THE COZY RELATIONSHIP BETWEEN HENRY AND SHINE—THE POLITICS OF INSIDER TRADING: A week ago, I promised to share some information that would shed a light on the cozy relationship between the leader of the Allen County Democrats (Henry) and the leader of the Allen County Republicans (Shine). I said I would share that information before the May primary, so here it is:
On August 20, 1980, a company called Midwest Steel and Trading was formed between Jerry Henry (Mayor Henry’s brother), Larry Shine (Steve Shine’s brother), and a third party. A year later, that filing was amended and the company was renamed Midwest Pipe & Steel. Originally, the company had 1,000 shares of private stock issued. The stock was all one class. I’ve helped form hundreds of corporations and 1,000 shares of one class stock is pretty common. When a corporation is formed, it has shareholders (hence the need for stock, which establishes ownership) and those shareholders elect a board of directors. In privately held companies, the directors are usually also the shareholders as that is how control over a company is first established and then maintained. The directors then choose the corporation’s executive officers, such as the CEO, CFO and COO. Again, in privately held company’s these are usually the shareholder-directors.
Fast forward to December 19, 2012, Jerry Henry is the only one listed as a Board of Director. He files an amendment to the company’s original Articles of Incorporation and increases the number of stock shares from 1,000 to 100,000 and creates two separate class of stock—a preferred class comprised of 10,000 and a common stock class comprised of 90,000. Now, there is only really two reasons to increase stock so dramatically: you are either trying to devaluate the stock or you are anticipating a big pay-out and need to “spread the wealth” so it’s not so obvious to your bank or the IRS.
For those who don’t know, Midwest Pipe & Steel sells steel pipes. The kind used to replace water and sewage pipes that break. The kind that will be used in a certain federally mandated sewer project. And the kind that are used to create water and sewer lines in newly constructed skyscrapers (Ash Brokerage), new housing developments (Cityscape Flats), and public-private partnerships (Parkview Field/The Harrison).
Jerry Henry builds ‘em---uh, erh, lays pipe. And Larry Shine—who works as a City Attorney in the Mayor’s Office (according to that pesky tell-tale Indiana Roll of Attorneys). Specifically, Larry Shine works in the Redevelopment Commission. This is the City department that is responsible for selecting which areas of our community get designated as “blighted,” so that interested parties can come in and buy real estate at near rock bottom prices.
Here's how this all works: After all the “blighted” real estate has been bought by private third parties, then the City comes in and purchases the properties for more that they were bought (and in many cases more than they are worth.) Once the City buys the properties, then the properties are “salvaged” for metals, brick, concrete, and anything else that can be recycled for a profit. When salvage is complete, then whatever remains of the house gets torn down. In the case of housing projects and private-public partnerships, the City brings in infrastructure and by infrastructure—I mean they lay water and sewage pipes.
Now how does one get in on this deal? Well, you have to be in positions to control city bids, navigate and negotiate favorable contracts, and simply---just be in the “know” of things. Oh, and have the necessary resources to take advantage of the opportunities you create. Sadly, though, you don’t even really need to have the “necessary resources” to take advantage of this opportunity. Government projects are guaranteed to pay. A contract can be negotiated to include a percentage of payment upfront to cover any costs and then payments on the back-end for the rest of the contract’s terms. It’s a pretty common contract tactic—one I, myself, have negotiated once or twice.
Riverfront development going on at the same time as the federally mandated sewage project---that is a pipemaker and pipe layer’s dream come true. The amount of pipes needed and the amount of money guaranteed to be paid is phenomenal.
When you vote for Henry-supported or Shine-supported candidates, what you are really voting for is your tax dollars going to support their private business enterprise.