How to run an investment fraud the Madoff way

The NY Times posted an article this week entitled "How to Run a Financial Fraud" that outlined six steps to run an investment fraud (ala Bernie Madoff) and walk away relatively scott free -- considering you may have stolen billions of dollars. Of course the article doesn't condone the activities or even say that people should expect to get away with things, but it offers some interesting observations on how Madoff consciously did certain things to limit the collateral damage of the fraud for himself and his family. A thumbnail outline of the points made follow below.

1 - Avoid the six year lookback period for fraud
2 - Make substantial transfers to your friends and family
3 - Title your assets in the name of your spouse (preferably in Florida)
4 - Confess when before you get caught so you can control things
5 - Get arrested by the Feds, not the state.

You can read the whole store here at NY Times.

Image: Tracy O @ Flickr

At Least One Place Is Hiring

While I am not a huge fan of big government, it's nice to know at least one place has jobs for people who are looking. The pool of employers looking for recruits and work for those who hang on to their jobs is dwindling, but Uncle Sam has been on a hiring binge. Reports peg the number of open positions in the FBI alone at 3,000. That's a huge number by any count, but there are currently approximately 30,000 employees in the agency right now, so this represents approximately a 10% increase over its current level. The positions on FBIJobs.gov range from linguists, special agents and mechanics.

Are There Any Safe Investments Left In This Economy?

Maybe this is a sign of the new normal, but I have been searching in vain to find some safe investments to park money that earn a respectable amount of interest. Now I realize that with return comes risk and that nothing in this world is guaranteed, but aside from parking money in a CD that is yielding in the 2-3% range or a money market fund with an equally dismal rate of return, there are not a lot of options. I think the best places to park short term cash right now are FDIC insured online banking institutions. They offer much better rates of return than traditional brick and mortar outfits and more liquidity than treasuries or CD's. A quick Google search can return the usual suspects. As of the posting of this article the banks below were offering rates higher than the national average for 1 year CD's of 2.28%.

E*Trade Bank: 3.01% (no minimum deposit)
ING Direct: 2.5% (no minimum deposit)
FNBO: 2.6% (no minimum deposit)
Capital One: 2.64% (no minimum deposit)
HSBC Direct: 2.45% (no minimum deposit)

If you see any FDIC insured banks beating these rates or offering sign up specials please drop me an email at goldenparachuteblog@gmail.com or leave a comment on this post.

Never Get a Refund Check, The IRS (Kind of) Looking For You

Turns out mailing address errors or incorrect addresses made approximately 383,000 of last year's refund checks undeliverable. While the IRS isn't actually actively seeking out people who's checks were returned, you can still claim your check until Nov 28, 2008. If you haven't received a check go to www.irs.gov or call 866-234-2942 or you will likely miss out on your chance.

Link: WSJ - The IRS Wants to Give You Cash

Image: sekimura @ Flickr

Obama, McCain and Your Money, The Cheat Sheet

After reading a Wall Street Journal article today about the money related positions of Barack Obama and John McCain, I figured it might be helpful to make a cheat sheet about where each candidate stands on the issues. I won't attempt to give an in depth analysis on any of the topics, this is just a very, very, brief overview.

Income Taxes:

Obama: Wants tax cuts for middle class, increases for families making $250k+ and inviduals pulling down $200k+. Wants to extend Bush tax cuts, but raise the top rates to 36% and 39.6%. Get rid of taxes on the elderly making less than $50k/yr and give people earning less than $75k/yr a credit equal to about $500 each year. The top 1% would see an approximate $19k/yr increase in taxes.

McCain: Wants to permanently extend Bush tax cuts, raise personal exemptions for each dependent from $3,500 to $7,000 over a few years. Wants to keep top tax rate at 35%. The top 1% would see a cut of $125k+/yr.

Short-Term Economic Relief:

Obama: To jump start the economy he wants to give a $1,000 rebate to each family or $500 per individual. He also would like people be able to withdraw 15% of their 401k or IRA up to $10k penalty free.

McCain: Wants to cut the capital gains tax rate for stock held more than one year to 7.5% and would increase the amount of loss that is deductible on stock sales from $3k to $15k. Would cap withdrawals by seniors from IRAs and 401(k)'s no more than 10%

Estate Taxes / AMT:

Obama: Keep 2009 estate tax rates in effect, taxing only estates worth more than $3.5 million per person at 45% per person. A $5 million dollar estate would pay approximately $675k in taxes.

McCain: Wants flat 15% estate tax (currently at 45%) on estates valued at over $5 million. A $5 million dollar estate would pay NO taxes.

Health Care:

Obama: Require employers not offering coverage to kick in a percentage of payroll towards a national plan (note small businesses are exempt). Would try to set up a national exchange for health insurance.

McCain: Would replace the income-tax exemptions for insurance paid by employers with a refundable tax credit of $5k per family or $2,500 per individual.
Investments:
Obama: Would eliminate all capital gain taxes on start-ups and small businesses, but raise top rates on securities and dividends to 20% for families making more than $250,000 per year.

McCain: Keep the max capital gain rate at 15%

Retirement / Social Security:

Obama: Wants to institute a 2 - 4% payroll tax for earners of more than $250k to be paid by employees and employers together. Would be phased in over 10 years or more. Impliment a savers credit to match 50% of the first $1,000 of savings for families earning less than $75,000.
McCain: Privitize social security and allow younger workers to place a portion of their account in the market.

Image: jvumn @ Flickr