TK Newsletter: Introducing “Racket of the Week”

Link: https://taibbi.substack.com/p/tk-newsletter-introducing-racket

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Excerpt:

In 2007, before the crash, Goldman, Sachs CEO Lloyd Blankfein even inadvertently paid tribute to one of the most ancient scams — the pig in the poke — when he ordered subordinates to start selling off the mortgage-backed “cats and dogs” on his company’s books. This detail, which came out in a Senate investigation of Goldman’s “Big Short,” let the “cat out of the bag” about the real value of mortgage-backed securities.

In 2021, we’re seeing a surge in con-like corruption cases once again, many involving old-school ripoffs. An economy puffed up by the steroid enhancement of Fed support has led to a great flowering of such creative grifts. Some are not terribly accessible to non-financial audiences at first glance, so to make it a bit easier to keep track of new cases coming in, I’m creating a new feature, “Racket of the Week.”

We had a cartoonist draw up icons for a key system, which will help explain how and if the story covered contains elements of common street rackets.

Author(s): Matt Taibbi

Publication Date: 7 May 2021

Publication Site: TK News

Cuomo Aides Spent Months Hiding Nursing Home Death Toll

Link: https://www.nytimes.com/2021/04/28/nyregion/cuomo-aides-nursing-home-deaths.html?smid=tw-share

Excerpt:

Aides to the New York governor, Andrew M. Cuomo, repeatedly prevented state health officials from releasing the number of nursing home deaths in the pandemic.

The effort by Gov. Andrew M. Cuomo’s office to obscure the pandemic death toll in New York nursing homes was far greater than previously known, with aides repeatedly overruling state health officials over a span of at least five months, according to interviews and newly unearthed documents.

Mr. Cuomo’s most senior aides engaged in a sustained effort to prevent the state’s own health officials, including the commissioner, Howard Zucker, from releasing the true death toll to the public or sharing it with state lawmakers, these interviews and documents showed.

A scientific paper, which incorporated the data, was never published. An audit of the numbers by a top Cuomo aide was finished months before it became publicly known. Two letters, drafted by the Health Department and meant for state legislators, were never sent.

….

The Cuomo administration’s handling of nursing home death data now is the subject of a federal investigation, one of at least four overlapping inquiries into the governor and his administration. As of this month, more than 15,500 nursing home residents with Covid-19 have died.

Author(s): Goodman, J David; Mckinley, Jesse; Hakim, Danny.

Publication Date: 28 April 2021

Publication Site: New York Times

California Has Seen a Staggering Amount of Unemployment Fraud During the Pandemic

Excerpt:

After sifting through news myriad stories about California’s ongoing scandal at the Employment Development Department, however, I’m left wondering: Where is Ed Anger when you need him? I’m “pig-biting mad” about the ongoing unemployment mess, as an angry Anger might write. Yet California’s elected officials and a weary public are treating it like any garden-variety bureaucratic failure.

This is one of the most infuriating scandals ever to plague our state. The department, which is responsible for paying out unemployment insurance claims, has been incapable of paying legitimate claims even as it has paid as much as $31 billion in fraudulent ones, often to inmates. Think about those staggering losses. They would be enough to make a dent in any number of the state’s infrastructure, budgetary, and debt-related problems.

The stories are as unbelievable as the Weekly World News‘ latest Elvis sighting. Here’s a desk-pounder from CBS Los Angeles: “A Fresno girl who just celebrated her first birthday is collecting $167 per week in unemployment benefits after a claim was filed on her behalf stating that she was an unemployed actor.”

Author(s): Steven Greenhut

Publication Date: 23 April 2021

Publication Site: Reason

Pfizer Identifies Fake Covid-19 Shots Abroad as Criminals Exploit Vaccine Demand

Link: https://www.wsj.com/articles/pfizer-identifies-fake-covid-19-shots-abroad-as-criminals-exploit-vaccine-demand-11619006403

Excerpt:

Fake shots for the pandemic can be easy to distinguish from real ones, experts said, because legitimate ones can be found for now sold only to governments, making any shots for sale on the internet counterfeit and potentially harmful.

Police in China and South Africa last month seized thousands of doses of counterfeit Covid-19 vaccines in warehouses and manufacturing plants, arresting dozens of people, according to the international police agency Interpol. Mexico also is investigating a shipment of some 6,000 doses of purported Sputnik vaccine from Russia, which were seized from a private plane headed to Honduras in March.

The Russia Direct Investment Fund, which leads efforts to market the vaccine internationally, said an analysis of photographs of the seized batch “suggests that it is a fake.” The Mexican Attorney General’s Office said it was investigating the matter and declined to comment further. Authorities haven’t determined whether the vaccines are genuine.

For months, agents from the National Intellectual Property Rights Coordination Center, an investigative arm of the U.S. Department of Homeland Security, have been investigating fraud related to the Covid-19 pandemic globally, recovering $48 million of phony masks, personal protective equipment and other products. Last fall, investigators shifted their focus to include Covid-19 vaccines that were nearing potential clearance by regulators, beginning with online scams. They have removed 30 websites and seized 74 web domains, according to IPR Center officials.

Author(s): Jared S. Hopkins, José de Córdoba

Publication Date: 21 April 2021

Publication Site: Wall Street Journal

Key investor in $100 million NJ deli has a history of legal problems, ties to criminals

Link: https://www.cnbc.com/2021/04/19/hometown-international-nj-deli-linked-legal-problems.html

Excerpt:

A key investor in the mysterious $100 million company that owns only a tiny New Jersey deli has a history of legal woes and ties to several people who have criminal convictions or have been sanctioned by regulators.

They include a lawyer, an accounting firm and a former stockbroker who have done work related to the company, Hometown International. They are linked to shareholder Peter Coker Sr., a 78-year-old North Carolina businessman.

Coker’s Hong Kong-based son, Peter Coker Jr., is chairman of Hometown International, whose Your Hometown Deli in Paulsboro, New Jersey, had sales of only about $35,000 in the past two years combined.

Despite those meager sales, Hometown International had nearly 8 million common shares of stock outstanding. On Monday, shares of the company rose 0.15% to $13.01.

Author(s): Dan Mangan

Publication Date: 19 April 2021

Publication Site: CNBC

Lawyer linked to creation of $100 million New Jersey deli firm pleaded guilty in shell company scheme

Link: https://www.cnbc.com/2021/04/16/lawyer-hometown-international-deli-owner-stock-scams.html

Excerpt:

A now-disbarred lawyer who pleaded guilty to federal crimes related to shell company scams is listed as an attorney in early financial documents filed by a New Jersey firm whose stock valuation has risen as high as $100 million or more despite owning just a single, small delicatessen.

The former lawyer, Gregg Jaclin, was copied on communications filed by deli owner Hometown International with the Securities and Exchange Commission in 2015 and 2016, records show.

They include the very first document filed by Hometown with the SEC that is publicly available.

In June 2020, Jaclin pleaded guilty to criminal charges of conspiracy and obstruction of justice. Separately, in a related case, the SEC in 2019 entered a final judgment against him “for running a fraudulent shell factory scheme through which sham companies were taken public and sold for a profit,” a press release noted that year.

The companies involved in that conduct — none of which were Hometown International — were incorporated in Nevada with the assistance of Jaclin, who was disbarred in New Jersey last October for his actions.

Author(s): Dan Mangan

Publication Date: 16 April 2021

Publication Site: CNBC

Applications for New Businesses Have a Double-WTF Moment

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Excerpt:

I don’t remember anything that has ever drawn so much fraud to itself, like an industrial magnet attracting ferrous scrap metal, as the federal government programs to support the unemployed and struggling businesses.

When it comes to this twin-spike in business applications, the forgivable Payroll Protection Program (PPP) loans and Economic Injury Disaster loans come to mind immediately – especially since the spike into July, and then the renewed spike this year, are timed with the two PPP generations.

Businesses that applied for the PPP loans had to submit documentation of wages paid over specified periods. The first-generation PPP program ended on August 8, 2020. The second-generation PPP program started this year and remains open.

The dates were structured so that it would be impossible by honest people to create a business entity after the announcement, pay wages for long enough to qualify for a PPP loan, and then apply for a PPP loan. Applicants had to submit historical wage documentation to the lenders whose job it was to check all this out.

Author(s): Wolf Richter

Publication Date: 16 April 2021

Publication Site: Wolf Street

Cuomo Advisers Altered Report on Covid-19 Nursing-Home Deaths

Link: https://www.wsj.com/articles/cuomo-advisers-altered-report-on-covid-19-nursing-home-deaths-11614910855?mod=djemwhatsnews

Excerpt:

New York Gov. Andrew Cuomo’s top advisers successfully pushed state health officials to strip a public report of data showing that more nursing-home residents had died of Covid-19 than the administration had acknowledged, according to people with knowledge of the report’s production.

The July report, which examined the factors that led to the spread of the virus in nursing homes, focused only on residents who died inside long-term-care facilities, leaving out those who had died in hospitals after becoming sick in nursing homes. As a result, the report said 6,432 nursing-home residents had died—a significant undercount of the death toll attributed to the state’s most vulnerable population, the people said. The initial version of the report said nearly 10,000 nursing-home residents had died in New York by July last year, one of the people said.

The changes Mr. Cuomo’s aides and health officials made to the nursing-home report, which haven’t been previously disclosed, reveal that the state possessed a fuller accounting of out-of-facility nursing-home deaths as early as the summer. The Health Department resisted calls by state and federal lawmakers, media outlets and others to release the data for another eight months.

Author(s): Joe Palazzolo, Jimmy Vielkind, Rebecca Davis O’Brien

Publication Date: 4 March 2021

Publication Site: Wall Street Journal

Why Cuomo Cooked the Books on Nursing-Home Deaths

Link: https://www.nationalreview.com/2021/03/why-cuomo-cooked-the-books-on-nursing-home-deaths/

Excerpt:

What DeRosa told lawmakers had them aghast. Not only had Cuomo misled them; he had, in DeRosa’s telling, done it in order to keep relevant information hidden from U.S. investigators. If the latter were true, Cuomo administration officials could well be guilty of federal-obstruction and false-statements crimes. In other words, so shameful was their actual reason for covering up nursing-home deaths — namely, to make a wayward governor look like a fantasy hero — that Cuomo administration officials figured it was better to be seen as potentially felonious than to admit their crude political motivation.

As the New York Times reported on Thursday night, in the spring of 2020, DeRosa and other members of Cuomo’s inner circle, who have no public-health background, studiously purged the nursing-home death data from a report compiled by state health officials. The Justice Department was not eyeing them at the time. That happened months later, in August, when the feds began seeking information about the treatment of, and record-keeping about, COVID-stricken nursing-home residents by New York and three other states.

So what was going on at the time of the purge? Well — whaddya know! — it turns out that was just when Cuomo was quietly securing the state ethics approvals that would permit him to earn outside income from a book he’d decided to write. The book would inform the world about his unparalleled mastery of the COVID crisis — which, oddly enough, he contemplated as a work of nonfiction.

Author(s): Andrew McCarthy

Publication Date: 6 March 2021

Publication Site: National Review

Unemployment Scammer Spills Secrets: Illinois Easy Target Because ‘They Don’t Verify Anything’

Excerpt:

“Over 50% of the claims that we receive in our office are fraudulent claims,” Eckstein said. Before the pandemic he said it was “Less than 1%.”

The bogus claims Eckstein sees are just a fraction of the fraud. The Illinois Department of Employment Security reported, between March 2020 and January 2021, it had stopped close to one million fraudulent claims.

Author(s): Dorothy Tucker and Carol Thompson

Date Accessed: 2 March 2021

Publication Site: CBS Chicago

Private Equity Pays To Silence Investor-Whistleblowers Aware Of Fraud

Link: https://www.forbes.com/sites/edwardsiedle/2021/02/28/private-equity-pays-to-silence-investor-whistleblowers-aware-of-fraud/?sh=45191ea71cee

Excerpt:

For fiduciaries overseeing other people’s money, private equity’s disparate treatment of investors, abusive industry practices and alarming lack of transparency should be deal-breakers. To the contrary, pensions in recent years have dramatically increased their allocations to private equity funds—either because they don’t understand the dangers lurking in the shadows or simply don’t care as long as above-market returns are promised (which will supposedly reduce severe pension underfunding).

….

Securities and pension regulators have paid little attention to the “side letter” agreements private equity funds enter into with investors granting preferential treatment. It’s no secret that these agreements exist—the practice of entering into them is disclosed in offering memoranda and is openly discussed throughout the industry. As a result of increasing institutional investor domination of private equity, and the regulation applicable to these investors, it is now standard practice in the industry for each investor to demand its own side letter. As a consequence, there has been a proliferation of the number of side letters being negotiated with investors, as well as the kinds of arrangements and provisions included in them.

Author(s): Edward Siedle

Publication Date: 28 February 2021

Publication Site: Forbes

DiNapoli: Westchester Sisters Sentenced for Stealing Deceased Mother’s Pension

Link: https://www.osc.state.ny.us/press/releases/2021/02/dinapoli-westchester-sisters-sentenced-stealing-deceased-mothers-pension

Excerpt:

State Comptroller Thomas P. DiNapoli and Westchester County District Attorney Miriam E. Rocah announced the sentencings of Annette Bigelow, 61, and Mary Nash, 59, who hid their mother’s death to pocket nearly $22,000 from the New York State and Local Employees Retirement System, which DiNapoli administers, from 2013 to 2015.

The two daughters pleaded guilty to felony grand larceny last September. They were sentenced to a three-year conditional discharge and ordered to pay full restitution of $22,000.

Author(s): Thomas P. DiNapoli

Publication Date: 10 February 2021

Publication Site: Office of the New York State Comptroller