Brookline Man Pleads Guilty to Foreign Economic Espionage

BOSTON—A Brookline man pleaded guilty today to foreign economic espionage. This is the first prosecution in Massachusetts for foreign economic espionage and only the eighth in the nation.

ELLIOT DOXER, 43, pleaded guilty before U.S. District Judge Denise J. Casper to one count of foreign economic espionage for providing trade secrets over an 18-month period to an undercover federal agent posing as an Israeli intelligence officer.

The parties stipulated in an agreed statement of facts that on June 22, 2006, DOXER sent an e-mail to the Israeli consulate in Boston stating that he worked in the finance department of Akamai Technologies, Inc., and was willing to provide any information that might help Israel. In later communications, DOXER said that his chief desire “was to help our homeland and our war against our enemies.” He also asked for payment in light of the risks he was taking.

In September 2007, a federal agent posing as an undercover Israeli intelligence officer spoke to DOXER and established a “dead drop” where the agent and DOXER could exchange written communications. From October 2007 through March 2009, DOXER visited the dead drop at least 62 times to leave information, retrieve communications, and check for new communications.

Included in the trade secret information that DOXER provided the undercover agent were an extensive list of Akamai’s customers; contracts between the company and various customers revealing contact, services, pricing, and termination date information; and a comprehensive list of the company’s employees that revealed their positions and full contact information. DOXER also broadly described the company’s physical and computer security systems and stated that he could travel to the foreign country and could support special and sensitive operations in his local area if needed. Because Akamai’s information was disclosed only to an undercover agent from the beginning, the information was never in danger of actual exposure outside the company.

We acknowledge the government of Israel for their cooperation in this investigation, and underscore that the information does not allege that the government of Israel or anyone acting on its behalf committed any offense under U.S. laws in this case. We would also like to acknowledge and thank Akamai Technologies, Inc., for its assistance throughout all stages of the investigation and prosecution.

DOXER was arrested on October 6, 2010, on a complaint charging him with wire fraud.

That charge will be dismissed at the end of this case as part of the plea agreement. The charge of foreign economic espionage carries a maximum penalty of 15 years in prison, a three-year term of supervised release and a $500,000 fine. Judge Casper scheduled sentencing for November 30, 2011.

United States Attorney Carmen M. Ortiz and Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation - Boston Field Office made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys William D. Weinreb and Scott L. Garland, respectively in Ortiz’s Antiterrorism and National Security Unit and Cybercrimes Unit, and by Trial Attorneys Kathleen Kedian and David Recker of the Department of Justices’s Counterespionage Section.

JUSTICE DEPARTMENT FILES ANTITRUST LAWSUIT TO BLOCK AT&T’S ACQUISITION OF T-MOBILE

Transaction Would Reduce Competition in Mobile Wireless Telecommunications Services, Resulting in Higher Prices, Poorer Quality Services, Fewer Choices and Fewer Innovative Products for Millions of American Consumers

WASHINGTON — The Department of Justice today filed a civil antitrust lawsuit to block AT&T Inc.’s proposed acquisition of T-Mobile USA Inc.  The department said that the proposed $39 billion transaction would substantially lessen competition for mobile wireless telecommunications services across the United States, resulting in higher prices, poorer quality services, fewer choices and fewer innovative products for the millions of American consumers who rely on mobile wireless services in their everyday lives.

The department’s lawsuit, filed in U.S. District Court for the District of Columbia, seeks to prevent AT&T from acquiring T-Mobile from Deutsche Telekom AG.

“The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services,” said Deputy Attorney General James M. Cole.  “Consumers across the country, including those in rural areas and those with lower incomes, benefit from competition among the nation’s wireless carriers, particularly the four remaining national carriers.  This lawsuit seeks to ensure that everyone can continue to receive the benefits of that competition.”

“T-Mobile has been an important source of competition among the national carriers, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer.” 

Mobile wireless telecommunications services play a critical role in the way Americans live and work, with more than 300 million feature phones, smart phones, data cards, tablets and other mobile wireless devices in service today.  Four nationwide providers of these services – AT&T, T-Mobile, Sprint and Verizon – account for more than 90 percent of mobile wireless connections.  The proposed acquisition would combine two of those four, eliminating from the market T-Mobile, a firm that historically has been a value provider, offering particularly aggressive pricing. 

According to the complaint, AT&T and T-Mobile compete head to head nationwide, including in 97 of the nation’s largest 100 cellular marketing areas.  They also compete nationwide to attract business and government customers.  AT&T’s acquisition of T-Mobile would eliminate a company that has been a disruptive force through low pricing and innovation by competing aggressively in the mobile wireless telecommunications services marketplace. 

The complaint cites a T-Mobile document in which T-Mobile explains that it has been responsible for a number of significant “firsts” in the U.S. mobile wireless industry, including the first handset using the Android operating system, Blackberry wireless email, the Sidekick, national Wi-Fi “hotspot” access, and a variety of unlimited service plans.  T-Mobile was also the first company to roll out a nationwide high-speed data network based on advanced HSPA+ (High-Speed Packet Access) technology.  The complaint states that by January 2011, an AT&T employee was observing that “[T-Mobile] was first to have HSPA+ devices in their portfolio…we added them in reaction to potential loss of speed claims.”

The complaint details other ways that AT&T felt competitive pressure from T-Mobile.  The complaint quotes T-Mobile documents describing the company’s important role in the market:

T-Mobile sees itself as “the No. 1 value challenger of the established big guys in the market and as well positioned in a consolidated 4-player national market”; and

T-Mobile’s strategy is to “attack incumbents and find innovative ways to overcome scale disadvantages.  [T-Mobile] will be faster, more agile, and scrappy, with diligence on decisions and costs both big and small.  Our approach to market will not be conventional, and we will push to the boundaries where possible. . . . [T-Mobile] will champion the customer and break down industry barriers with innovations. . . .”

The complaint also states that regional providers face significant competitive limitations, largely stemming from their lack of national networks, and are therefore limited in their ability to compete with the four national carriers.  And, the department said that any potential entry from a new mobile wireless telecommunications services provider would be unable to offset the transaction’s anticompetitive effects because it would be difficult, time-consuming and expensive, requiring spectrum licenses and the construction of a network.

The department said that it gave serious consideration to the efficiencies that the merging parties claim would result from the transaction.  The department concluded AT&T had not demonstrated that the proposed transaction promised any efficiencies that would be sufficient to outweigh the transaction’s substantial adverse impact on competition and consumers.  Moreover, the department said that AT&T could obtain substantially the same network enhancements that it claims will come from the transaction if it simply invested in its own network without eliminating a close competitor.

AT&T is a Delaware corporation headquartered in Dallas.  AT&T is one of the world’s largest providers of communications services, and is the second largest mobile wireless telecommunications services provider in the United States as measured by subscribers.  It serves approximately 98.6 million connections to wireless devices.  In 2010, AT&T earned mobile wireless telecommunications services revenues of $53.5 billion, and its total revenues were in excess of $124 billion.

T-Mobile, is a Delaware corporation headquartered in Bellevue, Wash.  T-Mobile is the fourth-largest mobile wireless telecommunications services provider in the United States as measured by subscribers, and serves approximately 33.6 million wireless connections to wireless devices.  In 2010, T-Mobile earned mobile wireless telecommunications services revenues of $18.7 billion.  T-Mobile is a wholly-owned subsidiary of Deutsche Telekom AG.

Deutsche Telekom AG is a German corporation headquartered in Bonn, Germany.  It is the largest telecommunications operator in Europe with wireline and wireless interests in numerous countries and total annual revenues in 2010 of €62.4 billion.

Fed Official: Print More Money (Again)

By Jack Hunter

Because it worked so well every other time, right? Reports Market Watch:

“The Federal Reserve should take further easing steps because the economy is ‘moving sideways’ and the labor market is in a recession-like state, said Charles Evans, the president of the Chicago Fed, on Tuesday.

‘I think we need to do more,’ Evans said in an interview with CNBC.

Evans is the first Fed official who publicly has supported additional easing.”

Evans thinks the Fed needs to “do more.” But every time the Federal Reserve “does more” quantitative easing (printing money) it does not help the economy–it damages it.

What’s the definition of insanity, again?

For the record, Ron Paul does not think the Fed should “do more.” He thinks it should do less. Much less.

Source: Ron Paul Campaign

California Aftermarket Auto Lights Distributor Agrees to Plead Guilty in Price-Fixing Conspiracy

WASHINGTON – A California aftermarket auto lights distributor has agreed to plead guilty today for its participation in a global conspiracy to fix the prices of aftermarket auto lights, the Department of Justice announced.  Aftermarket auto lights are incorporated into an automobile after its original sale, often as repairs following a collision or as accessories and upgrades.

According to a one-count felony charge filed today in U.S. District Court in San Francisco, Sabry Lee (U.S.A.) Inc. conspired with others to suppress and eliminate competition by fixing the prices of aftermarket auto lights.  The department said that Sabry Lee, a U.S. distributor for a Taiwan producer of aftermarket auto lights, participated in the conspiracy from about September 2003 until about September 2005.  Under Sabry Lee’s plea agreement, which is subject to court approval, the company has agreed to pay a $200,000 criminal fine and to assist the department in its ongoing investigation into the aftermarket auto lights industry.

According to the charge, Sabry Lee and co-conspirators participated in a conspiracy in which the participants met and agreed to charge prices of aftermarket auto lights at certain predetermined levels.  According to the court documents, the participants in the conspiracy issued price announcements and price lists in accordance with the agreements reached, and collected and exchanged information on prices and sales of aftermarket auto lights for the purpose of monitoring and enforcing adherence to the agreed-upon prices.  The department said that the conspirators met in Taiwan, the United States and elsewhere for their discussions.

Sabry Lee is the first corporation to be charged in connection with the department’s ongoing investigation into the aftermarket auto lights industry.  Three individuals have also been charged.  Polo Shu-Sheng Hsu, the former president and chief executive officer of a U.S. distributor of aftermarket auto lights, entered his guilty plea on March 29, 2011, and was sentenced to serve 180 days in prison and to pay a $25,000 criminal fine.  Chien Chung Chen, aka Andrew Chen, the former executive vice president of Sabry Lee, pleaded guilty to his participation in the conspiracy on June 7, 2011.  He is currently scheduled to be sentenced on Dec. 13, 2011.  Homy Hong-Ming Hsu was arrested at Los Angeles International Airport on July 12, 2011, and indicted on July 19, 2011.  Homy Hong-Ming Hsu is the vice chairman and second highest-ranking officer of a Taiwan manufacturer of aftermarket auto lights.

Sabry Lee is charged with violating the Sherman Act, which carries a maximum penalty of a $100 million criminal fine.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims, if either of those amounts is greater than the statutory maximum fine.

This case is part of an ongoing joint investigation of the Department of Justice Antitrust Division’s San Francisco Office and the FBI in San Francisco.  Anyone with information concerning illegal or anticompetitive conduct in the aftermarket auto lights industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.

Lucy Hayes First Spouse Gold Coin & Bronze Medal Available September 1

WASHINGTON - The United States Mint will begin accepting orders for the Lucy Hayes First Spouse Gold Coin and Bronze Medal on September 1, 2011, at noon Eastern Time (ET).  Both proof and uncirculated versions of the 24-karat gold coin will be available.

The coin's obverse (heads side) was designed by United States Mint Artistic Infusion Program Master Designer Susan Gamble and sculpted by United States Mint Sculptor-Engraver Don Everhart.  The design features the likeness of Lucy Hayes with the inscriptions LUCY HAYES, IN GOD WE TRUST, LIBERTY, 2011, 19th and 1877-1881.  The coin's reverse (tails side) was designed by United States Mint Artistic Infusion Program Associate Designer Barbara Fox and sculpted by United States Mint Sculptor-Engraver Joseph Menna.  The design represents Lucy Hayes' participation in the first Easter Egg Roll held at the White House.  Inscriptions are UNITED STATES OF AMERICA, E PLURIBUS UNUM, $10, 1/2 OZ. and .9999 FINE GOLD.

The Lucy Hayes First Spouse Gold Coins have a maximum mintage of 15,000 across all product options.  The ratio of proof coins to uncirculated coins will be determined by customer demand within the total maximum issuance of 15,000.  Pricing for the gold coins is based on the United States Mint's pricing structure, available at http://usmint/gov/catalog.  Pricing of the 1-5/16" bronze medal, which bears a likeness of the gold coin, is set at $7.95 each.

Orders will be accepted at http://www.usmint.gov/catalog or by phone at 1-800-USA-MINT (872-6468).  Hearing and speech-impaired customers with TTY equipment may place their orders by calling 1-888-321-MINT (6468).  A shipping and handling fee of $4.95 will be added to all domestic orders.

The United States Mint, created by Congress in 1792, is the Nation's sole manufacturer of legal tender coinage and is responsible for producing circulating coinage for the Nation to conduct its trade and commerce.  The United States Mint also produces proof, uncirculated and commemorative coins; Congressional Gold Medals; and silver, gold and platinum bullion coins.

Note:  To ensure that all members of the public have fair and equal access to United States Mint products, orders placed prior to the official on-sale date and time of September 1, 2011, noon ET shall not be deemed accepted by the United States Mint and will not be honored.  For more information, please review the United States Mint's Frequently Asked Questions, Answer ID #175.

United States Mint Launches New Quarter Honoring Vicksburg National Military Park

VICKSBURG, Miss. - Residents of Vicksburg and the surrounding area - including thousands of children - joined United States Mint and National Park Service officials today to celebrate the release of a new quarter honoring Vicksburg National Military Park.  The coin's reverse (tails side) design depicts USS Cairo on the Yazoo River as it looked when it served the Union Navy during the Civil War.  Inscriptions on the reverse are VICKSBURG, MISSISSIPPI, 2011 and E PLURIBUS UNUM.

United States Mint Chief of Staff Al Runnels told the crowd, which included more than 2000 school children, that the "America the Beautiful Quarters are a standing invitation for all Americans to come along on a journey to each national site" and that "today's launch starts the journey of the Vicksburg National Military Park quarters as they pass from American hand to American hand, connecting America through coins." 

In addition to Runnels and Vicksburg National Military Park Superintendent Michael Madell, participants included Sarah McCullough, Cultural Heritage Program Manager at the Mississippi Development Authority Division of Tourism, WLBT TV-3 reporter Walt Grayson, and Hinds Community College's Utica Jubilee Singers.  Following the ceremony, attendees exchanged their currency for rolls of the Vicksburg National Military Park quarter.  Those 18 years of age and younger received a free quarter to commemorate the event.  In addition to today's ceremony, the United States Mint hosted a coin forum last evening where local residents gathered to discuss U.S. coinage and learn about United States Mint coin initiatives and programs.

The Vicksburg National Military Park quarter is the ninth coin in the United States Mint's America the Beautiful Quarters® Program.  The new quarter was released to Federal Reserve Banks on August 29.  At noon Eastern Time the same day, the United States Mint opened sales of collectible bags and rolls of Vicksburg National Military Park quarters at http://www.usmint.gov/catalog and 1-800-USA-MINT (872-6468).  Hearing- and speech-impaired customers with TTY equipment may order at 1-888-321-MINT (6468).  Additional information about products featuring the Vicksburg National Military Park quarter is also available at the online catalog.

Vicksburg National Military Park commemorates one of the pivotal battles of the Civil War - the campaign, siege and defense of Vicksburg, Miss.  Surrender on July 4, 1863, coupled with the fall of Port Hudson, La., split the South, giving control of the Mississippi River to the North.  The museum exhibits at the park depict the hardships of civilians and soldiers during the 47-day siege of the city.  More than 1,350 monuments, a national cemetery and the restored Union ironclad gunboat, USS Cairo, mark the 16-mile tour road.  It was the first warship sunk by an electrically detonated "torpedo," which ushered in a new age of naval warfare.  Vicksburg National Military Park was first established as a national site on February 21, 1899 (30 Stat. 841).

The United States Mint, created by Congress in 1792, is the Nation's sole manufacturer of legal tender coinage and is responsible for producing circulating coinage for the Nation to conduct its trade and commerce.  The United States Mint also produces proof, uncirculated and commemorative coins; Congressional Gold Medals; and silver, gold and platinum bullion coins.

Leader of International Conspiracy Convicted of Defrauding the Military and Smuggling Gold

WASHINGTON – Roger Charles Day Jr. was found guilty late yesterday of leading an international conspiracy to sell more than $4.4 million in nonconforming and defective parts to the Department of Defense (DOD).

The guilty verdict was announced today by U.S. Attorney Neil H. MacBride of the Eastern District of Virginia; Assistant Attorney General Lanny A. Breuer of the Criminal Division; Special Agent in Charge Robert E. Craig of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office; and Special Agent in Charge Edward T. Bradley of the DCIS Northeast Field Office.

After a nine-day trial, Day, 47, formerly of Long Valley, N.J., was found guilty by the jury on all counts.   Day was charged in July 2008 with conspiracy to commit wire fraud, wire fraud, conspiracy to engage in international money laundering, and conspiracy to smuggle gold out of the United States.   Day was extradited from Mexico in December 2010. Day’s sentencing is scheduled for Dec. 15, 2011.

“The evidence showed that Mr. Day, a serial criminal, used other people like commodities to aid and assist his criminal enterprise,” said U.S. Attorney MacBride. “He sent the military bogus parts to critical application items, which were essential to ensuring the performance of our warfighters and the safety of our military personnel.   The verdict shows that criminals such as Mr. Day will be brought to justice even when they orchestrate complex crimes.”

“Mr. Day masterminded a sophisticated and dangerous conspiracy to profit from the sale of defective parts to the U.S. military,” said Assistant Attorney General Breuer.   “He foolishly put our nation’s security at risk for the sake of personal riches.   Yesterday, a Richmond jury convicted Day for his cowardly crimes, and now he faces the prospect of significant prison time.”   

“Over the past two decades, Roger Day has perpetrated a number of schemes in attempts to defraud the Department of Defense,” said DCIS Special Agents in Charge Craig and Bradley in a joint statement.   “Yesterday’s guilty verdict on all counts brings justice to bear on his criminal activity once again.   It is regrettable that even at a time when this country continues to fight terrorism in a hostile environment overseas, individuals such as Day are willing to attempt to enrich themselves through corrupt activity, at the expense of our brave men and women in the Armed Forces.   The Defense Criminal Investigative Service stands committed to aggressively investigate these crimes and to support their prosecution to the fullest.”

According to the evidence at trial and court documents, over a four-year period Day led a conspiracy to bid on and win contracts to provide parts to the U.S. military through the Defense Logistics Agency (DLA), including through the DLA’s Defense Supply Center in Richmond, Va.   The parts included “critical application items,” which are essential to weapons system performance or operation or to the preservation of life or safety of operation personnel.   Under DOD’s procurement procedures, contractors were permitted to submit electronic invoices upon shipment of the needed parts, and were paid electronically by the Defense Finance and Accounting Service.

In the course of the scheme, Day and other conspirators, operating in the United States, Canada, Mexico and Belize, formed at least 18 separate companies that posed as legitimate contractors and collectively used a computer program to win nearly 1,000 lucrative contract awards for the various companies.  Day and his conspirators then shipped defective parts to the DOD on more than 300 of those contracts, receiving more than $4.4 million in payment on parts that Day purchased for less than $200,000.  In all known cases, the parts sent by Day and his conspirators could not be used for their intended purpose.

Day and his co-conspirators compounded the fraud by concealing their identities through the use of multiple nominee companies and by assuming others’ identities to operate the companies.  When DOD requested proof that the companies had purchased and intended to supply the correct parts from approved manufacturers, Day and others submitted fabricated documents that falsely represented that the correct parts had been purchased.  When DOD debarred several of the companies from doing further business with the military, Day directed his conspirators to discontinue bidding through those companies and instead formed and used new companies. 

According to evidence presented at trial, to conceal the proceeds of the scheme and to prevent recovery, Day directed his conspirators to transfer the scheme’s proceeds to offshore bank accounts and ultimately to purchase more than 3,500 ounces (more than $2.2 million) in gold bars and coins.  Day further directed his conspirators to bring the gold bars and coins to his residence in Lo De Marcos, Mexico.   On one occasion he directed them to hide the gold bars in the modified bumper of a 1979 Toyota LandCruiser and on another occasion in the rear hatch door panel of a 1971 Austrian Pinzgauer military transport vehicle.

At sentencing, Day faces a maximum of 20 years in prison for each count of conspiracy to commit wire fraud and each count of wire fraud, 10 years in prison for each count of conspiracy to engage in international money laundering, and five years in prison for each count of conspiracy to smuggle gold out of the United States.

Prior to Day’s trial, five defendants in this conspiracy pleaded guilty.  Nathan Francis Victor Carroll was sentenced on Nov. 8, 2007, to 94 months in prison and was ordered to pay nearly $3.7 million in restitution.  Gregory Allen Stewart was sentenced on April 29, 2008, to 75 months in prison and was ordered to pay nearly $3.7 million in restitution.  Susan Crotty Neufeld was sentenced on May 14, 2008, to five years of probation and ordered to pay $47,600 in restitution for the gold coins she received.  Juerg Mehr was sentenced to five years of probation on March 27, 2009.  Glenn Teal was sentenced on Sept. 22, 2009, to 90 days in prison.

This case was investigated by DCIS, with assistance from the Defense Contract Audit Agency.   Assistant U.S. Attorneys John S. Davis and Elizabeth C. Wu of the Eastern District of Virginia and Special Assistant U.S. Attorney and Trial Attorney Ryan S. Faulconer of the Criminal Division’s Fraud Section prosecuted the case. The Criminal Division’s Office of International Affairs provided assistance.

VIDEO: Obama Announces New Chair of Council of Economic Advisers

By Nikki Sutton

This morning, President Obama announced his intention to nominate Alan B. Krueger as a member of the Council of Economic Advisers (CEA). As one of the nation’s leading economists, Dr. Krueger will bring decades of experience, including serving as chief economist at the Treasury Department, and a wealth of knowledge to the challenge of creating jobs and promoting economic growth. Following his confirmation, President Obama will designate Dr. Krueger as Chairman of CEA.

As the President said today, Dr. Krueger will be a strong addition to his economic team as they work tirelessly to accelerate hiring and spur innovation:

“I have nothing but confidence in Alan as he takes on this important role as one of the leaders of my economic team.

I rely on the Council of Economic Advisers to provide unvarnished analysis and recommendations, not based on politics, not based on narrow interests, but based on the best evidence -- based on what’s going to do the most good for the most people in this country.  And that’s more important than ever right now.  We need folks in Washington to make decisions based on what’s best for the country, not what’s best for any political party or special interest.  That’s how we’ll get through this period of economic uncertainty, and that’s the only way that we’ll be able to do what’s necessary to grow the economy.”

On Wednesday August 31st, the President’s Council on Jobs and Competitiveness is holding a Listening and Action Session with local businesses and stakeholders in Portland, Oregon.

Council members will take questions and comments from people around the country submitted on the White House LinkedIn group and whitehouse.gov as part of a discussion about how the public and private sectors can partner to create opportunity and support job creation.

You can also watch the session live at 11:00 a.m. ET/ 8:00 a.m PT on www.whitehouse.gov/live

Finally, don’t miss next week, when the President lays out a series of bi-partisan ideas that Congress can adopt immediately to put more money into the pockets of working and middle-class families, make it easier for small businesses to hire people, and put construction crews to work rebuilding American infrastructure.

Improving Regulations–With Your Help

After reading this blog post, you should check out yesterday's article by Kel Kelly outlining the hidden evils of government regulation.

By Tracy Russo

As part of its implementation of the Executive Order, “Improving Regulation and Regulatory Review” issued by President Obama on January 18, 2011, the Department of Justice prepared a plan for the retrospective review of its existing significant regulations to determine if any should be modified, streamlined, expanded, or repealed.

On June 1, 2011, we posted our preliminary plan on our Open Government website to solicit public input. On June 10, 2011, we published a request for comments in the Federal Register.  We reviewed the comments we received and revised the plan accordingly.

First, we refined metrics to clarify that the top priorities for retrospective review are those rules that could result in greater net benefits to the public if modified, or that could be replaced by other, less burdensome regulatory alternatives without compromising regulatory objectives.

Second, the Department established a process for members of the public to communicate with us regarding regulations or the retrospective review process throughout the year.

Third, the Department continued to place a strong emphasis on the balance between active rulemaking and retrospective review.

Finally, the Department made note of the specific regulations identified as candidates for retrospective review and will consider these suggestions as part of the review process.

Going forward, the Department will establish a working group that will help institutionalize a culture of retrospective review and collaborate with rulemaking components as necessary.  Once the working group reviews the initial candidate rules identified in the plan, we will report to the public on the outcome of our assessment.  Through this process, the Department seeks to build upon our commitment to open government, and to promote evidence‐based decision‐making with respect to regulations.

Members of the public are encouraged to suggest additional candidate rules and identify why those rules should be prioritized for review under the criteria described in the plan.  Members of the public may submit these comments to olpregs@usdoj.gov year-round, or take advantage of formal comment periods announced in the Federal Register.

Federal Reserve Board announces public meetings on the notice by Capital One Financial Corporation to acquire ING Bank

The Federal Reserve Board on Friday announced that it will hold three public meetings on the notice by Capital One Financial Corporation, McLean, Virginia, to acquire ING Bank, Wilmington, Delaware, and indirectly to acquire shares of Sharebuilder Advisors, LLC, and ING Direct Investing, Inc., both of Seattle, Washington (collectively, "ING"). The Federal Reserve Board also announced that it is extending the period for public comment on the proposal through Wednesday, October 12.

The purpose of these meetings, to be held in Washington, D.C., Chicago, and San Francisco, is to collect information related to the factors the Board is required to consider under the Bank Holding Company Act. These factors are whether the acquisition can be expected to produce benefits to the public, such as greater convenience, increased competition, and gains in efficiency, that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, unsound banking practices, and risk to the stability of the U.S. banking or financial system. The Federal Reserve's review also includes an evaluation of the financial and managerial resources of the acquiring firm. In addition, in acting on a notice to acquire a savings association, the Board also reviews the records of performance of the relevant insured depository institutions under the Community Reinvestment Act.

Meeting details are:

•Washington, D.C. – Tuesday, September 20, 2011, beginning at 8:30 a.m. EDT, at a location to be determined.

•Chicago – Tuesday, September 27, 2011, beginning at 8:30 a.m. CDT, at the Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, IL.

•San Francisco – Wednesday, October 5, 2011, beginning at 8:30 a.m. PDT, at the Federal Reserve Bank of San Francisco, 101 Market Street, San Francisco, CA.

All persons wishing to testify at the public meeting in Washington must submit a written request to Kimberly Zeuli, Vice President and Community Affairs Officer, Federal Reserve Bank of Richmond, 701 East Byrd Street, Richmond, VA 23261 (email: caorichmondfed@rich.frb.org; facsimile: 804/697-5460) no later than 5:00 p.m. EDT on September 9, 2011. All persons wishing to testify at the public meeting in Chicago must submit a written request to Alicia Williams, Vice President, Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, IL 60604 (email: ccaevents@chi.frb.org; facsimile: 312/913-2626) no later than 5:00 p.m. CDT on September 15, 2011. All persons wishing to testify at the public meeting in San Francisco must submit a written request to Scott Turner, Vice President and Community Affairs Officer, Federal Reserve Bank of San Francisco, 101 Market Street, Mail Stop 215, San Francisco, CA 94105 (email: scott.turner@sf.frb.org; facsimile: 415/393-1920) no later than 5:00 p.m. PDT, September 23, 2011.

The request to testify must include the following information: (i) the location of the meeting the participant wishes to attend; (ii) a brief statement of the nature of the expected testimony (including whether the testimony will support or oppose the proposed transaction or provide other comment on the proposal) and the estimated time required for the presentation; (iii) the address and telephone number (and e-mail address and facsimile number, if available) of the individual testifying; and (iv) the identification of any special needs, such as translation services, physical disabilities requiring assistance, or presentations requiring visual aids. Translators will be provided to the extent available if noted in the request to testify. Individuals interested only in attending a meeting, but not testifying, need not submit a written request.

The Federal Reserve will prepare a schedule for participants wishing to testify from the requests received for each meeting and establish the order of presentation. To ensure an opportunity for all interested commenters to present their views, the Federal Reserve may limit the amount of time allotted to each presentation. Persons not listed on the schedule may be permitted to speak at the public meeting, if time permits, at the conclusion of the schedule of witnesses, in the discretion of the Federal Reserve.  Copies of testimony may, but need not, be filed before a participant's presentation.

For media inquiries, call 202-452-2955.

Two Ft. Lauderdale Men Indicted for Money Laundering and Obstruction of Justice in Connection with Mutual Benefits Corporation Fraud

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and José A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division (IRS-CID), announced the unsealing of a fifty-four count indictment against defendants Henry Fecker, III, 57, and Steven Steiner, a/k/a “Steven Steinger,”59, for their participation in a scheme to launder and conceal proceeds in connection with the Mutual Benefits Corporation (“MBC”) fraud. More specifically, Fecker and Steiner are charged with receiving more than $10 million into the account of Camden Consulting, a company they controlled, and then hiding and concealing assets from the U.S. Securities and Exchange Commission (“SEC”) and the United States District Court. Both defendants were arrested and appeared in court earlier today. A pre-trial detention hearing is scheduled for Tuesday, August 30, 2011 at 1:30 p.m. before U.S. Magistrate Judge Andrea M. Simonton.

As alleged in the indictment, from approximately 1994 to May 2004, MBC purchased life insurance policies and sold them in fractionalized form to investors. MBC and its employees and agents eventually defrauded approximately 30,000 investors by, among other things, misleading them about the accuracy of life expectancies of the insureds and the expenses required to maintain the insurance policies via premium payments. New investor money was thus used to pay premiums on life insurance policies purchased by earlier investors. As the scheme continued, more investor money was required to prevent the Ponzi-scheme from collapsing. After the MBC business collapsed in 2004, investors eventually suffered more than $830 million in losses.

As charged in the indictment, Steiner was a founder and Vice President of MBC and was paid by MBC using the account of Camden Consulting. Fecker was the owner of Camden Consulting. In this way, the MBC funds were used to support a lavish lifestyle for Steiner and Fecker, who lived together and jointly owned waterfront homes in Ft. Lauderdale and Camden, Maine, and a luxury apartment in New York City.

According to the indictment, in May 2004, MBC was sued by the SEC in the civil action, S.E.C. vs. Mutual Benefits Corp., et al., No. 04-60573-CIV-MORENO (S.D. Fla.) (the “SEC Fraud Action”). The SEC obtained a restraining order to halt the alleged fraud at MBC, and thereafter a receiver was appointed by the United States District Court for the Southern District of Florida (the “MBC Receiver”), to identify and trace the assets of MBC. Steiner was a named defendant in the SEC Fraud Action and Fecker was a party due to his control of Camden Consulting.

According to the indictment, after 2004 when MBC was shut down, Fecker and Steiner engaged in a series of transactions to hide assets from the SEC and the MBC Receiver by placing funds attributable to Steiner with third parties or in Fecker’s name alone, and later by causing third parties to make payments of monies due to Steiner, instead to Fecker. In 2006, for example, Fecker obtained a refinance of the Maine property and placed the proceeds of approximately $480,000 into a series of certified checks to conceal their existence from authorities. Fecker began cashing these checks in 2008 and continued this through July 2011, using the funds to support a lavish lifestyle for Fecker and Steiner.

To obtain a favorable settlement of their liability with the SEC, the indictment alleges that in 2006 and early 2007, Fecker and Steiner submitted a series of false and misleading documents to conceal their true financial condition. Based on this documentation, around April 2007, the SEC agreed to settled their liability for $5 million and further agreed to a reduced penalty of $3.95 million, and the court in the SEC Fraud Action thereafter ordered that these sums be paid by order dated April 10, 2007. The indictment alleges that, to date, Steiner and Fecker have paid only $750,000.

The indictment further alleges in late 2009, to further conceal assets from the SEC and the SEC receiver, Steiner sold the luxury New York apartment for $1.3 million, but caused false documents to state that the sales price was $1.1 million and submitted these documents to the SEC and the MBC Receiver. To further thwart the SEC’s efforts to recover assets attributable to MBC, Steiner allegedly provided false and misleading testimony under oath to the MBC Receiver concerning his assets and financial condition.

Previously, in a separate case also in the Southern District of Florida, Steiner was charged in United States v. Joel Steinger, et al. (Case No. 08-CR-21158), with conspiracy to commit mail and wire fraud and money laundering, in relation to the MBC fraud scheme. Trial in that matter is scheduled for February 2013 before U.S. District Judge Adalberto Jordan.

United States Attorney Wifredo A. Ferrer stated, “Ponzi-schemes, like the MBC investment scheme, defraud unwitting investors out of their lives savings. These defendants compounded their legal troubles by then laundering the proceeds of the fraud and attempting to hide assets. Such abuse will not be tolerated.”

“We will vigorously investigate and prosecute individuals who obstruct justice by making false statements and concealing assets from an agency of the United States attempting to carry out its mission, such as the SEC’s efforts to protect investors here,” said FBI Special Agent in Charge John V. Gillies.

“We will hold accountable those who engage in the laundering of funds derived from fraud, particularly through concealment and spending of funds through sophisticated transactions, like the ones employed here,” said IRS Special Agent in Charge José A. Gonzalez.

Mr. Ferrer commended the investigative efforts of the FBI and the IRS-CID, and the Miami Regional Office of the SEC, which previously brought a civil action against MBC and its principals. The matter is being prosecuted by Assistant U.S. Attorney Jerrob Duffy.

An indictment is only a charging document, and a defendant is presumed innocent unless and until proven guilty.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on pacer.flsd.uscourts.gov.

Freddie Mac Will Delay Announcement of Weekly Reference Bills Auction Due to Hurricane Irene

MCLEAN, Va., Aug. 26, 2011 /PRNewswire/ -- Freddie Mac (OTC: FMCC) today announced that it will delay its regularly scheduled August 26, 2011, Reference Bills auction announcement until Monday, August 29, due to impending Hurricane Irene and the potential impact the storm may have on capital market participants in New York and other areas of the eastern United States.

The company's annual funding calendar sets weekly announcement and auction dates for Reference Bills offerings.  Freddie Mac was originally scheduled to announce this week's Reference Bills announcement at 10:30 a.m. today, and conduct the auction on Monday, August 29.  The company will now delay its announcement until the morning of August 29, when it will assess what impact, if any, the storm has had on the operations of the capital markets. 

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.  www.FreddieMac.com

SOURCE Freddie Mac

How Government Regulations Create Lower Wages and Unemployment

By Kel Kelly

The consequences of any regulation that government imposes in the workplace are ultimately borne by workers and/or consumers. The more costs imposed on employers—for example, requiring better workplace health and safety regulations—the lower salary workers receive. As we’ve seen above, the costs cannot come out of profits, or else the companies will go under.

It is a mistake to think that workers need “protective” regulation at all; it is a fallacy to believe that workplaces will not improve without forced regulation. OSHA and EPA regulations came about only in the 1960s and 1970s as workplaces had already reached a state similar to what they are today. In other words, workplaces have been improving for hundreds of years without government force. Employers have a natural incentive to make workplaces safer, healthier, and more comfortable in order to attract laborers. For example, if company A has air conditioning and a safer environment than workplace B, which is uncomfortably hot and less safe, workers will choose workplace A as long as they are paid the same. Companies with less desirable workplaces will have to pay more for labor, but since they can’t easily afford to pay higher salaries, they compete with more satisfactory workplaces.  This is why many workplaces today offer gyms, free food and drinks, entertainment, and other amenities voluntarily, without government force. In India, the outsourcing boom has resulted in a lack of qualified workers, and companies are not only bidding up wages to the point that they are increasing at over 30 percent per year, but they are also competing by offering myriad other benefits such as defined career paths, quicker promotions, more workplace amenities and services (such as transportation to work), more holidays, and flexible work schedules.

But when government tries to force such improvements before they are economically viable, workers will foot the bill with lower salaries. Think of the American textile factories in the early part of last century. They were hot in the summer and cold in the winter.  They had poor lighting and bathrooms (if they had any bathrooms at all). Now suppose the government had forced employers to install central air, which since it was invented only in 1902, was still enormously costly even in, say, 1910. Suppose further that the employers were forced to install nicer, bigger bathrooms with a minimum number of stalls. In addition, imagine they were compelled to put in carpet, more windows, cutting edge technology lighting, and a break room stocked with food. Clearly, the less developed workplaces of those days could not have afforded such luxuries. They would have had to lay off many workers to pay for the additions, or else paid workers much less money. To have paid for improvements out of profits would have resulted in business losses, and thus the entire business would have gone under.

© 2010 by the Ludwig von Mises Institute and published under the Creative Commons Attribution License 3.0. http://creativecommons.org/licenses/by/3.0/

Credit Quality of Large Loan Commitments Improves for Second Consecutive Year

The credit quality of large loan commitments owned by U.S. banking organizations, foreign banking organizations (FBOs), and nonbanks improved in 2011 for the second consecutive year, according to the Shared National Credits (SNC) Review for 2011. A loan commitment is the obligation of a lender to make loans or issue letters of credit pursuant to a formal loan agreement.

Total criticized loans declined more than 28 percent to $321 billion in 2011, although the percentage of criticized assets remained high compared to pre-financial crisis levels. A criticized loan is rated special mention, substandard, doubtful, or loss. Loans rated as doubtful or loss--the two weakest categories--fell 50 percent to $24 billion in 2011.

Reasons for improvement in credit quality included better operating performance among borrowers, debt restructurings, bankruptcy resolutions, and ongoing access to bond and equity markets. Industries that led the improvement in credit quality were real estate and construction, media and telecommunications, and finance and insurance.

Despite this progress, poorly underwritten loans originated in 2006 and 2007 continued to adversely affect the SNC portfolio. Approximately 60 percent of criticized assets were originated in these years. Refinancing risk remained elevated as nearly $2 trillion, or 78 percent of the SNC portfolio, matures by the end of 2014. Of this maturing amount, $204 billion was criticized.

Although nonbank entities, such as securitization pools, hedge funds, insurance companies, and pension funds, owned the smallest share of loan commitments, they owned the largest share (58 percent) of classified credits (rated substandard, doubtful, or loss).

In other highlights of the review:

•Total SNC commitments increased less than 1 percent from the 2010 review. Total SNC loans outstanding fell $93 billion to $1.1 trillion, a decline of 8 percent.

•Criticized assets represented 13 percent of the SNC portfolio, compared with 18 percent in 2010.

•Classified assets declined 30 percent to $215 billion in 2011 and represented 9 percent of the portfolio, compared with 12 percent in 2010.

•Credits rated special mention, which exhibited potential weakness and could result in further deterioration if uncorrected, declined 25 percent to $106 billion in 2011 and represented 4 percent of the portfolio, compared with 6 percent in 2010.

•Nonaccruals declined to $101 billion from $151 billion. Adjusted for losses, nonaccrual loans declined to $92 billion from $137 billion, a 33 percent reduction.

•The distribution of credits across entities--U.S. banking organizations, FBOs, and nonbanks--remained relatively unchanged. U.S. banking organizations owned 42 percent of total SNC loan commitments, FBOs owned 38 percent, and nonbanks owned 20 percent. The share owned by nonbanks declined for the first time since 2001. Nonbanks continued to own a larger share of classified (58 percent) and nonaccrual (60 percent) assets compared with their total share of the SNC portfolio. Institutions insured by the Federal Deposit Insurance Corporation owned only 17 percent of classified assets and 15 percent of nonaccrual loans.

•The media and telecommunications industry group led other industry groups in criticized volume with $70 billion. Finance and insurance followed with $37 billion, then real estate and construction with $35 billion. Although these groups had the largest dollar volume of criticized loans, the three groups with the highest percentage of criticized loans were entertainment and recreation, media and telecommunications, and commercial services.

•The 2011 review indicated that the number of credits originated in 2010 rose dramatically compared to 2009 and 2008. Although the overall quality of underwriting in 2010 was significantly better than in 2007, some easing of standards was noted compared to the relatively tighter standards in 2009 and the latter half of 2008.

Federal banking agencies expect banks and thrifts to underwrite syndicated loans using prudential underwriting standards, regardless of the intent to hold or sell the loans. Poorly underwritten syndicated loan transactions are subject to regulatory criticism.

The SNC program was established in 1977 to provide an efficient and consistent review and analysis of SNCs. A SNC is any loan or formal loan commitment, and any asset such as real estate, stocks, notes, bonds, and debentures taken as debts previously contracted, extended to borrowers by a federally supervised institution, its subsidiaries, and affiliates that aggregates to $20 million or more and is shared by three or more unaffiliated supervised institutions. Many of these loan commitments are also shared with FBOs and nonbanks, including securitization pools, hedge funds, insurance companies, and pension funds.

In conducting the 2011 SNC Review, agencies reviewed $910 billion of the $2.5 trillion credit commitments in the portfolio. The sample was weighted toward non-investment grade and criticized credits. The results of the review are based on analyses prepared in the second quarter of 2011 using credit-related data provided by federally supervised institutions as of December 31, 2010, and March 31, 2011.

Freddie Mac Will Not Issue a Reference Notes® Security in August

MCLEAN, Va., Aug. 25, 2011 /PRNewswire/ -- Freddie Mac (OTC: FMCC) announced today that it will not issue a Reference Notes® security in August.  The company's 2011 Reference Notes calendar designates dates that it may use to announce the issuance of Reference Notes securities. 

This announcement is not an offer to sell any Freddie Mac securities.  Offers for any given security are made only through applicable offering circulars and related supplements, which incorporate Freddie Mac's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange Commission ("SEC") on February 24, 2011, and all documents that Freddie Mac files with the SEC pursuant to Section 13(a), 13(c) or 14 of the Securities Exchange Act of 1934, excluding any information "furnished" to the SEC on Form 8-K.

Freddie Mac's press releases sometimes contain forward-looking statements.  A description of factors that could cause actual results to differ materially from the expectations expressed in these and other forward-looking statements can be found in the company's Annual Report on Form 10-K for the year ended December 31, 2010 and its reports on Form 10-Q and Form 8-K, filed with the SEC and available on the Investor Relations page of the company's Web site at www.FreddieMac.com/investors and the SEC's Web site at www.sec.gov.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.  www.FreddieMac.com

SOURCE Freddie Mac

Taxpayers Recover Nearly $900 Million From TARP Warrant Sales During Last Six Months

Cumulative Proceeds from Warrant Dispositions Now Reach More Than $9 Billion Since TARP’s Inception

WASHINGTON – The US Department of the Treasury today released the latest TARP Warrant Disposition Report including data during the six months ending June 30, 2011.  During that period, Treasury received more than $886 million in gross proceeds from the disposition of 20 warrant positions through repurchases and auctions of institutions in the Capital Purchase Program (CPP), the Targeted Investment Program (TIP) and the Asset Guarantee Program (AGP). Since the TARP’s inception, Treasury has received more than $9 billion in gross proceeds from the disposition of warrants associated with investments made through CPP, TIP and AGP.    

As a result of these dispositions and other TARP repayments and income, taxpayers have now recovered $314 billion (76 percent) compared to the $413 billion disbursed to date for the program.

“Although the central purpose of TARP was to help stabilize the financial markets during a time of severe crisis, the receipt of these funds is positive news for taxpayers,” said Treasury Assistant Secretary for Financial Stability Tim Massad. “We will continue our diligent efforts to protect taxpayer interests as we wind down the TARP program.”

The TARP Warrant Disposition Report released today provides an overview of the warrants received by Treasury, an explanation of the warrant disposition process and the results achieved on behalf of taxpayers.

The Emergency Economic Stabilization Act of 2008 (EESA) generally required that Treasury receive warrants in connection with the purchase of troubled assets.  A major part of the TARP was the CPP. It was created in October 2008 to stabilize the financial system by investing capital in viable banks of all sizes nationwide. Under this program as well as other programs to support the financial system, Treasury invested $245 billion in more than 700 banks.  Treasury has already recovered $256 billion and will realize a profit on these programs.

Under the CPP, Treasury purchased shares of senior preferred stock or other securities from qualifying U.S.-controlled banks, savings associations, and other financial institutions. As part of its investment, Treasury also received warrants to purchase shares of common stock or other securities from the banks. The purpose of the warrants was to provide taxpayers with an additional potential return on the government's investment.

When a bank repays the CPP investment, it has the right to repurchase its warrants at an agreed upon fair market value. The warrants do not trade on any market and do not have observable market prices. Accordingly, Treasury has established a methodology for evaluating a company's determination of fair market value. If a bank chooses not to repurchase its warrants, then Treasury intends to sell the warrants to a third party.

The first CPP warrant repurchase was completed in May 2009, and Treasury began the public sale of warrants to third parties in December 2009. Treasury follows a consistent process to dispose of the CPP warrants for all banks, regardless of the size of the institution or the warrant position. This process is designed to ensure that taxpayers receive fair market value for the CPP warrants whether they are repurchased by the issuer or sold to a third party.

As of June 30, 2011, Treasury held warrants to purchase common stock in 19 financial institutions that have fully repaid their CPP investments and in 171 publicly traded companies in which the CPP investment is still outstanding. Treasury intends to continue to execute a consistent and transparent disposition process that achieves fair market values and protects taxpayer interests.