In the Controversy Over Max Stark, the New York Post Gets It Right

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In the Controversy Over Max Stark, the New York Post Gets It Right

New York’s Satmar Jewish community is up in arms because the New York Post, America’s greatest tabloid newspaper, ran a cover story with a head shot of the murdered man and the accompanying dialogue, “Who didn’t want him dead?” Chaos ensued. Some members of the Hasidic Jewish community and public officials blasted the New York Post. Media headlines spilled over with words like “huge backlash,” “anger,” and “outrage.”

But why should a person who was reviled in life be revered in death? And what about the man’s victims? If nothing else, Menachem “Max” Stark, 39, was a slumlord who pissed off one too many people.

A friend of mine from middle school and high school, Michael Buchholz, had the unfortunate experience of being one of Max Stark’s victims and a former tenant at 239 Banker Street.

Buchholz recently wrote in a Facebook post about his experience dealing with Stark, from a tenant’s perspective:

“The shaft of the freight elevator [in the building] was dangerously close to collapsing … rats and other creatures roamed vacant, trash filled apartments freely. We came to learn none of the plumbing and general infrastructure had been updated since it was built almost 100 years ago. I personally had no windows, but boarded up holes in the walls of my 1,200 square foot apartment … I had no kitchen for a time, no heat, and occasionally no running water or electricity. I would frequently come home to find my door ajar, strangers inside cutting drywall just beside my bed, smoking cigarettes out one of the boarded up holes.”

One day, “The Department of Buildings showed up at 239 Banker Street to vacate the property. This ‘luxury’ rental property had sewage leaking uncontrollably on the first floor, which was also the floor Mr. Stark decided to hide months worth of his tenants trash in — in unfinished apartments — rather than pay to have it picked up regularly.”

“The inspector gave every tenant 4 hours to clear out everything they owned, then the doors would be barred. I was lucky enough to have family nearby, so in a dizzying and furious spell, I threw everything I owned into boxes and threw the boxes into a U-Haul to bring home. We left behind us 20 or more people who had no easy solution to their predicament.”

“239 Banker Street magically rented out every apartment again, so clearly Mr. Stark had paid the fines associated with the building and moved on,” writes Buchholz. The New York Timesand others reported on the same property, which many have switched owners at some point after Burchholz’s experience.

Abominable. Horrible. Disgusting. And at this point, you may agree with the Post‘s headline.

“Justice was never served in this case, but there’s a sense of anger and sadness suddenly evaporated from my mind. A torment has been put to rest in me. I hate to say both of the following statements: rest in peace Max Stark. Brooklyn is a better place to live without you,” writes Buchholz.

I don’t doubt that Stark was a decent man in the ultra-Orthodox Satmar Jewish community, as has been suggested in numerous media reports. Yes, he held some fundraisers in his home. Sure, he raised money to fund the reproductive propensity of the Satmar community. Therefore, it should come as no surprise that the Satmars are collectively furious and want this man’s legacy protected. But why should they discount how the man made his money, which was from being one of New York’s worst slumlords?

As Anna F’s Yelp review of Max’s real estate company demonstrates (with a lonely single star), “This company is the building management for an old apartment of mine. They are awful disrespectful slumlords. They took months to repair a leak, would not fix flood damage to the walls, closed off our roof access (which was an amenity I paid for), wouldn’t fix the broken washing machines (also an amenity I paid for), and are assholes on the phone when you call with any issues (especially Max, whose actual name is Menachem Stark), especially if you are a woman. I had to call 311 to report their violations to the city many times, and still that did not help getting things repaired. Oh, and the rent in the building went up $1000 in two years.”

Therefore, that “‘Any number of people wanted to kill this guy,” as one law enforcement source told the New York Post, is far from shocking. Heck, I would expect it.

It is purely laughable when Councilman David Greenfield said, “[W]e are disgusted, outraged and appalled that the New York Post would celebrate on their front page the murder of an innocent New Yorker.”

The man was hardly innocent. He was not innocent to people that he did business with.

“Thousands of people have suffered because of the criminal practices of this man and his partners,” Buchholz finishes. “With a tight grip on real estate throughout Brooklyn, you’d have a difficult time finding a building not owned by these men. In a time of rapid residential growth and a surge in the popularity of many Brooklyn neighborhoods, we as a community cannot afford to let these people swindle and endanger us, to shoddily build our homes and use the fortunes they’ve amassed to pay measly fines, bribe those who threaten to sue, sell the property they owe millions of dollars of loans on to another LLC they own, and seek out the next batch of unsuspecting tenants to ruin.”

Even death isn’t a reason to gloss over the truth.

Update: Texas Tribune CEO Evan Smith’s response to my recent post

My original post about The Texas Tribune is here.

UPDATE 2: Click HERE for an interesting white paper on non-profit/commercial news partnerships from the UC Berkeley Graduate School of Journalism.

UPDATE 1: Evan Smith, CEO of The Texas Tribune just returned my call. And he was angry. At the start of the call, he cited me as having factual errors in my reporting. (In reality, there was only one. Jay Root came to the Tribune directly from the AP, not the Fort Worth Star-Telegram, where he worked for many years, as I wrote.) As promised, I will give Smith his shot at a fair response right here:

Re: My accusation about a failure to disclose Texas A&M’s contributions to his organization in the recent New York Times piece, he said, “”I think we should have disclosed that A&M is an institutional donor to the Tribune.” He called the incident “a rare lapse.”

Smith then described a December 2010 story in the Times in which a Texas Tribune reporter, Emily Ramshaw, critiqued a Tribune donor, Christus Healthcare.

He said, “I wouldn’t be in the non-profit sector if I was in it for the money. I had a higher salary at Texas Monthly. The reason I raise the money has nothing to do with me, but everything to do with the the mission of this organization.”

Smith said that $315,000 is his actual salary, even though it may seem higher on financial reports, because of deferred payments.

He critiqued my notion that I should be watching over a watchdog by saying, “You’re allowed to have a point of view, but it ought to be based on something. Be a watchdog on the watchdogs. If that’s your place, God Bless.” By my own admission,  I have not done a full review of all of The Tribune’s articles to gauge whether or not they treat their donors preferentially. I simply found one recent incident and wrote about it.

However, I feel that someone must examine non-profit news organizations with the same scrutiny that for-profit news organizations are critiqued. Smith replied, “You haven’t done the work required to rip as a new one.” Admittedly, I worked on this post for a few hours, and I was unpaid for my work. Smith also said,  “There are plenty of places that go into strong stances on issues. We give you the tools to think about things yourself.”

He insisted, referring to donations, that, “None of this ever influences the work that we do. I pointed this out to Howard Kurtz in 2009: The money we got from advertisers at the for-profit publications where I previously worked is greater then what we get at The Tribune.”

Other Smith quotes from our conversation:

1. “If you provide us with the resources to do the work we do, we will get our work in as many places as possible. We will allow the individual corporate and foundations to support us, so that we can make that content available for free.”

2. “We want to help educate as many Texans as possible about the things that happen in the world.”

3. “The goal here is to provide as many news organizations as possible with great content.”

4. “The reason that you know about my salary is because we publish it. We overdisclose. We are not obligated to publish any of this stuff.” I disagree. As a non-profit, they must disclose the salaries of their five highest paid employees.

5. “We ask transparency of others so we do it ourselves.”

6. “My salary gives me a disincentive to ruffle feathers. We have written negatively about our donors. There are countless examples where they will yell at us.

7. “”It is enormously hard work. We take it very seriously. Most of us worked for for-profit media companies, but we believe the mission of The Tribune is more important.”

SXSW – Successful Journalism Startups: Global Lessons

Takeaways from Pekka Pekkala’s sustainable journalism business models talk:

Go to http://www.submojour.net/ (Database of for-profit news sites that make money!)

Top findings from case studies of profitable journalism startups:

1. This is not a new thing: The average age of money-making web sites is 6+ years (across the world!).

2. Advertising rules: 75%of people interviewed said they make more than 75% of their revenues from advertising. (Most journalists sell the ads themselves.) They sell weekly or monthly ads rather than CPM-based ads. Avoid Google AdSense.

3. Make money as a consultant. Make 3x as much money as you do as a journalist. But make sure you are an expert.

4. Host events.

5. Syndication.

6. Be frugal. (WordPress is by far the most popular publishing platform. Learn basic tech skills.)

7. Be entrepreneurial. Think about the money from day one.

8. People don’t pay for content…but they are happy to support a cause. (This is true in the US, but perhaps not in other countries.)

9. Find your niche. (Based on geography, taste, interest, or point of view…)

10. Pay your contributors. (Free citizen journalism is the exception, not the norm. 1 out of 10 contributors stay more than a couple of months, and those people hardly ever write again. You invest so much time and money in training people.)

11. It’s about community. (It’s not about you. The people who create the content have to be a part of he community. The Patch.com turnover rate was so high that new editors were not able to form relationships with the people they covered.)

Part 1: The law that could save sustainable journalism will be destroyed unless the US Senate acts now!

I recently argued that upstarts like Matter that have made successful pitches on Kickstarter are not the solution to solving journalism’s long-term problems. Why? Because crowdfunding, in its current form, does not permit people to make investments. Rather, crowdfunders make donations, or in some cases loans. The outcomes are variable and generally unsustainable

When David Cohn started the crowdsourced journalism non-profit Spot.us four years ago, it worked on a similar premise to Kiva, whereby donors received part or all of their money back if and when a crowd-funded story sold to a legacy media outlet. Cohn prevented  any one person from influencing which stories were funded by limiting each donor to funding 20% of the total amount raised for each pitch. (Of course this system is potentially flawed in that one donor can spread his/her money out to friends etc, but at least Cohn tried to implement a system of checks and balances.) But Spot.us was designed to assist existing organizations, not create entirely new media outlets.

We’re on the brink of a revolution that could lead to saving sustainable journalism and create many jobs

But we may be on the brink of a journalism revolution. Currently, only accredited investors are able to invest in newly formed companies, which prevents Kickstarter, Spot.us, and any other crowdfunding site from raising capital for startup companies and entrepreneurial journalism ventures.

Forbes reports:

Under current federal and state securities laws, startups are prohibited from selling stock or other securities via crowdfunding sites or social networking sites.  Such laws include:

  • A prohibition against “general solicitation” – which means that a company may not offer or sell securities unless there is a substantive, pre-existing relationship between the company (or a person acting on its behalf) and the prospective investor (see “Can I Raise Money For My Startup Via Twitter?” );
  • Disclosure and state law compliance requirements if the investors are not “accredited investors” — which usually makes the offering of securities too costly and onerous for a startup (see “Ask the Attorney – Securities Laws”);
  • A requirement that any intermediaries (including websites) must be registered with the SEC and applicable state securities commissions as a “broker-dealer” in order to legally accept any transaction-based compensation in connection with the sale of securities (see “Ask the Attorney – Beware of Finders”); and
  • A requirement that any company that has 500 or more shareholders and total assets exceeding $10 million must register with the SEC and file periodic reports.

These laws were designed with good intentions: Nobody wants to see Mom and Pop lose their hard-earned money to a snake oil salesman! But in today’s crowdfunded world, they no longer make sense. And when tech-savvy Americans realized this, they sought action.

In the United States Congress, Rep. Patrick McHenry (R-NC) (who made some excellent contributions to 2010 Census oversight, which I know from my time spent running MyTwoCensus.com), introduced crowdfunding legislation that was one of the most popular bipartisan initiatives in recent history, garnering support from Democrats all the way up to President Obama himself. McHenry’s bill, the Entrepreneur Access to Capital Act,  H.R. 2930 (full version here), passed 407 to 17.

This makes total sense. Republicans generally don’t believe that the government should be able to tell people how to spend their money (anyone can gamble or booze away all of their savings, can’t they?), and Democrats don’t see why accredited investors who are members of the “top 1%” should be the only folks permitted to invest in startups, thus preventing the upward mobility of the masses.

Specifically, the highlights of H.R. 2930 are as follows:

- Create a crowdfunding exemption from SEC regulations for firms raising up to $2 million, with individual investments limited to $10,000 or 10 percent of an investor’s annual income.

- Excludes crowdfunding investors from counting as shareholders for purposes of calculating the 499-shareholder cap under 12(g) of the Securities Exchange Act

- Preempt state law and exempts the ban on general solicitation for the new crowdfunding exemption.

But now, as always seems to be the case as of late with the American government,  just when we’re on the brink of something great, the millionaire’s club also known as the United States Senate has failed to move forward with this legislation, thus preventing it from making its way to President Obama’s desk to become a law.

Despite Senate Republican Scott Brown of Massachusetts championing similar legislation to the resolution that the House of Representatives passed, lobbying groups like the NASAA (North American Securities Administrators Association, “the oldest international organization devoted to investor protection”) have wielded their influence over the 100 people who control the fates of the other 300+ million.

What needs to happen now is simple: An online campaign of the magnitude of the SOPA/PIPA variety must be enacted to create swift and effective action to boost America’s economy by causing the US Senate to pass comprehensive crowdfunding legislation.  Sites like crowdfundinglaw.com and startupexemption.com have already been set up to explain this law and advocate its passage. And using a Wefunder.com petition, more than $6 million has already been pledged to support investment in new ventures if this legislation is passed.

But will Google, Craigslist, Wikipedia, and all of the other organizations that led the charge against SOPA and PIPA step in to assist with this one?

As someone who is not interested in the “rewards” that Kickstarter campaigns promise their donors, but rather direct return on investment in monetary form, I and other like-minded people would be happy to invest in startups despite our lack of accredited investor status. I don’t gamble in casinos, but I’d be happy to gamble on good ideas and innovation.

Coming soon: Direct effects of crowdfunding legislation on new journalism business models…

Future of crowdsourced fundraising? Dispersed!

Like everyone else, I have been amazed by how Kickstarter has been able to fund business, arts, and journalism projects. But I don’t give. Yes, new projects are cool. But what I’m looking for is return on investment.

In general, the rule of thumb on Kickstarter is that unless you are funding a cool new tech product that will later retail for a higher price (so the creators’ claim), you will only be rewarded with a measly little cupcake. Do I really want a $5 cupcake mailed to me at some random point next year? No, I don’t. And many other people who are mindful of their money don’t want such gimmicks either.

But I am interested in using crowdfunding for other media purposes. However, I want funders to have equity stakes in the projects they fund (which is possibly in Germany as evidence by my friend Lars’ project…check out the 2000 Euro+ levels here).

(As crowdfunding sites proliferate, the costs of building and developing them will go down rapidly, which is demonstrated by the fact that you can now find cloned Kickstarter source code free on the Internet or pay some guys — probably in India — less than $1,000 to build, modify, and maintain a clone site for you.)

But what stands in the way of equity investments in crowdsourced products? The US government’s accredited investor law. More on that soon…