Consumer eViews
FLORIDA CHIEF FINANCIAL OFFICER TOM GALLAGHER'S WEEKLY NEWSLETTER

Volume 2, Number 15, April 11, 2005    

I have been meeting across the state with small business leaders to discuss topics of mutual concern in Sarasota, Jacksonville, Orlando, Miami, Palm Beach, Naples and Fort Myers. 

Small business plays a vital role in keeping Florida's economy moving forward.

According to the US Small Business Administration, the estimated total number of small businesses in Florida in 2003 was 1,540,500.  Small businesses employ 2.9 million people or 45 percent of the state's private workforce. Their economic contribution to the state is estimated at over $33 billion.

As Florida’s chief financial officer, it is my responsibility to make sure small business continues to expand.  That means making sure our fiscal environment is one that is accessible for businesses of all shapes and sizes.

I am committed to working with small businesses throughout the state to ensure we are doing everything we can to continue moving forward.

This means we need a world-class education system to provide the workers we need for our growing economy.  We need a fair tax structure and regulatory environment so that our businesses aren't burdened needlessly. We need to eliminate the substitute communications tax so that businesses aren't threatened with that liability.

It is also time to eliminate the intangibles tax, something Governor Bush and I am committed to doing. Reform of our legal system will ensure fair access to courts is not a license for abuse of the judicial system.

We have to expand the availability of affordable health care for employees to make sure that health care stays available to working Floridians.

Finally, this past year showed the importance of providing hurricane relief throughout the state. With hurricane season fast approaching, I can’t stress enough the importance of preparation.  

                      -- Tom Gallagher

GALLAGHER NAMES NEW GENERAL COUNSEL

Florida’s Chief Financial Officer Tom Gallagher announced today that Carlos Muniz, former deputy general counsel to Governor Jeb Bush, has been tapped to serve as general counsel of the Department of Financial Services.

Muniz, who has several years of corporate law and civil and administrative litigation experience, replaces Pete Dunbar, who recently returned to his private law practice at Pennington, Moore, Wilkinson, Bell and Dunbar, P.A.  Muniz will start April 12.

“The citizens of Florida and the employees of this department will be well served by Carlos Muniz’s experience and intellect,” Gallagher said.  “I am looking forward to having him on the team.”

Muniz earned his undergraduate degree from the University of Virginia, and graduated in 1997 from Yale Law School, where he was an editor of the Yale Law Journal.  After law school, he served as a clerk for U.S. District Court Judge Thomas A. Flannery and then for U.S. Court of Appeals Judge Jose A. Cabranes.  He then joined Hogan & Hartson, a Washington, D.C., law firm. 

In January 2001, he was appointed Governor Bush’s deputy general counsel and in June 2003 joined the Tallahassee office of GrayRobinson where his practice focused on civil and administrative litigation.  In the fall of 2004, Muniz served as counsel to Florida Victory 2004, part of the effort to re-elect President Bush.

“I'm honored to join the outstanding team that Treasurer Gallagher has assembled at the Department of Financial Services,” Muniz said.  “I will do my best to live up to the high standards established by my predecessor in the general counsel position, Pete Dunbar.”  Dunbar will continue as Special Counsel to the CFO on storm-related matters.

Muniz is married to Katie Baur Muniz, and they have a 15-month-old son, Robert. 

GALLAGHER RELEASES LIST OF TOP TEN THREATS TO FLORIDA’S INVESTORS 

Florida’s Chief Financial Officer Tom Gallagher released a list of Florida’s top ten scams used to cheat investors out of hundreds of millions of dollars.  Gallagher said that while his department is always on the lookout for crooks peddling bogus investments, the best defense against these characters often is a vigilant citizenry.

 “The calls we get from Floridians to check out an investment or the person selling it often lead us to unregistered investments and unlicensed salesman and brokers,” said Gallagher.  “When the public calls us to verify a deal, they not only protect themselves, they might also protect others by tipping off our investigators.”

The top 10 threats to Florida investors for 2005 are:

1. Ponzi Schemes:  The premise is simple: pay early investors with money raised from later investors. The only people who make money are the promoters who set the Ponzi in motion. On July 30, 2004, Charles William Cox, of Ft. Myers, and Charles D. Gregory Jr., of Pensacola, were sentenced for running the schemes "European Marketing Group", "Mammoth Capital" and "Skyward Enterprises."  Investor's money was laundered through various U.S. and offshore businesses and bank accounts and then misappropriated by the defendants. Cox was sentenced to 48 months and Gregory was sentenced to 23 months in prison.  They agreed to pay over $2.7 million in restitution. 

2. Unlicensed Individuals Selling Securities: Anyone selling securities without a valid securities license should be a red alert for investors.  Call 1-800-342-2762 or go to www.MyFloridaCFO.com to Verify Before You Buy.

3. Unregistered Investment Products: Con artists bypass stringent state registration requirements to pitch viatical settlements, pay telephone and ATM leasing contracts, and other investment contracts with the promise of “limited or no risk” and high returns.  James Dent, of Plantation, FL, was sentenced in April of 2004 for the sale of unregistered securities.  Dent is serving eight years probation and was ordered to pay $290,000 in restitution.  

4. Promissory Notes:  Empty promises can leave these notes worth less than the paper they are printed on.  On February 23, 2004, Alfred Michael Jaillette, of Altamonte Springs, President of World Vision Entertainment, was sentenced to 51 months incarceration and ordered to pay restitution of $18,973,279 for the sale of guaranteed promissory notes which were backed by a shell company with no assets.   

5. Senior Investment Fraud:  Because of their access to a lifetime of savings, seniors continue to face investment fraud by con artists peddling unsecured promissory notes and other investments that are either fraudulent or unsuitable for them. On August 12, 2004, Philip Mehl, age 65, of Stuart, was sentenced to 20 years and ordered to pay restitution for running workshops and advertisements that offered 10 percent returns on investments that were guaranteed against loss. The scam sold over sold over $20 million of these bogus securities.             

Last year lawmakers passed the Senior Annuity Suitability law which was proposed by Gallagher.  It requires annuities to be compatible with the needs of the person purchasing it. 

6. High-Yield Investment Schemes: Con artists lure investors with promises of triple-digit returns through access to “risk-free guaranteed high-yield instruments” or something equally deceptive.

7. Internet Fraud: Stock promoters are using online “boiler rooms,” instant messaging, and fake websites to lure investors into “pump-and-dump” stock schemes. 

8.  Affinity Fraud: Con artists are increasingly targeting religious, ethnic, cultural, and professional groups. The Miami Herald recently reported on a Miami Beach couple who was told about an investment by a neighbor who attended the same church.  Their $25,000 was stolen along with $180 million that a bogus company scammed through churches across Florida. 

9.  Variable Annuity Sales Practices: Senior investors should beware of the high surrender fees and steep sales commissions agents often earn when they move investors into variable annuities.

10. Viatical Settlement Agreements: Many Floridians have been the victims of viatical investment companies that promise very high returns with very low risk.  Gallagher has been fighting to have lawmakers pass a bill to regulate viatical investments as securities, but many in the industry are trying to block this oversight. 

The legislation, House Bill 1437 by Rep. Dudley Goodlette and Senate Bill 2412 by Sen. Rudy Garcia, would require investments in viatical settlements to be regulated as “securities.” For investors, this would mean access to company information, any promises made to investors would have to be documented and approved by state regulators, and a determination of the investment’s suitability would have to be considered, including the purchaser’s financial and tax status, and the purchaser’s investment objectives.  The legislation would also require the broker and sales agent selling viaticals to be licensed.

Viatical providers, like Mutual Benefits and Lifetime Capital, buy life insurance policies for less than the face value and resell them to investors who seek to make money upon the insured’s death. By selling a policy for a percentage of its face value, the insured can get cash now for medical, living or other expenses. The tradeoff is giving up a bigger payoff at death for one’s beneficiaries.

Before making any investment, Gallagher urged investors to ask the following questions:

  • Are the seller and investment properly licensed and registered? 
  • Has the seller given you written information that fully explains the investment?
  • Are claims made for the investment realistic?
  • Does the investment meet your personal investment goals?

Gallagher also urged investors to contact the Department of Financial Services with any questions about an investment product, broker or adviser before making an investment. Please Verify Before You Buy.

For more information call the Department of Financial Services at 1-800-342-2762 or go to www.MyFloridaCFO.com. Information is also available at the North American Securities Administrators Association Fraud Center at www.nasaa.org.  

FIREFIGHTERS LICENSE PLATE HOTTEST SELLER IN 2004

The Florida Salutes Firefighters specialty license plate was the hottest selling new plate in 2004.  In a celebration in the Capitol Courtyard, it was announced that its 10,000th license plate was sold and its $200,000 in proceeds will benefit charities throughout the state. The tag, depicting a firefighter with a patriotic background, was sponsored by the Florida Professional Firefighters.   

The plate, which went on sale throughout Florida last June, was ranked 38th out of a field of 91 specialty plates in 2004, according to the Department of Highway Safety & Motor Vehicles.
 

 “Florida has specialty plates for many worthy causes, from child abuse prevention to wildlife conservation,” said CFO/Fire Marshal Tom Gallagher.  “This new tag is a wonderful way to show the men and women of fire-rescue here in Florida and throughout the nation that we appreciate their heroic service to our communities.”

The idea for the specialty tag came from Palm Beach County Fire Rescue’s Lt. Armand Nault, shortly after the September 11th terrorist act.  With the outpouring of community support, he thought a specialty plate would give the public an opportunity to show their support 365 days a year and help local charities at the same time.  "The money raised from the sale of each plate will be collected by the Florida Firefighter Charities and will be distributed back to eligible, local charities chosen by the firefighters where the plate was sold,” said Nault. 

The plate is available to the general public for an additional $20 plus a $2 processing fee required by the state.   

 The FPF has over 19,000 members including firefighters, emergency medical personnel and the state’s forestry workers.  Last year, the FPF ranked second among the 50 states for their $1.2 million contribution to MDA, just one of the charities that firefighters support. 

Bob Carver, President of the FPF said, “The statewide license plate was designed so citizens can be proud to show their support and salute Florida’s firefighters.” 

For more information, please visit www.firefightertag.com or call 561/747-8495.

 

GOVERNOR BUSH, GALLAGHER AND CABINET HONOR FLORIDA’S OUTSTANDING FIRE AND RESCUE SERVICE PERSONNEL

Governor Jeb Bush, Chief Financial Officer Tom Gallagher and the other members of the state Cabinet honored fire and rescue service personnel from around Florida for outstanding contributions to their industry and their communities.

Ten fire and rescue workers from throughout Florida were recognized for their work in 2004, including one firefighter who on-duty pulled a victim from a burning building and off-duty saved a life by applying the Heimlich maneuver to a patron in a restaurant.    

“These men and women are role models, but all who answer the call to serve and protect the public are heroes,” said Gallagher, who also serves as State Fire Marshal.  “I extend my gratitude to each and every one who puts on that uniform and responds when the alarm sounds.” CONTINUED

The Governor and Cabinet also recognized firefighters’ commitment to raising money for the Muscular Dystrophy Association as part of the International Association of Firefighters’ annual “Fill the Boot” campaign.  Florida firefighters last year raised more than $1.2 million.  In honor of their efforts, the Cabinet proclaimed this week, April 3-9, Florida Firefighter Appreciation Week. 

Professional Firefighter of the Year - Manly C. Bolin, formerly of Jacksonville Fire-Rescue Service

Career Firefighter of the Year - Craig M. Rogers, Palm Harbor Special Fire Control & Rescue District

Volunteer Firefighter of the Year - Alexander Nualart, Plantation Fire Department

Fire Investigator of the Year - Darrell W. Brown, Gainesville Fire Rescue Department

Fire Inspector of the Year - George M. Ellington, Cedar Hammock Fire Rescue

Forestry Firefighter of the Year - Frank Gibbs, Department of Agriculture and Consumer Services, Division of Forestry, Sebring

Fire Instructor of the Year - Buck Tomlinson, Department of Financial Services, Division of State Fire Marshal, Bureau of Fire Standards and Training, Ocala

Fire Marshal of the Year - Anthony Apfelbeck, City of Altamonte Springs

Fire Chief of the Year - Richard Williams, Gainesville Fire Rescue Department

Emergency Preparedness Manager of the Year - Keith Holman, Martin County Emergency Management 

Also, the Central Florida Fire Academy in Orlando was named Training Center of the Year.

In the Capitol Courtyard, Gallagher presented the first check to the Florida Firefighter Charities representing money raised from the sale of the Florida Salutes Firefighters license plate.  

Then a ceremony commemorated the installation of the Florida Fallen Firefighter Wall of Honor.  The Wall of Honor is located on the plaza level of the Capitol at the Chief Financial Officer’s office.   

Established and funded by the members of the Florida Joint Council of Fire and Emergency Services Organizations, the Wall names 129 Florida firefighters who have died from job-related injuries. 

“The Wall of Honor will serve in perpetuity as a remembrance of the sacrifice and service of our fallen firefighters,” Gallagher said.  “It will also serve to remind us of the risk all of our fire and rescue personnel take every time they go out.” 

 

UNLICENSED POMPANO BEACH PSYCHOTHERAPIST ARRESTED AGAIN

State insurance fraud investigators arrested an unlicensed psychotherapist a second time for practicing psychotherapy without a license and fraudulently billing insurance companies.  Lubomir Lacho, 53, of 2832 N.E. 32nd St., was arrested this morning at New Hope Counseling Center, located at 3500 N.E. Fifth Ave.  It appeared he had a full schedule of patients for the day.

Investigators with the Department of Financial Services, Division of Insurance Fraud, arrested and charged Lacho on three counts of insurance fraud, six counts of third-degree grand theft, three counts of second-degree grand theft, six counts of unlicensed practice of mental health counseling/psychotherapy, and one count of first-degree organized scheme to defraud.  The charges reflect billings of more than $111,000 to insurance companies and patients.  The National Health Care Anti-Fraud Association assisted in the investigation.

“These patients were put at risk of not getting the care they really need,” said Florida’s Chief Financial Officer Tom Gallagher, who oversees the Department of Financial Services. “And this man has clearly shown his intent to operate outside the boundaries of good medicine and the law.”  

One patient told investigators that she had been seeing Lacho since her release from a psychiatric hospital.  One of the conditions of her release was to see a licensed psychotherapist. 

Lacho was booked into the Broward County Jail.  If convicted, statutorily he could face up to more than 100 years in prison.

Lacho was arrested on similar charges in February 2004, and the Department of Health issued him a Cease and Desist Order in 1994.  This latest investigation was based on information from Aetna, Cigna, and Great West Life & Annuity Insurance Company indicating Lacho misrepresented information on health insurance claims (HCFAs) for patients that he treated.    

The Department of Financial Services, Division of Insurance Fraud, investigates various forms of fraud in insurance, including health, life, auto, property and workers' compensation insurance.  Anyone with information about this case or another possible fraud scheme should call the department's Fraud Busters Hotline at 1-800-378-0445.  A reward of up to $25,000 may be offered for information leading to an arrest and conviction.
 


KEEP ACCOUNT INFORMATION SAFE

Don't take e-mail scammers' bait

 
Do you like to fish? So do the crooks. Only thing is, they are not fishing for bass, they are fishing for money.
 
"Phishing" is the hottest Internet scam to come along. It is a simple scam and most deceiving in the manner in which it is perpetrated. ID thieves copy and paste the logos of your bank or credit card company into phony e-mails and send them to you over the Internet. The e-mail says they need to verify your account information or that your account has been compromised. If you click on the link posted in the e-mail you are immediately directed to a form you must complete. Fill out the form and presto, your ID and money will be stolen.
 
The crooks are hoping you will provide the information without investigating the source of the e-mail. Unfortunately, they are usually right. People tend to provide the information only to realize after hitting the enter key that perhaps they acted too hastily. The fact is, banks and credit card companies do not contact customers via e-mail, phone or mail to request or verify security information about passwords or personal identification numbers (PINs).
 
To give you an idea of what to watch for, below is an example of a fraudulent e-mail going out to Fifth/Third Bank customers:
 
If you choose to ignore our request, you leave us no choice but to temporally suspend your account. We ask that you allow at least 48 hours for the case to be investigated and we strongly recommend not making any changes to your account in that time. If you received this notice and you are not the authorized account holder, please be aware that is in violation of Fifth/Third Bank policy to represent oneself as another Fifth/Third Bank account owner. Such action may also be in violation of local, national, and/or international law. Fifth/Third Bank is committed to assist law enforcement with any inquires related to attempts to misappropriate personal information with the Internet to commit fraud or theft. Information will be provided at the request of law enforcement agencies to ensure that perpetrators are prosecuted to the fullest extent of the law. Please do not respond to this e-mail as your reply will not be received. For assistance, log in to your Fifth/Third Bank account and choose the "HELP" link. Thanks for your patience as we work together to protect your account. Regards, The Fifth/Third Bank Team.
 
Most phishing e-mails are similar. Therefore, if you see one like this in your in-box contact your bank or credit card company post haste. Also, bear in mind that a phishing e-mail may come disguised as a note from your electricity provider, cable company or other service providers you do business with. Therefore, be vigilant with all unsolicited e-mails.

If you get spam email that you think is deceptive, forward it to spam@uce.gov. The FTC uses the spam stored in this database to pursue law enforcement actions against people who send deceptive email.
 

STATE FIRE MARSHAL K-9 OFFICER RETIRING TO LIFE AS SOUTH WALTON FIRE DISTRICT STATION MASCOT

She isn’t doggone tired yet, but Savannah is retiring after serving eight years as the State Fire Marshal’s Office K-9 accelerant detective for the Northwest Florida region. 

She will live in the lap of luxury – at least as she sees it.  The yellow Labrador Retriever will become the mascot for South Walton Fire District Station #2.  She will go to work daily with Chief Les Hallman and hang out around the fire house to greet visitors. 

 “She has been invaluable in finding accelerants and helping detectives solve cases,” said Florida’s Chief Financial Officer and State Fire Marshal Tom Gallagher.  “She has also taught hundreds of school children arson awareness through demonstrations at local schools.” 

Since August 1998, Savannah has been a certified officer with the Bureau of Fire and Arson Investigations, the law enforcement branch of the Division of State Fire Marshal that assists other state and local fire and law enforcement agencies in the investigation of fires of suspicious origin. Her nose has proved very accurate, with over 80 percent of her findings confirmed. 

Savannah and her handler, Detective Tommy Barron, are credited with working more than 500 cases, including some high-profile homicide cases.  In one case, Savannah was able to track an arsonist’s gasoline-tainted footprints away from the damaged home and down the street to the getaway car.  

“Savannah has a very outgoing personality and loves being around people and interacting with children,” Barron said.  “I believe she has worked with every detective in this region.” 

Savannah has already helped train her replacement who will be introduced at the retirement party.
 


Consumer Services HelpLine (800) 342-2762.