Chris Hedges's Blog, page 271

Facebook Anticipates $5 Billion Fine Over Privacy Violations

SAN FRANCISCO—Facebook said it expects a fine of up to $5 billion from the Federal Trade Commission, which is investigating whether the social network violated its users’ privacy.

The company set aside $3 billion in its quarterly earnings report Wednesday as a contingency against the possible penalty but noted that the “matter remains unresolved.”

The one-time charge slashed Facebook’s first-quarter net income considerably, although revenue grew by 25% in the period. The FTC has been looking into whether Facebook broke its own 2011 agreement promising to protect user privacy.

Investors shrugged off the charge and sent the company’s stock up more than 9% to almost $200 in after-hours trading. EMarketer analyst Debra Aho Williamson, however, called it a “significant development” and noted that any settlement is likely to go beyond a mere dollar amount.

“(Any) settlement with the FTC may impact the ways advertisers can use the platform in the future,” she said.

Facebook has had several high-profile privacy lapses in the past couple of years. The FTC has been looking into Facebook’s involvement with the data-mining firm Cambridge Analytica scandal since last March. That company accessed the data of as many as 87 million Facebook users without their consent.

The 2011 FTC agreement bound Facebook to a 20-year privacy commitment; violations could subject Facebook to fines of $41,484 per violation per user per day. The agreement requires that Facebook’s users give “affirmative express consent” any time that data they haven’t made public is shared with a third party.

The now-defunct Cambridge Analytica, which provided political data services to the 2016 Trump campaign and others, had wide access to normally private user data. It exploited a Facebook loophole that allowed it to see the data of people’s friends, and not just people who explicitly permitted access when they took a personality quiz. While Facebook did have controls in place that allowed people to restrict such access, they are found buried in the site’s settings and are difficult to find.

In addition to the FTC investigation, Facebook faces several others in the U.S. and Europe, including one from the Irish Data Protection Commission, and others in Belgium and Germany. Ireland is Facebook’s lead privacy regulator for Europe. The FTC is also reportedly looking into how it might hold CEO Mark Zuckerberg accountable for the company’s privacy lapses.

The social network said its net income was $2.43 billion, or 85 cents per share in the January-March period. That’s down 51% from $4.99 billion, or $1.69 per share, a year earlier, largely as a result of the $3 billion charge.

Revenue grew 26% to $15.08 billion from a year earlier. Excluding the charge, Facebook earned $1.89 per share. Analysts polled by FactSet expected earnings of $1.62 per share and revenue of $14.98 billion.

The company cautioned during a conference call with analysts that it faces “ad targeting headwinds” in the second half of this year. That includes developments such as Europe’s new privacy regulation that could impair hurt the company’s ability to target ads. Facebook also plans to launch a long-promised “clear history” tool that will let users delete their web-browsing tracks from Facebook’s data records while also blocking the social network from tracking the links they click going forward.

Zuckerberg, meanwhile, doubled down on his long-term vision to turn Facebook into a “privacy-focused platform ” modeled after its encrypted messaging app WhatsApp. Analysts have questioned the company’s ability to make money if its focus shifts to private communications. But Zuckerberg said the company doesn’t currently use the content of messages for ad targeting anyway.

Facebook’s monthly user base on its flagship service grew 8% to 2.38 billion. Daily users grew 8% to 1.56 billion. The company said about 2.7 billion people used Facebook, WhatsApp, Instagram, or Messenger each month and 2.1 billion people used at least one of its services daily.

U.S. Measles Cases Jump to Highest Level in 25 Years

NEW YORK—Measles in the U.S. has climbed to its highest level in 25 years, closing in on 700 cases this year in a resurgence largely attributed to misinformation that is turning parents against vaccines.

“This is alarming,” said Dr. William Schaffner, a Vanderbilt University vaccine expert. Not only is measles dangerous in itself, but its return could mean other vaccine-preventable diseases seemingly consigned to the past may be coming back as well, he said.

The Centers for Disease Control and Prevention said 695 cases had been reported in 22 states this year as of Wednesday afternoon. That was up from 626 reported Monday and makes this the nation’s worst year for measles since 1994, with eight months still to go in 2019. There were 963 cases in 1994.

Roughly three-quarters of this year’s illnesses in the U.S. have been in New York state, mainly in two ultra-Orthodox Jewish communities in Brooklyn and suburban Rockland County. Most of those cases have been in unvaccinated people.

The number of cases is likely to go even higher. Measles is highly contagious and can spread through the air when someone coughs or sneezes. And in recent days, Jewish families have been gathering for Passover meals. It can take 10 to 12 days for symptoms to develop.

The CDC recommends the vaccine for everyone over a year old, except for people who had the disease as children. Those who have had measles are immune.

The vaccine, which became available in the 1960s, is considered safe and highly effective, and because of it, measles was declared all but eliminated in the U.S. in 2000. But it has made comebacks since then, including 667 cases in 2014.

Public health experts say some U.S. communities have low vaccination rates because of the spread of bad information — especially the now-debunked notion that the measles-mumps-rubella vaccine is linked to autism — through social media, pamphlets, hotlines and other means.

“Many parents are afraid. And if you want to believe your kid doesn’t need that many shots, there’s plenty of places to find people who agree with you,” said Dr. Jonathan Fielding, former head of the Los Angeles County Department of Public Health. “It’s not so easy to discern what is real and what is not.”

Measles in most people causes fever, runny nose, cough and a rash all over the body. However, a very small fraction of those infected can suffer complications such as pneumonia and a dangerous swelling of the brain.

According to the CDC, for every 1,000 children who get measles, one or two will die from it. No deaths have been recorded this year.

Measles’ return may be an early warning sign of resurgences in other vaccine-preventable diseases such as rubella, chickenpox and bacterial meningitis, Schaffner said.

“Measles is the signal that in these communities where there’s profound under-vaccination, they are susceptible to a whole menu of communicable diseases we thought were relegated to yesteryear,” he said.

Sixty-one of the new cases were reported in hard-hit New York City.

Up to now, the biggest single U.S. measles outbreak in recent years was in 2014, when 383 cases were reported in the Amish community in nine Ohio counties. But on Wednesday, New York City officials said the outbreak centered in some of Brooklyn’s Jewish neighborhoods has accounted for 390 cases since October.

“These cases are stark reminders of why New Yorkers must get vaccinated against the measles as soon as possible,” New York City Health Commissioner Dr. Oxiris Barbot said.

Ultra-Orthodox rabbis generally have no religious objections to vaccines and have urged their followers to get inoculated. But the “anti-vaxxer” movement has made inroads among the ultra-Orthodox, even though they have little exposure to the internet.

Earlier this month, city officials ordered mandatory vaccinations in four ZIP codes in Brooklyn and threatened fines of up to $1,000 for noncompliance. City officials said 12 people have been issued summonses.

There have been three measles-related deaths reported in the U.S. since 2000, the last one in 2015. The worst year for measles in modern U.S. history was 1958, with more than 763,000 reported cases and 552 deaths.

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The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Department of Science Education. The AP is solely responsible for all content.

Infighting Over Its Mission, Financial Turmoil Roils NRA

The National Rifle Association is used to battling forces that criticize its fiery and unbending efforts to protect gun rights. But as the group gathers for its annual convention this week, the NRA may be facing its toughest foe in decades: its own members.

NRA insiders and longtime observers describe an organization at war with itself over a central question: Has it strayed too far from its original mission of gun safety and outdoor shooting sports and become too political?

It is rare for the NRA to betray any hint of internal turmoil. But it erupted very publicly recently when the NRA sued its longtime public relations firm, Ackerman McQueen, accusing it of refusing to hand over financial records to account for its billings. In 2017 alone, the NRA paid the firm $40 million.

Ackerman McQueen has been by the NRA’s side for two decades and has crafted its aggressive messaging, including the “From my cold dead hands” line uttered by actor Charlton Heston in 2000 as he vowed to resist any effort to take away his guns. The line became a rallying cry for gun owners around the country.

Ackerman McQueen also created and operates NRATV, the online channel whose hosts not only aggressively defend the NRA and its cause but often venture into political debates not directly related to firearms, such as immigration or diversity on children’s TV. In its lawsuit, the NRA said some of its members have questioned NRATV’s weighing in on “topics far afield of the Second Amendment.”

The long history between the public relations firm and the NRA has made their potential parting of the ways all the more surprising to longtime watchers of the group.

“The battle in the NRA board that must have occurred with this breakup of a decades-long relationship must have been something,” said Adam Winkler, a professor at the University of California Los Angeles School of Law and gun rights expert.

The strife is expected to be a dominant topic of conversation at the convention starting Thursday in Indianapolis, where President Donald Trump and Vice President Mike Pence will address the crowd on Friday. The NRA’s two main political action committees spent $30 million to help Trump get elected in 2016, and the organization as a whole spent a record $412 million during the presidential year, according to its tax filings.

It has been a bumpy ride for the NRA over the past year.

The massacre at a high school in Parkland, Florida, last year created a groundswell of opposition to the NRA, driven by student-led protests over gun violence. Corporate America began pushing back, with some major retailers stopping gun sales and banks dropping discounts or certain services for NRA members and gunmakers.

More recently it was disclosed that Russian operatives tried to use contacts in the NRA to influence American elections. Democrats in Congress vowed to launch investigations into the gun lobby.

The NRA does not release detailed membership numbers but has repeatedly said in recent years that it has about 5 million members. The tax-exempt organization’s filings with the IRS for 2016 and 2017, the most recent years available, show combined losses of nearly $64 million. And income from membership dues plunged about $35 million in 2017.

The financial turmoil was seen as a key reason the NRA raised its dues last year for the second consecutive year.

Around the same time, the NRA saw its political influence wane during the 2018 elections and got outspent by gun control groups headed by former Rep. Gabrielle Giffords and New York Mayor Michael Bloomberg. More than a dozen NRA-backed congressional candidates lost in last year’s midterms.

The NRA also faces regulatory pressures in New York, where the marketing of its line of insurance for gun owners involved in shootings was scrutinized. That legal action ultimately led the broker and underwriting firm for the insurance to pay millions of dollars in fines and abandon the program.

The NRA’s charter was created in New York, and there are concerns that state officials may look for ways to strip it of its nonprofit status.

With the organization struggling financially, even some NRA stalwarts have begun questioning whether the millions spent on public relations and NRATV is worth the money.

One NRATV segment in particular seemed to be the last straw for some members: It took the children’s show “Thomas & Friends” to task for adding some ethnically and gender diverse characters to its lineup of talking locomotives and other vehicles. The segment featured several trains wearing Ku Klux Klan hoods and sitting on flaming tracks.

It’s unclear if the divide is so gaping that it will lead to the ouster of NRA leaders during the convention.

None of the more than two dozen board members contacted by The Associated Press would comment, with several saying they do not publicly discuss internal politics. Andrew Arulanandam, the NRA’s managing director of public affairs, said recent reports of turmoil or financial troubles have been exaggerated and fueled by anti-gun forces.

Ackerman McQueen declined to comment.

Another question that could be answered at the convention is the fate of the NRA’s president, retired Lt. Col. Oliver North, a central figure in the Iran-Contra scandal of the 1980s. He has a $1 million contract with Ackerman McQueen. That has raised alarm bells within the NRA about conflicts of interest.

John Crump, a longtime NRA member, firearms instructor and contributor to Ammoland, an industry publication, said he has never seen such a split within the NRA as exists now. But he is doubtful that any real change will take place.

“I know a lot of people want that, but I just don’t see it happening,” he said. “I think they have too much power right now. It’s going to take a big revolt to get them out of power.”

The strife has shades of the divisions that erupted in the 1990s when Neal Knox, an NRA leader in line to become its president, questioned the NRA’s direction and spending and found himself ousted by those who supported Wayne LaPierre, the NRA’s CEO with close ties to Ackerman McQueen.

Jeff Knox, a longtime NRA member and the son of Neal Knox, said the arguments today are similar to those from two decades ago. In a recent column, Knox questioned whether the NRA can survive.

“Could there actually be a group of directors within the upper echelons of the board who put the NRA first, above personal financial gain, cronyism and old loyalties?” he told the AP. “That would be a pleasant surprise.”

The Middle Class Is Under Assault Across the Globe

What follows is a conversation between Economist Michael Forster and Greg Wilpert of the Real News Network. Read a transcript of their conversation below or watch the video at the bottom of the post.

GREG WILPERT It’s The Real News Network and I’m Greg Wilpert in Baltimore. A recently released O.E.C.D. study finds that the middle class in 34 developed countries is being squeezed to such an extent that its income is shrinking. The study titled Under Pressure: The Squeezed Middle Class, looks at the growing economic hardship of the middle class and especially of the younger generation among O.E.C.D. member states. The O.E.C.D., or Organization for Economic Co-operation and Development, is an organization with 36-member states, mostly of the world’s more developed economies. Joining me now to discuss the report is Michael Forster. He is a Senior Economist and Policy Analyst at the O.E.C.D. Directorate for Employment, Labor, and Social Affairs, and is a co-author of the aforementioned report. Welcome, Michael. Thanks for joining us today.

MICHAEL FORSTER Good morning, Greg.

GREG WILPERT So why is it important, first of all, to study the changes in the middle class, rather than discuss average trends in standard of living, or the extent of poverty in a society?

MICHAEL FORSTER The point is middle class is the economic foundation of a society, but not only that; it is the democratic foundation. Not to forget in O.E.C.D. countries, the middle class pays two-thirds of taxes and contributions, but it’s also a recipient of two-thirds of transfers and benefits. The middle class is in a way a guarantee for a well-functioning, prosperous society, and used to be in the past a sense of aspiration. But in the last one to two generations, this dream has started to vanish.

GREG WILPERT So yeah, that’s actually the next point. Why exactly is it shrinking and why is this dream starting to diminish? What are your main findings about the middle class and what are the main ways under which it is under pressure, as the report says? Also, if you can mention, are there any countries that particularly stand out?

MICHAEL FORSTER Yeah. It’s not so much about the shrinking size of the middle class. The middle class decreased by three to four percentage points in the U.S., or a bit more, 5 points. But the point is rather to look at over generations. So it used to be very common to be part of the middle class for the baby boomers. But since that generation, the probability to reach the middle class has been broke significantly at some point. And this is due to three concurrent developments. One is, sluggish income growth. So in most O.E.C.D. countries, income growth since the last ten years is much, much lower, especially at the middle. Second is, insecurity in the labor market. The new labor market functionally makes it so that you have less of a security. And thirdly, the cost of a typical middle-class lifestyle has increased a lot. Typically a middle-class lifestyle means, housing, education, and health. So in some countries, it’s more to housing— lacking funds. Some countries it’s more to education, like in the U.K. And in the U.S., it’s all the three of them.

GREG WILPERT Are there any countries though that particularly stand out in terms of the increasing difficulties that the middle class has?

MICHAEL FORSTER Well in European countries, it’s a bit more in Germany than in other countries. And on an O.E.C.D. level, yes, it is the United States, which has a very smaller middle class than actually other O.E.C.D. countries. It’s very interesting because usually you have a correlation between overall living standards, G.D.P. per capita if you wish, and the strength of the middle class. But there are two big exceptions in this picture. One is the U.S. with a relatively very high G.D.P. per capita, but a middle class which is barely over 50 percent, which is about just 61 percent. The other exception are some central European countries like the Czech Republic, Slovak Republic, Slovenia, where you have a relatively low G.D.P. per capita but a very, very strong middle class.

GREG WILPERT So what happens to the economy if the middle class is under pressure more? If the new generation has greater difficulties in making it to the middle class, what does that mean for the economy, more generally speaking?

MICHAEL FORSTER Well if aspirations vanish, opportunities go hand-in-hand. As I said, the point is less the overall size but if— for instance, the economic rates of the middle class— if you put together all incomes generated by the middle class and juxtapose this to the incomes of the upper class, this ratio was four-to-one 20 years ago, and today it is less than three-to-one. And this of course translates also not only into the economic rate, but also the political rate, the decision-making rate of the foundation of society, which is the middle class. Interestingly, parsing this ratio, it decreased from 2.5 in the U.S., to below two now, 1.8.

GREG WILPERT And so, what are your recommendations for reversing this pressure on the middle class? What can governments do?

MICHAEL FORSTER Well in several ways that governments connect. Since we have identified three trajectories— one is incomes, the second one is labor markets, the third one is consumption expenditures— the policies need to be focused on these three tools, these three dimensions. So the first one in terms of income and the distribution of income, there are many ways how you can pose a fairer distribution of wages, of earnings. For instance, for measures like you have in the U.S., the E.I.G.C., but we’re making it stronger, this inward benefit. The second is, our labor market means devoting a lot to vocational and other education training, and that these education training offers go to them who need it, which are young people and those in the lower middle class. And then thirdly in terms of consumption, depending whether it’s in a particular country the housing, education, or the health sector, investing in services and also offering housing that helps people to make to the middle class.

GREG WILPERT Now finally, this goes beyond your actual report, but historically speaking the countries of the O.E.C.D. have actually pursued many of those policies that you’re recommending but have been dismantling them in the past few decades. To a large extent you could say because of globalization, because of neo-liberalism, these kinds of tendencies which at least according to some people’s arguments, has been making it more difficult for them to offer these kinds of policies. On a larger scale, what can be done? Is it just something that the countries can actually fight against, what some call neo-liberal globalization? Or does something have to change on a global level to make it more possible for these countries to fight against the pressure on the middle class?

MICHAEL FORSTER I think both is true. In an earlier report, which was called Divided We Stand: Why Inequality Keeps [Rising], we have looked at the issue of globalization and other driving factors of inequality. We found that policies are very much important and can change the game. Now you are right that before the crisis, in the two decades before the crisis, there had been a different thinking about structural and structural growth policies. But I think, and we have a lot of examples for that, that since 2007, since 2008, national governments but also international organizations including my own, have changed its course and now think in terms of inclusive growth. And this is I think the way to go.

GREG WILPERT Okay. Well we’re going to have to leave it there for now. I was speaking to Michael Forster, Senior Economist and Policy Analyst at the O.E.C.D. Directorate for Employment, Labor, and Social Affairs. Thanks again, Michael, for having joined us today.

MICHAEL FORSTER Thank you so much. Goodbye.

GREG WILPERT And thank you for joining The Real News Network.

Ambassador: U.S. Had No Prior Knowledge of Sri Lanka Threat

COLOMBO, Sri Lanka—The U.S. had no prior knowledge of the Easter bombings in Sri Lanka that killed over 350 people, the American ambassador said Wednesday, despite local claims that foreign officials had been warned an attack was looming.

As the investigation into Sunday’s Islamic State-claimed attack continues, FBI agents and U.S. military personnel are in Sri Lanka assisting the probe, Ambassador Alaina Teplitz said.

While declining to say whether U.S. officials had intelligence on the local extremists and their leader who allegedly carried out the assault, Teplitz said America remained concerned over militants at large.

She also said that “clearly there was some failure in the system” that caused Sri Lankan officials to fail to share the warnings they received prior to the attack.

“I can tell you definitively we were not warned and we did not have any prior knowledge of this,” Teplitz told foreign journalists from her office at the U.S. Embassy in Colombo. “We did not know because believe me, if we had, we would have tried to do something about it.”

Sunday’s bombings ripped through Christian worshippers at church celebrating Easter and at hotels in Sri Lanka, an island nation off the southern tip of India. The attacks killed at least 359 people and wounded some 500 others, marking Sri Lanka’s worst violence since its 26-year civil war ended a decade ago.

Authorities have blamed a local Islamic extremist group called National Towheed Jamaat, whose leader, alternately known as Mohammed Zahran or Zahran Hashmi, became known to Muslim leaders three years ago for his incendiary speeches online.

On Tuesday, the Islamic State group asserted responsibility for the attack, sharing images of the leader and other men with their face covered before an IS flag to bolster its claim. The extremist group, which has lost all the territory it once held in Iraq and Syria, has made unfounded claims previously.

Asked about whether American officials received warnings or knew about the group and its leader before the bombings, Teplitz declined to comment, saying she would not discuss intelligence matters.

“If you look at the scale of the attacks, the level of coordination, again, the sophistication of them, it’s not implausible to think there are foreign linkages,” she said. She added that the U.S. believes “the terrorist plotting is ongoing” and said that’s why America continued to warn its citizens in Sri Lanka to be careful.

Prior to the bombings, Sri Lankan officials received intelligence reports and warnings that such an attack could be looming. However, that information failed to stop the assault.

Teplitz said the current political situation in Sri Lanka could have exacerbated that. President Maithripala Sirisena ousted Prime Minister Ranil Wickremesinghe in October and dissolved the Cabinet, but Sri Lanka’s Supreme Court later reversed his actions.

“Certainly the fractious and fragmented political environment has not been good on a number of fronts,” Teplitz said.

She later added: “The Sri Lankans themselves have said they received information . and they had their own lapses that resulted in a failure to either mitigate or warn. So that’s incredibly tragic.”

Wickremesinghe has said some people might lose their job over the intelligence failures.

Teplitz also acknowledged that she heard “legitimate” concerns about civil rights in Sri Lanka after the government announced that it was allowing the military to conduct warrantless searches and hold prisoners for 14 days before bringing them before a judge.

“There is a legacy from that conflict era of human rights abuse, again an issue that the government here has been struggling to move past,” she said. “We definitely remain concerned about human rights here and democratic policing; the ability to respect people’s rights even in the midst of a crisis like this.”

Teplitz said the U.S. also was concerned that the bombings could spark reprisals targeting Muslims in Sri Lanka. The Buddhist-majority country of 21 million, which includes large Hindu, Muslim and Christian minorities, is rife with ethnic and sectarian conflict.

“I think the recognition that this could be a spark is out there and that there’s a pretty significant effort to try and blunt that,” Teplitz said.

FBI Joins Probe After Car Plows Into 8 California Pedestrians

SUNNYVALE, Calif.—The FBI is assisting California officials in the investigation of a motorist who appeared to deliberately plow into a group of people, injuring eight, authorities said Wednesday.

Prentice Danner, a spokesman for the FBI’s field office in San Francisco, said the Sunnyvale Police Department is the lead agency in the investigation but that the bureau will become more involved “if it is determined a federal crime was committed.”

Sunnyvale Police Cpt. Jim Choi said the driver of the car was arrested and has been identified but that his name is not being made public to avoid compromising the investigation. He said the driver was not injured.

He said the department notified the FBI after the Tuesday evening crash in the city about 50 miles (80 kilometers) south of San Francisco because “we are making sure we are looking at all the possible motives and angles.”

Witnesses told investigators the motorist was speeding and drove directly toward the pedestrians without trying to veer away or stop the car before striking them, Choi said.

Some of the witness statements “show that the driver did not try to avoid the pedestrians at the cross walk, and there was no attempt to swerve, drive away or brake,” he said.

“People are just walking to get to these restaurants, food places and grocery stores, rather than getting into their car and driving there,” Sunnyvale resident Shanelle Fioretti told KGO-TV in describing the area.

Some of the eight people injured, including a 13-year-old girl, were at a corner or on the crosswalk when the car hit them before smashing into a tree, Choi said. The crosswalk remained closed Wednesday as officials investigate.

The victims were taken to the hospital after the crash near a shopping center in Sunnyvale, Choi said.

An update on their conditions was expected later Wednesday.

Boy Scouts Could Be Hit With More Sex Abuse Claims

NEW YORK — The lawyers’ ads on the internet aggressively seeking clients to file sexual abuse lawsuits give a taste of what lies ahead this year for the Boy Scouts of America: potentially the most fateful chapter in its 109-year history.

Sexual abuse settlements have already strained the Boy Scouts’ finances to the point where the organization is exploring “all available options,” including Chapter 11 bankruptcy. But now the financial threats have intensified.

The reason: States have been moving in recent months to adjust their statute-of-limitations laws so that victims of long-ago sexual abuse can sue for damages. New York state has passed a law that will allow such lawsuits starting in August. A similar bill in New Jersey has reached the governor’s desk. Bills also are pending in Pennsylvania and California.

In New York and elsewhere, lawyers are hard at work recruiting clients to sue the Boy Scouts, alleging they were molested as youths by scoutmasters or other volunteers.

Plaintiffs’ lawyers “recognize that this is a very unique and lucrative opportunity,” said attorney Karen Bitar, who formerly handled sex-crime cases as a prosecutor in Brooklyn before going into private practice.

Attorney Tim Kosnoff, a veteran of major sexual abuse lawsuits against the Roman Catholic Church, said Tuesday that he and his team have signed up 186 clients from dozens of states in just the past few weeks who want to be part of litigation against the Boy Scouts. Kosnoff said 166 of them identified alleged abusers who have not been named in any of the Boy Scout files made public in past years.

Boy Scouts spokeswoman Effie Delimarkos said the organization continues to evaluate its financial situation, and she defended its current abuse-prevention policies. The organization serves more than 2.2 million youths.

A bankruptcy by the Boy Scouts could be unprecedented in its complexity, potentially involving plaintiffs in virtually every state, according to several lawyers. It would be national in scope, unlike the various Catholic Church bankruptcy cases in the U.S., which have unfolded diocese by diocese.

“A Boy Scout bankruptcy would be bigger in scale than any other sex abuse bankruptcy,” said Seattle-based attorney Mike Pfau, whose firm is representing more than 300 victims in New York state.

Jeffrey Schwartz, a New York-based bankruptcy expert with the firm McKool Smith, said the Boy Scouts don’t have a particularly large flow of cash and might be forced to sell off property in bankruptcy. The Boy Scouts have extensive land holdings, including camping and hiking terrain.

“They’ll play for time,” Schwartz said. “If their defense costs and settlement costs are greater than their membership fees, it could be a death spiral.”

However, Dallas-based trial attorney Michelle Simpson Tuegel, part of a team representing numerous sex abuse survivors, said bankruptcy might benefit the Boy Scouts and reduce any payouts to plaintiffs.

“It can be a tool that these institutions use to shield assets and avoid having to reveal some information,” she said. “In many ways, it’s a disservice to victims.”

Illustrating the depth of its problems, the Boy Scouts filed lawsuits last year against six of its own insurers, saying they have improperly refused to cover some of the sex abuse liabilities incurred by the organization. The insurers say the coverage obligation is voided because the Boy Scouts failed to take effective preventive measures such as warning parents that scouts might be abused. The suits are still pending.

The intensifying pressures on the Boy Scouts coincide with the mounting threats to the U.S. Catholic Church in regard to its own long-running sex abuse scandal. Catholic bishops will be meeting in Baltimore in June to discuss the next steps.

Both the church and the Boy Scouts are iconic, historically well-respected institutions now known as having been magnets for pedophiles trying to exploit the trust of boys and their parents.

“When you cloak people in badges of respect, you create the perfect opportunity for bad people to get access to children,” said Chris Hurley, whose Chicago law firm is representing 11 former scouts in sex abuse trials scheduled on a monthly basis this year.

Another common denominator for the Catholic Church and Boy Scouts: Both kept voluminous secret files with names of suspected abusers, yet balked at sharing the information with the public.

Since the 1920s, the Boy Scouts have been compiling “ineligible files,” which list adult volunteers considered to pose a risk of child molestation. About 5,000 of these files have been made public as a result of court action; others remain confidential.

Delimarkos said when any BSA volunteer is added to the database for suspected abuse, “they are reported to law enforcement, removed entirely from any Scouting program and prohibited from re-joining anywhere.”

Minnesota-based attorney Jeff Anderson, who had led many lawsuits against the Catholic Church, released a court deposition in New York on Tuesday in which an expert hired by the Boy Scouts said she tallied 7,819 individuals in the “ineligible files” as of January, as well as 12,254 victims.

Anderson expressed hope that litigation triggered by New York’s new Child Victims Act would increase pressure on the Boy Scouts to make public more of the still-confidential files.

Some of the files were ordered released after a 2010 sexual abuse case in Portland, Oregon, that led to a nearly $20 million judgment against the Boy Scouts on behalf of a man molested by a Scout leader in the 1980s.

Paul Mones, the plaintiff’s lawyer in that case, said there are no overall figures on Boy Scout abuse settlements because the details are kept confidential.

Both the Boy Scouts and the Catholic Church say they now have policies in place to sharply curtail abuse that abounded in past decades. In the Boy Scouts ′ case, the steps included requiring criminal background checks for all staff and volunteers, and requiring two or more adult leaders be present with youth at all times during scouting activities.

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This story has been corrected to show that Effie Delimarkos is a spokeswoman, not a spokesman.

The Appalling Exploitation of America’s Rehab Patients

A nationally renowned drug rehab program in Texas and Louisiana has sent patients struggling with addiction to work for free for some of the biggest companies in America, likely in violation of federal labor law.

The Cenikor Foundation has dispatched tens of thousands of patients to work without pay at more than 300 for-profit companies over the years. In the name of rehabilitation, patients have moved boxes in a sweltering warehouse for Walmart, built an oil platform for Shell and worked at an Exxon refinery along the Mississippi River.

“It’s like the closest thing to slavery,” said Logan Tullier, a former Cenikor participant who worked 10 hours per day at oil refineries, laying steel rebar in 115-degree heat. “We were making them all the money.”

Cenikor’s success is built on a simple idea: that work helps people recover from addiction. All participants have to do is surrender their pay to cover the costs of the two-year program.

But the constant work leaves little time for counseling or treatment, transforming the rehab into little more than a cheap and expendable labor pool for private companies, an investigation by Reveal from The Center for Investigative Reporting has found.

At some job sites, participants lacked proper supervision, safety equipment and training, leading to routine injuries. Over the last decade, nearly two dozen Cenikor workers have been seriously injured or maimed on the job, according to hundreds of pages of lawsuits, workers’ compensation records and interviews with former staff. One worker died from his on-the-job injuries in 1995.

Labor experts say Cenikor’s entire business model might be illegal under federal labor law. The Fair Labor Standards Act requires all employees to be paid minimum wage and overtime.

“They have to look at a different way to run their business operation other than merely absconding with the workers’ wages,” Michael Hancock, a former Department of Labor official, said when presented with Reveal’s findings. “They’re being preyed upon.”

An ongoing Reveal investigation has exposed how many drug rehabs across America have become little more than lucrative work camps for private industry. Patients have slaughtered chickens on speeding assembly lines in Oklahoma and cared for residents at assisted living facilities in North Carolina.

Among these programs, Cenikor stands out. It has a long history of accolades from sitting lawmakers and judges and even former President Ronald Reagan. Last year, the Texas-based nonprofit earned more than $7 million from work contracts alone, making it one of the largest and most lucrative work-based rehabs in the country.

Bill Bailey, who as Cenikor’s chief executive officer earned more than $400,000 in 2017, repeatedly declined requests for comment. But in a statement, Cenikor officials said the work provides “a career path for clients to be hired by companies who traditionally do not hire those with felony convictions, allowing them to return to a life of being a responsible, contributing member of society.” They said they follow all state and federal laws.

Many Cenikor participants work for a network of subcontractors that then dispatch them to the major companies.

Walmart said it found Cenikor’s labor arrangement troubling and pledged to investigate.

“Our expectations are that all of our vendors follow both the applicable laws and regulations as well as our standards for suppliers,” Walmart said in a statement.

Exxon declined to answer specific questions, but in a statement said the company “contractually requires all of our suppliers to comply with all applicable environmental, health, safety and labor laws for themselves and their subcontractors.”

Shell did not respond to requests for comment.

Many participants said Cenikor saved their lives and equipped them for success. After 18 months in the program, participants can become eligible to receive wages and graduate with jobs, a car and the tools to build a promising life. But fewer than 8 percent of people who enter Cenikor make it to graduation, according to the program’s own numbers, and therefore never receive a paying job.

“It was just a money racket,” said former Cenikor patient Alester Williams, who checked himself in to Cenikor for help quitting alcohol and cocaine. “That place was all about manipulation and greed.”

Cenikor patients and staff said work came before everything else. Staff routinely canceled doctors’ and legal appointments in favor of sending patients to work, records show. Working up to 80 hours per week left little time for counseling, therapy or sleep.

Like many participants, Ethan Ewers was ordered to complete Cenikor by a Texas judge after failing a drug test while on probation. Once he arrived, he said he worked 43 days straight in a sweltering warehouse unloading cargo containers for Walmart. One day in 2016, when he was bone tired and on the brink of relapsing, he finally snapped.

“I said, ‘You need to give me a day off because I can’t do this anymore,’ ” Ewers told Cenikor brass. “It was absolutely ridiculous.”

Multiple former staff members told Reveal that counselors routinely falsified counseling records to make it appear as though patients received more counseling than they did. During busy work seasons, some received no counseling at all.

Peggy Billeaudeau, who was the clinical director at Cenikor’s Baton Rouge facility from 2015 to 2016, said she got so fed up with the excessive work that she and her staff launched their own investigation. They pored over patient timesheets and painstakingly entered the hours into a spreadsheet. Billeaudeau discovered that many Cenikor patients were working 80-hour weeks and rarely received counseling.

She presented the evidence to top Cenikor officials at a staff meeting. “It was kind of like, ‘Peggy, don’t touch that with a 10-foot pole,’ ” she recalled. “It was about the money. Get the money.”

Some rehab staff have a financial incentive to work participants harder and longer, according to interviews. Former vocational services managers, who secured outside job contracts, said the more money they brought in, the larger their bonuses.

Cenikor managers had a compelling sales pitch. They promised companies cheap workers who were drug tested and always on time. Cenikor would pay for transportation and cover the costs of insurance.

“We tended to charge less than the temp agencies because of the demographics,” said Stephanie Collins, a former vocational services manager. “We were competitive.”

Patients, meanwhile, make nothing. They are told that their paychecks will be used to offset the cost of the program. Federal labor law allows Cenikor to deduct the costs of food, lodging and certain other expenses. But according to interviews and records obtained by Reveal, Cenikor typically brings in far more money from work contracts than it spends on patients.

Food stamps cover meal costs for all Cenikor participants, and in Louisiana, many are signed up for Medicaid to pay for counseling and medical care. Internal financial ledgers from the program’s Baton Rouge facility show that in 2016 and 2017, Cenikor’s job contracts regularly delivered more than twice as much money as its daily operating expenses.

At minimum, labor experts say this means Cenikor patients should see at least some of the pay from their work.

“I can’t fathom this being legitimate,” said John Meek, a former Department of Labor wage and hour investigator. “That math is just against it.”

Despite its reliance on work, Cenikor frequently has skimped on providing safety training or giving participants basic protective gear, such as steel-toed boots and harnesses.

In 2016, David Dupuis and other Cenikor participants went to work for a company cleaning up flooded homes filled with black mold and raw sewage. While regular employees got protective equipment such as masks and boots, Dupuis said Cenikor workers got nothing.

“They didn’t give us any protective equipment at all,” he recalled, adding that workers frequently caught staph infections. “It was extremely hazardous.”

In 2018, Cenikor sent Matthew Oates to a private residence in Baton Rouge to trim trees without a safety harness, helmet or rope. As he teetered on a ladder 20 feet in the air, Oates lost his balance and tumbled from the tree. The fall broke his back.

“You’re wondering if you’re going to be crippled, you know, you’re going to be in pain for the rest of your life,” Oates said. “You know, what’s going to happen to me? Am I going to be able to work again?”

Oates said his back still causes him severe pain and he regularly sees a chiropractor.

Cenikor has been warned repeatedly to make sure participants are safe on the job. After a Cenikor worker plummeted from an unstable platform and died in an office supply warehouse in 1995, federal labor officials told Cenikor that ensuring patient safety was paramount.

“Cenikor officials should take more of (an) active role in providing quality training” and “recognize hazards associated with the job,” officials with the Occupational Safety and Health Administration wrote. But injuries have continued to rack up.

In recent years, a Cenikor worker crushed his hands in an industrial press, another worker fell off scaffolding and shattered his knee at a chemical plant, and at least two workers broke their backs.

In Texas, Cenikor is not required to report on-the-job injuries to rehab regulators. But when officials with the Texas Health and Human Services Commission learned about the injuries from Reveal, a spokeswoman said the agency was “concerned about any injuries sustained to clients” and planned to investigate further.

In Louisiana, state law requires Cenikor to report injuries, but Cenikor has not submitted a single injury report to the Louisiana Department of Health in the last three years, even though Reveal uncovered numerous injuries during that time. Licensing officials said they would investigate the injuries if a patient complained about them.

The federal Department of Labor had the opportunity to crack down on Cenikor’s labor abuses more than 20 years ago. In 1994, Cenikor participant Loren Simonis graduated from the program and immediately filed a complaint with the wage and hour office, alleging violations of the Fair Labor Standards Act.

Under federal law, workers are entitled to minimum wage and overtime for their work. The Supreme Court ruled in 1985 that working for free in a nonprofit – even one with a rehabilitative purpose – was a violation of federal labor law. Cenikor can deduct the cost of room and board, but it cannot keep all of participants’ wages, former labor officials told Reveal.

But the Department of Labor declined to investigate Simonis’ complaint, according to records obtained by Reveal. Simonis got tired of waiting and filed a lawsuit against Cenikor, claiming unpaid wages. He eventually settled for an undisclosed sum.

Labor officials declined to comment on the department’s 1994 decision and refused to answer questions about whether investigators would look into Cenikor for wage violations. A department spokesman said the agency “takes all complaints of worker safety and health hazards and violations seriously.”

Today, Simonis lives in Oregon with his wife and kids and runs his own screen-printing shop.

“I’ve turned my life around,” he said. “I don’t think Cenikor had anything to do with it.”

This story was edited by Andrew Donohue and Matt Thompson and copy edited by Nikki Frick.

Amy Julia Harris can be reached at aharris@revealnews.org, and Shoshana Walter can be reached at swalter@revealnews.org. Follow them on Twitter: @amyjharris and @shoeshine.

Robert Reich: The GOP’s Obscene Power Grab Is Nearly Complete

The Supreme Court heard arguments Tuesday on the Trump administration’s decision to alter the 2020 Census to ask people if they are American citizens.

In a former life, I argued cases before the Supreme Court. From what I gathered today, it looks as if the five Republican appointees to the Court have already decided this move by Trump is constitutional.

But it’s not. The U.S. Constitution calls for “actual enumeration” of the total population for an explicit purpose:  To count the residents – not just citizens, residents – of every state to properly allocate congressional representatives to the states based on population.

Asking whether someone is a citizen is likely to cause some immigrants — not just non-citizens, but also those with family members or close friends who aren’t citizens — not to respond for fear that they or their loved ones would be deported. In the current climate of fear, this isn’t an irrational response.

The result would be a systemic undercounting of immigrant communities. The Census Bureau has already calculated that it’s likely to result in a 5.1 percent undercount of noncitizen households.

This would have two grossly unfair results.

In the first place, these communities and the states they’re in would get less federal aid. Census data is used in over 132 programs nationwide to allocate over $675 billion each year.

An undercount would deprive many immigrant communities and their states of the health care, education and assistance they need and are entitled to.

Secondly, these communities and the states they’re in would have fewer representatives in Congress. The Census count determines the distribution of congressional seats among states. Under the Constitution, these seats depend on the total number of people residing in the state, not just citizens.

Which is the real reason for this move by the Trump administration.

It’s no secret that immigrants with the right to vote tend to vote for Democrats. So undercounting neighborhoods that are heavily Latino or Asian would mean fewer Democratic members of Congress.

Commerce Secretary Wilbur Ross says the citizenship question is necessary in order to better enforce the Voting Rights Act.

Baloney. The Trump administration has shown zero interest in the Voting Rights Act. It has even defended voter suppression laws in court.

This is nothing but a Republican power grab orchestrated by the White House.

If Chief Justice John Roberts sides with his four Republican colleagues on this, the ruling will be the third in a series of landmark 5-to-4 Roberts Court decisions whose main purpose is to cement Republican control of federal and state governments.

The first and second were Shelby County in 2013, which gutted the 1965 Civil Rights Act, and last year’s Janus decision, declaring that public employees don’t have to pay union dues.

Mitch McConnell’s long-term strategy of packing the Court in order to entrench the Republican Party is becoming an obscene reality.

Trump’s Recent Moves Against Iran Are Silly—but Deadly

Iran is responding in kind to Donald Trump’s harassment, with the Iranian parliament having voted to declare that the US troops of the Central Command or CENTCOM (which is responsible for the Middle East) are terrorists. The move came in retaliation for Trump’s designation of the Iranian Revolutionary Guards Corps (IRGC), Iran’s national guard, as a terrorist organization.

Both designations are frankly silly. Terrorists are non-state actors. An army or a formal national guard, is not a terrorist group. It is an army. If it is doing something wrong, it is committing a war crime. The whole structure of the Geneva Conventions after WW II was intended to make these distinctions and to uphold the rights of prisoners of war. Members of a regular army taken prisoner may not be treated as terrorists or common criminals by their captors, with the benefit that this consideration applies to both sides in a conflict.

This rhetoric is silly as an idea, but deadly dangerous if put into practice.

The US has some 5,000 troops in Iraq, who are being hosted by an Iraqi government and army close to Iran and who are amid Shiite militias backed by the Iranian Revolutionary Guards. Will the latter now view them as terrorists and fair game?

Likewise, some Iranian officials have threatened to close the Strait of Hormuz, through which some 22% of the world’s petroleum flows, if Iran itself cannot export its petroleum. Iran cannot likely do so, but the rhetoric is dangerous.

The Iran War Party in Washington, D.C., tied to arms industries, to Big Oil, to the MEK guerrilla group, and to the Israeli far right, wants heated rhetoric and reckless action by Iran, because it provides them a pretext for military intervention against that country.

National Security Adviser John Bolton asked the Pentagon for a plan for an operation inside Iran last fall, to avenge the alleged endangerment of US troops in Iraq by an Iran-backed militia. Then secretary of defense James Mattis appears only to have found out about the request later on, and that Bolton and the warmongers were behaving in this dangerous way and undercutting his authority likely led to his resignation.

Bolton’s press to have the US military and the Revolutionary Guards treat each other as terrorists is another such ploy to provoke violence. I don’t think it would be too much to suggest that Bolton for his own selfish warmongering purposes is deliberately putting US troops in danger in this way. We already know he is basically a terrorist, given his strong ties to the Peoples’ Jihadis (MEK), which has at times been listed by the US as a terrorist organization.

As David Aaron Miller and Richard Sokolsky argue at Politico, the Pompeo-Bolton-Netanyahu press to defund Iran and box it in is not a Trump-style hard negotiating tactic. It is intended to make sure there are no negotiations. It is intended to make sure that if the Democrats get back into the White House in 2020, they will not be able to simply reinstate the 2015 Iran Deal and try again to bring Iran back in from the cold.

The Iran War Party wants nothing less than regime change in Tehran.

If the US sent war ships into the Gulf and stopped Iranian ships from exporting petroleum, that would be a blockade and an act of war. The War Party has instead attempted to impose a financial blockade on Iran, using the threat of third party sanctions to scare Tehran’s trading partners off from doing business with it.

The Trump administration will not likely have complete success in this strong arm tactic. I explained yesterday that China seems set to buck Washington. Iraqi prime minister Adel Abdul Mahdi pledged this morning to Iran’s leadership that Iraq would not cooperate with Washington’s blockade. It might be added that Iraq cannot afford to do so. Iraq is still economically hurting from the US invasion and occupation and then the rise of ISIL, and desperately needs Iranian help– electricity, fuel, investment.

Iran’s best interests lie in keeping a cool head, keeping the 2015 Joint Comprehensive Plan of Collective Action (JCPOA) in place with Europe, Russia and China, and declining to give Bolton and Pompeo their pretext for intervention.

I think President Hassan Rouhani, a center-right politician who pressed for the JCPOA, knows this. But his authority has been deeply wounded by Trump’s violation of the treaty, which vindicated the hard liners. Cooler heads may not prevail, especially given the scale of Washington’s financial blockade of Iran and the devastation the US is wreaking on the Iranian economy.

One argument for the House to forge ahead with the impeachment of Trump is that at least it might keep the administration too busy to provoke an Armageddon in the Middle East.