Winthrop man charged in $4m fraud

A Winthrop man was charged with defrauding 20 investors of $4 million in a life insurance scheme, according to an 18-count indictment filed in federal court yesterday.

The US attorney in Massachusetts alleged that Joseph Gennaco, 67, stole the money over six years, during which he promised people he was investing in life insurance policies on their behalf.

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The employer’s moral obligation?

To assist with this question consider the following scenarios;

1. An employee dies over the weekend and his family are left without their sole bread winner. The deceased could not afford to take the time off work to sort out his or her own affairs.

2. An employee is in a car accident and never took the time off work to take up disability cover. You, as the employer, have to make a very uncomfortable hospital visit and give a farewell handshake and a company card from Hallmark.

3. After 20 years of loyal service, an employee retires or resigns and knocks on the employer’s door to say “thank you” and collect a cheque. It doesn’t take long to realise that he just gave 20 years of service and has nothing to show for it. Granted he could have invested a portion of his salary but he was too fixated on the task at hand.

So with the above in mind, please note the following options that are available to companies or groups whereby both the employer and employee would contribute.

1. Group Insurance cover – whether through a pension, provident or without an investment portion. Your company’s personnel can get decent rates by applying for cover as a group. Insurers will also offer what is called free cover which means that personnel can get cover up to certain limits without the need of a medical.

2. Investment. Without being too technical, I will highlight the most salient features

a. Pension –At retirement the member can only take one third as a cash lump sum and two thirds must be invested in a compulsory annuity, similar to a RA.  Upon resignation, although not advised, the member can access funds.  Individual members need not be assessed for their risk profile.

b. Provident – At retirement, member can access full amount as a lump sum but tax implications must be borne in mind.  Upon resignation, although not advised, the member can access funds.  Individual members need not be assessed for their risk profile.

c. Group retirement annuities – This is a relatively new addition to the group benefit offering and one which I am particularly fond of.

The structure has very similar tax benefits, but group RAs can be substantially cheaper and there is a real benefit in being locked in to age 55, which means that upon resignation the member cannot access their funds which is the point of saving for retirement. In order to execute a group RA each member will have to be interviewed for his/her risk profile and hence can get a customised solution. Please note that a group can apply for group RAs and group insurance cover with different companies.

Finally, realising that nobody really likes sacrificing a portion of their income, the opportune time to consider group benefits is while future increases are being considered.  Such structures/ benefits provide a foundation (or the bare minimum) of financial planning but at least it offers the committed employee and responsible employer some peace of mind.

*Stuart Kantor (BBuSc Finance Hons and CFP) is an independent financial adviser and member of Kanan Wealth CC.

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KirloskarOil – Outcome of Board Meeting

circle Kirloskar Oil Engines Ltd has informed BSE that the Board of Directors of the Company on February 17, 2011 has approved the draft Business Transfer Agreement (“BTA”) relating to the disposal of BBD by the Company to PI on the terms and conditions of BTA as a going concern, on a slump sale basis for a lump sum consideration of Rs. 870,000,000 (Rupees Eight Hundred and Seventy Million) payable on the Completion Date (as defined in the BTA), on a cash free and debt free basis.

BTA will be executed between the Company and PI only after the approval of the shareholders of the Company under Section 293(1)(a) of the Companies Act, 1956, pursuant to a postal ballot under Section 192A of the said Act.

The Board of Directors have also consented to the conduct of a postal ballot for seeking approval of the shareholders for the aforesaid disposal of BBD, as per the provisions of Section 293(1)(a) read with Section 192A of the Companies Act, 1956.

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NSW Country Hour 18/2/11

red circle

On the NSW Country Hour today, federal water minister Tony Burke announces changes to the water buy back program and to tax rules so farmers who sell water and get a lump sum payment won’t be disadvantaged, we take you to Little Llangothlin wetlands which is flourishing after the floods, the copper and gold producer NorthParkes mine has announced a 90 million dollar pre-feasibility study into expanding it operations beyond 2024, plus livestock markets and weather information.

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Home Equity Lending Back in Business

Smart Money is reporting that banks are making a push back into the business but are only catering to pristine type of borrowers.

Three different banks told the publication that home equity lending is up at least 20% across the board. At Associated Bank, the average home equity loan, taken once as a lump sum, is around $75,000; at Citizens, the average credit line on a HELOC, which borrowers can tap over time, is around $100,000.

That’s enough for cash-strapped homeowners to pay for renovations or home repairs – especially if they’ve decided to stay in a house they can’t, or don’t want, to sell in the current market. “We found an opportunity that we can take advantage of,” says Val Glytas, director of consumer lending at Associated Bank.

However, not all borrowers will have access to the loans.  In order to qualify, borrowers need at least a 720 FICO score, a minimum of 20% equity in the home, and income verification for the last two years.  One requirement some borrowers not prefer is the HECM Counseling, but the new product has plenty advantages and is easier to qualify compared to a traditional home equity line of credit.

However, not all borrowers will have access to the loans.  In order to qualify, borrowers need at least a 720 FICO score, a minimum of 20% equity in the home, and income verification for the last two years.  One requirement some borrowers not prefer is the HECM Counseling, but the new product has plenty advantages and is easier to qualify compared to a traditional home equity line of credit.

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