Monthly Archives: June 2017

Homebuyers lose life savings during wire fraud transaction, sue Wells Fargo, realtor & title company

DENVER –  A Colorado couple, who lost their life savings while trying to buy their dream retirement home, has filed suit against Wells Fargo Bank, Land Title Guarantee Co., Envoy Mortgage Ltd., Kentwood Real Estate Services LLC and realtor Karen Porras, alleging that none of them did enough to protect sensitive financial information.

James and Candace Butcher sold their house in Longmont and were using the proceeds — more than $272,000 — as a down payment on a new home, at 41467 Sunny Farm Circle in Parker.

They said they wanted a place closer to their son and one big enough for grandchildren.

“We were truly excited, when through negotiations, we won the bid,” Candace Butcher said. “Through the entire process, I kept saying, ‘I can’t believe this is going to be our house.’”

Within 24 hours of closing, not only was it not their house, but they lost all their money.
Read on.

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Insurance Is the Hot New Way to Avoid Taxes

The new hot thing in tax avoidance has a boring old name: insurance dedicated funds.

Introduced in the 2000s, IDFs have become so mainstream that banks such as JPMorgan Chase & Co. and Goldman Sachs Group Inc. are offering them. Hedge funds like Paulson & Co. and Israel Englander’s Millennium Partners LP have been managing them for years.

For investors, the products provide a legal way to avoid taxes. For investment firms, the premiums are “sticky” — they make for stable, long-term sources of capital that act as a bulwark against client redemptions at a time when clients just pulled $75.6 billion from hedge funds in the five quarters through March, according to Hedge Fund Research.

How it works: The client buys a private-placement life-insurance policy. The insurance company invests in alternative assets such as hedge funds. Profits, if any, would ordinarily be taxed as capital gains, but because it involves an insurance company, which must abide by certain restrictions, the money can grow tax-free. Beneficiaries get their money when the insured person dies. For products structured correctly, there aren’t any levies on death benefits.
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Banks Accused Of Pocketing $240M In Foreclosure Billings To US

Law360, New York (June 27, 2017, 3:58 PM EDT) — Bank of America, Wells Fargo, JPMorgan Chase and Citigroup are accused of scamming U.S. agencies out of some $240 million in a False Claims Act suit unsealed Friday in Illinois federal court, which the government has said it will not join.

Relator Timothy Morgan’s March complaint was unsealed Friday after the U.S. declined to intervene. Morgan claims that the banks refused to pay vendors’ bills for foreclosure activity but still turned around and billed the U.S. for the supposed expenses.

Source: Law360

California moves forward on letting customers sue banks, inspired by Wells Fargo

California took another step on Tuesday toward allowing state residents to sue financial institutions for fraud, rather than letting banks force customers to settle disputes in arbitration, as a bill inspired by last year’s Wells Fargo scandal passed a key Assembly committee.

The bill has already passed the state Senate. The full Assembly, the legislature’s lower chamber, is expected to approve it in a vote toward the end of August, after the summer recess.

Under the bill, judges could override contract clauses that require customers to settle disputes through arbitration in cases where a bank commits fraud using customers’ personal information. Arbitration clauses, which have become standard practice since a 2011 U.S. Supreme Court decision, make consumers agree not to sue in the future as a condition of purchasing products or services.
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L.A. City Council Moves Toward Divesting From Wells Fargo

The Los Angeles City Council took a step Tuesday toward divesting city funds from Wells Fargo over the bank’s fake accounts scandal and its support of the Dakota Access Pipeline.

The city does the majority of its banking with Wells Fargo through 800 accounts and holds more than $40 million in securities with the company.

The motion approved on a 14-0 vote does not cancel the city’s contract with Wells Fargo, but directs the Office of Finance and other departments to report on options for doing so and outline criteria and standards the city would have in any future agreements with banks.
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Wells Fargo to sell commercial insurance business

Wells Fargo & Co (WFC.N) said on Tuesday it agreed to sell its commercial insurance business to private insurer USI Insurance Services, as the third-largest U.S. bank plans to focus on core banking products and services.

The financial terms of the deal, expected to close in the fourth quarter, were not disclosed by the companies.
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Consumer groups seek expansion of CFPB’s authority

Legislation would give CFPB power to enforce protections for military consumers

At a time when some in Congress are trying to reduce the power of the Consumer Financial Protection Bureau (CFPB), a coalition of consumer groups is trying to expand the agency’s authority.

Specifically, the groups – including the Consumer Federation of American, Public Citizen, Americans for Financial Reform, and the National Consumer Law Center – are backing legislation to give the agency the power to protect military consumers from exploitation.

Senate Democrats have introduced legislation that would give CFPB direct oversight of the Military Consumer Enforcement Act, a 2003 law designed to protect military personnel from abusive financial practices and predatory loans.
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