Real Estate Investors to Admit To Rigging Bids

   WASHINGTON – 10/27/2011 - Eight Northern California real estate investors have agreed to plead guilty today for their roles in two separate conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.
   Charges were filed on October 27 in U.S. District Court for the Northern District of California in San Francisco against Gary Anderson of Saratoga, Calif.; Patrick Campion of San Francisco; James Doherty of Hillsborough, Calif.; Keith Goodman of San Francisco; Troy Kent of San Mateo, Calif.; Craig Lipton of San Francisco; Henry Pessah of Burlingame, Calif.; and Laith Salma of San Francisco.
   According to the felony charges, the real estate investors participated in a conspiracy to rig bids by agreeing to refrain from bidding against one another at public real estate foreclosure auctions in San Francisco County and San Mateo County. Doherty, Goodman and Lipton participated in the conspiracy in San Francisco, and Anderson, Campion, Kent, Pessah and Salma participated in the conspiracy in San Mateo.
   “The collusion taking place at these auctions allowed the conspirators to line their pockets with funds that otherwise would have gone to lenders and, at times, financially distressed homeowners,” said Sharis Pozen, acting assistant attorney general in charge of the Department of Justice’s Antitrust Division. “The investigation into collusion at these foreclosure auction markets is ongoing, and the Antitrust Division will continue to pursue the perpetrators of these fraudulent schemes until they are brought to justice.”
   The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at San Francisco County and San Mateo County public foreclosure auctions at noncompetitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.
   According to court documents, the eight real estate investors conspired with others not to bid against one another at public real estate foreclosure auctions in Northern California, participating in a conspiracy for various lengths of time between November 2008 and January 2011. The real estate investors were also charged with conspiracies to use the mail to carry out a fraudulent scheme to make payoffs to obtain title to selected real estate at fraudulently suppressed prices, to receive payoffs and to divert money to co-conspirators and away from mortgage holders and others with a legal interest in these properties.
   Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.
   The charges are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, Calif. To date, as a result of the investigation, 18 individuals have agreed to plead guilty.
   The ongoing investigation into fraud and bid rigging at certain real estate foreclosure auctions in Northern California is being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.
   Source: U.S. Department of Justice release

Fitch: U.S. Residential Construction Still Distressed

   CHICAGO - (BUSINESS WIRE) - 10/20/2011 - Despite recent signs of stabilization in housing starts and new home sales data, Fitch Ratings expects U.S. residential construction activity to remain at distressed levels moving into 2012.
  The September housing starts release by the Commerce Department on October 19 pointed to a modest increase in single-family home starts, but applications for building permits were down slightly versus August, suggesting near-term weakness in new construction activity. The rise in the annualized level of total housing starts to 658,000 in September, up 15 percent from August, reflects some strengthening from this summer's trough, but the biggest driver of monthly gains was a pick-up in multi-family starts, which grew by 51 percent on an annualized basis from August to September.
   Separately, applications for new mortgages declined last week, and the National Association of Homebuilders' confidence index rose but remained at a distressed level. Taken together, recent data provide little support for the view that lower long-term interest rates are driving a material pick-up in the housing market.
   New home demand remains weak in the face of high existing home inventory levels, continuing foreclosure pressure and a persistently weak employment picture. In light of the continuing imbalance in supply and demand, Fitch forecasts very modest growth of approximately 1 percent in U.S. home prices for 2012.
   Although average 30-year mortgage rates have fallen to about 4 percent, near a 40-year low, new home buyer demand is still being depressed by poor jobs growth, tough credit standards applied by lenders and ample availability of competing home inventory.
   Fitch expects new home sales to grow at a rate of 7 percent in 2012, off of a still-depressed 2011 base. Somewhat less competition from distressed home sales, fewer low-cost rental alternatives and historically low interest rates should contribute to the modest rise in single-family home sales next year.

Oil Company Pleads Guilty To Multiple Violations

   WASHINGTON10/16/2011 - Pelican Refining Company LLC, pleaded guilty Oct. 12 to felony violations of the Clean Air Act and to obstruction of justice charges in federal court in Lafayette, La.
   Charges were by announced Stephanie A. Finley, U.S. attorney for the Western District of Louisiana and Ignacia S. Moreno, assistant attorney General of the Environment and Natural Resources Division of the Department of Justice, and Cynthia Giles, assistant administrator for the U.S. Environmental Protection Agency’s Office of Enforcement and Compliance Assurance.
   “Facilities that operate in our backyards have a responsibility to follow our nation's environmental laws, like the Clean Air Act, which is designed to protect the air we breathe and the local environment,”  Giles said. “Today’s guilty plea shows that businesses that choose to ignore these critical safeguards and put their employees and the public at risk will face serious consequences.”
   If the court sentences according to the terms in the plea agreement, Pelican will pay $12 million in criminal penalties, including $2 million in community service payments that will go toward various environmental projects in Louisiana, including air pollution monitoring. It would mark the largest ever criminal fine in Louisiana for violations of the Clean Air Act. Pelican would also be banned from future refinery operations unless and until it implements an environmental compliance plan, which includes external auditing by independent firms and oversight by a court appointed monitor.
   In pleading guilty, officials of Pelican, headquartered in Houston and operating a refinery in Lake Charles, La., admitted that the company had violated numerous aspects of its permit to operate. The violations were discovered during a March 2006 inspection by the Louisiana Department of Environmental Quality (LDEQ) and the Environmental Protection Agency (EPA), which identified numerous unsafe operating conditions. Pelican also pleaded guilty to obstruction of justice for submitting materially false deviation reports to LDEQ, the agency that administers the federal Clean Air Act in Louisiana.
   Pelican has admitted to the following:

   • Pelican had no company budget, no environmental department and no environmental manager;
   • In order to comply with a permit issued under the Clean Air Act, the refinery was required to use certain key pollution prevention equipment, but that equipment was either not functioning, poorly maintained, improperly installed, improperly placed into service and/or improperly calibrated;
   • It was a routine practice for over a year to use an emergency flare gun to re-light the flare tower at the refinery which was designed to burn off toxic gasses and provide for the safe combustion of potentially explosive chemicals; because the pilot light was not functioning properly, employees would take turns trying to shoot the flare gun to relight the explosive gasses;

   • Sour crude oil was stored in a tank that was not properly placed into service and remained in the tank after the roof sank;
   • A caustic scrubber designed to remove hydrogen sulfide from emissions was bypassed; and
   • A continuous emission monitoring system (CEMS) designed to measure the hydrogen sulfide levels in refinery emissions was not working properly.
   Byron Hamilton, the Pelican vice-president who oversaw operations at the Lake Charles refinery since 2005 from an office in Houston pleaded guilty on July 6, 2011, to negligently placing persons in imminent danger of death and serious bodily injury as a result of negligent releases at the refinery. Hamilton faces up to one year in prison and a $200,000 fine for each of the two Clean Air Act counts. 
   The government’s investigation of the Pelican Refinery is continuing. Under the Crime Victims’ Rights Act, crime victims are afforded certain statutory rights, including the opportunity to attend all public hearings and provide input to the prosecution. Any person adversely impacted is encouraged to learn more about the case and the Crime Victims’ Rights Act or you may contact the Victim Witness Coordinator for the U.S. Attorney’s Office, Western District of Louisiana. 
   The criminal investigation is being conducted by the EPA Criminal Investigation Division in Baton Rouge and the Louisiana State Police, with assistance from the Louisiana Department of Environmental Quality. The case is being prosecuted by U.S. Attorney Stephanie Finley, Richard A. Udell, Senior Trial Attorney of the Environmental Crimes Section of the Environment and Natural Resources Division of the U.S. Department of Justice, Trial Attorney Christopher Hale with the Environmental Crimes Section.
   Source: U.S. Environmental Protection Agency

Insider Trading Sentence is Longest in History

   NEW YORK – 11/14/2011 - Raj Rajaratnam was sentenced Oct. 13 in Manhattan federal court to 11 years in prison stemming from his involvement in the largest hedge fund insider trading scheme in history, announced U.S. Attorney for the Southern District of New York Preet Bharara.
   Rajaratnam was the managing member of Galleon Management LLC, the general partner of Galleon Management L.P. and a portfolio manager for Galleon Technology Offshore Ltd. and certain accounts of Galleon Diversified Fund Ltd. He was convicted on May 11 of all 14 counts of conspiracy and securities fraud with which he was charged, following an eight-week jury trial. Rajaratnam was sentenced today by U.S. District Judge Richard J. Holwell. 
   It is the longest sentence imposed for insider trading in history.
   “Two years ago, Raj Rajaratnam stood at the summit of Wall Street, commanding his own financial empire. Then he was arrested, tried and convicted by a jury. Mr. Rajaratnam stood convicted 14 times over of felonies, his empire exposed as a web of fraud and corruption that entangled many,” U.S. Attorney Bharara said. “Today, Mr. Rajaratnam stood once more and faced justice which was meted out to him. It is a sad conclusion to what once seemed to be a glittering story. We can only hope that this case will be the wake-up call we said it should be when Mr. Rajaratnam was arrested. Privileged professionals do not get a free pass to pursue profit through corrupt means. The message is the same for everyone no matter who you are or how much money you have – obey the law or face the fate of those who don’t.”
   According to the superseding indictment filed in Manhattan federal court, other court documents and statements made during related court proceedings:
   From 2003 to March 2009, Rajaratnam repeatedly traded on material, nonpublic information pertaining to upcoming earnings forecasts, mergers, acquisitions and other business combinations. As the evidence at trial showed, the inside information was given as tips by insiders and others at hedge funds, public companies and investor relations firms – including Goldman Sachs, Intel, International Business Machines (IBM) Corporation, McKinsey & Company, Moody’s Investor Services Inc., Market Street Partners, Akamai Technologies Inc. and Polycom Inc. Based on the inside information, Rajaratnam executed trades in the stock of public companies, including Goldman Sachs, Clearwire, Akamai, AMD, Intel, Polycom and PeopleSupport. The court found Rajaratnam earned “well over $50 million” from his illegal trading.
   The evidence at trial included, among other things, recordings of wiretapped phone calls between Rajaratnam and his various co-conspirators, including: Anil Kumar, a former senior partner and director at McKinsey; Rajiv Goel, a former employee of Intel; Adam Smith, a former portfolio manager and analyst at Galleon; and Danielle Chiesi, a former employee of the hedge fund New Castle Partners. Rajaratnam engaged in overlapping conspiracies to commit securities fraud with these individuals, as well as with Mark Kurland, a co-founder at New Castle Partners, Robert Moffat, a former senior vice president at IBM, and Roomy Khan, who traded securities on her own behalf.
   In addition to his prison term, Rajaratnam, 54, of New York was sentenced to two years of supervised release and ordered to pay forfeiture in the amount of $53,816,434 and a $10 million fine. Rajaratnam will surrender to authorities on Nov. 28, 2011.
   During the sentencing proceeding, Judge Holwell said that insider trading “is an assault on our free markets,” and added that “the crimes and scope of the crimes (committed by Rajaratnam) reflect a virus in our business culture that needs to be eradicated.”
  Chiesi, Kurland, Moffat, Kumar, Goel, Smith and Khan have all pleaded guilty to their involvement in the insider trading schemes. Chiesi was sentenced to 30 months in prison, Kurland to 27 months in prison and Moffat to six months in prison. Kumar, Goel, Smith and Khan are awaiting sentencing.
   Bharara praised the investigative work of the FBI and thanked the U.S. Securities and Exchange Commission for its extraordinary assistance.
   The case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Jonathan Streeter and Reed Brodsky, and Special Assistant U.S. Attorney Andrew Michaelson are in charge of the prosecution.

Federal Agency Releases Crime Statistics for 2010

    WASHINGTON, D.C. - 10/11/2011 - According to figures released last month by the FBI, the estimated number of violent crimes in 2010 declined for the fourth consecutive year. Property crimes also decreased, marking this the eighth straight year that the collective estimates for these offenses declined.
   The 2010 statistics show that the estimated volumes of violent and property crimes declined 6.0 percent and 2.7 percent, respectively, when compared with the 2009 estimates. The violent crime rate for the year was 403.6 offenses per 100,000 inhabitants (a 6.5 percent decrease from the 2009 rate), and the property crime rate was 2,941.9 offenses per 100,000 persons (a 3.3 percent decrease from the 2009 figure).
   These and additional data are presented in the 2010 edition of the FBI’s annual report Crime in the United States. This publication is a statistical compilation of offense and arrest data reported by law enforcement agencies voluntarily participating in the FBI’s Uniform Crime Reporting (UCR) program.
   The UCR program collects information on crimes reported by law enforcement agencies regarding the violent crimes of murder and non-negligent manslaughter, forcible rape, robbery, and aggravated assault, as well as the property crimes of burglary, larceny-theft, motor vehicle theft, and arson. (Although the FBI classifies arson as a property crime, it does not estimate arson data because of variations in the level of participation by the reporting agencies. Consequently, arson is not included in the property crime estimate.)
   The program also collects arrest data for the offenses listed above, plus 20 additional offenses that include all other crimes except traffic violations.
   In 2010, there were 18,108 city, county, university and college, state, tribal, and federal agencies that participated in the UCR program. A summary of the statistics reported by these agencies, which are included in Crime in the United States, 2010, follows:
  • Nationwide in 2010, there were an estimated 1,246,248 violent crimes.
  • Each of the four violent crime offenses decreased when compared with the 2009 estimates. Robbery had the largest decrease at 10.0 percent, followed by forcible rape with a 5.0 percent decline, murder and nonnegligent manslaughter with a 4.2 percent decrease, and aggravated assault with a 4.1 percent decline.
  • Nationwide in 2010, there were an estimated 9,082,887 property crimes.
  • Each of the property crime offenses also decreased in 2010 when compared with the 2009 estimates. The largest decline, 7.4 percent, was for motor vehicle thefts. The estimated number of burglaries decreased 2.0 percent, and the estimated number of larceny-thefts declined 2.4 percent.
  • Collectively, victims of property crimes (excluding arson) lost an estimated $15.7 billion in 2010.
  • The FBI estimated that in 2010, agencies nationwide made about 13.1 million arrests, excluding traffic violations.
  • The 2010 arrest rate for violent crimes was 179.2 per 100,000 inhabitants; for property crime, the rate was 538.5 per 100,000 inhabitants.
  • By violent crime offense, the arrest rate for murder and nonnegligent manslaughter was 3.6; forcible rape, 6.5; robbery, 36.6; and aggravated assault, 132.6 arrests per 100,000 inhabitants.
  • By property crime offense, the arrest rate for burglary was 94.3; larceny-theft, 417.5; and motor vehicle theft, 23.1 per 100,000 inhabitants. The arrest rate for arson was 3.7 per 100,000 inhabitants.
  • In 2010, there were 14,744 law enforcement agencies that reported their staffing levels to the FBI. These agencies reported that as of October 31, 2010, they collectively employed 705,009 sworn officers and 308,599 civilians, a rate of 3.5 employees for each 1,000 inhabitants.
   Caution against ranking: Each year when Crime in the United States is published, some entities use the figures to compile rankings of cities and counties. These rough rankings provide no insight into the numerous variables that mold crime in a particular town, city, county, state, tribal area, or region. Consequently, they lead to simplistic and/or incomplete analyses that often create misleading perceptions adversely affecting communities and their residents. Valid assessments are possible only with careful study and analysis of the range of unique conditions affecting each local law enforcement jurisdiction. The data user is, therefore, cautioned against comparing statistical data of individual reporting units from cities, metropolitan areas, states, or colleges or universities solely on the basis of their population coverage or student enrollment.
   Source: FBI release of 9/9/2011

Companies Scramble For Critical-Skill Employees

   NEW YORK - (BUSINESS WIRE) - 10/12/2011 - With the U.S. economy still unsteady, most U.S. companies are finding it relatively easy to attract or retain workers, with one major exception -- critical-skill employees. A new survey from global professional services company Towers Watson (NYSE, NASDAQ: TW) and World at Work, an international association of human resource professionals, shows that for the second consecutive year, the number of U.S. companies having difficulty finding and keeping critical-skill workers has increased.
    The Towers Watson Talent Management and Rewards Survey, a study of 316 North American companies, including 218 from the United States, also found that nearly two-thirds of respondents expect their employees to work more hours now than they did prior to the recession and see this trend continuing for some time. Additionally, respondents are concerned about the impact that organizational changes they made in response to the recession are having in areas such as employees’ work/life balance, productivity and willingness to take risks. Most companies have already made or are planning to make additional changes to their reward and talent management, and other organizational, programs.
    According to the survey, nearly six out of 10 U.S. companies (59%) reported problems attracting critical-skill employees this year. That is an increase from 52% last year and 28% in 2009. Forty-two percent also reported difficulty attracting top-performing employees. Additionally, more than one-third (36%) reported difficulty retaining critical-skill employees, an increase from 31% last year and 16% in 2009. Overall, only one in 10 companies is having difficulty attracting or retaining employees generally.
    “Although economic conditions have improved and hiring rates have increased modestly since 2009, companies are experiencing difficulties finding and recruiting employees with critical skills,” said Laura Sejen, global head of rewards consulting at Towers Watson. “Companies are taking longer to fill these positions, and more of them are open. There is clearly a greater-than-normal mismatch between the skills employers seek and those that are available in the marketplace. In short, despite the overall weakness in the job market, companies need a more appealing offering to attract critical-skill employees.”
Employees Working More Hours
    Nearly two-thirds (65%) of U.S. respondents report that employees have been working more hours over the past three years, and more than half (53%) expect this trend to continue over the next three years. Additionally, about one in three (31%) companies said their employees have been using less of their vacation or personal time off over the past three years.
    The survey also found that more than half (56%) of U.S. companies are concerned about the long-term effects that changes they made during the recession will have on their employees’ ability to maintain a healthy balance between work and their personal lives. And more U.S. employers are becoming concerned about employee productivity (39%) and their employees’ willingness to take risks (37%). As a result, almost two-thirds (66%) of respondents have made significant changes in the HR area -- reward and talent management strategies, organizational structure, job evaluation process and competencies -- and many expect to continue to do so.
   “In the short run, having employees work extra hours can increase productivity, but in the long run, extended hours can negatively affect employee well-being and retention,” said Laurie Bienstock, North America leader of rewards consulting at Towers Watson. “Employees at many organizations are already suffering from change fatigue. As a result, when the labor market does recover, companies can expect a sharp increase in voluntary turnover, especially if they do not address employee concerns, and deliver reward and talent management programs more effectively.”
    “Employees generally don't mind doing more with less especially when economic conditions are tough," said Ryan Johnson, CCP, Vice President of Research for WorldatWork. "But when this drags into multiple years, and they start to hear anecdotes of recovery, they become less understanding. At that point, the entire employee value proposition is crucial to retention."
    Release date: 10/10/2011

Cosmetic Industry Declares Formaldehyde Unsafe

   (EWG) - Washington, D.C. (10/3/2011) - The mainstream cosmetics industry has, for the first time, declared formaldehyde unsafe at any level in hair straighteners.
   Citing undisputed health risks, frequent consumer complaints and a lack of evidence of safety, the Cosmetic Ingredient Review panel, a scientific advisory board established by the major American cosmetics manufacturers, has effectively disavowed expensive salon products sold by a handful of small companies such as the Los Angeles maker of Brazilian Blowout.
   The federal Food and Drug Administration has yet to bar formaldehyde from hair straighteners, even though the U.S. Department of Health and Human Safety has labeled it a known human carcinogen. However, last month the FDA issued a formal warning that publicly admonished Brazilian Blowout. The agency declared the company’s hair-smoother adulterated, because it contained dangerous levels of formaldehyde, and misbranded, because it claimed to be free of formaldehyde.
   Last week, the Occupational Safety and Health Administration, the federal agency charged with overseeing workplace safety, escalated its warning to hair salons and employees after investigators found that two popular brands of hair straighteners exposed salon workers to dangerous levels of formaldehyde. OSHA officials also instructed the manufacturer of Brazilian Blowout Acai Professional Smoothing Solution, one of the products that failed OSHA’s tests, to stop suggesting that OSHA tests had found its product safe. Brazilian Blowout’s hair-straightener, though labeled “formaldehyde free,” was found by OSHA to contain significant amounts of the chemical.
   "Misleading or inadequate information on hazardous product labels is unacceptable," said OSHA Assistant Secretary Dr. David Michaels. "Salon owners and workers have the right to know the risks associated with the chemicals with which they work and how to protect themselves.
   Though OSHA singled out Brazilian Blowout and Brasil Cacau Cadiveu, an investigation earlier this year by the Environmental Working Group uncovered 15 companies that claimed to use little to no formaldehyde, yet whose products contained substantial amounts of the chemical. As a result of its investigation, EWG urged the federal Food and Drug Administration to ban formaldehyde as an ingredient in hair straighteners.
   The agency declined to do so, responding that it was “looking to [the Cosmetic Ingredient Review panel] to get additional information … that we need to be able to take an action. Right now we are not there.”
   It is unclear how the industry panel’s assertion that no level of formaldehyde can be considered safe will affect FDA’s decision-making on a possible ban.
   An April 2011 survey by EWG found dozens of top salons still promoting formaldehyde-laced hair straighteners despite the mounting evidence of the risks to stylists and clients.
   "The incentive to downplay mounting health concerns is substantial when you can charge several hundred dollars for a single treatment," said Thomas Cluderay of the Environmental Working Group. "Until regulators pull the plug on Brazilian Blowout, I think it's clear the company is prepared to do just about anything to peddle these products."
    Source: Environmental Working Group release of 9/28/2011

The Arms Debate

Not All American's Have the Right to Bear Arms

Photo by Steve Rensberry (c) 2018