Category Archives: Business

Business

SEC Family Members Loses $2 Million to Bernard Madoff

Bernard-Madoff

Sept. 7 (Bloomberg) — Family members of a U.S. Securities and Exchange Commission enforcement official, whose unit got a tip in 2005 that Bernard Madoff may be running a Ponzi scheme, entrusted $2 million to the scam, the agency’s watchdog said.

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 The anonymous e-mailed tip to the Office of Internet Enforcement was among at least six “substantive complaints” the SEC didn’t fully investigate during 16 years, Inspector General H. David Kotz said Sept. 4 in a report released before he testifies before the Senate. Investments by two of the official’s relatives were disclosed as a footnote in the 457- page report, which doesn’t identify him or specify losses. He wasn’t part of any Madoff probe, Kotz noted.

Kotz’s eight-month inquiry offers the most exhaustive look yet at how the agency missed chances since 1992 to detect a $65 billion fraud that burned thousands of investors. The inspector faulted the agency for inadequately pursuing tips, assigning inexperienced staff to conduct reviews and failing to seek trading records that would have revealed the scam.

“It is a failure that we continue to regret, and one that has led us to reform in many ways how we regulate markets and protect investors,” SEC Chairman Mary Schapiro said in a statement. “In the coming weeks we will continue to closely review the full report and learn every lesson we can.”

Read the entire story: bloomberg.com

Business

Mormons Scammed for $50 Million Promising Sale of 20,000 Tons of Gold

Gold_ingots

(Bloomberg) — Henry Jones delivered the good news in a conference call with Tri Energy Inc.’s investors: The gold deal the company had been working on for years was about to pay off.

Jones, 55, a record producer in Marina del Rey, California, and his two partners had raised more than $50 million from 735 investors, which they said they were using to broker the sale to Arab buyers of 20,000 tons of gold owned by a group of Israelis. They promised to triple investors’ money — if only Tri Energy could overcome some last-minute glitches.

All the company needed to close the deal, Jones said on the Dec. 20, 2004, conference call, taped by one of the participants, was a “safe-passage letter” that would cost $450,000. A few days later, on another call, he said Tri Energy had to come up with $100,000 to open a “commission account.” Then, on Jan. 15, 2005, a new request: The bank handling the deal wanted $125,000 to conduct an audit.

Like those caught up in other get-rich scams — from Bernard Madoff’s $65 billion Ponzi scheme, which initially snared wealthy Jews, to an alleged $4.4 million fraud aimed at deaf people — Tri Energy’s investors had something in common. Many were Mormons and born-again Christians who shared dreams and prayers on nightly conference calls. They vowed to use the profits for charitable works and kept raising funds, at times taking out second mortgages, draining retirement accounts and recruiting relatives.

While the delays and pleas for more money never stopped, the charade did.

Restraining Order
Continue reading Mormons Scammed for $50 Million Promising Sale of 20,000 Tons of Gold →

Business

Nigerian Letters or “419” Fraud

fishing-for-a-scam

Here is a typical 419 letter: 

From: yarah jane – janeyarah04@———– 

Dearest,

I am Jane yarah the only daughter of late Mr and Mrs william yarah.My father was a very wealthy cocoa merchant in Abidjan , the economic capital of Ivory coast, my father was poisoned to death by his business associates on one of their outings on a business trip . My mother died when I was a baby and since then my father took me so special. Before the death of my father on January 2006 in a private hospital here in Abidjan he secretly called me on his bed side and told me that he has the sum of ten million,five hundred thousand United State Dollars. USD $10.5mleft in fixed / suspense account in one of the prime bank here in Abidjan ,that he used my name as his only daughter for the next of Kin in depositing of the fund. He also explained to me that it was because of this wealth that he was poisoned by his business associates. That I should seek for a foreign partner in a country of my choice where i will transfer this money and use it for investment purpose such as real estate management or hotel management . 

Dear, I am honourably seeking your assistance in the following ways:

1.To provide a good bank account into which this money would be transferred into .

2 To serve as a guardian of this fund since I am only 19years.

3. To make arrangement for me to come over to your country to further my education and to secure a resident permit in your country. Moreover, dear, i am willing to offer you 15% of the total sum as compensation for your effort/ input after the successful transfer of this fund into your nominated account overseas. 

 Furthermore, you indicate your options towards assisting me as I believe that this transaction would be concluded within seven (7) days you signify interest to assist me. Anticipating to hear from you soon.
remain bless,
Yours Faithfully,

Jane.———————————
@—— 

Note that she is promising 15% of $10.5 million or $1.6 million.  All you have to do is trust her and give her your bank account number. While this letter is laughable , there are many people who fall for it and lose thousands of dollars.  Here are safeguards spelled out on the FBI website as to what to watch out for:  

According to the FBI:

Nigerian letter frauds combine the threat of impersonation fraud with a variation of an advance fee scheme in which a letter, mailed from Nigeria, offers the recipient the “opportunity” to share in a percentage of millions of dollars that the author, a self-proclaimed government official, is trying to transfer illegally out of Nigeria. The recipient is encouraged to send information to the author, such as blank letterhead stationery, bank name and account numbers and other identifying information using a facsimile number provided in the letter. Some of these letters have also been received via E-mail through the Internet. The scheme relies on convincing a willing victim, who has demonstrated a “propensity for larceny” by responding to the invitation, to send money to the author of the letter in Nigeria in several installments of increasing amounts for a variety of reasons.

Payment of taxes, bribes to government officials, and legal fees are often described in great detail with the promise that all expenses will be reimbursed as soon as the funds are spirited out of Nigeria. In actuality, the millions of dollars do not exist and the victim eventually ends up with nothing but loss. Once the victim stops sending money, the perpetrators have been known to use the personal information and checks that they received to impersonate the victim, draining bank accounts and credit card balances until the victim’s assets are taken in their entirety. While such an invitation impresses most law-abiding citizens as a laughable hoax, millions of dollars in losses are caused by these schemes annually. Some victims have been lured to Nigeria, where they have been imprisoned against their will, in addition to losing large sums of money. The Nigerian government is not sympathetic to victims of these schemes, since the victim actually conspires to remove funds from Nigeria in a manner that is contrary to Nigerian law. The schemes themselves violate section 419 of the Nigerian criminal code, hence the label “419 fraud.”

 Some Tips to Avoid Nigerian Letter or “419” Fraud:

 If you receive a letter from Nigeria asking you to send personal or banking information, do not reply in any manner. Send the letter to the U.S. Secret Service, your local FBI office, or the U.S. Postal Inspection Service. You can also register a complaint with the Federal Trade Commission’s Consumer Sentinel.

  • If you know someone who is corresponding in one of these schemes, encourage that person to contact the FBI or the U.S. Secret Service as soon as possible.
  • Be skeptical of individuals representing themselves as Nigerian or foreign government officials asking for your help in placing large sums of money in overseas bank accounts.
  • Do not believe the promise of large sums of money for your cooperation.
  • Guard your account information carefully
Business

Someone Stole My Credit Card Number!

credit card theft

Well, it happened to me. I received several e-mails from PayPal, and thinking that is was another scam to get my password, I ignored them. In fact, I put them in the delete folder and would have deleted them if I had not received an e-mail from American Express at about the same time.

The e-mail from American Express wanted to know if I had made a $2,419.49 charged to a large merchant store in Los Angeles. Trusting as ever, I did not call the number on the e-mail and instead looked up the telephone number for American Express on the internet.

Calling American Express, I was put through an alphabet of computer choices, in which the automated computer voice asked me if I wanted to know my credit balance, do I want to make a payment, do I want to raise my credit limit, and finally, having too many choices, I hit the telephone with a hammer a couple of times and got through to security.
Continue reading Someone Stole My Credit Card Number! →

Business, Real Estate

Economists Optimistic That Market Is Upward Bound

economic-upturn

Well, you can get a room full of economists and get a room full of different opinions. But according to USA Today it seems that two-thirds of the economists agree that we may have hit bottom. Here’s the article, let’s let a little sunshine in.

“Economic recovery is still a few months away, say economists surveyed by USA Today, but two-thirds of them think existing-home sales have bottomed out.

Both housing and automotive markets “have the potential to generate some quite large percentage increases,” says Bill Cheney, chief economist at MFC Global Investment.

Overall, economists say unemployment won’t peak until the first half of next year and credit markets will remain tight.

“I think (the recovery) is going to be anemic,” says Allen Sinai, chief economist at Decision Economics. “I don’t think consumers have the wherewithal to buy a lot of cars and a lot of houses.”

For full story, click here: USA Today, Paul Davidson; Barbara Hansen

Business, Education

California State Board of Education Cooks Their Books

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state-board-of-educa-book1
It seems that the California Department of Education has taken a leaf from Wall Street and AIG. Let’s keep the bad CEO’s which in this case are superintendents and their staff, layoff school teachers, and then cook the books on the rate of dropouts in the State’s high schools.

By using Wall Street techniques and new math, they claimed that the overall dropout rate for California dropped from 21.1 percent to 20.1 percent in 2008. But they noted only 68.3 percent graduated! The best guess is that the other 11 percent of students went into an equivalent of an offshore account where they were given a triple A rating.

Calling this unsecured account a derivative, they may somehow have become an asset instead of a liability.

It is my understanding that this account will be sold for additional funding for employing more staff for the management team and the administration.

In further accounting maneuvers, just a few months ago, they raised the high school dropout rate from 12 to 24 percent. Wall Street would indeed be proud of this administration.

By the way, according to the 2007-08 report from the National Education Association we spend more than $300,000 annually for each classroom of 25 students. My daughter is a school teacher and she has to buy paper and pencils for her students.

You know why? 75% of that money goes to salaries, benefits, administration and other overhead costs. That’s $9,000 per student or $225,000 per classroom per year for overhead. Now you know why they can’t provide pencils and paper.

Quoting the Visalia Times-Delta

““While enrollment has dropped by 70,000 in the last four years, the Department of Education (actually the districts themselves do the hiring) used its increasing funds to hire just 3,800 additional teachers while adding 15,600 more nonclassroom employees between 2004 and 2007. Our schools must have a reliable stream of funding, but it should be based on actual enrollment needs.”

Did you get that, they hired 76% more overhead then they did teachers. Yet, every time they cut the state budget for schools they lay off—teachers.

If you think this needs to be fixed, let your favorite politician know what’s going on.

Business

What about Health Care for the Entrepreneur?

mountain-climber

There was a fascinating story on NPR the other day about entrepreneurs. The person being interviewed felt that entrepreneurs could be the way out of the recession, but because of a few factors most people who could or want to start a business don’t. One of the reasons stated why older people won’t start a business, which caught my attention is health care.

Paul Kedrosky, editor of the business blog ‘Infectious Greed,’ stated that start up costs really are not the main consideration when people of the older persuasion decide not to start a business…it’s health care.

I cannot agree more! I am happily self-employed at the young age of 40. I started my business when I was 35 and I went for a long time with major medical only. Thankfully my ex-husband covered our daughter under his work sponsored health care plan. What did “major medical” mean? It meant that I paid full price for my Doctor visits, my prescriptions and any tests or x-rays performed. Why? It was what I could afford. The only time I saw my Doctor was for my yearly girl exam. That’s it. I couldn’t afford to get sick and if I did my medical coverage wouldn’t kick in until I am on the hospital bed dying.

Thankfully my new husband has a job with great health care and I’m now covered under his plan. A few months ago his place of business went through a major restructuring and it looked like he was going to lose his job. We started brainstorming about what we can do if that happened.

My first reaction was to tell my husband to go freelance. He works with video and web and it would be an easy fit into my business. We were very excited at the prospect of creating this expanded business together and how having him work from home would help because he would be around more to help with the girls. We had no doubt that we would create enough income to continue our lifestyle and save for retirement….but then came the health care issue.  Could we afford the health care we need (I am older now…premiums tend to skyrocket at the age of 40 and DH is a few years older)?  That became the proverbial fly in my glass of wine.

Right now we have dental, vision, RX and health insurance. Last year alone I had $ 2000 worth of dental work done and my teeth are in good shape but they are not getting any younger. I have glasses and need yearly exams and occasionally new lenses (besides what is it with turning 40 and suddenly having to hold a book at arms length away while reading….?)  As I get older I find that I need more medical monitoring besides the yearly girl exam, there is now the mammogram and other yearly checkups.

The night before the layoffs my husband and I toyed with the idea of him going in and saying take me…lay me off. What stopped us? The idea that once he became self employed we would be one accident or one illness away from losing everything we worked for. We would be putting not only our financial health in jeopardy but we would also be gambling with our girls’ future.  We couldn’t do that.  Thankfully my husband’s job was spared. For how long?  We don’t know.

How sad is it that he is now working for the health insurance? He loves what he does, he likes where he works and the people he works with/for. But given the uncertain future at his place of work he would have more security going out on his own but he/we chose not to because of health care.  Where did it all go wrong?

I’m not a policy or political wonk. I keep abreast of the headlines but I’m too busy raising my family and running my business to get deep into the political wrangling. Normally I don’t talk publicly about politics. For the first time I wrote to my representative and implored them to do the right thing and create a health care system that is affordable for everyone…including us entrepreneurs. If the blogger is correct and I suspect he is (given that just about every major corporation is either in or on the verge of bankruptcy) we entrepreneurs just might end up being the saving grace of our economy

 

This article was written by Lisa Jacobson (My daughter)

Business

Chrysler May Terminate Liberty Motors Chrysler-Dodge Dealership

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Liberty Motors
Liberty Motors

Wow, in continuing bad news for Grass Valley’s tax revenues and our local shopping, Chrysler has announced that they are trying to close 789 dealerships according to CNN today. One of the chosen one’s is our local Chrysler dealer, G.K. Alcombrack, Inc. known as Liberty Motors Dodge Chrysler off of Freeman Lane.

Since Chrysler is in bankruptcy court, they are asking that the sales and service agreements between Chrysler Motors LLC and the 789 dealerships be terminated.

Chrysler has already sent letters to the dealerships and “Upon approval from the court, your agreement will be rejected on or about June 9, 2009”. This represents about 25% of their dealerships and represents about 14% of their sales.

So now we have lost Weaver GMAC, Ford has moved to Auburn and we may lose Chrysler. The only car sales remaining in Western Nevada County will be used car dealers. If we want to buy a new car, we’ll have to go out of town. Not a good thing, sorry to say. That means we have not only lost our dealerships, but when we want warranty work, that’s another trip out of town and more lost revenue.

I talked to Ernie Shewmaker today, salesman for Liberty Motors and he stated that they will continue to sell used cars at their present site. He claims they have not ordered any vehicles from Chrysler in months. However, their website still reflects that they are a Chrysler dealer.

To read the full story got to CNN Chrysler Closing 789 Dealerships

For a map of the 789 Dealerships to be closed go to New York Times Maps of Closings

Business, Real Estate

Banks Banking Their Money

Banks and their money
Banks and their money

So the major banks have been given billions of dollars from TARP so we could start borrowing money to buy cars and homes to get the economy going again. But now that the banks are awash in cash they’re keeping it in the bank. It seems that the banks are hoarding their cash so they can pay back TARP funds and of course, so they can raise the pay of their CEO’s. After all, they claim if they can’t pay millions to the top help, they won’t be able to hire good managers?

According to Fortune Magazine, writing about the large amounts of cash that lending institutions have on hand:

“The rise was even more dramatic at Bank of America, where cash on hand soared to $173 billion at the end of the first quarter from $33 billion at year-end. CEO Ken Lewis, whose Charlotte-based bank recently acquired the troubled broker-dealer Merrill Lynch, called the shift “very expensive in the short term but well worth the cost in the long term.”

Other institutions holding cash are Goldman, $164 billion, Morgan Stanley $150 billion, AmEX, $25 billion in the third quarter from $13 billion in the forth quarter.

Here’s another quote from Fortune Magazine:

“Liquidity allows the banks to lend if they can find borrowers who can pay them back,” said Gary Townsend, a former bank analyst who now runs Hill-Townsend Capital in Chevy Chase, Md. “That’s the big challenge right now, because the risk-adjusted returns are as big as we’ve seen in a couple of decades.”

Interpret that statement to mean if you want to borrow money from a bank, you must have enough money and assets that you really don’t need to borrow money.

Business, Environment

The Flu, the Real Danger to You and the World Economy

flu-virus

What’s the big concern about this flu that’s going around now? According to Daniel J. DeNoon and reviewed by Louise Chang, MD is that this is an unusual strain of virus.

According to Mr. DeNoon, “there are four different types of swine flu strains that commonly circulate among pigs. Most recent swine flu viruses have belonged to the H1N1 and H3N2 subtypes. Pigs typically get sick but usually don’t die from swine flu.”

“What is alarming about the current flu that has started is that it’s acquired genes from swine, bird and human flu bugs. It also has genes from Eurasian swine flu viruses that aren’t supposed to be in North America.”

So we have a “cocktail” of virus that could mutate into something more dangerous. I’m not a scientist, but I believe that is the real concern of the government.

Just how concerned:

“We are declaring today a public health emergency,” Secretary of Homeland Security Janet Napolitano said today at a White House news briefing. That declaration is “standard operating procedure,” Napolitano said. “It is similar to what we do when we see a hurricane approaching a site. The hurricane might not actually hit but allows you to take a number of preparatory steps. We really don’t know ultimately what the size or seriousness of this outbreak is going to be.”

For more information on the flu and how to protect yourself, go to WebMD Health News

We’ve covered what the current flu worries are. Now here are some of the ramifications that are already happening to the economy because of the flu outbreak. According to CNN An article about how the could derail the fragile global economy:

“Already, Russia has banned imports from Mexico, California and Texas. As the flu progresses, the fear is an overreaction and the banning of exports, perhaps worldwide.

But if the outbreak does grow into a large-scale pandemic, Auger said global trade could be disrupted through export restrictions.

“It could lead to travel restrictions for goods and people through major control over ports and airports,” he said.”

My wishes and prayers are with all of you, be safe and stay healthy.