Health Reform Law Extends Coverage for 50,000

   WASHINGTON - (BUSINESS WIRE) - 2/25/2012 - Health and Human Services Secretary Kathleen Sebelius announced on February 23 that the new health care law’s Pre-Existing Condition Insurance Plan (PCIP) program is providing insurance to nearly 50,000 people with high-risk pre-existing conditions nationwide. The Department released a new report demonstrating how PCIP is helping to fill a void in the insurance market for consumers with pre-existing conditions who are denied insurance coverage and are ineligible for Medicare or Medicaid coverage.
   “For too long, Americans with pre-existing conditions were locked out of the health care system and their health suffered,” HHS Secretary Kathleen Sebelius said. “Thanks to health reform, our most vulnerable Americans across the country have the care they need.”
   Under the Affordable Care Act, in 2014, insurers will be prohibited from denying coverage to any American with a pre-existing condition. Until then, the PCIP program will continue to provide enrollees with affordable insurance coverage.
    PCIP is helping individuals like:
    Gail O’Brien of Keene, New Hampshire who is now getting help with non-Hodgkin’s lymphoma treatments and is responding very well.
    James Howard of Katy, Texas who is grateful for the coverage the PCIP program is providing to treat cancer and says that without it, he would not have been able to continue receiving care.
    In many cases, PCIP participants have been diagnosed with and need treatment for serious health care conditions such as cancer, ischemic heart disease, degenerative bone diseases and hemophilia. As a result of the new law, PCIP enrollees are receiving health services for their conditions on the first day their insurance coverage begins. Their critical need for treatment, combined with their lack of prior health coverage has led to higher overall per-member claims costs in state-based PCIPs of approximately $29,000 per year, which is more than double the per member cost that traditional State High Risk Pools have experienced in recent years.
    Enrollment in PCIP has seen a nearly 400 percent increase from November 2010 to November 2011. PCIP enrollment is anticipated to trend upwards of 50,000 enrollees within the coming month.
    People who enroll in the PCIP program are not charged a higher premium because of their medical condition. Program participants pay comparable premium rates to healthy people in the individual insurance market. By law, premiums may vary only on the basis of age, geographic area and tobacco use.
    PCIP provides comprehensive health coverage, including primary and specialty care, hospital care, prescription drugs, home health and hospice care, skilled nursing care, preventive health and maternity care. The program is available in 50 states and the District of Columbia and open to U.S. citizens and people who reside in the U.S. legally (regardless of income) who have been without insurance coverage for at least six months, and have a pre-existing condition, or have been denied health insurance coverage because of a health condition.
    The Affordable Care Act directed the Secretary of HHS to carry out PCIP either directly or through a contract with a state or nonprofit entity. In 27 states, a state or nonprofit entity elected to administer PCIP, while HHS operates the program in the remaining 23 states and the District of Columbia.
    The new report can be found at: http://www.cciio.cms.gov/resources/files/Files2/02242012/pcip-annual-report.pdf
    For more information, including eligibility, plan benefits and rates, as well as information on how to apply, visit www.pcip.gov and click on “Find Your State.” Then select your state from a map of the United States or from the drop-down menu.
    The PCIP call center is open from 8 a.m. to 11 p.m. Eastern Time. Call toll-free 1-866-717-582.

Quinn's Budget is Called Step in Right Direction

   By Benjamin Yount  (Illinois Statehouse News) - 2/23/2012 -  Illinois Gov. Pat Quinn's budget proposal tops 400 pages and is more than 3 inches thick.
   Inside the governor's plan for the next fiscal year, which begins in June, are the details of how he wants to spend $33.9 billion in taxpayers’ money.
   Illinois Statehouse News examines the governor's plan, speaking with lawmakers and outside experts and checking Quinn's math to make sure that dollars add up.
   Quinn’s fiscal 2013 spending plan is $700 million more than the current budget, an increase that will pay for the increase in the state's public employee pension payment.
   "Our pension payment is increasing a little over $1 billion this year," said Quinn’s Budget Director David Vaught. Illinois will owe $5.9 billion in the upcoming year/
   While spending has increased, Quinn is attempting to live within the state’s means, said Laurence Msall, president of the Chicago-based fiscal policy watchdog group, Civic Federation.
   "The governor's proposed spending is less than projected state revenues," said Msall. "And that is a step in the right direction."
   The Legislature's Commission on Government Forecasting and Accountability on Tuesday predicted Illinois will take in $34.3 billion in tax revenue in fiscal 2013.
   Quinn’s proposed spending plan maintains the status quo on spending for human services — including Medicaid — holding strong at $14 billion.
   "Illinois spent $14 billion on human services and Medicaid last year, at the same time the state had $15.9 billion in liabilities," said Jerry Stermer, Quinn's special adviser on Medicaid. "Illinois has to cut $2.7 billion from human services and Medicaid in the next budget, because the state simply cannot afford to spend $14 billion on $16.7 billion in liabilities."
   The governor has not said how Illinois will make such a large cut.
   Danny Chun, spokesman for the Illinois Hospital Association, which lobbies for almost all of Illinois hospitals, said that last year Quinn wanted to trim the amount paid to hospitals for Medicaid services. He said he fears that is the plan again.
   "Governor Quinn wanted a 6 percent cut to save $550 million on Medicaid," Chun said. "To get to $2.7 billion in savings, hospitals would see a 24 percent rate cut."
   Chun said a cut that large would be devastating.
   "In Illinois, one in three hospitals, or 70 of the 200 in the state, are losing money," Chun said. "A dramatic cut in Medicaid reimbursement may force some hospitals to close."
   Stermer said no decision has been made about a rate, but "everything is on the table."
   Quinn's budget estimates that closing 14 facilities and consolidating dozens more could save the state close to $100 million a year.
   "That's not just one year savings," said Vaught. "That's $100 million next year, and the year after that, and the year after that."
   The closings would transition residents from state institutions like the Jacksonville Developmental Center in Jacksonville and the Tinley Park Mental Health Center in Tinley Park to community care.
   The governor also is proposing to close the Tamms and Dwight Correctional Centers, and the Youth Centers in Murphysboro and Joliet.
   State Rep. Mike Bost, R-Murphysboro, whose district includes one of the youth centers considered for closure, said the governor is counting on savings while discounting the costs of moving people out of prisons, youth centers or institutions.
   "Just saying that we're closing facilities is not enough," Bost said. "You actually have to implement a plan and show those savings."
   Quinn’s proposal is not all cuts in spending. He has a handful of priorities where he would like to spend new money.
   "While nearly 150,000 Illinois students received state (Monetary Awards Program, or MAP) scholarships last year to attend college, just as many qualified applicants were denied because of lack of funding," Quinn said as he pushed for a $50 million increase for the MAP scholarship fund.
   The governor also wants lawmakers to approve clean water and new housing projects, and to make sure that elementary and high schools statewide receive the same level of funding as the current budget.
   But Quinn is not saying how he intends to pay for any of the items on his wish list.
   State Sen. Gary Forby, D-Benton, said that for that reason, the governor probably won't get much of what he wants.
   "We're going to give schools another $20 million, we're going to give the MAP program another $50 million. How can you give stuff away when you're shutting other things down?" Forby asked after Quinn's speech. "The governor's math just doesn't add up. He needs to get someone who knows how to add and subtract and make sure he knows how to balance the budget."
   Published courtesy of Illinois Statehouse News

Health Care Fraud Effort Saves Taxpayers Billions

   WASHINGTON -  2/22/2012 - Attorney General Eric Holder and Department of Health and Human Services (HHS) Secretary Kathleen Sebelius on February 14 released a new report showing that the government’s health care fraud prevention and enforcement efforts recovered nearly $4.1 billion in taxpayer dollars in fiscal year (FY) 2011. This is the highest annual amount ever recovered from individuals and companies who attempted to defraud seniors and taxpayers or who sought payments to which they were not entitled.
   These findings, released today in the annual Health Care Fraud and Abuse Control Program (HCFAC) report, are a result of President Obama making the elimination of fraud, waste, and abuse a top priority in his administration. The success of this joint Department of Justice and HHS effort would not have been possible without the Health Care Fraud Prevention & Enforcement Action Team (HEAT), created in 2009 to prevent fraud, waste and abuse in the Medicare and Medicaid programs, and to crack down on the fraud perpetrators who are abusing the system and costing American taxpayers billions of dollars. These efforts to reduce fraud will continue to improve with the new tools and resources provided by the Affordable Care Act.
   “This report reflects unprecedented successes by the Departments of Justice and Health and Human Services in aggressively preventing and combating health care fraud, safeguarding precious taxpayer dollars and ensuring the strength of our essential health care programs,” said Attorney General Holder. “We can all be proud of what’s been achieved in the last fiscal year by the department’s prosecutors, analysts and investigators—and by our partners at HHS. These efforts reflect a strong, ongoing commitment to fiscal accountability and to helping the American people at a time when budgets are tight.”
   “Fighting fraud is one of our top priorities and we have recovered an unprecedented number of taxpayer dollars,” Sebelius said. “Our efforts strengthen the integrity of our health care programs, and meet the President’s call for a return to American values that ensure everyone gets a fair shot, everyone does their fair share, and everyone plays by the same rules.”
   Approximately $4.1 billion stolen or otherwise improperly obtained from federal health care programs was recovered and returned to the Medicare Trust Funds, the Treasury and others in FY 2011. This is an unprecedented achievement for HCFAC, a joint effort of the two departments to coordinate federal, state and local law enforcement activities to fight health care fraud and abuse.
   The recently enacted Affordable Care Act provides additional tools and resources to help fight fraud that will help boost these efforts, including an additional $350 million for HCFAC activities. The administration is already using tools authorized by the Affordable Care Act, including enhanced screenings and enrollment requirements, increased data sharing across government, expanded overpayment recovery efforts, and greater oversight of private insurance abuses.
   Since 2009, the Departments of Justice and HHS have enhanced their coordination through HEAT and have increased the number of Medicare Fraud Strike Force teams. During FY 2011, HEAT and the Medicare Fraud Strike Force expanded local partnerships and helped educate Medicare beneficiaries about how to protect themselves against fraud. The departments hosted a series of regional fraud prevention summits around the country, provided free compliance training for providers and other stakeholders and sent letters to state attorneys general urging them to work with HHS and federal, state and local law enforcement officials to mount a substantial outreach campaign to educate seniors and other Medicare beneficiaries about how to prevent scams and fraud.
   In FY 2011, the total number of cities with strike force prosecution teams was increased to nine, all of which have teams of investigators and prosecutors from the Justice Department, the FBI and the HHS Office of Inspector General, dedicated to fighting fraud. The strike force teams use advanced data analysis techniques to identify high-billing levels in health care fraud hot spots so that interagency teams can target emerging or migrating schemes along with chronic fraud by criminals masquerading as health care providers or suppliers. In FY 2011, strike force operations charged a record number of 323 defendants, who allegedly collectively billed the Medicare program more than $1 billion. Strike force teams secured 172 guilty pleas, convicted 26 defendants at trial and sentenced 175 defendants to prison. The average prison sentence in strike force cases in FY 2011 was more than 47 months.
   Including strike force matters, federal prosecutors filed criminal charges against a total of 1,430 defendants for health care fraud related crimes. This is the highest number of health care fraud defendants charged in a single year in the department’s history. Including strike force matters, a total of 743 defendants were convicted for health care fraud-related crimes during the year.
   In criminal matters involving the pharmaceutical and device manufacturing industry, the department obtained 21 criminal convictions and $1.3 billion in criminal fines, forfeitures, restitution and disgorgement under the Food, Drug and Cosmetic Act. These matters included the illegal marketing of medical devices and pharmaceutical products for uses not approved by the Food and Drug Administration (FDA) or the distribution of products that failed to conform to the strength, purity or quality required by the FDA.
   The departments also continued their successes in civil health care fraud enforcement during FY 2011. Approximately $2.4 billion was recovered through civil health care fraud cases brought under the False Claims Act (FCA). These matters included unlawful pricing by pharmaceutical manufacturers, illegal marketing of medical devices and pharmaceutical products for uses not approved by the FDA, Medicare fraud by hospitals and other institutional providers, and violations of laws against self-referrals and kickbacks. This marked the second year in a row that more than $2 billion has been recovered in FCA health care matters and, since January 2009, the department has used the False Claims Act to recover more than $6.6 billion in federal health care dollars.
   The fraud prevention and enforcement report announced today coincides with the announcement of a proposed rule from the Centers for Medicare and Medicaid Services aimed at recollecting overpayments in the Medicare program. Before the Affordable Care Act, providers and suppliers did not face a deadline for returning taxpayers’ money. Thanks to the Affordable Care Act, there will be a specific timeframe by which self-identified overpayments must be returned. The Obama Administration has made prevention and recollection of overpayments a government-wide priority. These announcements today are just the latest in a series of steps that the administration is taking to protect taxpayer dollars and keep money in the pockets of Americans.
   The HCFAC annual report can be found here, oig.hhs.gov/publications/hcfac.asp. For more information on the joint DOJ-HHS Strike Force activities, visit: www.StopMedicareFraud.gov/.
   Source: U.S. Department of Justice national release

New ethanol blend could damage some vehicles

   (EWG) - 2/19/2012 - The Environmental Protection Agency’s decision on February 17 to pave the way for the sale of gasoline blended with up to 15 percent ethanol is likely to prove a nightmare for car owners who improperly fuel their gas tanks.
   Every major automaker has warned that millions of vehicle warranties will be voided if drivers fill up with E15. That means consumers will pull into gas stations that could have as many as four pumps with different kinds of fuel: one for E10 (up to 10 percent ethanol); one for E15; possibly one for E85 (between 70 and 85 percent ethanol); and maybe one for old-fashioned gasoline. The EPA intends to approve E15 only for vehicles manufactured after 2000. But some gas station pumps may not even have labels specifying which ethanol blend is which, because not every state requires them.
   "It is going to be extremely confusing and dangerous for consumers," said Sheila Karpf, a legislative analyst at the Environmental Working Group. "If they make a mistake and put E15 into an older car or small engine, there's a good chance they'll ruin their engine and the manufacturer's warranty won't cover the damage."
   To advance consumer safety, EWG analysts have created an Ethanol Blends Guide and Fact Sheet to help drivers choose the right fuel for their vehicles. The analysis provides more information about the new E15 label requirements.
   Ethanol is more corrosive and burns hotter than gasoline, properties that could cause some engines to stall, misfire and overheat. Fuel with higher ethanol blends emits more nitrous oxide and formaldehyde than gasoline, lowers mileage and damages fuel tanks and pumps.
   "Instead of approving a fuel that will pose health and safety hazards and damage engines, the U.S. should invest in energy efficiency measures and research and development for truly sustainable biofuels," said Karpf. "The high cost of replacing or repairing engines will be tacked onto corn ethanol's other costs -- including higher food prices, increased soil erosion and polluted water supplies."
   To be safe, EWG recommends that consumers stick with E10 or regular unleaded gasoline if they can find it. If gas pumps are not labeled, consumers should ask a service station employee for more information about the fuel and the amount of ethanol it contains. Consumers should check with their engine manufacturers or mechanics to find out if their cars or small engines can safely run on E15 or other ethanol blends.
   Source: Environmental Working Group

Health Care Software Executives Headed to Prison

Pair Defrauded Clients, Investors of More Than $93 Million
CHICAGO – 2/16/2012 - Two co-founders of Canopy Financial Inc., a bankrupt health care transaction software company based in Chicago, have been sentenced to 15 and 13 years in prison for defrauding investors and clients of more than $93 million. Anthony Banas, Canopy’s chief technology officer, was sentenced on Feb. 15 to 160 months in prison, while Jeremy Blackburn, Canopy’s former president and chief operating officer, was sentenced on Jan. 24 to 180 months in prison. Both men pleaded guilty in late 2010 to one count of wire fraud, admitting they engaged in a fraud scheme that cheated investors of approximately $75 million and also misappropriated more than $18 million from customer accounts intended for health care savings and expenses.
    The sentences, imposed by U.S. District Judge Ruben Castillo in federal court, were announced by Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois; Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the FBI; and James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor Office of Inspector General in Chicago. The Securities and Exchange Commission’s Chicago Regional Office assisted in the investigation.
    In imposing sentence on both defendants, Judge Castillo noted that this case was the most aggravated financial fraud he had seen in his 18 years on the federal bench. The judge ordered both men to pay mandatory restitution and forfeiture totaling $93,125,918. Approximately $50 million has been recovered so far through Canopy’s bankruptcy proceedings, and the government anticipates that the bankruptcy trustee will pay the claims of the health savings account customers. Banas, 34, of Homer Glen, Ill., was ordered to begin serving his sentence on April 18. Blackburn, 38, of Bolingbrook, Ill., was ordered to report to prison on March 20.
    According to court documents, Blackburn and Banas used false information about Canopy’s financial condition, including a bogus auditor’s report and falsified bank statements, to fraudulently obtain approximately $75 million from several private equity investors in 2009. Approximately $39 million of that money was used to redeem shares of other Canopy investors, including approximately $1.6 million that went to Blackburn and $975,000 that went to Banas, while another $29 million obtained from investors was deposited into Canopy operating accounts. Blackburn and Banas also misappropriated Canopy operating funds for their own benefit.
    Blackburn alone took approximately $6 million in unauthorized withdrawals and transfers from Canopy bank accounts during 2009. Blackburn typically directed a Canopy employee, or occasionally Banas, to transfer Canopy funds to his bank accounts or to pay for his personal expenses, including credit card balances, luxury car purchases and funding his account with a private jet company. Among Blackburn’s luxury car purchases with Canopy funds were the following: two 2010 Range Rover SUVs, a 2009 Bentley, a 2008 Lamborghini, a 2010 Lamborghini, a 2009 Rolls Royce Phantom, a 2009 Aston Martin DBS, a 2009 Bentley Continental and a 2009 Ferrari 430. Blackburn also paid for personal home renovations, bought sports tickets and purchased jewelry and watches using misappropriated Canopy funds.
   Banas used misappropriated Canopy money to invest $300,000 in a nightclub. Banas also spent $400,000 between 2007 and 2009 on other personal expenses.
    Blackburn admitted that he created phony bank statements during 2009 to conceal the transfer of more than $18 million from special health care accounts in which Canopy held funds as custodian for the benefit of more than 1,600 clients and customers to make payments to medical providers. The funds were transferred to Canopy’s own operating accounts, as well as to benefit Blackburn and Banas personally.
    In 2004, Blackburn, Banas and a third individual co-founded Canopy, which reportedly was one of the country’s fastest-growing privately-held companies before it entered bankruptcy proceedings in November 2009. Canopy, which had offices in Chicago, Plainsboro, N.J., and San Francisco, developed and marketed software programs for banks and health care payers to administer and process payments involving health-related savings and spending accounts. Canopy’s products related to expense tracking, online bill payment and claims processing for health care transactions.
    Beginning in March 2009, in connection with the offer and sale of Series D preferred stock by Canopy, Blackburn and Banas made materially false representations to prospective investors about Canopy’s financial condition, including its revenues, profitability and total number of client accounts, and falsely represented to prospective investors that its financial statements had been audited by KPMG, the international network of audit, tax and consulting firms.
    In addition to the phony audit report, Blackburn and Banas created falsified bank statements for the months of January through June 2009, purporting to show a Canopy account at Northern Trust Bank with monthly balances ranging between $5.7 million and $8.9 million. Blackburn admitted that these misrepresentations caused certain investors, including entities affiliated with Spectrum Equity Investors, to invest a total of nearly $75 million in shares of Canopy preferred stock in July and August 2009.
    The government was represented by Assistant U.S. Attorneys Stephanie Zimdahl and Manish Shah.
   Source: Financial Fraud Enforcement Task Force

NRF: Strong January Retail Sales a Positive Sign

   WASHINGTON - (BUSINESS WIRE) - 2/14/2012 - Building on the momentum of a strong holiday shopping season and propelled by gift card redemptions and warm weather, retailers’ January sales saw solid growth across the board. According to the National Retail Federation, January retail industry sales (excluding automobiles, gas stations and restaurants) increased 0.9 percent seasonally adjusted from December and 4.0 percent unadjusted year-over-year.
    “Thanks to a combination of unseasonably warm weather across much of the country and millions of shoppers with gift cards burning holes in their pockets, retailers are still riding the tailwinds of consumers’ spending power,” said National Retail Federation President and CEO Matthew Shay. “As a traditionally slower sales month for the industry, it’s encouraging to see such sustained growth in consumer spending and sentiment.”
    January retail sales data, released today by the U.S. Department of Commerce, showed total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 5.6 percent unadjusted year-over-year and 0.4 percent seasonally adjusted month-to-month.
    “A slightly improving labor market with gains in payrolls has lifted consumer confidence in January and corresponds with increasing retail sales,” said NRF Chief Economist Jack Kleinhenz. “However consumer spending alone will not be enough to sustain economic growth or provide a strong foundation for consistent retail sales and growth. We must see improvements in key economic indicators, such as housing and employment.”
    Likely due to January’s unseasonal warmer weather, sales in sporting goods, hobby, book and music stores increased 1.1 percent seasonally month-to-month and 3.5 percent unadjusted year-over-year.
General merchandise stores’ sales increased 2.0 percent seasonally-adjusted over December and 4.7 percent unadjusted year-over-year.
    Many consumers in January seemed to take advantage of the warm temperatures to work on their home and gardens. Sales at building material, garden equipment and supplies dealers increased 0.2 percent seasonally adjusted from the previous month and a strong 10.5 percent unadjusted year-over-year.
Sales at furniture and home furnishing stores decreased 0.2 seasonally adjusted from December and increased 7.9 percent unadjusted year-over-year.
    Electronics and appliance stores’ sales increased 0.5 percent seasonally adjusted month-to-month and decreased 1.1 percent unadjusted year-over-year, and sales at clothing and clothing accessory stores’ sales were flat over the previous month and increased 3.4 percent unadjusted over last year.

Settlement Reached Over Foreclosure Abuses

   WASHINGTON – 2/11/2012 - U.S. Attorney General Eric Holder, Department of Housing and Urban Development (HUD) Secretary Shaun Donovan, Iowa Attorney General Tom Miller and Colorado Attorney General John W. Suthers announced on Feb. 9 that the federal government and 49 state attorneys general have reached a landmark $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. The agreement provides substantial financial relief to homeowners and establishes significant new homeowner protections for the future.
  Under the terms of the agreement, the servicers are required to collectively dedicate $20 billion toward various forms of financial relief to borrowers. At least $10 billion will go toward reducing the principal on loans for borrowers who, as of the date of the settlement, are either delinquent or at imminent risk of default and owe more on their mortgages than their homes are worth. At least $3 billion will go toward refinancing loans for borrowers who are current on their mortgages but who owe more on their mortgage than their homes are worth. Borrowers who meet basic criteria will be eligible for the refinancing, which will reduce interest rates for borrowers who are currently paying much higher rates or whose adjustable rate mortgages are due to soon rise to much higher rates. Up to $7 billion will go towards other forms of relief, including forbearance of principal for unemployed borrowers, anti-blight programs, short sales and transitional assistance, benefits for service members who are forced to sell their home at a loss as a result of a Permanent Change in Station order, and other programs. Because servicers will receive only partial credit for every dollar spent on some of the required activities, the settlement will provide direct benefits to borrowers in excess of $20 billion.
   Mortgage servicers are required to fulfill these obligations within three years. To encourage servicers to provide relief quickly, there are incentives for relief provided within the first 12 months. Servicers must reach 75 percent of their targets within the first two years. Servicers that miss settlement targets and deadlines will be required to pay substantial additional cash amounts.
   In addition to the $20 billion in financial relief for borrowers, the agreement requires the servicers to pay $5 billion in cash to the federal and state governments. $1.5 billion of this payment will be used to establish a Borrower Payment Fund to provide cash payments to borrowers whose homes were sold or taken in foreclosure between Jan. 1, 2008 and Dec. 31, 2011, and who meet other criteria. This program is separate from the restitution program currently being administered by federal banking regulators to compensate those who suffered direct financial harm as a result of wrongful servicer conduct. Borrowers will not release any claims in exchange for a payment. The remaining $3.5 billion of the $5 billion payment will go to state and federal governments to be used to repay public funds lost as a result of servicer misconduct and to fund housing counselors, legal aid and other similar public programs determined by the state attorneys general.
   The unprecedented joint agreement is the largest federal-state civil settlement ever obtained and is the result of extensive investigations by federal agencies, including the Department of Justice, HUD and the HUD Office of the Inspector General (HUD-OIG), and state attorneys general and state banking regulators across the country. The joint federal-state group entered into the agreement with the nation’s five largest mortgage servicers: Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc. and Ally Financial Inc. (formerly GMAC).
   “This agreement – the largest joint federal-state settlement ever obtained – is the result of unprecedented coordination among enforcement agencies throughout the government,” U.S. Attorney General Holder said. “It holds mortgage servicers accountable for abusive practices and requires them to commit more than $20 billion towards financial relief for consumers. As a result, struggling homeowners throughout the country will benefit from reduced principals and refinancing of their loans. The agreement also requires substantial changes in how servicers do business, which will help to ensure the abuses of the past are not repeated.”
   The joint federal-state agreement requires servicers to implement comprehensive new mortgage loan servicing standards and to commit $25 billion to resolve violations of state and federal law. These violations include servicers’ use of “robo-signed” affidavits in foreclosure proceedings; deceptive practices in the offering of loan modifications; failures to offer non-foreclosure alternatives before foreclosing on borrowers with federally insured mortgages; and filing improper documentation in federal bankruptcy court.
   The $5 billion includes a $1 billion resolution of a separate investigation into fraudulent and wrongful conduct by Bank of America and various Countrywide entities related to the origination and underwriting of Federal Housing Administration (FHA)-insured mortgage loans, and systematic inflation of appraisal values concerning these loans, from Jan. 1, 2003 through April 30, 2009. Payment of $500 million of this $1 billion will be deferred to partially fund a loan modification program for Countrywide borrowers throughout the nation who are underwater on their mortgages. 
    The investigation was conducted by the U.S. Attorney’s Office for the Eastern District of New York, with the Civil Division’s Commercial Litigation Branch of the Department of Justice, HUD and HUD-OIG. The settlement also resolves an investigation by the Eastern District of New York, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the Federal Housing Finance Agency-Office of the Inspector General (FHFA-OIG) into allegations that Bank of America defrauded the Home Affordable Modification Program.
   The joint federal-state agreement requires the mortgage servicers to implement unprecedented changes in how they service mortgage loans, handle foreclosures, and ensure the accuracy of information provided in federal bankruptcy court. The agreement requires new servicing standards which will prevent foreclosure abuses of the past, such as robo-signing, improper documentation and lost paperwork, and create dozens of new consumer protections. The new standards provide for strict oversight of foreclosure processing, including third-party vendors, and new requirements to undertake pre-filing reviews of certain documents filed in bankruptcy court.
   The new servicing standards make foreclosure a last resort by requiring servicers to evaluate homeowners for other loss mitigation options first. In addition, banks will be restricted from foreclosing while the homeowner is being considered for a loan modification. The new standards also include procedures and timelines for reviewing loan modification applications and give homeowners the right to appeal denials. Servicers will also be required to create a single point of contact for borrowers seeking information about their loans and maintain adequate staff to handle calls.
   The agreement will also provide enhanced protections for service members that go beyond those required by the Servicemembers Civil Relief Act (SCRA). In addition, the four servicers that had not previously resolved certain portions of potential SCRA liability have agreed to conduct a full review, overseen by the Justice Department’s Civil Rights Division, to determine whether any servicemembers were foreclosed on in violation of SCRA since Jan. 1, 2006. The servicers have also agreed to conduct a thorough review, overseen by the Civil Rights Division, to determine whether any servicemember, from Jan. 1, 2008, to the present, was charged interest in excess of 6 percent on their mortgage, after a valid request to lower the interest rate, in violation of the SCRA. Servicers will be required to make payments to any servicemember who was a victim of a wrongful foreclosure or who was wrongfully charged a higher interest rate. This compensation for servicemembers is in addition to the $25 billion settlement amount.
   The agreement will be filed as a consent judgment in the U.S. District Court for the District of Columbia. Compliance with the agreement will be overseen by an independent monitor, Joseph A. Smith Jr. Smith has served as the North Carolina Commissioner of Banks since 2002. Smith is also the former Chairman of the Conference of State Banks Supervisors (CSBS). The monitor will oversee implementation of the servicing standards required by the agreement; impose penalties of up to $1 million per violation (or up to $5 million for certain repeat violations); and publish regular public reports that identify any quarter in which a servicer fell short of the standards imposed in the settlement.
   The agreement resolves certain violations of civil law based on mortgage loan servicing activities. The agreement does not prevent state and federal authorities from pursuing criminal enforcement actions related to this or other conduct by the servicers. The agreement does not prevent the government from punishing wrongful securitization conduct that will be the focus of the new Residential Mortgage-Backed Securities Working Group. The United States also retains its full authority to recover losses and penalties caused to the federal government when a bank failed to satisfy underwriting standards on a government-insured or government-guaranteed loan. The agreement does not prevent any action by individual borrowers who wish to bring their own lawsuits. State attorneys general also preserved, among other things, all claims against the Mortgage Electronic Registration Systems (MERS), and all claims brought by borrowers.
   For more information about the mortgage servicing settlement, go towww.NationalMortgageSettlement.com. To find your state attorney general’s website, go towww.NAAG.org and click on “The Attorneys General.”

EPA: Dry Cleaning Chemical is Likely Carcinogen

   Washington, D.C. – 2/10/2012 - The federal Environmental Protection Agency has declared tetrachloroethylene, or PERC, a chemical used by many dry cleaners, a “likely human carcinogen.”
   "The evidence against this ubiquitous dry cleaning chemical piled up for years, like dirty laundry in the corner of the room," said David Andrews, Ph.D., a senior scientist with Environmental Working Group. "It’s encouraging that EPA is completing this assessment so that health measures can be taken to protect workers and the public."
   The EPA’s decision is based on the 2010 recommendation of the National Research Council, an independent scientific body that advises the federal government.
   Tetrachloroethylene is a chlorinated solvent long used in dry cleaning, industrial cleaning and production of other chemicals and consumer products. Biomonitoring surveys have detected it in the bodies of a significant number of Americans. It has also been found in drinking water across the country including at Marine Corps Base Camp Lejeune and at EPA Superfund hazardous waste sites.
   Once in the environment, the chemical breaks down into other known human carcinogens, including trichloroethylene (TCE) and vinyl chloride.
   Consumers should take their dry cleaning to businesses that do not use tetrachloroethylene. The substance can remain on clothes and evaporate into the air at home, unnecessarily exposing the residents.
   EWG’s Tap Water Database can be searched to identify local tap water where tetrachloroethylene has been found.
  Source: Environmental Working Group.

Gene Regulator in Brain's Executive Hub Tracked

   (NIH) - 2/5/2012 - For the first time, scientists have tracked the activity, across the lifespan, of an environmentally responsive regulatory mechanism that turns genes on and off in the brain's executive hub. Among key findings of the study by National Institutes of Health scientists: genes implicated in schizophrenia and autism turn out to be members of a select club of genes in which regulatory activity peaks during an environmentally-sensitive critical period in development. The mechanism, called DNA methylation, abruptly switches from off to on within the human brain's prefrontal cortex during this pivotal transition from fetal to postnatal life. As methylation increases, gene expression slows down after birth.
   Epigenetic mechanisms like methylation leave chemical instructions that tell genes what proteins to make –what kind of tissue to produce or what functions to activate. Although not part of our DNA, these instructions are inherited from our parents. But they are also influenced by environmental factors, allowing for change throughout the lifespan.
   “Developmental brain disorders may be traceable to altered methylation of genes early in life,” said Barbara Lipska, a scientist in the NIH’s National Institute of Mental Health (NIMH) and lead author of the study. “For example, genes that code for the enzymes that carry out methylation have been implicated in schizophrenia. In the prenatal brain, these genes help to shape developing circuitry for learning, memory and other executive functions which become disturbed in the disorders. Our study reveals that methylation in a family of these genes changes dramatically during the transition from fetal to postnatal life – and that this process is influenced by methylation itself, as well as genetic variability. Regulation of these genes may be particularly sensitive to environmental influences during this critical early life period.”
   Lipska and colleagues report on the ebb and flow of the human prefrontal cortex's (PFC) epigenome across the lifespan, February 2, 2012, online in the American Journal of Human Genetics.
   “This new study reminds us that genetic sequence is only part of the story of development. Epigenetics links nurture and nature, showing us when and where the environment can influence how the genetic sequence is read,” NIMH Director Thomas R. Insel said.
   In a companion study published last October, the NIMH researchers traced expression of gene products in the PFC across the lifespan. The current study instead examined methylation at 27,000 sites within PFC genes that regulate such expression. Both studies examined post-mortem brains of non-psychiatrically impaired individuals ranging in age from two weeks after conception to 80 years old.
   In most cases, when chemicals called methyl groups attach to regulatory regions of genes, they silence them. Usually, the more methylation, the less gene expression.Lipska's team found that the overall level of PFC methylation is low prenatally when gene expression is highest and then switches direction at birth, increasing as gene expression plummets in early childhood. It then levels off as we grow older. But methylation in some genes shows an opposite trajectory. The study found that methylation is strongly influenced by gender, age and genetic variation.
   For example, methylation levels differed between males and females in 85 percent of X chromosome sites examined, which may help to explain sex differences in disorders like autism and schizophrenia.
   Different genes — and subsets of genes — methylate at different ages. Some of the suspect genes found to peak in methylation around birth code for enzymes, called methytransferases, that are over-expressed in people with schizophrenia and bipolar disorder. This process is influenced, in turn, by methylation in other genes, as well as by genetic variation. So genes associated with risk for such psychiatric disorders may influence gene expression through methylation in addition to inherited DNA.
   Scientists worldwide can now mine a newly created online database of PFC lifespan DNA methylation from the study. The data are accessible to qualified researchers at:
http://www.ncbi.nlm.nih.gov/projects/gap/cgi-bin/study.cgi?study_id=phs000417.v2.p1. BrainCloud, a web browser application developed by NIMH to interrogate the study data, can be downloaded at http://BrainCloud.jhmi.edu.
   Source: U.S. Department of Health and Human Services.

Forecasted Base Salary Increases Remain Steady

   PHILADELPHIA - (BUSINESS WIRE) - 2/4/2012 - U.S. employees can expect median base salary increases of 3.0 percent in 2012, according to recently released Hay Group research. The median increase of 3.0 percent is consistent for executives, middle management, supervisory and clerical positions. This picture is relatively steady across most industry sectors, and after factoring in annualized consumer price index growth at 3.0 percent, expected employee wage growth is in line with inflation.
   “Even though the economy continues to show signs of a slow recovery, we do not expect most employees to receive increases at the levels seen in the years prior to 2008 for awhile, when median increases were tracking between 3.5 percent and 4.0 percent,” Hay Group’s North American Reward Practice Leader Tom McMullen said.
   “Slower growth in base salary increases is causing most organizations to be innovative in their approach to reward management. We see most organizations having a continued focus on managing their fixed costs in base salary and benefits programs while placing renewed attention on retention and engagement strategies for the talent needed to run their business. Differentiating all rewards and ensuring that top performers receive rewards that are greater than average performers is a continued focus area for organizations. Organizations are quite happy to pay for performance, but only if they get it.”
   While most industry sectors are also consistent with this 3.0 percent median base salary increase, including industrial, retail and financial services sectors, the economy impacts industry sectors differently. Certain job families in healthcare systems, such as nursing and clinical employees, are trending at 2.5 percent median increases, while employees in the oil and gas sectors are faring better with 4.0 percent median increases planned for 2012.
   Hay Group’s forecast results are based on the latest data available from Hay Group’s U.S. database, provided by 285 organizations in November and December 2011. This is Hay Group’s 33rd year of conducting the survey. Typical respondents to the survey include compensation professionals in the Human Resources departments of small to large size U.S. organizations across a wide range of industries.

Brokerage Firm Chief, Stock Promoter Convicted

   WASHINGTON – 2./2/2012 - The principal of a Costa Rican brokerage firm and a Las Vegas stock promoter were each convicted on January 31 in the Southern District of Florida of all charges for their roles in a stock manipulation scheme that defrauded investors, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Chief Postal Inspector Guy Cottrell of the U.S. Postal Inspection Service (USPIS) and James W. McJunkin, assistant director in Charge of the FBI’s Washington Field Office.
   Jonathan Curshen, 47, the principal of Red Sea Management and Sentry Global Securities, two companies located in San Jose, Costa Rica, that provided offshore accounts and facilitated trading in penny stocks, was found guilty of conspiracy to commit securities fraud, wire fraud and mail fraud; two counts of mail fraud; and conspiracy to commit international money laundering. Nathan Montgomery, 30, a Las Vegas stock promoter, was found guilty of conspiring to commit securities fraud and wire fraud.
   The evidence at trial showed that in January and February 2007, Curshen, of Costa Rica and Sarasota, Fla., and Montgomery, of Las Vegas, were involved in a scheme to illegally manipulate the stock price of a company called CO2 Tech (ticker CTTD), which traded on the Pink Sheets, an inter-dealer electronic quotation and trading system.
   Evidence at trial showed that Curshen’s and Montgomery’s co-conspirators controlled the outstanding shares of CO2 Tech, which were used in the stock manipulation scheme. Montgomery and his conspirators engaged in coordinated trades in conjunction with the issuance of false and misleading press releases that were designed to artificially inflate the price of CO2 Tech shares to make it appear that it had significant business prospects. According to these press releases, CO2 Tech purported to have a business relationship with Boeing to reduce polluting gases emitted from airplanes, when in fact CO2 Tech never had any business or relationship with Boeing.
   According to the evidence at trial, Montgomery and his co-conspirators, Robert Weidenbaum, Timothy Barham Jr., Ryan Reynolds and others fraudulently “pumped” the market price and demand for CO2 Tech stock through these press releases and coordinated trades of shares of CO2 Tech stock in order to create the appearance of legitimate buying interest by legitimate investors. The evidence showed that as Montgomery and his conspirators pumped the price of the stock, Curshen and his conspirators facilitated the “dumping” of shares through the trading desk at Red Sea and Sentry Global Securities by selling the shares at the direction of their conspirators to the general investing public. The evidence showed that these shares, which became virtually worthless, were purchased by unsuspecting investors, including investors in the Southern District of Florida. The evidence showed that Montgomery, Weidenbaum, Reynolds and Barham were paid approximately $1 million in cash by their conspirators to participate in sham stock trades of CO2 Tech. The cash was delivered to Miami via a private jet from an airport outside New York.
   The evidence further showed that, from approximately 2003 through 2008, Curshen operated Red Sea as a money laundering hub in Costa Rica that established bank accounts and brokerage accounts in the United States and Canada under false pretenses and through nominee owners. The evidence further showed that Curshen and his co-conspirators laundered the proceeds of the stock fraud from accounts in the United States to an account in Canada, all in an effort to conceal and disguise the nature and source of the proceeds.
   At sentencing, Curshen faces a sentence of up to five years in prison on the conspiracy to defraud count, and up to 20 years on each count of mail fraud and money laundering conspiracy. Montgomery faces a sentence of up to five years for the conspiracy to defraud count. The defendants are scheduled to be sentenced by Judge Richard W. Goldberg on May 11, 2012.
   Stock promoters Weidenbaum, Barham and Reynolds, who were also charged in this case, previously pleaded guilty to conspiring to commit securities fraud, wire fraud and mail fraud. They also will be sentenced by Judge Goldberg on May 9, 2012. Michael Simon Krome, a securities attorney from New York, who participated in the conspiracy and evaded federal securities registration requirements in order to provide co-conspirators with millions of unregistered and “free trading” shares of CO2 Tech that were used to execute the stock manipulation, also pleaded guilty to conspiring to commit securities fraud, mail fraud and wire fraud.
  The case was investigated by the FBI’s Washington Field Office and the USPIS. The case is being prosecuted by Trial Attorneys N. Nathan Dimock and Rina Tucker Harris of the Fraud Section in the Justice Department’s Criminal Division. The U.S. Attorney’s Office for the Southern District of Florida provided significant assistance in this case. The Department of Justice acknowledges the significant assistance of the Financial Industry Regulatory Authority (FINRA) and the U.S. Securities and Exchange Commission (SEC) in its investigation. The SEC has a pending parallel civil case. The Criminal Division’s Office of International Affairs and Costa Rican authorities also provided assistance.
Source: Financial Fraud Enforcement Task Force

The Arms Debate

Not All American's Have the Right to Bear Arms

Photo by Steve Rensberry (c) 2018