Executive Summary

When the politically powerful, not the competitive marketplace, determine winners and losers in America’s business decisions, taxpayers take on all of the risk and crony companies extract the profits. The cycle of political profiteering is born when politicians exchange public subsidies for campaign contributions. This method of using the government to profit has become a trademark of one of the largest publicly traded real estate development companies in the United States: Forest City Enterprises.

Forest City Enterprises (FCE) is a $10.6 billion company that most Americans have likely never heard of, even though the public finances twenty-three percent of FCE’s revenue. The FCE business model is dependent upon political profiteering: relying on public money and government influence to reap millions in profit.  Using highly paid lobbyists, political connections, campaign contributions, and strategic hiring of government officials, FCE obtains lavish public subsidies, tax-exempt financing and the seizure of private land from eminent domain condemnations.

The following report exposes the money trail between FCE and its political friends that have resulted in a decade of kickbacks for both FCE and politicians. Between 2002 and 2012, FCE, its subsidiaries, and its employees spent $23 million on campaign contributions and lobbying at the federal, state, and local level. FCE even went so far as to coordinate donations among employees in its project locations: $15.4 million of the $23 million in contributions were made by multiple employees of FCE on the same day. During that same time frame, FCE and its subsidiaries received or signed agreements for fifty-two direct and indirect government subsidies or financial benefits with a total value of at least $2.6 billion. The subsidies amounted to twenty-three percent of FCE’s $11.4 billion revenue during that time period.

The FCE business model is one that damages competition in the market by abusing market mechanisms in ways that capitalizes off government handouts. This report is Part One of a three-part series examining how Forest City Enterprises uses politics to profit.

FCEGraph

 

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Preview of subsequent reports:In the reports that follow, resulting from Cause of Action’s two year investigation, CoA will show how FCE took public benefits under the premise of providing jobs for minority workers but failed to deliver as well as how FCE enriched itself through bribery and political graft, without ever being subject to investigation or oversight.

Subsidy and Political Spending Data:

Forest City Enterprises Data

Emails from Forest City Washington’s Alex Nyhan to former colleagues at the District of Columbia (D.C.) Office of the Deputy Mayor for Planning and Economic Development

Forest City Washington Emails

Full FOIA Production

 

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