Street Crime is Down - White Collar Crime is UP

The good news is that street crime is down. A recent study attributes the decrease in street crime to the fact that people carry less cash nowadays. According to the National Bureau of Economic Research (NBER) Working Paper: Less Cash, Less Crime: Evidence from the Electronic Benefit Transfer Program (No. 19996, 3/14) crimes have decreased since the 1990s due to welfare recipients using debit cards instead of receiving checks or paper food stamps. Cash benefits, child support payments, and food stamps are all automatically loaded onto an EBT card, no cash in the process. The abstract for that paper states:

"It has been long recognized that cash plays a critical role in fueling street crime due to its liquidity and transactional anonymity. In poor neighborhoods where street offenses are concentrated, a significant source of circulating cash stems from public assistance or welfare payments. In the 1990s, the Federal government mandated individual states to convert the delivery of their welfare benefits from paper checks to an Electronic Benefit Transfer (EBT) system, whereby recipients received and expended their funds through debit cards. In this paper, we examine whether the reduction in the circulation of cash on the streets associated with EBT implementation had an effect on crime."

Attributing the decline in crime to less cash, is a new perspective. Law enforcement and social scientists have explained the decrease in crime in a number of other ways.

One of the reasons often cited for the decline in crime is that we lock up so many people nowadays. According to the Prison Policy Initiative - "Looking at the big picture requires us to ask if it really makes sense to lock up 2.4 million people on any given day, giving us the dubious distinction of having the highest incarceration rate in the world."

Another piece of the puzzle is that we now have far more laws than in the past. People can break a law that they never new existed, and find themselves behind bars. The old saying, ignorance of the law is no excuse, no longer applies. Nobody knows all the laws. According to an article in The Economist:

"The number of federal laws has risen from 3,000 in the early 1980s to over 4,450 by 2008. Many of these have poor intent requirements, meaning people are being locked up not to keep the rest of society safe, but for technical violations of laws they may not have known existed."

If the pace of law creating has continued, then, now in 2014, we have double the number of laws as we did in the 1980s. And we are only counting federal laws. State and local law makers also have to justify their existence by continuing to create and pass more and more laws everyday.

More prisons and jails. Follow the money. The cheapest labor anywhere, even less than third world countries is found right here in America at the Gray Bar Hotel. There are now over 100 private prisons in the United States. Quoting an article about the prison industry in general:

"The prison industry complex is one of the fastest-growing industries in the United States and its investors are on Wall Street. “This multimillion-dollar industry has its own trade exhibitions, conventions, websites, and mail-order/Internet catalogs. It also has direct advertising campaigns, architecture companies, construction companies, investment houses on Wall Street, plumbing supply companies, food supply companies, armed security, and padded cells in a large variety of colors.”

According to the Left Business Observer, the federal prison industry produces 100% of all military helmets, ammunition belts, bullet-proof vests, ID tags, shirts, pants, tents, bags, and canteens. Along with war supplies, prison workers supply 98% of the entire market for equipment assembly services; 93% of paints and paintbrushes; 92% of stove assembly; 46% of body armor; 36% of home appliances; 30% of headphones/microphones/speakers; and 21% of office furniture. Airplane parts, medical supplies, and much more: prisoners are even raising seeing-eye dogs for blind people."

And THAT was the good news. The bad news is that although street crime, crime for cash is down. White collar crime is thriving. The stats presented below are not recent. However, the rate of increase seems to be similar or accelerated since the 1990s. This is an excerpt from a early 2000s article on the National White Collar Crime Center's website (NW3C):

"White collar crime is a term that is applied to nonviolent crimes committed in business situations by individuals, groups or corporations for the purpose of financial gain. Most white collar crimes are associated with some type of fraud, often involving a lending institution, such as a bank or insurance agency.

Examples of white collar crime include: antitrust fraud, bankruptcy fraud, bribery, computer fraud, credit card fraud, counterfeiting, embezzlement, identity fraud, insider trading, insurance fraud, kickbacks, money laundering, obstruction of justice, perjury and price fixing.

White collar crime is steadily on the rise, thanks to our technologically advancing society, which relies on the increased use of cellular phones and computers to access personal and financial information. The National White Collar Crime Center (NW3C), a nonprofit agency that supports state and local police in their efforts to prevent, investigate and prosecute economic and high-tech crime, reports that while arrests for violent crimes have decreased in recent years, arrests for white collar crimes - especially fraud and embezzlement - have increased.

The rise in white collar crime incidents has also contributed to a rise in cost to the nation. According to National Fraud Center statistics, the cost of economic crime has risen from $5 billion in 1970 to $100 billion in 1990, and is only expected to increase as occurrences become more frequent. ....

Statistics from NW3C also approximate that one in three households is the victim of white collar crime, yet of these, only 41 percent report the incident. Of the small number reported, only 21 percent are handled by a law enforcement or consumer protection agency."

Corporate crime inflicts far more damage on society than all street crime combined. Whether in bodies or injuries or dollars lost, corporate crime and violence wins by a landslide.

The FBI estimates, for example, that burglary and robbery -- street crimes -- costs the nation $3.8 billion a year.

The losses from a handful of major corporate frauds -- Tyco, Adelphia, Worldcom, Enron -- swamp the losses from all street robberies and burglaries combined.

Health care fraud alone costs Americans $100 billion to $400 billion a year. The savings and loan fraud -- which former Attorney General Dick Thornburgh called "the biggest white collar swindle in history" -- cost us anywhere from $300 billion to $500 billion.

Recent White Collar Crime Stats

The latest available data from the Justice Department show that during January 2014 the government reported 561 new white collar crime prosecutions. According to the case-by-case information analyzed by the Transactional Records Access Clearinghouse (TRAC), this number is up 0.5% over the previous month.

The largest number of prosecutions of these matters in January 2014 was for "Fraud-Financial Institution", accounting for 15 percent of prosecutions. Prosecutions were also filed for "Fraud-Other" (15%), "Fraud-Tax" (14.1%), " Fraud-Identity Theft-Aggravated" (13.2%), "Fraud-Federal Program" (9.6%), "Fraud-Identity Theft-Other" (7.8%), "Fraud-Health Care" (6.2%), "Fraud-Other Business" (3.6%), "Fraud-Computer" (2.7%), "Fraud-Telemarketing" (2.1%).

Remember, only a small percentage of white collar crime is even reported. And a scant 21% of the reported crimes are ever prosecuted.

In an article by Ben Steverman "Why Drug Lords and Criminals Are SoRisk-Averse" on Bloomberg.com, "convicted felon Sam E. Antar says stock-picking -- trusting in people and numbers you can’t directly verify -- sets you up as a mark for the unscrupulous. Antar was the chief financial officer of Crazy Eddie, Inc., an electronics chain led by Sam’s cousin, Eddie Antar. The chain collapsed under the weight of its fraud in 1989. “Investors live on hope and it’s the criminal’s job to take advantage of that hope,” Antar says:

'If I wanted to be a scam artist today, I could be very, very successful,” he says. “I’d probably have less risk of being prosecuted and far less risk of going to prison.'

So do you think that the worldwide mortgage crisis is the result of sloppy paperwork? Far more harm is done to consumers by a thief with a briefcase than by an army of purse snatchers.

Wall Street Owns the Country

Wall Street Owns The Country

A Speech by Mary Elizabeth Lease (circa 1890)

"This is a nation of inconsistencies. The Puritans fleeing from oppression became oppressors. We fought England for our liberty and put chains on four million of blacks. We wiped out slavery and our tariff laws and national banks began a system of white wage slavery worse than the first. Wall Street owns the country. It is no longer a government of the people, by the people, and for the people, but a government of Wall Street, by Wall Street, and for Wall Street. The great common people of this country are slaves, and monopoly is the master. The West and South are bound and prostrate before the manufacturing East. Money rules, and our Vice-President is a London banker. Our laws are the output of a system which clothes rascals in robes and honesty in rags. The [political] parties lie to us and the political speakers mislead us. We were told two years ago to go to work and raise a big crop, that was all we needed. We went to work and plowed and planted; the rains fell, the sun shone, nature smiled, and we raised the big crop that they told us to; and what came of it? Eight-cent corn, ten-cent oats, two-cent beef and no price at all for butter and eggs-that's what came of it. The politicians said we suffered from overproduction. Overproduction, when 10,000 little children, so statistics tell us, starve to death every year in the United States, and over 100,000 shopgirls in New York are forced to sell their virtue for the bread their niggardly wages deny them... We want money, land and transportation. We want the abolition of the National Banks, and we want the power to make loans direct from the government. We want the foreclosure system wiped out... We will stand by our homes and stay by our fireside by force if necessary, and we will not pay our debts to the loan-shark companies until the government pays its debts to us. The people are at bay; let the bloodhounds of money who dogged us thus far beware."

And so it goes ...

$864 Million Bank of America Fine a Fraction of Damage Done

Today, November 9, 2013, reported on Reuters, the U.S. government urged that Bank of America pay $863.6 million in damages after a federal jury found Bank of America liable for fraud over defective mortgages sold by its Countrywide unit. The case centered on a mortgage lending process at Countrywide, which Bank of America bought in July 2008, known as the "High Speed Swim Lane," or alternatively "HSSL" or "Hustle." Government prosecutors said Countrywide's program emphasized and rewarded employees for the quantity rather than the quality of loans produced, and eliminated checkpoints designed to ensure that loans were sound. The Hustle case, like some other financial crisis cases recently pursued by the government, was brought under the Financial Institutions Reform, Recovery, and Enforcement Act, a law passed after the 1980s savings-and-loan scandals.

The lawsuit is the first government case to go to trial over the faulty mortgage practices that led to the 2008 financial crisis.

A new wave of claims against financial institutions and rating agencies could breathe new life into an old law. Federal prosecutors have turned to the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA). FIRREA is a civil anti-fraud law passed in the wake of the savings and loan crisis.

FIRREA was passed, in part, to “enhance the regulatory and enforcement powers of Federal financial institutions’ regulatory agencies.” The obvious precedent event was the Savings & Loan Crisis that caused billions of dollars in losses to investors and federally insured deposit funds. Read more about FIRREA

Net income is what remains of a company's revenue after subtracting all costs. It is also referred to as net profit, earnings, or the bottom line. Net Income that is not paid out in dividends is added to retained earnings. On October 16, 2013 Bank of America Corporation reported net income rose to $2.5 billion in the third quarter of 2013 from $340 million in the year-ago quarter.

I admit that $864 million sounds like a lot of money, a whopping fine. But when you do the math, its not much. The proposed fine resulting from the FIRREA based law suit I mentioned, represents only .345% of Bank of America's most recent quarterly net. One quarter, Q3 only. Less than 1% of one quarter's net. How bad is that slap on the hand going to hurt?

According to RealtyTrac.com - November 2013.

Although many media types continually speak of the foreclosure crisis, and the world financial crisis in the past tense. We are not past it. The nightmare continues. There are currently 1,254,701 properties in U.S. that are in some stage of foreclosure. In September, the number of properties that received a foreclosure filing in U.S. was 2% higher than the previous month.

According to an article published in Huffington Post in May 2013, Americans lost $192.6 billion in wealth, or an average of $1,700 per household, in 2012 due to foreclosures. The article also stated that the U.S. could lose $221 billion more within the next year if officials don't come to the aid of millions of borrowers who owe more on their homes than they're actually worth.

And in the Fall 2012 issue of "Democracy, A Journal of Ideas", declared that wealth stripping has increased during the economic crisis. Since the onset of the Great Recession, Americans have lost $7 trillion in equity in their homes. The Federal Reserve estimates the median American family has lost nearly two decades of wealth, or almost 40 percent of their assets. In a separate report, the Pew Research Center estimates that Latinos, Asians, and African Americans have experienced wealth losses of 66 percent, 54 percent, and 53 percent respectively, compared to 13 percent for whites. These losses are largely due to home foreclosures and lost equity.

So, no, less than 1% of one quarter earnings as a fine for Bank of America is not nearly enough to put a dent in the damage done.

4 Reasons to Contest a Will

Despite what you see on TV, there are only four limited grounds on which to contest a will:

• The will wasn't signed in accordance with state law. If a will fails to meet the very stringent execution standards, then it won't be deemed to be a will. If it's not a will, it can't transfer your property at death. This has led to many people believing that they have a perfectly valid estate plan-but instead leaving their heirs in for an unpleasant surprise because the will wasn't executed properly. 
  
  
• Lack of testamentary capacity. This invalidates a will on the grounds that the person executing the will was incompetent to do so at the time they did it. You most often see this issue raised regarding an older person who modifies their will and removes some people who were beneficiaries under a prior will. The fact of the matter is that the level of capacity required to execute a will isn't very high; it's actually lower than the level of capacity needed to execute a contract. In essence, in order to be competent to execute a will, a person needs to know (1) the nature and value of their assets, (2) who would receive their assets if they didn't have a will, and (3) the legal effect of signing the will. Someone would have a long road ahead of them to prove you didn't have the capacity to execute your will. It's hard to come by historic evidence of lack of capacity. 
  
  
• Undue influence. This is the biggie when it comes to will contests. The issue is that if a person is in a confidential relationship with you, then the person might be able to cause you such duress about your will that you lose your independence of thought process. What if you rely on one of your daughters to cook and clean for you, and she hints that unless she gets the house, she won't be able to continue helping you? Or, what if a hired caregiver threatens to withhold your medication unless you change your will to benefit them? Or, perhaps your nephew helpfully drives you to his attorney to create a new will, which just happens to leave everything to him. When a will has unequal distributions, or distributions to non-family members, a court is reasonably concerned that the will was created out of fear that the favored beneficiary would cease caring for or even harm the person making out the will. Nine months before you died, were you threatened into changing your will to name your caregiver as the primary beneficiary? Or has your caregiver helped you for eight years, you don't see your relatives, and you just got around to making out your will nine months before you died? 
  
  
• Fraud. You give a person a contract to sign, and it turns out someone slipped a will into the document and the person didn't know they were signing a will. The will is invalid because it clearly isn't an expression of the person's intent. Another fraudulent situation is where somebody slips pages into the middle of the will. This is why best practices dictate that the person making out a will or revocable trust initial each and every page.
  

American Dream to American Nightmare

Homeowners facing foreclosure face a gamut of challenges and emotions. Many cannot afford an attorney or they would not be in foreclosure in the first place. And, oh so many, were told when they first bought or refinanced back during the boom years -- don't worry you can re-fi in two years and get out from under that adjustable rate mortgage (ARM) - get out from under that ARM that is tied to the mysterious LIBOR which was manipulated anyway and which caps the adjustable rate at some outrageous rate as much as 15%. People bought the lie and bought the line. After all, property values were going up and up, why couldn't they re-fi in a couple of years, cash out the old equity and get a fixed rate. Oops there go the goal posts. Now way way over there. This strategy worked for a while, as all good Ponzi schemes do. The homeowners who jumped on fast, and then jumped off the merry go round, made some money. It's the people who didn't jump off fast enough that got run over, and it's still happening. Lots of homeowner roadkill.

Homeowners in foreclosure feel shame. Shame that they are unable to pay their mortgage, and shame that they fell for it. Most scams are under reported because the victims are ashamed. They berate themselves that they should have known better.

The Ponzi Scheme

If current events have proven anything, it’s that there is no more potentially profitable con game than the Ponzi scheme. The trick dates back hundreds of years, but it was popularized by Charles Ponzi, an Italian immigrant to the U.S. who swindled investors out of millions in the early 1900s before being arrested. The modern Ponzi scheme is a form of investment fraud in which a fake or corrupt stockbroker uses the money of his new investors to pay the imaginary returns of his old ones. Initial investments with the fake broker might yield enormous returns for the people being conned, but in reality their money has not been invested in anything–the con man has simply been putting it all into a bank account. Any time someone wants to withdraw money, or if he has to pay the returns of his old investors, the con man simply uses the money he’s gotten from new investors to do it. Nothing is actually being invested, won, or lost in the market. The con man is simply giving that impression so that people keep handing over more and more cash. Because it can only grow so far, any Ponzi scheme is destined to eventually collapse under its own weight, so the con man usually pulls a disappearing act after collecting enough money, leaving the investors with nothing but the fake returns they received to keep them involved in the swindle. Undoubtedly the most famous recent example involved Bernard Madoff, a New York financier who engineered a Ponzi scheme estimated to be in the neighborhood of $65 billion. Madoff was eventually caught and sentenced to 150 years in prison, but not before pulling of what is essentially the biggest con game of all time.

Sound Familiar?

Maybe not yet, stay with me. The picture becomes more clear the more you learn about this huge scam being perpetrated by the too big to fail banks. You go to buy a house. Like most Americans, you expect to put money down and get a mortgage on the house. That's how it has always been done. When you go to the closing table you sign the mountain of documents that are briefly explained, but there is no time to read the documents. And no time to absorb or question the brief explanation. So you sign. Somewhere in that mountain of paperwork, sign sign signing, is the agreement and acknowledgment that this lender may sell and transfer the debt to another entity, shall I say lender? Problem is, it isn't really a lender, it is a trust, a pooling service agreement. At the time, you don't really care, because all you're trying to do is close on this house and take possession. Even if some of the paperwork doesn't seem quite right or you don't understand it, you let it go. We all did. You think, if you question it at all, is that you have protections. There are laws that protect home buyers from fraud. The mortgage industry must have rules and standards to protect buyers. This is America.

You live your life. A month or more after buying you get a letter stating that the original lender transferred the debt or the servicing to another company. The letter includes assurances that the terms of your debt remain the same. You continue to pay the same monthly amount, the only difference is that you send your payments to a new address. Life goes on.

And life has a way of bringing on life events. Maybe you get sick. Maybe your spouse gets sick. Maybe your spouse dies. Maybe you lose your job. Maybe this country experiences the worst economic down turn since the Great Depression. And then, your ARM resets.

What you didn't know, behind the scenes, is that when your original "lender" transferred their interest in your property to another entity, your debt morphed into an Asset Backed Security, a bond, a security theoretically to be sold on Wall Street.

The lenders and the servicers were busy selling these securitized debt instruments all over the world. They gleefully sold the paper -- over and over. And that debt, in many cases, was never actually placed in any trust or pooling service agreement. They sold these as more like a potential asset, a position, and investors bought. The higher the risk the more the return. As long as new "mortgages" were created money was flowing. The investors were paid. Paid over and over handsomely. But when the financial crisis hit the world, sometime around 2008, and homeowners began defaulting on their mortgages, and it became clear that the asset backed securities were based on loans that had been misrepresented and the asset backed securities that had supposedly been put into trusts were never transferred correctly and homeowners ARMs reset - the s**t hit the fan.

The bottom tier of the Ponzi scheme failed. The house of cards tumbled.

And this just in:

Hey friend,

INCREDIBLE: The Justice Department has evidence JP Morgan Chase committed major banking fraud - but instead of filing criminal charges, they're *negotiating* with them to settle for a small fraction of the damage they did.

Tell the Department of Justice that negotiating with criminals on their own punishment is unacceptable. America is tired of Chase paying fines. We need Chase doing Time:

http://other98.com/dont-negotiate-with-chase-prosecute-them

Thank you for doing the right thing.