Consumer eViews
FLORIDA CHIEF FINANCIAL OFFICER ALEX SINK'S WEEKLY NEWSLETTER

Volume 4, Number 42, October 19, 2007

Fellow Floridian:

It has been another busy week!

Mortgage Protection-- This week, I joined a national coalition of elected officials and consumer organizations to call on mortgage companies and lenders to follow basic principles of transparency and fairness. Read the Mortgage Protection Principles in this week’s eViews to learn how we’re asking lenders to help homeowners avoid foreclosure.

Disaster Preparedness-- A tornado hit Pensacola this week, reminding us all just how important it is to be prepared. Keep up your guard for the approach of a storm and have your supplies on hand. For additional information on disaster preparedness, visit www.MyFloridaCFO.com/Consumers/hurricane_2007.

Unclaimed Property—Today, I delivered a five-figure check from our unclaimed property program to a school nurse in Baker County. Have you checked to see if there is money or property being held for you or someone you may know? All it takes is a quick visit to www.FLTreasurehunt.org. Over a billion dollars is waiting to be claimed in over 7.8 million accounts. You may find lost assets that belong to you!

Sincerely,

Alex Sink

SISTERS RECEIVE COLLECTIVE 17 YEARS IN PRISON FOR STEALING SCHOOL VOUCHER FUNDS

Florida’s Chief Financial Officer Alex Sink and Jerry Hill, State Attorney for the 10th Judicial Circuit, announced that sisters Betty Mae Jives Mitchell, 40, and Jeannette Jives Nealy, 39, were sentenced Monday to a collective 17 years in prison for fraudulently obtaining and misusing more than $200,000 from Florida’s school voucher program.

Mitchell’s sentence is 160 months, just over 13 years, and Jeannette Nealy was sentenced to 48.9 months, just over four years, in prison. Both also received 10 years of probation, were ordered not to operate a child care facility or any school while on probation, were restricted to one bank account each and are banned from applying for any state or federal funding.

“The jury clearly recognized the seriousness of these actions and sent a strong message that stealing money from taxpayers is not acceptable,” said CFO Sink, who oversees the Department of Financial Services (DFS), which assisted with the investigation that led to the charges. “I commend the investigators and prosecutors involved in this case for ensuring these women were held accountable.”

The sentencing follows an investigation led by the Polk County State Attorney’s Office in partnership with the DFS’ Office of Fiscal Integrity and Division of Insurance Fraud. The investigation focused on the sisters along with other family members: Jocie Jives, Levy Gail Everett-Davis, (acquitted), Demario Quowon Jives, Willie James Jives, and Margaret Burns. All were arrested on June 29, 2004, on various charges of racketeering, grand theft, money laundering and scheme to defraud.

The charges are based on evidence that individuals, using a church-based school, illegally obtained and used funds from Florida’s school voucher program through misrepresentation and theft. Faith Christian Academy, formerly located at 810 E. Main St. in Bartow, was established as a school to educate disabled and low-income children. Principals of Faith Christian Academy applied to the Florida Department of Education to qualify for the John M. McKay Scholarships for Students with Disabilities Program and the Corporate Tax Credit Program. They then fraudulently applied for scholarship dollars on behalf of unknowing parents of students not at the school, charged the state for school vouchers in excess of what they charged other students in tuition, and submitted fake receipts in order to get funds from the national school lunch and breakfast programs. A substantial amount of the stolen funds were spent for personal use, including the purchase of a Hummer H2 and Lexus L400.

The trial of Betty Mitchell, Jocie Jives, Jeannette Nealy, and Levy Gail Everett-Davis began on May 15, 2006. Everett-Davis was found not guilt and the jury could not reach a verdict on the others. Betty Mitchell, and Jeannette Nealy’s retrial began on July 9, 2007, and both were found guilty – Betty Mitchell in 25 of 27 counts (Racketeering, Conspiracy, Money Laundering, Structuring Transactions, Fraud, Communications Fraud, Theft-McKay, Theft-National School Lunch Program, Theft-Florida PRIDE, Theft-Bank of America, and Uttering Forgeries 15 counts) and Jeannette Nealy in four of eight counts (Racketeering, Scheme to Defraud, and Theft-McKay and Theft-Bank of America).

The Office of Fiscal Integrity is responsible for statewide investigations of allegations of fraud, waste, or abuse involving State of Florida property and money. To report fraud, waste, or abuse of state resources, visit http://www.MyFloridaCFO.com/fraudpage.asp or call 1-800-GET-LEAN (1-800-438-5326).

CFO SINK JOINS NATIONAL COALITION CALLING FOR MORTGAGE CHANGES 

With the mortgage crisis continuing to affect the country and the financial markets, Florida Chief Financial Officer Alex Sink today has joined a coalition of national elected officials and consumer organizations to call on mortgage companies and lenders to adhere to basic principles of transparency and fairness.  Led by North Carolina Treasurer Richard Moore, the coalition includes Kentucky Treasurer Jonathan Miller, New York State Comptroller Thomas DiNapoli, the leaders of the American Federation of State, County and Municipal Employees (AFSCME) and UNITE HERE and several other financial organizations.  

By joining the coalition, CFO Sink is calling on companies to follow these Mortgage Protection Principles in order to strengthen their business operations going forward and to prevent yet another mortgage meltdown.  
    
“As Florida's Chief Financial Officer, I am highly concerned about our state's economy and the financial health of our consumers,” said CFO Sink, who oversees the Department of Financial Services.  “Today we are asking all financial institutions to help consumers avoid foreclosure, to be more diligent in their efforts to increase disclosure and to assist homeowners understand more about the financial decisions they make.”

“As investors, as leaders and as citizens, we are deeply concerned about the mortgage crisis that has hit our country on so many fronts,” said Treasurer Moore.  “We call on mortgage companies and lenders of all sizes to abide by these basic principles of fairness and transparency.  We have the holdings, the clout and the conviction to encourage positive behavior, and we hope that all companies will adopt these principles.” 

The Mortgage Protection Principles include:

  • Matching borrowers with the most appropriate, fair and affordable loans for which they qualify;
  • Verifying and documenting the borrower’s ability to repay the loan for all subprime loans;
  • Ensuring that subprime loans with an adjustable rate feature are affordable, rather than basing a borrower’s loan qualification on a teaser rate;
  • Not charging prepayment fees or penalties on any subprime loans;
  • Not incentivizing employees or brokers to place borrowers into higher cost loans than those for which they qualify;
  • Clearly disclosing all expected broker compensation, from lenders or elsewhere, for any loan options presented to the borrower;
  • Providing borrowers with a fixed-rate option whenever presenting adjustable rate products;
  • Making the same services available to all similarly-situated borrowers and ensuring that they do not discriminate on any prohibited basis; and
  • Conducting criminal background checks to ensure that mortgage brokers are of high moral character.

Kentucky Treasurer Jonathan Miller added: “Owning a home is a key component of the American Dream.  Given the recent mortgage quandary this country is facing, it is imperative that mortgage lenders are held accountable, ensuring fair business practices and the utmost quality of service to all potential homebuyers.” 

New York State Comptroller Thomas P. DiNapoli said the principles are also good for business.  “Following these principles isn’t just the right thing to do; it’s good business,” he said. “Consumers need to understand their mortgage fully before entering into what will most likely be the biggest purchase of their lives. Profits in the mortgage industry should be made through innovation, not because consumers lacked the information needed to make a sound financial decision.”

The mortgage crisis has wreaked havoc on investors, consumers and homeowners.  Subprime mortgages have been resetting, meaning that a low introductory rate resets to the market rate, and leaving many Americans with higher rates that they are unable to afford.  In August and September, $32.6 billion worth of mortgages reset, and the high volume of resets is expected to continue through next year.  The August 2007 U.S. Foreclosure Market Report shows a total of 243,947 foreclosure filings nationwide for the month, up 36 percent from the previous month and up 115 percent from August 2006.  In addition, the report showed a foreclosure rate of one filing for every 510 households – the highest figure ever noted in the report. 

Since the end of last year, more than 80 mortgage lenders, mainly subprime, have closed their doors or suspended new loan activity.  Some of the largest, like New Century Financial and American Home Mortgage, filed for bankruptcy, and Countrywide Financial shares have lost almost 60 percent of their value.  The world’s largest bank, Citigroup, announced just yesterday that its earnings were off by 57 percent for the third quarter – due in large part to subprime impacts.  
The full list of principles and signatories is attached.

 MORTGAGE PROTECTION PRINCIPLES
We, the undersigned, are concerned about the financial health of our citizens and our markets.  Recent events in the housing market, particularly in subprime lending, threaten the well-being of our neighborhoods and our economic security.  We call upon mortgage lenders and brokers to commit to fairness and transparency in the market, and to adopt and abide by the following principles: 

1) We shall match borrowers with the most appropriate, fair and affordable loans for which they qualify;
2) We shall verify and document the borrower’s ability to repay the loan for all subprime loans; 
3) We shall not base a borrower’s loan qualification on a teaser rate, but rather will ensure that subprime loans with an adjustable rate feature are affordable;
4) We shall not charge prepayment fees or penalties on any subprime loans;
5) We shall not incentivize employees or brokers to place borrowers into higher cost loans than those for which they qualify, and we shall clearly disclose all expected broker compensation, from lenders or elsewhere, for any loan options presented to the borrower;
6) We shall provide borrowers with a fixed-rate option whenever presenting adjustable rate products;  
7) We shall make the same services available to all similarly-situated borrowers, and will ensure that we do not discriminate on any prohibited basis; and 
8) We shall conduct criminal background checks to ensure that our brokers are of high moral character. (For mortgage brokers.)


 SIGNATORIES

Richard Moore, North Carolina State Treasurer
Alex Sink, Florida Chief Financial Officer
Jonathan Miller, Kentucky State Treasurer
Thomas DiNapoli, New York State Comptroller
Bill Lucy, Secretary Treasurer, American Federation of State, County and Municipal Employees
Bruce Raynor, General President, UNITE HERE!
Center for Responsible Lending/Self-Help
North Carolina Housing Coalition
North Carolina Justice Center
State Employees Credit Union
Cape Fear Regional Bureau for Community Action
Leslie Barber, Director of Community Credit Counseling Service and Emergency Housing Assistance, Triangle Family Services
Celeste Collins, Executive Director, CCCS WNC d/b/a OnTrack Financial Education & Counseling
Ann Estes, Vice President, ClearPoint Financial Solutions
Bruce G. Hamlett, Director, Economic Independence, United Family Services
Douglas Hammond, Alliance Credit Counseling, Inc.
Howard Jones, Executive Director, Wilson O.I.C.
Bob Kucab, Executive Director, North Carolina Housing Finance Agency
Peter Laroche, President & CEOO, Consumer Credit Counseling Service of Forsyth County
Rich Lee, Executive Director, Durham Affordable Housing Coalition
Ann C. Peele, Consumer Credit Counseling Service of Catawba Valley
Shayna Simpson-Hall, Executive Director, North Carolina IDA Collaborative
Peter Skillern, Executive Director, Community Reinvestment Association of North Carolina
Gregg Warren, President, DHIC, Inc. 

National Community Reinvestment Coalition
National Association of Human Rights Workers
International Association of Official Human Rights Agencies
 

DOCK PROJECT DENIED APPROVAL

At this week’s Cabinet meeting, Chief Financial Officer Alex Sink was joined by Attorney General Bill McCollum in opposing a controversial proposal to build a 1,540 foot dock along a stretch of mangroves in Collier County. The dock would have allowed 49 boats up to 35 feet in length to be moored on state submerged lands adjacent to a private condominium, development in North Naples.

The South Florida Water Management District had previously approved a permit for a condominium project, but the developer also needed approval from the Florida Cabinet to obtain a submerged lands lease and consent to dredge bay bottom. Florida owns submerged lands below the mean high water line and the Governor and Cabinet, sitting as the Trustees of the Internal Improvement Trust Fund oversee the disposition of state submerged lands. The private use of such lands is allowable if it does not negatively impact the public interest.

Much of the debate from people who opposed the project centered on whether the project posed a navigational hazard, its impacts to mangroves and manatees and whether the state's lease fees were too low. Residents who were in favor of the project focused on the fact the developer had preserved 54 acres of mangroves north of the dock and that others in the area have docks.

Remaining consistent with remarks she made in past Cabinet meetings, CFO Sink focused her comments on the fact that the approximate $29,500 the state would receive in lease fees was insufficient relative to the amount of money the developer would receive by renting or selling the slips, which estimates to be $15 million. “It’s just a bad economic deal for Floridians,” CFO Sink stated in voting against the project.

At the request of CFO Sink, the Department of Environmental Protection is in the process of revisiting its rules pertaining to lease fees in an effort to address the inequities concerning the amount of money the state receives for the use of its submerged lands. “We Floridians are not getting our money’s worth and we’re in tight budget times. Why are we giving away millions and millions of dollars in profit to private developers to sell docks when we need money to buy more environmentally-sensitive lands?”

BOARD SUSPENDS LICENSE OF FUNERAL DIRECTOR WHO SENT FAMILY TWO SETS OF REMAINS FOR FATHER
A funeral director who sent two sets of ashes to a family has been ordered to serve a six-month suspension and submit to other disciplinary measures. The decision was rendered last week during a meeting of the Board of Funeral, Cemetery, and Consumer Services. The board falls under the Department of Financial Services’ Division of Funeral, Cemetery and Consumer Services.

Leroy Sims, Jr., was funeral director in charge of the now-defunct Serenity Memorial Funeral and Cremation Services, formerly located at 3301 5th Ave. S., in St Petersburg. The funeral establishment went out of business and the license expired on November 30, 2006. The DFS’ investigation was launched after the department received a complaint from a man who received two sets of cremated remains, both certified to be the remains of his father. Three other cases against Sims, involving business practice violations, were also brought before the board.

“Serving families who are grieving the loss of a loved one is an important responsibility that must be handled with the utmost attention and dignity,” said Florida Chief Financial Officer Alex Sink, who oversees the department. “We will investigate and take action against any funeral director who fails to provide the highest service that consumers deserve.”

In addition to the six-month suspension of his funeral director and embalmer license, Sims was ordered to serve two years of probation following the suspension; pay an administrative fine of $3,500; pay more than $2,800 in restitution; complete 9 hours of continuing education courses on Florida laws and rules within 60 days of the consent agreement; and take and pass the Florida laws and rules examination prior to the lifting of suspension. He also will receive a formal reprimand.

Kurt Schuller and Thurman Lowe of the Tampa office of the Division of Funeral, Cemetery and Consumer Services were the investigators. Consumer can file complaints or ask questions about funeral and cemetery services by calling 1-800-323-2627 or by logging on to http://www.MyFloridaCFO.com/FuneralCemetery/.

CFO SINK ACTIVATES STORM LINE FOR TORNADO VICTIMS

Florida’s Chief Financial Officer Alex Sink is urging residents whose homes or businesses were damaged by a tornado that struck downtown Pensacola to call the Department of Financial Services’ storm hotline at 1-800-22-STORM (1-800-227-8676) if they have questions regarding steps to take to immediately protect their homes or if they need help filing an insurance claim.

The storm line was activated moments after the powerful storm hit the area on Thursday, and is active from 8:00 a.m. to 5:00 p.m. EDT.

“We have consumer specialists on the phone ready to assist victims with insurance and financial questions,” said CFO Sink, who also serves as State Fire Marshal. “We will do all we can to help the residents of Pensacola get back on their feet quickly.”

CFO Sink offered these safety tips to tornado victims as they begin the recovery process:

  • Stay away from downed power lines.
  • If safe, make emergency repairs to protect from further damage; document the damage and repairs in writing and with receipts and photos.
  • Immediately report property damage to your insurance agent and company.
  • Gather copies of your household inventory and other documentation, including photos. This will assist the adjuster in assessing the value of the destroyed property.
  • If you must leave your home because of the damage, let your agent or insurance company know your temporary forwarding address and phone number.
  • Beware of fly-by-night repair businesses. Hire licensed and reputable service people.
  • If considering the assistance of a public insurance adjuster, verify that they are licensed by calling the department’s storm hotline.
  • Be sure you understand how much a public insurance adjuster is charging and what services are included before signing any contract.
  • Use generators in well-ventilated outside areas, never indoors or in a garage or carport.

CFO SINK DELIVERS $28,000 CHECK TO BAKER COUNTY SCHOOL NURSE

Florida Chief Financial Officer Alex Sink delivered a check to Shelly Bennett, a Baker County resident, along with a reminder about the importance of regularly checking the Bureau of Unclaimed Property Web site for your unclaimed property.

Bennett, a nurse at Baker County Middle School, was recently contacted by the Bureau regarding unclaimed cash, mostly from certificate stocks, that had been turned over to the state. CFO Sink returned the money to Bennett today via a check for more than $28,000.

“I’m so glad we were able to find Ms. Bennett and give her this money back,” said CFO Sink, who oversees the Bureau. “I encourage all Floridians to visit our Web site at www.FLTreasureHunt.org. With nearly eight million accounts, the chances are good we are holding cash or property for you or someone you know.”

The Bureau is holding 7.8 million accounts, mostly from dormant accounts in financial institutions, unclaimed utility deposits, insurance benefits, premium refunds, uncashed checks and trust accounts, as well as watches, jewelry, coins, stamps and historical items from abandoned safe deposit boxes. Currently in Baker County, there are 3,286 unclaimed property accounts valued at more than $374,000; in Duval County, there are 308,638 accounts valued at more than $39 million; in Bradford County, there are 7,290 accounts valued at more than $746,000; in St. Johns County, there are 41,688 accounts valued at more than 5.4 million; in Clay County, there are 50,119 accounts valued at more than $4.6 million, in Nassau County there are 14,621 accounts valued at more than $1.5 million; and in Union County, there are 1,528 accounts totaling $127,589.

The Bureau receives items that have been abandoned in safe deposit boxes for at least three years and spends up to two years searching for the rightful owners or heirs. The Bureau has had tremendous success in finding owners. In the past year alone, the Bureau returned a record 255,000 accounts valued at more than $171 million. But when owners or heirs cannot be found, the items are auctioned. While the proceeds from the auctioned items are transferred to the state's Public School Trust Fund, the money is held in the original owner’s name and can be claimed for free at any time. Since the program’s inception in 1961, more than $1.5 billion has been transferred to the fund.

The Bureau has successfully reunited owners with more than $1 billion in unclaimed property. Over the past five years, the program has returned more than $546 million-- more than half of all the money returned since the beginning of the program-- due largely to aggressive efforts by the program to contact owners. Unclaimed property can be claimed for free at any time by the rightful owners or heirs by logging on to www.FLTreasureHunt.org or by calling the Bureau at 1-88-VALUABLE.
 

SIX COLLIER COUNTY CONTRACTORS CITED IN SURPRISE SWEEP

Investigators from the Department of Financial Services, Bureau of Workers’ Compensation Compliance, issued six Stop Work Orders (SWOs) during a surprise enforcement sweep last week of 39 contractor sites throughout Collier County. The SWOs were issued to contractors determined not to have workers’ compensation coverage for their employees.

Dubbed Operation Check Point, the sweep also involved inspectors and investigators from Collier County Licensing, who issued 11 citations, and the Department of Business and Professional Regulation, who issued three citations and two Cease and Desist Orders, all for unlicensed activity.

“Our commitment is to ensure Floridians are protected and that contractors are properly licensed and insured to provide services,” said Florida Chief Financial Officer Alex Sink, who oversees the Department of Financial Services (DFS). “By working together with local and state agencies, we are able to conduct a comprehensive investigation that allows us to take quick and decisive action.”

Operation Check Point, which took place Thursday, included work sites in eastern and western Collier County, the city of Naples, and Marco Island. DFS investigators issued SWOs to the following contractors, determined to be in violation of Chapter 440:

Collier County Custom Concrete, LLC

Amarildo A. Adriano

Roman Zet, DBA ZetFrame, Inc.

L & J Clean Up, Inc.

Professional Wood Installation, Inc.

Architectural Cabinets & Millwork LLC

These employers will be required to secure workers’ compensation coverage and pay a fine 1.5 times the evaded premiums or $1,000, whichever is greater, before resuming work. For more information about the Division of Workers’ Compensation and workers’ compensation requirements, call 850-413-1609 or log on to www.MyFloridaCFO.com/wc.

Consumer Services Helpline (800) 342-2762
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