Suspect Bloomberg News might have a bias or an agenda? On Friday, Michael Bloomberg, whose company owns Bloomberg News, told CBS news that his reporters were restricted from investigating Democratic candidates while he runs for President.
“We just have to learn to live with some things. [The reporters] get a paycheck. But with your paycheck comes some restrictions and responsibilities.”
CNN reported that inside the company reporters are frustrated by how difficult this will make their jobs.
Bloomberg is an influential player in politics.
As previously reported by deBanked last year, Bloomberg Senior Editor Robert Friedman thanked a state senator from New York on twitter for proposing legislation in response to a story he oversaw in 2018. When deBanked pointed it out, Friedman quickly deleted the tweet. The democrat-led legislature then went on to pass a law that relied almost entirely on the Bloomberg news story. That law was the restriction of entering Confessions of Judgment in New York against out-of-state debtors.
Former NYC Mayor Michael Bloomberg is officially running for President. He announced it over the weekend.
His campaign’s website paints him as a self-made entrepreneur who at 39-years old founded a company in a one-room office with the idea of turning a computer that connects users to a vast network of information and data. Today, Bloomberg LP employs more than 20,000 people and Bloomberg the individual is the 9th richest person on Earth (Forbes).
His campaign’s website is light on the name Bloomberg and heavy on the name “Mike,” perhaps to cast him as the friendly hegemon next door. One page on his website refers to him as Mike 128 times while the word Bloomberg appears only 12 times and almost entirely in connection with things his businesses have done. Even his logo leads with a soft all-lowercase mike atop BLOOMBERG2020.
Baby apparel for sale on his website goes even further to understate his power by simply stating m 2020.
Democratic voters will now have to choose between frontrunners Joe Biden, Elizabeth Warren, Bernie Sanders, and this other dude named mike.
Sanders was quick to voice his displeasure with the new competition:
We do not believe that billionaires have the right to buy elections.
That is why multi-billionaires like Michael Bloomberg are not going to get very far in this election. pic.twitter.com/738Eg5ssLe
— Bernie Sanders (@BernieSanders) November 24, 2019
A New York City marshal at the center of a controversial Bloomberg News story series last year about “predatory lending,” has resigned after a city probe, the City of New York announced.
Marshal Vadim Barbarovich was allegedly a prolific enforcer of New York judgments obtained by confession. After irregularities were discovered by the Department of Investigation with how he served levies, the City of New York formally levied penalties of their own against him that include a return of fees and poundage earned from 92 improperly served levies, his resignation, and a $300,000 fine.
The City agreed to suspend the full amount of the monetary fine provided he complies with an orderly wind-down of his business by March 20th. Barbarovich, in a twisted circumstance of irony, had to guarantee full immediate payment in the instance he did not comply…by signing a Confession of Judgment.
The investigation into Barbarovich began in May 2018, 4 months before Bloomberg News published their story, details published by the City reveal.
Earlier this year, New York State passed a law restricting COJs from being entered against non-New York state debtors.
The New York State legislature passed a bill (S06395) late Thursday night that effectively eliminates Confessions of Judgment (COJ) in the small business finance industry.
The Senate voted in favor 61-1.
The Assembly voted in favor 83-43.
The new law which goes into effect immediately after Governor Andrew Cuomo signs it, prohibits anyone from filing a COJ against a party that does not reside in New York State. That means if a small business or individual resides in any state that isn’t New York, you cannot file a COJ against them in New York. This matters greatly because 99% of all COJs industry-wide were being filed in New York due to the incredible ease and speed that New York Courts offer to turn those into valid judgments.
Debtors that reside in New York can still be subjected to New York COJs.
A particular sensational story series published by Bloomberg Businessweek created the impetus to change how such New York judgments by confession might impact out-of-state residents. The names of the Bloomberg reporters are written into the Bill’s official memo in the footnotes, memorializing for all time how this law came to be.
Within the small business finance industry, the percentage of funders that required a Confession of Judgment as a condition of their financing was relatively small. And their usage has been limited since COJs were only first introduced as a potential risk mitigation tool on merchant cash advances five years ago in 2014. However, Bloomberg News estimated that COJs have resulted in more than $1 billion in collective judgments over the years, mostly against non-New York businesses.
deBanked has received numerous inquiries regarding what this new law means for COJs already signed but not yet filed. That is a question for an attorney.
New York State plans to outlaw the use of Confession of Judgments (COJs) in small business loan contracts this year, according to details revealed in Governor Andrew Cuomo’s newly published Justice Agenda.
The proposal, dubbed “Stopping Predatory Merchant Cash-Advance Loans,” is a 3-part plan to:
- Codify an FTC rule that prohibits COJs in consumer loans
- Prohibit the use of COJs in small business loans under $250,000
- Stop lenders from exploiting New York courts for nationwide collections by requiring that any permissible confession of judgment enforced in New York courts have a nexus to business activity in New York
Cuomo’s proposal echoes calls from the State legislature in response to a series published in Bloomberg Businessweek late last year that speculated COJs were vulnerable to abuse.
Both the Assembly and Senate maintain a Democrat majority, the same party as Cuomo, increasing the likelihood that such a bill could become law.
The proposal is separate from a bill that was recently introduced at the federal level. The Small Business Lending Fairness Act, a bipartisan bill co-sponsored by Senators Marco Rubio and Sherrod Brown, call for a nationwide ban on COJs. That bill has not progressed, perhaps due in part to the government shutdown. Like New York, that initiative was a response to the series published in Bloomberg.
A review of Bloomberg’s facts by deBanked revealed highly questionable reporting. In one example, it’s claimed that a business owner had been so victimized by predatory lending that he’d been forced to sell his furniture just to feed himself. deBanked later determined that the “victim” was actually a multimillionaire TV station owner whose account of any such engagement with merchant cash advance companies was incredibly unlikely. The reporters have not responded to deBanked’s findings.
Zeke Faux, who co-authored the series with Zachary Mider, deleted his entire tweet history around the same time that deBanked uncovered strange ties between his editor and the New York Attorney General’s office. The AG is reported to have sent subpoenas to several companies in response to the stories.
On Monday, Faux and Mider reported that clerks in three New York counties, whose job, among other roles, is to enter legally compliant COJs into the public record, were revolting by refusing to process COJs submitted by merchant cash advance companies. Though a clerk’s duties is largely an administrative one, two that spoke on the record with Bloomberg were former state legislators. Erie County Clerk Michael Kearns, for example, who told Bloomberg News that he felt that the use of COJs was criminal, had actually drafted a bill in 2017 when he was an assemblyman that sought to regulate cash advances of a different sort in the litigation financing industry. Although Kearns is a Democrat, he has historically enjoyed support from the Republican Party.
Orange County Clerk Annie Rabbitt and Richmond County Clerk Stephen Fiala, who are rebelling along with Kearns by refusing to enter COJs, are registered as Republicans, demonstrating that the movement is crossing party lines.
According to deBanked, less than half of 1% of all MCA transactions have resulted in the filing of a COJ, despite Bloomberg’s insinuation that the outcome is common or typical.
Among the most prolific filers of merchant cash advance COJs, deBanked found, is Itria Ventures, LLC, a company affiliated with Biz2Credit. Itria filed more than 50 in the last two months. Biz2Credit’s CEO, Rohit Arora, is a writer for both CNBC and Forbes.
Hours after deBanked drew attention to a suspicious exchange on twitter between a senior editor at Bloomberg LP and a New York State Senator, one of the Bloomberg reporters behind the highly questionable merchant cash advance series took drastic action, he deleted every tweet he’s ever posted.
The series of events began on Thursday when Bloomberg editor Robert Friedman thanked New York State Senator Robert Hoylman for pledging to introduce legislation in response to the stories that he and reporters Zeke Faux and Zachary Mider produced. When deBanked’s Sean Murray chimed in on the exchange, Friedman quickly deleted his tweet, raising suspicions that there was something to hide.
By the next morning, deBanked published eyebrow-raising details such that Senator Hoylman and Friedman’s boss had at one time hosted a welcoming party at OnDeck’s New York City office, a major rival to the merchant cash advance companies that Bloomberg has been targeting in their series. It was also revealed that Friedman has a direct connection to the New York Attorney General’s office whom Bloomberg was the first to report had opened up investigations into merchant cash advance companies in response to his stories. The officiant of Friedman’s son’s wedding also happens to be the co-chair of the transition team for Attorney General-elect Letitia James.
After deBanked went live with the findings, Bloomberg reporter Zeke Faux deleted all of his account’s tweets, including every mention of the merchant cash advance series. He has been an active user of the platform since 2011 and has relied on it to promote his work. Faux has not replied to an inquiry about why he wiped his account.
Friedman, Faux, and Mider have openly bragged on twitter about the regulatory investigations and legislative proposals that have resulted from their story while not disclosing that some of these authorities have personal relationships with Bloomberg and Friedman.
Meanwhile, Faux had been responding to praise from fans over the last several weeks while rebuffing all inquiries about the glaring red flags in his stories. In one example, it’s claimed that a business owner has been so victimized by predatory lending that he’s been forced to sell his furniture just to feed himself. deBanked later determined that the “victim” was actually a multimillionaire TV station owner whose account of any such engagement with merchant cash advance companies was incredibly unlikely. Neither Faux or Mider have responded to the oversight and no corrections to their stories have been made.
The Strange Connection Between Bloomberg, the AG’s Office, and the State Senator Proposing LegislationDecember 14, 2018
On Thursday, Bloomberg Senior Editor Robert Friedman publicly thanked New York State Senator Brad Hoylman and his colleagues over twitter for pledging to propose legislation in response to the (highly questionable) merchant cash advance series he produced with reporters Zachary Mider and Zeke Faux.
When deBanked Chief Editor Sean Murray replied to it, to urge those legislators to hear both sides of the story, Friedman immediately deleted his tweet.
While the Bloomberg team behind the story has insisted they are just there to report the facts, it came across as unusual that an editor would thank a key legislator for proposing legislation in response to his story. When Friedman deleted the tweet once deBanked discovered it, the entire exchange aroused suspicions.
And this is where it led.
The CEO of Bloomberg LP (who employs Friedman) and Senator Hoylman have crossed paths before at an auspicious gathering, the ceremonial ribbon cutting for one of the merchant cash advance industry’s biggest competitors, OnDeck.
While the photo op doesn’t suggest anything untoward, Mayor Bloomberg also televised a lengthy speech where he expressed the difficulty that small businesses have obtaining bank loans and praised OnDeck for providing a valuable service. At the time, OnDeck offered loans with rates up to 99% APR, which by some metrics of comparison can produce a more costly outcome than modern day merchant cash advances.
Hoylman spoke at the ceremony too.
“I just want to welcome Noah to the neighborhood. It’s a great asset on the west side that we have burgeoning businesses like OnDeck,” Senator Hoylman said in the televised welcome. “This is just another example of [Mayor Bloomberg’s] legacy in sparking entrepreneurship across the city and I’m so glad that it’s happening here in this neighborhood.”
Hoylman followed that up with a public press announcement that heralded OnDeck as being good for New York.
Now, he’s going in a new direction. On Thursday, a Bloomberg News story broadcasted Hoylman’s legislative proposal to crack down on “predatory lenders,” companies that just happen to be OnDeck’s competitors.
Putting that aside, Friedman’s merchant cash advance series in Businessweek rather explicitly focused on the perceived abuse of the New York State court system and Hoylman’s newly appointed position as chairman of the New York Senate Judiciary Committee makes him the prime member to introduce impactful legislation. And that’s where any such coincidental connection would presumably end.
But it doesn’t.
Hoylman and Mayor Bloomberg share another bond, both were sworn in to office by the highest ranking judge in New York State, Chief Judge Jonathan Lippman. Lippman’s role, which he held for seven years until the end of 2015, was to oversee the work of the State’s Unified Court system and to suggest legislation and regulation pertaining to its administration.
And Lippman is directly linked to Bloomberg editor Robert Friedman. Lippman officiated the wedding of Friedman’s son in 2013.
That Lippman is no longer the Chief Judge overseeing the court system matters little. Today, he is the co-chair of the transition committee for New York Attorney General-elect Letitia James. Via Bloomberg News, Friedman’s team was coincidentally the first to report that merchant cash advance companies are now all-of-the-sudden under investigation by the Attorney General’s office.
So to recap:
Robert Friedman is the editor of the Bloomberg Businessweek story that portrayed merchant cash advance companies as predatory lenders abusing the court system.
The officiant of Friedman’s son’s wedding used to be the head of that court system, but is now working with the AG’s office. The AG’s office opened an investigation in direct response to Friedman’s story.
The state senator that Friedman thanked for proposing legislation in direct response to his story is the same senator that can be seen on video co-hosting a welcoming party with Friedman’s boss at the office of his target’s competitor.
To date, no other major news outlet has picked up Friedman’s story. The crusade to open investigations and enact legislation seems to be entirely driven by Friedman’s team and Bloomberg and those tasked with conducting investigations and proposing the legislation have coincidental connections to both Friedman and Bloomberg.
Friedman’s merchant cash advance series also lacked a key component, actual victims of the supposed predatory lending. In one tale, Bloomberg reported that one business owner had been so victimized by predatory lending that he was selling off his furniture just to feed himself. deBanked later determined that the victim was actually a multimillionaire TV station owner whose account of any such engagement with merchant cash advance companies was incredibly unlikely.
On Thursday, deBanked hoped that a group of New York State legislators would look past the gratitude of a Bloomberg editor to consider that there was more to the story.
As it turned out, there is more indeed.
In 2017, New York City Marshal Ruth Burko earned less in poundage than she owed the city in annual fees. At 91-years old, Burko’s tenure as a city licensed judgment enforcer has finally come to an end. She technically announced her retirement at the end of 2016 but her long career began when Mayor John Vliet Lindsay appointed her in 1967. She held on to that role ever since, grossing more than $500,000/year well into her late 70s, nearly double the annual salary of current Mayor Bill de Blasio
With the exception of Burko in her last few years, just about every New York City marshal grosses more than the Mayor. A profile by Bloomberg Businessweek says that Vadim Barbarovich outperforms all 38 of his peers when it comes to earnings, but city records reveal that the title on a gross income basis belongs to Manhattan-based Ronald Moses, who earned $3.27 million last year. Moses’s haul is down from the $5 million he earned in 2010.
70-year old Marshal Martin Bienstock, meanwhile, was the first to gross more than $2 million/year, a feat he pulled off in 1998. Records show that in 2017 he was still a top performer, ranked 2nd only to Moses.
Gross figures are before expenses like staff, rent, and other normal administrative costs of running a business. A marshal’s income stems from poundage, a 5% fee tacked on to whatever amount they collect. The city takes a small cut of that in addition to an annual fee for the privilege of being a marshal. Still, many have become millionaires on the job depending on how much work they’ve put in or how much risk they’ve undertaken.
Though the marshals can effectively enforce any judgment in New York City for private litigants, a popular one is tenant evictions. Two marshals have been murdered in the course of duty, most recently in 2001 when a marshal named Erskine Bryce “was pushed over the bannister in a Bedford-Stuyvesant apartment building during an attempted eviction,” according to The New Yorker. “The culprit, a fifty-three-year-old woman who had no intention of giving up her place, then clubbed him with a pipe, doused him with paint thinner, and set him aflame.”
In 2015, one marshal knocked on a door to handle a routine tenant eviction only to be greeted by a man covered in blood. The landlord’s motionless body lie inside after being stabbed to death by the tenant unwilling to leave. The marshal immediately called 911.
A recent online story says they have also enforced judgments obtained in connection with commercial finance transactions, even where the judgment-debtor is alleged to be located outside the city limits. No law prohibits marshals from seeking to seize assets outside the state, those with knowledge of the rules say.
A spokesperson for the city’s Department of Investigation told deBanked that the marshals are regulated by the Department but that they’re not city employees.
It’s long been rumored that it helps to know someone to get the gig. Marshal Stephen Biegel, a retired police Lieutenant, for example, is Mayor Bloomberg’s former bodyguard. Biegel grossed $2.2 million last year and has consistently grossed more than $1 million each year since 2010.
91-year old Ruth Burko got the job shortly after running Mayor Lindsay’s 1965 campaign. Burko had previously been appointed a position on a Bronx Community Board and she would continue to do both simultaneously for the rest of her life. In 2014 she told the Wall Street Journal about her experience in dual roles. “The positions give me the opportunity to serve the community, my friends, and my neighbors, whom I have coexisted with for so many years,” she said.
Two months ago, a billionaire hedge-fund manager named Philip Falcone, the 377th richest person in the United States who once “put the squeeze on Goldman Sachs,” led a Virginia-based investment group to make a strategic purchase of a local Telemundo TV station in Columbus, Ohio. The seller, a company led by local businessman Richard Schilg, pocketed a lavish sum of $850,000, according to the Columbus Dispatch.
Two months later, Schilg, who is 61-years old, had become so poor and destitute that he would have to sell his furniture just to buy food. That’s what Bloomberg Businessweek says of Schilg in its purported tell-all piece about predatory lending. Though Schilg successfully negotiated a deal with a Wall Street billionaire, he apparently was outmatched and “unable to defend himself” when it came to much less sophisticated transactions at his other business, Pathmark HR, a human resources company located 15 miles outside of Columbus.
Pathmark HR is anything but small. At the end of 2017, Schilg’s company was on track to gross $20 million a year in sales. Along the way, he engaged in commercial finance transactions that required the sale of future receivables, non-loan arrangements that businesses use to fuel their growth.
They did not go as planned. Multiple financial companies obtained judgments to enforce the contracts that Pathmark HR had entered into, NY State court records confirm. Schilg told Bloomberg Businessweek that “your life is ruined by their contract.”
But if that’s the case, it stands to reason he wouldn’t enter into one again.
Pathmark HR kept applying for more of these things, industry insiders told deBanked, though the stream of judgments filed against his business from competitors offering similar products have served as a veritable red flag for underwriting departments. That would’ve created a problem for Pathmark HR if it intended to rely on that type of capital going forward.
That’s when a straw man appeared.
According to a purported (and admittedly unauthenticated) corporate resolution reviewed by deBanked, Schilg appears to have transferred his majority interest in Pathmark HR to an 82-year old minority shareholder named Robert Renzetti, who lists a small mobile home more than 1,000 miles away in Sarasota, FL as his residence.
There’s a catch. The corporate resolution (dated in 2017) says that Schilg can just buy the shares back from Renzetti in the future. Either way, several finance companies said they received applications for capital from Pathmark HR up through and including this year, with only Renzetti’s name and information included. Schilg’s is nowhere to be found.
Schilg, who Bloomberg Businessweek portrays as so poor that he’s more-or-less eating his household furniture to stay alive, is the former founder, chairman and CEO of Team America Corp, a staffing organization that grew to more than $350 million in annual sales by 1999. That’s more than $500 million at today’s value, larger than almost every single alternative funder that deBanked ranked in 2018.
Meanwhile, the only thing that separates Schilg from the sale of his TV station to a billionaire is FCC approval. Hopefully the man has enough furniture to see it through.
This is the second in a series of articles relating to a fanciful tale in Bloomberg Businessweek