By: Selena Robinson, Freelance Journalist for WorldNewsVine

Washington, D.C. – In a press release from the Securities and Exchange Commission, the agency charged Daimler AG with “violations of the Foreign Corrupt Practices Act (FCPA)”. The SEC says that Daimler has bribed officials in multiple countries in an attempt to gain business. According to the complaint, the automaker has been accused of paying out more than $56 million in at least 22 countries, including Hungary, Nigeria, Latvia, Vietnam and Russia. As a result of the illegal bribery practices, Daimler earned more than $1.9 billion of revenue.

SEC Enforcement Chief Robert Khuzami said that the company routinely engaged in these kinds of dealings, stating “It is no exaggeration to describe corruption and bribe-paying at Daimler as a standard business practice.” Cheryl J. Scarboro, who oversees the SEC department charged with enforcing the FCPA Act, described the company’s corruption as “pervasive” and stated that the internal auditing departments should have stopped the bribery, but that they “permitted or were directly involved in the company’s bribery practices”.

To spread the money around, Daimler engaged in several shady business practices, such as using vehicles as kickbacks to foreign officials. In such a maneuver, the automaker even used spare vehicle parts as a kind of payoff under the United Nations program Oil for Food. Occasionally, straight cash was passed between parties by company sales executives.

Although Daimler has not admitted any wrongdoing, the company has agreed to pay a financial restitution of $91.4 million as well as an additional $93.6 million fine to settle the charges. Daimler AG is based in Stuttgart, Germany and produces automobiles under 11 different brands, including Mercedes-Benz and Maybach.

By: Selena Robinson, Freelance Journalist for WorldNewsVine

Manhattan, New York – Earlier today, the Federal Bureau of Investigation, along with five other government agencies, announced the arrest of Charles J. Antonucci, Senior, ex-CEO of Park Avenue Bank. Authorities say that Antonucci made fraudulent claims in an attempt to receive federal bailout funds from the Troubled Asset Relief Program (TARP). Antonucci is the first person ever charged with TARP fraud.

According to the FBI press release, Antonucci is charged with multiple crimes, including embezzlement, wire fraud, bank fraud, bank bribery and lying to investigators. Officials say that his criminal activity began long before he tried to scam the TARP program. Park Avenue Bank was a respectable, relatively stable institution when he became the CEO in 2004. But, in the five years that he oversaw the bank, investigators say that Antonucci “engaged in numerous instances of self-dealing…including authorizing extensions of credit and overdrafts to customers with whom he had financial relationships; authorizing extensions of overdraft credit to a customer in exchange for the use of a private plane; and causing the bank to make improvements on, lease, and pay expenses for properties owned by (himself)”. So, basically, everything you’re NOT supposed to do when you’re running an institution insured by the federal government.

One of the most egregious offenses by Antonucci involved a company called Easy Wealth Group, Ltd. The president of the company received a $400,000 line of credit from Park Avenue Bank, using deceptive financial statements and information for the credit application. Guess who owns Easy Wealth Group? Yep, Antonucci, who essentially gave himself $400,000 from the bank that he was running. He got an associate of his to become Easy Wealth’s “president” and apply for the loan. To add insult to injury, he then demanded that the “president” pay him $70,000 of the money as an interest-free loan. He only repaid $50,000 of it. The entire $400,000 loan was defaulted on.

None of this may have come to light, though, if Antonucci hadn’t applied for TARP money. The TARP funds, also known as the Wall Street bail-out, were the funds that the government set aside to boost financial institutions that were stuck holding toxic assets from the mortgage meltdown. Remember that big stink with AIG and Lehman Brothers and all the rest of it? Well, Antonucci apparently decided that his bank was also “too big to fail” and asked Uncle Sam for a loan.

The trick to getting TARP money is to look like you have done your part to make your bank solvent, such as investing some of the money you’re burning at home. To get by this rule without actually losing any of his money, Antonucci arranged for $6.5 million of the bank’s funds to be withdrawn into corporations that he was connected with, so that he could then withdraw it again and then deposit into the bank. Then he could go to the federal regulators and say, “See! I gave my bank $6.5 million! I’m committed to keeping my bank afloat.” Except that it was the bank’s own money. When the FDIC began to investigate, they told Antonucci that his TARP claim would be denied.

To cover his tracks with the public, Antonucci gave an interview explaining why the bank had withdrawn its application for TARP funds. He told Information Security Media Group, “Nobody really knows what the rules are going to be in terms of those who take and utilize the TARP money, and that is very unsettling…I don’t need TARP money…management is committed to putting capital in as it is needed.”

The Federal Deposit Insurance Corporation (FDIC) seized Park Avenue Bank on March 12, 2010. All deposits were assumed by Valley National Bank. Mr. Antonucci is charged with 10 counts of fraud and lying. If convicted on all counts, he faces up to 260 years in prison.

According to an FBI press release, Mr. Euirang Hwang and Ms. Sang Yi were the operators of an investment company called Pinupito, Inc. that “promised investors annual returns of up to 45 percent”. Supposedly the company was producing these enormous returns by “buying smaller companies in Korea, growing them, and selling them for a large profit”.  In actuality, the millions of dollars received from investors were either used to finance Hwang and Yi’s luxury lifestyle or were funneled back to previous investors  to serve as a cover for the “returns” that they were supposed to be receiving.

Victims of the scheme were made to believe that they were buying into a successful investment firm with “extensive holdings” in real estate and Korean businesses. Mr. Hwang, who falsely claimed to be a billionaire, served as chairman while Ms. Yi handled the financial end of the company. Authorities say that they primarily did their shilling to fellow Korean-American citizens, even doing some of their networking at Korean churches.

This kind of Ponzi scheme is referred to by the Securities and Exchange Commission (SEC) as an “affinity fraud”.  Just as Bernie Madoff focused on getting investors from the Jewish community in New York and Florida, Mr. Hwang and Ms. Yi similarly targeted members of their own ethnicity. What makes these scams so successful is that the fraudsters use their ability to relate to those of their own culture as a way to gain influence. These individuals generally appear trustworthy and successful, so they may already be admired by others in their community. This makes it easy for them to take advantage of those who are interested in making fast money.

To avoid being a victim of a Ponzi scheme, the SEC says that before you invest money in something, you should check out everything relating to it, especially the person in charge of the investment. If you’ve already been victimized, you should contact the SEC immediately to file a complaint.

The Consumer Federation of America is issuing a warning regarding Refund Anticipation Loans (RALs), commonly referred to as “Rapid Refund”. These loans enable taxpayers to get their IRS refund in 24 to 48 hours instead of having to wait 2 to 3 weeks for an IRS issued check or direct deposit. The consumer group is upset about the fees that are associated with these loans, which are often wrapped into tax preparation fees so that the taxpayer never knows exactly how much the RAL is costing them.

Essentially, these loans will run you around 90 dollars, but since you will only see the total of your tax prep fees, you may not realize that you will pay from 33 to 72 percent on the loan!!! These charges are made to seem less painful, since they are taken directly from your refund, instead of your bank account, but it’s still costing you a lot more than you may think. On the other hand, if you wait two weeks more, you can get your entire refund for free.

In the interests of full disclosure, I should state that I used to work at a national tax preparation service. The company was very trustworthy and I enjoyed working there. But, I routinely discounted the tax prep fees to try to ease some of the RAL pain on customers and this was encouraged by my supervisors. Even the employees know that this “convenient service option” is basically a loan shark-style transaction.

So, unless you have a dire emergency that requires you to come up with the exact amount of your refund (minus the tax prep and RAL fees) in 24 to 48 hours, wait 2 to 3 weeks and get your money for free. Even better, file your tax return yourself online. You’ll save money and learn more about how your money works at the same time!

One analyst’s take, though, is right on point. At BusinessWeek.com, Sean Ryan, with Wisco Research LLC, said that “the reality is that most or all of this tax will be borne by customers”.  If this tax goes through, there is definitely no way that the banks will swallow these charges for themselves. The prospect of the same taxpayers who bailed out these banks possibly having to pay even more money to cover this tax is almost enough to make the administration back off. And now, there’s another possible obstacle.

According to the Huffington Post, the banks are considering challenging the legality of the Financial Crisis Responsibility Fee in court, claiming that the tax would “unfairly single out and penalize big banks”. Well, boo-hoo-hoo…

The Merrill deal just keeps hurting BofA.

Bank of America, currently the subject of an official SEC inquiry, will have to answer yet another charge relating to the merger with Merrill Lynch. The bank has been on the defensive ever since Merrill posted a $15 billion loss, just one month after the merger became official. The Securities and Exchange Commission has been conducting an investigation into the inner workings of the deal and will now be adding another criminal charge of corporate wrongdoing to its complaint against the company.

The SEC initially wanted to amend its current complaint against BofA to include a new charge, but was denied that opportunity by the judge in the case. Now the agency claims it will pursue a separate charge against Bank of America, accusing the company of withholding vital information regarding Merrill’s fourth quarter losses from its shareholders.

Bank of America is already facing an official SEC inquiry relating to the Merrill merger, with the agency charging that the bank hid the enormous bonus pay-outs to Merrill employees. Bank of America has claimed that it was under government pressure to put together the Merrill deal in an effort to boost the sagging economy.

For the Charlotte, N.C.-based banking conglomerate, this is a setback to what was supposed to be a new start. With the departure of disgraced CEO Ken Lewis last year, the company had been hoping that 2010 would be a year of renewal, boosting the company’s public image. But, with skyrocketing Wall Street bonuses back in the news and this latest criminal complaint, it looks like BofA will have a long hard road to travel yet.

The trial for the initial SEC charge against Bank of America will begin on March 1, 2010.

The Biggest Bank in the U.S.

Bloomberg, the respected New York reporting site, is in a court struggle with the Federal Reserve over details of the 2008 bailout program. Bloomberg’s parent company has been fighting for more than two years to get full disclosure of the banks and corporations that would have failed were it not for the trillion-dollar financial program.

So far, the judges have been siding with the journalists. A lower New York court agreed with Bloomberg’s argument that the public has a right to know about the “unprecedented and highly controversial use” of taxpayer funds. For its part, the Fed is claiming that the disclosure of the particular companies could negatively impact their financial well-being and result in a run on the banks in question. The U.S. Court of Appeals will decide in the coming months which side to support.

I, of course, agree with Bloomberg on this one. While I understand that reporters can be a little bit of a nuisance and personally there are some things I could not care less about knowing, this is not just any matter. The money used to prop up these corporations, some of which were directly responsible for millions losing their jobs and homes, was borrowed from the victims themselves. To now claim that the people who came to the rescue of these companies cannot know who got their money is beyond audacious.

I wasn’t born yet during Watergate, so I missed out on that battle for journalists’ rights. This one, though, I’ll be staying tuned for.

The retail sector is now hoping that online sales on Cyber Monday today will boost profits. Among the sites offering bargains are Apple, Amazon, Borders and Overstock.com. But, while more consumers are expected to shop online this year, CNN quotes a Disney retail exec as saying “Shoppers are focused on value. But you could find value at $10 or at $50.” Bottom line: People are looking for bargains and they’re willing to shop around until they find it. If stores are hoping for increased sales, they’re going to have to pull out all the stops to encourage spending.

Interestingly, while Black Friday gets the hype, the busiest shopping day of the year tends to be the Saturday before Christimas. Seems like consumers have figured out that if they holdout for great deals, retailers will lower prices right up until the 25th. If so, shoppers hold all the (credit) cards and the stores are on the ropes.

courtesy of AMagill

One year in and the TARP money just keeps on rolling. GMAC, which financed the now-bankrupt General Motors, was the only bank unable to raise extra funds to pass the government’s recent stress test. So, what happens now? Will they be allowed to go belly up? Of course not! They will be receiving yet another installment of TARP money, in addition to the $13.5 billion they’re already received. Read the full story from the BBC here.

I can understand the need to keep certain banks afloat. And GMAC has underwritten a lot of mortgages and car loans for consumers. But, really, with the other nine banks tested doing so well that they raised excess capital, you’d think they could afford to chip in and boost GMAC without needing taxpayer money to do it.

courtesy of michaelll

If you’ve been on the fence about whether health care reform is needed, this just might push you over the edge. Pfizer has recently pled guilty to what’s called “off-label marketing” of one of its drugs and agreed to pay the record-setting criminal fine of $1.19 billion. (In case you didn’t know, that’s the largest criminal fine in U.S. history.) Bloomberg.com has the full story here.

What’s off-label marketing, you ask? Basically, it’s taking a drug that has been approved for one use and promoting it to for another use altogether. Kind of like teens using cough medicine to get “high”. Pfizer has admitted to touting their popular drug Bextra, which was approved for arthritis and menstrual relief, for all kinds of treatment. They even went so far as to pay doctors for the right to have one of their salespeople “spend the day” with the doctor and his or her staff. Think they were talking about the weather? Nope, the salesperson was essentially hyping the product for unapproved uses, allowing Pfizer to, in effect, “buy” influence with physicians.  The worst part of this is that Pfizer is not alone. Similar charges and fines have been leveled against Eli Lilly, Schering-Plough and Bristol Myers-Squibb in recent years.

For the record, I am not affiliated with any political party, so I have no opinion whatsoever about which party has the best idea for health care reform. But, cases like this are further evidence that as long as those entrusted with providing medical assistance are focused on dollars, big businesses are the only ones getting good care.