Current Events in April 2007

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    Veterinary Chain Puts Pet Food Injuries At 39,000

    Senate Hearing Will Probe Pet Food Safety


    A U.S. chain of veterinary clinics estimates as many as 39,000 dogs and cats were injured by eating tainted pet food manufactured by Menu Foods. The estimate, much higher than previous ones, is based on analysis of its database linking 615 pet hospitals and clinics.

    According to the analysis by Banfield, The Pet Hospital, which it shared with the Food and Drug Administration, three out of every 10,000 dogs and cats that ate the contaminated product developed kidney failure. Banfield said the diagnosis of kidney failure in cats rose 30 percent during the three months when the contaminated pet food was sold.

    At the same time, the numbers show very little increase in kidney failure among canines, suggesting the toxin in the pet food was a more serious problem for cats than dogs.

    At least six pet food manufacturers have recalled products over concerns that the toxin originated in wheat gluten imported from China. The FDA says about one percent of the pet food supply in the U.S. has been withdrawn.

    The FDA has said injury estimates based on Banfield's database are likely "authoritative." So far, the agency has confirmed only 16 deaths from an estimated 3,000 cases.

    ConsumerAffairs.com continues to hear from dog and cat owners about illnesses and deaths in their animals. And not all these illnesses and deaths are linked to products included in the recall of nearly 100 brands of pet food and treats.

    Pet owner John S. of Little Rock, Arkansas, says his Cocker Spaniel became ill after eating Purina dry Dog Chow, which is not being recalled. John says the problems started last October.

    "Our Cocker Spaniel had her first seizure in that month," he says, adding his dog hadn't had any previous problems with the food. "Since then, she had another seizure in March, which lasted longer than the first." His dog also developed a large rash after eating the dry Purina Dog Chow, he says.

    "(It) covered her entire stomach and seemed to get worse as time went by. We took her to the vet and he ran a blood test on her and did a check-up, telling us she did not have worms or seem to have any other problems to cause the seizures.

    "As far as the rash went, her white blood cell count was sky high and she was very sick," John says. "He (the vet) thought it might be an allergy, but was not sure ... and decided to put her on antibiotics for a week."

    But the medication didn't help the rash. John says his dog's condition didn't improve until he stopped feeding her the dry Purina Dog Chow.

    "The rash has cleared up a lot in the past three days . . . since she stopped eating the food," he says, adding he took her off that dry food even though it wasn't included in the recall. "And she seems to feel a lot better ... not sleeping all the time like she was. I don't know if the food caused the seizures as Cockers are know to have epilepsy, but the date when she had her first seizure dates back to the same month that the tainted pet food supposedly hit the shelves.

    "I just hope if there is something wrong with this food, they take it off the shelves."

    Another pet owner told us her dog became gravely ill -- and had to be put to sleep -- after eating Nutro dry food. That food isn't included in the recall, either.

    Pet owner Judy R. of Williamston, South Carolina, also says she occasionally fed her Maltese two products that are part of the recall: Ol'Roy treats and Mighty Dog in pouches.

    "The last canned food that I used was Mighty Dog pouches while traveling from South Carolina to Mississippi," Judy says. "My little Maltese, Angel, got really sick ... I took her to the vet and the blood work showed that she had been poisoned."

    And with a specific type of poison: rat poison.

    New York Agriculture officials said they discovered the rat poison, aminopterin, in some of the wheat gluten used to make the contaminated pet foods.

    Judy wonders if there's a connection between all the pet food and treats her dog ate -- and Angel's rapidly declining condition.

    Her veterinarian recommended one final option for Angel -- a complete blood transfusion.

    "(But) Angel weighed three pounds, seven ounces, and the vet said that she had a 20 percent chance of making it through a transfusion," Judy said. "Angel was so very sick and we opted to have her put to sleep.

    "This had been so very hard for our family, especially my nine-year-old daughter. I would like to find out if this (eating these pet foods and treats) could possibly have caused the death of our little Maltese."

    Senate Hearing Scheduled

    Durbin

    So would U.S. Senator Richard J. Durbin (D-Ill). The Senator, a member of Agriculture Appropriations Subcommittee, has called a special hearing this week to investigate the pet food recall-one of the largest in history.

    "Many cats, dogs and other pets, considered members of the family are now suffering as a result of a deeply flawed pet food inspection system," Durbin said in a press release. "The Food and Drug Administration's (FDA) response to this situation has been tragically slow. Pet owners deserve answers. The uncertainty about what is safe to feed their pets has gone on far too long.

    "I want to learn exactly when the FDA knew about the contamination, who is inspecting pet food manufacturing plants, and whether we need to force the FDA to update their regulations to protect our pets. Most importantly, I want to hear how the FDA is going to work to resolve the current crisis and ensure this doesn't happen again," Durbin said.

    Witnesses expected to be called for the hearing later this week include FDA officials who will be questioned on the timeline of the investigation, the source of the contamination, and the agency's regulatory and inspection responsibilities.

    Other witnesses expected to testify include outside experts who will discuss the current state of the pet food industry and regulatory or resource shortfalls that led to the widespread recall of tainted pet food.

    Durbin said he will urge the FDA to take action in three specific areas:

    Reporting delays -- Menu Foods first noticed a potential problem on February 20, 2007, but did not contact the FDA until March 15, 2007, the Senator's office pointed out. In the meantime, other companies were selling tainted product and the supplier didn't know it had provided wheat gluten contaminated with the chemical, melamine. Durbin wants companies that delay reporting to the FDA and endanger human and animal health to face penalties.

    Lack of inspections -- The Emporia, Kansas, Menu Foods facility where many of the tainted products were made had never been inspected by the FDA, the Senator said. According to Durbin, the agency relied on the states to conduct inspections. But the FDA has jurisdiction over all pet food manufacturing facilities and the ultimate responsibility to ensure facilities comply with FDA standards, the Senator said. Where there should be federal regulation, there is instead a patchwork of state inspection systems and voluntary guidance, he said. Durbin wants to require the FDA to work with the states to establish a standardized set of regulations and inspection requirements.

    Incomplete data and reporting from the FDA -- Blogs and Web sites have filled a gap and become the most efficient way to share information on the pet food contamination, Durbin said. The Senator wants to direct the FDA to create a similar information sharing system that would allow state veterinarians, pet owners, and others to alert the FDA of possible contaminations.

    Durbin is working with Senator Herb Kohl (D-WI), chairman of the Agriculture Appropriations Subcommittee, on the hearing. Witnesses expected to testify are:

    • Dr. Stephen F. Sundlof, D.V.M, Ph.D., Director, Center for Veterinary Medicine, Food and Drug Administration;
    • Duane Ekedahl, Executive Director, Pet Food Institute;
    • Eric Nelson, President, American Association of Feed Control Officers,
    • Dr. Elizabeth Hodgkins, Veterinarian;
    • Dr. Claudia A. Kirk, Associate Professor of Medicine and Nutrition, University of Tennessee College of Veterinary Medicine.

    In a related development, Durbin and Rep. Rosa L. DeLauro (D-Conn.) sent a letter on March 26, 2007, to the Commissioner of the FDA requesting the agency provide:

    • Information on the number of pet food manufacturing inspections and violations;
    • A detailed timeline of the situation;
    • An analysis of the FDA's oversight of pet food manufacturing facilities;
    • And a report of action taken since the recent pet food recall.

    A response is due by April 10, 2007.



    Veterinary Chain Puts Pet Food Injuries At 39,000...

    OnStar Goes Digital, GM to Drop 500,000 Subscribers

    New system isn't compatible with older units

    General Motors Corp. is abandoning almost 500,000 of its 4 million loyal OnStar subscribers because the nation's cell phone systems will no longer offer analog service.

    That means that owners of GM products that carry analog technology to power their OnStar systems are now considered "outdated" and the world's largest automaker will drop them from the safety and communications system.

    In 2008 newer digital systems will be the only way OnStar can communicate since the country's cell phone carriers, which carry OnStar's signals on their towers, will complete the changeover to digital service.

    GM will no longer be able to keep up with or keep track of some of the company's best and oldest customers like Lisa of Saint Louis.

    "I received a letter indicating that the factory-installed OnStar in my 2001 Buick Regal will no longer be functional because they are upgrading their system," she wrote ConsumerAffairs.com "I purchased this car because of this feature and now it will no longer work and they will not upgrade it to work"

    "I have 45,000 miles on my car with a extended warranty for 100,000 or 10 years whichever comes first. What do I do now?" Lisa wants to know.

    "The only thing GM said is that they will give me $500 towards the purchase of a new car," said Lisa, who was not impressed with the offer.

    "I don't want a new car, I just want my existing OnStar service to work. From what I understand they would just have to install a new digital radio for this to work, but they are not willing to do so."

    OnStar services include monitoring emergencies and vehicle diagnostics, and giving directions and noting which airbags were deployed and the intensity of any impact before notifying paramedics of an accident. The service costs about $199 a year.

    Some soon-to-be-abandoned OnStar subscribers are suing GM because the automaker refuses to offer an upgrade for their system. As many as 500,000 of OnStar's 4 million subscribers are in the same predicament.

    If your vehicle is a 2003, 2004, or 2005, you will need to update your OnStar system. An adapter will cost approximately $200. If your vehicle is a 2002 or older, there is no adapter available.

    That's where Don finds himself and his 2002 Chevrolet Tahoe -- up a shallow creek in Long Beach, California.

    "I was told that GM chose not to offer an upgrade but I was invited to purchase a new car," he wrote ConsumerAffairs.com. "No discount on the car, but 2 years free of OnStar by GM."

    "What a slap in the face," Don said.

    In a given month OnStar receives 900 automatic airbag notifications, helps with 500 stolen vehicles, connects 15,000 emergency calls, provides 44,000 remote door unlocks, takes 25,000 roadside assistance calls, receives 5,500 good Samaritan calls, offers 32,000 remote diagnostics and facilitates 12.6 million hands-free calls.

    OnStar works much like a cell phone. Push the button and a signal is sent to a cell tower.

    FCC rules require that cell towers support both digital and analog signals. But as of 2008, cell towers will no longer have to support analog so OnStar is disconnecting its analog equipment.

    GM dealerships say there's nothing they can do.

    OnStar Goes Digital, GM to Drop 500,000 Subscribers...

    NYC Rat Report: Mistakes Were Made

    Health Department Concedes Error but Fingers KFC as the Real Rat

    The New York City Health Department has released its report on February's KFC rat incident, which shocked even grizzled Gothomites. Pedestrians walking past the glass doors and windows of the Greenwich Village eatery were treated to the sight of at least a dozen large rats frolicking through the restaurant. TV news crews broadcast the rodent revelries live.

    The incident was embarrassing enough to the city's health department, but to make matters worse, the restaurant had passed an inspection the day before. Still, health department officials looked on the bright side.

    "Our restaurant program performs well overall," said Health Commissioner Dr. Thomas R. Frieden, "but in this instance there were failings of personnel, policy and practice. We have identified weaknesses in our system for handling restaurant complaints and combating rodent infestations. Rats are an unfortunate fact of urban life, and although they are not associated with illness in New York City, we must do a better job of ensuring that restaurants and other prevent and control infestations."

    Frieden said that restaurant owners and operators bear the responsibility for keeping their establishments clean.

    "The KFC/Taco Bell was cited for rodent-related violations as recently as December," he said. "If the operators had responded appropriately, they could have prevented the February incident. We hope that most NYC restaurants will continue to recognize the advantages of holding their kitchens to the highest standards of cleanliness."

    The report also discloses that the inspector who gave the restaurant a passing grade on February 22 observed more signs of rodent activity than she reported. Had she cited these violations accurately, the report argues, they would have justified a failing score and possibly a closure of the restaurant.

    However, there were other clues that something was not quite right at the fast food restaurant. Calls to the health department's 311 hotline for citizen complaints had mentioned this particular restaurant frequently, the last time -- from an employee -- on February 12.

    "He works at the Taco Bells and he has seen rats and rodent droppings in the oil where the food is fried, in the corn and nachos, and on soda machines," the 311 transcript says. "In addition, caller [says] the owner and the managers are not doing anything to fix the problem at all, and if a customer [says] they have seen rodents they are given their food for free. Caller also [says] workers are told not to eat the food. Caller [says] there are 2 restaurants in one and they both have the problem the restaurants are Taco Bell/KFC. Caller [says] the basement is the worst place of all. An employee was bit by a rat in the basement and did nothing about it."

    The department says it responded by sending the restaurant a warning letter. In its report on the incident, the department acknowledged that it currently lacks an adequate mechanism to recognize and respond to multiple complaints involving a single food-service establishment. Multiple complaints about this establishment, including an alleged rat bite, were not responded to appropriately, the department admitted.

    In response to the review, the health department said it would:

    • Develop a system to actively monitor 311 records for repeated complaints about particular restaurants, and establish a threshold for inspection based on the nature, frequency and timing of complaints.

    • Amend agency policy to ensure that sanitarians always conduct complete inspections when inspecting in response to complaints about restaurants. This change has already taken effect.

    • Reassign the current Director of Customer Service and pursue relieving her of supervisory responsibilities. The sanitarian who conducted the February 22nd inspection has resigned from the agency.

    • Revise the inspection system to place greater emphasis on conditions that attract and sustain pests.

    • Expand and institutionalize the agency's new rodent-control academy for restaurant inspection staff. In March 2007, 145 environmental health technicians, public health sanitarians and managers from the food safety program were trained to better identify rodent-related conditions.

    • Adapt the curriculum of the rodent-control academy to include a course for food service operators. The course will be mandatory for food service operators whose establishments have multiple rodent violations.

    • Improve coordination between the agency's food-safety and pest-control programs, and require building owners to repair buildings that house rodent-infested restaurants.

    • Pursue an initiative to monitor and combat rodent infestations at the neighborhood level. The New York City Health Department said it inspects approximately 700 restaurants in the city each week. It closes, on average, 20 to 30 for health code violations.



    Pedestrians walking past the glass doors and windows of the Greenwich Village eatery were treated to the sight of at least a dozen large rats frolicking th...

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      Senate Hearing Will Probe Pet Food Safety

      Pet Death Reports Continue; Many Blamed on Pet Food Not Included in Recalls

      As a Senate subcommittee prepares to open a hearing this week on the massive recall of 60 million containers of tainted pet food, ConsumerAffairs.com continues to hear from dog and cat owners about illnesses and deaths in their animals.

      And not all these illnesses and deaths are linked to products included in the recall of nearly 100 brands of pet food and treats.

      Pet owner John S. of Little Rock, Arkansas, says his Cocker Spaniel became ill after eating Purina dry Dog Chow, which is not being recalled. John says the problems started last October.

      "Our Cocker Spaniel had her first seizure in that month," he says, adding his dog hadn't had any previous problems with the food. "Since then, she had another seizure in March, which lasted longer than the first." His dog also developed a large rash after eating the dry Purina Dog Chow, he says.

      "(It) covered her entire stomach and seemed to get worse as time went by. We took her to the vet and he ran a blood test on her and did a check-up, telling us she did not have worms or seem to have any other problems to cause the seizures.

      "As far as the rash went, her white blood cell count was sky high and she was very sick," John says. "He (the vet) thought it might be an allergy, but was not sure ... and decided to put her on antibiotics for a week."

      But the medication didn't help the rash. John says his dog's condition didn't improve until he stopped feeding her the dry Purina Dog Chow.

      "The rash has cleared up a lot in the past three days . . . since she stopped eating the food," he says, adding he took her off that dry food even though it wasn't included in the recall. "And she seems to feel a lot better ... not sleeping all the time like she was. I don't know if the food caused the seizures as Cockers are know to have epilepsy, but the date when she had her first seizure dates back to the same month that the tainted pet food supposedly hit the shelves.

      "I just hope if there is something wrong with this food, they take it off the shelves."

      Another pet owner told us her dog became gravely ill -- and had to be put to sleep -- after eating Nutro dry food. That food isn't included in the recall, either.

      Pet owner Judy R. of Williamston, South Carolina, also says she occasionally fed her Maltese two products that are part of the recall: Ol'Roy treats and Mighty Dog in pouches.

      "The last canned food that I used was Mighty Dog pouches while traveling from South Carolina to Mississippi," Judy says. "My little Maltese, Angel, got really sick ... I took her to the vet and the blood work showed that she had been poisoned."

      And with a specific type of poison: rat poison.

      New York Agriculture officials said they discovered the rat poison, aminopterin, in some of the wheat gluten used to make the contaminated pet foods.

      Judy wonders if there's a connection between all the pet food and treats her dog ate -- and Angel's rapidly declining condition.

      Her veterinarian recommended one final option for Angel -- a complete blood transfusion.

      "(But) Angel weighed three pounds, seven ounces, and the vet said that she had a 20 percent chance of making it through a transfusion," Judy said. "Angel was so very sick and we opted to have her put to sleep.

      "This had been so very hard for our family, especially my nine-year-old daughter. I would like to find out if this (eating these pet foods and treats) could possibly have caused the death of our little Maltese."

      Senate Hearing Scheduled

      Durbin

      So would U.S. Senator Richard J. Durbin (D-Ill). The Senator, a member of Agriculture Appropriations Subcommittee, has called a special hearing this week to investigate the pet food recall-one of the largest in history.

      "Many cats, dogs and other pets, considered members of the family are now suffering as a result of a deeply flawed pet food inspection system," Durbin said in a press release. "The Food and Drug Administration's (FDA) response to this situation has been tragically slow. Pet owners deserve answers. The uncertainty about what is safe to feed their pets has gone on far too long.

      "I want to learn exactly when the FDA knew about the contamination, who is inspecting pet food manufacturing plants, and whether we need to force the FDA to update their regulations to protect our pets. Most importantly, I want to hear how the FDA is going to work to resolve the current crisis and ensure this doesn't happen again," Durbin said.

      Witnesses expected to be called for the hearing later this week include FDA officials who will be questioned on the timeline of the investigation, the source of the contamination, and the agency's regulatory and inspection responsibilities.

      Other witnesses expected to testify include outside experts who will discuss the current state of the pet food industry and regulatory or resource shortfalls that led to the widespread recall of tainted pet food.

      Durbin said he will urge the FDA to take action in three specific areas:

      Reporting delays -- Menu Foods first noticed a potential problem on February 20, 2007, but did not contact the FDA until March 15, 2007, the Senator's office pointed out. In the meantime, other companies were selling tainted product and the supplier didn't know it had provided wheat gluten contaminated with the chemical, melamine. Durbin wants companies that delay reporting to the FDA and endanger human and animal health to face penalties.

      Lack of inspections -- The Emporia, Kansas, Menu Foods facility where many of the tainted products were made had never been inspected by the FDA, the Senator said. According to Durbin, the agency relied on the states to conduct inspections. But the FDA has jurisdiction over all pet food manufacturing facilities and the ultimate responsibility to ensure facilities comply with FDA standards, the Senator said. Where there should be federal regulation, there is instead a patchwork of state inspection systems and voluntary guidance, he said. Durbin wants to require the FDA to work with the states to establish a standardized set of regulations and inspection requirements.

      Incomplete data and reporting from the FDA -- Blogs and Web sites have filled a gap and become the most efficient way to share information on the pet food contamination, Durbin said. The Senator wants to direct the FDA to create a similar information sharing system that would allow state veterinarians, pet owners, and others to alert the FDA of possible contaminations.

      Durbin is working with Senator Herb Kohl (D-WI), chairman of the Agriculture Appropriations Subcommittee, on the hearing. Witnesses expected to testify are:

      • Dr. Stephen F. Sundlof, D.V.M, Ph.D., Director, Center for Veterinary Medicine, Food and Drug Administration;
      • Duane Ekedahl, Executive Director, Pet Food Institute;
      • Eric Nelson, President, American Association of Feed Control Officers,
      • Dr. Elizabeth Hodgkins, Veterinarian;
      • Dr. Claudia A. Kirk, Associate Professor of Medicine and Nutrition, University of Tennessee College of Veterinary Medicine.

      In a related development, Durbin and Rep. Rosa L. DeLauro (D-Conn.) sent a letter on March 26, 2007, to the Commissioner of the FDA requesting the agency provide:

      • Information on the number of pet food manufacturing inspections and violations;
      • A detailed timeline of the situation;
      • An analysis of the FDA's oversight of pet food manufacturing facilities;
      • And a report of action taken since the recent pet food recall.

      A response is due by April 10, 2007.



      Senate Hearing Will Probe Pet Food Safety...

      Road To Ruin: Subprime Lending In The Auto Industry


      Wall Street is beginning to worry that subprime lending, currently unraveling in the mortgage industry, will deliver a double whammy to the economy as more and more consumers, who financed their cars with subprime loans, default. If it happens, consumer activists say banks and car dealers only have themselves to blame.

      "Car dealers are destroying their market, with phony loan documents and hidden charges that are driving their subprime customers into default," said Duane Overholt, founder of StopAutoFraud.com.

      Overholt is a shady car dealer's worst nightmare. In the business for 25 years, Overholt stood up and blew the whistle in 1997. At the time, by his calculation, he had swindled consumers out of $33 million. Today, he says, abuses at auto dealerships are even worse.

      "In 1997, the average rip-off that I could identify, because I did it, was about $1,200 a car. Today it's over $4,000 per automobile."

      The rip-offs don't just come on the price of the car, but on the financing. And Overholt says the subprime customer has provided an easy mark for the unscrupulous dealer.

      The customer who has little money and poor credit gets saddled with a very high interest rate. In addition, the consumer is charged for things that aren't really there, inflating the price of the car and -- more critically -- the amount the consumer must finance.

      They're doing it, he says, by falsifying documents. On the credit application, income is inflated and length of employment is increased to make the subprime borrower look more credit worthy, so they can afford a more expensive car, with those higher than necessary monthly payments.

      "They're taking other documents the bank requires, such as a book-out sheet, showing the equipment on the car, and falsifying that," Overholt charged. "Now, that's a very key document because it establishes the value of the car. These two documents they falsify consistently."

      For example, a consumer may want to purchase a used SUV that is actually worth $12,000. But as chrome wheels, alarm systems and premium sound systems are added on paper -- but not installed -- the price of the car rises to $15,000. As a result, the bank lends more money on the car than it's actually worth.

      "The customer is not only upside down because of the interest rate, there's equipment on the car that doesn't really exist, and they've been put into an automobile they know they really can't afford," Overholt said. "The consumer always believes that the bank is the good guy, that it's not going to lend them money they can't afford to repay. But that's not the case."

      How many car dealerships engage in these fraudulent practices?

      Overholt admits that it's hard to know for sure, but he believes it could be as many as 60 percent, with more succumbing to the pressure all the time. One rule of thumb, he says, is the bigger the car dealer, the more likely it is to be ripping off its subprime customers. Recently, automotive site Edmunds.com hired an undercover reporter to expose fraud in the showroom.

      Overholt says there was very little subprime lending on cars until about 1992. Prior to that time, when a person wanted to buy a car but didn't have credit, they depended on their parents to co-sign for them, or they saved up more money for a down payment, so they could get a decent interest rate.

      Car dealers embraced subprime lending because it opened up a vast new market of previously unqualified consumers, allowing Detroit to turn out more cars and fueling dealership growth, turning many into publicly-traded chains selling cars nationwide. With that growth came increasing pressure to bend the rules.

      "What the financial institutions have decided to do in order to get some of that revenue is to defraud customers," said William Cunningham, an investment advisor at Washington, D.C.-based Creative Investment Research. "The hard way to go about maximizing shareholder value is to provide absolutely excellent value to customers, but that's hard to do. It's easier to defraud a customer by adding $5,000 to the cost of a new vehicle, or by charging a higher interest rate than you should."

      Cunningham, whose expertise is mortgage lending, has closely followed the implosion of the subprime mortgage market. He traces the problems to the very concerns Overholt has expressed.

      "A lot of these predatory lending practices that are now showing up in the housing industry started out in the auto industry. When they weren't caught adding thousands of dollars to the cost of a car loan, those practices bled over to the housing sector," Cunningham said.

      "A lot of these predatory practices were first put onto people in communities of color; in Hispanic communities, where there are language issues, and in African-American communities, where there is a problem just from a net-wealth standpoint. We've seen these practices that started out in communities of color now move into the broader community."

      In fact, Cunningham charges the subprime category has an inherent gender and racial bias, with women and minorities making up the bulk of subprime borrowers.

      "Fifty years ago there weren't many women and minorities in that group of prime borrowers so you didn't really have a solid database that you could use to estimate the probability of repayment," Cunningham said. "And remember, that's what all these credit rating systems are supposed to do. They're supposed to evaluate your ability to repay a certain loan. Strangely enough, your ability to repay a loan goes down as the cost of the loan goes up."

      It's also young people who tend to make up the bulk of the subprime market. A young person just out of college with a decent job may have to settle for a subprime loan on that first car.

      "You start off at a higher rate, so you're behind the eight ball from the beginning," Overholt said.

      After the young person gets married, buys another car and then a house, the couple are firmly entrenched as subprime customers. As a result, they're paying double-digit interest rates on both vehicles and their home mortgage payment may be adjusted upward by $240 a month. Suddenly the young couple has a credit problem.

      "Now, did they create that credit problem, or did the lenders and the dealers create that problem?" Overholt asks.

      It's these kinds of consumers Overholt says he is trying to help. When consumers contact him with a complaint, he studies their documents, looking for signs of predatory lending. If he sees the signs, he sends in undercover "secret shoppers," sometimes wired with microphones and hidden cameras if state law allows. He has helped consumers bring lawsuits against a number of dealers. He's helping, he says, because no one else will.

      "The American public should realize the federal government is not protecting them anymore," he said. "Most states have abandoned, abolished or modified their deceptive trade practices laws."

      But lawmakers may have gotten the message, not so much from consumers as from Wall Street. When a major subprime lender like New Century Financial goes from making a $60 billion profit in 2006 to declaring bankruptcy in 2007, Washington and Wall Street take notice.

      The director of the Federal Deposit Insurance Corp. joined lawmakers recently in calling for a national standard to crack down on predatory lending. Meanwhile, Democrats in Congress have scheduled a number of hearings on predatory lending as a prelude to promised legislation. Overholt, however, remains highly skeptical.

      "There are laws on the books now to protect the consumer from predatory lending," he said. "Nobody is enforcing them."

      Road To Ruin: Subprime Lending In The Auto Industry...

      Study Warns Ibuprofen May Increase Heart Attack Risk

      Some patients may be nine times more likely to suffer a heart attack

      There's new evidence that people with an increased cardiovascular risk need to be careful when using over-the-counter pain medication.

      A team lead by researchers at Mount Sinai School of Medicine has found that ibuprofen increases the risk for osteoarthritis patients already prone to a heart attack.

      The researchers compared combination treatments of low-dose aspirin with the drugs ibuprofen, naproxen and the cox-2 inhibitor lumiracoxib. They have found that high cardiovascular risk patients taking ibuprofen and aspirin combined are nine times more likely suffer a heart attack.

      This new study, published in Annals of the Rheumatic Diseases, suggests that ibuprofen interferes with the blood thinning properties of aspirin in patients at high risk for cardiovascular disease.

      Past evidence suggests that both selective cox-2 inhibitors and non-selective non-steroidal anti-inflammatory drugs or NSAIDs increase the risk of cardiovascular events. However, research has been lacking in the high cardiovascular risk population of patients taking aspirin, in combination with these pain medicines used for osteoarthritis.

      Mount Sinai researchers are among the first to study this area and have found that the common painkiller ibuprofen used for osteoarthritis, may boost the likelihood of heart problems in high cardiovascular risk patients who are already taking aspirin.

      "Ibuprofen has a significantly higher rate of major cardiovascular events, mostly heart attacks, when compared to a COX-2 inhibitor," said Dr. Michael E. Farkouh, M.D., of Mount Sinai Heart. "The findings underscore the importance of not only considering the class of NSAIDs used in high risk cardiac patients with osteoarthritis but also making physicians aware of the interaction of NSAIDs with aspirin, diminishing any beneficial effects."

      The cardiovascular health of 18,523 patients over 50 years age with osteoarthritis were compared by researchers in the TARGET trial. Patients were taking high doses of lumiracoxib (Cox-2 inhibitor), or either of the NSAIDs- ibuprofen or naproxen.

      In patients with osteoarthritis at high cardiovascular risk not taking low-dose aspirin treatment, the rate of heart attacks was higher for those on lumiracoxib than it was for patients on naproxen. It was no higher for patients on ibuprofen. However, in patients at high cardiovascular risk taking low dose aspirin, ibuprofen was associated with a higher incidence of cardiovascular events than lumiracoxib and naproxen.

      The findings show interference of ibuprofen on the effects of aspirin in high cardiovascular risk patients.

      "This is the first randomized trial evidence to show risk of interaction between ibuprofen and aspirin to be real," said Farkouh. "Doctors should not give high risk cardiovascular patients ibuprofen for pain while they are taking aspirin for their heart. Cardiologists, rheumatologists and gastroenterologists need to work together to fully evaluate the evidence at hand to make proper recommendations to primary care physicians."



      Study Warns Ibuprofen May Increase Heart Attack Risk...

      Air Travelers Association Opposes Passenger Bill of Rights


      An advocacy organization, the Air Travelers Association (ATA), says it opposes the Passengers Bill of Rights legislation under consideration by the U.S. Congress.

      ATA president David Stempler says the bill would actually make things worse for air travelers. He cites the following reasons:

      • Cancellations would increase
      • Air fares would rise
      • Safety could be compromised
      • A single passenger could wield veto power over pilots, dispatchers, controllers, and other trained officials.

      In addition, according to Stempler, penalties to punish airlines for extensive delays already exist and no further penalties are needed.

      The ATA's position coincides with that of the airline industry, which insists it can police itself.

      Congressional impetus for a Passengers Bill of Rights followed a Feb. 14 ice storm that snarled air traffic in the northeast and resulted in nine JetBlue flights waiting on the JFK tarmac for 6-10 hours apiece.

      The ATA insists passage of the congressional bill would create even more chaos.

      For example, it says the bill would give one passenger the right to leave a plane that sits three hours on the ground prior to departure or upon arrival, with two 30-minute extensions, except if there is a risk to safety or security.

      The ATA says airlines would deal with that caveat by canceling, rather than delaying flights, thus making it harder for passengers to reach their destinations -- sometimes for days -- because of unavailable seats on subsequent flights.

      Because such cancellations reduce revenues and raise costs for airlines, and because the Passenger Bill of Rights requires food to be carried aboard every flight, the ATA predicts carriers would probably respond to passage by raising fares.

      Because the bill places penalties on airlines for delays, cancellations, and diverted flights, airline safety could be jeopardized by carriers that decide to do anything to avoid potential fines, ATA argues.

      Allowing a single passenger to order a flight cancellation also works against the greater good, the ATA says, since operational control of planes should remain in the hands of pilots, dispatchers, air traffic controllers, meteorologists, and others working in concert for airline safety.

      "Passengers angry at the airlines tend to be in favor of the Passenger Bill of Rights because they want to punish the airlines," Stempler says. "But in fact, they will punish themselves ... the PBOR will hurt passengers, not help them."

      Stempler is an aviation attorney and has a background in all areas of aviation. He has been president of two regional airlines and a senior vice president of a jet charter company. He was part of the legal team that was responsible for the grounding of all DC-10 aircraft in 1979.

      ATA says it "advocates for airline passengers on airline safety, security, savings, and service." Its Web page says the organizaiton "is not currently offering memberships." Its Web site offers no information on how many members the association has. Calls to its office were not answered.



      Air Travelers Association Opposes Passenger Bill of Rights...

      Vonage Gets a Reprieve but its Future is Murky

      Verizon Wins Patent Infringement Case, a Potentially Fatal Blow

      Internet telephone pioneer Vonage got at least a temporary reprive from an almost certain death sentence when a federal appeals court temporarily stayed a federal judge's order that Vonage stop signing new customers until it stops infringing on patents held by Verizon.

      U.S. District Judge Claude Hilton ruled Friday morning that Vonage stop signing new customers after a jury found that it had infringed on several patents held by telecom giant Verizon. Hilton said he considered the possibility that his order could result in bankruptcy for Vonage, which has seen its stock price plummet in recent months.

      But Hilton said he concluded that there is adequate competition in the telecommunications industry and that, whether or not Vonage survives, the public will have adequate access to telephone service.

      Vonage is running low on cash and has promised its investors it will grow quickly to reach profitability. It's been losing customers nearly as fast as it signs new ones, so if the judge's no-new-customers order is reimposed, Vonage could see its existing base of 2.2 million customers erode quickly.

      It's also possible existing customers will begin deserting Vonage more quickly, fearing that it could go out of business and leave them without service.

      Customers Restless

      Vonage says it is working to find ways around the patented processes so that it can get back in the race. But even if it solves the technical and legal hurdles, Vonage faces a growing chorus of consumer complaints that may be nearly as effective as a court order in stemming future sales.

      Although it advertises extensively and attracts a steady stream of new customers, Vonage has had a hard time hanging onto customers. Many complain about the audio quality of their phone calls, while others are never able to master the hook-up process, which requires installing a router between their Internet connection and their telephone. Billing disputes are also a common theme in the more than 400 Vonage complaints filed with ConsumerAffairs.com.

      "I had dropped calls, couldn't call or receive calls, etc. So, I decided to go back to my land line," said Ashby of Forest Hill, Md.

      "Vonage promised service that could not be delivered, stalled for several months and have billed me for service not delivered," said Peter of Big Bear Lake, Calif. "I have called for a resolution on this matter many times, they simply shuttle the calls from one nincompoop to another until the customer gives up."

      Vonage also faces a consumer class action filed in U.S. District Court in California which charges that it misled consumers about the quality and reliability of its service and engaged in false advertising and deceptive business practices.

      Verizon Suit

      Verizon sued Vonage in June, claiming that Vonage had illegally used key technologies owned by Verizon to connect Internet calls to regular telephone networks and claimed it had lost hundreds of thousands of customers to Vonage as a result of the infringement.

      Like many companies that try to capitalize on new technology, Vonage has attracted numerous competitors, including the huge telephone and cable companies it had hoped to displace. Much of the growth Vonage had hoped for has instead gone to the cable companies, which have aggressively rolled out telephone service packages bundled with high-speed Internet and video services.

      Between them, Cablevision and Time Warner have signed more than 3 million customers, business that Vonage had been counting on to meet its projections.

      Vonage has also run afoul of the regulatory thicket that is the telecom market. It has been required by regulators to add many of the very fees and surcharges already collected by its old-line competitors. That has taken away much of the low-cost advantage Vonage had been counting on.

      Since it sells itself as a replacement for traditional telephone service, Vonage also found itself required to beef up its 911 service, a major unanticipated expense.

      Defenders

      Not everyone is critical of Vonage. The president of CompTel, a telecommunications trade association, says Verizon is using its market dominance to stamp out competition.

      "We're seeing a still-dominant monopoly aggressively using its monopoly revenue to pursue and drive out of the market competitors," Earl Comstock told The Washington Post. "This isn't about protecting their patents. It's about crushing their competitors."

      Comstock predicted Verizon will use the same tactic to go after other competitors.

      Vonage Gets a Reprieve but its Future is Murky...

      Airline Passenger Revolt Spreads to Europe

      Americans aren't the only ones tired of being stuck, stranded and ignored

      Passengers of U.S. airlines arent the only ones demanding an end to the cycle of delays, cancellations, tarmac holds, lost luggage, and poor communication tendencies.

      Europeans are in the same boat -- or perhaps wish they were in a boat, a train, or a car.

      Anything but an airplane.

      Roiled by repeated complaints from consumers on the other side of the Atlantic, the 27-member European Union has given member states six months to comply with passenger protection rules.

      If they dont enforce those rules, which were enacted two years ago, legal actions may follow.

      The country with the most complaints is Great Britain, where more than 6,000 passengers went on record between February 2005 and September 2006.

      According to Jacques Barrot, the EUs Transport Commissioner, several member countries do not have specific offices to handle complaints. Even those that do, he said, are obligated to require responses from airlines.

      In an official report, the EU stated that too many complaints received no answer, while others were answered poorly by carriers.

      In the United States, legislation designed to enact a Passenger Bill of Rights was introduced after wild winter weather caused a myriad of diversions, delays, and cancellations.

      At least two planes left without their passengers after being diverted to other cities, while several airlines left planes idling for up to 10 hours on icy runways.

      During a Feb. 14 ice storm, nine JetBlue planes sat for hours on the JFK runway and US Airways encountered a luggage snafu that enveloped its Philadelphia hub. Both carriers needed almost a full week to recover.



      Airline Passenger Revolt Spreads to Europe...

      American Bullie Pet Chews Contaminated with Salmonella


      The Food and Drug Administration is warning consumers not to use American Bullie A.B. Bull Pizzle Puppy Chews and Dog Chews manufactured and distributed by T.W. Enterprises, Ferndale, WA, because they have the potential to be contaminated with salmonella, which can cause serious infections in dogs and cats, and, if there is cross-contamination, in people, especially children, the aged, and people with compromised immune systems.

      The recall is not related to the massive recall of wet dog food, snacks and other products made with contaminated wheat gluten.

      Consumers who have the pet treats manufactured or distributed by T.W. Enterprises listed below should not feed them to their pets, but instead dispose of them in a safe manner (e.g., in a securely covered trash receptacle).

      Salmonella can potentially be transferred to people handling these pet treats, especially if they have not thoroughly washed their hands after having contact with the products or any surfaces exposed to these products. Salmonella-infested peanut butter sickened consumers nationwide late last year.

      Healthy people infected with salmonella should monitor themselves for some or all of the following symptoms: nausea, vomiting, diarrhea or bloody diarrhea, abdominal cramping and fever.

      Rarely, salmonella can result in more serious ailments, including arterial infections, endocarditis, arthritis, muscle pain, eye irritation, and urinary tract symptoms. Consumers exhibiting these signs after having contact with this product should contact their healthcare providers.

      Pets with salmonella infections may be lethargic and have diarrhea or bloody diarrhea, fever, and vomiting. Some pets will have only decreased appetite, fever and abdominal pain. Well animals can be carriers and infect other animals or humans. If your pet has consumed the recalled product and has these symptoms, please contact your veterinarian.

      The products covered by this alert include all sizes and lots of American Bullie A.B. Bull Pizzle Puppy Chew and Dog Chew (made from all American beef pizzle).

      Following is a list of the affected products:

      • A.B. Small Chew, small, 3-4 inch
      • A.B. Puppy Chew, 4-6 inch
      • A.B. Dog Chew Medium, 6 inch
      • A.B. Dog Chew Large, 10 inch
      • A.B. Dog Chew XL, 13 inch
      • A.B. Dog Chew Mega, 16 inch
      • A.B. Dog Chew Jumbo, 26 inch

      FDA collected samples of packages of three different sizes of bull pizzle (beef) dog chews manufactured by T.W. Enterprises and, after analysis, found salmonella in one of them. FDA is including in its alert all sizes and all lots of bull pizzle chews manufactured by T. W. Enterprises because pizzles used in manufacturing the chews are processed at the same time, cut into chews of the desired sizes, and then packaged for sale.

      Differently sized chews are thus obtained from the same batch or lot of pizzles and manufactured under conditions that facilitate cross-contamination within batches or lots. It is impossible to differentiate chews manufactured by T. W. Enterprises by lot or batch numbers or dates of manufacture because packages of the firm's chews are not coded with batch or lot numbers, and do not specify the dates of manufacture or bear expiration dates.



      Pet Chews Contaminated with Salmonella...

      IRS Loses Nearly 500 Computers Over Three Years

      By Martin H. Bosworth
      ConsumerAffairs.com

      April 6, 2007
      More bad news for the IRS as tax time approaches -- an audit performed on the Internal Revenue Service (IRS) by the Treasury Department's Inspector General found that the IRS has lost 490 computers between 2003 and 2006, and that the personal information of roughly 2,359 taxpayers is at risk as a result.

      Moreover, the report found the IRS had poor security practices for protecting its machines, including easy-to-guess passwords and weak or no encryption, and that the total amount of exposed taxpayer data is difficult to estimate.

      Deputy Inspector General Michael Phillips and his team performed inspections of 100 laptop computers in use at the IRS. Of those laptops, 44 contained sensitive, unprotected information on agency personnel and taxpayers. Many of the examined laptops had simple username and password combinations, making them easy to access.

      "[W]e believe it is very likely a large number of the lost or stolen IRS computers contained similar unencrypted data," Philips said in the report. "Employees did not follow encryption procedures because they were either unaware of security requirements, did so for their own convenience, or did not know their own personal data were considered sensitive."

      Among the report's findings:

      • 111 laptop computers were lost or went missing from IRS offices between 2003 and 2006, the highest overall percentage of the total of missing computers. The audit found 89 instances of laptops lost or taken from vehicles, and 35 instances of laptops taken from residences.

      • Of the 100 employees interviewed for the audit, 20 had portable "flash drives" or memory sticks that they stored data on without using any encryption, and 54 of the employees stored sensitive data on CD's, DVDs, and floppy disks.

      • Several of the examined computers were set to boot up from locations other than the primary hard drive, such as a CD drive, which enables any user with operating software to operate the computer and bypass password protection.

      The Treasury IG noted that the IRS was already taking steps to address its concerns and implement its recommendations, chiefly centering on more stringent education and training in protecting sensitive information and securing laptops. IRS Commissioner Mark Everson told Computerworld that the issue of data security is a top priority for him and the agency.

      "Historically, missing laptops were treated by us and [the Inspector General for Tax Administration] as a loss of IT hardware rather than as a potential loss of taxpayer data or personally identifiable information," Everson said. "Clearly, this was not the proper response."

      The Government Accountabiliy Office (GAO) has issued several reports criticizing the IRS for failing to provide proper security procedures for its data, such as not limiting access privileges on machines containing sensitive data, and not ensuring training of employees in data security. The most recent report was issued on April 2.

      One area of laptop theft protection the IRS does employ is in using remote systems linked to the computer to track it whenever it logs on to the Internet. Companies such as CyberAngel and Absolute have been ramping up their marketing efforts to government clients in order to get agencies using their laptop-tracking software.

      The Treasury report is available as a free PDF download.

      IRS Loses Nearly 500 Computers Over Three Years...

      Judge Orders Vonage to Stop Signing New Customers

      Decision in Verizon Patent Case is a Major Blow to Vonage

      In the latest blow to Internet telephone carrier Vonage, a federal judge has ruled the company must stop signing up new customers until it stops infringing on patents held by Verizon.

      Vonage has promised its investors it will grow quickly to reach profitability -- something it won't be able to do if it can't sign new customers. The company said it will immediately appeal the judge's ruling, which followed a decision by a jury in Alexandria, Va., that Vonage had infringed on key Verizon patents.

      Vonage also faces a consumer class action filed in U.S. District Court in California which charges that it misled consumers about the quality and reliability of its service and engaged in false advertising and deceptive business practices.

      In his decision, U.S. District Judge Claude Hilton said he considered whether the order could result in bankruptcy for Vonage, which has seen its stock price plummet in recent months. He said he concluded that there is adequate competition in the telecommunications industry and that, whether or not Vonage survives, the public will have adequate access to telephone service.

      Verizon sued Vonage in June, claiming that Vonage had illegally used key technologies owned by Verizon to connect Internet calls to regular telephone networks and claimed it had lost hundreds of thousands of customers to Vonage as a result of the infringement.

      Vonage, which currently has 2.2 million subscribers, says it is working on alternative means of handling calls.

      Judge Orders Vonage to Stop Signing New Customers...

      Subprime Loans Led To Decreased Homeownership

      Study Finds No Net Increase in Home Ownership Despite Lending Bonanza

      Subprime loans, currently at the center of a crises in the mortgage industry, were supposed to be a good thing. Designed for consumers with little or no credit, subprime loans were supposed to allow millions of Americans shut out of the housing market to have a shot at the American Dream.

      Nine years and $2 trillion in subprime loans later, critics charge there has not been a net increase in homeownership. In fact, the Center For Responsible Lending says homeownership numbers are moving in the opposite direction.

      According to a CRL report, about 1.4 million first-time home buyers purchased their homes using subprime loans from 1998 through 2006. The group estimates that over 2.2 million borrowers who obtained subprime loans will lose or have already lost their home to foreclosure.

      Updating the analysis to include subprime originations for fourth quarter 2006 increases the total number of projected subprime foreclosures to 2.4 million.

      CRL estimates that subprime loans made during 1998-2006 have led, or will lead to a net loss of homeownership for almost one million families. In fact, the group argues, a net homeownership loss occurs in subprime loans made in every one of the last nine years.

      How can that be? Because, says CRL, most subprime loans are not made for the purchase of a home. They are made to refinance an existing mortgage.

      The report argues that until the recent boom in housing prices, the overwhelming majority of subprime loans were refinances. Even in 2006, subprime refinance loans accounted for a majority (56%) of all subprime loans originated.

      These loans were made to people who already owned homes, but who were tapping into their homes' increasing equity, while being saddled with high interest rates and risky features.

      CRL estimates that since 1998, only nine percent of subprime loans have actually gone to first time home buyers. The rest went to people responding to all those TV commercials about how easy and inexpensive it is to tap into your home's equity.

      "History has shown that borrowers with lower incomes or blemished credit can be successful homeowners when given suitable mortgages with reasonable terms and fees," the authors wrote. "But lax underwriting practices, dangerous loan products, and a disregard for affordability have set up vulnerable homeowners to fail.

      "As a result, millions of families with the most to gain from ownership have lost their homes and billions of dollars in equity."

      Subprime Loans Led To Decreased Homeownership...

      Pet Food Recall Expanded to Sunshine Mills Dog Biscuits

      Menu Foods Expands Its Recall to Foods Made in November


      The Sunshine Mills Co. announced today that it's recalling some of its dog biscuits after learning the products were made with tainted wheat gluten imported from China.

      The company said the dog biscuits involved in the recall were made at its Red Bay, Alabama, plant during part of March, 2007, and include such brands as Nurture Chicken & Rice, Pet Life Large, Lassie Lamb and Rice, and Pet Life People Pleasers Dog Treats.

      The Red Bay, Alabama, company used wheat gluten that may contain melamine, the toxin blamed for a fast-growing number of animal deaths throughout North America.

      "We still have a lot of work in understanding why melamine is involved," said Stephen Sundlof, the director of the Center for Veterinary Medicine at the U.S. Food and Drug Administration, at a news conference.

      The company said no illnesses or deaths have been reported -- to date -- in connection with these dog biscuits. It also said none of its small and medium sized biscuits -- or its dry dog and cat food and soft and chewy treats for dogs and cats -- are involved in the recall. A complete list of the recalled products is available on the company's Web site: www.sunshinemills.com. Pet owners can also call the company at 1-800-705-2111.

      In related news today, Menu Foods announced it's extending its original recall of 95 brands of "cuts and gravy" style cat and dog food to include a broader range of dates.

      The company said it's expanding its recall to include all products manufactured with wheat gluten -- that was purchased from ChemNutra Inc. -- from November 8, 2006 to March 6, 2007.

      Menu Food's earlier recall included products manufactured during a three month window-from December 3, 2006 through March 6, 2007.

      Dry Food Implicated

      Meanwhile, consumers who fed their dogs dry food say their pets are now becoming sick or drying. And their dogs' symptoms, they say, mirror those in pets who have eaten one of the recalled wet foods.

      There are no dry dog foods on the recall list.

      Hills Pet Nutrition recalled some of its dry cat food -- Prescription Diet m/d Feline Dry Food -- because the company that supplied its wheat gluten also supplied that same melamine-tainted product to Menu Foods.

      But in the past few days, ConsumerAffairs.com has heard from pet owners across the country who say their dogs become seriously ill or died after eating dry food.

      They're pet owners like John P. of San Diego, California, who fed his dog Nutro Max dry food.

      "My Dobie died today," he told ConsumerAffairs.com on Monday. "And my Beagle has been throwing up. This problem (of tainted pet food) is larger than anyone is admitting yet. Please feed your pets human food until this is corrected."

      Ayden

      Cindy C. of Tallahassee, Florida, says her three-year-old dog also became seriously ill after eating Nutro Max dry food.

      "He became very lethargic, was drinking a lot of water, and breathing heavy," she says of her dog, Ayden. "Then his belly began to swell ... it was really huge."

      Cindy's veterinarian originally suspected heartworms because Ayden's belly was so distended. But those tests came back negative.

      The vet then put Ayden on a diuretic and told her to bring him back in five days.

      "During this same time, I took Ayden off the Nutro Max and started feeding him chicken and rice," Cindy says, adding her dog had eaten Nutro Max for about a year and hadn't had any problems. "When I took him back to the vet a second time, I had enough money for more tests. Those tests showed Ayden's creatine levels were high, so the vet said to take him off the diuretic."

      Cindy says this occurred in February -- weeks before Menu Food announced its massive recall of 60 million containers of pet food.

      That's why she didn't think twice about giving Ayden the Nutro Max dry food again.

      "But his belly immediately began to swell up again," she says. "That same week, the news came out about the tainted pet food and I saw that Nutro Max was on the list. It was the wet food, but I thought I'm not taking a chance, and I took him off the dry food."

      How's Ayden doing now?

      "He's fantastic," she says, adding she now feeds him a brand of dog food that doesn't contain corn or wheat gluten. "Since I stopped feeding him the Nutro Max, his belly is back to normal, his breathing is fine, and he has his energy back. We took our first walk together this past weekend."

      Cindy says she contacted ConsumerAffairs.com to warn other pet owners about potential problems with dry dog food.

      "I'm convinced that the dry food was also contaminated with poison," she says. "It just seems so odd to me that when I started giving him the Nutro Max dry food again -- before I knew about the recall -- that he started getting bloated again.

      "I don't want to start a scare. I just felt a responsibility to share my experience with others."

      On its Web site, Nutro Products' President and CEO Dave Kravis states: "There are NO Nutro dry pet foods included in this recall, our dry pet foods contain NO wheat gluten and NONE of our dry pet foods are manufactured by Menu Foods."

      He adds: "Nutro is preparing to implement additional guidelines that will ensure that the quality control measures used by our co-manufacturers and their suppliers are strengthened so that this deeply troubling situation never happens again."

      Two California pet owners also contacted ConsumerAffairs.com this week with concerns about other brands of dry dog food. One of those pet owners says she had to put her dog to sleep because he became so sick after eating Iams dry food.

      "My dog was 15, but very active and spunky," says Angela of Alamo, California. "He was fed Iams dry dog food and became very ill, very quickly ... he was lethargic, lost weight rapidly, was vomiting, urinating in the house, and could not walk."

      Angela says her dog went into acute renal failure and she had to make the difficult decision to put him to sleep.

      "It was horrible. I am still so upset and confused and saddened by his loss. I don't understand what happened. He survived a fall off of a 15' ledge, a hernia, and other things and was still spry and happy. "This renal failure took him by surprise and was so devastating," she adds. "He could not even lift his head when he was being taken to the vet."

      Another pet owner, Joanne M. of Desert Hot Springs, California, says her dog became sick after eating another brand of dry dog food -- Stater Brothers.

      "My mini-doxie can't keep his hind legs under him anymore and he is lethargic," she says. "My toy rat terrier threw up all the time and suffered from bloating.

      "I believe Stater Brothers dry pet food reduced calorie for adult dogs should be tested," she says. "Someone needs to test the dry food."

      ChemNutra

      The FDA says that it has traced all of the foods containing melamine to wheat gluten imported from China by ChemNutra Inc. of Las Vegas. ChemNutra has recalled all the wheat gluten it received from the Chinese company that supplied the tainted product.

      ChemNutra said it took the action after the Food and Drug Administration discovered the chemical melamine in samples of the wheat gluten it imported from Xuzhou Anying Biologic Technology Development Co. Ltd. of China.

      ChemNutra said it shipped 792 metric tons of the contaminated wheat gluten from its Kansas City warehouse to three pet food manufacturers -- and one distributor. Those shipments started on November 9, 2006 and ended March 8, 2007.

      Sundlof said melamine is a "relatively non-toxic: substance and suggested it may be linked to another substance that has not yet been identified.

      No Human Food

      ChemNutra said it did not ship any of the melamine-tainted wheat gluten to facilities that make human food. It also said the distributor that received the contaminated wheat gluten only supplies products to the pet food industry.

      ChemNutra said in a press release that one of its pet food manufacturers -- which it did not name -- notified the company on March 8, 2007, that the wheat gluten it sold them -- from Xuzhou Anying -- was one of the ingredients linked to the deaths and illnesses of cats and dogs across the county.

      The company said it immediately quarantined its entire wheat gluten inventory.

      The FDA did not find any other contaminants in the wheat gluten it imported from Xuzhou Anying, the company said. It also said the FDA did not find any impurities in the wheat gluten the company imported from two other Chinese suppliers.

      The recalled wheat gluten came from China in 25 kg. paper bags and each shipment had the certificate of analysis information from the supplier, including batch number and the supplier's content analysis and test results.

      "ChemNutra is extremely concerned about the purity of all of its products," the company said in its press release. "The company is particularly troubled that the certificates of analysis provided by the above-named supplier did not report the presence of melamine."

      Vitamin D

      The animal rights group People For The Ethical Treatment of Animals (PETA) yesterday suggested that excessive amounts of vitamin D in pet food might be the cause of the growing number of kidney problems and deaths in cats and dogs across the country.

      PETA also called for the Commissioner of the Food and Drug Administration to immediately resign for his "complete failure" in handling the Menu Foods recall of 60 million containers of wet dog and cat food.

      PETA Vice President Bruce Friedrich -- citing laboratory evidence -- today urged the FDA to refocus its investigation beyond wheat gluten and consider other possible contaminants in the pet food.

      In his letter to Dr. Stephen Sundlof, director of the FDA's Center for Veterinarian Medicine, Friedrich said: "Wheat gluten is used almost exclusively in wet foods. However, the mounting number of complaints of illness and death in cats and dogs who had eaten only dry food strongly suggests that there is a second source of the poisoning, another toxic ingredient.

      "Evidence from reputable laboratories indicates that an as yet unnamed ingredient may be to blame, perhaps a form of vitamin D."

      Friedrich cited the following examples to illustrate his contention:

      • A manufacturing error last year in the production of Royal Canin pet food resulted in excessive amounts of vitamin D3 in the food. This caused hypercalcemia, an abnormally high level of calcium in the blood that caused animals' kidneys to malfunction;

      • Research in endocrinology at Cleveland Clinic has confirmed that high levels of vitamin D3 in animals' blood causes kidney malfunction;

      • Symptoms associated with excessive vitamin D3 appear identical to the symptoms now being reported in dogs and cats. This has led "us to believe that this vitamin may be implicated in this new horror," Friedrich writes.

      Friedrich asked Sundlof to let him know if the FDA is testing a wide sample of implicated cat and dog foods -- both wet and dry -- for vitamin D3 levels.

      He also implored Sundlof to "please tell the public what other measures you are taking to get to the bottom of this crisis."

      Wheat Gluten

      FDA officials said last week the wheat gluten in the recalled pet foods is contaminated with melamine, a chemical commonly used in plastics.

      But the New York Department of Agriculture and an agricultural laboratory in Canada dispute that finding. They say the pet food is contaminated with a rat poison called Aminopterin.

      The New York lab has 42 scientists and support staff and a $3.5 million annual budget. It tests about 20,000 samples of food annually. It has some of the latest high-tech equipment, some of it purchased with Homeland Security funds as a safeguard against bioterrorism.

      The director of the New York lab, Daniel Rice, told USA Today that all of pieces of the poisoning puzzle have not yet been found.

      "I guess we don't think this is a closed case yet," he said.



      Pet Food Recall Expanded to Sunshine Mills Dog Biscuits...

      Former Morgan Stanley Employee Arrested On Data Theft Charges


      A former Morgan Stanley client service representative was arrested and charged with stealing proprietary information relating to the brokerage firm's hedge fund clients. Ronald Peteka surrendered yesterday and was charged with conspiracy, according to the U.S. Attorney's office in New York.

      Peteka is alleged to have accessed information on Morgan Stanley's hedge fund clients and the rates they pay while he worked for another company, and sending the information to his personal e-mail account several times between December 2005 and February 2006.

      Peteka received the documents from Ira Chilowitz, a former computer consultant for the firm. Peteka is accused of using the information from Chilowitz to help set up his own financial consulting business with another unidentified Morgan Stanley employee.

      Chilowitz was arrested in July on charges of conspiracy, theft, and unauthorized computer access in July 2006. He pled guilty to the charges in February 2007.

      A U.S. magistrate judge set bail for Peteka at $35,000 at his hearing in federal court. Neither Peteka or his lawyers had any comment.

      "The actions by the U.S. Attorney's Office today are just a continuation of those undertaken last summer, which were based on information supplied by Morgan Stanley," the company said in a statement. "A second individual has now been arrested and charged in connection with the misappropriation of proprietary and confidential firm data.

      "Morgan Stanley continues to place the highest priority on maintaining the integrity of confidential information," the company said.

      Ironically,the British branch of Morgan Stanley's Consumer Banking division released a report in January 2007 predicting a rise in identity theft and related crimes. The report cited young people as being the most vulnerable, due to reuse of passwords and not shredding documents with personal information.

      Former Morgan Stanley Employee Arrested On Data Theft Charges...

      Monsanto Wants Feds to Silence Dairies

      No Need to Eliminate Growth Hormones, Chemical Giant Argues

      Monsanto, the giant chemical company, wants Big Brother to protect it from those bullies that hang around the dairy barns.

      The problem, to hear Monsanto tell it, is that dairies such as New England's Hood and California's Alta Dena are making a big deal about how their milk comes from cows that haven't been treated with an artificial growth hormone made by Monsanto.

      The hormone -- recombinant bovine somatotropin -- or rBST -- was approved by the Food and Drug Administration (FDA) in 1993. But many parents fear the substance can cause cancer, premature development or other conditions in children. Some European countries prohibit using the chemical.

      Farmers like the chemical additive because it causes cows to produce about ten percent more milk.

      Some major dairies made the move to rBST-free cows last year to compete more effectively against organic milk and Monsanto argues the dairies have been making health claims that aren't true, causing consumers to spend more for "natural" milk while in fact getting nothing in return.

      Monsanto has complained to the FDA and also to the Federal Trade Commission (FTC), claiming the ads amount to false advertising.

      Monsanto beefed that, on its Web site, Alta Dena says, "By not using rBST, we protect the health of our cows, their milk and our customers." But Monsanto says a study it commissioned looked at 98 brands of milk in 48 states and found no differences in the milk, regardless of whether it was rBST-free or rBST-fed cows.

      Hood and another new England dairy, Garelick, make no health claims but their milk bottles carry labels saying their farmers have pledged not to use artificial growth hormones. Monsanto says that implies that artificial growth hormones are unhealthful.



      Monsanto Wants Feds to Silence Dairies...

      American Importer Recalls All Wheat Gluten

      None of the Melamine-Contaminated Material Used in Human Food, Company Says

      The American company that imported the contaminated ingredient linked to the death and illnesses of pets nationwide has recalled all the wheat gluten it received from the Chinese company that supplied the tainted product.

      ChemNutra said it took the action after the Food and Drug Administration discovered the chemical melamine in samples of the wheat gluten it imported from Xuzhou Anying Biologic Technology Development Co. Ltd. of China.

      ChemNutra said it shipped 792 metric tons of the contaminated wheat gluten from its Kansas City warehouse to three pet food manufacturers -- and one distributor. Those shipments started on November 9, 2006 and ended March 8, 2007.

      The Las Vegas, Nevada, company said it did not ship any of the melamine-tainted wheat gluten to facilities that make human food. It also said the distributor that received the contaminated wheat gluten only supplies products to the pet food industry.

      ChemNutra said in a press release that one of its pet food manufacturers -- which it did not name -- notified the company on March 8, 2007, that the wheat gluten it sold them -- from Xuzhou Anying -- was one of the ingredients linked to the deaths and illnesses of cats and dogs across the county.

      The company said it immediately quarantined its entire wheat gluten inventory.

      The FDA did not find any other contaminants in the wheat gluten it imported from Xuzhou Anying, the company said. It also said the FDA did not find any impurities in the wheat gluten the company imported from two other Chinese suppliers.

      The recalled wheat gluten came from China in 25 kg. paper bags and each shipment had the certificate of analysis information from the supplier, including batch number and the supplier's content analysis and test results.

      "ChemNutra is extremely concerned about the purity of all of its products," the company said in its press release. "The company is particularly troubled that the certificates of analysis provided by the above-named supplier did not report the presence of melamine."

      Vitamin D

      The animal rights group People For The Ethical Treatment of Animals (PETA) yesterday suggested that excessive amounts of vitamin D in pet food might be the cause of the growing number of kidney problems and deaths in cats and dogs across the country.

      PETA also called for the Commissioner of the Food and Drug Administration to immediately resign for his "complete failure" in handling the Menu Foods recall of 60 million containers of wet dog and cat food.

      PETA Vice President Bruce Friedrich -- citing laboratory evidence -- today urged the FDA to refocus its investigation beyond wheat gluten and consider other possible contaminants in the pet food.

      In his letter to Dr. Stephen Sundlof, director of the FDA's Center for Veterinarian Medicine, Friedrich said: "Wheat gluten is used almost exclusively in wet foods. However, the mounting number of complaints of illness and death in cats and dogs who had eaten only dry food strongly suggests that there is a second source of the poisoning, another toxic ingredient.

      "Evidence from reputable laboratories indicates that an as yet unnamed ingredient may be to blame, perhaps a form of vitamin D."

      Friedrich cited the following examples to illustrate his contention:

      • A manufacturing error last year in the production of Royal Canin pet food resulted in excessive amounts of vitamin D3 in the food. This caused hypercalcemia, an abnormally high level of calcium in the blood that caused animals' kidneys to malfunction;

      • Research in endocrinology at Cleveland Clinic has confirmed that high levels of vitamin D3 in animals' blood causes kidney malfunction;

      • Symptoms associated with excessive vitamin D3 appear identical to the symptoms now being reported in dogs and cats. This has led "us to believe that this vitamin may be implicated in this new horror," Friedrich writes.

      Friedrich asked Sundlof to let him know if the FDA is testing a wide sample of implicated cat and dog foods -- both wet and dry -- for vitamin D3 levels.

      He also implored Sundlof to "please tell the public what other measures you are taking to get to the bottom of this crisis."

      Wheat Gluten

      FDA officials said last week the wheat gluten in the recalled pet foods is contaminated with melamine, a chemical commonly used in plastics.

      But the New York Department of Agriculture and an agricultural laboratory in Canada dispute that finding. They say the pet food is contaminated with a rat poison called Aminopterin.

      The New York lab has 42 scientists and support staff and a $3.5 million annual budget. It tests about 20,000 samples of food annually. It has some of the latest high-tech equipment, some of it purchased with Homeland Security funds as a safeguard against bioterrorism.

      The director of the New York lab, Daniel Rice, told USA Today that all of pieces of the poisoning puzzle have not yet been found.

      "I guess we don't think this is a closed case yet," he said.

      PETA Demands Resignation

      In other news, PETA has called for the commissioner of the FDA to resign in the wake of the agency's handling of Menu Food's massive recall. It issued a timeline that it said documented the agency's failings.

      "The FDA is feeding the public a line, and the American people's faith in the government is dying along with dogs and cats," Friedrich says. "The agency's failure to pinpoint the cause of death for animals who have eaten only dry food is cause for the commissioner to resign or be fired."

      In an April 2, 2007 letter, PETA's president Ingrid Newkirk, outlined four specific reasons for FDA Commissioner Andrew von Eschenbach to resign:

      • The FDA's failure to recommend a recall of Menu Foods' products -- or tell the public the pet foods might be harming or killing their animals -- before the company announced its recall on March 16, 2007. PETA says Menu Foods knew "its food was sickening animals as early as February 20, 2007, and killed more animals in a crude feeding test at the end of the month."

      • The FDA's refusal to recommend a recall or advise the public that dry pet food might also be contaminated -- even though the "FDA knew from numerous consumer complaints that dry food has been implicated in this tragedy."

      • The FDA's refusal to name the dry pet food manufacturer that received a contaminated ingredient used in the recalled pet foods. "The FDA refused to name the company or advise consumers which foods to avoid in order to ensure that no more beloved animals would be killed by the FDA-approved food fed to them," Newkirk wrote is the letter.

      • The FDA's apparent cover-up of evidence that reveals melamine is not what's causing cats and dogs to become sick and die. "At the FDA's press conference on March 30, the agency did not report the fact that the New York Department of Agriculture and a top Canadian agricultural laboratory both dispute the FDA's finding," Newkirk wrote.

      She also cited a New York Times article that quoted a spokesperson for the Department of Agriculture saying: "We don't think this is the final conclusion. Melamine is not a known toxin ... we are confident we found Aminopterin, and it makes sense with the pathology."

      Newkirk's letter to the FDA's commissioner also states: "Under your leadership, the FDA adopted a wait-and-see attitude while animals went into renal failure and households and children lost cherished members of their family.

      "Your failure to act in a timely fashion, let along speedily, to demand a recall showed that your interests lie in the protecting the pet food industry's profit margin, not animals and those who love them."

      FDA MIA

      PETA Vice President Friedrich described the FDA as "MIA when it comes to protecting dogs and cats."

      "The FDA has completely abdicated its responsibility of regulating the pet food industry," he told ConsumerAffairs.com today. "It has handed over pet food regulations to a non-governmental agency with no power at all-the Association of American Feed Control Officials."

      PETA has also called for criminal investigations into Iams, Menu Foods, and other companies to determine if there were delays that caused more suffering and deaths of animals.

      In a letter to the Prosecuting Attorney of Hamilton County, Ohio, PETA writes: "As we see it, Iams and its agents may have violated Ohio (anti-cruelty) law. Iams' manufacturer, Menu Foods, reportedly knew about the food contamination issues as early as February 20, yet a product recall was not announced until March 16 -- almost a full month later -- a month in which peoples' animal companions were sickened and may have died.

      "Iams, by delaying its recall announcement, should be held fully accountable for every pertinent death, to the extent allowed by Ohio law."


      American Importer Recalls All Wheat Gluten...

      PETA Suggests Vitamin D to Blame for Animal Deaths

      Group Demands FDA Head Resign for Ignoring Complaints about Dry Animal Food

      The animal rights group, People For The Ethical Treatment of Animals (PETA), says that excessive amounts of vitamin D in pet food might be the cause of the growing number of kidney problems and deaths in cats and dogs across the country.

      PETA also called for the Commissioner of the Food and Drug Administration to immediately resign for his "complete failure" in handling the Menu Foods recall of 60 million containers of wet dog and cat food.

      PETA Vice President Bruce Friedrich -- citing laboratory evidence -- today urged the FDA to refocus its investigation beyond wheat gluten and consider other possible contaminants in the pet food.

      In his letter to Dr. Stephen Sundlof, director of the FDA's Center for Veterinarian Medicine, Friedrich said: "Wheat gluten is used almost exclusively in wet foods. However, the mounting number of complaints of illness and death in cats and dogs who had eaten only dry food strongly suggests that there is a second source of the poisoning, another toxic ingredient.

      "Evidence from reputable laboratories indicates that an as yet unnamed ingredient may be to blame, perhaps a form of vitamin D."

      Friedrich cited the following examples to illustrate his contention:

      • A manufacturing error last year in the production of Royal Canin pet food resulted in excessive amounts of vitamin D3 in the food. This caused hypercalcemia, an abnormally high level of calcium in the blood that caused animals' kidneys to malfunction;

      • Research in endocrinology at Cleveland Clinic has confirmed that high levels of vitamin D3 in animals' blood causes kidney malfunction;

      • Symptoms associated with excessive vitamin D3 appear identical to the symptoms now being reported in dogs and cats. This has led "us to believe that this vitamin may be implicated in this new horror," Friedrich writes.

      Friedrich asked Sundlof to let him know if the FDA is testing a wide sample of implicated cat and dog foods -- both wet and dry -- for vitamin D3 levels.

      He also implored Sundlof to "please tell the public what other measures you are taking to get to the bottom of this crisis."

      Wheat Gluten

      FDA officials said last week the wheat gluten in the recalled pet foods is contaminated with melamine, a chemical commonly used in plastics.

      But the New York Department of Agriculture and an agricultural laboratory in Canada dispute that finding. They say the pet food is contaminated with a rat poison called Aminopterin.

      The New York lab has 42 scientists and support staff and a $3.5 million annual budget. It tests about 20,000 samples of food annually. It has some of the latest high-tech equipment, some of it purchased with Homeland Security funds as a safeguard against bioterrorism.

      The director of the New York lab, Daniel Rice, told USA Today that all of pieces of the poisoning puzzle have not yet been found.

      "I guess we don't think this is a closed case yet," he said.

      PETA Demands Resignation

      In other news, PETA has called for the commissioner of the FDA to resign in the wake of the agency's handling of Menu Food's massive recall. It issued a timeline that it said documented the agency's failings.

      "The FDA is feeding the public a line, and the American people's faith in the government is dying along with dogs and cats," Friedrich says. "The agency's failure to pinpoint the cause of death for animals who have eaten only dry food is cause for the commissioner to resign or be fired."

      In an April 2, 2007 letter, PETA's president Ingrid Newkirk, outlined four specific reasons for FDA Commissioner Andrew von Eschenbach to resign:

      • The FDA's failure to recommend a recall of Menu Foods' products -- or tell the public the pet foods might be harming or killing their animals -- before the company announced its recall on March 16, 2007. PETA says Menu Foods knew "its food was sickening animals as early as February 20, 2007, and killed more animals in a crude feeding test at the end of the month."

      • The FDA's refusal to recommend a recall or advise the public that dry pet food might also be contaminated -- even though the "FDA knew from numerous consumer complaints that dry food has been implicated in this tragedy."

      • The FDA's refusal to name the dry pet food manufacturer that received a contaminated ingredient used in the recalled pet foods. "The FDA refused to name the company or advise consumers which foods to avoid in order to ensure that no more beloved animals would be killed by the FDA-approved food fed to them," Newkirk wrote is the letter.

      • The FDA's apparent cover-up of evidence that reveals melamine is not what's causing cats and dogs to become sick and die. "At the FDA's press conference on March 30, the agency did not report the fact that the New York Department of Agriculture and a top Canadian agricultural laboratory both dispute the FDA's finding," Newkirk wrote.

      She also cited a New York Times article that quoted a spokesperson for the Department of Agriculture saying: "We don't think this is the final conclusion. Melamine is not a known toxin ... we are confident we found Aminopterin, and it makes sense with the pathology."

      Newkirk's letter to the FDA's commissioner also states: "Under your leadership, the FDA adopted a wait-and-see attitude while animals went into renal failure and households and children lost cherished members of their family.

      "Your failure to act in a timely fashion, let along speedily, to demand a recall showed that your interests lie in the protecting the pet food industry's profit margin, not animals and those who love them."

      FDA MIA

      PETA Vice President Friedrich described the FDA as "MIA when it comes to protecting dogs and cats."

      "The FDA has completely abdicated its responsibility of regulating the pet food industry," he told ConsumerAffairs.com today. "It has handed over pet food regulations to a non-governmental agency with no power at all-the Association of American Feed Control Officials."

      PETA has also called for criminal investigations into Iams, Menu Foods, and other companies to determine if there were delays that caused more suffering and deaths of animals.

      In a letter to the Prosecuting Attorney of Hamilton County, Ohio, PETA writes: "As we see it, Iams and its agents may have violated Ohio (anti-cruelty) law. Iams' manufacturer, Menu Foods, reportedly knew about the food contamination issues as early as February 20, yet a product recall was not announced until March 16 -- almost a full month later -- a month in which peoples' animal companions were sickened and may have died.

      "Iams, by delaying its recall announcement, should be held fully accountable for every pertinent death, to the extent allowed by Ohio law."

      Chinese Blamed

      The Food and Drug Administration yesterday blocked the Chinese manufacturer suspected of producing melamine-tainted wheat gluten -- and linked to scores of kidney-related illnesses and deaths in pets across the country -- from importing the product into the United States.

      In an import alert dated March 31, 2007, the FDA identified the Chinese manufacturer as Xuzhou Anying Biologic Technology Development Company -- www.xzay.com -- of Peixian, China.

      "In March, 2007, the FDA became aware of the illness and death of cats and dogs associated with certain pet foods," the alert states, referring to the massive recall of 60 million containers of wet pet food produced by Menu Foods of Canada.

      "Subsequently, samples of the implicated pet food were analyzed and found to contain melamine. The consumption of pet food containing melamine may be associated with acute renal failure in cats. Investigations have revealed that the source of the melamine was wheat gluten, which is an ingredient in the pet food.

      The alert adds: "Appropriate screening criteria have been set for wheat gluten from China and the Netherlands, as a country through which trans-shipping of Chinese wheat gluten may occur. "

      A sales manager for Xuzhou Anying told MSNBC the company was aware of the FDA's import alert. But manager Geng Ziujuan said her company had not made the contaminated wheat gluten, claiming it purchased the product from companies in neighboring provinces of China.

      The sales manager also said Xuzhou Anying sold the wheat gluten to another company called Suzhou Textile Import and Export Company.

      "There are many other exporters and I don't see why they would just blame us," Geng told MSNBC, adding the company was inspecting its products. It's too early, she said, to announce any results.

      Massive Recall

      Menu Foods' massive recall affects such national brands as Procter & Gamble's Iams and Eukanuba, Nestle SA's Purina Mighty Dog and others, including some sold at Wal-Mart and Safeway.

      Other pet food companies, including Del Monte Pet Products and Hill's Pet Nutrition, are now recalling products made with the same melamine-tainted wheat gluten imported from China.

      Del Monte Pet Products recalled some of its wet pet foods and pet treats sold under the Jerky Treats, Gravy Train Beef Stick and Pounce Meaty Morsel brands.

      It also recalled some of its dog snacks sold under private label brands. The company said it took that action after learning from the FDA that wheat gluten supplied to Del Monte Pet Products -- from a manufacturing plant in China -- contained melamine.


      PETA Suggests Vitamin D to Blame for Animal Deaths...

      Feds Sue Jackson Hewitt, Claiming "Pervasive" Tax Fraud

      Preparers Fabricated Deductions, Took Kickbacks, Suit Charges

      The Justice Department has sued five Jackson Hewitt tax preparation franchises who operate more than 125 retail tax preparation sotes in the Chicago, Atlanta, Detroit and Raleigh-Durham, N.C., areas., claiming they prepared fraudulent tax returns for their clients.

      The suit also names 24 individuals who manage or work at the franchises.

      The suits allege that one of the individual defendants, Farrukh Sohail of Atlanta, Ga., owns an interest in each of the five corporations, which prepared and filed over 105,000 federal income tax returns last year.

      According to the government complaint, Sohail and other defendants "created and fostered a business environment" at the Jackson Hewitt franchises "in which fraudulent tax return preparation is encouraged and flourishes."

      Examples of fraud alleged in the lawsuits include filing false returns claiming refunds based on phony W-2 forms; using fabricated businesses and business expenses on returns to claim bogus deductions; claiming fuel tax credits in absurd amounts for customers clearly not entitled to any credits; and massive fraud related to claiming the federal earned income tax credit.

      One complaint cites a Jackson Hewitt franchise customer whose Jackson Hewitt-prepared tax return claimed he was a barber who was entitled to a fuel tax credit for buying 25,000 gallons of gasoline for off-highway business use. The complaint alleges the customer would have had to drive 1,370 miles each day, seven days a week, to consume that much fuel in one year, leaving little if any time to cut hair.

      Last December, the Justice Department sued a Miami tax preparer alleging similar fraudulent claims of the fuel tax credit. In July 2006, a federal court in Miami enjoined a large Jackson Hewitt franchise from asserting frivolous positions on tax returns.

      The suits further allege that some of the Jackson Hewitt franchises' managers and employees received kickbacks from customers for helping the customers file fraudulent tax returns. The suits further allege more than $70 million in combined losses to the U.S. Treasury, and seek court orders barring the franchises and other defendants from preparing tax returns for others.

      "Preparing federal income tax returns based on falsehoods and fabrications is a serious violation of the law," said Eileen J. O'Connor, Assistant Attorney General for the Justice Department's Tax Division. "The Justice Department and Internal Revenue Service are working vigorously to put a stop to these activities."

      "When practitioners prepare a false tax return, it has a corrosive impact on the tax system," said IRS Commissioner Mark W. Everson. "I am deeply disturbed by the allegation that a major franchisee of the nation's second-largest tax preparation firm is intentionally preparing improper tax returns with inflated refunds."

      "I'm particularly concerned that many taxpayers of modest means could actually end up owing the government thousands of dollars if they claimed an improper refund," Everson said.

      Since 2001, the Justice Department's Tax Division has obtained more than 230 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns.

      The current round of litigation is at least the fourth time that investigators have targeted Jackson Hewitt since July. In the most recent case, Jackson Hewitt agreed in January to pay $5 million to settle claims it steered low-income people in California to high-cost loans to tide them over while they awaited refunds.

      In January, Jackson Hewitt agreed to pay $5 million, including $4 million in consumer restitution, to settle a lawsuit filed by California Attorney General Bill Lockyer.

      The suit alleged that the nation's second-largest tax preparation firm violated state and federal laws in marketing high-cost refund anticipation loans (RALs) mainly to low-income customers.

      Feds Sue Jackson Hewitt, Claiming ...