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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Wednesday, February 9, 2011

Goldman Sachs Takes Advantage of New Markets Tax Credit

The big banks, including Goldman Sachs, have found a way to take advantage of a development program introduced by President Bill Clinton in 2000 which was meant for developing poor communities. The federal subsidy will cost the taxpapers $10.1 billion. The Treasury controls these tax credits.

The excerpts below are from an article in Bloomberg by David Dietz:

Rich Take From Poor as U.S. Subsidy Law Funds Luxury Hotels
by David Dietz - Bloomberg

. . . .

Since 2003, some of the world’s biggest financial companies, including Goldman Sachs Group Inc., U.S. Bancorp, JPMorgan Chase and Prudential, have taken advantage of a federal subsidy that will cost taxpayers $10.1 billion -- and most of the public has never heard of it.

Investors have used the program, called New Markets Tax Credits, to help build more than 300 upscale projects, including hotels, condominiums, office buildings and a car museum, on streets far from poverty, according to Treasury Department records released through a federal Freedom of Information Act request.

Against Intent

Money spent on high-end development could have been used to build more than 1,000 job-training centers, medical clinics and schools. The program, endorsed by Republican Senator Rick Santorum and House Speaker Dennis Hastert and adopted by Congress, was signed into law by President Bill Clinton in 2000.

Building high-end commercial projects goes against the intent of the New Markets program, says Cliff Kellogg, a former senior policy adviser at the Treasury Department who helped design New Markets.

. . . .

Goldman targeted tracts on the upswing in Pittsburgh and Portland, Oregon, when the firm got its first New Markets investment authorizations in 2002. In Pittsburgh, $30.5 million of a $75 million Goldman investment authorization went to a shopping center in the East Liberty neighborhood.

The mall’s tract was in the midst of recovery with city renewal efforts that had already helped lure a Whole Foods Market Inc. grocery store.

Fees: $9 Million

Goldman brought in PNC Financial Services Group Inc., the sixth-largest U.S. bank by deposits, to help finance the project. PNC invested $30.5 million in equity and loans to receive $11.9 million in tax credits. The subsidy was $1.3 million more than PNC’s cash investment of $10.6 million.

Banks, lawyers and consultants took fees totaling $9 million -- 28 percent of the total project cost of $32.7 million, according to city records. Goldman’s share, for overseeing the project’s finances, will be $1.6 million over eight years, according to Goldman spokesman Stephen Cohen.

The tract had an individual poverty rate of 20 percent as of 2000, just enough to qualify. Family poverty was at 10 percent.

Read the full article here


Anonymous said...

The burying of the Financial Crisis Inquiry report

It has become a constant feature of American political life, however, that in the midst of criminality on a scale not seen before in US history, absolutely no one can be held accountable—no one within the economic and political elite, that is. From economic fraud on a monumental scale, to environmental disasters such as the BP oil spill, to the government-orchestrated violation of the most basic democratic and constitutional rights of the American people—the United States sends far more people to prison than any other country in the world, but the chief criminals are never prosecuted.

Indeed, in the wake of a crisis that is generally acknowledged to be the worst since the Great Depression, the only person who has been forced to serve jail-time is Bernie Madoff. He was sent to prison, moreover, not so much because he defrauded many people of a lot of money, but because he defrauded the wrong people and in the wrong way.

Such a culture of absolute impunity is one hallmark of a decaying aristocratic society. The corporate and financial elite is so embedded in criminal activity that the issue of responsibility can not even be broached, for fear that it will begin to unravel the entire stinking edifice.

Anonymous said...

50 Ways -- To Stash Money (Assets)

Goldman Sachs has 50, OK 23 established operations in the Cayman's. Sun burns, sand and turtles.......and suitcases of cash!

You would think with all these offices in the Cayman's , the Goldman folk would have some nice tans. Watch out for the turtles!

Anonymous said...

Alan Grayson On Mortgage Fraud (Lack Of) Accountability: "President Obama... Let These Crooks Off The Hook"

In essence, the former Florida Democrat said that it is none other than the President, who is the reason there have been no prosecutions on banks: " I am not only blaming the Obama administration, if the Bush administration had its head on straight they would have prevented a lot of these things from happening to start with. But the President Obama administration said at the beginning, we are going to look forward and not back and therefore in the process of making that decision basically let these crooks off the hook."

REP. GRAYSON: It’s actually worst than that. The same people who were committing fraud and crimes at Bear Stearns, they are now committing fraud and crimes at Bank of America, at Goldman Sachs and other institutions, because it turns out that crime does pay. It turns out that if you steal a large amount of money that leads to the collapse of your institutions, there’s jobs for you somewhere else.

DYLAN: What do you think Tim Geithner is so afraid would be found?

REP. GRAYSON: I don’t know but I am sure that Tim Geithner didn’t want the Fed audited because Tim Geithner didn’t want Tim Geithner audited, he worked for the New York Fed, led the New York Fed for years before he became Treasury Secretary — and frankly it sounded a bit self serving to me that he said that

Joyce said...

Thank you all for the links. Sad, sad day for the American people.

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