Business, Finance, & Economics: June 2009 Archives

A consumer organization is asking Congress to investigate the actions of the FTC, charging that the FTC, like the SEC, has ignored and protected pyramid and Ponzi schemes, causing as much as $10 billion per year in consumer losses. The losses over time are far greater than those suffered by investors in Bernard Madoff's Wall Street Ponzi.

Pyramid Scheme Alert, a non-profit consumer group founded in 2000, has released a 21-page whistle-blower's report that details a dramatic shift in FTC policy that began in 2001 and has left the public exposed to deceptive "business opportunity" frauds. Written by the group's president and investment expert Robert L. FitzPatrick, the report says most of the schemes are disguised as "multi-level marketing" (MLM) companies or as online "cash gifting" schemes. The report is entitled, "The Main Street Bubble: A Whistle Blower's Guide to Business Opportunity Fraud; How the FTC has Ignored and Now Protects It." 

Excerpted from PRWeb.com.

Banking experts say disputes over development land values threaten to become more common as loans for the properties enter default leaving room for battles over differing appraisals. An example of that was on display in an Ann Arbor courtroom this month as Bank of Ann Arbor sought over a half-million dollars from developers Francis and Marcus Yono after they defaulted on lots in West Bloomfield and Brighton Township.

The bank's appraisal valued the 26 lots securing the loan at $2.09 million, while the developers' valuation was $2.75 million. The outstanding loan amount is about $2.6 million, leaving the court battle over whether the Yonos are free and clear, or owe the bank $530,000 on the loan, plus more in unpaid property taxes.

While deficiency cases are most often settled out of court, lawyers and real estate professional said, the valuation discrepancy - and the possibility of an award to the bank - in this case prompted the trial.

Excerpted from Mlive.com.

Banking expert Keith Geary testified in Oklahoma City that Frontier State Bank should not change its policies and should continue to fight the FDIC in court.  FSB says it has been profitable in every quarter since 2002 and has not violated any regulation or law while the FDIC said FSB's policies should change because the bank is exposed to rate swings.  EarthTimesOnline reports:

The FDIC started an exam in April 2008, and filed a complaint in October. The rare administrative hearing started last Monday. The administrative law judge, an FDIC employee, has 45 days from the hearing’s conclusion to issue a decision to a three-person FDIC panel. The panel then has 45 days to uphold or overturn the judge’s decision. The losing side has 30 days to reply, followed by a 15-day window for the prevailing party to respond.

Business expert Shuchi Satwah, vice-president of Washington D.C.-based Nera Economic Consulting, testified Monday in Bob Waxman's fraud and theft trial.  The expert said the 77 deals she studied had no commercial value for Philip Services Corp but generated handsome profits for Waxman's copper trading company.  In total she found Philip lost $8.6 million on copper trading while Waxman's companies profited $5.5 million.

The deals "looked like financing for PSC at very high interest rates," she testified. "PSC was getting cash in the door right away and agreeing to pay for it in two or three months."

Excerpted from thespec.com.