DEFENDANT WANTS TO BUY-OFF LIFE SENTENCE BY PAYING COURT $19,000,000

Strib - Defense Attorney Douglas Altman will present a 68 page sentencing memo Monday, 12/17/12, outlining why his client should not receive a life sentence for various crimes including fraud and money laundering as money manager for business associate convicted Trevor Cook.  To sweeten the arguments against a harsh sentence, the defendant, Jason Beckman, is offering to immediately pay a check for $19,000,000 to the court to pay victims of his latest charges.  Mr. Beckman is no stranger to court antics.  He tried to fraudently buy a part ownership in the Minnesota Wild hockey team for               $5,000,000;  tried to defraud an elderly couple of  $4,000,000 life insurance proceeds; is carrying 3 current tax charges; had to borrow with court permission $5,151 for living expenses;  looted the estate of his grandfather; was forced out of the U. S. Air Force Academy for dishonesty; forged his mother 's signature on a student loan application; and committed perjury during a divorce  proceeding to avoid child support, all contained in an article about Mr. Beckman in the Minneapolis Star Tribune newspaper.  It's going to  be difficult for the judge to go easy on a sentence, it would seem.

ATER 4 YEARS, MADOFF MONEY IS STILL FLOWING BACK TO INVESTORS

 Strib - A seemingly improbable 4 years ago, Mr. Bernard Madoff confessed to his two sons his 20-year run as Bernard L. Madoff   Investment Securiteies LLC with as much as $60 biliion of investors' real money in the firm was all a big ponzie scheme.. It was on December 11, 2008 the 2 sons reported the disclosure to federal authorities and Madoff was arrested the next day.  Mr. Madoff is today serving a 150-year sentence in a federal prison. Court-appointed trustee Irving Picard and a gang of lawyers headed by David Sheehan of the New York law firm of Baker-Hostetler have recovered $9.3 billion of the estimated $17.5 billion possible to recover.  The time and efforts to recover the money comes with a high cost.  To date, legal fees have been as much as $600 million.  Records have shown the $60 billion invested by investors was never re-invested by Madoff on their behalf but instead was used "bit by bit" to pay other investors as returns on their "investment" with him.  Additional money to recover can be from accounts in Great Britain, Spain and Israel according to the Associated Press.

GOLDMAN SACHS FINED $1.5 MILLION

NYT - Matthew Marshall Taylor was a market trader for Golden Sachs from 2007 to  recent times.  During his tenure, he is accused of "fabricating" transactions and trades that improperly hid $8.3 billion that translated  into $119 million in losses for the firm.  Goldman was accused by the Feds for not properly monitoring such trades and fined the firm $1.5 million. A Democrat Commissioner on the Commodity Futures Trading Commission labeled the fine "a token sum" for a firm the size of Goldman.  It was pointed out  the 60 violations cited could have been reasons for a fine of as much as $7.8 million and would have been more appropriate.

EX-CFO DIVERTS CHARITABLE MON EY TO PERSONAL USE

WSJ - Mr. Glen W. Albanese worked for the brokerage house Needham & Co.  As CFO, he collected money from the firm to aid victims of Hurricane Katrina, especially children in a scholarship fund.   Wearing a hooded gray sweatshirt and with handcuffs and waist chains in court, he was charged with conspiracy to commit fraud and was released on a $200,000 bail.   Supposedly, he maneuvered invoices to the firm and diverted the proceeds for personal use including 2009 World Series tickets, interior decorating, a Labradoodle Poodle Cross, fitness equipment and "tens of thousands of other  expenses". He agreed to seek mental-health counseling as a condition of his bail.  Sentencing will be later .

MAJOR INVESTOR DECRIES INCENTIVE PAY

NYT - The Louisiana Municipal Police Employees' Retirement System, a major investor in Simon Property Group of Indianapolis, is very unhappy with a Simon Group Board action of 2011.  An "incentive award" was given by the Board  to Simon's CEO and Board ChaIrman, David E, Simon .   The award of one million shares of stock is valued today at $146 million and will be paid in 3 installments 6 years from the award date. Usually, a major "incentive award" is tied to share price and growth of the company. Not in this instance.   As Gretchen Morgenson wrote in the Times article, "The only requirement to receive this bounty was that Mr. Simon show up for work".  It would seem such a Board Decision  best serves Mr. David Simon as CEO but also as Chairman of the Board, a subject open for criticism.

THE PIZZAZZY LADY MAKES HEADLINES

 WSJ - Rita Crundwell is a 59-year old former Dixon, Illinois comptroller who can maybe add more figures to her resume - 20 years in prison for helping herself to $53 million of city money to fuel a fancy life style over more than 20 years.  One extravagance was buying a race horse named The Pizzazzy Lady by falsifying a sewer project invoice for $350,000 and then using the money for her horse farm and purchase of the horse.

FORMER MADOFF CONTROLLER PLEADS GUILTY

WSJ -  When Bernard Madoff was arrested on December 12, 2008, he stated nobody else was involved in or guilty of his giant Ponzie scheme of $billions. On November 8, 2012 - nearly 4 years after Madoff's arrest - the ninth employee of BLMIS,LLC, former controller Mr. Irwin Lipkin, pleaded guilty to criminal charges and will be sentenced March 22, 2013.  Mr. Lipkin started with BLMIS in 1964 when it was a 2-man outfit and was employed by BLMIS until 1998.  He has stated, "at no time prior to my departure was I aware of any Ponzie scheme" ( in spite of being controller for 44 years??). He also has stated he signed "myriad documents" he knew to be false.  His guilty plea included forfeiture of $170 billion, the same amount both Mr. Madoff and chief officer Mr. Frank DiPascali agreed to forfeit.  The Madoff Saga goes on and on!!

PETTERS CLAWBACK BY RECEIVER DENIED BY JUDGE

Strib - Tom Petters, Minnesota businessman, is in prison for 50 years for his $3.65 billion Ponzie scheme loss to investors (pages 101-105 in The Greedsters). Douglas Kelley was appointed by the court to be a receiver and clawback donations made by Petters  to various parties.  The College of St. Benedict in Avon, Minnesota received a pledge of $3 million from Petters, $2 million of which had been paid to the College who spent the money  to renovate and expand the Benedict Arts Center in St. Cloud, Minnesota and $1 million had never been  paid.  Receiver Kelley sued the College to clawback the $2 million.  U. S. District Judge Richard Kyle ruled Kelley had no authority to sue the College as the lawsuit filed under  the  Minnesota  Fraudulent Transfer Act and the Federal Debt Collection Procedures Act was governed by a new 2-year  limitations statute and therefore the Feds could not sue the College with new State limitations of 2 years (in this case) instead of the original  6 years.  Lucky St. Benedict College!!

RAINBOW ROOM SAVED BY BECOMING A LANDMARK

NYT - On August 22, 2012 , a Greedsters Sequel was posted pertaining to the inability of tenant and landlord to arrive at a new rental agreement for the famous Rainbow Room space in 30 Rockefeller Plaza, New York City.  It has been closed for more than 3 years.  It's happy news that the city's Landmarks Preservation Commission voted 7 to 0 to give Landmark Status to the "Rainbow Room", even though a landmark conservative approach limits the designation only to that part of the 65th floor where the music and dancing occurred.  Restaurant support operations used part of the same floor plus the 64th floor.  It appears the owners - Tishman Speyer Properties - and the renters - the Cipriani family - support the landmark designation.  It just may be the thing to bring the two parties together to have a big smash grand opening someday in the future.  The entertainment space on the 65th floor was named "Rainbow Room" because of multi-colored lights that bathed the dance and dining area while a fancy house organ filled in the period when famous orchestras were catching their breaths between sets. Oh, those were the days!!

PERSONAL SECRETARY CHARGED WITH EMBEZZLING FROM EXECUTIVE

WSJ - William J. Salomon, now 98 years old and son of one of the founders of the 100-year old Salomon Brothers investment firm, was an active executive at Salomon Brothers after rising from a 19-year-old fresh out of high school.  On retirement, he maintained an office at the firm and continued with an office after Citigroup merged with Salomon Brothers in 1997.  His recent secretary, Karen R. Febles, charged with embezzlement,  was a former Citigroup secretary and became Mr. Salomon's secretary from 2000 to September, 2011.  "Ms. Febles was the only other person given access to  Mr. Salomon's personal checking account".   An example sited by prosecutors was a check signed by Mr. Salomon for $900 dollars and when cashed, "nine  hundred became nine thousand nine hundred".   Ms. Febles will stand trial set for November 13 after pleading not guilty.   An investigative official has stated, "Part of what goes into larcenous thinking is that this is a wealthy person who isn't counting his nickels and dimes and will never miss the money".   After many years of trust, Mr. Salomon apparently missed about $1.8 million and blew a whistle.   Mr. Salomon is known as "pleasant, well-tailored, casual and has all of his mental faculties at 98".   His wife of 70 years died in 2008 and he now has another office assistant.

A SHOCKER FROM CITIGROUP

WSJ - For the CEO of one of the world's leading banks to suddenly resign shook up Wall Street and the financial world.  Mr. Vikram S. Pandit took over at the helm of Citigroup in 2007, steering the bank through thick and thin from 2007 to October 17, 2012.  The company's wheel wobbled during these past 2 years until he was deposed as CEO of Citigroup by Board  Chairman Michael  O'Neill .  Mr. O'Neill is regarded as a new generation of Chairman of the Board - inquisitive, poking into trading , questioning trades of all kinds, reducing some costs and exercising the exit of thousands of employees. Behind the scenes the tension between the CEO and Board Chairman finally became too much and Mr. Pandit's head rolled.  The Board asked for Mr. Pandit's resignation, which is a polite way to say he was fired.

J P MORGAN MISTREATS CUSTOMER'S TRUST (Sequel)

NYT - Oklahoma Tulsa County District Court Judge Linda G. Morrissey declared J. P. Morgan Chase  must pay $18 million for breaching fiduciary duties managing a trust of Carolyn S. Burford.   Ms Burford died in 1996, leaving a rich trust for JP Morgan to manage.  This particular  trust was established in 1955 by Ms. Burford's mother and father who had founded the Skelly Oil Company.  The District Judge believed J P Morgan had used some of the trust's proceeds to invest in the bank's own trust, thereby  "double-dipping" its fees.  The Court admitted it was a convoluted case but the bank had violated its customer's trust by using trust money to invest in another trust for its own benefit.

TOYOTO RECALLS MILLIONS MORE CARS

NYT - In 2009 -10, Toyota suffered through the recall world-wide of 11,000,000 Lexus and Toyota cars with defective floor mats and sticky accelerator pedals. Now, once again, they must recall 7.4 million cars world - wide, 2 1/2 million of them in the United States.   Eleven different models are listed with inadequately - applied special grease on the power switches for power doors on the driver's side. Toyota warns the use of "commercially available lubricants" could melt, leading to fire.  Just imagine the costs involved in dealing with millions of cars with defects!.

SUB-PRIME MORTGAGE WOES GO ON AND ON

    

NYT/STRIBE - The Bank of America announced another major payment to shareholders - $2.3 Billion - to settle a lawsuit involving the acquisition of Merrill Lynch and misleading statements made by B&A in late 2008.  B&A's current CEO, Mr. Brian Moynihan, stated a week ago, "Resolving  this litigation removes uncertainty and risk and is in the best  interests  of our shareholders".  In early 2008, B&A acquired Countryside Financial and settlements to date for that deal has cost the bank more than $40 billion.  Only Enron, Tyco, and World Com settlements in the financial world have exceeded B&A's settlements.  Horrible losses, to be sure.  Some critics believe even more are yet to come as the period of 2007- 2012 keeps rearing its ugly head.

EAST INDIAN BILLIONAIRE SHORT ON CASH

    

NYT - Mr. Vijay Mallya, listed by Forbes on its billionaire lineup, is way short of cash to pay his debts.  His Kingfisher Airlines, owned by his UB Group, ordered 50 new Airbus planes at the 2007 Paris Air Show, has never made a profit, is late paying bank loans on time ($1.3 billion late) and it's claimed he hasn't paid most workers for months. The airline is called his "crown jewel".  A report states his executives "seemed willing to practically gamble away the health of the group's other businesses, which were used as collateral for bank loans to the airline".  These "other businesses" included expensive cars, a car racing team and fancy parties at his home in Mumbai with Bollywood stars and prominent politicians.  The airline featured red-suited flight attendants, very generous frequent-flyer programs and quality food at the start.  The airline faced drastic competition from state-owned Air India.  Its fleet is down to 12 airplanes from more than 70, and schedules have been pared to only curtailed domestic flights.  You might say he's being grounded.

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.

PEREGRINE FINANCIAL NO LONGER A HAWK

NYT, WSJ - A Peregrine is a hawk that swoops after specific prey. One such human peregrine was shot down when a federal grand jury in Cedar Rapids, Iowa indicted Mr. Russell R. Wasendorf for 31 occasions when he made false reports to federal officials and can face up to 135 years in prison and fined as much as $7.75 million. Early in July, 2012, Mr. Wasendorf was found in his car in his company's parking lot attempting to commit suicide and leaving a note admitting to embezzling in excess of $100 million. The suicide note absolved his junior son, company president, from any involvement, but Mr. Wasendorf didn't hesitate illegally gathering funds for 20 years from friends and businesses for his own satisfaction and safety. Just one more case of a Greedster running wild.

SANDY CHANGES HIS MIND

NYT, WSJ - Anyone is free to change his or her mind, but for one of the WORLD'S foremost financiers, who was in favor of dumping the venerable Glass-Steagall Act, it was big news when he changed his mind on July 26, 2012 and announced to the trade he now believes the 1933 Glass-Steagall Act (struck down in 1999 by the adoption of the Gramm-Leach-Bliley Act) should be modified somewhat but reinstated by prohibiting a bank to be both an investment bank and a commercial under very specific rules. The Glass-Steagall Act in effect did just that- kept a Bank from being both a commercial and investment bank, denying an investment bank the right to use customer money (like CD's for instance) to gamble in financial markets.

The financial fiasco of 2007-2012 was fueled by the lack of controls as to whose money a bank could use for investments. Big Banks grew larger, balance sheets loaded up with risky paper like toxic assets and weird derivatives, loose mortgages and over-zealous investments with rewards handed out to executives and "hot" sales personnel for returns based upon faulty paper profits, watered-down intrinsic values of the very foundations under the financial institutions for whom they labored. Mr. Sanford Weill can take his share of the blame but it requires nerves of steel to step forward and announce to all he was wrong and The Glass-Steagall Act should be brought back albeit in a somewhat different form. Way to go, Sandy.

HEDGE-FUND MANAGER NEEDS NEW STRATEGY

WSJ - Mr. Chetan Kapur, founder and present lone manager of ThinkStrategy Capital Management, LLC, has been charged with securities fraud, investment-advisor fraud and wire fraud by a grand jury. Mr. Kapur started the company in November, 2002 and two of his executives have pleaded guilty and have been convicted of fraud. The year 2008 saw the peak of investor capital of $520 million poured into the company. One executive, Mr. Arthur Nadel, was imprisoned and died in April, 2012. The other executive pled guilty and is serving a 20-year sentence. 3 up and 3 down - wrong strategy. Certainly a new one is needed.

FEMININITY SCORES AT AUGUSTA

WSJ - The word "August" means "grandeur". The word "Augusta" has come to mean "Golf Club". 2012 is the year the first woman member was inducted into the Club - Dr. Condolezza Rice - former Secretary of State. Long a male business bastion, Augusta has hosted the prestigious Masters Golf Tournament for 79 years with most members guarding the male-only status. The gates have fallen. Congratulations!!

HEDGE-FUND FOUNDER FOUND GUILTY

Bloomberg - Doug Whitman, founder of hedge-fund Whitman Capital of Menlo Park, California, was found guilty by a jury in front of Judge Jed Rakoff in Manhattan of passing on inside information. Prosecuting attorney Pete Bharara led the charge. The duo of Judge Rakoff and Mr. Bharara have been most successful in bringing leakers of inside info to justice, proving that "The rules do apply". Up to 66 convictions to date have been racked up.

BUSINESS SCHOOL DEAN RETURNS $1.25 MILLION IN CONSULTANT FEES

Mpls Strib - Roger Jenkins, Dean of the Richard T. Farmer School of Business, Miami University, Oxford, Ohio returned cash of $1.25 million plus 22,000 shares of Enable Holdings, Inc.,(an Internet retailer worth less than a cent a share on today's market), to court receiver Doug Kelley as one settlement in the Tom Petters fiasco of a $3.65 Billion ponzi scheme. Mr. Petters is in prison under a 50 year conviction and sentence. In 2009, Miami University had returned to the receiver more than $5 million cash pledged by Petters to the U of Miami on behalf of his daughter and deceased son John, both students at the University. Dean Jenkins was paid stock and cash "for a variety of consulting services".

LEGAL SCHOLAR SEARCHES MINDS OF PONZI ARTISTS

NYT - Professor Tamar Frankel, on the faculty of Boston University Law School for 44 years, has written a book on ponzi schemers. A friend had urged her to write the book about "those mimics of trustworthiness: con artists". Among these artists were two I had not included in my book "The Greedsters" - the Caritas scandal in Roumania in the early '90s and a currency crime in San Diego in the mid-80s. She does include Madoff and his $64.8 Billion cheat. She has been asked what might be a final conclusion to her examinations. She states, "Victims failed to do their homework". I agree.

TAUNTING THE GOVERNMENT LEADS TO ANALYST'S DOWNFALL

NYT - Mr. John Kinnucan, founder of Oregon's Broadband Research, pled guilty of sharing insider information with customers evidenced by wiretaps, witnesses and instant messages. He could face many years in prison but is likely to settle on up to 5 years when sentenced. Mr. Kinnucan has been a long-time critic of government programs and actions relating to Wall Street regulations and controls. In one instance, he sent a voice mail to a United States attorney proclaiming "Too bad Hitler's not here. He'd know what to do with you". It's a good idea to be at least civil to someone who might be holding your fate in his hands.

IS THE RAINBOW OVER?

NYT - For more than 3 years, the famous Rainbow Room on the 65th floor of the Rockefeller Plaza just a short distance from Wall Street has been empty - as in nobody there. Disagreements between the landlord and restaurant owner have stalled a solution. It's too bad this one of a kind institution can't be preserved. However, the stakes are high.

The Ciprianai family who operated the Rainbow Room and the Tishman Speyer Properties who control the real estate are at loggerheads. The 65th floor was originally to be named the Stratosphere Room in the mid-30's, but the name was changed when a special organ was installed and bathed in colored lights while being played. Rainbow Room was fitting as the name. Every big band played the Rainbow Room and it was a thrill to be on top of the world dancing with a favored one as the Rainbow opened for business and happiness in 1934. I can attest to that during my college days. Come on, owner and operators, let's get together and preserve a sky-full of memories.

BRITISH BANK SETTLES $340 MILLION CLAIM

NYT - Legal responsibility for money laundering has long tentacles. The agency New York Department of Financial Services had charged a British bank, Standard Chartered, with $340 Million for money laundering for nearly a decade in a scheme between the Bank and Iran. The Bank has agreed to pay the charge. Involved in the charge were 60,000 transactions with Iran that hid tainted money with values as high as $250 Billion. The settlement money will go into the coffers of the New York Financial Services and then to New York State's General fund.

KNIGHT IN THE DARK FOR 30 MINUTES

NYT - Wednesday, August 4, 2012 should have been an average day for the electronic stock trading Knight Capital Group on Wall Street, but it became a nightmare. After the opening bell, a computer trading program at Knight suddenly burst forth with a huge volume of "erratic trades", and for 30 minutes no one knew how to shut the trading down. A former high-speed trader was quoted as saying "Trading being erratic even for just a minute or two would have been surprising to me, but to have something going on for 30 minutes is a shocking eternity". Knight barely survived the crisis after scrambling for 48 hours to secure temporary financing to save the ship. Regulators are investigating the possible cause of the malfunction.

G-e-e-e, GE Exec Retires on $89,000/mo.

     WSJ - GE  is splitting its energy division into 3 parts and a 50-year old energy executive has split with a retirement package estimated at $28.3 million.  The deal includes a non-compete for 3 years.  A monthly allowance of $ 89,000 also has been given Mr. John Krenicki for 10 years.  He is also maintaining eligibility in a further pension plan when he turns 60.  The generosity is part of a GE Plan labeled "retirement for the good of the company".  It goes without saying it's a  good one for Mr. Krenicki also.

Johnson & Johnson fined $2.2 Billion

WSJ-7/20/12 - Federal prosecutors reached a settlement with drug company Johnson and Johnson of $2.2 billion that includes a $400 million criminal fine for illegal marketing of the drug Risperdal.. Under
federal law, drug companies can only market drugs approved by the U. S. Food and Drug Administration. The Journal article stated many companies settle investigations into illegal marketing of drugs to avoid losing the ability to sell drugs to government health programs and Medicare.
    *    *    *    *

COUNTY COMMISSIONER GETS 28 YEARS

WSJ - 8/1/12 - A federal judge tossed Jimmy Dimora,  an Ohio, Cuyhoga County former county commissioner, into prison for 28 years. He had accepted bribes and asked potential County contractors for cash, business trips and prostitutes but 60,000 hours of wire-tap information led to his downfall.  There were more than 60 convictions of contractors and public officials, including an assessor and two judges. The judge gave Mr. Dimora 6 years more in prison than asked for by the prosecutors because
"the destruction left in its wake is incalculable"
    *     *     *     *

Ex-Banker Indicted for Muni-Derivitives Fraud

NYT  - July 21, 2012 -  Phillip D. Murphy, former head of Bank of America's Municipal Derivitives trading desk faced  indictment for wire fruad, conspiracy to defraud the United States and making false entries in bank  records.   He joins 13 other individuals of similar crimes who have pled guilty and their banks JPMorgan/Chase, Bank of America, UBS,  Wells Fargo and company General Electric have paid $700 million in penalties. Bank of America aided the Justice Department's investgation over a period  of 4 years.

LIN CHUMPING TAKES A THUMPING

     Denver Post - Lin Chumping,  a Chinese buyer and seller of rice, has claimed to have paid $60 million for the Atlantic Bank in Delaware.  It  turns out there is no such bank in Delaware and he did not spent $60 million for any such thing as a bank anyplace.  Arrested in China on an unrelated fraud, he  was forced to step down from his "Municipal-level appointment to the Chinese People's Political Consultive Conference", a governmental advisory group.  At least he's gained a reputation for a novel scheme.

GUPTA CONVICTED FOR LEAKING INSIDER INFORMATION

     NYT,etc - Mr. Ragat  Gupta, former CEO of McKinsey and Company and past Board Member of Goldman Sachs, was found guilty and convicted June 15, 2012 for securities fraud and conspiracy.  It's another "victory" for federal prosecuting attorney Bharara in Judge Jed S, Rakoff''s court room. Attorney Bharara has successfully charged 66 executives and traders in the past 3 years on insider trading crimes, with 60 of them pleading or found guilty.  "The government wants to protect investors, sending the message that the stock market is a level playing field and not a rigged game favoring Wall Street professionals" states the NYTimes. 

 

     Mr. Gupta is from Kolkata, India and per the Times article was "an orphan who earned an engineering degree and came to the United States to attend the Harvard Business School on a scholarship.  The global world has been stunned by the charges against Mr. Gupta".  Sentencing has been set  for October but an appeal is likely.

EXECUTIVE COMPENSATION PER EQUILAR, INC.

     NYT - The New York Times has published the total compensation of 200 Chief Executive Officers of U. S. public companies for the year 2011.  These  200 employees averaged $19,801,485 each. Total compensation includes base  salary, cash  bonus. perks/others, stock awards and option awards.  The average base salary was $1,322,908. Heading total compensation list of the 200 is CEO of Apple, Timothy D. Cook, with $377,996,537 (that's $3/8's of a $Billion). The next 4 CEO's are:  David Simon of Simon Property Group with $137,206,818; Lawrence J. Ellison of Oracle  with $77,556.015; Leslie Moonves of CBS with $68,422,211; and  Ron Johnson of J.C.Penny with $53,281,505.  If the annual compensation of the "average" worker is about $58,000.00 and the average annual compensation of the 200 Executives under discussion, the average executive is annual paid 341 times that of the average worker.

     It is not disclosed how many of these CEO's are also the Chairman of their Board of Directors, but it's a fair assumption the majority are also their Boards' Chairman. ALL German and Dutch public companies DO NOT allow dual CEO/Chairman roles.  79% of British companies have a 2-tier CEO-Board Chair relationship. (See Chapter 9, Lax Board of Directors, in the book "The Greedsters", pages 325-353 and especially page 334).

    It's only fair to shareholders to separate the roles of CEO and Board Chairman. The corporation will be better off because of it.

LONG SENTENCES FOR NON-VIOLENT CRIMES VERY COSTLY

     NYT - An editorial in the New York Times raises the question of the costs of long confinement of non-violent prisoners whose early releases would have little risk to public safety and would save $billions of dollars in the long run.  Ask someone who has been fleeced of life-time savings, whose children have been deprived of a good education, whose life styles have been severely altered by "non-violence"  crimes. Their "penalty" is a changed life style.  Madoff's ponzi caused at least two suicides, and who knows the effects of many other "non-violent" crimes.  Today's sentences may be questioned, but isn't living a degraded innocent life destroyed by a crime worse then incarceration for life?  The non-violent crimes are committed by those who should know the consequences, whereas many victims of such crimes unknowingly are at risk. Who should deserve the long penalty?  Certainly not the innocent. A crime deserves a punishment but when is enough? - when is too much?  Tough questions.

STANFORD GETS 110 YEARS IN PRISON

WSJ - .NYT - StarTrib - No longer  "Sir ", but rather "Stir" R. Allen Stanford was handed a sentence of 110 years in Federal Prison on June 15, 2012. (no parole but possible appeal).  Mr. Sanford is detailed on pages 181-202 in the book "The Greedsters". The 6 foot 4 inch Texan maintained his innocence despite testimony by his former Baylor University roommate, James M. Davis, who was also his chief financial officer but main informant.  Mr. Stanford said after being convicted and sentenced, "I am not a thief".  One victim who lost $1.5 million to Stanford said in court, "You deserve what's coming to you. You are a dirty rotten scoundrel".  Federal Judge Hittner, besides the prison sentence,  ordered Mr. Stanford to forfeit $5.9 BILLION in his bank's deposits associated with his misdeeds. A severe prison beating had caused Stanford to suffer a memory loss, but the Judge stated Stanford  had "exaggerated  his impairment" and he was competent to stand trial.  Three of the perpetrators of the largest ponzi schemes have been sentenced: Madoff to 150 years, Petters to 50 years and now Stanford to 110 years.  All three will probably die in jail - were  the crimes worth it?  In 2000 Mr. Sholam received an 845-year sentence for fraud and in 2008, Mr. Norman Schmidt was given a 330-year sentence for an investment fraud. Why don't others learn from these experiences?

BANKS PAY RECORD FINES FOR ILLEGAL FOREIGN EXCHANGE

     WSJ - Sanctions enforced  by the U.S. Treasury Department's Office of Foreign  Assets Control against foreign banks for "moving" sums of money without disclosure to the Treasury have resulted in big fines to several banks.  The Wall Street Journal announced the ING Bank, a unit of ING Group NV (a large Netherland bank) "stripped" mention of some foreign countries when moving large sums through the processing by the U. S. Treasury in Manhattan where most dollar payments are "filtered" to spot terrorists and those involved in money laundering.  ING agreed to a penalty of $619 MILLION.  The Credit Suisse Group AG bank paid $536 MILLION and  Lloyd's Banking Group forked over $350 Million in 2009.  In 2010, Barclays PLC Bank was fined $298 MILLION.  One of the common money routings used Cuba and Iran to get around clearing through Manhattan.  By stripping "little white lies", forming shell companies and other  devices, transactions were most difficult to trace.  So you think "banking" is an honorable profession?  Only sometimes!!! 

3 MORE SNAGGED IN COOKS' PONZI SCHEME

     StarTrib - Trevor Cook was found guilty in a massive Ponzi scheme in 2010 and is now serving a 25 year prison term.  3 more men were convicted  yesterday of varying degrees of fraud and money laundering related to Cook's misdeeds.  Cook concentrated mainly on hedge funds, Jason "Bo" Beckman, Patrick Kiley and Gerald Durand essentially targeted individuals.  Mr. Cook had explained earlier to authorities his program, created by him, dealt with fraudulent currency investments, working through special access with banks that comply with Islamic Shariah law prohibiting interest charges, thereby affording his investments a higher rate of return.  It takes all kinds---.  

ABACAS, A CHINESE AFFINITY BANK

     NYT - In 1984, Mr. Thomas Sung, along with business leaders from the Chinese community that included Lower Manhattan, formed the Abacas Federal Savings Bank. The bank became an important financial source for Chinese  people in northeastern United States.  Because the bank was primarily for Chinese customers, it can be classed as an "affinity bank".  Abacas mortgages were sold to other financial institutions to raise cash for the bank after a "run" occurred on the bank when it was disclosed a bank manager had helped himself to $1 million of customers' money.  It was discovered very lax mortgage requirements applied to many of the sold mortgages, smacking of a scheme.  Ms Jill Sung became Bank CEO and her father Thomas became Chairman of the Board. 

    
 Neither Sung has been charged in the mortgage schemes.  However, 19 "former" employees were charged, with some of them requiring a translator for them to understand the charges.  Mr. Yiu Wah Wong was the most senior manager of the bank and one of those charged.  According to Mr. Edward Starishevsky. an assistant district attorney,  "Mr. Wong was involved in this entire conspiracy from beginning to end".  He was arrested in April and has been free on $100,000 bail. Those charged could face up to 25  years in prison.  It's not uncommon for a specific race or group to be called an "affinity" when gathered together.

DENNY HECKER MOVED AGAIN

     StarTrib - For at least 6 times in 5 months, prisoner Denny Hecker has been moved, this time to the U. S, Penitentiary in Canaan, Pa. from a transfer facility in Oklahoma City. Mr. Hecker has been "given diesel therapy" for breaking prison rules. He has been sentenced to 10 years in prison for fraud. He had compiled debts of $767 million while living a high life style with and through 26 car dealerships. " Diesel Therapy" is an insider's description of penalizing a prisoner by constantly moving him or her from state to state and prison to prison, "to show who's the boss", disrupting contacts and maintaining some semblance of privacy as to where the  prisoner is.  Hecker can be classed as a "greedster" but was not included in the book "The Greedsters" because sentencing came after the book was published.

BEAR STEARNS EXECS SETTLE FOR $275 MILLION

     WSJ - Wreckage from Bear Stearn's March, 2008 demise reared its ugly head once again when it was announced yesterday the settlerment of a shareholders' lawsuit against top executives of the firm. The settlement? $275 million on behalf of sued executives that included Mr. James Cayne and Mr. Alan Greenberg.  What does this settlement cost the executives?  Not much.  When J.P.Morgan Chase took over Bear Stearns in 2008, a $9 billion fund was established by J. P. Morgan for probable settlements.  Part of this $275 million settlement is a statement that executives involved denied any wrongdoing.  An article in the Wall Street Journal stated in 2010, a Countrywide Financial lawsuit was settled for $600 million and in 2009, Merrill Lynch paid $475 million, after these two firms had been purchased by Bank of America.  In 2011. Washington Mutual paid $208.5 million settlement in a lawsuit and was snapped up by J,P,Morgan, and in May, 2012, a $90 million settlement of an investors lawsuit was reached regarding Lehman Bros.  Much of the settlement money came from "Directors and Officers Insurance". 

     It's a warning to all Boards of Directors - be sure the company you represent have you covered with adequate insurance. You're at risk. See  Chapter 9 in the book "The Greedsters".

DUAL ROLE OF CEO/BOARD CHAIR UNDER ATTACK

     WSJ- At  long last, the pendulum is swinging towards non-sharing of the roles of CEO and Board Chairman by the CEO.  According to head-hunter Spencer Stuart, 20% of S&P companies now have separate individuals as CEO and Board Chair compared to 12% in 2007.  This development "is creating a second seat of power (and responsibility) at the top of big companies".  Mr. Stephen Davis of Yale's School of Management states "Shareholder resolutions have been critical in opening boards' minds to splitting the chair and CEO".   At Nabors Industries, Ltd., a shareholder's resolution was approved to give shareholders a better way for making choices felt when voting occurs.  A  restriction on shareholders limits a shareholder's vote, however, to one who has held at least a 3% ownership position in shares for more than 3 years to nominate competing candidates for up  to a fourth of the Board's seats. It's a start, at  least.

CLAWBACKS HAVE SHARP CLAWS

Star Tribune - Tom Petters ran a $3.65 Billion Ponzi fraud in 2008. He declared bankruptcy and  has been convicted in Federal Court and sentenced to 50 years in prison.  But - effects of the fraud live on.  The law firm of Fredrickson & Byron in Minneapolis on May 31 announced a settlement with the bankruptcy trustee and returned $13.54 million in fees collected for legal work during the Ponzi scheme period.  The firm stated its payment was fully covered by a professional insurance policy.  The law firm denies any awareness of the Ponzi.  

     Also, the trustee said on May 31 it collected $1.25 million in settlement with the John T. Petters Foundation, monies contributed to it by Petters and others. On May 30, the trustee had announced collecting $19 million from General Electric Capital Corp with GE professing no knowledge of the Ponzi.  These figures swell the Petters clawback total to $299 million. The threat of a court trial showed the sharp claws of the recovery.  Settlements must be approved by Judge Gregory Kishel of the Federal Bankruptcy Court. 

SHAREHOLDERS KEPT IN DARK ON MERGER LOSSES

     Three and a half years late, it was revealed in court documents filed June 3, 2012 (in advance of a shareholder's lawsuit) that in the merger of Bank of America and Merrill Lynch on September  12, 2008, B&A  failed to disclose to shareholders (voting for a Merger in person and in a proxy)) that huge losses to B&A were probable because of the Merger.  Subsequent undisclosed losses totaled at least $14 billion. As these losses unfolded after the Merger, the common stock of B&A fell more than 50%, wiping out about $50 BILLION in market value. Per the New York Times article of June 4, 2012, 2 days after that shareholders meeting, B&A's Board of Directors met and were told of the loss of $14Billion in the 4th quarter of 2008. The Bank's General Counsel, Mr.Timothy Mayopoulos, lost his job the next day after he expressed  surprise by the size of the losses. "He was fired without explanation and immediately escorted from the premises without being given the opportunity to collect  his personal belongings".

      At Merrill Lynch, before the Merger, Mr. John Thain displaced Mr. Stanley O'Neal as CEO and Board Chairman in November, 2007. Previously, Mr. Thain had been Co-Chief Operating Officer for Goldman Sachs, COO and CEO of NYSE and NYSE Euronext, Inc.  Merrill Lynch under-performed badly in 2008 and Mr. Thain finally found B&A agreeable to a merger which  was consummated on September 12, 2008. Mr. Thain received total compensation of $83 million for his less than a year at Merril Lynch. He was slated to be the new CEO and probable Board Chairman of B&A after the Merger was completed.in January, 2009. After 2008 multi-billion dollar losses (with  many days losing $16.5 Million every HOUR of an 8-hour day) at Merrill Lynch for the 4th quarter were announced, Mr. Ken Lewis ( the CEO at B&A who Mr.Thain was replacing) called Mr.Thain, after which Mr. Thain was fired the next day, receiving $93 million for his 53 days associated with B&A.  In 2010, Mr. Thain became CEO of the CIT Group Inc. at a salary of only $6 million. Wall Street is unbelievable, isn't it?  

WSJ SCOOPED BY NEW YORK TIMES

The Greedsters Sequels originates in Minneapolis, Minnesota.  Where the printed editions of home-delivery-week-day Wall Street Journal and New York Times papers are completed aren't totally known, but the Journal's  Monday, June 4, 2012 home edition carried nary a trace of the news pertaining to Bank of America's current announcement of the lack of notice to its shareholders of the pending horrendous losses in the merger with Merrill Lynch in December, 2008.  The New York Times carried a front-page story in  IT'S June 4, 2012 home edition with the column headline, "Merrill Losses Were Hidden Before Merger". 

 

     This news item is a major development from the 2007-2012 financial disaster and will be detailed in another Sequel.  Somebody at the WSJ certainly has egg on his or her face but you can't win 'em all!!

"THE GREEDSTERS' ON KINDLE

     NOTICE: The new book "THE GREEDSTERS" has recently been listed on Kindle, for sale at $16.99. The Greedsters had its initial printing in late April, 2012 and is now being distributed in the market. The 400-page paperback will be available through most bookstores and other forms of availability.  Early comments from readers include "astonishing" and "a must for every household and business".  "THE GREEDSTERS SEQUELS"  is available on the Internet as to current information on  individuals, companies and organizations contained in the book plus any related items not contained in the book because of its publication date. The purpose of the Sequels is to keep "The Greedsters" book up-to-date so it has a life of its own.

THIEVES STEAL BRONZE STARS FROM VETERAN'S GRAVES

     Mpls. StarTribune - A cemetery in Isanti County, Minnesota has been raided by thieves removing 5-pointed bronze stars, with a holder on back to display an American flag, from graves of veterans.  The Commissioner of Minnesota's Department of Veteran's Affairs Larry Shellito has made it one of his priorities for the State agency to have  a 2-year supply of these special bronze stars to "accommodate the 10,000 Minnesota veterans who die each year". They cost $ 30,00 each but the metal in them is worth much less.

DENNY HECKER DEFIES PRISON RULES

     StarTribune - Ex-car dealer Denny Hecker has been moved to a 5th prison in 4 months for defying certain prison cell phone rules.  Such  repeated moves is termed "diesel therapy" by the "trade".  Mr. Hecker is serving 10 years for fraud.  He owned or shared ownership in 26 car dealerships but declared bankruptcy owing debts of $767 million.
 A bankruptcy auction of assets included cars and boats and 71 fancy watches, one of which was a $24,100 Rolex.  His car advertisements often featured his picture. 

     He married his girl friend by cell phone while both were in separate prisons but a judge declared the marriage null and void because of the phone ceremony.

CHESAPEAKE ENERGY CUTS COMPENSATIONS

      AP-Criticism of certain payments have led Chesapeake Energy to consult with an outside compensation advisor.  As a result, the company will cut the pay of its chief executive officer, name an outsider to the seat of Chairman of the Board, eliminate the personal use of company aircraft and ban personal company loans to executives.  From now on, outside directors will be paid $100.000 in cash and $250,000 in company common stock per year.  The company claims these changes bring outside director compensation to be more similar to their corporate peers.  A good move!

ND FLOWS PAST AK AS US #2 OIL PRODUCER

     WSJ - In 2008, North Dakota produced 144,000 barrels of oil daily, ranked 8th in US.  In March, 2012, ND pumped 575,490 bbls daily to take the # 2 spot ahead of Alaska (pumped 567,480 bbls daily. Texas pumped 1,700,000 bbls daily in February, 2012 for the # 1 spot). Oil production has skyrocketed in ND since hydraulic fracturing or fracking has tapped geologic shale for gas and oil.  

ND has its Bakken shale which is triggering budget balances ahead of plan, motel rooms reserved years ahead, highways clogged with trucks and even restaurants with long lines of waiting customers.  Happy days for the roughnecks but beware of boom days.

SHAREHOLDERS OF JPMORGAN HAD THEIR CHANCE

     WSJ-NYT - The annual shareholders meeting for J P Morgan/Chase was held in Tampa, Florida on Monday, May  14, 2012.  The meeting couldn't occur at a worse time after the disclosure of horrific trading loss the previous Thursday.  Two majors items appeared on the Agenda: (1) Should Jamie Dimon remain as CEO, and (2) If he remains Chief Executive Officer , should he continue as Chairman of the Board. Both issues were eventually voted in the affirmative.  It seemed shareholders had their chance to demote or even oust Mr. Dimon from one or both of those most important corporate positions.  Many shareholders felt strongly that Mr. Dimon  should be replaced, especially after the "London Whale" fiasco of losing more than $2 billion -  and maybe as much as $4 billion - in crazy (it turned out) investments in derivatives called credit default swaps. Why didn't the shareholders vote negatively and "toss the rascals out"?  As a practical matter, votes at shareholder's meetings  don't carry the weight you might think  they should. A ton - and a  majority - of votes were probably declared by proxy BEFORE  the meeting, before the London Whale Affair was made public on May 10, 2012,  Mr. Dimon, apparently in late April, 2012, was advised of a potential major problem in the London investment office. In the ensuing 2 weeks or so,  Mr. Dimon was trying to modify or at least calm a brewing storm. He couldn't as the trade values had  started to skid,  JPM was forced to come up with gobs of cash and tried to find some sort of buyers for all or at least part of their positions, to no avail. The point is - it's very doubtful many shareholders knew the enormity of the problem - Friday, before the Monday  shareholders' meeting, 
   
JPM announced a FURTHER LOSS OF  $ 200,000,000 that single day and there were few if any buyers for their positions.

The shareholders' proxy votes were before the fact - before the announced losses.  Mr. Dimon's jobs as CEO and Board Chairman were judged before the roof fell partly in.  

DIMON SURVIVES JPM/CHASE ANNUAL MEETING

     WSJ/NYT - On Monday, 5/14/12, the Annual Shareholders' Meeting of J P Morgan/Chase was held in Tampa, Florida. This only four days after announcing the fiasco of losing a plus $2 Billion in investment/trading losses in London mainly by the so-called  "London  Whale", Bruno Michel Iksil . Shareholders at the Tampa meeting, in person or by proxy, represented majority affirmative totals to (1) retain Mr. Jamie Dimon as CEO and (2) retain Mr. Dimon on the company's Board of Directors where he is Chairman. These two actions swim against the corporate tide of gradually separating the CEO/Board Chairman tie held by the same person. 

 

     Mr. Dimon was contrite in his speech to the shareholders, taking full blame for London losses because "the buck stops with me".  It was disclosed on Friday, 5/11/2012, a further $200,000,000 (that's million) was lost on that day, large losses were still occurring and total losses could reach a total of $4 Billion.  It should be noted the total votes cast on Monday, 5/14  could include proxies exercised BEFORE  the previous Thursday's announcement of London losses.  Proxies could be recalled in person at the meeting.  Mr. Dimon is not off the hook but he has a fine reputation to ride upon.

MR.JAMIIE DIMON LOSES HIS LUSTER

     May 13, 2012 - A startling trading loss of $2 BILLION dollars (and could get worse) by J. P. Morgan/Chase was exposed to the world today.  Mr, Bruno Iksil, a JPMorgan trader in London, has been called the "London Whale" for piling up huge risks in credit default swaps, a form of derivatives, which threatened to upend the entire derivative market. CEO Jamie Dimon knew of the terrible overall risk on April 13, 2012, and dismissed it by labeling it "a tempest in a teapot".  

 

     NYT's writer Jason Zweig suggests the principle of famous physicist  Richard Feynman be applied.  The principle is clear: "You must not fool yourself - and you are the  easiest person to fool".  A handy investment reminder is the biggest dangers in finance is self-deception.   Columnist Joe Nocera has stated our financial system has lost both its moorings and its ethical compass.  During the last half of April and early May, JPMorgan was LOSING $200 million per day.  Mr. Dimon has now admitted the bank's strategy was flawed, complex, poorly reviewed, poorly executed, and poorly monitored. Ouch!!! it's enough to sink the London Whale.   

NEW YORK CITY LAW FIRM COLLAPSES

     May 13, 2012 - WSJ - NYT  -  The old and huge New York law firm of Dewey and LeBoeuf seems to be calling it quits because of over-powering debts.  Partners in droves have packed up and left.  Partners were required to put money into the firm when they joined - and that  investment is gone.  Even worse, pensions may be wiped out or severely reduced and money paid to them in the past might be reclaimed.  The firm with 100-year roots had 2,000 world-wide employees. 

 

     Former Vice-chairman of Dewey, Morton A. Pierce, is indicative of the hurt that will be suffered: his contract calls for $8 million annually and he says the company owes him $61 million. His "Boeuf" (beef) is he may never be paid what he  is owed.

CHESAPEAKE ENERGY REBUKES CEO/CHAIRMAN

     5/8/12- WSJ - The Greedsters Sequels covered Mr. Aubrey Mclendon being booted out as Chairman of the Chesapeake Energy Corp on May 5, 2012.   While CEO and Chairman of the Board, he amassed an amazing array of personal assets during his long tenure of plus 20 years. He was involved with a hedge fund, two venture-capital companies, owned part of the Oklahoma City Thunder, owned a portion of a TV station, restaurants, a cattle ranch, cancer-treatment center, and outlets vending soft drinks. A variegated businessman !!!

BANK OF AMERICA SHAREHOLDERS IRATE

    May 10, 2012 - WSJ - B&A common stock was down 58% in 2011. Of course the shareholders were  unhappy but even so, at the annual stockholder's meeting on 5/10/12, 92% of the shareholders approved the CEO's 2011 compensation of about  $7 million including a base salary of $950,000 and $6 million in

restricted stock. 

 

     A demonstration at the Charlotte, N. C. shareholder's meeting "staged a boxing match dubbed 'Bank of America vs America'" and bounced a large ball around labeled "debt".   

 

     Bank of America is widely referenced  in "The Greedsters" in 24 separate pages.

REVERSE GREED FOR FREDDIE MAC

     NYT - The Federal Government controls the mortgage giant Freddie Mac after shoveling $13 billion into the company in 2010 to rescue it from default. Then, in 2011, Uncle Sam  forked over an additional $ 7.6 billion.  Now, on May 4, 2012, Freddie Mac has requested $19 million more for the first quarter of 2012 ( loss for the first quarter totaled $1.2 billion).  All of this can be labeled "reverse greed".

MANY COLLECTORS ARE GREEDY!!

     Denver  Post  - Heritage AuctIions announced an anonymous buyer paid $418,250.00 on May  4, 2012 for the baseball that rolled through the legs of Boston Red Sox first baseman, Bill Buckner, that enabled the New York Mets to win the game and eventually the World Series in 1986.  It proves there is a serious buyer for anything.  You wonder how many baseballs Mr. Buckner has collected. 

ONE OF WORLD'S RICHEST MEN GETS DEMOTED

      WSJ - 5/3/2012 Founder, Board Chairman, and CEO Mr. Aubrey Mclendon of Chesapeake Energy Corporation was dealt a blow by his Board of Directors when they voted to  replace him as Board Chairman without an immediate replacement. As a leader in the recent gas-drilling frenzy and fracking of shale formations to release trapped gas and oil, Mr. McClendon had a neat deal with the company that allowed him to purchase a 2 1/2% share in every well drilled by the company.  That right was terminated when he stepped down on Tuesday, May 1 as Chairman.  Talk about sweet-heart deals: In the first full year of his right to buy into new wells, Chesapeake drilled 19 wells. In 2011, they drilled nearly 1,700 wells, and Mr. McClendon's personal cost of the 2 1/2% of each well was $457.2 million.  He borrowed money from private sources -  as well as from Chesapeake without the Board being fully informed.  It's another example of misuse of a financial position when being CEO and Board Chairman.  More and more  companies are finally realizing the financial risk of the dual voting positions of CEO and Board Chairman. being the same person.

FORMER NY STATE SENATOR SENTENCED TO 7 YEARS IN PRISON

     A former New York State Senator, Carl Kruger, pled guilty before Federal District Court Judge Jed Rakof to accepting $1 million in bribes.  Despite pleas for a lighter sentence, the Judge said, " once corruption takes hold, democracy becomes a charade". A co-defendant, Dr. Michael Turano, received a 2 year sentence for lesser bribes but should go to prison "because he did help to corrupt our government".  Judge Rakof is a very active Judge and has been deeply involved in important inside trading cases.

WILT SCORED 100 POINTS 50 YEARS AGO

     WSJ - 2/28/12- With NBA basketball playoffs underway, it's only proper writer Gary Pomerantz recalled the historical basketball game played in Hershey Stadium on March 2, 1962. Wilt Chamberlain, on the Philadelphia Warriors team against the New York Knicks, scored 100 points, made 36 of 63 field goal attempts (without 3-point shots), and sank 28 of 32 free throws. At 7 foot 1 inch and 260 pounds, his stride coming down  the floor measured 8 feet.  Dolph Schayes of the Syracuse Nationals has said Chamberlain was "the most perfect instrument made by God to play  basketball".  A heart attack in 1999 killed Wilt at the age of 63.

ARTHUR ANDERSON EX-CEO FINED $ 400,000.00

     Den.Post--Recently, H. Clayton Peterson,  former Chief of the Denver office of accounting firm Arthur Anderson pled guilty to charges of relaying inside information on a pending acquisition of Mariner Energy.  He was sentenced to a 2-year probation, 3 months of home confinement, and a $400,000.00 fine  As a Director of Mariner, Peterson relayed inside information to his son, Drew, who is awaiting sentencing after pleading guilty.  He passed inside information on to hedge fund manager, Bo Brownstein, who made $2.5 million on the information.  He also pled guilty and is awaiting sentencing.  Peterson's attorney stated his client had limited assets, although records show liquid assets of $2.1 million and real estate worth  $1 million in Denver, Beaver Creek, and Phoenix.

LONG HAIR A CRIME

     LATimes- Seven members from a splinter cult-like Amish group from Bergholz, Ohio recently may face life imprisonment  for assaulting other Amish males by giving unwanted haircuts to those who have married. Such acts, according to Amish religion, are regarded as especially "heinous".  FBI agents conducted the haircut raid, and those committing  the crimes have been charged and face sentences of as much as life imprisonment. Removing men's beards and women's hair after marriage is prohibited by the conventional Amish.

NADEL DIES IN PRISON

      WSJ- The Greedsters page 61:
     Ponzi artist Arthur Nadel  died at the age of 80 in Federal Butner prison, N. C. He was guilty of fleecing the elderly of $397 million - a mini-Madoff. He faked suicide, then turned himself in.  His auditor was also fraudulent. Nadel said "I have been my own worst enemy".                    

ALL ABOUT RICHARD G. "DICK" GRAY, SR., D.Sc. (HON), AUTHOR OF "THE GREEDSTERS".

     Dick Gray is the author of the unique, fascinating financial book, "The Greedsters", published in the year 2012.

  It has been said Dick Gray is a true Renaissance Man of many talents. Born on April 6, 1918 in Peoria,  Illinois, he likes to describe himself as one who has lived many different types of lives during his 94 years through 2012.

  He  was educated as a Petroleum Engineer at Dartmouth College, the University of Wyoming and the University of Minnesota, from which he graduated in 1940. Montana State University has recognize d his contributions to science with an Honorary  Doctorate Degree in Science (D.Sc. (Hon). TheUniversity of Minnesota has honored him with an  Outstanding Achievement Award and he has received many other similar recognitions, including the Proclamation at  the State Capitol  by the then Minnesota Governor Tim Pawlenty of Dick Gray Day for the State of Minnesota on April 24, 2006.

  As a U.S. Naval Officer during WWII, he was aboard an amphibious attack ship (APA) and covered  68,000 miles of the Pacific Ocean in areas of engagement that included the invasion of Iwo Jima.

  In 1948, he founded the Minnesota Corporation, Zero-Max Industries, Inc. and for 33 years sold a patented mechanical variable speed device throughout the world. He owned a company in Basel, Switzerland, Zero-Max, A.G., which was used for a free-port distribution system for Europe. Zero-Max Industries Inc. was sold in 1981 to the Miki Pulley Company of Kawasaki, Japan with American headquarters in Golden Valley, Minnesota. Zero-Max products are widely sold and used in the world today.

  In 1968, Mr. Gray joined the Board of Directors of the Investors Group of Companies in Minneapolis, a mutual fund complex of 35 companies, sold by IDS (later American Express and Ameriprise Financial), at the time the largest complex of funds in the world and today has assets in excess of $one hundred million. He was a Board member of all companies for 25 years and CEO for 5 years. He was a member of the Investment Company Institute (ICI) of Washington, D. C. and became familiar with numerous major financial companies, their executives and many of their policies.

  Also in 1968, Mr. Gray founded what today is The Freshwater Society. He led a drive to raise $multi-millions to plan, build and equip a 52,000 square foot research facility which was donated to the University of Minnesota's College of Biological Sciences for freshwater research. He continues to be a Board member of the non-profit The Freshwater Society.

  A world traveler, Dick  Gray has had residences in Minnesota, Colorado and Arizona, where he has been active in a multitude of non-profit organizations, including the Minneapolis YMCA, Center for the Great Lakes, Minnesota Planned Parenthood, Science Museum of Minnesota, Wolf Ridge Environmental Learning Center, Lamont-Doherty Geophysical Laboratory atColumbia University and the Marion Downs Hearing Center Foundation in Denver , Colorado.

  Because of his worldly business, financial, charitable and executive experiences, he felt he was qualified to write "The Greedsters", a book full of greed examples  on Main Street, Wall Street and other financial scenes around the globe

What is "THE GREEDSTERS"?.

 Post (2) : April 16, 2012- :"The Greedsters" is a new financial book that is fascinating and easy to read   - a must  for anybody's library. This 400-page paperback describes the History of Greed in the Western World; Greedsters Today; Greedsters Ponzi Schemes; Greedster Madoff; Greedster Stanford; Greedster Banks; Greedsters on Wall Street; Greedsters on Main Street; Lax Boards of Directors; the Federal  Reserve System; and seven pages of Terminology and new financial terms. The book is available for $16.99 at  most bookstores, on Kindle and Kindle Fire and other "Readers", from Amazon or directly from The Cherry Creek Co., LLC, 130 Holly Lane North, Plymouth , MN. 55447.