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Accounting Fraud is Destroying Los Angeles … Here’s How

CORRUPTION WATCH--The Black Plague wiped out 25% of people in Europe in the mid-14th Century. That would be the same as 81 million Americans’ dying.  Since people did not understand how the plague spread from rats to humans via fleas, they had no idea how to protect themselves. 

A Black Plague is ravaging the United States economy. Since the American public knows as much about economic policy as 14th Century Europeans knew about medicine, the economic plague continues. 

Being ignorant louts, some Europeans decided that Jews must be the cause, and they murdered thousands of Jews so as to appease God and end the plague.  Fewer Jews caught the plague because Jews were more sanitary and had fewer rats.  At Passover, for example, all the hametz has to be cleaned from the house, which removes the rats’ food supply.  Today’s idiots believe that Mexican immigrants are causing their economic owes.  Yeah, sure, the guy who cuts your lawn, and not the Wall Street criminals who crashed the economy, causes Los Angeles housing costs to go sky high. 

The Purpose of Accounting Control Fraud 

Accounting Control Fraud [ACF] is designed to suck cash out of a corporation or city. As previously explained, an ACF can bankrupt a corporation like Enron. Thus, politicians like Mayor Eric Garcetti use Accounting Control Fraud to fleece the City of LA. By the ”City of LA,” I mean you and me, i.e. the taxpayers who have to pay the city’s debts. 

As William Black, author of Best Way to Rob a Bank Is to Own One, explains, whoever is in charge, be it a CEO or a mayor and city council, inflates income and hides liabilities so that massive amounts of money can flow out of the city coffers into the pockets of the uber-wealthy crooks manipulating the frauds.  When the corruption has become institutionalized as it has in Los Angeles, it becomes Corruptionism. 

One Way Wall Street Benefits from Accounting Control Fraud in Housing 

The ultimate beneficiary of all mortgages (promissory notes and trust deeds for California purists) is Wall Street.  They were the fraudsters behind the Crash of 2008.  Since 2012, Wall Street must have passed the Trillion Dollar mark in ripping off LA homeowners with the inflated mortgages scam.  Here’s how this scam works. 

(1) The City Fraudulently Increases the land value of residential properties 

The corrupt city council unanimously approves 100% of projects which a councilmember places on the city council agenda.  No matter how many zoning codes a developer violates all he has to do is be “nice” to one councilmember to guarantee his project’s approval. With this advance approval, he will overpay for property, outbidding families who want a home in which to live. 

As a result, the comparables for nearby properties increase and after a critical mass of residences sell for the higher developer value, all home prices are significantly higher.  “If the Jones got $1.3 Million for their dump, why can we get $1.35 M?”  Paying more for a house does not make it worth a cent more as a home. 

(2) Wall Street Bases Mortgages on Inflated Values 

In order to buy home, a family has to pay the higher developer value.  Even if a family pays only $100,000.00 over market, it has a 30-year mortgage with the extra interest on that unnecessary $100,000.  Of course, homes prices are inflated by $300,000, $400,000 $700,000 in the Los Angeles market.  A home north of Franklin Avenue is not actually worth $1.5 Million.  Those prices are the product of the City’s controlled fraud.  No Virginia, supply and demand are not forcing home prices higher. There is no Santa in the LA home market, only cadres of deceptive grinches.

A family home north of Franklin Avenue will carry at least an extra $500,000 mortgage which means the family will end up needlessly spending an extra $885,492 ($500K @ 4.25% = $885,492).  If fraud had not inflated the home price, it would cost between $400,000 and $600,000. Thus, the family may be paying an extra $1 million to Wall Street.  If this happens to only 1,000 homes, Wall Street rakes in an extra One Billion Dollars. Guess how much loot goes back to a mayor who wants to run for President. 

The Hype in Housing Costs Is One Facet of the Accounting Control Fraud 

Wherever one looks in Los Angeles, one finds Accounting Control Fraud.  The billions of dollars we tax ourselves for fixed-rail mass rapid transit is mostly based on fraud.  The cheapest and most efficient system would be low density neighborhoods with low rise office clusters served by buses.   

The traffic congestion, which the mayor uses to justify more subways and fixed rail trains, is due to excessive residential and office density.  The solution is not more mass transit, but less density.  If DTLA had remained low rise with no Bunker Hill and we had no Century City and similar high-density areas, we would not have rush hour traffic.  Traffic congestion is caused by too many people trying to squeeze into a small space.  Like 14th Century Europeans, we are causing our own demise.  Excessive density is like inviting flea infested rats into your home and wondering why everyone is dying. 

The $102 Billion in bonds for more mass transit will cost Angelenos $200 Billion. Guess who gets that $200 Billion. Wall Street! Guess who pays. You. 

Fixed rail systems last about 30 years so that decades before a system is completed, the first sections have to be re-constructed.  That is LA’s position right now. It opened in 1990 and we’re at 2020.  Leaving aside the construction costs which become eternal, all fixed rail mass transit lines operate at a huge deficit. NYC’s deficit is about $8 Billion per year – about the same of LA City budget. 

The beneficiary of mass transit is not the public but Wall Street who will forever finance the upgrading and the running of the subways and light rail lines, even as fewer and fewer people ride them.  It is all based on the bogus claim that LA needs fixed rail mass transit.  Angelenos are like the mediaeval faithful paying the Church huge sums of money, believing in the myth that priests will save them from the plague.

 

(Richard Lee Abrams is a Los Angeles attorney and a CityWatch contributor. He can be reached at: Rickleeabrams@Gmail.com. Abrams’ views are his own and do not necessarily reflect the views of CityWatch.)

-cw