Monthly Archives: December 2008

Holiday Cheer, 2008-style

BEDFORD FALLS, Ill. (Dec. 27)– A preeminent banker sits tonight in a small-town jail cell, accused of a myriad of state and federal crimes after a furtive attempt to take over a rival financial institution.

Henry F. Potter, 70, may even be the first banker in history to be charged with grand larceny by stealing the cash of a depositor one day, and then using it the next day in an attempt to buy a pardon.

The theft allegation triggered other charges against Potter as other cases began linking the banker to a bevy of other financial scandals.

The story unfolded yesterday after an employee at Potter’s First National Bank of Bedford Falls informed an Illinois state bank examiner of the Dec. 24 theft of $10,000 from William “Uncle Billy” Bailey, the cashier of the much smaller Bailey Building and Loan in Bedford Falls.

The money, a payment as part of the thrift’s banking relationship with First National, was misplaced in the bank’s lobby. Potter allegedly kept the money, according to Almira Sessions, Potter’s secretary.

Potter then called the state bank examiner’s office in Springfield, claiming that Bailey Building and Loan would show insufficient funds. He also claimed George Bailey, the thrift’s president, was under the influence of tsu-tsu, a Guatamalan plant with psychotropic side effects.

The result was a wild Christmas Eve in the small Illinois town, as Bailey eluded local police and reportedly babbled to an unseen companion he named Clarence Oddbody. Concerned townspeople rallied to Bailey – local druggist H.M. Gower called him “the soul of Bedford Falls” – and provided an emergency cash infusion to balance the books of the thrift, which was ineligible for the Treasury Department’s TARP financing..

The reported drug turned out to be flower pedals from his daughter, ZuZu.

A chance encounter at the local Martini’s Lounge later on Dec. 24 between Sessions and Charles Halton Carter, the examiner sent to investigate the Bailey thrift’s books, led to the revelation of the cash theft.

Potter, a notoriously tough person generally seen as a misanthrope in this close-knit community, reportedly refused to pay Sessions her year-end dividend, adding that he would be charging her rent space for her desk outside the banker’s office.

As a team of examiners rushed in for an unprecedented Christmas Day inspection of the First National’s records, Potter allegedly called Illinois Gov. Rod Blagojevich, offering the $10,000 as an immediate down-payment for a pardon on any state offences.

“Yeah, that f___ing George Bailey, what did he ever do for me,” said Blagojevich, unaware of wiretaps of Potter’s telephones or the local bailout of the thrift. “He can go have his own f____ing wonderful life in jail. I’ll take the cash.”

The governor’s wife also made several unintelligible comments in the background, with the only audible phrase coming as, “don’t touch Bailey Park.”

Those words about the Bedford Falls subdivision led to a raft of federal charges against Potter yesterday, as investigators in several cases found the banker to be a major piece of several investigative puzzles.

Federal prosecutors in New York cited Potter as a major player in the sub-prime mortgage scandal, alleging that he secretly took out massively inflated mortgages on Bailey Park properties without the knowledge of the neighborhood’s mainly middle-class homeowners. He then masked the location of the properties – usually as Modesto, Calif. – and marketed the mortgages to the Lehman Brothers investment firm.

Those filings spurred another set of securities-fraud charges from different federal prosecutors yesterday in New York. They allege that Potter securitized the illegal mortgages already pledged to Lehman through a dummy corporation, and then sold the pooled mortgages to the hedge fund operated by Bernard “Bernie” Madoff until earlier this month.

Prosecutors claim the Potter securities – basically a fraud within a fraud – appear to be the only Madoff investments that provided a steady financial stream.

Prosecutors in both cases stressed that the original Bailey Park mortgages, held by the Bailey thrift, are safe and will be unaffected by the alleged swindle.

Wall Street tycoon Sam Wainwright, working with state and federal banking officials, purchased all the assets of First National and Potter’s multiple real-estate holdings in Bedford Falls. Potter had pledged all the properties in a number of illegal loan transactions.

Bedford Falls Town Officer Bert Bond said that Potter, after being arrested early yesterday morning, “was pretty damn smug about everything until (U.S. Attorney) Patrick Fitzgerald released that talk with the governor. And then the subpoenas and legal papers started flying in here like bees on honey.

“He’s bawling like a baby now. And, after putting up with his crap for all of my life, I don’t care.”

Wainwright, meanwhile, immediately transferred all the Potter assets to the personal possession of George Bailey, a lifelong friend.

“I guess he’s the richest man in town now,” Wainwright said.

Bailey was unavailable for comment.

Emerson Schwartzkopf

 

You can read up-to-the-minute news on the dimensional-stone trade and search the archives at http://www.stonebusiness.nett, where you can also find this blog at the Main Menu under the clever title of “Editor’s Blog.”

The advertisements that appear on this page are placed by wordpress.com, and constitute no endorsement of the products or services. And I don’t get a dime from any of them, either.

 

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A Tax Break to Think About

OK – here’s the warning. While we’re going through an economic wringer and worrying about meeting the next payroll, I’m going to talk about spending money.

Actually, this is about saving money in the long-term. And it’s an opportunity where time is quickly running out … maybe.

Oddly enough, the savings opportunity comes via everyone’s friend in business: the Internal Revenue Service. Actually, it’s something that’s courtesy of the U.S. Congress and President Bush: IRS Code Section 179.

Since 2002, many of you probably dealt with Section 179, which details the ability to fully expense tangible property (essentially, anything but real estate and consumable materials) in one year. The one-year-write-off limit started at $25,000, and received several adjustments since then.

Section 179, unfortunately, became known as the “SUV loophole,” as individuals used it to expense vehicles and the media targeted the ability to write off a fully blinged Escalade or Cayenne. Some legislative fine-tuning changed that (the SUV limit is now $25,000), and also increased the one-year total write-off limit to $100,000.

Ten months ago, the Congress and the Bush administration agreed on new limits as part of the Economic Stimulus Act of 2008, as well as a special depreciation allowance. The IRS noted the details in a June news release, with the main focus on the boost of the one-year limit to $250,000, as well as another 50-percent one-year credit on the adjusted (minus that $250,000 deduction) worth of new business assets.

The section179.org Website offers further details on this, plus a handy calculator to figure out the “real” (minus the tax expensing) costs of new equipment. When you start plugging in the price tags of major stone-processing equipment, there’s some real bang-up savings for stone factories and fabricators.

Unfortunately, 2008 proved to be a bust-up year for business overall and business investment, as customers got scarcer and money for loans and leasing disappeared into the economic ethereal. The new Section 179 provisions expire at the end of this month, and there’s a nasty kicker for year-end purchases: You need to take possession and install new equipment by Jan. 1, 2009, for the big savings.

That’s going to cut out CNC machines and anything else that’s not in stock at the supply house, although you can still do well with computers, software and other quick-to-ship items. The one-year-write-off limit drops back to $133,000 in 2009, with no 50-percent additional credit. (That’s detailed in this very handy IRS procedural document on next year’s tax rates.)

Section 179’s one-year write-off may go back to $250,000 next year, if Barack Obama makes good on a campaign pledge. He’s sticking with the quarter-million-dollar expensing, even with a specific announcement on his transition-team Website. The additional 50-percent write-off likely won’t be carried over from 2008, but the $250,000 is better than nothing.

If you can still take advantage of the 2008 provisions of Section 179, make your move now. If not, keep an eye on Congress (which is wise counsel in any case) next year; if the one-year write-off limit goes back to $250,000, take another look at some major stone equipment. Yes, we may be scurrying to find any profits, but slow times often yield the best bargains.

Thanks to Drew Thornton of Laser Products Industries for his contribution to this entry.

Emerson Schwartzkopf

 

You can read up-to-the-minute news on the dimensional-stone trade and search the archives at www.stonebusiness.net, where you can also find this blog at the Main Menu under the clever title of “Editor’s Blog.”

The advertisements that appear on this page are placed by wordpress.com, and constitute no endorsement of the products or services. And I don’t get a dime from any of them, either.

StatWatch: Stone Imports, September 2008

Marble provided a bright spot for dimensional-stone imports in September, and granite tonnage also looked good … although it could be only a one-month reprieve from this year’s downward trend.

The following is taken from data collected by the U.S. Department of Commerce and the U.S. International Trade Commission. All figures give are for September 2008 (along with a comparison with September 2007 data). “Worked” stone is material that’s been shorn from boulders and blocks, and then cut in standard dimensional measures (such as slabs and tiles) and polished.

 

Worked Granite Value

Total: $99,281,726 (-17.78%)

Sector leader: Brazil @ $37,588,831 (-17.51%)

Backfill: Two of the Big Four in granite imports – China and India – slowed the usual double digit decline of this year, dropping 7.24% and 4.64%, respectively. Italy, however, showed a 37.22% decline from September 2007.

Worked Granite Volume

Total: 164,366 metric tons (+6.92%)

Sector leader: India @ 63,538 metric tons (+214.35%)

Backfill: India’s tonnage in September is three times that of the previous month, and the shipments may be more of an aberration than a trend. Brazil, meanwhile, dropped 20.84% from last September’s totals, and China slid by 51.66%. Italy, meanwhile, scored a 86% tonnage increase from a year ago; the large decline in value means that Italian exporters sold for less.

Worked Marble Value

Total: $23,007,502 (+8.35%)

Sector leader: Italy @ $9,122,806 (+2.06%)

Backfill: China provided the biggest boost in value, up 36.96% from September 2007. Spain showed an 8.24% increase, while Turkey’s imports dropped by 10.43%

Worked Marble Volume

Total: 18,926 metric tons (+3.19%)

Sector leader: China @ 4,872 metric tons (+33.15%)

Backfill: China pushed ahead of Italy in volume; Italia exports dropped 14.08% from the previous September. Spain increased its exports by 15%, while Turkey experienced a 26.62% fall.

Travertine Value

Total: $35,370,161 (-23.18%)

Sector leader: Turkey @ $22,390,877 (-25.75%)

Backfill: China is a distant fifth at $1.38 million, but that’s a 73.58% increase from September 2007. Italy’s shipment value increased by 6.61%; Mexico’s declined by 31.27%.

Travertine Volume

Total: 66.391 metric tons (-18.16%)

Sector leader: Turkey @ 54,341 metric tons (+9.99%)

Backfill: An increase in tonnage and a large decrease in value show that Turkey is slashing prices to keep stone moving to the United States. Mexico’s import volume dropped dramatically – 63.7% — from a year ago.

Other Calcereous Volume

Total: 25,079 metric tons (-55.72%)

Sector leader: Lebanon @ 11,585 metric tons (-49.92%)

Backfill: The Lebanese boomlet may be over in this category with the second consecutive month of major reductions in exports to the United States.

Slate Value

Total: $7,632,370 (-21.79%)

Sector leader: India @ $3,293,213 (-22.95%)

Backfill: India moved ahead of China – by $100,000 – in import values for the month, but both showed declines of more than 20% from September 2007.

Emerson Schwartzkopf

You can read up-to-the-minute news on the dimensional-stone trade and search the archives at www.stonebusiness.net, where you can also find this blog at the Main Menu under the clever title of “Editor’s Blog.”

The advertisements that appear on this page are placed by wordpress.com, and constitute no endorsement of the products or services. And I don’t get a dime from them, either.