Monday, November 1, 2010
Earth Conservancy's Scam On Property Taxes The Kanjorski Way
If you go to the Times Leader Property Reassessment website you can look up property values. Type in "earth" and see all the results that are returned. Click on the VIEW button and you are able to see what the property is worth and the taxes associated with that property. One problem. Look at the Property Type box. It states "Vacant-Exempt". All of the property owned by Earth Conservancy is tax exempt. Earth Conservancy lays claim to 574 parcels.
Here is how Congressman Paul Kanjorski screwed the taxpayers of Luzerne County out of taxable property.
The Earth Conservancy is a non-profit organization Congressman Kanjorski helped to found in 1992 for the purpose of restoring and reusing mine-scarred land for recreational, industrial and residential purposes. Congressman Kanjorski successfully secured more than $20 million in federal money for the Earth Conservancy to purchase more than 16,000 acres of land throughout Luzerne County from a bankrupt coal company in 1994. The organization is dedicated to land reclamation, conservation, and economic revitalization in the Wyoming Valley.
Basically he took our federal tax dollars to purchase for-profit assets and turned them into not-for-profit tax exempt properties. At the same time Earth Conservancy is selling that property at a significant profit and avoiding taxes legally.
This report from the New York Times in 1994 details the funding of Earth Conservancy.
In 1991, Mr. Kanjorski inserted two paragraphs into an obscure section of the Pentagon's budget with the help of his fellow Pennsylvanian, the powerful chairman of the House Appropriations subcommittee on the military, Representative John P. Murtha. One passage earmarked $20 million to create "an advanced technology demonstration facility for environmental technology." The other said that "these funds are to be provided only to the organization known as 'Earth Conservancy' in Hanover Township, Pennsylvania."
Mr. Kanjorski "encouraged the incorporation," as he put it, of Earth Conservancy. "An entity had to come about and I encouraged people to create it," he said in an interview. The directors of the nonprofit corporation included his brother, his former campaign manager, a "Republicans for Kanjorski" chairman and other political allies.
With no assets save the promised Federal dollars, the company set about trying to acquire some 16,000 acres in the Congressman's district. Mr. Kanjorski said the land would bring forth a high-tech research center to create coal-derived fuels, artificial wetlands and other environmental exotica in the hardscrabble hills of Luzerne County. He called it "an experiment in solving national problems" and "a form of reinventing government" with the potential to clean up some of the world's biggest environmental problems.
But back in Washington, the Senate added language to the spending bill requiring that the $20 million go to an institution with some expertise in environmental technology. Defense Department bureaucrats decided that Earth Conservancy had little or none. They awarded the $20 million to a group led by Rice University.
To Mr. Kanjorski, this was proof that bureaucrats can "prostitute the language" of the national legislature and that "the normal process doesn't work." Undaunted, he earmarked another $20 million into the military spending package approved in 1992, and added another $10 million last year. This time the legislative language, set forth in the tiniest type in the Government Printing Office's shop, made sure that the money could go only to Earth Conservancy. It was, as the Congressman said, "a straight earmark." One Bid for Land
Mr. Kanjorski and his allies redoubled their efforts to buy great swaths of undeveloped land in his district. The land belonged to the bankrupt Blue Coal Company, and was the subject of a struggle as long and bitter as a Russian novel. The coal company collapsed in 1976, its coffers drained by a consortium of criminals. Its remains are stacks of files that are part of the longest-running bankruptcy case in the nation.
The Federal bankruptcy court in Wilkes-Barre, Pa., was required to sell off the land at the highest price possible to satisfy Blue Coal's creditors. The court-appointed assessor in the case testified the land was worth roughly $20 million. Earth Conservancy offered far less, about $12.5 million, and no other bidders appeared.
The court-appointed assessor, Jeff R. Kern, testified in a sworn deposition in July 1993 that the process of competitive bidding was "subverted by the efforts of the Earth Conservancy to get the property as the exclusive buyer."
"The only buyer in town right now wants to make sure there's no competition," he said. He testified that Mr. Kanjorski personally warned him in January 1993 that unless the land was sold in its entirety to Earth Conservancy, the Congressman would see to it that no sale took place.
"I recall standing back going, 'Whoa,' to myself, 'there is some significant pressure here,' " the assessor testified. "It struck me that Mr. Kanjorski's threat was very heartfelt." Judge Approves Sale."
While this testimony appears to have attracted some attention at the criminal division of the Justice Department, the Congressman said it was the result of a misunderstanding over his desire to insure the land would be environmentally protected. He said he had discussed the sale with Attorney General Janet Reno and her predecessor in the Bush Administration, William P. Barr, and had successfully argued that the sale should go forward.
The judge in the bankruptcy case agreed. On Monday, he approved the sale. No money has changed hands yet, and some of the Congressman's constituents remain curious as to the nature of the transaction.
"They will not account for where the money is or what's to become of the land," said Lew Jones, a constituent of Mr. Kanjorski's with a keen interest in the case. He said he has been unable to learn any specifics of the conservancy's immediate plans. "Nobody seems to know what's going on," he said. "What is the Defense Department doing giving this man $20 million?"
Mr. Jones had a bitter experience trying to buy a parcel of the Blue Coal land. Last year, he and a partner offered the Federal bankruptcy court $200,000 for 206 acres of Blue Coal land -- roughly $1,000 an acre, more than Earth Conservancy was offering -- that they have leased and planted with corn for decades. No deal, the court said: Earth Conservancy wanted all the Blue Coal land and would have it all.
"Politics is terrible," Mr. Jones said. A Grand Vision
In what should be a proud hour, with the sale of the land all but final, Mr. Kanjorski seems equally embittered by the whole Earth Conservancy experience.
In past years politicians from the stripped and straitened coal towns of Pennsylvania were beloved for bringing bacon home; a predecessor of Mr. Kankorski's in Pennsylvania's 11th Congressional District, the late Daniel Flood, was for decades a legendary provider. But the Earth Conservancy story is not about pork, the Congressman said, or even about pleasing people back home. To him, it has become a tale about the ways in which Washington, and particularly the press and the bureaucracy, can delay and damage grand visions.
"I don't understand what's happening to America," he said. "Everyone's averse to risk and change. I and my friends get hurt because we tried to accomplish something."
The Earth Conservancy is tied into the 11th Congressional District Equipment Center and Cornerstone Technologies in this way.
Cornerstone’s origins lie in Mr. Kanjorski’s 1987 visit to the University of Missouri-Rolla, where Dr. Mazurkiewicz and other scientists were researching the use of water jets for underwater mining. Hoping to harness that technology to find new uses for the region’s anthracite coal, Mr. Kanjorski secured a $2.1 million Defense Department grant to research the use of water jets to clean large-caliber artillery shells. The money was funneled through Earth Conservancy, a nonprofit land-reclamation project Mr. Kanjorski formed to acquire 16,000 acres of former mine land in Luzerne County. Research funds went to Missouri-Rolla and King’s College and Wilkes University in Wilkes-Barre.
The King’s and Wilkes involvements and how much they were paid were not clear in documents obtained through the Freedom of Information Act.
When water jets proved unsuitable for mining or shell-cleaning, Mr. Kanjorski turned to the U.S. Economic Development Administration for a $1.1 million grant to research using water jets to pulverize old tires. The recipient of that grant was the 11th Congressional District Regional Equipment Center, another nonprofit formed by Mr. Kanjorski to lease surplus federal heavy equipment to local municipalities.
But in 1997 the center forfeited the grant because officials objected to hiring a firm co-owned by Mr. Kanjorski’s relatives, Impact Technologies, to conduct the research.
About a year later, in September 1998, Mr. Kanjorski managed to get $4 million in federal funding for “materials micronization technology” research included in the defense appropriations bill for fiscal year 1999. A footnote in the bill restricted that research to work on the “micronization” of coal and other particles for use in “composite materials, fuel cell membranes, filtration technology, diesel fuel and other materials and processes important to national defense.”
While any company could have submitted a proposal to perform that research, apparently only one did, according to Luis Leme, an attorney for the U.S. Office of Naval Research — Cornerstone Technologies LLC. The company was established by Peter A. Kanjorski and Bruce Conrad, a former Carbon County planning director, in December 1998.
According to Mr. Conrad, Peter Kanjorski, who was CEO of the firm, made no decision without consulting his uncle. In August 2000, the congressman personally presided over a meeting between Peter Kanjorski, two other Kanjorski nephews and Mr. Conrad to resolve a dispute over offering shares in Cornerstone to several key employees, Mr. Conrad maintains.
Thomas Unger, a former senior vice president at Cornerstone, said in published interviews in 2002 that Mr. Kanjorski took an active role at Cornerstone and acted “like a CEO.”
The majority of Cornerstone’s federal research was funded by the Office of Naval Research through earmarks Mr. Kanjorski had inserted in the agency’s budget for 1999, 2001 and 2002.
Cornerstone Technologies key players
- Paul E. Kanjorski: Twelve-term congressman who used his influence to earmark $10 million in federal contracts that were awarded to companies controlled by his relatives, including Cornerstone Technologies LLC, which recently filed for bankruptcy.
- Peter A. Kanjorski: The congressman’s nephew owns 20 percent of Cornerstone and is part-owner of KOR Holdings, which owns another 60 percent of Cornerstone. He is Cornerstone’s president and CEO.
- Marian Mazurkiewicz: Cornerstone’s former chief scientist and a leading researcher in water-jet technology. He is owed $600,000 in unpaid salary, according to Cornerstone’s bankruptcy filing.
- Bruce Conrad: Former president of Cornerstone and owner of 20 percent of the company. Conrad was fired and removed from Cornerstone’s board in May 2001, leaving Peter A. Kanjorski and his three brothers in control of the company’s operations. Mr. Conrad claims he was ousted at the instigation of the congressman because he supported a move to share company stock with key employees. In a lawsuit against Mr. Conrad, Cornerstone alleged he tried to leak company secrets to another firm.
- Paul Eric Kanjorski: Congressman’s nephew; Cornerstone employee and board member; part-owner of KOR Holdings.
- Russell Kanjorski: Congressman’s nephew; Cornerstone board member; part-owner of KOR Holdings.
- Mark Kanjorski: Congressman’s nephew; Cornerstone board member; part-owner of KOR Holdings.
- Nancy Kanjorski: Congressman’s daughter; part-owner of KOR Holdings.
Here is a picture of a recent ad for Earth Conservancy land.
Here is a picture of the Earth Conservancy Tax Card proving there are 574 parcels owned by Kanjorski's friends according to his statement.