Florida, Nevada may be hit hardest by coronavirus economic shock: study

By Howard Schneider

WASHINGTON (Reuters) – Florida beaches remained packed with partying college students as the coronavirus crisis gathered force, and the Republican governor was slow to impose social distancing in a tourist-dependent economy.

That may come back to haunt the U.S. state – and not just in the form of a sky-rocketing case load. According to a newly released study by Oxford Economics, Florida is among the states most vulnerable to the economic shock being caused by the pandemic. (https://reut.rs/34cmzs3)

Oxford ranked the 50 U.S states and Washington D.C. using 10 measures its economists felt could make a local economy more vulnerable, including the share of the population over 65, dependence on retail sales, and the importance of the tourist industry.

Maine, with its proportionately older population and comparatively large number of people who are self-employed or work in small businesses, is considered the most vulnerable state economy, according to Oxford. Nevada, with its massive casino-based tourism industry, was second, while rural Vermont was third.

Florida is the only heavily populated state near the top of the list, with a comparatively large share of its 21 million residents over the age of 65, and an economy that is relatively dependent on retail sales and tourism.

The state’s COVID-19 case load topped 10,000 last week and it is adding a thousand cases a day. Governor Ron DeSantis imposed a statewide “stay at home” order that took effect Friday, weeks after some U.S. states.

“We see what’s going on in New York now, we see that people are dying,” Rick Scott, the Florida senator, told Fox News Channel on Saturday. “People are taking this very seriously now.”

States such as New York and California that have so far had the heaviest COVID-19 case loads may actually be among the more economically resilient, the Oxford team found.

“Lockdown and containment measures are the key determinants of first-round economic impacts of the coronavirus, but structural economic vulnerabilities determine the severity of second-round impacts,” Oxford lead economist Oren Klachkin wrote. Long-term results could depend on the strength of local government budgets and health systems.

Economists are struggling to get a grip on the potential aftermath of the crisis as it continues to deepen. Companies cut more than 700,000 jobs from their payrolls in March, a likely understated measure of rapidly rising unemployment: More than 6 million people filed for unemployment benefits in the week ended March 28 alone.

President Donald Trump initially downplayed the dangers of the virus and did not quickly recommend nationwide health orders. Local governments, which vary widely in their finances and ability to cope, had different initial responses to the threat, a fact that could shape the ultimate outcome of the crisis nationally.

The situation has produced a quick flowering of research on pandemic economics, with most studies finding that stricter health measures taken early on lead to deeper, but shorter, economic downturns and faster recoveries.

There are political as well as economic implications.

Florida, for example, is an important battleground state in the U.S. electoral system, and the perceived success or failure of efforts to control the virus and support local businesses and households could influence Trump’s reelection chances.

IHS Markit U.S. regional economist Karl Kuykendall also ranked Florida among the more vulnerable states, using a different methodology focused on estimated declines in employment and economic output. The state may lose about 8% of its jobs by the end of the year, he calculated.

The manufacturing heavy “rust belt” states from Pennsylvania to Michigan, also politically important constituencies that swung the 2016 race for Trump, are in line to take similarly heavy hits to employment, Kuykendall estimated.

Personal finance site WalletHub.com used a broader set of metrics, including work from home capacity and local financial strength, for another ranking.

Florida is in the middle of that pack because of its comparatively few small businesses and stronger state finances, WalletHub found. It said Louisiana was most “exposed,” with Maine and Nevada also high on the list. Among the more populous states, Pennsylvania and Illinois were in WalletHub’s top 10.

None of the studies accounted for the help coming to households, businesses and local governments from the $2.3 trillion emergency rescue package approved by Congress in late March, or the wide set of programs established by the Federal Reserve.

The combined aim of those efforts is to offset the economic impact of the virus. Officials are focused now on whether the aid can reach where it is needed fast enough to matter.

(Reporting by Howard Schneider: Editing by Heather Timmons and Daniel Wallis)

Most Americans huddle indoors as coronavirus deaths keep spiking

By Dan Whitcomb

LOS ANGELES (Reuters) – Four new states imposed sweeping stay-at-home directives on Wednesday in response to the coronavirus pandemic, putting over 80% of Americans under lockdown as the number of deaths in the United States nearly doubled in three days.

The governors of Florida, Georgia, Mississippi and Nevada each instituted the strict policies on a day when the death toll from COVID-19 shot up by 925 to more than 4,800 nationwide, with 214,000 confirmed cases, according to a Reuters tally.

President Donald Trump said he saw no need for the federal government to issue a nationwide decree, with 39 states and the District of Columbia now requiring residents to stay home except for essential outings to the doctor or grocery store.

He also told a White House briefing on Wednesday he was considering a plan to halt flights to coronavirus hot spots.

“We’re certainly looking at it, but once you do that you really are clamping down on an industry that is desperately needed,” Trump told a White House news briefing.

Such a plan might conceivably shut down traffic at airports in hard-hit New York, New Orleans and Detroit.

“We’re looking at the whole thing,” Trump said of curtailing domestic flights already greatly reduced as demand has fallen.

White House medical experts have forecast that even if Americans hunker down in their homes to slow the spread of COVID-19, some 100,000 to 240,000 people could die from the respiratory disease caused by the coronavirus.

A Pentagon official who spoke to Reuters on condition of anonymity said the U.S. Department of Defense was working to provide up to 100,000 body bags for use by civilian authorities in the coming weeks.

Since 2010, the flu has killed between 12,000 and 61,000 Americans a year, according to the U.S. Centers for Disease Control and Prevention. The 1918-1919 flu pandemic killed 675,000 in the United States, according to the CDC.

A healthcare worker walks outside a newly constructed field hospital in the East Meadow of Central Park during the outbreak of the coronavirus disease (COVID-19) in the Manhattan borough of New York City, New York, U.S., April 1, 2020. REUTERS/Brendan Mcdermid

New York state remained the epicenter of the outbreak, accounting for more than a third of the U.S. deaths. Governor Andrew Cuomo told police on Wednesday to enforce rules more aggressively for social distancing.

“Young people must get this message, and they still have not gotten the message. You still see too many situations with too much density by young people,” Cuomo, a Democrat, said in imposing rules to close playgrounds, swing sets, basketball courts and similar spaces.

“How reckless and irresponsible and selfish for people not to do it on their own,” Cuomo said.

CALIFORNIA CASES SURGE

New York City Mayor Bill de Blasio told a news conference the city was contracting with hotels as part of a massive effort to add 65,000 additional hospital beds by the end of the month.

De Blasio, also a Democrat, said the city had arranged to add 10,000 beds at 20 hotels, which have lost most of their guests as travel has stopped.

“This is going to be an epic process during the month of April to build out all that capacity,” de Blasio said. “But this goal can be reached.”

California saw the number of coronavirus cases surge by roughly 1,300 over the day before to nearly 10,000 as Governor Gavin Newsom warned that even as stay-at-home policies appeared to be having some effect, the state would run out of intensive- care hospital beds equipped with ventilators within six weeks.

Newsom said California could still manage to “bend” the state’s infection curve more, saving the need for additional beds, if residents were rigorous in staying home and avoiding contact with others.

“We are in a completely different place than the state of New York and I hope we will continue to be, but we won’t unless people continue to practice physical distancing and do their part,” the Democratic governor told a news conference in the state capital, Sacramento.

But Americans under lockdown and largely unable to work struggled with making ends meet as rent came due on Wednesday, the first day of the month.

In Oakland, California, Alfa Cristina Morales said she had been surviving on money saved for a U.S. citizenship application since losing her job at a coffee shop. Morales had sought unemployment benefits to support her two-year-old son.

“We’re worried that it won’t be enough,” she said.

Connecticut Governor Ned Lamont said a six-week-old baby had died from COVID-19, in what he called “a reminder that nobody is safe from this virus.”

Florida Governor Ron DeSantis told Fox News that Broward County would likely allow two cruise ships with coronavirus outbreaks carrying a total of 2,500 people to dock in Fort Lauderdale, despite his misgivings about potentially contagious foreign nationals.

“We were concerned about a deluge into the hospitals, but I think it turns out that there will probably be some who need to go, but it’s very manageable and the local hospital system thinks that they can handle it,” DeSantis, a Republican, told Fox.

At Fort Lauderdale, Floridians aboard the ships would be taken home and flights arranged for foreigners, he said.

(Reporting by Susan Heavey, Doina Chiacu, Tim Ahmann, Daniel Trotta, Maria Caspani, Nathan Layne, Stephanie Kelly, Peter Szekely, Lisa Shumaker, Sharon Bernstein, Jeff Mason, Mohammad Zargham, Steve Gorman and Dan Whitcomb; Writing by Dan Whitcomb; Editing by Bill Tarrant, Cynthia Osterman and Peter Cooney)

Cruise ship passengers await Florida deal allowing them to disembark

By Zach Fagenson

MIAMI (Reuters) – The U.S. government and Florida were working on a plan on Wednesday to allow thousands of cruise ship passengers exposed to an onboard coronavirus outbreak to disembark, a day after President Donald Trump urged the governor to drop his opposition to their docking.

Fort Lauderdale Mayor Dean Trantalis said he was not opposed to them docking in his city. But he said a clear protocol was needed to protect residents of his South Florida city from infection.

“There can be no missteps in this process,” he told CNN.

“We have to be comfortable knowing that they are being quarantined in such a way that they do not infect the rest of the community,” Trantalis said.

One of the two Dutch cruise ships involved is Holland America Line’s MS Zaandam. Nearly two-thirds of its passengers, those who passed a medical screening, were moved to the line’s sister ship, the Rotterdam.

Both vessels were on the way to Port Everglades in Fort Lauderdale, the Zaandam carrying nearly 1,050 passengers and crew, and the Rotterdam almost 1,450.

Florida has reported 6,490 cases of coronavirus, including 251 non-residents, and 85 deaths, according to the state website. It ranks eighth in the number of new cases reported in the past 24 hours, analyst Michael Newshel of investment bank Evercore ISI said in a research note.

For the country as a whole, the tally stands at more than 190,000 reported cases and nearly 4,000 deaths, a toll that shot up by more than 850 on Tuesday, by far the most for a single day. Nearly half of the new fatalities were in New York state, the epicenter of the pandemic despite closed businesses and deserted streets.

Florida Governor Ron DeSantis issued a stay-at-home order on Monday for four counties in southern Florida that will last until April 15 and then be reviewed. On Tuesday, he said the White House task force had not recommended a statewide order.

“If they do, that’s something that would carry a lot of weight with me,” DeSantis told reporters.

Florida’s Democrats in the U.S. Congress published an open-letter to DeSantis renewing a call for him to issue a statewide stay-at-home order, saying the decision cannot be left to county and municipal governments.

“This pandemic has not respected global borders so it certainly will not respect county borders,” said the letter, which was signed by U.S. Representative Lois Frankel and 12 other members of Congress.

SICK AND STUCK

Jennifer Allan, whose 75-year-old father and 70-year-old mother are sick and stuck aboard the cruise ship Zaandam, was asked on NBC’s “Today” what she would say if she could speak with DeSantis:

“I would beg him and everybody who has the power to make this happen that we need to look at the humanity of what’s going on right now. There needs to be compassion for these people.

Another Florida official, Broward County Mayor Dale Holness, said the port was being operated by a “unified command” of federal and state agencies discussing the situation.

“As it stands today, they’re going back and forth, working on a plan to ensure that we’re safeguarding the people of Broward County from further spread of this virus, but also seeing how we can find a way to deal with these folks” in a humanitarian manner, Holness said on MSNBC.

GRAPHIC: Tracking the spread of the global coronavirus – https://graphics.reuters.com/CHINA-HEALTH-MAP/0100B59S39E/index.html

NEW MONTH, NEW CONCERNS

With rent and mortgage payments due on Wednesday, the first day of the month, job losses soaring, medical equipment in short supply and a projected coronavirus death toll in the United States of up to 240,000 people, Americans steeled themselves for months of uncertainty.

Medical experts on the U.S. government’s coronavirus task force on Tuesday said they were predicting that even with strict observance of stay-at-home orders and other precautions, between 100,000 to 240,000 people could ultimately die from the respiratory disease.

Public health officials are debating whether to recommend that people wear protective face masks even as an emergency stockpile of medical equipment maintained by the U.S. government has nearly run out of protective gear.

U.S. Surgeon General Jerome Adams, interviewed on the NBC News “Today” program on Wednesday, said officials were weighing potential new guidelines given the role of asymptomatic people carrying the virus but that people wearing masks should try not to touch their face and should still save N95 masks for healthcare workers.

“Wearing a face covering does not mean that you don’t have to practice social distancing. The most important thing you can do is stay at home right now,” Adams said.

The start of April brings a moment of reckoning for millions who have lost jobs and are forced to stay at home – their rent and mortgage checks are due.

Many Americans have already lost their jobs – last week’s national unemployment claims exceeded 3 million, shattering previous records.

Coronavirus news: https://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?navid=919104201

(Reporting by Susan Heavey, Doina Chiacu, Tim Ahmann, Daniel Trotta and Peter Szekely; Writing by Grant McCool; Editing by Howard Goller)

Trump says he might lock down New York as health workers call for more supplies

By Alexandra Alper and Jonathan Stempel

WASHINGTON/NEW YORK (Reuters) – President Donald Trump said on Saturday he might prohibit travel in and out of the New York area to limit the spread of the coronavirus from its U.S. epicenter, as healthcare workers in the hard-hit region said they did not have enough masks and medical equipment.

With the number of known cases soaring past 115,000, the highest tally in the world, Trump said he might impose a quarantine on New York, and parts of New Jersey and Connecticut to protect other states that have yet to bear the brunt.

“They’re having problems down in Florida. A lot of New Yorkers are going down. We don’t want that,” Trump told reporters.

Since the virus first appeared in the United States in late January, Trump has vacillated between playing down the risks of infection and urging Americans to take steps to slow its spread.

Trump has also been reluctant to invoke emergency powers to order U.S. companies to produce much-needed medical supplies, despite the pleas of governors and hospital workers.

He also appeared to soften his previous comments calling for the U.S. economy to be reopened by mid-April. “We’ll see what happens,” he said.

It was not clear whether Trump would be able to block road, air and sea travel out of a region that serves as the economic engine of the eastern United States, accounting for 10 percent of the population and 12 percent of GDP.

New York Governor Andrew Cuomo said he had no details on a possible quarantine order.

“I don’t even know what that means. I don’t know how that would be legally enforceable, and from a medical point of view I don’t know what you would be accomplishing,” Cuomo told reporters. “I don’t even like the sound of it.”

Some states have already imposed limits on interstate travel. New Yorkers arriving in Florida and Rhode Island face orders to self-isolate if they intend to stay, and West Virginia Governor Jim Justice asked New Yorkers to avoid citizens in his state.

New coronavirus cases in China leveled off after the government imposed a strict lockdown of Wuhan, the epicenter of the disease.

The body count continues to climb in Italy, where authorities have blocked travel across the country and prevented people from leaving their houses for all but essential reasons.

In the United States, the number of cases stood at 119,327 on Saturday afternoon with at least 1,992 deaths, according to a Reuters tally. The number of cases in the United States eclipsed those of China and Italy on Thursday.

TOO LATE FOR A LOCKDOWN?

Trump said any New York-area lockdown would only apply to people leaving the region. It would not cover truckers making deliveries or driving through the area, he said.

U.S. courts would likely uphold a presidentially imposed quarantine, but Trump would not be able to enlist local police to enforce it, said Louisiana State University law professor Edward Richards.

“The logistics of deciding who is an essential person or essential cargo could shut down the ability to transport essential personnel and supplies,” he said.

Even if it were possible, a New York-area lockdown might come too late for the rest of the country.

Los Angeles Mayor Eric Garcetti said Southern California was on track to match New York City’s infection figures in the next week.

In New Orleans, where Mardi Gras celebrations late last month fueled an outbreak, the number of coronavirus patients “have been staggering,” said Sophia Thomas, a nurse practitioner at DePaul Community Health Center.

American healthcare workers are appealing for more protective gear and equipment as a surge in patients pushes hospitals to their limits.

Doctors are also especially concerned about a shortage of ventilators, machines that help patients breathe and are widely needed for those suffering from COVID-19, the pneumonia-like respiratory ailment caused by the highly contagious novel coronavirus.

Hospitals have also sounded the alarm about scarcities of drugs, oxygen tanks and trained staff.

On Saturday, nurses protested outside the Jacobi Medical Center in New York, saying supervisors asked them to reuse their masks, putting their own health at risk.

“The masks are supposed to be one-time use,” one nurse said, according to videos posted online.

One medical trainee at New York Presbyterian Hospital said they were given just one mask.

“It’s not the people who are making these decisions that go into the patients’ rooms,” said the trainee, who spoke on condition of anonymity.

 

(Additional reporting by Jonathan Stempel, Gabriella Borter and Brendan Pierson in New York, and Joel Schectman, Andy Sullivan and Michelle Price in Washington; and Lisa Shumaker in Chicago; Writing by Andy Sullivan; Editing by Daniel Wallis)

Pentagon eyes Chicago, Michigan, Florida, Louisiana as coronavirus spreads

By Phil Stewart and Idrees Ali

WASHINGTON (Reuters) – The U.S. military is watching coronavirus infection trends in Chicago, Michigan, Florida and Louisiana with concern as it weighs where else it may need to deploy, after boosting aid to New York, California and Washington, a top general said on Friday.

Air Force General John Hyten, vice chairman of the Joint Chiefs of Staff, said the military was doing its own analysis as well as looking at data on infections compiled elsewhere in the government.

“There’s a certain number of places where we have concerns and they’re: Chicago, Michigan, Florida, Louisiana,” Hyten told a group of reporters, when asked where field hospitals could head next.

“Those are the areas that we’re looking at and trying to figure out where to go next.”

Confirmed coronavirus cases in the United States reached 100,040 on Friday, the highest number in the world, a Reuters tally showed.

The Army Corps of Engineers said on Friday it was aiming to provide facilities for 3,000 people with the coronavirus at Chicago’s McCormick Place convention center by April 24 for about $75 million.

Lieutenant General Todd Semonite, the Corps’ commander, said the Corps was looking at potentially converting 114 facilities in the United States into hospitals.

Asked about Hyten’s remarks, Semonite said he continued to be concerned about Michigan, Florida and Louisiana and had spoken with the governor of Louisiana. He said there could be a high demand for medical resources in Florida because of the aging population and added the Corps was developing options for the state.

STRAINS ON MILITARY

The military is already deploying field hospitals to Seattle and New York. A Navy hospital ship arrived on Friday in Los Angeles and another one is expected to reach New York City on Monday, where Hyten said the city was still dredging the harbor to allow the massive ship to dock.

Each ship has a capacity of about 1,000 beds and would not treat coronavirus patients, instead taking pressure off overwhelmed civilian hospitals.

But Hyten cautioned that the U.S. military only had limited medical capacity in the United States and, at some point, it would have to tap the reserve forces — while guarding against drawing medical staff away from civilian facilities.

President Donald Trump on Friday signed an executive order authorizing the Pentagon and Department of Homeland Security to call up reservists.

“We made a decision about five or six years ago that we would downsize our military (health care) capabilities in the United States … to only really focus on our deployed requirements,” Hyten said.

He estimated that the military only had 1,329 adult hospital beds staffed at any one time in the United States.

“We’re digging into the active duty force really heavily,” he said. “So the next thing that we’re going to need is to look into the reserves.”

(Reporting by Phil Stewart and Idrees Ali; Editing by Daniel Wallis)

As Florida, Georgia battle over water, panhandle oystermen struggle to survive

By Rich McKay

APALACHICOLA, Fla. (Reuters) – Standing in his boat in Florida’s Apalachicola Bay, Michael Dasher lowered a long pair of tongs into the water, pulling up a muddy mass of oysters that his son sorted, keeping those big enough to sell and tossing the rest back into the brackish bay.

His 53-year-old calloused hands grasped not just the 12-foot-long (3.7-m-long) tool but a way of life that Florida panhandle oystermen say is dying: Last year, they hauled in 16,000 pounds (7,257 kg) of oysters worth $130,000, according to state figures, a fraction of the 2012 catch of 3 million pounds (1.4 million kg) worth $8.8 million.

“It’s like dumping sacks of rocks every day, but I don’t know how to do anything else,” said Dasher, who fretted that his 32-year-old son nicknamed “Little Mike,” a fifth-generation oysterman in the family, may also be its last.

Their future may be determined by the U.S. Supreme Court, which is expected to rule later this year on a seven-year-long legal battle between Florida and Georgia.

Florida accuses its northern neighbour — and particularly the fast-growing city of Atlanta — of drawing too much water from the rivers that feed the bay, causing its salinity to rise and driving down the oyster population.

Georgia rejects that claim, saying it has made great strides in water conservation. It says that what has really hurt the oyster population is a surge of over-harvesting since the 2010 BP plc Deepwater Horizon oil spill, which Florida had feared would foul the bay but ultimately did not.

The oystermen have reason to be worried: U.S. Circuit Judge Paul Kelly of Santa Fe, a state water rights expert who was named a “special master” by the U.S. Supreme Court in the case, has recommended that the court side with Georgia.

But the court can ignore his recommendation, if it’s swayed by Florida’s arguments.

Florida says Georgia uses too much water.

‘EQUITABLE SHARE’

The swelling 6-million-strong population of the nine-county greater Atlanta area, as well as Georgia’s peanut and cotton farms, all draw on the same fresh water sources that flow to the Apalachicola Bay.

State officials and farmers say they are conserving more water than ever, and that they aren’t to blame for crash of the oyster beds.

Katherine Zitsch, manager of natural resources for the Atlanta Regional Commission, said the metropolitan area now uses 10% less water than it did 20 years ago, even though the population has risen by 1.2 million people.

But the oystermen and environmentalists in both states say that same water is needed in the bay.

Federal court precedent dating back more than 100 years dictates how states must share fresh water that flows across their borders, but does not set precise standards for water allocation. Water is divided based on proven needs, populations, agriculture and other factors.

“Even though Florida is entitled to an equitable share, that’s a moving target,” said John Draper, a Santa Fe attorney and expert in this sort of litigation. “It’s not a 50-50 split.”

The Florida Department of Environmental Protection said it was hopeful the court would rule in its favour.

“The state of Florida remains committed to restoring the historic flows of the Apalachicola River,” for the families who rely on the river for their livelihood, it said in a statement.

Officials declined to comment.

‘WE NEED THAT WATER’

Upstream and down, residents who have long relied on the water to support their sources of income say they can’t make do with less.

Farmer Murray Campbell, 64, a third-generation peanut farmer in Pebble City, Georgia, about 150 miles (240 km) north of Apalachicola Bay, says he has sympathy for the oystermen.

“Lord knows I love oysters, especially those Apalachicolas,” Campbell said. “I’d love to see them successful. But truth is, we need that water. Once you put a crop in the ground, the banker wants his money.”

“We’d be a dust bowl without irrigation,” he said.

The dozen or so oystermen left working the Apalachicola Bay — a sliver of the more than 400 that once worked its waters — likewise say they can’t do without.

“We’re counting on the court seeing it our way, or we’re sunk,” said Shannon Hartsfield, the 50-year-old president of the local Franklin County Seafood Workers Association.

Hartsfield has been reduced to oystering part time, making the rest of his living fishing for shrimp.

Many of his former counterparts had left their boats and gone to Tallahassee or Panama City to work in construction or the hospitality industry, he said.

“But it’s not too late to reclaim it,” Hartsfield said of the oystering way of life. “If we get that water back, our men will be back. The bay can bounce back.”

(Reporting by Rich McKay; Editing by Scott Malone and Bernadette Baum)

Special Report: ‘Scam PAC’ fundraisers reap millions in the name of ‘heart-tugging’ causes

By Jarrett Renshaw and Joseph Tanfani

Birmingham, Alabama (Reuters) – From unmarked strip-mall offices in small-town Alabama, the calls go out across the United States, meant to talk people into giving money for heart-tugging causes like helping breast cancer patients or the widows of fallen police officers.

Even as they charmed millions from credulous donors, a dozen former callers for two major fundraisers told Reuters that they knew their companies would be keeping the vast majority of it. And the groups they were raising money for weren’t charities at all, but political action committees, which normally are set up to gather funds for candidates or political causes.

“The motto was, ‘Leave your morals at the door,’” said Alexander Lefler, 21, who worked for nearly a year at a call center southeast of Birmingham, Alabama, describing what he saw as high-pressure and deceptive tactics. “We kind of all understood what we were doing was wrong, but I needed a place to live.”

The call centers in Alabama, along with others in Nevada, New Jersey, and Florida, raise money on behalf of “scam PACs,” slang among critics for political action committees that purport to support worthy causes but in reality hand over little of the money for political – or charitable – purposes. Instead, the bulk of the money is kept by fundraising firms or the people running the PACs.

Through interviews with the former callers and donors, reviews of call scripts and visits to three call centers in Alabama, Reuters has obtained rare access into the world of these for-profit fundraisers, a tiny but lucrative niche of the multi-billion-dollar U.S. telemarketing industry.

These so-called “scam PACs” and their fundraisers exploit the gray zone between U.S. election finance and state charity fundraising laws, regulators told Reuters. They often are set up as super PACs, groups which in recent years have been empowered by the courts to raise and spend money in unlimited amounts, with little regulation.

But “scam PACs” are not like other political action committees. Rather, they and their fundraisers present the PACs as charities, suggesting they support veterans, firefighters or victims of deadly diseases, for instance.

In fact, “scam PAC” operators and fundraisers are often old hands of the charity world, with a history of run-ins with regulators, state and federal records show. Some fundraisers work in both worlds, raising money for charities and PACs.

When organizations operate as political action committees, however, they are not subject to the laws governing charity fundraising, according to federal and state regulators and telemarketing industry officials. (See related story https://www.reuters.com/investigates/special-report/usa-fundraisers-scampacs on regulation of “scam PACs”)

In return for tax-exempt status, charities generally must register with states, disclose their key employees and account for how the money is spent – in some cases by providing audited financial statements.

Not so for “scam PACs.”

“It is a way for them to get around the charity laws – that’s exactly what they’re doing,” said Stuart Discount, chief executive of the Professional Association for Customer Engagement, a trade association for direct marketers.

“Scam PAC” telemarketers who use aggressive tactics in the charity realm also face less risk of scrutiny or sanction when they turn to PAC fundraising, regulators and former callers said. Callers told Reuters they easily made the switch, working in the same buildings, for the same bosses, using similar scripts.

Though “scam PACS” have no standard definition and can’t be definitively counted, a review of Federal Election Commission records suggests they account for a sliver of the some 6,800 PACs in the country. Even so, Reuters identified a loose network of fundraising companies and PACs that quickly grew into a money-making force, with some ranking near the top fundraisers in the period stretching from January 2017 through mid-2019.

Starting with a group of eight fundraising operations that earned at least a half-million dollars each during this period, Reuters traced interconnections among them and 31 PACs. Generally, those in the informal network portrayed themselves as charitable, gave little to the causes they promoted and relied principally on small donors. Most were super PACs, but several were traditional political action committees, which have contribution limits.

All told, the PACs took in $83.1 million during the 2 ½ year period examined by Reuters, about 82% of which went to the eight fundraising companies, according to the campaign disclosures required by the FEC.

The PACs examined for this article typically handed over less than 10% of their take – sometimes less than 1% – to candidates or causes, Reuters found. Aside from the lion’s share that went to for-profit fundraisers, many of the PAC operators took a slice for salaries and overhead.

Two of the fundraising companies identified by Reuters employed jail inmates and ex-cons as telemarketers, according to interviews in Alabama with several former employees, as well as court records.

Reuters interviewed a dozen donors to PACs in the informal network. All said they thought they were giving to a charity. Alex Angelides, a 31-year-old engineer from Arlington, Virginia, donated $600 to a super PAC called For a Better America, which spent 90% of its money on fundraising alone.

It’s infuriating,” said Angelides, who learned from Reuters that it was a PAC that got his money. “It would’ve been nice to know that my money was going to a PAC, not a charity, and that it wasn’t going to actually help police and firefighters directly.”

“There should be more transparency on this to protect consumers,” he said.

The committee’s treasurer, attorney Chris Marston, told Reuters the purpose of the PAC was to raise money “ in support of candidates who would help police and firefighters.”

“I’m sure the [call] scripts didn’t misrepresent anything,” Marston said. “I can’t speak to people’s understanding or what the scripts said.”

Few other top officers at these fundraising firms and PACS would speak to Reuters on the record. Those who responded denied their marketing was deceptive and defended their business model and compensation.

“I don’t think you understand how hard it is to fundraise,” said Forrest Sandusky Baker IV, a telemarketing professional. Baker said he founded Salt Lake City fundraising firm American Public Resource because he hoped to support worthy goals like helping veterans. The firm was paid nearly $3 million from 2017 through mid-2019 for its work raising money for PACS that spent anywhere from 0% to 7% on their promoted causes.

Baker said his employees never try to dupe donors and that he can’t control what his clients, the PACs, do with the money he raises.

“My job is to deliver a message, and try as best as I can to make sure I’m not working for a scumbag,” he said.

Richard Zeitlin, the biggest fundraiser in the loose network identified by Reuters, told a reporter in a brief interview that he had closed down all of his call centers, saying “I wanted a change in direction.” Asked about ex-employees’ claims of deception in his companies’ PAC fundraising practices, he declined to discuss specifics.

“How do I know you are telling the truth or the people who talked to you are telling the truth?” he said.

Last summer, after coming under fire from state and government regulators for alleged deception in fundraising for charities, he defended his reputation on a website called richardzeitlintruth.com.

While acknowledging that every industry has its “bad apples, he wrote: “To this day it strikes me as odd that an industry that has over the years hired hundreds of thousands of people (perhaps millions), many of whom had trouble holding down more traditional day jobs, would become such a punching bag for the government and the media.”

ANONYMOUS OFFICES, UNCLEAR OWNERSHIP

In a small Alabama town at the edge of the Talladega National Forest, next to a Chinese restaurant, stands a shop with mirrored windows and no signs.

The call center in Sylacauga, visited by Reuters last year, was operated by Las Vegas-based TPFE Inc, a firm controlled by Zeitlin. Like many such telemarketing centers tucked away in strip malls or office parks, it offered no clues to what went on inside.

Federal campaign records tell part of the story. In the 2 ½ year period examined by Reuters, records show, TPFE and three other Zeitlin firms earned more than $27.6 million for PAC fundraising.

For instance, the operation raised $16.8 million for PACs founded by Robert Piaro of Fredonia, Wisconsin, which purported to support police, veterans and people with breast cancer. About 82% of the money, $13.8 million, went to Zeitlin’s firms, while Piaro collected $190,613 in salary from the PACs, according to the records.

One Piaro committee, Americans for the Cure of Breast Cancer, garnered $1.6 million in donations through Zeitlin’s fundraising operations and made one charitable contribution, $10,000 to the Susan G. Komen Foundation – less than 1% of the total raised, campaign filings show.

JoAnn Coleman, 63, a construction engineer from Gaithersburg, Maryland, said she was particularly vulnerable to a pitch for the breast cancer PAC.

“I had breast cancer, so they knew how to get me,” she said. When she later realized it was a PAC telemarketer, she felt exploited. “What a racket, oh my God.”

Piaro declined to comment.

On his website, Zeitlin said his firms’ revenue – which he described as 80% to 90% of the proceeds – “may seem high” but actually is standard for the industry and is needed to offset high costs for technology and “intensive time-consuming labor.”

As a fundraiser for charities, Zeitlin ran into trouble with regulators.

In 2018, the Federal Trade Commission sued Zeitlin for allegedly deceptive practices in charity fundraising, but the case has been suspended because a grand jury was investigating, according to court documents. The FTC declined to comment.

Zeitlin told Reuters he was not the target of the grand jury investigation. He said only that it was based in Florida; Reuters could not determine the specific jurisdiction.

Neither Zeitlin nor his attorney would comment on the FTC lawsuit. Zeitlin, whose operations also have been examined by the Center for Public Integrity and other media outlets, said on his website that he’s “never been accused, indicted, tried or convicted of anything.”

Some political fundraising operations change locations frequently, operate under different names or dissolve and resurface under another name, making it difficult to trace their ownership, activities and connections to one another.

Reuters also could not ascertain the ownership of another large fundraising operation with a call center in Hoover, Alabama, some 45 miles from Zeitlin’s center in Sylacauga. Reporters visited the center last summer, though it has since closed.

Going by various names, the fundraising operation has worked for some of the same PACs as Zeitlin’s firms have and has employed some of the same people, according to internal PAC records, state corporate filings, employee interviews and deposition testimony in a civil case unrelated to this article. It also has roots in charity fundraising.

The fundraising operation used corporate names including Charity Promotions, from 2013 to 2016, and Charity Appeal, from 2016 to 2018, according to several ex-employee interviews and state filings. The fundraisers later went to work for PACs under the names Politicause and Pledge Assistance, both registered in Wyoming, which requires little disclosure from corporations.

Together Politicause and Pledge Assistance earned close to $20 million between January 2017 through mid-2019 raising money for PACS, campaign finance records show. Those two fundraising firms, whose ownership is not clear, dissolved – Pledge Assistance in July 2018 and Politicause in June 2019, according to Wyoming records.

Interviews and records indicate managers at both firms once worked at a Zeitlin company called Courtesy Call. None of the three managers Reuters was able to identify could be reached for comment.

At the time Reuters visited, the firm’s Hoover call center was jammed with desks and callers on headsets. The otherwise bland office was decorated with posters from the film “Glengarry Glen Ross,” a tale of ruthless telemarketer salesmen set in a real-estate boiler room. “Always Be Closing,” one poster read. “Coffee is for Closers Only,” read another.

LOOKING FOR ‘NATURALS’

In interviews, a dozen former employees of Politicause and Zeitlin’s TPFE described techniques they used to wrangle donations, leaving contributors with the impression they were giving to good causes.

“You are not lying, but you are being extremely misleading,” said Jason Jones, 24, a former employee at Politicause.

Training was minimal, pressure relentless and turnover high, the workers said. If new workers weren’t making sales, they were quickly fired. “It’s a sink or swim environment. They are looking for naturals,” said Jones, adding that good performers could take home $1,000 to $1,500 a week.

Former callers at both TPFE and Politicause said they were given scripts and FAQs that required them to mention that the groups were political action committees but were told by managers to glide past the disclosures about who was calling and how the money would be used.

“They said to pitch it like it was a charity but as quietly and quickly as you can, slip in that it was a PAC,” said Lefler, who worked at TPFE until March.

The callers said they’d already honed their charity pitches and so found it easy to repurpose them for the political committees, appealing to patriotism and what one called “pulling heartstrings.”

One FAQ, given to callers at Politicause and reviewed by Reuters, shaped the fundraising pitch for a super PAC called the American Coalition for Injured Veterans. It “is an organization who (sic) advocates for those who deserve it the most and are often left behind: American Veterans, especially who are homeless and disabled,” the FAQ read.

If the potential donors suspected they had given to the group before, the callers were instructed to say: “I have no way of knowing because we feel that donations are given from the heart, not the hand, so we keep all donation records confidential,” according to the FAQ.

The PAC, organized by Zachary Bass, spent 90% of its take on fundraising, campaign filings show. It spent $103,700 on behalf of House candidates – about 3% of the total, and it has contributed nothing directly to veterans groups.

Bass, who set up several other super PACs, declined to comment.

Across the industry, calls are computer-generated before being routed to telemarketers, something Politicause and TPFE employees said allowed their firms to maximize the number of calls – and to pester people repeatedly.

“They called 4 times in one day. We have told them many times to stop calling us,” one person contacted by Politicause complained to the FTC in April 2019, noting that the household was on a Do Not Call list.

Federal Do Not Call rules do not apply to political or nonprofit fundraising. Reuters obtained FTC complaint records, with names redacted, through a Freedom of Information Act request. The FTC’s response to complaints is not noted in the records.

Pitches at Politicause and TPFE were adapted to avoid allegations of fraud, former callers said, noting that the conversations were occasionally monitored by company compliance officers. At Politicause, for instance, some said they initially were told to say donations would be used to “help” buy new police and fire equipment. But because that suggested donors were contributing directly to purchasing new gear, the callers said they were told by managers to adjust their language.

“We could no longer say, ‘We are helping police officers get body armor,’ but we could say, ‘We are supporting efforts to get them body armor,’” said Jackie Armstrong, 32, a former Politicause employee.

When asked by potential donors how much of the money would go to the cause they were touting, telemarketers said they suggested it was the vast majority.

“‘We are proud to say it’s a 90-10 split,’” Jones recalled saying, leaving out that his company was getting the 90% share. “’We wish it was 100, but we have to keep the lights on.’”

The workers said Politicause managers eventually reined in that practice, requiring them to instead say that at least 10% went to the cause. Callers said they did so quickly and proudly, hoping people wouldn’t catch on.

At TPFE, callers said they told potential donors all proceeds went to “defraying the cost of the appeal [for funds] and to accomplish the mission,” said former employee Jake Adair, 28.

“Just enough to get them to stop asking,” he added.

FROM JAIL TO BOILER ROOM

James Dellinger, 34, said he and other callers got in the door with a remarkable qualification – they were in jail.

While in the Shelby County Jail on a felony charge of stealing a truck, Dellinger said he began working at a center in suburban Birmingham then known as Charity Promotions as part of his government-sponsored work release program. The company later was renamed Politicause.

These workers were a convenient labor pool – and skilled at getting people to open their wallets, former callers said.

“We were good at slick-talking these people,” said Dellinger, who court records show has been convicted of felonies including the truck theft and other burglary charges.

Some of the workers for TPFE also had felony convictions, according to several former callers and court records. The Sylacauga call center employed work release inmates, an arrangement that apparently ended before 2018, the former callers said.

“What is wrong with giving somebody a second chance?” Zeitlin responded when Reuters asked about his hiring practices.

Both Politicause and TPFE had procedures to keep workers with fraud convictions from handling credit card information, former callers said, although Politicause workers said the rules were sometimes relaxed for high performers.

Zeitlin did not respond to questions about this issue.

Drug abuse was a problem at both call centers, ex-employees said. They said it was not uncommon to find needles in the bathroom or a caller passed out at his desk.

Jessica Blanchard, 23, who worked at Politicause in 2018, said many callers either were addicts from halfway houses or jail inmates on work release.

Former Politicause employee Armstrong said he was fired in 2018, when the call center did charity fundraising, for having drugs at work. A week later, Armstrong said, he was rehired to help raise money for political action committees.

“It’s the only thing in life I’ve ever been (expletive) good at,” said Armstrong, who records show has theft and drug convictions. “Most of the guys that are real good are felons.”

(Jarrett Renshaw reported from Birmingham, Alabama, Joseph Tanfani from Washington; Editing by Julie Marquis)

Pressure mounts on FBI for answers on Florida naval base shooting

By Brad Brooks

PENSACOLA, Fla. (Reuters) – U.S. investigators face mounting pressure on Monday to deliver answers on the motive that led a Saudi Air Force lieutenant to shoot and kill three people and wounded eight others at a U.S. Navy base in Pensacola, Florida.

Florida Governor Ron DeSantis, speaking at a Sunday evening press conference, said he was sure the gunman carried out an act of terrorism. He questioned whether it could have been prevented by better vetting of foreign military officers who train in the United States.

“There is a lot of frustration in our state over this,” DeSantis said. “You have foreign military personnel coming to our base. They should not be doing that if they hate our country.”

The FBI said it thinks that the shooter, Second Lieutenant Mohammed Saeed Alshamrani, 21, acted alone when he opened fire inside a classroom at the base early on Friday morning.

The bureau said it was not ruling out labeling the violence as an act of terrorism, but that it still had many people to interview on Monday and was still collecting evidence at what it called an active crime scene.

The New York Times reported late Sunday that it had reviewed an official complaint Alshamrani lodged in April against an instructor at the base who had made derogatory comments about his appearance, but that there was no apparent connection between that incident and the shooting.

The FBI confirmed on Sunday that Alshamrani had legally purchased somewhere in Florida the Glock 9mm pistol he used in the shooting. DeSantis said he was able to buy the firearm because of a “federal loophole” in gun laws that allow nonimmigrant foreign nationals to purchase weapons for an array of reasons, including if they simply have a hunting license.

“I’m big supporter of the Second Amendment, but it’s so Americans can keep and bear arms, not Saudi Arabians,” the governor told reporters.

Alshamrani was on the base as part of a U.S. Navy training program designed to foster links with foreign allies. He had started training in the United States in 2017 and had been in the Pensacola area for the past 18 months, authorities said.

His fellow Saudi students were speaking directly with American investigators and were restricted to the base on order of the Saudi military, Rojas said.

(Reporting by Brad Brooks)

Saudi national suspected in shooting incident at U.S. Navy base in Florida

(Reuters) – The suspected shooter involved in a deadly incident on Friday at a major U.S. Navy base in Florida was believed to be a Saudi national in the United States for training, two U.S. defense officials said, speaking on condition of anonymity.

Four people including the shooter were killed in the episode at Naval Air Station Pensacola, the Navy and local sheriff’s office said, the second deadly shooting at a U.S. military installation this week.

The first reports of an “active shooter” on the base came through to the Escambia County sheriff’s office at about 6:51 a.m., officials said.

A few minutes later, a sheriff’s deputy fatally shot the shooter in a classroom on the base, Sheriff David Morgan said at a news conference on Friday morning.

“Walking through the crime scene was like being on the set of a movie,” Morgan said. He declined to share any details about the suspected shooter’s identity.

The two law enforcement officials, who were not authorized to speak on the record about the investigation, said the suspected shooter was on the base for training but said they could provide no additional information.

Saudi Arabia’s embassy in Washington did not immediately respond to questions.

Two sheriff’s deputies were injured, one shot in the arm, the other in the knee, but both were expected to survive, officials said at the news conference.

Eight people were taken to Baptist Hospital for treatment, hospital spokeswoman Kathy Bowers said.

Sheriff’s officials said one of the three victims died after being taken to the hospital, but it was unclear whether that victim was one of the eight who arrived at Baptist. Bowers declined to say.

While military bases house the nation’s most powerful armaments, military personnel normally are restricted from carrying weapons on base unless they are part of their daily duties. Nonetheless U.S. military bases have seen deadly mass shootings before, including one in Ford Hood, Texas, in 2009 that left 13 dead and one at the Washington Navy Yard in 2013 that killed 12.

U.S. President Donald Trump had been briefed and was monitoring the situation, a White House spokesman said.

On Wednesday, a sailor shot three civilians at the historic Pearl Harbor military base in Hawaii, killing two of them before taking his own life.

The Pensacola base, which is near Florida’s border with Alabama, is a major training site for the Navy and home to its aerobatic flight demonstration squadron, the Blue Angels. The base employs more than about 16,000 military and 7,400 civilian personnel, according to the base’s website.

Pensacola Mayor Grover Robinson said at the news conference that the base is “an incredibly important part of our community.”

“We’re a military town,” he said. “Our hearts and prayers are connected to all of those that serve us every day.”

(Reporting by Jonathan Allen and Maria Caspani in New York and Idrees Ali in Washington; Editing by Alison Williams and Steve Orlofsky)

Three killed including shooter at U.S. Navy base in Pensacola, Florida

Three killed including shooter at U.S. Navy base in Pensacola, Florida
(Reuters) – Three people including a suspected shooter were killed and at least seven others were injured on Friday at Naval Air Station Pensacola, a major U.S. Navy base in Florida, authorities said, the second deadly shooting at a U.S. military installation this week.

An “active shooter” was encountered on the base on Friday morning, according to the Escambia County sheriff’s office.

A few minutes later, the shooter was dead, according to the sheriff’s office and the Navy. WEAR TV, a local news channel, reported that sheriff’s deputies at the base fatally shot the shooter.

Two other people were killed, the Navy said in a statement, without providing further details. Authorities planned a news conference for later on Friday morning.

The base remained on lockdown.

At least six injured people were expected at the trauma center of the Ascension Sacred Heart Hospital Pensacola, spokesman Mike Burke said.

Seven people were being treated at Baptist Hospital, WEAR TV reported.

U.S. President Donald Trump had been briefed and was monitoring the situation, a White House spokesman said.

On Wednesday, a sailor shot three civilians at the historic Pearl Harbor military base in Hawaii, killing two of them before taking his own life.

The Pensacola base, which is near Florida’s border with Alabama, is a major training site for the Navy and home to its aerobatic flight demonstration squadron, the Blue Angels. The base employs more than about 16,000 military and 7,400 civilian personnel, according to the base’s website.

(Reporting by Jonathan Allen and Maria Caspani in New York; Editing by Alison Williams and Steve Orlofsky)