FactCheck.org http://www.factcheck.org A Project of the Annenberg Public Policy Center Mon, 15 Sep 2014 17:36:39 +0000 en-US hourly 1 http://wordpress.org/?v=3.8.1 Perdue Distorts Nunn Campaign Memo http://www.factcheck.org/2014/09/perdue-distorts-nunn-campaign-memo/ Fri, 12 Sep 2014 23:04:00 +0000 http://www.factcheck.org/?p=88355 Republican David Perdue says in a TV ad that Michelle Nunn, his opponent in the Georgia Senate race, “admits she’s too liberal” and that “her foundation gave money to organizations linked to terrorists.” Not exactly.

The ad cites the source as “her campaign plan,” but that particular memo — one of several included in a 144-page Nunn campaign document — talked about devising a strategy to push back against “potential Republican attacks” on Nunn. The likely attacks included that “Nunn is too liberal” and that a nonprofit organization that she headed, the Points of Light foundation, gave “grants to problematic entities.” Actually, the grants refer to $13,500 that eBay sellers — not the foundation — donated to the U.S. affiliate of the international charity Islamic Relief Worldwide.

Also, there is no evidence Islamic Relief USA, a federally approved charity, has ties to the U.S.-designated terrorist group Hamas.

Perdue and Nunn are competing for the U.S. Senate seat of retiring Republican Saxby Chambliss. The ad, called “Bringing Common Sense to Washington,” began airing on Sept. 9. It’s Perdue’s first ad of the general election.

On July 28, the National Review ran a story about a leaked Nunn campaign document that had been briefly published online, in draft form, months earlier. The document, covering all phases of Nunn’s Senate campaign, is a compilation of memos from Democratic strategists to Nunn and her senior advisers.

“From all appearances, the document was intended to remain confidential. It outlines the challenges inherent in getting Nunn, who grew up mostly in Bethesda, Md., elected to the Senate in a state with a large rural population,” the National Review article said.

The “Research Plan” portion of the document included an assignment for the Nunn campaign’s research team to “produce a ‘pushback’ document for each identified vulnerability in Michelle’s record, as well as common attacks frequently leveled against Democratic Senate candidates.” The vulnerabilities were identified by the research firm NewPartners, which performed a review of Nunn’s record for the campaign and “pointed out several areas of potential concern in her record,” according to the document.

According to the ad’s narrator, “In her campaign plan, Michelle Nunn admits she’s too liberal and her foundation gave money to organizations linked to terrorists.” But the document doesn’t “admit” to that. The “pushback research” was meant to prepare “responses to potential Republican attacks.” It didn’t say those attacks would be accurate.

“Nunn is too liberal” and “Nunn is not a ‘real’ Georgian” were listed in the campaign document as potential attacks on her biography. And “grants to problematic entities” was listed as a potential attack on her work for Points of Light, the volunteer group founded by former President George H.W. Bush and for which she has served as chief executive officer and president since 2007. (Nunn is currently on a leave of absence to run for the U.S. Senate.)

After the National Review published its story, Nunn campaign manager Jeff DiSantis released a statement saying, “This was a draft of a document that was written eight months ago. Like all good plans, they change. But what hasn’t changed and is all the more clear today is that Michelle’s opponents are going to mischaracterize her work and her positions, and part of what we’ve always done is to prepare for the false things that are going to be said.”

In fact, the Perdue ad’s claim that Nunn’s “foundation gave money to organizations linked to terrorists” is largely false.

The National Review reported that “[a]ccording to the IRS Form 990s that Points of Light filed between 2006 and 2011, the organization gave a grant of over $13,500 to Islamic Relief USA, a charity that says it strives to alleviate ‘hunger, illiteracy, and diseases worldwide.’ ” Islamic Relief USA falls under the umbrella of Islamic Relief Worldwide, which the National Review article said has ties to the terrorist organization Hamas.

But there are two issues with what the National Review reported.

First, the money that Islamic Relief USA received did not come directly from Points of Light funds. The organization, through its former MissionFish business unit, allowed individuals selling items on eBay to choose whether to donate proceeds from their sales to any of over 20,000 charities, including Islamic Relief USA. So, it was eBay sellers who gave $13,500 to Islamic Relief USA. Points of Light, by way of MissionFish, simply processed the donations.

In fact, Islamic Relief USA is also listed in the Office of Personnel Management’s Combined Federal Campaign catalog as an approved charity to which federal employees can donate through automatic payroll deductions.

Second, it is not clear whether Islamic Relief Worldwide has ties to Hamas. In a statement, the charity denied claims from Israel’s Minister of Defense that it had links to the terrorist group. In June, Israel banned Islamic Relief Worldwide from operating in Israel.

Islamic Relief Worldwide, June 19: On 19 June 2014 the Israeli Defence Minister declared Islamic Relief Worldwide an “unauthorised association” and added it to a list of organisations on the Ministry of Defence website, preventing us from operating in Israel and the West Bank and citing links with Hamas. Islamic Relief Worldwide is extremely surprised and concerned by this, and categorically denies any links with Hamas.

Even so, the donations were for the U.S.-based charity, not the worldwide organization based in the United Kingdom.

Islamic Relief USA, a 501 (c)(3) tax exempt charity founded in California in 1993, says that it “is an independent affiliate of Islamic Relief Worldwide and the Islamic Relief family of charities. We are completely separate legal entities that work together under the Islamic Relief Worldwide umbrella to provide aid.”

The charity also has longstanding ties to U.S. corporations and the U.S. government. Its corporate supporters include the JP Morgan Chase Foundation, the GE Foundation, the Cisco Foundation, HP (Hewlett Packard) and Microsoft. And, on its website, Islamic Relief USA notes that it has “an excellent working relationship with the federal government,” including a partnership with the Department of Agriculture on a summer food service program that provides meals to needy children. Plus, Anwar Khan, Islamic Relief USA’s chief executive officer, served on the 2013 USAID Advisory Committee On Voluntary Foreign Aid.

Also, MissionFish, now known as the PayPal Giving Fund, says it “screens all nonprofits to make sure they are not involved in the promotion of terrorism, hate, racial intolerance, or illegal activities,” according to eBay.

– D’Angelo Gore

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NEA Advocacy Fund http://www.factcheck.org/2014/09/nea-advocacy-fund/ Fri, 12 Sep 2014 22:29:46 +0000 http://www.factcheck.org/?p=88425 playersguide2014_135pxPolitical leanings: Liberal

Spending target: Unknown

The NEA Advocacy Fund is the super PAC of the National Education Association, the “nation’s largest professional employee organization.” The NEA describes itself as an “advocate for education professionals.”

The NEA created its super PAC in late 2010, and it has been active ever since in congressional and gubernatorial races. From the beginning, the NEA Advocacy Fund spent its money exclusively against Republican candidates and in support of Democrats.

The NEA Advocacy Fund spent $4.2 million in the 2010 election cycle in independent expenditures. All of it to defeat Republican Senate candidates. The super PAC focused on the Colorado and Washington races, spending nearly $1.9 million against Ken Buck in Colorado and $1.4 million against Dino Rossi in Washington. Both lost. The super PAC spent the $900,000 in losing causes against Pat Toomey and Rand Paul, both of whom won their races.

In the 2012 cycle, NEA Advocacy Fund nearly doubled its spending to $9.1 million, but only $1 million in independent expenditures. Half of that money was spent against a Republican House candidate, Richard Tisei of Massachusetts, who narrowly lost to Democratic Rep. John Tierney.

Gearing up for the 2014 election cycle, the NEA parent organization gave its super PAC $5.3 million in a few installments last year. As of mid-September, the Advocacy Fund had spent $3 million of that, all against Republicans in senatorial races, currently making it the ninth highest-spending super PAC in the cycle. Most of this money has been spent on the North Carolina, Arkansas, and Alaska Senate races — all considered “toss-ups” by RealClearPolitics. Of these races, the super PAC focused most of its attention (to the tune of $1.7 million) in North Carolina in the hope of preventing Republican Thom Tillis from taking Sen. Kay Hagan’s seat.

Fact-checking NEA Advocacy Fund

Tillis: An Education Budget Backer or Hacker?” Sept. 11, 2014

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Tillis: An Education Budget Backer or Hacker? http://www.factcheck.org/2014/09/tillis-an-education-budget-backer-or-hacker/ Thu, 11 Sep 2014 22:01:15 +0000 http://www.factcheck.org/?p=88298 A North Carolina public school teacher says in a TV ad that she tells her students to “start with facts,” but she begins attacking Republican Senate candidate Thom Tillis with an exaggerated claim about Tillis’ education “cuts.”

In the NEA Advocacy Fund ad, the teacher says Tillis, while state House speaker, “cut $500 million from our budget.” That’s not true. We found total state education spending increased by more than $700 million from the 2012-13 school year to the 2014-15 school year, but it hasn’t kept pace with enrollment. If one factors in enrollment, education funding is $368 million less than what a state funding formula says it should be — but not $500 million.

The ad also leaves the false impression that the $500 million “cut” came from the K-12 public school budget. The actual $368 million funding gap is in the total education budget — including community colleges and universities. The two-year gap for K-12 schools is $121 million — not $500 million.

The Democratic Senatorial Campaign Committee is running a similar ad at the same time that features a mom with kids in grade school talking about the impact of the same cuts.

Voters in North Carolina are being bombarded with confusing and contradictory claims about Tillis’ record on education funding.

According to the NEA Advocacy Fund ad — and numerous attacks from inside and outside Democratic Sen. Kay Hagan’s campaign — Tillis cut $500 million from North Carolina’s education budget.

Tillis, meanwhile, claims on his website that education funding is up $660 million since he was elected House speaker in 2011.

So is Tillis an education budget backer or hacker? Seems like a pretty straightforward question, right? Not necessarily. For starters, it depends on how one defines “education” — just K-12 public school funding, or also community college and university dollars — and how one defines “cuts.”

Let’s start with the version in the NEA Advocacy Fund ad featuring Vivian Connell, who teaches English as a Second Language at Chapel Hill High School. The National Education Association Advocacy Fund is a super PAC funded by the NEA, the nation’s largest teachers’ union.

“I always want my students to start with facts and the fact is, Thom Tillis is terrible for education in North Carolina,” Connell says. “He cut $500 million from our budget. His cuts go so deep, there are no longer enough textbooks to go around. Tillis even voted to increase class sizes — so kids don’t get the attention they need. The fact is: Thom Tillis hurts North Carolina students.”

Did Tillis “cut $500 million” from the education budget? As we often ask here at FactCheck.org: Compared with what?

Total education funding has gone up every year under Tillis’ House leadership in the state House of Representatives. But critics say it hasn’t kept pace with student enrollment growth.

Every year, the state puts out what it calls a ”continuation budget” — a budget prepared by the state’s Department of Public Instruction that projects the expense of keeping programs and salaries at current levels. The continuation budget accounts for such factors as student enrollment — including 10,000 new students this year — rising average teacher salaries and the changing cost of gasoline for buses.

In 2013, the continuation budget called for $23.6 billion in total education spending over two years (including K-12 public schools, community college and higher education). The Republican-controlled state Legislature passed a budget that included $23.1 billion. In other words, the enacted budget fell nearly $482 million short of the two-year continuation budget — even as the state spending for education increased.

The state education budget grew in raw dollars — from $11 billion in 2012-2013 to nearly $11.8 billion in 2014-2015 — but just not as fast as deemed necessary to maintain the current level of service. Tillis voted for the 2013 biennial budget, which passed the House 65-53, and defended it on the floor. The budget also passed the Senate and was signed by Republican Gov. Pat McCrory.

So the NEA ad hinges on whether one considers the difference between those budgets as underfunding or cuts.

But even if one considers the difference between the continuation budget and the enacted budget to be a “cut” — even though in raw dollars the budget grew — the $500 million figure used in the ad is outdated and exaggerated. That’s because in 2014, Tillis supported a budget adjustment that added in more education funding in the second year. So the gap between the two-year continuation budget and the actual funding ended up being $368 million.

The ad also leaves the false impression that the $500 million cut is from the K-12 public education budget.

The ad shows Connell in what is clearly a grade-school classroom and mentions the effect of budget cuts on K-12 public school education, such as cuts to textbook funding and larger classroom sizes. But the $500 billion figure used in the ad includes funding for community colleges and universities.

The two-year combined difference between the continuation budget and the actual budgets enacted under Tillis was $121 million for K-12. That’s far less than the $500 million cited in the ad and by the Hagan campaign.

Another ad currently on the North Carolina airwaves, from the Democratic Senatorial Campaign Committee, makes an even more explicit attempt to link the $500 million figure to K-12 public education. It features a young mother talking about her two children — a son in kindergarten and a daughter in fourth grade — and displays text on the screen that says, “Cut Nearly $500 Million from Public Schools,” while showing a photo of a grade-school classroom. The DSCC is spending $9.1 million on ads attacking Tillis’ legislative record, including on education.

Tillis’ claim on his website about increasing education spending focuses solely on state funding for public schools (K-12). The state’s contribution rose from $7.15 billion in 2010-2011 to $7.81 billion for 2013-2014. That’s how the Tillis campaign backs up the claim that education funding is up by $660 million since he was elected House speaker. That’s an increase in spending, but it doesn’t mean schools haven’t felt the effects of slow growth.

Enacted budget increases haven’t kept pace with a rising student population, said Eric Moore, a fiscal analyst in North Carolina’s Department of Public Instruction. In addition, he said, increased spending on benefits has cut into classroom spending.

Those are all concerns worthy of political debate, but as Connell says in the NEA ad, it’s best to “start with facts.” And in this case, the facts are being twisted. The NEA says it’s spending “north of seven-figures” to air the ad across 95 percent of the state, ending Sept. 12.

– Robert Farley

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Spinning Wisconsin Voters http://www.factcheck.org/2014/09/spinning-wisconsin-voters/ Wed, 10 Sep 2014 20:38:48 +0000 http://www.factcheck.org/?p=88288 In Wisconsin’s race for governor, both sides are playing “spin the voter” with Republican incumbent Scott Walker’s record on jobs.

  • Democratic challenger Mary Burke and her allies have hammered Walker with ads stating that “Wisconsin’s job growth is dead last in the Midwest.” Not so. His job gains are well below the national average and just half of what he promised when elected, but not as bad as Democratic ads make out.
  • Walker is countering with an ad saying, “We’ve come from losing over 133,000 jobs, to gaining over 100,000 jobs.” That’s not quite accurate either. The state had been regaining jobs for more than a year at the time he took office, and the pace of gains didn’t improve.

‘Dead Last’?

Walker said when inaugurated on Jan. 3, 2011: “My top three priorities are jobs, jobs and jobs. … We have an ambitious goal: 250,000 new jobs by 2015. I know we can do it.” He hasn’t delivered.

Midwestern Job GainsAs of July, the most recent month for which the Bureau of Labor Statistics has released state-by-state figures for seasonally adjusted total nonfarm employment, Wisconsin had gained just over 112,000 jobs since Walker took office. So with only five months to go before the end of his first term, Walker wasn’t even halfway to his goal.

But that said, Walker’s record isn’t as terrible as Democrats make out. An ad from the Burke campaign that ran last month and a very similar ad from the liberal, pro-Democratic Greater Wisconsin PAC both claimed that the state is “dead last” in job growth among Midwestern states. That’s not so when measured by the most timely, and commonly accepted, official statistics.

It’s correct that by one statistical measure Wisconsin did rank last in percentage gains in jobs among the 10 states that rapidly scroll by on screen. But that’s misleading.

Missing States and Stale Statistics

For one thing, the U.S. Census lists 12 states — not 10 — as being part of the officially defined “Midwest.” The list used in the Democratic ads omits Missouri and Kansas. More important, the statistical measure cited in the ad is several months out of date, and is not the metric commonly used by economists and reporters when reporting on employment trends.

The commonly accepted figures are current as of July, making them far more timely than the figures cited in the ad, which are current only through the end of last year. And since December, Wisconsin has had a greater percentage increase in jobs than five other Midwestern states: Ohio, Kansas, Minnesota, Nebraska and Illinois.

The ad cites the BLS Quarterly Census of Employment & Wages, which is a tally of all workers covered by unemployment insurance, making up about 97 percent of all workers. The QCEW is an excellent tool for some purposes, and in fact is used as a check on the accuracy of the BLS’ more timely surveys. But the comprehensive, quarterly figures take many months to gather. The next release (covering January, February and March of this year) won’t be out until Sept. 18.

That’s why the preferred figures for measuring employment come from the series called Current Employment Statistics, which is based on the payroll records from 144,000 private and government employers, a massive sample that covers over half a million workplaces. When using the most up-to-date figures on employment from the CES, Wisconsin actually ranks ninth among the 12 Midwest states. That’s not great, but it’s not “dead last,” either.

Walker’s Misleading Defense

The Democratic exaggerations may be having the desired effect; recent polling is showing a very tight race. The Huffington Post’s composite average of recent polling results puts Walker only a fraction of a percentage point ahead of Burke, while the Real Clear Politics composite shows Burke with a lead of 1.7 percentage points.

That may explain Walker’s most recent ad, which hit the air Sept. 4. In it, Walker says straight to the camera, “We promised Wisconsin we’d work to create more jobs,” and that’s followed by a series of upbeat TV news snippets reporting some specific job gains. Walker continues: “We’ve come from losing over 133,000 jobs, to gaining over 100,000 jobs.”

As we’ve noted, the actual job gain was 112,100 as of July, so that much of Walker’s ad is accurate. Of course, Walker doesn’t mention how far short that falls of his promised 250,000 jobs. His statement about “losing over 133,000 jobs” refers to what happened during the last term of his predecessor, Jim Doyle. The actual loss was 125,600, as measured by BLS’ most recently revised figures. But reality isn’t quite so black and white as Walker’s comparison suggests.

For one thing, by the time Walker took office Wisconsin had already turned the corner on the job losses that began in mid-2007, the result of a national financial crisis that was the worst since the Great Depression. In January 2011, the month Walker was sworn in, the state had already regained nearly 35,000 of the jobs it had lost.

In fact, the average monthly gain in the 13 months before Walker took office – 2,700 jobs a month – is the same average monthly gain that has occurred since.

Furthermore, Wisconsin has lagged far behind the national average in the pace of job growth during Walker’s tenure. Wisconsin’s job total has gone up 4.1 percent under Walker, but the national gain has been 6.2 percent during the same period.

And unlike the nation as a whole, Wisconsin has yet to regain all the jobs it lost during and after the Great Recession of 2007-2009. Wisconsin’s July total was still more than 29,000 (about 1 percent) shy of the state’s peak employment, reached in June 2007. But also as of July, the U.S. had regained all the jobs lost plus 611,000 more, a gain of about 0.5 percent.

Ordinarily, we would remind our readers that governors have only limited influence over jobs and the economy in their states. In this case, Walker made the state’s employment record a legitimate target by emphatically promising to deliver a quarter-million jobs, and failing to do so. But that doesn’t give Democrats a right to claim that his record is worse than it really is, any more than Walker has a right to claim credit for a dramatic turnaround that was under way well before he took office, and which hasn’t gained any momentum since then.

– Brooks Jackson

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Obama Fumbles ‘JV Team’ Question http://www.factcheck.org/2014/09/obama-fumbles-jv-team-question/ Mon, 08 Sep 2014 19:17:48 +0000 http://www.factcheck.org/?p=88266 President Obama enjoys his sports analogies, so let’s just say that he fumbled when he was asked whether he made a “misjudgment” eight months ago in dismissing the Islamic State in Iraq and Syria as the equivalent of “a jayvee team.”

Obama said he “wasn’t specifically referring” to ISIS when he made the junior varsity reference during an interview with The New Yorker in January. But the magazine article and a transcript of the interview — which Washington Post Fact Checker Glenn Kessler obtained and wrote about earlier this month — shows that Obama was referring to ISIS when he said “if a jayvee team puts on Lakers uniforms that doesn’t make them Kobe Bryant.”

The subject of the Islamic State in Iraq and Syria (ISIS) — or the Islamic State in Iraq and the Levant (ISIL), as the president refers to it — came up during a Sept. 7 interview on Chuck Todd’s debut as host of NBC’s “Meet the Press.”

Todd, Sept. 7: Long way, long way from when you described them as a JV team.

Obama: Well, I –

Todd: Was that bad intelligence or your misjudgment?

Obama: Keep — keep — keep in mind I wasn’t specifically referring to ISIL. I’ve said that, regionally, there were a whole series of organizations that were focused primarily locally. Weren’t focused on homeland, because I think a lot of us, when we think about terrorism, the model is Osama bin Laden and 9/11. And the point that I was –

Todd: You don’t believe these people –

Obama: Not yet. But they — they can evolve. And I was very specific at that time. What I said was, not every regional terrorist organization is automatically a threat to us that would call for a major offensive. Our goal should not be to think that we can occupy every country where there’s a terrorist organization.

It is true that Obama was talking about “a whole series of organizations” when he made his junior varsity reference. But ISIS was specifically referenced by the writer and Obama in that January interview as one of those organizations.

Let’s go back to what Obama said during his interview with David Remnick of The New Yorker.

The article appeared in the Jan. 27 issue of The New Yorker. The interview took place after ISIS captured Fallujah in early January. Remnick writes that he asked the president about what appeared to be a resurgence of al Qaeda-affiliated groups.

The New Yorker, Jan. 27: In the 2012 campaign, Obama spoke not only of killing Osama bin Laden; he also said that Al Qaeda had been “decimated.” I pointed out that the flag of Al Qaeda is now flying in Falluja, in Iraq, and among various rebel factions in Syria; Al Qaeda has asserted a presence in parts of Africa, too.

“The analogy we use around here sometimes, and I think is accurate, is if a jayvee team puts on Lakers uniforms that doesn’t make them Kobe Bryant,” Obama said, resorting to an uncharacteristically flip analogy. “I think there is a distinction between the capacity and reach of a bin Laden and a network that is actively planning major terrorist plots against the homeland versus jihadists who are engaged in various local power struggles and disputes, often sectarian.

“Let’s just keep in mind, Falluja is a profoundly conservative Sunni city in a country that, independent of anything we do, is deeply divided along sectarian lines. And how we think about terrorism has to be defined and specific enough that it doesn’t lead us to think that any horrible actions that take place around the world that are motivated in part by an extremist Islamic ideology are a direct threat to us or something that we have to wade into.”

The context of the article and the reference to the al Qaeda flag “now flying in Falluja” make it clear that ISIS was among the groups that Remnick asked about and was one of the groups that Obama dismissed as “a jayvee team.” In fact, Obama himself makes an indirect reference to ISIS when he talks about Fallujah.

On Aug. 25, White House spokesman Josh Earnest was asked about the “jayvee team” remark in a press conference, and Earnest responded by saying “the president was not singling out ISIL” when he made that remark. The Washington Post Fact Checker, however, obtained a transcript of The New Yorker interview, and Kessler declared Earnest’s statement “fairly misleading” and gave it four Pinocchios — the equivalent of a “whopper.”

Here is the relevant portion of the interview transcript, as published by the Post.

Q: You know where this is going, though. Even in the period that you’ve been on vacation in the last couple of weeks, in Iraq, in Syria, of course, in Africa, al-Qaeda is resurgent.

THE PRESIDENT: Yes, but, David, I think the analogy we use around here sometimes, and I think is accurate, is if a JV team puts on Lakers uniforms, that doesn’t make them Kobe Bryant. I think there is a distinction between the capacity and reach of a bin Laden and a network that is actively planning major terrorist plots against the homeland versus jihadists who are engaged in various local power struggles and disputes, often sectarian.

Q: But that JV team jus[t] took over Fallujah.

THE PRESIDENT: I understand. But when you say took over Fallujah –

Q: And I don’t know for how long.

THE PRESIDENT: But let’s just keep in mind, Fallujah is a profoundly conservative Sunni city in a country that, independent of anything we do, is deeply divided along sectarian lines. And how we think about terrorism has to be defined and specific enough that it doesn’t lead us to think that any horrible actions that take place around the world that are motivated in part by an extremist Islamic ideology is a direct threat to us or something that we have to wade into.

The transcript shows that the president was asked about al Qaeda-affiliated groups in Iraq, Syria and Africa, which would include ISIS, when the president made his remark about the “JV team.” That was Earnest’s point when he said the president “was not singling out” ISIS. But, as the transcript shows, Remnick followed up his initial question with a direct question about the “JV team” that “just took over Fallujah,” a reference to ISIS. On Jan. 3, the New York Times reported that “Sunni militants of Al Qaeda … members of the Islamic State of Iraq and Syria, or ISIS” had planted their flag over Fallujah.

The president can make the case that he wasn’t referring only to ISIS when he made his remark about a junior varsity team. But he cannot say that he “wasn’t specifically referring to ISIL,” because The New Yorker article and the transcript of the interview make it clear that the context of the president’s remark included ISIS.

– Eugene Kiely

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A Game of Telephone in Colorado http://www.factcheck.org/2014/09/a-game-of-telephone-in-colorado/ Fri, 05 Sep 2014 22:38:46 +0000 http://www.factcheck.org/?p=88097 A Crossroads GPS ad exaggerates a few personal anecdotes to claim that “many Coloradans pay roughly 100 percent more for health insurance since Obamacare.”

The ad, attacking Democratic Sen. Mark Udall, also tries to pin a shortage of doctors in rural areas on the health care law. But there’s no evidence the law caused a change in the ratio of residents to primary care physicians.

The ad, titled “Yes,” began airing on Aug. 19 and was still airing in the Denver market on Sept. 2, according to Kantar Media’s Campaign Media Analysis Group. The ad focuses on rural and resort area residents’ premiums and access to doctors, and criticizes Udall for supporting the Affordable Care Act.

The ad doesn’t say this, but its claims on premiums are about the individual market, where 7 percent of Coloradans get their insurance. It also doesn’t say that Coloradans living in rural and ski resort areas faced higher health costs before the Affordable Care Act, as the news articles cited in the ad make clear.

When a Few Anecdotes Become ‘Many’

Crossroads engages in an old game of telephone — in which a story gets exaggerated each time it’s told — when it claims that “many Coloradans” were paying roughly double for their insurance because of the health care law. While an announcer says that, an on-screen graphic reads, “resort area residents paying roughly 100 percent more for health insurance.” That’s a truncated quote that leaves off the word “some” — not “many” — from the Aspen Daily News, which said that “some resort area residents” were paying that much more and gave two personal anecdotes: a couple who say they are paying about double since the ACA launched and a woman who says her premiums have gone up 66 percent.

So the graphic is deceptively edited, and the voice-over leaves the false impression that the increase in premiums pertains to many of the state’s residents. In fact, the four resort counties — Pitkin (where Aspen is located), Garfield, Eagle (Vail) and Summit — have a total population of nearly 154,000, or 3 percent of the state’s 5 million residents, according to the 2010 Census.

The author of the May 10, 2014, Aspen Daily News article, Nelson Harvey, told us the sentence about “some resort area residents paying roughly 100 percent more” was based on a few select examples as well as what public officials had said they had heard from residents. Nelson, a freelance journalist, said that he had “no way to quantify” how many were paying 100 percent more and that he had never used the word “many.”

Resort area residents have been upset about their individual-market insurance rates — which the Kaiser Family Foundation determined were the highest in the nation on the ACA-created exchanges, based on the lowest-cost “silver” plan. The resort counties made up one of the state’s geographic rating areas, which insurers could use to price plans on the individual market and exchange. Garfield County officials even threatened to sue the state for including it as part of the four-county resort area, and the Colorado Division of Insurance ultimately proposed new geographic rating areas to distribute costs across broader regions. Rates for 2015, which will be based on the new areas, haven’t yet been released by the Division of Insurance but are expected later this month, a DOI spokesman told us.

Still, the rates won’t say much, if anything, about how premiums changed overall from before the ACA to now. As we’ve explained before, the law changed the way insurers can price plans on the individual market, which was historically volatile to begin with, with policyholders switching plans or exiting the market after short periods of time, reports in the journal Health Affairs have shown. Before the law, insurers could price plans based on health status or decline coverage due to medical conditions. The ACA required insurance companies to accept any applicant — regardless of preexisting conditions — and premiums can now only vary based on family size, geography and, to a limited extent, age and tobacco use. Prices can’t vary based on someone’s health.

On top of that major change in the way the market prices plans, individual (and small-group) plans also have to include certain essential benefits, including maternity coverage, prescription drug coverage and preventive care benefits. That means whether someone’s premiums on this market have gone up or down depend on individual circumstances. Those with health conditions were likely to see a drop in premiums; healthy folks with bare-bones plans were likely to see increases. And they may or may not have welcomed the more robust coverage in benefits.

The overhaul of this market made it difficult — if not impossible — to provide apples-to-apples comparisons of how premiums have changed. We contacted the Colorado Health Institute, a nonprofit, nonpartisan research and analysis organization, to ask whether rural or resort area residents had seen increases overall in premiums due to the Affordable Care Act. Amy Downs, senior director of policy and analysis, told us via email that “it’s hard to compare plan premiums before and after the Affordable Care Act was implemented. The whole playing field changed. Plan design requirements, provider networks, how premiums can be set by insurers all changed. People who could never purchase health insurance due to pre-existing conditions are now in the market.”

Said Downs: “To do a before and after comparison would be difficult because we wouldn’t have anything similar to compare.”

The nonpartisan Kaiser Family Foundation, normally the primary source for just such a comparison, also said it simply couldn’t be done, explaining in a September 2013 report that the new benefit requirements and ban on pricing by health status “make direct comparisons of exchange premiums and existing individual market premiums complicated, and doing so would require speculative assumptions and data that are not publicly available.”

High Costs for Rural and Resort Residents Pre-ACA

Coloradans living in ski resort areas or sparsely populated rural areas faced higher health costs before the health care law, and it’s unclear if the law caused an overall increase in premiums. The Colorado Division of Insurance says the new exchanges made the price variation across the state more transparent, so residents in high-cost areas could see how much more they were paying compared with other Coloradans for the first time. That information, in fact, shows the lowest-cost bronze plan on the exchange in 2014 for a 40-year-old in Denver and Boulder was $186.20, but in the resort area, it was $349.31.

It’s clear, however, from local news reports that there was outrage after the exchanges or marketplaces launched last fall. The Crossroads ad begins with text that reads, “rural residents confront higher health care costs,” citing a March 30 Associated Press story. That article said: “Health care has always been more expensive in far-flung communities, where actuarial insurance data show fewer doctors, specialists and hospitals, as well as older residents in need of more health care services. But the rural-urban cost divide has been exacerbated by the Affordable Care Act.” The AP noted that geography was one of the few factors insurers could use to vary rates.

The AP story quoted the spokesman for the America’s Health Insurance Plans, a trade group, as saying the prices reflected the higher medical costs in sparsely populated areas, and that wasn’t new. “Health insurance premiums track the underlying cost of medical care. This was true before the ACA, and it’s true now,” spokesman Robert Zirkelbach was quoted as saying. “Hopefully, the exchanges will shine a spotlight on the variances that exist in the cost of medical care.”

Another story cited by Crossroads, from the April 16 Colorado Independent said: “There have always been fewer – and, therefore, often more expensive — insurance options in the state’s rural and mountain areas.” The story said that rates in resort communities “have skyrocketed” but also noted that it wasn’t clear whether the ACA has caused in increase in rural areas. “Lawmakers are working to find out if the ACA has prompted hikes in rural health care costs or simply brought higher rates into clearer view as more rural Coloradans look for coverage, which long has been more expensive than in urban communities,” the story said.

We spoke with Vincent Plymell, communications manager for the Colorado Division of Insurance, who also said that health care, as well as other costs, have long been higher in mountain areas of the state. “The recent challenge had to do more with transparency,” he said. “People in the mountain areas could now more easily see and compare what people in Denver, Colorado Springs or Fort Collins were paying for their health insurance.”

An actuarial study commissioned by the Division of Insurance this year determined that health costs (including major medical and pharmacy costs) in the resort areas were 37 percent higher than the state average in 2012. (See Exhibit 5.) The figures were adjusted for age and gender.

Plymell said the geographic rating areas insurers had to use for 2014 rates on the individual market “didn’t cause any increase.” The essential benefit requirements under the ACA did cause an increase in some cases, he said, depending on what type of plan an individual had before. “That was true all over the state,” Plymell said.

All we can say with certainty is that some residents of resort and rural areas were upset with their individual market premiums — whether that was because the rates increased under the ACA or because those residents could see they were paying a lot more than people in other parts of Colorado.

ACA Causes Lack of Doctors?

The Crossroads ad also implies that the Affordable Care Act has affected the ratio of patients to doctors when it says, “On the eastern plains, patients now outnumber doctors five thousand to one.” That figure comes from a study released in February by the Colorado Health Institute. But there’s no indication in the study that the ACA has caused a change in the scarcity of primary care doctors in rural areas of the state.

The data is from 2013, and it’s the first time the study was conducted. The ad says this is “now” the case, as if there’s been a change, but we don’t know what the situation was in the past. The Health Institute’s Downs confirmed that the study wasn’t blaming the ACA for the problem. “Because the analysis was conducted prior to the launch of the major insurance reforms in the ACA, we don’t attribute the Affordable Care Act as a reason why there are few primary care physicians on the eastern plains,” she said in an email to FactCheck.org.

The institute found that statewide, Colorado had a “pretty good ratio” of residents to full-time equivalent primary care physicians from a “big-picture perspective,” it said. But there were large discrepancies between certain areas of the state.

Colorado Health Institute report, February 2014: When you look closer, though, our study shows that while many areas have enough primary care physicians to care for the population, a number of others – primarily rural and underserved urban areas – likely do not have enough. …

Denver County has 1,348 residents for each full-time practicing primary care physician. Less than an hour’s drive to the east, in a rural region consisting of Cheyenne, Elbert, Kit Carson and Lincoln counties, there are 5,636 residents for each full-time primary care physician – or more than four times as many.

The study found that the state “appears to have a suitable number of practicing primary care physicians” overall, but certain regions did not. In the rural counties listed above, it suggested a tripling of the current number of full-time equivalent primary care doctors.

The ACA didn’t cause the problem — after all, this is a ratio of the population to doctors, not how many patients each doctor has. And there isn’t any past data with which to compare the study. The study gives several reasons for a challenging situation — fewer physicians choosing to be primary care physicians, an aging population that needs more care, and doctors who are also aging and retiring.

The Colorado Independent article cited in the ad noted that this ratio of doctors to residents was one of the reasons, among a “complex constellation of factors,” for higher health costs in rural areas. Without much competition, providers had little incentive to charge lower prices.

– Lori Robertson

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The Rest of Alaska’s Crime Story http://www.factcheck.org/2014/09/the-rest-of-alaskas-crime-story/ Fri, 05 Sep 2014 22:29:07 +0000 http://www.factcheck.org/?p=88214 A controversial TV ad from Sen. Mark Begich accuses his opponent, former Alaska Attorney General Dan Sullivan, of letting “a lot of sex offenders get off with light sentences” — specifically one ex-con who prosecutors say killed an elderly couple and raped their infant granddaughter in 2013. The ad, though, doesn’t tell the full story.

The “light” sentence was not by choice, but because the Alaska Public Safety Information Network (APSIN) provided prosecutors with an incomplete criminal history of the accused murderer, Jerry Andrew Active, when he was charged in an earlier assault in 2009. Active was sentenced to four years in the 2009 case for the attempted sexual abuse of a minor in the second degree, because the APSIN database did not include a 2007 felony conviction. If it had, Active would have been subject to a sentence of eight to 15 years, rather than two to 12 years, and presumably he would have been given a longer prison term.

Three state departments share the blame for the “light” sentence: the Department of Law, the Department of Corrections and the Department of Public Safety.

As attorney general, Sullivan was in charge of the Department of Law, which prosecuted the 2009 case against Active and reached a plea agreement with him that resulted in a four-year prison term. There is at least one other way to access criminal background information besides APSIN, and an argument could be made that Sullivan’s office did not do its due diligence.

Still, Sullivan had no responsibility for the incomplete database maintained by APSIN, which is an agency within the Department of Public Safety and the primary source used by the state for criminal background checks. And Sullivan did not have responsibility for the probation officer at the Department of Corrections who wrote a confidential pre-sentencing report that apparently failed to include Active’s complete criminal history.

The ad ignores the reason for the “light” sentence or other parties responsible for the sentencing snafu. It also implies that Sullivan was personally responsible for Active’s sentence, but there is no evidence that he had any direct involvement in the case.

The ‘Crime Scene’

The Begich campaign began airing the TV ad, titled “Crime Scene,” the Friday before Labor Day. By Sept. 2, the campaign had pulled the ad after the victims’ family expressed concern that the ad would interfere with Active’s trial, according to a letter that the family’s attorney sent to the Begich campaign and that was obtained by The Daily Caller.

The Sullivan campaign condemned the ad and accused Begich of “lying.”

The ad features retired Sgt. Bob Glen, a 20-year veteran of the Anchorage Police Department, who tells viewers that he wants to “show you a crime scene,” and then he jumps into his car and drives to 415 N. Bragaw Street, Anchorage, Alaska. That’s the location of a grisly attack on an elderly couple and their 2-year-old granddaughter on May 25, 2013.

Retired police officer: I want to show you a crime scene. I was on the Anchorage police force for 20 years. I don’t know how long Dan Sullivan lived in Alaska, but I do know what he did as attorney general. He let a lot of sex offenders get off with light sentences. One of them got out of prison and is now charged with breaking into that apartment building, murdering a senior couple and sexually assaulting their 2-year-old granddaughter. Dan Sullivan should NOT be a U.S. senator.

It’s Glen’s opinion that Sullivan “let a lot of sex offenders get off with light sentences.” The Alaska Democratic Party provided us with a list of cases that it believes proves the point, but that amounts to anecdotal evidence. Others we spoke to in Alaska don’t share that opinion.

“It is not my experience that the District Attorney’s Office ‘lets a lot of sex offenders get off with light sentences,’ ” said Wally Tetlow, a former president of the Alaska Association of Criminal Defense Lawyers. “That has never been my experience.”

So, we will set that aside and instead focus on whether one of those sex offenders got off lightly — the focus of the ad.

The facts about the attack as presented in the ad are accurate. Jerry Andrew Active is not mentioned by name, but the address provided on the screen is the site of a crime he now stands accused of committing.

On June 3, 2013, Active was indicted for the murders of Touch Chea, 73, and his wife, Sorn Sreap, 71, and multiple sexual assaults of the 2-year-old granddaughter whom they were babysitting. The Alaska Dispatch News reported that Active “had been released from the Anchorage Correctional Complex about 12 hours before allegedly committing the grisly murders and assaults.” The paper said three Democratic lawmakers called for an investigation into “whether he should have served a longer sentence for an earlier assault.”

The Alaska Dispatch News was referring to the sentence Active received in 2010 when Sullivan was the attorney general. An investigation was launched, and state Attorney General Michael Geraghty announced on June 6, 2013, that Active should have received a longer sentence in 2010. He said the plea agreement “may have been incorrect and not consistent with the law.”

Here’s what happened, according to the attorney general’s report: Active was arrested on Jan. 29, 2009, on charges of “burglary in the first degree, sexual assault in the second degree, sexual abuse of a minor in the second degree, and assault in the fourth degree. The district attorney’s office added counts of attempted sexual abuse of a minor and criminal trespass.” The sexual assault involved an 11-year-old girl. On Jan. 30, 2009, the state ran a criminal background check using APSIN, but as Geraghty explained: “This report failed to include Mr. Active’s prior felony conviction from the 2007 offense.”

The 2007 felony conviction was for furnishing alcohol to a minor.

Attorney general’s press release, June 6, 2013: As a result of Mr. Active’s felony conviction in the 2007 case, and his conviction for attempted sexual abuse of a minor in the 2009 case, he was subject to a presumptive sentencing term of eight to fifteen years. The Department of Law, the Department of Corrections and the sentencing judge failed to identify Mr. Active’s prior felony conviction for purposes of calculating the applicable presumptive sentencing term, and believed that Mr. Active was subject to a presumptive sentence of two to twelve years for what was believed to be his first felony conviction for attempted sexual abuse of a minor.

Who’s to Blame?

Sullivan was not appointed attorney general until June 2009, so the Sullivan campaign says the fact that the faulty criminal background check was done about five months before Sullivan took office absolves him of any wrongdoing. That is a matter of dispute — even among Alaska’s criminal defense lawyers.

Sullivan was the attorney general when the plea agreement was reached in March 2010. His office had the opportunity to review Active’s criminal history before it negotiated a plea agreement.

“In my expert opinion, a DA that relies solely on APSIN without checking CourtView is not exercising due diligence,” Tetlow, the former president of the state defense lawyers association, told us.

CourtView is a state court database that provides summary information on cases dating to 1990. We found the criminal history of Jerry Andrew Active with just a few key strokes.

Steven Wells, who also is a past president of the Alaska criminal lawyers association, agreed — to a point. “It is incumbent on the AG’s office to run a background check, but they aren’t the only ones to do so. The probation officer will write a report called a pre-sentence report (PSR),” Wells told us in an email.

A pre-sentencing report was done in this case, and it was presented to the court on July 9, 2010, according to the attorney general’s review of the Active case. That report is confidential, so we don’t know what it says. However, the attorney general’s report listed the Department of Corrections — which includes the Division of Probation and Parole — as among those responsible for failing to “identify Mr. Active’s prior felony conviction for purposes of calculating the applicable presumptive sentencing term.”

Wells, however, doesn’t blame Sullivan or the probation officer. “I believe that Sullivan is being unfairly blamed, but not because the mistake occurred prior to his taking office. Instead, the problem is in APSIN,” Wells said.

APSIN’s failure to include the 2007 felony conviction in its database was particularly troublesome because, as the attorney general’s office said in its June 2013 press release, “[t]he state primarily relies upon the Alaska Public Safety Information Network (APSIN) to determine the prior criminal history of defendants.”

The Begich campaign placed the blame squarely on Sullivan, but in doing so it distorted the facts.

The Begich campaign issued a timeline of events that falsely states in March 2010 “Dan Sullivan enters into an improper plea agreement with Jerry Active.” As proof, the campaign provided a screen grab of the plea agreement showing Sullivan’s name. “Dan Sullivan’s name appears on a plea agreement with Jerry Active,” the campaign timeline says. But the plea agreement was signed by Assistant District Attorney Gustaf Olson, not Sullivan. That information was not part of the timeline.

The Begich campaign provided no evidence that Sullivan had any involvement in Active’s 2010 plea agreement — despite the implication that he did both in the ad and in the campaign’s timeline.

The Alaska Democratic Party makes a separate point that Geraghty in 2013 changed the plea bargain process to prevent prosecutors from negotiating plea agreements with defendants for sexual crimes and violent felonies. That, it says, is evidence that the plea bargain process was broken under Sullivan.

Attorney General Michael Geraghty, Department of Law 2013 Annual Report: I instituted a change in the plea negotiation process to restore sentencing where it belongs, with judges. While our Criminal Division will continue to arrive at appropriate plea dispositions based on the law and the facts, we will no longer agree to sentences with the defendant for sexual crimes and violent felonies. Instead, our prosecutors will argue for the stiffest sentence supported by the law and the facts, and allow the court to impose what it believes to be an appropriate sentence. I took this step because it is critical for the public to have confidence in the criminal justice system and it is judges, not prosecutors, who should be determining the appropriate sentence in those serious cases that affect our communities.

That’s not evidence, however, that Sullivan “let a lot of sex offenders get off with light sentences.” And whether the new process has or will result in longer sentences is not known.

It’s possible the change may result in shorter sentences. For example, the Alaska Democratic Party sent us a link to a March 1, 2012, news article in which state Supreme Court Chief Justice Walter “Bud” Carpeneti urged state legislators to change the sentencing guidelines to give judges more power to set sentences rather than approve plea agreements. But, contrary to the Democratic Party’s point, Carpeneti argued for the change as a way to reduce prison sentences.

“Too many of Alaska’s young men, particularly our young men of color, are spending their early adulthoods in our prison system,” Carpeneti told lawmakers.

In the end, we find that the Begich ad is misleading because it doesn’t tell the full story of Active’s “light” sentence; it ignores the responsibility that other state agencies had in this tragic case; and it leaves the false impression that Sullivan was personally involved in the plea agreement.

– Eugene Kiely

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Sept. 5: Presidential Support, Ethics, Crime http://www.factcheck.org/2014/09/sept-5-presidential-support-ethics-crime/ Fri, 05 Sep 2014 17:41:57 +0000 http://www.factcheck.org/?p=88409
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NRCC, Again, Cherry-picks Data http://www.factcheck.org/2014/09/nrcc-again-cherry-picks-data/ Thu, 04 Sep 2014 21:29:32 +0000 http://www.factcheck.org/?p=88099 The National Republican Congressional Committee once again uses selective evidence to attack a congressman for supporting President Obama. This time, the target is Democratic Rep. Nick Rahall of West Virginia.

Joe McCormick, a coal miner from Seth, West Virginia, says in an NRCC TV ad: “Anyone, including Nick Rahall, who supports Barack Obama, is not a friend of coal.” That’s followed up later with a graphic saying that Rahall “voted with Obama 94% of the time.” But as we found last month, when the NRCC attacked Georgia Rep. John Barrow, the group is cherry-picking data to support its case.

It’s true that Rahall voted with Obama that often in 2009, as the ad notes, according to a Congressional Quarterly analysis of votes. But Rahall has won two elections since then and his support for Obama has dropped each year. He sided with the president on just 58 percent of votes in 2013. Rahall doesn’t always side with the Obama administration on coal-related issues, either, as the ad suggests.

The 60-second ad, called “Rahall’s Record,” is the first from the NRCC in the race for West Virginia’s 3rd Congressional District between Rahall and Republican Evan Jenkins. It began airing in the Bluefield-Beckley and Charleston-Huntington TV markets on Sept. 2.

In the ad, McCormick says, “When Nick Rahall votes with Barack Obama, that tells me that Nick Rahall don’t really care about Southern West Virginia. He don’t care about us coal miners.” He says that as a graphic appears on screen, saying Rahall “voted with Obama 94% of the time.”

Yes, Rahall voted with Obama that often in 2009, according to CQ’s study of congressional votes where Obama took a clear position. But ad watchers should know that Rahall has voted less often with the president every year since. Rahall’s support of Obama’s position dropped to 88 percent in 2010, 65 percent in 2011, 64 percent in 2012 and 58 percent in 2013, when he ranked 11th among House Democrats who opposed Obama most often.

And Obama can’t always depend on Rahall’s vote on energy policies affecting the coal industry, as the NRCC ad would have viewers believe.

The ad also uses the headline of a May 11 op-ed in the Charleston Gazette that says, “W.Va. should be wary of EPA’s push to regulate.” In fact, Rahall has expressed his wariness of a proposal by Obama and the EPA to cut carbon emissions from existing coal plants 30 percent below 2005 levels by 2030.

After the EPA announced its plan, Rahall vowed to introduce a bill to stop it. And on June 9, he and Republican West Virginia Rep. David McKinley introduced H.R. 4813, The Protection and Accountability Regulatory Act. A press release said the bill “would terminate the new rule for existing power plants, along with the proposed rule for future power plants. In addition, to prevent some sleight of hand maneuver by the EPA, the bill will aim to block the issuance of similar rules for at least the next 5 years without Congressional approval.”

At the end of the ad, McCormick says, “I’d say that a vote for Nick Rahall is a vote for Obama.” That’s clearly not always the case in general, or even just on votes on coal-related issues.

– D’Angelo Gore

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Another Arkansas Whopper http://www.factcheck.org/2014/09/another-arkansas-whopper/ Wed, 03 Sep 2014 22:01:40 +0000 http://www.factcheck.org/?p=88064 An ad from the Republican Governors Association claims that Democratic gubernatorial nominee Mike Ross of Arkansas got a “sweetheart deal” on the 2007 sale of his family-owned pharmacy. That’s not so. The claim is based on an appraisal that state regulators later found to be bogus.

The ad also directly implies that former congressman Ross is “for sale,” which is utterly unsubstantiated. In fact, he was cleared in 2010 by the House Ethics Committee, which found that his pharmacy sold for “fair value” and that the appraiser “improperly” used the wrong method when he mistakenly put the pharmacy’s value at less than half the price Ross was paid.

The appraiser — quoted in the ad — gave up his license forever in 2010 rather than face a six-month probation and 30 hours of remedial training prescribed by the Arkansas Appraiser Licensing & Certification Board as a result of the Ross appraisal, according to documents obtained by FactCheck.org and reported here for the first time.

The RGA ad was released Aug. 26 and started running Aug. 27. The Ross campaign immediately called the ad “slanderous.” We find the ad to be false and defamatory.

No ‘Sweetheart’

The ad begins, “The only real-estate appraiser in Prescott [Arkansas] put it this way, ‘You can buy half the town for $420,000.’ Yet somehow, Mike Ross sold his Prescott pharmacy to the company of a campaign donor for just that amount. A sweetheart deal.”

That’s based entirely on a story reported by ProPublica, a nonprofit organization that produces investigative journalism, and reprinted by Politico, on Sept. 22, 2009. That day Ross vigorously disputed the story, and soon after the state’s leading newspaper, the Arkansas Democrat-Gazette, quoted several experts, including a professor of pharmacy management who said the price Ross received was “well within the ballpark” of what similar pharmacies in similar communities would bring. The paper later published blistering editorials denouncing ProPublica’s “smear” of Ross and describing it as “an artificial tempest” cooked up by liberals trying to discredit Ross’ resistance to the new health care law then moving through Congress.

We won’t speculate on ProPublica’s supposed liberal motives; it is a capable organization that has won two Pulitzer Prizes for other reports. But in this case, it relied almost entirely on what turned out to be a shoddy appraisal that led to a regulatory hearing and the permanent surrender of the appraiser’s license.

An ‘Incompetent’ Appraiser

The appraiser hired by ProPublica — and quoted in the RGA ad — is Adam Guthrie Jr. He was described in the original news story as “the only licensed real estate appraiser in Prescott.” He valued Ross’ pharmacy at only $198,500, which is less than half what Ross and his wife, Holly, received from the buyer, Stephen L. LaFrance, the owner of the USA Drug retail chain.

If that appraisal was accurate, it would indeed raise a question of what Ross might have done for LaFrance to warrant the extra money. But as we can report here fully for the first time, the appraisal was a bad one that failed to take into account either the cost of the building or the income it produced. Two days after the ProPublica story appeared, the chair of the Arkansas Appraiser Licensing & Certification Board, Dwight L. Brown, filed a complaint with the board’s chief investigator citing those and other errors in Guthrie’s work.

“In my opinion, I feel Mr. Guthrie is incompetent to complete real estate appraisals of this complexity,” Brown said in his complaint, which the board supplied to FactCheck.org at our request. Brown added, “This real estate appraisal conducted by Mr. Guthrie is a bad reflection on the appraisal profession.” Brown, we should add, is a veteran real-estate appraiser who was first appointed to the 10-member regulatory board by Republican Gov. Mike Huckabee in 2005, and reappointed by Democratic Gov. Mike Beebe in 2008.

Appraiser Guthrie based his valuation only on the sales prices of five other properties in 2006, 2007 and 2008. Only one of the properties was in Prescott, and the other four were in Hope, Arkansas, which is 16 miles away. Guthrie said these were “the nearest thing to comparable sales in this area,” but did not describe how any of them were being used at the time of sale, or the age or condition of the structures. Chairman Brown found the appraiser’s methods to be “inconsistent with good appraisal practice,” and added: “Looks to me [as though] he grabbed a dollar amount out of the air for use in the final determination of value.”

More important, Chairman Brown faulted Guthrie for failing to use either the “income approach” or the “cost approach” in valuing the Ross pharmacy.

Guthrie’s appraisal didn’t take the property’s income-producing record into account, saying it was “not applicable because there was no financial data available to make an income comparison.” But Brown’s complaint said, ”The Income Approach could and should have been completed.” Guthrie also rejected the “cost approach,” saying that it “was not considered to be relevant.” But Brown stated in his complaint, “In my opinion, the Cost Approach could and should have been considered and completed.” 

Cost alone could have led to a higher valuation than the $198,500 at which Guthrie arrived. In a statement issued on the day of the ProPublica story, Ross said he spent $316,000 to build the structure in 1998 and sold it nine years later for $420,000. “I would have made more during that time period if I had invested in a certificate of deposit (CD),” he said.

The chairman’s complaint led the state regulatory board to hold an informal conference of a “non-judicial hearing panel” on Jan. 14, 2010. According to a draft of a consent agreement that the board furnished to us at our request, that hearing panel concluded that because of “errors” in Guthrie’s appraisal he should submit to a six-month probation during which he would be required to complete two 15-hour courses, one in uniform standards of appraisal practice and the other in how to make general sales comparisons. 

But, according to a board staffer who asked not to be named, Guthrie decided instead to simply give up his license and cease practicing as an appraiser. So a new consent agreement was drafted and signed on Jan. 26, 2010, under which Guthrie agreed to surrender his license, and Guthrie further agreed that “he will not apply in the future nor will he be eligible for any licensure, certification or registration with the Arkansas Appraiser Licensing and Certification Board.”

Cleared by House Ethics Committee

The RGA ad mentions “a call for the Justice Department to investigate.” It’s true that a group called “Citizens for Responsibility and Ethics in Washington” did write a letter to the Justice Department the day after the ProPublica story appeared — and before the deficiencies in the appraisal came to light — calling for an investigation of whether Ross “engaged in bribery and honest services fraud by selling a piece of commercial property for more than it’s worth to a pharmacy chain with an interest in pending legislation.” But we’ve seen no evidence that the DOJ pursued the matter, and certainly no legal charges have been brought against Ross in the nearly five years that have passed.

However, the House Ethics Committee did inquire about the allegations in the ProPublica article, and after months of investigation, it cleared Ross of any wrongdoing. In a letter sent to Ross on Nov. 10, 2010 — more than a year after the original article — the bipartisan panel’s Democratic chair and senior Republican member said that ProPublica’s appraiser didn’t use the proper method, and that Ross sold the pharmacy at fair market value:

House Ethics Committee letter, Nov. 10, 2010: The appraisals cited in the ProPublica article are dated and the independent appraisal improperly employs the sales comparison methodology to assess their value. The documents you provided indicate that the fair market value of your building and property was approximately $420,000, the price USA Drug paid for them.

The committee closed the matter without taking any action against Ross.

The ad further states that Ross “got another $800,000 from the same buyer,” which is old news. The day after the ProPublica story appeared, the buyer released details of the full transaction at Ross’ request. The terms involved not only the sale of the pharmacy land and building but also of items including store inventory, prescription files, accounts receivable, petty cash and other things that are part of a retail concern. The value of the inventory was determined by Washington Inventory Services, which performed a physical count on the night of closing. The sale also provided for $110,000 to be paid to Ross, his wife and their pharmacy corporation in return for their agreement not to compete with their old store for 10 years at any pharmacy within 20 miles. Non-compete agreements are common in such sales.

Both the ProPublica story and the new RGA ad mention that the buyer, LaFrance, had given money to Ross’ House campaigns. And indeed, records show LaFrance has contributed a total of $6,450 to Ross’ campaigns for the House, both before and after the sale. What isn’t mentioned, however, is that LaFrance previously supported Ross’ opponent, Republican Rep. Jay Dickey. In 2000, when Ross defeated Dickey, LaFrance gave $2,000 to Dickey and nothing to Ross. His first donation to Ross came in 2006.

The RGA ad concludes by calling Ross a “typical politician” and adding, “Some things shouldn’t be for sale.” But the facts show that insinuation to be false, and the ad to be an extraordinary whopper.

– Brooks Jackson

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