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Archive | December, 2013

Four Ways Scammers Will Try To Ruin Your Holidays This Year

Obamacare Navigators, SIRF fraud, cyber squatters, and gift-card-gotchas head up this year’s list of holiday scams.

So why discuss scammers at Christmas time? Two good reasons:

Reason #1: The swindlers don’t take time off. They work overtime during the holiday Season in search of big payola at your expense. You must be wary. Keeping Seasonal scammers out of your billfold, and off of your permanent credit report, requires an extra level of caution during the holidays.

Woman Scammed

Don’t fall prey to holiday thieves!

Reason #2: Take it from me. Financial scams ruin way more New Years than you might think. As one of the area’s busiest bankruptcy attorneys, people share with me intimate histories of personal financial loss, and destructive scams. I see firsthand the catastrophic damage, and I don’t want it to happen to you.

If you would like my best advice in a nutshell? Be very cautious with your personal financial information this holiday season to avoid the pain and embarrassment of getting burned.

Obamacare Phishers

The looming sign-up deadlines for President Obama’s Affordable Care Act (ACA) have been a boon for identity thieves taking advantage of this historical turn of events. While identity theft phishing for private financial information is nothing new, the ACA offers scammers a chance to add a fresh twist to an old game.

Q: How does the scam work?

A: By offering assistance. Helpful fraudulent phishers now contact you as “ACA navigators”, offering to “help” you understand how the ACA might benefit you, your family, or loved ones.

The illicit phisher offers to educate, and prepare you for the “coming change in your health insurance”. Eventually the phisher will ask for personal information such as social security numbers, employer information, address, income figures, and occupation to conduct a (phony) comparison of your current health insurance to the ACA option.

Q: How does the scam spread to harm my loved ones?

A: Once you are “sold” on the change to the false ACA insurance option, the phisher collects even more personal financial data about you, your spouse, and children to “sign up your entire family for the better ACA health insurance option”. The real objective is not to help you at all – but rather to steal the identity of every household member. The bogus phisher then uses this accurate financial information to open up bogus lines of credit, falsely claim welfare benefits, or perhaps to steal Federal, or state income tax refunds through a practice called SIRF fraud.

Stolen Identity Refund Fraud, or SIRF fraud

The practice of SIRF fraud is now rampant at both the state and federal income tax levels. You should use your spare time during the holidays to prepare your 2013 tax return for quick filing in 2014.

Q: What is SIRF fraud?

A: Using stolen personal details, and made-up withholding forms, a SIRF fraudster applies online for dozens of tax refunds per day under your identity, and the identities of others, to be sent to addresses of his choosing. When the real taxpayer later tries to file a return, the IRS, or state income tax authority rejects the true taxpayer’s later honest tax return refund request, and the mess can take months to sort out.

Q: How big is SIRF fraud?

A: SIRF fraud is big criminal business. Georgia found that 160,000 out of 4 million state income tax returns were suspicious, and may have been prepared by SIRF fraudsters. This is 4%, or almost 1 in 20 of Georgia state income tax returns filed. Foreign and domestic criminal gangs are adding SIRF fraud to their agenda. One Armenian (former Soviet bloc area) gang filed 2,000 false returns claiming $7 million in false returns.

The “poster girl” of SIRF fraud is Tampa, Florida’s 27 year old Rashia Wilson, who suggestively (and unwisely) posed with fistfuls of cash on her personal Facebook page. The bundles of cash she clutched in her “selfie” Facebook photo represented only a small fraction of the estimated $11 – $20 million she and her gang netted in bogus refunds.

Ms. Wilson used some of her illicit millions to purchase a $90,000 Audi, and a custom gemstone encrusted necklace spelling out her name in diamonds. She also spent $30,000 on a birthday party.

The IRS has nearly 3,000 employees devoted to identity fraud issues like SIRF fraud, but the IRS admits it can’t keep up with this explosive new scam.

Q: How was Ms. Wilson caught?

A: The IRS did not catch Ms. Wilson, and her gang. She was caught by local police. Tampa police Major Ken Morman told ABC News last year that a decline in local drug dealing suggested that criminals had found a more lucrative business. Neighborhood Tampa detectives started to ask around. They eventually discovered Ms. Wilson and her gang of 13 co-conspirators, who at the time were also expanding their enterprise into stolen identity credit card fraud. The unrepentant Ms. Wilson received a 21 year prison sentence.

Q: How easy is SIRF fraud?

A: The SIRF fraud craze has spread like wildfire because it is so easy. For example, some 170,000 completely bogus Federal tax refund requests were filed by prison inmates alone between January and September 2012.

Q: How do I best defend against SIRF fraud?

A: There are two easy ways to beat SIRF fraud:

  • First, file your 2013 tax return(s) ASAP after January 1, 2014 so a SIRF fraudster doesn’t have time to beat you to the punch. The IRS will always accept, and recognize the first-to-arrive tax return.
  • Second, do not give out personal information to phishers like the phony “Affordable Care Act navigators” discussed above.

Cybersquatting

Crooks steal, or slightly alter the website address of a well-known company, and launch a bogus site that may be a nearly identical copy of the real thing. While these sites may have malware, they primarily function to collect your credit card information for the purchase of inferior counterfeit goods, assuming you actually receive them.

Q: How can I avoid the lure of cybersquatting copycat and counterfeit websites?

A: As the kids say, let’s “get real”. Do you really think a genuine $500 Louis Vuitton hand bag is on sale at a site with a bogus looking URL like “www.Lew.E.Viewton.net” for $75.00? Very unlikely. At best, you will get a phony bag. At worst, your credit card information will be circulated all over the Ukraine, and you may never even see even a phony bag.

Gift Card Scams

After taking gift cards from display racks, thieves peel and copy, or use a portable scanner, to get the code underneath the scratch-off strip. Then they put the cards back on the rack, and wait for the cards to be bought and activated. By dialing the card’s toll-free number, the thieves can find out exactly how much value is on the card. The way is clear now for them to make online purchases, or generate cloned copies for in-store use, leaving those who you intended to receive your gift cards with worthless cards.

Another angle on the gift card scam has an crooked store cashier pocketing the cash that you paid for the gift card without actually activating the card at the cashier’s check stand.

Q: How can I avoid the gift card scam?

A: Your best bet: Purchase gift cards from a store’s customer service counter, or website, rather than from untended display racks. If you do buy from a display rack, make sure the cashier scans and activates the card in your presence. You don’t want the cashier just pocketing the money, and make sure you get a receipt to give to the gift recipient in case there’s a problem.

Why discuss a gloomy topic like financial scammers during the holidays?

We care about you, that’s why. I sometimes see the effects of financial fraud that are so devastating that the scam was the “tipping point” of cascade of debt default. All too often, the fraud capped the person’s struggle to stay current on bills, and rent, mortgage, and car loan payments fell delinquent. Perhaps this event, through no fault of your own other than your innocent trust, may lead you to financial catastrophe.

These fraudsters look to financially victimize everyone they can, resulting in a disproportionate impact on elderly people and struggling households. If anything, the scammers find even bigger opportunities for fraud every holiday season.

Join us in fighting back. Keep the holiday scammers at bay, and enjoy the holidays with your loved ones by passing on this newsletter to those you know. If they like this type of info, they can subscribe to the newsletter by entering their email address in the subscription form on any interior page on this web site like this one.

Think Of Us, and Get a Jump On 2014

If a friend or relative confides in you that he or she has been with their finances, we may be able to help. If your friend or relative calls us at 253-383-1001, we will treat them in the same courteous, calm, no blame/no shame fashion that we treat all of our clients, whether they decide to move forward with a bankruptcy filing or not. If your friend or relative feels more comfortable with you at their side during their free 30 minute consultation with me, you are most welcome to accompany them to their appointment.

Right now would be a great time to get the jump on a late 2013, or early 2014 bankruptcy filing. Delay does nothing except prolong the worry and stress of financial problems over the holidays. Don’t wait, contact us now for a free 30 minute consultation.

My Special Request To You On Behalf Of Those Less Fortunate

If you should find that you and your family have some spare resources as 2013 draws to a close, please consider sharing some of your blessings with others. A cash, or nonperishable food donation to your local food bank, will not only help someone in need, it will also start your 2014 with a warm feeling of what the holiday season means, and a great opportunity to teach those younger members of your family a valuable lesson about the gifts that givers receive by helping others in need.

We hope that the links that we’ve provided below will help you identify a community food bank that is near to you:

Looking for a wonderful feel-good charity that provides gifts and food to needy families with children? Please consider my personal favorite: www.forgottenchildrensfund.org.

Blessings to you, and all those close to you this holiday Season,

James, Ray, Lisa, Mary, and Tina
The Law Offices of James H. MaGee
Washington Bankruptcy Attorney

Can “Thinking Young” Help You Get Ahead Financially in 2014?

Stick with me here. I want to share some ideas and a great website with you. I am going to give you three great reasons why you should start “thinking young”—or better said, “think like you were young’, during the Holidays, even if you are not under 30.
Couple Working on Finances

Couple Working on Finances

Reason #1: Broke as a 20 year old? Then strategize like a 20 year old—think young.

Many of us were battered and bruised financially by the Great Recession of the past decade. Some of us went back to school with the assistance of student loans when employers cut back or vanished. Others drained 401ks and relied upon credit cards just to get by. Many homeowners became renters once again as they lost homes to foreclosure.

Now the Holiday season begins with messages across virtually all media encouraging conspicuous consumption while some of us try to cope with reduced hours at work, smaller or non-existent year-end bonuses, and 5-10 years of flat wages.

The Holidays might not offer much more than stress with everyone under so much pressure to spend, spend, spend and put on a brave face for family and friends. If you can’t keep up the “doing just fine” image, you might feel really alone and disconnected this Holiday season.

2004-2013 may have been a “lost decade” in financial terms for many of us. Really, are you much better off this Holiday season than in Christmas 2003? How much progress towards financial security have you made since January 1, 2004? Do you feel much better off than you did during Christmases past when you were 20? Or when you were 30?

The “lost decade” may have led to a bankruptcy filing. Sometimes the choice was bleak: (1) file bankruptcy or (2) lose your sanity and ruin your health over financial stress.

So as the financial “lost decade” draws to a close, what to do?

There’s an alternative to the financial rat race. If you are 40 or 50 years old but not much financially better off than when age 29, doesn’t it make simple good sense to visit the financial advice columns and blogs read by financially savvy and well-informed 29 year olds?

I suggest survive the the Holiday season with a goal and a purpose to begin the new year with a new point of view, and with the support and shared wisdom of a group of forward thinking individuals just like you. How? Where? Read on.

Reason #2: Pass on the wisdom

If you are in your 30s, 40s or whatever, some younger person is going to look up to you for direction and help. Over the spiked punch bowl this Holiday season, your nephew may just spill the beans that he is struggling financially and is very unhappy. What better way to help lead someone else to greater financial literacy and better decisions than to introduce your nephew to the supportive and interesting on-line community found at moneyunder30.com.

David Weliver started moneyunder30.com  after he found himself $80,000 in debt at age 25 with nothing much to show for it. David writes, “I started moneyunder30.com in 2006 for [a] singular reason: to provide simple, honest and relatable financial advice for starting out. By the way, it is fine if you are over 30, too. It is never too late to get right with your money! Whatever your goal, I want to help you get there.”

The articles on the site are great. Staying informed is easy. You can either sign up to receive a free email newsletter on the site, or can follow David’s Twitter account there so that you’ll automatically be notified of new posts and comments on the site.

What sets this site apart from the rest is that by participating, you’ll join an active community of likeminded people. You can leave comments on articles to share your experiences or expand on the content, too. The article comments are surprisingly numerous. By participating on topics on the site relevant to your situation, you may soon learn that you are not alone in your stress over finances. But this is not just a community of complainers. It is a group working to proactively change their current financial status and share ideas and comments to that end.

The site does look at bankruptcy as an option, but not as a panacea or an end without epilogue. I think that participation in the moneyunder30.com community will help you to realize when it is too late for anything but bankruptcy, it makes perfect sense as a positive alternative to years unnecessarily and hopelessly wasted, toiling with debt to no avail. The site is balanced and mature in that sense. Sometimes no amount of smart shopping or expenditure trimming can avert the need to consider bankruptcy.

There are millions of people just starting out or just starting over at the end of this ”lost decade”, or perhaps recovering after a bankruptcy or other financial shock. Stress over finances can feel isolating and embarrassing, but as a countermeasure, moneyunder30.com offers a welcoming online community you can join to fight back. This community welcomes you to make contributions by commenting on nearly every article.

David’s website features the contributions of a number of knowledgeable guest posts about consumer, home, auto, educational, and investment finance as well as timely and entertaining feature articles on topics like saving during the Holiday season.

Many of the moneyunder30.com articles seemed to echo what clients ask me every day, such as: “How to build credit (for the first time)”, “Should you save or pay off your student loans”, “Top Financial iPhone Apps” and ”Why it is ok to rent”.

The deeper financial advice articles are balanced with shorter, action oriented one, including: ”Cut back on spending: 10 painless money-saving tips for the upcoming holidays”, ”Free budget spreadsheet”, and “10 best cities for the young, broke and single—where to live if you are 18-44 years of age”.

I also note that the moneyunder30.com site appears to vet some credit offers, saying in effect that “if you need credit, we took a look at this credit product/offering and as far as we can till, it seems to be the least of all possible evils”.

Reason #3: Excellent Holiday savings!

The moneyunder30.com website has some great gift ideas that are economical. Speaking of which: want to save a truckload on last minute Christmas shopping? Who doesn’t! In next week’s post, we will review some low-cost gift ideas suggested by a recent moneyunder30.com article.

What Can Eike Batista’s Story Teach Everyday Washingtonians About Financial Planning?

Brazil is a really big country generally recognized for its spectacular economic growth over the past 10 years.

In this steamy and exotic country, things happen in a big way. It is now the home of Latin America’s largest ever bankruptcy—the consequences of a huge gamble that didn’t quite pay off. The man at the center of this whirlwind is the flashy and self-assured promoter, Eike Batista.

What is interesting is that nearly everyone—even the Brazilian government—had astounding confidence in the charismatic and handsome Brazilian. There is no doubt that Mr. Batista also believed in himself and his plan. Not long ago, Forbes magazine ranked him as one of the world’s wealthiest people with an estimated $30 billion net worth.

The Choices Get Tough Once the Frying Pan Gets Hot

The Choices Get Tough Once the Frying Pan Gets Hot

 

Brazil is known as one of the BRICs, the term that economists use for Brazil, Russia, India, and China. For much of the past 5 years or so, Brazil has been a darling of global investors. Investment flowed into Brazil at a floodwater’s pace, and Mr. Batista had little trouble finding investors to provide credit, which he used abundantly to help build his empire.

Much of Brazil’s economy is based upon its natural resources such as timber, foodstuffs, oil, and gas. As demand and prices for these commodities increased around the world, Brazil’s abundance in most of those categories attracted large amounts of new investment. Consequently, as prices and demand for these commodities increased around the world, Brazil prospered even further as money from the sale of Brazilian commodities fueled a domestic consumption boom for consumer goods as more of Brazil’s once poorer citizens were able to afford cars, televisions, appliances, better housing, and nicer furniture.

Many global investors wanted a piece of the Brazilian investment action, and Mr. Batista’s companies provided ready opportunities for them. Mr. Batista started an oil company, OGX, followed by OSX1, a ship building company, followed by LLX, a logistics/shipping company, and by MMX, a mining company.

The idea was that LLX would buy oil transport ships and offshore oil drilling platforms from OSX1. OGX would then pay LLX to transport the oil in the ships that OSX1 built and sold to LLX. LLX would in turn lease offshore oil drilling platforms to OGX. LLX would also operate the ports where OGX oil and ore mined by MMX would be transported and exported.

But there was one problem, and it turned out to be a big one.

There wasn’t much extractable oil in the oilfields controlled by OGX. OGX had raised $4.1 billion in a 2008 public offering to acquire money to tap offshore oil field reserves then estimated at 10.8 billion barrels. In the ensuing years, OSX burned through much of its cash in a failed effort to develop those fields. In July 2013, OSX finally disclosed that it was incapable of extracting oil from most of the oil fields, triggering a fire sale on its shares.

The Brazilian government loaned Mr. Batista’s companies about $4.5 billion, making the Brazilian people likely losers to some extent in this disaster.

Things can happen explosively in Brazil, and Mr. Big can suddenly find himself as Mr. Nobody. While Eike Batista is a long way from a nobody, he could be on his way if his fortunes don’t improve.

Is Mr. Batista gone and forgotten? Not quite yet. Under Brazilian bankruptcy law, the debtor is granted quite a bit of leeway to propose and attempt to complete a reorganization plan. So Mr. Batista may have quite a long leash, but with new oil discoveries elsewhere, including in the U.S.A. thanks to new technologies like hydraulic fracking and applying data mining techniques to locating promising drilling sites, and with other Brazil’s other commodity prices stagnating, it may be very difficult for Mr. Batista to assemble a feasible reorganization plan.

Had the oil fields turned out better, perhaps Mr. Batista’s story would have turned out differently.

What Can We Learn From The Eike Batista Story About Financial Planning?

At first glance, the story reminds us to not borrow and spend future revenues that are not assured, particularly if the business venture involves high risk and is subject to intense competition like drilling for oil in unproven fields offshore.

Playwright William Shakespeare reminded us of irrational exuberance when he wrote of the unfortunate farmer in Macbeth, Act 2, Scene 3, “Here’s a farmer that hanged himself on the expectation of plenty.”

Another lesson is that just because we can borrow more money to get more stuff, it doesn’t always mean that we should. Mr. Batista borrowed from everyone to buy more stuff, including borrowing from his own country, the government of Brazil.

If you or someone you know bought too much stuff and now confronts a struggle with excessive debt due to poor financial planning, give us a call. A bankruptcy filing may help you out, as it may Mr. Batista. If you bought a reasonable amount of stuff, but an illness, or job loss, or some other life event has left you struggling with debt, please give us a call for a compassionate, non-judgmental and understanding consultation about your bankruptcy options.