drug users and drug-related deaths, as well as no difference in the prevalence of drug use among teens.

Many public health experts say the administration deserves credit for increasing access to drug treatment. But others say despite an increase in funding for rehab, the administration has continued to push programs and policies built to punish drug users.

As the administration lays out its latest plan on a new approach to drugs, here’s look at what’s in it, and what they’ve done so far.

“Break the cycle of drug use, crime, delinquency and incarceration”

“While smart law enforcement efforts will always play a vital role in protecting communities from drug-related crime and violence,” the latest strategy says, “we cannot arrest our way out of the drug problem.”

FBI records indeed show a drop in drug arrests, from 1.8 million in 2007 to 1.5 million in 2011.

But overall, the government spends roughly the same proportion of the drug policy budget on law enforcement now as was spent during Bush’s final years in office. In Obama’s 2014 budget proposal, 38 percent is allocated for domestic drug law enforcement, while another 20 percent would be spent to crack down on drugs along U.S. borders and abroad.

The Obama administration has also renewed funding for controversial programs like the Justice Assistance Grant program, formerly known as Byrne Grants, which had been cut under President Bush. The funding created local drug task forces, which critics say were quota-driven and increased corruption and misconduct. Budget-minded conservatives like the Heritage Foundation also argued the grants hadn’t led to a decrease in crime. States like California and New York have used some funding from the program for treatment instead of enforcement.

The administration has made progress when it comes to overcrowding in prisons: One Department of Justice program gives states money to support research toward policymaking that reduces recidivism. Several state legislatures have independently lessened mandatory minimums, reformed parole policies, and passed other laws aimed at cutting the high cost of incarceration.

Obama also signed the Fair Sentencing Act in 2010, which ended a five-year mandatory minimum sentence for crack possession at the federal level, and lessened the sentencing disparity between crack and cocaine.  

According to the Bureau of Justice Statistics, the number of inmates in state prisons dropped roughly two percent from 2010 to 2011. Seventy percent of that is from a decrease in California’s prison population, after the Supreme Court upheld an order for the state to reduce overcrowding.

But as a recent Congressional Research report highlights, the number of inmates in federal prisons continues to rise, increasing over three percent from 2010 to 2011. Over half the current federal prison population is drug offenders.

“Support alternatives to incarceration”

In his latest budget, the president is requesting $85 million to go toward drug courts, which some have pushed as an alternative to criminal trials. Since 1999, the number of drug courts has grown from just under 500 to 2,734 today. Drug courts allow for non-violent offenders to avoid being charged, or to have their convictions expunged and sentences waived after completion of a rehab program and passing regular drug tests. Proponents of the system say it allows non-violent drug offenders to serve their time in treatment, instead of in prison.

A 2011 GAO report found statistics suggest drug courts reduce recidivism, but there’s not enough data to fully assess their effectiveness.

Some critics argue drug courts still fall short, by taking a criminal justice approach to a public health problem.

“Increase addiction treatment services”

Obama has indeed repeatedly increased funding for addiction treatment. He proposed $9 billion in his latest budget, up 18 percent from 2012.

Despite that, only 1 in 10 of the 21.6 million Americans in need of drug or alcohol addiction treatment received it in 2011. The number of people receiving treatment has stayed roughly the same since 2002.

The treatment gap should narrow as Obamacare goes into effect: Roughly five million more Americans currently facing drug addictions will soon have insurance coverage for treatment. “That’s the biggest expansion of treatment in 40 years, and maybe in the history of the U.S., ” said public health professor Keith Humphreys, who has served as a policy advisor to the ONDCP.

But a recent Associated Press analysis said current clinics will be overwhelmed by the new demand for treatment. State-level budget cuts have hit organizations hard, and treatment centers in over two-thirds of states are at or close to 100 percent capacity.

ONDCP spokesperson Rafael Lematire said the administration’s latest plan calls for an increase in the number of health care workers to treat newly insured patients.

“Review laws and regulations that impede recovery from addiction”

The latest drug strategy highlights the need to reduce “collateral consequences” (barriers to public benefits, employment and other opportunities) for those convicted of drug crimes. But Obama has little leverage on those issues, which are mostly decided on the state and local levels. For example, while HUD has encouraged public housing authorities to not disqualify former drug offenders from receiving public housing or Section 8 vouchers, it’s up to each city housing authority to determine their own rules.

“While we encourage housing authorities to give ex-offenders a second chance, the decision to admit or deny to public housing remains with the housing authorities,” said HUD spokeswoman Donna White.

Obama’s administration has not announced any plans to address the 1996 federal ban on food stamps or cash assistance for those convicted of drug felonies. Most states have opted out of or amended the law.

“Reduce drug-induced deaths”

The GAO noted that drug-induced deaths and emergency room visits increased from 2009 to 2010. Much of that is likely due to pharmaceutical abuse, which contributes to more accidental overdose deaths than illegal drugs or alcohol.

In 2011, the government released a plan to crack down on the abuse of prescription drugs. There’s little current data on overdose deaths, but recent studies have indeed noted a drop in prescription drug abuse.

Advocates have praised Obama's decision to endorse increasing access to emergency drug Naloxone, which can reverse opioid overdoses. Some lawmakers have criticized that position, saying it essentially encourages drug abuse.

In 2009, Obama also attempted to end the federal ban on funding for clean needle exchange programs, but Congress reversed the decision.

“Curtail illicit drug consumption in America”

The GAO report notes that the prevalence of drug use among teens and young adults has stayed the same since 2009. “With the exception of marijuana use, illicit drug use is trending down, specially prescription drug abuse and use of cocaine, hallucinogens, inhalants, and methamphetamine,” said ONDCP spokesperson Lemaitre. Research cited in the GAO report suggests the increase in marijuana use is tied to a decreased perception of risk.

Obama remains staunchly opposed to legalization, but it’s unclear how hard the administration plans to come down on states loosening marijuana laws. Obama has overseen far more medical marijuana raids than under the Bush administration. For states that have legalized pot, Attorney General Eric Holder said he intends to “enforce federal law”, though Obama said he had “bigger fish to fry.” The Department of Justice said it is still reviewing the latest laws. 

by Theodoric Meyer

We’ve updated our sequestration explainer to reflect new developments. It was originally published on April 11, 2013.

When the annual White House Easter Egg Hunt faced cancellation this year due to the package of mandatory budget cuts known as sequestration, the National Park Service kicked into high gear. It rescued the event — held since 1878 — with money from “corporate sponsors and the sale of commemorative wooden eggs,” according to the Washington Post.

The nation’s airline passengers also caught a break last month when Congress passed (and President Obama quickly signed) a bill allowing the Federal Aviation Administration to shift some funds and halt the furloughs of air traffic controllers that had been blamed for long flight delays around the country.

But other programs haven’t been so lucky. Children in Indiana have been cut from the federally funded Head Start preschool program, and one Head Start program in Maine is being cut altogether. Furloughs have begun for employees of agencies from the U.S. Park Police to the Environmental Protection Agency. And cuts to Medicare have forced cancer clinics to turn away thousands of patients who are being treated with drugs the clinics can no longer afford.

We’ve taken a look at what’s actually happened in the two months since sequestration took effect.

Remind me, what is sequestration again?

Remember the clash over the debt ceiling back in 2011?

When Republicans and Obama struck a deal to raise it, they created a “super committee” of six Democrats and six Republicans and gave them three and a half months to hash out $1.2 trillion worth of cuts to the federal budget over the next decade. If they failed, a package of automatic cuts designed to slash funding to programs dear to both parties (military spending, in the Republicans’ case, and Medicare and other domestic programs in the Democrats’) would go into effect on Jan. 1, 2013.

Needless to say, the super committee failed, leading to the cuts we’re seeing now.

How does this fit in with the “fiscal cliff”?

Sequestration was one element of the so-called “fiscal cliff,” which also included a number of other spending cuts and tax increases. Congress passed a last-minute deal Jan. 1 to blunt the cliff’s impact, which included pushing back the effective date for sequestration to March 1. While Obama and members of Congress spoke out against sequestration in February — Senate Democrats announced a plan to put it off for another 10 months — those efforts failed to stop the cuts.

So what’s happened since March 1?

The indiscriminate cuts affected a wide range of federal programs and departments, making them difficult to track. (Even the White House struggled to explain exactly which programs they’d hit while it was denouncing them.) Jay Carney, the White House press secretary, told reporters Feb. 28 that sequestration would have “a rolling impact, an effect that will build and build and build.”

Congress passed a bill, signed by Obama on March 26, to spare a few programs from cuts this year, including an infant nutrition program, the nuclear weapons program and funding for security at U.S. embassies abroad — a sensitive area since the attacks in Benghazi, Libya, last September. The bill also gave some agencies, including the Pentagon, more flexibility in carrying out the sequester. And last week, Congress quickly passed (and Obama signed) a bill allowing the F.A.A. to scrap its furloughs of air traffic controllers, which had been blamed for long flight delays. But neither bill reduced the total amount the government is required to cut — $85 billion, or about 2.3 percent of the $3.6 trillion federal budget — by the end of the fiscal year in October.

Gotcha. What has all this done to the economy?

The Congressional Budget Office estimates sequestration will cost around 750,000 jobs in total, and forecasters think it could reduce economic growth by half a percentage point this year. But two months into sequestration, the effects are difficult to see. The economy added a relatively respectable 165,000 jobs in April, the Labor Department reported (though the federal government shed 8,000 jobs during the same period). And defense contractors like Lockheed Martin and Northrop Grumman, which warned that the sequester would lead to layoffs, have seen only a slight decline in their business.

Indeed, there’s at least one slice of the workforce that seems to be benefitting from sequestration: Washington lawyers. Contractors short on cash have hired attorneys to help them restructure loan payments.

Do we know any more about what’s been affected?

Yes. Sequestration is still playing out, but here’s what we know has happened so far:

Congress:

While lawmakers’ salaries are exempt from cuts, sequestration hasn’t spared congressional offices, which have had to slash spending by 8.2 percent. “Magazine subscriptions have been canceled,” the Washington Post reported. “Constituents are getting e-mail instead of snail mail. Invoices are getting a second look.” Sequestration has also cut into funding for the overseas fact-finding trips lawmakers often take, known as “codels.” House Speaker John A. Boehner, a Republican, has banned his caucus from using military aircraft for codels.

The White House:

While the egg hunt was saved, the White House announced in March that it would stop giving tours due to sequestration. (Republicans criticized the decision, with Rep. James Lankford of Oklahoma calling it “a dramatic overreaction.”) The White House has also furloughed 480 Office of Management and Budget staffers, and the president will voluntarily return 5 percent of his salary. Sam Kass, the assistant White House chef, has said he is also being furloughed. But Roll Call reported that the White House — which spent “more than a month of dodging questions” about the effects of sequestration on West Wing staffers —seems to have been spared from deep cuts.

Federal Agencies:

A few agencies, such as Department of Veterans Affairs, are mostly exempt from the sequester.

But the budget cuts have hit most others, sometimes with unpredictable consequences. After sequestration forced Yellowstone National Park to cut $1.75 million from its $35 million budget, the park — run by the National Park Service — trimmed its payroll and decided to cut back on snowplowing, which would delay the park’s opening. Plowing was saved only when the Cody and Jackson Hole, Wyo., chambers of commerce, fearing the economic impact of a late park opening, kicked in $170,000.

In Washington, agency after agency is planning to furlough its employees. “The Department of Housing and Urban Development,” the Washington Post reported, “will shut down for seven days starting in May, after concluding that staggering furloughs for 9,000 employees would create too much paperwork.” The Internal Revenue Service will also shut down almost entirely on furlough days. And Department of Labor employees have already started taking their furlough days, which they can do a half-day at a time.

(The Justice Department and the State Department, however, have managed to avoid furloughs.)

The Department of Labor is also planning to lay off 30 of the 74 lawyers it hired to work through a backlog of mine-safety citations that are under appeal. The department had hired the lawyers after a 2010 explosion at a mine run by a company that had received many such citations but fought them, preventing regulatory action against it. The move will save the Labor Department $2.1 million.

And while air traffic controllers won’t be furloughed, it’s unclear whether the FAA will follow through on its plans to close 149 airport control towers, most of them at rural airports. New Jersey officials, for instance, remain uncertain whether the Trenton, N.J., airport tower will be closed or receive a reprieve.

Meanwhile, IRS furloughs have the potential to be counterproductive. Treasury Secretary Jacob J. Lew told a House Appropriations subcommittee in April that the cuts would lead the IRS to answer fewer calls and take longer to respond to taxpayer questions.

“It will also lead to fewer enforcement actions and reduce revenue collection,” Lew said — which could cost the government money rather than saving it.

The Pentagon:

Despite the bill Obama signed in March giving the Pentagon more flexibility in carrying out the sequester, it still must cut $41 billion from its budget this year, which Gen. Martin E. Dempsey, the chairman of the Joint Chiefs of Staff, described as “the steepest decline in our budget ever.” (The Pentagon has been asked to cut more before, but never halfway through the fiscal year.)

Hundreds of thousands of civilian Defense Department employees will likely have to take 14 furlough days by October, though it’s unclear which branches will face them. Defense Secretary Chuck Hagel has said that everything from salaries and benefits to the number of generals and admirals could be cut.

Medicare:

Cancer clinics in March began turning away thousands of Medicare patients being treated with expensive chemotherapy drugs, which the clinics say they can no longer afford. “Legislators meant to partially shield Medicare from the automatic budget cuts triggered by the sequester, limiting the program to a 2 percent reduction — a fraction of the cuts seen by other federal programs,” the Washington Post’s Sarah Kliff reported. “But oncologists say the cut is unexpectedly damaging for cancer patients because of the way those treatments are covered.” Medicare has said that it doesn’t have the power to restore funding for the drugs. (Rep. Renee Ellmers, a North Carolina Republican, introduced a bill that would reverse the cuts, but the legislation remains in committee.)

Education:

The federally funded Head Start early education program is expected to lose around 70,000 of its roughly 1 million slots due to sequestration. Those cuts have already hit children in Indiana, where Head Start programs in two towns resorted to a lottery system in March to determine which kids could remain. A Head Start program in Birmingham, Ala., will shut down for 10 weeks this summer, and one in Pejebscot, Maine, will close for good. Other Head Start programs — such as one in Passaic County, N.J., that expects to lose about $200,000 of its roughly $4 million in federal funding — won’t have to wrestle with cuts until the fall. A program in Colorado Springs faced with cutting 142 spots this fall had children decorate empty chairs that it has sold for $500 apiece to raise money. It has saved two spots so far.

The Head Start cuts have come even as the president called for a massive expansion of preschool.

Sequestration is also hitting schools on Indian reservations, where federal funds can make up 60 percent of a school’s budget. The Fort Peck Indian reservation in Montana “can’t hire a reading teacher in an elementary school where more than half the students do not read or write at grade level,” according to the Washington Post. Summer school may be cancelled. And the Red Lake reservation in Minnesota — where a shooting at the high school left seven people dead in 2005 — has cut its security staff, as well as course offerings and support staff, in response to sequestration.

Scientific Research:

The sequester has also hacked away at funding for scientific research. The National Science Foundation expects to make 1,000 fewer grants this year. Vanderbilt University in Nashville, Tenn., will admit fewer science and engineering graduate students. And the directors of the Department of Energy’s National Laboratories expect that the “drop in funding will force us to cancel all new programs and research initiatives, probably for at least two years.”

More than 50 Nobel laureates have signed a letter protesting the cuts, which Hunter R. Rawlings III, the president of the Association of American Universities, has also decried. “To put it kindly, this is an irrational approach to deficit reduction,” he told a Senate committee in February. “To put it not so kindly, it is just plain stupid.”

Court System:

Sequestration has cut the federal judiciary’s budget by almost $350 million for the 2013 fiscal year, which is already half over. In Massachusetts, public defenders will have to take 16½ furlough days — which could lead to a backlog in the court system — and funding for drug and mental health services will be cut by 20 percent. In Dallas, the public defender’s office will shut down every Friday for the next six months. In California, the U.S. District Court of the Northern District will shutter its courtrooms in San Francisco, San Jose and Eureka on the first Friday of every month through September. And in Nebraska, U.S. District Court Judge Richard Kopf said he is “seriously considering” dismissing some criminal cases.

The sequester also has the potential to impact terrorism cases.

Public defenders representing Sulaiman Abu Ghaith, a former Al Qaeda spokesman and a son-in-law of Osama bin Laden charged with conspiring to kill Americans, have requested that a federal judge push back the trial date because of furloughs in their office. “It’s extremely troublesome to contemplate the possibility of a case of this nature being delayed because of sequestration,” Judge Lewis A. Kaplan said in Federal District Court in Manhattan. “Let me say only that — stunning.”

And the Massachusetts public defender’s office, which is representing Boston Marathon bombing suspect Dzhokhar Tsarnaev, still has to deal with furloughs. "No one knows exactly how it will affect things," a federal court official told ABC News.

Wow. Anything else?

Sequestration has led a number of states to cut their emergency unemployment benefits. Programs designed to help victims of domestic violence have had their funding slashed.  And less federal funding has meant to cuts to Meals on Wheels programs in places such as Roanoke, Va, which recently started a waiting list. "We've never had a waiting list," Michele Daley, the director of nutrition services at the Local Office on Aging, which administers Meals on Wheels in four Virginia counties, told the Huffington Post. "This is the first time ever and it's a direct result of sequestration."

Has anybody beside the FAA beaten sequestration?

Yes. Weeks before the sequester hit, Agriculture Secretary Tom Vilsack started describing how his department would have to furlough meat inspectors if the cuts went through, forcing meat-processing plants to shut down on furlough days. His talk convinced the meat inspectors’ union and other industry heavyweights to start lobbying. The National Cattlemen’s Beef Association, the National Chicken Council, the National Turkey Federation went to work, and the Senate ended up moving $55 million from other Agriculture Department programs to the inspectors.

Read David A. Fahrenthold and Lisa Rein’s excellent Washington Post story for more details.

The pet industry also successfully lobbied (yes, the pet industry has a lobbying group) for the U.S. Fish and Wildlife Service to restore overtime and weekend inspections of commercial wildlife imports and exports, including exotic snakes, birds and lizards bound for American homes. But the decision may not be as silly as it sounds — the importers and exporters pay substantial fees for the inspections.

How can I keep up with the sequester?

Here are some great resources for tracking the overall impact:

Mother Jones has examples of how sequestration has played out in each of the 50 states.

The Washington Post is charting the sequester’s projected and actual impact on federal agencies.

Government Executive is tracking furloughs by department and agency.

We’ve compiled some of the best charts and graphics explaining the sequester.

Have you seen any good reporting, graphics or other resources on sequestration’s impact? Tweet us your recommendations with #muckreads.

by Sergio Hernandez, Special to ProPublica

In November 2010, I was earning $300 a week for The Village Voice, blogging about unemployed actors who moonlit as bed bug exterminators and a city project to make biofuel out of toilet water. One afternoon, then-Schools Chancellor Joel Klein stunned the city by suddenly resigning his post of eight years for a job at Rupert Murdoch's News Corporation.

The bigger shock that day was who New York City Mayor Michael Bloomberg chose as Klein's successor: Cathie Black, the Hearst Magazines chairwoman who, as far as anybody could tell, had never stepped foot in a public school, let alone knew how to run one (or the city's 1,700, for that matter).

The announcement sparked fierce criticism among parents, educators, politicians and the city's press corps.

So I fired off a routine Freedom of Information request to the mayor's office, seeking emails between Black, Bloomberg and their staffs.

When the emails were finally released last week, after a two-year legal battle, they revealed a desperate public relations campaign in which city officials tried to rally support from prominent women — including Oprah Winfrey, Gloria Steinem, Caroline Kennedy, and Bette Midler — to champion Black's appointment. (I'll admit: never in a million years did I expect my work to result in stories containing the sentence, "Ms. Winfrey couldn't be reached for comment.") In the end, the emails were amusing, slightly enlightening, but largely innocuous.

Which is why it's so puzzling that the city fought all the way to the state's highest court to block their release. Cathie Black resigned as schools chancellor after just 95 days on the job. The case to keep her emails secret would last more than six times as long.

If I hadn't had high-powered help, the city would surely have won, and quickly. The city initially denied my request and, after I had exhausted an administrative appeals process, John Cook — now the editor of Gawker — put me in touch with a media law clinic at Yale Law School.

The Bulldogs and Elizabeth Wolstein — a partner at Schlam, Stone & Dolan who once supervised appeals for the U.S. Attorney in the U.S. Court of Appeals for the Second Circuit — agreed to take the case, pro bono, propelling a fresh-out-of-NYU, semi-employed, then-21-year-old journalist into a courtroom battle with New York's billionaire, third-term mayor.

We filed our lawsuit in May 2011 and won a judgment from the state's Supreme Court — New York's trial court — that Thanksgiving. The city appealed, drawing the process out another two years.

Plenty has been written about the actual emails since they were finally released last Thursday. The documents (and the protracted legal dispute surrounding their release) led to two articles in The New York Times, an article and an editorial in the New York Post, and stories in the New York Daily News, the Associated Press, WNYC, the Village Voice, the New York Observer, The Daily Beast, Gawker, Gothamist, Metro, New York magazine, NY1, and The Wall Street Journal.

But less has been written about why the city fought so hard — it spent more than 180 hours, totaling more than $25,000 in staff time — to keep the emails secret. Susan Paulson, a senior attorney for the city's Law Department who handled the appeal, has given some clues.

Last Halloween, Paulson showed up to the courthouse on East 25th Street and Madison Avenue. The five-judge panels in this courthouse hear appeals for civil and criminal cases in Manhattan and the Bronx, and at 3:10 that afternoon, Paulson took to the lectern and presented the city's argument.

While Black was not yet on the government's payroll when the emails in question were written, she was nonetheless acting as a "consultant" to the mayor, Paulson said, because she was acting at his direction to further one of his policy goals. What was that goal? Securing Black's own position on the government's payroll.

In her original order, trial court Judge Alice Schlesinger had minced no words, calling this argument "particularly specious" and "wholly devoid of merit." The five judges on the appellate panel also rejected the city's claim.

But the city persisted and tried to get a hearing in the state's highest court, the Court of Appeals, claiming the case now represented a novel and statewide issue.

I'd often been asked why I thought the city was fighting so doggedly to keep these emails secret. But without having seen them, it was difficult to say whether there was a sinister motive or a more legitimate reason.

While petitioning the Court of Appeals to take the case, the city began to make its policy concerns clearer. Disclosing communications with people who were appointed to, but had not yet taken, office would make it more difficult to lure good talent from the private sector, it argued. Of course, people considering public service know they are stepping under a public microscope.

There is also an interest, the argument goes, in allowing government officials some degree of privacy to do their work, so they can deliberate freely and candidly. That is the reason certain communications within and between government agencies are often exempt from disclosure under public transparency laws. These days, of course, much of that deliberation occurs electronically, creating a permanent record. Ardent transparency advocates often want those records open, too, arguing we shouldn't have any smoke-filled rooms — literal or virtual.

"The City believes that the principles permitting government employees to exchange opinions, advice and criticism freely and frankly, without the chilling prospect of public disclosure, should extend to individuals who have been elected or selected to public office but have not yet assumed office," Paulson wrote me — in an email, of course — answering a question for this article.

The question is where, exactly, to draw the line? Suppose the public backlash had forced Bloomberg to abandon hiring Black as chancellor, or that Black herself had withdrawn from the running. Could the emails have been kept secret merely because she had, at one point, been considered for the job? What, then, would prohibit an agency from withholding records of true public import by simply claiming that the Mayor was thinking about hiring John Doe to be his next Deputy Junior Assistant Something-or-Other someday?

While the city maintains it fought for the principle of free and candid communications, there's another theory as to why the mayor's office resisted disclosing these emails: It feared a precedent that would open the floodgates to release other ones that might be worse than embarrassing.

Public records laws rarely have much bite. And, except when disclosure has been advantageous to its goals, the Bloomberg administration has had a famously poor track record of respecting them. But they are still valuable tools for empowering public oversight. And sometimes, they even let David the lowly intern cut Goliaths like Bloomberg down to size.

by Blair Hickman and Jeremy B. Merrill

May 10, 2013: This post has been corrected.

Since the financial crash, jobs have held a top spot in public discussion. But among all the employment talk, one sector of the workforce has consistently received relatively little attention: interns.

In the past few decades, the number of internships in the United States has ballooned. One recent study found that just over half of graduating college seniors had held some sort of internship. That’s more than double the rate another study found two decades ago.

But legal protection for interns, particularly those who are unpaid, hasn’t kept pace with this rapidly emerging workforce.

That’s why we’re turning our eyes to internships in the U.S.

There are six criteria that must be met for an internship in the for-profit sector to qualify to be unpaid under federal law. One of the key criteria is that the position must be of more benefit to the intern than of benefit to the company. Companies can’t just use interns to replace regular employees.

The Department of Labor may examine internships during investigations of an employer’s compliance with wage standards and record-keeping provisions of the Fair Labor Standards Act, according to a spokesperson.

But Dr. Philip Gardner, director of the Collegiate Employment Research Institute at Michigan State University, says the government’s enforcement efforts have been passive.

“You have to file a complaint for them to act,” he said. “The rules are there. But in the scheme of things, the [Department of Labor] wouldn’t spend a lot of time heading out to employers.”

The agency receives only a handful of complaints per year, said the spokesperson. As the New York Times has reported, a few states have also begun investigations and fined employers.

Ross Perlin, author of Intern Nation, said he’s heard mixed reports about how responsive the Department of Labor is to complaints.

“In fairness to the Department of Labor, they require political will to go after things like this,” he said. “My impression is that there are people there who get it. But they have issues around their budget and what they can do.”

“Do I think they could do more?” said Perlin. “Yes, ideally.”

In the past few years, unpaid interns have filed three class-action lawsuits against companies alleging the companies owe interns back pay, because the interns performed the same duties as employees.

So, how many interns are being employed in violation of federal guidelines? What role do colleges and universities play in placing them? What protections cover interns in cases of discrimination or abuse?

We’re launching an investigation to explore answers to some of these questions. And we want to hear your stories. If you've held an internship in the past three years, help us by filling out the form below.

We're most interested in internships held during 2013, but we welcome stories about internships that began as early as Spring 2010. We will publish these stories along with  your employer’s name, but your name will remain confidential.

If you have an upcoming summer internship, sign up for an email alert here and we’ll remind you to submit your story in September. The same email listserv will also alert you to other ways to get involved in this investigation.

Correction: An earlier version of this post said the Department of Labor released a six-point unpaid internship test in April 2010. They actually released a fact sheet highlighting the test, which already existed. 

by Lena Groeger

by Lois Beckett

This post has been updated.

As we detailed yesterday, dozens of states are considering bills that attempt to nullify federal gun laws. One such bill became a law last month in Kansas. It exempts “Made in Kansas” guns from federal regulation and makes it a crime for federal agents to enforce federal law. 

Attorney General Eric Holder recently wrote to Kansas Gov. Sam Brownback, saying the law is “unconstitutional,” and that the U.S. is prepared to sue Kansas to prevent the state from “interfering with the activities of federal officials.”

Now, Brownback has fired back.

In a letter to Holder yesterday, Brownback wrote: “The people of Kansas have clearly expressed their sovereign will. It is my hope that upon further review, you will see their right to do so.”

Local news reports have highlighted an estimate from Kansas’ attorney general that defending the new law in court could cost the state $225,000 over the next three years. Attorney General Derek Schmidt did not immediately return a request for comment.

“Our office has received more than 300 emails and calls in the last two days from Kansans and Americans from around the country thanking the governor for his response,” Brownback’s spokeswoman, Sherriene Jones-Sontag, wrote in an email. She also cited the many favorable comments on the governor’s Facebook page.

DV.load("//www.documentcloud.org/documents/695771-eric-holder-response-05-02-13.js", { width: 600, height: 776, sidebar: false, text: false, container: "#DV-viewer-695771-eric-holder-response-05-02-13" }); Brownback Letter to Holder (PDF)
Brownback Letter to Holder (Text)

Kansas’ Secretary of State Kris Kobach, who helped draft the new law, also released a response to Holder’s letter. “As a former professor of constitutional law, I ensured that it was drafted to withstand any legal challenge,” he wrote.

“The Obama Administration has repeatedly violated the United States Constitution for the past four-and-a-half-years. That abuse cannot continue.”

Kobach told ProPublica that he does not consider Kansas’ law to be “nullification,” because the law only asserts that federal regulations do not apply to guns that are made in Kansas, and have never crossed the state’s borders.

“Nullification implies that you’re saying the whole federal law is wrong. That was the nullification of the 19th century. We’re not doing that…we’re acting with a scalpel.”

Kobach said he did not craft the legislation with the goal of provoking a legal battle. He said it’s also possible that the Justice Department will “decide that actually their legal position is not as clear as they thought” and back down.

Before the law can be challenged in court, he said, someone will  have to be “directly injured”  -- for instance, if the federal government decides to crack down on a Kansas gun manufacturer who decides to start making “Made in Kansas” guns without a federal license.  

“We’re a long way from litigation at this point,” Kobach said.

Kansas’ Secretary of State Kris Kobach, who helped draft the new law, also released a response to Holder’s letter. “As a former professor of constitutional law, I ensured that it was drafted to withstand any legal challenge,” he wrote.

“The Obama Administration has repeatedly violated the United States Constitution for the past four-and-a-half-years. That abuse cannot continue.”

Kobach told ProPublica that he does not consider Kansas’ law to be “nullification,” because the law only asserts that federal regulations do not apply to guns that are made in Kansas, and have never crossed the state’s borders.

“Nullification implies that you’re saying the whole federal law is wrong. That was the nullification of the 19th century. We’re not doing that…we’re acting with a scalpel.”

Kobach said he did not craft the legislation with the goal of provoking a legal battle. He said it’s also possible that the Justice Department will “decide that actually their legal position is not as clear as they thought” and back down.

Before the law can be challenged in court, he said, someone will  have to be “directly injured”  -- for instance, if the federal government decides to crack down on a Kansas gun manufacturer who decides to start making “Made in Kansas” guns without a federal license.  

“We’re a long way from litigation at this point,” Kobach said.

DV.load("//www.documentcloud.org/documents/695819-cobach-letter.js", { width: 600, height: 776, sidebar: false, text: false, container: "#DV-viewer-695819-cobach-letter" }); Cobach Letter (PDF)
Cobach Letter (Text)

Similar bills nullifying federal gun laws are continuing to advance in at least three other states: Louisiana, Missouri, and Alabama. In Alaska, a bill exempting any gun possessed in Alaska from federal law has been approved by the state legislature and is awaiting action from Gov. Sean Parnell. Bills attacking federal gun laws have been introduced in at least 37 states this year.

Many of the bills have caveats. In Kansas, for example, the law specifies that state will not actually arrest federal agents who try to enforce gun regulations.  

Bills in other states, including Montana, Wyoming, and Tennessee have attempted to go further. The approved version of Alaska’s bill removed a measure that would have allowed state law enforcement to arrest federal agents for trying to enforce gun laws.

5/3/2013: This post has been updated with comment from Gov. Brownback’s office and Kris Kobach. 

by Theodoric Meyer

On Jan. 23, 2008, the pharmaceutical company Novartis threw a party at a restaurant on Long Island. The party, which cost $1,250, was ostensibly for doctors to learn about cardiovascular drugs made by the company, with Novartis sales representatives present as well.

But no doctors ever came, according to a whistleblower lawsuit against Novartis that was unsealed last week. Instead, nine sales reps ran up the tab, and the company wrote an honorarium check to Dr. Robert Nissan, a Long Island family practitioner who wasn’t present, the lawsuit alleges.

The party, the lawsuit maintains, was one of “countless” events held by Novartis over a decade that were designed to direct kickbacks — cash, meals and favors to relatives — to doctors who prescribed the company’s drugs.

Last week, the Department of Justice joined the whistleblower lawsuit, which was originally filed in 2011 by Oswald Bilotta, a former Novartis sales representative on Long Island. “Novartis corrupted the prescription drug dispensing process with multi-million dollar ‘incentive programs’ that targeted doctors who, in exchange for illegal kickbacks, steered patients toward its drugs,” Preet Bharara, the U.S. attorney for the Southern District of New York, said in a statement.

Novartis has disputed the government’s allegations of wrongdoing; Nissan did not return several requests for comment.

Whether such payments by drug companies to physicians are kickbacks or a legitimate marketing and educational practice is a recurring controversy — as ProPublica has extensively reported. Our Dollars for Docs database tracks $2 billion in payments to doctors from 15 drug companies, including Novartis. All but one have settled government lawsuits alleging improper marketing practices.

A number of the doctors named in the Novartis case have received substantial sums since 2009, Dollars for Docs shows, including one physician who was paid more than $150,000 combined from six different drug companies.

Historically, the doctors cited in cases alleging improper marketing have not faced consequences. A ProPublica investigation in 2011 found that none of more than 75 doctors named in lawsuits since 2008 had been sanctioned, despite charges of fraud or conduct that put patients at risk.

Generally, payments like those in Dollars for Docs made for speaking, consulting, travel, meals and other promotional purposes are legal.

Novartis has only publicly reported payments since 2010, when the company pleaded guilty to a misdemeanor and paid $422.5 million to settle charges it had illegally promoted Trileptal, an anti-seizure drug, and had paid kickbacks for prescribing its drugs. Aside from the misdemeanor plea, Novartis denied wrongdoing.

The latest lawsuit is one of two filed last week by the Justice Department against Novartis in U.S. District Court in Manhattan. The company is also accused of paying kickbacks to pharmacies to promote Myfortic, a drug that suppresses the immune system. Novartis — which is bound by a corporate integrity agreement from its 2010 settlement — has disputed the allegations in both cases.

“We disagree with the way the government is characterizing our conduct in both of these matters and we stand behind our Compliance program,” Andre Wyss, the head of Novartis’s U.S. operations, said in a statement.

The whistleblower lawsuit alleges that Lotrel, a blood-pressure medication with sales of nearly $1.3 billion in 2006, “became a big seller for NOVARTIS because it paid physicians to write Lotrel prescriptions.” Novartis sales reps allegedly rewarded doctors with cash or gift checks and recruited them to attend “Clinical Learning Days” with honoraria of $250 to $500 a pop.

The meetings could be as short as half an hour, the whistleblower suit alleges, and doctors would be paid even if they didn’t show up. “So long as a physician was writing Lotrel prescriptions,” it says, “he or she could expect to be paid.”

Thousands of doctors took part in the alleged kickback scheme, according to the whistleblower lawsuit. But the case singles out 24 Long Island doctors and nurses, including Nissan. Nissan and two other physicians — Edward Condon, who specializes in internal medicine, and Mark Jagust, a family practitioner — “each received tens of thousands of dollars” from Novartis, according to the lawsuit.

Novartis also hired Ross Fishberger — the son of Kenneth Fishberger, another one of the doctors named — as a sales representative “in order to assure that Dr. Fishberger continued to prescribe” Lotrel and other Novartis drugs, according to the lawsuit. Novartis also allegedly employed Condon’s wife and daughter-in-law as sales reps.

Reached by ProPublica, Condon said he had no knowledge of the lawsuit, and hung up when asked more detailed questions. Jagust and the elder Fishberger did not respond to repeated requests for comment.

Ross Fishberger declined to comment when reached by ProPublica.

Dollars for Docs shows that drug companies have made payments to many of the 24 doctors named in the whistleblower lawsuit since 2009.

Condon received at least $156,094 in meals, travel, speaking fees and other expenses from six companies, including Novartis. Another doctor, Michael Shanik of Smithtown, N.Y., was paid at least $97,754 from six companies, including more than $30,000 from Novartis.

Robert Mormando, an internal medicine specialist in Port Jefferson Station, N.Y., who was also named in the case, told ProPublica he hadn’t taken any kickbacks and didn’t know of Long Island doctors who had.

“I would say it’s up for interpretation whether paying someone to be part of a speaking program” constitutes a kickback, he said. “I’m not aware of any doctors who have taken it to that level.”

Mormando said he had been a paid speaker for Novartis on three occasions a number of years ago and estimated he had earned between $1,200 and $1,500. According to Dollars for Docs, he was paid at least $9,958 from nine pharmaceutical companies since 2009, only $19 of which came from Novartis.

Another of the named doctors, Howard Hertz of Babylon, N.Y., also denied taking kickbacks in a brief interview. Hertz was paid at least $9,888 since 2010 from five drug companies, including $4,110 from Novartis, according to Dollars for Docs.

The main plank of the Justice Department’s lawsuit is the federal anti-kickback statute, which makes it illegal for drug companies to pay doctors with the intent of getting them to prescribe a particular drug or to reward them for doing so.

Kevin Outterson, a professor at Boston University Law School who has studied health care fraud, said it can difficult to prove intent in pursuing kickback cases.

“What it boils down to is they need smoking gun evidence,” he said.

But Outterson said he thought the Justice Department had a strong case. “It goes directly to the culture of wining and dining and having lavish entertainment and educational events in order to induce prescription writing,” he said.

by Lois Beckett

In mid-April, Kansas passed a law asserting that federal gun regulations do not apply to guns made and owned in Kansas. Under the law, Kansans could manufacture and sell semi-automatic weapons in-state without a federal license or any federal oversight.

Kansas’ “Second Amendment Protection Act” backs up its states’ rights claims with a penalty aimed at federal agents: when dealing with “Made in Kansas” guns, any attempt to enforce federal law is now a felony. Bills similar to Kansas’ law have been introduced in at least 37 other states. An even broader bill is on the desk of Alaska Gov. Sean Parnell. That bill would exempt any gun owned by an Alaskan from federal regulation. In Missouri, a bill declaring federal gun laws “null and void” passed by an overwhelming majority in the state house, and is headed for debate in the senate.

Mobilizing the pre-Civil-War doctrine of “nullification,” these bills assert that Congress has overstepped its ability to regulate guns — and that states, not the Supreme Court, have the ultimate authority to decide whether a law is constitutional or not.

The head of the Kansas’s State Rifle Association, an  affiliate of the National Rifle Association, says she put the bill together and found it a sponsor. While the NRA regularly lauds passages of states’ gun-rights laws, it stayed silent on Kansas’ law, and, so far, has kept a low profile on nullification. (The group did not respond to our requests for comment.)

Many observers see nullification bills as pure political theater, “the ultimate triumph of symbolism over substance,” as UCLA law Professor Adam Winkler put it.  He said he doubts the laws will ever be enforced, and, if they are, expects them to be struck down by the courts. 

Winkler and others say nullification laws violate the Constitution, which makes federal law “the supreme law of the land…anything in the Constitution or laws of any State to the contrary notwithstanding.” Indeed, U.S. Attorney General Eric Holder wrote a letter last week to Kansas Gov. Sam Brownback, asserting that Kansas’ law is “unconstitutional.” (Brownback, who signed the bill into law, did not immediately respond to our requests for comment.) 

But the growing number of such bills -- which have passed by large majorities in at least one chamber of seven state legislatures--highlight the challenge gun control advocates face in their attempt to fight for gun regulation at the state level.

It also shows how nullification is fast becoming a mainstream option for state politicians. In Pennsylvania, 76 state legislators signed on to sponsor a measure that would invalidate any new federal ban of certain weapons or ammunition. The bill would impose a minimum penalty of one year in prison for federal agents who attempt to enforce any new law.

Supporters of nullification are not simply frustrated at what they see as congressional and presidential overreach. During a hearing about one of the nullification bills she had introduced, Tennessee State Sen. Mae Beavers called the Supreme Court a “dictatorship.”

“You think that the Supreme Court is the ultimate arbiter of any of these laws. I don’t believe that. I don’t believe it was ever granted the authority under the Constitution,” Beavers was quoted as saying in The Tennessean. (Reached by phone, she asked to comment later, then did not respond to further requests.)  

The Supreme Court rejected nullification in 1958, after Southern states tried to use the concept to avoid desegregating public schools. “No state legislator or executive or judicial officer can war against the Constitution without violating his solemn oath to support it,” the Court ruled.

Winkler, the UCLA law professor, said that even though the nullification trend was likely to be ineffectual, “It represents a strong, powerful opposition to our government.”

The concept of nullification has had a resurgence since the beginning of President Obama’s administration. More than a dozen states have introduced bills to nullify Obamacare.

The Tenth Amendment Center, a group that advocates nullification as the solution to a range of policy issues, from marijuana legalization to Obamacare, publishes model gun nullification language. The center has little direct contact with state legislators, Michael Boldin, the center’s founder, said.

The roots of guns law nullification trace back nearly a decade.

In 2004, Montana gun rights activist Gary Marbut drafted a bill stating that any guns manufactured and retained in Montana are not part of interstate commerce, and thus are exempt from federal regulation. The bill failed twice, but it became law in 2009 after Republicans took control of the statehouse. By Marbut’s count, at least eight states soon enacted “clones” of the Montana law. (Those laws don’t go quite as far as the more recent nullification legislation. For instance, most of them don’t make it a crime to enforce federal law.)

The federal Bureau of Alcohol, Tobacco and Firearms responded to the earlier laws with letters to local firearms dealers explaining that federal laws and regulations “continue to apply.”

The day the Montana law went into effect, Marbut filed a lawsuit in federal court asserting the right to manufacture weapons in the state without a federal license. The suit, now before the Ninth Circuit Court of Appeals, has been backed by a large group of supporters, including Gun Owners of America, the Second Amendment Foundation, the Cato Institute, the Goldwater Institute, and a group of nine attorneys general, some of them from states that had passed their own versions of the Montana law.

Representatives of Goldwater and the Cato Institute said they see the case as not primarily about guns. Instead, they say, it’s meant to persuade the Supreme Court to rollback the Congress’ power to regulate commerce within a state.

“The likelihood of victory is low,” said Trevor Burrus, a research fellow at the Cato Institute’s Center for Constitutional Studies.

The latest set of bills — including Kansas’ new law —represent a far broader and more aggressive challenge to federal law. Even conservative organizations have been skeptical of the trend.   

“A state law that criminalizes federal activity — I would oppose that as both imprudent and wrong,” Burrus said. The Cato Institute’s chairman wrote an op-ed this spring arguing this kind of nullification is invalid.

Goldwater Institute’s Nick Dranias, a constitutional expert, said the term “nullification” is sometimes applied to legitimate attempts to exert state sovereignty, “and sometimes it is essentially lawless civil disobedience.” 

States should only pass laws challenging federal power "when there is a reasonable legal argument for sustaining them," he said. And the penalty for enforcing federal law in "hard cases" should be "a misdemeanor at most." 

The Heritage Foundation, a conservative research group, released a “fact sheet” last year titled “Nullification: Unlawful and Unconstitutional.” (The fact sheet does not address guns in particular.)

The Montana activist whose helped inspired the nullification movement Kansas is also a bit skeptical. While he simply chose to challenge the federal government’s commerce power, Kansas is “bucking federal power more generally,” he said.  

“I think, maybe tactically, they may have gone a little further than they needed to,” Marbut said.

Though he supports the principles behind the Kansas law, “I don’t know how much of that they can uphold when it gets to the courts.”  

But Marbut hopes that the rapid spread of gun law nullification bills across the country will encourage the Supreme Court to hear his case.

 “I see the tide moving our way,” Marbut said. “I think the Supreme Court has figured out that the people of America are gathering their torches and pitchforks and it’s time to settle things down by reeling in the federal giant.”

A spokeswoman for Alaska Gov. Parnell, who has not either approved or vetoed the state’s nullification bill, said last month that “he is supportive of it.” But, she added, “The bill (as with all bills that pass) is currently undergoing a thorough review by the Department of Law.”

In Kansas, Patricia Stoneking, the president of Kansas State Rifle Association, said she was recommending that Kansans not start manufacturing guns under the new law until its legal status has been clarified. 

Even if Kansas’ law ends up being struck down in court, “We actually are not going to roll over and play dead and say, ‘Oh, no, shame on us,’” Stoneking said. “The fight will not be over.”

by Justin Elliott

In January, Rep. Jeb Hensarling, R-Texas, ascended to the powerful chairmanship of the House Financial Services Committee. Six weeks later, campaign finance filings and interviews show, Hensarling was joined by representatives of the banking industry for a ski vacation fundraiser at a posh Park City, Utah, resort.

The congressman’s political action committee held the fundraiser at the St. Regis Deer Valley, the “Ritz-Carlton of ski resorts” known for its “white-glove service” and for its restaurant by superstar chef Jean-Georges Vongerichten.

There’s no evidence the fundraiser broke any campaign finance rules. But a ski getaway with Hensarling, whose committee oversees both Wall Street and its regulators, is an invaluable opportunity for industry lobbyists.

Among those attending the weekend getaway was an official from the American Securitization Forum, a Wall Street industry group, a spokesman confirmed. It gave $2,500 in February to Hensarling’s political action committee, the Jobs, Economy, and Budget (JEB) Fund.

Len Wolfson, a lobbyist for the Mortgage Bankers Association, which gave the JEB Fund $5,000 that month, posted a picture on Instagram from the weekend of the fundraiser of the funicular at the St. Regis. (It was labeled, “Putting the #fun in #funicular. #stregis #deervalley #utah.”) Wolfson did not respond to requests for comment. (UPDATE 1 p.m. Wolfson has now set his account to private.) 

This photo was posted to Instagram by Mortgage Bankers Association lobbyist Len Wolfson on Feb. 24.

Visa, which gave the JEB Fund $5,000, also sent an official. A Visa spokesman told ProPublica that in attendance were not just finance companies, but also big retailers and others.

Hensarling, a protégé of former Texas senator and famed deregulator Phil Gramm, has a mixed record regarding Wall Street. While he has been critical of “too big to fail” banks and voted against the 2008 bailout, Hensarling recently said he opposed downsizing big banks, according to Bloomberg. That stance matters now more than ever as a bipartisan duo in the Senate, David Vitter, R-La., and Sherrod Brown, D-Ohio, introduced a bill last week seeking to constrain the too-big-to-fail institutions. While the bill is considered a longshot, it has provoked intense opposition from the industry.  

Meanwhile, Hensarling recently barred the head of the new Consumer Financial Protection Bureau from appearing before the House Financial Services Committee, citing a legal cloud over recess appointments made by President Obama.

Whatever his stance on the industry, Hensarling has been more than happy to court Wall Street’s money.

Donors working in various financial industries are Hensarling’s biggest supporters, giving him over $1 million in the last election cycle, according to the Center for Responsive Politics. The congressman’s office did not respond to requests for comment.

Others donating to Hensarling’s JEB Fund around the time of the Utah ski weekend: Capital One; Credit Suisse; PricewaterhouseCoopers; MasterCard; UBS; US Bank; the National Association of Federal Credit Unions; Koch Industries, which is involved in sundry financial trading; the National Pawnbrokers Association; and payday lenders Cash America International and CheckSmart Financial. All either declined to comment or did not respond to requests.  

A spokeswoman for one large bank that donated $5,000, Alabama-based Regions Financial, told ProPublica the company doesn’t discuss events employees attend for “a number of reasons, including security.”

Also donating $5,000 to Hensarling’s political committee around the time of the ski weekend was Steve Clark, a lobbyist for JP Morgan and the industry group the Financial Services Roundtable. (In 2011, a memo written by Clark and his partners for the American Bankers Association proposed an $850,000 public-relations strategy to undermine Occupy Wall Street. It leaked to MSNBC; the plan had apparently never been executed.)

Clark didn’t respond to requests for comment.

The ski weekend was a large, apparently family-friendly affair. A Utah entertainment booker told ProPublica she had hired two caricature artists for a Feb. 23 event at the St. Regis for a group of 100, including 20 children. Hensarling’s JEB Fund, paid the bill. The fund also reported spending about $1,000 on “gifts and mementos” at Deer Valley as well as charges at the upscale restaurant Talisker on Main.

Campaigns and political action committees of a few other GOP congressmen also show charges totaling more than $50,000 at the St. Regis around that time: House Rules Committee Chairman Pete Sessions of Texas; House Ways and Means Committee Chairman Dave Camp of Michigan; and National Republican Congressional Committee Chairman Greg Walden of Oregon. None responded to requests for comment.

This is at least the second consecutive year that Hensarling has attended a fundraiser at Deer Valley. During the same February congressional recess last year, the National Republican Congressional Committee hosted a “Park City Ski Weekend” for Hensarling along with Sessions and Walden. Hensarling’s JEB Fund also reported about $60,000 paid to the St. Regis Deer Valley in the last election cycle. (The NRCC said it did not sponsor this year’s event.)

The Texan congressman has long had a taste for mixing skiing and politics. On the same February weekend in 2009, for example, Hensarling’s political action committee invited donors “to the second annual ‘JEB Fund Takes Jackson’” ski weekend for a minimum contribution of $2,500. The setting was the Snake River Lodge and Spa in Jackson, Wyoming, which boasted “wintertime activities fun for the entire family” including dog sledding tours and sleigh rides, according to the invitation. 

Reporting contributed by Al Shaw.

For more on politics and lobbying, read Jesse Eisinger's take on the 'Animal Farm' of Washington's revolving door politics or Justin Elliott's last piece on Lockheed's lock on a key Senate job.

by Raymond Bonner, Special to ProPublica

For 30 years, Ken Anderson was the face of law enforcement in Williamson County, Texas, first as a bearded district attorney asking the court for tough sentences, and for the last 10 years handing those kinds of sentences out as a judge.

Earlier this month, his beard gone, his hair white, Anderson, noted for his talks to school children about the criminal justice system and the dangers of drugs, walked into the courthouse again, this time as a defendant. He had come to turn himself in, be fingerprinted, photographed and post $2,500 bail. A few hours earlier a judge had ordered his arrest.

Not for drunk driving or speeding, or any other of the pedestrian crimes that sometimes fell public officials. Instead, Anderson was the rarest of defendants, a prosecutor criminally charged for his role in having helped send an innocent man to prison.

In one of Anderson's most notorious murder cases — the conviction of Michael Morton for killing his wife — he withheld critical evidence that would have been essential to Morton's defense.

Morton spent 25 years in prison before gaining his release. Anderson, once named the Texas Prosecutor of the Year, now faces 10 years in prison for his part in Morton's wrongful conviction.

The judge who oversaw a Court of Inquiry investigation of Anderson's conduct did not spare the former prosecutor.

"The court cannot think of a more intentionally harmful act than a prosecutor's choice to hide mitigating evidence so as to create an uneven playing field for a defendant facing a murder charge and a life sentence," said Judge Louis Sturns.

Anderson's lawyer has filed an appeal, arguing that the statute of limitations bars any action.

In Williamson County, the charges have shaken Anderson's friends and colleagues.

But Judge Sturns's action is even more remarkable when set against the long and often ugly history of prosecutorial misconduct. Even when prosecutors engage in strikingly unethical behavior, they are rarely sanctioned for it, much less criminally charged.

George Kendall, a veteran defense lawyer who has specialized in death penalty prosecutions, called the Anderson case "unprecedented."

Prosecutors and defense lawyers disagree on whether prosecutorial misconduct is widespread, or instead limited to isolated transgressions by inexperienced or overzealous prosecutors.

However, one thing is abundantly clear: While revelations of misconduct might result in people being freed from prison or granted new trials, action is almost never taken against the offending prosecutors.

An investigation by ProPublica found 30 cases in New York in recent years where convictions had been overturned because of prosecutorial misconduct. Yet in only one instance was a prosecutor punished in any meaningful way.

In fact, many of the New York prosecutors found to have withheld evidence and accepted false testimony were promoted, or received raises, even after courts overturned convictions because of their misconduct.

In one case, a Queens man was sent to prison for raping his 4-year-old daughter even though the prosecutor had evidence showing the child hadn't been sexually abused. After spending nearly two years in prison, the man's conviction was overturned. A judge later ruled that what the prosecutor had done was "tantamount to fraud." But after the conviction was overturned, the prosecutor received a raise and became head of a department where she oversaw and guided young assistant district attorneys.

In California, "prosecutors continue to engage in misconduct, sometimes multiple times, almost always without consequence," according to a study by the Northern California Innocence Project and Santa Clara University School of Law. In some 600 cases in which courts found there had been prosecutorial misconduct, the study found, only six times did the State Bar discipline the prosecutor

In Virginia, four murder convictions have been overturned within the last year because of prosecutorial misconduct, according to The Open File, a website launched last year "to monitor prosecutorial misconduct and accountability." None of the prosecutors have been sanctioned.

Twenty-six years ago in Texas, Michael Morton was charged with bludgeoning his wife to death with a club while she lay on the couple's waterbed.

During Morton's trial, Anderson put on an emotional case, shedding tears in court and graphically depicting Morton's alleged crimes. His theory of the case was that Morton had become enraged after his wife had denied him sex the previous night, which had been his birthday. For good measure, Anderson told the jury that Morton had masturbated on his dead wife before he headed off to work as a manager at the nearby supermarket.

The jury deliberated less than two hours before finding Morton guilty; he was sentenced to life in prison.

It is now charged that Anderson won his conviction corruptly, failing to comply with the law as laid down by the United States Supreme Court: Anderson had withheld from Morton's lawyers documents that indicated their client was innocent.

Anderson failed to turn over the transcript of an interview in which Morton's young son told his grandmother that a "monster" had killed his mother and that his father had not been at home, and a police report that a green van had been seen near the home and that a strange man had walked into the woods behind the house around the time of the murder.

Morton had been in jail 15 years when one of his trial lawyers contacted Barry Scheck, who had used his fame and money from the O.J. Simpson trial to expand the work and visibility of the Innocence Project. Scheck assigned the case to Nina Morrison, a bright, tenacious young lawyer then new to the office, but who has in the last decade secured the release of more than a dozen men from prison based on DNA testing.

The Innocence Project works with local lawyers, and Morton was fortunate that John Raley, a highly regarded civil litigator in Houston, agreed to represent him pro bono.

Morton's new lawyers quickly moved to request DNA testing on a bloody bandana that had been found at a construction site 100 yards from Morton's house. The state resisted, and a court denied the request; but Morrison persisted, and eventually a court ordered DNA testing.

The bandana was found to contain the blood of Morton's wife and the DNA of an unknown individual. That individual was later identified as Mark Alan Norwood, whose DNA was found in a national database; he was convicted of the murder and sentenced to life in prison last month.

DNA testing was not as advanced at the time of Morton's trial, and there was no serious criticism of Anderson for not having considered the bandana more carefully. But that was not the end of the case

Using the state's public records act, Morrison had sought documents from the district attorney's office. After years of litigation, what she obtained was explosive.

Foremost among the documents was an eight-page transcript of an interview of the victim's mother by a police officer, an account that suggested Morton could not have been the killer. There was also a sheriff's report about the strange man seen in the neighborhood around the time of the killing.

Anderson had kept all of this from the defense. With Morton out of prison, and fully exonerated, his lawyers might have stopped there. But they pushed on.

An obscure 1876 Texas law provides for a Court of Inquiry when there is probable cause to believe that "an offense has been committed against the laws of this State." Such courts have been used to investigate cases of wrongful convictions, but never allegations of prosecutorial misconduct.

Morton's lawyers persuaded a judge that this was a proper case for a Court of Inquiry. Their legal arguments were buttressed no doubt by the extraordinary public attention paid to the Morton case: Pamela Colloff had authored a two-part series, "The Innocent Man," which appeared in The Texas Monthly; there had been an editorial in The New York Times; 60 Minutes and National Public Radio had also weighed in.

Appointed as the special prosecutor for the Court of Inquiry was Rusty Hardin, who had been a legendary Houston district attorney — "one of the most feared death penalty prosecutors in Texas," says George Kendall.

During the hearing before Judge Sturns in February, Anderson, 60, was grilled for several hours by Hardin. Anderson defiantly defended his actions, "discounted the importance of the inquiry itself, struck a sarcastic tone, and cast himself as the victim of a 'media frenzy,'" Colloff reported.

He also suffered memory lapses. He routinely turned over all evidence to the defense that he was required to, he testified. But he had "no independent memory" of having given the defense the interview in which Morton's young son told his grandmother that a monster had killed his mother.

How could Anderson not remember a statement by a child seeing his mother killed? Hardin demanded to know.

"I have no recollection of it," Anderson repeated. Besides, he said, he'd put no credence in what a little boy said.

It is hard to overstate the uniqueness of the inquiry into the prosecutor's actions in the Morton case, and the subsequent legal action against Anderson.

One way to appreciate its novelty is to recall the South Carolina case of Edward Lee Elmore. A semi-literate African-American, Elmore was convicted and sentenced to death for the sexual assault and murder of a 75-year-old white woman.

In Elmore's case, the prosecution didn't just withhold critical information from the defense. There is reason to believe that the police and investigators concocted evidence, and that they committed perjury.

For instance, at Elmore's trial, officers testified that more than 40 of Elmore's pubic hairs had been found on the bed where he was alleged to have sexually assaulted the victim.

But the claims, as well as others involving what was once presented as scientific evidence of Elmore's guilt, ultimately crumbled upon re-examination. And some potentially exculpatory evidence was withheld from Elmore's lawyer.

Elmore was approaching 30 years in prison — more than half his life — when the Fourth Circuit Court of Appeals issued an opinion. It is striking for its length — 194 pages — but even more so for the majority's scathing criticism of the state's handling of the case. There was "persuasive evidence," the court held, that investigators "were outright dishonest," and that they "lied about" some of their investigative findings at the time of Elmore's trial.

That judgment was rendered more than 18 months ago, and Elmore was released shortly afterward. But there is no indication of any investigation into the police or prosecutors involved in the case.

Raymond Bonner, a lawyer and former New York Times reporter, is the author of "Anatomy of Injustice: A Murder Case Gone Wrong."

by Michael Grabell

CHICAGO — Ty Inc. became one of the world's largest manufacturers of stuffed animals thanks to the Beanie Babies craze in the 1990s.

But it has stayed on top partly by using an underworld of labor brokers known as raiteros, who pick up workers from Chicago's street corners and shuttle them to Ty's warehouse on behalf of one of the nation's largest temp agencies.

The system provides just-in-time labor at the lowest possible cost to large companies — but also effectively pushes workers' pay far below the minimum wage.

Temp agencies use similar van networks in other labor markets. But in Chicago's Little Village, the largest Mexican community in the Midwest, the raiteros have melded with temp agencies and their corporate clients in a way that might be unparalleled anywhere in America — and could violate Illinois' wage laws.

The raiteros don't just transport workers. They also recruit them, decide who works and who doesn't, and distribute paychecks.

And it's the low-wage workers — not the temp agencies or their clients, corporate giants like Ty — who bear the cost. Officially, the raiteros' fee, usually $8 a day, is for transportation. But, workers say, anyone who doesn't pay doesn't get work.

From this crowded barrio, raiteros ferry as many as 1,000 workers a day to warehouses and factories in Chicago and its suburbs. Many of these workers end up making about $6 an hour, well below Illinois' minimum wage of $8.25 an hour, because of the fees and unpaid waiting time.

"If you complain too much, they won't take you to work anymore," said Maria Castro, a Mexican immigrant who has worked on and off for Ty.

Like other workers, Castro said she has never been to Select Remedy, the temp agency that officially employs her. She knows Ty only as los peluches, Spanish for "the stuffed animals."

To Castro, her employer is Rigo, a raitero whose full name is Rigoberto Aguilar. He tells her and other workers whether they have a job and picks them up in a school bus in an alley at 4:30 a.m.

Ty is among a long list of brand-name companies that benefit from the raitero system. Workers report packing products for Sony, Frito Lay, Pampered Chef, Smirnoff, Marlboro and Fresh Express, a subsidiary of Chiquita Brands where workers cut vegetables for bagged salads and fast-food restaurants like Burger King and McDonald's.

The word raitero is a Spanglish invention that roughly means "a person who gives rides." In fact, the raiteros are effectively agents for Select Remedy and other temp agencies, which have grown steadily since the 1990s and are approaching new heights after the recent recession. While not a household name, the Select Family of Staffing Companies, which controls Select Remedy, posted $1.8 billion in revenue last year and employs nearly 100,000 people every week — about as many as Starbucks.

Select and other temp agencies maintain that the raiteros are merely van drivers hired by the workers. They say they have no contract or connection to the temp agency.

Yet the agencies provide applications so the raiteros can recruit workers. They call raiteros with the number of workers needed at each worksite. At the end of the week, the raiteros pick up the workers' paychecks from the temp agencies and bring them to check-cashing stores, where workers are charged $3 to $4 to cash them. In some cases, the raiteros say, the temp firms even provide the vans they use to drive workers to their jobs, or lend them money to buy the vans.

"Where there have occurred instances in which our well-established policies and protocols were not being followed, the appropriate corrective action was taken," Select Remedy wrote in a response to questions. "For some time now, we have instructed the managers who work at our branch offices that they are not to have direct contact with private van drivers, to reaffirm our policy that Select Remedy is to have no involvement in how our associates decide to get to work each day."

The company says it provides a valuable service to employers and employees: "In Illinois, Select Remedy puts thousands of people to work every year, and we are proud of that accomplishment."

Using raiteros, temp agencies and host companies like Ty can get the right number of workers to the right place at the right time. With such certainty, Ty can limit overtime as well as avoid paying benefits and the other costs of employing workers full time.

After dropping off about 50 workers, Aguilar leaves his big yellow bus in Ty's lot all day until he drives them back home.

Tania Lundeen, Ty's vice president of sales, said, "We typically don't do any kind of interviews." No one from Ty responded to a list of questions.

Wage Theft? Have You Worked With a Temp Agency? Send A Tip

Key parts of the raitero system, especially the transportation fee, may run afoul of Illinois' temp labor law. But, ironically, that very law helped create the current system.

When he first started as a raitero, Aguilar said, he was employed directly by a now-defunct temp agency, Prime Staffing, which paid him $350 a week. In many cases, temp agencies recouped this cost by charging the workers, deducting ride fees from their paychecks.

Illinois changed its law in 2006, making it illegal for temp agencies to charge workers for transportation or to refer them to van drivers who did. The law already outlawed temp agencies from forcing a worker to pay a fee for cashing a paycheck.

As a result, temp agency managers say, most staffing firms did away with official, paid relationships with drivers. Instead, they developed informal arrangements with the raiteros, which insulated the temp agencies from responsibility.

In other parts of the country, the van systems have clearer ties to the temp agencies and the fees are legal, with some restrictions.

Throughout New Jersey, vans show up every morning right in front of the temp agencies. When hired, workers sign a waiver authorizing the agency to deduct the ride fee from their checks.

In Boston, vans sent by temp agencies pick up workers from street corners and shuttle them to fisheries and recycling plants throughout eastern Massachusetts. A new law that went into effect in January limits transportation fees to 3 percent of a worker's daily wages and mandates that the fees can't reduce pay below the state's hourly minimum.

According to labor and employment lawyers, whether Select Remedy and other temp agencies have violated Illinois law depends on how free the workers are to choose their own transportation and check-cashing store and whether the rides and long hours of waiting are for the benefit of the worker or the company.

Miguel del Valle, the former state legislator who sponsored the day and temp labor act in Illinois, said that in his view the new transportation system still violates the law.

"We didn't want to allow temp agencies to gouge people and take big chunks of money out of their paychecks," he said. "They're doing something that we tried to prohibit them from doing," he added. "It's abusive."

A Tennis Court and a Pool

Ty Warner, creator of Beanie Babies toys, signs autographs to celebrate the 10th anniversary of the Beanie Babies toy line at the American International Toy Fair on Feb. 16, 2003 in New York, N.Y. (Chris Hondros/Getty Images) | More photos »

A Beanie Babies display in Grand Central Terminal, in New York, N.Y., on April 21, 2013. Ty Inc. became one of the world's largest manufacturers of stuffed animals thanks to the craze over Beanie Babies in the 1990s. (Krista Kjellman Schmidt/ProPublica) | More photos »

While Castro struggles to make her rent, Ty Warner, the chief executive of Ty, owns an oceanfront estate in Santa Barbara, Calif. He is the 206th richest person in the United States, according to Forbes, with an estimated net worth of $2.5 billion

D. Stephen Sorensen, the CEO of the Select Family of Staffing Companies, also lives in Santa Barbara. His 8,200-square-foot mansion features a tennis court and a pool.

Select was started in 1985. Beginning in the mid-2000s, it bought more than three dozen staffing firms, becoming a national chain. Its revenues skyrocketed from a little more than $300 million in 2002 to $1.8 billion in 2011, according to company press releases. In 2012, Staffing Industry Analysts, a research firm, ranked Select the 10th largest temp agency in America and the fourth largest in the industrial sector.

Select has supplied workers to Walmart warehouses, Bank of America, Toyota, Costco, Trader Joe's, General Mills, Mattel and Fisher-Price, according to court records, trade journals and the company's website.

In recent years, Select has weathered several controversies over its employment practices unrelated to its use of raiteros.

In 2011, it was hit with a $50 million jury verdict in a civil fraud case brought by the California state insurance fund. The lawsuit alleged that the company lowered its workers' compensation costs by lying about its payroll and falsely claiming its employees worked for another company. Select appealed and in January announced it had reached a confidential settlement with the state fund.

The company has also faced several lawsuits accusing it of cheating workers out of their pay. In August, while denying the allegations, Select Remedy agreed to pay up to $400,000 to cover unpaid wage claims from a group of more than 200 workers in the Chicago area. None of these workers used raiteros or worked at Ty.

Select Remedy entered the Chicago market in 2007. There, the raiteros helped the agency satisfy corporate clients by getting large numbers of people to the worksite, according to five former managers.

"Recruiters are under a lot of stress to make sure they don't lose out on the hours," a former personnel supervisor for Select Remedy said, meaning recruiters needed to fill an order immediately or the client company would turn to another agency. Indeed, volume is key. In the industrial sector, according to analysts, temp firms typically average only about 4 percent profit on each worker.

The supervisor, who asked not to be named because she signed a nondisparagement clause, recalled office-wide emails calling for, say, 200 workers all of sudden. "They're just trying to get bodies out there," she said, and the raiteros are "the easiest way to do it."

And one of the cheapest. In addition to not paying the raiteros, Select Remedy avoids the cost of maintaining and insuring the vans.

"It always bothered me," said the former personnel supervisor. "Half these employees were making minimum wage."

Temp agencies that don't use raiteros face other added costs, such as employing neighborhood recruiters. They also have to depend on individuals who might get sick, run late, or have cars break down.

Robert Stack, owner of Custom Staffing, which has an office in Little Village, said using raiteros definitely gives his competitors advantages. A big one: not having to pay rent in the neighborhood, which can cost a few thousand dollars a month. Still, Stack said he prefers not to use raiteros.

"Simply put, it's illegal," he said.

'Live the American Dream'

Get Paid Like a Professional (Select Staffing via YouTube)

Live the American Dream (Select Staffing via YouTube)

Promotional videos on Select's website tell job seekers that the company can help them "get paid like a professional" and "live the American dream." In one ad, the pitchman jokes, "Did you know that eight out of five economists say that working at Select is 6 bajillion times more effective than standing on a corner?"

In fact, Select employees in the raitero system start their workday by gathering on Chicago street corners before dawn. Many workers in Little Village don't know the basics of where they work. They often had to refer to their paycheck stubs for the name of their temp agencies. The companies they served were known simply by the Spanish name of the product they were handling — galletas (cookies), vinos (wines) or lechugas (lettuces).

A ProPublica reporter followed buses and vans from the early-morning pickups in Chicago to the warehouses in the far suburbs, and conducted more than 60 interviews with workers, raiteros, temp agency recruiters, managers of check-cashing stores and others. We examined check stubs, court records, labor department files and undercover video shot by the Chicago Workers' Collaborative, an advocacy group that opposes some temp agency practices.

Several workers agreed to speak for this story using their full names. Others like Maria Castro asked that only their second Spanish surnames be used for fear that they wouldn't be able to find work in a labor market that is largely controlled by the raiteros.

"I would be homeless if they found out who I am," she said.

Like many workers in this system, Castro is undocumented. However, companies must abide by most labor laws, such as minimum wage, for anyone they hire regardless of whether they are in the United States illegally.

Here's how the raitero system works.

Little Choice But to Pay

Temp workers go to Rigo's apartment to fill out applications for the temp agency, Select Remedy. The sign on the front door of Rigo's building says, "Señor Rigoberto lives on the second floor. If you come looking for work, go upstairs." (Michael Grabell/ProPublica) | More photos »

The business card of Rigo, whose full name is Rigoberto Aguilar, reads in Spanish, "If you want to work, you have the solution." Phone numbers have been obscured. (Michael Grabell/ProPublica) | More photos »

Aguilar said he has been a raitero for seven years. Like many others, he said he started as a temp worker himself, packing video games for Sega. Another raitero asked him to help drive one of his vans, and soon after, Aguilar said he borrowed $1,000 from a temp agency, now out of business, to buy his own van. Eventually, he bought a school bus.

He and other raiteros recruit workers by advertising in check-cashing stores and by word of mouth. When workers call, they are told to come to Aguilar's house to fill out Select Remedy's application. The sign on the front door of his building says in Spanish, "Señor Rigoberto lives on the second floor. If you come looking for work, go upstairs."

Castro originally applied to Select Remedy through Aguilar's brother, Eugenio Aguilar, who is also a raitero, and went to work for Xentris Wireless, a company she knew as los celulares, packing iPhone cases and other accessories. She said Eugenio sent her to Rigo's house, where she paid $5 to apply online. Rigo said people can come and use his computer, but he doesn't charge.

Every day, the temp agencies call the raiteros, giving them the number of people they need for the next shift. The raiteros then pick the workers, tell them where and when to meet and drive them to the warehouse or factory.

Nearly 50 workers said they have little choice but to pay the ride fee. Several workers said they had their own cars, but their temp agency told them they had to go with the raitero. "There was a lot of pressure to use Rigo," said Elizabeth Bellido, who worked for Select Remedy at Ty until March. "The first people who would get picked to work would be his people."

Other workers said they were allowed to drive, but soon found that the raitero had given their spot to someone else.

Castro recalled working with a raitero named Cirilo, who was ferrying workers on behalf of the temp agency Most Valuable Personnel, or MVP. One day, Castro said, Cirilo tried to cram 44 people into two 15-passenger vans.

"They wanted me to sit on the lap of another woman," Castro recalled. So she asked for a ride back from another raitero, who also served the plant and had a milk crate to sit on.

In retaliation, she said, Cirilo confronted her and told her she would never get work from him again. "If you work with another raitero, your raitero won't take you anymore," Castro said.

Cirilo declined an interview and hung up on a reporter.

MVP said it was unaware that Cirilo was charging the workers and said that it would investigate. While Select Remedy said it doesn't pay raiteros, MVP operations manager Darron Grottolo said his company has been paying Cirilo Peralta Transportación $1,350 every week to transport workers to his client companies. Hearing that workers said that they also paid Cirilo, Grottolo said, "It's disturbing. It's against the law. It's wrong." He explained, "You can't charge for transportation in Illinois."

This January, told by Aguilar that she had work, Castro came to the corner of 26th Street and Drake Avenue with about 50 others before dawn. She walked through an alley behind a blue-neon-lit dentist clinic and a shop selling quinceañera dresses and got on Aguilar's school bus. The bus took her 30 miles down Interstate 55 to the far southwest suburb of Bolingbrook, where the Ty warehouse is located.

A weekly paycheck from January for her work at Ty shows her take-home pay was $291.07, the state minimum of $8.25 an hour, minus taxes. Not mentioned on the pay stub, though, is the $40 she had to pay Aguilar to get to work that week. With those deductions, Castro's actual pay was $7.22 an hour.

Aguilar said if workers didn't pay him for the ride, they would still have to pay for gas or the bus. Select Remedy said in a written response that workers can get to a worksite any way they want.

"The cost of transportation to the job site, whether it is for public transportation, the cost of gas or maintenance on the associate's personal automobile, or any other cost, is not a deduction from wages," the company wrote.

Some raiteros deploy a network of drivers, many of whom work as temps in the factories themselves. Aguilar said he pays his drivers $100 a week. But several drivers for other raiteros said they don't get paid. Their compensation is not having to pay for the ride to work. The workers they drive still pay the raitero.

One raitero said the temp agency itself pockets the workers' transportation fees. Gabriel Espinoza said the only money he makes is the $8.25 an hour he gets as a temp for Triune Logistics at Fresh Express. He drives a van made for 15 people but says Triune has asked him to carry as many as 18 people. "It's not my van. It's the office's," he said, referring to Triune. "The temp workers pay the office through the check-cashing place."

Triune CEO Alfred Garza denied that the company has vans or charges workers. "I feel like we're doing the right thing and bending over backward for our employees," he said. "And we get thrown in with the whole industry as doing things the wrong way."

'Rigo's Checks'

Until recently, Aguilar would pick up the workers' paychecks at Select Remedy and bring them to the 26th and Central Park Currency Exchange, a Western Union agent in Little Village, on Friday afternoons. The check-cashing store sometimes dedicated a window for "Rigo's checks."

On each check, Aguilar would write how many days the worker owed him for rides so the cashiers knew how much money to take out when changing the check.

"It's a convenience they" — the raiteros — "are offering to the people, and they asked if we would help them out," manager Rudy Polheber said. "People come in, we deduct the driver's fee, makes it easier for the driver."

For cashing their checks there, the workers get charged a reduced rate, $1 plus 1 percent of the check, he said.

Castro and others said they felt forced to cash their checks at the currency exchange. When they asked the store if they could pay for rides separately and get their checks without cashing them, the cashiers refused, they said.

"How is it they want to charge us more money?" asked Sandy Lopez, who worked at Ty for Select Remedy last fall. "I have my account at the bank. They don't charge me anything."

She said when she complained to Aguilar, "He said, 'This is the last time I'm going to leave you the check there, but I'm not sure I'm going to have a job for you.'"

Polheber explained that they're not in the business of handing out paychecks. "We don't want to provide that service. We get no benefit other than tying up the lines for the people who do want to cash their checks here."

Aguilar said that when workers don't want to cash their checks at the currency exchange, he picks them up the following Monday, and workers can come to his house with the transportation fee to get their check. He said he has never withheld a job over check cashing.

Around the time ProPublica began asking workers about Select Remedy, the temp agency stopped giving the checks to Aguilar. Instead, a Select Remedy representative began passing out checks as the workers were leaving Ty. More recently, the agency has been depositing the workers' wages on debit cards.

In addition, Aguilar said Select Remedy no longer calls him and tells him how many people they need for Ty. "The work that I used to do looking for people, they're doing that now," he said. "They call people," who then call Aguilar for a ride to work, still paying him $8 a day.

Despite Select Remedy's changes, nearly all the other raiteros still pick up checks from the temp agencies and bring them to check-cashing stores.

The system often results in lost checks and workers not getting paid. But when problems occur, workers who complain to the temp agency say they are often told to work it out with the raitero.

Juan Rodriguez Trujillo was waiting outside H Services Exchange on 26th Street one Friday night earlier this year, complaining that he hadn't been paid for a week he worked at a chocolate factory more than a month ago. He said he was waiting for his raitero, Cirilo, to bring the check. Asked why he didn't go to the temp agency, Rodriguez said he did, but the agency, MVP, told him to wait at the check-cashing store for Cirilo.

"They think it's easier but it creates more problems," Castro said. "You go to the raitero and they tell you to call the agency. You go to the agency and they say we already gave your check to the raitero. They treat us like a ball that they pass back and forth."

MVP said it wasn't aware of such a practice and has specific procedures for employees to pick up their checks at the agency with an employee ID.

'Get There at 4 a.m., Get Work'

Finally, there is the unpaid wait time. To work at Ty, Castro must report in the alley no later than 4:30 a.m. In fact, many workers arrive earlier. "If you get there at 4 a.m., you get work," said a tamale vendor whose food cart steamed against the cold one January morning. "If you come at 4:20, there's no work for you."

At Ty's warehouse, every identifying aspect, from the official labor notices to the punch clock, said Select Remedy — not Ty. There was not even a name on the warehouse.

When workers arrived at 5:35, a Select Remedy employee made sure they signed in. But they had to wait another 20 minutes in the cafeteria before they could start getting paid.

In the Ty Inc. warehouse, next to the punch clock is a sign that reads in Spanish, "Please do not punch in until 5:55 a.m. This measure will be strictly enforced, and measures will be taken with employees that don't follow the rule." (Michael Grabell/ProPublica) | More photos »

Next to the punch clock was a sign that read in Spanish, "Please do not punch in until 5:55 a.m. This measure will be strictly enforced, and measures will be taken with employees that don't follow the rule."

Castro's pay after the hour and a half of waiting was factored in: $5.98 an hour.

Select Remedy said it can't control whether workers arrive early.

Leone Bicchieri, executive director of the Chicago Workers' Collaborative, has been struggling with how to fix what he sees as an effort by big businesses like Select and Ty to pass costs on to the workers.

A solution, Bicchieri suggested, would be for the temp agencies to make the raiteros official agents and offer transportation for free or at a minimal cost.

"We don't have any problem with this whole system becoming much more public and transparent," Bicchieri said. "We have always had a problem with them being forced to get on the van or workers getting a preference if they take the van."

Sitting in his home wearing a Select Remedy T-shirt, Aguilar said being a raitero provides a better life than when he worked as a temp in factories, but after paying for gas and maintenance, it's not much more money. Indeed, he rents an apartment not much bigger than what the workers have, with peeling paint and mold in the bathroom. A few Chinese prints of butterflies and orchids hang above his couch.

His son, Victor, sitting next to him on the couch, grew angry as he reflected on how the temp agency deals with his father.

"They don't want to pay him," Victor said. "They have all the people come here. They don't care. Screw you. You take the people. You give them the ride and you charge the fee. We don't want to have anything to do with you."

Marketplace reporter Jeff Tyler contributed to this report.

 

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Listen to ProPublica's Michael Grabell and Marketplace's Jeff Tyler discuss their reporting on raiteros:

Today we published an investigation on temp agencies in Chicago and the underground labor brokers (known as “raiteros”) who recruit and transport their workers. Reporter Michael Grabell spoke with temp workers who were making less than minimum wage after having to wait for hours off the clock and pay fees for rides to work or getting their paycheck.

Have you worked with a temp agency as a worker, recruiter, or client company? We’re trying to gain a broad perspective. Do you have any tips about issues or situations we should investigate? We want to hear from you. 

Tell us your story below (your information will be kept confidential) or contact reporter Michael Grabell directly at Michael.Grabell@propublica.org. 

* * * 

¿Ha trabajado con una agencia temp? Ayúdenos a investigar.

Hoy hemos publicado una investigación sobre las agencias de trabajo temporal en Chicago y el submundo de intermediarios de empleo (conocidos como “raiteros”) que reclutan y transportan a sus trabajadores. El reportero Michael Grabell habló con trabajadores temporales que ganaban menos del sueldo mínimo después de tener que esperar horas sin cobrar y también pagar tarifas por el transporte al trabajo o para recibir su cheque de paga.

¿Ha trabajado usted con una agencia temp (de trabajo temporal) como trabajador, reclutador o empresa cliente? Estamos intentando conseguir una perspectiva amplia. ¿Tiene usted alguna pista sobre asuntos o situaciones que tendríamos que investigar? Queremos que se ponga en contacto.

Cuéntenos su historia en este espacio (su información será mantenida en la confidencialidad) o contacte directamente con el reportero Michael Grabell a Michael.Grabell@propublica.org.