Appraisers Should Bristle

 

Stealthy vice again masquerades as public virtue. The head of yet another government-subsidized nonprofit was found funneling cash to cronies while raking in obscene compensation. The nation’s long-suffering appraisers will recognize the pattern in a porcine publisher they are forced to frequently slop as frenzied Beltway porkers go whole-hog on the swill.

Revelations surfaced recently about a New York City nonprofit receiving government subsidies to aid the homeless. The nonprofit then lavished a garden of earthly delights on its boss and his cronies. Jack Brown, the chief executive of CORE Services Group, a New York City provider of services to the homeless, was found to be receiving a salary and benefits of over $1 million a year.

A New York Times investigation published last year found that the housing boss also hired relatives and steered millions of dollars to for-profit companies he controlled. The story is all too familiar.

For 2020, Brown received a 15% raise and $40,829 bonus from CORE, bringing his base pay to $386,298, the New York Post reported. He got another $460,000 — an 8% increase from the previous year — from affiliated groups. On top of that, he received $188,461 — an increase of 16% — and a $22,500 bonus from a related nonprofit called CORE Services Group NY Inc.

“It’s way out of line,” Daniel Kurtz, a lawyer specializing in nonprofits and former head of the state Attorney General’s Charities Bureau, told the Post.

The nation’s captive appraisers will see striking parallels in a freeloading 501(c)(3) publisher that has learned to harness government’s coercive powers to maximize its proceeds by continually changing its national appraisal standards, the copyrighted “Uniform Standards of Professional Appraisal Practice.” The publisher also receives annual government grant funding of up to $1 million a year via a dishonestly labeled “National Registry Fee.” With little accountability, the publisher’s tiny federal patron treats the commandeered cash as something akin to a slush fund. The rogue entity operates outside the Congressional appropriations and review process.

“Appraisers are tired of supporting this Beltway barnyard,” said appraiser-author Jeremy Bagott. “The $40 annual fee multiplied by 80,000 appraiser licenses nationwide buys a lot of finished hogs.”

The publisher sells copies of its standards to captive buyers at monopoly pricing. Meanwhile, it receives annual subsidies from the obscure federal agency whose executive director was once an employee of the publisher. The nonprofit is known as the Appraisal Foundation. It has harvested other government handouts and even applied for and received PPP relief during the pandemic, despite the fact that its government handout is guaranteed in a federal statute.

For calendar year 2019, the most recent IRS filing available, the tiny nonprofit’s long-tenured president, David Bunton, received $458,927 in compensation – $354,537 in reportable compensation from the nonprofit plus an additional $104,390 from related organizations.

Bunton lists just 14 employees at his organization, from which he draws income that is more than twice the salary of the chairman of the Federal Reserve, who oversees 20,000 employees and controls the nation’s currency and central bank. In fact, Bunton’s organization pays him more than the salaries of the Federal Reserve chairman and U.S. Treasury secretary combined.

In 2020, details surfaced that Bunton was “retired in place,” receiving internal retirement pay in 2017 on top of his regular CEO pay, effectively more than doubling his reportable compensation to more than $760,000 that year. It would be no one’s business if his diminutive organization were not receiving guaranteed federal money each year and not exercising a monopoly at the expense of a class of citizens.

Over a recent eight-year period, the nonprofit received $6.5 million in federal grants and parlayed that, thanks to monopoly pricing, into $27.6 million in publishing revenue.

His group partners with private corporations, and representatives of lobbying groups sit on its board. It receives no-bid contracts from federal agencies, such as the U.S. Department of the Interior, and assigns resulting projects to former trustees on the CEO’s executive compensation committee. Bunton and a clique of favored trustees travel the globe on junkets to places like Paris, London, Rome, Rio and Singapore. In the world’s grand salons, these global villagers trade jabs and jousts with notables like the former British Chancellor of the Exchequer Alistair Darling.

“This nonprofit is like a holding lagoon on a Carolina hog farm in the middle of an algae bloom,” said author-appraiser Bagott. “You just can’t hide the smell. A profession that helps safeguard trillions in mortgage loans is ultimately at the mercy of a handful of lobbyist-influenced world citizens flush with U.S. government patronage and a license to mint money. Unchallenged power over decades has resulted in waste and abuse.”

Meanwhile, at Brooklyn-based CORE, federal and municipal investigators are rooting around. Brown, 53, previously worked for Correctional Services Corp., which was embroiled in an early-2000s Albany bribery scandal.

Last year, New York City pledged to cut all public ties with the nonprofit but just can’t seem to help itself.

“If there’s any more thankless job than appraising real property, it’s slopping hogs down on the farm,” said Bagott. “Appraisers must take this wasteful and abusive organization seriously. This nonprofit is makin’ bacon at the public’s expense while potentially putting trillions in mortgage loans at risk with its continually changing standards.”

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Jeremy Bagott

Certified General Real Estate Appraiser at Bender Rosenthal Inc

Jeremy Bagott is a real estate appraiser and former newspaperman. His most recent book, “The Ichthyologist’s Guide to the Subprime Meltdown,” is a concise almanac that distills the cataclysmic financial crisis of 2007-2008 to its essence. This pithy guide to the upheaval includes essays, chronologies, roundups and key lists, weaving together the stories of the politics-infused Freddie and Fannie; the doomed Wall Street investment banks Lehman and Bear Stearns; the dereliction of duty by the Big Three credit-rating services; the mayhem caused by the shadowy nonbank lenders; and the massive government bailouts. It provides a rapid-fire succession of “ah-hah” moments as it lays out the meltdown, convulsion by convulsion.

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