Springfield Prepares Lawsuits Against Comcast, Merrill Lynch
Posted on Friday, December 21 2007 by Heather Brandon
Among many items addressed at yesterday’s marathon Springfield Finance Control Board meeting, the city has initiated a process for two significant lawsuits.
One suit represents a major grievance against the city’s sole cable provider, Comcast, for passing on disallowed charges to city customers. The other suit, which has not yet been filed, is against Merrill Lynch (details forthcoming) for mishandling the city’s free cash reserves, investing in illegal securities collateralized by sub-prime mortgages.
When the city entered into its last ten-year contract with Comcast, Mayor Charles Ryan said during the meeting yesterday, certain costs were not supposed to pass through to city customers. In the intervening years, Ryan indicated, Comcast instead charged more than is allowed.
Efforts to work with the cable company, Ryan said, did not yield cooperation or adherence to a prior agreement.
A roughly $11 million lawsuit—which has not yet been filed—executive director Stephen Lisauskas (pictured) told the board, could yield more than $30 million in triple damages. More information will be shared as it becomes available, including any litigation documents ready to be made public.
The suit against Merrill Lynch relates to a loss of roughly ten percent from the value of the city’s cash reserves, an amount equivalent to about $12 million, board chairman Christopher Gabrieli (pictured) said during yesterday’s meeting. As of November 30, Lisauskas said today, “The investment value had dropped $12.3 million from the original $13.9 million.”
Mayor Ryan said that company representatives essentially lied about the nature of the investment of public monies in illegal securities backed by sub-prime mortgages.
Ordinarily, Ryan emphasized, public funds are handled in a conservative manner and there are laws regulating how they can be invested. Efforts to confront Merrill Lynch about what appeared to be illegal investment resulted in what amounted to denials that there was any wrongdoing, although Ryan indicated that there is evidence that the company knew full well about the limits of the law in how to handle the investments.
Ryan blamed “greed” as the foundation of the problem, saying that the people in charge of illegal investments and sub-prime mortgage scandals get annual bonuses that are “greater than the salaries of all the people in this room combined,” and that they only want more and more money.
Similar problems are happening elsewhere, board members told the audience. Nearly $150 million in a state treasurer’s fund was mishandled in the same manner.
Ryan indicated that the public will be hearing a lot more about this type of fiscal crisis in the handling of public monies, devolving from the national predatory lending and sub-prime mortgage fiasco, and related domino-effect concerns.
Heather Brandon http://urbancompass.net
December 23rd, 2007 at 3:30 pmThe Republican published an article yesterday about the case against Merrill Lynch that provides a few more details. It notes that the Boston-based office of Goulston & Storrs has been hired by the control board to assist in pursuing the case, and that the state attorney general’s office is apprised of the circumstances.
Heather Brandon http://urbancompass.net
January 1st, 2008 at 12:07 pmA discussion thread on Market Ticker Forums includes comments from various users about Springfield’s loss of funds regarding the Merrill Lynch investments.
One user, “Theneedles,” writes:
Heather Brandon http://urbancompass.net
January 3rd, 2008 at 11:56 amThe matter has gained the attention of the Boston Globe, which for some reason doesn’t spell Chris Gabrieli’s name right. Must be the double-L in Merrill triggering an irresistible urgge for doubble conssonants.
From the article, by Steven Syre:
Springfield City Solicitor Ed Pikula recently told me that investigations are still underway as to the actual damages. “The Merrill investments were acquired at a cost of $13,925,000,” he wrote in an email, “and Merrill has told the City that the current estimated market value is $1,257,500.”
NoPolitician
January 3rd, 2008 at 12:14 pmWhat kind of bozo writes this:
How is that any different than something like:
It’s just blatant stereotyping by this Globe reporter, with an admission that he doesn’t know if it’s true or not — but he’s going to paint the picture anyway. If the comment was directed at a person, it could be libel. He is basically smearing the entire city with that crack, and cracks like this are how people form their image of Springfield.
Heather Brandon http://urbancompass.net
January 3rd, 2008 at 12:57 pmI figure people in every city are struggling with the subprime mortgage disaster. It’s a crisis, after all. Populations are bigger in cities, and there are more people with acute financial struggles in them. So, technically speaking, no, it isn’t hard to imagine Springfield struggling, as a city, I suppose, in the wake of the disaster.
What I take some issue with is the notion that this somehow makes Springfield strikingly, poetically unique, or casts a particular light of elegiac, bitter irony on the loss in the value of its investments. I catch wind of that poignance in the addition of the comment, “That may or may not be the case, I don’t know,” which is almost wistful.
I don’t see how it helps to make this issue into one of yearning.
To me, it’s not so much a crack, as you put it, as it is a lament, filled with pity even while it delivers news. Springfield will “hope for the best” and “can’t wait forever,” like Penelope on the shores of Ithaca awaiting the return of Odysseus.
This tells me that among some who regard Springfield with sympathy, it is a place from which bad news perpetually emanates, and the natural response is to shake one’s head slowly, let the tears brim a little, and compose journalistic dirges.
NoPolitician
January 3rd, 2008 at 2:10 pmI’ve noticed, more and more, that people speak of Springfield in terms of narratives, or put another way, playing to stereotypes. By doing this, people can invent stories that people accept as “probably true”, without anyone even questioning them.
It’s kind of like Ronald Reagan’s “welfare queen” story:
Although there have been scattered cases of welfare fraud, that woman never existed, nor were those conditions rampant – it was a story made up with the intent of painting a very negative picture of public assistance. Reagan was successful, and that’s how people view public assistance to this day — by the actions of a small group of abusers, not by the actions of the vast majority.
On that Market Ticker forum, did you catch the “money exchanged in bags” crack? To an outsider who has only heard of the corruption of the past administration, that comment probably was widely accepted. Anyone currently living in this city knows that this stereotype is false for the outgoing administration.
The sick thing is, there *are* people who invent negative stories about Springfield and then spread them around. I’d love to understand the psychology behind those people — understanding it probably help us address it better. I’ve heard people I work with making stuff up. I heard someone say that there’s a murder in Springfield every week – believable to an outsider, absurd to a resident.
Others make up stories about certain racial/ethnic groups — how many times have you heard the “there’s a sign in Puerto Rico that says “come to Springfield — my cousin saw it, I swear!” story? I’ve probably heard that one 50 times.
Either way, I think it’s irresponsible for a journalist to basically make up a narrative, even if he was doing it to invoke pity, not scorn.
Central MA
January 3rd, 2008 at 3:32 pmOn the other hand… that is a wonderful piece today about Leslie Clement and her Craftsman style homes. What a great story about Springfield’s housing market.
NoPolitician
January 3rd, 2008 at 4:03 pmYes, Bravo to Leslie and to the press she received. We could use a dozen builders like her, instead of builders looking to quickly put up the easiest houses for the largest profit.
Heather Brandon http://urbancompass.net
January 4th, 2008 at 11:01 amThere’s more news on the Merrill Lynch investment losses today in the Republican. The article references a statement from the control board capturing comments from Massachusetts Attorney General Martha Coakley (I’m working on obtaining a copy). Basically the article seems to indicate that the AG’s office has confirmed looking into this matter and the possibility of recovering the city’s funds.
The Boston Globe provides a bit more information in a separate article today, however, by Megan Woolhouse. The piece reports on Secretary of State William Galvin’s office opening a probe of Merrill Lynch’s dealings with Springfield, having subpoenaed documents such as emails and any related pieces of information, due by 3:00 pm on Thursday, January 10. From the article:
Heather Brandon http://urbancompass.net
January 4th, 2008 at 5:11 pmThe story on Springfield and Merrill Lynch has now been picked up at Bloomberg.com, where reporter Sree Vidya Bhaktavatsalam notes, “U.S. state and local governments including Florida, Montana and Orange County, California, are vulnerable to losses as complex investments once sold as less risky high-yielding instruments are now backed by collateral that no one wants.”
Heather Brandon http://urbancompass.net
January 7th, 2008 at 6:13 pmThe Globe‘s Stephen Syre, who wrote the dirge, was interviewed by Tina Antolini of WFCR for a piece late last week on the subject of Springfield’s financial loss. A piece by Antolini earlier in the week included quotes from Mayor Domenic Sarno on the matter, the well-publicized “tooth and nail” remark about getting the money back.
Urban Compass | Blog Archive | Mayor Sarno Cites Merrill Lynch Investment Review http://urbancompass.net/?p=930
January 10th, 2008 at 6:02 pm[...] Domenic Sarno (pictured) issued a statement late today regarding the ongoing investigation into a loss of millions in public funds the city had invested through Merrill Lynch. It reads: I am very disturbed by the [...]
Urban Compass | Blog Archive | Debriefing on Springfield’s Pending Comcast Litigation http://urbancompass.net/?p=923
January 15th, 2008 at 9:50 am[...] its December 20 meeting, the Springfield Finance Control Board heard a debriefing about pending litigation against Comcast for passing through costs to city customers that the cable company had initially [...]