Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-63544 Sat, 20 Jan 2018 17:34:38 GMT Jersey Shore's Mike Sorrentino AKA The Situation Pleads Guilty To Tax Evasion http://implode-explode.com/viewnews/2018-01-20_JerseyShoresMikeSorrentinoAKATheSituationPleadsGuiltyToTaxEvasio.html iehi-feed-63543 Sat, 20 Jan 2018 16:38:53 GMT Felony Lane Gang Leader Indicted For ID Theft and Bank Fraud http://implode-explode.com/viewnews/2018-01-20_FelonyLaneGangLeaderIndictedForIDTheftandBankFraud.html iehi-feed-63541 Sat, 20 Jan 2018 01:41:53 GMT Kushner's Deutsche Bank-Backed Times Square Property Stung by Tenant Troubles http://implode-explode.com/viewnews/2018-01-19_KushnersDeutscheBankBackedTimesSquarePropertyStungbyTenantTroubl.html In a six-floor retail space near Times Square, the Guy Fieri restaurant has closed and construction hasn't begun on celebrity chef Todd English's food hall. A tourist attraction featuring a 1/87th scale model of New York City was behind on rent for two months as of December, according to loan documents. It wasn't supposed to be this way.

When Kushner Cos. bought the property for $296 million in 2015, then-Chief Executive Officer Jared Kushner had big plans to capitalize on the tens of millions of tourists who visit the area every year. Deutsche Bank AG financed the endeavor before selling most of the debt to investors across Wall Street a year ago. Those investors were shown disclosures describing the retail space as 100 percent occupied and estimating it would throw off $24 million of rent annually.

But Fieri, English and Gulliver's Gate, the operator of the miniature Manhattan, account for $9.9 million of that rent estimate, which underpinned a market-defying appraisal boost and helped justify $370 million of loans, the disclosures show. Problems with these spaces could make the economics challenging.

Last year, New York prosecutors requested documents from Deutsche Bank related to the property, where the Kushners used the debt to take out $59 million in cash. It isn't clear what prosecutors are looking for. But mortgages granted under generous financial assumptions then sold to others who will bear the risk have piqued their interest in other cases. A spokesman for the Brooklyn U.S. Attorney declined to comment, as did a spokesman for Deutsche Bank.

...

Gulliver's Gate was cited due to a technicality and payments were only a few days late, she said. The company has a letter of intent for the Fieri space from a prestigious tenant at a higher rent, and the operator of the food hall is making final adjustments to its plan, she added, saying the changes are increasing the value of the property and will attract more visitors. A spokeswoman for Gulliver's Gate said that it "is up to date on their rent and paid in full on their lease" and there are "no concerns" about its future there.

...

Even if they were brief, the missed payments by Gulliver's Gate, the second most lucrative tenant, triggered a clause in the Kushners' loan documents allowing creditors to demand any excess cash from the property until the problem was resolved, according to reports from debt servicers. Managers also put the retail space on watch lists for potentially troubled debt because it lost money for nine months through September 2017 after accounting for interest payments, the reports show. That's because new tenants were given millions in free rent, a common tactic used to fill store spaces. Kushner Cos. set aside $11 million of the loans for the free rent. Disclosures don't describe that figure as including funds for vacancies.

...

In truth, maintaining full occupancy looked tough from the start. When the debt was sold to investors, the 500-seat Guy's American Kitchen & Bar had been beset by negative reviews, and Todd English and his partners hadn't yet taken possession of the space for his food hall. The chef, who has pulled out of another project, was scheduled to open for business there last April. Gulliver's Gate, reportedly a $40 million endeavor, had not yet opened and was an untried competitor amid the glitz of Times Square.

...

When Kushner Cos. bought the property in 2015 from Africa-Israel, the distressed firm of Russian diamond magnate Lev Leviev, online retailers were ascendant, and the future of brick-and-mortar stores was uncertain. So filling the property with tenants offering experiences seemed smart.

...

The expected surge in income preceded a new appraisal in October 2016 at $445 million plus additional cash in accounts, indicating a stunning growth in value that far outstripped the broader Manhattan retail market, which had suffered a slowdown. Against that valuation, the $370 million of loans represented only 83 percent of the value, the investor disclosures showed. But Moody's and Kroll, the risk-assessment firm, found in independent calculations that the loans exceeded the value.

...

The situation might get worse before it gets better. In an October legal complaint against the Plaza Hotel, which contains a Todd English restaurant, the chef is accused of sexual harassment. In November, S&P downgraded the debt of another tenant, Guitar Center, saying it thought a potential debt restructuring could occur in the next six months, "a transaction that we would view as tantamount to a default." A Guitar Center spokeswoman declined to comment.

]]>
iehi-feed-63539 Fri, 19 Jan 2018 22:39:05 GMT U.S. CFTC sues three virtual currency operators for fraud http://implode-explode.com/viewnews/2018-01-19_USCFTCsuesthreevirtualcurrencyoperatorsforfraud.html The U.S. derivatives watchdog said on Friday that it has filed charges against three separate virtual currency operators alleging the defendants had defrauded customers and broken other commodity trading rules, in a further sign regulators globally are cracking down on the emerging asset class.

...

The CFTC charged New York resident Patrick McDonnell and his company CabbageTech with stealing money from customers that he had solicited for providing virtual-currency trading and other services.

In the second case the CFTC alleged Dillon Michael Dean of Colorado and his UK-registered company Entrepreneurs Headquarters Ltd operated a Ponzi scheme in which he solicited $1.1 million in bitcoin from more than 600 investors, promising them that their cash would be pooled and invested.

Not that there aren't sketchy crypto schemes out there, and outright scams -- but we all know the regulators have to "take some scalps" to quell public concern about "bubbles" (not in the stock or real estate markets, of course), as well as for "allowing" any crypto financial products in the first place...

]]>
iehi-feed-63535 Thu, 18 Jan 2018 18:54:40 GMT Weirdly-Evasive Hedge Fund Expat Browder is All Over Simpson Russia Testimony... And No One Notices http://implode-explode.com/viewnews/2018-01-18_WeirdlyEvasiveHedgeFundExpatBrowderisAllOverSimpsonRussiaTestimo.html iehi-feed-63533 Thu, 18 Jan 2018 04:54:46 GMT Ataris Bassist Michael Davenport Accused Of Running $27M Fraud Scheme http://implode-explode.com/viewnews/2018-01-17_AtarisBassistMichaelDavenportAccusedOfRunning27MFraudScheme.html iehi-feed-63531 Tue, 16 Jan 2018 22:43:48 GMT BofA Tops IBM, Payments Firms With Most Blockchain Patents http://implode-explode.com/viewnews/2018-01-16_BofATopsIBMPaymentsFirmsWithMostBlockchainPatents.html Bank of America Corp. may not be willing to help customers invest in Bitcoin, but that doesn't mean it isn't plowing into the technology underlying the cryptocurrency.

The Charlotte, North Carolina-based lender has applied for or received at least 43 patents for blockchain, the ledger technology used for verifying and recording transactions that's at the heart of virtual currencies. It is the largest number among major banks and technology companies, according to a study by EnvisionIP, a New York-based law firm that specializes in analyses of intellectual property.

"Based on what's publicly out there, the technology sector hasn't embraced blockchain as much as the financial-services industry," Maulin Shah, managing attorney for EnvisionIP, said in an interview.

International Business Machines Corp., which has targeted blockchain and artificial intelligence for future growth, tied with Mastercard Inc. for second on the list, with 27 each.

]]>
iehi-feed-63530 Tue, 16 Jan 2018 16:16:17 GMT Citigroup Plays Up Investor Payouts Once Tax Cuts Trigger Profits http://implode-explode.com/viewnews/2018-01-16_CitigroupPlaysUpInvestorPayoutsOnceTaxCutsTriggerProfits.html As big U.S. banks weigh how to divvy up their windfall from a massive U.S. tax cut, Citigroup Inc.'s approach appears to be set: Shower profits on investors. Lower tax rates mean the bank can stick to its multiyear plan to pay out at least $60 billion in capital to shareholders even after booking a larger-than-forecast charge of $22 billion to adjust to the new tax regime, the bank said Tuesday. Executives had braced investors last month for a $20 billion hit.

Banks face competing demands for a slice of the gains -- potentially raising pay for staff, cutting prices for clients or plowing more into charity. Wells Fargo & Co. executives said last week they'll boost donations to a philanthropic foundation, while JPMorgan Chase & Co. leaders said they're working on a plan to share the tax savings. Citigroup's statement announcing quarterly results only called out the cash coming investors' way.

...

The bank took a bigger up-front hit from the changes because it had been sitting on a massive pile of deferred-tax assets -- a form of IOU that cuts tax bills. The company had accrued them by suffering losses during the financial crisis, then long touted them as a way to burnish future payouts to investors. But the tax overhaul wiped out almost half of their value.

]]>
iehi-feed-63527 Tue, 16 Jan 2018 16:10:08 GMT Bitcoin, rival cryptocurrencies plunge on crackdown fears http://implode-explode.com/viewnews/2018-01-16_Bitcoinrivalcryptocurrenciesplungeoncrackdownfears.html Bitcoin slid as much as 18 percent on Tuesday to a four-week low, as fears of a regulatory crackdown on the market spread after reports suggested it was still possible that South Korea could ban trading in cryptocurrencies.

...

That came amid news that a senior Chinese central banker had said authorities should ban centralised trading of virtual currencies and prohibit individuals and businesses from providing related services.

China shut down exchanges operating on the mainland last year - a move that also sparked a selloff, though the market later recovered.

"It's mainly been regulatory issues which are haunting (bitcoin), with news around South Korea's further crackdown on trading the driver today," said Think Markets chief strategist Naeem Aslam, who holds what he described as "substantial" amounts of bitcoin, Ethereum and Ripple.

"But we maintain our stance. We do not think that the complete banning of cryptocurrencies is possible," he said.

]]>
iehi-feed-63525 Mon, 15 Jan 2018 20:06:17 GMT Blame the deluded board members for Carillion's collapse http://implode-explode.com/viewnews/2018-01-15_BlamethedeludedboardmembersforCarillionscollapse.html ... the hard fact is that Carillion directors were boasting in March last year of having "substantial liquidity with some £1.5bn of available funding" yet the company ran out of money 10 months later.

That suggests delusion in the boardroom on a grand scale. Hedge funds, looking from outside and betting on the shares going south, seem to have had a better grasp of Carillion's financial distress than the insiders.

...

In the end, it comes down to judgments made in the boardroom. Carillion, outrageously, was declaring a fatter dividend for shareholders only last spring. Given what we know now, the correct action would have been to go to those investors and ask for a big injection of capital via a rights issue. Half the board would have had to resign, but an over-stretched balance sheet might have been repaired. Instead Carillion seems to have chosen to chase more low-margin contracts in a desperate attempt to keep its revenue line moving.

Regarding the point about this all being obvious to hedge fund short sellers, this article has more.

]]>
iehi-feed-63524 Mon, 15 Jan 2018 19:56:39 GMT Three years on from currency shock, Swiss central bank can't get back to normal http://implode-explode.com/viewnews/2018-01-15_ThreeyearsonfromcurrencyshockSwisscentralbankcantgetbacktonormal.html If it raises rates, the Swiss franc strengthens. If it sells off its massive balance sheet, the Swiss franc strengthens. If a global crisis hits, the Swiss franc strengthens.

...

"The SNB will most probably be one of the last central banks to change course, and it will take years or even decades for monetary policy to return to ‘normal'," said Daniel Rempfler, head of fixed income Switzerland at Swiss Life Asset Managers.

The Bank of Japan illustrated the problem of reducing expansive policy when a small cut to its regular bond purchases sent the yen and bond yields higher.

...

"It is very difficult to say you are ready to intervene in the forex markets when you also winding down the balance sheet," said Florian Weber, an analyst at Bank J.Safra Sarasin.

]]>
iehi-feed-63523 Mon, 15 Jan 2018 19:46:12 GMT Euro Resurgence and QE Wind-down, US Political Dysfunction Weigh on Dollar http://implode-explode.com/viewnews/2018-01-15_EuroResurgenceandQEWinddownUSPoliticalDysfunctionWeighonDollar.html ... the drop [in the dollar of 12% this year so far and last year] is a bit of a mystery because the Federal Reserve has been raising interest rates for the past year... Hussein Sayed, chief market strategist at FXTM, an online currency brokerage firm, wrote in a report Monday that signs of life in Europe's economy, particularly Germany and France, are causing some investors to flock to the euro instead of the dollar.

Sayed added that the resurgence in Europe even has more investors betting that the European Central Bank will unwind its massive bond-buying program, similar to the Fed's after the 2008 financial crisis, sooner than expected.

...

But the dollar's slide can't be pinned entirely on what's happening overseas. Some analysts suggest that political dysfunction in the United States is also pushing the dollar down.

Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management, said in a report Monday that "there is more to dollar weakness than just the global feel-good story."

Schlossberg said more investors are starting to believe there is a real chance of a government shutdown in Washington later this week. That would happen Friday unless Congress passes a short-term funding resolution to keep the government open.''

]]>
iehi-feed-63522 Mon, 15 Jan 2018 18:27:58 GMT Don't be fooled. Wall Street, not Main Street, is the big tax winner http://implode-explode.com/viewnews/2018-01-15_DontbefooledWallStreetnotMainStreetisthebigtaxwinner.html While Winer is skeptical about how much money will be used to reward workers, he's confident about one thing: Most of the tax savings will be lavished on shareholders through stock buybacks and dividends.

"It's far better for investors than it is for employees," he said.'

...

It's true that personal income taxes are going down for many Americans. The White House has said that 90% of wage earners will likely take home more money as soon as February.

But it would be tough for those gains to offset the huge savings companies are guaranteed. The tax cuts are "skewed toward businesses and high-income earners," Beth Ann Bovino, S&P Global's chief U.S. economist, wrote in a report.

This doesn't even discuss the deficit effect. Guess who's going to pay for that (in the form of inflation)? Hint: the inflation measure for social security and other support payments was modified by this legislation to be even lower.

]]>
iehi-feed-63520 Sun, 14 Jan 2018 18:45:24 GMT Trump Floated Post-2007 By Secretive, High Money Laundering-Risk Condo Purchases http://implode-explode.com/viewnews/2018-01-14_TrumpFloatedPost2007BySecretiveHighMoneyLaunderingRiskCondoPurch.html More than one-fifth of Donald Trump's US condominiums have been purchased since the 1980s in secretive, all-cash transactions that enable buyers to avoid legal scrutiny by shielding their finances and identities, a BuzzFeed News investigation has found.

Records show that more than 1,300 Trump condominiums were bought not by people but by shell companies, and that the purchases were made without a mortgage, avoiding inquiries from lenders.

...

Treasury's financial-crimes unit has, in recent years, launched investigations around the country into all-cash shell-company real-estate purchases amid concerns that some such sales may involve money laundering. The agency is considering requiring real-estate professionals to adopt anti-money-laundering programs.

...

The surge was driven by the opening of 11 Trump condo buildings between 2008 and 2010 as Trump shifted his real-estate business from developing high-rises to licensing them. Nine were Trump-licensed, and they drew hundreds of shell companies that paid an average of $1.2 million in cash for a condo. In six of the licensed buildings, cash-paying shell companies bought at least a third of the condos, records show.

It's not clear how much Trump received from the sale of Trump-licensed condos, but when Trump announced his candidacy in 2015, he said his "real estate licensing deals" and other brands were worth $3.3 billion.

...

Eighty-three percent of the secretive sales occurred in markets that FinCEN is investigating for possible money laundering in real estate sales. In those markets -- Manhattan, South Florida, and Honolulu -- FinCEN is examining every luxury-home sale to a shell company that paid cash.

At least 28 shell companies resold their Trump properties within six months of buying them in cash. The National Association of Realtors says that immediate resales can indicate money laundering, "especially if the resale price is significantly higher or lower than the original purchase price."

At the Trump SoHo Hotel Condominium New York in Manhattan, 77% of the sales were to shell companies that paid cash. One of the project's Russia-born developers was convicted of money laundering in the 1990s. A pending lawsuit calls Trump SoHo a "monument to spectacularly corrupt money-laundering and tax evasion," though it says in a footnote that "there is no evidence that Trump took any part in, or knew of, their racketeering."

]]>
iehi-feed-63518 Sun, 14 Jan 2018 15:09:19 GMT Caliber Home Loans Busted Selling Client Information To Sex Predators http://implode-explode.com/viewnews/2018-01-14_CaliberHomeLoansBustedSellingClientInformationToSexPredators.html iehi-feed-63517 Sun, 14 Jan 2018 14:45:54 GMT Mr. Amazon Steps Out - Jeff Bezos Goes Public http://implode-explode.com/viewnews/2018-01-14_MrAmazonStepsOutJeffBezosGoesPublic.html As he was shaping Amazon into one of the world's most valuable companies, Mr. Bezos developed a reputation as a brilliant but mysterious and coldblooded corporate titan. He preferred to hunker down in Amazon's hometown, Seattle, at least partly because he thought it was better for Amazon's growing business, largely avoiding public causes and the black-tie circuit.

But while Mr. Bezos -- who at 53 is the world's richest person, with a net worth of more than $100 billion -- can afford virtually any luxury, obscurity is no longer among them.

Amazon, now a behemoth valued at more than $600 billion, has become one of the faces of "big tech," along with Apple, Alphabet's Google and Facebook. These companies are facing a backlash. Amazon is under the microscope for what critics say is its corrosive effect on jobs and competition, and Mr. Bezos has become a bête noire for President Trump, who repeatedly singles out him and Amazon for scorn on Twitter.

"People are starting to get scared of Amazon," said Steve Case, a co-founder of America Online, who recently started an investment fund focused on start-ups in underserved areas, with Mr. Bezos among its contributors. "If Jeff continues to hang out in Seattle, he's going to get a lot more incoming. Even for just defense reasons, he has to now play offense."

Mr. Bezos' portfolio of other ventures has thrust him farther into the spotlight. Four years ago, he bought The Washington Post for $250 million, jump-starting a renaissance of the paper. In 2016, Mr. Bezos bought a $23 million home in Washington, one of the city's most expensive, which is undergoing extensive renovations to make it a suitable party spot for the city's political class. Nearby neighbors include former President Barack Obama and his family, and Mr. Trump's daughter Ivanka Trump and her husband, Jared Kushner.

...

But for nearly two decades, he was adamant that the company should largely stay out of the political limelight and not make a stir in local communities. It also had a bare-bones lobbying operation.

...

A turning point came for Mr. Bezos around 2011 when Amazon faced a public showdown with state governments.

At the time, legislators began hounding internet retailers like Amazon to collect sales tax. In California, Amazon initially campaigned to overturn a new law imposing an internet sales tax. But Mr. Bezos backed off after it became clear that Amazon's image could be tarnished, a former employee involved in the matter said.

Instead, Amazon began to make peace. In 2011, it signed an agreement with California to collect sales tax in the state, reaching numerous similar agreements around the same time.

As part of those state deals, Amazon began building warehouses across the country, which allowed Amazon to deliver orders more quickly and let local politicians trumpet the arrival of thousands of jobs.

Suddenly, a company that once refused to confirm how many employees it had at its Seattle headquarters could not stop talking about how many jobs it was creating. It now has 542,000 employees.

As Mr. Bezos and the company talked about creating jobs, though, he and Amazon faced a counternarrative from critics that the company was really a job-killing bully.

]]>
iehi-feed-63515 Sat, 13 Jan 2018 18:19:24 GMT Fed Pays Banks $30 Billion Risk-Free for 2017 http://implode-explode.com/viewnews/2018-01-13_FedPaysBanks30BillionRiskFreefor2017.html ... note how the surging interest payments to the banks slashed into the remittances to the Treasury. If the Fed hadn't decided to pay interest on excess reserves, to benefit the banks, it could remit this money to the Treasury. In other words, every dime the banks receive comes indirectly out of the pocket of taxpayers.

The Fed will likely raise rates further this year. There is talk of four rate hikes. This would push the rate on excess reserves to 2.5% by the end of the year. Excess reserves will likely shrink as QE is being unwound, but not fast enough. And the amount that the Fed pays the banks this year might surge to $40 billion or more -- a glorious and hidden subsidy extracted from taxpayer pockets.

]]>
iehi-feed-63514 Sat, 13 Jan 2018 17:06:37 GMT 3 Lies Bitcoin Skeptics Tell Themselves http://implode-explode.com/viewnews/2018-01-13_3LiesBitcoinSkepticsTellThemselves.html iehi-feed-63512 Fri, 12 Jan 2018 20:29:32 GMT SCAM ALERT Serenity Financial Services Sends Out Deceiving Solicitation http://implode-explode.com/viewnews/2018-01-12_SCAMALERTSerenityFinancialServicesSendsOutDeceivingSolicitation.html iehi-feed-63511 Fri, 12 Jan 2018 15:58:38 GMT Greece to Remain Under Lenders' Supervision Until 2059 http://implode-explode.com/viewnews/2018-01-12_GreecetoRemainUnderLendersSupervisionUntil2059.html