of people posing as former or current U.S. Intelligence Officers in financial scams is fairly widespread and known in the industry as “hooky spooky,” he said. “It’s the frog and the scorpion.”
Roughly six months later after the Ghana operation debacle, in November 1999, with authorities still unaware of what had occurred, Sholtz was not a marked smog credit broker, by any means. She was an invitee to a major climate change conference at the United Nations as a member of the Emissions Marketing Association, records show.
IT COMES AND GOES
So why weren’t these activities in the Justice Department’s crosshairs if they wanted to send a message about tainting cap-and-trades as the regulatory milieu shifts toward them? Furthermore, even if there are legitimate ex-spies and soldiers traveling around the globe for someone like Sholtz, shouldn’t there be some transparency? USC Law School Professor Rebecca Lonergan, who worked in the U.S. Attorney’s Los Angeles office for sixteen years, said prosecutors probably made a judgment call based on what they could prove in court, what evidence they could gather overseas, the intricacies of her different schemes and other factors. “When you have a person like [Sholtz] one of the difficulties is sifting through the mass of seemingly exculpatory evidence,” Lonegran said. “You have a person who would make a great movie living as a con artist but you have to find out the individual schemes. Criminal prosecutors simply can’t charge a person with being a fraudster.”
True as that may be, there is still interest. Larry Neal, deputy Republican staff director for the House Energy and Commerce Committee, said Congressmen Barton and Walden believe it is important to remove the veil of secrecy over the Sholtz matter to follow where it leads. “We haven’t seen allegations on currency repatriation scams, but it is our aim to gather all facts surrounding the Sholtz case, regardless of what they entail,” Neal wrote via email. “It has been more than a year since the sentencing and there’s still no public justification for all the judicial [secrecy]. After all, the case was about an Anne Sholtz cap-and-trade scam, not an al Qaeda terrorism cell.”
For his part, AQMD Executive Director Barry Wallerstein both refused an interview about Sholtz and forbade anyone at the air district from commenting for this story. (His feelings about Sholtz aside, Wallerstein is said to be upset about a book on the iconic Los Angeles smog crisis this writer co-authored with a former AQMD staffer.) But that does not mean he’s not talking. In a seven-page letter to Representative Henry Waxman who chairs the House’s Energy and Commerce Committee, Wallerstein portrayed the RECLAIM cap-and-trade as virtually bulletproof to criminality. In this letter, prompted by congressional interest in Sholtz, Wallerstein ticked off the AQMD’s robust computer database that checks the availability and ownership of credits, well-scrutinized trade registration forms and a three-person trade approval team. “The safeguards…have been successful in preventing any fraudulent trades from ever being registered,” Wallerstein concluded.
Yet considering the breadth of Sholtz’s activities, questions about whether RECLAIM bankrolled attempted asset-repatriation ventures, much less speculators’ profiteering of the market during the 2001-02 electricity crisis, there are obviously cracks in the machine. Would stamping the credits with identification numbers and developing methods to police their ownership history in real time have helped? “What this points up is that there had to have been a failure in the design,” said EPA Senior Counsel Allan Zabel. “It’s ridiculous if people can get away with this sort of stuff. The system must be sufficiently designed so that somebody trying to do it would trigger a red flag that brings in investigative interest.”
In answering some of Barton and Walden’s questions about cap-and-trade fraud, the EPA said its criminal investigative agents meet with AQMD officials weekly. As of June, though, the EPA reported it had no criminal cases with filed charges involving emissions trading crimes—anywhere. But the story does not end there. Between the time of her arrest and the date of her sentencing, Sholtz tried softening her punishment. In 2005, she testified in the trial of a con man who stole about $4.5 million from an Idaho businessman in a wire fraud case that she knew about from her financial dealings. More provocatively, she offered to spill about sensitive subjects closer to home.
On April 9th, 2005, her lawyer, Richard Callahan, emailed the U.S. Attorney’s Office a two-page letter entitled “Areas of Possible Cooperation for Anne Sholtz.” Callahan wrote that his client would share “credible firsthand information” on four different subjects if it would help Sholtz’s plea agreement. Sholtz, Callahan wrote, knew about a “major U.S. bank” that was engaged in money laundering, check kiting, manipulation of subpoenaed documents, and even murder. In a direct reference to the Eagle scheme and others, Callahan said Sholtz had details about “fraud, money laundering [and] wire fraud by people claiming to work for the U.S. government…in the ‘extraction of assets’ overseas…”
Sholtz’s last tipoff was a humdinger. Callahan said that she had knowledge of “repeated and flagrant violations” inside the air district’s RECLAIM program that resulted in retribution—and threats of more of it—against potential whistleblowers, and the release of over one million excess pounds of nitrogen oxide when AQMD personnel could have offset it. By 2007, RECLAIM had transacted about forty million pounds of air pollution credits, reports show, so one million pounds in unauthorized discharges would be no small addition. Sholtz, Callahan said, also knew about “manipulation of data [or presenting it in a misleading fashion] to choose projects that would lead to personal gain for (AQMD) Board Members…” This document was the only one in which Sholtz declined comment. It is not evident if any of her tips sparked arrests or investigations because there have been no publicly revealed inquiries into RECLAIM since Sholtz’s arrest. A district spokesperson asked for comment referred back to Wallerstein’s gag order.
If all this seems like a crippling, humiliating and tragic slide for someone who might have ascended to legend of the Green Economy, Sholtz said she has largely put it behind her as she moves towards new horizons that she aimed to keep private. She is not sure if she will re-approach the cap-and-trade world again if she is allowed to broker. “The RECLAIM business was exciting,” Sholtz said, her eyebrows arching. “Being able to do a transaction, solve a problem, make software do new things, help the environment. The money just comes in and it goes.”
LA Weekly News Editor Jill Stewart contributed to this story
Scaffolding Man and Machine
Few incidents can compare to the tragedies that occurred and the ensuing public dramas that played out after the day the Colorado Street Bridge nearly fell apart.
—Pasadena Weekly, September 18th, 2003
Just past quitting time on Friday August 1st, 1913, soot-caked construction workers pouring concrete into the highest arch of the future Colorado Street Bridge heard a bloodcurdling snap. Something that wasn’t supposed to had torn loose. Hovering 150 feet above the Arroyo Seco, a lush view all around, the men felt their boots tremble. Seconds later, the walkway below them dissolved and a colleague hollered, “Jump!”
By the ungodly rumble, it was as if the entire structure was collapsing.
Actually, only a minor section on the San Rafael side had, but it packed a devastating wallop. When the mold for the top of span number nine buckled, it created a thunderous pancaking action that snatched three workers—and almost eight more—in a violent, plunging mass. Hundreds of tons of wet concrete, scaffolding, man, and machine came crashing onto the floor of the valley, kicking up dust and pandemonium where there had been nifty organization before.
The boom ricocheted through the gorge, into the undulating, green hills of Busch Gardens, off the Vista Del Arroyo Hotel and toward the storefronts along Colorado Boulevard. Burly carpenters and concrete men rushed toward the cloudy pile. Above them, scaffolding shaken loose by the jarring, dangled precariously. A lookout was later stationed to monitor what might else plummet.
