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The Typical Household, Now Worth a Third Less
By ANNA BERNASEKJULY 26, 2014
Economic inequality in the United States has been receiving a lot of attention. But it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer, too.
The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially.
The Russell Sage study also examined net worth at the 95th percentile. (For households at that level, 94 percent of the population had less wealth and 4 percent had more.) It found that for this well-do-do slice of the population, household net worth increased 14 percent over the same 10 years. Other research, by economists like Edward Wolff at New York University, has shown even greater gains in wealth for the richest 1 percent of households.
For households at the median level of net worth, much of the damage has occurred since the start of the last recession in 2007. Until then, net worth had been rising for the typical household, although at a slower pace than for households in higher wealth brackets. But much of the gain for many typical households came from the rising value of their homes. Exclude that housing wealth and the picture is worse: Median net worth began to decline even earlier.
“The housing bubble basically hid a trend of declining financial wealth at the median that began in 2001,” said Fabian T. Pfeffer, the University of Michigan professor who is lead author of the Russell Sage Foundation study.
The reasons for these declines are complex and controversial, but one point seems clear: When only a few people are winning and more than half the population is losing, surely something is amiss.
http://www.nytimes.com/2014/07/27/business/the-typical-household-now-worth-a-third-less.html?_r=0
Tim,
I found, in FNMA quarterly filings, a grouping of tables showing Alt-A and Subprime investments purchases and performance. I am not an accountant. You should have someone compare those investments on a monthly basis. I did see a loss in the 8/6/09 Q of $16 billion on those investments and a principal balance of $95 billion. That would lead me to believe that most, if not all were non-performing. It would be interesting to note how much the Treasury draw for that period was.
Here is a link to get you started: http://phx.corporate-ir.net/phoenix.zhtml?c=108360&p=irol-secQuarterly&control_SelectGroup=Quarterly%20Filings
The Alt-A and Subprime tables seem to start around table 20-30. This information is from the FNMA PUBLIC FILINGS. Also, FNMA should have ZERO Alt-a and Subprime investments.
That is not what they do.
http://timhoward717.com/2014/07/24/setting-the-stage/comment-page-1/#comment-1447
Lawsuit Stunner: Half of Futures Trades in Chicago Are Illegal Wash Trades
By Pam Martens
July 24, 2014
Terrence Duffy of the CME Group Testifying Before the Senate on May 13, 2014
Since March 30 of this year when bestselling author, Michael Lewis, appeared on 60 Minutes to explain the findings of his latest book, Flash Boys, as “stock market’s rigged,” America has been learning some very uncomfortable truths about the tilted playing field against the public stock investor.
Throughout this time, no one has been more adamant than Terrence (Terry) Duffy, the Executive Chairman and President of the CME Group, which operates the largest futures exchange in the world in Chicago, that the charges made by Lewis about the stock market have nothing to do with his market. The futures markets are pristine, according to testimony Duffy gave before the U.S. Senate Agriculture Committee on May 13.
On Tuesday of this week, Duffy’s credibility and the honesty of the futures exchanges he runs came into serious question when lawyers for three traders filed a Second Amended Complaint in Federal Court against Duffy, the Chicago Mercantile Exchange, the Chicago Board of Trade and other individuals involved in leadership roles at the CME Group.
The conduct alleged in the lawsuit, backed by very specific examples, reads more like an organized crime rap sheet than the conduct of what is thought by the public to be a highly regulated futures exchange in the U.S.
The lawyers for the traders begin, correctly, by informing the court of the “vital public function” that is supposed to be played by these exchanges in “providing price discovery and risk transfer.” They then methodically show how that public purpose has been disfigured beyond recognition through secret deals and “clandestine” side agreements made with the knowledge of Duffy and his management team.
The most stunning allegation in the lawsuit is that an estimated 50 percent of all trading on the Chicago Mercantile Exchange is derived from illegal wash trades.
Wash trades were a practice by the Wall Street pool operators that rigged the late 1920s stock market, leading to the great stock market crash from 1929 through 1932 and the Great Depression. Wash trades occur when the same beneficial owner is both the buyer and the seller. Wash trades are banned under United States law because they can falsely suggest volume and price movement.
The lawsuit says Duffy and his management team are tolerating wash trades “because they comprise by some estimates fifty percent of the Exchange Defendants’ total trading volume and also because HFT transactions account for up to thirty percent of the CME Group’s revenue.”
The complaint indicates that the plaintiffs have a “Confidential Witness A,” a high frequency trader, who has given them a statement that wash trades are used by high frequency traders as part of a regular strategy to detect market direction and “to exit adverse trades when the market goes against their positions.”
The strategy works like this, according to the complaint:
“HFTs [high frequency traders] continuously place small bids and offers (called bait) at the back of order queues to gain directional clues. If the bait orders are hit, the algorithm will place follow-up orders to either accumulate favorable positions or exit ‘toxic’ risks, a process which leverages bait orders to gain valuable directional clues as to which way the market will likely move. The initial bait orders are very small while subsequent orders, once market direction has been identified, are very large. A portion of the large orders that follow the smaller bait orders are wash trades.”
Another very serious charge is that some of the defendants in the lawsuit who are in leadership roles in management at the futures exchanges, have “equity interests” in the very high frequency trading firms that are benefitting from these wash trades. The complaint states:
“The Exchange Defendants profit from the occurrence of wash trades and have a vested interest in not having more robust safeguards against them because they contribute significantly to the Exchange Defendants’ volume numbers and revenue. Were the volume of wash trades excluded from the Exchange Defendants’ volume and revenue numbers, the radically reduced volume numbers would exert adverse pressure on the CME Group’s stock price, not to mention the revenue to members of CME Group’s governance who have equity interests in participating HFTs in addition to stock ownership in the CME Group, Inc.”
In addition to wash trades, the lawsuit charges that the CME Group has entered into “clandestine” incentive agreements.
“Defendants have entered into clandestine incentive/rebate agreements in established and heavily traded contract markets with favored firms such as DRW Trading Group and Allston Trading, paying up to $750,000.00 per month in one of the most heavily traded futures contracts in the world. At no time during the Class Period have Defendants voluntarily revealed to the trading public that these material agreements exist in established markets. Defendants through their lawyers have repeatedly ridiculed the suggestion that clandestine agreements exist.”
The complaint identifies another “Confidential Witness B” who has provided information on “the existence of a clandestine rebate agreement between the CME and a very large volume HFT firm that trades in the S&P500 E-Mini contract.” That’s a stunning allegation since the S&P500 E-Mini was thought to be one of the most liquid contracts in the U.S. The complaint correctly notes that “there can be no economically justified reason, such as to develop thinly traded markets, that would justify the CME and CME Group to maintain clandestine incentive agreements in this particular market, other than the improper intent.”
Another trick to get an early peek at trading information is referred to in the complaint as the “Latency Loophole,” which “allows certain market participants to know that orders they entered were executed and at what price, and to enter many subsequent orders, all before the rest of the market participants found out the status of their own initial orders.”
The complaint explains that the ability to continuously enter orders and get trade confirmations “of the price at which these orders are filled, before the rest of the public even knows about the executed trades,” empowers high frequency traders with “a massive informational and time advantage in discerning actual price, market direction and order flow before anyone else.”
By providing just a select group of market participants and high frequency traders with this “sneak peek” advantage, says the complaint, the defendants engaged in a “fraud on the marketplace.”
The Justice Department and FBI have opened investigations into high frequency trading. Let’s hope that includes both stock and futures exchanges.
The traders bringing the lawsuit, which is filed as a class action, are William Charles Braman, Mark Mendelson and John Simms. Lawyers for the plaintiffs are R. Tamara de Silva, who maintains a private practice, and lawyers from O’Rourke & Moody.
The suit was filed in the U.S. District Court for the Northern District of Illinois. The Civil Docket for the case is #: 1:14-cv-02646 and has been assigned to Judge Charles P. Kocoras. The CME Group is represented by the law firm Skadden, Arps, Slate, Meagher & Flom, LLP.
http://wallstreetonparade.com/2014/07/lawsuit-stunner-half-of-futures-trades-in-chicago-are-illegal-wash-trades/
Click on the button you wanna chart
http://finviz.com/futures.ashx
And Here Is The Smoking Gun
The reason Treasury seized FnF. They needed a conduit to bailout the TBTF banks. This is why FnF had to take draws they didn't need.
http://www.bloomberg.com/apps/news?sid=aDjJYMSphyM0&pid=newsarchive
Fannie, Freddie to Buy $40 Billion a Month of Troubled Assets
By Dawn Kopecki - October 11, 2008 00:00 EDT
Oct. 11 (Bloomberg) -- Federal regulators directed Fannie Mae and Freddie Mac to start purchasing $40 billion a month of underperforming mortgage bonds as the Bush administration expands its options to buy troubled financial assets and resuscitate the U.S. economy, according to three people briefed about the plan.
Fannie and Freddie began notifying bond traders last week that each company needs to buy $20 billion a month in mostly subprime, Alt-A and non-performing prime mortgage securities, according to the people, who asked not to be identified because the plans are confidential. The purchases would be separate from the U.S. Treasury's $700 billion Troubled Asset Relief Program.
The Federal Housing Finance Agency, which placed the two companies in conservatorship on Sept. 7, directed them last month to start increasing their purchases of loans and mortgage-backed securities as the Treasury seeks to absorb underperforming and illiquid assets from financial companies.
``For now, they're under conservatorship and they have to be used to keep the flow of capital going to the housing market,'' former Treasury Secretary Lawrence Summers said in an interview on Bloomberg Television's ``Conversations with Judy Woodruff.'' ``They're important to maintaining the flow of government finance'' and need to be used actively, he said.
Adding underperforming assets to Fannie and Freddie's combined $1.52 trillion mortgage portfolios would come at a time when the two mortgage-finance companies already hold as much as $210 billion of bad debt that may be eligible itself for the Treasury's relief program, their regulator said Oct. 5.
A spokesman for Washington-based Fannie, Brian Faith, and Doug Duvall at McLean, Virginia-based Freddie wouldn't comment.
Overall Goal
Neither Fannie nor Freddie has turned a profit in the past year, accumulating $14.9 billion in combined quarterly losses, largely related to bad subprime and Alt-A mortgage assets.
FHFA spokeswoman Stefanie Mullin declined to comment on the details of the program. Treasury spokeswoman Jennifer Zuccarelli wasn't immediately available to comment.
``The overall goal of the program will be to contribute greater stability and liquidity in the mortgage market, which should enhance consumers' access to mortgage financing and ultimately result in reduced mortgage interest rates,'' FHFA Director James Lockhart said in a Sept. 19 statement.
Subprime loans were given to borrowers with poor or limited credit records or high debt burdens. Alt-A loans were made to borrowers who wanted atypical terms such as proof-of-income waivers, without sufficient compensating attributes. About 35 percent of subprime loans in non-agency mortgage securities are at least 60 days late, while 15 percent of Alt-A loans are, according to a Sept. 9 report by FTN Financial Capital Markets.
Growth
Non-agency, or private-label, bonds are issued by banks and don't carry guarantees by Fannie, Freddie or government-agency Ginnie Mae. Freddie held about $207 billion in non-agency debt in its $760.9 billion portfolio as of August, according to its latest monthly volume summary. Fannie had about $104 billion of such securities in its $759.9 billion portfolio in August.
Regulators initially restricted Fannie and Freddie's growth when they seized control of the government-sponsored enterprises Sept. 7. To ``promote stability'' and lower mortgage costs to borrowers, Treasury Secretary Henry Paulson said the two would be allowed to ``modestly increase'' their mortgage portfolios to as much as $1.7 trillion through the end of next year and said they would no longer be run ``to maximize shareholder returns.''
Less than two weeks later, Fannie and Freddie were told to ramp up their mortgage bond purchases as the financial crisis deepened and credit activity came to near standstill.
Fannie and Freddie which own or guarantee almost half of the $12 trillion U.S. home loan market, were given access to $200 billion in emergency Treasury financing as part of their rescue package. The companies may also be able to sell their bad debt to the Treasury through its $700 billion financial-rescue program signed into law Oct. 3.
FHFA has said the companies plan to release third-quarter results next month as scheduled. Analysts surveyed by Bloomberg project losses for both Fannie and Freddie at least through 2009.
To contact the reporter on this story: Dawn Kopecki in Washington at dkopecki@bloomberg.net.
To contact the editor responsible for this story: Emma Moody at emoody@bloomberg.net.
I Stand Corrected. Not Fired.
Seminole Red Member Level Friday, July 25, 2014 8:38:33 AM
Re: Bruce A Thompson post# 9749 Post # of 9757
the judge was not fired back in 2012, he's still on fox news, here's some more info....from 2012
What Didn't Get Judge Napolitano Fired
Monday, 13 February 2012 09:41 Staff
Don't believe everything you see on the internet folks. Unless of course, it's a Firefly episode synopsis on Wikipedia, those things are monitored like they're the Vatican's secret gold (not to be confused with the Vatican's publicly displayed gold).
A rumor has been circulating that Judge Napolitano has been fired from his job at Fox Business, following this rant against the two party system and the main stream media:
The rant is of course real, and Napolitano's show has been cancelled, but the claims that he was canned for the rant are unfounded. A similar rumor is going around that he was fired after an anti-Israeli rant in which he said that Israel is more dangerous to the US than Iran because Iran can't really attack us, while Israel can drag our forces into foreign wars. That is actually true. Iran isn't a military threat to the US, and defending Israel puts more American lives at risk. But, by the same logic, we put the police more at risk when we ask them to respond to domestic violence calls and foil bank robberies. They'd be safer guarding the police station. Safety just isn't the end of the inquiry.
Either way though, neither segment got Napolitano canned. The truth is that Fox Business has sacked its entire prime time line up, cancelling Power & Money with David Asman, and Follow the Money with Eric Bolling. Napolitano and the others have been kept on as contributors, so they weren't fired at all. They just lost their shows.
And, their shows weren't cancelled for their content, but rather the remarkably poor ratings. Fox Business News draws fewer than 50,000 viewers during prime time. By comparison, CNBC does close to 200,000, MSNBC does over 1 million, and Fox News is close to 2.5 million.
In a way, it's disappointing that Napolitano wasn't sacked for his views. Not that we think his views warranted a sacking, but rather that the entire question of whether to cancel a show or keep it on comes down to viewers, not the quality of the program. Fox Business, unlike it's more popular sibling, does a pretty decent job in terms of providing actual news and not being terribly hacky, and they get canned. At the same time, you'd probably get to keep a show on Fox News just by ranting about how Obama's in secret league with the Golden Golems to sell America to the abortionists. If that doesn't cut it, add in incoherent equations scribbling on a chalkboard and spend a full two minutes of the show blowing on a vuvuzela, that ought to add another 20,000 viewers.
http://www.constitutionaldaily.com/index.php?option=com_content&id=1473:what-didnt-get-judge-napolitano-fired
How Inconvenient
5 minute speech that got Judge Napolitano fired from FOX
5 minute speech that got Judge Napolitano fired from FOX
I Just read in the reports on Kitco website
That the biggest open interest expiry on the COMEX Monday is @ $1300 for gold. All of the reports seem to be in agreement for $1285 - $1300 to be the range until then.
In JDST @ $11.88 Gold Broke Support
I am seeing that JNUG and JDST
do not usually run in mirror tandem. For example, JNUG is down $2.65 right now but JDST is only up $1.10. What's that all about?
Made the change in Chrome and
It seems to be carrying over into IE.
See the Click to play arrow pointing to Content Settings
Click Content Settings and scroll down to Plugins
Only works in Google
Air Algerie Flight Reported Missing
Wall Street Journal? - 1 hour ago
Plane Flying From Burkina Faso To Algiers; 110 Passengers, Six Crew On Board
By CHRISTOPHER BJORK CONNECT
Updated July 24, 2014 6:24 a.m. ET
MADRID—An Air Algerie airplane traveling from Burkina Faso to Algiers with 110 passengers and six crew members on board was reported missing Thursday by the Spanish company that operated the plane.
The plane, a Boeing Co. BA -2.34% MD-83 model with flight code AH5017, was scheduled to land at 0510 GMT, but never reached its destination, Swiftair, the operator, said.
"Thus far, we have no contact with the airplane," Swiftair said in a statement. The plane was traveling from Ouagadougou, the capital of Burkina Faso, to Algiers, Algeria.
The Algerian government said in a statement that air controllers lost contact with the flight at 0155 GMT, about 50 minutes after takeoff, according to the Algerian Press Service, which added that the airline has launched an emergency plan.
All six crew aboard the Air Algerie airplane are Spanish nationals, Spanish radio network Cadena Ser reported, citing sources at Swiftair. Two of the crew are pilots and the others are cabin crew.
http://online.wsj.com/articles/spains-swiftair-loses-contact-with-air-algerie-flight-1406196420
How to stop streaming ads in Chrome
Go to Settings
In the Search Box, type: Click To Play
Follow the prompt
Scroll down to Plugins and enable Click To Play
Things will get quieter and faster on your machine.
How to stop streaming ads in Chrome
Go to Settings
In the Search Box, type: Click To Play
Follow the prompt
Scroll down to Plugins and enable Click To Play
Things will get quieter and faster on your machine.
Obama Gives ICE the Cold Shoulder
Sources say immigration agents believe the federal government is deliberately not giving them work.
By Ryan Lovelace..
President Obama is encouraging Immigration and Customs Enforcement officers to slack off on the job, former border cops tell National Review Online.
Some ICE officials think the Obama administration has intentionally neglected to give them orders to support efforts to resolve the crisis on America’s southwestern border, says Ronald Colburn, former national deputy chief of the U.S. Border Patrol. As a result, the wave of unaccompanied children from Central America is unfolding while ICE officials cool their heels.
“They’re sitting still at their desks — reading newspapers, playing video games on their government computers — because they’re not being tasked with work, and they feel like it’s coming all the way down from the top,” Colburn tells NRO. “These are guys that do want to go out more, but basically they’re not.” Colburn says some ICE agents go work out at the gym for four hours each day because they have little work to do. Meanwhile, he says, the Obama administration continues to “strangle” Border Patrol agents who must process and handle the latest flood of Central Americans rather than stand guard at the border.
Border Patrol agents are often referred to as “catchers” because they are tasked with apprehending and processing illegal aliens crossing the border. ICE Enforcement and Removal Operations officers are dubbed “removers” because of their added responsibility of deporting illegal aliens.
Dave Stoddard, executive vice president of the Law Enforcement Officers Advocates Council and a retired Border Patrol agent with several decades of experience on America’s borders, tells National Review Online that ICE agents have voiced their complaints with him about how little work they have to do. “These ICE officers are sitting, in some cases, in brand new offices, brand-new furniture and the telephone that never rings, and brand-new cars with no place to go,” Stoddard says. “They’re on the payroll and they need to entertain themselves or occupy themselves some way or other.” Stoddard says some officers review law books while others choose to hone their skills at the shooting range because of the light workload.
An ICE spokesperson declined to comment to NRO about this story.
Stoddard says every ICE agent, Border Patrol official, investigator, and law-enforcement officer he knows within the Department of Homeland Security feels “terrified” of speaking out and committing a violation of policy. He says his experiences have led him to believe that speaking out against the wishes of DHS officials often carries more immediate consequences from management than if an agent is suspected of committing a criminal act.
Some U.S. Customs and Border Protection officers include helpful reminders about such violations of policy in their written communications. One CBP e-mail obtained by NRO includes the command “Anyone who steals, knowingly converts to his use or the use of another, or without authority, sells, conveys or disposes of any record or thing of value to U.S. Customs and Border Protection shall be fined or imprisoned not more [than] ten (10) years pursuant to 18 USCS § 641.” After speaking out publicly about public-health risks associated with the illegal immigrants transported to the San Diego Sector, Border Patrol agent Ron Zermeno received a letter, obtained by NRO, saying “you must immediately cease and desist” from issuing statements and press releases to the media with information that is “Law Enforcement sensitive.” Now ICE officials, Border Patrol agents, and others in the federal government have begun to confide in their former colleagues.
Colburn says the agents who have approached him are frustrated and note that the bottleneck of Central Americans crossing into the U.S. has been made worse by the federal government. “According to my sources, it appears that this administration is causing that [bottleneck] on purpose,” Colburn says. “So they [the Obama administration] may be saying they’re trying to resolve it, but they’re doing something different. They need to put their actions where their mouths are.”
— Ryan Lovelace is a William F. Buckley Jr. Fellow at the National Review Institute. http://www.nationalreview.com/article/383279/obama-gives-ice-cold-shoulder-ryan-lovelace
FEC chair warns of chilling regulations, book ban on conservative publishers
BY PAUL BEDARD | JULY 23, 2014 | 3:42 PM
TOPICS: WASHINGTON SECRETS BOOKS PAUL RYAN FIRST AMENDMENT FEC MEDIA DRUDGE REPORT
The chairman of the Federal Election Commission today blasted Democratic colleagues opposed to his effort to protect conservative media after they imposed rules on the publisher of Rep. Paul Ryan's new book, opening the door to future book regulations -- or even a ban.
http://washingtonexaminer.com/fec-chair-warns-of-chilling-regulations-book-ban-on-conservative-publishers/article/2551197
Survey: Fewer than 1 in 5 better off because of Obamacare; many more worse off
BY BYRON YORK | JULY 23, 2014 | 4:00 PM
TOPICS: BELTWAY CONFIDENTIAL OBAMACARE CNN POLLS
Photo - (iStock)
(iStock)
Eighteen percent of Americans, or fewer than one in five, say they or someone in their family is better off because of the Affordable Care Act, according to a new poll by CNN. Nearly twice that number, 35 percent, say they or someone in their family is worse off. A larger group, 46 percent, say they are about the same after Obamacare as before.
In nearly all demographic categories — age, income, education, etc. — more people say they are worse off because of Obamacare than say they are better off.
For example, one might expect respondents with incomes below $50,000 to be somewhat likely to say Obamacare has helped them. And that is the case: 21 percent say they are better off because of the Affordable Care Act. But 35 percent say they are worse off. (Forty-four percent are the same.)
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Likewise, one might expect young respondents to report benefits from Obamacare. And they do: 23 percent say they're better off. But 33 percent say they're worse off. (Forty-three percent are the same.)
In other categories, the gap between better off and worse off is larger. In just one demographic group, nonwhites, is the group of those who say they are better off, 29 percent, bigger than the group who say they are worse off, 17 percent. (Fifty-four percent say they are the same.)
CNN also asked a slightly broader question, in which in addition to asking if the respondent or his family is better off, the question also asked if "other families in this country" are better off because of Obamacare. Thirty-five percent of respondents said that other families are better off, while 44 percent said Obamacare has "not helped any families." It's not clear if those answers were based on personal knowledge, news reporting, ideology, or some other factor, so for that reason, the information doesn't seem nearly as valuable as the straight question of whether the respondent or a family member is better off.
The CNN numbers are basically consistent with other surveys. The most recent Kaiser Family Foundation poll, for example, found that 18 percent said that they or their family were better off because of Obamacare, while 26 percent said they were worse off and 53 percent reported no difference.
Numbers like those in the CNN poll are always subject to partisan interpretation. For example, Obamacare supporters could add the 18 percent who are better off with the 46 percent who are the same and argue that 64 percent are better off or the same after Obamacare. The law's opponents could add the 35 percent who are worse off to the 46 who are the same and argue that 81 percent are worse off or the same. But the basic better off-worse off number is as solid an indicator as we have of how many people Obamacare is helping or hurting. And if the polling is correct, Obamacare is leaving more people worse off than better off. http://washingtonexaminer.com/survey-fewer-than-1-in-5-better-off-because-of-obamacare-many-more-worse-off/article/2551199
JNUG Taking It In The Snoot This Afternoon
Shoss, Now Age 70 Homeless And No Job.
http://www.bop.gov/inmateloc/
ROGER LEE SHOSS
Register Number: 99006-179
Age: 70
Race: White
Sex: Male
Released On: 01/14/2014
It Gets Better
When he gets out of prison he will be homeless.
Order finds that a final forfeiture money judgment, in the amount of $800,000, was also entered and that a final order of forfeiture was entered for Shoss's residence in Houston, which was purchased with proceeds traceable to the wire fraud conspiracy.
http://www.floridastockfraudblog.com/2012/09/roger-l-shoss-esq---conspiracy-to-commit-wire-fraud.shtml
Second Attorney Goes To Prison For His Part In The Scam
Disbarred: http://txboda.org/cases/re-roger-lee-shoss
Gets 18 months in Federal Prison
Attorney Goes To Prison For Her Part In The Scam
That case was decided on December 20, 2012, and Loisel was subsequently sentenced to 12 months and one day in federal prison, followed by three years’ probation.
The Curious Case of Irwin Boock l Corporate Hijackings 101
Posted on April 9, 2014 by securities-lawyer-101 Leave a Comment
Securities Lawyer 101 Blog
The Irwin Boock corporate hijacking case is a gift that keeps on giving. The Securities and Exchange Commission (“SEC”) brought its original action against Boock and his associates in September 2009; since then several parallel actions have been filed. On September 27, 2013, the SEC announced that Nicolette Loisel, a Houston-area attorney, had agreed to settle. Loisel had been charged with hijacking 22 dormant public companies (along with the other original defendants) and with writing 28 legal opinion letters falsely stating that offerings of approximately 223 million shares were exempt from the registration requirements of the federal securities laws.
She agreed to accept a permanent injunction from violating antifraud provisions and was barred from participating in any penny stock offering. Disgorgement of $143,755 was ordered but waived due to the her financial condition. She had previously been suspended from practicing before the Commission as an attorney. The suspension stemmed from a criminal prosecution brought against her in Florida by the Department of Justice in connection with the hijackings.
That case was decided on December 20, 2012, and Loisel was subsequently sentenced to 12 months and one day in federal prison, followed by three years’ probation.
Corporate hijackings are more common than many market observers realize. Scammers locate an inactive public company that has allowed its corporate charter to lapse. They may then simply pay a small fee to reinstate the company in its state of domicile, and convince the transfer agent that they are the legitimate management of the company. Alternatively, they may bring fraudulent custodianship or receivership actions to gain control through an order granted by a state court judge. Either way, they then either sell the public shell in a reverse merger transaction, use it in a pump and dump scheme, or both.
The various actions against Boock and his accomplices began in October 2008, when the Ontario Securities Commission (“OSC”) filed a Statement of Allegations and scheduled a hearing. The SEC followed up a year later, filing suit against Boock, Stanton B. J. DeFreitas, Loisel, her parter Roger Lee Shoss, and Jason C. Wong on September 29, 2009. Boock dreamed up the scheme in late 2003, and recruited Shoss and Loisel to handle the paperwork. That, according to the SEC, consisted of false documentation to Secretaries of State, the Standard & Poor’s CUSIP Service Bureau, transfer agents, and Nasdaq Corporate Data Operations. They also provided fraudulent opinion letters.
This hijacking operation was more complex than most. Boock (who was born Irwin Lawrence Krakowsky), is, like Wong and DeFreitas, a Canadian citizen. In the course of the scam, all three used a variety of aliases, and even “borrowed” the names of real people. Boock was a recidivist securities laws violator; he and his wife Birte were sued by the SEC in 2000, in connection with another penny stock scam. Birte Boock was a relief defendant in the 2009 case.
The perpetrators even created their own transfer agency, Select American Transfer Company, to ensure that no questions would be asked by a suspicious independent transfer agent.
In late September 2008 the SEC obtained judgments against Boock, DeFreitas and Wong. Boock and DeFreitas had defaulted; the agency won summary judgment against Wong in 2011. Despite DeFreitas’s default, he had cooperated with Commission staff during the litigation, and so received a lesser penalty than Boock. Disgorgement and monetary penalties were ordered in the amount of $12.9 million.
On September 16, 2013, the SEC was granted summary judgment against a relief defendant, Alena Dubinsky. Dubinsky opened brokerage accounts in her name through which some of the other defendants made unregistered sales of stock. She was ordered to pay disgorgement and prejudgment interest of $1,085,495.55.
Both investors and companies considering going public in a reverse merger transaction should be aware that the SEC is cracking down on hijacking operations like Boock’s. Buying stock in a hijacked company could result in heavy losses when an enforcement action is brought, because the issue would be demoted to the Grey Market, where it would die a slow and painful death.
For further information about corporate hijackings and reverse mergers, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202N, Boca Raton Florida, (561) 416-8956, info@securitieslawyer101.com or visit www.securitieslawyer101.com. This memorandum is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information concerning the rules and regulations affecting the use of Rule 144, Form 8K, FINRA Rule 6490, Rule 506 private placement offerings, Regulation A, Rule 504 offerings, SEC reporting requirements, SEC registration on Form S-1 and Form 10, Pink Sheet listing, OTCBB and OTCMarkets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, go public direct transactions and direct public offerings please contact Hamilton and Associates at (561) 416-8956 or info@securitieslawyer101.com. Please note that the prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.SecuritiesLawyer101.com
http://www.securitieslawyer101.com/irwin-boock/
"I still feel safe and secure, but change at this age is always hard"
Really? You live behind bars and feel safe? Safer than what?
I guess everything is relative.
Those links are to deny, deny, deny Articles.
They say that illegal immigration arrests are the lowest since 2000.
A simple read would lead one to believe that everyone else is lying and there is no immigration crisis at all.
Then, why are they shipping illegal immigrants all over the country by the bus and plane loads?
Why is the Border Patrol saying publicly that they cannot patrol the border because they are too busy changing diapers?
No. I think that if you read the article closely, you will see that the word arrests is the keyword.
They are too busy feeding them and processing food stamp cards to arrest them.
Nice numbers. But.................
The most recent numbers you show are for 2012.
Jacksonville Police dept
3200 officers. Less than 400 on duty weeknights. Can take as long as an hour to respond to a major accident with injuries on I-10 near Stockton St. ( I know this from being in the rescue business in North Florida)
http://en.wikipedia.org/wiki/Jacksonville_Sheriff's_Office
Atlanta Police Dept
2,000 officers. About 700 on duty at any given time.
http://en.wikipedia.org/wiki/Atlanta_Police_Department
100,000 armed illegal alien gang members gotta go somewhere.
Sleep tite Atlanta.
Yup
Got out of JNUG @ $28.25 yesterday.
And he thinks he can get through Terminator Labs
Security?
He better bring his lunch.
Did you tell him
It was a head shot on that squirrel from 40 feet away with a hand cannon?
We are talking about a 50 cent piece sized target with a 44 mag.
He might want to know that before he gets here. (g)
FHFA Can't Stop Hedge Fund Probe of GSE Dividend Plan, Judge Says
BY BRIAN COLLINS
JUL 22, 2014 6:35pm ET
Fannie, Freddie Warn They Are Running 'With No Cushion'
Profitable Fannie Mae Crosses Bailout Threshold with 4Q Dividends
Freddie Reports Sixth Consecutive Profitable Quarter
A federal judge has directed regulators to stop blocking a hedge fund from conducting discovery into the government's decision to sweep Fannie Mae and Freddie Mac's profits in the coffers of the U.S. Treasury.
In making her decision, U.S. Court of Federal Claims Judge Margaret Sweeney dismissed objections raised by the Federal Housing Finance Agency.
"The FHFA cannot evade judicial review simply by invoking its authority" as the conservator of the two government-sponsored enterprises, she said.
"This ruling is a clear indication from the court that the discovery process will continue," crowed Tim Pagliara, executive director of Investors Unite, a group representing private shareholders of the GSEs whose investments were diluted in the 2008 government takeover. "Investors deserve to know when the U.S. Treasury knew that Fannie and Freddie would become profitable and how that factored into their decision-making process" regarding the sweep.
When the GSEs were placed in conservatorship in September 2008, Fannie and Freddie started to pay a 10% dividend on their borrowings from the U.S. Treasury. As the GSEs recovered financially, Treasury decided to amend the conservatorship agreements in August 2012 and sweep all their profits, leaving each GSE with a $3 billion buffer.
Freddie Mac ended 2012 with a net worth of $8.8 billion. But as part of the new conservatorship agreement signed in August of that year, it made a $5.8 billion payment to the Treasury in March 2013. These quarterly sweeps continue to this day.
In March 2014, Fannie made a $7 billion dividend payment to Treasury and Freddie made a $10 billion dividend payment.
Fairholme Capital Management and Investors Unite claim Treasury's decision to sweep the GSE profits constitutes a taking of dividends owed to Fannie and Freddie shareholders.
The claims court granted the hedge fund discovery rights in February. But the FHFA continued to object on the grounds that the Housing and Economic Recovery Act of 2008 bars the court from taking any action to restrain or affect the powers and functions of FHFA as a conservator.
Judge Sweeney brushed that argument aside.
"There is no request by the plaintiffs that would potentially restrain or affect the exercise of powers or functions of the FHFA as conservator," Sweeney said in a July 16 opinion and order.
The FHFA declined to comment the decision.
The judge limited initial discovery to two time periods: April 1, 2008 through December 2011 and June 1, 2011 through Aug. 17, 2012.
She also directed the GSE regulator to prepare a detailed log of any materials the FHFA considers privileged and wants to exclude from the discovery process http://www.nationalmortgagenews.com/news/regulation/fhfa-cant-stop-hedge-fund-probe-of-gse-dividend-plan-judge-says-1042193-1.html