New year means new laws for Illinois residents

   By Andrew Thomason - (Illinois Statehouse News) – 12/30/2010 – Soon, Illinois residents can no longer buy a pet monkey, give unlimited amounts of cash to political candidates or get high on fake marijuana.
    These changes, along with nearly 200 other laws, will take effect at the stroke of midnight Friday.
Campaign money
    Sometimes referred to as the “wild west” of campaign financing, Illinois’ political donation landscape will be somewhat tamer starting Jan. 1. Individuals will be limited to giving a candidate $5,000 per election cycle, and businesses, unions, and political action committees to $10,000, under a new law.
    “The limits are intended to both limit corruption and the appearance of corruption,” said Kent Redfield, director of the Sunshine Project. The new law will “hopefully start to restore the faith of citizens in the process.”
    The caps apply to donations to political parties and political action committees.
    Illinois was just one of five states that had no limits on the size or source of campaign donations before the General Assembly passed the law, according to the Illinois Campaign for Political Reform.
    Candidates will have more responsibility under the new law, too. They must file twice as many campaign expenditure and contribution reports – every three months instead of every six – under the new law. Also, candidates must make public all donations of more than $1,000 within five business days, or within two business days if the money comes in a month before an election.
    “There’s going to be a lot more transparency, which you hope does two things: it modifies people’s behavior because they know that the news media and citizen groups are watching," Redfield said. " The other side of it is that if you have transparency you can see that nothing (nefarious) is going on.”
    After pushing the primary election back to February in 2008 to help Barack Obama beat his Democratic rivals, the state has now returned the election back to the Tuesday in March in even numbered years.
    During the next gubernatorial race, voters will cast ballots for governor and lieutenant governor the same way they do for president and vice president, as a team. This change came after Scott Lee Cohen came out of nowhere to win the Democratic lieutenant governor nomination, only to bow out after allegations of past drug abuse and domestic violence surfaced, and run for governor as an independent.
   Generally, the law is playing catch up with technology. Such is the case with the trend of sending sexually graphic photos or video of one’s self to someone by means of a cell phone or e-mail.
    This is a trend that is especially popular among younger people. Prior to the passage of a new law, prosecutors could only seek felony child pornography charges against minors caught “sexting,” something most prosecutors were hesitant to do.
   “We don’t condone the behavior (but) we also don’t think these people should be sex offenders and be sent away to prison,” said Matt Jones, associate director for administration of the Illinois State’s Attorney Appellate Prosecutor.
    Starting in the new year, minors caught sexting could instead be taken to juvenile court to determine if they qualify for court supervision. Minors could be ordered into counseling or other similar services, as well as given community service, in place of being charged with a felony.
.  “We hope to intervene in situations where a minor is engaging in conduct that is harmful to them but don’t really realize is harmful to them,” Jones said.
Primate Pets
   While you don’t see monkeys in the windows of pet stores, it has been legal for a person to keep a primate as a pet. In order to protect the animals, as well as the owners, the legislature approved a plan to outlaw having primate pets, except for properly designated entities like zoos.
    “Most people simply cannot provide an appropriate environment for these highly intelligent and social creatures …You can’t provide what a primate needs in a basement or a bedroom,” said Michael Markariam, chief operating officer for the Human Society of the United States.
    Primates can also create public health problems, according to Markariam.
   “Even smaller monkeys can bite and scratch and spread very dangerous diseases to humans,” he said.
Drugs and Alcohol
    Residents of Illinois will have one less way to get high come 2011. Two synthetic forms of marijuana, which are readily available now, are set to be banned. Called K2, Spice, or Blaze, the drug is a manufactured form of THC, the altered-state inducing chemical in marijuana, and is generally sold as incense. However, people smoke it like they would pot.
    The drug is currently illegal in 15 other states, and the U.S. Drug Enforcement Agency put a year-long ban on K2 while it performs a study of the drug’s effects.
    And, parents hoping to use their children as their designated drivers are going to have to find another sober driver. Anyone caught intoxicated while instructing a minor with a learning permit operating a vehicle will be tagged with a moving violation.
   Story courtesy of Illinois Statehouse News.

Widespread Water Contamination Causes Concern

Report says millions ingesting chromium-6, a known carcinogen
    By Steve Rensberry
  (RPC) - 12/26/2010 - The environmental and regulatory fallout from a recent report by the non-profit Environmental Working Group (EWG), showing widespread contamination of the toxic metal hexavalent chromium (chromium-6), continues to force the hand of government officials and others implicated in the.
   According to the study, available here, toxic chromium-6 levels were found in the tap water of 31 out of 35 metropolitan areas across the United States, used by an estimated 26 million people. And this was only a sampling.
   U.S. Environmental Protection Agency (EPA) Administrator Lisa Jackson met with a handful of senators on Dec. 22 to brief them on the agency's response.
   Present were senators Richard Durbin (D-Ill.), Mark Kirk (D-Ill.), Debbie Stabenow (D-Michigan), Bob Casey (D-Penn.), Ben Nelson (Neb.), Bill Nelson (D-Fla.), Daniel Alaska (D-Ha.), Dianne Feinstein (D-Calif.), Jeff Bingaman (D-N.M.), and Jeff Merkley (D-Oregon).
   So far, there appears to be little doubt that the EWG's latest report could well produce a firestorm of litigation and policy changes.
   "The total number of Americans drinking tap water contaminated with this compound is likely far higher than is indicated by EWG's tests. At least 74 million people in nearly 7,000 communities drink tap water polluted with “total chromium,” which includes hexavalent and other forms of the metal, according to EWG’s 2009 analysis of water utility tests from 48,000 communities in 42 states (EWG 2009)," the report says.
   Anderson said she herself is concerned about the presence of chromium-6 in drinking water, both as a mother and as head of the EPA, but that the EWG's report provided only a brief "snapshot" of the problem at one specific time. The agency intends to work both local and state officials to determine precisely how widespread the problem is, she said.
   "The science behind chromium-6 is evolving. EPA is already on a path toward identifying and addressing any potential health threats from excessive, long-term exposure with its new draft assessment released this past fall. This assessment still needs to be reviewed by independent scientists as an essential step toward tightening drinking water standards for chromium-6. Strong science and the law will continue to be the backbone of our decision-making at EPA. EPA takes this matter seriously and we will continue to do all that we can, using good science and the law, to protect people’s health and our environment,” Anderson said.
   The EPA currently requires testing for total chromium, consisting of both chromium-3 and the toxic chromium-6, but doesn't not determine the ratio. All water facilities in the U.S. are in compliance with "existing total chromium standards" the agency announcement says.
   Jackson summarized the agency's view and commitment in four points.
   1) While provocative, the EWG report is a self-described “snapshot” in time and does not provide a full, long-term picture of the prevalence of chromium-6 in our drinking water. The EPA will work with state and local officials to better determine how wide-spread and prevalent this contaminant is.
   2) Meanwhile, the EPA will issue guidance to all water systems on how to test for and sample drinking water specifically for chromium-6. This guidance will provide  EPA-approved methods and other technical information.
   3) The EPA will also offer technical expertise and assistance to the communities cited in the EWG study with the highest levels of chromium. This assistance will include providing technical experts to work with water system operators and engineers to ensure the latest testing and monitoring is being utilized.
   4) Once the EPA’s chromium-6 risk assessment is finalized, the agency will work quickly to determine if new standards need to be set. Based on the current draft assessment, which has yet to undergo scientific peer review, it is likely that the EPA will tighten drinking water standards to address the health risks posed by chromium-6.
   What is potentially as explosive as the EWG's reported discovery of contamination is what it says about the industry deception that delayed protection.
   "Industry has sought for more than six years to delay state-mandated regulation of hexavalent chromium in tap water in California. Aerospace giant Honeywell International Inc. and others have stalled the adoption of the advisory public health goal by pressing for additional external scientific peer review," the EWG report says.
   The group pressed for immediate action from the EPA.
   "At least 74 million Americans in 42 states drink chromium-polluted tap water, much of it likely in the form of cancer-causing hexavalent chromium. Given the scope of exposure and the magnitude of the potential risk, the EPA should move expeditiously to establish a legal limit for the chemical in tap water and require water utilities to test for it."
   While current levels may meet existing EPA, those levels are drastically out of date, the EWG's report says.
   "The EPA’s inaction is but one example of the agency’s lack of resolve in protecting Americans’ tap water. The agency has not set a new, enforceable drinking water standard for any contaminant since 2001, even though the Safe Drinking Water Act requires the EPA to assess the need for standards for at least five new chemicals every five years. Three-fourths of the current standards, including for total chromium, were set in 1991 and 1992 and have not been updated since," it says.
   Current standards also do not take into account maximum legal levels for contaminants that could possible affect children, newborns or a fetus. Neither do existing threshholds take into account the possibility of exposure to multiple contaminants at the same time.
   Finally, it says: "EWG recommends that the EPA set a legal limit for hexavalent chromium in drinking water as quickly as possible and require all water utilities to test for it. The EPA can speed the process by streamlining the IRIS assessment. We hope that Administrator Jackson’s leadership on this critical issue will reduce cancer risk for all Americans."
   The principle author of the EWG report was Rebecca Sutton, PhD. Editors were Jane Houlihan, Renee Sharp and Nils Bruzelius.
   Chromium, the EWG notes, is a natural substance used in a number of manufacturing processes, including steel manufacturing, welding, the plating of metal surfaces, in pesticides that are used in pressure-treated lumber for play sets and outdoor decks, and in the making of alloys, dyes and pigments. It was used widely as an anti-corrosive agent in industrial cooling towers until a 1990 ban. Its most common use is as an essential component in the making of stainless steel and super-alloys.

Hate Group Listing Riles Family Reseach Council

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Veros Predicts Home Values Will Rise in 2011

   SANTA ANA, Calif.--(BUSINESS WIRE)-- 12/23/10 - The San Diego area regained its lead position for the strongest home price appreciation over the next 12 months in the most recent update to the U.S. real estate market forecast from Veros Real Estate Solutions, an industry leader in enterprise risk management and collateral valuation services.
   Veros’ U.S. real estate market forecast, VeroFORECAST, uses advanced analytics and micro-market data to achieve highly accurate results, and is utilized by economists, statisticians and business leaders as a key resource for forecasting and strategic planning due to its consistent strength and accuracy over the eight years the forecast has been available.
   The forecast for December 2010 through December 2011 indicates that select markets in the U.S. can expect to witness 2.5-3.5 percent appreciation on home values over the next 12 months, including Washington State’s tri-city area, Pittsburgh, Pennsylvania, Fargo, North Dakota, and the Washington D.C. metro area. Florida, Reno, Nevada and Boise, Idaho will experience the nation’s greatest depreciation rates in the coming 12 months, a trend which continues from prior periods.

Projected Five Strongest Markets*
1. San Diego / Carlsbad / San Marcos, CA +3.5 percent
2. Kennewick / Richland / Pasco, WA +3.4 percent
3. Pittsburgh, PA +2.7 percent
4. Fargo, ND-MN +2.6 percent
5. Washington / Arlington / Alexandria, DC-VA-MD-WV +2.5 percent


Projected Five Weakest Markets*
1. Reno / Sparks, NV -7.2 percent
2. Orlando / Kissimmee, FL -6.5 percent
3. Boise City / Nampa, ID -6.4 percent
4. Deltona / Daytona Beach / Ormond Beach, FL -6.3 percent
5. Port St. Lucie / Fort Pierce, FL -6.3 percent

 Strengthening Markets
    The Central Plains and Texas continue to see positive appreciation compared to prior periods, with generally good forecasts in Texas, Louisiana, Arkansas, Oklahoma, South Dakota, North Dakota and Iowa. A strengthening trend is also spreading to the Midwest with encouraging numbers in parts of Mississippi, Kentucky, Illinois, Indiana and Wisconsin. San Diego, California continues its consistent pattern of staying among the nation’s leaders in home value gains. “Smaller metro markets with populations less than 250,000 make up the majority of the better appreciating markets,” says Eric Fox, Veros’ vice president of statistical and economic modeling, crediting affordability factors.
Weak Markets
    The outlook for Florida remains weak, with six of the 10 U.S. markets expecting the greatest depreciation. Other especially weak forecasts include Reno / Sparks, Nevada, California’s interior, much of Idaho, and western portions of Washington and Oregon.
Good News
    “It is noteworthy that depreciating forecasts remain much better than those from a year ago with nothing worse than 7 percent depreciation,” Fox said. “A year ago, we were seeing some markets with depreciation rates in the double-digit range.
    “Approximately 40 percent of all major metro areas are forecast to appreciate over the next 12 months, even though appreciation is expected to be mild. Looking out to the 12 to 24 month horizon, nearly 60 percent of markets are expected to appreciate,” he says. “So while things aren’t happening rapidly, the forecast indicates they are getting better.”
    VeroFORECAST provides forecasts on the national real estate market with the capacity to segment results by property types, by three distinct pricing tiers – upper, middle and entry-level – and by metro area, county or zip code. The forecast utilizes more than 50 critical decisioning factors in its forecast analytics to develop reliable market trend predictions covering more than 900 counties, more than 300 metro areas and nearly 14,000 zip codes.
   Key factors range from interest, unemployment and inflation rates, to housing inventory levels and an array of economic and geographic trends. Veros engineered VeroFORECAST in response to demand for more focused and useful reports featuring improved methods and emphasizing more localized data in its analytics.
    *Markets demonstrated are for residential real estate in major metro areas (typically greater than 500,000 residents) among single-family homes in the median price tier.

Counties Vie for $1.2 Billion FutureGen Project

    By Benjamine Yount - (Illinois Statehouse News) - 12/21/10 -  The four communities in Illinois hoping for the revamped FutureGen project now know who their competition is.
    The FutureGen Alliance on Dec. 20 named Douglas, Morgan, Christian and Fayette counties as the final four communities for the underground sequestration site for the $1.2 billion project.
   FutureGen has been looking for a new site since the federal government pulled the plug on the original design that was supposed to be built in Mattoon. FutureGen has already announced it will build the project's state of the art clean-coal power plant near Meridosia in Morgan County.  FutureGen plans to spend $700 million to retro-fit an existing Ameren power plant.
   Those plans, along with Monday's announcement, have economic developers in Morgan County smiling.
   Terri Denison with the Jacksonville Regional Economic Development Corporation said he's allowing himself some hope that Morgan County  will get lucky.
    "If we're chosen as [the underground storage site] then all $1.2 billion would be here in Morgan County," Denison said.  "Where as if one of the other communities was to be the fortunate winner, then that $1.2 billion would be split-up between a number of communities.  We're kinda going for the home run in the bottom of the ninth."
   But other communities say they've done their work and are also hoping for a payoff. Tuscola's Brian Moody has been through a selection process with FutureGen once before, and is happy to be back on the short list.
   "[This] is really what we expected. Given our previous experiences with the first FutureGen project  and all of the various technical requirements that are necessary for an adequate sequestration site — we assumed that we would have a suitable site," said Moody.
    But for Moody, and many others involved in FutureGen in Illinois, the debacle that followed the initial selection of Mattoon is still fresh in their minds.
"We try not to get our hopes up.  We try to be very realistic about any kind of major industrial site selection process…We're trying to have some guarded optimism," said Moody.
   Denison in Jacksonville is "cautiously optimistic."
    "It not only involves the federal government, but the state of Illinois also has to play a part in this to make it happen. Ameren has to see that it makes financial sense for the corporation and the share holders. … So there are a lot of hurdles to go before it's a done deal," added Denison.
    If the deal gets done, FutureGen will be worth a lot to the four communities still in the hunt. Denison is quick to point out that along with the $1.2 billion in investments, there will be close to 1,000 construction jobs and dozens of full- time jobs to come. But it's not just the number of jobs that's attractive. FutureGen will bring high-paying, white collar jobs to Morgan County, Denison said.
    In addition to Morgan County and Tuscola, Vandalia and a site in Christian County remain in the hunt for FutureGen, Monday's decision leaves the city of Quincy and Pike County out of the running.
   The FutureGen Alliance hopes to chose a final site for the carbon sequestration facility by the end of January Construction, however, is not expected to begin until late 2012.  FutureGen is not expecting power to be produced until some time in 2016.
   Story courtesy of Illinois Statehouse News.

Public Company Insiders Face Conspiracy Charges

   NEW YORK – 12/17/10 - An executive for an “expert-networking” firm was arrested on Dec. 13 on wire fraud and conspiracy charges, announced Preet Bharara, U.S. Attorney for the Southern District of New York, and Janice K. Fedarcyk, Assistant Director-in-Charge of the New York Office of the FBI.
   James Fleishman was arrested for conspiring to provide confidential information, including material, non-public information to the firm’s clients, including hedge funds. Daniel Devore, formerly a global supply manager for Dell Inc., who worked as a consultant for the firm, previously pleaded guilty on Dec. 10, 2010, to an information charging him with wire fraud and conspiracy to commit wire fraud and securities fraud.
   U.S. Attorney Bharara and Assistant Director-in-Charge Fedarcyk also announced the arrests on the mornign of Dec. 13 of public company employees Mark Anthony Longoria, Walter Shimoon and Manosha Karunatilaka on wire fraud and conspiracy to commit securities fraud and wire fraud charges in connection with their employment as consultants for the firm.
   According to the complaint and information unsealed on Dec. 13 in federal court in Manhattan:
The Firm and Fleishman’s Employment
   The firm advertised itself as an “independent investment research firm that provides institutional money managers and analysts with market intelligence,” through a “Global Advisory Team of Experts.”
   The firm advertised that its team of consultants “have real-world experience in industries such as healthcare, technology, media, telecommunications, retail, manufacturing, energy and aerospace.”
   The firm stated that its consultants “speak one-on-one with [firm] clients to provide up-to-the-minute intelligence on trends, issues, regulations and dynamics affecting a particular company, product or industry.”
   Consultants who became part of the firm’s expert network can earn hundreds of dollars per hour or per call from the firm for their consultations with firm clients. Firm clients, which included hedge funds, often paid the firm tens of thousands of dollars annually for access to the firm’s consultant network and services.
Fleishman, 41, of Santa Clara, Calif., served as a sales manager for the firm responsible for attracting new clients and ensuring service to existing clients. Fleishman promoted the firm’s consultation services by arranging for clients, including hedge funds, to speak with consultants knowing that consultants would provide confidential information, including inside information, to clients.
Devore Provided Confidential Information
About Dell and Dell’s Suppliers, Including Inside Information
   Devore was employed by Dell Inc. (Dell), as a global supply manager. While employed at Dell, Devore provided confidential information about Dell and Dell’s suppliers, including Inside Information, to clients of the    Firm, including hedge funds. Between late 2007 through August 2010, the firm paid Devore approximately $145,750 for providing information, including inside information, to the firm and, directly and indirectly, to firm clients.
   Longoria Allegedly Provided AMD Confidential Information,
Including Inside Information
   Longoria, 44, of Round Rock, Texas, was employed by Advanced Micro Devices Inc. (AMD), as a supply chain manager in Round Rock. As part of his employment with AMD, Longoria executed an employment agreement with AMD that restricted the disclosure of AMD confidential information.
   While employed at AMD, Longoria engaged in consultation calls with firm clients. During the consultation calls, Longoria allegedly provided confidential AMD information, including inside information. For example, during telephone calls with cooperating witnesses in July 2009, Longoria provided AMD revenue information, average sales prices, product sales figures and gross margin information. Between January 2008 and March 2010, the firm paid Longoria more than $200,000 for consultation services he provided.
Shimoon Provided Flextronics and Apple Confidential Information,
Including Inside Information
   Shimoon, 39, of San Diego was employed by Flextronics International Ltd. (Flextronics), as a senior director of business development in San Diego. During the relevant time period, Flextronics had a business relationship with Apple Inc. pursuant to which Flextronics supplied certain electronic components to Apple, including specifically-engineered camera and charger components to Apple for its “iPhone” cellular telephones and “iPod” portable media players.
   As part of this business relationship, Flextronics and certain Flextronics employees were provided with information and forecasts regarding Apple purchase or shipping orders regarding certain Flextronics components, as well as information regarding alternative suppliers for Apple products. The confidentiality of this kind of information was governed by non-disclosure agreements executed between Flextronics and Apple. In addition, Apple often shared information with Flextronics about future Apple products under development.
  The confidentiality of this information was governed by a separate non-disclosure agreement executed between Flextronics and Apple. For example, in or about 2009, Apple informed Flextronics about a highly secretive project being developed that ultimately resulted in the public product launch of the “iPad” tablet computer.
   Shimoon also signed an employment agreement with Flextronics that restricted the disclosure of Flextronics confidential information and prohibited any business activity that competed with Flextronics’ business.
   While employed at Flextronics, Shimoon allegedly engaged in consultation calls with firm clients, during which he provided confidential Flextronics and Apple information, including Inside Information. For example, Shimoon provided highly confidential sales forecast information and new product features for Apple’s forthcoming “iPhone” cellular telephone. Between January 2008 and June 2010, the firm paid Shimoon more than $22,000 for consultation services he provided.
Karunatilaka Provided TSMC Confidential Information,
Including Inside Information
   Karunatilaka, 37, of Marlborough, Mass., was employed by Taiwan Semiconductor Manufacturing Company Inc. (TSMC) as an account manager. As part of his employment with TSMC, Karunatilaka executed an employment agreement with TSMC that restricted the disclosure of confidential information and prohibited any outside employment.
   While employed at TSMC, Karunatilaka engaged in consultation calls with firm clients, during which he allegedly provided confidential TSMC information, including inside information such as TSMC product sales and shipping information. Between January 2008 and June 2010, the firm paid Karunatilaka more than $35,000 for consultation services he provided.
   “Today’s charges allege that a corrupt network of insiders at some of the world’s leading technology companies served as so-called ‘consultants’ who sold out their employers by stealing and then peddling their valuable inside information,” U.S. Attorney Preet Bharara said. “The detailed allegations in the complaint, along with the guilty plea unsealed today, describe criminal conduct that went well beyond any legitimate information-sharing or good faith business practice. Over the next many months and beyond, we will continue to enforce the law, police the market, and protect honest businesses and their shareholders by working methodically with the FBI and Securities and Exchange Commission (SEC) to root out corporate corruption and insider trading.”
   “The information trafficked by the four ‘consultants’ went way beyond permissible market research; it was insider information,” FBI Assistant Director-in-Charge Janice K. Fedarcyk said. “And the fifth defendant was directly involved in the transfer of inside information from the consultants to hedge funds and other end users.
   The more than $400,000 the firm paid the four ‘consultants,’ merely to participate in phone calls with firm clients, is an indication of the value placed on the information. This wasn’t market research. What the defendants did was purchase and sell insider information. Our investigation is most assuredly continuing.”
   U.S. Attorney Bharara praised the investigative work of the FBI. He thanked the SEC for its assistance in this matter. He also thanked Apple, Flextronics, AMD, TSMC and Dell for their assistance in the investigation.
   U.S. Attorney Bharara noted that the investigation is continuing.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which U.S. Attorney Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group.
   The case is being handled by the U.S. Attorney’s Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Reed Brodsky, Antonia Apps and David Leibowitz, and Special Assistant U.S. Attorney Andrew Michaelson are in charge of the prosecution.

Consumer Mortgage Fraud Conspiracy Alleged

Government lawsuit cites 15 complaints against 14 defendants
    NEW YORK - 12/16/10 - The United States government has filed a civil fraud lawsuit against 14 defendants  – including sellers, lenders and appraisers - alleged to have engaged in an elaborate conspiracy to commit mortgage fraud in New York that caused at least 17 home buyers to default on their mortgages and face foreclosure.  The complaint also requests the court to bar what the government alleges to be an on-going mortgage fraud by a number of the defendants.
   The lawsuit was announced today by Preet Bharara, U.S. Attorney for the Southern District of New York; Dave Stevens, Commissioner of the Federal Housing Administration (FHA); and Rene Febles, Special Agent-in-Charge of the Department of Housing and Urban Development Office of the Inspector General (HUD-OIG) New York Field Office.
   According to the allegations in the complaint filed today in Manhattan federal court, the sellers, lenders and appraisers allegedly conspired to commit mortgage fraud in connection with the sale of 17 residential properties in New York.  The sellers purchased the 17 homes and promptly re-sold, or “flipped,” them - without substantial improvement - to inexperienced, low-income buyers, duping them into buying properties they could not afford at falsely inflated prices. 
   The appraiser defendants then fraudulently overstated the value of these homes in their appraisal reports so that the buyers would take out home mortgage loans far in excess of the property’s true value.  Cambridge Home Capital LLC, a mortgage lender, then allegedly underwrote mortgages for the buyers knowing that the properties were not accurately appraised, and knowing that the buyers could not afford the mortgage payments.
   All 17 loans, which were insured by HUD, defaulted, often within just a few months after the closing, exposing HUD to millions of dollars in losses.  In addition to the losses to HUD, the fraud also left the buyers facing foreclosure and eviction from their homes.  The fraud affected two financial institutions, Citibank N.A. and Countrywide Bank FSB, whose bank affiliates purchased these mortgage loans from Cambridge on the secondary market.
   Mitchell Cohen acquired homes for his flip sales through three entities that he controlled: defendants Buy–A-Home LLC, Metropolitan Housing LLC and Gramercy Funding Group LTD.  Once Cohen duped these buyers into purchasing his properties at inflated prices, he steered these buyers to Cambridge, which was authorized to underwrite loans insured by HUD, to underwrite the mortgage. 
   Through its owners and senior officers, Cambridge underwrote these loans to finance Cohen’s flip sales, even though Cambridge and its principals knew - in each case - that the transaction, the home-buyers or both failed to meet HUD’s underwriting requirements. 
   Cambridge then falsely certified that the transactions met HUD’s requirements, knowing that they did not.
Cambridge also created false records to make the buyers appear more credit-worthy than they were, either by overstating their income or by understating their debts. 
  In one instance, Cambridge fraudulently revised a buyer’s loan application to change the buyer’s occupation from “security guard” to “head chef” at a restaurant, falsely overstating that buyer’s income by 50 percent. 
   Cohen and Cambridge conspired to make the buyers appear more credit-worthy in some cases by paying off the buyers’ personal debts, while concealing those side payments from HUD.
   The mortgage fraud conspiracy included the participation of several appraisers who allegedly submitted false appraisal reports that “hit the numbers” for Cohen or Cambridge, valuing the homes Cohen was selling at or about the inflated prices set by Cohen.
   “Schemes like the one alleged here helped contribute to the home mortgage crisis,” said U.S. Attorney Preet Bharara.  “In this particular case, not only did the alleged fraud victimize the home buyers themselves, who were duped into buying homes they couldn't afford and who now face foreclosure and eviction, but also the government, which insured these bad loans.  This office will use every weapon in its arsenal to fight mortgage fraud, including its powerful civil remedies, and will hold those who participate in and profit from these schemes accountable for their actions.”
   “Lenders that engage in the sort of activities outlined in this lawsuit not only pose a particular risk to FHA but to families struggling to do the right thing,” said FHA Commissioner Stevens.  “The vast majority of the lenders we work with are part of the solution to our nation’s housing crisis and we simply can’t do business with those who are so clearly part of the problem.”
   “It is very important that the HUD-OIG aggressively investigate allegations pertaining to mortgage fraud,” said HUD-OIG Special Agent-in-Charge Rene Febles.  “It is equally important that we identify instances where the integrity of the FHA program is compromised and ensure that those committing such acts are brought to the attention of the U.S. Attorney’s Office so that victims and the American taxpayer are protected.”
   The complaint seeks civil penalties pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), a statute enacted in the 1980s as a tool to address the savings and loan crisis.
   FIRREA authorizes the United States to seek millions of dollars in civil penalties for violations of, and conspiracies to violate, certain predicate criminal statutes involving financial fraud, including mail and wire fraud In this case, the complaint alleges 15 separate FIRREA violations against 14 separate defendants. 
   The defendants charged are: Buy-A-Home LLC; Metropolitan Housing LLC; Gramercy Funding Group LTD; Mitchell Cohen; Cambridge Home Capital LLC; Seth Kramer; Craig Hyman; Seth Lapidus; Jacqueline Derrell; Cambridge Funding Group, LTD.; James J. Goldberg, dba JJG Real Estate Appraisal Services; Premier Appraisal Service; William Buckley; and Robert Micheline, dba P&M Appraisals.
   The complaint also seeks both damages and civil penalties according to the False Claims Act (FCA), which imposes liability on any person who knowingly submits, or causes to be submitted, a false or fraudulent claim for payment to the United States.  In this case, the United States alleges that two of the 17 loans at issue involve false or fraudulent claims to HUD for mortgage insurance and therefore give rise to civil penalties and damages under the FCA.  
   The complaint seeks not only penalties and damages for past fraud, but also a court order enjoining on-going fraud by defendants Cohen and Buy-A-Home.  According to the complaint, these defendants are continuing to engage in fraudulent flip sales of properties at the expense of HUD.  This year alone, Cohen, through Buy-A-Home, has allegedly consummated more than 20 flip sales, typically pricing the homes at 60 percent to 160 percent more than what he had paid for them just weeks or months earlier.
U.S. Attorney Bharara thanked HUD-OIG for their assistance.
   The case is being handled by the U.S. Attorney’s Office’s Civil Frauds Unit.  U.S. Attorney Bharara established the Civil Frauds Unit in March 2010 to bring renewed focus and additional resources to combating financial fraud, including mortgage fraud. 
Assistant U.S. Attorneys Li Yu and Cristine Irvin Phillips of the U.S. Attorney’s Office’s Civil Division are in charge of the case.

De-institutionalization of disabled recommended

 Illinois spends $18,387 on care, compared to $14,481 average
   By Mary Massingale (Illinois Statehouse News) - 12/16/10 - Moving the developmentally disabled and the mentally ill from Illinois institutions to community-based settings could get a boost from the legislature’s push to reform the state's Medicaid system.
   Illinois House and Senate committees on Medicaid reform on Dec. 14 heard consultant John Stephen recommend the state move those individuals into community-based settings. As of 2009, Illinois ranked first in the nation in institutionalization, outpacing other high-population states such as Texas, New Jersey and California, Stephen said.
    “It’s all about rebalancing long-term care,” said Stephen, who served as New Hampshire’s commissioner of health and human services before joining the Boston-based Lucas Group.
   As co-chair of the House committee, State Rep. Patti Bellock, R-Westmont, told Stephen he was preaching to the choir.
   “We know we’re 51st in the nation on this issue,” she said.
    Stephen also cited statistics from the Kaiser Family Foundation showing that Illinois currently spends $18,387 annually on caring for disabled individuals, while the national average stands at $14,481.
    The concept of community-based care – or “money following the person” – is popular among both federal and state lawmakers since it’s usually less expensive than institutional care. Additionally, disabled individuals are generally offered more freedom in community-based settings, in accordance with the 1999 U.S. Supreme Court Olmstead decision calling for the disabled to live in the least restrictive setting.
    But the “rebalancing” is easier said than done. Families of disabled individuals often resist moving them, Stephens said, because of the influence of caretakers who don’t want to lose their jobs.
“The families work closely with the people who take care of their loved ones,” Stephens said.
A spokeswoman for the American Federation of State, County and Municipal Employees said the individual’s care is the issue.
   “The state centers provide intensive, around-the-clock care that the smaller homes can’t,” said Anne Irving, AFSCME Council 31 director of public policy.
    Politics has already reared its head regarding the closure of any state institutions. Gov. Pat Quinn has agreed to no layoffs and no state facility closures through June 30, 2012, in return for $100 million in state budget savings offered by AFSCME.
    However, committee co-chair State Rep. Barbara Flynn Currie, D-Chicago, said that any move toward de-institutionalization must have the community support and resources to back it up.
    “I think the issue for us is making sure the infrastructure is there,” Currie said.
   Story courtesty of Illinois Statehouse News.(org. pub. 12/14/10)

Hundreds Charged in Investment Fraud Sweep

   WASHINGTON – 12/08/10 - U.S. Attorney General Eric Holder announced on Nov. 6 the results of Operation Broken Trust, a nationwide operation organized by the Financial Fraud Enforcement Task Force to target investment fraud. To date, the operation has involved enforcement actions against 343 criminal defendants and 189 civil defendants for fraud schemes that harmed more than 120,000 victims throughout the country.
   The operation’s criminal cases involved more than $8.3 billion in estimated losses and the civil cases involved estimated losses of more than $2.1 billion.
   Operation Broken Trust is the first national operation of its kind to target a broad array of investment fraud schemes that directly prey upon the investing public.
   In announcing the results of Operation Broken Trust, Holder was joined by FBI Executive Assistant Director Shawn Henry, U.S. Securities and Exchange Commission (SEC) Director of Enforcement Robert Khuzami, U.S. Postal Inspection Service (USPIS) Chief Postal Inspector Guy Cottrell, Deputy Chief Rick Raven of the Internal Revenue Service Criminal Investigation (IRS-CI), Acting Director of Enforcement Vince McGonagle of the U.S. Commodity Futures Trading Commission (CFTC), and other members of the Financial Fraud Enforcement Task Force.
   The interagency Financial Fraud Enforcement Task Force was established by President Obama to lead an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. Starting on Aug. 16, 2010, within a three-and-a-half month period, Operation Broken Trust involved 231 criminal cases and 60 civil enforcement actions. Eighty-seven defendants have been sentenced to prison, including several sentences of more than 20 years in prison.
   “With this operation, the Financial Fraud Enforcement Task Force is sending a strong message,” Holder said. “To the public: be alert for these frauds, take appropriate measures to protect yourself, and report such schemes to proper authorities when they occur. And to anyone operating or attempting to operate an investment scam: cheating investors out of their earnings and savings is no longer a safe business plan - we will use every tool at our disposal to find you, to stop you, and to bring you to justice.”
   “This operation highlights the scope of this problem, and its impact on individuals from all walks of life,” Henry said. “This one sweep alone involves fraud schemes that harmed more than 120,000 victims. The schemes may change, but the underlying greed does not. Working with our partners, we in the FBI will use all the investigative techniques in our arsenal, including undercover operations, to bring those responsible to justice.”
    Enforcement actions taken as a result of Operation Broken Trust involve a range of different investment fraud schemes, all of which prey directly on the investing public. The operators of these schemes often promise high returns to investors, but engage in little to no legitimate investment activity. Such schemes include Ponzi schemes, affinity fraud, prime bank/high-yield investment scams, foreign exchange (FOREX) frauds, business opportunity fraud and other similar schemes. In some instances, operators of these schemes filed for bankruptcy in an attempt to avoid claims by victim-investors.
   “The U.S. Postal Inspection Service has a long tradition of protecting postal customers from these types of investment and Ponzi scams and bringing those responsible to justice,” USPIS Chief Postal Inspector Cottrell said. “The Postal Inspection Service constantly strives to protect our customers and the general public from falling victim to these scams that claim millions of dollars every year.”
   Operation Broken Trust was conducted in conjunction with various Department of Justice components – including the U.S. Attorney Offices, the FBI, the Criminal and Civil Divisions and the U.S. Trustee Program – as well as the SEC, USPIS, the CFTC, IRS-CI, the Federal Trade Commission, the U.S. Secret Service and the National Association of Attorneys General.    As a part of Operation Broken Trust, the task force is making the public aware of resources available to protect against these types of fraud and how to report fraud when it occurs. To learn more about investment scams, how to take steps to protect yourself from scams, or how to report investment fraud if you believe you have been victimized, go to The website includes links to a wide array of task force member resources.

Oil Industry's Center of Gravity Moves Eastward

   NEW YORK--(BUSINESS WIRE) - 12/5/10 - The center of the oil universe is moving steadily eastward as oil companies throughout Asia add capacity to meet the region’s growing demand for oil and natural gas. This year’s ‘Energy Intelligence Top 100: Ranking the World’s Oil Companies,’ which incorporates the Petroleum Intelligence Weekly (PIW) Top 50, leaves little doubt they will continue to surge in size and influence.
   ‘Big oil,” meanwhile, appears to be cooling to mega mergers.
    Asia’s government-controlled national oil companies (NOCs) are increasingly dominant. ‘Energy Intelligence Top 100’ is the only oil company ranking that measures Asian and other government-controlled national oil companies (NOCs) side by side with privately controlled international oil companies (IOCs). This year 41 NOCs and 59 IOCs made the list.
    Malaysia’s Petronas (17), China’s CNOOC (38) and Thailand’s PTT (53) have been among the fastest rising companies in recent years. Korea’s National Oil Corp. (KNOC) made it back onto the list in this edition, landing at 77 following its acquisition of Canadian assets.
    Yet even more dramatic was the ascent of India’s Reliance Industries, which jumped a remarkable 26 spots to land at 40. Its success is the result of significant increases in both gas production and distillation capacity --made even more remarkable considering this growth was organic.
    The Top 100 control 87 percent of the world's oil reserves and 72percent of its gas reserves. Rankings are based on operating metrics rather than more traditional measurements such as market capitalization or revenues. A company’s rank is determined by the sum of ordinal ranks in each of six operational categories: Oil Production; Gas Production; Oil Reserves; Gas Reserves; Product Sales, and Refinery Distillation Capacity.
    The Top 100 are also ranked in more than 100 other financial, upstream, refining and marketing categories.
While the names at the very top of the list barely shift, “look a little deeper and most of the companies in this group are in the midst of important changes,” says ‘Top 100’ Editor and Senior Research Analyst Ian Nathan. Some of these changes “could actually push them down, not up, in the next few years.”
    BP, which faces huge costs associated with Deepwater Horizon disaster, may be the most prominent example of a shrinking giant. But the 2011 rankings suggest IOCs as a group may be rethinking size and mergers as a growth strategy.
   An expected consolidation wave in 2009 didn’t materialize. And a look back to 1997 shows that today’s six largest IOC’s contribute a smaller share of global oil and gas operations than their aggregated predecessors.
    While the consolidation may have made strategic sense for these companies at the time, the Top 100 research suggests that operational size is now being rethought as a driver of value creation.
    That would be a significant break from the past. An astonishing 48 companies appearing in the 1997 Top 100 have disappeared from the rankings due almost entirely to M&A.
   Research that produced the latest ‘Top 100’ also showed:
  • The 4 percent rise in Top 100 oil reserves was largely the result of a massive reserve upgrade by Petroleos de Venezuela (PDV); Top 100 gas reserves grew 2 percent.
  • Top 100 oil output declined by approximately 1 percent, damped by Opec production restraint, and gas production fell nearly 2 percent, hindered by severely diminished production from both Gazprom and Turkmengas.
  • Median revenue for the Top 100 was down 25 percent, while income dropped 42 percent.; median capital expenditures slid 35 percent.
  • Four companies joined the Top 100 list: Cenovus Energy, Southwestern Energy, Ultra Petroleum and Korea National Oil Corp.
  • North America is stirring again as a major upstream player, helped by unconventional (shale) gas success. 
Energy Intelligence has offices in New York, London, Houston, Dubai, Moscow, Washington and Singapore.

Public Employee Evaluations Shielded from FOIA

   By Mary Massingal (Illinois Statehouse News) – 12/4/10 - Any chance of getting a look at the performance evaluation of any Illinois public employee bit the dust this week.   
   The Illinois Senate on Wednesday followed the House’s lead in overriding Gov. Pat Quinn’s amendatory veto to legislation that exempts public employee personnel evaluations from Freedom of Information Act requests. Quinn changed House Bill 5154 so that only local police officers and state police officers were exempt.
    Media outlets were outraged when lawmakers passed the original legislation, saying it was an infringement on the public’s right to know about state government. Melissa Hahn, president of the Illinois News Broadcasters Association, said the Legislature’s override is a step backward in the state’s FOIA laws.
    “We had hoped that at least one chamber would simply ignore this bill and let it die in its entirety,” Hahn said.
    Both chambers have to vote to override a governor’s veto in order to return the legislation to its original form and become law.
    A Quinn spokeswoman said the governor stands by the original intent of his changes.
    “Governor Quinn’s amendatory veto would have promoted transparency and access to critical information, as well as protect public safety and maintain the integrity of the criminal justice system,” said Annie Thompson in an e-mailed statement.
   HB 5154 grew out of a bill passed earlier this year that prohibited the evaluations of public school teachers, principals and school superintendents from FOIA requests. Proponents of open government claim the FOIA exemption gives public employees an undeserved privilege since their salaries are paid by taxpayer money.
    But Senate sponsor Sen. Kimberly Lightford, D-Westchester, said that although she supports government transparency, she draws the line at the employer-employee relationship.
    “I don’t see (the exemption) as a privilege,” she said. “I see it as a tool for management to be able to improve their work force and to support the accomplishments that they’re trying to make in government.”
    She also said she believes that making performance records public would lead to inadequate evaluations and inadequate job performance.
    “If the supervisor says ‘Well, I’m not sure if I can evaluate you fairly because your record will be public knowledge,’ you’re exposing that management-level person, as well as the person being evaluated,” Lightford said. “So, it pretty much takes away a system that’s been working in terms of employee-employer relationship.”
    State Sen. Dale Righter, R-Mattoon, agreed and also said he doesn’t think the public is actually that interested in public employee performance evaluations.
    “If you ask the taxpayers 'Are you more interested in reading the evaluations of public employees or the public employees being fairly treated by their supervisors and doing a good job,’ I think they’d choose the latter,” he said.
    Hahn disagreed, saying her organization has heard from people across the state who say they have a right to know how teachers, state government workers and cops are performing in their jobs. “And now all of that information simply is shielded from any public view," she said.
   Story courtesy of  Illinois Statehouse News. (Originally published 12/2/10)