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Mendocino County Today: February 22, 2013

JEFF COSTELLO WRITES: Got my last issue here in Portland on Wednesday, as the next issue was being distributed in Mendo. Sometimes it gets here early as Saturday, but not often. Monday is the usual norm. Let me join the others in pleading for perpetuation of the print issue. I would sorely miss the margin quotes, some of which from over the years I have used again and again. And what would off-the-grid hermits like Bill Brundage do? I've concluded that the US postal service is constipated. Sometimes things move, sometimes they don't.

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MANBEATER OF THE WEEK. (In the pink corner, weighing in at 100 pounds soaking wet, a ball of fire from Ukiah, Amberrrrrrrrrrr Cate!)

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ChrisMulcahyCHRIS MULCAHY, 50, lately the chief financial officer of Brutocao Cellars based in Hopland with a branch in Philo in the Anderson Valley, was arrested Saturday on allegations of forging checks and embezzling roughly a quarter million dollars from Brutocao. Mulcahy is being held on $500,000 bail in the Mendocino County Jail. Mulcahy had worked for the winery for six years. Prior to Brutocao, he was with the Coca-Cola corporation for 14 years. Mulcahy presently co-owns Sapphire Hill Winery in Healdsburg with his wife, and also owns Family Wine Services, a consulting business.

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AN EARLY PEEK at Sen. Noreen Evans’ 2013-14 Legislative Agenda

By Hank Sims

Tomorrow is the deadline for members of the California legislature to introduce legislation that can be considered in this session. So let’s take an early peek at what our people are up to, shall we?

Sen. Noreen Evans has a pretty full plate going into tomorrow’s deadline — six bills introduced as of this moment, some of them real barnburners.

Senate Bill 121, which Evans introduced last month, is a fairly bold attack on corporate campaign financing and the Citizens United decision. It would require corporations to tally up and publish all their campaign donations yearly, and also to notify shareholders of any pending donations 24 hours before they are made. Evans took a run at a similar bill — SB 982 — last year; it died in committee after she canceled a hearing for reasons obscure.

Then you’ve got Senate Bill 241, a strike at the California oil industry. The bill would levy a 9.9 percent “severance fee” on every barrel of oil extracted from state lands or waters, with proceeds going to higher education and the California parks system. Last week the Press Democrat had some coverage of the bill, including a rundown of previous failed attempts and a brush-off from oil execs.

Senate Bill 59 attempts to close a truly bizarre loophole in the law that lets men sexually assault or rape unmarried women do so with impunity, so long as they accomplish their vile acts through impersonation of that woman’s significant other. The legislation follows from a repugnant case out of Los Angeles, in which the state’s 2nd District Court of Appeals was forced to overturn a man’s rape conviction because of the loophole. An LA Times report on the case notes that the court begged the legislature to fix the law, even as it set the man free.

Other bills include an extension of the commercial salmon stamp and a new system for tribal courts to recover civil judgments against non-tribal citizens. Finally, and perhaps closest to home, the senator proposes limiting state bar membership fees to their current levels; out-of-pocket expenditures are presumably ever a concern for the put-upon Evans, who has long protested the difficulty, for a working woman, of getting by on a mere $100,000 a year. (Courtesy, lostcoastoutpost.com)

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EXCELLENT REPORTING by Frank Hartzell in this week's Advocate-Beacon on a no public allowed public meeting convened Tuesday at the Noyo Harbor Coast Guard station that specifically excluded media. The meeting, as Hartzell tells us, was to discuss “how to deal with the mountainous issue of Noyo Harbor dredge spoils. Who is not invited? The press and general public.” According to Hartzell, “The agenda says Noyo Harbor District commissioners Tommy Ancona and Joe Caito would attend along with new district Secretary-Treasurer Kevin Michel and Manager Jere Kleinbach.” The two board members are the “Noyo Harbor District's Commission Infrastructure Committee…” “The meeting today [Feb. 19] is a Noyo Harbor District staff presentation of the history and current status of the dredge material holding area to bring Jared Huffman, our new US Congress Representative, up to speed on this issue. This is not a new story, just bringing new folks up to speed on past events.” Michel subsequently allowed Hartzell in, but not the public.

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MAN IN GARBERVILLE GUN CACHE CASE pleads not guilty — Ryan Floyd, 30, the Humboldt County gun guy, has pled not guilty to 11 felony drug and weapons charges. The Humboldt County Sheriff's Office said last week that it found 110 guns stashed inside a cave on Floyd's 55-acre property in Garberville. HumCo Sheriff Mike Downey says at least 20 of the weapons were stolen and likely bound for the black market. Deputies also found 117 pounds of dried marijuana, $12,000 in cash, thousands of rounds of ammunition and jewelry and vehicles that had been reported stolen. Floyd is due back in court on April 3.

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BLAZING SADDLES TOUGH,

By Matt Taibbi

I don’t want to sound like a broken record, but… the latest ploy by the government to insist it is “getting tough” on Wall Street is beyond laughable.

The tough new-and-improved regime, as described by the curiously credulous Dealbook, is a policy of extracting criminal guilty pleas from foreign subsidiaries, as opposed to the “usual fines and reforms.” This was the path chosen in the recent UBS deal (in which a Japanese subsidiary was charged while the parent company was given a complete walk, a non-prosecution settlement) and in the more recent deal with the Royal Bank of Scotland. Both of those banks were implicated in the LIBOR rate-fixing case, which is only maybe the most egregious and far-reaching financial scandal of our generation.

Writes Dealbook:

Criticized for letting Wall Street off the hook after the financial crisis, the Justice Department is building a new model for prosecuting big banks.

In a recent round of actions that shook the financial industry, the government pushed for guilty pleas, rather than just the usual fines and reforms. Prosecutors now aim to apply the approach broadly to financial fraud cases, according to officials involved in the investigations.

Lawyers for several big banks, who spoke on the condition of anonymity, said they were already adjusting their defenses and urging banks to fire employees suspected of wrongdoing in the hope of appeasing authorities.

The story was accompanied by a preposterous photo of Lanny Breuer angrily wagging a finger, suggesting a new, “get-tough” criminal division of the Department of Justice.

The article worried desperately over the issue of whether or not the Japanese subsidiaries would keep their licenses after these guilty pleas. As is often the case — I've personally heard this excuse about a dozen times coming from DC types — regulators are terrified of repeating an Arthur Andersen situation, i.e., punishing a company and seeing massive job losses as a result:

Critics point to the UBS case. Before UBS signed the deal, Japanese authorities assured the bank that a guilty plea would not cost the subsidiary its license, a person involved in the case said. While the case has weighed on the stock price, the subsidiary is operating normally and clients have stayed put, according to people with direct knowledge of the case.

Prosecutors defend their effort, saying it was born from painful experiences over the last decade.

After Arthur Andersen was convicted in 2002, the accounting firm went out of business, taking 28,000 jobs with it. The Supreme Court later overturned the case, prompting the government to alter its approach.

The Arthur Andersen case has become like Wall Street's magic mantra — you hear the name whispered anytime any company gets in trouble. This is a tactic straight out of Blazing Saddles, with banks essentially taking themselves hostage, putting guns to their own heads as they creep sideways out the door: “Back off! Prosecute us and all these jobs will die!”

And prosecutors, just like the idiot town leaders of Mel Brooks's Rockridge, are screaming, “They're just crazy enough to do it!”

This isn't brain surgery. You know what an effective deterrent to crime is? Jail! And do you know what kind of criminal penalty actually makes people think twice about committing crimes the next time? The kind that actually comes out of some individual's pocket, not fines that come out of the corporate kitty.

I get that regulators are worried about job losses. They should be. But the long-term job losses are going to be much greater when investors around the world lose confidence in the US financial system because they recognize that individuals do not face punishment for criminal activity. The individual incentive not to commit crime on Wall Street now is almost zero. Even the worst of the worst — like, say, a certain unindicted co-conspirator in an evolving insider trading case — is only threatened with individual prosecution after years of monstrous and obvious market manipulation, resulting in massive profits that he'll almost certainly get to keep most of, by the way, if previous settlements are any guide.

It continually amazes, the way all of these law-and-order types are so willing to pontificate about the importance of taking individual responsibility for one's actions, until the guy in their crosshairs is someone he/she went to college with, or a former client of his or her law firm. Then, suddenly, their idea of drastic justice becomes maybe yanking the license of a foreign subsidiary.

Let's make a new rule: The Department of Justice doesn't get to call itself “tough” until a) it puts someone from one of these companies in jail for at least 24 hours, or b) it extracts fines from either companies or individuals that represent at least slightly more than laughable fractions of their ill-gotten gains. That's setting the bar pretty low, but you have to start somewhere, right?

2 Comments

  1. John Sakowicz February 22, 2013

    Great blog post today about the State Parks audit. Frankly, if it weren’t for the AVA’s “Mendocino Today” blog, I don’t know where I would get this news, and news analysis and commentary. Thank you Mark. Thank you Bruce.

  2. burnunit February 23, 2013

    Hey Bruce,
    Today is the 23rd. I already read this!

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