Credit cards don’t just strong-arm people; they strong-arm businesses, too. Or at least try to. Back in the day, MasterCard tried to force businesses to accept debit cards branded with MasterCard at businesses where those credit cards were accepted. Many businesses (including Wal-Mart) took umbrage, claiming that the move created, in effect, a trust situation and tied the acceptance of debit to the acceptance of credit cards. Businesses claimed MasterCard was threatening them with revocation of the ability to accept its credit cards if they did not also accept branded debit cards.

In 1996, an antitrust suit was filed. In 2003, the suit was settled, reports TheStreet.com:

The Purchase, N.Y.-based company settled the suit in June 2003 with a number of U.S. merchants that took issue with certain antitrust aspects of the payment card industry. Under the settlement, MasterCard was required to pay $125 million in 2003 and $100 million annually each December from 2004 through 2012.

Instead of paying all of that through 2012, though, MasterCard wants to pay $335 million by the end of the 3rd quarter in order to be done with the obligation early. This is a discount, since MasterCard would pay $400 million if things went forward as originally laid out. A court will have to agree before the new payment schedule can take effect.

It’s a savvy move by MasterCard. Paying off your business debts early is always a good choice.

Image source: Wikipedia

Today, the word is out that unemployment has reached 9.5% . As the unemployment rate inches toward 10%, many are wondering what to do, and how they will cope. For the unemployed in Michigan (which has the highest unemployment in the country), help may be coming a little sooner. K-Mart plans to offer discounts to those who are on the unemployment rolls .

For those who can show that they are registered with the government as unemployed, K-Mart will provide a “Smart Assist Savings” card. This card will be valid for six months, and will offer 20% savings on K-Mart brand products . While the offer won’t apply to everything in the K-Mart store, discounts on already discounted labels are likely to help — and may even lure customers back to the store. Douglas McIntrye offers this look at the strategy in 24/7 Wall Street :

The new savings package is not completely selfless. K-Mart caters to the lower end of the middle classes, a segment of the economy that has been especially hard hit as corporations cut costs. K-Mart has probably lost many of its customers completely and believes that the new incentives will bring these people back .

Even with the alterior motive, the savings program is a nice touch during these tough economic times. Michigan was probably chosen due to the fact that before K-Mart merged with Sears, Troy, Michigan was its headquarters. If things go well in Michigan, K-Mart could roll out the program to other markets .

Image source: Wikimedia Commons

I think we’re all going to miss Lela Davidson . She’s sassy and smart. You can still read her at Business Pundit , but I hope you’ll stick around here as well. (After all, you can read both blogs, right?)

I thought I’d share a little bit about me for my first post in this area. I live in Utah right now, with my husband and my son. I am a professional writer working from home . When not writing, I enjoy spending time with my family, reading, being outdoors and playing chess. My other writing for b5 can be found at Yielding Wealth and Bizzia Personal Finance . I also cover business, investing and finance topics for Banks.com and Mainstreet.com .

Corporate finance is often as interesting as it is depressing, and there are plenty of stories of triumph as well as stories of defeat. But there is always something to be learned.

It’s a little depressing that there are so many Ponzi schemes to report. The bright spot I suppose is that the Securities and Exchange Commission is on the case. This week the SEC charged Moises Pacheco, Advanced Money Management, Inc. (AMM), and Business Development & Consulting Co. (BD&C) with fraudulently raising $14.7 million from more than 200 investors over a 3½-year period.

According to the SEC’s complaint, Pacheco told investors that he had developed a lucrative investment strategy involving the purchase and sale of covered call options, and that the hedge funds exclusively relied upon this strategy to generate trading profits ranging from 30 percent to 48 percent per year. In reality, Pacheco did not generate the returns he claimed to have made, and instead used investor principal to pay purported returns until the scheme collapsed.

“Pacheco disseminated monthly statements reflecting purported profits and trading activity, but providing little detail about how those returns were generated,” said Rosalind Tyson, Director of the SEC’s Los Angeles Regional Office. “These investors were principally solicited through word-of-mouth, which serves as a reminder to beware of opaque investment opportunities that promise unusually high payoffs even if it’s a referral coming from family or friends.”

According to the SEC’s complaint, filed in U.S. District Court for the Southern District of California, the hedge funds generated trading profits of only about $367,000, but paid investors purported returns of more than $9.7 million. The SEC alleges that the defendants thus operated a Ponzi-like scheme and further misused investor principal by transferring their money to Pacheco, entities under his control, or numerous third parties for reasons having nothing to do with the purported trading.

The SEC alleges that Pacheco claimed that the hedge funds had generated returns ranging from 2.5 to 4 percent per month during their existence, and continued to claim that they generated returns in that range until January 2008, when he reduced the returns to 1.25 percent per month. Pacheco told fund investors that the reduction was due to deteriorating economic conditions. Most fund investors live in the Chula Vista area, and know either Pacheco, one of his friends or family members, or another investor. The SEC alleges that Pacheco made no effort to determine whether the hedge fund investors were accredited or sophisticated, and did not provide investors with financial statements. Neither Pacheco nor his entities were registered with the SEC.

The SEC’s complaint alleges that Pacheco, AMM, and BD&C violated the securities registration and antifraud provisions of the federal securities laws and seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest and financial penalties. Additionally, the complaint names the hedge funds and various third parties receiving investor money as relief defendants, and seeks from them the disgorgement of all such amounts. The complaint also seeks the court’s appointment of a receiver over AMM and BD&C.

Image Credit: kevindooley, Flickr

This will be my last post on Bizzia - at least for now.  I’m so grateful to all the readers, especially those who have left thoughtful and thought provoking comments. And I’m also thankful to b5Media for the opportunity to write in such good company.

Writing on Corporate Finance here on Bizzia (and Accounting Solver before that) for the past several months has been a great experience. I’ve especially enjoyed sharing the financial fraud schemes, which sadly, are far more numerous than I realized. If you’re interested in keeping up with the latest cases, you can check in periodically with the SEC news page.  

Miranda Marquit, who also writes Yielding Wealthhere on Bizzia, has graciously agreed to take over the Corporate Finance topic. Marquit knows money, and I know you’ll be in good hands.

You can continue to find my business opinions on Business Pundit, and my suburban humor on After the Bubbly. And who knows, maybe someday I’ll be back!

Image Credit: Fern R, Flickr

The American Institute of Public Accountants reported this week that 47 percent of small- to medium-sized CPA firms believe the economy will begin to recover in the fourth quarter of 2009. Ten percent of firms believe the economy is already improving. This comes from the 2009 CPA Firm Top Issues Survey.

“The majority of CPAs in small- and mid-size firms counsel businesses on financial matters, so it is encouraging that they believe recent signs of economic improvement will continue,” said James Metzler, AICPA vice president for small firm interests.

The CPA firms surveyed reported that the biggest issues confronting them as a result of the economic crisis are strains on accounts receivable and revenue reductions because of client attrition and fee pressure. CPA employment is expected to remain steady.

The AICPA expects to announce the complete results of its 2009 CPA Firm Top Issues survey early next week. Key issues will include client retention, succession planning and marketing to new clients.

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The Supreme Court today confirmed that our nation’s fair lending laws should be vigorously enforced by all levels of government. Today in Cuomo v. Clearing House Association, the Court rejected federal regulators’ and national banks’ attempts to prevent states from enforcing their own fair lending laws. The Court’s ruling permits states to step up their efforts to curb discrimination in sub-prime lending markets, and is especially timely given that predatory lending has exacerbated the impact of the current economic crisis on minority communities.

“As the Court clearly recognized, this is a time when more — not less — enforcement of fair lending laws is essential,” said John Payton, LDF President and Director-Counsel. “Nothing justifies the federal government’s complete failure to enforce both state and federal antidiscrimination laws against financial institutions. Civil rights always benefit when both states and the federal government work aggressively to curb discrimination.”

The Cuomo case began in 2005, when the New York Attorney General launched an investigation into potential discrimination by national banks. Mortgage lending data indicated that national banks had issued a significantly higher percentage of high-interest predatory loans to African-American and Hispanic borrowers than to white borrowers. The Office of the Comptroller of the Currency (OCC), a small agency within the U.S. Treasury Department, went to court to stop the New York Attorney General’s investigation. OCC’s suit was joined by an association of national banks.

Justice Scalia, writing for the Court, correctly rejected the federal agency’s attempt “to do what Congress declined to do: exempt national banks from all state banking laws, or at least state enforcement of those laws.” The Supreme Court’s ruling restores the collaborative federal-state regulatory scheme that Congress designed to address the persistence of lending discrimination, which has contributed to the recent surge in foreclosures nationwide.

“As today’s ruling confirms, effective financial reform legislation must ensure that both state and federal regulators can take decisive action against lending discrimination wherever and whenever it occurs,” Mr. Payton stated.

Image Credit: walknboston, Flickr

Perot Systems Corporation announced today that its Fairfax, Virginia-based Government Services Business Unit, won the re-compete for the performance-based contract with the Centers for Disease Control and Prevention (CDC) valued at over $119 million. Perot Systems will provide a wide range of infrastructure support to the CDC’s Information Technology Services Office nationally and internationally. Perot Systems Government Services subsidiary QSS Group, Inc. has been the incumbent contractor for these services since 2004.

“This is a cornerstone win for us in the public health market. We are honored to continue to serve the CDC in support of its critical missions. It is a testament to our strong delivery team and capability to provide high value IT solutions tailored for the federal healthcare market,” said Lee Carrick, President of Perot Systems’ Government Services Business Unit.

Does this mean I’m not the only one following swine flu stats like sports?

‘Federal healthcare market’: remind me - which side of the debate was Ross Perot on?

Image Credit: jere-me, Flickr

The Department of Justice today released a statement about UBS client, Steven Michael Rubinstein, a chartered accountant living in Boca Raton, Fla., who pleaded guilty to filing a false tax return for tax year 2004. Rubinstein was charged with filing a false tax return that intentionally failed to disclose the existence of a Swiss bank account maintained by UBS of which he was the beneficial owner and failed to report any income earned on that account.

“Combating offshore tax evasion by wealthy taxpayers continues to be one of the IRS’ top priorities,” said IRS Commissioner Doug Shulman. “The IRS is committed to vigorously pursuing those who illegally hide their money offshore as well as the financial institutions which help them.”

According to court documents and statements made during the court hearing, Rubinstein maintained a UBS bank account in the name of Hybridge International Ltd., a nominee British Virgin Island corporation. From 2001 through 2008, Rubinstein communicated with bankers at UBS via email, telephone and in person about the purchase and sale of securities worth more than 4.5 million Swiss Francs, the conversion of investments from U.S. dollars to British Pounds, the deposit and transfer of funds into and out of the UBS Swiss accounts, and the repatriation of approximately $7 million into the United States to purchase property and build his personal residence in Boca Raton. Additionally, Rubinstein deposited and sold more than $2 million in South African Krugerrands through his UBS accounts.

Tax free.

According to court records, on or about April 15, 2005, Rubinstein, who works for an international company that assists clients to build, buy and sell yachts, filed a tax return for 2004 that failed to report that he had an interest in, or signature authority over, a financial account at UBS in Switzerland. Additionally, Rubinstein failed to report the income he earned on any UBS Swiss bank accounts.

Additionally, Rubinstein acknowledged that he was required to file Reports of Foreign Bank and Financial Accounts (FBARs) disclosing his UBS bank account for years 2001 through 2007. FBARs must be filed with the U.S. Treasury on or before June 30 of the succeeding year. However, he admitted that he intentionally failed to file FBARs each year. As part of his plea agreement, Rubinstein agreed to pay a fifty percent penalty for the year with the highest balance in the account as of June 30 in order to resolve his civil liability for failing to file FBARs for tax years 2001 through 2007.

“As the FBAR filing deadline of June 30 rapidly approaches, taxpayers should be aware of the serious consequences of failing to report offshore income and foreign bank accounts,” said Acting Assistant Attorney General John A. DiCicco. “Taxpayers who hide income offshore and fail to comply with the FBAR filing deadline face criminal prosecution, jail time, and steep fines.”

Got offshore accounts? They will find you!

Image Credit: borman818, Flickr

The Walt Disney Company is teaming up with Learning Tree to offer Disney Institute professional development programs in select cities throughout the U.S. Beginning August 2009, the relationship will bring a broad range of Disney Institute content to Learning Tree Education Centers, enabling individuals and intact work teams to select content that is ideally suited to meet their organizations’ needs.

“Disney Institute and Learning Tree are great complements to one another, and these new programs will deliver innovative Disney content into these exceptional education centers,” said Jeff James, vice president for Disney Institute. “Both organizations share a commitment to providing outstanding service, which ensures that the learning experience will be as powerful as the program content.”

Disney Institute curricula cover business practices that have transformed Disney into a global benchmark and one of the world’s most admired brands. Programs offered at Learning Tree Education Centers will include in-depth studies of the Disney approach to:

• Leadership Excellence
• People Management
• Quality Service
• Brand Loyalty
• Inspiring Creativity

Nick Schacht, CEO and President of Learning Tree International, said,

“Disney Institute brings an entirely new kind of professional development experience to Learning Tree customers. Participants in Disney Institute courses will learn business practices that have been proven through decades of successful application at Disney. Furthermore, they can begin using these same practices immediately in their own organizations. This real-life approach is a wonderful addition to our portfolio of hands-on training courses and another example of the innovative content that Learning Tree provides worldwide.

Disney Institute was created to showcase “the business behind the magic” - proven Disney business practices that easily adapt to other organizations. One of the most recognized names in professional development, Disney Institute travels the world offering engaging seminars, workshops and presentations and fully customized programming. Immersive learning experiences are also offered at Disney Destinations in the Americas, Europe and Asia, enabling participants to go behind the scenes and see firsthand how business theory drives operational excellence.

The Disney Institute client roster includes more than half of the Fortune 500 companies and a wide range of small businesses, non-profits and government agencies. To learn more about Disney Institute, visit www.disneyinstitute.com or call (321) 939-4600.

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