Q. Is HUD illegally Taxing low income senior citizens by price fixing rent? A. Yes it is. March 21, 2012 Samuel Alito United States Supreme Court One First Street, NE Washington, DC 20543 Re: HUD’s “Low Income”, “Quality of Life” Protection Justice Sotomayor, Pursuant to 18 U.S. Code § 2382, whistle blowing invitations and other reporting obligations, this report observes some of HUD’s contract price economic business operations. HUD is a public welfare program, like the Women, Infant and Children (WIC) program. It exists to serve public health, safety and wellbeing of identified “at risk” groups. As background on this “WIC” like financial emergency program, one of my recently submitted WIC reports is incorporated herein by reference. See Exhibits A and B. HUD’s stated objective reads: HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination, and transform the way HUD does business. This report centers on HUD’s housing for low income senior citizens, most of whom survive on limited Social Security Account incomes. Rent is the single largest bill low income seniors face. As such, assessing whether HUD is involved in price fixing rents, discriminating pricing practices and related contract issues is a paramount public concern. I. On The Upside On the upside of my review, at the ground level I’ve had the pleasure of meeting and observing some of HUD’s staff at a specific location. HUD’s working team at this location is top notch. They are caring of their elderly residents, considerate, patient, helpful. They do a superb job in tending to senior client needs. Given the very limited resources HUD provides for senior care at this location, commendable efforts are made. This notes some of my personally witnessed observations. a. Cleanliness HUD’s working team at this location keeps the overall cleanliness of this location in top notch share: gardening, landscaping and overall cleanliness is impeccable. b. Community Room HUD’s working team routinely provides functions for its tenants to attend. It keeps an open community room with books, television, a small gym for exercise other social functions. This is a critical consideration for the mental health and wellbeing of senior residents. c. Functions For Residents At this location, HUD’s working team regularly provides music, dancing and social holiday events, all of which inures to a positive, healthy environment. II. HUD’s Lease-Contracts Like all land-lords, HUD drafts contracts income senior citizen tenant contracts. My investigation of HUD Corporate indicates that its material “price terms” are “declared illegal” under the Sherman Act: Every contract, combination … or conspiracy, in restraint of contract price economic trade or commerce … is hereby declared to be illegal. Sherman Act, Section 1. Price is too critical, too sensitive a control to allow it to be used even in an informal manner to restrain competition. This is the core evaluation I’ve undertaken in this review. a. Validate Legality of HUD Rent Prices? In the past three months I’ve contacted HUD on repeated occasions. I’ve asked the same simple question: please validate that HUD sets its low income senior tenant prices in compliance with textbook law of price, contract’s covenant of good lease contract faith and fair dealings: Add Costs Price Accordingly In every lease-contract there is an implied covenant of good faith and fair dealing by each party not to do anything which will deprive the other parties of the benefits of the contract, and a breach of this covenant by failure to deal fairly or in good faith gives rise to an action for damages. I’ve provided HUD’s corporate offices with the simple rules governing the pricing of contract leases. The singular rule is contained in every economics textbook taught in every college in the country: the seller of home unit is required to independently add overhead costs (employee salaries and daily business operation costs), and set one price accordingly: Independent 1. Free from the influence, control, or determination of another or others; b) free from influence, persuasion, or bias; objective c) relying only on oneself or one’s own abilities, judgment, etc. e) not connected or related to another, to each other, or to a group; separate …. 2. Not depending on another or others …. I asked HUD’s top corporate level for the paperbacked, independent cost study documentation. I did so to assess the reasonableness of the markups in tenant prices, and to evaluate the possible existence of rental price fixing. Without exception, HUD’s corporate offices refuse to respond or otherwise answer this simple contract validity question. I’ve also asked HUD to simply produce its pricing protocol papers, generally and at a specifically reviewed HUD location. On this point too HUD’s very top corporate executives have chosen to “remain silent”, refusing to disclose this very basic public information. There is nothing confidential about the pricing of these public contracts. a. Illegal Pricing Protocol From my formal legal practice and informal study in this “law of price” field, HUD’s failure to produce some validating rent price papers is because it engaged the forbidden process. Instead of conducting a compliant, independent overhead cost study to set prices, HUD seems to have surveyed or “sought, obtained and used” nearby rent prices. It then used those numbers to fix “low income” prices above overhead cost figures. Its low income prices are still set high, above “defined competitive cost levels”, even if under local rival numbers. Appearance of law income does not define legality in this regard. Compliance with the law defines legality. This reality is sometimes overlooked by non-lawyers. Should such a case be packaged based on these facts, they would fit snugly into the per se illegal conduct explained in United States v. Container, 393 U.S. 333 (1969): ● The surveying of price information stabilized prices though at a downward level. ● The reciprocal surveying of price information was concerted action sufficient to establish the combination or conspiracy ingredient of § 1 of the Act. This is a problem for HUD to the extent it made “en mass” contracts that might be void: A void contract is “invalid or unlawful from its inception” and cannot be enforced. A void contract is without legal effect in that the law neither gives remedy for its breach nor recognizes any duty of performance to pay by a promisor. Therefore, the term void contract is a misnomer; if an agreement is void, at its genesis, no contract ever existed. The problem seems to be that HUD does not have a price fixing compliance manual. III. Is HUD Fixing “Low-Income” Rent Prices? By definition, HUD’s senior contract clients are low income. They largely survive on the limited income received from Social Security. HUD makes pricing in part based on prospective client “low-income” levels. In part, HUD adjusts prices by verifying degrees of “low income” levels. HUD does, therefore and by definition, engage in price discrimination. It fixes prices on something other than cost overhead: Price discrimination or price differentiation is a pricing strategy where identical or largely similar goods or services are transacted at different prices by the same provider in different markets or territories. Price differentiation is distinguished from product differentiation by the more substantial difference in production cost for the differently priced products involved in the latter strategy. Price differentiation essentially relies on the variation in the customers willingness to pay. No exception to the rules outlawing price discrimination avail HUD to any defense or excuse. This leads to more basic compliance questions. What subsidizes what, rent wise? Are monopoly rents being charged to some in order to subsidize others? The fact that HUD has realized enormous monopoly revenues and profits is admitted in its own Fiscal Report. a. HUD’s 2012 Agency Financial Report HUD’s principal financial statements have been prepared from the Department’s accounting records to report the financial position and results of HUD’s operations. See 31 U.S.C. 3515 (b). For fiscals 2012, HUD reported the following assets: ● Total Assets: $136.7 Billion ● Total Liabilities: $80.0 Billion The majority of these assets are with Treasury Department: Fund Balance, 79.2%. IV. Conclusion, Inability to Validate I’ve received no communication from HUD’s top corporate officers about this report. Unlike their on-site counterparts, these top federal officers haven’t been real cooperative: A party to a contract breaches the implied covenant of good faith and fair dealing by interfering with or failing to cooperate with the plaintiff in the performance of the contract. Kind regards, Gary Joseph Bonas United States v. Container, 393 U.S. 333 (1969). Competitive Strategy, Techniques for Analyzing Industries and Competitors, Michael E. Porter, page 242 (1980 The Free Press). Sutherland v. Barclays American/Mortgage Corp., 53 Cal. App. 4th 299, 314, 61 Cal. Rptr. 2d 614 (1997). Webster’s New World Dictionary, 3rd College Edition, at page 686 (Copyright 1988). 17A C.J.S. Contracts § 169. Restatement (Second) of Contracts § 7, comment a. J. Calamari & J. Perillo, The Law of Contracts § 1-11 (2d ed. 1977); First State Bank of Sinai v. Hyland, 399 N.W.2d 894 (1987). Krugman, Paul R.; Maurice Obstfeld (2003). Chapter 6: Economies of Scale, Imperfect Competition and International Trade. International Economics - Theory and Policy (6th ed.). p. 142.; see also Robert Phillips (2005). Pricing and Revenue Optimization. Stanford University Press. p. 74. ISBN 978-0-8047-4698-4. Witkin, Summary of California Law, Contracts, §744 (8th ed.; See also Sutherland v. Barclays American/Mortgage Corp., 53 Cal. App. 4th 299, 314, 61 Cal. Rptr. 2d 614 (1997); Harm v. Frasher, 181 Cal. App. 2d 405, 415, 5 Cal. Rptr. 367, 373 (1960). en.wikipedia.org/wiki/Samuel_Alito
Posted on: Fri, 21 Mar 2014 09:09:08 +0000
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