Show Me the Money

You will recall that the Governor signed an executive order in 2004 giving exclusive authority over state-issued student loans to two of her biggest supporters who also happen to be the President and immediate past President of the Firefighter's Union. 

The Tribune and the New Times were working on the story independently.  Here's the original Tribune story. 

Now Phoenix New Times has managed to track the money and it seems like some of the initial accounting may have been on shaky ground. 

The IRS requires a nonprofit to list its five highest-paid employees, if they earn more than $50,000 annually, and its five highest-paid contractors, if they cross that same threshold. The idea, according to IRS regulations, is to make sure that no one person or company is enriching themselves at the company's expense — and if they are, that it's at least disclosed to the public.

AHELA's initial tax return, filed in June, indicated that it hadn't paid any company more than $50,000 in 2005.

As its amended tax form now makes clear, that isn't true. A Scottsdale company, Cology Inc., was paid $207,000 for marketing. The Greenberg Traurig legal firm was paid $150,000. And RBC Capital Markets, a division of brokerage house RBC Dain, Rauscher, was paid $712,338.

Both Cology and RBC have close ties to the loan authority. AHELA's executive director, Shelly Murphy, worked at Cology just before AHELA hired that company to do marketing. And, as New Times first reported last month, it was an officer at RBC, Chris Hamel, who had the idea of starting the nonprofit in the first place.

Comments

[jason rose]

greg: since i am the "company's public relations guy" you cite i wanted to point out that the new times story did mention that thousands of new student loans have been made. a top financial aid official at the university of arizona was also quoted as saying how positive he thinks the loan authority's work has been for students there.

the loan authority's staff and board have done an outstanding job of getting a new non-profit student loan company up and running -- and making a difference for students -- faster and better than any such group in arizona history.

and they stepped up after the other company previously providing the service abandoned its mission to become a for-profit company.

all fees paid to bond companies were consistent with what have been paid in the past. in fact, rbc dain rauscher was the bond company for the previous group providing this service.

additionally, tax records were also amended to demonstrate to you and others that no one at the authority is improperly benefiting, as you and others have insinuated previously.

in fact, the new times did not include mention that even though the loan authority is not required to disclose expenditures under $50,000 they did so anyways.

finally, the purchase of existing loan portfolios is something every loan authority in arizona history has done, including the ones authorized by your favorite governor, fife symington.

it should also be pointed out the structure arizona and this governor is using is also being utilized by 27 other states, belying the notion that there was something untoward.

the only thing that would have been untoward is if a lower-cost student loan service would have been allowed to go away at a time of rising tuition costs in arizona.

thousands of arizona students and ultimately tens of thousands of arizona students will be forever grateful for the good work of the arizona higher education loan authority and the thousands of dollars they will save each student over their loan repayment periods.

jason rose

[Ann]

What?....no shift key?

[Kirly]

hey jason rose! not relevant to the seeming rules that were not followed. stay on topic.

[Ray G]

Jason;
Do you really not get it? You're in the process of not getting "it" by a wide margin.

No one is questioning how well the company has or has not performed, the question is the legality and ethics behind the formation of the company.

Long story short, there are people profiting from this company that would not be if they didn't move in the same, close political circle as Janet Napolitano.

Period.

[Ray G]

Oh, and seeing Jason's inability to comprehend the basics of this all, let me clarify something else for him.

I said "no one is questioning" . . . and he'll think of the details that various articles have given on the company and turn that into an attack on the company's performance.

But those are just details that have to be covered. In the process of investigating the unethical, and possible illegal formation of this company, their underbelly is going to be examined.

And yes, it does help that they are seemingly doing their job, things would be all the worse if they were obviously doing a slip-shod job.

But all of that is ancillary to the crux of the matter; how the company came into existence in the first place.

[frank scott]

Comments don't square with the New Times original story which indicated that $240,000 moved out of the nonprofit for the benefit of board members.

Also, none of these statements have been verified. Jason, please post the check register and bank statements for the company.