Daily Glean: The Petters payback: When 24 percent interest is too good to be true

If you could get 24 percent interest on a loan to a prominent businessperson, would you do it? Twin Cities nonprofit Teen Challenge went for the greed — er, gold — and now it’s likely out $5.7 million in the Tom Petters scandal, the Strib’s Dan Browning and David Phelps write. All told, $27.6 million may have evaporated; the notes are held by a larger local foundation that invests for others. Teen Challenge at least received $4.3 million in interest until now. Who’s the unidentified donor who sent the group Petters’ way?

Related: Petters consultant Robert White became the first person charged in the case; he allegedly deposited a $500,000 check in his personal account, earning mail fraud and illegal monetary transaction charges, Browning reports. The PiPress’ John Welbes says four other suspects — identified only as “A,” “B,” “C” and “D” — were cited in the charging document.

The credit crunch hit 22 Minnesota colleges: some were facing not making payroll because a key short-term investment fund was locked up, the PiPress’ Doug Belden and Nicole Garrison-Sprenger write. The Common Fund is owned by Wachovia Bank, which cratered in recent days. It was impossible to sell short-term investments given the credit crisis, but somehow the fund allowed 10 percent of assets to be withdrawn Friday and up to 26 percent today. The rest of the cash could be tied up for “weeks or months.”

Plans to finance Minnesota’s 911 system and $450 million in general obligation bonds are also on hold, Finance & Commerce’s Charley Shaw and Burl Gilyard report. For the city of Minneapolis, short-term borrowing rates have shot up from 1.6 percent to 7.9 percent. Wow. Just the tip of the iceberg that will hit your taxes in ways you probably didn’t see coming.

The Strib says bankruptcy is “on the table,” the paper’s Matt McKinney writes. The paper refused to make a $9 million payment to senior lenders; it missed a quarterly interest payment to junior lenders in June. Publisher Chris Harte says the paper “still makes money,” but not enough to service $432 million in debt. Restructuring negotiations continue with “an incredibly wide range of options” and vendors will get paid, Harte claims. My own early overview is here.

MSNBC host Keith Olbermann called 6th District Congresswoman Michele Bachmann “a racist” on his way to naming her “the Worst Person in the World” yesterday. (The trophy rotates daily, though the racism accusation doesn’t.) Olbermann called her “the most un-American member of the U.S. House of Representatives,” criticizing Fannie Mae and Freddie Mac for lending to blacks. Bachmann believes political correctness undermined underwriting standards. (Hat tip: Art at Metroblogging.)

In his “Truth Test” segment, KSTP’s Tom Hauser ladles out a rare “F” for a Democratic Congressional Campaign Committee direct-mail ad attacking 3rd District Congressional candidate Erik Paulsen. A GOP congressman raised money at a burlesque club, and his PAC gave to Paulsen; the DCCC makes it seem the burlesque club money went directly to Paulsen when the donor raised lots elsewhere. The ads also imply Paulsen’s been in Vegas; he never has, which is weird, but still …

Paulsen’s stay on the moral high ground was brief, after a campaign surrogate attacked opponent Ashwin Madia for being a bachelor. MPR’s Curtis Gilbert says Madia called that a “smear” tactic. Welcome to the campaign’s final weeks.

More Madia-bashing: The surrogate, Edina legislator Geoff Michel, also criticized Madia for not paying property taxes in the district; the 30-year-old lawyer lives with his parents uses his parents’ home as a permanent mailing address, but rents a Plymouth apartment (and thus pays higher taxes than homeowners!). Madia grew up in the ‘burbs, went to Iraq, then lived in Minneapolis for a year before deciding to run.

Also, in a related note, I need to correct an item from Tuesday’s Glean that misidentified a political worker in the 3rd District race. The person who borrowed a girl’s scooter for a ride was a paid DFL canvasser, not anyone with the Madia campaign.

Both dailies go narrative with the testimony of a “4-foot-9, 57-year-old” woman left for dead on New Year’s morning 2007; a St. Paul teen accused of raping her is now on trial. The PiPress’ Emily Gurnon makes you feel like you were in the parking lot that night, and there’s an especially depressing coda with the accused’s grandma acting out. The Strib’s Pat Pheifer writes that though the victim had specific details to identify the accused, the defense promises the evidence “won’t make sense.”

Twin Cities home prices actually rose between May and July — the biggest increase among the 20 largest metro areas, the Strib’s Jim Buchta notes. It’s too soon to call a market bottom, especially amid the credit crunch. Pending sales also rose 40 percent in a recent September week, compared with a year earlier. Minnesota Independent’s Molly Priesmeyer offers a more dour view, noting local home prices usually peak during the summer.

Sounds like Sun Country won’t negotiate with unions over its 50-percent pay deferral program, the PiPress’ John Welbes writes. The plan starts Oct. 7. “Severe hardship cases” will be considered, management says. Theoretically, workers get their cash back, with interest, after the holiday flying season.

WCCO’s Caroline Lowe says the newly formed Minnesota Peace Team will remain even though the Republican National Convention is over. St. Paul Police Chief John Harrington praised their work helping out during marches and standoffs.

The Strib’s David Chanen notes six local Somali men under 40 have been shot to death since December; the most recent incident was Monday. No one really has a link, and police have explicitly ruled out a connection between the most recent killing at a Minneapolis Somali mall and a weekend murder of an Augsburg student.

The Strib’s Maura Lerner profiles “health coaches” yoked closely to a new Medica insurance plan. They will “coax, cajole and inspire others to live healthier lives.” Some find it creepy, but there are testimonials to assisted gumption, and one study found “high-risk” patients in similar programs spent $300 less per month on care. (We assume that wasn’t coaches yelling at them to stop getting care.) The plan is voluntary (for now), so if it gives you the willies, buy your insurance elsewhere.

St. Paul’s K-9 unit will star in an “Animal Planet” series debuting at 9 tonight, the PiPress’ Mara Gottfried reports. All 15 episodes will feature the Capitol City canines.

Nort spews: My kingdom for a coin flip. The Twins were “blacked out” by John Danks 1-0 and our collective playoff tension ended in a single night. I, for one, will not second-guess sending Cuddy on Junior Griffey’s weenie arm, and am now the Upper Midwest’s biggest Rays fan. By the way, Twins ex-pats Jason Bartlett and Torii Hunter get the playoffs’ last laugh, while Johan Santana is right where our heroes are today.

Comments (1)

  1. Submitted by Bernice Vetsch on 10/01/2008 - 02:54 pm.

    Ashwin Madia’s ads are the only ones I don’t mind watching. He tells viewers who he is, what he believes, and what he’ll try to do to address their problems if they elect him. Thank you, Mr. Madia!!

    McCain, Coleman and Paulsen “approved” ads that, day and after day, deliberately mischaracterize the Democratic (Obama/Biden) tax plan by pretending it will raise taxes on ordinary people. What it will do is let the Bush tax cuts for the wealthiest one percent of Americans (roughly equal to the annual budget deficit for several years in a row) expire. Ninety-five percent of the population will see tax reductions. Quit lying, guys.

    I for one am extremely tired of the slime that passes for “advertising” and wish that (1)every candidate be allowed to speak only about him/herself and (2) political parties and organizations like the Swift-Boat guys be barred from advertising at all.

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