The other day, I got this cryptic email. It read:
From: Wayne Millbrand <email@example.com>
Date: 03/27/2017 2:23 PM (GMT-05:00)
Good day to you!
I have a rather delicate issue, which touches directly to you. Don’t be surprised how do I learned about you! The fact is that I have got already a second letter from the person, I do not know which asserts that you are fraud involved. He insists, that you forced him transfer funds on your PayPal account under fictional reason. However,with this information he pointed out your private data up to address:
First Last Name
State (with capitalization error)
Now he is collecting information and planing to contact the police. I advise you to view the information that he sent to me. I have attached Fine.doc with a copy of all of his messages.
Document was password-protected – 4299
Please explain to me what’s happening. I hope that all of this is a silly misunderstanding.
Based on the fake email address and the tell-tale Anguished English, I concluded that this was just another phish.
I usually delete these emails promptly, but this one had an interesting component to it: it came with a password protected MS Word document. This is somewhat unusual because they typically expect you to just launch the attachment and activate the payload immediately.
So it appears that the attack strategy was to:
- Send a threatening email
- Add some publicly available information about the recipient to make it look genuine
- Encrypt the document in order to hide the payload from an anti-virus scanner
- Provide the password in the email to allow the user to open and decrypt the file
- Activate the payload in the MS Word document and infect the user’s machine
Inside the encrypted Word document, I found the following API declarations, variable names, and this code:
Dim wyqud As String
Dim zdwie As Long
Dim rufhd As Long
Dim bldos As Integer
Dim mufid () As Byte
Dim kmvbf As Long
Dim dfety As Long
Dim bvjwi As Long
Dim wbdys As Long
Dim dvywi (256) As Byte
Dim wdals As Long
Dim dwiqh As Long
API Declarations and Variables
This seems to be a variation on an old theme where as soon as the user opens the file, the routine executes a URL file download from one of these two backup sources:
h t t p://adenzia.ch/_vti_cnf/bug.gif
h t t p://kingofstreets.de/class/meq.gif
The macro is quite sophisticated, it can even prompt the user to disable their firewall if the download fails. Both GIFs—despite having an appropriate header block and some image content bytes—actually carry the encoded malware.
The macro uses a subroutine to extract the executable binary from the downloaded GIF. It stores the binary in a temp file, appends an “exe” extension to it, and then using the Explorer function ShellExecuteA, executes it in order to install additional malware. In this case, it was ransomware that encrypted the Documents folder.
The installed ransomware in action
Interestingly, the first compromised URL used by the malware was website that belongs to Adenzia.ch, a Swiss accounting and corporate services firm that ironically advertises itself as providing “Privacy and secure Data storage” and:
– Accounting services
– Secure financial services
– Data entry from paper to digital
– Scanning paper data to digital
– Archiving data anonymously
The before and after the breach Adenzia.ch websites
The Kingofstreets.de website
Another noteworthy strategy is that both, the repurposed Swiss Adenzia.ch financial site as well as the second German kingofstreets.de gaming site required a login. This provides an additional layer of security by preventing internet security scanners from tracking down the payload by trying to follow a link to the malware.
From the variable naming convention and the language of the email itself, it seems that the writer is non native English speaker. The metadata from the Word document further supports this and suggest a strong link to a Russian origin. First, the author’s name was preserved as виньда (Vinda) and the company name came up as: SPecialiST RePack.
SPecialiST RePack is a Russian digital publisher that is used for repackaging software. According to Emsisoft malware database, they are a source of a large number of infected files and products.
SPecialiST RePack infected content
As far as the unfortunate Adenzia.ch site, it seems that it was breached in the past few months as the Wayback Machine still shows them operational on October 4, 2016.
I’ve tried to contact Adenzia and give them heads up that they need to have a look at their network. As of this date, I haven’t heard back from them. This could be an indication that either the site was a front for malware distribution from the get go or else it is no longer in business and has been abandoned.
© Copyright 2017 Yaacov Apelbaum, All Rights Reserved.
On February 20, 1939, over 20,000 American supporters of the Nazi party packed Madison Square Garden in New York City. They anxiously awaited the appearance of Fritz Julius Kuhn, the newly anointed Führer of the German-American Bund. The event took place two days before George Washington’s birthday and a 30-foot-portrait of the first president (who was described by Kuhn as the first fascist) hung behind the podium along with Nazi flags and swastikas.
Kuhn entered the arena together with thousands of uniformed Nazi guards. During the rally he and his fiery fellow orators held back no punches, calling President Franklin D. Roosevelt: “Franklin Rosenfeld,” and referring to his New Deal as a "Jew Deal."
Being a creature of the night, Kuhn loved nightclubs, drinking, and the company of women (among them his two mistresses, Virginia Cogswell AKA “The Marrying Georgia Peach–on account of her previous seven husbands”, Florence Camp, Frau Hedwig Munx, and others). Just like many petty dictators, he was pompous, dishonest, idiotic, and didn’t understand his own limitations.
Once during a testimony before the Dies Committee, he was asked by Congressman Starnes if the reason why 23 of 71 Bund units concentrated in and around New York City was because the aircraft and naval manufacturing facilities were handy for sabotage. He replied: "That’s the same thing Lipshitz said. You know who Lipshitz is? That’s Walter Winchell [referring to Winston Churchill]. Lipshitz is his real name." No one was amused.
Shortly after his rock concert-like appearance in Madison Square Garden, New York city’s mayor, La Guardia, who was fed up with the constant anti-Semitic and anti-American agitation, started an Al Capone-style financial investigation of the Bund’s taxes.
When asked about his relationship to Florence Camp during his trial, Kuhn denied that he had asked her to marry him and noted that Mrs. Camp was too much of a lady to accept a proposal after just a few days’ acquaintance. Herman McCarthy (the prosecutor) whipped out a Kuhn letter and read it aloud:
"Florence : I am terrible in love with you. I beg you to become my beloved wife. I will always be true to you. . . ."
In another letter to Florence he said that he loved her with his “whole soul and body and was about to have [his] teeth fixed.”
In the course of the trial, it was established that Kuhn had pilfered $14,548 from his organization ($717.02 of it having been spent on moving expenses for Mrs. Camp). Kuhn was swiftly convicted on charges of embezzlement, grand larceny, and forgery and was first sent to Sing Sing Prison. After the war, he was deported to Germany, where he managed to get into trouble again.
In 1949 when he again stood trial in front of a Munich court this time on charges of escaping from jail and being a major Nazi organizer, he claimed that the Bund was strictly "an American patriotic organization," that he had used the swastika only because it was "an old American Indian design," and that he had patterned the Bund’s uniforms after the US National Guard, not the SS. As for his 1944 meeting with Hitler he said:
"It was purely a social call. If I went to England today, I would naturally like to call on King George."
When the US. entered the war, whatever was left of the German-American Bund organization quickly disintegrated, however, that didn’t spell the end of Nazi activity in America. Another high profile organization waiting in the wings was the Steuben Society. In comparison to the Bund which was composed of common National Socialist riff raff, the Steuben Society represented the cream of the crop to the US Nazi aristocracy.
Although Steuben Society members avoided public Nazi displays such as hailing Hitler, the differences between the two organizations were only skin deep. When it came to hard core issues such Nazi ideology, they were indistinguishable.
While visiting the reception room of the Steuben Society in New York, John Roy Carlson observed:
“One could find a large American flag standing in one corner. On the walls were pictures of Von Steuben, Washington, and Lincoln, The Pledge to the Flag and the Bill of Rights hung framed between them. There was also no lack of red-white-and-blue. Patriotism oozed from every crevice in the room.”
True to its nature, the Society published “The Steuben News" a newspaper for Patriotic Americans which described itself as:
. . . a patriotic, civic and educational political society endeavoring to awaken in the hearts and minds of American citizens of German extraction the necessity for taking a more active part and interest in the political affairs of our great country.
Its program demanded "strict discipline" on the part of its members, and rejected "persons who are shifters and trimmers, or who are known to possess no race pride." The Steuben Society strongly emphasized Racial (Aryan) consciousness and political objectives.
In his 1943 investigative book Under Cover, Carlson wrote:
“…The Steuben News reprinted articles from the pro-Fascist Italian daily, Il Progress Halo-Americana. It recommended books by the notorious Ausland Institute and ran many articles by Nazi agents. The Steuben News praised as "extraordinary and valuable" the book Scarlet Fingers published by Flanders Hall, the propaganda mill financed by Nazi agent George Sylvester Viereck. The Steuben News followed the accepted party line of pro-Nazi isolationists. It headlined the speeches of Lindbergh. It championed the late senator Ernest Lundeen-some of whose speeches were written by Nazi agent George Sylvester Viereck-and on one occasion devoted eleven columns to one of his defeatist speeches.
It reprinted from Social Justice and The Herald, American Fascist weekly. It ran large advertisements for the America First Committee, reprinted its bulletins and urged its members to support it financially. The Steuben Society fought desperately all measures to arm those European Democracies which resisted Hitler’s brutality. And it also quoted liberally from the New York Enquirer, published by William Griffin, who was later shown to have associated with Viereck.”
Now, you’re probably thinking: “This is a fascinating piece of history, but what’s the relevance of all of this 1939 Nazi stuff to our current 21st century jet-set life style?” Well, wonder no more.
This past Sunday morning on our way out of our local diner, I caught sight of the newspaper stand in the entrance vestibule. I usually don’t read printed media, but the name of the paper and the motto “A Newspaper for Americans” caught my attention. Curious about how the Steuben Society’s defines “American,” I picked up my free copy and read on.
At the top of the cover page on each side of the title “The Steuben News” were the mission statements: (1) United for Common Interests and Common Needs” and (2) DUTY, JUSTICE, TOLERANCE, CHARITY.
I flipped through and read some of the articles. There was an announcement of a presidential proclamation regarding the German-American Day, a story about the treaty between German settlers of Texas and the native Comanche Indians. My first impression was that it all seemed rather banal. Then I got the last page. Under the calendar of events, I ran into some terminologies like “event sponsored by Unit #998” and “contact Brother Erick or Sister Hildegard.” That seemed a bit cryptic and militant. At the bottom of the page I saw the membership form which prompted an unexpected double-take.
The membership form, unlike any other application I have ever seen, had questions about the nationality of the applicant’s father and mother, political affiliation, and—most surprising of all—about naturalization. For some reason, the Steuben Society (acting in the capacity of a quasi-government organization?) will only issue membership cards after careful evaluation of the applicant’s naturalization certificate, which includes scrutiny of the certificate number and place of origin. (I’m kind of curious to know who at the INS helps them validate these applications.)
From what I can tell, this membership application has remained consistent over the years. After conducting a quick search on-line for similar historical documents, I found one for the Silver Shirts, and as you can see from the contents, not much has changed in terms of drilling down to pedigree and other über eugenics.
When, I checked out the Steuben Society’s website for the name and location of the chapter nearest me, I discovered that they are all named after some distinguished German American figure. I was hoping to find a chapter honoring the likes of von Stauffenberg, but alas, no such luck.
I am not sure what to make of all this. I hold German culture, ingenuity, work ethics, and organization in the highest esteem. I’m an avid admirer of Handel’s music and Nietzsche’s, Kant’s, Goethe’s, and Leibniz’s writings. My family originated from Germany and in my travels there I have found most German people to be kind, polite, friendly, and exceedingly intelligent.
On one hand, it’s laughable that anyone would be willing to complete an application detailing his mother’s nationality or his naturalization number in order to join a civic organization. On the other hand it’s really disturbing that in 2010—the age of the internet—a nationwide fraternity that draws its philosophy from one of humankind’s darkest moments, continues to operate in the mainstream with apparently unrestricted access to leading politicians and public figures.
If you are considering joining an organization such as this, take a breather and dedicate some time to learning the German language, literature, philosophy, and music instead. You will discover that the richness of Germanic culture has a lot to do with individuality and little with purity of blood.
© Copyright 2009 Yaacov Apelbaum All Rights Reserved.
You are Getting Sleepier
In Mortgage Refinancing Shysters, Part I I wrote about some suspicious refinancing solicitation letters I got from the Intercontinental Capital Group (ICG). After writing about it, I got several interesting comments. One cryptic comment came from what appeared to be a former employee who wrote:“I agree with your assessment on ICG and know this for a fact…” Now my curiosity was piqued. What was it that this individual knew?
I performed another search on the term “Intercontinental Capital Group and Fraud” but this time, the search returned many more postings about unscrupulous dealings. There were many negative comments regarding ICG, but I noticed that there were also a few positive ones written by apparently satisfied customers.
The details of the pro-ICG postings were interesting. They appeared to have come from bona fide customers. On the one hand, the language seemed to be unbiased acknowledging some bad online press while on the other hand the writers claimed that they were very satisfied with the quality of service they received from ICG and that the company was entirely above board. One example read:
…I previously cancelled an appraisal appointment that I had scheduled with this company because I read something online that got me nervous especially being a single mom that just got back to work after being injured. I checked out these links and feel a lot better. I am going to give them a call and hopefully the rates are still low because I really would like to get rid of this adjustable rate mortgage and lower my monthly payments.
by educatedconsumer August 6, 2009 5:13
Then last week, I myself received a similar comment on my blog posting from a user who identified himself as “Joseph.” He wrote:
I received one of their letters and refinanced with them. They did a fine job and got me a good rate. I agree that maybe it wasn’t the best way of soliciting business, but it’s a tough market. Either way, they did the job they promised to do.
by Joseph October 28, 2009 13:33
Now, I don’t know about most people, but I certainly don’t spend my free time posting positive comments on blogs trying to sway other readers to believe that allegations of fraudulent or contentious services are unfounded.
I suspected that Joseph had some vested interest in ICG. From the crux of the comment left by him, it seemed that he was so moved by his mortgage refinancing experience that he became overwhelmed with the desire to spread the good news about ICG to the rest of the world.
When I examined the comment source, I noticed that the e-mail associated with it was firstname.lastname@example.org. Now it is possible that Jennifer, following the romantic style of George Sand, was using a nom de plume. But on the other hand it was also possible that Joseph was Jennifer’s darker side, I have heard of stranger things before. So I did some more research, then I slipped into my feminine persona and contacted her via e-mail asking for mortgage refinancing advice.
It did not take to long before I received the following ICG e-mail:
Intercontinental Capital Group can probably give you a good rate and fast service. Their website is:
You should contact Brad Allen over there, he can give you the information you’re looking for. His phone number is 212.485.9655. His direct e-mail is email@example.com.
I hope they are able to help you!
I am looking into refinancing my home mortgage and would like to get more information about your services and rates.
Can you please provide more information about your offerings?
The Internet search confirmed my suspicions that Joseph and Jennifer Margulis were indeed one and the same (see image below). It also turns out that Jennifer was in fact an ICG marketing employee on a company mission to remove the rotten apples from the barrel. Apparently, she found my posting about her notorious company and decided to sprinkle some fluffy propaganda comments. To make them look more credible, her comments were disguised as coming from little Joseph, your all-American, happy and satisfied mortgage customer.
Deceptive solicitation letters, whitewashing negative customer feedback and impersonating legitimate users in order to lure customers have no place in any business, even less so, in financial organizations that above all should uphold integrity and honesty.
© Copyright 2009 Yaacov Apelbaum All Rights Reserved.
Your Trusted Advisor
You can’t miss him. He’s the guy with the freshly pressed $500 suit, designer silk tie, and imported Italian shoes. His stylish attire is elegantly complemented by an expensive fountain pen, a standard issue Rolex, the latest cell phone, and a brand new luxury car. His Physiognomy is unmistakable, styled hair, white teeth, and a nice tan; a modern day Cary Grant.
He’s a natural, standing out at every social gathering—in the fitness club, on the golf course, at church and synagogue. He is jovial and funny, the toast of the party, a real screamer. Always the first to introduce himself, reaching across the room with a friendly and firm handshake.
He loves sports and works out regularly. Which one is his favorite? Well, he loves them all. If you let him, he’ll talk to you for hours about the Super Bowel, the NBA, or the US Open.
If sports are not your thing, that’s ok, he’ll talk politics. But don’t get him started! He has an opinion on all matters domestic and foreign, and he’s not afraid to share them with you. He has strong convictions about capitalism, socialism, the government , the environment…you name it.
After just 10 minutes talking with him, you think “Wow, is this guy connected to the hilt!” He just got back from Washington D.C (important meetings with policy makers and various other movers and shakers). And then, there is his story about the White House—and check this out: a wallet sized group photo with the local congressman/senator/governor. And did I mention that he’s on texting terms with several high profile celebrities?
He’s not a loner; he frequently travels with the wolf pack. The lovely spouse is always nearby, ready to lend a hand. She will strategically join the conversation and make a joke or a teasing observation on his account (“Oh, my husband! He is such a Neanderthal. Ha, ha, ha!”), while your own wife whispers in your ear to check out his adorable son: “He’s only 7! Doesn’t he look mature in his tailored suit!” The kid, as if suddenly activated by some mysterious homing device, makes a B-line towards you for a handshake. “That’s my dad. He’s a financial advisor!” he says proudly.
By the time you’re done shaking hands with the kid, you realize that he’s dad has moved on. You watch him mingling with other guests working the room like a cowboy in a rodeo, quickly branding the fattened calves for follow up. Than he’s back, telling you a joke (about a CEO who signs a contract with the devil). Next comes the debriefing. What do you do? Who do you work for? Where is your office? Before you can say “Pocahontas”, he’s punching your e-mail and cell number into his Smartphone.
A few days later, as you are getting ready to grab a bite to eat, your cell phone rings. “Hey, how’s it going?” says the friendly voice “Who is this?” you answer confused. “It’s the CEO and the devil guy from last week,” he continues without skipping a beat. “Hey, I happened to be in your neighborhood and I’ve got something for you. Do you wanna do lunch? It’s on me.” “Sure,” you reply, wondering what he can possibly have for you.
During lunch, he goes over more of the same routine. You discover that he either knows some C Executives in your company or knows someone else who does and he hints that he can pull some strings for you. After lunch as you are preparing to leave, he springs a few expensive tickets for some sporting event and tells you that he and his significant other would love to have you and your significant other over in their private booth to watch the game. “Come on, its going to be fun!” A few days later when you come home from work, you discover a few boxes of toys and a bunch of CDs and DVDs on your dining room table. “What’s this, Honey?” you inquire. “Mr. CEO/devil’s wife just dropped them off. She said that their kids just love them and she thought ours would too!”
This goes on for several months, with lunches, family get togethers, tickets to see the Broadway show and offers to use his timeshare in Disneyland for free. You eventually let down you guard; clearly these are such nice people.
Then one lunch, your newfound buddy, with an intense look on his face, tells you about this amazing 3-month, double digit return investment opportunity. (But you have to act immediately!) “How much are we looking at?” you inquire. “Oh, not much,” he says, “just 100K.” You politely decline, telling him that you don’t have that kind of money to invest. He says, “can you borrow it from someone?” Sensing a high pressure sales tactic, you say that you don’t feel comfortable borrowing money from people. Your dining companion loosens up and assumes his collegial persona again and says “Hey, that’s not a problem, I’ll keep my eyes open for other opportunities for you, but I don’t know if they’ll be as good as this one.”
Then the conversation turns to your company and he starts debriefing you about acquisition plans, mergers, strategy, etc. His questions seem strangely reminiscent. Oh yeah, you just recently went over them in the corporate anti-trust and insider information certification course. Now you realize that he’s actually fishing for insider information.
In a moment of complete mental lucidity, you suddenly get it. This guy is a professional shyster and he’s been playing you like a violin. Now would probably be a good time to end lunch and this relationship. But its not as easy as that. By now, he has woven himself into your social fabric. Severing the relationship now would cause you and your family mental anguish and would probably require some form of unfortunate confrontation. And what about mutual friends; what do you say to them?
And then there is the doubt issue. Even though now you know he’s dishonest and deceitful, shouldn’t you give him a break? After all, he’s just a another guy with a family and a mortgage trying to make a living, isn’t he? So, what do you do?
The moral of the story is that this is all a scam. Don’t let your emotions get the better part of you. These individuals (and their accomplices) are cold blooded opportunists. They could care less about you, your family, or your financial well being. Their interest in you is purely financial and short term. As far as what you perceived to be generosity (the free tickets, lunch, gifts, etc.), they’re just a device to make you feel indebted and emotionally dependent.
Unfortunately, as many have discovered, few of us are immune from this type of relationship and manipulation. If you think that being scammed financially only applies to the ship of fools, check out the Who’s Who on Bernie’s list.
The majority of independent financial advisors\planners operate as one man shows and are not dissimilar to the elixir and snake oil salesmen of the Old West. To compensate for the lack of substance (i.e. breadth and depth of financial knowledge and operational know how), they rent an office at a respectable address, contract with financial service processor like Investors Capital, and purchase an off-the-shelf website that comes pre-loaded with content and functionality like whitepapers, newsletters, and financial calculators. The rest, is pure social engineering.
Despite the aura of legitimacy the financial advisor\planners industry is trying to assume (through certification and NASD regulation), the fact is that it is riddled with dishonest, unscrupulous confidence artists. If you need financial or investment advice, go with a large non-contractor or commission based company like Fidelity. They won’t be able to guarantee double digit returns, but they won’t lose your investment overnight either. If you are new to investing, do yourself a big favor and carefully read the information on the FINRA site. You can also use some of their tools to check out your prospective broker buddy.
Good financial advice is hard to come by. Since most of us are not savvy enough to distinguish between the legitimate advisors and the Madoff wannabes, you should stay away from all independent financial advisors\planners, regardless of how smartly they dress or successful they appear. This especially applies to the ones you know through your social circles.
If you do happen to use an independent financial advisor\planner, you may want to scrub him against the following list of the 7 deadly sins of financial conduct. If he fits one or more of these descriptions, it’s probably time for you (and your investments) to move on.
- Promising you any return on your investment (especially ones in the double digit range)
- Telling you about sudden investment opportunities that require prompt action
- Soliciting you for insider information and references for other potential investors
- Paying you in cash or using proxy accounts (like personal checks from a spouse)
- Exhibiting dishonesty of any type (i.e. asking you to attend financial sales meetings masked as social events or having any previous SEC or NASD history of complaints
- Showing willingness to spend money on you for no apparent reason (including free lunches, gifts for the kids, etc.)
- Having a history of contentious job loss with larger financial institutions and lawsuits or litigation involving trading irregularities
© Copyright 2009 Yaacov Apelbaum All Rights Reserved.
So you’re Looking to Refinance?
It may be true that David Hannum was the first to observe that suckers arrived in the delivery room at the rate of one per minute (ironically, he himself turned out to be a colossal sucker), but it took the marketing genius of P.T. Barnum (the man behind such novelties as the bearded lady) to turn gullibility into fortune. The world has changed significantly since the days of Barnum’s traveling freak shows where access to a new audience required lengthy cross country trips. Today, the Internet provides a virtual big top circus ripe with new ways to reel in and deceive, complete with unlimited seating for millions of new victims.
Eberhart and Kennedy in their excellent treatise "Swarm Intelligence" suggest that deception is quite common in social populations and they point out that all of us regularly practice it to one degree or another. In support of their argument, they discuss the well documented El Farol algorithm frequently used by individuals to effectively compete in social communities in order to gain material or social advantage.
I recently I had occasion to consider this maxim and even try it on for size. A practical and logical individual, I am by no means naive, so I was surprised—even blindsighted!—to discover that a certain financial advisor that I know personally is in fact a grade A shyster. This got me to thinking about the varying shades of dishonesty and gullibility and the gray area that exists between telling "the truth and nothing but the truth" and outright lying especially as it pertains to financial solicitations.
You may have noticed that over the last year as the economy has spiraled out of control, the number of mail offers for mortgage refinancing has increased significantly. The banks—which in the past were the traditional providers of such services—are still hemorrhaging profusely from the blunt trauma inflicted on them by the collapse of subprime mortgages. (I certainly don’t get any more solicitations for HELOC.) In what is further proof of the principal of horror vacui, it seems that the legitimate banking mortgage industry has now given way to a new breed of entrepreneurial ventures. These con-corporations have smelled the blood in the water and are aggressively following Mr. Bigweld’s motto: "See a need, fill a need".
Realizing that many of these solicitations were probably rip-offs, I decided to test the waters to see if I could find out who was behind one of them. As it happens, I didn’t have to wait long before receiving another mortgage refinancing solicitation letter. This one was from the Intercontinental Capital Group (ICG) and instead of sending it directly to my circular bin, I opened and read.
On the surface, the language and content of the letters (see both versions below) was drastically different from the one I’m accustomed to receiving from my bank. Whereas previous solicitations were factual and down to business, these were laced with crafty and deceptive language.
After examining the details I found the following noteworthy features:
- Disingenuous Claims of Previous Communication—In order to lower suspicions and fake familiarity, the letter claims to be a follow up on an already established relationship and ongoing communication.
- Design to Deceive—The letter contains what on the surface appears to be a legitimate application number, a "second notice" tag, a recognizable equal housing lender logo and acronyms of well known public and federal organizations. In fact none of these details has any significance and are there simply to create the semblance of legitimacy.
- Vague and Deliberately Confusing Language—The letter states that ICG is "unconditionally endorsed by the U.S Department of Housing and Urban Development". When I called the toll free number I heard: "Thank you for calling the FHA application processing center". ICG is certainly not a Federal Housing Administration (FHA) application processing center as the FHA neither issues loans directly nor has an application processing center.
- Skin Deep Corporate Internet Presence—On the surface the company web site appeared to be fully functional, but when I tried to use some of its key functionality (login, change password, etc.) I quickly discovered that none of it worked.
Being deceitful in marketing is not news (see Mortgage Refinancing Shysters II for more details), so respecting that any marketing campaign will always necessarily be laced with a certain amount of dishonesty (Seth Godin thinks that All Marketers are Lairs), I was ready to let this one go. Just before doing so, it occurred to me to Google "ICG" and lo and behold…it turns out that this shadowy and mysterious organization not only stretched their marketing collateral, they actually had some serious run-ins with at least one state banking regulatory agency (failure to submit financial statements and comply).
It appears that the vacuum created by the retreating lending banks is being filled in by old style confidence and run of the mill Internet scam companies. Be mindful of this and remember that "there’s no such thing as free lunch". If the mortgage refinancing offer you received looks too good to be true, it probably is.
© Copyright 2009 Yaacov Apelbaum All Rights Reserved.
Over the past two years, it has become increasingly clear that the scenes of carnage starring the world’s oldest and largest banks and our 401Ks are merely a symptom of a larger problem. By now, everyone has gotten used to the daily media’s serving of congressional hearings and testimonies showing the pale captains of industry publicly gnawing their fingernails, sobbing and informing us that they ‘did not and could not have predicted’ such an outcome.
Suddenly, everyone (including the FBI) is trying to figure out what happened to the money, why the global credit crunch is so severe and ultimately what is the single silver bullet that will solve the problem. Good questions to which there are many answers but probably no permanent solutions.
The causes of this great turmoil are really simpler than the media portrays them. They have nothing to do with complex derivatives and speculative trading. They can be attributed to the simple failure of the traditional banking risk assessment and mitigation practices. Ten years ago, no bank would lend a dime to somone that is credit unworthy. So why did veteran banks like Chase let down their guard? Because we are all in it for the money, and ultimately the banks can’t resist a good bubble, no more than you or I could.
From the historical prospective, this hysterical investment extravaganza is certainly not new. You can easily find a large number of similar examples—all of which oddly tend to replay themselves every few centuries—like Tulipmania, South Sea Company, Railway Mania, and the ever popular real estate bubbles.
The bankruptcy filing of Lehman Brothers (they lost a whopping $40 billion!) is probably one of the most poignant illustrations of how the toxic fumes of incompetent leadership, the inability to understand risk, and mitigate it have permeated the global economy. Though the handwriting has been on the wall long enough for all professional money managers to have reduced their exposure, surprisingly very few actually have. Even the black prince of finance, George Soros, who ran $20 billion in assets, actually raised his stakes in Lehman Brothers just months before its collapse.
Unfortunately, the tide raises and lowers all ships and due to the tightly coupled nature of the financial industry where trust and risk are easily transferable, the collapse of one bank on the scale of Lehman Brothers will by extension cause other banks to slump over like wet burritos.
Hyman Minsky had struggled with these problems for quite some time before eventually concluding that, for better or worse, our two stroke economic engine is driven by these business cycles and there is not much we can do about it.
© Copyright 2008 Yaacov Apelbaum All Rights Reserved.