Monthly Archives: March 2009

Owner Quashes Rumors That Ace Paving Will Close

We’ve heard several rumors the past several weeks that longtime Kitsap construction giant Ace Paving is closing. They’re not true.

Co-owner Roy Christopherson said the 62-year-old company kept fewer workers busy this winter than it usually does. It normally has enough work for about 15 people, but generally keeps 25. This year it cut back to 15.

“This is a little more severe than I’ve ever seen it in over 40 years of being at the Ace Paving Company,” Christopherson said.

Weather conditions don’t allow for much paving from Oct. 15 to May 15. The ground can’t be too cold, and the air can’t be too chilly or wet.

“Everything is normal for road construction at this time of the year,” Christopherson said of the company’s activity.

Ace is paving the Bremerton tunnel project, did the temporary lanes around the Burley-Olalla Road work at Highway 16 and expects to get several state jobs around the county, as usual.

Driveway work tailed off as the economy tanked and oil prices spiked. People can get by driving on dirt or crushed rock, he said.

Christopherson called rumors of Ace’s demise “just a lot of nonsense.”

“I get really exasperated trying to explain what is perfectly normal,” he said.

– Ed Friedrich (filling in briefly for Rachel while she’s on vacation)

Kitsap Has In-Home Hospice Care Contenders

By Rachel Pritchett

A battle is brewing over who should provide in-home hospice care in Kitsap County.  

The director of the largest current provider, Hospice of Kitsap County, says two potential newcomers being considered by the state could seriously affect the care his organization now provides to the dying.

“This can easily damage us,” said Jim Pledger, executive director of Hospice of Kitsap County.

The state Department of Health recently determined that Kitsap County could accommodate one additional provider of in-home hospice care. Hospice care providers dispatch nurses, aides, therapists and dietitians to patients’ homes.

Hospice of Kitsap County is the largest local Medicare-certified provider. The other, Group Health Cooperative of Puget Sound, provides in-home hospice care for enrollees in its programs.   

Not one, but two other organizations want to join Hospice of Kitsap County in providing services locally. They are Tacoma-based Franciscan Health System and HCR ManorCare, based in Toledo, Ohio.

To help decide who the winner will be, the Department of Health will host a public hearing at 10:30 a.m. Wednesday at the Sylvan Way branch of Kitsap Regional Library. Its decision is due June 23.

Pledger said numbers that the Department of Health used when it determined there was need for one more provider were from 2005 through 2007, but not 2008, when Hospice of Kitsap County was able to take on
20 percent more patients with its new hospice-care center in Bremerton.

“To me, that’s the real fantasy of this thing,” Pledger said.

He also said that Franciscan and HCR ManorCare are huge organizations with deep pockets. Hospice of Kitsap County, by contrast, is a stand-alone organization, which puts it at “a distinct disadvantage.”

Pledger said his organization’s programs, such as bereavement help in schools and the workplace, would go by the wayside.

“If we were to become financially strapped, those are the programs that would go first,” he said.

Representatives of Franciscan Health System, the biggest in-home hospice provider in the state, have a different perspective.

“What really we’re about is that all residents of Kitsap County have access to good hospice care,” said Mark Rake-Marona, Franciscan’s director of hospice and palliative care. 

He said that with its just-opened hospital in Gig Harbor, St. Anthony Hospital, Franciscan is in an excellent position to provide a continuum of care.

“I would say it has served us well to be connected with the hospital,” Rake-Marona said.

In addition, it has Franciscan Hospice House, a 20-bed inpatient facility in University Place.

Franciscan staff would make visits throughout Kitsap County, he said. No facility would be built here, “at least for the time being.”

Franciscan has shown an interest in Kitsap dating at least back to 2006, when it opened its Port Orchard Medical Clinic.

“Our demographics of Kitsap are that not only is it growing, but the demographics of the older population is growing,” Rake-Marona said.

Franciscan Health System has five Puget Sound hospitals including St. Joseph Medical Center in Tacoma, a group of clinics, its hospice house and foundation.

HCR ManorCare’s Web site states it is the nation’s third-largest provider of hospice care, with a presence in about 110 markets. 

It has 60,000 employees working in 500 health-care centers of various sorts. Its in-home hospice care program is known as Heartland Hospice.

The public meeting promises to be interesting.

Pledger, of Hospice of Kitsap County, is not impressed with the process.

“We have the capability to serve anyone and everyone in this county that needs hospice care,” he said.



The Washington State Department of Health will hold a public hearing at 10:30 a.m. Wednesday at the Sylvan Way branch of Kitsap Regional Library, 1301 Sylvan Way in Bremerton, to consider applications by two organizations to provide in-home hospice care in Kitsap County. The organizations are Franciscan Health System and HCR ManorCare. There will be opportunities for public comment, and written comments will be accepted, as well. For more information, contact Karen Nidermayer with the Department of Health’s Certificate of Need Program at (360) 236-2957.

Last Dish Washed at Angel’s Homestyle Buffet

By Rachel Pritchett


Angel’s Homestyle Buffet has closed.

The news caught some by surprise Wednesday, who pasted napkins on the restaurant’s shuttered door telling friends they’d meet them them at China Buffet instead, or impromptu notices of clubs’ hastily made arrangements used to coming to this modest and aging eatery for eyars.

The all-you-can-eat restaurant, in a rambling 7,200-square-foot building behind Family Pancake House on Wheaton Way, also was a popular meeting spot for clubs, community groups, celebrations and even a memorial service or two.

The building at 4111 Wheaton has been an all-you-can-eat joint for three decades, at one time a Royal Fork and a King’s Table. The Angel’s name came from a customer contest back when Wayne Turner owned the business, according to one of the current owners, Mike Mathwig.

Mathwig conceded it’s rough to run a restaurant during a recession, especially when there are about 15 of them in the immediate area.

And located behind Family Pancake House, out of immediate view, didn’t help.

But the hardest part of making money was controlling food costs. Waste among customers was rampant, and food theft was common. Customers routinely brought in little bags or plastic containers for their own free take-out.

“You think that it’s not that prevalent, but it is,” Mathwig said.

“They just throw the whole plate away and start over again.”

Those uncontrollable costs mean an all-you-can-eat restaurant has to have a lot more customer volume as a regular restaurant, maybe three times as much, to make money.

“It just wasn’t getting the volume,” he said.

Raising prices was difficult, because then you were hurting some elderly, mainstay customers who were only taking what they needed.

“I almost felt like you’d make more money by charging how little you wasted,” said Mathwig, who worked for many years in his dad’s restaurant.

There were other problems. 

“That place was old, needed some work,” Mathwig said.

Mathwig and his partners, which include other Mathwig family members and others, owned the building for some time, and inherited the business a couple of years ago.


So now, the building and business is for sale, as community members look for other places to meet.

“They can have a good deal on it,” he said.

Easy Ride Today for Locke for Commerce

WASHINGTON (AP) — Former Washington Gov. Gary Locke faced mostly friendly questions at his Senate confirmation hearing Wednesday for his nomination as commerce secretary.

He was introduced by Sens. Patty Murray and Maria Cantwell of Washington.

The former two-term Democratic governor must be approved by the full Senate before joining President Barack Obama’s Cabinet. Locke is Obama’s third nominee for the Commerce post.

New Mexico Gov. Bill Richardson withdrew amid questions about the awarding of state contracts. And Republican Sen. Judd Gregg of New Hampshire changed his mind about working for a Democratic president.

If confirmed by the Senate, Locke would assume control of an agency that oversees international trade, oceans policy and the 2010 census.

AIG Chief: Bonuses ‘Distasteful’ But Too Bad

WASHINGTON (AP) — The chief executive officer of failed insurance conglomerate AIG acknowledged Wednesday that the company’s multimillion-dollar bonuses were “distasteful” to many and had provoked a firestorm of wrath.

“I share that anger,” Edward Liddy, chairman and CEO of the American International Group Inc., said in testimony prepared for Congress.

Lawmakers from both parties expressed fury over the company’s behavior. For the American public, AIG now stands for “arrogance, incompetence and greed,” said Rep. Paul Hodes, D-N.H.

Liddy, in his written remarks, said, “Mistakes were made at AIG on a scale few could have every imagined possible.”

But, he also said that the roughly $165 million in bonuses paid out over the weekend should be honored as a legal commitment of the United States government, which now owns 80 percent of the battered insurer.

“When you owe someone money, you pay that money back,” Liddy maintained. “We at AIG want to believe that we are all in this together,” said the man named six months ago to take over the company as part of the government rescue. Some $170 billion in tax money has now been pledged to AIG.

Meanwhile, the agency that oversees AIG said that, while its criticism of the company’s practices had sharpened over the past five years, it failed to recognize the extent of risk posed by the exotic financial instruments the insurance company offered, many of them tied to a housing market that had long been rising.

Scott Polakoff, acting director of the Office of Thrift Supervision, said regulators failed to accurately predict what would happen to AIG’s so-called credit default swaps — a form of insurance — if housing values collapsed, as they have. “There are a lot of people walking around who failed to understand how bad the real estate market had gotten,” he said.

Liddy’s stance that the bonuses should be honored, no matter how distasteful, drew sharp comments from both parties.

It is “time for us to assert our ownership rights,” said Rep. Barney Frank, D-Mass., chairman of the full Financial Services committee. Frank said Congress will be asking for the names of the bonus recipients — and if AIG declines to provide it, he will convene the committee to subpoena for the names. “We do intend to use our power to get the names,” he said.

Rep. Scott Garrett of New Jersey, the senior Republican on the subcommittee, complained that the administration still has no exit strategy for disentangling itself from the insurance giant.

“Part of me wants to say to some of the loudest critics, `What did you expect and why weren’t you asking more questions before?’ I would argue that the real outrage now is the $170 billion of taxpayer moneys that’s been pumped into this company and to what effect,” he said.

Rep. Gary Ackerman, D-N.Y., cited a “tidal wave of rage” throughout America right now.

AIG is under fire for $220 million in retention bonuses paid to employees in its troubled financial products division. The most recent payment of $165 million began to be paid last Friday and caused a furor.

The retention payments — ranging from $1,000 to nearly $6.5 million — were put together in early 2008, long before then-Treasury Secretary Henry Paulson asked Liddy to take over the company. Liddy himself is not getting a bonus and is only drawing $1 a year in salary.

Liddy also said in his prepared testimony that AIG grew into an internal hedge fund that became overexposed to market risks. AIG is the largest recipient of federal government emergency assistance.

“No one knows better than I that AIG has been the recipient of generous amounts of governmental financial aid. We have been the beneficiary of the American people’s forbearance and patience,” he said. But he also said that “we have to continue managing our business as a business — taking account of the cold realities of competition for customers, for revenues and for employees.”

The clamor over compensation overshadowed AIG’s weekend disclosure that it used more than $90 billion in federal aid to pay out to foreign and domestic banks, including some that had multibillion-dollar U.S. government bailouts of their own. AIG is the single largest recipient of government assistance — a company whose financial transactions were so intricate and intertwined that it was considered simply too big to fail.

Orice Williams, director of financial markets and community investment at the Government Accountability Office, the government’s top watchdog agency, told the panel that the government’s intervention helped AIG avoid failure, but that the company is still struggling to pay back the money.

Market and other conditions have prevented the insurer from making significant asset sales, she testified. She said most restructuring efforts are still under way.

Liddy said the company’s new management team found its overall structure “too complex, too unwieldy and too opaque for its component businesses to be well managed as one company.”

He said the new managers have “addressed our liquidity crisis and stabilized the company’s cash position” and is winding down the financial products side of the business.

The White House and Treasury Secretary Timothy Geithner, both of whom have condemned the bonus payments, have been pounded by questions about why they did not know about the bonus payments sooner.

The White House for the first time on Tuesday night said Geithner learned of the impending bonus payments a week ago Tuesday; he told the White House about them last Thursday, and senior aides informed President Barack Obama later that day.

Geithner said on Tuesday he was working with the Justice Department to find ways to recover some of the payments. He cited a provision in the recent economic stimulus law that gave him authority to review compensation to the most highly paid employees of companies that already have received federal assistance.

Prosecutors Charge Madoff’s Accountant With Fraud

NEW YORK (AP) — Bernard Madoff’s longtime accountant was arrested on fraud charges Wednesday, accused of aiding the man who has admitted cheating thousands of investors out of billions of dollars in the past two decades.

The charges against David Friehling, 49, come as federal authorities turn their attention to those who they believe helped Madoff fool 4,800 investors into thinking that their longtime investments were growing comfortably each year. Friehling is the first person to be arrested since the Madoff scandal broke three months ago.

Friehling ran an accounting office in a nondescript suburban building north of New York City, and quickly drew scrutiny. Experts in accounting said it would be preposterous for such a tiny firm to audit properly an operation the size of Madoff’s.

He had served as Madoff’s auditor from 1991 through 2008 while he worked as the sole practitioner at Friehling & Horowitz. He was paid a tidy sum by Madoff: Prosecutors said he made between $12,000 and $14,500 a month from 2004 to 2007. That works out to $144,000 to $174,000 a year.

Friehling faces up to 105 years in prison if he is convicted. He is charged with securities fraud, aiding and abetting investment adviser fraud and four counts of filing false audit reports with the U.S. Securities and Exchange Commission.

Friehling’s lawyer, Andrew Lankler, did not immediately return a phone call Wednesday. The accountant had a court appearance Wednesday afternoon in federal court.

Acting U.S. Attorney Lev L. Dassin said in a release that Friehling is not charged with knowing about Madoff’s Ponzi scheme.

However, Dassin said: “Mr. Friehling’s deception helped foster the illusion that Mr. Madoff legitimately invested his clients’ money.”

In a Ponzi scheme, early investors are paid with money raised from later investors.

The SEC said Friehling did not meaningfully audit Madoff’s business or confirm that securities purportedly held by Madoff’s company on behalf of its customers even existed.

The SEC said Friehling instead pretended to conduct minimal audit procedures of certain accounts to make it seem he was conducting an audit and then failed to document his purported findings and conclusions as he was required to do.

The agency said if Friehling had done his job, Madoff’s financial statements would have shown his company owed tens of billions of dollars to his customers and was insolvent.

The SEC accused Friehling of lying to the American Institute of Certified Public Accountants for years, denying he conducted any audit work, because he was afraid that his work for Madoff would be subject to peer review.

Prosecutors said that as far back as 1995, Friehling failed to maintain professional independence from Madoff. They said he or his wife had an account with Madoff that exceeded $500,000, the maximum amount under SEC rules that an auditor can invest with a client and still maintain independence.

The strain of the Madoff scandal on Friehling began to show in recent months as he put his luxury home in Rockland County on the market.

A listing posted on the Web site of Prudential Rand Real Estate said the family is seeking $995,000 for the five-bedroom Colonial. The home was built in 1990 and has a swimming pool and 4,437 square feet of space.

The fraud charges against Friehling come just days after the founder of his auditing firm died of cancer. Jerome Horowitz died last week at the age of 80, a family friend said.

Horowitz handled Madoff’s books for many years before turning the business over to Friehling, who is his son-in-law.

Horowitz’s lawyer had previously described him as one of Madoff’s victims and said he was in financial ruin because of the fraud.

Madoff, 70, pleaded guilty to securities fraud, perjury and other charges on Thursday and was immediately sent to prison to await a June sentencing, when he faces up to 150 years in prison.

During his plea, Madoff said he began a Ponzi scheme in the 1990s in response to the pain of a recession, thinking it would be a short-lived solution. He said he never recovered, though, and knew prison awaited him.

As recently as November, Madoff notified investors that they had about $65 billion in their accounts. Investigators say they have recovered only about $1 billion.

Prosecutors have said they believe Madoff’s fraud started in the 1980s.

Kitsap Gas at $2.17 Today, Down a Nickel Over Last Month

Oil tumbles on new US inventory report

NEW YORK (AP) — Oil prices slumped Wednesday on a government report showing that crude and gasoline inventories are bulging with surplus supply.

Benchmark crude for April delivery fell $1.37 to $47.79 a barrel on the New York Mercantile Exchange. The Nymex April contract will expire Friday.

In London, Brent prices fell $1.45 to $46.79 on the ICE Futures exchange.

The Energy Information Agency reported crude inventories rose 2 million barrels for the week ended March 13, in line with analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.

However, gasoline stocks surged by 3.2 million barrels, which shocked analysts who had expected a draw down of 2.1 million barrels.

“This is throwing a little cold water on what people have been saying” about a rebound in oil prices, said Andrew Lebow, senior vice president and broker at MF Global in New York.

Prices have recently been bolstered by renewed optimism in stock markets, which some oil traders use as a barometer of overall investor sentiment. Still, months of massive layoffs, falling consumer demand and weak corporate profits have left some traders wary that the drop in crude demand reached a bottom.

“We’re seeing a bit of a sell-off after such a strong run-up” in oil prices, said Michael Lynch, president of Strategic Energy & Economic Research.

The Commerce Department said Wednesday the deficit in the broadest measure of U.S. trade fell sharply in 2008 for the second consecutive year. Economists expect imports to shrink even more as the recession cuts into consumer buying power. The global recession is also cutting into U.S. exports.

The World Bank said plunging exports continue to harm China’s economy and cut its forecast of China’s 2009 growth from 7.5 percent to 6.5 percent. Still, World Bank economists said they were confident in Beijing’s ability to expand the world’s third-largest economy despite the global turmoil.

“We see China as a relative bright spot in a rather gloomy global economic picture,” said David Dollar, the bank’s country director for China.

In Britain, the country’s unemployment rate rose to its highest level in 12 years. The Office for National Statistics said more than 2 million people claimed unemployment benefits in January.

Meanwhile, OPEC has been slashing production in hopes of drawing down a global surplus of crude. With oil trading well below OPEC’s comfort level, the national budgets of some member countries are under strain.

“Harmfully low prices are creating a damaging ripple effect, with diminished oil sector investments threatening the availability of much-needed future supplies,” Saudi Arabian oil minister Ali al-Naimi said.

On Wednesday, Iranian Oil Minister Gholam Hossein Nozari said that a plunge in crude prices has forced his country to pull money from other parts of its budget to support the oil industry.

Nozari, who spoke at an OPEC meeting in Vienna, told The Associated Press that while some fields were still profitable at current prices, production at others had to be subsidized to maintain output at over 4 million barrels a day.

Falling oil prices also forced Iranian President Mahmoud Ahmadinejad to propose an unpopular tax hike and plans to scrap costly state subsidies for fuel, water and electricity.

The Organization of the Petroleum Exporting Countries decided last week against shutting down production more than the previously announced cut of 4.2 million barrels per day. Instead, leaders said they’ll rein in wayward members of the 12-nation group and make sure everyone is cutting as much as promised.

Crude imports actually rose by 59,000 barrels compared with the previous week, according to the EIA.

Gas prices rose a penny overnight to a national average of $1.92 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Gas is 4.5 cents cheaper than a month ago and $1.36 cheaper than a year ago.

In other Nymex trading, gasoline for April delivery tumbled 7 cents to $1.3535 a gallon, while heating oil dropped 0.267 cent to $1.248 a gallon. Natural gas for April delivery fell 9.3 cents to $3.719 per 1,000 cubic feet.


Dow Gives Up Gains, Down Wednesday 56 to 7,339

NEW YORK (AP) — Stocks are giving back some of their recent gains as investors await details from the Federal Reserve’s interest rate meeting.

The Fed is expected to leave rates near zero following its two-day meeting, but the market is anxious to see how the central bank assesses the economy in its statement accompanying the rate decision. Investors also want to know if the Fed has any further moves planned to help boost the economy.

In midday trading, the Dow Jones industrial average is down 92 points to 7,303. The Standard & Poor’s 500 index is down 7 to 771, while the Nasdaq composite index is down 5 to 1,456.

Kitsap Unemployment Rises to 7.8 Percent

By Rachel Pritchett

Unemployment in Kitsap County rose to 7.8 percent in February, up from an adjusted 7.4 percent in January, according to new numbers released this morning from the state Department of Employment Security.

Some 9,690 persons were without work in February locally.

A year ago, Kitsap’s rate was 4.8 percent.

Statewide, the rate also rose in Feburary, to 8.4 percent from 7.8 percent in January, more proof the stubborn recession is sticking around in the Pacific Northwest.

The state lost an estimated 28,200 jobs last month, and now has close to 100,000 fewer jobs than this time a year ago.

An estimated 330,572 persons in Washington were unemployed and looking for work in February, a new record.

Job declines were sharpest in professional and business services, transportation, utilities, construction and manufacturing.

The county with the highest February unemployment rate was Wahkiakum County in Southwest Washington, at 14.6 percent. 

The lowest was Whitman County in Eastern Washington,  at 5 percent.