CFO Alex Sink's Consumer eViews NewsletterFLORIDA CHIEF FINANCIAL OFFICER
ALEX SINK'S NEWSLETTER

Volume 6 Number 40 October 2, 2009

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Dear Floridian:

As many of you know, I have worked since coming into office to institute meaningful reforms to Florida’s $110 billion pension fund that many of our state’s teachers, law enforcement officers, and state and local employees depend on for their retirement.

That’s why at this week’s Cabinet meeting, I proposed reforms to help provide better oversight of this fund, including expanding the Board of Trustees to include members with financial expertise and fund beneficiaries. I also recommended instituting fiduciary training for all the trustees and advisory board members and establishing regular, independent audits of the SBA.

I will continue to advocate for changes to ensure the highest level of accountability, transparency and oversight for the fund so many Floridians depend on for a secure financial future.

Sincerely,

Alex Sink
CFO
State of Florida


CFO Sink proposes SBA oversight reforms

Florida CFO Alex Sink on Tuesday recommended reforms to strengthen and enhance the oversight of the state’s public pension fund, including a proposal to expand the Board of Trustees, but her motions were delayed until December by the other two members of the SBA Board, Governor Crist and Attorney General McCollum.

CFO Sink noted her decades of business experience and the recent governance study when laying out reasoned arguments for reforming the oversight structure of the $110 billion pension fund so many Floridians depend on for a secure retirement. She also pledged to work with Florida Legislators to move forward with Legislation to expand the Board of Trustees.

“The SBA governance structure is long overdue for a change and the recent governance study clearly showed that the SBA’s Board of Trustees should include more than just three elected officials,” said CFO Sink. “My recommendations continue the reforms I have taken the lead on since coming into office to improve the transparency, accountability and oversight of the SBA, and I was disappointed that they were not brought to a vote.”

CFO Sink offered three recommendations to strengthen the oversight and accountability of Florida’s $110 billion public pension fund at today’s Cabinet meeting:

These recommendations were validated by a Board-directed study of best practices of 15 other state pension funds and numerous private sector investment professionals presented to the SBA Board of Trustees earlier this month. The study was from an initiative by CFO Sink to bring a more modern, businesslike approach to the oversight and management of the SBA. The report can be read here.

“As one of the SBA’s three trustees, and the only current trustee with previous business experience, I have long argued that it takes more than three elected officials to oversee the $110 billion fund that our police officers, teachers and other state employees depend on for a secure retirement,” CFO Sink continued. “These three proposals were taken from the findings of an in-depth study of public pension funds around the country and private sector experts – and I will continue to push for these needed reforms.”

In March of 2008, CFO Sink presented her ten point plan designed to toughen the SBA’s financial safeguards, increase transparency in SBA communications and strengthen board oversight, which included recommendations such as Board of Trustee expansion.


CFO Sink sends a letter to Governor calling for timely action on clemency errors

Florida CFO Alex Sink on Monday sent a letter to Governor Crist urging him to convene a meeting of the Clemency Board during the October 13 Cabinet meeting in order to take corrective action on the errors that allowed thirteen ex-offenders to wrongfully be granted restoration of their civil rights.

“I feel it is important for the safety of our citizens and in the best interest of our state to reverse the error of giving rights to these thirteen ex-offenders who did not qualify, while at the same time recognizing the differing circumstances of these cases,” CFO Sink wrote.

In her letter, CFO Sink assigned the thirteen cases into four general categories and offered recommended courses of action for each category. She also requested that the Chairman of the Parole Commission report at the next scheduled Clemency Board meeting on December 10 on all corrective action the Parole Commission is implementing.

A copy of CFO Sink’s letter is attached.


October is Disability Employment Awareness Month

On Tuesday, the Governor and Cabinet recognized October as Disabilities Awareness Month. Annually, Florida’s Agency for Persons with Disabilities provides services to more than 35,000 Floridians with developmental disabilities so they can live and work in their local communities.

Florida’s Vocational Rehabilitation and Blind Services programs assist clients with disabilities so they may become employed.

These agencies combined assisted more than 18,000 Floridians with disabilities seeking gainful employment. The Able Trust has awarded over $20 million to individuals with disabilities and nonprofit agencies for employment-related purposes.

Mentoring and job shadowing provide employment opportunities for students and job seekers. This year’s theme is "Florida’s People: Its Talent & Strength."

Dan Sowell, Bay County Property Appraiser, spoke in appreciation of the services available to citizens of Florida that enable employment. Read the Resolution.


CFO Sink promotes Florida to federal railroad administrator on eve of application deadline

Florida CFO Alex Sink met with Federal Railroad Administrator Joseph C. Szabo on Thursday to advocate for Florida to receive federal funds for the state’s rail projects. The meeting fell on the eve of today’s application deadline for the billions of dollars in stimulus funds set aside for rail projects, that could mean up to 25,000 jobs for Floridians.

“Not only are high-speed, intercity and commuter rail essential for helping move Florida’s economy forward, but funding of these projects could mean the creation of much-needed jobs in our state,” said CFO Sink. “During my meeting with Administrator Szabo I urged President Obama’s Administration to fully fund Florida’s rail applications, helping us get our state moving again and giving Floridians more of our tax dollars back.”

CFO Sink previously sponsored a Cabinet Resolution supporting these projects and urging President Obama, U.S. Transportation Secretary Ray LaHood and Federal Railroad Administrator Szabo to fully fund Florida’s applications. Read the Resolution in full here.

At the meeting, CFO Sink emphasized that the development of high speed and intercity rail will catalyze the strong regional and local rail projects, reduce congestion and air pollution and promote better growth management. She spoke with Administrator Szabo about all of Florida’s applications, including the $2.5 billion request for the “shovel-ready” Tampa-Orlando High Speed Rail Corridor that can be built faster than any other project in the country and would provide full service within 5 years.

“Especially given the unprecedented economic challenges our state is facing, I feel it is important to do everything I can to support these important projects,” CFO Sink continued. “Our tax dollars are going up to Washington, and we deserve to get them back in Florida, investing in projects that will help our state create jobs now and build a stronger economy in the future.”

CFO Sink has been a tireless advocate for the comprehensive development of Florida’s infrastructure system as a key component in creating a stronger economic future for the state.


Consumer Corner: FICO credit scoring has a new math formula

The way your credit score is calculated has changed.

With the new scoring model, called FICO 08, small missed payments in collections with original amounts of $100 or less won’t cause problems for your credit score. And you most likely won’t be penalized for a single delinquency if it occurred within the last two or more years and if the rest of your credit history doesn’t have other blemishes on it.

If a consumer has high credit usage, with accounts that have reached or are close to reaching their limits, the FICO 08 model can hurt your credit score. It will also hurt if you have a pattern of making late payments.

All three credit bureaus – Experian, Equifax, and TransUnion – have been using the new scoring model since August 2009.

Changes to the model were made in order to give lenders a better risk assessment of borrowers. With the changes, consumers with low credit risk most likely see their scores go up slightly and consumers with high risk will probably see their scores drop.

“Piggybackers” will also see changes to their score with the FICO 08 model. Piggybacking has been a practice used by credit-repair companies to help consumers improve their credit scores. FICO 08 will seek out people who are misrepresenting themselves through deceptive means, like piggybacking and their scores will no longer improve.

Here are some suggestions on ways to improve your FICO score:

For more financial tips and resources, visit the Consumer Guide section of the Department of Financial Services Web site at www.MyFloridaCFO.com   Source: MSN Money


Guilty plea by senior scammer shows need for better protections

Florida CFO Alex Sink today reiterated her calls for Safeguard our Seniors legislation that would increase penalties against agents who defraud senior investors and establish better disclosures and protections, after a guilty plea by a Tampa Bay Area scammer resulted in no jail time.

Last week, Port Richey senior scammer Randolph H. Kahl-Winter was sentenced to 10 years felony probation and ordered to pay restitution under a plea deal only on charges of grand theft from the insurance company. If CFO Sink’s Safeguard our Seniors legislation had been passed into law last session, Kahl-Winter would have also had to answer for his crimes against 82-year old Bonnie Madden.

“As this case proved, some unscrupulous insurance agents will take advantage of Florida's senior population to pad their own wallets, which is why safeguarding our seniors against these scammers is essential in these tough economic times,” said CFO Sink. “I’m proud of the work of my team in uncovering Kahl-Winter’s misdeeds; however, our state still needs tougher penalties in our laws to help deter crimes against our greatest generation from ever happening in the first place.”

Bonnie Madden at the advice of Kahl-Winter, liquidated her existing investments to fund the purchase of two annuities with 10- and 15-year surrender periods. He then converted the annuities into a $1.75 million life insurance policy by forging Madden’s name on several documents and inflating her net worth from $450,000 to $1,770,000 to qualify her. This generated $52,355 in commissions for him, while Madden would have been left unable to pay the premium on the inflated policy. CFO Sink’s Department of Financial Services recovered Bonnie Madden’s money.

Currently, CFO Sink’s Department has seven pending administrative charges against Kahl-Winter, including making fraudulent representations to Madden. Now that he has been convicted of a felony, the department will file a notice of revocation— the most severe license penalty for an insurance agent under current insurance codes.

Last legislative session, CFO Sink teamed up with key lawmakers to push legislation that increases the penalty for agents who defraud senior investors to a third degree felony and establish better disclosures and protections upfront for seniors who invest in these products. The legislation was approved unanimously by the Florida Senate but did not make it out of committee in the Florida House.

In the last fiscal year, CFO Sink’s department opened 267 annuity investigations involving seniors statewide and 52 in the Tampa Bay Area, recovering more than $1.5 million for Tampa Bay area seniors since February 2008 as part of her Safeguard Our Seniors initiative.

Florida is currently home to more than 2.9 million Floridians over the age of 65. The state’s senior population is projected to grow by as much as 30 percent, and many of these seniors will look into investing in annuities. To learn more about CFO Sink’s Safeguard Our Seniors Task Force or what to consider when purchasing annuities, visit www.flseniors.net. Floridians who believe they may have been the victim of annuity fraud should call (850) 413-3089 or toll-free at 1-877-My-FL-CFO (1-877-693-5236), or visit our web site, www.MyFloridaCFO.com, to file a complaint.


Miss Florida shares ideas in Cabinet meeting

Rachael Todd, Miss Florida 2009, visited the Florida Cabinet this week to speak about her platform to end homelessness in the United States. Rachael found a passion to ensure no human being goes without shelter several years ago when her mother founded the HOPE Foundation, an agency that works with those in crisis to guide them into self-sufficiency through Housing, Outreach, Prevention and Education.

Committed to changing the way Americans view and deal with the issue of homelessness, Rachael served as a delegate to the National Conference on Ending Homelessness in Washington D.C. Rachael will be representing the Sunshine State of Florida at the 2010 Miss America Pageant in Las Vegas, Nevada., where she will showcase her signature talent of Irish step dancing.

Rachael graduated from the University of Central Florida (UCF) with a Bachelor of Arts in Interpersonal Communication in 2009, and plans to obtain a Masters of Business Administration specializing in public and non-profit management.


Two DIF Detectives Honored for Exceptional Service

This week while attending the LECC conference, Division of Insurance Fraud Detectives Sandra Fitzsimons and Taylor Wells received an award and recognition for their successful participation in the arrest and ultimate conviction of Dr. Robert Ignasiak, Jr., a licensed physician who owned and operated Freeport Medical Clinic. Dr. Ignasiak prescribed controlled substances to patients without determining a sufficient medical necessity for the prescription of these substances in quantities and dosages that would cause patients to abuse and misuse the substances. Dr. Ignasiak also prescribed controlled substances to patients knowing the patients were addicted to the substances, misusing the substances, were "doctor shopping", and were requesting additional quantities of controlled substances for their drug habits. Because of Dr. Ignasiak’s unethical behavior, acting against the oath he took to become a physician, two of his patients died.

After a four-year joint investigation by the North Florida Health Care Fraud Task Force comprised of numerous local, state and federal agencies, (including the Department of Financial Services, Division of Insurance Fraud), Dr. Ignasiak was found guilty of 43 charges following a 19-day trial.

Dr. Ignasiak was sentenced on January 27, 2009, in the Federal Court House in Pensacola. The Judge L.A. Collier sentenced him to 292 months (24.4 yrs) in Federal prison and ordered Ignasiak to pay $1 million in fines and $43,000 in court costs.

Congratulations to all of the North Florida Health Care Task Force, in particular Division of Insurance Fraud Detectives Sandra Fitzsimons and Taylor Wells. U.S. Attorney Tom Kirwin for the Northern District of Florida attended the conference and presented our detectives with the prestigious award in honor of their exceptional service.


CFO Sink returns $1.2 million to Delray Beach seniors scammed out of life savings

Florida CFO Alex Sink on Monday announced the refund of more than $1.2 million to four Florida seniors scammed into buying inappropriate equity indexed deferred annuities that earned a Delray Beach insurance agent thousands of dollars in commissions while leaving the victims without access to their life savings. Department of Financial Services investigators and legal staff worked together with the insurance company to recoup the funds.

Larry Yale Krakow, 52, of Delray Beach has been suspended from selling insurance and ordered to pay a $25,000 fine for numerous violations of the Florida insurance code. Krakow is the owner, president and director of Golani Financial Group a/k/a Golani Insurance Group, Inc.

“I applaud our investigators and attorneys for protecting these seniors and making sure they got their money back,” said CFO Sink. “We are sending a strong message that we will not tolerate anyone taking advantage of Florida’s consumers, especially our seniors.”

Josephine Passinissi, 74, is one of the victims of Krakow’s scam. Krakow regularly ate dinner at her house and he sent flowers on her birthday to gain her trust. Believing him to be a reliable source of investment advice, Krakow convinced Mrs. Passinissi to liquidate her investments and place $274,384 into annuities that paid thousands to Krakow, but left her unable to access her savings. “Never trust anyone at first, check it out, and read everything,” is Passinissi’s advice. “Never put trust in someone, no matter how nice.”

CFO Sink has heard from hundreds of seniors and their families who say they were convinced to liquidate annuities, CDs, stocks and savings accounts to fund new annuities only to discover these actions robbed them of their savings. Last year, CFO Sink created her Safeguard our Seniors Task Force to examine and recommend solutions to better protect Florida seniors against financial fraud. She teamed up with key lawmakers last session to push legislation that would increase the penalty for agents that defraud senior investors to a third degree felony and would establish better disclosures and protections upfront for seniors who invest in these products. The legislation was approved unanimously by the Florida Senate but did not make it out of committee in the Florida House.

“After hundreds of investigations and thousands of complaints, it’s time that we have the ability to crack down on these scammers. Just like last year, one of my top legislative priorities next session will be to put some ‘alligator teeth’ into the law and crack down on those who prey upon our senior population,” said CFO Alex Sink. “There is no excuse for inaction when it comes to protecting our seniors.”

Equity indexed deferred annuities are often touted as a vehicle for investors to realize stock-market-like gains without the risk, a “best of both worlds” marketing strategy that has proven appealing to risk-averse seniors. However, CFO Sink cautions seniors to use great care in evaluating these complex investment products, as they often contain detrimental features such as hidden penalties, costs, fees, and massive, multi-year surrender charges. These surrender charges may leave the funds inaccessible for a 10- to 15-year period or more. Even then seniors may be required to spread the payments over several years in order to receive the promised bonus and interest rates for that policy.

CFO Sink encourages both licensed annuity agents and seniors to review the Equity Indexed Annuity Alert, at www.myfloridacfo.com/consumers/guides/life/annuity_alert.htm. Anyone who suspects they may be a victim of annuity fraud should log on to www.MyFloridaCFO.com or call the department’s Consumer Helpline at 850-413-3089 or 1-877-My-FL-CFO (877-693-5236).


Colonel Julie Jones Supported by CFO  Sink to head the DHSMV

Florida CFO Alex Sink and the Florida Cabinet on Tuesday unanimously selected Col. Julie Jones as Executive Director of the Department of Highway Safety and Motor Vehicles. Since 2002, Jones has served as the law-enforcement director of the Florida Fish and Wildlife Conservation Commission.

Col. Jones will now be responsible for one of the largest safety and consumer oriented agencies in the nation. The Executive Director is appointed and reports directly to the Governor and Cabinet, with functional responsibility for monitoring, supervising, coordinating, administering and directing all activities of the Department of Highway Safety and Motor Vehicles. CFO Sink and the Cabinet also took the time to thank outgoing DHSMV Executive Director Electra Bustle for her dedication and service.


CFO Sink announces arrest, confession of church arsonist

Florida CFO and State Fire Marshal Alex Sink on Thursday announced the arrest of Roderick Walker, 25, for the arson and burglary of the New Hope Missionary Baptist Church in Riviera Beach. Walker confessed to setting the fires, and faces up to twenty-five years in prison if convicted.

"This senseless act of arson at a local church is simply reprehensible,” said CFO Sink. “I am grateful for the work of my Fire Marshal investigators and the Rivera Beach Fire Department and Police Department, and it is my hope that the community will rally behind the New Hope Missionary Baptist Church during their time of need.”

The State Fire Marshal’s Office responded last night to the New Hope Missionary Baptist Church to assess the fire damage and conduct an investigation. The detectives uncovered three different areas of origin and determined that the fire was intentionally set by using matches on clothing. In an interview with Walker, detectives obtained a complete confession. The estimated damage to the church is approximately $75,000.

Pastor Chandler of the New Hope Missionary Baptist Church told State Fire Marshal investigators that, due to hard times in the community, the decision was recently made to drop the church’s fire insurance.

The Bureau of Fire and Arson Investigations is the Law Enforcement Branch of the Division of State Fire Marshal that assists other state and local law enforcement and fire service agencies in the investigations of fires of a suspicious origin. Anyone with information about arson or any suspicious incident of fire is asked to call 1-877-NO-ARSON. Rewards are offered for information leading to an arrest and conviction.


Disaster preparation event highlights DFS partnerships

Linda Smart, outreach coordinator for the Department of Financial Services’ Division of Consumer Services, held a disaster preparedness and recovery forum on September 24 at the Enoch Davis Community Center in Tampa. The event brought together agencies and resources that provided attendees with valuable information.

In addition to Smart, who moderated and addressed several key insurance issues, speakers and resources were provided by the Department of Financial Services’ Division of State Fire Marshal and Division of Funeral, Cemetery and Consumer Services, the American Red Cross, the Department of Business and Professional Regulation, Housing and Education Alliance, Inc., Crisis Center of Tampa Bay 2-1-1, and Hillsborough County Hazard Mitigation.

Speakers discussed a range of disaster-related topics such as planning and preparedness, what to do after a disaster, home fire safety, how to protect yourself against unlicensed and unscrupulous contractors, and crisis resources in the local community.

Among the presenters was Thurman Lowe from the Division of Funeral, Cemetery and Consumer Services who spoke about licensing in Florida. He explained to attendees the importance of knowing the difference between a pre-need arrangement verses an at-need arrangement. He encouraged everyone to visit the department’s Web site at www.MyFloridaCFO.com to check for licenses and other consumer resources.

Supervisor Augie Valdez from the State Fire Marshal’s Office spoke about general home safety and gave some compelling accounts of past deployments following hurricanes and how preparation could have made a difference. Fire Prevention Specialist Mike Cox described the basics of the Incident Management System, and assured participants “they are not alone following a storm.” Participants, however, were repeatedly reminded that the best protection is preparation.

“The partnership the Department has with these agencies is so important to Floridians because it offers them the opportunity to have a centralized forum like this to receive resources and information,” said Smart.

If you would like information or resources on disaster preparation, or if you would like to schedule a preparedness and recovery event in your area, please contact our Consumer Services Helpline at (850) 413-3089 or toll-free at 1-877-MY-FL-CFO (1-877-693-5236). You can also visit our Web site at www.MyFloridaCFO.com.


Florida Housing Help partnerships benefit homeowners

Since the first workshop in January 2009, CFO Sink and the Department of Financial Services have held 47 Florida Housing Help workshops and helped more than 7,500 homeowners.

To keep up with upcoming events, or for information and resources relating to foreclosure issues, visit http://www.myfloridacfo.com/FloridaHousingHelp. To request a Florida Housing Help workshop, call 850-413-3089 or 1-877-My-FL-CFO.

Florida Housing Help events coming up:

10/10 Florida Housing Help CFCC Ewers Century Center, Klein Conference Facility
3001 SW College Road, Ste. 205, Ocala 10:00-4:00 p.m.

10/16 Florida Housing Help The Cultural Center of Charlotte County
2280 Aaron Street, Port Charlotte 1:00 – 5:00 p.m.

10/21 Florida Housing Help Joseph P. D'Alessandro Office Complex (State Building)
2295 Victoria Ave., Fort Myers, FL 5:00-8:00 p.m.

10/28 War on Poverty-Florida (inside Gateway Mall)
Gateway Mall, 5196-A Norwood Ave, Jacksonville 5:00-8:00 p.m.

11/7 Florida Housing Help Englewood Neighborhood Center
6123 La Costa Drive, Orlando 10:00-4:00 p.m.


Hurricane Checklist: How do you define disaster?

Planning you probably haven't considered

When most of us hear the term “natural disaster” we think of hurricanes, tornados, or earthquakes. What we typically don’t think of is the flu or the H1N1 virus; however, we need to think of all these possibilities as we create disaster plans for our family and/or business.

What would you do if all of your employees contracted H1N1? How would you run your business? How will you care for and protect your family if you get the flu? How will you complete everyday tasks like grocery shopping or preparing meals? These are things we all need to consider.

Businesses, business owners, and household leaders can take steps to be proactive and help their employees and families. Here are a few steps you can take:

For more information and tips on creating a disaster plan, visit www.ready.gov. For additional disaster tips, visit the DFS web site at www.MyFloridaCFO.com.


My Family CFO: Earned Income Tax Credit - Do you qualify for advance payments?

If you anticipate that you will qualify for the Earned Income Tax Credit when you file your federal tax return in early 2010, you may qualify for advance payments now. These advance payments would mean more money in your household budget this year.

The Earned Income Tax Credit or the EITC is a refundable federal income tax credit for low to moderate income working individuals and families. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to be obligated to file a tax return.

The EITC has no effect on certain welfare benefits. In most cases, EITC payments will not be used to determine eligibility for Medicaid, Supplemental Security Income (SSI), food stamps, low-income housing or most Temporary Assistance for Needy Families (TANF) payments.

Find out if you are eligible for the Earned Income Tax Credit by answering some questions and providing basic income information using the EITC Assistant, available in English and Spanish.

You may prefer to get some of next year’s EITC throughout the year, rather than wait and get EITC after you file your tax return. See if you qualify for Advance EITC payments by completing the five questions on the back of Form W-5, Earned Income Credit Advance Payment Certificate, available here or through your employer.


In observance of Yom Kippur

Florida CFO Alex Sink on Sunday released the following statement in observance of Yom Kippur: “Tonight marks the beginning of the holiest day of the Jewish year, Yom Kippur. It is the Day of Atonement marked by fasting, prayer and reflection. I extend my best wishes to all of Florida’s Jewish families as they observe this solemn and sacred holiday.”