The different standards for public graft and corruption in Dayton, Ohio

Full Disclosure: my business, The Next Wave, does limited amounts of graphic design work and printing for the Sidebar and Brian Higgins. His websites for both the Columbus and Dayton restaurants are on our server.

Front page, center, top of fold. Multiple photos. Even when Mayor Clay Dixon took me outside to be his punching bag, it was below the fold.

The Dayton Daily News new modus operandi is to grab onto a small story and expand it into a grand inquisition. You can almost be guaranteed that if they do one investigative story, more will follow, each bigger and more inflammatory. Ask Sherry Oakes from Design Homes, Raleigh Tramell, or the operators of Richard Allen Academies, all whom have been dragged through the trial of public opinion in the Dayton Daily of late.

Now, we have the post mortem being written for a small, seemingly successful businessman, who happens to be in the body hauling business.

Montgomery County may have violated its own contracting requirements last month when it renewed a contract with a body-hauling business that was delinquent on hundreds of thousands of dollars in federal and state taxes, a Dayton Daily News investigation found. The debt — more than $215,523 in past due federal and state income taxes, and workers’ compensation premiums — would appear to put the Dayton-based company GSSP Enterprise Inc. in violation of its contract with the county, which requires payment of “any and all” taxes. Owner Brian E. Higgins also never disclosed that he had a business relationship with the director of the coroner’s office – something that the owner is required to disclose in a contract.

via County renews contract with delinquent business.

As a small business man, I can tell you from first hand experience that it’s very easy to get fined and have tax liens placed on your business. The myriad of websites, forms and differing reporting deadlines- as well as the number of different payments required by the state, as well as the complexity of tax laws make mistakes almost inevitable. Couple that with the misleading business practices of Intuit, makers of Quickbooks software, who sell a product for $150 every year that requires a $200 a year subscription to be able to use the payroll/taxation functions- including the ability to print out the basic filing forms and you have a recipe for the government to make more in some cases from fines than from collections. I remember one year not having sold any printing of business cards or letterhead for the six-month period that I report sales taxes in. The state decided this is impossible, “estimated” my sales taxes due, slapped a fine on my company and then took months to fix its assumptions.

The numbers that are reported on the front page of the Dayton Daily news (lowercase N intentional) add up to under a million dollars, and include the mixing of personal and corporate debt to inflate the numbers. This would never be done in a credible news story since the two aren’t in any way related. Corporate CEO’s get divorced all the time, with big settlements, and yet it would never be included in a financial analysis of their company.

But, there is one quote the DDn did dig up:

Susan Willeke, spokeswoman for the Ohio Ethics Commission, would not directly comment on the Betz and Higgins business connection, but said, “If someone uses their public position to secure a public contract for themselves, their family or a business associate, it is a fourth-degree felony.”

Really? Esrati.com has exposed multiple instances of county employees hiring friends and family without open competition. The hiring of a convicted rapist in the Board of Elections without even a job application, the Montgomery County Clerk of Courts made sure both his wife and father-in-law had jobs for the county, and if we go back to pre-blog days, I stood up at the Dayton City Commission meeting after losing against Bootsie Neal and Dean Lovelace for a commission seat, and threatened to file for an injunction to stop the “emergency legislation” the commission was enacting to purchase the former Sears site downtown for the Riverscape fountains project.

A brief recap of the Sears project: a group of local businessmen formed an LLC to purchase the Sears building for $200,000 with a five-year option on the real estate that it was on for $1.5 million. The businessmen included: Alan Rinzler who owns the Talbot Tower and other real-estate holdings; Sandy Mendelson, owner of Mendelsons; Jason Liff, a local real estate broker and former owner of MotoScooto, and Bruce and DeNeal Feldman, owners of Economy Linen.

Full disclosure once again- after I threatened to file the suit to stop this “emergency legislation” I naively approached Mr. Mendelson to do his advertising, something he mentioned when giving me a $500 cash donation for my campaign (a donation I had to return and get as a check to satisfy the BOE- who doesn’t believe cash is legal tender for donations larger than $100). He told me to “go-to-hell” when I called- which I didn’t understand, since I didn’t realize at the time he was part of the LLC. Over lunch at Franco’s he explained his part of the deal- and told me that “nobody cares” about this, and I had a simple choice- file the suit (which at best would stall the deal and force it into a regular ordinance- taking two readings and 30 days to go into effect) and “find my body parts in different area codes” (exact words- you don’t forget threats like that from someone you barely know at the time, who wears a lot of gold jewelry) or, drop it, and have a nice little advertising account that puts money in your pocket.

For a year and a half, my firm did award winning advertising for Mendelson’s Liquidation Outlet. We re-did his logo, introduced the new tagline “The first place to look for every last thing” and developed the “explorer” character in a series of TV ads. His business grew substantially. When we couldn’t agree on terms for me to close my business and come run his retail operation, including the eBay business that I had pushed him to, we parted ways. I did do a small campaign a few years ago because he had severely damaged his brand publicly by suggesting he was closing and moving to another location and his sales were down. He stiffed me for a few thousand dollars- to date, the biggest uncollected debt my business has had in 22 years.

Back to the Sears deal- if the names DeNeal and Bruce Feldman don’t ring a bell, maybe Bruce’s wife’s name does: Debbie Feldman, our county administrator, who is one of Montgomery County’s highest paid government employees (as far as I know only Steven Johnson at Sinclair is paid more and it’s a horse race between Debbie and Dayton Schools Superintendent Lori Ward for second depending on how you count their perks).

The price that the LLC got for their $200K investment and option on the Sears deal? $8.7 million.

Front page story anyone?

There are lots of people getting rich off government contracts in this community. Our Congressman’s wife got a no-bid contract from the Dayton Development Coalition to come up with “Get Midwest” – a tagline that may go down in the annals of advertising history as one of the lamest- if it had been consequential. She also had a GSA schedule to do work for the Federal government while her husband was a sitting congressman on the defense appropriations committee- no DDn story outed her for doing work for the Army Corps of Engineers after I exposed it and work for the Home Depot PAC- a convenient way to skirt campaign finance laws. I could go on.

I can’t tell you if Brian Higgins got any special tax breaks for job creation from any government or quasi-government organization for “job creation” or “economic development”- but I can tell you that everyone of those government bureaucrats who will be first to load the shells into the guns of his firing squad over these tax issues- ate at his restaurant or maybe enjoyed hors d’ouvres at a fund-raiser he hosted (I had my election night event there- Brian donated food and allowed us to use the private back room to gather and watch results). I can also tell you that the building owner, Mike Ervin (who filed an eviction notice on Friday causing a Saturday DDn article) had put several different operators in the former Pacchia space where Sidebar 410 is today- and none of them could make the menu and atmosphere work the way Higgins has. Higgins employs at least 40 to 50 people and spends his money locally- with companies like mine. Yet, he doesn’t get a 30-year tax abatement like GE. While “high-tech” jobs may pay more, we have an awful lot of people who need service jobs too.

I’d look up the performance of all the “job creation” and “economic development” deals and compare them to Higgins’ operation any day of the week, but of course, there is no required posting and reporting of tax dollar giveaways in return for promised job creation. Hmmm- I wonder why not?

In the grand scheme of things, Brian Higgins and his tax bills or his government contract are being used as smoke and mirrors to cover up for wholesale thievery of public tax dollars. I’ll once again set myself up for “you’ll never do work in this town again” by calling out the “job creating” and “tax roll enhancement” juggernaut, CareSource. A company that despite paying its CEO, Pam Morris, $3 million plus a year, getting all kinds of tax breaks- including its new HQ built with public dollars- is 100% dependent on tax dollars for income, making their CEO right up there with the CEO of Countrywide, FannieMae and FreddyMac- as criminally overpaid quasi-government bureaucrats who have zero risk and 100% upside guaranteed.

Where is the front page story hanging them up?

While I don’t doubt that the body collection contract award probably didn’t follow correct practices, I’m pretty sure that Debbie Feldman or Roy Sigritz (the head of county purchasing) won’t take a hit on this. I’ll also add, that getting paid $128 to go pick up a body anywhere in Montgomery County on 24-hour call isn’t exactly raking in big bucks for what can be some really disgusting work. I asked the owner of a tow truck company if he could make money on that price- without accounting for mileage or disposable supplies on each run (remember some of these corpses can weigh as much as 600 lbs, could be several weeks old, and can be dangerous- open wounds with bodily fluids etc- you’d want to wear a bio-hazard suit) and he said “barely.”

The real bodies that need to be moved in this county are the ones running this three-ring circus with impunity- but, that would require the newspaper to do real investigations and run the risk of alienating the friends and family of the Monarchy of Montgomery County- and they have the advantage of owning everything from elections to judges. Good luck with that.

 

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13 Responses

  1. Hall April 8, 2012 / 2:07 pm
    I’m disappointed to read that you dropped the “Sears” lawsuit so that your business would financially benefit… Why did you threaten to file the lawsuit in the first place for ?

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  2. David Esrati April 8, 2012 / 2:43 pm

    @hall I couldn’t stop the deal, only delay it and hope the public would notice. They hadn’t in the past when I protested secret illegal meetings- what would make this any different.
    I had just lost an election in which the fund raising dollars matched the votes.
    My business suffers every time I run… And, I would have had to foot the legal bill myself, with zero payback.
    Sorry I let you down, but as Mark Twain once said, “principles have no meaning unless one is well fed”
    I decided food in my fridge should come first.

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  3. Civil Servants Are People, Too April 10, 2012 / 12:33 am
    I’d look up the performance of all the “job creation” and “economic development” deals and compare them to Higgins’ operation any day of the week, but of course, there is no required posting and reporting of tax dollar giveaways in return for promised job creation. Hmmm- I wonder why not?

    Here’s one, although not exactly up to date….
     
    http://www.development.ohio.gov/Business/jctc/ 
     
     

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  4. bobby April 10, 2012 / 12:43 pm
       Speaking of smoke and mirrors, the soon to be approved Austin Landing JEDD will repay the cost of “public” infrastructure with a 2.25% income tax on hotel maids, retail clerks, and grocery store workers. White collar office workers, and upper level (higher price) residential are exempt from paying this tax. This “Let’s tax the schmucks” tax is brought to the developer, Montgomery County Transporation District, Miami Township Trustees, and the Montgomery County Commission.
       It is unconscionable.
          
       

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  5. David Esrati April 10, 2012 / 1:07 pm

    @Bobby- and realize- the income tax on Randy Gunlock alone- would probably equal that of all they collect from the little people running the registers at Kohl’s, Kroger etc.

    I’ll have something about this in the next few days- I’ve been very busy putting food in the fridge.

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  6. Bubba Jones April 10, 2012 / 3:09 pm
    That’s very interesting, Bobby, but I’d like to see some source for this.  I’ve never heard of an income tax in Ohio that targets only the wages from certain professions.  If it is true, it really is unconscionable!

    The only way that I can see that “white collar office workers”, et. al. would be exempt from this tax is if they tightly define the “taxable area” for income tax.  In other words, draw boundaries that encompass the restaurants and retail areas and declare them taxable and the businesses/residents/etc. outside those boundaries (including the new office buildings) would be exempt from the tax.  

    Or is all of Miami Township going to be subject to an income tax?   

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  7. bobby April 10, 2012 / 5:07 pm
      Bubba Jones, The Augus t6, 2011 David Esrati blog, ‘Government is meaningless , exceot as a sucker in my ponzi scheme” includes a memorandum of understanding between RG, the TID and Miami Township trustees. It is self-explanatory. There have also been two DDN articles in the last two weeks regarding this.
      Your presumptipn as to how it works is correct and all of Miami Township will not be taxed.
     

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  8. Bubba Jones April 11, 2012 / 8:29 am
    Thanks for the update, Bobby.  I must have missed the articles in the DDN since I don’t get it every day (and even on the days I get it, I don’t read it all the time).

    I did call the township yesterday after I submitted my first post.  I talked to Greg Hanahan who is the Miami Township administrator.  He was very cordial and informative.  We talked for quite a while but I’ll try to give a short synopsis of what he told me.  I do appreciate all of his time!

    The JEDD does allow for the taxing of wages for people in the “hospitality and entertainment industry.”  Apparently that was done at the request of the developer (Gunlock?) who told the township that he could get those types of businesses in the development and they would agree to the tax.  Other types of businesses could locate within the JEDD and agree to the tax if they wanted to.  I was told to think of the JEDD as to the types of use rather than a geographic boundary.  Only new businesses locating within the JEDD will be subject to the tax so no one is being forced to submit to the tax.  I did ask if the profits of the business would also be subject to the income tax and Mr. Hanahan said that is was his understanding that they would be subject to the income tax.  

    Apparently there are several JEDDs already in place in that area.  He mentioned that part of the area around Dayton Wright Brothers airport had a JEDD as did other parts of the “Dayton Mall Corridor.”  I asked about specific businesses within the corridor and was told that the Menards under construction would be taxed and that the WalMart on Kingsridge was taxed.  There were also a couple of other businesses in those JEDDs.

    One thing that he pointed out was that existing businesses were not being forced into the JEDD.  In other words, the businesses that are located within a newly defined JEDD were not necessarily forced into participating in the tax.  Also, it was the businesses themselves (or in the case of Austin Landing, the developer) that asked to be put into the JEDD.  If I remember correctly, there was also talk awhile back on Esrati.com about something similar around Miller Lane.

    Mr. Hanahan explained that the reasoning behind the JEDD concept was that businesses located in townships were requesting/requiring more and more amenities and that the township’s ability to provide those were limited due to the limited ways that townships can raise money.  As per the Ohio Constitution, townships do not have the power to levy an income tax and are pretty much limited to levy specific revenues.  The JEDD allows the township to partner with a government entity that does have the authority to tax in order to raise the needed money.

    I’m still not crazy about this but I will withdraw my “unconscionable” comment above as long as the profits of the business are subject to the income tax as well as the wages.  I feel that if a business owner is locating within an area of a township (a non-taxing entity) that requires that the wages of his employees is taxed then it is only “fair” that his earnings derived in that location are subject to the same tax.  Kind of the old “I won’t ask you to do anything that I wouldn’t do myself.”  I do think that it’s unconscionable for the Austin Landing developer to ask that certain businesses foot the bill for all of the amenities that ALL of his tenants/customers are going to enjoy.  I also think  that employees coming to work at businesses located within these JEDDs should be told up front that their wages are going to be subject to an income tax.  But, quite frankly, I don’t think that a lot of employees are really going to give a crap about the income tax.  As long as it’s deducted from their checks, they never miss it and they don’t think about it.  (If everyone was required to actually write a check for their income taxes – Federal, State and Local – there would be a HUGE tax revolt in this country!!  But, that’s a discussion for another thread and another day.)

     

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  9. David Esrati April 11, 2012 / 9:21 am

    @Bubba-

    thanks for helping out with the reporting. Glad you finally can admit that you were mistaken- or at least under-informed. Had I been able to spare time from rebuiliding my business after the congressional run- you would have been informed of this debacle sooner.

    This dual taxation system should be illegal- it’s saying that those who donate to political campaigns (Gunlock and the lawyers at Thompson Hine) don’t have to pay the taxes- but, the subsistence wage workers do.

    If I could raise the money- I’d file the lawsuit tomorrow. This is criminal.

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  10. Bubba Jones April 11, 2012 / 10:22 am
    >>>Glad you finally can admit that you were mistaken- or at least under-informed.<<<

    WTF, David???  What was I mistaken about?  In my first post, I didn’t state anything as fact.  And I asked for clarification and more information.  

    When will you ever admit to being wrong?  Every now and then you “admit” to some minor misstatement of fact but when you make blanket, asinine statements that are blatantly wrong you are conspicuously silent when called out on them.  The latest case in point being your statements about gift taxes and homeowners insurance coverage that I and others pointed out.  You should be more careful calling the pot black, Mr. Kettle.  

    >>> Had I been able to spare time from rebuiliding my business after the congressional run- you would have been informed of this debacle sooner.<<< 

    Nobody is holding a gun to your head to make you run for Congress. 

    >>>@Bobby- and realize- the income tax on Randy Gunlock alone- would probably equal that of all they collect from the little people running the registers at Kohl’s, Kroger etc.<<<

    Another statement that has no basis in fact but is merely a wealth envy statement designed to generate emotion.  Do  you have any idea what Gunlock makes?  Neither do I.  We can assume that Gunlock makes a pretty good living (maybe a damn good living!!) but you cannot prove your statement.  Maybe if you literally limit the income comparison to Gunlock vs. the people that only run the registers, you might be correct.  But it’s doubtful that if you compared the combined wages of all of the “little people” – present and future – at the development  that Gunlock’s income would exceed theirs.

     >>>the subsistence wage workers do<<<

    While the wages at many (or most) retail establishments is not that great, the wages at Kroger are hardly “subsistence wages.”  I know several people that work at various Kroger stores around the area and, while their wages are not at “lawyer levels”, they are hardly living at a subsistence level.  Again, another statement designed to evoke emotion.

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  11. bobby April 11, 2012 / 10:48 am
      “Mr. Hanahan explained that the reasoning behind the Jedd concept was that businesses located in the township were requesting/requiring more and more amenities…” 

      Right.  Public street and utility improvemnts (roadway infrastucture), a parking stucture, and funds to acquire property from the developer for right of way are not what I would call “amenities”.  These would be normal obligations of the developer.
     

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  12. ergohuman chairs September 29, 2012 / 6:13 pm
    Superb site you have here but I was wanting to know if you knew of any message boards that cover the same topics talked about here? I’d really love to be a part of community where I can get feed-back from other knowledgeable individuals that share the same interest. If you have any suggestions, please let me know. Appreciate it!

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