Archive for March, 2007
Thu 22 March 07 · Filed under Fraud News Stories
Today a judge did not allow a Hurricane Katrina class action lawsuit against State Farm Insurance to proceed. The judge said that even though the lawsuits appear to have similar facts (i.e. all properties were destroyed during Hurricane Katrina) they cannot be declared a class because there are many factual differences between each case.
The “class” status was sought by policyholders who wanted to speed up the process of resolving hundreds of individual lawsuits against State Farm. The company has denied the claims, generally because its policies cover damage from wind but not rising water (which includes storm surge).
Mon 19 March 07 · Filed under Scam Busting
In response to the investigative report about Usana Health Sciences issued by Barry Minkow and Fraud Discovery Institute, Dave Andereton of the Deseret Morning News reports the following:
“Minkow is simply looking to line his pockets based upon a hodgepodge of misinformation, half-truths and outright lies,” said D.J. Poyfair, an attorney for Usana. “Usana is regularly identified as the gold standard in network marketing by state and federal regulators.” (emphasis mine)
Dare I ask D.J. Poyfair to back that statement up with proof? Exactly which state and federal regulators have said such things, and exactly when were they said, and to whom were they said?
Mon 19 March 07 · Filed under Fraud News Stories
We had a ton of submissions this week, thanks to being featured on the Blog Carnival home page on Friday and over the weekend. Thanks for contributing and reading… and please stop back to see us soon! Submissions for next week’s carnival can be done here.
China Law Blog highlights the problem of Chinese employees taking kickbacks. Apparently this practice is not legal in China, yet it runs rampant because companies know they may lose significant business if they don’t give kickbacks.
Mine Your Own Business warns about a common scam perpetrated on retailers: A retailer is contacted by a “buyer” who is looking for special pricing on a large quantity of high-end items. Red flag!!!! This “buyer” is looking to run off with your merchandise
Debt Free offers up lesser-known tips to help avoid identity theft, including freezing your credit, regularly checking your credit report, and encrypting computer information.
Matt Paulson gives some information on the new “Identity Safeguards” program offered by Zander Insurance. I’m not a fan of identity theft insurance, but Matt thinks this one is a little different and a little better.
A Cash Advance blog tried to get us to put their post in this carnival. NO WAY! We don’t promote scams here, and “cash advance” companies are one of the worst consumer scams out there!
SoxFirst alerts us that Donald Trump is expected to be called as a defense witness in the fraud trial of Conrad Black. He will allegdly testify that a $40,000 party (paid for with company funds) was not a birthday party for Conrad’s wife, but rather a business gathering.
Digerati Life brings up a name we saw in last week’s carnival: Casey Serin. Word on the street is that the guy is a scam artist who has committed multiple mortgage frauds, but he has a website that is attempting to cash in on his tale of woe. At least he’s got people talking!
The Real Estate Forum highlights a recent warning about mortgage fraud issued by the FBI.
SteveO snapped a picture of a guy riding a bike after his trip to WalMart, and titled it “Loves to Ride“… since the guy was apparently riding a motorized scooter while shopping at WalMart.
Tax fraud… It’s not just for taxpayers anymore. It’s now for IRS agents too!
Weboma has a nice post about scams to avoid. I especially like this post because it references pyramid schemes. And if you know anything about me, you know that I like to speak out against multi-level marketing companies, which are really nothing more than product-based pyramid schemes.
Funny we should mention product-based pyramid schemes…
I worked with Barry Minkow and Fraud Discovery Institute on an investigation of Usana Health Sciences. Read about our conclusions on the fraud being perpetrated on the company’s investors and distributors. Usana promptly sued Fraud Discovery Institute and Barry, yet oddly enough, they didn’t address any of the real issues that we raised about Usana’s material non-disclosures.
Tags: mortgage fraud, Tax fraud, pyramid schemes, multi-level marketing, Barry Minkow, Usana
Fri 16 March 07 · Filed under Fraud News Stories
Wed 14 March 07 · Filed under Fraud News Stories
Former American Family Insurance agent Nancy Paquette was found guilty of 104 criminal counts - 52 counts of forgert and 52 counts of identity theft. Paquette established dozens of fraudulent insurance policies in order to receive commissions and bonuses, as well as to remain one of the company’s top agents.
Paquette’s defense was that organized crime was behind the insurance policies, but those “people” could not be located by law enforcement. She claimed that they scammed her into taking out these policies. Her lawyer says there was no way she would risk a successful 17-year career on these policies, which only amounted to about 5% of her business.
She used $200,000 of her own money to create these insurance policies, some for actual customers and others for people she had never even met. For these policies, Paquette received $265,000 in commissions.
She faces 200 years in prison at her sentencing on April 30.
Mon 12 March 07 · Filed under Fraud News Stories
This news really hits home with me. I was a probation officer a long time ago. I supervised adult offenders, most of whom were on probation for domestic violence, other physical assaults, or drug dealing. I had a few on parole for more serious offenses. (We were required to call them “clients” back then. Referring to them as criminals might hurt their feelings.)
I’ve always believed that probation is only a bandaid on a larger problem. In theory it’s great: You get a second chance to live right while under the supervision of law enforcement. In reality, it’s quite often a joke: Offenders know the probation officer has little power to enforce the law with jail overcrowding and certain violent offenses as priorities.
Even though the system is far from perfect, it is sad to see what little it does offer being squandered. Children in Milwaukee are waiting months to receive supervision, and in the meantime are running the streets. Recently a 16-year-old boy was convicted of homicide by negligent operation of a vehicle. He received probation in the Serious Chronic Offenders Program (which should tell you something about his record), but waited over two months to start the program.
There are two big problems with this:
- The children are not receiving the guidance and supervision they often desperately need.
- Some are committing new crimes while unsupervised.
The chief probation officer at the Children’s Court Center say there are too many cases for her probation staff. She says that they each supervise 40 to 44 children. (That’s actually not much, if you’ve ever worked in the field.)
Here’s a big problem: The judges didn’t know there was a “waiting list” for these probation programs. They were sentencing the kids to probation, thinking their supervision would kick in right away. Had they known it would not, they likely would have put some of the more violent kids in secure detention to protect society.
Mon 12 March 07 · Filed under Fraud News Stories
Plastic surgery patient Georgette Gilbert was unhappy with her results, and started a website called My Surgery Nightmare. On the site, she detailed her experience with Dr. Jonathan Sykes, including before and after photos. She had an endoscopic browlift, lower blepharoplasty, cheeklift and fat injections…and I must say that the “after” pictures are scary.
Here is a snippet of what Georgette wrote on her site:
For me surgery was the biggest regret of my life. I didn’t need 5 procedures and I had no idea what I was really getting myself into. What I thought was going to be subtle turned into a nightmare. I’ve spent over two years of my life meeting with doctors all over the United States and having revision surgeries in hopes to get back to how I once looked or at the very least look normal again… I have had some successful revisions but I can never get back to “my look” since there is only so much doctors can do….
Georgette filed a malpractice suit against Dr. Sykes, and he countersued for defamation. The court ruled against him on his counterclaim, based upon the website containing statements that were either true or a matter of opinion.
Mon 12 March 07 · Filed under Fraud News Stories
Welcome to this week’s Carnival of Fraud!
Another Ponzi scheme has been shut down. How do investors get themselves invovled with these? Don’t they know if that the investment returns sound too good to be true, it’s because they are????
The Real Estate Forum cautions us to learn the name Casey Serin. Apparently this guy has scammed his way into at least 8 properties in 4 states, committing mortgage fraud to obtain the loans. He inflated the value of the properties and received cash at closing… to the tune of $15,000 to $50,000 per property. Wow!
As if we have a theme going on today, DigeratiLife gives us 6 ways to protect yourself against mortgage fraud.
My Simple Trading Systems keeps with our theme of real estate, and mentions four important red flags when hiring someone to do home repairs.
Tick Marks discusses tax fraud. Tax preparers often seem to forget that they might be on the hook for fraud!
On a related note, a tax court recently ruled that a Goldman Sachs investment banker could not deduct $55,000 for used clothing that she donated. But I think the bigger fraud is the fact that she’d purchase all this designer cloting, wear it once or twice, and then donate it.
Wenchypoo gives us the secret to getting rich quick: to let go of habits, behaviors, and mindsets that are expensive and destructive. (Maybe that investment banker should read it?)
Be careful of getting too rich if you live in Wisconsin, however. Our esteemed governor has always got his hand in your procket! He promised during his recent campaign to not raise taxes…. but is now asking for a tax increase of $1.74 billion.
Submissions for next week’s carnival can be made here.
Sat 10 March 07 · Filed under Fraud News Stories
Remind me again…. didn’t he say in his re-election campaign that he wasn’t going to raise taxes? Sounds like another lie from the Doyle administration…
Here’s what’s in store for us:
- An additional $630 per each of the 2.76 million income tax filers (but gosh, how beter could this money be spent anyway)
- $506 million from the $2.02 per pack tax on cigarettes
- $417 million from the new tax on hospitals
- $272 million from the tax on oil company profits (not that this will ever happen, but still, he wants it)
- $142 million from doubling the real estate transfer fee paid
- Increased “fees” of $376.2 million (but that’s not really a tax, is it?)
And if you’re not tired of bending over yet, property tax bills are probably going to go up by about $350 million at the end of this year… Please sir, may I have another?
Oh wait… they already gave it to us again, by having Doyle’s spokesman Matt Canter say that “… this budget provides targeted tax relief for the middle class…” Yeah, this is what tax relief really looks like.
Fri 9 March 07 · Filed under Fraud News Stories
Pinnacle Development Partners LLC has been charged with running a Ponzi scheme that took $69 million from over 2,000 investors. The top man, Gene O’Neal was charged with 19 counts of federal mail and wire fraud.
In 2006, Pinncale advertised 25% returns in 60 days (which equals a 280% annual return). The company claimed it earned such high returns by purchasing distressed real estate and quickly selling it at a profit.
While the company claimed to have sold over 100 such properties, a federal receiver says that Pinnacle really only acquired 21 properties, and never sold them outside Pinnacle’s various partnerships. The federal indictment says that investment “returns” were paid from new investor funds, and this type of scam is generally referred to as a Ponzi scheme.
Barry Minkow, fraud investigator (and ex-con of ZZZZ Best fame) helped expose the company and its scam.
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