Aviva Survey: Americans Plan to Work Longer

   WEST DES MOINES, Iowa - (BUSINESS WIRE) - 2/28/2011 - According to an international study conducted by Aviva in the U.S., Europe and Asia Pacific markets, 57 percent of Americans expect to work past their normal retirement date – the highest percentage among people in any of the 10 countries surveyed.
   That’s just one of several steps Americans are taking to address retirement concerns stemming from the recent recession, according to the survey. Results indicate Americans are more engaged than residents of any other country represented in the study by taking actions such as increasing retirement savings and reviewing retirement plans, in addition to the expectation to work later in life.   
   Thirty-five percent of Americans plan to put more money into retirement savings in the next 12 months – the highest response of any of the 10 countries surveyed and significantly higher than the 22 percent median positive response. Respondents in Spain (29 percent) and China (28 percent) were the only countries besides the U.S. where positive responses to the question about putting additional money aside for retirement in the next 12 months topped 25 percent.
    “Although they are concerned about whether they have saved enough and how they will maintain their standard of living in retirement, there is evidence more Americans are taking action to do something about their retirement worries,” said Aviva USA president and CEO Chris Littlefield. “It’s clear more Americans are prepared in the long term to work beyond the normal retirement age and plan to continue to save more for retirement.”
    The survey was conducted by global insurance company Aviva plc, the world’s sixth-largest insurance group with operations in 28 countries. In America, Aviva USA is a sales leader of indexed life insurance and indexed annuities.
    Aviva’s “Consumer Attitudes to Savings” survey has been conducted annually since 2004.
    In addition to working longer and saving more, 44 percent of Americans have reviewed their retirement/pension plans over the past 12 months, the highest percentage among the 10 countries Aviva surveyed. Although retirement planning activity is increasing, the survey found Americans generally are not comfortable with their current position: three out of five Americans who have not yet retired (62 percent) don’t think they will have enough money to have an adequate standard of living when they retire.
    The 57 percent of Americans who agreed with the statement “I think I am going to have to work beyond the normal retirement date to fund my retirement” was the highest percentage of agreement among all the countries surveyed, and 10 percent higher than the composite response of 47 percent agreement. Only one in seven Americans (15 percent) disagreed with the statement – the lowest disagreement response rate among the 10 countries surveyed.
   “We know that most people underestimate both how long they’ll live and how much money they will need to sustain them throughout retirement,” Littlefield said. “The best way to alleviate these concerns is to work with a professional financial and insurance advisor to help find solutions that guarantee lifetime income.
   Americans need to become better educated about the amount of savings required to comfortably retire as well as how they can protect their families financially in the event of the death of a wage earner.”
    The survey – which was fielded this past October and November – revealed 52 percent of Americans do not believe they have the necessary savings or investments to cope with an unexpected event. Only one in four believe they do.

Wisconsin Makes High-Stakes Gamble on Budget

   By Melissa Leu - (Illinois Statehouse News) - 2/27/2011 - SPRINGFIELD — Illinois lawmakers may be feeling a sense of deja vu as they look to neighboring Wisconsin's struggle to solve a pension and budget deficit. Illinois last March reformed its public employee pensions when the General Assembly passed legislation that created a “two-tier” pension system.
   However, Wisconsin has added collective bargaining rights to the mix, muddying the waters.
   Amid widespread protest, Wisconsin Gov. Scott Walker proposed a budget repair bill that would require public workers to contribute more to their pensions and health insurance and reduce their collective bargaining rights.
   Wisconsin Democratic senators have fled the Capitol in protest of the repeal of most collective bargaining rights, leaving the rest of the GOP-led legislature to ponder how to close the state’s $136.7 million budget deficit for the current year. Walker's plan passed the Assembly chamber early Friday morning, but still needs to clear the Senate before hitting Walker's desk for his signature.
  Illinois' reforms allow current employees to keep their existing pension plan, changing the rules only for new employees hired after Jan. 1. The retirement age increased to 67, maximum salaries were capped at $106,800 and payouts became based on a worker's highest salary during eight consecutive years of the last 10.
   At the time, Illinois was facing a roughly $13-billion budget deficit. Although the measure angered unions, it was passed and ratified without much legislative opposition — 92-17 in the House and 48-6 in the Senate.
   Jim Nowlan, a research fellow at the Institute of Government and Public Affairs at the University of Illinois Urbana-Champaign, attributes the diverging reactions from each state to a contrasting political climate.
   “The speaker of the (Illinois) House did strike very quickly last year and surprised the public employee unions, which did mount some opposition,” Nowlan said.
   Illinois House Speaker Michael Madigan, D-Chicago, pushed the measure through in a single day.
   Nowlan attributes the lack of comparable opposition to a Democratic majority in the Illinois Legislature — typically backed by labor unions — that led the charge for pension reform. He likened Madigan's Democratic push to that of the late Republican President Richard Nixon's visit to China.
   “Only President Nixon could go to China back in his administration. A Democratic president would not have been able to get away with going to China to face and meet with the Communist leader of the world,” Nowlan said.
   In contrast, Wisconsin Republicans hold majorities in both the House and Senate. Walker, also a Republican, has made national news recently for moving to restrict union collective bargaining rights.
   Illinois state Sen. Dave Syverson, R-Rockford, who recalls last year's pension reforms, said he approves of how Wisconsin Republicans are handling the current situation.
   “Illinois is just putting off for a few months, maybe a year, what is inevitably going to be some painful decisions, because of the fact they refused to make small improvements over the last few years,” Syverson said.
   David Yepsen, director of the Paul Simon Public Policy Institute at Southern Illinois University-Carbondale, said the widespread protests aren’t surprising considering the financial crisis and recent political turnover in Wisconsin leadership.
   “It's one thing to raise questions about the level of benefits, about the numbers of state workers, and it's another thing to question whether unions really have a right to exist. So that's bound to spark a great deal of militancy on the part of labor leaders,” Yepsen said.
   Walker has threatened layoffs of state workers if his budget repair bill doesn't pass within the next few days.
   Anders Lindall, a spokesman for the American Federation of State, County and Municipal Employees, said an attack on public unions is an attack on middle-class America.
   “There is no good public policy justification for any of these attacks on vital services that teachers, firefighters, police officers, nurses and public service workers provide to the state of Illinois,” said Lindall.
   Like the proposal itself, even Wisconsin’s future seems to be a place of contention.
   “I think Wisconsin, at the end of the day, is going to pay a terrible price for this,” Yepsen of the Simon Institute said. “The Republicans may well win in the short term, but they are going to create levels of personal animosity that will make it difficult for their policy makers to work together. They're going to create levels of union militancy that's going to affect the delivery of public services.
   Syverson, the Rockford senator, however, had a more positive outlook.
   “What's going to happen a year from now is that people are going to look back and say the tough decision that Wisconsin made as regard to their budget has made them financially sound,” Syverson said. “Their bond rating is going to be good. They're going to be attracting more business (and) more jobs because they’re going to be a financially sound state.”
   Story courtesy of Illinois Statehouse News. Originally published 2/24/2011.

Farm Supply Retailer to Pay $54,922 Civil Penalty

   KANSAS CITY, KAN. -  2/26/2011 - ADI Agronomy, Inc., which owns a group of farm supply facilities in southeast Missouri and northeast Arkansas, has agreed to pay a $54,922 civil penalty to the United States for chemical Risk Management Program violations at its Ag Distributors retail facility at Kennett, Mo., which sells liquid fertilizer made with anhydrous ammonia.
    EPA Region 7 issued an administrative compliance order to the Kennett facility in July 2010, after an inspection noted eight violations of the chemical Risk Management Program regulations contained in the federal Clean Air Act. Specifically, Ag Distributors failed to establish and implement maintenance procedures to ensure the ongoing integrity of its anhydrous ammonia process equipment, and failed to document that the equipment complied with recognized and generally accepted good engineering practices, among other violations.
    As part of an administrative consent agreement issued by EPA in Kansas City, Kan., ADI Agronomy, doing business as Ag Distributors, agreed to pay the $54,922 penalty.
    The Ag Distributors facility in Kennett is subject to the Risk Management Program regulations because it uses, stores, manufactures or handles the on-site movement of 10,000 pounds or more of anhydrous ammonia in its fertilizer production process, the agreement says. Anhydrous ammonia is corrosive, and exposure to it may result in chemical-type burns to skin, eyes and lungs.
    Facilities like Ag Distributors that mix or blend fertilizers using anhydrous ammonia, but which do not sell anhydrous ammonia directly to farmers, must implement the most stringent type of Risk Management Program, known as the Program 3 Prevention Program. Ag Distributors failed to comply with the Program 3 Prevention Program requirements, which require detailed safety precautions, preventative maintenance, operating procedures, and employee training measures.
    Risk Management regulations are intended to help prevent accidental releases of harmful chemicals, and help local emergency responders prepare for and respond to chemical accidents. Failure to have an adequate Risk Management Program and Plan can compromise a facility’s ability to prevent releases and minimize the impact of releases that do occur.
    As part of its settlement with EPA, ADI Agronomy has certified that the Ag Distributors facility in Kennett is now in compliance with the chemical Risk Management Program regulations.
   Source: U.S. EPA

Koch Brothers Fund Walker's Union-Busting Effort

Online production of Democracy Now! - posted on Feb. 24, 2011.

Executive Faces 30 Years in $1.9 Billion Scheme

   WASHINGTON – 2/24/2011 – Desiree Brown, the former treasurer of a private mortgage lending company, Taylor, Bean & Whitaker (TBW), pleaded guilty today to conspiring to commit bank, wire and securities fraud for her role in a more than $1.9 billion fraud scheme that contributed to the failures of Colonial Bank and TBW.
    Brown, 45, of Hernando, Fla., pleaded guilty before U.S. District Judge Leonie M. Brinkema in the Eastern District of Virginia.
   Brown faces a maximum penalty of 30 years in prison when she is sentenced on June 10.  In a related action, the U.S. Securities and Exchange Commission (SEC) today filed an enforcement action against Brown in the Eastern District of Virginia.
   According to court documents, Brown admitted that from late 2003 through August 2009, she and her co-conspirators, including former TBW chairman Lee Farkas engaged in a scheme to defraud various entities and individuals, including Colonial Bank, a federally-insured bank; Colonial BancGroup Inc.; shareholders of Colonial BancGroup; investors in Ocala Funding LLC, including Deutsche Bank and BNP Paribas; the Troubled Asset Relief Program (TARP); and the investing public. One of the goals of the scheme to defraud was to obtain funding for TBW to assist it in covering expenses related to operations and servicing payments owed to third-party purchasers of loans and/or mortgage-backed securities.
   According to court documents, Brown and her co-conspirators referred to one aspect of the fraud scheme as “Plan B.”     
   “Plan B” generated money for TBW through the fictitious “sales” of mortgage loans to Colonial Bank.  The conspirators accomplished this by sending mortgage data to Colonial Bank for loans that did not exist or that TBW had already committed or sold to other third-party investors.  As a result, the Plan B loan data was recorded in Colonial Bank’s books and records, and gave the false appearance that Colonial Bank had purchased legitimate interests in mortgage loans from TBW. Brown admitted that she and her co-conspirators caused Colonial Bank to pay TBW for assets that were worthless to Colonial Bank.
    Brown admitted that, as part of the fraud scheme, she and her co-conspirators also caused TBW to sell fictitious trades, which had no pools of loans collateralizing them, to Colonial Bank. Brown and her co-conspirators caused false information about the trades to be entered on Colonial Bank’s books and records, giving the appearance that the bank owned interests in legitimate trades, when in fact the trades had no value and could not be sold.         
    Court documents indicate that the conspirators caused Colonial Bank to pay TBW more than $400 million for assets that in fact had no value, and caused Colonial Bank and Colonial BancGroup to hold these assets on their books as if they had actual value. Additionally, the conspirators caused TBW to misappropriate more than $1 billion in collateral from Ocala Funding LLC, a mortgage lending facility owned by TBW. 
    According to court documents, the fraud scheme also included an effort by the conspirators in the fall of 2008 to obtain $570 million in taxpayer funding through the Capital Purchase Program (CPP), a sub-program of the U.S. Treasury Department’s TARP program.   In connection with the application, Colonial BancGroup submitted financial data and filings that included materially false information related to mortgage loan and securities assets held by Colonial Bank as a result of the fraudulent scheme admitted to by Brown. Colonial BancGroup never received the TARP funding.
    In August 2009, the Alabama State Banking Department, Colonial Bank’s regulator, seized the bank and appointed the FDIC as receiver. Colonial BancGroup also filed for bankruptcy in August 2009.
    In June 2010, Farkas was arrested and charged in a 16-count indictment for his role in the fraud scheme.   His trial is scheduled to begin in April 2011.   An indictment is merely a charge and a defendant is presumed innocent until proven guilty.
   The guilty plea was announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Special Inspector General Neil Barofsky for the Troubled Asset Relief Program (SIGTARP); Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; Michael P. Stephens, Inspector General of the Department of Housing and Urban Development (HUD OIG); Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC OIG); Steve A. Linick, Inspector General of the Federal Housing Finance Agency (FHFA OIG); and Victor F. O. Song, Chief of the Internal Revenue Service (IRS) Criminal Investigation.
    The case is being prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Robert Zink of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Charles Connolly and Paul Nathanson of the Eastern District of Virginia.  This case was investigated by SIGTARP, FBI’s Washington Field Office, FDIC OIG, HUD OIG, FHFA OIG and the IRS Criminal Investigation. The Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury also provided support in the investigation.

APS Healthcare to Pay $13 Million in Claims Case

   ATLANTA — 2/22/2011 — The United States Attorney’s Office announced today that “Innovative Resources Group, LLC,” doing business as “APS Healthcare Midwest,” of White Plains, New York, has reached a $13 million settlement with the United States and the state of Georgia to resolve allegations under the False Claims Act. The United States’ share of the settlement is $5.2 million.
   The government alleges that APS Healthcare submitted false claims to Medicaid through the Georgia Department of Community Health (DCH) because it did not provide specialty services related to disease management and case management to members of the Georgia Medicaid Management Program (GAMMP) during the period from Sept. 1, 2007 through Feb. 28, 2010.
   “In this time of tight budgets and rising health care costs, the state of Georgia tried to improve its services to its Medicaid recipients by contracting with APS Healthcare. But instead of providing improved efficiency and effectiveness the company billed for, APS Healthcare took Medicaid’s money for itself and left some of our most vulnerable citizens without the aid they deserved,” United States Attorney Sally Quillian Yates said.
   Under the GAMMP contract, APS Healthcare agreed to provide case and disease management services to Georgia Medicaid recipients and was paid a monthly fee for each member receiving such services. The government contends that APS Healthcare failed to provide the required services to a large portion of the Medicaid recipients and over-billed the Georgia Department of Community Health in its monthly invoices.
   APS Healthcare has executed a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services, Office of Inspector General, which will require an aggressive compliance program. The Corporate Integrity Agreement requires, among other things, intensive training and implementation of policies and procedures designed to ensure compliance with federal health care program requirements. In addition, APS Healthcare will be subject to external review of its compliance with state Medicaid contracts.
   If APS Healthcare fails to comply with certain material terms of the CIA, the company is subject to monetary penalties and exclusion from federal health care programs, including Medicare and Medicaid.
   The civil settlement resolves a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery. The case, pending in the Northern District of Georgia, is filed under United States ex rel. Michael Claeys and State of Georgia ex rel. Michael Claeys v. APS Healthcare, Inc., APS Healthcare Bethesda, Inc., and Innovative Resource Group, LLC d/b/a/ APS Healthcare Midwest, 1:09-cv-2779-WSD.
   The investigation was conducted by special agents of the FBI and HHS-OIG.
   The civil settlement was reached by Assistant United States Attorneys Christopher J. Huber and Lena Amanti.
   Source: U.S. Department of Justice news release.

Consumer Comfort Index in U.S. On Shaky Ground

   NEW YORK- (BUSINESS WIRE) - 2/19/2011 - Consumer confidence last week held near a two-month low, and more Americans turned pessimistic on the outlook for the economy as gasoline prices rose.
   The Bloomberg Consumer Comfort Index, formerly the ABC News US Weekly Consumer Comfort Index, was minus 43.4 in the period to Feb. 13 compared with minus 46 the prior week. Twenty-nine percent of those surveyed said the economy will worsen, the most since November and up from 23 percent in early January, today’s release said.
   The highest gasoline prices in two years have pinched household budgets and threaten to stem the rebound in consumer spending, the biggest part of the economy, that began last year. At the same time, a decrease in firings may help Americans overcome concern their jobs are in jeopardy, easing some of the negative effects from rising energy bills.
    “Sentiment remains quite fragile,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Rising food and fuel costs are likely offsetting improvement elsewhere in the economy for households on fixed incomes and those whose wages are not sufficient to keep up with the increase in the cost of necessities.”
    The minus 46 reading two weeks ago was the lowest since late November. That week’s five-point drop was the biggest setback since January 2010.
    The average price of a gallon of regular gasoline at the pump increased to $3.13 on Feb. 15, the highest since October 2008, according to figures from AAA, the nation’s biggest motoring group.
Gasoline prices and the comfort index have moved in the same direction 98 percent of the time since 2004, according to calculations by Brusuelas. Changes in the four-week average of claims for jobless benefits have been in sync with the comfort gauge about 72 percent of the time.
    More Americans filed applications for unemployment insurance payments last week, figures from the Labor  Department showed. The number of claims increased to 410,000 from 385,000 the prior week.
Another report from the Labor Department showed consumer prices rose 0.4 percent in January, propelled by costs of food and fuel. Excluding food and fuel, the so-called core gauge rose 0.2 percent from the prior month.
    The consumer comfort survey also showed registered Republican voters have gained confidence over the past two months at the expense of Democrats.
    The index for Republicans stood at minus 32.9 last week, up from minus 38 the week before. For Democrats, it was minus 48.9, up from minus 51. The 16-point difference last week was the biggest since mid-December. The spread has averaged about 31 points in favor of Republicans since this index’s inception in 1990.
    The biggest political gap on record, 90 points, was in July 2004, when Republicans were optimistic and Democrats were pessimistic. Since then, Republicans have turned more pessimistic, narrowing the difference.
    The mood among Republicans turned more dour than that of Democrats in December 2009 for the first time in 13 years. The last time Democrats were optimistic overall was in July 2001. Since December 2008, the month after Barack Obama was elected president, the gap has not exceeded 31 points.
    Income plays a central role in shaping respondents’ views, the report showed. The index for Americans earning less than $15,000 a year was at minus 76.6 last week, compared with minus 79 the week before. For those making more than $100,000, the index fell to minus 4.6 from minus 4.
    The Bloomberg Consumer Comfort Index, compiled by Langer Research Associates in New York, is based on responses to telephone interviews with a random sample of about 1,000 consumers ages 18 and over.
    Each week, about 250 respondents are asked for their views on the economy, personal finances and buying climate; the percentage of negative responses is subtracted from the share of positive views and divided by three. The most recent reading is based on the average of responses over the previous four weeks.
    The share of households with a positive view of the economy was 14 percent last week, little changed from the prior week.
    Those with an upbeat rating on their personal finances climbed to 45 percent from 43 percent, and the share saying it was a good time to buy needed items held at 25 percent.
    A separate measure of expectations showed 33 percent of those surveyed said the economy will get better. Compared with the 29 percent who said it was getting worse, the gap narrowed to 4 percentage points from a 10-point spread in favor of optimists in January. This gauge represents responses from 500 Americans interviewed in the first two weeks of each month.
    Retail sales rose less than forecast in January, signaling it will be difficult for consumers to sustain last quarter’s pickup in spending without bigger gains in employment, figures from the Commerce Department showed this week.
    Purchases increased 0.3 percent, the smallest gain since a drop in June. The data also indicated winter snowstorms may have played a role in the slowdown as Americans stayed away from home-improvement stores and restaurants.
    BJ’s Restaurants Inc., which operates its namesake brewery, pizza and grill chains, is among companies concerned about rising fuel prices, unemployment, and home foreclosures. While Huntington Beach, California-based BJ’s sales trends have continued to be “solid” since the start of 2011, customers are under pressure, Chief Executive Officer Jerry Deitchle said on a conference call on Feb. 10
    “We are still operating in a very difficult, volatile environment for consumer discretionary spending,” Deitchle said. “Consumers are facing significantly higher food and gasoline prices.”
    The comfort index can range from 100, indicating every participant in the survey had a positive response to all three components, to minus 100, signaling all views were negative. The margin of error is 3 percentage points.
    The responses are broken down by participants’ sex, age, income level, race, region of residence, political affiliation, marital and employment status.

Biomass Power Plants Fined More Than $830,000

   SAN FRANCISCO - 2/16/2011 - Consent decrees have been lodged against two biomass power plants in Chowchilla and El Nido, Calif., on behalf of the U.S. Environmental Protection Ageny and the San Joaquin Valley Air Pollution Control District.
   The two companies have agreed to pay a combined civil penalty of $835,000 to resolve alleged violations of the federal Clean Air Act and district rules, including excess emissions of air pollutants such as nitrogen oxides—a precursor to ozone—and fine particulates.
    “EPA is committed to doing our part to tackle the worst air quality in the nation. Today’s enforcement actions are a victory for human health,” EPA’s Regional Administrator for the Pacific Southwest Jared Blumenfeld said. “San Joaquin Valley communities can now breathe easier as a result of the significant pollution controls won in these settlements.”
    The settlements require the facilities to install devices to improve monitoring and reporting of air pollutants; enhance automation of the control systems for nitrogen oxides emissions; and prepare more stringent control plans to minimize emissions of air pollutants. As a part of this action, the companies have installed controls that reduce emissions of nitrogen oxides by up to 180 tons per year and carbon monoxide by up to 365 tons per year. The EPA and district will continue to monitor both facilities for an additional two years to ensure completion of all requirements.
    Ampersand Chowchilla Biomass, LLC, (ACB), and Merced Power, LLC, (MP), located within 12 miles of each other in the San Joaquin Valley, are required to pay $328,000 and $492,000, respectively; EPA and the district will split the penalty equally. ACB is also required to pay an extra $15,000 to the district for a district-only violation.
    After refurbishing the plants in 2007-2008, ACB and MP initiated operations in 2008. A joint investigation by the EPA and district found that ACB and MP violated the air permits issued to them by the district by:
  • Emitting air pollutants including nitrogen oxides, sulfur dioxide, and carbon monoxide in excess of the permit limits;
  • Failing to perform timely source testing to measure emissions of various air pollutants;
  • Failing to properly install and operate emissions control systems for nitrogen oxides, a precursor to ozone; and
  • Failing to certify the continuous emissions monitoring systems.
  • The plants also violated various district rules including requirements for emissions control plans.
    Biomass power plants use green waste from farms and other operations that would otherwise be subject to open burning, and construction debris that might have gone to a landfill, to generate power.
    The San Joaquin Valley exceeds the national health standards for ozone and particulate matter. Nitrogen oxides react with other chemicals to form ozone and small particles, both harmful to the public’s health. Ozone and particulate matter affect the human respiratory system, and are linked to a variety of significant health problems ranging from aggravated asthma to premature death in people with heart and lung disease.
    Both proposed consent decrees are subject to a 30-day public comment period and final approval by the U.S. District Court for the Eastern District of California. A copy of each decree is available at http://www.justice.gov/enrd/Consent_Decrees.html.

Group Says Fannie Mae, Freddie Mac are Needed

   LOS ANGELES - (BUSINESS WIRE) - 2/14/2011 - In response to the White House’s recommendations last week to phase out Fannie Mae and Freddie Mac, the California Association of Realtors said the elimination of government involvement would raise borrowing costs for home buyers and severely restrict a safe and affordable flow of financing, further impeding the still-fragile housing market recovery.
   “A reduced government presence in the mortgage market will raise the cost of homeownership and make mortgages less available,” CAR President Beth L. Peerce said. “Moreover, Congress needs to understand that during economic downturns, the housing market needs government involvement to ensure capital stability. History has shown the private market is incapable and unwilling to step in during the hardest of times and meet the demands of the nation’s home buyers.”
   CAR, along with the National Association of Realtors, believes that Fannie Mae and Freddie Mac government-sponsored enterprises (GSEs) should be converted into government-chartered, non-profit corporations. Such an entity would ensure government’s role in a stable real estate finance system, while eliminating the conflict created by the GSE’s current charter allowing for a private profit and public loss structure. With a clear explicit guarantee by the government, these entities would continue to be able to offer low interest rate loans onto home buyers and assure investor confidence.
    The White House’s proposal to allow the maximum loan limit to drop back to $625,500 in high cost areas also would hamper California’s housing recovery
   “California dominates the jumbo loan market and cannot afford a reduced loan limit. The homeownership rate here consistently has lagged behind national figures for the last three decades,” Peerce said. “Any reduction to the conforming loan limit will prevent low- and moderate-income home buyers in high-cost areas from accessing low cost, low rate mortgages.”
    The conforming loan limit determines the maximum size of a mortgage that Fannie Mae and Freddie Mac can buy or “guarantee.” Non-conforming or “jumbo loans” typically carry higher mortgage interest rates than conforming loans, increasing monthly payments and hampering the ability of families in California to purchase homes by making them less affordable.
    GSE key points:
  • The national loan limit for Fannie Mae and Freddie Mac is $417,000. Only in areas where the median home price is above $417,000 does the higher loan limit apply, which allows all homebuyers to have equal and fair access to affordable capital.
  • An efficient and adequately regulated secondary market is essential to providing affordable mortgages to consumers. The secondary market, where mortgages are securitized and/or combined into bonds, is an important and reliable source of capital for lenders, and therefore, for consumers.
  • Without a secondary market, mortgage interest rates would be unnecessarily higher and unaffordable for many Americans. In addition, an inadequate secondary market would impede both recovery in housing and the overall economic recovery.
  • Government-sponsored entities have a separate legal identity from the federal government but serve a public purpose. Unlike a federal agency, the entities will have considerable political independence and be self-sustaining, given the appropriate structure.
  • The mission of the GSEs would be to ensure a strong, efficient financing environment for homeownership and rental housing, including access to mortgage financing for segments of the population that have the demonstrated ability to sustain homeownership. Middle class consumers need a steady flow of mortgage funding that only government backing can provide.
  • The entities should guarantee or insure a wide range of safe, reliable mortgage products such as 30- and 15-year fixed-rate loans, traditional ARMs, and other products that have stood the test of time and for which American homeowners have demonstrated a strong ability to repay.
  • There must be strong oversight of the entities (for example, by the Federal Housing Finance Agency – FHFA, or a successor agency) that includes the providing of timely reports to allow for continual evaluation of the entities’ performance.

Hedge Fund Portfolio Managers, Analyst Charged

   NEW YORK - 2/09/11 - Samir Barai, a former portfolio manager at two hedge funds, and Donald Longuefuil, , who formerly worked as a research analyst at a third hedge fund and as a portfolio manager at a fourth, have been charged with conspiracy to commit securities and wire fraud for their involvement in an insider trading scheme.
   Charges were announced by United States Attorney for the Southern District of New York Preet Bharara, and Assistant Director-in-Charge of the New York Office of the FBI Janice K. Fedarcyk.
   Barai has also been charged with securities fraud. Jacson Pflaum, a former research analyst for Barai, and Noah Freeman, a research analyst at a fifth fund and then a portfolio manager at a sixth, were charged with, and pled guilty in Manhattan federal court to one count each of conspiracy to commit securities fraud and securities fraud for their roles in the scheme.
   Representing six hedge funds, the four defendants allegedly obtained and shared material, non-public information about at least six publicly-traded companies for the purpose of executing securities transactions that realized millions of dollars in illegal profits. Barai and Longueuil have also been charged with obstruction of justice for their efforts to destroy evidence of their involvement in insider trading after reading media reports about the FBI’s insider trading investigation.
   "The Complaint unsealed today (Feb. 8)  is a sad chronicle not only of criminal conduct but also its brazen cover-up. It alleges hard core insider trading in stock after stock - people blatantly trafficking in material, non-public information. And the lengths to which two of these defendants went to cover their tracks sounds like something out of a bad movie. To date, twelve people have been charged by this office in connection with our investigation of expert networking firms and four have pled guilty, but we are far from finished. Together with our law enforcement partners at the FBI, we intend to continue being as systematic and methodical in attacking insider trading as we allege today's defendants were in practicing it, " Bharara stated.
   According to the complaint unsealed on Feb. 8 in Manhattan federal court, as well as the information to which Pflaum and Freeman pled guilty and statements made during their plea proceedings:
   Between 2006 and 2010, Barai, Longueuil, Pflaum, Freeman and their co-conspirators participated in a conspiracy to obtain "inside information," including detailed financial earnings, about numerous public companies, including Marvell Technology Group, Ltd. ("Marvell"), NVIDIA Corporation ("NVIDIA"), Fairchild Semiconductor International ("Fairchild"), Advanced Micro Devices, Inc. ("AMD"), Actel Corporation ("Actel"), and Cypress Semiconductor Corporation ("Cypress").
   They obtained such inside information both from employees who worked at these and other public companies and from independent research consultants who communicated with employees at public companies. Often, the defendants and their co-conspirators used an "expert networking" firm (the "Firm") to communicate with and pay their sources of inside information.
   In addition, although they worked at different hedge funds, Barai, Longueuil and Freeman had regular conference calls during which they shared Inside Information with each other.
   For example, on May 23 and May 28, 2008, Winifred Jiau, who was previously arrested on December 29, 2010 had telephone conversations with Barai and Freeman during which she advised them of Marvell’s quarterly revenues, gross margins, and earnings per share for the Marvell quarter ending on May 3, 2008.    
   The information JIAU provided was accurate and preceded Marvell’s public announcement of its financial results for the quarter. Freeman then provided the tip to Longueuil. As a result of Jiau's information about Marvell, the hedge fund where Barai worked (defined as "Hedge Fund B" in the complaint) purchased more than 300,000 shares of Marvell and the hedge fund where Longueuil worked (defined as "Hedge Fund C" in the Complaint) purchased approximately 800,500 shares of Marvell. After Marvell’s public announcement, the price of Marvell stock increased approximately 23 percent, resulting in net profits of over $820,000 to Hedge Fund B and approximately $1.08 million to Hedge Fund C.
   In addition, Barai, Longueuil, Pflaum, Freeman and their co-conspirators undertook efforts to conceal the scheme from regulatory and law enforcement agencies, including by saving any electronic records evidencing their communications with company insiders on external flash drives or external hard drives, rather than on hedge fund servers. They also used personal e-mail accounts rather than the hedge fund e-mail accounts to communicate about inside information.
   After reading media reports on November 19, 2010, that the FBI and a Manhattan federal grand jury were conducting an investigation into insider trading through the Firm, Barai and Longueuil attempted to, and did, destroy digital records and/or documents reflecting their receipt of inside information from their sources. Specifically, Barai sent Pflaum, who was at the time cooperating with the Government’s investigation, Blackberry Messenger ("BBM") communications instructing him to go to Hedge Fund A’s office, and to: "[s]hred as much as u can," "[p]ut all ur data files onto an encrypted drive," and "delete all emails from" two particular individuals. Barai also told Pflaum that he had already deleted his own emails.
   In that same series of BBM communications on November 20, Barai wrote:
 "So what if we talked to anyone"
 "They need proof that we acted on something"
 "And its hard to have that"
 "My sense is they tapped [the Firm] just recently..."
 "the more I think about it - just not enough clues to hold something on us"
 "There isn’t anything tho"
 "Nothing material"
 "We use all mosaic theory"
 "So we’re ok"
   Then, on November 21, 2010, Barai instructed Pflaum to leave his laptop computer, on which he memorialized some of his conversations with company insiders, with Pflaum's doorman so that Barai could obtain the laptop and "do a dept of defense delete," in order to erase all records from the laptop. Later that night, Barai picked up Pflaum’s laptop and never returned it.
   Similarly, after reading the news articles claiming the existence of an FBI and grand jury investigation, Longueuil destroyed the flash drive on which he logged his conversations with company insiders, as well as two external hard drives containing evidence relevant to the insider trading investigation. He later recounted to Freeman, who at the time was a cooperating witness, how he destroyed the evidence:
   So I just [expletive] ripped it [referring to the flash drive] apart right there... I had two external drives that had like wafer numbers on 'em. [expletive] pulled the external drives apart. Destroyed the platter... Put 'em into four separate little baggies, and then at 2 a.m. ... 2 a.m. on a Friday night, I put this stuff inside my black North Face [u/i] jacket,... and leave the apartment and I go on like a twenty block walk around the city... and try to find a, a garbage truck... and threw the [shit] in the back of like random garbage trucks, different garbage trucks... four different garbage trucks.
   Barai, 39, and Longueuil, 34, both of New York, New York, have been charged with one count of conspiracy to commit securities fraud and wire fraud (count one) and one count of obstruction of justice (counts five and six). Barai has also been charged with three counts of substantive securities fraud (count two through four). Count one carries a maximum penalty of five years in prison and a fine of $250,000, or twice the gross gain or loss from the offense, and counts two through four carry a maximum penalty of 20 years in prison and a maximum fine of $5 million. Counts five and six carry a maximum potential penalty of 20 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense.
   Barai self-surrendered to authorities. Longueuil was arrested at his residence in New York, New York. Both defendants were due to be presented in Magistrate Court on February 8.
   Both Pflaum, 37, of New York, New York, and Freeman, 35, of Boston, Massachusetts, who both previously pled guilty to conspiracy to commit securities fraud and securities fraud, face a statutory maximum sentence of 25 years in prison.
   Source: U.S. Department of Justice news release

Governor to consider fate of death row inmates

   By Mary Massingale - (ISN) - 2/7/2011 - Gov. Pat Quinn on Feb. 4 said he would decide the fate of inmates now on death row when he reaches a decision on whether to sign legislation abolishing the death penalty.
   Lawmakers last month passed a measure that would end the death penalty in Illinois, but the legislation excludes the 15 inmates now on death row. That point was noted to Quinn, and he was asked if he was considering commuting the sentences of those inmates.
   “I’m going to make a decision on everything at the right time — it won’t be that long from now — but I do think it’s important to have a period of reflection and review, and that’s what we’re doing,” Quinn said.
   The governor is the only state official authorized to commute death row sentences.
   Lawmakers narrowly approved the abolition measure during the lame-duck session after a long and often-emotional debate. Supporters pointed to multiple death row exonerations, while opponents argued the threat of capital punishment is a tool used by law enforcement to garner confessions from alleged killers.
   The state constitution allows the governor 60 days to act on legislation after it is sent to his desk, or it becomes law without his signature. The proposal was sent to Quinn on Jan. 18.
   Quinn said his decision will come in “a few weeks.” In the meantime, he said he has taken time to “listen to the dialogue of the people, reflect and pray.”
   “I’ve had meetings in my office with a variety of different law enforcement people, as well as private individuals, people from the faith community,” Quinn said. “I encourage anyone in Illinois with an opinion on this subject to e-mail me, mail me letters.”
   Quinn has said in the past that he supports capital punishment for the most heinous of crimes, but he also has kept in place the moratorium on the death penalty imposed in 2000 by former Gov. George Ryan. Ryan in January 2003 then cleared out death row, commuting the sentences of all inmates.
   As the main proponent of the legislation, the Illinois Coalition to Abolish the Death Penalty and its supporters are patiently waiting for Quinn’s decision.
   “Obviously, we want him to sign it, but we’ve really stressed that the governor should take as much time as he needs,” said Jeremy Schroeder, executive director.
   County state’s attorneys, however, favor capital punishment, and are hoping Quinn keeps it in place.
   Coles County State’s Attorney Steve Ferguson in February 2003 successfully prosecuted and got the death sentence for Anthony Mertz, who was convicted of killing a female Eastern Illinois University student. Mertz was the first inmate to be sent to death row following Ryan’s blanket commutations, and still resides there.
   Ferguson said he doesn’t begrudge Quinn the time he needs to reach a decision.
   “He certainly seems to be putting more deliberation and time into this than the legislature did, and I’m thankful for that,” Ferguson said.
   Kevin Lyons, state’s attorney for Peoria County, traveled to the state Capitol several times to testify against the abolition bill. He noted that if Quinn signs the legislation, he would also have to act in favor of the inmates now on death row.
   “Fairness would demand that if the death penalty is abolished, those persons would surely have to have their sentences commuted by governor act to life without parole,” Lyons said. “Fairness would require it.”
   But a political observer noted the Democratic governor’s conundrum: Quinn narrowly supports the death penalty, but has been handed abolition legislation by a Democratic Legislature.
   “It does put him in a bit of a box,” said Kent Redfield, a professor of political studies at the University of Illinois-Springfield.
   However, Quinn could sign the legislation, and then ask the newly elected, more conservative Legislature to craft a narrowly defined death penalty, Redfield said.
   “That seems to be the only kind of out he has right now,” he said.
   Story courtesy of Illinois Statehouse News.

Man indicted on allegations of health care fraud

   OKLAHOMA CITY - 2/05/2011 - Lance E. Faulkner, 44, from Tecumseh, Okla., was indicted by a federal grand jury for health care fraud in connection with sales of prosthetic limbs and components, United States Attorney for the Western District of Oklahoma Sanford C. Coats has announced.
   According to the indictment, Faulkner owned and operated Heartland Orthotic Prosthetic Lab, Inc., d/b/a Faulkner Prosthetic Designs of Oklahoma, LLC ("Heartland"), located in Shawnee, Okla.. Heartland was in the business of providing durable medical equipment ("DME"), specifically prosthetic limbs and related components.
   It is alleged that Faulkner billed Medicare and Medicaid for beneficiaries who did not have a prescription for the prosthetics from a licensed physician or other qualified health care provider. Instead, it is alleged that Faulkner submitted physician names and identification numbers to Medicare and Medicaid even though many of those physicians had never treated the patients or prescribed the prosthetic limbs.
   It is also alleged that Faulkner submitted claims to Medicare and Medicaid for expensive, computerized prosthetic limbs, when the beneficiaries actually received less sophisticated prosthetics or none at all.
   The indictment specifically alleges that Faulkner billed Medicare $47,000 on three separate occasions and $23,501 on three other occasions for prosthetic leg components when the beneficiaries never received the prosthetic leg components at all. In total, the indictment alleges that from January 2006 through June 2010,
   Faulkner used this scheme to obtain approximately $4,948,699 from Medicare and $600,348.64 from Medicaid.
   If convicted, Faulkner faces up to 10 years in prison, a $250,000 fine, and mandatory restitution. The public is reminded that the indictment is merely an accusation and that the defendant is presumed innocent unless and until proven guilty. Reference is made to the indictment for further information.
   This case is the result of an investigation conducted by the Federal Bureau of Investigation and the Office of Inspector General for the United States Department of Health and Human Services. The case is being prosecuted by Assistant U.S. Attorney Amanda Maxfield Green.
   Source: U.S. Department of Justice press release.

Upheavel in Middle East Grabs World's Attention

Special Democracy Now! broadcast on the crisis in Egypt. February 5, 2011.

Fuel Cell Industry Poised for Growth, Change

   BOULDER, Colo. - (BUSINESS WIRE) - 2/4/2011 - The fuel cell industry is growing even in the face of a global economic recession, with 2010 revenues exceeding $750 million. Markets such as uninterruptible power supplies (UPS), residential combined heat and power (CHP), power for remote monitoring equipment, auxiliary power units (APUs), and portal power for military applications have all experienced an increase in traction over the last year.
   A new white paper from Pike Research identifies 10 key trends that are having an influence on the development of the worldwide fuel cell market.
    “Fuel cells are finding a place in an increasing number of commercial applications, and 2011 is shaping up to be a big year in terms of market development,” Research Director Kerry-Ann Adamson said. “Industry consolidation is a trend that has been long anticipated, but will only accelerate during the course of the year. In addition, new issues have sprung out of nowhere in the past year such as concerns over supply of rare earth metals.”
    Adamson said the issue of government intervention versus the free market will continue to simmer as different countries’ economic policies diverge on matters of fuel cell development. And new markets for fuel cells are continuing to come to the fore as the economics of adoption, both direct and indirect, continue to be tipped in favor of the technology.
    Key fuel cell trends being is watched include:
  • The reemergence of private equity firms in the fuel cell market.
  • The continuing growth and deployment of fuel cell vehicles.
  • The rising influence of Japan and Korea in the global fuel cell industry.
  • The emergence of hydrogen as an energy storage medium.
  • Rare earth restrictions as an obstacle to fuel cell adoption.
  • Unmanned aerial vehicles (UAVs) as a key market for micro fuel cells.
    Pike Research’s white paper, “Fuel Cell and Hydrogen Industry: Ten Trends to Watch in 2011 and Beyond”, offers perspective and insight on 10 trends that will change the shape of the fuel cell industry during 2011. Information and analysis in this paper is drawn from Pike Research’s ongoing coverage of the global fuel cell market. A full copy of the white paper is available for download on the firm’s website.

Broker Indicted in Alleged 'Pump and Dump' Case

   WASHINGTON - 2/2/2011 - An indictment unsealed on Feb. 1 in Detroit charges stock broker Gregg M. Berger, of New York, for his role in a wide-ranging fraud scheme to illegally "pump-and-dump" thinly traded Chinese and Israeli stocks, announced Assistant Attorney General Lanny A. Breuer and U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade.
  The single count superseding indictment returned in the Eastern District of Michigan alleges that Berger, 47, conspired with Alan Ralsky, Francis Tribble, How Wai John Hui, Scott Bradley, and others to carry out a sophisticated stock fraud scheme from January 2005 through December 2007.
   The indictment alleges that during the course of the scheme, Berger caused the sale of approximately 30 million shares of stock, generating approximately $30 million for his co-conspirators and more than $600,000 in commissions for himself. Ralsky, Tribble, Hui and Bradley have all been previously convicted and sentenced for their roles in the case.
   "Pump-and-dump schemes undermine the integrity of our stock markets," Breuer said. "When stock brokers exploit their trusted positions to enrich themselves at the expense of innocent investors, as Mr. Berger is charged with doing here, we will pursue them vigorously."
   The charges arose after a multi-year investigation led by agents from the FBI, with assistance from the U.S. Postal Inspection Service and the Internal Revenue Service, which revealed a sophisticated and extensive pump-and dump operation in which the defendants sent spam e-mails to manipulate thinly traded stocks. After the e-mail recipients bought the stock being promoted, thereby driving up the share price, Berger and his co-conspirators profited by selling their existing shares at the newly inflated prices.
   According to the indictment, Berger's role was to act as the stock broker for the conspiracy. Berger allegedly established brokerage accounts for trading the stocks that were illegally promoted, arranged for shares of the stocks to be transferred into the brokerage accounts, executed stock trades at the direction of co-conspirator Tribble rather than the direction of the named account holders and transferred funds from the trading of the stocks to bank accounts controlled by the conspirators.
   Berger also allegedly routinely provided confidential account information, including trade amounts, prices, cash balances and wire transfer details to Tribble, Bradley and others involved in the scheme who were not entitled to such information, all without authorization from the named account holders.
   The stocks artificially inflated and then sold by Berger and his co-conspirators included China World Trade Corporation, Pingchuan Pharmaceutical Inc., China Digital Media Corporation, World Wide Biotech and Pharmaceutical Co., China Mobility Solutions, and m-Wise.
   The indictment charges Berger with one count of conspiracy to commit securities fraud and wire fraud. It also seeks forfeiture of criminal proceeds. If convicted, Berger faces a maximum penalty of 25 years in prison, and a $250,000 fine. Berger is scheduled to be arraigned on Feb. 8 in U.S. District Court in Detroit.
   "Investor fraud schemes like this one prey on small investors and are motivated by greed," McQuade said. "Financial fraud is an important priority so that we can protect victims and the integrity of our financial systems."
   An indictment is merely an allegation, and a defendant is presumed innocent unless proven guilty in a court of law.
   In a related action, the U.S. Securities and Exchange Commission (SEC) also filed civil fraud charges on Feb. 1 against Berger as well as seven other individuals and three companies involved in the scheme. The SEC seeks permanent injunctions, disgorgement and civil penalties, and a penny stock bar against Berger for violations of the antifraud and registration provisions of the securities laws.
   The case is being prosecuted by Assistant U.S. Attorney Terrence Berg for the Eastern District of Michigan and Senior Counsel Thomas Dukes of the Criminal Division's Computer Crime and Intellectual Property Section.
   Source: U.S. Department of Justice press release