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By Walter J. Burien, Jr.
Forward by Al Adask - Anti-Shyster
As editor of the AntiShyster, I’ve seen
so many unbelievable stories over the last eight years, that I’ve
become jaded, cynical and worldly. There are no surprises left for
me. I’m sure that I’ve seen it all. I’ve thought
so for several years. And generally speaking, about every two or
three months, life proves me absolutely wrong by showing me another
story so awesome that I’m left (almost) speechless. This article
introduces another one of those stories so awesome that it’s
right off the Richter Scale.
Walter Burien Jr. worked as a Wall Street commodity
trader for fifteen years, but now resides in Arizona. According
to Mr. Burien, every state, county and major metropolitan city is
keeping two sets of books. One set (the ‘Budget’) is commonly
available and tracks each governmental entity’s casts and tax
revenue. The Budget is the financial record that’s seen by
the public and used by politicians to justify new governmental services
and higher taxes.
However, there is a second set of books (called
the Comprehensive Annual Financial Report, or CAFR) which is virtually
unkown to the public but contains the real record of total governmental
income. According to Mr. Burien, although the Budget gives an accurate
account of government costs, only the CAFR gives an accurate account
ot government’s income.
For example, while a particular state budget
might report receiving $20 billion in taxes (just barely enough
to sustain its $20 billion in costs) - the CAFR might reveal the
state’s real income is in the neighborhood of $60 billion -
three times as much as reported on the budget. If these allegations
are accurate, the particular state could stop charging all the taxes
we are familiar with and, not only survive but, either double the
amount of reported government services or give every citizen a huge
tax rebate.
The implications are mind-boggling. They’d
mean our world is so different from what we are led to believe,
so much more corrupt than even I suspect, that we are left with
three choices, either; 1) government agrees to end the deception
and stop overtaxing us, or 2) the American people agree to accept
their status as slaves, or 3) both sides refuse to agree and precipitate
a shooting revolution. The issue is that big.
But are Mr. Burien’s allegation correct?
How could any governmental entity dare to routinely overcharge its
citizens by 200%, underreport its income by 2/3rds, and knowingly
press for higher taxes based on an inaccurate budget? Worse, how
could such a fraudulent system become widespread among all states,
counties, cities and the Federal Government? When you stop to think
about it, Mr. Burien’s allegations are too fantastic to be
credible.
Nevertheless, I talked to Mr. Burien by phone
for several hours and found him to be articulate, knowledgable,
and apparently sincere. I asked a retired professor of economics
to interview Mr. Burien and evaluate his allegations. The professor’s
assessment? Burien is probably correct. I steered an Alaskan M.D.
(who is also a dedicated constitutionalist researcher) to Mr. Burien.
The Doctor subsequently found evidence supporting Mr. Burien’s
claims: The State of Alaska and the city of Anchorage both use Budget/CAFR
accounting systems that conceal a ‘breathtaking’ difference
in reported revenue. Another researcher in Wyoming claims that a
comparison of his state’s budget and CAFR also support Mr.
Burien’s arguments. In every case, there are two sets of books
and the income reported on the budget is millions or billions of
dollars less than is reportedon the CAFR.
Does this support prove Mr. Burien’s extraordinary
allegations? No. But they lend enough credence to publish his allegations
to a broader audience who will do more research to confirm, refute
or refine those allegations.
What follows is an amalgam of statements or implications
raised by Mr. Burien on our telephone conversation, Tom Valentine’s
radio interview, Mr. Burien’s Email, and an article on Mr.
Burien written by "Betsy Ross".
Mr. Burien reports first discovering the CAFR report
in New Jersey in 1989, when he helped start a New Jersey tax protest
group called "Hands Across New Jersey". While involved
with that group, Mr. Burien read in the state’s Annual Budget
that the total cost of all public services was $17 billion and the
"net available" (the money on hand to pay all bills) was
$24.6 billion.But then he asked the first question the IRS asks
in any audit: "What are the gross receipts? He added the figures
from various sources and came up with about $44 billion and began
to wonder how the state could have $17 billion in costs, $24.6 billion
in cash on hand, and $44 billion annual income? The numbers didn’t
add up, so he bagan to dig deeper.
Because his father had been Personnel Manager for
the State Treasury for eight years, Mr. Burien understood how to
get around in the various government departments. The state Director
of the Budget was on vacation, so Mr. Burien called one of his lowest
level assistants and said, "I’m working on a report for
Richard [the vacationing Budget Director] and I need all the figures
on the autonomous agency accounts, interest accounts, investment
accounts." The assistant said, "Ohh, you want the CAFR."
This was the first time Burien had heard of CAFR but he said, "Yes"
and the assistant mailed it to him.
The CAFR showed that New Jersey had liquid investment
funds (cash) of $188 billion; common stocks worth $70 billion, $10
billion in loans due from public and private corporations, and $14
billion in insurance company equity participation. The little state
of New Jersey, which admitted to less than $25 billion in annual
income on its budget, reported $300 billion in cash, stocks, loans
and equity participation on its CAFR. According to Mr. Burien, "On
that day, I learned the definition of syndicated organized crime."
The scam worked something like this: Anything that
was a cost or expense for public services (the traditional
side of the Annual Service Budget, such as the Department of Transportation,
health and welfare, etc.) was reported on the Budget where public
taxes paid 100% of the bill for those services. That was $17 billion.
However, any governmental agency that was a profit
center (the Port Authority for New Jersey, the New Jersey Turnpike,
and investment account, etc.) that generated no-tax revenue was
"restricted by statute from being reported in the Annual Budget.
Why? Because the state legislature passed laws to prevent reporting
the income from profit center on the Budget. Instead, income from
these profit centers was disclosed only on the CAFR.
But that disclosure was not immediately apparent.
For example, when Mr. Burien looked for New Jersey’s 1989 "gross
cash receipts" in the CAFR, he found the figure buried on page
174, under the "Waste Water Treatment Trust Fund". It
showed the amount of the total cash receipts for 1989 from
all 69 autonomous state agencies and departments was almost $87
billion. In other words, New Jersey was charging $87 billion
to provide $17 billion in public services. New Jersey citizens were
paying $5 for every $1 in services they received, and the state
was pocketing the other $4 as "profit".
The CAFR also reported the state owned $32 billion
in common stocks - but this figure was footnoted. The footnote revealed
that the stocks were valued according to their original purchase
price, not the current market value. In other words, if the state
bought a stock in 1968 at $1.25 a share and it’s worth $3,000
a share now, they still report it on the CAFR as worth $1.25 a share.
Burien determined that the true market value for the "$32 billion"
in stocks reported on the New Jersey CAFR was actually about $70
billion.
But Mr. Burien goes further - he claims that the
dual system of books is not unique to New Jersey, but also common
among all fifty states. Moreover, he claims the dual accounting
system was not only used ten years ago, but is still being used
today.
For example, "In 1987 Arizona’s annual
service budget reported $2.8 billion in revenues but the state’s
1987 CAFR reported total cash receipts of $3.1 billion, a mere $300
million difference."
"However, in 1997, Arizona reported an Annual
Service Budget of $5.5 billion while the State’s CAFR (printed
by the Auditor General’s Office) showed total gross cash receipts
of $17 billion. that’s a difference of over $11 billion. In
just ten years, Arizona had caught up to New Jersey in that both
states’ annual budgets reported less than one-third of the
actual gross income seen in the states’ CAFRs.
"CAFR reports indicate that the composite totals
for all government (Federal, state, county and city) ownership of
publicly traded stocks exceeds $32 TRILLION (53% of the total ownership
of all listed stocks), $8 TRILLION in insurance company equity (should
we be surprised by high priced mandatory auto insurance or unaffordable
health care?) and $5 TRILLION in Bond Surety Escrow Accounts for
future liability of existing or potential debt.
Governments use Bond Surety Escrow Accounts to evade
that pesky little rule that government should not operate at a "profit".
That is, government should not impose more taxes than it actually
uses to run the government. By designating tax revenue that exceeds
operating costs as "Bond Surety Escrow" for future liability,
government avoids calling excess revenue a "profit" and
is thereby enabled to continue to enrich itself at public expense.
To illustrate the potential for abusing "future
liability payments", consider the New Jersey plan in the 1950s
to build the New Jersey State Turnpike and Garden State Parkway
Authorities. The state asked voters to approve a $7.5 billion bond
to construct the turnpikes. The state explained that these turnpikes
would be operated as toll roads by the bondholders until the $7.5
billion bond was paid off - but the bondholders could not operate
the toll roads at a profit. Once the bonds were repaid, the turnpikes
would revert back into the state’s Annual Budget as a normal
cost/revenue item. The public voted Yes.
Over the following years, the state sometimes alleged
that the toll revenue from operating those turnpikes failed to cover
their operating expenses, and so additional bonds were passed to
fund the turnpikes. As a result, in 1990, the total bond liability
still owed for the turnpike had grown to $14.5 billion. But guess
how much was in the ‘Bond Surety Escrow Accounts’? $38
Billion! Enough to repay the original $7.5 billion bonds almost
four times!
How could that happen? Say the toll road made a
$400 million profit for the year and the scheduled payment on the
$7.5 billion bond was $100 million. The state made the $100 million
payment but kept the extra $300 million in a Bond Surety Escrow
Account for ‘future liability payments’. Although they
kept the $300 million, they did not declare it as an asset but wrote
it off as a line item payment. In other years, even though they
made a profit, they’d allege that they lost money and therefore
floated more billions in bonds. (Guess who pays?)
The bottom line is that New Jersey is collecting
hundreds of billions of virtually unreported dollars from all the
autonomous agencies. The motivating factor is not public welfare,
but control of those billions.
Mr. Burien not only alleges that the dual accounting
system exemplified by CAFR is not only used by all fifty states,
but also by all counties, cities and the Federal Government itself.
If Mr. Burien’s allegations are correct, they comprise the
most damning indictment of big government yet seen. In sum, Mr.
Burien implies that our government is in fact a criminal
enterprise bent on oppressing Americans by extorting several
times as much tax revenue as it spends on public services and using
the majority of thos extorted revenues to enrich, empower and enlarge
government at public expense.
According to Mr. Burien, although the public is
absolutely ignorant concerning CAFR, the primary cause for that
ignorance is not the politicians but the mainstream media. When
Mr. Burien first discovered the CAFR reports in New Jersey in 1989,
he went on radio 101.5 FM in a live 45 minute interview. Two days
later, that radio station was threatened with losing its license
and was almost shut down. CAFR had become another example of - "third
rail journalism" - any reporter or media outlet that touched
the issue would be silenced or driven from journalism. As a result,
there’s been a total mainstream media blackout on disclosing
CAFR reports.
Later, Burien learned that the New Jersey official
in charge of discrediting his CAFR discoveries was a former reporter
who’d been appointed Assistant State Treasurer - even though
he had no former financial background. Burien investigated his background
and learned that as a reporter he made $35,000 a year. But as Assistant
State Treasurer he made $65,000 a year - plus a Carte Blanche expense
account of $125,000. !????????
Burien claims this was not an aberration: "I
knew there was a state data search department which tied all agencies
and departments together. I called that departement and asked for
a data search on all key level directorships and supervisory positions
for all budgetary or autonomous agencies, and they came up with
some 3,500 names from several administrations. Almost 1800 of these
Directors were former editors or reporters! It is a virtual
certainty that many of these appointments were payoffs for the journalists’
previous "cooperation" in spinning or silencing stories
to suit government.
If you conduct a comparable search in other states,
you may find a similar symbiotic relationship between government,
editors, and reporters. If so, the media’s "liberal, pro-government
bias" may run much deeper than anyone has imagined, and the
‘military-industrial complex" described by President Eisenhower
in the 1950’s may have been replaced by a "media-bureacracy-banker
complex" in the 1990s.
Therefore, Mr. Burien recommends that once you analyze
your state’s Budget and CAFR reports, you insist that your
local news mainstream media (TV, papers, radio) raise the "Public
Awareness" by reporting the difference between the composite
"total of cash receipts from all agencies, departments, investments,
etc." and the "actual total composite revenues held or
controlled".
If your local media refuse to publicize your state’s
CAFR, they may be cooperating with a criminal agreement which has
effectively silenced public disclosure of the CAFR reports for over
forty years. However, once Americans know how much money is out
there, where it’s coming from and where it’s going - the
government’s game will be over.
Any media that refuses to make immediate mention
of the CAFR report should be publicly and aggressively boycotted.
Media exposure is the jugular vein of the evil and corruption.
Ed. Note- Thanks to "AntiShyster" for
bringing this critical info. to out attention. AntiShyster subscriptions
are available $30 for six issues c/o P.O.Box 540786, Dallas, Texas
75354, (972) 418-8993, or www.antishyster.com
Next issue we will address practical matters
on locating and analyzing your local CAFR.
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