*IT’S (LOAN) SHARK WEEK: FAMILIES ARE BITING BACK!(ARTICLE BELOW)
*TAX AVOIDANCE: NIKE JUST DID IT AGAIN THE SPORTS GEAR GIANT SITS ON $12.2 BILLION OF UNTAXED PROFITS ABROAD (ARTICLE BELOW)
*FTC INVESTIGATING AMAZON AFTER NONPROFIT CLAIMS COMPANY DECEIVES CUSTOMERS WITH FAKE PRICES(ARTICLE BELOW)
**CORPORATE AGRICULTURAL DUMPING: GROWING THE WEALTH GAP(ARTICLE BELOW)
*HERE’S HOW TO BEAT YOUR STUDENT DEBT COLLECTOR(ARTICLE BELOW)
*BIG TOBACCO BULLIES THE GLOBAL SOUTH. TRADE DEALS ARE THEIR BIGGEST WEAPON (ARTICLE BELOW)
*Capital Punishment or Capital Reward?(ARTICLE BELOW)
*OHIO DECISIONS COULD PUT MORE RATEPAYERS ON THE HOOK FOR OLD CLEANUP COSTS (ARTICLE BELOW)
*WELLS FARGO STUCK MORTGAGE BORROWERS WITH EXTRA FEES, WHISTLEBLOWER’S LAWSUIT SAYS(ARTICLE BELOW)
*KUSHNER PROVIDES 'TEXTBOOK EXAMPLE OF CRONYISM' AS HE SLIPS HIS STARTUP INTO WHITE HOUSE ROUNDTABLE(ARTICLE BELOW)
*YELLEN CONCEDES POINT ON DOMINANCE OF BANKS — U.S. CORPORATIONS HOARDING “A LOT OF CASH”(ARTICLE BELOW)
*PRIVATE EQUITY: THE NEW NEIGHBORHOOD LOAN SHARKS(excerpt BELOW)
*BETSY DEVOS INVESTED IN MILITARY TECH CONTRACTOR RUN BY SON-IN-LAW, WHILE BROTHER SHAPED AFGHAN WAR POLICY(ARTICLE BELOW)
*PHILIP MORRIS CIGARETTES CHARGED MILLIONS AFTER LOSING PLAIN PACKAGING CASE AGAINST AUSTRALIA(ARTICLE BELOW)
*FEDERAL COURT TO DECIDE WHETHER GE CAPITAL WAS COMPLICIT IN PONZI SCHEME (ARTICLE BELOW)
*EXPORTING HAZARDS OR GLOBALIZING REGULATION?(ARTICLE BELOW)
*WHY ISN’T BIG PHARMA PAYING FOR THE HARM IT CAUSED LIKE BIG TOBACCO? (article below)
*IRS PRIVATE DEBT COLLECTORS ACCUSED OF PRESSURING TAXPAYERS, BREAKING THE LAW (article below)
*ENTIRE CITIES ARE CUTTING TIES WITH WELLS FARGO FOR ITS SUPPORT OF THE DAKOTA PIPELINE( article below)
...The more the warning signs are palpable—rising temperatures, global financial meltdowns, mass human migrations, endless wars, poisoned ecosystems, rampant corruption among the ruling class—the more we turn to those who chant, either through idiocy or cynicism, the mantra that what worked in the past will work in the future, that progress is inevitable. Factual evidence, since it is an impediment to what we desire, is banished. The taxes of corporations and the rich, who have deindustrialized the country and turned many of our cities into wastelands, are cut, and regulations are slashed to bring back the supposed golden era of the 1950s for white American workers. Public lands are opened up to the oil and gas industry as rising carbon emissions doom our species. Declining crop yields stemming from heat waves and droughts are ignored. War is the principal business of the kleptocratic state...
"reign of idiots" by chris hedges
It’s (Loan) Shark Week: Families are Biting Back! From payday loan sharks to Wall Street bottom-feeders, financial predators of all shapes and sizes are
By Jessica Juarez Scruggs / OurFuture.org July 24, 2017, 12:55 PM GMT
It’s Shark Week, but the most dangerous predators this year aren’t on TV or at the beaches – they are in Washington D.C., where they are menacing families with the help of their chums in Congress.
From payday loan sharks to Wall Street bottom-feeders, financial predators of all shapes and sizes are descending on our capital to take a bite out of financial protections.
Over the past six months, we’ve seen these sharks swarm in a feeding frenzy on our rights. GOP-backed Trumpcare wants to destroy Medicare and Medicaid, and take health care away from millions of Americans.
The Trump administration’s proposed budget slashes funds for public housing, food assistance and protecting the environment.
Newly appointed Education Secretary Betsy DeVos is refusing to to forgive loans to students defrauded by for-profit colleges, while seeking to funnel millions of dollars into for-profit charter schools.
On issue after issue, the GOP, the president and his team prioritize corporate tax breaks and tax cuts for the wealthiest one percent.
Sharks Attack the CFPBIn their latest attack on everyday people, Trump’s corporate sharks have set their sights on our financial system’s lifeguard: the Consumer Financial Protection Bureau (CFPB).
After Wall Street speculation nearly sank our economy in 2008, Congress created the CFPB to stand up for consumers and give them a voice – and some equal footing – in dealing with banks and lenders. The CFPB is a lifeguard for families making financial decisions. The CFPB is there when a shark gets us in their jaws through trickery or fraud – coming to the rescue and a chance for justice.
It was the CFPB that uncovered Wells Fargo’s massive effort to defraud consumers by opening fake accounts. Since it began, the CFPB has returned $11.8 billion to more than 29 million consumers defrauded by big banks and financial companies.
The CFPB rescues shark-attack victims; they issue rules that protect consumers from unfair and deceptive practices. Rules created by the bureau have prevented foreclosures, reduced racial discrimination in auto lending and stopped abusive debt collection practices. Last year, the CFPB began working on a rule to rein in the worst abuses of the payday loan sharks, an industry that traps more than 12 million Americans in a cycle of debt and desperation every year and strips billions of dollars from local communities. People’s Action members submitted more than 100,000 comments in support of a strong rule to the CFPB.
Last week, the CFPB issued a rule that would stop banks and credit card companies from forcing consumers into arbitration, a process rigged in favor of the big banks. Just hours after the CFPB issued its arbitration rule to ensure that consumers who are wronged can go to court to get justice, top Senate Republicans announced an effort to kill the rule.
In May, Texas Representative Jeb Hensarling, chair of the House Financial Services Committee, introduced the CHOICE Act, a Wall Street dream-come-true. The CHOICE Act would eliminate the CFPB’s ability to examine banks, credit reporting agencies, debt collectors and lenders to ensure they are following the law.
CHOICE would stop the CFPB’s rule on payday lending before it’s even issued. It would repeal the requirement that investment advisers act in the best interest of their clients, and allow banks to charge more for debit cards.
The same sharks that caused a worldwide financial crisis are circling again. They are determined to dismantle as many regulations and protections as they can.
We are putting the Wall Street sharks on notice: This Shark Week, we are biting back.
Tax Avoidance: Nike Just Did It Again The Sports Gear Giant Sits on $12.2 Billion of Untaxed Profits Abroad
By Matthew Gardner, Senior Fellow, ITEP
From DC Reports: The Nike Corporation’s annual financial disclosure of income tax payments is always notable for two recurring trends: the Oregon-based company’s steady shifting of profits into offshore tax havens, and Nike’s apparent effort to conceal how it’s achieving this tax avoidance. This year’s report, released earlier this week, is no exception.
Nike now holds $12.2 billion of its profits offshore as “permanently reinvested earnings,” up from $10.7 billion last year. Designating its profits this way allows the company to avoid paying even a dime of U.S. income taxes on these profits until they are repatriated to the U.S.
This ability to postpone paying U.S. income taxes, known as “deferral,” isn’t quite as troubling when the companies are clearly doing real business abroad and paying a reasonable amount of taxes in other countries. If these profits are repatriated to the U.S., the federal tax on foreign income is the statutory U.S. corporate tax rate of 35 percent minus whatever has already been paid to foreign governments.
But if a corporation reports that it would pay nearly 35 percent of its offshore profits in U.S. taxes upon repatriation, that means the company must be paying almost nothing in taxes in the foreign countries where it claims to earn these profits.
And that appears to be exactly what Nike is doing. The company estimates that if its $12.2 billion was repatriated to the U.S., it would owe $4.1 billion in U.S. taxes, for a tax rate of nearly 34 percent. The clear implication is that the company has paid a foreign tax rate of almost zero on this $12.2 billion, including the $1.5 billion the company shifted offshore in the last year.
In the past, it’s been easy to identify a likely candidate for the destination of this offshore cash: Bermuda. As we noted in 2013, Nike disclosed owning a dozen subsidiaries in this tiny (and income-tax free) country, almost all of which were named after specific brands of Nike shoes. Since it seems unlikely that the company needs all those subsidiaries to help it sell flip-flops to the good citizens of Bermuda, a highly plausible alternative explanation is that Nike has been shifting its intellectual property to its Bermuda subs, where the income generated by its patents and technology won’t be taxed.
But Nike appears to have wised up to the negative publicity this stunt could create. In each year since 2013, the company has disclosed fewer and fewer Bermuda subsidiaries. The most recent report whittles down the list to just two, “Nike Finance Ltd” and “Nike International Ltd.” Has Nike abandoned its tax-sheltering ways and eliminated its other Bermuda subs—or has the company’s leadership decided to simply stop reporting the existence of these subsidiaries? The lax disclosure requirements governingg subsidiary reporting make it impossible to know for sure. But the hard fact is that Nike’s offshore cash is now even more tax-free, in 2017, than it was before its Bermuda subsidiaries started disappearing.
Nike’s apparently tax dodging illustrates the problem with Trump’s proposal to lower the federal corporate tax rate from 35 percent to 15 percent. Nike’s continuing offshoring of profits is a sobering reminder that if deferral is allowed, the tax rate Republican leaders are really trying to compete with is zero. Nothing short of ending deferral will stop Nike’s tax-avoiding ways.
FTC Investigating Amazon After Nonprofit Claims Company Deceives Customers With Fake Prices BY DENISSE MORENO ON 07/21/17 AT 1:19 PM
From IBTimes: The Federal Trade Commission is looking into claims made by a nonprofit that accuse Amazon of misleading customers about price bargains, a source close to the investigation told Reuters.
The probe is reportedly part of the FTC’s review of Amazon’s recent $13.7 billion deal to buy Whole Foods.
The complaint was brought up by the nonprofit Consumer Watchdog, which looked at 1,000 products listed on Amazon last month. The organization found Amazon showed reference prices or list prices on about 46 percent of the items. Among the products with reference prices, 61 percent of them were higher than any observed price charged by Amazon in the past 90 days, the report said.
“Amazon has persistently engaged in unfair and deceptive practices that violate Section 5 of the Federal Trade Commission Act, as well as laws protecting consumers in several states where it does business,” Consumer Watchdog said about the report.
In a letter to the FTC, the nonprofit called on the agency to block Amazon’s purchase of Whole Foods until the online retailer “formally consents to halt its deceptive pricing practices that falsely lead consumers to believe they are getting deals with discounted prices.”
The FTC’s "Guide Against Deceptive Pricing" warns retailers against using “misleading” and "inflated" list prices that try to make the item’s cost look like a bargain. The rules say “the advertiser should make certain that the former price is not a fictitious one.”
After the report, the FTC made formal inquiries about the claims, according to Reuters.
Report Findings On Amazon Prices
The nonprofit also found 38 percent of all reference prices were higher than any price charged by the online retailer in observed history. The report said more than half of Amazon’s “was” prices surpassed the maximum price observed within the previous 90 days.
Consumer Watchdog said the before-sale prices were the most misleading type of reference price used. Reference prices on sale items “exceeded the maximum price observed within the preceding 90 days an astonishing 97 percent of the time,” the nonprofit said.
In response, Amazon said Consumer Watchdog's report was "deeply flawed."
"The conclusions the Consumer Watchdog group reached are flat out wrong," Amazon told Reuters. "We validate the reference prices provided by manufacturers, vendors and sellers against actual prices recently found across Amazon and other retailers."
The FTC has previously gone after Amazon. The agency sued the online retailer in 2014, claiming it billed parents and other account holders for unauthorized app purchases made by children. The FTC said Amazon’s setup allowed kids to make unlimited purchases without parental consent within apps. The agency and Amazon settled the case and in May the FTC announced Amazon would refund more than $70 million in unauthorized in app purchases.
The FTC has previously settled cases with other tech companies, including Apple and Google.
Corporate Agricultural Dumping: Growing the Wealth Gap Friday, July 21, 2017 By Sophia Murphy and Karen Hansen-Kuhn, Inequality.org | News Analysis
From Truthout: The Trump administration is threatening to crack down on foreign steel producers who are allegedly dumping cheap steel into the US market. "Dumping," the practice of exporting goods at prices lower than in the country where the goods are produced, is widely considered an unfair way to gain foreign market share. But you're unlikely to hear Trump officials complain about dumping in agricultural trade because in this sector, it's the US exporters who are at fault.
The Institute for Agriculture and Trade Policy (IATP) has used World Trade Organization formulas to document the systematic dumping of US grown agricultural commodities (specifically wheat, soybeans, corn, cotton, and rice) for two decades. They found that in the wake of the volatile commodity markets that dominated in the period from 2007 to 2013, export prices largely exceeded production costs. In recent years, however, US agricultural commodity dumping has started again. According to IATP's calculations, in 2015 US wheat was exported at 32 percent less than the cost of production, soybeans at 10 percent less, corn at 12 percent less, and rice at 2 percent less.
Dumping clearly increases inequality between farmers in the global North and South. Less visibly, dumping also worsens incomes and increases inequality within rural America.
For the farmers who grow the same (or substitutable) crops in the importing countries, agricultural dumping makes it nearly impossible to make a profit. It is especially devastating for such farmers in low-income countries, where governments have no means to provide compensation, nor the economic power to use trade rules to defend their markets.
Dumping creates unfair competition for producers in other exporting countries, too. And by encouraging overproduction in the United States, dumping traps US producers as well, forcing them to engage in a never-ending push for higher yields or bigger farms, or both.
The biggest winners from dumping are the handful of agricultural commodity trading corporations that dominate the markets (four corporations control an estimated 75-90 percent of the global grain trade). Their enormous market power allows these agribusinesses to squeeze small farmers and consumers, keeping the vast majority of profits for themselves. Farmers typically earn just a few pennies out of each dollar of food their grain goes into making.
Farmers do make a profit some years. But many other years farmers work at a loss, while agribusinesses make money much more consistently. When we look at the cost of production and the movement to ports and then to export, there are profits and losses at various stages but much of it is hidden behind vertically integrated supply chains, for example when grain traders own feedlots or when poultry producers contract with farmers to control the breeding and raising of chickens while also controlling the processing and marketing.
Corporate concentration in nearly every sector of agricultural inputs, production, processing and distribution has increased substantially over the last 20 years. The system is structured in a way that allows, even encourages, farmers to operate at a loss, which maximizes profits further downstream for agribusiness and leaves the public covering the farmers' losses.
The US government's answer has been to encourage even more exports to compensate for low prices. The value of revenue insurance will also diminish over time as its value is calculated by a moving average of prices that are now, once again, decreasing. The fall in revenue will increase the political pressure on Congress to introduce "emergency measures," as has happened often in the past. Such financial bail-outs, while providing much needed relief, do nothing to redress the market inequalities between producers on the one hand and farm input companies, grain traders, and processors on the other.
One of the countries hardest hit by unfair competition with US agricultural exports is Mexico. Corn holds an important place in Mexico's economy, diet, and culture. Under the 1994 North American Free Trade Agreement (NAFTA), US corn exports to Mexico increased more than 400 percent in the first few years, disrupting local markets. Based on Mexican Census data, Tim Wise estimates that more than two million Mexicans left agriculture in the wake of NAFTA's flood of imports, or as many as one quarter of the farming population. Even when dumping rates decreased during the period of high prices, existing public support programs for agriculture in Mexico, as in the United States, tended to support the largest farmers and agribusiness interests, rather than the smaller producers who had been the backbones of their rural economies.
The Mexican government has responded to the Trump administration's calls to renegotiate -- or abandon -- NAFTA by seeking to diversify its sources of corn imports. One proposal in the Mexican Senate calls for the government to cease corn imports from the United States and instead purchase from Brazil, in effect substituting imports from one set of agribusinesses to another.
The big grain traders have also profited from new technologies, such as the computer-driven high frequency trading that now dominates financial markets and has amplified commodity price swings. These firms are in the business of adding value to primary commodities, whether they are fattening animals or turning corn into ethanol. Cheap grain then becomes an input, and the companies are happy to keep those prices low. The structure of those supply chains, as well as the rules that govern them, favor agribusinesses with global reach.
What's the solution? Several US food and farm groups see the re-opening of the NAFTA debate as an opportunity to challenge the enormous power of the big agribusiness corporations. In early 2017 they issued a call for a different approach to the trade deal -- one that allows countries to "protect their farmers from unfair imports that distort the domestic market, undermine prices, and ultimately compromise the economic viability of independent farmers."
There is an urgent need for a new approach to global trade rules -- an approach that respects the obligation on governments to protect food security at home, the complex relationship of food systems to economic development, and the importance of accountability in domestic politics in rich and poor countries alike. Prices must incorporate environmental costs as well and allow for sustainable resource use. It is time for strong, clear rules that value more equitable returns to food production and distribution throughout the supply chain, as well as stable and predictable food prices.
Here’s How to Beat Your Student Debt Collector Dozens of borrowers have successfully defeated creditors in court. Maybe you can, too.
By Shahien Nasiripour July 19, 2017 5:00 AM PDT
From Bloomberg: There are countless advertisements on the internet and late-night television promising the indebted an easy way out. Just spend a few thousand bucks, and poof—that debt is gone. For some types of student loans, this too-good-to-be-true scenario has proven out: Hiring an attorney can, in certain cases, get massively indebted borrowers out from under hundreds of thousands of dollars in loans. The reason is as simple as it is astonishing: Some creditors trying to collect on private student loans haven’t been able to prove in court that they actually own the debt in question, prompting judges to let borrowers off the hook. There are real risks, however, even if the prospect of dodging a massive debt seems tempting. Here’s a guide to how it can work—and what happens if you fight and lose.
Why Student Debt Collectors Are Vulnerable
Thousands of Americans have been sued in the past few years for allegedly defaulting on student loans owned by a group of investment vehicles known as the National Collegiate Student Loan Trusts. These 15 trusts, created from 2001 to 2007, claim to own billions of dollars in private student loans, the type made without government backing. The trusts claim to have purchased the loans from banks and other lenders shortly after the loans were made to students. When debtors miss months of required payments, collectors working for these trusts initiate court proceedings to recoup the borrowed funds.
Most of the time, the trusts are successful. A typical case might go like this: A borrower doesn’t show up to court, the trust gets a default judgment as a result, and the borrower is forced to pay off the debt—often a paycheck at a time—under a court order. For borrowers who lose these cases, the debt nightmare really begins.
But these cases can also be a way out of debt, as dozen of borrowers have found. All they needed was a bit of money to fund a legal gambit and beat back the debt collectors.
To understand why some Americans have successfully delayed or even canceled what seemed like an inevitable day of reckoning, it’s important to know that creditors generally can’t come after you unless they can prove you owe them money. The various National Collegiate trusts are having difficulty doing that, according to court records and debtors’ attorneys. (For more, read thisBloomberg Businessweek story from 2015 and a follow-up report this week in the New York Times.)
The reason has to do with the mundane business of transferring and storing paperwork—loan documents, promissory notes, and the like. When National Collegiate purchased loans from banks, it presumably had a record documenting whose loan it purchased, how much was owed, when the loan was originated, and other pertinent details.
But when it comes time for the trusts’ debt collectors to prove that ownership, facing down a delinquent borrower with legal representation in a courtroom, the records often turn out to be missing. Former students who readily acknowledge that they borrowed money from, say, Bank of America Corp. to pay for college are able to get debt-collection lawsuits dismissed by arguing that they never borrowed from a National Collegiate trust. If the trust can’t prove transfer of the loan with careful documentation, there’s no way to collect.
It’s an echo of what occurred when millions of Americans faced foreclosure proceedings in the aftermath of the financial crisis, when loan companies took paperwork shortcuts—“robosigning” is a popular term—to seize homes in what state and federal regulators say was against the law. Similar issues have cropped up in various kinds of debt-collection lawsuits, such as those involving soured credit card debt.
How to Get Out of Debt
David Addleton, an attorney in Macon, Ga., said he’s represented at least a dozen clients who were sued by various National Collegiate trusts attempting to collect on defaulted student debt. Every case was dismissed before trial.
“All they care about is getting a default judgment,” he said of National Collegiate’s debt collectors. “All you have to do is show up and defend. They always dismiss.”
Addleton charges his clients 10 percent of the face value of the debt, he said, which typically ranges from $30,000 to $60,000. Borrowers have to pay regardless of the outcome of the case.
Here’s what typically happens when attorneys representing National Collegiate sue a delinquent borrower. When the lawsuit is filed, the attorneys produce a copy of the borrower’s promissory note and documents that claim the loan was transferred from the original lender to a National Collegiate entity, according to a Bloomberg News review of court cases across a handful of states. The problem for National Collegiate is that the documents allegedly showing the transfer don’t actually state whose loans were transferred. The pages that list which loans were transferred are often blank. (Here’s an example.)
In cases filed in Ohio, Georgia, New Hampshire, and Kentucky, among other states, judges have sided with borrowers when they’re forced to rule on whether National Collegiate entities in fact own the alleged debt, because the trusts can’t show that the particular borrower’s loans were transferred to National Collegiate.
In some cases, debt collectors working for National Collegiate swear upon penalty of perjury that they’ve reviewed the underlying documentation and that it shows the targeted debtor’s loans were transferred to National Collegiate. Sometimes it works; other times, like in one California case, it doesn’t. The federal Consumer Financial Protection Bureau has been investigating the issue since at least 2015, agency records and court documents show. (Cognition Financial Corp., which created the National Collegiate trusts when it was called First Marblehead Corp., didn’t respond to a request for comment.) Borrowers who successfully get the lawsuits dismissed generally can be sued again within a certain time frame established by each state. After the statute of limitations runs out, borrowers are effectively in the clear
What Happens If You Lose
For Addleton, borrowers now have every reason to test the documentation underlying private student debt. “No one should agree to pay these people one penny,” he said. But if you can afford to make your payments, this strategy probably isn’t for you. First, deliberately defaulting on your debt can have ruinous consequences for your credit, which can affect your ability to borrow, secure housing, or obtain a new job. Second, National Collegiate sues borrowers it thinks are in default. Why risk ruining your credit and possibly losing a lawsuit? Third, there’s a real chance you can lose if you pursue this route. A courtroom loss could stick you with National Collegiate’s legal fees, on top of the debt you’d be ordered to repay and any lawyer’s fees of your own
It’s a gamble that can slash a student debt—or leave a litigant even deeper in the hole.
Big tobacco bullies the global south. Trade deals are their biggest weapon
The industry has a long history of using trade to force their products into new markets. This has led to at least a 5% increase in cigarette deaths
Matthew Bramall and Paul Keenlyside Monday 17 July 2017 12.10 EDT
From The Guardian: Cigarette packets often carry the warning to “protect children: don’t make them breathe your smoke”. In 2014, the Kenyan government attempted to do just that – banning the sale of single cigarettes, banning smoking in vehicles with a child and keeping the tobacco industry out of initiatives aimed at children and young people.
But as the Guardian reported last week, British American Tobacco, in an effort to keep Kenyans breathing their smoke, fought the regulations on the grounds that they “constitute an unjustifiable barrier to international trade”.
In fact, big tobacco has a long history of using trade and investment rules to force their products on markets in the global south and attack laws and threaten lawmakers that attempt to control tobacco use. Back in the 1980s, as cigarette consumption fell off in North America and western Europe, US trade officials worked aggressively to grant American companies access to markets in Asia, demanding not only the right to sell their products, but also the right to advertise, sponsor sports events and run free promotions. Smoking rates surged.
In the 1990s, World Trade Organisation agreements led to a liberalisation of the international tobacco trade, with countries reducing import tariffs on tobacco products. The impact, according to a joint study of the World Health Organisation and the World Bank, was a 5% increase in global cigarette consumption and accompanying mortality rates.
Big tobacco’s lawyers were quick to discover the value of “next generation” trade agreements. In the 1990s, Canada dropped a plain packaging initiative after US manufacturers threatened a suit using the first next-gen trade deal, the North American Free Trade Agreement (Nafta). A few years later, Philip Morris threatened Canada again after it prohibited terms such as “light” and “mild” cigarettes. Philip Morris argued it would be owed millions in compensation for damage to its brand identity.
Philip Morris was able to credibly wield this threat because of the extraordinary powers that Nafta grants international corporations: the right to sue governments in private tribunals over regulations that affect their profits.
A toxic combination of far-reaching and poorly defined “rights” for investors, eye-watering legal costs, and tribunals composed of corporate lawyers with the power to set limitless awards against governments makes investment arbitration and the modern “trade” agreement a formidable weapon to intimidate regulators.
And what big tobacco learned in the global north it has been replicating in the global south, where threats carry greater force against poorer countries that may lack the resources to see down a legal challenge. In 2010, Philip Morris launched a $25m claim against Uruguay after it introduced graphic warnings on cigarette packs. Though Uruguay successfully defended the measure, it still faced millions in legal costs.
And Philip Morris effectively won, as Costa Rica and Paraguay held off introducing similar measures. Such are the fears around big tobacco’s aggressive use of trade and investment rules that the US-negotiated Trans-Pacific Partnership trade deal featured a carve-out excluding big tobacco from investment protections – an explicit admission of the problem.
But this does not go far enough. The important thing to realise is that the problem goes beyond big tobacco. Big oil, big pharma and big mining follow the same playbook, launching investment arbitration cases to defend their business models from governments that would regulate to protect public health, the local environment or the climate.
Rather than target individual companies or sectors, we must push our governments to reform trade and investment rules that grant such extraordinary powers to corporations. That means removing special investor rights and investment courts from trade agreements. It means removing limits on the freedom of governments to protect public health, labour and human rights and the environment.
Vice-President Mike Pence’s record includes opposing smoking regulation, taking huge campaign donations from big tobacco, and denying the causal link between smoking and lung cancer. The EU commission, meanwhile, has been criticized for its meetings with big tobacco while it was negotiating EU-US trade talks.
The good news is that from Brazil to India to Ecuador, countries are stepping away from outdated trade and investment rules. In the UK, the Labour party manifesto opposes parallel courts for multinationals and proposes to review the UK’s investment treaties.
But until we scrap the powers that we grant big tobacco and others to frustrate and bypass our laws, efforts around the world to protect public health will continue to go up in smoke.
Capital Punishment or Capital Reward? July 13th, 2017 by Phil Mattera
From Dirt Diggers Digest: When Betsy DeVos was nominated to head the Department of Education, the main concern was what harm a “choice” crusader would bring to K-12 public schools. Recently we’ve seen that she can also cause damage with regard to post-secondary education. DeVos announced plans to delay the implementation of rules on for-profit colleges that the Obama Administration fought long and hard to bring into being. Calling the plan unfair, DeVos said she wants to redo the rulemaking process from scratch – a clear sign that she wants to weaken or eliminate the restrictions. That’s the premise of a lawsuit just filed against DeVos by the attorneys general of 18 states and the District of Columbia.
The Obama campaign against predatory colleges was one of the most consequential initiatives of the administration on corporate misconduct. In addition to the rules – one of which is designed to bar federal loans at schools whose graduates don’t earn enough to pay off their debt and another that would make it easier to erase debt incurred at bogus institutions – the Obama Education Department and the Consumer Financial Protection Bureau brought enforcement actions that helped bring about the demise of flagrant abusers such as Corinthian Colleges and ITT Educational Services.
And this came after the Obama Administration pushed Congress to get commercial banks out of the student loan business.
Taken together, the Obama era measures against predatory for-profit education represent one of the rare instances in which government action targeted not just an illegitimate practice or a miscreant company but an entire industry. The message was not simply that for-profit colleges needed to be reformed but rather that they should not continue to exist. It was capital punishment for capital.
It comes as no surprise that the billionaire DeVos, who has had personal involvement with dubious business ventures, is seeking to undo the crackdown on for-profit colleges. And it is yet another example of how the Trump Administration is working against the interests of those lower-income voters who put him in office.
The same dynamic can be seen in the healthcare arena. The Republican “solution” to the problems of the Affordable Care Act is to make it easier for insurance companies to offer bare-bones junk insurance while dismantling Medicaid, both in its traditional form and its expansion under the ACA. The latest version of the Senate bill is willing to retain the hated taxes on high-income earners as long as the assault on the socialistic Medicaid program moves forward.
It appears that the right’s desire to protect the interests of corporations – including the most predatory – is even greater than its wish to redistribute income upward. Thus the one thing that Republicans have made sure to do with their stranglehold on the federal government has been to roll back as many business regulations as possible.
It remains to be seen how long Trump and Congressional Republicans can get away with telling their working class supporters that predatory corporations are the ones that deserve relief.
Ohio Decisions Could Put More Ratepayers on the Hook for Old Cleanup Costs Saturday, July 15, 2017 By Kathiann M. Kowalski, Midwest Energy News | News Analysis
From Truthout: Critics say an Ohio court decision underscores the urgency of a pending bill to address unfairness under current law, while opening the door to more efforts by utilities to shift the economic burdens for past pollution to today's customers.
Under the Supreme Court of Ohio's June 29 court decision, Cincinnati-area utility customers must pay $55.5 million to Duke Energy for cleanup of contamination from plants that haven't run in more than 50 years.
"It is a disappointment that Cincinnati-area customers must pay tens of millions of dollars for the cost of cleaning up their utility's defunct manufactured gas plants that date back to the 1800s," said spokesperson Dan Doron at the Office of the Ohio Consumers' Counsel.
Potential for "Pry Bars?"
The basic issue in the case was whether environmental cleanup costs for old contamination at two manufactured gas plants could be recovered from Duke Energy's current customers or would be borne by the company and its shareholders.
The plants have not been used for more than 50 years, and above-ground equipment and most associated structures have been removed. Any remaining utility activity at the sites is unrelated to the former plants. In Doron's view, neither the Public Utilities Commission of Ohio nor the court should have let Duke Energy pass the cleanup costs along to ratepayers under Ohio law.
"Consumers should not pay for utilities' investment-related costs if the investments are not used and useful to consumers for their utility service. Also, under another standard in the law, consumers should not pay for utility expenses that are not incurred for current utility service," Doron explained. "The position of the Consumers' Counsel was that the clean-up expenses for long-defunct manufactured gas plants (shut down in 1928 and 1963) did not pass the standards that protect consumers in the ratemaking process." "No matter how the properties are currently used, the vast majority of the costs of environmental cleanup are not associated with the current use and usefulness of the utility's activities on the site, and the cost of the cleanup should not be part of the rate base," said economics and public policy analyst Ned Hill at Ohio State University.
Nor would Hill consider the cleanup to be an operating expense of providing utility service. Although the cleanup was recent, liability for whatever cleanup might eventually take place was known as early as 1988, and the risk should have been factored into the company's capital asset value, he observed. "The compensation for these costs [from ratepayers] is an economic windfall to stockholders," Hill said. "The standards applied to the 'used and useful' criteria seem to be very loose as a result of this order," said Dan Sawmiller of the Sierra Club. In his view, "allowing cost recovery despite any usefulness of the facilities in providing service eliminates important cost protections for Ohio's utility customers." Duke Energy does not have other manufactured gas plant sites in Ohio, according to company spokesperson Sally Thelen. Nonetheless, other utilities might try to use the court's decision in other cases. "This creates a precedent on the used and useful standards of law that is very liberal for the utility," Sawmiller observed.
"This case offers the prospect of utilities using the location of plant and equipment related to their state-regulated transmission and distribution businesses -- which remain regulated monopolies -- on properties that are mainly part of their generation business as pry bars to shift historical cleanup costs and future decommissioning costs onto ratepayers," Hill added. "This could become a contentious public policy issue in the near future."
Duke Energy's obligation to clean up the contamination comes from the1980 federal Superfund Act. The law can impose strict, joint and several liability for cleanup of pollution, even if the disposal took place long before the law took effect.
For a while, exposure from Duke's former manufactured gas sites was deemed limited. Then news came about an adjoining landowner's development plans near one site and construction of a bridge near the other. Duke Energy began detailed investigation work for cleanup in 2007 at one site and 2010 at the other. The company then asked the Public Utilities Commission of Ohio to let it recover the costs from ratepayers.
Duke does use some part of the properties for utility purposes unrelated to the manufactured gas plants, so the PUCO staff recommended allowing recovery for about $6.4 million out of a total of almost $63 million. The regulatory staff would have disallowed the rest because most of the costs were for areas "that are not currently used and useful for natural gas distribution service."
Nonetheless, the commission decided that Duke's customers would pay about $55.5 million, with its shareholders bearing the much smaller burden of the carrying charges for the debt. The Supreme Court of Ohio affirmed that decision.
Besides the fact that some unrelated activities still took place on part of the land, the majority noted that the cleanup costs represented a current legalliability. Consequently, the four-judge majority felt it was appropriate for ratepayers to pick up the tab.
Three judges dissented. In their view, the fact that some unrelated infrastructure might be on another part of the land did not automatically make most of the costs recoverable. They would have sent the case back to the PUCO for further proceedings.
"The court's decision recognizes/confirms that compliance with environmental laws is a necessary cost of providing utility service," noted Thelen.
"Duke Energy Ohio undertook its remediation efforts under Ohio's laws that encourage proactive, coordinated remediation," she said when asked about how the costs benefit Ohio ratepayers. "These remediation activities are intended to protect the public and the environment."
Nor, in Thelen's view, did the historical nature of the contamination bar cost recovery. "The MGP plants are retired, but the property on which they were located is still in use for our delivery operations," she said. "The court's conclusion rightly recognizes that utilities incur many types of recoverable expenses in order to provide service, including expenses that are not tied to specific facilities or physical property included in [the] rate base."
For now, Duke Energy's customers will pay the charges. But questions posed by the court's decision remain.
"The charges will be $100 per consumer, on average, over the five-year collection period," Doron noted. However, ratepayers have already paid a chunk of that. That's because absent a stay, current Ohio law lets utilities start charging for riders and similar rate increases as soon as a PUCO order approving those charges becomes final.
The Ohio Consumers' Counsel and other challengers initially got a stay from the court, but then Duke Energy objected. When the challengers could not post a bond of more than $2.5 million, the court lifted the stay.
FirstEnergy's Ohio utilities weighed in on the side of Duke Energy in insisting on a bond.
The bond requirement "protects utilities from damages they could suffer from a stay of a Commission-approved rate increase, while likewise protecting customers from damages they could suffer from a stay of a Commission-approved rate decrease," FirstEnergy's brief said. "Ohio's rule against 'retroactive rulemaking' prohibits utilities from recovering lost revenue due to under-charges and from refunding past over-charges."
That rule is a potential issue in a pending FirstEnergy case.
"An appeal of the $200 million in annual subsidies that FirstEnergy is charging two million Ohioans cannot be filed until there is a final appealable PUCO order," Doron noted. "Meanwhile, FirstEnergy is already charging consumers for the subsidies -- charges that FirstEnergy may not have to refund even if the charges are later determined to be improper."
That dilemma exists because some decisions by the Supreme Court of Ohio have interpreted a law against retroactive rulemaking to be a ban on refunds. In one 2014 case, the court ruled that American Electric Power's Ohio customers could not recover $368 million of illegal overcharges.
"House Bill 247 would remedy for utility consumers this unfairness that has persisted for many years," Doron said. Among other things, the bill would require refunds for any charges later found to be "unreasonable, unlawful, imprudent, or otherwise improper."
The Ohio House Public Utilities Committee heard proponent testimony on the bill on June 20.
Wells Fargo stuck mortgage borrowers with extra fees, whistleblower’s lawsuit says Los Angeles Times 14 JUL 2017 AT 17:17 ET
From Raw Story: As Wells Fargo & Co. continues to be hit with fallout from its sham-accounts scandal, the bank is facing allegations that it put the screws to customers in yet another way: by slapping them with fees for delays in processing mortgage applications.
A former Wells Fargo mortgage banker who worked in Beverly Hills alleged in a lawsuit this week that the bank falsified records so it could blame delays on borrowers — and that it fired him for trying to report the practice.
The legal action follows a months-long internal investigation into the alleged abusive practices, one that contributed to an executive shake-up in the San Francisco bank's mortgage business. ProPublica first reported on the alleged improper fees in January.
When borrowers apply for mortgages, they are typically guaranteed a set interest rate — assuming the loan is approved within a certain period, often 30 to 45 days. If approval takes longer, borrowers can still get the promised rate but there are financing costs associated with extending guarantees.
Wells Fargo's policy, like that of most lenders, is to cover those costs itself unless the delay is the borrower's fault. Then, borrowers are charged what's called a rate-lock extension fee.
In his lawsuit, former banker Mauricio Alaniz alleged that the Wells Fargo's mortgage-processing and underwriting division was understaffed, leading to chronic delays that were not borrowers' fault. But rather than have the bank waive the rate-lock fee, workers would falsely report that borrowers had submitted incomplete or inaccurate information, according to the lawsuit
Rate-lock fees can be significant, typically ranging from 0.125 percent to 0.25 percent of the amount of a mortgage, depending on the size of the loan and other factors. For a home buyer looking to borrow $400,000, a 0.25 percent fee is $1,000.
Wells Fargo "would systematically attempt to charge or pass the rate lock expiration fees on to customers, even when the delay was not the customer's fault," Alaniz alleged in his complaint, filed July 10 in federal court in Los Angeles. He alleged that the practice led to borrowers paying millions of dollars in improper fees.
Wells Fargo is by far the nation's largest mortgage lender, originating $244 billion in home loans last year, or about 12 percent of all U.S. mortgages. Bank spokesman Tom Goyda said he could not comment on Alaniz's lawsuit but that the bank is reviewing "questions that have been raised about past practices" related to rate-lock fees.
Alaniz and other former Wells Fargo bankers have said the practice of improperly shifting rate-lock fees to borrowers was a problem in Southern California, and it's not clear whether problems were more widespread. The bank has parted ways with several mortgage executives, including its former national sales manager and two regional managers who oversaw mortgage operations in California, Nevada and Oregon.
Last month, the bank announced it had promoted Liz Bryant to head of mortgage sales, replacing former leader Greg Gwizdz. The bank at that time said that Gwizdz, along with the two former regional sales managers, were no longer with the bank. An L.A. regional manager, Tom Swanson, who was mentioned in Alaniz's lawsuit, left the bank in March.
Goyda said that findings of the bank's review contributed to the leadership changes.
"While there were a number of factors, some of the things we learned in our review of the rate-lock extension matter were factors in that decision," he said.
Swanson, Gwizdz and other former managers did not return calls seeking comment.
Alaniz's suit alleges whistleblower retaliation and discrimination, claiming he was fired for reporting alleged illegal conduct to bank managers and because a branch manager believed Alaniz was gay. He's seeking back pay, punitive damages and compensation for mental and emotional distress.
His attorney did not return calls seeking comment.
Alaniz's complaint mirrors claims made by another former Wells Fargo mortgage banker, Frank Chavez, in a letter sent last year to members of the House Financial Services Committee and the Senate banking committee.
Chavez, who also worked in Beverly Hills before resigning in April 2016, said delays in loan processing became more common starting in 2014, the year after Wells Fargo eliminated 2,300 mortgage-processing jobs. Other mortgage lenders cut back around that time, too, as the volume of mortgage applications declined following a surge of refinancing driven by record low interest rates.
As it became more common for loan approvals to stretch past the initial rate-lock period, Chavez said the bank started pushing the fees on to borrowers. A third former Wells Fargo banker in L.A. said managers essentially refused to have the bank cover the cost of rate-lock extensions.
Kushner provides 'textbook example of cronyism' as he slips his startup into White House roundtable
By Mark Sumner Friday Jul 14, 2017 · 1:51 PM PDT
From Daily Kos: Apple, Google, Microsoft, Intel, OpenGov. One of these things is not like the others. In fact, one of these things is about 4,000 times smaller than the others. But they all had front row seats at the White House tech roundtable.
Mr. Kushner’s brother, through a venture-capital firm, is a part owner of OpenGov, according to government disclosures and data from Dow Jones VentureSource. Until earlier this year, Mr. Kushner owned stakes in the venture-capital firm that he sold to his brother, according to a person familiar with the matter. Mr. Kushner’s connection to OpenGov isn’t widely known.
The crony capitalism on display in literally giving his company a seat at the big table, while larger companies were shut out, might seem fairly minor. But, as the name OpenGov suggests, there’s more at play here than just letting a friend bump elbows with tech giants.
Scoring a seat at the summit was a milestone for OpenGov, a Redwood City, Calif. company that aims to make government data more user-friendly and has sought business with the federal government, according to its website. OpenGov’s clients are mostly state and local governments—such as Converse County, Wyo. and California Polytechnic State University—looking to upgrade their technology.
OpenGov sells their services to governments, including agencies of the federal government. But of course, they compete for these contracts with many other companies. Companies that don’t have someone to pick them up and give them a front row seat. Kathleen Clark, a law professor at Washington University in St. Louis, said the OpenGov situation raised ethics issues. “This seems like a textbook example of cronyism in action,” she said.
Yellen Concedes Point on Dominance of Banks — U.S. Corporations Hoarding “A Lot of Cash” Published on July 12, 2017 by Sam Knight
From The District Sentinel: Fed Chair Janet Yellen didn’t seem too put off by the idea that Wall Street dominance is weighing down the country.
The central banker was pressed about the theory positing that the growth of the financial sector, over the past few decades, has choked off commercial activity in other industries.
Yellen noted that American corporations have, in recent years, been hoarding money and failing to inject capital into the tangible economy, much to the dismay of policymakers.
“For many years, many American companies have been sitting on a lot of cash, and have been unwilling to undertake investment in plant and equipment of the scale that we would ideally like to see,” she said. Yellen was asked about the theory, on the so-called financialization of the economy, by Rep. Keith Ellison (D-Minn.) at a House Financial Services Committee hearing on Wednesday.
Initially reluctant to concede any points, Yellen pointed out that improved technology and “globalization” have depressed the wages of the middle class families.
Ellison replied, noting that technological improvements have always been a feature of American life. “When we went from horse-drawn carriages to cars, people who made horse shoes had to find something new to do,” he said.
“Is it possible that the financial services sector is sort of channeling investment into financial activity and not into agriculture [and] manufacturing services that actually employ people?” Ellison then asked. The lawmaker also noted that financiers have demanded “outsized returns” when investing in companies that produce tangible goods.
Yellen said that she didn’t have “anything specific” in response to the question and would be “happy to take a look” at the issue, before offering her commentary on firms “sitting on a lot of cash.”
Rep. Ellison brought up the subject matter by pointing to a Rana Foroohar book published last year–Makers and Takers: The Rise of Finance and the Fall of American Business.
Ellison cited a stat from the book, noting that the financial sector comprises a little less than seven percent of the economy and creates four percent of overall jobs in the US, while earning a whopping quarter of all corporate profits.
In 1980, the financial services sector constituted about 4.9 percent of the economy. In 1950, the industry comprised only about 2.8 percent of total US output.
Since the 2008 financial crisis, the sector has only become increasingly dominated by a handful of players. In 2006, the four biggest banks controlled about 28.9 percent of industry assets. By the end of 2015, they held more than 40 percent of industry assets, which themselves had substantially increased in size.
Whether Yellen would actually be amenable to investigate the issue of financialization could be moot. She refused to discuss her future at Wednesday’s hearing when many lawmakers pointed out that her term as Fed Chair is up in 2018. She did note, however, that she would discuss the matter, if President Trump called her and asked her to stay on.
Yellen also didn’t seem generally keen on tacking any further from the laissez-faireapproach to financial regulation. She was pressed by Rep. Al Green (D-Texas) about a recent Fed decision to allow the biggest banks in the country to reduce reserves to finance stock buy-backs and dividend increases. Yellen said that she was happy with existing reserve requirements. “Once those capital buffers are in place, the Federal Reserve has no objection to firms distributing profits as dividends to shareholders or in the form of share repurchases,” she said.
Private Equity: The New Neighborhood Loan Sharks Veterans of the Contract Buyers League hit the doors again.
Chuck Collins July 11, 2017
From American Prospect: Mike Gallagher double-checks the address on his smartphone and walks up the cement steps of the brick two-story house on Detroit’s west side. He rings the doorbell, and after waiting a minute knocks loudly on the door. A dog barks and a shirtless black man in his mid-thirties cracks open the door.“Good afternoon. I’m Mike from the Home Savers group. We’re talking to people who have a land contract from Harbour Portfolio. Is that your situation?”
“Yes,” says the man, whom the visitor may have just woken up. He cautiously looks at Mike, who is white with unruly short white hair.
“A lot of people are finding these rent-to-buy loans may not be such a good deal. Sometimes they’re worse than being a tenant, since you have to pay for all repairs and maintenance. But you don’t build any wealth until you make the last payment. How long is your contract loan?”
Gallagher learns the man’s name is Antoine and that he paid $30,000 for a house that Harbour Portfolio bought for about $6,000. Antoine has paid $410 a month for four years. He works a night-shift job and has struggled to make the payments.
“If you miss a payment, all this money you are putting into the house will be lost,” Gallagher cautions. “They can evict you, without the protections a homeowner often has.”
Gallagher invites Antoine to an organizing meeting on Monday night. “You could meet other neighbors who have these contract-for-deed situations and learn how to protect yourself.”
“Jeez,” says Antoine, shaking his head. He is fully awake and is smiling now. “Yeah, I could stop by on my way before heading to work.” He takes down the information about the meeting.
They say goodbye and Gallagher enters information into the app on his phone. He heads on to the next house, this one apparently abandoned. He has seen this before. As a much younger man in the 1970s, Gallagher helped to organize Chicago residents around predatory “contracts for deed.”
“I was one of Jack’s Scouts,” Gallagher explains, referring to Jack Macnamara, a former Jesuit seminarian who helped co-found the Contract Buyers League in Chicago. The scouts were college students and seminarians who knocked on hundreds of doors to jumpstart the league. Between 1967 and 1977, the league worked to stamp out predatory contract practices through organizing and lawsuits.
“By 1977, we thought the plague was gone,” says Gallagher. Until last year. Like a virulent contagion that was thought eliminated, contracts for deed have resurfaced. This time, however, the perpetrators are not “mom and pop speculators,” as Gallagher calls them, but Wall Street private equity firms.
Gallagher is retired now and lives in Boston, after over two decades working for the Service Employees International Union. But one morning in February 2016, Gallagher got a call from Jack Macnamara in Chicago.
“Did you see the story?” Macnamara asked, referring to a front-page article in The New York Times, “Market for Fixer-Uppers Traps Low-Income Buyers.”
In that article, investigative reporters Matthew Goldstein and Alexandra Stevenson described the return of contract-for-deed abuses. “Lured by the dream of homeownership, these seller-financed transactions can become a money trap that ends with a quick eviction by the seller, who can flip the home again.”
On that winter morning, 50 years after the founding of the Contract Buyers League, Macnamara told Gallagher it was time to get the band back together. Their work was not done.
Contract for What?A contract is shorthand for “contract for deed,” also advertised as “rent to buy,” “seller financing,” or “installment land contracts.” These are not inherently predatory, as any northern Midwesterner will tell you. Land contracts are common ways to finance real estate, especially in rural areas without many banks.
In 2009, the last year such data was collected, the U.S. census reported that about 3.5 million people bought their homes through a land contract, more than 4.5 percent of all homeowners. This probably underestimates the number, as many buyers don’t understand the transaction well enough to report it to the census. Most states require that land contracts be recorded, but many sellers do not bother to do so.
Yet the opportunities for abuse are plentiful. Most contracts for deed (CFDs) are not subject to the Truth in Lending Act and other consumer protections that most traditional mortgage borrowers enjoy. Under a CFD arrangement, the buyer has all of the responsibilities and headaches of a homeowner, including repairs and paying property taxes and insurance, without actually owning anything. Yet buyers have fewer rights even than tenants, who can at least call the landlord to fix a busted toilet or broken lock.
“These contracts exist in a regulatory ‘no-man’s land’ between tenant protections and homeowner protections,” says Sarah Mancini, an attorney with the National Consumer Law Center and co-author of a 2016 report about contracts for deed, “Toxic Transactions: How Land Installment Contracts Once Again Threaten Communities of Color.” “These aspiring homeowners have neither,” she says.
Assuming all the risk, if contract buyers miss a payment, they can lose all their previous payments and investments they’ve made in maintaining the house. Because they are technically not owners, buyers may be quickly evicted under forfeiture procedure, without the increased protections of foreclosure law afforded to homeowners. Think “repo” of a car, not a home. (Read more)
Betsy DeVos Invested In Military Tech Contractor Run By Son-In-Law, While Brother Shaped Afghan War Policy BY JOSH KEEFE @THEJOSHKEEFE ON 07/11/17 AT 4:27 PM
From IBT: Department of Education Secretary and billionaire heiress Betsy DeVos invested in a defense contracting firm owned by her son-in-law at the same time her brother was helping the Trump administration craft a new Afghan war strategy — one that called on the military to use more private contractors.
Prince, who founded the security firm Blackwater Worldwide and now leads Frontier Resource Group, wasn’t just using the pages of the Wall Street Journal to call for the U.S. to employ more private contractors. He was spreading the same message in the White House, according to a report Monday in the New York Times.
The Times reported that Prince and Stephen Feinberg, owner of the military contractor DynCorp International, developed proposals to increase the use of contractors in Afghanistan at the request of White House strategist Steve Bannon and senior adviser (and Trump son-in-law) Jared Kushner. Prince briefed “several White House officials” on the plans, the Times reported, including National Security Adviser H.R. McMaster. Defense Secretary Jim Mattis heard the proposals from Bannon on Saturday, the Times reported, but ultimately declined to include them in the Afghanistan policy review he is leading with McMaster.
The plans Prince presented to White House officials mirrored the strategy he laid out in his Journal op-ed, according to a former American official anonymously quoted in the Times. If that’s true, those plans could have benefited Lowery’s company and investors like DeVos.
Prince’s Journal op-ed called for “cheaper private solutions to fill the gaps that plague the Afghan security forces, including reliable logistics and aviation support.” A sampling of LexTM3’s contracts with the DoD shows that’s precisely the kind of support the company provides the U.S. military.
In May, LexTM3 was awarded a $132,000 subcontract with the Air Force to work on a power supply project. In 2015, LexTM3 inked a $90,000 deal to provide the Air Force with “electronic power and distribution equipment.” (In his op-ed, Prince noted that “barely 40% of Afghanistan’s U.S.-provided fixed- and rotary-wing aircraft are functional.”)
In addition to its work with the Air Force, the company has provided the DoD with logistics support. In 2016, the company signed a $89,090 deal with the DoD’s Defense Logistics Agency for “electronics and communication equipment” and another $125,920 contract with the Defense Logistics Agency for “electrical control equipment.”
The company’s largest contract, worth $770,035, was a September 2015 deal with the Department of the Navy’s Space and Naval Warfare Systems Office. Lowery declined to comment for this story. The White House directed questions to the Department of Education, which did not respond to inquiries. An email sent to an address on Prince’s Frontier Resource Group’s website did not receive a response.
DeVos' holdings in LexTM3 were not part of the more than 100 items that the secretary said she would divest from in her ethics agreement, and given that the company didn't have any contracts with the Education Department, it's not hard to see why. But the ehtics agreement Devos signed on Jan. 19 did say she would "remain vigilant in indentifying any particular matters affecting the interests of these entities and their holdings."
Prince has been connected to both the Trump administration and the Trump campaign. In January, the United Arab Emirates arranged a secret meeting in the Seychelles Islands between Prince and a Putin confidant, the Washington Post reported in April. Prince, who presented himself as an “unofficial envoy for Trump,” attended the meeting to see if the Russians could be persuaded to weaken their support for Iran, the Post reported.
DeVos family members have been major Republican donors for decades. In her confirmation hearing, DeVos admitted it was “possible” that her family had contributed more than $200 million to the Republican party. Last year, Erik Prince contributed $150,000 to the pro-Trump super PAC run by Republican megadonors Rebekah and Robert Mercer.
The corporate giant not only lost but was criticised by the court, which found the case to be “an abuse of rights”.
The court published a decision on the payment of costs at the weekend, which it made in March. The decision, which brought five years of proceedings to a close, found Philip Morris Asia liable to pay Australia’s multimillion-dollar claim for legal costs.
The final costs figure was kept secret but Fairfax Media reported it as being up to $50m.
Australia successfully argued Philip Morris must pay its court fees and expenses, the cost of expert witnesses, travel, and solicitors and counsel. It also claimed interest. Australia had told the court its claim was modest and was a small proportion of what the tobacco giant had sought in damages.
It said Philip Morris had sought to challenge a public health measure of critical importance to Australia, making it important to “mount a robust and comprehensive response to all aspects of the claim”.
Philip Morris had tried to argue the government’s costs were unreasonable for a “legal team that consisted primarily of public servants”.
The company argued that two similar countries, Canada and the US, had never claimed more than US$4.5m and US$3m respectively in costs and fees.
Australia’s claim was much more than that.
“The claimant emphasizes that, even excluding the fees of four outside counsel, the respondent’s government lawyers claim over [redacted] in fees, even though Australia itself pays them ‘very modest government salaries’,” the court’s decision read.
But the court found Australia’s claim was reasonable, rejecting Philip Morris’s arguments.
“Taking into account the complexity of issues of domestic and international law relevant in this procedure, particularly for a government team usually not engaged in such disputes, the Tribunal does not consider that any of these costs claimed by the Respondent were unreasonable and should not have been incurred,” it found.
“In making this assessment, the Tribunal also takes into consideration the significant stakes involved in this dispute in respect of Australia’s economic, legal and political framework, and in particular the relevance of the outcome in respect of Australia’s policies in matters of public health.”
Earlier this year big tobacco failed in a separate bid to have the laws overturned by the World Trade Organisation. The decision was widely seen as a green light for more countries to follow Australia’s lead.
Federal Court To Decide Whether GE Capital Was Complicit In Ponzi Scheme Walter Pavlo, CONTRIBUTOR Jul 6, 2017 8:05 AM
From Forbes: By December 8, 2000, GE Capital Corporation (GECC) had received nearly $50 million that it had loaned to Petters Capital, a company that specialized in buying bulk lots of merchandise from various retailers and then re-selling them to large, big box, distributors like Costco and Walmart. GECC had grown concerned over Petters’ banking habits, late payments, unscrupulous owner and the discovery that the underlying assets were fraudulent. Getting the money returned must have been a huge relief.
GECC grew suspicious enough to place a call directly to Costco, one of the vendors reported on Petters Capital’s receivables. Costco had no record of the invoices that Petters had reported to GECC as outstanding. Paul Feehan, an executive of GECC at the time, got on the phone and started screaming at Petters, according to a deposition given in October 2013, “This is a fraud. This is all one, big fraud.” When things calmed down, Petters promised to pay back the loan along with all the substantial fees associated with it. After a few missed promises-to-pay, the final payment occurred and GECC went on its way to find new customers and Petters’ CEO, Thomas Petters, went on to continue building one of the largest Ponzi schemes in U.S. History.
In April 2010, Petters was sentenced to 50 years in prison after being convicted of fraud by a jury in federal court. The result was that investors lost over $2 billion, with the largest being a small investment firm in South Florida, Palm Beach Financial Partners (PBFP).
In late 2002, PBFP loaned Petters Capital, $10 million to finance his new ‘big box’ venture, Petters Group, and the loans were promptly paid back with interest. PBFP wanted to loan more and Petters offered them great returns through financing his growing business. Over the following six years, PBFP would finance nearly 2,500 separate promissory notes with a value of $8.7 billion in principal. Then, on September 24, 2008, Petters Group Worldwide headquarters in Minnetonka, MN was raided by federal agents who had information to believe that Petters was running a Ponzi scheme. For PBFP, it meant that their entire investment was lost.
PBFP and another fund that was spun off by it, Palm Beach Finance II, went into bankruptcy and Barry Mukamal was appointed as Chapter 11 Trustee for the funds. To date, Mukamal and his team have recovered $65 million from litigation and $35 million from Peters Company bankruptcy estate. Now he has his sights on GECC.
In Mukamal’s view, PBFP would have never loaned Petters a dollar if the fraud that GECC had discovered back in 2000 had been disclosed. According to a financial expert hired by Mukamal, not only did GECC not report Petters’ earlier defaults to its auditor, Ernst & Young, but it failed to comply with Bank Secrecy Act and Anti-Money Laundering regulations for not filing a Suspicious Activity Report with regulators or law enforcement. According to Solomon Genet, who provides litigation oversight counsel for Mukamal, “GE Capital discovered and assisted the third-largest financial fraud in U.S. history. We look forward to presenting GE Capital’s wrongdoing to a jury.”
Mukamal and his team have been resilient. Mukamal even went as far as to visit Petters in Leavenworth Federal Prison and was rewarded with a written declaration (worth a read) that spoke to his relationship with GECC in the final days of their financial relationship. When GE Capital representatives showed up for a formal deposition, Petters (59 years old) refused to talk. Petters is scheduled to be released in April 25, 2052, he will be 94 years old.
This month, U.S. District Bankruptcy Judge Paul G. Hyman, Jr. ruled that he would neither give summary judgement for GECC to dismiss the lawsuit, nor grant PBFB an outright judgement for damages from GECC. So on to trial they go.
GECC’s position is interesting in that it does not dwell on the coverup of the original Petters loan, but on a position that only the Petters trustee, not PBFB’s, has standing to hold GECC liable. Judge Hyman summarized GECC’s position as, ”GECC cites several recently-decided cases which appear to stand for the proposition that a creditor of a bankrupt entity lacks individual standing to sue a third party for a generalized injury that is common to all creditors.” However, Judge Hyman did not agree saying that such a position” … misconstrue a bankruptcy trustee’s role and fail to address the lack of statutory authority permitting a bankruptcy trustee to bring a cause of action on behalf of a debtor’s creditors.”
According to Jeffrey Sloman, the former United States Attorney for the Southern District of Florida and now a private attorney who was called on as an expert by Mukamal, it looks like GECC would have faced criminal charges had he been at the helm and known about the Petters discovery. Sloman concluded, “… had I been presented with these facts while I was a prosecutor, I would have concluded that there is probable cause that GECC’s employees committed promotional money laundering and conspiracy to commit promotional money laundering, and that GECC could be held criminally liable for the illegal acts of its employees, and therefore, I would likely have sought an indictment.” Sloman knows a good Ponzi scheme when he sees one, he worked on the Scott Rothstein case in South Florida.
Regulators have come under scrutiny for not detecting frauds such as those committed by Bernie Madoff and Art Nadel. However, regulators depend on the watchful eyes of those in the business community to speak up when they see something is wrong. In this case, it may not have been the regulators who failed us as much as one of our own financial institutions who thought more of covering their assets than about speaking up.
GECC has not given up on avoiding a trial. They filed a number of motions after this most recent ruling. It looks like we know what happened, but the remaining question is, “Who should pay for it?” When Walt is not writing on white collar crime, he works with expertswho present on it. Check out 500 Pearl Street Speakers or contact him firstname.lastname@example.org.
Exporting Hazards or Globalizing Regulation? June 29th, 2017 by Phil Mattera
From Dirt Diggers Digest: Americans may have initially felt a bit smug upon learning that the combustible material responsible for the Grenfell Tower disaster in London is largely banned in the United States. Perhaps our regulatory system is not as deficient as we thought.
That moral superiority went out the window when it came to light that the deadly cladding was purchased from an American-based company. Some of the outrage being exhibited toward public officials in Britain should also be aimed at Arconic, a company created from the break-up of the aluminum giant Alcoa.
Arconic has announced that it will suspend sales of the cladding, known as Reynobond PE, for high-rises, but that does little good for the scores of people killed in the Grenfell fire or the thousands of others who have been forced to leave other apartment houses now found to contain the material.
Although most of the attention is on Arconic’s cladding and its role in spreading the conflagration, it turns out that fire itself was caused by another American product, a refrigerator made by Whirlpool under its Hotpoint brand. The appliance had a back made out of flammable plastic rather than the metal typically used in models sold in the United States. The London Fire Brigade had long lobbied, to no avail, to require new appliances to have fire-resistant backing.
The sale of banned products in offshore markets is, unfortunately, a longstanding practice among U.S-based multinational corporations. What’s unusual in this case is that the offshore market is a wealthy country such as Britain, whereas the dumping is normally done in poor countries.
As Russell Mokhiber points out in his 1988 book Corporate Crime and Violence, one of the earliest examples was that of the now defunct company A.H. Robins, which in the 1970s sold thousands of its Dalkon Shield intrauterine contraceptive devices in 42 countries even after it became apparent that thousands of U.S. women were experiencing severe and sometimes deadly ailments linked to the IUDs. In 1972 the U.S. Environmental Protection Agency prohibited most uses of the insecticide DDT, yet American producers continued to sell in foreign markets for years until most other countries adopted their own bans.
U.S. companies also continued to export dangerous products such as asbestos, flammable children’s pajamas and lead-based house paint after being barred from selling them in domestic markets. These practices illustrate the perverse way that most large companies regard the regulation of their business. They are not willing to admit that restrictions are legitimate — even when imposed in the wake or injuries and deaths — and will adhere to them only to the extent absolutely necessary. If they can continue to sell products they have been told are harmful to some customers, they will do so. This mindset seems to result from both a knee-jerk ideological opposition to all regulation and an amoral pursuit of profits. The persistence of corporate crime suggests that attempting to reform big business from within — the dubious promise of corporate social responsibility — is far from adequate. Just as markets have superseded borders, so must regulation be globalized.
Why Isn’t Big Pharma Paying for the Harm It Caused Like Big Tobacco? They got their claws in the opioid crisis and are milking it for all it's worth.
By Martha Rosenberg / Intrepid Report June 26, 2017, 1:15 PM GMT
From Alternet: Late last year, the Senate approved $1 billion of taxpayer money for “opioid prevention and treatment programs” as part of the 21st Century Cures Act. Yes, taxpayers are stuck paying for the opioid crisis which Big Pharma created for no other reason than to make more money.
Once upon a time, narcotics were limited to post-surgery, post-accident and cancer pain because they are addictive. But cagey Pharma marketers, assuming that both younger doctors and patients had forgotten why narcotics were so heavily restricted, spun the lie that the narcotics were not addictive per se—that addiction boiled down to the individual person. Right. They began marketing narcotics for everyday pain and the result is the opioid and heroin crisis we have now.
When Big Tobacco was busted for a similar scheme—lying to consumers that its products were neither addictive or deadly—it was forced to pay $206 billion in the 1998 Tobacco Master Settlement Agreement. [executives are pictured before Congress in 1994) Provisions include paying states, in perpetuity, for some of the medical costs of people with smoking-related illnesses. Why are taxpayers paying for the similar, Pharma-caused scourge?
Because drug ads account for as much as 72 percent of TV commercials and almost all media companies allow drug company representatives to serve as board members, mainstream media enables the deadly deception and pretends the opioid crisis "just happened" like the Zika virus or influenza. Recently, the New York Times said the controversy swirling around the new mental health czar was whether the opioid crisis should be treated with "the medical model of psychiatry, which emphasizes drug and hospital treatment and which Dr. McCance-Katz [the new czar] has promoted” or “the so-called psychosocial, which puts more emphasis on community care and support from family and peers.”
Nope, New York Times. The issue is about Pharma money pure and simple. The “medical model of psychiatry” also known as “addiction medicine” is a big, second line business for Pharma. People who were totally normal until Pharma hooked them on narcotics by marketing opioids for everyday pain are now said to have the “psychiatric disease” of an “addiction disorder” and need to be treated with more lucrative Pharma drugs. Ka-ching.
To get an idea of how lucrative addiction medicine has become, Bain Capital paid $720 million for CRC Health in 2006 and resold it for $1.18 billion in 2014. The National Alliance of Advocates for Buprenorphine Treatment (one Pharma drug marketed for addiction) unashamedly admits it is industry funded to “Educate the public about the disease of opioid addiction and the buprenorphine treatment option; [and] help reduce the stigma and discrimination associated with patients with addiction disorders.” Addiction medicine is so lucrative, Amazon may start acquiring addiction chains!
Pharma is so camped out in the opioid crisis, insurance companies will no longer reimburse rehab facilities unless they use an expensive drug to treat the “disease.” The message of peers, patient advocates and former addicts, on the other hand, who know that more drugs is not the answer to drugs and that peer support is 100 percent free, is lost in the greed scramble.
In covering Dr. McCance-Katz’s appointment, the Times cites her support from the American Psychiatric Association (APA) and the National Alliance on Mental Illness (NAMI). Is that a joke? Both the APA and NAMI are so steeped in Pharma money they were investigated by Congress.
When Big Tobacco said its products were neither addictive or deadly it was forced to pay $206 billion in the Tobacco Master Settlement Agreement. Why are US taxpayers paying for Pharma’s similar deception?
IRS private debt collectors accused of pressuring taxpayers, breaking the law
From Forbes: A new law which went into effect this year directs the Internal Revenue Service to hand over some unpaid tax bills to private agencies for collections. The law was pushed through despite the failures of past privatization efforts and despite concerns about what privatization efforts might mean for taxpayers (including those recently expressed by Treasury Inspector General for Tax Administration J. Russell George and National Taxpayer Advocate Nina E. Olson).
It appears those concerns were not unfounded. In response to complaints about how private debt collectors are handling taxpayer accounts, Sen. Sherrod Brown (D-OH), Sen. Benjamin Cardin (D-MD), Sen. Jeff Merkley (D-OR), and Sen. Elizabeth Warren (D-MA), have sent a letter Pioneer Credit Recovery, one of the companies which has a debt collection contract with the IRS.
According to the letter, the senators have concerns that Pioneer may be:
(1) failing to adequately protect taxpayers from criminals posing as IRS agents; (2) pressuring taxpayers into risky financial transactions; (3) violating the Fair Debt Collection Practices Act (FDCPA) and provisions of the Internal Revenue Code; and (4) violating IRS guidelines and provisions of Pioneer’s IRS contract.
The senators explained that they were particularly concerned about “Pioneer’s contract because of the abuse of federal student loan borrowers by its parent company, Navient, through its Education Department student loan servicing contracts.” -----
To investigate the matter, the senators obtained the call scripts used by Pioneer and other private debt collectors contracting with the IRS. According to the Senators, “[e]ach of the call scripts… raises concerns” about the Fair Debt Collection Practices Act (FDCPA) and will be referred to the Federal Trade Commission. Of those, however, “Pioneer’s call scripts are particularly troubling.”
For example, to prevent scammers from capitalizing on the opportunity to exploit these calls, collections activities are initiated after the taxpayer receives a letter in the mail with a unique identifier that will allow them to verify that the debt collector is legitimate. However, when a taxpayer has not received a letter, Pioneer’s script only allows for a five-day cessation of collection attempts while a new letter is mailed. Having such a short window creates an opportunity for scammer confusion: one of the hallmarks of a scam call has been a very small window to respond.
There are also concerns about the amount of pressure exerted on taxpayers. Previously, NTA Olson reported that a disproportionate number of those taxpayers on private debt collector lists are poor: 80% are taxpayers below 250% of the federal poverty level and the median income is $32,000 (1/3 of taxpayers turned over for collection reported income below $20,000). Despite those numbers, the senators claim that Pioneer is “unique among IRS contractors in pressuring taxpayers to use financial products that could dramatically increase expenses, or cause them to lose their homes or give up their retirement security” such as shifting debt to credit cards, taking out a second mortgage, or borrowing against an existing 401k. The senators assert that “[n]o other debt collector makes these demands.”
Pioneer’s call scripts also allegedly make an implied threat that the debt collector will have the means to seize payment involuntarily; that may be a violation of the FDCPA and other laws. Additionally, in keeping with issues raised by Inspector General George last month, Pioneer’s call scripts ask for payment agreements that are longer than authorized. George previously reported to Congress that he had concerns that private collection agencies were extending payment requirements “beyond what the law provides.”
Part of the collection process should involve information that taxpayers have the right to obtain assistance from the Taxpayer Advocate Service (TAS). The senators found, however, “there is no evidence in the Pioneer call scripts…that the collector intends to provide this information to taxpayers.” At least one other collector, Performant, did have scripts which included instructions on how a taxpayer may contact the TAS. Finally, private debt collectors are supposed to refer cases back to IRS if the taxpayer describes a significant hardship that would impact repayment. Again, at least one other collector, Performant, offered explicit guidance on this issue but the Pioneer call scripts which were reviewed did not.
As a result of these concerns, Pioneer has been asked to modify the existing call scripts “so they comply with the law, your contract, and IRS policy.” --- Pioneer is one of four contractors authorized to collect unpaid tax debts on behalf of IRS. The other private collection agencies are: CBE, ConServe, and Performant.
When reached by phone about the allegations, Pioneer did not immediately offer comment.
A spokesman for the IRS said about the concerns:
The IRS is committed to running a balanced program that respects taxpayer rights while collecting the tax debts as intended under the law. The IRS will be closely monitoring the private debt collection program and will be working closely with the firms to ensure the fairness and integrity of the initiative.
While IRS and Congress works to sort out complaints, the calls will continue. Here’s what you need to know to sort out a legitimate call from a scam:
- If your tax account is to be handed over to a private collection agency, the IRS will send you a letter. Your first contact regarding overdue taxes will not come from a private collection agency.
- Private collection agencies are required to follow the provisions of the Fair Debt Collection Practices Act. That includes following the law with respect to time and frequency of communication: among other things, debt collectors may not contact a taxpayer at “any unusual time or place or a time or place known or which should be known to be inconvenient to the consumer.” Typically, this means that calls should only be made between 8:00 a.m. and 9:00 p.m., local time.
- Any payment of tax must be sent to the IRS, and not to the debt collector or any other person. Checks should only be made payable to the United States Treasury and not to the debt collector. Taxpayers will never be asked to pay in gift cards, including iTunes cards, or wire transfer. Additionally, payments of tax made by credit or debit cards should be made through the IRS online: never give out your credit or debit numbers over the phone to satisfy an alleged tax obligation. - Debt collectors are not authorized to take enforcement actions against taxpayers, including placing a lien or issuing a levy. Further, debt collectors cannot threaten a taxpayer with arrest or deportation.
Fake Olive Oil Companies Revealed – Stop Buying These Brands Now
From Anonymous: There’s an enemy at the gates, it has been slowly infiltrating our olive oil market and corrupting one of the products that we all know is a healthy, sustainable option and one of Europe’s secrets to longevity. That’s right, 7 of the biggest olive oil manufacturers in the US have been cutting their products with cheaper, inferior oils (such as sunflower oil or canola oil) in order to minimize the cost of production, but it has come at a huge cost to everyone who invests in this healthy alternative.
And this is not too dissimilar to 2008, when over 400 Italian police officers participated in a major crackdown called “Operation Golden Oil.” This resulted in the seizure of 85 oil farms who were adding certain percentages of chlorophyll to sunflower and canola oil and selling it on as extra virgin olive oil. The oil is mixed, perfumed, coloured and then flavoured before being sold to the producer as “extra virgin.” These busts prompted the Australian government to investigate their own olive oil market, and indeed, after testing all of its brands’ “extra virgin olive oils” in their laboratories, none were given the 2012 certification for being a pure olive oil. All of these scams prompted the University of California to carry out studies on 124 imported brands of extra virgin olive oil, and they found that over 70% of the samples failed the test. The brands that failed the test:
The guys that passed the test and can be trusted:
Bariani Olive Oil
McEvoy Ranch Organic
California Olive Ranch
Aside from brands there are simple tests you can do at home to check whether your olive oil is pure or not. Place the bottle in the fridge for around 30 minutes and check if the oil is starting to solidify. If it does then it is a good indication that the oil contains a large amount of monounsaturated fat, which is exactly what extra virgin olive oil contains. If the oil doesn’t begin to show signs of solidification then its a good sign that the oil is fake. This is not a perfect test yet it is a good indicator if you are unsure about the quality of your oil. You can also look for official governmental seals of approval on the label, such as “Australian Extra Virgin Certified” and “California Olive Oil Council Certified Extra Virgin.” We have really had the wool pulled over our eyes with this one and its time to make a stand and stop supporting this corrupt industry of chemical additives, GMO’s and unhealthy alternatives. Hopefully this new action will decriminalise the olive oil industry around the world and restore it to being an honest trade, where an honest working person gets paid for what the other honest working people want to pay for…We’re paying for our Health after all.