The money-transfer businesses, or casas de cambio, are commonly used by people in the U.S. to send money back to family members in Latin America, but the Justice Department suspects the popular businesses are also used by drug traffickers to shuttle money from U.S. drug sales to drug cartels in Mexico.

"Internal emails and documents filed in federal courts in Miami, Chicago and New York describe former ties between Wachovia and money-changing firms," the Journal said.
 
It said Miami court documents show that US agents have seized over 11 million dollars in 23 Wachovia accounts that belonged to the Mexican chain Casa de Cambio Puebla. US authorities suspected the money was the laundered funds of a drugs syndicate.
 
The probe into Wachovia is part of a larger investigation into money laundering by drug cartels through the money transfer firms that involves both US and Mexican authorities.

"Wachovia probed over drug-money laundering: report" [AFP]

RELATED
"Wachovia To Pay $144 Million For Bilking "Gullible" Seniors"
(Photo: Adam Cole)

Under the scam, telemarketers called unsuspecting seniors and pretended to update their Social Security or insurance information to knock loose private financial details. The scammers then used that personal data to write themselves $142 million worth of unsigned checks, which Wachovia gladly cashed.

Upon learning that one scammer's account received 4,500 complaints in a two-moth span, one Wachovia executive wrote in an email: "YIKES!!!! DOUBLE YIKES!!!! There is more, but nothing more that I want to put into a note."

Though Wachovia did not admit or deny wrongdoing, the investigation found that Wachovia, one of the country's largest banks, engaged in unsafe practices — failing to conduct suitable due diligence, failing to monitor accounts used by telemarketers and failing to follow normal procedures that would probably have uncovered the thefts.

The bank's actions were "part of a pattern of misconduct" that resulted in Wachovia's collecting millions of dollars in fees, regulators wrote.

Wachovia has agreed to pay a $10 million fine, contribute $8.9 million to consumer education programs and make restitution to victims that could top $125 million. In a statement, the bank said this "situation was unacceptable and we regret it happened."

Disturbingly, the government hasn't tackled unsigned checks, the root cause of this pernicious scam.

In 2005, attorneys general of 35 states urged the Federal Reserve to end the unsigned check system. But the Federal Reserve demurred.

"We really need these unsigned checks to be prohibited completely," said Mr. Miller, the Iowa attorney general. "There's still a lot of work to be done."

His celebrity could raise attention about tax defiance and deter protesters, said Assistant Atty. Gen. Nathan J. Hochman of the Justice Department's tax division.

"The three-year sentence Mr. Snipes received today sends a loud and crystal-clear message to the tax defier community that if they engage in this illegal conduct, they can and will go to jail," Hochman said.

Despite Snipes' claims that he was taken advantage of, Hochman said the actor was a "disciple" of the tax defiance movement who understood that his actions were illegal.

"It's more than just an accident. It occurred on numerous occasions over many different years," Hochman said. "This wasn't an innocent victim of 'jackals.' This is someone who willfully and knowingly participated."

Before his sentencing, Snipes told the judge that his wealth and celebrity attracted "wolves and jackals like flies are attracted to meat," and he called himself "well-intentioned but miseducated."

Snipes was convicted on three misdemeanor counts of failing to file tax returns for 1999-2001. His former "tax advisers," Douglas Rosile and Eddie Ray Kahn were respectively sentenced to 54 months and 10 years in jail.

The decision is a tragic setback for Tax Dog, and a reminder to always pay your taxes.

Wesley Snipes sentenced to 3 years in prison [L.A. Times]
(AP Photo/Phil Sandlin)

While it may not be obvious when a consumer receives such a high verdict, without attorney fee awards, most attorneys would not be able to bring lawsuits against credit reporting bureaus like Equifax, unscrupulous debt collectors, mortgage fraudsters, and other consumer predators. As the 11th Circuit said over two decades ago, "[t]he award of attorney fees, as a practical matter, is a critical and integral part of [the creation of a system of private attorneys general.]"

Alpha Consumer, who was at the hearing, recounts:

[Susan Wones of Denver said one] of her Chase credit cards jumped from a 14.9 to 25 percent interest rate after she got close to, but didn't exceed, her $6,000 credit limit. She said the interest rate on a second Chase card similarly shot up after she went $15 over her credit limit in the middle of a billing cycle, even though the beginning and ending balances were under the limit.

The NFL does not allow one team, in the midst of the fourth quarter, to unilaterally move their end zone 20 yards in their favor just because they don't like the point spread. The rules are laid out before the kickoff, and the umpires enforce the same rules for both home and visiting teams for the whole contest. It's time for legislation at the federal level that tells the credit card industry, "Game Over" to unilateral, one-sided, rule changes.

As a registered Republican, it has typically been my philosophy that business and commerce flourish and perform better with minimal government interference. However, when an industry sector proves time and again that it is unable to police itself and behave and engage in fair and ethical trade practices, legislative intervention is required.

"credit card abuses faced by our middle class families add insult to injury ...charging interest on penalty fees is wrong...contracts are totally incomprehensible...if this problem is going to be resolved it is going to be resolved here in Congress...The fed is looking at disclosures, it's (looking is) endless."

The Credit Cardholders' Bill of Rights is a wonder-packed piece of legislation that would:

• Ban arbitrary rate increases
• Force creditors to provide 45 days notice of any rate increase
• Ban double-cycle billing
• Empower cardholders to set limits on their cards and ban over-the-limit fees once that ceiling is reached
• Ban excessive fees
• Ban lending to subprime borrowers
• Require creditors to mail bills at least 25 days before the due date, instead of 14 days as currently required
• Require creditors to apply payments first towards high interest items

The Credit Cardholders' Bill of Rights: Providing New Protections for Consumers [House Financial Services Committee]
Live blog from credit card hearing [U.S. PIRG]
Credit Card vs. Consumer [Alpha Consumer]
HR 5244 - The Credit Cardholder's Bill Of Rights [THOMAS]
Write Your Senator
Write Your Representative
PREVIOUSLY: How To Write To Congress
Credit Card Victims Muzzled, Ordered To Release Financial Histories Before Sharing Their Experiences
(Photo: the illustrious untitled13)

Even when Drew called the companies that had issued him cards he had never applied for, the companies still sent him huge bills for items he never bought. And despite the fact that Richard Gibson, the hospital employee who stole his card, was convicted - the first in the nation under the Health Information Portability and Accountability Act - Drew's bad credit lingered for another two years.
 
Litigation is still pending with Bank of America, Chase, Citibank, Equifax and Experian.

The FTC alleged that consumers lured to ValueClick's Web sites by these promises were led through a maze of expensive and burdensome third-party offers - including car loans and satellite television subscriptions - which they were required to "participate in" at their own expense, in order to receive the promised "free" merchandise. The FTC charged that ValueClick's use of deceptively labeled e-mail offering free gifts and its failure to disclose that consumers must expend substantial sums of money to obtain the promised "free" merchandise violates the CAN-SPAM Act and the FTC Act.

The FTC also charged that ValueClick, Hi-Speed Media, and E-Babylon, misrepresented that they secured customers' sensitive financial information consistent with industry standards. The FTC alleged the companies published online privacy policies claiming they encrypted customer information, but either failed to encrypt the information at all or used a non-standard and insecure form of encryption. The agency also charged that several of the companies' e-commerce Web sites were vulnerable to SQL injection, a commonly known form of hacker attack, contrary to claims that the companies implemented reasonable security measures.

Countrywide is one of 14 companies being investigated over the past year by the FBI as it looks into how financial institutions packaged mortgages into securities.

The Times says it's unclear what sort of charges might be filed, but that as part of the larger investigation against the group of companies the FBI "is looking into possible accounting fraud, insider trading or other violations in connection with loans made to borrowers with weak, or subprime, credit."

"Countrywide Said to Be Subject of Federal Criminal Inquiry" [New York Times]
(Photo: Getty)

In case you think $2.5 billion could bankrupt the company, The Salt Lake Tribune points out that Exxon Mobile's profit in the last quarter of 2007 was $11.7 billion, and that "the award represents less than three weeks' worth of Exxon profit." (Update: Consumerist reader oeolycus points out that several newspapers are misrepresenting Exxon's profit: "Their NET INCOME was $11 billion. Net profit is closer to $5 billion.") In this case, "excessive" seems to be related to what Exxon claims is appropriate under maritime law. Additionally, Exxon says it's already paid "$3.4 billion in criminal fines, cleanup costs and compensation payments."

The punitive damages would be dispersed to about 33,000 Alaskans, and Exxon is seeking to cut the per-person award from $75,000 to $30,000.

The New York Times' coverage of yesterday's argument is somewhat exciting to read, with Justice Ginsberg—who sympathizes with the plaintiffs—subjecting "Exxon's lawyer, Walter Dellinger, to a rapid-fire series of questions about his central arguments," and arguing with him about maritime law from as far back as 1818. By contrast, the Exxon-sympathetic Justice Breyer argued over how much culpability a company should accept for its employees' actions:

"This is a very dramatic accident. It involves oil spills, and they cause an enormous amount of trouble. But there are accidents every day, and ships are filled with accidents."

Given that punitive damages have not been the normal rule in maritime cases, Justice Breyer continued, "then it will be a new world for the shipping industry and for those who work on the ships" if the courts begin to impose them. "What principles do you have to suggest, if any," the justice asked Mr. Fisher, "for creating a fair system that isn't just arbitrary?"

"Exxon Valdez payout could be cut in half" [AP via Salt Lake Tribune]
"Justices Take Up Battle Over Exxon Valdez " [New York Times]
(Photo: Jack Smith/Associated Press)

Warshak could face more than 20 years in prison, while his company, Berkeley Premium Nutraceuticals, may have to "forfeit tens of millions of dollars," according to the Associated Press. We don't have any info on the sentence his mom could receive.

Prosecutors claimed customers were bilked out of $100 million through a series of deceptive ads, manipulated credit card transactions and the company's refusal to accept returns or cancel orders. They said unauthorized credit card charges generated thousands of complaints over unordered products.

(Thanks to Ken!)

"Enzyte Maker Found Guilty of Fraud" [AP]

RELATED
Previous articles about Enzyte and Steve Warshak

Neither company bothered to send a lawyer to the hearing—although the day before the hearing, they contacted him with a settlement offer if he agreed not to discuss the case with the media—and last week Karantsalis won damages plus court fees for a total of $756.80.

Okay, so that's clearly not enough money to hurt either company—Sprint easily spends 50 times that every day giving lobotomies and tongue-bobs to Customer Service new hires—but we're impressed with Karantsalis' DIY approach to legal justice. As Evan Schuman notes in a related article, there are lots of ways you can define "winning" in a situation like this, but few of them can beat the odds of wrapping up a small claims case quickly and in your favor:

Is the objective to make the consumer whole, in the sense of getting them to the point financially where they would have been the data privacy booboo never happened?

Is it to make it much more likely that the wrong will never be repeated, sparing other consumers of the headache? Is it to make money for the consumer? Is it, dare I say, to make moneys for the law firms?

The recent TJX lawsuits, for example, could be said to have failed for their consumer plaintiffs on all of those objectives, other than making money for the law firms and even that money was rather paltry.

With this settlement publicized, will tens of thousands consumers now take these frequent breach notification letters and drive to their local small claims court? The onerous nature of a retailer having to defend against literally tens of thousands of virtually identical accusations was precisely the kind of situation that class-action lawsuits were supposed to eliminate. But the civil demands for financial losses create a crack for these cases to slip into.

(Thanks to econobiker!)

"The Librarian Wins In The Data Breach David Vs. Goliath Battle" [StorefrontBacktalk]

RELATED
"Sears, Where America Sues" [StorefrontBacktalk]
(Photo: Getty)

Here's what Senator Chuck Schumer (D-NY) had to say about the lawsuit:

"We all know that you can't always judge a book by its cover and the same is true with many used cars that end up at junk and salvage yards. Consumers deserve to know the true origin and condition of the vehicles they are purchasing, including whether that car was once stolen.

It is simple: for sixteen years, the Department of Justice and junk yards have been eschewing their responsibility to consumers, law enforcement, and the public by ignoring their mandate to routinely file the required reports. It is about time that all parties were forced to comply with what I believe is a common sense measure to fight auto theft and to protect the public from fraud. I am encouraged by Public Citizen's efforts on this case, and I hope that this important law will finally be enforced as it should have been from day one."

Consumer Groups Sue Justice Department Over Auto Database [CL&P]
(Photo:Senor Codo)

DSI... either directly or through its dealers failed to disclose or misled consumers about the cost of magazine packages and individual magazines, and made weekly cost representations even though consumers could not make weekly payments for the packages.

[It also failed to] tell consumers that their credit cards would be billed for membership in a buying club unless they called within 30 days to cancel, and its failure to provide consumers with information that would enable them to cancel.

"Court Affirms Ruling: Magazine Seller Will Pay More Than $7 Million" [Federal Trade Commission]
(Photo: Getty)

The Court found that Trudeau violated the permanent injunction when he misrepresented the contents of his book, "The Weight Loss Cure 'They' Don't Want You to Know About," in several infomercials. The permanent injunction banned Trudeau from using infomercials to sell any product, service, or program. The ban contained a narrow exemption for infomercials for books and other publications, but specifically required that Trudeau not misrepresent the content of the books.

His 2004 permanent injunction was caused by a calcium product he was peddling that he said could cure cancer, and an analgesic that he said could permanently cure pain.

The Court hasn't yet determined "the appropriate contempt remedy," so we'll wait anxiously to find out his new fate, although we figure if he ends up in prison it will look something like this:

"Federal Court Finds Kevin Trudeau in Civil Contempt" [Federal Trade Commission]

RELATED
"'Easy-To-Follow' Diet Requires Injections, Colonics, And More"

The 375 pounds of seized illegal cheese included panela, queso fresco and queso oxaca varieties, the [California Department of Food and Agriculture] says. It was a significant find, the department says.

"Illegally produced is cheese is serious threat to public health," says CDFA Secretary A.G. Kawamura.

Arrests drain bathtub cheese sellers [Central Valley Business Times via BarfBlog]
(Photo: jthorvath)

A new Cornell study shows that, on appeal, Plaintiffs are far more likely to lose than Defendants, including in areas like product liability, malpractice, real estate, and more. Overall, "[D]efendants were far more likely than plaintiffs (41.5% versus 21.5%) to successfully reverse an adverse trial outcome. Indeed, from the perspective of a plaintiff victorious at trial, the appeals process offered a chance to retain victory not far from what a coin-flip would predict." (Emphasis added.)

Here's the full breakdown:

Now, think back to all those "outrageous" jury verdicts you've heard of. Chances are, the appellate court tossed them on appeal. This is probably good news if you support tort reform. (Maybe now you can rest easy for a job well done.) But it isn't very good news for wronged consumers seeking redress in the courts. Plaintiffs beware. — SAM GLOVER

[via Tortdeform]

Robertson said the attorney said WalMart was afraid "that people might try to run [the shoplifters] down or throw something at them.''

Wal-Mart: No shoplifters, even the kind with signs [AP]
PREVIOUSLY: Judge Orders Shoplifters To Wear Signs Reading "I Am A Thief I Stole From Walmart"
(Photo: Dave Hyatt, The Gadsden Times via AP and USA Today)

Lest you think that this sort of justice is not welcome at the store, let it be knows that the Walmart is all for it.

"Maybe they'll think twice about doing it," the store manager tells The Gadsden Times.

And what will happen to the signs when they're done, you ask? The Walmart is keeping them available for use by future thieves. There's something sort of Die Hard 3 about the whole thing, don't you think? —MEGHANN MARCO

Sentence: Wear a sign that says 'I AM A THIEF' [USAToday]
(Photo: Dave Hyatt, The Gadsden Times via AP and USA Today)

However, under the new rules enacted Tuesday, federal prosecutors...

1:

Fine and good. Attorney-Client privilege is sacrosanct and its protection should not be penalized.

2:

Ambivalent. On the one hand, it's noble for an innocent company to stand behind its employees. On the other, it's clear that a guilty company could be leverage its resources to unduly protect its interests. Perhaps too the company-paid lawyers would defend in a way that favored the company over the employee. Not to mention a strong parallel with a little thing called "hush money."

In the wake of recent and rampant corporate improprieties, do corporations really need protection?

In limited instances, like particular overreaches by the Thompson memorandum, yes, if we want to preserve what we're prosecuting in the first place: Justice. — BEN POPKEN

U.S. Moves to Restrain Prosecutors [NYT]

Previously: Senator Wants Corporate-Wrongdoing Rules Eased

"We sincerely hope that, in light of governing law and the national security concerns implicated by the requests for information, you will decline to open an investigation and close these proceedings, thereby avoiding litigation over the matter," the letter reads.

Let's see how well Maine lives up to its state motto of Dirigo, Latin for "I direct" or "I lead."

(Thanks to Jpac!)

Early Saturday morning, in the darkest hours of the night, the Department of Justice made good its threat to file a motion to dismiss our class-action lawsuit against AT&T, contending that AT&T's collaboration with the NSA's massive and illegal program to wiretap and data-mine Americans' communications (which violates the law and the privacy of its customers)—despite being front page news throughout the United States and the subject of government press conferences and Congressional hearings—is a state secret. The motion was accompanied by declarations by Lieutenant General Keith B. Alexander, Director, National Security Agency and John D. Negroponte, Director of National Intelligence. We will vigorously oppose this motion. Donate to EFF and help stop the illegal spying!

We hate to sound alarmist, but when something being top secret is the only defense necessary to dismiss questions of legality, it's time to move abroad. Luckily, half of The Consumerist's 'royal we' duumvirate did that five years ago... mostly because he likes making out with Eastern European girls.

DOJ Moves to Dismiss AT&T Class Action under Cover of Night [EFF]

In his book "Cracking the Code" and on his website, Peter Eric Hendrickson, pictured in a polo shirt bearing the patch he designed, posits that just a twiddle bit of your income is taxable.

"The government has no claim against those dollars unless the government obtains a sworn statement from us that we have income as defined in the law," said Hendrickson. The federal courts have rejected these arguments. Typical.

Five followers of Hendrickson's teachings are being sued by the Justice Department for tax evasion. "Mr. Golson and his wife, Debra, wrote on their 2003 tax return that "for fear of I.R.S. retaliation," Cisco Systems, his employer, "refuses to issue forms correctly listing" his $241,840 Cisco salary as not subject to tax," reports the NYT.

The couple has a history of tax hatin'. In 1990 they mailed a bomb filled with tea, referencing the Boston Tea Party, to the IRS. It went kaboom and gave a postal worker a big booboo.

"U.S. Seeks Order to End What It Calls a Tax Scheme" [NYT]

Earlier studies by the Federal Trade Commission estimated 9.3 million such victims in 2004 and 10.1 million in 2003.

The Justice Department said the different results could be attributed to different data collection methods, time considered and counting methods.

The disparity of seven million lead the AP to headline the story, "Government Report Finds Fewer ID Theft Victims."

[via AP Newswire] (Thanks to Andrew!)

The Currency Comptroller routinely goes double-dildo with national banks to undermine state s consumer protection laws.

The FDA lip-synced a legal opinion last month proclaiming that FDA approved labels should give pill companies carte blanche from most suiture.

The Justice Department helped industry groups kill a pollution-control rule in Southern California requiring cleaner-running buses, garbage trucks and other fleet vehicles. It s a trash wagon, it s supposed to be dirty, said the lobbyists before diving into a pool of gold coins. And buses are for poor people. Who wants to remind them they can t afford a shower?

Greve, an American Enterprise Institute scholar...said well-connected industry law firms were part of a policy network providing legal and political rationale for the effort.

He called them "a merry band of Washington lawyers who know how to push the buttons" and "get things done."

Industries Get Quiet Protection From Lawsuits [LA Times] (Thanks to Lysa!)