From Stark

Lots of people have been getting phone and text messages supposedly from “Wells Fargo” seeking PIN numbers and other stuff you don’t want bad guys to get.

Washington Attorney General Rob McKenna has issued this warning:

SEATTLE – Washington State Attorney General Rob McKenna today warned consumers about a text-message trap to capture financial information and drain credit card and bank accounts. Such text message scams are called “smishing.”
“If you don’t wish to be smished, ignore text messages that look like they’re coming from your bank or credit card,” McKenna said. “Flip over your credit or ATM card and call the number on the back. If there’s a problem with your account, that’s the best way to find out.”
Consumers began contacting the Attorney General’s Consumer Protection Division early this week complaining about calls to their cell phones from those posing as Wells Fargo employees. An automated voice suggested that the customer’s account has been breached and directed them to “press one” for assistance. They were then connected to a person who asks for sensitive account information.
Many of the calls came to those who don’t even have Wells Fargo accounts. As the week progressed, the scam morphed to text messages from those posing as representing Bank of America, Chase, Citibank and Capital One.
“Phishing” scams trick consumers into turning over account numbers, PINs, credit card security codes, usernames, passwords and other sensitive information. “Smishing” is a similar scam launched over SMS (Short Message Service) messages – better known as text messages.
Scammers have long phished by phone and email. The text scam is a somewhat new variation. The Attorney General’s Office recommends that consumers never respond to any message requesting account or personal information. Instead, contact the institution using a phone number from a statement or from your bank or credit card company’s official Web site.
Phishing and smishing are criminal acts that the state Attorney General’s Office lacks authority to investigate. Consumers contacted by such scammers should file a complaint with the FTC: http://www.ftc.gov/ftc/contact.shtm. Federal law enforcement monitors complaints filed through the FTC.
Consumers concerned they may have revealed sensitive information in a phishing or smishing scam should contact their bank or credit card company, if applicable, and monitor their bank statements, credit card bills and credit reports to watch for suspicious activity.

The Washington Utilities and Transportation Commission is reminding low-income people that help may be available if they are struggling to afford the cost of a telephone, thanks to the Washington Telephone Assistance Program

Residents who participate in or are eligible for public-assistance programs such as Food Assistance or Temporary Assistance for Needy Families (TANF) from the state Department of Social and Health Services (DSHS), are entitled to receive local telephone service for about $8 per month plus taxes and fees. WTAP also provides a reduced or no-cost service installation for qualifying households that do not have telephone service.

“Access to local emergency services and community resources is vital to all state residents,” says Jeff Goltz, chairman of the UTC. “We want low-income and elderly residents to ‘stay connected’ and are reaching out to those who need phone service but can’t afford it.”

In addition, the WTAP Community Voice Mail Program provides a free personal phone number and voice mailbox to qualifying residents in transition housing, because the line between a job interview and a job offer can be as thin as a telephone cord. Without voice mail, applicants cannot respond quickly to job offers and may lose the chance to work.

To apply for WTAP benefits contact your local landline telephone company and provide your DSHS client identification number.

For more information on the WTAP program, contact DSHS at 1-888-700-8880 or by clicking here. For information on the Community Voice Mail program visit www.cvm.org.

The Federal Deposit Insurance Corporation is warning us to beware of emails that appear to be targeting small businesses or anyone else who conducts financial transactions by wire or accept credit card payments.

The email in question is another variation of the familiar pattern that you probably see on a regular basis if your spam settings are a bit liberal: “There is a problem with your account. Open this attachment or visit this website to fix it, and make sure you have entered your PIN correctly…”

The FDIC, the IRS, your bank, PayPal–none of these are likely to send out emails like this. Delete them as fast as you get them.

Below is the press release from the FDIC. The “ACH” referred to is the “Automated Clearing House” that processes credit card transactions:

The FDIC  has received numerous reports of fraudulent e-mails that appear to be from the FDIC and contain an infected attachment.

The fraudulent e-mails have addresses such as “no.reply@fdic.gov” or “notify84zma@fdic.gov” on the “From” line. The message appears, with spelling and grammatical errors, as follows:

Subject line: “FDIC notification”

Message body:

“Dear customer,
Your account ACH and WIRE transaction have been temporarily suspended for security reasons due to the expiration of your security version. To download and install the newest installations read the document(pdf) attached below.

As soon as it is setup, you transaction abilities will be fully restored.

Best Regards, Online Security departament, Federal Deposit Insurance Corporation.”
The e-mails contain an attachment “FDIC_document.zip” that will likely release malicious software if opened. These e-mails and attachments are fraudulent and were not sent by the FDIC. Recipients should consider these e-mails an attempt to collect personal or confidential information, or to load malicious software onto end users’ computers. Recipients should NOT open the attachment.

Financial institutions and consumers should be aware that these fraudulent e-mails may be modified over time with other subject lines, sender names, and narratives. The FDIC does not directly contact consumers, nor does the FDIC request bank customers to install software upgrades.

Information about counterfeit items, cyber-fraud incidents, and other fraudulent activity may be forwarded to the FDIC’s Cyber-Fraud and Financial Crimes Section, 3501 North Fairfax Drive, CH-11034, Arlington, Virginia 22226, or transmitted electronically to alert@fdic.gov. Questions related to federal deposit insurance or consumer issues should be submitted to the FDIC using an online form that can be accessed at http://www2.fdic.gov/starsmail/index.asp.

For your reference, FDIC Special Alerts may be accessed from the FDIC’s website at www.fdic.gov/news/news/SpecialAlert/2011/index.html. To learn how to automatically receive FDIC Special Alerts through e-mail, please visit www.fdic.gov/about/subscriptions/index.html.

End press release

Burger King, trying to catch up with its fast food rivals, is adding oatmeal to its breakfast menu, the AP reports.

Until I saw this report, I did not realize that Burger King has been in a bit of a tailspin, with both profits and overall sales dropping significantly in North America.

I’m not a fast food guy myself, so I have no insights into why the meal-in-a-bag crowd is becoming less likely to dine on BK food. Anyone else care to weigh in?

The article also notes that McDonalds, Denny’s and Starbucks, among others, are already offering oatmeal and it is selling well. Who saw this development coming?

Travel clubs promise lucrative discounts on air fares, cruise trips and hotels to those who are willing to pay thousands of dollars for memberships, but do they deliver?

Not always.

On July 17, 2011, the New Jersey Attorney General’s office arrested Daryl T. Turner, charging that he took more than $75,000 from people who bought costly memberships in Dreamworks Travel and other travel companies he operated, without delivering the promised discounts or providing refunds.

The criminal prosecution of Turner came after years of state civil litigation attempting to put Turner out of business and get him to pay back his customers.

After filing a civil suit  in 2009, New Jersey investigators said Turner and associates “lured consumers in with promises of deep discounts, free gifts and misrepresentations about their affiliation with respected corporations, all for the purposes of defrauding consumers and enriching themselves.”

A Burlington County,  N.J. consumer protection official put it this way:

“Dreamworks and its other vacation clubs offered a ‘dream’ vacation that was too good to be true. Consumers must realize that high-pressure sales tactics, coupled with prepaid vacation packages, plus freebee airline ticket offers are always a dangerous combination.”

In Washington state, the attorney general’s office has gone to court to sue travel club promoters on behalf of consumers on several occasions, going back to at least 1997.

From Stark

In the wake of the collapse of the housing bubble, some of the biggest names in corporate America are exchanging insults as they try to fix blame for the billions of dollars they lost on mortgage backed securities.

An excerpt from this story in the Washington Post:

Bank of America spokesman Lawrence Grayson said the blame lies with AIG.

“AIG recklessly chased high yields and profits throughout the mortgage and structured finance markets. It is the very definition of an informed, seasoned investor, with losses solely attributable to its own excesses and errors,” Grayson said.

AIG spokesman Mark Herr shot back: “It is disappointing but unsurprising that Bank of America continues to attempt to blame others for its own misconduct. Investors, no matter how sophisticated, were entitled to rely on its numerous written representations about the securities it sold.”

AIG has filed a $10 billion lawsuit against Bank of America, partly due to its losses on mortgage-backed securities that depended on loans made by Countrywide, the big nationwide lender that was absorbed by Bank of America as its losses mounted.

AIG’s attorneys charge that the loans backing the bonds were based on fraudulent documentation, leading AIG to underestimate the risk of non-payment of the underlying mortgages.

Many years after the housing and mortgage bubble inflated and exploded, it seems as though the long arm of the law is beginning to make significant legal moves against some of the people who appear to have enriched themselves in the process.

Earlier today, we noted that AG Rob McKenna was taking legal action against a Bank of America foreclosure-servicing subsidiary, accusing that firm–ReconTrust–of illegal behavior.

On the same day, U.S. Attorney Jenny Durkan of Seattle has announced criminal charges against four former employees of a failed Tacoma bank, accusing them of approving hundreds of bad loans that helped to sink their former employer. They are accused of falsifying loan documentation to get the job done.

Here is the press release:

Four former bank employees have been indicted by the grand jury in connection with fraudulent mortgage loans originated at the now defunct Pierce Commercial Bank.  The lead defendant in the case, SHAWN L. PORTMANN, 39, was arrested this morning and will make his initial appearance in U.S. District Court in Tacoma at 3:00 today.

PORTMANN, a former Senior Vice President and loan officer at the Bank, is charged in a 30 count indictment with conspiracy, false statements on loan applications, false statements to HUD, mail fraud, wire fraud, bank embezzlement, and transactional money laundering.

Three other defendants are charged in the indictment: SONJA L. LIGHTFOOT, 52, the former Senior Vice President of Residential Lending at Pierce Commercial Bank; JEANETTE R. SALSI, 54, a former underwriter at Pierce Commercial Bank; and ADAM S. VOELKER, 38, a former loan processor at Pierce Commercial Bank from January 2005 until July 2006.  Pierce Commercial Bank was closed by regulators in November 2010, in part because of mortgage lending losses.
“This conspiracy didn’t just damage Pierce Commercial Bank.  This activity helped pump up the housing bubble that artificially drove up valuations, and now leaves innocent families underwater on their mortgages,” said U.S. Attorney Jenny A. Durkan. “Mr. Portmann and his co-conspirators are being held accountable for their criminal conduct that was fueled by greed.  I commend the painstaking work by FBI, IRS-CI, HUD-OIG and U.S. Postal Inspection Service in bringing this case.”
According to the indictment, between 2004 and 2008, PORTMANN and the other defendants conspired to submit false documents within various loan documents and applications.  They falsified information about the borrowers’ qualifications as well as about the value of the properties being purchased.  Based on a review of a sample of loans, the co-conspirators caused more than 270 loans that contained false and fraudulent documents and information to be funded by Pierce Commercial Bank representing in excess of $45 million in loan proceeds.  More than 100 of these loan files have defaulted, causing in excess of $10 million in loss to Pierce Commercial Bank, secondary investors, and HUD/FHA.  The indictment details multiple false statements included in loan documents regarding an applicant’s employment, income, and intention to reside in the property.
The indictment alleges that PORTMANN committed mail fraud affecting a financial institution when sending various documents through the mail to support the scheme.  PORTMANN and LIGHTFOOT are charged with counts of wire fraud stemming from the sale of these mortgages on the secondary market to financial institutions such as Wells Fargo, Countrywide, IndyMac and J.P. Morgan Chase.
PORTMANN is charged with bank embezzlement for billing Pierce Commercial Bank for advertising that never occurred.  PORTMANN set up two companies, The Principles, LLC and WM1, LLC.  Using these companies PORTMANN billed Pierce Commercial Bank more than $150,000 for advertising that was never provided.  PORTMANN used some of these funds to purchase a $68,000 BMW.  That purchase is the basis for the transactional money laundering count.
“This investigation targets an unscrupulous goliath in the mortgage industry—someone who brokered thousands of loans with little regard for the ability of the borrowers to make good on the payments,” said Laura M. Laughlin, Special Agent-in-Charge of the FBI Seattle office. “Fraudulent business practices on thousands of loans that Mr. Portmann and his co-conspirators pushed through unquestionably contributed to the larger housing market decline and the failure of Pierce Commercial Bank.”
“Mortgage fraud has burdened our economy and caused an urgent reliance on the government, and ultimately the taxpayer, to bolster devastated communities,” said Wayne North, Special Agent in Charge of HUD’s Office of Inspector General. “HUD OIG is deeply committed to working with our law enforcement partners in the continuing efforts to bring to justice those that seek to enrich themselves at the expense of our economic well-being.”

“Mortgage fraud is a modern day plague throughout the country that has burdened lenders with bad loans and neighborhoods with abandoned and deteriorating properties,” said Marcus Williams, the IRS Special Agent in Charge of the Pacific Northwest .  “ Washington residents can rest assured knowing that federal law enforcement takes mortgage fraud seriously since it played a major role in almost crippling our nation’s banking system just a few years ago.”

Pierce Commercial Bank received $6.8 million from Troubled Asset Relief Program (TARP) in January 2009.  This money was never repaid.
False statements in loan applications, mail fraud affecting a financial institution, and bank embezzlement are punishable by up to 30 years in prison and a $1,000,000 fine.  Wire fraud is punishable by up to 20 years in prison and a $250,000 fine.  Conspiracy is punishable by up to five years in prison and a $250,000 fine.  False statements to HUD are punishable by up to two years in prison and a $250,000 fine.  Transactional money laundering is punishable by up to 10 years in prison and a $250,000 fine.
The charges contained in the indictment are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.
The case is being investigated by the FBI, the HUD Office of Inspector General (HUD-OIG), Internal Revenue Service Office of Criminal Investigation (IRS-CI) and the United States Postal Inspection Service.  The case is being prosecuted by Assistant United States Attorneys Brian Werner and Arlen Storm.

This indictment is brought as part of President Barack Obama’s Financial Fraud Enforcement Task Force.

President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

(End press release)

Washington Attorney General Rob McKenna took a meaningful step today in the effort to untangle the mortgage foreclosure processing mess that makes it so difficult for struggling homeowners to get back on track, repay their loans and keep their homes.

McKenna, an announced GOP candidate for governor in 2012, has filed a lawsuit againts ReconTrust, a Bank of America subsidiary, accusing the company of conducting illegal foreclosures in the state.

“ReconTrust ignored our warnings, repeatedly broke the law and refused to provide information requested during our investigation,” McKenna said in a press release. “ReconTrust’s illegal practices make it difficult, if not impossible, for borrowers who might have a shot at saving their homes to stop those foreclosures.”

ReConTrust is a major player. According to the online records at the Whatcom County Auditor’s office, ReconTrust has filed 68 foreclosure notices in this county since the beginning of 2011, while actually selling 32 homes in foreclosure sales during the same period.

Here is the text of the lawsuit, filed in King County Superior Court.

Here is the text of McKenna’s press release:

SEATTLE – Washington Attorney General Rob McKenna today announced that his office is suing ReconTrust Company, a subsidiary of Bank of America, for conducting illegal foreclosures on thousands of Washington homeowners.

“ReconTrust ignored our warnings, repeatedly broke the law and refused to provide information requested during our investigation,” McKenna said. “ReconTrust’s illegal practices make it difficult, if not impossible, for borrowers who might have a shot at saving their homes to stop those foreclosures.”

ReconTrust is a foreclosure trustee that is legally required to act as a neutral party on behalf of both the lender and the borrower while conducting foreclosure proceedings in good faith and in accordance with the law.

The lawsuit filed in King County Superior Court by McKenna and Assistant Attorney General Jim Sugarman, of the office’s Consumer Protection Division, alleges that “ReconTrust has failed to comply with the Washington Deed of Trust Act, RCW 61.24, in each and every foreclosure it has conducted since at least June 12, 2008.” The company is also accused of violating the state’s Consumer Protection Act.

The Attorney General’s Office announced the suit during a news conference held outside a foreclosed home in Seattle. McKenna and Sugarman were joined by two women whose homes were foreclosed by ReconTrust and several private attorneys who are also concerned about ReconTrust’s actions.

“My home is being foreclosed on. The situation has caused great pain for my son and myself,” said Myra Cole, a single mother from Spanaway who struggled to find employment after a layoff. Her loan servicer was reviewing her Spanaway home for a loan modification when ReconTrust sold the house at foreclosure.

“I couldn’t understand how this could have happened,” Cole continued. “I got the run-around. I just can’t believe that the company that’s supposed to be helping me is foreclosing on me. … We are trying to save our homes. We’re doing the steps they tell us. In the end, it’s all for nothing. It’s an injustice.”

Ruby Barrus told a similar story about the home where she and her husband live in Marysville. During a time of financial hardship, their loan servicer promised not to foreclose while they worked out a loan modification.

“Our payments were never late,” Barrus said, adding that they only stopped making payments because the bank indicated they needed to default to qualify for the modification. “We just figured they knew what they were doing because they were our servicer. … Months later, we get a letter from ReconTrust saying they’re our foreclosure attorneys. We had never heard of them.”

Both women are in court battles to keep their homes.

McKenna said an essential requirement of the Deed of Trust statute is that a trustee maintains an office in the state where homeowners can go to ask questions, make last-minute payments and request a foreclosure be postponed for a legitimate reason. But ReconTrust doesn’t have an office in Washington.

“ReconTrust’s claim that the company doesn’t have to follow Washington law and procedures because it is a national bank is wrong,” McKenna added.

The Attorney General’s Office alleges the company:

• Failed to maintain a physical office with telephone service in Washington.

• Failed to identify the actual owner of the promissory notes being foreclosed.

• Provided confusing information regarding how borrowers defaulted and how they can cure that default.

• Failed to conduct foreclosures in a public place, instead holding them at private sites including an office park in Bellevue.

• Created or permitted the use of documents that were improperly executed, notarized or sworn to. Sugarman said notices and agreements contained conflicting dates and improper notarizations and ReconTrust employees sometimes signed as officers of other entities.

• Failed to exercise its duty of good faith toward the borrower by deferring solely to the lender when deciding whether to postpone a foreclosure.

The complaint states that homeowners facing foreclosure are “captive to ReconTrust’s services” and that the company’s failures to abide by the law have concealed material information needed by homeowners to assert rights and defenses, negotiate a loan modification, cure defaults, and postpone or stop a foreclosure sale.

Sugarman said, “It is particularly important right now for trustees to understand and strictly comply with Washington foreclosure law. There have been several changes including a new right for homeowners to request mediation to discuss a possible loan modification or forbearance before the bank pursues foreclosure.”

The complaint asks that the court require ReconTrust to comply with the law and impose civil penalties of up to $2,000 per violation, as well as restitution for consumers.

Based on information obtained during its investigation, the Attorney General’s Office estimates that ReconTrust has issued 9,900 foreclosure notices since January 2008 in King, Pierce and Snohomish counties alone.  ReconTrust forecloses across the state.  It’s unknown how many of those foreclosures violated homeowner rights, although the Attorney General’s Office believes the problems are systematic and widespread. It’s also unknown how many foreclosures may have been prevented had ReconTrust complied with laws.

In May 2010, the Attorney General’s Consumer Protection Division began investigating reports of lenders and trustee services not properly reviewing foreclosure documents or following other legal procedures. McKenna sent letters in October 2010 and April 2011, outlining concerns and calling on trustees to suspend questionable foreclosures in the state. The office is investigating more than a dozen other trustees for suspected violations.

The office also remains very involved with the multistate investigation into problems in the foreclosure industry.

For more information about these investigations and resources for homeowners, including new mediation rights, visit www.atg.wa.gov/foreclosure.aspx.

Private lawsuits against ReconTrust have been filed in Utah, Nevada, California, Oregon and Arizona concerning its role in foreclosures in those states, as well as by private attorneys in Washington.  The Attorney General of Utah sent a public letter to Bank of America threatening suit if ReconTrust continued to violate Utah foreclosure law.

(End press release)

Washington state homeowners facing foreclosure have until Friday, July 22 to apply for the federal Emergency Homeowners Loan Program.

There are a lot of dubious offers of foreclosure help out there. This one appears to be legit, but the deadline for your application is fast approaching. Here is a press release from the US Department of Housing and Urban Development that explains what you have to do:

SEATTLE – This Friday, July 22nd, is the deadline for at-risk Washington state homeowners facing foreclosure as a result of a loss in income due to a change in employment or high medical bills to qualify for Emergency Homeowners’ Loan Program (EHLP)  interest-free, forgivable “bridge loans” of up to $50,000 to bring their mortgages current and help them pay their mortgages.

The U.S. Department of Housing and Urban Development awarded Washington state some $56 million for “bridge loans” under the EHLP program.  The average EHLP “bridge loan” is expected to be about $35,000 so as many as 1,500 eligible, at-risk homeowners at-risk could benefit from the program, created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

“The clock is ticking for Washington state homeowners at risk of foreclosure,” said HUD Northwest Regional Administrator Mary McBride.  “It is absolutely critical for them to get to the EHLP Web site at www.findEHLP.org before Friday, July 22nd,  to pre-apply for an EHLP  bridge loan.  Simply put, it could be the difference between losing or holding onto their homes.”

At-risk homeowners interested in the EHLP “bridge loan”  program should visit its Web site or call EHLP at 855-FIND-EHLP (346-3345). By Friday, July 22nd, they must have completed and submitted the EHLP Pre-Applicant Screening Worksheet and the Third-Party Authorization to pre-apply.

EHLP funds will pay a portion of an approved applicant’s monthly mortgage including missed mortgage payments or past due charges including principal, interest, taxes and insurance. Only participating EHLP agencies found on www.FindEHLP.org are approved to accept  Pre-Applicant Screening Worksheets. Homeowners should beware of scams. It is free to submit a worksheet or get assistance with completing the worksheet. Any company asking for money to assist homeowners with the EHLP application process is a scam. Contact information for participating agencies, the Pre-Applicant Screening Worksheet and more information on the EHLP assistance and its eligibility requirements can be found at www.FindEHLP.org or by calling toll free at 855-FIND-EHLP (346-3345).

To be eligible for an EHLP “bridge loan,” households may incomes of no more than 120 percent of area median income.  For  EHLP income limits in Washington state, see http://www.huduser.org/portal/EHLP/index.html

Due to expected high demand for EHLP “bridge loans,” interested homeowners will complete a Pre-Applicant Screening Worksheet first. If there are more potentially eligible pre-applicants than funding available, the worksheets will be entered into a random selection process. Homeowners will be randomly selected and invited to apply for EHLP. Unfortunately, some qualified homeowners will not be selected and some will complete an application but not be approved to receive assistance because they do not meet all of the requirements.

The EHLP program is being administered on HUD’s behalf by NeighborWorks America, a national nonprofit organization that, since 1991, has been committed to providing access to homeownership and to safe and affordable rental housing.

(End press release)

The Wall Street Journal offers a lengthy report on a new study that says thousands of cardiac patients are getting unnecessary heart stent procedures.

The report offers anecdotal evidence that in at least some cases, these procedures are being done because they generate profits for doctors and manufacturers.

It’s encouraging to me that this kind of thing is drawing strong public scrutiny. Too much of the debate over the U.S. health care system has narrowly focused on who will pay. Private insurers or Uncle Sam? The fact is, we’re going to have trouble paying for health care costs under any public or private system, unless those costs can be controlled.