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Sheriff sale ads: A bonanza for the politically connected in Philly

Philadelphia Sheriff Jewell Williams has spent millions of extra dollars to advertise foreclosure sales - and funneled hefty commissions to some political consultants.

Sheriff Jewell Williams, a Democrat first elected in 2011, has authorized millions of dollars in extra spending to advertise sheriff sales.
Sheriff Jewell Williams, a Democrat first elected in 2011, has authorized millions of dollars in extra spending to advertise sheriff sales.Read moreDAVID MAIALETTI / Staff Photographer

Former Philadelphia Sheriff John Green turned on the spigot nearly 30 years ago and the spending has gushed forth ever since.

Without any legal obligation to do so, Green and his successor, Jewell Williams, have spent millions of dollars to place ads for forthcoming sheriff sales in community and niche newspapers across Philadelphia, using fees imposed during foreclosures. In some cases, those fees are borne by the very homeowners at risk of losing their houses.

The result has been a bonanza for politically connected intermediaries who have gotten a cut of the ad money, as well as for the papers themselves, a number of which were founded by politically active owners.

Williams and Green both say the money has been well spent, a way to reach a more diverse pool of potential bidders for foreclosed properties. Critics dismiss the ads as an expensive frill, meant to reward the sheriffs' Democratic allies and buy friendly news coverage for the relatively uncovered agency.

Statewide court regulations require that sheriff-sale legal notices be placed in a major general-interest newspaper and an area legal publication. To that end, Williams purchased $4.2 million in ads last year in the Inquirer, the Daily News, the Philadelphia Tribune, and the Legal Intelligencer. But he has gone well beyond that, spending an additional $3.6 million for ad space in many other publications, some small and obscure.

The Public Record, the Sunday Sun, the Philadelphia Gay News, Scoop USA, Fun Times, and Impacto News are among 20 newspapers and two radio stations that have received such discretionary ad money from the sheriff for years.

Williams declined an interview request. In a statement, he said the extra spending was needed to reach beyond mainstream media. This way, he said, "all citizens in a city as diverse as Philadelphia have an opportunity to participate in the sheriff sales."

The price for that opportunity is steep. The cost of the ads is covered by a fee that can be as high as $1,500 on a foreclosed house, officials say.

"The money comes from the homeowners, the people who lost their homes. That's not good," said John Dodds, the director of the Philadelphia Unemployment Project. "It still doesn't make any sense to me."

City Controller Rebecca Rhynhart is another critic. At a time when the city is considering tax hikes, she said, the Sheriff's Office spending on the ads "needs to be thoroughly explored."  Her agency is planning a new audit of the Sheriff's Office, including its nearly $8 million annual advertising expenditure, Rhynhart said.

The ads have been controversial for years. Advocates for the poor, such as Dodds, have tried to rein in the practice. But nothing has had any impact — not even the harsh light cast on the spending by the federal corruption investigation of Green that climaxed in his recent trial on bribery charges.

Federal prosecutors accused the former sheriff of pocketing kickbacks from the money flow, though a jury deadlocked on some charges and acquitted Green on others. He is facing a retrial.

Still, the debate over the sheriff's largesse continues as part of a larger disagreement about whether state law should mandate any sheriff ads in newspapers. Detractors say such legal notices could be posted on government websites at a fraction of the current cost.

Mark Cohen, president of the Pennsylvania NewsMedia Association, which represents the state's newspapers including the Inquirer and Daily News, said it was important that papers, independent of local governments, continue printing legal notices.  "We're a watchdog," he said. "I'm not sure it makes sense for public notices to be in the hands of government."

In editorials, the Inquirer, along with many other papers, has argued that printed legal notices are necessary to reach elderly and low-income readers who may not be online. Philadelphia Media Network, the parent company of the Inquirer and Daily News, was paid $1.6 million for ads by the Philadelphia Sheriff's Office last fiscal year.

>> READ MORE: Covering the Philadelphia Sheriff's Office: A word from the publisher

It is notable that even defenders of the continued use of printed ads are surprised by the Philadelphia sheriff's aggressive use of community and niche publications, often free with small circulations.

"This is shocking that they are going above and beyond what is required," said Holly Lubart, the lobbyist for the NewsMedia  group.

In total, Williams, a Democrat first elected sheriff in 2011, authorized the purchase of $41 million in ads over the last five years.

The Sheriff's Office also has chosen to outsource the purchase of those ads rather than rely on any of its 400 employees to handle that task. In contrast, the City of Philadelphia gets the job done in-house, detailing two employees to place $2 million in legal notices yearly, said Mike Dunn, spokesman for Mayor Kenney.

In the case of the Sheriff's Office, the decision to outsource the ad placements has benefited two well-connected Democratic political consultants, Barbara Grant and Luz Cardenas, former spokeswomen for Mayor John F. Street.

Williams hired their media firm to place ads with 17 news organizations, paying them more than $4.5 million since 2013. They have kept their contract despite being underbid in 2016 by a competitor who offered to place the ads for less than half their fee. The Sheriff's Office, like other city agencies, is not required to hire the lowest bidder.

Another political veteran in on the action is Kenneth Smukler, a longtime adviser to U.S. Rep. Robert Brady, the Democratic Party chairman in Philadelphia. Brady has been a key backer of Williams.

Smukler is awaiting trial on federal charges of violating campaign-finance laws during two Democratic primaries, including the 2012 election in which Brady won renomination. None of the charges involves the Sheriff's Office.

Smukler and his wife have been generous supporters of the sheriff. The couple have given $13,000 to Williams' campaign fund since 2011.

For a fee, Smukler provides five niche publications with pages of sheriff sale ads, as well as a few accompanying articles, including self-penned editorials that anchor the insert. Publications that print and use the ads and insert were paid $11 million by the sheriff. In addition, they paid Smukler a fee for his efforts.

Smukler declined to say what he is paid. One publisher in his group, while declining to specifically reveal Smukler's fee, said his work would typically be covered by a 15 percent commission. In that case, Smukler would have been paid $1.6 million by the papers.

Smukler spoke with a reporter for this story, insisting the exchange be off the record. Last week, he published an article in his online publication, Liberty City Press, that detailed the interview. In his article, he asserted the Inquirer exploited its special legal status to overcharge the sheriff.

Since Smukler violated his own ground rules for the interview, the Inquirer and Daily News view the exchange as on the record.

During the interview, Smukler said the members of his group were paying for his editorial material, and not merely to gain access to the sheriff ad revenue. "This is a real publication," he said, referring to Liberty City Press.

"I'm charging our partner publications for content that our partners seem to be happy with," he said.

A reform candidate

The practice of placing sheriff's ads in smaller community papers can be traced to Green's first election in 1987 when he ran against the party as a reform candidate.

"He was interested in getting people involved — people that don't read the Legal Intelligencer or the Inquirer,"  Janet Pina, a former top aide to Green, testified during his recent trial. "He believed the best way to do that was through the community newspapers that were free."

In an interview, Irwin Trauss, a veteran lawyer with Philadelphia Legal Assistance who advocates on behalf of homeowners in foreclosure, said the spending was in part an effort to buff Green's image. "I think it was also viewed as a way of buying favorable coverage in the smaller papers," he said.

Barbara Deeley, Green's former second-in-command, also testified at Green's trial, saying she persuaded Green to place ads in the Gay News after its publisher, the politically active Mark Segal, asked for help.

Deeley said she presented the buys as smart politics.

"The gay community are voters, and they're very community active," she recalled telling Green.

The Gay News was not the only publication with political heft to receive sheriff ad money over the years ($538,000 last year). Others receiving money over time include the Sunday Sun  ($572,000 in 2017),  founded in 1992 by the late J. Whyatt Mondesire, a former top aide to the late U.S. Rep. William H. Gray; and the Public Record ($234,000 in 2017), founded in 1999 by former City Councilman James Tayoun after he served 40 months on a corruption conviction;

Tayoun and his paper gave Williams a total of $2,000 in campaign contributions in 2011 and 2015,  campaign-finance reports shows.

And in 2015, with Williams up for reelection, the Public Record named him "Public Servant of the Year" in a front-page story. The article failed to report that the paper also honored him with a $1,000 prize.

The honor was short-lived. After the city Ethics Board spotted the honorarium in Williams' financial disclosure the following year, it forced him to disgorge the money and pay a $500 fine. (Tayoun died in 2017).

For Williams, the ethics complaint was an embarrassment. Green, his predecessor, faced far more serious allegations.

Green's trial ended early this month when a jury acquitted him of three corruption charges and deadlocked on conspiracy and corruption counts. A codefendant, businessman James Davis, was convicted on several charges, including conspiracy and helping file a false Green campaign-finance report. Green's retrial is several months away.

The placement of sheriff sale ads formed the heart of the corruption case against both men.

The government faulted Green for giving no-bid contracts to Davis to purchase the ads under contracts that called for Davis to receive a 15 percent commission on the sales. Prosecutors said Davis reciprocated by showering Green with zero-interest loans, illegal donations to his campaign fund, and other benefits.

Green's lawyer said there was no evidence that Davis' actions were tied to his sheriff's contracts.

Green quit midterm at the end of 2010 amid hostile audits and criticism from good-government groups.

Deeley took over as acting sheriff and promptly killed Davis' contracts. But she didn't end the niche advertising.

Instead, Deeley handed the work to Grant and Cardenas, and Smukler, who, in 2011, worked for the two women's firm. All three have benefited since.

For six years, the Sheriff's Office paid Cardenas-Grant Communications a 15 percent commission on the ad sales. The women lowered the rate to 12 percent in 2017 after a bidding competition. Asked about competing bids, the Sheriff's Office, in a statement, said, "Bids ranged from 5 percent to 12 percent."  Grant and Cardenas got the contract again after the sheriff deemed other bidders to not meet all the requirements for the job, according to a statement.

For their commission, Grant and Cardenas also handle public relations work for the Sheriff's Office. They fielded questions for this story, for instance.

Grant said politics had nothing to do with her firm's winning the contract and keeping it. "The reason we were selected was we submitted superior proposals," she said.

In all, Grant and Cardenas are paid commissions on ads placed with 17 news organizations, including the Inquirer, Daily News, Legal Intelligencer, and Philadelphia Tribune.

Smukler's network is made up of the Gay News; the Sunday Sun; Al Dia, which serves the Latino community; and New Mainstream Press, which prints papers in Chinese and Vietnamese.

Catherine Hicks, co-publisher of the Sun and a former aide to Sheriff Green, and ‎Hernán Guaracao, publisher of Al Dia, declined to answers questions about Smukler.

Segal, publisher of the Gay News, said Smukler "gets a percentage" of the ad placements. He would not say how much, but added that the "typical agency fee is 15 percent."

"Ken acts as the agent for the multicultural consortium," Segal said. "Ken is a political consultant and a businessman. In this he is more of a businessman."

While Grant and Cardenas are paid by the Sheriff's Office under a government contract subject to rebidding and competition, Smukler is paid by the newspapers in his group.

There has never been any bidding or public competition for the placements of ads in his group.

According to Smukler, before each sheriff sale, Williams' staff sends sales information to print shops that create the listings. Smukler then adds his editorials and other material. The papers in Smukler's group print the material at their own cost as an English-language insert for their publications — including those in Chinese and Vietnamese.

His wraparound generally includes photos from charity events, feature stories focused on people of color, stories on high school sports, and Smukler's editorials.

In his editorials, Smukler has defended his political allies, including Brady and Williams. In December, he devoted his front page for two consecutive weeks to a plan to grow marijuana in a warehouse in North Philadelphia. He did not mention he has an option to buy the warehouse.

Segal, who founded the Philadelphia Gay News 42 years ago, said the ad payments from the sheriff — a total of $2.7 million to his weekly since 2013 — supported local journalism and alternate voices.

"We at PGN, like at minority and multicultural newspapers, have fought for years to gain city, state and federal advertising that the mainstream media has always had for itself," Segal added.

Supporters of the spending point out that the money does not come from general taxes, but from a foreclosure fee.

The advertising fee is often the biggest part of a bewildering package of foreclosure levies used to cover auctioneer charges, hall rentals, lunch for sheriff staff, attorney fees, and more. In total they can reach almost $5,000 per house.

"One of the problems is that the costs are viewed as if nobody is paying them," said Trauss, of Philadelphia Legal Assistance. "There's not a significant recognition that it is coming out of the pockets of the  homeowners or the lender."

Rhynhart, the city controller, also said the fees needed to be scrutinized.

"It is people's money," she said. "Whether it's tax dollars or fees from business or individuals, it is money that is being contributed and should be safeguarded and used appropriately."

Staff writer Anh Nguyen contributed to this article.