459 Banker gets 40-months for $3 billion fraud; Homeless man gets 15 years for stealing

Banker gets 40-months for $3 billion fraud; Homeless man gets 15 years for stealing $100

(1) Millions of homeless people NOT ALLOWED to build their own homes
(2) Housing: the debate at Naked Capitalism - from Michael Hudson
(3) Housing - the debate at Naked Capitalism
(4) Dwelling Entitlement/Building Permit laws keep people bottled up in the cities
(5) Big Brother housing laws
(6) "Little Hitler" building inspectors
(7) Florida home construction materials. Pine roof trusses blow away in hurricanes
(8) Comment on Florida home construction materials
(9) More on Florida home construction materials
(10) Justice In America: A Tale Of Two Crimes
(11) Banker gets 40-months jail for his role in a $3 billion Mortgage fraud
(12) Homeless man gets 15 years for stealing $100

(1) Millions of homeless people NOT ALLOWED to build their own homes

Peter Myers, June 28, 2011

Most of my readers would be city people who have never built as much as a chicken pen.

That's the way I was too, until I was seduced into "dropping out and going bush" by the hippy movement of the mid 1970s.

I learned how to build from hippies. Hippies learned by helping one another - no courses, no permits. In the wake of the US defeat in Vietnam, an anarchistic spirit prevailed: the hippies defied the laws, and in rural areas were allowed to "do their own thing". They learned to build houses and have babies at home.

Even now, I am still building - in this case, an outdoor bathroom and toilet. It's one reason my bulletins have been delayed.

Although the hippies vanished from the scene, swept away by Feminism (which encouraged the women to leave the men), religious fundamentalism (which some took up, after their marriages fell apart), and the conservative impetus of the Thatcher/Reagan era, just last week I noticed a new shop in Gin Gin, a small town an hour's drive away: The Hippy Shop - Di's Hippy Shop, selling clothing of the hippy era. The owner, Di, who makes the clothing herself, said she can't keep up with demand.

The housing bubbles have allowed house prices to inflate, and landlords have pushed up rent too - because they get tenants to pay off their mortgages. There's now a bitter social divide between renters and landlords, an undeclared civil war.

Millions on unemployed people could be building their own houses in rural areas, as the hippies did, if only they could throw off the burden of the Big Brother laws introduced by the Nanny State.

These laws are introduced in the name of "raising standards". Yet modern houses are jerry-built, with flimsy pine walls and roof trusses; buyers only see the bricks on the outside (which are merely a cladding) and the plaster on the inside. All these houses look the same: picky-packy boxes which have no soul.

Hippies in Australia NEVER built with radiata pine - it's a rubbish timber; they only used hardwood (eucalypt). Eucalypt trees, although indigenous to Australia, are now grown on all continents. They're fast growing, beautiful, regrow after wildfires, make strong and durable houseframes, and, used in a campfire, give off a wonderful smell in their smoke, which reminds Australians of home. Timber houses are also a carbon sink, which is a better outcome than letting a tree rot.

(2) Housing: the debate at Naked Capitalism - from Michael Hudson

From: Michael Hudson <michael.hudson@earthlink.net> Date: 25.06.2011 08:29 AM
Subject: Re: Germany's affordable housing cf UK/Australia bubble. Negative Gearing makes housing unaffordable

Dear Peter,
    This is the first I've heard from you in a long time. Have you been off?
    Re German vs English prices, this article or one like it was on Naked
Capitalism yesterday (which Steve Keen and I write for). In the DISCUSSION,
I have two long remarks elaborating the difference.
        You should like the site in any case.
    Michael

(3) Housing - the debate at Naked Capitalism

From: Michael Hudson <michael.hudson@earthlink.net> Date: 25.06.2011 10:21 PM
Subject: Re: Germany's affordable housing cf UK/Australia bubble. Negative Gearing makes housing unaffordable

http://www.nakedcapitalism.com/2011/06/how-germany-achieved-stable-and-affordable-housing.html

michael hudson says:

June 23, 2011 at 10:08 am

This good article leaves out an important feature in the German system: Its rental co-ops. A large number of Germans belong to these co-ops, which hold down rents to reflect actual operating costs much as were done for years in New York, where the right to move into a co-op in my old Manhattan neighborhood was only $3,000. Labor unions created many co-ops in New York, and also in Germany. Public authorities created others.

The availability of such housing saved Germans from being panicked into buying.

Also, construction prices are not monopolized there. I have seen wonderful custom-made windows installed for $3,000 — half the cost of inferior pre-fab windows here in New York.

The other points are well taken: no 100% mortgages, no liars' loans, and little absentee buying to make a profit. Especially in East Germany, having property was a problem, not a solution. The old Communist state would tell you whom you had to share your house with, and you were obliged to take care of it. (DYI stores are more frequent in Germany, I think, than here.) So there is a cultural tradition that is almost a fear of home ownership in the East.
Michael Hudson

Michael Hudson says:

June 23, 2011 at 10:20 am

I should add a point re England.

In Central London — where rents and housing prices are so exorbitant — a reported 80% (NOT a typo) of property is owned WITHOUT MORTGAGE. Mainly by foreigners, and much of it flight capital in effect.
People who actually have to work for a iiving in London are obliged to live WAY outside the city. When companies advertise, they often say, "Salary includes season ticket." This is NOT a ticket to a soccer club. It is a train ticket to get to where you have to live, as foreigners (I plead guilty) have bought up the central London property.

Also, re capital gains, if you buy through a partnership in one of the crazy offshore British isles, you do NOT have to pay a capital gains tax. this, to encourate "foreign investment in Britain." So most British absentee landlords appear as "offshore."

The moral is that the real estate market is not like any other market, either in Britain or elsewhere.

  DownSouth says:

June 23, 2011 at 10:15 am

The outcome of the economic revolution inspired by the Chicago Boys has been the same everywhere it has been implemented, and especially in its purest Reaganite and Thatcheriete manifestations. The first examples of this to materialize were in Latin America. (See Greg Grandin's Empire's Workshop for a thorough explication of this, a short synopsis of which can be found here.)

The neoliberal's wet dream has come true beyond the Chicago Boys wildest dreams. After Latin America, it went global. The neoliberal wet dream was not to increase new assets, or production, but to extract more rents from existing assets. ...

If we take a longer historical perspective, however, the revolution inspired by the Chicago Boys was actually a counter-revolution. Its purpose was to reverse the reforms that came out of the New Deal revolution, a counter-revolution to carry us back to the Roaring Twenties.

The PBS special The Crash of 1929 does a great job of recounting the 1920s era. It was a time when production was spiraling downwards at the same time rents and prices were spiraling upwards, a Ponzi scheme if there ever was one. ...

 readerOfTeaLeaves says:

June 23, 2011 at 9:31 pm

A big driver of this involves home builders and developers.
(The developers buy the land, rezone it, get power and sewer and water to it. They are sometimes also builders, but generally they move on and do the same thing elsewhere, then sell finished lots to builders.)

Unless you are high-end and/or have solid technical and engineering skills, you can make good money as a subdivision builder creating McMansions, because that is your most profitable ‘product'. Or was.

So the builders were incentivized to build McMansions.
The developers were incentivized to demolish the environment to build lots for McMansions.
The genuine affordable housing was left to non-profits, or government entities.

The result is expensive disaster: too many overbuilt homes on big, sprawling asphalt-covered cul-de-sac bulbs that are incredibly expensive in terms of transportation and energy use.

I have literally been in meetings where big subdivision developers wailed and whined because they ‘couldn't afford' to build affordable housing. Translation: "we're in this to cream as much profit as we can, as fast as we can and if 70% of the population ends up crammed into shitty apartment, that's not our problem." ...

 David says:

June 23, 2011 at 1:57 pm

Compare the German Housing Market to the UK Housing Market ….. what a shambles the UK is! Here's why:

1) Snobbery among the fake middle classes, most of whom are actually POOR

2) MASSIVELY overpriced housing, thanks to greed at every level of society …. banks, home "owners", media types, estate agents, et al

3) Rental prices are tied to house prices. Overpriced houses mean that the "But To Let" brigade pass their costs onto their tenants.

I applaud Germany for using sense to rule their market. Britain used greed, social engineering via the media, and snobbery, to create a market in terminal decline.

The UK is the most indebted country in the World (per head). Much of the debt is thanks to the nation's obsession with house prices, and GREED. ...

 JohnF says:

June 24, 2011 at 10:06 am

Sigh.

As always, it's not quite that simple. I've been living in Germany for over 20 years now and while nothing that Yves said is really wrong, it's simply not that simple.

There are strong limits on building in Germany (rezoning is a serious nightmare for anyone trying to turn agricultural land, for instance, into residential land), largely because there are in fact vested interests in keeping housing costs for single-family dwellings as high as the market will bear. While this benefits both the local government (since assessed values for tax purposes are high) and builders (since they basically control the supply and ensure that building is itself very expensive), the losers are consumers, many of whom start saving for a down payment when they are born (a "Bausparvertrag", where you pay in a set fee and 20 years later get more money back, sort of like a savings bond, is a very popular birth and christening gift amongst German middle class families) and sacrifice their entire lives to getting a piece of land and building on it, giving up vacations and investing bonuses in order to afford their own place.

German construction codes are basically designed for a 150 year build-to-tear down cycle, with major renovations every 50 years, while US codes, for instance, are designed largely for a 75 or even 50 year cycle: houses built 100 years ago reflect very, very different consumer needs and design abilities. While you end up in Germany with massively solid (and stolid) housing, this is massive over-engineering, since houses built so massively cannot be easily changed and modified into more modern designs: a significant portion of the money you spend on a house, based on this housing life-cycle, is money that only benefits follow-on owners. While this improves, to a certain degree, re-sale prices, a significant portion of existing housing is torn down after resale because the design of the place is, bluntly abysmal: many older houses have multiple very small bedrooms, for instance, for when families had 4-6 kids, but given the average family size in Germany, having 1-2 much larger bedrooms makes more sense: unfortunately, knocking out walls is impossible because of the fact that most walls are load-bearing, rather than drywall, forcing you to tear the place down and rebuild in order to have the floor plans you want. The older the house, the more likely it is that you'll want to do this.

There is also the fact that rental prices are heavily influenced by large numbers of government-owned housing. There were put up largely for government employees and the military in order to provide subsidized housing so that German government employees and soldiers could be paid significantly less; given that these prices are included in what is called "Mietspiegel" or the official average rent prices. German law does control how much and how fast rents can increase, which is moderate and orderly, with real jumps only occurring when a tenant leaves a property. Generally speaking, rents may only increase at around 10% a year until they reach the Mietspiegel, at which point they may increase not more than 20% over a three-year period. That's a built-in brake to rapidly increasing rental costs.

Most rental unit owners are loath to lose good tenants, given the risk of rental nomadism (moving from place to place while not paying rent, staying one step ahead of the lawsuits: rental nomads are the bane of the unit-owners existence, since they can usually milk you of 2-3 years' worth of rent before you can actually get them out of your place, which is then usually in need of major renovations) and the general aggravation of having your cash flow interrupted when you are still paying off your mortgage. As a result, as long as the cash flow works, you can generally expect rental prices increasing only according to the rate of inflation at worst. Given the large percentage of renters, it's more of a renter's market than a landlord's market, as it is easier to move than to sue your landlord for poor maintenance and the like (and people really do that as well).

There's also little social stigma for renting, rather than owning, unless you are in a very high income cohort (and even then it's more a matter of curiosity, rather than stigma). While for some ownership remains a mantra of materialistic consumerism, us post-materialists prefer to rent and enjoy avoiding both debt and interest rates …

(4) Dwelling Entitlement/Building Permit laws keep people bottled up in the cities

Peter Myers, June 28, 2011

I often talk about how congested the cities have become, and sympathy with those seeking to try a rural life.

They face many hurdles.

In recent decades the states have made laws for "Protection of Agricultural Land" (PAL), to prevent good farmland being cut up for urban sprawl. Nevertheless, this continues at the fringes of the big cities.

The NSW Government says, "Setting the minimum area necessary for a building entitlement is a commonly used tool to influence residential land uses in agricultural zones. ... Setting a large minimum is a disincentive to life style purchasers"

(Policy for Protection of Agricultural Land, 2004
31 May 2004. Article was at http://www.agric.nsw.gov.au/reader/landuseplanning/policy-ag-land.htm;
is archived at http://web.archive.org/web/20070906055323/http://www.agric.nsw.gov.au/reader/landuseplanning/policy-ag-land.htm)

So, people moving to the bush are forced to buy more acres than they want. This reduces the number of blocks available, and makes moving to the country more expensive, thus keeping more people bottled up in the cities.

In many areas where the minimum for a dwelling entitlement is 100 acres, the land is former sheep country, not really much good now that the wool market has declined. Yet even to live in these zones, people are forced to buy 100 acres.

If we want to lessen the unevenness of our population, we need to cut such bureaucratic red tape.

In Tasmania, unlike the other states, the PAL legislation defines "agriculture" so as to include forestry.

As Crown land and State Forests have been converted into National Parks, the logging companies have bought up farmland - former dairy country on the red basalt soil of North-West Tasmania - and put plantations on it, for pulp and woodchips.

This land is being lost to agriculture - according to the usual definition of that word. But it's being done under "Protection of Agricultural Land" laws, because they've tweaked the definition of agriculture.

Under Tasmania's PAL legislation, people buying a bush block no longer have the right to a building permit, because even a bush block is deemed agricultural land. The consequence is that buyers hoping to build and move there are inhibited from buying; sellers are unable to sell except to plantation companies.

(5) Big Brother housing laws

Peter Myers, June 28, 2011

I know a builder who lost his licence merely because his wife divorced him.

She got the house. Because he no longer had any assets, the Insurance Company refused to renew his insurance. Without Builders' Insurance, he lost his licence.

When I last saw him, in 2004, he was building a house for someone, with that person obtaining an Owner Builders' licence. These days, lots of "Owner Builders" are merely customers subcontracting out the work to tradesmen.

The real Owner Builders, those who go bush and do all the work themselves, often using second-hand materials, have been pushed to the wall.

Council planners now dictate everything you can do on your own block. Try asking whether you can use second-hand windows in your house.

"Provided it complies with the Building Code of Australia", they all reply.

"But in practice," you persist, "Do you allow it?".

You won't get a straight answer. Pretty soon, you realise that you need a Newspeak dictionary.

These are the local faces of Big Brother. They insist that these rules are for our own good. The Nanny State claims that it's looking after us.

If there's no right to put a roof over your own head, on your own land, then "Human Rights" has no meaning at all. It's just a slogan.

Similarly, if you can't give birth in a simple, low-tech way, avoiding the hospitals (with their 20% cesarean rate), then you have no Human Rights.

We fought Communist totalitarianism for 40 years, but did not notice the variant growing up in our own backyard. George Orwell told us to look there, and warned that Big Brother would pose as our benefactor.

You can't even use second-hand galvanised iron to build a shed. They want you to build kit buildings - that's the only kind of shed it's easy to get approval for. Standardised ugly monstrosities, with none of the character of the shacks and sheds of the past.

The same Socialist pollies who have introduced these rules, also tell us that they are saving the environment. Meanwhile, houses are being demolished and thrown away at the tip, with hardly any recycling of quite usable materials, merely because of these new "planning" laws about "standards".

Safety is another excuse. A few bits of fibro in a house, and they prevent you from salvaging any part of the house, for "occupational health and safety" reasons.

I've heard of couples intending to owner-build, who started by accumulating second-hand doors, windows, timber and other materials, then finding that they can't be used, and their relationships breaking up over intransigent Planners and Building Inspectors.

The Australia of Henry Lawson seems far away. In those days, you didn't need approvals or inspections to build your own house or shed in the bush. In many shires, e.g. in the Bega and Nimbin areas, and in rural Tasmania, you could do this until about 1990.

It all changed during the 1980s when the Socialists in Sydney and Canberra brought in "Uniform Building Regulations". The Newcastle Earthquake was the excuse they used to make all the states comply.

A real estate agent in the Newcastle area told me that extensive underground coal-mining may have contributed to the earthquake damage. It's the reason why weatherboard houses sell as dear as brick ones in the Newcastle-Cessnock-Maitland area.

The consequence of the Newcastle Earthquake has been a doubling of the volume of concrete & steel in house foundations across the country. Engineers cover themselves against ligitation, by prescribing unnecessarily big footings. This, even though cement is an energy-intensive product.

Politicians cry crocodile tears over these disasters, and follow up with draconian laws that impact on us long after they have taken their pensions.

(6) "Little Hitler" building inspectors

Letter to the Premier of NSW, Bob Carr; August 2004 - by Peter Myers

Dear Mr Carr,

In the mid-1970s, there was a movement "back to the land" among young Australians. They built shacks in the Bush, and had babies at home. I was part of that movement.

These days, there are nearly no home-births in NSW, and owner-builders live in fear of "little Hitler" building inspectors.

No home births, because of the insurance and litigation industries.

The houses that owner-builders built were made of stone, timber-framed, pole-framed, mudbrick, rammed earth, log cabins etc.

They were much more varied, in size, shape and style, than "normal" houses built by the building industry. Owner-builders built more like artists, from the heart. Their houses were an expression of their own creativity.

Many built at sites without electricity; all used low-tech, manual methods. They were often poor, and built cheaply, giving each other free labour. Each person who helped was learning on the job, and would be able to use newly-acquired skills for his own projects later.

About 1979, the NSW Government issued a booklet on Low-Cost Country Home Building, as an easy-to-read and non-bureaucratic guide to owner-builders.

These days, that has all vanished, thanks to laws brought in to regulate the building industry. Building inspectors apply these laws to owner-builders too, demanding that they know The Building Code of Australia, and threaten to pull their houses down.

One owner-builder, in the north of NSW, told me that building inspectors are "little Hitlers". Another, in the south of NSW, told me that you (Mr Carr) do not know what is being done in your name. Now I am telling you.

I heard of a carpenter - a tradesman - who built a Japanese-style house, of timber, without any nails or bolts. It was held together merely by cleverly-designed timber joints, as per Japanese traditional design. Only a master craftsman could build such a house.

The building inspector forced him to drill holes and put bolts in it. He did, to comply, but later removed the bolts and filled the holes.

"Enforced mediocrity" is how Architect Harry Siedler calls the new regime.

When you see stories about shonky builders, on current-affairs programs on TV, consider whether any of the complaints have been about owner-built homes. I've never seen such.

Owner-builders have no interest in cheating, because they are building for themselves. They aren't employees, and they're not mercurial.

But, thinking like artists, owner-builders should not be regimented like the building "industry". One cannot regulate creativity without stifling it. Imagine if artists had to produce their works to a defined set of "standards".

The Soviet Union fell because it was too top-down. It tried to concentrate all creativity in a few people at the top, and make everyone else fall in with their thinking.

Please introduce an opt-out clause. Call the dogs off.

Yours Faithfully,

(7) Florida home construction materials. Pine roof trusses blow away in hurricanes

From: S. U. N. <fistwallop@msn.com>  Date: 01.06.2009 05:07 AM Subject: You Asked....

Peter,

Florida home construction materials vary, depending on when the structure was built, and where it is located.

Florida building codes have gone through many changes. Also, some Florida regions have stricter codes than others (stricter local codes than required by the State).

Here where I live, most homes built during the past fifty years have steel-reinforced concrete block walls, with standard wood interior wall framing, and wood trusses on top.

In remote areas of the island on which I live, there are some homesteaded properties, on which generations of inheriting owners have constructed primitive, entirely wooden homes, unlawfully. These peope are mostly authentic old naturalists (beekeepers, orange tree growers, small-scale farmers, etc.).

Every year during hurricane season, a handful of those outlaw structures do get destroyed, and then rebuilt. Their owners, who are the simple-minded, old-timer, libertarian types, are constantly engaged in ongoing legal battles against the state and local authorities; but this area of the deep south is still somewhat sympathetic to the old-timers (the "Florida Crackers" is what such folks are called in these parts).

For more about the rustic adventurousness and the mystique of the "Florida Crackers", you can rent the two classic (and masterfully magnificent) motion pictures entitled "Cross Creek" and "The Yearling".

Both movies are set in the Florida wilds during the first half of the twentieth century. If you like beautifully-filmed and exquisitely-accomplished family films (films with REAL virtue, decency, and dignity), then I strongly recommend that you permit yourself the elegant opportunity to experience both of those. 

The building I live in is entirely steel-reinforced concrete (exterior and interior). The ceilings are nine inch thick, pre-formed, steel-embedded concrete slabs. The building was constructed as a hurricane shelter for the workers who were building the NASA Kennedy Space Center (which is located within eyesight of where I am).

When hurricanes hit here in my area, the thousands of homeowners who live in buildings with truss roofs head for hurricane shelters located many miles inland. Truss roofs will blow away.

We who live in this building just stay here in this fortress, with plenty of candles on hand (because the electricity always dies, of course), and with plenty of food and water. I also have a few different types of audio/visual devices which operate with hand-cranked "dynamo" energy storage technology. That way I can keep receiving the music and the inland television signals being broadcast by inland stations.

If you want more-detailed info about hurricane-resistant building materials required by Florida law, here's a starting link to Florida's building materials code:   
http://www.floridabuilding.org/BCISOId/bc/default.asp

Take Care, Brother,

John
Florida, USA

(8) Comment on Florida home construction materials - Peter Myers, 2009

John,

It sounds as if these concrete walls would be hot in summer.

The building you live in has a concrete ceiling; but what about the roof? Are there trusses above the ceiling? Or is the roof made of concrete slabs too?

In Florida houses, what are the timber roof trusses made of? Radiata Pine? In the ones they use here, each Pine truss is only about 1" thick. I wouldn't trust them at all.

I build not with trusses but with hardwood (eucalypt) rafters. In my cabin, I put 10" bolts through the edge batten, the rafter and the top plate (of the timber wall, also hardwood).

Eucalypt is far stronger than pine. Pine snaps like matchsticks. The cross-section of eucalypt members needs only to be about half that of pine.

Do the rooves of Florida homes have steel sheets (eg Colourbond) or tiles? Or some other material?

I don't want to look at the Building Code - I hate rulebooks. All I'm interested in is what works.

Peter

(9) More on Florida home construction materials

From: S. U. N. <fistwallop@msn.com> Date: 05.06.2009 04:26 AM Subject: Re: You Asked....

Peter,

Actually, the concrete walls make this building much cooler than the other, more-common panel-over-wood-frame structures. Why? Because the air-tight solidity of the concrete prevents the seepage of (and/or radiation of) hot air into the interior. I can keep a window cracked open approximately 1/4" (for supply of sufficient fresh air), and keep an electric fan blowing inside, thereby maintaining a temperature of around 75-80 degrees Fahrenheit, when the outside temperature is approaching 100 degrees.

I'm able to get by using very little electricity that way. The fan uses only 110 volts, as opposed to 220 volts for the  air-cooling system. I spend around only $30 to $40 monthly on electricity.

My roof is simply the concrete slabs previously described, covered with plywood, tarpaper sheets, sealant and gravel. No trusses.

Standard trusses in Florida are pine, assembled using cheap nail-studded plates. They're crap!! They are not intended to be trusted in big hurricanes, which is why the people who live in houses with trusses always evacuate to the inland during big hurricanes.

Majority of Florida homes use hard or soft tiles. Very few use steel sheet. On the island on which I live (Merritt Island), I have seen only one home, amongst many hundreds, using steel sheet for roof.

Pleasure talking shop with you, brother. Take care. Stay strong. Live long.

John

(10) Justice In America: A Tale Of Two Crimes

From: Kristoffer Larsson <krislarsson@comhem.se> Date: 26.06.2011 05:47 PM

http://www.commondreams.org/further/2011/06/24-8

Justice In America: A Tale Of Two Crimes

by Abby Zimet

June 24, 2011

{visit the link to see images of the two news reports}

Consider Paul Allen, 55, a former mortgage CEO who defrauded lenders of over $3 billion. This week, prosecutors celebrated the fact they got him a 40-month prison sentence. Consider Roy Brown, 54, a hungry homeless man who robbed a Louisiana bank of $100 - the teller gave him more but he handed the rest back. He felt bad the next day and surrendered to police. He got 15 years. Justice in America has a ways to go.

(11) Banker gets 40-months jail for his role in a $3 billion Mortgage fraud

http://www.msnbc.msn.com/id/43487593/ns/business-personal_finance/t/ex-mortgage-ceo-sentenced-prison-billion-fraud/

Ex-mortgage CEO sentenced to prison for $3 billion fraud

Officials called the scheme one of the biggest corporate frauds in U.S. history

By MATTHEW BARAKAT

Associated Press June 21, 2011

ALEXANDRIA, Virginia — The CEO of what had been one of the largest privately held mortgage lenders was sentenced Tuesday to more than three years in prison for his role in a $3 billion scheme that officials called one of the biggest corporate frauds in U.S. history.

The 40-month sentence for Paul R. Allen, 55, is slightly less than the six-year term sought by federal prosecutors.

"I messed up. I messed up big," Allen told U.S. District Judge Leonie Brinkema before he was sentenced, apologizing to his family and "the entire financial community. "There was no excuse for my behavior."

Allen was chief executive at Ocala, Florida-based Taylor Bean & Whitaker, which collapsed in 2009 after the criminal investigation became public, resulting in its 2,000 employees losing their jobs. The fraud also contributed to the collapse of Alabama-based Colonial Bank — the sixth largest bank failure in U.S. history — after Colonial bought hundreds of millions of dollars in Taylor Bean mortgages that had already been sold to other investors.

Two other banks — Deutsche Bank and BNP Paribas — lost nearly $2 billion after buying corporate paper from Taylor Bean that was not properly backed with collateral, authorities said.

Taylor Bean and Colonial also tried to obtain more than $500 million from the government's Troubled Asset Relief Program but ultimately never received any funding from the program also known as TARP.

Neil Barofsky, who served as TARP's special inspector general, said the Taylor Bean case was the most significant criminal prosecution to arise out of the nation's financial crisis. The convictions of Farkas and Allen represent some of the most high-profile executives in the housing and financial industries to receive prison time in the aftermath of the housing sector meltdown.

Allen's lawyer argued for leniency on the theory that Allen was CEO in name only. The real mastermind was company chairman Lee Farkas, who kept Allen out of the loop on much of the company's day-to-day operations, according to trial testimony.

"Mr. Allen was not treated as a CEO. He did not function as a CEO," said defense lawyer Stephen Graeff. "Sentence Mr. Allen the man, not Mr. Allen the title."

But Brinkema said Allen's title was significant, adding Allen's reputation in the industry lent credibility to Taylor Bean that it otherwise would not have had. Even worse, Brinkema said, Allen had subordinates who were reporting the problems to Allen, but Allen left them to fend for themselves. One of those Taylor Bean employees, Sean Ragland, also was sentenced Friday to three months in prison and nine months of home detention for his role in the scheme.

"I can't understand why in the world you didn't stop it," Brinkema told Allen.

Allen, for his part, apologized to his family and to "the entire financial community."

By the time Allen became CEO in 2003, the fraud was already under way, and Taylor Bean owed more than $100 million to Colonial. Allen's part in the schemes, came later, especially in the commercial paper loans from Deutsche Bank and BNP Paribas that eventually grew to become the largest part of the fraud.

Ragland and Allen are the fifth and sixth persons to be sent to prison as part of the Taylor Bean-Colonial fraud, and investigators say the investigation is continuing. Sentences have ranged from three months to eight years.

All six received credit on their sentences for cooperating with investigators and testifying at Farkas' trial.

Farkas is to be sentenced next week, and prosecutors have indicated they will seek a significantly longer sentence for Farkas than for his co-conspirators.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(12) Homeless man gets 15 years for stealing $100

http://www.digitaljournal.com/article/265402

Digital Journal JAN 17, 2009

by Chris V. Thangham

A homeless man robbed a Louisiana bank and took a $100 bill. After feeling remorseful, he surrendered to police the next day. The judge sentenced him to 15 years in prison.

Roy Brown, 54, robbed the Capital One bank in Shreveport, Louisiana in December 2007. He approached the teller with one of his hands under his jacket and told her that it was a robbery.

The teller handed Brown three stacks of bill but he only took a single $100 bill and returned the remaining money back to her. He said that he was homeless and hungry and left the bank.

The next day he surrendered to the police voluntarily and told them that his mother didn't raise him that way.

Brown told the police he needed the money to stay at the detox center and had no other place to stay and was hungry.

In Caddo District Court, he pleaded guilty. The judge sentenced him to 15 years in prison for first degree robbery.



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