According to a confidential report submitted to US Attorney Zane David Memeger in October 2011, City Controller Alan Butkovitz explained that the Philadelphia Sheriff’s Office has a duty to conduct “real and personal property sales and collect and disburse fees and funds related to these activities.” Logically, this includes publishing the hundreds of ads for foreclosed properties and other assets seized by the Sheriff’s Office in the wake of the mortgage collapse in the past decade. These seemingly uncontroversial listings, however, have been the focus of a years long investigation initiated by the City Controller, in conjunction with Deloitte Financial Advisory Services LLP, into the misappropriation of funds and a conspiracy to funnel millions of dollars of taxpayer dollars into unaudited community newspapers, including the Philadelphia Gay News, in order to sustain them in the wake of dwindling ad revenue making the Philadelphia Gay News otherwise insolvent.
Pennsylvania state law and Philadelphia municipal guidelines state explicitly that “the Sheriff [is] to publish notice of sales once a week for three successive weeks in the Legal Intelligencer and in one daily newspaper of general circulation.” In reality, however, the Sheriff’s Office has been publishing these ads in newspapers controlled by Mark Segal’s Philadelphia Multicultural Media Network, including the Philadelphia Gay News. Most interestingly, the Philadelphia Gay News is not in the commonly accepted definition of general circulation, has no audit of its circulation performed to ensure it adheres to this statute, and still receives these ads published on a regular basis.
In January 2011, REACH Communications, then the agent of record for the Philadelphia Sheriff’s Office, charged with publishing sheriff’s sale ads in area newspapers publicly, lost its contract with the Sheriff’s Office because of gross ethics violations, including filtering public money through several channels and into the pockets of, literally, family members of Sheriff’s Office workers. Subsequently, Cardenas Grant Communications took REACH Communications’ place on March 1, 2011, signing a contract with then acting Sheriff Barbara Deeley in the wake of the ethics violations by former Sheriff John D. Green’s office and REACH Communications. In a letter dated February 2, 2012, Cardenas Grant Account Manager Ken Smukler sends a letter to the Philadelphia Tribune identifying himself as the agent of the Philadelphia Sheriff’s Office discussing perfunctory business operations with the Tribune.
Less than two months later, Philadelphia Gay News publisher Mark Segal sends
a letter to the Philadelphia Sheriff’s Office designated Liberty City Press as the clearinghouse for sheriff’s sale ad revenues to be published in the Philadelphia Gay News. Coincidentally, Ken Smukler, previously Cardenas Grant Communications representative working on behalf of the Philadelphia Sheriff’s Office, is now in charge of Liberty City Press and directs the publication and revenue generated from the ad sales’ publication. Immediately following this letter, the Philadelphia Gay News announces publicly that it is partnering with Liberty City Press as part of a new “media initiative.”
So, the conspiracy works this way: Ken Smukler, initially in his role as the Sheriff’s Agent, uses his connections to later direct ad revenues into the Liberty City Press; Mark Segal, using his shell network the Philadelphia Multicultural Media Network, partners with Smukler to ensure that these ads are published in the Philadelphia Gay News; in exchange, Smukler receives a cut of the money as the clearinghouse for ad revenues; City Controller Alan Butkovitz, endorsed enthusiastically by the Philadelphia Gay News, turns a blind eye even though this is part of the reason REACH Communications originally lost its contract in January 2011; and, the Philadelphia Gay News sustains itself solely with public money derived from the sheriff’s sale ad scheme, even though it is not in general circulation, even though it does not audit its circulation, and even though state and local laws forbid such a complex, unethical, and obviously wasteful relationship from existing. As of the October 2011, over $3,000,000 was funneled into these “community newspapers.”
Despite repeated, polite requests for comment or explanation, Mark Segal, Ken Smukler, and Alan Butkovitz all refused to comment on this story.
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