Investigative Newspaper Journalism
For Large-Circulation Southern California Weekly Newspapers
In 2006, I wrote a number of freelance articles, on assignment and on my own, for the Core Media Group of newspapers: The Arcadia Weekly (of my then-home town), The Monrovia Weekly, The Sierra Madre Weekly, The La Cañada–Flintridge Weekly, and The Pasadena Independent (later The Pasadena Cosmopolitan).
In our northeastern foothill region of the greater Los Angeles area, more people read Core Media weeklies than the Los Angeles Times. The circulation of daily newspapers was shrinking, as more people were getting their news from the Internet; but that of weeklies, with more local news, was growing.
Nonetheless, I wrote several stories of national interest, usually with local angles; my subjects included the powerful local Rep. David Dreier and the Republican-controlled Congress (about which I interviewed Gen. Wesley Clark in person), AT&T and the telecom industry, Red Cross scandals, and bitter lawsuits over a $300-million-a-year burger “empire.” My editor stood by me through it all.
Articles Published in Core Media Weeklies
- Democracy, Alive and Well in Southern California — news/opinion article about local congressional campaign event of Russ Warner, vs. Rep. David Dreier, featuring an interview with visiting Gen. Wesley Clark.
- “Billboard Art” Celebrates Diversity of Northwest Pasadena — news article / art review about community art project, featuring work by Don Repella.
- Backed by Big Money, Congress May Gut Identity Theft Laws — investigative journalism “following the money trail” (By reserving online rights, I also posted the article in several news and opinion Web sites).
- Arcadian’s “Bug Art” in Armory Art Show — news article / art review about the Artist in Residence, Steven Kutcher, a.k.a. “The Bug Man of Hollywood”.
- One Less Bell to Answer — an in-depth news analysis covering recent developments in the telecom industry (By reserving online rights, I also posted the article in several news and opinion Web sites).
- Code Red for the Red Cross — investigative journalism reporting mismanagement and corruption at both the local and national offices of the American Red Cross.
- In-N-Out of Court — a scandal-ridden exposé about the bitter legal battle over one of the nation’s oldest fast-food “empires”.
- Proud to Be a La-Z-Boy — feature story about a new “customer-friendly” retail store.
- My Dad, Quite a Guy — a human interest story, a tribute, to my (now late) father — an assignment kindly suggested by my new editor.
Democracy, Alive and Well in Southern California
Published the week of April 27 to May 3, 2006
If you’ve never been to a political event, you’ve never seen grassroots democracy in action.
The speeches, the mingling, the positioning, the give and take — these are the elements that when mixed in the proper proportions produce the spontaneous combustion known as democracy.
This Tuesday morning at a lovely tiled, patioed, and tiered private residence overlooking most of La Cañada – Flintridge, there was such a get-together: Benefiting the congressional candidacy of small businessman Russ Warner, Democratic opponent of Republican incumbent David Dreier, the backyard breakfast allowed concerned citizens to rub elbows with and tug the ears of local party activists, elected city councilpersons, assembly and congressional candidates, state political operatives, and the guest of honor — former Supreme Allied Commander of NATO and 2004 U.S. presidential contender General Wesley Clark.
This was a thoroughly inspiring experience, connecting those who would lead us with our most pressing concerns — from educating our young people and keeping them from dying in unnecessary wars (Warner’s son Greg, with an appointment to West Point, has survived 17 months in the warzone of Iraq) to reigning in exorbitant profits in the oil and healthcare industries and nurturing the growth of small businesses, besieged by international behemoths sending jobs overseas.
As congressional candidate Warner told me, running a government should be like running a small family business: take care of your people while watching the bottom line. Running up massive debts and allowing human beings to fall through the cracks is not the way to do things.
This present contest — between Warner and Dreier — is important not only to the citizens of the 26th congressional district — stretching from La Cañada – Flintridge to Rancho Cucamonga and beyond — but also to the citizens of the United States as a whole: Our current congressman, David Dreier, as chairman of the House Rules Committee, exercises a stranglehold on all legislation appearing before the House; even on some bills for which there has been broad bipartisan support, Dreier has prevented the bills from ever coming to a vote, because they were opposed by the White House. As newspapers across the country have noted for years, David Dreier serves as George Bush’s “hatchet-man” in Congress.
As General Clark said Tuesday, with his commanding, yet accessible presence: “This country is, right now, under the domination of a party that is captured by some obsolete ideas.
“They made some serious strategic blunders: like invading Iraq, which was an unnecessary, elective war; like running a huge budget deficit and leaving our children and grandchildren saddled with trillions of dollars of debt held by people abroad, not even by other Americans.”
“We’ve got to get America back on the right path. To do that, we’re going to need men and women in Congress who can look at the situation that our country finds itself in, listen to the needs of the American people — the rich, the poor, the middle class, everybody in between; people of every faith and denomination.
“We’re going to need men and women who respect America for what it is and believe that every American should be given the opportunity to live his life or her life and develop their potential to the fullest.
“We’re looking for pragmatic leaders, problem-solvers: people who can take ideas and turn them into concrete reality, people who can make it happen.”
And we the people can make that happen.
Don’t let the powers-that-be fool you. Just as most of the economic activity in this country is conducted by households, the lion’s share of the political power in the U.S. is ultimately held by the public at large.
Democracy. Use it or lose it.
“Billboard Art” Celebrates Diversity of Northwest Pasadena
Published the week of April 13 to April 19, 2006
A yearlong exhibition entitled “Northwest Portraits” is being held at the Armory Northwest/965. Month after month, in large outdoor artworks, select Southern California artists are portraying and celebrating the often-overlooked diversity of Northwest Pasadena.
The first of these 13' by 8' “super graphic” (“billboard”) artworks hung on the fascia of the Armory Northwest, for all the community to see, is a composite by artist Grace Amemiya that depicts all of the “Northwest Portraits” artists and artworks that will be exhibited. A professional designer for commercial products and motion pictures, Amemiya is also an accomplished fine artist whose works have been exhibited throughout California and who has taught for the Barnsdall Art Center Art Partners in Los Angeles, the Laguna Art Museum Children’s Workshop, and Comision de Femenil Gifted Children Program at the 2nd Street School in Boyle Heights.
Amemiya is on the board of directors of NewTown, an Altadena-based arts organization that is sponsoring “Northwest Portraits.” In their Web site, http://www.newtownarts.org, NewTown describes itself as “a dedicated consortium of accomplished professional artists and artist/administrators — musicians, dancers, film and video makers, and visual artists — all of whom donate their time to ensure new creative opportunities for their colleagues throughout Southern California.” Over the last four years, this artist-run, not-for-profit organization has presented a wide variety of arts to over 100,000 people in such diverse venues as streets, plazas, storefronts, parking lots, a swimming pool, a church basement, and even a hiking trail in the San Gabriel Mountains. Bringing art to the people, NewTown has earned grants from The Pasadena Art Alliance, the Los Angeles County Arts Commission, the California Arts Council, the National Endowment for the Arts, other public organizations, and many private donors.
For “Northwest Portraits,” NewTown partnered with the Armory Northwest to select by jury ten accomplished artists from throughout Southern California, who are portraying such diverse representatives of the local community as a retired bar owner, a physician in a community clinic, a beauty queen, and a former professional women’s ballplayer.
Beginning April 14, the first of the individual artworks will be on display: the billboard-sized reproduction of a digitally enhanced double-portrait of the local married couple Jim Wright and Bazana Belakosa, by photographic artist Don Repella.
In addition to being an internationally recognized fine artist — with an MFA from the University of Connecticut and a course in photography that he teaches online at Donau Universitat, in Krems, Austria — Repella is known to many locally as the executive director of Pasadena Community Access Corporation, providing Channels 55 and 56 on the Charter Communications cable system and, thus, opportunities for many in the community to express themselves through television.
As archived in his Web site, http://www.repella.net, Repella’s expressions in photography and videography portray individuals trying (often in vain) to maintain their individuality in our modern mass society. His contribution to “Northwest Portraits” is a good example of this examination of art as communication and sometimes “commodification” (art and people all-too-often at least seemingly for sale).
Repella’s portrait of Wright and Belakosa works on two levels. On the personal level, it is a stunning portrait of an intimate relationship: a man and a woman rendered with digital precision as unique individuals — his image brownish, earthy, and outgoing; hers bluish, spiritual, and introspective (Repella confides that both his subjects are quite intelligent, although she lives more in the world of ideas, as a poet).
Further displaying the uniqueness of his subjects, Repella presents quotes in print next to (presumably from) each. Stated next to Belakosa is “We need a more economically strong Northwest Pasadena by creating job and career programs for people 18 to 40 years old”; next to Wright, “Being a creative personality within Pasadena’s boundary is a challenging, rewarding and unique experience because of its diverse ethnicities.”
Tying these married individuals together is a very warm-colored line between their eyes as well as a background depicting an extreme close-up of the texture of their skin: the portraits are united by the shared memories etched into every last microscopic line that has, as Repella puts it, “transformed their flesh.”
Indeed, the phrase “Our memories, transformed flesh” is written explicitly in the digital composition; however, as he has done in many other works, Repella does not spell out his message in English: Instead, he communicates his theme in yet another form of communication, the “QR Code” — a machine-readable barcode-like pattern used to mark containers in the shipping industry and often employed in Japan for encoding personal information, as on business cards for quick entry into cell-phone memories.
These digitized, commercialized square patterns — interspersed with inserts of extreme close-ups of such personally identifiable features as fingerprints and palmprints and positioned next to the logo of “Repella Industries” (taking the place of the artist’s signature) — lead the viewer from the realm of a very personal portrait of a marriage to a very impersonal impression of society.
As the eyes of the very solemn couple stare down upon the passersby on the street — conveying a rather “cold, sci-fi” mood and feeling, according to Repella — the observers become the observed: Big Brother (and Sister) are watching you!
As the other two QR codes in his artwork state (in a visual language decipherable only by machine), “We did not notice while our freedoms vanished”; and “We observed everything believing in free will.” Indeed, if one examines the fine print beneath the personable quotes, one sees an FBI-like notice (written in English): “Reviewed for Classification by SA [Special Agent, specified by number].”
This contrast of the intimate individuality of a digital portrait with the intimidating dehumanization of a “factory product” is, of course, disturbing but also, in a strange way, reassuring: No matter how “commodified” this communication, the individuality and mutual love of the man and woman portrayed cannot be denied.
That is a message that can resonate throughout our modern mass society and in particular in Northwest Pasadena, all-too-often thought by outsiders to be homogenous and dull but known by residents to be diverse and lively — an idea to be conveyed by a different artist every month for the next year through the larger-than-life “Northwest Portraits” on display at the Armory Northwest for all the world to see.
The Armory Northwest/965 is located at 965 N. Fair Oaks Ave., Pasadena. “Northwest Portraits” are billboard art, hung on the outside of the building; to view the galleries inside, you may visit every Friday through Sunday, from noon to 5 p.m. Admission is free. Free group tours are available with reservations. For more information, call the Armory Center for the Arts, 626-792-5101, or visit their Web site, http://www.armoryarts.org.
Backed by Big Money, Congress May Gut Identity Theft Laws
Scheduled to have been published the week of March 23 to March 29, 2006 but not published in print, because of my editor’s illness; however, it was published online and is available in my online archives.
As I sit here writing this, my ATM/Debit Check card (from a bank of America that shall remain nameless) has been blocked. After receiving the official notice a few days ago, I hurriedly made other arrangements for my automatic payments, as for the Internet service I used to research this article and e-mail it to my editor; modern life runs on digital money.
Of what crime was I guilty, to receive such punishment? I had the gall to claim an identity. Apparently, my account (and God only knows how many more) “may have been compromised at a third-party location.” I am reassured that my card is covered by “both zero liability and next day refunds guaranteed credit” (subject to dollar limits) but I am also told to carefully review my “statements and report any unauthorized transactions” ... although I may be (and indeed am) “temporarily unable to access Online Banking” (The last time something like this happened, three years ago, I caught the problem online before the bank did, and before the rent check bounced ... and I bounced out on the sidewalk). I await my new card, said to arrive within five business days ... as of a week ago.
Sound familiar? Odds are you or someone you know has suffered the same or worse fate. According to the Federal Trade Commission, there are nearly 10 million identity theft victims each year; that's about 19 every minute! Far from a victimless crime, identity theft costs the businesses, financial institutions, and consumers of America billions of dollars a year.
Earlier this year, the FTC levied the largest civil penalty on record — a $10 million fine plus a $5 million restitution fund — on ChoicePoint, a “data broker,” or credit-reporting service, used by over 50,000 merchants and landlords for credit checks on potential customers and tenants: In 2005, ChoicePoint became the poster child for lax identity protection, by allowing an organized ring of identity thieves to gain access to over 160,000 personal records; hundreds of individuals became victims of identity theft.
Remember, too, that the 9/11 hijackers left behind piles of credit cards in their rooms; identity theft is a weapon of choice — a “weapon of mass financial destruction” — for Al Qaeda terrorists worldwide.
So naturally, the federal government is doing everything in its power to crack down on this crime wave, this threat to national financial security, to ease the burden upon us innocent victims of this crime that has turned countless lives upside-down (To paraphrase the Bible, it's easier to pull a camel through the eye of a needle than it is to restore bad credit).
Don't bank on it.
The ChoicePoint debacle was brought to public attention not by some federal regulation but by the strict identity theft laws here in California, which call for notifying victims of almost any breaches in security — not just those that the financial institutions themselves determine to be “reasonably likely to result in substantial harm or inconvenience to the consumer” (as the new federal legislation would mandate) — and which freeze the accounts of potential victims: As a representative of the Consumers Union has said, “we shouldn't have to wait until an identity thief has already bought a Lexus in your name in order to have the right [to] protect yourself.”
The same sort of strict reporting requirements and account freezes are found in the antiidentity-theft laws in several other states that will be gutted like a dead fish by the legislation that was just voted out of committee last week by the House Committee on Financial Services.
And to me, that stinks like a dead fish. Actually, it is the smell of money, and lots of it.
In particular, according to the Center for Responsive Politics, fourteen of the twenty members of the House who receive the most campaign contributions from the commercial banking industry — whose interests are not served by letting the public know their security has been breached, let alone by making good on the losses — serve on the House Committee on Financial Services: Eleven Republicans, including the Chairman, Michael G. Oxley (ROH), and three Democrats.
And the six remaining House members out of the top twenty getting the largest contributions from the commercial banking industry are hardly ill-placed to influence legislation: In addition to Henry Bonilla (D-TX), the first Hispanic Republican elected to Congress from Texas, the big bank money goes to Dennis Hastert (R-IL), Speaker of the House; Roy Blunt (R-MO), House Majority Whip; Tom DeLay (RTX), indicted former House Majority Whip; Eric Cantor (R-VA), Chief Deputy Majority Whip; and David Dreier (D-CA — representing most of the territory covered by Core Media publications), Chairman of the House Rules Committee.
In particular, the Rules Committee is notorious for keeping legislation from reaching the floor of the House, in what longtime observers have found to be the most partisan chokehold on the democratic process in memory. As the Boston Globe reported in its groundbreaking investigation in October of 2004 (and things have gotten only worse), “the Rules Committee, the all-powerful gatekeeper of the Republican leadership ... has sidelined legislation unwanted by the Bush administration, even when a majority of the House seemed ready to approve it.”
But who would want this current legislation, H.R. 3997 (identical to S.2129, in the Senate), laughingly called the “Financial Data Protection Act of 2005” (but I’m not laughing), just voted out of committee, to ever get that far? Who in their right mind would ever want passed what the U.S. Public Interest Group has called “the worst data security bill ever”?
Maybe those in big banking for whom it would become the best data security bill ever bought ... at all our expense.
Arcadian’s “Bug Art” in Armory Art Show
Published the week of March 16 to March 22, 2006
Longtime resident of Arcadia, Steven R. Kutcher, known around the world as “The Bug Man of Hollywood,” for his work with insects in movies and television, has created a new form of art — “bug art” — and been named Artist in Residence at the Armory Center for the Arts, in Pasadena, as part of a larger, three-month exhibition, beginning this week.
Inspired perhaps by once having made a fly walk through ink and leave inky footprints for a Steven Spielberg production, Kutcher created his bug art: painting done by insects tracking “gouache,” opaque watercolor, across a damp paper surface, under the guidance of the artist. Kutcher uses his knowledge of art, acquired through personal study, to design compositions and to select the colors that he carefully applies to the tarsi (feet) and abdomens of his “living brushes.” And Kutcher uses his knowledge of the science of entomology, acquired by earning a Master of the Arts degree and by his lifelong interest in insects, to manipulate the movements of his six-legged collaborators.
The truly unique, typically abstract, often mesmerizing patterns of line, color, and form that result have not only captivated viewers in informal showings and in a formal exhibition in northern California, earlier this year, but have also won the praise of serious artists and art critics.
Later this year, Kutcher’s bug art will be among a select group of pieces in an exhibition touring through Europe.
Closer to home, you may see some of the great variety of his work — as diverse as the insects with which he creates the paintings — in a room dedicated to Kutcher’s work, as Artist in Residence, at the Armory, in Pasadena. In addition to his bug art, and a continuous DVD presentation of his background and creative process (which will eventually air on Pasadena 56), there will be selections from his extensive collection of the world’s most fascinating and beautiful insects as well as displays of “cultural entomology” — the influence of insects in such diverse fields as fine art, music, literature, and even advertising.
Kutcher’s installation will be part of a larger exhibition of artwork inspired by insects entitled “Bugology,” showing at the Armory from February 25 through May 21. The official opening reception will be on March 10, from 6 to 10 p.m., as part of Pasadena’s semiannual Art Night, with galleries open and shuttles running all around town.
For more information about Kutcher and his art, you may visit [http://bugartbysteven.com] ... for the “Bugology” exhibit, contact the Armory Center for the Arts, 145 N. Raymond Ave., Pasadena, CA 91103, (626) 792-5101, http://www.armoryarts.org; and for Art Night, visit http://www.artnightpasadena.org.
One Less Bell to Answer
Published in print the week of March 9 to March 15, 2006; it was also published online and is available in my online archives.
The problem with unfettered capitalism is that it puts itself out of business.
Big fish eat little fish, until there’s only one fish. And that’s called monopoly, which is not only the opposite of competition — the “invisible hand” of a truly free marketplace, keeping companies honest and innovative — but also a dire circumstance for consumers and workers (as if workers weren’t consumers as well): If there is only one store selling and hiring, then they can set prices as high and wages as low as they darn well please.
That “take it or leave it” situation might be acceptable for luxury items or frivolous wants; but when it comes to providing services vital to the rest of the economy, a monopoly amounts to a stranglehold on the nation. Even in the most innocent of scenarios, a lack of competition flirts with extortion.
And no sector of the economy is more vital to our Information Age than the communications industry. The announcement this weekend that AT&T Corp. has agreed to buy BellSouth Corp. is, thus, not only newsworthy but also historic, in terms not only of its sheer size (At $67 billion it is one of the largest deals ever) but also of its social impact: If the merger is approved by the shareholders — those of BellSouth are being offered a premium price by AT&T — and regulators — and the Bush Administration (very much like the Clinton Administration) never met a trust it wanted to bust — then this union of the nation’s largest and third-largest phone companies would reduce the seven regional “Baby Bells,” which the government created in 1984 by carving up the original AT&T monopoly, to just three telecom giants: the new AT&T (incorporating BellSouth as well as the current AT&T, itself the product of SBC just recently acquiring the previous AT&T), Verizon Communications (which recently bought MCI), and — smallest by far — Qwest (in the west, probably now targeted for acquisition by Verizon, trying to consolidate its uneasy secondplace position).
The final word in this alphabet soup is that just two companies — the new AT&T and Verizon, a “duopoly” — would control almost all of the local residential wireline service, most of the longdistance telephone service, most of the cellphone and other wireless service, and most of the DSL wires — as used by competitors to carry Internet phone calls and broadband TV — across the USA. That’s a lot of power in a very few hands ... with some 10,000 fewer pairs of hands actually doing the telephone work, as the consolidation of companies would result in the “cost efficiencies” of massive layoffs.
But the telecom environment is far more complex than in the days of the old AT&T monopoly, as any web-surfing, music-streaming, video-downloading, Voice-over-InternetProtocol-calling teenager could testify.
We find ourselves caught not just in some bigfish-eats-small-fish food chain but in an elaborate food web, if you will, of intricately competing and supporting relationships, which if thrown out of balance can threaten the economic existence of any or all concerned. Consider the interests involved:
Major (Wireline) Telephone Companies
The major telephone companies may be stifling competition from smaller telecom companies, but they are facing stiff competition from cable companies. The telecoms claim that this will stimulate innovation and keep prices low; although it can be argued that if such benefits do indeed accrue, it will be in spite of, not because of, the monopolization now taking place within the telecom industry itself.
It is also worth noting that merged companies often succumb to “unrealized synergies”: failures to realize proposed efficiencies and other goals because of problems encountered when trying to integrate two different corporate cultures and structures, in an ever-changing market.
Bundling phone, Internet, and video services, telephone companies are trying to become “onestop shops” for all our communications needs. Because such services as live video feeds are clearer if their bits of digital information are transmitted rapidly and together, the telephone companies want to charge Internet content providers (See below) a premium for delivering videos with “routing priority” over generally less time-sensitive transmissions, such as e-mail. The telecoms claim that they are simply providing consumers with additional choices and recouping some of the billions of dollars they have invested in their networks, as for fiberoptic lines, even as they have cut the price of their broadband service, in competition with cable providers. As John Chambers, CEO of Cisco, recently told analysts, “very soon, all TV will be broadcast over the Internet.”
The big telephone companies are lobbying Congress to rewrite the landmark Telecommunications Act of 1996, which deregulated the communications industry, allowing telephone and cable companies to directly compete. In particular, they want to make it easier to provide television service without having to negotiate a new agreement with each city they wish to serve (An indirect but inevitable consequence of this would undoubtedly be the end of funding for uniquely, locally valuable community access television).
Wireless Telephone Companies
Owned jointly by AT&T and BellSouth — and, thus, having helped to pull the two corporations together — Cingular, the largest cellphone company in the country, competes directly with Verizon Wireless, the second-largest (jointly owned by Verizon and a British telecom), and Sprint, the third-largest wireless company, which recently bought Nextel; and wireless telephone companies in general compete at least indirectly with wireline telephone companies (See also Cable and Satellite Companies, below).
To support the new technology of high-speed wireless communications, and to thus make wireless providers more competitive, there are calls for more government auctions of unused portions of the wireless spectrum and for the release of other frequencies for unlicensed utilization.
Internet (VoIP) Telephone Companies
Internet phone services (“Voice over Internet Protocol,” or VoIP) are growing rapidly in popularity. However, because they are often offered by smaller telephone companies, such as Skype or Vonage (CallVantage, from AT&T, is an exception), they are often at a competitive disadvantage to more traditional telephony. Sensitive to that, the FCC last year ceased Madison River Communications, a telecom company, from blocking their consumers’ access to Vonage.
Cable and Satellite Companies
Facing stiff competition from telephone companies, cable and satellite companies are bundling phone and Internet services with their video services. Typically having infrastructure already in place, cable companies can often undercut the price that telecoms need to deliver video profitably.
Efforts by telephone companies to promote congressional legislation that would allow the telecoms to bypass local regulations and, thus, build into communities more quickly, have provoked some coordinated resistance by cable companies, each protective of its “turf.”
Actively competing with the major telephone companies, Comcast, Time Warner Cable, and some other cable companies are selling phone lines into homes; and they are also partnering with Sprint-Nextel to provide mobile phone services, in competition with Cingular (from AT&T–BellSouth) and Verizon Wireless. In addition, Sprint is providing its long-distance network to carry phone calls for cable companies, which are thus less dependent upon AT&T and Verizon.
Although the telephone companies have been pursuing the idea of a “tiered” pricing structure for Internet content providers (See below), cable companies have generally not embraced this controversial position, although they can be expected to side with the telecoms, as it would bring in more revenue.
Other Hi-Tech Companies
Telephone equipment companies, like Lucent (spun off from AT&T in 1995) and Nortel, may find themselves in a more difficult bargaining position, having fewer telephone companies with which to negotiate.
Even electric companies may become involved in the communications market, by offering a new technology of broadband service delivered over their power lines.
Internet Content Providers: “Network Neutrality” vs. “Tiered Service”
Perhaps the greatest debate in the field of telecommunications these days involves the plan by telephone companies and cable companies, normally at odds, to establish “tiered” levels of service on their systems: “fast lanes” and “slow lanes” on the “information superhighway,” if you will.
The telecom companies argue that as Internet content providers, like Google, Yahoo!, Amazon, eBay, or Microsoft, increasingly download video and other transmissions that consume enormous amounts of bandwidth (capacity), they should be required to pay a fee — in addition to the standard access fee paid by end-users — to the telephone or cable companies, which supply the costly, typically fiber-optic lines.
Moreover, by giving a video transmission priority treatment — by routing its digital bits together through the system, ahead of less timesensitive transmissions (such as e-mails) — the quality of the video will not be degraded, even during periods of heavy Internet traffic.
In the press and before committees in Congress, which are considering and drafting legislation, the telephone companies and, less vocally, the cable companies are promoting tiered levels of service — a “pay to play” system, if you will — as a reasonable way for them to recoup their sizable investments and a method by which higherquality sites can deliver higher-quality content to their users.
Not surprisingly, the Internet content providers — and most consumers and many legislators — feel otherwise.
Google, in particular, has termed this practice “cyberextortion.”
Less inflammatory, but no less damning, critics have accused the telecoms of wanting to be “gatekeepers” of the Internet, or “toll booths” on the “information superhighway,” impeding the free flow of ideas and innovations.
How, they ask, could a start-up company ever hope to compete with, say, a Google, which could afford to spend far more on getting priority service on the Internet? Who would use a new search engine, no matter how good, that took ten seconds to return a result that took only a second on Google?
In effect, the critics contend, the telecoms — and not a competitively free market of ideas — would be picking the winners and losers on the Internet, the winners being not only those who paid the most but also those with whom the telecoms had a working relationship (such as a subsidiary or sister company within a conglomerate). Internet phone companies would be particularly vulnerable to “discrimination,” as some have called it, by rival telephone companies being allowed by law to charge more for some than for others to use their systems.
The fundamental question is, shall the Internet be turned into a system like that of cable television, in which the content producers must pay to have their content transmitted, in addition to the fees paid by the end-users to have the content received? Or will the dissemination of information on the Internet continue to be free? And how would all that impact personal Web sites and blogs? The implications — for society at large as well as for the economy in particular — are as staggering as the power of the Internet itself.
Currently, the popular demand is for continuing “network neutrality” — perhaps with some accommodations for extraordinarily large transmissions — but telecom companies, and perhaps cable companies, are thought by some to already be working out deals behind the scenes for preferential treatment of various content providers.
Consumers & Workers
Both residential and business consumers of telecom services can expect to be bombarded with press releases, advertising, and other corporate communications from the new AT&T regarding the BellSouth merger — perhaps in addition to the half billion dollars AT&T is spending this year acclimating its customers to the recent acquisition of AT&T by SBC, which took the more famous brand name of its purchase.
Just as the SBC–AT&T deal was by almost all accounts a “good fit” — AT&T bringing with it long-distance; SBC, local — the AT&T–BellSouth merger also makes sense on paper — the two systems compete very little for local or Internet customers, and they own Cingular Wireless together: At least initially, customers of AT&T, BellSouth, and Cingular should experience little if any change from the deal.
It is in the long run that the impact is more debatable.
Speaking on behalf of the combined AT&T and BellSouth, for which he would serve as chairman and CEO, current AT&T Chairman Edward E. Whitacre Jr. has said, “The merger ... will benefit customers through new services and expanded service capabilities.” The plan is for the company’s increased size to help hold down costs — as with those layoffs mentioned above and other economies of scale, saving some $2 billion to $3 billion a year — which may allow the new AT&T to undercut the prices of the cable and satellite companies, particularly for the television programming AT&T is beginning to deliver.
Speaking on behalf of consumers, Gene Kimmelman, policy director at Consumers Union, publisher of Consumer Reports magazine, has been quoted as saying that the merger “will lead to the end of the era of falling prices for telephone and cellphone service.” In addition, fees for Internet service may rise, particularly in areas with limited high-speed choices and perhaps with the introduction of a “tiered” system of fees for content providers (as discussed above), probably ultimately passed on to consumers.
Regulators and Legislators
Mark Cooper, research director of the Consumer Federation of America, has been reported as saying, “Telecommunications has now gone from a regulated monopoly to an unregulated duopoly with just two major players. Consumers know that is not enough competition to lower their prices and drive innovation.”
Moreover, Janee Briesemeister, a senior policy analyst of the Consumers Union, has said, “The track record of the baby Bells since the passage of the Telecommunications Act of 1996 shows a persistent pattern of bad acts, broken promises, and a failure to compete.”
And it doesn’t help at least the image of the telecom and cable companies to have so many of their members in regulatory positions: In 2003 to 2004, for example, about a third of the Consumer Advisory Committee of the FCC was composed of lawyers for AT&T, BellSouth, Cingular, Verizon, MCI, Cellular Telecommunications and Internet Association, National Association of Broadcasters, Telecommunications Industry Association, and the National Cable Telecommunications Association.
Regardless, despite all the lobbying by phone companies and by those who oppose a tiered system of fees on the Internet, Congress will probably not pass telecom reform legislation this year: It is probably too complex and timeconsuming to debate in an election year. But as mentioned above, supporters of “net neutrality” fear that secret deals are already being done between phone companies and certain content providers for preferential treatment on the Internet.
And it is widely anticipated that the merger of AT&T and BellSouth will be approved by both shareholders and regulators within a year, particularly because the business environment in which the new AT&T will operate bears little resemblance to that which existed when the old “Ma Bell” was broken up: Back in 1984, cable companies were far smaller and less competitive, cellphones were a novelty, and the Internet was mostly a scholarly dream.
The original Bell Telephone Company was founded in 1877 by Alexander Graham Bell. This inventor of the telephone captured the spirit of our Information Age when he said: “Great discoveries and improvements invariably involve the cooperation of many minds.”
That is precisely the reason we must so jealously guard the freedom of all our communications.
Code Red for the Red Cross
Published the week of March 2 to March 8, 2006
Revelations in the press for the last several months and by a Blue Ribbon Commission released earlier this month about mismanagement and corruption in the local chapter of the American Red Cross bear a striking — and not coincidental — resemblance to revelations in the press for the last several months and by a Senate report released earlier this week about mismanagement and corruption in the national organization of the American Red Cross. If this venerable institution, operating under a charter from Congress, is to survive, let alone prosper in its role of helping victims of disasters — if the good works of countless selfless volunteers and donors are not to be in vain — there will need to be a thorough housecleaning and reorganization from top to bottom. Declarations of disaster have, in effect, been issued for the American Red Cross itself.
Consider first what has been going on in the San Gabriel Pomona Valley Chapter, headquartered in Pasadena, and what needs to be done to regain the trust of the community it is meant to serve.
On August 17, 2005, on the front page of the Los Angeles Times there ran an article exposing the chief fundraiser of the local chapter, Fred Brito Gomez, as a convicted felon who admitted to embezzling from more people over the decades than he could even remember; indeed, in April, 2005, he had been fired from his previous job — a $100,000-a-year fundraising position at UCLA — when his résumé was revealed to be a fabrication. Under various aliases, Brito had been using this scam even to pose as a priest and psychiatrist.
Although Brito — like a hundred thousand or more other Angelenos — had read the Times article and expected to be fired the next day, nothing happened. Almost a month later, on the evening of September 16, Dereck Andrade, then Director of Public Affairs for the local Red Cross chapter, Googled “Fred Brito,” who had been acting suspiciously, and came across the article in the Times, which had apparently been published when Andrade was out of town. Andrade immediately brought the incriminating information to the attention of their boss, Angie Turner, CEO of the local chapter.
After an initial reaction of “no, no, no,” Turner instructed Andrade “on September 16 and during the week of September 19 [the date on which Brito would ultimately be terminated] ... to keep in confidence all personnel issues surrounding” Brito, according to a memo dated October 3.
The memo to Andrade went on to say, “We have since learned that you disregarded my explicit instructions and that you did in fact make a call on the morning of September 21 to a member of a public affairs office not within the American Red Cross.”
Andrade does not deny having spoken to the press as of Sept. 21; but with reporters asking him ever more pointed questions, he did not want to be part of what he felt was “going to look like a cover-up.”
Turner put Andrade on suspension — allegedly voluntary and with pay, according to an e-mail Turner sent out to the chapter staff, but actually involuntary and without pay, according to a letter given to Andrade. Andrade’s attorney, James Otto, said in an interview for this article that he can produce both the e-mail and the letter. By mid-October, Andrade was fired.
Why was Turner so obsessed with trying to keep secret Brito’s criminal past, which by then had been front-page news for over a month? On August 5, five days before he had been hired, a background check had revealed Brito’s aliases and felony record. Turner claims his criminal check came back clean; Brito claims she knew about his record but believed him when he said it must have belonged to someone else by the same name. A note on the document says “Not same person.”
According to Otto, Andrade’s attorney, Turner had pushed Brito through the interview process during July of 2005 in order to hire someone, anyone, as Chief Financial Development Officer, to replace one Elizabeth Lopez. Lopez had taken the local chapter of the Red Cross from the red to the black but in early 2005 was forced to take a medical leave of absence, which a doctor recommended and Turner approved in writing. Within a month, on March 29, 2005, Turner fired Lopez; Turner said there was not enough money in the budget for two senior fundraisers. However, according to Otto, there was no other Chief Financial Development Officer at this time — Brito would be hired, recklessly, in July, only after Otto had been appealing on behalf of Lopez to the national headquarters: This was a blatant violation of California labor law, according to Otto, motivated by Turner’s contempt for female fundraisers and employees in general, an allegation Otto says is corroborated by Andrade and Cindy Harris, a consultant, both of whom were involved in hiring Brito but unaware of his criminal background at the time.
In addition to Andrade and Lopez, who claim their careers have been ruined and are, thus, asking in excess of $1 million a piece in damages in lawsuits against Turner and the Red Cross, James Otto is also representing Ed Anderson, who resigned as program and services officer of the local chapter in December in yet another scandal involving Turner.
On September 19, 2005, Anderson made an appeal to the Pasadena City Council for a donation of $100,000, to meet the local needs of Hurricane Katrina survivors (for whom the local community had donated over $3 million). Anderson told the Council that $70,000 had already been spent on food, shelter, clothing, and counseling, “with no end in sight.”
On November 14, after several hearings, the Council tapped its tight budget and made the generous donation. What the Council was not told, however, was that leaders of the local chapter knew by early October at the latest that all but about $15,000 of the expenses of the local chapter would be reimbursed by the national Red Cross.
When the truth came out, local media and civic leaders, led by City Councilman Paul Little, demanded that the Red Cross return the donation, which after much give and take, did occur, on February 16.
His reputation damaged, Anderson accuses Turner of fraud: He claims that Turner, who was originally called before the Council, sent Anderson instead but did not tell him about the national reimbursement policy. Anderson now works as the bioterrorism and emergency preparedness coordinator for the city of Pasadena; through his lawsuit, he seeks at the very least to retain his position and regain his reputation, as perhaps with a public statement by the Red Cross, according to his attorney, Otto.
Earlier this month, Turner stepped down as CEO of the local chapter of the Red Cross. That, however, was not a direct consequence of any of these lawsuits; no, it came two weeks after it was revealed that in the 1980s, when she was a registered nurse, Turner had been imprisoned as part of an international heroin smuggling ring.
However, according to Michael Zoeller, chairman of the San Gabriel Pomona Valley chapter’s board, Turner did not resign in the best interests of the chapter but for health reasons caused by negative media reports.
Why has Zoeller been so defensive of Turner? Perhaps it has something to do with the fact that, as chairman of the search committee who hired Turner in 2004, he was one of only two people at the chapter who knew of her criminal background. And yet he still decided to hire her; moreover, he kept it secret.
Actually, the hiring of CEOs for local chapters of the American Red Cross is overseen by regional Service Area Executives, in this instance, Ms. Pat Hofmaster, in Sacramento. For this article, attempts to contact Hofmaster, who has not responded to calls by another media organization, were unsuccessful: Voice-mail messages left with various representatives in the national headquarters and in the Sacramento chapter were not answered; and staff at the Pasadena chapter, although helpful, did not know Hofmaster’s contact information.
And that — according to the Final Report of the Blue Ribbon Committee commissioned by Zoeller, under duress, and composed of twelve leading local citizens — is a big part of the problem: “The Sacramento-based Regional Executive now oversees 44 local chapters and is ultimately responsible for hiring and firing CEOs. ... In our opinion, there is no way the Regional Executive can provide anything but the most remote guidance and oversight. This, in turn, limits the regional office’s ability to provide leadership and maintain credibility at the local level.”
Moreover, according to the report, “because of its size and scope as a national institution, the American Red Cross is, perhaps of necessity, a bureaucratic, paper-driven system that we believe has not proven to be effective at the local level.”
According to Donald F. McIntyre, an urban affairs consultant and a former Pasadena city manager, who chaired the committee and who was interviewed for this article, the mismanagement of the local chapter was “not taken as seriously as it should.” In particular, McIntyre noted that although many members of the board of such charitable organizations serve out of a sense of service to the community, others sit on a board simply because their companies want good public relations; and in either case, as cited in the report, there is insufficient leadership training and development for board members. Indeed, the Blue Ribbon Commission strongly recommends that before a new permanent CEO is even sought out, there should be a carefully organized retreat or series of workshops for members of the board, whose size should be reduced to a more manageable number.
Stewardship, fiduciary responsibility, and good communication are among the keys to successful management, of a non-profit or, in a larger sense, any substantial organization.
In addition, the report recommends adding to the board the perspective of the volunteers, many of whom have been understandably demoralized by these very regrettable incidents.
These findings and recommendations for the San Gabriel Pomona Valley Chapter of the American Red Cross are indeed strikingly similar to those released this Monday in a letter by Sen. Charles Grassley (R-Iowa) to the Board of Governors of the American Red Cross, in Washington, D.C., as a result of an investigation by the Committee on Finance, which the senator chairs. The inquiry was prompted in December by the resignation of Marsha J. Evans as CEO of the national organization, in the wake of the generally criticized performance by the Red Cross, mirroring that of FEMA, in the aftermath of Hurricane Katrina.
Having first scrutinized the Red Cross in the aftermath of 9/11 — when another Red Cross CEO stepped down, as monies raised for victims were being diverted to other purposes — Grassley states in his letter that “I am concerned the Red Cross appears at times to be more interested in image than results and wants to shut out those volunteers and employees who want to improve the Red Cross.”
Grassley continues by writing “many organizations can trace their problems to board governance. This is true whether it be non-profit or for-profit.”
“I am troubled by the number of the board of governors, particularly government-appointed board members, who rarely attend board meetings and often send representatives who do little more than sit in a chair.”
“In contrast to the lack of board participation [in oversight] ... I am receiving reports of overly intrusive participation by some board members, i.e., board members who cross the line and get involved in the day-to-day management of the Red Cross.”
With respect to large boards, “when everyone is in charge, no one is in charge.”
“Generally, the non-profit sector, like the commercial sector, has come to recognize that smaller boards — which meet more frequently and have standing committees focused on particular issues relevant to the organization — are more effective than overly large boards which meet infrequently, often by telephone, and whose members sometimes regard board service as an honorary function.”
Differing sharply with the conclusion of the Blue Ribbon Committee’s report on the San Gabriel Pomona Valley chapter, Grassley writes, “to be effective, the Red Cross must vigorously oversee chapters and discipline chapters as well as ensure that national standards are in place and met by the chapters.” The local chapter report did, however, recommend leadership training as through the national organization.
In addition, Grassley writes, “the Red Cross cannot be all things in response to disaster. For the Red Cross to succeed in its mission of disaster relief, it must work in concert with the entire charitable community.”
Grassley concludes with his most damning indictment: “In my twenty plus years of conducting oversight I have rarely had as significant a response from the public as I have had from my December 29th letter to the Red Cross. ... The vast majority [of volunteers and employees] spoke with admiration for the goals of the Red Cross but tempered that by first-hand observations.”
“I am particularly troubled that several volunteers have told me that when they tried to raise concerns or issues about possible misuses of donated funds and property — including suspected criminal activity — the volunteers were ignored, told to leave, or otherwise made to feel like the skunk at the picnic. This type of culture, a culture that discourages people from coming forward, management that does not want to hear the bad news, and is more concerned about good press than good results, is a theme that I am hearing too often from Red Cross volunteers. I cannot emphasize enough how important it is to correct this culture — perceived or real.”
And what is the response of our local chapter to the scathing report of the Blue Ribbon Committee? In the official statement released by Mike Zoeller, the Chairman of the Board, taking heat especially for his support of disgraced CEO Turner, “the Board of Directors of the San Gabriel Pomona Valley Chapter of the American Red Cross is extremely grateful to the twelve members of the Blue Ribbon Committee who gave their time and energy to shaping a better local Red Cross.”
“The Board has immediately formed an ad hoc task force of Board members to thoroughly review all of the Blue Ribbon Committee’s suggestions and to report back to the full Board as soon as possible with recommendations for implementation.”
And the response of the national organization to the letter from Sen. Grassley? “We are fully cooperating with the Senate Finance Committee and Chairman Grassley in response to their questions regarding the operations of the American Red Cross. The American Red Cross is committed to learning from our prior challenges and making the necessary changes to improve the delivery of services to the American people.”
“The American Red Cross has initiated an independent governance review and will soon host a summit on corporate governance best practices, all with the purpose of developing concrete recommendations.”
One would hope that such professions are made in good faith. But as the Blue Ribbon Committee noted, “the public trust of the local chapter has been seriously damaged.”
And as Sen. Grassley wrote, “the public needs full confidence in the Red Cross. Certain incidents have shaken that confidence. It’s important for the Red Cross to go the extra mile with governance reforms to ensure public confidence.”
We’ve had enough of confidence games.
Douglas Drenkow is a political commentator in print and online; he is also an associate producer of the talk show Barry Gordon From Left Field, broadcast Sunday from 2 to 5 p.m. on KCAA 1050 AM and webcast on www.kcaaradio.com. He may be e-mailed at email@example.com.
In-N-Out of Court
Published the week of February 23 to March 1, 2006
In 1948, Harry and Esther Snyder would make carhops eventually obsolete by installing a two-way speaker and opening the first drive-thru hamburger stand in California: In-N-Out Burger was born. From that humble beginning, right next door in Baldwin Park, the chain has grown to over 200 restaurants, in California, Arizona, and Nevada. One would think that Ms. Snyder, now 86 years old, would be able to retire to a life of peace and contentment; instead, she finds herself right at the center of a profoundly nasty legal battle, which threatens her still-family-owned business and perhaps her very family as well. A great American success story has become a great American tragedy.
Not that Ms. Snyder is any stranger to sorrow. In 1976, Mr. Snyder passed away. In 1993, the younger of their two sons, Richard, died in a plane crash; in 1999, the older, Guy, died of an overdose of painkillers. The sons had been groomed to run the company, by learning the family business “from the ground up”; but with them gone, Ms. Snyder, who had continued to take part in day-to-day duties, assumed the role of president.
She also served on the three-person board of directors, with Richard Boyd, vice president of real estate and development, and Mark Taylor, vice president of operations. Boyd and Taylor were co-trustees, with equal voting rights, of the family trusts that held some two-thirds of the stock and, thus, controlling interest in the company.
A quarter of the stock in In-N-Out Burgers, Inc. was held by Lynsi Martinez, who as the daughter of Guy Snyder and his first wife, Lynda Kelbaugh, is the sole surviving descendant of the founders. Martinez, now 23 years old, stands to inherit a third of the stock held by the trusts at age 25, another third at age 30 — then giving her outright, majority control of the company — and the remaining third at age 35.
Further complicating matters, a half-sister of Martinez, another daughter of Kelbaugh, is married to Vice President Taylor, one of the trustees of the stock Martinez stands to inherit.
The stage was, thus, set for the tragedy that ensued.
By reading through all the suits and countersuits and supporting documents that have been filed over the last several months with the Los Angeles County Superior Court, two radically different accounts of what transpired emerge.
According to Boyd, Martinez is “the product of ... [a] broken marriage” who lacks “sufficient personal maturity, experience, and skill necessary to successfully run” In-N-Out; she “traded a college education and work, in favor of other pursuits such as car racing, and partying hard.” Boyd additionally alleges that “she had an affair with an employee with a reputation for selling marijuana ... and she ultimately divorced her first husband, to marry that employee.” Boyd continues, “Martinez commenced holding weekly prayer meetings for INO employees at her home featuring prerecorded sermons from her mother’s pastor, and ‘healings,’ while at the same time instructing Taylor into firing, demoting or transferring ... any INO employee she believes to have slighted her. ... Martinez has conspired to remove Boyd on false charges solely because she does not believe him to be a ‘man of God.’”
Actually, Boyd’s allegations charge that Martinez also wanted to remove him because, as co-trustee of the trust holding the stock, he stood in the way of her assuming control of the company before her 30th birthday; he alleges that she and Taylor and those she intimidated within the company wanted him — and Ms. Snyder — out of the way, so they could rapidly expand the company nationally and even internationally, which Boyd asserts would not allow In-N-Out to maintain the quality of their service and ingredients, presently almost entirely shipped out fresh from their Baldwin Park headquarters: It is generally agreed that the almost fanatical following In-N-Out has amassed among its customer base is due in large measure to their restaurants having no freezers or microwaves.
In response to this charge, Bob Emmers, of the Sitrick Company, a public relations firm representing In-N-Out, states that the company continues to open just nine or ten new stores a year, as it has for the last ten years.
On January 30, 2006, Boyd was fired “for cause” as vice president and said to have resigned his position on the board of In-N-Out Burgers, as a result of a special meeting of the board, consisting solely of Taylor, with attorneys, and, by telephone at her home, Ms. Snyder; Boyd states that even though he was still a member of the board, he was not allowed to participate in the meeting and that there was no official record made of the meeting.
Moreover, Boyd says that security guards stopped him from even entering Ms. Snyder’s property; he alleges that Ms. Snyder has been kept in isolation by armed guards and that her visitors and phone calls have been screened and monitored and her phone line at times completely disconnected. Boyd also alleges that “Taylor, Martinez [and others] ... laid siege to Esther Snyder in her own home ... by taking turns sitting with Esther Snyder, praying over her, and conducting spiritual ‘healings.’”
Boyd claims to represent the best interests of Ms. Snyder — he states that with the help of her nephews, whom he would prefer see inherit the company, he had previously rescued her from a nursing home in which Martinez and Taylor had confined her for a year after a broken hip — as well as the best interests of the company, as he says he had promised to the now-deceased members of the family.
In his lawsuits, Boyd also alleges that employees and vendors of In-N-Out have been coerced by Martinez and Taylor to make incriminating statements against him and to perform work on their personal property.
Boyd is seeking unspecified monetary damages as well as reinstatement to his former positions within the company, his attorney, Philip Heller, denying the legitimacy of the special board meeting, saying that is was nothing more than a “kangaroo court.”
Not surprisingly, In-N-Out Burgers, Inc. — representing the positions of Martinez and Taylor — denies all of the allegations by Boyd. Indeed, they have filed their own civil charges against him in court; and through the Irvine Police Department, they have filed additional, criminal charges, for fraud and embezzlement.
In particular, on January 31, 2006, Martinez issued the following statement: “Mr. Boyd continues to circulate the most outrageous fabrications and untruths about me and my grandma in an increasingly desperate effort to draw attention away from his own misdeeds. It is shocking that a man who once occupied a position of trust to me and my family would sink so low with no seeming regard for the facts or the feelings of the people involved. ... His lies ... are the wild accusations of a man who is bent on harming not only me and my grandma but the Company we all care so much about.”
According to the suit filed by In-N-Out, Boyd, as vice president of real estate and development, conspired with Michael Anthony Concrete (MAC), which has built over 90 In-N-Out stores, and perhaps other contractors to defraud the company, over the course of several years. In their court filing, In-N-Out states: “Boyd ran the [Real Estate and Construction] Department with a high degree of autonomous control. ...
“Boyd established separate accounting and computer systems within the Department. Such measures provided Boyd with an opportunity to carry out various activities without much oversight or auditing. ...
“Boyd operated the Department in a way that was contrary to the interests of In-N-Out. Boyd selected contractors to perform construction on new In-N-Out stores without any competitive bidding process. ...
“Boyd’s practices resulted in his most favored contractor, Defendant MAC, receiving contracts for over 90 In-N-Out stores over a 13-year period. These contracts were not subject to competitive bidding, and the values of these contracts, paid by In-N-Out, were grossly higher than industry standards.
“To reward Boyd for all of the In-N-Out money that he funneled to MAC, MAC performed construction services on Boyd’s personal property. ... These actions were taken in concert with, and with the ratification of, Boyd, and were part of a common scheme to defraud In-N-Out and misappropriate its assets.
“In mid-2005, In-N-Out discovered that its construction costs had spiraled out of control, far out of proportion to inflation or the increasing cost of supplies or labor. ...
“In-N-Out hired Grant Thorton LLP, an independent forensic investigation firm, to investigate these matters. ...
“Documents were discovered that show that Boyd was having In-N-Out pay for work that was actually completed on Boyd’s private residence, and that Boyd was falsifying and destroying documents in order to conceal his conduct.”
In particular, the private investigators reported the Boyd diverted some $15,000 of the company’s money earmarked for the building of a store in Laughlin, Nevada, to the construction by MAC of a six-foot wall on his personal property in Bullhead City, Arizona.
For this article, Heller, Boyd’s attorney, answered these charges by stating that In-N-Out, as part of its corporate culture, maintains high quality, both in its foods and in its construction, not by awarding contracts to the lowest bidder but by establishing long-term relationships with the highest quality suppliers and contractors; moreover, Heller stated that the contracts were routinely awarded by supervisors within the department, not by Boyd himself, and that in any event, they were fixed-price contracts: As long as MAC performed the work for which they were contracted, at the price at which they were contracted, then it was completely up to them how to spend the money, including a portion, if they chose, on property belonging to their longtime business associate, Boyd. Heller posed the question, why would Boyd, making millions of dollars as vice president, endanger that position by allegedly embezzling $15,000 from the company?
According to the complaint filed by In-N-Out, “several witnesses confirmed that Boyd had a pattern and practice of using In-N-Out money to pay MAC and other companies to perform personal construction projects for Boyd ... including the construction of a patio and cabana at Boyd’s home in West Covina, California.”
The complaint by In-N-Out continues: “In response to In-N-Out’s confronting Boyd with the evidence that he had stolen from the company, a charge Boyd did not deny, on or about December 7, 2005, Boyd filed suit against In-N-Out.”
That suit would later be dropped, during negotiations; only to be followed by another by Boyd, on or about January 5, 2006. The countersuit was then filed by In-N-Out, on January 10. Boyd dropped his second suit, approximately two weeks ago; but in its place, he is now filing another cross-complaint, to bring all the claims together in one suit, according to his attorney, Heller (who also states that matters involving Boyd’s status as co-trustee of the Snyder family trust funds will be decided separately, in probate court).
This convoluted and sordid case, ironically and sadly involving a company whose reputation has been built on an image of straightforwardness and wholesomeness, boils down to this: Are Martinez and Taylor ousting Boyd and holding Ms. Snyder incommunicado as part of an attempted coup, as Boyd contends? Or is Boyd simply an embezzler who is trying to cover his crime by casting blame and suspicion on those who caught him, as the company contends?
Perhaps Ms. Snyder, connected to all the principals in the case, holds the key. Even though she is 86 years old and arguably in frail physical condition, both sides agree that she is of sound mind — the two sides are resting much of their cases on sworn statements that they state they have obtained from her.
On January 12, 2006, according to a notarized and witnessed deposition presented by attorneys representing In-N-Out Burgers, Ms. Snyder swears, among other things, that “I no longer have any trust or confidence in Mr. Boyd and wish to see him removed as quickly as possible from any role with In-N-Out Burger, with me or my family, or with my family’s trusts.”
However, On January 23, 2006, according to a declaration presented by attorneys representing Boyd, Ms. Snyder swears, among other things, under penalty of perjury, that “I do not want Rich to resign or to be removed from any position. I want him to continue to serve for as long as he is willing. Knowing Rich as I do, I do not believe that he would ever betray me, my family or my company.”
In breaking news, Heller, attorney for Boyd, reports that they will soon file a petition to compel Ms. Snyder to make a deposition; he claims that to date, they have been denied access to her — Heller states that he cannot reveal the means by which the declaration they have was obtained, without endangering the position of someone connected to the case — and that Ms. Snyder’s statement once made under oath with both sides present will prove their case. Presumably, the other side would insist that any such deposition would prove their case instead.
Putting the bitter particulars aside, there is a cautionary tale for businesses at large: Even within a company in which “all associates are treated like family,” as In-N-Out’s Web site so proudly proclaims, there is always the possibility of an ugly “divorce,” especially with over $300 million a year in sales at stake.
That’s a lot of Double-Doubles.
Information for this article was obtained from documents filed with the Superior Court of the State of California in and for the County of Los Angeles, information previously reported in the Los Angeles Times, content from http://in-n-out.com and http://hoovers.com, and phone conversations and e-mail correspondence with Philip Heller, of Fagelbaum & Heller LLP, representing Richard Boyd, and Bob Emmers and Tony Knight, of Sitrick and Company, “a strategic communications firm,” representing In-N-Out Burgers, Inc.
Proud to Be a La-Z-Boy
Published the week of February 23 to March 1, 2006
“It’s not your mom and dad’s La-Z-Boy store.” That’s how Store Manager Reggie White aptly described the La-Z-Boy Furniture Galleries that opened November 26th in the new development on Hamilton Road, at Mountain Avenue, just south of the Wal-Mart in Duarte.
At 18,000 square feet, this is the largest La-Z-Boy showroom in Los Angeles and Orange counties; but more than that, this is one of a “new generation” of stores, for the company founded over 75 years ago by cousins Edward M. Knabusch and Edwin J. Shoemaker, inventors of the recliner chair.
Although there are still rows of inviting “La-Z-Boys” in a Recliner Gallery, this new store also includes Leather, Living Room, and Family galleries, presenting a sumptuous variety of chairs, sofas, tables, and accessories arranged to make the customer feel right at home.
At the center of it all is the Design Center, with a rich array of fabric samples and other stylistic elements from which to choose. Helping customers make their happy decisions are not only ten sales associates but also Mary Shimer, Regional Designer, who by appointment may make a complimentary house call before an in-store presentation, recommending various colors, pieces, and other ideas to complement the customer’s home. There is even a small play area, to keep the little ones occupied while the grown-ups design.
When asked why customers should patronize his grand new store, Manager White replied quite simply, “Variety, comfort, quality, and warranty.”
Times — and stores — may change, but old-fashioned business values remain the same.
My Dad, Quite a Guy
Published the week of February 16 to February 22, 2006. My father passed away August 11 of that year.
My dad just turned 89 this week. And he is quite a guy.
Marvin Edmund Drenkow was born on February 12th — Lincoln’s birthday — in 1917, during the First World War. Growing up in South Dakota, Dad heard the stories of how his Grandpa and Grandma Winter and their companions emigrated from Germany in the 1860s and pioneered a settlement on the prairie.
Although Dad often tells me his “horse tales,” his greatest love was for “the good old John Deere tractor.”
Dad became — or perhaps was born — very “mechanically inclined,” inventing all sorts of devices, some of which (like his motorized water pump) were actually more Thomas Edison than Rube Goldberg.
It was a rugged but good life on the land, chores rewarded at night with farm-fresh food and Jack Benny on the radio.
Then the hard times hit. Locusts. Dust storms. The Depression.
Grandpa ended up working the farm for the bank. In eighth grade, Dad was pulled from the one-room schoolhouse to work full-time on the farm, his brothers grown and out on their own. Dad would sometimes drive a truck with his brothers, hauling cola, beer, or even grapefruits from Texas.
Then like a one-two punch, with the nation still reeling from the Great Depression, Pearl Harbor was attacked. The nation went to war. Now a young man, Dad moved to California and found work in a defense plant. Myra Schmidt, whom he had dated in South Dakota, had also moved to California. She and Dad became quite an item, enjoying their free time in the exciting big city of Los Angeles.
One day, some guys Dad worked with asked him to drive them out to Riverside (Dad was the only one frugal enough to have saved and bought a car, hard to come by during the War). They wanted to take the test for the U.S. Army Air Force. They convinced him to take the test, too. He thought it foolish, with his poor education, but said why not?
And wouldn’t you know it, he was the only one who passed the test!
[It was omitted from the article that Dad gave up his automatic deferment, working in a defense plant, to volunteer for service, at the height of the war. He wasn’t cocky, just patriotic.]
He was sent down South, from base to base, for the regimen of training. Mom followed; and on July 1, 1944, they married.
That was something of a scandal — Dad, a Lutheran, marrying Mom, a Catholic (how she would raise me) — but their love conquered all doubters.
Despite his meager formal education — and being up against high-school and college graduates — Dad graduated second in his class in flight school! (I asked him how he passed what amounted to college physics courses. He said it reminded him of what he had learned tinkering around with machinery on the farm!).
Dad won the coveted position of fighter pilot.
But the war was nearing an end. Recuperating in a hospital from a bout with pneumonia, Dad saw an endless parade of amputees. From that day onward, Dad hated war with a passion.
After the war, Mom and Dad returned to Los Angeles, where his sister Irma and their friends from South Dakota, Marlo and Glyda Bates, lived. During the week, Mom took the streetcar to work in the Union Bank downtown. Dad went to work for Northrop; he helped build “The Flying Wing,” predecessor to the modern stealth bomber.
In his spare time he also sold popcorn and candy out of vending machines, but good locations were hard to find.
Finally, Dad returned to his first love: driving trucks. He saved his money and bought a ready-mix cement truck — the business he worked in, as an independent driver, till he retired, in 1986.
Dad worked long hours, five and a half days a week, and provided Mom and me with all we needed. In the late Sixties, my dad and Uncle Shorty, Irma’s husband, bought a place in Carpinteria. They fixed up a cabin, and our families spent many wonderful weekends relaxing on “the world’s safest beach” or fishing on the ocean in Dad’s little boat. My cousins Collette, Janet, and Charlotte are still like sisters to me.
In the late Seventies, I went off to college at U.C., Davis. Dad had worked long and hard to put me through college, but perhaps the best lesson I learned is that nothing is more important than family.
When Dad retired, we created and sold woodcraft together. Mom liked to paint the wooden figures I cut out of wood. Dad made the best doggone doghouses!
Mom passed away suddenly in 1996, a year and a half after their Golden Wedding Anniversary. Dad and I were devastated, but we picked each other up and carried on. We enjoy watching sports, especially the Lakers, together. Dad is a wonderful cook, his homemade pizza known far and wide!
Whether it was helping his father on the farm, his brothers with their truck, his country during the war, or his wife and son with anything and everything they needed, my dad has always given his all for those he loved.
Like I say, he’s quite a guy.