Former Enron broadband exec set to be sentenced

The criminal case related to the failed Enron Corp. broadband unit is set to finally wrap up after eight years.
Former Enron broadband executive Rex Shelby is to be sentenced Monday during a federal court hearing in Houston. He faces up to 10 years in prison after pleading guilty last year to insider trading.
Shelby was one of seven former executives first indicted in 2003, accused of lying to shareholders about the broadband division's value in order to get rich by selling inflated shares.
The six others have previously been acquitted, had charges dropped or been sentenced.
Once the nation's seventh-largest company, Enron went bankrupt in 2001 after years of accounting tricks could no longer hide billions in debt or make failing ventures appear profitable.

Why Lottery Winners Go Bankrupt

CALLIE ROGERS blew a 2003 U.K. lottery jackpot of $3 million on shopping, cocaine, friends and breast augmentation and told reporters two years ago she was working as a maid. William "Bud" Post squandered his 1988 Pennsylvania prize of more than $16 million on houses, vehicles and bad businesses before going bankrupt and serving time for firing a shotgun at a bill collector before his death in 2006.
Are these outcomes rare? A recent study of Florida lottery winners suggests no.

Economists at the University of Kentucky, University of Pittsburgh and Vanderbilt University wanted to answer a public policy question: What happens when individuals in financial trouble are given large lump sums? So they collected data from nearly 35,000 winners of up to $150,000 in Florida's Fantasy 5 lottery from 1993 to 2002, and cross-referenced this information with state bankruptcy records.

Their findings, published last fall in The Review of Economics and Statistics, show that a big lottery score does little to reduce the likelihood of bankruptcy.

More than 1,900 winners went bankrupt within five years. That number implies that 1% of Florida lottery players (winners and losers) go bankrupt in any given year, about double the rate for the broader population during the study period.

Big lottery winners, defined by the researchers as those awarded between $50,000 and $150,000, were half as likely as small lottery winners to go bankrupt within two years of their score but just as likely to go bankrupt three to five years after. "The results show that giving $50,000 to $150,000 to people only postpones bankruptcy," the authors concluded.

Perhaps most shocking, the typical big winner in the sample was awarded a prize of $65,000, while the most financially distressed ones had unsecured debt of $49,000. In other words, the cash was more than enough to pay off everything most winners owed.

The researchers offer a few theories on why so many winners went bust. Prior research has shown that lottery players have below-average incomes and education; it's no great leap to assume they tend to have limited financial literacy (even compared with a general population that has been shown to sorely lack it). Winners might also engage in something behavioral economists call mental accounting by treating their winnings less cautiously than they would their earnings. Of course, winners might simply "develop a taste for luxury goods that outlasts their money," the researchers write.

There's a more cynical explanation. Florida bankruptcy law allows for an unlimited homestead exemption. That means lottery winners there who are deep in credit card debt have an incentive to put their windfalls toward their home equity. If they file for bankruptcy later, collectors can't touch the cash.

Wellington businessman and property developer, Frank de Vries has been bankrupted

Wellington businessman and property developer, Frank de Vries has been bankrupted over a $5.6 million loan to finance company St Laurence Lending.

Mr de Vries owned several self- storage facilities including Storage King and specialised in refurbishing larger commercial properties.

St Laurence Lending is part of the failed Wellington-based St Laurence finance group which was put in receivership in April last year owing investors $212m.

The High Court at Wellington declared Mr de Vries bankrupt last week after he failed to show that he had any means to pay the debt to St Laurence Lending or make a reasonable part payment.

Associate Judge David Gendall said Mr de Vries did not dispute that he owned the money, but argued it would not be just and equitable to declare him bankrupt.

He also asked to be given time to restructure the financial affairs of 26 companies he controlled, which he suggested could clear the debt.

The hearing had been adjourned for one day on March 21 to give Mr de Vries a chance to file any formal opposition to the bankruptcy application and an affidavit of his financial position.

Mr de Vries's lawyer David Bleier requested a three-week adjournment for Mr de Vries to prepare a compromise settlement.

However, Judge Gendall said Mr de Vries had offered $20,000 in full and final settlement in February, which was rejected, although it appeared an offer of about $200,000 might have been acceptable. No higher offer was made.

Mr de Vries had failed to provide the court with any verified information about his personal financial position as requested other than a statement from his accountant that "he does not own any assets of significant value" and "the property he lives in and the car he drives are both owned by a Family Trust", Judge Gendall said.

Mr de Vries had also not given any explanation why he had not taken any earlier steps to resolve the issue with St Laurence Lending despite a summary judgment order for nearly $5.5m made against him on November 2 and the bankruptcy notice being serviced on December 21.

Mr de Vries had ample opportunity to enter into an arrangement with St Laurence Lending to repay the debt but did not attempt to engage an insolvency consultant till the eleventh hour, Judge Gendall said.

Tens of thousands of people who lost money after investing in products tied to bankrupt U.S. investment bank Lehman Brothers Holdings Inc. are to get most of their money back

Tens of thousands of people who lost money after investing in products tied to bankrupt U.S. investment bank Lehman Brothers Holdings Inc. are to get most of their money back.

Sixteen Hong Kong banks and bankruptcy receiver PricewaterhouseCoopers announced an agreement Sunday that will give investors up to 96.5 percent of their money back.

Investors sued Lehman Brothers two years ago after the Wall Street firm's collapse left their bond holdings possibly worthless. The investments were marketed as safe, low-risk "mini-bonds" but were actually complex derivative products.

The products originated with Lehman, and banks in Hong Kong sold them to retail investors, who spent more than $1.5 billion on them.

federal prosecutor said Monday that a Texas businessman bilked hundreds of investors throughout the country out of more than $100 million

federal prosecutor said Monday that a Texas businessman bilked hundreds of investors throughout the country out of more than $100 million, but his defense attorney argued the only crimes were committed by former business partners.

Christian Allmendinger, 39, of Houston is charged with mail fraud, money laundering, conspiracy and securities fraud. His trial is expected to last up to two weeks.

Allmendinger was one of the founders of A&O Life Funds, which bought life insurance policies from insured people at less than face value, then collected the benefits when those people died and distributed some of the funds to investors. Prosecutors say Allmendinger and his associates illegally portrayed investments as risk-free and misrepresented many aspects of their business, including its size and record of success.

"These were lies that brought in millions of dollars and allowed Mr. Allmendinger to live a lavish lifestyle," federal prosecutor Albert Stieglitz Jr. told a panel of 12 jurors and two alternates. He said investors heard sales pitches replete with lies intended to "lull them into a false sense of security and take their money."

Vincent Tchenguiz, the property tycoon, saw the holding companies behind his largest property business collapse into administration yester-day.

Vincent Tchenguiz, the property tycoon, saw the holding companies behind his largest property business collapse into administration yester-day. Zolfo Cooper, the restructuring firm, has been hired as administrator for four companies within the Peverel Group, which is the UK's largest property management company.

The administration is not thought to be connected to the arrest of Mr Tchenguiz and his brother Robert last week by the Serious Fraud Office, which is investigating the collapse of the Icelandic bank Kaupthing in 2008. The Tchenguiz brothers were two of the City most high-profile entrepreneurs before the credit crunch hit their business interests, which ranged from owning firms in their own right to stakes in companies across the retail, pub and property worlds.

Their spending spree was often funded with cheap loans provided by failed Icelandic banks.

The board of Peverel, including Vincent Tchenguiz, appointed Zolfo Cooper after it was unable to repay debts of £125m.

The directors and Peverel's main lender, Bank of America, had failed to reach an agreement after months of negotiations. Peverel oversees the management of 190,000 residential units in the market for retirement and non-retirement property.

However, Zolfo Cooper stressed that the administration would have no impact on the operating companies of Peverel, which means that its primarily elderly tenants will not notice any change today.

Furthermore, it is understood that the Tchenguiz brothers have kept the freeholds on all 283,966 residential properties they own.

Simon Appell, a partner at Zolfo Cooper, said: "While the business [Peverel] itself was profitable at an operating level, the level of debt in the holding companies was unsustainable. The administrations of the holding companies were therefore unavoidable." He added: "The business will continue to trade as usual while we seek a buyer for it."

The four holding companies in administration are: Peverel, Peverel Group, Aztec Opco Developments and Aztec Acquisitons.

There are no plans to make any of Peverel's 4,000 employees redundant. A Zolfo Cooper spokesman said: "Employees will continue to be paid as normal, and other benefits will accrue as normal."

In a separate development yesterday, Robert Tchenguiz has threatened to sue the Serious Fraud Office for arresting him as part of their inquiry into Kaupthing.

He accused the fraud watchdog's investigators of ignoring his offers to co-operate before he and his brother were arrested last week at the headquarters of their London offices. In a statement, he said the investigations were a publicity stunt for the SFO to show its mettle.

Robert Tchenguiz said: "I believe that the disproportionate and aggressive conduct of the SFO was designed to generate maximum publicity for its own ends, given its uncertain future."

Robb and Stucky will be completely liquidating its entire inventory, valued at approximately $90 million.

After more than 95 years in business, the nation's largest high-end home furnishings company will conduct a court-ordered bankruptcy liquidation sale, a news release said.
Robb and Stucky will be completely liquidating its entire inventory, valued at approximately $90 million. The news release said that customers will find a large assortment of home furnishings in styles ranging from high-end traditional to Caribbean chic to clean contemporary. The sale will also include all of the company's brand-name furnishings and accessories such as Ralph Lauren, Elements, Tommy Bahama, Paloma and others.
The sale will begin Friday. Robb and Stucky filed to reorganize under Chapter 11 on Feb. 18.

Saab could go bankrupt in, “just a few days.”

Russian billionaire Vladamir Antanov isn’t done with Saab yet. Forced out of the Saab deal when General Motors sold off the Swedish automaker to Spyker, he recently re-acquired the Spkyer brand from the combined Saab Spyker Automobiles through a British coachbuilder he’s heavily invested in.

Now Antanov is stirring up trouble suggesting Saab might miss its sales target of 80,000 vehicles. In a recent interview with Swedish newspaper Dagens Industi, he said that Saab was more likely to achieve sales of 60,000 to 65,000 units for 2011.

Saab boss and Spyker founder Victor Muller has fought back, claiming that the original sales targets would in fact be met.

Antanov then went on to cast doubt on Spyker’s financing, commenting that without the current loan from the European Investment Bank Saab could go bankrupt in, “just a few days.”

But why would the EIB refuse the loan? It’s not a stretch to suggest that Antanov wants back in, and a change in ownership or control would require both the EIB and the Swedish government to sign off on the deal – and both parties might have a problem with Antanov’s alleged ties to the Russian mafia. Conveniently, Antanov happens to be well funded and could front some of the necessary funds, but even he admits coming up with enough to pay back the loan would require additional partners.

Innkeepers USA Trust won permission to auction its bankrupt hotels

Innkeepers USA Trust won permission to auction its bankrupt hotels under a revised deal with Lehman Ali Inc. and Five Mile Capital Partners LLC that values the properties at $970.7 million.

U.S. Bankruptcy Judge Shelley Chapman in New York today approved the so-called stalking-horse offer from the unit of Lehman Brothers Holdings Inc. (LEHMQ); Connecticut-based asset manager Five Mile; Midland Loan Services, a division of PNC Bank; and Apollo Investment Corp. Such offers serve as a baseline agreement to be challenged by competing bidders at an auction.

Chapman overruled objections from creditor Appaloosa Investment LP, which said a deal calling for Lehman to get $200.3 million in cash to cover its claims is improper, and “creates an unsupportable hurdle to competitive bidding.”

“Far from being chilled, the bidding appears to be quite heated,” Chapman said, praising Innkeepers for marketing itself so well in bankruptcy that competitive offers to be a stalking horse were received as late as last night.

The revised offer, announced March 7, separates seven hotels from the sale. Innkeepers will continue to market those hotels, seeking to raise more money for creditors.

Lady Gaga’s legal bill could leave his company bankrupt,The ice cream in question is Baby Gaga – which is made with real breast milk.

The Icecreamists owner Matt O’Connor has told HollyBaby.com that Lady Gaga’s legal bill could leave his company bankrupt!

Lady Gaga’s attorneys at Mishcon de Reya served The Icecreamists owner Matt O’Connor with a legal document obtained by HollyBaby.com, claiming he has ripped off her name for his own gain.

The ice cream in question is Baby Gaga – which is made with real breast milk.

“We have been only open two weeks, it’s like Apocalypse Now with ice cream,” Matt told HollyBaby.com. “We expected this to cause a few ripples. But nothing in a D-cup!”

Matt says that the legal bill would be almost $81,000, which would “effectively bankrupt” his company.

“We have a trademark application, which is pending,” Matt added. “At the moment it [the breast milk ice cream] has been banned by the Westminster City Council. It’s been portrayed in a negative light… they made this really hyped up and they took it away for testing.”

Matt said the council claims Baby Gaga “was very damaging and unsafe for human consumption.”

“We could legally oppose it, and say this is ridiculous,” he says. “We may decide to disassociate ourselves totally. We may decide to try to change the name — maybe Baby Goo Goo, or Barak Obaba or the Cry Baby.”

luxury cars, high-end jewelry and expensive toys will be sold to the highest bidders to help pay thousands of creditors owed money by bankrupt US Fidelis,

luxury cars, high-end jewelry and expensive toys will be sold to the highest bidders to help pay thousands of creditors owed money by bankrupt US Fidelis, which once led the nation in the sale of extended auto-service contracts.
The auction, which will include hundreds of items belonging to US Fidelis and the millionaire brothers who owned it, will be spread over three dates: March 26, April 2 and April 3. The public can inspect the spoils at a preview on March 25. The auction and the preview will be held at the US Fidelis headquarters, the former Belz Factory Outlet Mall at Interstate 70 and Highway 40 in Wentzville.
David Warfield, a bankruptcy lawyer representing US Fidelis creditors, said the estate isn't sure how much money the auction will raise. "Obviously there's hundreds of thousands of dollars worth of stuff — the vehicles alone are worth that much," he said.
Warfield has organized many liquidation auctions, but he said this one might end up being the most complicated he's seen — if only because of the strange variety of what's for sale.
Warfield has invited reporters to inspect the auction lots today, and he's warning them that it takes about two hours to get a sense of what's being offered.
US Fidelis collapsed in late 2009 amid allegations of widespread consumer fraud. Its owners — Darain and Cory Atkinson — were sued last year for stripping more than $101 million from the firm at the expense of creditors and hundreds of thousands of customers. To settle that suit, the brothers surrendered virtually their entire fortunes to the US Fidelis bankruptcy estate.

Britain's biggest "boiler room" scam.

Richard Pope, 53, funded a lifestyle of fast cars, yachts and private jets as his international gang pressurised pensioners over the phone into buying non-existent shares. His crime empire made over £100 million as more than 2,300 victims were bullied into handing over life savings, detectives believe. One victim alone lost more than £800,000.
As Pope pleaded guilty to his part in the conspiracy at the Middle District of Florida District Court, British detectives condemned him for leaving a trail of victims destitute.
Detective Superintendent (DS) Bob Wishart, from the City of London Police's Economic Crime Directorate, led the investigation in partnership with US authorities. He said: "He and the guys who did this are on a par with some of the most ruthless villains out there," he told the Press Association.
DS Wishart told how most of the victims were retired pensioners from the UK who trusted Pope with their life savings.
He added: "They did not deserve what they have got, they thought they were going to be able to look after their families for years to come with this. But instead many of them have ended up divorced, homeless or have had to come out of retirement and get jobs.
"For some of these people there will be no closure. This has scared them for life. The psychological effects cannot be underestimated. It is the worst case I have dealt with."
Boiler room scams involve fraudsters using high pressure sales tactics to con investors into buying non-tradable, overpriced or even non-existent shares. They are thought to cost the UK around £200 million a year.
Pope spent two years on the run before his arrest, police said. The bachelor, who was extradited to the US from Spain, helped sell fake shares and options to unsuspecting investors between July 2004 and March 2008.
His crime gang stole the identity, history and shareholder base of dormant, publicly trading companies in America before cold calling investors using "high pressure and misleading sales techniques".