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Category: Fraud

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Kelo vs. New London revisited
By Brynn Jacobs on November 10th, 2009

Kelo vs. New London revisited

Remember the case of Kelo vs. New London? Briefly, it was a case in which homeowners including Susette Kelo sued their municipality to stop it from taking their homes using the power of eminent domain. The city wanted to raze the homes and redevelop the area, making it shiny and new to complement the anticipated Pfizer pharmaceutical research facility. After all, one musn’t allow the shabby dwellings of the peasantry to mar the image of success and corporate uniformity that one is trying to project:

So, the politicians picked a 24-acre lot and sold it Pfizer for $10, adding on special tax breaks. Also, state and local governments promised $26 million to clean up contamination on the lot and a nearby junkyard.

But Pfizer executive David Burnett thought New London needed to do some more cleaning. “Pfizer wants a nice place to operate,” the Hartford Courant quoted Burnett in 2001. “We don’t want to be surrounded by tenements.” The old Victorian houses in the Fort Trumbull neighborhood next door did not match Pfizer’s vision - a high-rise hotel or luxury condominiums would be more fitting.

Corruption • Court Decisions • Current Events • Fraud
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By Erich Vieth on October 28th, 2009

Bond raters hiding behind First Amendment

This is insanity: The bond raters, those three big Wall Street companies that rated crappy mortgages to be great investments, thereby plunging the country into economic chaos, are hiding behind the First Amendment. They are claiming that they can’t be sued for the financial equivalent of calling a mouse an elephant, because their work product is just an “opinion.” We charge millions of dollars for giving you a rating, and you can’t hold us accountable because it’s an “opinion.”

I’ll tell you this: I work as a lawyer. If a screw up someone’s case because I give him bad advice (in return for charging her a fee), she could (rightfully) sue me for malpractice. If I raised the defense that I can’t be sued for terrible advice because it was merely “an opinion,” I’d be laughed out of court with an adverse judgment tattooed onto my forehead. That the courts aren’t letting these ratings firms get hammered makes you wonder whether the unspoken defense is “too big to fail.” If they didn’t have this ridiculous “First Amendment” defense, the smug and irresponsible raters would be ripped apart by millions of justifiably irate plaintiffs.

And, of course, Congress is in no hurry to beat back the ratings firms’ lobbyists and hold these jokers accountable for all of the 401K’s they’ve trashed.

Economy • Featured • Fraud • Law
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By Brynn Jacobs on October 23rd, 2009

More questions on the reliability of voting machines

Sequoia voting machines has been troubled by allegations of vote irregularities before. (see here, here and here for typical examples). Now Slashdot is reporting that a new analysis of the computer code used by these machines indicates there is probably some truth to the allegations.

The existence of such code appears to violate Federal voting law: “Sequoia blew it on a public records response. … They appear… to have just vandalized the data as valid databases by stripping the MS-SQL header data off, assuming that would stop us cold. They were wrong. The Linux ’strings’ command was able to peel it apart. Nedit was able to digest 800-MB text files. What was revealed was thousands of lines of MS-SQL source code that appears to control or at least influence the logical flow of the election, in violation of a bunch of clauses in the FEC voting system rulebook banning interpreted code, machine modified code and mandating hash checks of voting system code.”
Of course, this barely rises to the level of news in the formerly democratic USA.

Fraud • Politics • computers
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By Erich Vieth on October 12th, 2009

William Black’s five fatal flaws of finance

William Black is a white-collar criminologist who has written a compelling account of how the bloated parasitic financial sector is ruining America in his recent post at Huffpo. These are Black’s five “fatal flaws” of finance:

1. The financial sector harms the real economy. Even when not in crisis, the financial sector harms the real economy. First, it is vastly too large.

2. The financial sector produces recurrent, intensifying economic crises here and abroad.

3. The financial sector’s predation is so extraordinary that it now drives the upper one percent of our nation’s income distribution and has driven much of the increase in our grotesque income inequality.

4. The financial sector’s predation and its leading role in committing and aiding and abetting accounting control fraud combine to: A) Corrupt financial elites and professionals, and B) Spur a rise in Social Darwinism in an attempt to justify the elites’ power and wealth.

5. The CEOs of the largest financial firms are so powerful that they pose a critical risk to the financial sector, the real economy, and our democracy.

The Solution: Fix the real economy, if you can find it. “The real economy came off the rails at least three decades ago for the great majority of Americans.”

I was highly impressed with William Black after seeing him interviewed by Bill Moyers. And now, after reading this detailed by accessible analysis, I’m even more impressed. We can’t begin to fix the economy unless we begin to implement basic principles we can actually understand. Fixing the real economy and making sure that finance is merely the servant of the real economy are clearly steps one and two, for each of the reasons listed by Black.

Economy • Featured • Fraud • Politics
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By Erich Vieth on October 05th, 2009

Matt Tabbi on economic death by short-selling

In this month’s Rolling Stone, Matt Tabbi once again takes on Wall Street with an article entitled “Wall Street’s Naked Swindle.” This article is not yet available online. Tabbi’s focus this time is naked short selling. Tabbi has proven to be an excellent teacher of abstruse financial concepts, including the concept of short selling, and also including the insidious practice of naked short selling. With this technique (and others) Wall Street has turned the economy into “a giant asset-stripping scheme, one whose purpose is to suck up the last bits of meat from the carcass of the middle class.”

Tabbi’s article is an excellent read, which is not at all surprising given Tabbi’s track record. The bottom line is that naked short selling is a “flat-out counterfeiting scheme.” How bad is the widespread use of this technique?

That this particular scam played such a prominent role in the demise of [Bear and Lehman] was supremely ironic. After all, the boom that had ballooned both companies to fantastic heights was basically a counterfeit economy, a mountain of paste that Wall Street had built to replace the legitimate business it no longer had. By the middle of the Bush years, the great investment banks like bear and Lehman no longer made their money financing real businesses and creating jobs.

As Tabbi then reminds us, there is more than one way to counterfeit. Consider credit default swaps:

If you squint hard enough, you can see that the derivative-driven economy of the past decade has always, in a way, been about counterfeiting. At their most basic level, innovations like the ones that triggered the global collapse-credit default swaps and the collateralized debt obligations-were employed for the primary purpose of synthesizing out of thin air those revenue flows that are dying industrial economy was no longer pumping into the financial bloodstream. The basic concept in almost every case with the same: replacing hard assets with complex formulas that, once unwound, would prove to be backed by promises and IOUs instead of real stuff.

In this related piece, Tabbi further discusses “naked short selling”:

Again, a lot of this stuff is complicated and not only hard for people outside the finance world to follow, but kind of, well, boring as well. But it’s through these tiny regulatory loopholes, these little nooks and crannies, that the economy gets manipulated. The effect of all of these regulatory gaps has been to transform Wall Street from a means of connecting capital to good business ideas into a giant casino, where the object of the game is shaving little slices off the great flows of money as you push them back and forth using a great big toolbox of manipulative techniques. This is one of the tools.

Economy • Fraud • snake oil
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By Erich Vieth on September 27th, 2009

How to not-audit a DOD contractor

Listen to the scolding being delivered by Senator Claire McCaskill of Missouri with regard to what appears to be a fraud committed by a major Department of Defense contractor and subsequent incompetence by the GAO. How many other millions and billions of tax dollars are being wasted by the pentagon and its contractors? Where are the tea-parties protesting pentagon fraud?

Fraud • Military
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The ACORN hypocrisy
By Brynn Jacobs on September 23rd, 2009

The ACORN hypocrisy

Over the past few weeks, videotapes have been trickling out that purport to show ACORN employees offered tax advice to those seeking to engage in child prostitution or other salacious activities. Having viewed the tapes, it’s obvious that they have been edited extensively, and that alone should make one wonder what the original tapes may show. Further, Media Matters has a lengthy critique of the credibility of the conservative activists and the manufactured news story that they have created, including failing to report that in at least one instance police were called and the filmmakers were removed from the premises after inquiring about underage prostitution. But really, whether ACORN employees did or did not do everything they are accused of is a side issue.

The Huffington Post yesterday pointed out that the legislative zeal to cut off funding for ACORN may have created an even bigger problem: it may eliminate the entire military-industrial complex. You see, the legislation prohibits federal funding or promotion of organizations that, among other things, “has filed a fraudulent form with any Federal or State regulatory agency”. The Project on Government Oversight (POGO) maintains a database of companies holding federal contracts that also have “histories of misconduct such as fraud” that would ostensibly bar them from receiving any further governmental funding under the “Defund ACORN Act”. Top violators include Lockheed Martin, Boeing, Northrop Grummond, Raytheon, KBR (former Halliburton subsidiary)…. and a staggering number of other large corporations doing business with the federal government. House Republican leader John Boehner released a statement congratulating house Republicans for all they “have done to hold ACORN accountable for its abuse of taxpayer dollars and the public trust.” One wonders whether he will hold these other corporations to the same standard that they require of ACORN? After all, the scale of the violations by the weapons industry dwarfs anything ACORN is accused of. For fiscal year 2007, Lockheed Martin had federal contracts valued at $34.2 billion (with a b) dollars, and the cost of their misconduct since 1995 is valued at $577.2 million. ACORN has only received $53 million in federal funds since 1994, and none of the allegations show any actual harm was done to the government. In other words, Lockeed Martin has committed fraud to the tune of over 10 times the total amount of federal funding ACORN has received.

American Culture • Fraud • Social justice • hypocrisy
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James (Amazing) Randi is still debunking and his $1M challenge fund is still safe
By Erich Vieth on August 27th, 2009

James (Amazing) Randi is still debunking and his $1M challenge fund is still safe

My local alternative weekly newspaper, The Riverfront Times, just published a detailed article on James “The Amazing” Randi, professional magician and debunker of claims of the paranormal. I learned a lot. Here’s an excerpt:

Randi has debunked more than 100 psychics and faith healers in a quest to rid the world of hucksters. It also makes him the subject of scorn among purveyors of the paranormal, true believers who say Randi has made himself rich, pulling in nearly $200,000 a year from his foundation, at the expense of others’ careers.

Now, however, Randi’s work may be in jeopardy. His foundation has been hemorrhaging money, and Randi, who has spent his career challenging the notion of an afterlife, now faces his own mortality. He has intestinal cancer and may not have long to live. Randi has been a commanding presence for four decades, but it’s unclear who could fill his role as the face of the skeptic community.

Current Events • Education • Fraud • ignorance • snake oil
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Brownshirt guards prevent free-wheeling discussion at the Creation Museum
By Erich Vieth on August 14th, 2009

Brownshirt guards prevent free-wheeling discussion at the Creation Museum

It’s almost unbelievable. I suppose that too many thinking people were wandering in and criticizing the faux-science exhibits at the “evolution science” museum in Kentucky. Apparently, Ken Ham and his Creation Museum team simply can’t stand it when people talk real science in their “museum.” They’ll shut you up and kick you out. PZ Myers gives a detailed description of his visit, and it’s well worth reading the entire thing.

It’s pretty amazing that a “museum” would so unabashedly attempt to stifle all thinking. Myers almost can’t believe his own eyes and ears. Stifling thinking? But that’s how it is in most fundamentalist churches too. Fall in line or else. Pretend you know things you don’t really know. Pretend that you don’t know things that you do know. This is the foundation for an incredibly screwed up community, and the fundamentalists want to export it to the public schools too.

American Culture • Evolution • Featured • Fraud • Religion • ignorance • snake oil
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By Tony Coyle on August 04th, 2009

More GOP Astroturf?

I watched Rachel Maddow last night, and one of her segments focused on the disruption of recent Democratic Town Halls by ‘grass roots activists’. Her piece exposed the activists as following an agenda designed by a DC lobbying firm. In many ways this is worse that the Tea Party fiasco, since that was unfocused and generally laughable kookery. This, however, is targeted directly at health-care reform, and appears to be heavily funded by lobbyists for that industry (indeed, Rachel mentioned that some firms were sending ‘representatives’ to every state).

I also happened to see many of the same clips on Fox & Friends this morning (forced upon me in the hotel gym). F&F ‘reported’ the ‘protests’ as legitimate outpourings of anger against the ‘government’s plans for healthcare reform’.

I was surprised. Not!

Think Progress has more on the Lobbyist memo.

American Culture • Current Events • Fraud • Health • Politics • Uncategorized • hypocrisy • snake oil
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Anti-abortion = anti-contraception?
By Erich Vieth on July 31st, 2009

Anti-abortion = anti-contraception?

One of the first posts I wrote at this site was an in-depth look at a “pregnancy resource center” which, to my dismay excelled at spreading untruths about abortion and did its best to discourage the use of effective birth control. What a strange thing, I thought, to discourage methods that would prevent accidental pregnancy which would, in turn, lower the abortion rate. Maybe fighting effective birth control (i.e., methods that don’t exclusive rely on just say no) would be good for repeat business at the “pregnancy resource center,” but it is terrible for the unwitting clients of these highly dysfunction centers.

Along comes this Alternet post by Christina Page, “Why the Anti-Choice Movement Is on the Verge of Civil War.” This is a fascinating look at the anti-choice movement’s big schism:

The question now is: ‘are you pro-life and pro-contraception, therefore trying to reduce the need for abortions, or are you pro-life and against contraception and you hope that people’s lives improve just by hoping it, wishing it so.’”

And consider this–I think that Page’s logic is impeccable:

It may come as a shock to most pro-life Americans, but there’s not one pro-life group in the United States that supports contraception. Rather, many lead campaigns against contraception. As [anti-abortion yet pro-contraception] Congressman [Tim] Ryan explained, “I think the pro-life groups are finding themselves further and further removed from the mainstream; they’re on the fringe of this debate.” Considering that the average woman spends 23 years of her life trying not to get pregnant, the anti-contraception approach depends on a scourge of sexless marriages or a lot of wishful thinking.

Where does this lead? If you aren’t for preventing accidental pregnancies, you can’t truly be anti-abortion. Yet that is the situation with all major anti-abortion groups. For example, none of them support Ryan’s legislation that would increase funding to make birth control available, promote effective sex-ed and provide financial incentives for adoption. Yet no pro-life group supports his efforts. Many groups staunchly oppose the use of real birth control (e.g., this one). On the other hand, most pro-life individuals support his efforts. Not surprising, in that 80% of pro-life individuals (90% of Catholics!) support the availability of effective birth control. Page presents many other eye-popping stats in her article.

The bottom line?

The greatest opportunity to reduce the need for abortion is to focus the 95% of unintended pregnancies that are highly preventable. The plan is simple: address the lack of and incorrect use of contraception.

This is a solution that virtually all individuals agree on. But all we get from “pro-life” groups is defiance. Therefore, pro-life groups (such as Democrats for Life) are wholly unaccountable to their constituents.

American Culture • Featured • Fraud • Reproductive Rights • Sex • hypocrisy • ignorance • snake oil
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National traffic safety agency (NHTSA) causes thousands to die by hiding safety data
By Erich Vieth on July 21st, 2009

National traffic safety agency (NHTSA) causes thousands to die by hiding safety data

From a bureaucrat’s perspective, it’s just much easier to hide inconvenient information. That doesn’t make it right to hide important information. Not at all.

Heads should roll for the recently disclosed cover-up by the National Highway Traffic Safety Administration. People died on the highway because of this cover-up, and not just a few people. Back in 2003, federal government researchers estimated that 955 people died and 240,000 accidents occurred in 2002 due to cell phone use. Extrapolate those numbers out to 2009 and we can reasonably assume that 5,000 people needlessly died in highway wrecks because the government didn’t release this shocking cell phone usage data and issue a stern warning that people shouldn’t talk on cell phones while they drive, because it’s as bad as driving while drunk.

This cover-up by the U.S. government means that more people died because of the government’s corrupt ways than the number of people who died in the 9/11 attacks. Shouldn’t we declare “war” on safety officials who cause people to die by intentionally withholding safety information? I would have a commission get to the bottom of this to find out who made this piss poor decision to withhold the date. All the people involved should (but won’t) spend many years in prison for manslaughter.

And let’s connect the dots. Why would Congress get mad because of the release of this accurate data? Let’s see . . . maybe it’s because the telecoms, who contribute massive amounts of money to Congress, would see their profits cut if their customers could run up cell phone minutes while driving. Could that be it? Note: The telephone utilities pour more than $40M annually into lobbying Congress and many millions more into political contributions. These politicians and government employees apparently forget who they work for. Here’s a hint: their top priority should not be the telecoms and other monied contributors. They work for us. If they would have asked themselves this simple question (”Who do I really work for?”), maybe they would have felt compelled to release important safety data, which could have saved thousands of lives.

This recent disclosure is unbelievable and very very sad.

The NYT reports:

The former head of the highway safety agency said he was urged to withhold the research to avoid antagonizing members of Congress who had warned the agency to stick to its mission of gathering safety data but not to lobby states.

Critics say that rationale and the failure of the Transportation Department, which oversees the highway agency, to more vigorously pursue distracted driving has cost lives and allowed to blossom a culture of behind-the-wheel multitasking.

“We’re looking at a problem that could be as bad as drunk driving, and the government has covered it up,” said Clarence Ditlow, director of the Center for Auto Safety.

Corruption • Featured • Fraud • Politics • hypocrisy
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By Erich Vieth on July 17th, 2009

Modern credit card agreements: 29 pages of “tricks and traps”

Elizabeth Warren, the TARP Oversight Chair was on the Rachel Maddow’s show discussing the aggressive anti-consumer practices of credit card companies, and warning that the credit card industry is about to try to kill federal efforts to regulate the industry. She reminds us that in 1980 a credit card agreement was only about a page long. Now credit card agreements are 30 pages long, full of “tricks and traps.”

MADDOW: Are you worried that the [credit card] industry’s going to be about to kill [credit card reform legislation] in the crib? Reporting is that it’s their top priority to get rid of it.

WARREN: My gosh! I have to tell you, it’s like they’re stampeding in the halls already in Washington. the Gucci loafers. These guys have built up a huge war chest, they’ve been interviewing public relations firms to see who can come up with the next Harry And Louise ad to explain to the American people why they’re better off with credit cards that nobody can read, hundreds of pages of mortgage documents that nobody can read…the idea is you’re better off with how things are…forget all that stuff the happened over the last few years. And we promise to keep things up just like we did before. I just can’t believe they’re trying to sell that to the American people.

You can read much more on this topic at Jason Linkins’ post at Huffpo’s new Lobby Blog.

Corruption • Economy • Fraud • Politics • Psychology Cognition • snake oil
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