US Government Launches Anti-Fraud Site (StopFraud.gov) (via economics)


Here we get to read about the interesting & much required initiative taken by Obama’s US Government by launching StopFraud.gov
a website to educate individuals & reveal various actions of Financial Fraud Enforcement Task Force.

stopfraud.gov

President Obama’s Financial Fraud Enforcement Task Force has introduced a new Web site to educate Americans about how to protect themselves from fraud and report instances of fraud. The site, StopFraud.gov, will also provide information about the task force’s work. Obama established the interagency task force to wage a coordinated effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of f … Read More

via economics

Advertisements

INSURANCE ACTUARIES: Just How Much Fraud Is There?


Let’s start off with a simple explanation of why fraud costs us all money. Insurance companies employ math-geeks called actuaries. They spend their time estimating how many traffic accidents there are likely to be and how much all the claims will be worth in a year. That total is divided among all the policy holders as the premium. It’s all guesswork but they are good guessers. Except that, when thousands of people make false claims, the insurers suddenly find themselves short of money to pay out. The result? Premium rates go up for all.

How bad is the problem? In New York, the number of suspected cases of fraud has risen by one-third from 2007 through 2009. Across the state, the insurers identified 13,433 probable cases of fraud in 2009 alone. To pay for this, the premium rates rose by an average of 6.3% in 2009. The most common frauds are staging an accident to claim medical expenses. This has caused the average value of each claim to rise to more than double the national average. That’s millions of dollars paid out and millions of dollars that have to replaced in the capital reserves. This problem is not, of course, unique to New York. It has become a well-recognized way of raising cash as the recession has deepened. So, if people find their household budgets under pressure, they can report their vehicle stolen or become the victim in a phantom hit-and-run. Ah, but you are saying all this needs support from attorneys and physicians prepared to push claims knowing or suspecting their clients are faking or exaggerating. Well, let’s keep this real. The FBI and local law enforcement agencies regularly run undercover sting operations to catch the fraudulent. In Philadelphia, for example, a recent operation resulted in long jail terms for an attorney and thirty-four individuals falsely claiming millions based on fake medical evidence. In Santa Clara County, California, the police recently prosecuted more than twenty body shops for supplying false estimates to insurance companies. An undercover officer driving an undamaged Honda Civic explained he had reported the vehicle vandalized to pay for a new paint job. The body shops supplied an estimate under $3,000 — insurance companies do not inspect damage for “small” claims.

The truth is there’s an epidemic of fraud and it’s not only established criminals or those on the fringe of legality like street racers. But, sadly, it’s also becoming a mom-and-pop crime. Why? Because the cost of investigating every claim as possible fraud is too expensive for the insurers. It’s cheaper to pay out all the smaller claims and absorb the losses. This is one of the main reasons why it’s getting harder to find cheap auto insurance. The volume of fraud is driving up the premium rates for everyone. But there’s a secondary problem. Outside California, insurance companies still use zip codes in setting rates. Where the levels of fraud are high in some areas, the rates reflect this. So, those who live in the Bronx and Brooklyn pay more than other parts of New York because there are more fake claims. This does not mean it’s impossible to find cheap car insurance. You just have to work harder, using a site like this, to identify those insurance companies offering good discounts. As another self-help step, you could report all those you know are making false claims. If the police and FBI cannot stem the flood of fraud, it’s up to every law-abiding citizen to step up to the plate. The result will be lower premiums for all.

by: Norris Rios

http://article-niche.com

Warning: The US Government Mail You Received Might Be a Scam


Warning

This article is a reprint of Wise Bread’s contribution to OPEN Forum from American Express — where small business owners can get advice from experts and share tips with each other.

Con artists are constantly bombarding us with bills that look like official government mail.  It is one of the most effective scams, and there’s a good chance you are already a victim.

“33% of all businesses that receive bills in the mail for products or services they never asked for actually pay the bills,” said Robert Siciliano, an identity theft expert and author of The Safety Minute.

Fake bills are especially convincing when disguised as government mail.  For example, here’s a picture of a fraudulent letter I received from the “Business Filing Division”

Fake Business Filling Bill Form

It looks just like a real California state form.  Using official language and citations to actual law, the letter warns that my business will be suspended if I didn’t pay $239 to update my company’s information with the state of California.  (California does require businesses to periodically update their information, but it only costs $20, not $239.)

After almost falling for this scam, I reached out to experts and other victims of government mailing scams to learn more about how it works.  Here’s a list of their best advice on:

I.  8 ways to spot this scam

Most of these fake government letters share the following tricky features:

1.  Everything looks official

These fake letters have official-looking seals, quote real regulations, and contain government forms that look like the real thing.

The words “Office Use Only” are prominently displayed on the top.  This is a sneaky attempt to mimic the words “Official Use Only.” – Harif87 (http://www.scam.com/member.php?u=136786), Scam.com.

“I’m a designer, and so I can usually spot the difference right away between a real government document and a spurious one.  But often times they’re very close!  I have a grudging respect for how well these sales letters are designed to look like government notices.”  – Matt Kirkland, Brand New Box.

2.  They have your correct information

Just because they have your correct information doesn’t mean the letter is legitimate.  A lot of your professional and personal information are part of the public record.  It is easy for scammers to pick info from online databases and go to work.  – Alexis A. Moore, Survivors in Action.

“Since your state filings are public records, they time the mailings to coincide with your corporation’s actual renewal dates.”  – Kate Lister, author of Undress For Success.

3.  Offering a semi-legitimate service

“Some of these companies offer a legitimate service that is actually required by State Law.  However, they do not offer this service in a forthright manner.”  – Lisa Nguyen esq, Proviso Law Group.

4.  Sneaky disclaimers

“The mailings generally contain disclaimers required by law, such as ‘This is not an invoice.’  However they can still be deceptive if prepared in a format similar to a state document such as an annual report.”  – John Meyer, Company Corporation.

Even when disclaimers are attached, they are sometimes printed in small gray letters, hidden among a sea of legal jargon, or printed on parts of the letter that is likely to be discarded.  –  Issamar Ginzberg, Entrepreneur of the Year.

5.  Prey on your fear of government and obedience to authority

“The letter language didn’t feel right.  It was vague and stressed a deadline.  It preyed on a fear that one is delinquent on a government related fee.” –  Blaine Ung, co-founder of WebinarHero.

“I got accustomed to writing checks to the government in order to get the LLC set up.  Just when I thought that the numerous fees were done with, I got a letter in the mail exactly as you described.  I was furious that I was going to have to pay $325 each year as another cost of doing business.” – Taylor Brown, lead software architect for YouNeedABudget.

6.  Targeting the most vulnerable people

“What makes this insidious is that they are preying on new business owners who are probably excited to get their business off the ground, almost at any cost.”  – Russ Hearl, co-founder of Sherpa Travel Exchange.

7.  Deceptive addresses

They are set up in virtual office parks located in prestigious business buildings. The addresses are in the state capital to avoid raising red flags. – Christine Durst, co-author of The 2-Second Commute.

8.  Official sounding names

They use important names like “Corporate Compliance Filings,” “Board of Business Center,” “Annual Filing Division,” “Business Filing Division,” “Compliance Annual Minutes Board,” “Federal Clearing House,” “Department of Business Minutes,” “Department of Business Compliance,” etc.

II.  7 most effective ways to protect yourself

1.  Google the phone number and payment address

“I did a Google search of the phone number to see if it led to a government Website; instead I found numerous postings that the number I searched belongs to an organization that scams business owners out of money. Thank goodness for these public forums and for the folks that take the time to post in them.”  – Caroline Callaway, Bolt Public Relations.

2.  Look for official consumer alerts

Check your state’s official website for consumer alerts.  Most likely your scam has already been reported (see official state websites for all 50 states).  – Nicole Winger, spokesperson for CA Secretary of State.

3.  Your accountant or lawyer may help for free

“I never charge clients for asking questions.  I thank them and make them feel good for bringing it to my attention before taking action so that they feel good about contacting me whenever another similar question comes up.” – Michael T. Hanley, CPA at Merl & Hanley.

“Generally, I don’t charge my client for looking at a document like this if they hired me to set up the LLC or Corporation.”  – Lisa Nguyen esq, Proviso Law Group.

4.  Set reminders in accounting or calendaring software

Enter your schedule of required government payments into your accounting software.  By setting up reminders in advance, you can quickly verify whether you are late for a payment.  – Dawn Tulman, ToiBocks.

If you have made payments to the real government agency in the past, the agency’s mailing information should already be in your accounting software’s database.  The fact that you have to create a new payee profile for this new “bill” should raise red flags.  – Rick Smith, Chefs Resource.

5.  Create an official “accounts payable list”

“We have an official Accounts Payable list.  Anything not on that list is required to be forwarded to me (president of the company) for review.” – Ken Wisnefski, Webimax.

6.  Use a legitimate third-party service

I registered my LLC through the Company Corporation.  My service package gives me unlimited access to their toll-free customer service hotline.  When I asked about the dubious letter I received, they immediately identified it as a scam.  Their website also has a helpful scam alert section.

Several other companies provide legitimate incorporation and business registration services.  For example, Denise LaBuda, founder of Money Wizdom, also got excellent help from Mycorporation.com when she received the same fake government solicitation.

7.  Join a community

Don’t reinvent the wheel.  Other business owners have received the same scam letters and have already done the research.  Joining communities like the Rotary Club, your local Chamber of Commerce, blog communities, or online business forums give you access to a large reservoir of collective experiences.

Membership in these communities can also open many doors.  When I did research on this scam, I identified myself as a contributor to the American Express Open Forum and Wise Bread community.  I received a torrent of responses, including immediate follow-ups from the California Secretary of State and the IRS.

III.  Getting help after you’ve been scammed

Should you contact law enforcement?

“Depending on how savvy the scammers are, it may be difficult for law enforcement to tackle from a resource perspective.  While there are a number of state and federal rules and regulations that can be called into play, the reality is that most won’t have much of an effect since the potential for enforcement is so low.”  – Edi Goodman, chief privacy officer of Identity Theft 911.

On the other hand, California’s Attorney General has been actively prosecuting these rip-off artists. When in doubt, it is probably best to make a report.

Organizations that help

There are non-profit victim advocacy groups that can help you file complaints.  “Reporting crime and knowing what to look for in a scam is difficult.  We have volunteers eager to assist anyone who is in need at no charge.”  – Alexis A. Moore, Survivors in Action.

Contact your credit card company

If you paid by check or money transfer you can probably kiss that money goodbye.  However, if you paid by credit or charge card, you may be able to dispute the charges. – Shawn Mosch, Co-founder of ScamVictimsUnited.

IV. The many variations of this scam

These government solicitation scams often target the following groups:

  • Business owners: Notice offers to update your company information, file your corporate minutes, renew your business registration, or help with other record-keeping requirements.
  • Taxpayers:  Scammer tempts you with a fake tax refund or scares you with a delinquency notice.
  • Property owners:  Letter tells you that you’re eligible for lower property taxes if you submitted to an official reassessment of your property’s value.
  • Licensed professionals such as realtors, cosmetologists, brokers:  You get a bill for renewing your license, along with a stern warning that failure to pay will result in revocation of your license.
  • Employers:  Letter tries to sell you employment posters required for the workplace.  Usually these posters can be downloaded for free from official government websites.

V.  Why this scam is so dangerous

Beyond monetary loss, there are many other reasons why you should worry about these scams.

Marked as a mark

If you respond to one letter, you might be marked as an “easy target” and receive additional – and perhaps more dangerous – solicitations in the future.

They might be after your identity

“The scammers are often looking for personal data as well as bogus fees.  They’ll use the info for ‘true ID’ thefts, which means setting up credit accounts in your name and making other mischief.” – James Walsh, editor of Scams & Swindles: How to Recognize and Avoid Internet Era Rip-offs.

You miss a real government deadline

Some of these scams “help” you fulfill a real government requirement at an extremely inflated price.  But just because they are charging you a high fee is no guarantee that they will do a good job.

In one recent California case, a company charged victims $175 to help them file corporate records.  However, the company didn’t bother asking the victims for the right information, and instead filed fictitious corporate records on the victims’ behalf.

VI.  Official state websites for registering or incorporating your business

Before you pay another “bill” from the government, check your state’s official website for the real requirements and deadlines:

Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Guam
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Puerto Rico
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
U.S. Virgin Islands
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming

If you have received these fraudulent letters in the past, please share your experiences in the comments.  Search engines will pick up your story and make it easier for other people to identify these scams.

Posted in ...Fraud & Risk, Uncategorized. Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . 17 Comments »

US GDP Fraud … a report on user-generated Social News site www.nowpublic.com


The US government released GDP figures showing rosy 3.5% growth in the third quarter. But don’t be fooled: the books were cooked. This time by the cash for clunkers boondoggle, the first time homebuyers tax credit, and other forms of useless stimuli.

According to The Wall Street Journal, “fully 2.2 percentage points of the third quarter’s 3.5% growth figure related to vehicle purchases and residential construction, both juiced by government support. Federal spending added 0.6%.”

Spending Trend

Spending Trend

GDP Growth with & without Mortgage Equity Withdrawals (MEW)

GDP Growth with & without Mortgage Equity Withdrawals (MEW)

The Bureau of Economic Analysis says, “car sales shot up 157.6% quarter on quarter.” That means cash for clunkers accounted for 1.66% of total GDP.

So subtract fake demand (1.66%) from the official GDP figure (3.5%), and you’re left with 1.84% GDP growth. Not so great after all…

And if you take away other forms of stimulus, the GDP picture appears even darker. According to David Rosenberg, GDP would have been flat or negative without stimulus.

“Don’t believe the GDP hype,” Dan Denning cautions. “The big problems in the economy – too much debt, too much leverage, too much government – are still there. They didn’t go anywhere overnight. We’d suggest that getting sucked back into stocks now because of the US GDP figure is a very bad idea.”

“Of course, we could be wrong,” Dan, continues. “Maybe stocks will go up another 20% from here, or 30%, or 50%. But it’s not likely. It’s more likely that the recession is over, but that the Depression has just begun.”

“It’s begun because what the US GDP numbers actually show is a private sector in full retreat as its income shrinks, its assets fall in value and the cost of servicing debt rises. Into that terrible breach the public sector has stepped armed with an arsenal of inefficient and stupid programs that give the illusion of economic activity, but actually prevent the economy from liquidating excess capacity and bad debt (the two conditions required for a real recovery).”

“Never before did a gap between a 3.2% consensus GDP forecast and an actual print of 3.5% manage to elicit so much excitement in the equity market. It just goes to show how speculative the stock market has become.” The question is why the economy couldn’t do even better?

GDP Fraud

GDP Fraud

“Historically, the auto sector adds 0.1-percentage point or 0.2-percentage point to any given GDP report. In the third quarter, courtesy of cash-for-clunkers, the sector added 1.7 percentage points to the headline figure, which is less than 1-in-10 event in terms of probabilities. Tack on the rebound in housing and government spending and the areas of GDP that received the most medication from public sector stimulus contributed almost all of the growth in the economy. You read this right. If not for the entire government incursion into the economy in Q3, real GDP basically would have stagnated.”

Rosenberg puts the US “recovery” into perspective by comparing it to the eerily similar “recovery” experienced by the Japanese in the 1990s.

“While it seems very flashy, 3.5% growth is far from a trend-setter. Let’s go back to Japan. Since 1990, it has enjoyed no fewer than 19 of these 3.5%-or-better GDP growth quarters. That is almost 25% of the time, by the way. And we know with hindsight that this was noise around the fundamental downtrend because the Japanese economy has experienced four recessions and the equity market is down more than 70% from the peak. What is important for the future is whether the U.S. economy can manage to sustain that 3.5% growth performance in the absence of ongoing massive government stimulus.” In other words, it may be a little early to uncork the champagne.

The big risk going into Q4 is a renewed contraction in real final sales. That is not priced into the various asset classes right now. When good news starts generating the same volume as bad, then one can start with the champagne nibbling. Until then, be very careful with the interpretation of presented results. Don’t think easily that official GDP figures can be trusted like China does; most figures are cooked in the US too.

Look at the data from railroad traffic. Just like electricity demand, this indicator can’t be doctored. Statisticians eager to please the boss can’t massage those ones. Published last week, the Association of American Railroads reported a steep decline in rail traffic:

“Rail traffic remains down year over year for the week ended Oct. 24, 2009. U.S railroads reported originating 276,357 carloads, down 14.8 percent compared with the same week in 2008 and 17.3 percent from 2007.”

A 14.8% decline should cause concern to any bulls out there. One need to look beyond the government sponsored green shoots to see weeds sprouting up everywhere.

And this to think about:
“ If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State. ” (Joseph Goebbels)

Truth is the mortal enemy of the lie. This is a profound observation from such an evil man. The definition of truth is being in accordance with fact or reality. The Nazis were masters of using propaganda to manipulate facts and produce the reality that suited their wicked purposes. Other states have attempted to repress dissent and rule by using the Big Lie. The Soviet Union and Communist China come to mind.

Nine U.S. banks seized in largest one-day haul !!! Ever since Recession


By Sam Mircovich and Edwin Chan

LOS ANGELES (Reuters) – U.S. authorities seized nine failed banks on Friday, the most in a single day since the financial crisis began and the latest stark sign that substantial parts of the nation’s banking industry are being crippled by bad loans.

The move brought the total number of failed banks in 2009 to 115 — their highest annual level since 1992 — with analysts expecting more to come. Among the lenders seized Friday was Los Angeles-based California National Bank, in what was the fourth-largest U.S. bank failure this year.

The largest institution to fail in the current financial crisis was Washington Mutual, which boasted $307 billion in assets when it was shuttered in September 2008.

U.S. Bancorp on Friday acquired the nine banks that had been held by FBOP Corp, picking up $18.4 billion in assets and $15.4 billion of deposits.

Visibly worried employees lined up to file into Cal National’s head offices in the heart of a deserted downtown Los Angeles on a chilly Friday evening, where they had their employers’ fate explained to them, regulators said.

“We’re getting ready to turn everything over to U.S. Bank,” said Roberta Valdez, a spokeswoman for the Federal Deposit Insurance Corp, which helped supervise the transfer of FBOP’s assets. “They will continue to operate as normal in the interim,” she added, referring to lenders acquired from FBOP.

U.S. Bancorp — which has been buying up distressed assets this year — is picking up the lenders once owned by FBOP, a private Illinois group with over $18 billion in assets that owned banks in Texas, Illinois, Arizona and California.

Cal National is FBOP’s largest bank by branches. Others that will now go under the U.S. Bancorp umbrella included BankUSA, Citizens National Bank, Madisonville State Bank, North Houston Bank, Pacific National Bank, Park National Bank, San Diego National Bank, and the Community Bank of Lemont.

“This transaction is consistent with the growth strategy that we have outlined many times in the past, which includes enhancing our existing franchise through low-risk, in-market acquisitions,” said Rick Hartnack, vice chairman of consumer banking for U.S. Bancorp.

“This transaction adds scale to our current California, Illinois and Arizona footprints.”

NEXT BIG HEADACHE

In the “near future”, all nine lenders’ branches will be re-branded U.S. Bank, which is the California-focused unit of U.S. Bancorp’s that operates a network of more than 770 branches across Illinois, Arizona and California.

U.S. Bancorp did not specify what would happen to the new employees it inherits.

Cal National operates 68 branches across Southern California with more than $7 billion in assets. As of June 30, the lender maintained five times as much foreclosed property on its books and twice as many non-current loans as it had a year earlier, according to the Los Angeles Times, which first reported news of its evening takeover on Friday.

Cal National lost about $500 million on heavy investments in Fannie Mae and Freddie Mac preferred shares, the newspaper added, referring to securities rendered nearly worthless by the government takeover of the mortgage firms last year.

According to FDIC data, Cal National was the fourth biggest bank failure this year in terms of assets, just edging out Corus Bank, seized Sept 11 with a flat $7 billion of assets.

A bank official who answered the main number at Cal National’s headquarters said they could not talk at the time.

Banks are still cleaning up their balance sheets from the recent credit boom that fueled banks’ appetite to extend loans, many with poor underwriting and triggers that caused borrowers’ payments to spike to unaffordable levels.

More lenders are expected to go under this year as the industry tries to get a handle on commercial real estate loans that will continue to worsen, as more strip malls go vacant and residential developments stall.

Banks held about $1.7 trillion in commercial real estate loans at the end of September, according to Federal Reserve data, or about 15 percent of their total assets. But to the extent these loans weaken, small banks are likely to be hit the hardest because larger banks were better diversified.

Banks that analysts say could risk big losses include Salt Lake City’s Zions Bancorp, Columbus, Georgia’s Synovus Financial Corp and Dallas-based Comerica Inc.

Before FBOP, U.S. Bancorp bought Downey Savings of Newport Beach and PFF Bank & Trust of Pomona when those thrifts failed last November, the newspaper said. Just this month, U.S. Bancorp bought 20 Nevada branches from BB&T Corp, which had acquired them as part of its deal to buy Colonial BancGroup Inc, it added.

(Additional reporting by Mary Milliken; Editing by Bernard Orr and Dean Yates)

US market regulator focuses on role of auditors in Satyam fraud


NEW DELHI: American capital market regulator the Securities and Exchange Commission has completed its probe in India into the multi-crore rupee Satyam fraud case, especially the role of auditors.

A team of the Commission came to India following filing of over a dozen class action lawsuits in the US against the promoters and managers of the IT firm on behalf of investors, who purchased American Depository Shares of the company between January 6, 2004 (the listing date in the US) and January 6, 2009 (the day before Raju’s letter).

Mahindra Satyam Ltd

Mahindra Satyam Ltd

TURNING INTO

                                                                                                                                                              Asatyam Story

Asatyam Story

In these lawsuits, Satyam Computer, its promoters and management were charged with duping thousands of American investors of billions of dollars by artificially inflating share prices.

The SEC team has conducted detailed discussions with the CBI specifically on the role of auditors in the multi-crore rupee scam.

During the discussions, the team of Commission looked into particular details about the way accounts were allegedly fudged in the tainted computer firm and also at the role accounting firms involved in the same.

%d bloggers like this: