Monday, April 30, 2007
Washington Settles With Movieland.com Over Pop-Ups
Washington State Attorney General Rob McKenna has announced a settlement with three California-based businesses that resolves allegations they installed software that took control of a consumer’s computer by launching aggressive and persistent pop-ups that demanded payment for a movie download service. The software was installed after users signed up for a seemingly anonymous free trial for the service.
“Under this settlement, Movieland.com and its associated companies agree to cease offering anonymous free trials to Washington consumers for their movie download service,” said Attorney General Rob McKenna “Additionally, the defendants must receive express consent from Washington consumers before installing any billing software on the user’s computer, disclose whether the software will cause any pop-ups and clearly state all important contract terms in any advertisement.”
The state filed its original lawsuit last summer following an investigation by the Attorney General’s Consumer Protection High-Tech Unit. The suit accused the following of violating Washington’s Computer Spyware and Consumer Protection acts: Digital Enterprises of West Hills, doing business as Movieland.com; AccessMedia Networks of Los Angeles; Innovative Networks of Woodland Hills; and Alchemy Communications of Los Angeles.
Allegations against Alchemy were subsequently dismissed and the state reached a stipulated agreement with the remaining defendants that was filed today in King County Superior Court. Two company officials, Digital Enterprises’ Easton A. Herd, and Alchemy’s Andrew M. Garroni, are also parties to the settlement, which does not include a finding or admission of wrongdoing.
The defendants agreed to pay a total of $50,000 to resolve the allegations. They also agreed to provisions that limit their business practices.
According to the state’s complaint, the defendants promoted a movie download service through Web sites including movieland.com, moviepass.tv and popcorn.net that offered consumers a free three-day trial. Billing software was then downloaded onto the personal computers of consumers who accepted the offer.
After the trial period, defendants remotely activated the billing software, causing a popup window to appear that indicated the trial period had expired. Consumers who clicked on a “Continue” link on the pop-up were then shown a 40-second video that recurred hourly and told them that they were legally obligated to purchase a subscription. A statement on the company’s Web site also indicated that failure to pay “may result in an escalation of collection proceedings that could have an adverse effect on your credit status.”
The Attorney General’s Office is offering a refund program for consumers who believe they have been subject to the defendants’ practices. Washington residents who believe they are eligible for a refund should file a complaint with the Attorney General’s Consumer Protection Division online at www.atg.wa.gov or call 1-800-551-4636 (number only available in-state) to request a complaint form.
Labels: movieland, scam, Washington
Wednesday, April 25, 2007
Children Eating Magnets? It's True And Dangerous. Another Recall Issued
Consumers may think of children's toys with detachable magnets as a choking hazard, but in the case of Magnetix Magnetic Building Sets, the issues have become far more serious.
Working with the manufacturer, the United States Consumer Product Safety Commission has issued a recall of 4
million units of the toy. The government agency has discovered at least two dozen cases of children ingesting the magnet. One of the children died and nearly all required surgery.
This is the second recall for the toy and by far the most sweeping. The toy contains more than 100 detachable pieces, some of which can cause serious injuries to a child's digestive system or even be aspirated into a lung. What makes this issue so unusual is the age of the children involved. Although the hazard was initially thought to be a problem primarily for children younger than six, it has since been learned that at least ten injuries involved children between the ages of 6 and 11 years old.
“CPSC is deeply concerned about the dangers that small, powerful magnets can pose to children if swallowed,” said CPSC Acting Chairman Nancy Nord. “In order for any product recall to be effective in protecting consumers, we must significantly reduce incidents and injuries from occurring after the recall is announced.” Mega Brands has been cooperative in this expanded recall, according to the CPSC.
Consumers should stop using the recalled magnetic sets immediately and contact Mega Brands for a comparable replacement toy. If consumers are uncertain as to whether their product is being recalled, they can contact Mega Brands at (800) 779-7122 between 8 a.m. and 6 p.m. ET Monday through Friday.
The CPSC is also asking consumers to immediately report any incidents of loose magnets to the CPSC Hotline at (800) 638-2772 or to the CPSC Web site at
www.cpsc.gov.
Labels: CPSC, Magnetix, recall
Tuesday, April 24, 2007
Intuit Steps Up To The Plate To Protect TurboTax Customers
Consumer Help Web has long given high marks in reviews of various Intuit products, including two of their flagships: Quicken and TurboTax. Members of our staff have even participated in beta testing with the company, and the company agreed those years not to review the products.
Intuit's once legendary customer service had fallen on hard times in recent years. Consumers complained about product activation (although in reality, Intuit had found a huge percentage of tax preparation was done with "borrowed" copies of TurboTax). Customer service and tech support also became difficult, with the company often charging customers for basic issues. But the consumer community was whispering that Intuit was changing its ways.
Those whispers proved true last week when the company announced it would provide more than $10 million in refunds to consumers after a late glitch in its TurboTax program caused taxpayers to miss the deadline. While we would be the first to criticize a company that didn't acknowledge its responsibilities with such an important piece of software, we were delighted to see the company proactively reach out to the Internal Revenue Service and save trouble for its customers. The government agency agreed to extend the tax deadline for those customers by another two days.
"We deeply regret the frustration and anxiety this caused our customers," said Steve Bennett, president and chief executive officer of Intuit. "This is not the experience customers have come to expect from Intuit. It's not acceptable to us, and we will do right by our customers who were impacted by this delay."
Those are usually words written by Marketing in a last ditch effort to save face. In this case, the company did do right and deserves praise.
Labels: Intuit, tax deadline, TurboTax
Saturday, April 21, 2007
More Ground Beef (for Humans) Recalled
Reports are coming in that Richwood Meat Company is recalling over a third of a million pounds of ground beef because of E.coli contamination fears. The meat was sold in large Western and Mid-Atlantic states, including California, Pennsylvania and Virginia.
Included in the recall is 107,000 pounds of meat sold in the Western states by Richwood Meat under a variety of names. According to the USDA, consumers with questions should call (209) 722-8171, extension 14, if they have questions about the recall.
Labels: meat, recall, Richwood Meat
Friday, April 20, 2007
Student Loan Crisis Expands To Schools As Cuomo Announces Suit Against Drexel
New York Attorney General Andrew M. Cuomo announced the first legal action against a school in his nationwide student loan investigation. Cuomo announced a notice of intent to sue Drexel University in Pennsylvania over its revenue sharing agreements with Education Finance Partners. This week, Education Finance Partners (EFP) agreed to Cuomo’s College Loan Code of Conduct and would end revenue sharing agreements. Cuomo also announced settlement agreements with three more schools: Salve Regina in Rhode Island, Pace University and the New York Institute of Technology. Salve Regina and Molloy College both had revenue sharing agreements with Education Finance Partners.
Previously, Fordham University, St. John’s University, and Long Island University all agreed to cease their revenue sharing agreements with EFP and reimburse students on a pro rata basis for the money received through those agreements.
Drexel received over $124,000 from its revenue sharing agreements with EFP and accrued $126,000 more through March 2007 that has not been paid. Under Drexel’s agreement with EFP, dated April 1, 2006, Drexel agreed to make EFP its “sole preferred private loan provider.” In return, Drexel was to receive 75 basis points (.75 percent) of the net value of referred loans between $1 and $24,999,999; and 100 basis point (1 percent) of all loan amounts of $25,000,000 or greater. Drexel had an earlier revenue sharing agreement with EFP that began in May of 2005 under which Drexel received 75 basis points (75%) of all referred loans. EFP was a non-exclusive preferred lender under the earlier contract. Since 2005, Drexel University has sent over $16 million in loan volume to EFP.
Drexel solicits and corresponds with students from New York, and New York students and their families rely on Drexel's representations about preferred lenders; the New York Attorney General therefore has jurisdiction over Drexel in this matter.
“This investigation is a two front battle: lenders and schools. We have proceeded against lenders and now we are proceeding against schools. There is no reason for a school not to adopt the Code of Conduct,” Cuomo said. “This office has been clear to schools: settle or we will commence litigation. Either way we will get justice for students.”
Salve Regina, Pace University, and NYIT agreed to the Attorney General’s Code of Conduct, after the Attorney General’s investigation that revealed various practices at each university could have potentially created conflicts of interest.
Salve Regina University: Salve Regina University is located in Newport, Rhode Island. The Attorney General’s investigation found that during the period of 2005-2006, Salve Regina received over $7,800 pursuant to a form of revenue sharing with EFP, which was one of the Salve Regina’s preferred lenders. Between January 2004 and March 2007, certain lenders, some of whom appeared on Salve Regina’s preferred lender lists, provided printing costs or services to the university and/or paid for meals and lodging for university employees at loan workshops, conferences, and/or advisory board meetings. Salve Regina agrees to accept the OAG Code of Conduct and will reimburse the affected students $7,839.74.
Pace University – Pace University is in Westchester, New York. The Attorney General’s investigation found that Pace hired Sallie Mae to staff financial aid call centers, and the Sallie Mae employees wrongfully identified themselves as Pace University employees. Additionally, a Pace administrator who oversaw student loans and advised Pace to drop the federal direct lending program and enter into contracts with Sallie Mae subsequently went to work for Sallie Mae after leaving Pace. This administrator may have had an inappropriate relationship with Sallie Mae while employed by Pace.
New York Institute of Technology: The New York Institute of Technology has three campuses, two on Long Island in Old Westbury, Central Islip, and one in New York City. The Attorney General’s investigation found that NYIT accepted payment from certain lenders, some of whom were on NYIT’s preferred lender lists, including payments for sponsorships of University events and scholarships. When composing its preferred lender list, NYIT considered whether or not lenders had made such contributions or offered Opportunity Loan funds as a criterion. Additionally, some preferred lenders including Sallie Mae, Citibank, College Loan Corporation and AFC paid for meals and trips to student loan conferences for financial aid officers.
Molloy College: Molloy College is in Rockville Centre, Long Island. The Attorney General’s investigation found that Molloy had a revenue sharing agreement with EFP. Molloy received over $1600 from EFP as a result of this arrangement. Molloy has returned this money to EFP and requested that any future revenue due to it under the EFP agreement go towards reducing student loan payments.
The Code of Conduct includes:
1. Colleges are prohibited from receiving anything of value from any lending institution in exchange for any advantage sought by the lending institution. This severs any inappropriate financial arrangements between lenders and schools and specifically prohibits "revenue sharing" arrangements. Lenders can no longer pay to get on a school’s preferred lender list.
2. College employees are prohibited from taking anything of more than nominal value from any lending institution. This includes a prohibition on trips for financial aid officers and other college officials paid for by lenders.
3. College employees are prohibited from receiving anything of value for serving on the advisory board of any lending institution.
4. College preferred lender lists must be based solely on the best interests of the students or parents who may use the list without regard to financial interests of the College. This ensures that preferred lenders will be those the school has determined should be preferred by students as opposed to preferred by the school.
5. On all preferred lender lists the College must clearly and fully disclose the criteria and process used to select preferred lenders. Students must also be told that they have the right and ability to select the lender of their choice regardless of the preferred lender list.
6. No lender may appear on a preferred lender list if the lender has an agreement to sell its loans to another lender without disclosing this fact. In addition, no lender may bargain to be a preferred lender with respect to a certain type of loan by providing benefits to a College as to another type of loan.
7. Colleges must ensure that employees of lenders never identify themselves to students as employees of the colleges. No employee of a lender may ever work in or provide staffing assistance a college financial aid office.
Thursday, April 19, 2007
Merchant Processing Credit Card Firm Sued by Multiple States
The Federal District Court in Oregon has frozen the assets of Beaverton-based Merchant Processing, Inc. (MPI), its owner, and affiliated companies. The court ordered a temporary halt to claims the Federal Trade Commission alleges are deceptive, and appointed a receiver to temporarily take control of the business. The FTC alleges that the defendants used deceptive tactics to sell credit and debit card processing services to thousands of small businesses across the county. The Washington State Attorney General’s Office also has sued the defendants.
In its complaint, the FTC alleges the operation falsely promised that it would save the small businesses money and that it would buy out the merchants’ existing equipment leases, often worth thousands of dollars. The FTC also charged the defendants with failing to disclose fees and concealing pages of fine print from the merchants until after they had already signed contracts. The FTC charged MPI, its owner, Aaron Lee Rian, and affiliated companies Vequity Financial Group and Direct Merchant Processing with violating the FTC Act.
According to the FTC’s complaint, the defendants’ sales representatives call and visit small businesses around the United States and promise they can save them hundreds to thousands of dollars a year in processing fees by offering lower rates than the merchants’ current credit card processing service. They also tell the merchants that the credit card swipe equipment they currently are using is outdated or incompatible with their systems, or that the merchants will need to replace their systems in order to get the special low rate.
Many merchants already are under a contract to lease their card swipe equipment, but the defendants claim they will buy out the merchants’ current leases if they sign a new, usually more expensive, lease. With the claimed lower processing rates, the sales agents promise overall savings despite the higher lease payments. The FTC alleges the defendants’ agents then have the merchants sign third-party equipment leases and processing agreements while concealing pages of fine print. According to the FTC, the sales representatives often don’t leave copies of the agreements with the merchants.
The merchants soon find their fees are not lower, and they end up paying additional fees that they weren’t told about. MPI does not buy out their previous equipment leases, so merchants often end up paying on two leases or spending thousands of dollars to get out of the old lease. Then, to cancel the new, more expensive processing service, the merchants must pay a substantial, previously undisclosed cancellation fee.
The FTC also is seeking preliminary and permanent injunctions halting the deceptive claims and unfair practices, and refunds for the small businesses.
Labels: credit card, FTC, Merchant Processing
Monday, April 16, 2007
Look Before You Gargle -- Listerine Recalls Kids' Mouth Rinse
McNEIL-PPC, Inc. has voluntarily recaled
all lots of the GLACIER MINT™ and BUBBLE BLAST™ flavors of LISTERINE® AGENT COOL BLUE™ Plaque-Detecting Rinse after the Company determined that the preservative system is not adequate against certain microorganisms. The Company is recalling all bottles of AGENT COOL BLUE™ Plaque-Detecting Rinse, an estimated 4 million, from both retailers and consumers.
The Company conducted a thorough assessment and concluded that the risk of illness in healthy individuals following use of this product is very low. However, there could be a significant health risk to individuals with weakened or suppressed immune systems.
To date, there have been no consumer adverse health events reported that are related to this issue.
The recall affects all existing bottles of AGENT COOL BLUE™ Plaque-Detecting Rinse. Consumers should discontinue using and properly discard the product, and may obtain a full refund through calling the Company's toll free consumer line 1-888-222-0249 and mailing in the back label, including the UPC code.
Consumers can readily distinguish this product by the cartoon character on the front of the bottle. Only AGENT COOL BLUE™ Plaque-Detecting Rinse products are affected by this action. No other LISTERINE® branded products are affected and they remain safe and effective for use as directed.
AGENT COOL BLUE™ Plaque-Detecting Rinse has been sold to consumers through supermarkets, drug stores, mass merchants and other retail outlets, and is sold to dental professionals' offices nationwide. The Company is contacting dental professionals and retailers directly as part of their recall notification process.
Labels: FDA, Listerine, recall
Friday, April 13, 2007
More Cat Food Added To Product Recall, FDA Says Recalled Items Still On Shelves
FDA is advising pet owners that recalled pet food may still be on the shelves in some retail establishments. FDA urges retailers across the country to be vigilant in removing all products associated with the pet food recall, which began on March 16, 2007.
To verify the effectiveness of the recall, FDA has conducted approximately 400 checks of retail stores across the country. Based on the checks, FDA believes most companies have removed the recalled product; however, some have not. FDA will continue to monitor retailers’ efforts to remove these items from the shelves.
“FDA’s priority is to make sure that cats and dogs have safe food to eat, said Stephen Sundlof, D.V.M., director of FDA’s Center for Veterinary Medicine.” Many of us are pet owners and animal lovers, and we want pet owners to feel assured that we are doing everything we can to make sure that all contaminated food is off the shelves.”
In related news, Menu Foods, Inc., a private label manufacturer based in Streetsville, Ontario, Canada, expanded its recall on Tuesday, April 10, to cat food not previously subject to the recall. The varieties of cat food in the United States and Canada now being recalled are included in the list below. A complete list of Menu Foods' recalled products, including the new items, can be reviewed at www.menufoods.com.
The company acted after receiving information from FDA, which had confirmed test results it received from a laboratory at University of California, Davis. The UC-Davis lab found that canned cat food which had not been included in Menu Food’s earlier recalls tested positive for melamine, a chemical used as a fertilizer and in the manufacture of cutlery and kitchenware.
The company informed FDA that it had shipped wheat gluten purchased from China and contaminated with melamine from its Emporia, Kansas plant to its plant in Streetsville. Some of the products produced with the contaminated wheat gluten also were shipped to the United States. FDA investigators and officials with the Canadian Food Inspection Agency were in the Ontario facility on April 11.
Since March 16, recalls of pet food products, including certain varieties of dog food, have been conducted by Menu Foods, Inc., Hill’s Pet Nutrition, P&G Pet Care, Nestle Purina PetCare Company, Del Monte Pet Products, and Sunshine Mills, Inc. Extensive information about the current pet food situation can be found at the FDA Web site, www.fda.gov. There is now a single list of all recalled pet food located at http://www.fda.gov/ora/fed_state/recalls/Recall.xls which will be updated with any new recall information when announced.
LIST OF NEWLY RECALLED PRODUCTS:
Cat Food | | | | |
| | | | | |
Brand | Look For This Date on The Bottom of Can or Back of Pouch | Variety Description | Can / Pouch | Size | UPC |
| | | | | |
Americas Choice, Preferred Pet | | | |
| Jan/2/10 | Flaked Tuna 3oz | Can | 3oz | 54807-59114 |
| | | | | |
Your Pet | | | | |
| Dec/19/09 | Sliced Beef/Gravy 3oz | Can | 3oz | 72036-29026 |
| Jan/24/10 | | | | |
| Nov 06 09 | Sliced Variety Pack 3oz | Can | 3oz | 72036-40013 |
| | | | | |
Pet Pride | | | | |
| Dec/19/09 | Sliced Beef/Gravy 3oz | Can | 3oz | 11110-86264 |
| Jan/24/10 | | | | |
| Nov 06 09 | Sliced Variety Pack 3oz | Can | 3oz | 11110-86003 |
| Dec 05 09 | | | | |
| Dec 06 09 | | | | |
| Jan 23 10 | | | | |
| Jan 24 10 | | | | |
| | | | | |
Laura Lynn | | | | |
| Jan/2/10 | Flaked Tuna 3oz | Can | 3oz | 86854-02407 |
| Dec/19/09 | Sliced Beef/Gravy 3oz | Can | 3oz | 86854-02406 |
| | | | | |
Nutriplan | | | | |
| Dec/19/09 | Sliced Beef/Gravy 3oz | Can | 3oz | 41130-06755 |
| | | | | |
Price Chopper | | | | |
| Dec/19/09 | Sliced Beef/Gravy 3oz | Can | 3oz | 41735-12828 |
| | | | | |
Publix | | | | | |
| Jan/2/10 | Flaked Tuna 3oz | Can | 3oz | 41415-08327 |
| Dec/19/09 | Sliced Beef/Gravy 3oz | Can | 3oz | 41415-08827 |
| Jan/2/10 | | | | |
| Jan/24/10 | | | | |
| | | | | |
Stop & Shop Companion | | | |
| Jan/2/10 | Flaked Tuna 3oz | Can | 3oz | 88267-00286 |
| | | | | |
Winn Dixie | | | | |
| Dec/19/09 | Sliced Beef/Gravy 3oz | Can | 3oz | 21140-19419 |
| | | | | |
Nutro Products | | | | |
| All Dates | Chicken Cacciatore 3oz | Can | 3oz | 79105-35205 |
| All Dates | Orleans Seafood Jambalaya 3oz | Can | 3oz | 79105-35206 |
| All Dates | Beef Ragout 3oz | Can | 3oz | 79105-35207 |
| All Dates | Alaskan Halibut/Rice 3oz | Can | 3oz | 79105-35221 |
| All Dates | Kitten Chicken/Lamb 3oz | Can | 3oz | 79105-35202 |
| All Dates | California Chicken 3oz | Can | 3oz | 79105-30011 |
| All Dates | Lamb/Turkey Cutlets 3oz | Can | 3oz | 79105-30014 |
| All Dates | Salmon/Whitefish 3oz | Can | 3oz | 79105-30013 |
| All Dates | Beef/Egg 3oz | Can | 3oz | 79105-30015 |
| All Dates | Turkey/Chicken Liver 3oz | Can | 3oz | 79105-30016 |
| All Dates | Seafood/Tomato/Bisque 3oz | Can | 3oz | 79105-30017 |
| All Dates | Hunters Stew with Duck 3oz | Can | 3oz | 79105-30018 |
| All Dates | Hunters Stew with Venison 3oz | Can | 3oz | 79105-30019 |
Labels: FDA, pet food, recall
Wednesday, April 11, 2007
Sears Issues Hazard Warning For Craftsman Saw
Sears and the United States Product Safety Commission have issued a hazard warning for the company's well known circular saw.
The company says the logo (pictured left) can partially detach and expose a portion of the blade. Sears reported that they knew of two such incidents, one of which caused an injury requiring 12 stitches.
The recall involves a 7-1/4-inch circular saw. The model numbers included are: 172.108550, 172.108560, 172.108650, and 172.108660. The model number is located on the circular saw's upper motor housing. Model numbers 172.108560 and 172.108650 have a gray body housing and a gray blade guard. Model numbers 172.108550 and 172.108660 have a black body housing and a gray blade guard. "Craftsman" is written on the label on the upper blade guard.
The organizations said that consumers should immediately remove the Craftsman label from the upper blade guard. For additional information, call Sears at (800) 659-7026 between 7 a.m. and 9 p.m. CT Monday through Friday.
Labels: Craftsman, recall, Sears
Tuesday, April 10, 2007
Medicare Advantage Plans "Unfair", "Inflated", Says AARP
The consumer group representing people aged 50 or older and their spouses came out swinging this week against the government's proposed Medicare Advantage rates.
“AARP believes inflated payments to Medicare Advantage plans are unfair and fiscally irresponsible. Congress should ensure that traditional Medicare and Medicare Advantage compete on a level playing field,” said AARP Director of Government Affairs David Sloane.
Last month, the independent Medicare Payment Advisory Commission (MedPAC) found that reimbursements to Medicare Advantage plans are 12 percent more than reimbursements to Medicare’s traditional fee-for-service program. All taxpayers and all Medicare members—not just the 18 percent of Medicare members enrolled in private MA plans – are funding these inflated payments.
“Right now Medicare payments clearly favor the MA program over traditional Medicare, which is unfair to the majority of beneficiaries who participate in the traditional program. The federal government should be financially neutral with regard to Medicare reimbursement,” continued Sloane.
Medicare Advantage plans were supposed to provide the same benefits as fee-for-service more efficiently—not at greater cost to the program. In the past, they were able to provide extra benefits to beneficiaries through the greater efficiencies achieved by managed care (e.g., care coordination, negotiated prices, provider networks). Today, because of the excess payments to the plans, they have no incentive to achieve these efficiencies.
According to the nonpartisan Congressional Budget Office (CBO), the federal government could save $65 billion over five years and $160 billion over 10 years, if Medicare Advantage plans were paid at the same rates as traditional Medicare providers.
Labels: AARP, healthcare, Medicare
Monday, April 09, 2007
IRS and Justice Dept Give Last Minute Tax Warnings
To curb the marketing of tax shelters to corporations and individuals, the Justice Department's Tax Division has helped the IRS to identify and pursue nearly every customer who engaged in certain abusive tax shelter transactions, while at the same time pursuing the professionals who designed, facilitated or accommodated the underlying tax shelter transactions.
Bringing Fraudulent Tax Return Preparation to a HaltThe Tax Division continues to bring civil injunction suits to stop tax preparers who habitually prepare bogus tax returns. In response to the government's efforts, courts across the country have barred tax preparers from preparing inaccurate returns.
Since January 2001, the Justice Department has sought and obtained injunctions against more than three dozen tax return preparers, including 18 since January 2006. It expects to obtain many more injunctions throughout the year. The United States recently has obtained injunctions that barred the following schemes by tax preparers:
*Filing tax returns that falsely report "zero income";
*Claiming that only income from a foreign source is taxable, using a spurious interpretation of Section 861 of the Internal Revenue Code; *Claiming personal living expenses as business expenses;
*Preparing amended tax returns to claim tax refunds without customers' knowledge or consent; and
*Asserting that casino gaming proceeds paid to Native Americans are exempt from federal income tax.
The Department of Justice also has obtained injunctions against employers who fail to withhold, account for, and pay over employment and withholding taxes and against return preparers who prepare related false returns.
Stopping Tax EvasionDuring fiscal year 2006, the Justice Department's Tax Division authorized prosecutions of nearly 1,200 defendants for tax crimes, an increase of more than 34 percent over the number authorized for prosecution in 2001. The Tax Division's criminal enforcement priorities include investigating schemes that involve:
*Using trusts or other entities to conceal control over income and assets;
*Shifting assets and income to hidden offshore accounts;
*Making false statements to the IRS in order to claim tax refunds;
*Selling and promoting fraudulent tax avoidance schemes;
*Using frivolous justifications for not filing truthful tax returns;
*Failing to withhold, report and pay payroll and income taxes;
*Failing to report income on individual and corporate returns; and
*Failing to file tax returns.
*Stopping the Promotion of Tax Fraud Schemes
Since April 2006, the Justice Department and the IRS have vigorously pursued the promoters of tax fraud schemes to stop their activity and to warn would-be promoters that promoting tax fraud schemes leads nowhere but to a federal court injunction or to a long stay in jail.
Since January 2001, the Justice Department has sought and obtained injunctions against nearly 200 promoters of tax fraud schemes, including 66 since January 2006. These injunctions have stopped promoters from selling tax evasion schemes on the Internet, at seminars, or though other means. The tax-scam promoters the government has sought to enjoin have cost the U.S. Treasury an estimated $2.5 billion, and have had an estimated 500,000 customers. Among the government's results in this area are:
In May 2006, David Carroll Stephenson was sentenced to eight years in prison in connection with his promotion of a tax evasion scheme using "pure equity trust" organizations.
In June 2006, a federal judge sentenced five defendants, Dennis Poseley (seven years), David Trepas (five years), Patricia Ensign (18 months), Rachel McElhinney (16 months), and Keith Priest (18 months), to prison terms for their respective roles in promoting a tax evasion scheme that used offshore trusts and bank accounts.
On June 22, 2006, District Judge Elizabeth Kovachevich issued an injunction permanently barring Douglas Rosile, a former certified public accountant whose clients included Wesley Snipes, from preparing federal income tax returns for others and from promoting a frivolous tax argument based on Section 861 of the Internal Revenue Code. Among the documents the government filed in court was a return submitted to the IRS on behalf of Snipes claiming a bogus $7.3 million tax refund.
In November 2006, a federal judge sentenced Milton H. Baxley II to 18 months in prison and fined him $10,000 for contempt of court. On August 9, a jury convicted Baxley on two counts of violating an injunction order barring him from promoting a tax fraud scheme. In December 2006, a federal judge sentenced Thomas Miller to nearly four years in prison for conspiring to defraud the United States in connection with a "pure trust" tax fraud scheme. Miller operated Freedom Education Center, a business in California that sold anti-tax literature and helped people create bogus trusts.
Curbing High-End Tax SheltersDuring the past year, the Justice Department and the IRS have continued their vigorous enforcement efforts against the promoters and facilitators of abusive tax shelters. Abusive shelters for large corporations and high-income individuals have cost the U.S. Treasury billions annually, according to Treasury Department estimates. The Tax Division also has had great success in federal court defending the U.S. Treasury against tax shelter-related claims of large companies and individual investors. The Tax Division is currently litigating approximately 86 tax shelter cases or groups of cases, including 47 separate cases involving the Son of BOSS tax shelter. Among the successes during the past year in this area are the following:
In December 2006, Utah businessman Chandler S. Moisen pleaded guilty to conspiracy and wire fraud in connection with a criminal probe of tax shelters promoted by a group of KPMG, LLP executives. In January 2007, Steven Michael Acosta, a former KPMG manager, pleaded guilty to four felony tax charges in connection with his involvement in KPMG's promotion of tax shelter transactions.
The Supreme Court let stand the decision of the U.S. Court of Appeals for the 6th Circuit that the COLI (corporate-owned life insurance) program The Dow Chemical Company used to claim more than $33 million of tax deductions was an economic sham.
The Supreme Court also let stand the decision of the U.S. Court of Appeals for the Federal Circuit that the IRS was right to disallow the $375 million loss Coltec Industries claimed from its "contingent liability" tax shelter.
The U.S. Court of Appeals for the 2nd Circuit held that the IRS properly disallowed the losses General Electric Capital Corporation claimed from its participation in an equipment leasing tax shelter, resulting in $62 million in additional income taxes. The U.S. District Court for the Middle District of North Carolina granted summary judgment for the United States in the first Lease In - Lease Out (LILO) tax shelter to go to court, BB&T Corporation v. United States.
The U.S. Court of Appeals for the Federal Circuit ruled for the United States on an issue raised by tax shelter participants in several tax shelter refund suits in A D Global Fund, LLC v. United States. The court ruled that the statute of limitations on the return of a person who participates in a tax shelter partnership does not expire at least before the statute of limitations on the partnership's return does.
Coordinated Civil and Criminal ProceedingsThe government brings both its civil and its criminal tools to bear in the fight against tax fraud. An ongoing tax scam causes continuing harm to the federal Treasury and it leaves participants owing taxes, interest, and often, penalties. The government does not wait until a criminal case has been developed to take action to stop the scam. Rather, the Justice Department brings civil injunction suits to stop both the promotion of tax scams and the preparation of false or fraudulent returns. Additionally, in appropriate cases, the Justice Department brings criminal charges against the promoters, preparers, and scam participants to punish them for their unlawful conduct.
Labels: IRS, Justice Department, taxes
Thursday, April 05, 2007
Olive Garden, Red Lobster Parent Company Settles Federal Charges Over Gift Card
Darden Restaurants Inc., which owns restaurant chains Olive Garden, Red Lobster, Smokey Bones, and Bahama Breeze, has agreed to settle Federal Trade Commission charges that it
engaged in deceptive practices in advertising and selling its gift cards. As part of the settlement,
Darden will restore fees that were deducted from consumers’ gift cards and disclose fees or expiration dates in future gift card sales. This is the agency’s second law enforcement action involving allegedly deceptive gift card sales.
“The FTC works to make sure consumers have the facts they need to make smart decisions, no matter what they’re buying,” said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection. “When it comes to gift cards, issuers can’t gloss over key information. They must clearly and prominently disclose fees and restrictions that affect the use of their gift cards.”
According to the FTC’s complaint, Darden advertised its gift cards on television and radio, and in its restaurants and Web sites. Darden represented that consumers could redeem the cards to buy goods or services at its restaurants equal to the card’s monetary value. But Darden did not disclose adequately the “dormancy fees” that would be deducted after a certain period of time. For cards sold before February 2004, after 15 months of non-use, a $1.50 dormancy fee was deducted from the card’s balance for each month of inactivity; for cards sold after February 2004, the monthly fee was deducted after 24 months of non-use.
In many instances, the Commission alleges, consumers did not learn of the fee until they attempted to use their gift cards and learned that they had little or no remaining value.
The Commission’s complaint alleges that Darden and co-respondents GMRI Inc. and
Darden GC Corp. inadequately disclosed the fee by noting it in fine print on the back of the card,obscured by miscellaneous other information; marketing a transparent Red Lobster Gift Card with a red lobster on the front that further obscures the disclosure; marketing cards in restaurants without notifying consumers of the fee; and marketing cards on Web sites without disclosing the fee. As of October 2006, Darden stopped charging a dormancy fee on all Darden gift cards.
The proposed settlement requires Darden to disclose any automatic fee or expiration date clearly and prominently in future advertising, at point of sale, and on the card, and prohibits the company from collecting any fee on cards activated before the order is approved by the Commission. The settlement also requires Darden to restore to each card any dormancy fees that were assessed and publicize the restoration program on its Web sites for two years. Darden has already completed the process of restoring all fees on cards. Consumers may simply present their card at any Darden restaurant to receive the card’s value with the dormancy fees restored.
Labels: FTC, gift card, olive garden, red lobster
Wednesday, April 04, 2007
As Housing Crisis Looms, FDIC Warns Consumers About Common Scams
The Federal Deposit Insurance Corporation (FDIC) is alerting the public to questionable solicitations directed at homeowners. Consumers have contacted the FDIC with questions and complaints after receiving solicitations suggesting there is a "Community Reinvestment Act (CRA) Program" that entitles certain homeowners to cash grants or equity disbursements. Some of these solicitations may imply that the FDIC endorses or supports the offers they contain.
These solicitations appear to be a deceptive effort to encourage consumers to apply for a mortgage loan secured by the consumer's home. The FDIC does not endorse or sponsor mortgage loan programs. In addition, the federal law known as the Community Reinvestment Act, or CRA, does not require programs as described in the solicitations, nor do such programs exist. The FDIC cautions the public about loan solicitations or other offers from lenders or mortgage brokers that offer consumers cash as part of a "Community Reinvestment Act (CRA) Program."
The Community Reinvestment Act is a federal law that was enacted in 1977. It encourages depository institutions to help meet the credit needs of their communities, including low- and moderate-income neighborhoods, in ways that are consistent with safe and sound banking operations. The CRA does not entitle individuals to any grants or loans.
Consumers should be very suspicious of conducting business with lenders or mortgage brokers that make deceptive claims. Individuals who are considering taking out a loan using their house as security are urged to compare various programs. Comparing loan programs offered by a variety of different lenders can help consumers make a well-informed decision and
secure the best program to meet their needs. Useful information on shopping for home loans can be found on the FDIC's Web site at http://www.fdic.gov/consumers/looking/index.html.
Questions about these solicitations may be directed to the FDIC's toll-free Central Call Center at 1-877-275-3342 or 1-877-ASK-FDIC (1-800-925-4618 or 202-942-3147 for the hearing impaired). Questions may also be submitted to the FDIC's Web site using the Online Customer Assistance Form found at http://www2.fdic.gov/starsmail/index.html.
Labels: equity, FDIC, scam
Tuesday, April 03, 2007
All About The Pet Food Recall - Direct From The FDA
Menu Foods Pet Food Recall
Frequently Asked Questions
Q: What is being recalled?
On March 16, Menu Foods, Inc. of Streetsville, Ontario, Canada initiated a voluntary recall involving a large number of both dog and cat foods produced at its facilities in Emporia, Kansas and Pennsauken, N.J. between December 3, 2006 and March 6, 2007. The products are sold by many different distributors under a number of different brand names. At present, Menu Foods is recalling dog food products marketed by about 50 firms and cat food products marketed by about 40 firms. A full listing of all the recalled products can be found at http://www.menufoods.com/recall/. The affected products are moist (packaged in pouches) and canned diets. The products have been described as “cuts and gravy” style pet foods. Please see http://www.fda.gov/oc/opacom/hottopics/petfood.html
Q: What prompted the recall?
Menu Foods, Inc. initiated the voluntary recall after conducting routine tasting trials in which some animals developed kidney failure after eating the product being tested. The company had also received consumer complaints, some of which apparently involved kidney failure. The firm has undertaken extensive testing of the pet food products in question, but has not yet been able to find the source of the problem.
Q: When did Menu Foods first notify FDA of the problem and a possible recall?
On Thursday, March 15, 2007.
Q: What is wrong with the pet foods?
It is unclear what is causing the adverse effects reported by Menu Foods and pet owners. FDA is working with Menu Foods, pet owners, pet food companies, local veterinarians, and diagnostic laboratories to identify the source of the problem.
Q: Are only dog and cat foods involved in the recall?
Yes. The recall is only confined to pet food intended for dogs and cats. The affected products are moist (packaged in pouches) and canned diets. The products have been described as “cuts and gravy” style pet foods.
Q: What should I do if I have cat or dog food at home?
Please check the Menu Foods Recall Information at http://www.menufoods.com/recall/ to see if your pet food is involved in the recall.
If your pet food is not listed, the pet food is not affected by the recall and you can continue to feed it to your pets.
If the pet food is one of those being recalled, do NOT feed it to your animals. Feed your pets another pet food that is not included in the recall.
Q: Is dry dog or cat food affected by the recall?
At this time, no dry dog or cat food has been implicated in pet injury or death. The recall is confined to the list of products found at: http://www.menufoods.com/recall/.
Q: What should I do if I have cat and/or dog food included in the recall?
Do NOT feed the pet food to your animals. Return the pet food to the store where you purchased it and ask for a refund. Stores generally have a return and refund policy when a company has announced a recall of its products. If you cannot return the pet food immediately, store the food in a secure place where pets and children cannot get to it.
Q: What if my pet ate one of the dog and cat foods being recalled?
Monitor your pet. If your pet shows signs of illness (such as loss of appetite, lethargy and vomiting), you should consult with your veterinarian immediately. If your pet is diagnosed with renal failure, we suggest you hold onto the food if the brand and lot numbers match the recall.
Q: If my dog or cat ate some of the recalled food, how soon after would I see any symptoms?
It’s difficult to say for sure, but usually within a couple of days. The important thing is to monitor your pet closely for signs of lethargy, loss of appetite and vomiting. If your pet shows any of these signs, please consult your veterinarian.
Q: What if I took my dog or cat to the vet as a result of the recall and I want to be reimbursed for my vet bills?
The FDA recognizes that there may be financial costs associated with any veterinarian visit; however, reimbursement for veterinary care does not fall under FDA’s regulatory authority.
Q: What is FDA doing about the recall?
FDA is conducting an investigation and working with Menu Foods and affected pet food companies to ensure that the recall is effective, and to identify the source of the contaminant. FDA is continuing to collect and analyze product samples in an attempt to identify the source(s) of the contaminant. FDA will continue to release additional information as it becomes available.
Q: How many confirmed pet illnesses and deaths have been reported to the FDA?
It is difficult to determine confirmed illnesses and deaths associated with the recall. Since the recall was announced, FDA has received many complaints and we are following up. The FDA’s primary concern is in identifying the source of the contaminant, assuring that the recall is effective and providing information to the public.
Q: What if I need more information about the recall?
Consumers with questions may contact Menu Foods at 1-866-895-2708. Some of the other affected pet food companies whose products are included in the recall may also have consumer question lines. Check the product label of the pet food. Some firms have also notified FDA that they have issued press releases; links to these press releases are available on the FDA internet page, Pet Food Recall, at http://www.fda.gov/oc/opacom/hottopics/petfood.html.
Q: What if I want to report an adverse action about a pet food?
Consumers and veterinarians who wish to report adverse reactions or other problems can go to the FDA internet page at http://www.fda.gov/opacom/backgrounders/complain.html to obtain contact information for the FDA complaint coordinator in their state. When reporting an adverse event or complaint, please try to have the following information:
-
Brand name and lot numbers for the pet food fed to your dog or cat when it was ill
-
If your pet received treatment by a veterinarian, the name, address, and telephone number of attending veterinarian
-
Date illness first noticed
-
Signs displayed
-
Any veterinary reports available
Q: What advice do you have for veterinarians concerned about this pet food recall?
Q: I understand Menu Foods, Inc. is focusing on wheat gluten as the possible source of contaminant? Is this true?
Menu Foods, Inc. suspects that wheat gluten might be the source of contamination; however, as part of the ongoing investigation, FDA is looking at all ingredients.
Q: What is wheat gluten and how is it used in pet foods?
Wheat gluten is a mixture of two proteins obtained when flour of wheat is washed to remove the starch. One use of wheat gluten is as a filler and binder in wet-style, cuts-and-gravy-type pet food. It provides a gelatinous consistency and is used to thicken pet food "gravy." It also has uses in human food products as a stabilizer or thickener. It is not generally associated with food contamination; however, it could possibly become contaminated by a toxic mold or other substance.
Q: How does FDA regulate pet food?
The FDA's regulation of pet food is similar to that for other animal feeds. The Federal Food, Drug, and Cosmetic Act (FFDCA) requires that pet foods, like human foods, be pure and wholesome, safe to eat, produced under sanitary conditions, contain no harmful substances, and be truthfully labeled. In addition, canned pet foods must be processed in conformance with the low acid canned food regulations to ensure the pet food is free of viable microorganisms (see Title 21 Code of Federal Regulations (CFR), Part 113). There is no requirement that pet food products have premarket approval by FDA. However, FDA ensures that the ingredients used in pet food are safe and have an appropriate function in the pet food. Many ingredients such as meat, poultry, grains, and their byproducts are considered safe “foods” and do not require premarket approval. Other substances such as mineral and vitamin sources, colorings, flavorings, and preservatives may be generally recognized as safe (GRAS) or must have approval as food additives. (See Title 21 CFR, Parts 73, 74, 81, 573 and 582). For more information about pet foods and marketing a pet food, see FDA’s Regulation of Pet Food and Information on Marketing A Pet Food Product.
Q: What are the labeling requirements for pet foods?
The FDA regulations require proper identification of the product, net quantity statement, name and place of business of the manufacturer or distributor, and a proper listing of all the ingredients in order from most to least, based on weight. Some states also enforce their own labeling regulations. Many of these regulations are based on a model provided by the Association of American Feed Control Officials (AAFCO). For more information about AAFCO, please visit its website. There are two documents on CVM’s web site that provide more details about labeling requirements: Interpreting Pet Food Labels and Interpreting Pet Food Labels -- Special Use Foods.
Q: Have there been other recalls involving pet foods?
Yes. The following are recent pet food recalls: In February 2007, FDA recalled Wild Kitty raw cat food http://www.fda.gov/bbs/topics/NEWS/2007/NEW01562.htmlafter Salmonella was detected during routine testing performed by FDA. In December, 2005, Diamond Pet Foods initiated a voluntary recall after aflatoxin was discovered in their product http://www.fda.gov/oc/po/firmrecalls/diamond12_05.html. For information on other pet food related recalls, please see http://www.fda.gov/cvm/petfoods.htm.
Labels: FDA, pet food, recall
Monday, April 02, 2007
Two Pesticide Companies Land In Hot Water With EPA
A pesticide producer and a telemarketer and distributor in Suffolk County, New York will pay a total of $145,000 for violating the federal pesticide law. Both companies allegedly sold off-spec, misbranded products, with the second also making false claims, according to the U.S. Environmental Protection Agency (EPA). The Agency cited the Topaz Turf Corporation in Holtsville and its distributor, Southern Chemical Supply, Inc. in Bohemia. In its complaint, EPA alleged that both companies had been involved in distributing off-spec and misbranded pesticides to the public since at least October 2003. Topaz has agreed to pay $65,000 and Southern has agreed to pay $80,000 in financial penalties under the agreements with EPA being announced today.
“Companies which sell misformulated, unregistered or misbranded pesticides to unsuspecting customers and telemarketers that make misstatements about products will pay a stiff price for their disservice to the public and the environment, both in fines and the trust of their clients,” said EPA Regional Administrator Alan J. Steinberg. “EPA and its partners in the states are keeping a close eye on would be violators.”
Any pesticide product, such as a weed killer, contains a certain percentage of active chemical ingredients approved by EPA for a specific end-use. By law, these registered formulations must match the information on the product label and must have the correct EPA product registration numbers. The percentage of active ingredient in the weed killer sold by Topaz and/or Southern didn’t match the claims made on the labels. In addition, the Agency cited Topaz for selling an unregistered product designed to kill insects on plants and for failing to maintain and furnish records on this product. EPA also found that Southern made misstatements in its telemarketing messages to customers when selling the pesticides.
In February 2006, after discovering the violations during inspections conducted jointly with the New York State Department of Environmental Conservation, EPA ordered both companies to stop selling their products. Both companies stopped selling the pesticides identified in EPA’s Orders.
Topaz wrote EPA in April 2006 indicating that it had conducted an investigation of the problems in manufacturing and documentation that were uncovered by EPA and the state and that it corrected the problem by implementing a new quality control program during the production process. As part of the settlement, Topaz will submit to EPA a copy of its new program aimed at ensuring the problems in the manufacturing process do not reoccur. Southern Chemical is no longer in business.
Labels: EPA, pesticide
