|
|
| |
| Thu, Nov. 20, 2008 |  |
 |
|
||
| |
Katrina criminals leaving long trail of victims Saturday, Nov 19, 2005 By Wesley Brown The trickle down effect of Hurricane Katrina has the potential to be with us for many years to come, whether we want it to or not. The people who will bear the brunt of the fallout from the Gulf Coast hurricanes and flooding are the thousands of evacuees, mostly poor and black, that have no idea what their lives will be like even next week. The Federal Emergency Management Agency's announcement earlier this week that it will stop paying for hotel rooms for most evacuees of sisters Katrina and Rita lets us know that the Grinch for this holiday season is alive and well. But hurricane backlash is also starting to show up in a lot of unexpected places, such as corporate financial statements, charity scams, unemployment figures and even used car lots. For example, corporate finance officers are already finding creative ways to book Katrina-related charges to shield bad management from investors and shareholders, and to employ tricky accounting methods to use hurricane expenses to pad earnings. Of course, companies like New Orleans-based Entergy Corp. - which have to deal with the double whammy of having to relocate its damaged corporate offices to Mississippi and then bear the expensive costs of restoring power to millions of homes and businesses - should be given some leeway and accounting flexibility. But other companies that are miles away from New Orleans with little exposure to hurricane winds are also attempting to take advantage of these "acts of God" exemptions. The federal Securities and Exchange Commission recently warned such publicly traded companies of their fiduciary duties following the Gulf Coast storms. "While the (SEC) believes that the relief from filing requirements ... is both necessary in the public interest and consistent with the protection of investors, we remind public companies and other persons ... to continue to evaluate their obligations to make materially accurate and complete disclosures in accordance with the anti-fraud provisions of the federal securities laws," the SEC said. Similarly, there are other such scam artists who use simpler methods to extract money from unsuspecting victims. Two missives sent out by an Arkansas senator and the state Insurance Department show that some swindlers will stop at nothing to make a fast buck. Wednesday, U.S. Sen. Mark Pryor, D-Ark., office said the recent string of hurricanes and subsequent flooding have brought to light problems in the used-car market where flooded and salvage cars are sold to unsuspecting consumers. Pryor said Senate hearings have been set to examine the threat posed to consumers and methods for reducing this fraud. The senator said he is worried that an estimated 500,000 vehicles could be transferred to new owners who are unaware of potential safety problems ahead, such as defective brakes and air bags, steering problems and poor vehicle alignment. "Every year countless consumers unknowingly buy cars that have been previously flooded or damaged, which carries significant safety and financial risk," Pryor said. "Unfortunately, the flooding in the Gulf Coast is likely to escalate this problem to a whole new level." A day later, state Insurance Commissioner Julie Benafield Bowman sent a note to insurance companies in Arkansas reminding them of state law regarding transfer of ownership titles for water-damaged cars. "In the wake of the catastrophic property damage occurring during the 2005 and 2004 hurricane seasons, the department has received information indicating that owners may be selling cars and other vehicles without disclosing the fact that the vehicle has been damaged by water," Bowman wrote. "The purpose of this bulletin is to remind insurers of the requirements of (state law) ..." The commissioner warns insurers that if they obtain ownership of a water-damaged vehicle through settlement of a claim and transfer of a title, then it is their duty to forward that information to the state Office of Motor Vehicles so that potential new owners will be aware of such defects. Unfortunately, willful violations of that same state law are only punishable as misdemeanors. A possible suggestion to both Sen. Pryor and Ms. Benafield is to use their bully pulpits to make such behavior a more serious crime. After such disasters as Sept. 11 and Katrina, honest folk shouldn't have to worry about tricksters getting rich off people's misery. ------ Wesley Brown is business editor for the Arkansas News Bureau in Little Rock. His e-mail address is wbrown@arkansasnews.com. |
