Activist Responsible for FBI Raid on Corrupt Former Mayor of Scranton Running Himself to Finish the Fight

Activist Responsible for FBI Raid on Corrupt Former Mayor of Scranton Running Himself to Finish the Fight

Gary St. Fleur mayor of Scranton

Scranton has been in the news a lot lately – not for being the hometown of both Joe Biden and Hillary Clinton, which it is, but for corruption scandals that have rocked the entire city and surrounding areas.

Know more about Russia than your friends:

Get our free ebook on how the Soviet Union became Putin's Russia.

Q2 hedge fund letters, conference, scoops etc

Two months ago, Bill Courtright, mayor of the last five years, pleaded guilty to extortion, corruption, and bribery, and resigned as mayor. He now faces up to 35-years in jail and $750,000 in fines.

At the heart of all this is Gary St. Fleur, who for the last four years has been fighting deep seated corruption in the city. Working with the Department of Justice and FBI to rid the city of the former mayor, Gary is now running for mayor of Scranton himself in order to finish what he started.

Gary is a frequent contributor to this site and though he's busy preparing for Scranton's November 5th special election, Gary shares his history and platform with us below.

Can you tell us about your background?

It began when I first stepped foot in Scranton. I was told by the locals it was the most corrupt city in America. I didn't believe this but after being told this by so many people in the city I began to wonder. Additionally, I started investigating the city's budget, news articles related to the city, and the local stories. What I discovered was an underfunded pension, an imbalanced budget, and an open secret that the city was controlled by a "secret political society."

In fact, it was a seated city councilman that told me this is how the city was controlled. I compiled my research and created a blog called "Save Scranton" where I shared all of my discoveries. I obtained local and national news for my reporting, activism, and organizing. The blog eventually evolved into a civic group that would go on to bring a lawsuit against the city of Scranton. The lawsuit accused the city of taxing the people of Scranton beyond the legal cap.

We would go on to win this lawsuit. Furthermore, exposing the corruption of Scranton was a common theme of the blog. I have maintained contact with the DOJ since 2016 which has culminated in the arrest of the former mayor Bill Courtright who confessed to extortion, bribery, and conspiracy. Now, I have decided to run for mayor of Scranton to finish the job that I started. I am proud to potentially be the first African American mayor in Scranton history. My campaign is entirely for championing the interest of the people.

How did you decide to get involved with the the mayor of Scranton and other local Government issues?

When I combed through the budget of Scranton, what stood out to me the most was the fact that the city had a pension that was only 33% funded. Its unfunded pension liabilities towered in the hundreds of millions and there were strange imbalances like the number of police and firefighters on disability (50% and 58%). This sparked my curiosity as to what happens when these unfunded liabilities begin to pile up. The city has to spend more of its budget on pension costs and retired employees than actual services to the residents.

Furthermore, the cost of the piling debt absorbs any remaining liquidity placing a city like Scranton on the road to bankruptcy. The city has responded to this by selling all its public assets which does nothing to solve the structural issues with the government's budget. The fact remains that the cost of the government is too high for the people of Scranton. The city of Scranton has a population of 76k and 2/3rds live on a fixed income.

The median income of the city is 37k. The median income of most government positions is above the median income of the local residents. Therefore, the residents pay a higher percentage of their income to the government. This results in absurdly high taxes on businesses and property causing businesses to flee the area and houses to lose value because there is no money available for upkeep.

The goal of many residents in Scranton is to leave the city. My concern is that this pension issue is a nationwide issue and is becoming an unfolding crisis in real-time.

Why are you running for mayor of Scranton?

The city of Scranton needs a mayor that serves the people; a mayor with no political ties to strong institutions and no allegiance to special interests. I am that mayor. I have spoken on record for the past 3 years about the corruption and financial mismanagement of the city of Scranton. Additionally, I have championed the interest of the people of Scranton from the beginning. Residents can rest assured that as mayor of Scranton, I will serve at the pleasure of the people and rid the city of every last bit of corruption.

People don't realize Scranton from The Office is the most corrupt city in the country. The show never talked about the problems with local government. But the local government is a cesspool of nepotism, kickbacks, back door deals, and conspiracy. The city needs a leader that will not only expose all of this but unravel it.

What happened to the former mayor of Scranton? Why is there a special election? Why was there an FBI raid?

The former mayor of Scranton, Bill Courtright, was indicted on charges of corruption. On July 1, 2019, the disgraced former mayor Mr. Courtirght resigned from his mayoral post and the next day plead guilty to conspiracy, bribery, and extortion in a federal court. From the beginning of his administration, the mayor was extorting businesses in order to obtain kickbacks.

He would throw lavish parties where business owners would need to come and deliver envelopes filled with money. These businesses would be refused permits or licenses if they did not pay these kickbacks. The former mayor also blocked new businesses from being started within the city.

On Jan 10th, the FBI raided the former mayor's home and city hall due to an investigation involving a developer who claimed he was being extorted by Bill Courtright. The increased FBI presence was largely due to my efforts involving exposing the corruption in Scranton. Since 2015, I have been writing extensively about the corruption in Scranton and have been in contact with the DOJ since 2016. My work has been featured in local and national news. A

lso, I was able to pique the interest of FBI agents regarding certain financial transactions conducted in the city government that proved to be highly illegal. I gathered evidence and ran informants. My efforts involved going to the local FBI field office, Harrisburg as well as DC. I have been informed by the DOJ that more arrests are on the way as the investigation is still ongoing. It goes to show that resilience and determination do ultimately win out when one is in the right.

What are the main problems facing the city? Is this a Rustbelt problem being hollowed out by globalization or are there other factors?

The main factors affecting the city are corruption and punitive taxes. The city has the highest wage tax in the area (3.4%). It has high mercantile taxes, property taxes, and other local taxes. This makes living in the city punitive. People can move 10 minutes away and get an instant raise. Also, corruption keeps the prospects of the city down.

Scranton's last mayor was extorting local businesses and blocking other businesses from coming into the city. The permit office is notorious for being used to obtain kickbacks. Beyond issues of globalization, the local government runs in a self-serving manner. The people of Scranton know about nepotism, jobs given, and back door deals. This makes for a business environment that is not conducive to growth or experimentation. Anything that threatens the corrupt status quo is quashed.

Can you tell us about your Act 511 lawsuit?

The earned income act of 1965 states that any municipality in the state of Pennsylvania can only raise local taxes within a cap that is based on a formula using property values. The idea is that if property values begin to decline that means the people are getting poorer. Raising taxes on poorer people would be unconscionable and the legislation was meant to prevent predatory taxation. Nevertheless, the city of Scranton has been breaching this taxation cap for the past 20 years.

It is not easy to win a suit against an opponent such as the mayor of Scranton with so much more money for high paid lawyers and friends in the judiciary. How did you do it?

It was quite serendipitous to have a supreme court ruling during my case that proved our position. The city was attempting to argue that their home rule charter superseded state law. The state supreme court recently ruled that all municipalities are subject to state law.

The takeaway from all this is that resilience and truth win out every time. The first time we brought our case, it was thrown out. But the second judge ruled in our favor. No matter how much money or friends the other side has, if the law and truth are on your side then you put people in a position where they have to publicly disgrace themselves by ruling unfairly. This is the power the people have. The government knows that it is ultimately public opinion that determines whether or not anyone in government remains in government. For example, look at what just happened in Hong Kong.

How can the pension problems be fixed? Can they?

The first step to fixing pension problems is to stop kicking the can down the road. There is this unwillingness to address the issue because it is politically contentious. I recommend that officials be candid, transparent and open about the issue. Bring unions and the public to the table and see what works for everyone. It is clear that the defined benefit model does not work and puts an undue strain on the taxpayers because of mismanagement that the taxpayer has nothing to do with.

Government employees depend on taxpayers for their salary and benefits; therefore, it is also in their best interest to find a solution that works for everyone. If not, the end result will be a mass exodus of taxpayers which is already happening in states like Connecticut and Illinois, and ultimately bankruptcy. Many people do not realize this but states can and do go bankrupt. Once the money is gone, it is gone.

Is this a revenue issue, or obligations one, or corruption, or what exactly?

It depends on the location. In Scranton, it is clearly a question of corruption because of absurd things like the number of policemen and firefighters on disabilities (50% and 58%, both the highest in the state). It is also known that many of these "disabled" employees are working in the county or other places. This is entirely unacceptable. The city is also notorious for accounting issues where funds aren't accounted for. Lastly, Scranton's former mayor was throwing parties where people would come to give him kickbacks in envelopes. Such high handed actions demonstrate a culture of corruption that is widespread. Thus in Scranton, corruption is the biggest issue.

In other places, there does not need to be corruption for pension problems to be exacerbated. Defined benefit plans are inherently susceptible to under-funding because of how they are designed. First, the government must decide what discount rate to use to plan out the necessary funding requirements. On average most governments use a discount rate of 7% to 8%, which is outrageous.

The average private company discount rate is 4% to 3%. Also, defined benefits payout for life in a time where people are living longer. Thus, the combination of low fund contributions and larger/longer payouts to retirees creates a serious financial problem.

The taxpayers will ultimately be on the hook, which will force them to make the economic decision to leave high tax locations. The result is a revenue shortfall which means the government must then raise taxes even higher on the remaining residents. This cycle will continue until the pension collapses completely. Sadly, by the time this happens, the funds that could have gone to infrastructure and economic progress would have been spent on pension obligations, causing a massive overhang in the economy that will affect generations to come.

Pensions seem to always become political - is there any way to forge a bipartisan consensus on solving daunting problems?

Yes, the public needs to be informed on the issue. The fact is that many people do not even know what is driving the cost of government pensions. They don't know why taxes keep going up but services keep getting cut. It is the pensions. The remedy to this is to create forums where the public can be presented the information and discuss possible solutions. Remember the public are the ultimate stakeholders in government and they will ultimately have a say in what goes on in government. Political leaders need to be willing to demonstrate the courage to have these tough conversations. Often politicians are looking to curry the favor of powerful groups, but that is not their first responsibility. Their first responsibility is to serve the public. Bringing unions and the public to the table to work out solutions is a powerful first step.

Are you also focusing on global pension issues?

I am definitely aware of them. In all honesty, this is an iceberg that we are on course to hit on a global scale very soon.

Next door in New Jersey we are also facing major pension funding problems - do you see a connection?

This may sound cynical but greed is a constant. What limits the greed in the private sector is that companies are accountable to shareholders and bondholders. If a company attempted to run to benefit itself and not its customers or stakeholders, then that company would fail and would no longer exist as an enterprise. On the other hand, the government can have people who are also greedy, but there are no real bounds to their greed. If they attempt to run a government for their personal benefit, they can always justify their mistakes through the increasing of taxes. What are the markers to hold the government accountable?

Are there any benchmarks? Stats? Thus, the problem with pensions is a problem where people seek their self-interest without any parameters that restrain this pursuit. Local governments across the country gave promises to unions that they could never fulfill in order to obtain votes and allegiance. Now, we as a society are suffering the repercussions of these decisions.

What do you imagine Scranton looking like in 5 years?

Part of the issue with government is often leadership is behind on advances that could create tremendous opportunities. For instance, the government could become more efficient through the use of technology which would rebound in savings to the taxpayer. The taxpayer having more money means more disposable income for the local economy. Furthermore, governments should be willing to allow for experimentation in the private sector to spur innovation. The government can do this by accommodating interest in utilizing new technologies.

The following is what will happen once I am mayor. Scranton will be known as a technological hub. With 5 highways, the city is 2 hours away from 90-million people and can be used to test self driving trucks. A hyper-loop or high-speed train to NYC would boost the economy. Solar powered street lights will shine over roads that fix themselves with automated monitoring technology.

We will have drones that put out fires, lowering the risk of injury to firefighters. Blockchain technology can be incorporated into voting, energy, and manufacturing. All this already exists or is undergoing mature testing. Scranton will become a marvel. The greatest resource every society has is the minds of its people. If the environment facilitates and encourages the free expression of art, creation, and tech, I believe that the people will take care of the rest. This is what Scranton's future will look like in 5 years.

How can we get involved?

You can get involved at:

https://garystfleur.com/volunteer.

Donate at:

https://garystfleur.com/donate.

Or contact me directly at:

https://garystfleur.com/contact.

What else should we know about you? What do you do when you’re not campaigning for mayor of Scranton?

I read a lot and love learning about all sorts of topics. I'm a longtime dedicated anime and video game fan. I enjoy running, weightlifting, boxing, and martial arts. When I was younger I wanted to be a gymnast or a stuntman.

Final thoughts?

Politics needs to get back to the basics. What I mean by this is that local politics are as important, if not more so, than national politics. We have the power to change the course of our society, but we have to be willing to put in the work and get involved. I believe community and civic participation is the key to not only bring about effective change, but to bring us together. This is the root of why all this matters in the first place.



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver