The Gawker leak of e-mails and photos sent to a Craigslist personals ad has caused Chris Lee to resign from the New York House of Representatives. Image from Wikimedia Commons.

Christopher Lee has resigned as congressman because of a leaked photo, which he had sent to a woman he met on Craigslist. Lee is a Republican congressman from New York and in the middle of his second term. He announced his resignation seemingly to head off a scandal before it got out of hand.

False claims in personals ad response by ‘Craigslist congressman’

Christopher Lee’s resignation from the New York House of Representatives was the culmination of events that began on Craigslist. Photos were leaked to popular site Gawker.com, according to the Washington Post. Lee responded to a personal ad on Craigslist by an unnamed woman who lived in Maryland. In the ad, the woman asked “will someone prove to me not all CL men look like toads?” Lee, beginning his second term in the House of Representatives, wrote her back claiming that he was a lobbyist on Capitol Hill and that he was younger than his actual age of 46. The two bantered back and forth, but the ruse was discovered once he sent her pictures of himself.

Pictures lead to Gawker leak

When Lee sent shirtless pictures of himself, his Craigslist correspondent asked if he habitually sent pictures of himself topless, and he said that it was “all I had.” As the two kept e-mailing each other, eventually she asked about his marital status, to which he replied that he was divorced. Lee is married and has a son. Vaguely recognizing the photograph, she searched the internet for his name and discovered he was actually older than 40, married and a congressman from the 26th District of New York. She sent the e-mails and pictures to Gawker.com, and the news broke.

Gawker forces resignation

Gawker.com published the pictures and the e-mails on Wednesday., Feb. 9, and the story quickly gained online momentum. Lee wrote a letter to John Boehner, the Speaker of the House, notifying him that he was resigning within hours of the news breaking, according to NPR. A clerk read the letter aloud on the floor later in the day. A special election will have to be called by Andrew Cuomo, governor of New York, to replace him.

Sources

Washington Post

NPR

E-mails and photos on Gawker

Steven Rattner will pay New York $10 million. (Photo Credit: CC BY-ND/Finance Blog)

Former Obama administration car czar Steven Rattner has reached an agreement with the New York State Attorney General’s office after a multi-year investigation into allegations that he engaged in a kickback scheme that enabled him to skim money from that state pension system. The New York Times reports that under the agreement, Rattner will pay $10 million to the State of New York and, in his capacity as founder of private equity firm Quadrangle, will not be allowed to work with any public pension fund for five years. Rattner was not required to admit any wrongdoing.

Rattner oversaw auto industry bailout

In his position as President Obama’s car czar, Steven Rattner was charged with overseeing the automotive industry bailout, ensuring that federal funds were allocated properly. In hindsight, it appears Rattner’s alleged pension fund activity – a kind of “pay for play” situation in which Quadrangle is said to have paid for access to public pension funds – makes the duties he performed as car czar suspect.

New York State Attorney General Andrew Cuomo released a statement in which his relief was evident, even if the monetary settlement was much less than the $26 million his office initially sought from Rattner.

“The state pension fund is a valuable asset held in trust for retirees and supported by taxpayers. Through the many cases, pleas and settlements in this investigation, I believe we have been able to help restore and protect the integrity of the state pension fund,” Cuomo said.

Rattner wants this behind him

In his own statement, Steven Rattner expressed gratification that the legal battle was over and that the matter could be put behind him. While Rattner in no way admitted wrongdoing, he did apologize to Attorney General Cuomo for having extended the process of investigation of infractions involving the New York State Common Retirement Fund unnecessarily.

In November, the Securities and Exchange Commission reached a settlement with Rattner. At that time, he released $3.2 million being held from the pension fund and paid a related $3 million penalty.

According to records filed when he was appointed to head President Obama’s automotive task force in 2009, Rattner’s net worth was as high as $608 million.

Sources

New York Times

‘Justice will be done’

Ernst & Young is being accused of helping cook Lehman Brothers' books. (Photo Credit: CC BY-SA/Angie Linder/Flickr)

The questionable practices of U.S. investment and accounting houses continue to be exposed, thanks to the vigilance of officials like New York Attorney General Andrew Cuomo. According to the Wall Street Journal, Cuomo has filed a lawsuit against Ernst & Young for alleged civil fraud. Ernst & Young is being accused of helping Lehman Brothers Holdings Inc. to hide its ailing balance sheet from investors for seven years, before the bank collapsed in Sept. 2008.

New York sues Ernst & Young for fooling investors

Not only did Ernst & Young allegedly help Lehman Brothers hide the truth from investors who were legally entitled to know, but the accounting firm allegedly advised Lehman to take on “Repo 105” debt. Repo 105 is an accounting move where short-term loans are classified on the books as sales, and the cash obtained through the “sale” is used to pay down debt. Thus, a company can conceivably appear as though it is reducing its leverage by paying down its liabilities – just long enough for it to look good on a published balance sheet. After the glittering report is released, the company then borrows money and repurchases its original assets, which would be uninspiring to investors if they ever found out.

All of this made Lehman Brothers Holdings Inc. appear to be a much less risky investment than it was in reality.

‘A massive accounting fraud’

Andrew Cuomo bluntly stated that Ernst & Young “substantially assisted” Lehman Brothers in committing “massive accounting fraud,” claims on which Ernst & Young have declined to comment so far.

According to accounting records, Ernst & Young collected $150 million in fees from Lehman from 2001 to 2008. During that time, Lehman shifted an estimated $50 billion in assets off its balance sheet and moved them to foreign banks when it was time to report financials. Days later, Lehman bought them back, completing their Repo 105 accounting fraud.

Kevin Reilly, an Ernst & Young partner, testified to Attorney General Cuomo that this policy was “acceptable.”

Sources:

Wall Street Journal

Wikipedia

FOX Business Network coverage of Ernst & Young scandal

Jimmy McMillan of the Rent is Too Damn High Party. Photo Credit: Wikimedia Commons, by Tduk and Alex Lozupone. CC-BY-SA

Jimmy McMillan is creating an online sensation. Last night, at the New York governor debate he upstaged front runners Andrew Cuomo and Carl Paladino. McMillan is running on the Rent is Too Damn High party ticket. Though Cuomo and Paladino are the most likely candidates to make it to office, the spotlight was stolen at moments by some colorful third-party candidates.  Kristin Davis, the madam who arranged Ashley Dupre for Eliot Spitzer, has also thrown her hat in the ring.

Jimmy McMillan steals the show

For all the grandstanding from other third party candidates, the most notable was Jimmy McMillan. McMillan, according to the New York Daily News, is running on the Rent Is Too Damn High platform. The main point the party wants to make is that rent, especially in New York City, is exorbitant. Should rent prices come down, all other problems will diminish if not disappear, McMillan contends. McMillan is a veteran of the Vietnam war and wears black gloves at all times, which he attributes to Agent Orange. When asked about gay marriage, he replied that “if you want to marry a shoe, I’ll marry you.” He said “as a karate expert,” he refuses to say anything bad about the other candidates.

Colorful candidates

There were other colorful candidates at the New York governor debate. Besides the wildly inflammatory rhetoric of Paladino, there was also Kristin Davis. Davis is allegedly the “madam” who arranged the tryst between Eliot Spitzer and call girl Ashley Dupre. Davis is running on the Anti-Prohibition ticket, which is a heavily Libertarian platform. She advocates legalizing marijuana, prostitution and gambling to raise immediately needed revenue.

Cuomo comes out on top

Andrew Cuomo merely had to hang on for the ride to appear the sanest man in the room. That aside, New York State is in a budget crisis that  needs resolving. Paladino is a Tea Party favorite, but has alienated some voters with inflammatory rhetoric.

Sources

New York Daily News

Rent Is Too Damn High Party

David Paterson. (Photo from Wikimedia Commons)

Governor of New York State, David Paterson has announced that he will not seek another term as Governor of New York.  Paterson took over the office of previous governor Eliot Spitzer. Spitzer resigned from office in the wake of a scandal where he had been caught having an extramarital affair with Ashley Dupre, a prostitute, while in office.  Almost from the beginning, his term has been mired in controversy and scandal, and it seems that he may only be able to secure campaign funds with payday loans. It is anticipated that Andrew Cuomo, the State Attorney General, will be running.

Scandal had a fast start

One day into his term as replacement Governor, Paterson and his wife admitted to extramarital affairs.  This causes controversy no matter the politician and no matter the office, but it wasn’t to be the last accusation of impropriety leveled at Paterson.

Inheriting deficits, financial crisis

When Spitzer resigned, Paterson inherited a state with a budget deficit reaching critical mass and a financial crisis originating from Wall Street.  The first item on his agenda was to shore up the budget through spending cuts, but was unsuccessful as both houses of New York’s State Congress were deadlocked, and couldn’t pass anything of consequence.  His nomination for replacing Hilary Clinton’s seat in the Senate was seen as a slap in the face to Kennedy loyalists, who wanted to see Caroline Kennedy take her place in the long standing Kennedy tradition of Congressional service. The inability to curb the deficit heavily contributed to opinion polls, which revealed a growing lack of confidence in David Paterson as governor by April of 2009, in which 60% of New Yorkers felt he wasn’t up to the job.

Recent Accusations

Recently, one of Governor Patersons’ top aides was involved in a domestic violence complaint. David Johnson, one of Patersons’ top aides allegedly assaulted his live in girlfriend, and instead of letting police handle the matter as it should have been, Paterson had State Police troopers from his personal detail look into the matter.  Allegedly, the victim was spoken to by State Police and by Paterson himself, persuading her not to file a restraining order against Johnson.  The order was never put in place, and critics have posited that the incident constitutes an ethics violation.  Deputy Secretary for Public Safety, Denise O’Donnell, resigned out of protest. Perhaps he’ll need a cash advance for a lawyer as well.

Political reality

Any governor anywhere would be hard pressed to find enough support for re-election in those circumstances, and perhaps dropping the campaign was the right thing to do.  Paterson himself cited becoming “realistic about politics,” which is perhaps a good thing for any elected official to do when faced with voters that believe them to have dropped the ball in office.