The Black Rod

The origin of the Usher of the Black Rod goes back to early fourteenth century England . Today, with no royal duties to perform, the Usher knocks on the doors of the House of Commons with the Black Rod at the start of Parliament to summon the members. The rod is a symbol for the authority of debate in the upper house. We of The Black Rod have adopted the symbol to knock some sense and the right questions into the heads of Legislators, pundits, and other opinion makers.

Location: Winnipeg, Manitoba, Canada

We are citizen journalists in Winnipeg. When not breaking exclusive stories, we analyze news coverage by the mainstream media and highlight bias, ignorance, incompetence, flawed logic, missed angles and, where warranted, good work. We serve as the only overall news monitors in the province of Manitoba. We do the same with politicians (who require even more monitoring.) EMAIL:

Sunday, September 30, 2012

Mayor Katz: Up to his neck in the quicksand of scandal and sinking fast.

Sam Katz, Mayor of Winnipeg, made the worst mistake of his political life last week.

Instead of stifling suspicions over the odd circumstances of his purchase of a house in Phoenix, Arizona, Katz managed, with a disingenuous answer to a simple question, to stoke the mystery to new heights. Ooooh, so not good.

Confronted by aggressive reporters, Katz was peppered with questions about how he came to be buying a house at a discount from the sister of the Chief Finance Officer of Shindico Realty, the company at the heart of not one, but two, audits of how the city conducts its real estate business and whether Shindico gets preferential treatment.

Visibly nervous, he dismissed any suggestions of impropriety, often with a prepackaged answer: "I purchased a home in Arizona. I paid fair market value." The scrum running out of steam, one reporter threw out a softball question. When did the mayor buy the house?

"I purchased a home in Arizona. I paid fair market value." said Katz, avoiding the question. 

Now why would the mayor be ducking such a simple question? It makes you wonder. Or, as Columbo would say, "Just one more thing, Mr. Mayor..."

Taking a broad overview of the known facts, we have...

* A woman living in Colorado buys a newly built house in a suburb of Phoenix, Arizona in October, 2008, for $1.5 million. Cash, no mortgage. Her husband signs off on any financial interest in the house, which, we repeat, sold for $1.5 million. Isn't that what husbands do? Turn a blind eye to the wild purchases their wives make without checking the Visa bill item by item? Yeah, sure.

* The woman fills out an affidavit where she swears to a notary public that the house will "be occupied by (the) owner or family member."

* But the very next year, a man who is not her husband is listed in the city directory as living in the house, a man who has an ex-wife living about 15 blocks away.

* And by 2011 the tax bill is sent, not to her husband's home, but to the home of the other man in Winnipeg, so that he, presumably, will pay it even though it's in her name.

* Four years after buying the house, the woman from Colorado accepts $10 from the man in Winnipeg and transfers ownership of the Phoenix house to him for that "and other valuable consideration." The deed is recorded as "payment in full."

Oh, no, nothing suspicious here, Lt. Columbo.

Well ... maybe that part about when the man in question, Sam Katz, Mayor of Winnipeg, actually paid for the house and why he's being so evasive about it.
Katz told reporters he paid a million dollars for the Phoenix house. Asked where he got so much money to buy a house without resorting to a mortgage, Katz said he was a self-made millionaire who raked it in when he sold his Winnipeg businesses, apartment blocks, and other investments after being elected as mayor. He presumably meant in 2006, not the byelection in 2004.
So Katz was sitting on a mountain of money, slightly dented following his divorce from his first wife, Baillie, in early 2007. And sometime during the next five years he decided to drop a million smackers cash on a house in Phoenix, a house that somebody else also bought for cash.


A professional cynic like Columbo might look at the timeline and ask whether the woman in Colorado was acting as a cutout to buy the house for Sam Katz without leaving a paper trail with his name on it. The fact that she is the sister of the wife of Sam Katz's business partner in the Winnipeg Goldeyes ballpark doesn't do anything to dampen suspicion.

And speaking of suspicion, million dollar cash purchases in the United States often attract the attention of police agencies whose job it is to track money laundering or illicit asset transfers. Especially if there appears to be an effort to avoid leaving a paper trail by the principals.
Luckily there's no hint of money laundering or illicit asset transfer in Katz's purchase of a house in Phoenix, although the lengths to avoid a paper trail might require some explanation.

Just as the claim that the Phoenix house would be occupied by the buyer or a relative might require some explanation. Given that Katz is not a relative, if he was the sole occupant, then the claim on the notarized buyers' affidavit might be seen as perjury. But that wouldn't involve Katz except peripherally, as a witness against his partner's sister-in-law.

Not that the mayor needs more embarassment.

Katz was mortified at Thursday's session of city council when he was forced to stand and vote in favour of a motion from Councillor Jenny Gerbasi --  calling for a thorough audit of the city's real estate dealings starting with the past five years, and extending to ten if the auditors choose. The vote was unanimous and Katz would have looked the right fool if he hadn't joined the 'aye side.

The shamed mayor knew, if reporters didn't, this was sweet revenge by Gerbasi for an insult Katz hurled against her in 2008 when he was pushing the city to hire his best friend Phil Sheegl as Winnipeg's chief operating officer, effectively the most powerful job in the city with more power to hire and fire and negotiate contracts than even the mayor holds.

Gerbasi questioned Sheegl's qualifications, leading an exasperated Katz to sneer,
"When it comes to ability, intelligence and integrity, Coun. Gerbasi wouldn't even qualify to be in the same building, let alone the same room, as Phil Sheegl."

Thursday, a humbled Katz had to grovel before Gerbasi and support her motion, which everyone knows paints a bullseye on Sheegl. Sheegl himself sat frozen behind his benefactor, knowing full well that his remaining time at city hall is probably measured in months, not years.
Sam Katz's personal credibility is in shreds. Like Humpty Dumpty he will never be put together again and everyone knows it.

He tried for a month to control the scandal swirling around him, then to distance himself from it, and finally to pretend he's leading the charge to get to the bottom of it. Nobody's buying a word.

How could they?

Katz was nonplussed when CBC broke a story Aug. 23 that Shindico Realty had a city property, a dis-used fire hall, up for lease---even though the site has never been declared surplus. It wasn't the first time Shindico put a city property on the market before it was declared surplus and suspicion was raised that maybe Shindico owner and Katz friend Sandy Shindleman was getting a gentle assist in business from somebody on the inside. Hint hint.
Nobody at city hall seemed perturbed. The listing was pulled; Shindleman said it had been up in error.

Winnipeg's property director Barry Thorgrimson said the land was "technically" surplus anyway because the firehall on it had already been replaced. The Fire Chief revealed the land was part of a land swap he had personally negotiated with Shindico in exchange for some land Shindico owned on which a fire station in River Heights had been built.
Say what? City councillors began asking about this other firehall and discovered an unknown Shindico connection to the construction of all four new fire stations dating back to 2010.
Katz jumped in then with his own take. Everybody, he said, knew that two of the fire stations that had been replaced were going to be declared surplus. So what was the big deal?

It seems the deal was that the city built a firehall (Fire Station #12 to be precise) on land it didn't own, the land swap had been a secret from city councillors, and nobody was sure that the value of the land we were giving Shindico was equal to the land under the fire station. And the contract to Shindico was untendered. And had been structured to keep city councillors from knowing who the contractor was.

Katz rushed to get ahead of the steamroller. He went on CJOB and disowned Sandy Shindleman, declaring he hardly knew the man who just happened to own some shares in the Goldeyes. And, he said, he wasn't happy with the land-swapping fire chief, either. He deserved a good fingerwagging.
Then, on Aug. 31, Katz's handpicked CAO joined five other city bureaucrats in an unprecedented news conference to declare everything about the firehalls was on the up and up. And city councillors should zip it because he, the mighty Phil, would tell them what they needed to know, maybe in September, maybe in October.
By coincidence this is the very day Katz took ownership of the house in Phoenix. Did he know something nobody else in Winnipeg did?

When, in early September, Jenny Gerbasi called for an audit of the real estate division going back at least three years, Katz declared nothing of the kind was warranted.

Instead, he announced a review of the land swap would be conducted by, guess who, Phil Sheegl and the city's financial officer, Mike Ruta, two of the bureaucrats who had already cleared the department of wrongdoing at the strange gang-newser.

There's a story about that "review" we haven't been told yet.

But before it could be presented to city council, leaks out of city hall revealed that it was being scrapped and in its place the city auditor was launching his own audit of the firehall construction and land swaps.

The mayor, still leading from behind, rushed to announce that he was fully in agreement with an official audit rather than the whitewash review he was expecting.

But by then, nobody was listening to anything he had to say. They were talking about the news that back in February Phil Sheegl had sold Katz one of his defunct companies in Phoenix for one dollar.

Problem was, as the mayor himself said, it would have cost him $3000 or $4000 to hire a lawyer and set up a company on his own. So, in effect, he got a $4000 financial benefit for $1 from his best friend Phil Sheegl, the man he assigned to examine how his other friend Sandy Shindleman got a sweetheart deal on the firehalls contracts.

And then, this latest news. Sandy's wife's sister bought a house for $1.5 million in 2008 and turned it over to Sam Katz in August for $10. Cash. No realtor. The bare minimum paper trail.

If Katz escapes with only two audits, he will be lucky.

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