« July 2012 | Main | September 2012 »

13 posts from August 2012


Texas agency directors make big bucks, but audit says some should make more

BishopIt’s comforting to know that at least one state employee will probably be OK when she retires.

Ann S. Bishop, executive director of the Employees Retirement System makes $312,000 (plus a bonus), according to a new report of top state officials’ salaries by the State Auditor’s Office.

Bishop should be good since she’s a “veteran of state government” who served as deputy Comptroller of Public Accounts and the first executive director of the Department of Information Resources.

To be clear, we’re not knocking Bishop, who has a big job managing a $23 billion investment portfolio and manages the Texas Employees Group Benefits Program, which provides health
care coverage to more than 500,000 state and higher education employees, retirees and their families. Gold

But the auditor’s report appears to preemptively rationalize the top salaries of state government employees, noting “it is in the State’s best interest to ensure equitable pay for executive officer positions to help recruit and retain qualified executive officers capable of effectively and efficiently managing state agencies.”

Salaries range from Bishop’s six-figures down to $65,000.

Of course, Gov. Rick Perry some state officials managed to Mansiondraw an annual salary, say $133,000, while also collecting retirement of, uh, oh call it another $92,376.

The audit recommends upping the pay among similar executive officer positions at state agencies. And it does point out some rather strange pay disparities, such as the four executive officers and another four management positions that earned higher salaries than the Health and Human Services Commission’s executive commissioner.

Or that the Department of Public Safety’s executive officer is not among the 30 top management salaries, despite managing an agency protecting Texans and overseeing a $1.5 billion budget.

Still, this is taxpayer money. So how much do, say, the top 26 people (two tied) get paid?

Here’s the list. We threw in a little comparison based on Texas’ 2010 median income of one earner: $38,801.






Percent Median Income

Employees Retirement System Exec. Director $312,000   804%
Department of Transportation Exec. Director $292,500   754%
Treasury Safekeeping Trust CEO $292,000   753%
Teacher Retirement System Exec. Director $270,000   696%
Department of Transportation Finance officer $250,000   644%
Department of Transportation Chief, Strategy and Administration $245,000   631%
Department of Transportation  Chief Planning/Project Officer  $245,000   631%
Teacher Retirement System  Dep. Administrative Officer $231,276   596%
Health And Human Services Commission  Executive Commissioner $230,000   593%
Health and Human Services Commission  Dep. Director $216,652   558%
General Land Office  Dep. Director $216,446   558%
Department of Transportation  Dep. Executive Director $215,000   554%
Cancer Prevention and Research Institute  Executive Director $214,000   552%
Cancer Prevention and Research Institute  Chief Scientific Officer $212,000   546%
General Land Office  Dep. Director $210,244   542%
Teacher Retirement System  Dep. Director $205,200   529%
Department of Transportation  Chief Financial Officer $205,000   528%
Comptroller of Public Accounts  Dep. Comptroller $201,960   521%
General Land Office  Dep. Director $199,997   515%
General Land Office  Dep. Director $199,310   514%
State Auditor's Office  State Auditor $198,000   510%
Employees Retirement System  Dep. Director $196,000   505%
Department of Transportation  Dep. Director $195,000   503%
General Land Office  Division Director $194,480   501%
Office of the Governor Dep. Director $192,975   497%
Department of Transportation Dep. Director $190,000   490%


-- Darren Barbee


Feds want to blacklist Texas trading biz just because it defrauded $30 million

Seems like there's always someone trying to take your money.

Fraud warningEar candle sellers, for some reason, always come to mind.

But now it's the Mihailovich Family Fraud fund being hit up.

The U.S. Commodity Futures Trading Commission wants to revoke the registration of a father and son Texas company that bilked, conned and messed over lots of folks for $30 million.

Federal authorities say Robert Mihailovich Sr., convicted felon, and son Robert Mihailovich Jr., banned trader, ran a scheme to fraudulently solicit cash from commodity futures and foreign currency traders.

The commission says that’s plenty reason to yank the registration of Growth Capital Management of Rockwall.  Growth Capital is a registered Commodity Pool Operator and Commodity Trading Advisor.

A little background: Mihailovich, Sr. was convicted on federal wire fraud charges, spent 27 months CFTCBuilding inside and, while on a three-year supervised release, defrauded about 93 people out of than $30 million to open managed trading accounts, according to the government. Mihailovich, Jr., at the time of Growth Capital’s initial registration, forgot, as we all do from time to time, that dad was part of the business, the controlling principal and an ex-con.

It's like Father's Day; you just forget sometimes.

It’s still unclear whether Sr. and Jr. will face criminal charges. Federal court records do not show any Foreign exchangecriminal filings against them.

No doubt, though, they’re already writing the checks a federal court ordered Mihailovich Sr. and company to pay $3,475,112 in restitution, $389,006 in ill-gotten gains and a $5.4 million fine.

OK, maybe a little doubt.

-- Darren Barbee

Burger King smites Christian fired for wearing skirt, so feds smite back, suit says

A Texas Burger King is being accused of skirting the law, which, as you will see, is a very bad pun.

Creepy Burger ManA Christian woman's claim of religious discrimination based on her beliefs about clothing has brought the wrath of a somewhat higher power — the federal government — to the home of the Whopper.

The woman adheres to an interpretation of scripture about wearing clothing that is “befitting of specific gender,” the EEOC said. (Rumors have circulated for years that no BK uniform befits either gender.)

A Grand Prairie, Texas, Burger King is accused of discriminating against the Pentecostal cashier, who Do not buy a burger from this woman was fired after she wore a skirt to work instead of pants, the U.S. Equal Employment Opportunity Commission said in a lawsuit filed Wednesday. But be honest, would you buy a CROISSAN'WICH from a woman dressed like this anonymous person (pictured right)?

The woman told the company about her religious beliefs during her job interview and was told she could wear a skirt, the EEOC said. Then, at orientation, she was informed her apparel was inappropriate and was sent home.

Such conduct would violate the Civil Rights Act of 1964, which bars religious discrimination in the workplace, the feds contend. The EEOC is seeking back pay and damages for the woman.

The Burger King is owned by Fries Restaurant Management, LLC, which operates at least 10 BKs in Texas, according to Texas Comptroller of Public Accounts data. A person reached at the company could not comment on the case. No one else called back.

This brings us to the Quote of the Week: Regional Attorney Robert A. Canino of the EEOC’s Dallas District Office said the nation apparently hasn’t figured out religious liberties if there's a problem “posed by letting an employee ‘hold the pickles’ and ‘hold the lettuce’ while wearing a skirt.”

-- Darren Barbee

Side note 1: If the feds really want their pound of flesh, they should join the 11 million people who each day visit Burger Kings globally. Here's how that works out if people just bought Whoppers without cheese and no fries or drinks:

Food stuffs calories Total fat (grams) Total calories for 11 million people Pounds of fat
WHOPPER 670 40           7,370,000,000         970,039
DOUBLE WHOP 900 57           9,900,000,000       1,382,306
TRIPLE WHOP 1140 82         12,540,000,000       1,988,580

Side note 2: Yes, we know Natalie Portman is Jewish.


More government pork? Obama directs military, USDA to buy meat in lean times

After billions of dollars in government bailouts of banks, automakers,and Fannie and Freddie here comes another one: The Beef Bailout. Fresh meat

With so many folks getting federal hand-out love, perhaps it was only inevitable that the livestock industry would be next, even though it’s already received $3.7 billion in subsidies from 1995 to 2011, according to the Environmental Working Group.

The rationale: A bad drought has hit livestock folks hard. President Barack Obama directed the military and USDA to spend some more money, including $170 million for pork, chicken, lamb and catfish. The money would help farmers and ranchers to sell more and save taxpayer cash on food the Obama droughtgovernment would purchase anyway, the White House said.

Critics, aren't happy, saying Obama isn't doing enough to make it rain. Obama's meat buy, on the other hand, will cost more than the individual GDPs of 11 of the world's countries, according to the CIA World Factbook.

The president has also directed the military to explore accelerating meat purchases, which it would freeze it for future use.  

The Department of Defense annually purchases about:

194 million pounds of beef (estimated cost $212.2 million)

164 million pounds of pork ($98.5 million)

1500,000 pounds of lamb ($4.3 million)

EXLUSIVE: Watchdog has learned the military gets Spam. From July 2011 to June, the Defense SPAM Logistics Agency Troop Support purchased 701 cases of Spam for $31,242.  No word on whether Hormel Foods will also cash in on the federal aid.

(Will this cause blowback against the military? It's already had to deal with "emission prohibitons" (see link) for soldiers in Afghanistan.)

Obama noted that the meat buy won't solve the problem.

"We can't make it rain," he said.

Oh, but can’t he?

John BoehnerIn a press statement, Speaker of the House John Boehner, said Obama should take steps to pass legislation to help with the drought.


And that brings us to our quote of the month: “...The president continues to blame anyone and everyone for the drought but himself,” Boehner said.

Who can argue with that?

-- Darren Barbee


Not so rad: Texas radiologist will pay $650,000 to settle kickbacks

The doctor will see you nowPerhaps Dr. Jack L. Baker, like another famous doctor1, was exposed to harmful doses of radiation that turned him into a hulking, uncontrollable, er, violator of the federal Anti-Kickback Statute. 

Whatever the causes of his transformation, the prominent Houston radiologist accused of paying off 17 doctors for patient referrals is about to pay up a little more.

Baker recently settled government accusations that he violated laws including False Claims Act and the Texas Medicaid Fraud Prevention Act between 2002 and 2010.  

Bad M.D. price tag: $650,000. Baker also agreed to a “voluntary” expulsion from the Medicare and Medicaid programs for six years.

UPDATE: Despite all that, it doesn’t look like Baker isn't facing criminal charges, Aint that a kick in the head a spokesperson for U.S. Attorney Kenneth Magidson said. The office could not comment further because, generally, we are not able to discuss our prosecutorial discretion.

UPDATE 2: Baker faces investigation by the Texas Medical Board and potential action/sanctions, a spokeswoman said. 

Naturally, the government wasn't exactly on the ball on this, at least to begin with.

The scheme went tumbling down after two doctors turned whitleblowers. Under the law, the doctors will earn 20 percent of the settlement, about $130,000.  Unconfirmed: The amount doesn’t include any co-pays the government may still owe the physicians.

1 Dr. Bruce Banner

OK, here’s a radiology joke we found on YouTube. Click away if you’ve already heard it.

The short version:

What is thisA man takes his dog to the vet, where he learns the pet is dead. The man says, “no way, I can’t believe it.”

The vet says “just a minute,” brings in a cat and it briefly sniffs the dog. The vet says, “The cat concurs, the dog is deceased.” Distraught, the man can’t bring himself to accept the news. So the vet brings in a Labrador retriever. After a good sniff of the dog corpse, the vet says that clinches it: the man’s dog is dead.

Finally accepting the news, the vet informs the man his bill will be $600.

 “$600? To tell me my dog’s dead?”

The vet shrugs, “The initial diagnosis was only $50. The extra money is for the cat scan and the lab test.”

-- Darren Barbee


Pretend 'Hero' Dr. Phil smacked down by military mom over PTSD show

P-GrawWe find it hard to believe, but Dr. Phil McGraw (or P-Graw, as we call him) has been slammed by a military mom who believes the good doctor is something of a misleading twit. (Or words to that effect.)

In a Veterans Affairs column gently titled “Dr Phil: Pretends to be a Hero ‘Helping’ Heroes” a woman who has children and a spouse in the military says P-Graw  “... perhaps by the ‘sin of omission’ clearly misled the people watching his show.”

A promo for the show appears to portray veterans suffering with Post Traumatic Stress Disorder as dangerous, suicidal and/or reviled in the sort of way we’ve all come to expect from ratings harlots TV talk shows.

The P-Graw clip has people talking about veterans like this:

Unidentified woman: “I hated watching him walk in the door.”

 Ominous Announcer Voice: “Damaged goods.”

P-Graw:So he set you on fire?

Elizabeth Benson wrote in a blog for VAntage Point (Dispatches from the U.S. Department of Gunner Veteran Affairs) that at a time when veteran unemployment is “so high and employers comment that they are wary of hiring vets he decided to completely undermine all the good results working with Vets, so he could look like a hero–rather than really uplift the heroes."

“Shame on you, Dr Phil!”

She called the show "Dr. Phil grandstanding disabled veterans to get ratings."

Benson, by the way, has room to talk. Two of her daughters served in the Navy, one who is now disabled. Her son is an active duty Marine who has served in combat zones. Her youngest daughter serves in the U.S. Air Force.

Smash hitShe ends her column by saying the show should highlight the “real work being done ... by the Department of Veterans Affairs and Wounded Warriors and Boston’s Vet Run.” 

Yeah, no doubt P-Graw will get right on that.

By the way, Dr. Good Times earned a Ph.D. in clinical psychology from the University of North Texas

Benson’s entire column can be read here.

-- Darren Barbee

Single fed drug program loses enough to buy 700,000 beers -- at ballpark prices

ThanksUnforced error: The nation’s finest federal health care institution, Medicare, could have saved at least $4.6 million in a single quarter of 2012.

But, hey, in this time of breathtaking debt, rampant joblessness and potential fiscal calamity who wants to save money?

And really, who in the federal government is going to miss $4.6 million? That piffling amount would buy a mere 16 Budweisers for every fan who attended a single Texas Rangers home game (based on average attendance; see chart below). Bud

Congress mandates that the inspector general for the U.S. Department of Health and Human Services monitor average Medicare B drug sale prices.

If the drugs cost more than 5 percent of a manufacturer’s average price, Medicare, in gambling terms, craps out. (But, of course, it’s the taxpayers who lose the bet.)

The inspector general found that Medicare exceeded the threshold on 7 percent of drugs it bought.

Had Medicare reimbursements been based on 103 percent of the average manufacturing price,
Headachestaxpayers would have saved all that beer money, just in the second quarter in 2012.

Naturally, the inspector general has told Medicare this information a few times — 21 to be exact. However, the Centers for Medicare and Medicaid Services has yet to lower reimbursements. The agency does have a proposed rule that calls for price substitutions to occur effective in January 2013.

More good news: Of 63 drugs with partial average manufacturer prices, 10 exceeded the 5 percent cap. Medicare says that partial manufacturer’s prices may not adequately reflect market trends and therefore will not apply its price substitution policy to drugs. 

-- Darren Barbee

How many beers would $4.6 million buy at a Texas Rangers game?


Size BeerCost Beer budget Total beers Avg crowd Beers/fan
16 oz  $6.50  $ 4,600,000             707,692 43,607            16




$45 million Texas scam run by Nigerians nets conviction, "amazing opportunity"

This post is adapted (and/or taken) from several Nigerian scam letters found on a blog that archives them. It isn't an actual letter from convicted fraudster Tony Nnonso Obi, but he really was part of a $45 million scam in Houston.

Dear Sir,

Good day and salutations. This letter will be a big surprise, but read carefully as the decision you make Police
will go off a long way to determine the future and continued existence of my life in federal prison.

NigeriaPlease allow me to introduce myself. My name is Tony Nnonso Obi, 56. I am a naturalized U.S. citizen from the the Federal Republic of Nigeria. (Tip: Don't go there, as it is rather dangerous.)

My ordeal started sometime after my associates and I bilked your U.S. government’s Medicare and Medicaid program out of $45 million. I was involved in Houston’s City Nursing scam. I was in the (fake) physical therapy business. Your government’s prosecutors said that I was involved in fraudulent billing for physical therapy that never happened. 

In fact, your government says it has evidence there was never a single licensed or otherwise qualified physical therapist at City Nursing.

Fight the fraudYou can imagine my dismay! One person described our clinic as looking like an unemployment office with people hanging out. An employee even asked a patient to make a pot of coffee. (In our defense, the patient made high quality coffee.) Another Medicare beneficiary testified at a trial that when she asked the doctor at City Nursing for physical therapy she was told the clinic did not provide that type of service and to go to her primary care physician for a referral to another clinic.

Earlier this month, I pleaded guilty to my part in this “conspiracy” that netted me a mere $1,051,425.28, the government says. Now I have been  convicted of one count of conspiracy to commit health care fraud and one count of money laundering.

I face up to 10 years in prison and a $250,000 fine for each count, the government says. Six others have also been convicted in relation to this so-called scheme.

I am writing because I’m hoping you might have tragically experienced the death of a wealthy general, foreign dictator or been the beneficiary of a bank error that left in your account the sum $50,000,000. This sort of thing happens all the time where I originally came from.

I will be happy to put the money into my Bureau of Prisons prisoner account for the low fee of 20 percent.

This business is completely risk-free on your part. I have much confidence in you and hope that you will consider this mutually beneficial offer.


Tony N. Obi

-- Darren Barbee


Pfizer set on stunned: drugmaker to pay $15 million for bribery of foreign officials

PfizerNot now, they've got a headache: Viagra maker Pfizer is taking heat, and paying up, after subsidiaries bribed government officials in Bulgaria, Croatia, Kazakhstan and Russia with millions of dollars.

Pfizer will cough up $15 million to resolve an investigation of Foreign Corrupt Practices Act violations, the U.S. Justice Department said Tuesday. (Hopefully, Pfizer makes some kind of cough syrup for that.)

In exchange for the money, Pfizer will enter a deferred prosecution agreement. 

“Corrupt pay-offs to foreign officials in order to secure lucrative contracts creates an inherently uneven marketplace and puts honest companies at a disadvantage,” said Assistant Director James W. McJunkin in charge of the FBI’s Washington Field Office.  “Those that attempt to make these illegal backroom deals to influence contract procurement can expect to be investigated by the FBI and appropriately held responsible for their actions.” 

Subsidiary Pfizer H.C.P. Corporation was accused of paying off government officials, including hospital Esteemed Pfizer products administrators, members of regulatory and purchasing committees and other health care professionals, according to court documents. It also and sought to improperly influence government decisions in these countries regarding the approval and registration of Pfizer Inc. products, the award of pharmaceutical tenders and the level of sales of Pfizer Inc. products. 

Pfizer H.C.P. used sham consulting contracts, an exclusive distributorship and improper travel and cash payments to buy influence, according to court documents. The company paid $2 million in bribes from 1997 to 2006 and made $7 million as a result, the justice department said.

Pfizer said the improper payments involved the operations of two of its subsidiaries outside the United Go ahead take the moneyStates, which the company “voluntarily reported to the U.S. government beginning in 2004.”

“We have worked diligently to strengthen our corporate compliance program worldwide,” said Douglas Lankler, executive vice president and chief compliance and risk officer for Pfizer.

In a related matter, Pfizer and its 2009 acquisition Wyeth LLC reached settlements with the Securities and Exchange Commission to pay more than $26.3 million in disgorgement of profits and interest to resolve concerns involving the conduct of its subsidiaries.  Wyeth agreed to pay $18.8 million to resolve concerns involving the conduct of Wyeth subsidiaries.

“There is no allegation by either DOJ or SEC that anyone at Pfizer’s or Wyeth’s corporate headquarters knew of or approved the conduct at issue before Pfizer took appropriate action to investigate and report it,” the company said in a press release.

Pfizer’s Lankler said the company has created “rigorous oversight and accounting mechanisms and pioneered a host of new tools designed to maintain compliance and detect problems before they spread.”

Side note: In addition to making lots and lots of money off drugs, Pfizer was also responsible for saving many lives in World War II. In 1941, the company rushed the manufacture of penicillin to treat Allied soldiers.

-- Darren Barbee




Fast and Furious whistleblower resolves retaliation claim with government

GunsAn ATF agent turned whistleblower on the Fast and Furious scandal has resolved a retaliation claim with the government through a mediation program, according to the U.S. Office of Special Counsel.

Peter Forcelli, one of the employees at the Bureau of Alcohol, Tobacco, Firearms and Explosives who blew the whistle on Operation “Fast and Furious” testified before the Congress’ Committee on Oversight and Government Reform last June. Forcelli was assigned to the Phoenix field office, the center of the scandal that allowed guns to be sold in the hopes of making a bigger case.

Forcelli told Congress that ATF agents allowed weapons to be “provided to individuals whom they knew would traffic them to members of Mexican drug trafficking organizations (DTOs).  They did so by failing to lawfully interdict weapons that they knew were going to be delivered to members of DTOs, and they did so by encouraging federal firearms licensees to continue selling weapons that were destined for delivery to members of the DTOs where no interdiction efforts were planned."AG Holder

Forcelli believed the operation endangered the American public.

“Allowing firearms to be trafficked to criminals is a dangerous and deadly strategy.  The thought that the techniques used in the “Fast and Furious” investigation would result in “taking down a cartel” ... is, in my opinion, delusional.”

Under OSC’s mediation program, all mediation communications are confidential.  A spokeswoman for the special counsel office said she could not disclose any terms of the settlement.

“I commend Mr. Forcelli for his courage in coming forward, and I applaud both him and ATF for their good faith efforts to reach resolution of these issues,” said Special Counsel Carolyn Lerner. “This is a testament to the ability of mediation to resolve complex cases.”

Forcelli has been an ATF agent law enforcement agent for more than a quarter century. His testimony before Congress can be found here.

-- Darren Barbee