Wed03042015

Last updateWed, 04 Mar 2015 6am

Revelations Lead to Calls for Hubbard’s Resignation

By Brandon Moseley
Alabama Political Reporter

On Monday, a growing list of media professionals and political groups joined Alabama Political Reporter Editor Bill Britt, in calling for Representative Mike Hubbard (R-Auburn) to step down as the Speaker of the Alabama House of Representatives.

The leadership of the Rainy Day Patriots called for Speaker Hubbard to resign immediately.

In a written statement the group wrote: “The Rainy Day Patriots of Alabama call upon Speaker of the House, Mike Hubbard to resign his position immediately. Should he choose not to resign, we call upon his colleagues, the members of the Alabama House elected by the people to have the courage to remove him until such time as his innocence or guilt is determined by a jury of his peers.”

Speaker Hubbard was indicted on 23 counts of felony ethics violations in October.

The Rainy Day Patriots wrote, “The U.S. Supreme Court in Taylor v. Kentucky (1978) said that the presumption of the innocence of a criminal defendant is best described as an assumption of innocence that is indulged in the absence of contrary evidence. Which is why we believe that in light of the undeniable evidence recently released by prosecuting attorneys, W. Van Davis and Matt Hart, the presumption of innocence can no longer be indulged as a valid excuse for Hubbard to remain speaker pending his trail.”

Former State Senator John Rice (R) is calling on Alabama citizens to call the State House and ask for Speaker Hubbard’s removal: “334-242-7600 is the Alabama House of Representatives switchboard. Start calling at 8 am and give the person who answers (1) Your Name, spelled out (2) Your town, Spelled out as necessary (3) Ask for Hubbard to resign from the Legislature (4) Request he never enter the State House again.(5) Thank the person and leave your phone number if that person will take it. (6) Call some friends and ask them to do this! (7) Thanks for saving Alabama from Corruption. Please pass this along.”

The Rainy Day Patriots Ann Eubank and Suzanne “Zan” Green wrote, “It is obvious that Speaker Hubbard has shown a long-term pattern of operating the Alabama House of Representatives for his own benefit.”

Not every conservative activist is ready for formally calling for the removal of Speaker Hubbard.

Deanna Frankowski of the Alabama Constitutional Conservatives states: “The recent information that has come forth regarding Speaker Hubbard is troubling, but like all citizens, he is entitled to his day in court. However, we question how effectively Speaker Hubbard can perform his duties while focusing on his defense, and we urge him to do what is in the best interest of the citizens and Alabama. This matter should not be a distraction to our state legislators who need to focus on the Conservative agenda, which we support.”

On Sunday, the Alabama Media Group called for the Speaker to step down.  On Monday, their veteran political reporter and columnist Chuck Dean called for Speaker Hubbard to resign.  Dean wrote: “One cannot read the stunning series of emails between Hubbard and various powerful and influential individuals - including a former governor of Alabama - and not conclude that Hubbard is not fit to wield the speaker's gavel.”

Green and Eubank wrote, “It is clear by his own admissions in the emails that have been released that he used or attempted to use, his speakership for the benefit of his private business interests, the Business Council of Alabama and other associates.” “With the legislative session only days away it is imperative that the residents of Alabama have confidence in the leadership of the House of Representatives. It would be impossible for any reasonable person to read the exhibits presented as supporting evidence in the indictments and to conclude that Speaker Hubbard should continue to hold his leadership position. We the people no longer believe that he will do what is in the best interests of the citizens of the State of Alabama  Zan Green, President and Founder, Rainy Day Patriots Ann Eubank, Co-Chair Rainy Day Patriots.”

Speaker Hubbard was not elected as the Speaker of the Alabama House of Representatives by the people of Alabama.  Instead the 105 members of the House got together and a bipartisan group of Representatives decided that he was the one they all trusted to be their leader and the face of legislature.  Many people outside the House now say that they should select someone else to lead while Rep. Hubbard deals with his legal issues.

The Alabama Political Reporter summarized the 45 page prosecution filing.

To read more, click here.

This is naturally tilted towards the prosecution as it was their filing and the defense has yet to present its case. Everyone is presumed innocent until proven guilty by a jury of their peers.

 

Constitutionality of Alabama Accountability Act Upheld by Alabama Supreme Court

By Brandon Moseley
Alabama Political Reporter

Monday, March 2, the Alabama Republican Party announced in a statement that the Alabama Supreme Court has announced its decision to uphold the constitutionality of the Alabama Accountability Act (AAA).

Alabama Speaker of the House Mike Hubbard (R from Auburn) said on Facebook, “Great news from the Alabama Supreme Court tonight. I issued the following statement upon learning the Alabama Accountability Act was upheld: The Supreme Court Ruling on the Alabama Accountability Act is a win for parents, a win for students, and a win for school choice in the state of Alabama. I look forward to hearing even more success stories as this law continues to work in our state. We are committed to expanding school choice in Alabama until every child has the chance at a quality education regardless of their income or zip code.”

The all Republican Alabama Supreme Court overturned a ruling by Montgomery County Circuit Judge Gene Reese. Reese ruled in May, 2014 that the AAA violated the Alabama constitutional due to improper legislative procedures.

Alabama Republican Party Chairwoman Terry Lathan issued a written statement following the court's decision. Chairwoman Lathan said, “The Alabama Republican Party has been supportive of school choice for families and is pleased to see the Alabama Supreme Court has ruled that the Alabama Accountability Act did not violate our state constitution or any of our state laws. Giving parents the choice to choose a good school for their children that are zoned in failing school districts was a historic and monumental move in the right direction for education in Alabama.”

Lathan continued, “As a former public elementary school teacher, I strongly support the classroom teachers and can identify with the daily challenges they face. As a parent, I also know that education decisions should start in the home with a student's family. The partnership between the two can have wonderful outcomes, but in the end, a parent's decision should go to the head of the class. I applaud the decision by the Alabama Supreme Court and we look forward to more innovative ideas from the Republican legislature and Governor Bentley on the topic of education.”

In February 2013 legislative sessions both Houses of the Alabama Legislature passed the Alabama School Flexibility Act (H.B. 84) with bipartisan support to give school systems the ability to ask the state for some flexibility in following state rules.  The bill was amended slightly in the Senate.  The House non-concurred so a conference committee was called to resolve the difference.  After a recess, the Republican majority on the committee returned with a bill that was 21 pages longer than the bill they went to recess with.  They passed what was now the Alabama Accountability Act (AAA) which allowed taxpayers to divert their income tax dollars from the Education Trust Fund (ETF) to private Scholarship Granting Organizations (SGOs).  Students who are zoned to Alabama’s worst performing schools are allowed to transfer to another public or a private school and the SGO awards them a scholarship to pay for that opportunity.  The AAA was wildly unpopular with Democrats and the Alabama Education Association (AEA).

AEA President Anita Gibson, State Senator Quinton Ross (D), and Daniel Boyd challenging the AAA and the validity of its passage.  Judge Reese agreed and ruled in favor of the plaintiffs striking down the AAA.  Monday’s Alabama Supreme Court decision struck down the lower court ruling and upheld the validity and constitutionality of the Accountability Act.

During the 2014 elections, GOP incumbents were challenged both in Republican Primaries and in the General Election by opponents claiming that the Accountability Act hurt public schools.  A lot of money was spent on political ads but the issue never gained traction with voters who returned the GOP to power with even bigger super-majorities in both Houses of the Alabama Legislature.

Monday’s ruling clears the path for the Alabama GOP to pass even more school choice legislation in this session.

Senate President Pro Tem Del Marsh (R-Anniston) has already introduced a charter school bill.  Senator Marsh said in a recent statement, “We are learning how other states operate charter schools and we have taken the high points from those states in terms of accountability, transparency and performance. Because we are so late to the game, we can ensure Alabama’s charter schools are the best in the nation.”

A public hearing will be held in the Senate on The School Choice and Student Opportunity Act will be held on Wednesday, March 4.

Alabama Republican Party Chairwoman Terry Lathan recently was elected last month to succeed popular ALGOP Chairman Bill Armistead who elected not to pursue a third term as Chairman.

 

Palmer Critical of FCC’s “Net Neutrality” Order

By Brandon Moseley
Alabama Political Reporter

On Monday, March 2, US Representative Gary Palmer (R-Hoover) released a statement in which he strongly disagrees with the Federal Communications Commission’s (FCC) “net neutrality” order and criticizes the rules as both an unnecessary and beyond the scope of power prescribed to the FCC by Congress.

Congressman Palmer said in a written statement, “The FCC’s ‘net neutrality’ erodes the authority of Congress. The FCC, an independent federal agency, does not have the authority to write laws, but in a 3-2 ruling has done just that.  Moreover, as FCC Commissioner Ajit Pai pointed out in his dissenting statement, this order opens the door to taxing the internet, is likely to increase rates, and was previously rejected by the FCC, only to have it resurrected at the behest of the White House.  Finally, by putting internet content under the thumb of federal bureaucrats, this ruling threatens free speech.  This ruling cannot be allowed to stand.”

Rep. Palmer continued, “The internet is one of the great success stories of free enterprise. It has grown rapidly in the past two decades precisely because it is unfettered by intrusive regulations. Free markets have ensured low prices for consumers and entrepreneurs alike. The internet will not be made ‘more free’ through government intrusion, particularly as we already have laws to stop the hypothetical anti-competitive practices that this order is supposedly intended to fix.”

The conservative Alabama Congressman continued, “That unelected FCC Commissioners are using a 1930’s law written to regulate an entirely different industry to justify this order demonstrates that their order is purely political.  Any change in the law requires action from Congress, not federal bureaucrats.” 

Rep. Palmer concluded, “Commissioner Pai said it best in his dissent, when he said, ‘because this Order imposes intrusive government regulations that won’t work to solve a problem that doesn’t exist using legal authority the FCC doesn’t have, I dissent.’  I could not have put it better.”

Many Republicans agreed with Rep. Palmer and Commissioner Pai.

Speaker of the House John Boehner (R-Ohio) said in his own statement, “It’s disappointing, but not surprising, that the Obama administration continues to disregard the people’s will and push for more mandates on our economy. An open, vibrant Internet is essential to a growing economy, and net neutrality is a textbook example of the kind of Washington regulations that destroy innovation and entrepreneurship. Federal bureaucrats should not be in the business of regulating the Internet – not now, not ever.  In the new Congress, Republicans will continue our efforts to stop this misguided scheme to regulate the Internet, and we’ll work to encourage private-sector job creation, starting with many of the House-passed jobs bills that the outgoing Senate majority ignored.”

Alabama Republican National Committeeman Paul Reynolds recently wrote, “These rules, issued under the misnomer of “net neutrality,” will allow the government to regulate and prioritize content, rather than internet users and the free market.  What could possibly go wrong when the federal government controls the internet?  These rules will surely have the effect of discouraging investment and lead to taxes on emails, video chats, data usage and video streaming.  Rand Paul described the internet as “the single greatest catalyst in history for individual liberty and free markets,” and now Obama and the FCC want to restrict both.”

Many of the powerful corporations whose business models are most affected by these 300 pages of new rules are suing to block the takeover of internet regulation by the FCC.

Congressman Gary Palmer represents Alabama’s Sixth Congressional District.

 

State Auditor’s Office to Become “The People's Headquarters"

Montgomery (March 3, 2015) -- When the legislature starts the 2015 regular session Tuesday, hundreds of citizens are expected to show up to be seen and heard. Where will they gather for coffee, pastries and bathroom breaks?

New state auditor Jim Zeigler is setting up hospitality in his office in the historic state capitol. He calls it "The People's Headquarters."

The state auditor is in room S-101. Zeigler says "Think, Savings 101." His issue to identify areas of cost savings.

He is also quick to point out that his office is the first in the capitol, next to the marble statue of Gov. Lurleen Wallace. Zeigler objected to the removal of the portraits of governors George and Lurleen Wallace from the capitol rotunda by what he calls "the hysterical commission."

A number of Tea Party and conservative groups will join in a rally on the statehouse steps Tuesday at 11 a.m. deemed, "Welcome Back Rally." Zeigler is slated to speak to the rally.

Zeigler calls those who come for the session opening, "the hard-working families who often are not heard."

One of the groups coming Tuesday is Zeigler's own "Common Sense Campaign." They are bringing a bus with 35 people from the Mobile-Baldwin County area.

Hubbard Cries Poor With Millions In Assets

By Bill Britt
Alabama Political Reporter

MONTGOMERY—Documents released on Friday by the State’s prosecution in the corruption case of Speaker of the House Mike Hubbard show that Hubbard claimed he was on the brink of financial ruin, even though he had millions in personal assets.

Emails released, at the request of Hubbard’s criminal defense attorney, J. Mark White, paint a picture of a man desperate to earn money by receiving financial support from former Governor Bob Riley and some of the State’s wealthiest individuals. These documents were made public at the request of Hubbard’s legal team, as part of a motion for a more defined statement of indictments made to Lee Count Circuit Judge Jacob Walker III in December 2014, who imposed a dateline on the prosecution to respond by February 27, 2015.

In emails from 2011 and 2012, Hubbard expressed a fear of impending financial ruin if he did not find employment and investors in his business interest, Craftmaster Printers, Inc., even though his net worth ran into the millions with liquid assets in the hundreds of thousands.

The court filing contains a copy of Hubbard’s personal finance statement given to Regions Bank, in which he states total assets of $8,380,000. He lists his personal net worth as $7,778,000, with liquid assets totaling $865,000 (liquid assets meaning cash or its equivalent) with an annual income of over $400,000.

Hubbard’s personal finance statement was included in a request for extension contract for a $600,000 revolving line of credit for Craftmaster Printers, Inc., which it had received from Regions Bank in February 2009 extending the maturity date to April 12, 2013. The remaining balance was $534,000.

Hubbard had other restructuring agreements including a bankruptcy of Craftmaster as reported by this publication in 2012.

The agreement with Regions bank outlines the “turnaround” strategy that Hubbard had proposed to the bank. The extension of the loan from Regions was to be secured by Craftmaster’s accounts receivable which the bank listed the gross annual revenues at $4,129,000—total amount of receivables was $720,000 of which $699,000 was current.

The terms of the loan’s extension are laid out with an enumerated statement of the turnaround process.  “Our extension agreement will retain the basic terms and require the following:”

LIST TERMS 

1) completion of the plan to raise $1.5 prior to 12/31/12

2) Regions retains the right to engage a turn around consultant to analyze the plans

3) complete debt repayment plan

4) complete conversation of existing shareholder debt*

5) borrower to provide monthly borrowing base report

6) Regions took a security interest in all equipment and inventory

7) maintain an advance rate of 85 percent on accounts receivable

(*The current shareholder debt that totaled $898,500 was converted to $68,000 shares of common stock and $35,000 in preferred share options to be distributed equally among Hubbard, Whatley and Dye. The value of the stock to these three shareholders was valued at $299,500)

According to the extension application, Hubbard’s business interest owed Southern States Bank $465,000, Heidelberg Press $326,000, delinquent payroll taxes $350,000, note to P. Cole $9,000, and Regions loan reduction $350,000.

According to the Regions document, due to the cash flow shortage during FY2011, “the borrower [Hubbard] slowed in payroll tax payments and is currently delinquent for approximately $350,000.”

Withholding tax, as it is commonly referred to, is the amount of an employee's pay withheld by the employer and sent directly to the government as partial payment of income tax.

As emails released by the State show, Will Brooke, financial adviser for Harbert Management Corporation and BCA Board member, was solicited by Hubbard to help him raise the needed capital.

A series of emails recount how Hubbard pursued and then persuaded Brooke and others to provide him with financial help.

Hubbard emailed Brooke on September 6, 2011, and said: “I know you have a lot more important things on your mind, but I wanted to touch base on my situation that we discussed a few weeks ago to see if you’ve had any more thoughts. I am starting to get very nervous and am anxious to pursue any options you might suggest.”

In another email dated March 19, 2012, Hubbard expressed that his work as Speaker was very time ­consuming and did not generate much income (Hubbard’s legislative salary and expenses totaled $71,000 in 2012). He also explained that his IMG contract was ending at the end of March. After expressing those concerns, Hubbard explained that he needed financial favors from Brooke in order to avoid resigning his position as Speaker and a member of the House, “…As you know, my concern is financial and the fact that serving as Speaker consumes a enormous amount of time and generates virtually no income. I have been in discussions with Governor Riley and believe I would have an opportunity to work with him and his company if I were to give up being Speaker and resign from the Legislature. Although I believe I am making positive changes in Montgomery, I need to think of my obligations to my family. Please keep me in your thoughts as I make this decision.”

On September 4, 2012, Hubbard’s email says that he is anxious to hear your thoughts, but I believe if I take the reins of the business, rIse [sic] the capital necessary to eliminate the debt—and most importantly take care of the tax debt—I can turn the company around. Failure is not an option as it means personal and political ruin.”

Brooke’s response to Hubbard’s email indicates that he was eager to help Hubbard fix his money problems to ensure that Hubbard would keep his job as Speaker: “There should be a solution to this. I have spoken to many business people about it, and have found no answer. I even spoke to Governor Riley about it, and he told me that you two had discussed it and were working on some options. I did not realize that path would lead to your resignation but, on reflection, I guess that is a given. It is quite a quandary.”

As a result of these pleas from Hubbard, Brooke gave Hubbard a free financial investment plan and advised Hubbard to raise $1,500,000.00 in capital from ten investors at $150,000.00 per person. In exchange for the money, each investor would be given preferred stock in Craftmaster, which would pay the investor interest and dividends over time. Hubbard later explained the plan to Riley in an email, “With regard to the Craftmaster deal I mentioned to you on Thursday, Will Brooke has helped me put together a scenario that I believe will work. If I can find 10 people to invest $150,000 (total of $1,500,000), I can pay all of the back payroll taxes, virtually all of the remaining debt (including 1/3 of the LOC) and free up roughly $40,000 per month in cash flow. The offer is to pay a 6% return on the investment beginning 3 months after the investment with a payback of the original $150,000 in five years.”

After meeting with Regions bank’s Trouble Asset Division, Hubbard emailed Brooke that he “laid out the plan that [Brooke] developed” in “a meeting with the [Regions’] Trouble Asset Division.”

In addition to providing the free financial plan, Brooke also personally invested $150,000.00 in Craftmaster. That is, even though Brooke is a “principal” for the BCA, Hubbard solicited and received from Brooke a free financial investment plan for Craftmaster and a $150,000.00 investment in Hubbard’s failing printing business.

Hubbard did so with the clear implication that Brooke’s failure to help Hubbard would very likely result in Hubbard stepping down as Speaker.

Hubbard also solicited the President and CEO of Stern Agee, Jim Holbrook, who, like Brooke, is a “principal” under the Ethics Law. Hubbard emailed Brooke as follows: “I met with Jim Holbrook today in B’ham. It went very well. He indicated that he would almost certainly do one of the $150,000 deals and may have its investors who would be interested on one []or two more!”.

In September 2012, Hubbard solicited Jimmy Rane, also a principal under the Ethics law, to participate in the Craftmaster investment scheme. When Hubbard approached Rane about the investment, Rane told Hubbard to speak with Great Southern Wood’s “financial person” Gene Woodham.

Hubbard told Rane that “failure is not an option...”.. In that same email, Hubbard added that Rane’s “[p]articipation would be a huge help.”(I d.). After Woodham signed off on the investment, Rane invested $150,000 of his personal funds in Craftmaster.

Hubbard also solicited Rob Burton, the CEO of Hoar Construction and principal under the Ethics Law, to invest in Craftmaster. In one of the emails Hubbard sent to Burton in the course of soliciting his investment, Hubbard wrote as follows: “I just wanted to check in with you regarding the investment in Craftmaster. I have received the money from three (3) of the six (6) investors thus far and am trying to get it all in so we can pay off Heidelberg (at a discount) as well as the other parts of the plan I outlined for you.” Burton later invested $150,000 of his personal funds in Craftmaster.

Hubbard’s solicitation and receipt of financial favors from lobbyists and principals to help Auburn Network obtain more clients: Counts 20-23.

 

 

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