As the media landscape has evolved into a land of digital opportunity, Donald Watkins stands ready to deliver an "ass kicking" to wrongdoers of all stripes

Donald Watkins

 

The developing saga of racketeering, accounting fraud and "hush money" payments at Southern Company might prove to be one of the most important stories of corporate corruption in Deep South history, especially for residents of Alabama, Georgia, and Mississippi -- the states with the highest percentage of customers in the Southern Company service area. It even has national implications (see here and here), but the mainstream press has been largely somnolent.

Al.com, the largest news-gathering organization in Alabama, has written a handful of stories about the dueling lawsuits in Florida and Alabama involving Matrix LLC and the surveillance of Southern Company CEO Tom Fanning, but it otherwise has been mostly silent. We have seen a fair amount of coverage in Georgia, with relatively little in Mississippi. The press in Florida, which is not part of Southern Company's service area, reported heavily on the dueling-lawsuits story, mainly because the tentacles of Matrix LLC reach deep into the Sunshine State.

That has left the heavy lifting to independent online journalism -- and in Alabama, that means longtime attorney and entrepreneur Donald Watkins at DonaldWatkins.com and CDLU CEO K.B. Forbes at banbalch.com, with assistance from yours truly at Legal Schnauzer.

Watkins, who developed sharp investigative skills over five decades in the legal profession, says it is not an accident that a classic "big story" has come to be dominated by non-traditional, online reporters and publishers. In Watkins' case, the media landscape has evolved to allow someone with his background to develop a powerful journalism presence -- with no printing press, TV studio, advertisers, or traditional newsroom.

The digital age presented an opportunity, and Watkins was ready to grab it. He has responded by breaking a string of stories in recent months that exposed corruption tied to Southern Company, and he appears to have more such stories in development. In an op-ed piece today, under the headline "The News Media Business Has Changed, Radically," Watkins writes:

On April 24, 2023, Tucker Carlson was fired at Fox News and Don Lemon was fired at CNN. The audiences of both news media organizations were shocked, but I was not.

The news business has changed radically in the last ten years. Instantaneously delivered, free digital-news content is rapidly replacing the old-fashion news model that comes from a primetime show with a highly-paid host/anchor.

I would never pay any media organization for news, via a subscription purchase or a requested donation. Articles that appeal to my areas of interest now saturate the Internet.

On my news media platforms (i.e., www.donaldwatkins.com, Facebook, Twitter, and LinkedIn), I do not market products, or force readers to pay a subscription fee for my content, or beg my readers to support me with a donation. I don’t have “cookies” loaded into my articles. I don't get a fee or kickback from any sponsor if a reader clicks on one of my articles. In fact, I have NO sponsors.

My news media content is diverse, fresh, well-researched, educational, thought-provoking, and free. It is often backed up with court documents, photos, and tape-recorded evidence.

That is where Watkins' years of investigative experience as an attorney enter the picture -- to the benefit of readers. He writes:

My special investigations over the past five decades have caused the resignation or removal of a litany of corrupt public officials, including two Alabama governors (both of whom were convicted on ethics charges), one Chief U.S. District Court judge (in Montgomery, Alabama), two U.S. District Court judges (in Birmingham, Alabama), two U.S. Attorneys (in Birmingham), one mayor (in Montgomery), dozens of crooked police officers, and countless local government officials.

I hold the national record for exposing the largest number of coverups of wrongdoing by public officials, corporate thugs, and crooked law enforcement officials in America. I am proud of this accomplishment.

Even though I do not promote my news media sites in any way, the average daily readership across all of my social-media platforms exceeds 60,000 people. My brand of journalism is NOT a commercial enterprise. It is a public service.

Watkins understands that journalism, to a great extent, is about holding people accountable -- especially wrongdoers in positions that directly impact the public:

I report the cold, hard truth on topics that commercial news-media groups like Bloomberg News, the Wall Street Journal, the Atlanta Journal-Constitution, AL.com, and others of a similar ilk will not devote the time, money, and resources to develop and report.

I am an unapologetic advocate for civil and human rights in the United States and abroad. My articles are often written in an effort to remove the yoke of oppression from the necks of the oppressed.

My readership is about 60% white and international in scope. The majority of my U.S.-based readers are political moderates who have been reading my articles for many years. I always learn from my readers and they often learn from me.

My media platforms are very interactive, but always respectful. I encourage spirited debate on the important public policy issues of the day. However, these debates must be carried on in a civil and respectful way on my news-media platforms. 

Watkins, long outspoken, has been the target of numerous campaigns to silence his voice. Those efforts clearly have failed, over the long haul. Watkins writes:

Many of my adversaries, including city, state, and federal government officials, have tried for decades to shut down my investigative reporting, but none has succeeded. The campaign to shut down my investigations began in 1976, via an effort to weaponize the state's criminal justice system against me. Since that time, state and federal officials in Alabama have repeatedly tried to put me in jail.

In 1994, white Birmingham corporate icon Henry C. Goodrich demanded that I leave the city because I was was disturbing the business community’s “good relations with the colored community." At the time, I was investigating and reporting on unlawfully lender discrimination against African-Americans by Birmingham-area banks.

By 1999, the Birmingham business community's campaign against me had turned overtly racist. The Birmingham News (known today as AL.com) became the flag-bearer for the white community's racist campaign to quash me like a bug.

Watkins has proven that you don't have to graduate from "J-School" or attract a bevy of sponsors to make a major impact in journalism:

Despite it all, I strive every day to maintain a sense of journalistic integrity in a world that is gushing weaklings who walk around each day masquerading as journalists. Most of them don't even have the backbone of a jellyfish.

Unlike Tucker Carlson and Don Lemon, I own my digital news media platforms. Nobody can fire me.

I am "unbought" and "unbossed." What is more, I do not place myself in a situation where I have to kiss anybody's ass in order to write and publish my articles.

In fact, it is my natural instinct to kick the asses of bullies and demagogues who target women, children, disadvantaged minorities, poor people, and the elderly for abuse. Whenever I see vulnerable members of these targeted groups getting bullied or abused, the media ass kicking I administer to the bullies or demagogues who are abusing them is unrelenting.

It matters not whether I am liked or disliked by abusive bullies and demagogues. As my father, Dr. Levi Watkins, Sr., always told my siblings and me: "It is more important to be respected than liked." My brand of journalism commands respect. Just ask the CEO of the Southern Company in Atlanta.

As the stench of corruption and backstabbing fill the air at the Southern Company, even board members can't escape the toxicity of a warped corporate culture

Kim Tanaka and Georgia Gov. Brian Kemp

The whiff of scandal is getting stronger and wafting higher on the Southern Company food chain -- all the way to the board of directors -- according to a report today from longtime Alabama attorney and entrepreneur Donald Watkins. Also, as tensions mount, backstabbing has become part of the environment at Southern Company. Under the headline "Criminal Complaint Amended in Southern Company Fraud and Racketeering Scandal," Watkins writes:

On April 28, 2023, I amended a criminal complaint that was filed with Fulton County, Georgia, District Attorney Fani T. Willis on April 13, 2023. The complaint alleged that the Southern Company has operated a decade-long racketeering enterprise and massive $27-billion accounting-fraud scheme.

The Amendment added allegations that Southern Company executives organized and participated in an extortion scheme that attempted to force the resignation of Southern Company CEO Thomas A. Fanning in 2017. A major component of the scheme was the unlawful surveillance on Kimberly Ann Tanaka, Fanning's girlfriend at the time. Certain aspects of the surveillance program continued through September of 2022.

The Amendment also alleged that, commencing in late 2022, Fanning and "de facto CEO" James Y. “Jim” Kerr, II, orchestrated a “hush money” payments scheme in which Southern Company money was funneled to Tanaka through a third-party vendor for a “no show” job. The purpose of the "hush money" payments was to silence Tanaka about the unlawful surveillance of her during the failed extortion scheme.

Late yesterday afternoon, Watkins detected evidence that indicated the corporate toxicity had reached all the way to the Southern Company Board of Directors. That revelation could have serious legal implications. Writes Watkins:

After we filed the Amendment with District Attorney Fani T. Willis, new evidence surfaced late Friday afternoon suggesting that at least one board member may have been informally briefed on the “hush money” scheme in real-time. However, this board member did not formally report the "hush money" scheme to the full board or any law enforcement agency, even though the payments were directly tied to an effort to cover up an extortion attempt that was sanctioned by Kerr.

If any board member knew of the “hush money” payments scheme and extortion attempt, but did not report these matters to the company’s full board of directors or an appropriate law enforcement agency, then such a board member is an accomplice to the coverup of the attempted extortion scheme.

Several of the board members are attorneys who knew or should have known that covering up an extortion attempt is a crime itself.

In light of our April 24, 2023 and April 27, 2023 articles exposing their “hush money” scheme, Thomas Fanning and Kerr have concocted a plan to shift the legal blame for the scheme to Lead Independent board member David J. Grain. Reportedly, they told Grain about the scheme in an informal setting.

Kerr and Grain were listed as culpable parties in the original criminal complaint filed with District Attorney Willis on April 13.

The only two parties who reported any aspect of this matter to law-enforcement officials are Kimberly Tanaka, via a police report to the Roswell Police Department, and me, via a criminal complaint filed with District Attorney Willis.

As for backstabbing, that started near the top, with Fanning and Kerr, Watkins reports:

At the time Ms. Tanaka was spied on, Jim Kerr was Fanning’s executive vice president, general counsel, chief compliance officer, and chief of staff. Fanning believed that Kerr was one of his close friends when, in fact, Kerr was the top Southern Company official who greenlighted the attempted coup d’état against Fanning in 2017.

Had the coup d'tat succeeded in 2017, Fanning would have been replaced by then-Alabama Power Company CEO Mark Crosswhite, who was Jim Kerr's close friend and corporate ally. Kerr wanted to succeed Crosswhite as CEO of Alabama Power.

Crosswhite was fired three months after word of the Southern Company's surveillance of Kimberly Tanaka and Fanning spilled into the public domain for the first time in an article we published on August 3, 2022.

Backstabbing signals now are being sent in Tanaka's direction. In fact, Watkins says Fanning and his company minions are trashing Tanaka:

Presently, certain Southern Company board members and subordinate officials have joined Thomas Fanning in a private whisper campaign against Ms. Tanaka that is aimed at besmirching her character and denigrating her as a woman.

By all accounts, Ms. Tanaka is a highly respected and well-regarded Georgia native. She is a first-class, professionally trained, highly credentialed, and certified fitness trainer. Tanaka is a Georgia native and a graduate of the University of Georgia. She also holds Personal Trainer certifications from the American Council on Exercise (ACE) and the National Academy of Sports Medicine (NASM).

Kimberly Tanaka also enjoys recognition and respect in her own right on Georgia’s political scene.

Meanwhile, Fanning reportedly plans to exit the Southern Company this spring with a $100-million retirement package in tow. Watkins draws parallels between that and the recent firing of NBCUniversal chief Jeff Shell:

On April 24, 2023, NBCUniversal fired CEO Jeff Shell, whose inappropriate interaction with CNBC correspondent Hadley Gamble cost Shell a loss of $43 million in compensation. Shell was on the receiving end of a sexual-harassment complaint, which happened to be true.

NBCUniversal acknowledged in an SEC filing on Friday that Shell forfeited vested and unvested stock options with an “estimated fair value of $43.3 million as of the termination date.” Shell did not receive any supplemental payments, benefits, or earned bonuses in connection with his termination.

Shell only received accrued but unpaid base salary and vacation time, vested employee benefits and reimbursement for any unreimbursed business expenses in accordance with his employment agreement.

In Thomas Fanning’s case, he is departing the Southern Company on May 24, 2023. Fanning was a willing participant in an unlawful “hush money” scheme that used Southern Company money to pay Kimberly Tanaka, an innocent party. The Southern Company is a publicly traded company and this "hush money" belonged to its shareholders.

Fanning failed to report to his full board of directors or any law-enforcement agency an attempt by Southern Company subordinates, including Jim Kerr, to extort him and force him into an early retirement in 2017.

In addition to criminal laws that make it a crime to pay “hush money” for the purpose of concealing an underlying crime like extortion, stalking/spying, and criminal trespass, Fanning’s conduct violated these Southern Company operating policies:

1. "Company resources are for business purposes and company-approved activities."

2. "We do not use our position, company resources or information for personal benefit."

3. "Any potential conflicts of interest must be disclosed promptly to management." In Fanning’s case, Jim Kerr, who had his own conflicts of interest, was covering up Fanning’s conflicts of interest.

4. "All business records and accounts will be complete, accurate and based on proper accounting principles." "Hush money" payments are a per se violation of this operating policy. Using corporate funds of a publicly traded company for "hush money" payments is a criminal act.

5. "Any attempt to conceal, omit or make false entries in the records will not be tolerated."

The “hush money” scheme violated all of these Southern Company operating policies, and many more.

Yet, Southern Company board members, under pressure from Fanning, plan to award him a retirement package that is valued at up to $100 million, all of which is tainted in fraud. These board members have no plans to claw back any component of Fanning's retirement package.

Is that a wise position for board members to take? Watkins says it is not, noting they stand to find themselves as the targets of a criminal complaint:

After Thomas Fanning retires on May 24, 2023, I plan to amend my complaint with District Attorney Fani T. Willis, once again, to add every board member who votes to award Fanning a retirement package beyond his accrued but unpaid base salary and vacation time, vested employee benefits and reimbursement for any unreimbursed business expenses.

Somebody must protect the stakeholder rights of the Southern Company’s 9 million customers, and I am happy to do it. This is their money, and every dollar of this money is sacred. If it takes the prosecution of a criminal complaint to force the Southern Company to comply with its own Code of Ethics, operating policies, and the Georgia criminal code, so be it.

When Thomas Fanning leaves the Southern Company, he will discover that the people he thought were his close friends DO NOT give a damn about him. They were "sunshine" friends who only used Fanning, like he used his 9 million Southern Company customers.

The company's 9 million customers paid dearly for Fanning's $28-billion worth of mistakes on two Southern Company construction projects (i.e., the Kemper, Mississippi, coal-gasification project, which never operated and is presently being demolished, and Units 3 and 4 at the Vogtle Nuclear Power Plant near Waynesboro, Georgia, which are $21 billion over budget and seven years behind schedule).

One-third of these 9 million customers live at or below the poverty level. Yet, they supported Fanning's extravagant lifestyle and his $28 billion in managerial mistakes because they had no choice.

Fanning is an elitist and his sidekick, Jim Kerr, is a bona fide racist. Both men are expected to catch pure hell in their legal entanglements after Fanning steps down as CEO.

Stay tuned for more explosive news about these men!

It's a matter of trust: With reports of hush-money payments hanging overhead, Southern Company execs face an environment of scheming and high anxiety

Tom Fanning and Kim Tanaka

 

Reports this week that Southern Company made "hush money" payments to at least two individuals has rocked the Atlanta-based utility giant, according to a report at donaldwatkins.com. Longtime Alabama attorney and businessman Donald Watkins, who has become a leading voice in online journalism about Southern Company's massive accounting-fraud scheme, broke the hush-money story on Monday -- and he has compared it to a similar tale occupying front pages around the country.  That has roiled insiders at the firm, which is the nation's second-largest utility. Writes Watkins:

There is a complete meltdown in the executive suites of the Southern Company’s headquarters in Atlanta. No one trusts anybody. The leaks are flowing from the office. It’s one hot mess.

Will Thomas Fanning make it out the door on May 24, 2023, with his retirement package that is valued up to $100 million? He WILL leave the company, but NOT with the money.

How did a sprawling, once-reputable company turn into a hot mess? Watkins provides background in a post titled “Hush Money” Payments Scandal Causes Meltdown at the Southern Company":

On April 24, 2023, I exposed secret “hush money” payments by Southern Company CEO Thomas A. Fanning to his ex-girlfriend Kimberly Tanaka. The payments were funneled through a Southern Company vendor to Ms. Tanaka, who was the innocent victim of a spying campaign that was hatched by top Southern Company executives in 2017.

Ms. Tanaka was surveilled, along with Fanning’s other girlfriend, Sarah Loudon Novascone, as part of an effort to establish whether Fanning engaged in an alternative lifestyle. If so, the documentation of this lifestyle would be used to force Fanning’s ouster as CEO and orchestrate the selection of former Alabama Power Company CEO Mark Crosswhite as his successor.

James Y. “Jim” Kerr, II, who was Fanning’s good friend, executive vice president, general counsel, chief compliance officer, and chief of staff, greenlighted the spying on Kimberly Tanaka. Kerr was more loyal to Crosswhite than he was to Fanning. It was the ultimate act of betrayal, which Fanning never discovered until we began publishing our most recent articles on the Southern Company this month.

The spying initiative on Ms. Tanaka was documented in the April 6, 2017 “Homewood Notes” of a meeting of Southern Company executives and “dirty tricks” operatives.

Fanning dumped Ms. Tanaka as a girlfriend in late 2017 and subsequently blocked her calls. She moved on with her life. Fanning moved on with his, as well. In 2018, he married Ms. Novascone.

The mainstream media (MSM), which has largely ignored the Southern Company accounting-fraud scandal, played a role -- perhaps unwittingly -- in bringing the hush-money story to light. Writes Watkins:

Tanaka first learned about the spying when Bloomberg News reporter Josh Saul called her cell phone in June 2022 and asked for her reaction while she was having drinks with a planted spy named Kristen Hentschel. The call from Josh Saul was setup by Ms. Hentschel’s handler, who implemented and oversaw the spying operation. Bloomberg News never published a story about the spying, even though this was the stated reason why Saul called Tanaka.

Instead, the call from Josh Saul set off a chain of events that resulted in Kimberly Tanaka urgently contacting Thomas Fanning, via email, at Ms. Hentschel’s encouragement. Fanning unblocked Tanaka’s number and called her repeatedly. She did not accept his calls. Fanning left voice messages on Tanaka’s phone in which he begged her to call him.

Tanaka’s email to Fanning after the call from Josh Saul simply asked Fanning whether he knew about Southern Company operatives spying on her. Fanning acknowledged that he did.

Tanaka felt violated and anxious. She was also mad and devastated.

It seemed clear that Tanaka had grounds for a civil complaint against Southern Company, executives at the company, or both. The threat of a lawsuit got the story churning into high gear:

At the encouragement of Ms. Hentschel, Tanaka sought legal counsel and pursued her legal remedies against the Southern Company.

On September 22, 2022, Kimberly Tanaka filed a police report about the surveillance after a private investigator found a tracking device on her car that day.

Thomas Fanning consulted with Jim Kerr, the man who greenlighted the nefarious spying campaign in the first place, about the sticky situation. It is not known whether Fanning consulted Kerr in Kerr’s capacity as Fanning’s executive vice president, or general counsel, or chief compliance officer, or chief of staff, or trusted friend.

However, it is known that both men had an affirmative duty as top executives of a publicly traded company to report this matter to the Southern Company’s board of directors, which they reportedly failed to do.

Instead, Fanning and Kerr resolved Ms. Tanaka’s legal claims by implementing a “hush money” payment scheme that funneled Southern Company funds through a third-party vendor to Tanaka for “no show” work.

As law-enforcement became more deeply involved, that likely rattled nerves at Southern Company. And that brought Fulton County District Attorney Fani T.Willis, who is overseeing the Georgia vote-fraud case against former President Donald Trump, into the picture. Writes Watkins:

On April 25, 2023, the Roswell Police Department confirmed that Kimberly Tanaka’s case remains “ACTIVE” and has been assigned to Detective C. White (ID #121) for investigation.

The illegal surveillance and “hush money” payments fall squarely within the jurisdiction of Fulton County, Georgia District Attorney Fani T. Willis for a grand-jury investigation and prosecution, if warranted.

On April 13, 2023, I filed a criminal complaint with District Attorney Fani Willis against certain executives of the Southern Company and their alleged criminal conduct in running a racketeering enterprise and massive $27 billion accounting fraud scheme.

In the interest of full disclosure, I am one of many victims of the Southern Company’s decades-long racketeering scheme. In addition to the criminal complaint I filed with District Attorney Willis, my son and I also filed a criminal RICO complaint with the Criminal Division of the U.S. Department of Justice (DOJ) on January 27, 2023.

The Southern Company’s racketeering scheme has corrupted certain public officials in the company’s six-state service area, compromised state and federal regulatory officials in Alabama and Atlanta, and corrupted certain federal prosecutors and judges in Alabama and Atlanta.

The Southern Company’s ongoing racketeering has NOT corrupted District Attorney Fani T. Willis. Her reputation for integrity, honesty, and ethical conduct is pristine.

I will amend my April 13, 2023, criminal complaint with District Attorney Willis to add the facts dealing with Fanning's and Kerr's unlawful “hush money” scheme. The amendment will be submitted to District Attorney Willis not later than May 1, 2023.

After the amendment has been submitted to Ms. Willis, I will publish more details about the “hush money” scheme.

That brings us to the other hush-money case grabbing national attention -- and that, of course, involves Donald Trump, in New York. Watkins sees differences in the Trump case and the Southern Company case, but he says it is imperative for the justice system to handle them in a similar fashion:

On April 4, 2023, Manhattan District Attorney Alvin Bragg indicted former president Donald J. Trump in New York on 34 felony counts arising from a “hush money” payment scheme in which Trump used his private company money to silence porn actress Stephanie Gregory Clifford (a/k/a Stormy Daniels) from discussing her alleged affair with Trump. The money was funneled through Trump attorney Michael Cohen to Stormy Daniels. Trump’s state-court prosecution is ongoing.

As head of a private company, Trump had no duty to report his “hush money” payments to his board of directors, or anyone else. Unlike Trump, Fanning was required to report the Tanaka payments to his board of directors and his state and federal regulators. This, he did not do.

Jim Kerr also had a duty to report these payments to the Southern Company’s board of directors and the company’s state and federal regulators. This, he did not do.

Whoever runs the Southern Company’s worthless Code of Ethics compliance program also had a duty to report the Tanaka “hush money” payments to the board of directors. This, he/she did not do.

Trump used his private corporation's money for his "hush money" payments. In Kimberly Tanaka's case, the Southern Company, a publicly traded company, reportedly used ratepayer money for its "hush money" payments.

To prosecute Donald Trump and Michael Cohen for their roles in “hush money” payments to Stormy Daniels, but not prosecute Thomas Fanning and Jim Kerr for their roles in the “hush money” payments to Kimberly Tanaka would constitute a glaring example of selective prosecution and would seem to be a grave injustice to Trump in the public’s eye.

Southern Company reportedly has turned to political influence and big money to deal with its problems. Will that plan be successful? Watkins shares his thoughts:

The Southern Company has skillfully used former president Bill Clinton’s political influence in Washington to (a) stall and clamp-down on the DOJ’s criminal investigation of the company's long-running, multi-state racketeering activities and (b) totally ignore the company’s massive accounting-fraud scheme.

In Washington, money talks and big money talks very loud. This is why Wells Fargo Bank has never been prosecuted for any one of the 230 major violations of laws the Bank has committed since 2000. Wells Fargo simply pays a fine and keeps breaking the law.

The Southern Company has modeled its criminal conduct after Wells Fargo. Both companies share Donald M. James as a longtime board member. James is Jim Kerr’s sidekick. . . .

Like the 14 executives who were indicted and convicted in the HealthSouth fraud scheme (2003 to 2005), Thomas Fanning, Jim Kerr, and other Southern Company executives are in big trouble. They cannot “fix” a case with District Attorney Fani T. Willis. Bill Clinton’s considerable influence peddling skills will NOT make this case go away.

Anyone who aids or abets Thomas Fanning and Jim Kerr in this “hush money” payments scheme will be deemed an accomplice.

Harlan Crow, Clarence Thomas' billionaire buddy, has held dual citizenship in island tax havens, raising questions about the shadowy ways he buys influence

St. Kitts and Nevis

The Texas billionaire who lavished gifts on U.S. Supreme Court Justice Clarence Thomas for more than 20 years held citizenship in island tax havens as recently as last year, according to a report today at The Intercept. Under the headline "Clarence Thomas Billionaire Benefactor Harlan Crow Bought Citizenship in Island Tax Haven; Leaked documents reveal the GOP megadonor held dual citizenship in St. Kitts and Nevis as he lavished the Supreme Court justice with gifts," reporters Jason Paladino and Ken Klippenstein write:

Harlan Crow, the billionaire GOP donor who paid for luxury travel on his private jet and yacht for Supreme Court Justice Clarence Thomas, was a dual citizen of the U.S. and the island nation of St. Kitts and Nevis as recently as last year, according to recently unearthed documents.

In 2012, Crow and his family were granted passports for St. Kitts and Nevis, a tax haven known for impenetrable financial secrecy, through a cash-for-citizenship scheme. Documents provided to the Daphne Caruana Galizia Foundation by a whistleblower as part of its Passport Papers investigation and reviewed by the Project on Government Oversight, or POGO, and The Intercept suggest Crow and his brother Trammell S. Crow paid hundreds of thousands of dollars for the passports. Financial transparency experts say the island’s tax regime would make tracking Crow’s assets, including gifts to Supreme Court justices, extremely difficult.

The documents were leaked from Henley and Partners, a London-based firm known for assisting the ultra-wealthy in obtaining “golden passports,” which allow the holders to shield assets from their home country’s tax authorities. The firm advertises itself as “the global leader in residence and citizenship by investment” and has been shown to do business with controversial clients. An Organized Crime and Corruption Reporting Project investigation using the leaked documents reported that the firm was working with a rogues’ gallery of accused financial criminals from around the world. An investigative journalism collaboration, also based on the leaked trove of Henley documents, reported that oligarchs, fugitives, and sanctioned business people were among the clients seeking foreign passports. The passports, granted in 2012, would expire after 10 years unless renewed. It’s unclear if the Crow family renewed them last year.

 What does this mean? The reporters explain:

The revelation of Crow’s history as a dual citizen of a nation considered to be one of the world’s most secretive tax havens raises new questions about the lavish, undisclosed gifts to Supreme Court Justice Clarence Thomas, first revealed by ProPublica. On Monday, Senate Finance Committee Chair Ron Wyden, D-Ore., sent a letter to Crow seeking evidence that Crow “complied with all relevant federal tax and ethics laws,” something his dual-citizen status is sure to complicate.

“The American public deserves a full accounting of the full extent of your largesse towards Justice Thomas, including whether these gifts complied with all relevant federal tax and ethics laws,” Wyden wrote to Crow, demanding answers to detailed questions about whether he complied with IRS gift tax rules by May 8. St. Kitts and Nevis passport holders are not subject to a gift tax.

Even among tax havens, St. Kitts and Nevis is considered high risk by regulators, once even appearing on a Financial Stability Forum list of countries that were “non-cooperative” with global efforts to fight money laundering and financial crime. In 2018, the European Union moved the nation to a list of “non-cooperative jurisdictions,” citing its “harmful preferential tax regime.” A 2018 investigation in The Guardian dubbed it “the world’s most secretive offshore haven.” Even when tens of thousands of St. Kitts and Nevis business documents appeared in the “Paradise Papers” leak, company ownership was still hidden because the jurisdiction keeps so little information filed.

“International business tycoons and politicians, who have looted the assets of their nations — and other high wealth individuals — have used the dubious network of offshore tax havens across the world, which includes St. Kitts and Nevis, to hide their assets and income,” said Rep. Hank Johnson, D-Ga., ranking member of the House Judiciary subcommittee overseeing courts.

Harlan Crow did not respond to questions about his citizenship arrangement.

There is no evidence that Crow’s dual citizenship is connected to any illegal activity. A review of Supreme Court cases involving dual citizenship and taxation do not show any obvious signs of influence by Crow or favorable decisions by Thomas. But the existence of the potential conflict of interest is alarming to ethics experts.

Fallout from the Thomas-Crow bromance already has raised a load of ethical questions. The story of Crow's dual citizenhip, and the possible financial implications, add to it. Chief among the questions is this: How might Clarence Thomas have benfited from Crow's peculiar arrangement?

Thomas has enjoyed one of Crow’s overseas assets registered in another “tax efficient” jurisdiction. The billionaire’s 162-foot luxury yacht, the Michaela Rose, that Thomas and his family spent a nine-day trip on in Indonesia in 2019, is owned by Rochelle Marine Limited, a company domiciled in Guernsey, a British protectorate in the Channel Islands known for minimal taxation and maximum secrecy.

“If tax avoidance and secrecy are what Harlan Crow was seeking, it might be no coincidence that concurrently and for more than two decades Justice Thomas has been concealing the full extent of his financial relationship with Harlan Crow,” said Johnson, who recently introduced legislation in the House that would create ethics and transparency rules for Supreme Court justices. “The public interest requires that financial relationships between Supreme Court justices and people like Harlan Crow be publicly disclosed.”

According to NPR, the value of Thomas’s undisclosed gifts could total more than a million dollars, and ProPublica’s investigation valued the Indonesia trip alone at $500,000. ProPublica later revealed that in 2014 one of Crow’s companies purchased and renovated Thomas’s mother’s home in addition to buying several lots on the street. CNN then reported that the Supreme Court justice’s mother does not pay rent and still resides in the home. Thomas didn’t disclose the sale on his ethics forms, despite co-owning the home prior to the sale.

Thomas has said that his failure to report gifts he accepted from Crow did not violate the law because he did not have business before the court. But in 2005, an architecture firm appealed the Supreme Court in a case alleging misuse of copyrighted designs and sought $25 million in damages from Trammell Crow Residential, a firm founded by Crow’s father and in which the Crow family was invested at the time, as Bloomberg reported on Monday.

The court, including Thomas, who did not recuse himself, voted to deny the petition.

Questions about Harlan Crow go way beyond the nation's highest court, The Intercept reports:

Crow is not just a close friend to one of the most powerful judges in the country; he is also a prolific political donor, personally giving more than $10 million by ProPublica’s estimates, largely to conservative causes, and that is only in publicly disclosed donations. ProPublica notes he also donates to groups not required to disclose their donors. While current law forbids political giving or expenditures by foreign nationals, it does not preclude dual citizens who hold a U.S. passport from doing so.

The financial secrecy afforded by dual citizenship could allow Crow’s accounts in third-party countries to remain invisible to regulators in the United States.

Crow oversees several financial entities in another small Caribbean island nation also known for its tax avoidance policies. Three investment funds belonging to Crow Holdings — the real estate conglomerate on which Crow serves as chair — are located in the Cayman Islands, according to the IRS’s foreign financial institution list. One of the entities is an offshore feeder fund, a type of foreign investment fund that shields investors from certain domestic taxes. (A company founded by Crow’s late father, Trammell Crow, also lists a subsidiary in the Cayman Islands.)

“Feeder funds generally refers to an offshore fund that then buys onshore funds — it’s a way for foreigners to buy U.S. investments without normal reporting requirements,” said Sarah Alexander, a partner at Constantine Cannon, whose practice focuses on international financial misconduct. “In practice, it’s also a way to shield assets, and there’s a lot of U.S. persons who shouldn’t be there.”

“A very small percentage of American citizens hold dual citizenship with another country, and a key question is why Mr. Crow acquired St. Kitts and Nevis passports for himself and his family,” said Elise Bean, former staff director and chief counsel at the Senate Permanent Subcommittee on Investigations. “U.S. passports already enable U.S. citizens to visit a lot of countries without a visa, and there’s no indication Mr. Crow or his family plan to buy a house in St. Kitts and Nevis, so what is the purpose?”

For a U.S. citizen, gaining a St. Kitts and Nevis passport would allow less restricted access to only a few countries like Russia, Iran, and Belarus, according to data compiled by Passport Index.

Crow's efforts to obtain a "golden passport" took a circuitous route, and that process has drawn the attention of government officials in multiple countries, including those in the U.S. Treasury Department, State Department, and the Department of Justice, The Intercept reports: 

To obtain golden passports in St. Kitts and Nevis, the Crow family paid into the Sugar Industry Diversification Fund, one of several options for the citizenship-by-investment program at the time, according to internal Henley and Partners documents. That program and the law firm that had the exclusive rights to sell citizenship through donation have faced questions of self-dealing. The fund, controlled in part by lawyers associated with the firm, made several investments into companies connected with the chair of Henley and Partners, according to an Organized Crime and Corruption Reporting Project investigation, and the arrangement was eventually terminated.

Documents reviewed by POGO and The Intercept show payments of approximately half a million dollars for the Crow family’s passports, a small price to pay when considering the potential savings to be had by avoiding pesky estate, inheritance, income, or wealth taxes.

The prime minister of St. Kitts and Nevis criticized the investments of the fund, telling Parliament it was as if the money, intended to help residents of the islands’ transition from the sugar trade, had been “given away.”

In 2014, two years after the Crow family paid for St. Kitts passports, the U.S. Treasury Department’s Financial Crimes Enforcement Network raised the alarm on the practice. The financial regulator was concerned about Iranian nationals using the system “to mask their identity and geographic background for the purpose of evading U.S. or international sanctions or engaging in other financial crime.”

That same year, Canada decided to require St. Kitts and Nevis citizens to obtain a visa to enter the country, “to properly determine the true identity of St. Kitts and Nevis passport holders,” citing “concerns about the issuance of passports and identity management practices within its Citizenship by Investment program” — the same program the Crow family bought into just two years prior.

In 2017, the State Department noted in a report on money laundering that St. Kitts and Nevis’s Citizenship by Investment Program was “afflicted by significant deficiencies in vetting candidates and conducting due diligence on passport and citizenship recipients after they receive citizenship,” and noted that the country was a “desirable location for criminals to conceal proceeds.” The country remains on the State Department’s 2021 list of high-risk jurisdictions due to the prevalence of money laundering.

In 2020, the Department of Justice indicted tech CEO Robert Brockman in what law enforcement officials called “the largest ever tax charge in the United States.” Prosecutors alleged that companies in Nevis that were key to the scheme were used to hide $2 billion of wealth from U.S. tax officials. Brockman died last year while still facing trial.

Last year, Armenia’s then-President Armen Sarkissian abruptly resigned after a news outlet learned that he had secretly retained citizenship to St. Kitts and Nevis. Sarkissian has said that he received the passport after he invested $500,000 in a luxury hotel on the island.

The schemes involved in obtaining "gold passports have even raised eyebrows in the U.S. Congress:

Last month, a Senate Finance Committee report singled out the risks of high-net-worth dual citizens avoiding taxes. According to the report, investigators found a trend of “complicit bankers” helping high-net-worth U.S. citizens hide the true ownership of bank accounts through citizenship-by-investment schemes, like the one Crow bought into. The report investigated several cases where Credit Suisse was facilitating these arrangements on behalf of wealthy Americans, finding hundreds of millions of dollars hidden offshore, sometimes using St. Kitts entities.

The committee report points to a 40 percent reduction in IRS revenue agents since 2010 as a contributor to the problem, and recommends fully funding the IRS. Doing so, according to the committee, is “the single most important factor in stemming offshore tax evasion by wealthy tax cheats.” The Inflation Reduction Act provides a historic investment in the IRS, and the agency has pledged to use that money to pursue any tax avoidance by high-net-worth individuals.

Several U.S. watchdog organizations, including POGO, have called for an investigation into the Supreme Court justice’s alleged violations of the Ethics in Government Act, which requires financial disclosures, and, if warranted, for civil monetary penalties.

“The Department of Justice has a duty to hold Justice Thomas accountable for this flagrant and repeated law breaking, unless an investigation reveals that the facts radically differ from what has been reported,” wrote POGO’s Walter Shaub and Sarah Turberville. “The department has enforced the disclosure law against other federal officials. There is no reason to treat Justice Thomas differently.”

Documents: From helping develop an entity to pay bribes to helping ruin a colleague's life, Drummond Company lawyer Blake Andrews looks like a swell guy

Birmingham brownfield sites

 

Newly obtained documents show that Drummond Company's chief legal officer was regularly briefed on establishment of the money-laundering entity at the heart of the North Birmingham Bribery Scandal. General Counsel Blake Andrews even participated in planning the Alliance for Jobs and the Economy (AJE), which was developed to bribe a state lawmaker in an effort to block the U.S. Environmental Protection Agency's (EPA) plans to designate several heavily polluted areas in North Birmingham as brownfields. For good measure, the documents appear to show that Andrews knowingly set up former Drummond vice president David Roberson to be the "fall guy" in the scheme.

That's all from a post at banbalch.com, which operates under the CDLU public charity and advocacy group. The documents now in possession of the CDLU make the North Birmingham scandal look even uglier than we already knew. And the documents paint a picture of Blake Andrews that is unflattering, on multiple levels. Writes Forbes, under the headline "“Fall Guy” Follies: Drummond’s “Confused” General Counsel Briefed Since Inception About North Birmingham Scheme":

The emails and documents we recently received show unequivocally that Blake Andrews, the “confused” General Counsel of Drummond Company, was briefed regularly about the North Birmingham Scheme.

On February 18, 2015, at the inception of the money laundering entity, Alliance for the Jobs and the Economy (AJE), convicted felon and now ex-Balch partner Joel I. Gilbert reached out to Andrews and his underling, Curt Jones, an Assistant General Counsel at Drummond Coal Company.

AJE was not incorporated until almost two weeks later, on March 3, 2015 in the State of Delaware.

Both men, according to Gilbert’s email, “expressed interest in participating in the planning/strategy session to establish AJE.

In our story about the more than 20 entities that participated in AJE, we posted the body of the email written by former Balch partner Steve McKinney warning Drummond executives and his staff about emails falling into the wrong hands. Blake Andrews and Curt Jones were included in the header.

In the body of the email, McKinney called the operatives “the Drummond/AJE team.”

Interesting choice of words or a Freudian slip of the keyboard?

A day after McKinney warned Andrews and others about the emails, he drafted another email to Blake Andrews discussing:

• 1.) a potential AJE contractual agreement with Dr. Kenneth A. Mundt of ENVIRON. The goal was to present “truth squad” work that went counter to the arguments laid out by GASP and the EPA.
• 2.) and asking Andrews if Balch’s AJE effort was or was not “perfectly on track with the company’s interests and concerns.”

Maybe Andrews wasn't so confused after all. His thinking appears to have been clear enough to take actions that had a profoundly negative impact on David Roberson's life and career. Writes Forbes:

As we reported in 2020 before ex-Drummond executive David Roberson’s $75-million lawsuit was sealed in its entirety, Drummond’s attorney foolishly argued that lying to and framing Roberson was ” a legal service.”

We wrote at the time:

Drummond’s attorney threw a hand grenade when he testified at the hearing. This is what he foolishly said:

With respect to the argument that Drummond’s general counsel was not giving  legal advice, I think [Roberson’s attorney] just made the argument for me. Their theory is that Drummond’s general counsel formed a legal opinion that this whole plan was illegal and did not tell Mr. Roberson about it, and in fact told him things that would basically make him be the fall guy, I think is their theory. That is — the formation of a legal opinion as to whether something is legal or illegal. It is the definition of what a lawyer does. So I don’t know that I can state it any better than [Roberson’s attorney] did. That is legal services.

Problem is that Drummond’s General Counsel Blake Andrews allegedly never, ever told Roberson the scheme was illegal.

Roberson’s attorney Burt Newsome rips Drummond’s argument to shreds. From the transcript:

[Drummond’s attorney] did a great job summing up Balch and Drummond’s legal services argument in a nutshell. He just told you because Blake Andrews formed in his head that this lobbying scheme was illegal and decided, I better not pay these invoices to the foundation because I’ll go to jail, then I’m going to — so I’m going to get David Roberson to pay these so he will go to jail, that that was providing a legal service to Mr. Roberson. That is absurd. Blake Andrews making a legal opinion in his head that this is illegal, I better not pay these, I better get somebody else to do it, that’s not giving legal advice to Mr. Roberson. That doesn’t make David Roberson his client. That makes David Roberson him and Balch’s fall guy.

As we said earlier, this stuff is ugly -- and the treatment of David Roberson seems particularly lowdown. What should be coming next? Forbes offers his ideas:

Roberson appears to have been set up as the “Fall Guy” in the North Birmingham Bribery Case.

In court documents, Drummond denied ever having received invoices in Andrews name, an apparent bold-faced lie.

In early 2021, Roberson filed concrete evidence that Drummond Company lied in a court proceeding and that original invoices sent to Drummond from Balch & Bingham were addressed to Blake Andrews, the “confused” General Counsel of Drummond Company.

White lies, damn lies, and fall guys!

Blake Andrews should have been, and should be, investigated for his participation in AJE and the North Birmingham Bribery Scheme.

Now, in 2023, Andrews should also be probed for his alleged role in which Roberson’s defense attorneys (paid by Drummond) rejected a full-immunity deal for David Roberson back in 2017, allegedly trampling Roberson’s civil rights.

The only “confusion” we see has been the truth.