Look Out for the Scams

About 10 years ago, I gave a series of Junk Bond Seminars to the public. When you open something up like a seminar to the public, you never know what you are going to get. One person in the seminar had something to sell and was trying to get me to give her a copy of the names and phone numbers of the people attending the seminar. I refused to do it. Then she wanted to speak to the audience and I ignored her.

She called me when it was all over and tried to get me to buy into some investment that she claimed she was selling. I told her that I do not buy direct investments into businesses. So she changed it to bonds. I asked questions about the bonds so she changed it to stock. I asked in what exchange is the stock sold on. That did not work so she changed it to nothing to do with stocks, bonds, nor business interest. I told her that I don’t fall for fly by night operations and I don’t invest $20,000 to $30,000 on a phone call. She claimed that she was going to call me back with a prospectus and more information on the investment. It has been 10 years and I never heard from her again.

Because of the economy and lack of jobs, people are doing what they must to survive. This is what the citizens of Harrisburg found out when they allowed its mayor to run the rebuilding of its incinerator. With the mismanagement of the School System and the mismanagement of the City, the people must pay back about $1 Billion. The population is only 48,000 people. Many of them women and children. Many do not work at all. Only 48% of the property is taxable and many people are not current with their taxes. The property owners and renters allowed the politician to invest their money in whatever they wanted with whoever they wanted. No law enforcement agency in the country is coming to their aid. Most money was scammed away without the knowledge of the people of the City.

It is up to you to protect yourself. Law enforcement can only do so much. Below is an article written by Allison Andersen, an employee of Zion’s Bank.

Investment Scams and Fraud: What you need to know
October 18, 2011 by Alison Andersen

The current state of the economy at home and abroad has left many looking for alternative investment strategies in the hopes of boosting or, in some cases, rebuilding their savings. Scam artists are ever aware of this desperate search and are adept at preying on such insecurities and aspirations. Unfortunately, some individuals are seduced by false promises of high returns and little or no risk – hallmarks of most investment scams – and too often they lose considerably. In many cases, by the time fraud is realized, it is too late to recover lost funds.

A sound first step to avoid falling victim to investment fraud is to be able to recognize some common strategies con artists employ, and to be vigilant of other less conspicuous warning signs.

One centuries old tactic that has garnered recent media attention is the Ponzi scheme. Agents of this scam guarantee returns and interest payouts much higher than those available through most legitimate investments. Yet the money received from new investors is used to pay previous investors’ their return – none of the funds are actually being invested in a traditional sense. In order for this scheme to remain operational, there is a constant need for new investors. Therefore a Ponzi scheme typically disintegrates and is realized once the pool of new investors runs dry, depleting the money supply to pay current investors, or if the con artist runs off with all of the capital.

Affinity fraud is another practice used to deceive investors. In fact, according to the North American Securities Administrators Association (NASAA), a quarter of the Ponzi schemes in the past decade were built using this method. It involves targeting recognizable groups of people with common characteristics in order to build a false sense of trust about a fraudulent investment. Such groupings include persons of a particular religion, age group, ethnicity, or other organization. The notion that a particular opportunity has the support and participation of leaders and other members is used to develop the perception of security and legitimacy. Perpetrators of these schemes may engage group leaders to further strengthen their cause, or they may even be the leaders themselves.

In their list of prevalent cons, NASAA mentions that the unlicensed and unregistered sale and promotion of investment opportunities is becoming an increasing problem

(http://www.nasaa.org/3752/top-investor-traps/).

Individuals must be licensed and/or registered to trade or advise on the trading of or investment in securities. Following the direction of someone without these credentials can lead to incorrect or unfavorable transactions, which may result in unnecessary financial loss. NASAA encourages requesting verification of the license of any individual who provides you with specific advice or recommendations relating to your future investments and current holdings.

While we are living in a world of unprecedented discoveries and developments, investment scams and fraud are nothing new. Technological advancements in particular have changed the way we communicate, share and store information, and conduct business – for better or worse.

The Internet has allowed for greater accessibility of information, which can facilitate research of investment opportunities. However, it has also required a greater deal of responsibility to determine what data is credible.

Access to individuals via social media websites, email, and phone has also become easier with current technology. Consequently, these mediums are commonly used to enable investment scams. Any unsolicited phone calls requesting personal information should be met with suspicion. Many con artists will pose as representatives of banks, credit card companies, insurance companies and the like, and may provide a seemingly credible pitch.

It is advisable to ask for the caller’s contact information and ask other questions to determine validity. Legitimate organizations should be willing to provide investment information in writing, but be aware that intricate language and fancy letterhead do not automatically indicate authority.

Be aware that many scammers will try to encourage you to make decisions on the spot, often giving compelling reasons to do so. Do not be pressured into making rushed decisions, as investment opportunities should be well researched and given careful thought, even to the point of consulting a trusted adviser.

Finally, it is important to remember that nearly always in the investment world, great reward comes with great risk – any promise otherwise is a red flag. The Financial Industry Regulatory Authority (FINRA) requires all advertising pertaining to investments be fair and balanced. If the person contacting you fails to mention risks or denies any instance of risk, they are likely dealing fraudulently.

If you are suspicious of any contact you receive in person, in writing, by email, or by phone, it is important to act. Check with state government agencies to verify the authenticity of the solicitor, their products, and their company. Whether or not you have fallen victim to investment fraud, be sure to report suspicious activity.

The following sources provide further details and advice regarding these and other common scams:

-FBI : http://www.fbi.gov/scams-safety/fraud-NASAA: http://www.nasaa.org/2815/nasaa-fraud-center/-FINRA: http://www.finra.org/Investors/ProtectYourself/

Alison Andersen is an employee of Zions Bank. Zions Direct is a non-bank subsidiary of Zions Bank.

If you ever woundered how many countries "Bond Investments" is read in. Here is the list from the countries with the highest readership to the countries with the lowest readership.

Top Five: 1. United States; 2. Russia; 3. Canada; 4. United Kingdom; 5. South Korea.

Second Five: 6. Germany; 7. Slovenia; 8. Ukraine; 9. Brazil; 10. Italy.

Third Five: 11. Hong Kong; 12. Ireland; 13. Lebanon; 14. Philippines; 15. Sweden.

Fourth Five: 16. South Africa; 17. Israel; 18. Palestine; 19. Poland; 20. Latvia.

What about RIVER ROCK ENTMT AUTH 9.75000% 11/01/2011 SR NT?

A Special Report on RIVER ROCK ENTERTAINMENT AUTHORITY.



People are asking me if this Indian tribe will pay off come Nov. 1, 2011. So I put together this special report to answer that question. I have this bond issue and many of my friends as well. However, I hold very few of them because I always thought them to be speculative.

My opinion, this is a self governing organization and a bankruptcy cannot happen. I would think that they will pay off there bonds on Nov. 11, 2011 at $1,000 per bond with interest. But not on Nov. 11, 2011 like the indenture says. I think that they will have the bond holder refinance the bond issue for another several years. I think that is what the bond price is reflecting.

The bonds sells for $741.25 per bond and pays 9.75% interest. If they do not pay on time, they will pay in the future. Below is the reason why I feel this way.

http://www.fructivore.com/

Insider information about the bond issue

The bond sells so low because many people around the world do not understand that Native American Nations are self governing organizations. So they do not know how to handle this investment. If I am right about them paying on Nov. 11, 2011 and you buy the bond today for this price, in 30 days, you will make $258.75 in principal plus $8.25 in interest for a total of $266.88. That is a 36% return in 30 days. If I am right about them paying after maturity date then the investor will not get the 36% in one month. This issue is speculative at best for bond holders.

http://www.fructivore.com/2011/03/moodys-downgrades-river-rock-entertainment-authority-bonds-too-soon-to-be-concerned/

They are a Tribal governmental instrumentality of the Dry Creek Rancheria Band of Pomo Indians (the “Tribe”), a federally recognized self-governing Indian tribe. The Tribe has 1024 enrolled members and approximately 75-acre reservation in Sonoma County, California. We own and operate the River Rock Casino, a 68,000 square foot facility which is on the reservation and overlooks the scenic Alexander Valley, 75 miles north of San Francisco. River Rock Casino features 35,500 square feet of gaming space containing 1289 slot machines. They have 4 food outlets: The Center Stage Bar Grill-64 seats, bar top video poker games, The Quail Run Restaurant-buffet menu, 152 indoor seats and 96 outdoor seats, Fortune Café-24 seats, offering quick service , cook-to-order Asian themed menu, Lucky Dogz snack shop-open 24 hours, seven days a week and video poker machines, as well as a full-service restaurant. There gaming facility is the closest and most accessible gaming facility to nearly all the residents of the San Francisco bay area and Sonoma, Napa and Lake counties.

The Tribe has 1,007 enrolled members and approximately 75-acre reservation in Sonoma County, California.

http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTA0MDE1fENoaWxkSUQ9LTF8VHlwZT0z&t=1

RIVER ROCK ENTERTAINMENT AUTHORITY ANNOUNCES SECOND QUARTER 2011

http://www.fructivore.com/2011/05/river-rock-entertainment-authority-the-final-obstacle-to-refinancing-now-resolved/

Refinancing problems seem to be resolved according to researcher.

Safety of Principal and Income for your 401K

According to “The Street” article “None of Your Mutual Funds Are Making Money” written by By Frank Byrt (10/03/11 - 07:15 AM EDT), it seems that some US, no leverage, or short position funds can be used for income and safety of principle. They seem to be seen as attractive investments for those seeking dividends and the preservation of money in volatile markets. Among funds that buy mainly U.S. stocks and use no leverage or short positions, only three sector-specific funds eked out gains from the beginning of July to the end of September, according to fund-research firm Morningstar:
1. Icon Telecommunications & Utilities (ICTUX_), up 1.9%;
2. Franklin Utilities (FKUTX_), up 1.7%;
3. Invesco Utilities Investor (FSTUX_), up 0.3%.

I bring this up because many of you investors have 401K programs at work. The only securities that most of you can buy in your 401K are mutual funds. If you are looking at safety of this money and income as your primary objective in your 401K, then I would suggest that you look into these funds or mutual funds with the same investment objectives as these three funds.

Drug Dealers and Bankers

Special Report

One thing that I learned when I first became an adult was that drug dealers and bankers have the same business model. The big banks sent me credit cards and they were free to use. They had no fees to use them or to borrow money from them. Then they sent me a bank card. I could go to any ATM and use them for free. My checking account was free. Just as I started getting use to using these services, the banks started charging me. If I were still at these institutions, I would be paying out money for nothing every year.

Well I am no junkie and I sure am not addicted to bank services. I use the least expensive bank services that I need. As of this writing, I do not have a bank card because I don’t need to use one. I use a VISA card instead. I pay off my card every month. This helps me keep track of my spending. It also allows me to accumulate points to exchange for cash. I have direct deposit into my checking account. This allows me to get a free checking account. My bills are paid for free out of my checking account initiated by the bank or by the business charging me for the product or service. I do nothing to pay my bills. The bank and businesses pay my bills for me out of my checking account. I pay nothing because I took the time to shop around for the bank services that I need. If I have to deal with cash, I go to the bank and withdraw the cash. So my banking charges come to zero every year. I pay about $2.00 for Post Office mailing expenses per year.

Most people cannot say that because they are bank junkies. Here is the reason why. Most people who know little or nothing about banking bank at the largest banks that they can find. They think that the large banks are the safest banks. Many bank at their bank because their parents banked at that institution. So they look out for the banks interest instead of their interest.

Bankrate.com says, “While free checking is in decline, more accounts have introduced waivers to avoid monthly fees, McBride says. Last year, 88 percent of noninterest accounts were either free or could become free if the customer signed up for direct deposit. This year, the number is 92 percent, which shows banks are still willing to offer checking for free in exchange for a deeper relationship with customers.”

“In Bankrate's annual survey, the average account maintenance fee rose from $2.49 last year to $4.37 this year, an increase of 85 percent.”

“That adds up to about $52.44 a year, an amount that isn't going to break the bank but might surprise people accustomed to free checking, McBride says.”

“With so much change going on with checking, watch your statement for new fees such as "account maintenance fees," "monthly service charges" or "monthly service fees," McBride says.”

“Maintenance fees on debit card accounts aren't yet common; so many people may not even know to scrutinize their bank statements for them. At this point, only 4 percent of accounts charge a point-of-sale fee when using a debit card, and less than 2 percent charge a monthly or annual fee for carrying a debit card. But that's expected to change in the new regulatory environment, McBride says.”

"The Durbin Amendment is really a game changer on the debit card front. And I think, in addition to continued declines in the prevalence of free checking, we will see an increase in debit card fees, whether it's a fee to carry the card or it's a transaction-based fee, McBride says.”

“If your bank begins charging a debit card fee and you don't want to move your checking account, you can always go back to carrying a credit card. As long as you pay off your balance every month, credit cards can have advantages over debit cards such as rewards programs and better protection from fraud liability.” This is what I do and I pay nothing in fees.

Banks have hurdles that allow you to get around paying fees. But these hurtles are rapidly getting higher as banks attempt to increase fee revenue. “The average minimum balance required to avoid a monthly fee rose from $249 in 2010 to $585 this year, an increase of nearly 135 percent.” says Bankrate.com.

"The big increases in balance requirements and fees aren't just from banks that already have those raising them, it's also from those that didn't use to have a balance requirement or a fee now instituting one," McBride says.

“If you think your checking account has become too expensive, shop around for a better deal,” McBride says. “Competition is still stiff in the banking industry, and many different banks, credit unions, and community banks may offer checking accounts that are much cheaper than your current account. Another alternative is an online bank.”

In this year's Bankrate's Annual Survey; Checking Survey section, ATM surcharges hit an all-time high for the seventh consecutive time. Last year, the average charge was $2.33. This year, it's $2.40. That's an increase of 7 cents, or about 3 percent. "The ATM surcharge is almost universal, and it's been that way for years," says McBride.

Bankrate.com says, “If you have a Smartphone, such as an iPhone or a BlackBerry, try pulling up a banking application before you use another bank's ATM. Many bank Smartphone apps can use your phone's GPS functionality to locate in-network ATMs near you. Walking or driving a few blocks may save you the fee charged by the other bank's ATM and the out-of-network fee your own bank will charge, easily amounting to $5 or more.”

“If you want to earn interest on your checking account balance, and you tend to make a lot of debit card transactions, you might want to look into high-interest checking accounts”., McBride says. “Mostly offered by small banks, credit unions and online banks, high-interest checking accounts can pay more than 1 percent on deposits.”

If you make a mistake and make a purchase with a check or debit card your balance won't cover, you'll pay more than before to cover your mistake.

According to Bankrate.com, “Like ATM fees, overdraft fees tend to rise at or near the rate of inflation, and this year is no exception. The average nonsufficient funds, or NSF, fee rose 1 percent, from $30.47 last year to a record $30.83 this year.”

“Thanks to the Fed's Regulation E, which forces banks to get a customer's opt-in before charging him or her overdraft fee for a debit purchase, it's easier to avoid overdrafts.”

“All you have to do to avoid overdraft charges is refuse to opt in. That way, if you don't have enough money to cover a purchase, your card will simply be declined at the register and can't be used to complete the purchase while costing you a hefty fine.”

“Alternatively, many banks allow you to set up a linkage between a savings account or line of credit and your checking account, allowing you to tap them if you don't have the cash to cover a purchase.”

The Stereo Type of the Unemployed

If you never been unemployed, then you don’t know what it is like to be unemployed. I hear all kinds of stories about how the unemployed people are making a killing by going on vacation, not working, and hanging out, and just enjoying life while everyone else has to go to work. The unemployed get free money according to the ignorant. When you question some of these people who tell you these stories, you find out that they got their information second and third hand about people who they don’t know. Sometimes they are talking about a real person but that person is telling others stories about their good unemployment fortunes to save face.

I became friends with this woman who was going to Alabama to see her relatives and wanted me to look after her tomato plants while she was away. I asked her what line of work she was in. She told me that she works for the US Army. That sounded reasonable because a US Army sticker was on her very expensive truck. But she seam to always be home. About a month later, she told me that she was moving to Atlanta because she was tired of waiting for the US Government to give her a job. Then she told me that she is unemployed. It was only one day after she moved; the constable came and placed a notice on her door to appear in court for failure to pay her rent.

The long term unemployed has other problems even if they go back to work. If they have a good skill and can find a job within a year, they will probably take a pay cut. However, they may come back to their pre-unemployment income level before they retire. That is if they are young enough and in the right field of work.

If you are over 40 years of age, have little skills that are in demand, have a criminal record, have bad credit, and have been unemployed for over one year, chances are, you may never see the type of money that you made before unemployment started for you.

To add pain to injury for the people getting ready to retire, your social security check is calculated on your ending years of working. You don’t work so your Social Security check is drastically reduced from the time you start receiving until you die.

Read the following article called “Unemployed risk a permanent pay cut.”

http://money.cnn.com/2011/10/06/news/economy/unemployed_income/index.htm?iid=Lead

“Unemployed risk a permanent pay cut” written By Chris Isidore @CNNMoney October 6, 2011

Do You Really Know How to Buy a Car?

Most people concentrate on the sticker price of the car without giving much thought to the financing and “add on” features of the deal. The over all cost of your deal is what you should be looking at. This is a common blind spot that consumers have when buying cars and dealer know it.

In 1972, I bought my first new car at age 21. Being a computer programmer and over seeing the “Floor Plans” System for Union National Bank in Pittsburgh, I had a very good idea how much money the dealers where paying banks to keep the cars on the dealer’s lots. Going from dealership to dealership, I knew what inventories these dealers had. So taking advantage of me was not going to be easy. But like everyone else especially since I was young, they tried.

I found the car that I wanted from Dealer “A” but I went to Dealer “B” to buy the car. I told them how much I wanted to buy the car for. We agreed on a price that was lower than the sticker price. But the dealer thought that he was going to make up the difference on the interest rate of the loan and the “add on” options of the car. He started telling me how much the different options would cost me and I started telling him that the options he is talking about is already on the car. He quoted me an interest rate that his dealership would give me and I told him that I already have arrangements to buy my car using my bank.

Getting a loan was not like it is now. Up until 2008, a person could drop out of the shoot at the hospital and qualify for a loan. In my day, it did not matter if you had a good job or no job, at age 21 you needed a co-signer. My father co-signed for me. They offered me life insurance with the loan. In the event that something happened to the borrower, the loan would be paid off. But since the loan was in my father’s and my name, I took out the policy on my father.

Why? He was 55 at the time, smoked two or more packs a day and got about 3 hours of continuous sleep a day for 25 years. He worked 6 days a week from January to October. He worked 7 days a week from November to December for 25 years. Knowing the odds in 1972, he was at the end of his life span. He died less than 4 years later and the bank paid the car off and placed the car in my name. Some people called me all kinds of names because I was smart enough to know that Life Insurance is a gamble. You are betting that you will die and the company is betting that you will not. In most cases, I will not advise people to take out this option when buying a car because in most cases the odds are against you.

Below is a link to the article, “Biggest blind spot for car buyers? Financing” published by Zion’s Direct Online on September 29, 2011 written by Candice Choi.

http://think.zionsdirect.com/2011/09/29/biggest-blind-spot-for-car-buyers-financing/?m_source=ym_email&utm_medium=email&utm_content=article_3&utm_campaign=2011_10_05_newsletter

Should I Refinance My Mortgage?

Over the past 30 years, the banking industry trained the public to treat their house as a revolving loan account. But as the housing bubble hit, that revolving loan account got smaller and smaller until one day, people got out of bed and discovered that they had high mortgage debt and faced a pay cut or lay off. That is when the real fun began.

A family came to me and asked if they should refinance their home after being in the home for about 2 years. The ad says that they can qualify for a loan with a rate 2% lower than what they have now. They also had the impression from other people that once you buy a house, the equity in your house increases every year. That may have been true from 1950 to 2005 but not today. I told them that they can talk to the bank about it. They had nothing to loose by inquiring. They reported back to me later telling me that the bank said they would not advise them to refinance since they had no equity in the house and the fees to do the refinancing would not be worth the refinancing.

Don’t be fooled by what you read in the newspapers or see on TV. Mortgage rates are the lowest that they have been since my parents bought a home in 1952. But for some homeowners, the opportunity to refinance could be placed out of reach by an appraisal. The process isn't an exact science and homeowners may be surprised to find their property isn't worth as much as they have been led to believe.

Read the article below “Refinancing your mortgage? Understand appraisals” published September 30, 2011 by Zion’s Direct Online Brokerage and written by Candice Choi.


http://think.zionsdirect.com/2011/09/30/refinancing-your-mortgage-understand-appraisals/?m_source=ym_email&utm_medium=email&utm_content=article_1&utm_campaign=2011_10_05_newsletter

How do these Financial PHD Geniuses keep their Jobs?

CNN Money came out with an article around Oct. 3, 2011 saying;

“Investors became so nervous in the past two months that they're not willing to gamble on risky junk bonds anymore -- despite the lucrative promise of high yields.”

“The junk, or high-yield bond market has tumbled along with the stock market, which suffered its worst performance in three years.. Traders say it's eerily reminiscent of the months leading up to Lehman Brothers' bankruptcy in 2008.”

A Bond Investor is not a Bond Trader. The way you invest in bonds for the short-term or the long-term depends on your investment goals and time frames, the amount of risk you are willing to take and your tax status. Individual bonds mature.

A Bond Trader is a person who buys and sells bonds for short term gain. They base their trades on technical analysis and charts. These people are not investors but speculators.

Here is the reason why I have been telling you investors to buy junk bonds below par or $1,000 because they usually mature at $1,000.

The article goes on to say, “Before August, the high-yield market was soaring, and investors were on pace to generate annualized returns of roughly 11%. But shortly after the stock market started gyrating wildly in August, investors sold off even the safest of the junk bonds, which are those rated BB. These BB bonds are down roughly 5%, and the CCC bonds are down 13% for the year.”

The article is correct but if you lock in your yield at 11%, you will get 11%. If you have your money in a mutual fund, you can’t lock in your yield. That is why I tell you to buy individual junk bonds if you want to lock in your yield. A mutual fund is a speculative investment. Personally in this market and this economy, I would only invest in S&P Rated B- to BBB bonds. Your only fear is corporate bankruptcy of the underlying company. My portfolio as of Oct. 26, 2011 is back to my July 1, 2011 levels.

If I had the time and money, I would buy;

Lender Processing Services Inc. 8.125% of 07/01/2016

Recent Price $952.30;
Yielding 9.39% with an S&P Rating of BB+.

Lender Processing Services, Inc. (LPS) is a provider of integrated technology and services to the mortgage lending industry, with mortgage processing and default management services in the United States. The Company operates in two segments: technology, data and analytics and loan transaction services, which produced approximately 31% and 69%, respectively, of its revenues during the year ended December 31, 2010. The Company's technology solutions include its mortgage processing system, which automates all areas of loan servicing, from loan setup and ongoing processing to customer service, accounting and reporting. Its technology solutions also include its desktop system, which is a middleware enterprise workflow management application designed to streamline and automate business processes. Its loan transaction services include its default management services, which are used by mortgage lenders, servicers and other real estate professionals.