Elevated levels of trichloroethylene, or TCE, were found at Google’s satellite campus in Mountain View. The chemical is known to cause cancer and birth defects.

Credit: David Paredes/NBC Bay Area

UPDATE, March 25, 2013: This story updates to include a link to the Geosyntec contamination report.

For at least two months, Google employees were exposed to excessive levels of a hazardous chemical after workers disabled a critical part of the ventilation system at the company’s new satellite campus on a Superfund toxic waste site, records show.

From mid-November to mid-January, levels of trichloroethylene, or TCE, exceeded concentrations considered safe by the federal Environmental Protection Agency at a Google office complex in Mountain View, according to a detailed report to the EPA obtained by the Center for Investigative Reporting. The buildings sit on aSuperfund site three miles from the company’s headquarters.

TCE, an industrial solvent used in making computer chips, is known to cause cancer and birth defects. The EPA recently adopted a more stringent safety threshold for TCE after finding it can cause cardiac abnormalities in developing fetuses. 

Pregnant women who are exposed to low levels of the chemical during a crucial three-week period in their first trimester face an increased risk of having a baby born with holes in the heart, a 2011 EPA analysis found.

In response to questions from CIR, the EPA said last weekthat it would “take a more aggressive approach to ensure prompt action” when TCE levels at the Superfund site exceed safe levels. The agency also said women of childbearing age should consult a doctor if they are concerned they were exposed to TCE.

“While EPA cannot verify how many employees were in the Google buildings in question, we encourage women who are concerned about potential exposure to contaminants at the site to speak with their obstetrician or pediatrician,” agency spokesman David Yogi said in an email.

More than 1,000 employees work in the two buildings where elevated levels of TCE were found.Google confirmed that employees were exposed to the hazardous chemical but would not say how many.

Google spokeswoman Katelin Todhunter-Gerberg said employees in the two buildings had access to information on the company’s intranet, but she declined to say whether they were warned of any health risk. She said employees were never in danger.

“We take several proactive measures to ensure the healthiest indoor air environment possible in our workplace,” she said by email. 

Google, which was not involved in manufacturing chips with TCE, is a newcomer to the Superfund site. It leased buildings previously occupied by Netscape Communications and began moving employees in last summer.

During the 1960s and '70s when computer chip manufacturers such as Intel Corp., Fairchild Semiconductor Corp. and Raytheon Co. occupied the site, large quantities of contaminants leaked or were dumped there.

In 1981, TCE was discovered in the soil and groundwater beneath the three companies’ plants. The federal government designated the area as a Superfund site, and since 1989, more than 100,000 pounds of TCE and other contaminants have been removed. 

When Netscape occupied the Google site, a controversial “air stripper” operated there for more than a decade, emitting toxic chemicals into the air without monitoring, according to Lenny Siegel, executive director of the Center for Public Environmental Oversight, an activist group based in Mountain View. In 1999, Netscape was acquired by AOL, which declined to comment.

The Superfund site covers about 400 acres above the contaminated plume in a Mountain View neighborhood near Middlefield Road, Whisman Road and Ellis Street

The site is now home to about 85 businesses, including the software firm Symantec Corp., the insurance company eHealthInsurance, a patent law firm, a baby ultrasound center, an adoption service, a restaurant and a cafe. All told, thousands of people work at the site. Companies contacted by CIR declined to discuss any potential health risk.

Google leases its campus from Keenan Lovewell Ventures, a Palo Alto property developer. Perry Palmer, the partner who handled the lease, would not discuss any disclosure he may have provided Google.

Over the years, the plume of contamination has spread to surrounding residential neighborhoods and nearby Moffett Field. In December, TCE was found under more homes outside the boundaries of the Superfund site.

The main threat from TCE is posed by vapors from the contaminated groundwater seeping into buildings and accumulating in interior spaces.

The new Google campus features four two-story office buildings linked by steel-reinforced fences that require a key card to enter. Inside is a stretch of grass and food carts, giving the area the feel of a college campus. 

On a recent afternoon, young women, pregnant women and visitors with young children could be seen relaxing in the courtyard. One Google employee who was visibly pregnant was asked if she was aware of risks associated with TCE exposure. 

“We’re really not allowed to talk about it,” she said. “Sorry.”

The danger of vapor intrusion into buildings was not as well understood when the EPA and the city of Mountain View agreed in the 1990s to allow commercial use of the site. 

In 2012, the EPA’s Region 9, which oversees California, began setting stricter standards for TCE exposure.

Region 9 now requires that it be notified if the level of TCE in a building exceeds the safety threshold of 5 micrograms per cubic meter of air. One recent EPA document indicates that prolonged exposure at even lower levels may cause cancer.

Since 2011, the EPA also has required that new buildings at the Mountain View Superfund site have subslab ventilation systems and vapor barriers to prevent TCE from accumulating indoors.

But since the Google campus was renovated, not newly built, the company relies on a “positive pressure” ventilation system to pump fresh air into the building and keep toxic vapors from collecting.

A 1,300-page report prepared by environmental consulting firm Geosyntec Consultants, Inc. and obtained by CIR from the EPA details the extent of the contamination at the Google site and efforts to correct it. The report was commissioned by Schlumberger Technology Corp., the oilfield services company, which acquired part of the site in 1979 and assumed legal responsibility.

The problem at Google was discovered when routine air sampling found TCE at a level of 7.8 micrograms per cubic meter in a hallway of one building on Nov. 21. The EPA was notified as required. It is unclear how long the levels had been above the danger threshold. The previous sampling in September 2010 found nearly nondetectable levels.

In an effort to reduce the vapors, workers sealed cracks in floors and walls where TCE might get in. But despite their efforts, samples collected on Dec. 29 found the problem was getting worse: TCE exceeded the 5-microgram safety threshold in five locations in two of the four buildings.

On Jan. 14, the team finally inspected the heating, ventilation and air conditioning system (often referred to as HVAC) and found it had been switched to manual, which prevented the positive pressure system from running continuously.

The move was motivated by a desire to keep the buildings warm as the weather turned colder in the fall, the report shows.

“The HVAC systems were operating in a manual mode (i.e. automatic system was overridden) in order to maintain the temperature in the buildings,” the Geosyntec report concluded.

The system wasreset to automatic on Jan. 19. Three days later, tests showed that TCE vapors in the offices had been reduced to acceptable levels.

If employees were exposed to dangerous levels of TCE without warning, Google could be vulnerable to legal action under Proposition 65, California’s tough anti-toxics law, which sets a cancer risk threshold of 50 micrograms of TCE per day. Someone working in an office with TCE vapors measuring 5 micrograms per cubic meter would inhale that amount in 10 hours. 

After CIR questioned why there was no risk level for birth defects under Prop. 65, the state Office of Environmental Health Hazard Assessment announced last week that it would examine whether TCE also should be listed as a chemical known to the state to cause reproductive harm. 

The EPA said in its email to CIR that it would establish a new notification system for companies at the site and launch a website to provide information to the public. It also said it will make its toxicologists available to speak with employees’ physicians about TCE.

“Everyone who works or lives near the (Mountain View) Superfund site should have access to clear and timely information about the contaminants at the site,” said EPA Region 9 Administrator Jared Blumenfeld.

This story was edited by Richard C. Paddock and copy edited by Christine Lee.

The chairman of the Chicago White Sox and Bulls is going into the global security business with an eclectic and controversial group of partners tied to the Obama administration, documents and interviews show.

According to incorporation records filed in Arizona, the former director of the U.S. Secret Service, the former U.S. attorney for Arizona and the ex-chief of staff to Secretary of Homeland Security Janet Napolitano have joined forces with Jerry Reinsdorf. A fifth partner is a prominent Arizona lobbyist and former GOP lawmaker.

Reinsdorf, 77, has surrounded himself in the new venture with a cast of former high-level government officials and political insiders, some of whom have had their own brushes with scandal and controversy. The melding of deep pockets, personal connections and powerful lobbying signals lucrative opportunities in the fast-growing global security industry. The venture highlights the shift toward international markets for government consultants and contractors amid an uncertain landscape for the U.S. federal budget.

Reinsdorf and his four partners each have a 20 percent stake in a new limited liability company called SRB2K, according to articles of organization filed last month with the Arizona Corporation Commission. The company is using the name Global Security and Intelligence Strategies as a “placeholder,” said Len Sanderson, a Washington-based spokesman for Reinsdorf.

Sanderson said that the partners may be discussing which markets the company would target, but that it would have an international interest. He emphasized the business is still in the early planning stages, but Reinsdorf and his partners wanted to stake their claim in the area.

“Most of this right now is about relationships and friendships and the belief they have in each other,” he said. “They’re not near to opening the doors. They’ve known each other a long time. They like each other. They trust each other. They’re just figuring out” what the business is going to do.

Based for now in the Phoenix area, where Reinsdorf has spent parts of the year living and the White Sox hold spring training, the company draws on three Arizona political operatives with years of experience in state and national politics and government as well as the man who was in charge of protecting two presidents and other government leaders.

Mark Sullivan retired last month as the director of the Secret Service after 30 years with the agency, which is part of the Department of Homeland Security. In nearly seven years at the helm, he presided over two scandals, including uninvited White House gate-crashers who sneaked past security into a 2009 state dinner and 13 agents who paid prostitutes to visit them in their Cartagena, Colombia, hotel rooms ahead of President Barack Obama’s visit to the country last year.

The Arizona personalities, who in their different ways have long ties to Napolitano, the Homeland Security leader, include Noah Kroloff, who left his post in recent weeks as the secretary’s chief of staff, and Dennis Burke, another former Napolitano adviser.

Kroloff, who first went to work for Napolitano when in law school at Arizona State University, earned a reputation in Arizona and Washington as a bare-knuckle political brawler, but a fierce supporter of his boss.

Burke, who worked as a federal prosecutor during Napolitano’s tenure as the U.S. attorney for Arizona, was in that position himself when the Alcohol, Tobacco, Firearms and Explosives agency's failed effort to track guns flowing between the U.S. and Mexico, known as Operation Fast and Furious, spun out of control when agents lost track of hundreds of guns. Under pressure, Burke, who also served as Napolitano’s chief of staff when she was Arizona’s governor, resigned as the U.S. attorney in 2011, clouding his political future. 

David Waid, who was chairman of the Arizona Democratic Party when Napolitano was governor, said Burke’s return to the public sphere may not necessarily be a step back on the political track, but the new enterprise would help establish him in the business and security worlds.

If he were to run for higher office, Burke would have “his detractors over Fast and Furious,” Waid said. He would “also have a whole lot of boosters in this state.”

Reinsdorf met the Napolitano aides when they worked in the governor’s office, said Waid, a former deputy chief of staff to longtime New York State Assembly Speaker Sheldon Silver, whom Kroloff worked for earlier in his career.

Sanderson said he did not know whose idea it was to start the company.

The fifth partner is listed as P3 LLC, which is run by John Kaites, a top Arizona lobbyist and former Republican state lawmaker. He previously teamed up with Reinsdorf in a bid to buy Arizona’s cash-strapped NHL franchise, the Phoenix Coyotes. Kaites also ran for the state’s attorney general as a Republican candidate in a race that Napolitano won in 1998, her first elected public office.

Kaites’ firm, Public Policy Partners, also lobbies for Major League Baseball teams such as the Oakland Athletics as well as Fortune 500 company Sempra Energy and The Geo Group, a private prison and immigration detention company, according to the Arizona Secretary of State website.

“Politics makes strange bedfellows,” Waid said. “It’s an eclectic and effective group. They are all people who have shown an ability to effectively tackle issues and make a difference.”

Calls to Kaites and the attorney representing the company were not returned. Reinsdorf did not return calls to his office at U.S. Cellular Field in Chicago. Kroloff, Sullivan and Burke could not be reached for comment.

This photo illustration is based on James Greer's patent application for technology that could detect objects, including stealth aircraft. He lived under a secrecy order for eight years.

Credit: Jaena Rae Cabrera/Center for Investigative Reporting

Gold developed a breakthrough in wireless communications that would help people speak to one another with less interference and greater security.

Then it disappeared like a dropped call.

The Department of Defense concluded that his invention could be a national security threat in the wrong hands and slapped Gold’s patent application with a so-called “secrecy order” in 2002, which prevented him from discussing the technology with anyone. Five years later, his attorney succeeded in lifting the order, but by then, it was too late.

“The window of opportunity, I believed, had really passed during those years,” Gold said. “So we have not been successful at commercializing the idea.”

Gold stresses today that he didn’t oppose the government’s position – public knowledge about covert communications techniques could undermine the military. The federal government sponsored his research and retained the right to use the technology.

But it also promoted an incentive by granting Gold shared patent rights, meaning he could file an application with the U.S. Patent and Trademark Office and seek to commercialize the idea. Accomplishing that, however, required petitioning to have the secrecy order lifted as the years passed with his invention living in the shadows.

It’s a common refrain in the stump speeches of politicians that America is a nation of ideas, but Congress decided in 1951 that some of those ideas must nonetheless be kept hidden. Today, as Silicon Valley and other innovation centers churn out thousands of patents a year, some lawmakers wonder whether the government should have broader powers.

What is known about secrecy orders is largely the result of Freedom of Information Act requests filed by groups like the Federation of American Scientists, an independent, nonpartisan think tank. Those documents show that the overall number of secrecy orders has steadily increased in recent years, totaling more than 5,300 by 2012, with some of them in effect for decades.

Tens of thousands of patent applications are manually examined each year under the Invention Secrecy Act and referred for a final decision to the Pentagon, National Security Agency, Department of Justice and, more recently, Department of Homeland Security.

“From the patent owner’s perspective, you’re stuck in this legal limbo where the government says you’ve got this valid invention, but there’s nothing you can do with it until maybe decades later,” said Mark Lemley, a technology law professor at Stanford University.

Secrecy orders are rare, but violating one can result in prison time.

A California man named James Constant filed his patent application in 1969 for radar technology that could track shipping containers, packages or components traveling along an assembly line. After his secrecy order was eventually lifted in 1971, Constant sought damages from the government, arguing that he couldn’t capitalize on the idea. When it reached trial years later in 1982, the court ruled against him, concluding that a “lack of business experience” impeded his chance of success.

Constant said from his home in Claremont that the secrecy order caused him to incur “a substantial financial loss” and set him back for years.

“When the secrecy order was put on my patent, I had the only viable technology,” he said.

In each case, the legal headaches occurred only after the inventor had spent no small amount of time and resources developing the idea in the first place.

“We still have a Cold War approach to secrecy orders,” said Pat Choate, an economist and intellectual property expert. “If a secrecy order is imposed, you wind up with the inventor effectively having the technology taken away.”

Lemley and others understand why defense officials might want to shield cryptographic technology that could prevent the government from secretly eavesdropping on the conversations for foreign enemies. But modern encryption can also protect consumers from identity thieves and allow human rights activists living under abusive regimes to communicate more freely.

 

“Who’s going to make the determination that something is economically viable? It’s usually the market making that determination,” said Robert Stoll, who retired as the nation’s patent commissioner in 2011 before joining a private practice.

Stoll said such a move would do its own damage to the economy, and the nation would be better off filing patent applications in foreign countries and taking China or other violators before the World Trade Organization if they fail to honor intellectual property agreements now in place.

Tom Culligan, legislative director for Wolf, countered that achieving recourse from the World Trade Organization can take far too long. The congressman’s goal was, first, to review secrecy orders in general after years of inattention from Congress and, second, to force the federal government to examine how strong present protections are for America’s most important ideas, Culligan said. 

“We just wanted to start a conversation. We weren’t necessarily prescribing a solution,” he said.

Under the law, an inventor can seek compensation if defense agencies choose to use the idea or if the applicant can prove damages were suffered by not being permitted to take it to the marketplace. But the process for doing so is arduous, economist Choate said. Among other things, evidence confirming the government simply took an inventor’s idea could itself be considered secret.

Steven Hoffberg has handled one secrecy order in his 23 years as an intellectual property attorney. But that order was enough to threaten his client’s idea for a technology that could detect objects, including, potentially, stealth aircraft.

Hoffberg’s client, James Greer of Alabama, lived under a secrecy order for eight years after his application was filed in 2000. During that time, it would have been a challenge to explore whether the idea could be exported to strategic allies of the United States as an anti-stealth technology, let alone identify possibilities outside of the defense community. Those possibilities included object tracking for “smarter” highways of the future and next-generation communications.

Hoffberg argues that it was unjustified for the order to be in place for such a long period of time and that at least by 2004, the application would not have given adversaries a strategic advantage.

“They kept us from fulfilling the purpose of the patent, which was to make an investment to bring a product to market,” Hoffberg said. “ … If the government wasn’t going to buy the product from us and wasn’t going to let us sell it commercially, we basically had no value.”  

Choate and others want the government to stop publishing applications until a formal patent is issued, and if the application is denied, they want it destroyed so the inventor has a chance to try again or guard it as a trade secret and ultimately reap the rewards before it’s stolen.

When it comes to secrecy orders, many of the technologies were backed by defense agencies to begin with. So it’s less of a surprise if such an order exists for the technical components of a nuclear weapons system, for example.

But dozens of so-called “John Doe” secrecy orders are issued each year, affecting private individuals and businesses that might never enjoy a payoff from their invention, even though the government has no explicit interest in the technology. John Doe orders reached a high of almost 100 in 1998, though the annual number has declined in the new millennium, according to the Federation of American Scientists.

So is the next Google hiding behind a secrecy order? It seems highly unlikely, but because of the shroud of secrecy, no one can know for sure, said science historian Alex Wellerstein.

He said even one hidden technology carrying possible benefits for society that are not defense-related is enough to undermine the purpose of patents – encouraging invention. He and other experts want at least the criteria used for issuing secrecy orders made public.

“The law says it just has to be detrimental to national security, which is vague,” Wellerstein said. “That doesn’t mean anything. It’d be nice if you had to actually pass (the patent application) to people who have business experience, not just people who make weapons and have a tendency of seeing lots of things as dangerous.”

This story was edited by Robert Salladay and copy edited by Nikki Frick and Christine Lee.

After a week in which the phone lines of the Associated Press were bugged and Google glasses that can record our every move are being tested, it seems fitting to mark World Information Society Day. This event was established by the U.N. to raise awareness of how new technologies are transforming our society and to acknowledge the challenges they present to human rights.

“Naked Citizens,” a documentary by Austrian Public Broadcasting, goes inside this brave new world industry and asks whether, in the name of security, our most basic freedoms already are being compromised. The film details new inventions like smart cameras that are being programmed to stop crimes before they occur. It also examines the fallout when mistakes occur and innocent people are caught up in the Orwellian dragnet.

Digital activists warn that it is up to each of us to investigate the technology we use and protect our own information.

For more on this topic, check out this Technology playlist compiled by the editors of The I Files, featuring creepy drones, omnipresent surveillence cameras and at least one scientist named Orwell.

To keep up with the latest documentaries, subscribe to The I Files, a project of the Center for Investigative Reporting.

When a thief rang up $2,000 in charges at Victoria’s Secret, Gymboree and Gap on Rosa Franco’s credit card, she quickly surmised the reason – the state of California had mistakenly left her credit card and Social Security numbers exposed.

Twice.

The state Department of Developmental Services, which serves Franco’s 5-year-old daughter and thousands of others with disabilities, had in March 2012 left stacks of billing and patient records in an abandoned, unsecured office. In another case, an employee in November left his unencrypted computer in his unlocked car overnight. The computer and more than 18,100 patient records disappeared.

“They send you a letter saying, ‘Oh, I’m sorry, oops, your information is lost!’ ” said Franco, 46, who lives in Los Angeles with her husband and daughter, who has Down syndrome.

“Thousands of people got that letter,” she said. “It’s unfair. We already have enough stress with our kids being special needs. Now I have to watch my daughter’s Social Security number.”

The security breach was one of thousands reported by state agencies over the past decade, the result of hacking, employee carelessness and theft. In 2012 alone, 16 state agencies and affiliated nonprofits reported major data breaches, according to state data reviewed by The Center for Investigative Reporting.

Despite numerous laws and state policies aimed at protecting privacy, consumer information represents easy pickings for hackers and thieves. State agencies frequently fail to protect the confidentiality of patients and consumers, including those who are the most vulnerable to fraud and identity theft – children, the elderly and the disabled.

Nearly 10 years of state-collected data on computer security incidents involving confidential and private information reveals state agencies do not always encrypt computers, even when they contain confidential information affecting thousands of people. Of the 283 computers and phones containing confidential information that were reported lost and stolen, 25 percent were not encrypted.

In some cases, employee carelessness, not hacking, leads to security breaches. In 1,646 cases since 2003, confidential information was released after state employees lost equipment and documents or mailed and posted private information to the wrong place, according to a state database of preliminary reports.

About one-third of cyberbreaches are successful, according to the database. Agencies reported 49 out of 154 computer viruses, denial-of-service attacks and hacking attempts breached security. On several occasions, computers were disconnected from the network and destroyed after being infected with malware.

Michele Robinson, acting director of the state’s Office of Information Security, said the agency tries to continually train and instruct information technology staff across the state to protect and encrypt sensitive information.

“Obviously, we’ve seen incidents where they have not done that,” she said. “From our perspective, one of those is one too many.”

The cases run the gamut, from employee error to hack attacks to poor information security practices.

In little more than two years, for example, the Department of Motor Vehicles has mailed the wrong driver’s license or vehicle registration to more than 1,000 people, according to internal records. Last year, a courier left the keys in the ignition as he delivered a package and 283 Social Security numbers and driver’s licenses were stolen.

In April 2012, a thief stole an unencrypted computer from a state Department of Public Health service provider in Palm Springs that contained confidential information on 4,400 patients with AIDS. A month later, a package containing Social Security numbers for 748,902 elderly home care recipients and their caretakers was stolen en route to a state insurance office.

In November, the Department of Health Care Services accidentally posted 14,000 Social Security numbers for in-home care workers online. Nine days later, employees realized their mistake and took down the list. But workers were alarmed to find the information easily on Google.

Encryption has been a required state practice for years. A memo in 2008 from the Office of Information Security and Privacy Protection reminded state agencies to encrypt all devices containing confidential information, a requirement long outlined in the State Administrative Manual. Yet many agencies have not followed the procedure, allowing electronic information to fall into harm’s way.

“We definitely need to find out how rampant this situation is and rectify the situation as soon as possible,” said Assemblyman Ed Chau, D-Monterey Park, chairman of the Assembly’s Select Committee on Privacy. “Building a firewall to safeguard information is crucial.”

Without encryption, anyone can override a computer’s password and gain access to its confidential contents by removing the computer’s hard drive, using software or guessing. Technology experts say encryption is an easy procedure for any information technology department.

“People don’t realize that passwords are quite trivial,” said Seth Schoen, a senior staff technologist for the Electronic Frontier Foundation. “They should encrypt their data storage on every device. In the absence of that, whoever gets the device will be able to read it.”

By law, the California Highway Patrol is required to take reports on each security incident and investigate crimes involving state computers or those that are on state property. But Sgt. Kelly Dixon, an investigator in the Computer Crimes Investigation Unit, said limited resources make it impossible for the unit to investigate every crime.

“Theoretically speaking, we would be responsible,” he said. “Practically speaking, the local agency would come and take the report. We’re not going to investigate a vehicle burglary.”

Records show many agencies do not always send out notification letters immediately after security breaches, despite California’s first-in-the-nation law requiring businesses and state agencies to notify anyone whose unencrypted private information might have been accessed by outsiders.

Breaches involving theft of equipment are rarely investigated or lead to an arrest.

Last September, a Highway Patrol officer was shopping at a Sacramento Barnes & Noble when a thief broke into the trunk of his personal car, according to a state property report. The loot included a Highway Patrol-issued.40-caliber Smith & Wesson pistol, three .40-caliber high-capacity magazines and the officer’s unencrypted laptop containing confidential information, according to the database.

The officer called the Sacramento Police Department to make a report; no arrest was made.

In the case of the Department of Developmental Services records, a supervisor of a program for developmentally disabled infants and toddlers at the North Los Angeles County Regional Center had left his work laptop, personal laptop and iPhone in his car overnight on a street in Santa Monica, according to a police report. When he returned in the morning, the items were gone.

Although the state supervisor reported the thefts to the Santa Monica Police Department, the case never was investigated. Santa Monica police Sgt. Richard Lewis said the employee did not call police to collect evidence but dropped off a report he filled out himself, which meant the case would not be examined.

“I guarantee this case was never looked at,” he said, adding that the man did not identify himself as a state employee. “If we know it’s state property, we do a full-blown report.”

The Department of Developmental Services did not report the incident to the Highway Patrol or notify affected patients until two months later.

Nancy Lungren, the department’s assistant director of communications, could not explain the delay but said the regional center “has been reminded of their responsibility to submit timely reports on these type of security incidents.”

Click for larger image

Former Mayor Willie Brown speaks during the Hunters Point groundbreaking. On its website and in company brochures, the San Francisco Bay Area Regional Center refers to Brown as a "principal," but he denies knowledge of the investment firm.

Credit: Michael Short/For The Center for Investigative Reporting

House Minority Leader Nancy Pelosi and San Francisco Mayor Ed Lee have devoted staff time, lobbying resources and political capital to ensure the success of a private investment firm linked to Democratic power broker Willie Brown.

The firm, the San Francisco Bay Area Regional Center, would help secure visa priority for foreign investors who back a city dream: redevelopment of the former Hunters Point Naval Shipyard with Lennar Corp. Like other investment firms, its core business is to sell private shares, collect fees, reap returns and pass along risk.

In a letter to the U.S. Department of Homeland Security, Pelosi, a longtime Brown ally, wrote that “it would be in our national interest” to allow the firm to collect fees and investment returns under a federal program, noting federal investment in the toxic cleanup of the property.

Lee’s support has included having an aide travel to China to help market shares to investors.

Brown’s exact role in the investment firm is a bit of a puzzle. He denies knowledge of it, but the company’s brochures and website call him a “principal,” and regional center CEO Ginny Fang says he is a minority partner.

But when Fang wrote to city officials July 4, 2012, making the case for lobbying the Homeland Security Department, she wrote that the regional center has three leaders: herself, Brown and Steven Kay, secretary of the board for the Willie L. Brown Jr. Institute on Politics & Public Service. Brown is chairman and CEO of the institute.

Records show the regional center’s managers are lining up $67 million in investments and hope to eventually raise $300 million. Investments would be held by two separate LLCs. In U.S. Securities and Exchange Commission filings, both of those LLCs name Kay as president.

“If I had to diagram this project, it would look like a family tree with lots of extra little problems,” said Judy Nadler, senior fellow in government ethics at Santa Clara University. “Brown as chair and principal of this financial services firm stands to benefit financially, probably in a significant manner. So I’d say that the skeptic would look at this and say this pretty much looks like an inside deal.”

Fang took issue with the term “inside deal,” telling The Center for Investigative Reporting that support for her firm was no different than other civic enterprises. She did not answer questions about Brown’s potential financial stake.

“The City supports, advocates and funds a myriad of projects, nonprofits and contractors across San Francisco, most of which have no relationship with Willie Brown,” Fang wrote in an email. “Are each of those also ‘inside deals?’ ”

The San Francisco Bay Area Regional Center formed a partnership with Miami-based developer Lennar Corp. in 2011 to act as a broker for foreigners, primarily Chinese, under the federal EB-5 visa program, according to company memos. Named for a section of the U.S. immigration code, the program gives green-card priority to people who invest at least $500,000 in designated U.S. enterprises.

The regional center hired the Shanghai firm Visas Consulting Group to host a series of seminars this spring in Chinese cities. The pitch to foreign investors has emphasized the firm’s links to political figures such as Brown as evidence that it is a sound investment. At an April 14 seminar in Shanghai, prospective investors received glossy brochures illustrated with photographs of Lee and Brown.

Click for larger image

At an April seminar in Shanghai, prospective investors for the San Francisco Bay Area Regional Center received about 100 pages of promotional material. They included glossy brochures with endorsements from San Francisco Mayor Ed Lee and Willie Brown, the former mayor and state Assembly speaker. "The Hunters Point project is, to my knowledge, the best opportunity in the world of San Francisco development," the brochure, translated from Chinese, quoted Brown as saying. According to Lee: "This collaborative project between government and enterprise ... will breathe new life into San Francisco's south-eastern district. ..."

The investment brochures, like online materials, refer to Brown as a company “principal.” During the seminar, a presenter described Brown several times in connection with the regional center as “dong shi zhang,” or chairman of the board.

Fang said Brown is not chairman but, after being provided a tape of the presentation, acknowledged that was what he was called. She offered no further explanation.

A video featuring Brown led into the April 14 sales pitch. It was shown before a presenter told attendees that 50 investments already had been made, with 40 remaining.

“I am Willie Brown, former mayor of San Francisco and, of course, former speaker of the California Assembly, and I am a principal in the San Francisco Bay Area Regional Center,” Brown said in the video. “I am just delighted to be a part of this.”

At a May 21 City Hall speech by Lee, Brown brushed off a reporter’s request to discuss the regional center.

“I have no idea what you’re talking about,” he said.

The CIR reporter asked Brown: “You don’t know what the San Francisco Bay Area Regional Center is?”

“Nope,” Brown said, before excusing himself.

At a June 26 groundbreaking for the first of 247 Hunters Point housing units, Brown wound up the ceremony by touting the project’s moneymaking potential. The regional center was never mentioned.

“The investment opportunity here represents something that’s unique in America,” he said, highlighting his own role in getting government funds for the project. “There is no other piece of soil as potentially lucrative and profitable for the public sector and private sector than this spot is going to be.”

Asked at the event what he expected the San Francisco Bay Area Regional Center’s profit to be, Brown said: “I don’t know what that is. I don’t know what that is. I don’t know what that is.”

Development at Hunters Point

Brown is credited with engineering Lee’s 2011 appointment to serve out the remainder of Gavin Newsom’s mayoral term after he was elected lieutenant governor. Brown later played a prominent role in Lee’s campaign to remain mayor.

Lee likewise initially claimed ignorance about the regional center. Asked at a May 30 ribbon cutting to comment on the San Francisco Bay Area Regional Center, he said, “I can’t say that I have much detail on that.”

However, in an interview at the Hunters Point groundbreaking last week, Lee acknowledged that the first phase of construction would be financed by the Brown-linked firm. The Lennar Urban division previously installed streets and sewers at the Hunters Point project site, but delayed construction, citing lack of money.

“The ones taking the risk and putting infrastructure into the ground, that’s Lennar,” Lee said. “And they’ve been doing a really great job.”

Before the event, regional center CEO Fang said her company would fund part of the first phase of Hunters Point construction, referring specific questions to Lennar. Lennar Urban President Kofi Bonner, who served as San Francisco’s director of economic development while Brown was mayor, did not answer questions.

“We don’t discuss financing,” Bonner said.

Click for larger image

Lennar Urban President Kofi Bonner (left) and former San Francisco Mayor Willie Brown attend a June 26 groundbreaking for Lennar Corp.'s housing development at the old Hunters Point Naval Shipyard site in San Francisco.

Credit: Michael Short/For The Center for Investigative Reporting

Pelosi’s Sept. 18 letter urging U.S. immigration authorities to fast-track the regional center’s certification was part of her efforts to bring jobs to low-income sections of her congressional district, her press secretary wrote in a statement.

“By incentivizing private investment to the redevelopment of the Hunters Point Naval Shipyard, the shipyard will be transformed into a source of local jobs and economic development into this disenfranchised community,” the statement said.

In her letter to the Homeland Security Department, Pelosi wrote that the government so far has spent $1 billion at Hunters Point, with most of the money going to toxic and radioactive waste cleanup.

The project still requires $3 billion to pay for infrastructure and $7 billion for planned apartments and office space, yet neither the city nor Lennar has been able to come up with necessary funds, Pelosi wrote.

According to Pelosi, U.S. Citizenship and Immigration Services needed to authorize the San Francisco Bay Area Regional Center to solicit funds under the Immigrant Investor Program, so the city can “proceed with the remainder of the project without delay.”

City support at seminars

The City and County of San Francisco’s lobbyist, Eve O’Toole, joined the effort last September, also pressing U.S. immigration officials to fast-track the application, according to internal emails.

The city government may have opened itself up to liability by helping in the sale of securities, said Michael Gibson, who leads a Tampa, Fla., firm that audits EB-5 regional center investment firms.

In March, Wells Lawson, Lee’s aide overseeing the Hunters Point project, traveled to China and Japan for two weeks to help with seminars marketing shares in the company to potential investors. The regional center paid for all of Lawson’s travel expenses, including more than $1,300 in plane tickets, said Leo Levenson, the city accountant who tracks government finances related to redevelopment projects such as Hunters Point.

According to Lawson’s presentation notes, obtained through a public records request, he underscored the backing of government officials for the Hunters Point project.

“This would not be possible without deep commitment at the federal, state and county level and the extent of public investment cannot be overestimated,” Lawson’s notes read. “I invite you to be a part.”

Click for larger image

San Francisco Mayor Ed Lee poses for a photo with Ginny Fang, CEO of the San Francisco Bay Area Regional Center, during the Hunters Point groundbreaking. Lee acknowledged that the first phase of construction would be financed by the regional center, a private investment firm that has ties to former Mayor Willie Brown.

Credit: Michael Short/For The Center for Investigative Reporting

Although Lawson was on the city payroll while in China, the city kept no financial records of the trip, Levenson said. Lennar ultimately reimbursed the regional center, Lawson said. Fang, the regional center CEO, also said the developer paid for the trip.

Lawson said he simply was performing his government job, which is to try to ensure the Hunters Point project proceeds. The China trip was “a project cost. It’s no different than if I went over to Sacramento to make a presentation to Caltrans about the project,” he said.

Fang also defended Lawson’s involvement in the Chinese investment sales seminars.

“The city is not selling the investment,” she wrote in an email. “It is legitimizing the existence of the project in its own self interest.”

Trouble gaining financing

After he became San Francisco mayor in 1996, Brown pushed to redevelop the Hunters Point Naval Shipyard, which closed in 1988. With Pelosi’s help, the federal government contributed to the $815 million cleanup of toxic and radioactive waste at the former base, she wrote in her letter to the Department of Homeland Security.

But developer Lennar, which in 1999 was chosen by the city to develop the 770-acre parcel, has stumbled in obtaining financing for construction of what was to be a $10 billion project. 

The last such failure came in April. Following a trip to China by Lee, the mayor’s office confirmed that a proposed $1.7 billion loan to Lennar from the China Development Bank had fallen through. It would have funded redevelopment projects at Hunters Point and the former Treasure Island Naval Station.

Lennar announced soon afterward that the development would proceed nonetheless, with 88 housing units to be built this summer and 159 more in the fall. Not included in the announcement was that, behind the scenes, Brown’s allies in local and federal government had helped assure that funding would flow through a Brown-linked company, according to communications and other documents obtained through public records requests.

For the Hunters Point deal, the regional center is asking for a $45,000 fee from each $500,000 investor, according to documents filed with the SEC.

It intends to create an investment partnership with Lennar to build the first and second phases of a residential and commercial development at the former base. That development ultimately is to include 10,500 residential units and more than 4 million feet of retail and office space, according to investment materials and government documents obtained by CIR.

Click for larger image

Mayor Ed Lee speaks during the Hunters Point groundbreaking. Lee’s support for the San Francisco Bay Area Regional Center, which is involved in financing for the Hunters Point project, has included having an aide travel to China to help market shares to investors.

Credit: Michael Short/For The Center for Investigative Reporting

Eunice Edwards, a San Ramon, Calif., real estate agent who had discussions with the firm on behalf of a client, said she was told that investors would earn a return of about 2 percent, be able to get their money back in five years and have an option to buy a Hunters Point apartment at market rate.

Carolyn S. Lee, an attorney representing the San Francisco Bay Area Regional Center, emphasized that there is no conflict of interest in the arrangement.

“So let’s say the principal is Willie Brown, and he was a key fundraiser for the current mayor. So what?” she said. “These are local businesses, and it’s not unusual for public officials to support them.”

The Brown-linked firm is not related to the Bay Area Regional Center, another EB-5 visa investment firm based in Oakland.

Controversy in EB-5 program

The EB-5 visa program has long been controversial. Since it began in 1990, it has been a perennial source of stories about immigrants who saw their investments evaporate and their visa applications denied.

One repeated criticism has been that sales pitches don’t focus on ordinary investing principles such as risk and rate of return. Emphasis instead is put on political support and the tangible benefits of a U.S. visa.

During the Shanghai marketing seminar, one video featured Chinese citizens who had successfully immigrated to the United States through the EB-5 visa program.

“A few years ago, I was concerned about my son’s education and wasn’t sure what to do,” said one videotaped woman who identified herself as Michelle from Guangzhou. “But now, I look at my son’s education today and he’s studying at the University of California at Berkeley.”

Lately, the EB-5 program has ballooned, expanding from 806 visas issued in 2007 to more than 7,400 in 2012, according to U.S. immigration figures. Troubles likely will grow as well, said Gibson, the EB-5 investment specialist.

“In the next few years, there will be investors not given any capital or only a fraction of what they invested,” Gibson said. “That’s where we’re going to see a lot of investigation.”

Already, litigation is emerging around the country. Last year, EB-5 investors filed a class-action suit in New Orleans alleging misuse of funds that still is pending. In April, a federal judge ordered a Chicago developer raising investor-visa funds to return the money after the SEC filed fraud allegations.

San Francisco attorney Edward Lau, who specializes in the EB-5 program, obtained a fraud judgment earlier this year for three Chinese clients after an EB-5 developer – unrelated to the San Francisco Bay Area Regional Center – disappeared along with $3 million that was to be invested in a San Bruno restaurant.

“If there is a major loss because of a regional center, attorneys go after everybody – everybody who’s a conspirator, a cohort, everybody who’s a participant in advancing the scheme itself,” Lau said.

Manuela Zoninsein contributed to this report from Shanghai. This story was edited by Amy Pyle. It was copy edited by Nikki Frick and Christine Lee.

The Center for Investigative Reporting is pleased to announce that Visual.ly, a community platform for data visualization and infographics, will be donating $10,000 in development time to help produce the winning project at TechRaking III's data journalism design sprint. CIR and Visual.ly will be working together to develop the conference's winning idea into a usable product.

Last year, Coco Studios donated $10,000 worth of hours for the winning news game pitch at CIR's TechRaking II: Gaming the News conference with IGN. "Hair Net Hero," a game that challenges players to create a healthy school lunch, was TechRaking II's winning concept. It's in development now and will be launched in late September.

TechRaking III, "Mining the News," is a free invite-only event co-hosted by Google and will be held at the Googleplex in Mountain View, Calif. Designed for data professionals and journalists, the conference will connect innovative data models and practices with high-quality investigative journalism. Media and data experts will explore the benefits of open data and how to equip the next generation of journalists with 21st-century research skills. Participants also will dive into specific best practices to help journalists produce groundbreaking investigations – data journalism design sprints will result in a winning project at the end of the day.

Launched in April 2011, Visual.ly makes it possible to present information and meaning in a bite-sized visual way that makes sense in the age of big data. The platform has grown to include a library of more than 40,000 infographics, a robust community of almost 150,000 and a suite of offerings that includes premium services, free self-service tools and a marketplace that automates the infographic creation process.

Click for larger image

Financial company executives testify before the U.S. Senate Banking Committee in 2007. At the time, Andy Pollock (far right) was president of First Franklin, a subprime mortgage lender whose risky loans hastened the downfall of Merrill Lynch. Today, he's co-CEO of Rushmore Loan Management Services, a company that traditionally collected payments on loans and now is originating loans.

Credit: Dennis Cook/Associated Press

Andy Pollock rode the last subprime mortgage wave to the top, then got out as the industry collapsed and took the U.S. economy with it. Today, he’s back in business.

Pollock was president and CEO of First Franklin, a subprime lender whose risky loans to vulnerable consumers hastened the downfall of Merrill Lynch after the Wall Street investment bank bought it in 2006 for $1.3 billion. He still was running First Franklin for Merrill in 2007 when he told Congress that the company had “a proven history as a responsible lender” employing “underwriting standards that assure the quality of the loans we originate.”

The next year, federal banking regulators said First Franklin was among the lenders with the highest foreclosure rates on subprime loans in hard-hit cities. Standard & Poor’s ranked some of its loans from 2006 and 2007 among the worst in the country. Lawsuits filed by AIG and others who bought the loans quoted former First Franklin underwriters as saying that the company was “fudging the numbers” and calling its loan review practices “basically criminal,” with bonuses for people who closed loans that violated its already-loose lending standards.

Merrill closed First Franklin in 2008, after the subprime market imploded and demand for risky loans dried up. For Pollock and his contemporaries, who have survived decades of boom and bust in the mortgage trade, the recent near-toppling of the global economy was a cyclical, temporary downturn in a business that finally is beginning to rebound.

Five years after the financial crisis crested with the bankruptcy of Lehman Bros. Holdings Inc., top executives from the biggest subprime lenders are back in the game. Many are developing new loans that target borrowers with low credit scores and small down payments, pushing the limits of tighter lending standards that have prevailed since the crisis.

Some experts fear they won’t know where to stop.

The Center for Public Integrity in 2009 identified the top 25 lenders by subprime loan production from 2005 to 2007. Today, senior executives from all 25 of those companies ‒ or companies they swallowed up before the crash ‒ are back in the mortgage business. Most of these newer “nonbank” lenders are making or collecting on loans that might be too risky to qualify for backing by the U.S. government. As the industry regains its footing, these specialty lenders represent a small but growing portion of the market.

The role of big subprime lenders in teeing up the financial crisis is well documented.

Lawsuits by federal regulators and shareholders have brought to the surface tales of predatory lending, abusive collection practices and document fraud. A commission charged by Congress to look at the roots of the crisis said lenders “made loans that they knew borrowers could not afford and that could cause massive losses to investors in mortgage securities.”

Risky loans, a Senate investigation concluded, “were the fuel that ignited the financial crisis.”

As borrowers defaulted at increasing rates in 2006 and 2007, global financial markets tightened, then froze. The result was the worst economic crash since the Great Depression. Today, millions of Americans still face foreclosure. Yet few subprime executives have faced meaningful consequences.

“Old habits die hard, especially when there’s no incentive to do things differently,” says Rachel Steinmetz, a senior underwriter-turned-whistle-blower who worked at subprime lender GreenPoint Mortgage, later bought by Capital One, until June 2006. “The same shenanigans are going on again because the same people are controlling the industry,” says Steinmetz, who stays in contact with former colleagues.

To be sure, loans offered by these executives’ new companies face unprecedented scrutiny by regulators and investors. Many of the riskiest practices from the subprime era have been outlawed.

“We could never, ever go back to the kinds of products we were selling. They were disastrous,” says John Robbins, who founded three mortgage lenders ‒ two before the crisis and one in 2011, from which he recently stepped down. The new holy grail for some lenders, according to Robbins: a mortgage that complies with new rules yet “creates some opportunity to lower the bar a little bit and allow consumers the opportunity to buy homes (who) really deserve them.”

Robbins is one of several executives identified in the Center’s investigation who have gathered up their old teams and gotten back into the mortgage business. Others have tapped the same private investors who backed out-of-control lending in the previous decade.

The lenders vary in how willing they are to accept lower down payments, weaker credit scores or other factors that can make a loan more risky.

New Penn Financial allows interest-only payments on some loans and lets some borrowers take on payments totaling up to 58 percent of their pretax income. (The maximum for prime loans is 43 percent.) PennyMac's nongovernment loans make up a tiny portion of its total lending and have virtually the same underwriting standards as prime mortgages, but the loans are bigger than government agencies would allow. And Rushmore Home Loans so far offers only mortgages that could likely get a government guarantee, though a company website says it "intends to expand and enhance current product offering."

The newer loan offerings remain fairly safe, but companies gradually are becoming more flexible about what documentation they require and how big borrowers' payments must be, says Guy Cecala, publisher of the trade magazine Inside Mortgage Finance. "You're going to see a little more risk coming into the system," Cecala says, as lenders permit smaller down payments and finance more investment properties.

Riding out the storm

After First Franklin closed in 2008, Pollock remained in his five-bedroom, $2.4 million home in ritzy Monte Sereno, Calif. He led a consulting firm that became a temporary haven for at least 15 former First Franklin employees.

By 2013, Pollock was co-CEO of Rushmore Loan Management Services, a company that traditionally collected payments on loans and is now originating loans. The company offers adjustable-rate mortgages and allows down payments as low as 5 percent. A company spokeswoman said that Rushmore’s loans meet government standards and that some government programs allow low down payments to encourage homeownership.

Pollock is among at least 14 founders or CEOs of top subprime lenders whose postcrisis employers want to serve consumers who might not be able to qualify for bank loans.

Also on the list is Amy Brandt, who at 31 became CEO of WMC Mortgage Corp., then owned by General Electric. Brandt‘s properties include a $2 million, 13,600-square-foot mansion– with a landscaped pool, waterfall and wood-paneled home theater – in a Dallas suburb that Forbes once ranked as America’s most affluent.

In July, she was named chief operating officer of Prospect Mortgage, backed by private equity firm Sterling Partners. The firm is run by a former executive of IndyMac and American Home Mortgage, and its chairman is a former CEO of the government-sponsored mortgage finance giant Fannie Mae. Prospect’s mortgage offerings include interest-only loans whose payments can increase sharply after a few years.

Jim Konrath, founder and former CEO of Accredited Home Lenders, which cratered so quickly when the housing bubble burst that a private equity firm that had agreed to buy it tried to back out of the deal, today is chairman of LendSure Financial Services, a company that advertises “serving customers along the credit continuum, and doing so in a way that is both profitable and fair.”

The company’s founders “successfully emerged from the latest industry downturn ‒ and navigated others before it,” LendSure tells visitors to its website.

In 2011, California regulators accused Konrath and LendSure of collecting illegal upfront fees from people seeking loan modifications and failing to maintain required records. Konrath paid $1,500 and was required to take a class and pass a professional responsibility exam. David Hertzel, a lawyer for the company, said Konrath was not “actively involved” in the decision and was penalized because the company was operating under his broker’s license.

With LendSure based in San Diego, Konrath has been able to keep his secluded 4,200-square-foot house in nearby Poway, as well as a ski chalet near Lake Tahoe.

And there’s Scott Van Dellen, former CEO of the homebuilder-lending division owned by IndyMac ‒ a California bank whose collapse was the nation’s costliest. Last December, a jury agreed that he and two other former executives should pay $169 million to federal regulators, finding that they negligently approved risky loans to homebuilders. (IndyMac’s insurers may pay some or all of the judgment, which is subject to a possible appeal.)

Van Dellen’s new company, Yale Street Mortgage, is in the same Pasadena ZIP code as IndyMac and provides loans to real estate investors who want to “buy, fix and flip” single-family homes and small apartment buildings.

Lender, yes; bank, no

Most of the bad loans that brought about the crash in 2008 were made by lenders that were not owned by banks. These companies cannot accept deposits ‒ their loans are funded by investors, including private equity firms, hedge funds and investment banks. In the run-up to the crash, big Wall Street investment banks binged on subprime lenders, spending billions to buy them up and resell their loans just as the market turned.

Lehman Bros., for example, bought BNC Mortgage in 2004 and financed subprime loans offered by other companies. Jim Harrington was a senior vice president with Lehman from 1999 to 2008 and now is a managing director for Resurgent Capital Services, which collects mortgage and other debts and specializes in “challenging loan portfolios.”

At Lehman, Harrington was charged with determining how much risk was posed by a lender’s legal compliance and lending decisions. He says he was not a “key decision-maker or a key source of setting credit policy” at Lehman, but more of “a spoke in the wheel.”

As the mortgage industry undergoes another wave of consolidation, nonbank lenders again are attractive targets for investors seeking to enter the mortgage business overnight. They also remain far less regulated than banks that take deposits. Banks tend to offer only the safest home loans ‒ those that qualify automatically for government backing.

New regulations have made lending standards so tight, industry officials argue, that many Americans who should qualify for home loans effectively are shut out of the market.

“The American consumer is underserved at this point,” says Robbins, the three-time mortgage CEO. “How do we serve the low- to moderate-income community as an industry when you have these kinds of daunting regulations?”

Many of the most problematic loan types from before the crisis have been banned, including “liar loans,” which didn’t require borrowers to prove their income, and balloon loans, which offer low payments for a number of years, then sock borrowers with a giant, one-time payoff at the end.

Nonbank lenders now face on-site examinations by the Consumer Financial Protection Bureau and can be punished for making deceptive loans or loans that borrowers clearly cannot repay. The bureau found recently that many lenders lack basic systems to ensure that they comply with the law.

Still, lenders are finding other ways to offer loans to people who can make only a small down payment or who have lower credit scores than traditional banks will accept. Such loans, known in the post-meltdown era as “nonprime” or “below-prime,” go to borrowers who would not meet the standards of government-backed mortgage companies Fannie Mae and Freddie Mac.

Carrington Holding Co., for example, will lend to borrowers with credit scores as low as 580, so long as they can prove adequate income and savings. The average credit score for a prime mortgage borrower now tops 700. Christopher Whalen, executive vice president and managing director at Carrington, says borrowers with banged-up credit histories are safe bets if they can show they have the income and savings to afford payments.

So far, nonprime loans by nonbank lenders are only a sliver of the market ‒ 5 percent, by some estimates. But the industry is mushrooming in size. The two fastest-growing lenders are not owned by banks.

To get a sense of the growth, one need look only at the volume of nongovernment-backed loans that are being pooled into mortgage bonds. Loans in these pools tend to be too risky to satisfy banks’ stringent lending requirements.

Companies are expected to issue more than $20 billion of the nonguaranteed bonds this year, up from $6 billion in 2012, according to an April report from Standard & Poor’s. By comparison, in 2005, just as home values began to dip and foreclosures to rise, companies bundled $1.19 trillion in mortgage-related investments that were not backed by the government.

In the industry’s mid-2000s heyday, bartenders could become loan officers and quickly draw six-figure salaries, while loose lending standards allowed housecleaners and field laborers to buy $300,000 homes with loans whose teaser rates rocketed upward after a few years, forcing them into foreclosure.

Those days are gone. Marquee-name lenders like Countrywide, IndyMac and New Century have closed their doors. While the scenery might be different, the cast of characters hasn’t changed.

“Five years down the road, and we’re back in the thick of it again. It’s a weird place to be,” says Cliff Rossi, who was a high-level risk management executive at Countrywide, Washington Mutual and Freddie Mac before the crisis.

Rossi got his start during the savings and loan debacle that felled 747 lenders in the 1980s and 1990s, he says, and left the industry during the 2008 crisis.

“In that intervening 20 years, we forgot what we learned in the ’80s,” he says. “I fear right now, human nature being what it is, that downstream, we could find ourselves in the same situation.” Rossi now teaches finance at the University of Maryland’s Robert H. Smith School of Business.

Most of the 25 executives identified by the Center for Public Integrity refused to be interviewed for this story.

At CS Financial, Chief Marketing Officer Neal Mendelsohn referred questions about Chief Operating Officer Paul Lyons to Ameriquest, where, according to his LinkedIn profile, he was director of whole loan sales until 2007, when the company stopped lending.

“There’s just the lingering stink of it that’s really kind of troubling,” Mendelsohn says of Lyons’ difficulty in shaking his past association with Ameriquest. The company's practices were condemned widely before the crisis; in 2006, it agreed to pay $325 million to settle charges of widespread, fraudulent and misleading lending.

Van Dellen, the former IndyMac executive who is lending to flippers, hung up on a reporter and ignored an emailed interview request.

From Countrywide to PennyMac

Mortgage companies don’t just make money by pocketing the interest people pay on their home loans. In fact, many resell most of the loans they originate to other investors. Much of the lenders’ income comes from fees charged for everything they do: originating loans, bundling them into bonds and collecting payments from borrowers. They don’t necessarily need the loans to be repaid to make money.

PennyMac, a fast-growing company founded by former Countrywide Home Loans CEO and IndyMac director Stanford Kurland, is a sprawling concern that earns fees by originating loans in call centers and online. It consists of two intertwined companies: a tax-free investment trust that holds mortgage investments and an investment adviser that manages the trust and other investment pools, among other activities.

PennyMac buys loans from preapproved outside sales offices, bundles them and sells off the slices. The company manages other peoples’ mortgage investments, collects borrowers’ payments and forwards them to investors. It forecloses on properties and amasses portfolios of loans and mortgage-backed securities as investments.

By the second quarter of this year, it was among the fastest-growing lenders, extending $8.9 billion in loans, up from $3.5 billion in last year’s second quarter, the company says. Ninety-seven percent of the loans were purchased from outside lenders.

Most emerging nonbank lenders are smaller than their precrisis predecessors and specialize in a handful of these activities. That’s beginning to change, though, as more of them follow PennyMac’s lead, expanding their offerings and cobbling together companies that can make money at every stage of the mortgage finance process. They accomplish this through aggressive acquisitions or by buying the assets of bankrupt companies.

Among PennyMac’s first big investments was a joint venture with the Federal Deposit Insurance Corp. to buy and service $558 million in loans from a failed bank. PennyMac paid roughly 29 cents on the dollar for the loans and says the investment has performed well.

PennyMac is not nearly as big as Kurland’s former company, Countrywide, which made $490 billion in loans in 2005. But Kurland and his team appear to have grand ambitions.

Countrywide made the most high-cost loans in the years before the crash and is among the lenders considered most responsible for fueling the mid-2000s housing boom. It was founded in 1968 and by 1992 became the biggest home lender in the country.

“After spending 27 years of my career at Countrywide and assisting in growing the company into a large, widely-known enterprise that was highly regarded and well respected by regulators, peers, consumers, and other stakeholders, I faced the most difficult business, and personal, decision of my career,” Kurland said in an emailed statement. “In 2006, as a result of irreconcilable differences with the company’s prevailing management, I was terminated from Countrywide without cause and left the company.”

PennyMac spokesmen declined to elaborate on his reasons for leaving.

After Kurland’s departure in late 2006, to boost production, Countrywide “eliminated every significant checkpoint on loan quality and compensated its employees solely based on the volume of loans originated, leading to rampant instances of fraud,” according to a civil complaint filed last year by the Justice Department against Bank of America, which purchased Countrywide in 2008.

Kurland and other Countrywide alumni formed the tax-free PennyMac investment trust in 2009 “specifically to address the opportunities created by” the real estate crash, according to public filings. The 14 members of its senior management team had spent a combined 250 years in the mortgage business, the filings say.

This year, the former Countrywide executives who manage the investment trust sold separate stock in their investment advisory and lending firm, PennyMac Financial Services, which earns millions in fees for managing the publicly traded, tax-free trust. PennyMac Financial Services also manages separate mortgage funds for big-money investors.

The company’s name is so similar to those of government-controlled mortgage giants Freddie Mac and Fannie Mae that regulators forced PennyMac to add a disclaimer to its offering documents for potential investors, stating that it is not a government enterprise. Regulators also questioned PennyMac’s assertion that its managers’ experience was purely a strength and suggested that “the failures of Countrywide while under the management of these individuals” should be considered a risk factor.

PennyMac said in a separate written statement that the complexity of the mortgage business demands experienced and expert leaders. It said Kurland and his team “have demonstrated sensible leadership over decades in the mortgage industry” and noted that the venture is supported by major banks, government agencies, regulators and investors.

Kurland, who reportedly sold stock worth nearly $200 million before leaving Countrywide in 2006, last year earned about $6.1 million in total compensation from the two PennyMac companies. Some of the pay isn’t available to him until a few years after it is recorded. His stake is worth about $150 million, the company says.

Kurland still owns the $2 million, 9,000-square-foot house he bought in 1995 with a Countrywide loan. He’s also managed to keep a $4.9 million beachfront house in Malibu, Calif.

For many Countrywide borrowers, life has been considerably more difficult.

Fighting foreclosure

Brenda Fore, a former office supervisor who lives in rural West Virginia, has been on government disability benefits since a drunk driver struck and injured her in 1998. Her husband has suffered from a traumatic brain injury since 2010, also caused by a drunk driver, while he was working at a trucking company.

The Fores are trying to stay in the home they’ve lived in for 33 years, where they raised two children and several grandchildren. The home was sold in foreclosure when their loan payments nearly doubled.

The Fores’ house had been paid off for years, but Fore decided in 2006, when rates were low, to take out another mortgage to help her daughter buy a mobile home. The trailer sits in Fore’s yard because her daughter makes too little money working at a homeless shelter to afford a separate lot.

Fore, 60, got a loan from Countrywide that was based on an inflated appraisal, according to a lawsuit she filed in state court in 2011. The appraiser hired by Countrywide estimated the home’s value at $92,000, Fore says. An appraiser hired by her lawyer more recently said the house is worth about $61,000. Unlike fast-growth markets in the Sun Belt, home prices in West Virginia were relatively stable throughout the crisis.

Fore also got a second “piggyback” loan from Countrywide at a much higher rate.

Without the high appraisal value, her lawyer says, Fore could not have qualified for the second mortgage. She says she did not have a fair opportunity to look over the paperwork and identify any problems because Countrywide did not provide her with copies of the closing documents until 10 days after the close, according to the lawsuit.

Fore’s monthly payment doubled in 2007 because of the Countrywide loan, she says, from roughly $400 per month to more than $800. By that time, Bank of America had bought Countrywide. Fore asked Bank of America to change the loan terms until her husband’s workers’ compensation settlement cleared. The bank told her to keep mailing her payments, but it repeatedly mailed them back to her ‒ and deemed her loan to be in default.

One Sunday, she says, she returned to her house to find a pamphlet stuck in the fence notifying her that the house would be put up for sale.

“I thought, ‘Oh well, what are we going to do now?’ ” Fore says. “There wasn’t a whole lot we could do.”

Only after the family home was sold in foreclosure did the bank tell her that it had rejected her request for a loan modification.

Since then, Fore’s lawyer has offered to settle with the bank, seeking to have the foreclosure sale reversed so that Fore and her husband can remain in the house.

A Bank of America spokeswoman said the bank does not comment on open litigation. The company is negotiating a possible resolution that would keep the Fores in their home, the lawyer says.

Click for larger image

John Robbins (center) is shown at a 2007 congressional hearing, when he was chairman of the Mortgage Bankers Association. Robbins has founded three mortgage lenders – two before the financial crisis and one in 2011, Bexil American Mortgage, from which he recently stepped down as CEO.

Credit: Susan Walsh/Associated Press

Waiting for the recovery

The Fores are just one example of the wreckage caused by the subprime mania of the last decade. Millions of people across the country lost their homes, and tens of millions more lost jobs and economic security.

Meanwhile, many subprime executives left their companies. Some saw where the industry was headed and quit. Others were ousted by their boards or investors. Many of them didn’t go far.

Bob Dubrish ‒ a founder and CEO of Option One Mortgage, a top subprime lender owned by H&R Block that was shut down in 2007 ‒ teamed up with a firm backed by Lewis Ranieri, who was instrumental in developing mortgage bonds, the type of investments that fueled the economy’s spin off the rails in 2008. In early 2012, Dubrish was put in charge of wholesale lending for Ranieri’s lender.

Ranieri, through his company Ranieri Partners, had helped launch the mortgage investment firm Shellpoint Partners LLC, known to investors in its mortgage bonds as ShellyMac. He then purchased New Penn Financial, a Pennsylvania lender. New Penn rose from the ashes of one of American International Group’s subprime subsidiaries. AIG is the global insurance giant that received the biggest single taxpayer bailout of any financial company.

Standard & Poor’s, the credit rating company, was not impressed with the company’s speedy expansion.

“We view New Penn’s aggressive growth targets for all of its production channels, coupled with the recent appointment of a head of correspondent lending, as a potential weakness,” the company said in a report. The correspondent lending head, Lisa Schreiber, had run the wholesale division of American Home Mortgage, another member of the Subprime 25.

Dubrish, a former college football player, lives in the same $1.5 million home in Villa Park, Calif., (town nickname: “The Hidden Jewel”) he bought in 2000.

His boss at New Penn is CEO Jerry Schiano, who founded Wilmington Finance before the crisis. Schiano ran Wilmington until 2007, despite selling it to AIG subsidiary American General Finance for $121 million in 2003. In 2010, Wilmington and another of AIG’s companies paid $6.1 million to settle charges by the Justice Department that they illegally overcharged black borrowers during Schiano’s tenure, between 2003 and 2006. The companies denied wrongdoing.

Getting back on the horse

Another industry veteran looking to return is Thomas Marano, who led the mortgage finance division at Bear Stearns and was on the board of its subsidiary, EMC Mortgage. He then took over the mortgage subsidiary of GMAC, another top subprime lender. Lawsuits filed by federal regulators allege that Marano’s unit was so hungry for new loans to securitize that it weakened its standards and slipped bad loans into pools of mortgages that were resold to investors.

Asked recently about his plans, Marano said he’s toying with the idea of launching or buying a nonbank mortgage company.

“I’ve been modeling the numbers on … those opportunities and I’m intrigued with that possibility,” he told The Wall Street Journal. The mortgage business “is a pretty hot space right now, so I’m really looking at those two options, really doing it on my own or doing it with someone who’s got more of the infrastructure established.”

There are numerous reasons for Marano and his compatriots to launch mortgage companies right now.

Interest rates, while ticking up a bit lately, are still near all-time lows, fueling a boom in refinancing. The government wants to dial back its role in housing finance and encourage private investment.

Separately, a recent IRS ruling makes it easier for some big, consolidated mortgage companies to avoid paying most taxes. The IRS decides what investments can be held by real estate investment trusts, or REITs, companies that buy real estate investments, sell shares to investors and enjoy tax advantages. This summer, the IRS said REITs can avoid paying taxes on certain income from collecting mortgage payments. Mortgage servicing income is a crucial revenue stream for many lenders, particularly as rates rise and the refinancing boom slows.

PennyMac is the most prominent REIT among the new nonbank lenders, but many key precrisis companies also were set up this way: IndyMac originally was formed as a REIT to invest in Countrywide’s loans. American Home Mortgage was a giant REIT with taxable subsidiaries to carry out its lending.

Those companies succumbed quickly because they were highly leveraged ‒ meaning they relied on a lot of borrowed money but had relatively little cash in reserve. Concerned that the strategy could harm regular investors, the Securities and Exchange Commission proposed tightening regulation of REITs in 2011, a move that would have limited their ability to use leverage. The industry balked, and the commission so far has failed to act.

REITs and other nonbank lenders are regulated more loosely than banks, according to Kenneth Kohler, an attorney with Morrison & Foerster, who wrote about them in a 2011 client bulletin.

Regulation in all corners has increased, but “there is no question that the burden of the new requirements is substantially higher on banks,” Kohler wrote.

Banks are overseen by at least two regulators ‒ one responsible for their financial strength, the other for their business involving consumers. Nonbank mortgage lenders, by contrast, are overseen at the federal level mainly by the Consumer Financial Protection Bureau, which can consider only potential violations of consumer protection laws.

In March 2007, Robbins, then chairman of the Mortgage Bankers Association, warned during a congressional hearing that banning risky mortgages would kill the dream of homeownership for millions of Americans.

“Assertions that delinquency rates are at crisis levels and a greater percentage of borrowers are losing their homes are not supported by the data,” he said.

Lenders were “responding to consumer demand for product diversity, particularly in high-cost markets,” he said, by offering loans whose total balance actually could increase over time because borrowers were permitted to choose how much they paid.

Before the crisis, Robbins had founded two companies, which were sold for a total of $431 million. Mortgage losses tied to the second company, American Mortgage Network, helped sink Wachovia as the financial crisis peaked in October 2008. The bank was sold under regulators’ orders to Wells Fargo. Less than two weeks later, Wells received $25 billion of taxpayer bailout money.

Today, Robbins says he sought to warn his colleagues that lending without proper documentation would have “dire consequences.” He wanted in 2007 to draw a line between irresponsible lending and new kinds of loans that properly account for risk, he said in a recent interview. After Wachovia bought American Mortgage Network in 2005, Robbins says, he “really had no control or say” over what loans it offered.

“You want new products, you want innovation, and you don’t want to stifle it ‒ as long as you realize there has to be a solid foundation to underwrite the loan,” he says.

Until this summer, Robbins was CEO of Bexil American Mortgage, a company he founded in 2011 that employs executives from Robbins’ two previous subprime ventures. Bexil is offering adjustable-rate mortgages and allowing down payments as low as 3 percent.

Robbins remains committed to the mortgage industry.

“I love this business, helping to provide the American dream to our customers and getting paid well to do it,” he told Mortgage Banking magazine last year. He said he wanted back in at the bottom of the market ‒ what he called “the fun and exciting time in our business.”

Bexil, which he launched with a private investor, was a chance to start fresh. It lacks the massive legal liabilities that continue to mire what’s left of the old subprime lenders.

The ‘toxic business model’

Dan Alpert, managing partner with the investment bank Westwood Capital LLC, says there is a reason why the same players keep getting back in the game: There was no meaningful effort by the government to identify bad actors and hold them accountable.

“Had there been prosecutions,” Alpert says, companies wouldn’t touch anyone deemed responsible “with a 10-foot pole. The only thing people are concerned about is the loss of their freedom. They can lose all their money and make more money, but they take it quite seriously when jail is staring at them.”

Whalen, of Carrington Holding Co., says many of these arguments are misguided. Carrington began a decade ago as a small hedge fund and now has 3,000 employees who manage investments, lend and service home loans, and manage and sell real estate. He warns against painting mortgage industry professionals too broadly.

“Are they really in a legal sense bad people, or did they just mess up? Were they just trying to do deals?” he asks. He cautions against focusing too much blame on individuals like Carrington Chief Operating Officer Dave Gordon, who ran capital markets and servicing for Fremont Investment & Loan until 2007.

Blaming only mortgage lenders ignores the roles of overeager or disingenuous borrowers, Wall Street traders with voracious appetites for mortgage investments and even the Federal Reserve, whose easy money policies in the early 2000s encouraged lending and sent global investors on a quest for higher-yielding investments, Whalen says.

“I’m not absolving everybody from responsibility for doing stupid things, but you can’t paint everyone in this industry as though they were just doing this on their own,” he says, because mortgage lenders “don’t operate in a vacuum.” He says the U.S. economy slowed sharply after the terrorist attacks in 2001, and policymakers decided to help inflate the economy by boosting the housing sector.

He says new rules and fearful investors make it difficult to imagine offering irresponsible loans.

“That old kind of subprime lending is gone,” Whalen says. “We have prime and slightly-less-than prime. That’s it.”

“That won’t last,” says Susan Wachter, a real estate finance professor at the University of Pennsylvania’s Wharton School.

The companies rely mainly on fees from originating and servicing loans, an income stream that grows only if lending increases, Wachter says. To boost lending, she says, companies eventually will have to “undercut competitors by getting people into those loans on whatever terms possible.”

“That toxic business model is still out there,” she says, and it’s being exploited by the same people who “were feeding toxic mortgages into the system” during what she calls “the 2007 frenzy.”

The conclusion seems obvious to Brenda Fore, who is fighting to take back the house in which she spent her adult life.

“If it’s being built by the fellows who screwed it up last time, you’re going to have the same result,” she says. “The system was dysfunctional before, so its offspring are going to be dysfunctional as well.”

The Center for Public Integrity is a nonprofit, independent investigative news outlet. For more of its stories on this topic, go to publicintegrity.org.

Update, Sept. 12, 2013: This story updates information about Civic Development Group.

Errol Copilevitz started his legal career representing strip clubs and porn shops on the seedy side of Kansas City.

Then he took free-speech arguments honed defending topless bars to a more lucrative field.

Philanthropy.

Today, Copilevitz is the undisputed king of the charity world.

From his offices in a renovated turn-of-the-century warehouse in Kansas City, Mo., Copilevitz and his four partners represent more nonprofits and professional solicitors than any other law firm in the nation.

Last year, the NonProfit Times, an industry journal, named Copilevitz as one of the sector’s 25 “Best and Brightest,” thanks to his First Amendment work.

That expertise has been especially beneficial to a particular kind of charity – those that spend a tiny fraction of the cash they raise helping people in need.

The Tampa Bay Times and The Center for Investigative Reporting spent a year identifying the 50 worst charities in America based on the money they paid to professional solicitation companies over the past decade.

Copilevitz & Canter has represented nearly three-quarters of them, as well as most of their for-profit telemarketers and direct mail companies.

If there’s a dollar being donated over the phone in America, there’s a good chance the firm had a role in creating, registering or advising at least one of the parties involved.

More importantly, Copilevitz has won landmark First Amendment cases that have undercut government efforts to regulate sham charities and helped unleash an avalanche of junk mail and telemarketing calls on the American public.

Thanks in part to Copilevitz, the government can’t limit how much charities spend on fundraising.

And their for-profit solicitors don’t have to disclose how much they keep unless donors ask.

It’s impossible to calculate how much Copilevitz’s courtroom victories have meant to his clients’ bottom line. But the 37 charities he represents that were ranked among the 50 worst raised a total of $1.2 billion in cash over the past decade. Of that, nearly $880 million went to pay their outside solicitors, most of which also were the lawyer’s clients.

In a two-hour interview with the Times and CIR, Copilevitz calmly deflected criticism aimed at his clients.

He sat at a conference room table in a tweed jacket and patterned blue tie, rarely raising his voice, occasionally tapping the table to emphasize a point.

He knows that there are bad guys in the charity business.

“There’s no doubt there are some people who start charities whose intentions aren’t the greatest,” he said. “They’re looking to create a job for themselves, I suspect.”

But to Copilevitz, the choice is simple.

Put up with groups that don’t do enough to help people in need, or stifle everyone, including the charity “that actually may come up with the cure to cancer.”

As for those donors who give without realizing that only pennies will reach the cause, Copilevitz has little sympathy.

“I think people understand that there’s a cost (to raising money),” he said. “How long do you have to be telling them that?”

From vulgar to virtuous

Trim and tanned at 70, Copilevitz is reveling in the rewards of a long career.

He rubs shoulders with Julie Andrews at benefits for the National Children’s Cancer Society, a client in St. Louis.

On his wrist he wears a black rubber bracelet in support of Wounded Warrior Project, another high-profile account.

He owns a condo overlooking Kansas City, a winter getaway in Scottsdale, Ariz., and a couple of commercial real estate investments in Florida and Georgia.

He has about 40 employees and a multimillion-dollar practice that was recently named by U.S. News & World Report as one of the best law firms in the country.

He built it all himself.

The son of a grocer raised in rough-and-tumble East St. Louis, Copilevitz saw a career in law as the ticket to a better life.

After earning a law degree from University of Oklahoma in 1968, Copilevitz moved to Kansas City and landed a job at the radio station where his brother worked.

Within a decade, he had his own practice defending topless bars, adult bookstores and traveling circuses.

He represented strip club owners with alleged mob ties against a crusading district attorney intent on shutting them down. He defended a promoter facing criminal charges after a hippo went on a rampage at a fundraising event. And his firm represented clients like Pleasure Chest and Erotic City in battles with the city over their coin-operated video booths.

Copilevitz’s fight against regulators – people he derided for years as censors – culminated in a showdown in St. Louis in 1987. The U.S. Justice Department, under Attorney General Edwin Meese, had declared a war on pornography. More than 200 video store owners fought back with Copilevitz as their lawyer.

Calling the government’s crackdown an attack on the First Amendment, Copilevitz told a newspaper that banning the rental of porn movies would have “a chilling effect on the community.”

Less than a year later, he was making a similar argument in a much loftier venue: the U.S. Supreme Court.

This time, Copilevitz was arguing on behalf of charities and their paid solicitors.

Click for larger image

Errol Copilevitz (right) talks to reporters after oral arguments before the U.S. Supreme Court in 1988. He argued on behalf of the National Federation of the Blind, successfully defeating attempts by North Carolina regulators to restrict professional solicitors.

Credit: Courtesy of Errol Copilevitz

                

The high court

It was a big leap for a tiny law practice. But Tom Gray, a former colleague, said the same legal principals held true, whether Copilevitz was defending strip clubs or charities.

“The fundamental issues of the First Amendment were the connecting piece,” he said.

In the case before the Supreme Court, Copilevitz’s clients were charities and professional solicitors challenging a new state law that required fundraisers to tell donors how much of their money actually got passed on to a charity. The attorney general said telemarketers, typically working with transient circus promoters, were keeping 80 percent or more of the money raised.

When the case reached the U.S. Supreme Court in 1988, Copilevitz argued that the law presented “a real and present danger of censorship” and could be especially harmful to small charities advocating unpopular causes.

If telemarketers were forced to start conversations by disclosing where donations wound up, he warned, they would “end up with a dial tone.”

The court sided with Copilevitz, building on a series of previous decisions that limited state regulators’ ability to crack down on fundraising costs.

The ruling slammed the door on officials who had been trying for years to find a way to stop charities from funneling almost everything they raised to for-profit solicitors.

“There’s not much left to protect the donor,” David Ormstedt, Connecticut’s assistant attorney general, told reporters at the time.

Telemarketers and charities of all stripes celebrated the verdict.

A major trade journal described Copilevitz’s success in the case as “the year’s biggest gift to philanthropy.”

The rise of telemarketing

If donors lost as a result of the 1988 decision, Copilevitz clearly won.

He also had the good fortune of being on the ground floor of an industry that was about to boom.

Computerized phone dialers introduced in the late 1980s made calling faster and more efficient.

Phone rates plummeted with the breakup of AT&T’s monopoly on long-distance service.

Dozens of entrepreneurs spied the opportunity, opened call centers and started signing up charity clients.

Robert Preston was one of them. He’d been running a part-time phone room for the Police Benevolent Association in South Florida for years when he decided to open a telemarketing company in 1991.

Preston said the computerized dialer made calling more efficient.

“It increased human productivity,” he said.

To help him launch a telemarketing business, Preston turned to Copilevitz, who had built a reputation as a guy who could get your business started and get you out of a jam with regulators.

“I realized he was the 800-pound gorilla in terms of understanding this area of the law,” Preston said.

Over the years, Preston’s company, Organizational Development, has relied on Copilevitz & Canter to file annual reports with regulators. Copilevitz helped negotiate a settlement in Maine in 2010 when Preston’s firm was charged with misrepresenting itself to donors. Copilevitz has also reviewed contracts between the telemarketer and its charity clients.

At its peak a few years ago, Preston’s company had $10 million in revenues; it keeps about 85 percent of donations.

Preston also turned to Copilevitz for help when he started a charity, WorldCause Foundation, in late 2010 to create a job for his son. The law firm handled the new charity’s IRS application and state filings.

Apart from their lawyer-client relationship, Copilevitz has joined Preston in several commercial real estate investments over the years.

“He’s not a baby if a deal goes sour,” Preston said of Copilevitz. “And when I would get angry with tenants, he would talk me off the ledge. He’s like a rabbi.”

Shutting regulators down

As telemarketing calls multiplied exponentially over the next decade, Copilevitz’s firm worked to make sure the calling continued unfettered.

In 1994, he knocked down a Georgia law designed to stop charities from using a law enforcement agency’s name, without permission, to drum up donations.

Three years later, Copilevitz stopped Louisiana from limiting how many police organizations could solicit in the state.

Copilevitz won both cases on behalf of the American Association of State Troopers, which went on to raise tens of millions of dollars.

In the past eight years alone, the association has raised nearly $45 million through professional solicitation companies, IRS records show. About $36 million of that went straight to the solicitors, placing the charity at No. 9 on the Times/CIR list of America’s worst.

Copilevitz was on hand again in 2001, when Florida lawmakers made their own attempt to crack down in high-cost fundraising.

They passed a law forcing charities to declare on mailers and fliers how much they spend on solicitors.

Copilevitz filed suit on behalf of two charities, including the Committee for Missing Children, No. 13 on the Times/CIR list.

He won yet again. Copilevitz convinced a federal judge that spending 86 percent of donations on professional solicitors – as the Committee for Missing Children had done that year – does not make a charity unworthy of support.

By 2003, Copilevitz’s reputation made him a natural candidate for another case before the Supreme Court. Illinois’ attorney general had sued Telemarketing Associates, claiming it misled donors and that it was keeping 85 cents of every dollar raised on behalf of one of its clients.

Click for larger image

A large painting that dominates Errol Copilevitz’s conference room depicts him speaking before the U.S. Supreme Court in March 2003. In that case, his second before the court, Copilevitz successfully argued that limiting what charities pay solicitors is a violation of the First Amendment.

Credit: Maurice Rivenbark/Tampa Bay Times

Copilevitz took the case, with no pay, and stepped before the nation’s highest court for the second time in his career.

This time nearly 200 charities, many of them Copilevitz clients, had signed briefs in support of his case.

Again he argued that limiting what charities pay solicitors is a violation of the First Amendment.

Again the justices agreed.

A large painting that dominates Copilevitz’s conference room shows him speaking before the court that day in March 2003.

“It was very gratifying,” Copilevitz said. “We had gone from representing this distasteful, small-time telemarketer in the circus days to these major trade associations that understood the issues went far beyond the case at bar. It affected the industry.”

The regulatory shuffle

Regulatory filings, disciplinary records and court documents collected by the Times and CIR show that Copilevitz & Canter has done work for more than 400 charities over the past decade.

Often that work involved nothing more than filing a charity’s annual registration papers with state regulators. Some of the firm’s most prominent clients – the American Cancer Society and Susan G. Komen Foundation – told reporters they fall into that category.

But the firm also has helped dozens of clients navigate more serious legal issues, including fighting allegations that they misled donors.

Copilevitz said that shouldn’t be a surprise.

“There are only a small handful of law firms in the country that focus on the myriad state charitable solicitation laws,” he said. “We happen to be one of them.”

When the United States Deputy Sheriffs’ Association was accused by Kentucky’s attorney general in 2009 of deceiving donors by telling them their money would buy bulletproof vests for local law enforcement, the nonprofit called Copilevitz & Canter.

Within a month, Copilevitz negotiated a settlement. His client would pay $30,000 to the state, donate $71,000 in equipment to Kentucky sheriffs’ departments and briefly stop soliciting in the state.

At the same time, he negotiated a separate case brought by Oregon against the charity.

In both cases, the charity admitted no wrongdoing and showed no lasting impact.

In its 2011 tax filing, the group reported spending nearly $1.7 million on fundraising out of total expenditures of $2.4 million – or about 70 cents of every dollar.

When charities and solicitors run into regulatory problems in one jurisdiction, they’re supposed to report it if asked by other states where they solicit. But in more than a dozen cases identified by the Times and CIR, Copilevitz’s firm filed annual registration forms in which charities and solicitors did not disclose prior actions in other states, despite being asked on the application.

United States Deputy Sheriffs’ Association did not disclose either the Kentucky or Oregon actions in its subsequent registrations in Florida, filings that were handled by Copilevitz’s firm. After being asked about the omissions, a spokesman for the Florida Department of Agriculture and Consumer Services said the matter is under investigation.

In another case, JAK Productions’ $300,000 settlement with the Federal Trade Commission, which was signed by Copilevitz in June 2010, was not mentioned in the solicitor’s filing the following year in North Carolina. Copilevitz & Canter submitted the paperwork to North Carolina on the solicitor’s behalf.

According to a spokeswoman for North Carolina’s charitable division, “The solicitor should have responded ‘Yes,’ ” to the question that asked if there had been actions taken by other state regulators in the previous five years.

And in Florida and Ohio, Copilevitz’s firm handled registration paperwork that failed to disclose a $100,000 fine by California in 2010 against the Association for Firefighters and Paramedics.

Asked about these filings, Copilevitz said his law firm never advises clients to omit such information. He said clients, not his firm, are responsible for ensuring the accuracy of their registrations.

But Michael Gamboa, president of the Association for Firefighters and Paramedics, which is No. 14 on the Times/CIR list, blamed Copilevitz’s office.

“They know all about those fines,” he told the Times and CIR. “They’re supposed to make sure it’s in the registration.”

Traci Gundersen, Utah’s former top charity regulator, said law firms like Copilevitz & Canter that specialize in state charity filings should have systems to track disciplinary cases to ensure they are disclosed as required.

“It’s almost like you’re burying your head in the sand if you fail to have a safeguard like that,” she said.

The fixer

To understand how deeply involved Copilevitz gets with some of his clients, consider the case of Civic Development Group.

In 1998, the FTC sued the telemarketer for falsely claiming that donations would be used locally to buy bulletproof vests and provide benefits for dead officers’ families.

With Copilevitz’s assistance, the company negotiated a settlement that did little to affect its practices or hinder its success.

Within a decade, the New Jersey-based company became one of the largest telemarketers in the country.

It ran boiler rooms in at least 18 states and collected tens of millions of dollars each year on behalf of its charity clients, according to documents filed with state and federal regulators.

But in 2001, a law passed by the Indiana legislature threatened to cut into collections.

In most states, telemarketers calling for charities can solicit people on the Do Not Call list.

But Indiana’s new law said only people directly employed by a charity could; calling people on the list was off limits to hired-gun solicitors.

That put a damper on returns to the Indiana Fraternal Order of Police, which had hired Civic Development Group for telemarketing.

Civic Development turned to Copilevitz for advice.

According to court documents, Copilevitz walked Civic Development through a new fundraising arrangement that got around Indiana’s restrictions.

Civic Development’s phone room workers became employees of the Indiana Fraternal Order of Police, giving them access to people on the Do Not Call list.

Callers also began telling donors that 100 percent of their donation went to the charity.

Civic Development morphed from being a telemarketer to acting as a “consultant” to the call center operation. But its managers retained the right to hire and discipline workers. And through its consulting fees, Civic Development continued to take most of what was collected from donors.

In 2007, the FTC again sued Civic Development, calling the new setup a sham.

In court filings, the company said Copilevitz had reviewed the new contract with the Indiana police charity and reviewed solicitation material.

Though Civic Development admitted no wrongdoing, it agreed in 2010 to a pay a record $18.8 million settlement. The former owners of the company, Scott Pasch and David Keezer, were banned from the industry.

Pasch and Keezer sued Copilevitz and his firm earlier this year, alleging they were given bad legal advice. When they asked attorneys at the firm whether they should seek FTC approval for their new fundraising model, they were told to “let sleeping dogs lie,” according to the complaint, which is pending. 

Copilevitz denied the claims made by his ex-clients and told reporters he never advised Civic Development to do anything improper. He said he outlined a legal way to deal with Indiana’s new law.

Mark Josephs, the former U.S. attorney who prosecuted the case against Civic Development, said he believes Copilevitz should have at least been aware of his client’s deceptive scripts.

Copilevitz told the Times and CIR that the company’s in-house lawyers prepared the scripts and when he learned they were claiming 100 percent went to charity, he advised them to stop.

“They did not follow my advice,” he said.

Respect and suspicion

Copilevitz said that as an expert in a small and specialized field, it is inevitable that he has represented some “unpopular clients.”

“If you made a list of the 50 best charities, I suspect you would find that we do registrations for many of them and legal work on occasion for others and steady legal work for still others,” he said.

But Copilevitz has used the First Amendment to defend some questionable characters.

That bothers people who hear him arguing that free speech protections are needed for unpopular causes and fledgling groups, then see him repeatedly defending charities that are neither.

Among Copilevitz’s clients on the Times/CIR list are charities soliciting for cancer patients, dying children and injured police, firefighters and veterans.

And far from being startups that need outside help to build a donor base, many of Copilevitz’s clients on the list have been around for decades.

Roger Craver is a 50-year veteran of the fundraising business, who has run both telemarketing and direct mail companies and believes it’s an honorable profession when done ethically.

Craver said Copilevitz is widely respected in the industry for his expertise. And he agrees with him on the sanctity of the First Amendment.

“But given some of the charities he’s represented,” Craver said, “I often wonder whether his clients are using the First Amendment to shield questionable behavior rather than advancing the free speech rights for which it was intended.”

Copilevitz said he warns clients that over time, they have to find sources of revenue other than high-cost fundraising or they will be “low fruit for the media to pick on.”

If they ignore his advice, however, he’s not about to pass judgment.

“It’s not my position, and I don’t think it should be your position, to say you have to close your charity,” he said.

Despite his passionate defense of the industry, even Copilevitz has his limits.

When a telemarketer’s number pops up on the caller ID in his condo at night, he’s just like a lot of people.

He doesn’t answer.

Times researchers Caryn Baird and Carolyn Edds contributed to this report.

For some, revelations that the National Security Agency has been collecting vast amounts of personal information on U.S. citizens might seem as far removed as the city of Moscow.

But it’s not just an ultrasecret spy agency that can create a dossier on you.

Many Americans would be surprised by how easily local law enforcement, IRS investigators, the FBI and private attorneys can reach into the vast pool of personal information about their lives with little more than a subpoena, which no judge needs to review.  

And it’s not just for selling you more products or services. It can be wielded against you.

“We used to have to rely on private investigators,” said Lee Rosen, a divorce attorney in North Carolina whose office averages dozens of subpoenas each month. “Now everything we need is more or less on the other side of the keyboard.”

Often, a simple form is all that’s required to access prescription histories, credit card purchases, monthly banking statements, ATM withdrawals, wire transfers, tax returns and, perhaps most importantly, the rich digital portraits we keep on our smartphones.

Law enforcement can create a map or timeline of a person’s whereabouts by accessing data from license-plate scanners, toll-bridge crossings and mobile phone carriers and, without much trouble, access records on your power consumption, purchasing habits and even snail mail.

Click for larger image

Some police departments use license-plate scanners to identify stolen cars and outstanding warrants. But the devices photograph vehicles and record the location, date and time of everyone who passes by without discriminating between criminals and innocent people.

Credit: Coco Studios

The more we leave heaps of digital detritus behind, privacy advocates say, the more we may have to answer for it to someone with an ax to grind, an investigation to close or a client to represent.

“The digital world has suddenly given us a wealth of information like we never had before,” Rosen said. “The floodgates of data have opened up.”

To illustrate this, The Center for Investigative Reporting teamed up with NPR to craft a typical day in the life of personal information. Along the way, we’ll explain how it is amassed and how it can be vacuumed up.

First, consider your IP address, a unique identifier used to connect your phone or laptop to the Web. Perusing the Internet before you shower in the morning, you might not know that the government or a private lawyer can start with your IP address and determine your name. Or, starting with your name, the government can determine your IP address.

Although precision can be limited, private lawyers have used IP addresses to unmask alleged movie and music pirates.

Voltage Pictures, makers of “The Hurt Locker,” subpoenaed the IP address of a 69-year-old woman believing it linked her to Internet downloads that infringed on the movie’s copyright. She and numerous others targeted in the suit said they weren’t guilty of piracy accusations. The lawsuit eventually died.

Say, however, you’re streaming Internet radio as you move about the house, listening to a shock jock or political talk show host considered obnoxious by some. Smartphone apps like TuneIn and Pandora will store data on their servers on the talk shows and music you enjoy.

If you’re like millions of other Americans, you might use dating sites like JDate.com or OkCupid.com to find romantic matches. Many users rely on pseudonyms until they’re comfortable giving out more personal information to a potential date, but digital anonymity is often an illusion.

In 2011, Google acquired facial recognition software company PittPatt, which has been used by researchers to link dating profiles with full identities on other social media sites. Google already uses “computer vision technology” to power its image searches, Picasa photo platform and Google Goggles.

“Any attempt to set up a dating profile – even if you’re using a pseudonym and even if you’re not uploading photos you put in other places – can result in (someone being able) to find you,” said Rainey Reitman, activism director at the Electronic Frontier Foundation.

OkCupid’s privacy policy says personal information could be disclosed “in response to a subpoena or similar investigative demand, a court order, or a request for cooperation from a law enforcement or other government agency.”

Little-known third-party advertisers and marketers can observe your dating activity, too. Software privacy specialist Ashkan Soltani offered a recent demonstration using a tool called Collusion, which visualizes the array of companies that monitor our activity online, watching as we click from one place to the next in order to better understand consumer behavior.

Collusion can be downloaded to your browser – Firefox, Chrome or Safari. Clicking on an icon while visiting a site will display an interconnected web of bubbles that represent companies collecting information about your activities. The companies have names like Lotame and Criteo. The tracking is largely invisible without an add-on like Collusion.

Soltani offers this metaphor: a phone call in which you dial OkCupid.

“In responding to my phone call or connection to OkCupid, (the site) brought all of its friends on to listen to my phone call,” Soltani said. “I’m on speakerphone at OkCupid, and all of these other people are also listening to my conversation.”

While many tracking companies insist they don’t need personally identifying information in order for the data to be useful, Soltani and others say trackers know enough about your behavior from pseudonymous “cookies” to profile you and make decisions about you online, such as how to target ads or special deals.

Reading the network traffic – the language that exists behind Internet activity – Soltani showed how answers to sensitive profile questions on OkCupid’s site covering drug use, religious beliefs and more were transmitted to the data tracking company Lotame, along with the user’s IP address.

When you log in with a username and password to sites like Gmail, Amazon or OkCupid, your behavior can be linked to your real name or email address. Soltani said personally identifying information also can unintentionally “leak” to third parties, even if companies say they have no need for such data, and it’s not clear what happens to the information once it falls into their hands.

Stanford University's Center for Internet and Society showed in a 2012 paper how usernames or IDs leaked to third parties on 113 popular websites out of 185 tested.

Jonathan Mayer, a graduate student at Stanford who worked on the study, offered another demonstration. He first logged in to the video-sharing site Dailymotion with the username “jonathanmayer” and showed how a unique ID number assigned to him by the data tracker Criteo followed him to another site about sexually transmitted diseases.

Even a generic name like “stanfordguy” used to log in on multiple sites could be used to determine one's real identity and theoretically be exploited by law enforcement, Soltani and Mayer said.

Officials with OkCupid declined an interview, and Lotame did not respond to phone calls and emails.

Alexandra Pelissero, a spokeswoman for Criteo, said the company wouldn’t know that “jonathanmayer” or “stanfordguy” correspond to the same technology researcher at Stanford. She also said Criteo does not store IP addresses.

Click for larger image

Little-known third-party advertisers and marketers can observe your activity online, watching as you click from one place to the next in order to better understand consumer behavior.

Credit: Coco Studios

“Criteo’s cookie-based technology recognizes events, i.e., products viewed, and does not create individual user profiles based on them,” Pelissero wrote. “It assigns Criteo IDs, which are based on a user’s interests, i.e., online browsing behavior, and (doesn’t) allow us to identify the individual user, so that we can serve more personalized ads that correspond to those interests.” 

Jules Polonetsky, executive director of the Future of Privacy Forum, said many such companies have good intentions and wish only to better-tailor advertising for products consumers want.

The forum bills itself as a “think tank that seeks to advance responsible data practices” and is supported by Amazon, Facebook, Netflix, Bank of America and a host of other major companies.

“I think companies haven’t figured out how to talk to people about data or privacy,” Polonetsky said. “ … There’s nothing to be ashamed of if what they’re doing is fair and honest.”

Accessing personal information

Logs of seemingly innocuous everyday activities – like your power usage – can be obtained and used against you.

There are typically three ways the government and civil attorneys can try to access personal information. A search warrant is the toughest standard and requires the government to convince a judge there’s probable cause of a crime. Next is a court order, and the easiest to obtain is a subpoena.

“A subpoena, unlike a warrant, doesn’t come from a court,” said Kevin Bankston, senior counsel at the Center for Democracy & Technology, a nonprofit organization that advocates for Internet freedoms. “No one has to go to court. No one has to make a showing to a judge. A subpoena in the criminal context is issued directly by a prosecutor.”

Bankston said all investigators must do for a subpoena is state that the information is relevant to an ongoing investigation.

Law enforcement agencies often argue all they need is a subpoena. Drug agents issued a subpoena in 2010 demanding that the Golden Valley Electric Association turn over the power consumption records, customer names, telephone numbers and credit card numbers for three addresses. For drug investigators, big power surges in a private house could mean the resident is cultivating marijuana with grow lights. 

But the Alaska energy cooperative balked at the subpoena, citing its customer privacy policy. A federal court decision overruled the company’s position and directed it to give up the records.

“It’s kind of like looking at you through an open window and seeing what you do in your home,” said Cory Borgeson, president of the company. Borgeson said that if the government wants your power records, it should have to show probable cause of a crime and get a search warrant.  

When you head to work, your data portrait will continue expanding. Surveillance cameras in subway stations and on city buses watch you board and depart.

Chicago police for the first time successfully nabbed a suspect in May using facial recognition software known as NeoFace that connected a surveillance image of the man from the city’s train system to a massive database of booking photos.

To automatically identify celebrities and regular customers when they enter a store, some retailers reportedly are using another facial recognition technology originally developed in the U.K. for spotting terrorists and criminals.

Meanwhile, smart cards log when and where you travel using public transportation.

Police departments in the San Francisco Bay Area and elsewhere around the country have used license-plate scanners to identify stolen cars and outstanding warrants. But the devices are designed to photograph vehicles and record the location, date and time of everyone who passes by without discriminating between criminals and innocent people.

The American Civil Liberties Union recently found that departments have widely ranging guidelines for how long they’ll store this data, from 48 hours to five years to indefinitely.

Toll records remember when you crossed a bridge or used a particular interstate, and divorce attorneys are fond of them for that reason.

E-ZPass records, for example, will tell divorce attorney Jacalyn Barnett when someone has driven from the island of Manhattan, and paying cash makes her more suspicious that a spouse has something to hide. Another sign is odd departures from routine.

“People are very, very ritualistic,” Barnett said. “Most people go to the same bank (branch) to do their transactions. If all of a sudden they’re going to a different area, that tells you something.”

Gray area around technology

One of the most powerful sources of information is your mobile device, which creates a rough approximation of your whereabouts by checking in with nearby cell towers or a more precise pinpoint when the GPS function is enabled.

The government doesn’t believe it needs a warrant for historical tracking with a mobile device. Instead, investigators have said the law requires only a court order, which is slightly more demanding than a subpoena but still less protection than the Constitution affords under a warrant.

Judges so far have handed down a patchwork of rulings on locational privacy, and the issue is far from resolved. In a Baltimore case that has civil liberties groups worried, police were able to obtain more than seven months’ worth of location data without a warrant from two cellphones belonging to robbery suspects. Most people would applaud catching robbers, but the advocacy groups argue that such prolonged tracking violates a reasonable expectation of privacy.

By the time you reach work, a mound of unopened emails awaits. Those, too, are part of a fierce debate over what requires a warrant. As its name suggests, the Electronic Communications Privacy Act of 1986 was designed to protect Americans who at the time were using the Internet increasingly to communicate. But the government has interpreted the law to mean that once your emails are opened or older than 180 days, no warrant is required.  

Even if an investigator faces some hurdles with your inbox, such as Google insisting on a warrant, email is not entirely protected. With a court order that doesn’t reach probable cause, Google will give up your name, IP address, the dates and times you’re signing in and out, and with whom you’re exchanging emails.

Click for larger image

An IP address is a unique identifier used to connect your phone or laptop to the Web. The government or a private lawyer can start with your IP address and determine your name. Or, starting with your name, the government can determine your IP address.

Credit: Coco Studios

Google said in a statement: “We are committed to keeping people’s information safe and helping them control their personal data. Google Dashboard shows what’s stored in your Google Account. From one central location, you can easily view and update your settings for services such as Blogger, Calendar, Docs, Gmail, Google+ and more.”

Email nevertheless is at the center of a long-simmering legal dispute between environmentalists and Chevron over drilling in Ecuador. A federal judge this year granted Chevron’s subpoena seeking metadata from Microsoft email accounts of activists, including names, dates and possible locations. The company also has requested access to accounts on Google and Yahoo.

Last year, Twitter fought a subpoena from prosecutors in New York who were seeking information about a user charged with disorderly conduct among hundreds arrested by police during Occupy Wall Street protests in 2011. A judge threatened Twitter with fines if it didn’t give up the information, and the company handed over the data.

Digging into medical records

While many Americans are under the impression that their medical records are protected by privacy laws, investigators and private attorneys enjoy special access there, too.

The USA PATRIOT Act, passed shortly after the Sept. 11, 2001, hijackings, prohibits medical professionals from telling you if the FBI seeks your medical records as part of a national security or intelligence-related probe.

In some states like North Carolina, attorneys are considered officers of the court and issue subpoenas on their own as long as the information is connected to an ongoing dispute.

Divorce attorney Rosen tells the story of one client in a child custody case. The woman suspected that the father had mental health problems, so a subpoena was issued directing his psychiatrist to turn over notes about the man’s treatment, relationship with his child and prescription medications.

“Medical records are very private and need to be protected, but there’s a balance,” Rosen said. “Sometimes, your medical records need to be made public in order to do what’s best for a child.”

Credit card purchases are similarly illuminating. Rosen calls them a “table of contents” for your life. Your financial records enjoy some amount of protection that requires the government to notify you when it seeks information about your purchasing habits.

That is, unless the FBI uses a so-called national security letter – which the Congressional Research Service calls “roughly comparable to administrative subpoenas” – to demand details about your financial transactions. Then the bank is barred from notifying you.

The FBI’s authority to issue such letters was expanded by the PATRIOT Act, and the letters’ use has exploded to the tens of thousands each year, targeting telephone billing records, bank transactions, credit reports, names of employers and more.

Perspective on privacy

Many Americans still might ask why they should care, following the recent news of NSA snooping. After all, asks Paul Rosenzweig, a former deputy assistant secretary at the Department of Homeland Security, why would we fear giving personal information to the government if we’re willing to give police the power to kill and arrest?

“I tend to think that this is a manageable problem along the lines of cops with guns,” he said. “Anybody who denies the U.S. government has made mistakes in the past is a moron. My own sense, however, is that our system is wonderfully self-correcting.”

Former President Richard Nixon and former FBI Director J. Edgar Hoover were known for their widely documented eavesdropping abuses. But even Nixon became angry when his daughters’ privacy was violated, according to John Dean, a lawyer for the former president.

“If Richard Nixon were alive today, I’d have a lot of concern about the data that’s being collected, because I don’t think Nixon would have any reservations about going into anything that was available to pursue his enemies,” Dean said.

One such “enemy” of Nixon was Morton Halperin, a senior policy official in the administrations of Nixon, Bill Clinton and Lyndon B. Johnson. Halperin eventually fell out of favor with the Nixon White House, so much so that his phone was bugged for two years.

During a recent interview, transcripts and summaries of the intercepted calls rested on a table in front of Halperin. But all these years later, he still was reluctant to read aloud from the personal communications. 

“There were many conversations between me and my then-wife,” Halperin said, “none of which I would have wanted to be made public and some of which would have been a little embarrassing.”

Daniel Zwerdling is a correspondent for NPR’s Investigations Unit. This story was edited by Robert Salladay and copy edited by Nikki Frick and Christine Lee.

When a large, national data set showing a massive increase in the Department of Veterans Affairs’ opiate prescription rates landed on our desks in August, we asked ourselves the same question that normally begins our data app development process: What tools and techniques can we employ to best showcase this material? We wound up leveraging approaches we’ve honed over the past few years while incorporating some new ones. We even learned some lessons along the way, which might be helpful for your newsroom to consider when crunching big chunks of data.

This post is broken into two parts. First, we'll discuss how building "research applications" is a great approach to developing intelligent news products quickly. Second, we'll discuss the tools we used to build this particular app and how we used a JavaScript MVC framework to our advantage.

We hope that by using some of the techniques we describe below other news applications developers can build apps that use sophisticated (and free!) tools at record speeds and create engaging news products.

Research apps

Data comes to our newsroom in many different ways. Often, it's in response to reporters filing public record requests, but we also scrape websites and have our hooks into a number of continually updated data streams.

So, once we have the data, how do we make .dbf, .xls, .csv, .pdf and .json files play together? Our answer is to write load scripts that clean up the various data sets we get and shove all the data into a framework.

This is how we start our research apps. A research app is an application created to "interview" data and find out the answers to the questions we have. We typically use Django and PostgreSQL for these things, but a research app isn't stack-specific. By throwing our data into a database and framework early, we get a head start on modeling the data. It also saves a ton of time should the data or process of gathering it change. Specifically with Django, we can use the ORM to manage and weave all our data sources together.

It also allows us to utilize many powerful Python tools, such as FuzzyWuzzy for name matching and pandas for statistical analysis and geo queries. Some examples: Under the tutelage of Chase Davis, our former technology director, we used a spatial clustering algorithm to look for clusters of community college offices in California. We also used a machine learning algorithm to pick out the drug-related press releases from U.S. Customs and Border Protection.

Research apps allow us to do powerful forms of analysis, all in one reproducible bundle. For longer-term projects, we can publish very basic Web pages displaying the in-progress analysis with maps, charts and tables that the whole team can work from. All the data displayed is current and easy to update. That keeps out-of-date spreadsheets from littering inboxes and file systems. And if a reporter has a specific query to run, we write a model method: instantly documented and easy to tweak. That keeps unintelligible SQL queries from littering analysts' notes.

APIs rule everything around me

Since much of what we do has a lot of front-end interactivity (mapping, sliders, etc.), and because we often get requests for slices of our national data sets, we've found it helpful to run our apps off their own APIs. This approach also helps make our data more open and accessible for folks who want to do their own analysis, localization and reporting.

Our tool of choice is Django Tastypie, as it's easy to set up and reasonably well documented. It outputs JSON (among other formats), which is a great way to represent data and makes building JavaScript-based interactives a breeze. Come publish time, our data-driven interactive, as well as the data we used to build it, can launch simultaneously.

We've used this approach with great success in our ongoing coverage of wait times for veterans applying for VA benefits. By opening up the data and encouraging media partners across the country to localize it for their areas, we’ve enabled more than 15 media outlets to create original, local stories from our work, with dozens more citing the information in their reporting. Highlighted circles on our interactive map show just where our media partners have paired the numbers with local veterans’ experiences.

We also used this approach with our U.S.-Mexico border drug seizure API. It’s incredibly rich, with data on more than 130,000 individual seizures of marijuana, cocaine, methamphetamine and heroin by U.S. Customs and Border Protection and the U.S. Border Patrol. If you’re interested in that data, please dig in or get in touch.

We went a step further with the opiate prescription data, creating a step-by-step localization guide along with the app to help folks understand the numbers. And we’re already seeing results.

Building the front end

For our initial work on this project, we used the usual suspects: Handlebars.js for templates, jQuery for DOM manipulation and AJAX, Leaflet for mapping and Bootstrap 3 for the CSS framework. The early version of this app made a server call to the API to retrieve the JSON and sent the response to Handlebars to create the template. We spent about a month on it, and we were pretty close to wrapping it up, but we were bothered by the lack of shareability.

For example, how would a reader use social media or email to share information specifically about her local VA system? This is almost always a feature we want. We've previously built in sharing for individual slices of a larger data set, but it involved a lot of custom code to read URL GET parameters, which then pulled some levers in the background. Furthermore, managing a bunch of JavaScript objects in general is a tough task, and the code was growing harder and harder to read.

Developers and reporters alike have dealt with 11th-hour changes to their products. Sometimes it's a bug fix, sometimes it's a request from above and sometimes it's finding a better angle or source for a story. In our case, we realized that by refactoring the app we could kill a lot of birds with one stone.

Ember + Django

In our previous application on the VA’s disability benefits backlog, we used Backbone.js to handle the locations of VA processing centers. In the interest of exploring new territory, we decided to build with Ember.js.

Ember.js is pretty bleeding edge. In fact, its API only went 1.0 (that is, they locked API changes) while we were building the VA opiates interactive. Despite being brand-new, Ember.js proved useful for structuring applications around URLs and provided great features for managing application state.

NOTE: It takes some work to get Ember and Django to play nicely, but luckily many great developers have already done the hard work. Check the bottom of this post for the versions/tools we used to make Ember work with Django.

In our final product, as a user clicks around the application, the template and map will adjust without actually reloading the entire page. Edit any URL, e.g., /region/14 to /region/13, and the app will move to that model, update the model's template and fetch the corresponding Leaflet information immediately. Press “back” in the browser and the same thing will happen. That is Ember.js at work. Ember is watching the state of the model that is displayed. This all starts with Ember Routes:

App.Router.map(function () {
    // truncated output
    this.resource('region', {path:'region/:region_id'});
});

Ember sees this region route and implicitly creates a RegionController object in memory that looks for our Region model and provides the correct data for the route. Controllers in Ember move data between the model and the route. If your JSON is formatted the way Ember expects it to be, you won't even need to explicitly create a model. The special :region_id syntax tells Ember to do an AJAX call to the API to get the id property of the model. For example, going to va-opiates.apps.cironline.org/#/region/13 in the browser fetches va-opiates.apps.cironline.org/api/v1/region/13 from the API and returns the data to the app.

Ember Views allows you to control what happens when someone interacts with the page, e.g., clicking on a button. The app uses Ember Views all over the place to adjust content based on user interaction.

Ember.js also lets you observe changes to the application state. For example, when a user goes from one region to another, we make sure to run a function to rebuild the map based on the new model.

App.RegionMapView = Ember.View.extend({
        // truncated code
    modelChanged:function() {
        var region_id =this.get('controller').get('id');
        Opiates.Region.buildMap(region_id);
    }.observes('controller.model')
});

Here, Ember observes a model and runs the code in the modelChanged() function when the model is changed.

It's worth nothing that while Ember is great at moving content around a Web page, it doesn't handle crazy-nested JSON very well. Considering that the data that drives news apps tends to be pretty nested, it's worth keeping your API as simple as possible for Ember. Otherwise, you'll have to mess around to make things work. Make sure you discuss your API first– before heading deep into Ember.

Lessons learned

The flexibility available to developers today is astounding, and we at CIR are working hard to make our development process as smooth and simple as possible. In real time, we can load data into a database, model it with a framework and have a live JSON feed of the data done – all before dinner. Progress!

While the front-end code was fun to write, building the research application first was crucial in the development of this application. By having a live API to work with from the beginning, we saw firsthand how someone else might approach building an application with our data. Furthermore, we were able to refine the API itself based on what we needed. Rolling thunder!

Code appendix

●      Django Tastypie Adapter

●      Ember 1.0.0.rc-6

●      Ember Data 0.13

●      Handlebars 1.0.0.rc-4

Click for larger image

Credit: OAndrews/Flickr.com

In 1964, Johnny Cash sang, “Good news travels slow.” It would be 30-some-odd years before the Internet would reveal the breadth of its abilities and impact. Nowadays, news – good or bad – travels at the speed of a click and is absorbed at the rate of one’s own attention span. 

Our next TechRaking conference examines how fast and far we’ve come, specifically looking at the advancements digital audio has made online. On Nov. 16, The Center for Investigative Reporting is teaming up with SoundCloud, a leading audio platform, and devoting the day to delving deep into the theme of “Hearing the News.”

SoundCloud and other audio-streaming platforms are revolutionizing your listening experience – creating products that are both easily accessible and navigable for mass consumption. Music, podcasts and other audio projects have seen a recent boom in popularity – able to reach and garner audiences from around the world now more than ever.

On the flip side (which, in this case, is analog), radio broadcasts have played a major role in how the public gathers information. Full disclosure: We just launched the pilot episode of “Reveal”– an investigative reporting show we produced with Public Radio Exchange (PRX) that has aired on more than 100 stations nationwide.

 
So how do we harness the power of digital audio for news? And how can news organizations use online sound platforms, or audio in general, to better tell their stories and enhance their multimedia packages? What is “smart audio” and how do we create it? What makes audio engaging anyway?

Join us Nov. 16 as we, along with SoundCloud, explore news and try to answer these questions.

Radio industry executives, audio experts and artists will convene with journalists to look at how digital audio platforms can be used to reach and engage the news-consuming public. In addition to participating in discussions with featured speakers, conference participants will be divided into teams and challenged to develop pitches for audio innovations that can help relay the news in radically new ways. The winning team will be able to jump-start its idea with CIR.

This conference will be hosted by SoundCloud at its San Francisco office.

If you’re interested in attending, please send your contact information to events@cironline.org or request an invite.

Have questions or suggestions? Tweet at me @juliachanb or follow @cironline and use #TechRaking4 for more information.

Click for larger image

Officer Rob Halverson, with the Chula Vista Police Department in California, uses a Samsung Galaxy tablet to identify a woman as part of a pilot program in San Diego County testing facial recognition software.

Credit: Roque Hernandez/Univision

On a residential street in San Diego County, Calif., Chula Vista police had just arrested a young woman, still in her pajamas, for possession of narcotics. Before taking her away, Officer Rob Halverson paused in the front yard, held a Samsung Galaxy tablet up to the woman’s face and snapped a photo.

Halverson fiddled with the tablet with his index finger a few times, and – without needing to ask the woman’s name or check her identification – her mug shot from a previous arrest, address, criminal history and other personal information appeared on the screen.

Halverson had run the woman's photograph through the Tactical Identification System, a new mobile facial recognition technology now in the hands of San Diego-area law enforcement. In an instant, the system matches images taken in the field with databases of about 348,000 San Diego County arrestees. The system itself has nearly 1.4 million booking photos because many people have multiple mug shots on record.

The little-known program could become the largest expansion of facial recognition technology by U.S. law enforcement. Amid an international debate over collecting and sharing huge amounts of data on the public, this pilot program is putting that metadata to use in the field in real time.

The use of this technology was rolled out without any public hearings or notice. In turn, the secrecy of the program has alarmed privacy experts and raised questions about whether San Diego is the leading edge of an alarming future – one in which few people escape cataloging in a government database.

Twenty-five local, state and federal law enforcement agencies – including U.S. Immigration and Customs Enforcement, the Border Patrol, the San Diego County Sheriff's Department and San Diego State University – participate in the system. The project is coordinated by the San Diego Association of Governments and relies on a vast data-sharing program called the Automated Regional Justice Information System.

For some, the use of biometric technology by police represents a radical milestone in the militarization of American law enforcement.

For years, technology that was developed on the battlefield has been migrating into domestic police agencies. Since 9/11, America's wars in Afghanistan and Iraq have sped up that transfer. Facial recognition technology, which has been widely used by the military, is the next frontier.

“What we're seeing now is much more surveillance oriented, and it's in the guise of preventative policing,” said Kevin Keenan, former executive director of the American Civil Liberties Union of San Diego & Imperial Counties. “It's really this aspiration of prevention and social control through the monitoring of everyone's every action and storage in perpetuity.”

San Diego’s program, if considered successful, easily could expand beyond the county’s borders.

The system’s mug shots are pulled from the statewide Cal-Photo law enforcement database, which also has access to 32 million driver's license photos. And, according to a report by the Automated Regional Justice Information System, the county is looking at using mug shots from statewide gang and parolee databases, as well as information stored by the Department of Motor Vehicles.

Click for larger image

Click to view the full graphic.

The legality of law enforcement using facial recognition technology has not been tested in the courts. But a Privacy Impact Assessment, which the Automated Regional Justice Information System helped write, claims that photos of everyday people can be taken during “traditional police-civilian encounters.”

San Diego law enforcement agencies have used the facial recognition system since the beginning of this year, when 133 Galaxy tablets and smartphones were distributed to 25 law enforcement agencies around the region, according to documents obtained through a public records request by the Electronic Frontier Foundation, a San Francisco nonprofit that studies surveillance and privacy issues.

Compared with the number of arrests throughout the San Diego region, which has about 3.2 million residents, the system is rolling out with relatively modest numbers. In the first 10 months of 2013, officers ran 5,629 queries through the database.

The sheriff’s department and San Diego Police Department have the most devices, with 64 and 27 devices, respectively, and they have made nearly 2,000 queries into the system combined. The most active single user is an SDSU police officer who used a device 224 times from January to Oct. 30, according to the documents.

Officials with the sheriff’s department and San Diego Association of Governments declined requests for comment.

Law enforcement officials said the pilot program is a valuable tool to help them identify people who refuse to give their names or use fake identification. Immigration officials said they have used the system to help them when they encounter immigrants who don’t have authorization to be in the U.S.

“Photographs are neutral – you can't say it's racist when a camera is taking a neutral picture of someone,” said Halverson, the Chula Vista officer. “It’s hitting on certain points of contact. It's doing a neutral analysis of a person.”

The software works by capturing a freeze frame of a live video feed, which then focuses on the face and uses the distance between the eyes as a baseline. An algorithm then analyzes unique textures and patterns on the face, cross-referencing the freeze frame at the rate of a million comparisons per second against the police mug-shot database that also has been processed by the software.

Halverson said he has used the system to identify injured people who were unresponsive and had no identifying documents. Other officers have been overwhelmingly positive, according to the Automated Regional Justice Information System.

One Immigration and Customs Enforcement agent who provided a testimonial said he used the device during a warrant sweep in Oceanside. While on the sweep, the agent wrote, his “ ‘spidy senses' were tingling” about the immigration status of a neighbor of the person he was pursuing.

He decided to run the man’s picture through the facial recognition software. The agent discovered the man was in the country illegally and had a 2003 DUI conviction in San Diego.

“I whipped out the Droid (smartphone) and snapped a quick photo and submitted for search,” the immigration agent wrote in his testimonial for the Automated Regional Justice Information System. “The subject looked inquisitively at me not knowing the truth was only 8 seconds away. I received a match of 99.96 percent. This revealed several prior arrests and convictions and provided me an FBI #. When I showed him his booking photo, his jaw dropped.”

Law enforcement officials said the facial recognition software has built-in privacy safeguards. After an image taken in the field is run through the system, it is discarded by the central database, they said. They say it does not create a database of photos of people who are stopped by police and questioned.

“If you're not in a criminal database, you have nothing to hide,” Halverson said.

However, during field tests with Chula Vista police, images taken by field officers were stored within individual tablets. It’s up to police to delete those photos on their own.

Officers who have used the system in San Diego rave about its precision in identifying people. But facial recognition technology remains imperfect. Documents obtained by the Electronic Privacy Information Center, a Washington nonprofit, show that the FBI’s facial recognition program could fail to identify the right person in 1 out of 5 encounters – potentially ensnaring innocent people in investigations.

Developing the program

Click for larger image

San Diego law enforcement agencies have used the facial recognition system since the beginning of this year, when 133 Galaxy tablets and smartphones were distributed to around the region, according to the Electronic Frontier Foundation.

Credit: Roque Hernandez/Univision

Development of the San Diego program goes as far back as 2007, according to documents obtained by the Electronic Frontier Foundation. That’s when the federal government’s National Institute of Justice awarded a $418,000 information-led policing grant to the Automated Regional Justice Information System.

The program's goal, according to the proposal, was to develop open-source software that “will be made available as part of a repeatable national model.” Over the next few years, the San Diego Association of Governments and county sheriff’s department worked together to vet potential vendors and develop the system.

In 2012, the association selected FaceFirst LLC, a privately held facial recognition firm in Camarillo, Calif., as the technology vendor. A $475,000 Department of Homeland Security grant covered the cost of purchasing FaceFirst's license and the hardware required to roll out the system.

Founded in 2007, FaceFirst is a spinoff of military contractor Airborne Technologies and is backed by the $18 billion private equity firm Kayne Anderson Capital Advisors. FaceFirst’s main product is facial recognition software that, according to CEO Joe Rosenkrantz, has the capability to “identify everyone in a football stadium in five seconds.”

The $126,800 contract for the San Diego system is the company's first public contract in the United States. Tocumen International Airport in Panama City also uses FaceFirst's technology. Rosenkrantz would not say whether the company's products are used by federal law enforcement, but the company has had talks with the Pentagon, Border Patrol and Navy.

During heavy fighting in Fallujah, Iraq, in 2007, the American-led coalition forces documented civilians they came into contact with in a database of mug shots, iris scans and fingerprints taken in the field with mobile devices, according to Wired magazine. The military has developed a similar biometric database for virtually every Afghan it comes into contact with. 

In 2009, Air Force Gen. Victor Renuart, the Pentagon's homeland security commander, advocated for the increased use of biometrics within the U.S. Among domestic law enforcement, the Maricopa County Sheriff’s Office in Arizona and the Pinellas County Sheriff's Office in Florida have devoted considerable time and resources to developing biometric technology.

Jennifer Lynch, a senior staff attorney at the Electronic Frontier Foundation, expressed alarm at the normalization of military-grade technology in daily police activity. She said she believes the San Diego regional government’s lack of transparency around the facial recognition program is designed to minimize opposition and public debate.

“It becomes accepted and is much harder to push back when an agency has purchased 150 devices and deployed them in the field," Lynch said.

Biometrics is a multibillion-dollar-a-year industry, with more than 70 percent of spending by the military, domestic law enforcement and the government, according to the Los Angeles Times. Next year, the FBI will unveil its Next Generation Identification system, a nationwide database of biometric information on criminal suspects and convicts that will replace the bureau’s current national database of fingerprints, corresponding criminal records and notes from past field interviews.

Keenan, the former San Diego ACLU official, pointed to the U.S.’ history of political surveillance after World War II and 9/11 as evidence that the rapid proliferation of biometric technology is part of a tightening net of social control in the United States.

“We were given a false bargain,” Keenan said. “We were told that this kind of control is to prevent another 9/11, and in fact, it's going to be used to fight the drug war, to pursue other policies where we would not have bargained away our privacy back at that time if we knew that was the tradeoff.”

This story was edited by Robert Salladay and copy edited by Nikki Frick and Christine Lee.

Click for larger image

A license-plate reader mounted on a San Leandro Police Department car can log thousands of plates in an eight-hour patrol shift. “It works 100 times better than driving around looking for license plates with our eyes,” says police Lt. Randall Brandt.

Credit: Michael Katz-Lacabe

You've heard how the NSA is snooping on your data, but what about local law enforcement?

Ali Winston and G.W. Schulz have been looking into local governments’ growing surveillance infrastructure – most of which is legal.

Winston and Schulz will be on Reddit on Tuesday at 11 a.m. PT to take your questions and comments about facial recognition technologies, biometrics, license-plate scanners, fusion centers and more. What are some examples of how cities have used these technologies? Do they keep us safer? Who is paying for it? How do people feel about these new policies? How is all this intelligence data being stored?

For a primer on how local agencies are using surveillance technology, here are a few cases we’re following. If you have more examples, let us know in the comments below.

• Facial recognition technology: In San Diego, law enforcement agencies are deploying what could be the largest expansion of facial recognition technology for civilian use. The Tactical Identification System allows law enforcement officials to use a mobile device to snap a photo of an individual and run the image against a database matching criminal history, mug shots and other personal information of about 348,000 arrestees in San Diego County. "If you're not in a criminal database, you have nothing to hide,” said Officer Rob Halverson of the Chula Vista Police Department. While officials value the efficiency of being able to easily identify someone, critics argue that how that information is stored – especially for those who have done nothing wrong – raises serious privacy concerns.
   
  More: The rollout of facial recognition technology in San Diego and its military ties; how facial recognition technology works 
   
• Oakland’s Domain Awareness Center: In the port city of Oakland, Calif., a federally funded Domain Awareness Center is being expanded to allow local agencies to track Twitter feeds and use license-plate scanners, gunshot detectors, crime mapping software and stationary cameras. The Domain Awareness Center began as part of a nationwide initiative to secure ports by networking sensors and cameras in and around the facilities. The project will cost an estimated $10.9 million to complete.
   
  During a city council meeting in July, Oakland residents protested the city’s decision to accept additional funding to streamline intelligence gathering by incorporating data across different agencies, including local and state departments of transportation, the city’s school district and sports/entertainment venues like the O.co Coliseum and Oracle Arena.
   
  More: The progress of Oakland’s surveillance center and the debate around data collection
   
• License-plate scanners: One technology law enforcement agencies in California are using is scanners that sit atop police cars. The scanners document license plates and geographic locations of cars passing by – even when drivers have done nothing wrong. Winston reported that “the intelligence center database will store license-plate records for up to two years, regardless of data retention limits set by local police departments.” Critics are concerned about how this data is being stored and the privacy implications.
   
  Last year, following a California Watch investigation that revealed a private company was stockpiling half a billion records on drivers using license-plate scanners, state Sen. Joe Simitian, D-Palo Alto, attempted to increase privacy protections. But under pressure from lawmakers and lobbyists, he backed away from his bill to regulate how such data is stored.
   
  More: Private company hoarding license-plate data on US drivers; License-plate readers let police collect millions of records on drivers; Police, lobbyists defeat bill to regulate license-plate scanners; DEA launches license plate scanners along border
   
• Your digital trail: Schulz has reported that, “Many Americans would be surprised by how easily local law enforcement, IRS investigators, the FBI and private attorneys can reach into the vast pool of personal information about their lives with little more than a subpoena, which no judge needs to review.” Your medical records, online dating profiles, public transportation records, even unopened emails – all of these things can be accessed with a subpoena or court order by private investigators, private attorneys and local law enforcement officials.
   
  More: Easily obtained subpoenas turn your personal information against you; Watch how private companies track your digital trail, even when you’re not signed in

Check in to Reddit at 11 a.m. PT Tuesday for the live chat with Schulz and Winston.

Click for larger image

Cellphone towers are one tool police agencies may try to use to collect data from your mobile phone.

Credit: Christian Delbert/Shutterstock

The Center for Investigative Reporting has recently told you about how local law enforcement agencies in California are using emerging technology – such as license-plate scanners and facial recognition software– to collect citizens’ data in new ways. But did you know the extent to which police can tap directly into information about your cellphone?

A new investigation by USA Today and Gannett offers a window into the new technologies and tactics police are using to bulk collect cellphone data. Their reporting reveals how many law enforcement agencies use a device that impersonates a cellphone tower – called a Stingray – to capture location and activity information from cellphones in the area.

Of 125 police agencies in 33 states that were reviewed by USA Today and Gannett, at least 25 own a Stingray. Most of the devices were purchased through federal antiterrorism grants, which have helped fund an array of high-tech, combat-ready gear for state and local police.

One in four police agencies analyzed also have used a tactic called a “tower dump” to obtain data on the identity, activity and location of any phone that connects to an individual cellphone tower over a set timespan. While police say the data can assist in solving and preventing crimes, USA Today also highlights a few cases in which data collection has been abused. In Minnesota, for example, state auditors found that 88 police officers across the state improperly looked up Minnesotans’ driver’s license information without authorization or relevance to an investigation last year.

As part of Gannett’s investigation, The Desert Sun surveyed how Southern California law enforcement agencies have collected cellphone data. See the infographic on its website for a breakdown of how the technology works.

What are the legal implications for bulk collection of cellphone data? As USA Today points out, they’re fuzzy, and privacy advocates have questioned the legal standards. Last year, CIR reporter G.W. Schulz highlighted a court brief filed by the Electronic Frontier Foundation and American Civil Liberties Union of Northern California that argued that Stingrays are “highly intrusive and indiscriminate.” 

But as the technology is deployed, states are responding in different ways. Montana and Maine passed laws requiring police to show probable cause and get a search warrant to obtain some cellphone data this year, while California Gov. Jerry Brown vetoed a similar measure last year. See ProPublica’s overview of data collection laws for a look at state-level developments.

USA Today’s investigation comes on the heels of new revelations that the National Security Agency is gathering nearly 5 billion cellphone location records a day, as reported by The Washington Post.

Click for larger image

The EPA, headquartered in the William Jefferson Clinton Federal Building, says it has enough data on pesticide Nanosilva to know that it’s safe while the manufacturer finishes testing.

Credit: c_nilsen/Flickr

Tiny particles of silver could appear soon in children’s toys and clothing, embedded inside plastics and fabrics to fight stains and odors.

No one knows how the germ-killing particles, part of a new pesticide called Nanosilva, affect human health or the environment in the long run. But regulators have proposed letting Nanosilva on the market for up to four years before the manufacturer has to submit studies on whether the particles pose certain dangers.

That’s because the U.S. Environmental Protection Agency has backed approving Nanosilva through conditional registration, a fast-track process that recently has drawn criticism for oversight problems. Unlike regular registration, it allows a pesticide to be sold before all required safety studies are in. In this case, manufacturer Nanosilva LLC can move ahead even though it hasn’t explored fully the potential health risks if the product were to seep out of plastic or be inhaled.

Nanosilva’s approval, which could be finalized early this year, has renewed focus on the loophole, designed mainly to help the EPA speed up approvals of pesticides nearly identical to those already being sold.

Recent reviews have found vast problems with the EPA’s oversight of conditional registration. An internal audit showed in 2011 that 70 percent of all active pesticides had been conditionally approved. The audit also concluded that the agency used the label too broadly. Since then, its use has increased. Figures the EPA provided in December put the number at 80 percent.

Thousands of pesticides kept conditional status for more than 20 years, the Natural Resources Defense Council, a nonprofit environmental advocacy group, found in 2010. The EPA says studies typically are due within four years.

And last year, federal auditors found the agency couldn’t reliably track how many products were conditionally registered or whether safety studies were submitted. As a result, pesticides could linger on the market for years without critical tests, the Government Accountability Office warned in August.

These aren’t new problems. At least seven independent reviews dating back to 1980 have noted flaws with the agency’s systems for tracking pesticide registrations.

The EPA said it has enough data on Nanosilva to know that it’s safe while the manufacturer finishes testing, as the law requires. But some scientists and environmentalists say the agency is taking a risk on products that are hardly essential, like sports clothing that doesn’t stain or stink or toys that last longer.

"You could allow some uses that are justified based on human well-being, such as medical implements, but to allow the possibility that nanosilver would be released in plastic on children's toys, and your kid could chew on it and ingest that material before we understand its toxicity – that's unnecessary risk,” said Samuel Luoma, a research ecologist at the University of California, Davis. “It doesn’t make any sense.”

Conventional silver has been used as an antibacterial product for centuries. It releases ions that are deadly for many bacteria and fungi.

Recently, scientists have broken down silver into particles more than 1,000 times smaller than the width of a human hair – some not much wider than a DNA strand. They’re called nanosilver. Nanosilva is just one brand that contains them.

Nanosilver can be embedded directly into plastics, fabrics and other materials. Companies say this helps products last longer. It also allows them to call items antibacterial and attract germ-conscious consumers. Nanosilver needs to be registered as a pesticide because it claims to kill bacteria and other live organisms.

Regular silver is highly toxic to fish and other aquatic life but isn’t usually dangerous for humans. But scientists say nanosilver could pose unique hazards, and they know little about its long-term risks.

Click for larger image

Samuel Luoma, a research ecologist at the University of California, Davis, says the EPA is taking a risk by allowing nanosilver to be used in nonessential products before scientific testing is complete.

Credit: Courtesy of Samuel Luoma

Animal studies show that nanosilver can slip into cells and build up in the brain, heart and other organs. The EPA doesn’t know whether nanosilver causes reproductive harm or cancer because there are no valid studies. Research on animals suggests that it can collect in the male reproductive system, potentially harming fertility, and may cause genetic mutations, which sometimes are linked to cancer.

Scientists have warned that nanosilver may be more toxic than regular silver and act as a carrier for other poisonous chemicals. Besides human health risks, researchers worry that nanosilver could kill fish and disrupt food chains if it makes its way into the environment.

The EPA argues that approving Nanosilva promotes innovation and lets consumers enjoy better products. The agency also says it didn’t give the manufacturer enough time to do safety tests. The EPA didn’t ask for those tests until nearly four years after an independent scientific advisory panel counseled the EPA on how it should evaluate nanosilver in 2009.

And, in evaluating Nanosilva, the EPA ignored some of that panel’s advice.

The scientists told the agency to evaluate every nanosilver product separately. Just because one is safe doesn’t mean others will be, they said. The agency instead figured out many health and environment risks based on studies on particles that were different from those in Nanosilva. The EPA said the tests were “scientifically appropriate.”

Nanosilva officials couldn't be reached for comment.

This isn’t the first time the EPA has conditionally approved pesticides containing nanosilver.

In November, a federal appeals court overturned the approval of two nanosilver products, ruling that the EPA had incorrectly found they posed no risks to toddlers. That decision didn’t affect Nanosilva because the EPA used different calculations in each case.

Regulators still are grappling with how to deal with nanomaterials. While only two companies have asked for EPA approval, hundreds of products containing nanosilver already are on the market, according to an inventory by The Project on Emerging Nanotechnologies.

The EPA also has fast-tracked other controversial pesticides, including ones linked to the collapse of honeybee colonies and tree deaths.

All conditionally registered pesticides meet legal safety standards, the EPA said. The agency said it’s taken steps to prevent staff from coding registrations incorrectly, which it said was the main reason numbers appeared high.

The EPA also has reviewed some conditionally approved products to look for missing data and other problems. But it hasn’t traced the paper trail for all pesticides, as it told federal auditors it would do by last fall.

The EPA also doesn’t have a concrete plan for the main fix auditors prescribed, an automated tracking system to guarantee that studies arrive and get reviewed. Currently, pesticide managers sometimes rely on handwritten notes and memory to keep track.

“Until they figure out the system, they shouldn’t be using conditional registration,” said Mae Wu, an attorney for the Natural Resources Defense Council.

The EPA first told federal auditors it would develop an automated tracking system more than 25 years ago.

This story was edited by Andrew Donohue and copy edited by Nikki Frick and Christine Lee.

For decades, the tools used by data scientists have provided the backbone for important stories that effected change.

The Center for Investigative Reporting now in the midst of the sixth TechRaking conference on data and journalism, and we’re holding this one in Toronto with Google Canada and The Canadian Press.

As we start to explore ways that technologists and journalists can come together to bring about change and better inform the public, let’s review some key historical moments in what’s now known as data journalism.

In 1952, Walter Cronkite reported stories based on an analysis of election results on one the first mainframe computers. That allowed journalists to call the election for Dwight Eisenhower before the voting closed, despite polling that indicated Illinois Gov. Adlai Stevenson would win.

During the 1967 Detroit race riots, reporter Philip Meyer did something few journalists had done before: He adopted the techniques of social scientists to show the underlying causes of the riots. When the Detroit Free Press won the Pulitzer Prize for local general reporting in 1968, the newspaper cited Meyer’s analysis of survey data. Meyer went on to write “Precision Journalism” (now called “The New Precision Journalism”), considered the bible of computer-assisted reporting.

Despite the difficulty of managing large databases back in those days, more reporters started using them to do stories that no one else could.

In 1989, the Pulitzer Prize for public service was awarded to the Anchorage Daily News for Richard Mauer’s analysis of the deaths of Alaskan natives. Mauer found that an Alaskan native boy had a 250 times greater chance of committing suicide than a boy like him living elsewhere in the United States. After Mauer’s stories ran, suicide prevention programs were launched and the battle against alcohol abuse was strengthened.

More recently, a team of reporters from CIR’s California Watch project used multiple databases to show that state regulators “routinely failed to enforce California’s landmark earthquake safety law for public schools.” As a result, California lawmakers ordered audits and investigations, and the State Allocation Board made it easier for schools to get funding for seismic repairs.

Data has been the foundation for many investigations. It has provided a view of entire populations, rather than anecdotes. But news organizations still could not give readers all the information. Even with large news holes in the 1990s, you could not print a database.

In 1999, the San Jose Mercury News did an investigation based on decades of animal transfer records showing that animals at some of the nation’s top zoos were dumped with dealers or ended up on hunting ranches. The newspaper, among the first to publish online, put up a tool so readers could search by zoo.

Today, spreadsheets and databases are commonplace in newsrooms and on Web sites. Government agencies regularly release information in electronic format. The tools to analyze data and make it available online are cheaper, faster and more powerful.

But challenges remain.

Nearly 20 years since the passage of the Electronic Freedom of Information Act, which required agencies to provide records electronically, among other requirements, federal agencies still balk at releasing databases.

In the U.S. and Canada, federal agencies release data in hard-to-process PDF files. In fact, that might be more commonplace today.

At the local level, state and provincial laws vary widely. So you might be able to get data about day care centers in Texas easily, but, as CIR recently experienced, getting that data in California is virtually impossible.

Some state open records laws don’t address access to electronic records, so interpretation often is left to individual agencies or courts, if the requester has the resources to sue.

The New Hampshire open records law allows an agency to provide a printout of a public record rather than the underlying computer file. Courts there have been mixed on whether an agency must hand over a database. California’s Public Records Act did not address electronic records until 2001.

In an age in which information means money, some agencies, particularly on the local level, try to put hefty price tags on public data. At the same time, newsroom budgets are shrinking, making it harder to pay for data or fight for access to data in court.

The rush to put information online sometimes means that data is not checked thoroughly or that it is posted without the necessary context to enable users to make sense of what they’re seeing. Simply regurgitating a government database in its original form may drive click traffic, but it’s our job as journalists to bring meaning to the data. Not only that, most government databases are flawed. Finding those flaws is another one of our jobs as journalists.

When the nonprofit news organization ProPublica obtained data from the U.S. Department of Education’s Office for Civil Rights in 2011 to build its Opportunity Gap project, reporters found significant problems in the data, including schools with more teachers than students and schools offering more than 1,000 Advanced Placement courses when fewer than 40 exist.

Traditionally, data was sorted in rows and columns, but that’s not always the case today. Data is in free-form text, PDFs or even in things that don’t begin as data. Much work is being done on the data science side to develop tools to manage “big data.” That can be a great resource for journalists trying to analyze pages of documents. To deal with some of these issues, journalists must move from spreadsheets and databases to more powerful tools. Involving data scientists in journalism and developing interdisciplinary programs will increase newsrooms’ ability to bring about change – and produce some pretty cool projects in the process.

There’s a great term for the way the government and other big organizations work.

It’s “creeping incrementalism.”

Surveillance of ordinary Americans is happening right now across the country. Local governments and law enforcement agencies are slowly and steadily adopting some astonishing technologies to monitor the day-to-day activities of private citizens in the name of fighting crime.

It’s a steady drip. A pilot program to install facial recognition software. A federal anti-terrorism grant for a big port that turns into a citywide monitoring system. A test run of a “wide-area surveillance” camera over the city of Compton, Calif.

This year, The Center for Investigative Reporting is focused on pulling together the pieces of this remarkable transformation of policing and local government. Law enforcement agencies are embracing surveillance technologies like never before. We’ve already written a lot about this, and we’re going to do more of it.

This week, CIR and KQED have teamed up to take an inside look at emerging technologies that could revolutionize policing. “State of Surveillance” – a 30-minute television special that airs 7:30 p.m. Friday on KQED 9 – examines crime-fighting technologies that also raise concerns about privacy and the presumption of innocence. Radio reports also will air Friday morning on KQED 88.5 FM.

Attention has been rightly directed at the NSA and the leaks by Edward Snowden. No local government or police agency in the U.S. comes close to the incredible breadth and reach of the NSA’s spying program.

But given the speed that technology advances, turning attention to local law enforcement and government surveillance activities is critical. We could wake up one day in a completely different world, where law enforcement has access to nearly every waking moment of a person’s life.

We think that deserves a public debate.

Today, CIR is creating a forum on Reddit.com for people to participate in our coverage and drive conversation on this important subject. This subreddit will allow CIR to gather a community of folks interested in the topic of local surveillance. By that we mean: What’s happening in your own backyard?

CIR has done Reddit chats in the past with our reporters, but making this topic-specific subreddit would open up the dialogue. We’re asking ask the public to share opinions, experiences and story tips that we could use to inform our reporting.

Along the way, we’ll pose key questions about these emerging technologies and practices. For example:

•  Have you ever been accused of a crime based on surveillance technology, such as a camera that showed your car in a suspicious area?
• Have the results of police surveillance technology ever been used against you in a divorce or child-custody proceeding?
• Should police be allowed to record from the air the movements of an entire city? How long should they keep these records?
• Have you restricted what you say on Facebook and Twitter because you know people are monitoring you?

Why should we worry about this? Who cares if police read your Twitter account and take your picture walking around the mall or driving across a bridge? 

For one, we know that private attorneys love surveillance technologies; they can access much of what’s produced with a simple subpoena. That has a lot of people worried.

There’s another interesting term that applies here as well. It’s “confirmation bias.” Here’s the problem with collecting everything and anything on people, as described in an Al Jazeera America piece about Brandon Mayfield, who was falsely accused in the 2004 Madrid commuter train bombing.

Information overload “... can imply guilt where there is none. When investigators have mountains of data on a particular target, it’s easy to see only the data points that confirm their theories – especially in counterterrorism investigations when the stakes are so high – while ignoring or downplaying the rest. There doesn’t have to be any particular malice on the part of investigators or analysts, although prejudice no doubt comes into play, just circumstantial evidence and the dangerous belief in their intuition.”

After the Madrid bombing, the FBI determined that fingerprints found at the scene were possible matches to 20 people, including Mayfield. Mayfield’s house was broken into by the FBI. The FBI bugged his house and tapped his phone. He was followed and then arrested and detained for two week without charges. Finally, Spanish authorities said the fingerprint actually belong to an Algerian national, and Mayfield was released.

With that in mind, feel free to connect with us on Reddit and Twitter at @cironline and @chenkx. You can also email kchen@cironline.org.

COMPTON, Calif. – When sheriff’s deputies here noticed a burst of necklace snatchings from women walking through town, they turned to an unlikely source to help solve the crimes: a retired Air Force veteran named Ross McNutt.

McNutt and his Ohio-based company, Persistent Surveillance Systems, persuaded the Los Angeles County Sheriff’s Department to use his surveillance technology to monitor Compton’s streets from the air and track suspects from the moment the snatching occurred.

The system, known as wide-area surveillance, is something of a time machine – the entire city is filmed and recorded in real time. Imagine Google Earth with a rewind button and the ability to play back the movement of cars and people as they scurry about the city.

“We literally watched all of Compton during the time that we were flying, so we could zoom in anywhere within the city of Compton and follow cars and see people,” McNutt said. “Our goal was to basically jump to where reported crimes occurred and see what information we could generate that would help investigators solve the crimes.”         

Click for larger image

The Los Angeles County Sheriff’s Department used high-powered surveillance cameras attached to a small civilian aircraft to monitor Compton’s streets.

Credit: CIR

McNutt, who holds a doctorate in rapid product development, helped build wide-area surveillance to hunt down bombing suspects in Iraq and Afghanistan. He decided that clusters of high-powered surveillance cameras attached to the belly of small civilian aircraft could be a game-changer in U.S. law enforcement.

“Our whole system costs less than the price of a single police helicopter and costs less for an hour to operate than a police helicopter,” McNutt said. “But at the same time, it watches 10,000 times the area that a police helicopter could watch.”

McNutt’s airborne cameras are just one part of a new digital movement in law enforcement. The Hollywood version of American policing is made up of darkened command centers where a wellspring of digital data about criminals always seems just a few clicks away.

In cities across the country, that fiction is inching closer to reality.

The FBI is rolling out a sprawling data complex that contains over 147 million mug shots and sets of fingerprints, many of which belong to people who are not criminals. Local law enforcement analysts are using surveillance centers to monitor video feeds and reported crimes minute by minute.  

The Center for Investigative Reporting and KQED teamed up to take an inside look at the emerging technologies that could revolutionize policing – and how intrusively the public is monitored by the government. The technology is forcing the public and law enforcement to answer a central question: When have police crossed the line from safer streets to expansive surveillance that threatens to undermine the nation’s constitutional values?

In one city, law enforcement officials don’t need to see your identification: They just need your face. Police officers in Chula Vista, near San Diego, already have used mobile facial recognition technology to confirm the identities of people they suspect of crimes. After using a tablet to capture the person’s image, an answer is delivered in eight seconds. (About 1 percent of the time, the system retrieves the wrong name, according to the manufacturer, FaceFirst.)

Chula Vista is now part of a larger trend in law enforcement to use unique biological markers like faces, palm prints, skin abnormalities and the iris of eyes to identify people.  

“You can lie about your name, you can lie about your date of birth, you can lie about your address,” said Officer Rob Halverson. “But tattoos, birthmarks, scars don’t lie.”

The FBI, meanwhile, is finalizing plans this year to make 130 million fingerprints digital and searchable.

Click for larger image

Persistent Surveillance Systems’ technology captures in real time a necklace snatching and the getaway car that was involved.

Credit: CIR

Many of the fingerprints belong to people who have not been arrested but simply submitted their prints for background checks while seeking jobs. Civil libertarians worry that facial images for these individuals could be next. The FBI already maintains a collection of some 17 million mug shots.

This personal information is now housed in a West Virginia-based storage facility the size of two football fields containing row after row of blinking and buzzing server stacks. These machines are the heart of the FBI’s Next Generation Identification program, which seeks to make it easier for police officers and investigators around the nation to distinguish one human being from another based on biological traits.

“What it potentially means is that we’re able to catch bad guys faster, and we’re able to get them off the streets a lot faster with the technologies we have so they don’t commit another crime,” said Jeremy Wiltz, acting assistant director of the FBI’s Criminal Justice Information Services Division.

Such technology, he said, also could exonerate innocent people and keep them from being held in a jail cell for days or longer. Audits have been conducted to ensure Next Generation Identification isn’t accessed by local police for conducting inappropriate searches, Wiltz added.   

The potential for misuse nonetheless troubles civil libertarians.

Jennifer Lynch, a senior staff attorney at the Electronic Frontier Foundation, said she’s concerned the government will eventually collect and store face images like it does now with the tens of millions of fingerprints submitted by people seeking certain jobs. She’s worried such data will be merged with criminal records that are currently kept separate – resulting in innocent people being placed under suspicion.

“Once the nation has a facial recognition database, and once facial recognition capabilities improve to the point that we can identify faces in a crowd, it will become possible for authorities to identify people as they move through society,” Lynch said.

As for wide-area surveillance, McNutt said that ground-based cameras offer higher resolutions and that his technology cannot zoom in on faces or other particular details. But cameras on the ground are limited in range, and a seemingly infinite number would be necessary to blanket an entire city. McNutt believes his technology will be good enough in a few years to cover twice as much area – perhaps as large as the entire city of San Francisco.

In the case of a Compton necklace snatching, the suspects eventually drove out of camera range without being identified, said L.A. County sheriff’s Sgt. Doug Iketani, who supervised the project. He added that McNutt’s system can’t provide the kind of detailed, close-up images that would survive in court. But Iketani said the technology did give police useful leads.

So why have the people of Compton heard little about this experiment until now?

Click for larger image

The Los Angeles Police Department’s Real-Time Analysis and Critical Response Division has access to 1,000 surveillance cameras spread across the city.

Credit: G.W. Schulz/CIR

“The system was kind of kept confidential from everybody in the public,” Iketani said. “A lot of people do have a problem with the eye in the sky, the Big Brother, so in order to mitigate any of those kinds of complaints, we basically kept it pretty hush-hush.”

Elsewhere in the Los Angeles area, police are facing similar challenges at a command center near downtown where law enforcement analysts observe a video surveillance feed aimed at the iconic Hollywood sign, which police say is sometimes targeted by vandals and is vulnerable to fires.

Policing the Hollywood sign is one of many tasks of the Los Angeles Police Department’s Real-Time Analysis and Critical Response Division– looking not unlike other high-tech law enforcement centers that have sprung up around the country as part of a post-9/11 trend known as predictive or intelligence-led policing. The goal: speed up reaction times or, better yet, intercede before new crimes, including potential precursors to terrorism, occur.

The center has access to 1,000 surveillance cameras spread across the city. Also available, through a feed to the center, are social media sites, news broadcasts and data captured by license-plate recognition devices.

There’s also a wall-mounted digital map of real-time reported crimes around Los Angeles that could provide analysts with valuable insight into when and where crimes are most likely to occur, where trends are emerging and where officers should be patrolling.

Like many cities around the country, Los Angeles is grappling with unease from residents over thousands of networked cameras that can peer into many corners of our lives, often without us being fully aware of it.    

The center’s commanding officer, Capt. John Romero, recognizes the concerns but equates them with public resistance to street lights in America’s earliest days.

“People thought that this is the government trying to see what we’re doing at night, to spy on us,” Romero said. “And so over time, things shifted, and now if you try to take down street lights in Los Angeles or Boston or anywhere else, people will say no.”

This story was edited by Robert Salladay and copy edited by Nikki Frick and Christine Lee.