Current Events in September 2010

• "Easy money" for a small amount of work.

• The need to respond immediately.

• Difficulty meeting prospective employers face-to-face.

• Most importantly, at some point during these scams, victims will be asked to wire-transfer money to another person.

Fleecing the consumer

• Poor grammar or misspelled words in ads or email messages.

• The use of "generic" email addresses, like Gmail, Yahoo or Hotmail, rather than a specific business email address.

• A lack of details about the actual job.

• Stories that change frequently.

Read more about Modeling & Talent Agencies

September 20, 2010
A federal court in Pensacola, Fla., has sentenced three of nine promoters of a fraudulent tax-and-debt-elimination scheme to prison terms for their roles in tax fraud, wire fraud and money laundering. Four others were sentenced in July to prison terms ranging from 5 to 12 years. The remaining two will be sentenced in October.

The court sentenced Eugene Casternovia to 7 years in prison and sentenced Arthur Merino to 3 years and 4 months in prison. Mark Lyon, who cooperated with the government and testified at trial, was sentenced to 18 months in prison.

On March 31, 2010, a federal jury returned guilty verdicts against eight people, following a month-long trial in Pensacola involving the promotion of fraudulent schemes through Pinnacle Quest International, also known as PQI and Quest International. The ninth, Lyon, entered a guilty plea and testified against the other eight at trial.

According to the evidence presented during trial, PQI was an umbrella organization for numerous vendors of tax and credit card debt elimination scams. Some of the PQI vendors, such as Southern Oregon Resource Center for Education (SORCE), sold bogus theories and strategies for tax evasion.

For fees starting at $10,000, SORCE assisted its customers in the creation of a series of sham business entities in the United States and Panama. Other tax-related PQI vendors denied the legitimacy of the income tax system on various theories and provided customers with a reliance defense that consisted of a paper trail of frivolous correspondence which a client could allegedly use as evidence of good faith if the client were prosecuted.

At trial, the government established that other PQI vendors sold fraudulent schemes for eliminating credit card debt, the most successful of which was called Financial Solutions. Financial Solutions charged its customers thousands of dollars for a series of letters to send to credit card companies disputing the lawfulness of the underlying debt. The product was wholly ineffective, and customers typically were sued by their creditors and often forced into bankruptcy.

According to the evidence, another PQI vendor, MYICIS, operated as a sophisticated, computerized warehouse bank. MYICIS was a single bank account in which customers pooled their money. MYICIS was promoted to PQIs clients as a method to hide their assets from the IRS as a result of the pooled nature of the account. MYICIS had 3,000 clients and approximately $100 million in deposits over a three-year period.

Evidence introduced at trial showed that PQI purported to sell only CDs and tickets to offshore conferences. However, PQI acted as a gateway to its fraudulent vendors. PQI clients seeking the tax evasion and debt elimination vendors could only access the product if they joined PQI first. The cost of membership ranged from $1,350 to $18,750, depending on the level of access. In May 2008, a federal district court issued a preliminary injunction against the promoters of Pinnacle Quest International.

There are consequences for disobeying the laws of our nation. These defendants are now being held accountable for their criminal behavior, said Victor S. O. Song, Chief, IRS Criminal Investigation. They helped form a series of sham business entities and then promoted fraudulent debt elimination tactics intended for the sole purpose of concealing income from the IRS. Their tactics were fraudulent. There is no secret formula that can eliminate an individuals tax obligation.

The court actions seek to shut down these outfits in Ohio with full restitution to homeowners.

"In each case, the rescue operations charged ridiculously high fees to assist homeowners who were at risk of losing their homes," said Attorney General Richard Cordray. "In the end, homeowners got no help and ended up in deeper mortgage trouble. No Ohioan should ever pay for foreclosure assistance, and we have legitimate housing counselors who help you for free."

The suits were filed against National Homeownership Assistance Foundation Ltd (NHAF), located in Worthington, Ohio, and Stephens Investment & Financial Services dba Lifeline Financial Legal Home Solutions, located in Fort Lauderdale, Fla.

Offered false hope

Cordray accuses NHAF and its managing partner, Casimir S. Suwinski, its general manager, Casimir S. Suwinski Jr. and its president, Arden Banks of charging homeowners on average $2,500 for foreclosure prevention services, such as securing loan modifications from mortgage servicers, and then not providing the service.

In the case against Lifeline, Cordray accuses the operation of claiming that it could "reduce your payments up to 10-50 percent," or "lower your interest rate." After charging thousands of dollars, the company failed to deliver the service. Lifeline also misled consumers by misrepresenting its legal expertise and the availability of legal services, including "retained legal experts."

Complaints about Lifeline Financial are not limited to consumers in Ohio. Edward, of Billings, MT, says he paid the company $1200 in July, 2009, to negotiate a loan modification to save his home from foreclosure.

"Our mortgage company told me LifeLine sent in our Making Home Affordable package in August and then never got back with them as of October 30, 2009," he writes ConsumerAffairs.com. "When I complained they threw us under the bus. I want our money returned to us."

Additionally, Cordray filed a suit against 1st American Law Center Inc. based in Oceanside, Calif. In that filing, 1st American is accused of charging homeowners as much as $4,000 for foreclosure prevention assistance services such as negotiating loans and accepting payment for these services without delivering on its promises.

"I contacted them (1st American) to help lower my mortgage rates and credit cards," writes Randy of Hiawatha, KS. "They would stall and would not answer email or phone calls. When I had enough, I contacted them by phone and stated I wanted out. They finally agreed that I could be let out of the contract. I had paid them $1995.00. They stated that they would give me $1300.00 back." Randy tells ConsumerAffairs.com that as of August 17, 2010, he had yet to receive the money. "This is a bogus company," he concludes, "who prey on people who are struggling to keep afloat."

All three foreclosure rescue operations have been charged with multiple violations of Ohio law, including failure to deliver, misrepresentation and unfair or deceptive acts or practices. Cordray is seeking civil penalties from each of the companies in addition to full restitution for consumers. Further at the AG's request, the court has ordered an attachment of NHAF's assets, pending resolution of the case.

With these lawsuits, Cordray has taken formal legal action against 14 foreclosure rescue scam operations targeting Ohio homeowners since he took office in January 2009. He also has sued three mortgage servicers for unfair or deceptive loan modification practices.

The lawsuits against Carrington Mortgage Services, American Home Mortgage Servicing Inc. and Barclays Capital Real Estate dba HomEq Servicing for violations of Ohio's Consumer Sales Practices Act introduce an unprecedented legal strategy into the fight against foreclosure.

Music fans who paid too much for their Bruce Springsteen concert tickets take heart: the check will soon be in the mail.

An administrator working for the Federal Trade Commission (FTC) has mailed claim forms to 1,018 consumers who are eligible for refunds because they allegedly were steered from the Ticketmaster website to its ticket resale website TicketsNow while buying tickets to attend a Springsteen concert last year.

Ticketmaster and its affiliates agreed to pay refunds to some of the concertgoers to settle FTC charges that they used deceptive bait-and-switch tactics to sell event tickets.

The claim forms were mailed earlier this month to some concertgoers who bought tickets for shows in 14 cities: Glendale, Ariz.; San Jose, Calif.; Los Angeles, Calif.; Denver, Colo.; Hartford, Conn.; Atlanta, Ga.; Chicago, Ill.; Boston, Mass.; Saint Paul, Minn.; East Rutherford, N.J.; Long Island, N.Y.; Pittsburgh, Pa..; University Park, Pa..; and Washington, DC.

According to the February 2010 FTC complaint, Ticketmaster steered unknowing consumers to TicketsNow, where tickets were offered at prices that were sometimes double, triple, or quadruple the face value of the ticket. Under the settlement, these concertgoers will get back the difference between what they paid for their tickets and what they would have paid on Ticketmaster.

For example, if a consumer paid $400 for two tickets from TicketsNow, and those same two tickets would have cost $200 from Ticketmaster, the customer will get a $200 refund.

Ticketmaster provided the FTC with a list that included the 1,018 eligible concertgoers who had not received refunds for the extra money they paid to buy the higher-priced tickets from TicketsNow.

All claims must be made by mail and postmarked on or before October 8, 2010. There is no way to submit a claim form online. No date has been set yet for distribution of the checks.

While Apple's iPad has connectivity through AT&T's network, the new Samsung Galaxy Tab will connect using Verizon Wireless. The product will launch in the coming weeks, Samsung said.

In announcing the product, Samsung failed to mention how much it would cost to buy one. The technology publication PC World notes that a 16GB Samsung Galaxy Tab is already being marketed in the UK, at a price of over $1000, about twice the price of an Apple iPad.

According to a company release, the Galexy will feature a seven-inch touch screen and a 1.2 GHz Cortex A8 Hummingbird Application processor.

"The Samsung Galaxy Tab is an exciting addition to the Verizon Wireless Android portfolio," said John Stratton, executive vice president and chief marketing officer for Verizon Wireless. "Coupled with the nation's largest 3G network, the Galaxy Tab is a powerhouse that will be as exciting to use as it is practical for both consumers and business customers."

Verizon Wireless will market the Galaxy Tab with a number of exclusive applications such as V CAST Music with Rhapsody, V CAST Video on Demand, V CAST Song ID, VZ Navigator, along with games "Let's Golf" and "N.O.V.A."

Flash support

Unlike the original iPad, the Galaxy will offer full support for Adobe Flash 10.1 for video and mobile gaming and an integrated entertainment, multimedia and social networking experience. Apple this month relaxed its ban on Flash apps, saying it was responding to feedback from developers.

Key features of the new tablet computer include:

• TFT display with WSVGA resolution Delivers 1024 x 600 resolution whether watching a movie or reading a book

• Rear-facing, 3.0-megapixel camera and camcorder AutoFocus captures DVD quality video

• Front-facing, 1.3-megapixel camera and camcorder Enables video chat with other people who have video conferencing capabilities (applications available in Android Market)

• Corporate Email Supports Android 2.2 Exchange ActiveSync e-mail to synchronize corporate e-mail, contacts and calendars from office e-mail accounts

• Wi-Fi connectivity (802.11 b/g/n)

• Built-in 2 GB internal memory with 16 GB pre-installed microSD expandable to 32 GB

• 4,000 mAh Battery Provides ample power to watch movies, share content and surf the Web for hours

• Ultra thin and weighing less than a pound For users who don't want to be weighed down by adding a mobile tablet to their pocket or purse

"As unemployed Ohioans searched for jobs, these individuals sought to profit from the desperation of others," said Cordray. "My office has received more than 100 complaints from consumers who felt that they were ripped off by the deceptive practices of NSA Technologies. With this lawsuit, I intend to collect full restitution and stop the abhorrent business practices of these three individuals."

The lawsuit charges NSA Technologies LLC and its principals, Mark W. Jenney of Akron; Victor J. Bierman III of Broadview Heights; and Vincent E. Fisher of Copley with multiple violations of Ohio's Consumer Sales Practices Act (CSPA).

According to the lawsuit, NSA Technologies advertised work from home jobs, self-employment guides and job placement services through online ads. In the suit, Cordray accuses the operation of taking money from Ohioans in payment some victims paid hundreds of dollars apiece and then not providing the services that were purchased.

Additionally, the trio issued flyers to patrons after the purchase, threatening to "blacklist" consumers through www.badcustomer.com if the bank charges were disputed.

The lawsuit charges the operation with violations that include failure to deliver or provide refunds, unfair or deceptive sales practices and unconscionable acts. Cordray is seeking restitution, civil penalties and a permanent injunction.

Work from home jobs - a few tips

Cordray offers the following tips to protect Ohioans searching for work at home jobs:

• Don't pay for help finding work. Some business opportunities involve upfront costs, but for most jobs, you should be making money, not spending it. Be suspicious of companies that make you pay for "exclusive information," mandatory training sessions, starter kits or other materials, especially if they ask you to wire transfer money to a foreign country.

• Check a company's reputation with the Better Business Bureau and search complaints filed with the Ohio Attorney General's Office.

• Don't trust unrealistic salaries or vague job descriptions. Demand a detailed description of the work involved before you commit to a job.

• Beware of lengthy contracts. Don't sign a contract without reading the fine print. Scam artists may try to slip in certain clauses, hoping you won't read them. Written contracts generally are binding, so take the contract to an attorney or trusted friend to review, and don't sign until you fully understand the agreement.

• Take your time. Don't give in to high-pressure tactics. If a company doesn't give you enough time to review a contract or make a decision, don't do business with it.

• Be wary of suspicious interviews. Interviews that take place at unusual locations (such as hotel lobbies, restaurants or other locations outside a normal place of business) are fishy. Be skeptical of group interviews and representatives that seem to be selling the company to you. If you feel pressured, walk away. You probably have good reason to be suspicious.

Among children between the ages of three and 11 years old, 54 percent were exposed to secondhand smoke. Nearly all (98 percent) children who live with a smoker are exposed and have measurable levels of toxic chemicals from cigarette smoke.

Smoking rate steady

According to the report, the number of adult smokers dropped between 2000 and 2005, but smoking has remained at about 20-21 percent since 2005. In 2009, more men (nearly 24 percent) than women (about 18 percent) smoked and about 31 percent of those living below poverty level smoked. Fewer than six percent of adults with a graduate degree smoke compared with more than 25 percent of adults with no high school diploma.

Further, nearly 90 million non-smoking Americans are exposed to secondhand smoke and have measurable levels of toxic chemicals from cigarette smoke. Black non-smokers are one-third more likely than white smokers, and twice as likely as Mexican-American smokers, to have measurable exposure to tobacco.

"Smoking is still the leading preventable cause of death in this country," said CDC Director Thomas R. Frieden, M.D., M.P.H. "But progress is possible. Strong state laws that protect nonsmokers from secondhand smoke, higher cigarette prices, aggressive ad campaigns that show the human impact of smoking and well-funded tobacco control programs decrease the number of adult smokers and save lives."

On the decline

In 2009, smoking among adults was lowest in Utah, followed by California. The Golden State has had a long-running comprehensive tobacco control program. Adult smoking in California declined by about 40 percent during 1998-2006, and as a result lung cancer in California has been declining four times faster than in the rest of the nation.

Maine, New York, and Washington have seen 45-60 percent reductions in youth smoking with sustained statewide efforts. If each state supported comprehensive tobacco control programs for five years with CDC recommended levels of funding, an estimated five million fewer people would smoke, resulting in prevention of premature tobacco-related deaths.

Kicking the habit

The federal government is stepping up its efforts to reduce tobacco use in order to achieve the tobacco use targets in Healthy People 2010 and Healthy People 2020. The 2009 Family Smoking Prevention and Tobacco Control Act gives the Food and Drug Administration (FDA) authority to regulate the manufacturing, marketing, and distribution of tobacco products and has provided new opportunities to reduce tobacco use.

In addition, the Communities Putting Prevention to Work program provides guidance and funding for states and communities to change policies to prevent tobacco use and protect nonsmokers from secondhand smoke. The latter is especially important, according to CDC, given that more than half of young children are exposed to secondhand smoke. Children whose parents smoke are twice as likely to smoke themselves, but kids who grow up in communities with comprehensive smoke-free laws are much less likely to become smokers.

Smoking causes cancers of the lung, mouth, stomach, pancreas, kidney, colon, cervix, bladder and leukemia, as well as heart attacks, stroke, blindness, pneumonia, emphysema and other lung diseases, and many other health problems.

Exposure to secondhand smoke causes sudden infant death syndrome and low birth weight, acute respiratory infections, middle ear disease, exacerbated asthma, respiratory symptoms, and decreased lung function in children. It also causes heart disease and lung cancer in nonsmoking adults.

The study is the first to examine the effect of aerobic exercise on middle-aged and older adults with a diagnosis of insomnia. About half the people in these age groups complain of chronic insomnia symptoms.

The aerobic exercise trial resulted in the most dramatic improvement in patients' reported quality of sleep, including sleep duration, compared to any other non-pharmacological intervention.

Need for sleep

"This is relevant to a huge portion of the population," says Phyllis Zee, director of the Sleep Disorders Center at Northwestern University and senior author of a paper to be published in the October issue of Sleep Medicine.

"Insomnia increases with age," Zee says. "Around middle age, sleep begins to change dramatically. It is essential that we identify behavioral ways to improve sleep. Now we have promising results showing aerobic exercise is a simple strategy to help people sleep better and feel more vigorous."

The drug-free strategy also is desirable, because it eliminates the potential of a sleeping medication interacting with other drugs a person may be taking, says lead author Kathryn Reid, research assistant professor.

Sleep is an essential part of a healthy lifestyle, like nutrition and exercise, notes Zee.

"By improving a person's sleep, you can improve their physical and mental health," Zee says. "Sleep is a barometer of health, like someone's temperature. It should be the fifth vital sign. If a person says he or she isn't sleeping well, we know they are more likely to be in poor health with problems managing their hypertension or diabetes."

Sweating with the oldies

The study included 23 sedentary adults, primarily women, 55 and older who had difficulty falling sleep and/or staying asleep and impaired daytime functioning. Women have the highest prevalence of insomnia.

After a conditioning period, the aerobic physical activity group exercised for two 20-minute sessions four times per week or one 30-to-40-minute session four times a week, both for 16 weeks. Participants worked at 75 percent of their maximum heart rate on at least two activities including walking or using a stationary bicycle or treadmill.

Participants in the non-physical activity group participated in recreational or educational activities, such as a cooking class or a museum lecture, which met for about 45 minutes three to five times a week for 16 weeks.

Both groups received education about good sleep hygiene, which includes sleeping in a cool, dark, and quiet room, going to bed the same time every night, and not staying in bed too long, if you can't fall asleep.

Overall benefits

Exercise improved the participants' self-reported sleep quality, elevating them from a diagnosis of poor sleeper to good sleeper. They also reported fewer depressive symptoms, more vitality, and less daytime sleepiness.

"Better sleep gave them pep, that magical ingredient that makes you want to get up and get out into the world to do things," Reid says.

"Exercise is good for metabolism, weight management, and cardiovascular health and now it's good for sleep," Zee says.

A from booklet the National Institutes of Health. (NIH) available with suggestions to help you get to sleep.

The suit, filed Wednesday in a Chicago federal court, says that Wright County Egg and Hillandale Farms failed to adequately and properly test, inspect and comply with federal and statutory regulations, leading to the outbreak that sickened over 1,500 consumers.

Kenneth Moll, an attorney for the plaintiffs, told Chicago ABC affiliate WLS-TV that the class could eventually grow to over 76,000 people.

The class members include every purchaser and consumer of eggs from both farms from April of this year to August, Moll said. The class seeks reimbursement for everyone who purchased these eggs.

The suit is the first nationwide class action brought over the incident.

The complaint alleges that the farms failed to utilize and/or implement a reasonably sterile environment in the manufacture of eggs; and failed to manufacture eggs in a reasonably safe condition for public consumption. The plaintiffs' attorneys are planning to personally inspect the farms over the next few weeks, an effort they hope will turn up additional evidence.

More bad news

Over the past few weeks, things have gone from bad to worse for the farms that appear to be at the epicenter of the outbreak. Last month, the Food and Drug Administration (FDA) reported that both farms had a number of serious health violations, including rodent and bug infestations, manure, holes in the walls, and dead flies too numerous to count. FDA official Michael Taylor said the conditions represented significant deviations from what should be happening.

Congressional investigations currently underway have uncovered shocking information about one of the the farms' safety records. The House Energy and Commerce Committee discovered documents showing that testing for salmonella at Wright County Egg came back positive 426 times in the period between 2008 and 2010. Up to 67 of those results were this year alone.

Making matters worse, the committee's leadership says that Wright County Egg CEO Jack DeCoster didn't provide those documents when Congress asked him for data in August.

In a joint letter to DeCoster, chairman Henry Waxman and subcommittee chairman Bart Stupak told DeCoster to come prepared to explain why your facilities tested potentially positive for salmonella on so many occasions ... and whether you shared these results with FDA or other federal or state food safety official.

The named plaintiffs are from Illinois, Indiana, Pennsylvania, North Carolina, New York and Mississippi. They are seeking disgorgement of profits from the contaminated eggs, compensatory and punitive damages, and the creation of a monitoring program that can respond to health problems facing class members.

Well, not quite, says a report that finds big banks like Wells Fargo and Bank of America are only too eager to lend billions of dollars to some industries like, oh, the payday lenders.

While small businesses and individuals have struggled to get affordable loans in the wake of the taxpayer bailouts, payday lenders have received new and amended credit agreements from Wall Street, says the report. Instead of wading further into the business of predatory payday lending, big banks need to stop financing these lenders and instead lend to businesses and individuals that create wealth, rather than destroy it.

In fact, the study by grassroot groups National People's Action and Public Accountability Initiative singles out Wells Fargo, saying it finances more payday lenders than any other big bank, pouring fuel onto the already flaming growth of big payday lenders like Advance America and Cash Advance Centers, Inc.

The report, dubbed "The Predator's Creditors," includes diagrams showing the ties between payday lenders and the big banks that benefited from the Troubled Asset-Relief Program, perhaps justifying the Tea Party allegation that the Wall Street bailouts haven't done much for Main Street.

Chart from "The Predator's Creditors" shows links between big banks and payday lenders.

"Ultimately, the big banks that borrow at near-zero interest rates from the Federal Reserve are not far removed from the payday companies that lend money at 500%, the report charges.

Lest anyone thinks the report is making a mountain from the proverbial molehill, the report notes that the growth of the payday loan industry has been virtually explosive, growing from 2,000 payday stores in 1995 to ten times that number today, while loan volume by publicly-traded lenders has nearly doubled from 2003 to 2007, as banks and other traditional lenders began cutting back their consumer loan activity.

Nor is it that the payday lenders simply appeared at the bankers' door. The report chronicles the founding and growth of Advance America, the largest payday lending company. It secured somewhere between $40 and $50 million in financing from Wells Fargo, Wachovia (now part of Wells Fargo) and NationsBank (now Bank of America) before it had even begun operating.

How? "Using their connections," said Gary Rivlin, author of Broke USA, which traces the recent impoverishment of the middle class.

Those connections are still solid. Today, the report finds, big banks offer over $1.5 billion in credit to major, publicly traded payday lenders, about $3 billion to the industry as a whole. Wells Fargo lends to more payday loan companies than any other big bank, lending to both publicly- and privately-held companies.

While some large banks refuse to finance payday lenders because of the "reputational risk," most are only too happy to take the money. And good money it is. The report estimates that major publicly-traded payday lenders paid about $70 million in interest in 2009.

The biggest payday lenders, the report found, are financed by a number of TARP-financed banks, which received billions of dollars in taxpayer bailouts. They include Bank of America, JPMorgan, Wells Fargo, US Bank, KeyBank and Banco Popular.

Instead of wading further into the business of predatory payday lending, big banks need to stop financing these lenders and instead lend to businesses and individuals that create wealth, rather than destroy it, the report charged.

Industry reaction

Industry reaction was swift. A Wells Fargo spokesman said the bank "exercises strict due diligence with these customers." Steve Schlein of a payday lenders organization said payday loans "are a valuable service to millions of American consumers that have short-term financial needs."

In a class action lawsuit filed this week, around 450 Chrysler retirees claim they lost over $100 million in pension payments as a result of the way the bankruptcy was structured. According to the lawsuit, Daimler AG and Cerberus -- Chrysler's former owners -- failed to transfer the pensions to New Chrysler, the company that emerged after the bankruptcy.

Among the plaintiffs is former Chrysler CEO Lee Iacocca, who ironically steered the company away from what looked like inevitable bankruptcy in the late 1970s.

According to the suit, Daimler converted current executives' pensions into annuities back in 2005, when the company began experiencing financial problems. For reasons unexplained, the company failed to do the same with former employees' pensions.

The suit also contends that Cerberus, which bought Chrysler from Daimler in 2007, failed to protect the pension fund from creditors before the bankruptcy -- or perhaps converted the funds itself.

Sheldon Miller, an attorney for the plaintiffs, said in a statement that the shortfall has caused the executives to make drastic changes to their retirement plans at a time when they can't go out and find other jobs to supplement their incomes.

Miller said there are no plans for an additional suit against New Chrysler.

Everybody involved in this suit loves that company and like everybody else wants to see it succeed, Miller said. The plaintiffs in our case are trying to assure that there won't be similar hardships for Chrysler's current employees, many of whom worked for and with the people involved in this suit.

Chrysler has seen more than its share of turmoil over the past decade or so. In 1998, the company was purchased by Daimler-Benz AG, the longtime Mercedes manufacturer. In 2007, Daimler sold 80 percent of the company to Cerbeus, a private equity firm that counts among its leadership former Vice President Dan Quayle and former Treasury Secretary John Snow. Cerbeus gave up its equity stake less than two years later, when Chrysler declared bankruptcy and transferred most of its assets to New Chrysler. Fiat, the Italian automaker, currently has a 20 percent stake in New Chrysler.

By Truman Lewis
ConsumerAffairs.Com

September 16, 2010
It's unofficially official -- the White House is naming Harvard law professor Elizabeth Warren to run the new Bureau of Consumer Financial Protection (BCFP). Sort of.

Technically, President Obama has so far appointed Warren only to a lead role in setting up the agency but around Washington, that's pretty much the same thing. If you insist on knowing the complete title, it's Assistant to the President and Special Advisor to the Treasury Secretary.

The interim appointment means Warren won't yet have to undergo Senate confirmation, a process that would likely be highly unpleasant, given Warren's penchant for outspoken criticism of business and government alike.

The new bureau will be writing and enforcing rules governing credit cards, mortgages and other financial tools that too often turn into traps that trip up the unwary or unlucky consumer. An outspoken critic of Wall Street and big banks, Warren is likely to cause severe indigestion both in New York and Washington, where her scathing criticism of government's response to the mortgage crisis has not been warmly received.

"So many of the people in financial trouble are desperately trying to hold it all together. They are struggling to save themselves, their children and their elderly parents from the consequences of complete collapse. They work hard, but they just can't seem to get it right," said Warren in an interview with the Harvard Law Bulletin earlier this year. "Doing this kind of work is not just about numbers and regressions. It's about human beings."

A native of Oklahoma, Warren earlier this decade ran an intensive Harvard study of 2,000 families that had gone bankrupt. The Harvard Consumer Bankruptcy Project found that even families with two working partners were often just barely scraping by and were in danger of bankruptcy and homelessness if hit with a job loss, divorce or serious illness.

The situation is even worse for single parents, most of whom are women, Warren said. They often have a mere 4 percent of income remaining after they pay their fixed costs -- items like mortgages and rent, car payments, healthcare costs and insurance. All have risen drastically as a percentage of income in recent decades.

She and her daughter, Amelia Warren Tyagi, a Wharton M.B.A. and former consultant with McKinsey & Co., co-authored a book, "The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke" (Basic Books, 2003) that drew on the Harvard study -- and perhaps helped shape her view of the financial meltdown that left so many families bereft over the last few years.

Access to credit

The financial services industry fiercely opposed creation of the BCFP, perhaps fearing a populist like Warren would be named to run it. Bankers and Republicans have claimed the new agency's regulations will do little to protect consumers and will instead make it even harder to get credit.

Known in its legislative gestation period as the Dodd-Frank Wall Street Reform and Consumer Protection Act, the measure was signed into law by President Obama in July, after supporters fought for months to pass the legislation that they say will protect consumers from hidden fees and investment scams and require the financial industry to provide clear information so consumers can make the best financial decisions.

Obama echoed those claims in his remarks as he signed the measure at the Ronald Reagan Building in Washington. "These protections will be enforced by a new consumer watchdog with just one job: looking out for people - not big banks, not lenders, not investment houses - looking out for people as they interact with the financial system," he said.

"If youve ever applied for a credit card, a student loan, or a mortgage, you know the feeling of signing your name to pages of barely understandable fine print. What often happens as a result is that many Americans are caught by hidden fees and penalties, or saddled with loans they cant afford," Obama said.

Obama added: "With this law, well crack down on abusive practices in the mortgage industry. Well make sure that contracts are simpler - putting an end to many hidden penalties and fees in complex mortgages - so folks know what theyre signing.

"With this law, students who take out college loans will be provided clear and concise information about their obligations.

"And with this law, ordinary investors - like seniors and folks saving for retirement - will be able to receive more information about the costs and risks of mutual funds and other investment products, so that they can make better financial decisions as to what will work for them. "

With an eye on the upcoming midterm elections, Republicans -- who had almost unanimously opposed the measure -- said that the government's attempt to more closely regulate banks and Wall Street would lead to more bailouts, not fewer. Republican Rep. Mike Pence of Indiana echoed last week's call by Minority Leader John Boehner (R-Ohio) to repeal the measure.

"This financial-services reform is nothing more than a permanent bailout of Wall Street that will restrict credit, kill jobs, raise taxes and expand government control of the private sector," Pence said.

Obama returned the favor, calling the Republicans "a partisan minority determined to block change."

By James Limbach
ConsumerAffairs.Com

September 16, 2010
Help is available to Connecticut consumers who think they've bought a "lemon" -- a new passenger vehicle or motorcycle that is at the shop for the same problem week after week.

But, for that to happen, they have take part in the state's Lemon Law Program, said Connecticut Consumer Protection Commissioner Jerry.

"People may be missing an opportunity to receive repayment or even a new vehicle from the manufacturer if they don't take advantage of this low-cost arbitration program," Farrell said. "But documentation is extremely important. An owner who keeps bringing his car back for the same problem needs to be certain that the problem -- the car's 'symptoms,' if you will -- get included on each repair order."

Under state law, the auto shop must provide consumers with a written repair order when they pick up their vehicles. The repair order must contain the customer's complaint, the date, the mechanic's proposed diagnosis and solution, and the amount paid.

"Make sure you check your repair order carefully while you're still at the shop," Farrell said. "If all those details are not spelled out in writing -- especially the specific problem your vehicle is having -- ask that the information be entered in, and get the shop to print you a revised repair order."

Be thorough

Vague documentation will not be enough to qualify the car as a "lemon" under the guidelines of the state program, Farrell said. To qualify for arbitration under the "Lemon Law" all of the following conditions must be met:

• 1. the consumer must have purchased or leased the vehicle in Connecticut and it must have a passenger, combination or motorcycle registration;

• 2. the defect must be covered by the manufacturer's written warranty;

• 3. the same defect must occur four times within the first 24,000 miles or two years, whichever first occurs, or, the vehicle must be out of service for more than 30 days for repair for any defects during the 24,000 miles/two year time period; and

• 4. the manufacturer must have been given a reasonable opportunity to repair the defect (this requirement is met if the vehicle has been subject to repair four times, or, two times in the first twelve months for a defect that poses a serious risk of death or bodily injury) and in some situations, based upon the facts, one repair attempt could be sufficient.

The vehicle owner must pay a one-time $50 fee to apply for the arbitration program.

Peter from Winsted, CT, who could likely benefit from the program, tells of a stalling problem he had with his Jeep Commander Limited, 4.7L. "The dealer has looked at it and has found no solution," he writes ConsumerAffairs.com. "All they tell us is it is a result of poor design. That is unacceptable, my wife drives this car and her safety is at risk. Even one of the repair employees laughed it off and said, 'oh it happens to me all the time, it is kind of fun.' Fun for who? I am so angry."

As long as the vehicle was bought in Connecticut, and all other criteria are met, even a person living in another state is protected by Connecticut's Automobile Dispute Settlement Program, commonly known as the Lemon Law.

"As the first program of its type in the United States, Connecticut's Automobile Dispute Settlement Program has provided relief to about 6,400 owners of defective new passenger vehicles and motorcycles," Farrell said. "Manufacturer defects can quickly turn a 'dream car' into a financial and logistical nightmare, and consumers can't afford to shoulder the cost of this burden. We're fortunate to have the Lemon Law program available to provide cost-effective, timely arbitration to resolve disputes between consumers and automobile manufacturers."

The Automobile Dispute Settlement Program closed the 2009-2010 fiscal year with $1,063,000 awarded to consumers in cash and replacement vehicles. Since 1984 the program has returned nearly $55 million to consumers in cash refunds and replacement automobiles.

Connecticut, of course, is not the only state with a Lemon Law. All 50 states and the District of Columbia have them. A list of the states, with the provisions of their laws, can be found here.

Eat your heart out, Richard Branson. Virgin Galatic has some serious competition in the space tourism sector -- Boeing says it and its partner Space Adventures, Ltd. will be offering tourist-class seats from Cape Canaveral to the International Space Station and beyond by 2015.

Of course, knowing commercial air travel, it's possible flights will leave a bit later than that, or perhaps wind up somewhere else entirely. No word on yet on whether food will cost extra, or for that matter, whether there'll be anything beyond Tang and pretzels.

All of this plays into the plans of the Obama Administration, which would like for the National Aeronautrics and Space Administration (NASA) to get serious about building commercial space travel into something other than science fiction.

Taking a page from the commercial airline industry, NASA is basically jamming a few more seats into the Boeing Crew Space Transportation-100 (CST-100) spacecraft, so that it can carry four space station crew members and three tourists on each flight.

"By combining our talents, we can better offer safe, affordable transportation to commercial spaceflight customers," said Brewster Shaw, vice president and general manager of Boeing's Space Exploration division. "To date, all commercial flights for private spaceflight participants to the ISS have been contracted by Space Adventures. If NASA and the international partners continue to accommodate commercial spaceflight participants on ISS, this agreement will be in concert with the NASA administrator's stated intent to promote space commerce in low Earth orbit."

Space Adventures, headquartered in Vienna, Va., has flown seven spaceflight participants on eight missions to the space station so far. It's not exactly the Washington-New York Shuttle but it's more than the competition, Sir Richard's Virgin Galactic.

On the other hand, while Boeing and its partners are issuing press releases and thinking up new acronyms, Virgin Galactic is already accepting reservations for flights on its VSS Enterprise, which made its first crewed flight July 15. Tickets are $200,000 but only a $20,000 deposit is required.

The VSS Enterprise and its mothership. -- VSS Photo

Passenger manifest

And who might go on such a trip?

The Boeing/NASA/Space Adventures triumvirate puts it like this: "Potential customers for excess seating capacity include private individuals, companies, non-governmental organizations, and U.S. federal agencies other than NASA. Boeing plans to use the CST-100 to provide crew transportation to the International Space Station (ISS) and future commercial LEO platforms.

Intelligence operatives and junketeering politicians, in other words.

Virgin makes no presumptions about its passengers and instead portrays the experience as, well, a dream: "As you hurtle through the edges of the atmosphere, the large windows show the cobalt blue sky turning to mauve and indigo and finally to black. You're on a high; this is really happening, you're loving it and you're coping well."

"Later that evening, sitting with your astronaut wings, you know that life will never quite be the same again," purrs Virgin. Hard to argue with that.

Gout occurs due to an excess of the bodily waste uric acid, which is eventually deposited as needle-like crystals in the joints or in soft tissue. These crystals can cause intermittent swelling, redness, heat, pain and stiffness in the joints.

Gout is strongly associated with obesity, high blood pressure, high cholesterol and diabetes, and occurs more often in men, in women after menopause, and in people with kidney disease.

"About three percent of the three million adults who suffer from gout are not helped by conventional therapy. This new drug offers an important new option for them," said Badrul Chowdhury, M.D., director of the Division of Pulmonary, Allergy, and Rheumatology Products in the FDA's Center for Drug Evaluation and Research.

Metabolizes uric acid

For patients with gout, the conventional therapy is to receive drugs that lower the amount of uric acid in the blood -- for example, the xanthine oxidase inhibitors Zyloprim (allopurinol) and Uloric (febuxostat). Krystexxa is an enzyme that lowers uric acid levels by metabolizing it into a harmless chemical that is excreted in the urine. The drug is administered to patients every two weeks as an intravenous infusion.

Two six-month clinical trials of 212 total patients demonstrated that the drug lowered uric acid levels and reduced deposits of uric acid crystals in joints and soft tissue, the FDA said.

Since one out of every four patients in the clinical trials experienced a severe allergic reaction when receiving an infusion of Krystexxa, health care providers should dispense a corticosteroid and an antihistamine to their patients beforehand to minimize the risk of such a reaction, the agency advised. Other reactions during the clinical trials included gout flare, nausea, injection site bruising, irritation of the nasal passages, constipation, chest pain and vomiting.

Physicians are also being warned to be cautious about administering Krystexxa to patients with congestive heart failure because the drug was not studied in this patient population.

Krystexxa is being approved with a Risk Evaluation and Mitigation Strategy that includes a medication guide for patients and materials for healthcare providers to communicate the risk of severe infusion and allergic reactions. The drug is manufactured by Savient Pharmaceuticals Inc. of East Brunswick, N.J.

U.S. District Judge John Darrah nearly doubled advisory federal sentencing guidelines in imposing a 10-year prison term on Matthew Scott, who lured his victims -- including many close friends -- to invest approximately $28 million over nine years in a business that he falsely represented purchased used high-speed commercial printers that were re-sold for a substantial profit. Scott, who then used the money instead to make "Ponzi-type" payments to earlier investors, had pleaded guilty in January to one count of mail fraud.

Scott, 51, was ordered to begin serving his sentence on Sept. 23 and was also ordered to pay $4.9 million in restitution. Judge Darrah imposed the sentence after hearing directly from three victims of the fraud scheme, as well as considering victim impact letters from more than a dozen others.

Plea deal

Mail fraud carries maximum penalty of 20 years, but Scott's plea agreement anticipated a sentencing guidelines range of 63 to 78 months. Judge Darrah determined that 10 years was a reasonable sentence under the circumstances.

Scott was president and sole owner of a printer repair company known as Gelsco, Inc., located in Northlake. Between early 2000 and March 2009, he fraudulently obtained at least $28 million from approximately 75 investors, and caused the victims to lose a total of $4.9 million.

Elaborate scheme

Scott admitted that he falsely told investors that their funds would be used to purchase, or finance the purchase of, printers that had a value of more than $100,000, which would be sold to third parties. He further claimed that there were specific buyers and sellers of printers, when, in fact, he and Gelsco did not purchase or finance any such printers. Instead, Scott fabricated false purchase orders, invoices, promissory notes and other documents that he provided to investors.

He lied to investors, saying Gelsco increased the cost of the printers approximately 10-12 percent and earned substantial profits, usually within 90 days or less, which he promised to split with the investors. In fact, he never attempted to build a business or generate profits.

Over nine years, Scott had to raise funds continually from investors to make payments to earlier investors, all of which he concealed and intentionally failed to disclose to new and old investors alike.

What is new is the latest target: the Federal Deposit Insurance Corp., which is warning of a vishing scam that is duping consumers.

According to the FDIC's statement, the criminals behind the vishing calls allegedly told consumers they were delinquent in loan payments that had been applied for over the Internet or made through a payday lender. The loans may or may have not even existed, giving the vishers opportunity to collect personal information to confirm the authenticity of the loans. Recipients of the calls said the vishers requested everything from Social Security numbers to dates of birth.

The FDIC-related vishing scam is but one in a number of targeted vishing attacks reported in recent months -- a reflection of the growing sophistication of the criminals who perpetrate socially engineered schemes.

Vishing can be powerful

In July and August, several community banks and credit unions were targeted in a series of vishing attacks that hit consumers in rural areas. The calls and texts made to land-line and mobile phones, in most cases, claimed that customer accounts from specific institutions had either been compromised or closed, offering the fraudsters opportunity to collect personal account information.

Mike Urban, senior director of global fraud solutions at FICO, which provides decision-management and predictive-analytics solutions, says vishing scams are expected to increase, as other socially engineered schemes such as e-mail phishing attacks have become more difficult for criminals to pull off.

"The criminals are continuing to leverage communication channels beyond traditional e-mail phishing and disguise themselves behind more trusted names to get consumer information that they can turn into profits," he says.

'Socially engineered' scam

Vishing itself is a relatively low-tech crime, says Robert Siciliano, a McAfee security consultant and founder of IDTheftSecurity.com. The problem is that it's a socially engineered scheme that is hard to fight. Phishing attacks can be combated with more advanced spam filters.

Vishing preys on consumer trust, making the role of customer and member education ever more critical. "Consumers should not respond to any request that comes through on the phone to provide any information that could compromise their identity in any way," he says.

Peter Cassidy of the Anti-Phishing Working Group, says the FDIC-related vishing case proves that the financial industry should brace itself for a growing number of more crafty socially engineered schemes. "Vishing can be powerful, in part, because people are used to receiving calls, when it comes to financial information," he says.

Couple that power with the ease and low cost of perpetrating a vishing attack, and it's easy to see why these types of attacks are expected to multiply. "Out of 10,000 calls the vishers made, even if they only get a fraction to respond, it's worth it for them," he says.

Using the FDIC or the Internal Revenue Service as a veil also proves that the social-engineering muscle put behind these schemes is getting stronger, Cassidy says. In July, a vishing-by-fax scam hit small U.S. business-owners, telling them they were owed tax refunds from the IRS, and then asked them to provide personal information in response to the fax.

"The FDIC would never call you, but a lot of people don't know that," he says. "They're used to seeing the FDIC logo on the wall at the bank; they're familiar with the IRS, because they file taxes every year. These guys are getting good at what they do, and it's going to take a unified approach (from the industry) to fight these kinds of attacks."

By Truman Lewis
ConsumerAffairs.com

Chrysler must have had the same thought because, sure enough, the company says its redesigned mid-sized sedan will henceforth be known as the Chrysler 200.

The last time we drove a Sebring was in Los Angeles a year or so ago, when we found ourselves at the airport while our Mini was at home, 40 miles away. We rented a Sebring convertible from Hertz and felt that we'd been taken back in time to the 1960s. The interior looked like our grandmother's living room and the thing rocked its way around turns as though it had rocking chairs where the suspension should have been.

It had all the excitement of an afternoon in Burbank, although any droptop is always pleasing as one cruises up the PCH.

The company showed the slightly reworked car to dealers at a meeting in Orlando yesterday and said it would be arriving in showrooms later this year. There were no reports of dealers swooning with enthusiasm, though it has been so long since Chrysler has rolled out any new models that any change at all is no doubt welcome.

The 200 will be available with the new Chrysler Pentastar V-6 engine and a six-speed automatic transmission or with a 2.4-liter I-4 engine and a four- or six-speed automatic. It will also feature a stiffer body, new suspension, a new rear sway bar and much-needed attention to noise and vibration.

So, the origin of the Sebring name was clear enough, even though the car was about as far from a sports or racing car as anyone could imagine. So where does the 200 come from?

Well, yes, it is smaller than the Chrysler 300. But the company insists the 200 comes from the electric-powered concept car that Chrysler displayed at the 2009 Detroit auto show. You know, the one that was never built.

The "SkyRider," officially introduced this week, will allow airlines that install them to shoehorn even more passengers into coach. Some airlines may opt to install just a few of the seats and offer them at a discounted price.

The SkyRider, which is shaped like a saddle, allows 23 inches of leg room, about seven inches less than a normal seat in coach. The occupant sits at an angle, with her legs supporting more of her weight. Because the passengers are sitting at an angle, the seats can overlap.

The SkyRider also includes a tray table like other airline seats, though it is a fraction of the size. But since airlines rarely give passengers anything to eat on flights these days, it might prove more than adequate.

Italian manufacturer Aviointeriors Group came up with the SkyRider, seeing it as a way for discount airlines to squeeze more revenue out of each flight. An official of the company says that the seat could be comfortable on flights up to three hours.

The SkyRider was designed, perhaps, with discount Irish carrier Ryanair in mind. The airline petitioned the government of Ireland to allow it to outfit cabins so that passengers stand up, like strap-hangers on a subway car, for the flight. Safety officials said they would not allow passengers to stand during take-offs and landings.

Airlines have been under pressure to make each flight more profitable. Over the last two years most have added fees for everything from checked baggage to pillows and blankets.

Giddy-up

Aviointeriors Group displayed its SkyRider at the Aircraft Interiors Expo Americas conference in Long Beach, Calif., this week. Aviation International News, a industry trade publication, reports the SkyRider display at the Expo drew crowds of incredulous gawkers. The publication describes the seat as a "cross between a miniature horse saddle and a thinly sliced seat back."

It's not known if any U.S. carriers are actively considering it, but Dominique Menoud, the company's director general, told USA Today they shouldn't hesitate to install the saddle seats.

"Cowboys ride eight hours on their horses during the day and still feel comfortable in the saddle," he said.