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Friday, July 01, 2005

A Bunch Of Takings

This was predictable, but it doesn't necessarily predict the future. A lot of takings had been stalled waiting for the Kelo decision, and now they are proceeding on. QandO has a partial list and some interesting comments. A more complete list is up at Institute for Justice (although let me point out that no such list will ever be compiled of property-owners who sell their property under the threat of condemnation after being told by lawyers that they will almost certainly lose if they try to fight legally). I would say that these types of cases would form a much larger group than cases in which eminent domain is actually used.

One of the more disturbing cases to me is the Newark NJ one:
That's what George Mytrowitz believes he's facing in Newark, where officials want to build 2,000 condominium units and retail space on 14 acres. City officials say the Mulberry Street area is blighted and should be demolished.

"The developers said 'We want it. Let's blight it and we'll figure out what to do with it after,'" said Mytrowitz, whose family's auto shop has been in Newark since 1913.

After Newark's Municipal Council initially voted against the plan in 2003, developers donated thousands of dollars to city campaigns, according to New Jersey Election Law Enforcement Commission records. Eight months later, the council voted to reverse its decision.
The article closes:
"This is a last resort," said Jeffrey Finkle, the group's president. "I can't imagine that this Supreme Court ruling will all of a sudden cause every city council member to risk alienating their constituents by rampantly doing eminent domain."
Oh no? What if the council members make a truly impressive buck off it and can afford to retire? What if the council members receive the bulk of their campaign funding through money directed by developers? This can happen in a number of ways. Some strategies used are things like the councilman (or woman, this is equal-opportunity graft) buying a run-down commercial property (getting a loan through a bank which does a lot of business with a developer) and then selling it a year later for a large profit to a developer. This sort of thing happens all the time!

And as for New Jersey, remember Machiavelli McGreevey and the arrest of dozens of local officials? (See this Asbury Park story and click on the associated links. ) Everybody's on the take in New Jersey. Tell you what - google NorCrown Bank:
The joint Order requires that The NorCrown Trust and Charles Kushner pay civil money penalties totaling at least $12.5 million, to divest The NorCrown Trust's shares of NorCrown Bank, and to transfer the shares to a voting trust administered by an independent trustee until the divestiture is completed. The joint Order also prohibits Mr. Kushner from participating in the conduct of the affairs of any financial institution or holding company.

The Federal Reserve Board also issued an order upon consent under the Bank Holding Company Act requiring other individuals and trusts with relationships to The NorCrown Trust to cooperate in implementing the divestiture plan.

The enforcement actions resolve allegations that The NorCrown Trust and Charles Kushner violated the Change in Bank Control Act, the Bank Holding Company, or both, in a series of transactions from 1995 through 1997 that led to the formation of the NorCrown Trust, which never received the Federal Reserve's approval to become a bank holding company. The joint Order also resolves allegations of violations of Regulation O and Sections 23A and 23B relating to transactions with NorCrown Bank.
So when was this illegal conduct ended? Only in 2005, after Charles Kushner pled guilty to federal charges:
Less than 24 hours after New Jersey developer Charles Kushner pleaded guilty to retaliating against a federal witness and filing both false tax returns and false campaign-finance reports, the would-be political kingmaker was in his office on Columbia Turnpike in Florham Park. Shamed, humiliated, and facing at least a year and a half in jail, he was discussing his predicament with defense attorney Ben Brafman, marveling at how fast his life had unraveled. Wasn’t this the same man who had built Kushner Companies into a billion-dollar real-estate empire that controlled office buildings, condominiums, and apartments in half a dozen states? Hadn’t he skillfully crafted a role for himself as a major power broker with unfettered access by contributing millions of dollars to politicians?

It was no accident that when Bill Clinton was president, he made several appearances at Kushner functions in Florham Park. So had former Israeli prime minister Benjamin Netanyahu. And so, especially, had Governor James McGreevey, who, more than any of the others, was a political creature built of his will and cash. Kushner, 50, was also a towering figure in the Jewish community, building schools, helping synagogues, and contributing freely to a broad variety of causes both here and in Israel.
And Kushner and the trust controlled NorCrown Bank. And they funded McGreevey:
The only thing Kushner craved more than wealth was access to power. For his part, McGreevey, like all politicians, needed money. He also needed a way to keep his political team together until the next campaign began in 2001. So he started an organization called Committee for Working Families, which employed his key people and was largely funded by Kushner.
Believe me, there is so much money in real estate that the money reaches right to Washington. The little guy has no chance fighting the political power that this sort of organization can bring to bear, unless there are ironclad protections in the law against it. The same sort of thing happens here in Georgia. There are many local banks, developers, mayors and sheriffs who have a good working relationship, believe me.


Comments:
This is an excellent post. When all is said and done, I'm reminded of the constitutional amendment that precludes the government from billeting soldiers in private homes- only now, it is the government itself that has taken up residence- as your controlling partner in your real estate investments.
 
GP.
 
on a side note, O'Connor just retired... not good.
 
No Dingo, it is not.

I'm glad for her - she deserves a happy retirement. But it is extremely unfortunate for the nation.
 
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