The Mess the WSJ Made: Famed trader Joe Lewis not Investing in Bitcoins

Who is Harriet Agnew's Editor?

The Wall Street Journal had Bitcoin investors all excited Monday morning after it reported legendary currency trader turned investor Joe Lewis was spending a whopping $200 million on a Bitcoin miner company. Except it took only a few hours for CNBC reporter Scott Wapner to call his friends at Joe’s investing firm, Tavistock Group, and confirm the story was completely unfounded. The WSJ had major egg on its face and the story reported by Harriet Agnew and Robin Sidel was pulled down from their online publication. So how did a story like this get past a seasoned reporter like Sidel and the layer of editors that are ultimately responsible for hitting the print button?

The news of a Bitcoin miner, Avalon, getting any VC or Angel money started Sunday at a Bitcoin blog called Bitcoinexaminer.org . I spoke with Danny Ashton who runs the site and he said they had the tip from an unnamed source that had pieced together a series of details that looked like the investment could be coming from something called the Phoenix Fund which is supposed to be Swiss-based.

Bitcoin Examiner writes:

There might be a major deal being made in the Bitcoin ecosystem in the next few days: a deal that mixes the names of BitSynCom LLC’s founder, Yifu Guo, and a Swiss private equity fund, which is allegedly about to invest $200 million to make sure the brand Avalon emerges as the leader in the mining technology race.

Then they go on to tell readers this is a rumor and their source is anonymous. They are setting up the story as speculative. Not the best method of journalism but perfectly ok if they state this is what ‘we are hearing’ but we don’t know if this is fact yet – which they did. Speculation can at times force a story into the light…it’s a method I’ve used. Their headline even said the word ‘might’ be getting a $200mn investment.

The Bitcoin blog then goes on to tie in a man named Andrew Laurus who is allegedly setting up this huge investment. Laurus is sourced as being related to Bitcoins based on his twitter profile which says: ‘taking time off for Bitcoin mining project’. Danny Ashton, of Bitcoin Examiner, said he didn’t know if Laurus was the source for the story.

Here is where a game of Telegraph starts. This unnamed source throws out Laurus is working with ‘the Travistock bunch’ — a firm Joe Lewis does actually own. Then all of a sudden there is this unexplained jump that Lewis owns The Phoenix Fund.

A bunch of other names are thrown into this deal; a Taiwan microchip manufacturer TSMC, Bitsyncom, and the unknown private equity guys at The Phoenix Fund.

The team at Bitcoin Examiner closes out the story reminding readers once again this is all rumor, their source is anonymous, and they have to actually confirm all this. Then BOOM – the Wall Street Journal has taken this mess of maybes and printed it as FACT with a big bold photo of Mr. Lewis and a promotion of the story above the fold in their Money and Investing – C Section.

WSJ: Bitcoin's New Champion by Teri Buhl

The Journal didn’t only get the fact that Joe Lewis was putting that much money into a Bitcoin miner deal wrong but they also printed Mr. Lewis “leads the Phoenix Fund, a Zurich-based private equity fund that on Tuesday plans to invest $200 million in Avalon, a company that makes computer servers aimed at creating Bitcoins, according to people familiar with the situation.”

There is so much wrong about that sentence that could have been fact checked it’s scary. 1) Mr. Lewis public relations person Lauren Morgan told me today the WSJ NEVER even called for comment. If they had they would have learned what CNBC got on the record, which was Mr. Lewis has nothing to do with the Phoenix fund. 2)If you regularly report on Bitcoins like I’ve had the chance to for a year now, you know computer servers do not make Bitcoins. They might help distribute the digital formula that moves the Bitcoin volume and pricing but no one or no machine makes a Bitcoin- that’s why it’s called a digital currency. 3)I have not found a real private equity fund called The Phoenix Fund that has $200 million to invest in Bitcoins.

The simple lack of fact checking that appears to have gone on with the Sunday night editors at the WSJ is amateur beyond belief.

I’ve reached out to the lead byline reporter on the story, Harriet Agnew, who appears new/young and recently been covering UK hedge funds, but she refuses to answer who her editor was. The only answer I got from her was this:

Fyi we have just published a correction:

Correction

05 Aug 2013

Investor Joe Lewis isn’t investing in a bitcoin venture called Avalon and doesn’t lead a Zurich-based private-equity fund called the Phoenix Fund. An article on the supposed investment was inaccurately published and has been removed.

Harriet

Neither Harriet or the other experienced reporter on the story, Robin Sidel, have admitted who came up with the lede in this report – meaning whose idea was it to link Joe Lewis to this apparent non-deal? Lauren Morgan at Joe Lewis’s firm also told me the WSJ won’t tell them who the editor is. It’s a massive duck and cover by what is supposed to be a pillar of business journalism.

Here is where the story gets even more troublesome. It’s clear that Harriet, Robin and their editors are not really well sourced or well versed in the Bitcoin investing space. A quick email to VC’s I’ve sourced and reported as investing in real Bitcoin companies like Bitpay or CoinLab said, “The BTC market is only worth around $1 billion now so why would someone make a single investment of 20% of the market ($200 million) into one company?” Then we have the fact that the highest round of investment in a BTC company at one time has been what Coinbase got with around $5 million. We have yet to see any BTC company get a double-digit million investment so how does it makes sense that triple digit millions are getting put into a deal. The WSJ also could have called around to VC’s and asked if any Bitcoin miner deal will get funded and how much is likely to be spent… like I did. The answer I got was ‘high single digit millions is all the Bitcoin miner space is worth right now.’

This is basic high-finance gut-instinct reporting skills that most journalist trying to report on a subject like Bitcoin investing would ask BEFORE you hit the print button.

And even if the WSJ editors didn’t figure out the math on this deal doesn’t it make sense to do a quick google search to see what active Bitcoin players are talking about over at chatroom bitcointalk.org. It would have shown as early as Sunday they were challenging the notion that you barely need $20 million to build out a better mining technology and were making fun of the idea that Avalon would use the rest of the money to hold a long position in Bitcoins.

These chatroom users also point out that the only link to $200 million and the word Avalon comes from a press release in Jan 2011 when San Diego-based VC firm Avalon Ventures closed a fund with $200 million. I called the VC firm to see if this fund was designed to invest in Bitcoins or if they have ever invested in Bitcoins and the answer was NO.

That leaves us with what is the motive of this anonymous source. It’s possible this person was writing Bitcoin Examiner and the WSJ reporters trying to get something printed but knowing how the WSJ likes to lift other original reporting and source it as their own I’m going with they just lifted a rumor story from Bitcoin Examiner and really screwed up by trying to turn it into deal-making news reported as FACT.

Joe Lewis firm made this statement yesterday, “”Unfortunately, many immature investments and investors would like the association of private investors like Joe Lewis. They bring instant credibility,” said Douglas McMahon, senior managing director of Tavistock Group, a private investment organization founded by Lewis.”‘Our’ Joe Lewis has nothing do with Bitcoin, Phoenix Funds or Andrew Laurus,” said McMahon.

A few motives come to mind here: Someone with a sizeable long position in Bitcoin coins (lets say $500k – $1 million) wanted the daily trading value of Bitcoins to go up so they could cash out. This sucks because there is already so much miss-reported on how the value of Bitcoins can be manipulated and as journalist we shouldn’t be enabling traders to move a market on false info not vetted. There wasn’t much of a movement in BTC price yesterday so thank goodness it didn’t work.
Or
A Bitcoin miner company needed to get word out that they could get big investment money so whoever might really be considering to give them a few million would do it. Butterflylabs has the equipment Bitcoin miner pros use now. There has also been talk heard at the London Bitcoin conference in July that there is a better ASIC rig being worked on by some ex Silicon Valley hotshots. This of course is my SPECULATION based on reporting on this sector for a bit.

We might never get the answer to the motive of the story source but I strongly believe the Wall Street Journal editorial board owes the reader an investigation into what happen in this major failure of reporting check and balances. They need to admit who the editors were and explain how the story got to print. And honestly someone needs to get fired.

Now if hundreds of millions of dollars ever do get invested in a Bitcoin company I’m going to recommend checking www.bitcoinmagzine.com who is so dialed into what is happening in this market they’ll at least give you a fact checked, vetted, insightful report. The folks over at American Banker have also done some quality reporting on Bitcoins under the editorial leadership of Marc Hochstein and RT’s top Biz TV host Max Keiser often has excellent guest talking about the digital currency.

Here is the story the WSJ had to take down:

Who is Harriet Agnew's Editor?

Who is Harriet Agnew’s Editor?

Hedgie T.Boone Pickens Sues to Squash Son’s Tell-All Speech About Family Emotional Abuse

Boone Confused why his money can't get the courts to stop his Son's speech?

Texas oil millionaire T. Boone Pickens is trying to use the Dallas state courts to squash his son’s first amendment rights after Mike Pickens wrote a tell-all blog about the famed hedge fund manager’s troubling family dynamics. The blog titled 5 days in Connecticut posted ‘my story’ which centers on how 85-year old Boone’s emotional abuse caused his 55-year old son’s drug and alcohol abuse along with a litany of other alleged facts going back to childhood whippings. In the original compliant Boone first tried to call Mike’s actions Cyber-bullying/ Cyber-harassment but the actual legal claim that was filed was invasion of privacy and common law defamation. Texas doesn’t actually have Cyber-bullying laws for adult online speech but that didn’t stop Caleb Melby, Forbes staff writer, to headline a story last month that Boone was suing for Cyber-bullying.

In something that reads like a hit piece written especially for a Forbes labeled Billionaire, who likely is only a millionaire these days, Forbes misses the guts of the legal dynamics that are actually happening. Boone, who has a history of suing if you write negatively about him, is throwing cash at lawyers to stop speech because it feels uncomfortable. He even got a two week temporary injunction order on his son, Mike, to force him to take the story down but Mike’s lawyer ,Collin Porterfield, got it amended on March 1st at a hearing about the injunction. Court transcripts show Judge Parker also told Boone’s attorney that they didn’t have a Cyber-bullying claim but Forbes ignored that or didn’t bother to check the transcript and still reported this was the legal action Boone took.

On top of that, after the court allowed Mike to print an edited version of the story, Boone fired his lawyer and picked a new one named Leland de la Garza of Shackelford, Melton & McKinley, LLP. The new attorney’s 3rd amended complaint doesn’t focus on Cyber-bullying this time and was filed April 13th, a few days before the Forbes story ran. Still Forbes runs an inaccurate headline that Mike is being sued for Cyber-bullying.

When I asked Caleb why they did this and pointed out the flaw in their editorial decision his on record comment was, “We stand by our story.”

Boone first filed the suit in February under his daughter Pam’s name and then tried to hide his role in the litigation by adding on just his initials to the claim but the Dallas Morning News caught wind of the story and published the material his son Mike wrote on his Dad’s emotional abuse that Boone was trying to silence. It was printed because of course the story ended up in public court filings. Boone then got three of his kids to sign statements they were never abused emotionally and filed them with the court. This week he also got the court to grant an emergency deposition of Mike, albeit with a two hour limit. One of the questions Boone’s lawyer stated they will ask is who gave the Dallas Morning News the court exhibit with the original ‘my story’ that Boone desperately doesn’t want published online. This looks like an attempt to show malice on Mike’s part but then Boone would have overcome the objection that the info was public for all the press to see in the first place and he’d have to prove Mike knew what he wrote wasn’t factually true which is hard to do when it’s written as opinion.

This afternoon Boone’s lawyer sent notice of Mike’s May 8th depo to his attorney stating Boone will be bringing his bodyguard ,Terry Ruckel, to the deposition along with his long time friend and divorce lawyer John V. McShane; who is also a member of Mike’s Alcohol Anonymous Group. McShane has either magically become an expert in defamation suits and free speech or just wants to be there to grill Mike who he has known since Boone divorced Mike’s mom decades ago.

Mike says he’d actually written his story for $200 in 2009 when a rehab counselor had approached him to share it for a publication they were writing. The story had been online since 2010 but it wasn’t until his sister Pam saw it online recently that the family took notice. The story started to get spread around the internet when Mike began tweeting a link of ‘my story’ to every TV reporter he knew, even Barack Obama and Mitt Romney, after and emotional event happen in the family’s lives. His Nephew and Boone’s grandson, 21-year old Ty Pickens, died from a drug overdose while a student at Texas Christian University. But what apparently sent the angry Boone clan into a full court legal assault against Mike was when Pam alleges Mike emailed a group of Pam’s friends, under a made up name Robert Barris, and called attention to his family tell-all blog; that also included language saying that Pam uses their mom’s illness to drum up business. Here is a copy of that email that is now part of the legal argument in the family’s claim for defamation.

Ms. Pickens,

I was shocked, at best, to receive your “Good Morning from Sunny California” narrative of your mother’s recent, serious financial/medical problems, with your own admission that you were “unable to think straight, making terrible decisions, sinking into paralysis and leaving yourself wide open to financial losses !”
Then, in the same breath, you ask me to trust you with my life and money, in an area where you obviously have NO experience or expertise.
Secondly, I find it appalling that you would use your mother’s woes to “drum up business.” Do you have NO integrity?
Thirdly, I do NOT appreciate you sending my email address around the globe. Were you too lazy to “figure out” how to mass email this wholly amateurish/improper “message” without exposing your entire address book ?
It is my understanding that ALL sales/marketing email’s sent through Morgan Stanley’s server and otherwise, must be approved by your compliance department; certainly this was not an approved email, was it ?
Bob

Mike latter wrote on his blog that Pam is an addict (of what he didn’t say) and she used his mom’s credit cards to pay for personal expenses even though Pam is a V.P. of Morgan Stanley in the wealth management division. Mike also cc’d Morgan Stanley executives on the email which Pam claims in court filings got her in trouble at work. Pam fought back with her own family admissions saying in a statement filed with the court that Mike hit her at a family Thanksgiving dinner on Boone’s multi-million dollar ranch, which Mike flat out denies on the record.

As a result of this litigation, Boone is now facing an anti-slap hearing May 17th. Mike’s attorney is suing for a frivolous lawsuit with the intent to stop speech that affects the public interest. Poterfield will argue any story about family emotional abuse that leads to drug addiction is a story the public should hear because it could help another family. Boone just sees it as airing dirty laundering by an upset son embellishing on their history. In Texas the anti-slap laws are pretty strong forcing Boone’s side to prove they have a valid claim before a trial even begins. If he wins that motion it means Boone would have to pay for Mike’s legal fees.

Boone Confused why his money can't get the courts to stop his Son's speech?

Boone Confused why his money can’t get the courts to stop his Son’s speech?

At present all of Mike’s first amendment rights have been preserved due to quick legal work by his lawyer Porterfield. He can print anything that is known through his own personal knowledge or his opinion about his family and he’s continued to entertain and inform on his blog whose page views have skyrocketed since the lawsuit news broke in March. Forbes has inaccurately reported on the temporary injunction and is under the impression Mike’s speech is being control by the courts but a review of legal filings clearly shows otherwise. Apparently fact-checking went out the window when Randall Lane took over Forbes.

Mike’s online humor has cost him his own pain this week. Boone called his granddaughter Ali Pickens, Mike’s daughter, to tell her he won’t be attending her college graduation at his alma mater Oklahoma State University. Mike says Boone told her he couldn’t come because there was a ‘death threat’ on Mike’s blog. Boone is supposedly talking about this post from Saturday that doesn’t name him anywhere in the post. It shows an image of a greeting card from Rotten Cards that makes a statement on Narcissist. Apparently Boone just assumed Mike was taking about him. There have been no police call warnings to Mike about this alleged death threat. The only calls have come from Boone in what appears to be emotional manipulation of his Granddaughter.

Boone and his Attorney would not comment on the case or his last minute move to bail on his granddaughter’s graduation.

As a result of Boone’s phone call Ali also uninvited her dad to the ceremony (he’ll still driving his wife to Oklahoma to see the graduation though) and Boone won’t be flying with his entourage to Oklahoma on his private jet either. Boone could have another reason for not wanting to show up at OSU. His $175 million donation to the college in 2005 was gutted when the University invested it in one of Boone’s hedge funds that lost most of its value in 08 (according to internal performance statements from BP Capital seen by this reporter).

OSU is now stuck with a big brown ugly vacant lot alongside several blocks of razed housing next to the school that was supposed to house a beautiful sports complex and sports village.

BP's Unfinished Mess

BP’s Unfinished Mess


Boone said in previous press reports the project will move forward but a Google maps search shows an abandoned eye sore. In March the hedgie fund titian lost an appeal to sue a broker-dealer of life settlements who he got the school to invest with and lost their investment. It looks like another case of Boone using the courts and lawsuits to try and shift blame.

As of April 2012, a BP Capital investor report shows Boone is only managing $325 million, which is down from $5 billion at the funds peak. Returns have been negative ytd or flat for the 2 commodity fund and 2 equity energy funds in 2010/2011 according to the April 2012 internal investor report. Prior to 08 Boone had booked some killer returns for his investors (in 2000 his BP Capital Energy Fund booked a 4447.68% simple annual return! That fund is now closed to investors). His investor report also states he has 20 percent of his own money in the funds.

Stay tuned as I continue to investigate the ‘extortion’ claim Boone has drummed up now against Mike and his lawyer in what looks like a move to disqualify Porterfield from representing Mike.

This is Mike Pickens recovery story that T.Boone doesn’t want anyone to see. It’s filed in public court documents but has been taken down from Mike’s blog while they litigate the case. It’s a compelling read and printing out the story makes it easier to see.

Michael Pickens 'My Story'

Reuters is Writing Stories to Help JP Morgan Defend Itself from the NYAG Now

J.P. Morgan’s outside counsel at Sullivan & Cromwell are showing signs of desperation in their mortgage securities fraud lawsuits. You know the ones that the bank says in SEC fillings are now $140 billion of litigation. Last week the banks lawyers got a Reuters reporter to write a hit piece on the New York Attorney General’s $22 billion civil fraud suit against JPM / Bear Stearns.

The Reuters story, by Karen Freifeld, basically speculated a judge would be looking at a conflict of interest in the AG’s office because they hired a top lawyer from the firm, PBWT, who first discovered some of the alleged Bear Stearns rmbs fraud. Freifeld starts by writing a line that ‘legal experts’ think the former PBWT attorney who worked on the Ambac v. JP Morgan Securities suit has a conflict because she also played a role in the NY AG’s suit. Karla Sanchez, the lawyer in question, started with the NY AG in January 2011 – after the explosive amended Ambac complaint was filed. This is the complaint you just saw me talking about in the Frontline film The Untouchables.

It’s odd for Retuers to not quote actual working lawyers in the story and leave the reader guessing that the reporter actually found attorneys to back up her claim. I called five securities lawyers last week trying to get one of them to go on the record that they saw a conflict here but none would. That’s because Robert Sacks, JPM’s puffy chested outside counsel from Sullivan & Cromwell, doesn’t actually lay out in the motion what he thinks the conflict is.

The Reuters reporter, who has indirectly become a JP Morgan’s flack, also doesn’t explain to the reader that JP Morgan’s lawyer, Sacks, didn’t actually file a motion in the NY AG’s case in New York civil supreme court. All he really did is indirectly mention the idea in a damn footnote in a motion for an entirely different case. On February 19th Sacks filed a motion trying to stop Judge Ramos from allowing AMBAC/PBWT to get loan file discovery and CLAS database records from third-party due diligence firm Clayton – info they been asking for over a year that Clayton is also fighting to not turn over because it’s likely really really damaging. [ You see on top of all this Clayton is apparently STILL covering up for it's big bank clients even though they signed an agreement to help the State of New York prosecute their financial crisis cases in turn for them not getting sued for their role in billions of rmbs fraud. ] It’s this motion that has the footnote that Reuters in turn made into a story to discredit the NY AG’s head of economic cases.

Here is what the footnote says:

Defendants understand that, upon joining the NYAG, this former PBWT partner was
initially screened from participating in the NYAG’s investigation relating to Bear Stearns, but
that the screen was later lifted and she participated in the investigation. Following concerns
raised by defendants, the NYAG apparently reimposed the screen. Defendants have asked the
NYAG to confirm whether there is additional information about this lawyer’s involvement in the
matters leading up to the NYAG’s suit against Bear Stearns that they should be aware of before
deciding what further action is warranted.

Somehow that footnote made the Reuters reporter think this:

The case against JPMorgan is similar to one that the lawyer had worked on before joining the Attorney General’s office, JPMorgan said in court papers this week, raising the possibility of a conflict of interest.

I did some background checking on what the lawyer in question here, Karla Sanchez, did at PBWT. She ran all of discovery in the monoline suits so yea she would know where the bodies are buried. But she didn’t leave PBWT and go work for a firm to use that info to harm her prior client Ambac. That’s where a real conflict would be. Instead people inside the AG’s office explain she simply led an administrative role in overseeing his case – for a little while – that is a copy cat of the Ambac case. But then so is nearly every rmbs putback case against JP Morgan/Bear Stearns filed in the last two years by clients of Bear’s mortage trading team. The real bulldog lawyer the AG put on the case actually came from the DOJ and joined last summer. I was told by someone familare with the case she was frustrated with the lack of action against the banks at the DOJ and jumped to work for the NY AG because he was actually going to try and hold them accountable. Her name is Virginia Romano and she’s actually known to get things done and not roll over.

Reuters went out and spent a few $ to even FOIA the AG’s records to show when Karla did or didn’t have her hands on the case. This is where the NY AG did something kind of stupid. They originally wouldn’t let her touch the case out of extra caution that JP Morgan would complain. Then they figured it was ok for her to play an admin role in the case – it’s not like she brought over whistleblower emails from the Ambac litigation – the AG actually had to subpoena PBWT for that kind of stuff in May 2011. And by the time she joined his office most of what Ambac had was public anyway because their suit had finally been unsealed and I broke news about it at The Atlantic. JP Morgan did end up complaining about her working the case so the NY AG took her off it. The NY AG should have stuck to their guns and just left Karla on the case. This all happen last year. Which is why it’s odd that Attorney Sacks is brining it up now in a footnote in a lawsuit that isn’t the NYAG’s case. And keep in mind NO motions have been filed in the AG’s suit against JP Morgan talking about a conflict of interest that Reuters somehow thinks could affect his case.

Now using footnotes in a legal motion to say something nasty that the press can then turn use as quotes for a story is an old trick – even PBWT has done it in their litigation against JP Morgan. Heck I’ve found some of great details in my series of reporting on this fraud in footnotes. But the reporter then has the responsibility to check out if actually true. Big Law lawyers like JP Morgan has hired often do dirty block and tackle moves for their clients and this one simply reads like they are trying to distract Judge Ramos from the real issues at hand and just be an all out dick trying to smear one of the NY AG’s top lawyer.

There was actually some real news on this case last week. JP Morgan had asked the court to assign the case to Judge Ramos – who is also trying the Ambac case. Ramos is an old judge who has said in court testimony he doesn’t like Ambac’s fraud claim although he hasn’t ruled it out. A few days after Sacks filed the motion that is the subject of this story Ramos was removed from the case. Yep on Thursday Judge Marcy Friedman became the new judge on the NY AG’s case. So all the ranting Sacks has been making to Ramos in the Ambac case about the AG’s case is kind of moot now as he’s got a new judge to brow beat into believing that the JPM (via Bear) didn’t really steal billions from their own rmbs clients.

Editors Note: AMBAC and JP Morgan have a conference meeting with Judge Ramos on Monday (2-25) at 4p.m. If the Reuters reporter is looking for some real news on these cases that’s a good place to start. I emailed Robert Sacks at Sullivan & Cromwell to ask how long he’d been working with the Retuers reporter to get that story published but he didn’t answer the email.

Here is motion Sacks filed that started this whole story:
JPM Brief 75

Told You So: SEC Wants JP Morgan to Pay for Bear Stearns Sins

Last night the Financial Times broke news Jamie Dimon is willing to admit that maybe the Bear Stearns mortgage traders really did break securities laws and he should settle with the Securities & Exchange Commission. What the FT forgot to mention was I was the lone reporter in late January 2011 who reported JPM was under SEC investigation for this. A story I continued to report and warned on for the last two years at DealFlow Media and on RT’s top financial news show Keiser Report.

Most of my peers in the financial press have been afraid to report on this story. Even when JP Morgan admitted in their own 1st quarter filling this year that they’d received a wells notice –which means their regulator told them they are going to be sued if they don’t settle. Once again a series of my reporting on a financial institution committing fraud was proven right. The only thing I don’t know is how many millions the SEC will accept as settlement for these crimes against Bears own investors. The amount of dollars JPM pays the SEC isn’t that important though because the simple fact that they are willing to admit it wasn’t ok for Bear Stearns traders, under Tom Marano, to steal billions from their own clients gives the $100 billionish in civil rmbs fraud suits, filed by investors, a huge negotiating advantage.

The WSJ wrote today that people close to the SEC settlement talks told them the investigation was over, “whether Bear Stearns got compensation from lender for bad loans it had purchased to bundle into mortgage-backed securities, but then failed to pass that money on to investors by putting it into the trust managing the securities.” The WSJ actually learned about this when I first went on Max Keiser’s show last year, multiple times, and told his millions of viewers this is what the SEC was investigating. Then the WSJ read my story in May about JPM getting a Wells Notice.

A sad fact to the state of journalism in covering this story is Tom Marano, Mike Nierenberg, and Jeff Verschielser’s attorneys have done a good job of keeping their names out of the press. The day I broke my first story on the subject at The Atlantic we actually reported an update to the story that the SEC was investigating. That’s because I was able to confirm the SEC called people involved in the situation and started to interview them the day I reported the story. It ran for about 24 hrs and then I watched a pr man from Bank of America, where Nierenberg is head of mortgages, run interference with The Atlantic’s top editors and the SEC update was taken down. A pathetic reaction by the senior editors at The Atlantic.

Max Keiser at international TV network RT trusted my reporting and printed on his website the SEC was now investigating for all the illegal actions I’d just reported. Then my editors at DealFlow Media encouraged me to continue to report out the Bear Stearns traders story at their trade publication The Distressted Debt Report. Jody Shenn at Bloomberg copied some of my reporting on the subject but then dropped off the story. In fact it was really only me and a talented legal columnist at Retuers, Alison Frankel, who continued to report on the impact of the rmbs fraud litigation against JP Morgan.

Still we have no criminal charges filed against Tom Marano’s team and they keep beating motions to add them individually as defendants in civil litigation. I remember feeling a little shocked when I first called Mike Nierenberg’s pr people at BofA to tell them about all the dirty emails and whistleblower testimony I had showing how Mike and Jeff executed this fraud and Mike came back saying ‘I’m not worried about it’. Yep that’s the mindset of Wall Street’s top mortgage executives — it just a cost of doing business and the bank will have to pay for their sins.

JP Morgan was Bear Stearns clearing agent before they bought the bank in March 2008. That means they saw all the toxic rmbs Bear was selling – so I don’t buy the argument that it’s not fair for JP Morgan to pay for Bear’s bad boys. Remember JP Morgan had the chance to settle with the monolines who’d sued for only a little over one billion dollars when they bought Bear in 2008 but choose to rack up millions in legal cost for the last five years and fight these charges. Even after Bear had previously told the monolines ‘ok you kind of caught us’ so we’ll pay back what we stole at cost. Seriously read the Ambac complaint and you’ll see this spelled out. So Jamie Dimon crying wolf that he’s a victim of the US government forcing him to buy Bear Stearns is line of total BS and any reporter who prints that line is only writing pr statements for the nation’s largest bank. Why is it so hard for my peers in the financial press to admit these guys did something really really wrong?

Justice in Fairfield County? Morgan Stanley Banker Hate Crime Case Had Flaws

William Bryan Jennings, a Morgan Stanley Executive, had to wait nearly nine months before Connecticut admitted they didn’t have the evidence to litigate a hate crime case against the Darien, CT native. Felony charges were brought against the banker in February after a New York cabbie told the Darien police he’d been assaulted by Jennings over a dispute about the price of a cab fare from New York City last winter. The Queens-native cabbie was Muslim, the banker rich & white—a scenario that created an easy target for supervisory assistant state’s attorney Steven Weiss and his boss, David Cohen, to show Main Street they’ll prosecute bad behaving Wall Streeters. Except in this case the banker became the victim.

A review of the request for a warrant, Darien police notes the night of the incident, Jennings signed statement, and a motion challenging the process the local cops and states attorney went through to get to an arrest show significant evidence was left out of the judicial process. Most of the information in Jennings own statement to the Darien police, signed on January 28th, was not in the warrant request filed by Darien Detective Chet Perkowski. Attorney Weiss claimed when he dropped the charges against Jennings it was because the cabbie, Mohamed Ammar, had not been honest about having the weapon, a pen knife, this whole time. A fact Weiss actually learned in May but waited till mid-October to disclose in open court.

The 2 ½ inch pen knife was allegedly used by Jennings to stab the cabbie in his right hand when the cabbie abducted Jennings after he wouldn’t pay the fare because he said it was over the usual rate. Darien’s Captain Komm told me they searched cab the night of the stabbing but never found the knife. In Jennings sworn statement he said he didn’t have the knife and thought the cab driver had it. Detective Perkowski actually mentioned this in his police notes but left this detail out in the warrant report which the judge used to sign for Jennings arrest.

Who had the knife was important because there was a he said-he said debate if the cabbie grabbed the knife out of Jennings hand and caused the cuts to his hand or if Jennings actually used the knife to purposely assault the cabbie.
“I told the driver that I had a knife in my possession and that I expected him to pull his car over and allow me to get out of it at this point. He again refused and I showed him the knife so it was clear to him that I had one in my possession. At no point did I attempt to make contact with the driver (with the knife or otherwise). The driver reached towards my hand in an aggressive manner and attempted to grab the knife from me. I released my grip on the knife and, at this point, I believed he had the knife in his hand,” wrote Jennings in his police statement.

Jennings goes on to state the cabbie actually stopped the taxi in the middle of Post Road (that runs through Darien town center) and got out of the driver side door.
“I feared that he now had my knife and that he had the opportunity and intent to harm me physically so I grabbed my belonging and ran as fast as possible up Leroy Avenue,” wrote Jennings.

These statements were never seen in the warrant report or the multiple news stories about the attack but could be found by any public citizen or journalist if they went to the Stamford court house and request the file on the case – like I did.

Officer Perkowski appeared to want to build a case against Jennings with the logic of Jennings not coming to them first to report the crime so he must be hiding something. Perkowski stated in his warrant report that when he sat in the cab he thought it would have been impossible for the cabbie to reach back through the partition and grab the knife from Jennings. If true that would make Jennings statement not credible. But when Jennings attorney, Gene Riccio, inspected the cab he said it would have been possible. He also stated in a motion to dismiss that State’s attorney Weiss also came to this conclusion. In an interview with Darien Captain Komm he told me attorney Weiss had actually never seen the inside of the cab only photos so there are unanswered questions on if Weiss thought officer Perkowski was mistaken. Weiss has refused to answer reporters’ questions about the case and only made comments in court. Komm told me he thought Weiss stood by the police work in the warrant report yet he dropped the charges?

The level of injury was also miss-stated in the warrant report. Medical records of cabbie Ammar show he only had stitches on the middle part of his right index finger and not his palm. Darien Officer Whyte, the first officer on the scene, wrote in his police notes “the night of the incident Ammar said he was stabbed multiple times in his right hand.” Whyte did note he saw the cabbie’s right hand was bleeding and “had small slice wounds that would have been caused by a sharp object”. Whyte stated the EMTs cleaned and bandaged Ammar’s wounds but he refused further medical treatment. Ammar later told the Darien police he went to New York’s Roosevelt hospital to get treated and needed 6 nylon stiches in his right finger. Medical records show Ammar’s doctor wrote there was no visible tendon or bone and he had full sensation and motor function intact. The cabbie left the hospital with a bill, before insurance, of $1169.52.

Ammar’s wounds were reported as a violent stabbing in the press. A media interpretation Jennings attorney had problems with. Attorney Riccio wrote in his motion to dismiss this June, “Does probable cause to arrest exists where the description of the assault and the injury sustained by Mr. Ammar are not supported by the medical records and photographs of the injury?”

The state’s attorney had used statements the cabbie said Jennings made to get the felony charge for ‘intimidation by bias’. The warrant report shows Ammar telling Darien cops Jennings yelled, “Mother fucker I’m going to kill you, you should go back to your own country.” This was allegedly said after Ammar  overcharged him for the fare and then drove off with Jennings locked in the car when he refused to pay $300—the NY taxi rate chart shows the fare should be $204. Ammar also said Jennings made threatening statements about paying $10,000 in taxes to the town so the cops wouldn’t do anything if Ammar called them. Town records show Jennings actually is assessed to pay $29,852 in taxes on his home.

The problem is Officer Whyte’s police notes, taken at the scene, don’t have a word about hate statements being made by Jennings. Yet those alleged facts, witnessed only by Ammar and Jennings, made it front and center in the warrant report filed weeks later. You see Darien police records show somehow Ammar remembered these hate statement when Detective Perkowski did a follow up interview. Jennings consistently maintained he didn’t say anything like that. Court records show Jennings had no prior disturbance of the peace or hate-like charges filed against him in the past. There is nothing in his FINRA broker check record that shows prior criminal actions.

There is a federal law that mandates States track all reported hate crimes even if it’s only a verbal threat. In 2010 Darien had no assault hate crimes reported but its poorer neighbor city, Norwalk, shows eight were reported. In 2011 Darien had one hate crime based on race filed and Norwalk had five. In 2010 for all of Connecticut only one assault hate crime was reported against a Muslim, 37 were reported against Jewish people. The report filed by Commissioner Ruben Bradford says in 2010 there were 72 hate crimes reported against people (they also track property that is vandalized) of which only 8 were with an injury that needed treatment. In 2011 only 9 out of 82 people were assaulted with an injury that needed treatment. The report shows in both years about 20% of the hate crimes happened on a highway/road/street. Jennings faced up to ten years in jail if convicted of the assault because a hate crime was attached to it. With no weapon and a he-said he-said series of statements why did Stamford’s state attorney go so gung-ho with pursuing these charges against a rich banker? It’s a case with a lot of holes in the State’s attorney’s process of justice that is still answered.

When I asked Darien’s Captain Komm if he ever remembered a hate crime charge in the town, that was headed for trial, during his long tenure on the force he said no. He also said the Darien police asked state’s attorney Weiss if they could charge the cabbie with abduction and he said “no only go after Jennings”. Not surprisingly the State’s Attorney office is mum about how many hate crimes they’ve brought that had to be dropped.

Court filings show attorney Weiss knew since the early summer the cabbie’s statements were not adding up. So why did he wait till the weekend before the October trial was set to start to tell the cops he was going to nullify the charges. Darien PD told me Weiss even spent the state’s money issuing subpoenas for the cops and cabbie to testify at trial. Jennings lawyer filed at least three motions to dismiss which piled on the banker’s attorney cost. Weiss was likely trying to bluff Jennings into taking a plea deal after Judge Provodator ruled their Franks Motion would not go forward and Jennings couldn’t put the cops on the stand before trial to question them about their shoddy police work. But Jennings held to his not guilty plea and even requested a bench trial(judge rules without a jury) to speed up a trial date.

Weiss statement to Judge Provodator that he was not going to try the case because the cabbie mislead him about having the knife reads like bull shit. Jennings attorney Riccio is not talking about what he thinks motivated the charges being dropped and only made statements questioning the media’s pre-trial guilty verdict against his client based on one Darien cops warrant report. Most metro reporters are taught by their editors on day one “the cops lie and the perps lie your job is to find the middle”. But the wide variety of international reporters who covered this case wrote their stories copying other reporter’s work which hardly checked out the facts in the warrant report. Darien Times metro reporter David DesRoches was a rare exception and continued to follow the story with details presented by Jennings attorney that questioned the info in the Darien Police warrant report.

After the charges were dropped the Muslim cabbie cried race again and eluded to feelings that this was a white rich man getting off and an injustice occured. Ammar even said he’d ask the DOJ to follow up and charge Jennings but that isn’t likely to happen. He also told the Darien Times he was considering a civil suit against Jennings but a search in New York and Connecticut court records show nothing has been filed. The person who likely has a viable case to sue civilly is actually Jennings. He can’t sue the state’s attorney but can sue the town of Darien for the cops’ violations of his civil liberties via a false arrest.

Seasoned civil rights lawyer Norm Pattis told me, “It’s hard to build a case proving the police built a case that didn’t get to probable cause but this case sure has unusual facts. It’s troubling to see the State’s attorney use politics in the wheels of justice here.”

“It looks like this was a race to court house steps, whoever reports to cops first becomes the victim, and Ammar did that,” said Pattis. “Civil remedies are definitely worth a look here as it turns out the defendant became the victim.”

Bloomberg reported unnamed people who worked at Morgan Stanley saying Jennings no longer worked there. The investment bank, where he was co-head of U.S. bond underwriting, said at the time of his arrest this February he’d been put on indefinite leave. Jennings isn’t answering questions about where he works now. His $3 million home at 39 Knollwood Lane (4 beds, 5 baths, 6,484 sqft) is still listed in his family’s name so it appears they are still living in Darien. His attorney wouldn’t comment on questions if Jennings wants to sue the town.

So what’s left, Jennings avoids a criminal charges and goes on with his life but every time someone Googles his name the hate crime charge will come up. Attorney Weiss gets off without a solid explanation of how Connecticut dragged this man’s name through the mud and failed to build a viable case. The Darien cops go unchecked unless Jennings files a suit against them. I guess that’s how justice works in Connecticut’s gold coast of Fairfield County.

SEC Recovers Only $100k From Spongetech Fraud but Stops Metter’s WGCH Income

Spongetech’s co-founder Michael Metter was forced out of his CEO job at Businesstalkradio.net last week and had to give up his six-figure income. You might remember Metter’s name when he made headline news around the world for his arrest by the FBI for securities fraud and interference with an SEC investigation. The alleged scam involved the pump and dump of a penny stock company he was CEO of called Spongetech. Metter has been out on bail since May 2010 and allowed to keep his side-job as CEO of four am radio stations he partially owned.

I was first to report last year for DealFlow Media that the SEC, in their civil fraud suit against Metter, was able to seize control of the radio station bank accounts after they discovered Metter and his Spongetech partner Steven Moskowitz had used money from a Spongetech affiliate company to lend the stations $6 million. The transaction was set up as a PIPE deal, which means it involved the sale of Spongetech stock to come up with the funds that BTR then used to pay off Barker Capital who had an asset backed lending fund that gave Metter and his radio company money to buy more radio stations. Metter had also secured his $2 million mid-country Greenwich home as collateral for the Barker Capital loan and when BTR didn’t pay Barker the money back on time they filed a lawsuit to seize the radio station assets and personal assets of BTR owners.

Luckily for Metter he had this high-flyin’ penny stock company, Spongetech, to borrow from and get Barker Capital off his back. The SEC convinced the court this move was similar to money laundering and last year the radio stations, which includes a Greenwich CT am political and business station (WGCH), were named as relief defendants in the Spongetech fraud suit. I reported in February 2010 for Greenwich Time, before Metter’s arrest, that if the SEC sued him for fraud he’d likely lose his radio stations. Well that started to come true last year when the securities regular forced the stations to be put up for sale because they didn’t have the millions needed to pay back the ill-gotten gain from Spongetech.

Today, I reported for finance trade pup Growth Capitalist Investor that court documents show some of the BTR assets have actually sold and the funds are now held by the court. The station won’t answer questions about which stations or assets have sold but I was able to confirm the SEC is telling lawyers in the case it’s only for about $100,000 (net of cost). BTR owns am stations in Pittsburg, Brockton Mass., Las Vegas, and Greenwich. FCC records show the Greenwich and Brockton stations are still owned by BTR and their call letters, WGCH / WXBR are still advertised on BTR’s website. The Las Vegas station was purchased for $3.9 million so if it’s one of the assets that just sold for around $100k that is one heck of a loss. The court appointed receiver for BTR isn’t talking either about the asset sold but by year-end new ownership likely has to be filed with the FCC.

On Friday, Rob Varnon inaccurately reported for Greenwich Time that the Brockton station has been sold for $250,000. Varnon also wrote, “Metter maintains his innocence and said funds from the loan went to pay back a hedge fund that was calling in its loan. He says he did not know the source of the funding was Spongetech.” Now that’s odd since Metter was the signatory power for BTR who received the funds from Spongetech who he was also the CEO of since 2001? SEC filings show Metter signed financial statements and 8-K’s with the SEC stating BTR’s parent Blue Star Media had gotten the loan in question so if he didn’t know where the loan came from then the SEC could just add on another regulatory violation, breach of fiduciary duties because as CEO of BTR it’s his job to know where he is borrowing money from.

These are all documented and easy to research facts Greenwich Time left out of their story. Maybe it has something to do with the fact that Metter’s replacement at the radio stations is Jeff Weber, the chair of the Greenwich Chamber of Commerce and former COO of BTR who was there when the questionable loan went down. SEC filings also show Weber owned shares in Spongetech-it’s unclear if they were ‘given’ as payment for his COO job at BTR or if he bought them on his own. Part of the SEC’s case against Spongetech is the fact that millions of penny stock shares were cashed out via illegal methods of unrestricting stock that wasn’t allowed to be sold on the market. I have to wonder if Weber received any of his Spongetech stock this way? Weber hasn’t been named as a defendant in the SEC or DOJ’s criminal case against Spongetech and also won’t return calls for comment.

Weber told the Greenwich Time last year the Greenwich station was listed for $1.25mn but I reported at Growth Capitalist Investor that people involved in the sale said they’ve haven’t gotten offers anywhere near that.

The monies held from the partial BTR assets sale are meant for defrauded Spongetech investors but my report at Growth Capitalist Investor shows there is now a ‘magical’ new secured lender who claims BTR also owes them millions. This means even if the rest of the stations end up sold, for say $500,000, the SEC will have to fight another court battle in its slow attempt to get back any relief dollars for mom and pop Spongetech investors. The only thing investors can take satisfaction in is Metter’s personal bank accounts, Greenwich home, boat and other assets are still frozen and now he doesn’t have his $8,600 bi-weekly salary coming in.

New Canaan Town Council Encouraged to Talk Pension Vote Off Record

UPDATE 8-28-12: A copy of Jeb Walker’s letter to New Canaan officials telling them how he will payback the pension is attached at the end of the story.
UPDATE 8-30-12: Two days after Walker’s letter was published here the New Canaan Advertiser reports First Selectman Mallozzi now says it’s up to the town, not Walker, to determine how the money will be paid back. Mallozzi’s statement is timely given the outrage expressed on New Canaan Patch about Walker essentially asking the town for an interest free loan to take care of his overpaid pension problem.

Original Story
A few New Canaan Town Council members laid on the blame game over their vote granting ex-first selectman, Jeb Walker, special pension benefits at a public meeting hosted by the New Canaan Advertiser last Friday. A pension payment now under third party investigation for the shoddy methods used to get it done. The meeting was a showcase of elected officials in a cover-your-rear exchange even though an Advertiser editor had promised them whatever was said is off the record.

Questions are surfacing if New Canaan’s ex CFO, Gary Conrad, violated ERISA (pension plan laws) by paying Walker $944 since December 2011 while there was no legal vote changing pension vesting from 5 to 4 years. But residents at the public talk also expressed concern if the 6-4 Town Council vote was executed by a group of officials who aren’t paying attention to what they are voting on or it’s simply an example of cronyism.

The locally owned paper, New Canaan Advertiser, places print ads weekly inviting the public to come every Friday at 9 a.m. for coffee talks; where town council members, selectmen/women, and political party leaders (James O’Hora was there) attend with the expectation of answering questions from the public about local issues. What’s odd about these weekly meetings is the editors of the Advertiser told me they promise local officials all their comments are off the record. At last Friday’s meeting at least 30 minutes were used to talk about how the Walker pension vote went down, what the Board of Finance did or didn’t tell them, and whether any Council members were influenced to change their vote. Connecticut has open meeting laws for elected officials to make sure voting issues are public record. Robert Lutts, election rules expert for the State GOP, told me the only real time TC members have a private rights to discuss a vote is during an executive session meeting. Lutts, who reviewed the Friday coffee meetings for me said Town Council members should know if they are talking about voting those comments can be made public.

The Advertiser (owned by the Hersam family who are registered Republicans) should have reported that Republican Town Council member Tucker Murphy screamed at Friday’s meeting, like a worried sorority girl, about her vacation being ruined because residents called her vote for Walker cronyism and Council member (R) Penny Young told attendees it was a bipartisan vote where no extra influence was involved (except no Dems voted for Walker to get $944 a month for only 4 years of service). We also heard elected officials blame the Board of Finance for not giving them detailed information, like the fact only two people would benefit from the pension vesting year change of 5 to 4, while they described what they were about to vote on. You can clearly see from the July 18th meeting Town Council member Roger Williams was the only elected official who did his homework before the vote to educate his peers on the fact Walker had been getting paid a lot more than the plan legally provided for and he’d be the main beneficiary of the rule change.

Tom Odea, who is running for CT state assemblyman, told me he didn’t read the agenda till the night before even though they’d been given details of what would be up for a vote at least 5 days before the vote. Odea also told me he thinks he only needs a few hours to get up to speed on the facts and the meeting video shows him asking a lot of questions about the pension change before he voted for Walker to get more money. We also saw Ken Campbell in a spacecadet move change his vote which tipped it in favor of Walker because he claims he didn’t know “no really meant yes”. Kind of an absurd excuse for someone who also was asking a ton of questions about why Walker should get full pension benefits after only serving four years.

Roy Abramowitz who attended the meeting told me, “Some town council members might want to start reading what their voting on earlier than the night before and not depend on so called experts to tell them how to vote.” Tucker Murphy was another council member who admitted she read the agenda notes only the night before.

You can see a video of the drama about the Walker vote unfold starting 30 minutes into the July 18th Town Council meeting here. It’s an interesting view into how our local government operates and I encourage everyone in New Canaan to watch it. This is serious business — our tax dollars have been given away to one person with rubber stamp payments made by another person before a town council vote. Republican Council member Roger Williams said it doesn’t matter the amount we are paying Walker it’s the principle of what we award here that should be considered. An award with benefits for a finance savvy man who had to know while he was leaving the job the benefits wouldn’t be available because the pension fund didn’t perform over 125% since 2009 and he couldn’t fully vest till he served 5 years. Keep in mind this is the same man, Walker, who went hard on the local police union about asking for more money after the 09 pension fund devaluation. Yet magically when he’s out of office there is enough dough to help cover some of his bills from the Town Pension fund. Doesn’t Walker have money from his retirement at big four auditor Deloitte & Touche?

A FOIA request shows Walker sent an unsigned letter, via email, to the Town saying he’ll payback the overpaid pension dollars by not accepting the $373 a month pension he was suppose to be paid before the vote for his service as First Selectman. Now that would take about 23 months to payback ($8496/$373) so shouldn’t he be charged interest for what is basically a two-year loan? If New Canaan residents don’t pay their property tax on time they pay a penalty — so why shouldn’t Walker be forced to pay interest if he’s not going to pay it all back right away?

What’s equally troubling is a town paper would encourage public meetings and keep the info off the record. At last Friday’s coffee talk I saw three Town Council members speak and Selectwoman Beth Jones. Some might think you need a majority (or quorum) present to make the meeting public but that’s just not true. Mark Caramanica, attorney for the Reporters Freedom of the Press Committee told me, “There is some legal authority under Connecticut law holding that a quorum is not required under the State open meeting law in order for a ‘public’ meeting to occur under the law.”

Lutts also adds it’s a matter of free speech for anyone as a resident or as a reporter to be able to repeat what you hear elected officials say about issues they vote on.

I’d encourage New Canaan residents to attend one of these coffee talks and if you are ever denied attendance or bullied into not repeating what you heard then let me know. Selective meetings on public issues are not good governance. I’d also encourage all local reporters to attend the Friday coffee talks so there isn’t a funnel of information going to one newspaper – who has a history of being selective about what they print. Lutts told me, “If the Advertiser wants off record conversations with elected officials they should send private invites for meetings at the office. But they didn’t do that.” Just because the paper made a donation for the room or bought the coffee doesn’t give them the right to control the conversation.

Penny Young announced at the end of the meeting she thinks her comments should be off the record and acted confused on why more than one reporter was at the meeting. After the meeting she wouldn’t answer my emails on why she thinks it’s ok to hold private talks in a public meeting about a vote, while all the Democrats at the meeting, like Beth Jones or Kit Devereaux, had no problem getting back to me with on-record thoughts.

Maybe at the next Friday’s coffee meeting someone will figure out where Town Treasure Hersam’s check signing rubber stamp is and encourage the Town Council to vote to get rid of it. We don’t need a third-party investigation to figure out how sloppy that kind of corporate governance is.

Exhibit One: Click here for Roy Abramowitz Letter to the Editor-”Interest Free Loan?” Sent to the New Canaan Advertiser this week.

Exhibit Two: Jeb Walker Letter to New Canaan asking to payback overalloted pension with no-interest.

Poytner Finds More Fabricated Stories by Hearst: Shows Deeper Editorial Problems

UPDATE 6-26-12: Poytner’s Silverman found another made up story by Paresh Jha that the Hearst editors haven’t identified yet. He wrote this morning he’s going to stay on the story until Hearst starts answering questions and details which stories are made up so the reader can figure out what’s news v. fiction. Now that’s my kind of Journalist!

It looks like Hearst editorial director for Connecticut, David McCumber, is dealing with more than just made up quotes from his recently fired reporter. Craig Silverman over at Poytner has found what appears to be an entire made up story. One with funny last names that should have stood out for his managing editor’s spot check, who Silverman points out could have easily done a white pages check. Something the Poytner journalist took only a few hours to figure out!

This goes to show McCumber has some more explaining to do and the journalism watchdogs over at Poytner think he hasn’t been transparent enough with his readers. But it’s not just his readers McCumber is going to have to answer too. Bigger brass at Hearst Corp could be placing a microscope over his editorial practices because he’s up for leaving the CT newspapers to get a job as head of investigative reporting for all of Hearst papers. Well that’s according to a single source that is somewhat senior within the Hearst Newspapers group.

When I asked McCumber if this was true I got a quick no comment email from him. But then he went on to say “investigative reporting is done on the local level at our newspapers and is the purview of the individual editors, and I don’t expect that to change.”

Humm, except during my time on staff at Greenwich Time it was McCumber who brought in a seasoned journalist who had worked under him at the Seattle PI (Hearst shut down the paper) to do rookie reporter training. The journalist was working as an investigative reporter for all of Hearst newspapers…so it would make sense that McCumber’s been trying to push the idea of a central investigative reporting unit and create some sort of new job to get the heck out of CT. Remember McCumber was arrested for a DUI last year and court records show he made a deal on the charges. It’s unclear if that meant keeping his drivers license.

Jurno Awards, like the one the fired reporter Paresh Jha won last month, make editors look good. Paresh even boasted about how hard the New Canaan News team works last month when he won the award from the Connecticut Society of Professional journalist. Except now we learn the hard work was coming up with made up sources.

The weekly New Canaan News paper doesn’t have a high circulation in town – Most residents read The Advertiser which is owned by the town’s Treasure, and a long time Republican, Hersham. So Paresh’s reporting honors could have really helped the weekly gain credibility. But now that we know he was violating a fundamental rule of journalism to get colorful stories it’s going to be hard to earn the town’s respect back. So Hearst officials will likely be looking at where the process broke down and what drove the lack of editorial inspection if they plan to move the EIC out and on to a new shiny job.