Posted by: RICHARD PROCTOR | October 14, 2010

CREDIT HISTORY FRAUD SPREE

As fraud detection technology and electronic payment methods make some of the most common embezzlement schemes more difficult to perpetrate without getting caught, fraudsters are resorting to increasingly creative tactics to get what they want. A quite recent, and intricate, example of this type of dishonest ingenuity involves credit history fraud. In July 2010, two individuals were indicted for their roles in a credit history fraud that allegedly contributed to a multi-million dollar mortgage fraud. One of the individuals, a real estate agent, purportedly obtained and sold false Social Security numbers (SSNs) to individuals to use when applying for mortgages. The agent also incorporated two companies — under the guise of financial institutions with fairly generic names — to report positive payment histories for the individuals to the credit bureaus, which increased the borrowers’ credit scores. The resulting stellar credit reports were then used by the borrowers to obtain home loans. Although this case has not yet been resolved, it brings up some critical questions: How can people perpetrate this kind of crime and fool mortgage lenders into giving such large amounts of money? And, more importantly, how can such schemes be prevented and detected?

http://www.acfe.com/newsletters/fraud-examiner.asp?copy=sept10-credit-history-fraud

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Posted by: RICHARD PROCTOR | October 14, 2010

CALIFORNIA NATIONAL GUARD FRAUD SPARKS PROBE

The federal agency that oversees funding for the California National Guard said Tuesday it has launched an examination of its nationwide procedures for detecting fraud in recruiting-incentive payments.  The move was in response to a Bee report Sunday that the Guard gave as much as $100 million to soldiers who didn’t qualify for the incentives, according to federal auditor documents. The program is the subject of a criminal investigation led by the U.S. Department of Justice.

http://www.sacbee.com/2010/10/13/3100152/guard-fraud-report-sparks-probe.html

Posted by: RICHARD PROCTOR | September 2, 2010

BERNANKE AND THE LIQUIDITY TRAP?

Bernanke likes to remind everyone that he is an expert on the Great Depression and knows how to prevent it from happening again in the US. Apparently, he is also an expert on Japan and its struggle with chronic deflation following its housing bubble in the 1980’s. In fact, Bernanke wrote an article in 2000 titled “Japanese Monetary Policy: A Case of Self-Induced Paralysis,” where he lectured BOJ officials about what they could and should have done differently to to avoid a deflationary outcome. He went on to postulate that the BOJ was not trying hard enough to stimulate the economy and that 0% interest rates are just one tool to beat deflation. The Fed Chairmen even went so far as to assert that he knew how to escape a liquidity trap caused by 0% interest rates. The reason I bring this up is because it gives people a good idea of what Bernanke’s next move may be. The US is dangerously close to falling into the dreaded “liquidity trap” as deflation takes hold and monetary policy loses its effectiveness.


http://seekingalpha.com/article/223506-bernanke-s-plan-to-escape-the-liquidity-trap?source=email

Posted by: RICHARD PROCTOR | August 22, 2010

SMALL CHARGES LEAD TO BIG CREDIT CARD FRAUD!

If the allegations in a civil case filed in a federal court in Chicago hold up, you can even haul off $10 million if you stick to $9 here or 20 cents there. The suit, filed in March by the Federal Trade Commission, contends that over at least four years, scammers placed more than $10 million in bogus charges on consumers’ credit and debit cards. Then, the suit says, they moved the money to bank accounts in Lithuania, Estonia, Latvia, Bulgaria, Cyprus and Kyrgyzstan. The suit was filed in United States District Court for the Northern District of Illinois. The scammers evaded detection by keeping each charge under $10 and stealing from each cardholder only once, spreading the theft across more than a million cardholders, the suit says.

Link: http://www.nytimes.com/2010/08/22/business/22digi.html?emc=tnt&tntemail1=y

Posted by: RICHARD PROCTOR | August 19, 2010

HOW DELL DID IT???

Sometime in the second quarter of 2004, Dell Chief Financial Officer James Schneider was told by the company’s EMEA (Europe, Middle East and Asia) financial director that the unit was having difficulty meeting its US$159 million operating income target.  “[W]e need $175m,” Schneider replied. “You need to tell me how we will get it. I suggest you not be too proud and see what [D]unning has socked away.”  Schneider was referring to “cookie jar” reserves overseen by Nicholas Dunning, who at the time was vice president of marketing for Dell’s EMEA Home & Small Business unit, according to an exchange recounted in a complaint filed last week in U.S. District Court by the Securities and Exchange Commission.

http://www.businessweek.com/idg/2010-07-29/wall-street-beat-dell-case-serves-as-cautionary-tale.html

Posted by: RICHARD PROCTOR | August 11, 2010

NYC DAY CARE FRAUD

A group of day care center operators bribed workers at three New York City agencies and exploited the complex social service bureaucracy to loot millions of dollars from a program that pays child-care expenses for poor parents so they can find work, officials said Tuesday. Federal prosecutors called it a “massive fraud and bribery scheme” involving a group of Russian immigrants that controlled more than 30 day care centers in Brooklyn and Staten Island and called itself “the Congregation.” In all, 11 people — 7 of them city workers — were charged with conspiring to pay or receive bribes; all but one were charged with conspiracy to commit fraud.

http://www.nytimes.com/2010/08/11/nyregion/11daycare.html?_r=1&emc=tnt&tntemail1=y

Posted by: RICHARD PROCTOR | August 10, 2010

THE GROWING PROBLEM OF UNEMPLOYMENT

The employment situation in the United States is much worse than even the dismal numbers from last week’s jobless report would indicate. The nation is facing a full-blown employment crisis and policy makers are not responding with anything like the sense of urgency that is needed.

http://www.nytimes.com/2010/08/10/opinion/10herbert.html?_r=1&emc=tnt&tntemail1=y

Posted by: RICHARD PROCTOR | August 6, 2010

MARC FABER………DOW MAY FALL TO 1000???

When investment guru Robert Prechter recently predicted that the Dow Jones Industrial Average will drop to 1,000, many dismissed him as being very unrealistic.

After all, that would be a 90 percent drop from the recent level of 10,680.

Not so fast, says fellow investment icon Marc Faber.

In his newsletter, “The Gloom, Boom & Doom Report,” Faber points out that people also rolled their eyes at Prechter in 1978, when he predicted the Dow would more than double to 2,300, CNBC reports.

“Prechter is right when he says that when manias come to an end, prices tend to retreat to where the mania started,” Faber writes.

http://www.moneynews.com/StreetTalk/marc-faber-dow-stocks-1000/2010/08/05/id/366673

Posted by: RICHARD PROCTOR | August 3, 2010

ASSESSING THE RISK OF DEFLATION?

James Bullard of the St. Louis Fed is the latest member of the growing deflationistas. He is increasingly concerned of a Japanese style deflation here in the US. On Friday, he discussed his outlook on CNBC.

http://seekingalpha.com/article/217964-assessing-the-risk-of-deflation?source=email

Posted by: RICHARD PROCTOR | July 28, 2010

THE NEXT BLACK SWAN?

The Black Swan: The Impact of the Highly Improbable is a philosophical treatise on uncertainty that managed both to entertain readers and to predict the financial meltdown of 2008. Nassim Nicholas Taleb—the book’s author, who is also a trader and university professor—has reissued his 2007 best seller in a second edition that includes a new 73-page essay, “On Robustness and Fragility.”

http://www.businessweek.com/investor/content/jul2010/pi2010078_530571.htm

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