1/24/17

Here’s What $20M Cash Stuffed Inside A Box Spring Looks Like

It is a rule universally acknowledged in crime writing that if you stash your ill-gotten gains under the mattress, someone is eventually going to find it. Just like the $20 million in cash hidden in a box spring that federal agents found in Massachusetts this week.

The U.S. Attorney’s Office in Massachusetts says the cash was seized on Monday, and a Brazilian man was arrested and accused of conspiring to launder proceeds of a massive alleged pyramid scheme.

He was charged with one count of conspiring to commit money laundering related to the alleged TelexFree pyramid scheme: the company purportedly sold VOIP telephone service, but prosecutors said instead it made most of its revenue from people buying into the company with promised payouts for posting online ads. Those folks were then allegedly paid with money from new recruits.

Back in April 2014, federal investigators searched TelexFree’s headquarters in Marlborough, MA. One of the founders of the company allegedly fled to his native country of Brazil and remained there, investigators say. He and the company’s co-founder were indicted in July 2014 on charges that they operated TelexFree as a massive pyramid scheme. The co-founder pleaded guilty to those charges in Oct. 2016 and is awaiting sentencing.

In the meantime, prosecutors claim that the other founder had an intermediary working on his behalf who contacted an associate for help transferring millions of dollars of TelexFree money hidden in the Boston area to Brazil.

That associate then became a cooperating witness for the government, and allegedly arranged to launder the cash through Hong Kong, convert it to Brazilian reals, and then transfer it to Brazilian accounts. According to court documents, the accused intermediary flew from Brazil to New York City a few days ago. On Sunday, he met with the cooperating witness and allegedly gave him $2.2 million in a suitcase. Agents followed the man and the suitcase back to an apartment complex and later arrested him. They later searched an apartment at the complex and seize the massive stockpile of cash.

Hey, now seems like a good time to brush up on the basics of a pyramid scheme! First of all, it’s illegal. And unlike a legitimate multi-level marketing plan, where the money you earn for participating is based on sales to the public, your income is based mainly on the number of people you recruit, the Federal Trade Commission notes, and the money those new recruits pay to join the company.

It’s worth noting that while multi-level marketing campaigns are legal, John Oliver, for one, is not a fan.

Although the alleged TelexFree pyramid scheme was originally aimed at Brazilian immigrants in Massachusetts, authorities allege that almost one million people around the world were swindled out of nearly $1.8 billion. That’s a lot to hide in box springs.

CitiFinancial, CitiMortgage To Pay $28.8M Over Mortgage Servicing Issues

Millions of consumers lost their homes when the housing market bubble burst. But federal regulators say some of those people may have been able to stay in their homes had mortgage lenders fulfilled their requirements. To that end, the Consumer Financial Protection Bureau has ordered two Citigroup subsidiaries to pay $28.8 million to resolve allegations that some of its mortgage units harmed home borrowers. 

The CFPB announced Monday that CitiMortgage [PDF] and CitiFinancial Services [PDF] will pay fines and restitution to thousands of customers who were allegedly not made aware of their options to avoid foreclosure.

In all, CitiMortgage must pay $17 million to consumers and pay a civil penalty of $3 million, while CitiFinancial Services must refund approximately $4.4 million to consumers and pay a civil penalty of $4.4 million.

According to the CFPB complaint, the subsidiaries gave customers struggling to make mortgage payments the runaround when it came to trying to save their homes.

For example, CitiFinancial Servicing — which collects payments from borrowers for loans it originates and handles customer service, collections, loan modifications, and foreclosures — failed to consider a borrower’s application for deferred payment as a request for foreclosure relief options, the CFPB alleges.

Requests for foreclosure relief trigger protections required by CFPB mortgage servicing rules, that include helping borrowers complete their applications and considering them for all available foreclosure relief alternatives.

In the case that CitiFinancial did allow customers to defer payments, the CFPB claims, the subsidiary did not provide borrowers with information on how that would affect their future payment. Specifically, the company did not notify borrowers that the deferred amounts would become due when the deferment ended.

Additionally, the CFPB alleges that CitiFinancial charges customers for credit insurance — which cover a home loan if the borrower couldn’t make a payment — despite the fact that the insurance should have been canceled.

From July 2011 to April 30, 2015, the CFPB claims that 7,800 borrowers paid for credit insurance that CitiFinancial Servicing should have canceled based on the terms that insurance would not be applicable if the borrower had missed four or more monthly payments.

As for CitiMortgage, the CFPB complaint alleges that the subsidiary failed to help consumers looking for assistance in making their mortgage payments.

Instead, the Bureau alleges that when customers asked for help, CitiMortgage requested borrowers provide dozens of documents and forms that had no bearing on the application for foreclosure relief or that the consumer had already provided.

In 2014 alone, the CFPB claims that CitiMortgage sent 41,000 borrowers letters requesting unneeded documents with descriptions such as “teacher contract,” and “Social Security award letter.”

In addition to paying fines and refunds, CitiFinancial and CitiMortgage must clearly provide customers with information on what documents are needed for foreclosure relief, and provide terms for deferments upfront.

Pricey Wearable Baby Monitors May Be Better At Giving Parents Anxiety Than Monitoring Babies

Raising a baby can be pretty nerve-wracking, especially for first-time parents. Babies make weird sounds, do bizarre things, and can’t describe when something’s actually wrong. Meanwhile, it’s 2017 and our solution to basically every old problem is: “Have you tried throwing new technology at it?”

And so we have a whole industry of “smart,” connected, smartphone-app-using baby monitors that can tell you junior’s every heartbeat and breath… but expert scientists say these devices are effectively useless, and may cause parents to panic more than they should.

That’s the upshot of a review published in the Journal of American Medical Association today. At the very least, the authors found, there’s no scientific evidence that the devices do anything useful, and they may even do some tangible harm by making parents freak out without cause.

The devices the authors specifically call out are smartphone-linked wearables, like smart socks, onesies, diaper clips, and more. They measure babies’ biometrics — respiration, pulse rate, blood oxygen, and the like — and send those measurements to parents’ apps.

Specifically, the authors cite the Baby Vida, MonBaby, Owlet, Snuza Pico, and Sprouting wearables, which cost anywhere from $150 to $300 each.

The idea is that if you’re in the next room over while your baby is napping, you can simply look at your phone for reassurance that your baby is still breathing without you staring at them.

The devices are not regulated by the FDA, researchers point out, and in order to stay that way (and presumably, also avoid problems with the Federal Trade Commission) they don’t make specific claims about their ability to prevent sudden infant death or distress.

Owlet, for example, says, “We can’t promise to prevent SIDS right now, it’s an unknown issue but… we believe notifying parents when something’s wrong maybe can help.”

That’s similar to Baby Vida, which states in its marketing, “What sound does your baby make if he or she stops breathing?”

New parents, often sleep-deprived and navigating a haze of contradictory advice from well-intentioned sources, are particularly susceptible to doing everything they can “just in case.”

“These devices are marketed aggressively to parents of healthy babies, promising peace of mind about their child’s cardiorespiratory health,” pediatrician Dr. Christopher P. Bonafide, with the Children’s Hospital of Philadelphia, said. “But there is no evidence that these consumer infant physiological monitors are life-saving or even accurate, and these products may cause unnecessary fear, uncertainty and self-doubt in parents.”

For starters, the authors note that nobody actually knows if the apps even work properly. Wearable sensor tech may not be entirely accurate for adults, let alone kids.

One blood pressure app, the authors write, inaccurately told nearly 80% of participants with hypertension that their blood pressure was in the normal range.

So what can be done? Well first, the FDA could step in and categorize these wearable, app-using sensors as medical devices, the authors suggest. That would mean they have to hit certain thresholds for accuracy and function or else face regulators’ wrath.

Barring that, the authors suggest, scientists should get to work and start testing the heck out of these devices. Results should be published “either independently or in partnership with patient safety organizations or the device companies,” the authors suggest.

Either way, the safety, effectiveness, and accuracy of wearables needs to be measured and shared so parents can make informed decisions.

Okay, you may be thinking, so it doesn’t help — but does it actually hurt anyone to clip a sensor on your kid that measures pulse and respiration?

The authors suggest that it does: “By continuously monitoring healthy infants, parents will inevitably experience some alarms for conditions that are not life-threatening.”

Parents, being deeply concerned about their offspring and usually not trained medical professionals, may overreact to both false-positive readings and “true-positive alarms for events that are not clinically important,” the authors note.

Real babies are variable and their stats might occasionally, and totally normally, drop below “ideal” stats. You don’t know that your sleeping child’s oxygen desaturation is under 80% for a few minutes if you’re just watching them, for example, but if there’s a monitor on their ankle, your phone will go off like gangbusters, and you’re likely to worry.

That can lead to over-diagnosis, the authors note, which is one color in the rainbow of potential problems.

For example, say a phone monitor goes off, signaling low pulse oximetry. While that’s resolved on its own a few minutes later, worried parents have whisked their kid to an ER, where the confused baby undergoes a whole battery of tests… just to end up with results showing that the tests are coming back fine or that results are inconclusive. In the end, everyone’s spent a bunch of money just to come home without answers, and still worried that their kid’s life is at risk.

The authors conclude that for now, nobody should be recommending infant wearable devices to parents of healthy kids.

“Their performance characteristics are unknown to the public and there are no medical indications for their use,” the authors conclude. “There is no evidence that consumer infant physiologic monitors are life-saving, and there is potential for harm if parents choose to use them.”

For now, “child and family advocates should make it clear to the FDA and policy makers that regulatory guidance and research” on high-tech baby monitors is needed, to make sure that they actually do what they say — and that what they claim to do is actually beneficial.

Mall Owners Let Properties Go Into Foreclosure, Walk Away

It’s not hard to believe that the owners of malls might be looking to get out of the mall business. Developing shopping centers may have looked like a solid investment for most of the last 60 years or so, but now owners are calculating that it’s better to let them go into foreclosure than to try keeping them open.

“There have been some draconian losses for the enclosed mall business,” the managing principal of a property company told The Wall Street Journal. He happens to have bought five bank-owned malls in foreclosure sales in the last year.

If you’re starting to think that this sounds a lot like the foreclosure crisis in family homes of almost a decade ago, you’re not wrong: mall landlords are doing the equivalent of mailing in their house keys and walking away from their homes.

Even Simon Property Group, a major national mall operator and innovator in the field of staying open on Thanksgiving Day, let a loan go into default at the beginning of 2016, letting the mall in Worcester, MA, that secured it go into foreclosure.

While the economy is doing better on the whole, default rates for malls are going up, reflecting the bigger reality that consumers are shifting more of our shopping online, and will need something other than retail to persuade them to visit a mall. Maybe try restaurants, medical offices, or megachurches.