Justice Dept. considering whether to prosecute SEC on costly office lease

Kotz’s report showed that the agency’s Office of Administrative Services “conducted a deeply flawed and unsound analysis to justify the need for the SEC to lease” the building and that “OAS grossly overestimated” the amount of space needed for the SEC’s intended new headquarters, including an estimated 800 new workers at a cost of $557 million over 10 years.

Witnesses in the report described an environment “in which inexperienced senior management make unwise decisions without any input from employees with significant knowledge and experience.”

The report found that the SEC also might have violated the Anti-Deficiency Act by committing the agency to spend funds Congress hadn’t approved.

http://www.goodporkbadpork.com/2011/07/secs-lease-of-unneeded-office-space-subject-of-second-hearing/

The SEC is one of the most useless agencies in Washington.

“couldn’t afford and didn’t need” sounds like the criteria this administration uses for spending

If the culprits are white the Justice Dept. will take them down.

If the culprits are Holder’s People they are safe.

SEC IG David Kotz, testifying Thursday on his report dated May 16, said the circumstances surrounding SEC’s entering into a lease for 900,000 square feet of space at the Constitution Center in Southwest Washington, formerly the headquarters of the Transportation Department, “were part of a long history of missteps and misguided leasing decisions made by the SEC since it was granted independent leasing authority by Congress in 1990.”

After reviewing 1.5 million emails from 27 current and former SEC employees and interviewing 29, Kotz’s auditors concluded that agency’s Office of Administrative Services “conducted a deeply flawed and unsound analysis to justify the need for the SEC to lease” the property. “We found that OAS grossly overestimated (by more than 300 percent) the amount of space needed for the SEC’s projected expansion and used these groundless and unsupportable figures to justify the SEC’s commitment to an expenditure of approximately $557million over 10 years,” the report said.

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The SEC entered into the lease at Washington’s Constitution Center shortly after the passage of the Dodd-Frank financial-overhaul law last July. The regulator anticipated hiring 800 additional staff to carry out new duties that the agency gained from the law.

When a promised funding increase from Congress became uncertain last autumn, the SEC backed out of about 600,000 feet of the lease. Two other federal agencies agreed to take over much of the space. The SEC is now in the process of searching for a tenant for the rest after an anticipated budget boost from Congress never materialized.

The SEC remains locked in a dispute with the landlord for the space, which has submitted a formal claim for reimbursement for the brokerage fees and renovation costs it incurred fitting out the space for the new federal tenants. The landlord, David Nassif Associates, estimates the costs are at least $45 million. It hasn’t filed suit against the agency. Ms. Schapiro said Wednesday she doesn’t expect the SEC will have to pay the landlord because the new tenants signed up for a longer lease at a higher rate.

At Wednesday’s hearing, Ms. Schapiro said SEC staff in signing the lease overrode her preference for staffing the bulk of any new hires in regional offices and for any new office space in Washington to be within walking distance from the SEC’s headquarters.

Rep. Jeff Denham (R., Calif.), the chairman of the subcommittee that oversees public buildings, questioned Ms. Schapiro as to why she didn’t deserve a share of the blame for the decision, saying she must have known the staff has strayed far from her initial instructions on the lease.

“If you’re not the person being held accountable, and neither is your chief of staff, you were both in meetings and both aware of these changes,” he said.

Inspector General David Kotz told a House of Representatives subcommittee on Wednesday that the Justice Department could bring criminal charges if it finds that employees changed the date on the document to support the chosen location for new SEC office space.

The plan for new Washington office space came under scrutiny after Kotz’s office found in May that the SEC made numerous mistakes in securing the 10-year, $556.8 million leasing deal.

The owner of the building demanded about $94 million in damages after the agency tried to back out of the deal.

http://www.reuters.com/article/2011/07/07/us-sec-leasing-idUSTRE7655FC20110707

"The Justice Department is considering whether to prosecute Securities and Exchange Commission employees over the agency’s handling of a $557 million lease for downtown Washington offices that it could not afford and did not need, the agency’s inspector general said Wednesday."

Just a flash of a thought, but ...

My guess is, over the years, socialists and other brand(s) of commie have systematically been stealing and or confiscating a LOT of stuff from America ... land, money, buildings etc., and then finds a complicit agency to be assigned aforesaid thefts.

Thus, the CEO (president, or other minion) is kept away from the crime and like Mr Phelp's crew .... "we will disavow ANY knowledge ... if you choose to accept this mission"

Series 7 licensed, here.
This story does not surprise me in the least.

Follow the money boys and girls, I think the following questions need to be answered:
1) Who is the developer
2) Who is the owner
3) What donations have the made
4) What are the interconnections between the above

Follow the money. Leasing from whom?

Kotz said he thought the reason for obtaining the lease in the renovated former Transportation Department headquarters was for “a beautiful space with fancy views.”

In an interview with the inspector general’s office, an unnamed SEC employee — one of many whose names were redacted in the report — said one of the assumptions the agency used was merely a “WAG”— a “wild-ass guess,” the report said.

The inspector general’s report focuses on a lease for Constitution Center, an office building in Southwest D.C. that formerly housed the Department of Transportation and had recently undergone an extensive renovation.

In March, the SEC told private landlord David Nassif Associates that it was trying to sublease 342,000 square feet covered by its lease but had not succeeded in finding a tenant, the report said.

The landlord has asserted that the SEC owes it $94 million in damages, but the SEC denies that any damages are owed, the report says. The alleged damages include brokerage commissions the landlord incurred, borrowing costs and expenses for finishing space the SEC never occupied.

In March, the SEC told private landlord David Nassif Associates that it was trying to sublease 342,000 square feet covered by its lease but had not succeeded in finding a tenant, the report said.

The landlord has asserted that the SEC owes it $94 million in damages, but the SEC denies that any damages are owed, the report says. The alleged damages include brokerage commissions the landlord incurred, borrowing costs and expenses for finishing space the SEC never occupied.

http://www.washingtonpost.com/business/economy/sec-leased-unneeded-space-in-dc-watchdog-report-says/2011/05/24/AFvzrqAH_story.html?nav=emailpage

Constitution Center - David Nassif Company

April 2011

David Nassif Associates to Sell Constitution Center

Constitution Center (formerly known as the David Nassif Building) is an office building located at 400 7th Street SW in Washington, D.C. It is 140 feet (43 m) high and has 10 floors. Covering an entire city block, it is the largest privately owned office building in the District of Columbia. Current tenants include the United States Securities and Exchange Commission and the Office of the Comptroller of the Currency.

Over the years, so many government workers complained of ailments while working in the structure that some believed it suffered from sick building syndrome. David Nassif Associates, owner of the building, disputed these claims. However, when the Department of Transportation announced it would leave the building in 2000, the owners promised a $100 million renovation that included a new air ventilation and cleaning system as an inducement for the agency to stay. The owners also unsuccessfully sued the General Services Administration in 1999 to force it to renew the federal lease on the building. The Department of Transportation completed their move out of the Nassif Building and into their new headquarters in June 2007.

In 2006, Nassif Associates announced a $220 million renovation of the building and renamed it "Constitution Center". SmithGroup was the architectural firm overseeing the redesign, and Davis Construction oversaw the construction.

The Constitution Center is registered with the Green Building Council for Gold LEED Certification.

The late-2000s recession left the renovated building struggling to find tenants. It was empty for nearly two years after it was opened for occupancy in April 2009. Both the United States Department of Homeland Security and NASA explored leasing all or part of it in 2009 and 2010, but chose not to do so. In August 2010, the United States Securities and Exchange Commission (SEC) signed a lease for 900,000 square feet (84,000 m2) of space at Constitution Center. The SEC planned to take occupancy in September 2011. In January 2011, the Office of the Comptroller of the Currency agreed to lease the remaining space in the building.

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With an agreement in hand, Jaroch, a grandfather of seven, was ready to sell the 1.4 million-square-foot building in Southwest Washington — potentially for an all-time record price — and head off into the sunset.

But that was before the SEC’s lease became a major point of contention.

A report by the SEC’s inspector general found that the lease was based on assumptions that the agency would receive even more funding than was proposed for the agency by President Obama, that it would receive its full 2012 appropriations request and that it would receive all additional funding it deemed necessary to implement the new Dodd-Frank Act. The inspector general said these and other assumptions were “unfounded, egregiously flawed and irresponsible.”

Controversy over the lease has complicated things for David Nassif Associates, a family real estate empire founded in the 1940s. For one, Jaroch, the company’s managing general partner, says that when the SEC realized it could not fill the building and other government agencies, such as Office of the Comptroller of the Currency and the Federal Housing Finance Agency, moved to fill the void, it forced Nassif to unfairly assume additional costs related to brokerage services and building the office interiors.

“We incurred additional or unusual expenses in order to relieve the SEC of approximately 550,000 square feet of its 900,000 square feet obligation, and not surprisingly it was our position that we should be reimbursed for those demonstrable extra expenses and it’s been the SEC’s position that they don’t agree,” he said.

Jaroch said the company had discussed filing a lawsuit, though it is not his preference, and he suggested that “some of the dust is perhaps going to have to settle before some of the issues can be addressed.”

“We would like to work it out. We’re peaceful people,” he added. Nassif still plans to sell the building and is negotiating the sale through the real estate banking firm Eastdil Secured. It is a smart time to hit the market, as fully leased, high-end Washington office buildings have attracted some staggeringly high prices recently. The Market Square offices on Pennsylvania Avenue sold for the announced price of $904 per square foot in March, an all-time D.C. record that some have suggested Constitution Center could break.

More Here

They’re just jealous of all of those Football National Championships the SEC has won.