Hundreds of Long Island Rail Road employees have found a way to be a part of the $1 billion fraud. They have cheated there way to making money and not going to work. These employees were paying off their doctors to say that they were unable to work due to disabilities. However, these disable retirees were said to be seen playing tennis, shoveling snow, and working out in the gym for several hours.
Eleven of the doctors, including an orthopedist and a former union official were charged with "conspiracy in a decade long fraud" that had corrupted the pension system used by the employees. Hundreds of retired rail road workers declared themselves disabled to collect more money between the ages of 50 to 65.
One worker who complained of having severe hand, knee, shoulder, and back pain. While complaining of having this severe pain he was reportedly playing tennis and golf often. This individual was collecting $105,000 yearly, between his pension and disability payments. Another employee who reported similarly the same symptoms was seen shoveling snow for several hours and was collecting $108,000 in both pension and disability payments.
The complaint said that many workers who retired with disability payments worked an extremely high amount of overtime within 5 years before retiring. That is because this is when pension funds begin being calculated. The complaint also said that employees lied about their physical condition so that they can retire at an earlier age and receive the same salary as when they are working.
Prior to 2008, three doctors were responsible for 86% of the disability applicants. These doctors received between $800 and $1200 from each patient as they built up these cases by prescribing unnecessary therapies. This showed that these employees were unable to work and allowed them to collect disability payments.
This complaint was written by a special agent from the Office of the Inspector General for the federal Rail Road Retirement board. He estimated that "the fraudulent scheme could cause the RRB to pay unwarranted occupational disability benefits exceeding $1 billion if disbursed in full."
The complaint stated that 61% of these employees were between the ages of 50 to 55 during the years 2004 and 2008. This was a criminal investigation prompted by a 2008 New York Times investigation. During this investigation, Governor Andrew Cuomo said that "These arrests continue to show that we have zero tolerance for waste and fraud when it comes to pension systems."
These employees were cheating the system for several years and it is about time they were caught.
Thursday, October 27, 2011
Tuesday, October 11, 2011
Morningstar a Ponzi Scheme
When investors seek to take on more investments they will often look for the best company to do this with. Many investors will turn to Morningstar for this advice. However, it is believed that some think that Morningstar is giving false advice.
A lawsuit has been filed against Morningstar as a result of Morningstar being "reckless in giving a five-star rating to hedge a fund later." As a result of this the Securities and Exchange Commission labeled this a Ponzi scheme. If Morningstar had given a reasonable thought before giving a five-star rating, they would have noticed that a lower rating was necessary or no rating at all.
Morningstar is a company located in Chicago and for many years has been able to influence investors. Research has shown that Morningstar has been giving funds a higher rating than the firm actually deserves. In turn fund companies are taking these five-star ratings to help market there company as being a highly rated company.
Unlike mutual funds, hedge funds are not required to make standard public disclosures, which results in them being much less transparent. Morningstar rates these hedge funds based off of "self-reported data" as well as the firms acknowledgement. They will flag a fund when that fund begins to fall below certain standards, such as the use of a reputable independent auditor.
Morningstar is legally responsible to disclose information on why the fund received the rating it did. They do not need to audit the funds unless they promised that they would. This case is brought to court because it is believed Morningstar knew they were providing false information and continued with it.
Instead of Morningstar investing the money as they had promised, they operated as a Ponzi scheme. They used this money for personal expenses such as the defendent's luxary yacht rental and other unrelated things.
With this being said, it is important for investor's to be extremely cautious in the "less-than-transparent world of hedge funds." Those seeking to invest should go above and beyond ratings from Morningstar and do some research themselves. This can be done by requesting a standard due dilgence form from the fund firm. This form is known as Alternative Investment Management Association and provides a list of questions to be answered by the managers. Some of these questions include things like references of experience, team experience, and fees and contact information that would be helpful for the auditor.
Investor's should also request a copy of the fund's recently performed audits and make sure that an unqualified opinion has been provided by a well known auditing firm. They can also call the bank that holds funds money and be sure that they fund has a assets that it says it does. Investors should be very careful when using a hedge-fund firm.
A lawsuit has been filed against Morningstar as a result of Morningstar being "reckless in giving a five-star rating to hedge a fund later." As a result of this the Securities and Exchange Commission labeled this a Ponzi scheme. If Morningstar had given a reasonable thought before giving a five-star rating, they would have noticed that a lower rating was necessary or no rating at all.
Morningstar is a company located in Chicago and for many years has been able to influence investors. Research has shown that Morningstar has been giving funds a higher rating than the firm actually deserves. In turn fund companies are taking these five-star ratings to help market there company as being a highly rated company.
Unlike mutual funds, hedge funds are not required to make standard public disclosures, which results in them being much less transparent. Morningstar rates these hedge funds based off of "self-reported data" as well as the firms acknowledgement. They will flag a fund when that fund begins to fall below certain standards, such as the use of a reputable independent auditor.
Morningstar is legally responsible to disclose information on why the fund received the rating it did. They do not need to audit the funds unless they promised that they would. This case is brought to court because it is believed Morningstar knew they were providing false information and continued with it.
Instead of Morningstar investing the money as they had promised, they operated as a Ponzi scheme. They used this money for personal expenses such as the defendent's luxary yacht rental and other unrelated things.
With this being said, it is important for investor's to be extremely cautious in the "less-than-transparent world of hedge funds." Those seeking to invest should go above and beyond ratings from Morningstar and do some research themselves. This can be done by requesting a standard due dilgence form from the fund firm. This form is known as Alternative Investment Management Association and provides a list of questions to be answered by the managers. Some of these questions include things like references of experience, team experience, and fees and contact information that would be helpful for the auditor.
Investor's should also request a copy of the fund's recently performed audits and make sure that an unqualified opinion has been provided by a well known auditing firm. They can also call the bank that holds funds money and be sure that they fund has a assets that it says it does. Investors should be very careful when using a hedge-fund firm.
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