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Thread: Will another GOP gov fall? Major scandal headed toward Sarah Palin?

  1. #31
    Elite Member WhoAmI's Avatar
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    None of the above is bad enough to damage her stature among her fantards. So she pays some penalties. This is not an iceberg.

  2. #32
    Elite Member Fluffy's Avatar
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    ^I don't think anything will diminish her stature amongst her fantards. Amongst other, normal people, it's still a possibility. She could be convicted on murder charges with video proving she did it and her fantards would still believe she's innocent. They really are a cult at this point.

  3. #33
    Elite Member WhoAmI's Avatar
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    Yeah, probably the only thing that would damage her was if she had an abortion. They wouldn't care if she murdered a "born" person. They would also hate her if she claimed to be Muslim. Or had an affair with a woman (who wasn't one of them).

  4. #34
    Elite Member Fluffy's Avatar
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    It crossed my mind this morning that perhaps the IRS is investigating Palin for tax fraud for not declaring all the per diem(s) she received from the Alaska government while living in her home. She would have done this on her '07 and '08 tax returns, which would definitely be within the 3-year statute of limitations. Perhaps the "embezzlement" claim comes from receiving a meals per diem while living in your own home? After all, usually people receive per diem reimbursement because they are living away from their homes, not in them.

    An article on this from the Anchorage Daily News in February.
    Palin owes tax on per diem, state says
    EXPENSES: Governor received meal money while living in Wasilla.


    (02/17/09 21:53:17)
    Gov. Sarah Palin must pay income taxes on thousands of dollars in expense money she received while living at her Wasilla home, under a new determination by state officials.

    The governor's office wouldn't say this week how much she owes in back taxes for meal money, or whether she intends to continue to receive the per diem allowance. As of December, she was still charging the state for meals and incidentals.

    "The amount of taxes owed is a private matter," Sharon Leighow, Palin's spokeswoman, said in an e-mail. "If the governor collects future per diem, those documents would be a matter of public record."

    The revelation about Palin comes as U.S. senators, including Sen. Mark Begich, D-Alaska, are under scrutiny over back taxes. A survey by the political newspaper and Web site Politico ( found that Begich was one of seven senators who acknowledged having paid back taxes.

    Some other state employees also owe back income taxes for travel payments and will be getting revised tax forms, Annette Kreitzer, state administration commissioner, said in an e-mail.

    She wouldn't say which, or how many, employees will be receiving the notifications.

    The payments became a touchy issue for Palin last fall when she was running for vice president and campaigned as a budget watchdog.

    The Washington Post published a story in mid-September that said she had charged the state almost $17,000 for meals and incidentals while staying in her own home.

    The state considers Juneau, where she lives in the Governor's Mansion, to be Palin's official duty station.

    Palin billed the state for 312 nights spent in her Wasilla home during her first 19 months in office, according to the Washington Post. She received $60 a day tax free, money intended to cover meals and incidentals, while traveling on state business, her travel forms show.

    "Last fall we raised questions about longstanding practices within the Department of Administration regarding tax treatment of per diem payments," Kreitzer wrote in an exchange of e-mails over the past few days with the Daily News.

    "At the Governor's request, we reviewed the situation to determine whether we were in full compliance with the pertinent Internal Revenue Service regulations," Kreitzer wrote. "As a result of this review, we determined that per diem needs to be treated as income, requiring a revision of W-2 forms for any affected employees."

    The new determination by administration officials won't affect state lawmakers, said Pam Varni, director of the Legislative Affairs agency.

    Under IRS guidelines, legislators receive tax-free payments to help with living expenses while in Juneau for the legislative session -- if their home is at least 50 miles away, Varni said.

    The current rate, set by the U.S. Department of Defense, is $189 a day. That goes to everyone except the three Juneau-based legislators, who get smaller payments that are taxed as compensation.

    Legislators can also charge the state $150 a day for time spent on state business when the Legislature is not in session, but those payments are taxed as income, Varni said.

    Begich's situation came to light through a political survey released last week by Politico about senators and their taxes.

    Fifty-five senators, including Sen. Lisa Murkowski, R-Alaska, didn't answer the questions, and a few others owed money but didn't consider it "back taxes" for one reason or another.

    On his way out of a meeting with veterans on Monday, Begich answered a few questions about the back taxes he paid on a vehicle provided to him by the city when he was mayor.

    "I refused the car the first 10 or 12 months," Begich said. "I didn't want the car.

    "Then they told me I had to have it because of liability and a need and security and blah, blah, blah. So I ended up getting a used car. The first time a mayor has gotten a used car." It was a former police SUV.

    The tax obligation came to his attention in late 2007, as he remembers it, after a regular IRS audit of city issues. The city then sent him revised tax statements.

    "They gave me a letter and said you got to pay taxes on it. So they revised my W-2s." He wouldn't say how much he owed. "It's irrelevant," Begich said.

    Generally, people are supposed to pay income taxes on the value of an employer-provided vehicle that is for personal use. Police vehicles are among the exceptions -- officers can drive them home and not be taxed on the value of the commute.

    There's no specific exception in the law for mayors or governors. Palin has had a state Chevy Suburban.

    Begich said a mayor is always on the job. No other Anchorage mayor ever had to pay income taxes on a city vehicle, he said.

    "That's the point. I'm always on call. Always. ... And I think that's what the city's view was, for the city manager and me, was that we were always on call," Begich said. "But the IRS viewed it differently."

    "After that issue came up, I got rid of the car," Begich said. He was in a downtown parking lot getting into the Toyota Highlander hybrid he bought in late 2007 to replace the city rig.

    The Politico story about the survey said his situation echoed that of Tom Daschle, who had to step down as President Barack Obama's pick for health secretary after revelations about back taxes, including taxes owed for a limo and driver.

    "For Politico to say it's the same as Daschle -- that's bunk," Begich said.

    Palin owes tax on per diem, state says: Gov. Sarah Palin |
    If the IRS learned about this from the ADN story in February, then perhaps that's why rumors of an IRS investigation started a few months later in April/May?

    Some people have noted that in Alaskan law the governor and lieutenant governor are not "employees of the state" unlike legislators, so Palin shouldn't be claiming per diem.
    Sarah Palin is not a state employee

    Sec. 39.20.060. Exclusion of governor and lieutenant governor from personnel laws.

    Notwithstanding the provisions of any other law, the governor and lieutenant governor are not considered employees of the state for the purpose of state personnel laws relating to hours of employment, annual leave, sick leave, overtime, compensatory time, and travel allowances. This section does not deprive the governor and lieutenant governor of the right to participate in the state retirement system or in state group insurance plans.

    There is a very big contradiction regarding this statute.

    The governor is not considered an employee of the state. In which case the entitlement to collection of per diem and travel allowances as detailed in the Alaska Administrative Manual - Accounting Travel does not apply to her. The whole manual refers to the entitlement and rules for state employees or approved travellers on state business.

    Is there a separate manual for the governor? If she is not a state employee for the purpose of travel allowances, she falls outside the scope for collecting the said allowances. In other words, she should not be entitled to collect per diems or charge the state for travel expenses. By the same token, her family should not be entitled to reimbursements because they are not state employees or approved travellers either.

    Sarah Palin can't have it both ways. The statute excludes her from the provisions detailed in the manual, but she claims expenses according to the manual?

    Obviously there is a possible get-out clause.

    The statute may be interpreted as exempting the governor from complying with the rules in the manual, but retaining entitlement. So there should be a separate set of rules that applies to her regarding travel and other expenses.

    If there are not clearly stated rules covering these expenses, does the statute mean that the governor is simply not accountable?

    Why did the Personnel Board go through the pretense of investigating the ethics complaint filed by Frank Gwartney against the governor when they could have quoted the statute and end the matter there and then?

    None of this makes any sense!

    palingates: Sarah Palin is not a state employee
    Frank Gwartney is the man who filed an ethics complaint for the state paying for Palin's children to travel along with her.

    Sarah Palin's wrongdoings

    It's nearly time for Sarah Palin to cough up the money she owes the state for her children's travel. The ethics complaint filed by Frank Gwartney last October wasn't frivolous after all!

    Alaska Gov. Sarah Palin has until June 23 to reimburse the state for an estimated $10,000 in costs associated with trips taken by her children, under an agreement resolving an ethics complaint against her. The board found no wrongdoing on Palin's part. (as usual)

    There were 72 trips and Sarah Palin will reimburse the state for 10 of them.

    That's between her and the state of Alaska.

    What I would like to know is how the IRS regard these trips. I have seen the Palin's tax return for 2008 but can't find the link anymore. I don't remember seeing any money for travel by her family members listed as income in there. There's no mention of travel on the 2007 document either.

    Sarah Palin had to amend her tax returns and pay tax on her per diems. Did she pay tax on the family travel as well?

    If she had to pay tax on her own per diems as a legitimate state official, I would expect the family travel to be even more taxable as they hold no official position in the Alaska government.

    I re-read all the ADN articles related to both the per diems and the family travel but couldn't find any questions about tax on the latter. All I could find was that she was completely innocent of any wrongdoing, but being a good girl she decided to pay the state back for some of the travel out of the goodness of her heart.

    In an article dated October 5, 2008, Jack Bogdanski discusses this very subject:

    There is no question whatsoever that the payments for the Palin children's travel -- $24,728.83 -- were indeed taxable to Governor Palin. The money paid for Todd Palin's travel -- $18,761.37 -- might possibly turn out to be tax-free, but it would be quite a stretch. And the per diems and other travel payments to the governor herself ($16,951) may or may not be taxable, but certainly not because state law or the state payroll office says so.

    (More on this from TaxProf)

    What's Sarah Palin's tax liability, then? Certainly not on the $10,000 she's giving back because she did nothing wrong, but what about all the other children's trips and Todd's travel during her time in office?

    palingates: Sarah Palin's wrongdoings

  5. #35
    Elite Member Fluffy's Avatar
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    Some info from tax professors:
    September 10, 2008

    Sarah Palin's Tax Problem

    From today's Washington Post: Palin Billed State for Nights Spent at Home; Taxpayers Also Funded Family's Travel, by James V. Grimaldi & Karl Vick:
    Alaska Gov. Sarah Palin has billed taxpayers for 312 nights spent in her own home during her first 19 months in office, charging a "per diem" allowance intended to cover meals and incidental expenses while traveling on state business.

    The governor also has charged the state for travel expenses to take her children on official out-of-town missions. And her husband, Todd, has billed the state for expenses and a daily allowance for trips he makes on official business for his wife.
    Palin, who earns $125,000 a year, claimed and received $16,951 as her allowance, which officials say was permitted because her official "duty station" is Juneau, according to an analysis of her travel documents by The Washington Post.

    The governor's daughters and husband charged the state $43,490 to travel, and many of the trips were between their house in Wasilla and Juneau, the capital city 600 miles away, the documents show.
    Jack Bogdanski (Lewis & Clark) outlines the tax problems Governor Palin faces as a result of these per diem payments in Governor Palin, Your Tax Return, Please:
    "Per diem" allowances received by an employee can legally be omitted from her gross income if they constitute reimbursements for amounts that the employee could have deducted as business expenses had the employee paid for them out-of-pocket and not been reimbursed. Thus, for Palin, the tax question would appear to boil down to whether, had she not been reimbursed for the $60,441 of travel, meals, and lodging expenses, she could have legitimately taken business deductions for them.

    It does not appear that such deductions would have been allowable for any amounts attributable to travel by her husband and children. Section 274(m)(3) of the Internal Revenue Code strictly forbids deductions for bringing spouses and dependents along on business travel unless the spouses and dependents (a) are employees of the taxpayer (here, the taxpayer is the governor), (b) are travelling for a bona fide business purpose, and (c) would otherwise be entitled to deduct the travel on their own tax returns. Unless Palin's spouse and kids are also her employees and she can show that they were away on their own businesses, their expenses would not be deductible by the governor. And therefore she cannot exclude from income any per diems attributable to any of them. (By the way, since she's the employee, the income would be required to be reported on her own return, not her kids'.)

    As for her own travel, Palin could also run into tax problems. Only travel "away from home" qualifies for tax exclusion (or deduction), and for this purpose, one's "home" is generally the principal place of one's business. In this case, the governor reportedly works out of offices in both Anchorage and Juneau, but since she has only one state job, she can declare only one of those as her tax "home." If Juneau is her tax "home" (which would seem to be the case, since that's the capital), she cannot exclude or deduct meals and lodging expenses incurred in Juneau, and if Anchorage is her tax "home," she cannot exclude or deduct such expenses incurred in Anchorage or Wasilla. If she got per diem reimbursements for stays in both places, stays in only one place would appear to be excludible or deductible. And perhaps more importantly, the cost of regular commuting between one's residence and one's tax "home" is not deductible at all, no matter how long the distance between them; it is certainly possible that Palin's treks between the two locales are simply long-distance commuting for tax purposes.
    See also:TaxProf Blog: Sarah Palin's Tax Problem
    October 6, 2008

    Tax Profs Agree: Gov. Palin's Tax Returns Are Wrong

    Jack Bogdanski (Lewis & Clark) & Bryan Camp (Texas Tech) have independently reviewed the tax issues raised by the release of Gov. Palin's 2006 and 2007 tax returns and financial disclosure form, as well as the remarkable opinion letter issued from Washington D.C. tax lawyer Roger M. Olsen. Jack and Bryan conclude that there are serious errors in Gov. Palin's returns as filed and that she and her husband owe tens of thousands of dollars in additional taxes.

    Jack Bogdanski, There's No Debate: Palins Owe Thousands in Back Taxes:
    There is no serious debate (at least, none that has been brought to our attention) about the fact that at least the amounts paid for the children's travel -- $24,728.83 in 2007, according to the Washington Post -- are taxable. The campaign's tax lawyer has got at least that much of the law, and perhaps more, wrong. ... The Palins, who had their tax returns done by HR Block, simply got it wrong. And the fact that the state payroll office got it wrong, too, doesn't erase the Palins' unpaid tax liability.
    Bryan Camp, A Brief Analysis of Governor Palin's Tax Returns for 2006 and 2007:
    The release of an opinion letter by attorney Roger M. Olsen dated September 30, 2008, has stirred up the pot once again about the accuracy of Sarah and Todd Palinís 2006 and 2007 tax returns. Not only that, but Mr. Olsenís letter raises a couple of new issues.

    This paper focuses on five problems: three raised in the tax returns and two new ones raised by Mr. Olsenís letter. Hereís a summary of the five problems and my conclusions, for those who want to cut to the chase. My analysis will follow.
    1. The Palins did not report as income some $17,000 that Governor Palinís employer (the State of Alaska) paid her as an ďallowanceĒ for her travel. Can they do that? Yes, most likely.
    2. The Palins did not report as income some $43,000 that the State of Alaska paid the Governor as an ďallowanceĒ for her husband and childrenís travel. Can they do that? No, most likely not.
    3. The Palins deducted $9,000 on their 2007 return, claiming it was a loss from Mr. Palinís snow machine racing activity. Can they do that? Most likely not, but more info could make the deduction OK. If any of the above issues goes against the Palins they then risk getting hit with the section 6662 penalty for ďnegligence or disregard of rules or regulations.Ē
    4. Can the Palins avoid the section 6662 negligence penalty by claiming that they reasonably relied either (a) on the W-2ís sent to them by their employer, which did not reflect either the $17,000 or the $43,000, or (b) on their tax return preparer H&R Block, or (c) on Mr. Olsenís opinion letter dated September 30, 2008? The three reliance defenses are unlikely to succeed, but more info may make the (b) defense a good one.
    5. Does Mr. Olsen have any exposure to sanctions by the IRS because of his letter? I believe Mr. Olsenís letter probably violates 31 C.F.R. section 10.35. If so, he would be exposed to possible sanctions from the IRS Office of Professional Responsibility.
    TaxProf Blog: Tax Profs Agree: Gov. Palin's Tax Returns Are Wrong
    I looked at the Palin's 2007 tax return via a link in the post above. They're still listing their mortgage on there. Perhaps that trust issue is still an issue if they're not claiming the value of their mortgage correctly.

  6. #36
    Elite Member WhoAmI's Avatar
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    Still, none of this will take her down, which I'm assuming the "iceberg" reference is referring to (she's the Titantic; it sinks her). She'll just have to pay some back taxes/penalties after she says she didn't know she did anything wrong.

  7. #37
    Elite Member Fluffy's Avatar
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    ^Yeah I agree. I'm kind of wondering if what "it" is. Would be something we've never even heard about? You know how Donald Rumsfeld said there were "unknown unknowns." Taking Phil Munger at his word (My understanding is that THIS IRS thing is not the same IRS thing as "the iceberg.") it's hard to know what's what. Is speculation about her per diem and her mortgage the "THIS IRS thing?" Gryphen, the Alaskan who runs the Immoral Minority blog, maintains that the "iceberg" is real and "it is huge." Don't know what to make of that. I just can't help but wonder how deep the IRS is digging and what they'll find.

    But all this talk of an "iceberg" headed toward the "SS Palin" has happened at the same time of some new public feuds. There was the David Letterman thing. And recently Palin's spokeswoman lashed out at photoshopped picture of Palin and Trig that was posted on an Alaskan's blog. (An Alaskan who just raised all the money to get some Palin emails that she clearly doesn't want released.) I just can't help but wonder about the PR timing. Is Palin trying to set up a meme of her as a victim, where people are always picking on her? Well, I suppose her base already thinks that. But perhaps she's trying to get folks beyond her base to believe that? I think that might explain the Letterman thing. Photoshopped pics and comedians weren't a worry a couple of months ago, and now they are. And of course, there's that legal fund of hers created due to the ethics complaints. Palin complains that the ethics complaints have cost Alaska millions of dollars and she needs a huge fucking legal fund to pay her bills. Palin claims her legal bills are $600,000, which stretches belief. Yet most of these complaints haven't gone beyond the personnel board, so how can it cost Alaska "millions of dollars?" Even one of her conservative critics was skeptical of her "legal fund." Is she just grifting like she did with per diems & travel expenses? Or is she preparing to fight a larger legal battle? And knows that she has to get the cash now because her supporters aren't going to be so free with their cash down the road...

  8. #38
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    The Palins really are hick dumbasses if they get H&R Block to prepare their taxes.

  9. #39
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    I think she's doing her international traveling to gain support for something that's going down.

    Is Dairygate going to finally be coming to a head?

    I read somewhere that the only ethics complaint that cost money was the one she filed against herself with the Wooten affair. She spent a lot on lawyers for that shit.

    BTW, AKM is on Shannyn Moore's show right now (10 pm EST):

    KBYR - Smart Radio 700 AM Anchorage, AK - Listen Online
    Last edited by WhoAmI; June 27th, 2009 at 09:07 PM.

  10. #40
    Elite Member Fluffy's Avatar
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    Quote Originally Posted by WhoAmI View Post
    I think she's doing her international traveling to gain support for something that's going down.
    I think so too.
    Quote Originally Posted by WhoAmI View Post
    Is Dairygate going to finally be coming to a head?
    "Dairygate" is a topic that whenever I've read about it, I have a hard time connecting the dots. I read lots of Andrew Halcro's posts on it last year during the election. But not being an Alaska local, it was always a bit confusing.

    The rundown I found on the palingates blog helped a bit, but I don't know exactly how they would be able to connect Palin to "embezzlement" from this post.
    Sarah Palin's Dairygate

    Dairygate is a very complicated story. Researching it made me dizzy, so I'll try to keep it as concise as possible and provide links for further reading. I could be here all night and not make much sense at all. So what's new? Most of the accounts concerning Sarah's gates seem to elicit the same question, "Does this make any sense to you?"

    Take a deep breath, here we go!

    In 2007, the state Board of Agriculture and Conservation (BAC) considered a request for $600,000 to the state for a review of the operating expenses of the Matanuska Maid Dairy, an unprofitable state-owned business. Milk prices were too high and competition from national brands was impossible to match. The Alaska Creamery Board, a sub-committee of the BAC, which oversaw the dairy and made the request, met in May and discussed privatizing or possibly closing the dairy. It subsequently voted to close it, and on June 13 the Board rejected Sarah Palin's public request that it keep the dairy open, saying it stood by its decision to close the dairy plant as of July 7.

    On June 18, Palin fired the entire membership of the BAC, and replaced them with an assortment of Mat-Su Valley residents, all without any experience in running a dairy, but with family or business connections with the Valley's milk producers, which then installed itself as the Creamery Board, and voted to keep the dairy open for 90 days while reviewing options. The loan was immediately approved and payments to the milk farmers connected to the Board continued uninterrupted. On August 29, 2007, Palin announced that the business could not be made profitable and would be offered for sale. It had suffered $300,000 losses. She said that the board could use the $600,000 help with the transition to a private operator.

    On December 7, with a required minimum bid of $3.35 million for the dairy, no bids were received and all dairy operations were scheduled to close later that month. Two of the Valley's dairy farmers came forward and offered to lease the equipment to start their own dairy and a further grant of $200,000 was made available to them, provided they started production at the now renamed Matanuska Creamery by the end of December. They only started operations in March 2008, but received the grant anyway. Matanuska Creamery is owned by one of the biggest milk farmers in the area, Kyle Beus, and Robert Wells, a Mat-Su Borough Assemblyman, who is also president of Alaska Farmers and Stockgrowers Inc.

    On top of the two grants provided by the state, Ted Stevens arranged a $634,000 USDA grant for Beus and Wells' new venture, Matanuska Creamery, in March of 2008.

    Between September and November 2008 Matanuska Creamery applied for a further loan from the state. After much wrangling over personal guarantees, which were removed in a meeting on November 21, the Board, which is comprised of Governor Palin's appointed friends and neighbours, ended up voting to give the Mat-Su Valley business a $630,000 loan. The BAC approved the unsecured operating loan fully knowing that the business did not have the cash flow to make the payments.

    Matanuska Creamery didn't have a very good start. 30,000 pounds of cheese in their cold storage, which had already been sold in "cheese futures" deals without insurance, were found to be contaminated with e.coli, listeria and staph and had to be thrown away. Matanuska Creamery made a loss of $250,000.

    This is an extremely simplified account of all the shenanigans that went on in the transition from state owned MatMaid to privately owned Matanuska Creamery.

    The cost of privatizing MatMaid cost the state of Alaska more than $1,4 million so far. Add the $634,000 in federal grants and the costs are astronomical, considering that it was seen as a failed operation as far back as April 2007.

    Hey, it's only taxpayers money and it keeps Sarah's pals in Wasilla and Palmer in business, so what seems to be the problem?

    palingates: Sarah Palin's Dairygate
    Hmm... perhaps this quote from Andrew Halcro back in 2007 is key:
    Why isn’t Governor Palin ensuring Matanuska Maid’s assets are being used to satisfy creditors? Where in the world is Alaska's ethical political king of the jungle?
    Dec 28: Looting Matanuska Maid As The Lioness Sleeps. |

  11. #41
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    You know she feathered her nest in some way, since so many of her high school buds were involved.

    It's kind of a boring story, though. Hopefully she's being investigated for something more fun.

    Celtic Diva is coming up on the radio next to talk about the Saint Sarah photo flap.

  12. #42
    Elite Member Fluffy's Avatar
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    Just read two posts on Daily Kos, which gives a more in-depth explanation. After reading both of them, yeah, if it's "Dairygate" as the "embezzlement" thing, it sure could be big.
    DairyGate: Palin and the Mystery of Matanuska Maid

    by RobertoW

    Sat Aug 30, 2008 at 09:19:14 AM PDT

    A follow-up/re-telling of my post from yesterday, with actual links at the bottom.

    Sarah Palin is touted as a "clean government" reformer whose insistence on fiscal responsibility has been shaking up Alaskaís corrupt political culture.

    The truth, as the Matanuska Maid story illustrates, is quite different, and far stranger.

    Matanuska Maid was a failing, state-run dairy that had lost about $600,000 over two years when the state Creamery Board finally decided to shut it down in the spring of 2007.

    Sarah Palin felt so strongly that Matanuska Maid should continue operating that she fired the entire state Board of Agriculture and Conservation, which appoints the Creamery Board, just to install new members who would reverse the Creamery Boardís decision and keep Matanuska Maid alive.

    Sustaining a money-losing state-run business certainly doesnít sound like fiscal responsibility. But neither does increasing the price the hemorrhaging enterprise pays for milk, which is precisely what the Creamery Board did, making it even more likely Matanuska Maid would not be able to continue as a viable entity.

    In June of 2007, Matanuska Maid eked out a small profit. In July, however, it lost almost $300,000. So, after first going to extraordinary lengths to keep Matanuska Maid alive, then imposing the equivalent of a death sentence (raising the dairyís already high expenses), Sarah Palin came to the same decision the fired Creamery Board had several months before Ė Matanuska Maid had to be shut down.

    There are several puzzles here crying out to be deciphered. Why would someone so frugal that she sold off the former Governorís plane support a failing state-run business? Why would she then raise its expenses and, when the expected result occurred - a large loss Ė abruptly decide to shut the operation down? Was her intention all along to get rid of a white elephant? If so, why didnít she simply go along with the original Creamery Boardís decision in the spring?

    Things just continued to get stranger that fall. Rather than sell off the assets of an obviously doomed enterprise, Palin decided to auction off Matanuska Maid as a going concern because "they would get more that way". Why any frugal businessman or prudent investor would want to purchase a concern that couldnít make money even with hefty state subsidies apparently didnít occur to Palin, who set the minimum bid for Matanuska Maid at $3.3 Million. The auction, held in December 2007, attracted exactly no bids, while the doomed dairy continued to operate at a loss. The equipment of the Dairy was finally sold off for $1.4 million.

    Most of the equipment, anyway.

    For while the state was attempting to arouse interest in the Matanuska Maid that winter, Kyle Beus, who had been one of Alaskaís biggest dairy farmers in more flush times, took over another struggling operation November 1st outside Palmer, near Palinís own hometown of Wasilla.

    Beus faced what seemed like impossible odds: if a state-subsidized dairy was already losing hundreds of thousand of dollars, what were the odds he could make a go of it on his own, when all around him other farmers were going out of business? Not to mention the possibility that someone with deep pockets and a lot of optimism might buy the Matanuska Maid at auction and immediately threaten his livlihood.

    But by December the remote possibility of competition(if it in fact even existed) was gone. And by March, Beus began purchasing milk from local farmers, because things really started going his way. According to a March 31st article from the Anchorage Daily News, "the state Creamery Board, which controls Mat Maid property, provided 71 pieces of equipment to Beus' nascent dairy for a monthly fee of $1,966 a month, or $23,601 a year," a lease figure based on an appraisal for most of the equipment at half its market value.

    In other words, the Creamery Board appointed by Palin the prior June to give Matanuska Maid a new lease on life ended up giving Beus his own very favorable lease.

    Perhaps this was coincidence, but it starts to look like Beus getting back into the dairy business was meant to be.

    Even better for Beus, more help was on the way. The Anchorage Daily News reported May 31st that Matanuska Creamery "got off the ground with help from a $643,000 U.S. Department of Agriculture grant and a lot of support from Stevens and from state Senate President Lyda Green, R-Wasilla". Stevens and Don Young even turned out for a big ribbon-cutting ceremony, their presence testifying to the uncorrupt, newly responsible way things now work in Alaska, thanks to Sarah Palinís vigorously cleaning house.

    But while Dairygate looks definitely sleazy to me, maybe Iím taking a parochial, Lower 48 view. To an Alaskan, what Sarah Polin did just looks like an innovation in fiscal management. After all, what happened here, aside from a little deception, insider-dealing and rank hypocrisy?

    A failing state-run enterprise supported by Alaskan taxpayers ends up reborn as a private enterprise, run by a struggling local businessman and subsidized by Federal taxpayers.

    To the locals, what a win/win: why should Alaskans have to support the local dairy farmers that bring them fresh milk and cheese, after all, when they have Uncle Ted and Uncle Don (and Aunt Sarah) around to make sure Uncle Sam picks up the tab?

    Now for some links:
    Palin Board firing:
    Milk Price increase:
    Mat Maid sale/no bids:
    Mat Maid equipment auctioned off:
    Beus leases Mat Maid equip:
    Matanuska Creamery opening/Grant:

    As I mentioned yesterday, going to and searching for "Matanuska Maid" gives plenty of related stories. One unexplored angle is the many suppliers, contractors and laborers who provided goods and services to Matanuska Maid and were apparently never compensated.

    In reality, not all the locals ended up winning - just the well-connected ones.

    Daily Kos: DairyGate: Palin and the Mystery of Matanuska Maid
    A federal grant was involved? Perhaps that's what the crackpot commenter was talking about when he wrote, "and Palin tried and now she shall get "tried" in a federal court..."

    The Kristen Cole mentioned below is the chick who runs Palin's "legal fund" currently. After reading this, I'm more convinced than I was before that Palin heartily embraces cronyism.
    Dairygate 2: More on Palin and the Matanuska Maid scandal

    by RobertoW

    Sun Aug 31, 2008 at 11:02:09 AM PDT

    Further research has revealed just how blatantly sleazy Alaskan politics can be.

    Since my last diary, Iíve gleaned many additional details concerning Sarah Palinís corrupt, fiscally irresponsible, and almost comical mismanagement of the last days of a failing Alaskan state-owned dairy. What Iíve learned has confirmed my worst suspicions. Matanuska Maid is no longer a mystery to me: itís a scandal that shreds forever the myth of Sarah Palin as a government reformer and fiscal conservative.

    Iím extremely indebted to Andrew Halcro, an Alaskan businessman, newspaper columnist and radio host. Below I link to the most pertinent of his blog entries and related local items. Or you can go to | and search on "Mat Maid".
    For my earlier account of Dairygate, go here:

    In the summer of 2007, Matanuska Maid, the 70-year-old dairy the state had taken over in the 1980ís, was probably beyond saving. The rising cost of milk, and price competition from national brands, made it unlikely the struggling dairy would ever make its way back to profitability. Alaskans are practical, independent and a little sentimental. The Matanuska Maid logo was a treasured icon in southern Alaska. As one of the few buyers of local milk, its closing would have ripple effects throughout the local agricultural community. But giving out precious tax dollars so a few well-connected dairy farmers could make products most Alaskans couldnít afford to buy didnít make much sense to the Creamery Board, the Board of Agriculture and Conservation(BAC) subcommittee that had direct oversight of the state-owned company. So they refused a $600,000 state grant to keep Mat Maid going, and did what they felt they had to do as responsible overseers: put the troubled dairy out of its red-ink-drenched misery.

    Palin was outraged at this callous disregard for the well-being of local farmers, and insisted the dairy simply needed to be properly managed. Radical measures clearly needed to be taken. Palin fired the whole BAC. The new Board Palin appointed quickly designated itself as the new Creamery Board. This group of local notables was much more likely to keep Mat Maid alive: it was composed solely of relatives and associates of the dairy farmers most likely to benefit from continued milk purchases by Mat Maid.

    But the farmersí political connections went even deeper: Franci Havermeier, Director of the Division of Agriculture, was the real estate agent for BAC/Creamery Board chair Kristen Cole. This connection was apparently sufficient to qualify Havermeier, a housewife, as Director over a well recognized agriculture industry expert and a UAF Professor with a degree in agricultural economics. Franciís father in law, Bob Havermeier, was one of the dairy farmers to benefit from the continued payouts by Mat Maid.

    We shouldnít be surprised that Havermeier was as unqualified as she was well-connected. None of Palinís appointees to the BAC had any actual expertise in the dairy field, either, just family or business ties.

    Once the new Board was seated and the death sentence on Mat Maid lifted, Palin immediately authorized paying out the $600,000 state grant to Mat Maid. The money disappeared into the corporationís general funds, where it was used to fund operations. Payments to the well-connected dairy farmers continued uninterrupted, even as other bills piled up. In my last post I mentioned how raising the price of milk Mat Maid paid to dairy farmers only made Mat Maidís economic predicament worse. The Creamery Boardís lack of experience running a dairy might explain such a violation of basic business sense, if it werenít for the fact that the beneficiaries of the continued payments were the Boardís own friends and relatives. By ignoring the taxpayersí interests and putting her own people in place, Palin was able to keep state funds flowing to thefavored few in her hometown of Wasilla and nearby Palmer.

    Of course, this naked money grab needed camouflaging. So the new Board spent several months, and tens of thousand of dollars, investigating the prior Boardís behavior, hiring an accounting firm (Mikunda, Cottrell and Company) to review the financial records of Mat Maid and look for the classic mismanagement trinity: waste, fraud and abuse. No significant improprieties were found.

    In August, Palin and the Board claimed Mat Maid was profitable again for June, making $62,000. Seven days later, the Board revealed that Mat Maid had suffered the worst financial loss in July in over twenty years, almost $300,000. The June profit was also reduced to $2,000. By September, the Board regretfully decided to close Mat Maid down, the same decision the prior board had come to three months, and about $900,000, earlier.

    The assets of Mat Maid now had to be disposed of, and some arrangement made for those long-suffering dairy farmers that would no longer have an outlet for their milk. A group of local dairy farmers, including Kyle Beus and Bob Havermeier, came forward as the Southcentral (sic) Dairy Joint Venture and proposed leasing Mat Maid equipment and taking over many of its operations if no outside buyer could be found. Other dairy operations, such as Northern Lights Dairy, were also interested, but had no chance to get involved: Franci Havermeier (who supervises the stateís assets manager, Ray Nix) went so far as to meet with her father in law and the Southcentral Dairy group in her office, a violation of conflict of interest rules but nothing out of the ordinary in an administration where Sarah Palinís husband would often sit in on official government business. Havermeier was later alleged to have threatened an employee who was suspected of disclosing these activities.

    The Board decided that fall to discontinue operations at Mat Maid in December, based on the Southcentral groupís assurance that they would be in a position to purchase and process milk from local farmers by then if the whole company couldn't be sold intact. Once the outside buyer option vanished, a favorable lease deal on Mat Maid equipment was made behind closed doors, and an additional state grant of $200,000 was dispensed on the understanding the group would be up and running by December. This money was used to compensate farmers who, having no outlet for their product, were forced to dispose of it.

    The taxpayers of Alaska, in other words, were now paying top dollar to pour thousands of gallons of raw milk into the ground.

    Throughout the last painful days of Mat Maidís terminal illness, Palin and the Boardís intention was never to minimize the stateís losses from Mat Maid and to realize the greatest return possible from a disposal of its assets. The comical attempt to auction off Mat Maid whole, a fiasco resulting in no bids at all that I covered in my last post, was most likely a delaying tactic to allow the Southcentral group to organize. From that point on, only a few local parties were kept in the loop, and benefited from the decisions made. Outside parties were actively discouraged from any involvement. Alaskan auction firms, with specific knowledge of the Alaskan market, were even excluded from bidding on the right to hold the Mat Maid asset auctions, which were finally conducted by out of state firms: apparently in this one instance just being local wasnít good enough.

    The pattern here, of incestuous insider dealing and total disregard of public interest and fiduciary responsibility, is monotonously repetitive and clear as a glacial lake. Corruption runs so deep in Alaskan political culture it looks as natural a part of the landscape as moose and snow.

    As it turned out, Kyle Beus and the Southcentral group were still setting up and learning how to operate their new machinery in December. Actual purchases of local milk didnít begin until March, by an entity now known as Matanuska Creamery. The $200,000 mentioned earlier was paid out anyway, in violation of the prior understanding. The farmers who directly benefited had meanwhile made no capital commitment of their own. As Halcro puts it, they had "no skin in the game". The "skin" came exclusively from state taxpayers.

    Mat Maidís books were officially closed in March 2008, even though they contained outstanding debts and pending law suits, in order for the Palin Board to claim the dairy had closed "in the black" (thanks mainly to cash remaining from the $600,000 and $200,000 state grants). The state was then left to pick up any additional payouts that might result. But the prolonged agony of Matanuska Maid was finally over.

    As Palin and her friends might have proclaimed: Mission Accomplished.

    So who really came out on top, in the end? Obviously not the state of Alaska and its taxpayers. One primary beneficiary of the Mat Maid closing was Kyle Beus, at one time Alaskaís largest dairy farmer. According to press reports he now owns the Matanuska Creamery with Mat-Su Borough Assemblyman Robert Wells, who is also president of Alaska Farmers and Stockgrowers Inc. There is some question about legal ownership. A blogger on Halcroís site claims that, while a search revealed no "South Central Dairy" entity of record and no business license in that name, it did turn up a business license for a "Valley Dairy", issued January 8, 2008 to Kyle Beus as sole proprietor. The Southcentral Dairy Joint Venture was possibly all along simply a front organization that Kyle Beus used to take over Mat Maidís dairy operations, lending a faux-populist flavor to a personal power play. The involvement of yet another local politician (Wells) in the whole sordid affair is just one more tile in a depressingly familiar mosaic.

    Beus has a spotty record at best as a businessman. The same blogger quoted above had this to add about him:

    "This is the same guy that the ARLF [Agricultural Revolving Loan Fund] charged off approximately $500,000 in a Deed in Lieu of Foreclosure Settlement (public information) AND currently has a IRS lien for over $40,000 (public record)."

    Beusí spotty record for financial acumen and integrity, however, doesnít seem to bother those Alaskan politicians, from Sarah Palin to Ted Stevens, who continue to shower him with state and federal largesse. Beus has personally received significant grant money in recent years. In April 2007 he received a $175,000 Federal grant for an ice cream production facility in Wasilla that was part of a $22 Million grant Ted Stevens arranged to support Alaskaís dairy industry. As I mentioned in my prior post, Stevens arranged a $634,000 USDA grant for Beusí new venture Matanuska Creamery in March of 2008.

    Thanks to Palin and Stevens, U.S. taxpayers have now stepped in to prop up a well-connected, if not totally trustworthy, local, in a business likely doomed to failure without additional infusions of taxpayer support. Alaskan taxpayers, exhausted after many months of carrying Mat Maid and politicianís relatives and cronies, must be breathing a deep sigh of relief that Uncle Sam's deep pockets are now open wide.

    A final, rather comical note: in order to raise money to pay farmers for milk before they had any actual product to sell, Kyle Beus and Robert Wells entered into an agreement with several local mining concerns to sell "cheese futures" Ė people would pay now to receive Matanuska Creamery cheese products several months later. According to a 7/31/08 Halcro post, however, "Matanuska Creamery has 30,000 pounds of cheese sitting in their cooler that the DEC[Department of Environmental Conservation] has found to contain e-coli, listeria and staph." Having sold $250,000 in cheese futures without any insurance, Halcro wasnít sure how Beus and Wells were planning to get out of another fine mess of their own making.

    I really want to know what happens to all that cheese. Iíll be contacting Mr. Halcro for a follow-up.
    [Tom Irwin is Commissioner of Natural Resources, another one of Palinís minions involved in Mat Maid]

    Daily Kos: Dairygate 2: More on Palin and the Matanuska Maid scandal

  13. #43
    Elite Member
    Join Date
    Oct 2005


    The problem with this dairy scandal, if there is anything to it, is that it's so convoluted and complicated her base won't be able to make out the corruption...they'll think she's just savvy. Same thing with trust funds and mortgages and stuff. Even if the mainstream media tries to dumb it down to report her wrongdoing, they still won't "get it" and it'll be the whole "liberal media is attacking Palin again" scenario.

    It needs to be something simple that brings Palin down. Frankly I can't think of much that her base wouldn't forgive or overlook. If she can be aligned with a party that wants to secede from the U.S. for heavens sake, her followers will overlook almost anything.

  14. #44
    Elite Member Fluffy's Avatar
    Join Date
    Nov 2007


    Who cares about her base? They're going to follow her no matter what. But plenty of other Republicans will dump her. That's the important thing. How can she claim she'd be a good president or governor if she has to deal with embezzlement charges? All those claims of "reforming Washington" or bringing change to Washington will be seen as the bunk it is.

  15. #45
    Elite Member WhoAmI's Avatar
    Join Date
    Oct 2005


    Rush and his dittoheads think she's the Second Coming no matter what she does. So that segment of the vote is locked up. He also says Jindal is a genius, though, so he could move the votes to that camp should he decide to.

    She has to have done something really serious to scare off the dittoheads. Eating arugula? Going out without lipstick?

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