MAN AND WIFE EACH GET 10 YEARS

    

Strib - Mr. and Mrs. James Ober of Hudson, Wisconsin were each given 10-year prison terms for racketeering by Hennepin County District Judge Joseph Klein.  The couple pleaded guilty for getting fraudulent mortgage loans through their company, Mortgage Planners, Inc., and then negotiating more than $6 million in "kickbacks" from many such mortgage loans. They engineered about $23 million in such loans.  Three other people were involved in these transactions, one has pleaded guilty, one will be standing trial and a third one has apparently flown the coop and is being sought.  This complex equity-plot relied on forged documents such as property records, college transcripts, pay stubs and even court  records to qualify 'straw buyers', according to the news report.  It is very unusual to have 5 forgers, 3 of who are unrelated to the other two. The combination of greed and fraud is most difficult to conceal when more than one person is involved.

"WORKING FOOL" GETS 3 1/2 YEARS

    

Strib - Mr. George Wintz, Jr., of Triangle Warehouse, Minneapolis, was found guilty by a jury and sentenced to 3 1/2 years by U. S. District Judge Ann Montgomery of bank fraud and embezzlement of money from employees' retirement plan.  Mr. Wintz kited and floated checks to keep his business going and employees working.  He wrote "batches" of checks against accounts in two banks and solicited "nominee loans" totaling $1.9 million, signed by family members and employees but used the money in his name.  Even the President of one of the banks signed such loans to cover overdrafts by Wintz.  One of the banks was closed in 2011.  The sentencing Judge said, "I think you're kind of a working fool" when she imposed a prison term of 3 1/2 years when she could have "given" him 8 years.

AMISH LONG HAIR WINS HATE CASE

     WSJ - NYT - In U. S .District Court in Cleveland, Ohio on September 20, 2012, 16  people of an Amish group from Bergholz, Ohio were declared guilty of a hate crime.  A jury deliberated for 5 days before declaring them guilty as charged.  The crime?  Cutting off the long hair of other Amish against their wishes.  Long Amish hair is a sign of devotion to their  religion, the longer the more devout.   Attorney Steven Dettelbach of the U. S. Northern District of Ohio stated "Our community and our nation must have zero tolerance for this type of intolerance".  The defiant group cut the long hair of fellow Amish with scissors and clippers usually used by them for cutting and trimming horse

hair.  The "head" Amish defendant, Bishop Samuel Mullet, Sr., has a history of ordering his Amish brethren be beaten with paddles or confined in chicken coops for violations of strict religious principles.  Come January 24, 2013, the 16 men and women involved in the hate crime could be sentenced to as much as life imprisonment. This is America, not the religious world of the Amish.

WIRTH WILL BE WORTH MUCH LESS

    

     Strib - Mr. Jeffrey Wirth, a resident of Plymouth, Minnesota, a CPA and developer of commercial real estate with 30 or so related and unrelated companies headquartered in Brooklyn Center, Minnesota, was sentenced to 41/2 years in prison and fined $6.45 million yesterday by U. S. District Judge Ann Montgomery.  A maximum of 20 years in prison could have been levied. Mr. Wirth had previously pled guilty to tax frauds, along with  Ex-CFO of Wirth Co., Holly Damiani, and outside accountant Michael Murray.  Wirth's sentencing terms were the result of a plea bargain. Judge Montgomery said "This is not a case of a single tax year or a slip-up" but frauds that continued over several years

 

   Wirth's Defense Attorney, Christopher Mandel, negotiated a time - release for Mr. Wirth so he could attend his son's piano recital in New York and will turn himself in at a later date.  Judge Montgomery said, "The most stupid thing Mr. Wirth could do in this situation is to run.  I realize I'm taking a risk on that".  Wirth had built a special 18,000 square-foot house with a 15-car garage (on an island?) dubbed "Isle Windemere" on Lake Minnetonka and has made very liberal donations to charitable causes - as well as family members.  Under the circumstances, it seems the Court and its decisions has been very fair. 

LUCKY THE LOSS WAS ONLY $2.3 BILLION, not $12 BILLION

    

NYT - A gambling stock market swinger, Kweku M. Adoboli, caused Switzerland's largest bank, UBS, to nearly fail because of wild trades and fictitious accounting.  His motivation was "greed and ego" while piling up billions in hidden losses until arrested and brought to trial in London recently.  Unauthorized speculative trading started in 2008 and  existed for 3 years before questions were asked.  His worst  exposure for the bank was $12 billion and the real financial risk stood at $8.1 billion late in September, 2011.  A Pete Hahn of the Cass Business School in London says."A fundamental rethink is underway".  Sounds like a good idea!

STANFORD EXECUTIVES STILL BEING SENTENCED

NYT - Laura Pendergest-Holt, a former Chief Executive Investment Officer for the Stanford Financial Group, Houston, Texas and Antigua in the West Indies, was sentenced to 3 years in prison by Houston's Federal District Court Judge David Hittner on Thursday, September 13, 2012. She was convicted of obstructing an SEC proceeding. 20 other similar charges were dropped in a plea bargain. Ms Pendergest-Holt stated before the Judge: "I'm sorry I was so trusting in people who didn't deserve my trust, and my trusting them caused harm in others". Judge Hittner is the judge who sentenced R. Allen Stanford to 110 years in prison in June, 2012 which he is currently serving in a Central Florida prison. This saga is a common one for Greedsters - loss of big money, prison terms, employees being convicted, years of trials and millions of dollars for lawyers. The end is still not in sight for the period we have experienced - pre - and post - 2007-2012 and beyond.

CEO PLEADS GUILTY AFTER PLEADING NOT GUILTY

WSJ - Russell Wasendorf, Sr. was CEO of Peregrine Financial Group when he tried to commit suicide on 7/9/12. On 9/11/12, he signed an agreement with Fed prosecutors, pleading guilty (after saying he was not guilty), as he admitted he was indeed carrying out a $200 Million fraud and embezzlement racket involving his financial customers. It's possible he could be sentenced to prison for up to 50 years. Mr. Wasendord asked to be freed until his hearing and sentencing but the request was denied by Judge Jon Scoles because of Wasendorf's attempted suicide. The long arm of the law got him and won't let go.

FELON WHISTLEBLOWER AWARDED $104 MILLION

WSJ-STRIB - A USB AG Swiss banker, Mr. Bradley Birkenfeld, at long last was awarded a fat purse of $104 million for whistleblowing on U. S. citizens who maintained secret accounts in the Swiss Bank. Federal prosecutors worked with Birkenfeld since 2007 collecting data and since that year, 30,000 U. S. taxpayers have owned up to undeclared overseas accounts and have settled for more than $5 billion in taxes and penalties. Mr. Birkenfeld was one of the 30,000 snagged.

He ran tax-evasion errands for clients and was also caught trying to hide undeclared diamonds in his toothpaste tube when entering the U. S. He was sentenced to 40 months in prison and is now serving the tail-end of the sentence in home confinement. If you don't mind spending the rest of your life being classed a felon, it's still a tough way to make your millions. $104 million may seem like a lot of money to award a felon, but after all, his information has snared over $5 billion and still counting for the Feds.

SMALL CHANGE STOPPED FOR PETTER'S EX-FIANCEE

Star-Trib - Tom Petters is in prison for 50 years for his $3.65 billion Ponzi scheme (see pages 101-105 in the book "The Greedsters"). His fiancee, Tracy Mixon, was awarded $1,879.00 per month for living and health insurance expenses, and has collected this monthly amount for more than 3 years. In early September, 2012, Judge Ann Montgomery issued an order ending these benefits. The Judge stated she felt Ms Mixon has had enough time to become "a sole wage earner" for the two children and herself. I'm sure many people will feel such action is unjust. For an adult to support two children and herself this day and age, $1879 per month is probably not enough. However, don't judge the JUDGE. She must have had her reasons for the order.

DO REAL ESTATE AND ART DESERVE THE SAME VALUE?

NYT - As each year passes, values of most everything increase. Is this true for real estate when compared to fine art? This question was raised when a penthouse in Manhattan was recently purchased by a Russian billionaire for $88,000,000 or $13,000 per square foot. Recent fine art has also been purchased at a high price (Cezanne's "The Card Player" was sold in 2011 for an estimated $250 million). Such a price for fine art is justified because a piece of fine art is "one of a kind" and cannot be replicated. A high real estate price is questioned for several reasons: a piece of real estate can be duplicated; a "local" piece of real estate can't be globally re-located; fine art values evolve from much scholarly research and critical appraisal which could take generations to recognize; and valuing art is a much more complicated procedure than real estate. Curator David Kusin has stated "When people get crazy over something, they like to rationalize something", like a high real estate price is justified by calling it apartment art or real estate art. It comes down to an individual opinion of someone who has money to spend to appease a strong attachment to an object like a painting or a piece of real estate. Value is in accordance with the desire of the buyer.

PEREGRINE ASSETS TO BE AUCTIONED

WSJ - The assets of Russell Wasendorf, Sr., founder and CEO of Peregrine Financial Group will be auctioned off shortly as announced by a court-appointed receiver. The futures and currency firm filed for bankruptcy July 10, 2012. Items to be auctioned are (per Wall Street Journal): a 1957 Ford Thunderbird; mason jars; a Swiss watch; clothes; an Italian Restaurant called "My Verona"; thousands of bottles of wine; Chicago Bears sports memorabilia; dishes; jewelry; sports vehicles and hundreds of other items. As the court-receiver said, "One man's trash is another man's treasure".

THOUSANDS OF TANK CARS PUT TO USE

WSJ - Norwegian company Statoil has announced the leasing of 1,000 rail tank cars to move crude oil from oil field to refinery or shipping port in the United States and Canada because of lack of pipeline capacity. The usual petroleum tank car(sometimes called "tankar") has a capacity of about 10,000 gallons or about 238 barrels of crude oil (at 42 gallons per barrel). Larger capacity tank cars exist but their use is limited by theweight most rail trackage can carry. Statoil estimates an average tank car will require up to 15 days for a round trip to destinations in Canada, Gulf of Mexico or the U.S. East Coast.

Coal trains are standard for moving coal from mine to production use but pipelines have long taken over the majority of crude oil shipping in the United States. Tank cars are still used, however. The increase in crude production in the Bakken oil region of North Dakota, for instance, has increased rail shipment of crude to more than 325,000 barrels daily in June, 2012, double the 2011 amount.

Tank cars are usually leased and may remain idle for weeks or months at a time, depending upon crude production and storage capabilities. New oil fields present special shipping problems as it takes time to apply for and put in place new pipelines with their gathering systems, storage and shipping facilities. The fast-moving oil business is a tough and expensive one.