It has come to our attention that not everyone out there is a financial professional (and aren’t you glad, as I am, that you and I are not?) But understanding the basics of what can be a very complex world isn’t easy…until your Uncle Ghost ‘splains it to you. So here goes. This will help now and as the weeds of crime bear even more bitter fruit in Florida. Ready? Let’s go.
Bob Iger via New York Times Events YouTube
There are things called bonds.
Bonds are simply (or not so simply as we’ll see) documents/contracts that are a popular way that organizations borrow money, offering interest to investors for the use of their money.
They are legal documents in a way similar to loan documents you may have signed at a bank, but they are bigger, more complex, and regulated by state and federal law.
Corporations issue bonds but when they do, (a) the interest they pay you on your investment is taxable so you pay the IRS on those interest payments and (b) the corporation doesn’t have to specify what they’re going to use your money for–it can be for virtually any legal purpose they choose. AND if the company goes belly up, you lose. You read the prospectus, judge the content, take the risk, they pay the bennies, you pay your taxes, and you all hope it works out.
Mickey walks down Main Street USA at Disneyland. (Credit: Mortimer Productions)
BUT…municipalities (i.e. cities, states, counties, governments) ALSO issue bonds but these have serious differences:
FIRST, to encourage people to invest to help the community, the interest you get is tax free–usually the rate of interest is lower than the corporate bonds because those have to compete with these, but when you get it, it is “free” money without any IRS obligations for you.
Second, however, the municipal bond has to state specifically what it is going to use the money for–a power plant, a sewer, roads, other things that benefit the taxpayers/residents/businesses of the municipality involved—importantly ALL of them regardless of what neighborhood, business, company etc. they’re in. Water, power, roads are for everyone. Fire departments and police and schools and parks and airports are for everyone. That’s why Municipal bonds have tougher rules on disclosure, honest representations, etc. etc.
Walt Disney World sign via Orlando Streets YouTube
Well…what if a government issues municipal bonds, but that government is partial to ONE entity within their territory. What if they claim the funds will be used for everyone, but they are actually used ONLY to benefit ONE company. What if that municipal government issuing these municipal bonds has been, yes, BRIBED by that company and issues these municipal bonds ONLY to benefit the one company? And what if the OTHER entities in the district who DON’T get their rightful benefit from the projects paid for by these bonds are actually competitors with the company that does and still pay taxes to that municipality?
Haven’t those other entities been cheated? Haven’t investors and regulators been lied to? Isn’t all this illegal as heck? You’re not a lawyer, I’m not a lawyer but we can all agree that if that happens, yes…yes it is indeed as illegal as heck. Maybe more.
Mickey Mouse in The Prince and the Pauper (1990), Walt Disney Animation
RELATED: Disney World Cities and How We Got to this Place: A Seedy Reedy Creek Story
Example? What if they issue a municipal bond saying it will do general improvements of the area they control, but all it does is build three big parking garages next to a shopping mall owned by one company that ONLY benefits ONE company–it is near NOTHING that isn’t owned by that company and ONLY customers of that ONE company and their tenants will ever park there–the SAME company that is giving employees and officers at the allegedly-independent government that approves this freebies and goodies and perks and even paying their individual property taxes for them to get them to help them specially, in the case of the parking garages (only one case among many) to the tune of SEVEN HUNDRED MILLION BUCKS!
(OH, and those perks and goodies the governmenr employees thinks are gifts? What if the company getting the parking lots paid for—and a lot more– is actually BILLING the govt. for them afterwards and IT, the “government” that is supposed to benefit ALL the companies in its jurisdiction, not just the one, is PAYING for them out of general tax revenues, including those that come from those other entities in the district who don’t get the benefits OR the perks?)
Kaitlin P. and Sorcerer Mickey via Disney Parks YouTube
ALL of this breaks all the laws for such bonds, all of that is both a state and federal crime and a fraud, and that is what it looks like happened over and over again for decades in the area in Florida we’re talking about. There’s proof—the “exhibits” attached to the recent audit of the Reedy Creek Improvement District has the receipts and has forwarded them to the appropriate regulators and lawmen….lawpersons…whatever.
Oh, and y’know what’s worse? When the company that’s benefitting from these Municipal Bonds itself employs the person who is actually selling/trading the bonds themselves, potentially without being licensed or qualified to do so, and selling these “municipal” bonds from an email address that is a dot.com of that selfsame COMPANY, Disney, that benefits?
Cinderalla’s Castle in Walt Disney World via 4k WDW YouTube
And now…one last what-if to imagine: What if this isn’t one bond or ten bonds or one year or ten years but an ongoing practice that has been going on for DECADES without any outside authorities knowing about it until now? How MANY criminal and financial laws have been broken how MANY times?
Simply put, dear friends and readers, it is beginning to appear and the documents and evidence prove it, that the answer is…lots. A whole lotta lots.
And now you know. (putting on my best Maui/Rock voice: ) “You’re welcome!”
