Finance

Lynn Brewer is a former Enron employee who claims she was an executive whistleblower, and has turned that into a career as a highly paid motivational speaker and founder of the Integrity Institute. But it turns out that she was never an executive, she worked in a clerical position writing summaries of gas and energy contracts. The document she claims was a memo in which she blew the whistle is a document her boss says she never saw and described an alleged financial transaction which she never would have done any work on. Her former VP, Tony Mends, says that Brewer was sent to the UK to train Enron employees on the use of Factiva, but she never showed up to conduct the training, instead traveling the UK with her fiance. She claims she had to stay outside of London because of a terrorist threat, but nobody else in the Enron office in London was kept from going to work. Greg Farrell at USA Today has done a great job of exposing Brewer’s claims and how she has capitalized on being confused for Sherron Watkins, who really was an Enron executive whistleblower. Brewer’s web page at “Speaker’s Spotlight” shows that she bills herself as “the” Enron whistleblower and is filled with misrepresentations: Lynn Brewer’s notoriety stems from her actions that have dubbed her “the Enron Whistleblower”. Her accomplishments include: Author of Confessions of an Enron Executive: A Whistleblowers Story; Earning a Certification in Business Ethics from Colorado State University; Founder and President of The Integrity Institute, Inc., which assesses and certifies corporate integrity at the request of organizations for the benefit of their stakeholders. Prior to joining Enron, Brewer worked in forensic accounting and spent 18 years as a legal professional in private practice, until she joined Ralston Purina, where she worked in Corporate Development for the General Counsel and Chief Financial Officer. As an executive at Enron, Ms. Brewer was responsible for Risk Management in Energy Operations, the e-Commerce initiatives for Enron’s water subsidiary, and Competitive Intelligence for Enron Broadband Services. Her responsibilities included financial derivatives and the now infamous “off-the-balance sheet” partnerships. During her nearly three-year tenure, she witnessed numerous instances of illegal and corrupt dealings, including bank fraud, espionage, power price manipulation and the gross overstatements to the press, public and financial world. When her attempts to notify those inside Enron of her knowledge failed, she notified the United States government, who refused to return her e-mails and telephone calls. Since leaving Enron, Lynn Brewer has become an internationally recognized speaker providing compelling details into Enron’s rise and fall, leaving audiences shocked when they realize how vulnerable they are to becoming the next Enron. A past nominee for the “Women of Influence” Award, Brewer was selected in 2006 for inclusion in the 25th Silver Anniversary Edition of Who’s Who of American Women for her contributions to society.Notice that she doesn’t give her actual title; her claim of being responsible for risk management as though she headed a risk management group is untrue. Her boss, Mary Solmonson, was a director, not an executive. Another boss, David Gossett, who reported to VP Mends, was also a director, not an executive. I suspect we’ll see more allegations and stories of deception by Brewer coming to light. I’d like to know if there’s any substance to her claim to have experience in the field of forensic accounting prior to working at Enron. Her 18 years experience “as a legal professional in private practice” really means she worked as a paralegal (which was apparently her role at Enron). Here’s an interview transcript where she misrepresents herself from the get-go, answering the question “what was your role at Enron” with: I was recruited about three years before the implosion of Enron, to head up a risk management group inside the legal department, that would brief, for senior management and the board of directors, these off the balance sheet partnerships at the centre of the scandal.She didn’t head up a risk management group. She didn’t brief senior management and the board of directors. She didn’t report on the off balance sheet partnerships at the center of the scandal, she wrote summaries of gas and energy contracts for managers. UPDATE (October 15, 2007): Lynn Brewer was known as EddieLynn Morgan (her maiden name) while she was at Enron, and her name appears in the “Enron corpus” of emails that were made public after the scandal. Studies of the Enron emails have been done to look at the web of interconnections between recipients, which show that EddieLynn Morgan was a very bit player–she is the recipient of a total of four emails in the corpus, and the author of none. ...

I’m in the process of reading Akhil Reed Amar’s America’s Constitution: A Biography, and just came to the portion about the 16th Amendment, which instituted a federal income tax. I had already known that the tax was a very low percentage, but I hadn’t realized that only the top 1% of income earners paid any income tax. It would be a nice model to go back to, but not possible without dramatically reducing federal spending–the wealthiest Americans wouldn’t tolerate an extortionate percentage of taxation that would be required on the current level of spending, and given the huge amounts of money that are now a part of political campaigning, nobody gets elected without the support of at least some of the wealthiest Americans. (And those levels of spending are tied together–there’s huge money riding on political campaigns because there’s huge money and power in the hands of the federal government. The only way to reduce the former is to reduce the latter.) Here are the two paragraphs where Amar describes pre-Civil War and post-16th Amendment income taxes in the United States: Prior to the Civil War, at least seven states had adopted income taxes. High exemptions and graduated rates–the basic features of a progressive tax structure–were commonplace in these states. Congress followed this pattern when introducing a federal income tax in the 1860s. For instance, the 1865 federal tax code exempted all persons who made less than $600, taxed income between $600 and $5,000 at 5 percent, and subjected all income above $5,000 to a steeper 10 percent rate. Later federal laws tweaked the specifics but preserved the basic structure, under which more than three-quarters of federal revenue came from the seven wealthiest states: New York (which itself generated more than 30 percent of the total national intake), Massachusetts, Pennsylvania, Ohio, Illinois, New Jersey, and Connecticut. Under the law struck down in Pollock, incomes over $4,000 were taxed at 2 percent, all others were exempt. According to Treasury Department estimates, less than 1 percent of the population had been subject to this levy. … In the first income-tax statute enacted after the new amendment was in place, Congress once again opted for a progressive tax structure that exempted a large swath of low- and middle-income persons and taxed the rest at a sloping rate, beginning at 1 percent for an individual making $3,000 and topping out at 7 percent for income over $500,000. The $3,000 minimum threshold effectively limited the tax to the top 1 percent of the economic order. In 1916 the Supreme Court unanimously upheld the new tax law, expressly rejecting the notion that the “progressive feature” of the tax somehow rendered it unconstitutional. The American People had spoken and–this time, at least–the Court listened.

Michael Donnelly’s blog has a chart of mortgage lender failures since April 2006, which reports that we reached 21 lenders going under this month yesterday, on the 21st of the month. (Via Distributed Republic.)

Long or Short Capital takes a look at a few investment strategies available to the time traveler, including “groundhog maximization,” “terminator option protection,” and “alien/squid technology asset allocation.”

Charity Navigator has issued a report on salaries of CEOs of charities for 2007. While religious charities have the lowest average CEO compensation of any category (educational charities have the highest), at the top of the religion list is Peter Popoff Ministries, which pays Peter Popoff an annual salary of $628,732. His wife Elizabeth Popoff gets another $203,029. Not bad for a phony faith healer who was exposed as a fake on the Tonight Show by James Randi two decades ago.

The Arizona Republic’s website has posted a search page for the 2006 salaries of faculty and staff at Arizona State University, the University of Arizona, and Northern Arizona University. I took a quick look at UA and ASU’s philosophy departments, both of which have several professors making well over $100,000/year, and was struck at the oddness of some of the salaries–there are some excellent professors who have been teaching for a long time making less money than some who haven’t been around nearly as long, and an administrative assistant who makes more than most assistant and associate professors. UA has 28 people making over $300,000 (most at the medical school, whose salaries mostly come from non-state funds) and three making over $500,000–two of which are football and basketball coaches and one who is a professor of surgery at the medical school (only 17.4% of his salary is state-paid). Robert Shelton, president of UA, made $420,000. ASU has twelve people making over $300,000, and four making over $500,000–all of which are coaches for football and basketball. ASU president Michael Crow made $442,970. NAU has only one employee making over $200,000, which is NAU’s president John Haeger, who made $260,000. I suspect it’s still the case that professors at Arizona universities, on the average, make well above median salaries for Arizona’s major cities and occupations. Further, I suspect there may be quite a few ASU professors making six-figure salaries who are among Maricopa County’s 106,210 millionaire households. But they don’t compare to compensation for Arizona-based CEOs of publicly-traded companies, where the search engine options for salaries are “any amount,” “$1 million or more,” “$5 million or more,” and “$10 million or more.”

CNN’s Money website has a list of the top 500 zip codes for foreclosures. Here are the eleven Arizona entries on the list:PositionZip CodeCity StateDefault NoticesAuction NoticesBank RepossessionsTotal Foreclosure Filings140.85242Queen Creek AZ123040271183.85323Avondale AZ517865248270.85379Surprise AZ214563210324.85243Queen Creek AZ017225197355.85706Tucson AZ016918187395.85086Phoenix AZ012554179415.85239Maricopa AZ015520175423.85037Phoenix AZ113933173445.85338Goodyear AZ212441167452.85326Buckeye AZ112243166456.85335El Mirage AZ212439165

I just came across a wiki devoted to Casey Serin, the failed housing flipper turned blogger whose “I am Facing Foreclosure” blog documented the details of how he used liar loans to drive himself into $2 million in debt. It’s got quite an extensive collection of details about Serin, his deals, his blog, and the people he’s burned along the way, as well as appropriately critical articles about various real estate investment “gurus” like Robert Kiyosaki and descriptions of new natural phenomena and genetic mutants. Some very funny stuff. ...

A Christian blog reports on a Barna poll of believers and atheists: Most atheists and agnostics (56 percent) agree with the idea that radical Christianity is just as threatening in America as is radical Islam. Two-thirds of active-faith Americans (63 percent) perceive that the nation is becoming more hostile and negative toward Christianity. Atheists and agnostics were found to be largely more disengaged in many areas of life than believers. They are less likely to be registered to vote (78 percent) than active-faith Americans (89 percent); to volunteer to help a non-church-related non-profit (20 percent vs. 30 percent); to describe themselves as “active in the community” (41 percent vs. 68 percent); and to personally help or serve a homeless or poor person (41 percent vs. 61 percent). Additionally, when the no-faith group does donate to charitable causes, their donation amount pales in comparison to those active in faith. In 2006, atheists and agnostics donated just $200 while believers contributed $1,500. The amount is still two times higher among believers when subtracting church-based giving. The no-faith group is also more likely to be focused on living a comfortable, balanced lifestyle (12 percent) while only 4 percent of Christians say the same. And no-faith adults are also more focused on acquiring wealth (10 percent) than believers (2 percent). One-quarter of Christians identified their faith as the primary focus of their life. Still, one-quarter of atheists and agnostics said “deeply spiritual” accurately describes them and three-quarters of them said they are clear about the meaning and purpose of their life. When it came to being “at peace,” however, researchers saw a significant gap with 67 percent of no-faith adults saying they felt “at peace” compared to 90 percent of believers. Atheists and agnostics are also less likely to say they are convinced they are right about things in life (38 percent vs. 55 percent) and more likely to feel stressed out (37 percent vs. 26 percent).The results about “convinced they are right about things in life” is not surprising–that strikes me as the difference between arrogant dogmatism and open-mindedness and humility, and brings to mind studies which have shown that the highly competent believe themselves to be less competent than the incompetent believe themselves to be. The lack of voter registration could also be a sign that atheists and agnostics don’t think their vote makes a difference. What I find contrary to my own personal experience are the results regarding charitable giving and assistance to the homeless. From my perspective, all of the charitable donation dollar amounts ($200/year for atheists/agnostics, $400/year for believers not counting church giving, $1500/year for believers including church giving) seem quite low. I’d like to see more of the data, and see how income level and political affiliations are correlated with charitable contributions. (I previously commented on another study that found that conservatives were more generous than liberals, which also said that the religious were more generous than the secular.) I’ve found significant differences within secular groups when raising funds for RESCUE’s Bowl-a-Rama two years ago (which Kat was a bowler for last year)–my requests for donations to groups of skeptics yielded absolutely nothing from people who have known me (at least online) for years, while my request to the Humanist Society of Greater Phoenix yielded well over $1,000 in donations, many from people who didn’t know me at all. (My target was to raise $3,500 for the event, which I surpassed.) I’ve heard, similarly, that more donations to the Center for Inquiry come from humanists than from skeptics, even though there are more skeptics subscribing to Skeptical Inquirer than there are humanists subscribing to Free Inquiry. HSGP, by the way, is a regular contributor to HomeBase Youth Services, a group that helps homeless youth in Arizona. Another comparison from my own experience that is inconsistent with these results is that Kat and I know a couple of homeless people by name who we periodically help out in various ways (typically not by just giving them money), yet we’re unaware of any similar activities by our extended families (who are all born-again Christians on my side). But perhaps the survey answerers were counting giving cash to panhandlers at freeway ramps or on the street, which is something I make a point of not doing, and don’t consider to be an effective way of helping the truly needy (though I have, in the past, fallen for the occasional well-told sob story from a con artist about a lost wallet, dead battery, need for bus fare to a job, etc.).

Defense contractor BAE is under scrutiny in the British press for paying over a billion pounds through Riggs Bank in Washington, D.C. to Prince Bandar of Saudi Arabia, at the rate of 30 million pounds per quarter over the last ten years. This resulted in a British fraud inquiry by its Serious Fraud Office that was stopped last December by attorney general Lord Goldsmith, on grounds that according to the Guardian, “British ‘government complicity’ was in danger of being revealed unless the SFO’s corruption inquiries were stopped.” Tony Blair said that he accepted “full responsibility” for stopping the fraud investigation. The OECD has begun its own investigation. Riggs Bank, which was used to launder money by the Saudis, former Chilean dictator Augusto Pinochet, and the government of Equatorial Guinea, had relationships with the CIA, as did Bandar and Pinochet (through his secret police chief Manuel Contreras, who banked at Riggs). Riggs was investigated by the Treasury Department and the Senate, and admitted failure to report suspicious transactions or take actions to prevent money laundering schemes, for which it paid $25 million in fines levied by Treasury in May 2005. Bandar and BAE claim that there is nothing wrong with their arrangement and that it did not constitute bribes paid to Bandar. The accounts Bandar used belonged to the Saudi Arabian Ministry of Defense and Aviation, but he spent huge amounts of money on personal expenses such as $17.4 million to build a palace and $400,000 on a luxury car purchase. When Bandar was interviewed by PBS Frontline for a show about terrorism, he made the following statement about corruption in the Saudi government: ...