Archive for the ‘Debtbeat News’ Category

I’m almost bored of writing about star athletes with multi-million dollar contracts who mismanage their personal finances and end up squandering their wealth. There’s just too many of them.  But I am obligated to continue chronicling these cautionary tales, because if it can happen to someone making $100,000,000 then it can easily happen to the dude making a comparatively pedestrian $100k.

The latest is the case of NBA player Eddy Curry, a backup center formerly with the Chicago Bulls and now with the New York Knicks.

Multiple sources report that despite having a $60 million contract, Curry is millions of dollars in debt and even owes his employer (the Knicks) money that they fronted him to help him dig out from under his bills.

How did he get in this mess? You could probably guess, but I’ll tell you anyway.  Frivilous spending on himself and his “posse” of friends and family who he kept in houses and cars that he paid for and bad advice from a questionable accountant. It was so bad that Curry didn’t know what cars he owned or how his money ran the pick-and-roll on him.  Curry claims that his accountant handled his money up until 2008, when he realized that he was up to his eyeballs in bills.

(Which is tough to do when you’re seven feet tall.)

Not much of  a saver, he currently has only $186,000 set aside for retirement in his 401(k).

Worst financial move? In 2008 Curry took out a personal loan of $580,000.  The interest rate?  Eighty-five percent.  Yes, 85%.  By the way, a rate this high is only legal in the state of Nevada.  According to the lender, Curry has not made any principle payments on the loan.

The only silver lining for Curry may be the fact that if officially broke, he won’t have to pony up any of the cash that he stands to lose in the current sexual harassment lawsuit that he is facing.  Yup, this guy is a winner all-around.  Except on the basketball court where he averages less than four points a game for one of the worst teams in the league.

Curry joins the likes of other pro financial flameouts like Antoine Walker, who just filed for bankruptcy after having his mama’s house foreclosed on.

This is not good pub for his team or the league, and the NBA has a very good rookie program to help young players from poor backgrounds who are suddenly showered with more money than God try to understand how to protect their windfall.  Unfortunately you can lead a horse to water, but you can’t stop him from buying the Rolls Royce for his second cousin.

As we all know by know, the only language that the big banks understand is the language of money.  So to make its voice heard on the issue of usurious credit card interest rates, the state of Massachusetts has announced plans to move millions of dollars in state investments out of several major banks.

The state has removed Bank of America, Citi and Wells Fargo from the list of financial firms approved for new state investment dollars. They are also looking to divest $243 million in funds held at those banks, though the process could take up to six months.  A quarter of a billion dollars is real money, and this is extremely bad PR for banks that don’t need any more critical press.

Massachusetts law caps interest rates at 18 percent, and the banks refuse to use that rate as a ceiling.  Nationally chartered banks can charge whatever they can get away with.  Sen. Bernard Sanders (I-Vt.) said that he plans on introducing a national cap on credit card interest rates through an amendment to the financial regulation reform bill being debated in the Senate.

The banks argue that rates of 20 and even 30 percent are needed to offset higher credit costs and losses, despite the fact they they can borrow money from the federal government at near-zero interest rates and have all made credit tighter than the lug nuts on a Mack truck.

Now it would be fantastic if this were just the first of several states to take up the fight for their citizens and hit these banks where it hurts. Several private groups organizations have already taken similar steps.

Individuals consumers are adopting a similar strategy, looking to move their money from big banks who took taxpayer bailout money, paid billions in record bonuses to their execs and yet still stick it to their customers with sky-high rates and fees. New web sites with high-profile backers have been promoted to help consumers move thir money out of the nationals into community banks and credit union.

This is a bold move, but not surprising, coming from the land of the original Tea Party and other revolts against tyrants who thought that they could do whatever they wanted to the common man. Way to go MA.

Chalk it up to the bad economy, more people than ever with Internet access, or just bad guys who are really, really good at what they do.  Regardless of the reasons, Americans lost twice as much to online scamsters in 2009 as they did in the prior year.

The total number of Internet fraud cases was also up big, growing by 22% in 2009.

The figures come from The Federal Bureau of Investigation/National White Collar Crime Center’s Internet Crime Complaint Center, which reported receiving 336,655 complaints in 2009 with losses totaling $559.7 million. In 2008 there were 275,284 complaints and about $265 million in money lost to victims.

“Criminals are continuing to take full advantage of the anonymity afforded them by the Internet. They are also developing increasingly sophisticated means of defrauding unsuspecting consumers,” said Donald Brackman, director of the National White Collar Crime Center.

While the old standbys still work, like the e-mails purportedly written on behalf of a Nigerian royal family member who needs help to getting access to an inheritance, the fraudsters need to keep coming up with new scams for an ever more savvy online mark.

One of the most recent developments is the rise of the so-called “hit man scam” whereby people are extorted to pay someone who claims to have a contract out on them and will take a few grand not to execute it. (Pardon the pun.) Other frauds include not shipping items paid for in online auctions, identify theft and work-at-home schemes.

I’ve tracked the best Internet scams for a while, and you can see some of my favorites in our archives.