Protecting Your Identity As Cyber-Attacks Become More Frequent and Sophisticated

 Blog article or ad? Is anything finance-related really free?

Blog post by Ken Lin, founder and CEO, CreditKarma.com

The South Carolina Revenue Department announced a major cyber-attack at the end of October possibly affecting 3.6 million taxpayers dating back to 1998.

The state says an international hacker took unencrypted social security numbers and 387,000 credit and debit card numbers.

New information also shows the breach affected 657,000 businesses in the state. South Carolina is offering anyone affected by the cyber-attack free credit monitoring on protectmyid.com with a validation code, but this will only check your Experian report.

Earlier in October, although on a much smaller scale Barnes & Noble also had a breach of some of their store's credit and debit card terminals. Security breaches like these two aren't going away and are only getting more sophisticated.

Here are some steps that consumers can use to protect themselves.

Take Action Quickly

In both incidents it took time to notify those affected. The South Carolina government became aware of the data breaches on Oct. 10 and didn't inform taxpayers until Oct. 27. Barnes and Noble took more than a month to let their customers know. That means, for some people, their information could have already been used in a malicious way.

Don't wait until you hear of a data breach, be proactive about protecting your identity.

Monitor Your Credit

A good first step is to monitor for new, fraudulent accounts and activity on your credit report, by signing up for a credit monitoring service like the free service offered by Credit Karma.

It will monitor your TransUnion credit report daily and alert you to any important changes, such as a new account opened in your name. As security breaches become more frequent, monitoring your credit is a good action for all consumers to take.

Place a Fraud Alert on Your Credit Report

If you are notified you are part of data breach, placing an initial fraud alert on your reports is a good extra level of protection.

The alert tells lenders and creditors that they must verify your identification by contacting you before opening credit or a loan in your name. The alert will last for 90 days and can be extended if you find you do become a victim of identity theft.

To initiate a fraud alert, contact one of the three credit bureaus; that bureau will be required to notify the other two credit bureaus to place an alert on your file. You will not be charged for placing an initial fraud alert on your credit report.

Cancel Your Credit Card and Reset Your Passwords

A fraud alert won't protect accounts and credit cards already active. If account information is exposed in a data breach, cancel the card and change any passwords or pins that may be tied to it immediately.

Alert all companies that have your card on file for automatic monthly billing because your now canceled card can't be charged. Not alerting those companies results in your bills going unpaid, causing even more problems like mounting debt and the potential for your credit score to suffer.

Remember: No one can completely protect themselves from identity theft, but taking these steps can help you catch red flags before there is major damage to your credit and finances.

Ken Lin is the founder and CEO of CreditKarma.com, a free credit management website that helps more than nine million people access their credit score for free.

Taking It In The Big Shorts




What, Me Short?

  Excerpted from Matt Taibbi's scathing May 26, 2011 Rolling Stone article The People vs. Goldman Sachs:

"Thanks to an extraordinary investigative effort by a Senate subcommittee that unilaterally decided to take up the burden the criminal justice system has repeatedly refused to shoulder, we now know exactly what Goldman Sachs executives ... lied about.

We know exactly how they ... defrauded their clients. America has been waiting for a case to bring against Wall Street. Here it is, and the evidence has been gift-wrapped and left at the doorstep of federal prosecutors, evidence that doesn't leave much doubt: Goldman Sachs should stand trial."

"How did Goldman sell off its 'cats and dogs'? Easy: It assembled new batches of risky mortgage bonds and dumped them on their clients, who took Goldman's word that they were buying a product the bank believed in. The names of the deals Goldman used to clean its books – chief among them Hudson and Timberwolf – are now notorious on Wall Street."

Goldman specifically designed the Hudson deal to reduce its exposure to the very types of mortgages it was selling. One of its creators, trading chief Michael Swenson, later bragged about the "extraordinary profits" he made shorting the housing market. Goldman dumped $1.2 billion of its own "cats and dogs" into the deal – and then told clients that the assets had come not from its own inventory, but had been "sourced from the Street."

Hudson quickly lost a ton of money. Goldman's biggest client, Morgan Stanley, alone lost nearly $960 million on the Hudson deal, which the bank turned around and dumped on taxpayers, who within a year were spending $10 billion bailing out the bank through the TARP program.

Goldman clients who bought into the deal had no idea they were being sold the "cats and dogs" that the bank was "cleaning" off its books. An Australian hedge fund called Basis Capital sank $100 million into the Timberwolf deal on June 18th, 2007, writes Taibbi, "and almost immediately found itself in a full-blown death spiral."

In February 2007, Goldman mortgage chief Daniel Sparks and senior executive Thomas Montag exchanged e-mails about Timberwolf.

MONTAG: "CDO-squared – how big and how dangerous?"
SPARKS: "Roughly $2 billion, and they are the deals to worry about."

In a conference call on May 20th that included Viniar, Sparks oversaw a PowerPoint presentation spelling out Goldman's concern about Timberwolf. In a later e-mail, he wrote: "There is real market-meltdown potential."

Four days after Goldman sold $100 million of Timberwolf to Basis. "Boy," Montag wrote, "that timeberwof [sic] was one shitty deal."

In the spring of 2010, about a year in to his investigation, Senator Levin hauled Goldman execs to Washington, made them take oaths, and demanded that they explain themselves.
Goldman execs lied under oath

• David Viniar insisted that Goldman's massive bet against mortgages was "not a large short." At work, he'd written an email in which he called Goldman's bet "the big short."

• Daniel Sparks claimed that Goldman expected deadly mortgage deals like Timberwolf "to perform." At work, he'd approved an internal document warning that Goldman expected such deals "to underperform."

• Michael Swenson said Goldman had forfeited profits by refusing to bet against mortgages: "We left money on the table." At work, he had bragged about the "extraordinary profits" he made while betting against mortgages.

"Before the hearing, even some of Senator Levin's allies worried privately about his taking on Goldman and other powerful interests. The job, they said, was best left to professional prosecutors, people with experience building cases. ... But in the case of this particular senator, that concern turned out to be misplaced. A Harvard-educated lawyer, Levin has a long record of using his subcommittee to spend a year or more carefully building cases that lead to criminal prosecutions."

"[The] questioning of the bank's executives was not one of those for-the-cameras-only events where congressmen wing ad-libbed questions in search of sound bites. In the weeks leading up to the hearing, Levin's team carefully rehearsed the moment with committee members. They knew the possible answers that Goldman might give, and they were ready with specific counterquestions. What ensued looked more like a good old-fashioned courtroom grilling than a photo-op for grinning congressmen."

"When it came time for Goldman CEO Lloyd Blankfein to testify, the banker hedged and stammered like a brain-addled boxer who couldn't quite follow the questions. ... But Blankfein also testified unequivocally to the following: 'Much has been said about the supposedly massive short Goldman Sachs had on the U.S. housing market. The fact is, we were not consistently or significantly net-short the market in residential mortgage-related products in 2007 and 2008. We didn't have a massive short against the housing market, and we certainly did not bet against our clients.'

"Levin couldn't believe what he was hearing. 'Heck, yes, I was offended,' he says. 'Goldman's CEO claimed the firm didn't have a massive short, when the opposite was true.' First of all, in Goldman's own internal memoranda, the bank calls its giant, $13 billion bet against mortgages "the big short."

Second, by the time Sparks and Co. were unloading the Timberwolves of the world on [unsuspecting clients] in the summer of 2007, Goldman's mortgage department accounted for 54 percent of the bank's risk. That means more than half of all the bank's risk was wrapped up in its bet against the mortgage market – a 'massive short' by any definition."

After releasing his report, Levin sent all of this material to the Justice Department. His conclusion was simple. "In my judgment," he declared, "Goldman clearly misled their clients, and they misled the Congress."

http://www.rollingstone.com/politics/pictures/how-goldman-execs-screwed-their-clients-and-lied-to-congress-20110511

Greg Smith’s ‘Why I Left Goldman Sachs’: A Coming of Age Tale, Not a Goldman Exposé



Shameless Goldman Sachs CEO Lloyd Blankfein tesifies before the Senate in April 2010.

Here's Greg Smith's Why I Left Goldman Sachs 
http://finance.yahoo.com/blogs/the-exchange/book-review-greg-smith-why-left-goldman-sachs-195604181.html


And here's Matt Taibbi's Rolling Stone article:

The People vs. Goldman Sachs

A Senate committee has laid out the evidence. Now the Justice Department should bring criminal charges

by Matt Taibbi, May 11, 2011

"...They weren't murderers or anything; they had merely stolen more money than most people can rationally conceive of, from their own customers, in a few blinks of an eye. But then they went one step further. They came to Washington, took an oath before Congress, and lied about it....

... To date, there has been only one successful prosecution of a financial big fish from the mortgage bubble, and that was Lee Farkas, a Florida lender who was just convicted on a smorgasbord of fraud charges and now faces life in prison.

But Farkas, sadly, is just an exception proving the rule: Like Bernie Madoff, his comically excessive crime spree (which involved such lunacies as kiting checks to his own bank and selling loans that didn't exist) was almost completely unconnected to the systematic corruption that led to the crisis.

What's more, many of the earlier criminals in the chain of corruption — from subprime lenders like Countrywide, who herded old ladies and ghetto families into bad loans, to rapacious banks like Washington Mutual, who pawned off fraudulent mortgages on investors — wound up going belly up, sunk by their own greed....."

Read the entire nauseating article at:

http://www.rollingstone.com/politics/news/the-people-vs-goldman-sachs-20110511

A Billion Here, A Billion There -- Do the "Hustle"

 

 

How about throwing down some criminal charges as well?

Feds sue BofA for $1 billion over loans sold to Fannie, Freddie

by E. Scott Reckard

October 24, 2012

The federal government has filed another mortgage-fraud lawsuit against Bank of America, contending that defective loans generated by the bank's Countrywide Financial Corp. subsidiary caused mortgage finance giants Fannie Mae and Freddie Mac to lose more than $1 billion.

A statement Wednesday from the office of U.S. Atty. Preet Bharara in New York said that after the subprime mortgage market collapsed in 2007, Calabasas-based Countrywide devised a loan-processing system called "Hustle" to "process loans at high speed and without quality checkpoints."

BofA used the Hustle system after acquiring Countrywide in 2008, according to the lawsuit, described as the Justice Department's first civil fraud suit over loans sold to Fannie and Freddie. The companies were seized by the government during the financial crisis in a bailout that has cost taxpayers $137 billion.

Federal prosecutors said that from 2007 through 2009, the Hustle system “generated thousands of fraudulent and otherwise defective residential mortgage loans sold to Fannie Mae and Freddie Mac that later defaulted, causing over $1 billion dollars in losses and countless foreclosures.”

Bank of America did not immediately respond to requests for comment on the suit.

Lawsuits over Countrywide's aggressive lending and BofA's controversial acquisition of Merrill Lynch & Co. during the financial crisis have cost the bank tens of billions of dollars.

In one of the previous cases, the bank agreed to a $1-billion settlement of a lawsuit accusing it of defrauding the government on loans insured by the Federal Housing Administration.

The government has filed a flurry of civil cases against mortage lenders recently. The complaint against BofA Wednesday seeks damages and civil fines under the False Claims Act and a law passed in the wake of the savings and loan industry debacle, the Financial Institutions Reform, Recovery and Enforcement Act of 1989.


In-depth WSJ article:

http://online.wsj.com/article/SB10001424052970204530504578076680514724050.html

Fraud -- What Fraud? Besides, There's Only $1.6 Billion Missing

There's seldom a criminal charge in sight for these runaway rogue traders, it seems.

I can feel a smirk spreading across my face.

By Jonathan Stempel

* Ex-MF Global CEO said had no motive to commit fraud

* US investigators also probe future brokerage's collapseNEW YORK, Oct 22 (Reuters) - Jon Corzine's lawyers say allegations that he fraudulently ran MF Global Holdings Ltd make "no sense" and that a lawsuit seeking to hold him and others responsible for the futures brokerage's bankruptcy must be thrown out.

Corzine, former colleagues and several banks, including JPMorgan Chase & Co and Goldman Sachs Group Inc, filed papers on Friday night to dismiss investor litigation over MF Global's collapse. The company's Oct. 31, 2011, bankruptcy was Wall Street's biggest meltdown since 2008.

Plaintiffs led by the Virginia Retirement System and the province of Alberta, Canada, have accused MF Global in the U.S. District Court in Manhattan of inflating its ability to manage risk, obscuring risks from a big bet on European sovereign debt and improperly accounting for deferred tax assets.But lawyers for Corzine, MF Global's former chairman and chief executive officer, said there was no securities fraud. They said the allegations merely suggested that Corzine mismanaged the company, was too optimistic, or failed to predict a liquidity squeeze prompted in part by credit rating downgrades.

Corzine's lawyers also said the former New Jersey governor's ownership of 441,960 MF Global shares, including some bought in August 2011 when the exposure to European sovereign debt had peaked, showed that he had no motive to commit securities fraud.

"Plaintiffs have not alleged any facts from which it could be inferred that Mr. Corzine knew prior to October 30, 2011 that MF Global would not be able to survive," Corzine's lawyers wrote. "Plaintiffs' theory that Mr. Corzine had fraudulent intent or participated in a fraud makes no sense."

The bank defendants, in a separate court filing, contended that MF Global's business strategy and risks were fully disclosed in public filings.

Salvatore Graziano and Jonathan Plasse, lawyers who represent the lead plaintiffs, did not immediately respond to requests for comment.

The Virginia Retirement System said it had managed about $53.1 billion of pension fund and other assets as of June 30. Alberta, through its Alberta Investment Management Corp unit, said it oversaw about C$70 billion (US$70.4 billion) of pension fund and government assets.

Their lawsuit, which seeks class-action status, covers investors in MF Global common stock, convertible bonds and senior notes between May 20, 2010, and Nov. 21, 2011.

Among the other defendants are former MF Global Chief Financial Officers J. Randy MacDonald and Henri Steenkamp, seven former independent directors, and units of Bank of America Corp , Citigroup Inc, Deutsche Bank AG and Royal Bank of Scotland Group Plc.

The U.S. Department of Justice and Commodity Futures Trading Commission are also investigating MF Global's collapse, which has left an estimated $1.6 billion of customer funds missing.
Criminal charges stemming from the collapse are unlikely, and civil cases are the more likely outcome, people familiar with the matter have said.

The case is DeAngelis et al v. Corzine et al, U.S. District Court, Southern District of New York, No. 11-07866.

GlaxoSmithKline to pay $3 billion healthcare fraud settlement

GlaxoSmithKline to pay $3 billion healthcare fraud settlement, U.S. says
By Tiffany Hsu

Los Angeles Times July 2, 2012

Pharmaceutical drug maker GlaxoSmithKline will pay $3 billion and plead guilty to federal charges to resolve a slew of criminal and civil issues stemming from its use of kickbacks, mis-branding and other misconduct to market drugs such as Paxil, Wellbutrin and Advair, the U.S. government announced.

The agreement is the largest healthcare fraud settlement in history, spanning nearly every state, according to the Justice Department. It's also the largest payment ever by a drug company.

The settlement is "unprecedented in both size and scope," said James M. Cole, deputy attorney general, in a statement.

"Today brings to resolution difficult, long-standing matters for GSK," said Chief Executive Sir Andrew Witty in a statement. "Whilst these originate in a different era for the company, they cannot and will not be ignored. On behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made."

The British company illegally marketed depression drug Paxil to children and teens, even sponsoring dinners and spa programs in the drug's name, prosecutors said.

Glaxo also used sham advisory boards and speakers at lavish resorts to promote depression drug Wellbutrin as an option for weight loss and a remedy for sexual dysfunction and substance addiction, according to the government. Customers were urged to use higher-than-approved dosages, the government said.

The healthcare giant was also accused by prosecutors of advertising off-label uses for asthma drug Advair, seizure medication Lamictal and nausea treatment Zofran while also making false claims about the safety and usefulness of such drugs.

The government also accused Glaxo of offering kickbacks to medical professionals, dangling cash, trips to Florida and tickets to basketball games as an incentive to promote and prescribe its drugs.

Glaxo was also submitting incorrect prices for its products to the government, allowing it to underpay rebates owed to programs such as Medicaid, prosecutors said.

The company will plead guilty to three federal criminal charges, two of them for introducing mis-branded Paxil and Wellbutrin drugs and one for not reporting safety data about the cardiovascular effects of diabetes drug Avandia to the Food and Drug Administration.

To deal with damages and civil penalties, Glaxo will shell out $2 billion while paying a $1 billion criminal fine.

They Earn Their Money the Old-Fashioned Way -- They Cheat: Enron

I won't write too much about the Enron debacle, except to say that it's a chilling example of everything that's wrong with corporations and executives with no ethics or remorse, who "game the financial systems." The DVD documentary reveals all the scandalous details. If you haven't already seen it, check it out. Yes indeedy, They Earn Their Money the Old-Fashioned Way -- They Cheat.

From Amazon: "One of the greatest scandals in American corporate history is chronicled in the riveting documentary Enron: The Smartest Guys in the Room. Based on the bestselling book by Fortune magazine reporters Bethany McLean and Peter Elkin, and directed by Alex Gibney (who also produced The Trials of Henry Kissinger), the film is an epic morality tale, drawing upon a wealth of insider interviews and archival material to show how Enron, once the nation's seventh largest corporate entity, essentially faked its bookkeeping to report profits that never existed. The corrupt and closely-guarded mismanagement by Enron executives (including Kenneth Lay and Jeffrey Skilling, later placed on criminal trial) is revealed through such heinous concepts as "Hypothetical Future Value" (a way of reaping fortunes based on false profit projections) and the use of offshore "shell" companies to hide the massive losses that eventually toppled the company (along with the venerable Arthur Anderson accounting firm) and left 20,000 employees jobless. As a maddening portrait of hubris and white-collar crime, Enron transcends political and corporate boundaries by showing how smart and powerful men grew blinded by greed and brought ruin upon themselves, along with thousands of otherwise innocent victims. For better and worse, it's a perfect double-feature with eye-opening 2004 documentary The Corporation. -- Jeff Shannon"

They Earn Their Money the Old-Fashioned Way -- They Cheat. Dept.: Bernie Madoff

I mentioned earlier, that after the 2008 Financial Crisis, I devoted myself to reading business books in an attempt to wise up. I've since studied the efficient market hypothesis, passive indexing, portfolio allocation, 401 (k) plans, IRAs, value investing, arbitrage, diversification, collectibles, commodities, etc.

I opened a Roth IRA at Fidelity in 2011, and put in the max for the last two years, about $6K worth of cribbed savings. Last week I received via snail mail a jaw-dropping statement for my tax-free interest for the month of May, 2012. The grand total? One thin dime. Clearly, I haven't learned enough about sound investing strategies.

What I have learned along the way, is that the big boys often earn their fortunes "the old-fashioned way" -- they cheat. They steal, use inside information, and at the very least, "game the system."

There's scores of hindsight exposes about scandalous cheaters. From John Law's (1671-1729) Mississippi Bubble to Kenneth Lay's (1942-2006) Enron fiasco, it seems con men are jockeying to soak us gullible investors.

A recent eye-opener for me was Bernard Madoff (b. 1938). He was the dad-blamed former non-executive chairman of the NASDAQ stock market for chrissakes, and when finally exposed, the admitted operator of a Ponzi scheme that is considered to be the largest financial fraud in U.S. history.

Madoff didn't mess with implementing any of those complex financial strategies I mentioned above. He didn't allocate, arbitrage, or diversify. No sir, he just cheated his clients out of their money. Savvy investment analysts like Harry Markopolis and Edward O. Thorp saw the end-result coming, but somehow the SEC didn't. Madoff's returns were just too good, month after month, to be possible. Those charged with recovering the missing money believe Madoff's investment operation may never have been legitimate. The amount missing from client accounts, including fabricated gains, was almost $65 billion. Below are two in-depth books on the scandal.

As for me, I might just stick with original comic book art for my fortune. Even I can make more than a dime a month with $6K.

The Madoff Chronicles: Inside the Secret World of Bernie and Ruth by Brian Ross

"After the news broke of Bernie Madoff's arrest on December 11, 2008, the facts were hard to grasp. Madoff claimed to have stolen fifty billion dollars; the sum seemed impossibly large. But of course it wasn't impossible. And that was only the beginning of the story.

As chief investigative correspondent for ABC News, Brian Ross has been on the front lines of the Madoff scandal since the beginning. Throughout the course of his investigation, he and his team have achieved unequaled access to the investigators working to unravel Madoff's fraud, and have succeeded in cultivating sources deep within the walls of Bernard L. Madoff Investment Securities that no other journalist has reached. Ross was even able to obtain a copy of the contents of Madoff's "little black book."

The result is an unparalleled, fly-on-the-wall view of a life of corrupted luxury and outrageous lies.
Ross chronicles the lavish lifestyle that Bernie and his high-school sweetheart, Ruth, enjoyed as the result of his ill-gotten gains and the bone-deep deceit that shocked the world with its sheer audacity. He details the layers of Madoff's scheme--from money men across the country who made millions convincing clients to entrust their wealth to Madoff, to the fabricated stock trades and false quarterly statements that fooled his victims, many of whom lost their savings, their homes, some of them even their lives, in the wake of Madoff's betrayal.

This is a true-crime drama of Shakespearean proportions, built upon the up-close investigative skills of one of our most respected journalists. The Madoff Chronicles is a vivid and chilling look behind the gilded doors of the greatest financial fraud in history."


No One Would Listen: A True Financial Thriller by Harry Markopolos

"Harry Markopolos and his team of financial sleuths discuss first-hand how they cracked the Madoff Ponzi scheme.
No One Would Listen is the exclusive story of the Harry Markopolos-lead investigation into Bernie Madoff and his $65 billion Ponzi scheme. While a lot has been written about Madoff's scam, few actually know how Markopolos and his team-affectionately called "The Fox Hounds" by Markopolos himself, uncovered what Madoff was doing years before this financial disaster reached its pinnacle. Unfortunately, no one listened, until the damage of the world's largest financial fraud ever was irreversible.

Since that time, Markopolos openly has testified and questioned the enforcement and fraud investigation capabilities of the Securities and Exchange Commission (SEC), shared a sliver of this page-turning story with 60 Minutes, and become perhaps the world's most visible and insightful whistleblower on fraud and conflicts of interest in financial markets.

Throughout the book, Markopolos and his Fox Hounds tell their first-hand story of investigating Madoff-with the help of bestselling author David Fisher. They explain how they discovered the fraud, and then how they provided credible and detailed evidence to major newspapers and the Securities and Exchange Commission (SEC) many times between 2000 and 2008, only to have his warnings ignored repeatedly by the SEC.

Provides a firsthand account of how Markopolos uncovered Madoff's scam years before it actually fell apart

Discusses how the SEC missed the red flags raised by Markopolos
Describes how Madoff was enabled by investors and fiduciaries alike
The only book to tell the story of Madoff's scam and the SEC's failings by those who saw both first hand

Despite repeated written and verbal warnings to the SEC by Harry Markopolos, Bernie Madoff was allowed to continue his operations.

No One Would Listen paints a vivid portrait of Markopolos and his determined team of financial sleuths, and what impact they will have on financial markets and financial regulation for decades to come."