Ally GMAC Foreclosure Investigation Widens

Fallout over GMAC Mortgage’s foreclosure practices deepened as Ohio’s top law enforcement official asked courts in that state to review all foreclosure cases involving the Ally Financial Inc unit.

Investigators in several states including California, Colorado, Connecticut and Illinois are investigating GMAC foreclosure practices or have asked the company to halt or defend its foreclosures.

Ally said this month it has suspended evictions and post-foreclosure proceedings in 23 states, though it has not halted foreclosure proceedings.

Foreclosures Questioned in Wake of GMAC Errors

The recent admission by a major mortgage lender that it has filed dubious foreclosure documents is likely to fuel a furor against hasty foreclosures, which have prompted complaints nationwide since housing prices collapsed.

Lawyers for distressed homeowners and law enforcement officials in several states seized on revelations by GMAC Mortgage that it had violated legal rules in its rush to file many foreclosures as quickly as possible.

Florida lawyers said they would start filing motions to have hundreds of foreclosure actions dismissed; the attorney general in California has directed the company to suspend all foreclosures in that state.

Attorneys general in Iowa and North Carolina said they were also beginning separate investigations of the lender.

The federal government, which became the majority owner of GMAC after supplying $17 billion to prevent the lender’s failure, has told the company to clean up its act.

FTC, Courts Shut Down Envelope-Stuffing Scam

The FTC has gotten a district court to shut down an envelope-stuffing operation that promised consumers they could make thousands of dollars sruffing envelopes from the comfort of their own home.

According to the FTC’s complaint, Louis Salatto and Global US Resources bought classified ads in local newspapers that promised weekly earnings ranging from $1,200 to $4,400.

Consumers who paid the up-front fee did not receive the materials they needed to do the envelope stuffing, nor the income promised, nor the refund that Salatto said they could get upon request.

The court order freezes the allegedly illegal tactics of Salatto and Global US Resources and freezes their assets while the FTC seeks a permanent order.

Springsteen fans will get refunds from Ticketmaster in deal to settle bait-and-switch charges

The Federal Trade Commission has sent claims forms to more than 1,000 Bruce Springsteen fans, victims of a bait-and-switch scam perpetrated by Ticketmaster.

According to the FTC, an administrator working on its behalf has sent these claims forms to people who were unknowingly switched to a Ticketmaster-owned ticket resale site, TicketsNow.com. Those thousand-plus people logged on to Ticketmaster.com seeking passes to Bruce Springsteen concerts across the country.

However, they were directed to buy the tickets at the resale site, which is owned by Ticketmaster, where they paid up to four-times the face value of tickets.

The affected concerts were held in Glendale, Ariz.; San Jose, Calif.; Los Angeles, Calif.; Denver, Colo.; Hartford, Conn.; Atlanta, Ga.; Chicago, Ill.; Boston, Mass.; Saint Paul, Minn.; East Rutherford, N.J.; Long Island, N.Y.; Pittsburgh, Pa..; University Park, Pa..; and Washington, DC.

Concertgoers are eligible to receive the difference in what they overpaid for the ticket against the actual price they would have paid at Ticketmaster.com. Claims must be mailed by Oct. 8 to be eligible for the refund, and must be done through the mail.

FTC probe of Apple Inc. continues, based mostly on Adobe’s complaint

The Federal Trade Commission is continuing a criminal investigation into Apple Inc., despite it reversing a decision it made earlier this year to disallow Flash-based Applications on its iPhone device.

Earlier this year, Apple said it would only allow third-party App creations for its new iOS4 system written in specific computer programming languages. That list of languages did not include Flash, which is created by software giant Adobe, makers of many Web and print development products.

Flash-based Apps have become a standard on the Web and for other non-Apple phones. When Apple made its decision earlier this year, Adobe shut-down a division of its company dedicated to developing Flash for iPhone.

Apple products are known for being user-friendly, but Apple is generating a business attitude that doesn’t play well with others. By limiting the languages which can generate iPhone Apps, the company can control who makes money piggybacking its wildly popular product.

Last week however, Apple reversed its decision on Flash for iPhone, meaning Adobe could resurrect those plans it once had. Many believe the growing popularity of competitive devices like Android – which allow open-source Apps and their languages – and the loss of several key allies like the founder of Facebook, forced Apple’s hand. Appearing to comply and be submissive to the investigating FTC is another reason.

FDIC warns of phone scam to repay payday loans

Federal officials are warning of an ongoing phone scam which demands payments on “payday loans” that may or may not exist.

According to several reports, the scamming callers purport to represent the Federal Deposit Insurance Corp. (FDIC) and demand payments over the phone so a consumer will avoid legal action or arrest.

The caller tells the consumer they have a payday loan payment overdue. Payday loans are cash advances given to consumers in anticipation of a regular job stipend. These loans are used by consumers in need of immediate cash and if they go unpaid carry large interest rates.

However, no such representatives of the FDIC exist, making these calls false. The scammers even have access to consumer Social Security numbers and dates of birth and use those in attempts to intimidate consumers into making payments.

The FDIC said it rarely contacts consumers directly and does not act as a debt collector in any way. It urges consumers who receive these calls to make a “fraud alert” on one of their credit reports to indicate a break in their security.

FDA warns makers of green tea drinks about making false claims

The Food and Drug Administration says advertising for two green tea beverages is misleading and make unfounded medical claims.

According to a Los Angeles Times report, regulators have warned the makers of Canada Dry Sparkling Green Tea Ginger Ale and Lipton Green Tea 100% Naturally Decaffeinated beverages they must change marketing and labels of those products.

Dr. Pepper Snapple Group makes the Canada Dry product, which claims to be “enhanced” with antioxidants. Because the drink is caffeinated however, the FDA considers it a snack food and therefore can not have any nutritional fortification.

Also, in a letter to Dr. Pepper Snapple Group, the FDA said ingredients allegedly containing antioxidants “are not nutrients with recognized antioxidant activity.”

Unilever Inc. is the maker of the Lipton Green Tea product, and has also been informed that its marketing materials for the product are misleading and make false claims.

Unilever claims its Lipton green tea product is the same as other green tea, and that green tea consumption has been linked to a reduction in cholesterol levels among heart disease sufferers.

Because the company attempts to claim the product has medicinal values, the FDA considers that product a drug and therefore is subject to regulator approval just like any other drug.

Unilever would have to conduct expensive clinical trials hoping they prove that consuming their product actually reduces cholesterol among heart disease patients. Instead, the company will alter its message.

These letters to food makers are the latest in an FDA crackdown on misleading advertising of products purporting to contain health benefits. Earlier this year, the agency sent letters to 17 manufacturers over claims made on 22 different products.

LA Times is skeptical of the FDA’s follow-up effort, noting that 12 of the 17 manufacturers who were warned in March about their labels have failed to change any of them, based on the newspaper’s glance of store shelves near its Washington, D.C., bureau.

American Apparel Faces Fourth Shareholder Lawsuit

A fourth shareholder lawsuit has been filed against Los Angeles, California-based American Apparel.

The filing in the local US District Court seeks class-action status for shareholders that allege they were misled by American Apparel’s leaders regarding how its ability to hire and keep workers would effect its bottom line.

Last year, American Apparel had to let go of up to 1,800 workers who could not prove they were in the country legally after it was revealed that it was being investigated by the US Immigration and Customs Enforcement agency.

The clothing maker, which has about 280 retail stores worldwide, has been challenged recently by $120 million in debt, a possible delisting by the New York Stock Exchange, and slowing sales.

New Whistleblower Awards Leads to Surge in Fraud Tips

New awards for informants who help the Securities and Exchange Commission uncover fraud are already prompting a surge in tips.

The Dodd-Frank financial law passed in July provides for the larger bounties, with the hope of fingering wrongdoers such as Bernard Madoff before they swindle thousands of people.

People who supply “original information” about large frauds could net as much as 30% of the penalties and recovered funds collected by the SEC, which could add up to a multimillion-dollar payout.

Defense lawyers warn that the bounty program could spawn a flood of frivolous cases that create headaches for companies.

Credit Union Execs Sued for Fraud

A federal agency is accusing two former executives of a giant failed credit union in Los Angeles County of fraud for their roles in adding millions of dollars to retirement payouts for themselves and other top brass at the financial institution.

A lawsuit by the regulators also alleges breach of fiduciary duty and negligence by the two executives and 14 other officers and directors of Western Corporate Federal Credit Union in San Dimas.

WesCorp, as it was known, was seized by the government in March 2009 after incurring nearly $7 billion in losses, largely because of bad investments in mortgage-backed bonds.

The suit, filed this week in federal court in Los Angeles by government agency National Credit Union Administration, seeks at least $1 billion from the defendants or their insurers.

Among the defendants is the current head of the national trade group of credit unions.