I don't Know But Pat Cantelme

Last Sunday, the Tribune's Mark Flatten and Dennis Welch stunned the political community with their revelation that the Governor had used an executive order to give exclusive authority to grant state-authorized student loans to two of her closest political allies.  The current and immediate past Presidents of the Firefighter's Union, Billy Shields and Pat Cantelme, have no experience with student loan administration. 

It's been a week and all we have are more questions. 

I got a copy of the organizational filing that the company made at the Arizona Corporation Commission and discovered two interesting points that haven't been mentioned in the media.  First, the bylaws state that the company was organized "at the request of the State of Arizona."

What?  It was formed at the "request of the State of Arizona"?  What does that mean?  Who requested it?  That doesn't make it look like Cantelme and Shields went to the Governor's office with a great idea.  It looks like the Governor's office went to THEM.  Is that what happened?  Did the Governor's office ask Shields and Cantelme to form this corporation and then grant them exclusive authority to issue $100 million worth of bonds annually?

In fact, the Tribune article says that the Governor signed the executive order in December of 2004.  The Corporation was formed on December 14th of 2004.  It's clear that the order was in process before the corporation was actually formed.  No wonder Shields and Cantelme said they formed it at "the request of the State of Arizona."

The Governor steadfastly denies that she knew Shields and Cantelme were involved in the Corporation.  However, the organization documents show that Shields and Cantelme ARE the organizaton.  There are only three board members, Shields, Cantelme and their lawyer. 

Is it possible that the Governor's staff would concoct such a plan and leave her in the dark?  Come on.   Can you imagine being on the Governor's staff and creating a plan like this and not telling her?  The person who crafted this would have to go way out of his way to hide it from her.  That's unbelievable.  If it's true, then someone did her a huge disservice.  This is past non-feasance.  This is malfeasance.  This may be criminal. 

In fact, the Governor's office is beginning to get the message that this is serious. According to the Trib, the Governor's office has conceded that the deal needs to be investigated. 

even the governor's office is suspicious of a trade-off between ADELA and Cantelme's marketing and advertising company,

"That is something I have asked the Arizona Department of Commerce to look at," L'Ecuyer said. "It is a situation we need to have more information on."

The State Commerce Department?  What, they were too busy at the Department of Motor Vehicles?  Give me a break.  The state Commerce Department is the most political agency of any Administration and its not known for its investigative ability.  Conceding that there needs to be an investigation and then choosing her own political appointees to conduct the investigation using an agency that has very little investigative ability is the worst of both worlds. 

Who would best be able to carry out the investigation?  The Attorney General would be an obvious choice.  However, Shields and Cantelme are as close to Goddard as they are to Napolitano, so he has an obvious conflict.  That leaves either the County Attorney or the Auditor General.  Both have the capacity to investigate and neiter are beholden to the Governor.  Since her office is calling for the investigation, she should have no problem with an independent investigator.

Finally, here's an interesting media note. 

The company that received this exclusive franchise is known by its abbreviation "AHELA".  That's a unique name and makes it easily searchable.  In fact, if you put AHELA into Google News, you will get plenty of hits.  A great feature of  Google News is that you can specify a source.  For example, if you search "AHELA Tribune".  You will get links to all of the Tribune's stories on the arrangement. 

If you specify the "AHELA Republic", you get this:  "Your search - ahela republic - did not match any documents."   Come on guys the election is over, you can cover the Napolitano Administration now.  Really, it's OK. 
 

Comments

[Special Agent Johnny Utah]

I'll bet this ends up like the Napolitano Clean Elections "violation."

[Ann]

Here we go again folks.... This is not going to get any real coverage unless we demand it. Department of Commerce! So she can say, "There was a thorough investigation and found no wrong doing whatsoever, actually it is the epitome' of the process." The question will be then....what process? The one where she appoints her cronies to jobs where they make more money to contribute to her future campaigns?

The only other possible outcome given her past record would be this: "The previous administration appointed the head of the department that offers these insider deals, go talk to him if you want answers!"

[Voice of Reason]

Now we will begin to see the consequence of re-electing Janet and Terry. Janet will continue to act as she wishes and Terry will cover for her through inaction and/or incompetence. Will voters remember in four years when Janet and Terry want promotions? Has their been any TV coverage, yet??

[Stacy Pearson]

Greg: Saw your most recent post and unfortunately, a couple of key items are missing. Also, wanted to take a minute to get back to you on your previous questions. I hope you read the guest column which covers some of these important items too.

* AHELA has 4 employees. Its office is at Loop 101 and Broadway.

* There are four directors on the board as well as an executive director who previously worked with the California Higher Education Loan Authority for more than a decade.

* Executive orders for this exact same designation were used by Governors Babbitt and Symington.

* Like any new business, all revenues are being used to repay bondholders, set up systems and infrastructure, etc. Additionally: all net proceeds minus necessary administrative expenses will be used to fund student scholarships.

* As a result of the interest, the 990s are being amended to show that Grupo N
-- an advertising company Pat Cantelme has an interest in -- received NO compensation. All of the marketing expenses noted in the tribune's original story were paid to collegiate solutions for a loan portfolio acquisition fee and marketing plan so students and schools were aware of AHELA.

* Grupo N was asked to do a bilingual marketing plan for Pima County for AHELA. I know the PR and advertising business pretty well. Grupo N would be on
any company's short list for such a marketing exercise. But rather than pay
them for the good services rendered, Grupo N was in the process of moving and was compensated with 4 months trade-out, temporary office space. This was a good, common-sense arrangement for both parties, as addressed the need for outreach to the U of A and Pima Community.

* ASU and U of A have thought highly enough of AHELA's initial work to put them on their preferred lender lists. If students select AHELA as their loan provider, they will save $1,500-$2,000 over the life of their student loans.

* Shields and Cantelme have served on the boards of the state's largest pension funds so I do not know why it would be unusual for them to serve on this board, which is a much smaller.

* I'm not sure why then Sen. Martin pushed so aggressively for Industrial Development Authorities to have the right to issue student loans. This is the bill the Governor vetoed. This has never before been done in Arizona before and no IDA in the country has such authority just as no student loan authority can issue industrial bonds. I believe Kevin Demenna was the lobbyist pushing this with Sen. Martin.

* There are for-profit lenders which have recently come into the market in force that have expressed interest in getting an AHELA-like designation. They are free to make application to the Governor. For example, there were two lenders during Symington. However, I think we can all agree that any non-profit entity that is set up should not be a shell for a for-profit group to simply funnel proceeds back into its other entity. AHELA avoids this by plowing its proceeds back into scholarships as the program matures.

Greg: you ask many good questions. And trust that I have asked them myself internally. But as I have learned in getting to know this issue over the past week, there are many good answers too. And at the end of the day, a program that
saves students some money on their loans is a pretty good thing.

Greg: Feel free to call me any time about any issue. AHELA very much wants to clear the air since there are a number of very good people there dedicated to doing some very good work for students.

Now, how about the sweetheart deal on the CoppeRx card?

Greg, you keep referring to the fact that the Tribune "stunned the political community," etc. But the fact is that the New Times were the ones to provide these "revelations." I think it is unfair - and a violation of journalistic ethics - to continue to neglect the New Times' role in breaking this story.

Also, you can't contain your excitement - and outrage - over the fact that Napolitano was so unethical. Where is your outrage over the fact that Symington committed deeds far more outrageous? Not only did he stick his friends at the head of Arizona organizations, which he then benefited from, but he stuck patently incompentent individuals in those positions. In Napolitano's case, no one is alleging that people aren't doing a good job. Symington can't even claim that about his cronies.

[espressopundit]

Note from Greg: Actually, I mentioned the New Times story and linked to it. I think that the Tribune story was far more complete and it's placement A1 on a Sunday was very effective.

Greg,

I like how Cantelme and Shields have their hired gun (Stacy Pearson) posting their spin on your website. Unfortunately, I think she fails to understand what the problem is here. Unilaterally passing on business to your political cronies doesn't look good no matter how much you try to spin it.

[Ray G]

Stacy;
You seem to be missing one very important point; regardless of how well (or not) the business is being conducted, was that business obtained in a legal and forthright manner?

And even if it was technically legal, we can already see that it was definitely not forthright or on the ethical highground.

Or more simply put, would Shields and Cantelme be in the student loan business now if it were not for their proximity to Napolitano?

That's a serious question. We know what the answer is, and so do you. Thus we have an ethical problem that, for all the Republic's efforts at making this go away, it will not do so.