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Posted by Kathy Bazoian Phelps    Below is a summary of the activity reported for May 2016. The reported stories reflect: 3 guilty pleas or convictions in pending cases; over 129 years of newly imposed sentences for people involved in Ponzi schemes; at least 8 new Ponzi schemes worldwide; and an average age of approximately 47 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.    Lori Ann Anderson, 54, was sentenced to one to 15 years in prison for each of three felonies in connection with a $1.7 million Ponzi scheme that defrauded 46 investors. Anderson ran an investment business called SMTS, which she said stood for “Show Me the Savings” or “Stock Market Trading Services.” This was the second time that Anderson was sentenced. In 1992, she was sentenced in a similar case which caused her to lose her securities license for embezzling $140,000 from Farm Bureau Insurance policy holders.    Charles Bennett, 57, a former corporate lawyer at Skadden, Arps, Slate, Meagher & Flom, was sentenced to 5 years in prison for running a $5 million Ponzi scheme. Bennett had left a suicide note before trying to kill himself which revealed the scheme that defrauded 30 friends and family members.

Read More from: The Ponzi Blog

4 hours 20 min ago
Although the economic recession is over, many people still struggle to cover their living expenses because they simply are not earning enough money and are buried underneath a mountain of debt. According to a report issued by the National Low Income Housing Coalition (NLIHC), a person who works 40 hours per week and earns the minimum wage (whether it’s the state minimum wage or the federal minimum wage) is not able to comfortably afford the rent on a two-bedroom apartment. Moreover, this holds true regardless of where in the U.S. a minimum wage earner resides. The NLIHC is a respected organization that is dedicated to helping shape public policy by lobbying on behalf of low-income individuals and families who need affordable housing. The High Cost of Renting a Home in New Jersey The NLIHC used a fairly standard calculation of rent and utilities costing no more than 30 percent of a person’s total income. In fact, this comes from a federal guideline on calculating reasonable housing costs. The average monthly cost on a standard two-bedroom apartment in New Jersey is $1,379, which makes the Garden State fairly expensive compared to other states. The most expensive counties in which to rent in NJ include Bergen County, Hudson County, Hunterdon County, Middlesex County and Somerset County.
8 hours 9 min ago
The chapter 11 case of Energy Future Holdings (“EFH” or “Debtors”) roared back to life this month. Certain key conditions for the plan of reorganization approved last December (the “First Plan”) to become effective were not met by a deadline of April 30, and one of the major parties to the support agreement that underlay the First Plan gave written notice of termination on May 1.  The Debtors followed up immediately by filing a new proposed plan and a motion seeking a confirmation hearing in early August.  (Kelley Drye & Warren LLP represents a creditor of certain Debtors, but has taken no part in the matters discussed here).

Read More from: Bankruptcy Law Insights

12 hours 38 min ago
The availability of a debtor’s insurance policy can have a significant impact on its chapter 11 case.  Indeed, in certain chapter 11 cases insurance proceeds may be a creditor’s only opportunity to potentially receive a recovery on meritorious claims.  Relying on insurance proceeds, however, is not infallible.  An insurance policy may, for example, contain a coverage exclusion that would preclude a claim.  For instance, nearly all directors’ and officers’ liability insurance policies traditionally include an insured v. insured exception that is designed to generally exclude from coverage any claim made against an insured that is brought by another insured, the company or any of the company’s security holders.  Depending on the facts at hand, including the identity of the party asserting the claims against the insured directors and officers, and the court adjudicating the matter, an insured v. insured exception may preclude coverage. Courts across the country have rendered different decisions on whether an insured v. insured exception is triggered if a debtor-in-possession, creditors’ committee, trustee or liquidation trustee assert claims belonging to a company.  And many times companies forced to file a chapter 11 petition do not pay close attention to the potential effect of this exclusion and the scope of any potential “carve-out” from the exclusion.
12 hours 43 min ago
[wsj-responsive-image P="//" J="//" M="//" caption="The demise of Sports Authority has reignited a fight in Colorado over the future of the Denver Broncos' stadium, a place long tied to the city's identity. (AP Photo/David Zalubowski)" credit="Associated Press" placement="Inline" suppressEnlarge="false" ] The owner of the NFL’s Denver Broncos is seeking to end its stadium-sponsorship agreement with Sports Authority Holdings Inc. The team’s request to scrap the deal comes after the bankrupt retailer skipped two payments this year and made an unauthorized attempt to sell the stadium naming rights in bankruptcy court. The Broncos claim Sports Authority owes them roughly $2.1 million for 2016. Representatives for Sports Authority and the Denver Broncos’ ownership didn’t immediately respond to comment.

Read More from: Bankruptcy Beat

13 hours 57 min ago
The idea that restricted access to loans for poor-credit borrowers is unequivocally a bad thing is based on industry talking points that don't stand up to real-world scrutiny.

Read More from: BankThink

14 hours 27 min ago
Here at Shenwick & Associates, we're devoted to helping our clients discharge as many of their debts as possible in bankruptcy. We also aggressively attempt to help our clients retain as much of their property as possible after their bankruptcy case is concluded.However, with regard to property that's secured by a debt, whether a debtor can retain that property will often depend on whether he or she is willing to sign a reaffirmation agreement. We covered reaffirmation agreements in a recent e-mail, but have recently done some more investigation into the topic, which we wanted to share with you.As a hypothetical, let's say we have a married couple, filing jointly, who own a house with a mortgage and are current on their mortgage payments. There is no equity in the house. They want to keep their house after their bankruptcy case is concluded and continue to pay their mortgage during the pendency of the bankruptcy case. Does this couple need to file a reaffirmation agreement with the secured creditor? Our answer, for cases filed in the Second Circuit (New York, Connecticut and Vermont) is no.Prior to the enactment of BAPCPA in 2005, courts in several circuits (including the 2nd Circuit in Capital Communications Federal Credit Union v.

Read More from: Shenwick & Associates

14 hours 44 min ago
Sometimes, the conversation with a debt collector or a debt buyer seems all too one-sided. The collector makes demands.  Nothing you say penetrates. Including your assertion that you don’t recognize the collector, the debt, or any legal responsibility for paying. Or maybe you recognize the debt but simply don’t have the money to deal with old debt right now. If you don’t get the collection conversation on track and productive, at best, the collector keeps calling. See also:  when they call your family At worst, they sue. You need some tools for debt defense. Your debt collection rights Federal law, grounded in the Fair Debt Collection Practices Act, gives you both legal rights, and tools to enforce those rights. Consider moving the conversation to paper. The new federal agency, the Consumer Financial Protection Bureau, has posted template letters that you can adapt for dealing with dubious debt collectors. The Action Letters cover five different situations:
  1. You need more information about the supposed debt
15 hours 7 min ago
Instant Apps could give banks a better option for transitioning customers from a quick and easy account opening to a more robust banking experience.

Read More from: BankThink

16 hours 57 min ago
Receiving Wide Coverage ... Banking's Identity Crisis: Banks are in the midst of a period of upheaval, as the industry seeks to reinvent itself amid huge changes in consumer preferences, banking technology and the regulatory landscape. Fintech disruptors will probably be subsumed into the larger banking universe, although their ideas will live in. Ultimately, the old ways of banking will die only when those banks that lived through the financial crisis move on. ...

Read More from: BankThink

17 hours 10 min ago
Chemical manufacturer Vertellus Specialties Inc. filed for chapter 11 protection and is planning to auction its business. The Wall Street Journal has the Daily Bankruptcy Review article here. (Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit, scroll to the bottom and click “try for free.”) Hercules Offshore Inc. is planning to file for chapter 11 protection again with plans to liquidate less seven months after it emerged from bankruptcy, DBR reports in WSJ. Seattle-based Great Pacific Seafoods is shutting down and will liquidate in bankruptcy, the Seattle Times reports. Takata Inc. said it won’t use bankruptcy to mitigate liabilities, Bloomberg reports.

Read More from: Bankruptcy Beat

18 hours 51 min ago
Last week the UK Government issued a consultation document on changing UK insolvency legislation to enable distressed companies to obtain a moratorium for up to three months, with the possibility of an extension, under the supervision of an insolvency practitioner. The moratorium would prevent all creditors, including secured creditors, from taking any enforcement action against such companies without first applying to court for permission to do so. This follows a briefing paper published by R3 last month suggesting a similar moratorium process.

Read More from: eSQUIRE Global Crossings

19 hours 50 min ago
Differing Priorities By Donald L. Swanson Non-bankruptcy cases usually have a different priority than bankruptcy cases: namely painting a picture v. maximizing value. In non-bankruptcy cases, an event or series of events occur, and the focus is, typically, on (i) painting a clear picture of what happened, and (ii) assigning or absolving liability accordingly. In non-bankruptcy cases, the picture to be painted might be: –What happened when a collision occurred at the intersection of Main and 38th Streets? –What happened when an invasive cervical cancer diagnosis is preceded by five consecutive years of negative Pap test results? –What happened when a single-engine plane crashes in a cornfield? There is no particular urgency in non-bankruptcy cases to paint the picture quickly. A leisurely-timed painting process is usually sufficient. So, discovery takes a long time. And mediation often happens as discovery winds down. In business bankruptcy cases, by contrast, painting an accurate picture is certainly important. But the primary aim is something different: it’s to preserve and maximize value of the business and its assets. If value is lost or destroyed, the bankruptcy case is a failure. A Bankruptcy Failure Here’s an example of bankruptcy failure: –A production facility requires $120 million financing to construct and begin production

Read More from: Mediatbankry

21 hours 26 min ago
CBS reports “Overdraft fees are raking in billions of dollars for the banking industry. But who’s paying them? Predominantly a tiny subset of consumers: young, working in lower-wage jobs and heavy users of debit cards. Surveying 304 individuals who reported paying more than $100 in overdraft fees during the past year, the Pew Charitable Trust found that the bulk — 67 percent — of those paying hefty overdraft charges are working but earning less than $50,000 annually. Roughly one-third earn $25,000 or less. Their preferred method of payment is a debit card, and more than a third of them are under age 36. Nearly a quarter of those surveyed said they paid more than a week’s wages in overdraft fees in the past year, with one in four reporting that the charges added to $300 annually or more. Nearly one in five of these individuals said overdrafts cost them $500 or more last year.5 Ways to Cut Costly Overdraft Fees… The post 5 Ways to Cut Costly Overdraft Fees appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
1 day 12 hours ago
It has taken several months, but the Russian Particulars of Claim and Ukraine's Defence (akin to complaint and answer in U.S. civil procedure) have now been filed. Distilled to its essence, Ukraine's response, as the Financial Times notes, is that "if you wanted your money back you should not have invaded our country." Or as Ukraine's lawyers put it in the Defence: "The [Russian] claim forms part of a broader strategy of unlawful and illegitimate economic, political and military aggression ... aimed at frustrating the will of the Ukrainian people to participate in the process of European integration." 

Read More from: Credit Slips

2 days 15 hours ago
Texas has some of the strongest homestead protections in the country.   It was also one of the last states to allow home equity lending.   When it reluctantly amended its Constitution to allow home equity lending, it included some draconian provisions for lenders who didn't follow the rules, allowing forfeiture of principal and interest in some cases.   A lender's failure to provide a timely release after the borrower repaid the loan sparked a spirited disagreement among the Texas Justices as to whether to apply the Constitutional provision as written or to use common sense.   In a 7-2 decision, "common sense" and the lender prevailed. Garofolo v. Ocwen Loan Servicing, LLC., No. 15-0437 (Tex. 5/20/16).    You can read the opinion here and the dissent here.What Happened Teresa Garofolo took out a home equity loan for $159,700 in 2010.   She paid the loan off in April 2014.   While the lender recorded a release of lien, it did not provide her with a recordable release as required her loan documents.    She made demand upon Ocwen to provide her with the required paperwork.   When they failed to comply within sixty days, she filed suit in federal court seeking forfeiture of all principal and interest under the Texas Constitution.    The District Court dismissed the case.   When Ms.
3 days 8 hours ago
June 25, 2016 Google announced that it would ban ads for payday lenders (and similar services) starting on July 13. In a statement, David Graff, the company’s director of global product policy wrote:
We will no longer allow ads for loans where repayment is due within 60 days of the date of issue. In the U.S., we are also banning ads for loans with an APR of 36 percent or higher. When reviewing our policies, research has shown that these loans can result in unaffordable payment and high default rates for users so we will be updating our policies globally to reflect that.
Graff added that the new policy “is designed to protect our users from deceptive or harmful financial products,” and will still leave room for companies to advertise mortgages, car loans, student loans, and credit cards.  Read more… As additional information read the article “Feds Payday lender charged 700% interest”… read more
3 days 12 hours ago
“Charge off” is accounting jargon for the formal determination that the creditor is no longer treating its claim against you as an asset.   It permits the creditor to take a “wholly worthless bad debt” deduction on its taxes under Sec. 1244 of the IRC.    It does not mean the creditor has released its claim and it cannot pursue you.  Any payments received after the debt is charged off are treated differently for tax purposes.   And that its claim against the reorganized debtor is not on its balance sheet above the line. What it does mean is that the creditors still retains the right to collect the full amount of debt and have a variety of options available to them. Depending upon the situation, the creditor may have internal collections staff pursue collection or sell it to an external collector, or the creditor may elect to sue on the entire debt.
4 days 6 hours ago
Court Looks to the Knowledge of the Transferees in Madoff
4 days 11 hours ago
Sometimes a debtor’s rights in bankruptcy get affected by an overly aggressive Trustee.  The Trustee gets a fee and a percentage of any assets administered.  The debtor is seeking to keep any and all of his assets free and clear from the long arm of the Trustee.  This blog today deals with the personal injury+ Read More The post Bankruptcy Exemption For Personal Bodily Injury Applies In Illinois appeared first on David M. Siegel.
4 days 13 hours ago