democrats

Politics is a Team Sport: Rand Paul’s Destiny

/ L. M. Walker / 2 Comments

adfa7100cb2d163a27ee88a1965a4c19_400x400Rick Perlstein said it best, “I believe politics is a team sport. That, for awful and unfortunate reasons beyond any of our control, the American system only allows, effectively, for two teams.”

Is politics a team sport? The question resurfaced recently when Senator Rand Paul referred to the Graham-Cassidy Health Care Plan as — “Amnesty for Obamacare.”

When I saw this, I immediately fired off a tweet to Senator Paul stating, “Not again! It’s a team sport. Time is up. If you are not Republican, then get off the team and go join the Democrats.”

An unidentified third party then replied, “Wrong – it’s absolutely NOT a team sport. Members must represent their constituents’ wishes – not follow some pigheaded slogan.”

In reality, it’s Senator Paul who’s following a self-contrived “pigheaded slogan”, while most Republicans in the House, 90%+ of those in the Senate, and the Trump Administration are in support of a “bill”, which repeals the main provisions of Obamacare, and takes power away from the District of Columbia, handing it back to the states.

If politics isn’t a team sport, then why do political parties exist? And, what is the purpose of winning the majority in both houses and the White House if the party in control isn’t going to stick together on major legislation? Of course, politics is a team sport.

Yet there always seems to be at least one grandstanding maverick, almost always a Republican, who wants to make a name for himself rather than play his position. Face it, Rand Paul doesn’t represent any constituents. Like John McCain and a few others, he merely represents himself.

If Senator Paul represents anyone, it should be the party he belongs to, whichever that may be. At this point, he represents constituents of the Democratic Party, who oppose the bill at all costs, and cares nothing for Republicans, the majority of whom favor some measure of victory.

Under the Graham-Cassidy plan a Federal block grant is given annually to states to help individuals pay for health care, Planned Parenthood is defunded, and the individual mandate, employer mandate, and medical device tax are completely repealed, to name a few. But even better, it’s supported by most Republicans in the House, 90%+ of those in the Senate, and the Trump Administration. So, what’s Rand Paul’s problem?

If Senator Paul can’t get 90%+ of Republican Senators to go along with his proposal, which he can’t, then perhaps he should dismount from his high horse and support the 90%+ of his party who see merit in Graham-Cassidy. If that’s not good enough for Senator Paul, then only one choice remains.

Stop calling yourself a Republican, and go team up with those more in line with your views. At this point in time that would be none other than the Democratic Party, which stands firm, in unison, against every proposal favored by the President and the majority of Republicans.

Alan Grayson: Lies, Tax Fraud and Deceit

/ L. M. Walker / 6 Comments

Lies, Tax Fraud and Deceit (Originally Published 11/03/2009)

My theory is that Alan Grayson is a liar, a fraud, and a tax-cheat. Who is this guy? How did he really obtain his wealth? It’s certainly worth further investigation in light of the following.

Summary:

  1. Roll Call lists Alan Grayson’s largest asset is a claim against Derivium Capital, the now bankrupt Ponzi scheme, in the amount of $34 million.

  2. Central Florida Politics lists Alan Grayson as the Derivium Capital scams most frequent customer.

  3. Roll Call lists Grayson’s net worth at $31.12 million. Grayson’s only other asset is said to be a trust fund worth $5 to $25 million.

  4. Roll Call states that Grayson founded IDT Corp. in 1990. However, Wikipedia.org states that IDT was founded by Howard Jonas in 1990. An article from January 9, 1992, in the New York Times, entitled, “Hot-Wiring Overseas Telephone Calls”, backs up the fact that the company was founded by Howard Jonas, not Alan Grayson.

  5. Per taxprophet.com, the IRS has targeted Derivium Capital’s loan transactions as taxable events.

Questionable Issues:

  1. If Alan Grayson was not the founder of IDT Corp., then how did he obtain $29 million worth of stock between the years 2000 and 2005?

  2. Since Alan Grayson was not the founder of IDT Corp., then why did he lie on his Congressional disclosure?

  3. What was the cost basis of the stock which Alan Grayson sold to Derivium Capital for $26 million?

  4. Did the IRS investigate Alan Grayson, and if so, how much was determined that Grayson owed in back taxes?

  5. Did Alan Grayson voluntarily amend his tax returns to report the sale of stock to Derivium Capital?

  6. What did Alan Grayson know about Derivium Capital at the time of the transaction?

  7. Did Alan Grayson knowingly profit from an illegal Ponzi scheme?

Excerpts:

Rep. Alan Grayson (D-Fla.) $31.12 million

The Florida lawmaker’s largest asset stems from an apparent financial mistake. Grayson lists a claim valued at $25 million to $50 million against Derivium Capital. The now-bankrupt firm managed a Ponzi scheme in which investors, including Grayson, could turn over stock to Derivium in exchange for cash loans and redeem the value later if the stock prices increased. A South Carolina court ruled earlier this year that Derivium shareholders were collectively owed about $270 million in lost profits and that Grayson’s share would be about $34 million. In addition to that claim, Grayson, an attorney who founded the telecommunications company IDT Corp. in 1990, lists a trust valued at $5 million to $25 million. The same trust was previously Grayson’s largest asset, with a value of $25 million to $50 million when he filed a candidate disclosure form in November 2008.

Scam’s Most Frequent Customer

Between 2000 and 2005, Grayson was the most frequent participant in Derivium’s “90-percent stock-loan” program, transferring about $29 million in stocks to Derivium and promptly receiving 90 percent of it – about $26 million – back in cash as “stock loans,” according to his court filings. In that sense, he lost only about $3 million out of pocket. But Derivium had promised to pay Grayson profits on his stocks, if they appreciated enough over the three-year loan period to cover the amount of his “stock loans” plus interest. And Grayson picked some lucrative stocks. His $34 million in damages is based on the profits he should have received on stocks that rose in value – had Derivium not run out of cash and filed for bankruptcy.

Derivium Loan Update: IRS Targets Derivium Loan Transactions

Introduction: IRS has targeted taxpayers who have engaged in loan transactions through Derivium Capital by sending them Preliminary Notices, in late January, 2007, stating that the Derivium loan transaction may be a “tax avoidance” device. In essence, IRS claims the Derivium loan transaction is really a taxable sale of securities at the time taxpayers received the proceeds, rather than a bona fide loan. IRS has an audit project underway in Sacramento, California, involving Derivium-type loans.

How It Works: In general, Derivium arranged loans for 90% of the value of a stock for an initial 3-year period at a compounded interest rate of approximately 10%. The loan is non-recourse, which means that at the end of the loan term, if the borrower cannot repay both principal and interest, the lender forecloses on the stock in full payment for the loan. The borrower has the option of rolling over the loan at maturity for an additional fee.

Note: Derivium has filed for bankruptcy and its client list has become public, thereby providing IRS with a road map of taxpayers who engaged in the loan transactions. Derivium is no longer in business.

Tax Consequences: IRS challenges the transaction and maintains a sale occurred in the initial year of the transaction on the following grounds:

  1. The taxpayer was obligated to transfer the stock to Derivium, but repayment was optional because the purported loan was non-recourse to the taxpayer.

  2. Taxpayers eliminated the risk of loss.

  3. Principal payments are prohibited during the entire term of the transaction.

  4. Legal title to the stock was transferred to Derivium.

  5. The stock was treated as belonging to Derivium.

  6. Derivium sold the stock to fund the transaction.

When the loan matures and if the borrower does not repay it, the lender forecloses on the security (the stock) and the borrower has a taxable event at that time. The stock is treated as sold for the full amount of principal and interest outstanding. Thus, the borrower has a gain equal to the difference between the sales price (the full amount outstanding on the loan) and the borrower’s basis in the security. The gain will usually meet long-term capital gain requirements under federal law and be taxed at 15%.

Sources:

http://centralfloridapolitics.com/2009/07/10/rep-alan-grayson-loses-millions-in-ponzi-scheme/

http://www.taxprophet.com/archives/Derivium_loan_2007_update.shtml

http://www.rollcall.com/features/Guide-to-Congress_2009/guide/38181-1.html?page=4#alangrayson

http://www.nytimes.com/1992/01/09/business/hot-wiring-overseas-telephone-calls.html

http://en.wikipedia.org/wiki/IDT_Corp.

http://innovation.cqpolitics.com/cq-rollcall/richest_members_of_congress_2008