Archive for March 2009

Think inside the box: Control of the motorcycle industry and education Pt. I

March 31, 2009

I’ve spoken before about how the Motorcycle Safety Foundation is a self-enclosed system like a snake swallowing its own tail. Or perhaps it’s the House that Jack built. But, in relation to the other two organizations that share the same address it’s more like a three-headed dog like Cerberus.

I intended to make a diagram to illustrate the interrelationships, but it defeated me because it would be so complicated it would be useless. So maybe breaking it down in smaller pieces and then to try to put it together might be more illustrative.

Let’s begin with the relationship between the Motorcycle Industry Council, the Motorcycle Safety Foundation and the Specialty Vehicle Institute of America.

As you know, the companies are members and some belong to all three groups. The member companies are represented by employees. Honda, for example, assigned Dave Edwards, national manager of environment and education to MSF and SVIA but Assistant V-P, Motorcycle division, Mark Pearlstein to MIC. But it’s the corporations, not these individuals who are the members.

You probably know that Tim Buche is the President of all three and that all three share the same suite of offices at #2 Jenner Street, Irvine, CA. Many employees at the three organizations perform work for all three. What you may not know is how much the membership of the three trade groups overlap. As the following chart shows, in 2007, 83% of MSF’s membership also sat on the board of the MIC and 82% of SVIA’s board was on MSF’s board:

MIC

MSF

SVIA

President

Buche

Buche

Buche

VP

Di Corpo

Di Corpo

Di Corpo

VP Gov.

Relations

Van Kleeck

Van Kleeck

Van Kleeck

VP

Information Technology

Frank

Wagenseller

Frank

Wagenseller

Frank Wagenseller

Honda

(Pearlstein)

Honda

(Edwards)

Honda (Edwards)

Vice-Chair

MIC

Sec/Treas

MSF

Chair/Sec/

Treas SVIA

Kawasaki

(Hagie)

Kawasaki

(Hagie)

Kawasaki (Hagie)

Sec/Treas

MIC

Suzuki

(Harris)

Suzuki

(Alsip)

Suzuki (Bush)

Director/

Trustee

Yamaha

(Schmitt)

Yamaha

(Pugh)

Yamaha (Schmitt)

Director/

Trustee

Victory

(Subsidiary

Polaris)

(Hurd)

Victory

(Subsidiary

Polaris)

(Gray)

Polaris (Dougherty)

Director/

Trustee

KTM

(Narayana)

KTM

(Narayana)

Director/

Trustee

Harley-Davidson*

(Chichlowski)

Vice-Chair/

Trustee

Harley-Davidson*

(Lara Lee)

Director/

Trustee

?

(Monica Halperin)

Director

MIC

Fairchild

Sports/

Hein Gerike

(Schilke)

Director

MIC

Custom Chrome

(Esposito)

Chair

MIC

Cycle World

(Little)

Director

MIC

Parts Unlimited/

Drag Specialties

(Fox)

Vice-Chair

Arctic Cat (Tweet)

Trustee

Bombardier (Garcia)

Overlapping

membership

10/14 w MSF

(71%)

10/12 w MIC

(83%)

9/11 w MSF

(82%)

*In 2007, Harley had two representatives on the board of trustees but was only counted as one member in the above analysis (Lara Lee was no longer with H-D in early 2008 and joined Jump Associates).

Power over all three organizations, then, is concentrated in five corporations—the Big Four and Polaris—and while MIC includes voices from outside the manufacturers, the MSF and SVIA do not.

It should also be mentioned at this time that industry—and all of them are MIC members—hold 50% of the control of the American Motorcyclist Association and the current board includes KTM, Buell (a subsidiary of Harley-Davidson) and Kawasaki and MSF member Ducati. Of six industry seats, then, 66% belong to the manufacturers—and 100% of them are on MSF’s board.

What probably no one outside #2 Jenner Street know is that the three organizations also share the same attorney: Stuart Ross, of Ross, Dixon & Bell, LLP, has been MIC’s outside counsel since 1971, advised MIC on the creation of MSF and was one of the founding trustees as well as its outside counsel since 1973—and is also SVIA’s outside counsel since its inception. And, of course, Ross was the attorney that threatened Colorado’s Attorney General from allowing TEAM Oregon’s curriculum from being taught—and his firm handled the litigation against TEAM Oregon in the failed copyright infringement case. Ross, was given the MIC Chairmen’s award in November of 2008. 2008, as you remember, was the year that MSF—not MIC—settled the lawsuit with TEAM Oregon in such a way that it prevented the use of that curriculum by other states.

Already, then, we see that the three supposedly separate organizations are much more intertwined than has been evident to anyone outside #2 Jenner Street. We see the concentration of power and control and see through the disguise that these are, in fact, three separate organizations. Rather, they appear to act as three parts of an invisible and unincorporated fourth organization.

But this is just the beginning of the nearly invisible intertwined relationships between the three that have serious implications both for motorcycle industry businesses and rider education programs. We’ll go into that in the next entry which will be posted later today.

NY training sites can expect their operating costs to go up

March 26, 2009

MSF’s press release after winning the bid stated, “In each state program it has managed, MSF has increased student-training numbers through more sites, more RiderCoaches, and improved operational efficiencies and quality control, while reducing operating costs and lowering costs to these rider-funded state programs,” said Robert Gladden, director of program administration for MSF.”

It’s true that training numbers went up in those states but they did in every state program during those years by the same or greater percentages without MSF being involved. Nor are the means stated necessarily related to increasing students trained.

But it is true that MSF reduced its operating costs and (at first) charged the state less for the services than the proceeding administrator. MSF accomplished this by passing costs on to the independent site operator lowering his or her profit margin.

In New York as in California, small businesses sub-contract with the company hired to administer the state motorcycle safety program. MSF has administered the California program since 2004 under the supervision of the California Highway Patrol (CHP). California, rather than the other three states is the model for how MSF can be expected to administrate the state.

So what can New York independent training providers expect when the Motorcycle Safety Foundation takes over running the state program? This is the experience of many small businesspeople in the California program:

Bare nekkid: exposing sensitive financial data

To get a contract with MSF, California providers who had been in business for multiple contracts with Crayne and Associates and then MSF still had to reveal every scrap of financial information about their businesses, contracts, employees and so forth completely exposing sensitive data to MSF.

According to Joe Aiello, MANYS “didn’t always request financials and [instead] looked to see that they were currently viable from past performance and that they were in good standing with their creditors/landlords/etc. Of course, we had the authority to request their financials at any time during the training period if necessary.”

If MSF treats New York owners like it did Californian ones, they can expect the same kind of strip search of every aspect of their business and personal finances.

What MSF required in California went far beyond any requirement of the California Highway Patrol but the liaison at the time said that there was no law against it and since MSF wasn’t in competition for business it wasn’t an issue.

However, MSF did begin running its own for-profit training sites—going into competition with its subcontractors.

The process of applying for subcontractor status became exceedingly time-consuming and complicated for business owners. Excessive delays in approving contracts and renewing the site RERP was par for the course causing great anxiety among site owners.

Steering students to favored providers—and favoring itself most

MSF, like Crayne and Associates before them, had an 800 number to find a training site—and MSF has an online inquiry and registration presence. Inquiries prior to MSF opening it’s own sites, found that call in and online prospective students were steered to “friends of MSF” sites even though those sites were farther than others who were owned by those who had criticized MSF’s BRC curriculum or administration.

Once MSF’s for-profit sites began operating, the 800 line and online site presented its own for-profit sites as viable options for students seeking a course—even if MSF-operated sites were farther away— being a “Friend of MSF” no longer helped to get business. When training numbers drop—even briefly—the small businesses became very vulnerable or went out-of-business leaving RiderCoaches and office staff without jobs, causing businesses to default on range contracts and motorcycle loans.

MSF for-profit sites, however, were still chock full even during the drop in training numbers.

In other cases MSF used the information it collected to approach colleges that rented range space to try to dissuade them from doing business with the small business and instead work with one of MSF’s favored providers—or MSF itself.

MSF also granted new sites within the territories of existing training providers even though wait times were well within the guidelines of the CHP contract. And they did so without informing the site owners that new sites—and therefore competition for business—were being established.

If MSF demands the same depth of information of New York small training businesses, they may find the same difficulties following.

A rough beginning As mentioned in an earlier entry, MSF wasn’t prepared to take over that program either—even though they had a similar lead time to do so. Contracts weren’t ready, Policies & Procedures, forms, etc. etc. weren’t available.

Communication problems were rampant—people couldn’t get through voice mail jail, didn’t get responses and, if they did, didn’t get the information they needed.

Other communication problems included MSF not informing site owners that certain forms that had been provided by Crayne and Associates had to be printed out by them now. Because of that failure, forms—and some new forms that MSF demanded—weren’t filled in and sent in. Then many site owners were upbraided by MSF employees and threatened that their contracts would be cancelled because of that. Such problems didn’t endear MSF to the site owners.

MSF sent out people to paint ranges to the BRC standards and many of them had never painted a range again. The ranges were painted wrong in many cases or so badly that they had to be painted again.

Given that MSF has begun in NY as they began in CA—other than the painting ranges problem, the other difficulties are to be expected.

Motorcycles

We’ve already been told that MSF will not provide motorcycles as MANYS did—it’s unclear, since Paulter won’t return my calls—if the NYDMV was aware of that when the bid was accepted. This means site owners have to buy their own—a huge expense that had not been anticipated in budgets.

But, with MSF keeping the prices the same for the next two years, site owners will have to absorb the cost into the current price structure—meaning they will be making less profit. Only by increasing training—if there’s demand during a recession where gas prices are lower and they have range and instructor availability—would they be able to make up the difference.

In California, even though MSF’s members are the manufacturers themselves, MSF did not help site owners find small motorcycles or get them a better deal on them. MSF wasn’t referring to availability and accessibility of motorcycles, then.

Paper money

MSF’s press release on its victorious takeover of NY state also bragged that “MSF RiderCourse Enrollment System, an online enrollment program for riders, will be made available at no charge to all New York State Motorcycle Safety Program subcontracted training sites to permit students to enroll in courses via the internet. This will enable MSF to transmit pertinent course completion information to the New York Department of Motor Vehicles within one business day of course completion.”

The question is whether “made available” means site owners can choose to participate or not? It’s not optional in other MSF states. In New Mexico, according to the report by Alavar to the Confederation of Clubs, only online registration was possible for students—as is the case in Pennsylvania.

New Yorkers can expect the same, iow.

How this effects small business owners: In California, Crayne and Associates supplied all the forms and so forth needed. This is the same case in New York under MANYS, according to Joe Aiello. “MANYS supplied all forms and materials to the site. Sign in/Sign out, accident reporting, Admin guides, student registration…everything. We had them printed and we even paid for the postage to have them delivered. This was the case for the RCP as well as the regular courses.”

As noted above, MSF does not supply those forms as printed materials. Instead documents are sent as .pdf files which the rider educator or owner has to print out for themselves.

In California under Crayne and Associates and under the first few years of MSF’s administration, site owners submitted all course paperwork to MSF who then put it into databases and the required reports were then sent to DMV. Data collection and entry was one of the major duties of the Primary Contractor, MSF.

MANYS operated the same way Crayne and Associates did, Aiello says, “MANYS did ALL processing for student data. Again, the sites were not charged. We also paid for all printing of completion cards, PIRP cards and even the mailing to the student. We also covered any costs for a reprint of these materials. The only thing the sites had to pay for was the $2 PIRP fee that DMV charged us per student (if the student requested PIRP) and the overnight mail cost to send the course records to MANYS.” That overnight fee was $10, he said.

In California, MSF changed all that and now site owners have to do all the data entry and print many of the forms required. According to site owners, it meant an additional 50 hours a month—especially during the busiest training system. Site owners had the choice of hiring a data entry clerk at minimum wage and then checking their work or putting in the extra hours themselves with the staff they had.

Printing out forms that used to be provided by Crayne and Associates added hundreds to the budget, according to site owners, over a year—but that was a small cost compared to the data entry work which resulted in driving up costs thousands of dollars.

More costs less profit

If MSF is to be believed, while it wasn’t paying those costs (and theoretically the state) the costs were just shoved onto the independent site owners.

While the course cost seem high to those in other parts of the country, the small businessmen who own these schools have small profit margins. Motorcycles and data entry could be enough to make those profits razor-thin—and that’s if gas prices remain low.

Readers should also remember that the price cap will remain for two more years. That price cap was set assuming those costs–motorcycles, data input, etc. would be borne by the adminstrator and not by the subcontractors. These additional costs to the site owner then will have to be absorbed within that price structure. As a result, the independent site owner’s situation may become more precarious.

MSF’s claim that it saved the state money is indeed true–but at the expense of the small businessperson. Big business, then, makes money on the backs of the little guy who’s just trying to make a living.

And I hate to mention the obvious–neither California or New York was spending all the money under the old administrators that they collected from special fees on motorcyclists. Not that this excuses wasteful spending–but it’s not as if less training happened because there wasn’t enough money for more. Money wasn’t the issue–and where are those states going to spend Two State Joes money if not on the motorcycle program? I’m just saying the ABATE folks were snookered by a false argument…and so is anyone else who thinks that MSF is going to “save” the state any money.

But MSF will certainly be able to replace any site owners that go down—stay tuned for the next entry.

Following the money–where MSF gets it, what it spends it on

March 24, 2009

Before we go back to how New Yorker small business training providers can expect their costs to go up, it’s time to take a look at the Motorcycle Safety Foundation’s finances:

Where MSF gets its money

Up until MSF began what Kawasaki trustee Roger Hagie described as “a march to take over state programs”, the manufacturers’ dues supported MSF. In 1998, for example, the manufacturer dues totaled $1,842,842 or almost 84% of MSF’s income and program service revenue brought in 16%—and none of that was borne by Joe the Motorcyclist through fees paid to the state on motorcycle registration and an motorcycle license.

The manufacturers benefited from that public image of generosity and public service—and even now MSF press releases include the names of all the manufacturer members at the bottom of every communiqué.

If anything could give justification for the complete control the manufacturers exerted over MSF it would’ve been that golden rule—“Them that pays the gold gets to make the rules.”

What a difference ten years and four state programs make: In 2007, manufacturer dues amounted to just 28% ($3,305,368) and program services amounted to 67% ($7,929,816) of MSF’s revenue ($11,809,185). And “rider training” accounted for all but 1% of that program revenue.

MSF’s revenues have gone up then about 500% in ten years with the vast bulk of that money coming from administering state programs. And that comes from all the Joe the Motorcyclist in those states. And remember, two of those states have seen their fees jump 150% after MSF took over–and two states had the price of the training course double.

Iow. Joe the Motorcyclist in four states now bear 66% of the expenses for MSF but the manufacturers still have 100% of control over what MSF does and how it spends that 500% increase in spending.

So let’s see what bang Four State Joe is getting for his buck:

How MSF has spent that 500% increase in revenue

Let’s go over some of those expenses. A few entries ago, I showed the change in legal fees. In 1998 MSF paid less than $18,000 in 1998 to almost $750,000 in 2007.

Iow, the motorcyclists in four states paid almost $495,000 so MSF could try to pressure Oregon into setting up a separate state program that would give the driver’s license-waiver to Harley-Davidson dealerships and prevent TEAM Oregon’s curriculum from spreading to other states. But Joe didn’t have a say in that.

According to Charity Navigator’s 2008 annual CEO compensation study, the average CEO of a nonprofit in the Pacific Western region earns $135,922. In 1998, the President of MIC/SVIA/MSF, Tim Buche, earned—with benefits—$168,430–iow, he already earned more than the average non-profit CEO earned ten years later. In 2007 he earned $312,412—almost twice as much as he earned in 1998. The greatest increases in Buche’s salary followed the acquisition of a state program. As a result, Four State Joe, who certainly hasn’t seen his salary double and may not even have a job now—underwrites Buch’s lifestyle in a million-dollar home with a 3-car garage in the front and a pool in the back on a hilltop in an upscale area of Yorba Linda.

In 1998, MSF claimed it had 22 employees and $375,283 was claimed in “Other salaries and wages” (not including the officers such as Buche). In 2007, with four state programs and the Discovery program, it claimed it had 36 employees and spent $1,279,293 for on the same category of salaries.

Of those 36 employees, 17 can be accounted for from the latest MSF Contact List. Add in Ray Ochs who  was left off of it for an unknown reason and that brings it up to 18. However, only three of those employees are listed with responsibilities for state programs.

Iow, Four State Joe is paying $844,333 for three employees that actually have anything to do with running state programs.

It’s not clear what category employees in the states that run the program for MSF such as PA state coordinator Dave Surgenor and NM’s program manager David Smith and staff employed directly in those states fit in . It could be in the above or “contracted personnel” below—or in some other category of wages—there are many:

In 1998, MSF spent $377,637 on “contracted personnel” and another $5,700 on “Outside Consultants” and $16,439 for “temporary help”. In 1998, MSF had hired several people, including Ray Ochs and Al Hydeman, to help develop the Basic RiderCourse and their wages fell in the first two categories.

In 2003, it was no longer developing curriculum but it did have three state programs under it’s administration, and it spent $511,549 on Contract Personnel, $10,605 for Outside Consultants and $1,114,065 on temporary help. Contract Personnel are those hired for projects such as someone like Dan Petterson who has been hired on more than one occasion by MSF (though not necessarily in that particular year).

Instructors who get their paychecks through MSF fall in the Temporary Help is the category. Four State Joe, then is getting the full bang for his buck there.

In 2007, MSF spent $628,189 for Contracted Personnel, $127,534 for Outside Consultants and $1,866,862 for temporary help. The 2007 990s also included a new category—RiderCoach Site Coordinators who were paid $406,590.

MSF does not pay instructors in the CA program except at sites it operates itself such as the Discovery Project, a co-funded project by NHTSA. That federal agency is obligated to pay almost half a million for that project. How much of the money spent in the categories above and below for expenses directly related to  the Discovery Project site is unknown.

In 1998, MSF spent $10,068 on insurance. By 2007, it spent $254,656 for liability insurance and another $25,119 in worker’s compensation (don’t you wonder why this expense is there? I do.) Four State Joe paid almost $168,073 of the liability insurance costs.

1998’s Staff Development cost $26,575 but 2007’s Professional Development cost $160,468. Four State Joe paid $105,908.88 of that amount–but were those costs directly related to professionals who worked in or for their state programs? Unknown.

In 1998, computer and IT related expenses cost $47,043 and in 2007, they cost $194,442 of which Four State Joe paid $128,331.72. MSF is now selling the software that Four State Joe helped pay for to other states.

These are just a few of the costs that appear to have nothing to do with the training that happens in Joe the motorcyclist’s state. Even so, Four State Joe bears the brunt of the cost. But what does MSF claim it spends on running state programs?

State Program related expenses

It’s impossible to separate out what MSF spends on its for-profit sites in California or costs of running chief instructor training and so forth from what is directly related to state program management. However, it falls under the description of “Safety Program Services”. The IRS 990 form in 1998 used the same explanation as it does in 2007: “a) Program Services—the objective of the program services department is to provide administrative, financial, material and technical support for rider training programs.”

However since the 66% of funding Four State Joe supplies to MSF’s revenue is listed as coming from “Rider Training”, state expenses might fall under “d) Training Program—Objectives are to provide training, and educational and licensing materials for rider instructor courses and state licensing examiners.” Otoh, that may only reflect how much MSF spends on its on for-profit training courses. Either way, the amounts are eye-popping:

Under Part II, Line 43 Other Expenses there’s a line item “Safety Program Services”. In 1998 the 990 form lists this expense as $106,594. Or approximately the costs of the New Mexico state program.

In 2003, and administrating three states, the expense was $1,195,312

In 2004, after adding California–by far the largest state motorcycle program in the nation–the expense was listed as $1,471,446.

Or up only $276,134 dollars.

In 2007, MSF claimed program services cost $2,799.698.

Iow, without taking on any more states or dramatically expanding its operations in those states, it cost almost double what it cost three years before.

However, many of the administrative, material and technical support costs that are supposedly in “program services” are also listed as expenses on their own and may give us a hint of what running state programs (as well as its own for-profit sites) costs MSF.

The next categories didn’t exist in 1998 but in 2007 they cost:

“Safety Program Implementation” $25,017

“Range supplies” $124,582 (This applies only to three states and MSF’s own for-profit sites in California).

“Instructor supplies” $10,210 (ditto)

“Quality Assurance” $174,596 (this includes all four state programs)

“RiderCoach Preparation/Training” $182,928. According to the SMSA survey, in 2007, 247 instructors were trained between Pennsylvania, New Mexico and California and almost $50,000 for training was paid by the candidates themselves.

There’s another category “Training and Seminars” with an expense of $3,944—it’s unclear what all this category includes.

“Enrollment & Support Services” $58,832

“Training site rent/maintenance” $177,866 (however, the sites in Pennsylvania used to be free—unknown if they still are). Three State Joe is paying for 69 sites in PA, 10 in NM and 10 in WV. If MSF now has to pay for all sites in each of the three states, it pays an average of $1,9998.49 per site. Or, it could be what MSF pays for its own sites in California. Who knows?

Expenses that also include MSF’s own expenses to run #2 Jenner Street but also may include state program and its for-profit site expenses:

“Offsite storage” in 1998, this was listed specifically as “offsite media storage” and cost $1,552. In 2007, it cost $68,328

Office maintenance was the only category in which expenses dropped in ten years—even though there were more offices to maintain: in 1998, it was a broader category “repairs and maintenance” and cost $25,184. In 2007, it cost $19,313.

Office supplies cost $22,585. In 2007 they cost $38,793.

Iow, many of those expenses listed above fall into the description of what “Program Services” is supposed to cover—and yet there’s almost $3 million claimed for that.

Whether these expenses seem reasonable or not is for others to decide. Or what “Program Services” expenses are compared to the line-listed items.

More money in, more money spent

Still, there’s been an explosion of personnel and their salaries and wages with many costs doubling or even having exponential increases.

The net result is that Four State Joe is underwriting a lot that seem to have nothing to do with training in their state—and have a great deal to do with MSF pursuing an agenda to throttle any free market competition both in the USA and in the world.

The Golden Rule No Longer Applies

It should be pointed out that though Four State Joe pays 66% of the expenses for all of MSF’s expenses, he has 0%—zero percent—of the power to determine where that money is spent and the manufacturers who pay only 28% of the expenses have 100% control over the organization.

What happens to costs when MSF takes over?

March 22, 2009

I read the NY Comptroller’s audit report on MANYS and the attached DMV letter in response today. I couldn’t help but notice that DMV’s Edward J. Wade, Director of Audit Services practically apologizes that MANYS was the administrator of the program, then he explains how it had to be because of how the law had been written, then he gloatingly took credit for the bill, S7405, that was rushed through the NY legislature last year in time for MSF to bid on the NY state program.

That bill was sold to both the DMV and the state ABATE as needed because “Due to the lack of competition, the cost of rider training in New York has risen to the highest in the nation. This lack of competition also impedes efforts to correct deficiencies in the performance of any coordinating organization,” according to this official communiqué from Pam Wright the state legislative officer for ABATE in 2008. Competition–that free market fundamental–is supposed to do what it’s supposed to do and benefit New York and its motorcyclists. So let’s see if that’s true:

Training, upstate, is $275 and in the NY metro area is $350 according to the Comptroller’s Report.

It’s certainly not the most expensive training in the nation. For example, Rider’s Edge in Glendale, CA costs $395. Lakewood, NJ is outside the exurban metro NY area but Rider’s Edge is still $350. Iow, brand name costs the same price that a private school operating a 1 ½ acre range in the most expensive real estate in the nation costs.

Non-brand name training prices are pretty comparable to other courses in the region, too. In NJ, for example, the non-profit Rider Training of New Jersey in Camden, NJ near Philadelphia, it costs $295. At Fairleigh Dickson University (with the mailing address of Hackensack, NJ) it’s $300. Rider Education of NJ charges $250 for training in locations such as Sussex, Middlesex or Randolph counties. If cost-of-living is considered, New Yorkers have an even better deal: The $275 course in Boston, MA seems cheaper NYC but it would cost $452 in Manhattan if cost of living is considered. The $250 course in LA would cost $372 in the city.

So I have to wonder—don’t these well-intentioned people do any research or do they simply believe what they’re told?

It also should be noted that MANYS hadn’t raised the price cap since 2005. MSF’s press release says it will keep the prices the same for two years and then raise them.

For this reason alone, the rationale given by NY’s ABATE and NY’s DMV that competition would be good for the cost of training is bogus. It won’t be—in fact, MSF has promised that the cost that’s supposedly the “highest in the nation” will go even higher.

Wade, in the DMV’s response to the Comptroller goes on to assure them, “The new contractor [the Motorcycle Safety Foundation] has a proven record of accountability and effectiveness with experience administrating the motorcycle safety program for four other states.”

Oh really? Just wait until you see what it costs after MSF takes over:

New Mexico

In 1997, the year before MSF took over training in NM, training cost $75 per adult student and there were 10 training sites of which most were mobile. In 1998, MSF got a $70,000 administration fee a year.

In 2002, the program trained 2,550 according to MSF’s “Cycle Safety Information 2003” with a budget of $302,059. Training now costs $150—double what it did before MSF took over.

In 2006, according to this report to the NM Confederation of Clubs, MSF trained 2,771 students (however, the SMSA survey states that 3,029 took the course—and 2,421 passed).

As of 2007, according to the SMSA annual survey, just three more sites had been added in ten years bringing the total to 13. MSF was getting $100,000 a year for administration. MSF had a budget of $485,00—$100,000 of which includes MSF’s administration fee.

Up to $454,350 in revenue came from student fees—iow, almost all MSF’s budget was met before money from the state collected in fees on motorcycle registration.

Training is still not happening in several areas of the state. And, according to the report to the confederation of motorcycle clubs, MSF wanted to raise the motorcycle registration fee from $2 to $5—a 150% increase—even though the vast majority of the training costs were borne by student course fees.

Pennsylvania

When MSF took over the Pennsylvania program in 1999, it also underbid the previous contract holder. Shortly after ABATE President Joe Dickey became an instructor, he spearheaded legislation that more than doubled the surcharge on licenses and registrations—strangely enough from $2 to $5—another 150% increase. MSF subsequently increased its fee for running the program when the contract was renewed. Training continues to be free for students in the basic course.

West Virginia

MSF took over West Virginia’s program in 2002. In MSF’s 2003 publication, Cycle Safety Information, it states it cost WV students $50 to take the BRC. The West Virginia Motorcycle & Safety Awareness site lists that as $100 today—double what it cost before MSF took over.

MSF also has significantly increased the fee it charges the state with every renewal of the contract though so far I’ve been unable to get hard evidence of fees—or numbers of students trained. WV does not participate in the SMSA survey.

California

MSF took over California in the same way that it took over New York. It also aggressively under-bid Crayne and Associates. It also claimed it “saved” Californians $400,000 however, the CHP liaison officer dryly pointed out that it didn’t save any money—it just hadn’t spent as much as it said it would up until that point—however, the contract wasn’t finished yet. Nor had it trained as many students as it said it had.

Like in NY, Crayne and Associates gave motorcycles to the sites. And under Crayne and Associates, sites were reimbursed $75 for each 18 and under student they trained. Both of those stopped when MSF took over.

Before MSF took over Harley-Davidson could not offer Rider’s Edge in the state and get the driver’s license-waiver. After MSF took over California, Harley-Davidson sponsored a bill through Assemblyman Rudy Bermudez to get the price cap taken off. A later version was worded it in such a way that it would remove all authority over the program from the California Highway Patrol. After Assemblyman Rudy Bermudez, lobbyists from Harley and CHP officials met, the CHP created a new classification for training—premier—that could charge up to $400 and Rider’s Edge could be profitably offered in the state. The price cap on standard courses remained and training now costs $250 because of the CHP—about a 21% increase over the $198 it was when Crayne and Associates had the program.

Just as that change was announced:

the CHP got a really great deal on Electra Glide police motorcycles.

The bill that would’ve stripped all power from the CHP over the program disappeared.

And Bermudez got a lot of donations from clients of the same lobbyist that Harley had used—who had never given to him before.

But in the months after that:

Bermudez narrowly lost his senatorial bid.

CHP decided that the wobble problem with the Electra Glides were so treacherous it decided not to purchase them.

Otoh, Harley got to get the driver’s license-waiver and charge up to $400 for the BRC all dressed up in black and orange.

Right now, there are only three states in the USA where Harley-Davidson’s Rider’s Edge is not offered. New York is one of them. Will it still be next year?

The idea that competition could keep training costs down when the only “competition” is the Motorcycle Safety Foundation isn’t borne out in MSF’s administrative history with the four states it already took over.

Aiello’s response to allegations

March 21, 2009

The following is the full text of the former MANYS administrator, Joe Aiello’s e-mail to the Associated Press. A few of the points below were in the rebuttal article published in Newsday.com. However, as the majority of my readers are rider educators, the additional detail may give you a broader or deeper—and certainly much longer—basis to judge whether the expenditures sound reasonable or not.

I am retaining the formatting as it was sent to me. Aiello put the AP article in italics. I added “Joe wrote” to indicate his responses. At times I will add something in from what he said in the earlier phone interview or what’s needed for clarification. That text is set off with [square brackets and blue text].

State Comptroller Thomas DiNapoli said Tuesday that the Motorcycle Association of New York State, based in New York City, is losing the contract it first secured in 1998 in the administration of Gov. George Pataki. The audit includes accusations against some of its top officials. Findings are being sent to the state attorney general’s office for possible further action.

Joe wrote: This paragraph makes it sound that we are losing the contract as a result of the audit. Also, untrue. The DMV sent out a press release in late January stating that the contract was awarded because the MSF underbid MANYS. The audit was only released at the end of last week. Details of this are in my previous letter to you. I will also state that the Comptroller’s audit was a year and a half in the making. If we were involved in such nefarious activity, don’t you think that they would have taken action a year and a half ago??

The state’s contract is worth about $6.4 million over five years. The spending by the association came during a period in which Mr. DiNapoli said the association failed to meet basic requirements of the contract including the establishment of enough training sites statewide.

Joe wrote: What the auditors didn’t understand (and apparently, still don’t) is that you just can’t wave a wand and, “Poof”, there is a training site. First of all, NYS has always had higher requirements in their range dimensions. We adopted a 200’ x 300’ minimum requirement for the ranges. The range also had to be free of any and all obstructions. We did not use modified ranges in NYS. This, incidentally, was a standard that was agreed upon with the DMV a number of years ago. I will also state that MANYS has never had a life threatening injury (let alone a death) in the program since it began operations in 1994. I firmly believe that this is because of the quality of the instructors as well as the increased range dimensions.

[It should be noted that, as far as we are aware, most state programs have never had either a life-threatening injury or death yet have smaller ranges. Aiello explained it this way—when he hadn’t had time to think of what he was going to say: He said, “No student has ever run into anything on any of our ranges” and attributed it to the larger range size.]

It wasn’t until October, 2008 that the DMV accepted the use of the MSF compact range to be used in NYS (though it must be noted that the original request from MANYS to have them accept this range was made in June ’08).

As far as opening enough sites…the auditors failed to mention that we did open more sites. However, they looked at sites that closed and didn’t give us credit for reopening new sites and simply offset the numbers.

That being said, understand that even though we didn’t meet the “pie-in-the-sky” numbers of training sites the DMV was looking for…we still exceeded all training numbers during the last contract period. The last contract period stated that a total of 57,000 riders should be trained during that 5-year timeframe. MANYS exceeded all expectations by training over 69,000 riders. This was an increase of over 20% above and beyond projections. All this was done at $1,000,000 UNDER budget. Yes, you read that right…one MILLION dollars UNDER budget.

The association’s contract expired in February.

The spending Mr. DiNapoli questioned included:

-A Ford Lariat pickup truck that was to be used for towing motorcycles. The truck had upgrades including premium wheels, “jewel-effect headlamps” and lots of leather and chrome, but couldn’t tow motorcycles. The truck didn’t fit in the association’s $300-a-month parking garage so parking meters were used daily.

Joe wrote: The Ford Truck is a Ford F-350 Super Duty Diesel truck. We needed a truck that could not only haul up to 14 motorcycles in a trailer at a time, but could also haul thousands of pounds of brochures, literature, give-aways, etc. for each time we participated in a motorcycle awareness event (as were contractually obligated to do). Also, this was not a new purchase but a replacement for a similar truck that MANYS purchased at an earlier time that was destroyed in a road accident. Since the beginning of the contract, MANYS always had a Pickup truck that was budgeted for and subsequently purchased with contract funds. Why is it all of a sudden an issue now?

[In the phone interview, Aiello said that the new Ford pickup was paid for, in part, by the insurance from the totaled pickup—lowering additional monies from the state to pay for it.]

Joe said: Secondly, they actually had the audacity to state we purchased a “tricked out” vehicle! What we boug [sic] was a standard, super duty F-350 that had back seats. The reason for the super duty was already explained. The reason for the back seats was so the truck could be outfitted with a cap and reclassified in its registration as a Suburban. Why? Simple, it would have to registered as a commercial vehicle otherwise which would severely impact where we could use it and even prohibit us from parking it in NYC overnight.

So, we took the lower-end trim level that was offered on the truck that met our requirements. We never added any packages and only took was offered in that trim level…which included bigger tires and the headlamps. Incidentally, the “jeweled headlamps” are nothing more than a fancy term for regular reflector headlamps. They are not HID or other exotic headlamps.

The final point is the parking space. Yes, MANYS rented a parking space in the building in NYC where the main office was located. Yes, the truck was too big to fit in the underground garage there so we utilized meter street parking. Why was it not mentioned that I MYSELF paid for every quarter that went into those meters and did not use state funds? Also, the space was utilized for the staff motorcycle that I explain next.

-A $13,000 motorcycle apparently used for one official to get to work.

Joe wrote: The motorcycle in question is a 2006 Honda ST-1300. With the 2004 contract, MANYS and the DMV budgeted $20,000 for a staff motorcycle. This bike was used (weather and purpose permitting) for travel all throughout the state to the training locations, speaking engagements, program promotions, etc. It was part of the original budget submitted to the DMV with the 2004 contract and approved. Do we even get credit for spending $8,000 less than we were budgeted for?

Oh, and did I mention that the auditors needed an explanation as to why we couldn’t just use one of the training bikes to ride around the state? It seems that they did not understand the issues of driving a 125cc bike, loaded with luggage and equipment, unregistered on public highways.

-A Chrysler 300 sedan one official took to Arizona when he semiretired, at a cost of $36,221 in leases and insurance. The state Department of Motor Vehicles subsequently disallowed reimbursement for the car.

Joe wrote: The former President and CEO of MANYS,[Mike Melis] as per the original cost proposal and budget submitted and approved by the DMV, was supposed to collect a salary of just over $100,000 per year. Also, there was supposed to be a 3% to 5% increase worked into the salary each year and even a budgeted (and approved amount) allocated for a year end bonus. The former President and CEO voluntarily reduced his own salary by 20% in the first year of the contract and then refused to take any increases or bonuses, so he could allocate funds to other projects in the program. The MANYS board of directors met and approved the leasing of a vehicle in lieu of the salary that was given up so the President and CEO did not have to continue using his own vehicle for all company issues.

When the president took ill and had to move (under advice of his physician) to another climate, he elected to reside at his house in Arizona. While he was still president and CEO of the firm, another person was chosen to take on the role of State Administrator of the program here in NYS. The President, believing that the leased car was in lieu of salary (which it was), took the vehicle with him to Arizona. The DMV initially agreed on this arrangement and continued paying the vouchers submitted monthly by MANYS which included the cost of the lease. It wasn’t until months later that DMV reversed themselves and disallowed the payments after the fact and reduced the outstanding vouchers by the amount they wanted to recoup.

-$13,000 for six hotel rooms for a 13-night stay during the State Fair near Syracuse, without a record of who accompanied association officials or the purpose of the trip.

Joe wrote: MANYS, as per our contract obligations, attended the State Fair in Syracuse for a number of years as part of the Motorcycle Awareness Program. Using its 42’ show trailer, it put out a huge display for the program. This display included a video system that would play public service announcements, training videos, etc., an audio system, a DWI awareness demonstration (with the help of the State Police) and even had 4 static demo bikes that are used in the program. MANYS staffed these events with volunteers from all over the state to meet the public, explain the program, give information on training and answer questions. We also hosted news events and interviews with the media.

[Those who attended the SMSA conference in Buffalo, NY, had the opportunity to tour the motorcycle awareness “show trailer”.]

Since people were working this event on their own dime (so to speak), MANYS took a block of room at a local hotel so the volunteers would have a place to sleep. Incidentally, it should be noted that we used the exact same hotel that the DMV used since they had a booth at the Fair as well. We would double and even triple up people in the rooms as they came and went to work the show and we provided a list of these people to both the auditors and the DMV.

It should also be noted that the State Fair is a HUGE event in Syracuse every year for the last 2 weeks of August and hotels generally sold out all rooms by March or April. So, MANYS took a block of rooms for the duration of the fair. If you do the math, for the 14 days (not 13 as reported) we were paying about $150 a night per room. This was well in line with all GSA per-diem expenses.

Finally, they question “the purpose of the trip”. How about “It was the State Fair that we were contractually obligated to attend?” Yes, I told them this over and over. I even reminded them that the DMV and even the Office of the State Comptroller was at the very same event each year!

[Aiello mentioned on the phone that the DMV also booked an adjoining block of rooms for their staff for the State Fair—and that’s how MANYS ended up at that particular hotel. However, I assume the DMV wasn’t using volunteers but paid employees to man their booth. Also Aiello said that tens of thousands of people were exposed to safety messages through the program’s presence at the fair.]

-$1,800 to maintain a trailer in Arizona with no record of its purpose or for who used it.

Joe wrote: For the last time, there is no trailer in Arizona.

Once again…there is no trailer in Arizona.

I can’t even begin to count the number of times I’ve said this.

What this really is: It was for modifications to a room in the then-President’s home so we could incorporate a disaster recovery hot site for all of the student and program records. We reasoned that since the student records were so high priority and held such critical and confidential information that it would be a good idea to use this place in Arizona as a hot site and disaster recovery location for all program records. As such, we put in modifications to the home that included a special air conditioning unit for the servers, fire boxes for storing tapes and DVD’s of the data, new installation of data and power lines for the equipment and drywall/sheetrock to partition the room. The name of the company that did the modifications happened to have the word “trailer” in their name and the auditors seemed unable to get beyond that point.

[Aiello explained this far better on the phone—it helps to remember this is a program centered in New York City after 9/11 and the Northeast Blackout of 2003. He said, specifically because of the black-out, the need for a disaster recovery site out of the area made sense to them—particularly since it didn’t require paying rent.]

-Thousands of dollars in air fare for association officials and their relatives, some of which was eventually reimbursed to the association.

Joe wrote: There are 3 points here and (surprise, surprise) no underhanded schemes.

The first point is that the former President and CEO was reimbursed for his trips from Arizona to NY when company business required his presence in NYS. This was standard practice and appropriate.

[Aiello said on the phone that Melis was running the program from Arizona for a time. He said it was no different than MSF running West Virginia, New Mexico, Pennsylvania—and now New York—from Irvine, California. Certainly, he said, employees of MSF obviously aren’t paying for their own airfare when they need to visit the state. Yet MSF is also receiving funding from the state. Iow, if DiNapoli had a problem with MANYS, just wait till it gets a load of MSF’s expenses.

Though that would depend exactly how the contract is written. In California, for example, MSF receives a fee for each student registered—and that’s where the bulk of the money comes in—rather than is reimbursed for expenses. This allows MSF to make a great deal of money above and beyond their costs.]

The second was a trip to Puerto Rico when the Association sent down members, at the request of the NYS DMV, to help start the Puerto Rico Motorcycle Safety Program.

[What Aiello doesn’t know and surely that this was flagged by DiNapoli’s audit is that MANYS involvement is a sore point with MSF as it wanted to be to be in control over the Puerto Rico program. Buche, according to sources, was enraged that MSF wasn’t put in charge.]

The final point was when an employee of MANYS, upon learning of the death of a family member in the Dominican Republic, booked a flight and erroneously used a corporate credit card instead of her own credit card. This was discovered upon her return only a few days later and was immediately corrected. This also took place a year BEFORE the audit but MANYS, in trying to be as forthcoming as possible, disclosed that the error took place to the auditors. So, yes, we made a mistake and corrected it as soon as it was discovered. As I told the auditors, we would do our best to ensure that any employee that loses a parent ensure that they use the right credit card during their grieving process.

[When Aiello described this on the phone, he said that the flight was booked within half an hour of finding out about her father’s death when the woman was overwhelmed with grief and made an honest mistake. Six days later—just six days later—when the woman returned to NYC, she discovered the error herself, reversed the charges off the corporate card and put it on her own.]

-37 motorcycles worth $47,515 that were missing, although 24 were eventually located and the others may have been dismantled for parts, according to the DMV’s response.

Joe wrote: Another 2 point issue:

First, at the time of the audit, the auditors visited some of the training locations to see if the bikes on record were indeed at the location. In some instances, they noticed the bikes on record were not at the locations and that bikes not on record were present.

The reality of the situation is that many of the Site Administrators in the program had more than one site and at the beginning of the season mixed up the bikes in their possession so some didn’t end up at the training location of record. However, all bikes assigned to them were still in their possession and accounted for.

There were in fact a few bikes that were removed from the program due to catastrophic failures (engine, gearbox, etc.) and these were dismantled and the parts cannibalized for the other machines.

The second point is that this is not something that we should even have to be audited on. You see, each and every bike in question was purchased during the previous contract period. At the end of that period, those bikes, as per contract, became the property of MANYS. So, these bikes in question were MANYS property at the beginning of the contract period we were being audited for and have nothing to do with this audit.

Some of the spending has since been reimbursed, according to the audit.

Joe wrote: Yes, as I explained, some expenses were reimbursed. What they fail to mention is that was done before the audit even took place.

[As a writer, this is just one of the many instances where the author deliberately phrases things to create the impression of wrong-doing. In this case, as Aiello points out the reimbursement proceeded the audit—and, as he didn’t point out, came years before any warning an audit was going to take place.]

Other violations of provisions of the contracted were found in a spot check of 50 of 82 instructors: 26 had no high school or equivalency diploma, four didn’t have current and valid motorcycle licenses, and two didn’t meet the minimum of teaching two beginning rider courses a year.

Joe wrote: Several points to address here.

First, it is a fact that the rules require that instructors in the Program have a High School or equivalency diploma. This is not the problem. The problem is that MANYS didn’t request a copy of that diploma be provided when individuals held jobs or positions that meant they had to have a high school or even a college diploma. So, no, we never asked for a paper copy of a high school diploma from people who were employed as police officers, engineers, educators/teachers/professors, state workers, military, etc. It doesn’t mean they didn’t have a diploma…we just didn’t have a copy of it on hand because their occupations required that they HAD to have one.

Second, the auditors requested a copy of all instructor training courses that were held during the audit period. They then looked at each candidate in those courses and asked for the training records for each of them. What they found was that some people had either stopped training or never pursued training in NYS after the certification course. So those that “didn’t meet the minimum of teaching two beginner rider courses each year” were nothing more than inactive instructors who weren’t teaching (well, in NYS at least).

Finally, when an instructor candidate wants to enroll in a instructor certification course, a copy of their license (or a copy of their abstract if they are licensed out of NYS) is given to MANYS who in turn forwards these records to DMV for approval. MANYS has no access to DMV license records so we rely completely on DMV providing the appropriate check and telling MANYS if the person is approved or denied. A copy of all this correspondence was given to the auditors. If something is wrong with the license, MANYS has no way of verifying this and relies on the approval (or denial) from DMV.

[Aiello also mentioned on the phone that—as all you rider educators know—instructors that don’t teach don’t get paid—so it’s of no “account” to the state if inactive instructors appear on a list.]

The contract provided thousands of motorcyclists with training to get licenses and to eliminate “points” for violations on their licenses.

Joe wrote: Absolutely correct. MANYS has trained over 110,000 students since 1998 and over 69,000 in the last contract period. MANYS is also a member of the New York State Points and Insurance Reduction Program (“PIRP”). This means that students who took the Basic Rider Course received a road test waiver as well as a points and insurance reduction card that lowers insurance for their cars and motorcycles by 10% for a period of three years and removes up to 4 points from their license if applicable.

Since it is mentioned in the article, how about mentioning that the PIRP benefit is no longer available now that the MSF has been awarded the contract?

[Aiello explained more about PIRP on the phone—this isn’t your standard insurance discount that saves a few dollars a year on a motorcycle—it can save drivers hundreds of dollars a year on insurance as well as be much more skill-oriented than “traffic school” while taking off points. One of the restrictions the bill passed in 2008 that allowed MSF to take over the state program was that the administrating organization be a member of PIRP. It’s unknown why MSF didn’t want to be a member. By removing the insurance discount, training, in essence, costs students hundreds more even though the course costs the same.]

The DMV agreed with many of the findings and is rebidding the contract.

Joe wrote: Nonsense! There were points in the audit that DMV may have agreed to but not the points listed in this article! Also, the 5 year contract was over on February 3, 2009 and the bid process started in October of 2008. They are NOT rebidding the contract.

[Once again, the way the writer worded it, it implies MANYS lost the contract because of these things rather than the contract had already been awarded long before the audit was completed.]

Officials for the association couldn’t immediately be reached at phone numbers in New York and in Arizona.

Joe wrote: When I spoke the Associated Press who wrote this article [He tried to find out also who wrote the article and never did. However, he did speak to a “Rick” who was an editor at the Albany desk], I asked what number they tried to call to speak with MANYS, since I contacted them the minute I found out about this article. We weren’t able to determine exactly how they tried to contact MANYS but nevertheless, I contacted them immediately.

[The line in the article above was not in the version of the article I first read before the sun came up. I sent e-mails shortly after reading it to Newsday and the Associated Press. Later in the day, this line appeared as part of the article.]

This concludes Aiello’s response to allegations distributed in the Associated Press.

Auditing the AP article on the New York State Motorcycle Program

March 20, 2009

Before the sun came up yesterday, I was watching Morning Joe and drinking my cuppa Joe I read an article on the Newsday.com site, “Audit: high spending at cycle training program” distributed by the Associated Press without any originating media source or attribution. I suggest you read the article first before reading the rest of this entry.

I don’t know Joe Aiello and had never spoken to him before I had read the piece. I know several people who do not like him (hatred is a more accurate word to describe one of them) or have their own problems with how MANYS ran the program. And, before the article had been published, I had heard from a trusted source that there was financial mismanagement of the program. If anything, I was predisposed to take the article at face value.

On a cursory read, it appears as solidly reported news. However one very obvious thing raised a red flag:

Although very serious allegations are made about MANYS no one from the organization was contacted for comment—nor is there even a “attempts to reach for comment were not returned”. Nothing. [NOTE: As I was going over Aiello’s response to AP, I discovered that a later version of the article on the Newsday site included at the very end of the article mention that whoever generated the article tried to get hold of someone from the Association. This was not in the article I read before the sun came up.]

That is not standard procedure in newsrooms and generally indicates its generated by vested interests. I myself would love to get comments from MSF on everything I write but they stopped responding to my requests years ago and I got tired of calling and e-mailing with no response. Had I unlimited minutes, I would, however, do exactly that–leave messages, send e-mails, wait interminably just so I could say that I tried.

What readers may not know is that AP also accepts press releases and other articles generated from public relations firms, etc. and prints them verbatim but without identifying them as such. It was not clear where this article orginated (and my efforts to find out through the AP have been unanswered).

I had to talk to Joe Aiello to get his side—after all, the Newsday article presented only what interests such as MSF would want out there. Otoh, my friend had shared the rumors—so maybe there was fire under the smoke.  I was able to speak with him yesterday and asked him some hard questions on the phone yesterday morning. He was unaware that an article allegedly finanical misbehavior had been printed. Being uwaware he was also unprepared and that’s a good time to ask someone questions. I took good notes, which I will share with readers.

I also have a call into Bill Pautler, at the NY DMV, but he has not returned my call as of yet.

Later in the day I received an e-mail that Aiello had sent to the Associated Press—and Newsday.com did publish an article that addressed many things he said in that e-mail. And I suggest you read the followup article, too. In the next entry I am posting Aiello’s entire rebuttal uncut.

But before we let Aiello present his side, I believe it’s important that you know what I knew as I read the article in the first place. It’s background information that may give you a different perspective that may help in evaluating what both sides have gotten into print in the mainstream media:

As I had revealed long ago on the old Journalspace blog, in late 2004, employees at the Motorcycle Safety Foundation saw a document called a “hit list” that listed the states that MSF planned to take over. New York topped the list. At that time, MSF had just taken over the California program and MSF was struggling to get that program up and running (almost as badly as they’re handling NY now). The next time the NY contract was up for bid was the fall of 2008–and MSF, as we know, moved to take over the state. But they didn’t wait until the fall to begin.

In May 2008, a bill was introduced in the NY Senate, S7405 that removed requirements that would prevent an organization such as MSF from taking over the state program. The need for this modification was explained as “…this bill would encourage competition among motorcycle rider training coordination organizations to provide the highest quality training program at the lowest cost to riders.”

There are, however, extremely few “motorcycle rider training coordination organizations” in existence–and now there are less. In fact, the only two I can think of: the first was the one that used to be in California–Crayne & Associates–they lost the bid to MSF–and MANYS which lost the bid to MSF. It is fair to say that the bill was passed that benefited only one such entity—the Motorcycle Safety Foundation was the only corporation that could compete with MANYS. No other organization that met the legislative definition was prepared to bid on the program.

Astute readers will recall that a bill is currently before the New Jersey legislature that would also remove obstacles that would prevent MSF from taking over that program and that such language is already in the bill before the Mississippi legislature that would establish a state program. New Jersey was also on the “hit list”.

Just 2008 was the first year MSF could respond to the RFP, 2008 was the last year such a bill could be passed in time to bid on the program.

At the same time, MANYS had already allowed Lee Park’s Total Control to operate as a state-authorized program and Park’s program was going to expand greatly this year. Parks, it is rumored, is coming out with a novice training program.

MANYS had also planned to start offering a sidecar course this year that would use Evergreen Council’s curriculum instead of MSF’s new sidecar course.

Aiello was also going to allow independent contractors who wished to use TEAM Oregon’s curriculum to do so under the state program.

Otoh, he had no problem letting Rider’s Edge in either—as long as they met the requirements for ranges, instructors and so forth.

As he said, if the program was good, whatever would get students in to take a course was good for New York.

MSF’s takeover then was just in time to prevent any other curriculum than its own from being taught as part of a state program.

After I had read the Newsday article I went back to the source who had heard the rumor of financial misdealing to find out how he had heard. The rumor was being spread by someone who stood to benefit from MSF taking over the program from MANYS. And it also turned out that he heard the rumor before MSF was awarded the contract—and weeks before the audit was done. That, then, also influenced how I looked upon this conveniently timed article.

Such tactics–making allegations of misdeeds fits MSF’s modus operandi from its takeovers of other states. It’s also how it deals with critics in general. Not only that, Tim Buche had insinuated to me, Dave Searle and Fred Rau similar financial misbehavior about Crayne and Associates, Doug Fitts and Hoot Gibson shortly after MSF had taken over the California state program—none of which turned out to be true. In the same interview, Buche also insinuated similar thing about TEAM Oregon, too—and that didn’t pan out either. In fact, he told me specifically to “follow the money”. Which I did–though I didn’t think he imagined I’d follow MSF’s money.

The Motorcycle Safety Foundation also has claimed it’s come in as the savior of troubled state programs in each of the states it’s taken over. So I had to consider the possibility this was yet another case of Yogi Berra’s déjà vu all over again.

I also had to wonder about the timing of Thomas P. Di Napoli’s (D) involvement in this article. Di Napoli has been politically ambitious from youth and who had been an Assemblyman before he tried to run for Lt. Governor but bowed out after Spitzer of the so-ethical-and-yet-so-involved-in-a-prostitution-ring fame chose another running mate. Di Napoli then set his sites on becoming Comptroller. He promised to be an  ethical wunderkid—just like Spitzer had promised to be if he was elected Governor. The NY Comptroller is the sole trustee of the $154 billion-dollar NYS pension fund. According to an article published by the NY Times on March 14th—three days before the audit article on MANYS—Di Napoli “also routinely accepts contributions from those seeking to do business with his office, from investment firms, executives and law firms to intermediaries known as placement agents.”

Questions have been mounting about how he manages that multi-billion dollar pension fund and some of the deals he’s been making. So it’s a little odd he gets concerned about supposed financial misdeeds of a non-profit that—even if they had been true—would amount to chump change compared to the shenanigans he’s now suspected of doing. The original article alleged misdeeds that amounted to very little money—however, when AP contacted Di Napoli’s office for comment on the rebuttal suddenly Di Napoli’s office is claiming several hundreds of thousands of dollars were misspent. So which is it?

All of which begs the question because MANYS didn’t lose the contract because of these supposed misdeeds but because MSF submitted a lower bid. Yet the article implies that was the cause. Once again the timeline is important:The contract was awarded in January. The audit wasn’t done until the second week in March. So why would this article suddenly appear and allege financial problems?

Nor was the audit that’s just been completed the first that had been done on MANYS. The politics of rider ed in NY has always been highly contentious—two separate individuals both felt they and they alone should run the program and both separately on more than one occasion created rumors of financial mishandling and audits were subsequently done. In every case MANYS passed. The timing of this one—just as MSF takes over yet another state—becomes interesting and particularly so when allegations after it’s done are published—and…well, you’ll see.

Given the background, then, this article that smears MANYS is awfully convenient as it serves the interests of the rich and powerful in a way that does not serve motorcyclists or the small businessmen that operate the training courses in NY, and it does not serve the truth.

So that’s the broader picture–and the reason that no one should take anything at face value that appears in the media. Including this blog. Ask questions, look for agendas, and always give it the old smell test: who gets power, who gets power, who has the vested interests. Critical reading–a very good skill.

So this–or the next entry is not to say Aiello isn’t the epitome of the stereotypical Brooklyn boy and rather off-putting as a result. Nor is it to say MANYS did a particularly good job running the NY motorcycle program. He could be a total jerk for all I know and the program run poorly.That’s not the issue.

It is to say that it fits a pattern that’s happened over and over of alleging that MSF comes in the savior for poorly run programs, a pattern of smearing opponents and predecessors and a habit of cozying up to influential politicians with runaway ambitions.

Still, there have been allegations made—and the rebuttal that AP consequently published not only didn’t give the space for Aiello to address each allegation. Otoh, it gave Di Napoli a chance to rebut the rebuttal. And that’s just wrong since Aiello didn’t have the opportunity in the first place.

Therefore, it’s more than fair to let Joe Aiello have a chance to tell his side of the story—and that entry will be up tomorrow.

MSF holding rider training hostage in New York

March 19, 2009

The training season in New York officially began March 15 and runs until November 15—though only the southern part of the state can train for the whole six months. However, according to two sources—all training providers have been told by the Motorcycle Safety Program that they cannot offer any training. MSF also has refused to sell handbooks to the sites until the DMV signs the statewide administration contract. All RERPS for programs, ranges and instructors have been cancelled.

MSF who was awarded the New York state contract at the end of January is still in negotiations and has not yet signed the state contract. No sites have finished the application process or received contracts. No ranges have been approved. There is no Policies & Procedures yet in place—nor anything else required to actually run a state program.

For all intents and purposes, MSF is holding training hostage as spring brings out the bikes—and the highest accident rates of the year.

It’s reported that some sites contacted the DMV directly and asked what they should do and were told to go ahead and train. It’s unknown if, without RERPS on the provider or range, insurance would cover an incident should one occur.

Some sites did go ahead and offer training anyway last weekend. Others were too afraid to potentially alienate MSF or to take on the additional risks they might incur without a contract, RERP or certainty insurance would still cover them.

However, even if the DMV gave permission and the owners were willing to risk it, some sites don’t have enough handbooks in stock and some are in danger of losing their range space they rent without a contract. Conversely, if they can hang on to the range, they are locked into contracts with New York real estate prices without even knowing if they will be offered a contract by MSF.

MSF’s failure to have acted in a timely manner also means that independent providers are in danger of not only losing sites, but they’re already scrambling with hugely unanticipated costs of buying motorcycles that the previous administrator, MANYS provided.

But without money from students being trained coming in, these small businesses also are in danger of losing their businesses all together—and instructors in danger of losing employment at a time when many are worried about their own finances.

Given the severe economic situation of the country, this couldn’t have happened at a worse time. Given that spring is the both the most seductive time to ride a motorcycle after a long winter and yet is the most dangerous time of the year to ride, this couldn’t happen at a worse time either.