Gleaming the Cube
Philly PD
Workers who suffer serious injuries on the job can apply for disability benefits, a system run by the government. There are significant bureaucratic hurdles to overcome, but if a person is able to prove they are unable to work, they can receive a measly payment - the national average is around $1,277 a month. If they’re found to be lying about their ailment, or actually able to work, they can face civil and criminal penalties.
What if you worked for an organization that had negotiated a different sort of deal? What if, hypothetically, you could make up or exaggerate an ailment, have a doctor sign off on it, and then receive your full salary, tax free, and still earn years towards your pension? If it sounds implausible, allow me to introduce you to life as a Philadelphia police officer:
While Philadelphia buckled in 2021 under the weight of record gun violence that shattered families and devastated neighborhoods, at least 652 police officers were missing in action, the majority due to Heart and Lung claims.
Under this system, three doctors selected by the police union treat most of the officers; last year, they designated all but 65 of the officers as “no duty,” meaning hundreds were unavailable to handle even menial tasks such as filing paperwork, answering phones, or testifying in court.
A staggering 14% of Philly patrol officers are listed as Injured on Duty, and the number has doubled since 2017:
The problem is unique to the city, with nearly four times as many officers listed as injured as the next highest example:
The root of the problem is a program called Heart and Lung benefits:
The seeds of the Heart and Lung morass were planted in the mid-1990s, when George Kenney, a now-retired Republican state representative from Northeast Philadelphia, introduced legislation to give city police officers and firefighters access to the tax-free benefit, formally known as the Enforcement Officer Disability Benefits Act.
Heart and Lung benefits became available to Philadelphia in 2004.
The program is a misnomer; it has nothing to do with heart and lung ailments. Rather, the story goes that firefighters coined the phrase because cardiopulmonary problems were most prevalent among their ranks when they got hurt on duty.
So, how does the process work? A cop who wants to claim these benefits goes to see a doctor chosen by the FOP, who generally rubber stamps their claim. It’s a lucrative gig for the doctors:
According to city data, the majority of police officers, firefighters, and sheriff’s deputies who have been injured on duty were treated by two doctors, Rocco Costabile and Richard J. Berger, at Holmesburg Family Medicine Associates, a one-floor office on Frankford Avenue.
Since 2018, the city has paid the Holmesburg practice about $1 million to treat cops, mostly with Heart and Lung claims. A third physician in South Philadelphia, Paul Sedacca, was paid $257,000.
The city also pays a private company to administer the benefits, financially motivating them to approve most claims:
The city pays a private company, PMA, $6 million a year to administer medical benefits to cover injuries of all city employees, a task that includes looking into each claim. If an officer was hurt in the line of duty, a PMA adjuster typically will approve the Heart and Lung claim.
In fiscal year 2019, PMA approved 96% of Heart and Lung claims among police officers.
Once the officers are on Heart and Lung, there’s no limit to the amount of time they can spend injured:
As of September, more than a dozen officers have been out for at least four consecutive years. An additional 17 officers have not worked since 2018, and 45 more not since 2019, according to internal records from that month.
One 22nd District officer has filed 18 claims during her 19-year career.
Remember, while they’re on this “temporary” disability leave, they are accruing vacation, sick time, and years served. And their salary isn’t taxed by the city, so they’re earning more than if they were actually on the job.
The program forbids injured officers from doing any other sort of work, but because there’s little oversight of the program it’s rife with abuse:
In Williams’ driveway sat a bright blue and white pickup truck, covered with logos and slogans for Exterior Solutions Roofing and Siding. On LinkedIn, Williams has a photo of himself in his police uniform, with the words “Business Owner at Exterior Solutions, LLC.”
[…]
While taxpayers paid his salary, Wolfe managed to launch a new career as a motivational speaker, in violation of the police policy forbidding outside employment while designated as “no duty.”
[…]
The city put him under surveillance and discovered Nosik was actually working at two businesses he owned: Xander Auto, where he buys and sells used cars, and Xander Electric. He was observed with a work belt and tools going to various homes.
[…]
Johnson took that time at home to open a clothing business, 8289 N. Luxury Boutique. She made the announcement on her Facebook page Oct. 20.
During the last District Attorney election, the Philly police union spent hundreds of thousands of dollars and lobbed fiery rhetoric at reformer Larry Krasner, blaming him for the city’s rising crime rates - a trend seen across the nation during the last two awful years. Meanwhile, the hundreds of officers unable to do their jobs hobbled an already ineffectual police force:
In Northeast Philadelphia’s 2nd District, more than 20% of the officers are injured, according to an Inquirer analysis.
[…]
In North Philadelphia’s 22nd District — which recorded 297 shootings in 2021, the highest of any district — 43 cops are out with Heart and Lung claims.
[…]
Judges, prosecutors, and defense lawyers have separately complained that the missing officers cause criminal cases to be delayed or dismissed.
The city is paying $24 million dollars a year in salary to cops on Heart and Lung. City officials - Kranser included - dance cautiously around accusing these officers of wrongdoing, because even mild criticism of the police is met with incendiary rhetoric and threats from union leaders. Despite major increases in crime, officer injuries are down in the last decade:
The number of reported police injuries has actually fallen 30% over the last decade, from 1,265 in 2009 to 884 in 2021. But over that same time, the total days that cops stay out on Heart and Lung has nearly tripled.
If these officers were subject to the same rules as the rest of us, this would be called what it is - fraud. Instead, the FOP blames rising crime rates on the DA while cops make fewer arrests, solve fewer cases, and file three times as many phony injury claims so they can take paid vacations and run side businesses.
As a Philly resident this story is enraging, but not surprising. City police departments wield an incredible amount of power in this country, funded generously by the same taxpayers with the apparently unrealistic expectation they show up to work.
Allstate
Newly released documents in a California regulatory case reveal Allstate may have overcharged its customers one billion dollars in premiums over a decade:
They allege that Allstate was engaging in price optimization by giving smaller than appropriate discounts to the least-price-sensitive among its customers with clean driving records who held multiple policies with the company or who had several decades of driving experience.
We talk a lot about algorithms here, and the way insurance companies tend to use them is finding creative ways to rip off their customers. That may sound harsh, but it is literally the insurance company business model - they make profits, in large part, by maximizing premiums and paying the minimum amount in claims.
So, what Allstate did - which The Markup cleverly caught when they tried it in Maryland - was create an algorithm that ranked customers not on their driving records or accident risk, but on their price insensitivity - how much the company could charge them before they started shopping around for a new policy:
“Those policyholders were known by Allstate to have a lower elasticity of demand and were more likely to renew with Allstate even though they were charged premiums in excess of those based upon an actuarially sound estimate of the cost of risk transfer,” he said.
This may seem distasteful, but we’ve all encountered companies optimizing their pricing to ensure people pay the most they can tolerate. No doubt many of you have done the “threaten to cancel your cable/internet” trick to unlock a cascade of increasingly generous discounts. The problem for Allstate is insurance companies are closely regulated by the states they operate in, so they aren’t allowed to charge rich people way more money because they don’t bother to check their bills. Insurance companies have many ways to make money, but they aren’t allowed to create sucker lists with algorithms, at least not in California or Maryland.
Crypto Mortgages
Speaking of unregulated marketplaces, a company in Miami wants to give crypto holders the ability to buy real estate against their assets:
The Miami-based company, Milo, is offering what it describes as the “the world's first crypto mortgage,” which it claims will allow customers to leverage their wealth to buy an American home with no money down or need to convert their Bitcoin to dollars—and with the possibility of getting all their Bitcoin back once the loan is paid off, no FOMO needed.
This sounds less like a mortgage and more like a secured (giant air quotes) loan, but with crypto?
The licensed direct lender does not plan to require a down payment, Social Security number, FICO score, or even customers’ tax returns. “Your crypto is what qualifies you,” the company states on its website. Specifically, potential customers must hold at least $150,000 worth of Bitcoin and enough to cover the entire loan at the outset. “For example, if your loan value is $250,000, then you will need to have the same equivalent value in Bitcoin,” the company states. If the customers pledge even more Bitcoin, they receive a lower interest rate, since it lowers Milo’s risk.
This also sounds like an interesting new way to get your crypto stolen?
If a customer is approved after completing a 10-minute application that involves inputting their crypto wealth and identification documents, like a passport or driver’s license, they pay an origination fee and transfer the necessary Bitcoin to a “trusted third-party custodian,” where it is “locked for the life of the loan.” Milo buys the home for the customer, who then begins to pay off a 30-year mortgage with interest, using cryptocurrency or fiat currencies. When the mortgage is completely paid off, the Bitcoin is sent back to the customer’s wallet.
This also also sounds like a way for Bitcoin holders to avoid taxes?
Traditional lenders don’t like to accept crypto, so the crypto-rich often need to convert their crypto into U.S. dollars to buy a home, which triggers a tax bill if they made a profit.
So the idea of this mortgage is you give Milo enough Bitcoin to cover the cost of the property - or more! if you want a lower interest rate - and then you make payments…in…fiat? to pay down the loan. You could also deposit more Bitcoin to get a lower rate, or renegotiate once a year if the price of Bitcoin has gone up a lot. What if it goes down? Well, then you get a margin call:
Rupena said that should a customer’s Bitcoin-to-loan ratio fall below 65 percent, Milo will require a “margin call for risk purposes,” meaning customers will have to pony up more money. If they don’t have the money, Milo starts to pull from the third-party account.
If you bought a Bitcoin House back in November when Bitcoin was at $67,000 and are now sitting on Bitcoins worth $35,000 this does not seem like a very good deal, and you should probably have taken the tax hit and bought your house with dollars. When the price of Bitcoin can fluctuate as much as ten percent in a single day this seems like a very risky bet, but I guess if you’ve reached the “buying a house with Bitcoin from a start-up in Miami” level of risk tolerance, you’re prepared for these potential outcomes.
The company’s own press release touts their mortgage solution for “foreign nationals” which is an anagram for “money laundering” and I am certain the government will be interested in those Bitcoin loans at some point.
Tesla
It hasn’t been a great week for Tesla. In fact, while I was researching this story I came across an 800,000 car recall for seatbelt issues. Anyhow! Two days before that recall, Tesla agreed to recall over 53,000 cars with the company’s “Full Self-Driving” software which allowed the cars to conduct illegal rolling stops at stop signs. This was not a bug in the code, it was part of an “assertive” mode the company wrote into the software:
The FSD system upgrade costs an eye-watering $12,000 as of last month. Apparently, the National Highway Traffic Safety Administration got word of assertive mode and forced Tesla to update the software:
NHTSA noted federal law "prohibits manufacturers from selling vehicles with defects posing unreasonable risks to safety, including intentional design choices that are unsafe."
Musk took to Twitter to…not exactly dispute this, but instead defend his company’s cars breaking traffic laws:
…while smearing an AP reporter who wrote a piece on it, aka the full Musk Experience. On the topic of safety issues, a Washington Post report this week details the high number of consumers complaining their Teslas are slamming on the brakes at high speeds:
Owner reports of phantom braking to NHTSA rose to 107 complaints in the past three months, compared with only 34 in the preceding 22 months.
One potential reason for the rise in unexpected braking is Musk’s insistence on using cameras rather than radar to detect threats:
Tesla announced last year that it would stop equipping Tesla Model Y and Model 3 vehicles built in North America with radar beginning in May 2021. Tesla’s new approach is known as “Tesla Vision.”
Other car companies who use driving assist technology cross-check threats against an array of different sensors, but Tesla’s limited data may cause compounding errors with its tech and software:
“Phantom braking is what happens when the developers do not set the decision threshold properly for deciding when something is there versus a false alarm,” said Phil Koopman, a Carnegie Mellon University professor who focuses on autonomous vehicle safety. “What other companies do is they use multiple different sensors and they cross-check between them — not only multiple cameras, but multiple types of sensors,” such as radar and lidar, a type of sophisticated sensor that uses laser lights to paint a dot matrix mapping the environment.
We’ve read many stories about eccentric tech CEOs doing things like buying wave pool companies or pivoting to the Metaverse, but the problem with Musk’s insistence on building Teslas with no regard for laws or regulations is that human beings ride inside them and drive/walk/cycle on streets around them. I don’t know at what point Musk’s intransigence will run up against regulators and lawmakers who have no patience for his schtick, but hopefully it happens before a large number of people are hurt or killed by his products.
Starlink
…or an asteroid wipes out the Earth:
A prime ground-based observatory that scans the sky for exploding stars and dangerous near-Earth asteroids is struggling with disruptive light streaks from SpaceX's Starlink internet satellite constellation, a new study revealed.
I mean, it’s one way to keep Tesla critics quiet! Starlink has been controversial in the scientific community since SpaceX began launching the satellites. The company plans to launch 12,000 satellites to provide Internet service around the globe. The problem is, despite efforts to paint the satellites to reduce interference, these satellites are already getting in the way of astronomers and telescopes, and they’ve only got about 15% of them in orbit.
Why is a private company run by the world’s richest Twitter addict allowed to pollute the night sky with his satellites so he can sell Internet service? It’s quite the metaphor for whatever stage of capitalism this is - the hyper rich are charging us to use our planet’s orbit.
Not to be outdone by their sister car company, Starlink satellites may soon be crashing into other stuff in space:
The controversial technology has many opponents among space safety experts as well. According to Professor Hugh Lewis, Europe's lead authority on space debris, Starlink satellites are now responsible for more than 50% of collision risk situations between two satellites in orbit.
Lack of Internet access in rural and remote areas is an issue for poor and underserved communities, but this is a problem for governments to solve - Internet access is required for so many aspects of modern life it should absolutely be considered a utility. As to who owns space, arguably we all do, and someone should sort that out before it becomes a graveyard for failed startups.
Gold Cube
A German artist raised a lot of money to make a cube out of gold and display it in Central Park for a day:
A cube composed of 186 kilograms of pure 24-karat gold, conceived by the German artist Niclas Castello who has billed it as a conceptual “socle du monde” (base of the world) sculpture for our time, was wheeled out to the Naumburg Bandshell this morning at around 5 a.m.
Although the work is not for sale, according to the artist’s team, based on the current price of gold at $1,788 per ounce, its material worth is around $11.7 million. Flanked by a heavy security detail, the 410-pound work is set to be displayed in the park until the day’s end.
My thoughts on the optics of putting an $11.7 million dollar gold cube with a security detail in the middle of Central Park in winter are best summed up by Spencer Ackerman:
Estimates of the number of homeless New Yorkers range between twenty five and eighty thousand, with an estimated 2,400 people sleeping on the street (or in parks) every night.
Then there’s the actual size of the cube:
The cube measures over a foot and a half on all sides and has a wall thickness of about a quarter inch.
That is…not large. Farther down the article is a photo of the cube, which doesn’t even reach the artist’s knee. And…it’s hollow??
Castello’s plan appears to be a tour of wealthy cities whose residents might be impressed by a golden hat box. Oh, and of course there’s a crypto angle:
The Castello Coin, traded as $CAST, is available for purchase online at an initial price of €0.39 ($0.44) each, with an accompanying NFT auction scheduled for 21 February.
I hate it so much.
Short Cons
POLITICO - “The Crisis Text Line’s AI-driven chat service has gathered troves of data from its conversations with people suffering life’s toughest situations. […] The organization’s for-profit spinoff uses a sliced and repackaged version of that information to create and market customer service software.”
Insider - “Amazon is shutting down its third-party-seller program "Sold by Amazon" after the company was accused of price-fixing.”
CFPB - “From arrest to incarceration and reentry, people who come into contact with the justice system are confronted with numerous financial challenges, including financial products and services that too often contain exploitative terms and features, offer little or no consumer choice, and can have long-term negative consequences for the individuals and families affected.”
NBC New York - “Two nurses working on Long Island are accused of forging official COVID-19 vaccination cards and entering the information into New York's statewide database -- a scheme that allegedly brought in over $1.5 million.”
Tips, thoughts, or non-hollow gold cubes to scammerdarkly@gmail.com